One of the more memorable books I’ve read is called Dead Men Do Tell Tales, in which Dr. William Maples takes you inside the world of forensic medicine. As the book points out, you can learn a lot from the dead, which is why one of my favorite web pages to browse is CB Insight’s startup post-mostem page.
From cash burns, to dodgy accounting, to health code violations, to picking fights with the wrong people, Silicon Valley’s deaths shed as much light into the startup experience as its success stories. CBI’s succinct postmortems should be required reading for any new CEO.
I checked in recently, and here (in no particular order) are some of the most notable recent departures.
The Departed: Cha Cha
Any Last Words? Advertising revenue declined sharply , leaving the company unable to service its debt, and no suitors took a bite. So its secured lender, which [founder Scott] Jones didn’t name, recently emptied ChaCha’s bank accounts.
“We sold some assets, but not enough to sufficiently cover all of our obligations,” Jones said in an email Monday morning. “Unfortunately, our debtholders and shareholders, including me, will be writing off their investment.”
The Departed: Dealstruck
Any Last Words? Dealstruck closed its doors after more than three years in business. It did not close because the customer base isn’t there or due to a lack of demand for its lending products. It closed because a deal fell through.
The Departed: VidAngel
Any Last Words? The judge has issued a preliminary injunction against VidAngel, requiring that we pull down all the studios’ content. We are seeking a stay of this injunction, but if our efforts fail, we will need to take down the movies of all major studios.
The Departed: TaskBob
Any Last Words? …a solid [home services] business is created only by building scalability and profitability. And to achieve those in a low margin business and in a tough external market proved unexpectedly daunting. More than what anyone could have expected.
The Departed: Vinaya
Any Last Words? Whilst we ended up going by way of the system of founding and creating a buyer electronics corporation, it grew to become apparent that the projected amount of expansion for the B2C company by yourself was unlikely to be ready to maintain the expenses linked with the velocity of technological innovation necessary … to continue being aggressive in this space.
The Departed: Loanbase/BitLending Club
Any Last Words? We’ve worked extremely hard to build a platform and a community which is uniquely positioned to provide the Bitcoin ecosystem with a greatly needed service. However, over the last year or so, the regulatory pressures has been increasing to the point that it is no longer feasible to maintain the operation of the platform. We are regretfully announcing that we will have to begin terminating the services effective immediately.
The Departed: Teanometer
Any Last Words? (Don’t) multiply big numbers
Multiply $30 times 1.000 clients times 24 months. WOW, we will be rich!
Oh, silly you, you have no idea how hard it is to get 1.000 clients paying anything monthly for 24 months. Here is my advice: get your first client. Then get your first 10. Then get more and more.
Until you have your first 10 clients, you have proved nothing, only that you can multiply numbers.
The Departed: bitphone
Any Last Words? After 1.5 years in operation, bitphone.net is shutting down. WE DIDN’T GET HACKED, NOT ONCE! And believe me, they tried! All customer funds are secure and accounted for! (And we are happy to say that!) Unfortunately we’ve had too many users abuse our phone service! Our underlying carrier service now requires we collect your identification when placing calls. – We won’t do it … This is an unfortunate outcome, we had recently enhanced our service considerably! We don’t want to collect your identification, so we have no choice but to close the service.
The Departed: Opsh
Any Last Words? …ultimately we fell victim to the notoriously difficult investment chasm – the chasm that exists when a sparky start-up needs to move into a global-looking machine. And so, for some of you this won’t come as a surprise. There is a distinctly unsexy side to running a start-up that made every effort to push-through almost impossible.
The Departed: Scarf
Any Last Words? Alberta Health Services issued a cease-and-desist order to Scarf, shutting down the meal sharing service last month. In a written statement, Alberta Health Services said its duty is to “keep Albertans safe. This includes working with food operators to ensure they are meeting the provincial standards required to serve safe and healthy food to Albertans.” AHS says all kitchens producing food for public consumption must have proper permits. Scarf cooks did not have those permits.
Scarf operator Kian Parseyan [said]: “As individuals we’re going to move on and suffer our losses,” says Parseyan, who estimates that working on this project full-time for a year cost between $60,000 and $70,000. “Sometimes that’s what happens in entrepreneurship. It’s big risks and rewards.”
The Departed: SunEdison
Any Last Words? SunEdison at its core is a boring construction company, that earns the trust of its institutional investors by being boring and managing risks … [but the company’s senior executives] didn’t want to be boring, they wanted to be a technology company.
The Departed: Skully Helmets
Any Last Words? [The Wellers, Skully’s founders] routinely demanded [that their accountant] engage in fraudulent bookkeeping practices designed to defraud investors in Skully into believing that Skully funds were being used for business purposes, when in fact, the funds were being used to pay the personal expenses of the Wellers … In hindsight, Skully appeared to be kind of shady for some time. The company continuously pushed back its promised release date while sucking down $2,446,824 from Indie GoGo backers—that’s 979 percent of the $250,000 “goal” they “needed” to get running.
The Departed: HiveBeat
Any Last Words? We’ve tried all the things we wanted to try and we have a pretty good sense of what went wrong:
- We never hit real product/market fit. We built a product that was too generic for a very niche-based industry.
- Our product was great, but it wasn’t a 10x product. We had a much prettier product than the competition, but we were always lacking features in every niche.
- We were trying to do too many things at the same time. Both product-wise and marketing-wise.
- A transaction-based business model makes it hard to predict revenue, which made our growth curve look like a rollercoaster.
The Departed: Gawker Media
Any Last Words? I wish I’d known how litigious Hulk Hogan was … I’m kind of glad I didn’t [hold back from publishing the tape] because if every publisher and every editor made editorial decisions based on who is scary and well funded and litigious and uses the court system to exercise power, to edit what is out there about them, then the news would look very very different than it does.
The Departed: Besomebody
Any Last Words? Shaikh cited three reasons for the decision. Most importantly, the demand wasn’t there, especially when it came to repeat bookings. He said the business would only work if “tens of millions” of people were booking one to two experiences per year, and that just wasn’t going to happen. Second, people were using the app to book fun, one-time experiences, not to “truly learn” about their passions. And that led to the third problem, which was that the app only appealed to people who had expendable cash to put toward fun experiences, not to the full “multi-million-member community” that interacts with #besomebody content on Twitter and elsewhere on the web.
The Departed: Condom Key Chains
Any Last Words? There was no doubt about it: I had discovered The Next Big Thing. Like Edison and the lightbulb, like Gates and the pc operating system, I would launch a revolution that would transform society while bringing me wealth and fame. I was about to become the first person in America to sell condom key chains.
The Departed: Boompa.com
Any Last Words? Ethan and I came up with the “Zombie Team” test for figuring out whether or not someone is ready to work on an intense project, be it a start-up or otherwise. The test is this: If zombies suddenly sprung from the earth, could you trust the perspective team member to cover your back? Would they tell you if they got bit? Most importantly would you give them the team’s only gun if you knew they were the better shot? If the answer is no to any of those questions you need to let them get eaten by the cubicle wasteland of corporate culture, because they aren’t ready for this kind of work.
The Departed: Link Management System
Any Last Words? So the most important thing is to sell – a fact lots of startups forget. And we did too. After much thought it comes down to these six reasons why we failed (beside the obvious one that the VC market imploded when we needed money and noone was able to get any funding):
1. We didn’t sell anything
2. We didn’t sell anything
3. We didn’t sell anything
4. The market window was not yet open
5. We focused too much on technology
6. We had the wrong business model
The Departed: TrustBuddy
Any Last Words? According to the board, a 44 Million SEK ($5.4M) discrepancy was uncovered. The “Company has used lenders’ capital in violation of their instructions, or, without their permission.” Due to the extreme nature of the uncovered misdeeds, Swedish police have been contacted. Members of the previous management team have been placed on suspension during the investigation. The misconduct was said to be “likely in place since the TrustBuddy platform began operation”.
The Departed: SideCar
Any Last Words? In short, we were forced to shut down operations and sell. We were unable to compete against Uber, a company that raised more capital than any other in history and is infamous for its anti-competitive behavior. The legacy of Sidecar is that we out-innovated Uber but still failed to win the market. We failed – for the most part – because Uber is willing to win at any cost and they have practically limitless capital to do it.
The Departed: RealTime Worlds
Any Last Words? Dave Jones made a virtue of having no business model for APB. He said “if a game is built around a business model, that’s a recipe for failure.”
To paraphrase the good Dr. Maples, in Silicon Valley, as in all life, the instruments of death are as manifold as the unlimited human imagination.
Read this post on LinkedIn.