Startup climate change

Climate change has had massive environmental, societal, economic, and political impact.

The sick care climate is rapidly changing.

According to Carta, we are seeing the results of startup climate change too.

Nine of the top 20 reasons for startup failures – and five out of the top 10 – were related to customers – not meeting customers’ needs, not listening to them or even ignoring them.

In fact, the number one reason start-ups fail was “no market need.” In other words, there was no customer.?The second common reason is the business model is not VAST.

Nearly the same number of reasons for failure – seven of the top 20 -- were related to the people and/or culture of the company.?Lack of money was lower down the list.

The iron triangle of startup success includes product-market fit, the people on the team, most importantly the CEO, and resources to fuel growth and development, in that order.

“The purpose of business,” Peter Drucker said, “is to create and keep a customer.” To do that, Drucker believed each company has an?optimum?profitability. What is optimum? Enough, Drucker said, to employ a long-term workforce, insure against financial risks, and to finance any company’s top two functions: marketing and innovation.

Like environmental climate change, startup climate change demands that founders modify how they do things and how startup ecosystems can provide value.

1. Eliminate innovation theater
2. Stop dumbing down how define innovation
3. Rethink the effectiveness of the lean startup methodology and plug the holes, particularly as it applies to biomedical and clinical products and services
4. Stop relying on what existing and potential customers say and measure more what they do. Improve the quality and quantity of customer discovery candidates and beta testers.
5. Stop the accelerator madness. We need more euthanators and scalerators
6. Close the clinician-entrepreneur-technologist gaps
7. Reform medical education and training to graduate students and trainees to graduate them with an entrepreneurial mindset
8. Use improving techniques of predictive analytics to identify the probability of success i.e, startup moneyball
9. Improve knowledge transfer programs between industry, community, and academic entrepreneurs
10. Private and public investors need to stop throwing good money after bad
11. Close graduate business school programs that don't have data driven evidence of success
12. Improve how we measure and compare regional ecosystem outcomes and make the results transparent
13. Streamline how founders find investors
14. Make the advisor/mentor process more effective and efficient
15. Measure the impact of startup weeks and other "feel good" initiatives and adjust them accordingly
16. Do a better job of testing and validating a product at scale

Cyclical financial and economic factors impact startup success and we will continue to see booms and busts. Another AI winter might be on the horizon.

At this point in time, the startup success ecosystem has lost touch with its customers and can make one of three strategic choices moving forward: persevere, pivot or punt.

We have made it too easy to rebuild houses after they were destroyed by fire or hurricanes made worse by climate change without fixing the reasons why they were destroyed. Treat the disease, not the symptoms.

Arlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs on Substack and Editor of Digital Health Entrepreneurship