The Low-Down: Where Are They Now? Failed Startup Lessons Learned (Or Not) Edition

As a society we tend to be pretty jaded. Been there, done that; seen it all, nothing new under the sun. Until the next iPhone iteration comes out and the entire tech universe acts like a bunch of 13 year olds at a Katy Perry concert. But we digress.

The fact is that we're pretty excited about failure these days. Embracing failure has become so popular that no one even goes to Bay Area conferences about failure anymore. It's just taken for granted. As it probably should be since the chances of any startup getting funded let alone making it out of beta, past second round financing, popular hit status and the liquidity event stage are literally infinitesimal.

And no entrepreneur worth her salt would be deemed seasoned without at least one failed enterprise under her belt, if she wore such accessories.

So it is worth contemplating what, exactly - or even approximately - investors, coders and the leaders who inspire them think they have learned from all this real-world experience.

And the answer is...it depends. Because it turns out that just as people - even, or maybe especially - smart people tend to believe what they want to believe about opportunities those less gifted perceive to be dead ends, so, too, do they discern lessons from less salubrious experiences that are consistent with deeply held beliefs and their general emotional point of view.

All of which is not to say that we shouldn't fail, or contemplate and celebrate failure. It's just that we tend to bring to our analysis of such experiences a pretty well-established worldview. Which may be even more deeply entrenched in tech where those doing both the failing and the learning tend to be well educated, smart, sociable, self confident and products of strong culture with well-established norms and principles that are likely to reinforce the prevailing ethos rather than some Aristotelian ideal. JL

Molly McHugh reports in The Kernel:

There are far more startups heralded as “the next big thing” or “the Uber for (something)” that have fallen from favor, quietly shepherded into some app afterlife—and maybe even the unnoticed death no one would admit was coming.
There are two bubbles in Silicon Valley: the ever-present threat of a second dot-com implosion, and the often-ignored beta bubble. In the latter, ideas are a currency traded easily, willingly, and without shame. And perhaps the bubble could use a little shame, because there are far more startups heralded as “the next big thing” or “the Uber for (something)” that have fallen from favor, quietly shepherded into some app afterlife where they get the mild usership it always deserved—and maybe even the unnoticed death no one would admit was coming. It’s a bubble created by the homogeneity of the tech market and its fenced-in San Francisco/Bay Area “influencers.” These startups were all called game-changers, darlings of the tech market for a single moment in Valley history. In reality, none of them deserved the hype. They were destined to be average, but they were heralded as Facebook killers instead. So where are they now? Highlight

In March 2012, during the annual pre-SXSW app hype, the world was introduced to Highlight. It was one of the first “ambient reality” apps, which meant that it used your location to find your social network as it was changing around you. The app required your location to be turned on at all times, and it would alert you to surrounding users and allow you to get some quick info about them, the idea being you could meet up with them IRL (“in real life”). Highlight was introduced at the same time as the term “SoLoMo” was coined, a horrible, terrible phrase that has been unanimously taken out back and shot by the industry. Social-location-mobile (get it? SoLoMo) was right about one thing, though: Social networks at the time were becoming more and more intertwined with where we, and our smartphones, were physically located. Unfortunately, the phrase was so regrettable that apps tied to its origins were held with a similar disdain. As the golden child of SoLoMo, Highlight stole the SXSW Interactive show in 2012. Everywhere you went, you would pull up Highlight and see Silicon Valley royalty pop up in cute little icons around you. I sat down with founder and CEO Paul Davison at SXSW that year. He told me that Highlight would continue to work on not being a battery suck and regaled me with heartwarming stories about people who’d connected using the app. It was fun and interesting and new… and then, SXSW was over. And so was Highlight. Not actually, of course, as the app has gotten a handful of updates and the charismatic, dedicated Davison remains committed to the project. But Highlight was victim to the SXSW curse: When your beta testers are some of the most jacked-up, app-addicted technology users and you put them in what’s basically a booze-fueled Internet playground for a week, your numbers are going to look pretty damn good. About eight months ago, Highlight released its latest version to little fanfare. Today, some of the most recent posts on its Facebook page are deletion requests from users. The app didn’t change the world, but it raised a hell of a lot of money. (Highlight’s dream lives on: At SXSW 2013, it raised another $4 million; its seed round remains undisclosed.) It reminded the world that app evangelists and SXSW obsessives are not always the trend-casters they think they are. Lesson: Location is a feature, not an app, and that will remain the case until smartphone batteries get a serious upgrade.

Turntable.fm It seemed like a genius idea: Take the popularity and ease of a music-streaming service like Pandora and combine it with our love of making mixtapes and earning friends’ approval for our excellent taste. That’s exactly what Turntable.fm did when it launched in summer 2011, and it was an instant hit. Paired with cutesy avatars and the ability to upload your own catalog, the Web app created a digital platform that hosted musical hangouts, with public and private rooms that either won you a coveted spot at the DJ table or booted you into the audience. It was a musical-chairs-type player, and each DJ would play a song and then bump to the next—a crowdsourced playlist with a competitive streak. When it released its iPhone app, the company also announced it had raised $7 million in funding and was valued at $35 million. There were even rumors Kanye West and Lady Gaga were helping to back the app. Turntable was a victim of its own success. The app got too big too fast, and pretty soon we all realized that it was essentially a gamified music experience—and it wasn’t actually that great for listening to music. You had to keep your playlist ordered and full, otherwise you’d never hear your own songs, and you had to make sure there was a flow, or else you might get booted from the DJ seat. And then inevitably someone would RickRoll you, which is funny only the first few dozen times. Put plainly, we all had a lot of fun with Turntable over the summer. Then we realized we had to work to make these playlists stick, and we lost interest. Turntable tried to pivot into a platform for streaming live concerts in the fall of 2013. By December, it was shut down entirely. Lesson: Not everything can be gamified, and music streaming needs to be easy.

Viddy One of the startup world’s fail-safe strategies is to take a thing that is popular and come up with spin-off concepts that are exactly like that thing but for other things. For instance, there is an Uber for nearly everything you could ever think of. Same goes for Airbnb, Pinterest, Tinder, and Instagram. Launched in 2012, Viddy was one of the first Instagram-for-video apps and easily the most popular. At SXSW that year I talked with founder J.J. Aguhob about how Viddy was going to be one of Facebook’s first official Timeline apps (a distinction that was significant at the time but has come to mean absolutely nothing). Early on, Viddy raised $8.2 million from notable venture firms, and a few celebrities were even on board, using the app and bumping its rising star power. What did Viddy do? Well… do you really need to ask? It put photo filters on videos and helped you share them. Post SXSW 2012, Viddy announced it was raising $30 million, bringing it to a $370 million valuation. And then Vine happened. Vine was acquired by Twitter in the fall of 2012 and officially introduced later. The weirdness of the looping-video app flew in the face of the beautiful, Instagram-like nostalgic feel Viddy was trying to recreate in its own product. Vine quickly defined what we wanted from social video. When Instagram released its own Instagram-for-video feature, it pretty much sealed Viddy’s fate. On Nov. 4, Viddy announced it was shutting down, and the team would be redirected into working “on something new and exciting.” Users have until Dec. 15 to download their Viddy content. Lesson: If you’re going to be the Instagram for video, you have to recreate its virality, not its nostalgia.

Myspace Myspace’s story is a strange, well-documented saga.The original MySpace—the MySpace that introduced the world to bathroom pics and Tila Tequila and came with a capital “S”—was essentially shuttered when it was bought by News Corp in 2005 for $580 million. At that point, “the original social network” began its fall from grace, exacerbated by the rise of Facebook, which launched in 2004. In 2011, MySpace was bought once again, by Justin Timberlake and Chris and Tim Vanderhook of Specific Media. In November 2012, the flashy redesign was introduced: It became Myspace (with a lowercase “s”), a new, social music-streaming application with a slick look and an impressive catalog. I was invited to Myspace’s press event along with a handful of other journalists to talk to Myspace’s famous co-owner and get some early hands-on time with the site. It was undeniably cool, with an inventive search mechanism and big, beautiful graphics. But it was also confusing, and the social elements simply paled in comparison to other social apps. The decline continues, but Myspace certainly isn’t closing its doors. The site is now the 1,364th most popular site on the Web globally and 1,249th in the U.S. Not fantastic numbers, to be sure, and we certainly aren’t seeing the second coming of Myspace. News Corp CEO and founder Rupert Murdoch recently admitted his company failed with its 2005 acquisition of MySpace. It’s unfortunate, because today’s Myspace is actually a great source of new music journalism, but it certainly isn’t the social network we remember.