Learning from startup failures is important for anyone planning to start a venture. The startups can avoid those mistakes and thus improve their chances of success.
The learnings from failure can shorten the learning curve for the new entrepreneur.
A startup may have honest wrong belief on some of the assumptions made and reading the failed stories or having face to face meeting with those failed entrepreneurs will certainly help. An open mind is crucial for learning and the startups are no exception to this word of wisdom.
There are skeptics who are of the opinion that reading failure stories will not have an impact on chances of success ,as they feel, there are many factors outside the control of the entrepreneur which may still result in failures.
Image Source:Sira Anamwong
Let’s Get Some Perspective On the Failure Rate
· Over 95% of startups are expected to fail.
· Stats about Y-Combinator – one of the most successful startup accelerators. Their acceptance rate is about 3 to 5%. Within the ones that do get accepted the odds of success are 10%.
· General industry thumb rule points to the fact that 1 or 2 in 10 startups eventually succeed. Most fail or remain mediocre.
The entrepreneurs share their experiences and also clearly state what went wrong and the reasons which forced them to close the business.
A great platform in which entrepreneurs have posted their stories.
The above website has a list 132 companies which have closed or has been taken over by somebody. The following six companies closed between June- November ,2015.
1.House This -India’s first NRI focused real estate portal- Lost Focus on the product
2.Homejoy- Home Cleaning Services-High cost of customer acquisition
3.EverythingMe- Adds contextual capabilities to mobile-No business model
4.Zirtual- Unlimited virtual assistant tasks for a monthly price- Burn Rate
5. Alikolo-e-commerce market Place-Internal problem and wrong positioning in the market
6.Circanews- Mobile News App.- Lack of funding and no buyers
In all the above cases, by the time the entrepreneur realized the wrong directions /mistakes, it was too late to retrieve the situation. Investors or employees do not want to get into a sinking ship.
FailCon organizes a one-day conference for technology entrepreneurs, investors, developers and designers to study their own and others' failures and prepare for success.
"The willingness to fail is the key ingredient in success”, billionaire investor Vinod Khosla told the audience at Failcon."
Failure is still a taboo topic all over the world, but Failcon is working to change that, one city at a time.
Change in Mindset
Learn from your mistakes. Even better, learn from others’ mistakes. This is an oft-repeated piece of advice to startups, but it’s easier said than done. We don’t easily accept our mistakes to be able to learn from them. Nor do we find it easy to talk about them for others’ benefit.
This is especially true in a society like India, where failure isn’t worn proudly like a badge as it is in a more mature startup ecosystem like that of Silicon Valley. In 2014, Failcon organized a conference in India aimed at sharing experiences of failures which got a lukewarm reception.
The following quote aptly sum-up a sound gyan for any startup to follow.
“Founders routinely become emotionally attached to their startups, especially if it is their first one. Be practical. If you see that things are becoming unsustainable, or that customer interest isn’t shaping up as expected, take that difficult call and shut down the business. You may be able to prevent greater damage.” - Aditya Mehta
Failure is part of the entrepreneurial world and now a lot of support from mentors, incubators, accelerators etc. are available to improve the chances of success.
The failed entrepreneurs are coming out of the shell and willing to talk about their failures. It is a great support to aspiring entrepreneurs.
The stories also reflect never say die attitude of failed entrepreneurs who are willing to start all over again with their pockets full of wisdom.