The statistics for starting a successful business in the UK are grim. There’s no other way to put it. About 600,000 new companies are founded in the UK each year. Most fail. In fact, the majority never celebrate their third birthdays.
The media is good at reminding founders of this. Headlines announcing a dearth of opportunity are rife. Our families and friends too often take the same line, as if they were ‘saving’ us from something. They tell us we would find better prospects elsewhere. They might share a link to a job vacancy at Google, as a treat.
Isolation is the principal result of this environment for founders. When the work becomes tough, ‘I told you so’ conversations only make it tougher. We avoid them because we’re obsessed with success. The distance between us and the outside world grows. We become isolated.
Many will blame funding issues or bad ideas for killing startups. Sometimes they’re right. But like a game of Cluedo, declining sales are only the murder weapon. In my opinion, the killer is isolation. You’ve discovered the candlestick in the lounge. The important question is: who swung the fatal stroke?
Who swung the candlestick?
I’m not the first to seek the answer to this question. Tom Eisenmann, a 25-year Harvard Business School professor, has tried too. Having funded companies as an angel investor and sat on multiple elective boards, he’s spent more time than most investigating it.
When Eisenmann tried to find out why so many startups failed for his book Why Startups Fail, he interviewed hundreds of founders and investors as part of his research. The result? Eisenmann discovered that many startups had good ideas, but more often than not they had bad bedfellows. Unsuccessful startups failed to get what they needed from their partners, investors, and core team members at the right time, and in some cases were in a vacuum of partners and investors that weren’t always acting to their needs.
Eisenmann’s solution to the bad bedfellows issue rests on one thing: a brilliant rolodex of industry contacts. Instead of partnering with a friend, he suggests founding the company with an industry veteran. Instead of securing funding from a VC, he suggests convincing an industry player to invest (eg. a garment manufacturer for a clothing business.) It’s one of the main reasons to get an MBA. But for the rest of us, most will never boast that kind of network.
We all need our squads
It might be difficult for founders to recognise that the narrow set of people around them could be the cause of their lack of success. But it’s important to recognise it. It’s also important to set realistic expectations. Harvard Business School grads might have it different, but convincing major garment manufacturers to invest time and money into your high-risk new company is a major reach for most of us.
Having said that, the principle that good connections improve the opportunities for success is clearly true. Good connections might come as a result of fortune but it’s strong, diverse communities that provide the requisite support for success. Based on my time leading one of the world’s most exclusive startup accelerators, the benefits of community arise time and time again.
This aphorism might sound clichéd. Perhaps it is. But for some reason, many founders fail to realise it. They get so caught up in their businesses that they never stop to connect with others following the same journey as them.
This is a problem because one of the most prevalent downsides of the entrepreneurial lifestyle cited by founders is loneliness. Founders face unique problems that none of our family or friends can relate to or, indeed, take seriously. The extreme competition for funding in the world of startups is tougher now than it has ever been. Those who go it alone struggle both financially and mentally.
To succeed, startup founders need to recognise that a plurality of support infrastructure is essential. It’s easy to get lost in a myopic ‘my startup only’ vortex. Bonding with other founders from diverse backgrounds is often the best source of support and context when the going gets tough (which it always does), but also advice for business matters. We may not know someone who owns a garment factory, but someone we know might.
It’s the communities that embrace us, that take us as who we are, and that we choose to immerse ourselves in, help us see straight and prevent us from falling. The pandemic has arguably made us more focused, but are we ensuring we have the stable network to grow? Founders gain a huge competitive advantage when they embrace this. Alone, it just increases their odds of adding themselves to the growing ‘tried but failed’ pile.
About the author: MD Saalim Chowdhury is Managing Director of Techstars London.