Business angel and founder of the Foundation Malpani Ventures Malpani published in his blog on LinkedIn reasoning about why theres nothing wrong with that some startups can not compete and die. In his opinion, is a manifestation of “creative destruction”. To have a strong company, weak must die.
When you run a start — cheers all around, and when he dies — a natural sad and upset. At this point, the co-founders there comes a revaluation of values, or they begin to exchange mutual recriminations. What went wrong. Whose fault is it. What could have been done to fix it.
This is especially true for those startups that are “burned” a lot of money, because in this case failure not only causes personal and emotional pain, but is very devastating, because too much money was wasted. While others try to “get lost in the crowd” and found guilty, if at the helm of the bankrupt company was a Mature businessman, hell take full responsibility for the failure
Even if investors refused to support the team, or external conditions are not suitable, or competitors put extortionate prices, or the company released the product too early and the market wasnt ready. I think we all have to understand that the failure of a startup is not so bad. The truth is that startups and startup to fail.
Not all of course, but those who are unable to compete effectively. They deserve failure. Remember that the capitalist system was conceived initially like this. A rule like this.
Survival of the fittest. And startups need to compete with each other to earn the right to win. Especially in “hot” areas. Against you will fight a crowd of entrepreneurs who want to improve in this area.
As a rule, they will have exactly the same ideas as you, and they will appear around the same time as your. As a result, the market will be many similar projects. That is why every few months we see a surge in the number of startups-clones in the area where you will be lucky to become a “sector of the month” (currently artificial intelligence). Since the market will not be able to accommodate all, a small part of the companies grow, some will stop in development, and most will die.
And lets not forget that if a startup wants to become the market leader, hell first need to crush all competitors. That is, has grown to one company, the other will disappear — is not a manifestation of creative destruction, which wrote the economist Joseph Schumpeter.
In a start-up environment, fierce competition, and we just have to accept it. This is true not only for entrepreneurs but also for investors. So many of us end up losing money. However, there is no reason to mourn the demise of a startup.
Loss of money is a painful experience, but we should understand that this is part of the natural history of startups. It is like life and death. We rejoice when the light a child is born and we grieve when someone dies. But the truth is that death is the same part of life as birth and we need to take both phenomena. Im not trying to philosophize, but the sooner we accept reality, the easier it will be to live with this fact of life.
If we consider the situation in the scale, the death of startups makes the economy more efficient. Startups are small experiments, and the financial damage that occurs as a result of their bankruptcy, much less than if you go bankrupt already a Mature company. Conversely, thanks to socialism we have to support these inefficient behemoths like Air India, due to expensive life support systems. In my opinion, it would be much more merciful to kill them and allow more efficient companies to take their place.
Yes, as a result of the death of a startup occurs a short illness, but instead to mourn his death, we should learn the lessons that we learned from this situation and move on to the next time to make everything better.