Why Startups Fail

When the internet started changing the way the venture capital business worked Gatto and his partner Marcus Whitney decided to create a new business, one that could offer unique advantages to its portfolio companies. 

To do this, they identified the five most common reasons why startups fail, and they take a prescriptive approach that Gatto compares to the process of healthcare itself. 

“Doctors don’t actually keep you alive, they just keep you from dying. If you don’t die of a heart attack today, you live longer. We took that same approach to startups,” he explained. “We don’t necessarily guarantee success, we’re just going to keep you from dying of these major five pitfalls. And then the derivative of that is you have a much better chance of success.”

In his research, Gatto found that 83 percent of startups fail because they are too early to the market, their pricing and ROI design are too limited, they don’t focus enough on selling, the team fractures, or they don’t understand working capital. 

Jumpstart took that information and designed a new venture capital platform which addresses those five issues with three key solutions, and the company uses Salesforce to do it.

Customized Solutions for Venture Capital 

First, Jumpstart avoids worrying about deal flow in the beginning, instead focusing on finding startups that are creating the solutions people have been asking for. Gatto uses Salesforce to keep track of all of these leads, so that he can then help connect startups with the people who most want their solutions.

“Salesforce helps us manage the relationships and remember that the cardiac surgeon asked for something, and I couldn’t find it,” Gatto explained. “So when I go back a year later, I sound smart, because Salesforce reminds me, ‘He asked for this last year.’” 

Salesforce also helps Jumpstart maintain Gatto’s determination to be data and demand driven, instead of being swayed by personal biases in investment decisions. Jumpstart has adapted Salesforce’s lead scoring system, using it to screen startups and figure out which ones are most ready to receive investments.

Once Jumpstart has used Salesforce to identify the best startups for its portfolio, the company then helps those startups succeed by implementing a program that teaches them how to progress. Since entrepreneurs have to do so many different things to be successful, this takes some of the stress away by breaking the process down into clearly ordered steps.

“You don’t have to do it our way, but there is a Jumpstart way to build a startup, and if you want to be in our portfolio, you will do it this way,” Gatto explains. “We can move you through the process as quickly as you can make progress.”

With these three steps, Gatto and his company successfully eliminate the common reasons for failure and equip the best startups to create agile technology in the healthcare space.

Incentivizing Customer Service

As Gatto looks at the changes happening in the healthcare space, he notices a common trend: the demand for great customer service.

Gatto points out that people are more ready than ever to take control of their health, but with that comes a need for businesses to market themselves better and take steps to really understand their patients.

“I’m a believer that healthcare is changing dramatically,” Gatto says. “It’s changing from ‘I do whatever the old man in the white coat tells me to do.’ That’s the old way, that’s the past in healthcare. Now patients are taking control of their own health and looking for information, and that leads itself pretty well to what you and I would call content marketing.”

In today’s world, many of the biggest health concerns center more around changing patient’s behavior than around providing traditional care. For this to happen effectively, clinicians need more access to data about their patients, and no one is better equipped to provide this than CRMs like Salesforce, Gatto argues.

“It is ludicrous that my dog groomer knows about me and my dogs and my birthday and where we get dog food… and my physician doesn’t know anything about me,” Gatto points out. “He asks me my birthday every time I come in, and it’s because there are not incentives ever in that space.”

But thanks to startups like those in Jumpstart’s portfolio, this could change soon. 

“We’re ready to deliver that customer service. I think the industry just has to be incentivized to turn it on.”

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