What can you learn from a failed startup?

Prajakt Raut
4 min readApr 20, 2018


Studying a startup that was not successful can teach you many valuable lessons

Here are some things that you could learn if you introspect deeply and think about why a startup failed:

About the product/service: Was the product or service relevant to the consumers/customers? Was the experience of using the product/service good? If the answers to these questions are negative, you could learn about what could have been done better in designing the product/service.

Was the value proposition meaningful: I.e. was the product/service addressing a genuine need? Was it solving a problem for consumers/ customers; was it making their life simpler; or simply offering the product/service at a lower price than competition or was it fulfilling an emotional need (e.g. status in the case of premium products). If the answer to these questions is negative, you need to introspect and figure out whether the consumers really had a need for the product or did the startup ‘manufacture’ a need because they invented some product/service.

Was the positioning right: When I was younger, a new brand of packaged burgers was launched under the name ‘Big Bite’. It was an awesome product and priced just right. But, it was actually a mini snack… not actually a big bite. However, consumers, including me, had seen the product being advertised as a ‘BIG BITE’ and expected a ‘BIG BITE”…. and we were disappointed at seeing the actual size of the snack. Now, I feel that if the company had called the snack a ‘Mini Bite’, the product could have been a huge success. This was, to my mind, a big lesson on a great product at a good price-point getting killed because of over-promise and incorrect positioning.

Was the communication clear: Sometimes, even with a great product that addresses a real need if the brand communication is unclear, the company just does not get enough sales as it would have with more appropriate communication. Often companies underestimate the power and importance of quality communication.

Was the pricing right: At the concept test stage, it is critical to test the product/service at different price-points and via customer research surveys (even if not in the actual market place).

Were the processes appropriate for the venture: Operational issues and their mismanagement is one of the most common reasons for startups to fail. Often we see startups do well at the initial phases but falter when it comes to doing the same business at a different scale. Introspecting on whether aspects of operations planning could have been different can teach some very valuable lessons for the future.

Was the team right: Did the team have competencies that were required for the venture. If they did not, did they know what they did not know, and therefore were they able to reach out to advisors, mentors, and consultants, or experts who could have helped them in their journey.

Sometimes despite having a great team, the team dynamics do not work right. It is also important to have one of the founders declared as the CEO. There has to be one person who is calling the shots and where the buck stops. If there are 2–3 or more founders, each one with an equal say in the direction and decision-making, it often leads to chaos. Introspect and see if you went wrong on the people front.

Was the company adequately funded: Many startups burn out despite a good product/service because they run out of funds. The enthusiasm and confidence make many founders more optimistic than practically possible, and this means they end up raising lesser capital than was necessary for the business. Evaluate if the venture was funded right.

Changing the business model often: One of the most common mistakes entrepreneurs make is to make changes in strategy and direction too often and without giving enough time for one strategy to be implemented. Often this change is considered as being nimble and is assumed to be the nature of a startup. However, while it is easier for startups to change direction, it should be a very well debated and a thoroughly considered decision.

Either way, failure teaches you that you do not have the right to take success for granted. It teaches you that your assumptions and your beliefs may not always be right and that you should validate them. It teaches you the value of being frugal, and that being resource-starved actually could lead to more innovation & creativity. It teaches you that planning is important, and failing to plan is planning to fail. Failure makes you stronger. It gives you the confidence to face bigger challenges than you have had previously. It often helps you in gauging who your real supporters & friends are.

Failure forces you to introspect and think about what went wrong and make an attempt to do things differently when you embark on your journey again.

By Prajakt Raut — Managing Partner Supply Chain Labs — Indias first supply chain focused venture capital fund and Founder applyifi — corporate accelerator program management.



Prajakt Raut

Managing Partner — Supply Chain Labs. Founder Applyifi. Entrepreneurship evangelist.