[petewailes]

Marketer and 7 time company founder/C-suite member. Every time a company fails, it's a function of one of two things:

1. A lack of a product people will pay for, reliably delivered in a way they're willing to accept. If people won't buy your thing, you don't have a business, you have a hobby.

2. Poor financial acumen leading to costs being higher than turnover. Unless a business actually turns a net profit, it's not a business. It's a subsidised organisation waiting to collapse.

There's a whole pile of ways both of those can go wrong, but it's always one of those two. Bad product &| marketing, or poor financials.

The may valuable piece of advice I can give is, work out a proper strategy (start with a model like Roger Martin's strategy cascade), and then for every thing you plan to do at any point in the business, right down a list of assumptions which would have to be true for the idea to be good. Then try and knock those down with evidence, starting with the most fragile, least likely, most important ones first. Always try and prove your ideas are bad, not that they're good. At least then you've robustly tried to kick the shit out of them before the market does.

[thecleaner]

Knocking down assumptions and attacking your ideas is a great thing. Very useful when done right but most ideas are shit and will collapse under careful analysis so people dont do it as much because it can be discouraging. But this thing has a formal name - Red Teaming. DoD wrote a great memo on how to do it right. There are other tools to solidify and stress test ideas such as simulation and game-play. I came across these while reading Farsighted. Excellent book.

[petewailes]

It's also just basic hypothesis testing - formulating and then proving/disproving a null hypothesis. But most of the people I talk to can't remember what that means, if they ever knew. Hence assumptions and attacking as the language - they can work that out.

Also, Farsighted is a great book. If you liked it, you'd also get a kick out of Creating Great Choices, The Choice Factory, Alchemy: The Surprising Power of Ideas That Don't Make Sense, and How to Measure Anything: Finding the Value of Intangibles in Business.

[jlbnjmn]

Would I be simplifying too much to say the cause of failure was, in all cases, "a failure to economically supply demand"?

[petewailes]

To simplify too much, yes.

Firstly, demand is not always a given. Sometimes it's built in to a market, other times it needs to be created. Other times, there's demand but no known solution if your work is novel, so you need to educate the market as to the benefits of your solution and to win trust in it.

Also, it's entirely possible to supply a product which meets a demand at good unit economics but fail because of other issues - recession, international political issues, governmental pressure, societal or social issues...

Finally, you need a market to be willing to accept a solution. It's entirely possible to have a better product, but lose the Comms/trust game in a winner takes all market situation.

Failure can come through issues in any of about nine different areas, but it always boils down to an issue in profitability or marketing. How that's expressed can take lots of forms. Hence you can simplify that far, and no further.

[jlbnjmn]

Thank you, I'm glad I asked.