Startups that Sounded Great on Paper, But Failed

What can be learned from this list of failures?

Written by Ian R.

1 year ago

Some were lacking the right organizational structure, while others were simply a little early, or a little late. Whatever the reason, there have been many startups over the years that seemed like great ideas, and even acquired a good amount of funding, only to crash and burn.

WebVan

If you pitched the idea of a web-based grocery delivery service to anyone today, they’d likely agree it’s a solid idea with a clear market. While today the idea seems like a practical one, when WebVan launched in 1998, people just weren’t ready to embrace it. But the company didn’t fail solely because of timing. WebVan also made the well known scale-too-fast mistake, spending billions on setting up warehouses and distribution centres all over the United States. If they’d started out with securing a market in one location first, things might have turned out differently.

Auctionata

A more recent example, Auctionata secured what seemed like adequate funding at $95 million since its launch in 2012. Opening the art and collectibles auction market to the world seemed like a great idea. Instead of auctioning to a capped audience, now pieces could get global exposure. Auctionata’s live auctioning streams proved otherwise. Sales were below predictions, and the after expected financing failed to materialize, the company filed for insolvency in January of this year.

Home Hero

Another example from this year is Home Hero, an online service that sought to connect non-medical caregivers with families looking for hospice-type assistance. The company succeeded in raising a formidable $23 million over three investment rounds. The hope was to partner with insurance providers, and reduce hospitalizations, while providing families with online updates of patients’ health statuses. According to the company’s co-founder and CEO, Kyle Hill, a number of cracks led to the service’s demise. The main blow was when new industry regulations defined home caregivers as W-2 workers, leading to a sudden and steep hike in prices, beyond the company’s control.

GO Corporation

GO Corporation practically invented the tablet. Founded in 1987, the company today seems very forward-thinking. They set out with the aim of building mobile computing solutions using their own OS and pen-based applications for tablet devices that they developed. Unfortunately, the market wasn’t ready to go there yet, and the company ended up burning through their venture funding by 1994.

GovWorks

Depending on where you’re from, government-run websites and online services are generally quite painful to use. The idea behind GovWorks was great – to consolidate all the government services into a single portal, allowing users to pay fees, receive community information, and access governmental services. As can be seen in the documentary Startup.com which depicts the company’s story, organizational conflict was at the core of what led the company to its eventual demise. This proves once again that if the relationships within your business aren’t solid, you’re going to have a tough time making things work.

Pets.com

Another startup that may have met with a different fate had it been launched today is Pets.com. Not only is it a winning URL, Pets.com also poured a ton of cash into marketing and did manage to create wide-spread brand awareness. Unfortunately, while the pet-owning market was there, people still weren’t ready in 1999 to fully embrace ecommerce solutions. Another reason was that nothing those days was scalable and everything had to be coded from the foundation up. The company need over 40 in-house engineers to build and maintain the site as it grew.


LoudCloud

It’s hard to imagine why, but cloud computing didn’t catch on at first. LoudCloud were providing what today is the backbone of online business not to mention private users – cloud services. It seems like they were doing a decent job of it too. The problem – slow adoption. People just didn’t open up to the idea quickly enough for the company to create revenue that it could grow from.

So, what can be learned from this list of failures? While there are a few lessons here, ultimately it shows that there is always a slight element of chance when you want to create something from nothing, and succeed.

This doesn’t have to be a depressing thought. In fact, it’s quite liberating if you think about it. The bottom line is that if you believe in your idea, you have no choice but to go for it. Of course, that doesn’t mean that you can skip out on the crucial steps to building a business. You have to eliminate as many obstacles as you can along the way.

The thing is, a lot of the people behind the companies in this list went on to far better things after their companies either filed for bankruptcy, or were bought. They ended up gaining invaluable knowledge through the experieince of being at the helm of a major company, maybe even more so than if their first idea had gone all the way.

 

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