Ep. 249: Bernie Bulkin - On Why Start-Ups Fail

Why do start-ups fail? And what if more of those failures are avoidable than we think?

There is an enormous mythology around start-ups.

Perhaps the biggest is the often-repeated claim that 90% of them fail — as if failure is simply the natural, almost inevitable price of trying to build something new.

My guest on this episode of The Decision-Making Studio Podcast is Dr Bernard Bulkin OBE.

Bernie spent more than two decades in venture capital, investing in Silicon Valley and London. He's been an angel investor, a founder and a company leader, and has served on boards ranging from start-ups to large public companies. He's also an Emeritus Professorial Fellow at the University of Cambridge and has served as a Vice President of the Energy Institute.

And, as his biography rather refreshingly points out, he has also founded, led and invested in companies that have failed.

His book is Why Start-Ups Fail: Avoiding the Traps on the Path to Commercial Success.

And I think it's a rather counter-cultural business book.

Bernie's argument is not that start-ups don't fail. Of course they do. It's that many of the reasons they fail are understandable, and, crucially, avoidable.

If you're a founder, or thinking about starting a business, Bernie offers something approaching a masterclass here in why start-ups fail and what can be done differently.

But this isn't really a business podcast.

The Decision-Making Studio is about decisions and uncertainty. And what interested me in Bernie's work is what happens when you look beneath the start-up context.

We talk about engineers and the particular ways they can think about businesses. We talk about money, and why most start-ups need more than they think they do.

We get into behavioural science, myths and assumptions, and self-awareness: understanding yourself, your own limitations, and the role that plays in the decisions you make.

So yes, this is something of a masterclass in start-ups.

But it's also a conversation about something much broader: why failure is not always inevitable, how our own thinking can help create it, and whether, by understanding the traps we repeatedly fall into, we might make better decisions.

In start-ups, certainly.

But well beyond them too.

In this episode

(00:03:00) Why do start-ups fail?
(00:10:00) The 'horrible premise' of a business based on failure
(00:21:00) Why start-up failure is not inevitable
(00:32:00) Engineers, founders and ways of thinking
(00:44:00) Money, investment and the power law
(00:56:00) Behavioural science, judgement and the Theranos case
(01:09:00) Self-awareness and better decision-making

Chapter timings are approximate.

Links and resources

Bernie Bulkin and Why Start-Ups Fail

Why Start-Ups Fail — Bloomsbury

Bernie Bulkin — Bloomsbury author profile

The Power Law: Venture Capital and the Art of Disruption — Sebastian Mallaby

An examination of venture capital and the power-law dynamics that shape the industry.

The Power Law — Penguin

7 Powers: The Foundations of Business Strategy — Hamilton Helmer

Helmer's framework for understanding the persistent sources of competitive advantage.

7 Powers — official website

Theranos and Elizabeth Holmes

The Theranos case comes up in our discussion of technology, leadership, governance and the stories that can take hold around start-ups. For a detailed account, see John Carreyrou's Bad Blood: Secrets and Lies in a Silicon Valley Startup.

Bad Blood — Penguin Random House

More from Bernie

Professor Bernie Bulkin — Murray Edwards College, Cambridge