We’ve come to accept that there are people who will “Like” a Facebook post even if said post talks about a recently-deceased relative or being mugged or just relatively having a bad day. These people aren’t being jerks on purpose. They’re just trying to express sympathy or solidarity the easy way—you know, by simply clicking a button, rather than typing up a relevant comment or calling or sending a text message. It’s weird; but until Facebook invents that hug button, we’re just going to have to make do with one that just fails when it comes to communicating the nuances of face-to-face interaction.
And you know what? That’s okay, because if we were to assume that people just love hearing bad news, we would have to wonder if that makes us normal or worse as human beings. Well, we suppose this normal versus worse theory deserves to be tested, which is why we’re here to tell you about some startups that failed. Whether these stories delight you or make you sad is something we’ll never know. But we promise that you’ll learn something, lessons, nuggets, bits of truth, or whatever you call it that would be helpful, especially if you’re planning to put up your own business.
Lesson #1: Focus on What Really Matters: Making your Customers Happy
Marc Hedlund, cofounder and Chief Product Officer of Wesabe, has blogged about why Mint eventually defeated Wesabe. Just in case you haven’t heard of Mint or Wesabe before, both are websites that help people manage their personal finances. Wesabe launched in November 2006, while Mint was founded the same year but officially launched 10 months after Wesabe was. Anyway, Hedlund was candid enough to admit that the main reason Wesabe failed was because Mint was able to make users happy quickly even if it failed (or still fails) to actually solve the financial problems of consumers. Of course, making customers or clients happy is easier said than done; but we think the real lesson here is that it doesn’t matter if you launched first or second or fifth or tenth. For example, if you’re thinking of venturing into the IP PBX (more info) business, you already have this understanding that you’re not the first to do it, which leaves you with the task of innovating aspects of it that would make users choose you over the competition. At the end of the day, what’s important is (as Hedlund said) to make “users happy with your product as quickly as you can, and helping them as much as you can after that.”
Lesson #2: Your Startup is Only is as good as your Team
The business starts with you, because no one else will invest blood, sweat, and tears to make the startup work. However, you don’t have to micromanage everything. You need to surround yourself with the best possible people. As great as he was, Michael Jordan didn’t start winning championships without Phil Jackson and Scottie Pippen at his side. Same goes for Lebron James, who had a “startup” in Miami with Dwyane Wade and Erik Spoelstra after spending seven fruitless years in Cleveland. The same goes for first time businessmen or even experienced veterans who quit their posts at established companies to launch their own gigs. “Having a competent, committed and professional team is imperative to succeed. For a first time entrepreneur it’s even more so,” said Indian businessman Rajiv Poddar, who shut down his first startup Sedna Wireless after two years to start another company.
Lesson #3: Think Small, Start Small and Gradually Expand
Having hundreds of millions in venture capital is not a guarantee that a startup will succeed. You have to make sure that your business plan is sustainable in the long run because a number of things could go wrong at any given point in time. While there’s nothing wrong with dreaming about taking the world by storm, it’s still best to start small. Electric car venture Better Plans had more than $800 million provided by investors like General Electric and Stanley Morgan at its disposal. It launched its innovative electric car battery-swapping technology in Israel while simultaneously planning to expand in Australia, China, Europe, Japan and the United States. However, it disastrously lost its funding due to a number of reasons. Better Plans CEO Shai Agassi was based in California, but his startups operations were in Israel. The company also assumed that car manufacturers would offer compatible models, but only Renault supported the venture. But ultimately, it was Better Plans’ failure to succeed in a small scale operation that led to its demise.