In the world of startups, $1 billion Instagram exits are the exception, not the rule. Failure is a fact every experienced startup founder is intimately familiar with. For all the glittering Groupons and Facebooks of the world, there are thousands of festering remains of once promising startups languishing in the deadpool.
The failure rate is so high that Harvard Business School estimates 95 percent of new businesses fail if failure is defined as failure to meet a set projection. This rate falls down to 70-80 percent if failure is defined as inability to get adequate return on investment. The rate goes down further to 40 percent if we define failure as investors losing all or most money put into the company.
Sobering thought, but also something every star struck entrepreneur should consider before plunging headfirst into this pool. Failure is an ever threatening reality in business, and the sooner you accept this fact, the better you’ll fare.
Failure, of course, isn’t the end of this world. Many founders who fail once come back to build big businesses. Others gleam great wisdom from their startup experience and transition to well-paying roles in successful enterprises. “Failure” is not a welcome word in most lexicons, but don’t think that a failed startup sees its founders dumpster diving and living under bridges: most do quite well for themselves even with a failed startup, especially because they can bring fresh perspectives to conventional organizations.
Read the full report on Harvard Business School Working Knowledge –>