Death by poor execution: How your startup can avoid failure

As a former venture capitalist I’ve been privileged to interact with numerous entrepreneurs in South Asia and play a small role in some start-up ventures. A few of these succeeded and went on to become large companies while many others failed.

Some ended up as lifestyle businesses – the living dead in VC parlance – and continue to chug along never quite realizing their original promise.

Most of these start-ups had credible solutions targeting large, fast-growing markets, had raised one or more rounds of venture funding and in every case was led by a passionate and committed founding team.

Why then did so many of these businesses fail? Indeed, why do most start-ups fail?

In Silicon Valley – the poster child for entrepreneurship – the majority of Valley start-ups tended to be IP heavy, product companies. Most failed since new product development took up too much time and money and often the products didn’t work. In some cases, the market either wasn’t ready or turned too quickly, and poor execution killed the rest.

The Asian picture is different. Most start-ups here are relatively low-tech with little IP. Many target high-growth consumer markets with either a novel business model or follow a copycat approach, localizing Western success stories (think daily deals websites like Beeconomic or Deal.com.sg).

Still others tend to be service businesses. Capital requirements are relatively low. With non-existent product risk and only limited concept risk, execution turns out to be of overarching importance.

What is execution anyway? It’s the day-to-day stuff that keeps the company moving onward and forward towards the Founder’s vision. It’s where the rubber meets the road, where strategy meets tactics and where pies in the sky confront realities on the ground. Ultimately, it means having the right people at the right place at the right time doing the right things.

I believe 60-70% of the outcome of any business venture is attributable to people, 20-30% to external factors such as market environment and the rest to dumb luck. Time and again I’ve observed that the degree to which a founder is self-aware and willing to stretch himself/herself and evolve can make all the difference between success and failure.

This is especially true in Asia, where most business founders are first-time entrepreneurs and not battle-hardened by past experiences. The smaller pool of entrepreneurial CEO talent also means that founders continue to run operations long after the start-up phase.

Here’s a very incomplete list of dos and don’ts for first time entrepreneurs to minimize their chances of failure:

Do delegate and know when to let go.

In the early days you’re forced to wear different hats and be all things to all people. As the business grows, hire competent professionals and step back from day-to-day operations. For instance, as a technical founder, sales may not come naturally to you, yet you have to don a sales hat, meet customers and close the first few deals.