Digital Project Abandonment Crisis: Deadweight Loss in Plain Sight

The most cited figure in startup failure research comes from the U.S. Bureau of Labor Statistics: roughly 20% of businesses fail in their first year, and about 65% within ten years. For technology companies specifically, CB Insights’ analysis of over 110 startup post-mortems found that 42% failed because there was no genuine market need for what they built. Running out of cash was second at 29% — but as the report noted, cash problems typically trail the market need problem by months. The technology sector fails at higher rates than the broader business population. Approximately 63% of tech businesses fail within five years. For software-as-a-service companies specifically, the dynamics are similar: roughly 90% of SaaS startups fail to reach sustainable scale. None of these numbers are encouraging. Together they point at a consistent structural problem: we build for the wrong things.