Starting a tech company is no different from starting an ordinary business. Many tech startups will fail and never make it past the fundamental first three years in business. That could include yours unless you make significant strides to avoid this fate.
I know what you're thinking, not my company, we could never go under, we're just too good. These are innovative ideas, what we're producing is something people need. So what if it is? Let's look at the stats, shall we? According to the Wall Street Journal, 75% of tech startup fail. Many fail in the first three years, and those who don't, fail in the first five.
By all means, don't get me wrong. I'm not saying you're going to fail. You're likely to succeed as well - but only if you fail-proof your company. How do you do you do that? By avoiding these 4 reasons tech startups fail.
1. Not Focusing On The Customer
Every business, whether you're a tech startup or a comic book store needs one thing to succeed - customers. Without customers, your product or idea won't get anywhere. What's even truer is that you don't need a million to find customers you need a product people want or need. Something that solves something for them. Until your customers are satisfied your work is never complete. Remember that.
2. Getting Stuck Creating The Perfect Product
Many of the 75% of startups that fail are obsessed with perfection. They want a near perfect product to take to market. They keep building and theorizing and never actually testing. Once again, they're leaving the customer out of the equation.
Although you think by building something perfect you're helping the customer, you're in fact hindering your (and their) progress. Start by placing your simplest ideas on the market and let people use it. Feedback is vital at this stage, feedback is your lifeblood.
In your head, you may be making the ideal product but without feedback how will you know? In all honesty, perfection in tech startups can only be achieved after your initial phase of testing. That initial phase will reveal the cracks in your work and even in the idea. Start testing as soon as possible too, the product can still be in its most basic form when you first test. That way, when you build you are building based on a tangible reaction to your product. Making failure near impossible.
3. Being Inflexible
A lot of the time startup founders surround themselves with a team of 'yes' men, and people who believe in the product despite its faults. What they'll do in this instance is create something they believe should work. Something they're confident about, and not invite critique or criticism. Even if they can see the product failing they are incapable of changing and transforming their initial idea. They want their ideas to succeed so badly that they're unable to be flexible about the direction of the product or what it should become. Successful startups are able to change, tweak and adjust their product until it's what people want.
4. Becoming Blinded By Ego
Let's say you do all of this, people love your idea. You're a customer-centric company and you're growing at a phenomenal pace. That's where things get tricky. Startups fail in those crucial 5 years because after they've surpassed their peers in the first three years they get over confident and this ultimately means the attention to detail they once paid to their startup diminishes.
Unless you've built an unrivaled product, that people can't live their lives without, you're not immune to failure. Once you deafen your ears to feedback - it's a slippery slope downhill. What's worse is by this time your failure will be public. You won't die a silent death like all the other startups.
Simply, ditch the ego and remain in tune so you're able to hear the right feedback, the feedback that will keep you on track. Bottom line, what we mentioned in point one, is what will set your business apart from other startups. Be customer focused with a passion. Care what they think, what they want and build based on that. All the while keeping in mind that the minute you stop doing this is the minute you fail.