Survey finds failure doesn't scare founders, and most say they would try again

Survey finds failure doesn't scare founders, and most say they would try again

Founders are launching companies at record levels despite high failure rates and economic uncertainty.

According to U.S. Census Bureau data, Americans filed over 532,000 new business applications in January 2026. But a startup doesn't equal success. The Bureau of Labor Statistics reports that approximately 4 in 5 businesses survive their first year, but that rate declines to about 50% by year five.

However, fear of failure shouldn't prevent anyone from starting a business. One way to raise the odds of startup success is to learn from current and past entrepreneurs. Wilbur Labs, a startup studio that builds businesses, surveyed 200 startup founders on startup failure to look for commonalities and patterns.

The study found that more than 80% of entrepreneurs said going through a startup failure made them more likely to launch a new company, not less. While outside factors can have an outsized impact, serial founders learn from past mistakes to increase their odds of success.

Nick Woodman, the founder of GoPro, first launched a gaming and marketing platform called Funbug in 1999, which folded when the tech bubble burst. He came up with the idea for a wearable action camera on a surf trip he took to clear his head.

Stewart Butterfield's gaming company failed when its online game Glitch shut down, but the internal communication tool his team built became Slack. And Travis Kalanick's first startup, a peer-to-peer file-sharing search engine called Scour, was forced into bankruptcy after several massive entertainment companies sued Scour for copyright infringement. Years later, he co-founded Uber.

For those willing to study their mistakes, seek advice, and apply what they have learned, a failed startup can become the most valuable training they will ever get.

Pivoting Is the New Normal

Pivoting has always been a part of startup life. Some of the most successful technology companies began as something entirely different. Shopify began in 2004 as Snowdevil, an online snowboard shop. Instagram began as a cluttered location-based social app called Burbn before its founders realized users were drawn almost exclusively to its photo-sharing feature. Even YouTube was originally conceived as a video dating site before its creators noticed that people simply wanted a fast way to upload and share videos.

According to the 2026 Wilbur Labs survey, 81% of founders said their company pivoted from its original idea, with 57% making a major pivot or multiple pivots. Notably, 42% of founders said that pivoting was essential to preventing failure. When asked why their company failed or needed to pivot, founders most often pointed to competition and shifting market dynamics (45%), followed closely by technology or product issues (44%).

The most effective pivots tend to follow recognizable patterns, such as doubling down on what's already working or solving a problem the founders themselves encountered without a good solution. Slack emerged from an internal tool a gaming company built for itself. Shopify's founders built their own e-commerce platform because nothing else fit their needs, and then they realized other businesses needed the same thing.

The same conditions that drive companies to pivot are sometimes what cause them to fail in the first place.

Without Product-Market Fit, Nothing Else Matters

More than half of survey respondents (54%) said the most important lesson they learned from failure was the need to better understand product-market fit. Compared to the 2023 survey (conducted in the wake of the COVID-19 pandemic), founders most often cited running out of money as the primary cause of failure (38%). By 2026, that number fell to 25%. The top causes are now technology or product issues (44%), external factors outside their control (31%), and hiring missteps (30%).

This likely reflects how the AI era has made it faster and cheaper to build, launch, and find early signals of traction. Funding, or lack of it, is less likely to be seen as the biggest obstacle to success.

For founders trying to close the product-market fit gap before it becomes a liability, the approach doesn't need to be complicated. Talking directly to potential customers before building, running small tests to validate demand, and revisiting core assumptions when early signals are weak are among the most commonly cited habits of founders who caught misalignment early.

Methodology

This study was designed and conducted by Wilbur Labs as part of ongoing research into startup failure and founder experiences. Wilbur Labs engaged Wakefield Research to assist with survey administration. The survey was fielded between Feb. 3 and Feb. 12, 2026, using email invitations and an online questionnaire. Respondents were asked a mix of multiple-choice and open-ended questions about their experiences building startups, including company failures, pivots, operational challenges, and lessons learned.

As with any survey research, results are subject to sampling variation. For the 200 interviews conducted in this study, the margin of sampling error is ±6.9 percentage points at the 95% confidence level. In addition, the survey relies on founders' self-reported experiences, which may be influenced by factors such as attribution bias, exaggeration, telescoping, and recency bias.

This story was produced by Wilbur Labs and reviewed and distributed by Stacker.

Copyright 2026 Stacker Media, LLC

This story was originally published May 7, 2026 at 10:30 AM.