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Speaker 1: Welcome to Tech Stuff, a production from I Heart Radio.

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Speaker 1: Hey there, and welcome to tech Stuff. I'm your host,

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Speaker 1: Jonathan Strickland. I'm an executive producer with I Heart Radio

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Speaker 1: and I love all things tech. And those of you

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Speaker 1: who have listened to my show for a while have

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Speaker 1: heard me talk a few times about the infamous dot

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Speaker 1: com crash that happened around two thousand, two thousand one.

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Speaker 1: And one of the factors, and there are lots of factors,

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Speaker 1: but one of them that contributed to the problem was

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Speaker 1: that you had a lot of companies popping up that

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Speaker 1: were based around novel and potentially awesome ideas, but they

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Speaker 1: had no real way to generate revenue. And that's a problem.

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Speaker 1: A company might be centered on a fantastic idea, one

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Speaker 1: that appeals to a lot of people, but if there's

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Speaker 1: no way to monetize the bis no, then you're living

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Speaker 1: on borrowed time. You can only operate for as long

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Speaker 1: as you have the money to fund it, which means

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Speaker 1: you're hustling for investments from venture capitalists or you know,

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Speaker 1: even better, for some bigger company to come along and

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Speaker 1: scoop you up in a lucrative acquisition. Now, perhaps that

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Speaker 1: larger company will actually find a way to monetize your idea,

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Speaker 1: or maybe integrate your idea with other existing products and

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Speaker 1: services that that company already has. Either way, for some companies,

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Speaker 1: this ends up being a pretty dangerous game. It doesn't

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Speaker 1: always pay off. While a company like Twitter might manage

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Speaker 1: to hang around for years before developing a viable revenue model,

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Speaker 1: others will fade away. So in this episode, I want

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Speaker 1: to look at some tech startups that didn't survive and

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Speaker 1: not really focus on the dot com crash because that

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Speaker 1: was a particularly rough time that that affected a lot

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Speaker 1: of companies, both good and bad. I'm going to look

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Speaker 1: at stuff outside that era. Now. To be clear, I

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Speaker 1: don't necessarily think that all the companies I'm going to

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Speaker 1: talk about today were bad, or that the people who

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Speaker 1: are working on them weren't working hard enough or anything

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Speaker 1: like that. Like I said, good ideas can fail, and

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Speaker 1: on the opposite side, bad ideas can sometimes really take off.

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Speaker 1: A business is financial success isn't necessarily tied to how

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Speaker 1: good an idea it is, you know, which is kind

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Speaker 1: of frustrating, But that's capitalism, baby. So let's talk about

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Speaker 1: a few companies that made a go of it but

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Speaker 1: came up short in you know, more recent years. To

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Speaker 1: set the stage, it is very easy for us to

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Speaker 1: assume that a tech startup is one of the best

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Speaker 1: bets to get rich quick. We see reports in the

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Speaker 1: news all the time about companies where the valuation skyrockets.

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Speaker 1: I mean, you hear about unicorns all the time in

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Speaker 1: tech news. Those are startups that reach a billion dollar valuation,

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Speaker 1: and most of those companies at least well many of

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Speaker 1: those companies are in the tech sector. Right. It's not

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Speaker 1: just tech sectors that are billion dollar unicorns, but that's

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Speaker 1: typically the way I hear about it. Then again, I

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Speaker 1: also cover technology for a living, so I'm already biased.

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Speaker 1: But the fact of the matter is that, according to

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Speaker 1: the Harvard Business School, nearly nine out of ten startups

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Speaker 1: actually fail. So for every big success we hear about

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Speaker 1: in the news, there are nine companies that didn't survive.

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Speaker 1: And heck, I'm not even sure that this takes into

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Speaker 1: consideration companies that initially appear to be a monumental success

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Speaker 1: and then like a decade later, completely implode when it

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Speaker 1: becomes clear that it's all, you know, built around a fantasy.

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Speaker 1: Cough Faroness Cough and of course more rea. Suddenly we've

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Speaker 1: had the COVID nineteen pandemic playing a major role in

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Speaker 1: all factors of our lives, including business startups that were

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Speaker 1: tied to activities that were meant to bring a lot

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Speaker 1: of people together in a physical space. Suddenly they found

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Speaker 1: their use case eliminated. You know, when I did my

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Speaker 1: episode about the video service Quimby, I talked about how

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Speaker 1: the pandemic has played a part and pulling the rug

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Speaker 1: out of the use case for that service. And if

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Speaker 1: you don't know what Quimby is, the original idea was

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Speaker 1: to create a short form video content platform and they

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Speaker 1: would serve up high production value videos like think TV

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Speaker 1: level production value to subscribers, and each of those videos

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Speaker 1: would be around ten minutes in length or shorter. The

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Speaker 1: idea was that people would watch these videos on their

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Speaker 1: mobile devices well, you know, like waiting on stuff like

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Speaker 1: let's say you're in line at the coffee shop or whatever.

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Speaker 1: Because the pandemic meant that the use case scenarios kind

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Speaker 1: of went away because people were spending greater amounts of

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Speaker 1: time at home. Quimby is still around right now, and

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Speaker 1: the company has tried to pivot a bit by offering

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Speaker 1: up the service on platforms beyond mobile devices. But you

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Speaker 1: get my point. So let's talk about some big and

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Speaker 1: maybe a few not so big. But you know recent

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Speaker 1: tech startup failures, and one of the ones I want

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Speaker 1: to cover existed for more than a decade, it received

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Speaker 1: an enormous amount of financial backing, and yet it's still

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Speaker 1: ultimately failed. That company was General Magic, and I should

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Speaker 1: really do a full episode about this company, as it

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Speaker 1: was incredibly innovative and important, and yet for years, not

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Speaker 1: that many people outside the computer and telephone industries and

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Speaker 1: Silicon Valley really knew much about it. Now that has

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Speaker 1: changed over the years. There's a documentary that came out

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Speaker 1: about this company, and that documentary came out in and

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Speaker 1: so that's a great resource to learn more about it

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Speaker 1: if you want to. But the founders of General Magic

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Speaker 1: were incredible. They saw the writing on the wall before

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Speaker 1: pretty much anyone else did. Heck, you might even argue

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Speaker 1: that they saw the writing on the wall before there

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Speaker 1: was a wall there. They were looking beyond the PC

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Speaker 1: to see what was coming next down the pipeline, like

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Speaker 1: what was going to be the next big revolution in computing,

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Speaker 1: And they were convinced that the future would be centered

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Speaker 1: around communications devices and mobile devices. So they got to

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Speaker 1: work developing technologies that would converge into a form factor

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Speaker 1: that we would recognize as sort of a proto smartphone.

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Speaker 1: And keep in mind the company actually formed around n

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Speaker 1: and that was before there was even a worldwide web.

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Speaker 1: General Magic would do a lot of pioneering work that

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Speaker 1: would later be intrinsic in smartphone design, both from a

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Speaker 1: hardware standpoint and a software and user interface standpoint. The

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Speaker 1: company itself had spun off from Apple, which, of course,

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Speaker 1: Apple would go on to execute on many of the

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Speaker 1: ideas General Magic kind of came up with and do

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Speaker 1: it with enormous success. So what happened? I mean, if

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Speaker 1: General Magic's ideas were so radical and transformative, why isn't

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Speaker 1: the company around today? I mean, why didn't it stick around?

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Speaker 1: There's not just one reason that I can point to

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Speaker 1: to explain all this, but there's a collection of issues

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Speaker 1: that contributed to its ultimate failure. For one, when the

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Speaker 1: company started working on an operating system called magic Cap.

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Speaker 1: They were doing that for an announced project. It was

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Speaker 1: sort of a partnership project with Sony and A T

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Speaker 1: and T was involved to feature creep became a huge issue.

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Speaker 1: Feature creep is what it sounds like. During the design

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Speaker 1: and development process for a product, people begin to add

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Speaker 1: more and more features to the original concept, which causes

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Speaker 1: that concept to bloat, and more importantly, it creates delays

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Speaker 1: as the development teams have to figure out how to

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Speaker 1: turn those ideas into reality. That's not easy to do.

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Speaker 1: Feature creep often originates as a well intentioned idea, kind

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Speaker 1: of a wouldn't it be cool if this thing we're

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Speaker 1: working on could also do this other thing, but it

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Speaker 1: can frequently lead to disaster or to halfhearted implementations where

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Speaker 1: the product just doesn't seem very good because too much

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Speaker 1: was going into it. That was a big problem for

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Speaker 1: General Magic. Worse than that, though, is that when the

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Speaker 1: Sony Magic Link, the product that was using this operating

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Speaker 1: system they had developed. When that finally came out, hardly

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Speaker 1: anyone bought it. The Magic Link was a p D,

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Speaker 1: a personal digital assistant in a sort of tablet form,

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Speaker 1: a small tablet form like the screen was about the

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Speaker 1: size of a big smartphone, but it was a very

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Speaker 1: clunky device is very thick, and this was not a

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Speaker 1: knock against Sony I don't blame the company. I don't

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Speaker 1: blame General Magic because the state of the art of

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Speaker 1: technology in the early nineties meant it would have been

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Speaker 1: impossible to make something as sleek and sexy as the

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Speaker 1: smartphones of today. Keep in mind, this is more than

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Speaker 1: a decade before the iPhone would come out, and it

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Speaker 1: got some good reviews from you know, to tech writers

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Speaker 1: of the time, but that didn't translate to actual sales.

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Speaker 1: So despite having some really super smart and creative people

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Speaker 1: working on and creating innovation in a space that hadn't

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Speaker 1: seen it in ages, and it had the backing of

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Speaker 1: big companies like Sony and A T and T, General

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Speaker 1: Magic ultimately failed to get a foothold in the market.

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Speaker 1: The general consensus is that it was just too soon

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Speaker 1: for those technologies to gain traction. Now, you could argue

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Speaker 1: that it's kind of like virtual reality, which also tried

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Speaker 1: to establish a place in the market in the nineteen nineties,

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Speaker 1: but it failed to do so and it almost totally

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Speaker 1: faded away from public consciousness. However, we could actually argue

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Speaker 1: that smartphones are not just here, they dominate the technology space,

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Speaker 1: whereas VR is still kind of trying to find a

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Speaker 1: place today. I mean, there's a niche market for VR,

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Speaker 1: but it is not what I would call a mainstream technology,

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Speaker 1: certainly nowhere near as ubiquitous as mobile tech. Now I'm

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Speaker 1: gonna let off of general magic for now. That's just

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Speaker 1: an overview of what happened, but if you guys want

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Speaker 1: to hear a full episode on it, let me know. Next,

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Speaker 1: I want to talk about a company that I'm guessing

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Speaker 1: most of you probably have never heard about, and it

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Speaker 1: was called Atrium Legal Technology Services, Incorporated, and the idea

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Speaker 1: was to pair legal services with software. The original concept

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Speaker 1: for the business was to create a law firm that

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Speaker 1: could offer basic legal services at lower fees than the competition,

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Speaker 1: partly through the use of software which would help automate

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Speaker 1: certain processes and make things more efficient. When I say

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Speaker 1: legal services, I'm mostly not talking about litigation. I'm talking about,

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Speaker 1: you know, other stuff that you typically need to employ

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Speaker 1: legal services for in order to get it done. So

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Speaker 1: in early twenty twenty, the company actually completely shed the

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Speaker 1: technology part of that business. They laid off nearly a

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Speaker 1: hundred people, and they slimmed down to a more traditional

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Speaker 1: law firm, again, one that's not pursuing litigation, but rather

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Speaker 1: providing other legal services to tech companies in particular. In

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Speaker 1: the end, while the idea to use software to help

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Speaker 1: streamline things seemed really promising, the company just couldn't find

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Speaker 1: a way to fit the software and the legal services

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Speaker 1: together in a way that made sense. And that's sometimes

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Speaker 1: the case. You'll hear of a business that has an

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Speaker 1: idea that, at least on the surface level, seems like

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Speaker 1: a great idea. Right, it seems like a no brainer.

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Speaker 1: Let's take this traditional process, will inject technology into it

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Speaker 1: and will make it more betterer. But there's not always

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Speaker 1: a logical or helpful way to integrate technology into a process.

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Speaker 1: Or it might be that the technology itself has to

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Speaker 1: reach a new level of adaptability or capability before it

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Speaker 1: will really be helpful. Like it's just too early to

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Speaker 1: bring that tech in. It's going to cause more problems

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Speaker 1: and it'll solve. So it might not even be a

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Speaker 1: quote unquote bad idea. It might just be one that's

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Speaker 1: not viable under current circumstances. It could be that we're

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Speaker 1: gonna see something like Atriums Technology Division emerge in a

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Speaker 1: few years, and at that point it will work great.

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Speaker 1: This kind of reminds me of when I was a

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Speaker 1: kid in high school and at that time, computers were

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Speaker 1: just starting to become, you know, like a high school fixture.

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Speaker 1: But it was one of those things where everyone recognized

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Speaker 1: the value of technology, but not everyone had a good

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Speaker 1: way to implement it into the educational process. So you

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Speaker 1: would have classrooms with computers in them, but not really

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Speaker 1: a meaningful way to use those computers for any good purpose.

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Speaker 1: They just kind of took up space. And that was

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Speaker 1: a real issue and continued to be an issue well

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Speaker 1: through my high school years, where schools were competing to

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Speaker 1: get funding to buy stuff like computers and ultimately not

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Speaker 1: finding good ways to use it, which then turns into

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Speaker 1: a perception that schools are wasting money, even though no

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Speaker 1: one wanted to waste money. People wanted to make the

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Speaker 1: computers be a part of the educational system. It's just

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Speaker 1: that we didn't have all the pieces in place to

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Speaker 1: make that a reality. You know, teachers didn't have the training,

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Speaker 1: the software wasn't fully there yet. So it wasn't one

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Speaker 1: single person or institution's fault. It was a collection of

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Speaker 1: issues that ultimately made it a painful process. Now, the

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Speaker 1: Atrium story also makes me think of a totally unrelated

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Speaker 1: one of the Apple Newton, which I talked about a

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Speaker 1: little bit in a recent episode. The Newton is the

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Speaker 1: device that led to the coining of the term personal

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Speaker 1: digital assistant or p d A. Now, granted, we don't

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Speaker 1: really talk about the Newton anymore because or even PDAs anymore,

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Speaker 1: because smartphones have emerged to take that spot. Right, p

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Speaker 1: d a's aren't needed. Smartphones do pretty much everything the

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Speaker 1: PDAs used to do. But before we had smartphones, the

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Speaker 1: p d A was a high tech way to manage

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Speaker 1: calendar appointments, to take notes, to build out a contact list,

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Speaker 1: and you know, other business e business type of things.

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Speaker 1: The Newton was one that really captured a lot of

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Speaker 1: attention when it was being promoted, and its most anticipated feature,

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Speaker 1: I think, was that it would be able to interpret handwriting.

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Speaker 1: So you could use a stylus and you could write

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Speaker 1: on the Newtons screen and the Newton would detect your

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Speaker 1: handwriting and interpret it and convert the script you're writing

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Speaker 1: into text, which would mean you could just jot down

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Speaker 1: notes and the Newton would build out a text file

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Speaker 1: for you. There was one teeny tiny problem. The handwriting

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Speaker 1: recognition technology was completely unreliable. There were numerous reports of

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Speaker 1: people having issues with the Newton's ability to detect or

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Speaker 1: understand their handwriting, and what had been a huge selling

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Speaker 1: point for the device morphed into more of a punchline,

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Speaker 1: and it really ended up hurting the Newtons sales, even

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Speaker 1: after Apple attempted to fix the issues. Now a couple

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Speaker 1: of decades later, we have devices that can do what

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Speaker 1: the Newton was trying to do more reliably, or we

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Speaker 1: have devices that use alternative approaches to handwriting recognition, you know,

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Speaker 1: like swipe keyboards to make it really easy to take notes,

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Speaker 1: or you can even skip the physical note taking entirely

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Speaker 1: and use a voice to text app to dictate notes

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Speaker 1: directly into text. The problem with the Newton wasn't the

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Speaker 1: idea necessarily, but rather that the ability to execute that

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Speaker 1: idea wasn't fully mature when the product launched. Moving on

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Speaker 1: to another product that failed to find a place in

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Speaker 1: the market, let's talk about the Uh Yeah, Oh you

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Speaker 1: y A. This project, which originated back in two thousand twelve,

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Speaker 1: aimed to bring a video game console device that would

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Speaker 1: run on the Android operating system, you know, the OS

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Speaker 1: that runs on Android phones. The company's Kickstarter was one

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Speaker 1: of the most successful of all time. They raised more

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Speaker 1: than eight million dollars on Kickstarter, and unlike another entry

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Speaker 1: that I'll get to on this list, the Yeah was

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Speaker 1: actually a real thing. Backers started receiving their consoles and

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Speaker 1: two thousand thirteen, and the console went on sale to

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Speaker 1: the general public not long after that. And it worked.

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Speaker 1: You could download games to the console, you could play

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Speaker 1: those games on a television. It was a lower price console,

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Speaker 1: too much lower than the competition. It was at dollars retail,

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Speaker 1: but despite the initial interest from backers, it failed to

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Speaker 1: catch on with a wider gaming audience and sales were blackluster.

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Speaker 1: The company tried to stay afloat, but it was clear

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Speaker 1: that the Uyah was going to be a disappointment and

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Speaker 1: there wasn't enough money to fund the development of a

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Speaker 1: successor that would keep up with future versions of the

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Speaker 1: Android operating system. Because, of course, the danger is if

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Speaker 1: you build out physical hardware that runs a specific operating

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Speaker 1: system and the operating system gets more advanced, the hardware

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Speaker 1: may not support the later versions. In Razor acquired Uyah's

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Speaker 1: software assets for an undisclosed amount of money, and developers

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Speaker 1: on Uya moved over to Razor. Not long after that,

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Speaker 1: Razor announced the discontinuation of the console, which wasn't a

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Speaker 1: big surprise. The company did commit to supporting the existing

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Speaker 1: consoles that were on the market for the time being,

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Speaker 1: but in twenty nineteen that support finally came to an

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Speaker 1: end when Razors shut down all of Uyah services, including

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Speaker 1: the app store. Many of the apps for Uyah would

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Speaker 1: stop working as a result, effectively killing the consoles off completely.

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Speaker 1: I think with Uya, the reason for this company's failure

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Speaker 1: is largely due to a lack of interest in the

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Speaker 1: general gaming market. The tech worked, it did what the

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Speaker 1: company set out to do, It just didn't find a

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Speaker 1: home in the marketplace, and ultimately that led to the

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Speaker 1: demise of the company. When we come back, I'll cover

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Speaker 1: some more failures and the lessons that we've learned from them.

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Speaker 1: But first let's take a quick break. Okay. One business

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Speaker 1: that I have done episodes on was movie Pass, a

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Speaker 1: company that had some major ups and downs and appeared

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Speaker 1: to be quote unquote dead more than once. The company's

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Speaker 1: business was about offering up a subscription based service in

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Speaker 1: which for a monthly fee, a user could go to

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Speaker 1: the movie theaters and see a certain number of movies

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Speaker 1: per month. The number of films you could see per

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Speaker 1: month changed throughout the history of the service. At one

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Speaker 1: point it was three films a month, and another point

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Speaker 1: it was you can see a film every single day

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Speaker 1: of the month. To really get a sense of how

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Speaker 1: crazy the story of movie Passes, you should go find

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Speaker 1: the episodes of tech stuff I did about them. Movie

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Speaker 1: theater chains at large resisted movie Pass, and they made

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Speaker 1: it really hard for movie Pass to actually put its

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Speaker 1: service into reliable operation. Movie Pass was trying to build

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Speaker 1: out a new approach to going to the movies, and

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Speaker 1: to capitalize on that approach by gathering data about moviegoers habits,

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Speaker 1: which in turn could become really valuable information for various advertisers.

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Speaker 1: The revenue side of the business seemed, at least on

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Speaker 1: the surface, to make sense, but the opposition of movie

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Speaker 1: theater chains, which were already struggling in many cases, meant

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Speaker 1: that there was a huge hurdle to get over. Movie

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Speaker 1: Pass never quite managed to do that. Perhaps at the

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Speaker 1: company had instead become a software company that could develop

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Speaker 1: products for the movie chains themselves, such as developing apps

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Speaker 1: that a movie chain like AMC could use to offer

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Speaker 1: up to its own subscription service. That might have worked,

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Speaker 1: but we just didn't see that happen. The cost of

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Speaker 1: operation was great enough to necessitate a shutdown. In two

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Speaker 1: thousand eighteen, the company just shut off for like a

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Speaker 1: day while they tried to figure out more financing, and

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Speaker 1: it continued to limp along for another year, but in

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Speaker 1: late twenty nineteen, movie Pass shut down its ticketing service.

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Speaker 1: This was after numerous changes and how the service was

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Speaker 1: being operated, which was a source of constant frustration for

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Speaker 1: movie Pass customers, and then in early twenty the parent

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Speaker 1: company that owned movie Pass itself went bankrupt Sad Trombone Today,

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Speaker 1: after we have had more than six months of dealing

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Speaker 1: with COVID nineteen in the United States, I think it's

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Speaker 1: pretty safe to say that movie Pass would not have

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Speaker 1: survived much into twenty twenty. Even if there hadn't been

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Speaker 1: so many problems towards the end of twenty nine, maybe

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Speaker 1: movie theaters would have been eager to strike deals with

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Speaker 1: movie Pass in the wake of COVID, hoping to you know,

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Speaker 1: make up some cash with concession sales and stuff. But

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Speaker 1: the drastic drop in theater attendance would likely have spelled

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Speaker 1: doom for a movie Pass, even if it had made

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Speaker 1: it further into the year. That being said, it's not

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Speaker 1: like you can anticipate a once in a century pandemic,

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Speaker 1: So I wouldn't hold movie Pass at fault if that

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Speaker 1: had been the case. But it's a moot point because

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Speaker 1: the company had sunk well before we really had an

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Speaker 1: inkling about the scope of what was to come. The

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Speaker 1: next company I want to talk about is one that

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Speaker 1: I actually have kind of a personal history with, and

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Speaker 1: it's a personal history I really regret, but I feel

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Speaker 1: it's important to be honest and front with you guys. Also,

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Speaker 1: it could serve as a warning for some of you

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Speaker 1: to help avoid the same mistakes that I have made.

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Speaker 1: So it's time to talk about yik Yak. Yik Yak

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Speaker 1: was a regionalized like a localized and anonymized messaging service.

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Speaker 1: So essentially, the idea was that users could post messages

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Speaker 1: to a localized forum to talk about what's going on

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Speaker 1: in the area, with particular focus on targeting college campuses.

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Speaker 1: So in other words, the idea was that it could

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Speaker 1: serve up as sort of the rumor mill for a

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Speaker 1: region like a college campus, users would be able to

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Speaker 1: see the posts that were relevant to whatever area they

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Speaker 1: were in at the time, like what's going on. But

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Speaker 1: the fact that it was anonymous meant that there was

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Speaker 1: also a prime opportunity for people to abuse the service

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Speaker 1: and other people. There were numerous issues with a person

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Speaker 1: being called out on yik yak by anonymous accusers, right Like,

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Speaker 1: you could get a bunch of people saying so and

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Speaker 1: so is, you know, cheating on their significant other, or

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00:24:10,000 --> 00:24:13,359
Speaker 1: so and so is cheating on tests. I mean this

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Speaker 1: was a college campus after all, or just so and

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Speaker 1: so is a total scumbag. Reputations could be ruined and

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Speaker 1: people could be harassed, and vulnerable populations could be ostracized

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Speaker 1: and hassled, or even worse, it could get seriously ugly. Now,

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Speaker 1: let's talk about my personal connection to this. That happened

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Speaker 1: at a south By Southwest several years ago. I was

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Speaker 1: put in charge of moderating a discussion with the founders

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Speaker 1: of yik yak, and all of my questions had to

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Speaker 1: be vetted beforehand. I couldn't just ask them anything I

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Speaker 1: wasn't supposed to anyway, so I had to work with

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Speaker 1: them to create a list of questions, and I was

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Speaker 1: told by others that I should be really fair and

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Speaker 1: really go after them right, like really nail them down

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Speaker 1: for answers. But at the same time I was getting

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Speaker 1: a lot of indicators from others that were saying that, no,

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Speaker 1: you really don't want to do that. So I was

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Speaker 1: in a bad position. There was really no way for

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Speaker 1: me to succeed. It was just a bad idea for

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Speaker 1: me to agree to do this in the first place. Now,

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Speaker 1: as it turns out, when I asked these questions, and

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Speaker 1: I had drafted a pretty long list of questions, the

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Speaker 1: founders were really short with their answers, Like I was.

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Speaker 1: It was like trying to get blood from a stone.

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Speaker 1: I couldn't get them to give me longer answers, and

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Speaker 1: before long I had run out of questions. I still

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Speaker 1: had like twenty minutes to go with that speaking engagement,

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Speaker 1: which meant that the audience Q and A session was

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Speaker 1: much longer than anyone had intended it to be, and

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Speaker 1: the audience did not have the same restrictions that I

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Speaker 1: was working with. One of the first people to ask

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Speaker 1: a question was Bartunde Thurston. If you do not know

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Speaker 1: who it is, look him up. Because he's brilliant. He

416
00:26:03,640 --> 00:26:07,040
Speaker 1: also hosts a podcast on our network called how to Citizen,

417
00:26:07,160 --> 00:26:12,159
Speaker 1: highly recommended. Anyway, Barrettunde got right to the point and

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Speaker 1: started to grill the founders about the problems that came

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Speaker 1: along with anonymity, particularly harassment of vulnerable populations, and how

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Speaker 1: it's incredibly easy to abuse the service, and it got

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Speaker 1: super uncomfortable up on that stage. To this day, I

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Speaker 1: regret that I agreed to moderate that panel, as I

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Speaker 1: kind of felt complicit in supporting a narrative that I

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Speaker 1: just didn't really believe in. And I'm really thankful for

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Speaker 1: the audience who didn't let anyone up on stage get

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Speaker 1: away with that, including myself. Right. So, yeah, that's just

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00:26:46,600 --> 00:26:49,000
Speaker 1: a warning out there for all of you that not

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Speaker 1: every opportunity that's offered to you is necessarily a good opportunity,

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Speaker 1: and it is okay to say no to stuff. Take

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Speaker 1: it from me. I wish I had said no to

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00:27:00,200 --> 00:27:06,400
Speaker 1: that anyway. Yik Yak, while it received some very enthusiastic

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Speaker 1: initial investments, eventually tried to address the harassment problems that

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Speaker 1: were mounting up. People were really concerned about this, and

434
00:27:17,560 --> 00:27:20,840
Speaker 1: the company decided to change things and forced users to

435
00:27:20,920 --> 00:27:24,800
Speaker 1: abandon the anonymous approach. You had to make an account

436
00:27:24,840 --> 00:27:28,760
Speaker 1: that was linked to your actual identity. That in turn

437
00:27:29,000 --> 00:27:31,679
Speaker 1: caused the user base to revolt and a lot of

438
00:27:31,720 --> 00:27:34,800
Speaker 1: them left the app. And you could say that the

439
00:27:34,840 --> 00:27:38,200
Speaker 1: well had been poisoned, and yik yak would end up

440
00:27:38,280 --> 00:27:43,080
Speaker 1: getting scooped up at by Square for a million dollars.

441
00:27:43,320 --> 00:27:45,919
Speaker 1: Now a million dollars, that's that's no chump change, right,

442
00:27:45,960 --> 00:27:49,880
Speaker 1: that's a princely some however, and its height, yik yak

443
00:27:50,000 --> 00:27:54,560
Speaker 1: had reached a valuation of four hundred million dollars, so

444
00:27:54,640 --> 00:27:57,479
Speaker 1: it was a huge drop off. Now. I've seen at

445
00:27:57,520 --> 00:28:00,639
Speaker 1: least one analyst say that the company had made a

446
00:28:00,680 --> 00:28:04,359
Speaker 1: mistake in pivoting away from its original use case. But

447
00:28:04,400 --> 00:28:07,120
Speaker 1: I would respond to that with I don't think an

448
00:28:07,119 --> 00:28:10,439
Speaker 1: app that enables abuse is one we really want to

449
00:28:10,480 --> 00:28:15,840
Speaker 1: see become incredibly successful. Besides, we already have stuff like

450
00:28:15,920 --> 00:28:20,679
Speaker 1: that like Twitter and Facebook that are allowing for ridiculous

451
00:28:20,720 --> 00:28:24,720
Speaker 1: amounts of harassment. Okay, that's enough of that. Our next

452
00:28:24,880 --> 00:28:28,439
Speaker 1: startup failure is another example of a great idea that

453
00:28:28,560 --> 00:28:33,360
Speaker 1: turns out to not actually be possible. We could categorize

454
00:28:33,359 --> 00:28:36,959
Speaker 1: these businesses as having fallen victim to wishful thinking. So

455
00:28:37,000 --> 00:28:40,520
Speaker 1: in this case, the company was called Mark One and

456
00:28:40,560 --> 00:28:44,280
Speaker 1: the product was called the Vessel, but spelled v E

457
00:28:44,560 --> 00:28:47,880
Speaker 1: S S y L. I first heard about this back

458
00:28:47,920 --> 00:28:50,720
Speaker 1: when the company was holding a crowdfunding campaign in order

459
00:28:50,720 --> 00:28:53,719
Speaker 1: to get enough money for the development of the Vessel.

460
00:28:54,280 --> 00:28:57,160
Speaker 1: I heard about it actually on another podcast, the Rooster

461
00:28:57,320 --> 00:29:01,600
Speaker 1: Teeth podcast, where Rooster Teeth foul under Bernie Burns mentioned

462
00:29:01,640 --> 00:29:04,840
Speaker 1: he had backed the campaign. He had intended to get

463
00:29:04,880 --> 00:29:10,520
Speaker 1: a Vessel cup for fellow Rooster Teeth employee Gavin Free. Sadly,

464
00:29:11,000 --> 00:29:14,240
Speaker 1: that gift was never meant to be and Mr Free

465
00:29:14,680 --> 00:29:18,040
Speaker 1: has never received a Vessel cup because nobody did. The

466
00:29:18,080 --> 00:29:22,400
Speaker 1: fundraising campaign was a success, with Mark One receiving a

467
00:29:22,440 --> 00:29:26,240
Speaker 1: few million dollars from other ventures to boot, so they

468
00:29:26,240 --> 00:29:28,840
Speaker 1: had some good startup money. But it turned out that

469
00:29:28,960 --> 00:29:32,600
Speaker 1: making a cup that can identify the liquid poured into it,

470
00:29:32,960 --> 00:29:35,080
Speaker 1: because that's what the vessel was supposed to do. No

471
00:29:35,120 --> 00:29:36,880
Speaker 1: matter what you pour into it, it was supposed to

472
00:29:36,920 --> 00:29:39,400
Speaker 1: tell you not just what it was that was inside

473
00:29:39,400 --> 00:29:42,120
Speaker 1: the cup, but the nutritional value as well. It turns

474
00:29:42,120 --> 00:29:44,880
Speaker 1: out that's actually pretty difficult. Now it's not as simple

475
00:29:45,080 --> 00:29:48,240
Speaker 1: as throwing a sensor in with a microprocessor and maybe

476
00:29:48,240 --> 00:29:54,400
Speaker 1: some Bluetooth capability. After numerous delays and numerous complaints from backers,

477
00:29:54,760 --> 00:29:57,480
Speaker 1: the company tried to make the best of an increasingly

478
00:29:57,560 --> 00:30:00,120
Speaker 1: bad situation, and one solution was to offer up an

479
00:30:00,120 --> 00:30:05,720
Speaker 1: alternative product, one called Prime spelled p R y m E,

480
00:30:06,120 --> 00:30:08,560
Speaker 1: essentially a water bottle that kept track of how many

481
00:30:08,600 --> 00:30:12,360
Speaker 1: times you refilled it during the day. But there were

482
00:30:12,440 --> 00:30:16,880
Speaker 1: widespread reports that these promised replacements just never arrived too

483
00:30:16,960 --> 00:30:21,080
Speaker 1: many backers, and things turned even uglier. After a few

484
00:30:21,200 --> 00:30:25,800
Speaker 1: sporadic updates on the official company blog, the company apparently

485
00:30:25,840 --> 00:30:29,520
Speaker 1: shut down. Now. I say apparently because it's actually really

486
00:30:29,520 --> 00:30:33,120
Speaker 1: hard to find definitive information on what happened or when

487
00:30:33,240 --> 00:30:37,680
Speaker 1: it happened, but certainly by two thousand eighteen, the company's

488
00:30:37,720 --> 00:30:42,400
Speaker 1: website and their social media handles were all shut down.

489
00:30:43,000 --> 00:30:46,320
Speaker 1: Vessel remains one of the big cautionary tales for those

490
00:30:46,320 --> 00:30:50,120
Speaker 1: who would otherwise, you know, fund hardware early on rather

491
00:30:50,160 --> 00:30:54,040
Speaker 1: than just wait for a finished product. So sometimes things

492
00:30:54,360 --> 00:30:57,080
Speaker 1: just don't work out. I have a lot of unanswered

493
00:30:57,160 --> 00:31:00,960
Speaker 1: questions about the Vessel thing for examp Couple. A writer

494
00:31:01,120 --> 00:31:05,719
Speaker 1: for The Verge one named Ellis. Hamburger wrote a piece

495
00:31:05,800 --> 00:31:09,080
Speaker 1: that talked about how a prototype of the cup was

496
00:31:09,120 --> 00:31:13,120
Speaker 1: able to detect with great accuracy whatever was being poured

497
00:31:13,280 --> 00:31:16,320
Speaker 1: into it, including being able to tell the difference between

498
00:31:16,360 --> 00:31:19,840
Speaker 1: two different types of gatorade. But I can't find much

499
00:31:19,960 --> 00:31:24,280
Speaker 1: other information to back that up, and it really makes

500
00:31:24,280 --> 00:31:27,080
Speaker 1: me wonder what was going on now. I'm not trying

501
00:31:27,120 --> 00:31:31,200
Speaker 1: to say that Hamburger was inaccurate or trying to mislead

502
00:31:31,240 --> 00:31:34,440
Speaker 1: the readership or anything like that. I mean, I just

503
00:31:34,480 --> 00:31:37,720
Speaker 1: wonder where the problems ultimately were. And it's entirely possible

504
00:31:38,000 --> 00:31:41,560
Speaker 1: that they did develop a working prototype, but that the

505
00:31:41,600 --> 00:31:44,720
Speaker 1: working prototype was just way too expensive to turn into

506
00:31:44,840 --> 00:31:47,800
Speaker 1: a production model, Like it could have been like, yeah,

507
00:31:47,880 --> 00:31:49,880
Speaker 1: we got it to work, but it would cost five

508
00:31:50,280 --> 00:31:52,480
Speaker 1: dollars and no one's going to spend that on a cup.

509
00:31:53,000 --> 00:31:57,200
Speaker 1: I just don't know what actually happened. Now, if we

510
00:31:57,240 --> 00:32:02,040
Speaker 1: want to go with a spectacular or public failure, one

511
00:32:02,080 --> 00:32:04,680
Speaker 1: that was kind of a head scratcher even when it

512
00:32:04,840 --> 00:32:08,520
Speaker 1: was available for purchase, we have to talk about Juice

513
00:32:08,560 --> 00:32:11,840
Speaker 1: a Row. This started off in two thousand thirteen, again

514
00:32:11,920 --> 00:32:15,360
Speaker 1: as a crowdfunding campaign, and the goal was to create

515
00:32:15,400 --> 00:32:20,240
Speaker 1: a smart, high end luxury juicing machine, as in a

516
00:32:20,360 --> 00:32:25,320
Speaker 1: machine that makes juice, and it would have a persistent

517
00:32:25,400 --> 00:32:29,640
Speaker 1: Internet connection to give it some kind of smart capabilities.

518
00:32:30,080 --> 00:32:32,600
Speaker 1: And it would also have a really high price tag.

519
00:32:33,040 --> 00:32:36,600
Speaker 1: And the price tag was around four hundred bucks sometimes

520
00:32:36,920 --> 00:32:40,000
Speaker 1: quoted as high as seven hundred bucks when it came

521
00:32:40,000 --> 00:32:46,000
Speaker 1: out Home My Goodness, where people disappointed or enraged or

522
00:32:46,120 --> 00:32:51,840
Speaker 1: just amused. The actual Juicer Row came out in By

523
00:32:51,880 --> 00:32:55,880
Speaker 1: then the company had raised nearly a hundred twenty million

524
00:32:56,040 --> 00:33:00,000
Speaker 1: dollars and then the problems started to roll in. See

525
00:33:00,240 --> 00:33:05,080
Speaker 1: this cold press juicer would squeeze plastic bags from juice

526
00:33:05,120 --> 00:33:07,840
Speaker 1: a row that were filled up with cut up fruits

527
00:33:07,840 --> 00:33:11,160
Speaker 1: and vegetables. So you would put these juicer ro bags

528
00:33:11,200 --> 00:33:15,200
Speaker 1: in the juicer Ro machine, close the machine, push a button,

529
00:33:15,560 --> 00:33:18,880
Speaker 1: and after a few moments you'd have your juice. And

530
00:33:18,920 --> 00:33:21,280
Speaker 1: I imagine the packages were really meant as a way

531
00:33:21,320 --> 00:33:25,320
Speaker 1: for the Juicy Row company to build in recurring subscriptions,

532
00:33:25,360 --> 00:33:29,200
Speaker 1: like a recurring revenue model, because he would pay one

533
00:33:29,320 --> 00:33:32,800
Speaker 1: big upfront fee to buy the juicer, but then you

534
00:33:32,840 --> 00:33:36,360
Speaker 1: would have a recurring fee in order to buy the

535
00:33:36,440 --> 00:33:39,800
Speaker 1: packages that could work inside the juicer. Because you couldn't

536
00:33:39,840 --> 00:33:43,480
Speaker 1: just you know, like put slices of fruit or or

537
00:33:43,600 --> 00:33:46,680
Speaker 1: vegetables into the machine. It had to be in these bags.

538
00:33:47,360 --> 00:33:50,280
Speaker 1: But the real headaches for the company came when folks

539
00:33:50,360 --> 00:33:55,600
Speaker 1: started posting videos of themselves just squeezing the bags by hand.

540
00:33:56,320 --> 00:33:59,840
Speaker 1: They were making juice as effectively and in fact faster

541
00:34:00,480 --> 00:34:04,960
Speaker 1: than the Juicero machine itself. The videos showed that the

542
00:34:05,000 --> 00:34:09,200
Speaker 1: machine was totally superfluous, it was expensive, it was slow.

543
00:34:09,800 --> 00:34:12,839
Speaker 1: The company offered up a fairly weak defense, saying the

544
00:34:12,840 --> 00:34:16,840
Speaker 1: Internet connectivity meant that the machine could avoid using packets

545
00:34:16,880 --> 00:34:21,279
Speaker 1: that were past their expiration date, but that expiration date

546
00:34:21,360 --> 00:34:24,200
Speaker 1: was already printed on the packages, meaning you just had

547
00:34:24,239 --> 00:34:26,000
Speaker 1: to look at the package to see if it was

548
00:34:26,239 --> 00:34:29,680
Speaker 1: good or not. As you can imagine, things did not

549
00:34:29,920 --> 00:34:34,320
Speaker 1: go well, and by the company had shut down. Juicero

550
00:34:34,640 --> 00:34:38,279
Speaker 1: became a mascot for companies that offer up solutions to

551
00:34:38,400 --> 00:34:42,440
Speaker 1: things that turned out to not actually be a problem. Okay,

552
00:34:42,440 --> 00:34:45,080
Speaker 1: how about we look at a company that appears to

553
00:34:45,160 --> 00:34:49,759
Speaker 1: have failed largely because of bad leadership. For that, I

554
00:34:49,840 --> 00:34:53,920
Speaker 1: submit the startup that was called BP. That was spelled

555
00:34:54,000 --> 00:34:58,680
Speaker 1: B E E p I. So what was BP? Well,

556
00:34:58,719 --> 00:35:01,359
Speaker 1: the concept was kind neat. It was like a peer

557
00:35:01,360 --> 00:35:04,040
Speaker 1: to peer market for used cars. And here's how it

558
00:35:04,040 --> 00:35:09,000
Speaker 1: would work. BP the company would create the online platform

559
00:35:09,000 --> 00:35:13,120
Speaker 1: through which buyers and sellers could find one another. The

560
00:35:13,160 --> 00:35:16,399
Speaker 1: company promised a cell price of a certain value for

561
00:35:16,480 --> 00:35:20,480
Speaker 1: every car. And if you were selling your car on BP,

562
00:35:20,920 --> 00:35:24,399
Speaker 1: and after thirty days you were unable to sell your car,

563
00:35:24,960 --> 00:35:27,879
Speaker 1: the company BP would buy the car from you at

564
00:35:27,920 --> 00:35:31,440
Speaker 1: that agreed upon price, you know whatever. It might be

565
00:35:31,480 --> 00:35:33,880
Speaker 1: the low end of what you were hoping for, but

566
00:35:33,960 --> 00:35:35,839
Speaker 1: you would still be able to sell your car and

567
00:35:35,880 --> 00:35:38,399
Speaker 1: the company would take it over. Presumably the company would

568
00:35:38,400 --> 00:35:43,839
Speaker 1: then sell it later down the line. As for buyers, well,

569
00:35:44,080 --> 00:35:49,360
Speaker 1: BP would handle the inspection of the vehicles and delivery

570
00:35:49,360 --> 00:35:52,200
Speaker 1: of the vehicle to the buyer's home, and even fill

571
00:35:52,200 --> 00:35:54,880
Speaker 1: out the paperwork for the buyer's local d m V office.

572
00:35:55,480 --> 00:35:59,360
Speaker 1: The proposition was really phenomenal. I mean, convenience was built

573
00:35:59,360 --> 00:36:02,200
Speaker 1: in and buyers would suddenly be able to look at

574
00:36:02,239 --> 00:36:06,200
Speaker 1: cars that they might not ever consider because of local scarcity.

575
00:36:06,320 --> 00:36:10,680
Speaker 1: Like just imagine you're out in the boondocks somewhere and

576
00:36:10,760 --> 00:36:13,080
Speaker 1: you really have your heart set on this particular type

577
00:36:13,080 --> 00:36:15,759
Speaker 1: of sports car, but there's no place near you that

578
00:36:15,880 --> 00:36:20,200
Speaker 1: has them. Well, this service could potentially be a solution,

579
00:36:20,560 --> 00:36:23,200
Speaker 1: and it sounds too good to be true, right, Well,

580
00:36:23,320 --> 00:36:26,240
Speaker 1: it's not that the company was running a scam, because

581
00:36:26,280 --> 00:36:28,560
Speaker 1: that was not the case, and it's not like they

582
00:36:28,600 --> 00:36:31,760
Speaker 1: didn't get investors either. The company raised nearly a hundred

583
00:36:31,760 --> 00:36:35,759
Speaker 1: fifty million dollars in funding, which gave the company a

584
00:36:35,840 --> 00:36:39,760
Speaker 1: valuation of more than half a billion dollars. The company

585
00:36:39,880 --> 00:36:43,279
Speaker 1: geared up in fourteen, but it went off road and

586
00:36:43,360 --> 00:36:47,080
Speaker 1: ultimately crashed by twenty sixteen. So what the heck happened?

587
00:36:47,640 --> 00:36:52,680
Speaker 1: According to numerous reports, the big issue was that BP

588
00:36:53,040 --> 00:36:57,400
Speaker 1: was burning through money at a pretty incredible rate. According

589
00:36:57,440 --> 00:37:02,160
Speaker 1: to one of tech crunches sources, someone that the site

590
00:37:02,160 --> 00:37:04,680
Speaker 1: said had been working for BP for at least a

591
00:37:04,719 --> 00:37:08,400
Speaker 1: while before talking to tech Crunch, the company at at

592
00:37:08,440 --> 00:37:13,279
Speaker 1: one point was turning through seven million dollars a month yauza,

593
00:37:13,680 --> 00:37:17,160
Speaker 1: and most of that, according to that same source, was

594
00:37:17,320 --> 00:37:20,960
Speaker 1: going to cover big salaries for the top management team

595
00:37:21,280 --> 00:37:24,799
Speaker 1: or to cover unnecessary costs. So, in other words, it

596
00:37:24,840 --> 00:37:27,400
Speaker 1: sounded a lot like the sort of stuff we saw

597
00:37:27,640 --> 00:37:30,040
Speaker 1: in the years leading up to the dot com bubble

598
00:37:30,080 --> 00:37:34,400
Speaker 1: bursting a decade earlier. A couple of decades earlier, companies

599
00:37:35,000 --> 00:37:39,359
Speaker 1: flush with cash start spending that cash irresponsibly and that

600
00:37:39,480 --> 00:37:44,239
Speaker 1: leads to an unsustainable situation. BP attempted to find a

601
00:37:44,280 --> 00:37:47,560
Speaker 1: solution in the form of a buyer. The company itself

602
00:37:47,600 --> 00:37:51,279
Speaker 1: tried to find another company to purchase them, but there

603
00:37:51,280 --> 00:37:54,320
Speaker 1: were two failed attempts to do that. Two different companies

604
00:37:54,520 --> 00:37:58,040
Speaker 1: considered it and ultimately backed out of the deal, and

605
00:37:58,360 --> 00:38:02,880
Speaker 1: eventually BP had to resolve and its assets were bought piecemeal.

606
00:38:03,440 --> 00:38:06,360
Speaker 1: It was a rather shoddy into what could have been

607
00:38:06,400 --> 00:38:09,960
Speaker 1: a fairly bold move on the market. And just to

608
00:38:10,000 --> 00:38:14,640
Speaker 1: be clear, BP had some other challenges apart from hemorrhaging money.

609
00:38:14,920 --> 00:38:17,480
Speaker 1: I mean, there was a big trust issue to overcome.

610
00:38:17,600 --> 00:38:20,280
Speaker 1: For the purchase of something as important as a car.

611
00:38:20,800 --> 00:38:23,840
Speaker 1: It's a lot to ask consumers to hand over the

612
00:38:23,960 --> 00:38:27,440
Speaker 1: duties of inspecting the vehicle to someone that they would

613
00:38:27,440 --> 00:38:31,200
Speaker 1: never meet or even speak with, without knowing if the

614
00:38:31,239 --> 00:38:35,400
Speaker 1: inspection is trustworthy. It's a huge request to have someone

615
00:38:35,440 --> 00:38:38,399
Speaker 1: put down the thousands of dollars it would cost by

616
00:38:38,480 --> 00:38:42,480
Speaker 1: a used car. Now, perhaps if BP hadn't been spending

617
00:38:42,480 --> 00:38:45,360
Speaker 1: so much money, it could have built up that trust

618
00:38:45,600 --> 00:38:48,359
Speaker 1: needed to become a viable business and it would still

619
00:38:48,360 --> 00:38:51,400
Speaker 1: be around today, but due to mismanagement and out of

620
00:38:51,400 --> 00:38:56,120
Speaker 1: control costs, it just beaped right the heck off. I've

621
00:38:56,120 --> 00:38:59,640
Speaker 1: got a little bit more to say about failures in general,

622
00:39:00,080 --> 00:39:10,640
Speaker 1: but before that, let's take a quick break. Why do

623
00:39:11,320 --> 00:39:14,799
Speaker 1: startups fail? Well, as we've seen, there's not really a

624
00:39:14,840 --> 00:39:17,080
Speaker 1: single answer for this, and in fact, in most cases,

625
00:39:17,560 --> 00:39:20,920
Speaker 1: there are several contributing factors that can lead to failure,

626
00:39:21,480 --> 00:39:24,160
Speaker 1: but there are a few patterns that tend to emerge

627
00:39:24,200 --> 00:39:28,520
Speaker 1: if you look through enough examples. C B Insights did

628
00:39:28,600 --> 00:39:32,239
Speaker 1: that when looking at postmortem reports. They actually talked with

629
00:39:32,320 --> 00:39:38,359
Speaker 1: people who founded companies that failed and got really insightful

630
00:39:38,480 --> 00:39:43,160
Speaker 1: information about what caused the failures, and they aggregated a

631
00:39:43,360 --> 00:39:47,440
Speaker 1: top twenty reasons list as to why companies fail, and

632
00:39:47,480 --> 00:39:49,879
Speaker 1: I want to give you a few highlights. So at

633
00:39:49,880 --> 00:39:55,000
Speaker 1: the very top, the number one contributing factor was no

634
00:39:55,320 --> 00:40:00,440
Speaker 1: market need, with of failures having that as one of

635
00:40:00,560 --> 00:40:04,400
Speaker 1: the attributed causes for their failure. So what that means

636
00:40:04,480 --> 00:40:07,480
Speaker 1: is that someone came up with an idea, they formed

637
00:40:07,480 --> 00:40:11,280
Speaker 1: a business around it, and then ultimately discovered that nobody

638
00:40:11,520 --> 00:40:16,080
Speaker 1: really wanted the thing they were offering. Actually, and this

639
00:40:16,160 --> 00:40:18,799
Speaker 1: is a tough one. Now, on the one hand, you

640
00:40:18,880 --> 00:40:22,160
Speaker 1: don't want to launch a company that's super similar to

641
00:40:22,400 --> 00:40:26,120
Speaker 1: existing ones, because I mean, you're already behind, right. Your

642
00:40:26,160 --> 00:40:29,319
Speaker 1: competitors might be really well established, Some of them might

643
00:40:29,320 --> 00:40:32,600
Speaker 1: be really big companies, and they might have market tested

644
00:40:32,640 --> 00:40:36,120
Speaker 1: products and services that people are familiar with. Now, unless

645
00:40:36,160 --> 00:40:40,279
Speaker 1: those companies have a reputation for lousy products and services

646
00:40:40,480 --> 00:40:44,160
Speaker 1: or customer service, it can be really hard to gain

647
00:40:44,200 --> 00:40:48,040
Speaker 1: a foothold in those markets. Though. Sometimes consumers are just

648
00:40:48,280 --> 00:40:50,680
Speaker 1: hoping that a new company will enter a field and

649
00:40:50,680 --> 00:40:53,080
Speaker 1: shake things up, so it's not impossible, it's just really

650
00:40:53,120 --> 00:40:58,160
Speaker 1: hard to do. Typically, the stronger poll is to come

651
00:40:58,239 --> 00:41:01,760
Speaker 1: up with an idea that isn't already present in the market,

652
00:41:01,960 --> 00:41:05,719
Speaker 1: something that's new and innovative and exciting and there are

653
00:41:05,760 --> 00:41:08,360
Speaker 1: no competitors out there for you to have to worry about.

654
00:41:09,239 --> 00:41:11,800
Speaker 1: But on the flip side, the danger of that approach

655
00:41:11,840 --> 00:41:14,040
Speaker 1: is that, yeah, you might find out the idea is

656
00:41:14,120 --> 00:41:16,840
Speaker 1: new and stuff, but you might also find out no

657
00:41:16,880 --> 00:41:20,120
Speaker 1: one really cares. And that is a tough pill to swallow.

658
00:41:20,400 --> 00:41:24,319
Speaker 1: I mean, I experienced this myself. I once tried to

659
00:41:24,360 --> 00:41:28,840
Speaker 1: get funding for a video series a superhero comedy series

660
00:41:28,880 --> 00:41:32,560
Speaker 1: that I wanted to do, and I promoted the crowdfunding link.

661
00:41:33,040 --> 00:41:36,640
Speaker 1: I worked really hard. I got a lot of people

662
00:41:37,000 --> 00:41:41,600
Speaker 1: who lent me their expertise and their their talent. We

663
00:41:41,680 --> 00:41:45,120
Speaker 1: all put together a pretty compelling pitch and I failed

664
00:41:45,280 --> 00:41:49,040
Speaker 1: to get it funded, which really indicates that either I

665
00:41:49,080 --> 00:41:52,040
Speaker 1: didn't reach enough people or and this is the part

666
00:41:52,120 --> 00:41:56,360
Speaker 1: that really hurts, I reached enough people. They just didn't

667
00:41:56,440 --> 00:41:59,719
Speaker 1: care to see the finished product. And that happens. And

668
00:42:00,000 --> 00:42:03,560
Speaker 1: it can feel awful when you pour your heart into something,

669
00:42:03,960 --> 00:42:06,600
Speaker 1: but it doesn't mean that people made the wrong choice.

670
00:42:06,640 --> 00:42:10,319
Speaker 1: It just might mean that you put more emphasis into

671
00:42:10,360 --> 00:42:14,200
Speaker 1: something than other people do, and that happens. It stinks,

672
00:42:14,520 --> 00:42:18,640
Speaker 1: doesn't feel great, but that's life in a distant second

673
00:42:18,719 --> 00:42:23,359
Speaker 1: place to the no market need factor. CB Insights identified

674
00:42:23,760 --> 00:42:27,720
Speaker 1: ran out of cash as a top contributor to business failure,

675
00:42:28,000 --> 00:42:32,279
Speaker 1: with of the businesses they looked at listing that as

676
00:42:32,400 --> 00:42:35,319
Speaker 1: one of the reasons they failed. We've seen that in

677
00:42:35,560 --> 00:42:38,680
Speaker 1: some of the examples I've talked about in this episode,

678
00:42:39,280 --> 00:42:43,560
Speaker 1: and it's what I was alluding to earlier in the podcast. Startups,

679
00:42:43,760 --> 00:42:48,399
Speaker 1: particularly those with steep operating costs, are really operating under

680
00:42:48,440 --> 00:42:51,960
Speaker 1: a ticking clock scenario. They need to establish a revenue

681
00:42:52,000 --> 00:42:56,000
Speaker 1: generating business, you know, one that can cover operating expenses

682
00:42:56,560 --> 00:42:59,920
Speaker 1: before investment money runs out. They might be able to

683
00:43:00,080 --> 00:43:03,760
Speaker 1: keep things afloat by raising multiple rounds of funding or

684
00:43:04,000 --> 00:43:07,160
Speaker 1: you know, securing some loans and if the idea is

685
00:43:07,160 --> 00:43:11,080
Speaker 1: attractive enough, and that could work for a while, but

686
00:43:11,200 --> 00:43:14,719
Speaker 1: ultimately they need to make revenue off the business or

687
00:43:14,760 --> 00:43:18,000
Speaker 1: the cash will eventually run out. Investors aren't likely to

688
00:43:18,080 --> 00:43:22,600
Speaker 1: pour endless amounts of money into a failing business, even

689
00:43:22,640 --> 00:43:27,359
Speaker 1: with the sunken cost fallacy. That's the illogical belief that

690
00:43:27,600 --> 00:43:31,200
Speaker 1: you're too invested in something and you can't walk away

691
00:43:31,239 --> 00:43:34,400
Speaker 1: from it, so instead you just keep pouring more cash

692
00:43:34,440 --> 00:43:37,360
Speaker 1: in with the hope of at least breaking even. The

693
00:43:37,400 --> 00:43:42,840
Speaker 1: sunken cost fallacy is what casinos thrive on. They depend

694
00:43:43,000 --> 00:43:47,160
Speaker 1: upon it, running up in third place as a contributing

695
00:43:47,200 --> 00:43:51,640
Speaker 1: factor to failure with twenty three percent of startups you

696
00:43:51,680 --> 00:43:57,479
Speaker 1: know listing it would be not the right team, which

697
00:43:57,560 --> 00:44:00,680
Speaker 1: is true. If you've got a bad leadership team and play,

698
00:44:00,719 --> 00:44:04,000
Speaker 1: it's really hard to succeed. I mean, you might succeed

699
00:44:04,040 --> 00:44:06,960
Speaker 1: despite your team, but you're not going to reach the

700
00:44:07,080 --> 00:44:10,800
Speaker 1: same heights as you would if you had a really capable, nimble,

701
00:44:10,920 --> 00:44:14,840
Speaker 1: and knowledgeable team. This can happen a lot with tech startups,

702
00:44:14,880 --> 00:44:16,840
Speaker 1: where you might have a founder who has a really

703
00:44:16,880 --> 00:44:21,799
Speaker 1: strong background in engineering but not in business management, so

704
00:44:22,200 --> 00:44:25,640
Speaker 1: they might have a great idea for making technology that works,

705
00:44:26,040 --> 00:44:28,120
Speaker 1: but not a great idea of how to market and

706
00:44:28,239 --> 00:44:31,520
Speaker 1: sell it and fund it. Likewise, you can also hit

707
00:44:31,560 --> 00:44:34,080
Speaker 1: this point if you've got someone who has great business

708
00:44:34,120 --> 00:44:37,080
Speaker 1: sense but they have a really weak grasp on what

709
00:44:37,280 --> 00:44:41,400
Speaker 1: is actually technologically possible. And I'm not gonna do the

710
00:44:41,440 --> 00:44:45,680
Speaker 1: cough joke again, but thoroughness leaps to mind. Now. I

711
00:44:45,719 --> 00:44:48,920
Speaker 1: won't go through all the other factors, but I do

712
00:44:48,960 --> 00:44:52,840
Speaker 1: want to name a couple more. Sometimes companies fail because

713
00:44:53,040 --> 00:44:56,680
Speaker 1: some other company manages to do what they're doing, but

714
00:44:56,880 --> 00:45:01,520
Speaker 1: you know, successfully. Sometimes it comes down to pricing or cost.

715
00:45:02,080 --> 00:45:04,600
Speaker 1: The product or service ends up being too expensive for

716
00:45:04,640 --> 00:45:08,480
Speaker 1: the market, but there's no real option to reduce prices

717
00:45:08,520 --> 00:45:13,520
Speaker 1: because the operational costs of the company are themselves too high.

718
00:45:13,920 --> 00:45:17,720
Speaker 1: Sometimes the company fails to pay attention to customers entirely

719
00:45:17,880 --> 00:45:21,400
Speaker 1: and lose his focus. And usually again it's a combination

720
00:45:21,440 --> 00:45:25,759
Speaker 1: of these and other factors that ultimately lead to failure. Now,

721
00:45:25,800 --> 00:45:27,600
Speaker 1: the reason I wanted to do this episode in the

722
00:45:27,640 --> 00:45:29,960
Speaker 1: first place was not for some sort of shot in

723
00:45:30,040 --> 00:45:34,239
Speaker 1: Freuda as we examine the shortcomings of various companies. It

724
00:45:34,320 --> 00:45:37,120
Speaker 1: was rather to illustrate the sort of lessons we can

725
00:45:37,239 --> 00:45:40,960
Speaker 1: learn through these failures. I mean, honestly, failure is a

726
00:45:41,000 --> 00:45:44,799
Speaker 1: better teacher than success is. Through failure, we learn what

727
00:45:44,960 --> 00:45:48,239
Speaker 1: mistakes to avoid and where to put our focus. So,

728
00:45:48,360 --> 00:45:50,800
Speaker 1: if you're ever going to work on a startup idea,

729
00:45:51,320 --> 00:45:53,360
Speaker 1: you know some of the pitfalls that you need to

730
00:45:53,400 --> 00:45:56,400
Speaker 1: be aware of. You need a good team in place.

731
00:45:56,480 --> 00:45:58,799
Speaker 1: You need strong people on both the business and the

732
00:45:58,840 --> 00:46:02,640
Speaker 1: products side. You need short and long term business plans.

733
00:46:03,080 --> 00:46:05,359
Speaker 1: You need to test your ideas and make sure there's

734
00:46:05,400 --> 00:46:08,920
Speaker 1: a place in the market for those ideas. Personally, I

735
00:46:08,920 --> 00:46:12,000
Speaker 1: feel people should avoid the whole fake it until you

736
00:46:12,080 --> 00:46:14,600
Speaker 1: make it approach, where you know, you pitch an idea

737
00:46:14,640 --> 00:46:18,000
Speaker 1: that you think might be possible, but you don't really

738
00:46:18,040 --> 00:46:21,200
Speaker 1: know that it is possible, and then it just becomes

739
00:46:21,239 --> 00:46:23,400
Speaker 1: a race to see if you can make your idea

740
00:46:23,480 --> 00:46:26,839
Speaker 1: work before the money runs out. That doesn't work out

741
00:46:26,840 --> 00:46:30,360
Speaker 1: well most of the time. Also, if you are looking

742
00:46:30,400 --> 00:46:34,200
Speaker 1: for investment opportunities, or you see a crowdfunding campaign that

743
00:46:34,239 --> 00:46:38,600
Speaker 1: catches your eye. It's good to ask some really tough questions,

744
00:46:38,680 --> 00:46:42,120
Speaker 1: even if you're just asking yourself before you contribute your

745
00:46:42,239 --> 00:46:46,360
Speaker 1: hard earned cash to that endeavor. Now, I've done episodes

746
00:46:46,360 --> 00:46:50,880
Speaker 1: about crowdfunding failures as well as outright scams and hoaxes.

747
00:46:51,560 --> 00:46:55,600
Speaker 1: The hoaxes and scams tend to be slightly easier to avoid,

748
00:46:55,680 --> 00:46:58,960
Speaker 1: I think, because there's usually at least some indicators that

749
00:46:59,080 --> 00:47:01,680
Speaker 1: things are not on the up and up. Looking into

750
00:47:01,680 --> 00:47:04,400
Speaker 1: the background of the people involved is always a good idea.

751
00:47:05,040 --> 00:47:08,440
Speaker 1: Examining their goals and what they're promising is a must,

752
00:47:09,200 --> 00:47:11,760
Speaker 1: And as the old saying does go, if it sounds

753
00:47:11,760 --> 00:47:15,319
Speaker 1: too good to be true, it probably is. These scenarios

754
00:47:15,360 --> 00:47:18,560
Speaker 1: are for the most part avoidable if we really employ

755
00:47:18,680 --> 00:47:22,680
Speaker 1: critical thinking and we don't fall in for stuff that

756
00:47:22,800 --> 00:47:26,600
Speaker 1: just sounds like wish fulfillment. But the other failures, the

757
00:47:26,600 --> 00:47:30,439
Speaker 1: ones that are not based off misdirection or scams, those

758
00:47:30,440 --> 00:47:34,440
Speaker 1: are harder to avoid. Right These can be people and

759
00:47:34,520 --> 00:47:39,600
Speaker 1: companies that have sincere legitimate goals, and they might even

760
00:47:39,640 --> 00:47:43,200
Speaker 1: achieve some of those goals. As we've seen failure does

761
00:47:43,239 --> 00:47:46,400
Speaker 1: not necessarily mean having nothing to show for your work.

762
00:47:46,840 --> 00:47:51,040
Speaker 1: Plenty of these companies failed after bringing a product to market.

763
00:47:51,520 --> 00:47:54,480
Speaker 1: It's just that the market, for whatever reason, didn't receive

764
00:47:54,560 --> 00:47:57,759
Speaker 1: the product with open arms. It's a lot harder to

765
00:47:57,840 --> 00:48:00,839
Speaker 1: predict that kind of thing unless you hear of an

766
00:48:00,880 --> 00:48:04,359
Speaker 1: idea and say, I don't understand why anyone would want that.

767
00:48:04,680 --> 00:48:07,279
Speaker 1: I mean, if that's your reaction, that might be a

768
00:48:07,320 --> 00:48:09,680
Speaker 1: red flag. It could be something that a lot of

769
00:48:09,680 --> 00:48:13,200
Speaker 1: other people are also thinking. But then again, keep in

770
00:48:13,239 --> 00:48:16,200
Speaker 1: mind that's coming from a guy who was pretty sure

771
00:48:16,239 --> 00:48:18,920
Speaker 1: the iPad was going to be a total failure. I

772
00:48:18,960 --> 00:48:22,719
Speaker 1: had seen so many tablet style devices failed to get

773
00:48:22,719 --> 00:48:26,279
Speaker 1: a place in the general consumer market. And also I

774
00:48:26,320 --> 00:48:28,920
Speaker 1: thought the name was pretty dumb, and I was pretty

775
00:48:28,920 --> 00:48:31,560
Speaker 1: sure that was gonna be a flop, and I was

776
00:48:31,640 --> 00:48:36,440
Speaker 1: obviously a billion percent wrong. So, as I said, figuring

777
00:48:36,480 --> 00:48:38,960
Speaker 1: out if a product or service has the potential to

778
00:48:39,040 --> 00:48:42,239
Speaker 1: be a big hit requires a lot of insight and

779
00:48:42,320 --> 00:48:44,840
Speaker 1: maybe a little bit of luck, and I definitely didn't

780
00:48:44,880 --> 00:48:47,520
Speaker 1: have enough of either one of those when I dismissed

781
00:48:47,560 --> 00:48:51,360
Speaker 1: the iPad. Personally, I'd kind of like to see a

782
00:48:51,440 --> 00:48:55,120
Speaker 1: readjustment to how startups get funding and support in the

783
00:48:55,120 --> 00:48:58,200
Speaker 1: tech world in the first place, I feel there's way

784
00:48:58,239 --> 00:49:01,839
Speaker 1: too much speculation going on, and it means that some

785
00:49:01,920 --> 00:49:05,240
Speaker 1: things that could be great ideas don't get the support

786
00:49:05,239 --> 00:49:08,920
Speaker 1: they need, while others that are far more far fetched

787
00:49:09,120 --> 00:49:12,840
Speaker 1: or have limited value end up getting pushed into the stratosphere.

788
00:49:13,480 --> 00:49:16,200
Speaker 1: There are some startup incubators out there that try and

789
00:49:16,239 --> 00:49:20,319
Speaker 1: help founders create a strong base for their companies, complete

790
00:49:20,320 --> 00:49:24,440
Speaker 1: with things like making up business plans and networking opportunities.

791
00:49:24,600 --> 00:49:27,560
Speaker 1: I think that's a good step, but in some cases

792
00:49:27,600 --> 00:49:30,880
Speaker 1: these can turn into what feels like a tech oriented

793
00:49:30,920 --> 00:49:33,919
Speaker 1: fraternity and less of a genuine effort to help good

794
00:49:33,920 --> 00:49:39,360
Speaker 1: ideas flourish. Now, these problems are not unique to technology.

795
00:49:39,640 --> 00:49:43,080
Speaker 1: We see it in business across multiple industries, but tech,

796
00:49:43,120 --> 00:49:46,040
Speaker 1: with its cool appeal and how it expands into every

797
00:49:46,080 --> 00:49:50,799
Speaker 1: aspect of our lives, is particularly visible in this regard. Well,

798
00:49:50,840 --> 00:49:54,600
Speaker 1: I hope you guys learned some interesting stuff in this episode.

799
00:49:55,360 --> 00:49:59,799
Speaker 1: I barely scratched the surface of tech startup failures. I mean,

800
00:49:59,840 --> 00:50:04,960
Speaker 1: the list of failed companies is hundreds of companies long.

801
00:50:05,400 --> 00:50:08,480
Speaker 1: So if there are particular instances you would like me

802
00:50:08,560 --> 00:50:13,200
Speaker 1: to cover, either companies that promise big things but fell short.

803
00:50:13,800 --> 00:50:17,000
Speaker 1: Maybe there's some hoax or scams that you specifically want

804
00:50:17,040 --> 00:50:19,400
Speaker 1: to know more about, or you want to know about

805
00:50:19,440 --> 00:50:22,799
Speaker 1: some success stories about companies that started off in a

806
00:50:22,920 --> 00:50:28,280
Speaker 1: humble way and grew into something truly spectacular. Let me know. Also,

807
00:50:28,360 --> 00:50:32,000
Speaker 1: if you have any other requests for topics on tech stuff,

808
00:50:32,480 --> 00:50:34,239
Speaker 1: reach out to me. The best way to do that

809
00:50:34,480 --> 00:50:39,040
Speaker 1: is on Twitter. The handle is text stuff, h s

810
00:50:39,160 --> 00:50:48,640
Speaker 1: doubable and I'll talk to you again really soon. Text

811
00:50:48,680 --> 00:50:52,120
Speaker 1: Stuff is an I Heart Radio production. For more podcasts

812
00:50:52,160 --> 00:50:54,920
Speaker 1: from my Heart Radio, visit the i heart Radio app,

813
00:50:55,040 --> 00:50:58,200
Speaker 1: Apple Podcasts, or wherever you listen to your favorite shows.

814
00:51:00,320 --> 00:51:00,520
Speaker 1: Nine