4 Reasons Startups Fail (Shared From The Desk Of This Here Marketing CEO)

4 Reasons Startups Fail (Shared From The Desk Of This Here Marketing CEO)

Reasons Startups Fail

Over the last decade our digital marketing agency has been privileged to work with dozens of startups in Israel, North America and Western Europe. And it really is a privilege. We have met with some of the most brilliant thinkers of our generation, Startup founders who are improving the human experience  – from medical and pharma to education, tech and agriculture. It’s humbling to meet these giants and watch how they have transformed our world for the better.

And yet for all the huge successes, we’ve seen even the most brilliant startups, with the most ingenious technology,  great initial funding and awesome backing, fizzle out without fanfare after a few years, into the great abyss of the startup graveyard. It’s depressing and quite frankly unnecessary.

In our experience, there are a handful of traps that plague startups and they are avoidable. Bear with me while I share my (slightly biased) list here:

1. Perfect is the enemy of the good:

In the startup world this resonates extra loudly. We’ve met with way too many startups that have poured almost every last investor dollar into their technology and yet have allocated almost no money to market research, intellectual property, patents and most critically marketing.

As startup founder Phil Masio states on the danger of perfection –

…shy away from wasting time, energy and resources trying to be perfect…You need to remain lean and nimble so you can pivot as you learn. Conserve your precious early stage capital…Get 80% of what you need to get your business up and running. Use your capital to get users. Users are going to tell you what is working and what needs to change in your business model. Wasting time trying to make things perfect is stopping you from being successful. 

2. Lack of Marketing Budget:

Without a meaningful marketing budget your startup will look like a blazing bonfire for a couple of days before it ends up in the ash heap.

Every startup needs to allocate a reasonable budget to marketing.  This budget will be determined by your short and long term marketing goals, the ad channels you plan on leveraging, the volume of users you need to reach monthly and other variables.  And yes, there are lots of hidden costs in marketing a startup. So be prepared to spend.

3. Lack of Marketing Experience:

From scientists to engineers, millions of dollars are often allocated to finding and harnessing the best talent to perfect a startup technology. But scientists and engineers are rarely equally skilled at marketing. Most startup founders allocate just enough funds for a slick website and cool explainer video – but that’s not enough. According to Neil Patel –

… the “build it and they will come” theory doesn’t hold much weight and those overnight success stories you hear about are often the result of behind the scenes years of hard work.

A smart startup will recognize the need to bring in a marketing director or digital marketing agency with an expertise in offline and online strategies that will drive a channel of qualified leads in the door and have a decent marketing budget in place to support it.

4. Irresponsible spending:

With 29% of all startups failing because the money just ran out, I get really nervous when I walk into an early stage startup with super cool, office digs. You know, open concept work spaces with comfy couches and  cool glass enclosed spaces for the VIPS. Don’t forget those fully stocked kitchens and you’d better have at least one expensive coffee machine. Totally cool if you can afford it – but few startups can maintain this without giving up on other way more important budgeting decisions – like marketing.


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