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These Are The Some Startup Ideas That Frequently Fail

Mar 27, 2016

1. Disrupting Craigslist (or eBay)

Hundreds of companies have tried to kill them with vertical and hyper local marketplaces, but no luck. The best quote I heard about this is: Marketplaces are very hard to build, but impossible to die. After millions of dollars wasted, As craigslist seems to be on the decline, but far from being “disrupted”. Yet people try.

2. Dating

Despite more than 5000 dating apps out there, people still try different spins. Most of them fail to take off, but once in awhile there’s a hit (HowAboutWe, Tinder, etc.) and that creates fresh energy and excitement. As Andrew Chen notes:

Built-in churn

Dating has a shelf-life

Paid acquisition channels are expensive

City-by-city expansion sucksHard to exit

Demographic mismatch with investors

3. Disrupting Amazon

Hundreds of companies try vertical e-commerce to try and take a slice of Amazon but fail..  As Scott Galloway says:

We believe that pure play retail is going away, that ecommerce companies are either going to open stores or go out of business, and retailers need to be excellent in digital or they will go out of business.

4. Food delivery

The success of some early companies like Grubhub created many food delivery companies, most of them failed. From DineIn:

“Despite us being a bit smaller in order numbers to where Deliveroo were at, we had key restaurant relationships, were growing consistently, great tech but the main driving force was that funds were frightened of the follow on funding rounds required to scale this consumer business and having to compete with the larger funds”.

5. Fashion re-sale

The early wave (Poshmark, Threadflip..) of mobile vertical marketplaces for women's fashion created dozens of companies that raised millions of dollars, but Amazon is threatening them:

"This is an execution business," said Brian O'Malley, a partner at Accel Partners, a venture firm that has invested in Vinted. "They're all competing over that same closet space."

Investors and analysts agree that the competition is too stiff to ensure everyone's survival. The consolidation process has already begun. Bib + Tuck, a resale website funded by fashion entrepreneur Christopher Burch and others, has announced that it's shutting down after being sold to Crossroads, a national store chain. All buying, selling, and cashouts on the site have ended.

"I don't even know if there is going to be one winner," said Sucharita Mulpuru, an analyst at Forrester Research, "This model is never going to take over the world."

6. Photo sharing

I still see a new take on photo sharing, de-duplication, curation... don't know of a single success story other than Instagram.

7. Ed-Tech

One of the toughest markets to crack, but hundreds of companies keep trying... direct to consumer, mobile education, a new product for teachers, for schools... only a handful survive(d). Avichal Garg's Why Education Startups Do Not Succeed:

  • Most entrepreneurs in education build the wrong type of business, because entrepreneurs think of education as a quality problem. The average person thinks of it as a cost problem.
  • Building in education does not follow an Internet company’s growth curve. Do it because you want to fix problems in education for the next 20 years.There are opportunities in education in servicing the poor in the US and building a company in Asia — not in selling to the middle class in the US.
  • The underlying culture will change and expose interesting opportunities in the long term, but probably not for another 5 years.

8. Proximity marketing

After Estimote started, hundreds of companies went after (and continue to go after) iBeacon and proximity marketing... hard to get retailers to play...

9. HR / Recruiting

Hundreds of new companies every year... assumption is that talent is a big pain point for companies... but companies are flooded with new products, it's very hard to sell to HR.

Some general failure themes:

  • X for Y… Just because Uber, AirBnB, or Tinder took off, doesn’t mean every Uber for X, AirBnB for Y or Tinder for Z will take off. From 10000 feet it may look interesting, but the peculiar dynamics of one market rarely make another work.
  • New Markets… it’s a lot harder to create a new market than make an existing market efficient. Behavior change is hard.
  • Consumer mobile… most consumer apps are experiments and don’t take off…
  • B2B… efficiently getting to SMBs is hard, selling to enterprises is hard… many B2B companies fail because the sales model doesn’t work…

This question originally appeared on Quora: What are some startup ideas that frequently fail? Answer by Chandra Kalle, Founder @orangecaffeine, @collegefeed (acquired); Principal Engineer @Symantec.


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