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The causes of failure
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In a recent interview, an expensive consultant… those that charge you for their offices in the middle of Manhattan and all the MBA fees of the Ivy League graduates, responded the following on TV to this question: “Are there some main causes behind startup failure?” ​ The answer was: “Yes. There are.” ​ Which ones? ​ No market need – 42% Ran out of cash – 29% Not the right team – 23% Got outcompeted – 19% Pricing/cost issues – 18% Poor product – 17% Flawed or missing business model – 17% Poor marketing – 14% Ignored customers – 14% Bad timing – 13% Lost focus – 13% Disharmony among team/investors – 13% Bad pivot – 10% Lack of passion – 9% Bad location – 9% Lack of funding/investor interest – 8% Legal challenges – 8% Didn’t use network/advisors – 8% Burnout – 8% Failure to pivot – 7% ​ No one said “Bad communication” or “We just don’t know how to sell.” ​ What mean is startups fail and fail and still don’t know why they fail. ​ Anyway, I went to see the official statistics of the World Bank for PPPs… and you’ll recognize this pattern. ​ 1. Unrealistic risk allocation – 41% Governments push risks they don’t understand. Private sector accepts them… until they explode. ​ 2. Poorly structured KPIs and deduction regimes – 33% Penalties designed by bureaucrats who’ve never run a project. Death by spreadsheet. ​ 3. Political interference – 31% Ministers want ribbon cuttings, not 30-year success. ​ 4. Weak contract management – 29% Public side forgets the “Partnership” part. No monitoring, no enforcement, no memory. ​ 5. Optimism bias in the financial model – 28% Forecasts made by interns on Red Bull. Reality? Brutal. ​ 6. Permitting and land delays – 25% The “shovel-ready” project spends 3 years finding the shovel. ​ 7. Inadequate market sounding – 22% Nobody asked the market if the deal made sense. Spoiler: it didn’t. ​ 8. Sponsor misalignment – 20% One wants to build, another wants to flip, and the third is already gone. ​ 9. Weak lenders’ oversight – 18% Banks too focused on closing fees to read the contracts they finance. ​ 10. Poor asset handover process – 16% Construction ends. Nobody’s ready to operate. Then everyone panics. ​ 11. Inflated construction costs – 15% “Value engineering” means cutting quality and praying. ​ 12. Change in government priorities – 14% The new minister hates the project. The old one’s already at the World Bank. ​ 13. Legal and governance uncertainty – 13% PPP law says one thing, procurement manuals say another. ​ 14. Underestimated lifecycle costs – 12% Maintenance budgets magically shrink after year 5. ​ 15. Ineffective dispute resolution – 11% Panels that never meet. Arbitration that costs more than fixing the problem. Timing to solve minor disputes is longer than the construction period. ​ 16. Public opposition and poor communication – 10% “We didn’t know there’d be tolls!” — even though it’s in the name. ​ 17. Lack of skilled public-sector negotiators – 9% The private side brings 15 experts and a couple of guys empower to take decisions on the spot. The public side brings… good intentions. ​ 18. Currency and inflation exposure – 8% “Unhedged” becomes a national sport. ​ 19. Weak performance monitoring – 7% KPIs? Collected once. Reviewed never. ​ But again… everyone forgot about the obvious cause: 20. Ego and denial – 100% Because in PPPs, the last thing anyone wants to admit… is that the partnership never worked. ​ If you want a different opinion to the World Bank, you can click below. ​ ​The top 15 Lessons of a successful project​ ​The top 15 lessons of a nightmare project​ ​Don't be embarrassed. ​ ​ PD 1: If you liked this email, don't keep it in secret and forward it to a friend. They will thank you enormously one day. PD 2: If somebody has sent you this email and you want to receive emails like this yourself, visit vicentevalencia.com PD 3: If you want unsubscribe, click the link below. ​ ​ |
Vicente Valencia
I talk about Personal Growth, Management, Infrastructure and More | 👇JOIN +2k readers 👇
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