Book uses lessons learned from the Titanic to tell startups what not to do

Research shows that more than 70 percent of startups fail. An even larger percentage never even get off the ground. So how do you avoid the pitfalls that come with navigating the uncertainties of a startup?

Image of the Titanic approaching an icebergView print quality image
The Titanic sank not just because of an iceberg but because of poor decisions made by designers, builders and operators, say the authors of a new book.

A new book, "The Titanic Effect: Successfully Navigating the Uncertainties that Sink Most Startups," guides early-stage startups and their supporters through the challenges they will encounter as they begin building their venture. Startups are inherently uncertain. Decisions have to be made with incomplete information. These decisions result in unanticipated consequences -- problems that lurk beneath the surface.

The book draws on lessons learned from the Titanic, which sank in 1912 not only because it hit an iceberg, but because of a number of decisions that interacted to create one of the largest maritime disasters. A series of tradeoffs and choices in the design, building and operating of the Titanic magnified the catastrophic consequences.

The co-authors -- M. Kim Saxton, clinical professor of marketing at the Indiana University Kelley School of Business at IUPUI, Todd Saxton, associate professor of entrepreneurship and strategy at the Kelley School, and serial entrepreneur Michael Cloran, who has founded multiple startups -- leverage decades of startup experience to reveal the often-overlooked human, marketing and technical "hidden debts" that sink startups, drawing parallels to little-known parts of the original Titanic story.

"Over our more than 20 years of working with student, alumni and venture community startups, and helping launch and investing in them as well, we have seen the same patterns of mistakes repeated over and over again," Kim Saxton said. "We made a list of the most common startup mistakes, and that's the main focus of this book. Our goal is to bring these so-called 'icebergs' -- or 'debt-bergs,' as we call them -- out of hiding. Debt is not necessarily bad, as long as you recognize, measure and manage it."

"Entrepreneurs make a lot of decisions under uncertainty, and often, they don't fully understand the consequences of those decisions," Kim Saxton added. "Each decision has the potential to either enable -- or hamper -- future potential. At best, the wrong decision could limit how the startup can grow. At worst, it could cause the venture to sink."

Kim Saxton teaching a class View print quality image
M. Kim Saxton is a clinical professor of marketing at IUPUI.

"The Titanic Effect" is now available as an e-book, and it will be available in June in print. For more information, head to the book's website.