Case Studies: Lessons from Failure

Starting a business is exhilarating—it's like setting sail on the open sea, with all the hopes and dreams of reaching some tropical paradise. But here's the catch: the sea is unpredictable, and storms (aka, market competition, product flops, and, well, reality) can sink even the best of ships. According to the U.S. Census Bureau, nearly 20% of new businesses fail within their first two years, with that number rising to 65% by the tenth year. While the numbers may seem daunting, failure is also one of the best learning tools not just for entrepreneurs, but everyone. By understanding where others went wrong, we can avoid repeating the same mistakes. Let's take a look at some well-known startups that didn't make it, what they did right, and what ultimately led to their downfall.

1. Juicero

Juicero was once a promising startup aiming to disrupt the health and wellness industry with its high-tech juicing machine. The company raised over $120 million from investors, including Google Ventures, and developed a sleek juicer that worked exclusively with a proprietary juice pack, and for a brief period, it seemed like a cutting-edge solution for health-conscious consumers.

What They Did Right: Juicero's branding was effective and they successfully marketed to the correct consumers. The product appealed to health-conscious folks and those interested in high-quality, organic juices. The company also secured significant backing from top investors like Google Ventures, which initially gave it a strong foothold. Unfortunately, they poured it into a cup that nobody wanted to drink from.

Where They Went Wrong: The product itself turned out to be more of a luxury than a necessity. A viral video showed that consumers could squeeze the juice packs by hand, making the $400 machine useless to the general public. Additionally, the price point was far too high for the value it delivered, and this disconnect between innovation and practical utility led to Juicero's demise.

Key Lesson: Innovation should solve a genuine problem for customers, and pricing must reflect the value provided. Over-engineering can lead to unnecessary complexity, making the product unappealing to a larger audience.

2. Quibi

Quibi, short for "Quick Bites", aimed to revolutionize mobile video streaming with high-quality shortened videos. Backed by $1.75 billion in funding and founded by media veterans Jeffrey Katzenberg and Meg Whitman, Quibi seemed destined for success. Yet, within six months of its launch, the company announced it was shutting down.

What They Did Right: Quibi understood that mobile-first content consumption was on the rise, and they sought to fill that gap. The company also recruited top Hollywood talent to produce original shows, giving it significant initial appeal and media attention.

Where They Went Wrong: Quibi's timing was terrible. The platform was launched in the midst of the COVID-19 pandemic when people were consuming longer-form content on their home TVs rather than short videos on the go. Additionally, Quibi's content was not easily shareable, which limited its potential for viral growth. Quibi has misread its audience's preferences—user-generated content on platforms like TikTok was far more engaging than glossy Hollywood mini-movies.

Key Lesson: Timing and market awareness are crucial for any product launch. Understanding your audience's evolving needs, especially in times of rapid change, is essential for success. You could have a great idea but right then might not be the best time to launch it-wait and see where things go.

3. Theranos

Theranos was supposed to change healthcare forever, with a device that could run hundreds of blood tests using just a few drops of blood. The idea captured the imagination of investors and the public alike, with the founder Elizabeth Holmes quickly becoming one of the most high-profile figures in Silicon Valley. However, the company's meteoric rise was followed by an equally spectacular fall when it was revealed that the technology simply did not work.

What They Did Right: Theranos excelled in storytelling and fundraising. Holmes painted a compelling vision of revolutionizing healthcare, attracting over $700 million in investment from major players. The partnerships Theranos established with companies like Walgreens also added to its credibility, but overpromising and underdelivering is a dangerous combination, especially when it involves people's health.

Where They Went Wrong: Despite their grand claims, Theranos failed to develop a functioning product. Instead of addressing the technological challenges early on, the company concealed its problems, ultimately leading to investigations, lawsuits, and criminal charges. Once again: overpromising without delivering tangible results will be your undoing.

Key Lesson: Honesty is the best policy, especially when your business is quite literally a matter of life and death. Bold claims must be backed by proven, reliable technology, and transparency with stakeholders is critical to building long-term trust.

4. Jawbone

Jawbone started out strong, offering Bluetooth speakers and wearables long before competitors like Apple and Fitbit dominated the market. However, despite being an early innovator, Jawbone struggled to maintain its market position and was eventually forced to liquidate its assets in 2017 after years of decline.

What They Did Right: Jawbone's early innovation and product design helped it carve out a space in the crowded wearables market, with loyal customers and investors to help them along. The company raised significant funds and launched products that were initially well-received by tech enthusiasts.

Where They Went Wrong: Product quality issues and poor customer service eroded consumer trust, which became increasingly problematic as competitors like Fitbit and Apple entered the market. Jawbone was unable to keep up with the rapid pace of innovation and failed to differentiate itself in a space that was becoming increasingly crowded and competitive.

Key Lesson: Being first to market is not enough to guarantee long-term success. Continuous innovation and a strong focus on product quality and customer satisfaction are essential for maintaining a competitive edge.

The failures of Juicero, Quibi, Theranos, and Jawbone serve as important reminders that even well-funded startups can falter if they lose sight of their roots. Each of these companies provides valuable lessons about innovation, timing, transparency, and customer focus. While failure can be painful, it can also be an opportunity to learn and grow, and by understanding where others went wrong and trying to learn from it you're already on your way to success. After all, failure is not the end—it's just another step to getting where you need to go.

Sources:

Alexander, Julia. "11 Reasons Why Quibi Crashed and Burned in Less than a Year." The Verge, 22 Oct. 2020, www.theverge.com/2020/10/22/21528404/quibi-shut-down-cost-subscribers-content-tv-movies-katzenberg-whitman-tiktok-netflix.

Carreyrou, John. "Hot Startup Theranos Has Struggled with Its Blood-Test Technology." WSJ, Wall Street Journal, 15 Oct. 2015, www.wsj.com/articles/theranos-has-struggled-with-blood-tests-1444881901.

Goode, Lauren. "Jawbone Is Going out of Business." The Verge, The Verge, 6 July 2017, www.theverge.com/2017/7/6/15931080/jawbone-going-out-of-business-report.

"Jawbone's Demise Heralds the End of the Wearables Industry." Engadget, 7 July 2017, www.engadget.com/2017-07-07-jawbone-s-demise-heralds-the-end-of-the-wearables-industry.html.

Meisenzahl, Mary. "The Rise and Fall of Quibi, from Raising $1.75 Billion before Launch to Shutting down Just 6 Months Later." Business Insider, www.businessinsider.com/how-quibi-went-from-raising-1-billion-to-shutting-down-2020-10.

Mitchell, Dan. "This Man Just Raised $120 Million for a Fancy Home Juicer." Fortune, 2 Apr. 2016, fortune.com/2016/04/02/juicero-doug-evans-startup/. Accessed 2 Dec. 2024.

Robertson, Jamie. "Bad Blood: The Rise and Fall of Theranos and Elizabeth Holmes." BBC News, 15 Mar. 2018, www.bbc.com/news/business-43415967.

Waters, Bret. "The Launch Path — a Case Study." The Launch Path, 17 Aug. 2021, medium.com/the-launch-path/the-launch-path-a-case-study-f3f72f141845.