Why Your Startup Will Fail: You. The most common preventable failure comes when CEOs are simply not willing to put their companies' needs ahead of their own.
By Steve Tobak Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
As a veteran of Silicon Valley, I've had the distinct pleasure of working with more than my fair share of talented and innovative entrepreneurs. Sadly, some of their behavior was just dysfunctional enough to royally screw things up for themselves and their companies.
That's not meant to be as irreverent as it sounds. I have always felt empathy for founders and their stakeholders. After all, it's not as if I were some paragon of virtuous behavior when I was an executive, either. Nobody's perfect.
Nevertheless, you can't fix a problem until you face the truth. So whenever I have an opportunity to help a promising startup that can't find its way or a mature company in need of a turnaround, it is difficult to watch them fail simply because those in charge aren't willing to deal with their limitations.
Of course, we're all human. But the beauty of an organization is that the head honcho does not have to go it alone. They have senior staff, boards of directors and outside advisors to help them deal with big issues and make tough executive decisions.
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And yet, in all the years I've been doing this, the most common preventable failure mode by far is when CEOs are simply not willing to put their own narrow beliefs, myopic views, Utopian ideals, selfish greed and fragile egos aside, face reality and do what's right for the company.
I say "not willing" because it is a choice. Denial is a choice. Failing to challenge your own comfort zone is a choice. Maintaining the status quo is a choice. Listening to groupthink is a choice. Lacking the courage to face your fears is a choice. And putting your own self-interest ahead of those of your stakeholders and your business is a choice.
Any decent psychiatrist will tell you that on some level smart people do understand what's really going on. They do have common sense. They hear what others are telling them. They know what they're doing. So when they suppress it, bury it in their subconscious, hear what they want to hear – call it what you want -- that, my friends, is a choice.
I bet I know what you're thinking. There are lots of reasons why startups fail. Yes, there are. I'm sure I've seen them all. But if you dig down a bit, the root cause of most of them is that their leaders choose not to see what's staring them right in the face. Think about it. You find a reason and I'll show you an entrepreneur in denial. Want some examples?
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Lots of companies run out of cash. But while some can't raise capital, you would not believe how many can and simply don't. Oftentimes, their founders aren't willing to give up a piece of the pie. They try to bootstrap a promising venture and end up starving it to death. Or they have too high a burn rate, aren't willing to invest the time it takes to raise a round of funding, wait too long and run out of time.
It's hard to imagine how many beneficial ideas, inventions and innovations never see the light of day because they offer solutions that don't actually solve any real problems. Or they've come up with concepts, not products.
Lots of entrepreneurs are not in it for the long haul or for the right reasons; they think they can make a quick million or feed their egos. Some don't think they need a unique value proposition or competitive differentiation. Others have holes in their strategy so big it would take a miracle to fill them.
I see this stuff every day. And none of it is rocket science, folks. It's Startup 101. You should all know better. In all likelihood, you probably do. But you do it anyway. And fail. That's what I'm talking about.
Look, it's not easy starting and growing a business. If it were, every startup would succeed. The problem is they can't. Don't kid yourself. Markets are zero-sum games. They are elastic but they are also competitive. People and companies have limited budgets. Ad dollars are finite. We are all after the same number of eyeballs and page views.
Just so this isn't misunderstood or misinterpreted, let me make an important distinction. You should take risks. You should do what you love. You should take the plunge if it is in you to do it. You will never know how things would have turned out if you don't. All I'm saying is do it with your eyes open.
I don't care how inspired or passionate you are. Like it or not, there are laws of physics, finance, and human nature your ego simply cannot overcome. By all means, reach for the stars. But if you don't keep your feet planted firmly on the ground, you're just going to end up floating away. And trust me when I tell you, there are no customers up there.
