There is no question, running a startup is not for the faint-hearted. It takes effort, hard work, abilities, know-how, perseverance, and resources. Many startup founders fail to realize that early branding is often crucial for staying in business. We often look at success and avoid focusing on failure – of course, everyone likes a good story, it’s lighter, more positive, and inspiring. However, survivorship bias is not a joke and can lead to false conclusions and so errors. Brace yourself and let’s learn from some of the mistakes startup founders made this year.
2020: A closer look and analysis of failed startups
Essential. Launched in 2015 with a funding of $300 million, a team including some of the biggest names in the technology industry, and a valuation of over $1.2 billion, Andy Rubin’s phone company called Essential seemed to have everything going for them. Except perhaps a clear idea of how to materialize their ambitious plan to become a top player in the consumer electronics market. A series of problematic marketing issues, a product that did not meet people’s expectations, and many other unfinished projects, pushed the company to finally announce this past February that they were shutting down their operations.
Quibi. The fleeting streaming platform had two titans of the entertainment and technology industry who promised to deliver the next generation of storytelling in people’s smartphones. Where did Quibi go wrong? With $1.75 billion in funding, however, the company was never able to connect with its target audience. Their content offering was plagued with traditional celebrities and old shows that no 18-year-old would find appealing. This unimaginable misreading of their customers, alongside the fierce competition offered by well-established streaming platforms, the limitation of watching the content only in the mobile app -which was a less than dismal experience-, and the impossibility to share content in the middle of a pandemic lockdown was enough to put this poorly-named service out of work after a mere six months. Also, the brand name was supposed to be “Omakase”, which means high-quality sushi. But in the end, they hired Siegel+Gale, which helped come up with the name Quibi— short for “quick bites.” Maybe the name was hard to pronounce?
Hoop. Launched in 2016 in the UK, Hoop promised to help parents to find activities their kids could do with them in their local area. It was chosen twice by Apple as App of the year, raised over £8.4 million during three investment rounds, and had a reasonable success throughout its run. What happened then? Its core value proposition became obsolete after the pandemic hit the world, and its customers were forced to stay in their homes. And even though they tried to reinvent themselves to adapt to the new circumstances and survive, they ultimately failed and shut down.
Periscope. In December, the video broadcasting app from Twitter shut down, after five years of acquiring the startup as part of their efforts to enter the live-video scene. The once-popular application found itself sinking into oblivion as time went by. The fact that Twitter was developing its own video services, combined with a non-existent brand strategy for the standalone app, and the arrival of new video platforms such as Tik Tok, Facebook Live, and Instagram Stories and Reels, were more than enough to push Periscope aside.
Hipmunk. With a capital funding of more than $55 million, a ten-year run, the travel aggregator (bought by SAP Concur in 2016) stopped offering its services in 2020. Hipmunk developed a handful of innovations that were later copied by other competitors, which eventually took over the market and became rivals too powerful to defeat. To keep the brand alive, the co-founders tried to buy the company back but were unsuccessful.
Lasso. Facebook launched Lasso in November 2018 to compete with the wild popular TikTok. The app was launched as a test by Facebook’s New Products Experimentation team but never gained any real traction among younger users, and was labeled as a clone of TikTok. You might say it lacked a proper brand strategy that made it stand on its own and a value proposition that caused an impact on its target consumers. Lasso was shut down in July 2020 while “Reels” was added as a new feature to Instagram. As opposed to Lasso, Reels has had more success competing against TikTok, backed by the popularity of Instagram amongst worldwide users and the possibility of using different features (stories, shop, instant messages, and photos) within the same platform.
The list could go on and on. There were so many more startup casualties this year that we could list. Lack of funding, inadequate branding strategies, scalability, operational issues, and growth potential are some of the reasons why startups usually collapse. This year, many of these failures can be imputable to the crisis unleashed by the pandemic. From companies whose value proposition was no longer feasible, such as tourism and travel companies, to entertainment and leisure companies that are still suffering the consequences of lockdowns, these businesses found themselves in an environment which made it impossible to survive. While there might be plenty of reasons to leave this year behind, there are also valuable lessons to learn and start over again.
We hope the above information will help you in making informed decisions about your brand. If you want to say hi or have any questions about naming, branding, and domain names get in touch, we’re always happy to hear from you.