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December 05, 2013
Lessons from a start-up failure

For every startup success story you hear in startupville there exists thousands of startups that fail due to lack of funding or bad pivoting or bad management or bad luck or a combination of them.

Success owes its success to doing the right thing at the right place and the right moment but it also boils down to bailing out of a potentially bad position by recognizing early signs of startup failureSo, at the risk of oversimplifying things, I will say that founders need a combination of strategy and risk recognition and mitigation to have any chances of succeeding at startupville. To make it easier to understand, I am going to divide this post into two parts – strategy and risk recognition/mitigation. In strategy, I will lay down the ground rules for starting a business. The early signs of failure that every founder should know about will be dealt later under risk recognition and mitigation. So here we go –


There are many takers for solutions to common everyday problems but new ideas have few takers

I learnt this the hard way. My first venture – an online housing portal - did not take off as expected because the concept was ahead of its time. It was a new idea. Unfortunately new ideas take time to take root.  Back then, people did not log into the internet for renting property, they called a broker. Of course, now, people don’t think twice before searching online. So my first advice to entrepreneurs is this – look for solutions to everyday problems. My second venture had more takers, because provided SMEs with a business class communication solution.

Cash should go into the cash till

If collection is not your strong suit get a specialist. Personally, I hated going on collection rounds for collecting my money. This feeling got worse after a chance encounter in a lift with two collectors who were scheming and plotting against a client refusing to pay a bill. That shook me good. The next time I started a business I took care that I received the payment upfront. So make sure that the cash goes into the till. A strong bottom-line will help you at the bargaining table.

Start with something you’re good at and do it better than everybody in the whole world

Do what you love. Sounds like a cliché but works like a dream every single time. It is easy to understand why. You will stay more committed to your dream. Secondly, you will work harder than the rest and third, you won’t mind the initial hurdles. And if you are really serious, you will pursue your startup goals with more zeal than anybody in the history of the world.

Fail fast if you have to fail

No use dragging your feet here. If you must fail, fail quickly and start all over again. Get a startup accelerator to transition quickly from the startup phase. Unlike popular belief, don’t hid in anonymity, emerging out of your self imposed cocoon only when you have a completed product under your belt.  Roll out the beta version as quickly as possible. Get inputs from beta users and iterate like mad till you have a working solution.

Most successful startups started with something else and ended with something else

Pivot. When our outgoing cloud telephony solution failed to get going we transitioned (pivoted) to an incoming cloud telephony solution. Some entrepreneurs fall in love with their product and refuse to pivot even when feedback from users are telling them to pivot.

Risk Recognition & Mitigation

If you fall in love with your idea and you’ve dug yourself a hole

Be flexible. Change, pivot, junk your idea if has no traction in the market.

Don’t hide yourself in a cave while developing your product

Interact. Be out there in the open. Strike conversations with community groups, user groups, or target users, anyone who you think will be ultimately interested in your product or idea. If you are thinking in terms of a big bang debut be prepared to be hit by a big Mac truck. If you don’t want to be road-kill get user groups or target users involved in the product development phase.

Quarreling co-founders are bad for your business image

You don’t want co-founders quarreling at a critical stage of your company. Tensions between co-founders tend to come out during the pivoting stage stalling growth prospects of the company. A public squabble could harm the growth interests of your company. Investors shy away from investing in a company with quarreling co-founders.

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