Top 10 Web Startup Business Screwups!

Why do many new web startups, with great ideas, valuable assets and deep motivation, fail? What are the major mistakes startups commit leading them to failure? What can be done to prolong the life of a startup rather than bring its business life to a guaranteed end?

It’s sad: the percentage of failed startups. It’s almost depressing! Even years ago, going back to the 90’s, it seems that startups have been failing continuously yet more discretely since social media channels and Web 2.0 were not in play!

A Table of Web Companies that Vanished!

Now many of you out there will think: why should I consider opening my own startup when there’s a 50-50% chance that it’s going to fail? Why not just apply for a stable company and settle for being an employee with a steady income? I beg to differ, the remaining successful 50% could be perceived positively! What failing startups lacked is the ability to learn from the mistakes of the many others! Yet now, with the abundant availability of failure stories, both online and offline, it has become easier to learn from the mistakes of others and try hard to avoid them.

So here’s what I’m going to do for this particular post: I’m going to choose a list of startups that failed and point out their mistakes clearly, explaining how they could be avoided in future ventures.

1. Simplicity Does Not Substitute for Functionality!
   • AlmondRocks (as we were able to conclude from the little resources we found) created blogs that were too simple that they were actually useless!
2. Don’t Underestimate Competition:
   • TinFinger Took their competition, Wikipedia – one of the top ten websites worldwide- lightly. They also concentrated on the technical side of the interface (RDF triples and semantic web) rather than the friendliness of the user experience.
   • Feedster, a search engine which seems to have been resurrected then killed again, is yet another example of underestimating competition, in this case: Google!
3. Always have a backup system (or be prepared to pack and leave)!
   • Ma.gnolia a social bookmarking site which was operating well but was not using reliable & scalable hosting, which eventually caused major data loss potentially deleting user data permanently!
4. Do Not invest in over saturated markets (unless you have a significant competitive advantage)!
   • A great lesson to be learned is from the deceased online news space, Findory, which invested in a field which is highly saturated with similar services yet was unable to prove unique or provide a significant benefit to its market.
   • The social bookmarking site, SpinSpy, made the same mistake too! Though they had a twist which encouraged political bloggers to rate news, they entered a saturated market hoping to shine above existing companies and ended up vanishing form the world wide web!
5. Prepare a feasibility study BEFORE launching your startup!
   • Tagyu’s founder, Adam Kalsey, simply ran out of cash and was unable to cover information retrieval costs and thus couldn’t “afford room for growth“!
   • TheAdCloud was able to capture the attention of TechCrunch: a news classifieds service with tags, free listings and an added feature for user comments! They started off well then poof!
6. Do not depend on external factors to help you succeed! (Focus on internal resources and then grow outwards)
   • Opinity is now in “suspended animation” waiting for partners to buy in and ad support to materialize!
   • Mercora came up with a great idea and waited for growth to happen disregarding competition and running costs!
7. Before launching: test, test and test again!
   • Colorado-based Gtalkr needed flash 8 (operated on windows only), some videos failed to load, some extensions didn’t work and they reported some server hosting troubles! People got frustrated and down the hill Gtalkr went!
   • dPoll was a unique idea of a quick poll service which failed due to many unplanned errors.
8. Be open with your users!
   • Filangy allowed users to import Firefox and Internet Explorer bookmarks yet was unable to provide an easy way to export user data, which made it less open and interactive.
9. Don’t give up easily! (Patience is the greatest of all virtues. Cato the Elder – Roman orator & politician (234 BC – 149 BC))
   • Skobee was rated as “Best in Show” and in 6 months, the company owners seem to have given up and moved along!
10. Always plan monetization ahead!
    • Kiko failed to monetize its free subscription and just like that, it flat lined!
    • Fruitcast is yet another example of a service which inserted ads into audio files making it unable to accommodate advertisers who want to pay by the listen. This caused its fruits to go sour!

Some companies didn’t even live to see the light of any day so no one talked about them! If you know about any more failing startups or have any more lessons you’d like to share, please don’t hesitate to add your feedback down below :)