90% of all startups fail—and these are the only 2 reasons why

Keep these two pieces of advice in mind as you build your startup

Think your idea is enough to make it? Think again.

It’s a brutal truth: most startups don’t make it. Nine out of 10 fail, and only a measly 1% ever reach unicorn status like Grab or Carousell.

But your startup doesn’t have to be part of the 90% that fail. What separates the rare winners from the startups that crash boils down to just two reasons, at least, according to investor and business strategist, Misti Cain—and understanding them could mean the difference between folding in a year or building the next unicorn.

Reason #1: Being overly focused on solutions

According to Misti, startups that are prone to fail often focus on solutions. Those that succeed, on the other hand, focus on problems.

Innovation is simply the creative ability to solve problems.

Misti Cain

You might think coming up with a solution is the same as solving a problem—but it isn’t. Diane Halpern, an American psychologist defines problem-solving as “the cognitive use of skills or strategies that increase the probability of a desirable outcome.”

In plain terms: learn as much as you can, make an informed decision, test your hypothesis, and settle on the best result.

Starting with a solution, Misti shared, can actually limit your thinking. “It’s like buying tissues over and over for a runny nose when the real problem is an allergy to sesame seeds in your morning bagel.”

Take Stewart Butterfield as an example. In 2002, he built a game called ‘Game Neverending.’ The game failed to gain traction and ended in 2004. But Butterfield noticed something important: players loved the game’s photo upload and sharing feature.

Back then, people lacked an easy way to store and share photos. By focusing on the problem, not the original game, Butterfield and his team pivoted and created Flickr. Less than a year later, Yahoo purchased it for over US$20 million.

Butterfield loved building games, so he tried again with ‘Glitch’ in 2011, a game designed for collaborative world-building. During development, his team ran into a problem common to many startups: inefficient communication. Since most of the team were engineers, they built an internal communication tool to solve their own problem. 

When Glitch failed, they realised other teams likely had the same communication challenges. They shared an early version with friends and colleagues, and in 2013 officially launched Slack—a platform designed to centralise team communication. By 2020, Slack was acquired for over US$27 billion.

The key lesson is here that successful innovation starts by identifying the problem first. Focus on solving real problems, not just implementing solutions, and you dramatically increase your chances of success. In the end, Butterfield may not have been a great game builder, but his knack for spotting problems and solving them was never in doubt.

But that’s just half the reason most startups fail. The other half? Speed.

Reason #2: Not moving fast enough

A few years ago at global startup accelerator and venture capital firm Techstars, Misti recalled having the chance to mentor a founder she nicknamed “Captain.” “The reason why I called him Captain was because he tested the waters and shipped like it was his full-time job,” she said.

In the startup world, to “ship” means to make a product or feature available to real users.

Captain—whose real name was Brian—was the CEO of a startup that helped developers and their teams gain insights into, and share the value of, their open-source projects. From the very first meeting, Misti noticed what set him apart: he moved fast.

During one call, she suggested he test his current messaging. While she was speaking, Brian was typing. At first, she thought he wasn’t paying attention—then a direct message popped up from him with a link to a landing page he had just built and rewritten based on their conversation.

Within days, he was already testing it with actual users. Every week followed the same rhythm: ship quickly, gather feedback, run experiments, kill what wasn’t working, and double down on what was. Before the 13-week accelerator even ended, Brian had closed his fundraising round, gained thousands of users, and secured multiple design partners. Less than two years post-launch in 2024, he sold his startup.

Successful founders don’t just build products—they rapidly ideate, experiment, and make decisions that confirm they are solving urgent, pervasive problems. This iterative approach is innovation in action.

Building a successful startup

Building a startup is never easy—it’s full of challenges and setbacks. But failure can be mitigated.

Focus on two things: first, continually ask and identify what is the real problem is, and second, once you find a problem worth solving, move fast to address it. Doing so can dramatically increase your chances of success.

You might be thinking: What if a co-founder leaves? Or they can’t secure funding? Or there’s a recession—or even a pandemic? Sure, these events can affect a startup, but think of them like symptoms in a medical diagnosis.

The underlying “diseases” that kill most startups are almost always the same: focusing on solutions instead of problems and moving too slowly.

So, become a fast-moving problem seeker. Ship, test, iterate, and learn quickly. That’s how you turn your ideas into successful startups.

• Watch the full talk given by Misti Cain here. 
• Read more stories we’ve written on Singaporean businesses here.

Also Read: Your ideal version of a ‘good leader’ is wrong—this is the one trait they should possess instead

Featured Image Credit: TEDxTalk