Startups fail when they lack focus, says LinkedIn founder
It’s been said that as many as nine out of 10 startups fail. So, what can entrepreneurs do to ensure startup success?
Before diving into the specifics, it’s essential to understand why startups fail to begin with.
CB Insights notes that many startups offered multiple reasons for their failure, but the top reason from their analysis was a lack of market need.
“Tackling problems that are interesting to solve rather than those that serve a market need was cited as the number one reason for failure, noted in 42% of cases,” it said.
One company said in the report, “Startups fail when they are not solving a market problem. We were not solving a large enough problem that we could universally serve with a scalable solution.
“We had great technology, great data on shopping behaviour, great reputation as a thought leader, great expertise, great advisors, etc, but what we didn’t have was technology or [a] business model that solved a pain point in a scalable way.”
Another company, kolos, said: “With Kolos, we did a lot of things right, but it was useless because we ignored the single most important aspect every startup should focus on first: the right product.”
Other reasons that contributed to a startup’s fail include running out of money, not having the right team, and getting outcompeted.
Ensuring startup success
Based on his experience, LinkedIn co-founder Allen Blue believes startups can improve their chances of success with one thing: focus on your team.
Speaking to the BBC, Allen Blue, who co-founded professional network LinkedIn, said, “One of the things that I wish I had known when I was doing my first startup was that when you are at a startup, you’ve got to focus on just one thing.”
He goes on to explain: “Back when we were starting LinkedIn, we had already done a couple of startups and by that point, we really understood the value of focus. In the early days of LinkedIn, we were building a people search engine.”
Blue said the most important thing if he wanted to solve a business problem would be to find another professional who could help him.
“So the most important thing for us, as a matter of fact, the only problem we needed to solve was we needed to grow our network. Because we knew we only had one thing that we had to get absolutely right, we were able to put two-thirds of the company on solving this one problem,” he said.
That focus paid off and “led to fantastic results, great innovative ideas, regular testing and experimentation”.
LinkedIn claims to have over 700 millions users in over 200 countries and territories worldwide.
The professional network officially launched in 2003; BusinessofApps notes that between 2009 and 2019, LinkedIn saw a consistent growth in the LinkedIn membership base, “with quarterly increases tending to remain in the 15-20 million zone pretty much every time”.
Currently, Blue is focusing on driving innovation in LinkedIn, but will never forget that one lesson: focus on your team.
“Your team can be tremendously creative and innovative, but only if you define the problem they’re trying to solve as narrowly as possible,” he said.