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6 Failed Startups and Where They Went Wrong

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The internet is full of stories of startup success: tales of how two guys and their laptops went from tinkering with algorithms in their college dorm to taking on the world and becoming billionaires thanks to nothing but hard work and luck. Problem is, as anyone who works in business management consulting could tell you, people tend to forget about that luck part – and they also tend to forget about survivorship bias. If you read one of those success stories and think ‘it worked for them – it’ll work for me too!’, you’re forgetting that there are a whole bunch of people out there for whom it did not work.

Here we have the antidote: stories of six startups that didn’t work out, along with some ideas about what went wrong so you can try to avoid making the same mistake. Read on, and don’t have nightmares!

#1 BricaBox started out with too small a team

Who were they?

BricaBox was a New York-based ‘social content platform’: like WordPress, but for social content.

What happened?

One of the co-founders walked out, and ultimately the company closed down in 2008.

Where did they go wrong?

Founder Nate Westheimer blogged extensively about the lessons he learned from the failure of BricaBox, and it’s recommended reading: there’s a lot of useful stuff there to take away. But I think one of the most widely applicable exhortations he makes to his reads is to ‘Start with a real team’: the implication being that BricaBox did not.

How can you avoid making their mistakes?

The small-scale nature of any startup encourages the ‘jack of all trades’ approach, whereby any one member of the team can find themselves acting as not only a developer but also HR, the marketing director and the janitor. These are all separate skill-sets, and if you can recruit as people as you can with talent and experience in multiple fields right from the start, your startup stands a greater chance of success.

#2 Wesabe didn’t give customers what they wanted

Who were they?

A web app for managing personal finances, similar to the (more successful) Mint.

What happened?

Wesabe shut down in 2010, around four years after its launch.

Where did they go wrong?

In trying to analyse why Wesabe had failed where Mint succeeded, Wesabe co-founder Marc Hedlund attributed at least part of the blame to a difference in approaches. Mint made their processes much easier for the customer, whereas Wesabe focused on behaviour change – while this might have been a noble aim, ultimately it just wasn’t what their customers wanted.

How can you avoid making their mistakes?

Invest a lot of time in your market research right at the start, listen to feedback from your customers as you go along, and be prepared to implement it: business management consultants like Carpedia can help you out.

#3 Riotvine never nailed their marketing strategy

Who were they?

Founded in 2009, Riotvine was a two-man event sharing site.

What happened?

RiotVine closed down in 2010.

Where did they go wrong?

Like many of the unsuccessful startup founders on this list, Riotvine’s Kabir Hemrajani named a number of different factors responsible for his product never ‘gaining the traction’ it needed to succeed: but one was that he and his co-founder hadn’t come up with an effective easy way for their product to reach potential customers.

How can you avoid making their mistakes?

Don’t neglect marketing. It’s easy to think of your social media as an add-on you can do in your spare time, but your customers aren’t going to find you by telepathy. If you’re not experienced at marketing, find someone who is.

#4 YikYak failed to anticipate their product being misused

Who were they?

YikYak is the one now-defunct project on this list I’m confident you’ve already heard of: an anonymous messaging app for high school and college students.

What happened?

Following a myriad of scandals and lawsuits relating to threats, bullying and other misuse of the anonymity inherent in the app, YikYak finally shut down in April 2017.

Where did they go wrong?

The anonymous nature of YikYak’s platform was what made it so popular, but also proved its undoing. Arguably, it would have been possible for YikYak’s creators to anticipate the drawbacks of anonymous communication between young adults and build in safeguards, or respond more swiftly to feedback from users once the abuses became clear.

How can you avoid making their mistakes?

This is a little like #2: talk to your audience, both before you launch your product and continuously throughout its life, and act on their feedback.

#5 Maple tried to do too much

Who were they?

Maple was a food delivery startup with a new approach, promising to source, prepare and deliver high-end food.

What happened?

After only two years in operation, Maple ceased operating in the US and became part of UK food delivery company Deliveroo.

Where did they go wrong?

The ‘whole food cycle’ approach was ambitious, and ultimately may have been too much for a small startup to handle.

How can you avoid making their mistakes?

There are a couple of different ways to look at this: generally, it’s better to try and do one thing really well than to do too many things. On the other hand, partnering with Deliveroo may have allowed Maple’s founders to achieve some of their goals for the company, so this isn’t necessarily a ‘failure’ as such.

#6 Beyond Oblivion had leadership troubles

Who were they?

This company was founded in January 2008, and their main product was a(nother) music service seeking to address the ‘consumers want low-cost music/artists need to get paid’ conundrum.

What happened?

The company shut down at the end of December 2011, before the product even officially launched.

Where did they go wrong?

As usual, there were multiple reasons behind the collapse of this particular company, but most of them come down to failures of leadership.

How can you avoid making their mistakes?

If you’re the CEO or founder of a startup, an important way to avoid messing up as extensively as many do is to surround yourself with people who will call you out when you need it. Get yourself a good, diverse team right from the start, and listen to them.

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