Why Entrepreneurs Fail

Tom Altman's Wedia Conversation :: A conversation about technolology's impact on media.

Posted by tom.altman on January 30th, 2009

: Image by bootload via Flickr

Why 99% of Entrepreneurs Fail: Because they don’t do anything.

There are three types of amateur entrepreneurs out there, and in my young life, I’ve been every single one of them. By coming to terms with my failures, I’m more prepared to classify which type of amateur entrepreneur I am, and thus preventing myself from failing in the same way again.

Type 1 Amateur Entrepreneur: All ideas, no implementation.
Let’s admit it. All of us have at some point thought of the brilliant, billion dollar idea. We brainstormed it out, thought about how rich and successful we’d be from having thought of the idea, then dreamt about living lavishly in a penthouse overlooking Central Park with enough money to feed every starving child in Africa. I’ve done it, and I know you have too. The problem lays in the fact that most self-proclaimed entrepreneurs are great at dreaming and envisioning their business idea, yet they lack the capability (and even willpower) needed to see it through. In my honest opinion, these people cannot be considered legitimate entrepreneurs if all they know is dreaming and allocating the task of implementation to others.

Type 2 Amateur Entrepreneur: Lots of ideas and half assed implementations.
These entrepreneurs think of good ideas and have the willpower needed to start working. However, they take the “fail fast” mentality way too far – they’ll launch a prototype of their project, put in almost no effort in getting it noticed, then call it a failure. Or even worse, I know of some entrepreneurs who dedicate months of their time working on a startup idea, but never end up launching. If you’re going to fail, at least make people think that you spent your time semi-wisely. Alternatively, type 2 amateur entrepreneurs have multiple ideas that they’re simultaneously working on, and figure that they’ll get rich from at least one of them. To you and me, this is obviously flawed logic. But at one point, I was a type 2 amateur entrepreneur.

Type 3 Amateur Entrepreneur: Lots of ideas, lots of implementations, and absolutely no focus.
Type 3 entrepreneurs are marginally better than type 1 and 2 combined, but they have absolutely no time for anything other than their work. They make a solid attempt to see their business idea through, but get distracted by the idea of another growth opportunity. I feel bad for these people more than anything – they try harder than both type 1 and 2 entrepreneurs, yet they often see just as devastating results. (and mostly on their psychological well-being)

I usually hang out at #1, maybe once or twice at #2 – never #3 for some reason.