Startups are a tricky thing. At a time when most people dream of starting their own ventures or becoming entrepreneurs it makes sense to learn from those who have been there, done that. Here's a few reasons why some startups failed, as stated by their founders.
1. "I launched a recruitment technology platform to help companies find the right people to hire. We generated 1.2 million in sales in our first year. After getting approval from their CEO, one executive from our biggest client invested a good sum for 5%. Life was awesome. A few months later, something went down and their CEO ended up leaving, the new CEO saw the investment as a conflict of interest and killed the whole deal, effectively sinking our ship. Take away: Diversify your client base, never go 50/50 with a business partner. 49/51 51/49 doesn't matter - but someone has to be the top dog. Otherwise no one will want to make the hard decisions." - Reddit
2. "Our startup was related to the Advertising industry. We were 3 co-founders. It lasted for about 3 years. Server Cost was probably the largest expense after paying salaries. There were many reasons for its failure but majorly poor technology infrastructure and not being able to adapt fast enough to new technology. Key takeaways: Hire a better CTO, be more picky about the co-founders and also learn coding. Do I have regrets nope. Why? Because It was a great learning experience." - Reddit
3. "At my first eCommerce business, I built the website on Magento. The business sold vinyl wall graphics which would be printed on demand and shipped to the customers. I am a self taught designer and built the website and graphics myself. I had operations aligned with a printing company and got my first sale from a Facebook friend. There were a lot of successes in this business, but my head got in a negative place and I wasn’t confident of my abilities as an entrepreneur and business person. I wasn’t willing to invest into marketing and didn’t have the knowledge of how to bootstrap marketing. Lessons learned: Doing business alone is challenging, marketing without cash is hard, and I liked eCommerce but wasn’t passionate about the product." - Reddit
4. "I didn't have enough money to operate the first year at a loss. Seriously, it is so important to have that. I mean technically my business could have survived, but I'd have starved. When factoring in year one projections: don't forget your salary!" - Reddit
5. "I started an independent engineering consultancy firm that was made up of only me. Turns out I spent so much time trying to get old customers to pay me, that I didn't spend enough time looking for new customers." - Reddit
6. "Didn’t have enough starting capital. So we shifted our business plan to bring in some small capital to save up for our major plans. During that process, I realized my business partners were not what I was looking for. They just didn’t have the right mentality for what we were doing. The drive was there, but drive isn’t all we needed. So I bailed out of it before I lost anymore of my money." - Reddit
7. "I was too naive. As an engineer, I just wanted to build a product for the customers and then hoped that it would sell itself. So I built dispatching software for a local truck company. After I finished building it, I found that there were at least 10 other competitors with better features. I tried cold calling other truck companies, had to price myself lower in order to be a compelling offering. In essence, I fucked up by not doing enough research, not coming up with a more unique product, trying to be 5% better that competitors, not being able to get help on the sales end, and much more. The only thing I did well was to build good software." - Reddit
8. "When it came to marketing channels, I didn't follow what the numbers said was working. I had my heart set on building a blog to promote my products. But all my sales success came from influencer marketing. If I had to do it over, I would have dropped the blog and put everything I could into the marketing channels that worked." - Reddit
9. "Did a lot of things wrong, but also learned a lot. This was a mobile gaming tech startup. Things I did wrong:
- Had an equal footing co-founder which sounds great, but the result was we'd agree and compromise, there was never a hard vision or a final say. I think we would have done better if either one of us had led alone.
- Spent too much time building the product (because it's the part we knew) and not enough time putting in people's hands and making sure it's what people needed.
- Relied on a two-sided marketplace without a foothold in either.
- Had no idea how to market or engage with users and/or customers.
- Assumed that liking something "in theory" would translate to liking it in reality. - Reddit
10. "I had an online startup that failed (online vacation rental marketing). I looked at the competition in the market at the time and realized the only offerings in that space were awful and expensive. I thought, at those prices I can provide awesome services. It became a race to the bottom on price during that time. Lesson learned." - Reddit
11. "I trusted investors to come through with over $100,000 without a written agreement. I'd been in business with the guy for 3 years and trusted him, but when it came time to honour his agreement, he bailed. Bottom line, every time I approached him with regards to a contract, he had some excuse as for why he couldn't sign it that day. Always get agreements in writing!!!!!" - Reddit
12. "Out of the 10 companies I started, 2 have failed. Their failures were important in my other future successes. Both were due to having wrong business models, wrong partners and wrong offerings." - Quora
13. "My best friend and I saw the terrible traffic and pollution in China and wanted to do something about it. We left our American lives, quit our jobs and moved to China to build a carpooling start-up. Despite no connections, we were able to raise seed funding from reputed investors, won a bunch of awards (MIT, Castrol, Lenovo), joined 500Startups, built some traction, built a 13-person team, and had great press. Yet it still didn't work out because:
- The carpooling concept was still new in China and we had to educate the market.
- Carpooling model is sophisticated in reality: location, time, trust, legal, revenue model. Plus it's hard to guarantee rides." - Quora
14. "It took me three founding teams before I was able to get the right team to start my company. Team number one failed because two of my co-founders quit and stole the intellectual property of the company and left me for dead the day before we were going to get funded. Team number two failed because the team wasn’t strong enough. Team number three succeeded because we had the right combination of people that had the same vision and meshed well as a team." - Quora
15. "These were the most consequential reasons that my last startup failed:
- We were trying to solve too many problems different sets of customers. This means we didn't have enough focus to truly satisfy anyone’s needs, and our product never launched on time.
- Our product was just marginally better than the competitions.
- We were focused on building the product, and didn’t interact with our customers enough.
- We wasted a lot of valuable time building a lot of uses features that no one needed.
- We were doing a lot of unnecessary activities like hiring too soon, getting PR, attending every conference, etc." - Quora