Sunday, August 03, 2008

Start-up Failure

It's painful to see a start-up close up its door knowing the financial, emotional, and time investment of everyone involved. All that's left is a sad little notice from the start-up that ends all the dreams.

It may seem that start-ups could benefit from the consumer advocate approach mentioned in the last post, but any start-up would not have reached the maturity necessary for consumer-oriented best practices to be implemented into a proven business model. Instead, a start-up is left fumbling around to find one or more business models that potentially will work, and the focus of the start-up has to be on discarding misleading and flawed models while locking into one or more promising ones.

Thus start-ups need more of a business advocate instead of a consumer advocate approach. Another term for this is the business angel, a guiding force to mentor the start-up executive team. The business angel often will have to turn the start-up away from the initial unsound business model and towards a model that will be successful. This is usually done instinctively, and thus business angels need to have proven track records. Start-ups that don't take advantage of business angels, or advocates, are doomed to stumble around in a hit-and-miss lottery-ticket approach to staying afloat.

Returning to large companies, and the need for consumer advocates, it is interesting to draw a parallel between the Narcissistic Personality Disorder, and companies that become primarily internally facing - let's reinterpret the criteria from a business perspective:
  • grandiose sense of importance
  • preoccupied with unlimited success, power, brilliance, beauty, or ideal technology
  • believes company is "special" and unique
  • requires excessive admiration
  • has a sense of entitlement
  • is financially exploitative
  • lacks empathy with consumers
  • is often envious of other companies or believes companies are envious of them
  • shows arrogant, haughty behaviors or attitudes

Certainly a few of these factors could be considered positive if isolated, but the whole package would be a poor placed company for long term business success.


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