37signals collects their stories so that we don’t repeat the same mistakes, presenting a set of brief post-mortems on failed startups.
The recurring issues seem to be: solving problems that the world isn’t asking for, not having a feasible revenue model (specifically, the difficulty in moving from a free to a paid service), the complexity in scaling an idea from a prototype to a functional product, failing to articulate clearly the benefits the product will bring and failing to focus on the most important product/feature.
In addition, there’s the issue Wesabe encountered: competent competition in the form of Mint:
Mint focused on making the user do almost no work at all, by automatically editing and categorizing their data, reducing the number of fields in their signup form, and giving them immediate gratification as soon as they possibly could; we completely sucked at all of thatâ€¦ I was focused on trying to make the usability of editing data as easy and functional as it could be; Mint was focused on making it so you never had to do that at all. Their approach completely kicked our approach’s ass.
You’ll hear a lot about why company A won and company B lost in any market, and in my experience, a lot of the theories thrown about â€” even or especially by the participants â€” are utter crap. A domain name doesn’t win you a market; launching second or fifth or tenth doesn’t lose you a market. You can’t blame your competitors or your board or the lack of or excess of investment. Focus on what really matters: making users happy with your product as quickly as you can, and helping them as much as you can after that. If you do those better than anyone else out there you’ll win.