Founders, analysts, investors can come up with hundreds of reasons why startups fail: bad product-market fit, hired too much, failed to raise, etc. But in reality, I think there's only two real root causes. Everything else are just excuses and noise.

1. Ran out of money
2. Ran out of motivation

Failure occurs only when the Cost of the Next Iteration exceeds the Remaining Capital + Founder's Will.

But first, what is a startup?

Too often, startups and companies get conflated with the products they make and sell. This isn't the right framing, especially for a solo founder.

A startup is fundamentally a company – a group of people (or single person) working to achieve a common goal: create enough value that people will pay for it.

Your product should not be your company identity. Look at Google and Facebook who ended up renaming their companies to Alphabet and Meta. Or consider Nintendo, which started out making playing cards; Nokia, which started as a pulp mill; or YouTube, which started as a dating site. Slack was a game studio.

Tip: Naming your company after your product is your first mistake. Your product is not your company.

If you delineate between company and products, it becomes easier to see why companies can succeed even if products fail. Sure, you might build a product that fails. Even successful companies do. That doesn't mean your company has failed.

As long as you have enough money + will to keep going, you can pivot or even build in a completely new space. You can go after that next iteration.

That gets us to the two real reasons your startup might fail.

1: Running out of money

This is the obvious reason: you ran out of money to keep going. In the case of a solo founder, it doesn't necessarily mean your company ran out of money. Since you probably shouldn't be paying yourself in the early phases, your company could be making enough money to cover its expenses, but you yourself don't have enough runway to pay for your living expenses.

Easy enough fix: don't run out of money 😄 But more seriously, I'll cover this in a different post but tl;dr: you should to set yourself up financially before working on a company.

2: Running out of motivation

I'll be frank: I think this is the main reason why startups and especially solo founder companies die.

Let's look back at our equation. You fail if Cost of the Next Iteration > Money + Will.

Running out of motivation is obviously related to #1; if you don't have enough money in your bank account for your rent or don't have enough money in you company's bank account to pay for servers, you're probably questioning why you're doing this in the first place.

Money is a hard number but will is a completely volatile and psychological variable.

Losing motivation can take other forms:

• You don't have enough users (or any users)
• You're not growing fast enough
• You're not making enough money (or any money)
• Competitors in the space are doing better
• People you know, people on the internet, are doing better
• If you're not solo and are working in a team, co-founder conflict is a big factor

Building a company is difficult. It is psychologically taxing because it's at the crossroads of being an open ended problem – at any given moment, there are a thousand of different things you could be doing for your company – and having large financial ramifications. It's especially difficult when you don't see any signs of success. It's even worse, in the age of social media, when you see others seemingly succeeding while you are failing. What are you doing wrong?

The easy way out – giving up – is... easy.

That said, there are things we can do to keep our motivation and spirits up. Consider:

• Why are you doing this in the first place?
• What is success to you?
• Do you have the right expectations in the first place?
• Do you believe in the space you're building in?

If you have good answers to these questions, you'll have no problem keeping your motivation. More posts to come on motivation.