Startups Fiasco : 7 Startups That Failed For Arriving Too Early

All startups begin with a vague idea initially. Some startups are able to have more weight in their forecast and succeed in procuring a handsome investment to pursue their goals. Others aren’t that lucky; they just have to make do with the bare minimum. Yet, once the idea is out in the market, all players are, more or less, placed on an even playing field. The solutions that offer the greatest utility to the customer go on to become successful. One could argue if all the steps from the idea conceptualization to realization have been carried out with utmost care, the success should be the promised destiny. What’s astonishing to see, however, is that many of the wonderful and potential bearing startups fail when the stage seems set for them to succeed. Through the course of this blog, we’d take a look at some of the most scandalous startup failures. Startups that could have practically disrupted industries but fell short of the mark. Let’s dive straight into the “startup fiasco.”



Friendster is popularly known to many people as Facebook’s precursor but more importantly, it was the first social network, a phenomenon soon to explode and change the world, we knew back then. Friendster began its journey back in 2002. It received an impressive $50 million in funding. Its success could be understood from the fact that Google made a bid to purchase the company for $30 million. In the event, the bid was declined and it’s still considered to be a grave error in the company’s history.

Friendster would go on to decline. Why? Because it wasn’t meant to be what we know Social Media nowadays. Friendster was a profile based concept. Features such as news sharing were lacking in it. So, other than viewing your friends’ profiles to find something new, Friendster didn’t really have much to offer. This drawback was capitalized on by Facebook. It brought together a wide array of people and offered them plenty of features to stay connected to the network. How often we see this pattern being repeated where a pioneer does all the groundwork to bring an idea to reality only for an upstart to improvise and hijack it to their advantage.



Launched in May 2011, Color was a photo-sharing app that looked to utilize social and geographical data. The idea was laughed off by many people right away. But the fact that Color secured a staggering $41 million in its first round of funding created all sorts of buzz. Its co-founders Nguyen and Peter Pham, based on their impressive track record, were considered to be the main reason why the company succeeded in securing abundant investment.

Color didn’t get off to a good start and only after 6 months it was relaunched as a Facebook video streaming service. The company’s biggest challenger at the time was Instagram, a similar but less-funded app. Instagram’s daily 7 million user engagement was easily palling Color’s progress.

In the end, Color was acquired by Apple for a $7 M, marking a huge low for the company that had $41 million in their pockets to start with.

The famous ‘dot-com boom’ was still in the distance when announced its arrival. It was launched in 1998 with a simple concept – to sell pet products online. One can liken it to today’s Amazon but specifically for pet owners. Its mascot of a sock puppet puppy became quite popular at the time and the site was successful in raising $80 M through the funding.

But, existence was to be a short-lived one. The company spent an immense $300 million in just as little as twenty-three months. Majority of the staff was laid off once the site went shut. The problem with was that it had a solid idea but not the market for it. The market would materialize in the next decade.

Six Degrees:

Six was a website founded in 1997. It was based on the concept that everyone is connected in a way and that we should post our opinions online and interact more with our social connections. It’s seen by many people to be the original forebear of Social Networks such as Friendster, Myspace, and Facebook etc.

Despite that, the website didn’t achieve a great deal of success. Yet, it can’t categorically be called as a failure. Six’s founder Andrew Weinreich was able to sell it for a massive $125 M, in the end, to help kickstart scores of ventures.



Napster was a bit of what we could call an “aberration” in the 21st century. It was founded in the late 90’s by Shawn Fanning and Sean Parker. The main purpose of Napster was to allow users to share music online, free of cost. This was asking for trouble in the 90’s. Napster, however, was progressing and quite rapidly. At its height, Napster saw as many as 80 million users sharing music online.

But, it soon became a thorn to the music industry. One after the other lawsuits were filed against Napster forcing it to release a subscription-based model. The project failed in 2001. It was bought by Best Buy in 2011 and was amalgamated with Rhapsody.



Just like, WebVan seems to have arrived too early on the scene in 1991. If judged by the standards of the time, the company was ambitious to try to make a business by selling groceries online. The ease of ordering groceries online and getting them delivered to your doorstep was a great idea in theory. To top that up, the company promised to deliver groceries inside a 30-minute window. But, Webvan’s CEO George Shaheen got most of the forecasts incorrect. By spending hugely in warehouses, a fleet of trucks, expensive IT etc. for customers that wouldn’t appear, he got it all wrong. The company couldn’t operate in 2001. It was acquired by Amazon later on. Yet another case of being a pioneer, whose failure is capitalized on by others.

Boo set itself as an online fashion store back in 1998. It got the backing of major investment banks viz JP Morgan and Goldman Sachs. It was imagined to become the digital center for the ‘cool and chic.’ Fortune called it one of the coolest companies in Europe. There’s little doubt that company had done all the necessary groundwork but it was, yet again, like many failed startups of the time, trying to crack into a market still in its infancy. The founders set the bar too high for success and it was destined to fail with only 20% of the people online in the UK. The company failed to sustain itself and was closed down in 2000. The fact that they burnt staggering $135 million was something that became a subject of ridicule for them.

How To Make Your Startup Work?

How to make your startup work

The listed failures might make a lot of startup entrepreneurs edgy. But it doesn’t have to be all doom and gloom. There are ways to know if your startup is a good idea. If you can get a Yes to the following three points, you’re good to go.

  • Idea Validation
  • Fertile Market
  • Edge Over Competitors

Idea validation is the very first step in your startup’s journey. So it’s a must before you embark on any business proposition that you perform a thoroughgoing idea validation. Reach out to other entrepreneurs in the industry and get their view in. That way you stand in a good stead to get the best out of your idea.

Next is the market availability. Market availability is another crucial factor that could seal the fate of your startup on its own. What we saw with a number of .com businesses from the late 90’s is that they had wonderful, innovative ideas but just not the market for them. That market materialised when a greater number of people started using the internet, paving the way for the global giant i.e. Amazon today.

Another lesson for startups aspiring to disrupt a certain industry is that their idea doesn’t always have to be totally unique and different. Facebook, Amazon, Instagram have proved that you just need to come up with a better solution than what your competitors are offering. Many businesses have turned into a success overnight just because of having that minor but all necessary edge over their competitors. You never know your business could be one of them. So do proper homework before launching your startup.


May 4, 2018



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