That good start-ups sometimes - or even often - fail is not a new story. Countless bright-eyed entrepreneurs and savvy business folk have thrown their lot in for a promising, idealistic or ingenious idea only to see their investments of time and money crash in flames a short time later. For years it’s been happening to brilliant people who had great visions but were lacking in other areas - sometimes marketing prowess, sometimes long-term vision and sometimes plain old bravado. Here are 10 start-ups that burned bright at inception but flamed out as the reality of making it in the entrepreneurial world set in.
1. Everpix
In a recent essay on this start-up's demise, The Verge called Everpix the “world’s best photo start-up” - so what happened? Everpix provided a simple, elegant solution for storing photos, one that allowed users to preserve their precious memories of vacations and life events without the hassle of other services and photo editing softwares.
It was widely praised for its sophistication and simplicity, and its founders Pierre-Olivier Latour and Kevin Quennesson remained committed to developing and fine-tuning their product. Everpix had a bright future and was even a runner-up at TechCrunch Disrupt in 2011. They had backers, they had heart and they had a great service to offer. But what they didn’t have was growth. The Verge reports that the Everpix team was so fixated on perfecting the product that they didn’t focus on building their user base, and spent very little on marketing and outreach until it was essentially too late. When they approached potential investors to keep the company going, they received praise for their team but scepticism about how well their paid service would compete with free photo apps.
2. Flowtab
Now here’s an app that, better executed and marketed, really should have survived. Flowtab was initially founded as an app that would allow users to skip long lines at the bar and order drinks from their phones without ever having to leave their table or breaking conversation with the hot thing they’ve been chatting up all night. But as a TechCrunch piece on Flowtab’s failure demonstrates, the company had a poorly organized marketing strategy and a lot of good ideas that fell flat. They threw lavish marketing events that went haywire and lost them the confidence of customers (think poorly staffed bars on the company-organized crawl and crashing servers as people tried to order drinks). The Flowtab founders have posted what TechCrunch described as “a death chronicle of sorts,” which is their start-up's story, both the failures and successes, in their own words. There, the founders attribute their failure to not having found the “right product-market fit” for the app.
3. Sonar
In the words of Sonar’s former co-founder and CEO Brett Martin, this app was “created to help make the world a friendlier place.” In cooperation with companies like Facebook, Foursquare and Twitter, Sonar was designed to alert users when any of their friends were in a particular area. In theory, it sounds great - how nice would it be to know you could easily connect with an online acquaintance IRL whenever you happened to be in the same area? Beyond that, Sonar was designed to connect you with people you may not know yet but are in the same area, and with whom you share interests or friends. In a piece for Medium, Martin recounted that Sonar attracted plenty of buzz and hype from behemoths such as Apple and Google, but lost traction in a number of other areas. Among those he cited: following false positives in customer feedback, letting the competition get into their heads, valuing engagement over growth and getting distracted by events and side projects when they should have been focusing on the product.
4. Flud
This social news reader app garnered all kinds of buzz and support that made it seem like it was destined for success. According to TechCrunch, Flud received praise for its excellent user interface design and was called “the future of news” by NBC. The idea had merit, no doubt. Even as Flud goes the way of so many promising but failed start-ups, other companies are looking at ways to develop efficient, timely, and lucrative social news apps. In an interview with TechCrunch, Flud co-founder Bobby Ghoshal attributed the company’s failures to a lack of testing before releasing various incarnations to users, a preoccupation with attracting press attention, too much focus on what competitors were doing, and not knowing when to pivot when presented with a new direction for the company. Flud ran out of money before it could make enough changes to be valuable for major companies who had shown interest in it, and ultimately had to shut down.
5. Plancast
Another social app, this one was designed to help facilitate users’ social lives by allowing them to share information about their plans and social engagements and see what their friends were up to. Founder Mark Hendrickson, who was also CEO and a former TechCrunch writer, came up with the idea because he was excited about using it himself, seeing it as a means to a “more fulfilling social and professional life,” as he wrote in a piece for TechCrunch. Despite early interest, however, he says the company never got past the early adopter phase for a number of reasons, including the fact that people are less active on social media when it comes to RSVPing and sharing events, are inclined toward privacy when making real world plans, and a lack of incentive to share event information before they actually attend, among others. This lack of understanding of the social networking landscape led to the company’s demise.
6. Gilt Taste
The fine-food arm of the Gilt Groupe was an online high-end magazine and grocery store, through which customers could order artisanal foods and get their fix of delicious content delivered by former Gourmet editor-in-chief Ruth Reichl. The site operated for only two years before closing its doors, though according to CNN Money, the online food market is a unique nut that can be tough to crack. In the case of Gilt Taste, it turned out that while customers enjoyed the quality content and perusing Gilt goods online, most people only wanted to purchase the artisanal products for special occasions and during holiday seasons, which turned out not to be a sustainable business model for the publication/store. The editorial side shut down in May 2013, though the products are still available through Gilt Home.
7. WebTV
A throwback to the earlier days of the Internet, WebTV offered what would seem to be a useful service but never quite gained traction. WebTV was a small device that would allow users to get online using their television sets without needing to purchase a computer for their homes - which was a steep cost for many families when WebTV was founded in 1995. It would appear to be a good solution for those wanting to get online without having to purchase and set up a new computer, and according to Complex, which included WebTV on its roundup of Start-ups That Failed but Should Have Succeeded, it was even bought by Microsoft in 1997. But even a rebranding as MSN TV wasn’t enough for consumers to pay US$400+ for the convenience of surfing the web on their television sets.
8. Napster
Another pick on Complex’s list, Napster was the granddaddy of music downloading back in the day, and at one point had a staggering 80 million users sharing tunes through their service. The brainchild of Shawn Fanning and Sean Parker, Napster revolutionized the way people share music online and sparked on-going debate about the music industry and ways to get consumers to pay for music in a world where you can get it for free. Ground-breaking as it was, Napster took major blows when it was sued by artists outraged that their music was being shared and downloaded without providing them any compensation, and the company was forced into a paid model. They faced huge legal fees and other free services sprung up to take its place and the company folded in 2001 (though it was later purchased by Best Buy and has now merged with Rhapsody as a paid service). Napster’s story continues to intrigue and the file-sharing site was the subject of the 2013 documentary Downloaded.
9. Healtheon
No one has been able to solve the digitization-of-healthcare-information problem just yet, but Healtheon was one of the early start-ups to try. The company’s mission - to streamline communications and paperwork processing among healthcare providers, patients and insurance companies - was a good one, as even then, the healthcare system was messy and confusing for most users. But the company lacked a coherent, effective business strategy and was met with hesitation by major California healthcare systems, according to California Healthline, who cited privacy and execution concerns as reasons providers were reluctant to work with the company. The lack of coherent business plan seemed to hinder the organization from gaining real traction, and its saving grace was a merger with WebMD, which has become a go-to medical information site in recent years. Nonetheless, it is a cautionary tale for other health start-ups. As one Forbes contributor put it about Healtheon’s early hopes: “Flash forward [from its early years] and Healtheon is buried somewhere deep inside WebMD. There’s still a lot of waste and paperwork that hasn’t gone away.”
10. Boo.com
This European designer fashion site got a little too big for its britches, and folded despite a rather promising beginning. This oft-cited start-up launched in 1998 with investments from companies such as JP Morgan and Goldman Sachs, according to Complex. Either unaware of or not heeding low Internet penetration in Europe at the time, the company hoped to make forays into 18 countries but failed spectacularly and shut down seemingly almost as quickly as it had begun. Its failure in 2000, after spending US$135 million in less than two years, spooked the industry, making investors for a long while wary of fashion start-ups, given Boo’s spectacular failure. In 2005, The Guardian referred to Boo.com’s demise as England’s “first high-profile internet collapse.”
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