'People Problems' Sink Most Startups

Photograph by WB Digital

It’s not undercapitalization, lack of planning, or failure to test the market that most often cause startup business failures, says Noam Wasserman, a 42-year-old associate professor at Harvard Business School. Instead, nearly two-thirds of early stage failures stem from people problems—who does what and how they’re compensated, says Wasserman, who has written a new book, The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup (Princeton University Press, 2012). I spoke to Wasserman recently about his conclusions on startup failure and how he recommends would-be entrepreneurs increase their odds of success. Edited excerpts of our conversation follow.

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