Startup Failure Pinned to People Problems

By Yvonne Milosevic

Many budding entrepreneurs would sell their grandma for the recipe for mega success. Unfortunately, there’s no secret formula to create a booming business. But, the data does point a flashing red arrow at why a new company often flops. According to business school professor Lindred Greer, “The number one reason your startup will fail is going to be a people issue.”

A fight between co-founders ends up tearing the company apart. Two leaders squabbling over who will lead the organization causes it to flame out.  Or, Greer says, maybe a lack of culture created ongoing churn, and the company couldn’t scale.

Everything you do at a startup, from the project choices you make to how you’re going to pivot, come back to the people you have in the room, and their ability to make effective decisions, Greer explains in this video from her time as a professor at the Stanford GSB. (She’s now at Michigan Ross.) People problems can torpedo your great idea before it has a chance to launch.

You can still attract talent, even when you’re cash-strapped

In the beginning, entrepreneurs fret about attracting A-players when they can’t offer killer financial incentives.  Greer dismisses that argument outright. “If you create an amazing place to work that’s very mission-driven, you actually can draw in the top talent,” she says.

So far, that strategy has worked for Canny, the B2B product feedback tool. Even as a two-person, early-stage startup, they managed to recruit top talent from Airbnb, Tesla, and Groove.  Their method? Let the talent find them. It turns out, applicants liked the vibe they saw on Canny’s Instagram and blog. These social media streams showed Canny’s day-to-day antics and gave authentic insight into the kind of people who work there.

“One advantage small companies have is being able to show personality,” Canny co-founder Sarah Hum notes on their blog. “All you have to do is be yourself. In contrast, big companies are inherently more closed and mysterious because they’re bigger. In the early days, you and your company are one. Use that to your advantage!”

Avoid these personality types at all costs

Isaiah Hankel, founder and CEO of Cheeky Scientist, penned an intriguing piece on staffing for Entrepreneur magazine a while back. In it, he pointed out 10 personality types to avoid like the plague when you’re starting a business.

Whether it’s the addicted-to-drama Ares type, the Black Cat with a perma-dark cloud overhead, or the charismatic Goat that continually leads you to make bad decisions, these personality types will only drag your company down. “If you want to build a great business, you have to be very deliberate about whom you let into it,” Hankel advised.

Greer would agree. When you become as intentional about the people choices you make as you are about the product, she says, the more likely you are to be that one in 10 startup that becomes the unicorn the rest of the world envies.