The biggest startup failures of all time
Posted by Himanshu arora on September 2nd, 2020
Today, we're gonna look at the biggest startup failures of all time, so that we can learn from them. What do they have in common? And how do we avoid falling into that trap? I've researched all kinds of sources to make the biggest startup failures, looking at how much was invested and lost.
And I guarantee you, you will be surprised by some of the things we find. Always remember that behind these failed startups are real people. Real people that invested blood, sweat, and tears into those startups. And yes, even though they failed, they did invest blood, sweat, and tears. Building a startup is rough. Building a startup that fails is even rougher, so well done for trying. I have nothing but respect for people that try, and for most companies on this list, people really tried.
Unfortunately, we also have serious mismanagement and fraud on the list. So let us discuss some of the biggest startups that failed.
Terralliance invested 352 million USD in today's money. They didn't actually go bankrupt, they got new investors, new team, and completely pivoted the business. Terralliance was in the business of looking for oil by using low and slow flying airplanes to find the oil. A very, very creative approach, but I'm not sure it ever worked.
Still, it was a very interesting journey. Founder, Erlend Olson really wanted to use US U-2 spy planes for this job. However, there was a problem. U-2s were not available for commercial use, they were only available for military use. Instead, Olson went to Russia and acquire to Sukhoi Su-27 fighter jets. I guess you can find a lot of things for sale in Russia. And if you have the money and willing to spend it, you can buy it. Olson was definitely willing to spend the money. The story is that Olsen told his investors that this would be a quick IPO and the company be worth billions.
After having spent 0 million, he said the following, "We spent like NASA during the Apollo program, "and we were on our way to the moon as well." With that kind of aggressive spending, they ran out of cash in 2009 and the game was up for Terralliance. It got so bad that even some of the investors sued Olsen. Apart from the big-spending founder, it looks like the product never worked, they never really found a product-market fit. I want to read startup failures in India then I got some information about those unsuccessful startups in India.
Pay By Touch
Pay By Touch comes in on the list as number two with 420 million invested the day they shut down. Pay By Touch was a payment provider that offered biometric authentication at the point of sale, which was supposed to be a low-cost alternative to other payment options. Data pretty clear, things started to go wrong even before they started. Stay tuned as things go south very, very quickly.
This was the first picture I could find of CEO and founder, John P. Rogers. And yes, that is what you think it is, a mugshot. In Minnesota, even before Pay By Touch was founded, Rogers' chiropractic clinic had closed down with unpaid bills and lawsuits. Not one, but two girls, had reported Rogers, one for abuse, the other one for trashing her house. At a traffic stop, police also booked him for suspicion of using cocaine. That's where the mugshot's from. You look at this background and think, this might not be the perfect profile to come to Silicon Valley and raise almost half a billion dollars.
But that's what happened. Investors, great job on vetting this guy. I'm thinking maybe you should have looked a little bit closer before you put almost half a billion dollars into the company. According to one insider, only a minimum background check was made because Roger had such a common name. I guess I'm not falling into that category. Not only did Rogers have a pretty shady background, but he was also extremely good at spending money. He spent 150 million dollars buying competitors. And at one point, there were 750 people working at Pay By Touch. Pay By Touch lost 7 million based on the revenue of 600,000.
This clearly was not gonna last and they could not make payroll, and Pay By Touch was in real trouble. The investors tried to save the company but Rogers made this completely impossible. San Francisco investor Phillip Bright said to SFGate that he got some over the top unbelievable calls from Rogers. He was screaming and cursing, the language was worse than a drunken sailor. I don't think there was anything wrong with the basic idea of Pay By Touch. And when we think about it, we do pay with biometrics today. However, it doesn't matter how good your idea or concept is, in the end, it's all about execution
About the AuthorHimanshu arora
Joined: September 2nd, 2020
Articles Posted: 1
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