For every successful start-up, there’s someone who tried it before and failed. It’s no secret that Google, iTunes, and Facebook all came after other entrepreneurs had similar ideas which happened to fail in execution. Whether it was due to timing, management, or market forces, these businesses folded, proving that a good business idea alone isn’t always enough.
On February 11th, we’ll be celebrating Don’t Cry Over Spilled Milk Day – a drive designed to get everyone thinking positively. Ever made a mistake in business? #DontCryOverSpilledMilkDay is about looking on the bright side. Sure you had a slip up, but what did it teach you?
Here, we highlight six start-ups that had the right idea but wrong execution and consider what they can teach others.
1. Friendster: the social network that failed to adapt
Founded in 2002, a year before Tom Anderson’s Myspace entered the scene, Friendster was one of the first platforms that paved the way for the social networking revolution. In its heyday, Friendster received nearly $50 million in funding, and was so popular that Google made a bid to acquire it for $30 million. Friendster turned Google down—a move that to this date is considered one of the biggest mistakes in the history of start-ups. But this is not why the fledgling social network went belly-up. Friendster failed simply because it didn’t foresee its users’ interest in sharing news. If Friendster had changed its interface to incorporate a newsfeed for external news, it may have survived as a social media network instead of becoming a lesser known gaming website it is now.
2. AskJeeves: a victim of the dotcom crash
Before Google was a thought, AskJeeves ruled the internet as the smart search engine. Powered by an intuitive algorithm that made it capable of responding to questions instead of just keywords, AskJeeves actually used many of the methods Google uses to this day such as semantic search and ranking web pages by hyperlinks. Despite its popularity in the 90s, AskJeeves gave into the excesses of the dotcom era and spent a lot more than it was earning, which eventually led to its decline.
3. Webvan: death by poor forecasting
Webvan was one of the first companies that sold groceries online. At its height, it even promised to deliver groceries to customers within a 30-minute window. Webvan’s visionary CEO George Shaheen launched this concept well before its time, and expecting a massive influx of customers, invested heavily in warehouses and delivery fleets, which led to Webvan permanently closing its doors in 2001. Amazon recently revived Webvan as Amazon Fresh which has been a runaway hit so far. Online grocery home deliveries are now a goldmine for traditional supermarkets and online retailers alike, making UK latecomer Ocado the giant it is today. This is a classic example of how growing too fast can be disastrous, no matter how strong your business idea may be.
4. Pay By Touch: great idea, poor leadership
Founded more than ten years before Apple Pay, Pay By Touch allowed users to pay for items with a swipe of their finger on a biometric sensor. It was hailed the future of payments and within a few short years, the company had raised $340 million. Unfortunately, Pay By Touch had a CEO who was embroiled in domestic abuse, drug possession, and embezzlement scandals, and the company’s investors and customers quickly began to lose faith in his judgement. With the right person at the helm, Pay By Touch might have made it past the noughties. As the personality driving your business, make sure you stay on the right side of the law, and establish trust between your company and its stakeholders as early on as possible.
5. LetsBuyIt.com: perfect on paper
LetsBuyIt.com was a pan-European online group buying service which aimed to bring discounts to consumers. The idea failed to take off simply because there weren’t many consumers or small businesses online at the time. This example proves that the ‘build-it-and-they’ll-come’ approach doesn’t always work. Years later, as the internet was booming, consumers scathed by the recession were desperate for a bargain. This was when Groupon entered the scene, and understandably grew to become one of the fastest-growing companies of the decade.
6. LoudCloud: cloud computing before it was cool
LoudCloud set the stage for players like Amazon and Microsoft to provide cloud services to start-ups and enterprises. Unfortunately, when the company launched, the term ‘cloud’ was only understood in its meteorological sense. Businesses at the time didn’t see any benefit to cloud solutions and storage, which is why LoudCloud had to change tack to survive by changing its name to Opsware and focusing on data centre solutions. A little more market research could have gone a long way for this company. By gauging the readiness of the market, LoudCloud could have enjoyed the success of the hundreds of cloud service providers in the market today.
Many of these innovative ideas simply didn’t stand a chance past the dotcom bubble. The more resilient ideas were revived and repositioned to become the viable businesses we recognise today. These examples prove that a good idea is only as good as its execution.
Ultimately, even the most successful businesses have hit roadblocks along the way. The key ingredient to long-term business success is learning from others and seeking advice early in your journey. A lot of research into your target market, planning ahead, and pacing your growth can go a long way. In the words of David Packard, the visionary co-founder of Hewlett Packard, “Don’t be afraid to make mistakes; if you don’t make mistakes you’re not reaching far enough.” And while Packard is a world renowned entrepreneur now, his first venture before HP was one worthy of this list—a great idea that didn’t take off!
How does your business handle the unexpected or unplanned things that happen in life? Share your stories and advice with us on Twitter. Tweet @SageUK and be sure to include the hashtag #DontCryOverSpilledMilkDay in your message.