Why do the majority of hosts fail?

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There are thousands of web hosts, with new names appearing every day. I've read somewhere that around 75% of these close within the first year.


I'm looking for the biggest reasons why so many new hosts fail. Is it because of the competition and lack of money? HostGator and similar companies make millions each year so it is certainly a massive industry - but what separates these companies from the others that just shut down, and what are the reasons?


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