Newsberry

Launched: ~2005

Shut Down: January 2012

Founder: Wildbit

Funding: none

Newsberry was an email marketing product that was founded by the then consulting company Wildbit. It was shut down after 7 years, which is a reasonable run in itself, but the unusual thing about this story is that at the time of shutting down, Newsberry was actually profitable (to the tune of $75,000 per year).

So why did they shut down? Why didn’t they sell? Wildbit have written two blog posts (here and here) explaining their decision to kill a profitable product without selling out. The crux of the problem was that Wildbit themselves didn’t particularly like the product, weren’t proud of it, didn’t even use it and basically ignored it. The second of the posts exlpains why they didn’t sell – they wanted to, but couldn’t find a suitable buyer.

This probably doesn’t qualify as a failed startup, but it does illustrate some of the complex reasons people have for creating, maintaining and letting a startup go.

Beyond Oblivion

Founded: January 2008

Shut Down: December 2011

Founder: Adam Kidron

Funding: $87m (News Corporation)

The flagship product of Beyond Oblivion was Boinc, which was a music service where customers paid a one-time flat fee for a music device that would give users the right to listen to unlimited music for the life of the device (or seven years). In theory, copyright owners would be paid a “micro-royalty” for each song played. But Beyond Oblivion was a big time flameout, burning over $32m of News Corp’s money and then shutting down weeks before officially launching.

Evolver.fm has written a great post-mortem about how the company fell apart.It’s a good read and the list of failings are many, but most of them boil down to the founder and CEO Adam Kidron, who seemed to really lead the company astray with his overspending, overpromising, cheap gimmicks, poor management and poor negotiating. Incidentally, this isn’t the first time Kidron has been blamed for ruining a company. Back in 2001, he was the CEO of Urban Box Office, a cable startup that failed for many of the same reasons as Beyond Oblivion.

Plancast

ImageLaunched:December 2009

Shut Down: Still live (but no longer being worked on)

Founder: Mark Hendrickson

Funding: seed funding (locally sourced)

Plancast is a social events discovery network that helps people find upcoming events that their friends are going to. Founder Mark Hendrickson has written an insightful post-mortem on why Plancast didn’t work out. Lack of traction was cited as the main reason, but he also writes about some of the underlying reasons behind this.

Short summary below:

  • Sharing frequency – events are really only suitable for occasional sharing and people don’t make (or share) events all that often.
  • Consumption frequency – the majority of people generally don’t proactively seek out new events, leaving the service to a minority of proactive users
  • Tendency to procrastinate – most people resist making advanced commitments on events
  • Incentives to share – here Mark has an interesting take on why people share anything on social networks. He believes it is mostly to do with vanity and narcissism, whereby people share content so others will think better of them. Events generally don’t lend themselves well to fulfilling this motive so the incentives to share are low for the vast majority.
  • Selectivity and privacy concerns – many events are small and private in nature and extend only to personal friends. Therefore, they’re not suitable for public broadcast on Plancast.
  • Importance of an invitation – most people will respond better to a personal invitation rather than a notification about an upcoming event a friend is attending
  • Content lifespan – event plans are not “evergreen” and the content is more or less worthless after the event has come and gone
  • Geographic limitations –  events are also place-related, which has its own issues, e.g. when a new user can’t find anyone else living in the same area and quits.

I pretty much agree with everything Mark said. Some additional thoughts:

  • Plancast is a specific social network for something most people just don’t need all that often and which a more general social network (such as Facebook) would probably suffice. While Facebook’s events app is not necessarily an event discovery service and it’s certainly not perfect, I doubt that the majority of people would sign up to a specialised service just for this feature.
  • I think a cooler idea would have been to layer the social network over an events search engine. Rather than just relying on user submissions, the search engine looks for event listings from all around the user’s area (or any location) and lists them on the site along with attendees, likes, recommendations, etc from the social network part.

Post-Mortem for 10 Products

Dana Levine has written an insightful post-mortem of ten products that he has built (and ultimately failed). Below is a quick summary of the products he built and why they failed:

  1. Tweedledo (web to-do list) – no traction
  2. InstantQ (queue management for restaurants) – no customers
  3. InstantQ V2 (restaurant marketing platform) – low customer (i.e. restaurants) willingness to pay
  4. Rentize (local rental marketplace) – gave up after deciding that the idea wouldn’t work very well and that the commissions would be low
  5. Wish List (search for best prices on internet) – no traction and co-founder difficulties
  6. SimplyHours (office hours scheduler) – co-founder left to work on something else
  7. SpeakerGram (marketplace for conference organisers and speakers) – market wasn’t big enough
  8. About/Team/Press (app to manage about, team and press pages) – co-founder left to work on something else

The last two were consulting projects, both of which didn’t launch.

Some of my thoughts:

  • Most of the products are pretty standard tech startup ideas (e.g. a to-do list, marketplaces for X and Y, etc)
  • None of them actually address a real pain point – they are all simply “nice to have” products, but in no way essential
  • Startups focusing on local small businesses are notoriously difficult and are hardly ever successful. Despite this, they are somehow always seductive to tech entrepreneurs (e.g. InstantQ, V2 and Rentize)
  • Alot of these products would need to rely on network effects to grow large
  • This list implies an approach to startups that goes along the lines of – acquire tech skills, find some general problem that you don’t necessarily have, try to solve it with a web app and then attempt to monetize it. This seems completely backwards. It would probably work better to start from the opposite side – be involved in a field outside of web technology, understand the problems, needs and wants of the people in the field, then learn tech skills to help them solve these problems.

Notifo

Launched: ~ March 2010

Shut Down: ~ September 2011

Founder: Chad Etzel, Paul Stamatiou

Funding: Seed funding (Y Combinator – Winter 2010)

Notifo was a mobile application which allowed websites or online services to push notifications to subscribers on their mobile phones. Technically Notifo is still alive (at the time of writing), but a shutdown notice on their blog points out that the service is no longer being developed and will eventually shut down.

Like many other failed startups, the key reason for Notifo’s pending shut down is lack of traction – as the blog put it, the service “never gained enough traction with publishers or consumers to make enough revenue to pay the bills and sustain it as a company.”

The founders put 20 months into the startup before they finally ran out of money and had to give up, but this was certainly enough time to invalidate the concept. Clearly, there wasn’t enough of a market for a third-party notification service – probably because 1) most web services already have their own mobile apps and 2) users are already being flooded with app notifications and inbound marketing.

Fanvibe

Launched: ~ November 2009

Shut Down: ~ July 2011

Founder: Vishwas Prabhakara, Art Chang and Joe Pestro

Funding: Seed funding (Y Combinator)

Acquired: beRecruited (June 2011)

Fanvibe was a sports web application where users could check-in to matches that were currently being played to interact with friends who are also watching. Fanvibe covered the NBA, NFL, MLB, NHL, college basketball, college football, and the English Premier League.

The interesting thing about Fanvibe was that it shut down because of external reasons, namely the NFL and NBA lockouts, that were beyond Fanvibe’s control. The startup was acquired shortly before shutting down by beRecruited and it was quite popular, with around 100,000 users. But the threat of a continued lockout made the outlook for Fanvibe’s near future difficult and beRecruited decided to call it quits.

The takeaway lesson here is simply the reminder that startups can fail, despite having traction, for reasons entirely outside of the startup’s control. You can do everything right and still have outside forces cause you to fail, as in Fanvibe’s case. Fortunately for the founders, they were acquired and are now working at beRecruited, but it could have ended far worse, and through little fault of their own.

Exambuff

Launched: ~ January 2009

Shut Down: ~ January 2011

Founder: Tim Ruffles

Funding: none

Exambuff was an exam preparation service where  one could “hand-write an answer to an example exam question from your course, upload it to a PhD student, and they’d comment on it and tell you where you were going wrong”. Unfortunately, it never gained any traction, nor did it ever make any sales. Around two years after starting, Exambuff shut down. However, Exambuff isn’t totally defunct – founder Tim Ruffles has open-sourced the project.

Given that ExamBuff never made a sale, it could probably be described as a failed project more than a business startup. But as a case study, it does provide some insight into a project idea that never quite found a market.

Why Exambuff Failed

Founder Tim Ruffles wrote a post-mortem and pins the failure down to three main factors:

  1. Not understanding customers – this was the big one he identified (and I entirely agree). Tim only tested his assumptions with a Facebook survey, but never bothered to talk to actual or potential users.
  2. Harmful ramifications of knowing how to code  – he was a technical guy who wanted to code and he essentially re-invented the wheel by creating a complex app from scratch. To be fair, I don’t think this was a proximate cause for the startup not succeeding, but rather a waste of his time.
  3. Market or industry forces – the university exam market is seasonal (exam time) and he was targetting the universities themselves, and institutional market. Again, this probably wouldn’t have broken the startup if he was more flexible in his target market (e.g. one suggestion on the Hacker News discussion thread was to target the legal niche, or alternatively build an open platform for scanned and annotated documents).

Ultimately, there wasn’t a paying market for ExamBuff, probably due to a number of separate reasons, for example: the target demographic (students) generally aren’t interested in paying such services, it’s hard to know how many students study for essay-based exams by actually writing practice essays, students can solicit third-party reviews for free from friends or at local student centres, etc.

Moreover, the site design was mediocre at best, with the dubious choice of a canary yellow theme. It was also noted that the demo was lacking, not for the handling or technical aspects, but for the actual content of the example essay. The comments were in mildly unclear handwriting and were stock, banal comments and writing advice that would have been at home in a primary school setting. Were I the customer, I would have felt it was a total waste of money.

Lessons Learned

The main lesson from ExamBuff is to test your assumptions and constantly seek feedback on your product. A common theme in many failed startups is the lack of a product-market fit. This may take some time to develop but it is clearly crucial to success. Startups need to continue to test their theories in the market and find the product that fills a need or desire that someone is willing to pay for. This may mean experimenting in many different directions to find the right fit. Now that it’s open source, perhaps someone could use the source code for ExamBuff and discover a market for it.