Why Startups Fail

One of Facebook’s cool features is its habit of occasionally reminding you of your previous posts.  Our friends in Menlo Park recently notified me of a link to an article called The Main Reason Why Startups Fail I forwarded two years ago when my business – Pearson Health Tech Insights, LLC (PHTI) – was still relatively new.  (PHTI helps tech-oriented startups selling into the hospital world hone their strategies to maximize market success.)  As I re-read the article with two more years of helping clients under my belt, I was able to confirm just how easy it for a hospital-targeted product to get derailed.  PHTI’s tagline is If you build it, they might not come.   

The article’s author Gijs van Wulfen presents some sobering statistics.  He cites a study of 2,000 startups financed by venture funds between 2004 and 2010 that reports that an estimated 30% - 40% failed outright.  Only 60% lasted three years or more, and only 35% made it to ten years.  Van Wulfen also references a report by cb insights that presents the top 20 reasons why startups fail.  (Since failures are caused by multiple factors, the total percentages add up to over 100%.)  The top two reasons for startup failure were:

·         No market need – Cited by 42% of the failures

·         Company ran out of cash – Cited by 29%

Other factors were:

·         Poor product – 17%

·         Need for or lack of business plan – 17%

·         Poor marketing – 14%

·         Product being mis-timed – 13%

In addition to these factors which plague startups in any industry, companies selling to hospitals face additional challenges.  A couple of weeks ago, I met with the CEO of a leading medical device innovation center.  Her opening statement reflected what her organization has learned over the last few years.  She observed that most device developers clearly understand the following hurdles:

·         Achieving FDA approval

·         Understanding the reimbursement climate

However, she said they often overlook one that is equally important:

·         Figuring out how to get hospitals and clinicians to actually adopt their technology

And that brings me back to our tagline:  If you build it, they might not come.

PHTI can help any company targeting hospitals sharpen its approach and strategy.  Our signature offering is the Healthcare Marketing Tune-Up Program that consists of three parts:

1.  A review of the company’s products in light of the “7 Ps of Marketing” 

  • Product
    • Place (distribution methods)
    • Positioning
    • Promotion
    • Packaging
    • Price
    • People

2  Suggestions for avoiding the relevant pitfalls PHTI has identified from our list of 79 Pitfalls of Marketing to Hospitals

  • 3 Timing Pitfalls
    • 9 Credibility Pitfalls
    • 4 Product Design Pitfalls
    • 3 Market Misreading Pitfalls
    • 10 Data/Technical Pitfalls
    • 9 Communications Pitfalls
    • 14 Financial Pitfalls
    • 3 Legal/Regulatory/Bureaucracy Pitfalls
    • 2 External Political Pitfalls
    • 11 Internal Political Pitfalls
    • 11 Organizational/Operational Pitfalls

3.  A summary S/W/O/T analysis

 

Let us help you avoid becoming an unfortunate statistic.  Contact me at glenn@pearsonhti.com or (770) 861-6941.   http://www.pearsonhti.com.