Why Only 1 in 700 Tech Startups Truly Succeeds and How to Be That One
Out of every 700 companies, only one truly makes it. Let that sink in. One in 700. A staggering 90% of companies fail even to scale, and of those that do, 85% never sell for a meaningful amount. Either the negotiations broke off, or the company wasn’t built so it can be sold. But why are the stats that low? And more importantly, how can you ensure your startup isn’t just another statistic?
The Scaling Challenge
We’ll focus on the scaling part. Only 10% of companies manage to scale, and the primary reason is simple: they don’t address a genuine need in the market. It’s not enough to work on something you’re passionate about; it must be something the market needs.
Take the AI space, for instance. There’s a massive demand for AI solutions, from AI-assisted sales to AI-assisted content writing and even AI-assisted product management. But here’s the catch: everyone’s jumping on the bandwagon. The market is saturated with companies offering AI solutions, and many existing companies are integrating AI into their existing products.
Everybody wants AI, so everybody does AI.
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The Differentiation Dilemma
When everyone is offering similar solutions, products start to look identical in the eyes of the customer. If your AI-powered product management tool feels similar to the next company’s product management tool, customers will inevitably decide based on price.
And I get objections from clients all the time. Our solution is unique. We have this feature or that feature. But do the customers know, recognize and appreciate that unique feature? Is it that good, that they are prepared to leave their current solution and switch to your product?
Because in most cases, that’s not the case. Most startups want to educate their customers why their features are better than their competitors, but that’s a lengthy process that’s going to fail every time and you’ll end up competing on price again.
Competing on price is a dangerous game, leading to high customer acquisition costs and low conversions. This is a recipe for stalling growth.
In most category, for example in the AI space, many startups fail because they offer a “me too” product rather than something truly unique. It’s not about what you believe sets your product apart; it’s about what the customer perceives as different.
The Path to Differentiation
So, how can you stand out? Here’s a roadmap:
- Identify Your Use Case: Understand who you’re serving. In the AI realm, this often means identifying a specific use case that resonates across multiple segments. Pinpoint the job your product accomplishes for the customer.
- Craft Your Value Proposition: Turn your use case into a compelling promise. “Our product helps you solve X problem” or “Our product ensures you achieve Y.”
- Leverage Your Unique Assets: Assess what you have that your competitors don’t. These assets can be anything from proprietary technology, exclusive partnerships, or even unique insights.
- Build Your Differentiation: Transform these assets into clear differentiators in your messaging and branding.
For instance, let’s say you are building an AI-powered CRM and your product has a unique algorithm developed after years of research, that gives you the perfect follow-up dates. That’s your asset. Now turn that asset into a benefit for the customer. “Because of our unique algorithm, you know exactly when to follow up with your leads.”
So your differentiation could be “Know exactly when to follow up leads with out AI-powered algorithm.”
That would be great for introverts, wouldn’t it? I would love that solution. And if it calls leads even better:)
In Conclusion
Positioning is crucial. Even if you have a differentiated product today, the landscape can and will change tomorrow. Stay vigilant, keep iterating, and always ensure your product not only meets a market need but does so in a way that’s unmistakably unique. In the crowded world of tech startups, it’s not just about being the best; it’s about being different in the best possible way.
If you need a structured way to find your differentiation, go to and craft a value proposition your customers will love.
Next time, we’ll continue this discussion, and I’ll show you specifically why and how your startup will fail. Fun times, see you next time, may your customers love you and understand your product.
