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Applied AI @ OpenAI • Startups GTM • On Deck Fellow • Proud Son • Duke + Wisconsin Alum • Building for impact • Venture Scout • Neo Mentor • Duke AI Advisory Board

17 April 2022

Insights from Entrepreneurial Failures

by Shyamal Anadkat

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“Failure is only the end if you decide to stop.” — Richard Branson

Entrepreneurs inherently know that failures and setbacks are inevitable. Many have embraced the culture of “fail fast, learn quick.” Regardless of high-profile failures, persistent entrepreneurs haven’t quit when they genuinely believe they’re solving an unmet market need, have the hunger to keep “hustling,” and have the courage to pivot when needed. From what I have gathered from a failed B2C application-based venture that I was part of in the past and from the lessons learned from Fuqua’s New Ventures Discovery class, I will shed some light on why I think most first-time entrepreneurs fail and how they can consistently eliminate risks, iterate, and learn to avoid failures.

Flawed assumptions. Building a product without testing assumptions results in false starts that can prevent entrepreneurs from setting themselves up for success. When working on my first venture many years back, I had these preconceived assumptions about the world, which translated to confirmation bias when talking to potential stakeholders. This was a false start that led to building a product that I wasn’t even sure had a market fit. To precisely avoid false starts, entrepreneurs should map out their critical assumptions and work on a design process to prove/disapprove them. Make a shift from intuition to evidence, and from questions to insights. List down the top assumptions and prioritize the ones that are critical to the venture’s success and ones that can be tested cheaply and efficiently. It’s very important to understand if a market need exists in a data-driven way before spending the engineering effort, capital, and mental and emotional energies on an endeavor.

The team. It’s all about the team. Entrepreneurial success is largely dependent on the founder-market fit and the core team. The wrong team or investors could sink a new venture. Going solo and not building a team can prove risky as well. It’s essential for the founder to build a great culture and healthy team dynamics to collaborate better and be there for each other when things don’t go as planned. In the very first venture that I was part of, this was a primary reason that led to disbanding our startup; part of the team did not have the skin in the game, and that slowed things down to the point that we ran out of cash and desire. I learned the hard way how important it is to assess the team dynamics to ensure everyone on the core team is equally or more passionate about solving the problem you’re working on. Invest in the right team, and this includes your investors and advisory board as well.

Promises that don’t scale. This has happened to many ventures that have failed to get past the early adopters. You’ve talked to two, maybe three users, and they all love the product and how excited they are for you to keep building it. These users might be your friends; in that case, they’re rarely representative of the larger market you’re targeting. Moreover, they would probably want to keep cheering for you. These can turn into false promises. A strong positive response from the early adopters can naturally create optimism. Still, it’s worth taking a step back and asking yourself: how are those early adopters different from your mainstream users? Additionally, insights from your extreme users might reveal some patterns and expose those differences. Dig deeper around: How can we recruit the right users? Where can we find them? How can we screen them to get a diverse and representative sample? Don’t be afraid of negative feedback, as that can prove to be useful in thinking holistically about the product roadmap.

Build, measure, learn. And learn deeply about your customers, their need, and the market. It cannot be emphasized how important it is to empathize and deeply understand your user pain points early on and take a scientific approach to run experiments to validate your assumptions. Failure is unavoidable, but you’ve probably not failed gracefully if you haven’t learned much from it. Surround yourself with a team that believes in the same vision and asks the right questions to validate assumptions and discover insights. Move fast and be open to changes, and don’t be afraid to ask for help when needed; the entrepreneurial community has each other’s back. Ultimately, I believe that entrepreneurs can channel these failures to grow stronger and keep building.

tags: Startups - Failures - Reflection