Introduction

Some eight of ten new businesses fail within their first three years. Nine of ten venture-backed startups fail to generate meaningful returns. Venture capitalists turn down 99% of the pitches they see. The odds appear to be stacked against you!

But entrepreneurs often make the same avoidable mistakes over and over. Why Startups Fail can help you beat the odds and avoid the pitfalls and traps that lead to early startup death.

Numerous books have been written about winners like Apple, Google, and Facebook. Few, however, capture the mistakes: the key decisions that led to running out of cash and early startup failure. Some startups spend millions building products the market doesn't want, others spend too much too early on marketing and sales, and still others hang on too long without pivoting out of bad markets. Knowing how to avoid these mistakes doesn't guarantee startup success. But it certainly increases your chances.

Whether you are a soon-to-be entrepreneur thinking about taking the leap, a bootstrapped entrepreneur trying to energize a business three or four years in, or a venture-backed entrepreneur trying to scale, Why Startups Fail shows you the key mistakes that cause new ventures to fail—and how to avoid them.

As a serial entrepreneur and venture capitalist, I've been part of or witnessed a fair number of startup successes and failures, some of which you read about in this book. In some cases, I disguise the companies and players involved or use composites, but the essence of each story contains a powerful kernel of wisdom—or point of caution.

Most recently, I was a general partner at Mohr Davidow, a Sand Hill Road (Silicon Valley) venture capital firm with $2B under management, where I worked from 2006–2011. Before Mohr Davidow, I started four companies, two of which were acquired. I've bootstrapped and raised venture capital. I've experienced both sides of the fundraising process: raising money and investing it. I've bought and sold companies, and I worked at a big software company—Microsoft—in the 1990s.

Expanding on my popular VCDave.com blog post Why Startups Fail, I use short, powerful chapters to reveal the keys to successful entrepreneurship: excellent product-market fit, focus, superb execution, the ability to pivot, stellar teams, and wise spending. In Why Startups Fail, you learn from the mistakes I've seen made over and over and find out how to position your startup for success.