Why do so many startups fail? originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Balaji Viswanathan, CEO of Invento Robotics, on Quora:

You mean that two guys who might have never worked before, with no experience of making tough business decisions, with no financial experience or cash cushion, putting together a product that was never seen and entering a market that doesn't exist, with a brand that no one cares and a business entity with no real process, but still taking on large complex problems do fail often? Yeah, what do you expect?

So many startups fail because new and risky ideas are by design failure prone.

I worked for a "startup factory" project within Microsoft -- where they assembled some of the best scientists and engineers tasked with building new ideas. There was money, there was experience, there was Microsoft's brand and distribution channels. Despite all that most ideas never succeeded.

For another company, I was managing new venture creation and it was quite hard to push new products despite having large customers for the existing product and the brand name.

New ideas fail everywhere with a high probability. If the risk of failure were not there someone else would have done that already. Startups by design take those ideas that have a slim chance of success.

It is not like IBM could not have built an operating system for microcomputers. Just that they rightly guessed it was risky and the market not big. But, it actually turned out to be a huge market due to changing economic conditions and Microsoft ruled the roost. Walmart entered e-commerce late as they believed people were not likely to buy through computers. The Internet evolved way too fast for them to react.

As a startup founder you are entering a lonely coast known for tsunamis. You might drown by the huge wave or might actually catch a huge amount of fish (that no one else is taking).

You are trying to put a completely new concept or a new market and assemble a group of people who might not have worked together. While they might have studied together, working together is a different ball game. There is no process to hold the discipline and no brand to lean on. The cash cushion is not big enough to withstand multiple failures and the executives might have no experience wading through tough times. There is no real HR process to manage talent and no good financial management. There is no established relationship with customers and no established channels. Product quality is often poor in the early days and customer support not as professional.

It is just a miracle that some startups even succeed. Startups that got incredibly lucky being at the right time with the right people succeeded. Most others with similar capabilities died.

And many of the startups that die should not have existed in the first place. It might be a feeble attempt by a group of people who might have met at a meetup and decided to try something for a few months. Or a lone ranger trying to build the next big thing. Or some new grads who try something before getting a good job.

For startups with founders who have experience, connections and a team, the failure rate is not as high. The failure rate is just proportional to the risk of the idea itself.

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Published on: Jan 18, 2019