Any entrepreneur will tell you it’s quite a thrill to start and grow companies, foster ideas and turn them into products people want to use, start a community and see it thrive, change the world (even if just a bit, for a tiny group of people). Many entrepreneurs consider it to be their destiny, and often they will tell you that they wouldn’t trade it for anything, regardless of the eventual outcome of the startup’s objectives.
Being an entrepreneur is also damn hard, for thousands of reasons and then some. I would like to point you to a testimony of that undeniable fact, penned by one of the founders of web startup MakeFive, whose Elevator Pitch video we recently highlighted. Eric Karjaluoto is his name, and his must-read blog post is titled ‘Why your web startup will fail‘. Required reading for aspiring entrepreneurs!
Here’s the gist, summarized in 6 points:
- You won’t have an audience
- You’re going to run out of cash
- You’ll get frustrated
- The emotional rollercoaster will beat you
- You’ll get excited about something else
- But it won’t be because of the competition
Of course, none of the challenges and obstacles cited in the post will ever stop a true entrepreneur from trying. This lifestyle chooses you, not the other way around.
(Image via BizHack)
Thanks for the link and kind words Robin! Glad to hear that you enjoyed the post!
Happy new year!
Great piece Eric.
I think many readers here can relate to your 6 points.
An entrepreneur has to keep trying new ideas and keep that day job so they can blow the tax returns on development cost until something pops big.
Thanks William–nice to hear others feel similarly!
(It’s an interesting balancing act, isn’t it?)
look into my website and tell me if i am missing some points there or not http://groups.im/
before you take any advice from this guy I advice you to watch his elevator pitch (linked above). quite simply, if Eric had invented the wheel, I wouldn’t have invested!
I suppose that would make you a pretty bad investor then, wouldn’t it Mark?
Why not link your URL so we can see who is standing behind the comment? TC should ban unlinked comments.
Reading Eric’s piece on his website, I can’t see how anyone who is doing anything serious can not identify with the points.. It didn’t make TechCrunch for nothing.
refreshing to hear war stories from w/in the trenches. I’d personally eyeball the following in 09
(1) Build an “Auxiliary Service” – get in good w/ company who has huge VC dollars. Build a good app using their API. Get them to buy what you’ve created.
(2) Simplicity – simple service, 1 purpose, generalizable to all. That seems to be trend these days.
I would suggest another essential one, and that is (if you are married) spouse support.
If your husband or wife is not supportive of you being an entrepreneur, and ready to face their own list of 5 or 6 things, then you might as well quit early on.
Jason Alba
)
forced into being an entrepreneur (see link
Very good point, Jason. Glad you mentioned it, because it is important (IF you have a spouse).
It applies especially when you’re obsessing over your passion, not cutting the bills and have an unsupportive spouse who either A) can’t support the both of you financially B) Can’t stand the obsessive attention you’re devoting to your passion or C) both.
I wouldn’t necessarily suggest for someone to quit at that point, but rather to just be warned AND you’d better have a kick a** business model, or you will fail. The rest of the 6 reasons will simply come falling down on you.
This list makes me glad to know we’re all going through the same thing. And its all the more reason to “Be kinder than necessary, for everyone you meet is fighting some kind of battle”.
p.s. I am 100% single.. so don’t think I’m married or ever have been just because of this comment. It was just an insight.
Great article Eric! I think all of your points are valid. Although, when people voice their opinion on an idea or project it is key that you suspend your voice of judgement and start to ask questions. There is usually something valid in every opinion and question. The job is to find the validity in them. Even the stupid ones can prevent you from tripping up. I think the key is to to stay focused and always ask questions. Never assume you have all of the answers.
A sound business plan is good. But plans are usually obsolete as soon as your print them out on your printer because there are constant changes to your product or service in order to attract customers. In simple terms…there is always something.
Start-up to their programmers:
“Perhaps we should make some Twitter application to get overnight TC visibility, yeeesss thatsss it!”
Will most web startup fail that are not Google, Twitter, or Facebook based?
It seems this is all VC or tech blogs are interested in.
No kidding – I’m dead tired of reading about Twitter and all those “plug-in” sites that simply aggregate the data a million different ways. I mean, as a DBA, I find it rather trivial to collect 140 characters of text, then aggregate it and spit it out onto a screen for people to get all red-eyed over. I wish there were a little more diversity in the new companies covered in here. What exactly is the point of hyping Twitter so much? Is it a science project for TC to see how much influence they can have for a startup?
For the record, kudos to Twitter for finding something people find useful for one reason or another. I just don’t really get it I guess.
Allen, Twitter is a fad that has yet to find a market nor profitability… I also wish there was also a little more diversity on TechCrunch but at the end of the day, I just skip over anything with the letters “T” and “W” in their titles. So far, it has worked wonderfully
The holiday season is always slow news wise, so I would expect TC to get back into covering start-ups again once vacation time is over.
Jon
http://buzvia.com – Where’s Your Traffic Going?
Thanks Eric! I am right in the middle of my voyage, always good to read such posts!
Best in the New Year!
Peace Out
Thanks Michael!
Sometimes I think it’s just nice to know that we’re not alone in these sorts of struggles. (Which is sometimes hard to remember when one’s generally just working away.)
Guy Kawasaki posted this on Twitter earlier – really worth the read:
guykawasaki RT @karj “Why Your Web Startup Will Fail” http://tinyurl.com/7v29vx Truer words were never spoken
Didnt expect Copy-Paste Stuff atleast in TechCrunch, atleast you should have linked back to the original post in the main article.
like we didn’t know these
*sigh*
… keep in mind that this is advice from a “designer” and a “writer” not true entrepreneurs.
Yes, but knowing things doesn’t mean they aren’t still valid.
You’re clearly pretty young, so you likely think that you have everything worked out. When I was your age, I often felt the same. With time, however, you learn that knowing and acting on that knowledge are quite different.
(Let’s talk again when your other ball drops.)
Wow..Eric, based on your comments above, you sound pathetically arrogant. Probably you should take another look at your pitch and learn to grow up.
Way to be “that guy,” Eric. Take some advice that I learned the hard way – Don’t respond to unimportant complaints because it makes you look bad.
That’s a good suggestion Johnny, and I don’t disagree with you.
That being said, some of the comments TechCrunch have a rather negative tone to them. As such, I find it fun to sometimes poke back a little.
Eric, what is *your* experience? What companies have you started/founded? If you have, are they successful? — Is your advice based on real world experience? Thanks for your response.
Ummm… wasn’t that rather clearly stated in the first paragraph of the original blog post?
I didn’t say they are in invalid … just not fit for Techcrunch
Don’t take it personally … I like your blog and all … so no hating
The only way to make a startup work:
- invest as little as possible to get things going; bootstrap the rest of the way
- stick to it, even if it looks like you’re going broke
- be willing to physically walk around and knock on doors during slow times
The people who are most successful at this have much in common with institutionally committed lunatic – a complete inability to stop doing stuff even when it doesn’t work.
I talk from personal experience.
Wow Jeremy, I like your list too.
Decent article. However I would caution against taking web advice from a “designer” that would even fathom sizing their main body content at 75% of the user’s chosen default font. Usability 101 fail.
You need to get laid.
I only have one question. Eric why is it six points and not five!
JP
I should have aimed for something like that–would have been a nice touch. Perhaps I could just pretend it was intentional by saying that this one goes, “one louder”.
I thought the hardest part of a startup was coming up with a good idea that can make money. It blows my mind that a lot of these ideas get funded when there is no clear plan to generate revenue, which is the main reason they fail.
He nailed it. Everyone of the reasons my first website (www.showchange.com) hasn’t taken off as quick as I had originally expected.
We studied this question (why web/tech startups fail) and gathered statistics for a 10 year period. You can see the results here:
http://www.high...ducts_fail.html
I think it’s a fascinating topic.
Frankly in this environment you’re not going to get off the ground by building a business that is an iteration of an existing business and hoping that business will buy you. That’s a weak model, IMHO, and weak models won’t survive in this economy. You still need to be visionary and think bigger and longer term than the other guys. If you can do that these obstacles won’t matter.
You didn’t mention another potential reason for failure – the current recession economy. A lot of people ask me about this, so I just wrote my own blog on this subject – titled “Recession Means Selected Startups can Win Big”. See http://www.star...ofessionals.com for details, but here are the bullets:
1. Be in the right sector. Energy, green, and biotech are hot. Everyone wants alternative energy sources, to save the environment, and stay healthy. If you have “the next big thing” in one of these categories, you can get money and you can get customers.
2. Play where you are the expert. We all can site exceptions to this rule, but now is not the time to ask for money to help you cure the common cold, if you have no background or credentials in medicene. But if you have deep domain knowledge and executive experience in battery technology, you will likely find many people who will buy or invest in your new energy storage startup.
3. Face the issues head-on. You must show a marketing strategy and spending strategy that recognizes economic realities. Highlight in your business plan, and every executive presentation, that you have tuned your plan to account for today’s realities. Before you are asked, you should address the obvious questions on investors minds, like, “What are you doing differently because of the spending downturn?”, and “Why should we believe that you can make money when all around you people are closing businesses?.” List examples of how you are “walking the talk”, like not moving to that expensive office building this year.
4. Be flexible. Even in boom times, the only constant for startups is change. Be ready to show and admit that you have adapted your strategy as you learned from technology issues, customer input, and trend changes. Nothing turns off an investor more than a startup which seems to be charging straight ahead, despite evidence that a brick wall looms ahead.
5. Be a leader. The exciting thing about being an entrepreneur is that you are going where no one else has been. Adopting a hesitant and negative approach probably won’t get you there, and certainly isn’t any fun. Investors and customers like confidence, and everyone likes to follow a leader. Be one of the first one to jump on the coming upswing, so you can ride the wave rather than be swamped by it.
Marty Zwilling
CEO, Startup Professionals, Inc.
There nothing more straight forward than this good lesson and hoping it will be applied to all startup.
Nat
http://www.halflet.com
I think the #1 reason for failure is the lack of a viable business plan. The jokers who believe creating a service and then hoping Google will buy them out are the ones who fail the hardest.
I understand that Twitter is the “hot” company right now. However, of all these flash-in-the-pan apps that are being developed for Twitter, I doubt any of them will ever see a profit. I know some will be angered by that statement, but it’s true. If you’re not making money, sorry, you’re not a business. You’re a project.
I can’t wait until Twitter starts rolling these small apps into the main product. Why can’t Facebook do the same thing?
What legal protection do the small developers have against that?
I love using make five daily. I find it relaxing, enjoyable and viral.
Thanks Sam–I think we’re going to have to appoint you one of our official ambassadors.
Here are a few more myths that can send your company down the tubes. Please don’t bank on these:
Some of the biggest myths encountered include:
• Popularity will make you rich
• Advertising will pay the bills
• Venture capital is free money
• Someone will want to buy my company
• Advertising will create customers
• We’ll figure out how to make money later
There are some additional sounds tips on what you can do to avoid the pitfalls.
http://newleade...s-model-mystery
Hard truths.
Sage advice, however you have to have a great idea to begin with. And if it’s not original, a lot of money and time.
None of you know shiit.
Have you ever heard of the “P “Test for Start Ups?
I am involved in a group called Save Australia…obviously!
It’s aim is to help fund start ups with great ideas.
The “P” Test is;
Is there a PULL from the market for the end product?
Has the inventor got enough PUSH…enthusiasm, consistency, determination & belief to see the project through?
Is there a PLAN, business & Marketing Plan in place?
Where is PRODUCTION available & at what cost?
PACKAGING…is it able to be shipped OK?
PEOPLE, who are involved, are they reliable etc
Anyway, you get the gist of this by now & you can add more P’s.
One thing I’ve found being & supporting entrepreneurs, is that investing in smaller start ups for older people is a huge problem when it comes to filling in aged pension forms, as our Government DEEMS the invested money at the going interest rate & reduces the persons aged pension by the amount of interest they deem it should have earned!
Older people are the ones with a bit of spare cash, who are old school & who do want to “Save their Country” from foreign imports , to provide jobs for their grandkids!
So, it goes on
Regards,
Mary from Australia
Now I know what’s wrong with me …
“This lifestyle chooses you, not the other way around.”
Thanks.
@peterurban
Just curious if Eric also reads people’s palms and tells future by looking into crystal balls?
You will fail if you:
1. Eat often at McDonald’s
2. Drive your car at 100+ mph speeds regardless of the weather conditions
3. Get depressed over your girlfriend leaving you
4. Read too much into what some guy thinks you should do to succeed
cool.
Well, that’s not a very positive way to start ‘09, now is it?!?
the point is, one has to try and see what happens.
timing is the key.
how much time can one afford to invest in one idea before devolving his time to something different (family, personal life, a real job…)?
I think that in most if not all cases in the first 6 months after going live you are able to get a picture of the real potential of your idea.
7. You will flail and fail as founder if you fail to obtain the programmer skills to avoid outsourcing product development.
This is sooo freakin true!!!
Prior to reading the topic of this fine entry fully, I was apprehensive about the title. While the points you have pointed out can’t be disagreed upon, they have the tendency to scare new kids on the block. The title of the article should be changed to something positive.
lol. this makes me sad
http://tinybud.latestdot.net/
That’s true, we should keep them in mind, but don’t let them stop us.
keep going…
Such simple thoughts gets anyone’s attention? amazing!
I also am not sure if I have ever seen a more poorly done pitch.
Slow news day.
Great post. While I agree with much of it, here is my rebuttal:
http://startupc...ll-succeed.html
Mark
What is a startup?
Being x,y,z is not hard at all. Either you are, or you’re not. PRETENDING to be x,y,z IS. Me-too mashup-BS ‘ideas’ can only take you that far.
I found the article realistic and thorough, I recommend subscribing to Erics blog at http://www.ideasonideas.com/ and of course checking out http://www.makefive.com/
Those aren’t convincing reasons. Most web startups (unless you are trying to build the next facebook or eBay), don’t require much startup capital, especially if one of your partners is the programmer/developer building it.
And emotional roller coaster? Distracted by another idea? This means you weren’t that into your idea in the first place… So I doubt I’d call that a real startup but more of a meager attempt at building something. lol.
The only real obstacle would probably be the audience. I’ve seen some pretty stellar applications that were built, but no one used them. (Often times this was due to poor publicity, which could have easily been achieved through better planning.)
Meh….
I typically notice that “startups” fail due to an inadequate team. A successful web app will require a lot of resources spanning various sets of skills. Many times, partners have different visions / strategies. Hiring the “right” team might be financially impossible.
Achieving the right balance of skills and strategies with limited resources is quite challenging.
Nonetheless, for an entrepreneur, it’s a fun ride. Ambition will take you places if you actively learn from every single experience in an unbiased fashion.
Best wishes on your endeavors in ‘09.
I think the #1 issue would be “you won’t have an audience”. I’d like to add a few more to the list: “you don’t iterate enough”, “you can’t change on a dime” and finally “you don’t hire good people”.
Love it! It truely make it even more aware and realize startups must work even harder to survive
The biggest single reason for failure I usually encounter when hearing about startups is lack of a viable marketing plan. Too many “companies” in this age assume getting on TechCrunch and Twittering will build the initial audience, and revenue will magically flow.
Typically when someone I know is talking about starting something, my first point of advice is to start from the bottom. How will they get their very first users/customers in the first few days of launch, and how will the business grow from there. Some ideas do just attract an audience off the bat and grow virally, but most do not.
The second point of advice is to do some very thorough market research. Not only regarding who wants this and what real needs they have, but who else is even close to doing the same thing. I find a lot of people get so excited about building that they ignore an actual growth strategy.
A Start-up addresses the consumer or the business market.
In the consumer market the most obvious revenue is advertising. Thus you need to generate a lot of traffic to get noticed. That takes time.
In the business market people need to have the problem your solution addresses and they need want to pay for it. The more leads you can generate the more chance of finding someone who will actually pay for your solution. That’s why we developed LEADSExplorer (www.LEADSExplorer.com)
In both cases a lot of people will find your solution or service interesting, but when it comes to actually use it or even worse pay for, then the doubt of use arises and the value for money.
I agree with second part (Don’t Let Them Stop You) even more. My own exprience shows (and I am not a web pro at all) that:
- You won’t have an audience
Even very strange ideas, like my Wirtland.com, can and do win wide global audience.
- You’re going to run out of cash
It doesn’t cost much to run.
- You’ll get frustrated
I feel excited, as I’m getting lots of fans and help.
- The emotional rollercoaster will beat you
Just eat regularly and have regular g/f.
- You’ll get excited about something else
So what?
- But it won’t be because of the competition
You found a niche, didn’t you?
startups are always fun. the ups and down are frustrating but it’s well worth it in the end