poker player with chips and money at casino table
poker player with chips and money at casino table

Many times I have observed successful entrepreneurs who have built great companies and yet failed at their next start-up or product. The list is long. But, I think that I understand at least three good reasons why.

Over 30 years ago, Mike, a friend of mine had just cashed in when his company was sold for millions of dollars (that was a lot of money back then.) Before I knew it, he and his management team started another company, investing some of their own hard-earned cash. I asked him why and he replied: "I want to find out if I am that good, or if I was just lucky." Mike's path and mine diverged and we subsequently lost touch.

Many years later, my family and I were at the airport returning from a vacation and I saw Mike at baggage claim looking somewhat disheveled and tired and I asked how he was doing. He replied, as if we had just had the prior conversation, saying: "I guess I was just lucky."

Reason 1. - Luck & Timing

Without doubt, it takes perseverance and hard work to build a start-up. I know, personally, from sleepless all-night'ers and endless airplane trips. But, one cannot understate the importance of being at the right place at the right time for the success of a new, trans-formative, business model.

One of the books that I had my MBA students read was "The Drunkard's Walk, or How Randomness Rules Our Lives" by Leonard Mlodinow. Honest entrepreneurs will recount for you the many twists and turns that happened to them on their way to success or failure and often those turns were imposed upon them by external forces beyond their control.

The lesson is partly to remain humble if you make it, and to ease up on yourself if you don't. Just keep swinging and try to avoid the catastrophes while exploiting serendipities, and most importantly - have fun.

If one analyzes why, for example, Apple's IPhone was successful, one cannot underestimate impact of the fact that cell phone service providers like Sprint, AT&T and Verizon were madly rushing to add communications capacity to their networks without a clear understanding of how that capacity would be used. The advent of a "Wireless Internet Browsing" device at that moment when capacity was surging forward was, in my opinion, part of the key for Apple's success. But that surge was independent of any of Apple's own plans or actions and I suspect not even carefully analyzed as part of their strategy. Timing (and possibly luck) was critical to their success.

Google's and Amazon's inability to successfully introduce their own phones in subsequent years demonstrates that it's not simply cash, or talent that is required.

Reason 2. - Hubris versus Customers - Mirror, mirror on the wall. Who's the smartest entrepreneur of all?

Every successful CEO that I know has made it a policy to spend lots of time with their customers, carefully listening to their needs and making sure that their company is focused on those needs. Often, an entrepreneur, after a first successful product, will develop an attitude that "they know best" and they will start to ignore their customer in favor of developing products of their own liking. This is very dangerous for obvious reasons.

I've often heard entrepreneurs describe their current activities as "being in stealth mode," with fear that competitors will steal their ideas. Quite to the contrary, I have lived by the concept of telling customers (and frankly anyone else that would listen) everything that I know and believe in the belief and hope that their feedback is more important than the risks of competitive loss.

Reason 3. - A lawyer who represents himself has a fool for a client

And, I would offer that: "an entrepreneur who uses only his own money has a fool for an investor." Many of us have experienced our own tendency to try win back loses when gambling, only getting deeper into debt. Entrepreneurs who find some financial success are often willing to risk part of their winnings on their next great idea. But there are two serious problems with this.

First, it only reduces the number of independent voices that express opinions about the worthiness of your new business idea and second, the tendency to try to "win back" early losses can drain the prior winnings of the formerly successful entrepreneur.

I have never been a fan of venture investment for a start-up and I have urged entrepreneurs to find strategic partners who strongly believe in their ideas and have deep enough pockets to put their money where their "mouths" are in the form of deposits or development agreements for the opportunity to share in the eventual bounty. Their knowledge of the market, combined with their commitment and strength is often an unbeatable combination and the start-up can reduce its risk by partnering with a strong partner that has these qualities.

About the Author

Bob Caspe is the CEO at the International Entrepreneurship Center (   He has started three companies, has taught thousands of entrepreneurs around the world, and has mentored and taught students at MIT and Babson College.

Download a copy of his book: Entrepreneurial Action at

Bob's personal website: