Wednesday, August 31, 2022

Anna Karenina and Successful Startups

If you have ever worked at a startup that failed, the “Anna Karenina principle” will make sense to you. If success requires solving a number of key problems, then failure to solve just a single one of those problems produces failure. My personal experience is that failure happens as much as 70 percent of the time and perhaps closer to 100 percent over a decade’s time, if one considers acquisition to be an outcome or failure to scale outcomes that represent failure. 


To put it another way, failure goes through a wide gate; success through a very-narrow gate. 


source: slideshare 


The way I have come to understand that principle is an analogy to high walls, locked doors or hurdles. Success requires scaling a series of high walls; opening a series of locked doors or jumping over a series of hurdles. And each obstacle must be successfully navigated. Failure at any single obstacle kills the venture. 


source: Inc. 


Those obstacles can include failure to get the next round of funding; making a bad key hire; betting on the wrong product; launching too early or too late. Trying to solve the wrong problem; burning out the founding team; failure to manage remote teams; making the wrong pivot; lack of domain knowledge; team discord or lack of focus also are gates, hurdles or locked doors. 


Not “listening to customers” is a gate. But sometimes one has to ignore feedback as well. Poor marketing; lack of a viable revenue model; user interface problems; the wrong pricing model; a “too high” cost model; more-nimble competitors; having the wrong team; running out of cash before you are ready to go to market or misjudging the existence of a market also can be key hurdles, walls or gates. 


The point is that success requires success at every single obstacle. Failure requires only one obstacle not surmounted.


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