How to Decrease the Odds That Your Startup Fails

Read plenty of "what went wrong" eulogies by founders and see what you can learn. But also know that the lens from which they tell you the answer is flawed and narrative biases are present.

4. Microeconomics Who's going to pay (advertisers, data companies)? If you're selling to moms - what are they spending on comparable products right now? The price won't affect demand if it's "inelastic" Products that are "inelastic" mean that price increases don't affect demand much. Know what they are.

3. Incumbent Strengths & Weaknesses Facebook is likely to let you scale a video product really, really, quickly if you figure out how to do it. Platforms cannot allow outsiders to grow enormously large in their ecosystem without paying the appropriate tax or benefit to them. A perfect competitor would be one that is unable to respond because of... See more

2. Market Structure "Market structure" also matters, as does market size. Airbnb's success was attributed to releasing a new market of inventory for travelers tired of paying too much for hotels. Less than 10% of Public Storage's $2.4 billion in sales are controlled. After a year in the market, MakeSpace's biggest issue was CAC (customer acquisitio... See more

1. Market Size If you target a small market, you can probably build a niche business. However, you won't be able to raise money from investors. Therefore, you need to raise small amounts of money, keep your costs extremely low, and become cashflow positive as soon as possible.

To build a successful company, you ultimately need revenue. Many startups, tech or otherwise, fail. A $500 ticket and a $5 fee from the airlines (1% gross margin) is not the same as selling $500 of software. People have been saying things I thought I'd never have to, like "getting to a positive gross margin in several territories is a very low bar ... See more