Autopsy: Lessons from Failed Startups
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"Doubt kills more dreams than failure...but Random Chance is like, Grim Reaper for dreams."
Success in startups (and life in general) is not the linear function that most of us want it to be. It isn't related in direct proportion to the amount of effort, intelligence, work, time, love, energy, etc that's invested. It's more of a logarithmic function. There is a minimum amount of effort and those other things that must be put in to have any chance of success. But after that the returns diminish rapidly. It's comforting to think that if we just try harder or smarter we can triumph in the end. But the fickle winds of fate have the ultimate say, and any sense of control is probably an illusion.
Saying that a company failed due to lack of product-market fit is like saying that a sports team lost due to not scoring enough points. It's always a true statement, but it doesn't illuminate the cause of the failure in a way that would be instructive to others. Most startups that were successful enough to be included on this list probably did 80% of things "right". Some times "it just didn't work out" is all that you'll be able to say.
Despite all that, I think there is a lot of value in these autopsies. Being able to learn something, anything, from the experience of others is very valuable. Knowing more about what causes failure won't guarantee success, but it sure as hell beats knowing nothing.
Business success, however, is not mostly random.
Business success can occur slowly, perhaps growing 5-10% every year (or maybe not even growing at all, and just remaining profitable).
I think of it like golf: bootstrapped businesses are like trying to use a putter to get the ball from the tee all the way to the hole. It's probably going to take you a long time, but if you pay attention you have a good chance of eventually succeeding. VC is like a big driver club, so you can get the ball to the hole faster but if you make a bad shot then you're screwed.
If startup success is mostly random then how can someone like Elon Musk create startup-after-startup shooting for a goal against-all-odds, but always come out on top?
Does he define the "mostly" in the argument?
Could Elon have started Tesla if he didn't previously make $165M from PayPal? I say "unlikely". Could he have started X.com/PayPal if he didn't make $22M from Zip2? I don't know. Was Zip2's success partly due to luck? I don't know but I'm sure it played a part.
In July, 2003, Tesla Motors was founded by Martin Eberhard and Marc Tarpenning (who both initially financed the company).
A year later Elon Musk invested in the company and became Chairman. Musk made Tesla’s long-term vision to produce affordable electric vehicles available for the public.
Which brings me to a point regarding this article: I don't want to be a dick but most startup postmortems don't tell the truth. Besides that most founders fail to realize exactly where they failed the fact is that the startup environment itself isn't transparent at all.
On that last point: a year ago I was talking to a friend who just closed his startup and he gave the typical "not enough traction/not enough funding" explanation they should be selling as hallmark cards already. Last month I bump into him after a meetup and the story was quite different: his startup was unfortunately used as filler along many others by a group of investors who needed to put a show because they were using government funds to finance these companies. All the participant startups got some seed money but at the end of the day all the full amount of funding was given to one single company with no employees a half-baked product that failed to launch and founded by none other than the younger brother of one of the investors who then moved his entire operation to singapore, and then nothing.
There are tons of stories like that, and founders can't say anything because when something like this happens and in the heat of the moment its most likely they would look like sore losers and the last thing they need at that point is to scare away other potential investors by looking like a rogue founder.
My point is that we rarely if ever get the whole story.
He may have been extended, but that doesn't mean he was almost in the poorhouse.
Billionaires getting ruined doesn't happen any more.
1. http://dealbook.nytimes.com/2010/06/22/sorkin-elon-musk-of-p...
2. http://www.carbonated.tv/technology/spacex-founder-and-tesla...
Musk works hard, no doubt. But that is a necessary, not a sufficent, condition for success. Many people have worked just as hard as Musk and failed. Furthermore, successful people who start second businesses tend to fail slightly more often than first-timers, which is hard to understand if you believe business success is a learnable skill.
So I don't think Musk is a counter-example to the OP's point, but rather a predictable consequence. In a world were 95% of startups fail and tens of thousands of people start companies, you'd expect the odd one to have multiple successes.
Again: this does not mean that Musk isn't incredibly smart, hard-working and most of all courageous. It means he's all of that, and lucky as well.
Every successful entrepreneur is going to be hard working etc, but that says nothing about all the hard working entrepreneurs who aren't successful (I'm belabouring this point because in this kind of discussion one often sees "All the successful people I know are hard-working" as if that had anything at all to do with the claim "All hardworking people are successful."
Survivor bias is a huge problem in learning from case studies. A particular tactic may work well through a particular combination of market, environment, team and timing. That doesn't mean it's a good tactic for your particular situation.
You absolutely have to study and learn from the failures as well as the successes.
I don't follow - would you elaborate?
The parent post is saying that "starting to watch someone" constitutes naming the #56.
http://www.motherjones.com/politics/2013/10/tesla-motors-fre...
That's in the nature of car manufacturing. If one government starts subsidizing a high capex industry, others have to follow suit or throw up trade barriers or their industries will drop off a cliff.
This has been going on since at least the 50s when Japan threw monumental sums of cash at its (at the time), pathetic and failing car industry.
Aerospace is similar. Best of luck trying to create a competitor to Boeing or Airbus unless you have the backing of the Chinese state. No amount of magic pixie startup fairy dust is going to get you there.
Second time replace luck with publicity. Same reason why Paris Hilton has success selling parfume.
99Dresses - Nikki Durkin:
Many startup folk say that failure should be celebrated. “Fail fast, fail early, fail often!” they all chant, trying to put a positive spin on the most excruciating pain any founder could experience..Let me tell you — failure fucking sucks..I travelled to my parent’s place in the countryside of Australia, locked myself away in my room and cried for what seemed like an entire week.
Critica - Jason Huertas:
You’ll hear the phrase “Fail fast” or “It’s good to fail”. Which is true. You can’t learn without failing. But what they don’t tell you is just how utterly devastating failure actually is for an entrepreneur. To sacrifice your personal relationships, finances, and health to the dream, and to still come up short. How could this happen to me? It was a very frustrating and dark place to be in.
The case of 99Dresses was an eye opener. I would beg to differ with the general sentiment in the comment section here about how co-founders lacked sense of product market fit etc.
Nikki Durkin had oodles of determination, immense grit, was a YCombinator alumni, had great product-market fit, managed decent seed funding, had good traction which many startup can only aspire to in the initial days, a team who were behind her most of the time, still..
All things being equal (actually the case showed even if they are not) fate, right-time-right-place is a factor which nobody can control, and which has decisive play in the scheme of things.
I can only wish good luck to Nikki Durkin, and I’m 100% sure that she would come out with something amazing in future.
1) Learn to live with failure. Most of these folks sound pretty privileged, as if they never got smacked in the face with reality or had to deal with failure. Sometimes that's what happens when one is a young superstar, the odds were in their favor until it wasn't. The rest of us just learned to deal with disappointment and overcoming.
2) The real secret about success is that it's random. It's not even about luck or hard work, success is simply random. Luck is just a lottery scratcher and hard work lets you get more tickets to scratch but hard work, product fit, traction blah blah don't guarantee success. Because again, success is random. Thinking otherwise will drive you crazy trying to analyze why bad things happen to good people and good things happens to bad people. Determination is the only trait that finds success, because you just keep trying until you die. Which then calls back to my first point: learn to live with failure. It's good for you. Each subsequent time you need to cry less.
I disagree. Never learn to live with failure. Failure should be painful, and should be proportional to what you put into trying to succeed. Doing a startup should be toward the top of the list of things you should feel really bad about failing at (after failing as a parent, spouse, child). You should pour everything you have into the startup. If you do anything less then you probably deserve to fail (although you may still succeed).
If you can do a startup, fail, and then say, "no biggie, on to the next", then you're probably not someone that I would bet on.
That said, after a week of crying (and probably months prior to that of anxiety), you should be able to bounce back. Incorporate all that you learned into your next try.
And in your scenario only a child plays that game. Because they don't know any better and at that stage it's entirely based only randomness. Today's Disney super star is tomorrow's old news.
There's also some kind of weird perversion of only wanting to place bets on those so intense that they tilt to suicide from the anxiety and shame.
Adults know better and as it turns out after adulting for awhile and living in reality only then does entrepreneurship really take shape.
That's the difference between those that make it and those that don't.
I'd be curious if there are virtually any successful founders (Steve Jobs, Bill Gates, Larry Ellison, Sergey Brin, Larry Page, Jerry Yang, etc) who would have been completely indifferent if they failed. I suspect that is not highly correlated with those that succeed.
And I think Floyd Mayweather would offer that failure is bad for you. You can learn as many lessons from winning/succeeding as losing/failing. Or as an ex-coach used to say, "losing teaches a lot of lessons -- most importantly, that you need to figure out how to win"
Given that the world is full of talented people who are working hard--and it is--the difference between those who make it and those who don't is very often due to luck. Persistence and courage are two things that really do make a difference because they give luck the most time and largest field on which to operate, but nothing can eliminate luck entirely.
Almost everyone who succeeds is talented and works hard. That is completely unrelated to the claim that everyone who is talented and works hard succeeds. The belief that winners and losers are separated primarily by talent and effort is not very plausible, given the number of "near misses" in the world: people who make it most of the way to success and get derailed by one bad choice (which was not an obviously bad choice at the time) or some other piece of bad luck.
That's the line I was responding to. This seems directly opposed to what you said, "They are saying that randomness has an important role to play in the creation of a winning team, along with talent and hard work."
I will grant you that randomness plays a role. But success in NOT "simply random".
Someone right now said hello once and met their significant other they're marrying.
Someone right now submitted their resume once and got the job of their dreams.
Someone right now has interviewed ten times and only got one rejection letter.
Someone right now had paid for a hundred thousand tickets and never won a thing.
Someone right now has said hello a million times and still hasn't found their romantic love.
You and I are somewhere in between those two extremes.
It is random and chaotic.
There are times good things happen to bad people and sometimes bad things happen to good people.
This isn't to say you shouldn't go full nihilistic, don't work hard, don't be kind, don't be compassionate, but the unwavering belief that hard work and fearing failure is the only salvation will drive you crazy pointlessly when you still don't get what you want.
Expecting results and not getting it in spite of your hard work will make you bitter, jealous and negative.
The pursuit for success will make you a monster and in turn distance you from others.
And in the end you might just get hit by a bus randomly walking down a street.
That's mostly randomness.
Someone right now said hello once and met their significant other they're marrying.
Someone right now submitted their resume once and got the job of their dreams.
Someone right now has interviewed ten times and only got one rejection letter.
These probably mostly are not random.
Someone right now had paid for a hundred thousand tickets and never won a thing.
Mostly random.
Someone right now has said hello a million times and still hasn't found their romantic love.
Mostly not.
There are times good things happen to bad people and sometimes bad things happen to good people.
This implies things are mostly non-random. Unless you're saying that good/bad things happen with equal randomness to all people.
This isn't to say you shouldn't go full nihilistic, don't work hard, don't be kind, don't be compassionate
I think you are saying that doing all of that won't impact if you're a success though.
but the unwavering belief that hard work is the only salvation
No one said that.
Expecting results and not getting it in spite of your hard work will make you bitter, jealous and negative.
Why do the work if you don't expect an increased likelihood of the result? Why try to dig a hole if I believe that it's just as likely that the hole randomly appears in the spot that I want? Of course, I have a feeling that the hard work of digging the hole increases the odds of there being a hole in the ground. But that's just me in my crazy world where not everything is simply random.
The pursuit for success will make you a monster and in turn distance you from others.
Really? It seems like I've seen the exact opposite in my life. Friends I know who have given up on any ambition at all have distanced themselves from others (and largely fallen heavily onto drugs).
And in the end you might just get hit by a bus randomly walking down a street.
I think I'm more likely to get hit by a bus if I don't try to watch where I'm going. That is, succeeding in crossing the street is something I try to do. Failing to do so and getting hit by a bus may cause me to cry and feel pain. Obviously for you failing in this manner is no big deal.
It's the middle way between everything being planning and everything being luck.
You don't know all the skills you need in advance.
You don't have thousands of hours of live and taped competition directly between the best in the world to study.
Progress towards those skills and a championship/success isn't directly measurable.
The ground may shift out from under you overnight (few pro sports rule changes have caused players or teams to go bust or lose all hope of winning... compare that to any widely-felt economic event).
The environment facing an entrepreneur is far, far more chaotic, which is why a first-time founder without deep personal reserves is going to be far more at the mercy of luck than Lebron James or Russell Wilson.
(And even then, there are fierce debates over the role of luck when it comes to individual's career accomplishments. Drop Lebron onto MJ's Bulls, and how many titles does he win? Drop MJ onto the mid-2000's Cavs, and how many does he win?)
(Edit for fixing inconsistency between which directions I was making the comparison in.)
It's a mistake to think that fear of failure is the only or even the best motivator, and I would be extremely leary of betting on anyone who was primarily motivated by fear of failure. I want to back someone who desires success above all else, not who fears failure. They are quite different things.
It's not about being motivated by fear. It's about not being indifferent to success or failure. If you show me someone who doesn't care if they succeed or fail, I'll show you someone who probably will fail a million times or more -- then die.
But are you saying that the teams that didn't make it the finals just didn't want it bad enough? Worked hard enough? Were talented enough? Or lucky enough?
Maybe you can look at it as it's pretty random how the players on the respective teams ended up there compared to hundreds of thousands of potentials drawn from the NCAA.
Because one wrong twist of your ankle, one indulgence of a pizza from a commercial entity, one bad grade, and you could easily be on a different path.
I couldn't agree more and I tell a less elegant version of it to people myself.
Would you claim that hunting and fishing are also pure luck? Doesn't the hunter's skill and knowledge come into play?
I learned this from my first business failure. I was being the center of attention and loving it. But when it failed, I was crushed. Took me a while to understand that a business is merely a system that works around selling a product. Its not me. This has allowed me to build and sell products that fail without feeling shame or pain. Its just a product. It failed. Let's move on to the next.
I think though that Virgin group of companies would be less successful and well known if Richard Branson was not such a face for all the companies. Steve Jobs persona was a factor in Apple, as is Elon Musk's persona is helpful to Tesla and SpaceX.
At best it is a double edge sword, good and bad all in one. I am sure Nikki Durkin will rise again.
My top at-a-glance eye-roller says "technical co-founder quit & pulled the code out from under me".
So completely neglectful of basic business structuring that the tech co-founder could just walk away with the code, to which you don't have copyright claim? If a non-technical co-founder can't even bring responsible management to the table, why are they at the table?
Article goes on to suggest that if the non-technical co-founder had learned to code so as to not feel so helpless, things would have gone better. Just wow.
The real fail there is poor relationship management. Why did the cofounder quit? What was running through their head? Did they not really want to commit to a startup in the first place, in which case the business founder should've vetted them more thoroughly before starting the company? Or did they lose trust in the business founder's leadership, market knowledge, and integrity? Were their incentives never aligned to begin with?
Eh, this is what every new employee at an established company does.
And when a startup has a "technical cofounder", that usually means the "tech" is a CRUD website, as opposed to a novel invention being productized (in which case it would be a technical founder or technical founder pair.
When in fact the real reasons why start-ups fail are often complex interplays between the various factors rather than just one single factor, and only a few of those are under direct control of the founders.
Anyone notice anything else standing out?
Not so much on this list, but one I've heard repeatedly for Bay Area startups.
I know there's a lot of grumbling on here when sales teams promise products that aren't built yet, but I'd rather build a product with an actual end-user case than a product with a hypothetical customer that no one may ever end up using. (It's also the reason I hate "stealth" startups -- your idea isn't unique, and if you think your competitive advantage is the element of surprise instead of implementation then you're in for a bad time.)
Any other engineers in the same boat?
I'm heartened by this autopsy.io site, hoping it grows, as it can be a place where failure can be reviewed and lessons can be learned, directly from the horses' mouths, so to speak. Failure gets swept under the rug too much, and I think we're seeing a bit of shifting in that area, to start acknowledging it publicly.
I have met 2 of the founders in this list personally, and was a bit surprised by the stories - not entirely, there's nothing earth-shattering in the details - but still surprised to see the shutdowns.
Lack of traction comes from poor focus on customers — whether that's marketing, feedback, or strategy. Without that pure focus on your paying customers you can't iterate and create a great product.
You can hate lemonade, but can still make money selling it.
I can understand that many people working for McDonalds hate their job, but it's no risky task, just quick money.
As soon as they need to do the boring work (IE: 90% of the hard work involved in any business), interest is lost and they want to quit.
I call these people employees because they aren't willing to do what it takes to build and maintain a business.
(FYI: I'm one of those listed as "we weren't in love with the idea/market")
Most people spend most of their time working for somebody else, and most of them at the jobs they don't care for.
That's why when people win a lottery, the first thing they do is quit and do something they actually like - eat, travel, party, drive a nice car, sail, whatever. Almost none of them stay at their shitty job.
We should talk about nuances of why startups failed. Otherwise, "lack of product market fit" is just jargon for "we failed." Of course, we already know they failed. And since they are startups, they probably didn't fail with millions in revenue.
It tells you that they might have had a great team and great technology but had no clue how to sell it. Selling being something that the technology crowd loves to hate (myself included) it really drives home that marketing really does matter.
I'm not sure it makes sense to separate a concept like product-market fit from a concept like "correct" pricing. Changing the price point significantly may dramatically affect the market you're aiming at and the expectations of that market. Your product might have mass appeal but only as a casual/impulse purchase (typical mobile app). Your product might have only niche appeal but to the right market of people who appreciate it, it could be worth a fortune (original works by famous artists sometimes sell for more money than most of us will earn in a lifetime). To make things more challenging, it can also be relatively difficult to test different pricing levels.
However, it's the thousand little details that go into gaining that traction in the face of diverse challenges that are probably more interesting if we're looking at this as a learning exercise. Why did a business that could have gained enough traction to succeed actually fail before that point? What could the leadership of that business have known earlier or done differently to change their fate?
When you introduce new products or services the market may or may not buy them, it's very difficult to predict beforehand. If your product is disruptive enough the market won't even exist, so you'll have to create it. If you fail it will be easy to blame it on "lack of product-market fit" but that will just be obvious. What else did fail? Why weren't these products able to create market demand?
IMHO comparing some of these ideas to the iPhone is a copout. As a kid I watched Inspector Gadget and saw Penny's "computer book" and wanted one instantly. When I was older I watched Star Trek and they all had PADD (sp?) devices that were a large screen with no keyboard. iPhone wasn't a revolutionary new idea for which there was no demand... its just that Apple knew that the time was right and that they could technically pull it off. They certainly didn't just engineer the iPhone on a wing and a prayer hoping that they might figure out a business plan one day.
This also applies to Blackberry and Nokia, but they failed miserably. The reason why we don't see them on this list it's because they were well established companies, and they could afford failure. That's the main difference with a startup, you pull off a Maemo, a Newton or a Virtual Boy and that's it, you are done. And let's not forget about the ROKR E1. You make it look like the iPhone's success was a very predictable and obvious thing, but just take a look at the reviews from 2007.
For example, the first was a "same day ingredient delivery service" that "simply didn't have legs", but both Blue Apron and Instacart could be considered same-day ingredient delivery and both are growing fast.
I wonder if we can "unpack" product-market fit into a checklist of smaller goals?
Product-market fit has more nuance than the words suggest. Maybe the product wasn't right for the market they tried (Caviar for rural Kentucky I'd imagine), or the market as a whole never wanted the product (drive thru dog grooming), and then there's the matter of timing, maybe it was right, just not at that moment. It would be interesting to explore those deeper assessments of lack of product-market fit (as assessed by the founders and outsiders) and see which one is most common. I'm sure we'd find some fun surprises.
That's why MP3 players and smart phones failed to get widespread consumer adoption before Apple, why Instagram succeeded where Picwing failed, why Facebook has taken over the world while Xanga is relegated to the dustbin of history, and why Google makes billions while Lycos, Infoseek, Altavista, etc. failed. Same product category, but the product itself was much better.
From the looks of it, he'll not make it, but how can I possibly tell him that ? How can I possibly take his dreams and hopes and break them into pieces and hope to still be a friend after that.
Sometimes failure is unavoidable, no matter how much people will warn you about it. Failure is something so personal and private that the only way to understand it is to live through it.
Don't tell him. Ask questions that get him to think.
That is also not easy. Poster's friend might get annoyed\offended when he will not have answers
Many people don't have the heart to even really try. Many people don't have the heart to keep going for years when at times it looks hopeless. Your friend does, and that's admirable. If he's a good programmer he's not going to put his future in jeopardy. There's no need for well-intentioned -- but ultimately patronizing -- concern here.
So don't volunteer your opinion. If he's a friend, just be there for him (emotionally).
There's a thin line between the drive to get things done and obsession, sometimes they're the same thing, only the outcome can differentiate between the two.
However working in isolation for such a long period can result in disconnect. How about asking him to do a limited alpha among a small tech group and getting their feedback?
He needs money to live.
You just should tell him that - "I think this is going nowhere and you will likely burn out and have a crisis." And then when in few weeks/months he will start having doubts, he will have a reference and hopefully it will help him to bury the project faster and move on to other things. At the very least he'll have an option of coming back to you and asking why did you say what you said and you two can go on from there.
Here's another angle: try to help your friend succeed.
Also, I'm pretty sure he won't fail completely. Why? Because his contributions are open source. That means, unlike a lot of projects you spend a year or two and nothign visible comes out of it, there is visible code and visible effort that can credential him into his next step.
I especially like what jacquesm said "Here's another angle: try to help your friend succeed." Now that's the sort of attitude we could all do with more of.
if i had a friend in business trouble this would be the first thing to enter my mind. in fact, it's the first thing that popped into my mind when i read your post. i would give up hours of my day, sacrificing a small amount of input to my own business, to help his make it through the squeeze. i know this because i've done it before in the past.
the fact that this hasn't occurred to you tells me you aren't the right type to help/advise him in any circumstance. you want to tell him to give up - well no shit sherlock. pretty much anyone can give him that advice. how valuable is that advice, exactly, when literally anyone can give it? answer: it's exactly worthless.
so, since you asked, i say keep your mouth shut and let him win or lose on his own merits. he's not a child, and you're not his dad.
In a way it's pretty similar to giving advice to people hopelessly in love with the wrong person. They'll listen, they'll agree and then next day they'll be back after the person who makes them suffer.
I am helping him out, with advice and now with some code, but I cannot help him enough, because I've got my own things going, a family, children, etc.
But point taken, good advice. thank you.
@NiralSJP here—one half of the team that put this together.
Glad you're finding it useful and we appreciate the comments and suggestions
Something I've noticed when discussing failure is there's a class of people who are real assholes about other people's failures (focusing on blame, using very negative phrases, trying to second guess founders for who knows what reason, etc). I notice some comments in this thread are along those lines.
I'd love it if you kept that in mind as you build this, esp since some of the comments/suggestions in this thread are quite, em, unpleasant.
That's not to say a founder has too much more insight into the specifics of what you faced. Without being in the thick of it, it's almost impossible to really see what happened.
Everybody has a plan until they get punched in the mouth - Mike Tyson
But, as a community, we should try to builds things that don't encourage this sort of shit. If you want to promote learning from failure, it's in your best interest to make sure that you don't accidentally dissuade people from writing about it.
But, we're definitely conscious of negativity, as the goal was always to be constructive and learn from entrepreneurs like yourself.
Reminds me of one of the best books I ever read on SCUBA theory: a case by case description of some 30 odd fatal incidents.
Knowing what goes wrong is helpful
It is fascinating to read it now and see how much of it they got right (and see how much was wrong, with the benefit of hindsight).
[1] Why E-commerce Didn’t Die With the Fall of Webvan http://hbswk.hbs.edu/item/2496.html
[2] What Webvan Could Have Learned from Tesco http://knowledge.wharton.upenn.edu/article/what-webvan-could...
When you get a drug trial approved you're obligated to publish the findings no mater what happens. By analogy, investors could require a post mortem when they provide funding.
But...
There is no business idea I cannot kill using a sufficiently cold and objective evaluation. I can show the demand is not there, that it doesn't solve a customer pain-point, that the price is too high, that the model won't work in this market, that the technology won't scale...
At the end of WWII Vannevar Bush, the head of the American military rocketry program, said that human beings would never go to the Moon because you'd have to take a rocket the size of a battleship, stand it up on end, and launch it into space, and this was obviously impossible.
Prediction is hard, especially about the future. Entreprenuership is fundamentally about courage, because you've got to jump off that ledge knowing the odds are you'll fail. If you dig too deeply or look too closely at the problem you may never start, because the risk is always going to be unacceptably high to any sane person.
So it's important for entrepreneurs to balance their optimism against reality, rather than just giving in to realism and sticking with the day job.
Businesses on the other hand are considerably more rational. B2B decisions are made based on value. Even when a deal doesn't go through, you get tangible data to see why. But make yet another photo-sharing app and no one uses it? That's a lot more harder.
It'd be great if the table had start/close dates, or "months alive", or something.
Sometimes the fine line between failure:success hinges on nothing more than timing itself. The optimal time to enter a market is a variable that should be weighted almost as heavily as cash to burn.
The medical imaging play got scooped by a patent issued to another research team a month before our patent application was ready to go (this was before applications were published.) That was pure bad luck. We were a small team who weren't publishing our work while it was in development, they were a small team who weren't publishing their work while it was in development. They started a few months before us, or long after us but had more resources, or long before us but worked more slowly, or didn't go down the same blind alley we did part way through. I defy anyone using the information available at the time to pick out a better set of choices than we made without flipping a coin.
The key to understanding the role of luck is to realize how scarce information is when you are building something new. You don't know how big the market is. You don't know what customers are willing to pay. You don't know what the "killer application" will be. One company I worked with thought they were aiming for selling a service to the bottled water sector. They ended up selling it to the sewage treatment sector.
I also know people who were one decision away from success: if they had taken deal X or added feature Y they almost certainly (in hindsight) gotten rich. Given the information at the time, they made the best choice they could. That it happened to be the wrong choice was luck, and nothing else. These are people who had built successful companies during the dot-com era, mostly. If they had exited at the right time they'd be hailed as geniuses today.
They seem to lack the OMG spark of insight into how technology can be used to do something exciting. IMHO, a web site or an App (is there really much difference) is not a STARTUP--but it can be a business that generates income.
While on the subject of timing, I'd add a column for years in business, but that might be getting too cluttered.
Examples that stand out to me just from knowing really successful competitors of the same idea:
Bombfell Manilla Dnnr bloom.fm solorix
Overall, I value their feedback (and I am glad to see it compiled as opposed to every failed company posting on here as if they have some diamond in the ruff wisdom on why they failed) but I would prefer some more data based trends.
Overall interesting idea to start pulling more calibrated analytics from. I was also thinking someone should do the same thing for lessons learned from how VCs and Angel Investors screw over companies.
It's actually going to take some time for me to find something on this list that doesn't reek of knocking off popularized trending app ideas.
I happened to see 99 Dresses on this list, whom I saw on Shark Tank somehow (the one time I watched the show). I'm a girl and for me personally I don't really give about the idea of weddings and think its nonsense, and think it's a waste of money, but I thought it was a pretty cool idea that basically you could rent a wedding dress, and that sounded unique to me and a good niche of rent the runway, though I doubt I'll ever invest in a wedding dress myself in any capacity. Point is weddings are a billion dollar a yr industry and wedding dresses are sometimes the most expensive part aside from venue and catering. As culture becomes less traditional, it's less likely women will view their dresses as a long term investment their posterity will wear.
Additionally, I think I know of plenty of girls who would rather rent a designer wedding dress they could never afford outright (especially if their posterity is not going to wear it as culture is these days) than settle for something they like alot less because that is all they could afford to buy, that will sit in a closet. Additionally, now that we have facebook and social media, girls do not need to buy the dress (despite posterity) so it can collect dust in their closet for the sake of nostalgia. Now we have social media to document not only the dress but how the woman looked in the dress. Therefore, providing the capability to rent one of the most expensive clothing items the average woman will ever invest in, seemed like a pretty solid idea, and at least there was something a little unique about it. However, I have no idea how well she implemented the idea nor did I follow the company after the pitch.
Other than that one company, I didn't see anything I have not heard of realistically, atleast 5 times before.
Because they are many - a lot more than in that list. And there will be a lot more of them in the future.
For every startup success story, there are about 9 silent tales of shattered hopes, financial ruin, depression and even suicides.
Success stories are so shiny an bright, that all the smart 20-somethings are blinded by them - and why not - who doesn't want to be a billionaire ?
The theme is always the same.
A really cool idea - which will totally transform, disrupt, reinvent and reimagine the world and will forever change it for the better.
Your heart beats faster, you're full of enthusiasm, you're obsessed, you talk to everybody and you infect others with your enthusiasm. They come on board, you find money, then the coding starts.
It's so fun and cool - you're on that path - you're an actual startup - the coolest thing you can do with your life - sacrifice a bit of yourself for a huge payout sometime in the nearest future.
And so you put in days and nights, you replace food with caffeine, sleep with debugging sessions. You ignore the wisdom of others, because they're not you - you can do it better, you will prove it in the end.
And then, suddenly, after so much work, your main coder drops the bomb that he's accepted a job at XYZ.
You now have little money, no users and a repository full of spaghetti which only your coder understands. You need to launch fast. You use duct tape and saliva to keep everything from falling apart.
And...... You launch! Version 0.1 beta. Then 0.2 beta. Then 0.3 beta. You have 231 users after two weeks. 0.4 beta. 0.5 beta. Two months in and you've still less than 500 users. According to your business plan, you're short about 49500 users by now.
More Red Bulls, it's 3 o'clock in the morning again, when did I sleep last time ? The fucking thing still crashes. Where's everyone ?
Your mother calls. "I'm fine, mom. Everyting's fine.". She knows you aren't, it breaks her heart, she tears up.
You can still do it. Look at XYZ - they've been through worse and they made it. Never give up. Never give up. Rent is due next week. Jack doesn't show up to work and doesn't answer his phone. He's burned out and he's had it, he's leaving.
I can still do it alone, I just need to re-write the whole thing and it will be much better. How long could it take ?
You're in denial, but reality knocks on your door. It's time to move out.
You've failed. You're not good enough. You disappointed everyone and yourself. You're not built for this. You will never make it. You lock yourself in your room for weeks. You put on weight. Days are nights are days are nights are...
Your girlfriend wants to really talk about something. She can't take it anymore. Fine, we split up. Maybe it was because of her anyway...
Depression kicks in. The dark place. The 'there's no escape' place. The 'i'm worthless' place. The 'I'm a failure place'. The shame, the guilt. The disappointment.
The place were all failed people go. By now, you should have been having an IPO, rubbing shoulders with the big guys. Instead, you're in that place - the silent place, the place nobody wants to talk about.
You will be there for a couple of months, maybe years, before you recover. Or you'll swallow your guilt and get a job. Any job. Maybe in another city, maybe in another country.
And then things fade, life gets better, you meet another girl, you fall in love, you recover. You're good again. You have energy. You have power. Your mind is energized.
And then ... the coooolest idea in the world pops up in your head. If you don't do it, who will ? This time you know better. You've learned from all the mistakes of the past. This time will be different.
This time you'll make it... You've got a 10% chance.
And various other unknown factors.
http://www.warplife.com/tips/business/stock/venture/capital/...