Is Your Startup Standing in a Graveyard?

Is Your Startup Standing in a Graveyard?

I meet with a lot of entrepreneurs that are myopic about their idea. So myopic that they are likely in for a painful outcome, especially if they are in a tough market.

“Standing in a Graveyard” is a phrase I heard Adeo Ressi from Founder Institute use recently. The comment was in response to a Company that was in a Market where there have been many failures in the past. What’s a graveyard? Here’s a few graveyard categories:

  • Music – the next brilliant music app – how many startups are buried in this graveyard?
  • WAP – Wireless Application Protocol  – there was a market that was over funded and didn’t take off.
  • Photo sharing – lot’s of successes here but failures as well
  • Communications platforms – VOiP, etc.

Many of these markets have been over-invested in over the years. So in addition to being a tough market, you’re not likely to find investors in some of these categories, because they have had previous investments that have bombed. Fund managers aren’t likely to go back to their limited partners and tell them they will be investing in another music company – after they dropped a few million in the first loosing investment.

The graveyard isn’t limited to Startups – there are some notable established companies like Google, who purchases Picnik and closed it down for a lack of “strategic fit” or Wave. In fact Google has its own graveyard here. Microsoft is another company with a list of failed ideas – here’s their top 10 failures include WebTV and Tablet PC – both of which were too early to market – compared to iPad. The jury is still out on GoogleTV – I bought one but use it mostly for TV – not like I thought I would when I bought it.

How do you know if you’re standing in a graveyard? Let’s start with your research – where are you competitors in their development process and market success? Are all of the comparable companies only historic and not current?

Here are some resources:

In addition to the Market Research – you need to look at the Market Timing. As I referenced above, there were some of those ideas on the failed list that really had to do with timing – Is the market ready for your product or service? More on market timing later…
But Dave, you don’t understand – my product is innovative! Yes innovation matters – and by definition, you’re creating something that people don’t know that they need (yet). But if your innovation is in the graveyard, you better make sure the timing is better than it has been for those companies that have been buried their before you.

3 Replies to “Is Your Startup Standing in a Graveyard?”

  1. Another startup graveyard: Parking.

    I started a (now dead) parking startup myself, and every year I see, and sometimes advise, new startups tackling the same old parking problems in the same ways – none of them have worked out well, and I doubt that any will.

    1. another disadvantage to have 3 or 4 co-funders I think is hihger amount of time that you need to discuss company issues.there is a biological example for it. our genetic system composed of 4 letters. you can ask why it isn`t consists of 1 (to have a lesser energy expediture to produce letters) or why it isn`t consists of 20 letters (so we could get hihger information)the reason for not being is somehow obvious (genetic system could not transmit enough massage with only one letter, because the combination of these letters could generate different meanings)but the reason for not being 20, because for a system like cell, it is very energy consuming process and time consuming process to deal with hihger numbers alphabets.in fact there are reasons and mathematical models to show why nature have chosen exactly 4 letters for genetic system which I can give reference for those who want to read it.

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