Entrepreneurs share why their startup failed
Founder of Choose Your Reader
My failed startup was a tech business that sounded like a good idea and probably really was.
I joined the idea mostly as a financial backer and business advisor.
Our challenge that led to our failure was:
- I didn’t see the need for additional financial backing until it was too late
- We lacked a tech partner and instead only had a tech vendor
- The idea was created by a person who had a background in managing teams but not managing processes, so our business process was flawed.
Choose Your Reader
Choose Your Reader
Director of Light-It
I was 21 when I became Managing Director of South America at GeneStore, nothing to do with my studies, interests, or experience. Two years trying to expand the company in the region but finally failed for many reasons. The two main ones were bad timing and not the right strategy. It was definitely too early to convince people to make everyday health and wellness decisions using their genetic code. Regarding the team, we should have focused on partnering with gyms and nutrition centers (B2B), and not B2C. Light-It
Founder of Her.CEO
I started a color contact company and it had some small successes but then never really got off the ground. I think it ended up failing because I never really put the time and money behind it, and because I could never directly sell products as you need such high order volumes for contacts and it is such a highly regulated industry requiring prescriptions for all orders. In order to have a successful business you really have to back it either with time or money and if you don’t do either, it likely will never go very far. Her.CEO
Co-Owner of VC Inc. Marketing
I’ve found that the #1 reason why startups fail is because they misunderstand or misinterpret the needs, goals, tastes, and challenges of their target customers/clients. In this way, they are completely disconnected from the people who they’re relying on to purchase their offerings. The latest case of this cluelessness: Quibi. As David Leonhardt said of the company’s demise in the New York Times, “Quibi didn’t seem to understand the needs of its extremely online audience.” VC Inc. Marketing
Founder of GameCows
My first business failed due to inexperience and lack of knowledge. I thought I was doing the right thing by signing up for workshops and seminars to get an idea of how eCommerce worked, and I would get super pumped to get started right away. That was the downfall. I jumped in without vetting the source, and before I recognized the sales funnel within these free seminars/lectures I was already set up for failure. Instead of doing something that worked I had a bunch of trendy apps that linked up to pretty, but non-functional website. On the outside, everything looked amazing, but everything about the business was shoddy. I dumped 6 months of time and money into it before I cut my losses and went back to the beginning. GameCows
CEO of 5th Dimension Strategies, LLC
- Capital Planning: A business will likely not make money in the first year, and may not make money in the second. In high growth, it can take 3-5.
Making hard choices between an expense and an investment, product development over market entry, production people over executives. These are critical to the success of a venture.
- Product vs Market: The big leaps in an entrepreneurs mind usually over-investment in product or services development, and then there is no money left for adequate market entry. Easy rule of thumb, for every $1 in early product development, you need $3 to enter the marketplace.
- Overhead: The early stage capital markets push for big names, expensive people in the deal. I’ve seen businesses with Senior Executives pulling extraordinary salaries, and they are all watching 5 people do the work.
CEO of Rutman IP
We had a killer idea, a killer team, yours truly doing backend machine learning for computer vision, and an American CEO, which Israeli VCs love. We all liked each other, got an early hit with free tickets to Boston for a summer in the Mass Challenge accelerator and subsequent investments, and it seemed we were on the way. The team was growing, the product was maturing, customers were starting to line up. But competitors were beginning to appear on the horizon, the end of the runway was coming up fast, and we’d already pitched to most of the investors we could find. An investor did finally show up and dangled a $5M investment in front of us as long as we promised not to sign with anyone else while he was shopping us. They strung us along with the due diligence for months, and in the meantime we ran out of gas, stopped paying ourselves, and let everyone go. Then one of the founders got a tip that these ‘investors’ made a habit of finding companies at the end of runway, promising a sweet investment while blocking out any competition, then dropping the offer and simultaneously threatening to sue while offering a firesale buy of the patents. We couldn’t get more investment since the due-diligence record was public, and the impression of ‘uninvestability’ was stronger than the fact of a strong product and good sales. Rutman IT
Founder of More Marketing Firm
My biggest takeaway has been you don’t know what you don’t know and what you don’t know can kill your business. I started a custom candy wrapper business to tie into my event planning company. It sounded at the time like a simple and easy way to capitalize on capturing additional revenue as many of my clients added these sort of goodies to their events. What I did not do well was figure out how to process these orders. So essentially everything was done in house and I was making everything myself. Small orders were easy enough but as I worked to expand and get larger orders I became a victim of my own success. I can remember my first order of 2000 candy bars. Everything that could go wrong did. From printing issues to a deadline that was impossible for me to make on my own. To attempting to get help but realizing that the cost would eat into practically all of my profits. I did get the job done but it was a wake up call. So I decided to look at hiring staff on an as needed basis to help with these big orders as I had others lined up and I knew I could not complete these on my own. What did I learn? My prices were way to low! I couldn’t pay a staff and complete these orders and turn a profit. I ended up closing this end of my business up but I learned a very valuable lesson about the true cost to do business and how to plan my business for growth from the beginning. Fast forward and now as a marketing professional with a team that works under me this is one of the things we discuss with our clients that are solopreneurs because we know the challenges that are faced when you have too much business and the importance of having a plan in place to scale up. More Marketing Firm
CEO of Sküma
Back in 2016, while I was still completing my undergraduate degree in engineering in Montreal I founded my first company: Omex Solutions INC. My idea was to develop a machine that transforms tap water into contact lens sterile solution, and one of my closest friends helped with the electrical part of the development. Although we built a functional prototype, after spending more than 3 years pursuing this idea, I noticed that the project was not going anywhere due to a lack of self discipline. Without a constant motivation to work from morning to evening from its founders, a project or startup will never even come close to fruition. Sküma
CEO & Co-Founder of ElCid Tour
It is always a good idea to look back to realize what you did in the past. As a founder, I realized that the first steps of every startup are essential. However, you may not recognize what you did wrong initially, and you know it when it is too late. I failed to run a cryptocurrency startup and what I did was the wrong market research. Market research is important for every startup, and it is obvious, but we may fool ourselves with data and results that we collect from them. I was so optimistic that I ignored ominous signs in my market research and thought that there are enough customers for my product out there. As I invested more time and money in my startup, I realized that my product is perfect, but people do not need my service. Although it may solve their problems, this kind of pain may not be vital for them to solve or use my product in the cryptocurrency market. In the end, I learned to pay attention to every detail that I got in my business’s first few steps. ElCid Tour
Founder & CEO of The Word Counter
One of the biggest mistakes you can make when starting a business is trying to do too much too soon. I made this mistake a lot in my early career before learning the concept “MVP”, which stands for “Minimum Viable Product.” In other words, you should create an initial product that gives customers a solution to their main problem and that is it. No frills, and no unnecessary accessories – just the bare minimum. From there you can add more features as you incrementally improve. The Word Counter
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On the podcast, Sean talks with entrepreneurs about the reality of their struggle to succeed, as well as answering questions from the community, and sharing nuggets of wisdom from his own life.
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