Every minute in the world start more than 190 startups but only 1% succeed. Many of them had amazing idea, goal, team and/or a lot of resources, however they failed too. In this article, we’ll analyze the reasons of startups fails.
An early stage in the life cycle of an enterprise where the entrepreneur moves from the idea stage to securing financing, laying down the basic structure of the business, and initiating operations or trading is a Startup.
Here are 3 startups from different spheres that had a good idea, but failed:
Patterbuzz - Changing the misconception that content on the internet is up for free. Enabling people to pay for the single article rather than the whole magazine.
Patterbuzz places itself as an end to end digital content marketplace. Patterbuzz is built on the core philosophy that readers should get the best content providing a rich, interactive and enhanced the reading experience. Patterbuzz believes that digital publishing goes beyond the boundaries of getting PDF's online. Patterbuzz provides a common platform for both the readers and the publishers. Patterbuzz has built an innovative product enabling readers to get their favorite content as they want it. Readers can purchase individual articles instead of purchasing the whole issue or subscribe to a magazine. This will enable readers to make more informed decisions to save a lot of money. Readers can even purchase content independent content publishers which are not easily available in print on in the digital world.
In March 2015 Patterbuzz team succeeded in prototyping and starting the first investment round but couldn’t succeed enough in funding.
Zirtual - Providing dedicated, virtual executive assistants for entrepreneurs, professionals, and small teams. The U.S. based assistants are thoroughly vetted through the 7-step hiring process and trained to do anything an in-person admin could do, except grab a cup of coffee.
Short cause: burn. Burn is that tricky thing that isn’t discussed much in the startup community because access to capital, in good times, seems so easy. Burn is the amount of money that goes out the door, over and above what comes in, so if you earn $100 in a month but pay out $150, your burn is $50.
Zirtual was not flush with capital — for as many people as they had, they were extremely lean. In total, they raised almost $5 million over the past three years, but when we moved from independent contractors (ICs) to employees, their costs skyrocketed. (Simple math adds 20–30% on to whatever you pay an IC to know what it will cost to have them as an employee).
Lumos - Internet connect electrical switches and wall plugs that come with embedded sensors to detect ambient conditions in a room.
The biggest issue of Lumos was incorrect estimation, for example, overestimated machine learning or underestimated efforts in converting a prototype into fully functional hardware product. They were trying to enter the IoT hardware market without knowledge about IoT, its hardware with specific market and risks. Experts were asked only after understanding of their big failure.
There's a lot of excitement when a startup is launched. However there are unhappiness and sorrow when it fails. But in my opinion the startup failure is normal. Remember that this is the way of capitalistic system has been designed, furthermore, it’s their worldwide goal. The rule is “Survival of the fittest” and startups have to compete with each other in order to earn the right to be a winner. There are more than 7 billion people on the Earth and one global information space. That’s normal when different people create similar ideas simultaneously, you should make up mind to the truth: “Your idea is not unique".
Failure causes not only personal and emotional pain but also a negative moment with wasting time and money. Mature entrepreneurs will step up and take responsibility for the failure because the startup died when they were CEO, while others try to find someone else to blame. What were the reasons? Investors failed to support them, the external environment was not favorable, the competition in predatory pricing, too early idea realization and the market conditions were not right.
We need to understand that startup failure is not a bad thing, but it's a big step from an unstable idea to sustainable business that can deliver useful product. Yes, startup failure does cause short-term pain, but instead of mourning their demise, we need to imbibe the lessons the failure teaches us, and move on, so we can do a better job the next time.
In conclusion, due to our experience we saw startups ups and downs. How to move on with technical side? That’s exactly what Roll’n’Code can share with you and tell more about existing tips and tricks to succeed with your idea!
- Why startups need to die
- 5 Reasons Why My IoT Startup Failed
- Zirtual: What Happened and What’s Next
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