Okay, up front? Most startup advice is recycled nonsense, passed around by people who’ve never actually watched hundreds of companies quietly die. Startup failure isn’t mysterious, it’s patterned. Predictable. Boring, even. The frustration is that founders keep making the same mistakes while congratulating themselves for “learning fast.”
If you’ve been around accelerators, demo days, angel groups, or Slack channels long enough, you start seeing the same corpses in different clothing; different logos, same obituary. What follows aren’t “mistakes.” They’re death patterns. If you see one, you should already be nervous. If you see two, you should stop. If you see three, congratulations, you’re rehearsing a postmortem that we’ve already heard.
So, some patterns, and it struck me that one of these directly contradicts some of the most popular startup pitching advice ever given…
Article Highlights
1. The Solution Looking for a Problem
This one never goes out of style. “I built this really cool AI thing… now I just need to figure out who wants it.” That sentence alone should disqualify you from raising money (who am I kidding, it does disqualify you).
The tell is always the same. You describe the technology before the problem. You light up talking about architecture, models, features, integrations. When someone asks who it’s for, you squint a little and say, “Well, potentially anyone who…” No. Stop. Nobody asked for this.
Research backs this up in painfully obvious ways. CB Insights’ long-running postmortem analysis of failed startups consistently shows “no market need” as the number one reason startups die (aside from a bad team), cited in roughly 35–42% of failures depending on the year. That’s not bad execution. That’s building something no one wanted in the first place.
This pattern thrives because builders confuse capability with demand. Engineers, especially, mistake “can be built” for “should exist.” Markets don’t reward cleverness, they reward relief from pain.
2. The “It’s Like X But for Y” Pitch (Yes, This Is the One That’s Wrong)
This is the sacred cow I’m happy to tip over. You’ve been told by investors, mentors, decks, and Medium posts that the fastest way to explain your startup is to say, “It’s like Uber for dogs,” or “Shopify for healthcare,” or “Slack for construction.” Cute. Familiar. Completely misleading.
When you pitch this way, you’re telling everyone you don’t understand your own business yet.
Analogies compress thinking, they don’t clarify it. When you anchor your identity to another company, you inherit their assumptions, their market context, and their constraints (most of which don’t apply to you). Worse, you train investors to evaluate you as a derivative instead of a solution.
This problem has gotten dramatically worse in the age of AI. “It’s like [X] but with AI!” isn’t a pitch; it’s a confession that your product can be recreated in ten minutes by anyone with access to ChatGPT. If your differentiation disappears when OpenAI ships a new feature, you don’t have a moat, you have a timer.
Harvard Business School research on competitive advantage makes this painfully clear: durable companies are built around unique value creation, not borrowed framing. Substitutability is death.
If your idea only makes sense in comparison to someone else’s success, you’re behind.
3. The Zombie Market
Some markets look alive: they have blogs, conferences, trade associations, and white papers. “Thought leaders.” What they don’t have is a grave marker acknowledging the dozens of startups that already tried (and failed) to make more work.
Zombie markets consume founders. They shuffle forward, moaning about “timing” and “education,” while quietly killing every new entrant. Everyone’s tried. Everyone’s failed. And somehow you think you’re the exception.
Literally, every single Event / Ticket / Things to Do startup I’ve heard about since 2004 is, I know, doomed, because they aren’t even doing what was already successful then… they’re trying to solve a problem in a completely DEAD way.
This is not about competition making it impossible; healthy markets support multiple winners. Zombie markets don’t support any. When you Google your idea and find twenty dead startups with eerily similar positioning, that’s not validation, it’s a warning label.
Economists call this path dependence and market saturation, but founders experience it as slow, confusing resistance. Entrepreneurial recycling happens in healthy ecosystems and how the absence of recycling solutions into new innovations signals structural problems in a market:
If no one survives long enough to become an acquirer, customer, or platform, ask yourself why before you become entry number twenty-one.
4. The One-Time Use Tool
This one hides behind “MVP thinking.” You find a real problem, but it happens once a year; or once per job change; or once per crisis. You build a beautiful product. People say, “That’s useful.” And then they never open it again.
Usage frequency isn’t a metric you want to discover later. It defines your destiny now. Recurring revenue requires recurring pain. If the problem disappears after it’s solved, so does your business.
Low-frequency usage correlates directly with churn, low lifetime value, and failed expansion. Let’s be frank, this is precisely why we have a bit of a challenge in healthcare pushing for preventative care to be prolifically available – it’s not that healthcare community doesn’t want to but there isn’t much money in eliminating problems. Products with infrequent core actions struggle to maintain revenue retention above 100%, which is table stakes.
If your best case is, “They’ll use it again next year,” you don’t have a startup, you have a feature.
5. Customers Said It’s Good
Okay, my article headline lied, I have two bit of conventional wisdom that are b.s. Customers aren’t lying to you, it might be good, but that is NOT market validation and that feedback alone is misleading and irrelevant to your success (because come on, if you don’t know it’s good and you need customers to tell you, you probably aren’t right for that startup, are you??)
Customers don’t want to hurt you. They don’t want to look stupid. They don’t want conflict. So, they nod. They encourage. Heck, they want the solution. They say things like, “I’d totally use that,” which is not the same as actually pulling out a credit card.
Real validation comes from strangers who owe you nothing and still choose to pay. This isn’t opinion; it’s behavioral economics: stated preference is unreliable. Revealed preference (what people actually do) is all that matters. Nobel laureate Daniel Kahneman spent his career explaining why humans are terrible at predicting their own behavior, especially in hypothetical scenarios (worth some reading).
If the only people excited about your idea already like you, you don’t have market validation. You have emotional support.
How Startups Avoid Failure in These Traps
The fix isn’t complicated: You have to talk to strangers, not friends (and not just customers). It’s funny the number of times I say this and have some supposed startup advisor tell me I’m wrong. 200 random people is worth FAR more than a dozen potential customers; you’re a startup, not a business that can just close customers. More, you have to look for “hair on fire” problems; situations where people are already hacking together ugly solutions because the pain won’t wait. You have to actively search for failed startups in your space and learn why they died instead of assuming you’re smarter (you’re not). And you have to ask the one question founders dodge because it’s brutal and clarifying: would I pay for this if someone else built it?
Notice what’s missing here: pitching tricks, clever decks, demo day theatrics. None of that matters if you’re standing on one of these fault lines.
Startup failure isn’t random. It’s patterned. Once you see the patterns, you can’t unsee them. The question is whether you’re willing to admit which one you might be standing in right now and whether you’re brave enough to change before momentum turns into rigor mortis.
If you’ve spent enough time around founders, investors, or ecosystems, you’ve seen these deaths play out in different disguises. The interesting work isn’t pretending they don’t exist, it’s recognizing them early, saying it out loud, and helping founders not repeat what everyone else already proved doesn’t work.
All are valid sources of failure, but you missed the most important one.
Cash management.
In my expereince running out of cash is the most common cause of failure.
You might argue is it an outcome of the five you note, but too it is the cause.
Allen Roberts not in startups
You start without cashflow and you’re not getting funding to start. Make it work until it does
New business? Of course. Startup? Nope, this misleads founders to focus on cash and revenue, and overwhelmingly most startups fail despite having that. It’s a false positive signal.
I disagree with the notion of excluding cash from the list.
No business starts without cash, nowadays it is often a few dollars for a domain, computer, and materials for a MVP, Nevertheless it requires some cash.
A little further down the track, later, I have seen businesses fail by being successful.
They beg, borrow or steal to fund orders, misread pricing, competitive response, and many other things, and simply run out of runway.
Allen Roberts I expect as much, it’s okay; you keep using the word business. I’m talking about startups.
By separating ‘start-up’ from ‘Business’ are you not splitting hairs?
I have yet to see a start-up that did not set out to be a business. Equally, every business begins life as a start-up.
Allen Roberts I truly understand what you mean here, its already becoming a pandemic for African startup nowadays. I still believe one of the true test of entrepreneurship is how you can manage cash flow even while starting with less or nothing most times.
Feel free to dispute this, cos I have obviously not seen a startup whether in my own lifetime or in history that grew at scale without proper cash management. What am even seeing now is most startups failing with even much funding while those that are grounded in money management still stay alive for decades.
Allen Roberts not remotely. This mindset is precisely why my work is popular and my articles resonate.
A startup is a temporary venture in search of a new, repeatable, scalable business model. It’s the very definition of NOT yet a business but might be.
A new business is also extremely not that, it’s a new instance of an existing business model.
That distinction means everything in our economy and accounts for far too much of why advice is bad, investors misleading or disappointed, and founders confused.
Simply, a new business can and should be expected to deliver to customers, immediately; how and to whom is known. A startup is explicitly not that for the foremost reason of explaining to people that what the founders are doing is not that.
An interesting distinction, not one I have thought about in the terms you describe.
Every nascent enterprise (business, start-up, whatever you choose to call it) I have been involved with or observed is searching for that magical combination of business and customer value model that will enable commercial sustainability.
I always try to simplify by removing as much as can be possibly removed while retaining the customer value delivery. Amongst the common simplifications is nomenclature, which often gets in the way of clarity.
Allen Roberts most often in my experience founders ‘run out of money’ because they’ve run out of customers – because they can’t sell or built something no-one wants.
Phil McSweeney certainly common. Having money is an outcome of doing many things well, most importantly, identifying and serving customers. However, many startups make poor pricing choices, their business model sucks, or that do not understand the drivers of customer value., so concentrate on the wrong things,
Many factors contribute to running out of money, but the common denominator is they do not identify the problems that will lead to the ‘run out’ early enough to make the necessary, often very hard choices.
Allen Roberts You are right. Most of the kids (founders) don’t know how to manage cash. Older founders, especially repeated founders have that skill, and that makes huge difference. Just VC don’t care much about that.
Allen Roberts is 100% correct here. Not the only reason, but certainly losing runway to reckless spending or just poor cash management (whether your own, friends and family, investors etc) is the #1 reason I’ve seen startups fail. This can happen at any stage. One of my investors taught me this lesson real early – it shaped everything for me in my startup – from hiring, product development, marketing and most importantly, how I ultimately developed my business model. That discipline was gold – something I carried throughout until getting acquired.
The not so secret formula for making a profit:
1. Solve a problem someone you know actually has
2. Who is willing to pay you to solve it for them
3. At a price above what it cost you to solve it for them
If you cannot say yes to all three of those you have a hobby
This is Absolutely correct, David
Well said, Paul O’Brien. The most telling failures aren’t random — they’re predictable patterns of misread demand and weak validation.
I especially liked the call-out on analogies (“it’s like X for Y”) — they often mask the absence of real customer proof. The discipline is learning before scaling, not explaining after.
Pure Wisdom: “The frustration is that founders keep making the same mistakes while congratulating themselves for ‘learning fast.'”
While learning is absolutely essential to venture success, it appears the entrepreneurship community has created a culture of faux learning. That’s not at all good for the faux learners. But, it certainly hands over the advantage to the actual learners.
Venture With Vision
How do we look at these? Symptoms of insufficient planning. A good plan shows that you’re offering a good solution for a problem that needs one. A good (short) plan shows us that you KNOW what you’re talking about (“If you cannot explain it quickly, you don’t know it well enough”). Zombie markets can be revived, with truly innovative solutions to problems. The one-time-use tool is only good if your target market is a heartbeat. Validation is key, and you’re quite right. Just having people say, “Yeah, that sounds like a good idea!” isn’t worth investing 10K man/hours and your retirement savings. Startups must really FOCUS on the problem they’re solving, offer a truly innovative solution – and PROVE it works, and line up paying customers. THIS is how you validate your product/service. However, it DOES take time, money, and quite a bit of effort to get this far. That’s the essence of entrepreneurship. What are you willing to sacrifice to get this far? Love your articles!
I liked this. And I think there’s overlap in these points. A very good friend and successful entrepreneur taught me that you need a “3-legged stool” bare minimum in a startup, where the legs are team, execution, channnel. A loss of any one of them, is a guarantee of failure. It’s the best distillation to evaluate my own ventures both as an operator and as an investor. Kaushik Thakkar thank you.
Amit Rohatgi agreed
And really, team is what determines and pulls of the other two, or is incapable of doing so
Amit Rohatgi interesting to see this “3 legged stool” startup requirement. Another one that i have heard and frequently used is to assess the probability of a startup product success – 3 legged stool of technical feasibility, within social norms and acceptable within the regulatory framework. If either of these legs is missing or weaker – it requires so much friction in product marketting that a startup is better off waiting it out for the big companies and deeper pockets to do the ground work to establish that leg.
Amit, absolutely agree!
Your missing the biggest: No vision on how they could become a 10M scale-up themselves. It sounds simple, and it is..
So true—failure leaves clues if we’re willing to see them; always up for connecting and swapping lessons on building things that actually survive.
I read with my hands clenched, “Am I on this list of Startup Failure Predictors?” I am thrilled to report not even close yet I recognize so many times I was almost all of them at different early stages. Great article, and maybe you can take some time to see POPOLOGY® Yourself? http://www.popologynetworks.com
I’m not looking for good, I’m looking for all caps
Paul, I really must complement you on the quality of this and your previous articles. They are well-researched, carefully considered, and exceptionally written. Bravo!
True
This is painfully accurate. I’ve watched smart, driven founders hit all five of these. Usually without realizing it until month 12. The line between “visionary” and “delusional” is often just real demand. If you’re not solving something painful, frequent, and paid for today…
you’re probably rehearsing failure.
Alex Canupp hit all 5?! I can’t even imagine, that would get from me a, “just quit, quit now, trust me.”
We see “The Solution Looking for a Problem” often in #HigherEd. Research inventions looking for #commercialization.
Jordan Jocius welcome to my next article following up on my last article
Jordan Jocius, not as controversial as the previous but here’s another take on the issues with IP commercialization: https://www.linkedin.com/pulse/ip-trap-how-licensing-knowledge-became-tax-progress-paul-o-brien-om9dc/
Absolutely loved the articles. The listed “mirages” can be very pursuasive. I believe that the highest priority in a startup is a real market; a large group of spenders with real buying power, a clear channel of distribution and track record of chasing “new and improved”. The second priority is the ability to foresee where that market is going.
No 4. is a good bis model if your running a fitness studio: ppl are willing to pay annual fees that also recure if not cancelled on time
So charge 500$ a yr for 1k memberships
Its enough to run 1 studio so build 10 and voila your moving to a 5m recurring bis model
Its perception
Simon G. Sure. A new fitness studio isn’t a startup.
Paul O’Brien of course it is
If its a bee studio model. Why would it not be a startup?
I think we need to define these terms first
Happy to argue into 2026
Simon G. They are defined. A startup is a temporary venture in search of a new, repeatable, scalable business model.
What aspect of a fitness studio is new and temporary?
That is very true, Paul, Most startups don’t fail from carelessness, they fail by building before clarity. The cost is wasted time, delayed investors, late pivots, and burnout. We built #SIRQC as a pre-flight reality check to help founders decide: Go, Refine, or Pause.
If you’re building right now, what’s the one assumption you’re most unsure about?
Thank you, such a great text!
Just adding a bit: Incidentally, Kahneman made many mistakes in his book, he later confirmed that.
https://replicationindex.com/2020/12/30/a-meta-scientific-perspective-on-thinking-fast-and-slow/
Illia Kushch nothing in economics is right or wrong (well, sort of)
Paul O’Brien Well, marginalism is good as a final test of many economic theories.
Thanks for Sharing.
Patterns are startup spoilers—guess we all need better scripts!
Great post.
How about you to talk before the kick off?