Why Startups Die | Hacker News Reader

Why Startups Die

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I never thought I would fail. For 7+ years I think that's what drove me. Then things changed. Life changed. They attribute it to burnout and often that is the case, but you have to also factor in life and motivation changes. If the success doesn't come soon enough, you start looking towards other things, other aspects of life, if I may even say, more rewarding and real parts of life. Startups are a microcosm of what life is about, but we get hung up on the outcomes, our identities become intertwined with the mythology of the founder. It's important to break free of some of these notions and this retelling of the narrative even for failed founders in the way of "it's burnout", "lack of product market fit". Life goes on. We should look at these more as experiences to learn from, phases of life and then many go towards the next thing, and that's OK. To any failed startup founder here, it's okay, move on with life, try again, just keep going.

I'm closing my startup this month after five long years of toil and daily struggle. There were many times where we were just one step away from financial success that could have 10x the company. It always felt like we were just "so close" to making it. After years went by, the long hours, stress, and constantly uncertainty made me want my old life back. At this point, I'd rather do boring contract work where the success definition is clear.

Sometimes we need a reset. I think after some time away you start to gain clarity and then you understand what went wrong or what didn't work. And then if you want to decide to do it again, you can with a better perspective, but you can equally find more value, the same value elsewhere. Some people find contributing to a shared mission elsewhere also works. I hope you figure things out.

I somewhat failed my last 2 startups as well. None turned into a huge success. But the friends along the way and the contacts sticked. I think the most important thing is that you learn from those failures and improve for the next one!

My own experience presiding over startup failure was excruciating. I had a serious personal breakdown that took a couple years to recover from. There was the burnout, but also a deep sense of guilt, weakness, and personal failure. Articles like this can inadvertently heap on guilt, insinuating that a founder "stopped trying" or "lost heart", as a if a better or stronger soul might have prevailed. But sometimes, closing the doors is the right thing to do.

For other failed founders out there... I found very few resources that could help me navigate the aftermath, so I wrote the book I wish I'd had. It's a passion project, so I give it away for free. It's titled "Eating Glass: The Inner Journey Through Failure and Renewal."

Amazon/Audible link: https://www.amazon.com/Eating-Glass-Journey-Through-Failure/...

Free copy: https://www.dropbox.com/scl/fi/arauyfnkwwezbbk0cbvdp/eating-...

Yes, personally I think this idea that our identities are defined by careers, job titles or being a founder is inherently very dangerous. So when it all falls apart, who are you? It is very dangerous. We need to stop evangelising this way of thinking and try to be more holistic about it. Life before startups, tech, etc was not defined like this. Yes people's last names were effectively the work they did, but the whole of your identity was not wrapped up in something that could disappear in an instant. Or something we have effectively infatuated as a real necessity. The reason so many of us fail is because we're building things nobody needs. Maybe that's harsh but I have to ask myself, if I didn't build go-micro.dev, would something else have existed to replace it, yes, wholeheartedly yes. My contribution to software is not that significant. If Google didn't exist, would something else exist, Yes, it would.

We have to look at the world differently. OK there's Elon with his effed up childhood and maniacal need to "save humanity" but when you really get down to it, he falters at the simplest questions about life. This man doesn't know what's real and what's not. Let's be clear, those we follow are just human and often what gets them to where they are, while its hard work, if it wasn't them, it would be someone else and those people would be just potentially in the right place, at the right time, and sacrificing things that maybe we shouldn't sacrifice. Life went on long before tech and it will continue long after tech.

A lot of this “startups commit suicide, not homicide” framing feels like it pathologizes what is often a rational choice. Most founders don’t “give up” in some moral sense, they just run out of personal runway before the company produces enough evidence that the sacrifice is still worth it. Cash runway is visible on a spreadsheet; emotional runway, health, relationships, and opportunity cost aren’t, but they’re just as real a constraint.

What I’ve seen kill companies is the mismatch between those two curves: the time it takes to get real signal from the market vs the time a small group of humans can tolerate living in permanent crisis mode. In a ZIRP world you could paper over that with cheap capital; in 2025 you can’t. Calling that “suicide” makes it sound like a failure of grit, when it’s often just updating on new information about your life and the macro environment and deciding this particular lottery ticket isn’t worth any more years.

Calling it suicide is assuming that most startups shouldn’t fail of “natural causes”. There’s nothing bad or unnatural about a startup not being viable. It’s not like every company can be viable just by sacrificing a bit more for a bit longer

I'm wondering if the culture of an "exit plan" may be a contributing factor.

I grew up in a world, where companies were supposed to be ongoing concerns, with no end in sight. You established a company, and worked towards achieving at least an equilibrium, if not growth. Most brick-and-mortar companies are like this. The focus is on the product/service provided by the company, and all efforts are devoted to maximizing efficiency and steady profitability. Plans are made with a long view, as the company needs to be around to support their product. I know a lot of folks that own/run standard companies. None of them want to sell the company (it does happen, but it's an unusual thing; usually around the time they want to retire).

A standard company might consider an IPO to be their "exit."

Tech companies seem to have the company as the product. They have a plan to "exit," i.e. sell the company. That means they work on making the company, itself into an attractive package, and their product/service is simply a tool to maximize the company's attractiveness. In this case, descending into debt, in order to make the company look good in the short term, makes sense.

I could see this resulting in a situation, where the product made by the company is doing OK, but the company is not succeeding in being sold, so is considered a "failure."

A start-up needs to have an exit to pay back investors. A company that isn’t hoping to exit is just a lifestyle business. Both are valid options, but very different tactically.

Maybe, but all businesses begin as "startups." I guess getting a lot of outside financing is a big deal. Most companies that I know, don't get investors, until they are a going concern. They usually have a bank loan, to start (which can be burdensome).

I used to work for a 100-year-old Japanese corporation. They absolutely refused to go into debt, or seek investors. It could be challenging, getting them to loosen their pursestrings.

But they survived depressions, recessions, and even being bombed in WWII. They had a massive implosion, a few years back, that would have killed most companies (it resulted in me being laid off), but it looks like they are getting their feet under them again.

I guess the problem is what if your competitor does take on that debt, and uses it effectively to put you out of business. Whether the competitor survives much beyond that is immaterial if your company has already closed.

What sucks, is when one company drives another one out of business, then fails, themselves, leaving end-users in the lurch.

> A start-up needs to have an exit to pay back investors

It depends on the kind of investors you want to attract for your startup. Some investors are interested in building a slow-growth, long-term, stable company, while others prefer a higher-risk approach and will expect fast results. IMHO choosing the right kind of capital is just as important as focusing on the product.

You’re right that the underlying incentives are very different. Traditional businesses are built to last, so the focus is naturally on steady profits, good operations, and long-term customer value.

In tech — especially with VC money involved — the company itself becomes the product. An exit isn’t a nice-to-have, it’s the model. That pushes founders toward growth over profit and narrative over durability.

It doesn’t mean tech companies are “fake,” but it does mean a startup can look busy and promising while still drifting toward failure if the long-term fundamentals never arrive.

Some of the strongest startups today are the ones that intentionally step away from that exit mindset and build for resilience instead.

I had some savings during the pandemic and I needed to choose between down payment for a house or fund my patient monitoring venture. I had contact with few care home chains and very positive feedback and even agreement for a test run. I was pussy and went for a home. Couple years later no semiconductor parts were available anymore and I was super happy with my cautious decision. I heard of few hardware ventures, which died during part shortage. What an unfortunate time. There was a product, market opportunity, but simply no production material.

The original sensor got discontinued, I have some savings again and would love to try the same with radar approach. Anyone willing to analyze well being of old people from radar data together?

What do you mean by "radar" data? Literal radar? Or am I missing some more specialized term?

Most likely radars as used in microwave presence/movement sensors.

Texas Instrumens multichannel radar. Devkit at the moment. Custom hardware later.

It sounds similar to devices that are being tested trying to keep addicts safe.

I think this article is "why startups died pre-2020", rather than "why startups die [now]".

Lots of this article relates to the reasons startups died when cash was freely available - both from VCs and from the markets you were trying to find product in. For example, if you started an online learning company in March 2020, you'd have hit product right away (along with a thousand competitors), and been lathered with cash from every direction. But three years later, all of those startups were struggling, and I don't know of _any_ that survived. That's not a case of the business owners in 1000 discrete companies giving up. That's the entire world economy reverting back to in-person learning, and the disappearance of the ultra-low interest rates for the company to fall back on while it pivots.

In 2025, founders need to be acutely aware of exogenous factors, as they can be business-obliterating events without the social safety net of 0-1% IR.

Interesting opinion. Perhaps it's because I am a founder pre-2020 and lots of my thinking was shaped around that. What else do you think changed post-2020?

Why do you say pre-2020? 2020-2021 were the easiest times ever for funding with a lot of money-printing and zero rates (unlike 2018-2019!). Only in 2022 things started to get worse, and ground to a halt, at least for everyone outside of the AI bubble, from 2023. Now all who i know who are still operating, do so simply with the money raised before. Companies are going belly up left and right simply because that money runs out.

4x founder with 2 exits. The only time conflict arose or I felt like giving up was when we weren't growing. Growth and sales can heal just about all wounds (not all, but just about all). These types of articles always seem to point out the symptoms, and not the cause.

The symptom of wanting to give up is because you aren't growing fast enough

The symptom of founder turmoil is because whatever strategy you're currently using isn't growing the company fast enough

The symptom of running out of money is because you're not hitting your sales targets

I agree on your statement that growth and sales heals a lot of wounds or covers them actually. In co-founder relationship the absence of those also does open wounds and shows problems.

I agree. Growth solves all. It give you money to throw at problems, raises to keep people happy, and motivation. When there is no growth, that is when things fall apart.

Congrats on your good fortune, and agree with your diagnosis.

Does it work the other way? If the company isn't growing, do you close it? When/how do you decide this? What if the growth is just around the corner if you just solve this just one more thing?

>Growth and sales can heal just about all wounds ...

A similar thing seems to apply to marriages: If the money and sex are good, any other BS in life is easier to tolerate.

There's a huge difference in startup cultures too, I noticed the European regions are more focused on organic growth while US startups tend to aim high. I've been a solo dev in a startup with like 4 people for little over a year now, the business exists since 2 years and we are somewhat even on expenses vs income now. Growth is pretty slow, but as long as we break even its been pretty good.

The keyword is sustainability. I have seen the same, in the US is winner takes all (or most) while in the EU, you can be present locally on a smaller scale (say within a single country or region), be growing (albeit slowly) and still be able to exist.

Sure, it might not make you a billionaire but you end up still being your own boss, not stress out if investors suddenly change mind on what's cool, etc.

IMO as soon as the investment dry this is going to be seen as "smart" and "grounded" but it should have been the only way of doing.

Having VC gamble on start-up all the time is just not sustainable. If a product is not generating $ then maybe it deserves to die

> If a product is not generating $ then maybe it deserves to die

Somewhat agree. Depends on the product, if its novel and does not do its job well enough to generate a revenue stream it does yea. If it's in a market where some big corp has a monopoly I'd love to be able to see whether the monopoly killed it silently, like Amazon does with many many startups (predatory pricing).

Monopolies are creating unfair competition scenarios for businesses ensuring them to stay alone at the top... Idk what happened to competition but im tired of local shops closing due to people buying everything from a predatory corporation.

The cultural difference is massive. In much of Europe, breaking even early is seen as healthy and responsible. In the U.S., the mindset is more “swing big or don’t swing at all,” which pushes teams to chase hypergrowth long before the business is stable.

Neither approach is inherently better, but they create totally different failure modes. Slow, steady growth can keep a company alive for years.

There is obvious survivorship bias in the analysis throughout this article. You could reframe it as startups that succeed done have these problems - well, duh! Edit: actually the more i go through it, it sounds like chatgpt prose, especially by the end.

I love this comment because if you flip the article like see below, the concept remains the same and yet I am eased into the premise with "obvious facts" I already believe. Plus, inverting like this focuses on what we want to do to survive versus the negativity of what causes failure.

> Startups have a notorious failure rate – some estimates say 9 out of 10 startups eventually fail. Yet, contrary to what many first-time founders expect, startups rarely fail because a giant competitor swoops in or because of some external “homicide.” Instead, most startups die by “suicide,” meaning their demise is self-inflicted by internal issues. As YC founder Paul Graham once noted, “Startups are more likely to die from suicide than homicide.” In my experience building two startups, I’ve seen that the biggest threats usually come from within the company’s own walls, not from the outside world.

Updated by me:

Startups have an incredibly small survival rate. One in ten startups survives. The ones that survive don't survive simply because a giant competitor didn't kill it or because some external affliction didn't cause it to fail. Counterintuitively, the startups that survived didn't actively try to kill themselves by internal issues.(The rest I can copy paste) As YC founder Paul Graham once noted, “Startups are more likely to die from suicide than homicide.” In my experience building two startups, I’ve seen that the biggest threats usually come from within the company’s own walls, not from the outside world.

“Edit: actually the more i go through it, it sounds like chatgpt prose, especially by the end.”

I noticed that too. 100% mostly written by AI.

It also provides literally no data to back up the assertions.

Just more bare assertions.

You could easily write the exact opposite article (ie “exactly as people believe, most startups run out of money well before they give up internally” or whatever) and it would sound exactly as true

In my experience writing tech history, the most common reason is money. The second most common reason is entering a crowded market with little differentiation. The second reason could have been solved by marketing, but many in the industry are allergic to marketing.

If you are building a better <insert product here>, this must be heavily and clearly marketed. Otherwise, people have zero reason to switch. Why mess with what's working?

Additionally, just being cheaper doesn't make a product better. If I were starting a new effort, the cheaper part might be enough. If I already have stuff in production, cheaper isn't sufficient.

Feel free to tell me I'm wrong, but these are my observations.

I think you’re spot on — money and differentiation are the two cliffs most startups fall off.

A lot of founders underestimate how hard it is to get someone to switch to a new product. Unless you’re 10x better in a way that’s obvious, people stick with what already works. And as you said, being cheaper rarely moves the needle once something is in production.

The allergy to marketing is real too. Many teams think a good product will “speak for itself,” but in a crowded market, clarity and distribution matter just as much as the tech.

Your observations line up with what I’ve seen as well.

Why have you wasted both my time and yours by posting replies clearly written by AI that add nothing to the discussion and only restate what the parent comment has said? Infuriating.

I worked at 2 startups. Both failed.

The first had been around for about 4 years when I joined and had products that made money. They were trying to get acquired. They had partnered with 2 companies making products specifically for them. One of them offered to buy the company for $30 million but the founders thought their company was worth $300 million. They said no and then money started to run out and people started leaving. In the end the assets were sold for $2 million.

The second startup was created by former coworkers and I joined after it had existed for 4 months. We worked like crazy for the first year and got our prototype out. We had a lot of interest but it took me a while to realize that the 3 founders already had net worths from $5 million to billionaire level. When I heard about offers in the $30 million range they just weren't interested in selling for so little. I left after 3 years and the company floundered another 2 years until they shut it down as people left.

These are perfect examples of how misaligned expectations can quietly sink a company. In both cases, the teams actually had something: revenue, interest, real offers. But when the founders anchor on a fantasy outcome, they stop making grounded decisions.

You can survive almost anything in a startup except delusion about what the company is worth. Turning down a realistic exit, or holding out for a number that only exists in your head, creates a slow death spiral: morale drops, talent leaves, and eventually the market decides for you.

Really appreciate you sharing these — they highlight a pattern that happens far more often than people think.

Many are gambles, many are funded by those who know buzzwords but not the actual market or viability. Once that funding runs out, often the buzzword has moved on to something new so no more funding can be gained. You have to find a way to make money without funding in that period. The key issue is trying to grow too fast with too few solutions. If you can solve a problem for people then that is giving you a good chance of survival.

A lot of startups get built around hype instead of a real problem. When the buzzword fades and the funding dries up, the company suddenly has to stand on its own legs, and many can’t.

Growing fast without a solid solution underneath is a dangerous combo. If you’re not solving a real, painful problem for someone, no amount of funding or storytelling will save you.

annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness

annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery

Of course almost all startups expect a long live, but strategically it may be better (for the founders) to close when the fundamental assumptions are no longer valid, in order to do a future clean restart in a brand new endeavor (usually after a detox period).

Agreed. I think building a startup should also rather have a fast failure in case it doesn't work out. I've seen friends trying for several years, only walking away in the end with almost nothing.

Opportunity cost is very real. Chasing the wrong thing for 5 years can leave you broke instead of pocketing 7 figures gross elsewhere

This seems to miss diagnose the issue as suicide but really the startup wasn’t having success. If the company isn’t making money, then yes you run out of runway, you get founder conflicts etc. Saying this is suicide is missing the point.

If you are failing giving up is sometimes the right option. Many startups are based on assumptions/predictions that turn out to be wrong. And it is hard to pivot if you’ve spent the money and committed or not worth it if your cap table is wrecked.

BTW this mostly read like it was mostly written by AI. The various bolded text, missing the point, and emdashes.

If I were a startup, I would simply achieve product/market fit instead of failing.

(yes, /s)

Haha, yes. I never understood why startups don't achieve PMF

Totally agree that sometimes shutting down is the right call, not every startup should survive, and plenty of ideas simply don’t work once they hit reality. The point I was trying to make isn’t that failure = suicide, but that many teams collapse before they’ve fully tested whether the idea works.

And fair feedback on the writing style. Appreciate you calling it out. I am not a native speaker, so I definitely used AI to help me formulate my ideas & opinions.

To me it doesn't seem the author made a honest effort to understand how start ups function, why they fail or succeed. It's a low quality piece, if it is even wrote by a human.

i can say with 98% confidence that this is written by an LLM

9 out of 10 startups fail? Where is this statistic from? Every single I see this troupe repeated I wonder why people don’t question it.

These are, as far as I know, well tracked datasets. For the US the Bureau of Labor statistics tracks each annual cohort of new companies and the attrition over time: https://www.bls.gov/bdm/us_age_naics_00_table7.txt

So for example the first chunk there, cohort of companies that started March 1994, there were 13% still operating 10 years later in 2024.

30 years later....

There are some good nuggets of wisdom here, and I think the author should be less crass about "startup suicide"-- it's just an organization and it failed. If someone outside of the founder team is calling it a suicide, they need to go touch grass. SV VC's are so dramatic.

Feedback taken. If for sure helps making people more likely to click! haha I hope you forgive me that!

I try to separate the art from the artist when critiquing, so no bones to pick :)

As a topic or metaphor, I'm not advocating for suicide to be avoided, but your post struck on the toxic bravado that VCs have, especially Silicon Valley VCs with their Drama, and why I am much much more selective on fundraising for my projects.

People talk about "finding the right founder" but really it's finding the right environment to perform and excel in. The culture from SV is almost Swiftian in how it tries to devour its young. And yet creatives get "oh it's my fault for picking the wrong copilot" from the experience.

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