When the RMS Titanic set sail, no one on board had any inkling of the complete failure it would become. Likewise, the founders of most startups think that they will beat the odds – yet, over 70% of startups do fail.
The tragic fate of the Titanic was caused not only by the iceberg it collided with, but also due to a series of small decisions along the way. Similarly, many startups sink due to unanticipated consequences or “hidden debts” they incur in their early stages of development. So, what are some of these “small” decisions?
The most important job of a startup in the early stages is figuring out product/market fit. Turns out that this is much, much harder than it sounds like. In fact, even with software technology companies, finding product/market fit can take two to four years. Life science companies can take much longer. You might know the basic story:
Entrepreneur has a great idea for an unsolved problem to fix: for example, run a wide range of tests on a finger stick of blood (hopefully, you recognize Theranos in this example)
They envision what they think needs to be done to fix it. They build that product: Sadly, this is where Theranos got stuck--they could not actually build this product and make it work. Instead, all they got was market fit. Lack of alignment between the product and the market is a major source of hidden debt.
But, product/market fit is not the only early challenge for a startup. They also need a diverse founding team and set of investors and advisors. Here too, we see some challenges at Theranos. There was a founding team, which morphed into a solo founder who had zero experience in running startups and nearly zero knowledge of the science of blood testing and her co-conspirator.
People, products, and markets all are troubling sources of debtbergs that can limit a startup’s success. Join the webinar to learn more about the Titanic, Theranos, and how to keep The Titanic Effect from sinking your startup.