I recently came across some research done by CB Insights about The Top 20 Reasons Startups Fail. They’re data aggregators backed by the National Science Foundation and other heavyweights, and they regularly read startup post-mortems and compile an aggregation of why startups fail.
The first thing that really stood out to me was that HALF of the top 10 reasons were directly related to marketing. More specifically, four of the ten were grounded in a fundamental lack of understanding of what the customer really wanted. (The fifth was “Poor Marketing,” specifically a lack of time or focus on it)
In fact, the #1 reason for failure is No Market Need. Based on my work with startups and entrepreneurs, that wasn’t surprising to me. Over the years I’ve encountered many founders who seem to view entrepreneurship as an end in itself. They seemingly decide they want to be entrepreneurs and then they look for something they can do/make. Although it’s not to say that this can’t lead to a viable enterprise! I’ve worked with some extremely dynamic, successful companies that were founded this way.
But there’s not question that it’s a much harder road if you develop a product first and then have to find the customers who might have the need for it. In most cases, the most successful entrepreneurs see an unmet customer need and figure out a way to solve that need in a better, stronger or faster way than it’s ever been done before (if it’s ever been solved before at all).
This approach is also helpful because it puts the customer and their need at the center of the company and all product development work.
Here’s the full list, and you might want to read the follow-up post, which goes into a more detailed explanation of what each of these reasons is really about.