Thursday, February 8, 2007

5 reasons why most Web 2.0 startups fail

Nowadays, Web 2.0 startup companies are popping up at an incredible speed. But, the fact is, that most of them fail. In this post, I write about what I'm thinking to be the top five reasons for these failures.

  1. Not having a business model. This one is very frequent. Most Web 2.0 companies think that they don't have to have a business model like real companies, because if there's enough traffic, it means money. Lots of money. In most cases, of course, traffic is very important, and it's a starting point, but it's not enough.
  2. Unoriginal idea. People don't want dozens of social bookmarking sites, photo galleries, or online calendars. They want only one that doesn't suck. Sure, gets millions of pageviews a day, and it makes a lot of money, but it doesn't mean if you make a copy of it, you'll be successful, too. It takes more. Everything begins with a good idea.
  3. Relying on the blogosphere. Blogs are a great (and free) way of advertising. If you get your service reviewed by a top blogger, it can make a real traffic boost. But you have to understand that most of the visitors gained this way will be tech-savvy geeks. If you want to your site to be used by normal (sorry, geeks!) people, you have to use other marketing methods, maybe offline, too (MySpace did that).
  4. The service is ahead of its time. It's not really a problem, but it happens. You may have a great idea for a startup, but there are cases when the time just didn't come yet. There were online photo galleries before Flickr, but none of them really succeeded. Not because they were bad. It was because people just didn't need a thing like that. You have to be in the right place at the right time (as with most bussinnesses).
  5. Not enough users. This is not a distinct category, but sometimes, that's just it. It may be a great service with many great features, if not enough people is using it, the company will never generate profit. And if I were a company, that would hurt me.
There may be many more things, but this was my first try to collect the reasons. Maybe I'll do a second part if I can come up with something.

No comments: