The Whole Truth (& Nothing But The Truth): A Summary Of Failed Startups

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The path to success is never an even, illuminated, and straight highway; it is better described as a winding road full of ups and downs. Let’s dive into lessons learnt the hard way, and what we can take from them.

The keys to a successful start-up (learnt afterwards)

Here’s some information from people whose ships did sink afterall. At least we don't have to repeat the same mistakes. So let's check out the three examples we can learn from. 

SWOT - Yes, we really have to face it.

What is a SWOT analysis? It is the way we have to ponder the strengths and weaknesses of our project, regard the inner structure, and consider the overall market conditions. The internal factors are the Strengths and Weaknesses of our project, even before heading into the market. They are the value of what can we bring to the market and the things we need to keep an eye on before they turn into real problems.

Then come the Opportunities and Threats we endure when we face the marketplace, and overall regional conditions. Our Opportunities will be the actual business niches we can go for, the ones we have to take advantage of. The Threats are the external factors that jeopardize our success, and have to do with regional, political, or worldwide issues.

Some web based apps to help you do the SWOT analysis can be:


Marketing Teacher

The accurate business models for this era

Business models are not static; they are completely dynamic, and are a worthy expression of how business should get done in the exact time they are applied. As an example, the business model applied before the Industrial or Digital Revolution became obsolete, and has been changed. What are some of the most suitable business models for today? Let’s just see a few of the recommended models by the Entrepreneur site:

  1. Hold Reverse Auction - allows extremely price-sensitive customers to name their price for the service they’re requesting.

Example - Priceline

  1. Orchestrate Demand Aggregation - reunites the largest amount of buyers and sellers of a determinate niche in the same virtual location, to maximize selling.

Example - eBay

  1. Cut prices to gain industry share and gain profits later - target the biggest audience possible and sell a product as cheap as you can, with fast delivery and good service. Grow the amounts sold, negotiate discounts on large quantities with suppliers, then translate that into your final prices. Growth is the key.

Example - Amazon

  1. Modern Franchise business - Focus in the tightest operations manual humanly possible, then apply it. Once it works, sell it to hungry entrepreneurs who can deal with all the hassles of running the actual business.

Example - McDonald´s

  1. The freemium model - Offer a free version of your service (often with ads) and then a premium paid version of it (without them), using the free as bait to have customers love your great product.

Example - Spotify

The examples we can learn from

These are some failed start-ups, and the things we learn about them by applying the aforementioned key aspects of business development and planning:

#1 Sidecar 

Sidecar was an UBER competitor trying to provide affordable and reliable transportation for daily commuting, or eventual use. The company was completely outrun by UBER due to cracks and failures within the design, and deployment of the idea itself.

  • Too many features - When people are in need of a cab, they just raise their hand and stop one to get somewhere as fast as they can. Sidecar was more complete regarding features than UBER, but that made it more intricate.

    • Extra features weren´t a Strength; they were a Weakness (SWOT analysis).

  • Not enough money raised - The competition was very tight, and the idea was the same. UBER got 8.7 billion dollars while Sidecar only got 35 million dollars.

    • UBER translated money overflow to customers discount (business model #3), and gained market.

  • Not enough supporters - The network created by drivers and users started getting smaller compared to UBER, at which point they started losing weight in the market until they sank completely.

    • (Threats in the SWOT should mention competition: UBER).

#2 Rdio

A music streaming platform launched to compete directly with Spotify. The app had a great assortment of features and was also a pioneer in its field, but failed to outdo its competition and fell into oblivion. Let´s see what went wrong:

  • Gaps defining user needs - This can be described as poor reception of feedback, and hence not being consumer-oriented. The features available for listeners were irrelevant and confusing.

    • Again SWOT misunderstanding, placing a Weakness as a Strength.

  • Not marketing correctly - If you have a great product, you have to market like a madman to have everyone try it out. Nowadays we’re bombarded by all kinds of offers and new companies, so efficient marketing is an absolute must.

    • Opportunities at the SWOT lacked depth.

  • Not offering a free version -The Rdio service was not free for any users, old or new. This made people pay just to “try it out” and killed the willing customer’s curiosity. Their competitor Spotify saw the Freemium business model and grew exponentially.

    • SWOT Threats should have included Spotify, plus they were working with an obsolete business model.

#3 Quirky

A community-driven invention platform that followed up, developed, manufactured, and distributed their products to the big retail stores like Walmart and Target. They were founded with an astonishing sum of 175 million dollars, but ended in failure.

  • Products didn't fully develop - This is the same as saying they were too arrogant. All products were developed in their original form and released to the market, but never improved with consumer feedback.

    • SWOT analysis would have exposed this as a Weakness if correctly applied.

  • Branding wasn’t strong enough - Consumers nowadays don’t buy because of the product quality, but because they believe in the seller. Quirky was too diverse. An incoherent array of products kept growing, and didn’t allow a concept to develop and stick.

    • An example of how business model #3 can be badly applied. Focus on a niche and then go to the next, (just like Amazon).

  • Needs were irrelevant - The products weren’t efficiently designed to have a role in modern life, and help customers in a certain way. They were not market-validated and so fell far behind their competition.

    • SWOT analysis Weakness and Threats were incorrectly applied. They didn´t make sure there was a market ready to purchase the products they manufactured.

  • Mass distribution with no market analysis - They went all-in, and decided to go with major retail chains that demanded a huge amount of each product. This sent the  production budget sky-high. There was no organic or generated demand for each product, so they sat on the shelves for a long time.

    • Instead of using business model #4 to tighten and sell internal operational manuals, or manufacturing small amounts to slowly grow demand, they went all-in and lost everything.

What can we learn from these companies that had a bright future in their hands, and let it slip away? Let´s narrow it down to three components:

1. Be Humble: This is the keystone of success! Be humble and take your weaknesses very seriously. Turning them into strengths is the name of the game. SWOT analysis can be definitive here.

2. Think before acting (plan): It’s one thing to have an idea, another to develop it and a very different one to be successful selling it. Don´t take it for granted. Choose your business model carefully, and use consultancy services as much as you can.

3. Listen carefully: Feedback is the roadmap to success most of the time. Keep your ears open, and you´ll be a winner. Remember that customers come first.

If you were the CEO of these companies, what would you have done differently? Let us know in the comments below.


Postat: 11 august, 2017


Entrepreneur & Creator

Nick is the Entrepreneur Correspondent for He is based in Sydney, NYC, & London. His life consists of frequent flyer points.

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