Why Startups Fail

You might not remember ANKI Robotics, an hardware and AI startup featured onstage at an Apple event in 2013. Well, this company folded yesterday and had to fire 200 employees after burning through $200 million in capital funding (including Index Ventures and Andreessen Horowitz). And ANKI was not idle in the market, it was generating around $100 million in revenue since 2017. This is not small potatoes!

Anki demo at Apple WWDC 2013 Keynote.

So, why do I write about their failure? To point that even backed by smart money and having access to Apple as a key PR partner, your future as a startup is never guaranteed? Sure. But, I think that it’s a more simple story. The story of the usual cautionary tale on why startups fail.

Remember this definition of a startup: a company without a business model trying to reach for scalable revenues?

I believe this optimistic time is over. It’s back to reality now. The market has been saturated for too long with cute ideas, fantastic tech and smart people. In the end, if there is no business model there is no business, and this is why startups will fail. Always. Even when recently, Anki’s CEO was speaking about preparing the future of self-driving cars (after selling the idea of merging video games with reality) it was clear that this management team was essentially good at marketing itself as a sexy startup.

And that they did for just too many years, winning most of the startup / tech competitions in their field:

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Aligning all the right partnerships in their market:

Anki costly partnership with the Fast & Furious movie franchise.

But eventually, reality just caught up with them…

This is certainly a cautionary tale for all of you in various startups trying to be sexy, to win pitch contests, to attend tech events or get on-boarded in a prominent corporate incubator. Always remember that you are a product.

The money you get for participating this form of reality TV has a price: you’re not working on your market. And when I see so many articles trying to explain why startups fail, I’m always puzzled. Because there is always one and only reason: not having customers.

The only reason why startups fail is damn simple: not having enough customers. Every hour spent away from getting customers (or enough customers) is an hour pushing you out of the real game…

I guess I saved you from reading further articles on this topic from now on. You now know why startups fail.