The Titanic Effect
Successfully Navigating the Uncertainties that Sink Most Startups
The Titanic Effect captures our decades of experience teaching and mentoring entrepreneurs, starting companies, and investing in startups. We have noted repeated patterns in mistakes that founders make early in the life of a venture that limit success. These patterns transcend life sciences, information technology, consumer products, and even service businesses.
Why the title? The Titanic represents to many of us the iconic tale of what happens when an unstoppable force meets an immovable object. The tragedy is embodied in that instant when The Ship struck The Iceberg, killing over 1,500 passengers and crew—and the hubris of thinking we can build something too big to fail. But while the iceberg may have represented the killing blow, what many do not realize is that the demise of the Titanic was in fact a result of a series of small decisions and missteps across a number of dimensions.
Tales of venture failure also often focus on the defining moment when a lost customer, a lack of investor dollars, or a product malfunction results in the death of a promising startup. But that failure is nearly always the result of a series of errors that were not obvious—problems that lurked beneath the surface—that were a consequence of navigating uncertainty in the early stages of development. These errors take the form of hidden non-financial debts that gradually weigh down the budding enterprise. While financial debts are obvious and easy to measure, the hidden debts we explore are obligations and barriers to success that are not as easy to identify, and an unintended consequence of navigating uncertainty.
In our book, we further explore the set of human, technical, and marketing challenges that combined to result in the sinking of the Titanic, one of our most tragic historical maritime disasters. We draw on lessons learned, as well as case studies of failed businesses, to show similar patterns for entrepreneurial ventures–and how hidden debts accumulated early in the life of even the most promising startup can subsequently sink them. Our tool, the Iceberg Index, helps entrepreneurs and investors identify, measure, and manage these hidden debts.
We believe the book will be of interest to current and would-be entrepreneurs as well as investors and advisors who support early-stage enterprises. More broadly, those with an interest in history and business should find this an entertaining and educational read, in the style of Steven Johnson (How We Got To Now, Future Perfect) and Daniel Pink (Drive, A Whole New Mind). We hope it is beneficial to all who participate in the venture community.
You can learn more and purchase the book here