December 16, 2019
Article
HBR Ascend

Why Your Startup Won't Last

By: Ranjay Gulati and Vasundhara Sawhney

Format:Electronic

Abstract

Why do some startups that have crossed the threshold of “product-market fit” and have a viable business model still fail? This article begins by exploring the argument that most startups need more professionalization to thrive. Founders resist putting in place structures and systems as they grow and that eventually leads to organizational chaos and, ultimately, failure. But it then departs from this conventional view and explores the idea that while on the one hand too little structure in a high growth venture can lead to chaos, going too far on the other extreme with too much structure can also be equally detrimental and kill the soul of the startup. The article concludes by summarizing some ideas for startup founders on how they can learn the mechanics of scaling up effectively before they reach a point where they tip over too far in one direction or the other. In an attempt to better understand this problem, the authors conducted a closed-group discussion with professionals, investors, and founders operating in various segments of the Indian startup ecosystem on which this article is based.