Ask HN: What made your startup fail?

People disagreeing within the company on sensible comp killed one, a failure to target a large enough market for another, and finally another disagreement on direction where I left.

Arguably the last startup I was in hasn’t failed but… it’s not really growing from my purview either, they failed to entice the IC employees to stay with stock or sensible bonus payouts. Almost everyone not a “vp” left.

Were I to go for another startup I’d start it myself, start small with minimal time investment and throw the line in the water for paying customers. Basically I’d do it solo I think. With a product I know I’d personally want to pay for and use.

I worked at a startup making a (ps3 and xbox360) AAA game. It was bought up by a company specializing in buying multiple smaller game companies and then taking investment from larger investors. It would use the money for another small company, increased the valuation and do another investment round. At some point, it all collapsed, the owner going to jail.

If it didn't collapse due to financial mismanagement, we would fail due to our own incompetence :)

Speculative infra investment certainly didn’t help.

But I finally gave up because too many clients had a bottomless appetite for services and seemingly limitless capacity to ignore contractual payment terms.

Built a great product, but didn't focus on selling it.

Essentially stayed in my comfort zone of engineering and product, rather than going out of my comfort zone of sales.

Obvious. But not mentioned yet: lack of product/market fit.

In another case: local government imposing a regulation scheme on crypto-related projects that we couldn't meet. Not because we did scetchy stuff, but because the regulation scheme required rediculous budgets, corporate setup (specialized risk and compliance departments and officers and all etc) all on a startup that was running under €3000/month.

Non-technical management making technical decisions and too much management.

We built and then tried to find a market, rather than the other way around.

I stopped working on it

Founder infighting.

Thinking that if we built the best technical product, the customers would naturally come to us.

Google getting in the space just as another raise was in train as well as a problem domain that required fast, asynchronous and low latency communication but was written in unoptimised single threaded Ruby.

I think at the end of it it's primarily always the same reason: didn't have customers.

That's an easy one - we didn't go to market early enough and couldn't get customers because we tried to build the perfect product. My co-founder and I raised a decent series A off the back of a good demo, and then we spent 18 months trying to build the product we wanted to solve the pain we had (managing requirements in medium projects). We coded for about 14 months of our 18 month runway, and when we eventually talked to customers they were reluctant to risk projects on a new management app. It really could be a textbook example of getting everything wrong in a startup. It was a lot of fun though.

I joined this startup during the 2015 AI bull run that was doing chat bot for transportation - you talk to a chat bot and it would order you flights, hotels, rental cars, etc.

Side note - what’s so funny about the current buzz around ChatGPT is that everyone is forgetting that tons of companies were funded to create chat AI interfaces backed in 2014-2016 and all of them went nowhere! A lot of it was kicked off by Zuck announcing that FB Messenger would be the future of e-commerce which threw fuel on the fire. But I digress. https://techcrunch.com/2016/04/12/agents-on-messenger/amp/

The company raised huge money, like $100 million in a few quick rounds, despite no revenue and few users. The product launched, no one liked it, then everyone just fucked around all day for like 5 years until it was acquired for no money. I left after 12 months because it was a joke despite “big names in AI” working there and a semi-famous co-founder.

What became very obvious was that an imperfect chat robot was a terrible way to book something as essential as flights and hotels. Eventually it became a self-automated flow where the chat bot was basically a flow chart, and then eventually that was abandoned and it became a clone of all the travel booking websites and apps.

I would be very, very leery of AI right now - I lived this story before and you’d be amazed at how efficient a few button clicks are vs. trying to explain exactly what you want to a robot. Finding paying customers is an open question even for the biggest names. AI seems more like a feature than a product to me, but time will tell I suppose.

I don't have a startup. But I have seen and heard that most startups fail due to cashflow problems.

Fun info, just yesterday I came across the term "cockroach startup" something like "unicorn startup". Cockroach startups are those that survive and thrive financially no matter what the economic conditions are. And they do that by being conservative with their expenses and manage their cashflow very well.

We never managed to sell it to a lot of people. We were selling direct, even door to door at some point. Cost of acquiring a new customer was too high and bringing in very little.

Our investors contacts turned out to be pretty bad and just wasted our time with unrelated mini projects (some of which they didn't pay) and we never managed to sell them the actual product.

In hindsight we had to figure out a different sales pipeline eg. try to offer a revenue shares to other actors in the market who had access to our target market.

We built a nice product for the time and one of the biggest companies in the world bought one of our competitor which was very very similar. The timing was ok, the product was there, we lacked in sales.

It was making money, but it was a slow burn. Customer acquisition is too expensive and the average restaurateurs did not understand technology.

Now, 12 years later... I saw what I built done by others on every restaurant. We were simply way too early.

My angels were part of a questionable group. I checked with the RCMP (that was in the 90s), and, without giving much details, they strongly suggested I leave the group. I was hardly making any money at the time and was working like a horse. When I announced I was leaving, my investors offered me $300000 right away, no question asked. I left anyway, as the atmosphere was already strange and toxic. No regrets, as I was also burned-out.

Edit: I was very young, inexperienced, and was literally learning on the go. Totally set to fail.

Insufficient profit. Had a startup based around an depreciating asset that we held and rented out. Costs recovered in three years and then two years of profits before asset was sold for the last bit of money.

We were profitable on each individual asset we had to the tune of about 6.5% return after five years. Not profitable as a company though. Costs were fixed though (about 80 people in an office) so if we could have gotten more capital to buy more assets we would have become profitable. No one wanted to wait five years to get l 6.5% back in the midst of a bull market. So we failed to raise and died.

I did too much engineering and not enough management, and we never managed to ship the damn thing.

Also, I have learned that I hate thinking about money, and would rather just give things away for free; if I would have to create a business around an idea to make it happen, that's a good sign that I should find a better way to spend my time.

I have a (currently inactive) consulting company that was clearing 40% above my senior software engineering salary in the sf bay area. Eventually the stress of getting a company's treasury dept's to pay on time to cover my contractors and I induced so my stress that I developed GERD (also known as heart burn). The money was great, and I was single at the time so I had a lot of great experiences with the extra cash. The company is inactive now but I still own it and get requests from clients a few times a year, I'm pretty busy with married life now though I would probably do it again full time in the future and sell it off to a big 4 consulting firm (which is what a family friend of ours did for $XX million).

TLDR: ran out of runway, stakeholders from clients moving on all at the same time.

Longer story: I ran a startup that did natural language data analysis (kinda like what people are trying to do now with ChatGPT). You could ask it a question (via email or command line) and it would return its analysis. It could do a variety of statistical analysis and could explain the results in words (tho not as well as a finetuned ChatGPT could do today).

Technically it was strong. And I'd say way ahead of the curve. A few things caused the failure:

1. Spending too much time keeping one potential cash cow instead of finding more clients. Having failed a few prior startups, we (cofounders) were obsessed with getting and more importantly keeping clients. This led us to build integrations for clients. One integration was particularly absurd: the "database" that they wanted to connect to is a PowerPoint file on a SharePoint server. Specifically the tables on particular slides. We spent way too much time building custom integrations

2. Running costs were too high. We had developed a sorta "staggered on-line" training scheme. Each client had its own model. Monthly costs per client reached $2000 per month. But with one of the clients we absorbed the costs because they were a potential cashcow (same client as above)

3. The main stakeholder at this potential cashcow left the company to found his own startup, leaving no one else to advocate for my product. At the same time the two other clients decided it was way too expensive to having not enough of an impact on the business.

Thus, we ran out of money. Good news is that Gorgonia (https://github.com/Gorgonia) was born from this. I'm still working on the framework for deep learning today

Selling to people without ability to pay. Not solving a big enough pain.

I'm so comfortable with an ok income from the current business that I haven't started the startup I know in my heart would be wildly successful.

Vandalism and high operating costs eroded the extremely slim profit margins that only existed in the most favourable of real-world usage scenarios. Also competition from publicly-traded entities with cash to throw at problems we couldn't afford to risk investing in without a guaranteed solution.

Previous start-up failed because we ran out of money, this was due to constant pivoting and not following through correctly when we actually got something that was bringing in revenue.

I feel my current one is going the same direction too unfortunately, development is the only department delivering, no contracts coming through at all