Around 90% of startups fail within the first 3 years.
A survey suggests that 42% of startups succeeded by virtue of being launched at the right time in the right market and within the right demographics, while 36% failed due to lack of product market.
The following results ask one question, is there a formula to decide startup success?
Dr. Stojanov proposes an alternative. “Given how much of business success is simply a matter of luck, an important insight can be derived from creating a situation where we learn quickly by making failures fast, cheap and most importantly instructive, all in search of a business model that will inevitably lead to success,” he says. “Using this approach, we can iterate through dozens of business models by running a start-up like a science experiment, through a process of constant iteration and improvement.”
Another eminent personality, El-Sheikh- an investment banker with Lehman Brothers adds, “It is basic economics. Failures are frequent, successes are seldom. We need to maximize the reward for success and make it far outweigh all the small losses in failures. If 90 percent of start-ups fail, rather than asking why the 10 percent of start-ups succeed, isn’t it far more informative to try and understand why the other 90 percent fail? When we know this, we ‘game’ the system and make failure work to our advantage. The two business failures I have had, whilst difficult to stomach at the time, have turned out to be blessings in disguise because I used everything I learned to go on and launch three successful start-ups.”
Why do big companies fail?
Samuel Pierpont Langley was a highly educated man who convinced the US Department of Defense to invest $50,000 to develop a person-carrying flying machine. Backed by the best technology and brightest minds in the US government, it was left to two bicycle mechanics who share the surname Wright. The aircraft named Kitty Hawk costing a mere $1,000 was designed to define the course of a human powered flight.
So where did Langley go wrong?
Langley fell prey to the wrong belief that a monumental challenge would require an equally monumental solution. However, history is full of examples where the opposite holds true. Thomas Edison was the perfect example where small tinkerings and modifications got them to success. Forgetting these small lessons has led to the downfall of some of the world’s largest enterprises.
As large companies reach their peak of success, the most counter-intuitive course of action would be to upend your business model and start over at the height of success, but that is exactly what the pair proposed.
“In business, change is the only guarantee we have, and given how quickly technology is disrupting long-established business models, the choice is to keep up or pack up,” Dr. Stojanov says. “If you wait long enough, the choice will no longer be yours to make, it will be made for you by the market.”
The way we think about startups is wrong.
Startups are not simply smaller versions of large companies. A Startup is an experiment that should be based on two pillars- repeatability and scalability. Therefore, Startups are more comparable to science labs than to corporate boardrooms. Entrepreneurship requires a totally different approach – practical lessons taught by entrepreneurs, for entrepreneurs.
“In our workshops, nobody takes notes during the class, yet our participants remember almost all the information weeks after the workshops end,” Dr. Stojanov says. “The secret sauce is the way we structure and deliver the content.
“As a university lecturer, tutor and demonstrator for almost a decade, I have refined a method of transformational learning which I have been secretly testing on my students back in Australia, and which Tarig and I have applied within this workshop series. Together, we have combined a unique method of delivery and wrapped important insights inside stories from our own experiences as start-up founders.”
El-Sheikh adds: “We have targeted the most challenging issues start-up entrepreneurs are facing, such as how to create compelling customer value propositions, how to validate business models, start-up financing and market sizing, sales and negotiation strategies, and finally, pitching their ideas from an investor’s perspective. We bring in real VCs and give participants a ‘behind the scenes’ view of how investors think.”
The modules are structured to be taken in any order. Each is a self-contained toolkit of key knowledge, skills and insights, combined with examples from the pair’s collective experience as entrepreneurs.
“That’s why we believe the workshops have proved to be so compelling; they are taught by practitioners, people who have actually been in the start-up trenches, who have stumbled and failed along their own journeys and have emerged successfully,” El-Sheikh says. “What we are really doing is teaching from our own experience, so we are not simply imparting knowledge, we are imparting wisdom.”
What do start-up founders need to learn first?
The biggest challenge for founders is falling in love with their own products. “Giving them honest feedback is like telling them their newborn child is ugly,” says El-Sheikh. “They take it as a personal affront, an insult to their own being. It is important to have a deep understanding of the product, but a product without a market is a business with no customers. That is not a business, it is a hobby. A lesson the pair credit for their business success is when they really started listening to their customers, who as it turns out are willing to reveal their biggest pains and pay handsomely for a solution. These insights are then used to quickly and cheaply iterate business models, in order to arrive at what is called a ‘product-market fit’; a product or service that fits all of the requirements of a specific customer segment.”
A recent Bayt survey claimed that 64 percent of employees would rather start their own business than work for an employer. That is the duo’s second goal – to empower more employees to start their own businesses.
Original source: ArabianBusiness.com