However, fixing the cold start problem is a tough one. Chen gives the example of Tiny Speck, the game company that would become Slack. Tiny Speck has it all: a star team, an exciting launch, and $17 million from respected investors (including Andreessen Horowitz, where Chen works). It also has a lot of people trying out the game, called Malfunction. The problem is that it can’t get people to stay.
What is the difference between Glitch and Slack? For one thing, Slack’s timing worked: It anticipated distributed workforces and the need for text logs. But it also benefits from small atomic lattices. People join groups, and when those groups become familiar with the product, they are likely to continue using it. (The magic number, according to Slack, is when a team exchanges about 2,000 messages.) The company has since grown by incentivizing companies to adopt Slack across the entire workforce, incorporating multiple team together on a unified working tool.
Of course, network effects alone cannot explain the success or failure of a startup. Slack is just one of many workplace communication apps that have a similar idea; Not all of them are equally successful. “For every successful launch like Slack, there are many more failures, and they often stumble in the beginning,” Chen admits.
Both Cold start problem and Failure prediction offers the autopsies of several failed companies, but that can still leave the reader scratching their heads. Chen points out that some startups achieve the network effect because they provide free, convenient, and easy-to-use services. Other startups succeed for the exact opposite reason: Their products are exclusive, invite-only, and hard to get. Ananth, in her case studies, identifies problems in various startups without making helpful predictions to avoid those pitfalls in the future.
Another book from 2021 attempts to provide a more comprehensive account of startup failure. Tom Eisenmann, who has taught entrepreneurship at Harvard Business School for the past 20 years, surveyed 470 failed startup founders about why their ventures went south. Their feedback makes up his book, Why Startups Don’t Succeed.
Eisenmann rejects the idea that most failures fall on the founders, and even criticizes venture capitalists for focusing too much on finding the “right person” with the guts. , determination and industry acumen. Instead, he suggests, failure is often caused by misjudging market needs, growing too quickly, and being too idealistic (especially all the things VCs promote). Like any good business school professor, Eisenmann is prepared with a wealth of case studies. He pays particular attention to startups founded by his students — cases where autopsies are almost personal.
Why Startups Don’t Succeed offers six reasons everything goes wrong, including ignoring customer research, finding the wrong stakeholders, and falling into the growth “speed trap” at all costs. Eisenmann emphasizes that these mistakes can be avoided. But more importantly, like Ananth, he advises founders to understand that failure is often part of the outcome. At the end of his book, he gives advice on how to handle failure when it inevitably happens.
In today’s startup environment, raising money can be easy — the hard comes after the hard. Will these books help founders or startup investors avoid disappointment? Perhaps, but in the same way that millions of health books have kept people from getting sick. Diagnosing common reasons for death is one thing. Learning to live healthier is another.
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