Why Startups Die

I never thought I would fail. For 7+ years I think that's what drove me. Then things changed. Life changed. They attribute it to burnout and often that is the case, but you have to also factor in life and motivation changes. If the success doesn't come soon enough, you start looking towards other things, other aspects of life, if I may even say, more rewarding and real parts of life. Startups are a microcosm of what life is about, but we get hung up on the outcomes, our identities become intertwined with the mythology of the founder. It's important to break free of some of these notions and this retelling of the narrative even for failed founders in the way of "it's burnout", "lack of product market fit". Life goes on. We should look at these more as experiences to learn from, phases of life and then many go towards the next thing, and that's OK. To any failed startup founder here, it's okay, move on with life, try again, just keep going.

A lot of this “startups commit suicide, not homicide” framing feels like it pathologizes what is often a rational choice. Most founders don’t “give up” in some moral sense, they just run out of personal runway before the company produces enough evidence that the sacrifice is still worth it. Cash runway is visible on a spreadsheet; emotional runway, health, relationships, and opportunity cost aren’t, but they’re just as real a constraint.

What I’ve seen kill companies is the mismatch between those two curves: the time it takes to get real signal from the market vs the time a small group of humans can tolerate living in permanent crisis mode. In a ZIRP world you could paper over that with cheap capital; in 2025 you can’t. Calling that “suicide” makes it sound like a failure of grit, when it’s often just updating on new information about your life and the macro environment and deciding this particular lottery ticket isn’t worth any more years.

I'm wondering if the culture of an "exit plan" may be a contributing factor.

I grew up in a world, where companies were supposed to be ongoing concerns, with no end in sight. You established a company, and worked towards achieving at least an equilibrium, if not growth. Most brick-and-mortar companies are like this. The focus is on the product/service provided by the company, and all efforts are devoted to maximizing efficiency and steady profitability. Plans are made with a long view, as the company needs to be around to support their product. I know a lot of folks that own/run standard companies. None of them want to sell the company (it does happen, but it's an unusual thing; usually around the time they want to retire).

A standard company might consider an IPO to be their "exit."

Tech companies seem to have the company as the product. They have a plan to "exit," i.e. sell the company. That means they work on making the company, itself into an attractive package, and their product/service is simply a tool to maximize the company's attractiveness. In this case, descending into debt, in order to make the company look good in the short term, makes sense.

I could see this resulting in a situation, where the product made by the company is doing OK, but the company is not succeeding in being sold, so is considered a "failure."

I had some savings during the pandemic and I needed to choose between down payment for a house or fund my patient monitoring venture. I had contact with few care home chains and very positive feedback and even agreement for a test run. I was pussy and went for a home. Couple years later no semiconductor parts were available anymore and I was super happy with my cautious decision. I heard of few hardware ventures, which died during part shortage. What an unfortunate time. There was a product, market opportunity, but simply no production material.

The original sensor got discontinued, I have some savings again and would love to try the same with radar approach. Anyone willing to analyze well being of old people from radar data together?

I think this article is "why startups died pre-2020", rather than "why startups die [now]".

Lots of this article relates to the reasons startups died when cash was freely available - both from VCs and from the markets you were trying to find product in. For example, if you started an online learning company in March 2020, you'd have hit product right away (along with a thousand competitors), and been lathered with cash from every direction. But three years later, all of those startups were struggling, and I don't know of _any_ that survived. That's not a case of the business owners in 1000 discrete companies giving up. That's the entire world economy reverting back to in-person learning, and the disappearance of the ultra-low interest rates for the company to fall back on while it pivots.

In 2025, founders need to be acutely aware of exogenous factors, as they can be business-obliterating events without the social safety net of 0-1% IR.

4x founder with 2 exits. The only time conflict arose or I felt like giving up was when we weren't growing. Growth and sales can heal just about all wounds (not all, but just about all). These types of articles always seem to point out the symptoms, and not the cause.

The symptom of wanting to give up is because you aren't growing fast enough

The symptom of founder turmoil is because whatever strategy you're currently using isn't growing the company fast enough

The symptom of running out of money is because you're not hitting your sales targets

There is obvious survivorship bias in the analysis throughout this article. You could reframe it as startups that succeed done have these problems - well, duh! Edit: actually the more i go through it, it sounds like chatgpt prose, especially by the end.

In my experience writing tech history, the most common reason is money. The second most common reason is entering a crowded market with little differentiation. The second reason could have been solved by marketing, but many in the industry are allergic to marketing.

If you are building a better <insert product here>, this must be heavily and clearly marketed. Otherwise, people have zero reason to switch. Why mess with what's working?

Additionally, just being cheaper doesn't make a product better. If I were starting a new effort, the cheaper part might be enough. If I already have stuff in production, cheaper isn't sufficient.

Feel free to tell me I'm wrong, but these are my observations.

I worked at 2 startups. Both failed.

The first had been around for about 4 years when I joined and had products that made money. They were trying to get acquired. They had partnered with 2 companies making products specifically for them. One of them offered to buy the company for $30 million but the founders thought their company was worth $300 million. They said no and then money started to run out and people started leaving. In the end the assets were sold for $2 million.

The second startup was created by former coworkers and I joined after it had existed for 4 months. We worked like crazy for the first year and got our prototype out. We had a lot of interest but it took me a while to realize that the 3 founders already had net worths from $5 million to billionaire level. When I heard about offers in the $30 million range they just weren't interested in selling for so little. I left after 3 years and the company floundered another 2 years until they shut it down as people left.

annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness

annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery

Of course almost all startups expect a long live, but strategically it may be better (for the founders) to close when the fundamental assumptions are no longer valid, in order to do a future clean restart in a brand new endeavor (usually after a detox period).

This seems to miss diagnose the issue as suicide but really the startup wasn’t having success. If the company isn’t making money, then yes you run out of runway, you get founder conflicts etc. Saying this is suicide is missing the point.

If you are failing giving up is sometimes the right option. Many startups are based on assumptions/predictions that turn out to be wrong. And it is hard to pivot if you’ve spent the money and committed or not worth it if your cap table is wrecked.

BTW this mostly read like it was mostly written by AI. The various bolded text, missing the point, and emdashes.

There's a huge difference in startup cultures too, I noticed the European regions are more focused on organic growth while US startups tend to aim high. I've been a solo dev in a startup with like 4 people for little over a year now, the business exists since 2 years and we are somewhat even on expenses vs income now. Growth is pretty slow, but as long as we break even its been pretty good.

i can say with 98% confidence that this is written by an LLM

There are some good nuggets of wisdom here, and I think the author should be less crass about "startup suicide"-- it's just an organization and it failed. If someone outside of the founder team is calling it a suicide, they need to go touch grass. SV VC's are so dramatic.

9 out of 10 startups fail? Where is this statistic from? Every single I see this troupe repeated I wonder why people don’t question it.

Many are gambles, many are funded by those who know buzzwords but not the actual market or viability. Once that funding runs out, often the buzzword has moved on to something new so no more funding can be gained. You have to find a way to make money without funding in that period. The key issue is trying to grow too fast with too few solutions. If you can solve a problem for people then that is giving you a good chance of survival.

To me it doesn't seem the author made a honest effort to understand how start ups function, why they fail or succeed. It's a low quality piece, if it is even wrote by a human.

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