The plague of rationalization

TechCrunch | 2/15/2018 | Joseph Flaherty
jolan (Posted by) Level 3
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Joe Flaherty is director of Content & Community at Founder Collective.

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Reasons - Startups

There are many reasons startups fail.

Unfortunately, we just didn’t have enough time and ran out of money.

Customers - Offering

Unfortunately, the customers just didn’t care enough about our offering.

Unfortunately, the channel just wasn’t economically efficient.

Person - Engineering - Marketing - Sales - Finance

Unfortunately, I had the wrong person running engineering (or marketing, sales, finance etc.).

Unfortunately, we were screwed anyway so we just decided to throw a Hail Mary pass.

Layoffs - Morale

Unfortunately, I thought layoffs would ruin morale, so we just burned too much for too long.

Unfortunately, the term sheet fell through at the last minute and we ran out of money.

Account - Business

Unfortunately, we didn’t land the key account that would have saved the business.

Unfortunately, because we had always overcome every previous obstacle, we blindly assumed we’d always overcome the next one.

Sample - Explanations - Investor - Company - Money

These are just a small sample of the explanations I’ve heard as an investor, usually immediately after the company runs out of money.

There are times a startup’s fate is beyond its control. Like when a platform tells you they’ve unilaterally decided to take your revenue streams, or a country bans your app. However, outside of a few rare circumstances, the life or death of a startup is mostly in the founder’s hands.

Startups - Money - Problems - Money - Failure

Startups don’t just “run out of money.” Instead, they wait too long to address problems while they had money. Failure doesn’t usually happen “to” startups. It happens when founders rationalize problems until it’s too late and put off dealing with their most profound challenges.

Most of the problems above are present at some point, not just in failures, but also in every successful company. The difference between success or failure is how quickly the startup engages the problem. Attack problems early and the startup will advance. Rationalize that the problems don’t exist and you’ll just be another depressing startup post-mortem.

Founders

Founders...
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