No one should look on Startup failure as only a negative. Most of the learning we do as humans is from example and experience. It is important to look at the reasons some startups do not succeed. Recently, Pando Daily posted an article; YC grad Leaky quietly shuts down, a valuable lesson in disruption. Disruption of a traditional business model is a classic startup strategy. This is for very good reason as documented in the classic work The Innovator’s Dilemma by Clayton Christensen. Yet there are high barriers to disrupting a traditional business. In the analysis written on Pando Daily, the lack of industry knowledge was cited as the most likely reason for failure.
If you are disrupting a traditional business model, it is critical that your team have deep experience in the traditional industry. As most who build startups know, validating your assumptions is critical. Without the knowledge of the traditional industry, assumptions will likely be wildly out of sync with reality. Traditional industries are often described as “mature”. What often comes with maturity is complexity. The startup focused on disrupting an industry must first have a thorough understanding of that complexity in all of its forms.