DREIESKIVA​|Roald Kvam

In entrepreneurship, failure is often seen as a badge of honor—a necessary step on the road to success. Yet, the increasing rate of startup failures in the U.S. reveals a sobering reality: not all failures are educational, and many could be avoided altogether. Recent data indicates that U.S. startup failures have increased by 60% in the past year, a significant jump that reflects the volatile nature of innovation and business. Every failed startup carries tangible and intangible costs: wasted resources, lost jobs, and damaged reputations.

To better understand the mechanics of failure, venture capitalist Sean Jacobsohn created the Failure Museum—a collection of over 1,000 failed products and businesses. This unique archive is not just a reminder of what went wrong but a resource for learning how to avoid common mistakes. Through his research, Jacobsohn has identified six key warning signs that often predict failure, as well as critical lessons to help entrepreneurs navigate the challenges of building a sustainable business.

Let’s explore the six lessons every startup founder should learn from the Museum of Failure…

1. Validate your market before building your product

One of the most common reasons startups fail is a lack of market demand. Many entrepreneurs fall in love with their idea but fail to ask a crucial question: Does anyone actually want this? Jacobsohn highlights the cautionary tale of Juicero, a $400 juicing machine that squeezed pre-packaged juice bags. Despite raising $120 million in funding, Juicero shut down after consumers realized they could squeeze the juice bags by hand—rendering the expensive device useless.

Lesson: Validate your market before investing time and capital into product development. Conduct thorough market research, engage with potential customers, and test minimum viable products (MVPs) to gauge demand. Tools like surveys, focus groups, and pilot programs can provide valuable insights and reduce the risk of building something no one wants.

Key Q: Are we solving a real problem that enough people care about?

2. Understand the importance of timing

Even a great product can fail if it arrives too early—or too late. Jacobsohn points to Google Glass as an example. Despite the backing of a tech giant, Google Glass struggled with privacy concerns, limited functionality, and an audience that wasn’t ready for wearable tech. The product was pulled from shelves in 2015, though it laid the groundwork for future innovations.

Lesson: Timing is everything. Study market trends and consumer behavior to determine whether your product is arriving at the right time. Being ahead of the curve is as risky as being behind it.

Key Q: Is the market ready for this product, and are we equipped to educate and onboard users?

3. Prioritize customer-centric design

Many failed startups share a common trait: they neglect the end user’s needs and experience. Jacobsohn notes that New Coke, Coca-Cola’s infamous reformulation in the 1980s, failed because it ignored customer loyalty to the original product. Despite extensive taste tests, the company underestimated the emotional connection people had with the classic formula.

Lesson: Design your product with the customer in mind. User experience (UX) should guide every decision, from product features to marketing messages. Collect user feedback early and often, and be willing to iterate based on what you learn.

Key Q: Are we truly addressing the customer’s needs, preferences, and pain points?

4. Manage financial discipline and cash flow

Running out of cash is the death knell for many startups. Quibi, a high-profile streaming platform focused on short-form content, raised nearly $2 billion but burned through funds due to extravagant spending and an unclear value proposition. Within six months of launching, the company shut down.

Lesson: Financial discipline is critical for survival. Create detailed financial forecasts, monitor burn rates, and maintain lean operations—especially in the early stages. It’s also essential to have a clear monetization strategy and scalable revenue model.

Key Q: Are we managing our resources wisely and maintaining a sustainable burn rate?

5. Foster a culture of adaptability

Startups operate in uncertain environments, and the ability to pivot is often a key factor in long-term success. Jacobsohn cites Blockbuster’s failure to adapt to digital streaming as a cautionary tale. Despite having the opportunity to buy Netflix early on, Blockbuster clung to its brick-and-mortar model until it was too late.

Lesson: Embrace a culture of adaptability. Encourage team members to surface new ideas, monitor industry trends, and be prepared to pivot when necessary. Flexibility can be the difference between survival and extinction.

Key Q: Are we agile enough to respond to changing market conditions?

6. Communicate a clear vision

Without a clear and compelling vision, even the most promising startups can lose their way. Jacobsohn points to Theranos, the blood-testing company that collapsed due to misleading claims and poor leadership. The lack of transparency and ethical leadership not only led to business failure but also legal consequences for its executives.

Lesson: Articulate a clear, honest vision that aligns your team and stakeholders. Transparency builds trust, and a compelling mission inspires commitment. Regularly revisit and refine your vision as the company grows.

Key Q: Is our vision clear, and are we communicating it consistently to our team and customers?

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The Failure Museum serves as a powerful reminder that no startup is immune to missteps—but those who learn from past failures can greatly increase their chances of success. Entrepreneurs should actively seek out lessons from both successes and failures, applying them to their own ventures.

By focusing on market validation, timing, customer-centric design, financial discipline, adaptability, and clear communication, startups can navigate the uncertainties of building a business while reducing the likelihood of becoming another exhibit in the Museum of Failure.

Failure isn’t the opposite of success—it’s part of the journey. The difference lies in whether you use those failures to grow, adapt, and ultimately succeed.