Why Startups Fail

Buchzusammenfassung

Tom Eisenmann is Professor of Business Administration at Harvard Business School, where he teaches entrepreneurship. He has coauthored 130 case studies that are used in business schools across the globe. Eisenmann has invested in dozens of new ventures, has served on many startup advisory boards, and has coached thousands of students who want to become entrepreneurs.

Fab.com’s rise and fall illustrates the dangers of scaling too quickly, as early success and substantial funding can obscure market limitations. Despite initial achievements, including $600,000 in sales within two weeks and $170 million in venture capital, the company’s rapid expansion led to unsustainable losses, forcing layoffs and the eventual closure of U.S. operations. To avoid such pitfalls, startups should use the RAWI test—Ready, Able, Willing, and Impelled—to evaluate their readiness for growth. Similarly, Harvard professor Tom Eisenmann’s framework highlights four critical opportunities—innovation, operations, profit strategy, and marketing—backed by a capable team, as essential for startup success. However, as seen with Shai Agassi’s overly ambitious Better Place, ventures that depend on factors beyond their control often fail. Mitigating risk requires adapting innovations to customer comfort, gathering feedback early, and avoiding inflated market projections. Other examples, like Baroo’s unchecked growth and Triangulate’s lack of market research, emphasize the importance of analyzing early success and understanding target audiences. Startups like Quincy Apparel and Dot & Bo further demonstrate the need for industry expertise and experienced leadership to navigate challenges effectively. While failure is common, recovery is possible through the Three Rs—Recovery, Reflection, and Reentry—as shown by Christina Wallace, who transformed her setbacks into long-term success by learning from her experiences and reentering the entrepreneurial world with renewed focus.

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