Previously from Equity Match

In our previous article from this, the “Mistakes and Lessons Learned” category, we addressed the topic Common Startup Mistakes and How to Avoid Them, where we looked at the most common reasons for startups to fail and how to mitigate these factors. 

This Article

This article is composed of two parts, in which we discuss several case studies of startups that failed. In Part 1, we will look at learning from failure and dive into two examples – Juicero and Theranos – and gather important lessons learned from their respective failures. In Part 2, we will look at three more examples: Quibi, Blockbuster, and Webvan, and gauge what we can learn from these, and other failed startups.

Learning from Failure

In the world of entrepreneurship, failure is often considered a taboo topic. The glamour and allure of successful startups such as Facebook, Google, and Amazon tend to overshadow the harsh reality that most startups face: failure. According to statistics, around 90% of startups fail. While these failures can be painful and disheartening, they also offer invaluable lessons and insights that aspiring entrepreneurs can learn important business lessons from.

In this article, we will delve into the world of failed startups and examine a series of some of the best-known case studies to extract valuable lessons and insights. By closely examining the mistakes and missteps these startups took before their respective failures, we can gain a deeper understanding of what went wrong in each case and, more importantly, learn how to avoid similar pitfalls in our entrepreneurial endeavours. These case studies cover different aspects of business these companies ignored or neglected. We have carefully selected these examples to encompass 10 different lessons that lead to 10 startup best practices.

Case Study 1: Juicero

Let us start with one of the most infamous failed startups in recent history – Juicero. Founded in 2013, Juicero aimed to revolutionise the way people consumed fresh juice by creating a sleek, high-tech juicer that used proprietary juice packs. Investors poured over $120 million into the company, and it garnered widespread media attention.

Lesson 1: Beware of Overengineering

Juicero’s downfall can largely be attributed to overengineering its product. The juicer itself was an intricate piece of machinery that connected to the internet and required a constant Wi-Fi connection to operate. Juicero learned this important business lesson the hard way, however, when customers discovered that they could achieve the same result by simply squeezing the juice packs with their hands, the company’s reputation took a massive hit. This serves as a stark reminder that while innovation is essential, overcomplicating a product can lead to its demise. Unfortunately, this is one of the most common small business mistakes and can be mitigated by conducting extensive market research.

Lesson 2: Understand Your Market

Another critical mistake Juicero made was failing to understand its market fully. Juicero was a company that required an infusion of reality through market research and startup guidance. The company priced its juicer at a whopping $699, assuming that health-conscious consumers would be willing to pay a premium for fresh juice. However, this price point was far too high for the average consumer, leading to limited sales and eventually the company’s demise. Entrepreneurs should conduct thorough market research to gauge the willingness of potential customers to pay for their product or service.

Case Study 2: Theranos

Theranos, founded by Elizabeth Holmes in 2003, promised to revolutionise the medical testing industry by providing rapid and low-cost blood testing using just a few drops of blood. The company is a startup case study in how not to conduct yourself as a business, as it raised billions of dollars in funding and was once valued at $9 billion. Let us look at two lessons we can learn from this venture that was doomed from its inception.

Lesson 3: Ethics and Honesty are Non-Negotiable

The downfall of Theranos serves as a stark reminder that ethics and honesty are non-negotiable in entrepreneurship. The company faced allegations of fraud and deceptive practices, leading to lawsuits and regulatory investigations. Its story reads as one where there was a lack of ethics at all levels, ignoring established industry best practices for ethics, leading to its imminent failure. Ultimately, the lack of transparency and ethical misconduct led to the demise of Theranos and severe legal consequences for its founder and executives. Building trust and maintaining a high level of integrity are crucial for long-term success in any business venture.

Lesson 4: Validate Your Technology

Theranos claimed to have developed groundbreaking technology that could revolutionise the medical industry, but the company failed to validate its technology adequately. When scrutiny and independent testing revealed that the technology did not live up to the promises made, the company’s credibility was shattered. The main lessons learned from this point at one thing: Entrepreneurs must invest in rigorous testing and validation of their products or services to ensure they can deliver on their claims.