How do you, as an employee, recognize a start-up that is doomed to failure?

Hello Thorsten,

You ask a good question and one should hope that at least professionals (investors like VC/PE/HF…) can recognize this.But i can say from experience that 9 out of 10 cases fail. The chance that your start-up employer is doomed to failure is therefore, unfortunately, at 90%, statistically speaking. That’s off the front, because there’s certainly no universal statement, no grid through which you let companies run and then just the successful ones fall out below.

It is even more difficult to evaluate employees, especially without insight into (cryptic?) Financial key figures (KPIs) such as Cash Burn Rate per Month, Revenue Run Rate (Annualization Month.Customer Acquisition Cost, or total customer revenue, conversion rate, … not to mention the (less cryptic) basic capital endowment, fixed costs, margin, revenue expectations and many more things. And then the whole thing depends on how open the communication from “up” to the bottom is. The issue of transparency. There are companies that disclose everything internally, others do very mysteriously. Window dressing is done to investors, but it is impossible to at least get a clue about it if you, as an intern, keep your eyes and ears open 鈥?and use the brain, not the heart!

The most important thing (IMHO) seems to me: one should have understood the business model 100% 鈥?only in this way can one recognize whether the product, the service is marketable at all and has opportunities to get started.Explain it to someone third party (consumer or bustomer) in a few sentences ….

It has to satisfy a benefit at the right time, solve a problem in the right place, which is considered by as large (or financially strong small) users as such 鈥?do you need that?Do companies need this? Does anyone need it at all or is it just a nice-to-have? Are there big competitors that make your employer flat by copying… Keyword Snapchat (?).

As a system theorist, I can refer to Luhmann: every subsystem (company/employer) must contribute a benefit to the overall system (society/economy/politics/…), otherwise it will disappear.Likewise, every actor (employee) within a subsystem must contribute a benefit to the preservation, otherwise he too will disappear. You could also say that if the team doesn’t fit together or is sufficiently qualified, diversified, or whatever is azifier, then success will be damn difficult.

Sounds little grippy, of course, I admit!It is damn difficult to identify at an early stage which business model is/will not succeed and which will not. If you had that, would you probably be doing business yourself?

In order not to conclude completely without something concrete perhaps the very simple and obvious things: if your salary is paid out from time to time late you should consider being among the 90%.unfortunately!

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