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:
- Founder Institute Video on Startup Research
- Krill Makharinsky talked about Zombie Startups
- You may want to look at the TechCrunch Deadpool