Signs Your Startup May Be Failing

This article was originally published on my personal Facebook page earlier this year. At the request of my former boss I removed it. In retrospect, with examples drawn from several startups I or friends have worked at and no mention of any company names, I should have stuck to my guns and kept it up.

I’ve worked at a few startups now, with millions in funding, with a single small investor, with nothing but our own profit to keep us afloat. It’s always an incredible environment, full of exceptional people, caffeine and passion. On the flipside, they’re volatile. I’ve seen some spectacular failure, and having seen it before, I have fought (uselessly, like Cassandra of Troy) to prevent it when I see it happening again. But since I’m not cursed by Apollo I’d like to think that if my immediate colleagues won’t hear my warnings, maybe people a little further removed might take something worthwhile away from my frustrating experiences with startups in decline.

So what are some of the warning signs? Based on my own, frustrating, experience with good people working on good ideas that just couldn’t seem to get traction these are some of the things that make my spine tingle.

You Stop Innovating

Presumably the founder and entire team are there because they want to do something new, or something better. Startup hours and wages are a trade-off for the chance to do something awesome. I’m happy to work 30 hours straight and fall asleep on the office floor (I’ve done it), provided I’m working on something incredible. People are drawn to startups (and established companies that maintain that startup drive to innovate) because they don’t want to be part of lame, corporate, “me too” projects. The minute you start trying to copy your competition, without truly aiming to create something better, your company is in trouble.

As Paul Graham puts it, “the way a startup makes money is to offer people better technology than they have now.” Flat out cloning something that people seem to enjoy, and assuming that they’ll switch to your product even though you don’t offer any significant advantage over what they’re already using is just insane. In fact, it probably sounds so crazy that you might even question if a savvy company would try it. Alas, some do. Without going into detail (I don’t want to point a finger specifically at which employer put me in this situation), I have worked on a project that consisted of having people figure out how the competitor’s math worked, copying their art, and building a product that was so obviously a hasty duplicate with no value added that I laughed out loud when I saw the strict copyright we put on our version.

Ask yourself what your product does better than anybody else, what problems does it solve, how does it make things better for the users? How is it special? If you can’t answer that, you need to give some serious thought to what you’re doing, and why.

You Have No Vision

Good companies have a goal beyond just making money. Whether it’s something as grandiose as to shift people from computers to mobile devices as their primary source of Internet consumption, or as simple as make web searching suck less (Google’s initial goal, and proof that simple can be amazing), a company and the people within it need to have a sense of purpose. Startups have to be agile and adaptive, absolutely, and that may mean changing the plan to meet the goal.

Startups begin to fumble when they lack a genuine direction, and simply twist in the wind, rapidly changing direction to ape current trends instead of setting them. It shows a lack of confidence that can be fatal. Companies that identify dominantly with an immediate product rather than the ultimate problem that product is meant to solve run the risk of floundering.

I have worked for companies that changed direction monthly, eventually leaving everybody feeling as exhausted as sailors being buffeted around the ocean by capricious winds and waves. A strong idea of where you want to go, and who you want to be, can’t be underestimated. If you find your startup constantly shifting gears, ask yourself if you’re doing so because it will get you where you need to be. If not, then where the hell is it going to get you?

The Passion is Gone

An almost inevitable symptom of the two problems I’ve already listed is that eventually you will lose your most important asset: passion. Startups are hard, exhausting, risky experiences. But as long as you believe in what you’re doing, they’re exhilarating too.

Take away the thrill of creating something that people believe in and you will fail. Simple as that. You may turn out something mediocre and stay afloat for a while, but eventually somebody will come along, demonstrate genuine innovation, and stomp you.

There isn’t a way to solve this issue without finding the reason for it. It’s a symptom, not a cause, but it’s a deadly problem. Try to figure out the last time there was real passion, and identify what has changed since then. It’s easy to fall off track little by little without noticing, the challenge is to admit it and deal with it before it’s too late.

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