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Why tech start-ups fail?

Tue 14 Feb 2017 08:57

In general, Start-ups have been created with a great vision and emotions to convert a tiny organization to larger one catering customers worldwide. However, only few start-up success stories are inspiring while countless start-ups fails in no time. So why start-up fails? Here are few common reasons for tech start-up failure.

 

Distributed Teams Challenges

 

Lack of domain knowledge

Tech Start-up focus on development of web or mobile solution cater to specific customer segment. Many times core team do not have enough knowledge about end user needs or target market. This leads towards creating a wrong product roadmap just on the basis of assumption and hence final solution is disastrous. In the initial phase it is very difficult or even rare sometimes to hire an expert with detailed knowledge of the domain.

Recommendation

  • Start development with whatever known using an existing team/resources

  • Emphasis on iterative development (1-4 weeks)

  • Demonstrate enhancement to end users at the end of every iterations

  • Get feedback from at least 3-5 different users and take their opinions about features, usability experience, performance and design

  • Plan next iterations basis on end user feedback

 

Slower and in-frequent product delivery

Start-up mind-set is having lots of ideas and excitement to deliver them quickly without proper research of end users’ need. Excitement creates improper planning, wrong pressure among the team and that leads to poor quality product. In competitive era, Product-delivery with constant speed is a new strategic weapon and a key differentiator in business success.

Recommendation

  • Achieve high level of Automation through DevOps

  • Bring agility among team members

  • Iterative planning

  • Focus on high business value features. Remember that only 20% of features are being used frequently

 

Technical debt

Technical debt is a term which reflects that extra work arise because of improper implementation of code by the team instead of choosing the best solution.Few reasons behind technical debts are Lack of skills, Extreme delivery pressure, Understanding gap and Lack of collaboration

Recommendation

  • Automatic code monitoring for Coding standard, Cyclomatic complexity, Code duplication

  • Implement test automation

  • Stick to Iterative planning & no change within it (1-4 weeks)

  • Emphasis on refactoring of code on regular basis & make it as a part of Definition of Done

 

Time to Market

Time to market is critical factor for start-up success. Focusing on value creation from the Day 1 is crucial for any start-up.

Recommendation

  • Focus on high business value features. Remember that only 20% of features are being used frequently. Put your money and energy toward making them perfect

  • Implement DevOps to accelerate idea to production at least 30x faster

 

Ignoring the actual Customer need

A good product idea and a strong technical team are not a guarantee of a sustainable business. To meet end user need should be key objective of any start-up. Many times start-up founders think that they know what the customer wants or expects, so they only focus on their passion to build the product and the end user only gets it in their way not like what they want.

Recommendation

  • Regular interaction with end users at the end of every iterations

  • Get feedback from at least 3-5 different users and take their opinions about features, usability experience, performance and design

  • Plan next iterations based on end user feedback

 

Too much emphasis on raising money

Raising money is very time consuming job. It is full time job top of building your business. Start-up founders should ask this question to themselves, Is it really worth to spend your time and attention for raising money from the beginning of start up? Focusing too much on raising money can take away your focus from what really matters to your business.

Recommendation

  • Focus on value creation

 

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