Prof.Tom Eisenmann On Hidden Patterns of Startup Failure

Jyotshana Rani

19th Nov'20

Startup these days is a common thing. Every 4th person you meet is planning to start their own business due to various reasons. But, have you ever thought about why most of them fail? Most of us try to replicate the other success patterns. And it is a good thing, but what we always forget is that avoiding failure patterns has an equally important role to play in finding success. When you avoid failures, success will automatically come to you. 

Harvard Business School professor, Tom Eisenmann who has been teaching entrepreneurship for more than a decade has uncovered patterns of startup failure that every Founder must know so that they can avoid making the same mistakes.

 

Tom Eisenmann, 6 patterns account of startup failures, at early-stage as well as late-stage:

 

  1. Pattern #1: Bad Bedfellows
  2. Pattern #2: False Start
  3. Pattern #3: False Positive
  4. Pattern #4: Speed Trap
  5. Pattern #5: Help Wanted
  6. Pattern #6: Cascading Miracles

 To know more about the pattern so do Listen to the whole NFX podcast of Prof. Tom Eisenmann (HBS) on Hidden Patterns of Startup Failure. Click here.

 

3 Early-Stage Failure Modes

 

1. Bad Bedfellows

Changing startup models is not something that you can take forward on your own. You need an excellent team, great investors, and various other factors to achieve great heights. A good idea that never gets traction due to poor founder fit, weak team, and poor investor fit. 

 

startup failure

 

2. False start

Entrepreneurs love to build. They are told to launch early and often. False start refers to take a false step that's why some startup fails when you avoid studying the market, customer needs, and good minimum viable product tests and start building quickly. You have good founders/ team/ investors, but when they start building too quickly, they waste their capital on a bad product. You get going too fast and you waste a pivot, so you have less capital available and you can try fewer things. 

 

3. False Positive

The false positive is when you receive signals that appear to be positively pointing towards growth, but upon careful analysis are actually false positives. Your start is great with early adopters and then it turns out that mainstream demand doesn't share the same needs. 

To know more on 5 false positives common to a new startup, Click here.

 

3 Late-Stage Failure Pattern

 

1. Speed Trap

You need a team to run your business smoothly. So, you're hiring legions of employees that you have to train, you have to layer in middle managers, you have to create processes, and so forth, and you're going as fast as you can. But, moving fast is not the correct move. The right way is to slow down and fix things with proper business strategies to move forward, but you have a lot of pressure to keep going and that's where the speed trap comes.

 

2. Help Wanted

A late-stage venture that has product-market fit, customers love the product, everything is on track, but something on the resource front goes awry. It might be a mistake made, or it might just be a misfortune.

 

3. Cascading Miracles

The term ‘cascading Miracles’ first came from John Malone, an entrepreneur who built TCI, Tele-Communications Inc, the biggest US cable company. It basically means that many things have to go right and if any one of them doesn't, the venture fails. Like a math equation, when you multiply a bunch of outcomes and if any one of them is zero, the value of the whole equation is zero.

 

To know more on, 7 Reasons Startups Fail--and How to Avoid Them, Click here.

 

We, at OpenGrowth, are continually looking for trending startups in the ecosystem. If you want to know any further information about the startup ecosystem or have any mind-boggling ideas, do refer to the other blogs at OpenGrowth. If you have any suggestions, do let us know in the comment section below.

Jyotsana is very keen to express her views on new topics and wants readers to remember her through her writing. She is passionate about reading and believes that words wield the power of changing the scenario and she uses them to encourage people to the best of her knowledge.

Comments

robertmorrison744@gmail.com

5th Sep'22 04:41:22 PM

READ MY REVIEW HOW I WIN $158m CONTACT DR KACHI NOW FOR YOUR OWN LOTTERY WINNING NUMBERS. I was a gas station truck driver and I always playing the SUPER LOTTO GAME, I’m here to express my gratitude for the wonderful thing that Dr Kachi did for me, Have anybody hear of the professional great spell caster who help people to win Lottery and clear all your debt and buy yourself a home and also have a comfortable life living. Dr Kachi Lottery spell casting is wonders and work very fast. He helped me with lucky numbers to win a big money that changed my life and my family. Recently i won, ONE HUNDRED AND FIFTY EIGHT MILLIONS DOLLARS, A Super Lotto ticket I bought in Oxnard Liquor Store, I am so grateful to meet Dr Kachi on internet for helping me to win the lottery and if you also need his help, email him at: drkachispellcast@gmail.com and he will also help you as well to win and make you happy like me today. His WhatsApp number: +1 (570) 775-3362 visit his Website, https://drkachispellcast.wixsite.com/my-site

robertmorrison744@gmail.com

5th Sep'22 04:40:46 PM

READ MY REVIEW HOW I WIN $158m CONTACT DR KACHI NOW FOR YOUR OWN LOTTERY WINNING NUMBERS. I was a gas station truck driver and I always playing the SUPER LOTTO GAME, I’m here to express my gratitude for the wonderful thing that Dr Kachi did for me, Have anybody hear of the professional great spell caster who help people to win Lottery and clear all your debt and buy yourself a home and also have a comfortable life living. Dr Kachi Lottery spell casting is wonders and work very fast. He helped me with lucky numbers to win a big money that changed my life and my family. Recently i won, ONE HUNDRED AND FIFTY EIGHT MILLIONS DOLLARS, A Super Lotto ticket I bought in Oxnard Liquor Store, I am so grateful to meet Dr Kachi on internet for helping me to win the lottery and if you also need his help, email him at: drkachispellcast@gmail.com and he will also help you as well to win and make you happy like me today. His WhatsApp number: +1 (570) 775-3362 visit his Website, https://drkachispellcast.wixsite.com/my-site