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21 Tech Startups That Missed the Mark and Then Crashed and Burned

The line between success and failure is often razor-thin for startups. Learn about the spectacular failures of startups like Theranos, where ambition outpaced reality. Unravel the stories behind these entrepreneurial misadventures.

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image credit: Drazen Zigic/Shutterstock burned through $135 million in just 18 months, showcasing the dangers of rapid expansion without a sustainable plan. Their lavish spending on advertising and a complex website, which was ahead of its time but user-unfriendly, led to their downfall. They aimed to revolutionize online retail but failed to understand their market and technological limitations.’s failure teaches the importance of balancing ambition with practicality.

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image credit: buritora/shutterstock became infamous for its rapid rise and fall in the dot-com bubble. With a high-profile marketing campaign featuring a sock puppet, they invested heavily in brand awareness but neglected the logistics of pet supply e-commerce. Their assumption that consumers would flock to buy pet food online proved costly. This case underscores the need for startups to validate market demand before scaling up.


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“They tried to create the future too soon,” commented an online observer about Webvan. This grocery delivery service raised over $800 million but collapsed within two years. Their aggressive expansion and investment in infrastructure were unsustainable without a corresponding customer base. Webvan’s lesson is clear: timing is crucial in innovation.


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Juicero raised over $120 million to sell a $400 juicer and proprietary juice packs. However, it was soon discovered that the juice packs could be squeezed by hand, rendering the expensive machine unnecessary. This led to widespread mockery and showcased the dangers of overcomplicating a simple problem.


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Theranos promised revolutionary blood testing technology but was ultimately exposed for fraudulent claims. Led by Elizabeth Holmes, the company deceived investors and customers about the capabilities of their technology. The fallout was immense, including lawsuits and a loss of trust in startups. Theranos exemplifies the importance of ethical practices and honesty in business.


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“A spectacular miss in understanding social media dynamics,” an online tech critic said about Color. This startup raised $41 million for a photo-sharing app but shut down after a year due to a lack of user engagement. Its high valuation and funding couldn’t compensate for a product that didn’t resonate with users. Color’s story highlights the need to understand user behavior in the social media landscape.


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Quibi, with its unique proposition of short-form content for mobile devices, raised $1.75 billion but lasted only six months. Their model assumed a demand for high-quality, short-duration videos, but this didn’t align with consumer preferences. The COVID-19 pandemic further hindered their growth as their target audience of commuters dwindled. Quibi’s failure teaches the importance of flexibility and understanding consumer habits.


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Segway, once hailed as a revolution in personal transportation, struggled to find a broad market. Its high cost, regulatory hurdles, and limited practicality in urban environments hindered widespread adoption. Despite initial hype, Segway failed to become more than a niche product. This case shows that not every technological innovation translates into market success.

Yik Yak

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“A breeding ground for negativity,” remarked a user about Yik Yak. This anonymous social media app gained popularity but faced criticism for enabling cyberbullying and hate speech. Without effective moderation, the platform became toxic, leading to its decline. Yik Yak’s story is a reminder that fostering a positive community is crucial for social platforms.


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Beepi, an online platform for buying and selling used cars, raised $150 million but collapsed under the weight of its rapid expansion. They spread too thin, too fast, and couldn’t sustain the operational costs. Beepi’s failure underscores the danger of scaling a business faster than its foundational stability.

Powa Technologies

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Powa Technologies, once valued at $2.7 billion, declared bankruptcy due to poor financial management and unrealistic projections. Despite promising technology in mobile payments, their leadership failed to steer the company effectively. This case is a lesson in the importance of prudent financial and strategic management.


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“Innovation isn’t always enough,” an online commenter noted about Aereo. This startup, which offered a cloud-based antenna and DVR technology, faced legal battles from broadcasters. The Supreme Court ultimately ruled against them, leading to their shutdown. Aereo’s story shows that legal compliance is as critical as innovation in technology ventures.


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Lumosity, which offered brain-training games, faced fines for making unfounded scientific claims about its product’s benefits. Their aggressive marketing outpaced their evidence, leading to legal action and a damaged reputation. Lumosity’s experience warns startups against overstating their product’s capabilities without solid proof.

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image credit: Drazen Zigic/Shutterstock pivoted from a gay social network to a design-focused e-commerce site, raising over $336 million. However, frequent changes in strategy and business models led to confusion and a loss of identity. Their inability to stick to a consistent vision resulted in their eventual sale and dismantling.’s journey highlights the risks of frequent pivots without a clear direction.


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“An example of how not to treat customers,” commented a disgruntled Sinemia user. This movie subscription service faced a backlash over hidden fees and poor customer service. Their failure to address these issues led to a loss of trust and eventual closure. Sinemia’s downfall emphasizes the importance of customer satisfaction in business sustainability.


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Homejoy, a home cleaning startup, struggled with worker classification laws, leading to legal challenges and high operational costs. Their inability to navigate the regulatory landscape ultimately led to their shutdown. Homejoy’s case serves as a reminder of the importance of understanding and complying with labor laws.

Tink Labs

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Tink Labs, once a promising startup providing smartphones for hotel guests, failed after diversifying too much and losing focus on its core offering. They ventured into areas that diluted their brand and strained their resources. This lack of focus on their primary business model led to their downfall, teaching the importance of maintaining core business clarity.


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Pebble, a pioneer in smartwatches, faced intense competition from tech giants like Apple and Samsung. Despite a strong start and a loyal customer base, they couldn’t keep up with the innovation and marketing power of their larger rivals. Pebble’s experience is a lesson in the challenges of competing in a market dominated by established players.


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Skully, which aimed to create high-tech motorcycle helmets, was derailed by mismanagement and internal conflicts among its founders. This discord led to financial misappropriation and a loss of investor trust. Skully’s failure highlights the importance of strong, harmonious leadership.


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Maple, a food delivery service in New York City, raised substantial funding with the promise of revolutionizing the dining experience. However, they struggled with the high costs of preparing quality meals and the logistics of delivery in a crowded urban area. Despite a unique business model, they couldn’t sustainably compete with established restaurants and food delivery services. Maple’s story teaches the difficulty of disrupting traditional industries without a clear and sustainable competitive edge.


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“Outpaced by bigger players,” observed a tech blogger about Gowalla. This location-based social networking startup was once a direct competitor to Foursquare. However, it failed to innovate rapidly and lost users to more versatile and engaging platforms. Eventually, Facebook acquired Gowalla, but the brand itself disappeared, demonstrating the high stakes and fast-paced nature of the social media industry.

Josh Dudick

Josh is a financial expert with over 15 years of experience on Wall Street as a senior market strategist and trader. His career has spanned from working on the New York Stock Exchange floor to investment management and portfolio trading at Citibank, Chicago Trading Company, and Flow Traders.

Josh graduated from Cornell University with a degree from the Dyson School of Applied Economics & Management at the SC Johnson College of Business. He has held multiple professional licenses during his career, including FINRA Series 3, 7, 24, 55, Nasdaq OMX, Xetra & Eurex (German), and SIX (Swiss) trading licenses. Josh served as a senior trader and strategist, business partner, and head of futures in his former roles on Wall Street.

Josh's work and authoritative advice have appeared in major publications like Nasdaq, Forbes, The Sun, Yahoo! Finance, CBS News, Fortune, The Street, MSN Money, and Go Banking Rates. Josh currently holds areas of expertise in investing, wealth management, capital markets, taxes, real estate, cryptocurrencies, and personal finance.

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