In Part 1 of this article, we looked at the cases of Juicero and Theranos in terms of startup failure. In this part, Part 2, we will look at three more case studies – Quibi, Blockbuster, and Webvan – where we address what caused these startups to fail and what lessons we can learn from these failures.
Case Study 3: Quibi
Quibi, short for “quick bites,” was a short-form video streaming platform founded by Jeffrey Katzenberg and Meg Whitman in 2018. From its inception, Quibi seemed on track towards startup success. The company raised $1.75 billion in funding and attracted top Hollywood talent, but it shut down just six months after its launch.
Lesson 5: Understand User Behaviour
One of Quibi’s fatal mistakes was failing to understand user behaviour and preferences. The platform focused on delivering premium, short-form content to mobile users, assuming that people would pay for this service. However, they overlooked the fact that many consumers preferred free, ad-supported content available on platforms such as YouTube. That entrepreneurs must conduct thorough user research to align their offerings with consumer preferences and spending patterns is one of the main startup lessons learned in this example.
Lesson 6: Adapt and Pivot When Necessary
Despite the initial failure, Quibi could have potentially survived had it been willing to adapt and pivot. However, the company remained rigid in its approach and did not explore alternative strategies, such as integrating with existing streaming platforms or offering a free tier with ads. In the fast-paced world of startups, adaptability, and the ability to pivot when necessary are essential for survival.
Case Study 4: Blockbuster
While not a traditional startup, the decline and ultimate bankruptcy of Blockbuster – Once the go-to location for movie and video rentals – offer valuable business lessons in the ever-changing landscape of modern-day business.
Lesson 7: Embrace Technological Change
Blockbuster was a giant in the video rental industry, with thousands of stores spread throughout the globe. However, the company failed to embrace the digital revolution. When streaming services such as Netflix began to gain traction, Blockbuster was reluctant and did not adapt quickly enough to advances in technology such as faster and more reliable internet services, letting the digital revolution take over its entire business model. This reluctance to embrace technological change ultimately led to the company’s downfall. Blockbuster now serves as a grim reminder of lessons learned from not adapting to new ways of doing things in a digital age. In today’s rapidly evolving business environment, staying up to date with technology and industry trends is imperative.
Lesson 8: Customer-Centric Approach
Blockbuster’s business model revolved around late fees, which often frustrated customers. In contrast, Netflix offered a customer-centric approach with no late fees and a vast library of content. This customer-centric approach won over consumers and contributed to Netflix’s success. Entrepreneurs should use this as a business case study and prioritise customer satisfaction and continually seek ways to improve the customer experience.
Case Study 5: Webvan
A business case study from the last millennium, Webvan, founded in 1999, aimed to revolutionise the grocery delivery industry by providing online grocery shopping and home delivery services. The company raised billions in funding and went public, but it filed for bankruptcy just two years after its launch.
Lesson 9: Sustainable Growth Over Rapid Expansion
Webvan’s downfall can be attributed to its rapid expansion and unfettered aggressive spending. The company invested a significant amount of its funds in infrastructure and expansion without first establishing a sustainable business model. Startup entrepreneurs should identify the case of Webvan’s failure as an opportunity to identify the important business lessons of prioritising sustainable growth and carefully managing their finances to avoid the pitfalls of overextending their resources.
Lesson 10: Timing and Market Readiness
Webvan entered the market before consumers were ready for online grocery shopping on a large scale. Internet penetration and consumer trust in online transactions were not as high as they are today. Entrepreneurs should consider market readiness and timing when launching a new venture to ensure they are meeting actual consumer needs.
Learning the right Lessons: An important aspect of entrepreneurship
Failure is an integral part of entrepreneurship, and studying failed startups can provide valuable business lessons and insights for aspiring entrepreneurs. From the overengineering of Juicero to the ethical lapses of Theranos, the missteps of Quibi, the reluctance of Blockbuster to embrace technology, and the rapid expansion of Webvan, each business case study offers unique lessons that can help entrepreneurs avoid similar pitfalls.
Ultimately, successful entrepreneurship requires a combination of innovation, market understanding, ethical conduct, adaptability, and a customer-centric approach. By learning from the mistakes of failed startups, entrepreneurs can increase their chances of building sustainable, successful businesses that stand the test of time. Instead of fearing failure, we should embrace it as a teacher, guiding us toward better decisions ,brighter entrepreneurial futures, and startup success.
At Equity Match, we have a team that has seen their fair share of successes and failures in the sphere of startup companies. What we have learnt from these endeavours, we can impart on you. We provide you with a breadth and depth of knowledge and experience for startup guidance like no other organisation in the global market. Become a member today and find out how your business can succeed where others have failed.
In Our Next Article:
Our next article in this category is entitled “Overcoming Founder’s Dilemmas: Lessons in Decision Making,” where we address issues related to strategic decision-making and the common small business mistakes that a founder must overcome.