Technology
Why Startups Fail: Here’s the 20 Most Common Reasons
For anyone who launches a new venture, there’s a grim reality involved: eventually 90% of startups bite the dust, and 51% of all businesses die off within a period of five years.
While failure is not fatal, there’s definitely no harm in stacking the odds in your favor in the first place. With some proper insight and critical thinking, the chance of a venture’s success can be increased by mitigating some of the most common startup risks.
That’s why it is not enough to know how many startups fail – we must know why startups fail.
CB Insights, a venture capital database, did their homework based on 101 startup post-mortems to pin down causes on why startups failed. Here’s the results in infographic form:
Why Startups Fail
The most common reason for startups to meet the grim reaper was a dreaded lack of “product/market fit”.
In other words, a startup was unable to satisfy a real market need with its product. Famed investor Marc Andreessen says that product/market fit is so important, that the lifespan of a startup can be broken up into two parts: before product/market fit, and after the fit is achieved. Once it is obtained, it’s a game-changer that increases the chance of success tremendously.
Presumably, the startups that never achieve such a fit end up in the graveyard. The analysis from CB Insights above agrees, showing 42% of startups fail because they do not solve a real market need.
The two other major reasons why startups fail include running out of cash (29%) as well as not having the right team (23%).
Inevitably, there’s no changing the fact that the vast majority of startups will meet their bitter end. That said, a better understanding of the above causes of failure may help to mitigate the risks of any new venture. And even if a startup does meet its maker, the founder may still have another shot: failed entrepreneurs often find more success the second time around.
As Winston Churchill says: “Success is not final, failure is not fatal: it is the courage to continue that counts.”
Original graphic by: Lance Surety Bond Associates
Technology
How Big Tech Revenue and Profit Breaks Down, by Company
How do the big tech giants make their money? This series of graphics shows a breakdown of big tech revenue, using Q2 2022 income statements.
Creator Program
In the media and public discourse, companies like Alphabet, Apple, and Microsoft are often lumped together into the same “Big Tech” category. After all, they constitute the world’s largest companies by market capitalization.
And because of this, it’s easy to assume they’re in direct competition with each other, fiercely battling for a bigger piece of the “Big Tech” pie. But while there is certainly competition between the world’s tech giants, it’s a lot less drastic than you might imagine.
This is apparent when you look into their various revenue streams, and this series of graphics by Truman Du provides a revenue breakdown of Alphabet, Amazon, Apple, and Microsoft.
How Big Tech Companies Generate Revenue
So how does each big tech firm make money? Let’s explore using data from each company’s June 2022 quarterly income statements.
Alphabet
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In Q2 2022, about 72% of Alphabet’s revenue came from search advertising. This makes sense considering Google and YouTube get a lot of eyeballs. Google dominates the search market—about 90% of all internet searches are done on Google platforms.
Amazon
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Perhaps unsurprisingly, Amazon’s biggest revenue driver is e-commerce. However, as the graphic above shows, the costs of e-commerce are so steep, that it actually reported a net loss in Q2 2022.
As it often is, Amazon Web Services (AWS) was the company’s main profit-earner this quarter.
Apple
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Apple’s biggest revenue driver is consumer electronics sales, particularly from the iPhone which accounts for nearly half of overall revenue. iPhones are particularly popular in the U.S., where they make up around 50% of smartphone sales across the country.
Besides devices, services like Apple Music, Apple Pay, and Apple TV+ also generate revenue for the company. But in Q2 2022, Apple’s services branch accounted for only 24% of the company’s overall revenue.
Microsoft
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Microsoft has a fairly even split between its various revenue sources, but similarly to Amazon its biggest revenue driver is its cloud services platform, Azure.
After AWS, Azure is the second largest cloud server in the world, capturing 21% of the global cloud infrastructure market.
Technology
Animation: The Most Popular Websites by Web Traffic (1993-2022)
This video shows the evolution of the internet, highlighting the most popular websites from 1993 until 2022.
The Most Popular Websites Since 1993
Over the last three decades, the internet has grown at a mind-bending pace.
In 1993, there were fewer than 200 websites available on the World Wide Web. Fast forward to 2022, and that figure has grown to 2 billion.
This animated graphic by James Eagle provides a historical look at the evolution of the internet, showing the most popular websites over the years from 1993 to 2022.
The 90s to Early 2000s: Dial-Up Internet
It was possible to go on the proto-internet as early as the 1970s, but the more user-centric and widely accessible version we think of today didn’t really materialize until the early 1990s using dial-up modems.
Dial-up gave users access to the web through a modem that was connected to an active telephone line. There were several different portals in the 1990s for internet use, such as Prodigy and CompuServe, but AOL quickly became the most popular.
AOL held its top spot as the most visited website for nearly a decade. By June 2000, the online portal was getting over 400 million monthly visits. For context, there were about 413 million internet users around the world at that time.
| Rank | Website | Monthly Visits (May 2000) |
|---|---|---|
| 1 | AOL | 400,891,812 |
| 2 | Yahoo | 387,573,587 |
| 3 | MSN | 354,239,803 |
| 4 | eBay | 116,101,785 |
| 5 | Lycos | 116,064,930 |
But when broadband internet hit the market and made dial-up obsolete, AOL lost its footing, and a new website took the top spot—Yahoo.
The Mid 2000s: Yahoo vs. Google
Founded in 1994, Yahoo started off as a web directory that was originally called “Jerry and David’s Guide to the World Wide Web.”
When the company started to pick up steam, its name changed to Yahoo, which became a backronym that stands for “Yet Another Hierarchical Officious Oracle.”
Yahoo grew fast and by the early 2000s, it became the most popular website on the internet. It held its top spot for several years—by April 2004, Yahoo was receiving 5.6 billion monthly visits.
| Rank | Website | Monthly Visits (April 2004) |
|---|---|---|
| 1 | Yahoo | 5,658,032,268 |
| 2 | MSN | 1,838,700,057 |
| 3 | 1,318,276,780 | |
| 4 | AOL | 905,009,947 |
| 5 | eBay | 805,474,705 |
But Google was close on its heels. Founded in 1998, Google started out as a simpler and more efficient search engine, and the website quickly gained traction.
Funny enough, Google was actually Yahoo’s default search engine in the early 2000s until Yahoo dropped Google so it could use its own search engine technology in 2004.
For the next few years, Google and Yahoo competed fiercely, and both names took turns at the top of the most popular websites list. Then, in the 2010s, Yahoo’s trajectory started to head south after a series of missed opportunities and unsuccessful moves.
This cemented Google’s place at the top, and the website is still the most popular website as of January 2022.
The Late 2000s, Early 2010s: Social Media Enters the Chat
While Google has held its spot at the top for nearly two decades, it’s worth highlighting the emergence of social media platforms like YouTube and Facebook.
YouTube and Facebook certainly weren’t the first social media platforms to gain traction. MySpace had a successful run back in 2007—at one point, it was the third most popular website on the World Wide Web.
| Rank | Website | Monthly Visits (Jan 2007) |
|---|---|---|
| 1 | 7,349,521,929 | |
| 2 | Yahoo | 5,169,762,311 |
| 3 | MySpace | 1,276,515,128 |
| 4 | MSN | 1,259,467,102 |
| 5 | eBay | 957,928,554 |
But YouTube and Facebook marked a new era for social media platforms, partly because of their impeccable timing. Both platforms entered the scene around the same time that smartphone innovations were turning the mobile phone industry on its head. The iPhone’s design, and the introduction of the App store in 2008, made it easier than ever to access the internet via your mobile device.
As of January 2022, YouTube and Facebook are still the second and third most visited websites on the internet.
The 2020s: Google is Now Synonymous With the Internet
Google is the leading search engine by far, making up about 90% of all web, mobile, and in-app searches.
What will the most popular websites be in a few years? Will Google continue to hold the top spot? There are no signs of the internet giant slowing down anytime soon, but if history has taught us anything, it’s that things change. And no one should get too comfortable at the top.
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