Six Entrepreneurial Mistakes

Source and verification limitations (2026-11-02): The original WeChat article is credited to Ba Jiuling and the Wu Xiaobo Channel; it should not be treated as a verbatim transcript of Wu Xiaobo speaking. Primary statistics have not been obtained for claims that 95% of companies die within 18 months, the daily number of people starting businesses, an 80% market share, or odds of one in a million. The six mistakes form the article's framework; the original source also promotes a course. Retaining the figures does not mean they have been verified. Sources and reference links (see the explanation above for the scope of verification): https://mp.weixin.qq.com/s/kklyCmmqH4c7Q8RGua9ZrA ---- Wu Xiaobo: Six Mistakes Entrepreneurs Make Entrepreneurial success has always been a low-probability event. Ultimately, it is a game of survivors. Over the past few years in China (2013–2019), an average of 10,000 people started businesses each day, and more than 95% of those businesses faced death within the following eighteen months. In Adizes' corporate lifecycle theory, they are in the stages from Infancy to Go-Go. Analyzing the symptoms of business death, Mr. Wu believes that most entrepreneurs make six kinds of fatal mistakes. Mistake one: entering the wrong industry. “Women fear marrying the wrong man; men fear entering the wrong trade.” In his theory of competitive strategy, Michael Porter proposed that whether a company has room for sustainable growth depends first on the industry's room for growth. An industry is not worth entering if it displays the following four conditions: ▶ The pool of new consumers has reached saturation, leaving no room for market expansion. Industry leaders can sustain themselves only through brutal price wars and acquisitions. ▶ The industry has remained in a state of technological maintenance for a long time, with no prospect of an innovative breakthrough in the short or medium term. ▶ The industry is relatively small, and leading companies hold more than 80% of its market share, creating an “ultra-stable, low-error-tolerance” structure. ▶ The industry has obvious policy risks or ethical risks. Mistake two: dreaming too big. This is the mistake entrepreneurs make most easily. They aspire to change the world at every turn, benchmarking themselves against Bill Gates or Jack Ma from the moment they emerge. These entrepreneurs may not yet have put their own house in order, but are already declaring that they will sweep the world clean. They always feel the world owes them a fulcrum. They like reciting long passages of famous entrepreneurs' maxims, and their business plans are full of impassioned words such as “disrupt,” “eliminate,” “remake,” and “revolution.” Mistake three: false demand. This is the mistake entrepreneurs find hardest to spot. Starting a business is an act of supplying something; what determines its fate is whether the demand side is willing to pay for it. Many startup ideas come from founders' imagined demand. That imagination is precious, but, being untested, the demand remains ill-defined. In his past experience, Mr. Wu has encountered several startup cases that, even at the business-plan stage, received validation, support, and even investment from leading entrepreneurs such as Jack Ma and Pony Ma, and leading investors such as Neil Shen. Yet the market ultimately exposed them as cases of “false demand.” In other words, whether demand is real can be known only after the market has tested it. Mistake four: difficulty making a profit. Many failed startups look appealing and have consumers willing to pay, but their profit margins are too low because delivery costs are too high, the market is too small, the supply chain is too long, or the scope for adding value to the product is limited. They offer little reward, yet are hard to give up. Once market conditions change or team morale is exhausted, the venture may quietly come to an end. Mistake five: a homogeneous team. Startup teams often bring together “like-minded” people. The most alarming potential problem is that their capabilities are alike and their resources overlap. It is like a barrel with one long stave, while water pours out over the other, shorter ones. Yet bringing together people with different professional skills and cultural backgrounds may also create difficulties integrating their cultures from the very first day of the venture. Sharing a mission without being homogeneous is a crucial challenge in forming a startup team—one that, in a sense, cannot be overcome through reason or formal systems alone. Mistake six: busily chasing trends. “When the wind is strong enough, even pigs can fly.” This famous saying by Lei Jun is half right and half wrong. As for which half is right and which is wrong, nobody knows. Almost all fast-growing companies are genuine trend-chasers, and when a strong wind arrives, some pigs will certainly be lifted into the air. But the real question is who will soar into the clouds like a god, and who will fall like a pig and be smashed to pieces. You know only when the outcome is revealed. A successful trend-chaser such as Zuckerberg is a one-in-a-million event. The eventual victories of trend-chasers such as Wang Xing, Huang Zheng, and Zhang Yiming reflect both luck and exceptional talent. Another fact that cannot be overlooked is that they are all veterans of failure. That is why they describe their success as “nine failures and one success.” So entering the wrong industry, dreaming too big, false demand, difficulty making a profit, a homogeneous team, and busily chasing trends are the six mistakes most easily made in entrepreneurship. The problem is that many founders realize their company is in trouble and that they must have made a mistake, but cannot identify where they went wrong. ▶ When a product launches and sales are poor, is the demand wrong, or is the product itself inherently difficult to make profitable? ▶ When difficulties arise, should you adjust direction promptly and find a new field, or hold on to your original purpose? Original: https://mp.weixin.qq.com/s/kklyCmmqH4c7Q8RGua9ZrA