#7 Why start an IT project if most fail?
More than 90% of startups fail, according to a Startup Genome report.
Such a high failure rate is uncommon in other industries. Nobody would even start building a house if in 9 cases out of 10 it will collapse, and doctors would not be willing to try a new vaccine if it led to death in the majority of cases.
So why do venture firms still pump millions of dollars to the startup scene?
First of all, the definition of failure is vague and subjective. If one’s aim was to build the next Facebook, but all that was achieved was Twitter, then the goal was not reached. However, it could very well be a profitable product, just not reaching the set expectations. According to The National Venture Capital Association, out of ten startups three to four return the original investment, one to two produce substantial returns and only three to four fail completely. Setting the right expectations and willingness to adjust them along the way is one of the keys to reaching a positive outcome.
Besides tangible benefits, many startups and IT projects produce intangible ones. Even if the delivered value was negative and the project had to be closed, it could have provided the team members with valuable experience, created business contacts, or improved communication. Such intangible benefits may serve as an advantage for further projects.
Lastly, the IT projects or startups that do succeed in the end, may justify the prior investments into less successful ones. With the global reach in the modern connected world, IT projects can find customers anywhere on the globe. It may explain why eight out of ten companies with the highest market capitalization are IT companies.
Being highly innovative in nature, many IT projects fail. Lessons learned from the failures provide the ground for new better projects.