Why startups fail – and why Moonfruit didn’t

What I’m listening to while I type: Time (The Revelator)

Couple of interesting things this morning via the UK Business Forums’ e-flyer that I thought worth a quick post.

First, the infographic below on ‘Why startups fail’ out of research by the Startup Genome Project.

 

Their ‘five core dimensions’ for success are pretty obvious: to succeed you need customers, the right product, a good team, a good/innovative business model, and a funding cushion. These are things all startup founders know but, as I’ve said before, knowing isn’t doing.

What’s interesting about the research is that they link success directly to keeping those  five core dimensions in balance during the scaling of the business – that ‘proper’ scaling means moving all five forward at the same pace, while allowing any of the five to grow faster than the others, leads to premature scaling and to startup failure. 

I’m not sure how much the concept equates to the reality, where growth is more like The Blob than those nice neat graphs, and when founder vision is half panic, half lightbulb moments. I’ll be looking in more detail at the project in a future post, in the meantime, here’s the story on Techcrunch.

The other useful piece in the e-flyer was this video interview with Moonfruit’s Joe White.

I mentioned his wife, Wendy Tan White, in my earlier post about women founders, and his perspective on the differences between running Moonfruit now and running it in the early days, pre-2000 dotcom crash, is interesting.

Among the points he makes are:

  • Despite the recession, the UK tech sector is “crazily buoyant” right now compared to other sectors
  • The recession is good for businesses like Moonfruit because, as they saw in 2008, the recession prompts more people to set up online businesses, as a secondary or main income, that make use of the sort of services Moonfruit supplies
  • It’s easier to launch a new web-tech business now because it’s cheaper, you need less startup capital to get going
  • The downside of that is that VCs expect you to be further down the road before you come to them.

His advice to startups? “Get as much done as you can before you go after funding.”