Starting Small with a Minimal Viable Product (MVP): Key Strategies for Success
(Featuring Airbnb, Twitch, and Stripe)

Launching an MVP in the Early Stages of a Startup

One of the most critical strategies for any early-stage startup is quickly rolling out a Minimum Viable Product (MVP) to gauge market response. Let’s take a look at how Airbnb, Twitch, and Stripe began with simple MVPs, validated their ideas in the market, and evolved into successful business models.

 

1. Airbnb

Airbnb was founded by Brian Chesky, Joe Gebbia, and Nathan Blecharczyk in 2007, after meeting as design school classmates in San Francisco. They came up with the idea of renting out living spaces by using air mattresses—especially during conventions and conferences—so attendees wouldn’t get stuck paying high hotel fees or struggling to find available rooms.

§  October 2007 : Brainstormed “renting out space” for design conference attendees

§  Early 2008 : Launched the first website under the name “Air Bed & Breakfast”

§  Summer 2008 : Operated during specific events like the Democratic National Convention in Denver to gather market feedback

Initially, Airbnb placed air mattresses in living rooms for conference visitors who couldn’t find a hotel.

§  Air mattresses and a simple breakfast : Provided a basic but comfortable sleeping setup.

§  Payment system : No online payment feature; the rental fee was exchanged directly between guests and hosts.

§  No map feature : There was no way to visually show the location of the listing.

§  Short-term testing : The website was open only during conference seasons and then shut down afterward to do small-scale market validation.

By releasing their service quickly with minimal features, Airbnb gathered real user feedback and improved their business model accordingly. Their later success in raising funds and growing their user base is now widely recognized.

 

2. Twitch (Originally Justin.tv)

Justin.tv, the predecessor to Twitch, was started by Justin Kan, Emmett Shear, Michael Seibel, and Kyle Vogt. They wanted to explore the potential of live streaming, so they built a product with only the most essential features.

§  March 2007 : Justin.tv officially launched

§  2011 : Split the service into Twitch.tv to focus on game streaming

§  2014 : Amazon acquired Twitch for about $970 million

In the early days of Justin.tv, cofounder Justin Kan wore a camera on his head 24/7 and live-streamed his daily life :

§  Single-channel broadcast : The website had only one live channel—Justin’s. It didn’t offer game broadcasts or other content.

§  Streaming infrastructure : They relied on a CDN instead of their own technology, which was expensive.

§  Market response and technical feasibility : They quickly developed an MVP to see if “live streaming” could be an engaging experience, while also testing the tech’s viability.

3. Stripe

Founded in 2010 by brothers Patrick Collison and John Collison, Stripe aimed to simplify the complex online payment systems and lengthy signup processes by creating a quick, easy-to-use payment platform.

§  Late 2009 – Early 2010 : Started under the internal project name /dev/payments

§  2011 : After joining Y Combinator (YC), they officially rebranded to Stripe and began to expand

§  2012 : Raised $2 million from investors including General Catalyst

Stripe’s initial platform had a very limited API, and account setup was done manually:

§  /dev/payments beta version : Focused almost entirely on credit card processing and left out any complicated features.

§  Developer-friendly interface : Designed for quick and easy integration, especially for YC startups.

§  Problem-solving approach : Since online payments were notoriously cumbersome at the time, Stripe’s main goal was to “eliminate complexity and provide a simpler payment API.” 

4. Common Themes and Takeaways

All three companies rapidly entered the market with products that featured only the bare essentials:

§  Airbnb rushed to get a simple website running right before a conference.

§  Justin.tv launched a 24-hour live broadcast to immediately gauge market interest.

§  Stripe provided a beta version that YC startups could use right away.

Each product was deliberately limited in functionality :

§  Airbnb had no map feature, online payments, or comprehensive lodging options.

§  Justin.tv started with just one live channel.

§  Stripe offered little beyond basic credit card processing.

Their early adopters were enthusiastic but small in number:

§  Airbnb served conference goers who needed last-minute accommodations.

§  Justin.tv attracted early adopters interested in trying a new format of live streaming.

§  Stripe fulfilled the needs of YC startups and a niche developer community.

These cases clearly show the value of leveraging even a modest MVP to test your ideas in the market. Instead of perfecting a product from the start, it’s crucial to launch quickly with limited features and use customer feedback to gradually refine the product into something people truly want. This strategy works especially well for startups with limited resources, and it helps lay a solid foundation for eventually reaching a large user base. Above all, getting those small, early wins can help you stay motivated and pave the way for bigger growth down the road.

 1. Why Startups Need “Technical Co-Founders”

Non-technical founders often believe that having a great idea alone is enough to succeed. 

However, a startup without a developer as a co-founder has a significantly lower chance of making it. Launching a startup without a “Technical Co-Founder” is like trying to build a rocket without knowing any physics, or designing a building without understanding structural engineering. Even with the advancements in AI and SaaS, without strong technical expertise, it’s tough to make the progress you imagine. And even if you manage to create a product or service, you’ll struggle to adapt quickly to market demands and customer needs.

• Great founders have the ability to persuade and recruit talented “Technical Co-Founders.”
• Rapid, high-quality product/service development is essential to a startup’s success.
• Without trustworthy “Technical Co-Founders,” you’ll end up relying on external development firms, which puts you at a competitive disadvantage.

 

2. How to Find Exceptional “Technical Co-Founders”

• Think of the best engineers you’ve ever met or worked with.
• Recall the most talented developers from your past experiences.
• Persuade them that they’re not just there to “build your idea,” but are true partners in creating a company together.
• What if you can’t think of any outstanding engineers?
• First, work at a startup to grow your network and build trust.
• Join developer-heavy communities and network actively to find potential partners.
• You’ll meet more engineers during the MVP development process.
• The worst approach is looking for someone to “just build my idea.”
• The person you’re looking for is not “a servant who simply codes your idea.”
• A co-founder is a partner who grows the company alongside you.
• Maintaining an equal relationship is crucial.

A startup lacking strong technical skills will have trouble earning customer trust. External development agencies work off project briefs and instructions; they don’t proactively or independently solve problems. Ongoing improvements and big pivots at critical moments also become difficult. Early on, when you need to gain customers’ confidence, hiring an inexperienced dev shop or contract developers can jeopardize the future quality of your product or service.

Founders must be able to recruit reliable, skilled “Technical Co-Founders.” It’s not just about money—it’s about vision, trust, and building strong relationships.

Guide to Writing a Business Plan for Startups and Investment: From Market Analysis to Financial Planning

Part 1: Overview and Preparation for a Business Plan

1.1 What is a Business Plan?

A business plan is a comprehensive document outlining the goals and operational strategies of a business. Just as a building cannot be constructed without blueprints, launching a successful business requires a clear, well-structured business plan.

A business plan transforms an idea into actionable steps, clearly documenting business objectives, management strategies, resource allocation, and execution pathways. In other words, it's a blueprint for your business, serving as an essential tool for maximizing the probability of success. Extensive research confirms that the process of creating a business plan helps entrepreneurs validate technical feasibility, revenue models, and market potential, significantly boosting business viability.

Internally, a business plan acts as a detailed management guide and communication tool. Externally, it becomes critical for persuading potential investors and securing funding. Depending on its intended audience, a business plan might serve as persuasive marketing material. Hence, it is crucial to adjust the content and emphasis based on the intended use and target readers. For example, an internal business plan might highlight detailed action plans, role assignments, and expected outcomes, whereas a plan aimed at investors should emphasize growth potential, profitability, and return on investment strategies.

1.2 Why is a Business Plan Important?

A well-prepared business plan enables entrepreneurs to systematically prepare and clearly define their business direction. It helps anticipate potential obstacles and establish strategies in advance, thus reducing risks and increasing the chances of success.

The process of writing a business plan encourages entrepreneurs to evaluate their businesses objectively. Even the most passionate entrepreneurs can develop biases if they rely solely on enthusiasm and emotions. Objective assessment of a business idea—evaluating technological feasibility, market demand, and financial viability—significantly enhances the potential for success. Studies consistently demonstrate a strong correlation between well-crafted business plans and company performance.

Clear and detailed planning is especially crucial for startups, as it directly influences the chances of success. A business plan acts as a final checkpoint before launching operations, reminding founders of critical yet often overlooked aspects and prompting realistic solutions. Moreover, investors and government agencies use business plans as tools for evaluating company potential, underpinning external credibility.

However, it's essential to remember that merely writing a business plan does not guarantee success. Execution capability and team collaboration are ultimately decisive.

To summarize, a business plan serves as both a compass and a communication tool. It allows entrepreneurs to define objectives, refine strategies, and effectively communicate their vision to stakeholders. Thus, business plans should be seen as ongoing tools rather than one-off documents aimed solely at attracting external investment or complying with internal reporting requirements.

Part 2: Preparation Before Writing a Business Plan

2.1 Refining Your Business Idea

The first step in preparing a business plan is refining your business idea (BI) or business model (BM).

Entrepreneurs often assume that having an innovative idea alone is sufficient. However, ideas must be developed into feasible business concepts through thorough examination of their innovativeness, marketability, and profitability. Consider the following critical questions:

• Is the business idea prominent in the current market?
• Does it align with market trends?
• Is the market or technology in an early growth stage?
• Entering a saturated market (Red Ocean) late significantly reduces chances of success unless there’s a clear competitive edge.
• Choosing inappropriate market segments or ideas often leads to startup failure due to poor judgment.
• Does your idea offer new value to customers?
• Does it address customer problems and needs?
• Is there a clear, straightforward value proposition?
• Ensure your product or service is something customers would willingly pay for.
• Clearly define the core value customers perceive, such as convenience, cost reduction, or speed.
• What are the distinctive core elements, technologies, and revenue models of your idea?
• Identify key elements and core technologies in your product or service.
• Clearly explain differentiation points.
• Outline how your idea translates into a viable revenue model, considering various income streams such as direct sales, subscriptions, advertising, or licensing.
• Clearly define how your differentiated approach secures a competitive advantage in acquiring new customers.
• Why is this idea necessary now?
• Consider societal, technological, policy, or regulatory changes.
• Provide clear and persuasive reasoning to establish the rationale and timeliness of your idea.
• Does your team have the skills aligned with your company's vision?
• Evaluate if team members' profiles and capabilities match your company's mission and vision.
• Demonstrate clearly how your team's experience, skills, and expertise contribute to the business’s potential success.
• Do you have a clear roadmap for product development and commercialization?
• Create detailed plans and resource allocation for technology development, prototyping, testing, certification, and mass production.
• Develop strategies for timely market entry.
• Anticipate scenarios that require pivoting if initial assumptions are proven incorrect or market reactions differ from expectations. Thus, flexibility and backup plans should be prepared.

In summary, careful assessment and selection during the ideation phase are crucial prerequisites for writing a solid business plan. Evaluate your business idea’s innovation, market suitability, profitability, and founder-item fit objectively. Prioritize ideas strategically, choosing the most promising business models that set the stage for the overall direction of your business plan.

Sam Altman’s Guide to Startup Success

Sam Altman outlines seven key principles for building a successful startup.

1. Build a Product So Good That Customers Recommend It

The single most important factor in a startup’s success is creating a product that people enthusiastically recommend to their friends. If you achieve this, you’ve already done 80% of the work needed to succeed.

 

2. Keep It Simple and Easy to Understand

If your product or service is complicated to explain, it will struggle in the market. Your offering should be instantly understandable and compelling. In other words, clear value communication is essential.

 

3. Enter a Rapidly Growing Market

A startup shouldn’t just look at the size of a market today—it should target markets that are growing exponentially. Growth potential is what matters.

For example, the iPhone app market didn’t exist at first, but it grew rapidly, creating massive opportunities. In contrast, while many were excited about VR, slow hardware adoption limited real user engagement. Successful founders must develop a keen sense for identifying markets and technologies poised for explosive growth.

 

4. Be a Visionary CEO with Real Execution Power

A great startup requires a founder who can sell the vision, inspire people, and relentlessly push the company forward.

Before starting a company, ask yourself:

Ÿ   Can I convincingly articulate my company’s vision and value?

Ÿ   Do I have the skills and drive to bring that vision to life?

Ÿ   Am I balancing ambition with practical execution?

A bold yet achievable roadmap is essential—not only to guide the company but also to attract top talent.

 

5. Build a Team of Optimistic Doers

A startup’s success ultimately depends on its team. Here are key traits to prioritize when hiring:

Ÿ   Optimists – Startups are filled with challenges and failures. Pessimists will drag the team down.

Ÿ   Idea Generators – You need a few people who constantly come up with new ideas, even if most of them don’t work.

Ÿ   Problem Solvers – When unexpected issues arise (and they will), the right team doesn’t complain—they fix them.

Ÿ   Bias for Action – Startups must move fast. Even without perfect data, decisions must be made quickly, and failures must be addressed immediately.

 

6. Startups Are Like Unicycles—Keep Moving or Fall

Ÿ   Momentum is everything. In the first few years, you can’t afford to slow down. Once a startup loses momentum, it’s incredibly hard to regain.

Ÿ   Competitive advantage is critical. Your startup should aim for network effects, brand power, data advantages, or a strong business model to build long-term dominance.

Ÿ   Revenue matters. Free products are fine in the beginning, but you must eventually develop a clear strategy for making money.

 

7. Exploit the Weaknesses of Big Companies

Ÿ   Startups can take risks big companies can’t. At a large corporation, a single “no” from upper management can kill an idea. But as a startup founder, you only need one "yes."

Ÿ   Speed is a major advantage. The faster the market changes, the more opportunities startups have over slow-moving corporations.

Ÿ   Leverage platform shifts. Every major tech shift (mobile, AI, blockchain) has created massive startup success stories. Startups adapt faster than legacy companies when new platforms emerge.

 

Final Thoughts

This summary combines Sam Altman’s insights with my own perspectives. His advice offers powerful guidance for aspiring founders. A winning startup is built at the intersection of an innovative product, a fast-growing market, and a high-performance team. If you can align these three elements, your startup has a real shot at success.

 

The 21st Century New Mercantilism Era: Where History Meets Modernity

Mercantilism emerged as a prominent economic idea in Europe from the 16th to the 18th century, born out of the age of exploration and the rise of absolute monarchies. Back then, nations pursued wealth accumulation through protectionist trade policies and fierce competition, and the wealth generated primarily served the interests of a small elite rather than the general populace.

 

1. The Dawn of the Age of Exploration and Its Ripple Effects

With the discovery of the New World, European powers rapidly expanded their trade networks around the globe. Spain and Portugal, for instance, imported vast amounts of gold and silver from South America, turning these metals into symbols of national wealth. This surge in wealth went beyond mere economic growth; it became a tool for bolstering political power.

 

2. Strengthening Absolute Monarchies and Shifting Economic Policies

Between the 16th and 17th centuries, leaders like Louis XIV of France, Philip II of Spain, and Charles I of England consolidated centralized power. They reduced the influence of nobles and parliaments, strengthened the monarchy, and expanded the national treasury. Their direct intervention in economic matters linked the accumulation of national wealth to the enhancement of military might and political influence.

 

3. European Rivalries and Protectionist Strategies

European nations engaged in intense competition to secure colonial resources and foreign markets. As a result, they adopted protectionist policies aimed at shielding their domestic industries. However, this competitive stance eventually led to imbalanced trade structures that hindered long-term economic development.

 

4. The Rise of Commerce and Financial Systems

After Columbus’s discovery of the New World, trade between Europe and the Americas blossomed. Goods produced in the Americas flowed into European markets, and a triangular trade network connecting Africa, America, and Asia emerged. This boom in commercial activity spurred significant advancements in financial systems and laid the foundation for capitalist economies.

 

5. The Revival and Limitations of Mercantilism in the 21st Century

Traditional mercantilism sought to build national wealth through the accumulation of gold and silver, with this wealth benefiting a privileged few rather than the broader population. Today, some nations emphasize economic sovereignty through government intervention and protectionist measures. Yet, such policies can disrupt the natural market adjustments, leading to inefficiencies in production and pricing, and ultimately risk triggering zero-sum competition.

 

6. Balancing Free Markets with Government Intervention

Adam Smith argued in "The Wealth of Nations" that a free market with minimal government interference allowed individuals to pursue their self-interest, which in turn benefitted society as a whole. He stressed that the right mix of freedom and healthy self-interest could drive economic progress. Even now, it is evident that sustainable development is more likely to arise from market autonomy and individual freedom than from power-centered economic policies.

 

By comparing the experiences of 16th-century mercantilism with the modern echoes of similar economic policies in the 21st century, we can clearly see the challenges and limitations facing today’s economic strategies. History teaches us that while accumulating national wealth through centralized power can yield short-term gains, it often undermines balanced and efficient long-term economic growth.

 

1. What Is “Failure Studies”?

Failure Studies is an academic field that systematically analyzes failures, identifies their underlying causes, and develops strategies to address them. It focuses on defining failure, understanding different perspectives on failure, and drawing lessons from failure. By examining failures that occur in various domains—such as individual life events, corporate management, technological development, and public policy—Failure Studies classifies causes by integrating diverse theoretical approaches. This classification process then informs strategies for prevention and improvement.

Failure Studies does not view failure merely as a defeat or an “end point.” Instead, it regards failure as a catalyst for social progress and individual growth. Behind most success stories lie numerous failures. Researchers in this discipline analyze how such failures happened and the subsequent paths toward resolution. The main goal is to build knowledge and insight so that people do not repeat the same mistakes.

In essence, the core principle of Failure Studies is to “learn from failure.”

Originally, Failure Studies emerged from the engineering sector. It began with analyzing accidents and defects in large-scale systems (e.g., aerospace, nuclear power, and infrastructure) and devising measures to prevent them. Over time, its scope expanded to include personal failures (such as in academic pursuits or career development), organizational failures (e.g., project or startup failures, corporate bankruptcies), and even failures in government policy. This broader scope reflects a growing academic recognition that failures are not confined to a single domain.

Failure Studies is fundamentally interdisciplinary. For instance, when a technical failure occurs, engineers investigate potential physical or structural flaws. Psychologists look into how decision-makers reasoned. Management scholars examine organizational culture and leadership problems. Economists analyze cost–benefit issues and financial structures. By combining these different perspectives, researchers arrive at comprehensive solutions. Such synergy also offers a holistic understanding of failure, which in turn provides critical insights into how to avoid it in the future.

Failure Studies became firmly established in the 20th century. In particular, Japan’s “Society of Failure Studies” is a prominent research institution in this area. Japanese engineer Yotaro Hatamura is well known for his extensive analysis of failure cases. In his book, The Laws of Failure, he distinguishes between technical, institutional, and organizational failures, systematically examining each type. His work has gained wide international recognition.

In the United States, a culture that often considers failure a prerequisite for entrepreneurship and innovation has fostered robust research on Failure Studies in places like Silicon Valley. In Europe, the field has advanced in areas such as safety engineering and disaster management. More recently, Failure Studies has begun incorporating psychological factors, including individual cognitive biases, organizational barriers to critical thinking, and sociocultural implications. In today’s online environment—where information travels rapidly—understanding the details of failures has become even more crucial, thereby boosting interest in this field.

Failure Studies typically involves categorizing failures statistically and assessing which factors are most likely to contribute to them. These insights help decision-makers make more rational choices. In this respect, Failure Studies can be seen as a form of preventive science. While it may be impossible to eliminate every single failure, recognizing repeated patterns and minimizing the scale of damage are attainable goals—and precisely why Failure Studies exists.

 

2. The History of Failure Studies

2.1 The Industrialization Era

he idea of studying failure itself has existed for a long time. As early as the Industrial Revolution, machines and equipment frequently broke down, causing accidents in railways, steam engines, and manufacturing facilities. At the time, engineers primarily attributed these breakdowns to structural defects, materials issues, or thermodynamic constraints. However, these analyses typically took the form of “accident reports,” stopping short of developing an academic framework.

2.2 Early to Mid-20th Century (The Emergence of Safety Engineering)

In the 20th century, warfare, the defense industry, and the aerospace sector all expanded. Large-scale accidents posed enormous human and material risks. In defense-related fields, research on “system safety” became increasingly active. In the United States, organizations such as Bell Labs and NASA created manuals that detailed systematic procedures for investigating accident causes. These documents introduced structured methods for assessing the potential for failure.

During the 1960s and 1970s, techniques such as FMEA (Failure Modes and Effects Analysis) and FTA (Fault Tree Analysis) emerged. These methods logically traced system defects to reduce accident probability. Initially, they were used mostly in aviation, defense, and space industries. This period marked the preliminary steps toward incorporating Failure Studies into academia.

2.3 Late 20th Century (Yotaro Hatamura and the Japanese Society of Failure Studies)

In Japan, Professor Yotaro Hatamura popularized the term “Failure Studies.” He collected an extensive range of technical failure cases from multiple fields, including manufacturing, construction, and materials development, then classified these instances to identify common patterns.

His overarching principle was straightforward:

“In order to design for success, one must first understand failure.”

Hatamura criticized the cultural tendency to conceal failure. He argued that failure should not be treated as a source of shame; rather, it must be openly shared so that others can learn and improve. This perspective had a significant impact on Japanese society, which has traditionally viewed failure in a negative light. Against this cultural backdrop, the Society of Failure Studies (失敗学会) was established in 2002.

2.4 The Modern Era: Systematic Approaches and Convergence

In the 21st century, Failure Studies has continued to expand, incorporating insights from business management, organizational theory, psychology, and behavioral economics. The discipline recognizes that many failures are not merely technological in nature. Organizational decision-making, leadership styles, communication lapses, and sociocultural factors also play major roles. For example, if a large-scale project fails, it might not be solely due to inadequate funding. A lack of accountability, poor communication, or over-optimism can all be contributing factors.

Harvard Business School has conducted detailed research on “business failures,” studying how and why certain organizations collapse, and proposing strategies to increase the likelihood of success. At MIT and Stanford, researchers have examined why startups fail, emphasizing that setbacks can be a necessary precursor to innovation. For instance, Clayton Christensen, in The Innovator’s Dilemma, analyzes how established market leaders can fail when confronted with emerging, disruptive technologies.

In Europe, various catastrophic incidents—like bridge collapses and railroad accidents—have also spurred investigation. Institutions such as Sofia University, Oxford, and Cambridge have focused on failures in public policy, examining why government programs sometimes fall short of intended outcomes or even produce counterproductive effects. This research has led to the establishment of “policy failure studies.” International bodies, including the UN, OECD, and EU, have collected data on these policy failures as well.

To summarize, Failure Studies originated in analyzing industrial accidents, then grew into a multidisciplinary field that addresses a wide range of failures in technology, business, psychology, and public administration. Scholars share their findings and continue to broaden the discipline’s scope and impact.

 

3. Major Case Studies in Failure Studies

3.1 Technical Failures

1) The Challenger Space Shuttle Explosion (1986)

The 1986 Challenger explosion remains one of the most shocking failures in the history of space exploration. On January 28, 1986, the shuttle launched from Cape Canaveral in Florida but exploded approximately 73 seconds into flight, killing all seven crew members.

Investigations identified defective O-rings on the solid rocket boosters as the immediate cause. These rubber seals hardened in the cold weather, failing to function properly. The day’s low temperatures raised red flags among engineers, but NASA leadership, under pressure from budget concerns and public expectations, proceeded with the launch.

Ultimately, the compromised O-rings could not contain the high-temperature gases and flames, damaging the external fuel tank and leading to a catastrophic explosion within seconds. The post-accident inquiry revealed that NASA’s decision-making process had ignored critical technical warnings. Scheduling, budgets, and political pressures overshadowed safety considerations.

Thus, the Challenger disaster highlighted not just a technical defect, but also deeper organizational and leadership problems. NASA overlooked obvious risk signals due to bureaucratic structures, overconfidence, and political factors. Consequently, the Challenger stands as a quintessential case of systemic failure, underscoring the importance of risk management, respect for engineering expertise, and the development of a safety-first culture.

2) Sony Betamax (Failure in the Competition with VHS)

In 1975, Sony introduced Betamax, a home video recording and playback format renowned for its superior picture and sound quality. However, JVC released the VHS (Video Home System) in 1976, and the two formats went head-to-head in the marketplace. Ultimately, consumers favored VHS, and Betamax declined relatively quickly. This outcome was not just about technical quality; market strategy, corporate alliances, consumer convenience, and content availability all played critical roles.

Early Betamax models allowed for only about one hour of recording time. VHS machines, by contrast, offered up to two hours from the start. Since that capacity was enough to record an entire movie or TV show in one go, VHS was more convenient for users. Despite Betamax’s superior resolution, its limited recording length was a severe handicap.

Sony also maintained strict control over Betamax, granting licenses sparingly and imposing high production standards and royalties. Meanwhile, JVC pursued an expansive licensing strategy, partnering with companies like Matsushita, Hitachi, Toshiba, and RCA. As a result, more manufacturers produced VHS machines, diversifying product choices and driving down costs. In the home VCR market, price competitiveness was crucial. Consumers gravitated toward the cheaper option that allowed for longer recording times—VHS.

Moreover, a robust content library proved vital for widespread adoption. The VHS camp aggressively worked with film studios and distributors, amassing a large library of available movies and other programming. By contrast, Sony’s focus on hardware excellence meant it lagged in cultivating partnerships with content producers.

In the end, this is a classic illustration that superior technology alone does not guarantee market success. Equally—if not more—important are open licensing strategies, ecosystem building, competitive pricing, and consumer-friendly features. The Betamax story remains one of the most frequently cited examples of a format war lost due to misaligned strategy and market realities.

 

4. Causes of Failure in New Business Ventures

4.1 Insufficient Market Analysis

One of the most common reasons new ventures fail is a lack of thorough market analysis. Companies may neglect to investigate consumer needs, market trends, or the competitive landscape, relying instead on the unfounded belief that a “good idea” alone will guarantee success. Without adequately exploring what customers truly want, how industries are structured, and where the competition stands, businesses often face rejection once they finally reach the market.

4.2 Technical Problems and Lack of Verification

Tech-based startups frequently stumble by not conducting adequate validation of their technology. They roll out prototypes without fully confirming feasibility and ignore—or only partially listen to—user feedback. While they may have advanced technology, they often fail to address broader challenges needed for commercialization, such as infrastructure, compatibility, and maintenance costs.

4.3 Poor Financial Management

Mismanaging funds can be a critical vulnerability for startups. Even if they manage to secure investment, they may fail to allocate resources effectively, spending excessively on marketing, R&D, and hiring without a sound plan. These misallocations lead to unstable cash flow relative to revenue, ultimately risking insolvency.

4.4 Team Capabilities and Organizational Culture

Dysfunction within the founding team—lack of leadership, conflicts, or divergent visions—can bring decision-making to a standstill and derail the business. In fast-evolving markets, delays can be fatal. A hierarchical or opaque culture also discourages team members from quickly reporting signs of trouble, which then go unaddressed until it is too late.

4.5 Marketing Failures

Even well-made products can flop if they remain unknown to target audiences. Misaligned market positioning, ad spending, or branding leads to wasted budgets. Businesses may pin their hopes on viral marketing that fails to materialize. Some attempt global expansion without having thoroughly tested the product in a local market, leading to costly setbacks.

4.6 Macroeconomic Shifts

Shifts in the external environment—economic downturns, regulatory changes, or intensified competition—may catch firms off-guard. For instance, during a recession, consumer spending slows, and startups’ growth can stall. Stricter regulations may suddenly render an existing business model non-compliant. Without the agility to respond to these changes, failure often follows.

 

5. Responding to Failure

1. Root Cause Analysis (RCA) and the 5 Whys

Go beyond surface-level explanations to identify the fundamental cause. Repeatedly asking “Why?”—often five times or more—helps uncover the deeper issues.

2. Prompt Information Sharing and Clear Accountability

Communicate the problem transparently to everyone involved. Instead of simply assigning blame, treat failure as an opportunity for organizational learning. Where accountability is necessary, use that knowledge to make institutional improvements and prevent recurrence.

3. Documenting Lessons Learned

Draft formal incident reports detailing each problem and solution. These become reference points for handling similar situations in the future. Building a knowledge database helps strengthen organizational learning.

4. Developing Recovery Strategies

Plans may include raising new capital, reorganizing teams, or pivoting the business. Use insights gained from failure to reinforce strengths and address weaknesses. Re-allocate resources to more promising areas.

5. Psychological Support

On an individual level, failure can be emotionally painful. Organizations should avoid burdening those involved with excessive guilt. Emphasizing that failure can be a stepping stone to growth helps foster a more resilient culture.

 

[References]

[Clayton Christensen]

• The Innovator’s Dilemma
• Explores why successful companies sometimes fail to innovate effectively, losing market dominance to disruptive technologies.

[Amy C. Edmondson]

• Harvard Business School professor known for her work on “psychological safety.”
• Stresses that open discussions and a willingness to share mistakes are essential for organizational learning.
• Warns that concealing failures hinders long-term organizational development.

[Sidney Dekker]

• Renowned for his research in aviation and healthcare safety, as well as his books on “Just Culture.”
• Argues that failure arises from complex systemic factors rather than simply individual error.
• Believes organizational structure, norms, and procedures strongly affect the likelihood of failure.

[Richard Cook & David Woods]

• Experts on complexity and system failures, examining them through systems engineering and cognitive engineering.
• Point out that major disasters often originate in a buildup of smaller defects.
• Advocate the view that organizations are perpetually “operating near the edge of failure.”

[Karl E. Weick]

• Organizational theorist who, in Sensemaking in Organizations, explores how organizations identify and respond to signals of failure.
• Suggests that when teams cannot make sense of critical events, errors escalate into larger-scale disasters.

[Nassim Nicholas Taleb]

• Discusses highly unpredictable, large-scale events in The Black Swan.
• Within the context of Failure Studies, a “black swan” can be seen as a failure that is nearly impossible to anticipate.
• Urges organizations to be prepared for extreme, low-probability threats.

 

Collectively, these scholars and works view failure not just as an obstacle to be overcome, but also as a valuable learning resource.

Failure Studies, therefore, approaches failure not as a negative endpoint but as a valid object of scholarly examination, dedicated to accumulating the knowledge necessary to prevent the same mistakes from recurring. This discipline has broad implications in industry, management, and individual growth. It helps prevent large-scale disasters, reduce business risks, and improve personal development. After all, failures happen everywhere; the more pressing question is what we can learn from them.

For entrepreneurs, project managers, or organizational leaders, Failure Studies offers significant benefits. It enables them to predict potential pitfalls, detect warning signs early, and address problems before they escalate. Even when failures do occur, analyzing these setbacks can lead to rapid lessons learned and set the stage for a more successful comeback. Embracing failure constructively is often crucial for innovation and growth in any organization.