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Seven Classic Startup Failure Modes

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Startups primarily fail because the vision of the founders, leaders and the team does not match reality. That's why we continue with our projects independent of market fit, when the technology isn't really ready, or there are clear competitive disadvantages.

This deck introduces the idea of matching vision with reality, and outlines seven classic ways that startups fail.

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Seven Classic Startup Failure Modes

  1. 1. Why Startups* Fail *and other tech projects Seven Fail Modes. And Some Successes.
  2. 2. successes (but nobody bats 1.000)
  3. 3. reasons for failure (self-reported) source: cbinsights cbinsights.com/blog/startup-failure-post-mortem/
  4. 4. vision reality reality will always win most failure = non-alignment with reality
  5. 5. seven failure modes ➡ fails 1-5 : non-alignment with the real world ➡ fails 6 &7 : execution
  6. 6. To see what is in front of one's nose needs a constant struggle “ George Orwell (would have enjoyed the Lean Startup) “
  7. 7. classic fail 1 : too early “This technology is so cool…”
  8. 8. too early : symptoms the long-term strategy is great but you’re doing a lot of persuading (a lot) a few enthusiastic early adopters (head-fake) obvious practical objections are waved away traction just doesn’t happen
  9. 9. too early : why in love with the theory, blind to the practicalities
  10. 10. too early : what to do ➡ plan and fund for a long (long) haul ➡ find a piece that will work (really work) now ➡ find a niche that will work (really work now
  11. 11. classic fail 2 : too late hoping one or two “plus” features will move a market hoping a giant grizzly won’t notice you’re there assuming that you’re a bigger grizzly “We can compete with Google because…”
  12. 12. too late : why it’s probably a good idea, except for the competition hubris: you’re going to disrupt a giant thinking maybe you’re get acquired (maybe you will)
  13. 13. too late : what to do ➡ move really, really fast (see also: grizzly) ➡ be really massively disruptive (hard)
  14. 14. classic fail 3 : adhd there is no one customer everybody is really busy: product teams get burned frequent bursts of optimism at “the new start” the strategy gets increasingly convoluted “we could be a <insert new idea here>”
  15. 15. adhd : why disappointment of seeing reality meet the vision fear of commitment to one goal fear of letting go of a direction that has failed
  16. 16. adhd : what to do ➡ commit, and then cut stuff. yeah. that’s hard ➡ do one thing really well
  17. 17. classic fail 4 : the Big System “we’ll get the architecture right this time” the “why” explanations are convoluted: often justified by one feature, not by real user need there are too many engineers timescales keep drifting out into the future
  18. 18. the Big System : why we are really attracted to “doing it right” theory of what “a complete system” overrides practicality
  19. 19. the Big System : what to do ➡ ewww. tough one. just stop. ➡ isolate the customer need. address that. only.
  20. 20. classic fail 5 : not listening customer responses are ignored or “re-interpreted” Lean Startup, or anything like it, is not used Lean Startup is kind of used: results are ignored “we’ll put another feature in”
  21. 21. not listening : why we’re gonna build what we’re gonna build we’re attached to our creativity
  22. 22. not listening : what to do ➡ well, you could build it - you probably will anyway ➡ or: start listening. it’s hard. you don’t want to hear it.
  23. 23. classic fail 6: oops, forgot the marketing there’s no marketing person in charge of marketing no spreadsheet exists showing cost of user acquisition “our investors will tweet this” “techcrunch is going to love it”
  24. 24. oops, marketing : why we love our products. surely other people will, too! we see lots of success out there. surely it must be easy!
  25. 25. oops, marketing : what to do ➡ get expert help ➡ include a marketing plan in your runway (time and $) ➡ do this before you write any more code
  26. 26. classic fail 7: damn thing doesn’t work
  27. 27. damn thing : symptoms two steps forward, at least one and a half back bugs, performance issues demos are a nightmare continuous schedule overruns
  28. 28. damn thing : why the tech is beyond (at least some of) the team changing this means facing hard people issues
  29. 29. damn thing : what to do ➡ manage the hell out of it ➡ change (at least some of) the team (do this)
  30. 30. successes ➡ small, committed, excellent teams ➡ real world alignment : strategy/timing/customer fit
  31. 31. enjoy building your vision joedunn@cloudbreak.com @startup2020 cloudbreakleadership.com

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