Wednesday, April 12, 2017



A study shows that 9 of the 10 start-ups fail.[1] Yet, entrepreneurship is still the buzz words. They wear these failures as badge of honour and pen down their experiences to benefit the entrepreneurs in the making.[2] It’s intriguing that despite words from the experienced, countless books from management gurus and advices from consultants, start-ups fail.

I was part of a medtech start-up. The start-up set its sight firmly on a single product- self powered incubator. It offered enormous potential for growth. The start-up had bagged funding of over a million dollars from the central government as well as the angel investors. Yet, the company failed and failed miserably. Our start-up kept a fa├žade of success even when the company was decaying and falling apart to please the investors. After reading “Seven Ways to Fail Big,” I was compelled to do a post mortem of the start-up I was part of. I have tried my best to pen down my insights as to why the start-up failed so badly despite posing enormous potential.

Management crisis:

It was a start-up by graduates from IIT. IIT boasts to have the smartest of people as its alumnus ranging from Sundar Pichai to Rajat Gupta.[3] We were about 24 individuals in the company. All the founders, 6 of them, were from IIT. From what I saw, each of the 6 founders were head strong people and it was very difficult for all of them to think on the same lines.  They had a tinge of overconfidence. It would have been impossible for them to start venture without overconfidence. However, many a times, this over confidence turned into arrogance. Due to this, there was a negative vibe created in the work place. Employees had lost trust in the founders and did not talk them as they looked down upon the other non-IIT graduates. With their morale decreasing, employees stated leaving the company one by one. Within 16 months of start, the company was reduced to 10 employees (half the founders had moved away) 


The start-up focused solely on designing of a self-powered incubator. It was a low-cost device designed to be used in rural India. Considerable amount of time and money had gone into the project. The founders were so convinced that they dived headfirst into the project with all its resources. The start-up had a chance to consider other options at the beginning. However, they decided to stay with the incubator and had odds strongly placed on it. About a year from the start, a bigger player was successfully able to lunch a similar product on a large scale.[4] Our start-up couldn’t complete with them as their production volume was 100 times ours. Thus, we had to abandon the project and consider other opportunities. It is often said that “paralysis by analysis” will give a company comprehensive understanding.[5] We never had such intensive “paralysis by analysis” moments. Even if the company had, it may have been limited to the management. Moreover, the start-up didn’t pay much heed to the sales and marketing which prevented the product from reaching the target population at the appropriate time.

Lack of mentors:

The start-up had talented and highly motivated people who had specialized knowledge. Yet they couldn’t come one as a team and the synergy was completely missing from the organization. There were no guides or mentors who were go to people at the time of need. There were collaborations and tie-ups with educational institutes, yet there were no mentors during tough times, the founders tried to solve the problems by themselves. Their relative inexperience in the industry had an adverse effect on how they approached the problem.

Lack of freedom:

Most of the start-ups offer high degrees of freedom to experiment. However, our start-up was confined to the pet project-incubator. They were too optimistic about the project and underestimated the threats.  The employees were forced to work on nothing but this project. Even when certain things were proven not to work, the management decided go ahead with the obsolete methods. We had a 50-hour week schedule. At times, we used to work on weekends to meet the deadlines. This put enormous stress on the employees mentally and physically.  Lack of freedom, tight working schedules mad it difficult for the employees to give their best. 

There were definitely other factors that were responsible for our start-up's failure. But these were some of the reasons that stood out during the post mortem.

[1] Patel, Neil. "90% Of Startups Fail: Here's What You Need To Know About The 10%." Forbes. Forbes Magazine, 02 Sept. 2015. Web. 12 Apr. 2017.
[2] Reilly, James Marshall. "Embracing Failure on the Path to Success." Entrepreneur. N.p., 18 Apr. 2012. Web. 12 Apr. 2017.
[3] Clara, Jyoti Thottam/Santa. "A Reunion at the "MIT of India"." Time. Time Inc., 09 July 2007. Web. 12 Apr. 2017.
[4] Kannan, Shilpa. "The Low Cost Technology Saving Premature Babies' Lives." BBC News. BBC, 26 Aug. 2013. Web. 12 Apr. 2017.
[5] Boss, Jeff. "How To Overcome The 'Analysis Paralysis' Of Decision-Making." Forbes. Forbes Magazine, 20 Mar. 2015. Web. 12 Apr. 2017.

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