Failed startups and what we can learn from them
Whenever my kid was too excited to wait for his hot meal to cool down, I would tell him to wait. But like all toddlers who are trying their limits, he wouldn’t listen. He would still sip a spoonful of scalding soup and shout: hot! hot! hot!
Instead of telling him what to do, I scooped some soup from the bowl, I blew air on it until it was tepid. I made sure that he was watching and then, I slurped with pleasure. Afterwards, I was thrilled to see that he copied me.
Now he knows how to cool down his own food.
People always look for signs from other people on how to do things right and we imitate people who have displayed success in what they do.
Another example is when you check out what other people have said about an online seller before you give them your money. Even when we’re looking for a new job or want to start a new business, we look for reviews or more information.
We want to know what went wrong so we don’t make the same mistakes again.
Most new businesses fail because they don’t know enough about a specific field, don’t have enough money, or even end up offering bad products. But there are ways to cut down on how often things go wrong.
If you are just starting, remember to:
- Stay grounded: remember the reason/s why you chose to be in that line of business in the first place.
- Work with the right people.
- Set your goals based on a conducted feasibility study and accurate research.
- And more importantly, love what you do.
Startups that failed and what happened to them
Quibi Holdings
Quibi Holdings LLC is the costliest startup to hit the skids just 6 months after its launch. It’s an online streaming service with total funding of $1.75 billion.
Cause of failure? Well, if you have Peacock, HBO Max, and Disney+ as competitors in the streaming service industry, you’d have to produce compelling content to satisfy an audience that’s presented with a lot of other options.
Quibi wasn’t able to entice the users of the more popular mobile video entertainment streaming apps like Instagram, Tiktok, and YouTube – which can all be accessed for free. 19% of startups fizzle out because they were out-competed.
Lesson: Be sure you’re armed to the teeth especially if you’re to go against the industry giants.
Jawbone
Jawbone was an American tech company that manufactured Bluetooth earpieces, portable wireless audio devices, and wearable fitness trackers. In 2014, it had an estimated value of over $3 Billion.
However, even with that huge earnings, Jawbone lagged behind its rivals.
In 2017, the company eventually succumbed to its unresolved internal conflicts – the departure of its key employees, and alleged stolen trade secrets that resulted in a lawsuit against one of its major competitors.
Jawbone decided to liquidate its assets and disabled the app that had rendered its fitness trackers useless to the users, which led to numerous customer complaints.
Lesson: Settle company disputes before they go out of proportion. And strive to offer quality products. 17% of startups flunk due to substandard or mediocre product offerings.
Neil Patel’s Web Hosting Business
Neil Patel needs no introduction to the world of SEO writing and online marketing. He’s the co-founder of Crazyegg, KISSmetrics, and Hello Bar.
But way before he became the successful entrepreneur that he is today, he had lost a fortune in a company that went awry.
Hiten Shah is an American plastics engineer and investor. He’s also the co-founder of Nira, QuickSprout, and FYI. He co-owns KISSmetrics and Crazyegg.
He and Patel ventured into a web hosting business that had gone down the drain at a cost of over a million dollars.
Lesson: Invest wisely. Know your customers. Focus on addressing their needs, and what they care about.
Learn from mistakes
They say 50% of startups are more likely to close after five years. And 70% after a decade of operation. So what? Often, the ones who succeed are those who aren’t scared to fail.
Learn from the mistakes of failed startups and your predecessors. The probability of a business growing as projected becomes higher if you have a better understanding of your customers.
