#8 Intractable Technical Problems = Startup Death

These days, every company is a technology company in some way.  Perhaps your product or service is a true technology innovation which, of course makes you a straight-up tech company.  But even if you are running an ecommerce business selling products you source on Alibaba or Doba or an online content business, you still have a technology infrastructure to help you run that business!

In the last post “Scaling Too Soon or Improperly, I identified various technology components of most businesses which, without being exhaustive, included:

  1. Website
  2. Checkout or payment systems
  3. CRM and customer management systems
  4. Inventory management capability
  5. Bsiness intelligence dashboard
  6. Shipping and logistics systems
  7. Customer service and support
  8. Marketing and lead generation systems
  9. Sales management/conversion support
  10. Your proprietary technology solution!

There are so many stories of early stage companies failing because of technical failures that it’s a stereotype.  Even a relatively “simple” business relying on existing technology solutions requires a lot of integration and management, and plenty of companies just get it wrong – they can’t find customers, they can’t sign them up, or they can’t support them, so customers just go away!

As an example, our family recently tried to sign up with Sling TV.  We have been loyal customers of Dish Network satellite TV for 2 decades, but the price kept going up and up and up, this time over 10% this year!  And, let’s face it, new customers are treated much better than loyal long term customers. So we decided to ditch satellite and go to Sling (which had the best streaming value for the content we wanted). Now, you would think Sling (which is actually part of Dish), would want new customers to sign up, but do you think their website would work?  No.  It took multiple rounds of logging in, logging out and trying to sign up again before the system would accept our account.  And this is a company that’s had some time to build up their tech capabilities! Don’t let this be your business!  Each system, and especially each technology system, has to be carefully set up, vetted, tested, improved and then finally scaled.

Sometimes when it comes to solving problems, the problem is just too hard.  Creating generalized human-level artificial intelligence has been such a problem.  Early research on AI began decades ago, but essential “failed”. Today, the AI industry understands that successful implementations of AI tech needs to be problem and data specific rather than “general purpose”. And even then, it has taken about 20 years of increases in compute power, memory and network infrastructure improvements to support even those specific AI applications.

Sometimes the approach to the problem is wrong.  In the life sciences, research teams follow promising technical solutions from the earliest in vitro testing through extensive human trials.  At any point, the solution may fail at some level of testing because the approach was simply, wrong and the proposed solution doesn’t work.  This is especially true with therapeutics, but can also be true in both diagnostics and medical devices. And sometimes the failure isn’t identified until hundreds of millions of dollars have been spent on development and testing.

But sometimes, the source of tech problems is in the team itself.  Poor team dynamics, wrong skill set, conflict between the tech team and a founder or CEO, the reasons are myriad, and often legend.  We recommend some “StartupTherapy™ ” to help with these issues, but they have to be confronted early and often and they require a good interface between “management” and the technical team.

Sometimes the smartest answer to an intractable tech problems is to admit defeat, but being aware of the risks at least allows you to take precautions!

Remember – 10 Reasons Startups Die
  1. Destructive corporate culture
  2. Failure of product – market fit
  3. Founder issues and conflict
  4. Staffing and Team problems – poor hiring choices or inability to prune staff appropriately
  5. Can’t raise sufficient capital
  6. Run out of cash after raising capital
  7. Scaling too soon or improperly
  8. Intractable technical problems
  9. Poor strategic environment (customers, suppliers etc)
  10. Regulatory problems (forseen or unforseen)

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