Welcome to the 90% Club??
Updated: Apr 8, 2020
Learn about the 90% Club and how to avoid it. Trust me, this is a club you don't want to be in. Roughly 90% of all new product launches fail. I will discuss how to break through the noise and join the 10% Club.
"Getting to market with a new product is a tough business. It’s complicated and messy. Most companies aren’t very good at it. A large majority (up to 90%) of all new product launches FAIL!"
I’m Len Denton. I’m a commercialist.
You’ve probably never heard of that term before, right? So, you’re asking yourself: what’s a commercialist, and why should I care in the first place?
A commercialist is a business professional who partners with technologists and startup entrepreneurs to bring their new products and services to market. This process is called commercialization. That’s what I do.
(And, no...I didn’t invent the term “commercialist!,” but I am trying to make it famous. You know...BRANDING!)
A commercialist teams up with an innovator (high-tech, low-tech, no-tech...it actually doesn’t matter). They then work together to deliver a new product or service to market.
The fundamental purpose of any new startup is to commercialize a new product. Once you cut through all of the hype associated with startup culture, it's really nothing more than a commercialization ‘launch vehicle’ for a new product. And the sole mission of the startup is to successfully deliver that new product or service into the target market.
Getting to market with a new product is a tough business. It’s complicated and messy. Most companies aren’t very good at it. A large majority (up to 90%) of all new product launches FAIL!
That’s worth repeating. Most new product launches will fail! That also means that most startups fail.
I know what you’re thinking right now. I know that entrepreneurs (and especially startup entrepreneurs) are first-class optimists.
I’ll bet you’re thinking: “There’s no way that could happen to me!”
How do I know that’s what you’re thinking? Because, I’ve worked with more than 1,500 entrepreneurs in the USA, Mexico, Europe, Korea, and India. And they’re all extreme optimists.
I also know that more than 30 years of academic research points to the same conclusion. Around 90% of all startups and product launches fail. But, don’t believe me. Believe Harvard Business School (1). Believe startup industry research firm Startup Genome (2). Dozens of other studies arrive at similar findings. The research is clear...it’s around 90%, plus or minus!
I call it the 90% Club, and most startups working on new product launches are members of this club. They just don’t know it yet.
But I know you. You still aren’t buying it. You’re wondering: “What about the venture capital-funded companies? After all, these VC people are really smart, right?
Well, they ARE really smart, but even that’s not enough!
The Wall Street Journal conducted a study of VC-backed companies and found that 70-75% of these companies failed. Failed... as in completely shutting down without returning the original investment (3). Not to mention that less than 1% of all startups ever receive venture capital funding in the first place.
What about patents? Surely having a patent for the technology would improve the chances of success, right?
Nope. It doesn’t.
Statistics from the U.S. Patent and Trademarks Office show that 95% of all registered patents never make any money at all (4)! These aren’t the commercialization success stories we were looking for.
Ninety percent of startups fail. Following the conventional wisdom on startups will land you in the 90% Club. It’s not a club you want to belong to.
Entrepreneurs, startup CEOs, VCs, etc. are some of the smartest people in the world. I’ve always been puzzled that such an intelligent and passionate group of people could end up with an overall 90% failure rate. The costs are enormous. According to Pitchbook, venture capitalists invested $131 billion in U.S.-based startups in 2018 (5). Based on the studies cited above, the majority of those startups will become members of the 90% Club. They’ll ultimately fail, costing their VCs $118 billion of lost investment. And that’s just the money! The costs in terms of lost time and opportunities are immeasurable.
If you’re an entrepreneur or innovator, it's pretty likely that you’re a member of the club. One of the big problems with the 90% Club is that most people don’t realize that they are actually members until it's too late! I know this, because I’ve actually been a member myself. But that’s a story for another blog post.
The 90% Club is real and it is the PROBLEM.
Fortunately, there is also a 10% Club! It is the SOLUTION.
Members of the 10% Club are successful in getting their new products and services into the market. They connect with eager customers in need of the solutions they are offering. The 10% Club members do things differently.
This blog is about the 10% Club. The topics you’ll read about here will show you a different way to reach your ideal customers with the products and services they’re looking for and willing to pay for.
Let’s ditch the 90% Club, and buck the trend! Let’s see if you have what it takes to join the 10% Club. Welcome to the revolution!
1 Harvard Business School Working Knowledge article: Why Companies Fail—and How Their Founders Can Bounce Back
2 Startup Genome report: Startup Genome Report Extra - Premature Scaling
3 Wall Street Journal article: The Venture Capital Secret: 3 Out of 4 Start-Ups Fail
4 Forbes Magazine article: https://www.forbes.com/sites/danielfisher/2014/06/18/13633/#24cefa606f1c
5 Pitchbook article: 21 charts showing current trends in US venture capital
I write for small business owners and startup entrepreneurs who are trying to change the world with their new products and services. But before anyone can change the world, they have to get someone to buy their product. My personal mission is to help innovators win. I do that by helping them succeed in getting to market. How can we work together?