Startups are about moving quickly in the right direction. To achieve this, the project’s niche must be chosen correct-ly, along with the development strategy and tactics, marketing channels, and—most importantly—a team capable of executing all of this.
As someone who has been working with innovations since 1988 (yeah, I’m already a dinosaur in the innovation space😄) and has been closely involved with ex-ternal startups since 2013, I have observed a wide variety of project founders and would like to share my observations.
To move quickly in the right direction, startups need:
1. A correctly chosen niche/industry and product.
In other words, the ladder of success must be leaning against the right wall.
2. Rapid development in the right direction.
This includes:
— finding product–market fit;
— the ability to work quickly and efficiently, choosing creative ways to develop the project;
— staying far ahead of competitors;
— properly protecting intellectual property;
— maintaining focus on the right, most important priorities;
— anticipating potential problems and being able to prevent and resolve them effectively;
— attracting investments in a timely manner, in the required amount, from the right investors, at an optimal valuation;
— developing the project organically;
— a high level of competence in sales (sales generate revenue, while development “burns” it);
— creating a corporate culture that is favorable for business.
3. Successful project execution requires an effective, well-coordinated team.
At the same time:
— at the initial stage, a project needs a leader capable of assembling a team out of chaos, developing an MVP, and testing it in the market; at later stages, when operations emerge, a specialist is required who can effectively handle daily routine work; typically, the qualities required for these fundamentally different types of work demand personal traits that are not compatible within a single individual; there-fore, at the second stage, critical authority will have to be delegated to another team member;
— the team must be cohesive, proven, and ready to overcome any difficulties effectively without falling apart;
— it would be advisable to avoid situations where team members steal/resell know-how and/or key employees split off to create a competing company;
— many teams experience serious disagreements regarding equity distribution and decision-making on key issues (from appointing company leadership to defining strategy and development directions, de-termining exit points and conditions for individual team members, or the sale of the entire project, etc.);
— prevent burnout among team members;
— avoid bringing into the team so-called “starters” (people who ignite quickly and lose interest just as quickly), as well as toxic and unprofessional employees.
I try to imagine where and how a nascent startup (without investment) can assemble a cohesive, expe-rienced, and effective team.
A team of students?
A team of scientists?
None of them has business experience. With students, it may be easier—text is easier to write and read on a blank sheet. But overall, these are not the people who can build a business. If entrepreneurs are added to scientists, in the overwhelming majority of cases they will not find common ground—their mental frameworks and thinking models are too polar.
Ultimately, the probability of a startup’s success is the result of multiplying the probabilities of all the events listed above.
Top 10 Reasons Why Startups Fail
| # | Reason | Share of Failures |
|---|---|---|
| 1 | No Market Need | 42% |
| 2 | Ran Out of Cash | 29% |
| 3 | Not the Right Team | 23% |
| 4 | Get Outcompeted | 19% |
| 5 | Pricing/Cost Issues | 18% |
| 6 | Poor Product | 17% |
| 7 | No / Weak Business Model | 17% |
| 8 | Poor Marketing | 14% |
| 9 | Ignoring Customers | 14% |
| 10 | Product Mistimed | 13% |
Source: Startups.com
If 42% of startups fail because there is no demand for their product, then the probability of success due to correct niche selection can be expressed as: 1 − (42% / 100%) = 0.58.
The same approach can be applied to all other factors. As a result, by multiplying these probabilities, we obtain that the probability of a startup taking off equals:
0.58 × 0.71 × 0.77 × 0.81 × 0.82 × 0,83 × 0,83 × 0,86 × 0,86 × 0,87 = 0.09336 (approaching zero).
In other words, this is a probabilistic process. Expecting to win big in such conditions is roughly the same as sitting in an office and trying to guess, among people entering a casino, those who will place bets and consistently (systematically) win.
Many publications periodically release lists of reasons why startups fail:
lack of product demand, inability to raise investment, founder burnout, a poor business model, under-estimating competitors, and many others.
All these problems share one fundamental root cause — an unsuitable team (for this particular pro-ject). Period.
A chain breaks at its weakest link.
If any multiplier equals zero, the result will be zero.
After many years of working with startups, I’ve come to the following conclusion:
to reduce the risk of startup failure and achieve success (that is, to move quickly in the right direction), it is essential to build professional teams. This enables effective risk management.
From my perspective, the most suitable format for achieving this is the venture builder model.
That’s essentially what I’m working on right now, while also building a life and network in Europe.
Let me reiterate. I believe every entrepreneur should have their own written—let’s call it—a “Constitution”, outlining the key aspects of their experience, perspectives, interests, core values, and decision-making logic, among other things.
This helps you quickly assess whether someone is the right co-founder fit.
* The image was generated using AI.
The content is original, mine.
