May 25, 2020
Why Startups Fail – Weak Execution
I once worked for a company in the telecom industry whose Director of Sales was highly reactive to prospects and would promise them every feature possible. He would then meet with the CEO who had accepted a large investment from the Sales Director’s father to start the company. Whenever the Sales Director came in with new feature requests, he felt compelled to add them to the product requirements prior to launching our first product. We were selling integrated inboxes for small businesses, along with a suite of other modules you could add on, like IVR, Inbound Call Management, etc. We were ramping up a new sales channel – computer network installers – who could make more money selling these phone related services as well.
Every time a requirements document changes, we in the business call it “scope creep”. A simple project may need to be entirely re-written due to a new feature. There were several times, after the CTO was called in that shouting ensued, doors were slammed and I hoped against hope that the CTO wouldn’t quit. I had learned a lot from him and because he took a chance on me, he taught me everything I know about user interface experience and design.
This company had a small sales force and they weren’t making sales with our traditional offerings to trunkers who sold, installed and customized PBX switches and telephones. We were running out of money quickly. We were doing a few trade shows and I managed to get the CTO up speaking about our new technology, and also executed a press tour once we had our minimally viable integrated inbox for fax, emails and voicemails. It was very successful. So successful that even before we sold a single box, Nokia bought the company for USD $56MM, put the tech in a closet and took all of our tech staff with them. Everyone else was let go.
This case shows a failure to execute, and we were very lucky that Nokia showed up when they did. Most failed startups just can’t execute in a timely manner. Some show a huge lack of judgment. They work too hard on product features, and too little with the market. They build too many “nice to have” features into a product while other similar products are launching in their industry, so they did not launch in time and lost market share before they even had a chance. Maybe they did not work hard enough to build a user/customer base. Didn’t manage expenditures well enough. Failed to identify opportunities, failed to build strategic connections…
Good companies can be strong in their tech, but weak in their marketing. Good companies can be strong in their marketing, yet weak in their tech. Great companies are strong at both. We were lucky we were strong in the marketing department because without it, the company would have disappeared, not because of the CTO, but because the Sales Director was delaying the project over and over. He was a weak salesperson because he could not manage customer expectations. If it wasn’t for marketing opening new sales channels, getting out to speak at trade shows and doing that press tour with the first iteration of our basic product, Nokia never would have come knocking with a check in hand.