Taking the world by storm, startup culture is hugely appealing to Millennials and driving many to take risks for the profound possibilities of success.
An article from Statista states that the startup funding across all industries grew by at least 50 percent between 2012 and 2017.
“Investment in startups has become very popular in recent years, with more and more investors recognizing the potential fortune to be made from supporting the right startup,” Statista reports.
Sophomore information systems major Ujjwal Bhattarai said that everyone wants to know they are contributing to society in some way, and that drives the whole startup culture.
“In earlier days, it was a struggle to get [an] idea moving, and today, almost everyone has a plan,” Bhattarai said. “The rapid development of technology has shaped this market perfectly. It has allowed vast access to communication and capital to fund groundbreaking ideas.”
While the business community is growing, challenges are equally surfacing.
There are plenty of success stories like Amazon and Facebook, but with more and more people trying to replicate this model of success, nine in 10 startups fail, according to Fortune. The number one reason? There is no market need for the business.
Fortune also shows the practical reasons why so many businesses fail, with insufficient funds, inadequate team formation and a lack of business model placing in the top 10.
With these planning mishaps in mind, Professor of Business Administration Hermilo Jasso explained that launching a successful startup is not as easy as major companies make it seem.
According to Jasso, it is not as simple as seeing other people creating billion-dollar business models and then believing anyone can achieve that same benchmark with just an interesting idea.
“Not everyone can make it,” Jasso said. “We have thousands of businesses. The majority of them don’t work.”
One example is the Fyre Festival, a luxurious musical event planned in the Bahamas in 2017. The organizer, Billy McFarland, promised an extravagant three-day concert on the beach, advertised with promotional videos of models and a website featuring lavish descriptions of the lodging arrangements.
When guests arrived, next to nothing met their expectations, and the festival turned out to be a fluke. Currently, McFarland is serving a six-year sentence in prison for wire fraud.
Jasso explained that, like McFarland, people are prepared to take unimaginable risks at the prospect of success, sometimes going so far as to put their mortgage payments towards their businesses instead of their homes.
“In order to keep it floating, people begin to compromise their work and start deceiving individuals so that they can make it in the long run,” Jasso said.
Also in the list of failed startups is Elizabeth Holmes' Theranos, a blood test startup that promised diagnosis of cancer and chronic diseases just with one drop of blood.
With this idea, Holmes, a Stanford University dropout, sparked excitement, and Business Insider described Theranos as “a revolutionary idea thought up by a woman hailed as a genius who styled herself as a female Steve Jobs.”
However, concerns arose from former employees of Theranos, and the FDA started looking into the company. A 2015 investigation launched by journalist John Carreyrou brought Theranos into the concerns of the medical world when he reported that the company’s Edison devices were not reliable.
As the details of the project unfolded, Theranos was revealed to be a scam, and Holmes is now charged with nine counts of fraud and could face 20 years in prison.
As the Fortune article delves into the many reasons startups fail, it shows that success is tied not only with planning but also presenting the right thing at the right time.
It seems, then, that success is not an exact science, and young entrepreneurs are left to find their own way.