These Startups failed so you don’t have to: Learn from their mistakes
These Startups failed so you don’t have to: Learn from their mistakes
| Learn from their mistakes
When owning a Startup your primary goals are to either sell it or get it listed. Sometimes, a lot of pressure can lead to the owners of Startups acting out. Today, in this article, I will be presenting to you the story of each Startup, why they failed, and what you can learn from their mistakes. By the end of this article, you will know the mistakes of all these startups and not repeat them. In the end, I have included links so you can learn more about each startup's story.
The 5 Startups I will be talking about in this article are:
Theranos
QuadrigaCX
Juicero
Terraform Labs
Mixer
I know some of these aren’t exactly “Startups” for example QuadrigaCX but we can still learn from them.
Now, what do all these companies have in common?
What all of these companies have in common is that they have a key person, someone that eventually led each Startup to its demise. I will be explaining more about that later.
Now we will see a brief description of each Startup
Theranos
Founded in 2003 by 19-year-old Stanford dropout Elizabeth Holmes, it promised to revolutionize the health care industry. With just a single pinprick of blood, Theranos claimed to be able to perform hundreds of tests, ranging from cholesterol levels to complicated genetic analysis. At the time, Theranos seemed like the next big thing. Fast forward to 2015, WSJ investigative reporter John Carreyrou publishes an article titled “Hot Startup Theranos Has Struggled With Its Blood-Test Technology”. In the article, Carreyrou talks about how Theranos was using commercially available machines instead of its own to test blood samples for patients. He later published several articles and a book about the story. Holmes had defrauded investors by telling them that her devices had been sent to the US military in Afghanistan, also she added a fake Phizer logo to official papers to trick investors. She was later found guilty of 4 charges of wire fraud.
QuadrigaCX
Quadriga was founded by Gerald Cotten in 2013. Although it is not a start-up it is really similar which is why I am including it in this article. Quadriga was believed to be Canada's largest crypto exchange, with millions in volume traded there every day no one would have suspected Cotten. On the outside, it looked like an extremely successful crypto exchange that was making millions. But that was not what was happening on the inside. The exchange worked like this: A user would deposit USD or bitcoin exchange it and then be able to withdraw. Gerald took advantage of that, he took the assets of his clients posing as fake accounts that wanted to trade and then sent them to other large exchanges to trade them. He took over 250 million dollars. Now, why do I say took?
After a large crypto crash, Cotten had invested over $250.000.000 into different coins. When the market started falling he started losing all his client's money. He was basically gambling with other people's assets. 250 million dollars were lost from this crash. The money that was lost was discovered when Cotten died of Crohn's disease in 2019. Many suspected he had faked his own death, but that was not the case.
Juicero
Founded by Doug Evans in 2013, the startup was known for its 699$ wifi-connected luxury juicer that needed proprietary juice packs. Evans compared himself with Steve Jobs on his mission to achieve juicing perfection. He claimed that the pressure of the machine could lift 2 Teslas. The company collapsed on December 1st of 2017 after the company attracted negative media attention when consumers and journalists realized that the juice packets could easily be squeezed by hand and it was also a bit faster.
Terraform Labs
In 2018, Terraform labs was founded by Do Kwon and Daniel Shin. The company launched its first coin in 2019, UST. It was the first algorithmic stable coin that was basically backed up by the US dollar. This startup is the most recent story in this article. In May of 2022, in just one week, Terra whipped out $45 billion in market capitalization.
Mixer
Originally called Beam, Mixer was an American video game live streaming platform. It launched in January 2016 and was acquired by Microsoft in August of the same year by Microsoft. It was integrated into Microsoft's Xbox division and was renamed, Mixer. The platform became famous when it signed a contract with streamers Ninja and Shroud exclusively to Mixer. In 2020 Microsoft announced that Mixer would be shutting down because it had an inability of scaling.
Now let's go over the stories one by one and understand what went wrong.
Theranos, Juicero, Quadriga and Terraform all had the same problem. One person was in charge, not that that is bad but unfortunately or fortunately in some cases, the companies couldn't function in that way. Mixer on the other hand had another problem.
What Theranos and Juicero have in common is that both companies focused more on Marketing than the actual product, I guess we could also say that megalomania was also a problem, both of the CEOs compared themselves to Steve Jobs the founder of Apple.
In Quadriga, the problem was probably the lack of regulation. The fact that someone could just steal all the people's money like that is probably the biggest problem that the company had. It could have been avoided with regulations. Companies that are listed in the stock market can not have the investment money and the client's money in the same place. In fact, the 2 departments aren’t even allowed to communicate with one another.
At Terraform Labs, the problem was that Do Kwon had too much power. Da Kwon didn’t hear anyone's opinion and wanted to control his company. When the market started crashing he printed more and more coins. That made the situation harder.
The problem with Mixer was that it was not there at the right time, there was too much competition with Twitch and the company wasn’t making enough money. Also as according to Business Insider, Mixer also had many internal problems.
What we can say about all these Startups is that they tried to achieve something new, but new is not always accepted by society.
Here are videos, books, and articles I used for this article and also are very interesting if you would like to learn more about one of these stories.
Theranos:
Bad Blood: Secrets and Lies in a Silicon Valley Startup book by John Carreyrou
Cold Fusion: YouTube Channel video: https://www.youtube.com/watch?v=3CccfnRpPtM
QuadrigaCX:
Netflix Documentary: Trust No One: Hunt for the Crypto King
Juicero:
Crunchbase.com
theguardian.com
Terraform Labs:
Cold Fusion(YouTube Channel) Video: https://www.youtube.com/watch?v=3KZY41SqaTI
NY Times: https://www.nytimes.com/2022/05/18/technology/terra-luna-cryptocurrency-do-kwon.html
Indian Express: https://indianexpress.com/article/technology/crypto/end-of-algo-stablecoins-tether-co-founder-on-luna-terra-fiasco-7952475/
Mixer:
BusinessInsider.com
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