The Same Question, Over and Over
When I log into our “Tom on Entrepreneurship” page on Quora, I look for content that’s been submitted for approval. It’s always a combination of spam, questions, and some answers that range in quality. I’d guess only about 10% of the content gets approved by me. Next, I go to the “suggested” tab to see what content is suggested by Quora. Today, it was at least a dozen questions about why startups fail. That question comes up every day. Some days we get it a dozen times, some days we get it just one or two times, but it’s a question asked so often, I screen it out unless it’s a very unique answer. I think the very question paints “failure” with too broad a brush.
Most of the data I’ve read on the subject on company failures is wrong and makes some wild assumptions about what they consider to be failures. Now, most of the stats about failures come from business license starts and stops. Even some of the big studies on the subject can’t take into account those ventures that never got far enough to apply for a business license. Furthermore there is no way for someone to know what is and isn’t a venture started within an existing business that is then spun out or never sees the light of day. My point is, disregard the stats.
The very term “failure” can run the range of someone filling out a document then disregarding it with no cost, to a major company filing for the big B, and everything in between. The problem is that failure comes in all shapes and sizes and it’s not a one-size-fits-all term. In fact, I’d guess that a huge percent of what’s noted as a failure was merely an experiment in which we don’t know the outcome, if it was a success or failure. It was merely to gather a data point. When someone retires and shuts down their small office, it’s not a failure.
When a large public company makes an acquisition, they will often set up another company to manage the transaction. Once the transaction is complete, the transactional entity is shut down. It served its purpose. That’s definitely not a failure! I also know of a lot of startups that are testing an idea with no intent to turn it into a business just yet. It’s to collect a data point or experiment in some way. When I founded Cravings, Inc., the Bellingham site was an experimental location and not at all our target. It was to prove a concept because of a unique criteria at the time that could not be replicated in Seattle. That location was not a failure.
Sometimes companies shut down to leverage what was learned into something new. As an example, restaurant concepts come and go, so a restaurant could be trendy one day, and not the next. The owner shuts one concept down to rebrand the new concept. It’s not a failure. It’s a metamorphosis. I’ve started ventures to pursue one target market and when it was time to do something else, I shut it down. It was not a failure. I had a thriving business but decided I didn’t enjoy it, so I stopped taking cases, and closed shop to pursue something else I wanted to do more. It was far from a failure and would still be running today if I liked the work. I didn’t! It was not a company I could sell because of some legal hurdles.
I see the obsession with failure to be a reason not to start an entrepreneurial journey. The stats do not predict your outcome. This is so critical and why I’m not using a lot of data in my upcoming book. It’s pointless to entrepreneurs. I’m strongly in favor of heavy research when starting a new venture so it doesn’t take you in a direction you never intended, but don’t pay attention to the stats. Let that be about someone else. Instead focus on what you need to get done to make your venture a success. The data, the comments about failure are all meaningless. Instead place your attention on what matters when you build a fantastic company. Focus there instead.