Top to Flop: The Unpredictable Path of Startup Success
Investors can be decisive, but luck can also play the main role in successful startups
Most startups succeed through a combination of an innovative idea or approach, hard work, smart strategies, timing, access to investment capital, and a little or a lot of luck. But what is the key to making a startup successful?
Unfortunately, there is no golden formula that will make every startup successful. It is not without reason that an average of 10% of startups go bankrupt within the first year. This percentage rises to 30% within 5 years and to 50% within 10 years. The underlying reasons are usually that there is too little demand for the product or service, funding capital cannot be attracted, or there is no good team present.
Even if you do everything by the book, your startup can still fail. On the other hand, it can also be that you simply build a billion-dollar company through a stroke of luck. Below are some well-known examples that highlight both sides of the coin.
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The luck of “Yo”, the app that exploded
The app “Yo” was launched in 2014. Yo was a simple app that allowed users to send “Yo” to each other. A simple message without any other form of communication. The idea was (rightly) laughed at and dismissed as ridiculous.
But a chance mention on the popular tech website TechCrunch caused the popularity of the app to explode. Within a few days, “Yo” had millions of users. Although the app never really broke through as a major player in the tech industry, it was a clear example of a startup that became successful purely by luck.
The luck of Oculus VR, which caught the eye of Marc Andreessen
The Oculus VR headset was developed by a young startup called Oculus VR. Although the team behind Oculus VR undoubtedly worked hard to develop their product, it was the funding of a well-known technology investor that made the difference.
After Oculus VR gave a demo at the E3 conference in 2012, it caught the attention of investor Marc Andreessen of a16z. He decided to invest $2.4 million in the startup. This was the beginning of a series of funding rounds that eventually led to the acquisition of Oculus VR by Facebook for $2 billion in 2014.
The luck of Flappy Bird, which made the game too difficult
Flappy Bird was a mobile game that was launched in 2013. Within a few weeks, the game went viral. That’s because the game was accidentally so difficult that it frustrated users. It eventually became one of the most downloaded apps in the App Store.
The luck of Burbn, which became Instagram
With Burbn, you should have been able to do everything, but it was actually a copy of FourSquare. However, the app was so complex that no one wanted to use it. Yet in March 2010, they received funding from Anderson, who together with several other investors including Andreessen Horowitz, Chris Sacca’s Lowercase Capital, and several angel investors saw potential in the idea.
Because they didn’t gain traction, or users, they decided as a last resort to remove all the functionality from the app and focus entirely on sharing photos and videos. Hooray, Instagram was born. But the real success came in 2012 when Facebook acquired the company for $1 billion.
Not every investment in a startup is successful
Unfortunately, there are also many examples of startups that have attracted huge investments in a short time but still went bankrupt within a year. This may be due to various factors, such as poor management, a poor market environment, or a product that does not appeal to the public. Here are some examples of startups that attracted millions of investments but went bankrupt
Quibi – A mobile streaming service that launched in April 2020 and attracted $1.75 billion from big names in the entertainment industry. Quibi, however, was unable to attract enough subscribers and went bankrupt within six months.
Zirtual – A virtual assistant company that was launched in 2014 and quickly attracted $2 million in investments. The company offered services for small businesses and entrepreneurs but had to shut down within a year due to financial problems.
Clinkle – A payment app that was launched in 2013 and attracted millions of investments from some of the biggest names in Silicon Valley. Clinkle, however, was unable to develop a product that had sufficient demand from the public and went bankrupt within a year.
Viddy – A mobile video app that was launched in 2011 and quickly became popular with celebrities and influencers. Viddy received $30 million in investments but couldn’t compete with other popular video platforms and went bankrupt within a year.
Jawbone – A startup that focused on wearable technology and the development of fitness trackers and smart speakers. The company quickly became one of the key players in the market, with a valuation of more than $3 billion. However, after a few years of financial problems and lawsuits, the company went bankrupt in 2019.
There is always more to making a startup successful than luck and capital. It can be just that one feature or that one person who believes in the product that makes it successful. But one thing is certain, despite the fact that almost every startup requires incredibly hard work, with hard work alone, you won’t make it.
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