I can tell you how we failed with our first product. Bad design choices (that people would accept a large client download, that Mac wasn't that important) and a bad UI meant a bad user experience. Plus a lack of up front planning about why would users want to use us. Therefore the users never returned - the lack of momentum had a big negative effect on morale. Every day in the office was miserable then because we knew people weren't using/enjoying our product and we weren't growing.
We made a tough choice to abandon that first product and our new site is starting to rock and is heading in right direction. The positive momentum has such a big impact on morale and every day hearing a user say "I'm so glad I found this site" is best motivation to keep going through all startup challenges. So it comes back to momentum from users, and that comes back to good design and understanding what people want and why they would use your product.
just my $0.02