Why do startups fail? This Harvard professor blames the ‘speed trap’

Expanding at an unsustainable pace is one of the primary reasons why startups go out of business, writes Harvard Business School professor Tom Eisenmann.

How fast is too fast? Fab.com cofounder and CEO Jason Goldberg learned the hard way. When it launched in 2011, Fab was a flash-sale site that curated distinctively designed consumer products and sold them at deeply discounted prices. It was an instant hit. Fab’s featured offers spread like wildfire through social media, so Fab didn’t have to spend any money on marketing—initially. The products were shipped directly to consumers by their designers, so Fab didn’t hold any inventory—initially. As a result, the fledgling venture had positive cash flow—temporarily.

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Originally published on Fast Company : Original article

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