Saturday, November 19, 2011

Why Startups Fail Out Of The Gate

The more startups I see, use, and review makes me question the future of things. It would appear to me that we are on the cusp of some serious changes in the culture. Robert Scoble and Sean Parker have both given their critical thoughts of the startup world based on years of experience. From my perspective the startup problems I see are noticeable right away and tend to fall within two main categories.

First, the definition of a startup seems to have become a bit convoluted. It may not have ever been written in stone, but a startup at least meant a company with a specific vision, a business plan, or one that brought an innovative product or thought to market.

Woother is a weather "startup" according to the entry on The Startup Pitch. It plans to be a simple and easy to use weather service that provides accurate weather information on the desktop and on mobile devices. I would categorize this as a project and not a startup. We have many weather websites and apps today, from simple to complex, that are substantially better than this. There is no market for this service which offers no advantage or innovation over the others.

Second, many products or services are brought to market to quickly. I am finding more and more private alpha and beta releases that are not ready for primetime. Even with an early release startups should have a complete product that has been tested and used substantially before any release. These "private" tests that the public can signup for and get in on are essentially public launches. Not only do they use up valuable launch media coverage, they risk bad reviews because of an inferior incomplete product.

Take SphereUp as an example. Looking over the website pages it appears to be an address book management platform that brings in contacts from Gmail, Skype, Yahoo, Salesforce, LinkedIn, Facebook, and more. Apparently all these contacts are blended together into a database that is available on your desktop, the web, and your mobile device. This program/app also acts as a place to initiate conversations with your contacts through different the channels.

I was accepted into the test and was surprised to find there is only a local desktop program that pulls in your contacts from Gmail, Facebook, and Salesforce. The desktop application is nothing special and needs a lot of work. The astonishing thing to me was that the web portal and mobile apps are still in development and the test versions won't be available until next year. This launch should have waited because nothing advertised is working yet. It would have been better to stay behind closed doors until the product was complete.

The lesson here is to slow down and build quality products to completion that are new, or improve upon the current standard, and that have a definitive use case that fills a need. What are your feelings? Share your thoughts in the comments below.


  1. Aiming at specific companies is not a nice thing to do.

  2. Dhaivat, the mentioned startups where on my radar to review and test. Not reviewing them, or not giving them a fair review would have been a disservice. It would not be positive for my integrity and would continue the trend I speak of; true feedback is needed. It would inherently cause people to question my good reviews if I was not honest.

  3. They are just applying lean startups principles. SphereUp seems to have a working service, if it's a beta you expect for things not to work completely.

    They should probably have sent you an invite mail that clearly states that they only have a few things working but that if you wish to try it anyway, they would be grateful.

    I otherwise agree that too many people are calling their projet a "startup" as it sounds cooler. But I doubt that Woother is funded and that it falls into the startups that Scoble and Parker talked about.

  4. I totally disagree with the (apparently unsupported) assertion that "it would be better" for startups to stay behind closed doors until they are feature complete. That's a recipe for building a product no one wants. Having a low key early release/beta to gather and incorporate customer feedback into product development early on is just smart business. You should be up front with people you invite if you are lacking key features they expect, but still get your product out there and listen to what people say.

    I hope no one reads Dain's poorly thought out statements in this article and decides to build their product to completion behind closed doors, where they will miss out on important learning that early adopters could provide.

  5. Patrick, the SphereUp invite and website did indicate beta. The thing with beta (and this is part of the changing market as well) is that it should have already gone through development and initial alpha testing. All requirements would have been defined and built with the product working as expected internally. A beta test is used to garner additional feedback and to see if there are unexpected compatibility or functionality issues across different users. Thanks for your feedback.

  6. Anonymous, because no attribution is given for my statements makes them my own; my opinion. "Feature complete" is the wrong interpretation; it takes years to implement all the envisioned features for a website or service. Focus groups and use case analysis should have been completed during the design phase. If you are waiting until the beta testing period to determine if there is a market for a product you are asking for trouble.

  7. I think you're 100% wrong. Every startup starts as a project and gradually makes the transition to a "real" company over time. Even Google started as a project. The question is: when do you start to interact with (potential) customers? And the right answer is always: as soon as possible. There are only two possibilities: either your project is something people want, in which case you win, or it isn't, in which case learning that sooner rather than later is always a good thing.

  8. Ron, I agree with you. I am not sure what you mean about me being wrong; never said I was right. Just offered my opinion.

    I think there is a disconnect on they way I am saying something or the way you are interpreting it. Maybe we are looking at things from different perspectives.

    1) Projects are good! Although, they are not business startups. Either way, a project or startup is not going to make it as a business if it is an inferior product. It may in the future if it evolves.

    2) You must deliver on what you are selling; no matter what phase you are in. If the earlier phase does not have a feature simply don't sell that feature. As an example; imagine I ask you to test a new video and music player, and you discover that the video part is not complete yet and it only plays the 10 sample songs because the music upload feature has a glitch. How would you rate that product?

    Now, take that same product; now it was describe to you that those things have not been built yet but they want you to test the audio quality and volume level of some sample songs. Your review and perception of the product would be vastly different.

  9. I disagree with startups being brought to market too quickly being a problem. Most startups end up calling it quits when they run out of money too quickly: more startups should launch as quickly as possible to increase the length of time that they can survive.

    I've been through too many startups to count and this quest for perfection by the programmers ultimately caused the downfall of the business in many cases because they would take months (or even years, seriously) to perfect features that nobody wanted to use or provided little value.

    If you create a tool or product that people actually love to use and want in their lives, they're not going to suddenly abandon you if you have a few minor bugs or have 99% uptime initially instead of 99.999% uptime. Look at Twitter as proof of this: when they started getting popular their site was basically down much more often than it was up: yet people still used it and loved it and accepted its faults.

    The biggest problems that startups always face are shoddy business models and actually finding customers.

    * Finding customers and spreading the word about your product is going to be the biggest issue you'll ever face because there's so many options for people to devote their attention to. Unless you have connections with media or lots of money for ads, you're going to have to make your own luck and spread your own message. A lot of companies are focusing in on Facebook with all of the services listed at BuyFacebookFansReviews, but there's so many options for advertising beyond simple social media. Different businesses work best with different types of ads, so you need to experiment with all of them (email, content marketing, search marketing, ad networks, mail, etc) and see what works best for you.

    * Too many people rely on advertising rather than charging money for services. That's not inherently bad to try and create a popular product, but most businesses never get to this point. You can flourish with minimal traffic if your costs are low and you're actually charging money for a product. This is one of the main things that the startup community often misses: though I think in the last few years 37Signals' group and some other bloggers has had some influence in guiding many developers through this issue.

    If you can solve these issues before you run out of money, you can create a viable business. Most startups don't get to this point though and I think that launching too early is almost never a mistake.

  10. Very good points! Thank you for the insight.

  11. Dain, I'm guessing you've never worked at a startup from the moment of its inception. If you did, you'd know that there's really no such thing as a "complete" product, only one that has the right product-market fit. A startup's biggest challenge is not only finding the right audience, but also discovering what that audience wants. I'm also a fan of the Lean Startup (who hasn't read this book!) and agree with what others have posted already that spending time to craft a quality product without getting feedback at the same time is wasteful. Also, your comment "nothing advertised is working yet" regarding SphereUp is absolutely untrue.

  12. Thanks for the feedback. When saying a "complete" product I mean one that has the features it says it has. As I said in a previous reply "it takes years to implement all the envisioned features for a website or service". I certainly agree with you on the aspect.

    As for my other opinion regarding SphereUp, it is based on the information provided on their "How It Works" page. It says "...provides communication buttons so you can email, call, and text your contacts from a single app" and "Accessible Anytime, Anywhere". I found both of those statements to be false in the current product. Now, if this page said that this was their vision that would have been fine. If you read my reply to Ron, a couple up form here, #2 expands on this.

  13. Hi Anonymous,

    Well put, and I had a burning desire to comment something similar (so thanks).

    Learning from past failures (feature release, product launch, customer dev) is a way to accelerate all of our learning curves!

    I just launched this website: where entrepreneurs can submit failure stories to help each other out. Let me know what you guys think!

  14. Ray, that website is a great idea! It is a true testament that the community is willing to share lessons learned to help out the next entrepreneur. From time to time people may disagree, especially with bloggers :), but overall the web startup community is a great place with excellent people. Being able to work together and through anything only increases the possibilities. I will learn a lot from

  15. Just curious, have you ever worked at a startup?

  16. ^ I forgot to add. If you have, can you please share your experiences there? Was it a successful startup? If not, what happened? Ray, I think your website idea is very interesting. Startups that don't pan out can definitely teach valuable things.

  17. Hello Anonymous, I have not. Although I have worked on and done testing for new systems and financial product launches. Of course a startup is an entirely different thing. One day I hope to work for one or initiate my own.