Common Failure Points for Startups

HCM tech startups may fail for many reasons. It’s conventional wisdom to blame most failures on “undercapitalization.” But only a complete lunatic would blame a lack of money on the failure of most HCM tech startups. The truth is that most of the startups we meet with have more money than they know what to do with and are often encouraged to spend it in reckless ways.

Another popular myth is that HCM tech startups fail because they have a bad product. Although the inability to produce at least a minimally viable product may be a valid cause for failure, it’s important to recognize that the “best” product rarely wins. All differentiation and advantage derived from technology is temporary; it’s only a matter of time before the competition catches up with similar features and benefits. In your mind, the competitor’s technology may be a cheap knockoff of your superior product. But many superior products end up in the junk pile while many mediocre products end up dominating the industry. Over time, product quality becomes increasingly important, but in the first wave of a new market cycle, brand growth is much more important than product quality.

The true failure points in the HCM tech segment are less obvious than money and product quality, but more confounding and insidious. I’ve already written too much and I haven’t even gotten started, so I won’t be able to share every failure point with you — but below are a few of the patterns we have witnessed time and time again that cause many startups to lose their way and end up in the junk pile.