A case study of 32 companies to explore the cause of TOP20 's failure

Source: Internet
Author: User

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Financing, acquisitions, major product updates, whether intentional or unintentional, the entrepreneurial media circle seems to focus on the shiny shells. And those who are short of life of the failure of entrepreneurship is like sand as silent as the waves involved in the sea.

A cautionary tale, is. Overseas pioneering Service Web site Chubbybrain in 2010, 32 companies have failed to conduct a detailed investigation of the company, and finally combed out the reasons for the failure of TOP20 business. This article is compiled from 36 krypton.

The following figure is a summary of the reasons for the failure of 20 startups:


Top 20 is not a good time to start a business

The market maturity of the economic environment and the subdivision area is the index of the entrepreneurial opportunity. The typical example is the 2010-year start-up. The impact of the 08-year economic crisis has not faded, and the investment environment has fallen off the cliff since 2009, most importantly the purchasing power of consumers, the target client group of the C-end start-up, has slipped. In the context of the Great Depression, Untitled, a website that specializes in art deals, is one of the startups that has suffered multiple blows, ultimately powerless. Untitled also summed up the failure:

Our market judgment is based on a number of articles in the Wall Street Journal and the New York Times, as well as a reference to the global Art index. One of the central conclusions of these articles and data is that the art market is counter-cyclical and less relevant to the S & P index. This conclusion is true in the long run. But in the present environment, the two are still very strong positive correlation. And as a start-up, we can't wait for the reverse cycle to happen. In addition, the decline in purchasing power of ordinary art customers is also a variable that we have failed to take into account in advance.

19 always want to start a business as a part-time

Keep existing jobs, ensure a stable source of income, and start a business in your spare time. It is clear that many entrepreneurs will consider this the safest way to start a business early. Overto, who ate a big loss, didn't think so:

We thought we could use the time after work to develop and operate our Internet service. Yes, that's true, if we're lucky enough, the server doesn't happen again. And when we have a problem with our infrastructure, things start not as we expected. Our team does not have a full-time staff, after the emergence of the organization of the server hanging machine is in our work time, the problem can not be resolved in a timely manner, hung out several times. You can imagine the impact of this on the brand and the user experience. Worse still, as we spent too much time on problem fixes, the development of new product features was almost stagnant.

In addition to the above drawbacks, you can imagine, a full time part-time entrepreneurial team still has a fundamental problem: lack of sense of crisis, anyway, we all have a guaranteed job. In fact, several of the 32 companies surveyed attributed the lack of full-time staff to the most important factor in the failure to start a business.

18 Company Location

Location is a problem, which is reflected in many ways. First of all, the company site selection is best with the company's development concept, target customers, potential investors location.

A personal feeling is that I have interviewed a start-up company in Xiamen, Fujian-Mobile fun electricity price. It's a good start-up, and it's said that sales have more than 100 million yuan in more than a year, but rarely in the media. In fact, according to founder Huangtianyi, the two or three-line cities in Fujian have a number of reliable start-ups, but few opportunities to contact the media, investors, potential partners. Of course, the dwelling two or three line city also has the advantage, that is the start-up cost is low, the good luck government supports gives back the force. Both pros and cons need to be weighed by the entrepreneur themselves.

In addition, remote collaboration is the company's main organizational form for many earlier startups. The benefits of cost savings are obvious, but remember to ensure that the team's communication and collaboration efficiency.

In fact, according to Chubbybrain's survey, at least two companies believe that the main reason for the failure of entrepreneurship is the improper location. One is to provide companies with Nouncer to prevent malware intrusion.

Nouncer the company's address in New York. It thinks New York is not short of money, entrepreneurial atmosphere, talent, no lack of entrepreneurial instructors and other advantages. But it failed to take into account the only drawback of New York-that it could not provide them with the first batch of seed business users. San Francisco is a city that has been hit by hackers more often than in New York.

17 can't attract investors.

Several entrepreneurs in the survey said frankly that the direct reason for the company's eventual collapse was that they could not attract investors. This does not rule out the reason for bad luck. Maybe it's because the investors they touch are not discerning, or the founders themselves don't have access to a broad enough investor. But after the failure of financing, one can not evade the operation is to put aside external factors, to re-examine their own entrepreneurial projects. Ideas, products, target customer base, business model and other issues are considered in place. Take advantage of this introspective opportunity!

16 Lost in the competition

It's not good to pay too much attention to competition early in the business, but it's not wise to ignore opponents altogether. Especially in the market heat, the model has been verified by the market, you have to do a large number of beginners to join the psychological preparation of competition. In the survey, 10% of the entrepreneurs ate the loss of total neglect of competition. One of these is Marc Hedlund, founder of the Financial Services website Wesabe. His entrepreneurial failure is summed up in this way:

Do not rely on a single company's financial products, pay attention to protect the user's personal privacy, to help users achieve better financial management, all these mint done, we have done. Poor on the threshold of our users too high, need users to do too many things. In fact, this surface usability optimization is not difficult to do, the wrong is wrong in our timely attention to competitors, and make changes, resulting in qualitative differences.

15 physically and mentally exhausted

In the entrepreneurial circle, rarely in the early team to see the nine-to-five work life, work to 10 is a potluck, midnight is also common. This enthusiasm was once the entrepreneur proud of the capital, until the end of last year, the teacher had cancer incident, the circle once again sounded the advance of the health of the alarm bells. In fact, working too hard will not only harm the body, but more than 12% of the entrepreneurs in the survey also attributed it to their failure to start a business. Long working hours and high efficiency are often not proportional. And with everything in hand, it's better to slowly learn to delegate tasks to team members. At the same time, for some things can be expected to fail results, why not give up early, save energy.

14 distracted, dazzled by flashy things.

A startup can trigger a variety of possibilities, huge imaginary spaces. This is the charm of entrepreneurship at the same time, but also led to many startups eventually defeated the biggest stumbling block. My project can be extended to this business, this business, this business ... What's the best thing to do? Or do you want to start with a platform that can carry all the business? This is the lack of core competitiveness of the product approach, beware of the subsequent single point of breakthrough to achieve catch-up. After chatting with a Mentor-level investor, I suddenly found out that there was such a possibility for my product, and the existing product was too painful. If you change the direction of a product just for one conversation, I can only say that your chances of failure are as high as 90%. Look at what Kiko founder Mahesh Piddshetti said:

Most entrepreneurs have all kinds of ideas. Of course that's a good thing. And most people choose to start their own business because of the creative ideas that are constantly emerging in their minds. Such people are talking about new products and new models all day long. But they are also the easiest people to be fascinated by the flashy ideas. It happened that I was one of them, constantly experimenting with new products that eventually led to the postponement of our main product.

13 and investor/partner relationship is stiff

It's a big taboo to start a business with a partner. Bricabox's co-founder gave the advice with personal experience: "Take my example, when a co-founder is gone, this means you've had a heavy blow." But everything must be prepared, and the best precaution is to extend the grant period of the option as much as possible. ”

And investors to break off the general main reason is that the two sides in the company's development process gradually emerged differences of opinion. One of the more well-known examples is the open source provider ArsDigita Corporation, and General Atlantic, Greylock in the direction of the company's development of the conflict of opinion eventually led to the company lost the industry leadership position. Therefore, it is very important to choose investors carefully!

12 Chaos Network

Chinese communities rely on relationships everywhere, and in many cases abroad. So many entrepreneurs complain that the lack of a broad enough network of relationships is a big bottleneck for entrepreneurship. But you know what? 16% of the entrepreneurs in the survey said they had nothing to do with it, but the problem was they didn't use it properly. This is for reference only.

11 Pricing of products

The product pricing problem is 1 points science, 9 cent art. Many companies in the survey attributed the failure to the high/low price of the product. One entrepreneur, for example, said: "I bought a chain of key chains for 50 cents and sold them for 1.25 dollars, making only enough money to pay for the phone calls of my sales staff." Eventvue's founder said: "My biggest failure in this entrepreneurial experience was to chase the enterprise-level market with an overly cheap pricing scheme." ”

10 Product User Experience Difference

It seems Top10 to classify the product experience as a reason for the failure of entrepreneurship. After all, the former can hardly be the direct cause of the latter. But from the example of these 32 companies, it is true that more than 12% of the founders attributed the reason. Quantitative change leads to qualitative change. Whether you intentionally or unintentionally, by sacrificing the user experience in exchange for cost savings, new features such as increased investment and other competitive advantages, end users will slowly lose. Such entrepreneurial failure cases mostly belong to the chronic death category, the scariest category.

9 failure to properly handle the transformation

"Transformation" is the 2010-year Business Circle hot Word. The emergence of excessive frequency makes the term "transition" almost a derogatory term. Of course, when the setbacks began to turn the direction immediately, this kind of fast-food transformation is difficult to have a future. Nearly 20% of the 32 companies were defeated for this reason.

4 years later, the term "transformational" has faded, and we have seen more of the company's normalization of transition-to avoid losses and to be cautious about the company's transformation.

The most typical example of the 2013 is Renren. From the initial core business Renren to the decentralized resources development game, glutinous Rice Group and other peripheral business, and then to the end of last year, full return to Renren mobile end, everyone around the detour for two years. Two years, for the rapid development of the science and technology industry has long been transformed. As a pirated Facebook, it has not been able to expand its users from the university market to the mass market, and new social applications such as micro-letters and theology have already completed a round of enclosure movement. Today, everyone can only play "to secure campus users, for young people" slogan.

8 lack of enthusiasm and expertise in the field

No matter how good you think your idea is, if you lack the necessary field background, you'd better turn the other way and choose the industry you know well. I really think it's going to be a good thing, and it must be luck to find professionals in the field as co-founder to make up for it. Fear is afraid the whole team is half a bottle of water. What's even more frightening is that when things are halfway through, you instantly discover that the whole team is moving towards this idea business vision, and the original enthusiasm has long gone. This has accounted for 18.8% of the survey. One example is from the news service provider Newstilt. The founder summed up this failure:

Frankly speaking, we really don't know the news industry. This idea was originally created because I wanted to design a perfect comment system for my blog, so that reading comments could be as wonderful as reading the article itself. According to this idea, Newstilt was born. But the result is not as we expected. In fact, even I have not been my newstilt entertainment, people like to see the Hacker News, Reddit. Failed to figure out why. In fact, how can we think about the news industry itself? And I am not even an enthusiastic reader. At the time, we thought more about the commercial value of this idea.

7 The timing of the product launch is not right

Premature release of the product, may face the embarrassment of inadequate preparation, leaving the user with a bad first impression. But if the release is over, you may also be worried about missed opportunities. Two-phase trade-offs also require a certain amount of wisdom. And more than 20% of the entrepreneurs in the survey failed to handle the matter properly.

However, whether the product is early or postponed some release, this is still some hungry law to follow. First, it depends on your product category. such as Ebay, Mint, such as related to the electricity business, financial aspects of the site, it requires a higher degree of product improvement, rather than some late also not earlier. Social networking sites like Twitter may have flaws in early release, but the impact is far less bad than the former.

At the end of the day, one of the classic words from 32, Reid Hoffman, one of the failed founders: "If you're not ashamed of your version 1.0, it only means that your product was released too late." ”

6 I finished the product, but I need a business model.

When it comes to this, you might think of Twitter. It has not been possible to launch a truly viable business model until it is listed. But with this exception in mind, we cannot make the current inability to make income a product an excuse for not thinking about business models. And, unfortunately, 25% of the founders in the survey regretted having failed to figure out the business model.

5 dollars burned.

How to spend a reasonable amount of financing is a big problem for early entrepreneurs who don't have too much financial experience. How to find unnecessary costs, cut down those destined to die of the business, choose the speed of what kind of team to launch products, this is a compulsory course for entrepreneurs. Unfortunately, in this survey, more than 25% of the founders failed to do the required course. YouCastr is one of the most typical, with the team putting poor financial budgets at the top of the business's failure.

4 Market promotion does not give the force

Understand the target customer base, effectively attract their attention, and eventually turn them into real users. For a successful venture, market promotion occupies a large proportion. The entrepreneurial team that is apt to be confused on this issue is often a technical team. All staff work hard to do products, no one considered after the promotion. In the upcoming product launch, began to think of recruitment promotion, found that people are so easy to find. 30% of the entrepreneurs in this survey are in this matter.

3 team is wrong.

The diversity and strengths of team members is also a golden rule for successful entrepreneurship. It's easier said than done. More than 1/3 of entrepreneurs in this survey believe the team's failure is the cause of the failed venture. Someone said, "I wish I had a CTO from the start," someone said, "I want my founder to be a man who understands business," and some say: "I want some checks and balances within the company, not just the will of the founder." ”

Nouncers's founder said: "The team's hidden problem is that I didn't have a co-founder to work closely with me." He was able to look at my decisions in a more perspective when I decided. ”

Wesabe's founder said: "I was a bit like a dictator throughout the company's life cycle." So I can't blame anyone for this failure, I can only blame myself. ”

2 Ignore market demand

Compared to thinking about how to look at the market demand to find the problem of products, many teams are more willing to solve the problems of their own interest, so as to obtain "pleasure." The reason for the failure ranked second. Bricabox's founder ate this loss. "An important reason for bricabox failure is that the team tends to solve some technical problems and find pleasure in fixing bugs," he said. But these ' technical accomplishments ' have low visibility in the user. On the contrary, some customers really care about the problem, we did not find and solve in time. ”

1 inflexible, do not pay attention to actively collect user feedback

It sounds as if everyone knows it shouldn't be wrong. But it has become the reason for the No.1 of the investigation. A more extreme example, Ecrowds, a Web content Management service provider, admits: "We spend too much time concentrating on making our products what we want, not collecting user feedback at all, which can easily lead to narrow vision." Now come to think of it, I believe that in the early days, work hard to do products can not be more than 3 months, after the need to stop to collect feedback, look at products, and then decide the next step. ”

At this point, the survey of the 32 enterprises from the failure of the enterprise 20 reasons for failure have all been presented. You may find it easy to understand, and you have never made these mistakes. But please still the above 20 good collection, when needed to remind themselves. In addition, you are welcome to share with other small partners who are starting a business.

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