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Warning: 7 Steps To Startup Failure

Let me tell you a story about Joe.

You see — Joe (not his real name) used to be a fired-up and motivated entrepreneur. Huge dream to make it big in the world of business — he set out to build his empire from scratch. Yes — another startup.

But guess what? Joe is now toast. Dry toast with no jam.

And worse? It went from grand to gutter in less than 18 months.

In my role as mentor, coach and writer on Forbes for startup and struggling entrepreneurs — I actually meet many Joes. So many it’s almost impossible to count. And even though each one of them is not actually named Joe; they each share the common bond of disillusionment and despair.

So what happened to all these Joes — so motivated at the start in their quest to be the boss of their own profitable business?

Discover 7 short steps Joe took to land in the ditch:

Step 1 — Joe thinks of a brilliant idea.

Great place to start. Nothing inherently wrong here as a first step because let’s face it — you have to come up with some idea to pursue for your new business. Joe is right on track so far…

Step 2 — Afraid someone will steal his idea; Joe doesn’t really share it with anyone.

Now it gets a little squirrely. Joe has taken his first wrong turn. And yes — we all need to be diligent on how we protect real trade secrets — but in general, it’s a very bad idea to start down this path.

Sometimes Joe tells me he did ask around a little (mainly family and close friends) and everyone thought his idea sounded great. Wrong.

You have to find out if anyone else (namely your targeted customer segment) cares about your idea. And the sooner the better. Customer discovery (or customer development as Steve Blank coins it) is a critical part of the early journey for a startup entrepreneur. Markets are conversations (from The Cluetrain Manifesto) and not monologues. So Joe is now headed for a train wreck and he doesn’t even know it…

Step 3 — Joe spends a fortune in time and money to build his brainchild product or service.

Hunkered down in his cave; Joe builds the Taj Mahal. It’s beautiful but does anyone really want it? Again, because Joe does not have active feedback loops set up with his potential target market for dialogue; and because he is not operating in a lean way while he builds his brainchild — he heads further into the abyss.

Lean and agile development combined with active dialogue and customer conversation is a must in the startup world — even if you’re not building a high-tech venture. The process of testing both your product ideas and marketing messages (lean marketing) with minimal expense and using the feedback to guide you is of paramount importance. Gone are the days of “build it and they will come”.

Step 4 — With a new fancy logo and website — Joe launches his product/service/company to the world.

The day arrives to cut the ribbon and Joe is beyond excited. He has spent a ton of his own money and countless hours building his dream product/service/company. Elated, but exhausted, he releases his grand idea to the world.

But here is the thing: Joe is about to be blindsided because here comes Mack Truck #5 barreling down the road…

Step 5 (The Mack Truck) — Nobody cares.

Yes — that’s right. His grand plan lays a big goose egg.

Why does nobody care? Because Joe completely missed the market. His failure to test, measure and learn from ongoing conversations on the value proposition of his products and services meant he built something no one cares about or needs. Or, if he did happen to build something of value which someone could actually use — he has no idea how to effectively communicate about it because he was not active in discussion and therefore knows nothing of the right words to use.

Talk to any really good marketer and they will tell you it is an artform to tweak words into melodies which cause people to take the action you want them to. And combine art with the science of experimentation and measurement through customer dialogue? You end up holding one of the keys to your secret sauce.

But Joe missed that completely.

Step 6 — Joe is confused, tired and now broke.

In a panic — Joe starts to flail and thrash about. Akin to a swimmer who gets in trouble in deep water but doesn’t remain calm in order to save himself. Joe actually begins to throw any remaining money he has at multiple snake oil quick fixes to get his company going. He lacks direction and enters into even more of a “spray and pray” method of marketing. But the more he thrashes about with failed attempts to get something going, the more he sinks.

Step 7 — Another startup bites the dust.

Yes — Joe finally throws in the towel and heads back to the help wanted section.

The sad part? It didn’t have to end this way. At any point along the path he could have righted the ship. Now I realize this is an overly simple diagram of a fictitious guy named Joe and his startup. But please resist the temptation to think this doesn’t apply to you. As smart as you are, you might actually have blind spots and be headed down the same path.

Yes, I know — but you really do have the next idea to change the world and will really be the next Mark Zuckerberg. And maybe you will — but I will bet the last dollar in my wallet if you follow the 7 steps above you will not succeed.

So you tell me — what am I missing here? Do you think I am wrong? Whatever your thoughts — I’d want to hear them below.

NOTE: If you don’t know me, I’m Eric. Husband, father & life-long entrepreneur.

If you’re an entrepreneur — let’s connect right here — right now.

Seriously. Here’s a proven formula:

Your Wisdom + My Wisdom = More Success

(You can also find me hanging out on Google+, Facebook or Twitter @MightyWiseMedia.)

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About the Author: Eric T. Wagner is a husband, father and life-long entrepreneur. After starting multiple businesses, Eric is now focused on helping other entrepreneurs find the path to success in business and life. You can also catch his gig on Forbes or connect with him on Google+.


  1. Rakayia says:

    I found this extremely helpful…I found this Mighty Wise page by your article on the $100 Startup in Forbes. I am currently reading Chris’s book. I am excited about starting a new business and I can easily see how a person could fall into the path above.



  2. I too have seen these mistakes made by others I know that have tried to start up their own businesses. Unfortunately I also saw one person telling multiple investors his idea (an actual relative of mine) only to have none of them interested in it, then about a year later something exactly like it came out. So it is hard to blame Joe for not wanting someone in a financially able position to steal his idea, but in the end you have to trust someone. Kind of a catch 22 isn’t it. I think I will start going to my potential prospects to see if they are in fact interested in my idea. Thanks eric for this article, it is a great piece of advice.

    • Eric T. Wagner says:

      Thanks Kevin. The one challenge some entrepreneurs face is they don’t understand their ‘idea’ is usually not unique. With so many entrepreneurs in the world working so many different angles, it’s a pretty fair bet someone else in the world has the same idea.

      Thus, the difference maker is those who can pull it off. Execution wins.

      Thanks for sharing Kevin…

  3. How does one get customer discovery or what does that look like? Doesn’t Joe have to have something in hand? Does he have to put some money into his business to show people? How does one get the feedback before building the “Taj Mahal”? Just curious.



    • Eric T. Wagner says:

      Thanks Paul. Conversations my friend.

      Conversations with the market. Conversations with your target customers.

      This is one of the biggest mistakes I watch entrepreneurs make is their misunderstanding about what is needed to first engage the market.

      And yes — at some point you will need to begin creating and giving value in the form of ‘minimum viable products’ with ‘minimum feature sets’. But again, baby steps and small iterations are the order of the day. Not running off to build the Taj Mahal.

      Make sense?

  4. Charlotte says:

    Dear Eric,

    As a budding entrepreneur, I sought some “online help” and insight before I got started. As soon as I came across your articles, I found myself almost almost dangerously addicted. You’ve really got some great perception and writing skills. In addition, your story is incredibly moving and inspirational. Thank you for sharing. Of course, I’ve joined your website and I look forward to hearing more from you!

  5. I have desperately read the Joe failures and I have found out that in most cases we face the same problems with our great ideas here in Africa, because we do not get opportunities to share our ideas with the right people at the right time. Here in Africa so commonly happens is idea plagiarism especially when you share your idea with those who have got money and you don’t have to start off. So what can you advise young African entrepreneurs to avoid Joe scenario and still make it to success?

  6. This is an excellent (and readable) summary of why entrepreneurs fail.

    Good to see someone talking about customer conversation and agile development in business. There’s a lot of overplanning and overpreparing taking place in the wrong areas.

    Certainly finding out if your target customer wants what you plan would be a good place to start, but it’s often skipped. Business plan? Sure – that seems to get treated as a prerequisite, although most are never looked at once completed. Customer aquisition strategy? Not so much.

    “Spray and pray” marketing is sad, wasteful, and marks the beginning of the end of many small business dreams.

  7. Palash Bora says:

    Hi, I am Palash.I want to start a studio business in my small town. But I have no prior experience in business field.I have some big plans but I want to start with some minimal services at the beginning like Album making, Old photo restoration, Photo editing & printing, Calender designing etc. Now I am not able decide properly how to know the customers whether they will need my services or not as some of the the services are very common and 4 to 5 players in my town are already doing it(but with no great quality).Please give me some ideas.

    • Eric T. Wagner says:

      Thanks Palash. Your main objective at this stage is ‘discovery’. You need to discover what the market wants. What their pain points are. How do you do this? Through conversations. Go out and interview potential customers. Talk to them. Find out if they have pain you can solve with your value propositions. Always start with the customer my friend…

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