Why Startups Fail Before They Run Out Of Money
How to avoid the death spiral before it sneaks up on you
If you get a chance to talk to a startup founder who has failed (raises hand), and ask them when they saw that failure coming, they’ll probably tell you a similar story: The writing was on the wall long before the money ran out.
So why didn’t they catch it?
In all my years of experience running startups, working at them, advising them, even investing in them, I’ve never seen a failure go down because one morning everyone woke up and the money was gone.
It happens more like this.
The thing about failure is that it almost always rides the coattails of success. In other words, a startup must be in a position to succeed before it can fail.
With a new business, even a modicum of success can be difficult to achieve, thus, it’s intoxicating when it finally happens. This is fine. It’s good. Success needs to be celebrated, capitalized upon, and chased.
But almost always, as the party rages on, a bad actor can slip in, almost imperceptibly. And when it does, it’s usually disguised as something else — something potentially awesome.
