Practitioners’ Perspectives
This page collects posts from entrepreneurs and investors on the reasons why startups fail; when and how to shut down a venture; and how to cope with and learn from entrepreneurial failure. The page also provides links to post-mortem analyses of ventures’ demise and some general interest books that explore lessons from failure in other settings, such as foreign policy, medicine, and military campaigns.
A companion page shares academics’ perspectives on these topics.
Causes of Startup Failure
CBInsights lists the top 20 reasons why startups fail, based on their analysis of 101 startup post-mortems
Forward Partners and Autopsy describe the top reasons why startups fail, based on analysis of 300 startup post-mortems
Paul Graham of Y Combinator describes 18 mistakes that kill startups
a16z's Ben Horowitz describes the "Product CEO Paradox," i.e., failure induced by an initially product-focused founder disengaging from the product
Matrix's David Skok on why startups fail
Steve Blank describes the nine deadliest startup sins; he also explains why startups often fail when they reach the ‘build’ phase—at about 40 employees—and must be able to profitably accelerate customer acquisition
Fred Wilson of Union Square Ventures posits that overfunding ventures with unproven business models is a major cause of early-stage startup failure
Marc Andreessen’s tweet storm on ways to kill a late-stage, high growth startup
Jessica Livingston of Y Combinator on startup failure patterns
VC Leo Polovets examines common startup timing mistakes
Entrepreneneur Luke Lawal lists 12 reasons why Black founders fail
Andrew Montalenti of Parse.ly describes seven causes of startup failure
Seth Bannon, founding partner of the early-stage VC firm Fifty Years, describes seven mistakes founders make
Entrepreneur Sumon Sadhu describes seven signs of startup dysfunction
Entrepreneur Sim Simeonov lists 73 root causes of startup failure, which he calls "anti-patterns"
SpinBrush inventor John Osher cites 17 mistakes that hurt startups
Rid Empson/TechCrunch describe Startup Genome research on premature scaling as the leading cause of startup failure; infographic from Business Insider summarizing this research
Quora thread on why startups fail
Startup Failure Rates
Benedict Evans on the distribution of returns for VC funds
Mattermark's Jason Rowley analyzes, by round, the percentage of startups that raise a subsequent round; shows how failure rates vary by total amount raised for seed and Series A startups; and analyses startup failure rates by U.S. location. CBInsights presents similar data
Hans Swildens and Eric Yee of Industry Ventures present analysis of PitchBook data for all VC investments in late-stage ventures from 2006 through 2016 and show that 29 percent of investments return 0x to 1x (compared to 65% for early-stage investments); 28 percent of late-stage investments earn 1x to 2x (compared to 25% for early-stage investments)
Business Insider founder/CEO Henry Blodget analyzes Y Combinator data to assess startup failure odds
Failory’s infographic compiles lots of data on failure rates and reasons for failure by startup type
Startup Post-Mortems
CB Insights frequently updates its list of several hundred startup post-mortems, including many first-person accounts
Failory aggregates lots of startup post-mortems along with interviews of failed founders; Autopsy likewise aggregates many startup post-mortem analyses
In this video and a companion post, Twitch founder Justin Kan offers a candid and thoughtful account of mistakes he made in launching his next venture, Atrium, and what it felt like to shut down the legal services software startup
In his post-mortem analysis of Fab.com’s failure, founder Jason Goldberg discusses lessons he learned and offers advice for other failed founders
Courtney Rubin documents the meltdown of the boutique Brooklyn-based ice cream chain, Ample Hills
Jasper Diamond Nathaniel recounts the events that led to the failure of his startup Revere (which sold sports nutrition supplements) describes the painful personal aftermath and how he coped with it, and shares lessons he learned from the experience
Inc. magazine story on Blinkybuggy, a digital vault for family photos that never took off; the author concludes that startup culture should stop fetishizing failure due to the high personal costs experienced by failed founders
Alex Fishman shares a post-mortem analysis of the failure of his startup, Dishero, which aimed to replace printed restaurant menus
Bloomberg story on how pressure for growth led the leaders of Zenefits, a SaaS provider of benefits for SMEs, to push beyond ethical boundaries
Othmane Rahmouni, co-founder of the yoga studio referral app Yoga Panda, recounts the startup’s story and reasons it failed
Michal Bohanes offers a post-mortem of Dinnr, a London-based same-day ingredient delivery service he co-founded
Former employee Hunter Davis analyzes factors behind Homejoy’s failure
NY TImes story about the messy failure of the clothing retailer Outdoor Voices
Some books that provide detailed launch-to-shutdown accounts of failed startups:
Bad Blood: Secrets and Lies in a Silicon Valley Startup, by John Carreyrou, profiles Theranos
Eccentric Orbits: The Iridium Story by John Bloom describes a failed effort—costing over $6 billion—to provide phone service anywhere on the planet using a constellation of satellites in low-Earth orbit
Reinventing the Wheel: A Story of Genius, Innovation, and Grand Ambition by Steve Kemper profiles the development of Segway, a two-wheeled, gyroscope stabilized, electric-powered “personal transporter”
Totaled: The Billion-Dollar Crash of the Startup that Took on Big Auto, Big Oil, and the World by Brian Blum profiles Better Place, which aimed to deploy a worldwide network of charging stations for electric vehicles
Boo Hoo: $135 Million, 18 Months… A Dot.com Story from Concept to Catastrophe, by company co-founder Ernst Malmsten, with Erik Portanger and Charles Drazin, profiles the failure of a pan-European online apparel retailer
Startup: A Silicon Valley Adventure by company founder Jerry Kaplan, profiles GO Corp., a tablet computing startup launched in the late 1980s
The Good Fail: Entrepreneurial Lessons from the Rise and Fall of Microworkz, a budget PC manufacturer that failed in 2000, by company founder Richard Keith Latman
Films and documentaries about failed startups:
General Magic, a documentary on the early 1990s failed effort to create the first handheld “personal communicator”
Startup.com, a documentary about GovWorks, a dot com bust casualty that provided software for government agencies, puts a spotlight on co-founder conflict
Fyre, a documentary about the Fyre Festival, a messy, epic fail
Tucker: The Man and His Dream recounts the failed 1950s effort to launch a new car company
E-Dreams, a documentary about the urban delivery service Kozmo.com, a victim of the Get Big Fast strategy’s collision with the dot com crash in 2000
When and How to Shut Down a Struggling Startup
Entrepreneur Gabe Zichermann on when to pull the plug; in a second post, Zichermann explores options such as pursuing an acquihire and describes specific steps a founder should take to shut down responsibly
YC’s Paul Graham on the importance of understanding whether you are "default dead," i.e., how many more months you can operate without raising fresh capital; Graham on options for founders when cash is running low
Fred Destin of Stride.VC describes a scenario in which board misalignment can lead a late-stage startup failure after an unsuccessful attempt to sell the company
SaaStr founder Jason Lemkin describes the drama and conflict that can ensue when an entrepreneur leading a struggling startup seeks a bridge financing from existing investors
Mike Gozzo chronicles his emotional ups-and-downs during his venture’s endgame in a series of gut-wrenching posts for the blog, “My Startup has 30 Days to Live” (The blog was anonymous when he wrote it; Gozzo later disclosed his authorship in a visit to my class on entrepreneurial failure.)
Advice from entrepreneur/angel investor Jason Calacanis on how to handle the layoffs that often precede a shutdown
Foundry Group’s Brad Feld argues that sometimes failure is your best option
Union Square Venture’s Fred Wilson describes two scenarios for VCs when things don't work out: slogging it out, and hitting the wall
Brooklyn Bridge Venture’s Charlie O'Donnell on what to do when your startup has stalled
Entrepreneur Vin Vacanti offers advice on when to shut down a startup
Drawing lessons from the failure of his venture, Andrew Lee shares advice for founders whose startups are struggling
Jason Freedman offers tips on how to fail "elegantly," i.e., keeping one's reputation/relationships intact
Josh Maher on how to tell an investor that failure is likely, and steps to take in preparing for a shutdown
Failed founder Alex Fishman describes specific steps an entrepreneur should take when planning for and implementing a shutdown; failed founder Tristan Zier offers a similar list of steps for entrepreneurs considering a shut down in part 3 of his post-mortem of his failed startup, Zen99, a SaaS provider of tools for gig economy contractors
Writing for the legal advice website NOLO, Bethany Laurence offers guidance for entrepreneurs shutting down their business on how to decide whether to file for bankruptcy or liquidate assets yourself. NOLO’s “Going Out of Business” page offers more advice on related topics
Upfront Ventures’ Mark Suster on the wisdom/ethics of "failing fast"
VC Guy Turner explores the ethics of startup failure and when/why/how struggling entrepreneurs should be transparent with employees and investors
Coping with and Learning from Startup Failure
In this First Round Review interview, serial entrepreneur and investor Jeff Wald offers advice for failed founders that will help them cope with and learn from failure
Steve Blank riffs on the Kubler-Ross stages of grief model to describe an entrepreneur's likely emotional reactions to failure
Advice from entrepreneur Adi Hillel on learning/rebounding from entrepreneurial failure
After six years of “hiding in shame,” Lauren Kay, co-founder of Dating Ring, describes her efforts to rebound from its failure and offers advice for other failed founders
Entrepreneur Andy Sparks on coping with startup failure
Rui Delgado chronicles the personal physical and emotional toll taken by his failed startup
Josh Carter describes his emotions in the wake of his startup’s failure and how he dealt with the grief
Nikki Durkin recounts the last days her startup, 99dresses, and what it felt like after the venture failed
Failure in Other Settings
Books that discuss the role of failure across different settings is include Megan McArdle’s The Up Side of Down: Why Failing Well is the Key to Success and Sarah Lewis’s The Rise: Creativity, the Gift of Failure, and the Search for Mastery
In From Lemons to Lemonade: Squeeze Every Last Drop of Success Out of Your Mistakes, Notre Dame professor Dean Shepherd, a leading academic expert on the psychological impact of entrepreneurial failure, shares advice on how to learn and recover from failure in any aspect of life
In “Strategies for Learning from Failure,” Harvard Business Review, April 2001, HBS professor Amy Edmondson provides an overview of different reasons for organizational failure, barriers to learning from failure, and strategies for overcoming those barriers
in Brilliant Mistakes, Wharton’s Paul Shoemaker describes how mistakes in fields like aircraft design, weather prediction, and medical research can lead to breakthrough innovation
In Born Losers: A History of Failure in America Scott Sandage provides a historical perspective on U.S. societal attitudes toward failure
In The Icarus Paradox: How Exceptional Companies Bring About Their Own Downfall, HEC Montreal professor Danny Miller explains how attributes that led to a big corporation’s success can turn into liabilities
Charles Perrow, Normal Accidents: Living with High-Risk Technologies analyzes the failure of complex systems such as nuclear power plants
Military Misfortunes: The Anatomy of Failure in War by Eliot Cohen and John Gooch examines failure in battle
Thinking in Time: The Uses of History for Decision Makers by Richard Neustadt and Ernest May contrasts foreign and domestic policy successes and failures
Atul Gawande’s The Checklist Manifesto: How to Get Things Right explores medical failures and how to avoid them