Why Entrepreneurs Fail And Most Startups Are DOA

Editor’s note: Contributor Ashkan Karbasfrooshan is the founder and CEO of WatchMojo, he hosts a show on business and has published books on success.  Follow him @ashkan.

This isn’t an anti-entrepreneur rant. It’s also not a piece to discourage anyone from launching their own business. It’s a warning for those who seek to launch their startup to understand some of the lesser-discussed reasons why 99% of new businesses are Dead On Arrival.

As outlined, success is

1) subjective, relative and fluid:

i)                    we define success based on what drives us,

ii)                   but we tend to measure it relative to other people’s success and over time,

iii)                 we convince ourselves to change its definition, revising upwards or downwards, depending on the conditions on the ground.

2) a function of six variables: vision, ambition, determination, execution, timing and luck.

Part 1: Before You Launch Your Startup…

Sometimes, Macro Timing is Everything

Success is as common as an eclipse, the result of externalities lining up at the right time.  However, entrepreneurs rarely launch their business as a result of market (macro) conditions, but rather, personal (micro) timing and circumstances that have little to do with the broader landscape, even if the macro backdrop is at odds with the micro circumstances.

An example of this is launching a hiring startup in a recession when companies are laying people off by the boatloads.  No amount of vision, ambition, determination, execution and luck will offset your bad timing.

Ideally the macro and micro come together at the right time.

Don’t underestimate the micro timing, either

Of course, that isn’t an excuse for those who fail due to the wrong timing, either. You can overcome bad timing if you execute well otherwise.

However, more often than not, entrepreneurs launch businesses when they’re inexperienced or when their personal situation doesn’t lend itself to the startup life’s rigors (recently married, new child, student loans, etc.)

What are you: an Intrapreneur or an Entrepreneur?

Assuming the timing isn’t off, many aspiring entrepreneurs simply aren’t cut out – or truly willing – to be entrepreneurs, whose roles and responsibilities literally include janitorial services.  The sheer majority of people who launch businesses are in fact intrapreneurs – entrepreneurial types who can succeed in a larger organization by launching new products, business units etc., when they benefit from support in administration, sales, marketing and have the stability that comes with a regular paycheck.

Too many brilliant minds waste energy and mindshare on non-value generating functions because they think they‘re destined to be entrepreneurs when they are, at best, possibly intrapreneurs.  For these, it’s far better to launch a product, service, division within an existing company to have a better chance to succeed and then over time, if desired, pursue the traditional entrepreneur route which includes mind-numbing, back-breaking and otherwise demoralizing tasks that don’t add value.

Part 2: Still Want to Launch a Startup?

 “I’ve failed over and over and over again in my life and that is why I succeed” – Michael Jordan.

The mark of a good entrepreneur (and athlete or entertainer) is learning from mistakes, somehow turning them into opportunities and coming back stronger to win.  It’s part art, part convincing job, part delusion.

The instant you realize you’ve made a mistake, learn from it but find ways to turn it to your advantage.

If mistakes demoralize you to the point of bringing you down or giving up, stop now: entrepreneurship isn’t for you.

Failing to Ask Around and Asking The Wrong People

Entrepreneurs are accused of not listening, but the best ones are listening and learning all the time.  However, we’re selective in how we process and apply what we hear and learn; that’s part of what makes entrepreneurs seem difficult.

A common mistake is hatching, launching and growing a startup without actually asking people around you what they think.  I’m not referring to friends and family, but people in the industry or other entrepreneurs who have battle wound scars.

If you’re going to launch an ad-supported business, for example, ask people on Madison Avenue.

If you’re going to need massive funding for a disruptive product, ask VCs on Sand Hill Road.

Don’t Underestimate the Critical Milestones of Your Startup

People don’t think that the status-quo is broken, and even if it is and they voice their discontent, human beings are creatures of habit.  So don’t simply assume that advertisers will beta test your service or users will adopt your product.

Wrong Geographic Market

VCs oftentimes remind entrepreneurs to set up shop where they can hire talent.  It’s equally important to be in hubs where you can rise with the ecosystem.  This doesn’t mean that you “have” to be in NY, San Francisco, etc., but usually the pros will offset the cons.

Open Your F*****g Blinders

Sometimes we have a tendency to launch a new venture based on our previous limited experience.  As proud individuals, entrepreneurs also tend to launch projects based on some kind of personal drive to prove people wrong.  That can be a positive source of motivation but it can also send you down the wrong path.

Stealth is Stupid

Do yourself a favor and drop the stealth approach.

Whatever you’re thinking of, no matter how unique and revolutionary it might seem, others are doing what you’re doing.  In fact, you ought to tell everyone what you’re working on so that you 1) find out about the others and 2) get feedback to avoid shipping a clunker.

I’ve never seen a stealthy project come out and be either impressive or interesting; usually it’s overhyped and underwhelming.

Experience is What You Do With It

A failure can be a learning experience, or a shock to your confidence.  Winners come back from defeats and overcome setbacks.  If you can’t do that, then maybe entrepreneurship isn’t for you, at least not now.

Everyone can be an entrepreneur if they realize what it takes to be a successful one.

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[image via flickr/fireflythegreat]