Unicorn Tears

CHAPTER 2F IS FOR FAILURE

Before we can analyse startup failure we need a common understanding of what a startup is. In his book The Startup Owner’s Manual, the respected educator and entrepreneur Steve Blank defines a startup as ‘a temporary organisation in search of a scalable, repeatable, profitable business model’. Once a startup finds and successfully demonstrates a business model it transforms into a more structured corporation, and sadly loses some of its startup DNA.

What is the DNA of a startup? In its simplest form, a startup is a business that occupies a space at the intersection of three elements: founders, funding and business model (figure 2.1, overleaf):

• Founders: Someone has to do the work. Whether through a sole founder, a partnership or a hired team, startup success is usually heavily influenced by the people and personalities who work there — and those founders need to be fit enough to lead the business.
• Funding: Sooner or later (usually sooner), startups require capital in order to develop a product and go to market. That capital can come from bootstrapping a business yourself, from friends and family, or from venture capitalists. Regardless of the source, startups cannot survive without money.
• Business model: The seed of a startup is an idea, out of which grows a product and a business model. Most startups are defined by their idea; that said, this is usually the least important factor in their success. What is more important is solving a relevant problem ...