For a few years now, Internet startups have become a fundamental pillar for the development of new technologies, the discovery of new use cases for them and the creation of applications of all kinds that make your daily life easier.
However, the startup world is very competitive. So much so that 9 out of 10 startups that are created disappear during the first three years of life.
This can happen for many different reasons: poorly planning the business, trying to copy business models that work without adapting them, making bad decisions or simply not obtaining the necessary financing during the first years.
In this context, here you will learn about the case of 10 Internet startups that failed and why they did so:
Why these promising Internet startups failed
-Theranos: The great promise of Silicon Valley that was destined to change science and medical testing. Theranos has been one of the most notorious cases of Internet startups that failed. Founded in 2003 by Elisabeth Holmes, it sold the idea of a machine that, with a single drop of blood, was capable of analyzing countless pathologies. The company received millions of dollars in financing and the support of some of the largest US investors, politicians and even attracted the attention of the American military. In 2015, the publication of an article showing that Holmes’ company falsified analyzes ended with the company and its CEO being charged with 11 criminal charges.
-High view: Altavista was the fashionable search engine and the only one that could have competed head to head with the almighty Google. The problem is that it did not obtain the necessary capitalization to stay in the fight. Despite being one of the first search engines, it was Google that caught the attention of investors as it presented a better monetization model. Altavista was bought by Yahoo! and it operated until 2013.
-Yahoo!: Yahoo! It was one of the main Internet search engines. It became so big that in 2002, they made an offer to buy Google and in 2006 they had the opportunity to buy Facebook. However, neither of the two offers came to fruition. The problem with Yahoo! It was making very poor decisions (for example, not buying Facebook and buying AOL) that led them to lose ground and finally fall into second place behind Google. Then the company was sold again and again, devaluing its value.
-Terra: A Spanish startup, Terra, destined to be a combination between Google and Facebook. The company, Terra Networks, founded in 1997, became so popular that it surpassed large Spanish titans such as BBVA or Repsol in market capitalization.
Terra’s problems came when the dotcom bubble burst in 2000 and by 2002 it had losses of more than 2,000 million euros. Terra was absorbed by Telefónica, which tried to relaunch the portal on several occasions by offering movie, music or live content rentals. In 2017, after 18 years of history, Terra closed.
-Friendster: One of the first social networks founded in 2002, whose failure was due to not knowing how to exploit the “social” part of the networks. The content of the feed was static and only changed when friends’ profiles were visited.
The initial success of Friendster was diluted with the appearance of other platforms such as MySpace. Friendster is remembered for having rejected an offer of 30 million from Google, shortly before being sold to an Asian company that eliminated the social network and turned Friendster into an entertainment website.
-MySpace: After becoming one of the most used social networks in the world and overtaking Friendster, MySpace began to lose users with the appearance of Facebook. In an attempt to save himself, in 2011 he changed his focus to entertainment and music, although with little success.
The most curious thing is that Chris DeWolve, creator of MySpace, had a meeting with Mark Zuckerberg in 2005, in which Zuckerberg offered to sell him Facebook for 75 million dollars.
-Zenefits: In just 2 years, this online human resources and insurance management startup for SMEs went from 15 to 1,600 workers. It had a portfolio of 14,000 companies and had a turnover of more than 65 million dollars annually, reaching a valuation of 4.5 billion dollars. Considered one of the most brilliant ideas of the decade, it failed when the state of Washington launched an investigation into the accusation that 83% of insurance sales were made by unlicensed agents.
-Boo: Boo’s case is different, since his failure was due to being ahead of his time. Boo was a website dedicated to selling clothes, shoes, accessories and all kinds of fashion items for Europe and the United Kingdom in the late 90s. The problem was that during that time, less than 20% of the population had access to the Internet, which caused the business to fail.
-Color: Color could have been like Instagram. However, a poor interface design and problematic privacy policies caused users to abandon the app. Furthermore, Color appeared at a time of fierce competitiveness in the world of apps, so it did not have room to correct its mistakes and was wiped off the map by its competitors.
-Gilt: In 2007, Gilt was set to repeat Amazon’s success. In her case, in the fashion and luxury goods sector, through a time-limited flash sale model. In 2014 it became the most popular startup in New York. Suddenly, sales began to fall and investors withdrew their support as the business model was no longer profitable.
