Research* indicates that 42% of startups fail because there wasn't a true market need. Basically, overly-optimistic entrepreneurs launched a business tackling problems that were interesting to solve but didn’t exist in the marketplace (or barely exited). Trying to find customers that are not there is always going to be very expensive. As a result, the cost of acquisition will far exceed the return value of the customer. What's the lesson to learn? Look for problems that LOTS of people already have! Then ask what kind of solution they are looking for. Next, go create that solution. Make sure it's a GREAT solution too!
P.S. The second highest reason of startup failure is overspending (29%). The third highest reason is not having anyone to provide sanity checks (23%). Fourth was that they unwisely ignored the competition (19%). Pricing and cost imbalances came in fifth (18%).
* By CBInsights, a machine intelligence platform that captures real-time information on startups, VC firms, and angel investment transactions in the United States.