People make mistakes. We’re only human. We fail.
This is especially true of startups. As Chris Dixon once said, “the default state of a startup is failure.” It takes an extraordinary group of people to launch a startup that does NOT fail.
Failure isn’t a bad thing. It’s a great test of character. It’s suppose to make you wise and give you experience. But damn, to quote C.S. Lewis, “experience is that most brutal of teachers. But you learn, my God do you learn.”
As founders of the failed startup, yes, you learn A LOT.
But, to the outside world reading articles and essays about the startup failures of others, you have to take the lessons from other’s failures with a grain of salt.
Startup Failures Are Complex
Startups failures are complex. Most of them are not because of stupid or simple mistakes. So, be careful when you form the following conclusion:
Startup X failed because of Y. Therefore I should avoid doing Y in my own startup
It is NOT that simple. Startups fail because of a combination of factors and causes, some of which are almost impossible to put a finger on.
Be very careful when you read articles about postmortems of startups. Startups don’t grow in a controlled environment. Don’t form causal conclusions out of correlations.
The One Reason Why Most Startups Fail
But, there is one cause that I see consistently in postmortems of startups. Read through the 14 essays about startup failures in ProductHunt. Did you get it?
From what I see, all of them failed because they weren’t able to sustainably monetize their product. Some of them didn’t make money! They didn’t make money because of some problems with their product or market.
THAT’s why I advice the startups I help to go after the money as quickly as possible. You’re not a business until you make money. Period.
Don’t kid yourself. Great, you’re saving the world. You’re making the world a better place. But if you don’t make money from your product or services sustainably, you might as well dig your own startup’s grave.
The Lean AAR Metrics
I love Dave McClure’s AARRR metrics. It’s great for startups that already have some momentum.
But for really early-stage startups, I suggest the AAR metrics: acquire customers, activate them and then collect revenue – all in one day if possible! Read how I monetized my buffer app copycat in one day. Winners of Lean Startup Machine workshops where I’ve spoken and mentored at have done the same thing. They’ve monetized an idea in a weekend!
Then once you’ve validated that enough people are willing to pay for your idea, then that’s when you build out the rest of the AARRR metric engines: acquisition, activation, retention, referral and revenue.
Show Me The Money
Never ever forget that you’re not a business until you make money. I’ve had to learn this lesson through my own painful startup failures. To quote Jerry McGuire, “show me the money!”
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P.S. I’ve started helping out startups through one-on-one skype or hangout sessions. Here are details. It’s a little corny, but I like Breaking Bad! You can schedule time with me through my SoHelpful page.
