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Why do startups fail to launch?

BY MobileFolk

08.06.2022 | 5 mins

We all know early stage startups are high risk endeavors, and many things need to go right after launch for a startup to succeed. However, what many people don’t see is that even getting to launch can be a major accomplishment – many startups fail even before that. Why?

We all know early stage startups are high risk endeavors, and many things need to go right after launch for a startup to succeed.  However, what many people don’t see is that even getting to launch can be a major accomplishment – many startups fail even before that. Why?

There is no blueprint for startup success, but after working with startups to develop new products since 2016 we’ve noticed a few trends among the startups that do struggle to launch.

5. Conflicts between founders

Disagreements and differences of opinion are normal and healthy, but startups are a stressful environment and it’s easy for conflict to arise.  

Many possible sources of conflict:

  • Strong differences in vision
  • Differences in commitment – for example: when one co-founder is working full time on the startup and another has a full-time job
  • Personal conflict – can even be disputes over rent or completely unrelated to the startup

Thus, conflicts between founders can be a major obstacle for startups. Many fail to get it resolved, thus, startups fail even before launching. 

4. Lack of go-to-market plan

Entrepreneurs, especially those who work in tech, are builders.  They often focus on the product without giving much thought to what will happen after it’s built.  Unfortunately, “if you build it they will come” rarely happens outside of movies.

We all have a natural fear of rejection and failure, but a product can only be rejected by users after they get access to it, not while it’s still in development.  So development is safe, and launch is dangerous!  Is the product really ready?  What if people don’t like it?  How to get the first one hundred, one thousand, one million users?  As the features get completed and launch draws closer, doubts start to creep in.  If there is conflict between the founders, it can get amplified.

Solid business development and a clear launch plan need to go hand in hand with the product development.  It does not mean that things will go as planned, or that work ends after launch.  But it does mean that launch approaches with a sense of excitement and anticipation, rather than a sense of confusion and dread – and the product can actually launch!

3. Not talking to users

This should go without saying, but startups must talk to their users.  Without these conversations the product roadmap is purely theoretical. There is no validation for which features should be prioritized or dropped entirely.  Countless development cycles can be spent on features that do not actually address the user’s needs, and unexpected dramatic shifts in direction for the project become more likely.

This is not to say that finding early adopters and champions who want to be involved and provide feedback is easy.  However, if a startup has trouble finding such users early on, it does not bode well for finding real users after launch!

2. Budget

There have been countless management books written about estimates – as humans, it is a task we are naturally bad at.  Combined with an entrepreneur’s necessary self-confidence and optimism, this often leads to unrealistic expectations.  In short: everything is always harder and takes longer than we think!

We have many project management tools available to control scope and budget during development.  Historical data, safety buffers, mini-discoveries to reduce risk and uncertainty, prioritizing features, and so on.

However, startups never go in a straight line from idea to launch.  As the startup’s understanding of their market grows and evolves during development, so does the product itself.  The initial vision rarely matches the launch product exactly, which means that the first budget for the initial vision often does not match the budget needed for the final launch product.

The product related costs are only part of the budget.  The rest can be administrative costs such as legal fees, and – depending on the go-to-market plan – significant costs for marketing, sales, or PR.

It is truly disappointing when a great product is completed and ready to use, but fails to launch for budget reasons.  Unfortunately, this does happen.

1. Speed

The single most common factor we’ve noticed among startups that fail to launch is speed.  Specifically: startups that fail to launch usually make decisions slowly.

Slow speed can be a symptom of other underlying problems mentioned above.  It can mean the founders are not fully dedicated to the startup and distracted by other obligations, or that they do not work well together.

It can mean lack of confidence or clarity on the startup’s direction – maybe assumptions aren’t validated with real users, or maybe the go-to-market plan is unclear and is unable to inform the product roadmap.

Or the indecision can be caused by limited budgets, and fear of making a wrong decision that will be difficult to recover from.

Whatever the reason, every small delay stretches out the timeline.  3 months turn into 6 months, and then into 12 months.  And the longer timeline makes it more likely something will go wrong: a founder leaves, a market opportunity closes, or money runs out.

The end result, sadly: the product fails to launch.

These are the major reasons as to why startups fail. We believe there are many more, and it would only get harder and harder along the way. But don’t worry, we’re here to help! Shoot us a message and tell us your concerns, our consultants are always available to support you and walk you to success!