Starting a business is risky, but the causes of failure are known, and largely human before being technical. Naming them is already a form of protection.
6.1The first cause: no market
CB Insights' analysis of hundreds of failures is unequivocal: the leading cause is no real market need (~35%), just behind running out of cash (~38%). Start-ups rarely fail because the product is bad. They fail because nobody wanted it.
6.2Cash: the final cause
Whatever the root cause, failure materialises as running out of cash. Monitoring your burn rate and your runway (the number of months of cash left) is a vital discipline: you raise money or become profitable before you run short.
6.3Conflicts between co-founders
Noam Wasserman (The Founder's Dilemmas, a study of ~10,000 founders) shows that 65% of failures have a human cause: tensions between co-founders, poorly designed equity splits, unclear roles. Hence the importance of a shareholders' agreement from the start.
6.4The founder's mental health
A long-taboo subject: Dr Michael Freeman's study (UCSF) estimates that about half of entrepreneurs report a mental health condition. The Sifted 2024 survey confirms it: 53% in burnout, yet 77% do not seek help. Resilience is cultivated; it cannot be improvised.
6.5Protecting yourself legally
- Shareholders' agreement: vesting, good/bad leaver clauses, tag along / drag along.
- Equity split: anticipate dilution and avoid a deadlocked 50/50.
- Intellectual property and contracts: secure the brand, the code and customer agreements from the start.
Going further: the library
International books
The Lean Startup
Eric Ries
MVP, the build-measure-learn loop, the pivot.
Zero to One
Peter Thiel
Building a monopoly, not yet another competitor.
The Hard Thing About Hard Things
Ben Horowitz
Leading through hard times.
The Four Steps to the Epiphany
Steve Blank
Customer development.
The Founder's Dilemmas
Noam Wasserman
The human choices that make or break a start-up.
The Innovator's Dilemma
Clayton Christensen
Why leaders get disrupted.
French-language references
Effectuation
Philippe Silberzahn
The logic of decision-making under uncertainty (after S. Sarasvathy).
Tout entrepreneur est un explorateur
Bruno Martinaud
École polytechnique.
L'Âge de la multitude
Nicolas Colin & Henri Verdier
The platform economy.
The reference French Tech media outlet
Maddyness
News and analysis (maddyness.com).
Sources
CB Insights, Why Startups Fail; N. Wasserman, The Founder's Dilemmas; M. Freeman (UCSF); Sifted 2024 survey on founders' mental health.
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