
Ask HN: Examples of startups that failed due to moving slowly? - fooshint
Conventional startup advice is to &#x27;move fast&#x27; and &#x27;pump out features.&#x27; Are there any startups that created a great new thing that was growing and then failed because they were improving too slowly?<p>How slow is too slow?
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MCRed
I am aware of multiple companies that died because they were forced to "grow
too fast", rather than growing slow.

One was a search engine ahead of google in its category that would have been
an ideal google acquisition target (in fact, google is still doing a poor job
in their area of search.)

Another was a company that invented a key gaming technology, but was ahead of
the market by a couple years.

In both cases the VCs forced them to make compromises to to the product to
chase the current fads... rather than invest in the parts of the product that
their customers wanted (and would have paid for.)

Both companies had identified markets that would be extremely fast growing and
are today worth many billions of dollars, and in both cases, to date no
company has really done what they did.... though the market has shifted to get
by without them.

VCs focus on growth because it benefits them. Finding the market and
addressing it benefits the company. IF the timing is off by a couple years,
then its "too late" for the VCs. This was the case even though it was obvious
that there was a massive market coming-- in both of the above examples, the
hockey stick had started.

VCs would apparently rather have a $30M valuation in year 2 than a $1B
valuation in year 6. The VC funds last 5 or 7 years, if I recall.

~~~
adventured
10 out of 10 VCs would take the six year $1 billion acquisition over the two
year $30 million acquisition in fact. Your numbers are way off. It would have
to be closer to $500 million in two years, versus $1 billion in six.

~~~
dagw
When looking at $30 million today with a probability of 1.0 vs $1 billion in
six years with a low and unknowable probability, then taking the $30 million
today might make sense for the VC, depending on what their books look like.

------
SatvikBeri
According to Joel Spolsky, Ingres lost to Oracle due to slow growth:
[http://www.inc.com/magazine/20091101/does-slow-growth-
equal-...](http://www.inc.com/magazine/20091101/does-slow-growth-equal-slow-
death.html?partner=fogcreek)

Discussion on a previous thread also suggests that Fogbugz suffered the same
fate due to growing slower than Atlassian:
[https://news.ycombinator.com/item?id=920668](https://news.ycombinator.com/item?id=920668)

~~~
jfoster
My take-away from that was that Atlassian had a proposition that made
companies customers before those companies could afford Fogbugz. ($10 for 10)

~~~
snom320
Yep. That's my personal experience as well. Looked at FogBugz several times,
but the pricing always put us off. Eventually Atlassian came around and made a
good enough product.

------
nstart
Hashable. One of the startups that I believed in the most just crashed and
burned. Right out of the gate they got plenty of feedback. Lots of hate. Some
amount of love. Much confusion. But the people who got it, really got it
(that's my criteria for great new thing). I still long for a contact
management tool like that. When I first started using it, I kept giving
feedback to the team to the point that they sent me stickers, a button pin,
and a tshirt. Yey for #swag. And I kept giving feedback. And then they went
dark. No replies. Sporadic tweets. Updates rarely. It was like they just gave
up. And then I got the mail that they were closing down. They stopped because
they "couldn't make it good enough"

[https://twitter.com/mikeyavo/status/223263315038711808](https://twitter.com/mikeyavo/status/223263315038711808)

Side note - That was also the first time I understood the risk of putting
content into a closed eco system that's using non open standards for data.
<sad face>

------
GBond
MapQuest. They achieved the marketing Holy Grail of reaching the Verb Status
("Let me MapQuest it") only to lose it. It was stale in features while Google
pushed forward rapidly.

------
acomjean
Osborne computer?

Either they were moving too slow or announced new product too early (killing
demand for the model they were actually selling). They went bankrupt before
new model came out...

Apparently not entirely true, but that was the takeaway. it got a name: the
"Osborne Effect"

[https://en.wikipedia.org/wiki/Osborne_effect](https://en.wikipedia.org/wiki/Osborne_effect)

~~~
unfunco
I'd argue that Osborne moved too quickly, he was announcing the future (and
they didn't deliver it too slowly, they just announced it too quickly) and
subsequently committed suicide (figuratively, of-course.)

------
jkarneges
Competition and profitability aren't your only reasons to move fast. _VCs_ may
judge you on your speed as well.

Our company bootstrapped for the first 2.5 years before raising an angel
round. This raises eyebrows. Some investors assume there is a problem if you
are looking for a small round after so much time has passed. It's a rare
stance to encounter, but something to be aware of.

(Personally, I'm proud of what we were able to accomplish before taking
outside investment.)

------
ffn
>How slow is too slow?

That depends entirely on your financial structure, your product, and your own
lifespan. If you never on-board investors and never depend on a loss-leader
strategy for capturing market, you can small-business yourself from you mid-
twenties to retirement and beyond. A lot of trade professions do exactly this
sort of slow expansion; my neighbors is self-employed plumber and he's been
routing tubs for the past two decades.

------
adventured
Jaiku, Pownce, Gowalla, Bing/MSN search, Posterous, Windows Phone

There are tons of them. You'll see a lot of responses that claim all of these
companies didn't die due to moving slowly, but for other reasons - that will
also always be true though, even in cases where a startup moved too slow. For
example, Windows Phone was both backwards, and slow to match the iPhone once
it became obvious consumers loved touch.

In many consumer spaces, it's: 'winner take most.' If your competition gets to
critical adoption first, most of the time you're toast. So even if Gowalla was
growing slowly, they were too far behind. If your competitor takes 60% of the
market, you've previously been growing fast but are now growing slowly, and
you're now down to 14% of the market - the outcome is most likely that your
future growth will be extremely difficult, and eventually you'll burn vast
resources just trying to acquire each point of market share thereafter.
Microsoft and Google have both delivered rare, extremely expensive examples of
this behavior over a long-term basis (in search for Microsoft and social for
Google), funded by their prior dominant products.

~~~
michel-slm
I still miss Jaiku. I wonder if they would have survived if either they didn't
get acquired by Google, or if Google keep supporting them instead of
acquihiring.

------
jonathanmarcus
AWS launched in 2006, while Google App Engine launched in 2008 and Google
Compute Engine launched in 2012. But Amazon has always moved significantly
faster than Google in the IaaS market, introducing the most comprehensive
suite of infrastructure services and relentlessly undercutting on price. AWS
has been consistently innovative while Google has long played catch-up at far
too slow a pace.

~~~
mianos
App engine is largely useless. People wanted virtual machines. Google only
just worked that out last year. Useless POS could not even allow TCP
connections. No long running processes. Dog slow io. So many limitations. Sure
it is a different product so I am not comparing apples to apples but Google
said 'you want this' and amazon gave us what we wanted.

------
joeax
Digg, Delicious, Mixx - lost to reddit

Plaxo - lost to LinkedIn

Bebo - social media space became too crowded

Geocities - died of natural causes

Netscape - slow to adopt after v3

~~~
joshu
Delicious was a different product from Digg or Reddit, so that doesn't make
sense.

~~~
yoklov
And Digg lost for several reasons, but one of them wasn't that it moved too
slow. More the opposite, really. They released a buggy version too soon, when
the users were already angry and considering leaving.

~~~
dagw
Yup. Digg should be the poster child for why "move fast and break things"
isn't always the best of ideas.

------
lkrubner
"Failed" sometimes means bankruptcy, but you should also include those
companies that survived but remained tiny, while one of their competitors
became huge.

Circa 1995, many companies tried online retailing, but none of them could
match the speed of Amazon, and so Amazon slowly won out over all of them.

MySpace lost to Facebook, partly by not matching what became popular features
on Facebook, such as "The Wall".

And it's not just startups that fail due to moving slowly. The USA auto
companies have been losing market share since 1960, partly due to their slow
adoption of new techniques.

Toyota in the 1950s was a super nova of new ideas. They invented kanban and
"just in time". Oddly, they got some of their best ideas from an American who
could not get an audience in the USA:

"Interestingly, important elements of the Japanese production system were
enhanced by the work of W. Edwards Deming, an American who developed a system
of statistical quality control for the U.S. war effort during World War II.
After the war, he was assigned to General McArthur’s staff overseeing civilian
transition of Japanese industry, and introduced his system of quality control
throughout Japanese industry, but especially in the automobile sector. Largely
ignored in the United States after his return, his methods were only adopted
by U.S. manufacturers after 1981 when he was recognized by Japan for his
contribution to the country’s economic revival."

[http://www.mbca.org/star-article/july-august-2013/putting-
it...](http://www.mbca.org/star-article/july-august-2013/putting-it-line-
mercedes-benz-us-international-mercedes-production-sys)

~~~
zaidf
_MySpace lost to Facebook, partly by not matching what became popular features
on Facebook, such as "The Wall"_

That is a gross over simplification of why MySpace lost to facebook. One of
the main reasons I think MySpace lost was that they never seemed to have a
grand vision like Zuck and fb seemed to have developed around '06-07. Not to
mention, MySpace was an offshoot of a super shady marketing company, not a
technology company. That became more and more apparent as MySpace suffered
constant performance and security issues.

~~~
Ntrails
Facebook was about real life, myspace was about the internet. Facebook was
about statuses, groups, uni life, wall to wall convos and organising your
life. It's where I heard about climbing club trips, or socials, or that
someone in halls was watching top gear on their tv and the price of entry was
1 slice of pizza ordered.

Then of course there was the user experience. Facebook was plain, simple,
uniform and quick. Myspace...

    
    
        -Click on myspace page
        -Wait 10 secs for background to load
        -Really loud obnoxious music is playing
        -Animated page background starts going
        -Quizzes load
        -A wild photograph appears
        -You can see an embedded youtube now - hit pause
        -It wasn't the goddamned youtube making the noise, now you've got two things running you idiot
        -Try and pause the youtube again
        -page freezes
        -audio player loads
        -manage to stop everything playing
        -have epileptic fit from background
        -forget why you came here anyway

------
hyperpallium
_Crossing the Chasm_ (Moore) suggests different phases in adoption - when
entering the mainstream (after enthusiasts's love of the tech itself, and
visionary's grabbing the tech's benefits ahead of everyone else) pragmatists
wait until they see who will win. Therefore, in this phase, speed of acquiring
marketshare is everything - not tech, not benefits.

Moore generalized this theory from actual startups, so he has lots of
examples, but from decades ago (like apple and oracle when they were new). I'd
think it would apply to today, just faster - though no one ever seems to cite
it.

eg IBM lost RDB to Oracle, even though they invented it. Perhaps all the
competitor's to pg's viaweb, who lost to it (note: they employed an expensive
PR firm; it wasn't just lisp tech).

------
mikekchar
There are lots of examples of startups that failed due to moving too slowly.
The problem is that you probably won't know about them because they often
don't get multiple rounds of financing (and hence don't make the news).
Uncountable numbers of startups fail all the time in relative obscurity.

Your question is hard to answer, though, because it depends on where your
funding is coming from. Part of your pitch for your business probably included
an exit plan (if it didn't, then you should probably figure it out now). You
need to get your business to wherever it needs to be to deliver that exit
plan. Now you work backwards. What conditions need to be met to make that exit
work? For a business that is built mostly on technology, what do you need to
have in place to meet those conditions. Then you need to allow time to iterate
your development because I can pretty much guarantee you that whatever you
think you need now is almost certainly wrong. So you need to deliver early
enough to allow yourself time to figure out what is wrong about it and what
you need to do to make it right.

I've been in this industry long enough (and been with enough startups) to say
that most founders don't understand what they are doing to the extent that
they can make a coherent plan. Therefore they simply push to move as fast as
possible and "pump out features". This is not necessarily a bad strategy if
you are good at reacting to failure and adjusting your plan accordingly. The
faster you fail, the more time you will have to discover what will succeed.

This strategy will only work for so long, though, and you need to be able to
change your strategy at the correct time. This is very difficult and my
experience tells me that most people get it very, very wrong. Sometimes even
if the founder can do it, the people they hire to search the solution space
(by banging out features one after another) are incapable of building a
coherent product. To off-set this problem some startups adopt a demo-only
strategy. Their goal is to build a disruptive demo and get bought out by one
of the big boys (and probably buried). They have no intention of actually
building a viable product. This can actually work well, depending on the
prevailing economic environment and how scary you can make your demo.

If you want to build a sustainable business, though, my suggestions is to
avoid the "pump out features" track (and the developers who are good at only
doing that). Instead build more slowly with very strategic experiments and a
very flexible code base (along with programmers who have experience building
real products this way). If you can find the programmers who are able to do
it, then you should have a higher rate of success. The "if you can find the
programmers who are able to do it" part may be limiting, though. You may be
forced to go the "bang out features and react to failures" route.

~~~
omouse
This is something I'm seeing too; having a committee design a product has
resulted in feature after feature being put together in an incoherent way.
Pump out features can't work for long.

------
megablast
Lyft maybe this? The other groupon competitors? Foursquare?

~~~
andrewcamel
Could not agree more on Lyft. In a winner-take-all market where an all-out
land grab is critical to the long-term success of the marketplace, moving
quickly and being the first to reach that golden scale of monopolistic
ownership of supply and demand is absolutely key.

Not a perfect comparison given Lyft was founded 2 years after Uber and
therefore was already at a disadvantage, but had they grown faster, they might
have been able to overtake Uber's position.

In any case, the outcome of the Uber / Didi battle in China should be a great
data point for this question.

~~~
panorama
I don't think Lyft has failed by any means, it's a 4 billion dollar company
and growing. Also, it seems they're quite quick to innovate. IIRC, they were
first to come up with the carpool system that Uber then rapidly appropriated
into UberPOOL. It's just hard to overtake a company executing as brilliantly
as Uber.

------
mijustin
I'd argue that HipChat, Campfire and Yammer all "lost" to Slack because they
weren't moving fast enough.

This Google trends line is interesting:
[https://www.google.com/trends/explore#q=slack%2C%20hipchat%2...](https://www.google.com/trends/explore#q=slack%2C%20hipchat%2C%20yammer&cmpt=q&tz=Etc%2FGMT%2B7)

~~~
jtwebman
Slack is a way to common term to gather any information from these trend
lines.

~~~
mgr86
I'll forever think slackware when I hear slack.

~~~
gargarplex
Nice surf move there

------
vacri
Linode?

[https://news.ycombinator.com/item?id=9852245](https://news.ycombinator.com/item?id=9852245)

~~~
Grue3
Since when is Linode a failed startup? Last time I checked they're doing well
and expanding.

------
nstart
Wife pointed out one. Hotmail. The glory days of internet. Sat on its ass.
It's actually great now (outlook.com) and I prefer it over gmail now (bring
out the flame throwers). But it took a long long time to get there.

------
prostoalex
Friendster, MySpace?

~~~
fooshint
I would argue they were not moving slowly, but in the wrong direction.

~~~
paulsutter
Yes and you could almost say Myspace moved too fast, chased after local maxima
(rapid A/B testing) and pursued vanity metrics (registered users). In
contrast, Facebook stepped back enough to have a real vision, and carefully
chose the right metric (active users). DAU and MAU are industry standards
today, but back then it was a bold and careful decision by Facebook.

~~~
zatkin
What's DAU and MAU?

~~~
justizin
Daily / Monthly Active Users.

------
mmaunder
For investors, time value of money is more important than lowering the risk
profile of the portfolio. Also growth is easy to sell to other investors
including retail on IPO. And it sexes up the whole portfolio with brand
recognition. So get big fast is the accepted 'wisdom'.

Really depends if your building a growth engine vs job creation machine vs
small cash generator - that will dictate your approach to growing and funding
and of course exit, or not.

------
danieltillett
If the growth rate is slower (or faster) than the optimal growth rate then the
management has made a mistake (assuming they have any control over this). When
you frame it this way what you are asking is have any startups failed for
making mistakes which is does not need to be answered.

What you are really asking is it possible to workout in real-time (no
hindsight) what the optimal growth rate should be for each company and if this
is always “as fast as possible”. This is very hard question to answer. My
feeling is the optimal is more often than not close to the “fast as possible”
level, but it will depend on the company and industry.

~~~
mark-r
No, what they're asking for is concrete examples. Real-life examples are
always more illuminating than theoretical discussions.

~~~
danieltillett
How can there be any “real-life” examples of failure for this reason unless
you first determine what the optimal growth rate of the company should have
been? If you can’t answer this question then any discussion about the reason
for failure is a “just-so” story made up after the fact.

The more important question to answer is how can you work out what the optimal
growth rate should be of any startup.

