Whenever I interview someone that recently worked at a startup that went out of business I ask them why it failed. How analytically someone answers this question says a lot about them. But the truth is that I'm mostly asking because I'm curious. I want to know what to look out for.
More often than not, the answer comes down to one thing: dysfunctional leadership. More specifically, for some reason, leadership didn't communicate well and couldn't make quick decisions.
Tomas Tunguz had a great blog post on this topic recently, titled the Challenge of Uncertainty. From the post:
Slow decision-making can be paralyzing for a company.
Management teams should check themselves occasionally on the speed and quality of their decision-making. It will almost always deteriorate over time. There are dozens of little things that can weigh down management and cause them to slow the pace -- too many direct reports, too many meetings, not enough meetings, new personalities, fear of telling the truth, personal issues, different communication styles, poor prioritization and on and on. All of these things will come up at some point. How well a leadership team weeds through this stuff and finds a way to continue to make good, speedy decisions might make the difference.