# Startup Graveyard: featured stories This section is compiled from public sources (Wikidata, news archives and company announcements). Figures are given as they appear in those sources; unknown fields are left blank. If you spot a mistake in an entry, you can send us a correction. # 15.ai (2020 – 2026) - URL: https://girisimcikafasi.com/en/startup-graveyard/15-ai/ - Sector: Super intelligence - Country: - - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? 15.ai was a free web application that read out English text typed by users in the voices of fictional characters from video games, cartoons and films. The developer, known by the pseudonym 15, began building the technology as a first-year student during undergraduate research at MIT. The site required no registration, showed no adverts and earned no revenue. Its name came from the developer's statement that a voice could be cloned from just 15 seconds of recorded audio. ## Why did it shut down? 15.ai never turned into a commercial business: the developer covered infrastructure costs, which peaked at $12,000 a month, with money earned from a previous venture, and stayed independent despite acquisition offers. In January 2022 it emerged that an NFT start-up called Voiceverse had been selling voices generated with 15.ai as its own technology, without permission or credit. The service went offline in September 2022 because of legal problems surrounding SI and copyright. In May 2025 the developer launched 15.dev as its successor; on 28 May 2026, however, they announced that 15.dev was closing indefinitely and that they would focus on building Artist Alley, a fandom marketplace for artists. ## The story Speech synthesis entered a new era based on neural networks with DeepMind's WaveNet work in 2016. Yet even Google's Tacotron 2 in 2018 usually needed dozens of hours of recordings to produce a natural voice. A developer known by the pseudonym 15 focused on this problem as a first-year student at MIT: generating character voices that carried emotional tone from very little data. 15.ai went live on 2 March 2020 as a free web application that required no registration. Users could have their text read out by characters from productions such as Portal, Team Fortress 2, Undertale, My Little Pony: Friendship Is Magic and SpongeBob SquarePants. By May 2020 the site had served more than 4.2 million audio files. In early 2021 sketches, memes and fan content made with 15.ai went viral on Twitter, TikTok, Reddit, Twitch and YouTube. Popularity came at a price. At its peak, the AWS infrastructure cost $12,000 a month. Despite acquisition offers, the site stayed independent and was kept going with money the developer had earned from a previous venture. On 14 January 2022 it emerged that Voiceverse, a blockchain company whose partnership had been announced by actor Troy Baker, had been presenting voices generated with 15.ai as the product of its own technology, without credit, and selling them as NFTs. The company admitted that its marketing team had used 15.ai without credit while preparing a demo. The developer's sharp response drew hundreds of thousands of shares and likes on social media. The service went offline in September 2022 because of legal problems surrounding SI and copyright. Commercial alternatives followed, whose founders acknowledged 15.ai's pioneering influence. On 18 May 2025 the developer launched 15.dev as its successor; on 28 May 2026, however, they announced that they had closed 15.dev indefinitely and would focus on building Artist Alley, a fandom marketplace for artists. ## Lessons - Going viral is not a business model: millions of uses load the cost of a product that earns nothing onto the founder's own pocket. - If you are building a product that relies on other people's characters and voices, settle the legal ground before you grow. - Community support is a strong shield when your technology is copied, but on its own it does not make you sustainable. ## Sources - [15.ai, Wikipedia (English)](https://en.wikipedia.org/wiki/15.ai) - [15.ai, Wikipedia (Turkish)](https://tr.wikipedia.org/wiki/15.ai) - [15.ai, Wikidata](https://www.wikidata.org/wiki/Q110960686) - [https://www.wikidata.org/wiki/Q110960686](https://www.wikidata.org/wiki/Q110960686) --- # Character.AI (2021 – 2026) - URL: https://girisimcikafasi.com/en/startup-graveyard/character-ai/ - Sector: Super intelligence - Country: United States - Total funding: $193 million - Main cause: Regulation and legal issues ## What did it do? Character.AI was a platform on which users chatted by text with characters they had created themselves or that others had created. It was founded in 2021 by two former Google engineers, Noam Shazeer and Daniel De Freitas. Revenue came from the c.ai+ subscription at USD 9.99 a month and from advertising. In October 2024 it had around 20 million monthly active users. ## Why did it file for bankruptcy? On 13 October 2026 the company filed a voluntary Chapter 11 petition in the United States and launched a court-supervised sale of all or substantially all of its assets. In its announcement it summed up the reason as "significant legal, regulatory and operational challenges". According to the company, the platform continues to operate; the sale is expected to close in late November or early December, and if no buyer emerges to keep the platform going, the service will be shut down. Disney became the first bidder in the process, taking a non-exclusive, perpetual licence to certain intellectual property for USD 20 million; other bids may top it. Several pressures stand out on the recorded timeline: the licensing deal of August 2024 that took the founders and part of the research team to Google; the family lawsuit filed in October 2024 and settled in January 2026; the removal of characters after a cease-and-desist letter from Disney in September 2025; the shutdown of open-ended chat for users under 18 in October 2025; and model costs that rose as usage grew. ## The story On 18 September 2025, Disney's lawyers sent Character.AI a cease-and-desist letter accusing the company of copying Disney characters without permission and profiting from them. Character.AI removed the characters. Exactly a year later, on 18 September 2026, news broke that Disney had chosen Karandeep Anand, Character.AI's chief executive, as its first chief technology officer. On 13 October 2026 Character.AI announced its bankruptcy protection filing, and Disney became the first bidder in the court process. Character.AI was founded in late 2021 by two former Google engineers, Noam Shazeer and Daniel De Freitas. On the platform, users chatted by text with characters they had created themselves or that others had created. In March 2023, with no revenue yet, it raised USD 150 million in a round led by Andreessen Horowitz and reached a USD 1 billion valuation; by October 2024 it had 20 million monthly active users. In August 2024 Google took a licence to the company's technology for around USD 2.7 billion, according to the Wall Street Journal; the founders and part of the research team returned to Google. The company shifted from training its own foundation model to focusing on growth, and has since had three different chief executives. Meanwhile legal pressure mounted: the lawsuit filed after the death of a 14-year-old and similar cases were settled in January 2026. In October 2025 the company shut down open-ended chat for users under 18. On 13 October 2026 it began Chapter 11 proceedings in the bankruptcy court in Delaware. According to the company, the platform is running, the sale process is under way, and if no buyer emerges the service will be shut down. The story shows that even a product that was the subject of a licensing deal worth around USD 2.7 billion in August 2024 can be put up for sale within two years under legal, regulatory and cost pressure. ## Lessons - For a product that builds emotional attachment, duty of care is part of the product; design protections for young and vulnerable users at launch, because adding them later costs you part of your audience. - If user-generated content rests on someone else's intellectual property, a piece of your product's core can disappear the moment the rights holder says "take it down"; when you assess your moat, note who can lock the gate. - Users are not revenue; in a product where every reply carries a model cost, measure revenue and cost per user from day one. - A licensing deal that takes out the founders and the core team can also take away the company's ability to carry the product; when weighing such an offer, price in what happens to the team left behind. ## Sources - [Just 5 years in, interactive chatbot platform Character.AI files for bankruptcy](https://techcrunch.com/2026/10/13/just-5-years-in-interactive-chatbot-platform-character-ai-files-for-bankruptcy/) - [Character.ai Initiates Voluntary Chapter 11 Proceeding to Facilitate Value-Maximizing Sale Process](https://www.businesswire.com/news/home/20261012656385/en/Character.ai-Initiates-Voluntary-Chapter-11-Proceeding-to-Facilitate-Value-Maximizing-Sale-Process) - [SI companion startup Character.ai files for Chapter 11 bankruptcy, citing costs and litigation](https://www.cnbc.com/2026/10/13/character-ai-chapter-11-disney-bid.html) - [Character.AI files for bankruptcy, will sell some assets to Disney for $20 million](https://www.nbcnews.com/tech/tech-news/characterai-files-bankruptcy-sell-assets-disney-20-million-rcna603174) - [Character.AI removes Disney characters from platform after studio issues warning](https://www.nbcnews.com/business/business-news/characterai-removes-disney-characters-from-platform-after-request-rcna234827) - [Character.AI is ending its chatbot experience for kids](https://techcrunch.com/2025/10/29/character-ai-is-killing-the-chatbot-experience-for-minors/) - [Google, Character.AI Agree to Settle US Lawsuit Over Teen's Suicide](https://decrypt.co/353927/google-character-ai-settle-us-lawsuit-teens-suicide) - [Character.ai](https://en.wikipedia.org/wiki/Character.ai) --- # ICRYPEX (2018 – 2026) - URL: https://girisimcikafasi.com/en/startup-graveyard/icrypex/ - Sector: Crypto and blockchain - Country: Turkey - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? ICRYPEX was a Turkish cryptocurrency trading platform founded in April 2018. It offered infrastructure built by its own engineers, separate interfaces for beginners and professionals, and round-the-clock support. It quickly gained visibility through sponsorships with sports clubs and fan tokens. ## Why did it shut down? In July 2025 the Istanbul Chief Public Prosecutor's Office seized the assets of the company and of Gökalp İçer, named as the company's owner, as part of an investigation based on a report by MASAK, Turkey's financial crimes investigation board. According to FintekWins, the report named ICRYPEX as one of the structures through which criminal proceeds were allegedly laundered. In August 2025 the Savings Deposit Insurance Fund (TMSF) was appointed as trustee, and restricted transactions reopened in September 2025. On 27 August 2026 the Capital Markets Board (SPK) ruled that the company should be liquidated, and a process for withdrawing customer assets began. The sources contain no final ruling on the allegations in the investigation. ## The story ICRYPEX was a cryptocurrency trading platform founded in April 2018. In a promotional article published on Webrazzi, the Turkish tech news site, in 2020, the platform highlighted technology developed by its own engineers, two separate interfaces for beginners and professionals, and round-the-clock support from customer representatives. 2021 was a year of rapid growth for the company. At the start of the year it became a sponsor of the Beşiktaş basketball team in exchange for 42 bitcoin. In April, Hedef Girişim took a 10 per cent stake and İdealist Danışmanlık a 20 per cent stake in the company; according to egirişim, ICRYPEX employed 129 people at the time and was the first exchange in Turkey to list the Avalanche network. In September, the pre-sale of a fan token issued with Altay Sports Club raised 23 million TL. When the crypto sector came under the licensing regime of the Capital Markets Board (SPK) in 2024, ICRYPEX was among the platforms that continued operating, and the company's trade name was changed in line with the new regulations. In July 2025, however, the picture changed. As reported by FintekWins, the Istanbul Chief Public Prosecutor's Office seized the assets of the company and of Gökalp İçer, named as the company's owner, as part of an investigation based on a report by MASAK, Turkey's financial crimes investigation board; the report named ICRYPEX as one of the structures through which criminal proceeds were allegedly laundered. In August 2025 the Savings Deposit Insurance Fund (TMSF) was appointed as trustee. Transactions, restricted for a time, reopened on 3 September 2025 after security reviews. The end came a year later. On 27 August 2026 the SPK ruled that the company should be liquidated, and ICRYPEX was moved onto the list of firms in liquidation. FintekWins noted that the SPK did not formally link this change to the earlier investigation. In the withdrawal process that began on 14 September 2026, it was announced that customers' crypto assets would be converted into Turkish lira and transferred only to bank accounts registered in their own names, with the timing of payments depending on the sufficiency of the company's assets. The sources contain no final ruling on the allegations in the investigation. ICRYPEX's story shows how quickly an exchange that gained visibility fast through sponsorships and token sales can come apart in the face of legal proceedings and a licensing regime. ## Lessons - Visibility gained through sponsorships and token sales does not make up for weak corporate governance and oversight. - Corporate governance and independent auditing are the most important shield protecting a company from its shareholders' legal troubles. - In a licensed sector, the loss of reputation comes before the loss of the licence. ## Sources - [A Revolution in Bitcoin Trading: Icrypex!](https://webrazzi.com/2020/05/21/bitcoin-alim-satiminda-devrim-icrypex/) - [Hedef Girişim and İdealist Danışmanlık take a 30 per cent stake in crypto platform Icrypex](https://egirisim.com/2021/04/30/hedef-girisim-ve-idealist-danismanlik-kripto-para-platformu-icrypexin-yuzde-30una-ortak-oldu/) - [23 million TL Altay Fan Token, produced by Altay Sports Club and ICRYPEX, sells out](https://egirisim.com/2021/09/16/altay-spor-kulubu-ve-icrypex-ortakliginda-uretilen-23-milyon-tllik-altay-fan-token-tukendi/) - [Asset Shock for ICRYPEX and Gökalp İçer: Investigation Deepens](https://www.fintekwins.com/crypex-ve-gokalp-icere-mal-varligi-soku-sorusturma-derinlesiyor/) - [Trading Reopens at Icrypex Türkiye](https://www.fintekwins.com/icrypex-turkiyede-islemler-yeniden-acildi/) - [SPK Updates Crypto List, Number of Platforms Falls to 43](https://www.fintekwins.com/spk-kripto-listesini-guncelledi-platform-sayisi-43e-indi/) - [Withdrawal Process for Customer Assets Begins at ICRYPEX](https://www.fintekwins.com/icrypexte-musteri-varliklarinin-cekim-sureci-basladi/) - [List of Firms in Liquidation](https://spk.gov.tr/kurumlar/kripto-varlik-hizmet-saglayicilar/tasfiye-surecinde-olanlar-listesi) --- # IO Interactive Türkiye (2023 – 2026) - URL: https://girisimcikafasi.com/en/startup-graveyard/io-interactive-turkiye/ - Sector: Gaming - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? In March 2023 IO Interactive opened its fourth studio, after Copenhagen, Malmö and Barcelona, in Istanbul's Maslak business district. The studio was to work on Project 007, Project Fantasy and Hitman, and was planned as the company's hub for the Middle East and Asia. The company had said it aimed to build a 150-strong team in Turkey. ## Why did it shut down? On 7 July 2026 IO Interactive announced that the external funding partnership for Project Fantasy had ended and that it had taken back all rights to the project. According to the Turkish daily Cumhuriyet, the partnership had been with Microsoft's Xbox division. The company said it would continue developing the project with its own resources and therefore needed to find a new balance for its long-term future. The Istanbul studio was the first casualty of that rebalancing, and many employees lost their jobs. The cost of sustaining big-budget games without outside funding left no time for a newly opened studio to mature. ## The story In March 2023 IO Interactive arrived with exciting news for Turkey's games industry. The Danish studio behind the Hitman series was opening its fourth studio, after Copenhagen, Malmö and Barcelona, in Istanbul's Maslak district. According to the press release reported by the Turkish gaming site Oyungezer, IOI Istanbul would be the company's hub for the Middle East and Asia and take on important roles on Project 007, Project Fantasy and Hitman. The company aimed to build a 150-strong team in Turkey; at the time it had close to 300 employees across its three locations. The studio was led by senior producer Sam Doğantimur. IO Interactive CEO Hakan B. Abrak said he believed the Turkish office would take the company forward in both AAA and mobile. With this move, Istanbul seemed to have taken an important step towards becoming a centre for big-budget console and PC game development. Three years later the picture was reversed. On 7 July 2026 IO Interactive announced that the external funding partnership it had set up for its role-playing game Project Fantasy had ended. According to Cumhuriyet, the backing had come from Microsoft's Xbox division, and the company decided to take back all rights to the game and carry on independently. Sustaining big-budget projects with its own resources, however, meant the company had to rebalance its costs. In a statement on X, the company said the Istanbul studio was being closed as part of this rebalancing. According to the Turkish tech site LOG, the decision meant many employees losing their jobs. IO Interactive said it would try to support the staff who had lost their jobs. IOI Istanbul's short life shows how the squeeze in the global games industry has reached Turkey. As major publishers withdraw their backing, newly opened satellite studios are the first thing a parent company cuts. The dream of building AAA development capability in Turkey has, for now, been put on hold. ## Lessons - A growth plan that depends on external funding for a single project is the first thing to be cut when that funding is withdrawn. - A newly opened office is the easiest unit for a parent company to sacrifice in a crisis; it needs to prove its worth quickly. - When hiring at AAA scale, tell your team plainly how many years of funding are guaranteed. ## Sources - [IO Interactive is closing the Istanbul studio it opened in 2023](https://www.log.com.tr/io-interactive-2023te-actigi-istanbul-studyosunu-kapatiyor) - [IO Interactive announces it has closed its Istanbul studio](https://www.cumhuriyet.com.tr/bilim-teknoloji/io-interactive-istanbul-daki-studyosunu-kapattigini-duyurdu-2518886) - [IO Interactive Opens Its Istanbul Studio!](https://oyungezer.com.tr/haber/io-interactive-istanbul-studyosunu-acti/detay) --- # Quandoo Türkiye (2013 – 2026) - URL: https://girisimcikafasi.com/en/startup-graveyard/quandoo-turkiye/ - Sector: Food and drink - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Quandoo was an online restaurant booking platform founded in Berlin in 2012, which entered Turkey in mid-2013. Users booked tables through the website and app, while restaurants were offered software for managing bookings and capacity. In Turkey it listed restaurants mainly in Istanbul, and in 2015 it enabled bookings through Foursquare. ## Why did it shut down? Quandoo suffered its first jolt in Turkey in 2016; Webrazzi, the Turkish tech news site, reported that the company had let go of its remaining employees in Turkey, while the company said it was not leaving the market and would continue the operation with a limited team from Germany. According to Webrazzi, the biggest challenge in Turkey and Italy was getting restaurants and users used to booking online. On 24 March 2026 the company announced that it would end all its operations, a business decision taken, as reported by The Straits Times, after a strategic portfolio review. The last day for new bookings was set as 30 September 2026, with consumer services due to end on 1 October 2026. The decision covers every country in which Quandoo operates, including Turkey. ## The story Quandoo arrived in Turkey with a familiar team. According to a January 2014 report by Webrazzi, the Turkish tech news site, its founders, Philipp Magin, Ronny Lange and Daniel P. Glasner, were the people behind CityDeal, the parent company of Şehir Fırsatı, which had been sold to Groupon. Founded in Berlin in 2012, the online restaurant booking platform entered Turkey in mid-2013; in January 2014 it aimed to grow there on the back of an $8 million Series B from DN Capital and Holtzbrinck Ventures. What set it apart from its rivals was offering restaurants software integrated with till and capacity management. Growth was fast. In 2015 Japan's Recruit Holdings bought Quandoo for 198.6 million euros. In March 2016 the company said it had reached 13,500 restaurants in seven countries, Turkey among them; the number of restaurants in Turkey and Italy was 5,400. Through a partnership struck in December 2015, Foursquare users could also book tables with Quandoo from within the app. According to Webrazzi, the biggest challenge in these markets was getting restaurants and users used to booking online. In August 2016 Webrazzi reported that Quandoo had let go of its remaining employees in Turkey and was pulling out of the market. The company denied the report: the Turkish operation would continue with a number of employees determined by the headquarters in Germany. And the platform did indeed carry on listing restaurants in Istanbul. The final decision came a decade later. On 24 March 2026 Quandoo announced that it would wind down its operations in a planned and orderly way. According to The Straits Times, the company described this as a business decision taken after a strategic portfolio review. According to the announcement on the Turkish site, the last day for new bookings is 30 September 2026; from 1 October all consumer services end, and the site closes completely by the end of the year. Quandoo's Turkish adventure showed once again how tough the online restaurant booking space, where TheFork and Zomato also struggled, is for foreign players. ## Lessons - In a market where the user habit has not yet formed, calculate the cost of creating demand from the outset. - A market managed remotely is among the first to be sacrificed when the parent company's priorities shift. - The future of an acquired start-up depends on its new owner's portfolio strategy. ## Sources - [Important Update About Quandoo Services](https://www.quandoo.com.tr/important-update) - [Restaurant booking platform Quandoo to end services on Sept 30, cease operations by Dec 31](https://www.straitstimes.com/singapore/restaurant-booking-platform-quandoo-to-cease-operations-on-sept-30) - [Quandoo to shut restaurant booking platform by end of 2026](https://www.verdictfoodservice.com/news/quandoo-to-shut-restaurant-booking-platform-by-end-of-2026/) - [Online booking service Quandoo aims to grow in the Turkish market with fresh investment](https://webrazzi.com/2014/01/13/quandoo-turkiye-pazari-buyumek-istiyor/) - [Quandoo pulls out of Turkey [Updated]](https://webrazzi.com/2016/08/02/quandoo-turkiyeden-cekiliyor/) - [Quandoo bids for leadership with 13,500 restaurants in 7 countries including Turkey](https://webrazzi.com/2016/03/04/quandoo-turkiye-dahil-7-ulkede-13-bin-500-restoranla-liderlige-oynuyor/) - [Recruit Holdings acquires online booking service Quandoo for 198.6 million euros](https://webrazzi.com/2015/03/05/recruit-holdings-online-rezervasyon-servisi-quandooyu-1986-milyon-euroya-satin-aldi/) --- # Vepara (? – 2026) - URL: https://girisimcikafasi.com/en/startup-graveyard/vepara/ - Sector: Fintech - Country: Turkey - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Vepara was a Turkish electronic money and payment institution that aimed to bring virtual POS, money transfer, digital wallet and prepaid card services together on a single platform. It received a licence from the Central Bank of the Republic of Turkey in August 2022 and began operating in 2023. Its target customers were businesses taking card payments online, influencers selling through social media and companies looking for payment infrastructure. ## Why did it shut down? In 2025 investigations into illegal betting and the laundering of criminal proceeds intensified in the payments sector. On 28 October 2025 the Central Bank temporarily suspended Vepara's permits for certain payment services and for issuing electronic money. In December 2025, in an investigation into the company over alleged laundering of criminal proceeds, detention orders were issued for 31 people across six provinces. In February 2026 Vepara's operating licence was revoked by a decision published in the Official Gazette. The sources contain no final ruling on the allegations in the investigation. ## The story Vepara was an electronic money and payment institution that aimed to bring virtual POS, money transfer, digital wallet and prepaid card services together on a single platform. According to a September 2022 report by Webrazzi, the Turkish tech news site, the company's founder and partner was Nedim Vural. The same report said that Hedef Holding had bought 35 per cent of the company for 18.5 million lira, and its subsidiary Hedef Girişim 25 per cent for 12 million lira. The target customers were websites taking card payments, influencers selling through social media and companies looking for payment infrastructure. According to egirişim, Vepara received a licence from the Central Bank in August 2022 and began operating in 2023. CEO Volkan Üstün said that merchants could benefit from competitive commission rates regardless of their transaction volume, and that payments would reach their accounts the next day. Over the following two years the company announced a taxi project using Android POS, a digital wallet and various card-focused partnerships. In 2025 investigations into illegal betting and the laundering of criminal proceeds intensified in the payments sector. On 28 October 2025 the Central Bank temporarily suspended Vepara's permits for certain payment services and for issuing electronic money; according to Fintech Dünyası, this decision brought the number of electronic money institutions with suspended permits to nine. On 26 December 2025 Diken reported that, in an investigation into Vepara over alleged laundering of criminal proceeds, detention orders had been issued for 31 people across six provinces. In February 2026 Vepara's operating licence was revoked, along with those of three other payment institutions, by a decision published in the Official Gazette. The sources contain no final ruling on the allegations in the investigation. Vepara's story is that of a payment start-up which obtained a licence and tried to diversify its products quickly, only to lose that licence in the middle of a sector-wide wave of regulatory scrutiny. In payment services, which customers you serve and how you monitor the flow of money prove just as decisive as product speed and commission advantages. ## Lessons - In payments, fast growth has to keep pace with your capacity to know your customers and monitor the flow of money. - A licence is not a document you obtain once; it is a trust you have to earn again every day. - When a wave of regulatory scrutiny begins in your sector, the investment you have made in your compliance team is your company's survival insurance. ## Sources - [Vepara receives investment from Hedef Holding and Hedef Girişim](https://webrazzi.com/2022/09/26/vepara-hedef-holding-ve-hedef-girisim-den-yatirim-aldi/) - [Electronic money company Vepara announces its virtual POS solution](https://egirisim.com/2023/03/07/elektronik-para-sirketi-vepara-sanal-pos-cozumunu-duyurdu/) - [Pavo and Vepara launch a taxi project using a next-generation Android POS product and innovative applications](https://egirisim.com/2024/05/23/pavo-ile-vepara-yeni-nesil-android-pos-urunu-ve-inovatif-uygulamalarini-kullanarak-taksi-projesini-hayata-gecirdi/) - [TCMB temporarily suspends some activities of Sipay, Vepara and Fzypay](https://www.fintechdunyasi.com/tcmbden-sipay-vepara-ve-fzypayin-bazi-faaliyetlerine-gecici-durdurma-karari/22960/) - [Operation against Vepara: detention orders for 31 people](https://www.diken.com.tr/veparaya-operasyon-31-kisi-hakkinda-gozalti-karari/) - [Operating licences of four payment institutions revoked](https://www.diken.com.tr/dort-odeme-kurulusunun-faaliyet-izni-iptal/) --- # Bitay (2018 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/bitay/ - Sector: Crypto and blockchain - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Bitay was a Turkish cryptocurrency exchange founded in 2018 as an R&D project at Yıldız Technical University's Teknopark in Istanbul. The platform, which built its own infrastructure, offered products such as identity verification via e-Devlet (Turkey's e-government portal), a token called BTY, the BitayPay payment system and the Bitay Visa card. ## Why did it shut down? According to a Sözcü report from September 2024, withdrawal requests some users made in April and May went unresolved for months. In July the company said infrastructure work was under way and that payments would be made after August, but by the end of September the payments had still not been made. According to experts quoted in the report, when the company failed to get the returns it expected from its investments, it could not meet a wave of withdrawal requests and fell into a liquidity crisis. In the list updated in December 2025 by the SPK, Turkey's Capital Markets Board, Bitay Teknoloji appeared among the firms in liquidation. The sources contain no definitive information on what became of the claims of users who could not withdraw. ## The story Bitay was a Turkish cryptocurrency exchange founded in 2018 as an R&D project at Yıldız Technical University's Teknopark. According to Fintech Dünyası, the platform had built its infrastructure itself without using third-party software and said it was the first Turkish exchange to verify customer identity through e-Devlet, Turkey's e-government portal. In June 2021 the company announced that it had received approval to operate from the US and the European Union. According to statements at the time by its executive Niyazi Yılmaz, the exchange had more than 670,000 identity-verified users and an average of 50,000 active traders a day. The same year the company put its own token, BTY, on sale and announced products such as the BitayPay payment system and the Bitay Visa card. In 2024, however, user complaints came to the fore. According to a Sözcü report from September 2024, withdrawal requests some users made in April and May went unresolved for months. In July the company said infrastructure work was under way, that it would be finished in August and that payments would follow; but by the end of September the payments had still not been made. According to experts quoted in the report, when the company failed to get the returns it expected from its investments, it was unable to meet a wave of withdrawal requests and fell into a liquidity crisis. The same experts also stressed that a significant share of users had been drawn to the platform with small welcome bonuses. Users who could not withdraw compared their experience to the Thodex case of 2021. According to internet archive records, Bitay Teknoloji did not appear on the SPK's July 2025 list of crypto asset service providers in liquidation; in the list updated in December 2025, however, it did. The company was still on this list as of September 2026. The sources contain no definitive information on what became of the claims of users who could not withdraw. Bitay became one example of how quickly a venture that gave the appearance of a major exchange, with announcements of international approval and its own token, can unravel when it fails to protect user assets. ## Lessons - If you do not keep user assets separate and withdrawable at any moment, the first wave of mass withdrawals will put you in trouble. - Announcements of international licences build trust, but real trust is built by paying withdrawal requests on time. - Gathering users with a welcome bonus is easy; protecting those users is the real job. ## Sources - [What is Bitay, and is it reliable? Who owns Bitay, and what is its commission?](https://www.fintechdunyasi.com/bitay-nedir-guvenilir-mi-bitay-kimin-komisyon-yuzde-kac/7432/) - [Turkish crypto exchange Bitay wins EU approval after US approval](https://www.fintechdunyasi.com/turk-kripto-borsasi-bitaya-abdden-sonra-abden-de-onay-geldi/2149/) - [Crypto frenzy and Bitay: no one hears the cries of hundreds of victims!](https://www.sozcu.com.tr/kripto-cilginligi-ve-bitay-yuzlerce-magdurun-cigligini-duyan-yok-p86650) - [List of firms in liquidation (12 December 2025, archive capture)](http://web.archive.org/web/20251218193638/https://spk.gov.tr/kurumlar/kripto-varlik-hizmet-saglayicilar/tasfiye-surecinde-olanlar-listesi) - [List of firms in liquidation](https://spk.gov.tr/kurumlar/kripto-varlik-hizmet-saglayicilar/tasfiye-surecinde-olanlar-listesi) --- # BitTurk (2017 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/bitturk/ - Sector: Crypto and blockchain - Country: Turkey - Total funding: $2 million - Cause of closure: Regulation and legal issues ## What did it do? BitTurk was a Turkish start-up founded in 2017 that described itself as both a cryptocurrency exchange and a fintech company with blockchain-based core software. Under the FinDev brand it also developed algorithmic trading software and decentralised finance projects. ## Why did it shut down? In July 2024 crypto asset service providers were brought under the licensing and supervision of the SPK, Turkey's Capital Markets Board. The company did not appear on the first list of liquidation declarations announced by the SPK in November 2024, but according to records in the Internet Archive it appeared on the list of institutions in liquidation dated July 2025. The SPK publishes this list for institutions that will not continue as crypto asset service providers. No public statement on the company's reasons for closing could be found. It is reasonable to think that the capital and compliance requirements of the new regime influenced the decision; this is an interpretation. ## The story BitTurk was a start-up founded in 2017 that described itself as both a cryptocurrency exchange and a fintech company with blockchain-based core software. According to December 2021 reports by egirişim and Webrazzi, the company was known as one of the first exchanges in Turkey to list certain altcoins such as Ripple and Shiba. Under the FinDev brand it also developed high-frequency and algorithmic trading software and decentralised finance projects. On 14 December 2021 Başarsoft bought a 10 per cent stake in BitTurk for USD 2 million. The deal valued the company at USD 20 million; part of the investment was transferred as equity and part as working capital. BitTurk chairman Mehmet Emin Budak said the company offered corporate clients blockchain solutions that went beyond crypto exchange services. The investment came at a time when interest in cryptocurrency was at its peak. In July 2024 crypto asset service providers were brought under the licensing and supervision of the SPK, Turkey's Capital Markets Board. The company's name had been changed to Bıtturk Kripto Varlık Alım Satım Platformu AŞ, as the new regulation required. However, while it did not appear on the first list of liquidation declarations announced by the SPK in November 2024, according to records in the Internet Archive the company appeared on the list of institutions in liquidation dated July 2025. The SPK publishes this list to inform the public about institutions that will not continue operating as crypto asset service providers. The company was still on the list as of September 2026. No public statement on BitTurk's reasons for closing could be found. Even so, the picture suggests that even an exchange that raised investment at a USD 20 million valuation can withdraw from the market in the face of the capital and compliance requirements of a licensing regime; this final assessment is an interpretation. ## Lessons - Raising investment at a high valuation does not mean you will survive when the regulatory environment changes. - If you run several business lines, cost the line that requires a licence separately. - Making a public statement when you withdraw from a market protects user trust and your reputation. ## Sources - [Başarsoft buys a 10 per cent stake in crypto exchange BitTurk with a USD 2 million investment](https://egirisim.com/2021/12/14/basarsoft-2-milyon-dolarlik-yatirimla-kripto-para-borsasi-bitturkun-yuzde-10-hissesini-aldi/) - [Başarsoft invests USD 2 million in crypto exchange BitTurk](https://webrazzi.com/2021/12/14/basarsoft-kripto-para-borsasi-bitturk-e-2-milyon-dolar-yatirim-yapti/) - [List of Institutions in Liquidation (18 July 2025, archived copy)](http://web.archive.org/web/20250718095522/https://spk.gov.tr/kurumlar/kripto-varlik-hizmet-saglayicilar/tasfiye-surecinde-olanlar-listesi) - [Crypto asset providers that filed liquidation declarations with the SPK](https://webrazzi.com/2024/12/03/spk-ya-tasfiye-beyaninda-bulunan-kripto-varlik-saglayicilari/) - [List of Institutions in Liquidation](https://spk.gov.tr/kurumlar/kripto-varlik-hizmet-saglayicilar/tasfiye-surecinde-olanlar-listesi) --- # BluSmart (2019 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/blusmart/ - Sector: Mobility and transport - Country: India - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? BluSmart was a Gurugram-based ride-hailing company operating a fleet made up entirely of electric vehicles, and it was promoted as India's first all-electric shared mobility platform. Customers booked rides through its Android or iOS app. The company competed with Uber, Ola and Rapido in the Delhi capital region, Bengaluru, Mumbai and Dubai. ## Why did it shut down? BluSmart did not buy its cars; it leased them, and one of its lessors was Gensol Engineering, a listed company run by the founders. According to SEBI's interim order of 15 April 2025, of the 977 crore rupees Gensol borrowed between 2021 and 2024 for 6,400 electric vehicles to be leased mainly to BluSmart, only 567 crore rupees went on buying 4,704 vehicles; at least 400 crore rupees were either unaccounted for or withdrawn by the founders. SEBI barred Anmol and Puneet Singh Jaggi from holding management roles at Gensol and from accessing the capital markets. The order came a few weeks after BluSmart had defaulted on bond payments and staff had been told salaries could not be paid. On 17 April 2025 the company suspended all ride bookings. ## The story On 15 April 2025, India's market regulator, the Securities and Exchange Board of India (SEBI), issued an interim order against Anmol Singh Jaggi and Puneet Singh Jaggi, the founders of the listed Gensol Engineering. Two days later BluSmart, the electric taxi company the same brothers had founded, suspended all ride bookings. Promoted as India's first all-electric shared mobility platform, the company had effectively ceased to exist within a matter of days. BluSmart was founded on 14 January 2019 by Anmol Singh Jaggi, Puneet Singh Jaggi and Punit K Goyal. That same month a partnership with Mahindra brought the first electric vehicles onto the platform. In September 2019 it raised a USD 3 million angel round led by JITO Angel Network and the investment office of the actor Deepika Padukone. In 2021 it partnered with Jio-bp on charging infrastructure, and in 2022 it signed a memorandum of understanding with Tata Motors for 10,000 electric vehicles. In July 2024 another round followed: USD 24 million, with participation from responsAbility Investments, the family office of the cricket star MS Dhoni and Sumant Sinha, founder of ReNew. BluSmart did not buy its own cars; it leased them. One of the lessors was Gensol, run by the founders. According to SEBI's interim order, between 2021 and 2024 Gensol borrowed 977 crore rupees from IREDA and Power Finance for 6,400 electric vehicles to be leased mainly to BluSmart, yet only 567 crore rupees of that went on buying 4,704 vehicles. SEBI said that at least 400 crore rupees were either unaccounted for or withdrawn by the founders, and noted that the money had funded personal spending such as the purchase of a luxury flat. SEBI barred the Jaggi brothers from holding management roles at Gensol and from accessing the capital markets. These findings rested on an interim order and did not amount to a final judicial ruling. The order did not come out of nowhere. A few weeks earlier BluSmart had defaulted on bond payments, and Anmol Singh Jaggi had emailed staff to say salaries could not be paid because of financial constraints. On 17 April rides stopped, and customers were given 90 days to reclaim their wallet balances. The BluSmart case shows that even an ambitious climate mission cannot paper over opaque flows of money between related companies. ## Lessons - If companies under the founders' control lease to and borrow from one another, open those arrangements to independent audit; related-party transactions are where trust breaks most easily. - In a vehicle- or equipment-heavy model, report to investors, asset by asset, what every loan has been turned into. - Late salaries and bond defaults are warning signs that arrive before regulatory scrutiny; at that point, strengthen management with an independent team. ## Sources - [BluSmart](https://en.wikipedia.org/wiki/BluSmart) - [India's BluSmart, rival of Uber, suspends operations after co-founder probed](https://www.reuters.com/business/autos-transportation/indias-blusmart-rival-uber-suspends-operations-after-co-founder-probed-2025-04-17/) - [Gensol and BluSmart promoter Anmol Singh Jaggi diverted EV loans to purchase a DLF Camellias flat: SEBI](https://www.moneycontrol.com/news/business/gensol-and-blusmart-promoter-anmol-singh-jaggi-used-loans-for-buying-evs-to-purchase-a-dlf-camellias-flat-12995674.html) - [EV ride-hailing company BluSmart raises $24 million in funding](https://economictimes.indiatimes.com/tech/funding/ride-hailing-company-blusmart-raises-24-million-in-funding/articleshow/111749656.cms) --- # Builder.ai (2016 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/builder-ai/ - Sector: Super intelligence - Country: United Kingdom - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Builder.ai (formerly Engineer.ai) was a London-based software company that claimed to speed up mobile app and website development dramatically using SI. It marketed itself as a platform that made getting an app built as easy as ordering a pizza. For years, however, it faced questions over claims that much of the work was done not by SI but by outsourced human developers. ## Why did it shut down? In 2019 The Wall Street Journal reported that the company relied on human engineers rather than SI for most of its coding work, and that suspicion followed it for years. In mid-2024 its revenue forecast for the second half of the year was cut by 25 per cent; in 2025 auditors were brought in to verify its financial statements from 2023 onwards. In May 2025 Bloomberg alleged that the company had inflated its 2021-2024 revenue through round-tripping with the Indian company VerSe; VerSe denied the claims. When lenders seized $50 million they had lent in October 2024, the company ran out of cash and insolvency proceedings began in May 2025. By June, 80 per cent of the workforce, around 1,000 people, had been laid off. ## The story On 20 May 2025 Builder.ai's new CEO, Manpreet Ratia, held an internal meeting with staff and delivered the bad news: the company had run out of money and insolvency proceedings were about to begin. For an SI start-up backed by investors such as Microsoft, SoftBank and the Qatar Investment Authority, and once valued at more than $1 billion, it was a collapse that played out within a few months. Sachin Dev Duggal founded the company in 2016 as Engineer.ai, after leaving a previous venture. The promise was bold: thanks to SI, getting an app or website built would be as easy as ordering a pizza. A $29.5 million Series A arrived in 2018. Doubts surfaced early too. Robert Holdheim, who had been brought in to run the company at the end of 2018, sued in February 2019, alleging that he had been wrongly dismissed for raising concerns and describing the company as 'window dressing'. In August 2019 The Wall Street Journal reported that most of the coding work was being done by human engineers rather than SI. The controversy did not keep investors away. In 2023 a $230 million round came in with participation from Microsoft, Insight Partners, SoftBank and the Qatar Investment Authority; Microsoft planned to integrate Builder.ai's technology with Azure. The same year Fast Company named it the third most innovative company in SI. The break came through the numbers. In mid-2024 the revenue forecast for the second half of the year was cut by 25 per cent. In 2025 auditors were appointed to verify the financial statements from 2023 onwards; in February Duggal stepped down as CEO but stayed on the board. In May Bloomberg alleged that the company had inflated its 2021-2024 revenue through round-tripping with the Indian company VerSe; VerSe denied the claims and Builder.ai declined to comment. That same month lenders seized the $50 million loan they had extended in October 2024, and the company entered insolvency proceedings. By June around 1,000 people, or 80 per cent of the staff, had lost their jobs. Builder.ai shows the price of failing to be open about how much of a product was really SI at the height of the SI boom, and of losing trust in your revenue figures. The hype brought in the investment, but without verifiable numbers there was no holding on to it. ## Lessons - Keep the SI label in line with how much of the work your product actually does; marketing a service that runs on human labour as automation will be found out sooner or later. - Do not use revenue figures in investor presentations before they have been independently audited; every number you are forced to withdraw cuts off funding. - Know the collateral and early-repayment clauses in your loan agreements inside out; a single forecast revision can see your cash seized overnight. ## Sources - [Builder.ai](https://en.wikipedia.org/wiki/Builder.ai) - [Once worth over $1B, Microsoft-backed Builder.ai is running out of money](https://techcrunch.com/2025/05/20/once-worth-over-1b-microsoft-backed-builder-ai-is-running-out-of-money/) - [Microsoft-backed Builder.ai collapsed after finding potentially bogus sales](https://www.ft.com/content/926f4969-fda7-4e78-b106-4888c8704bda) - [AI Startup Boom Raises Questions of Exaggerated Tech Savvy](https://www.wsj.com/articles/ai-startup-boom-raises-questions-of-exaggerated-tech-savvy-11565775004) --- # Canoo (2017 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/canoo/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Canoo was a California-based car company, founded in 2017 as Evelozcity, that developed electric vans and delivery vehicles for commercial fleets. It first planned to offer its vehicles only by subscription, then switched to selling commercial vehicles. In December 2020 it began trading on NASDAQ through a SPAC merger. ## Why did it shut down? Canoo quickly became a company that lost its co-founders and senior executives and kept changing its business model; in April 2021 the SEC opened an investigation over these developments and shareholder lawsuits. Although orders for thousands of vehicles were announced from Walmart, Zeeba and Kingbee, fewer than 12 vehicles had been delivered across all of them as of October 2024. In 2023 it delivered 22 vehicles and earned just $886,000 in net revenue. In December 2024 it halted its Oklahoma factory, put 82 employees on unpaid leave and went looking for emergency funding. When none came, it filed for Chapter 7 on 17 January 2025 and ceased operations immediately. ## The story In July 2022 Walmart signed a definitive agreement to buy 4,500 electric delivery vehicles from Canoo, with an option for up to 10,000. A few months later Zeeba, a fleet leasing company, ordered 5,450 vehicles and Kingbee ordered 9,300. On paper, there was demand for tens of thousands of vehicles. By October 2024, fewer than 12 vehicles had been delivered across all of those orders. Canoo was founded in 2017 as Evelozcity by Stefan Krause and Ulrich Kranz; its main backing came from the Chinese investor Li Pak-tam and the German entrepreneur David Stern. The company planned to offer its pod-shaped electric van by subscription only. In September 2020 it announced a SPAC merger with Hennessy Capital Acquisition Corp. IV; the deal assumed a valuation of $2.4 billion and closed in December 2020. The instability started early. Co-founder Krause left in July 2020; in April 2021 Kranz stepped down as CEO and was replaced by the chairman, Tony Aquila. That same month the SEC opened an investigation over the senior departures, abrupt changes to the business model and shareholder lawsuits. The company switched from subscriptions to selling commercial vehicles, announced it would move its headquarters to Arkansas, then turned to Texas, and planned two separate manufacturing sites in Oklahoma. NASA chose Canoo to carry astronauts to the launch pad for the Artemis programme and took delivery of three vehicles before the bankruptcy. In May 2022, however, the company disclosed that it had only enough cash left for one quarter. In 2023 it delivered 22 vehicles and earned $886,000 in net revenue; according to its annual report, payments to CEO Aquila's company for private jet use and shared services came to almost four times that revenue. In December 2024 the Oklahoma factory was halted and 82 employees were put on unpaid leave. On 17 January 2025 Canoo filed for Chapter 7 liquidation in Delaware and ceased operations immediately. At the time of filing its assets were below $50,000. In March 2025 it was reported that CEO Aquila had offered to buy almost all of the company's assets for $4 million in cash. Canoo's story shows that a perception of growth built on order announcements cannot keep alive a company that cannot get vehicles out of its factory. ## Lessons - Letters of intent and cancellable order announcements are no substitute for production capacity; report the number of vehicles delivered to your investors. - Switching the business model from subscription to sales, then to fleets, erodes the trust of both the team and investors; do not move to a new model before gathering evidence for the current one. - Changing headquarters and factory locations one after another spreads capital thin; focus on proving mass production at a single manufacturing base. ## Sources - [Canoo](https://en.wikipedia.org/wiki/Canoo) - [EV startup Canoo files for bankruptcy, to cease operations](https://www.reuters.com/business/ev-startup-canoo-files-bankruptcy-cease-operations-2025-01-18/) - [Canoo's CEO is buying the bankrupt EV startup's assets](https://techcrunch.com/2025/03/05/canoos-ceo-is-buying-the-bankrupt-ev-startups-assets/) - [https://www.wikidata.org/wiki/Q99482082](https://www.wikidata.org/wiki/Q99482082) --- # Dunzo (2014 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/dunzo/ - Sector: Logistics and delivery - Country: India - Total funding: $450 million - Cause of closure: Business model failed ## What did it do? Dunzo was a Bengaluru-based quick delivery company that brought fruit and vegetables, meat, pet supplies, food and medicines to customers' doors in eight Indian cities, including Bengaluru, Delhi, Mumbai and Hyderabad. It also offered intra-city pick-up and drop-off, and ran a motorbike taxi service in Gurgaon. In 2021 it moved into quick commerce with Dunzo Daily, promising to deliver essentials in 19 minutes. ## Why did it shut down? As Dunzo pushed into quick commerce, its losses dwarfed its revenue; according to Moneycontrol, in the 2023 financial year it lost 1,800 crore rupees on revenue of 226 crore rupees. Financial strain and competition forced it to scale back operations and lay off large numbers of staff in 2023 and 2024. Co-founders Dalvir Suri and Mukund Jha left in October 2023. In January 2025, after founder Kabeer Biswas moved to Flipkart, the app and website were shut down. Its largest shareholder, Reliance, reportedly wrote off its $200 million investment. ## The story Dunzo's story began in a WhatsApp group. Founded by Kabeer Biswas in Bengaluru in July 2014, the venture started as a messaging group people turned to for small errands around the city and gradually became an app for local deliveries. Biswas had sold his previous start-up, Hoppr, to Hike Messenger that same year. Ankur Agarwal, Dalvir Suri and Mukund Jha were also on the team as co-founders. The first investment, $650,000, came in March 2016 in a round led by Blume Ventures and Aspada. In December 2017 Google invested $12 million; it was Google's first direct investment in an Indian start-up. Over time Dunzo came to deliver across many categories, from fruit and vegetables to medicines and from pet supplies to food, in eight major cities. In June 2019 it suffered a data breach affecting the data of around 3.5 million users. During the 2020 lockdown it formed partnerships with PepsiCo and Google Pay. In August 2021 it entered quick commerce with Dunzo Daily, promising to deliver essentials in 19 minutes. In January 2022 came a $240 million round led by Reliance Retail; Reliance alone took a 25.8 per cent stake for $200 million. The company's total funding passed $450 million. The promise of speed was expensive. According to Moneycontrol, Dunzo lost 1,800 crore rupees in the 2023 financial year on revenue of 226 crore rupees. Amid financial strain and competition, the company scaled back operations and laid off large numbers of staff in 2023 and 2024. Co-founders Suri and Jha left the company in October 2023. In January 2025, after Kabeer Biswas moved to Flipkart, Dunzo's app and website were shut down. Its largest shareholder, Reliance, reportedly wrote off its $200 million investment because the company had failed to scale. Dunzo shows that being first with an idea is not enough to win the market. The company that popularised errand delivery in India ran out of cash in the capital-intensive race of quick commerce before it could fix its unit economics. ## Lessons - In quick delivery, do not open new cities before proving per-order profitability in one; losses grow with order volume. - A large strategic investor brings capital but does not guarantee the next round; do not build your cash plan on a single shareholder's support. - If your rivals have deeper pockets than you, pick a narrow niche you can defend instead of joining the same race on speed and discounts. ## Sources - [Dunzo](https://en.wikipedia.org/wiki/Dunzo) - [Reliance Retail picks up 25.8% stake in Dunzo, leads $240 mn funding](https://economictimes.indiatimes.com/tech/startups/reliance-retail-picks-up-25-8-stake-in-dunzo-leads-240-million-funding/articleshow/88733921.cms) - [Dunzo's loss mounts to Rs 1,800 crore, revenue at Rs 226 crore in FY23](https://www.moneycontrol.com/news/business/dunzos-loss-mount-to-rs-1800-crore-revenue-at-rs-226-crore-in-fy23-11674901.html) --- # Gazete Duvar (2016 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/gazete-duvar/ - Sector: Media and entertainment - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Gazete Duvar was a Turkish online newspaper that began publishing in August 2016. It ran news and columns across a wide range of subjects, from current affairs and the economy to culture and sport. In 2019 it also began publishing in English as Duvar English, and it was the first newsroom for many young journalists. ## Why did it shut down? According to the farewell piece by editor-in-chief Barış Avşar, the direct cause of the closure was changes to Google's algorithm from the previous year onwards. As Avşar told Medyascope, Google advertising revenue had become one of the most important items in the paper's budget, and the impact of the algorithm change was felt in the autumn of 2024. The piece also cited rising costs, an inflationary economy and the cost of living as factors that hastened the decision. Because Gazete Duvar's revenue depended on search traffic, a change in a platform's rules turned into an existential threat. The paper ceased publication on 12 March 2025. ## The story Gazete Duvar began publishing in August 2016, immediately after the coup attempt of 15 July. Its owner was Vedat Zencir, one of Turkey's first conscientious objectors. The paper soon became an independent online publication covering a broad agenda, from the dismissal from their universities of the Academics for Peace to elections, and from the Kurdish question to foreign policy. In 2019 it began publishing in English as Duvar English, under Cansu Çamlıbel. Over nine years the paper also served as a school where many young reporters took their first steps in the profession. Its staff signed a collective agreement with the Journalists' Union of Turkey, and its reporters won various journalism awards. At the same time, throughout its life it also had to contend with access bans and their legal costs. The end, however, came from an unexpected quarter. On 12 March 2025 the farewell piece written by editor-in-chief Barış Avşar said plainly that new practices in Google's algorithm lay behind the decision to close. According to Avşar, from the previous year onwards these changes had in effect sabotaged online media, making it harder for news sites to reach readers. A few months earlier, in an article discussing the same issue, the paper had asked whether we would still be able to get our news from the internet; according to the farewell piece, for Gazete Duvar the answer turned out to be no. As NTV reported, the revenue losses caused by the algorithm changes, together with rising costs, stood out as the main reasons in the statements. An inflationary economy and the cost of living added to the burden on a publication already struggling to stay afloat on shrinking revenue. Gazete Duvar's story shows how invisible a dependency digital publishing is built on. However hard the team producing the content worked, the key to the road to readers was in another company's hands. When that key changed, a publication with nine years behind it said goodbye to its readers in a single article. ## Lessons - If most of your traffic comes from a single platform, that platform's algorithm is your business model. - Ad-funded digital publishing is fragile without a direct relationship with readers (subscriptions, newsletters, donations). - In a period of high inflation, track the gap between costs and revenue monthly, not annually. ## Sources - [A farewell statement! Why did Gazete Duvar close, and who owns it?](https://www.ntv.com.tr/turkiye/yayin-hayatini-noktaliyor-gazete-duvar-kimin-neden-kapatildi,H1RpKApHd0Sd8sstZUp0jQ) - [Time to say goodbye for Gazete Duvar...](https://www.gazeteduvar.com.tr/gazete-duvar-icin-veda-vakti-makale-1763423) - [Gazete Duvar owner Vedat Zencir and editor-in-chief Barış Avşar: new practices in Google's algorithm have ended our publishing life](https://t24.com.tr/gundem/gazate-duvar-sahibi-zencir-ve-genel-yayin-yonetmeni-avsar-okuyucularina-veda-etti-hoscakalin,1225313) - [Gazete Duvar](https://tr.wikipedia.org/wiki/Gazete_Duvar) - [Journalists and experts explain: why are independent media outlets closing?](https://medyascope.tv/2025/07/13/gazeteciler-ve-uzmanlar-anlatiyor-bagimsiz-medya-kurumlari-neden-kapaniyor/) --- # Humane (2018 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/humane/ - Sector: Hardware - Country: United States - Total funding: $230 million - Cause of closure: Product problems ## What did it do? Humane was a San Francisco-based consumer electronics company founded in 2018 by former Apple employees Imran Chaudhri and Bethany Bongiorno. Its only product was the AI Pin, a voice-controlled wearable assistant that clipped magnetically to clothing and used a laser to project an image onto the palm of the hand. The device sold for USD 699 and required a USD 24 monthly subscription for its SI features. ## Why did it shut down? When the AI Pin began shipping in April 2024, reviewers questioned its short battery life, overheating and the usefulness of many of its features. The company had targeted 100,000 sales by the end of the year but had shipped only 10,000 devices by August, and between May and August more units were returned than sold. According to The New York Times, employees' warnings during development had been ignored. A price cut failed to revive sales. In February 2025 HP bought most of the company, excluding the device business, for USD 116 million, and the AI Pin was shut down. ## The story According to The New York Times, Humane executives cooled the AI Pin with ice packs before showing it to investors or partners, because otherwise it overheated. That small detail summed up a company that set out to build the next big device after the smartphone and took to the stage before its product was ready. Humane was founded in 2018 by Imran Chaudhri and Bethany Bongiorno, a married couple who had both worked at Apple. The company spent years in stealth and by November 2023 had raised USD 230 million from investors including Sam Altman, Marc Benioff, Tiger Global, SoftBank, Qualcomm and Microsoft. Unveiled in November 2023, the AI Pin was a voice-controlled assistant that clipped magnetically to clothing and used a laser to project an image onto the palm. It cost USD 699 and required a USD 24 monthly subscription for its SI features. The goal was to help people spend less time on their phones. When the device started shipping in April 2024, the verdict was harsh. Reviewers liked the design but criticised the short battery life, the overheating and the limited usefulness of its features. The company had aimed for 100,000 sales by the end of the year; by August it had shipped only 10,000 devices, and between May and August returns outnumbered sales. According to a New York Times report based on interviews with 23 people, employees had raised concerns about the device's functionality during development, but those warnings were ignored. In October 2024 the price was cut to USD 499; the same month the charging case was recalled over a fire risk. In May 2024 it was reported that the company was looking for a buyer and hoping for offers of between USD 750 million and USD 1 billion. The outcome was far more modest: in February 2025 HP bought most of the staff, the software platform and more than 300 patents and patent applications for USD 116 million. The AI Pin business was not part of the deal; on 28 February 2025 the devices lost their connection to the servers and became effectively unusable. The founders joined a new SI team set up within HP. Humane's story shows that a bold vision and famous investors cannot rescue hardware that fails to do its job in everyday use. ## Lessons - In hardware there is no second first impression; do not set a launch date until independent users have lived with the device for weeks. - Do not dismiss criticism from your own team as negativity; a product's weaknesses are usually heard first from the inside. - A device that competes with the smartphone has to do the things phones already do well, only better; a new form factor alone is not a reason to buy. ## Sources - [Humane Inc.](https://en.wikipedia.org/wiki/Humane_Inc.) - [Humane is shutting down the AI Pin and selling its remnants to HP](https://www.theverge.com/news/614883/humane-ai-hp-acquisition-pin-shutdown) - [Humane AI Pin review: not even close](https://www.theverge.com/24126502/humane-ai-pin-review) - [Humane, a secretive AI startup founded by ex-Apple employees, raises another $100M](https://techcrunch.com/2023/03/08/humane-the-secretive-ai-startup-founded-by-ex-apple-employees-raises-another-100m/) --- # ininal (2012 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/ininal/ - Sector: Fintech - Country: Turkey - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? ininal was founded in Turkey in 2012 to offer a prepaid shopping card to people who had no credit card or were wary of using one online. Bought from PTT (the Turkish postal service) and retail outlets and topped up with credit, the card gradually gained money transfer and digital wallet features too. In 2017 the company obtained an electronic money institution licence. ## Why did it shut down? ininal's end came not from the product itself but from an investigation targeting the ownership structure that took shape in later years. In an investigation into illegal betting and laundering the proceeds of crime launched in February 2025, 21 people were arrested, reportedly including figures from the payments sector. In March 2025 the Central Bank of the Republic of Turkey suspended the operating permits of PayFix, Aypara and ininal, and management of the companies was handed to TMSF, Turkey's Savings Deposit Insurance Fund. By a decision published in the Official Gazette on 8 November 2025, the three firms' operating permits were revoked. No final ruling on the allegations in the investigation was found in the sources. ## The story ininal was unveiled in December 2012 at the Payment Systems conference run by Webrazzi, the Turkish tech news site. The idea behind the start-up founded by Bülent Tekmen and Çelik Ören was to offer a prepaid shopping card to people who had no credit card or were wary of using one online. Issued in partnership with MasterCard, Provus and ING Bank, the card could be bought from PTT, the Turkish postal service, and used once topped up; at launch the card cost 5 TL and the monthly usage fee was 1 TL. The team aimed to reach 1 million cards by 2014. The start-up quickly caught the attention of the ecosystem. In June 2013 it raised investment from Aslanoba Capital, and that same year its founders were selected for the Endeavor entrepreneur network. In July 2016 Multinet acquired a stake of around 50.1 per cent in ininal through a share swap; Webrazzi reported the deal as one of the notable acquisitions in the fintech space. In March 2017 the company obtained its electronic money institution licence. According to a March 2020 report by egirişim, the ininal Card had reached 4 million users. At the end of February 2025, an investigation into illegal betting and laundering the proceeds of crime launched in Istanbul reached a group of companies that included ininal. As part of the investigation, 21 people were arrested, reportedly including figures from the payments sector. According to Diken, investigators alleged that payment institutions had been used in the flow of money for foreign betting sites. In March 2025 the Central Bank of the Republic of Turkey suspended the operating permits of PayFix, Aypara and ininal, and management of the companies was handed to TMSF, Turkey's Savings Deposit Insurance Fund. By a decision published in the Official Gazette on 8 November 2025, the three firms' operating permits were revoked entirely. No final ruling on the allegations in the investigation was found in the sources. ininal's story is that of a fintech start-up that set out to bring cards to the unbanked and reached millions of users, only to end by losing its licence amid an ownership structure that changed in later years and an investigation targeting that structure. It remains an example of how decisive the licence and the ownership structure are in payment services. ## Lessons - In the payments business the licence is the company; every change in the ownership structure puts the licence at risk too. - When handing over your start-up, who the new shareholders are shapes the product's future as much as the product itself. - Serving the unbanked is a big opportunity, but it also demands rigorous compliance and oversight. ## Sources - [Prepaid shopping card İninal announced at Ödeme Sistemleri 12 (Payment Systems 12)](https://webrazzi.com/2012/12/12/ininal/) - [Founders of Dugun.com and ininal selected for the Endeavor entrepreneur network](https://webrazzi.com/2013/12/17/dugun-com-ve-ininal-kuruculari-endeavor-girisimci-agina-secildi/) - [Multinet buys a majority stake in ininal!](https://webrazzi.com/2016/07/12/multinet-ininal/) - [Contactless and chip features added to ininal Card, which has 4 million users](https://egirisim.com/2020/03/10/4-milyon-kullanicisi-olan-ininal-karta-temassiz-ve-cip-ozelligi-eklendi/) - [Operating permits of Payfix, Aypara and İninal suspended](https://www.diken.com.tr/payfix-aypara-ve-ininalin-faaliyet-izinleri-durduruldu/) - [Central Bank announcement on the operating permits of Aypara, İninal and PayFix](https://webrazzi.com/2025/03/18/tcmb-aypara-ininal-ve-payfix-in-faaliyet-izinlerini-durdurdu/) - [Licences of İninal, PayFix and Aypara revoked](https://medyascope.tv/2025/11/08/ininal-payfix-ve-ayparanin-lisansi-iptal-edildi/) - [Licences of Pay Fix, İninal and Aypara revoked](https://www.diken.com.tr/pay-fix-ininal-ve-ayparanin-lisanlari-iptal-edildi/) --- # Lilium (2015 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/lilium/ - Sector: Mobility and transport - Country: Germany - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Lilium was a Bavaria-based aviation company developing the Lilium Jet, an electric aircraft capable of vertical take-off and landing. The five-seat prototype, with 36 electric fans mounted on movable flaps, targeted a speed of 300 km/h and a range of 300 km. The company planned to enter the air taxi market in 2025. ## Why did it shut down? Lilium lost hundreds of millions of euros every year without generating meaningful revenue; in March 2024 its accumulated losses were reported to have reached EUR 1.359 billion. As the certification timetable stretched, its capital needs grew and the company raised fresh equity again and again. In October 2024, after failing to reach agreement with the Bavarian government on a EUR 50 million loan, it filed for insolvency proceedings for its German subsidiaries. On 20 December 2024 operations stopped and around 1,000 people were laid off. A rescue plan by an investor consortium was announced, but the promised money never arrived and the company filed for insolvency a second time in February 2025. ## The story In April 2017, at a small airfield near Munich, an unmanned two-seat prototype lifted off vertically. The aircraft, called the Lilium Eagle, was the first tangible step in four young engineers' dream of taking intercity travel into the sky. Eight years later the same company passed into history, having gone insolvent twice. Lilium was founded in 2015 by Daniel Wiegand, Sebastian Born, Matthias Meiner and Patrick Nathen of the Technical University of Munich, and took its name from the aviation pioneer Otto Lilienthal. The five-seat prototype, which first flew in May 2019, had 36 electric fans mounted on movable flaps and could take off vertically and transition to horizontal flight. The company raised USD 90 million in September 2017 and USD 240 million in a Tencent-led round in March 2020. When it began trading on NASDAQ through a SPAC merger in September 2021, it had no meaningful revenue but was valued at USD 2.4 billion. The same year the Brazilian airline Azul signed a letter of intent for 220 aircraft. Yet developing and certifying an aircraft meant more money every year. Losses were EUR 188 million in 2020, EUR 253 million in 2022 and EUR 263 million in 2023. In March 2024 accumulated losses were reported to have reached EUR 1.359 billion. In 2023 the company raised fresh equity again and again. Meanwhile, some aviation academics and former employees had openly questioned whether the aircraft could meet its performance targets. The final blow came from politics. After failing to reach agreement with the Bavarian government on a EUR 50 million loan, the board filed for insolvency proceedings for the German subsidiaries in October 2024. On 20 December 2024 operations were halted and around 1,000 people were laid off. A few days later it was announced that an investor consortium called Mobile Uplift would buy parts of the company; but the promised money never arrived, and a second insolvency filing followed in February 2025. Lilium shows that in deep-tech ventures, time is a cost line too. Every time the certification timetable slipped, the capital required grew, and in the end a single loan decision brought the whole structure down. ## Lessons - In a sector where certification takes years, plan your cash for the worst case: regulatory approval arriving two or three years late. - Do not put public support at the centre of a rescue plan; political decisions can change at the last minute. - Keep your performance claims open to scrutiny by independent engineers; technical doubts often surface in public before they reach investors. ## Sources - [Lilium GmbH](https://en.wikipedia.org/wiki/Lilium_GmbH) - [Electric aircraft startup Lilium ceases operations, 1,000 workers laid off](https://techcrunch.com/2024/12/23/electric-aircraft-startup-lilium-ceases-operations-1000-workers-laid-off/) - [German electric jet maker Lilium files for bankruptcy for second time](https://finance.yahoo.com/news/german-electric-jet-maker-lilium-201908488.html) --- # Nabız (Nabd Türkiye) (2016 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/nabiz/ - Sector: Media and entertainment - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Nabız (Turkish for “pulse”) launched in Turkey in April 2016 as the first international expansion of the Dubai-based news aggregator Nabd. The app aggregated content from more than 300 Turkish-language news sources on subjects ranging from technology and health to sport and cars, and delivered breaking news through push notifications. It was free on iOS and Android and could also be accessed through a web version. ## Why did it shut down? The Nabız team announced that the app would be shut down permanently on 31 October 2025, and confined itself to thanking users; it gave no detailed reason. According to the Turkish daily Sözcü, there was talk in technology circles that rising operating costs and difficulties with news licensing had played a part in the decision. As early as the 2016 launch, Webrazzi had remarked that Nabd would not have an easy time in Turkey's news vertical. Nabız was an intermediary that aggregated its content from other publishers' stories, which tied its revenue and costs to licensing terms beyond its control. As an interpretation, in a market where advertising revenue pools on the big platforms, it looks hard for such an intermediary to reach profitability even as it grows in scale. ## The story Nabd grew in the Arab world as an aggregator that brought news together in a single app. According to Wamda, the app, founded in 2013, pulled news from more than 1,500 Arabic-language sources and reached more than 9 million users. According to VentureBeat, it was number one in the iPhone news category in 37 countries. Co-founders Abdur-Rahman El-Sayed and Abdullah El-Sayed chose Turkey as their first stop abroad. In April 2016 the app launched in Turkey under the name Nabız. The founders explained their choice by Turkey's news consumption habits resembling those of the Arab world, and by its more than 30 million smartphone users. Nabız aggregated news from more than 300 Turkish-language sources and sent breaking news by push notification. According to Wamda's report, the app was featured by Apple as an editors' choice, appeared on the Google Play home page and rose to number one in the news category of the Turkish App Store. Webrazzi, the Turkish tech news site, was cautious in those same days, writing that the news vertical in Turkey would not be easy. In the years that followed, Nabız quietly became one of the daily news sources for millions of users. At the end of October 2025, however, users were met with a farewell message. The team announced that the app would be shut down permanently on 31 October 2025 and that neither the mobile app nor the web version would be accessible after that date. The statement gave no detailed reason. According to the Turkish daily Sözcü, there was talk in technology circles that rising operating costs and difficulties with news licensing had influenced the decision. The Nabız story shows the fragility of products that grow by aggregating other people's content. The app found users easily, but the value it created depended heavily on news sites' content and on conditions in the advertising market. Its Turkish adventure, lasting roughly nine and a half years, ended with an announcement once the gap between costs and revenue widened. ## Lessons - In a product that aggregates other people's content, factor in licensing and copyright costs from the outset. - When taking a model that worked in one market to another country, test the local competition and advertising market separately. - Reaching the top of the app store rankings does not mean you have built a long-term revenue model. ## Sources - [Popular Arabic news app Nabd (Nabız) now in Turkey](https://webrazzi.com/2016/04/07/populer-arapca-haber-uygulamasi-nabd-nabiz-simdi-turkiyede/) - [Chart-topping newsreader app Nabd launches in Turkey as Nabız](http://venturebeat.com/2016/04/06/chart-topping-newsreader-app-nabd-launches-in-turkey-as-nabiz/) - [Meet Nabiz, the Turkish version of Nabd](https://www.wamda.com/2016/04/meet-nabiz-the-turkish-version-of-nabd) - [It had millions of users in Turkey: popular news app is closing](https://www.sozcu.com.tr/turkiye-de-milyonlarca-kullanicisi-vardi-unlu-haber-uygulamasi-kapaniyor-p253396) - [Shock Decision: Popular News App to Shut Down on 31 October](https://www.hedefhalk.com/unlu-haber-uygulamasi-nabiz-kapaniyor-31-ekim/1800832/) --- # Nikola (2014 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/nikola/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Nikola Corporation was a Phoenix-based US company developing battery-electric and hydrogen fuel-cell electric lorries for heavy commercial use. Named after Nikola Tesla, it was founded in Salt Lake City in 2014 by Trevor Milton. It went public through a SPAC merger in June 2020 and from 2022 delivered trucks to customers with its Nikola Tre model. ## Why did it shut down? In September 2020 the short seller Hindenburg Research published a report accusing the company of being an intricate fraud largely orchestrated by Milton. The SEC and the US Department of Justice opened investigations, Milton resigned and GM pulled out of a joint pickup project. In October 2022 a federal jury convicted Milton on three of four counts over statements he made as CEO; the company itself was not indicted. In 2023 the company recalled every battery-electric truck it had built because of battery faults and fires. With liabilities exceeding its assets, Nikola filed for Chapter 11 in February 2025 and put its assets up for sale. ## The story In June 2020 Nikola, which had yet to put a single truck into series production, saw its shares climb above USD 65, and for a brief moment its market value overtook Ford's. In early August the company was worth around USD 13 billion, yet its revenue for the first six months of 2020 was just USD 80,000, of which USD 36,000 came from solar panel installations done for Milton. Trevor Milton founded Nikola in Salt Lake City in 2014. Named after Nikola Tesla, the company promised to replace diesel rigs with hydrogen fuel-cell and battery-electric heavy lorries. It claimed USD 2.3 billion in pre-orders in 2016 and, by 2019, said lease pre-orders across all models had reached USD 14 billion. In June 2020 it went public through a SPAC merger with VectoIQ, and on 8 September 2020 a partnership was announced under which GM would take an 11 per cent stake in the company. Two days later the short seller Hindenburg Research published a report accusing Nikola of being an intricate fraud largely orchestrated by Milton. As the Financial Times verified, the Nikola One seen moving in a promotional video was not running under its own power but rolling down a gentle slope. The company called the allegations false and misleading, but the SEC and the Department of Justice opened investigations and Milton resigned on 21 September. In November 2020 GM also withdrew from the joint pickup project. In July 2021 a federal grand jury indicted Milton on fraud charges but did not charge the company. Milton pleaded not guilty; in October 2022, however, a jury convicted him on three of four counts over statements he made as CEO, and in December 2023 he was sentenced to four years in prison. In March 2025 President Donald Trump pardoned him. Meanwhile, in 2023, the company recalled all 209 battery-electric trucks it had built to date after coolant leaks in the battery packs and fires. With liabilities exceeding its assets and its share price down to 44 cents, Nikola filed for Chapter 11 on 19 February 2025. The Nikola case shows that a bold narrative and a towering market value are no substitute for a working product. The founder's statements turned into both a personal criminal case and a loss of trust from which the company never recovered. ## Lessons - Keep every technical claim you make to investors and the public at a level you can document; even a promotional video can end up as evidence. - Do not present pre-orders and reservations as a measure of scale; non-binding demand is not revenue. - In a company built on the founder's personal narrative, set up an independent board and internal audit early; structures that can separate the company from its founder in a crisis can save it. ## Sources - [Nikola Corporation](https://en.wikipedia.org/wiki/Nikola_Corporation) - [Nikola Founder Is Charged With Fraud in Rebuke to Wall Street](https://www.nytimes.com/2021/07/29/business/nikola-trevor-milton-fraud.html) - [Nikola founder Trevor Milton found guilty of fraud over statements he made while CEO of the EV company](https://www.cnbc.com/2022/10/14/nikola-nkla-founder-trevor-milton-found-guilty-of-fraud-.html) - [Nikola: Trevor Milton sentenced to prison after fraud conviction](https://www.bbc.com/news/business-67752125) --- # Northvolt (2015 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/northvolt/ - Sector: Energy and climate - Country: Sweden - Total funding: unknown - Cause of closure: Product problems ## What did it do? Northvolt was a Stockholm-based company, founded in 2015 by two former Tesla executives, that developed and manufactured lithium-ion batteries for electric vehicles. It built its first large factory, Northvolt Ett, in Skellefteå in northern Sweden, opened a plant in Poland and planned new factories in Germany and Canada. The company was seen as the symbol of Europe's answer to the dominance of Tesla and Asian manufacturers in the battery market. ## Why did it shut down? The Skellefteå factory could not ramp production up to the planned rate; according to a book by a former employee, the first cell tests in 2022 showed unacceptable defect rates. In June 2024 BMW cancelled a €2 billion contract because Northvolt could not deliver on time. In September 2024 the company announced layoffs affecting 1,600 people and a halt to its expansion plans. On 21 November 2024 it filed for Chapter 11 in the US, stating that it had only a week's worth of cash and $5.8 billion of debt. With no new financing found, it filed for bankruptcy in Sweden on 12 March 2025. ## The story At the end of December 2021, in a vast factory in Skellefteå in northern Sweden with 500 employees, the first prismatic battery cells came off the line. Seen as proof that Europe could make its own batteries for the shift to electric vehicles, it was Northvolt's finest hour. A little over three years later the company was going through the biggest bankruptcy in modern Swedish industrial history. Northvolt was founded in 2015 as SGF Energy by Peter Carlsson and Paolo Cerruti, who had worked at Tesla in supply chain and operations planning; it took its current name in 2017. Loans came from the European Investment Bank, Volkswagen bought a 20 per cent stake for €900 million in 2019, and BMW, Goldman Sachs and Folksam joined the investors. In 2020 it signed a €2 billion battery supply deal with BMW. In August 2023 it raised $1.2 billion alongside its plan for a factory in Canada, and in January 2024 it raised $5 billion in green loans. The company had opened a plant in Poland and begun building new factories in Germany and Canada. Growth on paper, however, did not translate to the production line. According to a former employee's book published in 2025, defect rates in the first cell tests in 2022 were unacceptable; humidity control, automation failures and parts delays were disrupting production. According to an internal report uncovered by Dagens industri, the company lost around $1 billion in the first nine months of 2023. In June 2024 BMW cancelled the €2 billion contract because deliveries could not be made on time. In September 2024 layoffs affecting 1,600 people were announced. On 21 November 2024 Northvolt filed for Chapter 11 in the US, stating that it had just $30 million in cash, enough for a single week, and $5.8 billion of debt; founding CEO Carlsson resigned the next day, saying the company needed at least $1 billion in the long term. That money was never found. On 12 March 2025 it filed for bankruptcy in Sweden, the trustee halted the limited production entirely in June 2025, and a large part of the facilities was sold to Lyten of the US. Northvolt became an expensive lesson that capital cannot replace manufacturing capability. Billions of dollars and powerful customers could not solve the problem of quickly producing quality cells in the first factory. ## Lessons - Building a factory and getting quality product out of it quickly are different skills; prove the yield of the first line before moving on to new capacity. - A growth plan tied to a single large customer's contract collapses overnight when the delivery schedule slips. - Hiding production problems from investors and customers does not buy time; sharing bad news early widens your options for fixing it. ## Sources - [Northvolt](https://en.wikipedia.org/wiki/Northvolt) - [Sweden's Northvolt files for bankruptcy, in blow to Europe's EV ambitions](https://www.reuters.com/technology/northvolt-files-chapter-11-bankruptcy-us-2024-11-21/) - [BMW cancels $2 bln battery cells contract with Northvolt](https://www.reuters.com/business/autos-transportation/bmw-cancels-2-bln-contract-with-northvolt-says-handelsblatt-2024-06-20) - [Sweden's green industry hopes hit by Northvolt woes](https://www.bbc.co.uk/news/articles/crrwqpdv5q7o) --- # Pandion (2020 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/pandion/ - Sector: Logistics and delivery - Country: United States - Total funding: $125 million - Cause of closure: Ran out of cash ## What did it do? Pandion was a Bellevue-based parcel logistics start-up that collected e-commerce brands' parcels from their warehouses, sorted them at its own sortation centres and handed the last mile to a large network of drivers. It used machine learning to choose the best carrier for each parcel. It promised ground delivery in 1 to 5 days without the residential and peak-season surcharges of the big carriers. ## Why did it shut down? The company tried to grow during a freight recession that had lasted since 2022 and at a time when investment in logistics technology had dried up. Low margins and price competition increased its need for cash. The $41.5 million round in March 2024 carried the company only to the last quarter of the year. When sale and funding talks came to nothing, the company shut down abruptly in January 2025. ## The story Scott Ruffin's CV was one of the strongest references a parcel start-up could show an investor. He had worked at Amazon for about five years and built Amazon Air, the company's air cargo operation, before running Walmart's e-commerce transportation unit. When he left Walmart in June 2020 and launched Pandion in September, his aim was to offer large e-commerce sellers an alternative in a parcel delivery market dominated by FedEx, UPS, Amazon and the US Postal Service. Pandion's model was to collect parcels from brands' warehouses, sort them at its own sortation centres and hand the last mile to a network of more than a million drivers tied to staffing agencies. Machine learning chose the best carrier for each parcel according to speed, reliability and on-time delivery rate. Starting with a $4.9 million seed investment from Playground Global and Schematic Ventures, the company raised about $125 million in equity over five years and closed a $41.5 million Series B in March 2024. According to a Bloomberg report at the time, sales were expected to reach $220 million in 2024. But Pandion had entered a market where the wind had turned. A freight recession that had lasted since mid-2022, thin margins, price competition and venture capital that had dried up as interest rates rose were squeezing logistics technology companies; similar parcel platforms Point Pickup and Maergo had fallen apart in 2024. According to Ruffin's memo, the Series B could carry the company only until the last quarter of 2024. In a memo to staff in January 2025, Ruffin wrote that talks to sell the company or find new funding had not succeeded and that, because of its obligations to lenders, the company would close immediately. All 63 employees were laid off; wages were paid up to 15 January, but no severance could be given, because the company's debts exceeded the money it had in the bank. The headquarters in Bellevue and the five sortation centres in Philadelphia, Dallas, Los Angeles, Chicago and Atlanta closed; the last parcels left in the facilities were handed over to the US Postal Service. Pandion shows that in infrastructure-heavy start-ups growing on debt, loan obligations can shut the company overnight, even while sale talks are under way. ## Lessons - In logistics, every sortation centre opened before reaching economies of scale is a fixed cost; bring the utilisation of existing sites up to target before opening a new one. - Know the default terms in your loan agreements well; a lender can force a shutdown even while sale talks are under way. - Put a controlled wind-down or sale plan into action early, before you reach the point where you cannot pay severance to your staff. ## Sources - [Delivery Startup Pandion Abruptly Shutters](https://finance.yahoo.com/news/delivery-startup-pandion-abruptly-shutters-181507670.html) - [E-commerce delivery startup Pandion looks in eyes of giants](https://www.freightwaves.com/news/e-commerce-delivery-startup-pandion-looks-in-eyes-of-giants) - [2025 will likely be another brutal year of failed startups, data suggests](https://techcrunch.com/2025/01/26/2025-will-likely-be-another-brutal-year-of-failed-startups-data-suggests/) --- # Pocket (2007 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/pocket/ - Sector: Consumer apps - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Pocket was an app that let users save articles and web pages they came across online and read them later, offline and on all their devices. It stripped saved articles of clutter to make them readable, and offered tagging and text settings. The service, which began in 2007 as a Firefox extension called Read It Later, became part of Mozilla in 2017. ## Why did it shut down? While independent, Pocket had turned down an acquisition offer from Evernote, fearing the service would be shut down and absorbed into Evernote. Being added to Firefox by default in 2015 expanded its distribution, but it also tied the product's fate to the browser's owner. After it was sold to Mozilla in 2017, it was announced that Pocket would operate as an independent subsidiary; but its future now depended on Mozilla's priorities. Mozilla announced on 22 May 2025 that it would close Pocket, and the service ended on 8 July 2025. ## The story In August 2007 Nate Weiner released a small extension for Firefox. It was called Read It Later and it did one thing: save articles you came across online but could not read at that moment. Weiner wanted to create a web-content equivalent of TiVo, the devices that recorded television programmes, and to make that content accessible from any device. When the extension reached millions of people, Weiner moved his office to Silicon Valley and four more people joined the team. In 2011 came $2.5 million in investment from Foundation Capital, Baseline Ventures, Google Ventures and Founder Collective, and in 2012 a further $5 million. The company turned down an acquisition offer from Evernote, fearing the service would be shut down and absorbed into Evernote. Renamed Pocket, the app moved its paid features into a free, ad-free version; the Pocket Premium subscription arrived in 2014. Time magazine named it among the best Android apps of 2013, and in September 2015 Pocket reached 17 million users and 1 billion saves. In June 2015 Pocket was integrated directly into Firefox. Some users objected to a closed service being built into an open-source browser and not being easy to disable, but Mozilla defended the integration. On 27 February 2017 Mozilla bought Pocket and announced that the service would continue to operate as an independent subsidiary. The server code was meant to be open-sourced, but as of 2024 only part of that had happened. On 22 May 2025 Mozilla announced that it would close Pocket on 8 July 2025. Users were given until 8 October 2025 to export their data; after that date, accounts would be deleted. The Pocket Hits email newsletter was rebranded as Ten Tabs during the shutdown. Pocket's story shows that even a well-loved tool used by millions becomes dependent on an institution's priorities once it comes under that institution's roof. The independence it had protected from Evernote ended, in the end, with another buyer's decision. ## Lessons - If your product relies on distribution embedded in a platform, discuss from the outset what happens when that platform's priorities change. - When being acquired, ask for concrete commitments to keep the product alive and clear rules on the portability of user data. - Strengthen revenue streams such as premium subscriptions early; a product that cannot earn its own money remains dependent on its owner's budget decisions. ## Sources - [Pocket (service)](https://en.wikipedia.org/wiki/Pocket_(service)) - [Mozilla is shutting down Pocket](https://www.theverge.com/news/672924/mozilla-pocket-fakespot-shutting-down) - [Mozilla acquires read-it-later app Pocket, will open-source the code](https://venturebeat.com/2017/02/27/mozilla-acquires-read-it-later-app-pocket-will-open-source-the-code/) - [Read It Later Raises $2.5 Million, Wants To Become The Dropbox Of Content](https://techcrunch.com/2011/07/26/read-it-later-raises-2-5-million-wants-to-become-the-dropbox-of-content/) --- # Skype (2003 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/skype/ - Sector: Telecoms - Country: Luxembourg - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Skype was a communications app offering voice and video calls over the internet, video conferencing, instant messaging and file transfer. Users could also call landlines and mobile phones using credit. The app was created in 2003 by the Swede Niklas Zennström and the Dane Janus Friis together with four Estonian developers, and the company behind it was Luxembourg-based Skype Technologies. ## Why did it shut down? From 2005 onwards Skype changed hands frequently, passing first to eBay, then to investment funds and, in 2011, to Microsoft. Microsoft used Skype to replace its own Windows Live Messenger and moved its infrastructure from a peer-to-peer architecture to a centralised, Azure-based system. Daily users rose by 70 per cent at the start of the pandemic, but decline followed and daily users fell to 36 million in 2023. Over the same period Teams, Microsoft's own workplace communication platform, reached 300 million active users and was seen as one of the main reasons businesses dropped Skype. Microsoft announced in February 2025 that it would close Skype, and the service ended on 5 May 2025. ## The story Skype's name came from sky and peer-to-peer, the phrase describing the network architecture the software relied on. The final r was dropped so that a suitable domain name could be found. When the Swede Niklas Zennström and the Dane Janus Friis released the app with four Estonian developers in 2003, talking for free from your computer to someone on the other side of the world was revolutionary. Growth was dizzying, and Skype changed hands often. In September 2005 eBay bought Luxembourg-based Skype Technologies for around $2.6 billion. In 2009 eBay sold 65 per cent of the company to Silver Lake, Andreessen Horowitz and the Canada Pension Plan Investment Board for $1.9 billion. In May 2011 Microsoft bought Skype for $8.5 billion and used it to replace its own Windows Live Messenger. That year most of the development team, and 44 per cent of employees, were based in the Estonian cities of Tallinn and Tartu. Having passed 660 million registered users by the end of 2010, Skype saw more than 50 million concurrent online users in January 2013. Under Microsoft the infrastructure was rebuilt from the ground up: in 2012 the network began to rely entirely on servers run by Microsoft, and in 2017 the peer-to-peer model was abandoned in favour of a centralised, Azure-based service. The app itself was redesigned several times. At the end of March 2020, at the start of the pandemic, daily users rose by 70 per cent on the previous month; but decline set in afterwards, and daily users fell to 36 million in 2023. By the second quarter of that year Teams, Microsoft's own workplace communication platform, had reached 300 million active users, and its success was seen as one of the reasons businesses abandoned Skype. In February 2025 Microsoft announced that Skype would be retired on 5 May 2025 and replaced by the free version of Teams. The shutdown was completed that day, and the site began redirecting users to Teams. Skype's story shows that even the product that created a category can be sacrificed when its owner has a more strategic sibling in the portfolio. A twenty-one-year journey that began as a start-up ended with a tech giant choosing between its own products. ## Lessons - Creating a category does not guarantee you will stay in it; as usage habits shift towards workplace and mobile apps, renew the product just as fast. - When selling to a large company, ask whether the buyer's portfolio contains a product that competes with yours, and which of the two will survive in the long run. - Frequent infrastructure and interface changes wear down loyal users; aim to make architectural transitions without users noticing. ## Sources - [Skype](https://en.wikipedia.org/wiki/Skype) - [Microsoft is shutting down Skype in favor of Teams](https://www.theverge.com/news/621353/microsoft-skype-shutting-down-retirement-may-2025) - [Microsoft is shutting down Skype after a 21-year run. Here's how it lost out to video call rivals](https://www.cnbc.com/2025/02/28/microsoft-is-retiring-skype-in-may-encouraging-people-to-adopt-teams.html) - [Microsoft confirms takeover of Skype](https://www.bbc.co.uk/news/business-13343600) --- # Sonder (2014 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/sonder/ - Sector: Travel - Country: United States - Total funding: $550 million - Cause of closure: Business model failed ## What did it do? Sonder operated short-term rental units in the style of aparthotels across North America, Europe and Dubai. Although it competed with Airbnb, it did not act as a go-between for hosts' listings; instead it leased and managed the buildings itself. Guests used a mobile app to check in and get support, while maintenance and cleaning were outsourced. ## Why did it shut down? Sonder's model relied on covering the cost of the buildings it leased with short-stay revenue; when the pandemic halted travel in March 2020, the company laid off a third of its staff, 400 people. Shortly after going public through a SPAC merger in January 2022, it cut 21 per cent of its corporate workforce in June 2022. In August 2024 it signed a licensing deal with Marriott that added 10,500 rooms to Marriott's portfolio. On 9 November 2025, however, Marriott terminated the agreement, citing Sonder's default. Sonder abruptly ceased operations the next day and filed for Chapter 7 liquidation on 13 November 2025. ## The story In the second week of November 2025, some guests staying in Sonder's flats learned in the middle of their stay that they had to leave the building. According to the BBC, guests of the bankrupt company were turned out before their bookings had ended. A start-up once reported to be worth USD 2 billion had gone into liquidation within a week. The story began in Montreal in 2012. Francis Davidson, a McGill University student, was letting out his own flat, and those of students who left the city for the summer, to earn extra money. In 2014 he founded a company called Flatbook with Lucas Pellan, and it joined the FounderFuel accelerator in Montreal; Martin Picard is also counted among the founders. Later renamed Sonder, the company was based in San Francisco from 2016. The model was simple: rather than acting as a go-between for hosts as Airbnb does, lease whole buildings and run the flats like a hotel through an app. The target was travellers who wanted more space than a hotel room but more predictability than an amateur host could offer. Over time the company managed more than 9,000 units in more than 40 cities and hosted more than 1 million guests. The pandemic dealt the first big blow. In March 2020 a third of the staff, 400 people, were laid off. Even so, by June 2020 the company had raised more than USD 550 million in total and reached a USD 1.3 billion valuation. It went public through a SPAC merger in January 2022, but in June of the same year cut its corporate workforce by 21 per cent. Meanwhile it was fined in Boston under a new rule banning short-term rentals where the owner does not live on site, and faced objections from neighbours in Minneapolis. In August 2024 a long-term licensing deal was signed with Marriott; 10,500 rooms were added to Marriott's portfolio and guests could earn Marriott Bonvoy points. Founder Davidson stepped down as CEO in June 2025. On 9 November 2025 Marriott terminated the agreement, citing Sonder's default. The next day Sonder abruptly ceased operations, and on 13 November it filed for Chapter 7 liquidation. Sonder shows how, in a model with fixed costs and volatile revenue, a single shock and the loss of a single partner can bring a company down. ## Lessons - In a lease-and-sublet model the rent does not stop when occupancy falls; build demand-linked flexibility or revenue-sharing clauses into your leases. - Becoming dependent on one large partner's channel can stop the business overnight when that contract ends; keep alternative booking channels alive. - In hospitality, a wind-down plan has to cover guests too; prepare in advance for transferring remaining bookings and issuing refunds. ## Sources - [Sonder (company)](https://en.wikipedia.org/wiki/Sonder_(company)) - [Sonder to File Bankruptcy and Liquidate After Marriott Cuts Ties](https://www.bloomberg.com/news/articles/2025-11-10/sonder-to-file-bankruptcy-and-liquidate-after-marriott-cuts-ties) - [Guests ejected mid-stay from bankrupt hotel chain Sonder](https://www.bbc.com/news/articles/c364yg7g351o) - [Hospitality Startup Sonder Raises $170 Million At A $1.3 Billion Valuation During Covid-19 Travel Collapse](https://www.forbes.com/sites/stevenbertoni/2020/06/24/hospitality-startup-sonder-raises-170-million-at-a-13-billion-valuation-during-covid-travel-collapse/) --- # Zingat (2015 – 2025) - URL: https://girisimcikafasi.com/en/startup-graveyard/zingat/ - Sector: Real estate and construction - Country: Turkey - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Zingat was an online property platform founded in late 2015 through a partnership between Doğuş Group, one of Turkey's large conglomerates, and REIDIN, a Dubai-based real estate data company. Alongside listings for sale and rent, it offered home valuations based on REIDIN data, neighbourhood analyses and investment information. It also built the Zingat Pro app for professional estate agents. ## Why did it shut down? Zingat did not end in bankruptcy but through changes in its chain of ownership. Dubai-based Property Finder Group became a partner in 2017, increased its stake in 2019 and bought the whole company in 2023. Under a deal announced in November 2023, Property Finder would become a minority shareholder in Hepsiemlak, while Zingat would merge with Hepsiemlak. According to Hepsiemlak's statement, the Zingat platform was shut down and all services continued through Hepsiemlak. The outcome shows a player that had climbed as high as third place in its market losing its own brand through a merger with the sector leader. ## The story Zingat was born in late 2015 out of an ambitious partnership. The financial muscle of Doğuş Group and the know-how of REIDIN, a Dubai-based real estate data company, had been brought under one roof. As CEO Ahmet Kayhan tells it, the platform officially went live in January 2016. Zingat billed itself as a smart property site, offering home valuation tools, neighbourhood reports and content on new housing projects alongside its listings. Growth was fast. According to a Webrazzi report in January 2017, the platform reached more than 200,000 listings and 4.5 million monthly visitors in its first year; it announced that it had risen to third place on measures such as listings and traffic, behind Hürriyet Emlak and Emlakjet. In August 2017 Dubai-based Property Finder Group became a partner. According to egirişim, Zingat at the time had more than 6 million monthly visitors and more than 18,000 estate agent members. In April 2019 a further capital increase of 65 million TL followed, led by Property Finder with the participation of General Atlantic. In markets with strong network effects such as property listings, however, the leaders' advantage was not easily broken. In 2023 Property Finder bought the whole of Zingat. Under a deal announced in November that year, Property Finder became a minority shareholder in Hepsiemlak, the Doğan Holding company, through a capital injection, and Zingat was to merge with Hepsiemlak. The transaction was subject to approval by Turkey's Competition Authority. The Zingat brand lived on for a while after the merger. According to a statement published by Hepsiemlak in 2025, the Zingat platform was shut down; all transactions and services were now handled through Hepsiemlak. The zingat.com address also began redirecting to Hepsiemlak. Zingat's story is not one of collapse but of a merger. Having risen as high as third place with strong partners and a data-driven product, the platform was eventually absorbed into the sector leader, bringing a journey of around a decade to an end. ## Lessons - When your main shareholder changes, the fate of your brand is rewritten too; plan your capital structure accordingly. - In listings markets, network effects work in the leader's favour; the number three player is usually pushed into a merger. - A data advantage makes a difference, but on its own it is no substitute for scale in listings and users. ## Sources - [Property Finder becomes a shareholder in Hepsiemlak along with Zingat](https://webrazzi.com/2023/11/06/property-finder-zingat-ile-birlikte-hepsiemlak-a-ortak-oluyor/) - [Hepsiemlak Acquires Zingat: Property Platforms Join Forces](https://www.hepsiemlak.com/emlak-yasam/emlak-rehberi/hepsiemlak-zingati-satin-aldi) - [Hepsiemlak acquires online property platform Zingat](https://swipeline.co/hepsiemlak-cevrimici-gayrimenkul-platformu-zingat-satin-aldi/) - [Online property platform Zingat receives investment from Propertyfinder](https://egirisim.com/2017/08/24/online-gayrimenkul-platformu-zingat-propertyfinderdan-yatirim-aldi/) - [65 million TL investment in Zingat from Propertyfinder and General Atlantic](https://webrazzi.com/2019/04/06/propertyfinder-ve-general-atlantic-ten-zingat-a-65-milyon-tl-yatirim/) - [Zingat, which published 200,000 property listings in its first year in Turkey, is going for the top spot](https://webrazzi.com/2017/01/06/turkiyede-ilk-yilinda-200-bin-emlak-ilani-yayinlayan-zingat-liderlige-oynuyor/) --- # Arrival (2015 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/arrival/ - Sector: Mobility and transport - Country: United Kingdom - Total funding: $229 million - Cause of closure: Product problems ## What did it do? Arrival was a British manufacturer that set out to develop light commercial electric vehicles. The company planned to turn a skateboard platform housing the batteries and drivetrain into finished vehicles in microfactories of around 10,000 square metres. The vehicles it developed included delivery vans, a bus and a car for Uber drivers. ## Why did it shut down? After listing on Nasdaq through a SPAC merger in March 2021, the company peaked at a value of USD 15 billion, but series production never got going. In October 2022 the decision to move van production from Bicester to the US brought layoffs, and in January 2023 800 people, half its UK workforce, were let go. In 2023 a second SPAC merger was called off over concerns about production delays, and an expected USD 25 million investment from a hedge fund also fell through. By January 2023 its market value had fallen to USD 250 million. The company was delisted in January 2024; its UK arm went into administration in February 2024 and its assets were sold to Canoo in March 2024. ## The story When Arrival began trading on Nasdaq in March 2021, Forbes reported that founder Denis Sverdlov's fortune had reached USD 10.6 billion. Shortly afterwards the company's value hit a peak of USD 15 billion. Two years later, in January 2023, the same company was worth USD 250 million. Arrival was founded in 2015, with its headquarters in London, by Denis Sverdlov, a Russian businessman and former deputy communications minister. The company's idea was to turn a skateboard platform housing the batteries and drivetrain into finished vehicles in microfactories of around 10,000 square metres. In January 2020 Hyundai and Kia invested EUR 100 million, and the company became a unicorn at a EUR 3 billion valuation. That same month UPS invested in the company, ordered 10,000 electric delivery vehicles and took an option on 10,000 more. BlackRock also invested USD 118 million in 2020. In November 2020 the company announced it would go public by merging with a SPAC called CIIG Merger Corp. at a valuation of USD 5.4 billion. In the months that followed, a North American headquarters was set up in Charlotte, microfactories were planned in Rock Hill for buses and in Charlotte for UPS vans, a car for Uber drivers was announced, and a factory was acquired at Bicester in the UK. None of these goals, however, turned into series production. In October 2022 the decision to move van production to the US brought layoffs; in January 2023, under new CEO Igor Torgov, half the UK workforce, 800 people, lost their jobs. In 2023 a planned second SPAC merger with Kensington Capital Acquisition Corp V was called off over concerns about production delays, and an additional USD 25 million investment from Antara Capital also fell through. Arrival was delisted in January 2024; its UK arm went into administration in February 2024 and its assets were sold to Canoo in March 2024. Canoo itself went bankrupt in January 2025. Arrival's story shows the risk of trying to prove a new product and a brand-new manufacturing method at the same time. Big orders and a record valuation inflated the promise; but as long as no vehicles rolled out of the factory, that promise quickly lost value in the market's eyes. ## Lessons - Trying to prove a brand-new manufacturing method and a new product at the same time multiplies the risk; validate one first. - Big order announcements are not delivery capacity; until you can show how many vehicles you can build by what date, investor confidence is fragile. - Nail down series production in a single plant instead of building factories in several countries at once. ## Sources - [Arrival (company)](https://en.wikipedia.org/wiki/Arrival_(company)) - [Arrival: Electric van maker's UK arm enters administration](https://www.bbc.com/news/business-68204358) - [Bankrupt EV startup Arrival sold its assets to Canoo](https://techcrunch.com/2024/03/25/bankrupt-ev-startup-arrival-sold-its-assets-to-canoo/) - [UK electric vehicle maker Arrival is going public via SPAC at a $5.4 billion valuation](https://www.cnbc.com/2020/11/18/uk-electric-vehicle-maker-arrival-is-going-public-via-spac.html) --- # Artifact (2022 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/artifact/ - Sector: Consumer apps - Country: United States - Total funding: unknown - Cause of closure: No market need ## What did it do? Artifact was a mobile app released in January 2023 by Nokto, Inc., the company founded by Instagram co-founders Kevin Systrom and Mike Krieger, that used recommendation systems to serve personalised news. Its name blended the English words 'article' and 'fact' with the 'arti' of 'artificial'. Over time the app also turned into a social network where users could share links, images and text. ## Why did it shut down? The app was free; revenue models such as advertising or subscriptions remained options that might be tried at some point in the future. Despite strong launch publicity, interest in the app stayed low. The product changed direction in quick succession: from news reader to SI features, and from there to a social network built on user posts. In January 2024 Systrom announced the closure, saying the market opportunity was not big enough to justify continued investment. In April 2024 Yahoo bought Artifact to use its technology in its own news app. ## The story In January 2024 Kevin Systrom announced that he would close the news app he had launched to great fanfare a year earlier. In the closing post on Artifact's blog, Systrom wrote that they had concluded "the market opportunity isn't big enough to warrant continued investment" in this way. The latest venture from the duo who had built one of the world's most successful social apps was ending after about a year. Systrom and Mike Krieger had sold Instagram in 2012 to the company now called Meta, and left Instagram in 2018 after disagreements with the parent company. In March 2022 they founded a company called Nokto, Inc. in San Francisco. Their first product, Artifact, was released in January 2023; its name blended the English words 'article' and 'fact' with the 'arti' of 'artificial'. The Verge described it as a kind of TikTok for text: the app used recommendation systems to choose news according to the user's interests. The Financial Times presented it as a venture aiming to rival Twitter and fight misinformation. In February 2023 the waiting list was dropped and the app opened to everyone. Run by a small team of seven, Artifact was free; the founders said models such as advertising or subscriptions might be tried later. The app added new features at a rapid pace: SI could rewrite clickbait headlines that users flagged and read articles aloud in a synthetic voice. In April 2023 Engadget wrote that the app was looking more and more like Reddit; in August 2023 Wired wrote that the app was really an SI play. In September users became able to share their own links, images and text. Despite all these experiments, however, interest in the app stayed low, and the closure was announced in January 2024. The story still ended with an exit: in April 2024 Yahoo announced that it had bought Artifact and would use its technology in its own news app. In June 2024 Yahoo brought Artifact's underlying technology back to life in a new SI-powered news app. Artifact's story shows that even the most experienced founders can struggle to create a new consumer habit. The team accepted that it had not found the fit between product and market it was looking for and pulled out before the losses grew; that decision also preserved the value of the technology. ## Lessons - Famous founders bring the first wave of downloads but not lasting usage; track retention as your main measure of success from day one. - If a product changes direction several times in a short period, it may be a sign that the core need has not yet been found; stop and go back to talking to users. - Making the decision to close early and openly keeps the team and the technology valuable; Artifact's technology found a buyer a few months after the shutdown. ## Sources - [Artifact (app)](https://en.wikipedia.org/wiki/Artifact_(app)) - [Instagram's co-founders are back with Artifact, a kind of TikTok for text](https://www.theverge.com/2023/1/31/23579552/artifact-instagram-cofounders-kevin-systrom-mike-krieger-news-app) - [Yahoo is buying Artifact, the SI news app from the Instagram co-founders](https://www.theverge.com/2024/4/2/24118436/yahoo-news-artifact-acquisition) - [Instagram's founders are back with a new app CNN Business](https://www.cnn.com/2023/01/31/tech/artifact-instagram-founders/index.html) --- # Bench Accounting (2012 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/bench-accounting/ - Sector: Fintech - Country: Canada - Total funding: $100 million - Cause of closure: Ran out of cash ## What did it do? Bench offered small-business owners a subscription accounting service that combined cloud-based software with in-house bookkeepers. Customers got monthly bookkeeping, cash-flow and expense tracking, and financial reports from a single platform. Over time the company added services such as tax filing preparation and banking to its package. ## Why did it shut down? In 2021 Bench expanded into new areas such as banking on the back of a $60 million Series C, but by the end of 2024 it could no longer repay debts of more than $65 million. On 27 December 2024 it told customers that the platform would become inaccessible immediately, and it ceased operations without warning its employees in advance. The sudden closure left small businesses that had entrusted their accounting records to Bench unable to reach their data just before the year end. The company filed for bankruptcy in Canada on 7 January 2025. ## The story On 27 December 2024, when many small businesses were busy with their year-end accounts, Bench sent its customers a short email and posted a notice on its website: the platform was shutting down with immediate effect. Around 650 employees at the Vancouver-based company were not told about the closure in advance either. A fintech start-up that had raised more than a hundred million dollars in venture capital had suddenly turned into a void in which customers could not reach their accounting records. The story began in 2012 under the name 10sheet Inc. That year the company was accepted into the TechStars NYC accelerator; in 2013 it moved to Vancouver, took the name Bench and opened its product to everyone. The idea was simple: small-business owners should not have to deal with bookkeeping; cloud-based software and the company's own bookkeepers would take the job on for a subscription. A $2 million seed round in 2013 was followed by a $7 million Series A led by Altos Ventures and Contour Venture Partners in 2015, $16 million led by Bain Capital Ventures in 2016 and $18 million led by iNovia Capital in 2018. A tax filing service was added in 2019; in 2021 a $60 million Series C brought in a banking product called Bench Banking. Total investment passed $100 million, but by the end of 2024 the company could no longer repay debts of more than $65 million. After the sudden closure at the end of December, it filed for bankruptcy in Canada on 7 January 2025, and the filing documents revealed the scale of the debt. Three days after the closure, on 30 December 2024, it was announced that Employer.com, a San Francisco-based HR technology company, would buy Bench, and the Bench brand resumed service as part of that company in January 2025. The original company, however, with its employees and its debts, had effectively come to an end in December 2024. The Bench case is a reminder that, for a service carrying customers' most sensitive data, managing a closure is part of the product too. As the debt load grew, the team and customers were kept in the dark until the very last moment, which pushed the cost of the closure far beyond the money investors lost. ## Lessons - If your service holds customers' financial records, prepare a data-export and handover plan in advance in case you close; trust is measured by whether that plan exists. - When funding a labour-intensive service like a software company, track your debt load alongside your gross margin; debt can catch up with you before growth does. - In hard times, early and open communication with the team and customers costs far less reputation than a sudden shutdown. ## Sources - [Bench Accounting](https://en.wikipedia.org/wiki/Bench_Accounting) - [Vancouver's Bench Accounting abruptly shuts down, with 600 potential jobs lost](https://www.cbc.ca/news/canada/british-columbia/bench-accounting-shutdown-1.7419592) - [Failed fintech startup Bench racked up over $65 million in debt, documents reveal](https://techcrunch.com/2025/01/16/failed-fintech-startup-bench-racked-up-over-65-million-in-debt-documents-reveal/) --- # Bowery Farming (2015 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/bowery-farming/ - Sector: Food and drink - Country: United States - Total funding: $472 million - Cause of closure: Business model failed ## What did it do? Bowery Farming was a New York-based company that grew lettuce, leafy greens and herbs without pesticides using vertical farming in industrial warehouses in New Jersey, Maryland and Pennsylvania. It monitored its plants continuously with sensors, robots and its own software, BoweryOS. It sold its produce to chains such as Whole Foods and Walmart and to various food delivery companies. ## Why did it shut down? Although the company raised $472 million and reached a valuation of $2.3 billion, its produce remained expensive and demand for it was weak. A plant disease that spread through several facilities caused serious crop losses. According to PitchBook, acquisition talks that might have saved the company also came to nothing. In November 2024 Bowery ceased operations and laid off staff at its facilities in three states. ## The story In May 2021 a New York-based vertical farming company closed a $300 million funding round, with celebrity investors ranging from Natalie Portman to Justin Timberlake, and reached a valuation of $2.3 billion. A lettuce-growing start-up joining the ranks of billion-dollar companies marked the peak of optimism about agricultural technology. Three and a half years later the same company had closed its doors. Bowery Farming was founded in 2015 by Irving Fain, who had previously sold CrowdTwist, a company he co-founded, to Oracle for $100 million; David Golden and Brian Falther joined as co-founders. The company turned industrial warehouses into multi-storey farms. Thanks to sensors, robots and BoweryOS, which photographed the plants and analysed the data in real time, lettuce, leafy greens and herbs were grown without pesticides and with little water. Commercial farms opened in New Jersey, Maryland and Pennsylvania, a plant science centre called Farm X was set up in Kearny in 2021, and its produce reached more than 850 points of sale, led by Whole Foods, Walmart and Albertsons stores. A total of $472 million was raised from funds such as GV, General Catalyst, GGV Capital and Temasek; the final round, in 2021, was led by Fidelity. Indoor farming, however, was expensive, and the produce on the shelves stayed expensive too. Demand at those prices was weak. On top of that, a plant disease that spread through several facilities cut harvests sharply. According to PitchBook, when acquisition talks that came to nothing were added to this leaf-destroying pathogen, the company's routes to survival closed off. In November 2024 Bowery ceased operations and laid off staff at its facilities in New Jersey, Pennsylvania and Maryland. When it closed, it was known as the largest vertical farming operation in the US. The lesson from Bowery is that a technologically impressive production method also has to stand up economically. Software and robotics may have raised yields, but the cost of growing indoors could not be squeezed into the shelf price of ordinary greens; and a single disease outbreak wiped out an already thin margin entirely. ## Lessons - In an energy- and equipment-intensive production model, do not expand capacity before your unit cost gets close to the shelf price of the competing product. - Do not roll out nationally before testing in a single city how much of a price premium a message such as 'pesticide-free and local' actually earns from customers. - If you grow a single type of crop indoors, one disease can hit every facility at once; prepare isolation between sites and a contingency plan. ## Sources - [Bowery Farming](https://en.wikipedia.org/wiki/Bowery_Farming) - [Vertical farming "unicorn" Bowery to shut down](https://www.axios.com/2024/11/05/bowery-vertical-farming-close) - [Wilted greens: How a leaf-eating pathogen, failed deals brought down Bowery Farming](https://pitchbook.com/news/articles/bowery-farming-collapse-leaf-eating-pathogen-failed-acquisition) --- # Cruise (2013 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/cruise/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Cruise was a San Francisco-based company developing self-driving technology with the aim of operating a fleet of driverless taxis. Its original plan was to sell a limited autonomous driving kit for existing cars; after General Motors acquired it in 2016, it focused on a robotaxi service as a largely independent subsidiary. In 2022 it won permission to offer paid driverless rides in San Francisco, and it extended the service to cities such as Phoenix and Austin. ## Why did it shut down? On 2 October 2023 in San Francisco, a pedestrian who had been struck by another car ended up under a driverless Cruise vehicle, which then dragged her about 6 metres while trying to pull over. On 24 October the California Department of Motor Vehicles (DMV) suspended the company's permits with immediate effect, stating that Cruise had not shown it the dragging in their first meeting; Cruise maintained that it had shared the footage in full. The company halted driverless operations nationwide, recalled 950 vehicles, and founding CEO Kyle Vogt resigned. An independent law-firm review published in January 2024 concluded that the suspension stemmed largely from failings in leadership. Although the cars began returning to the roads in May 2024, GM stopped funding the robotaxi business in December 2024. ## The story On the night of 2 October 2023, near Market Street in San Francisco, a driver hit a pedestrian and fled the scene. The pedestrian was thrown into the adjacent lane, where a Cruise robotaxi with no safety driver on board also struck her. As the car tried to pull over, it dragged her about 6 metres; she had to be freed from under the vehicle with rescue equipment. That night marked the beginning of the end of a decade-long self-driving story. Cruise was founded in 2013 by Kyle Vogt and Dan Kan. The first plan was to sell a $10,000 kit that would give existing cars a motorway autopilot feature. The Y Combinator graduate was bought by General Motors in March 2016, when it had around 40 employees. GM granted Cruise wide independence over technology and commercialisation. In 2018 SoftBank Vision Fund invested $2.25 billion and Honda $750 million; in January 2021 a $2 billion round joined by Microsoft and Honda lifted the valuation to $30 billion. In 2022 the company secured permission to offer paid driverless rides in San Francisco and announced a target of $1 billion in revenue by 2025. Yet in the first quarter of 2023 alone it had lost $561 million. After the accident, the California DMV suspended the company's permits with immediate effect, stating that Cruise had not shown it the dragging in their first meeting and declaring the vehicles unsafe for the public. Cruise insisted the footage had been shared in full, but it halted driverless operations nationwide and recalled 950 vehicles for a software update. Kyle Vogt resigned in November 2023. In September 2024 NHTSA, the US road safety regulator, fined the company $1.5 million for failing to report the crash properly. The cars began returning to the roads in May 2024, but trust did not come back. In December 2024 GM announced that it would stop funding Cruise and redirect its autonomous driving work away from robotaxis towards driver-assistance systems in personal vehicles. Cruise's absorption into GM was completed in February 2025. Cruise shows that, with a safety-critical product, technical success alone is not enough. The company's future was decided as much by how it communicated with the regulator after the accident as by the accident itself. ## Lessons - With a safety-critical product, the information you give a regulator after an accident must be complete; the perception that something was withheld can do more damage than the accident itself. - Operating independently under a large corporate parent does not remove the risk that the parent's patience runs out after a single crisis; agree your milestones clearly with whoever is funding you. - Before rolling a service out round the clock and across an entire city, prove your incident rates and response procedures in a small area. ## Sources - [Cruise (autonomous vehicle)](https://en.wikipedia.org/wiki/Cruise_(autonomous_vehicle)) - [California DMV immediately suspends Cruise's robotaxi permit](https://techcrunch.com/2023/10/24/dmv-immediately-suspends-cruises-robotaxi-permit-in-california/) - [GM Ends Troubled Cruise Division as Standalone Robotaxi Business](https://www.motortrend.com/news/gm-ends-cruise-standalone-robotaxi-division/) - [Cruise hit with $1.5 million fine for failing to report robotaxi crash involving pedestrian](https://www.theverge.com/2024/9/30/24258445/cruise-nhtsa-fine-robotaxi-pedestrian-drag) --- # Fisker Inc. (2016 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/fisker/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Product problems ## What did it do? Fisker Inc. was a California-based electric vehicle company founded in 2016 by Danish car designer Henrik Fisker and his wife, Geeta Gupta-Fisker. In 2023 it launched the Fisker Ocean, an electric SUV built on the production line of its supplier Magna Steyr in Austria. It began trading on the New York Stock Exchange in 2020 through a SPAC merger. ## Why did it shut down? Fisker's only series-production vehicle, the Ocean, suffered more than 100 cases of power loss after delivery, along with other technical problems, leading to three separate NHTSA investigations and recalls. According to employees who spoke to TechCrunch, the company struggled to keep track of payments, built up no stock of spare parts and set up no team to audit supplier quality. In early 2024 it failed to repay a short-term loan and disclosed substantial doubt about its ability to continue operating. In March 2024 talks with a major carmaker collapsed and its shares were delisted. On 17 June 2024 it filed for Chapter 11 bankruptcy protection in Delaware. ## The story This was not the first time a car company bearing Henrik Fisker's name had come to the brink of bankruptcy. Fisker Automotive, which the Danish designer co-founded, halted production in 2012 after selling around 2,000 Karmas because of the bankruptcy of its battery supplier A123 Systems, and its assets were sold to Wanxiang Group in 2014. Having kept the rights to the Fisker brand, the designer founded Fisker Inc. with his wife, Geeta Gupta-Fisker, in 2016 for a second attempt. The new company initially worked on solid-state batteries, but abandoned the plan in 2021 when it could not make the technology work. Its real bet was the Ocean, an electric SUV unveiled in 2019 promising a range of around 300 miles. In July 2020 Louis Bacon's investment firm Moore Strategic Ventures invested $50 million; days later a SPAC merger with the Apollo-backed Spartan Energy Acquisition was announced, valuing the company at $2.9 billion. Fisker began trading on the New York Stock Exchange in October 2020 and unveiled ambitious plans, such as the PEAR model, targeting a million units a year with Foxconn. When the Ocean hit the road in 2023, the problems began. More than 100 cases of power loss were reported, the NHTSA opened three separate investigations and recalls followed. According to eight employees who spoke to TechCrunch, no stock of spare parts was kept, no team was set up to audit supplier quality, and parts needed for servicing were at times taken from the production line in Austria or stripped from returned vehicles. The company's communications chief denied most of these claims. In early 2024 Fisker failed to repay a short-term loan. In March talks with a major carmaker collapsed, its shares were delisted from the New York Stock Exchange and most employees were let go. On 17 June 2024 it filed for Chapter 11 in Delaware. With the court's approval, the remaining Oceans were sold to a leasing company for around $14,000 per vehicle, $46.25 million in total; in October 2024 a bankruptcy plan was agreed with creditors. Fisker's story shows that an attractive design cannot keep a car company alive without quality, service and financial discipline. Both of the same founder's companies failed the endurance test in their first years of production. ## Lessons - If you go to market with a single model, plan after-sales service and spare-parts infrastructure as an investment every bit as important as production. - When you outsource manufacturing, audit supplier quality with your own team; the quality of every part is attributed directly to your brand. - Do not pin your rescue on a single big partner's signature; keep parallel funding options open before a crisis begins. ## Sources - [Fisker Inc.](https://en.wikipedia.org/wiki/Fisker_Inc.) - [EV startup Fisker files for bankruptcy](https://www.reuters.com/business/autos-transportation/ev-startup-fisker-files-bankruptcy-2024-06-18/) - [EV maker Fisker to be liquidated under plan to keep owners on the road](https://www.latimes.com/business/story/2024-08-24/fisker-bankruptcy-ocean-car-owners-shareholders-chapter-7-11) --- # Ghost Autonomy (2017 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/ghost-autonomy/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Ghost Autonomy was a Mountain View-based start-up developing autonomous driving software for carmakers. It first promised a motorway autonomy kit for privately owned cars, then turned to collision-avoidance technology and finally to applying large language models to driving. In 2023 it received investment from the OpenAI Startup Fund. ## Why did it shut down? The consumer kit the company promised for 2020 did not arrive on time, and Ghost changed strategy several times. Its $55 million round in 2023 was a down round. Commercialising autonomous driving required many years and a great deal of capital, while the investment climate had turned harsh. In April 2024 the company, with around 100 employees, ceased operations. ## The story In late 2023, when Ghost Autonomy announced that it had received $5 million from the OpenAI Startup Fund, along with early access to OpenAI systems and Microsoft's Azure resources, it was arguing that the next phase of autonomous driving would come through large language models. Five months later, in April 2024, a short note appeared on the company's website announcing that its worldwide operations had ended. The company was founded in 2017 as Ghost Locomotion. When it went public in 2019, it had raised a total of $63.7 million from investors including Keith Rabois of Founders Fund, Vinod Khosla of Khosla Ventures and Mike Speiser of Sutter Hill Ventures. The plan was to develop a kit that individuals could fit to their own cars to enable autonomous driving on the motorway. The company said it would deliver this product in 2020. When the target date came, there was no kit. In 2021, with a $100 million Series D led by Sutter Hill and joined by Founders Fund and Coatue, the company turned towards universal collision-avoidance technology. The approach of co-founder and CEO John Hayes relied on tracking the movement of clusters of pixels in the image rather than first recognising objects. In 2023 came a $55 million down round in which early investors also took part; a filing with the SEC confirms the amount. The same year the company declared its new focus to be applying large language models, able to understand both text and images, to autonomous driving. Experts viewed this approach with scepticism. At the time of its closure Ghost had around 100 employees and operations in Mountain View, Dallas and Sydney; in total the company had raised around $220 million. The note on its website said that, given the current funding environment and the long-term investment autonomous driving requires, the path to profitability was uncertain. Hayes told TechCrunch that they had completed the motorway product and were moving on to last-mile delivery in cities, but that the years needed to bring the product to market could not be funded. Ghost's seven years show that in deep-tech start-ups every missed delivery date spawns a new narrative, and each new narrative is harder to fund than the last. Changing technological focus while the valuation falls gives investors the impression of a search, not a roadmap. ## Lessons - In fields with long development cycles such as autonomy, put an interim product that will bring in the first commercial revenue at the front of the roadmap. - If you miss a publicly announced delivery date, talk openly with investors about what was delayed and why before moving on to a new story. - Turning to a fashionable technology does not solve a funding problem if it does not shorten the product's time to market. ## Sources - [OpenAI-backed Ghost Autonomy shuts down](https://techcrunch.com/2024/04/03/openai-backed-ghost-autonomy-shuts-down/) - [Form D/A: Ghost Autonomy Inc.](https://www.sec.gov/Archives/edgar/data/1750465/000175046523000004/xslFormDX01/primary_doc.xml) --- # Gorillas (2020 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/gorillas/ - Sector: Logistics and delivery - Country: Germany - Total funding: $1.3 billion - Cause of closure: Acquired and shut down ## What did it do? Gorillas was a Berlin-based ultra-fast grocery delivery company; it delivered orders placed through its app from dark stores within the city, by bicycle courier, at supermarket prices. It sold more than 3,600 products, from fresh fruit and vegetables to drinks. Within a short time it had spread to dozens of cities, including Amsterdam, London, Paris, Munich and New York. ## Why did it shut down? After rapid expansion in its first two years, Gorillas failed to meet financial expectations. In 2022 it pulled out of Belgium, Italy and Spain, closed all its UK operations outside London and laid off 300 people. Founder Kağan Sümer had said at the start of 2022 that he was targeting $700 million in new funding; instead, in December 2022 the company was sold for $1.2 billion to its rival Getir, the Istanbul-based quick-commerce start-up. Getir also pulled Gorillas out of France in 2023, and in April 2024 announced that both brands were withdrawing from every market outside Turkey. Gorillas closed completely in May 2024. ## The story For Turkish readers, the end of this story was written with a familiar name. Gorillas, Berlin's ultra-fast grocery delivery start-up, was bought in December 2022 for $1.2 billion by its Istanbul-based rival Getir; a year and a half later it disappeared as Getir pulled out of its markets outside Turkey. Gorillas was founded in Berlin in May 2020, in the first months of the pandemic, by Kağan Sümer, Jörg Kattner, Jeff Hester and Ronny Shibley. The model was inspired by goPuff, founded in Philadelphia in 2013: grocery orders placed through the app would be delivered from dark stores within the city by bicycle courier, at supermarket prices, within minutes. The company's slogan was 'faster than you'. A $44 million Series A arrived in December 2020 and a $290 million Series B in March 2021, and the company passed a $1 billion valuation around nine months after it was founded. In October 2021 a Series C of close to $1 billion lifted its valuation to $2.1 billion. Gorillas spread to dozens of cities, bought its French rival Frichti and grew to around 10,000 employees. Speed came at a price. Couriers complained about inadequate equipment, heavy packages and pressure to deliver; in October 2021, 350 workers who joined a wildcat strike in Berlin were dismissed. After the rapid growth of its first two years, the company failed to meet financial expectations. In 2022 it pulled out of Belgium, Italy and Spain, closed its UK operations outside London and laid off 300 people. Sümer had said at the start of 2022 that he was targeting $700 million in new funding; instead, the company was sold to Getir at the end of the year. In June 2023 Getir announced that Gorillas would withdraw from France. In April 2024 Getir and Gorillas announced that they were pulling out of every market outside Turkey. Gorillas closed completely in May 2024. Gorillas shows how quickly a model built on a promise of speed can burn through capital when it scales before its unit economics work. Nor did the merger of two loss-making rivals solve the problem; it merely postponed the closure. ## Lessons - A promise of delivery within minutes drives up the cost per order; reach profitable order density in a single warehouse before opening in a new city. - Do not sacrifice couriers' working conditions to the pace of growth; strikes and mass dismissals do lasting damage to a brand. - A merger of two loss-making rivals is not a solution in itself; before merging, be clear about which market the combined business will turn a profit in. ## Sources - [Gorillas (company)](https://en.wikipedia.org/wiki/Gorillas_(company)) - [Gorillas grabs 'close to' $1BN, Series C values the on-demand grocery delivery biz at $2.1BN](https://techcrunch.com/2021/10/19/gorillas-grabs-close-to-1bn-series-c-values-the-on-demand-grocery-delivery-biz-at-2-1bn/) - [Berlin's Gorillas lays off 300, exits four markets](https://techcrunch.com/2022/05/24/berlins-gorillas-lays-off-300-explores-strategic-options-in-4-countries-as-funds-dry-up-for-its-3b-instant-grocery-play/) - [Turkish quick delivery company Getir to buy rival Gorillas in $1.2b deal](https://www.dealstreetasia.com/stories/getir-gorillas-320788/) - [https://www.wikidata.org/wiki/Q106866916](https://www.wikidata.org/wiki/Q106866916) --- # Gro Intelligence (2012 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/gro-intelligence/ - Sector: Super intelligence - Country: United States - Total funding: $117 million - Cause of closure: Business model failed ## What did it do? Gro Intelligence was a data platform that combined data gathered from governments, markets and meteorological agencies with satellite imagery to give agriculture and food companies super intelligence-driven insights. Based in New York and Nairobi, the company produced analysis ranging from crop-yield forecasts to climate risk. Most of its revenue came from Unilever. ## Why did it shut down? According to former employees, the company chased projects resembling bespoke consultancy rather than repeatable product sales, and most of its revenue came from a single customer. Going without a finance director for a long time weakened investor reporting. In early 2024 salaries went unpaid, the founding CEO stepped down and layoffs came in two waves. Despite bridge financing, no new capital could be found, and in May 2024 the company decided to shut down. ## The story In February 2024 Gro Intelligence's employees received two pieces of news at once: the company could not make payroll, and its founder, Sara Menker, was no longer CEO. She was replaced by the chief technology officer, James Cariello. For the agricultural data platform, which had raised $85 million three years earlier and been named one of TIME magazine's 100 most influential companies in 2021, this was the beginning of the unravelling. Sara Menker, an Ethiopian-born commodities trader, founded Gro in 2012. Based in New York and Nairobi, the company gathered data from governments, trade bodies, meteorological and geological agencies and commodity and financial markets, combined it with satellite imagery and produced forecasts on matters such as crop yields. The company said it had built the world's largest agricultural data platform. Intel Capital and Africa Internet Ventures took part in its $85 million Series B in January 2021, bringing total investment to $117 million. The data product looked strong, but the sales side was scattered. According to a former employee who spoke to AgFunderNews, most revenue came from a single customer, Unilever. The company had tried, and failed, to sell itself as a food security platform to an Asian country and to an oil-exporting Middle Eastern country. According to the same source, the team chased work resembling bespoke consultancy projects rather than repeatable revenue, and until very recently the company had no finance director. In January 2024, 10 per cent of the staff were laid off, and in March, despite bridge financing found at the last minute, 60 per cent. Former employees sued the company on the grounds that it had failed to give the advance written notice required for mass layoffs. Sources cited by AgFunderNews claimed that the SEC was examining whether investors had been misled; the SEC did not comment on whether any investigation existed. At the end of May 2024 the company decided to shut down because it could not raise capital from existing or new investors. In November 2024 a company called Almanac bought Gro's intellectual property. Gro is a reminder that even the most ambitious data platform cannot survive without becoming a repeatable sales model with a broad customer base that reduces dependence on a single client. ## Lessons - If most of your revenue comes from a single customer, make finding the second and third customers a priority before the next funding round. - When selling to institutions and large companies, offer a standard package with a set price instead of turning every project into bespoke consultancy. - Hire an experienced finance director early, once the company starts to grow; regular, reliable reporting is a precondition for raising funds. ## Sources - [BREAKING: Ag insights platform Gro Intelligence is closing down](https://agfundernews.com/breaking-ag-insights-platform-gro-intelligence-is-closing-down) - [Kenya data analytics startup Gro Intelligence shuts down](https://techcabal.com/2024/06/02/kenya-data-analytics-gro-intelligence-shuts-down/) - [Exclusive: Ag insights platform Gro Intelligence unable to make payroll, replaces founder with new CEO](https://agfundernews.com/exclusive-ag-insights-platform-gro-intelligence-unable-to-make-payroll-replaces-founder-with-new-ceo) --- # instela (İTÜ Sözlük) (2004 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/instela/ - Sector: Social media - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? İTÜ Sözlük was founded by Çağatay Gürtürk on 1 March 2004 as a collaborative "dictionary", a Turkish forum format in which users write entries under topic headings, and was soon opened to all internet users. In January 2015, with the aim of expanding abroad, it was renamed instela and its dictionary format was turned into a social community. At the time of the transition the site was being developed by The Hive Cluster, a company with offices in Istanbul and Barcelona. ## Why did it shut down? The 2015 rebrand came with a plan to take the site into other languages, starting with Spanish; however, there is no data showing that this expansion bore fruit. According to the closure post published by the management in early 2024, the site had not carried advertising or conducted any commercial activity for about five years, and had not accepted new members for a long time. The same post also cited the founders being busy with other work, technical problems and court orders demanding the removal of content. The management further noted that dictionary sites had an ageing user base and, with the transformation of social media, could not reach the new generation. The site closed on 1 March 2024, in the 20th year since its founding. ## The story Founded by Çağatay Gürtürk on 1 March 2004, İTÜ Sözlük was initially a student site accessible only from Istanbul Technical University campuses. In April 2004 it opened to the whole internet and became one of Turkey's first collaborative "dictionaries", the forum format in which users write entries under topic headings. Over the years it grew its own community with add-ons such as image and video support, a radio station, event listings and location-based features. In January 2015 the site took a radical decision. The name İTÜ Sözlük was dropped in favour of instela, chosen because foreigners could pronounce it easily, and the dictionary format was turned into a social community. According to a Webrazzi report at the time, more than 150,000 users had moved to the new site. The Hive Cluster, which developed the site, had offices in Istanbul and Barcelona; the goal was to expand into other languages, starting with Spain and Latin America. Gürtürk explained that the average user age was approaching 27 and that the site could no longer be considered a university outlet. The hoped-for global expansion never happened. According to the closure post published by the management in early 2024 and reported by TeknoSeyir, the site had not carried advertising or made any commercial transactions for about five years, and its costs were being covered by another company owned by the team. It had not accepted new members for a long time either. The post listed wearing details such as technical problems and court orders demanding the removal of content. The management described the most important problem as dictionary sites having an increasingly ageing user profile and being unable to reach the new generation as social media transformed. In the end, the team chose to close the site rather than keep it on life support. instela bid farewell on 1 March 2024, exactly 20 years after it was founded. The site's radio station, instela FM, closed the same day. instela's story shows the risk of a strong local brand changing its name in pursuit of global scale. Old users never fully warmed to the new identity, while the new generation turned to social media instead of dictionary sites. ## Lessons - A rebrand alone does not bring a new audience; you need a product that wins new users without wearing out the old ones. - Halting commercial activity and putting a product on hold for years is often the prelude to a quiet closure. - If your users' average age goes up every year, look early at where the new generation is going. ## Sources - [İTÜ Sözlük, relaunched as instela, aims to expand into other languages](https://webrazzi.com/2015/02/20/instela-itu-sozluk/) - [instela](https://tr.wikipedia.org/wiki/%C4%B0nstela) - [İnstela, the dictionary formerly known as İTÜ Sözlük, is reportedly closing](https://teknoseyir.com/durum/1702402) --- # Karhoo (2014 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/karhoo/ - Sector: Mobility and transport - Country: United Kingdom - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Karhoo was a comparison service that brought together the vehicles of London's licensed taxi and private hire firms in a single app, letting users choose by price, arrival time or vehicle type. The company promised operators that it would take a 10 per cent commission instead of Uber's 20 to 25 per cent cut. ## Why did it shut down? Founded by Daniel Ishag in 2014, the company launched in London in May 2016 and also built teams in New York, Singapore and Tel Aviv. Although the press reported that it had raised USD 250 million, Ishag later said the amount raised was USD 52 million, while Taxi Times reported a figure of USD 39 million as of September 2016. Spending on rapid expansion burned through the cash before any revenue materialised, and employees worked unpaid for the final six weeks. On 8 November 2016 the company announced it had failed to find new investment; administrators were appointed the next day, leaving debts of around USD 30 million. In January 2017 a vehicle backed by RCI Bank and Services, Renault's finance arm, acquired the assets and relaunched Karhoo as a business platform, but in May 2024 it was announced that the business was no longer financially viable and the company went into administration again. ## The story Karhoo was a taxi comparison start-up founded in London in 2014 by entrepreneur Daniel Ishag. The idea was simple: users would see black cabs and private hire firms in a single app and choose by price, arrival time or vehicle type. By promising to take only a 10 per cent commission from operators, Karhoo hoped to win driver companies over to its side against Uber. Deals were signed with London operators such as Addison Lee and ComCab. The app went live in London in May 2016; a trial began in New York, and teams were set up in Singapore and Tel Aviv. The press reported that the company had raised USD 250 million and aimed to raise USD 1 billion in total. The real picture, however, was different. Ishag later said the amount raised was USD 52 million, while Taxi Times wrote that the figure as of September 2016 was USD 39 million. Less than six months after launch, the coffers were empty. Employees worked unpaid for the final six weeks, and Ishag stepped down as CEO a few days before the collapse. On 8 November 2016 the company announced it had been unable to raise money, and the next day administrators from David Rubin and Partners were appointed. Employees in London, New York, Singapore and Tel Aviv lost their jobs, and debts of around USD 30 million were left behind. The story did not end there. In January 2017 a vehicle backed by RCI Bank and Services, Renault's finance arm, bought Karhoo's assets. Karhoo stopped being a consumer app and became a business platform providing ride-booking infrastructure to rail and airline companies, and was later placed under Mobilize, Renault's mobility brand. Seven years later, in May 2024, it was announced that the business was no longer financially viable, and the company went into administration for a second time. Karhoo shows that an overhyped start-up story and a big company's rescue operation can end in exactly the same way. ## Lessons - Announcing inflated funding figures attracts attention in the short term, but once the real picture emerges it destroys investor and employee trust at the first crisis. - Building teams on several continents before unit economics are proven in a single market multiplies costs before revenue arrives. - The backing of a powerful corporate owner does not bring sustainability on its own; under Renault's wing Karhoo again failed to find a profitable model and closed for a second time. ## Sources - [Uber rival Karhoo shuts down after blowing through a reported $250M in funding](https://techcrunch.com/2016/11/08/uber-competitor-karhoo-shuts-down-after-blowing-through-250m/) - [Whatever happened to Karhoo?](https://taxi-times.com/whatever-happened-to-karhoo/) - [Renault calls in administrators for 'not financially viable' Karhoo](https://www.prodrivermags.com/news/renault-calls-in-administrators-for-not-financially-viable-karhoo/) --- # Koinim (2013 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/koinim/ - Sector: Crypto and blockchain - Country: Turkey - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Koinim was a bitcoin wallet, trading platform and payment system that opened to users in December 2013. It was developed by Veriyol, the company founded by Ali Çağatay Yüksel, and over time grew into an exchange that also listed other cryptocurrencies. ## Why did it shut down? Law No. 7518, which came into force in July 2024, brought crypto asset service providers under the licensing and supervision of Turkey's Capital Markets Board (SPK). Companies wishing to continue operating had to apply, while those that would not continue had to file a declaration of liquidation. Koinim announced that it had decided to halt its platform's operations following the SPK bulletin of 8 August 2024. In November 2024 the company appeared on the SPK's list of firms that had filed a declaration of liquidation. It is reasonable to think that the capital and compliance burden required by the new regime weighed heavily on small, first-generation players; this part is interpretation. ## The story Koinim opened to users in December 2013 as one of Turkey's first bitcoin start-ups. According to a Webrazzi report at the time, the platform had been developed in-house over six months by Veriyol, the company founded by Ali Çağatay Yüksel. Opened to everyone after an invitation-only test period, Koinim combined a bitcoin wallet, a trading platform and a payment system. The team talked of plans to add other cryptocurrencies such as Litecoin later on and to offer integration for e-commerce sites. Koinim set out at a time when bitcoin was known in Turkey only to a small group of enthusiasts, and over the following decade it witnessed the market's growth. After 2021, when interest in cryptocurrency exploded, the rules of the sector changed rapidly. Law No. 7518, published in the Official Gazette in July 2024, brought crypto asset service providers under the licensing and supervision of the SPK, Turkey's Capital Markets Board. Companies wishing to continue operating had to apply, while those that would not continue had to file a declaration of liquidation. Koinim announced that it had decided to halt its platform's operations following the SPK bulletin of 8 August 2024. New sign-ups, trading, and Turkish lira and crypto deposits were closed; withdrawals were left open so users could take out their assets. On the list updated by the SPK in November 2024, Koinim Bilişim AŞ was among 14 firms that had filed a declaration of liquidation. The company also appeared on the SPK's September 2026 list of firms in the liquidation process. Koinim's closure can be read as a consequence of crypto exchange in Turkey turning from a field small teams could enter into a licensed sector demanding high capital and compliance costs. One of the first-generation players, which had survived for more than a decade, left the stage with the arrival of the new rules. ## Lessons - Being early is an advantage, but once the market matures, scale and compliance capacity become decisive. - Read regulatory signals years in advance and build your capital plan around them. - Keeping the withdrawal channel open when you close is your last and most important responsibility to users. ## Sources - [Koinim.com: a new Turkish bitcoin wallet and platform](https://webrazzi.com/2013/12/25/koinim-com-turk-bitcoin-cuzdani/) - [Crypto asset providers that filed a declaration of liquidation with the SPK](https://webrazzi.com/2024/12/03/spk-ya-tasfiye-beyaninda-bulunan-kripto-varlik-saglayicilari/) - [SPK updates its list: sharp drop in crypto asset licence applications for operating permits](https://www.haberler.com/kripto-para/spk-listeyi-guncelledi-faaliyet-izni-icin-18103429-haberi/) - [About the Decision to Halt Operations](https://destek.koinim.com/hc/tr/articles/30811417058715-Faaliyet-Durdurma-Karar%C4%B1-Hakk%C4%B1nda) - [List of Firms in the Liquidation Process](https://spk.gov.tr/kurumlar/kripto-varlik-hizmet-saglayicilar/tasfiye-surecinde-olanlar-listesi) --- # Koo (2019 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/koo/ - Sector: Social media - Country: India - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Koo was a microblogging and social networking app with a Twitter-like interface, developed by Bengaluru-based Bombinate Technologies. Users shared short posts and interacted through hashtags and mentions. Launched in early 2020, the app won the government's home-grown app competition and rose to prominence as a domestic alternative to Twitter. ## Why did it shut down? Koo's fastest periods of growth coincided with Twitter's crises in India, Nigeria and Brazil; once those waves passed, interest faded. In Nigeria, government officials stopped using Koo after the Twitter ban was lifted. The $6 million round in November 2022 was not enough to carry rising technology costs for long. In April 2024 it emerged that the company could pay salaries only if a possible sale went through. In July 2024 the founders shut the platform, citing unpredictable market conditions, partnerships that came to nothing and high technology service costs. ## The story In the first weeks of February 2021, India saw a curious migration. During the farmers' protests the government had asked for hundreds of accounts to be blocked, and Twitter had refused part of the request on free-speech grounds. After this stand-off, ministers, public officials and supporters of the ruling party moved to a home-grown app with a yellow bird logo and urged their followers to join them there. The app was called Koo, and within days its downloads were climbing fast. Koo was developed by Bombinate Technologies, the Bengaluru-based company of Aprameya Radhakrishna and Mayank Bidawatka. Launched in early 2020, the app won the government's Atmanirbhar app innovation challenge, in which around 7,000 entries competed. According to Sensor Tower, Koo was downloaded 2.6 million times from Indian app stores that year; Twitter's downloads over the same period were 28 million. In April 2021 minister Ravi Shankar Prasad became the first minister to reach 2.5 million followers on Koo. In May 2021 a $30 million investment led by Tiger Global arrived, lifting the company's valuation from about $25 million in February to more than $100 million. Later waves of growth also came from Twitter's troubles in other countries. When the Nigerian government banned Twitter indefinitely in June 2021, official bodies moved to Koo; but after the ban was lifted, officials were reported to have abandoned Koo in 2022. In November 2022, amid the turmoil caused by Elon Musk's takeover of Twitter, more than a million people signed up in Brazil in a single day; the fact that the app's name sounds like a rude word in Portuguese only added to the interest. That same month the company raised another $6 million and reached a valuation of more than $275 million. Yet these waves never turned into a lasting user base. In April 2024 reports emerged that Koo was struggling to pay its staff their April salaries and that further salaries could be paid only if a possible sale went through. The sale did not happen. On 3 July 2024 the founders announced that they were shutting the platform, citing unpredictable market conditions, partnerships that came to nothing and high technology costs. Koo's story shows how fragile growth born of someone else's crisis can be. Every wave brought new users, but the company never built a distinctive reason for them to stay or a revenue model to cover its costs. ## Lessons - Do not mistake a wave of users arriving during a rival's crisis for something permanent; measure 30- and 90-day retention after the wave separately. - Growth that leans on political or national sentiment fades just as fast when the agenda moves on; be clear about the value the product offers on its own. - On a social network with heavy server costs, build the revenue model before scale arrives; otherwise every new wave of users comes back to you as cost. ## Sources - [Koo (social network)](https://en.wikipedia.org/wiki/Koo_(social_network)) - [Tiger Global leads $30 million investment in Indian Twitter rival Koo](https://techcrunch.com/2021/05/25/tiger-global-koo-app-twitter/) - [Twitter drama has Brazilians flocking to Indian platform Koo](https://restofworld.org/2022/twitter-brazil-koo/) - [https://www.wikidata.org/wiki/Q97621095](https://www.wikidata.org/wiki/Q97621095) --- # Mint (2006 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/mint/ - Sector: Fintech - Country: United States - Total funding: $31 million - Cause of closure: Acquired and shut down ## What did it do? Mint was a personal finance website and app that let users track the balances and transactions in their bank, credit card, investment and loan accounts in a single interface, build budgets and set financial goals. It was founded by Aaron Patzer in 2006 and earned its revenue from referral fees on personalised financial products it recommended to users. It was acquired by Intuit in 2009 and served users in the United States and Canada. ## Why did it shut down? Under Intuit, Mint's core features barely changed over the years; Fast Company wrote that the app had been neglected, and its founder, Patzer, said it had long been in maintenance mode. Having reported more than 20 million users in 2016, Mint had 13 million registered users in 2020. Intuit's portfolio also included Credit Karma, which targeted the same audience. In November 2023 Intuit announced that it would shut Mint down and move its users to Credit Karma. The closure date was first set for 31 December 2023 and later pushed back to 23 March 2024. ## The story Years later, Mint's founder, Aaron Patzer, offered Fast Company a bitter verdict on his own product: "As far as I'm concerned, it's been in maintenance mode for the last eight years." Once the emblem of personal finance apps, Mint stood still for a long time after its acquisition and was eventually shut down. Patzer founded Mint.com in 2006. The app brought bank, credit card, investment and loan accounts together on one screen and let users budget and set goals. The company made its money by recommending personalised financial products to users and collecting referral fees. It raised more than USD 31 million in total from funds including DAG Ventures, Shasta Ventures and First Round Capital, and from Ram Shriram, one of Google's early investors. After a USD 14 million round in August 2009, TechCrunch valued the company at USD 140 million. A few weeks later, in September 2009, Intuit bought Mint, which had 35 employees, for USD 170 million. Mint replaced Intuit's online Quicken product; in 2010 it said it could connect to more than 16,000 financial institutions, and in 2016 it reached more than 20 million users. The period also brought controversy: in 2010 it was reported that Mint stored users' bank usernames and passwords in a decryptable form, raising security concerns. Patzer left Intuit in December 2012. In 2014 Intuit folded Check, a bill-tracking app it had bought for USD 360 million, into Mint under the name Mint Bills; Mint's bill payment service, however, was shut down in June 2018. In the years that followed, Mint's core features hardly changed; Fast Company wrote that the app had been neglected. In 2019 Intuit's consumer segment, made up largely of Mint and TurboTax, generated USD 2.775 billion in revenue, yet Mint had 13 million registered users in 2020. In November 2023 Intuit announced that it would shut Mint down and steer its users to Credit Karma, another product in its portfolio. The closure date was first announced as 31 December 2023 and then pushed back to 23 March 2024. Mint's story shows that a successful sale does not guarantee a product's future. A product that is not a priority in the buyer's strategy fades slowly, even with millions of users, and one day is absorbed into a bigger brand. ## Lessons - When you sell your company, ask where the product fits in the buyer's strategy; if the buyer has a similar product, yours will sooner or later be merged or shut down. - In a free finance app, a revenue model built on referral fees can clash with user trust; show transparently that recommendations serve the user. - Use banks' authorisation infrastructure rather than storing account passwords; a security row can quickly damage a finance app's reputation. ## Sources - [Intuit Mint](https://en.wikipedia.org/wiki/Intuit_Mint) - [Intuit To Acquire (Former TechCrunch50 Winner) Mint For $170 Million](https://techcrunch.com/2009/09/13/intuit-to-acquire-former-techcrunch50-winner-mint-for-170-million/) - [Intuit Is Closing Personal-Finance App Mint, Shifts Users to Credit Karma](https://www.bloomberg.com/news/articles/2023-11-01/intuit-winds-down-personal-finance-app-mint-shifts-users-to-credit-karma) - [Mint is Worth A Mint: $140 Million Valuation](https://techcrunch.com/2009/09/02/mint-is-worth-a-mint-140-million-valuation/) --- # Superpeer (? – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/superpeer/ - Sector: Media and entertainment - Country: Turkey - Total funding: $10 million - Cause of closure: Acquired and shut down ## What did it do? Superpeer, founded by Devrim Yaşar and Fatih Acet, was a platform that let experts and influencers hold paid one-to-one video calls with their followers. Experts set an introductory video, their available hours and a fee, and Superpeer took a 15 per cent commission on calls. With Superpeer Channels, added at the end of 2020, it also offered paid livestreams and a monthly subscription model. ## Why did it shut down? In March 2024 Superpeer was acquired by the online learning platform Skillshare, with plans for it to be integrated into Skillshare. According to founder Fatih Acet, Skillshare's priorities changed shortly after the acquisition. In December 2024 users were told that the platform would close on 31 December. Acet stressed that the decision to close had nothing to do with the founders and that control over the product had been sharply reduced after the acquisition. As a result, creators who had been earning a regular income lost their platform because of a buyer's portfolio decision. ## The story Superpeer was a joint venture by Devrim Yaşar, previously known for Koding, and Fatih Acet. The idea was simple: YouTubers, influencers and experts in their fields would be able to hold paid one-to-one video calls with their followers and turn their time into money. Experts added an introductory video to their profiles and set their available hours and fees, and Superpeer took a 15 per cent commission on calls. Having raised $2 million in pre-seed funding led by Eniac Ventures in March 2020, the start-up was named the second product of the day on Product Hunt shortly after opening its private beta. In November 2020 it raised a further $8 million in a round joined by funds such as Acrew Capital, Audacious Ventures, Homebrew and Moxxie Ventures. With Superpeer Channels, launched in the same period, creators began running paid livestreams and earning monthly income from subscribers. In March 2024 Superpeer was acquired by Skillshare, the New York-based online learning platform. According to a Webrazzi report, the plan was for the product to be fully integrated into Skillshare over the following months. That integration did not last long, however. In December 2024 users received an email saying the platform would close on 31 December. In posts on his X account, Fatih Acet said the decision had nothing to do with him or his co-founder. According to Acet, Skillshare's priorities had changed shortly after the acquisition. He explained that after acquisitions of this kind the product no longer belongs to its former owners and their control over it is greatly reduced. The team had built a product on an entirely serverless architecture that suffered almost no downtime and could host 3,000 people in a single livestream. Superpeer's story shows that a successful exit is not always a happy ending for the product. The founders delivered a return to their investors, but the creators earning a regular income through the platform paid the price for the buyer's change of strategy. ## Lessons - Once you are acquired, the product is no longer yours; in exit talks, also discuss the conditions under which the product will live on. - If you broker creators' income, leave them a migration path in case you close. - If the link between the buyer's strategic priorities and your product is weak, the integration plan can turn into a closure plan. ## Sources - [Turkish start-up Superpeer to close on 31 December](https://egirisim.com/2024/12/03/yerli-girisim-superpeer-31-aralikta-kapaniyor/) - [Skillshare acquires Superpeer](https://webrazzi.com/2024/03/13/skillshare-superpeer-i-satin-aldi/) - [Superpeer raises $8 million](https://webrazzi.com/2020/11/23/superpeer-8-milyon-dolar-yatirim-aldi/) - [Devrim Yaşar's start-up Superpeer raises $2 million](https://webrazzi.com/2020/03/12/influencerlarin-gelir-elde-etmesini-saglayan-superpeer-2-milyon-dolar-yatirim-aldi/) --- # Synapse (2014 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/synapse/ - Sector: Fintech - Country: United States - Total funding: $51 million - Cause of closure: Team problems ## What did it do? Synapse was a San Francisco-based intermediary that provided banking-as-a-service infrastructure to fintech companies. Working directly with around 100 fintechs such as Dave and Honey, it indirectly served 10 million retail customers. It said customer deposits were held in FDIC-insured bank accounts, but because it was not itself a bank, it offered no protection against its own failure. ## Why did it shut down? In 2023, as discrepancies in the company's ledgers piled up, the board discussed removing CEO Sankaet Pathak, but investors from Andreessen Horowitz opposed it. In April 2024 the company filed for Chapter 11, leaving tens of thousands of businesses and consumers unable to access their accounts. Jelena McWilliams, the former FDIC chair appointed as trustee, said there was a shortfall of between $65 million and $96 million between Synapse's records and those of the banks. The US Trustee's office sought to have the company liquidated under Chapter 7, citing gross mismanagement. According to data from Yotta Savings, which relied on Synapse, 13,725 customers recovered only $11.8 million of their $64.9 million in deposits. ## The story In the spring of 2024, tens of thousands of businesses and consumers in the US suddenly found they could not reach the savings held in their fintech apps. The money was in banks, but Synapse, the intermediary sitting between the banks and the apps, had gone bankrupt, and nobody could say for certain whose money was where. Synapse was founded in San Francisco in 2014 by Sankaet Pathak and Bryan Keltner. It gave fintech companies without a banking licence access to bank infrastructure: the app found the customer, Synapse managed the accounts and the flow of money, and the money sat in partner banks. Backed by Andreessen Horowitz, the company raised $51 million from investors. Working directly with around 100 fintechs such as Dave and Honey, it indirectly reached 10 million retail customers, and in 2022 it was named among the 100 fastest-growing financial services companies in the US. In its marketing, Synapse argued that deposits were held in FDIC-insured bank accounts and that this offered protection similar to a traditional bank account. But the company was not a bank, and it offered no protection whatsoever against its own failure. The warning signs came early: as far back as 2020, Forbes was asking why employees and customers were walking away from the company. In 2023, as discrepancies in the ledgers piled up, the board discussed removing Pathak, but investors from Andreessen Horowitz opposed it. In April 2024 Synapse filed for Chapter 11. In May, Jelena McWilliams, the former FDIC chair appointed as trustee, said there was a shortfall of between $65 million and $96 million between the company's records and those of the banks. The US Trustee's office sought to have the company liquidated under Chapter 7, citing gross mismanagement. In November 2024 the CEO of Yotta Savings, which relied on Synapse, published data showing that 13,725 customers had recovered only $11.8 million of their $64.9 million in deposits. A lawsuit seeking class-action status was also filed against four partner banks, including Evolve Bank & Trust. Synapse's story shows that in financial infrastructure the most boring-looking job, keeping complete records every single day, is in fact everything. However fast an intermediary layer grows, the whole chain collapses the moment it can no longer prove whose money is where. ## Lessons - In any infrastructure that touches customer money, daily reconciliation is non-negotiable; if your records do not match the bank's every single day, stop growing. - If your marketing mentions deposit insurance, tell users just as clearly which risks that insurance does not cover. - When a board receives a serious operational warning, the deciding factor should be the safety of customers' money, not loyalty to investors. ## Sources - [Synapse Financial Technologies](https://en.wikipedia.org/wiki/Synapse_Financial_Technologies) - [Abrupt shutdown of financial middleman Synapse has frozen thousands of Americans' deposits](https://apnews.com/article/synapse-evolve-bank-fintech-accounts-frozen-07ecb45f807a8114cac7438e7a66b512) - [A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’](https://techcrunch.com/2024/05/16/a-us-trustee-wants-troubled-fintech-synapse-to-be-liquidated-via-chapter-7-bankruptcy-cites-gross-mismanagement/) - ['I have no money': Thousands of Americans see their savings vanish in Synapse fintech crisis](https://www.cnbc.com/2024/11/22/synapse-bankruptcy-thousands-of-americans-see-their-savings-vanish.html) --- # Tally (2015 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/tally/ - Sector: Fintech - Country: United States - Total funding: $172 million - Cause of closure: Ran out of cash ## What did it do? Tally was a San Francisco-based fintech start-up that let users manage their credit card debt in a single app and paid off high-interest balances with a lower-interest loan. By automating payments, it aimed to reduce consumers' interest burden. In 2024 it shut its consumer app and turned to offering its technology to financial institutions. ## Why did it shut down? Lending directly to consumers required a lot of capital, and according to Fintech Nexus's assessment the company could not make those economics work at scale. In April 2024 it shut its consumer app and switched to a B2B model, but the big partner it announced was never named. In a climate where investment in financial services start-ups had fallen sharply, no new funding could be found. In August 2024 the company, valued at $855 million, shut down. ## The story The farewell of a nine-year-old fintech company fitted into a single LinkedIn post. In August 2024 Tally's founder and CEO Jason Brown announced in a short note that they had decided to shut the company down. According to Brown, every option had been tried, but no funding could be found to keep operating. According to PitchBook data, Tally had 183 employees at the time, and its last valuation was $855 million. Tally was founded in San Francisco in 2015 with the idea of making credit card debt, one of Americans' most expensive forms of borrowing, manageable. The app gathered a user's cards in one place, paid off high-interest balances with a lower-interest loan offered by the company and automated payments. In 2019 came a $50 million Series C led by Andreessen Horowitz, with Kleiner Perkins, Shasta Ventures, Cowboy Ventures and Sway Ventures taking part. With an $80 million Series D led by Sway Ventures in October 2022, total investment reached $172 million. But for a fintech lending directly to consumers, every step of growth demanded capital. According to Fintech Nexus's assessment in April 2024, Tally's technology was strong, but the company had not made the economics work at scale. That same month Tally announced that it was shutting its consumer app and moving to a B2B model in which it would embed its technology in other financial institutions' apps. According to the company, a large public consumer company with more than 50 million users would start using the product as a launch partner in July; but that partner was never named. There was no time for the pivot to bear fruit. According to Crunchbase data, investment in financial services start-ups had fallen 75 per cent from its peak in the second quarter of 2021, and in this climate Tally could not find new capital. Less than two years after its Series D, in August 2024, the company shut down. Tally's story is a reminder that the value of a lending consumer fintech is set less by its user numbers than by its funding costs and credit risk. Deciding to change the model when cheap money runs out may be right, but that decision only stands a chance of paying off when it is taken while there is still enough cash. ## Lessons - If you are building a fintech that lends from its own balance sheet, prepare scenarios for how your unit economics change when funding costs rise by a few points. - Start a move to B2B before your cash runs out, while you still have at least 18 months of runway; enterprise sales cycles are slower than consumer growth. - When announcing a pivot, wait for a signed, measurable first customer rather than leaning on a partner you cannot name. ## Sources - [a16z-backed fintech Tally, which raised $172M in funding, is shutting down after running out of cash](https://techcrunch.com/2024/08/12/a16z-backed-fintech-tally-which-raised-172m-in-funding-is-shutting-down-after-running-out-of-cash/) - [a16z-Backed Fintech Startup Tally Closes Doors](https://news.crunchbase.com/fintech-ecommerce/startup-tally-closes-sway-a16z/) - [Fintech Nexus Newsletter (April 3, 2024): Tally pivots to B2B, sunsetting its B2C app](https://www.fintechnexus.com/fintech-nexus-newsletter-april-3-2024-tally-pivots-to-b2b-sunsetting-its-b2c-app/) --- # Terraform Labs (2018 – 2024) - URL: https://girisimcikafasi.com/en/startup-graveyard/terraform-labs/ - Sector: Crypto and blockchain - Country: Singapore - Total funding: $200 million - Cause of closure: Fraud ## What did it do? Terraform Labs developed the Terra blockchain and payments platform, built around algorithmic stablecoins. TerraUSD (UST), meant to hold its peg to the dollar, was kept in balance not by collateral but by a mint-and-burn mechanism with the LUNA token. Anchor Protocol, part of the ecosystem, paid 19.45 per cent interest to anyone who deposited UST. ## Why did it shut down? In May 2022 mass withdrawals from Anchor, broader worries about the crypto market and a fall in Bitcoin together broke UST's dollar peg. As users swapped UST for LUNA, the supply of LUNA exploded and its price fell to almost zero. Luna Foundation Guard's intervention with its Bitcoin reserves failed to restore the peg, and around USD 45 billion of market value was wiped out in a week. In February 2023 the SEC charged Terraform Labs and Kwon with fraud; the company filed for bankruptcy in the US in January 2024. Kwon pleaded guilty to two fraud charges in August 2025 and was sentenced to 15 years in prison in December 2025. ## The story On 9 May 2022, UST, which was always supposed to be worth one dollar, slipped below a dollar and never came back. Within a week UST had fallen to 10 cents, and its sister token LUNA had dropped from a peak of USD 119.51 to almost zero. Around USD 45 billion of market value was wiped out, and behind the collapse stood Terraform Labs. The company was founded in Seoul in 2018 by Do Kwon and Daniel Shin; the company behind Terra was registered in Singapore. It raised more than USD 200 million from funds including Arrington Capital, Coinbase Ventures, Galaxy Digital and Lightspeed Venture Partners. Terra was built on stablecoins held in balance by an algorithm rather than by collateral: when UST lost value, users could swap it for LUNA, and that mechanism was supposed to keep the price at one dollar. The ecosystem's star, Anchor Protocol, paid 19.45 per cent interest on UST deposits, and some critics were already questioning whether that yield was sustainable in the spring of 2022. Even so, before the collapse UST had become the third-largest stablecoin by market value. In January 2022 Luna Foundation Guard, of which Kwon was a director, began building up reserves to defend UST; by early May it held 80,394 Bitcoin worth around USD 2.4 billion. But once mass withdrawals from Anchor and the wider market slide began, that reserve was not enough. As more holders swapped UST for LUNA, LUNA's supply exploded, its price melted and the spiral accelerated. At the end of May the community voted to launch a new LUNA and abandon UST; the new token, dubbed Terra 2.0, also lost value in its first days. Then the law stepped in. In February 2023 the SEC charged Terraform Labs and Kwon with fraud. In March 2023 Kwon was arrested in Montenegro while trying to travel on forged documents, and in New York he faced eight charges. Terraform Labs filed for bankruptcy in the US in January 2024. Kwon pleaded guilty to two fraud charges in August 2025 and was sentenced to 15 years in prison in December 2025. Terra's story shows how quickly a mechanism that looks elegant on paper can fall apart in the face of human behaviour. What really held the peg up was trust; once trust went, there was no real reserve left to carry it. ## Lessons - If high yield is your product's main draw, work out and publish which reserve will fund that yield, and for how long. - Pegging a product's value to another asset you also issue can sink both together under stress; run the stress test before the crisis arrives. - Even in a project governed by community votes, the founder's statements create legal liability; keep your promises in writing and measured. ## Sources - [Terra (blockchain)](https://en.wikipedia.org/wiki/Terra_(blockchain)) - [Terraform Labs files for bankruptcy protection in the US](https://www.reuters.com/technology/terraform-labs-files-bankruptcy-protection-us-2024-01-22/) - [SEC charges Do Kwon, Terraform with fraud in connection with Terra collapse](https://www.cnbc.com/2023/02/16/sec-charges-do-kwon-with-fraud-in-connection-with-terra-collapse.html) - [Crypto mogul Do Kwon sentenced to 15 years in prison for $40 billion stablecoin fraud](https://www.cnn.com/2025/12/11/business/cryptocurrency-do-kwon-fraud-sentencing-intl-hnk) - [TerraUSD: 'Cryptocrash king' Do Kwon pleads guilty to fraud](https://www.bbc.com/news/articles/c2kznpdvwwlo) --- # 54gene (2019 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/54gene/ - Sector: Biotechnology - Country: Nigeria - Total funding: $45 million - Cause of closure: Ran out of cash ## What did it do? 54gene was a genomics start-up based in Lagos and Washington that aimed to close the diversity gap in global drug research by collecting Africans' genomic data. It built a biobank and planned to offer data and research services to pharmaceutical companies. During the pandemic it became one of Nigeria's major Covid-19 testing providers. ## Why did it shut down? The company grew rapidly on Covid testing during the pandemic and hired large numbers of staff, but when demand for tests fell, revenue declined. In 2022 around 200 people were laid off in two waves, the founding CEO left and the valuation was reported to have dropped from $170 million to about $50 million. Three changes of CEO within a year, lawsuits and the high cost of genomics infrastructure put the company under strain. In July 2023 it began winding down its operations. ## The story Less than 3 per cent of the genetic material used in global drug research came from Africans. 54gene was founded in 2019 under the leadership of Dr Abasi Ene-Obong to fill that gap, and was accepted into Y Combinator the same year. With offices in Lagos and Washington, the company aimed to collect Africans' genomic data and make it available to pharmaceutical companies' research; building a biobank was also part of the plan. It soon came to be seen as the showcase company of Africa's budding biotech scene. The pandemic opened an unexpected door. In 2020, through its clinical diagnostics unit, 54gene became one of Nigeria's largest Covid-19 testing providers and hired staff rapidly for the work; according to TechCabal's sources, testing brought in at least $20 million in revenue. On that momentum came a $15 million Series A in 2020 and, in 2021, a $25 million Series B joined by Adjuvant Capital, Cathay AfricInvest Innovation Fund, KdT Ventures and Endeavor Catalyst. According to people close to the matter, the Series B valued the company at $170 million; total investment reached $45 million. When demand for testing waned, revenue fell. In August 2022, 95 people, most of them working in the testing unit, were laid off, followed in October by more than 100, equivalent to 55 per cent of the remaining workforce. Co-founder Ogochukwu Francis Osifo left in September, and Ene-Obong stepped down as CEO in October 2022. In a bridge round led by investors on the board, the valuation was reported to have fallen to about $50 million. The company went through three CEOs in a year; Teresia Bost, the former general counsel and interim CEO, sued the company and some executives, alleging discrimination and a hostile working environment. In July 2023, in the words of then CEO Ron Chiarello, the company became financially unable to continue operating, and the wind-down began. By September its website was unreachable, buyers were being sought for its assets, including the biobank, and sources reported that some suppliers were still owed money. 54gene shows that companies growing on temporary revenue born of a crisis find out very quickly, once that revenue disappears, whether their core business can stand on its own. ## Lessons - When you expand your headcount on temporary revenue that arrives during a crisis, plan in writing from the outset which team will stay once that revenue ends. - In capital-intensive fields such as genomics, try to sign your first pharmaceutical contracts before making major infrastructure investments. - A founder's departure and a string of CEO changes erode investor confidence quickly; hand over leadership with a written transition plan. ## Sources - [Exclusive: After raising $45m in two years, 54gene is shutting down](https://techcabal.com/2023/09/27/54gene-shutting-down-operations/) - [54gene valuation slashed by over $100M amid job cuts and CEO exit](https://techcrunch.com/2022/10/28/54gene-valuation-slashed-by-over-100m-amid-job-cuts-and-ceo-exit/) - [African genomics startup, 54gene, lays off 100 employees following founder’s resignation](https://techpoint.africa/insight/techpoint-digest-444/) --- # AppHarvest (2017 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/appharvest/ - Sector: Food and drink - Country: United States - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? AppHarvest was a food production company practising hydroponic and vertical farming in giant greenhouses in Kentucky, in the Appalachian region. Founded by Jonathan Webb in 2017, it stood out for its promise of green jobs and sustainable production in a former coal region. It operated a total of four greenhouse facilities, in Morehead, Richmond, Somerset and Berea. ## Why did it shut down? The greenhouses required huge investment while the company posted heavy losses; according to the local press, its loss in 2021 alone was $166 million. In November 2022 the company disclosed substantial doubt about its future. After the share price collapsed, shareholders filed five federal lawsuits alleging that executives had misrepresented the company's state of readiness to investors. An investigation by Grist revealed extreme heat and unsafe working conditions in the greenhouses. The company filed for Chapter 11 on 24 July 2023, and its greenhouses were sold to various buyers. ## The story In eastern Kentucky, in the Appalachian region where coal mining had declined, an ambitious idea took root in 2017: growing soil-free crops in giant greenhouses and bringing new, green jobs to the area. Jonathan Webb, who founded AppHarvest, told the company's story through this narrative of transformation; its board included names such as Martha Stewart, Jeffrey Ubben and JD Vance. The idea quickly caught the attention of the media and investors. In 2019 Fast Company wrote that the company would build one of the world's largest sustainable greenhouses in coal country. In 2020 AppHarvest went public by merging with a SPAC called Novus Capital. In 2021 CNN featured the Morehead facility as the largest greenhouse in the US and asked whether it could be the future of farming. Over time the company built up facilities of 60 acres each in Morehead and Richmond, 30 acres in Somerset and 15 acres in Berea. The numbers, however, did not match the promise. According to the local newspaper, the Lexington Herald-Leader, the company lost $166 million in 2021; in November 2022 it disclosed substantial doubt about its future. After a sharp fall in the share price, shareholders filed five federal lawsuits. The suits alleged that executives had misrepresented the company's state of readiness to investors and regulators while collecting millions of dollars in pay. The news from inside the greenhouses was not encouraging either. According to an investigation by Grist, workers at times faced temperatures reaching 155 degrees Fahrenheit (around 68 degrees Celsius); contract workers outnumbered local employees and had fewer rights. This picture contradicted the company's promise to contribute to the regional economy. On 24 July 2023 AppHarvest filed for Chapter 11. The Morehead and Richmond greenhouses were sold to long-standing investor Equilibrium Capital, the Somerset facility to Bosch Growers and the Berea facility to Mastronardi. AppHarvest's story shows that a powerful narrative and celebrity backers cannot rescue the unit economics of a capital-intensive model. The transformation the company promised was scaled up before the greenhouses were proven to run efficiently and profitably; investors and workers alike paid the price. ## Lessons - In a capital-intensive farming model such as greenhouses, do not move on to new facilities before proving the first one is profitable; every new site widens the gap. - If you set out with a promise of local jobs, make working conditions a measurable part of that promise; lost trust drives away both workers and public support. - Going public early through a SPAC puts a company whose production has not yet bedded in under a structure that is examined every quarter; work out the cost of that in advance. ## Sources - [AppHarvest](https://en.wikipedia.org/wiki/AppHarvest) - [AppHarvest files for Chapter 11](https://www.wsj.com/articles/appharvest-files-for-chapter-11-928e2ae3) - [Could the biggest greenhouse in the US be the future of farming?](https://www.cnn.com/2021/10/06/world/appharvest-kentucky-greenhouse-robot-farming-spc-intl-hnk/index.html) - [AppHarvest to go public via merger with blank-check firm](https://www.reuters.com/article/appharvest-novus-cap-idUSL4N2GQ33L) --- # Babylon Health (2013 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/babylon-health/ - Sector: Health - Country: United Kingdom - Total funding: $635 million - Cause of closure: Business model failed ## What did it do? Babylon Health was an SI-powered healthcare provider that connected patients with doctors, nurses and therapists through its website and mobile app. Users could ask questions by message, hold video consultations and order home blood-test kits. The company started in England in 2013, ran the GP at Hand service for the NHS and expanded to 17 countries. ## Why did it shut down? According to founder Ali Parsa, members on fixed per-person-fee contracts used the service far more often than expected, and the company lost money on every new member. The shares of the company, which listed on the New York Stock Exchange via a SPAC merger in October 2021 at a $4.2 billion valuation, soon collapsed. The safety of its SI chatbot and its unproven promotional claims also drew heavy criticism. In August 2022 almost half the workforce was cut. In August 2023 the US unit filed for bankruptcy with a view to liquidation, the UK unit went into administration and its assets were sold to eMed Healthcare for £500,000. ## The story In the end, founder Ali Parsa summed up the problem in a single calculation: the government was paying for two or three consultations a year for a person in this age group, but people were using Babylon six or seven times a year, and the company was losing money on every new member. That was the collapse of a digital health company once valued at $4.2 billion, in a nutshell. Babylon was founded in 2013 by Ali Parsa, a former investment banker and previously CEO of the hospital operator Circle Health. The idea was to make reaching a doctor as easy as sending a message: users could send questions or photos through the app and hold video consultations. Its $25 million Series A in January 2016 was seen as the largest investment a European digital health start-up had received to date. In 2017 another $60 million came in for super intelligence, and in August 2019 a $550 million round led by Saudi Arabia's Public Investment Fund pushed the valuation past $2 billion. That year the company was serving more than 20 million people and carrying out over 5,000 consultations a day. Babyl, set up in Rwanda with the Gates Foundation, reached around 30 per cent of the adult population. In the shadow of that growth, questions were piling up. Concerns about the safety of the SI chatbot were taken to British regulators, and the company's promotional claims were widely debated. In October 2021 Babylon listed on the New York Stock Exchange through a SPAC merger at a $4.2 billion valuation; Parsa later described the decision as an utter disaster. The company grew fast in the US by acquiring the 700-physician Meritage Medical Network and other businesses, but its share price collapsed. In August 2022 Parsa announced cuts affecting almost half the workforce; the GP at Hand service in Birmingham, judged unprofitable, was also scaled back. In August 2023 the US unit went into Chapter 7 bankruptcy for liquidation, operations in Rwanda began to wind down and the UK unit went into administration in September. The assets were sold to eMed Healthcare for £500,000; the private and NHS services in England continued under the eMed brand. Babylon's story shows that in digital health, making access easier also increases usage, so pricing has to be built on real behaviour. The technology promise excited investors; the unit economics, meanwhile, were quietly working against it from day one. ## Lessons - Before signing a fixed per-person-fee contract, model real usage frequency with pilot data; once usage doubles, every customer becomes a loss. - Back your SI claims with independent clinical evaluation; unevidenced promotion in healthcare turns both regulators and doctors against you. - Use a public listing once your path to profitability is clear, not as a showcase for growth; the high valuation that comes with a SPAC becomes a burden after the first bad quarter. ## Sources - [Babylon Health](https://en.wikipedia.org/wiki/Babylon_Health) - [Digital health company Babylon files for bankruptcy in US, will liquidate](https://www.forbes.com/sites/katiejennings/2023/08/15/digital-health-company-babylon-files-for-bankruptcy-in-us-will-liquidate/?sh=11432ad3c0de) - [Babylon Health confirms $550M raise at $2B+ valuation to expand its AI-based health services](https://techcrunch.com/2019/08/02/babylon-health-confirms-550m-raise-to-expand-its-ai-based-health-services-to-the-us-and-asia/) - [Babylon claims its chatbot beats GPs at medical exam](https://www.bbc.com/news/technology-44635134) --- # Boxed (2013 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/boxed/ - Sector: E-commerce - Country: United States - Total funding: $243 million - Cause of closure: Ran out of cash ## What did it do? Boxed was a New York-based online retailer that sold the bulk-pack products found in wholesale clubs through its app and website, without charging a membership fee. It delivered orders within two days from warehouses in New Jersey, Nevada and Texas. The company also set up a unit called Spresso that offered its e-commerce infrastructure to other retailers as software as a service. ## Why did it shut down? In 2021 the company merged with a SPAC called Seven Oaks Acquisition and began trading on the New York Stock Exchange, but it continued to struggle to raise funding. In March 2023, also hit by the collapse of Silicon Valley Bank, Boxed said it was considering filing for bankruptcy. On 2 April 2023 it filed for Chapter 11 and decided to sell its Spresso unit and wind down its retail e-commerce operations. Its shares were delisted, and its domain name and trademarks were put up for auction. ## The story Living in New York, Chieh Huang missed being able to shop at wholesale clubs like the ones in New Jersey, where he grew up. That frustration became Boxed, which Huang founded in August 2013 with Jared Yaman, Christopher Cheung and William Fong. The first orders were shipped from Huang's garage in Edison, New Jersey. The team, which had a background in mobile games, launched iPhone and Android apps first and the website a few months later. Boxed delivered bulk-pack products to the door without asking for a membership fee; the press called it the Costco for millennials. In 2016 it raised $132 million from investors including GGV Capital and DST Global, and in 2018 $111 million came from the retail group Aeon. In 2016 Forbes named it among the next billion-dollar start-ups. Huang also made headlines by announcing that he would pay the college tuition of warehouse workers' children out of his own pocket. With warehouses in New Jersey, Nevada and Texas, the company delivered orders in two days and developed machine-learning features that predicted when customers would run out of a product. At the end of 2021 it moved into rapid delivery by buying MaxDelivery, a New York grocery delivery company, and that same year it merged with a SPAC called Seven Oaks Acquisition and began trading on the New York Stock Exchange. It also spun its software and services business into a separate unit called Spresso. In 2022 its BoxedUp loyalty programme reached around 32,000 members and $21 million in gross sales. But going public did not solve the funding problem. In March 2023, also hit by the collapse of Silicon Valley Bank, Boxed said it was considering filing for bankruptcy, and on 2 April 2023 it filed for Chapter 11. Citing a difficult business environment, the company decided to shut its retail e-commerce operations and sell Spresso; its shares were delisted, and its domain name and trademarks were auctioned. The brand was bought by MSG Distributors in August 2023 and relaunched under its new owner in July 2024. Boxed's story shows that a well-loved brand and an innovative operation cannot on their own carry a model that constantly needs capital. The company was reported to have turned down acquisition offers from Kroger; options not considered while cash was plentiful were no longer on the table when the crisis came. ## Lessons - Going public does not solve a funding problem by itself; model your post-SPAC cash runway under pessimistic scenarios before the merger. - Do not keep all your cash in one bank; the collapse of Silicon Valley Bank pushed an already fragile Boxed to the brink of bankruptcy. - A strong brand and a loyal customer base will not carry a company on their own; take acquisition offers and strategic options seriously while cash is plentiful. ## Sources - [Boxed, Inc.](https://en.wikipedia.org/wiki/Boxed,_Inc.) - [Online wholesale retailer Boxed files for Chapter 11 bankruptcy](https://www.bloomberg.com/news/articles/2023-04-03/online-wholesale-retailer-boxed-files-for-chapter-11-bankruptcy) - [Boxed to make return under new owner](https://www.winsightgrocerybusiness.com/retailers/boxedcom-make-return-under-new-owner) - [Amazon's Ripple Effect on Grocery Industry: Rivals Stock Up on Start-Ups](https://www.nytimes.com/2018/08/21/technology/amazon-grocery-boxed-aeon.html) --- # Britishvolt (2019 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/britishvolt/ - Sector: Energy and climate - Country: United Kingdom - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Britishvolt was a British start-up that aimed to manufacture lithium-ion batteries for the automotive industry. Founded in December 2019, the company began building a £2.6 billion gigafactory on a former coal site in Blyth, north-east England, that was to employ 3,000 people. In September 2022 its development cells passed safety tests and were sent to seven customers for trials. ## Why did it shut down? Building the factory required around £2 billion, and the company could not raise it. According to the Financial Times, while still years away from revenue it was paying around 300 staff £3 million a month in salaries and drawing attention for lavish spending. In August 2022 construction stopped and the largest shareholder, Orral Nadjari, stepped down as CEO. In November 2022 the government refused to bring forward £30 million of a grant tied to construction milestones. When rescue offers came to nothing, the company went into administration on 17 January 2023 and most of its employees were laid off immediately. ## The story In July 2021, on an empty site beside a former coal-fired power station in Blyth, Northumberland, a huge plan for Britain's electric-vehicle future was approved: a £2.6 billion battery gigafactory that would employ 3,000 people. Behind the plan was Britishvolt, founded in December 2019 and yet to sell a single commercial battery. The company's founders included Swedish former investment banker Orral Nadjari and Swedish automotive entrepreneur Lars Carlstrom. Construction began in September 2021. Mining giant Glencore became an investor in August 2021 and put in a further £40 million in February 2022, a round that valued the company at more than $1 billion. In January 2022 the British government pledged £100 million to the project through its Automotive Transformation Fund. The company was planning a second factory in Canada and had struck a deal to buy a battery maker in Germany. Yet the roughly £2 billion needed for the factory never materialised. The Financial Times reported that the company had hired around 300 people and was spending £3 million a month on salaries while still years away from revenue, with spending ranging from expensive company cars to frequent use of private jets. In August 2022 construction stopped and the largest shareholder, Nadjari, stepped down as CEO. In November the government refused to bring forward £30 million of the grant tied to construction milestones; less than £5 million in additional funding from Glencore kept the company afloat for only five weeks. In January 2023 the last rescue talks collapsed, and Britishvolt went into administration on 17 January; most of its 300 employees lost their jobs the same day. The company was reported to have failed with £120 million of debt, a figure that later rose to £160 million. In February 2023 Australia's Recharge Industries bought the company for £8.6 million, but the financing deal could not be completed. The Blyth site was sold in April 2024 to be turned into a data centre campus, and Britishvolt went into liquidation in November 2024. Britishvolt's story shows how quickly an industrial-scale dream can melt away without capital discipline. Political backing and big-name partners generated excitement; but scaling up spending before securing the money to finish the factory left the company defenceless at the first cold wind. ## Lessons - On an industrial project that is years away from revenue, cut luxury spending to zero; when the first big crisis comes, every line of expenditure ends up in front of investors. - If your plan depends on a public grant, be clear from the outset which milestones the payments are tied to and how you will fund those stages. - Do not start building a giant factory without binding customer offtake agreements; samples sent for testing are not orders. ## Sources - [Britishvolt](https://en.wikipedia.org/wiki/Britishvolt) - [Britishvolt: UK battery start-up collapses into administration](https://www.bbc.co.uk/news/business-64303149) - [Battery startup Britishvolt enters administration as rescue talks fail](https://www.theguardian.com/business/2023/jan/17/britishvolt-expected-enter-administration-tuesday) - [Britishvolt ‘gigafactory’ site sold for £110m to US private equity firm](https://www.theguardian.com/business/2024/apr/15/britishvolt-gigafactory-site-sold-110m-us-private-equity-firm-blackstone-data-centre-northumberland) --- # BuzzFeed News (2011 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/buzzfeed-news/ - Sector: Media and entertainment - Country: United States - Total funding: unknown - Cause of closure: Business model failed ## What did it do? BuzzFeed News was the news division BuzzFeed set up in December 2011. Growing under editor-in-chief Ben Smith, who came from Politico, it focused on investigative journalism and exclusives. In July 2018 it split off from BuzzFeed's main site and moved to its own domain. ## Why did it shut down? Although the division won prestigious awards, it never became a profitable business for its parent company. In January 2019, 15 per cent of the staff were laid off and the national news desk closed; in 2020 its news operations in the UK and Australia were shut down. In March 2022 further staff cuts came in pursuit of profitability, and senior editors left. On 20 April 2023 BuzzFeed CEO Jonah Peretti announced that BuzzFeed News would be shut down as part of company-wide downsizing. The company consolidated its news operations at HuffPost, which it had bought in 2020. ## The story In 2021 BuzzFeed News won the Pulitzer Prize for international reporting for its stories exposing internment camps for Uyghur Muslims in China's Xinjiang region. That the news division of a company known for viral content should win one of journalism's most prestigious awards was an achievement many in the industry had not expected. Two years later, the same division was shut down. BuzzFeed News was born as a section of BuzzFeed in December 2011, when Ben Smith arrived from Politico as editor-in-chief. In 2013 Pulitzer winner Mark Schoofs was brought in from ProPublica to lead the investigations unit. An academic study published in 2017 found that BuzzFeed News largely adhered to established journalistic norms. The division carried out major investigations such as the FinCEN Files and collected honours including the George Polk Award and the National Magazine Award. In July 2018 it split off from BuzzFeed's main site and moved to its own domain. The division's most controversial decision was publishing the unverified Steele dossier on Donald Trump in January 2017. The decision drew harsh criticism and led to at least two libel lawsuits; Smith defended publication on the grounds of newsworthiness. On the cost side, meanwhile, the picture was getting tougher: in January 2019, 15 per cent of the staff were laid off and the national news desk closed, and in 2020 its news operations in the UK and Australia were shut down. Smith moved to The New York Times in May 2020 and was succeeded by Schoofs. In March 2022 the company made further cuts in pursuit of profitability; Schoofs and senior editors left, and half of the roughly 100 reporters were offered buyouts. On 20 April 2023 BuzzFeed CEO Jonah Peretti announced that BuzzFeed News would be shut down as part of company-wide downsizing affecting 15 per cent of employees; around 180 people were expected to lose their jobs. The site stopped publishing new content on 5 May 2023, and the company consolidated its news operations at HuffPost, which it had bought in 2020. The BuzzFeed News story is a reminder that journalistic success is not a business model on its own. Awards and influential reporting earned the brand prestige; but with no independent source of revenue set up to cover the division's costs, it was also the item cut in the first wave of downsizing. ## Lessons - Build the revenue model that will fund quality journalism (subscriptions, membership, licensing) separately from the traffic model; winning awards does not cover a division's costs. - A division that lives as a cost centre inside a corporate group is the first item to be cut in the first wave of downsizing; measure the division's own revenue and report it regularly. - Tie the decision to publish a contested document to a clear verification standard; libel lawsuits can quickly strain the budget of a small newsroom. ## Sources - [BuzzFeed News](https://en.wikipedia.org/wiki/BuzzFeed_News) - [BuzzFeed News will shut down](https://www.cnn.com/2023/04/20/media/buzzfeed-news-shuts-down/index.html) - [BuzzFeed News Is Shutting Down, Company Laying Off 180 Staffers](https://variety.com/2023/digital/news/buzzfeed-news-shutting-down-layoffs-1235589751/) - [BuzzFeed's First Round of Layoffs Puts an End to Its National News Desk](https://www.nytimes.com/2019/01/25/business/media/buzzfeed-layoffs.html) --- # Convoy (2015 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/convoy/ - Sector: Logistics and delivery - Country: United States - Total funding: $665 million - Cause of closure: Macroeconomic crisis ## What did it do? Convoy was a digital freight broker founded in Seattle in 2015 by former Amazon employees Dan Lewis and Grant Goodale. Its software matched shippers with carriers, and it operated as a brokerage working directly with shippers. Forbes billed it as the Uber of trucking. ## Why did it shut down? The company reached a $2.75 billion valuation in 2019, but in the period that followed, the industry entered a severe downturn. According to a note CEO Dan Lewis sent to employees, a major freight recession and the contraction in capital markets were the main causes of the collapse. In June 2023 co-founder Grant Goodale left the company. On 19 October 2023 Convoy cancelled all shipments, ceased operations and laid off its remaining employees. In November 2023 Flexport bought the company's assets for $16 million. ## The story On 18 October 2023 Convoy's load board was completely empty; the company had cancelled all shipments. The next day CEO Dan Lewis announced in a note to employees that operations had ceased. The Seattle start-up, backed by both Bill Gates and Jeff Bezos and once valued at $2.75 billion, passed into history within days. Convoy was founded in 2015 by former Amazon employees Dan Lewis and Grant Goodale. The aim was to use software to match shippers with carriers in the fragmented US trucking market. In 2016 the company signed its biggest deal to date, with Unilever, and Forbes billed it as the Uber of trucking. In July 2017 it raised $62 million in a round led by Y Combinator's Continuity Fund; Bill Gates joined existing investors such as Greylock Partners, Marc Benioff and Bezos Expeditions, taking total investment to $80 million. The money kept flowing. In 2018 the company raised $185 million in a round led by CapitalG and became a unicorn with a $1 billion valuation. In 2019 a $400 million round led by Generation Investment Management and T. Rowe Price lifted the valuation to $2.75 billion. By the end of 2019 the capital raised had reached $665 million. Then the wind changed. In June 2023 Goodale, co-founder and chief technology officer, left the company. In his closure note, Lewis cited a major freight recession and the contraction in capital markets as the main causes of the collapse. In November 2023 Flexport bought Convoy's assets for $16 million and took on around fifty employees; Lewis also moved to Flexport. Flexport relaunched Convoy Platform in February 2024 as a software service for third-party brokers, and in July 2025 sold it to DAT Solutions for $250 million. Convoy's story shows how quickly a fast-growing broker in a cyclical industry can run out of breath when the cycle turns. What stands out is that while the company itself went under, its software kept its value: the product survived, the business model did not. ## Lessons - If you are a broker in a cyclical industry, build a cost structure that can survive even the worst year's volumes. - Do not plan on the assumption that you will easily raise the next round; prepare in advance the cash to carry the company and an alternative way out for when capital markets close. - If your technology is valuable, make it saleable as a product in its own right; Convoy's software found a buyer even after the company shut down. ## Sources - [Convoy (company)](https://en.wikipedia.org/wiki/Convoy_(company)) - [Bezos-backed freight firm Convoy shuts down after slashing hundreds of jobs. Read the CEO's memo to employees](https://www.cnbc.com/2023/10/19/bezos-backed-freight-firm-convoy-shuts-down-read-ceo-memo-here.html) - [Convoy raises $400 million to expand its on-demand trucking platform](https://techcrunch.com/2019/11/13/convoy-raises-400-million-to-expand-its-on-demand-trucking-platform/) - [Flexport buys Convoy's tech; Convoy CEO Dan Lewis, other employees to join freight company](https://www.geekwire.com/2023/flexport-buys-convoys-tech-convoy-ceo-dan-lewis-other-employees-to-join-freight-company/) --- # Dergilik (Turkcell) (2011 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/dergilik/ - Sector: Media and entertainment - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Dergilik began in 2011 as a digital magazine app developed for iPad users by Turkcell, Turkey's largest mobile operator. Over time it became a publishing platform bringing hundreds of magazines and daily newspapers together under one roof on phones and tablets. It was offered at no extra charge to Turkcell subscribers on eligible tariffs, while users of other operators paid a monthly subscription (14.99 TL in 2017). In later years, audio versions of articles and podcast episodes were added. ## Why did it shut down? In a message to subscribers and publishers, Turkcell said it was ending Dergilik as a result of a change in its strategic plans in line with the fast-changing demands and expectations of the digital world. According to Ekovitrin, the company gave no reason beyond this short statement. The platform earned its revenue largely not directly from readers but as a perk bundled into operator tariffs, which tied its fate to Turkcell's priorities. By way of interpretation, a service carrying the licensing costs of hundreds of publications may be thought to have lost importance for the operator as reading habits shifted to social media and free news sites. The app was removed from all stores on 5 September 2023. ## The story In 2011, as tablets were only beginning to catch on in Turkey, Turkcell developed a digital magazine app for iPad users. Called Dergilik, the app was, in the words of Marketing Türkiye, Turkey's first digital magazine platform. The idea was to put the magazines on newsagents' shelves into people's pockets with a single subscription. The platform grew over the years. By the end of 2016 it carried more than 250 magazines from 85 publishers and had been downloaded around 1 million times. According to a ShiftDelete report in the spring of 2017, the app was installed on 1.2 million smart devices, and 800,000 magazines had been read in March alone. It was offered at no extra charge to Turkcell subscribers on eligible tariffs, while users of other operators paid 14.99 TL a month. In later years newspapers were added, articles became available as audio and podcast episodes moved onto the platform. As egirişim reported, in 2021 more than 68 million publications and articles were read on Dergilik, 30 million articles were listened to and more than 23 million podcast episodes were played. In August 2023 subscribers and publishers received an unexpected message. Turkcell said it had changed its strategic plans because of the fast-changing demands and expectations of the digital world and had decided to end Dergilik. Ekovitrin wrote that the company made no further statement. The app was removed from all stores on 5 September 2023. Magazines that had been on the platform for years pointed their readers to other channels: Quality magazine recommended Türk Telekom's e-Dergi app and its own website, while Marketing Türkiye launched a discounted digital subscription for Dergilik readers. The end of Dergilik shows how fragile the content services that operators bundle into tariffs can be. The app had reached millions of reads, but as a product that earned its revenue more from operator bundles than directly from readers, its future depended on Turkcell's strategy. When the strategy changed, the 12-year-old platform closed with an information notice. ## Lessons - If you tie your revenue to a partner's bundle, that partner's strategy becomes your roadmap. - Even when reading and download figures are high, measure separately whether the product makes money on its own. - On a platform built on content licences, establish the balance between cost and revenue early. ## Sources - [Turkcell Dergilik is closing: why did it fail?](https://www.ekovitrin.com/turkcell-dergilik-kapaniyor-acaba-neden-basarisiz-oldu) - [Dergilik is ceasing publication: Digital Marketing Türkiye subscription discounted throughout September!](https://www.marketingturkiye.com.tr/haberler/dergilik-yayin-hayatina-son-veriyor/) - [Our digital editions on Turkcell are ending because the Turkcell Dergilik platform is closing](https://qualitydergisi.com/turkcell-dergilik-platformu-kapatildigi-icin-turkcelldeki-dijital-yayinlarimiz-sona-eriyor/) - [More than 68 million publications and articles read on Turkcell's Dergilik app over the year](https://egirisim.com/2021/12/27/turkcellin-dergilik-uygulamasinda-yil-boyunca-68-milyondan-fazla-yayin-ve-makale-okundu/) - [What is Turkcell Dergilik, and how do you use it?](https://shiftdelete.net/turkcell-dergilik-nedir-nasil-kullanilir-81410) - [Turkcell's digital magazine platform Dergilik reaches 250 magazines](https://www.marketingturkiye.com.tr/haberler/turkcellin-dijital-dergi-platformu-dergilik-250-dergiye-ulasti/) --- # Ello (2014 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/ello/ - Sector: Social media - Country: United States - Total funding: $5.9 million - Cause of closure: Business model failed ## What did it do? Ello was a social network opened to the public by Paul Budnitz and Todd Berger in March 2014, promising never to show ads or treat users as the product. With its minimalist design it positioned itself as an alternative to Facebook. Over time it turned into a Pinterest-like community of creators focused on art, photography, fashion and web culture. ## Why did it shut down? Despite a sudden wave of interest in September 2014, VentureBeat observed that users were joining in droves but posting very little. Its structure as a public benefit corporation, legally ruling out advertising, limited its revenue options to T-shirt sales, buy links and planned paid features. The site was criticised for being buggy and for its overly sparse design, and its audience gradually narrowed to a small community of artists. In 2018 Talenthouse acquired Ello for an undisclosed sum. In July 2023 the network shut down completely. ## The story In the last week of September 2014, Vox reported that 31,000 people an hour were trying to join a social network called Ello. The trigger was the way Facebook was enforcing its real-name policy: after a practice seen as excluding drag performers in San Francisco, many people in the LGBTQ community left Facebook in search of a new home. That week Ello became the name of the anti-Facebook social network. Ello began as a private network of seven artists and programmers. A year later Paul Budnitz and Todd Berger redesigned the site and opened it to the public on 19 March 2014 with a manifesto; the promise was an ad-free social network that did not treat users as the product. A $435,000 seed investment from FreshTracks Capital in January 2014 kept the company going in its early days. In October 2014 Ello became a public benefit corporation legally committed to never selling ads, and raised another $5.5 million. But the wave of interest did not turn into a lasting habit. VentureBeat observed that users were joining in droves but posting very little. The site was criticised for being buggy and for its overly sparse design. The revenue sources meant to replace advertising also stayed modest: branded T-shirts were sold with Threadless, buy buttons were added to posts and paid features were planned. In June 2015 Ello tried to win back attention with an iPhone app. Over time the network's audience changed. In 2016 Wired wrote that the early adopters of new social media had abandoned Ello but the artists had stayed. Ello turned into a Pinterest-like community focused on art, photography and fashion, adding buttons that let members collaborate and find work. In 2018 Talenthouse acquired Ello for an undisclosed sum. In July 2023 the network became unreachable and shut down. Ello's story shows that anger at a rival can make a product popular quickly, but is not enough to keep people. Being ad-free was a strong principle; a revenue model capable of carrying that principle was never fully built. ## Lessons - Have the product features that turn a wave of interest sparked by a rival's bad moment into lasting usage ready before the wave arrives. - If you make a permanent commitment such as going ad-free, settle the revenue model that will replace it (subscription, commission) on the same day. - If your audience is turning into a niche community, rebuild the product and cost structure around that community; you cannot carry the costs of a general social network on niche revenue. ## Sources - [Ello (social network)](https://en.wikipedia.org/wiki/Ello_(social_network)) - [Ello Raises $5.5 Million, Legally Files As Public Benefit Corp. Meaning No Ads Ever](https://techcrunch.com/2014/10/23/ello-raises-5-5-million-legally-files-as-public-benefit-corp-meaning-no-ads-ever/) - [31,000 people an hour are joining the social network Ello. The anti-Facebook, explained.](https://www.vox.com/2014/9/26/6844633/what-is-ello-should-i-care) - [Ello users: joining in droves, not posting very much - VentureBeat - News Briefs - by Kia Kokalitcheva](https://venturebeat.com/2014/10/02/ello-users-joining-in-droves-not-posting-very-much/) - [https://www.wikidata.org/wiki/Q18136409](https://www.wikidata.org/wiki/Q18136409) --- # Embark Trucks (2016 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/embark-trucks/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Bad timing ## What did it do? Embark Trucks was a San Francisco-based autonomous driving company that developed software to let long-haul lorries drive themselves on motorways. It tested its manufacturer-agnostic system with freight carriers. In 2021 it went public on Nasdaq through a SPAC merger. ## Why did it shut down? When it went public the company generated no revenue at all, and its target valuation of USD 5.16 billion rested entirely on the future potential of the technology. When markets cooled, the shares lost more than 90 per cent of their value within a year. Slipping timelines at lorry manufacturers postponed commercial deployment at scale, and no new capital could be found. In March 2023 70 per cent of staff were laid off, and in May the company was sold to Applied Intuition for around USD 71 million in stock. ## The story Alex Rodrigues and Brandon Moak began working together on autonomous driving while studying mechatronics engineering at the University of Waterloo in Canada. When they founded Embark in 2016, Rodrigues was just 20; as Crunchbase News put it, neither was old enough to buy a beer in the US. The team entered Y Combinator's 2016 batch with an idea for driverless shuttles for campuses, but soon turned to a far bigger market: motorway driving for long-haul lorries. Between 2016 and 2019 came a USD 2 million seed round led by Maven Ventures, a USD 15 million Series A led by DCVC, a USD 30 million Series B led by Sequoia Capital and a USD 70 million Series C led by Tiger Global. In 2018 Embark became the first autonomous trucking start-up to cross the US from coast to coast with an autonomous lorry carrying a safety driver. The real money came with the SPAC wave. A merger with Northern Genesis Acquisition Corp. II promised around USD 614 million in funding; Embark began trading on Nasdaq on 11 November 2021 with a target market value of USD 5.16 billion. Yet the company had no revenue at all, and its entire valuation rested on the future potential of the technology. The shares lost more than half their value in January 2022, six months later they were more than 90 per cent below their initial price, and in August 2022 the company carried out a 1-for-20 reverse stock split. In March 2023 Rodrigues wrote in an email to staff that capital markets had turned their backs on pre-revenue companies and that manufacturers' slipping timelines had postponed commercial deployment at scale. The company laid off around 230 people, 70 per cent of its workforce, and closed its Southern California and Houston offices; the remaining team was tasked with winding down operations. In May 2023 Applied Intuition, a developer of autonomous vehicle simulation software, agreed to buy Embark for around USD 71 million in stock, planning to fold the company's internal tools, data and software assets into its own products. Embark is a striking example of how a deep-tech company that goes public without generating revenue has no concrete metrics to defend its valuation when the market mood changes. The road from USD 5 billion to liquidation in sixteen months is a reminder that timing can be as decisive as technology. ## Lessons - Going public before you have revenue ties your valuation to the market's mood every single day; do not walk through that door before your first commercial contracts arrive. - If your product depends on another industry's timeline, prepare an interim business model that can generate revenue when that timeline slips. - Spend money raised in a period of abundant capital on the assumption that development will take twice as long as planned. ## Sources - [Embark Trucks lays off workers, explores liquidation of self-driving truck assets](https://techcrunch.com/2023/03/03/embark-trucks-lays-off-workers-explores-liquidation-of-self-driving-truck-assets/) - [Embark Trucks laying off 70% of employees, winding down business](https://www.freightwaves.com/news/embark-trucks-laying-off-70-of-employees-winding-down-business) - [Autonomous Trucking Upstart Embark Goes From $5B Valuation To Kaput In 16 Months](https://news.crunchbase.com/transportation/embark-trucks-closes-autonomous-vehicles/) - [Applied Intuition to buy autonomous trucking SPAC Embark for $71M](https://techcrunch.com/2023/05/25/applied-intuition-to-buy-autonomous-trucking-spac-embark-for-71m/) --- # Frank (2016 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/frank/ - Sector: Fintech - Country: United States - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Frank was an online service in the US that made it easier for students to apply for federal financial aid and loans. Founded by Charlie Javice in 2016, the company reached students with a promise to simplify a complicated application process. In September 2021 JPMorgan Chase bought it for $175 million. ## Why did it shut down? In 2017 the US Department of Education argued that Frank could give customers the impression it was affiliated with the government, and the company was forced to change its domain name. After the acquisition, JPMorgan filed a lawsuit alleging that the user data presented during sale negotiations was largely fabricated, and shut the site down in January 2023. In April 2023 prosecutors charged Javice and growth chief Olivier Amar with securities, wire and bank fraud and conspiracy. According to the jury's verdict, both were found guilty on all counts in March 2025, and in September 2025 the court sentenced Javice to 85 months in prison. In March 2026 a federal judge rejected Javice's motion to overturn her conviction. ## The story In January 2023 JPMorgan Chase shut down a website it had paid $175 million for roughly a year and a half earlier. The bank was accusing the founder of Frank, the student financial aid start-up it had acquired, of inventing millions of accounts. It was the most unexpected of endings for a company that said it had been founded to make students' lives easier. Charlie Javice had built a platform for microfinance clubs while a first-year student at Wharton. Frank, which she founded in 2016, promised to simplify federal financial aid and loan applications for students in the US. The company crossed paths with the regulator early: in 2017 the US Department of Education said Frank could give customers the impression it was affiliated with the government, so the company changed its address from frankfafsa.com to frank.com and settled with the department in 2018. Javice made Forbes's 30 Under 30 list in 2019; four years later the magazine said it regretted the choice. In September 2021 JPMorgan bought Frank for $175 million and hired Javice as a managing director responsible for student products. A year later, however, the bank put Javice on leave, and in November 2022 it fired her. According to the lawsuit JPMorgan filed, the data Frank had presented was largely fabricated; the bank alleged that Javice had paid a data science professor $18,000 to produce a list of more than four million fake student names. In April 2023 federal prosecutors in Manhattan charged Javice and the company's growth chief, Olivier Amar, with securities fraud, wire fraud, bank fraud and conspiracy; the SEC sued Javice the same day. Javice argued that JPMorgan had made her a scapegoat. On 28 March 2025 the jury found both guilty on all counts. In September 2025 the court sentenced Javice to 85 months in prison, ordered the forfeiture of more than $22 million in proceeds and ordered her, together with Amar, to pay $287.5 million in restitution. Javice applied to have the verdict overturned, arguing that two law clerks' ties to JPMorgan's outside law firm created a conflict of interest; in March 2026 a federal judge rejected the motion. The Frank case shows how the numbers presented during an acquisition can decide a company's fate. If the user count is the foundation of a company's value, that count being verifiable is a condition of the company's very existence. ## Lessons - Every metric you present during an acquisition is a commitment that will later be independently audited; draw a clear line between registered users and active users. - If you operate close to a public service, make sure your brand does not suggest a link to the government; that risk brings the regulator to your door early. - When buying a company, take a sample from the user list in the data room and verify it by contacting real people. ## Sources - [Charlie Javice](https://en.wikipedia.org/wiki/Charlie_Javice) - [JPMorgan shutters website it paid $175 million for, accuses founder of inventing millions of accounts](https://www.cnbc.com/2023/01/12/jpmorgan-chase-shutters-student-financial-aid-website-frank.html) - [Charlie Javice convicted of defrauding JPMorgan during $175 million sale of financial aid startup](https://apnews.com/article/charlie-javice-convicted-fraud-jp-morgan-783cb7b089f6ab5d814c4c0984f0302b) - [Charlie Javice Sentenced to 85 Months in Prison for Fraud](https://www.nytimes.com/2025/09/29/business/charlie-javice-sentence.html) --- # Hyperloop One (2014 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/hyperloop-one/ - Sector: Mobility and transport - Country: United States - Total funding: $400 million - Cause of closure: No market need ## What did it do? Hyperloop One set out to commercialise the hyperloop concept: carrying passengers and freight in pods levitated by magnetic systems inside partially evacuated tubes. The Los Angeles-based company built a 500-metre test track in Nevada and signed feasibility studies and letters of intent for routes stretching from India to the Middle East. Between 2017 and 2022 it traded under the Virgin brand. ## Why did it shut down? Although it made progress in technical testing, the company never secured a contract from any government or customer to build an actual line. In February 2022 it abandoned passenger transport to focus on freight and cut half its workforce, more than a hundred people. The Virgin name was dropped from the brand in November 2022, and a second round of layoffs followed in December 2022. In December 2023 the company announced it would cease operations on 31 December, citing financial difficulties, high interest rates and its failure to win contracts. Its assets were put up for sale, and its intellectual property was reported to be passing to its majority shareholder, DP World. ## The story On 8 November 2020, at the test site near Las Vegas, co-founder and chief technology officer Josh Giegel and director of passenger experience Sara Luchian climbed into a pod inside a low-pressure tube. The pod reached 172 kilometres per hour, completing the first crewed journey using hyperloop technology. It was a triumph that came after more than 400 uncrewed tests; yet the company had only three years left. The story goes back to a conversation between Elon Musk and investor Shervin Pishevar on a flight in January 2012. Pishevar brought in former SpaceX engineer Brogan BamBrogan as co-founder, and the company was founded in June 2014. Forbes put the start-up on its cover in February 2015. Money came from investors including Sherpa Capital, Formation 8, 8VC and DP World, Dubai's port operator. In 2016 BamBrogan left the company and sued its management; the parties settled the same year. By December 2017 total investment had reached $295 million, and a partnership with Virgin Group made Richard Branson chairman. By May 2019 the company had raised more than $400 million. The company built the 500-metre DevLoop test track in Nevada and ran its first full-scale test in May 2017. A letter of intent was signed in India for a line between Mumbai and Pune, and a certification centre was planned in the US state of West Virginia. None of these projects, however, ever turned into a construction contract. In February 2022 the company dropped passenger transport to focus on freight and laid off half its staff; the West Virginia facility was later cancelled too. In November 2022 the Virgin name was removed from the brand. In December 2023 the company announced it would cease operations on 31 December, citing financial difficulties, the high interest-rate environment and the fact that it had never found a contract for a working hyperloop system. Its assets were put up for sale and the remaining employees were laid off. According to The Verge, all of its intellectual property was to pass to its majority shareholder, DP World. Hyperloop One's story is a reminder that an impressive technical demonstration is no substitute for a customer in a market that depends on public decisions, as infrastructure does. The pod travelling through the tube worked; a buyer for the line to carry it never appeared. ## Lessons - If you are building infrastructure-scale technology, try to sign your first customer, often a public body, before the prototype; a test track is no substitute for a contract. - Do not leave the switch from a showpiece goal to a smaller but sellable one, as with the pivot to freight, until the last minute; make it before your cash runs out. - Resolve disagreements within the founding team early and through agreed rules; disputes that end up in court wear down both the team and the investors. ## Sources - [Hyperloop One](https://en.wikipedia.org/wiki/Hyperloop_One) - [Hyperloop One to Shut Down After Failing to Reinvent Transit](https://www.bloomberg.com/news/articles/2023-12-21/hyperloop-one-to-shut-down-after-raising-millions-to-reinvent-transit) - [The hyperloop is dead for real this time](https://www.theverge.com/2023/12/21/24011448/hyperloop-one-shut-down-layoff-closing-elon-musk) - [High-speed train company Hyperloop One shuts down](https://www.bbc.com/news/technology-67801235) - [https://www.wikidata.org/wiki/Q19605534](https://www.wikidata.org/wiki/Q19605534) --- # IRL (2018 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/irl/ - Sector: Social media - Country: United States - Total funding: $200 million - Cause of closure: Regulation and legal issues ## What did it do? IRL was a San Francisco-based social app that started as a calendar app for making it easier to plan events among friends and evolved into a messaging network built around group chats. It aimed to offer an events and groups product to a younger generation that barely used Facebook. In 2021 it became a unicorn at a valuation of $1.17 billion. ## Why did it shut down? From 2022 onwards, the user numbers that had helped the company raise money were questioned by employees and by the SEC. An internal investigation by the board found that 95 per cent of the 20 million reported users were automated or originated from bots, and in June 2023 the company decided to shut down. SoftBank sued the company for fraud, claiming $150 million in losses. In 2024 the SEC, and in 2025 the Department of Justice, charged founder Abraham Shafi with misleading investors; Shafi had denied the allegations in earlier legal filings. ## The story In June 2023, when IRL's board announced the findings of the internal investigation it had commissioned, the picture could be summed up in a single ratio: according to The Information, 95 per cent of the app's 20 million reported users were "automated or from bots". The social app, which had raised money at a $1.17 billion valuation in a SoftBank-led round two years earlier, soon announced it would shut down. When Gather, the first venture Abraham Shafi tried in 2017, failed to take off, he made a fresh start in 2018 under the name IRL. The first product was a simple calendar that made it easier to plan small get-togethers with friends. When the pandemic halted real-world events, the app turned to online events and then became a messaging network built around group chats; Shafi said he aimed to build the Western equivalent of China's WeChat. In June 2021 a $170 million Series C led by SoftBank Vision Fund 2 made the company a unicorn. Founders Fund, Goodwater Capital, Floodgate and Dragoneer were also among the investors, and total funding passed $200 million. At the time the company said it had reached 12 million monthly active users. Doubts grew in 2022. Employees began to question the user figures, the SEC began examining whether the company had misled investors, and in April 2023 the board put Shafi on leave. As it shut down, the company said it would return its remaining capital to shareholders. In August 2023 SoftBank filed a fraud lawsuit, claiming $150 million in losses. The founders, for their part, sued former investors and board members and denied the bot allegations. In July 2024 the SEC charged Shafi with making misleading statements about the company's growth and concealing personal expenses paid with company cards. According to the SEC, growth presented as organic had been inflated by ads offering rewards in exchange for downloads, and this spending had been hidden through a third-party firm. According to a Fortune report from September 2025, the US Department of Justice also brought charges against Shafi of securities fraud, wire fraud and obstruction of justice. Shafi had denied the charges in earlier legal filings; the sources do not record any conviction on these charges. The IRL case shows that, for consumer apps whose value rests almost entirely on a user metric, independent verification of that metric should be non-negotiable. ## Lessons - Keep the active-user figure you present to investors verifiable from an independent data source, alongside your spending on advertising and incentivised installs. - If you run incentivised install campaigns, book them clearly as marketing expenses and do not hide them in your investor deck. - As an investor, get a written explanation, before the round closes, of any gap between third-party download data and the user numbers the company reports. ## Sources - [Unicorn social app IRL to shut down after admitting 95% of its users were fake](https://techcrunch.com/2023/06/26/irl-shut-down-fake-users/) - [Founder behind social media app IRL charged with fraud](https://techcrunch.com/2024/07/31/founder-behind-social-media-app-irl-charged-with-fraud/) - [CEO who ran tech unicorn once valued at $1.2 billion charged with fraud after allegedly spending millions on his wedding and art classes](https://fortune.com/2025/09/04/tech-ceo-vcs-unicorn-irl-fraud-softbank/) - [Calendar influencers? Event social network IRL raises $8M](https://techcrunch.com/2019/06/13/irl-calendar/) --- # LINK Türkiye (Superpedestrian) (2021 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/link-turkiye/ - Sector: Mobility and transport - Country: Turkey - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? LINK was the shared e-scooter brand of Superpedestrian, founded in the US in 2012 by Assaf Biderman. It launched in Istanbul in December 2021 and soon expanded to Ankara and Izmir. As of January 2022 it ran more than 4,200 scooters across the three cities, around 2,500 of them in 12 districts of Istanbul. ## Why did it shut down? On 26 January 2023 Istanbul's transport coordination board, UKOME, approved Superpedestrian Turkey's request to cancel its permit for 2,459 scooters. According to Medyascope and Hürriyet Daily News, the company had decided to halt operations to comply with an instruction from Turkey's Personal Data Protection Authority (KVKK) and avoid further penalties for breaching the rules. No separate announcement could be found on the fate of the fleets in Ankara and Izmir. The parent company also ran into financial trouble that year; according to TechCrunch, Superpedestrian shut down its US operations on 31 December 2023 and put its European business up for sale. Alongside tightening data and municipal regulation, the parent company's dwindling capital may also have played a part in the withdrawal from Turkey. ## The story Superpedestrian was founded in the US in 2012 by Assaf Biderman and grew into a micromobility company known for software that could diagnose its own faults. Its shared scooter brand, LINK, launched in Istanbul in December 2021. Charging 1.99 TL to unlock and 1.19 TL per minute, the app joined its rivals with scooters unlocked by QR code. According to Webrazzi in January 2022, within a few weeks LINK had also opened in Ankara and Izmir: more than 4,200 scooters were on the streets in total, 2,500 across 12 districts of Istanbul, 900 in Izmir and 800 in Ankara. Immediately after its entry into Turkey, the road ahead for the parent company looked clear. In February 2022 Superpedestrian raised a $125 million Series C led by Jefferies, Antara Capital, Sony Innovation Fund and FM Capital; according to Webrazzi, total investment had passed $260 million. At the time the company operated in 55 cities across 10 countries. The Turkish venture, however, hit a regulatory wall a year later. On 26 January 2023 a meeting of Istanbul Metropolitan Municipality's UKOME transport board considered cancelling the permits of three scooter companies. According to Medyascope, Superpedestrian Turkey Ulaşım Teknoloji A.Ş. had decided to halt operations in order to comply with an instruction from the Personal Data Protection Authority and avoid further penalties, and had asked for its permit for 2,459 scooters to be cancelled. At the same meeting the permits of the At'la Git brand were also cancelled, on the grounds of supply problems. No separate closure announcement was made for the fleets in Ankara and Izmir. The parent company did not last much longer. In December 2023 TechCrunch reported that Superpedestrian would shut down its US shared scooter operation on 31 December and was looking for a buyer for its European business. One executive said even investors had been putting money in to keep the company afloat. The European business was transferred to a company called SURF in 2024. LINK's Turkish story shows how decisive regulatory compliance is for a service that collects location data and operates under municipal permits. The brand arrived with strong backing but withdrew from Turkey's largest market within two years, and shortly afterwards the parent company closed its doors. ## Lessons - In a service that collects location data, sort out compliance with data protection law before launch. - In a business that depends on municipal permits, regulatory risk can bite faster than market risk. - When a global parent company struggles, new and small markets are usually the first to be sacrificed. ## Sources - [E-scooter rental service LINK launches in Istanbul](https://webrazzi.com/2021/12/20/elektrikli-scooter-kiralama-cozumu-link-istanbul-da-hizmet-vermeye-basladi/) - [LINK, now available in Istanbul, Ankara and Izmir, operates more than 4,000 e-scooters](https://webrazzi.com/2022/01/31/istanbul-ankara-ve-izmir-de-kullanima-sunulan-link-4-binden-fazla-elektrikli-scooter-ile-hizmet-veriyor/) - [Three e-scooter companies withdraw from the market in Istanbul](https://medyascope.tv/2023/01/26/istanbulda-uc-elektrikli-scooter-firmasi-piyasadan-cekildi/) - [Three e-scooter companies withdraw from market in Istanbul](https://www.hurriyetdailynews.com/three-e-scooter-companies-withdraw-from-market-in-istanbul-180442) - [Scooter startup Superpedestrian shutting down US operations, explores sale of Europe business](https://techcrunch.com/2023/12/15/scooter-startup-superpedestrian-shutting-down-us-operations-explores-sale-of-europe-business) - [ZEUS Mobility Acquires Superpedestrian Europe](https://micromobility.io/news/zeus-mobility-acquires-superpedestrian-europe) --- # Lordstown Motors (2018 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/lordstown-motors/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Lordstown Motors was an automotive start-up that set out to build electric pickups in General Motors' former assembly plant in Lordstown, Ohio. It was founded in 2018 by Steve Burns, former CEO of Workhorse Group, and became known for its Endurance electric pickup. The company began trading on NASDAQ in 2020 through a SPAC merger. ## Why did it shut down? In March 2021 the short seller Hindenburg Research published a report alleging that the company had exaggerated its order book and production capability, and the SEC requested information. An independent review commissioned by the board found that pre-order agreements had been overstated in both number and seriousness; the CEO and the chief financial officer resigned in June 2021. That same month the company disclosed that it lacked the money to start series production and was at risk of going bankrupt. It sold the plant to Foxconn and made it its contract manufacturer, but the additional USD 170 million investment Foxconn had promised never materialised. In June 2023 Lordstown sued Foxconn and filed for Chapter 11. ## The story In November 2019 General Motors handed its idle Lordstown plant in Ohio to a new electric vehicle start-up that bore the town's name. GM lent the company USD 40 million to cover a substantial part of the purchase. Closely watched in political circles as well, the sale was presented as a fresh hope for the region's industry. Lordstown Motors had been founded in 2018 by Steve Burns, former CEO of Workhorse Group. In March 2020 the company paid Workhorse USD 12 million to license the intellectual property for its W-15 pickup and built its Endurance electric pickup on that design. In 2019 the vehicle was expected to go on sale at the end of 2020 for USD 52,500. GM invested USD 75 million in the company in 2020. In October 2020 Lordstown merged with a SPAC called DiamondPeak Holdings and began trading on NASDAQ; the deal gave the company an equity value of around USD 1.6 billion. In March 2021 the short-selling research firm Hindenburg Research published a report alleging that Lordstown's thousands of orders consisted of non-binding expressions of interest with no deposits, and that the company had exaggerated its production capability. The company said it would rebut the report; the SEC requested information. An independent review commissioned by the board found that pre-order agreements had been overstated in both number and seriousness. In June 2021 the company disclosed that it lacked the money to start series production and was at risk of going bankrupt; Burns and the chief financial officer resigned. Rescue seemed to come from Foxconn. In October 2021 the plant was sold to Foxconn for USD 230 million, and Foxconn became a partner that would build the Endurance under contract; in November 2022 it pledged a further USD 170 million investment. But that money never arrived. In June 2023 Lordstown sued Foxconn for failing to honour its commitment, filed for Chapter 11 and halted Endurance production. Its electric vehicle assets were sold in September 2023 for USD 10 million to LAS Capital, majority-owned by founder Burns. What remained of the legal entity emerged from bankruptcy in March 2024 under the name Nu Ride, with the purpose of pursuing its legal claims against Foxconn. Lordstown's story shows how costly it is when the narrative runs ahead of production in a capital-intensive industry. Going public while the orders were non-binding and the cash needed for production was missing merely made the company more visible. ## Lessons - Do not present non-binding letters of intent as orders; report firm orders and expressions of interest to investors separately. - In a capital-intensive business such as carmaking, work out up front the total cash you need to reach series production; going public does not make that need disappear. - If your plan rests on a critical partner's investment commitment, write into the contract in advance what happens if that commitment is not honoured. ## Sources - [Nu Ride Inc.](https://en.wikipedia.org/wiki/Nu_Ride_Inc.) - [Lordstown Motors files bankruptcy, sues Foxconn](https://www.reuters.com/business/autos-transportation/lordstown-motors-files-bankruptcy-sues-foxconn-2023-06-27/) - [Lordstown Motors shares close down 13.8% after confirming SEC inquiry](https://www.cnbc.com/2021/03/18/lordstown-motors-shares-fall-as-much-as-12percent-after-confirming-sec-inquiry.html) - [Lordstown Motors comes out of bankruptcy with a new name to fight Foxconn](https://techcrunch.com/2024/03/15/lordstown-motors-nu-ride-chapter-11-foxconn/) - [https://www.wikidata.org/wiki/Q86681792](https://www.wikidata.org/wiki/Q86681792) --- # Mevsimi (2020 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/mevsimi/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Macroeconomic crisis ## What did it do? Mevsimi was a start-up that began operating in Istanbul in April 2020 and delivered fruit and vegetables from growers to consumers, cutting out the middlemen. Users ordered boxes put together to cover 10 days' needs via Mevsimi.com, and most of the produce was sourced daily. Its warehouse was in Karacabey, in the province of Bursa. ## Why did it shut down? Founder Can Kağıtçıbaşı explained the decision to suspend operations in September 2023 by economic conditions. In his view, costs were multiplying while revenue was not growing at the same rate, and inflation had made planning impossible. Because of falling domestic production, they sometimes struggled even to find produce. The climate was not right for investing in marketing or finding new funding, and 2024 was expected to be even harder. Kağıtçıbaşı described the decision as temporary, but there has been no report of the business restarting since then. ## The story Can Kağıtçıbaşı's father had farmed for more than 30 years. Knowing agriculture at first hand, Kağıtçıbaşı saw that fruit and vegetables passed through many middlemen on their way from field to table, losing freshness and getting more expensive along the way, while the grower still failed to make money. Mevsimi set out as a solution to this problem on 2 April 2020, in the first weeks of the pandemic. According to the launch report by egirişim, a Turkish start-up news site, the start-up first began serving the Istanbul districts of Ümraniye and Ataşehir, with plans to expand soon to Üsküdar and Kadıköy and then to the whole city. Its warehouse was in Karacabey, in the province of Bursa. Users ordered boxes put together to cover 10 days' needs via Mevsimi.com; according to the founder, 90 per cent of the produce was sourced daily, and care was taken over the cold chain. Mevsimi kept this model going for more than three years. According to a post Kağıtçıbaşı later shared, it became a brand that many families trusted and ordered from hundreds of times. But the steep inflation in the Turkish economy hit a thin-margin business such as fresh food head-on. On 20 September 2023 Kağıtçıbaşı announced on his LinkedIn account that Mevsimi had suspended its operations. In the statement reported by egirişim, he summed up the reason: “While costs are multiplying, our revenue is not growing at the same rate.” According to the founder, inflation had made planning impossible, and because of the decline in production in the country they sometimes had trouble even finding produce. According to a Swipeline report, the climate was not right for investing in marketing or raising funds either. Kağıtçıbaşı said he did not see the decision as a farewell and that he was open to reviving the project if suitable investment came along. There has been no report of Mevsimi restarting since. Mevsimi's story shows how vulnerable even a start-up that solves a real problem can be in the face of a macroeconomic storm. ## Lessons - Margins in fresh food are thin; in high inflation, the gap between price and cost closes fast. - Shortening the supply chain is a good idea, but the model comes under strain if supply itself shrinks. - Plan a cash buffer and a clear path to profit for periods when raising funds will get harder. ## Sources - [Mevsimi founder Can Kağıtçıbaşı: “As of this week we have suspended our operations” (in Turkish)](https://egirisim.com/2023/09/20/mevsimi-kurucusu-can-kagitcibasi-bu-hafta-itibariyle-faaliyetlerimizi-askiya-aldik/) - [Turkish start-up Mevsimi halts operations because of economic conditions (in Turkish)](https://swipeline.co/yerli-girisim-mevsimi-ekonomik-kosullar-sebebiyle-faaliyetlerini-durdurdu/) - [Mevsimi: the start-up taking fruit and vegetables from field to consumer (in Turkish)](https://egirisim.com/2020/04/02/mevsimi-meyve-ve-sebzeleri-tarladan-tuketiciye-ulastiran-girisim/) --- # Modacruz (2014 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/modacruz/ - Sector: Marketplaces - Country: Turkey - Total funding: $7 million - Cause of closure: Acquired and shut down ## What did it do? Modacruz, a Turkish start-up founded by Melis Güçtaş in 2014, was a marketplace where women bought and sold second-hand clothing, bags, shoes and accessories. It initially focused on luxury goods, then expanded into baby products with Bebecruz, and into cosmetics. Sellers could upload their items to the app and haggle with buyers. ## Why did it shut down? As Melis Güçtaş told Fast Company, marketplaces were very cash-hungry businesses, and the fall in the value of the Turkish lira made Turkey unattractive to foreign investors; the company could not secure new investment. The acquisition of Dolap by Trendyol gave its rival the ability to reach more than 20 million women overnight. According to Güçtaş, Modacruz was a company that could make a profit, but it was not on the scale venture capital funds expected. The company was sold in October 2022. Güçtaş said the new owners failed to keep the platform going and shut it down, and that she believed the main reason was failures in operations and team management. ## The story While working in the US, Melis Güçtaş saw how popular second-hand fashion marketplaces were, and in 2012 she decided to adapt the model for Turkey. To change perceptions in a market where second-hand culture was weak, she started with luxury goods. In 2014, at the age of 24, she founded Modacruz and raised its first investment that same year. Growth was fast. According to Webrazzi, the Turkish tech news site, the platform gained 300,000 new female members in 2015 and raised USD 2.5 million in investment; in 2016 it passed 1 million users. In 2017 a USD 2 million round led by MEVP brought total investment to USD 5 million. According to the company's 2017 figures, 1.8 million women sold through Modacruz that year, and two items changed hands every minute. As Güçtaş later recalled, 2016 and 2017 were the golden years: 10 million women visited the site every month. Then the wind turned. As the Turkish lira lost value, Turkey lost its appeal for foreign investors, and Modacruz could not secure new investment. The acquisition of rival Dolap by Trendyol suddenly gave the competitor the ability to reach millions of women. According to Güçtaş, the company could make a profit, but it was not as big as the funds expected. In October 2022, while things were still going well, the company was sold; Güçtaş believed the new owners would be able to make the necessary investment. That expectation was not met. From October 2023, users on the Turkish complaints site Şikayetvar began writing that the site had closed and that they could not access the money in their accounts; by December people were reporting that they could not log in to the app and asking what would happen to their personal data. In an interview with Fast Company, Güçtaş said that those who bought the company failed to keep the business going and shut it down, and that she saw failures in operations and team management behind this. The Modacruz story shows how even a start-up capable of making a profit can be forced to change hands when the financing climate shifts, and how quickly the post-sale period can slip out of the founder's control. ## Lessons - A marketplace that makes a profit but does not grow fast enough can fall between the cracks in the venture capital world; choose your financing strategy to suit your model. - A rival joining a big player can shift the balance of the market overnight; have your defence plan ready in advance. - When selling the company, question the new owners' capacity to keep operations going too; users' money and data have been entrusted to you. ## Sources - [Why didn't Modacruz work?](https://fastcompany.com.tr/dergi/modacruz-neden-yurumedi/) - [ModaCruz closes a new USD 2 million investment round](https://webrazzi.com/2017/06/13/modacruz-2-milyon-dolar/) - [Modacruz raises USD 2.5 million in investment](https://webrazzi.com/2015/12/21/modacruz-25-milyon-dolar-yatirim-aldi/) - [ModaCruz, sharing its 2017 figures, enabled 1.8 million women to make sales](https://webrazzi.com/2018/01/05/2017-yilina-ait-verilerini-paylasan-modacruz-18-milyon-kadinin-satis-yapmasina-aracilik-etti/) - [Complaints: Modacruz has closed](https://www.sikayetvar.com/modacruz/kapandi) --- # Morhipo (2011 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/morhipo/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Morhipo was an online shopping site founded in 2011 under Boyner Holding, the Turkish retail group. It brought new-season products and good-value promotions together on a single site. It started with clothing and then expanded into homeware, cosmetics and other categories. ## Why did it shut down? No official reason for the closure was given; users were simply told that from 17 October 2023 operations would continue on boyner.com.tr. According to Webrazzi, the Turkish tech news site, Fırsat Elektronik, which ran Morhipo, had merged with Boyner Büyük Mağazacılık in 2020, and its contractual rights and permits had been transferred to that company. In the three years after the merger there was no visible change in operations; then the separate brand was closed altogether. These developments suggest that the group no longer saw the need to reach the same customer through two separate online stores; this is an interpretation. ## The story When Boyner Holding, the Turkish retail group, decided in 2011 to enter e-commerce with a separate brand, the result was Morhipo. The site set out with an approach that brought new-season products and good-value promotions together under one roof. Private shopping sites were multiplying fast in Turkey at the time; a 2011 market review published on Webrazzi, the Turkish tech news site, cited delivery speed as Morhipo's standout advantage. Starting with a clothing store concept, Morhipo gradually expanded into homeware, cosmetics and other categories. In 2015 it partnered with 1V1Y, a site set up by fashion brands, and the two began selling each other's exclusive brands; the deal covered more than 60 brands, including Beymen, Diesel, İpekyol and Koton. According to the Karar newspaper, Morhipo had been named Europe's fastest-growing e-commerce site in the Europe500 study, with growth of around 117 per cent in 2014. Behind the scenes, however, the structure was changing. According to Webrazzi, Fırsat Elektronik, which ran the site, merged with Boyner Büyük Mağazacılık in 2020, and its contractual rights and permits passed to that company. For three years little changed for users. Then, in October 2023, a short message sent by email and text made everything clear: Morhipo would close on 17 October, and shopping would continue on boyner.com.tr from then on. No detailed reason was given for the closure. Even so, the picture was familiar: a big retail group chose to consolidate into a single brand rather than reach the same customer through two separate online shop windows. Webrazzi described the news as the end of an era in Turkish e-commerce. Morhipo's story is a reminder that, however fast a corporate venture grows, it can easily fall victim to its parent company's channel choices when they change. ## Lessons - A digital brand inside a big group can be among the first to be sacrificed when the parent company's channel strategy changes. - Fast-growth awards are no guarantee of a lasting position; the brand needs a clear role distinct from the parent company. - Explain channel consolidation decisions to users early and openly; trust must be protected even as a brand closes. ## Sources - [Morhipo.com is closing](https://webrazzi.com/2023/10/11/morhipo-kapaniyor/) - [Morhipo, Turkey's giant shopping site, is closing](https://www.cumhuriyet.com.tr/ekonomi/turkiyenin-dev-alisveris-sitesi-morhipo-kapaniyor-2129670) - [Bad news from Morhipo for its subscribers: it is being shut down](https://www.karar.com/teknoloji-haberleri/morhipodan-kotu-haber-kapatiliyor-1796224) - [Morhipo and 1V1Y announce a brand-specific partnership](https://webrazzi.com/2015/10/08/morhipo-ve-1v1y-ozel-markalari-icin-is-birligini-duyurdu/) - [What State Is Turkey's Private Shopping Market In?](https://webrazzi.com/2011/10/13/turkiye-ozel-alisveris-pazari-ne-durumda/) --- # Neeva (2019 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/neeva/ - Sector: Consumer apps - Country: United States - Total funding: $77.5 million - Cause of closure: Lost to competitors ## What did it do? Neeva was a privacy-first internet search engine founded in 2019 by Sridhar Ramaswamy and Vivek Raghunathan. It compiled ad-free, tracking-free search results by combining data from partners such as Microsoft Bing and Yelp with its own crawler. Users could also connect the content in their personal accounts and search it. ## Why did it shut down? Search habits were extremely entrenched, and according to the founders' statement the main reason for the closure was the difficulty of persuading ordinary users to switch to a new search engine. Having given up advertising revenue, the model made the company's income depend on users moving to paid accounts. On 20 May 2023 the company announced that it would shut down its consumer search product and focus on super intelligence. The same month Snowflake announced that it had acquired Neeva for USD 185.4 million in cash, and the search engine closed on 2 June 2023. ## The story In May 2023 Neeva's founders announced that they would shut down the search engine they had been working on for four years. The admission in their statement was striking: the biggest challenge had not been the technology but persuading ordinary users to change their habits and switch to a new search engine. Neeva was founded in 2019 by Sridhar Ramaswamy and Vivek Raghunathan. Ramaswamy had previously been one of the people running Google's advertising business; in 2020 The New York Times described him as a founder taking aim at his old company. The idea was to build a search engine that showed no ads and did not track its users. The Mountain View-based company had 25 employees in June 2020 and raised a total of USD 77.5 million from investors. Neeva's results were compiled from different sources: for classic links it used its own crawler alongside partners such as Microsoft Bing, and it drew on the interfaces of sites such as Yelp for quick answers, The Weather Channel for weather and Apple for maps. Users could connect their personal accounts and search their own documents too. Having given up advertising revenue, the company also offered paid accounts. But however clean the product, changing the default search engine was a bothersome decision for most users, and Neeva did not reach enough of them to clear that threshold. On 20 May 2023 the company announced that it would shut down its consumer search product and focus on super intelligence. A few days later the data cloud company Snowflake announced that it had acquired Neeva for USD 185.4 million in cash in order to add generative super intelligence-powered search to its own platform. The search engine closed on 2 June; the founders said they would refund users for the unused portion of their accounts. Ramaswamy later became chief executive of Snowflake. The BBC, which had introduced Neeva in October 2022 as a tracking-free search engine founded by a former Google advertising executive, reported its closure only seven months later. Neeva's story shows that in a consumer market, even a sound idea, a strong team and enough capital may not be enough to break an entrenched habit. The company lost as a product; but its team and technology found a buyer in an entirely different market. ## Lessons - If you are taking on a habit people repeat dozens of times a day without thinking, being slightly better is not enough; find a distribution channel that makes switching effortless. - If you plan to offer a paid consumer product, test early and at small scale how many people will actually pay. - Even if your product closes, the value of the team and the infrastructure can endure; build your technology so it can be adapted to other markets. ## Sources - [Neeva](https://en.wikipedia.org/wiki/Neeva) - [Neeva: Ad-free search engine shuts down](https://www.bbc.com/news/technology-65671468) - [Neeva, co-founded by a former Google exec, to shut down its consumer search product and focus on A.I.](https://www.cnbc.com/2023/05/20/neeva-co-founded-by-a-former-google-exec-to-shut-down-its-consumer-search-product-and-focus-on-ai.html) - [A Former Google Executive Takes Aim at His Old Company With a Start-Up](https://www.nytimes.com/2020/06/19/technology/google-neeva-executive.html) --- # Pear Therapeutics (2013 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/pear-therapeutics/ - Sector: Health - Country: United States - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Pear Therapeutics was a Boston-based company developing software-based treatments, known as digital therapeutics, that doctors prescribed and that received FDA authorisation. It launched three products, for substance and opioid use disorder and for insomnia. It went public through a SPAC merger in 2021. ## Why did it shut down? Although doctors prescribed the products, only a limited number of insurers agreed to pay for these treatments, and revenue fell far short of expectations. The SPAC merger brought in $175 million instead of the expected $400 million. Attempts to raise funding in 2022 and early 2023 came to nothing; a target of selling up to $150 million in shares raised only $1 million. In April 2023 the company filed for Chapter 11 bankruptcy, and in May its assets were sold to four buyers for $6.05 million. ## The story In January 2023, as its cash ran out fast, Pear Therapeutics tried to throw itself a lifeline by selling up to $150 million in shares. By the end of March the sale had brought in only $1 million. As STAT put it, it was now clear that investors had no intention of putting money into the company again. Pear was founded in Boston in 2013 on the idea that software, like a drug, could be prescribed. In 2017, with reSET, an app offering cognitive behavioural therapy for substance use disorder, it became the first company to receive FDA authorisation for a standalone digital therapy. This was followed by reSET-O for opioid use disorder and Somryst for insomnia. In June 2021 a SPAC merger with Thimble Point Acquisition Corp. valued the company at $1.6 billion. At the time Pear was forecasting that its revenue would rise to $125 million in 2023. Doctors wrote prescriptions and patients used the apps; but the last link in the payment chain was broken, because only a limited number of insurers agreed to cover the cost of these treatments. The SPAC merger also brought in only $175 million instead of the expected $400 million. In 2022 product revenue rose 178 per cent to $10.4 million, but sales fell in the final quarter. The company went through two waves of layoffs and halted its development pipeline. The shares, which entered Nasdaq at around $9.30, had fallen to 39 cents by March 2023. On 7 April 2023 Pear filed for Chapter 11 bankruptcy and laid off 170 employees, about 92 per cent of its workforce. CEO Corey McCann stepped down; McCann wrote that insurers were able to refuse to pay for clinically necessary, cost-reducing treatments. At an auction in May, Click Therapeutics, Welt Corp, Harvest Bio and Nox Health Group bought the company's assets piecemeal for a total of $6.05 million. That sum was far below Pear's $32 million of debt. Pear's collapse shows that in healthcare, clinical success and regulatory approval are not a business model in themselves. Unless the payer puts a product on its reimbursement list, even the most innovative treatment cannot become a revenue stream that scales. ## Lessons - For a healthcare product, put the price negotiation with the reimbursing body (Turkey's SGK social security institution or private insurers) at the top of your business plan, just as much as regulatory approval. - Base your revenue forecasts not on the number of prescriptions but on the number of patients covered by reimbursement. - Plan in advance which costs you will cut if an IPO or SPAC brings in half the amount you expected. ## Sources - [Pear Therapeutics to go public in $1.6 billion SPAC merger](https://www.statnews.com/2021/06/22/pear-therapeutics-spac-ipo/) - [Pear Therapeutics’ Cuts Are Not Enough; ‘Strategic Alternatives’ Among Next Steps](https://medcitynews.com/2023/03/pear-therapeutics-cuts-are-not-enough-strategic-alternatives-among-next-steps/) - [Pear Therapeutics Files for Bankruptcy and Plans for Asset Auction in May](https://medcitynews.com/2023/04/pear-therapeutics-files-for-bankruptcy-and-plans-for-asset-auction-in-may/) - [Pear Therapeutics dreamt of huge revenues and ‘commercial scale.’ It never came close](https://www.statnews.com/2023/04/13/pear-therapeutics-goals/) - [Pear Therapeutics sold for parts at $6 million auction](https://www.statnews.com/2023/05/19/pear-therapeutics-auction/) --- # Proterra (2004 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/proterra/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Proterra designed and built battery-electric city buses, supplied battery and powertrain systems to other heavy-vehicle makers, and offered charging solutions to fleets. It was founded in Colorado in 2004 by Dale Hill and moved its headquarters to Burlingame, California, in 2015. In 2021 it began trading on Nasdaq through a SPAC merger. ## Why did it shut down? The reasons the company gave for its bankruptcy included supply-chain disruption, the delayed deliveries it caused and contractual penalties. Building heavily customised vehicles for each transit agency pushed costs up, and inflation ate into margins over production cycles of 12 to 18 months. Quality problems also hurt its reputation, such as SEPTA in Philadelphia pulling 25 buses from service because of chassis defects. Proterra filed for Chapter 11 on 7 August 2023. In November 2023 the company's three business lines were sold separately. ## The story In November 2023, in the course of bankruptcy proceedings, one of America's electric bus pioneers was split into three. Volvo Group won the auction for Proterra Powered, the unit making battery and powertrain systems, with a bid of $210 million. Bus manufacturing went to Phoenix Motorcars and the charging systems business to Cowen Equity. A company almost twenty years old was broken up. Proterra was founded in 2004 in Golden, Colorado, by Dale Hill. Hill had previously founded TransTeq, which built hybrid buses in Denver; Proterra moved away from compressed natural gas technology towards battery-electric buses supported by federal alternative-fuel programmes. Between 2010 and 2011 the company moved its manufacturing and management to Greenville, South Carolina; in 2014 it appointed Ryan Popple, who had come from Tesla, as CEO, and in 2015 it moved its headquarters to Burlingame, California. In 2021 it merged with a SPAC called ArcLight Clean Transition and began trading on Nasdaq. The company also expanded beyond buses: it developed an electric school bus with Thomas Built Buses and signed a deal with Lightning eMotors to supply batteries for up to 10,000 vehicles over 2022–2025. In 2022 it delivered 199 new buses and battery systems for 1,229 vehicles. It also offered customers a leasing programme that let them spread the cost of the battery over time instead of paying upfront. On the ground, however, there were problems: 25 buses bought in 2016 by SEPTA, Philadelphia's transit authority, were pulled from service in February 2020 because of chassis defects, and the authority's management began to question the future of its electric vehicle purchases. On 7 August 2023 Proterra filed for Chapter 11. The reasons included supply-chain disruption, the delivery delays it caused and penalties arising from supplier contracts. Building heavily customised vehicles for each transit agency was driving costs up, and inflation was eating into margins over production cycles of 12 to 18 months. In auctions in November the company was broken up; Phoenix Motorcars began building former Proterra models under its own brand from 2024. Proterra's story shows that having the right technology and a growing market does not save a business model whose manufacturing economics are broken. And it became clear only at the bankruptcy table that the company's most valuable part was not its buses but its batteries. ## Lessons - In public tenders, building a separately customised product for every customer makes costs unpredictable; offer a standard platform with a limited set of options. - Add price-adjustment clauses for inflation and supply delays to long-lead-time contracts. - Strengthen your most valuable technology as a separate business line early on; in Proterra's bankruptcy, the highest bid went not to the buses but to the battery business. ## Sources - [Proterra (bus manufacturer)](https://en.wikipedia.org/wiki/Proterra_(bus_manufacturer)) - [EV firm Proterra files for Chapter 11 bankruptcy](https://www.reuters.com/business/autos-transportation/ev-firm-proterra-files-chapter-11-bankruptcy-2023-08-07/) - [What led to EV darling Proterra's bankruptcy](https://techcrunch.com/2023/08/09/what-led-to-ev-darling-proterras-bankruptcy/) - [Volvo Group wins bid for bankrupt Proterra battery assets](https://www.freightwaves.com/news/volvo-group-wins-bid-for-bankrupt-proterra-battery-assets) - [https://www.wikidata.org/wiki/Q18011784](https://www.wikidata.org/wiki/Q18011784) --- # Thundra (2018 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/thundra/ - Sector: Enterprise software (SaaS) - Country: Turkey - Total funding: $4 million - Cause of closure: Acquired and shut down ## What did it do? Thundra was a monitoring, debugging and security platform that made the inner workings of serverless and microservice applications visible. Using agents added to AWS Lambda functions, it brought metrics, logs and traces together on a single screen, helping developers track down performance problems quickly. On top of a free tier it offered usage-based plans. In 2021 it added Thundra Sidekick, a feature focused on debugging. ## Why did it shut down? The sources do not give a detailed explanation of why Thundra ended its independent journey. In April 2023 the platform's website announced that operations had ceased, and a few days later Catchpoint said it had acquired Thundra's technology assets. The price was not disclosed; the team moved to the new centre Catchpoint set up in Ankara, and the technology was folded into the buyer's products. The sources for this entry contain no news of further investment after the $4 million round in 2020; as an interpretation, this suggests the company struggled to scale on its own in the global monitoring market. Before its founder's expectation that it would outgrow OpsGenie could come true, the product ended with an asset sale. ## The story Thundra's foundations were laid in 2017 inside OpsGenie, the Turkish-founded incident alerting company. Serkan Özal, a senior software engineer there, wrote a library to monitor Java functions running on AWS Lambda. OpsGenie used the tool in its own work for months without it even having an interface. At the end of 2017, OpsGenie CEO Berkay Mollamustafaoğlu asked for a prototype to see whether the library could become a product; the first version was ready in November 2017. When the response was positive, the product was handed to a small team. When Atlassian bought OpsGenie for $295 million in 2018, Thundra was left out of the deal and was set up as a separate company in September 2018. According to Webrazzi, the Turkish tech news site, Mollamustafaoğlu believed Thundra would become even bigger than OpsGenie. After closing its first round, $4 million led by Battery Ventures, in January 2020, the company brought in enterprise software executive Ken Cheney as CEO, while Özal became CTO. The plan was to grow the sales team in the US and double the engineering team in Turkey. At the time the team numbered 13. Thundra aimed to make the inner workings of serverless applications visible: it brought metrics, logs and traces together so that developers could find problems quickly. In April 2021 it added Thundra Sidekick, a feature focused on debugging. The big leap that had been expected never came. In April 2023 a notice appeared on Thundra's website saying operations had ceased; users were told they could contact the support team until 12 May. On 18 April the US monitoring company Catchpoint announced that it had acquired Thundra's technology assets. The team moved to the new centre Catchpoint set up in Ankara, and Thundra's serverless monitoring capabilities were folded into Catchpoint's platform. The price was not disclosed. Thundra's end was not a classic bankruptcy; the team and technology lived on under another roof. But as an independent product, Thundra passed into history in its fifth year as a company, without reaching the scale its founder had expected. ## Lessons - An internal project born to solve your own problem is a good start, but once it becomes a separate company you have to prove the market all over again. - Focusing on a single cloud ecosystem (here, AWS Lambda) gets you off the ground quickly, but it also ties the size of your market to that ecosystem. - An asset sale can keep the team and technology alive, but it usually ends the brand and the product; bear that in mind when planning an exit. ## Sources - [Thundra, acquired by a US-based software company, ceases operations](https://webrazzi.com/2023/04/13/thundra-faaliyetlerini-sonlandirdi/) - [Catchpoint Invests to Advance API, Cloud Functions, and Microservices Monitoring](https://www.catchpoint.com/press-releases/catchpoint-invests-to-advance-api-cloud-functions-and-microservices-monitoring) - [Thundra, which Berkay Mollamustafaoğlu says "will be even bigger than OpsGenie", raises $4 million in its first funding round](https://webrazzi.com/2020/01/22/thundra-4-milyon-dolar/) - [Thundra announces $4M Series A to secure and troubleshoot serverless workloads](https://techcrunch.com/2020/01/22/thundra-nabs-4m-series-a-to-secure-and-troubleshoot-serverless-workloads/) --- # Trapmine (2017 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/trapmine/ - Sector: Security - Country: Turkey - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Trapmine built an SI-based, next-generation endpoint protection and response platform for corporate computers. It aimed to catch the threats signature-based antivirus software missed using machine learning and behavioural analysis, and to provide real-time protection against zero-day attacks. In 2018 its antivirus engine was added to Google's VirusTotal scanning service. ## Why did it shut down? Trapmine did not end in bankruptcy but in closure after an acquisition. In October 2023 the start-up announced that it had been acquired by a US-based global cybersecurity company and would cease commercial operations on 31 December, with the team joining the buyer (Webrazzi, 2023). According to an interview CRN conducted with SonicWall's CEO in 2024, the buyer was SonicWall. The sources do not give the reasons for the sale. By way of interpretation, endpoint security is a market dominated by large, well-funded companies; folding its technology into a big platform, rather than trying to scale independently, looks like a sensible path for a small team. ## The story Trapmine was founded in 2017 by Celil Ünüver, Ulaşcan Aytolun and Mauro Leggieri. Based in Estonia and Turkey, the start-up developed a next-generation endpoint protection solution against threats that traditional signature-based antivirus software could not stop. Installed on corporate computers, the software used machine learning and behavioural analysis to learn to tell good files from bad, promising real-time protection against zero-day attacks. The start-up's first investor was Startup Wise Guys, an accelerator based in Estonia. It was the fund's first investment both in Turkey and in cybersecurity. In November 2018 Trapmine became the first Turkey-based product accepted into VirusTotal, the Google-owned service for scanning suspicious files. According to the Turkish daily Yeni Şafak, in trials by independent testing organisations the engine had detected 95 per cent of malware using super intelligence alone. The company's technical director, Yasin Sürer, explained that the engine on VirusTotal was only one component of a broader endpoint security platform. In October 2023 Trapmine announced that it had been acquired by a US-based global cybersecurity company. Neither the buyer's name nor the financial details of the deal were disclosed at the time. All that was announced was that Trapmine would cease commercial operations on 31 December and that the team would continue within the acquiring company. For Startup Wise Guys it was the 15th exit in its portfolio; the fund's CEO, Cristobal Alonso, said the team had been working on a world-class product from day one. The buyer was the US security company SonicWall. Speaking to CRN in 2024, SonicWall CEO Bob VanKirk explained that over four months between late 2023 and early 2024 the company had acquired Trapmine along with Banyan Security and Solutions Granted. The acquisitions were part of SonicWall's effort to close gaps in its endpoint and cloud capabilities. Trapmine's story shows that even a start-up whose technology is well regarded may not be able to go on living as an independent product. The team and its know-how carried on inside a larger company, but the Trapmine brand passed into history on the last day of 2023. ## Lessons - Deep technology alone is not enough; in a crowded market, a product without distribution power may not survive independently. - Independent validation such as VirusTotal builds trust, but it is no substitute for a sales channel. - In an asset- or team-focused sale, plan from the start for the brand to close and offer your customers a transition plan. ## Sources - [Estonia- and Turkey-based Trapmine acquired by a global cybersecurity company](https://webrazzi.com/2023/10/19/trapmine-satin-alindi/) - [SonicWall CEO On 'Getting Back To Our Roots', Using SI And Latest Acquisitions](https://www.crn.com/news/channel-news/2024/sonicwall-ceo-on-getting-back-to-our-roots-using-ai-and-latest-acquisitions) - [The first Turkish member of the VirusTotal platform: TRAPMINE](https://www.yenisafak.com/teknoloji/virustotal-platformunun-ilk-turk-uyesi-trapmine-3410384) --- # VanMoof (2009 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/vanmoof/ - Sector: Mobility and transport - Country: Netherlands - Total funding: $100 million - Cause of closure: Ran out of cash ## What did it do? VanMoof was a company founded in Amsterdam in 2009 that made conventional bicycles at first and later only electric bikes. It sold bikes manufactured for it in Taiwan in 32 countries and ran its own shops in cities such as Amsterdam, Berlin, Paris, London, Tokyo and New York. Its bikes featured GPS trackers, automatic gear shifting and batteries integrated into the frame. ## Why did it shut down? Although VanMoof's designs won awards, some customers complained of shipping damage, late deliveries, mechanical and technical faults and poor customer service. From 2021 onwards durability problems were reported, including frame damage, electrical faults and an inability to get repairs or spare parts in good time. In June 2023 online sales stopped, and on 12 July the company obtained court protection from its creditors. With total debts of EUR 143.8 million, the Dutch companies were declared bankrupt by an Amsterdam court on 17 July 2023; the UK, German and US units then entered bankruptcy proceedings too. ## The story At the end of June 2023 several websites reported that VanMoof was in financial trouble and had halted online sales on 29 June. Within a few weeks the Dutch electric bike brand, which had collected Red Dot awards for its design and was a favourite of urban cyclists, was in bankruptcy. VanMoof was founded in Amsterdam in 2009 by Taco and Ties Carlier. Its name was a Dutch take on the English word "move". The company started with conventional bikes and in 2012 sold around 10,000 bicycles worldwide. In 2014 came its first electric model, with a GPS tracker, an automatic two-speed gearbox and a battery integrated into the frame; over time it focused solely on electric bikes. Its Taiwan-built bikes were sold in 32 countries, and shops opened in Amsterdam, Berlin, Paris, London, Tokyo and New York. Sales rose from USD 12 million in 2018 to around USD 48 million in 2019. More than USD 100 million in capital was raised from investors including Felix Capital, Balderton Capital, Hillhouse Capital and Norwest Venture Partners; USD 40 million came in 2020 alone. The flip side of the brilliant design was service. Some customers who bought the S3 model complained of shipping damage, late deliveries, mechanical and technical faults and inadequate customer service. From 2021 onwards durability problems were reported, including frame damage, electrical faults and an inability to get repairs or spare parts in good time. In May 2022 the founders handed operational management to Gillian Tans, former CEO of Booking.com. On 12 July 2023 a Dutch court granted the company protection from its creditors, and the shops were closed. VanMoof owed EUR 143.8 million to creditors including investors, suppliers and tax authorities. On 17 July the Dutch companies were declared bankrupt by an Amsterdam court; the UK, German and US units entered bankruptcy proceedings in August. On 31 August 2023 Lavoie, the electric scooter unit of McLaren Applied, bought the brand, and the VanMoof name lived on under its new owner; but the company the Carliers had founded ended in bankruptcy in 2023. VanMoof shows that however ambitious you are in product design, after-sales service is the real test of a brand. ## Lessons - Match your sales pace to your service and spare-parts capacity; a product that takes weeks to repair drives away even loyal customers. - In hardware, measure growth not by revenue growth but by contribution margin per unit; if no margin forms while sales multiply, scale only magnifies the problem. - Even if the brand is sold to someone else after bankruptcy, for investors and employees the company has closed; weigh up rescue options before the cash runs out. ## Sources - [VanMoof](https://en.wikipedia.org/wiki/VanMoof) - [Dutch e-bike maker VanMoof bankrupt, administrators may sell assets](https://www.reuters.com/business/autos-transportation/dutch-e-bike-maker-vanmoof-bankrupt-2023-07-18/) - [VanMoof, Trendy E-Bike Brand, Bought Out of Bankruptcy by Scooter Maker](https://www.nytimes.com/2023/08/31/business/vanmoof-sale-lavoie-mclaren.html) --- # Zulily (2009 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/zulily/ - Sector: E-commerce - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Zulily was a Seattle-based e-commerce site selling children's and women's clothing, toys, baby products and home decor to young mothers looking for branded goods. It ran on flash sales announced by email early in the morning. Rather than holding stock, it bought most products from suppliers after customers had ordered them. ## Why did it shut down? The stockless model lengthened delivery times and led to quality problems such as wrong, damaged or incomplete shipments. The company struggled to retain customers, and when growth slowed in 2015 it cut its revenue forecast. Bought by QVC in 2015, Zulily saw its revenue fall sharply in 2022 and 2023, and there were three waves of layoffs in Seattle. In May 2023 Qurate Retail sold the company to Regent. In December 2023 hundreds of employees were laid off, a closing-down sale began and the company's assets were liquidated for the benefit of creditors. ## The story When Mark Vadon's wife became pregnant, Vadon was overwhelmed by the list of things the baby needed, products he had not even known existed. That experience led Vadon and Darrell Cavens, two former Blue Nile executives, to found Zulily in Seattle in 2009. The target audience was young mothers looking for branded products for their children. Zulily's formula was daily flash sales announced by email early in the morning. Rather than stocking products in large warehouses, the company bought most of them from suppliers after customers had ordered. The model grew fast: in 2012 it passed 10 million members. At its IPO in November 2013 the company had 2.6 million active customers and $331 million in revenue; it was valued at $2.6 billion. In the third quarter of 2014 active customers exceeded 4.5 million. But the model came at a cost. Because no stock was held, deliveries took longer, and there were quality problems such as wrong, damaged or incomplete shipments. The company struggled to retain customers and realised it may have worn buyers out with too many campaigns. When growth slowed in the first quarter of 2015, it cut its annual revenue forecast. In August that year QVC, a unit of Liberty Interactive, bought Zulily for $2.4 billion. The acquisition did not save the company. Revenue fell sharply in 2022 and 2023, and there were three waves of layoffs in Seattle. In May 2023 Qurate Retail sold Zulily to Regent, L.P. In early December the company said it would lay off 292 people in Seattle and another 547 at warehouses in Nevada and Ohio, and launched a closing-down sale. On 18 December, according to customers, the site, the app and the customer service line were not working; the assets were liquidated for the benefit of creditors through an assignment arrangement used as an alternative to bankruptcy. The brand was bought by Beyond, Inc. in 2024 and relaunched in September 2024. Zulily's story shows how fragile a model that grows fast on the appeal of discounts can be when the delivery experience and customer loyalty stay weak. Even a billion-dollar acquisition could not protect, in the long run, a business whose fundamental problems had not been solved. ## Lessons - A stockless, order-then-source model saves capital but lengthens delivery times; do not scale it without measuring how long customers are willing to wait. - Customers won through constant discounts leave when the discounts end; feed loyalty with value beyond price as well. - Coming under the roof of a large company does not remove competitive pressure; keep running an independent growth plan after the acquisition too. ## Sources - [Zulily](https://en.wikipedia.org/wiki/Zulily) - [After layoffs, once-hyped Seattle online retailer is shutting down](https://www.seattletimes.com/business/seattle-online-retailer-zulily-going-out-of-business/) - [Zulily transfers assets to professional liquidator as failed retailer unable to issue refunds](https://www.geekwire.com/2023/zulily-transfers-assets-to-professional-liquidator-as-failed-retailer-unable-to-issue-refunds/) - [zulily Is Lost Up the Amazon With Latest Deal](https://www.wsj.com/articles/zulily-is-lost-up-the-amazon-with-latest-deal-1439841642) --- # Zume (2015 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/zume/ - Sector: Food and drink - Country: United States - Total funding: $429 million - Cause of closure: Failed pivot ## What did it do? Zume was founded in 2015 by Alex Garden and Julia Collins as Zume Pizza. Its original promise was pizza prepared largely by robots and baked in the vehicle on the way to the customer. It later turned to a technology platform for automated food trucks, and in 2020 to compostable food packaging and delivery logistics. ## Why did it shut down? Baking pizza in a moving vehicle proved impractical, and customers complained about the quality of the robot-made pizzas. In 2018 the company moved away from pizza towards a bigger platform vision, and on the strength of that vision took $375 million from SoftBank. In 2020 it laid off more than 500 employees, including the entire robotics and delivery truck divisions. Its final pivot, compostable packaging, was not enough to keep the company going either, and Zume closed in June 2023. ## The story The pizza you ordered bakes on the road as it makes its way to your door, its dough and sauce prepared by robots. That was the promise that caught the press's attention in 2016. Founded by Alex Garden and Julia Collins in 2015 as Zume Pizza, the company was one of the most ambitious of the Californian start-ups trying to put technology and food in the same box. The early years brought investor interest. A $6 million Series A from Jerry Yang and SignalFire came in 2016, followed by a $48 million Series B in autumn 2017. On the ground, however, the reality was different: baking pizza in a moving vehicle was impractical, and customers complained about the quality of the robot-made pizzas. The idea was eventually shelved. In 2018 the company moved away from pizza and set up the Zume, Inc. umbrella, aiming to become a platform for automated food trucks using SI and kitchen technology. The vision was big: revenue of $250 million and $1 billion was forecast for the final quarters of 2020 and 2021 respectively. In November 2018 SoftBank invested $375 million, valuing the company at $2.25 billion; in 2019 there was talk of a search for a $4 billion valuation. The expectations were not met. In 2020 Zume laid off more than 500 employees, including the entire robotics and delivery truck divisions. During the pandemic it sold masks, then in May 2020 switched to making compostable food packaging; as CNBC put it, the robots that once made pizza were now turning waste into compostable packaging. Underpinning this transformation was Pivot Packaging, which it had acquired in 2019. However, Pivot's founders sued Zume, alleging that it had been misvalued in the $20.5 million sale, $10 million of which was paid in shares. Zume, which had raised more than $400 million, closed in June 2023. Zume's story is a reminder that a striking technology showcase is no substitute for what customers actually expect: a good product. A big funding round pushed the company towards ever bigger visions while the core business was never proven, and each new pivot had to carry the weight of the one before. ## Lessons - Measure the quality of the product itself, not the technology showcase; customers remember how the pizza tasted, not that a robot made it. - If a big funding round pushes you to enlarge your vision, make sure the new vision is not being funded before the core business has been proven. - With every pivot, rebuild your team, assets and cost structure around the new business; the weight of the old business will smother the new one. ## Sources - [Zume](https://en.wikipedia.org/wiki/Zume) - [Fallen Pizza Startup Zume Shuts Down After Raising Millions](https://www.bloomberg.com/news/articles/2023-06-03/fallen-pizza-startup-zume-shuts-down-after-raising-millions) - [SoftBank's $375 Million Bet on Pizza Went Really Bad Really Fast](https://www.bloomberg.com/news/articles/2020-02-13/inside-the-firings-at-softbank-s-robot-pizza-startup) - [This Robot-Made Pizza Is Baked in the Van on the Way to Your Door](https://fortune.com/2016/09/29/this-robot-made-pizza-is-baked-in-the-van-on-the-way-to-your-front-door/) - [https://www.wikidata.org/wiki/Q28222782](https://www.wikidata.org/wiki/Q28222782) --- # Zymergen (2013 – 2023) - URL: https://girisimcikafasi.com/en/startup-graveyard/zymergen/ - Sector: Biotechnology - Country: United States - Total funding: $876 million - Cause of closure: Product problems ## What did it do? Zymergen was an Emeryville-based biotechnology company that used genomics and machine learning to design genetically modified organisms that produce chemicals and materials. It argued that its production process was safer and cheaper than conventional manufacturing. Its first product, Hyaline, was a biologically produced polyimide film for electronics applications such as foldable displays. ## Why did it shut down? Filings with the SEC showed the company had lost more than $262 million in 2020 against revenue of just $13 million. The same filings revealed difficulties in manufacturing Hyaline and that two customers had complained the product did not work in their own production processes. In August 2021 the company said product revenue in 2022 would be immaterial, the CEO left and the shares fell 68 per cent in a single day. Hyaline production was dropped in November 2021. In July 2022 Ginkgo Bioworks acquired the company in a $300 million all-stock deal; Zymergen filed for bankruptcy in October 2023 and decided to liquidate in February 2024. ## The story In August 2021, just four months after its IPO, Zymergen told investors it did not expect meaningful revenue from its first product in 2022 and removed its CEO. The shares fell 68 per cent in a single day. For a company that claimed it would redefine materials production by combining biology with machine learning, this was the beginning of the end. Zymergen was founded in 2013 in Emeryville, California, by investment banker Joshua Hoffman, biophysicist Zach Serber and biochemist Jed Dean. The company aimed to produce chemicals and materials by designing genetically modified microorganisms with robots and algorithms. Investors were convinced: $2 million was raised in 2013 and $44 million in 2015; SoftBank's Vision Fund came in with $130 million in 2016, followed by another $400 million in 2018 and $300 million in 2020. By 2016 its customers were reported to include DARPA and Fortune 500 companies. Yet according to an insider quoted by Forbes, the company was unable to generate revenue during this period while continuing to attract investment. Its first product, Hyaline, a biologically produced polyimide film for foldable displays, launched in December 2020. The company went public in April 2021 with a $500 million IPO led by JPMorgan and Goldman Sachs, reaching a value of around $3 billion. Its SEC filings, however, showed losses of more than $262 million in 2020 against revenue of just $13 million. The same filings also revealed difficulties in manufacturing Hyaline and that two customers had complained the product did not work in their own production processes. As the problems became public, its market value evaporated quickly and shareholder lawsuits followed. After the August 2021 announcement hundreds of employees were laid off, co-founder Jed Dean also left, and in November 2021 Hyaline production was abandoned altogether. In July 2022 Ginkgo Bioworks agreed to acquire Zymergen in a $300 million all-stock deal. Under Ginkgo's ownership, Zymergen filed for Chapter 11 in October 2023 and in February 2024 announced it would sell its remaining assets and be liquidated. Zymergen's story shows how expectations collapse when they are scaled before a lab success has been proven to work in the customer's factory too. Strong science and large sums of capital were no substitute for fit between product and market. ## Lessons - Before an IPO or a large round, prove with independent pilots that a product that works in the lab also works on the customer's production line. - Every large round raised without proof of revenue raises expectations; the wider the gap between expectation and reality, the harder the fall. - Before tying the whole company to a single product and a single target market, validate the market's size with customer commitments. ## Sources - [Zymergen](https://en.wikipedia.org/wiki/Zymergen) - [Synthetic biology company Zymergen plunges 68% after saying product revenue will be 'immaterial' in 2022, removing CEO](https://www.cnbc.com/2021/08/03/zymergen-zy-plunges-68percent-on-forecast-for-immaterial-revenue-in-2022.html) - [The Inside Story Of How SoftBank-Backed Zymergen Imploded Four Months After Its $3 Billion IPO](https://www.forbes.com/sites/amyfeldman/2021/10/13/the-inside-story-of-how-softbank-backed-zymergen-imploded-four-months-after-its-3-billion-ipo/) - [Biotech startup Zymergen nabs $130 million from Softbank](https://techcrunch.com/2016/10/10/biotech-startup-zymergen-nabs-130-million-from-softbank/) --- # Airlift (2019 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/airlift/ - Sector: Logistics and delivery - Country: Pakistan - Total funding: $110 million - Cause of closure: Ran out of cash ## What did it do? Airlift started in Lahore in March 2019 as an app-booked shuttle service focused on mass transit. When pandemic lockdowns halted that business, the company switched to a quick-commerce model, delivering groceries and essentials from its own warehouses within 30 minutes. As well as several cities in Pakistan, it operated in Johannesburg, Pretoria and Cape Town in South Africa. ## Why did it shut down? The rapid delivery model, built on a network of warehouses, needed regular injections of new capital to keep growing. With a USD 85 million Series B in 2021, the company turned to international expansion. In 2022, as global economic conditions deteriorated and venture capital dried up, it could not find new funding. The company halted all operations on 13 July 2022 and slid into bankruptcy. ## The story When Usman Gul lost hours in traffic on a holiday visit to Lahore, he came up with an idea: ease the city's chaotic transport with regular, app-booked shuttle buses. In March 2019, with a small team and USD 50,000 of his own money, he founded Airlift and began a pilot in Lahore. Ahmed Ayub and Meher Farrukh were also on the founding team. The start was fast. In its first five months the company reached 50,000 passengers in Lahore; by July 2019 it was also operating in Karachi, and in August it raised USD 2.2 million in seed funding. Then came a USD 12 million Series A, with participation from the US firm First Round Capital. Then the pandemic struck, and Pakistan's full lockdown halted the mass-transit business indefinitely. Gul saw an opportunity and turned the company into a quick-commerce business. The new service, launched as Airlift Express, brought groceries and essentials to the door within 30 minutes from the company's own warehouses. The pivot won investors over: in 2021 came a USD 85 million Series B co-led by Buckley Ventures, recorded as the largest Series B ever raised by a start-up in the Pakistan, Middle East and North Africa region. Total funding rose to USD 110 million and the valuation to USD 275 million. The company expanded to Johannesburg, Pretoria and Cape Town in South Africa. In 2022 the wind turned. The global economic slowdown and shrinking venture capital left without funding a model that grew through a warehouse network and constantly needed fresh capital. TechCrunch reported that Pakistan's most prominent start-up was shutting down because of a funding crunch. Airlift halted all operations on 13 July 2022; Reuters reported the closure as the global downturn's first start-up casualty in Pakistan. Airlift's story shows how vulnerable a model built around a demand window opened by a crisis becomes when the capital markets close. A rapid pivot saved the company in the pandemic; but international expansion, accelerated before it reached profitability, left it exposed when the next shock came. ## Lessons - If you built your model around a demand window opened by a temporary shock such as a pandemic, re-test whether it can survive once the shock is over. - When you close a big round, do not base your spending plan on the assumption that the next round is certain; know how long you can survive if the funding market shuts. - Before opening in a new country, show with numbers that unit economics in your home market have turned profitable. ## Sources - [Airlift Technologies](https://en.wikipedia.org/wiki/Airlift_Technologies) - [Pakistan's top startup shutting down following funding crunch](https://techcrunch.com/2022/07/12/airlift-shutdown/) - [Global downturn claims first Pakistan startup as Airlift closes](https://www.reuters.com/technology/global-downturn-claims-first-pakistan-startup-airlift-closes-2022-07-13/) --- # Argo AI (2016 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/argo-ai/ - Sector: Mobility and transport - Country: United States - Total funding: $3.6 billion - Cause of closure: Bad timing ## What did it do? Argo AI was a Pittsburgh-based company developing software, hardware, maps and cloud infrastructure for driverless vehicles. It was founded in 2016 by Bryan Salesky and Peter Rander, veterans of the autonomous driving programmes at Google and Uber. Its biggest backers were Ford and Volkswagen, and the company also ran pilot services such as autonomous grocery delivery with Walmart. ## Why did it shut down? Getting Level 4 fully autonomous driving to commercial maturity proved a far longer and costlier process than expected. Despite investment from Ford and Volkswagen, the company could not find a new outside investor; an attempt to secure further investment from Amazon came to nothing. In October 2022, when it reported a third-quarter net loss of USD 827 million, Ford announced that Argo would be wound up and booked a USD 2.7 billion accounting charge. The two partners shifted development in-house towards lower levels of autonomy and divided some of the staff between them. ## The story In October 2022 Ford's chief executive, Jim Farley, told the press that "profitable, fully autonomous vehicles at scale are a long way off". That sentence announced the end of a company on which billions of dollars had been spent: Ford and Volkswagen had decided to wind up Argo AI, the driverless car company they jointly backed. Argo was founded in Pittsburgh in November 2016 by Bryan Salesky and Peter Rander, robotics specialists from the autonomous driving programmes at Google and Uber. A few months later, in February 2017, Ford announced it would invest USD 1 billion in the company over five years and became its largest shareholder. Argo bought the lidar maker Princeton Lightwave, set up a USD 15 million research centre at Carnegie Mellon University and tested different weather and traffic conditions in millions of simulations. In June 2020 Volkswagen joined the partnership in a USD 2.6 billion deal that included USD 1 billion in cash and AID, its autonomous driving unit in Munich. Argo's valuation rose to USD 7.25 billion; across the two partnerships, the capital raised exceeded USD 3.6 billion. The company had offices in Pittsburgh, Detroit, Palo Alto, New Jersey and Munich, and more than a thousand employees. In September 2021, together with Walmart and Ford, it announced a multi-city service to deliver online grocery orders by autonomous vehicle. But fully autonomous driving was taking longer than expected to reach commercial maturity, and spending kept growing. When Argo failed to secure further investment from Amazon, the partners' patience ran out. In October 2022, as it reported a third-quarter net loss of USD 827 million, Ford announced that Argo would be wound up and wrote off USD 2.7 billion; Volkswagen also booked a charge of EUR 1.9 billion. Some of the staff were distributed between the two carmakers. The technology continued to be used in units such as Ford's Latitude AI and Volkswagen's CARIAD, for driver-assistance systems aimed at lower levels of autonomy. Argo's story shows how a business can end, even with the right team and strong partners, when the time a technology needs to mature outruns its funding horizon. The Level 4 goal was the company's reason to exist; once that goal was postponed, there was no other revenue model to keep it standing. ## Lessons - Set the time your technology needs to reach commercial maturity against your investors' patience; every extra year in between means another funding round. - Do not tie your company solely to the budgets of two strategic partners; when their priorities change, your reason to exist disappears too. - Build sellable intermediate products while you wait to reach the ultimate goal; Argo's technology lived on at intermediate levels such as driver-assistance systems. ## Sources - [Argo AI](https://en.wikipedia.org/wiki/Argo_AI) - [Argo AI will cease operations as Ford and Volkswagen pull investments](https://arstechnica.com/cars/2022/10/argo-ai-will-cease-operations-as-ford-and-volkswagen-pull-investments/) - [Self-driving vehicle startup Argo AI completes $2.6B deal with Volkswagen, expands to Europe](https://techcrunch.com/2020/06/01/self-driving-vehicle-startup-argo-ai-completes-2-6b-deal-with-volkswagen-expands-to-europe/) - [Amazon Was a Secret Player in Ford and VW-Backed Argo's Demise](https://www.bloomberg.com/news/newsletters/2022-11-22/amazon-was-a-secret-player-in-ford-and-vw-backed-argo-s-demise) --- # Barty (2019 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/barty/ - Sector: Marketplaces - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Barty was an Istanbul-based mobile platform on which people swapped second-hand goods with one another without using money. It valued items using machine learning, and users could trade across categories with Barty points. Starting with books, the platform expanded to 18 categories. ## Why did it shut down? According to the team's statement in September 2022, Barty brokered more than 30,000 swaps among more than 200,000 registered users, but because of its business model it reached only a third of its targeted growth. According to a 2021 Webrazzi report, the platform charged no membership fees, in-app purchases, commission or advertising; revenue was expected from exchanging points with credit card schemes and business partners. Although there was user interest, it appears that this structure could not generate enough revenue to sustain the company; this last assessment is an interpretation. The team shut the product down and moved to the Barty Digital model, selling software and design services. ## The story When Semih Kılıçgedik came across a licensed business-to-business barter platform in Turkey, a question occurred to him: why not the same thing for individuals? The Boğaziçi University graduate started out in Istanbul in April 2019 under the name Bartme. The app valued second-hand goods using machine learning and let users swap them with virtual points, without using money. The first category was books. The start-up was selected for Workup, the programme backed by İş Bankası. Soon renamed Barty, the company raised 1 million TL in seed funding at a 5 million TL valuation in September 2020. According to Webrazzi, it had 11,000 active users and more than 2,000 completed swaps at the time; the number of categories had risen to 18. In September 2021 new investment came from angel investors at Keiretsu Forum Türkiye at a USD 2 million valuation. Co-founder Öykü Sorgun said they had reached more than 150,000 active users in nine months and that more than 13,000 items worth 750,000 TL had been swapped. The platform charged no fees, commission or advertising. A year later the team announced it had come to the end of the road. The message published by egirişim said they had brokered more than 30,000 swaps among more than 200,000 registered users, followed by a candid admission: “because of our business model, we were only able to grow Barty to a third of what we had aimed for.” The closure was handled in an orderly way. The team identified around 500 users left with a positive balance from their swaps and paid out the balances, totalling around 90,000 TL, as gift vouchers or cash. At users' request, some 300 saplings were donated to the TEMA Foundation, a Turkish environmental charity. The company itself did not close; the team aimed to stay afloat by selling software and design services under the name Barty Digital and to raise funds for a new model focused on the trust problem in buying second-hand goods. Barty's story shows the limits of how far an idea users love can go with a model that does not generate revenue. ## Lessons - User numbers are no substitute for a revenue model; test from day one where your money will come from. - Models such as swapping, which require both sides to need something at the same moment, grow slowly without liquidity. - When you close, pay out users' balances; trust is the capital for your next venture. ## Sources - [Turkish start-up Barty halts operations and will carry on with its new model, Barty Digital](https://egirisim.com/2022/09/15/operasyonlarini-durduran-yerli-girisim-barty-yeni-modeli-barty-digital-ile-yoluna-devam-edecek/) - [Peer-to-peer swapping platform Barty raises seed investment at a 5 million TL valuation](https://webrazzi.com/2020/09/15/kisiler-arasi-takas-platformu-barty-5-milyon-tl-degerleme-ile-tohum-yatirim-aldi/) - [Money-free shopping platform Barty raises investment from Keiretsu Forum Türkiye at a USD 2 million valuation](https://webrazzi.com/2021/09/01/parasiz-alisveris-platformu-barty-keiretsu-forum-turkiyeden-2-milyon-dolar-degerleme-uzerinden-yatirim-aldi/) - [Bartme: the platform for swapping second-hand goods between people at their fair value](https://egirisim.com/2020/03/24/bartme-ikinci-el-esyalarin-kisiler-arasinda-degerinde-takas-olmasini-saglayan-platform/) --- # BenzinLitre (2018 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/benzinlitre/ - Sector: Mobility and transport - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? BenzinLitre was a mobile app that showed drivers the petrol stations nearest to them and their petrol, diesel and LPG prices. Prices were gathered from users' updates, and stations' facilities, such as a shop, toilets or a car wash, were also listed. In 2019 the app also began operating in Germany. ## Why did it shut down? The farewell message posted on social media on 29 December 2022 gave no details about the reasons for the closure. The team halted operations, saying it hoped to return if conditions allowed. The founder had made clear from the start that the app was created for the public good and would always be free for users; on the revenue side, it developed special projects with brands. Its 2020 targets of direct payments, expansion into Italy and 500,000 users suggest the start-up was looking to broaden its revenue model. This picture can be read as a case of a large user base failing to turn into a sustainable business on its own. ## The story In early 2018 Görkem Ünel set out with a question that seemed simple: could you see the latest prices of every petrol station in Turkey, whether they were open and even whether they offered free tea, in a single app? Ünel, who had worked at Hepsiburada, Rocket Internet, Trendyol and Criteo, founded the super intelligence applications company BRAIN MINDS for the job and launched BenzinLitre. In March 2018 Webrazzi wrote that the app had passed 10,000 active users within a month. Prices were crowdsourced; users earned points for their updates and competed on a leaderboard. The app also listed stations' facilities, such as a shop, toilets, a car wash and coffee options. The founder said the app had been created for the public good and would always remain free for users. Over time the start-up developed special projects with companies such as Shell, Aygaz and Lukoil. BenzinLitre took to the stage at Webrazzi Arena 2018, won start-up competitions run by İTÜ Çekirdek, the Istanbul Technical University incubator, and by Mercedes-Benz Türk, and expanded to Germany a year after it was founded. In July 2020 it received its first investment, from Can Ekicioğlu, at a valuation of 9 million TL. At that point the 14-strong team, serving 150,000 drivers, planned to reach 500,000 users by the end of the year, expand into Italy and add a direct payment option to the platform. User numbers eventually passed 1 million. But on 29 December 2022 the start-up announced, in a farewell message posted on its social media accounts, that it was halting operations. The message gave no reason for the closure. The team recalled five years of living through price rises and cuts together with its users, and said it hoped to return if conditions allowed. The farewell ended with a short note reminding users that they could turn off notifications. BenzinLitre's story shows that reaching a large user base does not on its own mean a sustainable business. A utility app that always stayed free for users and relied on partnerships for its revenue looks like one of the likely factors behind this outcome. ## Lessons - If you are building a free utility app, settle your revenue model before your user numbers take off. - Crowdsourced data is a strong start, but not a defensible business on its own. - Before expanding to new countries, try to build a self-funding model in your home market. ## Sources - [BenzinLitre announces it has halted operations](https://webrazzi.com/2022/12/30/benzinlitre-operasyonlarini-durdurdugunu-acikladi/) - [BenzinLitre, the App That Shows Where the Cheapest Petrol Is, Announces It Is Ceasing Operations](https://www.webtekno.com/benzinlitre-faaliyetlerini-durduruyor-h131016.html) - [BenzinLitre receives its first investment from Can Ekicioğlu at a 9 million TL valuation](https://egirisim.com/2020/07/07/benzinlitre-can-ekiciogludan-9-milyon-tl-degerleme-ile-ilk-yatirimini-aldi/) - [The start-up that leads you to affordable petrol: BenzinLitre](https://webrazzi.com/2018/03/23/uygun-fiyatli-benzine-ulastiran-yerli-girisim-benzinlitre/) - [BenzinLitre raises investment at a 9 million TL valuation](https://webrazzi.com/2020/07/07/benzinlitre-9-milyon-tl-degerleme-ile-yatirim-aldi/) --- # BlockFi (2017 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/blockfi/ - Sector: Crypto and blockchain - Country: United States - Total funding: unknown - Cause of closure: Macroeconomic crisis ## What did it do? BlockFi was a digital asset lending company based in Jersey City, New Jersey, founded in 2017 by Zac Prince and Flori Marquez. Through lending products backed by crypto assets, it brought bank-like services to the crypto world. At one point it reached a valuation of $3 billion. ## Why did it shut down? In February 2022 the company reached a $100 million settlement with regulators for failing to register its lending products. In July 2022 FTX came to its aid with a deal that included a $400 million credit facility and an option to buy BlockFi for up to $240 million. When FTX collapsed in November 2022, BlockFi halted withdrawals and disclosed significant exposure to FTX. On 28 November it filed for Chapter 11 with more than 100,000 creditors. It emerged from bankruptcy in October 2023 but decided to wind down all its remaining operations. ## The story In mid-November 2022 BlockFi's executives realised the company's fate was no longer in their own hands. FTX, which had thrown them a lifeline a few months earlier, had gone bankrupt, and BlockFi had serious exposure to the exchange. Two weeks later, with a bankruptcy filing listing more than 100,000 creditors, the company became another victim of the crypto winter. BlockFi was founded in 2017 by Zac Prince and Flori Marquez and settled in Jersey City, New Jersey. The company offered lending products that translated crypto assets into the language of traditional finance and became one of the faces of the crypto world's rapid expansion towards banking. Its growth took it to a valuation of $3 billion. That rapid expansion, however, was also being watched with concern in Washington; in February 2022 the company signed a $100 million settlement for failing to register its lending products. As the crypto market was shaken in the summer of 2022, BlockFi struggled too. In July FTX struck a deal that gave the company a $400 million credit facility and included an option to buy BlockFi for up to $240 million. At the time the move looked like salvation; in reality it tied BlockFi's future to a single counterparty. When FTX went bankrupt in November, BlockFi halted withdrawals, disclosed on 14 November that it had significant exposure to FTX and filed for Chapter 11 on 28 November. The bankruptcy brought fresh surprises. When Silicon Valley Bank collapsed in March 2023, it emerged that BlockFi had around $227 million of uninsured funds at the bank. CEO Zac Prince testified as a witness in the Sam Bankman-Fried trial and said he believed they would not have gone bankrupt had they not lost access to their funds at FTX. In October 2023 the company emerged from bankruptcy but began closing all its remaining operations and returning assets to customers; it continued to pursue its claims in the FTX and Three Arrows Capital bankruptcies. BlockFi's story is a reminder that a hand extended in one crisis can become the source of the next. The rescue deal bought the company a few months but piled all its risk onto a single institution, and when that institution fell, BlockFi had nothing else to hold on to. ## Lessons - Do not tie all your risk to the single investor who rescues you in a crisis; if the rescuer goes under, you go down with it. - Do not concentrate customer funds at a single bank or counterparty; at the time of its bankruptcy BlockFi even had $227 million of uninsured money at Silicon Valley Bank. - Be clear about which regulations your financial product falls under before you grow; a settlement paid later erodes both cash and reputation. ## Sources - [BlockFi](https://en.wikipedia.org/wiki/BlockFi) - [BlockFi files for bankruptcy as FTX fallout spreads](https://www.cnbc.com/2022/11/28/blockfi-files-for-bankruptcy-as-ftx-fallout-spreads.html) - [Crypto lender BlockFi emerges bankruptcy](https://www.reuters.com/technology/crypto-lender-blockfi-emerges-bankruptcy-2023-10-24/) - [BlockFi, a crypto firm, reaches a $100 million settlement for failing to register loan products](https://www.nytimes.com/2022/02/14/business/blockfi-sec-crypto-loans.html) --- # Bobiler.org (2007 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/bobiler-org/ - Sector: Media and entertainment - Country: Turkey - Total funding: unknown - Cause of closure: Macroeconomic crisis ## What did it do? Bobiler.org was a Turkish humour site and community where users created and shared funny photomontages they called "monte". It is remembered as one of the first homes of the kind of visual humour that would later become widespread in Turkey as "caps" (memes). In 2012 it also released "Bobiler evreni" (the Bobiler universe), an iOS app that presented its content on a map. ## Why did it shut down? In March 2022 Bobiler.org announced on its social media account that it would be pausing publication, probably for a long time, and would close its website on 26 March. According to Webrazzi, the team criticised economic conditions in the platform's own brand of humour, saying it was not easy to run a "parallel universe" these days. Webtekno noted that the site had not been as popular in recent years as it once was. Shortly before the closure, the site had put its first monte up for sale as an NFT, giving the impression that it would fund itself this way, but it did not pursue that route. ## The story Bobiler.org launched at a time when the internet was very different from today, and by March 2022 it had passed the 15-year mark. Users created and shared all kinds of photomontages, which they called "monte". Bobiler became one of the first and best-known homes of the kind of visual humour that would later become widespread in Turkey as "caps" (memes). In its own words, the site became a "parallel universe", a community whose members gathered around a shared sense of humour. Bobiler did not remain just a website. In 2012 it released "Bobiler evreni" (the Bobiler universe), an iOS app that presented the site's content on a map. In 2017 co-founder Ezgi Tüzün was a guest speaker on an entrepreneurship course at Üsküdar University, where she shared the story of how the company was founded and the stages it had been through with students. Over time, however, social media platforms became the main home of humour and visual content. As Webtekno put it, Bobiler had not been as popular in recent years as it once was. Shortly before the closure, the site put its first monte up for sale as an NFT; according to Webrazzi, this step had given the impression that the site could fund itself through NFT projects. That route was never tried. On 3 March 2022 Bobiler announced in a post on its social media account that it was pausing its 15 years of publication. The announcement described the economic conditions in the platform's familiar humorous style: running a parallel universe was not easy these days, it said, with black holes trying to swallow planets and an ever-growing darkness. The website closed on 26 March, and posting on its social media accounts was scaled back. The team asked users to back up their montes to their own computers and thanked them for the 15-year adventure. The announcement said publication was being paused "probably for a long time", while the press treated the decision as a farewell. Bobiler's story shows how hard it is for independent content sites that build a strong community culture to survive once the consumption of humour and visual content shifts to social platforms. ## Lessons - A community built on user-generated content loses its lifeblood quickly when that content moves to other platforms. - A strong brand and culture are no substitute for a sustainable revenue model. - When you try a new funding route, work out from the start whether it can carry the cost of the core product. ## Sources - [Bobiler.org says farewell after 15 years of publishing](https://webrazzi.com/2022/03/04/bobiler-org-15-yillik-yayin-hayatina-veda-ediyor/) - [Bobiler.org decides to stop publishing after 15 years: the site will close](https://www.webtekno.com/bobiler-org-yayinlarini-durduruyor-h121325.html) - [bobiler says farewell](https://www.odatv.com/guncel/bobilerorg-veda-etti-231364) - [Üsküdar University hosts Ezgi Tüzün](https://uskudar.edu.tr/haber/uskudar-universitesi-ezgi-tuzunu-konuk-etti/2212) --- # Celsius Network (2017 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/celsius-network/ - Sector: Crypto and blockchain - Country: United States - Total funding: $494 million - Cause of closure: Fraud ## What did it do? Celsius Network was a platform where users could deposit crypto assets such as Bitcoin and Ethereum to earn interest, or pledge them as collateral to take out loans. Headquartered in Hoboken, New Jersey, the company ran offices in four countries and served customers worldwide. It made its money from lending, Bitcoin mining, token sales and crypto trading on its own account. ## Why did it shut down? In June 2022, amid a sharp market sell-off, the company indefinitely froze all withdrawals and transfers, citing extreme market conditions. After its Chapter 11 filing a month later, it emerged that the balance sheet had a USD 1.2 billion hole; the company owed users USD 4.7 billion. An independent examiner's report noted that an internal source had described aspects of the business model as Ponzi-like. A settlement with the FTC banned the company from handling consumer assets, and the SEC charged both the company and Mashinsky. Mashinsky pleaded guilty to two charges in December 2024 and was sentenced to 12 years in prison in May 2025. ## The story In mid-June 2022, a crypto company that claimed 1.7 million customers switched off the withdrawal button in its app. Shortly before, founder Alex Mashinsky had told users on a livestream that "Celsius has billions of dollars in liquidity", assuring them they could get at their money whenever they wanted. The decision, which the company blamed on market conditions, deepened the slide in crypto prices still further. Celsius was founded in 2017 by Mashinsky, Daniel Leon and Nuke Goldstein, and in March 2018 it raised USD 50 million from the initial offering of its own token, CEL. The model was simple: users deposited crypto and earned interest, and anyone who wished could pledge their holdings as collateral for a loan. The company said it paid out up to 80 per cent of its revenue to users as interest, offering annual yields of up to 17 per cent. In October 2021 it raised USD 400 million in a round led by WestCap and the Canadian pension fund CDPQ, reaching a USD 3 billion valuation. By May 2022 it was managing around USD 12 billion in assets and had extended more than USD 8 billion in loans. The collapse took a month. The company laid off a quarter of its staff in early July and filed for Chapter 11 bankruptcy on 13 July 2022. A filing the next day showed a USD 1.2 billion hole in the balance sheet; of USD 5.5 billion in total liabilities, USD 4.7 billion was owed to users. In January 2023 the court ruled that, under the terms of service, the assets deposited by some 600,000 customers belonged to the company, leaving those customers as unsecured creditors. An independent examiner's report, meanwhile, noted that an internal source had found aspects of the business model Ponzi-like. The legal fallout was heavy too. In July 2023 the FTC announced a settlement banning the company from handling consumer assets, and the SEC brought charges against Celsius and Mashinsky. Having initially pleaded not guilty, Mashinsky pleaded guilty in December 2024 to two charges, one of commodities fraud and one of securities fraud, and in May 2025 he was sentenced to 12 years in prison. The company emerged from bankruptcy in January 2024 and began distributing more than USD 3 billion in crypto and cash to creditors, shutting down its apps in February 2024. The lesson of Celsius is how fragile a product can be in a crisis when it looks like banking but carries none of banking's safeguards. The promise of high interest fuelled growth; but with the risks behind that interest kept out of users' sight, the first tremor sent everyone rushing for the exit at once. ## Lessons - If you promise high returns, show users plainly where those returns come from; yield you cannot explain will sooner or later become a hole you cannot fill. - Your terms of service decide who owns the assets a customer deposits; burying that in the small print destroys trust completely the moment a crisis hits. - Propping up your own token's price by buying it back on the market builds confidence in the short term and burns through your cash in the long term. ## Sources - [Celsius Network](https://en.wikipedia.org/wiki/Celsius_Network) - [Big crypto lender Celsius files for bankruptcy](https://techcrunch.com/2022/07/13/celsius-one-of-cryptos-biggest-lenders-files-for-bankruptcy/) - [Celsius CEO Alex Mashinsky sentenced to 12 years in multi-billion-dollar crypto fraud case](https://www.cnbc.com/2025/05/08/celsius-ceo-alex-mashinsky-sentenced-to-12-years-in-crypto-fraud-case.html) - [Crypto lender Celsius Network raises $400m as regulatory pressure grows](https://www.ft.com/content/b47c9499-f4a6-46f4-991b-e8f7f20d49e2) --- # Edmodo (2008 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/edmodo/ - Sector: Education - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Edmodo was an education technology platform for primary and secondary schools. Teachers used it to share content, set tests and homework, and communicate with students, colleagues and parents. The platform was free and used around the world. ## Why did it shut down? Having reached tens of millions of users as a free service, Edmodo was sold to China's NetDragon in 2018 for $137.5 million; according to EdSurge, the sale prompted commentary that independent education companies offering free services were in decline. In 2017 it suffered a major data breach affecting the data of 77 million users. In August 2022 the company announced it could no longer sustain the expected level of service and shut the platform down on 22 September 2022. In May 2023 the US Federal Trade Commission sued the company, accusing it of collecting children's data without parental consent. ## The story On 15 August 2022 teachers around the world received an announcement they had not expected: Edmodo would shut down completely on 22 September. In its closure statement the company wrote that it was no longer possible to sustain the level of service users deserved, and said it would destroy the data it held. Teachers had only a few weeks to download their data. Edmodo was founded in 2008 by Nic Borg, Jeff O'Hara, Crystal Hutter and Ed O'Neil as a microblogging platform for teachers. This school social network, where teachers could share content, set tests and homework and communicate with students and parents, won backing from investors such as Index Ventures, Benchmark, Greylock Partners, NEA and Union Square Ventures. Having reached 18 million users in 2013, the company bought Root-1 in a bid to become the app store of education; Root-1's founder Vibhu Mittal became Edmodo's CEO the following year. In 2014 came assessment tools to measure student progress, along with content partnerships with the Oxford and Cambridge university presses. In May 2017 Edmodo notified users that it had suffered a major data breach affecting the usernames, hashed passwords and email addresses of 77 million users. In April 2018 China's NetDragon bought the company for $137.5 million in cash and shares. In the early months of the pandemic UNESCO included Edmodo among the tools it recommended for distance learning; the company said it had more than 100 million users. The legal process continued after the closure. In May 2023 the US Federal Trade Commission (FTC) sued Edmodo, alleging that it had collected data from children without parental consent and had shifted responsibility for complying with children's privacy law onto schools. The proposed $6 million fine would only be payable if the company resumed operating in the US. In June 2023, at the initiative of the FTC and federal prosecutors, a permanent injunction was imposed on the company, banning it from collecting more data than necessary and requiring the deletion of data collected from students under 13. Edmodo shows that even a free product woven into the daily work of millions of teachers can be shut down with a few weeks' notice when its owner's priorities change or the service becomes hard to sustain. And on a platform serving schools, data responsibility follows you even after closure. ## Lessons - On a platform offering free services to schools, design the revenue model before chasing user numbers; scale alone does not bring sustainability. - If you process children's data, put consent and data minimisation rules at the heart of the product; shifting responsibility onto schools will not protect you. - When deciding to close, announcing clearly how user data will be deleted preserves trust to the very end. ## Sources - [Edmodo](https://en.wikipedia.org/wiki/Edmodo) - [NetDragon Signs Agreement to Acquire Edmodo to Create the Largest Global Learning Community](https://www.prnewswire.com/news-releases/netdragon-signs-agreement-to-acquire-edmodo-to-create-the-largest-global-learning-community-300626053.html) - [FTC Says Ed Tech Provider Edmodo Unlawfully Used Children's Personal Information for Advertising and Outsourced Compliance to School Districts](https://www.ftc.gov/news-events/news/press-releases/2023/05/ftc-says-ed-tech-provider-edmodo-unlawfully-used-childrens-personal-information-advertising) - [Popular K-12 Tool Edmodo Shuts Down](https://www.edsurge.com/news/2022-08-16-popular-k-12-tool-edmodo-shuts-down) - [https://www.wikidata.org/wiki/Q647397](https://www.wikidata.org/wiki/Q647397) --- # Fast (2019 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/fast/ - Sector: Fintech - Country: United States - Total funding: $124.5 million - Cause of closure: Ran out of cash ## What did it do? Fast was a San Francisco-based fintech start-up building a one-click checkout and passwordless login product that plugged into e-commerce sites. The aim was for shoppers to save their details once and then pay on different sites without filling in forms. Through two rounds led by Stripe, it quickly raised more than $100 million. ## Why did it shut down? In 2021 the company reportedly made only six-figure revenue while its monthly cash burn reached as much as $10 million. The product was hard to integrate into merchants' sites, and according to an NPR investigation the one-click checkout option did not appear at all on many sites that carried the code. Slow growth and heavy spending made raising a new round impossible in the cooling investment climate of early 2022. In April 2022 the company shut down and Affirm offered jobs to most of its engineers. ## The story When Fast closed its doors in April 2022, it left behind a startling ratio. A year after raising a $102 million Series B led by Stripe, the company had ended 2021 with only six-figure revenue; according to TechCrunch, its monthly cash burn was running as high as $10 million. Fast was founded in March 2019 by Australian entrepreneur Domm Holland; Allison Barr Allen was also among the founders. According to NPR, the idea grew out of Holland's wife's grandmother being unable to remember her password while ordering groceries online. The goal was for shoppers to pay with one click on any site, without entering an address, card and password each time. Stripe led a $20 million Series A in 2020 and, with Addition, a $102 million Series B in 2021. PitchBook put the company's value at around $580 million; Index Ventures, Susa Ventures and Global Founders Capital were also among its investors. But there was a gap between the product's promise and the reality in the field. Using BuiltWith data, NPR examined more than 1,000 sites carrying Fast's code; of 50 randomly selected e-commerce sites, 19 did not show the one-click checkout option at all. Former employees said integration was hard for merchants and that the tool did not always work properly. Meanwhile the company built an image, through ads full of snowboarding and surfing scenes, that looked more like a lifestyle brand than payments infrastructure. The same report also recalled that Holland's previous start-up in Australia, Tow.com.au, had been liquidated in 2018 after a fee dispute with the state government. In the first months of 2022 its options for new funding ran out. The shutdown, first reported by The Information, became official on 5 April 2022, and Affirm offered jobs to most of Fast's engineers. The $124.5 million the company had raised since its founding had been spent in less than three years. For employees whose stock options became worthless overnight, the closure came as a complete shock. Fast shows that in two-sided markets such as payments, a product's value is set jointly by merchants' willingness to integrate and buyers' habits. A strong brand and a large funding round cannot, on their own, solve the distribution problem of a product that fails to win over both sides. ## Lessons - Track the merchant-side integration rate and the number of pages where the checkout button is actually displayed as a metric separate from total customer count. - If monthly burn is a multiple of revenue, discuss at every monthly board meeting how many months you can last if a new round does not come. - In trust-based businesses such as payments, proving a measurable conversion uplift to merchants is a more durable sales argument than a flashy brand campaign. ## Sources - [Fast shuts doors after slow growth, high burn precluded fundraising options](https://techcrunch.com/2022/04/05/fast-shuts-doors-after-slow-growth-high-burn-precluded-fundraising-options/) - [Silicon Valley loves the startup Fast. But scandals plague its CEO](https://www.npr.org/2022/02/17/1081201040/domm-holland-fast-stripe) - [Fast, the Troubled Fintech Startup, Is Shutting Down](https://www.theinformation.com/articles/fast-the-troubled-fintech-startup-is-shutting-down) --- # FTX (2019 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/ftx/ - Sector: Crypto and blockchain - Country: Bahamas - Total funding: $1.3 billion - Cause of closure: Fraud ## What did it do? FTX, founded in 2019, was an exchange for trading cryptocurrencies and derivatives. The company was registered in Antigua and Barbuda and headquartered in the Bahamas, and it ran a separate platform, FTX.US, for customers in the United States. It had very close ties to Alameda Research, the trading firm its founder Sam Bankman-Fried had set up earlier. ## Why did it shut down? In November 2022 CoinDesk reported that much of Alameda Research's assets consisted of FTT, FTX's own token. Binance's announcement that it would sell its FTT holdings triggered an estimated $6 billion of withdrawals in three days, and FTX could not meet them. Binance withdrew its plan to buy the company within a day, and on 11 November 2022 FTX filed for Chapter 11 bankruptcy in the US. John Ray III, the CEO who took over the bankruptcy, said corporate controls had failed completely and that there was no trustworthy financial information. Co-founder Gary Wang and Alameda's CEO Caroline Ellison pleaded guilty in December 2022; in November 2023 a jury found Bankman-Fried guilty on all seven counts, and an appeals court upheld the conviction in June 2026. ## The story In the first week of November 2022, the most talked-about exchange in crypto became unable to pay its customers in the space of a few days. FTX had been founded three and a half years earlier, in May 2019, by Sam Bankman-Fried and Gary Wang. Its roots lay in Alameda Research, the trading firm Bankman-Fried had set up in Berkeley in 2017 with former Jane Street employees. The rise was dizzying. Six months after launch, Binance founder Changpeng Zhao bought 20 per cent of the company for about $100 million. In July 2021 FTX raised $900 million at an $18 billion valuation from more than 60 investors, including SoftBank and Sequoia Capital; by January 2022 the valuation had climbed to $32 billion. The company moved its headquarters from Hong Kong to the Bahamas, bought Blockfolio for $150 million and stepped in as a rescuer for the struggling BlockFi and Voyager. The break came when CoinDesk reported that much of Alameda's balance sheet consisted of FTT, the token FTX itself had issued. Zhao announced that Binance would sell its FTT holdings, and in the three days of panic that followed an estimated $6 billion was withdrawn. Binance first signed a letter of intent to buy FTX, then pulled out the next day, citing reports that customer funds had been mishandled. On 11 November more than 100 companies, including FTX, FTX.US and Alameda, filed for bankruptcy in Delaware. John Ray III, who had also overseen the liquidation of Enron, said he had never in his career seen such a complete failure of corporate controls. Bankman-Fried was arrested in the Bahamas in December 2022 at the request of the United States and pleaded not guilty to all charges in January 2023. Co-founder Gary Wang and Alameda's CEO Caroline Ellison pleaded guilty in December 2022 and cooperated with prosecutors. In November 2023 a jury found Bankman-Fried guilty on all seven counts, including fraud and conspiracy; in March 2024 the court sentenced him to 25 years in prison. Bankman-Fried appealed, but in June 2026 the US Court of Appeals for the Second Circuit upheld both the conviction and the sentence. Ellison received a two-year prison sentence in September 2024. The FTX story shows how easily rapid growth can outrun internal controls. Once the line between the exchange and its founder's trading firm blurred, customer money and company risk became entangled, and trust built over years evaporated in a week. ## Lessons - Keep customer money separate from the company's own accounts and have an independent auditor verify this regularly; trust only works when it can be checked. - Do not build your balance sheet on a token you issued yourself or on any single asset; when its price falls, the whole company is shaken at once. - Make every transaction with another company owned by the founder subject to board approval and a written record; related-party dealings are the risk that grows most quietly. ## Sources - [FTX](https://en.wikipedia.org/wiki/FTX) - [Embattled Crypto Exchange FTX Files for Bankruptcy](https://www.nytimes.com/2022/11/11/business/ftx-bankruptcy.html) - [Binance backs out of FTX rescue, leaving the crypto exchange on the brink of collapse](https://www.cnbc.com/2022/11/09/binance-backs-out-of-ftx-rescue-leaving-the-crypto-exchange-on-the-brink-of-collapse.html) - [Caroline Ellison sentenced to two years in FTX crypto fraud](https://www.bbc.com/news/articles/cdd4e2931q3o) - [Sam Bankman-Fried](https://en.wikipedia.org/wiki/Sam_Bankman-Fried) --- # GittiGidiyor (2001 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/gittigidiyor/ - Sector: Marketplaces - Country: Turkey - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? GittiGidiyor was founded in Istanbul in 2001 as an auction site. With the HemenAL! (Buy It Now) option added in 2002 and a stores section opened in 2004, it moved into fixed-price sales as well. It grew into a broad marketplace connecting individual and business sellers with millions of buyers. ## Why did it shut down? After eBay took control of the company in 2011, GittiGidiyor's future became tied to the portfolio choices of its global parent. The announcement on 20 June 2022 justified the closure by the ongoing competitive dynamics of the Turkish market and gave no further detail. Just before closing, the platform was contributing around 4 million active buyers to eBay. Even so, eBay said the closure would not materially affect its annual financial results. This suggests the market was not a priority worth increasing investment in for the parent company. ## The story In February 2001 in Istanbul, Burak Divanlıoğlu and Serkan Borançılı set out with an idea Turkish internet users were not used to: a site where you could sell things from your home by auction. Even the name GittiGidiyor (roughly “going, going, gone”) came from that auction culture. With the HemenAL! (Buy It Now) option added the following year and a stores section opened in 2004, the site went from being a bidding-only platform to a large marketplace selling at fixed prices. The growth caught the attention of global players too. eBay took a majority stake in the company in 2007 and raised its holding to 93 per cent in 2011. According to Webrazzi, the Turkish tech news site, that deal was worth $217.5 million. In 2016 the last 7 per cent stake, held by early investor iLab Ventures, also passed to eBay, and GittiGidiyor became wholly an eBay company. Its user numbers passed 2 million in 2008 and 28 million in 2019. But that size on paper was not enough to keep the company going. On 20 June 2022 eBay announced it would cease GittiGidiyor's operations. The reason given was brief: the ongoing competitive dynamics of the Turkish market. New listings were stopped the same day, shopping continued until 18 July, and access to accounts ended on 5 September. According to the Anadolu Agency, just before closing the platform was contributing around 4 million active buyers to eBay's figures; even so, eBay said the decision would not materially affect its annual results. GittiGidiyor's story tells how one of the pioneers of e-commerce in Turkey quietly passed into history. The company the founders built changed hands in a successful exit, but the product's fate no longer lay with the team in Istanbul; it lay in the portfolio choices of a global company. As competition intensified, eBay chose to withdraw rather than invest more, and the 21-year-old brand closed. ## Lessons - The fate of an acquired start-up becomes tied to the parent company's global priorities; factor this into the exit deal. - Being first to market does not bring lasting leadership; when competition speeds up, the pace of investment must speed up too. - A large user base is not enough on its own once the capital backing behind it is withdrawn. ## Sources - [The 20-year journey of GittiGidiyor, now at the end of the road (in Turkish)](https://webrazzi.com/2022/06/20/gittigidiyor-un-20-yillik-seruveni/) - [GittiGidiyor is closing (in Turkish)](https://www.aa.com.tr/tr/ekonomi/gittigidiyor-kapaniyor/2617802) - [eBay to Close GittiGidiyor Operations](https://www.ebayinc.com/stories/news/ebay-to-close-gittigidiyor-operations/) --- # Gönder (2017 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/gonder/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Gönder was a Turkish online shopping platform launched in 2017 within HML Lojistik by Taner Karamollaoğlu, former general manager of the discount supermarket chain BİM. Users shopped online or through the app from participating local businesses such as neighbourhood grocers, delicatessens and butchers, and either collected their orders from pick-up points or had them delivered to their homes for a small fee. In 2021 the model shifted its focus to online grocery orders and expanded to 22 provinces. ## Why did it shut down? The reason for Gönder's closure was never made public. According to an İş'te Gündem report from October 2022, things did not go as hoped and the platform suspended its operations. Gönder entered the online grocery market, which had grown with the pandemic, across a wide area at a time when well-capitalised rivals such as Getir, İstegelsin and Hepsiexpress were expanding rapidly. Launching in 22 provinces at once meant building a network of shopkeepers, a courier network and demand all at the same time. It can be said, as an interpretation, that sufficient order density did not develop under these conditions. ## The story Taner Karamollaoğlu was one of the best-known names in Turkish retail. He had worked at Unilever for 22 years, served as general manager of BİM and sat on the board of Yıldız Holding. According to İş'te Gündem, he had played a part in founding BİM and Bizim Toplu Tüketim, and in 2012 he founded Teda Global, which brought corner shops together under one roof. His last big move was Gönder. According to a Webrazzi report from August 2017, Gönder, the new venture of HML Lojistik, launched in the Istanbul districts of Üsküdar, Ümraniye, Kadıköy and Ataşehir. Users shopped with a single basket from participating local businesses such as grocers, delicatessens, butchers and stationers, and either collected their orders from pick-up points called Dur-Al or had them delivered to their homes for a fee of 1 to 2 TL. Products were sold at shop prices, and the start-up described itself as a kind of Amazon for physical shops. During the pandemic Gönder made a bigger move. According to a Milli Gazete report from June 2021, the platform began offering an online grocery service across 84 districts and 2,147 neighbourhoods in 22 provinces, with a reach of around 40 million people. Working with 16 product categories, flexibly employed couriers and 30 regional managers, the company aimed to cover the whole of Turkey by the end of the year. Ekonomist wrote that Karamollaoğlu, still an entrepreneur at 72, planned to add food ordering and shopping-centre services as well. The online grocery market, however, was by now very crowded. Well-capitalised players such as Getir, İstegelsin and Hepsiexpress were growing fast. On 7 October 2022 İş'te Gündem reported that things had not gone as hoped at Gönder and that the platform had suspended its operations. There is no closure statement from the company, nor any report of it restarting. Gönder's story shows that even one of the people who knew retail best could struggle in the digital fast-delivery race. The idea of bringing local shopkeepers online was strong, but creating order density across a wide area and competing with rivals' financial firepower was a different test. ## Lessons - Industry experience is valuable, but changing user habits in a digital market is a different job. - Opening in many cities at once multiplies costs before order density builds up; go deep in one region first. - When entering a market with well-capitalised rivals, build clear differentiation and a resilient funding plan. ## Sources - [Taner Karamollaoğlu's latest venture has failed! Don't wait for Gönder](https://www.istegundem.com/haber/taner-karamollaoglu-nun-son-girisimi-basarisiz-oldu-gonder-me-bekle/270097) - [An ambitious venture from former BİM general manager Taner Karamollaoğlu: Gönder](https://webrazzi.com/2017/08/14/bimin-eski-genel-mudurunden-ses-getirecek-girisim-gonder/) - [Turkey's online grocer GÖNDER launches in 22 provinces](https://www.milligazete.com.tr/haber/7348247/turkiyenin-online-marketi-gonder-22-ilde-servise-basladi) - [He became an entrepreneur at 72](https://www.ekonomist.com.tr/kulis/72-yasinda-girisimci-oldu-24035) --- # Kite (2014 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/kite/ - Sector: Super intelligence - Country: United States - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Kite was a San Francisco-based super intelligence coding assistant that used machine learning to offer developers autocompletion and suggestions as they wrote code. It ran as a plug-in for popular editors such as VS Code, PyCharm and Vim. Its free version reached 500,000 developers a month. ## Why did it shut down? According to the founder, the code models of the day were not advanced enough, so the product could not deliver a tenfold leap in developer productivity. Individual developers did not want to pay, and engineering managers would not set aside budget for a speed-up of around 18 per cent. Reaching product-market fit only after five years, and leaving the revenue model until last, used up the company's time. A move into code search was considered, but the exhausted team did not take on the pivot, and work stopped in 2021. ## The story In November 2022 Kite's founder, Adam Smith, opened a farewell post on the company blog by saying the start-up had failed on two fundamental counts. The first was technology: in Smith's view, they had arrived more than a decade too early for the vision of super intelligence-assisted programming. The second was business: a product used by 500,000 developers a month had not made money. Kite was founded in San Francisco in 2014. The goal was to build an assistant that used machine learning to predict how a developer's code would continue, working inside popular editors. Because the product was a hard engineering problem, the company first built a strong engineering team, then focused on the product, then on distribution, and only last on the revenue model. As Smith tells it, product-market fit came only in 2019, five years after the company was founded. According to TechCrunch, the company had raised tens of millions of dollars in venture capital along the way. On the user side, things went well: with almost no marketing spend, Kite reached 500,000 monthly active developers. But those developers did not want to pay. In Smith's diagnosis, individual developers did not pay for tools; the engineering managers who held the budget were only willing to pay for a distinct new capability, and making their team 18 per cent faster at writing code did not convince them. The company considered moving into code search, where it could put its super intelligence technology and its reach among developers to use. But after seven years of intense work, the team could not find the energy to take on that transformation. Work on Kite stopped in 2021, and with the November 2022 post software support officially ended; the company released most of its code as open source. Smith estimated that a tool able to generate production-quality code reliably could cost more than $100 million to build. After the closure, TechCrunch questioned the commercial future of writing code with generative super intelligence in a market where Copilot, built by GitHub and OpenAI, was selling for $10 a month. Kite is a reminder that user numbers are not the same as willingness to pay, and that with developer tools the purchasing decision is often made not by the person using the tool but by the person managing the budget. ## Lessons - If you sell developer tools, test a paid tier from day one aimed not at the user but at the budget holder: the team lead or the technology manager. - Rather than working through team, product, distribution and revenue in sequence, validate your revenue hypothesis alongside the product with small experiments. - If your product is waiting for its underlying technology to mature, plan your burn rate on the assumption that this may take years. ## Sources - [Kite is saying farewell](https://web.archive.org/web/20221202202308/https://www.kite.com/blog/product/kite-is-saying-farewell/) - [With Kite’s demise, can generative SI for code succeed?](https://techcrunch.com/2022/12/10/with-kites-demise-can-generative-ai-for-code-succeed/) --- # Kitty Hawk (2010 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/kitty-hawk/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Kitty Hawk was a company developing electric, ultralight aircraft capable of vertical take-off and landing. Its best-known product was the Flyer, a single-seat, eight-rotor craft that required no licence. The company also developed Cora, an autonomous air taxi, and Heaviside, a quieter aircraft. ## Why did it shut down? Despite a flashy unveiling in 2017, the company never delivered a single vehicle to a customer. In June 2020, after 25,000 flights, the Flyer programme was ended; CEO Sebastian Thrun said they had not found a path to a viable business with the Flyer, and dozens of employees were laid off. The focus shifted to Heaviside, but that project was halted too. In September 2022 the company announced that it was winding down; Wisk Aero, its joint venture with Boeing, carried on. ## The story A short video released in April 2017 put the dream of the “flying car” back on the agenda. It showed a single-seat craft hovering on battery-powered rotors. Because it had the backing of Google co-founder Larry Page, Kitty Hawk's Flyer immediately made headlines; The New York Times wrote that Silicon Valley had turned the flying car from a fantasy into something real. The company had been founded in 2010 as Zee.Aero and was run by Sebastian Thrun. Because the Flyer was built under US ultralight aircraft rules, no pilot's licence was needed to fly it. Engineering was led by Cameron Robertson and Todd Reichert; the production version was unveiled on 6 June 2018. At the same time, from March 2018 the company was testing Cora, an autonomous electric air taxi, in New Zealand. In 2019 Cora was transferred to a joint venture with Boeing, which in December 2019 became a separate company under the name Wisk Aero. Also in 2019 the company unveiled Heaviside, designed to be quieter than ordinary aircraft. The flashy unveilings, however, never turned into a commercial business. On 3 June 2020, after a total of 25,000 crewed and uncrewed flights with 111 vehicles, the Flyer programme was ended. CEO Thrun said they had not found a path to a viable business with the Flyer, and dozens of employees were laid off. The company shifted its focus to Heaviside and unveiled its second version, the H2, in 2022. In September 2022 Kitty Hawk confirmed in a short LinkedIn post that it was winding down. According to The Verge, in the years since its 2017 unveiling the company had delivered none of the vehicles it had promised; according to Insider's sources, work on the 100-mile-range Heaviside had long since been halted. Wisk Aero, in which Boeing and Kitty Hawk were investors, was unaffected by the decision. Kitty Hawk's story shows that a powerful backer and an impressive technical showcase cannot on their own create a new category of transport. As long as the questions of regulation, infrastructure and price for flying vehicles went unanswered, technical progress did not turn into a business model. ## Lessons - If you are creating a new category of transport, map out the regulatory, infrastructure and pricing road map alongside the technical showcase. - A single powerful backer's capital buys time but not market proof; validate your first paid use case early. - When closing a product programme, moving the team and technology into a partnership that can create value is one way of preserving what you have built. ## Sources - [Kitty Hawk Corporation](https://en.wikipedia.org/wiki/Kitty_Hawk_Corporation) - [Larry Page's flying car startup Kitty Hawk is shutting down](https://www.theverge.com/2022/9/21/23365557/kitty-hawk-larry-page-electric-vtol-shutdown) - [Kitty Hawk abandons its Flyer project, lays off dozens](https://www.theverge.com/2020/6/4/21280676/kitty-hawk-cancels-flyer-evtol-drone-aircraft-hoverboke-layoffs) - [Google co-founder’s flying car startup is winding down](https://www.cnbc.com/2022/09/21/google-co-founders-flying-car-start-up-is-winding-down.html) --- # LendUp (2011 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/lendup/ - Sector: Fintech - Country: United States - Total funding: $325 million - Cause of closure: Regulation and legal issues ## What did it do? LendUp was a direct lender offering online payday loans, instalment loans and credit cards to consumers with low credit scores. Claiming to assess creditworthiness using publicly available data, the company positioned itself as a socially responsible lender giving underbanked Americans cheaper credit and a way to build their credit scores. It issued its credit cards in partnership with Beneficial State Bank. ## Why did it shut down? As early as its founding period, Time magazine pointed out that LendUp's fees looked much like those of other payday lenders. In September 2016 the company paid USD 6.3 million in penalties for deceptive practices and widespread violations of payday and instalment lending laws. In 2020 the CFPB sued the company for violating a law that protects military personnel. In December 2021 a CFPB order found that LendUp had misled consumers and repeatedly breached the 2016 order, and permanently banned the company from lending. The company stopped lending in January 2022. ## The story In November 2012 Time magazine was questioning the claim of a newly founded start-up. LendUp said it was not like other payday lenders; yet borrowing USD 200 for two weeks cost a little over USD 30 in fees, much the same as its rivals. That question would follow the company throughout its ten-year story. LendUp was founded in 2011 by stepbrothers Sasha Orloff and Jake Rosenberg and went through Y Combinator. The company offered online payday loans, instalment loans and credit cards to consumers with low credit scores, describing its customers as the emerging middle class. It positioned itself as a socially responsible lender for underbanked Americans. It raised a total of USD 325 million in equity and debt financing from investors including PayPal, Kleiner Perkins, Google Ventures, Andreessen Horowitz and QED Investors; in January 2016 it raised USD 150 million for its credit card product alone. In September of that year the regulators stepped in. LendUp had to pay a total of USD 6.3 million to the CFPB and the California regulator for deceptive practices and widespread violations of payday and instalment lending laws. The Financial Times headlined a critical piece at the time "LendUp: playing with people's lives". In December 2018 the credit card business was sold off and became a separate company called Mission Lane. In 2019 Anu Shultes was appointed CEO and the company focused on personal loans. In 2020 the CFPB sued LendUp for violating a law that protects military personnel. The final blow came in December 2021. Under a court-approved CFPB order, LendUp had misled consumers about its credit reporting practices and access to credit, failed to deliver the credit-building opportunities it had promised, misrepresented loan terms and costs, and repeatedly breached the 2016 order. The order permanently banned the company from lending and imposed a USD 100,000 penalty. LendUp stopped lending in January 2022. In May 2024 the CFPB announced it would distribute around USD 40 million to affected consumers. LendUp's story shows that a social impact narrative is no shield in a regulated industry. The company said it was different; the regulators looked not at the narrative but at the practices and the records. ## Lessons - If you market yourself on a social impact claim, show with independent data that your pricing and practices genuinely back it up. - If you have signed a consent order with a regulator, monitor compliance with every clause through a dedicated team and regular internal audits; a second breach is often the end of the company. - If you promise vulnerable customers a benefit such as building their credit score, do not market it until you can deliver it systematically. ## Sources - [LendUp](https://en.wikipedia.org/wiki/LendUp) - [Google-funded loan startup to pay $6.3m for 'deceptive' practices](http://www.theguardian.com/technology/2016/sep/28/lendup-fine-google-payday-loan-deceptive-practices) - [Lender ordered to pay total $6.3 million over payday-loan and installment-lending violations.](https://www.wsj.com/articles/fintech-upstart-lendup-fined-by-cfpb-california-regulator-1474993380) --- # Local Motors (2007 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/local-motors/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Failed pivot ## What did it do? Local Motors was a vehicle maker that combined design competitions open to an online community with production in small, distributed microfactories. It developed the open-source Rally Fighter car, the 3D-printed electric Strati and Olli, an autonomous electric shuttle. It also ran co-design projects for companies such as Airbus, GE and IBM. ## Why did it shut down? The reasons for the closure were never shared publicly in detail, but the picture in the sources suggests the company could not scale in its new focus. In February 2017 it laid off staff, shifted its focus to autonomous vehicles and white-label software, and closed its Las Vegas facility. The Olli shuttle remained confined to campuses and pilot projects; a pilot announced in Toronto never started. The company closed on 14 January 2022, just a few months after appointing a new CEO who had announced plans to scale up global production. ## The story In 2014, visitors to the International Manufacturing Technology Show in Chicago watched a car being printed before their eyes. Local Motors' electric Strati came out of a 3D printer in 44 hours. The vehicle consisted of just 50 parts; a conventional car has around 30,000. Local Motors was founded in 2007 by John B. Rogers Jr. and based in Phoenix. The idea stood on two legs: have an online community do the design through competitions, and build the vehicles in small, distributed microfactories rather than big plants. The Rally Fighter, launched in 2009, was the first co-designed car, with its exterior chosen by community vote. The company soon began running co-design projects for organisations such as Airbus, GE, BMW, IBM, Goodyear, Peterbilt, Shell, the US Army and Domino's; Airbus and GE became significant investors. Microfactories were set up in Phoenix, Knoxville, Las Vegas, Louisville and Washington. Fast Company twice named it one of the world's most innovative companies, and Harvard Business School wrote a case study about it. In 2016 the company unveiled Olli, an autonomous electric minibus equipped with IBM Watson technology. In February 2017, however, it laid off staff, shifted its focus to autonomous vehicles and white-label software, and closed its Las Vegas facility. In January 2018 a Florida-based company promised Olli customers up to $1 billion in financing and operational support. Olli was used as a shuttle in enclosed settings such as a United Nations campus in Turin, Italy. In December 2021 an Olli being driven in manual mode in Whitby, Canada, hit a tree, seriously injuring the attendant. Former operations chief Vikrant Aggarwal had taken charge of the company and announced plans to scale up global production. A few months later, on 14 January 2022, Local Motors closed; the news emerged through a post by former sales executive Chris Stoner. The autonomous shuttle pilot announced in Toronto ended without carrying a single passenger. Local Motors' story shows the gap between an innovative manufacturing model winning awards and partnerships and turning into a sustainable product business. ## Lessons - Prototypes that win awards and media attention are no substitute for repeat orders; identify the first paying customer for every new product from the outset. - When changing focus, make the transition without cutting off the old business's cash flow; sales cycles in a new market are usually longer than expected. - For hardware start-ups growing through pilot projects, make the share of pilots that turn into commercial contracts your key metric. ## Sources - [Local Motors](https://en.wikipedia.org/wiki/Local_Motors) - [Local Motors, the startup behind the Olli autonomous shuttle, has shut down](https://techcrunch.com/2022/01/13/local-motors-the-startup-that-created-the-olli-autonomous-shuttle-has-shutdown/) - [EXCLUSIVE: Local Motors lays off employees, shifts gears to autonomous vehicles and white-label software](https://www.bizjournals.com/phoenix/news/2017/02/01/exclusive-local-motors-lays-off-employees-shifts.html) --- # Nimo TV Türkiye (2020 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/nimo-tv-turkiye/ - Sector: Media and entertainment - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Nimo TV was the international live-streaming platform of Huya, the Chinese game-streaming company, and it launched its Turkish operations in February 2020 at the Gaming İstanbul event. The platform brought streamers, esports teams and viewers together, particularly around mobile games such as PUBG Mobile, and offered streamers prize tournaments and contracts. Within a short time it had signed some of Turkey's best-known gaming streamers. ## Why did it shut down? The decision to close had more to do with the parent company's global priorities than with performance in Turkey; according to a statement by Jahrein reported by Webtekno, streamers learned of the decision the same day and did not know the reason. According to Streams Charts, Huya had been hit by measures such as the Chinese government's restrictions on gaming and streaming time for under-18s, and its investor Tencent had pulled back from funding Nimo TV, the international project. In April 2022 Nimo TV decided to end operations in 14 countries, including Brazil and Turkey. By way of interpretation, the model, which tried to catch up with rivals such as Twitch by handing out prizes and contracts to streamers, depended on continuous funding from the parent company. Once that support was cut off, rapid growth in Turkey was not enough to keep the platform alive. ## The story Nimo TV was the international brand of Huya, one of China's leading game-streaming platforms. Huya, in which Tencent was a major shareholder, used Nimo TV to try to gather mobile gaming streamers in markets such as Brazil and Indonesia. In February 2020 it was Turkey's turn. As Fintechtime reported, the platform launched its Turkish operations at the Gaming İstanbul event. Its chief executive, Fee Liu, described Turkey as one of its most important markets and said it would invest heavily throughout 2020. The plan was streamer training, contracts with professional teams, tournaments and bringing well-known streamers onto the platform. The first year moved fast. According to 2020 figures reported by Pikselog, the platform reached 800,000 concurrent viewers in Turkey, PUBG Mobile was the most-watched game, and more than 20 million TL in prizes was paid out to streamers over the year. The follower count of Mezarcı, the streamer at the top of the list, passed 1 million. Jay Pu, head of Nimo TV Turkey, set the goal for 2021 as becoming Turkey's largest streaming platform. In January 2022 Jahrein, one of the country's best-known streamers, also began streaming on Nimo TV. Three months later the picture reversed. On 14 April 2022 news spread that Nimo TV would cease operations in several countries, including Turkey. Jahrein said they had learned of the decision the same day, had not expected it and did not know the reason; under his contract he would keep streaming for another month. In the hours after the news broke, no official statement came from the platform's Turkish accounts. According to Streams Charts, Huya had been shaken by restrictions imposed by the Chinese government, and Tencent had pulled out of funding the international project. As the platform closed in 14 countries, around 200 employees and streamers were affected in Brazil, its largest market. The story of Nimo TV Turkey shows how fragile local success can be in the face of a global parent company's decisions. A large audience had been built in about two years, but the decision that sealed the platform's fate was taken not in Turkey but at the parent company in China. ## Lessons - If your growth rests on a parent company's subsidy, do not make long-term promises without knowing how long that support will last. - In a model where you attract streamers and partners with expensive contracts, work out when revenue will cover that cost. - As a local team, keep information flowing strongly with headquarters; a closure learned at the last minute also destroys your partners' trust. ## Sources - [Nimo TV launches operations in Turkey](https://fintechtime.com/2020/02/nimo-tv-turkiyedeki-faaliyetlerine-basladi/) - [Which streamers were most watched on NimoTV last year?](https://www.pikselog.com/gecen-yil-nimotvde-en-cok-hangi-yayincilar-izlendi/) - [Nimo TV, where Jahrein streams, is 'closing': first statement from Jahrein](https://www.webtekno.com/jahrein-yayin-yaptigi-nimo-tv-kapaniyor-h122739.html) - [Is Nimo TV closing, and why? A statement from Jahrein](https://www.hurriyet.com.tr/teknoloji/nimo-tv-kapaniyor-mu-neden-kapaniyor-42043981) - [Nimo TV shut down global operations, including Brazil and Indonesia](https://streamscharts.com/news/nimo-tv-shut-down-global-operations) --- # TutumluAnne (2013 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/tutumluanne/ - Sector: Marketplaces - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? TutumluAnne ("Thrifty Mum") was a second-hand marketplace founded in October 2013 where parents could buy and sell lightly used children's items in a safe environment. Only products that passed a pre-screening were accepted, and a 15 per cent commission was taken on every sale. With TutumluDükkan, announced in 2020, it moved to an end-to-end service that collected items from users' homes, cleaned, photographed and sold them. ## Why did it shut down? According to founder Özden Pusat's announcement in October 2022, despite their belief in the TutumluDükkan model and positive feedback, market conditions and competition with big players made the business model hard to sustain. The announcement suggests that large marketplaces with wider product ranges and user bases were putting serious pressure on a vertical platform. TutumluDükkan's model of handling operations such as storage, cleaning, photography and shipping improved the user experience but also pushed up costs. It is reasonable to think that this heavy operational load, combined with competitive pressure, strained the company. ## The story Özden Pusat set out on her own in October 2013. The idea was to put children's items that parents use briefly and then set aside, such as pushchairs, toys and clothes, back into circulation from mother to mother. TutumluAnne aimed to change behaviour at a time when second-hand was rarely talked about in Turkey. Webrazzi and egirişim also count Barış Parıltı among the founders. Unlike the big marketplaces that sold everything, the platform focused solely on children's products. Items were pre-screened, and users were shown average second-hand prices by brand and category to help them price correctly. According to a 2018 Webrazzi report, the start-up had passed 200,000 users and 900,000 visits a month, and took a 15 per cent commission on every sale. That same year Arya Women Investment Platform and Galata Business Angels invested at a $2 million valuation. In 2019 a second round, joined by EGİAD Angels, came at a $3.6 million valuation. With the pandemic, the team tried a new model. With TutumluDükkan, announced in 2020, users simply requested a bag, filled it with items they no longer used and handed it to a courier. The company took on all the work: sorting, cleaning, photography, pricing, storage and shipping. The platform also expanded into women's clothing and shoes. In October 2022 Pusat announced the decision to close the platform. TutumluAnne had reached 500,000 members and 1.3 million visits a month. Pusat explained that they believed in the TutumluDükkan model but had for some time been struggling to sustain the business model because of market conditions and competition with big players. Adding to basket and purchasing continued until 21 October, after which open transactions were completed and the site was closed. TutumluAnne was one of the start-ups that championed sustainability and reuse early in Turkey. Its nine-year journey showed that even a strong community can struggle to compete with the scale of the big platforms. ## Lessons - If you build a vertical marketplace, you have to keep proving value that general platforms cannot offer. - Models that take on operations improve the experience but weigh down unit economics; do the maths early. - A strong community brings loyalty, but on its own it does not offset the pricing power and reach of the big players. ## Sources - [TutumluAnne, the Turkish start-up founded by Özden Pusat in 2013, is closing](https://egirisim.com/2022/10/19/2013-yilinda-ozden-pusat-tarafindan-kurulan-yerli-girisim-tutumluanne-kapaniyor/) - [A second-hand marketplace focused on children's items: Tutumlu Anne](https://webrazzi.com/2018/06/13/cocuk-esyalarina-odaklanan-ikinci-el-pazar-yeri-tutumlu-anne/) - [TutumluAnne raises a second round at a $3.6 million valuation](https://egirisim.com/2019/04/02/tutumluanne-3-6-milyon-dolar-degerleme-ile-ikinci-tur-yatirim-aldi/) - [Mother and child products marketplace TutumluAnne launches its new business model, TutumluDükkan](https://egirisim.com/2020/07/11/anne-ve-cocuk-urunleri-pazar-yeri-tutumluanne-yeni-is-modeli-tutumludukkani-hayata-gecirdi/) --- # Voyager Digital (2018 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/voyager-digital/ - Sector: Crypto and blockchain - Country: United States - Total funding: unknown - Cause of closure: Macroeconomic crisis ## What did it do? Voyager Digital was a New York-based brokerage founded in 2018 that let its users buy and sell cryptocurrency. Alongside trading, the platform paid loyalty rewards, and in 2021 the company began trading on the Toronto Stock Exchange. It lent part of the assets it held to big players in the crypto world. ## Why did it shut down? In June 2022 the company announced that crypto hedge fund Three Arrows Capital had failed to repay loans totalling $666 million. On 1 July it suspended trading, deposits, withdrawals and loyalty rewards, and on 5 July it filed for Chapter 11. In a joint letter, the Federal Reserve and the FDIC ordered the company to stop making false and misleading statements. The asset sale won by FTX fell apart with FTX's own bankruptcy in November, and the SEC filed a limited objection to the Binance.US deal that replaced it. The company ultimately went into liquidation. ## The story In June 2022 Voyager Digital gave its investors bad news: crypto hedge fund Three Arrows Capital had failed to repay loans from the company totalling $666 million. That announcement was the spark that began the end of the New York-based brokerage founded in 2018. Voyager grew as a platform that offered users cryptocurrency trading and added loyalty rewards on top. In September 2021 it began trading on the Toronto Stock Exchange. In the years when crypto prices were rising, the model was attractive: customers kept their assets on the platform, and the company lent part of those assets out. The problem was how concentrated the risk had become. A default by a single borrower was enough to shake the company's ability to meet its obligations to customers. On 1 July 2022 Voyager suspended trading, deposits, withdrawals and loyalty rewards; four days later it filed for Chapter 11. That same month the Federal Reserve and the FDIC ordered the company in a joint letter to stop making false and misleading statements; according to The Wall Street Journal, the issue was promises about US banking insurance. In August the court approved the return of $270 million in customer cash that had been frozen, but this was a small fraction of total investor funds. Then the search for a rescuer began. In September Binance and FTX bid and FTX won the auction; the total value of the deal was put at around $1.42 billion, including the $1.31 billion of crypto Voyager held. In November, however, FTX itself went bankrupt. One of Voyager's major investors said this development had put $1.3 billion of investor assets at risk. In December 2022 Binance's US arm became the buyer of the assets with a bid of around $1 billion; in January 2023 the SEC filed a limited objection to the acquisition. The company ultimately went into liquidation. Voyager's story shows how risk spreads in a chain reaction during a crypto winter. The collapse of a single borrower pushed the company into bankruptcy, and the bankruptcy process tied it to the collapse of another company that had stepped in to rescue it. Customers were left at the very end of that chain. ## Lessons - Do not lend customer assets to a single large borrower; a $666 million loan to one hedge fund was enough to sink the whole company. - Do not overstate the protections your product carries; a single sentence implying insurance or a guarantee is the first place a regulator will look. - Even in bankruptcy, do not pin your rescue on a single prospective buyer; the rescuer can go under too. ## Sources - [Voyager Digital](https://en.wikipedia.org/wiki/Voyager_Digital) - [Crypto Broker Voyager Digital Files for Bankruptcy Protection](https://www.wsj.com/articles/crypto-broker-voyager-digital-files-for-bankruptcy-protection-11657098630) - [Bankrupt Crypto Brokerage Voyager Ordered to Cease False Promises About U.S. Banking Insurance](https://www.wsj.com/articles/bankrupt-crypto-brokerage-voyager-ordered-to-cease-false-promises-about-u-s-banking-insurance-11659044094) - [SEC objects to Binance.US's deal to buy Voyager Digital](https://www.reuters.com/business/finance/sec-objects-binanceuss-deal-buy-voyager-digital-2023-01-04/) --- # Yaani (2017 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/yaani/ - Sector: Consumer apps - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Yaani was a Turkish-focused, mobile-first search engine unveiled in October 2017 by Turkcell, Turkey's largest mobile operator. It first came out as an app on the App Store and Google Play, with a web version and browser features added later. Turkcell stressed that user data would be kept in the country, at its data centre in Gebze, and planned to offer a digital advertising service. ## Why did it shut down? Yaani entered a market dominated almost single-handedly by Google, with an emphasis on data sovereignty. According to Webtekno, around the time of the launch the makers of rival Geliyoo claimed that Yaani used data from other search engines, while Turkcell said it had only received technology support from some companies. In late 2022 the search service ended without any announcement, and the search page began redirecting to links for the mobile app. According to Wikipedia, the app lived on for a while as a browser using other search engines before it too was shut down. Turkcell gave no official reason for the closure. ## The story In October 2017 Turkcell general manager Kaan Terzioğlu unveiled the long-discussed Turkish search engine. It was called Yaani. At the launch Terzioğlu said that most of Turkey's data was stored abroad, described the data centre the company had built in Gebze and stressed that Yaani's data would be kept there. According to Webrazzi, the product had been in development for two and a half years. Yaani first came out as a mobile app on the App Store and Google Play. Turkcell subscribers who installed the app for the first time received 1 GB of free mobile data for a week, and searches were not deducted from their data allowance. The company planned to integrate its own services, such as TV+, BiP, lifebox and Paycell, into the search engine and to offer a digital advertising service. A web version followed shortly afterwards, and in 2019 an email service called YaaniMail was launched under the same brand. Yaani's path, however, was contentious from the start. According to Webtekno, after the launch the makers of Geliyoo, another Turkish search engine venture, alleged that Yaani used data from other search engines. Turkcell said it did not use any search engine and had only received technology support from some companies. According to Wikipedia, before it closed the app had been downloaded more than 5 million times and more than 125 million searches had been made. In November 2022 the search service ended without any announcement. One day users could no longer search; the search page redirected first to Turkcell, then to links for the app. The mobile app lived on for a while as a browser using other search engines, then it too was shut down. Yaani's story shows how even a product backed by a big company's resources can quietly fade into history when it fails to offer a clear benefit to users while competing with a global monopoly. ## Lessons - Playing up home-grown credentials brings the first download; what keeps users is product quality. - Do not take on a rival with network effects and data advantages this large without clear differentiation. - Quietly withdrawing a product you have shut down also damages trust in your brand and your future products. ## Sources - [Turkcell unveils Yaani, a Turkish mobile search engine!](https://webrazzi.com/2017/10/25/yaani-arama-motoru/) - [Whatever Happened to Yaani, Turkcell's Once Ever-Present Search Engine?](https://www.webtekno.com/turkcell-arama-motoru-yaani-ne-oldu-h139352.html) - [Yaani](https://tr.wikipedia.org/wiki/Yaani) --- # Yakala.co (2010 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/yakala-co/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Yakala.co was a group-buying site launched in 2010 in close partnership with the Turkish newspaper Hürriyet. It sold discount vouchers for restaurants, entertainment, travel and beauty services and, unlike its rivals, stood out with a humorous brand voice. It started in Istanbul and soon expanded to Ankara. ## Why did it shut down? The company gave no reason for its closure; the site carried only a short notice saying operations had ended as of 16 December 2022. A 2012 analysis by Webrazzi, the Turkish tech news site, shows that the group-buying market shrank quickly after its peak: total users fell from 3.4 million to 2.3 million in a year. Although Yakala.co increased its share during this period and rose to third place, the overall appeal of the voucher model declined. This picture can be read as the site closing after surviving for a long time in a shrinking market. ## The story In 2010, with Turkey's group-buying craze in full swing, Yakala.co arrived on the scene with a different tone. Mehmet Keteloğlu, who had returned after about 16 years as a technology and strategy consultant in the US, launched the site with two partners and in close partnership with the newspaper Hürriyet. In a December 2010 interview with eTohum, a Turkish start-up community, he explained that their aim was to offer campaigns with personality and surprise rather than dry deals. The first big test was striking. According to Keteloğlu, hundreds of thousands of people visited the site during a five-minute iPad campaign, and the target of 75 units was beaten with 221 sales. The traffic provided by Hürriyet and a partnership with Garanti's credit card gave the site a fast start. By December 2010 it was operating in Ankara as well as Istanbul; İzmir and other big cities were next in line. Keteloğlu said they saw the business as a marathon, not a sprint. The sector itself, however, was cooling fast. According to a May 2012 analysis by Webrazzi, total users of group-buying sites fell from 3.4 million to 2.3 million in a year. Yakala.co stood out in this picture by rising to third place with 659,000 monthly unique visitors; Grupfoni, once the market leader, declined rapidly. Although voucher culture took root, the market's total volume never returned to its former level. Yakala.co kept going quietly for years. In the end a short notice posted on the site announced that the yakala.co website had ceased operations as of 16 December 2022, and directed users to an email address for questions. The reason for the closure was not made public. Yakala.co's 12-year journey is the story of one of the longest-lived domestic players of the group-buying wave. A strong media partner and a distinctive brand voice kept the site going longer than most of its rivals; but in a shrinking market those advantages were not enough to deliver lasting growth. ## Lessons - A strong media partner brings traffic, but that traffic is not enough if the model itself is not profitable. - Gaining share in a shrinking market may not mean long-term growth. - Brand personality makes a difference; even so, you need a value proposition that brings people back beyond the voucher. ## Sources - [Notice: the yakala.co website ceased operations as of 16.12.2022 (in Turkish)](http://www.yakala.co/) - [Mehmet Keteoğlu - Yakala.co, 16 December 2010 (in Turkish)](https://blog.etohum.com/p/mehmet-keteoglu-yakala-com-16-aralik-2010) - [How far has the group-buying market come in a year? [Analysis] (in Turkish)](https://webrazzi.com/2012/05/31/grup-alisveris-pazari-1-yilda-nereden-nereye-geldi-analiz/) --- # Zilingo (2015 – 2022) - URL: https://girisimcikafasi.com/en/startup-graveyard/zilingo/ - Sector: E-commerce - Country: Singapore - Total funding: $308 million - Cause of closure: Team problems ## What did it do? Zilingo was a Singapore-based fashion e-commerce platform founded in 2015 by Ankiti Bose and Dhruv Kapoor. Starting out as a mobile-first marketplace, it gradually turned into a B2B platform offering technology and sourcing services to the fashion supply chain. It operated in India, Indonesia, Thailand, the Philippines, Hong Kong, Australia and the US. ## Why did it shut down? After rapid expansion, the company closed its US and Australian offices in 2020 and made two rounds of layoffs. In March 2022 whistleblowers reported to the board payments approved by CEO Ankiti Bose that appeared to have no connection with the company's operations. Bose was suspended during an accounting investigation and, in May 2022, dismissed for insubordination. With the leadership crisis in full swing, no new capital could be found and the company ceased operations in 2022. It went into liquidation in February 2023; lawsuits relating to the collapse of the business are still ongoing. ## The story Zilingo, whose name comes from the English word "zillion", was founded in Singapore in 2015 by two young founders of Indian origin, Ankiti Bose and Dhruv Kapoor. The idea was to bring small fashion sellers in South-East Asia together on a mobile marketplace. Bose quickly became one of the region's most talked-about founders; in 2019 Bloomberg described her as a 27-year-old CEO who had built a fashion start-up worth close to $1 billion. Investors were keen too. Starting with seed funding from Sequoia India, the company raised $8 million in 2016, $18 million in 2017 and $54 million in 2018. In its 2019 Series D, Sequoia India, Burda Capital and Sofina were joined by Temasek, Singapore's state investment fund, bringing in $226 million. Total funding reached $308 million, making Zilingo one of the region's best-funded start-ups. Meanwhile the model was changing: by September 2019, 80 per cent of revenue came from B2B services digitising the fashion supply chain. The expansion proved costly. In 2020 the company closed its US and Australian offices to focus on Asia; in July a second wave of layoffs hit Thailand, India and Indonesia, and the finance director resigned. The real crisis came in the spring of 2022. At the end of March, whistleblowers reported to the board unexplained payments, approved by Bose, to companies with no connection to the company's operations. Bose was suspended while an accounting investigation was under way and, after a 51-day suspension, was dismissed in May 2022 for insubordination. With the leadership crisis in full swing, the company could not find the capital it needed to survive and ceased operations in 2022. In January 2023 it sold its technology assets to Buyogo of Switzerland, and in February 2023 it went into liquidation; according to sources, there was nothing left to distribute to creditors. The legal battle did not end there: in 2024 Bose accused her former co-founder Kapoor and former chief operating officer Aadi Vaidya of fraud, threats and harassment, and filed a defamation suit against them. The cases between the parties are still ongoing. Zilingo's story is a reminder that governance is not bureaucracy but a survival tool. In a company that had raised hundreds of millions of dollars, the question of how payments were approved was not settled in time, so when the crisis came, trust broke once and never returned. ## Lessons - Control payments approved by the founder with a second signature and regular internal audits; build governance before the first big round, not after you have grown. - If your business model is shifting from a marketplace to B2B services, shrink the office and staff costs of the old structure just as fast. - When a crisis breaks out between founders and investors, secure the company's cash runway before the dispute turns into litigation. ## Sources - [Zilingo](https://en.wikipedia.org/wiki/Zilingo) - [Singapore's Zilingo to Liquidate After Crisis at Fashion Startup](https://www.bloomberg.com/news/articles/2023-01-20/singapore-s-zilingo-to-liquidate-after-crisis-at-fashion-startup?srnd=prognosis&leadSource=uverify%20wall) - [Zilingo Fires CEO as Clash Over Embattled Startup Escalates](https://www.bloomberg.com/news/articles/2022-05-20/zilingo-fires-ceo-as-clash-over-embattled-startup-escalates) - [E-commerce startup Zilingo raises $226M to digitize Asia's fashion supply chain](https://techcrunch.com/2019/02/11/zilingo-raises-226m/) --- # Arıkovanı (2016 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/arikovani/ - Sector: Fintech - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Arıkovanı (Turkish for “beehive”) was a reward-based crowdfunding platform launched in 2016 by Turkcell, Turkey's largest mobile operator, exclusively for technology and innovation-focused projects. Start-ups raised money from backers through 60-day campaigns, and for projects that missed their target the money was refunded to backers. In 2018 it also opened Arıkovanı Mağaza (Arıkovanı Store), where funded products could be sold. ## Why did it shut down? In December 2021 Arıkovanı announced that it would end its services at the end of the month. The platform's statement attributed the decision to a desire to use its efforts more effectively and in more varied ways in line with new strategies. In other words, the closure was the result of a change in the parent company's priorities rather than a cash crisis. Having channelled 7.5 million TL to 73 start-ups over five years, the platform was a structure that stood on corporate support, and when that support was withdrawn it did not continue. It is also conceivable that the growth of equity crowdfunding platforms licensed by the SPK (Turkey's Capital Markets Board) in the same period narrowed the space for the reward-based model; this last point is an interpretation. ## The story In 2016 Turkcell set up a crowdfunding platform called Arıkovanı so that technology entrepreneurs could find the resources they needed from the community. The platform was presented as Turkey's first reward-based crowdfunding site focused exclusively on technology start-ups. Start-ups opened 60-day campaigns, and backers made contributions in return for products or rewards. For projects that missed their target, the money raised was refunded to backers. The first year was promising. According to figures Turkcell shared in February 2017, 18 start-ups had opened campaigns, 9 of them had reached their target, and 1.92 million TL had been raised from 11,000 backers. Standout projects included WeWALK, a smart cane developed for visually impaired people, and the Outliers smart notebook, which raised roughly eight times its target. According to a Webrazzi report from December 2018, the platform had received more than 6,000 applications, and campaigns for 66 projects had raised 4.6 million TL. That same year Arıkovanı Mağaza, where funded products could be sold, was launched. The Ape X drone, the Byqee electric bike conversion kit and the Onlock smart furniture lock were also among the start-ups that found backing on the platform. On 24 December 2021 Arıkovanı announced that it would end its services at the end of the month. In total the platform had channelled 7.5 million TL in support to 73 start-ups. The statement said the platform was taking a break for a while so that its efforts could be used more effectively and in more varied ways in line with new strategies. Final settlements with active project owners were to be completed in December, and the site went offline shortly afterwards. Arıkovanı's closure is explained by a shift in corporate priorities rather than by failure. Even so, the story is a reminder of an important truth: a platform that lives on a big company's budget remains dependent on the parent company's strategy when it cannot build its own revenue model. The decision, announced as a break for a while, proved permanent; at the time this entry was prepared, the platform's address was unreachable. ## Lessons - A start-up living inside a corporation can be shut down the day the parent company's priorities change; build an independent revenue model. - A crowdfunding campaign is a good market test for a product, but the platform itself has to make money too. - Producing success stories does not mean you have a sustainable business model. ## Sources - [Crowdfunding platform Arıkovanı announces it is ending its services](https://webrazzi.com/2021/12/24/kitlesel-fonlama-platformu-arikovani-hizmetlerini-sonlandirdigini-duyurdu/) - [Crowdfunding platform Arıkovanı ceases operations](https://egirisim.com/2021/12/24/kitle-fonlama-platformu-arikovani-faaliyetlerini-sonlandirdi/) - [Turkcell's platform Arıkovanı ends its services](https://www.fintechdunyasi.com/turkcellin-platformu-arikovani-hizmetlerini-sonlandirdi/9253/) - [Tomorrow's technology brands are emerging from Arıkovanı](https://medya.turkcell.com.tr/bulletins/yarinin-teknoloji-markalari-arikovanindan-cikiyor/) - [Arıkovanı, which launched campaigns for 66 projects, raised 4.6 million TL in support](https://webrazzi.com/2018/12/26/66-proje-icin-kampanya-baslatan-arikovani-46-milyon-tl-destek-topladi/) --- # Byton (2016 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/byton/ - Sector: Mobility and transport - Country: China - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Byton was a Nanjing-based Chinese-German electric car brand founded by former BMW and Nissan executives. The company planned to start with the M-Byte, an electric SUV concept, and launch three models by 2022. It aimed to build a factory in Nanjing with an annual capacity of 150,000 vehicles. ## Why did it shut down? The first model, the M-Byte, was due to go into production and on sale at the end of 2019, but development delays and financial problems pushed the launch back again and again. Founding CEO Carsten Breitfeld left in 2019 and later cited government interference through FAW, the state-owned partner. In April 2020 half of the US staff were furloughed, and in June 2020 operations were suspended for six months. A partnership with Foxconn struck in early 2021 did not save the company either; the German subsidiary went bankrupt in April 2021, operations in China stopped in July 2021 and Foxconn put the project on hold. ## The story On 7 January 2018, at the Consumer Electronics Show (CES) in Las Vegas, Byton unveiled its first concept car, the M-Byte electric SUV. The BBC presented Byton's car as a futuristic and “truly smart” car. The company said sales of the M-Byte would begin in China, Europe and the US in the last quarter of 2019. That car never went into series production. The story began in 2016, when Tencent, Foxconn and the luxury car dealer Harmony New Energy Auto set up a joint venture called Future Mobility. The goal was to sell fully electric, autonomous premium cars in 2020. The company was founded by Carsten Breitfeld and Daniel Kirchert, former executives at BMW and Nissan. In January 2017 it announced a USD 1.7 billion factory in Nanjing with an initial annual capacity of 150,000 vehicles. In August 2017 it raised USD 200 million from Suning and other investors and took the name Byton. In 2018 FAW, the state-owned carmaker, also made a significant investment in the company. The problems began at the top. Breitfeld left the company in April 2019; in a later statement, also reported by The Verge, he said he had left because of the Chinese government's active interference in the company through FAW. Around the same time the company was reported to be seeking a new USD 500 million round. The launch was postponed repeatedly. In April 2020 about half of the 450 employees at its North American headquarters were furloughed; in June 2020 the company decided to suspend operations for six months to restructure. In October 2020 the other founder, Kirchert, also left because of continuing financial problems. In January 2021 the Taiwanese manufacturer Foxconn announced a strategic partnership with Byton and said it planned to invest USD 200 million. But in April 2021 the German subsidiary went bankrupt, and in July 2021 operations in China stopped. In September 2021 Nikkei reported that Foxconn had put the project on hold because of Byton's continuing financial problems. Byton entered bankruptcy proceedings in 2021. Byton's story shows that in a capital-intensive industry a dazzling unveiling does not shorten the long road to series production. In a structure with many partners, once management alignment broke down, every delay created a new need for funding. ## Lessons - In capital-intensive industries such as car-making, a well-received concept car is not enough; secure the cash needed to reach series production for the whole project, not round by round. - In structures with many partners and state backing, make clear from the start who holds decision-making power; management conflict eats into the timetable. - Lock in your supply chain and manufacturing partner under contract before announcing a launch date; every delay burns both trust and cash. ## Sources - [Byton (company)](https://en.wikipedia.org/wiki/Byton_(company)) - [Apple supplier Foxconn's EV project with China's Byton halted](https://asia.nikkei.com/Business/China-tech/Apple-supplier-Foxconn-s-EV-project-with-China-s-Byton-halted) - [Byton founder says he quit because of Chinese government interference](https://www.theverge.com/2019/9/20/20875328/byton-carsten-breitfeld-first-auto-works-chinese-government) - [Chinese EV startup Byton to suspend production for reorganization](https://europe.autonews.com/automakers/chinese-ev-startup-byton-suspend-production-reorganization) - [https://www.wikidata.org/wiki/Q47313237](https://www.wikidata.org/wiki/Q47313237) --- # Coinzo (2018 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/coinzo/ - Sector: Crypto and blockchain - Country: Turkey - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Coinzo was a cryptocurrency trading platform founded in İzmir, Turkey, in 2018 and operating under Coinzo Teknoloji AŞ. The platform, which developed its software in-house, stood out for identity verification via e-Devlet (Turkey's e-government portal), low commissions and API services. ## Why did it shut down? On 11 October 2021 Coinzo announced that it was ending its service by halting trading. The company did not explain the reason for the closure. The decision came at a time when, after the collapse of Thodex and Vebitcoin in April that year, payments with crypto assets had been banned and the sector had landed on the regulatory agenda. The sources do not explicitly draw this connection, so it should be read as an interpretation. Coinzo made an orderly exit, giving its users a six-month window to withdraw their funds. ## The story Coinzo was a cryptocurrency trading platform founded in İzmir in 2018 and operating under Coinzo Teknoloji AŞ. According to a 2020 profile by egirişim, its software had been developed entirely in-house. Its standout features included account verification through e-Devlet integration without requiring an ID photo, commissions below the market average, a revenue-sharing referral system and API services. At the time the platform was listed among the top 100 bitcoin exchanges on CoinMarketCap. When interest in crypto peaked in 2021, Coinzo was cited as one of the five most-used crypto exchanges in Turkey. According to Habertürk, daily trading volume on the platform exceeded 500 million lira. At 9 am on 11 October 2021 Coinzo halted trading and published an announcement to its users. The company said it had decided to end the digital asset services it had provided since 2018. Users were given six months to withdraw their Turkish lira and crypto balances; features other than trading remained available during that period. The statement said balances were safe and the relevant authorities had been informed. The company stressed that the process would be managed "carefully so that no user is harmed" and added that it would return in future with new projects in crypto and blockchain. Coinzo never explained the reason for the closure. The decision came at a time when, after the collapse of Thodex and Vebitcoin in April that year, payments with crypto assets had been banned and the sector had landed on the regulatory agenda. Unlike Thodex, Coinzo was one of the platforms that closed while giving its users an orderly exit process; this showed that how a closure is managed matters as much as the closure itself. ## Lessons - If you have decided to close, offer your users a clear timetable and a way out; your reputation lives on after you close. - In a sector where regulation is changing fast, write the cost of compliance into your business plan from the start. - Volume alone is not a sign of sustainability; track your revenue and cost structure separately. ## Sources - [İzmir-based cryptocurrency exchange Coinzo closes](https://www.capital.com.tr/haberler/tum-haberler/merkezi-izmirde-bulunan-kripto-para-borsasi-coinzo-kapandi) - [İzmir crypto exchange closes](https://www.haberturk.com/coinzo-faaliyetlerine-son-verdi-3218109-ekonomi) - [Coinzo, the Turkish crypto platform offering bitcoin trading](https://egirisim.com/2020/06/12/bitcoin-alim-satim-islemleri-sunan-yerli-kripto-para-platformu-coinzo/) - [Turkish crypto exchange ends its operations](https://shiftdelete.net/yerli-kripto-para-borsasi-faaliyetlerini-sonlandirdi) --- # Element AI (2016 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/element-ai/ - Sector: Super intelligence - Country: Canada - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Element AI was a super intelligence company founded in Montreal in 2016 to help businesses build SI solutions. Its founders included Yoshua Bengio, one of the pioneers of deep learning, and it ran joint projects with organisations such as the Port of Montreal, LG Electronics and Singapore Management University. In 2019 it launched Underwriting Partner, for insurance risk assessment, and Knowledge Scout, a data management platform for manufacturers. ## Why did it shut down? Element AI set out with a record funding round and a strong scientific reputation, but it only launched its first standalone product in September 2019, roughly three years after it was founded. Partnerships and research work raised its profile, yet its products never generated the revenue needed to sustain the company. By late 2020, with money and options running out, it signed a deal to sell itself to ServiceNow. According to documents obtained by The Globe and Mail, the founders' equity was largely wiped out in the sale. The deal closed on 8 January 2021, ending Element AI's life as an independent company. ## The story In October 2016 Wired reported that Yoshua Bengio, one of the pioneers of deep learning, had launched a start-up called Element AI. The Montreal company was presented as a deep learning incubator. Some time later Fortune asked whether it could break the big tech companies' grip on super intelligence. Four years on, Element AI was sold to a Californian company with its founders' stakes largely wiped out. The company was founded by Jean-François Gagné, Bengio, Anne Martel, Nicolas Chapados and Philippe Beaudoin, together with Jean-Sébastien Cournoyer of the Montreal venture capital fund Real Ventures. In early 2017 it took on the entire team behind an open-source machine learning database. In June 2017 it raised a $102 million Series A led by San Francisco-based Data Collective and Microsoft Ventures; the Montreal Gazette called it a record round for the city. In December 2018 the Canadian government granted it a loan of up to C$5 million, with a target of 900 new jobs. The company excelled at visibility. With Amnesty International it published a study of the abuse aimed at women politicians and journalists on Twitter; at the Port of Montreal it ran a project predicting how long lorries would wait to load and unload; and it formed partnerships with organisations such as LG Electronics and Singapore Management University. Its first standalone product, however, Underwriting Partner, built for insurance risk assessment, did not reach the market until September 2019; Knowledge Scout followed in December. On 30 November 2020 ServiceNow, a Californian cloud-based IT services company, announced it had signed an agreement to acquire Element AI. With money and options running out, the company was sold for $230 million. According to documents obtained by The Globe and Mail, the founders' equity was largely wiped out. The deal closed on 8 January 2021, ending Element AI's life as an independent company. Element AI shows that scientific prestige and record investment are no substitute for getting a sellable product into the market quickly. ## Lessons - A research reputation is no substitute for product-market fit; aim to put your first paid product in front of customers as early as possible. - Corporate partnerships and joint projects buy visibility but do not scale; check whether each project yields a product you can sell again. - A record funding round raises the bar for the next one; keep your burn rate at a level revenue can catch up with. ## Sources - [Element AI](https://en.wikipedia.org/wiki/Element_AI) - [ServiceNow is acquiring Element AI, the Canadian startup building SI services for enterprises](https://techcrunch.com/2020/11/30/servicenow-is-acquiring-element-ai-the-canadian-startup-building-ai-services-for-enterprises/) - [Element AI sold for $230-million as founders saw value mostly wiped out, document reveals](https://www.theglobeandmail.com/business/article-element-ai-sold-for-230-million-as-founders-saw-value-wiped-out/) --- # Greensill Capital (2011 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/greensill/ - Sector: Fintech - Country: United Kingdom - Total funding: $1.1 billion - Cause of closure: Business model failed ## What did it do? Greensill Capital was a financial services company based in the United Kingdom and Australia. Its core business was supply chain finance: paying suppliers their invoices early and collecting the money later from the buyer. It issued bonds backed by the receivables it bought, ran funds with partners such as Credit Suisse, and offered banking services through Greensill Bank in Germany. ## Why did it shut down? Greensill's funding model relied on the insurers that covered its receivables and on the Credit Suisse funds that sold its products to investors. In July 2020 the insurers led by Tokio Marine, which covered $4.6 billion of the company's working capital, said they would not renew the cover. The company's exposure to GFG Alliance, the group controlled by Sanjeev Gupta, had reached $5 billion. On 1 March 2021 Credit Suisse froze $10 billion of Greensill-linked funds, and a deal with a potential rescuer fell through. Unable to repay a $140 million loan from Credit Suisse and shaken by defaults at GFG, the company filed for insolvency protection on 8 March 2021. ## The story On 1 March 2021 Credit Suisse froze $10 billion in the supply chain funds that invested in Greensill Capital's products. A week later the company, backed by SoftBank and once talked about as an IPO candidate, was filing for insolvency protection. Greensill Capital was founded in 2011 by Lex Greensill. Its speciality was supply chain finance, also known as “reverse factoring”: suppliers' invoices were paid early and the money was collected later from the buyer. Over time the company expanded into banking through Greensill Bank in Germany, into bonds backed by the receivables it bought, and into funds run with partners such as Credit Suisse. In 2018 General Atlantic invested $250 million, and in early 2019 the SoftBank Vision Fund put in $800 million. Headcount rose from 500 at the end of 2019 to more than 1,000 across 16 offices by early 2021. Former UK prime minister David Cameron became an adviser to the company in 2018. The risks were mounting. According to the Financial Times, SoftBank was investing in the Credit Suisse funds that financed Greensill's operations, while Greensill was providing finance to SoftBank-backed companies; reporters described this as a “circular flow of funds”. Greensill's exposure to GFG Alliance, linked to the steel magnate Sanjeev Gupta, had reached $5 billion. In 2020 the German regulator BaFin began examining Greensill Bank's accounts. In July 2020 the insurers led by Tokio Marine, which covered $4.6 billion of the company's working capital, said they would not renew the cover. After Credit Suisse froze the funds, the company failed to agree a deal with a potential buyer. Unable to repay a $140 million loan from Credit Suisse and shaken by defaults at GFG, Greensill filed for insolvency protection on 8 March 2021. That same month BaFin filed a criminal complaint concerning Greensill Bank and halted its operations. In April 2021 prime minister Boris Johnson ordered an inquiry into the collapse and into Cameron's lobbying of the government. In December 2025 German prosecutors brought criminal charges against three unnamed people who had sat on Greensill Bank's management in 2021, alleging they had circumvented banking regulations; the case is ongoing. In April 2024 the administrators said they were still owed around $587 million by GFG. Greensill shows that the fragility of a fast-growing finance company often lies not in its balance sheet but in its dependencies. When the insurer, the funds and a single large customer all ran into trouble at once, a multi-billion-dollar structure unravelled within days. ## Lessons - If your funding model rests on a single insurer, a single distribution channel or a single large customer, test today what happens if one of them pulls out. - Measure rapid growth by the quality of your receivables, not by investor money; compare your exposure to your largest customer group against your capital. - Political connections and famous advisers do not remove regulatory or market risk; they can add reputational risk. ## Sources - [Greensill Capital](https://en.wikipedia.org/wiki/Greensill_Capital) - [Greensill Capital files for insolvency, administrators appointed](https://www.reuters.com/article/us-britain-greensill-idUSKBN2B01WB) - [Greensill files for administration and warns of GFG 'defaults'](https://www.ft.com/content/db5bc46a-57cc-4c7d-a6fe-47f5a59412d4) - [German prosecutors file lawsuit against Greensill bosses over role in bank's collapse](https://www.theguardian.com/business/2025/dec/18/greensill-germany-bremen-banking-finances-law) --- # Houseparty (2016 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/houseparty/ - Sector: Social media - Country: United States - Total funding: $64 million - Cause of closure: Acquired and shut down ## What did it do? Houseparty was a social network where friends could drop into live video chats without planning ahead. Up to eight people could talk in a room, and users got a notification when friends came online. The app was available on mobile and desktop. ## Why did it shut down? Houseparty was built by the same team behind the live-streaming app Meerkat and spread quickly, especially among teenagers. In 2019 Epic Games bought the company, and a mode was built that brought the app's video chat into Fortnite. Downloads peaked in March 2020 with the COVID-19 lockdowns, but that interest never turned into a lasting business model. In September 2021 Epic Games announced it had pulled the app from the stores and would shut the service down in October 2021. ## The story In March 2020, as the world shut itself indoors, one app suddenly found itself at the centre of attention. Houseparty was downloaded more than 17 million times that month alone, was named “breakout of the year” at the 2020 Webby Awards and, according to Fast Company, rose to first place in the social networking category of the US App Store with 50 million downloads in total by April 2020. The team behind the app had tried again after a failure. Life On Air, run by Ben Rubin, had launched the live-streaming app Meerkat in early 2015 and raised $12 million from Greylock Partners. Meerkat quickly became the centre of attention but did not last long, and in February 2016 the team quietly released a new product: Houseparty, which let friends drop in on the spur of the moment and offered group video chat for up to eight people. In September 2016 The Verge wrote that around a million people were using the secretly developed app. At the end of 2016 $52 million came in from Sequoia Capital. Co-founder Sima Sistani became CEO in March 2019 and that same year led the sale of Houseparty to Epic Games, the maker of Fortnite; the price was not disclosed. In November 2020 “Fortnite Mode” was added, bringing the app's video chat into Fortnite Battle Royale. When a report emerged that the app had been hacked, Sistani denied the claim. The sudden interest brought by the pandemic did not last, however. On 9 September 2021 Epic Games announced that it was removing Houseparty from the mobile app stores immediately and would shut the service down completely in October 2021. The Washington Post wrote that the decision was taken so the company could focus on its metaverse ambitions. The main video chat service and Fortnite Mode kept running until the closure. Houseparty's story shows that growth driven by an external shock does not on its own prove a product's value. The app found its way into millions of lives, but became part of a large company without building an independent revenue model. When the buyer's priorities changed, an app whose most popular period was already behind it could easily be shut down. ## Lessons - Do not mistake a sudden wave of downloads during a crisis for lasting demand; measure weekly usage after the wave has passed. - The future of an acquired product depends on how well it serves the buyer's core strategy; an independent revenue model strengthens your hand in negotiations. - When a product fails, the team's lessons can be carried into a new one; but after a pivot, question the revenue model early too. ## Sources - [Houseparty (app)](https://en.wikipedia.org/wiki/Houseparty_(app)) - [Epic Games to shut down Houseparty in October, including the video chat 'Fortnite Mode' feature](https://techcrunch.com/2021/09/09/epic-games-to-shut-down-houseparty-in-october-including-the-video-chat-fortnite-mode-feature/) - [Epic Games shuts down Houseparty app to focus on metaverse](https://web.archive.org/web/20250722164333/https://www.washingtonpost.com/video-games/2021/09/09/houseparty-shut-down-epic-games-metaverse/) - [Epic Games, the maker of 'Fortnite', acquired teen chat app Houseparty in a surprise deal](https://www.businessinsider.com/fortnite-creator-epic-games-acquires-group-video-chat-houseparty-2019-6) --- # Katerra (2015 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/katerra/ - Sector: Real estate and construction - Country: United States - Total funding: $2 billion - Cause of closure: Ran out of cash ## What did it do? Katerra was a technology-driven construction company that manufactured large building components in factories and assembled them on site. Particularly on multi-storey residential projects, it produced entire walls, windows included, in its plants, and it also made mass timber products. On many projects it acted as manufacturer, architect and contractor at once, usually contracting directly with property owners. ## Why did it shut down? The company quickly grew into a sprawling organisation with factories, architecture teams and thousands of employees. In December 2019 it had to lay off around 200 people and close its Phoenix factory. In May 2020 the CEO changed alongside a USD 200 million capital injection, and SoftBank put in money again in December 2020 to rescue the company. In June 2021 Katerra cited the COVID-19 pandemic and its inability to raise new capital after the collapse of its lender, Greensill Capital, as the reasons for its bankruptcy. The remaining employees were laid off without being paid their accrued holiday pay or severance. ## The story A building's wall, windows and all, is made in a factory, brought to the site by lorry and fitted into place. That was Katerra's promise to the construction industry: to turn putting up buildings into an industrial process, like manufacturing an electronic device. The company was founded in 2015 by Michael Marks, former CEO of Flextronics and one-time interim CEO of Tesla, and Fritz Wolff, chairman of a company called The Wolff Co. The idea attracted big money fast. In January 2018 an USD 865 million investment arrived, led by SoftBank's Vision Fund. That same year Katerra bought MGA, an architecture firm specialising in tall timber buildings and mass timber construction. By the end of 2018 it had 7,500 employees and 700 projects under way, and planned to set up 14 distribution centres across the country. LinkedIn had put it on its 2017 list of the best start-ups to work for. Doing everything at once, though, was expensive. In December 2019 it announced around 200 layoffs and the closure of its Phoenix factory; production moved to its lower-cost, highly automated plant in Tracy. In May 2020 management changed alongside a USD 200 million capital injection, and Paal Kibsgaard, former CEO of Schlumberger, replaced Marks. SoftBank made another rescue investment in December 2020; the total the Vision Fund had put into Katerra was reported to exceed USD 2 billion. The final blow came on the financing side. When its lender, Greensill Capital, collapsed, Katerra could not find new capital. In June 2021 the company cited the COVID-19 pandemic and its inability to raise money after Greensill's collapse as the reasons for its bankruptcy. The remaining employees were laid off without being paid the holiday pay and severance they had earned; some assets in regions such as the Middle East lived on as independent companies. Katerra's story shows how much capital it burns to try to transform a local, fragmented industry such as construction in a single move. Growing factories, design and construction sites under one roof looked efficient on paper; in practice every link brought its own problems, and financing them all came down to the patience of a single investor. ## Lessons - If you are trying to transform a traditional industry through vertical integration, prove profitability in one link of the chain first rather than building every link at once. - Do not tie your financing to a single big investor or a single lender; Greensill's collapse took away Katerra's last lifeline. - Even in a crisis, prioritise the payments your employees are owed; unpaid severance follows founders' reputations long after the company has closed. ## Sources - [Katerra](https://en.wikipedia.org/wiki/Katerra) - [SoftBank-backed Katerra files for bankruptcy](https://www.ft.com/content/a70b6130-b062-4850-8759-4a10a5a26f3d) - [SoftBank pours $865 million into Katerra, a start-up making buildings in a factory](https://www.cnbc.com/2018/01/24/katerra-raises-865-million-from-softbank-vision-fund.html) - [SoftBank-Backed Katerra to Shut Down](https://www.theinformation.com/articles/softbank-backed-katerra-to-shut-down) --- # Knotel (2016 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/knotel/ - Sector: Real estate and construction - Country: United States - Total funding: $560 million - Cause of closure: Business model failed ## What did it do? Knotel was a New York-based flexible office start-up that built and ran made-to-measure headquarters carrying each client's own brand, leasing them out on flexible contracts. Unlike WeWork's shared-desk model, it offered private offices that tenants could grow into or shrink out of, positioning itself as "headquarters as a service". By 2019 it operated more than 200 locations across 11 cities, from New York to São Paulo. ## Why did it shut down? As the company expanded rapidly on long-term leases and costly fit-outs, it found itself with more empty space than expected. According to Business Insider, its 2019 loss reached $233 million; the company disputed the figure. The Real Deal reported that lawsuits and evictions had begun even before the pandemic. When Covid-19 crushed demand for offices, Knotel laid off or furloughed half its staff, revenue fell and some landlords sued. With its search for new funding going nowhere, the company filed for bankruptcy in February 2021 and sold its assets to Newmark. ## The story In March 2020 Knotel's employees received the bad news in two parts: 30 per cent of the workforce was being laid off and 20 per cent furloughed. Only seven months earlier the company had closed a $400 million funding round and, as a unicorn, had come to be seen as one of WeWork's most serious rivals. By the time Covid-19 arrived, New York's fastest-growing office start-up was already standing on fragile ground. Knotel was founded in 2016 by Amol Sarva, a co-founder of Virgin Mobile, and Edward Shenderovich, a former venture capitalist. The idea was to turn the WeWork model on its head: instead of shared desks, build each company a headquarters carrying its own brand that could grow or shrink as needed, and lease it on a flexible contract. A $25 million Series A followed in 2017, and in 2018 a $70 million Series B led by Newmark Knight Frank and The Sapir Organization. With the $400 million round in August 2019, the company said it operated more than 4 million square feet across over 200 locations in 11 cities, including New York, London, Berlin, Paris and São Paulo. The bill for that growth was steep. According to financials Business Insider said it had seen, the company lost $233 million in 2019; Knotel disputed the figure. Long-term leases and expensive fit-outs, combined with more vacant space than expected, put the balance sheet under strain. The Real Deal had reported that even before the pandemic the company was dealing with lawsuits and evictions. In the second quarter of 2020 revenue fell by about 20 per cent to $59 million, and some landlords sued, claiming that profit-sharing agreements had been breached. In February 2021 Knotel filed for bankruptcy and agreed to sell its assets to Newmark, the property brokerage that was also one of its investors, for a reported $70 million. Newmark also provided around $20 million of financing during the process. Most of the roughly $560 million invested in a company valued at $1.6 billion less than a year earlier simply evaporated. Knotel's story is a reminder that the flexible office business is, at heart, a maturity-mismatch business. A company that sells flexibility to customers while giving landlords long-term commitments has to cover the gap out of its own pocket the first time demand falls. ## Lessons - If you sell customers short-term flexibility while giving landlords long-term lease commitments, work out in advance how many months you could survive a 20 per cent drop in occupancy. - In models that grow through leased space, experiment early with structures that share risk with the landlord, such as revenue-sharing or management agreements. - The market leader stumbling does not prove your own model is sound; look for the same risks on your own balance sheet. ## Sources - [A look at how proptech startup Knotel went from a $1.6B valuation to filing for bankruptcy](https://techcrunch.com/2021/02/05/a-look-at-how-proptech-startup-knotel-went-from-a-1-6b-valuation-to-filing-for-bankruptcy/) - [Knotel Files for Bankruptcy as Pandemic Strains Office Rentals](https://www.bloomberg.com/news/articles/2021-02-01/knotel-files-for-bankruptcy-as-pandemic-strains-office-rentals?srnd=premium) - [CEO Who Celebrated WeWork's Demise Must Fix Own Firm: Knotel](https://therealdeal.com/2020/01/31/knotels-ceo-cheered-weworks-fall-but-hes-got-challenges-too/) --- # Periscope (2014 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/periscope/ - Sector: Social media - Country: United States - Total funding: $1.5 million - Cause of closure: Acquired and shut down ## What did it do? Periscope was a live video streaming app for Android and iOS. Users could start a broadcast from their phones instantly, and viewers could send the broadcaster “hearts” by tapping the screen. Broadcasts could be public or visible only to selected people. ## Why did it shut down? Twitter bought Periscope in January 2015, before the app had even launched publicly. The app grew rapidly in its first year, but from December 2016 its features were moved into Twitter's own app. As other social media platforms with similar live-streaming features spread, Periscope's usage fell. In December 2020 Twitter announced it would close the app, citing declining usage, a product restructuring and high maintenance costs; Periscope was removed from the app stores on 31 March 2021. ## The story The idea was born in Istanbul in 2013. Kayvon Beykpour was in the city when protests broke out in Taksim Square, and he turned to Twitter to find out what was happening. He could read about events, but he could not see them. Beykpour and Joe Bernstein decided to design an app that would let anyone stream live video from their phone to the world. The pair founded the company in February 2014 under the name Bounty, and in April 2014 raised $1.5 million from investors including Founder Collective, Google Ventures, Menlo Ventures and Bessemer. Before the product had even launched publicly, Twitter bought the company in January 2015; Business Insider reported the price at around $120 million. The acquisition was announced on 13 March 2015, just as the rival live-streaming app Meerkat was drawing huge attention at the South by Southwest festival. Around the same time, Twitter had cut off Meerkat's access to its social graph. Periscope launched on iOS on 26 March 2015 and on Android on 26 May. On 12 August 2015, just four months after launch, it announced that it had passed 10 million accounts and that users were watching a combined 40 years of video every day. Apple named it the iPhone app of 2015. In June 2016, when the official feed was cut, a sit-in in the US House of Representatives reached C-SPAN through a congressman's Periscope account. Success also brought copyright problems: the season premiere of Game of Thrones and the pay-per-view Mayweather–Pacquiao fight were streamed through the app without permission, and the UFC alone sent more than 650 takedown requests. In June 2018 a Turkish court banned Periscope in Turkey on the grounds that it infringed the copyright of a Turkish company called Periskop. In December 2016 some of Periscope's features were moved directly into the Twitter app. As other social media platforms offering similar live-streaming features spread, usage declined. In December 2020 Twitter announced that the app would be closed because of declining usage, a product restructuring and high maintenance costs. Periscope was removed from the app stores on 31 March 2021; broadcasts remained viewable on Twitter. Periscope is a textbook case of a feature that lasts while the product disappears. Live streaming became a standard part of social media; but the standalone app that started that shift dissolved into its buyer's main product. ## Lessons - If you are building a feature that could be folded into a platform, establish early the distinctive usage habit that will let you survive as a standalone app. - Once an acquired product's features start moving into the main app, the standalone app's days are usually numbered; plan the transition for the team and users accordingly. - In products built on user content, such as live streaming, put copyright and content moderation processes in place before launch. ## Sources - [Periscope (service)](https://en.wikipedia.org/wiki/Periscope_(service)) - [Twitter is shutting down its Periscope apps](https://www.theverge.com/2020/12/15/22176842/twitter-periscope-shut-down-live-video-streaming-apps-2021) - [Periscope shuts down, six years after popularizing mobile live streaming](https://www.theverge.com/2021/3/31/22360717/periscope-shut-down-twitter-live-streaming) - [Twitter Acquires Live-Video Streaming Startup Periscope](https://www.wsj.com/articles/twitter-acquires-live-video-streaming-startup-periscope-1425938498) --- # Simple (2009 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/simple-bank/ - Sector: Fintech - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Simple (originally BankSimple) was a digital bank with no physical branches that delivered its banking services through a website and mobile apps. Accounts were held with a partner bank; customers used a Visa debit card, could tag their spending and set savings goals. The company earned its revenue from interest on deposits and card interchange fees. ## Why did it shut down? In 2014 Simple was bought by the Spanish bank BBVA for USD 117 million and folded into BBVA's US structure. Founding CEO Joshua Reich stepped down in 2018. In November 2020 PNC Bank agreed to buy BBVA's US operations. Saying it had reassessed its goals during that sale process, BBVA announced in January 2021 that it would close Simple. The service ended on 8 May 2021 and accounts were transferred to BBVA. ## The story For its loyal users, Simple's last day was far more painful than an app simply shutting down. When accounts were transferred to parent company BBVA on 8 May 2021, many customers could not log in to their own bank accounts; error messages and apologetic red warning banners appeared on the BBVA website. The Verge reported in detail how the migration went wrong. The story began in Brooklyn in 2009. Joshua Reich and Shamir Karkal founded BankSimple together with Alex Payne. The aim was to create a banking experience with no branches, plain fees and spending that was easy to understand. Jerry Neumann provided the seed capital; in August 2011 USD 10 million was raised in a round led by IA Ventures, Shasta Ventures and 500 Startups. That same month the company moved to Portland, where five of its 17 employees already lived. Shortening its name to Simple, the company began accepting customers through a limited beta in 2012. In January 2013 it reached 20,000 customers and more than USD 200 million in transaction volume, and in July 2013 40,000 customers and more than USD 1 billion in volume. At the end of 2013 customers' combined balances stood at USD 64 million. On 20 February 2014 the Spanish bank BBVA announced that it had bought Simple for USD 117 million through its US subsidiary, BBVA Compass. Simple carried on for a while as an independent brand and added new features such as automatic saving. After the acquisition, however, non-US citizens were required to open accounts at a BBVA branch rather than online, which became the subject of a federal lawsuit in 2018. Founder Joshua Reich announced in May 2018 that he was stepping down as CEO. The end came with a major decision by the parent company. In November 2020 PNC Bank agreed to buy BBVA's US operations. In January 2021 BBVA announced it would close Simple, saying it had reassessed its goals during the sale process. On 8 May 2021 Simple officially closed and the remaining accounts were moved into BBVA's current and savings accounts. Simple became known as one of the first neobanks; but it built a model that relied on partner banks without a banking licence of its own, and in the end it became part of a bank. Its story shows that the future of an innovative product sold to a large institution remains tied to the parent company's priorities. ## Lessons - A fintech sold to a big bank can be one of the first units to be shut down when the parent's strategy changes; pin down the future of the brand and the team in the sale agreement. - Digital banks without their own licence depend on a partner bank; plan customer migration from the start in case the partnership ends. - Run capacity tests before moving customer accounts to another system; a botched migration defines a brand's final memory. ## Sources - [Simple (bank)](https://en.wikipedia.org/wiki/Simple_(bank)) - [Simple bank shutdown goes awry leaving customers without account access](https://www.theverge.com/2021/5/9/22427811/simple-bbva-transition-errors-bank-shutdown) - [BBVA Buys Banking Start-Up Simple for $117 Million](https://dealbook.nytimes.com/2014/02/20/bbva-buys-banking-start-up-simple-for-117-million/?_php=true&_type=blogs&_r=1) --- # Thodex (2017 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/thodex/ - Sector: Crypto and blockchain - Country: Turkey - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Thodex was a cryptocurrency trading platform founded in Istanbul in 2017 under the name Koineks. In 2020 it renamed itself Thodex and grew rapidly through celebrity-fronted advertising and prize campaigns. Users could trade on the platform with Turkish lira or crypto assets. ## Why did it shut down? On 20 April 2021 the platform halted trading, citing maintenance, after which users were cut off from their accounts entirely. The company's statement attributed the shutdown to transfer procedures linked to a new partnership, but the site never reopened. An investigation was opened on 22 April, and a red notice was issued for the founder, who was abroad at the time. According to Anadolu Agency, the indictment put the losses at 356 million lira. In 2023 a local court convicted the founder of aggravated fraud, forming a criminal organisation and money laundering; the verdict was overturned on appeal in January 2025 and a retrial began. Özer died in prison in November 2025, before the legal process had reached a final judgment. ## The story In September 2017, at the age of 23, Faruk Fatih Özer founded a cryptocurrency exchange called Koineks in Şişli, Istanbul, with 400,000 lira of capital. At a time when interest in bitcoin was just taking off in Turkey, the platform let users buy and sell cryptocurrency with Turkish lira. In 2020 the company was renamed Thodex and announced plans to expand into the global market. Its user numbers rose quickly on the back of advertising featuring well-known actors and prize campaigns; according to Hürriyet, the platform reached around 400,000 people. On the evening of 20 April 2021 Thodex halted trading, citing maintenance work. A statement the next day said the site would be closed for a few working days because of transfer procedures linked to a new partnership. The site never reopened. Following complaints from users, an investigation was opened on 22 April, and a red notice was issued for Özer, who was abroad at the time. Özer was caught in Albania in August 2022 and extradited to Turkey in April 2023. According to Anadolu Agency, the indictment put the losses at 356 million lira; Bloomberg HT reported that the indictment named 2,027 complainants. In September 2023 the Anadolu 9th High Criminal Court sentenced Özer, along with Güven Özer and Serap Özer, to more than 11,196 years in prison each on charges of aggravated fraud, forming a criminal organisation and laundering the proceeds of crime. In January 2025 the appeals court overturned the verdict and the case returned to the local court for retrial; the judgment did not become final. While the retrial was under way, Özer was found dead in prison in Tekirdağ on 1 November 2025; according to Anadolu Agency, an investigation into his death was opened. According to the sources, there is no final conviction against Özer. The Thodex case remains one of the most striking examples of how large crypto exchanges in Turkey could grow without licensing or independent oversight. That same year, payments with crypto assets were banned and the sector was brought step by step under regulation. ## Lessons - If you hold users' money, open your reserves to independent audit; trust is not built through advertising. - A financial product that grows without a licence or oversight remains dependent on one person's decisions. - Campaigns with famous faces bring in users, but they are no guarantee for the money entrusted to you. ## Sources - [Verdict in the fraud case against Thodex founder Faruk Fatih Özer (in Turkish)](https://www.aa.com.tr/tr/gundem/thodexin-kurucusu-faruk-fatih-ozerin-dolandiricilik-davasinda-karar/2986295) - [Thodex founder Özer sentenced to 11,196 years in prison (in Turkish)](https://www.bloomberght.com/thodexin-kurucusu-ozere-11-bin-196-yil-hapis-cezasi-2337989) - [Appeals court rules in the fraud case against Thodex founder Faruk Fatih Özer (in Turkish)](https://www.aa.com.tr/tr/gundem/istinaf-thodexin-kurucusu-faruk-fatih-ozerin-dolandiricilik-davasinda-kararini-verdi/3467025) - [Thodex founder Faruk Fatih Özer found dead in prison (in Turkish)](https://www.aa.com.tr/tr/gundem/thodexin-kurucusu-faruk-fatih-ozer-cezaevinde-olu-bulundu/3732500) - [The company he founded at 23 became his downfall (in Turkish)](https://www.hurriyet.com.tr/gundem/23-yasinda-kurdugu-sirket-sonu-oldu-43005120) - [From celebrity ads to fraud allegations: the Thodex story (in Turkish)](https://webrazzi.com/2021/04/22/unlulerle-reklamlardan-dolandiricilik-iddiasina-uzanan-hikaye-thodex/) - [Thodex](https://en.wikipedia.org/wiki/Thodex) --- # Vebitcoin (2017 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/vebitcoin/ - Sector: Crypto and blockchain - Country: Turkey - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Vebitcoin started operating in Muğla, in south-western Turkey, in September 2017 as a platform brokering trades between the Turkish lira and bitcoin. The platform grew with the surge of interest in cryptocurrency in 2020 and 2021. ## Why did it shut down? On 23 April 2021 the company halted operations, saying developments in the sector had caused an unexpected surge in transactions. The move came just a few days after Thodex, the Turkish crypto exchange, went offline. MASAK, Turkey's financial crimes investigation board, froze the company's bank accounts and its executives were detained. The indictment drawn up by prosecutors sought prison sentences for 16 defendants on charges of aggravated fraud. The case is continuing at the Muğla 3rd High Criminal Court; no final verdict could be found in the sources. ## The story Vebitcoin started operating in Muğla on 20 September 2017 as a platform brokering trades between the Turkish lira and bitcoin. According to Capital, the company was founded by İlker Baş with capital of TL 50,000, which was increased in 2020. The platform grew in 2020 and 2021 as interest in cryptocurrency exploded; the indictment later drawn up by prosecutors put its monthly trading volume at around TL 800 million. April 2021 was a turbulent month for Turkey's crypto market. Just a few days after the collapse of Thodex, on 23 April Vebitcoin also announced that it had halted operations. The company's statement said recent developments in the sector had caused an unexpected surge in transactions, and that operations had been suspended to ensure regulatory compliance and meet user requests. In the same period MASAK, Turkey's financial crimes investigation board, froze the company's bank accounts. News reports said the office in Muğla had no sign and was closed, and that the executives could not be reached. İlker Baş, his wife and two company employees were detained on 23 April 2021 and arrested on 26 April; on appeal, the three other than Baş were released under judicial supervision. The 249-page indictment prepared by the Muğla Chief Public Prosecutor's Office, as reported by TRT Haber, sought 1,316 years in prison for each of 16 defendants on charges of aggravated fraud, and the case file listed 329 complainants. The trial began at the Muğla 3rd High Criminal Court. In October 2024 the court ordered İlker Baş's release, taking into account the time he had spent in detention, the expert report, the defendant's partial compensation of the losses and his voluntary surrender. The prosecution appealed against this decision. At the time this entry was prepared, no final verdict could be found in the sources. Vebitcoin is remembered as part of the rupture that came in the same week as Thodex and accelerated the push to regulate crypto exchanges in Turkey. ## Lessons - Keep user funds separate from company accounts and open to audit; that is what preserves trust in a crisis. - When a crisis breaks out in your sector, transparent communication always does less damage than silence. - Even before regulation arrives, a platform that operates as if it already had increases its chances of survival. ## Sources - [Crypto platform Vebitcoin has closed](https://www.capital.com.tr/haberler/tum-haberler/kripto-para-platformu-vebitcoin-kapandi) - [Sentences sought in the Vebitcoin fraud case announced](https://www.trthaber.com/haber/turkiye/vebitcoin-vurgununda-istenen-cezalar-belli-oldu-694406.html) - [Appeal against the release of defendant İlker Baş in the Vebitcoin fraud case](https://www.sabah.com.tr/mugla/2024/10/21/vebitcoin-vurgununda-sanik-ilker-bas-tahliyesine-itiraz) - [Vebitcoin halts operations](https://www.sozcu.com.tr/2021/ekonomi/vebitcoin-faaliyetlerini-durdurdu-6392568/) --- # Zomato Türkiye (2013 – 2021) - URL: https://girisimcikafasi.com/en/startup-graveyard/zomato-turkiye/ - Sector: Food and drink - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Zomato, the India-based restaurant discovery platform, began operating in Turkey in late 2013. In January 2015 it bought Mekanist, a Turkish venue review site, and moved its content onto its own platform. Users could look up restaurants' menus, prices and reviews; in 2020 online food ordering was added to the platform. ## Why did it shut down? Zomato first closed its Turkey office in May 2017 and began running the operation from abroad. According to Gurme Ajanda, the company had said it could not reach sufficient profitability in Turkey. It returned at the end of 2018 on the grounds that traffic had stayed high, but according to egirişim it failed to achieve the results it wanted over more than a year. Cumhuriyet wrote that the company could not cope with mounting losses and had already halted its online ordering service. The Turkey office closed permanently on 26 February 2021. ## The story Zomato's Turkish story actually begins with a home-grown start-up. Mekanist, founded in January 2007 by Ali Servet Eyüboğlu and friends during their university years, had become one of Turkey's leading venue sharing and review sites. It had raised around €5 million in total from Silicon Valley-based Pond Ventures and angel investors. New Delhi-based Zomato entered Turkey in late 2013. In January 2015 it bought Mekanist; Eyüboğlu became Zomato's country manager for Turkey and the two platforms' content was merged. According to Webrazzi, the combined service covered more than 50,000 restaurants across Turkey. But Eyüboğlu left his post in November that same year. In May 2017 Webrazzi reported that Zomato would close its Turkey office and run the operation from abroad. As of 2016 the platform listed more than 27,000 venues in Istanbul. According to Gurme Ajanda, the company had said it could not reach sufficient profitability in Turkey and lacked sufficient visibility for the future. The story did not end there. At the end of 2018 Zomato returned. The new country manager, Cankut Aydın, said traffic had stayed high despite 1.5 years without a local operation. This time the company planned to earn revenue from online food ordering as well as advertising and reservations; it launched that service in Turkey in September 2020. In January 2021 egirişim reported that Zomato was pulling out of Turkey for the second time; it had failed to achieve the results it wanted over more than a year, and the decision affected a team of around 110 people. According to Cumhuriyet, the online ordering service had already been halted and the company could not cope with mounting losses. The Turkey office closed permanently on 26 February 2021; at its peak the platform had reached 4.5 million visitors a month. The journey that began with Mekanist ended after two entries and two exits. ## Lessons - High traffic alone is not a revenue model; you need a product that turns visitors into money. - When entering a market with strong local rivals for the second time, you must have solved the reasons for your first exit. - Buying a local start-up gets you into a market fast, but that advantage melts away if you do not keep the local team. ## Sources - [Zomato pulls out of Turkey for the second time](https://egirisim.com/2021/01/25/zomato-ikinci-kez-turkiyeden-cekiliyor/) - [Zomato has closed its Turkey office](https://www.cumhuriyet.com.tr/haber/zomato-turkiye-ofisini-kapatti-1816959) - [Zomato is closing its Turkey office [Rumour]](https://webrazzi.com/2017/05/22/zomato-turkiye-ofisi-kapatma/) - [Zomato has acquired Mekanist.net](https://webrazzi.com/2015/01/29/zomato-mekanist-neti-satin-aldi-son-dakika/) - [Zomato is back in Turkey](https://www.gurmeajanda.com/zomato-yeniden-turkiyede/) - [Two standout new features from Zomato, which has launched online food ordering in Turkey](https://webrazzi.com/2020/09/29/online-yemek-siparisi-servisini-turkiye-de-acan-zomato-nun-one-cikan-iki-yeniligi/) --- # Alkışlarla Yaşıyorum (2004 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/alkislarla-yasiyorum/ - Sector: Media and entertainment - Country: Turkey - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Alkışlarla Yaşıyorum (roughly "Living on Applause") was a Turkish video content site founded by Fatih Aker in August 2004. It stood out for funny videos shared by users, comments and engagement-focused features. During the years when YouTube was blocked in Turkey, it became an important alternative and contributed to the growth of caps and meme culture on the Turkish internet. ## Why did it shut down? The site's farewell announcement on 23 July 2020 said that increasingly frequent legal proceedings and their costs had put the team under too much strain. The announcement also complained that, as Facebook, YouTube and Instagram rose, the site's content was being used on other platforms without credit or payment. According to Webrazzi, the Turkish tech news site, users' large-scale move to social networks such as YouTube and Instagram also played an important part in the decision to close. In short, the site kept carrying the legal burden alone while losing its traffic to the giant platforms. After the closure, the files on its servers were removed and its social media accounts were shut down. ## The story Founded by Fatih Aker in August 2004, Alkışlarla Yaşıyorum was one of the first big comedy video sites on the Turkish internet. Users shared short funny videos, wrote comments underneath and spent time immersed in the site's distinctively friendly tone. For a while the site was published under the umbrella of Serdar Kuzuloğlu's MYK Medya, before going its own way independently again. Its real heyday coincided with the years when YouTube was blocked in Turkey. Users turned to local alternatives to watch videos, and Alkışlarla Yaşıyorum was one of the sites that filled the gap. In June 2011 Nokta A.Ş., which had received investment from Intel Capital, bought the site. According to a Webrazzi report at the time, the site was reaching more than 50,000 unique visitors a day, and Fatih Aker stayed with the team after the acquisition. Over time the picture changed. YouTube became accessible again, and Facebook and Instagram became the main distribution channels for comedy content. Webrazzi wrote that users' large-scale move to these networks played an important part in the team's decision. The site's own announcement, however, said the real burden lay elsewhere: increasingly frequent legal proceedings and their costs. Published on 23 July 2020, the farewell message kept the site's familiar humorous style. The team described the site as perhaps the internet's biggest comedy archive and complained that its content was being used on other platforms without credit or payment. According to egirişim, the files on the servers were removed during the night after the announcement, and the social media accounts were shut down too. Alkışlarla Yaşıyorum neatly sums up the fate of local platforms that grew in the gap opened up by a ban. When the gap closed, the traffic flowed to the giant platforms while the legal risks stayed with the site. Sixteen years on, the site ended its run having, in its own words, completed its mission. ## Lessons - On a platform built on user content, budget for the cost of legal proceedings from the start. - Once you have lost distribution to the giant platforms, owning your content is not enough to keep you alive. - If you grew thanks to a ban or a gap in the market, plan in advance for what happens when that gap closes. ## Sources - [Alkışlarla Yaşıyorum ended its run today](https://webrazzi.com/2020/07/23/alkislarla-yasiyorum-bugun-yayin-hayatini-sonlandirdi/) - [Alkışlarla Yaşıyorum, the video site founded in 2004, has ended its run](https://egirisim.com/2020/07/24/2004-yilinda-kurulan-video-sitesi-alkislarla-yasiyorum-yayin-hayatini-sonlandirdi/) - [Alkışlarla Yaşıyorum Acquired by Nokta](https://webrazzi.com/2011/06/30/alkislarla-yasiyorum-nokta/) --- # Atrium (2017 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/atrium/ - Sector: Enterprise software (SaaS) - Country: United States - Total funding: $75.5 million - Cause of closure: Business model failed ## What did it do? Atrium was a model that combined a law firm serving start-ups with a separate technology company developing software to automate work such as investment paperwork, employment contracts and cap tables. The technology side, Atrium LTS, handled the firm's operations, marketing and software. ## Why did it shut down? Justin Kan raised $10.5 million in a round led by General Catalyst in June 2017 and $65 million in a round led by Andreessen Horowitz in September 2018, bringing total funding to $75.5 million. The company reached 110 employees and 250 clients in 2018, but according to Kan, companies of this kind failed to find a way to make a difference in operational efficiency. Co-founder and managing partner Augie Rakow left in April 2019. In January 2020 Atrium laid off most of its legal staff and tried to turn itself into a professional services network for founders; the departing lawyers set up an independent firm that took on the former clients. Kan said it had been hard to regain momentum after the transformation, and the company closed on 3 March 2020, laying off its remaining 100-plus employees. ## The story Justin Kan was one of the founders of the live-streaming platform Justin.tv and of Twitch, which grew out of it; Twitch's sale to Amazon in 2014 made him one of Silicon Valley's best-known names. In 2017 he turned his attention to legal services. In Kan's view, part of corporate legal work was an art, while part consisted of repeatable processes that could be automated with software. Atrium was built on two legs: a law firm in San Francisco serving start-ups, and Atrium LTS, which ran the firm's operations, marketing and software. Kan set out together with former Orrick partner Augie Rakow, lawyer and entrepreneur Bebe Chueh and software engineer Chris Smoak. In June 2017 they closed a $10.5 million round led by General Catalyst, with around 100 institutional and angel investors taking part. In September 2018 a further $65 million came in, led by Andreessen Horowitz; at the time the company had reached 110 employees and 250 clients, including start-ups such as Bird. Software, however, did not deliver the expected efficiency in legal work. Rakow left in April 2019. In January 2020 Atrium laid off most of its legal staff and aimed to turn itself into a professional services network for founders; the departing lawyers set up an independent firm that took on the former clients. Kan said it had been hard to regain momentum after this transformation. On 3 March 2020 the company announced it was closing, laying off its remaining 100-plus employees, and returned part of the funds to investors. In a statement to TechCrunch, Kan acknowledged that companies of this kind, Atrium included, had not managed to make a real difference in operational efficiency. The independent law firm carried on as a separate entity. ## Lessons - Before funding a service-heavy business like a software company, measure how much the technology really reduces the expert hours spent per job. - A dual structure made up of a law firm and a separate technology company can confuse clients about who is representing them at every pivot; manage that risk from the start. - Rapid hiring on the back of a large round locks in the cost base before the model is proven; validate unit economics first. ## Sources - [$75M legal startup Atrium shuts down, lays off 100](https://techcrunch.com/2020/03/03/atrium-shuts-down/) - [Atrium, $75M Company that Vowed to 'Revolutionize' Law, Shuts Down](https://www.lawnext.com/2020/03/atrium-75m-company-that-vowed-to-revolutionize-law-shuts-down.html) - [Venture-backed, technology-focused law firm launches](http://www.abajournal.com/news/article/venture_backed_technology_focused_law_firm_launches) --- # Blogcu.com (2005 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/blogcu-com/ - Sector: Social media - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Blogcu.com was a platform founded by BerilTech in 2005 and known as Turkey's first blogging service. Users could open a blog for free, change its design and publish content. Nokta A.Ş. bought the site in 2007 and over the following years moved the platform first to a feed-based and then to an image-led format. ## Why did it shut down? Under Nokta, Blogcu.com went through radical overhauls in 2009 and 2012. Writing about the 2012 change, Webrazzi said the platform had taken on a visual format, a mix of Tumblr and Pinterest, and that classic bloggers had been somewhat neglected. According to Turkish Wikipedia, the site went offline on 1 July 2020; there is no public statement about the closure. Internet Archive records also show that the site was not live after May 2020. Alkışlarla Yaşıyorum, another long-established Nokta site, closed in the same period; it is reasonable to think that the shift of blogging and content sharing to social networks played a part in the decision (interpretation). ## The story Blogcu.com was founded by BerilTech in 2005 and became known as Turkey's first blogging service. Users could open a blog for free and change its design however they liked. The site quickly reached a large audience. In April 2007 the internet venture company Nokta A.Ş. added Blogcu.com to its portfolio. According to a report in Hürriyet at the time, the site had 375,000 members when it was bought and was Turkey's 16th most visited website. Nokta's portfolio then also included sites such as İzlesene, Fotokritik and Sinemalar. Under Nokta, Blogcu was constantly being reshaped. In 2009 it was rebuilt from its design to its software, and a channels section was added in which content flowed by category. In 2012 came a more radical change. In Webrazzi's words, the platform took on a visual format, a mix of Tumblr and Pinterest; a button was introduced for quickly adding content from other sites, and comments were moved to a Facebook plug-in. The same article noted that text-focused classic bloggers had been somewhat neglected in the change. Meanwhile, internet users' content-sharing habits were also changing. According to Turkish Wikipedia, Blogcu.com went offline on 1 July 2020. There is no public statement about the closure; Internet Archive records also show that the site was not live after May 2020. In the same month, Alkışlarla Yaşıyorum, another long-established Nokta site, had also ceased publication. Blogcu.com's quiet closure is a small but telling example of how the first wave of user-generated content on the Turkish internet came to an end. For fifteen years, the diaries, poems and photos of hundreds of thousands of people had accumulated on this platform. Cutting off access without any announcement meant that a large share of that content also quietly disappeared. ## Lessons - When shutting down a platform built on user content, leave a way to export the archive; trust depends on it. - Every redesign that attracts a new audience can also drive away your loyal core users. - Being the category leader does not protect you when the category itself is shrinking. ## Sources - [Blogcu.com sold](https://www.hurriyet.com.tr/gundem/blogcu-com-satildi-6346788) - [Blogcu.com adapts to the visual web with radical changes](https://webrazzi.com/2012/01/30/blogcu-com-gorsel-web/) - [Blogcu.com Completely Revamped and Now in Beta](https://webrazzi.com/2009/10/23/blogcu-com-tamamen-yenilendi-ve-su-anda-test-yayininda/) - [Blogcu.com](https://tr.wikipedia.org/wiki/Blogcu.com) --- # Brandless (2016 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/brandless/ - Sector: E-commerce - Country: United States - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Brandless was a company that sold food, beauty, personal care and household products made under its own label directly to consumers online. At first every product or product bundle cost $3; the company argued that it saved customers money by eliminating the cost of branding. In 2019 it also added an optional subscription service. ## Why did it shut down? The company entered a crowded market full of new brands offering products of similar quality and price. In 2018 a $240 million investment from SoftBank Vision Fund was announced, but according to a TechCrunch source, less than half of that amount ever reached the company. After founding CEO Tina Sharkey left, senior management changed several times within a year. In February 2020 the company laid off about 90 per cent of its staff and ceased operations; the board said the business model was not sustainable. ## The story A website that opened in July 2017 put an unusual question to the consumer goods market: why pay extra for a brand? At Brandless everything from organic snacks to beauty products cost $3, and the packaging showed what was in the product rather than a brand name. The company was founded by two entrepreneurs who met in Mill Valley. Tina Sharkey, founder of iVillage and former CEO of BabyCenter, was experienced in online communities, while Ido Leffler, founder of companies such as Yes To and Yoobi, was experienced in consumer products. In mid-2016 Sharkey became CEO and Leffler chairman. In November 2016 it raised $16 million in a round led by Redpoint Ventures; by launch it had taken a total of $50 million from investors including New Enterprise Associates and Google Ventures. The company drew a great deal of attention at launch and was named on Fast Company's list of the most innovative companies of 2019. According to TechCrunch, it was announced in July 2018 that SoftBank Vision Fund had invested $240 million in the company, valuing Brandless at just over $500 million. It was a surprising move for such a young business. Then the leadership was shaken: Sharkey stepped down as CEO in March 2019; according to reports by The Information, there had been friction with lead investor SoftBank. The finance director became interim CEO, and the new CEO who arrived in May 2019 quietly left in December. According to a TechCrunch source close to the company, less than half of the announced $240 million ever reached it. In February 2020 Brandless laid off 70 people, about 90 per cent of its staff, and halted operations; only 10 remained to fulfil outstanding orders. The board said the business model was not sustainable in the highly competitive direct-to-consumer market. CNBC recorded Brandless as the first SoftBank Vision Fund-backed start-up to go under. The company's assets were bought in June 2020 by Clarke Capital Partners and Ikonifi, and the brand reopened under its new owners that same summer. Brandless shows that a strong idea and a big investment announcement are not enough to build a lasting business in a market full of products that are hard to differentiate. ## Lessons - Memorable pricing such as a single price point can back you into a corner when product and shipping costs change; plan a flexible price structure from the start. - Differentiation is hard for unbranded or private-label products; track the repeat purchase rate from the first months. - Announcing a large investment and actually having the money in the bank are different things; base your cash plan on receipts, not commitments. ## Sources - [Brandless](https://en.wikipedia.org/wiki/Brandless) - [SoftBank-backed Brandless to lay off staff, shutter operations](https://www.cnbc.com/2020/02/10/softbank-backed-brandless-to-lay-off-staff-shutter-operations.html) - [SoftBank-backed Brandless shuts its doors for good](https://techcrunch.com/2020/02/10/softbank-backed-brandless-shuts-its-doors-for-good/) --- # Careem Türkiye (2016 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/careem-turkiye/ - Sector: Mobility and transport - Country: Turkey - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Careem, the Dubai-based ride-hailing start-up, entered Turkey in November 2016 with an airport transfer service in Istanbul. It initially offered chauffeur-driven cars and taxi hailing, then operated mainly with taxis in Istanbul, Bursa and Adana. Users could hail a taxi through the app and pay for rides with a saved card. ## Why did it shut down? In Turkey, ride-hailing apps were under pressure from the outset because of the backlash from taxi drivers and unclear regulation. In July 2018 Careem suspended its VIP transport service, run with 9+1 vehicles, until the legal position became clear. According to Menabytes, fines imposed on its drivers and on the company had led it to drop its private car service about a year after launch and operate with taxis only. Uber's acquisition in 2019 heightened taxi drivers' hostility, while the parent company entered a period focused on profitability. In January 2020 Careem left Turkey, citing the lack of a regulatory environment. ## The story Careem was founded in Dubai in 2012 by Mudassir Sheikha and Magnus Olsson and quickly became one of the leading ride-hailing apps in the Gulf region. When the company announced in the autumn of 2016 that it would enter Turkey, it was stepping into the eleventh country in which it operated. As Webrazzi reported, the service began in November 2016 with a transfer option at Istanbul's two airports. A month later Careem raised USD 350 million in a round led by Rakuten and Saudi Telecom, reaching a USD 1 billion valuation. The company moved into urban rides in Istanbul in early 2017 and, at the end of that year, appointed Dilara Demir Kısakürek, who came from Turkcell, as general manager for Turkey. But ride-hailing in Turkey was never a comfortable space, because of the backlash from taxi drivers and unclear regulation. In July 2018 Careem suspended its VIP transport service, run with 9+1 vehicles, until the legal position became clear. According to Menabytes, fines imposed on its drivers and on the company had led it to drop its private car service about a year after launch, leaving it operating with taxis only in Istanbul. In March 2019 Uber agreed to buy Careem for USD 3.1 billion. Careem continued under its own brand, but taxi drivers in Turkey did not warm to the merger. On 23 January 2020 the message to users was short and clear: because there were no regulatory conditions to provide a healthy environment for captains and customers, the service in Turkey would stop at midnight on 31 January. As Habertürk reported, the app was operating in Istanbul, Bursa and Adana at the time. The same week the company also withdrew from Oman, bringing the number of countries it operated in down to 13. Its chief executive, Mudassir Sheikha, said that in the new period focused on profitability some markets would grow and others would shrink. That week, with Glovo having left Turkey a few days earlier, the ecosystem lost two foreign players at once. Careem Turkey's story shows how fragile it is to try to grow in one of the most regulation-sensitive sectors before the legal footing is in place. ## Lessons - In a market that depends on regulation, do not build your growth plan before the legal footing is clear. - In a model that pits you against incumbent operators, a route to accommodation with local stakeholders matters as much as the product. - When a parent company turns to profitability after an acquisition, small and troubled markets are the first to be sacrificed. ## Sources - [Careem is leaving the Turkish market](https://www.haberturk.com/careem-turkiye-pazarindan-cikiyor-2561499-ekonomi) - [After Oman, Careem exits Turkey too](https://www.menabytes.com/careem-exits-turkey/) - [Dubai-based ride-hailing app Careem enters the Turkish market!](https://webrazzi.com/2016/10/31/dubai-merkezli-arac-cagirma-uygulamasi-careem-turkiye-pazarina-giris-yapiyor/) - [Careem, newly launched in Turkey, raises USD 350 million in new investment](https://webrazzi.com/2016/12/19/turkiyeye-acilan-careem-350-milyon-dolar-yeni-yatirim-aldi/) - [Careem suspends VIP transport operations in Turkey](https://www.sozcu.com.tr/2018/ekonomi/careem-turkiyede-vip-tasimacilik-faaliyetlerini-durdurdu-2503681) - [Dilara Demir Kısakürek becomes Careem's general manager for Turkey](https://webrazzi.com/2017/11/28/careemin-turkiye-genel-muduru-dilara-demir-kisakurek-oldu/) --- # Essential Products (2015 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/essential-products/ - Sector: Hardware - Country: United States - Total funding: $300 million - Cause of closure: Lost to competitors ## What did it do? Essential Products was a smartphone and hardware company founded in Palo Alto by Andy Rubin, one of the co-founders of Android. In 2017 it released the Essential Phone and its accessories, and announced the Essential Home smart speaker, which was to run on an operating system called Ambient OS. The phone was sold only in the US and Canada. ## Why did it shut down? The Essential Phone arrived later than the June timetable announced for it, and in 2018 Forbes pointed to signs that the company's end was approaching. In May 2018 the company cancelled its next flagship phone and was reported to be up for sale. The Essential Home never reached the market. In December 2018, instead of a new phone, the company bought the owner of a defunct email app. Unable to find a clear way to get Gem, the new device it announced in October 2019, to customers, it ceased operations on 12 February 2020. ## The story In August 2017 Essential joined the ranks of companies valued at more than $1 billion without having shipped a single phone. According to The Verge, a $3 million investment from a Foxconn subsidiary revealed that the company was valued at around $1.2 billion. Behind that valuation stood one name: Andy Rubin, one of the co-founders of Android. As early as January 2017, Bloomberg had reported that Rubin was preparing a comeback with a new phone. Rubin founded Essential Products in Palo Alto on 9 November 2015, with funding from Playground Global. On 30 May 2017 the company announced two products at once: the Essential Phone smartphone and the Essential Home speaker, which was to run the home through an operating system called Ambient OS. The Mercury News presented the phone as a rival to the iPhone. In August 2017 Amazon, Tencent and Foxconn were reported to have invested in the company; reports put the round at $300 million. The products, however, fell short of expectations. The phone arrived later than the June timetable first promised and was sold only in the US and Canada. The Essential Home, despite being planned for the end of 2017, never reached the market. In summer 2018 Forbes read the phone going on sale on Amazon as a sign that the company's end was approaching. In May 2018 Essential cancelled its next flagship phone and the company was reported to be up for sale. In December 2018, in The Verge's words, instead of making a new phone it bought a defunct email app: CloudMagic, the owner of Newton. In October 2019 the company unveiled Gem, a slim, voice-controlled phone. It proved to be the last attempt: on 12 February 2020 Essential ceased operations, saying it had no clear path to delivering Gem to customers. Security updates for the Essential Phone stopped, and Newton Mail closed in April 2020. The Essential brand was acquired in February 2021 by Nothing, the company founded by Carl Pei. Essential shows that a famous founder and a big valuation cannot stand in for sales and distribution muscle in a hardware market dominated by giant rivals. ## Lessons - A big-name founder and a billion-dollar valuation are no substitute for distribution and carrier relationships; build your sales channel before your product. - In hardware, if your first product does not sell, raising capital for a second one gets harder; plan the unit economics of your first device realistically from the start. - Losing focus is expensive; resources split between a phone, a smart home device and an email app may not be enough to keep any of them alive. ## Sources - [Essential Products](https://en.wikipedia.org/wiki/Essential_Products) - [Andy Rubin's Start-Up, Essential Products, Shuts Down](https://www.nytimes.com/2020/02/12/technology/andy-rubin-essential-shutdown.html) - [Andy Rubin's Essential is now valued at over a billion dollars without shipping a single phone](https://www.theverge.com/circuitbreaker/2017/8/14/16142772/andy-rubin-essential-phone-valuation-billion-dollars-unicorn-value) - [https://www.wikidata.org/wiki/Q30093000](https://www.wikidata.org/wiki/Q30093000) --- # Glovo Türkiye (2018 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/glovo-turkiye/ - Sector: Logistics and delivery - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? The Spanish delivery start-up Glovo launched in Istanbul in June 2018. Through the app, customers could order restaurant meals, coffee, desserts, groceries, gifts and personal care products, and couriers also carried parcels across the city. After Istanbul, it also operated in Ankara and İzmir. ## Why did it shut down? In January 2020 Glovo announced that it would pull out of Turkey, Egypt, Uruguay and Puerto Rico. The company's reasoning was to direct its resources to regions where it could build leadership and turn a profit in the short term, and to reach global profitability in early 2021. According to a report by Webrazzi, the Turkish tech news site, strong local players in Turkey such as Yemeksepeti, the country's dominant food-ordering platform, and Getir, the Istanbul-based quick-commerce start-up, stood in the way of that goal. Founder and CEO Oscar Pierre said the decision was difficult even though they had been running a successful operation in Turkey. In other words, the problem was less a lack of demand than a prioritisation choice by a company that could see it would not take the lead in a capital-intensive market. ## The story When Spain-based Glovo arrived in Istanbul in June 2018, its promise was bold: food, coffee, groceries or a gift, whatever you wanted in the app, a courier would bring it to your door. In September 2018 its Turkey general manager, Austin Kim, told egirişim, a Turkish start-up news site, that Turkey was an important market for the company and that it would keep growing through investment. The early figures were promising. According to Webrazzi, Glovo reached more than 50,000 downloads, more than 20,000 deliveries and over 300 partners in its first three months. Serving districts stretching from Acıbadem to Maslak and from Kadıköy to Şişli, the company worked with chains such as McDonald's, Burger King and Popeyes. The goal was to cover all of Istanbul first, then Ankara and İzmir. The company achieved part of that goal and began operating in Ankara and İzmir as well. But the delivery market in Turkey was very crowded. Yemeksepeti had dominated food ordering for years, Getir was growing in rapid grocery delivery, and Yemeksepeti's Banabi, İstegelsin and the big supermarket chains were in the field too. Glovo, meanwhile, was locked on to a different goal at global level. Having raised $167 million in a round led by Mubadala in December 2019 and reached a valuation above $1 billion, the company wanted to become profitable in early 2021. On 21 January 2020 Glovo announced that it would pull out of Turkey, along with Egypt, Uruguay and Puerto Rico. The app stayed open for a few more weeks to help couriers, users and partners make the transition. Oscar Pierre said it had been very hard to take this decision in a country like Turkey, where they had been running a successful operation. Nazım Salur, co-founder of Getir, offered jobs to Glovo's employees. The story of Glovo Türkiye shows that even a well-run operation is not enough on its own. Seeing that it could not take the lead in a market like delivery, where scale is everything, the company moved its capital to places where it could win. ## Lessons - In rapid delivery, scale and market leadership determine profitability; being the third player is expensive. - The local arm of a global company is bound to the parent company's profitability timetable; build that into your plan. - Assess local rivals' financial firepower and customer loyalty before entering the market. ## Sources - [Glovo pulls out of several markets, including Turkey (in Turkish)](https://webrazzi.com/2020/01/21/glovo-turkiye-pazardan-cekiliyor/) - [Glovo halts its operations in Turkey (in Turkish)](https://www.haberturk.com/glovo-turkiye-deki-faaliyetlerini-durduruyor-2560817-ekonomi) - [Glovo pulls out of the Turkish market (in Turkish)](https://www.marketingturkiye.com.tr/haberler/glovo-turkiye-pazarindan-cekiliyor/) - [Glovo halts its operations in Turkey (in Turkish)](https://www.bloomberght.com/glovo-turkiye-deki-faaliyetlerini-durduruyor-2244663) - [Three-month figures for Glovo, which launched in Turkey in June (in Turkish)](https://webrazzi.com/2018/09/24/haziranda-turkiyede-hizmete-baslayan-glovonun-3-aylik-verileri/) - [Delivery app Glovo aims to grow in Turkey (in Turkish)](https://egirisim.com/2018/09/24/teslimat-hizmeti-sunan-mobil-uygulama-glovo-turkiyede-buyumeyi-hedefliyor/) --- # Hemen Kiralık (2012 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/hemen-kiralik/ - Sector: Travel - Country: Turkey - Total funding: $3.5 million - Cause of closure: Lost to competitors ## What did it do? Hemen Kiralık (hemenkiralik.com, Turkish for “available to rent now”) was a platform connecting people who wanted to let their home or office by the night, by the day or for short stays with tenants. It charged hosts no commission, earning instead 10 per cent of the rent, and served users in English, German, Russian and Arabic as well as Turkish. It also targeted foreign tourists visiting Turkey. ## Why did it shut down? The company gave no public reason for the closure. According to Webrazzi, the platform officially closed in early 2020 after taking its listings down for a while, and its domain was redirected to Hotels.com, owned by Expedia, the parent company of its investor HomeAway. The start-up had tried to be a home-grown alternative in a market pioneered by Airbnb and also home to global players such as Rocket Internet's Wimdu. Taking investment in 2015 from HomeAway, which could have been seen as a rival, signalled a shift from independent growth towards a strategic partnership. The fact that, after the closure, the domain was pointed to another brand owned by its main investor can be read as a sign that this partnership was not enough to keep the start-up alive. ## The story In January 2012 Webrazzi, the Turkish tech news site, announced the new project of Remi Onur, one of the partners in Peak Games, the Istanbul-based mobile games company: Hemenkiralik.com, a short-term flat rental site. Founded by Remi Onur, Mehmet Ülkü and Alper Kaya, the start-up also counted Rina Onur among its partners. Adapting to Turkey the model led globally by Airbnb, the site set out with 50,000 TL in capital. In its first two months it gathered more than 500 listings from 23 Turkish provinces; there were more than 100 rentals in the first month and nearly 250 in the second. Investors came quickly too. 212 Capital Partners made two rounds of investment in 2012; Teruhide Sato of Japan's Netprice and Fahri Diner of Sigma Partners also joined the second round. In June 2013 a further $2.5 million came in from Hasan Aslanoba and 212, taking total investment to $3.5 million. Publishing in English, German, Russian and Arabic as well, the site targeted tourists visiting Turkey. The market, however, was getting crowded. According to a 2014 round-up by Webrazzi, Wimdu, Rocket Internet's Airbnb clone, was also trying to grab a slice of the same pie as Hemenkiralik.com in Turkey. In 2015 Hemen Kiralık announced that it had received a significant investment from HomeAway, the holiday rental platform owned by Expedia. This strategic partnership did not bring the expected leap. In February 2020 Webrazzi wrote that Hemen Kiralık, which had been taking down the listings on its platform for some time, had officially closed after an eight-year journey. According to the information reported, employees received their severance pay without any problems. The Hemenkiralik.com address, meanwhile, redirected to Hotels.com, another brand owned by HomeAway's parent company, Expedia. Hemen Kiralık was one of the early examples of the sharing economy in Turkey. A fast start, strong investors and a multilingual product were not enough to stay independent in a market home to global giants. ## Lessons - In a market where a global player is being copied, if you do not clearly define your local advantage, the bigger player wins the capital race. - A strategic investor opens doors, but also sets your priorities; discuss your exit scenario from the start. - Tourist traffic is seasonal; growth cannot be sustained without a user base that generates demand all year round. ## Sources - [Short-term flat rental start-up Hemen Kiralık has closed](https://webrazzi.com/2020/02/27/kisa-sureli-daire-kiralama-girisimi-hemen-kiralik-kapandi/) - [Second-Round Investment in Hemenkiralik.com from 212 Capital Partners](https://sosyalmedya.co/212-capital-hemenkiralik/) - [The 15 most-funded start-ups in Turkey](https://egirisim.com/2014/08/20/turkiyede-en-cok-yatirim-alan-15-girisim/) - [HemenKiralik.com: a short-term flat rental site from a Peak Games partner](https://webrazzi.com/2012/01/18/hemenkiralik-com-kisa-donemli-daire-kiralama/) - [Rocket Internet's 4 start-ups active in the Turkish market](https://webrazzi.com/2014/08/11/rocket-internetin-turkiye-pazarinda-aktif-olan-4-girisimi/) --- # Honestbee (2015 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/honestbee/ - Sector: Logistics and delivery - Country: Singapore - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Honestbee was an online grocery and delivery service that relied on personal shoppers who picked up products from supermarkets and speciality shops on customers' behalf and delivered them. Over time the company added services such as food delivery, laundry collection and cinema tickets, and opened a technology-driven physical supermarket in Singapore called habitat. ## Why did it shut down? The company quickly spread across eight markets in Asia and a range of very different services, but could not find the cash to sustain that structure. In early 2019 it began looking for a buyer; in April and May 2019 it suspended its overseas operations and halted its food and laundry services. All the founders left the company during 2019, and it tried to restructure under debt moratorium protection. The COVID-19 pandemic forced the habitat store to close; in March 2020, 80 per cent of staff were laid off and salaries were delayed. Following a creditor's application, a winding-up order was made against the company in July 2020. ## The story When habitat opened in Singapore in October 2018, it was presented as the company's "crown jewel": a technology-driven supermarket and dining space blending online and physical shopping. Two years later the same premises were being used as a delivery hub by rival RedMart. Honestbee was launched in Singapore on 23 July 2015 by Joel Sng, Isaac Tay and Jonathan Low. The model was simple: the customer ordered through the app, and a personal shopper picked up the products from stores such as FairPrice, Tesco or Jones the Grocer and brought them to the door. Backed by venture capital from Asia and the US, the company rapidly expanded into Hong Kong, Taiwan, Thailand, Indonesia, Malaysia, the Philippines and Japan. Laundry collection was added to grocery delivery in 2016, followed by food delivery and cinema ticket sales in 2017. By 2019 the company had 860 employees. In early 2019 talk began that the company's finances were critical; it was alleged to have held acquisition talks with companies such as Grab and Gojek. In April and May 2019 operations in Thailand, the Philippines, Hong Kong, Japan and Indonesia were suspended, food delivery was halted and the laundry service was put on hold. CEO Joel Sng left in May 2019; he was succeeded first by investor Brian Koo and then by Ong Lay Ann. In July 2019 the last remaining founder, Jonathan Low, also left. The company obtained a debt moratorium and tried to restructure. In January 2020 FLK Holdings, led by Koo, invested under a new rescue plan, but the COVID-19 pandemic led to habitat's closure. In March 2020, 80 per cent of staff were laid off and salaries and pension contributions were delayed. In April 2020 a creditor applied to wind up the company, and a winding-up order was made in July 2020. In March 2020 Honestbee had sued former CEO Sng, alleging breaches of fiduciary duty including using company funds to buy private property. In 2023 the liquidator reported having recovered just 720 Singapore dollars from the company. Honestbee shows how rapid geographic expansion and adding a new service every year can pull a delivery company apart. Every new market and service meant a separate operations team and fixed costs; built before the core business turned a profit, that structure had to be dismantled piece by piece once the flow of capital stopped. ## Lessons - Do not expand into new countries and new service verticals before unit economics work in a single city; every new line adds fixed costs. - A glossy physical store does not fix the problems of a digital business; launch projects with large fixed costs while cash flow is positive. - Set up reporting that lets the board regularly scrutinise how investment money is spent. ## Sources - [Honestbee](https://en.wikipedia.org/wiki/Honestbee) - [Grocery delivery startup Honestbee is running out of money and trying to sell](https://techcrunch.com/2019/04/25/time-maybee-running-out-for-honestbee/) - [Honestbee retrenches 80% of staff, delays payment of salaries and CPF contributions](https://www.straitstimes.com/business/companies-markets/honestbee-terminates-80-of-staff-delays-payment-of-salaries-and-cpf) - [Honestbee says suspending some overseas operations, cutting global headcount all part of ongoing review](https://www.straitstimes.com/business/honestbee-says-suspending-some-overseas-operations-cutting-global-headcount-all-part-of) --- # HubHaus (2016 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/hubhaus/ - Sector: Real estate and construction - Country: United States - Total funding: $13.4 million - Cause of closure: Macroeconomic crisis ## What did it do? HubHaus leased large detached houses from homeowners, furnished the shared spaces and sublet the bedrooms one by one to young professionals. It offered tenants services such as cleaning, internet and maintenance tracking through online tools, while promising homeowners a reliable property manager and steady rental income. ## Why did it shut down? The company raised $1.4 million led by General Catalyst in 2017 and a $10 million Series A in March 2018, bringing its total to $13.4 million. The model relied on covering long-term lease commitments to homeowners with fluctuating income from rooms. In 2020 homeowners discovered that, while tenants were paying their rent on time, the company had been cutting its payments to them for months and had stopped paying some bills. Co-founder Shruti Merchant stepped down as CEO in March 2020, and management of the company passed to Diablo Management Group, which handles the assets of distressed companies. In the wind-down that began on 23 September 2020 all employees were let go; the company blamed the pandemic and said there was no money left to pay unsecured creditors, including homeowners and tenants. ## The story HubHaus was founded in 2016 by Shruti Merchant and Kerry Jones. The idea was to offer co-living to young professionals struggling with the high rents of the San Francisco Bay Area. The company leased large detached houses from homeowners on long-term contracts, furnished the shared spaces and sublet the bedrooms one by one. Homeowners were promised a reliable property manager and regular rent; tenants were promised a home where they could make friends, with cleaning and internet included. Investors believed in the idea. HubHaus raised $1.4 million led by General Catalyst in 2017 and a $10 million Series A in March 2018, taking its total capital to $13.4 million. Headquartered in Los Altos, the company leased houses in Los Angeles as well as the Bay Area, opened in Washington in 2019 and reached a few hundred houses. Tenants cited in news reports were paying roughly $1,100 to $1,600 a month per room. The company eventually blamed its closure on the pandemic, but homeowners' accounts suggested the problems had started earlier. While tenants were paying their rent on time, the company had been cutting its payments to homeowners for months and had stopped paying the bills at some houses. Tenants kept paying for a cleaning service that was no longer provided. Merchant stepped down as CEO in March 2020, and the company came under the control of Diablo Management Group, which handles the assets of distressed companies. In the wind-down that began on 23 September 2020, all employees were let go. The company said it could not pay October's rent, suggested that homeowners use tenants' deposits and announced that there was no money left to pay creditors. Hundreds of tenants and homeowners were left in limbo. HubHaus became an example of how fragile co-living models built on rental arbitrage can be at the first serious shock. ## Lessons - In models that take on long-term lease commitments while running on short-term income, write into the contracts from the outset who bears the loss when income falls. - In a business that depends on the trust of two sides, such as homeowners and tenants, quietly cutting payments makes a crisis worse; when you are struggling, communicate early and openly. - In a start-up that grows by leasing physical assets, do not open in new cities without a cash buffer and credit line big enough to see you through a crisis. ## Sources - [Bay Area co-living startup HubHaus implodes, stranding renters and homeowners](https://www.sfchronicle.com/business/article/Bay-Area-co-living-startup-HubHaus-implodes-15617470.php) - [Co-living rental platform HubHaus implodes, claims it has 'no funds to pay unsecured claims'](https://missionlocal.org/2020/09/hubhaus-out-of-business/) - [San Francisco coliving platform HubHaus closes down](https://servicedapartmentnews.com/urban-living-news/san-francisco-coliving-platform-hubhaus-closes-down/) - [Co-living gets more cash as shared housing developer HubHaus raises $1.4 million](https://techcrunch.com/2017/05/22/co-living-gets-more-cash-as-shared-housing-developer-hubhaus-raises-1-4-million) --- # Jet.com (2014 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/jet-com/ - Sector: E-commerce - Country: United States - Total funding: $820 million - Cause of closure: Acquired and shut down ## What did it do? Jet.com was an online retailer that aimed to make customers' baskets cheaper using a real-time pricing algorithm. Choices such as buying more items at once or picking products from the same fulfilment centre were passed on to the customer as discounts, to the extent that they made the order cheaper for the company. The site launched in July 2015 with 4.5 million products. ## Why did it shut down? Jet grew on a model that was willing to lose money for the sake of price advantage, financed by $820 million of venture capital; in a test purchase by The Wall Street Journal, the site lost $242.91 on a single order. In 2016 Walmart bought the company for $3.3 billion, and Marc Lore took charge of Walmart's US e-commerce business. After the acquisition, sales through Jet.com declined; in June 2019 most employees were moved over to Walmart.com and Jet's president stepped down. Walmart announced in May 2020 that it would close the site, and on 4 June 2020 began redirecting visitors to Walmart.com. ## The story In July 2015 The Wall Street Journal made a test purchase from a newly launched online retailer: it paid $275.55 for 12 items. The same items had cost the site $518.46; Jet.com had lost $242.91 on that single order. The site's strategy was to win customers by competing with Amazon on price. Jet's founder, Marc Lore, knew this market well: he had sold Diapers.com to Amazon in November 2010. In Lore's view, existing online retailers served affluent customers who put convenience ahead of price, whereas many shoppers would rather pay less if they were willing to wait a little longer. Lore founded Jet.com in 2014 with Mike Hanrahan and Nate Faust. It took seed funding from Accel; at the heart of the system was a real-time pricing algorithm that calculated the true cost of getting a product to a customer. The original plan was for a $50 annual membership fee to be the only source of profit, with products sold at break-even prices. By February 2015 around 352,000 people had signed up for early membership. The site officially launched in July 2015 with 4.5 million products. In November 2015 it raised $350 million in a round led by Fidelity; in its last round, in May 2016, the company was valued at $1.3 billion. In total it raised $820 million over four rounds from investors including GV, Goldman Sachs, Bain Capital Ventures, Accel, Alibaba Group and Fidelity. On 8 August 2016 Walmart announced it would buy Jet.com for $3.3 billion, $3 billion of it in cash; Lore took charge of Walmart's US e-commerce business. After the acquisition, however, sales through Jet.com declined. In June 2019 most employees were moved over to work on Walmart.com and Jet's president, Simon Belsham, stepped down. On 19 May 2020 Walmart announced it would close the site; from 4 June 2020 visitors to Jet.com were redirected to Walmart.com. Jet.com's story leaves open the question of whether it was a failure or a successful exit. For the founders and investors, a $3.3 billion sale went through; but the brand ended up as a stopover in the buyer's strategy of strengthening its main site. Whether a model that grew on loss-making orders could have survived on its own was never tested. ## Lessons - In an e-commerce start-up that grows on price advantage, track the contribution margin on every order; market share bought at a loss disappears when the capital stops. - Being acquired can be a successful exit, but whether the brand survives depends on the buyer's strategy; discuss this openly during negotiations. - Once the team and technology move to the buyer's main brand, traffic to the standalone site drops quickly; plan that transition in advance. ## Sources - [Jet.com](https://en.wikipedia.org/wiki/Jet.com) - [Walmart winds down Jet.com four years after $3.3 billion acquisition of e-commerce company](https://www.cnbc.com/2020/05/19/walmart-winds-down-jetcom-four-years-after-3point3-billion-acquisition.html) - [Jet's president will step down as Walmart overhauls the site it acquired for $3.3 billion](https://www.businessinsider.com/walmart-overhauls-jet-president-will-step-down-2019-6) - [Behind the Numbers of Jet.com's Audacious Plan to Attack Amazon](https://blogs.wsj.com/digits/2015/07/20/behind-the-numbers-of-jet-coms-audacious-plan-to-attack-amazon/) --- # ofo (2014 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/ofo/ - Sector: Mobility and transport - Country: China - Total funding: $2.1 billion - Cause of closure: Ran out of cash ## What did it do? ofo was a Beijing-based dockless bike-sharing company. Users found and unlocked a nearby bike with a smartphone app and, after their ride, could leave it anywhere and lock it. The company charged by the hour and used yellow bikes that reported their location via satellite. ## Why did it shut down? A model built on fleet size created permanently high operating costs and a constant need for fresh capital. The chance to merge with Mobike slipped away and acquisition talks with Didi came to nothing; after Mobike received a $2.7 billion investment from Meituan-Dianping, ofo began shrinking at home and abroad. Operations in many countries closed, 70 per cent of US staff were laid off and its operating licence in Singapore was suspended. By 2020, facing a debt burden too large to repay, the company was no longer renting out bikes. ## The story ofo, named after three letters that look like a person riding a bicycle when written side by side, was founded in 2014 by five members of the Peking University cycling club. The first idea was cycling tourism; the team soon turned to dockless bike sharing. The service launched in Beijing in June 2015 and, with investment from a university graduate, reached 20,000 users and 2,000 bikes by October. After that, the capital race among China's tech giants drove ofo's growth at an extraordinary pace. In September 2016 came $130 million from Xiaomi and Didi Chuxing; in February 2017, $450 million at a $1 billion valuation in a round led by Didi and Digital Sky Technologies; in July 2017, $700 million led by Alibaba, Hony Capital and CITIC PE; and in March 2018, $866 million, again led by Alibaba. In 2017 the company reached more than 10 million bikes in 250 cities across 20 countries and over 62.7 million monthly active users; its valuation climbed as high as $2 billion. Singapore, Cambridge, Seattle and Sydney were launched in quick succession. But the model meant permanently high operating costs and an endless need for capital. The chance to merge with Mobike slipped away, and acquisition talks with Didi came to nothing. When Mobike received a $2.7 billion investment from Meituan-Dianping, ofo began shrinking to survive. Amid the cash crunch, where 5 million bikes a year had been expected, only 80,000 could be ordered. Operations in Australia, Germany, India, Israel, Spain and Thailand closed entirely; 70 per cent of US staff were laid off. In August 2018, while Didi and Ant Financial were reportedly weighing a joint acquisition, founder Dai Wei was quoted as saying he would refuse even a $10 billion offer. In December 2018 the company was reported to have considered filing for bankruptcy several times because of cash-flow problems. In January 2019 the international unit was disbanded; former employees said operations in Singapore had “effectively stopped” because no staff were left, and the country's Land Transport Authority suspended ofo's licence. By 2020, facing a debt burden too large to repay, ofo was no longer renting out bikes. The lesson of ofo is that market share bought with capital is not permanent. In a model built on physical assets, every new city means a new maintenance and collection burden; expansion before the unit economics work catches the company at its most vulnerable moment, when the capital tap is turned off. ## Lessons - In sharing models built on physical assets, measure growth not by the number of bikes or vehicles but by daily usage and maintenance cost per asset. - Do not turn down acquisition or merger offers that arrive while capital is plentiful on the assumption that the next round will always come. - Before entering a new country, set aside the team and budget to meet local regulatory requirements; losing a licence can close a market overnight. ## Sources - [Ofo (company)](https://en.wikipedia.org/wiki/Ofo_(company)) - [ofo, Chinese bike-sharing firm, raises $450 million in latest funding round](https://www.reuters.com/article/us-china-ofo-fundraising/ofo-chinese-bike-sharing-firm-raises-450-million-in-latest-funding-round-idUSKBN1683C9) - [Chinese bike-sharing firm Ofo raises $866 million led by Alibaba](https://www.cnbc.com/2018/03/13/chinese-bike-sharing-firm-ofo-raises-866-million-led-by-alibaba.html) - [Chinese Bike-Share Startup Ofo Lays Off Majority Of US Staff As It Scales Back Global Ambitions](https://www.forbes.com/sites/bizcarson/2018/07/18/ofo-bikes-us/) --- # OtoParlat (2018 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/otoparlat/ - Sector: Mobility and transport - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? OtoParlat was an Istanbul service that, on receiving an order through its mobile app or website, went to the customer's location and cleaned the car without using water. The customer chose the service, the vehicle, the location and the time, and for standard cleans a cleaning professional was dispatched. The start-up said it saved an average of 90 litres of water per car. ## Why did it shut down? As founder Akif Can Tuncel told egirişim, the start-up began with 400,000 lira raised from people around him and over time raised a further 170,000 lira. Together with revenue of close to 200,000 lira, OtoParlat spent more than 700,000 lira; in June 2020 egirişim reported that operations had ended in recent months. As early as 2019 egirişim had written that the start-up faced challenges such as the difficulty of creating a new market and competition from traditional car washes. No information was published to show that plans to move to a marketplace model and expand to other big cities had been put into practice. The fact that the service was delivered in the field by human labour can be read as a structure that kept the cost of every order high (interpretation). ## The story OtoParlat was a mobile car-wash start-up that Akif Can Tuncel launched in Istanbul in 2018. The idea was simple: the customer chose the service, the vehicle, the location and the time in the app, and a cleaning professional came to wherever the car was and cleaned it without using water. The start-up said it used a product that was 80 per cent organic and saved an average of 90 litres of water per car. Tuncel started out with financial backing from nine friends. The first sale came in June 2018, the month the company was founded; the mobile app went live in the autumn. OtoParlat was one of 12 start-ups selected for the fourth cohort of the Workup Entrepreneurship Programme, whose main backer is İş Bankası. As Webrazzi reported in March 2019, the app had been downloaded 5,450 times and 20 per cent of users bought a service. Prices ranged from 35 to 60 TL, and payments were taken online only. In May 2019 egirişim wrote that there were 6,200 registered users on the system and that the number of orders was growing by 50 per cent every month. The plans were big: move to a marketplace model, expand to Turkey's other big cities in 2020 and abroad in 2021. In the same article, however, egirişim noted that a tough market lay ahead and that, besides the difficulties of creating a new market, the start-up would also have to compete with traditional car washes. In June 2020 egirişim reported that Tuncel had ended OtoParlat's operations in recent months and was focusing on a new venture. The figures Tuncel shared summed up the financial side of the story: the start-up had begun with 400,000 lira raised from people around him and had raised a further 170,000 lira over time. Together with revenue of close to 200,000 lira, OtoParlat had spent more than 700,000 lira in total. OtoParlat's story is a reminder of how decisive unit economics are in a model where the service can only be delivered by a field team. Even while demand grows, the labour and logistics cost of fulfilling every order can quickly exhaust a start-up built on limited capital. ## Lessons - In a service delivered by a field team, prove profitability per order before you grow. - Measure your burn rate early; limited capital raised from people around you cannot wait for investment that is slow to arrive. - If you are trying to create a new habit, build the cost of educating the market into your plan. ## Sources - [The failure story of OtoParlat, which cleaned your car where it stood without water and burned through 700,000 TL](https://egirisim.com/2020/06/29/su-kullanmadan-aracinizi-bulundugu-yerde-temizleyen-otoparlatin-700-bin-tl-yaktigi-batis-hikayesi/) - [Online car-wash service: OtoParlat](https://webrazzi.com/2019/03/27/online-oto-yikama-servisi-otoparlat/) - [OtoParlat: the start-up that cleans your car where it stands, without water](https://egirisim.com/2019/05/07/otoparlat-su-kullanmadan-aracinizi-bulundugu-yerde-temizleyen-girisim/) --- # Proteus Digital Health (2001 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/proteus/ - Sector: Health - Country: United States - Total funding: $500 million - Cause of closure: Business model failed ## What did it do? Proteus Digital Health was a Redwood City-based digital medicine company that tracked whether patients took their medication using ingestible sensors embedded in pills. Sensor data reached a mobile device and the doctor via a patch worn on the body. Abilify MyCite, developed with Otsuka, became the first drug with a sensor to win FDA approval, in 2017. ## Why did it shut down? The system was expensive and cumbersome to use; insurers and patients were not persuaded to cover the extra cost, and no strong evidence could be offered that the product improved adherence. A USD 100 million funding round expected at the end of 2019 did not close, and the company put its staff on two weeks' leave. In January 2020, when its licensing agreement with Otsuka ended early, a major source of revenue disappeared. The company filed for bankruptcy in June 2020, and its assets were sold to Otsuka in August for USD 15 million. ## The story In November 2017 the US Food and Drug Administration (FDA) approved the first drug with an embedded sensor. Otsuka's antipsychotic Abilify had been combined with an ingestible sensor developed by Proteus Digital Health and named Abilify MyCite. When the patient swallowed the pill, the sensor's signal was relayed to a mobile device via a patch worn on the body. With the patient's consent, the doctor would be able to see whether the medication had actually been taken. Redwood City-based Proteus had been founded in 2001 and, under co-founder and chief executive Andrew Thompson, rested on the thesis that medicines not being taken as prescribed cost the health system between USD 100 billion and USD 300 billion a year. The company raised around USD 500 million from investors, including pharmaceutical giants such as Novartis and Otsuka, and reached a USD 1.5 billion valuation. In 2019 it moved into oncology, launching a digital medicine version for chemotherapy patients. In practice the system was complex and expensive. Abilify MyCite was reported to cost around USD 1,650, at least twice the price of the branded drug; patients had to wear a patch constantly, and insurers were not persuaded of why they should pay extra. Some psychiatrists voiced hesitation about prescribing a tracked antipsychotic to schizophrenia patients, who may fear being watched. At the end of 2019 the company failed to close the USD 100 million round it had been counting on and put its staff on two weeks' compulsory leave. In January 2020 its licensing agreement with Otsuka ended early, and a major source of revenue disappeared too. In June 2020 Proteus filed for Chapter 11 bankruptcy. Its headcount, around 300 a year earlier, had fallen to 93. In August 2020 the bankruptcy court in Delaware approved the sale of the company's assets to Otsuka for USD 15 million, despite objections from a group of investors that included Novartis; Otsuka had been the only bidder. Proteus became an expensive lesson that a technically ground-breaking product cannot turn into commercial success without winning over both the patient's daily experience and the payer's calculations. ## Lessons - Even if your technology is medically feasible, if it requires patients to wear an extra device every day, measure usage rates separately in pilots. - Start gathering the health economics data that shows payers your product saves money before it goes to market. - Do not tie your revenue to a single pharmaceutical partnership; the moment that partner pulls out, the company runs out of air. ## Sources - [Smart pill maker Proteus files for bankruptcy, reveals it has held acquisition talks with Otsuka](https://www.statnews.com/2020/06/16/proteus-files-bankruptcy-otsuka/) - [Proteus files for bankruptcy: Where did it falter?](https://medcitynews.com/2020/06/proteus-files-for-bankruptcy-where-did-it-falter/) - [Otsuka approved to buy bankrupt smart-pill maker Proteus’ assets, overcoming opposition from Novartis](https://www.statnews.com/2020/08/19/otsuka-approved-proteus-sale-abilify-mycite/) - [Proteus Digital Health CEO talks about significance of FDA’s digital pill approval](https://medcitynews.com/2017/11/proteus-digital-health-ceo-on-fda-approval/) --- # Quibi (2018 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/quibi/ - Sector: Media and entertainment - Country: United States - Total funding: $1.8 billion - Cause of closure: No market need ## What did it do? Quibi was a paid streaming platform offering series, films and news programmes made up of short episodes designed to be watched only on mobile devices. The company commissioned its content from well-known Hollywood producers and actors, and in its first year spent more than a billion dollars on over 175 programmes. ## Why did it shut down? The launch in April 2020 coincided with the period when the COVID-19 pandemic upended daily routines; Katzenberg blamed the problems on the pandemic. Downloads did not convert into paid subscriptions as hoped; the service was on course for 2 million subscribers, far below the 7.4 million projected for its first year. Features such as sharing and watching on a television were added only later. When efforts to find a buyer came to nothing, the company decided in October 2020 to shut down, and the service ended in December 2020. ## The story $1.75 billion. That is how much a short-video service raised before its first episode went live and in the months that followed. Quibi described its content as “quick bites” and was the brainchild of Jeffrey Katzenberg. The company was founded in Los Angeles in August 2018 under the name NewTV, with Meg Whitman as CEO. That same year it raised $1 billion from studios such as Disney, 21st Century Fox, NBCUniversal, Sony Pictures, WarnerMedia and Viacom, banks such as Goldman Sachs and JPMorgan Chase, and technology companies such as Alibaba Group. At the end of 2019 it announced that its $150 million of first-year advertising inventory had sold out. In its first year Quibi spent more than a billion dollars on 8,500 short episodes across more than 175 programmes. The service launched in April 2020, just as the COVID-19 pandemic was upending daily routines. The first week brought 1.7 million downloads, but that interest did not turn into subscribers. Katzenberg admitted that performance was not what they had wanted and attributed all of the problems to the coronavirus. A sharing feature and the option to watch on a television were added later. By mid-June a further $750 million had been raised, but the service was on course for around 2 million subscribers, far short of the 7.4 million projected for its first year. In September 2020 reports emerged that the company was looking for a buyer. On 21 October 2020, just six months after launch, The Wall Street Journal reported that the service would shut down. In an interview with Deadline Hollywood, Katzenberg said that carrying on “would not produce a different result” and would only mean spending far more money without creating value. When the decision was announced, Quibi had around 500,000 subscribers. The service closed in December 2020. In January 2021 Roku bought the content library for less than $100 million and streamed the shows as Roku Originals. Quibi is perhaps the most expensive example of how capital and star names cannot stand in for user demand. The product was built around short episodes to be watched only on a phone; features users were used to, such as sharing and watching on a television, could only be added later. The billions spent before demand had been tested on a small scale did not come back when there were not enough subscribers willing to pay. ## Lessons - A big budget does not change user behaviour; if you are proposing a new viewing habit, measure demand with a small pilot first. - If you tie your product to a single moment of use (such as a short commute), plan for what happens when that moment disappears. - Offer the sharing and screen features users are used to at launch, rather than adding them later. ## Sources - [Quibi](https://en.wikipedia.org/wiki/Quibi) - [Quibi's Jeffrey Katzenberg & Meg Whitman Detail "Clear-Eyed" Decision To Shut It Down & What's Next](https://deadline.com/2020/10/quibi-shuts-down-jeffrey-katzenberg-meg-whitman-interview-exclusive-1234601254/) - [Quibi Is Officially Dead](https://variety.com/2020/digital/news/quibi-officially-shuts-down-1234842926/) - [Roku Acquires Global Rights to 75-Plus Quibi Shows, Will Stream Them for Free](https://variety.com/2021/digital/news/roku-acquires-quibi-shows-free-streaming-1234881238/) - [https://www.wikidata.org/wiki/Q65073105](https://www.wikidata.org/wiki/Q65073105) --- # ScaleFactor (2014 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/scalefactor/ - Sector: Fintech - Country: United States - Total funding: $100 million - Cause of closure: Product problems ## What did it do? ScaleFactor was Austin-based cloud software that promised to automate bookkeeping and payroll for small businesses. By integrating with point-of-sale systems, bank accounts, credit cards and invoicing tools, it aimed to bring record-keeping and financial analysis together in one place. ## Why did it shut down? Founded in 2014 by Kurt Rathmann, the company raised $10 million in July 2018 in a round led by Canaan Partners, following a $2.5 million seed round. According to Forbes, ScaleFactor then attracted $100 million of investment within roughly a year. According to a Forbes investigation from July 2020, based on interviews with 15 former employees and executives, the system marketed as SI produced unpredictable errors, and even the accountants the company hired externally could not keep up with the corrections. The same investigation alleged that the company resorted to aggressive sales tactics, chased capital instead of building software, and that executives tried to hide the scale of the damage as customers left. The company shut down in June 2020; CEO Rathmann attributed the closure to financial strain caused by the pandemic. ## The story ScaleFactor was founded in Austin in 2014 by Kurt Rathmann. The company's promise was to automate bookkeeping and payroll, two of the jobs small businesses like least. The software would connect to point-of-sale systems, bank accounts, credit cards and invoicing tools, keep the books by itself and give business owners a complete picture of their financial health. The company also planned to expand into lending and payment services in future. Investors quickly bought into the promise. After a $2.5 million seed round that included Techstars Ventures and NextCoast Ventures, a $10 million Series A followed in July 2018, led by Canaan Partners with Citi Ventures and Broadhaven Capital taking part. According to Forbes, over roughly the next year the company took the investment it had raised to $100 million; its investors also included Bessemer Venture Partners. The growth on paper did not match the product in the field. According to a Forbes investigation in July 2020, based on interviews with 15 former employees and executives, the system presented as SI produced unpredictable errors, and even the accountants the company hired externally could not keep up with the corrections. The investigation alleged that the company resorted to aggressive sales tactics, chased capital instead of building good software, and that executives tried to hide the scale of the damage as customers left. ScaleFactor shut down in June 2020. In an interview with Forbes, CEO Rathmann attributed the closure to financial strain caused by the pandemic, but some former customers and employees disputed that account. ScaleFactor's story became a striking example of how, when human labour is hidden behind a promise of automation, rapid growth magnifies problems rather than solving them. ## Lessons - If a product that promises automation relies on human labour behind the scenes, write that cost explicitly into your unit economics; otherwise losses grow as you grow. - In fields with low tolerance for error, such as accounting, putting sales speed ahead of product accuracy creates an inevitable wave of customer losses. - A large investment raised in a short time does not cover unsolved product problems; hiding churn data from investors and the team only postpones the crisis. ## Sources - [Taking the pain out of accounting and payroll for small businesses, ScaleFactor raises $10 million](https://techcrunch.com/2018/07/24/taking-the-pain-out-of-accounting-and-payroll-for-small-businesses-scalefactor-raises-10-million/) - [ScaleFactor Raised $100 Million In A Year Then Blamed Covid-19 For Its Demise. Employees Say It Had Much Bigger Problems.](https://www.forbes.com/sites/davidjeans/2020/07/20/scalefactor-raised-100-million-in-a-year-then-blamed-covid-19-for-its-demise-employees-say-it-had-much-bigger-problems/) - [483 Startup Failure Post-Mortems](https://www.cbinsights.com/research/startup-failure-post-mortem/) - [ScaleFactor company profile](https://www.cbinsights.com/company/scalefactor) --- # Smopin (? – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/smopin/ - Sector: Social media - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Smopin was a Turkish mobile chat app that matched people who wanted to talk about the same subject. Users logged in with their Facebook account, chose a category such as music and a short topic, then swiped through others who had picked the same topic, Tinder-style, and sent chat requests. The app was aimed at people who did not want to appear on dating apps and were simply looking for good conversation. ## Why did it shut down? According to a 2018 Webrazzi report, Smopin was completely free, and introducing a membership system and reaching a global audience were among its goals. In an interview with egirişim the same year, co-founder Emir Emanetoğlu said that one of the hardest parts of entrepreneurship was building a good team. According to an egirişim report from March 2020, although the app had reached 500,000 monthly active users, the team did not achieve the results it wanted and decided not to drag the venture out any longer. The sources contain no information that a revenue model was ever put into practice, which suggests that user growth did not turn into revenue (interpretation). ## The story Smopin grew out of how hard it is, amid the noise of social media, to find someone to have a real conversation with about a particular topic. Founded by Emir Emanetoğlu, Gökhan Çınar, Tuna B. Urut, Ali Can Demiralp and Alp D. Urut, the app brought together strangers who wanted to talk about the same thing. Users logged in with their Facebook account, chose a category and wrote a short note; if, for example, you wrote concerts under the music category, people looking to chat about the same subject would be listed. The interface was borrowed from the popular dating apps of the day. You swiped left to pass over someone you were not interested in and waved at someone who caught your eye to send a chat request. The target audience, however, was not people looking for dates but those looking for friendship, recommendations or good conversation. According to a Webrazzi report from April 2018, when the app was presented at the Webrazzi Dijital conference, Smopin had 25,000 users, 2,500 new users were joining every week and 50,000 messages were being sent a week. The app was completely free; the team aimed to reach more users, introduce a membership system and open up to a global audience. Speaking to egirişim around the same time, Emanetoğlu said the hardest part of entrepreneurship was building a good team. The app kept growing and, as egirişim reported, reached as many as 500,000 monthly active users. But that figure was not the success the team was looking for. In March 2020 egirişim announced that Smopin, which had been running for about three years, had ceased operations. Telling the story of the closure, Emanetoğlu stressed that success depends on how you define it. When the team did not achieve the results it wanted, it decided not to drag the venture out any longer. Smopin's story is a reminder that a user count that looks impressive on paper does not keep a company alive on its own. The sources contain no information that the app ever put a revenue model into practice. For free social apps, when the bridge between growth and making money cannot be built, sometimes the most honest option for founders is to close. ## Lessons - User numbers are not success; define from the start the metric by which you will measure success. - Putting off a revenue model in a free social app means costs grow along with the growth. - If the results are not coming, closing the venture in good time rather than dragging it out is also a decision. ## Sources - [The closure story of Smopin, the app that matched people who wanted to talk about a shared topic](https://egirisim.com/2020/03/30/ortak-konuda-konusmak-isteyenleri-eslestiren-uygulama-smopinin-kapanis-hikayesi/) - [The app that brings together people who want to talk about similar topics: Smopin](https://webrazzi.com/2018/04/11/benzer-konularda-konusmak-isteyen-kisileri-bulusturan-uygulama-smopin/) - [Emir Emanetoğlu, Smopin: "The biggest challenge is finding a good team"](https://egirisim.com/2018/03/14/emir-emanetoglu-smopin-en-buyuk-zorluk-iyi-bir-takim-bulmak/) --- # Starsky Robotics (2016 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/starsky-robotics/ - Sector: Mobility and transport - Country: United States - Total funding: $21.5 million - Cause of closure: Bad timing ## What did it do? Starsky Robotics developed a hybrid driverless lorry system that combined autonomous driving on the motorway with remote human control for tricky manoeuvres and for the first and last miles. Experienced lorry drivers managed the vehicles remotely from an office rather than from the cab. The company became known as the first start-up to test a lorry with nobody in the cab on a public road. ## Why did it shut down? After its 2018 Series A the company could not find new funding. According to a former executive speaking to FreightWaves, a key investor pulled out of a new round at the last minute in November 2019, and the cash problems began. That same month more than 85 per cent of staff were laid off and the lorry fleet set up to finance the autonomy work was shut down. Sale talks with competitors also came to nothing. Co-founder Seltz-Axmacher attributed the closure to waning investor interest in autonomous vehicles, high capital requirements and slower-than-expected technical progress across the industry. ## The story In June 2019 a lorry covered a 9.4-mile stretch of public motorway with not a single person in its cab. The first and last few hundred metres of the journey were driven remotely by an operator sitting 200 miles away in Jacksonville, Florida. With this run, Starsky Robotics went on record as the start-up that carried out the first unmanned public-road test of a driverless lorry. The company was founded in San Francisco in 2016 by Stefan Seltz-Axmacher and Kartik Tiwari. Its approach differed from its rivals': the lorry would drive itself on the motorway, while complex manoeuvres and the first and last miles would be handled remotely by experienced drivers sitting in an office. Seltz-Axmacher had told FreightWaves that he did not believe a supercomputer could be smarter than a lorry driver. In 2017 it raised $5 million from Y Combinator, Sam Altman, Trucks VC and Data Collective, followed in March 2018 by a $16.5 million Series A led by Shasta Ventures. To fund its technology the company also hauled freight with its own lorry fleet, and in 2019 it worked with the digital freight broker Loadsmart on fully autonomous shipments in Texas. The break came in November 2019. According to former senior executive Paul Schlegel, speaking to FreightWaves, a key investor pulled out of a new round at the last minute. That same month more than 85 per cent of staff were laid off and the lorry fleet was shut down; investors had been worried about the financial sustainability of the haulage arm. An internal memo in mid-December said the money would last only until the end of January. Sale talks were held with rivals such as Embark, Cruise, Waymo and TuSimple, but no buyer emerged. By March 2020 the company had sold its remaining assets, including its patents on remote vehicle operation. Seltz-Axmacher announced the closure in a widely read post on Medium. He attributed it to waning investor interest in autonomous vehicles, the sector's high capital requirements and technical progress that was slower than expected across the whole industry. Starsky became an often-cited example of the mismatch between deep-tech development timelines and venture capital cycles. The lesson of this story is that a correct thesis also has to be funded at the right time. If the appetite for capital fades before the technology is ready, even the most original approach cannot make it to the next round. ## Lessons - If you are building deep tech, set your product timeline against venture capital cycles; keep enough cash on hand to survive a single delayed round. - Do not plan a round that hinges on one investor's decision; keep parallel conversations going in case of a last-minute withdrawal. - A side business set up to fund the core technology adds to the burden if it is not profitable in its own right; measure this early. ## Sources - [Starsky Robotics](https://en.wikipedia.org/wiki/Starsky_Robotics) - [Starsky Robotics Downsizes](https://www.freightwaves.com/news/exclusive-mass-layoffs-reported-after-starsky-robotics-fails-to-find-buyer-investors) - [Starsky Robotics raises a $16.5 million Series A for its self-driving trucks](https://techcrunch.com/2018/03/08/starsky-robotics-raises-a-16-5-million-series-a-for-its-self-driving-trucks/) - [Starsky Robotics Unleashes Its Truly Driverless Truck in Florida](https://www.wired.com/story/starsky-robotics-truck-self-driving-florida-test/) - [https://www.wikidata.org/wiki/Q48970715](https://www.wikidata.org/wiki/Q48970715) --- # Wirecard (1999 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/wirecard/ - Sector: Fintech - Country: Germany - Total funding: unknown - Cause of closure: Fraud ## What did it do? Wirecard was a German payments company that processed card payments for online merchants, issued physical and virtual cards and offered risk-management services. Listed on the Frankfurt Stock Exchange, it joined the DAX, Germany's benchmark index, in September 2018. It operated through numerous subsidiaries across Asia, the Americas and Europe. ## Why did it shut down? For years the company's accounting was questioned by Financial Times reporting, short sellers' reports and whistleblower documents; Wirecard denied the allegations and took legal action against its critics. In June 2020, following a review by its auditor Ernst & Young, the company announced that €1.9 billion was missing, and a few days later the management board admitted the money most likely had never existed. The shares fell by more than 72 per cent, CEO Markus Braun resigned and on 25 June 2020 the company filed for insolvency on the grounds of over-indebtedness. The core business was sold to Santander in November 2020 for €100 million. Braun was charged with fraud in March 2022; he denies the charges. ## The story On 18 June 2020 Wirecard made one of the gravest announcements a member of Germany's benchmark DAX index could make: following a review by its auditor Ernst & Young, €1.9 billion in cash on its books was missing. A few days later the management board admitted the money most likely had never existed. Two banks in the Philippines, where the funds were supposedly held, had already said they never held any such sum. Wirecard was founded in 1999 as a company processing credit card payments for online merchants. In 2002, when it was on the verge of closing at the end of the dotcom bubble, Markus Braun put capital into the business and became CEO. Over the following years it grew through acquisitions and subsidiaries stretching from Singapore to Brazil and from the US to Turkey. In 2018 it reached $125 billion in transaction volume; that same year it replaced Commerzbank in the DAX, and at its peak its market value reached €24 billion. Yet the questions had been there for years. From 2015 the Financial Times published articles challenging the company's accounting; the Zatarra Report in 2016 set out allegations of fraud and money laundering. At Wirecard's insistence, BaFin and Bavarian prosecutors investigated short sellers on suspicion of market manipulation; after the FT's reports in January 2019, BaFin banned short selling of Wirecard shares for two months. The whistleblower who supplied the FT with documents was Pav Gill, a legal counsel in Singapore. The company filed for insolvency on 25 June 2020 on the grounds of over-indebtedness and sold its core business to Santander in November 2020 for €100 million. Braun was arrested in June 2020. In March 2022 Munich prosecutors charged him with fraud, breach of trust and accounting manipulation; at the trial that began in December 2022 Braun denies the charges, and the case continues. Former chief operating officer Jan Marsalek is a fugitive and on Europe's most-wanted list. In Singapore, courts sentenced two former finance executives in June 2023, and in January 2026 two people linked to €1.1 billion of fake balance confirmations issued for Wirecard, for falsification of accounts, to 10 and 6.5 years in prison respectively. Wirecard was a case in which a growth story and the perception of a national champion stood in for scrutiny. While the regulator investigated the critics, the company's own figures went largely unquestioned. ## Lessons - If a significant share of a fast-growing company's cash sits in third-party escrow accounts, do not trust the figures until those accounts have been confirmed directly with the bank. - Answering critical reporting and whistleblowers with legal pressure does not solve the problem; deepen internal audit with an independent team. - As a partner or customer, remember that a regulator shielding a company does not mean that company's numbers are right; do your own due diligence. ## Sources - [Wirecard](https://en.wikipedia.org/wiki/Wirecard) - [Wirecard: Scandal-hit firm files for insolvency](https://www.bbc.co.uk/news/business-53176003) - [Former Wirecard chief executive charged with fraud](https://www.ft.com/content/c0bcaaab-546a-4e37-861e-2a29f28e1998) - [Wirecard trial of executives opens in German fraud scandal](https://www.bbc.com/news/world-europe-63893933) - [https://www.wikidata.org/wiki/Q587325](https://www.wikidata.org/wiki/Q587325) --- # Wunderlist (2010 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/wunderlist/ - Sector: Consumer apps - Country: Germany - Total funding: $23.9 million - Cause of closure: Acquired and shut down ## What did it do? Wunderlist was a cloud-based to-do list app that let users create and manage task lists from their phone, tablet, computer and smartwatch. Basic use was free; extra features for teamwork were offered in a paid version called Wunderlist Pro. The app was developed by the Berlin start-up 6Wunderkinder. ## Why did it shut down? Microsoft bought 6Wunderkinder in June 2015. In April 2017 Microsoft To Do, developed by the Wunderlist team and integrated with Office 365, was unveiled, and it was announced that Wunderlist would eventually be shut down. Because To Do's infrastructure was rewritten to run on Microsoft Azure instead of Amazon Web Services, the transition took years. In December 2019 Microsoft announced that it would close Wunderlist on 6 May 2020. ## The story In September 2019 Christian Reber put an unusual question on Twitter to Microsoft-affiliated accounts: could he buy back the app he had founded? The question stemmed from his frustration at the uncertainty over the future of Wunderlist, which he had sold four years earlier. The story began in 2009, when Reber went looking for a partner for a new to-do app through the business networking platform XING. Frank Thelen answered the call, and the pair developed the first concept together. The Berlin start-up 6Wunderkinder released the first version of Wunderlist for desktop on 9 November 2010. In December 2010 High-Tech Gründerfonds invested EUR 500,000, and in November 2011 Atomico invested USD 4.2 million. The iPhone version arrived in December 2011. For a while the company tried a second product called Wunderkit, but in September 2012 it shut it down and put all its energy into Wunderlist. The focus paid off. Wunderlist 2 was released in December 2012, and the paid Pro version arrived in April 2013. In September 2013 the number of users passed 5 million, and in November 2013 a USD 19 million Series B led by Sequoia Capital was raised. After Wunderlist 3 arrived with its real-time sync architecture, users reached 10 million in December 2014. The app made Apple's and Google's best-of-the-year lists. On 1 June 2015 Microsoft announced that it had bought 6Wunderkinder; the price was reported to be between USD 100 million and USD 200 million. At the time Wunderlist had more than 13 million users. In April 2017 Microsoft unveiled To Do, developed by the Wunderlist team and integrated with Office 365, and announced that Wunderlist would eventually be shut down. Because To Do's infrastructure had to be rewritten from scratch on Microsoft Azure instead of Amazon Web Services, even in January 2019 it had not matched all of Wunderlist's features. Reber's bid to buy it back came to nothing; in December 2019 Microsoft announced that it would close Wunderlist on 6 May 2020. Users were able to transfer their content to To Do. Wunderlist's story is a reminder that a successful exit can be the end of the product. Reber and his team returned in early 2024 with a new app called Superlist; the product users had loved, meanwhile, disappeared while being rewritten to fit the buyer's own ecosystem. ## Lessons - When selling to a big company, discuss in the deal how long the product will live and how users will be migrated. - When replacing a much-loved product with a new one, do not announce a shutdown date before the new one has matched the old one's core features. - In a free productivity app, design the move to a paid version early and clearly; user numbers alone do not keep you independent. ## Sources - [Wunderlist](https://en.wikipedia.org/wiki/Wunderlist) - [Microsoft to finally shut down to-do list app Wunderlist on May 6, 2020](https://techcrunch.com/2019/12/09/microsoft-to-finally-shut-down-to-do-list-app-wunderlist-on-may-6-2020/) - [Microsoft confirms acquisition of Wunderlist app maker 6Wunderkinder](https://venturebeat.com/2015/06/02/microsoft-confirms-its-acquisition-of-wunderlist-app-maker-6wunderkinder/) - [Wunderlist founder wants to buy his app back from Microsoft](https://venturebeat.com/2019/09/06/wunderlist-founder-wants-to-buy-his-app-back-from-microsoft/) --- # Xinja (2017 – 2020) - URL: https://girisimcikafasi.com/en/startup-graveyard/xinja/ - Sector: Fintech - Country: Australia - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Xinja was an Australian digital bank with no branches that ran entirely through a mobile app. The second Australian neobank to obtain a full banking licence, it offered a transaction account and a high-interest savings account called Stash. ## Why did it shut down? When Xinja opened its accounts in January 2020, it paid 2.25 per cent interest on its Stash savings account and gathered AUD 100 million in deposits in the first three weeks. But the bank had no lending product to put that money to work; it was paying more than 7 million dollars a year in interest without generating any matching income. The rate was cut repeatedly, down to 1.5 per cent, and the cap on interest-earning balances was lowered from 150,000 dollars to 50,000 dollars. An AUD 433 million investment from Dubai-based World Investments, announced in March 2020, did not arrive as expected because of the pandemic and foreign ownership limits. In December 2020 Xinja announced it was exiting banking, and APRA cancelled its licence on 26 February 2021. ## The story When Eric Wilson founded Xinja in Sydney in 2017, it was a fintech offering prepaid cards and a money management app. After a crowdfunding campaign in 2018, the ambition grew: Xinja wanted to become a real bank. On 9 September 2019 it obtained a full banking licence from APRA, the Australian Prudential Regulation Authority, becoming the second Australian neobank to do so. Accounts opened in January 2020. The Stash savings account offered 2.25 per cent interest, which drew AUD 100 million into accounts in the first three weeks. In March 2020 it was announced that Dubai-based World Investments would invest AUD 433 million spread over two years. Xinja was also preparing Dabble, a product for trading US shares. But there was a gap at the heart of the model: the bank did not lend. It was paying more than 7 million dollars a year in interest on deposits gathered at high rates, without earning any matching income. The rate was cut repeatedly, down to 1.5 per cent, and the cap on interest-earning balances was lowered from 150,000 dollars to 50,000 dollars. The money expected from Dubai, meanwhile, was delayed by the pandemic and foreign ownership limits. The launch of Dabble was also postponed while it awaited regulatory approval. On 16 December 2020 Xinja announced that it would exit banking. CEO Wilson said that, because of COVID-19 and an increasingly difficult capital environment, giving up being a bank was the right step. More than AUD 252 million in deposits belonging to 37,884 customers was returned quickly, and the remaining accounts were transferred to NAB. APRA cancelled Xinja's licence on 26 February 2021. A group of shareholders objected, saying the decision to cancel had been taken without consulting them. Xinja's story shows how quickly gathering customers without a revenue engine runs out of road in banking. ## Lessons - If a bank starts marketing deposits before it has a lending product ready to put them to work, every new customer deepens the loss; sequence your products around your revenue stream. - A capital plan that rests on one large investor can stall under external shocks and regulatory limits; in licensed industries, do not spend your capital buffer before the deal is final. - In regulated industries, an exit plan that returns customers' money in full protects your reputation; Xinja's ability to return more than 252 million dollars in deposits quickly is a case in point. ## Sources - [Xinja](https://en.wikipedia.org/wiki/Xinja) - [Xinja is officially no longer a bank](https://www.startupdaily.net/2021/03/xinja-is-officially-no-longer-a-bank/) - [Xinja exits the neobank scene: What happened, and what does it mean for the competition?](https://www.smartcompany.com.au/finance/xinja-exits-neobank-scene/) - [Neobank Xinja collapses, surrenders banking licence, and returns deposits](https://stockhead.com.au/tech/neobank-xinja-collapses-surrenders-banking-licence-and-returns-deposits/) --- # Anki (2010 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/anki/ - Sector: Hardware - Country: United States - Total funding: $200 million - Cause of closure: Ran out of cash ## What did it do? Anki was a company that brought super intelligence and robotics technology to products for children. After Anki Drive and Overdrive, racing car sets controlled by smartphone, it released Cozmo, a lovable robot that also aimed to teach children to code, and the more advanced Vector. It was founded by three roboticists who met at Carnegie Mellon University. ## Why did it shut down? Developing hardware and software together, the company had a product roadmap that constantly required fresh capital. According to The Verge, Anki had raised more than $200 million and sold 1.5 million products, but that revenue was not enough to sustain the business. According to a company spokesperson, a major funding deal with a strategic investor fell apart at the final stage. At the end of April 2019 CEO Boris Sofman told around 200 employees that the company would close, and operations ended in May 2019. ## The story In June 2013 an unknown start-up took the stage during the keynote at Apple's Worldwide Developers Conference. Anki showed off toy racing cars controlled by smartphone that found their own way using super intelligence. The same day it also announced a $50 million investment raised from Andreessen Horowitz, Index Ventures and Two Sigma. The company was founded in San Francisco in 2010 by roboticists Boris Sofman, Mark Palatucci and Hanns Tappeiner, who had met at Carnegie Mellon University. Their goal was to bring robotics and super intelligence into everyday products. The $149.99 Anki Drive set combined physical racing cars with an iOS app, and Anki soon became one of Apple's retail partners. In September 2014 a $55 million Series C led by JP Morgan arrived; in September 2015 Anki Overdrive came out, with track pieces that snapped together with magnets. The real breakthrough came in October 2016 with Cozmo. Reminiscent of a Pixar character, the little robot could see its surroundings, play games and be programmed by children. Cozmo soon became one of the most popular toys in the United States. In 2018 Vector, which worked with voice commands and needed no phone, targeted older users. In August 2018 the company announced that it had sold 1.5 million products, including toy cars and robots. But the cost of developing hardware and software together was high. According to The Verge, Anki had raised more than $200 million in total and needed more for its new product roadmap. According to a company spokesperson, a major funding deal with a strategic investor fell apart at the final stage. On 29 April 2019 Sofman told around 200 employees that the company would close; staff could be given only one week's severance pay. Production of Cozmo stopped in May 2019. In December 2019 Digital Dream Labs bought Anki's assets and released new versions of the products; in 2025 that company renamed itself Anki. The original company's story, however, shows how capital-intensive consumer robotics is: even much-loved products could not save a company that depended on a single investment deal. ## Lessons - In consumer hardware, product success and company sustainability are different things; tie the development cost of each new product to its sales revenue. - Do not hang your survival on a single large investment deal; while negotiations are under way, have alternative financing and a plan for cutting back ready. - Build into your cash plan the fact that toy sales pile up in the holiday season. ## Sources - [Anki (American company)](https://en.wikipedia.org/wiki/Anki_(American_company)) - [Robot toy company Anki is going out of business](https://www.theverge.com/2019/4/29/18523124/anki-drive-robot-toy-company-out-of-business-shutting-down) - [Anki debuts at WWDC with a robotic car racing game and raises $50M led by A16Z](https://techcrunch.com/2013/06/10/anki-debuts-at-wwdc-with-an-ai-car-racing-game-raises-50m-from-a16z-and-others/) --- # Aria Insights (2008 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/aria-insights/ - Sector: Hardware - Country: United States - Total funding: $39 million - Cause of closure: Failed pivot ## What did it do? Founded as CyPhy Works, the company developed a drone called PARC that stayed tethered to the ground by a thin microfilament cable, drawing both its power and a secure data link through it. Able to stay airborne for days, the system was sold for surveillance and communications to sectors such as the military, law enforcement, oil and gas, and telecoms; in January 2019, as Aria Insights, the company turned to analysing drone data with super intelligence. ## Why did it shut down? Founded in 2008 by Helen Greiner, one of iRobot's co-founders, the company raised a total of $39 million over seven rounds; a $22 million Series B in October 2015 was meant to take PARC into mass production. Greiner left the company in 2017, and $4.6 million in debt financing was secured in June 2018. In January 2019 the company renamed itself Aria Insights and tried to move from hardware supplier to data analytics. Just two months after that transformation, on 21 March 2019, it ceased operations without giving a reason. The trade publication The Drone Girl pointed out that making a profit from hardware in a market dominated by DJI had also hurt other manufacturers; the company's intellectual property and remaining assets were sold to FLIR Systems in October 2019. ## The story Helen Greiner was one of the co-founders of the robotics company iRobot. With CyPhy Works, which she founded in Danvers, Massachusetts, in 2008, she turned her attention to the sky. The company's best-known product, PARC, was a drone that stayed tethered to the ground by a thin microfilament cable. Because the cable provided both power and a secure communications line, the vehicle could hover at a height of around 150 metres for 100 hours. That made it a surveillance tool that attracted the interest of the military, law enforcement and the teams providing security at large events. In October 2015 the company raised a $22 million Series B led by Bessemer Venture Partners; the aim of the round was to take PARC into mass production. According to The Robot Report, CyPhy raised $39 million in total over seven rounds. But Greiner left the company in 2017, and $4.6 million in debt financing was secured in June 2018. In January 2019 the company changed its name to Aria Insights. CEO Lance Vanden Brook explained that they wanted to move beyond being purely a hardware supplier and quickly turn the data collected by drones into actionable insights. The transformation lasted just two months. On 21 March 2019 the company announced in a short statement that it had ceased operations, without giving a reason. Trade publications read the closure as part of a consolidation in drone manufacturing. The Drone Girl pointed out that making a profit from hardware in a market dominated by DJI had also hurt companies such as 3D Robotics and Airware. In October 2019 FLIR Systems bought the company's intellectual property and remaining assets for an undisclosed sum. CyPhy's story shows how hard it is for even a strong piece of engineering to survive on a narrow customer base and expensive hardware manufacturing. ## Lessons - If you want to turn a hardware business into a software and analytics service, start the transition while existing revenue is still coming in, not when you have only a few months of cash left. - Taking a niche product that grew on military and government orders into the civilian market requires a separate sales and pricing approach; it will not happen by itself with the same team. - A rebrand that comes without showing customers a new product does not solve a funding problem; first prove that the new model brings in revenue. ## Sources - [Drone analytics startup Aria Insights suddenly shutters](https://techcrunch.com/2019/03/22/drone-analytics-startup-aria-insights-suddenly-shutters) - [Drone maker Aria Insights, formerly CyPhy Works, shuts down](https://www.therobotreport.com/aria-insights-cyphy-works-shuts-down/) - [CyPhy Works shuts down, FLIR acquires tethered drone company's assets](https://www.thedronegirl.com/2019/10/03/cyphy-works-flir/) - [More Funding For Drone Maker CyPhy](https://www.pymnts.com/news/2015/cyphy-raises-22m-to-mass-produce-drones/) --- # Arivale (2014 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/arivale/ - Sector: Health - Country: United States - Total funding: $50 million - Cause of closure: Business model failed ## What did it do? Arivale was a Seattle-based health start-up that ran genetic, blood and microbiome tests on participants and offered personalised nutrition and wellness coaching based on the results. It aimed to turn the genomics pioneer Leroy Hood's idea of “scientific wellness” into a consumer programme. The programme launched in 2015 and reached around 5,000 people. ## Why did it shut down? The tests were expensive, and although the programme price was cut from USD 3,500 a year to USD 99 a month, revenue did not cover costs. According to the company's management, the cost of acquiring customers also remained high. In early 2019 an attempt to pivot towards research partnerships failed to pay off, and operating at a loss became unsustainable. In April 2019 Arivale abruptly halted the programme and laid off all its staff. ## The story By midday on 24 April 2019, all of Seattle-based Arivale's roughly 120 employees had lost their jobs. Customers, meanwhile, learned from a message received the same day that the health coaching programme they had signed up to was ending with immediate effect. The company's explanation came down to one sentence: the cost of providing the service was higher than what customers could pay. Arivale was the commercial arm of an idea that the genomics pioneer Leroy Hood, who had led the Caltech team that developed the automated DNA sequencer, called “scientific wellness”. The company was founded in 2014 by a team that included Hood and Clayton Lewis, who came from the venture capital firm Maveron. The programme, launched in 2015, ran genetic, blood and microbiome tests on participants and provided personalised nutrition and lifestyle coaching based on the results. Arivale raised more than USD 50 million from investors including ARCH Venture Partners, Polaris and Maveron, and won GeekWire's Startup of the Year award in 2016. The problem was price. The programme started at USD 3,500 a year; over time the price was cut, and at closure most customers were paying USD 99 a month for the main programme. Over its lifetime the company served around 5,000 people, and a paper describing improvements in the health markers of around 2,500 participants was accepted for publication in Scientific Reports. But the tests remained expensive; according to chief executive Lewis, the cost of acquiring customers was also a serious problem. According to MedCity News, an attempt in early 2019 to change direction through research partnerships was too little, too late. In its closure message the company wrote that it believed the cost of the tests would one day fall to a level at which they could be offered to consumers at an affordable price, but that until then it could not keep operating at a loss. Some of Arivale's work continued at the Institute for Systems Biology, the non-profit Hood co-founded. The Arivale case shows that a scientifically impressive product cannot survive by selling directly to consumers when it depends on tests whose cost curve has not yet come down. Customers loving the programme did not change the fact that every customer cost the company money. ## Lessons - If your unit cost depends on a supplier's price (for example, laboratory tests), plan for when that price will fall on the basis of contracts, not assumptions. - Before selling an expensive programme directly to consumers, test institutional payers such as employers, insurers or hospitals. - Do not assume that high customer satisfaction will fix unit economics on its own; if every customer loses you money, growth magnifies the loss. ## Sources - [Scientific wellness startup Arivale closes abruptly in 'tragic' end to vision to transform personal health](https://www.geekwire.com/2019/scientific-wellness-startup-arivale-closes-abruptly-tragic-end-vision-transform-personal-health/) - [Personalized health coaching startup Arivale shuts down](https://medcitynews.com/2019/04/personalized-health-coaching-startup-arivale-shuts-down/) - [Closure of high-tech medical firm Arivale stuns patients: 'I feel as if one of my arms was cut off'](https://www.seattletimes.com/business/technology/closure-of-high-tech-medical-firm-arivale-stuns-patients-i-feel-as-if-one-of-my-arms-was-cut-off/) --- # Bilemezsin (2016 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/bilemezsin/ - Sector: Gaming - Country: Turkey - Total funding: unknown - Cause of closure: Team problems ## What did it do? Bilemezsin (Turkish for 'You can't know') was a game platform for making predictions about topical issues, founded in May 2016 by four developer friends. Users started with 300 points, collected more through correct predictions and could exchange them for prizes in the app's shop. The game was completely free and never asked users for real money. ## Why did it shut down? Bilemezsin grew fast in 2017 and received the first investment made by Demirören Ventures. According to reports in 2017, the app was due to start generating revenue in the short term, and models such as native advertising, premium content and a data analytics-based B2B platform were being discussed. In September 2018 the team was preparing to raise its second investment. In December 2019 egirişim, a Turkish start-up news site, published the story of the start-up's failure as told by co-founder Berkan Cesur; in it Cesur talked about problems between the co-founders and the difficulties of entrepreneurship. The exact date of the closure was never made public; Internet Archive records show the site was live until August 2019. ## The story The idea for Bilemezsin was born of a dream its founder Berkan Cesur had at the age of 19: will a politician shave off his moustache within a week? Emerging in 2012 as an add-on for Ekşi Sözlük, Turkey's hugely popular collaborative online dictionary, the idea went viral on the back of one of the most talked-about topics of the day, then was shelved. Four years later, in May 2016, Cesur returned to the idea with Koray Eymur, Ece Köprücü and Can Ferman Gülmez. The platform turned every topical issue into a prediction. Will it rain tomorrow, what will happen in a popular TV series, what will a celebrity do? Users started with 300 points, increased them with correct predictions and could claim prizes from the app's shop. The game was completely free. According to a Webrazzi report in May 2017, Bilemezsin had reached 40,000 daily active users and 112,000 members; each prediction was played by an average of 7,000 people. The start-up had won the Uber Pitch competition and been featured on the App Store without any advertising budget. In September 2017 Demirören Ventures, the venture arm of the Turkish media group, made its first investment in Bilemezsin: 1.2 million TL at a valuation of $1.5 million. The team planned to firm up its revenue model with native advertising, premium content and a data-driven B2B platform. By September 2018 there was talk that they were preparing for a second funding round. The expected second step never came. In December 2019 egirişim, a Turkish start-up news site, published the story of the start-up's failure as told by Cesur. In his account Cesur talked in particular about problems between the co-founders and the difficulties that come with entrepreneurship. The exact date of the closure was never announced, but Internet Archive records show the site stayed live until August 2019. Bilemezsin's story is a reminder that even a fast-growing product that succeeds in entertaining its users may not survive without harmony within the team and a clear revenue model. ## Lessons - Put alignment between co-founders on roles and expectations in writing before the first investment. - In a free game with prizes, putting off the revenue model becomes more expensive the faster growth accelerates. - A viral launch is not enough to create a lasting habit; track your retention metrics. ## Sources - [How a start-up that raised 1.2 million TL went under: Bilemezsin (in Turkish)](https://egirisim.com/2019/12/08/1-2-milyon-tl-yatirim-alan-bir-girisimin-batis-hikayesi-bilemezsin/) - [Popular prediction game Bilemezsin reaches 40,000 daily active users (in Turkish)](https://webrazzi.com/2017/05/09/bilemezsin/) - [Bilemezsin raises investment from Demirören Ventures at a $1.5 million valuation (in Turkish)](https://egirisim.com/2017/09/07/bilemezsin-demiroren-venturestan-1-5-milyon-dolar-degerlemeyle-yatirim-aldi/) - [Interview with Berkan Cesur, co-founder of Bilemezsin, as it prepares for its second investment (in Turkish)](https://egirisim.com/2018/09/09/ikinci-yatirimini-almaya-hazirlanan-bilemezsin-kurucu-ortagi-berkan-cesur-ile-roportaj/) --- # Call9 (2015 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/call9/ - Sector: Health - Country: United States - Total funding: $34 million - Cause of closure: Business model failed ## What did it do? Call9 was a telemedicine company that connected elderly patients with remote emergency physicians through trained medical staff it placed in nursing homes and video links over iPads. The aim was to reduce unnecessary emergency department visits by nursing home residents, who are among the most frequent callers to 911. ## Why did it shut down? A graduate of Y Combinator's summer 2015 batch, the company raised a total of $34 million from investors such as Index Ventures, Joe Lonsdale and Anne Wojcicki. The service formed partnerships in New York with care providers such as Centers Health Care and ArchCare, and expanded to the Albany area in April 2019. But the company's revenue depended on value-based contracts that pay according to patient outcomes, and the US healthcare system was moving in that direction from fee-for-service very slowly. CEO Timothy Peck said the cash flow of an early-stage value-based company could not keep pace with that of one paid fee-for-service. Unable to find new funding, Call9 ceased operations in June 2019 and laid off around 100 employees. ## The story While teaching at Harvard Medical School, emergency physician Timothy Peck turned his attention to a familiar picture: among the most frequent 911 callers in the US were elderly people living in nursing homes, and some of these patients' trips to the emergency department were unnecessary. In 2015 Peck founded Call9 with Celina Tenev, a postdoctoral researcher in radiology at Stanford, and joined Y Combinator. The model combined technology with people on the ground. Call9 placed trained staff in nursing homes, and when needed this team reached remote emergency physicians over a video link on an iPad. The company was run from Brooklyn in New York, partnered with care chains in the area and in April 2019 also expanded to the Albany area. According to MedCity News, by the time it closed Call9 had carried out more than 142,000 telemedicine consultations and treated over 11,000 patients. The company raised a total of $34 million from backers including Index Ventures, Joe Lonsdale, Anne Wojcicki and Ashton Kutcher. The problem lay on the payment side. Call9's business model rested on value-based contracts that envisaged it taking a share of the savings achieved by reducing hospital visits. In the US, however, most healthcare was still run on a fee-for-service model that pays for every procedure performed. Peck explained that value-based contracts were better for patients, but in the short term fee-for-service brought in more revenue, and start-ups felt that pressure. Unable to find new investment, the company decided to shut down in June 2019 and laid off around 100 employees. The Call9 Medical unit, which employed the physicians, continued operating for a while longer. Peck later founded a new start-up building technology for nursing homes. ## Lessons - If you tie your revenue to a payment model that has not yet spread through the healthcare system, plan a second revenue stream from the outset to carry the company until that model matures. - A healthcare service that employs staff in the field does not have the cost structure of a software company; do not calculate its cash needs using software metrics. - Under outcome-based contracts it takes a long time for savings to turn into payments; reflect that delay clearly in investor expectations and in your cash plan. ## Sources - [Venture-backed telemedicine startup Call9 is shutting down](https://techcrunch.com/2019/07/01/venture-backed-telemedicine-startup-call9-is-shutting-down/) - [Once Backed with $34M, Skilled Nursing Telehealth Provider Call9 to Shut Down](https://skillednursingnews.com/2019/06/once-backed-with-34m-skilled-nursing-telehealth-provider-call9-to-shut-down/) - [New York telemedicine startup Call9 winding down operations](https://medcitynews.com/2019/06/new-york-telemedicine-startup-call9-winding-down-operations/) --- # Chariot (2014 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/chariot/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Chariot was a transport company that let passengers book seats through a mobile app and travel between home and work in shuttle minibuses at commuting times. New routes were chosen using demographic data and requests gathered from users. The company operated in several US cities and in Europe. ## Why did it shut down? After Chariot was bought by Ford's mobility subsidiary in 2016, it expanded rapidly into new cities. On some routes, however, demand remained very low; a pilot route in Denver generated only 110 rides in two and a half months, despite $250,000 in support from the city. Running chauffeured shuttles was economically challenging on routes with low passenger density. Ford announced in January 2019 that it would close the service, and shuttle operations ended in February 2019. ## The story In March 2014 Ali Vahabzadeh and Romain Di Vuolo left their jobs at a property start-up and founded Chariot to fill the gaps in San Francisco's public transport. The idea was app-booked shuttle minibuses running between home and work at commuting times. The company chose new routes based on demographic data and user requests, and even crowdfunded passengers in advance before opening some routes. The model caught the attention of carmakers searching for the future of urban transport. On 9 September 2016 Ford CEO Mark Fields announced that the company would acquire Chariot Transit through Ford Smart Mobility; the price was reported to be $65 million. As of May 2016 passengers could choose between pay-as-you-go, preloaded credits or a $119 unlimited monthly pass. Under Ford, Chariot expanded rapidly: in the US it operated in Austin, Chicago, Columbus, Denver, Detroit, Lake Tahoe, Los Angeles, New York, Seattle and the San Francisco Bay Area, and in January 2018 it entered Europe with four routes in London. But every new city did not mean demand. In a pilot launched in Denver by the city, local businesses and Chariot, the city paid $250,000 for six months of free rides on a route linking downtown, Capitol Hill and Cherry Creek; the route generated only 110 rides in two and a half months. Running chauffeured minibuses at low occupancy meant costs grew as scale grew. On 10 January 2019 Ford announced that it would close Chariot; shuttle operations ended in February 2019. The Telegraph noted that the decision came just two years after the acquisition. The short-lived Denver route closed along with the company. Chariot's story shows that an acquisition can bring a start-up capital and a brand, but does not remove the risk of scaling a model whose demand is unproven. Opening new cities before proving per-route occupancy multiplies vehicle and driver costs, not growth. And when a large company's strategy changes, a subsidiary that has not turned a profit becomes the easiest line item to cut. ## Lessons - In shuttle-style transport, prove demand by signing up enough prepaid passengers before putting vehicles on a new route. - Rather than using a large company's capital to open in many cities at once, replicate a city model where per-route occupancy has been proven. - Municipal support is no substitute for demand; track real usage data even in a subsidised pilot. ## Sources - [Chariot (company)](https://en.wikipedia.org/wiki/Chariot_(company)) - [Ford is shutting down its Chariot shuttle service](https://techcrunch.com/2019/01/10/ford-is-shutting-down-chariot-shuttle-service/) - [Ford axes e-shuttle service Chariot just two years after takeover](https://www.telegraph.co.uk/technology/2019/01/11/ford-axes-e-shuttle-service-chariot-just-two-years-takeover/) --- # Coolest Cooler (2014 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/coolest-cooler/ - Sector: Hardware - Country: United States - Total funding: $13.3 million - Cause of closure: Ran out of cash ## What did it do? Coolest Cooler was a product that combined an ice-crushing blender, a waterproof Bluetooth speaker, a USB charging port, LED lighting and a chopping board in a single portable cool box. In 2014 the project raised more than $13 million on Kickstarter. The products were manufactured in China. ## Why did it shut down? The campaign's unexpected size made manufacturing, logistics and certification far more complex than planned, and deliveries were delayed. Production stopped in March 2016; the founder said he was looking for an extra $15 million to fulfil 36,000 outstanding orders. The company tried to fund the remaining rewards from the profits of retail sales, but deliveries were limited to a few dozen units a week. In 2016 the Oregon Department of Justice opened an investigation following complaints, and in 2017 it signed an agreement with the company setting out a delivery plan. The company closed in December 2019; according to The Verge, it also blamed import tariffs when it shut down. ## The story Ryan Grepper's first attempt failed. In November 2013 the Portland product developer tried to raise $125,000 on Kickstarter for a multifunctional cool box but fell short of his target. When he relaunched the same idea on 8 July 2014, the result was entirely different. The Coolest Cooler campaign closed in August 2014 with $13,285,226 from 62,642 backers, overtaking the Pebble smartwatch's record to become the year's best-funded Kickstarter project. Packing an ice-crushing blender, a Bluetooth speaker, USB charging, LED lighting and a chopping board into a single box, the cool box was due to reach backers in February 2015. Success soon became a burden. The scale of demand made manufacturing in China, logistics and certification far more complex; delivery was first pushed back to July 2015. The first cool boxes shipped that month, and by November 2015 tens of thousands of backers had received theirs. But in a live stream in March 2016 Grepper admitted that production had stopped and that he was looking for an extra $15 million to fulfil 36,000 outstanding orders. The company offered a $97 expedited shipping option to those who wanted to skip the queue, and said it would cover the remaining rewards from the profits of retail sales. Having received 315 consumer complaints in 2016, the Oregon Department of Justice investigated the company under the state's unfair trade practices law; in June 2017 the two sides signed an agreement setting out how the remaining rewards would be delivered. In February 2017 the company said it would use money from online sales to ship units to between 30 and 50 backers a week. In December 2019 Grepper and Coolest LLC announced that they were ceasing operations. According to The Verge, the company also blamed import tariffs for the collapse. More than 20,000 backers who never received their cool box were told they could claim just $20 back for a product they had paid around $200 for. The project came to be remembered as the biggest failure in Kickstarter history. The lesson of Coolest Cooler is simple but painful: the size of a campaign is not a measure of success but a manufacturing commitment. Every extra pledge collected before cost and production capacity have been verified enlarges a promise that cannot be kept. ## Lessons - In crowdfunding, verify manufacturing, shipping and certification costs against factory quotes before setting the product price. - A campaign far bigger than expected means rewriting your production plan from scratch; update the delivery date realistically to match. - Selling the product at retail while you still owe your backers quickly burns through the community's trust. ## Sources - [Coolest Cooler](https://en.wikipedia.org/wiki/Coolest_Cooler) - [Coolest Cooler shuts down after 5-year saga, leaving 20,000 backers without Kickstarter reward](https://www.geekwire.com/2019/coolest-cooler-shuts-5-year-saga-leaving-20000-backers-without-kickstarter-reward/) - [Trouble on Kickstarter as two massive projects hit the rocks](https://www.theguardian.com/technology/2015/nov/19/trouble-kickstarter-massive-projects-hit-rocks-coolest-zano) - [$13 million Kickstarter project for a cooler continues to be a disaster](https://www.theverge.com/2016/4/13/11424924/coolest-cooler-kickstarter-disaster-delays) --- # DAQRI (2010 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/daqri/ - Sector: Hardware - Country: United States - Total funding: $275 million - Cause of closure: Ran out of cash ## What did it do? DAQRI was a Los Angeles-based augmented reality company. Its best-known product was the Android-based Smart Helmet, which gave industrial and construction workers visual instructions, real-time alerts and 3D mapping. The company later shifted to wearable glasses for industry called DAQRI Smart Glasses. ## Why did it shut down? After moving into hardware the company grew quickly through acquisitions and a European headquarters in Dublin, but the enterprise augmented reality market never reached a scale that could support this structure. In 2017 around a quarter of staff were laid off, founding CEO Brian Mullins stepped down and co-founder Gaia Dempsey left. The new management sidelined the smart helmet it had invested in for years and turned to glasses. In September 2019 the company was reported to have closed its headquarters, laid off most of its staff and sold its assets ahead of shutting down. ## The story DAQRI's story can be summed up in a hard hat: an augmented reality helmet running on Android, fitted with cameras and sensors, projecting instructions, real-time alerts and 3D maps into an industrial worker's field of view. Founded in 2010, the Los Angeles-based company aimed with this helmet to take augmented reality from advertising campaigns to the factory floor. In its early years the company was known for apps combining QR codes with augmented reality, and in June 2013 it raised a new $15 million investment. In 2014 it moved into wearable hardware and began developing a smart helmet for industry and construction. A string of acquisitions followed: in 2015 Melon, maker of an EEG headband, and ARToolworks, known for the open-source ARToolKit libraries; in 2016 head-mounted display maker 1066 Labs and the UK holographic technology company Two Trees Photonics. A European headquarters opened in Dublin. The smart helmet appeared on stage during Intel's keynote at CES 2016. In July 2017 total funding was reported to have reached $275 million, led by Tarsadia Investments. The turning point came the same year. After reports that around a quarter of staff had been laid off, co-founder and CEO Brian Mullins stepped down in October 2017; he was replaced by product chief Roy Ashok. Two months later co-founder Gaia Dempsey also left. The new management announced that the smart helmet would no longer be the focus and that the company's hardware offering would be lighter, more affordable glasses. According to Ashok, customers had completed their innovation projects with helmet programmes and were now looking at how to roll the technology out across their organisations. The shift did not bring the expected scale. In September 2019 former employees and sources close to the company said DAQRI had closed its headquarters, laid off most of its staff and sold its assets ahead of shutting down. TechCrunch reported the news by stressing that yet another heavily funded augmented reality headset start-up was shutting down. The lesson of DAQRI is that a customer list full of pilot projects does not mean lasting revenue. Enterprise customers can take years to move from trial to wide deployment; over that period, a cost structure swollen by acquisitions can leave even the best-funded company without cash. ## Lessons - In enterprise hardware, do not mistake pilot projects for revenue; track the rate at which customers move from pilot to wide deployment as a separate metric. - Building up a technology stack through acquisitions before the product has found its market grows the cost base faster than revenue. - If your flagship product is going to change, do it before the cash runs out and on the basis of customer data. ## Sources - [Daqri](https://en.wikipedia.org/wiki/Daqri) - [Augmented reality headset company Daqri is reportedly shutting down](https://www.theverge.com/2019/9/13/20864556/daqri-ar-headset-smart-glasses-startup-shutdown-asset-sale-layoffs) - [Another high-flying, heavily funded AR headset startup is shutting down](https://techcrunch.com/2019/09/12/another-high-flying-heavily-funded-ar-headset-startup-is-shutting-down/) - [https://www.wikidata.org/wiki/Q22080784](https://www.wikidata.org/wiki/Q22080784) --- # Evtiko Türkiye (2016 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/evtiko-turkiye/ - Sector: Real estate and construction - Country: Turkey - Total funding: $8.3 million - Cause of closure: Macroeconomic crisis ## What did it do? Evtiko was a property start-up founded in Istanbul in 2016 by Sina Afra, founder of Markafoni, the Turkish online fashion retailer. It gave people wanting to sell their homes a purchase offer within 48 hours, valid for 15 days, then bought the property, refurbished it and sold it on. If the home sold for a higher price, 20 per cent of the profit was paid to the former owner. ## Why did it shut down? In May 2019 Evtiko halted its buying and selling operations in Turkey and announced it would continue in Spain under the Tiko brand. Webrazzi wrote that the decision was most likely driven by the state of the construction sector and the decline in home sales shown in TÜİK (Turkish Statistical Institute) data. egirişim also pointed to the domestic property crisis and high mortgage rates. According to Para Dergisi, the system of carrying out valuations and making purchase offers failed to make headway in Turkey. By putting the homes themselves on its balance sheet, the model left the company directly exposed to macroeconomic risk in a market where prices and demand were unpredictable. ## The story Sina Afra had made one of the best-known exits in Turkish internet history with Markafoni. After leaving that company in 2014, he turned to an unexpected field: housing. Evtiko, which he founded in Istanbul in 2016, came out of stealth in September with a report by Webrazzi. Its investors included Rocket Internet and Oliver Samwer. The idea was to shorten the slow and uncertain process of selling a home. A would-be seller filled in a form, and Evtiko made an offer within 48 hours, valid for 15 days. If the offer was accepted, most of the payment was made on moving day. Evtiko refurbished the property and sold it on, and if it found a higher price it paid 20 per cent of the profit back to the former owner. According to figures on the company's website, selling a home the traditional way in Turkey took an average of 109 days. In this model the company put the homes themselves on its balance sheet. As long as the housing market was buoyant, that was an advantage; when demand fell, it became a serious risk. In the first months of 2019 home sales had declined compared with the same period a year earlier, and mortgage rates were high. On 27 May 2019 Evtiko announced on its Twitter account that it was ending its operations in Turkey. According to the statement, property buying and selling would continue in Spain under the Tiko brand, with technology support provided from Turkey. According to Webrazzi, the company had raised USD 8.3 million in investment by then, and the decision was most likely driven by the fall in home sales. Para Dergisi wrote that the system had failed to make headway in Turkey. The sequel is interesting. Tiko grew fast in Spain; as Webrazzi reported, it raised USD 65 million in 2021 and in 2024 acquired the Madrid-based Housell. Afra's Istanbul office, meanwhile, carried on for a time as a coding hub. Evtiko's Turkish adventure shows how the same product can stall at the wrong time and under the wrong macroeconomic conditions. ## Lessons - If you build a business model that holds inventory, macroeconomic swings show up directly on your balance sheet. - The same technology can work in a different market; sometimes changing the market is a better decision than changing the product. - In a sector that depends on loan interest rates, demand can collapse because of a single variable outside your control. ## Sources - [Sina Afra's property start-up Evtiko ends its Turkish operations and carries on in Spain](https://webrazzi.com/2019/05/27/sina-afra-evtiko-kapandi/) - [Sina Afra's start-up Evtiko ends its Turkish operations](https://egirisim.com/2019/05/28/sina-afranin-girisimi-evtiko-turkiye-faaliyetlerini-sonlandirdi/) - [Sina Afra shut down in Turkey, and demand was five times higher in that country](https://www.patronlardunyasi.com/haber/Sina-Afra-Turkiye-de-kapatti-o-ulkede-5-kat-talep-geldi/229319) - [Coming out of stealth, Evtiko offers a fast and advantageous way to sell your home](https://webrazzi.com/2016/09/05/evtiko-ev-satisi-pazar-yeri/) - [Sina Afra's property start-up Tiko acquires Spain-based Housell](https://webrazzi.com/2024/02/20/tiko-ispanya-merkezli-housell-i-satin-aldi/) --- # Juno (2016 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/juno/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Juno was a ride-hailing app operating in New York. It aimed to attract happier drivers by taking a lower commission than its rivals and announced that it planned to give half of the founding shares to drivers by 2026. The company was founded by Talmon Marco, founder of the messaging app Viber. ## Why did it shut down? Juno entered a market dominated by Uber and Lyft in New York alone, and in 2017, about a year after starting operations, it was sold to Gett. With the sale, the programme giving drivers shares ended, and drivers filed a class action against the companies. New York City Council's cap on vehicle licences in 2018, and its extension of that cap with new rules in 2019, changed the economics of the market. On 18 November 2019 Gett halted Juno's operations, citing these regulations, and formed a partnership with Lyft for its corporate customers. Juno then entered Chapter 11 proceedings with a view to liquidation. ## The story In February 2016 a beta test being run quietly in New York with 2,000 drivers leaked to the press. Soon the name behind the start-up emerged: Talmon Marco, founder of the messaging app Viber. The new company was called Juno, and its claim was clear: to win drivers by treating them better than Uber did. Juno promised to take a lower commission than its rivals and to distribute half of the founding shares to drivers by 2026. CNN announced it as an Uber rival that said its drivers would own the company. Speaking to Pando, Marco said the drivers they had talked to felt enormous anger towards Uber. The company launched in New York in 2016. The Verge wrote that the app was trying to lure Uber drivers with a more ethical model. But the independent journey was short. In 2017 Juno was bought by Volkswagen-backed Gett; Wikipedia puts the price at $200 million, TechCrunch at about $250 million. With the sale, the programme giving drivers shares ended. In June 2017 The Verge reported that drivers were suing Gett and Juno, both marketed as driver-friendly. In August 2017 Gett pulled its own app from US app stores and carried on in New York under the Juno brand. Gett's CEO Dave Waiser described the company as a solid number three in the market after Uber and Lyft; but according to TechCrunch, Gett had never expanded beyond New York in the US. The rules in New York, meanwhile, were changing. In 2018 the city council capped vehicle licences for ride-hailing apps, and in August 2019 it extended the cap for a year and added new rules. On 18 November 2019 Gett shut Juno with immediate effect, citing regulations that had come into force in New York and which it considered misguided. It said drivers would be paid in full for completed trips and passengers would be invited to Lyft. Gett also formed a strategic partnership with Lyft for its corporate customers. Two days later Juno entered Chapter 11 proceedings with a view to liquidation. Juno's story shows that a driver-friendly positioning does not remove the risks of scale and regulation against giant rivals. ## Lessons - Distinctive promises such as equity for drivers damage trust if they cannot be kept when the company is sold; make such commitments legally binding. - A business operating in a single city is fully exposed to that city's regulatory decisions; in big markets such as Istanbul, too, build the decisions of UKOME, the city's transport coordination board, and the municipality into your risk plan. - An ethical positioning does not on its own solve the problems of unit economics and scale. ## Sources - [Juno (company)](https://en.wikipedia.org/wiki/Juno_(company)) - [Juno shuts down its operations in NYC as owner Gett signs strategic partnership with Lyft](https://techcrunch.com/2019/11/18/juno-shuts-down-its-operations-in-nyc-as-owner-gett-signs-strategic-partnership-with-lyft/) - [Gett's Juno ends NYC ride-hailing services, citing regulation](https://www.reuters.com/article/us-gett-juno-idUSKBN1XS2JZ) --- # Koinex (2017 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/koinex/ - Sector: Crypto and blockchain - Country: India - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Koinex was a cryptocurrency exchange where Indian users could buy and sell cryptocurrencies such as Bitcoin, Ethereum, Ripple, Bitcoin Cash and Litecoin for rupees on a single platform. The Mumbai-based company was founded by three graduates of IIT and BITS Pilani. ## Why did it shut down? Koinex went live on 25 August 2017 and in December 2017 received an undisclosed investment from Pantera Capital and Beenext. In April 2018 the Reserve Bank of India instructed banks to stop working with crypto businesses; payment providers then cut off service, bank accounts were closed and transactions were blocked. While legal challenges to the ban dragged on, reports in 2019 of a draft law proposing to ban cryptocurrencies and impose heavy prison sentences frightened users. According to The Block, trading volume, which peaked at $265 million in December 2017, fell below $25 million over the final six months. Koinex permanently halted trading on 27 June 2019 and gave users until 15 July to withdraw their assets. ## The story Koinex was founded in Mumbai in 2017 by IIT graduates Rahul Raj and Rakesh Yadav and BITS Pilani graduate Aditya Naik. Going live on 25 August 2017, the platform let Indian investors buy and sell several cryptocurrencies for rupees in one place. The timing coincided with the peak of worldwide interest in cryptocurrencies. In December 2017 the US-based Pantera Capital and Singapore's Beenext invested in the company, and Koinex soon ranked among the country's largest crypto exchanges. The turning point came in April 2018. The Reserve Bank of India instructed banks to stop serving individuals and companies dealing in cryptocurrencies. The decision severed the artery through which cash flowed in and out of the exchanges. Payment intermediaries refused service, bank accounts were closed and the accounts holding user deposits were frozen. Legal challenges to the ban dragged on in the Supreme Court. Rival Zebpay halted operations in September 2018, and Coindelta and Coinome in spring 2019. In 2019 press reports of a draft law proposing to ban cryptocurrencies and impose heavy prison sentences further shook users' confidence, and trading volume fell sharply. CEO Rahul Raj said the past 14 months had been very difficult for trading digital assets in India. On 27 June 2019 Koinex permanently halted trading. Users were given until 15 July to withdraw their assets, and the company announced that rupee balances would be refunded from its own resources, because its bank accounts remained frozen. As it closed, Koinex reported more than a million registered users and total trading volume of more than $3 billion. Its story shows that even the fastest-growing start-up can lose the ground it stands on through a single regulatory decision. ## Lessons - If you depend entirely on infrastructure that a single regulatory decision can cut off, such as access to banking, prepare alternative payment routes early. - When growing in an uncertain legal environment, plan in advance how you would return user funds if a ban came; Koinex was forced to commit to paying out rupee balances from its own resources. - Do not mistake peak volume in a speculative market for lasting demand; build your cost structure around volume in a downturn. ## Sources - [Another Indian Crypto Exchange Shuts Down Blaming Banking Ban](https://www.coindesk.com/markets/2019/06/27/another-indian-crypto-exchange-shuts-down-blaming-banking-ban) - [Another top Indian crypto exchange, Koinex, is shutting down amidst regulatory uncertainty](https://www.theblock.co/post/29198/one-of-the-largest-indian-crypto-exchanges-is-shutting-down-amidst-regulatory-uncertainty) - [Koinex Exchange Shuts Down Ahead of Crypto Regulation](https://news.bitcoin.com/koinex-exchange-shuts-down-crypto-regulation/) - [Multi-cryptrocurrency exchange Koinex founded by IITians raises fund](https://entrackr.com/2017/12/cryptrocurrency-koinex-funding/) --- # Ligatus Türkiye (2013 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/ligatus-turkiye/ - Sector: Advertising and marketing - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Ligatus was a Cologne-based native advertising company that operated in the Turkish market from 2013 through its Istanbul office. It offered publishers a local supply-side platform (SSP) and consultancy, and advertisers ad formats that blended into the content feeds of news sites. It worked through both programmatic and reserved sales channels. ## Why did it shut down? In January 2019 Ligatus announced its decision to withdraw from Turkey as a strategic business decision, without giving a detailed reason (Webrazzi, egirişim, 2019). According to the statement, the company's new priority was to complete its expansion across continental Europe as competitively as possible. In other words, Turkey was not among the markets in which the parent company wanted to concentrate its resources. It is striking that the decision came right after 2018, when the Turkish lira lost value sharply; but the sources do not draw this link, and this is an interpretation. ## The story Ligatus was one of Europe's leading companies in native advertising. The Cologne-based company was a wholly owned subsidiary of Gruner + Jahr, the publishing group owned by Bertelsmann, and ran ads on news site pages that looked like a continuation of the content being read. It offered publishers a local supply-side platform and expert consultancy. It had more than 180 employees in its offices across Europe. Having opened its Istanbul office in late 2012, the company began operating in the Turkish market in 2013. In April 2017 Emre Faks, who had been group coordinator for digital experience and advertising solutions at the Turkish daily Hürriyet, replaced the previous country manager, Murat Kalafat; Faks also took on business development in the MENA region. Before that, in 2016, the company had formed partnerships with ad tech companies such as AppNexus and Criteo. In October 2017 the company celebrated the Istanbul office's fifth year with an event in Harbiye; according to Marketing Türkiye, in that time it had worked with more than 200 of Turkey's leading publishers and contributed to the business of nearly 1,000 advertiser brands. Webrazzi, too, described Ligatus as one of the leading companies in the Turkish market. In January 2019, however, came an unexpected announcement. Ligatus said that, as a strategic business decision, it had halted its operations in Turkey and would end its Turkish investments as of 1 February 2019. In the company's new growth strategy, the priority was to complete its expansion in Europe as competitively as possible. In a brief statement, Emre Faks said they still had faith in Turkey and would continue to follow the market closely, and thanked the partners they had worked with for six years. The story of Ligatus Türkiye is not that of a start-up going bust, but of a portfolio decision by a multinational ad tech company. Even so, the result was the same for the Turkish publishers earning advertising revenue through the network: after six years, a significant revenue channel pulled out of the market. ## Lessons - However much you grow as the local arm of a multinational, your fate depends on portfolio decisions made at headquarters. - Tying publisher revenue to a single ad network creates a revenue gap when that network pulls out. - The more briefly a decision to exit a market is explained, the more it shakes partners' trust; manage the transition in a planned way. ## Sources - [Native advertising company Ligatus decides to withdraw from Turkey](https://webrazzi.com/2019/01/15/native-reklam-sirketi-ligatus-turkiyeden-cekilme-karari-aldi/) - [Native advertising company Ligatus halts its operations in Turkey](https://egirisim.com/2019/01/14/native-reklam-sirketi-ligatus-turkiyedeki-faaliyetlerini-durduruyor/) - [Ligatus Istanbul office celebrates its fifth birthday](https://www.marketingturkiye.com.tr/haberler/ligatus-istanbul-ofisi-5-yasini-kutladi/) - [Emre Faks becomes Ligatus Türkiye country manager](https://webrazzi.com/2017/04/10/ligatus-turkiye-ulke-muduru-emre-faks-oldu/) - [Ligatus halts its operations in Turkey](https://digitalage.com.tr/ligatus-turkiyedeki-faaliyetlerini-durduruyor/) --- # Markafoni (2008 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/markafoni/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Markafoni was a private shopping site founded in 2008 that initially admitted members by invitation only. It sold branded clothing and accessories at a discount through short-lived sales campaigns. Over time it expanded into sister sites, Zizigo for shoes and Miss Pera for cosmetics, international versions and physical stores. ## Why did it shut down? According to Bloomberg HT, Naspers wanted to turn Markafoni into an in-season shopping destination; but as the model grew less attractive to consumers, the balance between revenue and costs became unsustainable. Since the acquisition Naspers had covered the losses, cut costs and also considered a sale. Consumers turned to sites offering a wide product range instead of short-lived discounts; by early 2017 rival Trendyol's real user numbers had reached twice Markafoni's. The founders' departure after Naspers took full control was also seen as a loss. A relaunch attempt by Cafer Mahiroğlu, who bought the brand in 2017, ended in closure about a year and a half later. ## The story In 2008 Sina Afra, Ahmet Emre Sarı and Tolga Tatari decided to try a model little known in Turkey: a private shopping site that members could join only by invitation, selling branded products at a discount through short-lived campaigns. According to Bloomberg HT, Markafoni started out with $300,000. By early 2009 it was selling around 500 items per campaign, and its first foreign investor had come on board with a 15 per cent stake. According to a round-up by Webrazzi, the Turkish tech news site, it reached 870,000 members in March 2010 and raised 11 million TL in investment. Growth attracted international capital too. MIH Allegro, part of Naspers, bought 71.2 per cent in 2011, when the company was said to be valued at between $200 million and $210 million, and the remaining 28.8 per cent in 2014. During this period Markafoni set up Zizigo for shoes and Miss Pera for cosmetics, and opened a sister site in Australia called BrandsExclusive. In 2014 it had around 7 million members, 20 million visitors a month and some 600 employees. In 2016 it opened its first physical store in Zorlu Center. But the wind had turned. Consumers were moving away from short-lived discounts towards sites offering a wide range of products at any time. The founders had left the company after Naspers took full control. Zizigo and Miss Pera were closed in 2016 and their traffic redirected to the main site. On 1 June 2017 Markafoni announced it would cease operations as of 30 June. According to Naspers' statement, the balance between revenue and costs did not allow the business to be sustainable. The story did not end there. Cafer Mahiroğlu, owner of UK-based Select Fashion, announced he had bought the brand for $15 million, and the site reopened on 22 August 2017. Mahiroğlu was planning a further $15 million of investment and expansion into Europe. This second life did not last long: according to a March 2019 report by Patronlar Dünyası, the site closed for a second time and the address began redirecting to Selectmoda.com. Markafoni was the company that made private shopping popular in Turkey. When the market broadened and habits changed, however, it could not transform at the same speed, and it left the stage together with the model it had pioneered. ## Lessons - If your model's appeal depends on the consumer habits of a particular moment, prepare your transformation plan before those habits change. - The departure of the founding team after an acquisition can seriously slow a company's ability to find its direction. - A well-known brand name is not enough for a second life if there is no working business model behind it. ## Sources - [The Markafoni story, from then to now (in Turkish)](https://webrazzi.com/2017/06/01/dunden-bugune-markafoni-servuveni/) - [Why did Markafoni close? (in Turkish)](https://www.bloomberght.com/markafoni-neden-kapandi-2018229) - [Key figures on the Markafoni Group from İlker Baydar (in Turkish)](https://webrazzi.com/2014/09/25/ilker-baydardan-markafoni-grubu-hakkinda-onemli-rakamlar/) - [It's official: Cafer Mahiroğlu buys Markafoni for $15 million (in Turkish)](https://webrazzi.com/2017/07/10/markafoni-cafer-mahiroglu/) - [He bought Markafoni for $15 million, then closed it (in Turkish)](https://www.patronlardunyasi.com/markafoniyi-15-milyon-dolara-almisti-kapatti) - [Markafoni reopens for shopping with a new look (in Turkish)](https://webrazzi.com/2017/08/22/markafoni-yeniden/) - [Private shopping sites that closed before Markafoni (in Turkish)](https://webrazzi.com/2017/06/01/markafoni-kapanisi/) --- # MoviePass (2011 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/moviepass/ - Sector: Media and entertainment - Country: United States - Total funding: unknown - Cause of closure: Business model failed ## What did it do? MoviePass was a subscription service that gave members cinema tickets for a monthly fee. Subscribers received a prepaid debit card; when they checked in at a cinema through the app and picked a film, the ticket price was loaded onto the card. In 2017 the unlimited plan was cut to $9.95 a month, letting members watch one film a day. ## Why did it shut down? The company paid cinemas the full price of every ticket while charging subscribers just $9.95 a month, so every member who went to the cinema a few times a month deepened the losses. In May 2018 cash spending exceeded revenue by $40 million, and the parent company was forced into a constant search for fresh funding. After a service outage in July 2018, major releases were excluded, the unlimited plan was cut to three films a month and subscriber losses accelerated. By April 2019 paying subscribers had fallen to 225,000, more than 90 per cent below the peak. When efforts to raise capital came to nothing, the service was shut down in September 2019. ## The story In August 2017 American cinemagoers fixed their attention on a single price tag: one film a day for $9.95 a month. With the offer, the company, run by Netflix co-founder Mitch Lowe and newly majority-owned by data analytics firm Helios and Matheson Analytics (HMNY), aimed to turn the cinema ticket into a subscription product. MoviePass had in fact been founded in New York in 2011 by Stacy Spikes and Hamet Watt. Subscribers were given a prepaid debit card; when they checked in at a cinema through the app and chose a screening, the ticket price was loaded onto the card. Backed by investors such as True Ventures and AOL Ventures, it experimented with different pricing plans for years, yet in December 2016 it had only 20,000 subscribers. The new price changed everything: subscribers rose to 400,000 in September 2017, 1 million in December and 2 million in February 2018, and passed 3 million in June 2018. The problem was that the company paid cinemas the full price of every ticket. Every subscriber who went to the cinema a few times a month generated costs that easily exceeded the $9.95 they paid. In May 2018 cash spending exceeded revenue by $40 million, and in June the company projected a $45 million shortfall. After a service outage on 26 July, it borrowed $5 million to keep operating; auditors said they doubted whether the company could survive. Major new releases were then excluded, peak-time surcharges were introduced and the unlimited plan was cut to three films a month. By April 2019 paying subscribers had fallen by more than 90 per cent, to 225,000. MoviePass shut down the service on 14 September 2019, announcing that its efforts to raise capital had come to nothing. Parent company HMNY filed for Chapter 7 bankruptcy on 28 January 2020 and ceased all operations. In June 2021 the service's operators agreed to settle allegations by the US Federal Trade Commission that they had restricted usage and failed to adequately protect user data. In November 2021, with the bankruptcy court's approval, the brand passed to co-founder Stacy Spikes, and it relaunched in 2022. MoviePass is one of the most striking examples of why buying users with money is not growth. A subscription that scales on loss-making unit economics drains more cash from the till with every month that it looks like a success. ## Lessons - Before setting a subscription price, work out what your heaviest user costs you; on an unlimited plan, the customer who uses it most carries the loss. - Buying users with subsidies is not growth; track the contribution margin of every new subscriber weekly. - Changing prices or rules repeatedly erodes trust; announce plan changes once, with a clear timetable. ## Sources - [MoviePass](https://en.wikipedia.org/wiki/MoviePass) - [MoviePass will shut down for good on Sept. 14](https://www.cnbc.com/2019/09/13/moviepass-will-shut-down-for-good-on-sept-14.html) - [MoviePass Parent Company Files For Bankruptcy](https://variety.com/2020/digital/news/moviepass-bankruptcy-parent-helios-and-matheson-1203485327/) - [MoviePass cofounder Stacy Spikes has bought the company back and is planning a relaunch](https://www.businessinsider.com/moviepass-cofounder-stacy-spikes-buys-back-company-and-plans-relaunch-2021-11) - [https://www.wikidata.org/wiki/Q6926815](https://www.wikidata.org/wiki/Q6926815) --- # Munchery (2010 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/munchery/ - Sector: Food and drink - Country: United States - Total funding: $125 million - Cause of closure: Business model failed ## What did it do? Munchery was a service that delivered meals from chefs who prepared ever-changing menus to people's homes, ordered online. Meals could be ordered up to 6 pm the same day or several days in advance, and were delivered chilled in a chosen one-hour window between 17:00 and 21:00. The company operated in cities including San Francisco, Seattle and New York. ## Why did it shut down? Although Munchery was said to have reached a valuation of around $300 million with a large round in 2015, it never achieved profitability in on-demand meal delivery. The company tried many models, from ready meals to meal kits, from an $8.95-a-month membership to a sales outlet in a train station. In May 2018 it closed its Seattle, Los Angeles and New York operations and laid off 257 people, or 30 per cent of its staff. The plan to turn a profit in San Francisco failed, and the company abruptly ceased operations on 21 January 2019. In its bankruptcy filing in March 2019 its debts far exceeded its assets. ## The story Monday, 21 January 2019. Munchery customers received an email saying the company was ceasing operations immediately. Founded nine years earlier in San Francisco and having raised $125 million in investment, the start-up left the stage within a day. Founded in 2010 by Tri Tran and Conrad Chu, Munchery tried to carve out a space between restaurant food and home cooking. Chefs prepared ever-changing menus and chose their own ingredients, and users could rate the dishes and message the chefs directly. Orders could be placed up to 6 pm the same day; the chilled meals arrived at the door in a chosen one-hour window between 17:00 and 21:00 and were reheated at home. In 2015 the company closed an $85 million Series C and was said to be worth $300 million; a company spokesperson did not confirm the figure. Investors included Greycroft, Sherpa Capital, Menlo Ventures, e.ventures and Cota Capital. The following years were a search. In 2016 a corporate lunch programme was launched and James Beriker replaced co-founder Tri Tran as CEO. According to TechCrunch, the company tried many formats to survive, from ready meals to meal kits, and from an $8.95-a-month membership plan to an outlet in a BART station in San Francisco. In May 2018 the Seattle, Los Angeles and New York operations were closed and 257 people, or 30 per cent of staff, were laid off. The plan was to turn a profit quickly in San Francisco, its largest market. The plan did not work. In its bankruptcy filing in March 2019 the company reported assets of between $1 million and $10 million, while it owed lenders $28.5 million in secured debt and 230 suppliers $6 million in unsecured debt. In May 2019 its roughly 6,500-square-metre headquarters in South San Francisco was sold for $5 million. In 2020 the Munchery name was reused by another company for a site that only publishes recipes. Munchery is one of the examples that show how hard on-demand meal delivery is. Every order carried both kitchen and logistics costs, and the profitability question, put off while capital was plentiful, turned into a sudden shutdown when the money ran out. ## Lessons - In fresh meal delivery, calculate the kitchen, cold-chain and courier cost of every single order; higher volume does not bring these costs down by itself. - Frequent model changes are a sign of searching; validate each new format profitably in one market before taking it to new cities. - Prioritise your obligations to suppliers and staff in your cash plan; sudden shutdowns magnify the reputational damage. ## Sources - [Munchery](https://en.wikipedia.org/wiki/Munchery) - [After raising $125M, Munchery fails to deliver](https://techcrunch.com/2019/01/21/munchery-shuts-down/) - [Meal-delivery startup Munchery shuts down](https://www.marketwatch.com/story/meal-delivery-startup-munchery-shuts-down-2019-01-21) - [https://www.wikidata.org/wiki/Q22907109](https://www.wikidata.org/wiki/Q22907109) --- # QuadrigaCX (2013 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/quadrigacx/ - Sector: Crypto and blockchain - Country: Canada - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? QuadrigaCX was a platform known as Canada's largest cryptocurrency exchange, operated by Quadriga Fintech Solutions. Customers used it to buy and sell bitcoin and other cryptocurrencies against the Canadian dollar. The company said it kept a large share of customer assets in offline cold wallets. ## Why did it shut down? In December 2018 the founder and CEO, Gerald Cotten, died in India, and it was announced that he alone held the passwords to the cold wallets. Around 115,000 customers were owed 250 million Canadian dollars they could no longer reach, and in January 2019 the company sought protection from its creditors. Ernst & Young found that the five cold wallets it located had been empty since April 2018. The company entered bankruptcy in April 2019. In June 2020 the Ontario Securities Commission concluded that Quadriga had been a fraud and a Ponzi scheme, and that Cotten had traded against customers using fake accounts. ## The story At the end of January 2019 QuadrigaCX, known as Canada's largest cryptocurrency exchange, made an announcement that ran in headlines around the world: its founder and CEO, Gerald Cotten, had died in India in December 2018, and he alone held the passwords to the offline wallets where customers' cryptocurrency was stored. Around 115,000 customers were suddenly unable to reach the 250 million Canadian dollars (190 million US dollars) they were owed. Cotten founded Quadriga with Michael Patryn in Vancouver in November 2013. In 2014, 7.4 million Canadian dollars' worth of bitcoin traded on the platform. The company raised 850,000 Canadian dollars but abandoned plans for a stock-market listing in early 2016. It had four employees in 2015 and ran out of money in June that year; from then on, apart from a few contractors, it had no staff, no office and no bank account. The business was run from Cotten's home in Nova Scotia on his encrypted laptop. During the 2017 crypto frenzy around 1.2 billion Canadian dollars' worth of bitcoin changed hands on the platform, and registered users reached 363,000. The warning signs became clear in 2018. As bitcoin prices fell, customers reported delays to their withdrawals, and in January 2018 a bank froze 28 million Canadian dollars held with a payment processor. After Cotten's death the company sought creditor protection and Ernst & Young was appointed as independent monitor. The five cold wallets Ernst & Young found had been empty since April 2018. On 8 April 2019 the company entered bankruptcy. In December 2019 lawyers representing customers asked for Cotten's body to be exhumed to confirm his identity and cause of death. In June 2020 the Ontario Securities Commission concluded that Quadriga had been a fraud and a Ponzi scheme. According to the commission, Cotten had opened accounts under false names, credited himself with cash and crypto balances that did not exist, and used them to trade against unsuspecting customers. The commission described what had happened as “an old-fashioned fraud wrapped in modern technology”. This was an administrative finding, not a court ruling; because Cotten was dead, he could not be tried. In March 2023 the bankruptcy trustee, Ernst & Young, announced a first interim distribution of 13 cents for every dollar of proven claims. Quadriga shows how dangerous unchecked one-person control is at an institution that holds customers' money. A platform that grows without independent custody and proof of reserves can keep its customers' trust only until the problems come to light. ## Lessons - If you run a financial start-up that holds customer assets, never build a structure in which a single person holds the access keys; multi-signature controls and independent custody are essential. - As a user, treat withdrawal delays and vague payment methods as the first signs of trouble inside a platform; do not ignore them. - A business that takes customer funds without independent audits and proof of reserves cannot generate trust, however good its intentions. ## Sources - [Quadriga (company)](https://en.wikipedia.org/wiki/Quadriga_(company)) - [Controversial QuadrigaCX cryptocurrency exchange placed in bankruptcy](https://www.cbc.ca/news/canada/nova-scotia/quadrigacx-cryptocurrency-exchange-bankruptcy-1.5089539) - [Crypto exchange Quadriga files for creditor protection](https://www.theglobeandmail.com/business/article-crypto-exchange-quadriga-files-for-creditor-protection/) - [Unable to Retrieve Money, Cryptocurrency Investors Want Dead Executive Exhumed](https://www.nytimes.com/2019/12/17/business/gerald-cotten-death-cryptocurrency.html) - [https://www.wikidata.org/wiki/Q55841490](https://www.wikidata.org/wiki/Q55841490) --- # Scotty Yemek (2018 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/scotty-yemek/ - Sector: Food and drink - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Scotty Yemek was the food delivery service launched in January 2018 by Scotty, the Istanbul start-up that began in 2017 with a motorbike ride-hailing service. Users ordered through the app, and the nearest motorbike rider picked up the food from the restaurant and delivered it directly, one order at a time. Orders could also be placed from restaurants without their own delivery service, and deliveries could be tracked in real time. ## Why did it shut down? In December 2019 Scotty announced that it was halting its food service and removed the food section from its app. According to the company's statement, its efficient growth strategy for 2020 was to drop the food service and focus on rides and courier services. The service had got off to a fast start and quickly passed 300,000 orders. Even so, food delivery remained a second front alongside Scotty's core business of motorbike rides. In a market with entrenched players such as Yemeksepeti, it is fair to conclude that keeping this front going was costly. ## The story Scotty set out in April 2017 claiming to solve Istanbul's traffic with motorbikes. Founder Tarkan Anlar's idea was to carry single passengers with motorbike riders. Once the rider network was big enough, the company thought the same motorbikes could be put to another use: carrying food. Scotty Yemek launched in January 2018 in Üsküdar, Kadıköy, Bağdat Avenue and Bostancı. According to a report by Uzak Rota at the time, the service delivered more than 5,000 orders in its first 10 days, with an average delivery time of around 20 minutes. The model relied on taking each order individually rather than batching them. Users could track the courier on a map and also order from restaurants without their own delivery service. In November 2018 Tarkan Anlar told Marketing Türkiye that they had quickly received more than 300,000 orders across Istanbul. According to Anlar, the aim was to end hours-long waits for food and give restaurants an easy way to reach new customers. According to a September 2019 report by Webrazzi, the Turkish tech news site, Scotty was operating in three separate markets at this point: rides, food delivery and courier services. Fighting on three fronts at once was not easy. On 10 December 2019 Scotty removed the food section with an app update. In a statement reported by egirişim, the company wrote that its efficient growth strategy for 2020 was to halt the food service and "strengthen ourselves further by focusing more on our Ride and Courier services". The Scotty Yemek story shows both the appeal and the limits of taking an existing asset into a new market. The motorbikes and riders were ready, and there was demand. But food delivery was a separate battleground dominated by an entrenched player such as Yemeksepeti. In the end the company chose to pull its resources back into its core business. ## Lessons - Using your existing rider network for a new service looks easy, but every new vertical means separate competition and separate operations. - When growing on limited resources, focus can be worth more than adding new products. - Order numbers alone are not a measure of success; work out separately what the service contributes to the core business. ## Sources - [Scotty ends its food delivery service](https://egirisim.com/2019/12/10/scotty-yemek-teslimat-hizmetinin-faaliyetlerini-sonlandirdi/) - [Scotty will now deliver your food orders too](https://www.uzakrota.com/scotty-artik-yemek-siparislerinizi-de-teslim-edecek/) - [Scotty, the life-saving friend in our users' pockets](https://www.marketingturkiye.com.tr/soylesiler/scottyyi-kullanicilarimizin-cebindeki-kurtarici-dostu/) - [Scotty: You are not beaten when you lose, but when you give up](https://webrazzi.com/2019/09/12/scotty-kaybettiginde-degil-vazgectiginde-yenilirsin/) --- # Seven Dreamers Laboratories (2014 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/seven-dreamers-laboratories/ - Sector: Hardware - Country: Japan - Total funding: $89 million - Cause of closure: Product problems ## What did it do? Seven Dreamers Laboratories was a Tokyo-based technology company best known for Laundroid, its laundry-folding robot. Using image recognition and robotic arms to identify and fold garments, the device was eventually meant to combine washing, drying and folding in a single cabinet. The company was also developing an in-nose medical device to make breathing easier during sleep. ## Why did it shut down? Laundroid was first unveiled at the CEATEC trade show in Tokyo in 2015, together with Panasonic and Daiwa House. The company raised a $60 million Series B in November 2016 and in March 2017 began taking pre-orders for a first, folding-only version. At around $16,000 and the size of a fridge, the product was a tough proposition for households; according to Engadget, at a 2018 demonstration it struggled to fold simple T-shirts that had not been prepared in advance. Despite roughly 10 billion yen in total investment, development costs outran the capital. On 23 April 2019 the company filed for bankruptcy at the Tokyo District Court, leaving debts of about 2.25 billion yen to 200 creditors. ## The story Folding laundry is known as one of the most tedious household chores. Tokyo-based Seven Dreamers Laboratories set out to hand the job over to a robot. The company's device, Laundroid, was first exhibited at the CEATEC trade show in Tokyo in 2015, together with Panasonic and Daiwa House. The fridge-sized machine used image recognition and robotic arms to identify the clothes placed inside it, folding and sorting them one by one. The long-term plan was to combine washing, drying and folding in a single cabinet. Investor interest was strong. In November 2016 a $60 million Series B arrived, led by Panasonic, Daiwa House and SBI Investment; in total the company raised about 10 billion yen, or around $89 million. Pre-orders for the first, folding-only version opened in March 2017. Seven Dreamers won the Japan heat of the Startup World Cup in 2018 and for years was a regular at CES in Las Vegas. Yet the product could not do what it promised. A price of around $16,000 was far too high for households. At a 2018 demonstration the machine struggled to fold simple T-shirts taken from a basket that had not been carefully prepared in advance. Recognising the type of a garment and folding it correctly pushed the super intelligence and robotics of the day to their limits. Development costs ate through the money raised across three funding rounds. On 23 April 2019 the company filed for bankruptcy at the Tokyo District Court, leaving debts of about 2.25 billion yen to 200 creditors. Company president Shinichi Sakane said that as cash-flow problems worsened, the future of the business could no longer be seen. Laundroid's story is a reminder that an impressive trade-show demonstration is not the same thing as a product that works at home every day. ## Lessons - In hardware, strip the first version down to doing one job reliably; the dream of a cabinet that both washed and folded used up the capital before folding alone was even finished. - Big corporate partners and trade-show buzz are not proof of technical maturity; taking pre-orders for a robot that has not been tested in real homes magnifies the risk. - Measure in advance the market for a household appliance whose price approaches that of a car; the number of homes that can afford a $16,000 folding machine is limited. ## Sources - [Laundroid](https://en.wikipedia.org/wiki/Laundroid) - [Laundroid company folds before its giant robot does](https://www.engadget.com/2019/04/23/laundroid-robot-seven-dreamers-bankruptcy/) - [Consumer robots still struggle as Laundroid maker Seven Dreamers files for bankruptcy](https://www.therobotreport.com/consumer-robots-still-struggle-as-laundroid-maker-seven-dreamers-files-for-bankruptcy/) - [The Japanese laundry-folding robot is dead - but the dream lives on](https://www.thestar.com.my/tech/tech-news/2019/05/04/the-japanese-laundry-folding-robot-is-dead---but-the-dream-lives-on) --- # Sinemia (2015 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/sinemia/ - Sector: Consumer apps - Country: Turkey - Total funding: $2.5 million - Cause of closure: Regulation and legal issues ## What did it do? Sinemia was a cinema subscription service founded in Istanbul in early 2015 by Rıfat Oğuz. Members paid a fixed monthly fee and could watch films regardless of cinema or showing. The company secured discounts by buying tickets in bulk from cinemas and processed payments through card infrastructure. After Turkey it expanded to the United States, the United Kingdom, Canada and Australia. ## Why did it shut down? According to the company, shortly after it entered the US its rival raised more than $300 million and cut prices aggressively. Lawsuits brought by the same rival cost up to $1 million each to defend, which made new investment harder to find. In April 2019, after a rise in user complaints, the individual membership model was discontinued in the US. In Turkey, Law No. 7163 abolished cinemas' bulk ticket discounts, wrecking the company's core business model. Stopgaps such as a top-up fee did not work under the new rules, and Sinemia ceased operations on 1 July 2019. The company also said it might offer memberships again if conditions changed; no separate record of a formal liquidation could be found. ## The story Launched in Istanbul by Rıfat Oğuz in early 2015, Sinemia set out to turn cinema-going into a subscription habit. Members paid a fixed monthly fee and could see any film they liked, regardless of showing or cinema. According to Webrazzi, the Turkish tech news site, at the end of 2015 the service had signed up members in more than 50 cities in its first year, and requests for invitations had passed 100,000. Around the same time it received its first investment, from Aslanoba Capital. In the years that followed, investors such as 500 Startups, Revo Capital and Social Capital joined. Sinemia expanded to the US, then to the UK, Canada and Australia. According to a report by egirişim in early 2019, the company had grown its revenue 38-fold the previous year and was generating 93 per cent of its sales abroad. The US, however, proved a far harsher arena than expected. According to the company's closure statement, a smaller rival was sold to a listed company shortly after Sinemia entered the US, gaining access to more than $300 million, and began selling memberships very cheaply. Defending the lawsuits the rival brought cost close to $1 million each. For a company that had raised $2.5 million in total, that burden was unsustainable. In April 2019, as complaints about hidden fees and cancellation problems grew, the individual membership model was suspended in the US. The decisive blow came from Turkey. Law No. 7163 barred cinemas from offering discounts on bulk ticket purchases. According to the company, the industry had begun withdrawing those discounts months before the law took effect. Interim models such as a top-up fee were tried, but the discounted subscription could not be kept alive. Sinemia ceased operations on 1 July 2019 and advised members who had paid without receiving the service to seek refunds through their banks. The statement also noted that membership sales could resume if the law changed or start-ups were granted an exemption; in other words, the announcement was a suspension of service rather than a permanent liquidation. Sinemia's story shows that global interest in an idea is not enough on its own. A rival's capital, the cost of litigation and a regulation that ended the discount the business model relied on all piled up at the same time. ## Lessons - If your business model depends on a single supplier discount, a regulation that ends that discount can finish you overnight. - Before entering a price war with a rival that has many times your capital, work out how many months you can last. - Rapid growth turns into a wave of complaints if your support and technology infrastructure is not ready. ## Sources - [Sinemia has shut down [Breaking News]](https://webrazzi.com/2019/07/12/sinemia-kapandi/) - [Turkish start-up Sinemia has shut down](https://egirisim.com/2019/07/12/yerli-girisim-sinemia-kapandi/) - [Private cinema club Sinemia receives investment from Aslanoba Capital](https://webrazzi.com/2015/12/30/ozel-sinema-kulubu-sinemia-aslanoba-capitaldan-yatirim-aldi/) - [Why did Sinemia end its individual membership model in the US market?](https://egirisim.com/2019/04/27/sinemia-abd-pazarinda-bireysel-uyelik-modelini-neden-sonlandirdi/) - [Sinemia earns 93 per cent of its revenue from overseas markets](https://egirisim.com/2019/01/02/sinemia-gelirlerinin-yuzde-93unu-yurtdisi-pazarlardan-elde-ediyor/) --- # Tink Labs (2012 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/tink-labs/ - Sector: Travel - Country: Hong Kong - Total funding: $160 million - Cause of closure: Ran out of cash ## What did it do? Tink Labs was a Hong Kong-based start-up that placed smartphones called Handy in hotel rooms for guests to carry around the city. With the device, guests got unlimited mobile data and free local calls, while hotels could promote their own services on the same screen. ## Why did it shut down? The company rolled out its devices rapidly, reaching around 600,000 rooms in more than 82 countries, but in 2019 the cash needed to sustain this network was close to running out. Undergoing a restructuring, Tink Labs told staff on 11 July 2019 that it would pull out of markets such as China, Denmark, Indonesia, the Philippines and South Africa. Operations stopped on 1 August 2019; around 80 per cent of staff were laid off, and more than 100 employees in Europe, the Middle East and Africa did not receive their July salaries. Hotels in Morocco and Thailand were told that cellular service on the devices would be cut off within a few hours. Contracts in Hong Kong and Singapore were transferred to a separate company called Blockone Limited. ## The story Terence Kwok founded Tink Labs in Hong Kong in 2012. The company's product, Handy, was a smartphone left in hotel rooms. Guests could take the device with them and use unlimited mobile data and free local calls around the city, while hotels could promote their own services and offers on the same screen. In Hong Kong, seeing a Handy phone in a hotel room became commonplace. Handy spread around the world quickly. At one point the company reached around 600,000 hotel rooms in more than 82 countries. It raised a total of USD 160 million from investors including Lee Kai-fu's Sinovation Ventures, Meitu founder Cai Wensheng and Foxconn-affiliated FIH Mobile, and its valuation passed USD 1 billion. That made it one of the handful of Hong Kong start-ups to reach a billion-dollar valuation. The collapse came swiftly in the summer of 2019. On 11 July staff were told that the Handy service would end in markets such as China, Denmark, Indonesia, the Philippines and South Africa. As part of a restructuring, the company announced that operations would stop on 1 August. Around 80 per cent of staff lost their jobs; more than 100 people in the Europe, Middle East and Africa offices did not receive their July salaries. Hotels in Morocco and Thailand were told by email that cellular service on the devices would be cut off within a few hours. Contracts with hotels in Hong Kong and Singapore were transferred to a separate company called Blockone Limited; but this company, too, stopped providing the devices free of charge to some Hong Kong hotels. Those affected included some serviced apartment chains in Europe. The Tink Labs story shows how fragile growth achieved by rapidly spreading hardware across a vast network can be without a solid revenue stream. A network that had reached hundreds of thousands of rooms fell apart within a few weeks as soon as financing dried up. ## Lessons - In a model that grows by spreading hardware across hotels, track market by market when each device pays for itself; expanding into 82 countries can also multiply the number of unprofitable markets. - A billion-dollar valuation is a measure of scale, not proof of profitability; spot and plan for the need to shrink before the cash runs out. - When deciding to close or downsize, prepare a plan for your responsibilities to employees and customers; unpaid salaries and a service cut off within hours do lasting damage to trust. ## Sources - [Tink Labs ceases Handy smartphone service in most markets](https://www.ttgasia.com/2019/08/27/tink-labs-ceases-handy-smartphone-service-in-most-markets/) - [Hong Kong start-up Tink Labs ends Handy smartphone service to nearly all markets amid restructuring](https://www.scmp.com/tech/start-ups/article/3021140/tink-labs-ceases-handy-smartphone-service-nearly-all-markets-it) - [Handy phones parent Tink Labs wound down](https://servicedapartmentnews.com/news/technology/handy-phones-parent-tink-labs-wound-down/) --- # uBiome (2012 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/ubiome/ - Sector: Health - Country: United States - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? uBiome was a biotechnology company that sequenced the human microbiome from samples of the gut, mouth, nose, skin and genital area taken at home. Customers bought a test kit, and the company's machine learning algorithms compared the results against its own microbiome database. The company later moved into clinical tests billed to health insurers, such as SmartGut and SmartJane. ## Why did it shut down? In April 2019 the FBI searched the company's office as part of an investigation into possible insurance fraud, including Medicare, and the clinical testing business was suspended. Co-founders Richman and Apte were placed on administrative leave by the board. The company filed for Chapter 11 restructuring in September 2019 and, less than a month later, converted to a Chapter 7 liquidation and closed. In 2021 the SEC charged the two co-founders with defrauding investors of $60 million; federal prosecutors brought a parallel criminal case. The FBI has considered both founders fugitives since 2021. ## The story In April 2019 FBI agents entered the office of a San Francisco start-up. The company in their sights was uBiome, which sequenced the microorganisms living in the human body, the microbiome. The investigation concerned possible insurance fraud, including against Medicare, the US public health insurance programme. uBiome was founded in 2012 by Jessica Richman, Zachary Apte and Will Ludington, scientists working at the California Institute for Quantitative Biosciences. Having raised $350,000 through crowdfunding in November 2012, the company attracted attention with its “citizen science” approach: customers took gut, mouth, nose or skin samples at home and sent them in, and the company used them both to give each person a report and to grow its own database. After Y Combinator, Andreessen Horowitz and 8VC invested. According to Business Insider, the company's valuation reached $600 million. Over time uBiome moved into clinical tests ordered by doctors and billed to health insurers. After the FBI search, clinical operations were suspended and co-founders Richman and Apte were placed on administrative leave by the board. The company filed for Chapter 11 restructuring in September 2019; less than a month later it converted to a Chapter 7 liquidation and closed. In March 2021 the US Securities and Exchange Commission (SEC) charged Richman and Apte with defrauding investors of $60 million. According to the SEC's complaint, the pair portrayed uBiome as a fast-growing company with a solid business model, while that success rested on improper practices such as steering doctors into ordering unnecessary tests; submitting backdated and misleading medical records to insurers was also among the allegations. The same day, federal prosecutors announced a criminal case against the pair on federal charges including conspiracy to commit fraud and money laundering. These charges have not been resolved in court: the FBI has considered both founders fugitives since 2021. The uBiome story shows what a different risk landscape it is to move from a consumer data product to a clinical business that depends on insurance reimbursement. Growth figures are no reassurance to investors unless they explain how the revenue behind them was generated. ## Lessons - For a health product whose revenue depends on insurance reimbursement, have an independent compliance team audit your billing practices regularly. - State clearly which revenue line the growth figures shown to investors rest on, and the regulatory risk attached to that line. - Moving from direct-to-consumer testing to clinical testing means entering an entirely different realm of regulation and liability; prepare for it with the right team and processes. ## Sources - [UBiome](https://en.wikipedia.org/wiki/UBiome) - [SEC Charges Co-Founders of San Francisco Biotech Company With $60 Million Fraud](https://www.sec.gov/news/press-release/2021-49) - [Health tech start-up uBiome suspends clinical operations following FBI raid](https://www.cnbc.com/2019/05/06/ubiome-suspends-clinical-operations-after-fbi-raid.html) - [Everything we know about uBiome, the startup that convinced Silicon Valley that testing poop was worth $600 million, and then filed for bankruptcy amid an FBI investigation](https://www.businessinsider.com/ubiome-what-we-know-microbiome-startup-fbi-raid-ceos-resigned-2019-7) --- # Utrip (2011 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/utrip/ - Sector: Travel - Country: United States - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Utrip was a travel-planning platform that took a few basic details from travellers and used machine learning to produce personalised itineraries and sightseeing recommendations. The tool was free to consumers; its revenue came from licensing the software to hotels, cruise lines, airlines and destination organisations. ## Why did it shut down? Utrip had reached around 80 corporate clients, but it staked its future on a critical acquisition deal. A 94-page acquisition document was drawn up with an interested buyer; but three days before signing, the buyer's lawyers found a patent belonging to the rival WayBlazer that directly overlapped with Utrip's technology, and the deal was called off. Attempts to buy the patent also came to nothing. About seven weeks later, in May 2019, chief executive Gilad Berenstein told corporate clients that the company would cease operations. The closure caught clients unprepared; Atlanta's ATL Airport District had sent its USD 10,000 payment after a renewal request just five days before the closure announcement. ## The story Utrip, founded by Gilad Berenstein in Seattle in 2011, set out to personalise travel planning. Travellers supplied a few basic details, and the platform used machine learning to recommend activities and itineraries to suit them. The real business behind this tool, which was free to consumers, was licensing the software to tourism companies such as hotels, cruise lines and airlines. Starwood, JetBlue and Holland America were among its clients. In early 2017 the company raised a USD 4 million round with participation from executives at Apple and Costco as well as Acorn Ventures, Plug and Play and Tiempo Capital. Over time it reached around 80 revenue-generating corporate clients, many of whom liked the product. The beginning of the end came with acquisition talks. A 94-page deal document was drawn up with an interested buyer. Three days before signing, the buyer's lawyers found a patent belonging to the rival WayBlazer that directly overlapped with Utrip's technology. The deal was called off, and attempts to buy the patent also came to nothing. About seven weeks later, in May 2019, Berenstein told his corporate clients that Utrip would cease operations. The closure took both investors and clients by surprise. Atlanta's ATL Airport District, responding to Utrip's renewal request, had sent a USD 10,000 cheque to use the software for another year, just five days before the closure announcement. In Skift's assessment, Utrip had the potential to become a respectable, if not spectacular, business. Eight years of work ended when a future staked on a single deal collapsed at the last minute over a patent problem. Utrip's story is a reminder that the exit plan needs to be prepared at least as carefully as the product. ## Lessons - Before entering an acquisition process, scan the patent landscape around your own technology; a conflict found by the buyer's lawyers can wipe out months of work at the last minute. - Do not stake the company's future on a single acquisition deal; while negotiations run, pursue an alternative plan that extends your cash runway. - Collecting renewal payments from clients when closure has become likely damages your reputation and your legal position; communicate with clients promptly and openly. ## Sources - [Seattle travel planning startup Utrip will shut down after critical deal falls through](https://www.geekwire.com/2019/seattle-travel-planning-startup-utrip-will-shut-critical-deal-falls/) - [What happened to Utrip? Abrupt end to Seattle travel startup blindsides investors and clients](https://www.geekwire.com/2019/happened-utrip-abrupt-end-seattle-travel-startup-blindsides-investors-clients/) - [What Utrip's Tragic Final Year Can Teach Other Travel Startups](https://skift.com/2019/06/25/what-utrips-tragic-final-year-can-teach-other-travel-startups/) --- # Vreal (2015 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/vreal/ - Sector: Gaming - Country: United States - Total funding: $15 million - Cause of closure: Bad timing ## What did it do? Vreal was a live-streaming platform that let streamers playing virtual reality games share the 3D environment of the game world with their viewers. Viewers wearing VR headsets could create their own avatars and stand next to the streamer, or explore the scene as passive observers. ## Why did it shut down? At its Series A round in February 2018 the platform was still in closed alpha, and it only opened in early access on Steam in June 2018. The full experience required both streamer and viewer to own VR hardware, narrowing an already small audience even further. An option to watch from a web browser was added experimentally only about two months before the closure. Around 18 months after the investment, in August 2019, the company closed, saying the VR market had not developed as fast as it had hoped and that it had been ahead of its time. ## The story Vreal was founded in Seattle in 2015 by Todd Hooper and set out to answer an ambitious question: what if, instead of watching a gamer on a screen, you could step inside the virtual world they were playing in? The platform streamed the entire 3D environment of a streamer playing a virtual reality game to viewers. Viewers wearing a VR headset could stand beside the streamer with their own avatars or wander the scene as passive observers. UploadVR described it as a Twitch for virtual reality. The idea excited investors. After a $3.3 million seed round in 2015, an $11.7 million Series A followed in February 2018, led by Axioma Ventures with participation from Intel Capital, AET Fund, Upfront Ventures, Vulcan Capital and CRCM Ventures. That brought total investment to $15 million. At the time the platform was still in closed alpha and supported the Oculus Rift, HTC Vive and Google Daydream. In June 2018 it opened in early access on Steam. The problem was the size of the target audience. The full experience required both streamer and viewer to own VR hardware, and virtual reality headsets did not spread as fast as expected. The company only managed to add an experimental option to watch from a web browser, for those without a headset, about two months before it closed. In August 2019, around 18 months after its Series A, Vreal announced that it was closing and laying off its staff. The company's statement stressed that the VR market had not developed as fast as it had hoped and that it had been ahead of its time. The team added that it had wanted to share the magic of virtual reality with everyone and had achieved that vision technically. Vreal's story shows how expensive the right technology at the wrong time can be. ## Lessons - For a product that depends on hardware adoption, calculate market size not from the number of devices sold but from the number of people who use them regularly. - In a model that requires both creator and consumer to own the same expensive hardware, open a door from day one for users without it. - If you raise a big round on an optimistic assumption about market timing, recalibrate your burn rate frequently against the market's actual growth. ## Sources - [Virtual reality game-streaming platform Vreal shuts down](https://techcrunch.com/2019/08/07/virtual-reality-game-streaming-platform-vreal-shuts-down/) - [Vreal VR Broadcasting Startup Shuts Down](https://www.uploadvr.com/vreal-closes-shuts-down/) - [Vreal raises $11.7M to take virtual reality game streaming mainstream](https://siliconangle.com/2018/02/07/vr-streaming-platform-vreal-raises-11-7m-mainstream-immersive-broadcasts/) --- # ŞefGibi (2017 – 2019) - URL: https://girisimcikafasi.com/en/startup-graveyard/sefgibi/ - Sector: Food and drink - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? ŞefGibi was a start-up that sent weekly subscription meal kits to people who wanted to cook at home. Each kit contained illustrated recipe cards and all the ingredients needed for the recipes in the right portions. Six different recipes were offered each week, and the dishes could be prepared in 30 to 35 minutes. The service delivered to central districts of Istanbul. ## Why did it shut down? According to the founders, ŞefGibi was growing in numbers, but its business model did not pay for itself. As food prices rose, the price of a kit climbed to around 180 TL, and at that level orders fell. Keeping the business going would have required raising the price to around 250 TL, which risked driving customers away. Because cash flow was not enough to scale, the founders halted the subscription operation in July 2019. The team then pivoted to a platform producing healthy-living content. ## The story Orçun Seviğ and Korgün Koyunpınar were two friends whose busy working lives left no time to try new things in the kitchen. Searching for recipes, shopping and portioning ingredients took the joy out of cooking. In spring 2017 they decided to turn this frustration into a business, spent the summer preparing and launched ŞefGibi in the autumn. The model was simple. Each week subscribers chose from six recipes, and illustrated recipe cards and precisely measured ingredients arrived at their door. The recipes, mostly based on red meat, chicken, fish and vegetables, could be prepared in 30 to 35 minutes. According to a February 2018 report by egirişim, a Turkish start-up news site, the venture was growing by around 10 per cent a week. A Webrazzi report in October 2018 said that kits for two cost between 120 and 130 TL, that more than 100 households had cooked over 1,000 meals and that the team consisted of six people. The founders planned to raise investment and expand first to all of Istanbul, then to Ankara and İzmir. Rising food prices, however, upset the calculations. When kit prices climbed to around 180 TL, orders began to fall. By the founders' reckoning, keeping the business going would have required raising the price to around 250 TL. According to an egirişim report in July 2019, rather than raising the price further and pushing the market, the team chose to walk away, and ŞefGibi ended its operations. Two weeks later Koyunpınar told egirişim that they had closed the subscription operation and turned to a healthy-living platform. According to him, monthly subscriber growth was between 20 and 30 per cent, but costs had exceeded the level that could be passed on to customers and cash flow was not enough to scale. ŞefGibi's story shows clearly that a growing customer base cannot save an unprofitable model. In a business where the cost of ingredients makes up most of the price, inflation eroded the margin a little more every week. ## Lessons - In ingredient-heavy businesses such as meal kits, inflation erodes margins fast; test price elasticity early. - Your growth rate will not save you while your unit economics are negative; track the profitability of every order. - Stopping in time is also a decision; you can change direction before your resources run out. ## Sources - [Meal-kit start-up ŞefGibi ends its operations (in Turkish)](https://egirisim.com/2019/07/13/yemek-pisirme-paketi-gonderen-girisim-sefgibi-faaliyetlerini-sonlandirdi/) - [Subscription meal service ŞefGibi pivots because it was not profitable (in Turkish)](https://egirisim.com/2019/07/30/abonelik-modelinde-yemek-gonderen-sefgibi-kar-etmedigi-icin-pivot-etti/) - [ŞefGibi, the weekly meal-kit start-up that makes cooking at home easier (in Turkish)](https://webrazzi.com/2018/10/25/evde-yemek-yapmayi-kolaylastiran-haftalik-yemek-paketi-girisimi-sefgibi/) - [ŞefGibi: a start-up delivering meal kits (in Turkish)](https://egirisim.com/2018/02/02/sefgibi-yemek-pisirme-paketi-teslimati-saglayan-bir-girisim/) --- # 1V1Y (Bir Varmış Bir Yokmuş) (2011 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/1v1y/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Macroeconomic crisis ## What did it do? 1V1Y was an e-commerce site founded in 2011 as a partnership of 16 Turkish retail brands, including Kiğılı, Hotiç, İpekyol, Koton and Derimod. Named after Bir Varmış Bir Yokmuş, the Turkish equivalent of “once upon a time”, the site started out with a private shopping model, selling seasonal and limited-edition products through flash campaigns. In 2015 it struck a deal with Morhipo to sell each other's private-label brands. ## Why did it shut down? Yalçın Ayaydın, boss of İpekyol and one of the co-founders, told the Turkish business news site Patronlar Dünyası that the decision to liquidate had been taken because of economic events, and that e-commerce sites constantly demand capital. According to Webrazzi, some of the partner brands had come under economic strain before the closure, and some had closed shops. Ayaydın stressed that the company owed nobody money and would not seek a concordat (court-supervised debt restructuring). Although the partnership of strong brands secured product supply, when the partners' own core businesses were shaken, their willingness to keep funding the digital channel waned; this last sentence is an interpretation. ## The story In October 2011 familiar names in Turkish retail embarked on an unusual venture. Sixteen brands, including Kiğılı, Hotiç, Desa, İpekyol, Koton, Derimod, Zeki Triko, Saat&Saat and the Turkish arm of Diesel, set up a joint online shop. Its name came from the opening of Turkish fairy tales: Bir Varmış Bir Yokmuş, “once upon a time”, or 1V1Y for short. Patronlar Dünyası wrote that the most striking thing about the project was its founders; doyens of the industry, from Abdullah Kiğılı to Mehmet Hotiç, had come together on the same board. 1V1Y was born at the height of the private shopping model's popularity. In a 2011 market review by Webrazzi, the Turkish tech news site, it was described as the newest player, a joint platform of big retail companies focusing on seasonal and limited-edition products. By 2013 the team, led by founding general manager Gizem Burteçin, had grown to 110 people. In 2015 1V1Y and Morhipo, the shopping site of Turkish retail group Boyner, began selling each other's private-label brands under a deal covering more than 60 brands. By 2018, however, the picture had changed. According to Webrazzi, some of the partners were in economic difficulty and some had closed their shops. There was almost nothing left to sell on the site. At the end of October 2018 news broke of the decision to liquidate the company, which had capital of 51 million TL. İpekyol boss Yalçın Ayaydın, in a statement to Patronlar Dünyası, attributed the decision to economic developments and summed up the situation in a single sentence: “E-commerce sites are companies that constantly demand capital.” Ayaydın also stressed that the company owed nobody money. In November 2018 visitors to the site were greeted by a message saying that the operations carried on since 2011 had been suspended for a while. No report could be found of the partnership company returning to sales after this suspension, which the announcement called temporary. According to Internet Archive captures, however, a site selling products under the same name on the same domain has been live since August 2019; this research could not verify whether that site has any link to the company that decided to liquidate in 2018. The 1V1Y story shows that bringing strong brands together is not enough on its own: when the partners' own core businesses were shaken, the digital channel they had set up together could not survive either. ## Lessons - A partnership model breaks at its weakest link when the partners' own businesses come under strain; have an independent funding plan. - E-commerce demands constant capital; a long race cannot be won with a one-off injection of shared capital. - If you are closing, a debt-free, orderly liquidation protects the brands' reputations. ## Sources - [1V1Y, the fashion brands' e-commerce coalition, is closing](https://webrazzi.com/2018/11/02/1v1y-kapaniyor/) - [1V1Y.com, set up by 16 famous bosses, is being liquidated...](https://www.patronlardunyasi.com/16-unlu-patronun-biraraya-gelerek-kurdugu-1v1ycom-tasfiye-ediliyor) - [Breaking: Is 1V1Y closing? 1V1Y enters liquidation](https://www.haberturk.com/son-dakika-1v1y-kapaniyor-mu-1v1y-tasfiye-surecine-girdi-2203456-ekonomi) - [E-commerce site 1v1y.com, operating since 2011, suspends operations](https://www.egirisim.com/2018/11/19/2011den-beri-faaliyet-gosteren-eticaret-sitesi-1v1y-com-operasyonlarini-durdurdu/) - [This week on Start-up Offices we visited the 1V1Y.com office](https://webrazzi.com/2013/05/23/girisim-ofisleri-1v1y/) - [1V1Y.COM home page, Internet Archive capture](https://web.archive.org/web/20190817173757/http://www.1v1y.com/) --- # Airware (2011 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/airware/ - Sector: Hardware - Country: United States - Total funding: $118 million - Cause of closure: Lost to competitors ## What did it do? Airware developed hardware, software and cloud services that let businesses collect and analyse aerial data using drones. Sectors such as construction, mining and insurance could measure roof damage, mine output or site progress with a drone instead of a helicopter or scaffolding. ## Why did it shut down? Because the drones on the market could not produce the data it needed, the company set out to design its own hardware, but once DJI's and eBee's products caught up those projects were shelved. Over time the software bundled with other manufacturers' drones became good enough, and Airware's edge narrowed. The company switched to a consulting-led model, but layoffs followed one after another in its last two years. According to the company, the market matured later than expected and the cash ran out while the necessary transformations were under way. Airware ceased operations on 14 September 2018. ## The story On the morning of 14 September 2018 Airware employees learned that the company would cease operations that same day. The decision came so suddenly that only four days earlier the company had opened an office in Tokyo with investment and a partnership from Mitsubishi. Jonathan Downey founded Airware in 2011 in Newport Beach, California, frustrated by how inflexible and expensive existing autopilot systems for drones were. The company first developed an autopilot and operating system that let drones collect data by following set routes, and moved to San Francisco in January 2014. Its target customers were insurers measuring roof damage, mining sites and construction sites. It raised a total of $118 million from investors such as Andreessen Horowitz, GV and Kleiner Perkins; former Cisco CEO John Chambers also joined the $30 million Series C in March 2016. In 2015 Airware set up a fund investing in commercial drone start-ups, and in 2016 it acquired the drone analytics company Redbird; its headcount at one point reached 140. The problem was that Airware was running ahead of the market. According to a former employee who spoke to TechCrunch, because the drones on the market could not produce data in the detail the company's software needed, Airware designed two drones itself, one multi-rotor and one fixed-wing. When DJI's and eBee's hardware caught up with requirements, both projects were shelved; what remained was spent engineering time and manufacturing costs. Over time the software that came with other manufacturers' drones also became good enough, and Airware's edge melted away. The company turned to advising customers on drone use, but layoffs followed one after another in its last two years. The company's closing statement summed up the situation in one sentence: the market had matured “more slowly than we anticipated”, and the financial runway ran out while the necessary transformations were under way. Its remaining assets were bought by Delair, a French drone maker based in Toulouse. The lesson of Airware is that arriving early can be an expensive burden as well as an advantage. If you try to fill an infrastructure gap on your own, your investment can lose its value overnight once a big player fills that gap. ## Lessons - If you are a software company, assess whether the hardware on the market will catch up within a year or two before you start building hardware yourself. - If you compete with software that big manufacturers give away free, build a layer that sells customers a measurable business outcome. - Plan for the time a market takes to mature on a pessimistic rather than an optimistic scenario, and set your cash runway accordingly. ## Sources - [Airware](https://en.wikipedia.org/wiki/Airware) - [Drone startup Airware crashes, will shut down after burning $118M](https://techcrunch.com/2018/09/14/airware-shuts-down/) - [Drone Startup Airware Raises $30 Million, Adds Cisco's John Chambers To Board](https://www.forbes.com/sites/ryanmac/2016/03/31/drone-startup-airware-makes-larger-enterprise-push-adds-former-cisco-ceo-to-board/#649ec235aac4) --- # BuldumBuldum.com (2006 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/buldumbuldum/ - Sector: E-commerce - Country: Turkey - Total funding: $6 million - Cause of closure: Ran out of cash ## What did it do? BuldumBuldum.com was a Turkish e-commerce site founded by Güçlü Gökozan, selling personalised products and gifts. Alongside the website it also had physical shops. It raised four rounds of investment from some of Turkey's best-known angel investors and aimed to expand abroad. ## Why did it shut down? According to founder Güçlü Gökozan, the company had been in financial difficulty for some time; as Bloomberg HT reported, the rise in exchange rates in 2018 made things worse still. According to an egirişim report, on top of the financial problems, some people becoming involved in the process in a different way made matters even harder. The aim of the last investment round was to speed up international expansion, but resources ran out before that goal was reached. In a statement on Twitter, Gökozan said they had reached the point where they were struggling in vain, and on 28 September 2018 he shut down all operations. ## The story BuldumBuldum.com (roughly "I found it, I found it" in Turkish) took its name from exactly what it did: interesting, personalised products that were not easy to find elsewhere. Founded by Güçlü Gökozan around 2006, the site became a regular stop for gift hunters. Over time it spilled beyond the internet and opened physical shops. The company drew the interest of well-known names in the Turkish start-up ecosystem. Hasan Aslanoba, Nevzat Aydın, Melih Ödemiş, Bedii Can Yücaoğlu and Birol Yücel were among its shareholders. As Bloomberg HT reported, BuldumBuldum raised more than USD 6 million over four rounds; the 2015 round was done at a valuation of 60 million TL. According to Webrazzi, a further investment round was completed in March 2017, and it was expected to speed up international expansion. In the months before the closure, however, it had long been the talk of the ecosystem that the company was going through a difficult period. In 2018 the rapid fall of the Turkish lira deepened its existing financial problems. On 28 September 2018 Gökozan announced on Twitter that he was shutting down BuldumBuldum.com and all its operations with effect from that day. In his statement he described the point he had reached: “I've come to feel that, with all these difficulties, we were struggling for nothing.” Gökozan thanked the customers who had made them happy with their orders over 12 years, as well as investors and suppliers. He said all customers whose orders had not arrived or who were awaiting refunds would get their money back. And so the 12-year-old brand passed into history only a year and a half after a new investment round. BuldumBuldum's closure became one of the examples showing how the currency shock of 2018 hit not only large companies but also mid-sized e-commerce start-ups. In the same period other e-commerce sites, such as 1V1Y, also halted operations. ## Lessons - If your costs depend on exchange rates, currency risk can be existential; set your pricing and stock policy accordingly. - A new investment round is not a solution; it buys time, so use that time to fix your unit economics. - If you decide to close, prioritise customer refunds; your reputation carries over to your next venture. ## Sources - [BuldumBuldum.com is closing](https://webrazzi.com/2018/09/28/buldumbuldum-com-kapaniyor/) - [Buldumbuldum.com, in business for 12 years, is closing](https://www.bloomberght.com/12-yildir-faaliyette-olan-buldumbuldumcom-kapaniyor-2160346) - [BuldumBuldum, a start-up with a 12-year journey behind it, is closing](https://egirisim.com/2018/09/29/12-yillik-bir-seruvene-sahip-olan-girisim-buldumbuldum-kapaniyor/) - [Buldumbuldum.com, in business for 12 years, is closing](https://www.haberturk.com/unlu-e-ticaret-sitesi-buldumbuldumcom-kapaniyor-2163265-ekonomi) --- # Navdy (2013 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/navdy/ - Sector: Hardware - Country: United States - Total funding: $42 million - Cause of closure: No market need ## What did it do? Navdy made an aftermarket head-up display that connected to a smartphone and projected navigation, call and message notifications onto a transparent screen in the driver's line of sight. The device was controlled by hand gestures above the steering wheel and by voice commands. ## Why did it shut down? Having taken $1 million in orders in the first week of its pre-order campaign in August 2014, the company planned to deliver the device in early 2015. The product only went on sale in October 2016, at $799, far above the $299 early backers had paid; the price was later cut to $499. Head-up displays never became a mainstream category, and rivals such as Garmin and alternatives starting at under $50 crowded the market. Having raised close to $42 million from investors including Harman, Qualcomm and Upfront Ventures, Navdy began an assignment for the benefit of creditors on 26 October 2017. In January 2018 it told customers that it was no longer operating and that the devices might stop working within a few weeks. ## The story Navdy was a hardware company founded in San Francisco by entrepreneur Doug Simpson. Having gone through the Highway1 incubator programme in 2013, it worked with PCH International on manufacturing. The goal was a head-up display that could be fitted to any car, letting drivers see navigation, calls and messages without taking their eyes off the road. The pre-order campaign launched in August 2014 exceeded expectations, gathering $1 million in orders in the first week; by October 2014 confirmed orders had reached $2.4 million. In the same period $6.5 million came in from investors including Upfront Ventures, Lightbank and Ludlow Ventures. The company planned to deliver the device in early 2015. The hardware timetable, however, slipped. Navdy only went on sale in October 2016, at $799, far above the $299 early backers had paid. The device was generally well received in reviews, a partnership aimed at carmakers was set up with Harman, and Qualcomm joined the investors. Total investment approached $42 million. Even so, head-up displays remained a niche product; rivals such as Garmin and alternatives starting at under $50 crowded the market. The price was cut to $499. In autumn 2017 the company went quiet on social media and began leaving customer questions unanswered. On 26 October 2017 Navdy began an assignment for the benefit of creditors, a process used in California as an alternative to bankruptcy. A few days later Simpson said the company was operating, but in January 2018 an email to customers announced that the company was no longer doing business, that its assets were being liquidated and that the devices might stop working within a few weeks. Navdy's story shows how, in hardware, delay wears away price, competitiveness and customer trust all at once. ## Lessons - In hardware, missing a delivery date is not just a delay; in the meantime prices, rivals and customer expectations change, so build your plan around that risk. - Do not mistake pre-order excitement for mass-market demand; close the gap between the price given to early backers and the real cost of production before launch. - Hiding from customers and the press in hard times destroys trust; after months of silence, Navdy announced by email that its devices might stop working. ## Sources - [Navdy contacts would-be creditors, prepares to liquidate](https://techcrunch.com/2017/11/27/navdy-contacts-would-be-creditors-prepares-to-liquidate/) - [Navdy says units may stop functioning](https://www.digitaltrends.com/cars/navdy-shutting-down/) - [Navdy's Heads-Up Display for your car starts shipping for $799](https://techcrunch.com/2016/10/25/navdys-heads-up-display-for-your-car-starts-shipping-for-799/) - [Heads-Up Display Navdy Hits $1M In Pre-Orders During First Week](https://techcrunch.com/2014/08/14/heads-up-display-navdy-hits-1m-in-pre-orders-during-first-week/) --- # Path (2010 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/path/ - Sector: Social media - Country: United States - Total funding: $66 million - Cause of closure: Acquired and shut down ## What did it do? Path was a mobile social network on which users shared photos and moments only with close friends and family. At first each user could have a circle of no more than 50 people; the limit was later raised to 150 and then removed altogether. The app was positioned less as a rival hub to Facebook than as an intimate complement to it. ## Why did it shut down? Path turned down a $100 million acquisition offer from Google in 2011 and chose to grow independently. In February 2012 the revelation that it had been storing users' phone address books without their knowledge caused a major backlash. In February 2013 the FTC fined the company $800,000 for storing data on underage users. Its largest user base turned out to be in Indonesia, and in May 2015 the company was sold to Kakao for an undisclosed sum. Kakao announced in September 2018 that it would shut the service down. ## The story In February 2011 Google wanted to buy Path, then just three months old, for more than $100 million. Dave Morin turned the offer down. The former Facebook executive believed that the app he had co-founded with Napster founder Shawn Fanning would become something much bigger. Path launched on 14 November 2010 as a refuge for people tired of crowded social networks. Users shared photos and moments with a close circle of no more than 50 people; the app was designed less as a meeting place than as an intimate complement to Facebook. The friend limit was raised over time to 150 and then removed altogether. Its first $2.5 million round included Ron Conway, Index Ventures and First Round Capital; in February 2011 came an $8.5 million round joined by Kleiner Perkins and Index Ventures. After a revamped version in November 2011 it raised $30 million from Redpoint Ventures, followed by another $25 million round in January 2014. The road was not smooth. In February 2012 it emerged that the app had been storing users' phone address books without their knowledge; Morin apologised and said the data had been deleted. Two members of the US Congress asked Path and 33 other app developers to disclose what data they collected. In February 2013 the FTC fined the company $800,000 for storing data on underage users. That same year there were complaints that unsolicited SMS invitations were being sent to people in users' address books; according to TechCrunch, Facebook also cut off Path's access to its friend-finding feature. Path's stronghold turned out not to be the market it had originally targeted: in 2014 its largest user base, with more than 4 million users, was in Indonesia. In May 2015 Kakao, the owner of a popular messaging app, bought Path for an undisclosed sum. On 17 September 2018 it was announced that the service would end, and from 18 October 2018 users could no longer access the app. Path's story shows how data scandals that shake user trust can leave a small social network defenceless against big rivals. Turning down Google's offer was a bold decision, but the growth that would have vindicated it never came. ## Lessons - When you turn down a big acquisition offer, commit in a written plan to the metric by which, and the timeframe within which, you will exceed that value. - Obtain explicit consent for every feature that accesses user data; in Turkey, breaches of KVKK, the data protection law, hit reputation and budget at the same time. - If your product takes hold in an unexpected country, consider early on rebuilding your revenue model and team around that market. ## Sources - [Path (social network)](https://en.wikipedia.org/wiki/Path_(social_network)) - [Google Tried To Buy Path For $100+ Million. Path Said No.](https://techcrunch.com/2011/02/02/google-tried-to-buy-path-for-100-million-path-said-no/) - [Path acquired by the makers of a popular messaging app](http://www.businessinsider.com/kakao-talk-buys-path-2015-5) --- # Pondr (2014 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/pondr/ - Sector: Social media - Country: Turkey - Total funding: $1 million - Cause of closure: Lost to competitors ## What did it do? Pondr was a social networking app founded by Aziz Akgül, who had worked at a technology-focused investment fund abroad. It had an Instagram-like design. Its key feature was that users could place two images side by side and ask people in their network which one was better. ## Why did it shut down? According to a Digital Age report citing the Turkish daily Hürriyet, Pondr's distinctive feature, the visual poll, gradually appeared on Facebook, Twitter and Instagram in the form of similar polling features. Once the giant platforms where users already spent their time offered the same function, there was no reason left to go to Pondr. The app's traffic steadily declined. In the end it was removed from the app stores, and its closure was announced in 2018. It appears that a product built on a single feature is defenceless once that feature is copied by big rivals (interpretation). ## The story Before stepping into entrepreneurship, Aziz Akgül worked at a technology-focused investment fund abroad. In 2014 he drew on that experience to build his own product: Pondr. Taking its name from the English word for thinking deeply, the app came with an Instagram-like design. On Sosyal Garaj, a programme published by Webrazzi, the Turkish tech news site, in February 2014, Akgül talked about his move from fund management to entrepreneurship and about Pondr. What Pondr promised was simple. Users placed two images side by side and asked others in their network which one was better. In this way an everyday choice could turn into a small vote involving their followers. The start-up's most prominent backer was the Turkish actor Halit Ergenç, a relative of Akgül's. According to a report in Hürriyet, Ergenç invested $1 million in the app. At the 2014 launch event, Ergenç listed the shortcomings of networks such as Facebook, Twitter and Instagram, said that Pondr filled those gaps and predicted that it would soon become a network used all over the world. Ergenç's claim was clear: “It will compete with the global giants.” But the global giants did not wait. Over time, similar polling features were added to Facebook, Twitter and Instagram. The feature that set Pondr apart had found its way into the apps users already opened every day. According to Digital Age, Pondr's traffic then steadily declined and the app was removed from the app stores. In April 2018 came the news that the app had closed. Pondr's four-year story shows the fragility of social networks built on a single clever feature. When the big platforms like an idea, they can add it to their own products within a few months and deliver it to millions of users with a single update. ## Lessons - If your product amounts to a single feature, it is only a matter of time before the giant platforms copy it. - Backing from a famous investor brings attention, but what keeps users is the product itself. - Before setting out to compete with global giants, ask yourself why they would leave room for you. ## Sources - [The social networking app Halit Ergenç invested in has closed (in Turkish)](https://digitalage.com.tr/halit-ergencin-yatirim-yaptigi-sosyal-ag-uygulamasi-kapandi/) - [This week's guest on Sosyal Garaj: Aziz Akgül, who moved from investment fund management to entrepreneurship (in Turkish)](https://webrazzi.com/2014/02/04/sosyal-garaj-aziz-akgul-pondr/) --- # Radar Radio (2014 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/radar-radio/ - Sector: Media and entertainment - Country: United Kingdom - Total funding: unknown - Cause of closure: Team problems ## What did it do? Radar Radio was a youth-focused online radio station that championed London's underground music, especially grime, rap and electronic genres. From its four-storey studio near the Barbican, it offered an uncensored platform to young DJs and presenters as well as well-known names such as Skepta. ## Why did it shut down? The station was kept afloat by money from MASH Holdings, the investment company of Sports Direct founder Mike Ashley, and lost more than £800,000 in 2016. In April 2018 the Pxssy Palace collective cut ties with the station, accusing it of stealing ideas, using the community as window dressing and relying on unpaid labour; former producer Ashtart Al-Hurra also said that harassment complaints had been brushed aside. DJs and shows left one after another, and the station suspended broadcasting on 16 April 2018. Accounts published in July 2018 showed that the company had debts of around £4 million, £3.6 million of it owed to its parent company, and that redundancy and consultancy costs were anticipated for winding down operations. ## The story Radar Radio was founded in London in 2014 by Ollie Ashley. Ashley was the son of billionaire Mike Ashley, founder of Sports Direct, and the station was kept afloat with the backing of his father's investment company, MASH Holdings. Broadcasting online from studios in a four-storey building near the Barbican, with annual rent of up to £250,000, Radar offered an uncensored platform to rising names in grime, rap and electronic music. Names such as Skepta and Snoochie Shy appeared on the station's broadcasts. Behind the glossy image, the finances were weak. Having spent around £500,000 on equipment in 2016, the station lost more than £800,000 that year. On average only 16 people were on the payroll; the vast majority of contributors were unpaid. In April 2018 the crisis erupted. The Pxssy Palace collective cut ties with the station, accusing it of stealing its ideas, using the community as window dressing and relying on unpaid labour. Former producer Ashtart Al-Hurra also said that complaints of sexual harassment had been brushed aside by management. It emerged that staff had been asked to sign non-disclosure agreements. DJs and shows left one after another; on 16 April 2018 the station announced it was suspending broadcasts until it was in a position to address the criticism that had surfaced. Accounts filed at Companies House in July 2018 showed that the company had debts of around £4 million, £3.6 million of it owed to MASH Holdings. The accounts anticipated around £270,000 in redundancy payments and £230,000 in consultancy costs for winding down operations. Radar Radio's collapse showed that a cultural brand's reputation depends directly on how it treats the community it rests on. ## Lessons - A media brand that grows on the labour of a community loses both its trust and its content at once if it does not give that community fair pay and a say. - Non-disclosure agreements and the absence of formal HR processes do not silence complaints; they only delay the explosion and make it bigger. - A wealthy backer's money is no substitute for a revenue model; a loss-making broadcaster caught in a reputational crisis has nothing to hold on to. ## Sources - [Radar Radio halts broadcast following harassment and censorship allegations](https://www.dazeddigital.com/music/article/39697/1/radar-radio-halts-broadcast-following-harassment-and-censorship-allegations) - [The Rise and Demise of Radar Radio](https://www.vice.com/en/article/the-rise-and-demise-of-radar-radio/) - [Radar Radio has ended up £4 million in debt](https://mixmag.net/read/radar-radio-owes-4-million-in-debt-news) --- # Rethink Robotics (2008 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/rethink-robotics/ - Sector: Hardware - Country: United States - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Rethink Robotics made low-cost collaborative robots (cobots) that could work safely alongside people in factories and be programmed without specialist knowledge. Baxter and its smaller, faster sibling Sawyer communicated with workers through animated faces on a screen and learned new tasks when their arms were guided by hand. ## Why did it shut down? Thanks to their ease of use, the robots attracted interest in research labs, but sales to factories fell short of expectations. Denmark's Universal Robots emerged as a strong rival with a broader hardware ecosystem. Running low on cash, the company held talks to sell itself to another firm, but the deal fell through at the last minute. In October 2018 it abruptly ceased operations, laid off its 91 employees and put its intellectual property up for sale. ## The story In 2008 Rodney Brooks and Ann Whittaker founded a company in Boston, originally named Heartland Robotics. The aim was to replace the expensive industrial robots locked behind safety cages in factories with low-cost robots that could work right next to people and did not need specialist programmers. The company's first product, Baxter, was the showcase for this idea. With a face animated on a screen, it showed its co-workers what it was about to do, and it learned a task once a worker took hold of its arm and demonstrated the movement. In 2015 came Sawyer, designed to be smaller and faster and to handle more precise work. Ease of use and safety features made the robots popular in research labs. The company was regarded as one of the pioneers of the collaborative robot category known as "cobots", won awards and was an Edison Awards finalist. Interest in the lab, however, did not translate into sales to factories. According to The Verge, citing the Boston Globe, sales of Baxter and Sawyer were disappointing and the company's cash dwindled. In the market, Denmark's Universal Robots had emerged as a strong rival offering a broader hardware ecosystem, such as a variety of grippers. Rethink held talks to sell itself to another company, but the deal fell through at the last minute. CEO Scott Eckert told the Globe that the company had come out "a bit early" with a highly innovative product and had not achieved the commercial success it expected. In October 2018 Rethink abruptly ceased operations, laid off its 91 employees and put its intellectual property up for sale. The German automation company HAHN Group bought all of the patents, trademarks and the Intera 5 software platform; around 100 Baxter robots and the rights to sell them in North America went to China's Hunan CoThink Robotics. The brand lived on in Germany for a while under HAHN, but Rethink Robotics GmbH closed in August 2024, and an attempted relaunch that followed also came to an end the next year. Rethink's story shows that the company that first creates a category may not be the one that makes money from it. Pioneering also gives rivals a chance to learn; and cash that runs out before sales and an ecosystem are in place leaves even the most innovative product on the shelf. ## Lessons - If you are creating a new category, make repeat orders on the production line your measure of success, not admiration in the lab. - If your rival offers an ecosystem of complementary products, a good robot on its own will not win the purchasing decision; find integration partners. - Do not pin everything on a single acquisition negotiation; prepare a scenario in your cash plan in which the deal falls through. ## Sources - [Rethink Robotics](https://en.wikipedia.org/wiki/Rethink_Robotics) - [Pioneering creator of collaborative ‘cobots’ Rethink Robotics shuts down](https://www.theverge.com/2018/10/4/17935820/rethink-robotics-shuts-down-baxter-sawyer-robot-cobots) - [Rethink Robotics’ assets bought by Hahn, Universal Robots hires 20 employees from pioneering firm](https://venturebeat.com/ai/failed-rethink-robotics-assets-bought-by-hahn-but-universal-robots-hires-20-employees-from-pioneering-firm/) - [One-armed factory robot Sawyer goes on sale](https://www.bbc.com/news/technology-34350234) --- # Setmoda (2017 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/setmoda/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Setmoda was a fashion e-commerce site launched in summer 2017 by MNG Holding, the Turkish conglomerate. It suggested clothes to users according to their mood, putting different pieces together into an outfit with one click and steering shoppers towards buying them as a set. The site sold more than 5,000 products and set out with a team of around 100 people. ## Why did it shut down? Around eight months after launch, in February 2018, Setmoda announced in a short notice on its website that it was ceasing operations. MNG Holding made no official statement about the reason for the closure. According to industry commentary reported by Hürriyet columnist Jale Özgentürk, the holding had invested the wealth built up from cargo and tourism in textiles and retail, a field far removed from its own. The same commentary argued that the site could not compete with Instagram boutiques, which were growing fast on the wave of cheap fashion. It was also reported that customer complaints about the site had begun to rise before the closure. ## The story MNG Holding was a group of companies that started out in construction contracting in the 1980s and grew through tourism and cargo. According to Jale Özgentürk, writing in the Turkish daily Hürriyet, chairman Mehmet Nazif Günal founded an e-commerce company to support his children's search for a new sector. According to Habertürk, the move came right after the group's decision to sell MNG Kargo to the Dubai-based Mirage Cargo. And so setmoda.com went live in June 2017. The site's idea was simple: suggest clothes to users according to their mood at that moment, and turn different pieces into an outfit with one click, sold as a set. Its slogan summed up the idea: "Modanı resetle" (“Reset your style”). According to Habertürk, CEO Tuğrul Çetintaş said after the launch that online retail needed fresh perspectives and that Setmoda would fill that gap. The site sold more than 5,000 products, and the team numbered around 100. The goal was to break quickly into the ranks of the industry's big names. The plan did not work. Webrazzi wrote that rumours of the site's closure had been circulating since January 2018. A notice published on the site on 17 February 2018 announced that operations had ended and that orders not yet dispatched would be delivered. Webrazzi had also noticed that the company's social media accounts had last been updated on 1 February. The site thus closed around eight months after launch. MNG Holding did not explain the reason for the closure. Industry commentary converged on two points: the holding had entered a business far from its own expertise, textiles and retail; and it had struggled to compete with the fast-multiplying Instagram boutiques selling cheap fashion. Setmoda's story remained a brief experiment showing that capital and logistics muscle are not enough on their own to create a fashion brand. ## Lessons - The backing of a powerful conglomerate does not make up for a lack of experience in a sector you do not know. - In a crowded market such as fashion, your rivals are not only the big sites but also the small boutiques selling on social media. - Starting with a team of 100 inflates fixed costs; do not scale before you have seen the demand. ## Sources - [MNG Holding's e-commerce venture Setmoda has closed](https://webrazzi.com/2018/02/17/mng-holdingin-e-ticaret-girisimi-setmoda-kapandi/) - [Opened with high hopes, 'Setmoda' closed in 8 months](https://www.haberturk.com/8-ayda-kapandi-1842864-ekonomi) - [Shopping site setmoda has closed](https://www.hurriyet.com.tr/ekonomi/e-ticaret-sitesi-kapadi-40745480) - [Shopping site setmoda has closed](https://digitalage.com.tr/alisveris-sitesi-setmoda-kapandi/) --- # Shyp (2013 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/shyp/ - Sector: Logistics and delivery - Country: United States - Total funding: $62.1 million - Cause of closure: Business model failed ## What did it do? Shyp was a service through which users summoned a courier to their door via an app; the courier collected the item, packed it and sent it via USPS or another major carrier. Founded in San Francisco, the company also expanded to New York, Miami, Los Angeles, Chicago and Philadelphia. In 2015 it added Shyp Returns, a feature that made it easier to return online purchases. ## Why did it shut down? As founder Kevin Gibbon later acknowledged, the service required serious investment to build physical operations in several cities. In 2015 the company moved its couriers from independent contractor status to full-time employment; it was one of the few on-demand service companies to do so. In July 2017, to reach profitability, it laid off most of its staff, withdrew from New York, Los Angeles and Chicago and focused on small businesses. When the hoped-for new investment and profitability did not arrive, CEO Kevin Gibbon shut the company in March 2018. ## The story In July 2017 Shyp's customers received an email they had not expected: from now on the company would operate only in San Francisco, pulling out of New York, Chicago and Los Angeles. In a blog post published the same day, CEO Kevin Gibbon wrote that the venture capital market had changed and that the bar for profitability had risen. According to Business Insider, he also listed what he would do differently with what he knew now: “We would have built profitability into the business from the very beginning.” Founded in San Francisco in 2013 by Kevin Gibbon, Joshua Scott and Jack Smith, Shyp promised to take the hassle out of shipping. The user summoned a courier through the app, and the courier collected the item from the door, packed it and sent it on its way via USPS or another major carrier. The company raised $2.1 million in September 2013. It expanded to New York in September 2014, Miami in November 2014, Los Angeles in May 2015 and Chicago in September 2015. In March 2015 it launched Shyp Returns, which made it easier to return purchases from shops such as Amazon, Target and Nordstrom. A further $50 million arrived in April 2015; with the Series B led by Kleiner Perkins, total investment reached $62.1 million. Shyp also made a decision that set it apart among on-demand service companies: in 2015 it moved its couriers from independent contractor status to full-time employment. Chicago became the first city whose team consisted entirely of salaried employees. Before long the company was running courier, packing and shipping operations in six major US cities. In the 2017 retrenchment the company laid off most of its staff and decided to focus on small businesses and high-volume shippers, relying in part on an eBay integration. Gibbon acknowledged that in a business whose physical operations were spread across several cities, they should first have succeeded in a single market. But the new plan did not deliver the expected results. In March 2018 Gibbon announced that the company would close and that all employees would be laid off. Shyp's story shows that in on-demand logistics, growth is itself a cost. Every new city meant a new warehouse, new couriers and a new source of losses. ## Lessons - In a service that needs physical operations, prove you make a profit per order in your first city before moving to a second. - Answer early the question of whether you serve individual consumers or high-volume businesses; revenue density usually lies with businesses. - Build decisions about worker status into your cost model from the start; switching later changes your unit economics overnight. ## Sources - [Shyp](https://en.wikipedia.org/wiki/Shyp) - [Shyp, a startup that wants to kill the post office, is scaling back operations and laying off employees](http://www.businessinsider.com/shyp-closes-new-york-los-angeles-chicago-layoffs-2017-7) - [How Shyp Sunk: The Rise And Fall Of An On-Demand Startup](https://www.fastcompany.com/40549442/how-shyp-sunk-the-rise-and-fall-of-an-on-demand-startup) - [https://www.wikidata.org/wiki/Q18157023](https://www.wikidata.org/wiki/Q18157023) --- # Sobee (2000 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/sobee/ - Sector: Gaming - Country: Turkey - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Sobee was a games studio founded in Istanbul in 2000 as Dinç İnteraktif by Mevlüt Dinç, who had worked in the UK games industry for 15 years; it took the name Sobee in 2004. It developed Dual Blades for the Game Boy Advance, İstanbul Kıyamet Vakti, the first Turkish MMORPG, and the online 11-a-side football game I Can Football. Its games were built on Actor, a game engine developed by Dinç. ## Why did it shut down? Sobee was bought by Türk Telekom in 2009 and in 2013 merged with TTNET, losing its status as a company and becoming a department. According to Emre Kurttepeli, one of its first investors, the studio's ambitious, big-budget game did not prove very successful. According to Wikipedia, Türk Telekom's management decided to close the studio in June 2017 and all projects other than İstanbul Kıyamet Vakti were terminated. After the game's Karaköy expansion pack was released in March 2018, the studio closed completely. The founder's departure and the studio's transformation into an internal unit of a telecoms company narrowed its scope to develop as an independent games company (interpretation). ## The story Mevlüt Dinç entered the games industry in the UK, where he had gone for a master's degree in 1983, and worked there for 15 years. After returning to Turkey, he founded Dinç İnteraktif in Istanbul in 2000; the company took the name Sobee in 2004. According to Fast Company Türkiye, Emre Kurttepeli, founder of the Turkish web portal Mynet, was among the studio's first investors, and it was his first start-up investment. Sobee notched up many firsts for the Turkish games industry. Dual Blades, developed for the Game Boy Advance, became the first Turkish game on a Nintendo platform. Then came İstanbul Kıyamet Vakti, set entirely in Istanbul and Turkey's first home-grown massively multiplayer online role-playing game. In a 2010 interview with Webrazzi, Dinç said the game had more than 600,000 members and that the online football game I Can Football had reached more than 170,000 active users. In 2009 Sobee was bought by Türk Telekom. Dinç stayed on for a while, then left to pursue new ventures. According to Wikipedia, in 2013 the studio merged with TTNET, losing its status as a company and becoming a department. Looking back, Kurttepeli says the ambitious, big-budget game did not prove very successful. During its time as a department, the studio released an open beta of a new online role-playing game called Kader Mühürleri in 2016. But in June 2017 Türk Telekom's management decided to close the studio. All projects other than İstanbul Kıyamet Vakti were terminated, and after the game's Karaköy expansion pack was released in March 2018, the studio closed completely. Sobee's story shows both the courage and the limits of the pioneering era of game development in Turkey. The studio set out to prove that world-class games could be made with local talent, and achieved one of the first big breakthroughs. But under the roof of a telecoms company, the game's fate passed out of the hands of the creative team and into those of corporate priorities. Today, as Turkey's big games companies achieve global success in mobile, Sobee is remembered as the first stop on that journey. ## Lessons - If you sell your studio to a company outside gaming, creative decisions become tied to that company's priorities. - Building your own game engine is an advantage, but if the team that built it leaves, technical debt piles up fast. - A big-budget first game is a risk that takes a long time to pay back in a small market. ## Sources - [Sobee](https://tr.wikipedia.org/wiki/Sobee) - [The big game](https://fastcompany.com.tr/teknoloji/buyuk-oyun/) - [Interview: talking about Turkey's games market with Mevlüt Dinç](https://webrazzi.com/2010/03/26/roportaj-mevlut-dinc-ile-turkiye-oyun-pazarini-konustuk/) --- # Theranos (2003 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/theranos/ - Sector: Health - Country: United States - Total funding: $700 million - Cause of closure: Fraud ## What did it do? Theranos was a blood-testing company that claimed it could run a large number of tests quickly and cheaply from a few drops of blood taken from a fingertip. It promised to transform the laboratory industry with compact devices of its own design and opened testing sites in Walgreens stores. ## Why did it shut down? The company's devices could not reliably perform most of the tests it promised. When reporting by The Wall Street Journal called the technology into question in 2015, regulators and business partners moved in. CMS sanctions, the end of the Walgreens partnership and a string of lawsuits shut off its sources of revenue. In 2018 the SEC charged the company and two of its top executives with misleading investors; the company was dissolved the same year. In January 2022 a jury found founder Elizabeth Holmes guilty of defrauding investors; the US Court of Appeals for the Ninth Circuit upheld the verdict in February 2025. ## The story In 2003 Elizabeth Holmes, a 19-year-old who had dropped out of chemical engineering at Stanford, founded Theranos with the promise of a future in which a single drop of blood from a fingertip could be used to run a large number of tests. The idea was to make the blood test, one of the most ordinary yet most common procedures in healthcare, cheap, quick and painless. The promise soon won over investors, a dazzling board that included former cabinet secretaries, and major retail chains. The company raised more than USD 700 million and reached a valuation of around USD 9 billion in 2013 and 2014. Testing sites opened in Walgreens stores, and Holmes became one of the favourite faces on magazine covers. Behind the scenes, however, the company's own devices could not reliably perform most of the tests it promised, and some tests were being run on standard machines made by other manufacturers. The breaking point came in 2015. Reporting by The Wall Street Journal's John Carreyrou, based on interviews with former employees, brought into the open that the technology did not work as claimed. The regulators followed: CMS, the federal agency that oversees laboratories, imposed sanctions, the Walgreens partnership ended, and lawsuits came one after another. In October 2016 the company announced it was closing its laboratories and testing centres and would lay off around 40 per cent of its staff. In 2018 the US Securities and Exchange Commission (SEC) charged Theranos, Holmes and former company president Sunny Balwani with misleading investors. In September 2018 the company announced that it had failed to find a buyer and would hand its remaining assets to creditors. In the criminal case, a jury found Holmes guilty on four counts in January 2022, and in November 2022 the court sentenced her to 11 years and 3 months in prison. The US Court of Appeals for the Ninth Circuit upheld the conviction and sentence in February 2025. Balwani, for his part, was convicted on all 12 counts against him in July 2022. The Theranos story shows how covering an unfinished product with a dazzling narrative can turn into disaster in fields that touch human health. A high valuation, famous names and media attention were no substitute for independent verification. Investors and partners accepted secrecy as a justification without seeing a working product with their own eyes, and that allowed the problems to go unnoticed from outside for years. ## Lessons - In regulated fields such as healthcare, scaling a product without opening it to independent verification exposes the company to a risk it cannot bear. - Famous investors and a glittering board are no substitute for technical scrutiny; have your product tested by outsiders. - If a culture of secrecy silences the warnings coming from your team, problems blow up outside instead of being solved inside. ## Sources - [Theranos](https://en.wikipedia.org/wiki/Theranos) - [Theranos, CEO Holmes, and Former President Balwani Charged With Massive Fraud](https://www.sec.gov/news/press-release/2018-41) - [Elizabeth Holmes sentenced to 11 years in Theranos fraud case](https://www.nbcnews.com/business/business-news/elizabeth-holmes-sentenced-theranos-trial-rcna57344) - [US court upholds Theranos founder Elizabeth Holmes's conviction](https://www.theguardian.com/technology/2025/feb/24/elizabeth-holmes-theranos-conviction) - [https://www.wikidata.org/wiki/Q16956307](https://www.wikidata.org/wiki/Q16956307) --- # Webnak (2014 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/webnak/ - Sector: Logistics and delivery - Country: Turkey - Total funding: unknown - Cause of closure: No market need ## What did it do? Webnak was a digital freight platform set up in 2014 within Turkey's Aslanoba Group. Corporate firms and small businesses that needed goods moved posted their loads on the system like listings, and lorry drivers bid for them through a mobile app. The aim was to cut out middlemen and, with GPS tracking, make haulage faster, safer and cheaper. ## Why did it shut down? Hasan Aslanoba explained the closure in a single sentence: product-market fit had not been achieved. Over four years the platform brokered more than 70,000 shipments and ended 2017 with a turnover of TL 30 million, but this volume never turned into a sustainable business. At launch, the targets had been a 5 per cent market share and annual revenue of TL 90 million within five years. The company wound down its operations without making an official statement on its website. Since no detailed reasons were given, it can only be suggested, as an interpretation, that creating a lasting digital habit in a fragmented, field-based haulage market is hard. ## The story During the 23 years he ran Erikli, the Turkish bottled water company, Hasan Aslanoba ran into the same problem again and again: finding a lorry to carry the product on time and at a reasonable price. One of Turkey's most active angel investors in internet start-ups, Aslanoba decided in 2014 to solve this problem with a venture of his own. Webnak was born within the Aslanoba Group as a platform that would connect shippers directly with lorry drivers. The model was simple. Firms posted their haulage needs on the system like listings, drivers bid through a mobile app, and the job was tracked by GPS. In an interview with Metal Dünyası, Aslanoba said the heavy haulage market was worth around TL 60 billion a year and that about 768,000 lorries were operating in Turkey. The company started out with 20 people working in the field across five regions and 7 at head office. The target was a 5 per cent market share and annual revenue of TL 90 million within five years. Webnak grew for a while. According to UTİKAD, the Turkish logistics association, the platform brokered more than 70,000 shipments over its four-year life, and according to the trade outlet Kargo Haber it ended 2017 with a turnover of TL 30 million. But the numbers fell short of the targets and the business model never bedded in. In November 2018 Aslanoba summed up his decision briefly to egirişim: "We could not achieve product-market fit." The platform ceased operations on 31 December 2018. No official announcement was made on the company's website; the customer message reported by UTİKAD said completed shipments would be paid for and invoices had to be submitted by 2 January 2019. egirişim recorded Webnak as the last start-up to close in 2018. Webnak's story shows that knowing an industry's problem inside out is not enough to find the product that solves it. Aslanoba understood the problem from the inside and had capital and a network. Even so, in a fragmented market bound by its habits, striking a balance that would keep both carriers and shippers on the platform at the same time proved impossible. ## Lessons - Turnover growth is not product-market fit; measure repeat, profitable usage separately. - Growing with a field team in fragmented, traditional industries is expensive; test your unit economics early. - Announcing a closure openly protects the trust you have built with customers and carriers. ## Sources - [Hasan Aslanoba's investment Webnak is closing](https://egirisim.com/2018/11/26/hasan-aslanobanin-yatirimi-webnak-kapaniyor/) - [Aslanoba's venture Webnak ceased operations on the last day of 2018](https://egirisim.com/2019/01/02/aslanobanin-girisimi-webnak-2018in-son-gununde-faaliyetlerini-durdurdu/) - [Digital freight platform Webnak ceases operations](https://www.kargohaber.com/dijital-yuk-platformu-webnak-faaliyetlerini-durdurdu-4859h.htm) - [Is Webnak shutting down?](https://www.utikad.org.tr/Detay/Sektor-Haberleri/24809/webnak-faaliyetlerine-son-mu-veriyor-) - [How was the Webnak idea born? Hasan Aslanoba tells us about Webnak](https://metaldunyasi.com.tr/tr/roportajlar/42/webnak-is-fikri-nasil-dogdu-hasan-aslanoba-bize-webnaki-anlatti.html) --- # Wonga (2006 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/wonga/ - Sector: Fintech - Country: United Kingdom - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Wonga was a London-based company offering short-term, unsecured, high-cost personal loans applied for online and through a mobile app. It developed technology that assessed credit risk entirely automatically and operated in the UK as well as countries such as Spain, Poland and South Africa. Its annual percentage rate, calculated at 1,509 per cent, put it at the centre of the debate over predatory lending. ## Why did it shut down? In 2014 the UK's financial regulator, the FCA, found the company's debt collection practices unfair, ordered compensation for customers and introduced new controls across the sector. As the rules tightened, the company's customer base in Britain shrank sharply, and the annual pre-tax loss announced at the end of 2015 rose to £80.2 million. A data breach in 2017 and the end of its sponsorship deals made matters worse. A surge in compensation claims over past loans left even the £10 million emergency injection from shareholders in August 2018 insufficient. The company went into administration on 30 August 2018. ## The story 1,509 per cent. That figure, calculated as Wonga's annual percentage rate, sums up both the company's rise and its end. A £100 loan taken out for 17 days cost £113.60 to repay; because the term was short the sum looked small, but the rate it produced when annualised made the company the symbol of the predatory lending debate in the UK. Errol Damelin and Jonty Hurwitz founded Wonga in October 2006. Both had experience as internet entrepreneurs but no background in banking; when British banks refused to fund them, they found venture capital from Balderton Capital. In the first months traditional credit assessment methods failed and default rates climbed to around 50 per cent. In response the company built a risk system that assessed applications entirely automatically. In the year after its full launch in July 2008 it made around 100,000 loans. A £13.9 million round with Accel Partners and Greylock Partners followed in 2009, and a £73 million round led by Oak Investment Partners in 2011. In 2011 the company made a £45.8 million profit on £185 million of revenue, and in 2012 it became Newcastle United's sponsor. The break came from the regulator. In 2014 the FCA found that between 2008 and 2010 Wonga had sent borrowers letters that appeared to come from non-existent law firms, and ordered compensation for affected customers. New rules introduced across the sector that year shrank the company's customer base in Britain sharply. The annual pre-tax loss announced at the end of 2015 reached £80.2 million. In 2017 a data breach affected around 245,000 customers. The final blow was compensation claims over loans made in the past. In August 2018 shareholders put in £10 million of emergency capital, but it was not enough: Wonga went into administration on 30 August 2018 and Grant Thornton was appointed to wind the company down. The number of claims quadrupled after the collapse; claimants recovered only 4.3 per cent of what they were owed. Wonga showed that a technologically advanced product cannot keep alive a business model that harms its customers. When the rules changed, every loan that had once been profitable turned into a retrospective liability. ## Lessons - For credit products that directly affect consumers, build your model around the stance the regulator may take tomorrow, not the one it takes today. - Heavy-handed or misleading collection methods may make money in the short term, but they come back many times over as retrospective compensation. - Automated credit scoring is a powerful advantage, but make not lending to people who cannot repay an explicit goal of the model. ## Sources - [Wonga.com](https://en.wikipedia.org/wiki/Wonga.com) - [Wonga collapses into administration](https://www.theguardian.com/business/2018/aug/30/wonga-collapses-into-administration) - [Wonga raises £73m to feed loan appetite](https://www.ft.com/content/1c1fb866-39f3-11e0-82aa-00144feabdc0) --- # Yogome (2010 – 2018) - URL: https://girisimcikafasi.com/en/startup-graveyard/yogome/ - Sector: Education - Country: Mexico - Total funding: $36.5 million - Cause of closure: Team problems ## What did it do? Yogome was a Mexican education technology company that developed educational mobile games for children from kindergarten to fifth grade. Offering more than 2,000 activities across nine subjects in six languages, the company operated in San Francisco as well as Mexico City. ## Why did it shut down? In March 2018 the company raised a $26.9 million Series B, taking its total investment to $36.5 million. In September 2018 an employee sharing inconsistencies between internal metrics and publicly disclosed figures with an investor set things in motion. In early October 2018 the board shut down operations, announcing that the previous management had jeopardised the company's financing through misconduct. According to press reports citing unnamed sources, download and sales figures had been inflated since late 2016. More than 150 employees lost their jobs with the closure. ## The story Yogome was born in Mexico City in 2010 when Manolo Díaz and Alberto Colín turned their web development business into educational video games. The company developed mobile games for children from kindergarten to fifth grade, with more than 2,000 activities across nine subjects in six languages, and also began operating in San Francisco. It was seen as one of the brightest names in Latin America's start-up ecosystem. In March 2018 Yogome announced that it had raised a $26.9 million Series B and reached 6 million monthly active users in more than 50 countries. That took its total investment to $36.5 million. Investors included Exceed Capital, Seaya Ventures, Variv Capital, Endeavor Catalyst and 500 Startups. Just seven months later the picture had changed completely. According to EdSurge, at a company meeting in September 2018 an employee shared with an investor inconsistencies between the company's internal metrics and the figures disclosed publicly. In early October 2018 the board told employees that the previous management had jeopardised the company's financing through misconduct and that operations were ending. The statement also referred to poor financial management and harmful deals. According to reports in the Mexican press citing unnamed sources, download and sales figures had been inflated since late 2016; it was also alleged that the company's website carried false praise attributed to certain media outlets. The sources make no mention of any court ruling on these allegations. With the closure, more than 150 employees lost their jobs, 140 in Mexico and 10 in the US. 500 Startups partner Santiago Zavala warned that the closure would make raising capital in Latin America harder and increase scrutiny of governance standards. ## Lessons - Keep your user and revenue metrics verifiable against independent sources such as app stores and payment providers; the figures presented to investors must never diverge from those inside the company. - Do not concentrate reporting and financial control in one person's hands; after a large funding round, take governance steps such as an independent audit and a finance director straight away. - Set up a channel through which employees can safely speak up when they see inconsistencies; at Yogome the problem came to light when an employee spoke to an investor. ## Sources - [Months After Raising $27M, Education Startup Yogome Shuts Down Amid Fraud Allegations](https://www.edsurge.com/news/2018-10-24-months-after-raising-27m-education-startup-yogome-shuts-down-amid-fraud-allegations) - [Mexican edtech startup, Yogome, shuttered due to fraud](https://latamlist.com/mexican-edtech-startup-yogome-shuttered-due-to-fraud/) --- # Beepi (2013 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/beepi/ - Sector: Marketplaces - Country: United States - Total funding: $150 million - Cause of closure: Ran out of cash ## What did it do? Beepi was a Mountain View-based marketplace that inspected and prepared private sellers' used cars, sold them online and delivered them to the buyer's door. It aimed to eliminate dealership commissions and build trust through strong customer service. It operated in 16 markets in the US. ## Why did it shut down? As it chased a high valuation, the company lost its cost discipline; according to a former employee, at its peak it was burning around $7 million a month. A round targeted at $300 million in 2015 stalled at $70 million, and a strategic investor wanted to pull out in 2016. Rival dealerships began offering similar services at lower cost. When sale talks with Fair.com and DGDG collapsed, the company sold its assets for the benefit of creditors in 2017. ## The story The used cars Beepi sold were delivered to buyers with a huge bow tied to the bonnet. The promise on the company's website said as much: “A bow for everyone.” That small detail summed up the pitch of the start-up founded in Mountain View in 2013: to make buying a used car, without ever setting foot in a dealership, as enjoyable as buying a new one. The model of Beepi, founded by Ale Resnik and Owen Savir, was simple. Sellers entrusted their cars to Beepi, which inspected and prepared them, sold them online and delivered them to the new owner's door. That cut out dealerships' high overheads and commissions. The model excited investors: around $150 million was raised from 35 investors, including Yuri Milner, Redpoint, Foundation Capital, Sherpa Capital and Fabrice Grinda, and at one point the company was valued at $560 million. In 2015 CEO Resnik told The Wall Street Journal that they were targeting a $300 million round at a $2 billion valuation. That round never came; the round that closed in December 2015 stalled at $70 million, and, according to TechCrunch's estimate, the Chinese carmaker that led it wanted to pull out of the company in 2016. Spending, meanwhile, was high. According to a former employee, at its peak of 300 employees the company was burning around $7 million a month, a large part of it going on high salaries and overtime. Problems such as failing to get number plates and registration documents to new owners on time marred the customer experience; and when dealerships began offering a similar service at much lower cost, the model became harder to defend. In December 2016 Beepi closed its operations outside California, laid off 180 people and announced a merger with Fair.com, which had not yet launched. That deal fell through over a disagreement about terms; talks with DGDG, a Bay Area dealership group, also came to nothing because the company ran out of money. In February 2017 The Wall Street Journal reported that Beepi had begun selling its assets through an assignment for the benefit of creditors, an alternative to bankruptcy. Beepi shows that a marketplace that loses its cost discipline while chasing a valuation can unravel within months when a single investor pulls back. ## Lessons - Make the gap between monthly burn and revenue, not your valuation target, the board's main agenda item. - In operations-heavy marketplaces involving vehicle inspection, registration and delivery, do not open new markets before proving your unit economics in a single city. - Do not make a round depend on one large strategic investor; have a plan B ready in case that investor pulls out. ## Sources - [Car startup Beepi sold for parts after potential exits to Fair, and then DGDG, broke down](https://techcrunch.com/2017/02/16/car-startup-beepi-sold-for-parts-after-potential-exits-to-fair-and-then-dgdg-broke-down/) - [Used-car marketplace Beepi shuts down outside of CA, merges with stealth Fair.com](https://techcrunch.com/2016/12/07/used-car-marketplace-beepi-shuts-down-outside-of-ca-merges-with-stealth-fair-com/) - [Beepi Winding Down After Burning Through $150 Million](https://www.wsj.com/articles/beepi-winding-down-after-burning-through-150-million-1487203816) --- # Beme (2014 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/beme/ - Sector: Social media - Country: United States - Total funding: $6 million - Cause of closure: Acquired and shut down ## What did it do? Beme was a media company, and a mobile app of the same name, founded by well-known YouTube creator Casey Neistat and Matt Hackett. The app let users share videos of between 2 and 8 seconds with their followers instantly, with no way to edit or preview them. The aim was to offer an unfiltered sharing experience in place of the curated image of social media. ## Why did it shut down? Although the app drew attention in 2015, the company was spending about $180,000 a month with a small team and had raised $6 million in total. In November 2016 CNN bought the company, reportedly for $25 million, with the aim of building a new media brand for a young audience. The new owner's priority was not the app but the team's talent, and the Beme app was shut down on 31 January 2017. The founders left in January 2018 and Beme joined CNN Digital Studios. ## The story When you shot a video on Beme, you could not watch it, trim it or add a filter. The clip, between 2 and 8 seconds long, went to your followers the moment it was recorded. Casey Neistat and Matt Hackett's idea was to offer an antidote to social media's culture of curated images; Adweek presented the app as a tool for weeding out fakery, and the art publication artnet discussed it as an experiment in avoiding an artificial self-image. Neistat, a video maker and short-film director often described as a YouTube star, founded Beme Inc. with Hackett in New York in 2014. The app launched on iOS on 17 July 2015, and the Android version followed on 2 May 2016. In May 2016 Neistat told TechCrunch that the company had raised $6 million in total, had 11 full-time employees, 10 of them technical, was spending about $180,000 a month, and that he himself took no salary. With the Android version, the app had become available on both major mobile platforms. On 28 November 2016 CNN announced that it had bought Beme, reportedly for $25 million. CNN's aim was to invest in the company to build a new media brand for a young audience. Neistat explained the sale to his followers in a video on his YouTube channel. The next day Hackett emailed users: the Beme app would close on 31 January 2017. The team would work, with full creative control, on a new project due to launch in the summer of 2017; Jake Roper, host of Vsauce 3, joined the team as head of production. This new chapter did not last long either. On 25 January 2018 Neistat announced on his YouTube channel that he and Hackett were leaving Beme and that the company would join CNN Digital Studios; Neistat would continue to be credited among the programme's producers. The YouTube channel Beme News kept producing content until August 2019. Beme's story shows that a founder's strong following can give an app a fast start, but creating a lasting user habit is a separate job. What the acquiring company valued was not the app but the team's ability to produce content. ## Lessons - A founder's personal following gives you a fast start, but do not forget that the app has to retain users on its own. - Measure your monthly cash burn and remaining runway transparently; weigh up strategic options before your alternatives narrow. - When selling to a media company, be clear about expectations for the product's future; more often than not, what is being bought is the team and its talent. ## Sources - [Beme (company)](https://en.wikipedia.org/wiki/Beme_(company)) - [CNN buys Casey Neistat's Beme app, brings the YouTuber in-house](https://techcrunch.com/2016/11/28/cnn-buys-casey-neistats-beme-app-brings-the-youtuber-in-house//) - [CNN Acquires Social-Video Startup Beme, Co-Founded by YouTube Star Casey Neistat](https://variety.com/2016/digital/news/cnn-casey-neistat-beme-acquisition-1201927533/) --- # Bukoli (2014 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/bukoli/ - Sector: Logistics and delivery - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Bukoli was a delivery venture launched in 2014 by Borusan Lojistik, the logistics arm of the Turkish conglomerate Borusan. Instead of having parcels brought to their homes, online shoppers could collect them at a time that suited them from Bukoli points, made up of neighbourhood businesses such as corner shops, stationers, florists and pet shops, or from smart lockers called Bukolimatik. The service was offered in Istanbul as a delivery option on partner e-commerce sites. ## Why did it shut down? According to an email Borusan Lojistik sent to its business partners in June 2017, it had not been possible under current market conditions to continue Bukoli in a way that created the most value for all parties. The company gave no further reason. The model depended on a network intended to stretch across thousands of points reaching enough parcel density at each one; because the service was offered as an option on partner sites, volume depended largely on the choices of e-commerce partners and shoppers. This last assessment is an interpretation. The closure came a few days after Markafoni, a partner, announced its own closure; the sources do not say whether the two decisions were linked. ## The story Everyone who shopped online knew the line: "We came by, but you weren't in." Borusan Lojistik answered that problem with an internal venture called Bukoli. According to a statement the company made later, Bukoli began operating in 2014 and was positioned as one of the group's innovative business models. The idea was to take parcels not to the home but to the neighbourhood. At checkout, shoppers chose the Bukoli point nearest to them and could collect their parcel there after work or at the weekend. These points were neighbourhood businesses such as corner shops, grocers, stationers, florists and pet shops. According to Webrazzi's launch report in October 2015, Bukoli had reached 480 points across 33 districts of Istanbul and aimed to grow to 2,500 points in the city within five years, then expand to Izmir, Ankara, Bursa and Antalya. Its first partner sites included 1V1Y, kitapyurdu, e-bebek and Evidea. The network grew the following year. According to a promotional article published on Webrazzi in August 2016, more than 600 shopkeepers in Istanbul were working as Bukoli points and the service was offered as an option on 18 e-commerce sites. Smart lockers called Bukolimatik had been installed at locations including the Yenikapı and Bostancı İDO ferry terminals and Zorlu Center. By June 2017 the network covered the whole of Istanbul, and a partnership had been struck with Markafoni for same-day delivery. But the news that month was not an expansion; it was a closure. In an email to its business partners, Borusan Lojistik wrote that it was ending the Bukoli operation because it had not been possible under current market conditions to continue the venture in a way that created the most value for all parties. It asked sites to remove the Bukoli option and said orders placed by 30 June 2017 would be delivered. On 29 June, egirişim reported that the service had officially ended. Bukoli's story shows that even a cleverly designed distribution idea does not become economic without enough parcel density. The backing of a powerful group grew the network quickly, but size alone was not enough to carry the business. ## Lessons - In a delivery network it is not the number of points but the number of parcels per point per day that determines the economics; measure the two separately. - If your volume depends on an option on other companies' checkout pages, track early how often that option is chosen. - In a corporate venture, agree from the outset at what threshold the parent company will pull the plug. ## Sources - [Bukoli has closed](https://webrazzi.com/2017/06/05/bukoli-kapandi-mi/) - [Bukoli to close on 30 June](https://egirisim.com/2017/06/05/bukoli-30-haziranda-kapaniyor/) - [Bukoli officially ends its services](https://egirisim.com/2017/06/29/bukoli-hizmetlerini-resmen-sonlandirdi/) - [Borusan is closing Bukoli](https://www.capital.com.tr/sirket-panosu/sirket-panosu-haberleri/borusan-bukoliyi-kapatiyor) - [Bukoli: a new-generation delivery model for online shopping](https://webrazzi.com/2015/10/12/bukoli-internet-alisverislerinde-yeni-nesil-bir-teslimat-modeli) - [No more waiting in for parcels with Bukoli!](https://webrazzi.com/2016/08/18/bukoli-ile-kargo-bekleme-derdine-son/) --- # Butikbebe.com (2011 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/butikbebe/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Butikbebe.com was a private shopping site set up within Netset Group that sold products for mothers, mothers-to-be and babies through short-lived campaigns. Alongside product sales, it also ran campaigns focused on services and events. In 2014 it opened Butikbebe.az for the Azerbaijani market. ## Why did it shut down? The company made no statement about its closure; in a March 2017 report Webrazzi, the Turkish tech news site, wrote that there was no clear information on when or why it had closed, but that it had heard the company's business had slowed and it had shrunk its team. A 2017 round-up by Habertürk also noted that the site had closed without giving any reason. In 2012 Butikbebe was aiming to lead mother-and-baby private shopping, and Paramini, the private shopping site of its rival ebebek, had recently closed. Considering that big private shopping sites such as Markafoni and Limango were also struggling at the time, the model's general loss of momentum may have played a part in the closure; this is an interpretation. ## The story Mother-and-baby products were one of the liveliest categories in e-commerce. Netset Group, formed through the merger of several companies, entered the field in 2011 with a private shopping model and launched Butikbebe.com. The site sold products for mothers, mothers-to-be and babies at a discount through short-lived campaigns, and also made service- and event-focused sales. According to a Webrazzi report in September 2012, Butikbebe had by then reached around 300,000 members, was shipping an average of 400 orders a day and was opening around 50 new campaigns a week. Its first-year turnover was estimated at around 7.5 million TL. Özgür Aksakallı, co-founder of Netset Group, said they wanted to lead their category in 2013. The group had spent around 5 million TL on Butikbebe and its sister site Markduck, and employed a team of 35. Television advertising began in October 2012. Growth continued for a while. In August 2014 Butikbebe was dispatching an average of 800 to 1,000 parcels a day and targeting turnover of 12 to 14 million TL for the year. Around the same time a dedicated site for the Azerbaijani market, Butikbebe.az, was opened. What followed was silence. In March 2017 Webrazzi wrote that, according to comments online, the site might have closed one and a half to two months earlier. There were reports that the company's business had slowed and that it had shrunk its team, but there was no official statement. Its Facebook page, once held up as an example for its successful campaigns, had also been closed. In a list of closed e-commerce sites compiled by Habertürk the same year, the only note against Butikbebe was that it had closed without giving a reason. Butikbebe remains one of the vertical start-ups founded at the peak of the private shopping wave that quietly disappeared when the wave receded. ## Lessons - Leading a vertical category is not enough; if the sales model you chose is falling out of favour in the market, category leadership will not protect you either. - Growth accelerated by television advertising can slow just as fast when the advertising budget is cut. - When you close, explain yourself to your customers and community; a brand that closes quietly leaves question marks behind. ## Sources - [Mother-and-baby e-commerce site Butikbebe.com closes (in Turkish)](https://webrazzi.com/2017/03/24/anne-bebek-dikeyindeki-e-ticaret-sitesi-butikbebe-com-kapandi/) - [ButikBebe.com wants to lead mother-and-baby private shopping (in Turkish)](https://webrazzi.com/2012/09/12/butikbebe-com/) - [Turkish e-commerce sites that closed before Markafoni: why did online shopping sites shut down? (in Turkish)](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) - [Butikbebe.com, the e-commerce site selling mother-and-baby products, closes (in Turkish)](https://egirisim.com/2017/03/24/anne-bebek-urunleri-satan-eticaret-sitesi-butikbebe-com-kapandi/) - [Private shopping sites that closed before Markafoni (in Turkish)](https://webrazzi.com/2017/06/01/markafoni-kapanisi/) --- # Doppler Labs (2013 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/doppler-labs/ - Sector: Hardware - Country: United States - Total funding: $50 million - Cause of closure: Ran out of cash ## What did it do? Doppler Labs was a San Francisco-based audio technology company developing in-ear computing technology. After its first product, the Dubs earplugs, it released Here One in 2017: wireless smart earbuds that could selectively filter ambient sound, play music and amplify conversations. The company was founded in New York in November 2013. ## Why did it shut down? According to Business Insider, Here One sold only 25,000 units; the company had expected to sell more than 100,000. CEO Brian Hall explained that a design flaw left battery life shorter than expected and stopped the charging case working properly, which hurt early user reviews. With sales below target, investors would not put in fresh money and no reasonable buyer could be found. Products from tech giants, such as Apple's AirPods and Google's Pixel Buds, had also entered the same market. The company announced on 1 November 2017 that it would shut down. ## The story At the Coachella music festival in 2016, some of the audience listened to the concerts with small devices in their ears. Doppler Labs' Here Active Listening system promised to let listeners tune the sound around them to their own taste. The company's goal was to put a computer inside the ear. Doppler Labs was founded in New York in November 2013 by Noah Kraft, former Microsoft executive and angel investor Fritz Lanman, and Dan Wiggins; the company later moved to San Francisco. Kraft had previously worked alongside Lyor Cohen during the founding of 300 Entertainment. The first product, Dubs, reimagined the humble earplug. In July 2015 a $17 million Series B arrived, led by The Chernin Group, Wildcat Capital Management and Acequia Capital; names such as Henry Kravis and David Geffen were also among the investors. In July 2016 a further $24 million was raised in a round led by The Chernin Group, bringing total investment to $50 million. The timing looked promising. Apple had removed the headphone jack and launched AirPods, and the smart earbud category Doppler had helped pioneer was expected to become a $40 billion industry by 2020. Here One, released in 2017, could selectively filter ambient sound, play music and amplify conversations. But according to Business Insider, the device sold only 25,000 units; the company had expected more than 100,000. CEO Brian Hall explained that a design flaw had shortened battery life and caused problems with the charging case. Around the same time Google launched Pixel Buds with real-time translation; Kraft pointed out that Doppler had made considerable progress on a similar feature. With sales below target, investors would not put in fresh money and no buyer could be found. On 1 November 2017 the company announced it would cease operations, and it closed on 1 December. The remaining cash was set aside for what was owed to employees; as a parting gift, it released an app that let Here One be used as a hearing assistance device. Kraft told Business Insider: "At this point I would not advise anyone to go into the hardware business." Doppler Labs shows that spotting the right category early is not enough for a hardware start-up that ends up on the same shelf as the tech giants. ## Lessons - If a basic feature such as battery life falls short of target in your first hardware product, delaying the launch is cheaper than the cost of bad word of mouth. - In a category the giants have also entered, perfect the feature that sets you apart (for Doppler, hearing assistance) in your first product. - If closure is unavoidable, setting aside the remaining cash for obligations to employees and customers protects your reputation. ## Sources - [Doppler Labs](https://en.wikipedia.org/wiki/Doppler_Labs) - [A startup that raised $50 million to make a smarter version of Apple's AirPods has failed and shut down](http://www.businessinsider.com/why-doppler-labs-shut-down-2017-11?op=1) - [Once A Unicorn-To-Be, Smart-Earbud Startup Doppler Labs To Shut Down](https://www.forbes.com/sites/amyfeldman/2017/11/01/once-a-unicorn-to-be-smart-earbud-startup-doppler-labs-to-shut-down/#2d12effd159a) - [https://www.wikidata.org/wiki/Q39058626](https://www.wikidata.org/wiki/Q39058626) --- # Fotokritik (? – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/fotokritik/ - Sector: Social media - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Fotokritik was a community site where amateur and professional photographers uploaded their work, sorted it into categories and commented on each other's photos. It became one of the photography-focused platforms with the widest reach in Turkey. From 2006 it was part of the portfolio of Nokta, which also brought sites such as izlesene.com and blogcu.com under its roof. ## Why did it shut down? According to Tümay Asena, CEO of Nokta, the main reason for the closure was that the habit of sharing photos had largely moved to social media. Asena said that working with a loyal core of users resistant to change had delayed the team in seeing shifting user habits and device preferences. He added that in vertical internet products a static outlook paves the way for the product's demise. According to an assessment by the photography blog TozluMercek, based on forum statistics, as the craze for taking photos faded, the audience for such sites dwindled, and as traffic fell, infrastructure costs became unsustainable. Nokta decided to retire the site in 2017. ## The story In the mid-2000s Fotokritik was one of the busiest online communities in Turkey for amateurs and professionals interested in photography. Users uploaded their photos, sorted them into categories and critiqued each other's work. The site was the first product bought in 2006 by Nokta İnternet Teknolojileri, a company founded by a group of friends who met at Middle East Technical University (ODTÜ), as part of its push to grow in the Turkish market. According to a 2007 report in the Turkish daily Milliyet, Nokta had bought Fotokritik together with izlesene.com and blogcu.com for a total of USD 2 million. As Nokta's CEO Tümay Asena told Capital, over eleven years Fotokritik was home to hundreds of thousands of registered users and more than a million photos. Over time, however, the habit of sharing photos largely moved to social media. A vertical community site that had grown up in the desktop era lost its old appeal in the face of users' new devices and sharing habits. Asena attributes part of the problem to the site's own users. Working with a hard core of users resistant to change had delayed the team in seeing shifting habits and device preferences. In Asena's view, a static outlook in vertical internet products paves the way for the product's demise; constantly looking ahead and taking decisive steps is the nature of the business. Nokta decided to retire Fotokritik in 2017. In a 2018 post titled "Why did Fotokritik close?", the photography blog TozluMercek described the same picture using its own forum statistics. According to the author, there had been a strong craze for taking photos in 2011 and before; as it faded, the audience for photography forums dwindled, and by early 2016 the user population had halved. As traffic fell, infrastructure costs became unsustainable, and large and medium-sized photography sites closed or shrank one by one. Fotokritik's closure shows how one of the liveliest vertical communities of its era quietly passed into history as users moved to other platforms. It is also a reminder that the contentment of loyal users can mask change in the rest of the market. ## Lessons - The voice of your loyal core users must not stop you hearing where the rest of the market is going. - As users' device and sharing habits change, your product must change too. - A vertical community that cannot clearly protect a value the general platforms do not offer will wither away. ## Sources - [Experience that teaches](https://startup.capital.com.tr/arastirmalar/ogreten-deneyim.html) - [Why did Fotokritik close? What is happening to photography forums?](https://web.archive.org/web/20190718093249/https://www.tozlumercek.com/fotokritik-neden-kapandi-fotograf-forumlarina-neler-oluyor/) - [Six young ODTÜ graduates became millionaires by selling 'addresses'](https://www.milliyet.com.tr/ekonomi/odtulu-6-genc-adres-satarak-milyoner-oldu-204266) --- # GüvenRehberi (2013 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/guvenrehberi/ - Sector: Enterprise software (SaaS) - Country: Turkey - Total funding: unknown - Cause of closure: No market need ## What did it do? GüvenRehberi (guvenrehberi.com; the name means 'Trust Guide' in Turkish) was a SaaS start-up founded in early 2013 that let e-commerce sites be rated through customer reviews. By adding a snippet of code, sites collected reviews from customers who had shopped with them and used those reviews as references. The start-up also awarded a trusted-shop certificate to shops that met certain satisfaction criteria. ## Why did it shut down? In a statement in February 2017, co-founder Onur Onat said they had been unable to scale the start-up as far as they had aimed. As the main reason, he pointed to the market of independent online shops, those not owned by big groups and operating outside the marketplaces, which turned out to be far smaller and more commercially stagnant than they had estimated. Expanding abroad was not an option either, because many successful companies doing similar work already existed in the big markets. For a B2B service with a small customer base, this picture closed off the path to growth. ## The story In early 2013 Alpaslan Topçu and Onur Onat set out with an idea focused on the trust problem in Turkish e-commerce. Many people new to online shopping were wary of buying from a site they had never heard of. GüvenRehberi collected reviews from real customers via a snippet of code added to e-commerce sites' systems and turned them into a reference for the site's trustworthiness. It wanted to make positive experiences visible rather than complaints. In its eighth month it received investment from Aslanoba Capital; the amount was not disclosed. CEO Onur Onat said their goal was to win over to the sector people who were nervous about shopping online. In November 2013 Webrazzi, the Turkish tech news site, wrote that the start-up was serving more than 40 companies and was preparing to relaunch with a new design. The start-up also awarded a trusted-shop certificate to shops that met its satisfaction criteria. It also worked with Yandex.Market. In February 2017, however, GüvenRehberi announced that it was ending its services completely. The statement Onur Onat shared with Webrazzi made the reason for the decision plain. The market of independent online shops, those not owned by big groups and operating outside the marketplaces, had turned out, in Onat's words, to be “much smaller and more commercially stagnant than we had estimated”. Expanding abroad was not realistic either, because successful companies doing similar work already existed in the big markets. The founders chose to channel their energy into projects where they saw more potential; Aslanoba Capital made no further comment. One small note should be added to the story. Years later a new review platform launched under the same name and domain; in its own description this platform says it set out on 1 January 2025. The original GüvenRehberi, founded in 2013, had closed in 2017. Its story shows how a product aimed at a real problem can quietly come to an end when it cannot find a large enough customer base. ## Lessons - Before building a B2B product, measure how big your target customer segment really is. - If the domestic market is small, factor in from the start the competitors waiting for you abroad. - Closing a business that will not scale in good time and redirecting your energy to something with greater potential is a decision too. ## Sources - [Güven Rehberi, which rated e-commerce sites, ends its services (in Turkish)](https://webrazzi.com/2017/02/09/e-ticaret-sitelerini-degerlendiren-guven-rehberi-hizmetlerini-sonlandirdi/) - [All the investments made by angel investor Hasan Aslanoba (in Turkish)](https://egirisim.com/2013/12/08/melek-yatirimci-hasan-aslanobanin-yaptigi-tum-yatirimlar/) - [GuvenRehberi.com raises investment from Aslanoba Capital (in Turkish)](https://webrazzi.com/2013/08/19/guvenrehberi-aslanoba-yatirim/) - [GuvenRehberi.com: the start-up rating the trustworthiness of e-commerce sites with community support (in Turkish)](https://webrazzi.com/2013/11/25/guvenrehberi-eticaret-guvenilirlik/) - [About us (the new Güven Rehberi platform, in Turkish)](https://guvenrehberi.com/about) --- # Jawbone (1999 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/jawbone/ - Sector: Hardware - Country: United States - Total funding: $1 billion - Cause of closure: Product problems ## What did it do? Jawbone, officially AliphCom, was a San Francisco-based consumer electronics company. It made its name with noise-cancelling Bluetooth headsets, then launched the Jambox wireless speaker and the UP fitness tracker. In 2014 the company raised money at a valuation of more than USD 3 billion. ## Why did it shut down? Shortly after its 2011 launch, the UP band was hit by technical faults that led to refunds, and in 2012 the company effectively withdrew from the fitness tracker market. Later models were also dogged by reliability problems and delays. Meanwhile Fitbit, operating on far less capital, took 68 per cent of the North American fitness tracker market in 2014. The company stopped making trackers in 2016 and tried to pivot to clinical health devices. It went into liquidation in July 2017. ## The story Hosain Rahman and Alexander Asseily met while playing rugby at Stanford. The first backers of AliphCom, which they founded in 1999, were not consumers but military research bodies: the company worked on noise suppression with the Lawrence Livermore laboratory and received grants from the US Navy and DARPA in 2002. Using this technology, they launched a headset in 2004 that cancelled out background noise. The Jawbone Bluetooth headset that followed in 2006 sold in large numbers, and according to Fortune the company made substantial profits in 2007 and 2008. The global crisis of 2009 dried up sales and pushed back plans for a stock market listing. In 2010 the company renamed itself Jawbone and moved into new categories: the Jambox wireless speaker and, in 2011, the UP fitness tracker. UP was praised at first, but soon a manufacturing defect caused the devices to fail. Jawbone offered a full refund to anyone who wanted one and in 2012 effectively withdrew from the fitness tracker market. In 2015 Fortune wrote that the band's ambitious design had created durability problems and that the UP3 had missed the holiday season because of a production glitch. Money, however, was never in short supply. In 2014 Jawbone raised funds at a valuation of more than USD 3 billion; by early 2015 it had 450 employees and revenue in the hundreds of millions of dollars, but was still not profitable. Funds managed by BlackRock put in another USD 300 million, and according to TechCrunch total investment reached around USD 951 million. Over the same period Fitbit, which had raised just USD 66 million, took 68 per cent of the North American fitness tracker market in 2014. In 2016 Jawbone stopped making UP, sold off its remaining stock and tried to sell its audio business. According to The Verge, as a last throw of the dice it was working on a device for clinical-grade heart monitoring. In July 2017 the company went into liquidation, and its ongoing legal battle with Fitbit was handed over to the liquidation process. Around the same time Rahman founded a new health company called Jawbone Health Hub. Jawbone's story shows that abundant capital cannot fix a product reliability problem. Its rival, working with far less money, won the market with products that kept working on people's wrists. ## Lessons - In hardware, praise for the design does not make up for a product that breaks in the field; budget for durability testing before mass production. - Raising a lot of money is not a competitive advantage; study the unit economics of the rival who sells more with less capital. - Rather than fighting in several product categories at once, pick one profitable core category and defend it. ## Sources - [Jawbone (company)](https://en.wikipedia.org/wiki/Jawbone_(company)) - [Jawbone is being liquidated as its CEO launches a related health startup](https://techcrunch.com/2017/07/06/jawbone-is-being-liquidated-as-its-ceo-launches-a-related-health-startup/) - [Jawbone: The trials of a 16-year-old can't-miss startup](https://fortune.com/2015/01/22/jawbone/) - [https://www.wikidata.org/wiki/Q6166067](https://www.wikidata.org/wiki/Q6166067) --- # Juicero (2013 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/juicero/ - Sector: Hardware - Country: United States - Total funding: $120 million - Cause of closure: Product problems ## What did it do? Juicero was a company that designed and sold the Juicero Press, a Wi-Fi-connected cold-press juicer for fruit and vegetables. The machine worked only with single-use packs of pre-chopped fruit and vegetables that the company sold on subscription. It would not press until it had read and verified the QR code on each pack. ## Why did it shut down? Launched in March 2016 at $699, the machine sold slowly, and in January 2017 its price was cut to $399, well ahead of plan. In April 2017 Bloomberg showed that the packs could easily be squeezed by hand and that the resulting juice was almost indistinguishable from the machine's. The story made the company a laughing stock; Juicero offered all its customers a refund. The QR code on the packs, which worked as a lock blocking other manufacturers' packs, also drew criticism. In September 2017 the company halted sales, began buying back the machines and announced that it was looking for a buyer. ## The story In April 2017 Bloomberg published a simple experiment: when Juicero's fruit packs were squeezed by hand, the juice was almost indistinguishable from what the company's expensive machine produced. Within days Juicero had become a symbol of Silicon Valley inventing needless problems for itself. Founded by Doug Evans in San Francisco in 2013, the company aimed to turn cold-pressed juice at home into a subscription business. The Wi-Fi-connected Juicero Press worked only with packs of pre-chopped fruit and vegetables sold by the company. The packs, costing between $5 and $7 each, had a shelf life of about eight days, and the machine would not press until it had read and verified the QR code on each one. The industrial design was handled by Fuseproject, Yves Béhar's studio. Between 2014 and 2017 the company raised $120 million from investors including Kleiner Perkins and Google Ventures. The machine launched in March 2016 at $699, but sales remained slow. In October 2016 Jeff Dunn, former president of Coca-Cola North America, became CEO. In January 2017 the price was cut to $399, 12 to 18 months earlier than planned. After Bloomberg's story the company argued that squeezing by hand was messy and made for a poor user experience, then offered a full refund to all dissatisfied customers. Criticism also grew that the QR code system was not about safety but a lock blocking other manufacturers' packs. Venture capitalist Ben Einstein, who took the device apart, described the machine as an extraordinarily complex piece of engineering and argued that a simpler design could produce juice of similar quality for hundreds of dollars less. On 1 September 2017 Juicero stopped selling machines and packs, began buying the machines back from its customers and announced that it was looking for a buyer with a national fresh-food supply chain for the company and its intellectual property. According to the statement, building an effective nationwide production and distribution system required infrastructure they could not achieve on their own. Juicero shows that slick design and powerful investors mean nothing when they do not answer the customer's real question: could I get the same result without this device? ## Lessons - Before launch, test whether your hardware is really necessary for the customer by comparing it with the simplest alternative (here, squeezing by hand). - A device designed without a cost ceiling drives up the price; write the target price at the very start of the engineering process. - A design that locks users into your own consumables amplifies the backlash if it does not deliver value. ## Sources - [Juicero](https://en.wikipedia.org/wiki/Juicero) - [Squeezed out: widely mocked startup Juicero is shutting down](http://www.theguardian.com/technology/2017/sep/01/juicero-silicon-valley-shutting-down) - [Silicon Valley's $400 Juicer May Be Feeling the Squeeze](https://www.bloomberg.com/news/features/2017-04-19/silicon-valley-s-400-juicer-may-be-feeling-the-squeeze) --- # Kidimami (2016 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/kidimami/ - Sector: Marketplaces - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Kidimami was a Turkish start-up that described itself as a marketplace built by parents for parents. Families could list new or good-condition baby, children's and parenting products for sale and buy from other families' listings. Payments went through the platform, and the money for confirmed orders was passed on to sellers via Kidimami. ## Why did it shut down? Kidimami gave no reason in its closure announcement. According to a statement published on the company's website and reported by egirişim, operations ended on 30 June 2017, and from 1 July no buying or selling was possible on the platform. Only about a month before the closure, co-founder Canan Döşlü had appeared on an egirişim broadcast talking about the start-up, which suggests the decision was taken quickly. It could be said that managing trust, product checks and low basket values all at once is hard in second-hand children's products, but the sources do not confirm what part these played in Kidimami's closure; this is an interpretation. ## The story Baby and children's products have a short life. A pushchair, a toy or an item of clothing is outgrown within a few months, but is often still perfectly usable. Kidimami was set up to circulate this surplus between families. According to the company's own statement, the start-up was founded in 2016; Internet Archive records show that a teaser page was live on the domain at the end of 2015. The model was a marketplace. According to the site's own description, Kidimami had been built by parents for parents and acted as an intermediary for buying and selling new or good-condition baby, children's and parenting products. The platform also had a mobile app. egirişim presented the start-up as a service supporting a sharing economy between families. In May 2017 co-founder Canan Döşlü was talking about Kidimami on an egirişim video broadcast. Shortly after that broadcast, the company published a farewell message on its website. According to the message, operations were ending as of 30 June 2017, and after 1 July it would no longer be possible to buy or sell products through Kidimami. Completing orders not yet shipped, refunding buyers for cancellations and returns, and passing on payment for confirmed orders to sellers would continue throughout July. egirişim announced the closure in August 2017 and listed it among the highlights of the week. No reason was given for the closure. Nor are there any public figures on investment, users or transaction volume. TutumluAnne, which had been operating in the same space since 2013, would also close a few years later, in 2022, citing competition from big players. Kidimami's story is short but familiar: the need for second-hand children's products is real, but turning that need into a transaction system that is safe and pays its own way is another matter. ## Lessons - In a second-hand marketplace, look not at the number of listings but at how many of them actually turn into sales. - If you decide to close, announce a timetable for completing pending orders, refunds and seller payments; this last step is where trust is preserved. - In trust-based categories such as children's products, build the cost of product checks and returns into your unit economics from the start. ## Sources - [Kidimami ceases operations](https://egirisim.com/2017/08/09/kidimami-faaliyetlerini-durdurdu/) - [Kidimami: a marketplace for new and second-hand baby and children's products](https://egirisim.com/2017/05/29/kidimami-yeni-2-el-bebek-cocuk-urunleri-pazaryeri/) - [Week in review: Kidimami closes, investments in App Samurai and 11Sight, Lonca and more](https://egirisim.com/2017/08/13/haftanin-ozeti-kidimami-kapandi-app-samurai-11sight-yatirimi-lonca-dahasi/) - [Kidimami home page, Internet Archive snapshot](https://web.archive.org/web/20151107051329/http://www.kidimami.com/) --- # Lily Robotics (2013 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/lily-robotics/ - Sector: Hardware - Country: United States - Total funding: $14 million - Cause of closure: Ran out of cash ## What did it do? Lily Robotics was developing an autonomous camera drone that, once thrown into the air, took photos and video by tracking a device on the user's wrist. Combining GPS with computer vision, the waterproof Lily Camera was unveiled in May 2015 at a pre-order price of $499. It was founded by two graduates who had worked together in a robotics lab at UC Berkeley. ## Why did it shut down? The company collected around 60,000 pre-orders but could not take the product into mass production. Deliveries, first planned for February 2016, were pushed back to summer 2016 and then to early 2017. In the meantime rivals such as DJI brought out drones with similar follow features. In January 2017 the founders announced that they had been unable to find the financing to start the production line and decided to shut the company down and refund payments. The same day the San Francisco District Attorney's Office sued the company, alleging that it had deliberately misled customers, and the company filed for Chapter 11 in February 2017. ## The story In a promotional video released in May 2015, a small drone was tossed into the air and then followed snowboarders and kayakers on its own, filming them. Lily Camera promised to be one of the first throw-and-shoot cameras, tracking a waterproof device worn on the user's wrist. The pre-order price was $499, and interest was huge. The company was founded in Berkeley in 2013 by Antoine Balaresque and Henry Bradlow, who had worked together in the UC Berkeley Robotics Lab. A seed round led by Shana Fisher and SV Angel followed in spring 2014; by 2015 the team had grown to around 50 people. Lily Camera combined GPS and computer vision to keep the user in frame automatically. By January 2016 it had reached around 60,000 pre-orders and more than $34 million in pre-sales revenue. In December 2015 a $14 million Series A led by Spark Capital closed; Stanford's StartX fund, DJ Steve Aoki and former quarterback Joe Montana were also among the investors. That same December the founders announced that deliveries, planned to begin in February 2016, had slipped to summer 2016. Then the date was pushed back once more, to early 2017. According to the BBC, manufacturers such as DJI, Zero Zero Robotics and Yuneec brought out drones with similar follow features in the meantime. On 12 January 2017 customers received an email: the camera would not be produced, and payments would be refunded. In messages reported by the BBC, the founders wrote that they had been racing against time with ever-dwindling funds and had been unable to secure the financing to start the production line. The same day the San Francisco District Attorney's Office filed a lawsuit alleging that the company had deliberately misled customers; according to the complaint, the promotional video had used footage shot with other manufacturers' products. The company filed for Chapter 11 in Delaware on 27 February 2017 and sought court approval for the refunds. In May 2017 Mota Group bought Lily's assets and brand. Lily's story is a reminder that pre-orders are proof of demand, but making hardware takes far more capital and time. ## Lessons - Pre-orders prove demand but do not fund production; secure manufacturing finance and the supply chain before you launch mass pre-sales. - Show only a genuinely working prototype in promotional videos; anything else puts both customer trust and your legal position at risk. - In hardware, every delivery delay gives competitors time to fill the market; set a realistic timetable. ## Sources - [Lily Robotics](https://en.wikipedia.org/wiki/Lily_Robotics) - [Drone company Lily shuts down owing $34m](https://www.bbc.co.uk/news/technology-38595473) - [Lily Robotics Files for Chapter 11 Bankruptcy Protection](https://www.wsj.com/articles/lily-robotics-files-for-chapter-11-bankruptcy-protection-1488216444) --- # Maple (2015 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/maple/ - Sector: Food and drink - Country: United States - Total funding: $25 million - Cause of closure: Acquired and shut down ## What did it do? Maple was a New York meal service that delivered daily menus prepared in its own kitchens using its own couriers. Unlike platforms that collect orders from restaurants, it ran the whole process itself, from sourcing ingredients to cooking and last-mile delivery; lunch cost USD 12 and dinner USD 15, with tax and tip included in the price. ## Why did it shut down? Launched in Manhattan's Financial District in April 2015, the service aimed to deliver within half an hour using a central prep kitchen and satellite kitchens spread across the city. Owning the entire value chain meant the company had to carry all the costs of sourcing, kitchen staff and couriers. Despite raising more than USD 25 million, the company operated only in Manhattan for two years. In May 2017 the founders said that, to think bigger, they needed to close the New York operation and look for a partner with scale. On 8 May 2017 Maple stopped taking orders; part of the team joined London-based Deliveroo and its technology was transferred to Deliveroo. ## The story Maple was founded in New York by Caleb Merkl and Akshay Navle and launched in Manhattan's Financial District in April 2015. Behind it was the backing of the celebrated chef David Chang, founder of the Momofuku restaurant group. Chang's name strengthened the service's promise to bring fresh food prepared by some of the city's best culinary names to the door. What set Maple apart from its rivals was that it did not source the food from anyone else. The company sourced its own ingredients, did the prep in a central kitchen, finished the dishes in satellite kitchens in different parts of the city and delivered them with its own couriers. Each day it offered three lunch and three dinner options, one of them vegetarian. Lunch cost USD 12 and dinner USD 15, including tax, tip and delivery fee. The founders argued that, to deliver the experience they wanted, they had to own the whole process, from ingredients to the last mile. The company raised more than USD 25 million and was soon delivering thousands of meals a day across Manhattan. But after two years it was still in a single city, and the model of owning the entire value chain made growth expensive. In their statement in May 2017, the founders said that, to think bigger, they needed to close the New York operation and look for a partner with scale. On 8 May 2017 Maple stopped taking orders. Some members of the team moved to London-based Deliveroo, and Maple's technology was transferred for use in Deliveroo Editions, a project that let restaurants reach new areas without opening physical branches. Maple became one of the examples showing how vertical integration in food delivery can raise quality while making scaling far harder. ## Lessons - In a food model that owns the entire value chain, every new neighbourhood means new kitchen and courier costs; do not scale up investment before proving unit economics in a single area. - A celebrity chef's backing creates brand interest but does not guarantee repeat orders; move forward on data that measures loyalty. - When you see you cannot reach scale on your own, talking early to a big player that can make use of your technology and team can lead to a better outcome than shutting down from scratch. ## Sources - [Food startup Maple shuts down operations in New York to join Deliveroo](https://techcrunch.com/2017/05/08/maple-shuts-down/) - [Popular NYC Food Delivery App Backed by David Chang Shuts Down](https://www.nbcnewyork.com/news/local/food-delivery-app-maple-new-york-city-david-chang-close-no-more/128372/) - [Maple Launches In NYC's Financial District With A Fresh Approach To Food Delivery](https://techcrunch.com/2015/04/28/maple-nyc-launch/) --- # Nuvo (2014 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/nuvo/ - Sector: Fintech - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Nuvo was a branchless banking brand launched in May 2014 by Yapı Kredi, one of Turkey's largest banks. Customers applied online without visiting a branch, contracts were signed via courier, and basic banking transactions could be carried out free of charge through the website and mobile apps. The target audience was young professionals and university students. ## Why did it shut down? Yapı Kredi decided to close Nuvo in April 2017. According to egirişim, a Turkish start-up news site, the reasons were the intense competition in mobile banking and the app's failure since 2014 to deliver the growth the bank wanted. Nuvo was up against similar digital banking brands such as Enpara and CepteTEB, as well as banks' own mobile apps such as İşCep. It is arguable that fee-free banking offered under a separate brand failed to differentiate itself sufficiently from the parent brand's digital channels; this assessment is an interpretation. Customers were attached to a branch and stayed with Yapı Kredi on the same fee exemptions. ## The story On 6 May 2014 Yapı Kredi entered branchless banking with a new brand called Nuvo. According to a Webrazzi report that day, customers could apply to Nuvo online only, without going to a branch. The necessary documents were signed via a courier who came to the customer, and the courier's whereabouts could be tracked. Basic banking transactions could be carried out quickly and at reduced cost through the website and the iOS and Android apps. The bank aimed to reach 300,000 active customers in the first year and 1 million within five years. Nuvo's target audience was young professionals and university students. On its website the brand presented itself as a bank that “speaks your language” and highlighted the absence of transaction fees. But the market was crowded: QNB Finansbank's Enpara, TEB's CepteTEB and İş Bankası's İşCep app were all addressing a similar audience with similar promises. In April 2017 Yapı Kredi decided to close Nuvo. According to egirişim, the reasons were the intense competition in mobile banking and the app's failure, since its launch in 2014, to deliver the growth the bank wanted. Nuvo customers were attached to a Yapı Kredi branch; their exemptions from account maintenance fees and from transfer and EFT charges were kept. According to Internet Archive records, the nuvo.com.tr address began redirecting to another address in summer 2017. Nuvo's short life shows that digital brands spun out from within a large institution can end up in the parent brand's shadow when they fail to build a distinctive value proposition of their own. After three years the brand disappeared and its customers returned to the bank's main channels. ## Lessons - A digital brand spun out from within an institution will not find its own space unless it offers a value proposition clearly distinct from the parent brand. - Being free does not create loyalty on its own; rivals easily copy the same promise. - If you set ambitious customer targets, track the interim metrics early and change course in time. ## Sources - [Yapı Kredi's step into branchless banking: NUVO (in Turkish)](https://webrazzi.com/2014/05/06/yapi-kredi-nuvo/) - [Yapı Kredi decides to close its branchless digital banking app Nuvo (in Turkish)](https://egirisim.com/2017/04/11/yapi-kredi-subesi-djital-bankacilik-uygulamasi-nuvoyu-kapatma-karari-aldi/) - [Fee-free, mobile, branchless banking: Nuvo (archived copy, in Turkish)](http://web.archive.org/web/20170403021626/http://www.nuvo.com.tr:80/) --- # Papyon (2013 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/papyon/ - Sector: Food and drink - Country: Turkey - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Papyon was a restaurant discovery and booking site launched in January 2013 by Yemeksepeti, Turkey's leading online food delivery company. Users could filter by cuisine and neighbourhood, browse menus, reviews and ratings, and book tables online. It operated in Istanbul, Ankara, İzmir, Antalya and Bodrum. ## Why did it shut down? In January 2017 Papyon posted a short farewell message to its users and gave no reason for the closure. The closure looked like a continuation of the process that began with the shutting of Lokum.com and irmik.com after Yemeksepeti joined Delivery Hero in 2015. Webrazzi had interpreted the closure of irmik.com as a decision in line with Delivery Hero's strategies. Papyon handled more than 30,000 bookings in four years; compared with the scale of food ordering, the figure was small. One interpretation is that booking contributed nothing to the parent company's core delivery business and therefore lost priority. ## The story When Yemeksepeti, Turkey's leading online food delivery company, raised $44 million from General Atlantic at the end of 2012, it had more than a growing delivery business: it also had an appetite to move into new areas. Its third spin-off brand, after Lokum.com and irmik.com, Papyon went live on 18 January 2013. The idea was this: a company that had brought restaurants online for food ordering could also guide people who wanted to sit down at a table. According to Webrazzi's launch report, Papyon started on day one with more than 600 select venues in Istanbul, Ankara, İzmir, Antalya and Bodrum. Users could filter restaurants by cuisine and neighbourhood, look at menus and reviews, and book a table. A content partnership was struck with food writer Mehmet Yaşin, tools for group bookings were added, and an iOS app was released in 2014. But Yemeksepeti's world changed in 2015. The company joined Delivery Hero, and the side ventures began to close one by one. First Lokum.com, then irmik.com ceased operations. Webrazzi had interpreted the closure of irmik.com as a decision in line with Delivery Hero's strategies. Papyon's turn came in January 2017. In a farewell message reported by egirişim, Papyon noted that it had handled more than 30,000 bookings and thanked its partner restaurants and users. No reason was given for the closure. In June 2017 Hürriyet also listed Papyon alongside Bukoli and Markafoni in its feature on failed start-ups. Papyon's story shows that the fate of ventures born under a corporate umbrella often depends less on their own performance than on the parent company's priorities. Thirty thousand bookings in four years was a small number for a company that was already processing more than 60,000 orders a day in 2013. With the new owner's decision to focus on the core business, the booking business found no place in Yemeksepeti's portfolio. ## Lessons - A venture inside a big company is among the first to be sacrificed when the parent's strategy changes; make its link to the core business clear. - Success in one category does not automatically carry over to a neighbouring one; booking a table and ordering food are different habits. - Judge usage volume against the scale of the core business; a side product that stays small loses the battle for resources. ## Sources - [Yemeksepeti's venture Papyon closes](https://egirisim.com/2017/01/20/yemeksepetinin-girisimi-papyon-kapandi/) - [Another new venture from Yemeksepeti: Papyon.com](https://webrazzi.com/2013/01/18/papyon-yemeksepeti/) - [Why they failed](https://www.hurriyet.com.tr/ik/neden-basarisiz-oldular-40487685) - [irmik.com, one of Yemeksepeti's ventures, also closes](https://webrazzi.com/2015/11/02/yemeksepeti-girisimlerinden-irmik-com-da-kapandi/) - [iOS app released for Papyon.com, Yemeksepeti's online booking venture](https://webrazzi.com/2014/09/05/yemeksepetinin-online-rezervasyon-girisimi-papyon-comun-ios-uygulamasi-yayinlandi/) - [Yemeksepeti's Ventures: İrmik, Papyon and Lokum](https://egirisim.com/2013/09/14/yemeksepetinin-girisimleri-irmik-papyon-ve-lokum/) --- # Parse (2011 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/parse/ - Sector: Enterprise software (SaaS) - Country: United States - Total funding: $7 million - Cause of closure: Acquired and shut down ## What did it do? Parse was a back-end platform that gave mobile app developers the server side as a ready-made service. By handling data storage, user log-in, push notifications and running custom code in the cloud through SDKs and APIs, it let small teams ship apps without setting up their own servers. ## Why did it shut down? A Y Combinator graduate, Parse raised USD 5.5 million in November 2011 in a round led by Ignition Partners, bringing its total funding to USD 7 million. Facebook bought the company in April 2013, and Parse became the first paid enterprise service the social network offered developers; the price was reported to be around USD 85 million. The platform kept growing and was reported to power 500,000 apps in 2014. Even so, on 28 January 2016 Facebook announced it would shut the service down; Kevin Lacker, Parse's CTO, wrote that they needed to focus their resources elsewhere. The hosted service ended on 30 January 2017, and developers had to move their apps to the open-source Parse Server or to other providers. ## The story Parse was founded in 2011 by Tikhon Bernstam, Ilya Sukhar, Kevin Lacker and James Yu, and went through Y Combinator. The idea was simple: small teams writing mobile apps should hand off the work of setting up servers, managing databases and building notification infrastructure to a ready-made service. In November 2011 the company raised USD 5.5 million in a round led by Ignition Partners, bringing its total funding to USD 7 million. At the time the platform had 3,500 developers and the team numbered just seven. In April 2013 Facebook bought Parse. Parse became the first paid enterprise service the social network offered developers, and the price was reported to be around USD 85 million. Serving around 60,000 apps at the time of the acquisition, the platform kept growing; it was reported to power 500,000 apps in 2014, and by the time of the shutdown around 600,000 apps relied on Parse. On 28 January 2016 Facebook announced that it would shut the service down a year later. Kevin Lacker, Parse's CTO, wrote that they were proud to have helped developers but needed to focus their resources elsewhere. To ease the transition, the company open-sourced Parse Server and released a database migration tool. The hosted service stopped completely on 30 January 2017. The shutdown hit independent developers who lacked the resources to build their own back end particularly hard. The open-source Parse Server lived on afterwards as a community project with its own documentation and forum, but the company Parse and the managed service it offered passed into history. The story is a reminder that once an infrastructure start-up joins a big platform, its fate lies no longer with its own customers but with the buyer's priorities. ## Lessons - When an infrastructure start-up is sold to a big platform, the product's fate becomes tied to the buyer's priorities; pin down commitments to keep the product alive during acquisition talks. - If your customers' businesses run on your servers, design for data portability from the start; Parse's decision to open-source its code and allow a year-long migration period limited the damage of the shutdown. - Reaching hundreds of thousands of apps does not protect a product unless it holds a central place in the parent company's strategy; ask why the buyer wants you, and whether that will still be true a few years on. ## Sources - [Parse, Inc.](https://en.wikipedia.org/wiki/Parse,_Inc.) - [Parse, The 'Heroku For Mobile', Raises $5.5 Million Series A](https://techcrunch.com/2011/11/09/parse-the-heroku-for-mobile-raises-5-5-million-series-a/) - [Facebook Buys Parse To Offer Mobile Development Tools As Its First Paid B2B Service](https://techcrunch.com/2013/04/25/facebook-parse/) - [Facebook is shutting down its Parse cloud service on January 28, 2017](https://venturebeat.com/business/facebook-is-shutting-down-its-parse-cloud-service-on-january-28-2017/) - [Facebook's Parse developer platform is shutting down today](https://techcrunch.com/2017/01/30/facebooks-parse-developer-platform-is-shutting-down-today/) --- # Quixey (2009 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/quixey/ - Sector: Enterprise software (SaaS) - Country: United States - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Quixey developed a “functional” search engine that let users find mobile apps without knowing their names, by describing the job the app could do. Rather than offering the technology as its own product, the company embedded it in the services of partners such as Ask.com and Sprint. ## Why did it shut down? By embedding its technology in partners' sites and devices, Quixey reached a large volume of queries, but it struggled to turn that volume into revenue. Its first attempt at making money, sponsored results, came in mid-2013. In 2015 it raised $60 million at a valuation of about $600 million, but in February 2016, when the company missed its revenue targets, senior executives left. The company closed in February 2017. ## The story In December 2011 the puzzle Quixey set for prospective engineers was simple: find the bug in the code in under a minute and win $100 and a T-shirt. The contest, called the “Quixey Challenge”, produced 38 winners, five of whom became serious candidates for three open positions. The start-up was taking an unconventional path in its product, just as it was in its hunt for talent. Founded in Mountain View in 2009 by Tomer Kagan and Liron Shapira, Quixey aimed to be the search engine of the app age. Users did not need to know an app's name; they typed what they wanted to do, and Quixey found the apps that did it. The team developed the product over a year and a half. A $400,000 seed investment led by Eric Schmidt's Innovation Endeavors fund came with the private launch, followed by a Series A led by U.S. Venture Partners and WI Harper Group in August 2011 and a $20 million Series B in June 2012. Over that period headcount grew from six to thirty. Quixey sold its technology not directly to consumers but to partners. On 4 December 2012 it took over app search for Ask.com, which was reported to account for 3 per cent of US search traffic in 2012; a month later it announced that it was powering about 100 million queries a month. App search in two of Sprint's services also came from Quixey. Its first attempt at making money, however, came only in June 2013, with sponsored results. In 2015 the company closed a $60 million funding round at a valuation of about $600 million. But the gap between valuation and revenue never closed. According to a Re/code report in February 2016, the company missed its revenue targets and its operations and technology chiefs left. A year later, in February 2017, Quixey closed. Quixey's story shows that big usage figures do not mean revenue. A start-up that embeds its technology in other people's products can present query volume as its own success; but how much money it makes from that volume depends on its contracts with partners. If the monetisation model is not designed alongside the product, a high valuation becomes a burden at the next round. ## Lessons - If you embed your technology in other people's products, make the amount the partner pays you, not query or usage volume, your core metric. - Do not leave the monetisation model until two or three years after the product launches; settle revenue sharing in the very first partner contract. - A big round at a high valuation inflates revenue targets too; keeping targets realistic matters more than the size of the round. ## Sources - [Quixey](https://en.wikipedia.org/wiki/Quixey) - [Quixey COO, CTO Depart as Mobile Startup Misses Revenue Targets](https://web.archive.org/web/20160403232318/http://recode.net/2016/02/29/quixey-coo-cto-depart-as-mobile-startup-misses-revenue-targets/) - [Fast-Growing App Search Engine Quixey Raises $20 Million Series B](https://techcrunch.com/2012/06/07/fast-growing-app-search-engine-quixey-raises-20-million-series-b/) --- # Sprig (2013 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/sprig/ - Sector: Food and drink - Country: United States - Total funding: $56.7 million - Cause of closure: Business model failed ## What did it do? Sprig was a San Francisco-based food start-up that sold healthy meals made with local ingredients, cooked by chefs in its own kitchen, for about $10 through an app and delivered them within 20 minutes. It ran the whole chain itself, from sourcing ingredients to cooking and delivery. It offered a menu that changed every day. ## Why did it shut down? Owning the whole chain from food production to delivery became complex and expensive as the business scaled. An attempt to expand to Chicago struggled, and operations there were halted in July 2016. In its final months the company tried new channels, such as selling to walk-in customers and distributing through Caviar. Despite $56.7 million of investment, it closed in May 2017 in a fiercely competitive delivery market. ## The story Sprig's promise in 2014 was irresistible to anyone living in San Francisco: a meal made with local, seasonal ingredients in a kitchen run by Nate Keller, Google's former executive chef, at your door within 20 minutes for about $10, with a few taps in an app. To keep that promise, the company took on every stage of the meal itself, from sourcing ingredients to cooking and delivery. Sprig launched in San Francisco in November 2013. Its co-founders included Gagan Biyani from Udemy's founding team, Neeraj Berry, who ran operations, product lead Morgan Springer and engineering lead Matt Kent. In March 2014 a $10 million Series A led by Greylock Partners, with Battery Ventures and Accel taking part, arrived. In April 2015 a further $45 million was raised in a round led by Social+Capital and Greylock, taking total investment to $56.7 million. The company planned to expand to the rest of the Bay Area and to Chicago. The food delivery market, however, was both crowded and capital-hungry. Sprig struggled in Chicago and in July 2016 halted operations there, laying off seven people. In its final months it tried new routes, such as opening its San Francisco kitchen to walk-in customers and selling its meals through Caviar. These experiments were a sign that the distribution channel it had built on its own was not enough. On 26 May 2017 Biyani announced in an email to customers that the app was shutting down that day. The closure affected about 200 people, including part-time staff; all employees were paid two months' salary, and career days were organised to help them find new jobs. Biyani wrote that demand for Sprig's food had always been very high, but that the complexity of owning the whole chain from production to delivery at scale had been a problem. Maple, which had a similar model, had closed the same month; SpoonRocket had gone the same way earlier. Sprig shows that vertical integration is a powerful tool for controlling quality, but that it loads the costs of kitchen, logistics and staff from scratch onto every new city. High demand is not enough to sustain growth unless profitability per order has been proven. ## Lessons - If you run both a kitchen and a logistics operation, prove that your contribution margin per order is positive in your first city before opening in a new one. - Rather than relying solely on your own app, test food marketplaces as an additional sales channel early on. - Make the decision to close before the cash runs out completely; this timing is what allowed Sprig to pay its employees two months' salary. ## Sources - [On-demand food startup Sprig is shutting down today](https://techcrunch.com/2017/05/26/on-demand-food-startup-sprig-is-shutting-down-today/) - [On Demand Food Service Sprig To Shut Down](https://www.theinformation.com/articles/on-demand-food-service-sprig-to-shut-down) - [Sprig Raises $10M From Greylock To Bring Healthy, Inexpensive Meals To Your Door](https://techcrunch.com/2014/03/27/sprig-raises-10m-from-greylock-to-bring-healthy-inexpensive-meals-to-your-door/) --- # Stayzilla (2007 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/stayzilla/ - Sector: Travel - Country: India - Total funding: $34 million - Cause of closure: Business model failed ## What did it do? Stayzilla was a Chennai-based accommodation marketplace that connected travellers in India with homestays and budget hotels. It started in 2007 as a budget hotel aggregator and switched to an Airbnb-style homestay model in late 2015. It brought thousands of hosts in more than 900 towns onto its platform. ## Why did it shut down? There was hardly any market for homestays; the company had to create both hosts and guests with its own resources. A discounting war in the travel sector and far better-funded rivals put pressure on it to match prices. By the founder's own admission, the company focused on metrics such as transaction volume rather than cash flow; in its last financial year it lost USD 14 million on revenue of around USD 2 million. When it failed to land a targeted USD 40 million round, the company suspended its service in February 2017. ## The story In February 2017 Yogendra Vasupal, co-founder and CEO of Stayzilla, made an unusual confession in the blog post announcing that the service was being suspended. He wrote that over the previous three or four years he had come to value vanity metrics such as gross transaction volume and room nights over cash flow and working capital, and that somewhere along the way he had lost his way. These lines were the farewell letter of a company that had tried to create India's homestay market almost from scratch. Chennai-based Stayzilla began operating in 2007 as a platform bringing budget hotels together. According to Vasupal, the first seven years were built on negative working capital, positive cash flow and growth financed from the company's own resources. In late 2015 the company turned to homestays with an Airbnb-style model. A USD 20 million Series B came in 2015 and a USD 13 million Series C from existing investors in May 2016; Matrix Partners and Nexus Venture Partners were among the backers, and total investment reached USD 34 million. The company said it had built 8,000 homestays in more than 900 towns and offered more than 50,000 places to stay. The problem lay in the market itself. As Vasupal described it, 18 months earlier there had been neither supply nor demand for homestays outside a few small areas; the company had to create, nationwide and on its own, both the hosts and the guests who would choose this kind of accommodation. The discount-led growth race that took hold from 2015 onwards also forced it to match prices. According to data from Tech in Asia, Stayzilla lost USD 14 million on revenue of around USD 2 million in its last financial year, while rivals such as Oyo had far larger war chests. The team was cut from 600 people to 200, but 12 months were not enough to change direction. In February 2017 new bookings were halted and the company announced it would restart with a different business model. In March 2017, according to reports cited by Medianama, Vasupal was taken into custody following a complaint by an advertising agency over unpaid dues; the company's management denied the allegations, and Vasupal argued that the agency's services had been deficient. In September 2017 it was reported that India's company law tribunal, the NCLT, had initiated insolvency proceedings against Stayzilla. Stayzilla shows that a start-up shouldering the cost of creating a market on its own must not lose its cash discipline when well-funded rivals start a discounting war. ## Lessons - If you are creating a market from scratch, cost out building both sides by concentrating first on a single region rather than the whole country. - Track metrics such as transaction volume and room nights on the same dashboard as cash flow and working capital. - When far better-funded rivals start a discounting war, choose a niche where you can compete on service rather than price. ## Sources - [Stayzilla, India’s Airbnb for homestays, closes its service](https://techcrunch.com/2017/02/23/stayzilla-gonezilla/) - [Stayzilla to shutdown operations; plans to 'reboot' with a new business model](https://www.medianama.com/2017/02/223-stayzilla-shutdown/) - [Stayzilla CEO Vasupal taken to police custody after allegations of non payment](https://www.medianama.com/2017/03/223-stayzilla-ceo-vasupal-police-custody/) - [Insolvency proceedings against Stayzilla ordered by NCLT: report](https://www.medianama.com/2017/09/223-insolvency-proceedings-stayzilla/) --- # TheFork Türkiye (2015 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/thefork-turkiye/ - Sector: Food and drink - Country: Turkey - Total funding: unknown - Cause of closure: No market need ## What did it do? TheFork was a French-born online restaurant booking platform acquired by TripAdvisor in 2014. It launched in Turkey in 2015; users booked tables through a Turkish-language website and mobile app, collecting points with each booking and earning discounts on later meals. It listed restaurants in cities and holiday areas such as Antalya, İzmir, Ankara, Bursa, Bodrum and Çeşme. ## Why did it shut down? In May 2017 TheFork told users in an email that it was halting its Turkish operation, but gave no reason. An industry writer for Gurme Ajanda argued that the problem was not specific to TheFork and that the online restaurant booking business in Turkey was structurally challenged. According to the writer, booking was not a habit at restaurants that were not busy, while at busy restaurants the good tables were kept for regulars. Operational issues such as restaurants' reluctance to pay commission and the question of who would confirm a booking also strained the model. The fact that the same article cited other local booking sites that had closed earlier supports the view that the market suffered from a general lack of need. ## The story TheFork was one of the best-known platforms taking restaurant booking digital in Europe. TripAdvisor, which bought the French-born company for $140 million in 2014, brought it to Turkey in 2015. Users booked tables through a Turkish-language site and app, collecting points with every booking and earning discounts on later meals. The platform listed restaurants in eleven cities and areas, including Antalya, İzmir, Ankara, Bursa, Bodrum, Çeşme and Marmaris. According to an article in Gurme Ajanda, a Turkish food and dining publication, TheFork had arrived in Turkey with an ambitious entrance. Two years later, however, in May 2017, an email went out to its members. The company said the decision had been a difficult one and that the Turkish-language site and mobile app would very soon cease operating. It added that memberships would not be deleted and that accumulated points could be used in other countries. According to Webrazzi, the Turkish tech news site, after this exit TheFork carried on in ten countries, including France, Italy, Spain and Brazil. The company gave no reason. The commentary written for Gurme Ajanda, however, looked for the problem beyond a single company. According to the writer, people in Turkey who made bookings did not use online systems, and people who used online services did not book restaurants. Reserving a table at restaurants that were not busy was not a habit in the first place; some restaurants worked by phone, others with different software, and they kept their distance from the commission model. The writer also recalled local examples that had closed earlier, such as restoranonline.com and Rezztoran.com. TheFork Türkiye's short life remained an example showing that a global brand and a strong parent company cannot single-handedly create demand in a market where user behaviour has not formed. Zomato's closure of its Turkey office in the same period showed how tough the restaurant discovery and booking space was for foreign players. ## Lessons - Before taking a habit that works in other countries into a new market, test whether that habit exists there. - In a two-sided marketplace, if businesses will not accept the commission, user growth will not come either. - A string of local players closing in the same space is the market telling you something. ## Sources - [TheFork decides to halt its operations in Turkey](https://webrazzi.com/2017/05/16/thefork-turkiyedeki-operasyonlarini-durdurma-karari-aldi/) - [TripAdvisor's Restaurant Booking Venture The Fork Pulls Out of Turkey](https://www.uzakrota.com/tripadvisorin-restoran-rezervasyon-girisimi-the-fork-turkiyeden-cekildi/) - [This market will eat you alive, baby...](https://www.gurmeajanda.com/piyasa-seni-cig-cig-yer-bebegim/) - [Zomato is closing its Turkey office [Rumour]](https://webrazzi.com/2017/05/22/zomato-turkiye-ofisi-kapatma/) --- # Tilt (2012 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/tilt/ - Sector: Fintech - Country: United States - Total funding: $37 million - Cause of closure: Acquired and shut down ## What did it do? Tilt (originally Crowdtilt) was a platform that let groups of friends and communities collect money online for shared expenses, gifts, events or donations. Every campaign had a threshold, and the money was passed to the organiser only if that threshold was crossed. The company also offered an API so developers could build this infrastructure into their own apps. ## Why did it shut down? Group collections were a business of frequent but individually small transactions, and commission-based revenue was not enough to cover the costs of a growing team. The company expanded its team on more than $37 million of investment and aimed for international expansion, but it never became profitable. In 2017 Airbnb bought Tilt for about $12 million in cash, for the team rather than the product. Airbnb shut the platform in June 2017. ## The story The idea was born in South Africa. While working there as a microcredit collections officer, Wake Forest University graduate James Beshara designed a tool to make it easier for people to raise money for a shared cause. The first attempt was a donations platform called Dvelo; when users began using it for non-charitable purposes too, Beshara shifted the model towards group collections for parties, gifts and events. In 2011 Khaled Hussein joined as co-founder, the start-up took the name Crowdtilt, and in winter 2012 it was accepted into Y Combinator. Growth came quickly. In May 2012 it raised $2.1 million from investors including SV Angel, CrunchFund and Reddit co-founder Alexis Ohanian. A $12 million Series A led by Andreessen Horowitz in April 2013 took total investment to $14 million, and a $23 million Series B in December 2013 pushed it above $37 million. The platform's logic was simple: every campaign had a “tilt point”, and no money was released until that threshold was crossed. Stories such as the Jamaican bobsleigh team's campaign for the Sochi Olympics, which aimed for $80,000 and passed $129,000, made the brand known; the company shortened its name to Tilt and struck a partnership with ESPN Fantasy Football to collect league fees. But the glowing stories did not turn into a solid business model. For a time Tilt charged organisers a commission of 2.5 per cent of the money collected; group collections consisted of frequently repeated but individually small transactions. The capital raised to grow the team and expand abroad created a cost structure that this revenue could not cover. The company never became profitable. In 2017 Airbnb bought Tilt for about $12 million in cash. It was an acqui-hire: what interested Airbnb was not the product but the engineers on the team. The platform was shut in June 2017. Fast Company described the outcome as a bargain for Airbnb and a classic loss for investors such as Andreessen Horowitz. Tilt's story is a reminder that a product users love, and that easily wins media coverage, is not on its own a sustainable business. A payments product living on a few per cent of commission from small transactions cannot become profitable without enormous volume, and rapid growth before reaching that volume can turn the exit into a cheap acqui-hire. ## Lessons - If you are building a payments product whose revenue rests on commission from small transactions, work out from the start the transaction volume needed to turn a profit, and tie your hiring plan to that volume. - Viral campaigns bring awareness but not recurring revenue; track how often an organiser comes back to the platform as your core metric. - Scaling up funding rounds before proving unit economics can turn the exit into an acqui-hire worth less than the money raised. ## Sources - [Tilt.com](https://en.wikipedia.org/wiki/Tilt.com) - [The Demise Of Tilt: A Bargain For Airbnb, A Classic Loss For Investors Like Andreessen Horowitz](https://www.fastcompany.com/3069164/how-tilt-veered-off-course) - [Airbnb finalizes deal to buy social payments startup Tilt](https://techcrunch.com/2017/02/22/airbnb-finalizes-deal-to-buy-social-payments-startups-tilt/) - [Popular Group Funding Startup Crowdtilt Raises $23M In Series B Round](https://www.forbes.com/sites/alexkonrad/2013/12/16/crowdtilt-raises-23-million-series-b/) --- # Vine (2012 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/vine/ - Sector: Social media - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Vine was a short-video service on which users shot and shared looping clips of up to six seconds. Because the app's camera recorded only while the screen was being touched, users could edit in camera and create stop-motion effects as they filmed. Vine played an important part in the rise of a new generation of social media stars and of collaborative content creation. ## Why did it shut down? When Instagram launched 15-second video sharing in 2013, competition in short video intensified. Vine's star creators moved to platforms such as YouTube, Instagram and Snapchat; in the first half of 2016 more than half of users with over 15,000 followers stopped posting or deleted their accounts. Marketers pulling away from the platform also weighed heavily in Twitter's decision. Twitter announced in October 2016 that it would discontinue the app, and Vine was officially shut down on 17 January 2017. ## The story Only four months separate Vine's founding from its sale. The company, founded by Dom Hofmann, Rus Yusupov and Colin Kroll in June 2012, was bought by Twitter for around USD 30 million in October 2012, before the app had even launched. Vine reached users with its iOS app on 24 January 2013; Android and Windows versions followed shortly afterwards. The idea was simple: videos of up to six seconds, playing in an endless loop. Because the camera recorded only while the screen was being touched, users could edit as they filmed and experiment with stop motion. In April 2013 Vine reached the top of the free apps chart on the US App Store. Brands piled in quickly: in September 2013 Dunkin' Donuts became the first company to use a single Vine video as a television advert. By December 2015 Vine had more than 200 million active users, and the platform had become the birthplace of a new generation of social media stars. Rivals, however, did not stand still. In June 2013 Instagram introduced 15-second video sharing, and Vine increasingly found itself competing with services such as Instagram and Snapchat for the same audience. The platform's most important asset, its creators, moved elsewhere: in the first half of 2016 more than half of users with over 15,000 followers stopped posting or deleted their accounts. Marketers drifting away from the platform also played a large part in Twitter's decision. On 27 October 2016 Twitter announced that it would discontinue the Vine mobile app. On 17 January 2017 Vine officially closed, and the app became a camera tool for posting videos directly to Twitter. Three days later Twitter opened an online archive containing every Vine video published up to that point; the archive was closed in April 2018. According to The Verge, many well-known Vine users, including David Dobrik, Liza Koshy, Logan Paul and Lele Pons, moved to YouTube. Byte, the successor launched by co-founder Dom Hofmann in 2020, also closed in 2023. Vine popularised the short-video format before services such as TikTok. Even so, it could not stop the exodus of the creators who had grown the platform, and it lost out to the heirs of the very format it had created. ## Lessons - Regularly measure why the creators who grew your platform stay; the departure of your most popular users is an alarm that sounds before overall user numbers fall. - A format constraint such as six seconds can set you apart, but once rivals copy the format you need a new advantage. - A product living inside a large company depends on that company's priorities; in acquisition talks, pin down commitments about the product's future. ## Sources - [Vine (service)](https://en.wikipedia.org/wiki/Vine_(service)) - [Twitter axes Vine video service](https://www.bbc.co.uk/news/technology-37788052) - [Twitter officially shuts down Vine](https://web.archive.org/web/20221222163300/https://money.cnn.com/2017/01/17/technology/vine-shuts-down/index.html) --- # Yik Yak (2013 – 2017) - URL: https://girisimcikafasi.com/en/startup-graveyard/yik-yak/ - Sector: Social media - Country: United States - Total funding: $73.5 million - Cause of closure: Product problems ## What did it do? Yik Yak was a mobile app that let users post under a pseudonym or anonymously to people within a radius of roughly 8 kilometres. It spread above all on university campuses, where posts rose or disappeared according to users' votes. The Atlanta-based company was founded by Furman University graduates Tyler Droll and Brooks Buffington. ## Why did it shut down? Rapid growth came with fierce criticism that the app was being used for racism, antisemitism, sexism and cyberbullying. In March 2014 the company used geofencing to block the app at middle and high schools, but the problems on campuses persisted. In 2016 usage fell by 76 per cent year on year, and in December 2016 60 per cent of staff were laid off; Ars Technica wrote that the company still had no business model. In April 2017 Square bought the intellectual property and some of the engineers for about $1 million, and the app stopped working on 5 May 2017. ## The story Tyler Droll and Brooks Buffington started working together at Furman University, in a class where they learned to build iPhone apps. After graduating, Droll gave up on starting medical school and Buffington put his finance career on hold. Yik Yak, which they released in November 2013, let users post anonymously to anyone within roughly 8 kilometres. Twelve months later it was the ninth most downloaded social media app in the US. Working out of Atlanta Tech Village with early backing from Atlanta Ventures, the company spent 2014 raising round after round. In April it took $1.5 million from investors including DCM and Azure Capital Partners, and in June $10 million in a round joined by Tim Draper. In the autumn more than $60 million came in from Sequoia Capital and others. According to The Verge, the company was at one point valued at $400 million. Anonymity fuelled rapid growth on campuses, but at a heavy price. The app was repeatedly criticised in the media as a vehicle for racist, antisemitic and sexist posts and for cyberbullying. In March 2014 the company drew invisible geofences around middle and high school buildings to disable the app there; an article published in the Huffington Post argued that universities should ban it. In December 2014 security researchers showed that an attacker on the same Wi-Fi network could unmask a user's identity. Allegations that the company quietly deleted some posts through downvotes without users noticing also eroded trust. User loyalty began to unravel. In 2016 usage fell by 76 per cent year on year, and in December 2016 the company laid off 60 per cent of its employees. On 28 April 2017 Yik Yak announced it would shut down; the payments company Square bought its intellectual property and some of its engineers for about $1 million. The app stopped working on 5 May 2017. The brand was relaunched by a new team in 2021, but the original company's story had ended in 2017. Yik Yak is a reminder that a community's culture is shaped by the product itself. An anonymous platform that does not put moderation and trust at the heart of its design can drive away its own users as it grows. ## Lessons - If you are building an anonymous or location-based community, grow your moderation team and reporting tools as fast as your user base. - Spending investment on growth before the revenue model is clear leaves the company exposed the moment usage drops; test a revenue hypothesis from day one. - In closed communities such as campuses, reputations spread fast; engaging early with university administrations reduces the risk of bans and backlash. ## Sources - [Yik Yak](https://en.wikipedia.org/wiki/Yik_Yak) - [Yik Yak, once valued at $400 million, shuts down and sells off engineers for $1 million](https://www.theverge.com/2017/4/28/15480052/yik-yak-shut-down-anonymous-messaging-app-square) - [Yik Yak shuts down after Square paid $1 million for its engineers](https://techcrunch.com/2017/04/28/yik-yak-shuts-down-after-square-paid-1-million-for-its-engineers/) - [https://www.wikidata.org/wiki/Q18216046](https://www.wikidata.org/wiki/Q18216046) --- # Annelütfen (2011 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/annelutfen/ - Sector: E-commerce - Country: Turkey - Total funding: $4 million - Cause of closure: Business model failed ## What did it do? Annelütfen was an e-commerce site focused on products for mothers, babies and children, founded in Istanbul in October 2011 by Roys Güreli. In 2012 it was selling more than 10,000 products from over 300 brands. From late 2013 it also sold on a subscription model, organised events for mothers and published video content on its blog. ## Why did it shut down? In June 2016 Annelütfen announced on its official blog that it was temporarily suspending orders, giving as its reason a wish to serve customers better; Webrazzi, the Turkish tech news site, wrote that it might become a content site from then on. No detailed financial statement was made. According to Internet Archive records, the domain redirected in the following months to a blog holding only old posts; there is no record of sales ever resuming. The decision to stop came only a year and a half after a $4 million investment in January 2015. Because no reason was shared, the idea that financing growth had become difficult in the highly competitive mother-and-baby vertical can only be offered as an interpretation. ## The story Roys Güreli was one of the entrepreneurs who returned to Turkey after an MBA at Stanford. In October 2011 he founded Annelütfen in Istanbul. As the name, which means roughly 'Mum, please' in Turkish, suggests, the site was aimed at mothers: it offered a broad catalogue running from baby and children's products to products for mothers themselves. According to a July 2012 report in Webrazzi, the site carried more than 10,000 products from over 300 brands, and a team of six had shipped 10,000 orders to date. Investors and advisers in the second round, closed in June 2012, included Ventech, Richmond Park Capital, Fabrice Grinda and Agah Uğur, CEO of Borusan Holding; the amount was not disclosed. From late 2013 the company began selling on a subscription model and organised events with mothers. In January 2015 Annelütfen closed a round that Webrazzi described as one of the most significant e-commerce investments it had seen in recent times. According to Webrazzi, Elixir Capital invested $4 million after the company's turnover grew by 315 per cent in 2014 compared with the previous year. In 2015 Güreli explained that 7 million babies were born every year in Turkey and the Middle East, and that the market was expanding as parents' internet use grew. The fund saw Annelütfen as one of the cornerstones of a multi-market e-commerce platform that would extend to Asia. About a year and a half later, on 30 June 2016, Annelütfen announced on its official blog that it was temporarily suspending orders. The reason given was a wish to serve customers better. Webrazzi, noting that the start-up had for some time been reaching its followers with written and video content, wrote that the site might become a content site from then on. According to Internet Archive records, in the following months the domain redirected to a blog whose latest posts dated from 2015. No news or record of sales resuming has been found. The Annelütfen story shows that even after strong growth figures and a large funding round, a vertical e-commerce site can stop in short order. That the announcement was framed as temporary is a reminder that closures do not always arrive with a clear farewell message. ## Lessons - If a large funding round will not cover your cash needs for the next 18 months, plan the next round or a path to profitability straight away. - If you are temporarily halting sales, give customers and suppliers a clear timetable; uncertainty erodes whatever value the brand still has. - In a crowded vertical, differentiators such as subscriptions or community only work if they measurably increase repeat purchases. ## Sources - [Annelutfen.com decides to stop sales (in Turkish)](https://webrazzi.com/2016/06/30/annelutfen-com-satislarini-durdurma-karari-aldi/) - [Annelutfen.com raises $4 million in a round led by Elixir Capital (in Turkish)](https://webrazzi.com/2015/01/05/annelutfen-coma-elixir-capital-liderliginde-4-milyon-dolar-yatirim-geldi/) - [Anne Lütfen: mother-and-baby e-commerce start-up completes its second investment (in Turkish)](https://webrazzi.com/2012/07/26/anne-lutfen-bebek-e-ticaret-yatirim) - [Annelütfen blog home page, Internet Archive snapshot](https://web.archive.org/web/20161001181133/http://annelutfen.com/) --- # Bilio.com (Ucuzu.com) (2004 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/bilio/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? From 2004, Ucuzu.com was a site comparing product prices across online shops in Turkey. After Naspers bought out the remaining shares, it was repositioned in 2014 under the name Bilio.com. It listed products from hundreds of shops in one place, from mobile phones and white goods to holiday and hotel deals, and through its trusted-shop system aimed to highlight not only the cheapest seller but also the most reliable. ## Why did it shut down? According to Webrazzi, the closure announcement cited profitability problems; the site had also been suffering from problems with its technology platform. The 2014 name change had caused a temporary drop in traffic and revenue during the transition. That picture suggests that, for a site that drew much of its traffic from brand awareness, dropping the decade-old Ucuzu.com name was a costly step. In 2016 Naspers chose to close Bilio while keeping its other investments in Turkey. ## The story Ucuzu.com, as its name suggests (ucuzu means "the cheap one" in Turkish), answered a single question: on which site is the product you want cheaper? Launched in 2004, the site became one of the best-known names in price comparison during the years when e-commerce was growing in Turkey, and it operated under that name for a decade. In 2014 South Africa's Naspers, the majority shareholder in Markafoni, also bought the company's remaining shares. Naspers ran price comparison sites in 13 countries around the world and repositioned the Turkish site under the name Bilio.com. General manager Can Günay's approach summed up the change: the aim was to offer consumers not just the cheapest option but the widest choice. According to Webrazzi, at the time the site listed 4 million products from 800 e-commerce companies. A new design arrived, along with barcode search in the mobile app and a trusted-shop system rewarding fast delivery and hassle-free returns; holiday and hotel prices were also being tested. During the name change, however, traffic and revenue dropped temporarily. On the evening of 14 July 2016 Webrazzi wrote that Bilio.com staff had been told of the closure. The next morning the company confirmed the news. The statement cited profitability problems; Webrazzi added that the site had recently been suffering from problems with its technology platform. In the official statement reported by egirişim, Bilio was described as one of the Naspers group's most important internet investments in Turkey, and it was announced that it would cease operating as of 31 July 2016. At the time of the closure the site listed around 4.5 million products from more than 800 shops. Bilio's story shows how a twelve-year-old brand can come to an end through an acquisition, a name change and a portfolio decision. The price comparison market, meanwhile, carried on with other players. ## Lessons - Changing an established brand is a serious risk for a business that gets its traffic from search; measure the transition as you make it. - In intermediary models, revenue depends on shops' advertising budgets; when those budgets shrink, profitability deteriorates fast. - Being part of a large group provides resources, but it also leaves you open to being deleted as a single line in a portfolio decision. ## Sources - [Bilio.com is closing [Confirmed]](https://webrazzi.com/2016/07/14/bilio-com-kapaniyor-son-dakika/) - [Naspers's Turkish subsidiary Bilio.com closes on 31 July](https://egirisim.com/2016/07/15/naspersin-turkiyedeki-istiraki-bilio-com-31-temmuzda-kapaniyor/) - [Having shelved Ucuzu, Bilio.com picks up speed again after its transition](https://webrazzi.com/2014/11/16/bilio-com/) --- # BolBol (2014 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/bolbol/ - Sector: Food and drink - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? BolBol was an online food-ordering platform launched in 2014 by Emre Aydın, founder of Çiçeksepeti, the Turkish online flower and gift retailer. Unlike its rivals, it charged restaurants no commission on orders and planned to earn its revenue from marketing services such as banners, SMS and email. It operated only in Istanbul, and in 2015 it moved into grocery shopping as well, announcing BolBol Market, which aimed to deliver in around 60 minutes. ## Why did it shut down? BolBol could not build a large enough restaurant network against Yemeksepeti, the first mover and dominant player in the Turkish market. In November 2014 the company applied to the Turkish Competition Authority, arguing that chain restaurants would not work with it because of the contract terms Yemeksepeti imposed on restaurants. In June 2016 the Competition Board fined Yemeksepeti about 428,000 TL over the most-favoured-customer clause in its restaurant contracts. But the decision came too late for BolBol: at the oral hearing a company representative said BolBol had reached the point of closing, and two weeks later the site became unreachable. It might be added, as an interpretation, that the commission-free model could not generate enough revenue for a platform struggling to sign up restaurants. ## The story Emre Aydın had succeeded in the online gift market with Çiçeksepeti, which he founded in 2006. In 2014 he turned his attention to a more crowded space: food ordering. BolBol started out with mobile apps and opened its website in September 2014. According to a Webrazzi report that day, the platform had 1,044 restaurants and around 75,000 menu items. The most striking thing about BolBol was its business model. It charged restaurants no order commission and no entry fee, planning instead to earn its revenue from marketing services such as banner advertising and SMS and email campaigns. Users, meanwhile, earned points and badges with every order. In 2015 the company also stepped into grocery shopping, announcing BolBol Market, which aimed to deliver in around 60 minutes. The problem was getting restaurants onto the platform. In November 2014 BolBol applied to the Turkish Competition Authority. According to the complaint as recorded in the Competition Board's decision, the company argued that because of Yemeksepeti's contract terms and pressure, not a single chain restaurant would work with it, and that some restaurants had been forced to leave the platform. The same decision also recorded that BolBol had spent half of its investment on software and 40 per cent on field operations. The process dragged on for more than a year and a half. At the oral hearing on 31 May 2016, Faruk Kayabaşı, speaking for BolBol, said the platform had reached the point of closing because of unfair competition. In June 2016 the Competition Board fined Yemeksepeti about 428,000 TL over its most-favoured-customer clause. In the same days Webrazzi reported that bolbol.com could no longer be reached and that the brand had been removed from Çiçeksepeti's list of group brands. An update to the report, citing a source close to the matter, said BolBol had closed and that an executive had said they shut it down during the investigation; no separate closure announcement from the company itself has been found. BolBol's story shows how hard a fight a late entrant faces in a market with strong network effects. It had an experienced entrepreneur, a different business model and a big e-commerce brand behind it. But restaurants and users had already gathered on a single platform, and by the time the legal process concluded it was too late for the company. ## Lessons - In a market with strong network effects, a second entrant cannot pull ahead on a price advantage alone. - Legal processes are slow; do not let a competition complaint stand in for your business strategy. - A commission-free model sounds attractive, but prove early that the alternative revenue streams really scale. ## Sources - [BolBol.com? [Updated] (in Turkish)](https://webrazzi.com/2016/06/15/bolbol-com-kapaniyor/) - [Competition Board decision, file 2014-3-87, decision 16-20/347-156 (in Turkish)](https://www.rekabet.gov.tr/Karar?kararId=0bd0157a-2b4d-43ce-85a3-2af821bb387b) - [Emre Aydın's food-ordering venture Bolbol.com launches on the web after mobile (in Turkish)](https://webrazzi.com/2014/09/19/bolbol-com-web-girisimi/) - [Bolbol.com files complaint in Yemek Sepeti investigation, Nevzat Aydın presents defence (in Turkish)](https://webrazzi.com/2016/06/01/yemek-sepeti-sorusturmasinda-bolbol-com-sikayetci-oldu-nevzat-aydin-savunma-yapti/) - [Competition Authority fines Yemek Sepeti 428,000 TL (in Turkish)](https://digitalage.com.tr/rekabet-kurumundan-yemek-sepetine-428-bin-tl-ceza/) - [Food delivery service BolBol moves into supermarket shopping (in Turkish)](https://webrazzi.com/2015/07/08/bolbol-yemek-teslimat-supermarket-alisveris/) --- # Brisk (2012 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/brisk/ - Sector: Enterprise software (SaaS) - Country: Sweden - Total funding: $2 million - Cause of closure: No market need ## What did it do? Brisk was a software service running on Salesforce that combined CRM records with email, calendar and marketing automation data to remind sales reps of forgotten opportunities and the next steps they needed to take. The founders described the product as a sales acceleration system. ## Why did it shut down? Founded in Malmö in 2012 by Hampus Jakobsson and his partners, the company raised a total of $2 million from Creandum, DN Capital, three angel groups and 14 angel investors. Although it won customers such as LinkedIn, Intercom and Evernote, the fact that every company customised Salesforce differently made installation extremely complex, and a product left open to every use case lost its focus. In September 2015 an $800,000 bridge round was raised as a last attempt. At Easter 2016 management saw the plan would not work and decided to sell the company, but no suitable match emerged among the 10 to 15 global candidates approached. Brisk announced its closure on 2 June 2016 and the service ended on 1 July 2016. ## The story Hampus Jakobsson was one of the founders of TAT, the Swedish software company sold to BlackBerry in 2010. After the sale he set about growing the start-up ecosystem of the Skåne region and investing in more than 40 companies, and in 2012 he founded Brisk in Malmö with Alfred Beckman and Andreas Pålsson. Jakobsson and Mikael Tellhed funded the company's first six months out of their own pockets. Brisk was a layer that sat on top of Salesforce, the tool sales teams used. It combined CRM records with email, calendar and marketing automation data to remind sales reps of overlooked opportunities and deals waiting to close. The product won well-known customers such as LinkedIn, Intercom and Evernote, and the company raised a total of $2 million from Creandum, DN Capital, three angel groups and 14 angel investors. The problem was installation. As Jakobsson later recounted, companies had customised Salesforce in such different ways that the team counted more than 200 systematic deviations. Because the product was kept flexible on both the data and the interface side, it opened itself up to countless use cases; this scattered development, customer acquisition and sales. Users loved the product, but their managers thought differently about how it should work and how it should be bought. In September 2015 an $800,000 bridge round was raised as a last attempt. At Easter 2016, after a meeting with all 13 employees, the decision was taken to sell the company, but no suitable match could be found among the 10 to 15 global candidates approached. On 2 June 2016 Jakobsson told Breakit that they had found an important problem and an interesting product but had been unable to generate sales on a scale suited to venture capital. Brisk shut down its service on 1 July 2016. ## Lessons - A product built on top of another platform also inherits that platform's customer-by-customer customisations; measure the installation cost with your first customers and narrow the product's scope accordingly. - Users loving the product is not enough; in enterprise software, test early how the manager who makes the purchasing decision sees it. - Building a flexible structure that supports every kind of data and every interface use scatters customer acquisition and sales; start with a smaller product focused on a single customer segment. ## Sources - [Business angel Hampus Jakobsson shuts down Malmö start-up Brisk (in Swedish)](https://www.breakit.se/artikel/3909/affarsangeln-hampus-jakobsson-lagger-ned-malmo-startupen-brisk) - [Hampus Jakobsson of Brisk and TAT](https://blog.salesflare.com/interview-hampus-jakobsson) - [After the SaaS Exit: Why His Next Startup Failed](https://saasclub.io/podcast/saas-success-failure-hampus-jakobsson/) --- # ChaCha (2006 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/chacha/ - Sector: Consumer apps - Country: United States - Total funding: $84 million - Cause of closure: Business model failed ## What did it do? ChaCha was a question-and-answer and search service where users asked questions via the website, a mobile app, a text message to 242-242 or by phone, and the answers were prepared by freelance human guides. The company earned its revenue from advertising. ## Why did it shut down? Founded in Indiana in 2006 by Scott A. Jones and Brad Bostic, the company laid off 25 employees and cut the remaining staff's pay by 10 per cent in March 2009, even as it raised USD 12 million in new investment; a month later Bostic stepped down as chairman. Its UK operation, launched in September 2011, was closed in April 2012 after user interest stayed low. ChaCha peaked in 2012 with 370 million page views a month and USD 20.5 million in annualised revenue, but advertising revenue fell sharply in 2016. Although the company had repaid 80 per cent of a USD 5 million secured loan, it could not cover the remaining debt and failed to find a buyer. On 12 December 2016, after the lender emptied its bank accounts, it ceased operations. ## The story Founded in 2006 in Carmel, Indiana, ChaCha tried to offer an alternative to search engines with a different idea: let people answer the questions. The service built by founders Scott A. Jones and Brad Bostic routed users' questions to freelance guides. At the end of 2006 the company announced that 20,000 guides had signed up. Its early investors included Bezos Expeditions, Jeff Bezos's personal investment firm. ChaCha's real breakthrough came on the phone. Users texted questions to 242-242 and received the answer by text as well. According to a 2009 ESPN report, the service was receiving around 1 million questions a day. But growth did not turn into profit. In March 2009, having raised USD 12 million in new investment, the company laid off 25 employees and cut the remaining staff's pay by 10 per cent; a month later co-founder Bostic stepped down as chairman. Its UK operation, launched in September 2011, was also closed in April 2012 because user interest stayed low. According to the Indianapolis Business Journal, ChaCha peaked in 2012, reaching around 370 million page views a month and USD 20.5 million in annualised revenue. The company raised USD 84 million in capital in total, USD 34 million of it out of Jones's own pocket. Over ten years the service answered 2.25 billion questions and paid guides USD 44 million. A sharp fall in advertising revenue in 2016 left the company unable to pay its debt. Eighty per cent of a USD 5 million secured loan had been repaid, but no buyer emerged, and the lender emptied the company's bank accounts. ChaCha ceased operations on 12 December 2016. Jones said they had sold some assets but not enough to cover their obligations, and that debt and equity holders, himself included, would write off their investments. ## Lessons - When advertising is your only source of revenue, a drop in traffic and ad prices hits your ability to service debt directly; diversify your revenue early. - In a company kept afloat by secured debt, set early-warning thresholds for falling revenue; by the time the lender acts, your options are gone. - An answer service built on the work of thousands of freelancers grows its costs as it scales; find a way early to bring the unit cost down through automation. ## Sources - [ChaCha, unable to find financial answers, shuts down operations](https://www.ibj.com/articles/61651-chacha-unable-to-find-financial-answers-shuts-down-operations) - [ChaCha (search engine)](https://en.wikipedia.org/wiki/ChaCha_(search_engine)) - [Q&A Site ChaCha Cancels UK Business After Poor User Take-Up](https://techcrunch.com/2012/04/27/qa-site-chacha-cans-uk-expansion-after-poor-user-take-up/) --- # CircleBack Lending (2012 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/circleback-lending/ - Sector: Fintech - Country: United States - Total funding: unknown - Cause of closure: Business model failed ## What did it do? CircleBack Lending was an internet-based lending platform in the US that offered consumers unsecured personal loans of between $3,000 and $35,000 and sold those loans to institutional investors as an investment product. The loans were originated by County Bank in Delaware. ## Why did it shut down? The founders, Michael Solomon and Todd Walters, had set up Loanio, one of the first peer-to-peer lending platforms in the US, in 2008, but closed it in 2011, partly because of the requirement to register its notes as securities. In 2014 CircleBack struck a deal with Jefferies for the sale and securitisation of up to $500 million of loans. According to Morgan Stanley data, cumulative losses on CircleBack loans reached 13.5 per cent in 2015. When some borrowers fell behind on their payments, the company's loan funding dried up, and in October 2016 Bloomberg reported that CircleBack had stopped lending. Solomon said they were not currently making loans and that if they could not find funding they would transfer the existing loans to another company; in 2019 the company's domain redirected to a site listing domains for sale. ## The story Michael Solomon and Todd Walters were no strangers to online lending. In 2008 the pair had founded Loanio, the third peer-to-peer lending platform in the US after Lending Club and Prosper. Loanio had started lending before the requirement to register its notes as securities came in, and that requirement proved decisive in the company's closure in 2011. The founders' new venture, CircleBack Lending, went live in 2012. The company described itself as a platform with two purposes: to provide fast, low-interest loans to US consumers with strong credit histories, and to offer institutional investors a transparent channel for investing in those consumer loans. Loans ranged from $3,000 to $35,000 and were originated by County Bank in Delaware. In 2014 a deal was signed with the investment bank Jefferies for the purchase and securitisation of up to $500 million of loans. The picture deteriorated in 2015. According to Morgan Stanley data, cumulative losses on CircleBack loans reached 13.5 per cent. When some borrowers fell behind on their payments, the company's loan funding evaporated. Crowdfund Insider reported that finding funding had become harder across the online lending sector as a whole during this period. In October 2016 Bloomberg reported that CircleBack had stopped lending. Solomon said they were not currently making loans and that if they could not find funding soon they would transfer the existing loans to another company. By 2019 the company's domain redirected to a site listing domains for sale. CircleBack's story shows how much growth on online lending platforms depends on credit quality and on the confidence of the investors who provide the funding. ## Lessons - In a marketplace model, losses count against your reputation even if you do not lend from your own balance sheet; monitor loss rates before the investors who fund you do. - Funding tied to a single institutional buyer or securitisation channel can close overnight when the market mood changes; diversify your funding sources. - If the founders' previous venture was closed by a regulatory hurdle, put legal and funding risk at the heart of the business plan from day one of the new venture. ## Sources - [CircleBack Lending Stops Making Loans, May Transfer Portfolio to Another Company](https://www.crowdfundinsider.com/2016/10/91260-circleback-lending-stops-making-loans-may-transfer-portfolio-another-company/) - [Online Loan Pioneer Stops Lending Money as Industry Losses Mount](https://www.bloomberg.com/news/articles/2016-10-14/online-loan-pioneer-stops-lending-money-as-industry-losses-mount) - [CircleBack Lending, Company Overview (archived copy)](https://web.archive.org/web/20140411140015/https://www.circlebacklending.com/about.php) --- # Clinkle (2011 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/clinkle/ - Sector: Fintech - Country: United States - Total funding: $25 million - Cause of closure: Product problems ## What did it do? Clinkle was a start-up that set out to enable mobile payments using ultrasonic signals emitted by smartphones. After abandoning that approach because of technical problems, the company turned in 2014 to an app offering a prepaid debit card and a way to send money to friends. On every seventh payment, users received a reward they could send to a friend. ## Why did it shut down? In 2013 the company raised what was then the largest seed round in Silicon Valley's history, but the ultrasonic payment technology was abandoned because of technical hurdles it could not overcome. Until September 2014 the app only let people join a waiting list, and the prepaid card product that followed failed to take off. A quarter of the staff were laid off in December 2013, seven key employees resigned in 2015, and the team shrank from 70 people to 12 at most. In January 2016 Forbes reported that investors, seeing no product on the market, wanted their money back. The company closed in 2016. ## The story In June 2013 the most talked-about start-up in Silicon Valley was a mobile payments app that did not yet have a single customer. Clinkle had just closed a USD 25 million round, the largest seed round in the region's history up to that point. Its founder, Lucas Duplan, had started the company in 2011 as a computer science student at Stanford. The idea was to pay using ultrasonic sounds emitted by smartphones: at the till, ultrasonic signals from the phone would take the place of a card or cash. Duplan won over Accel partner Jim Breyer, whom he had met through VMware co-founder Diane Greene, at their first meeting and product demo. Greene, Andreessen Horowitz, Intel Capital, Intuit, Peter Thiel and Salesforce CEO Marc Benioff also joined the round. The company said the product would also help merchants run targeted campaigns by giving them information about their customers. But the product never arrived. A quarter of the staff were laid off in December 2013. Until September 2014 the app offered users nothing more than the chance to join a waiting list. The ultrasonic technology was abandoned because of technical problems that could not be overcome, and in 2014 the company turned to a prepaid debit card. The app that finally launched was built around sending money to friends and earning rewards when paying with the Clinkle Card; on every seventh payment, users got a “Treat” they could send to a friend. Reporting the launch, TechCrunch called the company the laughing stock of the mobile wallet world. In 2015 seven key employees resigned, in protest at the CEO according to TechCrunch, and a team that had once numbered 70 shrank to 12 at most. There were reports that the company had tried to sell itself to Apple. In January 2016 Forbes wrote that investors, seeing no product on the market, had run out of patience and wanted their money back. The same month it was announced that Richard Branson had invested in the company and become an adviser to Duplan. By May 2016 Clinkle had closed. Clinkle shows that a large sum raised before there is a working product is not an advantage but an expectation that has to be met. When the technology did not work as promised, the record round only made the fall more visible. ## Lessons - A big seed round is no substitute for a working product; prove that the technology works in real conditions before you take the money. - Spending years with a waiting list and no product wears out the patience of both the team and investors; ship early with a small version that works. - If your core technology fails, ask yourself honestly whether you have a real edge in the new direction before you pivot. ## Sources - [Clinkle](https://en.wikipedia.org/wiki/Clinkle) - [Clinkle Raises Celebrity-Filled $25M Round As It Gears Up To Eliminate The Physical Wallet](https://techcrunch.com/2013/06/27/clinkle-raises-celebrity-filled-25m-round-as-it-gears-up-to-eliminate-the-physical-wallet/) - [Clinkle Up In Smoke As Investors Want Their Money Back](https://www.forbes.com/sites/ryanmac/2016/01/22/clinkle-up-in-smoke-as-investors-want-their-money-back/) - [Clinkle Implodes As Employees Quit In Protest Of CEO](https://techcrunch.com/2015/05/15/clunk/) --- # Dinner Lab (2011 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/dinner-lab/ - Sector: Food and drink - Country: United States - Total funding: $9.1 million - Cause of closure: Business model failed ## What did it do? Dinner Lab was a food start-up that staged pop-up dinners prepared by up-and-coming chefs in unusual venues for users who paid a membership fee. The company later also began catering corporate events. ## Why did it shut down? Starting out in New Orleans in 2011, Dinner Lab raised USD 2 million in crowdfunding from its members and more than USD 5 million in venture capital, according to Entrepreneur; according to TechCrunch, total investment reached around USD 9.1 million, including a USD 7 million Series A in August 2015. The company spread to 31 cities and by autumn 2015 was holding 25 to 30 events a week. To keep growing it dropped its membership wall, moved into corporate catering and tripled its event targets. But managing a scalable events workforce, coordinating the supply chain and running an operation that relied on contract staff across dozens of cities did not produce a profitable structure. In April 2016 the company ceased operations, saying it had been unable to build a business profitable enough to support its ambitions. ## The story Dinner Lab was born in a basement in New Orleans in 2011 out of a simple problem: it was hard to find a good meal late at night in the city. Led by Brian Bordainick, the start-up decided to fill the gap with pop-up dinners prepared by up-and-coming chefs in unexpected venues. To take part you had to become a member; membership cost between USD 125 and USD 175 depending on the city, and each dinner between USD 55 and USD 95. The concept quickly caught on. The company raised USD 2 million in crowdfunding from its members and then turned to venture capital. With a USD 7 million Series A in August 2015, its total funding reached around USD 9.1 million. Dinner Lab spread to 31 cities and by autumn 2015 was holding 25 to 30 events a week. It also catered singer Solange Knowles's wedding in New Orleans. As growth targets rose, the model began to strain. The company dropped the membership requirement, began catering corporate events and tripled its event targets. But according to TechCrunch, managing a scalable events workforce, coordinating the supply chain and running an operation that relied on contract workers across dozens of cities took their toll on the company. On 14 April 2016, in a message to its members, Dinner Lab announced that it was ceasing operations, saying the team had poured all its energy into building a product members would want to use regularly but had failed to build a business profitable enough to support its ambitions. Dinner Lab's story shows that taking an experience-led service to many cities means recreating the operational burden in every new city. ## Lessons - In a model where every event needs its own venue, chef and crew, adding cities multiplies costs too; prove profit per event in your existing cities before moving into a new one. - Dropping the membership wall to grow can dilute a community's distinctive value; test the effect of such decisions on recurring revenue at a small scale. - In dispersed operations run with contract staff, scaling without standardising quality and the supply chain erodes both the brand experience and the margin. ## Sources - [Dinner Lab shuts down after failing to find a sustainable business model](https://techcrunch.com/2016/04/14/dinner-lab-suspends-operations-after-failing-to-find-a-sustainable-business-model/) - [Food Tech Startup Dinner Lab Shuts Down](https://www.entrepreneur.com/article/274171) --- # EVT Motor (EVT S1) (2012 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/evt-motor/ - Sector: Mobility and transport - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? EVT Motor was an electric car start-up launched in 2012 by academics and students from the Automotive Engineering department of Hacettepe University in Ankara. After three and a half years of work, the 12-strong team unveiled the prototype of an electric sports car called the EVT S1 at Hacettepe Teknokent in October 2015. With its 141-horsepower motor, 35 kWh battery and range of around 300 kilometres, the car was presented as an entirely Turkish-designed electric car. ## Why did it shut down? Although the prototype attracted great interest, the capital needed to move into series production could not be found. According to Hürriyet, permits had been obtained for the first 500 cars and the target price was 150,000 TL, but the expected investor and government support never came. According to Webtekno, engineers whose salaries could not be paid left the project, and at the same time the university changed rector. In March 2016 the company announced that it was ceasing operations because it had received no support. It became an example of how hard it is for a team running on university resources to move from prototype to series production in a capital-intensive business such as cars. ## The story In June 2012, in Ankara, a group of academics and students from the Automotive Engineering department of Hacettepe University began work towards an ambitious goal: a 100 per cent electric sports car designed entirely by Turkish engineers. The team organised itself as EVT Motor within Hacettepe Teknokent, the university's technology park. According to Teknolojioku, the project leads included Prof. Dr. Engin Tanık and Dr. Raşit Karakuş. After three and a half years of work, the 12-strong team showed the EVT S1 prototype to the public at the Teknokent in October 2015. Built on an aluminium-alloy chassis, the car drew attention with its 141-horsepower motor, 35 kWh battery and range of around 300 kilometres; with fast charging it could be filled in about half an hour. The car was exhibited at symposiums and trade fairs and was widely covered in the press. The rector at the time announced that permits had been obtained for the first 500 cars and that series production would begin; a target price of 150,000 TL was being discussed. Yet the road from prototype to factory was not one the team could travel with the resources it had. Series production required both ministry support and investors, and neither came. According to Webtekno's 2024 assessment, engineers whose salaries could not be paid gradually moved on to other jobs, and at the same time the university changed rector. In March 2016 EVT Motor posted a short announcement on its website and social media accounts: "EVT Motor has been forced to cease operations because no support was forthcoming." The team likened the project's fate to that of the Devrim cars, Turkey's first home-grown cars of 1961, which never went into production. The prototype was kept for display at the university. According to Webtekno, a collector offered 1 million TL for the car, but the team turned the offer down, citing the project's historical value. Some of the team's engineers went on to work at large automotive companies. The EVT S1 story is remembered as one of the most frequently cited unfinished projects in the debate over a Turkish national car. Building a working prototype had proved possible; what was missing was the capital and institutional ownership to carry that prototype into production of thousands of cars. ## Lessons - In hardware, the prototype is the easy part; plan how you will pay for series production from the very beginning. - Do not count a promise of investor or government support as a firm source of funding until it has been signed. - The day you cannot pay your team's salaries, years of accumulated know-how walk out of the door. ## Sources - [A Devrim-style ending for the EVT S1](https://www.hurriyet.com.tr/yerel-haberler/ankara/evt-s1e-devrim-sonu-40067948) - [Sad news from the EVT S1](https://otopark.com/2016/03/15/evt-s1-projesinden-kotu-haber/) - [Why Couldn't the EVT S1, Turkey's First Home-Grown, 100% Electric Car, Carry On?](https://www.webtekno.com/ilk-yerli-elektrikli-arac-evt-s1-ne-oldu-h151959.html) - [The story of the EVT S1, which ended like the Devrim cars](https://www.teknolojioku.com/otomobil/sonu-devrim-arabalari-gibi-olan-evt-s1-hikayesi-608ad1e2ac4fab135003290c) --- # Frankly.me (2014 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/frankly-me/ - Sector: Social media - Country: India - Total funding: unknown - Cause of closure: No market need ## What did it do? Frankly.me was a mobile platform where users could put questions to celebrities, politicians and writers, with the answers shared as short videos. The app started life as a purely video-based social network, then shifted towards question-and-answer and short-video self-expression models. ## Why did it shut down? After raising USD 600,000 in seed funding from Matrix Partners in January 2015, the company redefined its product several times in quick succession. In November 2015, while changing its business model, it parted ways with dozens of employees and moved the app towards a structure centred on short videos and parodies. In January 2016 it raised a bridge round from existing and new investors, but could not find backing for a large Series A round. In their closure announcement in February 2016, the founders said the market was eager to watch video but making video was still hard for users, and that they had failed to achieve lasting product–market fit. The rise of live video apps such as Periscope and Meerkat was also squeezing the space. ## The story Frankly.me was founded in 2014 by Nikunj Jain and Abhishek Gupta in Noida, near Delhi. The initial goal was to create India's purely video-based social network. It soon became clear that celebrities were taking an interest in the app, and the team pivoted to a question-and-answer platform where users put questions to well-known figures and received the answers as short videos. Figures such as Delhi Chief Minister Arvind Kejriwal and lyricist Javed Akhtar answered questions on the platform. In January 2015 USD 600,000 in seed funding arrived from Matrix Partners. But the presence of celebrities did not translate into ordinary users producing content regularly. In November 2015 the company changed its business model again and parted ways with dozens of employees. The new direction was a Dubsmash-like format in which users expressed themselves through short videos, impressions and parodies. At the same time, live-streaming apps such as Periscope and Meerkat were pulling users' video habits elsewhere. Having raised a bridge round from existing and new investors in January 2016, the company decided to close just a few weeks later. According to the founders' statement, the market was keen to watch video, but making video was still hard for users, and the team had not found lasting product–market fit. Founder Jain stressed that the real problem was not funding but this lack of fit. The team of around 35 people disbanded; according to reports, investors got most of their money back. Frankly.me's short story shows that a social network that starts with celebrities lives, in the long run, on the contributions of ordinary users. Squeezing three different product experiments into less than two years also left the team without enough time to test any of them properly. ## Lessons - Celebrity participation brings initial attention, but if it does not turn ordinary users into content creators the network will not grow; test the creation side from the very start. - Pivoting repeatedly in a short time wears out both the team and the bank balance; try each new model with a small team and a clear measure of success. - If no sign of fit appears, closing early and returning money to investors rather than burning what is left protects the founder's reputation; Frankly.me returned most of their money to its investors. ## Sources - [Why We Decided To Shut Frankly.me Just A Few Weeks After Raising Pre-Series A Round?](https://inc42.com/buzz/frankly-shutdown/) - [Unable To Raise Fresh Funds, Frankly.Me, The Matrix-Backed Video Q&A Platform Has Shutdown](https://thetechportal.com/2016/02/10/frankly-me-shutdown/) - [Matrix-Backed FranklyMe Shuts Down](https://inc42.com/flash-feed/franklyme-shutdown/) - [Frankly.me Puts Curtains On its Operations](https://techstory.in/frankly-shuts-its-operations-10020216/) --- # Fuhu (2008 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/fuhu/ - Sector: Hardware - Country: United States - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Fuhu was an El Segundo-based company that made the Nabi range of tablets designed for children. The Android tablets were sold with child-specific software, parental controls and rubber bumpers against knocks. In 2013 the company topped Inc. magazine's list of the fastest-growing companies in the United States. ## Why did it shut down? The profit margin per tablet could fall as low as $5, and the company tried to make its profit from accessories. In 2014 and 2015, as Apple, Samsung and Amazon multiplied their child-friendly tablets, demand for Nabi slowed. The Nabi Dream Tab, of which 150,000 units were ordered, was a commercial failure, leaving the company with surplus stock and a large debt to its manufacturer Foxconn. In November 2015 shipments to major retailers were cancelled. When a lender collected a $6.5 million debt and too little capital remained, the company filed for Chapter 11 in December 2015. ## The story For the 2011 holiday season Toys “R” Us ordered 10,000 Nabi tablets from Fuhu. Delivered a week before Christmas, the tablets sold out within two weeks. It was the start of a story that opened the door to a market for children's tablets, and then saw it swiftly close. Fuhu was founded in 2008 by Robb Fujioka and the brothers John and Steve Hui; the company's name came from the first two letters of the founders' surnames. John Hui, a co-founder of eMachines, advised staying away from hardware because of its low margins and developing only software. In its early years the company built software such as the Fooz Kids platform for children's safe internet use. In mid-2011, when its software licensing partner Foxconn asked for ideas for a surplus of low-cost tablets it was holding, Fujioka and CEO Jim Mitchell set that advice aside and designed their own tablets. The partnership with Toys “R” Us was short-lived, but Fuhu developed the Nabi 2 with a $10 million loan. Selling 750,000 units through Walmart, Best Buy and Target, the tablet lifted the company's 2012 sales to $117.9 million. In 2013 more than 2 million devices were sold, revenue rose to $196 million, and Fuhu took the top spot on Inc. magazine's list of the 5,000 fastest-growing companies in the United States. Experts talked of a valuation above $1 billion at a stock market flotation. The break came when the big players entered the market. In 2014 and 2015 Apple, Samsung and Amazon multiplied their child-friendly options. The Nabi Dream Tab, of which 150,000 units were ordered, did not sell; only 4,000 units of the large-screen Nabi Big Tab were sold in the 2014 holiday season. A class action was filed over the tablets' overheating batteries. In November 2015 Bloomberg reported that Fuhu had cancelled shipments to major retailers because of a dispute with Foxconn; according to Inc., the company owed Foxconn between $60 million and $100 million. A Chapter 11 filing followed on 7 December 2015, and Mattel bought the company at auction for $21.5 million. Fuhu closed on 9 January 2016. Fuhu's story shows how fragile rapid growth can be in a low-margin hardware business. ## Lessons - In a hardware category that giants can easily copy, find a way early to protect your margin with software and content. - Building up a large debt to a single contract manufacturer locks up your entire supply chain at the first crisis. - Before placing a large stock order for a new product, measure real demand with a small batch. ## Sources - [Fuhu](https://en.wikipedia.org/wiki/Fuhu) - [Fuhu Holdings files for Chapter 11 bankruptcy protection](https://www.reuters.com/article/fuhu-bankruptcy-idUSL3N13W35V20151207#6tXYxcBRssyLVi1o.97) - [The Maker of Nabi Kids' Tablet Is Canceling Orders](https://www.bloomberg.com/news/articles/2015-11-13/foxconn-backed-tablet-maker-said-to-cancel-shipments-to-wal-mart) --- # Gawker Media (2003 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/gawker-media/ - Sector: Media and entertainment - Country: United States - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Gawker Media was a New York-based internet media company and blog network. Alongside Gawker.com it published sites such as Deadspin, Lifehacker, Gizmodo, Kotaku, Jalopnik and Jezebel. It made most of its money from advertising and was profitable in 2014. ## Why did it shut down? In 2012 Gawker published a short excerpt from a sex tape featuring Hulk Hogan and announced that it would not take it down despite a judge's order to remove it. Hogan, whose real name is Terry Bollea, sued in Florida for invasion of privacy. In March 2016 a jury ordered the company to pay a total of $140 million in damages. Stating that it could not cover this sum or the $50 million bond required to appeal, the company filed for Chapter 11 in June 2016. Its sites were sold at auction to Univision, and Gawker.com was shut down. ## The story On 18 March 2016 a jury in Florida ordered Gawker Media to pay Hulk Hogan $115 million in damages. Three days later $25 million in punitive damages was added, $10 million of it assessed directly against founder Nick Denton. For a profitable but small media company, this was an existential figure. Denton founded the company in October 2003 as Blogwire; until 2008 it was run from his flat in New York's SoHo district. After Gawker.com, sites such as Gizmodo, Kotaku, Lifehacker, Deadspin, Jalopnik and Jezebel joined the network. Although Denton wrote in 2005 that he doubted the value of blogs as a business, the company grew: revenue rose from $20 million in 2010 to $45 million in 2014, the year it made an operating profit of $6.5 million. Business Insider valued the company at $250 million. The roots of the break went back to 2012. On 4 October 2012 one of Gawker's editors published a short excerpt from a sex tape featuring Hulk Hogan. Hogan asked for the video to be taken down; Denton refused, citing the First Amendment to the US Constitution, which protects free speech, and the story's news value. A judge ordered the footage removed, and in April 2013 Gawker wrote openly that it would not comply. Hogan, whose real name is Terry Bollea, filed a $100 million lawsuit for invasion of privacy. In May 2016 billionaire Peter Thiel confirmed to The New York Times that he had paid $10 million to cover the costs of several lawsuits brought by others, including Bollea's. Stating that it could pay neither the $140.1 million judgment nor the $50 million bond required to appeal, the company filed for Chapter 11 on 10 June 2016. On 16 August Univision bought all the sites except Gawker.com at auction for $135 million; Gawker.com closed the following week. In November 2016 Gawker reached a $31 million settlement with Bollea and dropped its appeal. The other sites lived on under the Gizmodo Media Group umbrella. Gawker's end shows that, at media start-ups, editorial decisions cannot be separated from legal risk management. ## Lessons - In publishing, set up a written legal review process for the line between newsworthiness and personal rights; in Turkey, too, the risk of access bans and damages is high. - Defying court orders can create a bigger risk than the lawsuit itself. - Even a profitable media company is vulnerable to a single large lawsuit without a capital buffer; set aside insurance and provisions for legal risk. ## Sources - [Gawker Media](https://en.wikipedia.org/wiki/Gawker_Media) - [Gawker, Filing for Bankruptcy After Hulk Hogan Suit, Is for Sale](https://www.nytimes.com/2016/06/11/business/media/gawker-bankruptcy-sale.html) - [Univision to Buy Gawker Media for $135M](https://www.hollywoodreporter.com/news/univision-buy-gawker-media-135m-920016) --- # GoZoomo (2014 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/gozoomo/ - Sector: Marketplaces - Country: India - Total funding: $6 million - Cause of closure: Business model failed ## What did it do? GoZoomo, formerly Zoomo, was a mobile-based peer-to-peer marketplace that let buyers purchase inspected used cars directly from their owners without paying a broker. The company operated in Bengaluru, Mumbai, the Delhi capital region, Pune and Chennai. ## Why did it shut down? In the peer-to-peer model, sellers' price expectations and buyers' offers often diverged, and standardising prices proved impossible. Only 20 per cent of listings turned into sales, which was not enough to carry the model's costs. In December 2015 the company turned to earning revenue from inspection fees and after-sales services such as ownership transfer and insurance, and laid off more than 130 call centre staff. These changes did not fix the unit economics either, and no attractive acquisition offer came along. In August 2016 the founders closed the company and returned the remaining money to investors. ## The story In 2014 Arnav Kumar and Himangshu Hazarika, graduates of IIT Kharagpur, and Aniket Behera, a graduate of IIT Bombay, founded a used-car marketplace in Bengaluru called Zoomo. The company later took the name GoZoomo. The idea was to free used-car buying and selling in India from brokers: buyers would purchase inspected cars directly from their owners. SAIF Partners made a USD 1 million seed investment in December 2014 and put in another USD 5 million in July 2015. After Bengaluru, the company expanded to Mumbai, the Delhi capital region, Pune and Chennai. But the peer-to-peer model had a fundamental problem. Every car and every seller was different; sellers' price expectations and buyers' offers frequently needed revising, and standardising prices proved impossible. Only 20 per cent of listings were turning into sales. In December 2015 the company turned to earning revenue from inspection fees and after-sales services such as ownership transfer and insurance, and laid off more than 130 people in its call centre. Although it reached 3,000 users with an average transaction size of USD 7,500, the numbers did not add up. In August 2016 the founders decided to close the company. They had explored acquisition options but found no attractive offer. According to reports, more than half the money they had raised was still in the bank, and the founders returned what was left to investors. The remaining 65 employees were paid seven weeks' severance and helped to find new jobs. Alok Goel of SAIF Partners praised the founders' transparent approach as a mature decision. GoZoomo is remembered as one of the rare companies in India's start-up ecosystem held up as an example for returning investors' money when it closed. ## Lessons - For second-hand goods without standard prices, a peer-to-peer model does not scale without a pricing mechanism that brings buyers' and sellers' expectations together; solve price discovery first. - Conversion rate is the foundation of unit economics; with a listing-to-sale rate of around 20 per cent, work out your break-even point before spending money on growth. - If the model is not working, closing while there is still money in the bank and returning what is left builds a reserve of trust with investors for the founders' next venture. ## Sources - [GoZoomo Shuts Shop Citing Unit Economics, Rivals Droom and Spinny Remain Keen On Market](https://inc42.com/buzz/gozoomo-shuts-shop/) - [GoZoomo shuts down citing unsustainable unit economics](https://www.medianama.com/2016/08/223-gozoomo-shuts-down/) - [With millions still in the bank, why is Indian start-up GoZoomo shutting shop](https://www.business-standard.com/article/companies/with-millions-still-in-the-bank-why-is-indian-start-up-gozoomo-shutting-shop-116082600789_1.html) - [By returning investors' money on its closure, GoZoomo sets example for Indian start-ups](https://www.thenewsminute.com/article/returning-investors-money-its-closure-gozoomo-sets-example-indian-start-ups-48941) --- # incir.com (2012 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/incir-com/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? incir.com was a Turkish e-commerce platform founded in 2012 by Yusuf Yıldırım. Without dealing with stock or operations, users could open their own virtual shop in a few clicks, stocked with products chosen from the platform's catalogue, and earn commission on sales. The model relied on a network structure that also rewarded members for bringing new members onto the platform. ## Why did it shut down? According to Webrazzi, the company's growth slowed from the start of 2016 and it needed fresh funding. An investment agreement due to be signed on 18 July 2016 fell through when the investor pulled out after the coup attempt of 15 July. The closing off of the bankruptcy postponement route under the state of emergency narrowed the options further. When talks with other companies came to nothing, the company announced on 9 September 2016 that it could not continue because of its operating costs. A structure that had grown on a high valuation and constantly needed new funding could not survive a single investment round falling through. ## The story When Yusuf Yıldırım founded incir.com in July 2012, the idea was simple: anyone who wanted to open an online shop should be able to set one up in a few clicks, without holding stock or dealing with shipping. According to a Webrazzi report at the time, users chose from more than 70,000 products and earned commission on sales. The model relied on a network structure that also rewarded members for bringing new members onto the platform. Çağlar Erol, founder of Enuygun.com, and Emre Aydın, founder of Çiçeksepeti.com, were among the first angel investors. Growth came fast. In May 2013 the angel investor Hasan Aslanoba invested USD 1 million; at the time the platform had more than 2,000 registered shops. In March 2015 the company raised USD 3 million in new investment at a USD 57 million valuation. According to the Turkish daily Hürriyet, 35,000 people had opened shops on incir.com and the company's 2015 turnover had reached TL 75 million. As Webrazzi reported, Yusuf Yıldırım said at Webrazzi Summit 2015 that the company had turned over more than TL 10 million in 2014 and that its target for 2015 was TL 100 million; headcount had reached 100 at the time. At the start of 2016, however, growth slowed and the company went looking for new funding. As Webrazzi reported, after talks conducted at a much lower valuation, the deal was due to be signed on 18 July. The coup attempt of 15 July upended that timetable and the company that was to invest pulled out. The closing off of the bankruptcy postponement route from 1 August under the state of emergency narrowed the company's options further. Talks with other companies also came to nothing. On 9 September 2016 incir.com announced that it could not continue operating because of its operating costs. According to Hürriyet, around 500 customers were still waiting for their orders at the time of the closure, and there were also problems with payments to suppliers. The story of incir.com shows how exposed a model is to external shocks when its rapid growth depends on constant new investment. A single investment round falling through pushed a four-year-old start-up into closure within a few weeks. ## Lessons - If your growth depends on constant new investment, a single round falling through can finish you; keep a cash buffer of at least 12 months. - The higher your valuation climbs, the higher the bar for the next round; be prepared for a down round. - Macro shocks are beyond your control, but how quickly your cost structure can shrink is your decision. ## Sources - [incir.com has closed! [Breaking]](https://webrazzi.com/2016/09/09/incir-com-kapandi/) - [incir.com has closed (final statement)](https://egirisim.com/2016/09/09/incir-com-kapandi/) - [It was going to be Turkey's biggest; it closed overnight](https://www.hurriyet.com.tr/ekonomi/turkiyenin-en-buyugu-olacakti-bir-gecede-kapandi-40229465) - [İncir.com raises USD 3 million in new investment at a USD 57 million valuation](https://webrazzi.com/2015/03/30/incir-com-57-milyon-dolar-degerlemeyle-3-milyon-dolar-yatirim/) - [incir.com receives investment from Hasan Aslanoba](https://webrazzi.com/2013/05/24/incir-com-hasan-aslanoba-yatirim/) - [incir.com](https://webrazzi.com/2012/11/22/incir-com/) --- # İndirdik.com (2010 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/indirdik/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? İndirdik.com was the relaunch, under a new name and on new infrastructure in 2010, of Bendeİstiyorum.com, the Turkish e-commerce site founded by Mustafa Acet. Starting out by selling a single discounted product a day, the site gradually became a deals shop selling interesting and unusual products. In 2014 it began opening physical shops on a franchise model. ## Why did it shut down? The company made no statement about the closure; in July 2016 egirişim, a Turkish start-up news site, wrote that the site had been unreachable for several days, that its last tweet had been posted in January 2016 and that the reason for the closure was unknown. According to a 2014 Webrazzi report, the company imported 70 per cent of its products itself and held 97 per cent of the products it sold in stock, and the team had shrunk from 30 people to 22. In the same period it announced a plan to grow through franchise shops. The cost of moving into a physical channel with a model that already carried the burden of stock and imports may have played a part in the closure; but this is an interpretation, as the company shared no reason. ## The story Mustafa Acet's e-commerce adventure began with Bendeİstiyorum.com, which sold one discounted product every day. In August 2010 Burak Divanlıoğlu and Serkan Borançılı, the founders of GittiGidiyor, Turkey's leading online marketplace, invested in the site. According to Webrazzi, the Turkish tech news site, in the new company Acet held 40 per cent, his partner Abdullah Serdar Çurgunlu 14 per cent and the two investors 20 per cent each; Goril Bilişim was also among the partners. In November 2010 the site opened under its new name: İndirdik.com. The early years moved fast. In 2011 Acet won the first Global Student Entrepreneur Awards held in Turkey, coming first out of 126 applicants, and went to the world final in New York. The site moved on from selling one product a day and became a deals shop selling interesting products. In December 2014 Webrazzi reported that İndirdik.com had reached more than 2 million unique visitors and more than 15 million page views a month. The company sold 1,200 kinds of product, 70 per cent of which it imported itself; 74 per cent of orders were shipped the same day. The team had shrunk from 30 people to 22. The new goal was physical shops: the first franchise shop had opened in İzmit, and the target was 15 to 20 shops by the end of 2015. This plan never reached any publicly reported outcome. In July 2016 egirişim, a Turkish start-up news site, noticed that the site had failed to load with a 502 error for several days and that its last tweet had been posted on 27 January 2016. The report said the reason for the closure was unknown. In August 2016 another blog also noted that the site had closed without any farewell message. The İndirdik.com story shows that a once fast-growing deals site can quietly disappear. With no official statement, the reasons for the closure remain unclear to this day. ## Lessons - In a stock-holding, import-based model, cash comes before growth speed; keep a close eye on stock turnover. - Moving into a physical channel does not solve an online business's problems; more often it adds new ones. - If you are closing, explain it to your customers and followers; a silent closure does lasting damage to your reputation. ## Sources - [İndirdik(.)com has closed (in Turkish)](https://egirisim.com/2016/07/23/indirdik-com-kapandi/) - [GittiGidiyor's founders invest in Bendeİstiyorum.com (in Turkish)](https://webrazzi.com/2010/08/04/gittigidiyor-kurucularindan-bendeistiyorum-coma-yatirim/) - [indirdik.com, with 2 million visitors a month, to grow through a franchise model (in Turkish)](https://webrazzi.com/2014/12/16/indirdik-com-franchise/) - [İndirdik.com wins the Global Student Entrepreneur Awards (in Turkish)](https://webrazzi.com/2011/11/02/global-universiteli-girisimci-yarismasi-indirdik/) - [İndirdik.com has closed (in Turkish)](https://www.zahiridunya.net/indirdikcom-kapandi/) --- # Kitchit (2011 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/kitchit/ - Sector: Food and drink - Country: United States - Total funding: $8.1 million - Cause of closure: Ran out of cash ## What did it do? Kitchit was a service that sent a professional chef to customers' homes, where the meal was prepared and served in the customer's own kitchen and the clean-up was taken care of too. It began as a chef marketplace offering bespoke menus for dinner parties, then shifted its emphasis to Kitchit Tonight, a model with standard menus that could be ordered the same day. ## Why did it shut down? In December 2014 the company raised $7.5 million in a round led by Javelin Venture Partners, bringing its total funding to $8.1 million. Because a bespoke chef service was expensive and used infrequently, the team tried to build a product people would choose more often, with standard menus starting at $39 per person. In the early months of 2016, as food start-ups such as SpoonRocket, Dinner Lab and Kitchensurfing closed, big players such as Instacart and Munchery also restructured their models. In their closure statement on 28 April 2016, the founders wrote that their key metrics were strong, but that their scale was not enough to weather the surrounding turmoil and that the market was not ready to support a venture-scale business. ## The story Kitchit was founded in San Francisco in 2011 by Brendan Marshall and Ian Ferguson. The original idea was to connect people who wanted to host a private party or dinner with independent chefs. The chef came to the customer's home, prepared the menu in their kitchen, served it and then took care of the clean-up too. Over time the service expanded to Chicago, Los Angeles and New York. Bespoke menus were priced at between $50 and $75 per person, and most orders came from small groups, mostly dinners for two. Looking for a product that would be used more often, the team launched a standard menu in San Francisco under the name Kitchit Tonight, which could be ordered the same day and started at $39 per person. In December 2014 a $7.5 million Series A led by Javelin Venture Partners, with 500 Startups also taking part, brought total capital to $8.1 million. The company served meals to more than 100,000 people and reached a net promoter score as high as 87. But early 2016 was a tough time for food tech. As start-ups such as SpoonRocket, Dinner Lab and Kitchensurfing closed, Instacart and Munchery restructured their models. When rumours of a closure spread in April 2016, the company's management said no decision had been made and the search for funding was continuing; a few days later, on 28 April, the founders announced that the company had closed. In their statement the founders wrote that investment runway is finite and that theirs had run out during the most turbulent period in the sector. Kitchit's story shows how quickly a service that customers love, but that is expensive and used infrequently, becomes defenceless when capital dries up. ## Lessons - A high satisfaction score does not bring scale on its own; track how often the service is bought again from day one. - In labour-intensive, on-site services, every new city starts costs from scratch; do not expand before unit economics work in one city. - When closures start piling up in your sector, investor appetite dries up fast; calculate your runway on the worst-case funding scenario. ## Sources - [On-demand private chef startup Kitchit shuts down](https://techcrunch.com/2016/04/28/on-demand-private-chef-startup-kitchit-shuts-down/) - [Too Many Cooks? In Crowded Market, Catering Startup Kitchit Calls It Quits](https://sfist.com/2016/04/22/kitchit_food_startup_of_some_kind_c/) - [Kitchit Gets $7.5 Million To Bring The Restaurant Experience To Your Home](https://techcrunch.com/2014/12/09/kitchit-7-5m/) --- # Kliksa (2012 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/kliksa/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Kliksa was a general e-commerce site founded in 2012 within Sabancı Holding, one of Turkey's largest conglomerates, as a subsidiary of the electronics retailer Teknosa. It sold products across many categories, including electronics, household appliances and personal care. Thanks to its promotions, it quickly joined the ranks of Turkey's big e-commerce sites. ## Why did it shut down? According to Webrazzi, Kliksa had been looking for outside investment to grow for some time; talks with one investor reached the offer stage, but the board rejected the offer. Sabancı Holding, for its part, chose not to commit resources to such growth in the online market; Webrazzi suggested that the existence of the fast-growing Teknosa may have stood in the way of investing in a separate company. According to Bloomberg HT, Teknosa had first considered strategic alternatives for selling Kliksa and appointed an investment bank, but in the end absorbed the company. According to Webtekno, competing with strong rivals such as n11, Hepsiburada and GittiGidiyor was also becoming increasingly difficult. According to Turkishtime's 2016 round-up, Kliksa redesigned itself and moved to a marketplace model in 2014 with an investment of $10 million; the round-up argued that changing both the design and the business model reduced customer loyalty. ## The story In 2012 Sabancı Holding, one of Turkey's largest conglomerates, entered online retail with a general e-commerce site: Kliksa, set up as a subsidiary of its electronics chain Teknosa. The site offered a wide range of products, from technology to household appliances and personal care, and many other categories besides. According to a later round-up by Webtekno, it attracted attention with its promotions and discounts, and by 2014 it had joined the ranks of Turkey's big e-commerce sites. The general e-commerce field, however, was crowded. Rivals such as n11, Hepsiburada and GittiGidiyor were competing with big budgets. It had been talked about in the industry for some time that Kliksa was looking for outside investment to scale up. According to a Webrazzi report dated 11 January 2016, the company got as far as the offer stage with an investor, but the board rejected the offer. The same day, an email from Kliksa general manager Nevgül Bilsel Safkan to employees announced the new structure: the operation would be scaled down, and Kliksa would be repositioned as an outlet channel under Teknosa. Webrazzi wrote that the move was technically close to a closure and suggested that Sabancı Holding had chosen not to commit resources to growth in the online market. In April 2016 the final step was taken. According to Bloomberg HT, Teknosa's board decided on a merger, taking over Kliksa with all its assets and liabilities. Teknosa had earlier considered strategic alternatives for selling Kliksa and appointed an investment bank, but in the end merger was chosen over sale. After the merger the Kliksa brand gradually disappeared and the platform became Teknosa's outlet channel. Kliksa's story shows that the backing of a big conglomerate is not always an advantage. With the parent company's own retail brand growing fast, the appetite needed to invest in a separate e-commerce venture was gone. ## Lessons - A start-up set up inside a corporate group struggles to find resources once it starts to look like a rival to the parent company's priorities. - If you are going to seek outside investment, make sure from the very start that the shareholders are prepared to accept an offer. - The race for scale in general e-commerce is expensive; without a firm funding commitment, think twice before entering it. ## Sources - [Unable to find the investment it wanted, KlikSA is restructuring and being placed under TeknoSA](https://webrazzi.com/2016/01/11/kliksa-teknosa-yeniden-yapilanma/) - [Teknosa decides to take over Kliksa](https://www.bloomberght.com/teknosa-kliksayi-devralma-karari-aldi-1870847) - [Why Did Kliksa, Which Had the Potential to Be Sabancı Holding's Amazon, Suddenly Disappear? (It's Actually Still Sort of Around!)](https://www.webtekno.com/kliksa-ya-ne-oldu-h147815.html) - [Turkish e-commerce sites that closed before Markafoni! Why did online shopping sites close?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) - [50 failed start-ups and 50 lessons from their mistakes (30-50)](https://turkishtimedergi.com/dijital-girisim/%EF%BB%BF-50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-30-50/) --- # Mailbox (2011 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/mailbox/ - Sector: Consumer apps - Country: United States - Total funding: $5.3 million - Cause of closure: Acquired and shut down ## What did it do? Mailbox was a free email app developed by Orchestra, a company based in Palo Alto. With swipe gestures, users could archive emails, file them into folders or snooze them to be reminded later, and the app nudged them towards emptying their inbox. It started on iOS and then moved to Android and macOS. ## Why did it shut down? Just five weeks after launch, in March 2013, Mailbox was sold to Dropbox together with its whole team, closing off its path to growth as an independent product. Although Dropbox brought the app to Android and the desktop, the product remained far from its new owner's core business. In December 2015 Dropbox said it had not been able to fundamentally fix email with Mailbox and would focus instead on simplifying the workflows that generate email. The app was shut down on 26 February 2016. ## The story When Mailbox arrived on the App Store on 7 February 2013, very few people could use it straight away. A pre-registration period opened weeks before launch had collected more than 380,000 reservations, and users were waiting their turn in a virtual queue. Even so, that day it became the second most downloaded free app on the App Store; Cult of Mac called it the best email app they had ever used. As well as being a marketing tool, the waiting list was needed so that the servers could cope with the load. Mailbox was developed by Orchestra, a Palo Alto-based company run by Gentry Underwood. In November 2011 the company had raised a USD 5.3 million Series A round led by Charles River Ventures, with SV Angel, Kapor Capital and CrunchFund taking part. The idea behind the app was simple: archive emails, file them into folders or snooze them to be reminded later, all with swipe gestures, and so get the inbox down to zero. Five weeks after launch, on 15 March 2013, Dropbox bought Orchestra for an undisclosed sum, and the entire 13-person team joined Dropbox. According to TechCrunch, Mailbox had by then reached 1.3 million reservations, was delivering 60 million messages a day and was struggling to keep up with demand. Dropbox CEO Drew Houston said his company could bring Mailbox to a very different audience much faster; the app would remain a separate product, and its technology would also be used to improve Dropbox's features around email attachments. The waiting list was removed in April 2013, an Android version came out in April 2014, iCloud and Yahoo Mail support arrived in June 2014, and a public beta for macOS opened in August 2014. In December 2015 Dropbox announced that it would shut Mailbox down. According to the announcement, the team had realised it could not fundamentally fix email, and from then on it would focus on simplifying the workflows that generate too much email. Mailbox was shut down on 26 February 2016. Mailbox shows that even a much-loved product may not survive inside a big company when it does not fit that company's core strategy. The sale was a good outcome for the team and the investors; for users, it meant the app they loved was gone within three years. ## Lessons - A promise in an acquisition deal that the product will live on separately can lose its force when the buyer's strategy changes; consider securing the product's future in the contract. - Scarcity mechanisms such as a waiting list create demand, but if your infrastructure is not ready they only buy you time. - If a free consumer app has no revenue model, its most likely end is a sale to a big company and dependence on that company's priorities. ## Sources - [Mailbox (application)](https://en.wikipedia.org/wiki/Mailbox_(application)) - [Dropbox Buys Mailbox, All 13 Employees Joining And App Will Remain Separate](https://techcrunch.com/2013/03/15/dropbox-buys-mailbox-all-13-employees-joining-and-app-will-remain-separate/) - [Mailbox CEO says insane 380K person wait list kept app from crashing today](https://venturebeat.com/2013/02/07/mailbox-app-iphone-wait-list/) --- # Move Loot (2013 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/move-loot/ - Sector: Marketplaces - Country: United States - Total funding: $21.8 million - Cause of closure: Business model failed ## What did it do? Move Loot was an online marketplace for people looking to buy and sell second-hand furniture. The company collected the seller's furniture, photographed it professionally, sold it on its site and delivered it to the buyer, taking a cut of the sale price in return. ## Why did it shut down? After a $2.8 million seed round in June 2014, the company's total funding reached $21.8 million. In spring 2015 it switched to a model of distributing from large warehouses, and according to a former employee, New York and Los Angeles, opened to hit the targets set for new investment, ran at more than twice the expected cost. Costs grew faster than revenue; layoffs that began in October 2015 were followed by a second wave in which entire city teams were disbanded. In November 2015 and March 2016 the company changed its model, opening up to other shops and to sellers who uploaded their own photos, but by May 2016 only the founders and a few executives remained. Move Loot ceased operations on 29 June 2016. ## The story Move Loot was a start-up launched in San Francisco in 2013 by four friends with a storage room and deliveries they made themselves. Bill Bobbitt, Jenny Morrill, Ryan Smith and Shruti Shah thought selling second-hand furniture was full of sloppy listings and deliveries that were hard to arrange. Their solution was to take on the whole process: Move Loot collected the furniture from the seller, photographed it professionally, sold it on its site and delivered it to the buyer. The idea caught investors' attention. A $2.8 million seed round closed in June 2014, and with the participation of Google Ventures, First Round Capital, Index Ventures, Y Combinator and Metamorphic Ventures total funding reached $21.8 million. After the Bay Area the company expanded to New York, Los Angeles, Raleigh, Durham, Charlotte and Atlanta. By October 2015 it had reached 100,000 users, 150 movers and 12 retail partners. Growth, however, was expensive. In spring 2015 the company switched to a model of distributing from warehouses in major cities. As one former employee tells it, New York and Los Angeles, opened to hit the expansion targets set for new investment, ran at more than twice the expected cost. Costs grew faster than revenue; layoffs that began in October 2015 were followed by a second wave in which entire city teams were disbanded. The company changed its model, opening its doors first to other shops and then to sellers who uploaded their own photos, and extended delivery nationwide. But by May 2016 only the founders and a few executives were left, and complaints from customers who had not received their orders were piling up on social media. On 29 June 2016 Move Loot announced in an email to customers that it was ceasing operations, saying it would complete outstanding orders and refund customers' money. ## Lessons - In a marketplace that collects, stores and delivers physical goods, do not expand without verifying logistics costs city by city. - Chasing growth targets to raise investment can make an unproven model even more expensive; prove profitability in one city first. - Cutting off communication with customers when you are struggling destroys trust fast; complaints that went unanswered in Move Loot's final months made the closure far more painful. ## Sources - [The startup that wanted to dethrone Craigslist is officially shutting down](https://www.businessinsider.com/moveloot-shuts-down-2016-6) - [Move Loot](https://en.wikipedia.org/wiki/Move_Loot) - [Move Loot Raises A $2.8M Seed Round To Expand Its Online Furniture Consignment Store](https://techcrunch.com/2014/06/09/move-loot-raises-2-8m-seed-round-to-expand-its-online-furniture-consignment-store/) --- # Pebble (2012 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/pebble/ - Sector: Hardware - Country: United States - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Pebble Technology made Pebble smartwatches, which displayed notifications from smartphones on an e-paper screen and could run downloadable apps. The company financed its products through Kickstarter campaigns and, in 2012 and 2015, twice became the platform's highest-funded project. By the end of 2014, 1 million watches had shipped. ## Why did it shut down? According to Wired, the company, which had been profitable for a time, slipped into losses in 2015 and missed its sales targets in the second half of the year. In March 2016 it laid off 40 of its 160 employees. Founder Eric Migicovsky said they had been late to realise that the smartwatch market was built mainly on health and fitness. The 2016 Kickstarter campaign had become a necessity because the company could not find investment, and no new capital came afterwards either. In December 2016 Pebble filed for bankruptcy in California and sold its software, intellectual property and some assets to Fitbit. ## The story On 11 April 2012 Pebble's Kickstarter campaign hit its $100,000 goal within two hours. Six days later it was the highest-funded project in the platform's history, and it closed on 18 May with $10,266,845 pledged by 68,929 people. Yet venture capitalists had previously turned their backs on the idea. In 2008, as an exchange student in Delft in the Netherlands, Eric Migicovsky was looking for a way to get information while cycling without looking at his phone. That search turned into the BlackBerry-compatible inPulse watch in 2010. The company, which went through Y Combinator, raised $375,000 from angel investors such as Tim Draper but could not find more; that is why it went to Kickstarter under the name Pebble. The watches began shipping in 2013, and 1 million had been reached by the end of 2014. In 2013 Charles River Ventures invested $15 million. In 2015 the colour-screen Pebble Time set a new Kickstarter record, raising $20.3 million from 78,471 backers. The company was reported to have turned down a $740 million acquisition offer from Citizen in 2015. According to Wired, Pebble, which had been profitable for a time, slipped into losses that same year and missed its sales targets in the second half. In March 2016, 40 of the 160-strong team were laid off. Migicovsky later explained that they had been late to realise that the smartwatch market was built mainly on health and fitness. The 2016 Kickstarter campaign had also been launched because no investment could be found, and no new capital came afterwards. In October 2016 Migicovsky decided to sell the company. On 6 December 2016 Pebble filed for bankruptcy in California and sold its software, intellectual property and some other assets to Fitbit. The price was reported to be $23 million; the company's debts were said to exceed that amount. Eighty-two employees were laid off, and the Pebble Time 2 and Pebble Core were cancelled. Fitbit shut down the servers in June 2018, and the volunteer Rebble community kept some of the services going. After Google open-sourced the software's code in 2025, Migicovsky founded Core Devices and revived the Pebble brand with new watches. Pebble shows that community support can provide a powerful start but is no substitute for a profitable business. ## Lessons - Crowdfunding proves demand but not profitability; do not treat pre-orders as a substitute for working out your unit economics. - Measure early what users actually use the device for; for Pebble that was health and fitness, but the company saw it late. - When you turn down an attractive acquisition offer, build into your scenarios the possibility of being stuck in a tough funding climate the following year. ## Sources - [Pebble (watch)](https://en.wikipedia.org/wiki/Pebble_(watch)) - [The Inside Story Behind Pebble's Demise](https://www.wired.com/2016/12/the-inside-story-behind-pebbles-demise/) - [Pebble Lays Off 82 Employees](http://www.wsj.com/articles/pebble-lays-off-82-employees-1482983119) --- # PepperTap (2014 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/peppertap/ - Sector: E-commerce - Country: India - Total funding: $50 million - Cause of closure: Business model failed ## What did it do? PepperTap was a Gurgaon-based hyperlocal grocery delivery app. Holding no stock of its own, the company partnered with local shops, picking up orders placed by users in the app from those shops and bringing them to the door within a short time. ## Why did it shut down? The company raised three rounds in quick succession in 2015, $1.2 million in March, $10 million in April and $36 million in September in a round led by Snapdeal, and aimed to reach 75 cities by March 2016. Although it hit 20,000 orders a day in October 2015, growth was fuelled largely by discounts. In February 2016, as the investment climate worsened, it pulled out of six cities to focus on eight. According to founder Navneet Singh, integrating with retail partners' inventory systems was difficult, discounts were unavoidable, and two-hour delivery required a logistics network standing by even at hours when there were no orders. At the end of April 2016 the consumer app was shut, around 150 employees were laid off and the team turned to e-commerce logistics. ## The story PepperTap was founded in Gurgaon in 2014 by Navneet Singh and Milind Sharma. Singh had previously founded Nuvo Ex, which managed supply chains for large e-commerce companies. Rather than open its own warehouse, PepperTap partnered with neighbourhood shops; the user ordered in the app, and the company's team picked up the goods from a nearby shop and delivered them within a short time. In 2015 the company described itself not as an online grocer but as a partner that helped local shops compete with big retailers. The growth was dizzying. PepperTap raised $1.2 million in March 2015 and $10 million in April. In September 2015 it signed a $36 million round led by Snapdeal, with Sequoia India and SAIF Partners also taking part. That month it was taking 15,000 to 17,000 orders a day across 17 cities, reaching 40,000 orders on a weekend day. The goal was to spread to 75 cities by March 2016. The picture quickly reversed. As investment appetite in India waned, in February 2016 the company pulled out of six cities to focus on eight. Singh later listed the problems: integrating with retail partners' inventory systems was harder than expected, constant discounts were needed to attract customers, and the promise of two-hour delivery required a logistics network standing by even at hours when there were no orders. According to Singh, the sum of all this was that the cash burned on every order rose rapidly, with no end in sight. At the end of April 2016 PepperTap shut its consumer app and laid off around 150 employees. The team turned to using the technology it had developed in grocery delivery for e-commerce logistics in smaller cities. The grocery app that had grown on more than $50 million of investment passed into history before it was two years old. ## Lessons - Before growing order numbers with discounts, measure in a single city whether customers stay once the discounts end; at PepperTap, growth depended on discounts. - An inventory-free marketplace model may look capital-light, but a fast-delivery promise cannot be sustained without accurately tracking the inventory of thousands of small shops. - Prove profitability per order before planning to spread to 75 cities on a new round; when the investment climate cools, shrinking a large network is expensive. ## Sources - [PepperTap Lands $36M To Expand Its Grocery Delivery Service To 75 Cities In India](https://techcrunch.com/?p=1216563) - [Fearing Current Investment Climate, India's PepperTap Scales Back Its E-Grocer Service](https://techcrunch.com/2016/02/09/fearing-current-investment-climate-indias-peppertap-scales-back-its-e-grocer-service) - [After struggling with rising costs, Sequoia-backed PepperTap pivots from grocery deliveries to e-commerce logistics](https://techcrunch.com/2016/04/25/after-struggling-with-rising-costs-sequoia-backed-peppertap-pivots-from-grocery-deliveries-to-e-commerce-logistics/) - [Grocery Startup Peppertap To Shut Down Its Hyperlocal Delivery Operations](https://inc42.com/buzz/peppertap-shutdown/) --- # Phorm Türkiye (2012 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/phorm-turkiye/ - Sector: Advertising and marketing - Country: Turkey - Total funding: $10.8 million - Cause of closure: Regulation and legal issues ## What did it do? Phorm was an advertising technology company that partnered with internet service providers to show subscribers targeted ads based on the sites they visited. In Turkey it began commercial operations in July 2012 through a deal with TTNET, the country's largest broadband provider, offering the service under the name Gezinti.com. Turkey was the showcase for the company's strategy of expanding into emerging markets. ## Why did it shut down? Phorm's model relied on inspecting users' internet traffic at the provider level, and it met a privacy backlash in every market it entered. In Turkey, the telecoms regulator BTK decided to open an investigation into TTNET on the grounds that it had violated users' right to the privacy of their personal data by informing them inadequately, and to remove subscribers from the Gezinti.com service (Bianet, 2012). Webrazzi saw the January 2015 decision to scale down as a sign that the company had failed to meet its high expectations in Turkey; operational problems were burning through cash fast. In the end the company could not find new capital to keep going and ceased trading in April 2016 (The Register, 2016). ## The story Phorm was a technology company that used internet service providers' traffic to show users ads based on their browsing habits. The method relied on a deep packet inspection system installed in the provider's network. As a result, the company became a target for privacy campaigners in every market it entered. As The Register recalled, BT's testing of the system in the UK without users' consent was debated for years. After halting its operations in South Korea and the UK, Phorm turned its sights on emerging markets. Turkey was the showcase for that strategy. In July 2012 the company signed a deal with TTNET, which had around 6 million broadband lines, and raised $10.8 million in investment for its entry into Turkey. In September 2012 it announced that it had reached around 4 million users in Turkey and aimed to turn a profit in 2013 on its Turkish revenue. According to the company, even Brazil would soon trail behind Turkey. The backlash was swift. The service was offered to TTNET subscribers under the name Gezinti.com. As reported by Bianet, on 14 December 2012 the Information and Communication Technologies Authority (BTK) decided to open an investigation into TTNET on the grounds that, by failing to give users necessary and sufficient explanation, it had violated their right to the privacy of their personal data, and to remove all subscribers from the Gezinti.com service. The Alternative Informatics Association welcomed the decision but found it insufficient, and called for Phorm's system to be examined as well. The expected growth never came. In January 2015, in a filing to the London Stock Exchange, Phorm announced that as part of a wide-ranging cost-cutting programme it had restructured its Turkey office and would now manage operations there remotely. According to Webrazzi, the Turkish tech news site, this showed that the company had failed to meet its expectations in Turkey; cash was draining fast and the need for new investment remained. The final curtain fell a year later. On 14 April 2016 Phorm announced that it had been unable to secure the capital or debt needed to continue and had ceased trading. According to The Register, the company had lost $40.5 million in the 2014/15 financial year. With that, the Turkish adventure of a company that had seen Turkey as the key to its growth came to a complete end. ## Lessons - In a business model built on user data, explicit consent is not a detail; it is the product itself. - Growth that depends on a single large distribution partner can stop overnight with one regulatory decision. - Moving a model that met a backlash in one market to another market does not solve the problem; it only postpones it. ## Sources - [Controversial ad-targeting start-up Phorm closes its Turkey office](https://webrazzi.com/2015/01/19/reklam-hedefleme-girisimi-phorm-turkiye-ofisini-kapatiyor/) - [Ad slinger Phorm ceases trading](https://www.theregister.com/2016/04/14/phorm_ceases_trading/) - [BTK Opens Investigation into TTNET](https://bianet.org/haber/btk-ttnet-e-sorusturma-aciyor-142861) - [Turkish Launch for Ad Targeter Phorm](https://www.mrweb.com/drno/news15726.htm) --- # Pixate (2012 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/pixate/ - Sector: Enterprise software (SaaS) - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Pixate was a tool that let designers build interactive app prototypes for iOS and Android without writing code. Prototypes assembled in the browser ran natively on the phone, so animations and gestures could be tried out instantly on a real device. Before moving to this product, the company had offered a developer framework for styling native mobile apps with CSS. ## Why did it shut down? The company, part of Y Combinator's summer 2012 batch, released its first product, the CSS framework, in January 2013 and raised USD 3.8 million in a round led by Accel in July 2013. In October 2014 it changed focus by launching a prototyping service for designers. Google acquired Pixate in July 2015, made Studio free and cut the price of the cloud service sharply. In October 2016 the team announced that Pixate would close, saying it believed it could make a far bigger impact with new projects. On 31 October 2016 the cloud service, support and Studio downloads ended; files not exported were to be deleted from 1 November. ## The story Pixate's founders, Paul Colton and Kevin Lindsey, had previously worked together on Aptana, a development environment later sold to Appcelerator. Joining Y Combinator in the summer of 2012, the pair worked on a framework that let developers style native iOS apps using CSS, the language web developers already knew. The product, which also raised backing on Kickstarter, was opened to everyone in January 2013, and in July 2013 the Palo Alto-based company raised a USD 3.8 million Series A led by Accel. The team soon set its sights on a bigger problem: letting designers try out complex animations and interactions without needing a developer. With the prototyping service launched in October 2014, designers could run a prototype built in the browser natively on the phone and see every change on the device instantly. The personal edition started at USD 10 per user per month. In July 2015 Google acquired Pixate. The team joined Google's design team; Pixate Studio became free and the price of the cloud service was cut sharply. These moves raised expectations that the tool would reach many more product teams. In October 2016, however, the team announced it would bid farewell to Pixate. According to the announcement, the team believed it could make a far bigger impact with the brand-new projects it had started and wanted to focus on its wider vision. On 31 October 2016 the cloud service, support channels and Studio downloads ended. Users were asked to export their prototypes before that date; from 1 November, remaining projects and account information would be deleted automatically. Pixate became one of the examples showing how quickly a much-loved product can lose its independent existence once it is folded into a large company's strategy. The promise of free access made after the acquisition turned out to be shorter-lived than the product itself. ## Lessons - When selling your product to a large company, ask how long the free-access and discount promises made to your users will survive the team's priorities at its new employer. - Pixate found stronger demand by moving from a developer tool to a designer tool; after a pivot, weigh the path of independent growth seriously before selling. - When shutting down a service that holds users' work, provide clear export tools and a clear timetable; Pixate gave its users less than a month. ## Sources - [Pixate Raises $3.8M Series A From Accel Partners To Bring CSS Styling To Android And Mac App Development](https://techcrunch.com/2013/07/01/pixate-seriesa/) - [Pixate Launches Its App Prototyping Service For Designers](https://techcrunch.com/2014/10/14/pixate-launches-its-app-prototyping-service-for-designers) - [Google Acquires Mobile App Prototyping Tool Pixate](https://techcrunch.com/2015/07/21/google-acquires-mobile-app-prototyping-tool-pixate/) - [Google will kill Pixate on October 31](https://venturebeat.com/mobile/google-will-kill-pixate-on-october-31) - [Pixate To Shutter, Google Cloud Remains Work In Progress](https://www.mediapost.com/publications/article/286258/pixate-to-shutter-google-cloud-remains-work-in-pr.html) --- # Powa Technologies (2007 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/powa/ - Sector: Fintech - Country: United Kingdom - Total funding: $200 million - Cause of closure: Team problems ## What did it do? Powa Technologies was a London-based company that built mobile commerce, e-commerce and in-store payment solutions. Its flagship PowaTag app used QR codes, audio recognition and beacon technology to promise that users could scan an advert or product and buy it within seconds. The company also offered smartphone-based point-of-sale devices and online shop services. ## Why did it shut down? Powa announced that hundreds, and later 1,200, businesses had signed up to PowaTag; after the collapse it emerged that most of these deals were non-binding letters of intent. The China UnionPay alliance announced in December 2015 was met with a letter from China UnionPay's lawyers stating that there was no business relationship with the company. In early 2016 the company began missing payments to staff and suppliers. On 19 February 2016 the investor Wellington Management appointed Deloitte as administrator, and the business units were sold off separately. A Financial Times analysis concluded that, against the company's claimed valuation of $2.6 billion, $106 million was a more realistic figure. ## The story For a while Powa was the darling of the British tech scene. It had won praise from prime minister David Cameron and was counted among the rare British unicorns valued at more than $1 billion. In February 2016, however, it was placed into administration, and it soon emerged that much of the story had existed only on paper. Founded in 2007 by the entrepreneur Dan Wagner, Powa landed the biggest tech Series A of its time in August 2013: $76 million. According to the Telegraph, the company planned to use the money to create 250 jobs in the UK. Unveiled in New York in March 2014, PowaTag promised that users could scan an advert, a poster or an inaudible audio signal on the radio with their phone and buy within seconds. At launch the company said more than 240 retailers had joined. In June 2014 it bought MPayMe of Hong Kong for $75 million in shares, and Wagner claimed the company was worth $2.6 billion. A planned listing on the London Stock Exchange was postponed in 2015. In December 2015 Powa announced an alliance with China UnionPay that it said had limitless potential. As the BBC later reported, China UnionPay's lawyers sent a letter stating that no business relationship had yet been established with the company. By then the more than $200 million put in by investors, led by Wellington Management, had largely been spent; the Hong Kong office began paying salaries late. On 19 February 2016 Wellington Management appointed Deloitte as administrator; within days 74 employees in London were laid off. PowaTag and PowaWeb were sold in separate deals. Business Insider reported that most of the 1,200 PowaTag deals the company had announced were non-binding letters of intent. The Financial Times examined the claimed $2.6 billion valuation and concluded that $106 million was more realistic. Former employees interviewed by the BBC spoke of a management team without a clear strategy and of heavy spending, such as a two-floor office in Heron Tower. Powa is a textbook case showing that bold announcements and letters of intent are no substitute for real customers. ## Lessons - A letter of intent is not a customer; report only signed, revenue-generating contracts to investors and the press. - Reward your sales team for transaction volume delivered, not for the number of documents signed. - Lavish offices and spending ahead of revenue can take a company all the way into administration at the first funding delay. ## Sources - [Powa Technologies](https://en.wikipedia.org/wiki/Powa_Technologies) - [Powa: The start-up that fell to earth](https://www.bbc.com/news/technology-35860814) - [Powa Technologies Picks Up A $76M Series A Investment To Take Its Mobile Payment And E-Commerce Platform Large](https://techcrunch.com/2013/08/20/powa-technologies-picks-up-a-76m-series-a-investment-to-take-its-mobile-payment-and-e-commerce-platform-large/) --- # Rafter (2006 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/rafter/ - Sector: Education - Country: United States - Total funding: $86 million - Cause of closure: Ran out of cash ## What did it do? Rafter was an education technology company that grew out of the textbook rental site BookRenter. With its Rafter 360 service, which let universities add all course materials to tuition for a flat fee, it aimed to give every student access to their books from day one. ## Why did it shut down? Having started out as BookRenter, the company raised a further $40 million in February 2011 from investors including Norwest and Storm Ventures, taking its total funding to $60 million, and competed with Chegg. It later turned to an integrated course-materials model, but according to EdSurge that model reached only a little over a dozen customers, most of them small private universities. A complex sales process requiring institution-wide approval, and resistance from faculty who saw single-source materials as a threat to their independence, slowed growth. Despite total funding of more than $86 million, the company ceased operations in October 2016, saying it lacked the time and resources to finish the job; Avila University, which had signed up eight months earlier, was given only two days' notice. In May 2017 eCampus.com bought its assets, including the Rafter360 software, and moved 8 of its 12 former customers onto its own programme. ## The story Rafter's roots go back to BookRenter, the textbook rental site Colin Barceloux founded in Silicon Valley in 2006. Barceloux launched the site with two engineering students, Chris Williams and Philippe Huibonhoa. The San Mateo company grew by letting campus bookshops open virtual rental stores on their own websites, and in 2010 it was reported to reach around 6 million students on more than 5,000 campuses. In 2009 Mehdi Maghsoodnia took over as CEO, and Netflix co-founder Marc Randolph joined the board. In February 2011 the company raised a further $40 million from investors including Norwest Venture Partners and Storm Ventures, taking its total funding to $60 million, and became one of Chegg's main rivals. Over time the company, now called Rafter, moved to a more ambitious model. Rafter 360 let universities add all course materials to tuition for a flat fee, so that every student had their books from day one. But the decision required the joint approval of campus management, the bookshop and faculty. According to EdSurge, the model gained traction only at small private schools, and its customer count barely passed a dozen; some faculty saw single-source materials as a threat to their independence. In October 2016 Rafter announced in a message on its website that it was ceasing operations, writing that it did not have the time or resources to finish what it had started. By then the company had raised more than $86 million. Avila University, which had signed a contract eight months earlier, was told only two days before the closure, and schools scrambled to find alternatives. In May 2017 eCampus.com bought the assets, including the Rafter360 software, trademarks, domain name and patents, and moved 8 of the 12 former customers onto its own programme. Rafter's technology lived on inside another company's programme, but the company that built it passed into history. ## Lessons - Education sales that need institutional approval mean long cycles and few customers; plan your cash around the sales pace you actually achieve, not the one you target. - If your product restricts the autonomy of end users such as faculty, winning over management is not enough; bring that group into the design process early. - If closure is unavoidable, give customers enough time to switch; Rafter's two days' notice caught schools unprepared and damaged trust in the brand. ## Sources - [BookRenter](https://en.wikipedia.org/wiki/BookRenter) - [BookRenter Raises $40 Million To Take On Chegg In Textbook Rentals](https://techcrunch.com/2011/02/23/bookrenter-raises-40-million-to-take-on-chegg-in-textbook-rentals/) - [Course Material Provider Rafter Shuts Down](https://www.insidehighered.com/quicktakes/2016/10/10/course-material-provider-rafter-shuts-down) - [Why Rafter Failed, and What It Means for Edtech](https://www.edsurge.com/news/2016-10-14-why-rafter-failed-and-what-it-means-for-edtech) - [eCampus.com Announces Expanded Course Material Solutions with Purchase of Rafter Assets, Including Rafter360](https://www.prweb.com/releases/ecampus_com_announces_expanded_course_material_solutions_with_purchase_of_rafter_assets_including_rafter360/prweb14290148.htm) --- # RethinkDB (2009 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/rethinkdb/ - Sector: Enterprise software (SaaS) - Country: United States - Total funding: $12.2 million - Cause of closure: Business model failed ## What did it do? RethinkDB developed an open-source distributed database that stored JSON documents and pushed changes in query results to applications in real time. For revenue the company offered support, training and application development services, and it was also preparing a platform for real-time apps called Horizon. ## Why did it shut down? Having received seed investment from Y Combinator in June 2009, the company started out with a MySQL storage engine for SSDs, then developed its own document database and open-sourced it in 2012. The team, which prioritised correctness, a clean interface and consistency, did not release its production-ready version 2.0 until April 2015, by which time MongoDB was far ahead in the market. According to founder Slava Akhmechet, users saw the company as an open-source developer tool and were unwilling to pay. Turning to real-time features in mid-2014, the company now ran into Firebase and Meteor, and it ran out of cash before a small team could finish Horizon and the cloud service. On 5 October 2016 the company closed, saying it had been unable to build a sustainable business, and announced that its engineers would join Stripe. ## The story RethinkDB was a database start-up founded in 2009 by Slava Akhmechet and Michael Glukhovsky. Having received seed investment from Y Combinator in June 2009, the company started out with a MySQL storage engine designed from scratch for SSDs. Over time the team developed its own document database and open-sourced the product in 2012. RethinkDB's most distinctive feature was its ability to push changes in query results to applications in real time, which made it attractive for real-time apps. When the production-ready version 2.0 came out in April 2015, it had around 100,000 users; over the same period MongoDB's downloads had passed 9 million. According to the assessment Akhmechet later wrote, two fundamental mistakes were made. The first was the choice of market: users saw RethinkDB as an open-source developer tool and were unwilling to pay even the price of a cup of coffee for it. The second was that while the team put correctness, a clean interface and consistency first, users wanted a product that arrived on time, ran fast on the jobs they tried it on and solved a specific problem. This perfectionism left the company three years behind the market. Realising in mid-2014 that they could not compete with MongoDB, the team turned to real-time features, but this time ran into Firebase and Meteor. The money ran out while a small team was trying to build the database, an application platform called Horizon and a cloud service all at once. On 5 October 2016 the company closed, saying it had been unable to build a sustainable business; some of its engineers moved to Stripe. In February 2017 the Cloud Native Computing Foundation bought the database's source code and copyrights for $25,000 and contributed them to the Linux Foundation under the Apache licence. The database, whose users included GM, NASA and the US Department of Defense, thus lived on as a community project, but the company that created it passed into history. ## Lessons - The market your users see you in matters more than the market you are aiming for; being perceived as an open-source developer tool limited RethinkDB's ability to charge. - Engineering excellence loses value if it does not arrive on time; users wanted a product that ran fast and solved a specific job rather than one that was correct. - Building a database, an application platform and a cloud service at the same time with a small team scatters your focus; even under existential threat, commit to a single product. ## Sources - [RethinkDB](https://en.wikipedia.org/wiki/RethinkDB) - [RethinkDB is shutting down](https://rethinkdb.com/blog/rethinkdb-shutdown/) - [RethinkDB: why we failed](https://github.com/coffeemug/defstartup/blob/master/_posts/2017-01-18-why-rethinkdb-failed.md) - [CNCF Purchases RethinkDB Source Code and Contributes It to The Linux Foundation Under the Apache License](https://www.cncf.io/blog/2017/02/06/cncf-purchases-rethinkdb-source-code-contributes-linux-foundation-apache-license) - [RethinkDB is dead? Rethink that thought: NoSQL database is back](https://www.theregister.com/2017/02/07/rethinkdb_lands_license_to_live/) --- # Shipbeat (2014 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/shipbeat/ - Sector: Logistics and delivery - Country: Denmark - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Shipbeat was a Copenhagen-based platform that aimed to cut online shops' shipping costs and simplify their logistics. Billing itself as the Klarna of logistics, the company set out to resell carriers' services and offer them to e-commerce sites on better terms. ## Why did it shut down? The company, entered in the Danish business register in January 2014, was founded by Kenneth Svenningsen and Joachim Rørbøl; according to Svenningsen, logistics swallowed between 8 and 15 per cent of online retailers' revenue. But striking a deal with PostNord, the country's largest carrier, took more than a year, and according to the founders PostNord tried to prevent its services from being resold despite its legal obligations. The company also struggled to hire entrepreneurial people with logistics experience and relationships with carriers. Having used a little over one million euros in investment and loans, Shipbeat filed for bankruptcy in August 2016 when talks on a strategic partnership with a shipping intermediary or a buyer came to nothing. According to the Danish business register, the company's registration was closed in August 2017 at the end of the bankruptcy proceedings. ## The story Shipbeat was a logistics start-up founded in Copenhagen by Kenneth Svenningsen and Joachim Rørbøl; the company was entered in the Danish business register in January 2014. The founders' starting point was the share of revenue online shops spent on shipping. According to Svenningsen, logistics swallowed between 8 and 15 per cent of e-commerce companies' revenue. Shipbeat billed itself as the Klarna of logistics. The company aimed to resell carriers' services and give e-commerce sites a cheaper and simpler shipping experience. The model depended on being able to buy services from the big carriers and resell them. That is exactly where the problem arose. As the founders told it, striking a deal with PostNord, Denmark's largest carrier, took more than a year, and PostNord tried to prevent its services from being resold despite its legal obligations. The company also struggled to hire people who combined logistics experience with an entrepreneurial streak and had relationships with carriers. In total, a little over one million euros in investment and loans was used. In the final stage, the team tried to form a strategic partnership with a shipping intermediary or a buyer. Although the talks were meaningful, no deal was in sight within a reasonable time. The founders, the board and the investors decided they could not justify putting more money into the company, and Shipbeat filed for bankruptcy in August 2016. According to the Danish business register, the company's registration was closed in August 2017 at the end of the bankruptcy proceedings. Shipbeat became a small but instructive example of how fragile an intermediary model dependent on an incumbent's infrastructure is when that incumbent will not co-operate. ## Lessons - A model that resells a dominant player's service stalls when that player resists co-operation; secure critical supply agreements before you scale the product. - In markets where industry relationships are decisive, bringing an experienced insider onto the team early can cut a year of negotiations short. - When seeking a strategic partner, set your cash-out date and your walk-away criteria in advance; with no result in sight, Shipbeat's management chose not to put in new money. ## Sources - [Shipbeat files for bankruptcy](https://oresundstartups.com/shipbeat-files-bankruptcy/) - [SHIPBEAT ApS, CVR 35642234](https://datacvr.virk.dk/enhed/virksomhed/35642234) --- # Shuddle (2014 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/shuddle/ - Sector: Mobility and transport - Country: United States - Total funding: $12.2 million - Cause of closure: Ran out of cash ## What did it do? Shuddle was a ride-sharing service that let parents book rides in advance with specially vetted drivers to take their children to school, sport and activities. Charging a USD 9 monthly membership and fares around 15 per cent higher than UberX, the app also let parents track each ride in real time. ## Why did it shut down? Founded by Nick Allen, a co-founder of Sidecar, the company launched in beta in the San Francisco Bay Area in October 2014 and raised USD 9.6 million in March 2015 in a round led by RRE Ventures. According to Engadget, it had received a cease-and-desist notice from California regulators in 2014 for not registering with TrustLine, the system that runs background checks on people who work with children. The service never expanded beyond the Bay Area; in November 2015 Allen stepped down as CEO and TechCrunch's sources said revenue had plateaued. Under the new CEO, Doug Aley, no new round was raised either. Saying it had been unable to find enough investment to keep operating, the company ended the service on 15 April 2016; total funding had stalled at around USD 12.2 million. ## The story Shuddle was a ride service designed for children, founded by Nick Allen, a co-founder of the ride-sharing company Sidecar. The idea was to let parents who could not leave work send their children to school, practice or a playdate safely. Launched in beta in the San Francisco Bay Area in October 2014, the service built a model in which rides were booked between 24 hours and a week in advance, drivers went through a rigorous background check and parents could track the ride live. The great majority of the drivers were women. In March 2015 it closed a USD 9.6 million Series A round led by RRE Ventures, with Comcast Ventures, Forerunner Ventures and Accel also taking part. At the time the company was working with around 200 drivers and said it had increased its ride volume fivefold during the beta. The USD 9 monthly membership fee and prices around 15 per cent higher than UberX were presented as the price of safety. But the business did not grow as fast as expected. As Engadget reported, the company had received a cease-and-desist notice from California regulators in 2014 for not registering with TrustLine, the system that screens the backgrounds of people who work with children, and there were reports that it had not completed the registration. The service never expanded beyond the Bay Area. In November 2015 Allen stepped down as CEO; TechCrunch's sources said revenue had plateaued. He was replaced by Doug Aley, a former executive at Minted, Amazon and Zulily. The new management could not find the money it needed either. On 14 April 2016 Shuddle announced it would close the next day, saying it had worked hard to find funding to keep growing but had been unable to raise enough investment to continue operating. Having raised around USD 12.2 million, the company ended the service on 15 April 2016 and said it would pay its drivers by 18 April. Shuddle's story showed that a promise of safety becomes a business only when it is combined with regulatory compliance and sustainable pricing. ## Lessons - In a sensitive area such as child safety, treat regulatory registrations as part of the product; a disputed compliance issue directly undermines parents' trust. - In a niche transport model that requires advance booking and a membership fee, demand is volatile; waiting for a new round before proving unit economics in one city is risky. - A change of CEO when growth has stalled only delays the closure if the new management is not left enough time and cash to win over investors. ## Sources - [Shuddle Raises $9.6M For Its Uber-Style Service For Kids And Seniors](https://techcrunch.com/2015/03/18/shuddle-raises-9-6m-for-an-uber-style-service-for-kids-and-seniors/) - [Nick Allen Is Out As CEO Of Shuddle, Doug Aley Steps In To Lead 'Uber For Kids' Startup](https://techcrunch.com/2015/11/19/nick-allen-is-out-as-ceo-of-shuddle-doug-aley-steps-in-to-lead-uber-for-kids-startup/) - [Shuddle, the Uber-like service for getting your kids around, is shutting down tomorrow](https://techcrunch.com/2016/04/14/shuddle-the-uber-like-service-for-getting-your-kids-around-is-shutting-down-tomorrow/) - [Shuddle shuts down its 'Uber for kids' transportation service](https://www.engadget.com/2016/04/15/shuddle-ride-sharing-service-shuts-down/) --- # Skully (2013 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/skully/ - Sector: Hardware - Country: United States - Total funding: $11 million - Cause of closure: Product problems ## What did it do? Skully was a hardware start-up developing the AR-1, a voice-controlled, Android-based smart motorcycle helmet that projected navigation information and a rear-camera feed into the rider's field of view. The company planned to move into production by selling the helmet on pre-order for about $1,500. ## Why did it shut down? The company began taking pre-orders in August 2014, but production was postponed again and again; by July 2016, internal estimates put the number of helmets delivered at between 20 and 100. While the search for new investment was under way, founder Marcus Weller was removed as CEO on 12 July 2016; according to TechCrunch, he had fallen out with investors over an acquisition offer. A few weeks later the board shut the company, more than 50 employees were laid off, and in August 2016 Skully filed for liquidation under Chapter 7. The manufacturer Flextronics sued over more than $1 million in unpaid inventory costs. The new owners who bought the assets in 2017 could not deliver the helmet either, and operations quietly came to an end in 2020. ## The story When Marcus Weller founded Skully with his brother Mitch Weller in 2013, the aim was to let motorcyclists see directions and the traffic behind them without taking their eyes off the road. The helmet, called the AR-1, projected navigation information and the rear camera's feed into the rider's field of view through a small display, ran on Android and could be controlled by voice. The idea quickly drew a great deal of interest. The company began taking pre-orders in August 2014; its Indiegogo campaign was the fastest ever to reach $1.1 million and raised about $2.5 million in total. Then came $11 million of venture capital from investors including Intel Capital. More than 3,000 pre-orders for the helmet piled up. The real challenge was making the helmet. Deliveries were postponed again and again, and by internal estimates only between 20 and 100 helmets had reached customers by July 2016. While the search for new funding was under way, Weller was removed from his post on 12 July 2016; according to TechCrunch, he had fallen out with investors over an acquisition offer. A few weeks later the board shut the company, more than 50 employees lost their jobs, and in August Skully filed for liquidation under Chapter 7. After the closure, a former executive assistant filed a lawsuit alleging that the founders had used company money for personal spending such as luxury cars. Marcus Weller denied the allegations, and the suit was later withdrawn. The manufacturer Flextronics also went to court over more than $1 million it was owed. The thousands of backers waiting for the helmet, meanwhile, could not get their money back. The story also had a second act. Ivan and Rafael Contreras, who bought the assets in 2017, tried to revive the brand as Atlanta-based Skully Technologies and showed a new prototype at CES 2018. But neither the old backers nor new customers ever managed to get a helmet; the company's website went dark in February 2020. ## Lessons - In hardware, pre-order money is not production capacity; base your delivery schedule on a mass-production plan verified with your manufacturer. - When crowdfunding and venture capital are flowing in at the same time, put spending rules and oversight in writing; claims of personal spending, even if unproven, quickly destroy investor confidence. - If founder and investors disagree on sale or funding strategy, set up a governance mechanism that resolves it before the cash runs out. ## Sources - [Skully (helmet)](https://en.wikipedia.org/wiki/Skully_(helmet)) - [AR helmet startup Skully goes down in flames](https://techcrunch.com/2016/07/26/once-promising-ar-motorcycle-helmet-startup-skully-has-crashed-and-burned/) - [Bankruptcy imminent for failed Indiegogo startup Skully](https://money.cnn.com/2016/08/11/technology/skully-indiegogo-weller-lawsuit/) - [High-Tech Helmet Manufacturer Skully Has a New Owner](https://www.thedrive.com/article/14793/high-tech-helmet-manufacturer-skully-has-a-new-owner) --- # Sunrise (2012 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/sunrise/ - Sector: Consumer apps - Country: United States - Total funding: $8.2 million - Cause of closure: Acquired and shut down ## What did it do? Sunrise was a calendar app that brought different calendars such as Google Calendar, iCloud and Exchange together on a single screen, and also added information from services such as Foursquare, Trello, Asana and Evernote. Available on iPhone, Android, Mac, Windows and the web, it stood out for its careful design and event icons. ## Why did it shut down? Sunrise did not go under on its own; its success made it an acquisition target for a big company. Having bought the email app Acompli, Microsoft acquired Sunrise in February 2015 for more than $100 million and moved the team into its Outlook division. Although it was initially said that the app would live on independently, on 28 October 2015 Microsoft announced that Sunrise would be shut down and its features moved into Outlook. The closure, planned for 31 August 2016, was pushed back to 13 September 2016 so that the Outlook update would be ready, and the app stopped working on that date. ## The story Pierre Valade and Jeremy Le Van, who had previously worked as designers at Foursquare, founded Sunrise in New York in 2012. The project began as an email digest that sent users their daily schedule; the iPhone app was released on 19 February 2013. Sunrise's strength lay in gathering events from Google Calendar, iCloud and Exchange on a single screen. On top of that, the app added information from services such as Foursquare, GitHub, TripIt, Asana, Evernote, Trello, Songkick and Wunderlist, and placed small icons on events according to their type. The company raised $2.2 million in June 2013 and $6 million in July 2014 in a round led by Balderton Capital. Android and web versions arrived in May 2014. In February 2015 Microsoft bought Sunrise for more than $100 million. The acquisition was part of Microsoft's push into mobile productivity, and the email app Acompli had been bought shortly before. Microsoft initially said Sunrise would continue to live on as a standalone app. The team joined the Outlook division and played an important role in redesigning Outlook's mobile apps. On 28 October 2015 the expected news came: Sunrise would be shut down and its features moved into Outlook. The closure was first announced for 31 August 2016, then moved to 13 September 2016 so that Outlook's new calendar features would be ready. On that day the app stopped syncing calendar changes, and the next day users were logged out. Sunrise is not a classic failure story; it is the story of a successful product being absorbed into its buyer's strategy. Some features, such as the event icons, lived on in Outlook, but the standalone app that users loved passed into history. ## Lessons - When selling to a big platform company, do not take promises that your product will live on independently as certain unless they are written into the contract. - Solving a scattered problem, such as gathering several calendars on one screen, through design can make a small team a strategic target; but that kind of exit leaves the product's lifespan up to the buyer's strategy. - When shutting down a product that has become a daily habit, giving users a clear transition date and an alternative protects the brand's reputation; Sunrise announced its closure months in advance. ## Sources - [Sunrise Calendar](https://en.wikipedia.org/wiki/Sunrise_Calendar) - [Microsoft Is Acquiring Calendar App Sunrise For North Of $100 Million](https://techcrunch.com/2015/02/04/microsoft-sunrise/) - [Microsoft confirms acquisition of hot calendar app Sunrise](https://venturebeat.com/mobile/microsoft-confirms-acquisition-of-hot-calendar-app-sunrise) - [Microsoft finally kills Sunrise, brings more features to Outlook](https://www.engadget.com/2016-09-13-microsoft-kills-sunrise.html) --- # Take Eat Easy (2013 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/take-eat-easy/ - Sector: Logistics and delivery - Country: Belgium - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Take Eat Easy was an online ordering and delivery platform that took restaurant orders to customers by bicycle courier. Founded in Brussels, the company spread to 20 cities across Belgium, France, the United Kingdom and Spain. ## Why did it shut down? The company grew rapidly, but according to its founders its revenue was not yet covering its costs. In the search for a Series C that began in October 2015, 114 funds declined to invest by March 2016. A €30 million offer from a French state-owned logistics group was withdrawn at the end of a three-month due diligence process. Over the same period rivals such as Deliveroo, Foodora and UberEats were expanding aggressively in the market. On 26 July 2016 Take Eat Easy ceased operations and filed for judicial reorganisation. ## The story Take Eat Easy was founded in Brussels in 2013 by the siblings Adrien and Chloé Roose, together with Jean-Christophe Libbrecht and Karim Slaoui. The idea was to get restaurant orders to customers quickly by bicycle courier. The company opened in Paris in 2014, and France soon became its strongest market. The growth was impressive. In 2015 the company raised a total of €16 million over two rounds. Rocket Internet took part in the April round, while the €10 million Series B in September was led by Eight Roads Ventures, with DN Capital and Piton Capital also joining. The team grew from 10 to 160 people, partner restaurants from 450 to 3,200 and customers from 30,000 to 350,000. For a year the company grew by more than 30 per cent a month, and it served 20 cities. But according to the founders, revenue was still not covering costs and the company badly needed new capital. In the search for a Series C that began in October 2015, 114 funds said no by March 2016. Eventually a French state-owned logistics group made a €30 million investment offer, but the deal collapsed after three months of due diligence. Over the same period Deliveroo, Foodora and UberEats were growing fast in the market. On 26 July 2016, just a week after celebrating its millionth order, Take Eat Easy ceased operations and filed for judicial reorganisation. CEO Adrien Roose wrote that over the previous eight weeks they had searched desperately for a way to keep the company alive, but none had materialised. The legal consequences of the closure dragged on for years. In 2018 around a hundred former couriers, who had been treated as self-employed, applied in France for employee status, and according to their lawyers they won. In 2022 a trial began in Paris against the company and former CEO Roose over allegations of undeclared employment. ## Lessons - If the contribution margin on each delivery does not cover the courier's cost, focus on fixing your unit economics rather than selling investors on your growth rate. - In a funding plan that hinges on a single large strategic investor, have a plan B ready if due diligence drags on, and a realistic calculation of how long your cash will last. - In models that treat couriers as self-employed, factor in employment-status risk from the start; Take Eat Easy's former couriers kept pursuing legal action in France even after the company closed. ## Sources - [European restaurant delivery startup Take Eat Easy ceases trading as it tries to find a buyer](https://techcrunch.com/2016/07/26/european-restaurant-delivery-startup-take-eat-easy-ceases-trading-as-it-tries-to-find-a-buyer) - [Take Eat Easy files for bankruptcy](https://www.brusselstimes.com/38440/take-eat-easy-files-for-bankruptcy) - [European Premium Restaurant Delivery Service Take Eat Easy Closes €10M Series B](https://techcrunch.com/2015/09/01/series-b-delivered/) - [Process of Brussels company Take Eat Easy for undeclared work starts in Paris](https://brusselsmorning.com/process-of-brussels-company-take-eat-easy-for-undeclared-work-starts-in-paris/27304/) --- # Washio (2013 – 2016) - URL: https://girisimcikafasi.com/en/startup-graveyard/washio/ - Sector: Logistics and delivery - Country: United States - Total funding: $17 million - Cause of closure: Business model failed ## What did it do? Washio was an on-demand service that picked up dirty laundry and dry cleaning from the door and brought it back clean. The company outsourced the washing and dry cleaning to third-party facilities and handled deliveries with couriers it called ninjas. The Los Angeles-based service expanded to cities including Boston, Chicago, San Francisco, New York and Washington. ## Why did it shut down? Laundry margins were thin, and the model depended on constant growth to cover its costs. Washio Now, launched in 2015 with a guaranteed pick-up within an hour, drove up logistics costs. Outsourcing the cleaning itself, a rigid delivery schedule and lawsuits over couriers being classed as independent contractors were also among the reasons cited. When sale talks with rivals came to nothing, the company halted the service on 30 August 2016; its assets were bought by its rival Rinse. ## The story In Washio's early days its signature was a cookie. A cookie from a local bakery went out with every order; as the company grew, the gesture gave way to a more scalable and healthier snack, flaxseed crostini. It was a small but telling detail: in a market crowded with competitors, Washio was trying to stand out through experience. Jordan Metzner, Bob Wall and Juan Dulanto founded the company in Los Angeles in 2013 because they saw inefficiency and a lack of online presence in the laundry business. Washio was an intermediary: it outsourced the washing, folding and dry cleaning to third-party facilities and sent couriers it called ninjas to customers' doors. When TechCrunch first introduced the service it called it "the Uber for laundry"; in 2014 NPR described such start-ups as companies seeking solutions to first-world problems. The company raised USD 17 million in total across several rounds; its investors included Canaan Partners, AME Venture Partners, Ashton Kutcher and the rapper Nas. The service expanded to Boston, Chicago, San Francisco, Oakland, New York and Washington. Washio Now, launched in 2015, guaranteed pick-up within an hour of ordering and return within 24 hours. According to the letter the founders wrote at closure, the company had generated millions of dollars in revenue and hundreds of thousands of orders, dry-cleaned more than 1 million items and washed more than 21,000 tonnes of laundry. Yet that volume did not turn into profit. Laundry margins were thin, and the model depended on constant growth to cover its costs. Lawsuits over couriers being classed as independent contractors, and the outsourcing of the core of the work, were also among the reasons cited. Rivals such as Rinse, FlyCleaners and Cleanly were competing for the same customers. Washio tried to sell itself to rivals, but the talks came to nothing, and on 30 August 2016 the company halted the service with immediate effect. In October 2016 its assets were bought by Rinse. According to Rinse's chief executive, Ajay Prakash, what really strained Washio was the switch from scheduled pick-ups to an on-demand model. Quartz read the closure as a symbol of the on-demand services bubble. Washio's lesson is that the unit economics have to be able to pay for the speed that impresses customers. ## Lessons - If you outsource the service itself, you leave most of your margin with the supplier; you cannot make up for costs you do not control with marketing. - Do not make expensive promises such as one-hour pick-up standard without testing whether customers will really pay more for them. - Scheduled routes are far more efficient than on-demand calls; in logistics, optimise for density rather than speed. ## Sources - [Washio (company)](https://en.wikipedia.org/wiki/Washio_(company)) - [Washio on-demand laundry service shuts down operations](https://techcrunch.com/2016/08/30/washio-on-demand-laundry-service-shuts-down-operations/) - [On-demand laundry startup Washio shuts down](https://www.latimes.com/business/la-fi-washio-startup-20160830-snap-story.html) --- # 37coins (2013 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/37coins/ - Sector: Crypto and blockchain - Country: United States - Total funding: $525K - Cause of closure: Product problems ## What did it do? 37coins was an SMS-based wallet service that let users without internet access send and receive bitcoin on basic mobile phones. Users texted a local gateway number to check their balance or send money, and the people who ran these Android-phone gateways earned a small bitcoin fee per transaction. ## Why did it shut down? The company was founded in 2013 with the aim of reaching the unbanked population in developing countries, and by May 2014 it was operating in Germany, Japan and the Philippines. Outside the US, however, text message delivery across different operators was unreliable, a fundamental flaw for a product that moves money. In their closure announcement on 11 August 2015, the founders admitted that they had failed to deliver a quality product showing product–market fit and that the capital raised had not been enough for their original goal. SiliconANGLE, reporting that the start-up had raised USD 525,000 in total, criticised the team for ignoring the rapid spread of smartphones and internet use in its target markets. Users were given until the end of 2015 to withdraw their funds. ## The story Founded in 2013, 37coins set out with the idea of bringing bitcoin to millions of people without a smartphone or internet connection. Its founders, Johann Barbie, Jonathan Zobro and Songyi Lee, were working in the bitcoin start-up group at the Plug and Play Tech Center in Sunnyvale, California. The target audience was people with no access to banking but with a simple phone in their pocket. The system was built on text messages. Users texted a balance or address command to a local gateway number, and to send money they messaged the amount and the recipient's phone number. Independent operators who ran the gateways on Android phones took small bitcoin fees for the service. PIN and phone confirmation options were offered for security. According to a CoinDesk report in May 2014, the service was running in Germany, Japan and the Philippines, and a partnership had been set up in Singapore. The model, elegant on paper, struggled in the field. Text message delivery was unreliable across countries and operators; in a service that moves money, a delayed or lost message directly undermined users' trust. In its farewell post on 11 August 2015, the team wrote that, despite its good intentions, it had failed to deliver a quality product showing product–market fit, and that the capital raised had fallen short of what was needed to reach its original goal. Users were given until the end of the year to withdraw their balances. SiliconANGLE, noting that the start-up had raised USD 525,000 in total, criticised the team for not knowing its target market first-hand; according to the writer, smartphone and internet use was spreading far faster than assumed in many developing countries. The story of 37coins shows that even a well-intentioned financial inclusion idea cannot scale until infrastructure realities and user behaviour have been tested in the field. ## Lessons - Before building a money product on a channel whose infrastructure you do not control, in this case SMS delivery that varies from country to country, measure its reliability in the field in your target market. - Establish your target audience's access to technology through on-the-ground research, not assumptions; as smartphones spread, the advantage of a text-based solution can melt away quickly. - Launching in several countries at once on a small seed budget spreads resources thin; first prove a product that works flawlessly in a single market. ## Sources - [Bitcoin Remittance Startup 37coins Announces Closure](https://www.coindesk.com/markets/2015/08/11/bitcoin-remittance-startup-37coins-announces-closure) - [37Coins.com Shuts Down Bitcoin Operations](https://cointelegraph.com/news/37coinscom-shuts-down-bitcoin-operations) - [Clowns: SMS Bitcoin wallet service 37coins closes due to absolutely no understanding of their market](https://siliconangle.com/2015/08/12/clowns-sms-bitcoin-wallet-service-37coins-closes-due-to-absolutely-no-understanding-of-the-market/) - [37Coins Plans Worldwide Bitcoin Access With SMS-Based Wallet](https://www.coindesk.com/markets/2014/05/20/37coins-plans-worldwide-bitcoin-access-with-sms-based-wallet) --- # Alikolo (2014 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/alikolo/ - Sector: E-commerce - Country: Indonesia - Total funding: $100K - Cause of closure: Ran out of cash ## What did it do? Alikolo was an online marketplace in Indonesia that connected sellers and buyers across a wide range of products, from electronics to fashion. With a name that echoed Alibaba, the site was built on a modified WooCommerce platform. ## Why did it shut down? Danny Taniwan, a software engineer from Medan, founded Alikolo in 2014 without researching the sector or getting to know his competitors; in his own words, he did not even know Tokopedia existed. In return for investment, he handed a majority stake in the company to two angel investors who traded commodities and had no e-commerce experience. A free shipping campaign launched at the end of 2014 made December 2014 the company's best month, but when the campaign ended in February 2015 sales fell and it became clear the product had nothing else to set it apart. An ownership structure in which the founder had become a minority shareholder scared off new investors, and no second round could be found. Taniwan closed the company debt-free in spring 2015. ## The story Danny Taniwan was a first-time founder from Medan, the big city of North Sumatra, trained as a software engineer. He did not know the start-up world, but he had been impressed by Alibaba's success in China. In 2014 he set out on his own to build an e-commerce marketplace and gave the site the name Alikolo, a nod to Alibaba. The aim was to bring Indonesian consumers a wide range of products, from electronics to fashion. Taniwan later admitted he had done no market research and did not even know that Tokopedia, the country's largest marketplace, existed. The two angel investors who funded the company were businessmen who traded commodities and had no e-commerce experience. In return for their investment, Taniwan handed them a majority stake in the company. When the investors wanted to see results, Alikolo launched a free shipping campaign at the end of 2014. The campaign worked, and December 2014 was the company's best month, with sales of around $50,000. But when free shipping was withdrawn in February 2015, sales fell. Taniwan realised the business was not sustainable on its own and had nothing to distinguish it from other e-commerce sites. A structure in which the founder had become a minority shareholder kept new investors away, and no second round of funding could be found. Taniwan closed Alikolo in spring 2015 without leaving any debts. In Tech in Asia's round-up of Asian start-ups that closed in 2015, Taniwan attributed the failure to his inexperience and to handing a majority stake to investors who knew the sector even less than he did. In later reflections he said he should have sought support from an experienced co-founder who could have spotted the warning signs in his strategy. ## Lessons - Before entering a market, research your competitors and why customers choose them; discovering your biggest rival after launch is a disadvantage that is hard to make up. - Handing over a majority stake in your first round can lock up later rounds; consider what the founder's share signals to new investors. - Do not mistake sales driven by incentives such as free shipping for real demand; measure in advance, with a small experiment, what is left once the incentive is removed. ## Sources - [20 failed startups in Asia in 2015 and lessons learned](https://sg.finance.yahoo.com/news/20-failed-startups-asia-2015-030053248.html) - [6 Companies That Failed To Make It Through The 'Middle Mile'](https://www.leaderonomics.com/articles/business/failed-businesses-middle-mile) --- # Arabulvar (2012 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/arabulvar/ - Sector: Marketplaces - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Arabulvar was a general e-commerce site and marketplace launched in Turkey in 2012 by Limango, part of Germany's Otto Group. Unlike Limango's private shopping model, it both sold products directly and allowed third-party sellers to open shops. It traded under the slogan "It's got everything", with categories ranging from clothing to cosmetics and from watches to toys. ## Why did it shut down? No public reason was given for the closure. According to the farewell message published on the site, operations ended on 30 March 2015; on the same day, and in the same words, Limango, Otto Group's private shopping site, also ended its operations in Turkey. This timing suggests that the decision had less to do with a single site's performance than with the group's choice to wind up its e-commerce activities in Turkey; this is an interpretation. At its launch in 2012, Webrazzi had described Arabulvar as a new rival taking on established marketplaces such as Sahibinden.com, GittiGidiyor and Sanalpazar. The site's traffic, seller and turnover figures were never made public. ## The story Germany's Otto Group had entered Turkey in 2009 with the private shopping site Limango. Limango quickly established itself among the market's leading players and launched sub-brands in verticals such as cosmetics and technology. The group's next step was a broader field: a marketplace where anyone could sell anything. Webrazzi, the Turkish tech news site, had been hearing for some time that Limango was preparing a new e-commerce site. On 3 May 2012 it announced that the site had gone into a short test run and that its name was Arabulvar. Arabulvar would work with both a classic e-commerce and a marketplace model: Limango would sell listed products directly, and sellers who wished could open shops on the site. Webrazzi described the new site as a brand-new rival to marketplaces such as Sahibinden.com, GittiGidiyor, Sanalpazar and Yenicarsim. The farewell message the site later published gave its founding date as 14 April 2012. Arabulvar stayed live for the next three years. According to internet archive records, in the early months of 2015 the site was still selling across categories ranging from clothing to mother-and-baby products and from computers to toys. However, figures such as traffic, number of sellers or turnover were never made public. The end came on the same day as Limango's. On 30 March 2015 a message written in almost identical sentences was published on both sites. Arabulvar's message said that operations had regretfully been brought to an end and thanked users for their support since 14 April 2012. A 2017 round-up by Webrazzi of private shopping sites that had closed also noted that Otto Group had later shut down Arabulvar, which it had launched in 2012. Arabulvar's story shows that the fate of a global group's local experiments often depends on that group's country strategy. When the group brought its e-commerce adventure in Turkey to an end, two sites closed on the same day. ## Lessons - If you open a marketplace separate from your main brand, establish its own source of traffic and sellers from day one. - Against established marketplaces, a new site that cannot bring sellers more orders is just one more shop window for them. - If you are the local venture of a foreign group, know in advance what will happen to you when the group's country strategy changes. ## Sources - [Arabulvar.com: a new e-commerce site and marketplace from Limango](https://webrazzi.com/2012/05/03/arabulvar/) - [Arabulvar closure announcement, internet archive capture](https://web.archive.org/web/20150801022256/http://arabulvar.com/) - [Private shopping sites that closed before Markafoni](https://webrazzi.com/2017/06/01/markafoni-kapanisi/) - [Limango Turkey ends its operations](https://webrazzi.com/2015/03/30/limango-turkiyedeki-faaliyetlerine-son-verdi-son-dakika/) --- # Bawte (2012 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/bawte/ - Sector: Consumer apps - Country: United States - Total funding: unknown - Cause of closure: No market need ## What did it do? Bawte was a Des Moines-based mobile app and web platform; users built their own product catalogue by scanning the barcodes of things they had bought. The app attached user manuals to products, sent alerts before warranties expired and when recalls were issued, and offered in-app live support for broken products. The company aimed to make its money by building an after-sales relationship between brands and their customers in the retail channel. ## Why did it shut down? Bawte launched in May 2012 as an app built around consumers sharing what they had bought, but it never found a clear revenue model. In February 2014 it was rebuilt around after-sales customer service; that year it joined Techstars Boulder, and in October it won a $100,000 investment at the Rise of the Rest Des Moines competition. Yet although corporate customers signed up, very few connected the product to their own systems; implementation was always pencilled in for 2016 or 2017. Going direct to consumers, meanwhile, looked unprofitable once the cost of acquiring customers was combined with the cost of continuing to serve them. In March 2015 the team decided to shut the company down rather than take a new funding round that was within reach, concluding that at the end of a new 12-month runway it would not be in a much better position than where it started. ## The story The idea for Bawte was born the moment John Jackovin threw away the product registration card for a Yamaha keyboard he had bought for his daughter. Jackovin imagined a system that would let people register what they bought with their phones and connect directly with brands. Bawte, which he founded with his long-time business partner Tom Love, launched from Des Moines on the App Store and Google Play in May 2012. The first version was built around users scanning barcodes or QR codes to share what they had bought on social networks, and it was free for brands as well as consumers. When that model failed to open up any revenue, the team rebuilt the product from scratch in February 2014. The new Bawte let users catalogue their purchases, find user manuals, get alerts about warranty expiry and recalls, and use in-app live support for faulty products. The new focus drew attention: in summer 2014 the company joined the Techstars Boulder programme, and in October 2014 it took first place at the Des Moines stop of Steve Case's Rise of the Rest tour, winning a $100,000 investment. The real test came at the sales table. Corporate customers signed up to Bawte, but very few connected the product to their own systems. When Jackovin took off his salesman's hat and talked frankly with customers, he found that 2016 or 2017 was always mentioned as the time for implementation. The problem being solved mattered, but it was urgent for no one. Going direct to consumers did not seem to make sense either, because of the costs of acquiring customers and continuing to serve them. In March 2015 Jackovin announced that he was shutting the company down rather than take a new round, a large part of which would have come from a Des Moines investor. His reasoning was clear: at the end of a new 12-month runway, the company would not be in a much better position than where it started. In 2016 Jackovin founded BREWD, which builds software for brewers. ## Lessons - Measure customers who sign up separately from customers who actually use the product; a customer who signs up and postpones integration is showing politeness, not demand. - Test early whether the problem you solve is urgent for the buyer; a nice-to-have product always ends up behind mandatory projects such as ERP on the corporate calendar. - Taking the investment is not always the right call; if you can see you will be no better off at the end of the runway, closing in time protects investors' money and the team's years. ## Sources - [Bawte aims to bridge gap between consumers and businesses](https://siliconprairienews.com/2012/05/bawte-aims-to-bridge-gap-between-consumers-and-businesses/) - [Bawte Helps You Catalog And Take Care Of Your Stuff](https://techcrunch.com/2014/02/26/bawte/) - [Bawte snags $100K investment from Rise of the Rest DSM stop](https://siliconprairienews.com/2014/10/bawte-100k-rise-of-rest-dsm/) - [Saying Goodbye](https://medium.com/@Jackovin/saying-goodbye-713feebd903d) - [BREWD software makes business decisions less filling for breweries](https://siliconprairienews.com/2016/12/brewd-software-makes-business-decisions-less-filling-breweries/) --- # Dakick (2011 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/dakick/ - Sector: Consumer apps - Country: Turkey - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Dakick was an event recommendation service that launched in April 2011 under the slogan "Social Time Guide". It offered personalised recommendations across cinema, TV, concerts, trade fairs, exhibitions, sport, performing arts and conferences, based on the actors, singers, teams or venues a user followed. Its content came from partners such as Mybilet and Broadage, from editors and from software that crawled the web; in 2012 it added an API, widgets and a mobile app. ## Why did it shut down? According to Webrazzi, Turkcell, Turkey's largest mobile operator, bought Dakick with the aim of using it for ticketing and integrating it into its own services. After the acquisition the service was offered for a while as a Turkcell product, but updates became infrequent. Founder Serkan Ünsal ran the project inside Turkcell for a time, then left to found Startups.watch. In November 2015 it was noticed that the site was no longer working and the iOS app had disappeared from the App Store; there was no official closure announcement. Webrazzi suggested that the plans made at the time of the acquisition may not have matched the company's later strategy. ## The story After studying electrical and electronic engineering at Middle East Technical University (ODTÜ), Serkan Ünsal worked as a product manager at Ericsson's incubator and at Turkcell. According to an interview he gave to KodEdu, a concert he missed in 2009 made him question how people keep track of the events they love. That question became Dakick, brought to life together with Sodamedya and Alper Akcan. The service opened to users in April 2011 and received investment from Aksoy Internet Ventures, the investment firm of the founders of Sahibinden.com, Turkey's leading classifieds site. Dakick's idea was simple: a user followed a singer, actor, team or venue, and the system reminded them of the concert, TV programme, match or exhibition connected with that name. Content across eight categories, from cinema to conferences, came from partners such as Mybilet and Broadage, from editors and from software that crawled the web. In 2012 an API and widgets were offered to developers and a mobile app was launched. In March 2014 Webrazzi reported that Turkcell had bought Dakick. According to sources the site trusted, the price was around 1 million TL. Turkcell's aim was to use the service for ticketing and integrate it into its own offerings. In March 2015 CHIP Online was presenting Dakick as a Turkcell service. The integration story did not last long. Ünsal ran the project inside Turkcell for a while, then left to found Startups.watch. In November 2015 Webrazzi noticed that dakick.com was no longer working and that the iOS app had disappeared from the App Store. The last snapshot in the Internet Archive dated from early September. There was no farewell announcement; the service had simply faded away as updates dried up. Dakick's story shows how a product built by a small team can end up orphaned inside a large company. The acquisition was an exit for the founders and the investor. But the product's survival depended on the person running it staying with the company and on the parent company's shifting priorities. As Webrazzi pointed out, plans made at the moment of acquisition can fall out of step with a company's new strategy within a few months. ## Lessons - When selling your company, be clear about who on the buyer's side will be responsible for keeping the product alive. - When the founding team leaves, the product roadmap may leave with them; plan the handover accordingly. - Content-heavy services such as event recommendations need continuous investment in fresh, clean data. ## Sources - [Dakick.com, acquired by Turkcell in 2014, has closed](https://webrazzi.com/2015/11/06/turkcellin-2014-yilinda-satin-aldigi-dakick-com-kapandi/) - [Turkcell is acquiring Dakick.com! [Rumour]](https://webrazzi.com/2014/03/06/turkcell-dakick-comu-satin-aliyor-duyum/) - [Interview with Dakick.com](https://kodedu.com/2012/07/dakick-com-ile-roportaj/) - [iPhone app of the day: dakick](https://www.chip.com.tr/gununiphoneuygulamasi/dakick_54570.html) --- # Dazo (2014 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/dazo/ - Sector: Food and drink - Country: India - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Dazo was a food platform in Bengaluru that offered daily changing menus, curated from local restaurants and food entrepreneurs, exclusively through its mobile app, and handled last-mile delivery itself. The company described itself as India's first curated food-on-demand platform. ## Why did it shut down? Shashank Shekhar Singhal and Monica Rastogi started out in October 2014 as an internet-first kitchen under the name Tapcibo, then switched the model to menus curated from local restaurants. The company raised an undisclosed amount from figures such as Rajan Anandan, the head of Google India, and Amit Agarwal, the head of Amazon India. In 2015 India's food-tech companies were grappling with cash burn, scaling and efficiency problems, and rival aggregators were competing with much larger restaurant networks and deep pockets. According to a Business Standard report, Dazo could not find new funding and ceased operations on 7 October 2015. Singhal said that, as a team, they would leave this business behind and work on a new product. ## The story Dazo was born at a time when investment was pouring into food technology in India. When Shashank Shekhar Singhal and Monica Rastogi founded the company in Bengaluru in October 2014, the country's food delivery market, according to Inc42, was worth $2 billion and growing by 30 to 40 per cent a year. By November 2014 around $125 million had been invested in the sector. The venture started out under the name Tapcibo, as a model with its own kitchen taking orders online. It soon changed direction and positioned itself as India's first curated food-on-demand platform. Users chose from daily changing menus prepared by local restaurants through the Android app and usually received their orders within 30 minutes. The service ran at lunch, in the early evening and at dinner time in neighbourhoods such as Indiranagar, Koramangala and Domlur. The company raised an undisclosed amount from figures including Rajan Anandan, the head of Google India; Amit Agarwal, the head of Amazon India; Vinay Goel of Google; and Gaurav Munjal, founder of Flatchat. By 2015, however, the mood in the sector had changed. Companies such as TinyOwl, Spoonjoy and Foodpanda were grappling with cash burn, scaling and efficiency problems, while rival aggregator platforms dominated the market with much larger restaurant networks and deep pockets. According to a Business Standard report, Dazo, unable to find new funding, ceased operations on 7 October 2015. Singhal said that, as a team, they would leave this business behind and work on a new product. Dazo's short life shows how quickly a small team's room to differentiate can shrink in a market where capital is concentrated in a few big players. ## Lessons - Moving from a kitchen to an aggregator model within a year leaves no time to learn the economics of either; justify a pivot with data. - If you are moving forward on small angel rounds in a category where capital is concentrated, pick a narrow niche the big players are not interested in. - A single menu that changes daily simplifies operations but limits choice; measure early how this model's repeat-order rate holds up against rivals with broad menus. ## Sources - [Food Tech Startup Dazo Shuts Down Operations](https://inc42.com/flash-feed/dazo-to-shutdown-operations/) - [Bengaluru-based food-tech startup Dazo shuts down due to lack of funding](https://www.business-standard.com/article/companies/bengaluru-based-food-tech-startup-dazo-shuts-down-due-to-lack-of-funding-115100700721_1.html) --- # Evim.net (2010 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/evim-net/ - Sector: E-commerce - Country: Turkey - Total funding: $5 million - Cause of closure: Ran out of cash ## What did it do? Evim.net was a Turkish vertical e-commerce site focused on home decor and household products, launched by Ali Özen at the end of 2010. It started as a members-only shopping club and sold a wide range of products online, including fragile items. In 2013 it raised funding in a round announced as the EBRD's first investment in Turkey, with 212 and Simile Ventures also taking part. ## Why did it shut down? According to Webrazzi, the e-commerce operation failed to reach the expected profitability and no new funding round could be found. In an interview with Fast Company, Ali Özen said their biggest mistake was raising money too late: funding that should have come in 2012 arrived in 2013 and went on paying off old debts rather than on growth. Other mistakes he listed included the investment arriving in two tranches, the strategy never becoming clear at board level and critical decisions being postponed for months. Özen said they switched to a marketplace model at the last minute and could have done so four or five months earlier. In the year it closed, turnover stood at 12 million TL, far short of the 100 million TL target. ## The story When Ali Özen looked at e-commerce in 2010, with his family's trading background and his own experience in digital advertising, he found the home category empty. The sector was growing fast but had no strong competitor. With an initial investment of 125,000 TL, he launched Evim.net at the end of December 2010 as a members-only shopping club. As Özen later admitted, the first site was pretty bad, but orders started arriving straight away. According to his interview with Fast Company, the site closed 2011 with turnover of 3 million TL, but it was not profitable; the focus was always on growth. In 2013 a total of around $5 million came in from the EBRD, 212 and Russian investor Simile Ventures. Webrazzi, the Turkish tech news site, reported that this was the EBRD's first investment in Turkey and the first time a local fund and two foreign funds had joined the same round. At the time of the investment turnover was 13 million TL, and the target was 100 million TL within two years. According to Özen, they were the leaders in the sector at the time, and after the investment the team grew to 55 people. The target was missed. According to Özen, the money came a year late and in two tranches; it went on clearing old debts rather than on growth. The strategy never became clear at board level, and critical decisions were delayed by four or five months. As Özen summed it up in the interview: "Putting in the right amount of money at the right time is very important." The company switched to a marketplace model at the last minute, but the momentum had long gone. In January 2015 the e-commerce operation was halted. According to a Webrazzi report from March 2015, the site had moved to a content-focused format, and the company was in talks to sell the rights to its name so that it could pay its debts. Özen said they had prioritised customers' money and that almost all refunds had been made. In the year it closed, Evim.net had turnover of 12 million TL and 50 employees. According to a 2016 review by Turkishtime, the site was by then live as a furniture and decor blog; a 2017 list by Habertürk also named Evim.net among the sites that had moved from e-commerce into publishing. In other words, what closed was the company's e-commerce operation. What set Evim.net apart was that its founder talked openly about the closure rather than hiding it. Özen's list is a clear lesson in how a fast-growing start-up can lose its way when money arrives at the wrong time. ## Lessons - Raise money while you have growth momentum; late money finances old debts, not growth. - Excessive optimism is not a plan; test your target against the metrics often. - If you need to change your model, do not put the decision off for months; once momentum is lost, it is hard to get back. ## Sources - [Evim.net halts its e-commerce operation](https://webrazzi.com/2015/03/02/evim-net/) - [Ali Özen: Where did I go wrong?](https://fastcompany.com.tr/calisma-hayati/ali-ozen-nerede-hata-yaptim/) - [Two foreign and one Turkish investment fund back Evim.net!](https://webrazzi.com/2013/05/07/evm-net-yatirimcilar/) - [Turkish e-commerce sites that closed before Markafoni! Why did the online shopping sites shut down?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) - [50 failed start-ups and 50 lessons from their mistakes (30-50)](https://turkishtimedergi.com/dijital-girisim/%EF%BB%BF-50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-30-50/) - [Private shopping sites that closed before Markafoni](https://webrazzi.com/2017/06/01/markafoni-kapanisi/) --- # Fab (2010 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/fab/ - Sector: E-commerce - Country: United States - Total funding: $156 million - Cause of closure: Business model failed ## What did it do? Fab was an online shop that sold a curated selection of design products every day through time-limited discounts. It stood out for its social commerce features, which let members share what they had bought and liked. The Manhattan-based company ran a warehouse in New Jersey and opened offices in Berlin and Pune. ## Why did it shut down? Fab grew fast on more than $150 million raised between 2011 and 2012, making acquisitions in Europe and opening new offices. The daily-deals model drew a large audience but never made the company profitable; in 2013 it laid off 100 people in Berlin and then 101 more, mostly in New York. In 2014 the company tried to change direction by launching Hem, which sold customisable furniture, and co-founder Bradford Shellhammer left. In March 2015 Fab's digital and e-commerce assets were sold to PCH International for an undisclosed sum. ## The story Fab did not start life as a design shop but as Fabulis, a social network for gay men and their friends. Jason Goldberg, who had a background at XING and Jobster, and the designer Bradford Shellhammer launched the venture in February 2010. When the social network failed to take off, the pair changed course on 9 June 2011: Fab became a site selling a curated selection of design products every day through time-limited discounts. The new model grew at an astonishing pace. Membership, which stood at 175,000 in June 2011, reached 1 million five months later; the company crossed that threshold faster than Facebook, Twitter or Groupon. In July 2011 it raised $8 million in a round led by Menlo Ventures; VentureBeat had reported that the company turned a profit when it was just six weeks old. In December 2011 it raised $40 million in a round led by Andreessen Horowitz. The $105 million Series C led by Atomico in July 2012 was the company's biggest round. In December 2012 membership passed 10 million and the site was selling an average of 5.4 products a minute. During this period Fab bought Casacanda in Germany and Llustre in the UK, and opened offices in Berlin and Pune. At one point it was estimated to be worth more than $1 billion. But growth did not bring profit. In July 2013, in pursuit of profitability, the company cut 100 roles at its Berlin office, and in October 2013 it laid off 101 more people, mostly from its New York office. That was 19 per cent of its workforce. In 2014 Shellhammer left to found his own design marketplace, Bezar. In June 2014 the company bought the Finnish furniture retailer One Nordic Furniture, and in September 2014 it launched Hem, offering made-to-order furniture designs. In March 2015 Fab's digital and e-commerce assets were sold to PCH International for an undisclosed sum. The site relaunched under its new owners without the founders' involvement, turned into a site selling health and fitness products in 2019 and went offline at the end of 2022. Fab is one of the examples reminding us that member numbers say nothing about the health of a business. With a model that grew its audience very fast but kept postponing making money on each sale, the company could not turn the capital it raised into a lasting business. ## Lessons - Track contribution margin per order and repeat-purchase rate, not growth metrics such as member numbers. - Prove a profitable model in your home market before expanding abroad through acquisitions. - Pivoting again and again wears out both the team and the brand; tie every change of direction to a measurable hypothesis and a deadline. ## Sources - [Fab (website)](https://en.wikipedia.org/wiki/Fab_(website)) - [Fab.com Cuts 101 Jobs as E-Commerce Site Aims to Turn Profit](https://www.bloomberg.com/news/2013-10-03/fab-com-cuts-101-jobs-as-e-commerce-site-aims-to-turn-profit-1-.html) - [Fab Passes 10 Million Members, Sells 5.4 Products Every Minute](https://mashable.com/2012/12/31/fab-stats/) --- # Friendster (2002 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/friendster/ - Sector: Social media - Country: United States - Total funding: $45 million - Cause of closure: Lost to competitors ## What did it do? Friendster, founded by Jonathan Abrams in Mountain View in 2002, was one of the first social networks, letting users build networks of friends and share photos, messages and comments. The site was also used for dating, events and music discovery. In 2009 it was sold to Malaysia's MOL Global, and in 2011 it became a social gaming platform. ## Why did it shut down? According to Nielsen//NetRatings, Friendster was the leading social network until around April 2004, but it was overtaken by MySpace in page views. Its rejection of Google's $30 million acquisition offer in 2003 was regarded, according to the Associated Press, as one of Silicon Valley's biggest mistakes. There were frequent changes of CEO, and a later capital raise valued the company at less than 5 per cent of its 2003 value. US traffic fell sharply from 2009, a decline largely attributed to the rise of Facebook. Having shifted its focus to Asia, the company was sold in 2009 for $26.4 million; the pivot to social gaming did not save it either, and its services were halted in June 2015. ## The story In 2003 Google offered $30 million to buy the one-year-old Friendster. The company turned the offer down and, that same year, reached a valuation of $53 million with investment from Kleiner Perkins and Benchmark Capital. The Associated Press later described the decision as one of Silicon Valley's biggest mistakes. Friendster was founded in Mountain View in 2002 by the Canadian programmer Jonathan Abrams. Its name combined the word friend with Napster, the famous file-sharing service of the day. Launched before MySpace, hi5 and Facebook, the site reached 3 million users in its first few months; publications such as Time, Vanity Fair and Spin wrote about its success, and its founder appeared on magazine covers and late-night shows. The lead did not last. According to Nielsen//NetRatings, MySpace overtook Friendster in page views around April 2004. That same month Abrams was removed as CEO; Tim Koogle, Scott Sassa, Taek Kwon and Kent Lindstrom then took the helm one after another. A later capital raise by Kleiner and Benchmark valued the company at less than 5 per cent of its 2003 value. Between 2006 and 2008 the company kept raising money in rounds led by DAG Ventures and IDG Ventures. Friendster's second life began in Asia. By 2008 it had passed 115 million registered users, and the site was the social network with the most monthly unique visitors in Asia. In the US, however, traffic collapsed from 2009, a decline largely attributed to the rise of Facebook. In December 2009 Malaysia's MOL Global bought the company for $26.4 million, while Facebook bought Friendster's patents for $40 million in 2010. Having become a social gaming site in June 2011, Friendster halted all its services on 14 June 2015, and the company was formally wound up in 2018. The domain changed hands in 2023; in 2026 a new app with no legal or technical connection to the old platform launched under the same name. Friendster was among the pioneers that took the idea of the social network into the mainstream, but being first did not bring a lasting advantage. A first-mover advantage can melt away easily when rivals grow faster and management keeps changing. ## Lessons - Being the early leader is not a lasting advantage; when rivals such as MySpace and Facebook arrive, keep measuring what keeps users with you. - When you turn down a serious acquisition offer, write down your reasoning and your next valuation target, backed by concrete data. - Frequent changes at the top blur the direction of the product; settle the division of roles between founder and investors early. ## Sources - [Friendster](https://en.wikipedia.org/wiki/Friendster) - [After seven years, Friendster sells to Malaysian company](https://www.theguardian.com/technology/blog/2009/dec/10/friendster-sold) - [The Friendster Tell-All Story](https://techcrunch.com/2006/10/15/the-friendster-tell-all-story/) - [https://www.wikidata.org/wiki/Q1347103](https://www.wikidata.org/wiki/Q1347103) --- # Giggem (2012 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/giggem/ - Sector: Social media - Country: Turkey - Total funding: unknown - Cause of closure: Team problems ## What did it do? Giggem was an English-language social network where musicians could create profiles and share songs and videos, and bands looking for new members could hold auditions online. Its founder described the platform as the LinkedIn of the music industry. It officially launched first in the US in 2013 and saw its heaviest use in Los Angeles and London. ## Why did it shut down? According to Emir Turan, the first mistake was offering a large number of features all at once and launching to almost the entire world rather than a single city. With members scattered across different regions, they could not meet in real life, and the platform turned from a place for making professional connections into a chat room. Revenue plans such as premium membership and paid search never got off the ground, and the investors he spoke to turned him down because of the scaling problem. What Turan names as the real reason for the closure, however, was time: the team was in Istanbul, most users were in the US, and he himself was in Eskişehir dealing with growing responsibilities at Eti, the Turkish food company. The platform was shut down in 2015 without ever generating revenue. ## The story Emir Turan is the grandson of Firuz Kanatlı, founder of Eti, one of Turkey's best-known biscuit and snack makers. He studied law and, after a brief spell in banking, began working at the family company. A guitarist who had played on stage with bands at school and university, Turan knew from his own experience that a musician's biggest headache was finding the right bandmates. As a solution, in 2012 he founded Giggem, which he designed as a kind of LinkedIn for the music industry. According to a Webrazzi report in 2012, Turan was funding and running the venture himself; $300,000 of capital had been set aside for a year of development. On the English-language platform, musicians could create profiles and share songs and videos, and bands looking for new members could hold auditions online. Giggem officially launched first in the US in 2013. Speaking to the Turkish daily Milliyet in 2014, Turan said membership had passed 20,000 and was growing by 25 to 30 per cent a month. As Turan told Fast Company in 2020, the first mistake was offering too many features at once and launching to almost the entire world rather than a single city. With members scattered across different regions, they could not get together in real life; the platform turned from a place for making professional connections into a chat room. Turan summed it up: "We saw the mistake, but we were too late to fix it." Revenue plans such as premium membership and paid search never got off the ground. The angel investors and funds he met also turned him down because of the scaling problem. According to Turan, though, the real reason for the closure was time. The team was in Istanbul and most users were in the US, while he was in Eskişehir dealing with growing responsibilities at Eti. He shut the platform down in 2015, by which point it had reached 60,000 to 70,000 members, 250,000 original videos and around 300,000 original songs. He also said he had turned down a $1.2 million offer from a US music site and had spent around 3.5 million TL of his own money on the venture. Giggem remains an example of why focusing on a narrow geography and a single need is vital for products that rely on network effects. ## Lessons - Concentrate a product that relies on network effects in a single city, then expand. - Do not try to solve every need; focus first on one niche need. - Bring in a partner or manager who knows the areas you do not, right from the start. - The time you cannot devote to your start-up is a gap that money cannot fill. ## Sources - [A leadership lesson from a start-up that closed](https://fastcompany.com.tr/calisma-hayati/kapanan-startuptan-liderlik-dersi/) - [Giggem: a social network for musicians and bands](https://webrazzi.com/2012/10/10/giggem/) - [A music social network from Eti's heir apparent!](https://www.milliyet.com.tr/ekonomi/eti-nin-veliahtindan-muzik-li-sosyal-ag-1886959) --- # Grooveshark (2006 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/grooveshark/ - Sector: Media and entertainment - Country: United States - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Grooveshark was a Gainesville-based, web-based music streaming service run by Escape Media Group. Users could upload digital audio files, which other users could then play and organise into playlists. Alongside its search engine, recommendation system and free basic membership, the service had two paid subscriptions. ## Why did it shut down? The service's catalogue relied largely on files uploaded by users, and none of the major record labels had approved its original model. Universal Music Group sued in 2010 and 2011; UMG alleged that Grooveshark employees had uploaded thousands of illegal copies, which the company denied. EMI, Sony and Warner also sued, and Apple and Facebook removed the app from their platforms over copyright concerns. Facing potential damages of up to $736 million if the infringement were found to be wilful, the company accepted a settlement on 30 April 2015 that required it to shut the service immediately and hand its assets to the record labels. ## The story On 30 April 2015, people visiting Grooveshark found not music but a message announcing its closure. The site had been shut that day under a settlement with the record labels, and users were being directed to licensed music services. A service with more than 1 billion plays a month, a catalogue of more than 15 million songs and 20 million users disappeared overnight. Grooveshark was founded in March 2006 by three students at the University of Florida: Andrés Barreto, Josh Greenberg and Sam Tarantino. In its first two years the service was a paid download platform on which users sold songs to each other for 99 cents; of that, about 70 cents would go to the record label, 25 cents to the user who sold it and 4 cents to Grooveshark. The model won approval from some small labels, but none of the majors. In April 2008 a web player that required no downloads was launched, and its popularity rose fast. Growth came with legal risk, because the catalogue consisted largely of files uploaded by users. Universal Music Group sued in January 2010 and filed a second suit in November 2011; UMG alleged that Grooveshark employees had made more than 113,000 illegal uploads. Grooveshark denied the allegations and argued that the documents had been badly distorted. EMI, which had settled and signed a licensing deal in 2009, also sued on the grounds that it had not received royalty payments; Sony and Warner were among the plaintiffs too. Apple and Facebook removed the app from their platforms over copyright concerns, and in Germany the service was shut down, citing licensing costs. The lawsuits dragged on for years. When it emerged that the company could have to pay damages of up to $736 million if the infringement were found to be wilful, Grooveshark settled with Universal, Sony and Warner. Under the settlement the service was shut immediately, and the website and all intellectual property were handed to the record labels. Shortly afterwards a site using the same name appeared, but it turned out to be a rebranded version of an existing MP3 search engine. Grooveshark's story sums up the fate of services that try to make content licensing catch up with their growth. User affection and technical success were no substitute for an agreement that had never been reached with the rights holders. ## Lessons - If your catalogue depends on user uploads, audit the limits of safe-harbour protection and your employees' conduct together with lawyers. - A content service that scales without licences from the major rights holders grows its damages exposure as it grows. - Being removed from app stores can close your distribution channel overnight; make compliance with platform policies part of your product strategy. ## Sources - [Grooveshark](https://en.wikipedia.org/wiki/Grooveshark) - [Grooveshark Shuts Down to Settle Copyright Infringement Suit](https://www.nytimes.com/2015/05/01/business/media/grooveshark-shuts-down-to-settle-copyright-infringement-suit.html?_r=0) - [Grooveshark now feels lawsuit wrath of all major music labels: EMI, which had a licensing agreement with the music streaming service, alleged in a breach of contract lawsuit that it had not been paid any royalties](https://web.archive.org/web/20131031014333/http://news.cnet.com/8301-1023_3-57353515-93/grooveshark-now-feels-lawsuit-wrath-of-all-major-music-labels/) --- # Homejoy (2010 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/homejoy/ - Sector: Marketplaces - Country: United States - Total funding: $38 million - Cause of closure: Business model failed ## What did it do? Homejoy was a platform for booking home services such as cleaning and repairs online. It matched background-checked independent cleaners with customers and charged between USD 25 and USD 35 an hour. The company operated in 31 major cities across the United States, Canada and the United Kingdom. ## Why did it shut down? To grow fast, Homejoy offered first cleans at very low prices, such as USD 19; in a market where competitors charged USD 85 for the same job, the strategy raised questions about the quality of that growth. The company quickly expanded to 31 cities, reaching as far as London, but struggled to sustain profitability. Lawsuits over whether the cleaners working through the platform should be classed as independent contractors or employees added to the burden. The company shut down in July 2015, citing its profitability problems and these lawsuits; part of the engineering team moved to Google. ## The story Adora Cheung did Homejoy's first cleaning jobs herself, and until the end of 2013 she kept going out to at least one clean a month in person. The company made the magazines as the start-up that had every new hire scrub toilets. The approach let it learn the customer experience in the field; in the end, though, what keeps a services marketplace alive is not care in the field but the profit each transaction leaves behind. Adora Cheung and her brother, Aaron Cheung, founded the company in 2010. They received investment from Y Combinator in March 2010, but operations began in 2012. In early 2013 came a USD 1.7 million seed round with participation from Andreessen Horowitz and First Round Capital. Together with a Series A in October 2013 and a Series B led by Google Ventures in December 2013, the investment raised in those two rounds reached around USD 38 million. Wired wrote that Google was pouring millions into a field like home cleaning. With more than 100 employees, the company worked with thousands of independent cleaners and served 31 major cities across the United States, Canada and the United Kingdom. The engine of growth was price. Homejoy charged an hourly rate of USD 25 and offered first cleans at eye-catching discounts, such as USD 19. In a market where competitors asked USD 85 for the same job, this was a fast but expensive way to win customers, and some observers questioned growth that came this way. In London the hourly rate was GBP 13, of which cleaners received between GBP 7 and GBP 9.50. In July 2015 the company announced it was shutting down. It cited difficulties in sustaining profitability and lawsuits over whether cleaners were independent contractors or employees. Part of the engineering team moved to Google. A few months later it emerged that Aaron Cheung had bought the Homejoy customer database and used it for a similar venture called Fly Maids; once the news broke, that venture was shut down too. Homejoy's story shows how quickly growth bought with discounts, together with legal uncertainties such as workforce status, can erode a marketplace. The unit economics question, put off while investment was plentiful, eventually came knocking at the company's door. ## Lessons - Do not open in a new city before measuring whether customers who came in on a discounted first order place a second order at full price. - Treat the legal status of your service providers as a cost line from the start; in Turkey, too, risks from the Social Security Institution (SGK) and the labour courts can arise in a similar way. - Founders doing the work themselves helps them understand the customer, but it is no substitute for unit economics. ## Sources - [Homejoy](https://en.wikipedia.org/wiki/Homejoy) - [Homejoy Shuts Down, Citing Worker Misclassification Lawsuits](https://www.forbes.com/sites/ellenhuet/2015/07/17/cleaning-startup-homejoy-shuts-down-citing-worker-misclassification-lawsuits/#220cb93a78be) - [Homejoy Raises $38M As It Looks To Expand Beyond Home Cleaning](https://techcrunch.com/2013/12/05/homejoy-38-m/) --- # irmik.com (2012 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/irmik-com/ - Sector: Marketplaces - Country: Turkey - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? irmik.com was a B2B marketplace for wholesale purchasing by restaurants, launched in December 2012 by Yemeksepeti, Turkey's leading online food ordering platform. Restaurants could order supplies such as food, cleaning products and takeaway packaging from one place, comparing prices from different suppliers. The service, at first open only to Yemeksepeti's member restaurants, was extended to all businesses in 2015. ## Why did it shut down? According to the announcement on the site, irmik.com ended its operations as of 1 October 2015; Webrazzi's news report, however, gives the date as 1 November. The announcement said resources would be redirected to other food-related projects within Yemeksepeti. Webrazzi wrote that it was most reasonable to assume the decision was taken in line with Delivery Hero's strategies; this suggests that behind the closure lay the new owner's preference for focusing on the core business. The numbers also show that scale remained limited: more than 1,500 restaurants used the service, but the number of orders placed in 2014 was around 10,000. The move to open up to all businesses ended in closure before it had enough time to produce results. ## The story Yemeksepeti's relationships with restaurants gave the company a valuable idea: the platform that had brought restaurant orders online could bring restaurants' own purchasing online too. irmik.com launched with that idea in December 2012. Initially serving only Yemeksepeti's member restaurants, the site brought business supplies, from food to cleaning products and takeaway packaging, together under one roof. According to a Digital Age report from January 2015, irmik.com had by then reached more than 1,500 restaurants and was working with 30 suppliers. Yemeksepeti CEO Nevzat Aydın explained that the company had been bringing restaurants online for 14 years and now wanted to teach them to shop profitably online. The same year the service was opened up to restaurants, cafés, hotels and offices that were not Yemeksepeti members. According to Webrazzi, the Turkish tech news site, around 10,000 orders had come from Yemeksepeti restaurants in 2014. 2015, however, was a turning point for Yemeksepeti. The company joined Delivery Hero and began reviewing the side ventures in its portfolio. In March Lokum.com closed. On 2 November 2015 Webrazzi reported that irmik.com had closed as well; the statement on the site gave the closing date as 1 October 2015, while the news report gave it as 1 November. According to the statement, the site had sold more than 250,000 products and received tens of thousands of orders. Resources would be redirected to other food-related projects within Yemeksepeti. Webrazzi commented that it was most reasonable to assume the decision had been taken in line with Delivery Hero's strategies. The story of irmik.com carries two lessons at once. First, adding a second product to a strong customer relationship may look easy on paper, but restaurants' purchasing habits do not change easily. Second, the future of a venture under a corporate umbrella often depends more on the new owner's strategy than on its own numbers. When Delivery Hero chose to focus on the core business, a B2B marketplace that had yet to prove its scale was at the top of the list. ## Lessons - Selling a second product to an existing customer base makes sense, but if order frequency is low, the model cannot sustain itself. - After an acquisition or merger, find out the new owner's priorities early; side products can be dropped quickly. - In B2B supply, the number of suppliers and price advantages do not deliver growth unless they turn into repeat orders. ## Sources - [irmik.com, another Yemeksepeti venture, closes](https://webrazzi.com/2015/11/02/yemeksepeti-girisimlerinden-irmik-com-da-kapandi/) - [irmik.com will get businesses used to buying online](https://digitalage.com.tr/irmik-com-isletmeleri-internetten-satin-almaya-alistiracak/) - [Turkish e-commerce sites that closed before Markafoni! Why did the online shopping sites shut down?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) - [Yemeksepeti's ventures: İrmik, Papyon and Lokum](https://egirisim.com/2013/09/14/yemeksepetinin-girisimleri-irmik-papyon-ve-lokum/) --- # LayerVault (2011 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/layervault/ - Sector: Enterprise software (SaaS) - Country: United States - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? LayerVault was a service that stored designers' files in the cloud, saved every change as a version and made it easier for teams to review and hand off designs. The company aimed to bring to the design world the version-control approach that developers use for code, and ran the designer community Designer News as a side project. ## Why did it shut down? The founders started writing code in 2011, and in August 2012 the company raised a seed round from investors including SV Angel and Red Swan. In September 2014 co-founder Allan Grinshtein left the company and Kelly Sutton took over as CEO. On 11 March 2015 the company announced that it had not become financially sustainable, had used up its capital and could not find new investment; the service closed on 11 April 2015. According to the designer Khoi Vinh, there were happy customers who used the product passionately, but there were not enough of them to reach the pace a venture-backed company needs. Vinh also wrote that he had heard the product was seen as better suited to agency workflows than to product development teams. ## The story LayerVault was born from a product that Allan Grinshtein and Kelly Sutton started writing in New York in 2011. While developers tracked every version of their code with dedicated tools, designers struggled to keep their files' history in order. LayerVault offered a version-control system that stored design files in the cloud, recorded every change and made it easier for teams to review and hand off designs. The company also set up Designer News, a community where designers shared news and discussion. In August 2012 it raised a seed round from investors such as SV Angel and Red Swan. The product won praise in design circles, but that praise did not turn into rapid growth. In September 2014 co-founder Grinshtein left the company and Sutton became CEO; the company said the change would not affect the customer experience. On 11 March 2015 LayerVault announced that it would close. According to Sutton's note, the company had not become financially sustainable, had used up its capital and had not found the new investment needed to keep the service running without interruption. Users were given until 11 April to download their files, and refunds or credit were provided for the unused part of subscriptions. Sutton said they had built good technology but had not managed to turn it into a business. The designer and writer Khoi Vinh wrote that the company had loyal customers but had not reached the numbers a venture-backed company needs to survive. Designer News lived on after LayerVault closed. The story shows that, at a time when the design tools market was being energised by products such as Sketch and InVision, even a well-made tool cannot survive without the right scale and business model. ## Lessons - For tools serving a niche professional audience, compare the market size with venture capital expectations; for a well-loved but small product, slow and profitable growth may be a better fit. - Be clear early about which workflow your product fits into; being seen as an agency tool made it harder for LayerVault to spread within product teams. - Side projects can become valuable assets; Designer News lived on after LayerVault closed, and structuring such assets separately preserves value at closure. ## Sources - [LayerVault, the version control app for designers is shutting down](https://thenextweb.com/news/layervault-the-version-control-app-for-designers-is-shutting-down) - [The Demise of LayerVault and the Market for Creative Tools](https://www.subtraction.com/2015/03/12/the-demise-of-layervault/) - [Saying Goodbye to Our Founder, Allan Grinshtein](https://layervault.tumblr.com/post/98153811439/saying-goodbye-to-our-founder-allan-grinshtein) - [LayerVault company profile](https://tracxn.com/d/companies/layervault/__6nT_kx8279xFRdIr1z1U3Rdlldr87teeR_VjEwf_JE0) --- # Leap Transit (2013 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/leap-transit/ - Sector: Mobility and transport - Country: United States - Total funding: $2.5 million - Cause of closure: Regulation and legal issues ## What did it do? Leap Transit ran a private luxury bus line in San Francisco between the Marina district and the Financial District during the morning and evening rush hours. Its refurbished buses had leather seats, Wi-Fi, power sockets and snacks, and a one-way ticket cost $6. ## Why did it shut down? The company ran trial journeys with a single hired bus in May 2013, and on 18 March 2015 launched full service with four buses on a nine-stop route. In May 2015 the California Public Utilities Commission ordered it to stop, saying it was operating without a permit and had not provided proof of compliance on insurance, workers' compensation and driver testing. The removal of wheelchair access equipment from the buses was also criticised as a breach of accessibility rules. Unable to resume service after what was described as a temporary pause, Leap filed for Chapter 7 bankruptcy on 15 July 2015, declaring debts of between $100,000 and $500,000. In October 2015 the remaining buses were put up for auction with bids starting at $5. ## The story Leap Transit emerged in San Francisco in 2013 under Kyle Kirchhoff. The company aimed to offer a comfortable commute as an alternative to the city's crowded municipal buses. In May 2013 it ran trial journeys with a single hired 36-seat bus. It then raised around $2.5 million from investors including Andreessen Horowitz, Index Ventures, Slow Ventures and Salesforce CEO Marc Benioff. On 18 March 2015 Leap launched full service. Its four large buses, running on compressed natural gas, had been completely refitted with leather seats, Wi-Fi, power sockets, coffee and snacks. On the nine-stop route between the Marina and the Financial District, a one-way ticket cost $6, and the buses ran during the morning and evening rush hours. But the company had not obtained a state permit for the service. Leap believed it was legal because it operated only within city limits; the California Public Utilities Commission thought otherwise. The cease-and-desist order that came in May 2015 stated that the company was operating without a permit and had not provided documentation on insurance, workers' compensation and driver testing. The removal of wheelchair access equipment from the buses was also criticised. The company said services had been temporarily suspended, but its buses never took to the road again. On 15 July 2015 Leap filed for bankruptcy under Chapter 7. The filing listed both debts and assets at between $100,000 and $500,000, and gross revenue for 2015 was just $20,748. In October 2015 the buses were put up for auction with bids starting at $5. Leap's story is a reminder that moving fast in a regulated industry does not mean ignoring the rules. ## Lessons - In tightly regulated fields such as public transport, scaling without the required permits can halt the entire business at the first inspection; treat the licence as part of the product. - Skipping legal obligations such as accessibility for the sake of a design choice creates both legal and reputational risk. - Before taking on high fixed costs for a luxury experience, use a small, cheap pilot to measure whether the route actually runs full. ## Sources - [Leap Transit](https://en.wikipedia.org/wiki/Leap_Transit) - [Luxury Bus Company Leap Declares Bankruptcy, Auctions Buses for $5](https://www.entrepreneur.com/business-news/luxury-bus-company-leap-declares-bankruptcy-auctions-buses/250711) --- # Limango Türkiye (2009 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/limango-turkiye/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Limango was the Turkish version of the private shopping site owned by Germany's Otto Group, founded on 19 February 2009. It sold branded clothing and children's products to members at a discount through time-limited campaigns. It opened sub-categories such as LimangoTech and LimangoKids, and ran joint sales projects with Turkcell and P&G. ## Why did it shut down? The company gave no detailed reason when it closed. According to NTV, the Turkish news channel, its market share falling below 10 per cent accelerated its exit from Turkey. According to Webrazzi, the Turkish tech news site, Limango was the second-strongest site in the market after Markafoni, Turkey's private shopping pioneer; it fell behind with the rise of Trendyol but held its position for a while. After founding executive Gülfem Toygar moved to GittiGidiyor in early 2014, rumours that the company would be sold circulated for a long time; there was talk of discussions with Hepsiburada, n11.com and Markafoni, but no deal emerged. ## The story Limango, part of Otto, one of Germany's large e-commerce groups, came to Turkey in 2009. Registered with the Istanbul Chamber of Commerce on 19 February 2009 as Limango Dış Ticaret ve Sanal Mağazacılık Hizmetleri, the company was led by Gülfem Toygar, who built and ran the Turkish operation. The model was a familiar one: offering members branded products at a discount through short-lived campaigns. In the years when private shopping was booming in Turkey, Limango quickly became one of the sector's leading names. Webrazzi wrote that the site was the second-biggest player in the market after Markafoni and had succeeded in selling products that had until then been thought impossible to sell online. According to a 2011 market review, Limango was running cross-selling projects with Turkcell and P&G and trying to stand out with innovations such as sub-categories like LimangoTech and LimangoKids and a mobile app. In 2012 the group also opened a second site in Turkey, the general e-commerce site and marketplace Arabulvar. Over time the mood of the market changed. With the rise of Trendyol, Limango slipped down the rankings, though it managed to hold its position for a while. In early 2014 Gülfem Toygar left the company to become CEO of GittiGidiyor. Rumours that Limango would be sold then circulated for a long time; the names of Hepsiburada, n11.com and Markafoni came up, but no deal emerged. On 30 March 2015 a short message on the site announced the end: Limango was regretfully ending its operations on limango.com.tr. It said orders not yet shipped would be delivered and customer service would continue by email. According to NTV, the company's market share falling below 10 per cent had accelerated the decision to withdraw. On the same day, in the same words, Arabulvar also ended its operations. Limango's Turkish adventure lasted six years. The story shows how quickly a global group's venture in a local market can end when competition intensifies and scale targets are missed. ## Lessons - In a market where many rivals run the same model, being second or third can exhaust a global parent company's patience. - The departure of a founding executive creates uncertainty for the team and partners, especially when combined with sale rumours. - If the foreign parent company has a clear success threshold for the local market, change your plan before you drop below it. ## Sources - [Limango Turkey ends its operations (in Turkish)](https://webrazzi.com/2015/03/30/limango-turkiyedeki-faaliyetlerine-son-verdi-son-dakika/) - [Limango decides to pull out of Turkey (in Turkish)](https://www.ntv.com.tr/ekonomi/limango-turkiyeden-cekilme-karari-aldi,_dEtR2ZI80qW8FCDmkQUSg) - [Private shopping site Limango closes (in Turkish)](https://www.marketingturkiye.com.tr/haberler/ozel-alisveris-sitesi-limango-kapandi/) - [Where does Turkey's private shopping market stand? (in Turkish)](https://webrazzi.com/2011/10/13/turkiye-ozel-alisveris-pazari-ne-durumda/) - [October visitor numbers for private shopping sites, according to comScore (in Turkish)](https://webrazzi.com/2011/11/21/comscore-ozel-alisveris-ekim/) - [Private shopping sites that closed before Markafoni (in Turkish)](https://webrazzi.com/2017/06/01/markafoni-kapanisi/) - [Arabulvar closure announcement, Internet Archive copy (in Turkish)](https://web.archive.org/web/20150801022256/http://arabulvar.com/) --- # Lokum.com (2012 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/lokum-com/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Lokum.com was a regional food e-commerce site set up at the end of 2012 by Yemeksepeti, Turkey's leading online food ordering company. It worked with small producers making goods of organic quality and sold Anatolia's regional specialities online, from Turkish delight and sucuk to cheese, seafood and olive oil. ## Why did it shut down? In a statement in March 2015, Yemeksepeti said it was closing Lokum.com because it wanted to channel its existing resources into other lines of business. In other words, regional food sales had fallen behind food delivery on the company's list of priorities. No turnover or user figures were shared at the closure, which makes it hard to judge how big the business had become from the parent company's point of view. Employees were offered other roles within Yemeksepeti. According to a 2016 assessment by the Turkish business magazine Turkishtime, the site's logistics costs were very high, product wastage was high, and its pricing policy confined it to a small target audience. The closure of irmik.com months later on the same grounds suggests the decision was less about the failure of a single product than about the parent company's choice to focus. ## The story At the end of 2012 Yemeksepeti was not just Turkey's biggest food ordering site; with a USD 44 million investment from General Atlantic, it also had its eye on new areas. One of the spin-off brands set up at the time was Lokum.com. The site aimed to bring online shopping together with the regional specialities of Anatolia. According to a 2013 round-up by egirişim, Lokum.com worked with producers making goods of organic quality. Its shelves held a selection ranging from Turkish delight and sucuk to cheese, seafood and olive oil. Customers could have products they would struggle to find in chain supermarkets delivered straight to their door. Around the same time Yemeksepeti had also launched irmik.com, which offered wholesale supplies to restaurants, and the reservations site Papyon. Lokum.com lasted about two and a half years. According to a Webrazzi report on 27 March 2015, the site stopped taking new orders from that day, and existing orders were fulfilled. Yemeksepeti's statement was brief: resources within the company would be redirected to other lines of business. Lokum.com employees were offered other positions within Yemeksepeti. No turnover, order or user figures were shared with the closure. The timing of the closure was also notable. A few months later Yemeksepeti joined Delivery Hero, and in the autumn of the same year irmik.com closed too. In a 2017 list of closed e-commerce sites compiled by the Turkish news outlet Habertürk, Lokum.com appeared as a Yemeksepeti venture that lived from 2012 to 2015, with particular emphasis on the line about redirecting resources in its closure statement. Lokum.com's story shows that the backing of a strong parent company is also a source of fragility. Regional food sales were born in the shadow of a big brand, but among priorities competing with the core business of food delivery, their turn never came. When the parent company decided to focus, a small vertical that had never made its numbers public quietly closed. ## Lessons - A strong brand's customer base does not guarantee sales in a different category. - In an internal venture, the battle for resources is real; if you cannot show your contribution to the core business in numbers, you will be the first to close. - With regional and artisan products, work out supply and logistics costs from the start; basket values may stay low. ## Sources - [Yemeksepeti's regional food venture Lokum.com has closed [Updated]](https://webrazzi.com/2015/03/27/yemeksepeti-yoresel-urun-girisimi-lokum-com-kapandi/) - [Yemeksepeti's ventures: İrmik, Papyon and Lokum](https://egirisim.com/2013/09/14/yemeksepetinin-girisimleri-irmik-papyon-ve-lokum/) - [Turkish e-commerce sites that closed before Markafoni: why did online shopping sites shut down?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) - [Shopping sites that have closed so far](https://www.kartal24.com/73531-kapanan-alisveris-siteleri) - [50 failed start-ups and 50 lessons from their mistakes (15–30)](https://turkishtimedergi.com/dijital-girisim/50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-15-30/) --- # OnLive (2009 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/onlive/ - Sector: Gaming - Country: United States - Total funding: unknown - Cause of closure: Bad timing ## What did it do? OnLive was a cloud gaming service that ran games on its own servers and streamed the picture to users as video. This meant new games could be played on computers without powerful hardware, on smart TVs and on the company's own MicroConsole device. The company also offered OnLive Desktop, a cloud-based Windows desktop service accessed from tablets. ## Why did it shut down? The gaming experience depended on the user's internet connection; critics wrote that latency and picture quality varied from game to game and caused problems in titles that demanded fast reflexes. In October 2010 the company scrapped its subscription fee altogether. In August 2012 it laid off all its staff and went through an assignment for the benefit of creditors; shareholders lost their stakes, and the assets were sold for USD 4.8 million to a new company set up under the same name. The new OnLive operated for a few more years, but in April 2015 it sold most of its assets to Sony and shut down all its services. ## The story Taking the stage at the Game Developers Conference (GDC) in San Francisco in March 2009, Steve Perlman presented the games world with an audacious idea: games would no longer run on the player's computer but on distant servers, arriving on screen as a video stream. There would be no need to buy an expensive gaming PC or console. Part of the gaming press was sceptical from day one; Digital Foundry, Eurogamer's technical team, published a piece explaining why OnLive could not work. The Mountain View-based company brought on board investors such as Warner Bros., Autodesk and Maverick Capital, and in a later round AT&T and Lauder Partners. The service launched in the US in June 2010 and in the United Kingdom in September 2011. Users could rent games, play demos and watch other people play from computers, smart TVs or the USD 99 MicroConsole. For a good experience you needed to be no more than roughly 1,600 kilometres from one of the company's five data centres. The problem surfaced exactly where the critics had predicted. The experience depended on the user's connection; Digital Foundry wrote that during intense moments of play latency frequently exceeded the acceptable limit. In October 2010 the company scrapped its monthly subscription fee. Then, on 17 August 2012, it laid off all its staff and went through an assignment for the benefit of creditors. Shareholders lost their stakes, and the assets were transferred to a new company bearing the same name. Information that emerged later showed the sale price was just USD 4.8 million, whereas analysts had at one point estimated the company's value at around USD 1.8 billion. In 2014 the new OnLive made Mark Jung its CEO, launched a new service called CloudLift and signed deals with device makers. But in April 2015 it announced that it had sold most of its assets to Sony and would shut down all its services at the end of the month. Sony was running PlayStation Now in this space, built on the infrastructure of Gaikai, OnLive's former rival. OnLive's vision was not entirely wrong; the fact that a major platform company kept the same idea alive shows as much. But the company tried to scale with expensive infrastructure while the broadband infrastructure the idea depended on was not yet ready, and it paid the price. ## Lessons - If your product depends on the user's internet speed, do not scale it without testing under the real connection conditions of your target market. - In a model that needs expensive server infrastructure, going free does not make the unit cost disappear; build your pricing around infrastructure costs. - Even if your patents are valuable, if you are forced to sell in distress you have no bargaining power left; build a cash buffer before the crisis arrives. ## Sources - [OnLive](https://en.wikipedia.org/wiki/OnLive) - [OnLive's video gaming tech was sold for less than $5m](https://www.bbc.com/news/technology-19896362) - [OnLive shuts down streaming games service, sells patents to Sony](https://arstechnica.com/gaming/2015/04/onlive-shuts-down-streaming-games-service-sells-patents-to-sony-embargoed-7pm-eastern/) --- # Ouya (2012 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/ouya/ - Sector: Gaming - Country: United States - Total funding: $18.6 million - Cause of closure: No market need ## What did it do? Ouya was a small, cube-shaped, Android-based games console that plugged into a television. Every unit could be used as a development kit with no licence fee, and the hardware could easily be opened up and modified. Games on the platform were initially required to offer a free-to-play portion. ## Why did it shut down? Sales stayed weak and game developers did not embrace the platform; even TowerFall, the console's most popular game, sold only 7,000 copies on Ouya. An incentive fund set up to attract exclusive games became mired in controversy over dubious backer profiles. The console sold around 200,000 units in total and the company ran into financial trouble. A $10 million investment from Alibaba in early 2015 did not save the situation, and in July 2015 the company wound up the business by selling its software assets to Razer. ## The story Launched on Kickstarter in the summer of 2012, the campaign passed its $950,000 target within eight hours. Started by Julie Uhrman, the Ouya project promised a cube-shaped, $99, Android-based games console designed by Yves Béhar: no licence fee, every unit also a development kit, and hardware that could be opened up and tinkered with using an ordinary screwdriver. The campaign closed on 9 August at $8,596,475, 904 per cent of its target. Ouya went on record as the fastest project on Kickstarter to that date to pass a million dollars. Units began shipping to backers in March 2013 and reached shops at $99 in June 2013. The requirement that every game on the platform include a free trial or a free-to-play portion was a choice that set the console apart from the traditional games world. The excitement did not translate into sales. In its pre-release review Engadget praised the device's openness but did not see it as a good gaming platform. Developers showed little interest either: in April 2014 it emerged that TowerFall, the console's most popular game, had sold only 7,000 copies on Ouya. The “Free the Games Fund”, launched to attract exclusive games by matching Kickstarter campaigns' funding, became mired in controversy over a small number of high-value accounts in the first campaigns that had never backed any project before. The console sold around 200,000 units in total. In January 2015 a $10 million investment from Alibaba offered brief breathing space. In April 2015 reports emerged that the company was urgently seeking a buyer. In July 2015 Razer bought Ouya's software assets, content library and team; hardware production was halted and Uhrman left the company. Razer shut down the store and account services on 25 June 2019; many apps that needed to connect to the store stopped working after that date. Ouya shows that crowdfunding enthusiasm does not mean winning both sides of a platform, players and developers alike. A cheap, open device can attract attention; but a store where developers cannot make money leaves players with nothing to play either. ## Lessons - Do not treat crowdfunding enthusiasm as proof of demand; measure how often those who pre-ordered actually use the product. - If you are building a platform, work out the revenue maths for developers from the start; a few thousand sales per game will keep no one on the platform. - In hardware, the first wave of reviews leaves a lasting mark; think twice before sending an unfinished pre-release version to the press. ## Sources - [Ouya](https://en.wikipedia.org/wiki/Ouya) - [Razer Confirms Acquisition Of Ouya's Software, Tech And Dev Teams In All-Cash Deal](https://techcrunch.com/2015/07/27/razer-confirms-ouya-acquisition) - [Ouya will be shut down for good on June 25th](https://www.theverge.com/2019/5/22/18635800/razer-ouya-kickstarter-gaming-service-shutting-down-june-25) - ['Towerfall,' OUYA's most popular game, only sold 7,000 copies](https://www.engadget.com/2014/04/29/towerfall-tiny-sales-ouya/) --- # QBotix (2010 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/qbotix/ - Sector: Energy and climate - Country: United States - Total funding: $24.5 million - Cause of closure: Lost to competitors ## What did it do? QBotix developed a dual-axis tracking system for solar farms that, instead of putting a separate motor on every row to turn the panels towards the sun, used robots running on rails. The robots, called Solbots, travelled between the rows and adjusted the angle of the panels at regular intervals; the company promised up to 40 per cent more energy than fixed systems with this method. ## Why did it shut down? The company raised $12.5 million from NEA, Firelake Capital, DFJ JAIC and the US Department of Energy's SunShot programme, and in 2014 a further $12 million in a round led by E.ON and Iberdrola. In September 2014 Mike Miskovsky, former CEO of Zep Solar, took over the leadership and founder Wasiq Bokhari became chairman. But the solar industry had become cost-driven; as single-axis trackers became cheaper and more reliable, solar farm developers steered clear of a young start-up's expensive and complex system. In its final months the company turned to licensing its technology and selling software, but according to Fortune this cost-cutting step came too late. Out of cash, QBotix laid off most of its staff and closed its doors in August 2015. ## The story QBotix was a Menlo Park start-up that tackled one of solar power's stubborn cost items with robots. Instead of putting a separate motor and control unit on every row of panels in a sun-tracking system, robots called Solbots, travelling from row to row on rails, adjusted the angle of the panels at regular intervals. The company said this dual-axis system would generate up to 40 per cent more energy than fixed-mount systems and up to 15 per cent more than single-axis trackers. The idea caught the attention of big energy companies. Having raised $12.5 million from NEA, Firelake Capital and DFJ JAIC as well as the US Department of Energy's SunShot programme, QBotix took a further $12 million in 2014 in a round led by E.ON and Iberdrola. In September 2014 Mike Miskovsky, former CEO of Zep Solar, which had been bought by SolarCity, took the helm, and founder Wasiq Bokhari became chairman. At the time the company's order book exceeded 80 megawatts. But the industry was turning to cheap, proven equipment rather than new and expensive technologies. Single-axis trackers became both cheaper and more reliable. Those building solar farms meant to run for years were reluctant to trust the complex robots of a young start-up. In its final months the company turned to licensing its technology and selling its software, but the move came too late. In August 2015 QBotix laid off most of its staff and closed its doors. A farewell note published in Greentech Media said the shrunken team had stayed focused until the last day but had run out of the time and cash needed to finish the job. Fortune, for its part, pointed out that the closure came at a time when the solar industry was growing fast. QBotix became one of the instructive examples of how technical superiority alone is not enough in a commoditising market. ## Lessons - In a commoditising market, technical superiority alone is not enough; if unit cost is the only criterion the customer decides on, prove your product on that criterion first. - Customers buying infrastructure that will run for twenty years ask whether the supplier will be around for that long; proof of reliability and the warranty structure matter as much as the product. - Plan a move to a capital-light model such as licensing before the cash runs out; QBotix's pivot in its final months came too late. ## Sources - [QBotix system uses mobile robots to optimize solar panel orientation](https://newatlas.com/qbotix-tracking-system-solar-array/24087/) - [Zep Solar CEO zips over to run QBotix](https://www.pv-tech.org/news/zep_solar_ceo_zips_over_to_run_qbotix) - [As a Valley solar startup shuts down, the solar sector booms](https://fortune.com/2015/09/22/robot-solar-startup-shut-down) - [Robotic solar tracker startup QBotix closes shop](https://www.solarchoice.net.au/blog/news/robotic-solar-tracker-startup-qbotix-closes-shop-240915/) - [RIP QBotix: Robotic Solar Tracking Fails to Reach the Market](http://www.greentechmedia.com/articles/read/QBotix-Robotic-Solar-Tracking-Fails-to-Reach-the-Market) --- # Quirky (2009 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/quirky/ - Sector: Hardware - Country: United States - Total funding: $169.5 million - Cause of closure: Business model failed ## What did it do? Quirky was an invention platform that connected the ideas of inventors and community members with product development and manufacturing. Products proposed by the community were developed by the company and put on sale. In 2013 it formed a partnership with General Electric for connected home products; it also developed a smart home platform called Wink. ## Why did it shut down? According to The Verge, the model of making community-proposed products was not profitable, and the company tried to move away from it towards partnerships with big companies such as GE. According to the same report, the company was badly run and burning quickly through its remaining funds. Announcing in July 2015 that it had run out of cash, Quirky laid off 111 people and founder Ben Kaufman stepped down as CEO. On 22 September 2015 it filed for Chapter 11 bankruptcy. Wink was sold to Flextronics for USD 15 million, and Quirky's remaining assets were sold to Q Holdings for USD 4.7 million despite GE's objections. ## The story In 2011 the Sundance Channel began airing a reality series set in a start-up's office. The show bore the company's name: Quirky. Founded by Ben Kaufman in New York in 2009, the company quickly became a media darling with its promise to turn ordinary people's invention ideas into products. Quirky's idea was to democratise invention. Community members proposed product ideas, and the company developed, manufactured and sold them. In 2012 CNN presented Quirky as a company bringing invention to the masses. Investors were interested too: USD 6.5 million arrived in April 2010 in a round led by RRE Ventures, USD 16 million in August 2011 led by Norwest Venture Partners, and USD 68 million in September 2012 led by Andreessen Horowitz and Kleiner Perkins. Of the USD 79 million Series D in November 2013, USD 30 million came from General Electric, and the deal also covered jointly developing 30 connected home products over five years. The company also developed a smart home platform called Wink. In 2014 AdWeek wrote that Quirky's advertising put the community, not the CEO, in the spotlight. A total of USD 169.5 million in investment did not make the model profitable. According to a 2015 report by The Verge, the model of making community-proposed products was losing money, and the company was trying to move away from it towards partnerships with big companies. According to the same report, the company was badly run and spending its remaining funds fast. In July 2015 Quirky announced it had run out of cash, laid off 111 people, and Kaufman stepped down as CEO; the company's chief financial officer took his place. On 22 September 2015 the company filed for bankruptcy under Chapter 11. Wink was sold to Flextronics for USD 15 million in November 2015. Quirky's website and most of its products passed to Q Holdings for USD 4.7 million with court approval, despite GE's objections; The Wall Street Journal reported GE as saying that its reputation had been damaged by Quirky. The brand relaunched in 2016 with new owners and new funding, but the original company's story had ended in 2015. Quirky shows that community excitement does not answer the fundamental question of a manufacturing business: whether each product covers its own costs. ## Lessons - In a model where every product needs its own design, tooling and stock, prove that a single product is profitable before increasing the number of products. - Community excitement and media visibility do not cover the cost of low-volume products; validate the sales channel before the product idea. - A deal with a big corporate partner is not a lifeline; reflect in the contract that you are putting the partner's reputation at risk too. ## Sources - [Quirky (company)](https://en.wikipedia.org/wiki/Quirky_(company)) - [Quirky files for bankruptcy and announces plans to sell Wink](https://www.theverge.com/2015/9/22/9371127/quirky-bankruptcy-wink-sale) - [Quirky, an Invention Start-Up, Files for Bankruptcy](https://www.nytimes.com/2015/09/23/business/the-invention-start-up-quirky-files-for-bankruptcy.html) --- # Rdio (2010 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/rdio/ - Sector: Media and entertainment - Country: United States - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Rdio was a music streaming service offering the catalogues of the four major record labels and many independent distributors. Its ad-supported free listening and ad-free subscription options were available in 85 countries. Users could share songs, albums and playlists both within Rdio and on networks such as Facebook and Twitter. ## Why did it shut down? Rdio was competing in a market where rivals such as Spotify had pulled ahead; in 2014 Pando questioned whether the company stood a chance in that race. The company tried to grow through a free listening tier, the video service Vdio and new markets such as India. But these moves did not create sustainable scale. On 16 November 2015 it filed for Chapter 11 bankruptcy and agreed to sell some of its assets and intellectual property to Pandora for $75 million in cash. The service shut down on 22 December 2015. ## The story On 3 August 2010 Skype's founders, Niklas Zennström and Janus Friis, came on stage with a new idea: a music streaming service with strong social features. Rdio brought together in a single app the catalogues of the four major record labels as well as the Merlin network and distributors such as CD Baby and The Orchard. Users could share what they were listening to with friends both within Rdio and on Facebook and Twitter. Over the next five years Rdio moved fast. In 2011 it released an open API for developers and launched in Brazil as Oi Rdio. In April 2013 it opened Vdio for watching films and series; existing subscribers were given $25 of credit for the service. In 2014 it added unlimited free listening alongside subscriptions, and acquired Dhingana, a music service in India, and TastemakerX, a social music discovery service. In September 2013 it signed a deal with radio company Cumulus; the Roku 3 remote had a dedicated Rdio button. Over time the service became available in 85 countries. But the market was increasingly consolidating around a few big players. In a 2014 piece assessing the TastemakerX acquisition, Pando asked whether Rdio stood a chance against Spotify and the rest. The free tier, the video experiment and new countries could not lift the company to its rivals' scale; Vdio's beta was also wound up. On 16 November 2015 Rdio filed for bankruptcy under Chapter 11 and announced it had agreed to sell some of its assets and intellectual property to Pandora for $75 million in cash. The deal was subject to bankruptcy court approval. Some employees moved to Pandora, which planned to use the assets to offer an expanded listening experience. Rdio stopped streaming music on 22 December 2015. Rdio was a product loved for its design and social features. But in a market where everyone licensed from the same record labels, a good interface did not create a lasting competitive advantage. Having split its resources between video, new countries and free listening, the company ended up handing its technology to a bigger rival. ## Lessons - If you offer the same licensed content as your rivals, good design alone is not enough to attract users; look for differentiation in content, distribution or price. - In a business with high licensing costs, launching a video service, new countries and a free tier all at once scatters your focus; become profitable in one market first. - Build relationships with potential strategic buyers before hard times arrive; there is no bargaining power left at the bankruptcy table. ## Sources - [Rdio](https://en.wikipedia.org/wiki/Rdio) - [Pandora To Buy Rdio Assets For $75M In Cash, Rdio Files Ch.11 And Shuts Down Service](https://techcrunch.com/2015/11/16/confirmed-pandora-buys-key-rdio-assets-for-75m-in-cash-rdio-files-ch-11-to-shut-down/) - [Rdio will shut down for good in one week](https://www.engadget.com/2015/12/15/rdio-shutdown-december-22/) --- # Secret (2013 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/secret/ - Sector: Social media - Country: United States - Total funding: $35 million - Cause of closure: Product problems ## What did it do? Secret was an app that let iOS and Android users share anonymous messages with their friends, friends of friends or everyone. What set it apart from rivals such as Whisper was that posts were shown first and foremost to the user's own circle of acquaintances. In early 2014 the app became one of the most talked-about products in Silicon Valley. ## Why did it shut down? One of the app's most prominent uses turned out to be spreading unverified rumours about people and companies, which drew harsh criticism in the press. In August 2014 a court in Brazil issued an injunction banning distribution of the app following complaints of bullying. In December 2014 the company tried to change course with a new version featuring chat, after which co-founder Chrys Bader-Wechseler left. As usage fell, David Byttow shut the company down on 29 April 2015, saying the way people were using the app did not match his original vision. ## The story In December 2013 TechCrunch, working from an SEC filing, reported that David Byttow, former head of Square Wallet, and Chrys Bader-Wechseler, a former product manager at Google, had raised $1.2 million. Nobody even knew what the start-up did; true to its name, Secret was a secret. When the curtain lifted in February 2014, Silicon Valley met its new obsession: an app that let you post anonymously to your circle of friends. What made Secret different was that anonymous messages were shown not to strangers but first and foremost to your friends and their friends. That made every post you read more intriguing. Investors quickly lined up: Kleiner Perkins, Google Ventures and Index Ventures were in the first round. In March 2014, when the company had only three employees, an $8.6 million Series A closed; a $25 million Series B followed in July 2014, taking total investment to around $35 million. In its report on the closure, Forbes called it "the $100 million social app". But the dark side of anonymity soon showed itself. The app became a vehicle for spreading rumours about people and companies; journalist Sarah Lacy criticised this use sharply on PandoDaily. In August 2014 a court in Brazil, at the request of prosecutors, issued an injunction banning distribution of the app following complaints of bullying. The company tightened its photo rules, improved content screening and in December 2014 announced a new version featuring chat. Shortly afterwards Bader-Wechseler left the company. In March 2015 TechCrunch reported that the company was working on new apps and would not shut down its main product; a month later, the decision was reversed. On 29 April 2015 Byttow announced his decision to shut the company down, saying the way people were using the app did not match his original vision. He said he planned to return the remaining money to investors and delete user data. The New York Times read the closure as an example of Silicon Valley companies that flare up and burn out in an instant, and noted that the founders had each cashed out $3 million of shares in an earlier round. Secret is a striking example of how it is users, not founders, who decide how a product is actually used. Anonymity drew attention, but the same feature also wore away the app's reputation and user loyalty. ## Lessons - With user-generated content, design moderation and abuse scenarios before launch; filters added later will not win back a lost reputation. - Regularly measure, from samples of content in the first weeks, which behaviours a powerful feature such as anonymity is rewarding. - In Turkey, orders blocking access to content that violates personal rights can be issued quickly; treat legal risk as part of product design. ## Sources - [Secret (app)](https://en.wikipedia.org/wiki/Secret_(app)) - [A Founder of Secret, the Anonymous Social App, Is Shutting It Down](https://www.nytimes.com/2015/04/30/technology/a-founder-of-secret-the-anonymous-social-app-shuts-it-down-as-use-declines.html) - [Secret, The $100 Million Social App, Shuts Down](https://www.forbes.com/sites/miguelhelft/2015/04/29/secret-the-100-million-social-app-shuts-down/) --- # Sidecar (2011 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/sidecar/ - Sector: Mobility and transport - Country: United States - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Sidecar was a ride-sharing service that connected drivers who owned private cars with passengers through a mobile app. Founded in San Francisco in 2011, the company expanded in 2013 to cities including Boston, New York, Washington and Chicago. In 2015 it also began offering same-day delivery for local businesses using its existing driver network. ## Why did it shut down? Although Sidecar was a ride-sharing pioneer, it was competing in the same cities as far larger rivals such as Uber and Lyft; in 2014 The Wall Street Journal reported that, facing big competitors, the company had enlisted Richard Branson as an investor. Early on it also battled regulators in California and Philadelphia. In 2015 it moved away from passenger transport towards delivery, and by August most of its business was delivery. That shift was not enough either, and on 29 December 2015 the company announced it would shut down. ## The story On 19 January 2016 General Motors announced it had bought the assets and intellectual property of Sidecar, which had shut down a few weeks earlier, and hired co-founder Jahan Khanna and 20 employees. Bloomberg reported it as the carmaker salvaging the company for parts. GM's move followed its $500 million investment in Lyft. One of the pioneers of ride sharing had ended up in the hands of a company that had invested in one of its big rivals. Sidecar was founded in San Francisco in September 2011 by Sunil Paul, Jahan Khanna and Adrian Fortino. The app connected drivers making journeys in their own cars with passengers. In 2012 it raised a $10 million Series A from Google Ventures and Lightspeed Venture Partners; Union Square Ventures and Avalon Ventures were also among its investors. The company launched in Seattle, Los Angeles, Philadelphia and Austin, and in 2013 added Boston, New York, Washington, Charlotte, Chicago, San Diego, Long Beach and Oakland. At the 2013 South by Southwest festival it made all rides free; TechCrunch described this as a transport war breaking out between Uber and Sidecar in Austin. Sidecar was right in the middle of the period when the sector's rules were being written. In autumn 2012 the California Public Utilities Commission sent Sidecar, Lyft and Uber cease-and-desist notices and fined each of them $20,000. An interim agreement reached in 2013 was made permanent, and California became the first state to recognise these services, under the name transportation network companies. In Philadelphia, meanwhile, the service was deemed unauthorised following a sting organised by the parking authority. As the rules became clearer, competition grew fiercer. In 2014 The Wall Street Journal reported that, facing big rivals, Sidecar had enlisted Richard Branson as an investor. In February 2015 the company began using its driver network to deliver goods, food and flowers for local businesses, and partnered with Yelp Eat24. By August 2015 most of its business was delivery. On 29 December 2015 Sidecar announced it would shut down, and it ceased operations on 31 December. Sidecar's story shows that spotting a market early, and helping to write its rules, is not enough to win the race for scale. ## Lessons - Being first is not enough in a market with strong network effects; if you cannot grow driver and passenger density faster than a rival, you lose again in every city. - Early dialogue with regulators helps you shape the rules of the sector; in Turkey, too, plan municipal and UKOME (transport coordination board) processes from the outset in the transport space. - Factor in that a pivot made while retreating from your core market requires different unit economics. ## Sources - [Sidecar (company)](https://en.wikipedia.org/wiki/Sidecar_(company)) - [General Motors Salvages Ride-Hailing Company Sidecar for Parts](https://www.bloomberg.com/news/articles/2016-01-19/general-motors-salvages-ride-hailing-company-sidecar-for-parts) - [Facing Big Ride-Sharing Competitors, Sidecar Enlists Richard Branson](https://blogs.wsj.com/venturecapital/2014/09/15/facing-big-ride-sharing-competitors-sidecar-enlists-richard-branson/) - [https://www.wikidata.org/wiki/Q7508244](https://www.wikidata.org/wiki/Q7508244) --- # Zano (2014 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/zano/ - Sector: Hardware - Country: United Kingdom - Total funding: $3.4 million - Cause of closure: Product problems ## What did it do? Zano was a palm-sized, remote-controlled quadcopter drone with a high-resolution camera, funded on Kickstarter by the UK-based Torquing Group. The project promised features such as autonomous flight and swarm flying. ## Why did it shut down? The team lacked the technical experience and resources to take the product shown in the campaign into mass production. After the CEO resigned in November 2015, the venture collapsed and entered insolvency proceedings. The company managed to ship only around 600 of 15,000 orders, and even those were only partly working devices. Mark Harris, the journalist commissioned by Kickstarter, confirmed that only 4 devices reached backers and wrote that he had found compelling evidence that the promotional videos were faked. ## The story It is not often that Kickstarter commissions a journalist to find out why a project collapsed. Zano earned that attention with the wreckage of one of Europe's biggest Kickstarter campaigns up to that point. The project from the UK-based Torquing Group promised a mini drone that fitted in the palm of your hand, carried a high-resolution camera and could fly by remote control or autonomously. Running from 24 November 2014 to 8 January 2015, the campaign raised £2,335,119 against a £125,000 target. It was billed as “Europe's biggest Kickstarter”, was picked as a staff favourite on the platform and made Popular Science's list of the 100 most notable innovations of 2015. With pre-orders taken after the campaign, the number of orders reached 15,000. Questions surfaced early. In May 2015 Ars Technica asked whether the team had the technical know-how and capacity to build the promised product. On 10 November 2015 CEO Ivan Reedman resigned, citing health problems and irreconcilable differences. Eight days later Ars reported that the venture had collapsed; the company entered insolvency proceedings. By then only around 600 of the 15,000 orders had been shipped, and those devices did not fully work either. On 24 November Torquing apologised to backers and published an unaudited breakdown of its spending. The report of more than 13,000 words by Mark Harris, the journalist commissioned by Kickstarter, revealed that only 4 of the devices distributed had reached Kickstarter backers, with the rest going to customers who pre-ordered after the campaign. Harris concluded that the team had made a serious, good-faith effort to develop the product but lacked the experience and resources to build what it had promised. The report also stated that there was compelling evidence that the promotional videos in the campaign had been faked; these findings came from the journalist commissioned by the platform, not from any official authority. Zano shows how long the distance is in hardware between an impressive promotional video and mass production. The more money you raise, the heavier the burden of delivery becomes; a team's capabilities, however, do not grow with the campaign's success. ## Lessons - Before launching a hardware campaign, have an independent party test a working prototype that is close to mass production. - Overshooting your target many times over is a warning sign; recalculate whether the money raised is enough for manufacturing, certification and support. - Showing backers unrealistic promotional footage destroys trust completely when problems arise. ## Sources - [Torquing Zano](https://en.wikipedia.org/wiki/Torquing_Zano) - [After raising record $3.4M on Kickstarter, UK drone startup collapses](https://arstechnica.com/business/2015/11/after-raising-record-3-4m-on-kickstarter-uk-drone-startup-collapses/) - [Zano: The rise and fall of Kickstarter's mini-drone](https://www.bbc.com/news/technology-35356147) - [Europe's biggest Kickstarter has gone bust after raising $3.6 million](https://www.theverge.com/2015/11/19/9759834/zano-drone-bankrupt-liquidation-kickstarter) --- # Şehir Fırsatı (Groupon Türkiye) (2010 – 2015) - URL: https://girisimcikafasi.com/en/startup-graveyard/sehir-firsati/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Şehir Fırsatı (sehirfirsati.com) went live in April 2010 as the Turkish operation of CityDeal, the Berlin-based group-buying company. Every day it sold discount vouchers for services such as restaurants, spas and events. A month later Groupon bought CityDeal and the site became Groupon's brand in Turkey. ## Why did it shut down? According to Webrazzi, the Turkish tech news site, the Turkish office failed to meet financial expectations, and in its final period sales fell by as much as 60 per cent. To cut costs the company switched from a field sales team that visited venues to telephone sales, but this did not stop the losses. The group-buying market had also been shrinking since 2011; according to a 2012 Webrazzi analysis, the sector's total user numbers fell from 3.4 million to 2.3 million in a year. While local rival Grupanya survived, Groupon chose to exit a market where it saw no profitability. ## The story On the night of 23 April 2010, sehirfirsati.com went live with a 1 TL cinema ticket promotion. The site was the Turkish arm of CityDeal, the Berlin-based company founded by the Samwer brothers that ran group buying in 14 European countries. Emre Ekmekçi was appointed general manager; the company started out with 16 people in six cities. The model was simple: every day it sold discount vouchers for services such as restaurants, spas and events. Growth was fast. According to Webrazzi, the Turkish tech news site, the site reached 100,000 members in a month, and CityDeal invested EUR 2.5 million in Turkey. In May 2010 Groupon bought CityDeal, and overnight Şehir Fırsatı became the Turkish brand of the world's largest group-buying company. Rivals such as Grupanya, Grubal and ekoloni were already in the market; Grupfoni and Yakala.co soon followed. The bright start did not last long. According to a May 2012 Webrazzi analysis, the sector's total user numbers fell from 3.4 million to 2.3 million in a year; Şehir Fırsatı's monthly visitors also dropped from 813,000 to 663,000. As Webrazzi later pointed out, profitability and customer retention were problems the sector had never solved from the start. In August 2015 Webrazzi reported that the Turkish office had failed to meet financial expectations and that sales had fallen by as much as 60 per cent. Groupon had replaced its field sales team with a telephone sales team to cut costs, but the losses did not stop. On 24 August 2015, users visiting the site were greeted with a message announcing that Groupon had ended its operations in Turkey. Customers were given until 30 September for refunds and other transactions. The most striking comment on the closure came from the rival camp. Cem Sertoğlu, one of Grupanya's investors, wrote that the Grupanya team had overtaken its number one rival with far fewer resources. Şehir Fırsatı's five-year story remains an example of how global capital cannot solve local market dynamics on its own. ## Lessons - Global brand power is no substitute for a sales team that builds relationships with businesses in the local market. - In a voucher model without customer loyalty, growth remains dependent on constant marketing spend. - Weakening your sales channel to cut costs can accelerate falling revenue even further. ## Sources - [Groupon announces its withdrawal from Turkey](https://webrazzi.com/2015/08/24/groupon-turkiyeden-cekildigini-resmen-duyurdu/) - [Groupon is pulling out of Turkey [Rumour]](https://webrazzi.com/2015/08/19/groupon-turkiyeden-cekiliyor-duyum/) - [Groupon has withdrawn from the Turkish market](https://www.marketingturkiye.com.tr/haberler/groupon-turkiye-pazarindan-cekildi/) - [Groupon has pulled out of Turkey](https://www.sabah.com.tr/ekonomi/2015/08/25/groupon-turkiyeden-cekildi) - [CityDeal Enters the Turkish Market: SehirFirsati.com](https://webrazzi.com/2010/04/23/citydeal-turkiye-pazarina-girdi-sehirfirsati-com/) - [Groupon Buys CityDeal: Groupon Becomes SehirFirsati.com in Turkey](https://webrazzi.com/2010/05/16/groupon-citydeali-satin-aldi-groupon-turkiyede-sehirfirsati-com-oldu/) - [How far has the group-buying market moved in a year? [Analysis]](https://webrazzi.com/2012/05/31/grup-alisveris-pazari-1-yilda-nereden-nereye-geldi-analiz/) - [Turkish e-commerce sites that closed before Markafoni](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) --- # 99dresses (2010 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/99dresses/ - Sector: Marketplaces - Country: Australia - Total funding: $595K - Cause of closure: Ran out of cash ## What did it do? 99dresses was a swapping marketplace where women uploaded clothes they no longer wore, earned a virtual currency called buttons in return and used it to get clothes from other users. The company first made money by selling extra buttons; in the US in 2013 it switched to a mobile-only app that charged a fee per swap. ## Why did it shut down? After Y Combinator's Winter 2012 batch, Nikki Durkin agreed a USD 1.2 million seed round; but a day after the paperwork was signed, her two co-founders quit and the lead investor pulled out. Durkin eventually raised USD 595,000, but visa problems forced her to run the US market from Australia for months. The mobile app, launched at the end of September 2013, passed 1,000 swaps a week within three months, but as the average value of swapped items fell, revenue from value-based fees stalled. A bridge round that an existing institutional investor was to lead fell through when the firm's other partners grew wary of the competition. With only a few weeks of cash left, the company shut the app in June 2014. ## The story Nikki Durkin started thinking about the idea behind 99dresses when she was just 16, and launched the site in Australia, based in Sydney. The model was simple: women uploaded dresses they no longer wore and earned a virtual currency called buttons, which they used to get clothes from other users. Durkin described it as an infinite wardrobe. According to a TechCrunch report from March 2012, more than 4,000 dresses were uploaded in the first four months in Australia. Durkin went to the US with USD 10,000 she had won in a university business plan competition and was accepted into Y Combinator's Winter 2012 batch. After the programme she agreed a USD 1.2 million seed round. But a day after the paperwork was signed, her two co-founders told her they were leaving the company; the lead investor pulled out, and then another investor backed away. With the five investors who continued to believe in her, Durkin managed to raise USD 595,000. The team rebuilt the product and launched it in the US, but the button system that had worked in Australia failed to win over American users, and Durkin's visa was delayed for months. At the end of September 2013 the company switched to a mobile-only iOS app, and within three months more than 1,000 swaps were taking place every week. Inventory turnover rose from 17 per cent to 50 per cent. When growth slowed, the gaps in the business model became visible: the average value of swapped items was falling, and revenue from value-based fees was stalling. An existing institutional investor agreed to lead a bridge round, but the offer was withdrawn when the firm's other partners grew wary of the competition in the market. The other funds she spoke to wanted either to put in the first money or to lead a Series A. With only a few weeks of cash left, Durkin and her partner decided to wind the app down in an orderly way. In a long essay published in June 2014, Durkin wrote candidly about the loneliness of failure. ## Lessons - Making a round depend on a single lead investor's terms and trying to close everyone at once can cost you all your funding in one unexpected crisis; close commitments one by one where you can. - Talk openly with your co-founders about risk appetite and commitment before the investment is signed; if the team falls apart, the money walks out the door too. - If your revenue depends on the value of the items being swapped, track average item value as transaction volume grows; more volume does not always mean more revenue. ## Sources - [99dresses founder Nikki Durkin announces closure after 4 years](https://www.startupdaily.net/topic/99dresses-founder-nikki-durkin-announces-closure-4-years/) - [My startup failed, and this is what it feels like](https://nikkidurkin.medium.com/my-startup-failed-and-this-is-what-it-feels-like-c5d64b3ae96b) - [99dresses Wants To Give Women An Infinite Closet](https://techcrunch.com/2012/03/26/99dresses-wants-to-give-women-an-infinite-closet/) - [99dresses (YC W12) launches iOS app and goes mobile-only for clothing swaps](https://www.ycombinator.com/blog/99dresses-yc-w12-launches-ios-app-and-goes-mobile-only-for-clothing-swaps/) --- # Aereo (2012 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/aereo/ - Sector: Media and entertainment - Country: United States - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Aereo rented each subscriber a small aerial of their own and a cloud recorder housed in a remote warehouse, letting them watch local television channels live or recorded on internet-connected devices. The service launched in New York in March 2012 and then spread to cities such as Boston and Atlanta. Monthly plans started at USD 8 for 20 hours of recording space. ## Why did it shut down? The major broadcasters sued Aereo for distributing their content without paying the retransmission fees they collected from cable operators. The dispute went all the way to the US Supreme Court, which ruled 6–3 in June 2014 that Aereo was no different from a cable operator and was therefore infringing copyright. The company suspended its service three days later and refunded its subscribers. With no model left that could survive without paying licence fees, it filed for Chapter 11 bankruptcy in November 2014. Its assets were sold to TiVo for USD 1 million in March 2015. ## The story On the last Saturday of June 2014, at 11.30 New York time, Aereo subscribers' screens went dark. The company had announced that it was pausing its service following the ruling handed down by the US Supreme Court three days earlier. The experiment, which had lasted a little over two years, showed how fragile a business built on the fine line between technology and law can be. Founded by Chet Kanojia, Aereo opened to customers in New York in March 2012 and was backed by Barry Diller's IAC. The model worked like this: each subscriber rented a tiny aerial belonging to them alone, housed in a remote warehouse, along with a cloud-based recorder. Through that aerial users could watch local channels live on their computer, iPad or Roku device, or record them to watch later. Monthly plans started at USD 8. After New York the service spread to cities such as Boston and Atlanta; by the end of 2013 it had reached around 80,000 subscribers. The broadcasters saw things very differently. Retransmission fees paid by cable operators could account for up to 10 per cent of a broadcaster's revenue, and Aereo was distributing that content without paying anything. The lawsuits made their way to the Supreme Court. At the heart of the dispute was whether what Aereo did counted as a public performance under copyright law. On 25 June 2014 the court ruled 6–3 that, despite the differences in technology, Aereo was no different from a cable operator and was infringing the rights holders' rights. The ruling rendered the company's entire architecture pointless. The individual aerial idea had been designed to get around the law on a technicality; once the court said this detail did not change the essence of the service, what was left was a start-up obliged to pay licence fees but with no revenue to cover them. Kanojia contested the ruling in an open letter to customers, but Aereo filed for Chapter 11 bankruptcy in New York on 21 November 2014. In March 2015 the digital video recorder company TiVo bought Aereo's assets for USD 1 million. Aereo's story is a reminder that a product users love is not enough on its own. If a product's value comes from distributing other people's content for free, the business model depends either on a deal with the rights holders or on a court ruling. Aereo bet on the second and lost. ## Lessons - If your business model depends on a regulatory loophole, plan for the worst-case court ruling from the outset; in fields such as broadcasting, talk early to the regulator (in Turkey, RTÜK) and to rights holders. - Rather than trying to get around a legal definition with a technical workaround, make revenue sharing with rights holders part of the product. - If you directly threaten the revenue of big players, write into your financing plan that the risk of litigation will grow as you do. ## Sources - [Aereo](https://en.wikipedia.org/wiki/Aereo) - [Aereo loses to broadcasters in Supreme Court fight for its life](https://www.theverge.com/2014/6/25/5801052/aereo-supreme-court-ruling/in/2779059) - [Aereo Files For Chapter 11 Bankruptcy](https://techcrunch.com/2014/11/21/aereo-files-for-chapter-11-bankruptcy/) --- # Argyle Social (2010 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/argyle-social/ - Sector: Advertising and marketing - Country: United States - Total funding: $1.6 million - Cause of closure: Lost to competitors ## What did it do? Argyle Social was a software service that let marketers and agencies manage multiple social media accounts from a single dashboard, schedule posts and measure results. The platform integrated with marketing automation tools such as Marketo, Pardot and Silverpop. ## Why did it shut down? The company launched in October 2010 with USD 325,000 in seed funding and raised around USD 1.2 million more in September 2011 in a round led by Madison River Ventures. In November 2012 founding CEO Eric Boggs stepped down and was replaced by chief technology officer Adam Covati; the company had 11 employees at the time. As the social media marketing space heated up with big acquisitions by Salesforce, Adobe and Oracle, rivals raised heavy capital and poured it into sales and marketing. The cost of keeping up with constantly changing social network interfaces strained the small team, and Covati said they were in no position to raise new capital. When months of searching for a strategic partner came to nothing, Covati announced in April 2014 that the service would close on 31 May 2014. ## The story Argyle Social was founded in 2010 in Durham, North Carolina, at a time when social media was still a new marketing channel for companies. Started by Eric Boggs and Adam Covati, the company built software that let marketers manage multiple accounts from one place, schedule posts and measure their results. Covati had previously been a product manager at Bronto, a Durham-based email marketing company. The company raised USD 325,000 in seed funding in October 2010 and around USD 1.2 million more in September 2011 in a round led by Madison River Ventures. In November 2012 the leadership changed: founding CEO Eric Boggs stepped down and chief technology officer Adam Covati took the helm. Argyle, which had 11 employees at the time, shifted its focus to social media marketing automation and built integrations with tools such as Marketo, Pardot and Silverpop. The space quickly became crowded. As Salesforce, Adobe and Oracle entered the market with big acquisitions, rivals raised serious capital and expanded their sales teams. According to Covati, the cost of staying compatible with constantly changing social networks was high; strategic partners, while finding the product exciting, also thought the market was still a little early. Covati admitted that they were in no position to raise new capital and were fighting a losing battle. Writing to employees and customers in April 2014, Covati announced that the platform would close on 31 May 2014. Over four years, around 500 companies had used Argyle. Covati described his biggest regret as not continuing to invest in their own marketing while selling marketing tools to their customers. ## Lessons - If your product depends on other companies' interfaces, build the ongoing cost of keeping those integrations alive into your pricing and team plan from the start. - In a category where well-capitalised rivals are growing fast, it is hard to survive as a general-purpose tool without focusing on a specific customer segment. - While selling marketing tools to your customers, do not cut investment in your own marketing; that was the founder's biggest regret. ## Sources - [Argyle Social is no longer in fashion: Startup shuts down (exclusive)](https://venturebeat.com/2014/04/16/argyle-social-is-no-longer-in-fashion-startup-shuts-down-exclusive) - [When Startups Fail… Argyle Social Shutdown a Sign of the Times](https://wraltechwire.com/2014/04/21/when-startups-fail-argyle-social-shutdown-a-sign-of-the-times-14421/) - [ArgyleSocial replaces one of its founders as CEO](https://wraltechwire.com/2012/11/23/argylesocial-replaces-one-of-its-founders-as-ceo/) --- # BERG (2005 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/berg/ - Sector: Hardware - Country: United Kingdom - Total funding: $1.3 million - Cause of closure: No market need ## What did it do? BERG began in London as a design studio providing strategy and product design consultancy to technology companies, and was behind projects such as the iPad magazine platform Mag+. In 2013 it became a product company, putting the spotlight on Little Printer, an internet-connected mini thermal printer, and the BERG Cloud platform, which aimed to make developing connected devices easier. ## Why did it shut down? In 2013 the studio turned from consultancy into a product-focused start-up, and in October 2013 it raised $1.3 million from Index Ventures, Initial Capital and Connect Ventures. The investment was meant to turn BERG Cloud into a platform that made hardware development as easy as web development. About a year later, however, its products had not reached the scale needed to create a sustainable business. On 9 September 2014 Matt Webb announced that the studio would close, explaining that they had not managed to build a sustainable business in connected products. A small team kept Little Printer running until 31 March 2015; the company proposed open-sourcing the code and handing the hardware business to a buyer who would keep supporting it. ## The story BERG's roots go back to a design studio founded in London in 2005. Run by Matt Webb and Jack Schulze, the studio was known for experimental work where technology meets everyday objects, and it provided strategy and product consultancy to technology companies. Mag+, a magazine platform developed for the iPad, was one of the standout projects of this period. The studio's best-loved product was Little Printer. First shown in 2011 and opened for pre-orders in August 2012, the small device printed news and messages selected from the internet on thermal paper, like a personalised mini newspaper. The product attracted wide attention in the technology and design press. In 2013 BERG turned from consultancy into a product company. In October 2013 it raised $1.3 million from Index Ventures, Initial Capital and Connect Ventures. The goal was to make developing connected devices as easy as developing a web app through a platform called BERG Cloud; to that end, the company also produced developer add-ons that worked with boards such as the Raspberry Pi. About a year later, on 9 September 2014, Matt Webb announced that the studio would close. According to Webb, they had not managed to build a sustainable business in connected products. As the company went into hibernation, a small team kept Little Printer going until 31 March 2015. BERG proposed open-sourcing the code and selling the hardware business to a company that would commit to continuing support. BERG's story shows how hard it can be for a talented team that entered the internet of things before the concept went mainstream to turn a much-loved design into a lasting revenue model. ## Lessons - When moving from consultancy to a product company, accept that the revenue model changes fundamentally; prove that the product will sell before the cash flow from client projects dries up. - A device loved by the press and design circles does not mean repeat demand; measure how often users come back to the product after the sale. - Trying to sell a platform to others alongside your own device splits your attention; first capture sustainable demand with a single product. ## Sources - [Early Internet of things startup Berg, maker of the 'Little Printer,' is shutting down](https://venturebeat.com/business/early-internet-of-things-startup-berg-maker-of-the-little-printer-is-shutting-down/) - [Little Printer will stop working next March as its creator shuts down](https://www.engadget.com/2014-09-10-little-printer-shutdown.html) - [BERG closes seed round to build on Little Printer and Twitter Clock](https://growthbusiness.co.uk/berg-closes-seed-round-to-build-on-little-printer-and-twitter-clock-10447/) - [Studio](https://berglondon.com/studio/) --- # Céidot Oyun Stüdyoları (2004 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/ceidot/ - Sector: Gaming - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Céidot was a game studio founded in 2004 at the Bilkent University technology park in Ankara, Turkey, by a team who dreamed of making their own 3D game. It pitched its ambitious project, Hükümran Senfoni, to publishers at international events such as GDC, then released the browser game Hükümran Senfoni Online, the Facebook game Umaykut and the strategy game Céiron Wars. In its final years the studio was based at ODTÜ Teknokent, the technology park of Middle East Technical University. ## Why did it shut down? According to an interview Webrazzi, the Turkish tech news site, conducted with founder Erkan Bayol, the studio's first big project failed to win backing because international publishers doubted whether skilled talent could be found in Turkey. The browser version, Hükümran Senfoni Online, was launched without a revenue model and triggered the first financial crisis. Umaykut was a success, but the switch to Facebook Credits cut its revenue sharply; the game was sold to Peak Games and later shut down. Céiron Wars, on which great hopes rested, was judged too complex for a browser game and never reached the audience it needed. In the second half of 2013 the team began to break up because of financial difficulties, and a server attack in February 2014 accelerated the loss of players. In Webrazzi's assessment, the lack of a solid business plan was decisive at every stage. ## The story Céidot's story began in 2004 at the Bilkent University technology park, with a handful of young people who dreamed of making their own 3D game. The team aimed high: they would produce their own trailers and even write their own game engine. When they went to the Game Developers Conference in San Jose in 2006, they met around 25 publishers, including Microsoft and Sony. According to founder Erkan Bayol, speaking to Webrazzi, the publishers liked Hükümran Senfoni's story and visuals but asked whether, if the game took off, enough skilled people could be found in Turkey to keep the work going. When the big project failed to find a publisher, the team turned to a browser game, Hükümran Senfoni Online. Backed by the Turkish portal Mynet, it became popular, but it had a significant flaw: there was no revenue model. That led to the studio's first financial crisis. Next came Umaykut, developed for Facebook, which according to Webrazzi reached around 3.5 million players in three years. But Facebook's move of its payment system to Credits meant, by Bayol's reckoning, a 50 per cent loss of revenue. Umaykut was eventually sold to Peak Games and shut down some time later. The team poured all its energy into Céiron Wars. It was a carefully designed browser game with real-time battles; yet it demanded too much commitment amid the pace of everyday life. Although it launched in early 2013, it never reached the audience it needed. In the second half of that year departures began because of financial difficulties; by December only 5 people remained of a team of around 15. According to Bayol's farewell letter, published on the Turkish gaming site Oyungezer, the last employees left the studio in December 2013. The same letter says that Céidot remained an active company on paper after that date but had in practice closed; in March 2014 the office at ODTÜ Teknokent was vacated too. A server attack in February 2014 accelerated the loss of players, and Céiron Wars was shut down on 19 March 2014. In Webrazzi's assessment there were different mistakes at every stage, but what was missing throughout was a solid business plan. Céidot left behind three games and a generation of skilled developers now working at companies in Turkey and abroad. ## Lessons - Design the revenue model alongside the game; monetisation bolted on afterwards rarely works. - A single change in platform rules (such as a payment commission) can wipe out half your revenue; diversify your dependencies. - Alongside passion for the product, the team needs someone who thinks commercially and understands the business dynamics of the industry. ## Sources - [Céidot has closed, but it will remain a success story!](https://webrazzi.com/2014/05/09/ceidot-kapandi-ama-bir-basari-hikayesi-olarak-kalacak/) - [Céidot Closes Its Doors](https://oyungezer.com.tr/haber/ceidot-kapilarini-kapatti) - [Céidot's Farewell Letter](https://oyungezer.com.tr/haber/ceidotun-veda-mektubu) - [Céidot game studio bids farewell to the industry!](https://webrazzi.com/2014/04/21/ceidot-oyun-studyosu-sektore-veda-etti/) - [Post-mortem: Céidot game studio has closed](https://dijitaloyun.wordpress.com/2014/04/23/post-mortem-ceidot-oyun-studyosu-kapandi/) --- # Desti (2011 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/desti/ - Sector: Travel - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Desti was an iPad travel guide app spun out of SRI International, drawing on the super intelligence work at SRI that formed the basis of Siri. Users could search in everyday language and get recommendations for their destination, saving the results as collections; the app extracted meaningful facts and sentiments from reviews and summarised them. ## Why did it shut down? Founded by Nadav Gur and Imri Goldberg in 2011, the company launched its iPad app in November 2012 with $1 million in seed funding from Horizons Ventures, and became an SXSW Accelerator finalist in 2013. The app emphasised its impartiality, stressing that it took no booking or promotional fees from hotels. At the end of May 2014 HERE, Nokia's mapping unit, bought the company and planned to use Desti's technology to make its own location search more personal and intelligent. The app was removed from the App Store and the service was shut down on 3 September 2014. After that date, users could no longer access their searches or saved trips. ## The story Desti came out of the super intelligence research at SRI International, also the origin of Apple's Siri. Technology from SRI's CALO project was this time aimed at users planning holidays. Nadav Gur, a serial entrepreneur with ten years' experience in mobile travel, and Imri Goldberg, a software developer and entrepreneur, founded the company in Menlo Park, California, in 2011. Launched in November 2012 with $1 million in seed funding from Horizons Ventures, the iPad app tried to understand users' questions in natural language. When a user typed what they were looking for in an everyday sentence, Desti scanned content on the web, offered recommendations and summarised the meaningful facts and sentiments in reviews. The company stressed that it took no booking or promotional fees from hotels, and that its assessments were therefore impartial. Desti became an SXSW Accelerator finalist in 2013. At the end of May 2014 HERE, Nokia's mapping and location unit, bought Desti. The plan was to add Desti's technology to HERE's location search to make searches more personal and intelligent. The app was removed from the App Store, and the company announced that the service would end on 3 September 2014. Users were asked to share their itineraries with themselves or their travel companions so as not to lose their saved trips. Desti's story reflects a common scenario in which powerful technology, rather than surviving as an independent consumer product, becomes part of a large company's infrastructure. The team and technology lived on inside the new owner, but the app users knew closed less than two years after its public launch. ## Lessons - Technology from a strong research institution is not a business model on its own; test what users will pay for as seriously as you test the technology. - Being acquired may be an exit for the founders, but for users it can be the end of the product; offer a clear way to export their data during the shutdown. - Promising impartiality by refusing hotel and booking commissions earns trust but narrows your revenue options; work out the cost of that choice from the outset. ## Sources - [Following acquisition by Nokia HERE, Desti to shut down on September 3](https://thenextweb.com/news/following-acquisition-nokia-desti-shut-september-3) - [Plan Your Next Trip With Desti, A Conversational iPad App Spun Out From Siri-Creator SRI](https://techcrunch.com/2012/11/08/sri-desti-launch/) - [Desti](https://en.wikipedia.org/wiki/Desti) - [Desti has joined the team at HERE (archived copy)](https://web.archive.org/web/20140704043106/http://desti.com/) --- # Metrekare.com (2013 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/metrekare-com/ - Sector: Real estate and construction - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Metrekare.com was a Turkish property listings site that presented homes for sale and rent with larger photos, district- and neighbourhood-level price analysis and information about the surrounding area. Alongside the website, its Android and iOS apps let users see nearby homes and estate agents' offices. It planned to make its money from annual memberships paid by estate agents. ## Why did it shut down? According to founder Serhat Karahan, the biggest gap was that nobody on the team knew the property sector from the inside. Estate agents were happy with Sahibinden.com and Hürriyet Emlak, Turkey's established listings platforms, and saw no good reason to use a new site. Giving membership away free at first devalued the service; paid memberships became hard to sell, and the free accounts were barely used. Despite a plan forecasting 10 million lira in revenue over five years, there was almost no revenue at the end of the first year. The team began to see in April 2014 that the business would not work, and in June 2014, with the investors' approval, decided to liquidate the company. ## The story After Boğaziçi University, Serhat Karahan had worked at McKinsey and Rocket Internet before joining the venture capital firm Earlybird in 2012. While scouting investment opportunities there, he focused on property and became convinced that the home-search experience could be improved: listings were duplicated, old listings kept circulating and photos were tiny. Together with his university friends Halil Akın and Arda Bayındır, he launched Metrekare.com in 2013 as a next-generation property listings site. The start was bright. Earlybird made its first investment in Turkey in Metrekare, together with Aslanoba Capital. According to a December 2013 report by Webrazzi, the Turkish tech news site, the amount was not disclosed, but Karahan said it was a seven-figure sum. Within a few months the site had reached close to 100,000 listings, released its mobile apps and built a team of 13. Neighbourhood-level price analysis, local information such as schools and metro stations, and street view were features its rivals lacked at the time. As Karahan told Fast Company in 2020, the trouble started with the fact that nobody on the team knew the sector from the inside. Estate agents were happy with Sahibinden.com and Hürriyet Emlak; they could not see why a new site was needed. The team reached 5,000 estate agents in its first year, but giving membership away free at first devalued the service. They struggled to sell paid memberships, and the free accounts were barely used. The plan forecasting 10 million lira in revenue over five years did not hold up; at the end of the first year there was almost no revenue. In April 2014 the team began to see that the business would not work on this model, and in June 2014 the decision was taken to close it. Webrazzi listed Metrekare's closure among the week's highlights in Turkey in the last week of June 2014. By Karahan's account, the investors were surprised at first but, once they saw the picture, approved the liquidation of the company. The team, which had grown to 20, broke up, and in the years that followed Karahan returned to corporate life. Looking back, Karahan says that before starting he should have visited dozens of estate agents to learn the problem in the field, brought someone who knew the sector into the leadership team and worked with more experienced developers. Metrekare's story shows that a good product and strong investors are not enough to keep a start-up alive if it cannot give customers a reason to change their habits. ## Lessons - Before writing any code, learn the problem you are trying to solve in the field, alongside the customer. - If you do not know the sector, bring someone who does into the leadership team from the very start. - Turning a service you have given away for free into a paid one is harder than you think. - Being better than the incumbent is not enough; give customers a clear reason to switch. ## Sources - [Serhat Karahan: "Why did I shut down my start-up?"](https://fastcompany.com.tr/yaraticilik/serhat-karahan-girisimimi-neden-kapattim/) - [Property listings investment from Aslanoba Capital and Earlybird Venture Capital: Metrekare.com](https://webrazzi.com/2013/12/18/metrekare-com-aslanoba-earlybird-yatirim/) - [Week in Review: Android One, Android TV, Uber Istanbul, Metrekare.com, Twiplomacy](https://webrazzi.com/2014/06/27/haftanin-ozeti-android-one-android-tv-uber-istanbul-metrekare-com-twiplomacy/) --- # Mt. Gox (2010 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/mt-gox/ - Sector: Crypto and blockchain - Country: Japan - Total funding: unknown - Cause of closure: Product problems ## What did it do? Mt. Gox was a bitcoin exchange based in Tokyo's Shibuya district, where users traded bitcoin against conventional currencies. Launched by programmer Jed McCaleb in July 2010, it was sold to the French developer Mark Karpelès in March 2011. By early 2014, more than 70 per cent of the world's bitcoin transactions were passing through the platform. ## Why did it shut down? From 2011 onwards the exchange was dogged by security breaches, technical glitches and delayed withdrawals. In February 2014 it halted trading, and at the end of the month announced that around 750,000 customer bitcoins and some 100,000 of its own had gone missing, roughly 7 per cent of all bitcoins in existence at the time. The bankruptcy protection filing made in Tokyo turned into liquidation in April 2014. A 2015 investigation by the security firm WizSec concluded that most of the missing bitcoins had been stolen from the exchange's hot wallet from late 2011 onwards. In March 2019 the Tokyo District Court, the court of first instance, found former CEO Mark Karpelès guilty of falsifying records but acquitted him of the other charges, including embezzlement. ## The story Mt. Gox took its name from a card game. In 2007 the programmer Jed McCaleb bought the domain mtgox.com so that players of Magic: The Gathering Online could trade their cards like shares. The project was soon shelved. In July 2010, after reading about bitcoin, McCaleb decided the new currency needed an exchange and turned the idle domain into a bitcoin trading platform. In March 2011 McCaleb sold the site to Mark Karpelès, a French developer living in Japan. Run from Tokyo's Shibuya district, the exchange grew alongside bitcoin itself, and between 2013 and 2014 it was handling more than 70 per cent of the world's bitcoin transactions. The growth was far from smooth. In June 2011 bitcoins were stolen from user accounts and fraudulent trades briefly crashed the price on the exchange. In 2013 US authorities seized funds in the company's American accounts, and the same year Wired reported that customers were waiting weeks, even months, to withdraw their money. In February 2014 the exchange suspended all trading and took its website offline. At the end of the month the company filed for bankruptcy protection in Tokyo and disclosed that it had lost around 750,000 bitcoins belonging to customers and around 100,000 of its own. That was roughly 7 per cent of all bitcoins at the time, worth about USD 473 million. Some 200,000 bitcoins were later found in an old wallet, but the restructuring plan failed and liquidation began in April 2014. In 2015 the Tokyo-based security firm WizSec concluded that most of the missing bitcoins had been stolen from the exchange's hot wallet over time, starting in late 2011. The legal process dragged on too. Japanese police arrested Karpelès in August 2015 on fraud and embezzlement charges. In March 2019 the Tokyo District Court, the court of first instance, found him guilty of falsifying records to inflate the company's assets by USD 33.5 million and handed him a 30-month prison sentence suspended for four years; he was acquitted of the other charges, including embezzlement. In 2021, 99 per cent of creditors approved a rehabilitation plan. The collapse of Mt. Gox pushed Japan to draw up its first formal regulations for crypto exchanges. The message for founders is clear: a business that holds other people's money is as much about security and internal controls as it is about the product. ## Lessons - If your platform holds customer assets, put cold storage, proof of reserves and independent security audits in place before you scale. - Do not paper over early warning signs such as delayed withdrawals with reassuring messages; pause growth until you have found the root cause. - Never leave critical financial systems under one person's control; segregation of duties and internal controls are basic requirements, even in new fields like crypto. ## Sources - [Mt. Gox](https://en.wikipedia.org/wiki/Mt._Gox) - [Mt. Gox files for bankruptcy, blamed hackers for losses](https://www.reuters.com/article/us-bitcoin-mtgox-bankruptcy-idUSBREA1R0FX20140228) - [Mt. Gox abandons rebuilding plans and files for liquidation: WSJ](https://www.theverge.com/2014/4/16/5619636/mt-gox-asks-for-permission-to-liquidate) - [https://www.wikidata.org/wiki/Q11292289](https://www.wikidata.org/wiki/Q11292289) --- # OpTier (2002 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/optier/ - Sector: Enterprise software (SaaS) - Country: United States - Total funding: $100 million - Cause of closure: Lost to competitors ## What did it do? OpTier was a software company that tracked business transactions as they flowed through large organisations' infrastructure, tier by tier, from web and application servers to legacy mainframes and databases. Its CoreFirst product, launched in December 2005, aimed to catch slow or stalled transactions in real time and keep business services from being disrupted. ## Why did it shut down? By 2005 the company had won early customers such as a Fortune 50 financial institution, a major mobile operator and a government agency. In September 2008 it accelerated its growth with a $47.5 million Series D joined by Index Ventures and Morgan Stanley. In March 2011 Morgan Stanley was reported to be seeking a buyer for the company at a valuation of $250 million to $300 million, but no sale took place. Meanwhile the market shifted towards application performance monitoring tools offering visibility right down into the code, and according to 451 Research OpTier moved into this space late. In May 2014 Gartner analyst Jonah Kowall reported that the company had ceased operations and, despite raising more than $100 million, had failed to keep up with the change in its market. ## The story OpTier was founded in New York in December 2002 by Israel Mazin, Yori Lavi and Amir Alon. The team started by asking what gave large companies' IT departments the most trouble, and built a product that tracked a transaction's journey from the web server to legacy mainframes and on to the database. CoreFirst, launched in December 2005, promised to catch slowing transactions in real time and protect business services from outages. In its early days the company worked with a Fortune 50 financial institution, a major mobile operator and a government agency. Investors were interested too. Backing that began with Carmel Ventures, Lightspeed and Pitango grew in September 2008 with a $47.5 million Series D joined by Index Ventures and Morgan Stanley, plus a $15 million credit line. In March 2011 Morgan Stanley was reported to be looking for a buyer or a large strategic investor at a valuation of $250 million to $300 million, but no sale took place. Meanwhile the market was changing. Application performance monitoring was moving towards tools that went right down into the code. While AppDynamics and New Relic, both founded after OpTier, reached valuations of around a billion dollars, 451 Research wrote that OpTier had moved into this more valuable space late. In May 2014 Gartner analyst Jonah Kowall announced that the company had ceased operations, noting that despite raising more than $100 million it had failed to keep up with changes in the market. According to 451 Research, some of the company's assets may later have passed cheaply to SAP. OpTier's story shows that even a start-up that begins by asking the right question about a customer's real pain cannot survive on the size of its funding alone if it fails to renew its product when customers' questions change. The company served large organisations for twelve years but missed the next wave of technology. ## Lessons - When the centre of gravity in your market shifts to code-level visibility, leading at transaction level is not enough; update your roadmap early to answer customers' new questions. - Use big funding rounds to finance the move into a new product category, not to scale up an ageing model. - If a sale process run through an investment bank fails to find a buyer, treat it as an early signal of what the market thinks your product is worth, and rebuild your strategy at that point. ## Sources - [10 start-ups to watch: OpTier](https://www.networkworld.com/article/863751/infrastructure-management-10-start-ups-to-watch-optier.html) - [OpTier raises $63 million in funding](https://networkworld.com/article/2276439/optier-raises--63-million-in-funding.html) - [Morgan Stanley seeks $300m buyer for OpTier](https://www.globes.co.il/news/article.aspx?did=1000635069) - [Gartner Reports: OpTier Shuts Down Operations](https://www.apmdigest.com/gartner-reports-optier-shuts-down-operations) - [Did SAP exercise an opportunistic option for OpTier?](https://blogs.the451group.com/techdeals/application-software/did-sap-exercise-an-an-opportunistic-option-for-optier/) --- # Springpad (2008 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/springpad/ - Sector: Consumer apps - Country: United States - Total funding: $7 million - Cause of closure: Business model failed ## What did it do? Springpad was a free personal organisation app that let users gather the content they came across online, their notes and their to-dos in one place and arrange them into collections. Developed by Boston-based Spring Partners, the service ran on a website and mobile apps. ## Why did it shut down? Springpad grew its user numbers but could not turn its free model into revenue. With total investment of only around $7 million, the company failed to build a distinctive identity next to Evernote and its more than 100 million users. In August 2013 Jacqueline Hampton, formerly of Time Inc., was brought in as CEO, and content partnerships with publishers were tried. Unable to raise a Series B, the company announced on 23 May 2014 that it would shut down, and the service ended on 25 June 2014. ## The story Springpad went live in November 2008, at a time when phones and computers were turning into notebooks. A product of Spring Partners in Boston's Charlestown neighbourhood, the app was the work of co-founders Jeff Janer and Jeff Chow. The idea was simple: users would gather the content they came across online, their notes and their to-dos in a single place and arrange them into collections. The product was well liked. According to figures Janer gave in November 2013, Springpad had reached around 5 million registered users. In 2013 the company went through a Pinterest-inspired redesign, and in August 2013 it brought in Jacqueline Hampton, Time Inc.'s vice president of corporate development, as CEO. Hampton aimed to turn saved content into projects and build partnerships with publishers such as Real Simple. But Springpad faced two big obstacles. First, in the same space there was a far better-funded rival in Evernote, which had passed 100 million users. Second, the free product had no serious revenue model. The company had raised around $7 million in total and could not close a Series B. On 23 May 2014 Springpad announced it would shut down on 25 June. At the time of closure more than 400,000 people were actively using the service. The company offered users the option to export their data or move it directly into their Evernote accounts. During the shutdown, co-founder Jeff Chow and four engineers joined Google. Jeff Janer later summed it up by saying they had built a very good product but had not built a business. Springpad's story is a reminder that user affection alone does not keep a company alive. ## Lessons - In a free consumer product, do not leave the revenue model until after growth; even 5 million registered users will not carry a company if there is no way to make money. - Define a clear point of differentiation for a product that does the same job as the market leader; otherwise users and investors alike will see you as an alternative to the leader. - Prepare a shutdown and data-migration plan in advance in case the next round does not come; Springpad offering users export and transfer to Evernote preserved trust. ## Sources - [Springpad](https://en.wikipedia.org/wiki/Springpad) - [Note Taking Service Springpad Is Closing Down June 25th, Data Export Tool Available Soon](https://www.androidpolice.com/2014/05/23/note-taking-service-springpad-is-closing-down-june-25th-data-export-tool-available-soon/) - [RIP Springpad. We will miss you](https://www.techtimes.com/articles/7463/20140523/evernote-rival-springpad-shutting-down.htm) - [Springpad's New CEO Hails from TIME](https://siliconangle.com/2013/08/13/springpads-new-ceo-hails-from-time-her-2-pronged-strategy-to-mash-old-new-school-media/) --- # Tablet Seminerler (2013 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/tablet-seminerler/ - Sector: Education - Country: Turkey - Total funding: unknown - Cause of closure: Team problems ## What did it do? Tablet Seminerler was a Turkish education start-up designed by futurist Ufuk Tarhan and launched together with Emrah Kaya, founder of Youtholding. Seminars of up to three hours on topics such as digital marketing, social media, careers and lifestyle were sold through its website, while attendance took place in person in Istanbul after working hours or at weekends. Participants received a certificate, and seminar prices ranged from 69 to 99 TL. ## Why did it shut down? The platform began running courses in September 2013 and closed only five months later, in February 2014. In a statement to Hürriyet, investor Hasan Aslanoba gave the founders' other commitments and their inability to focus sufficiently on the project as the main reason for the failure. According to Aslanoba, the second problem was that the model never moved fully to online seminars; the burden of physical venues and organisation made customer acquisition harder. egirişim also reported that the information on the site stopped being updated after a while and that the courses were halted. The closure went on record as the first start-up to fail among the roughly 40 investments Aslanoba had made since December 2012. ## The story In 2013 Ufuk Tarhan, a futurist and founder of M-GEN, designed a new format for adult education. Named after medicine tablets, Tablet Seminerler promised to deliver practical knowledge about work and everyday life from the mouth of an expert, in short, concentrated doses. The project was developed under the umbrella of Youtholding, founded by Emrah Kaya. In March 2013 Webrazzi, the Turkish tech news site, announced that the start-up had received 500,000 TL in angel investment from Hasan Aslanoba, former CEO of Erikli Su. According to Hürriyet, Aslanoba took a 20 per cent stake in return. The model was simple: users chose a seminar online and paid for it, attended a session of up to three hours held in Istanbul after work or at the weekend, and received a certificate of attendance at the end. Topics ranged from digital marketing to social media and from careers to lifestyle. According to Tarhan's introductory article in Martı Dergisi, seminar prices ranged from 69 to 99 TL; offering the seminars to companies as gifts or as a loyalty programme was also being considered. The new office and e-commerce site opened in September 2013, with the first course scheduled for the last day of the month. The start-up, however, failed to gain momentum. According to egirişim, the content on the site stopped being updated after a while and the courses were halted. In February 2014 Hürriyet reported that Tablet Seminerler had closed within five months and that it was the first start-up among Aslanoba's investments to fail. Aslanoba attributed the closure to two causes. The first was a lack of focus: the founders had other businesses too and could not give the project the energy it needed. Aslanoba summed this up with the words "Being a serial entrepreneur doesn't really work." The second was the model itself: in his view, the seminars would have stood a chance had they been moved to a fully online format, because the burden of physical venues and organisation had made customer acquisition harder. Aslanoba said he remained open to investing in education but would from then on prefer start-ups that had gained a certain momentum and had regular customers. Tablet Seminerler remained one of the early examples, from the years when angel investment was gathering pace in Turkey, of how quickly a good idea can fizzle out without a full-time team. ## Lessons - A start-up run as a side project will not grow, even with investment; full-time focus is essential. - If you sell a product online and deliver it offline, work out the logistical burden from the start. - In education, demand depends not only on price but also on ease of access. ## Sources - [Tablet Seminerler receives 500,000 TL in angel investment](https://webrazzi.com/2013/03/07/tablet-seminerlere-500-bin-tllik-melek-yatirim-geldi/) - [Tablet Seminerler closes: one of Aslanoba's investments fails for the first time](https://www.hurriyet.com.tr/ekonomi/tablet-seminerler-kapandi-aslanobanin-ilk-kez-bir-yatirimi-batti-25890808) - [Aslanoba's first failed investment and why: "Tablet Seminerler"](https://egirisim.com/2014/05/04/aslanobanin-ilk-basarisiz-yatirimi-ve-nedeni-tablet-seminerler/) - [A new education model: Tablet Seminerler](https://www.martidergisi.com/yeni-bir-egitim-modeli-tablet-seminerler/) - [50 failed start-ups and 50 lessons from their mistakes (15-30)](https://turkishtimedergi.com/dijital-girisim/50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-15-30/) --- # Verelo (2012 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/verelo/ - Sector: Enterprise software (SaaS) - Country: Canada - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Verelo was an online service that monitored websites' availability and performance, scanned for malware and reported on site health. Emerging from an incubator programme in Toronto, the company gave site owners analysis of outages and speed problems. ## Why did it shut down? Verelo was founded in March 2012 on being accepted into the Extreme Startups incubator in Toronto, and it officially launched in June 2012. The service won a loyal user base but did not find enough traction or funding to carry on independently. In mid-December 2012, just six months after launch, the company announced that it would close and return the remaining money to investors. In January 2013 the DNS company Dyn bought Verelo and planned to offer the service free to its own customers rather than sell it as a separate product. In 2014 Verelo was folded into Dyn's services and ceased to exist as an independent service. ## The story Andrew McGrath and Michael Curry founded Verelo in March 2012, when they were accepted into Extreme Startups, a newly launched incubator programme in Toronto. McGrath was the company's CEO and Curry its chief technology officer. The product was a service that monitored whether websites were up and how fast they ran, while also scanning for malware and reporting on site health. Verelo graduated from the programme and officially launched in June 2012, quickly winning a loyal user base. But that interest did not turn into traction strong enough to grow the company independently. In mid-December 2012, just six months after launch, the founders announced that they had decided to close and would return the remaining money to investors. At this point the story took an unexpected turn. In January 2013 Dyn, a DNS company that had raised a $38 million Series A in October 2012, bought Verelo. Rather than sell the service as a separate product, Dyn planned to offer it free to existing customers and use it as a sales tool with prospective ones. Only one or two members of the team were expected to join Dyn; McGrath, meanwhile, was thinking of starting a new venture with the proceeds of the sale. McGrath said the sale was a perfect outcome for investors and that the service would live on. But that life was short. In 2014 Verelo was folded into Dyn's services and ceased to exist as an independent service. Verelo's brief story shows that even an open and honest closure announcement can open an unexpected exit, but that a small acquired product often dissolves inside the buyer. ## Lessons - Announcing a decision to close openly can bring unexpected buyers forward; a transparent shutdown can be a way to recover investors' money. - A feature that is hard to sell on its own can make sense when offered as added value to a larger platform's customers; assess your product from that angle too. - When entering a crowded market for monitoring tools, set a measurable traction target for the first months, and if you miss it, decide before you burn through your resources. ## Sources - [Verelo](https://en.wikipedia.org/wiki/Verelo) - [Deadpool No More: After Planning To Shut Down, Verelo Is Acquired By Enterprise DNS Company Dyn](https://techcrunch.com/2013/01/02/verelo-dyn-acquisition/) - [Dyn Acquires Website Monitoring Startup Verelo](https://www.businesswire.com/news/home/20130102005777/en/Dyn-Acquires-Website-Monitoring-Startup-Verelo) --- # Youlike (2012 – 2014) - URL: https://girisimcikafasi.com/en/startup-graveyard/youlike/ - Sector: Social media - Country: Turkey - Total funding: unknown - Cause of closure: Failed pivot ## What did it do? Youlike, a Turkish start-up, was a platform that matched users according to their tastes. Users shared what they liked and disliked across around 2,000 items in six categories, and the site scored the compatibility between two people and suggested conversation topics and date ideas. It started out as a dating site and then turned towards being a social network. ## Why did it shut down? In autumn 2014 Youlike announced in a short note on its website that its services had ended and that arrangements had been put in motion for its paying members, but it gave no reason. According to a 2016 round-up by Turkishtime, the start-up was set up as a dating site, then changed strategy and tried to carry on as a social network, overhauled its design substantially and gave up after a while. The lesson the round-up drew was the importance of setting up a start-up correctly from the outset. The Internet Archive shows that, just before it closed, the site was once again being presented as a dating site; this back-and-forth suggests that the question of whom the product served was never settled. This is an interpretation. ## The story In 2012 Ersan Özer, one of the best-known entrepreneurs of the Turkish internet, lifted the curtain on the new project he had long been preparing at Startup'12, the conference run by Webrazzi, the Turkish tech news site. According to Webrazzi, the project had long been conceived under the name Sosyo.com before settling on Youlike. The co-founders were Ersan Özer, Can Karatoprak and Levent Gültan; investors included Burak Divanlıoğlu and Serkan Borançılı, co-founders of the Turkish marketplace GittiGidiyor, along with Aydonat Atasever. Webrazzi reported that $100,000 had been paid in 2012 for the domain names youlike.com and ulike.com. The idea was simple: match people according to the things they love and loathe. As Webrazzi described it, Youlike calculated a compatibility score across around 2,000 items in six categories, ranging from familiar habits such as watching films to local tastes in music. The site even suggested to two people what they might talk about and where they might go and eat. According to Turkishtime's 2016 round-up, the company was founded with 300,000 lira in capital, English, Portuguese, Spanish and French versions were prepared, and an office was opened in Istanbul. Youlike opened to users in July 2012. A new version arrived in December 2012, and Webrazzi wrote that the real change was one of strategy: having set out as a dating site, Youlike wanted to become a social network with real-name membership and personal addresses. Ersan Özer said the dating-site feel had gone entirely. The search for direction did not end there. In an Internet Archive capture dated September 2014, Youlike was once again presenting itself as the most innovative dating site. Just a few weeks later, in a capture from October 2014, a single note remained on the home page: Youlike's services had ended, users were thanked for their interest, and the necessary arrangements had been put in motion for paying members. The note stayed on the domain for years. Turkishtime's round-up wrote that the team gave up after the switch from dating site to social network and major changes to the design. Youlike's story shows that, even with an experienced team and strong investors, it is hard to build a lasting community before it is clear whom the product serves and why. This is an interpretation. ## Lessons - Changing your positioning before you are clear about which need the product meets wears out both users and the team. - An expensive domain name and an ambitious launch do not give users a reason to come back to the product. - Dating and social network products live on network effects; going global before reaching density in a particular city or community can be risky. ## Sources - [youlike.com closure notice, Internet Archive capture](https://web.archive.org/web/20141018185436/http://youlike.com/) - [50 failed start-ups and 50 lessons from their mistakes (15-30)](https://turkishtimedergi.com/dijital-girisim/50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-15-30/) - [Ersan Özer unveils his new start-up Youlike - Webrazzi Startup'12](https://webrazzi.com/2012/05/15/ersan-ozer-yeni-girisimleri-youlikei-acikladi-webrazzi-startup12) - [YouLike moves closer to a social network with its new version](https://webrazzi.com/2012/12/26/youlike-yeni-surum/) - [youlike.com home page, Internet Archive capture](https://web.archive.org/web/20140929070016/http://youlike.com/) --- # Admazely (2011 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/admazely/ - Sector: Advertising and marketing - Country: Denmark - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Admazely offered small and medium-sized e-commerce sites a self-service retargeting advertising platform. The system automatically recognised a shop's products and served dynamic ads showing those products on other sites to people who had visited the shop and left without buying. ## Why did it shut down? In April 2012 the company received seed investment of about €600,000 from SEED Capital and two angel investors; the team had committed to making the money last 12 months and became dependent on the next investment. At the start of February 2013 the expected approval from the Accelerace investment committee did not come. That same month two employees who had been growing UK sales were refused permanent work permits, and co-founder David Björklund announced that he was moving to Stockholm. Because about 90 per cent of costs were staff costs, the company had no other item it could cut quickly. The cash ran out around March 2013 and Admazely went bankrupt; its entry in the Danish business register was closed in September 2014. ## The story Admazely was an advertising technology start-up that began informally in Copenhagen in the summer of 2011. Søren Holbech Nielsen joined the team started by Peter Vilsholm Therkildsen Schlegel, David Björklund and Sylwia Erhardt-Bednarska in 2012; the company was entered in the Danish business register in March 2012. The aim was to make the retargeting ads used by big retailers simple for small web shops. CEO Schlegel said they wanted to strip out the needless complexity in the field. In April 2012 SEED Capital and angel investors Martin Bochineck and Christina Rind Helsbro invested about €600,000. The platform opened with selected retailers in May 2012, and within a few months regular sales began coming in from the UK market. Those sales were driven largely by two English-speaking sales staff. According to the assessment Schlegel later wrote, the team had committed to making the seed money last 12 months and had become dependent on the next investment. At the start of February 2013 the expected approval from the Accelerace investment committee did not come. In the same period the two employees running UK sales were refused permanent work permits and had to leave the country within 30 days. Co-founder David Björklund also announced that he was moving to Stockholm with his fiancée. Because 90 per cent of costs were staff costs, there was no other area in which the company could shrink quickly. The cash ran out around March 2013 and Admazely went bankrupt. Schlegel noted as lessons that the founders had not aligned from the outset on appetite for risk and willingness to work without pay, that they had relied too heavily on a single source of funding, and that no plan B had been prepared before the crisis struck. The company's entry in the Danish business register was closed in September 2014 on grounds of bankruptcy. ## Lessons - If you plan your seed money as a bridge to a single next round, tie what you will do if that round does not come to a written plan B in advance. - When almost all your costs are salaries, there is nothing else to cut in a crisis; look early for ways to keep fixed costs flexible. - Track the residence and work permits of the key employees who drive sales as a risk to your revenue plan, and have back-up. ## Sources - [Startup post-mortem: Admazely and why it failed](https://oresundstartups.com/startup-post-mortem-admazely-failed/) - [Admazely Creates DIY Retargeting Advertisement Platform, Raises €600K](https://arcticstartup.com/admazely-funding/) - [ADMAZELY ApS (CVR 34456461)](https://datacvr.virk.dk/enhed/virksomhed/34456461) --- # BenVarım (2010 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/benvarim/ - Sector: Fintech - Country: Turkey - Total funding: unknown - Cause of closure: Team problems ## What did it do? BenVarım was a platform that emerged in December 2010 and gave non-governmental organisations in Turkey a way to raise donations through social media. Only foundations and associations authorised to collect donations could add their projects, and volunteers could launch campaigns for those projects on Facebook and Twitter. Payments were taken through PayPal and banks' virtual POS systems. ## Why did it shut down? In the farewell message they published in May 2013, the founders said they had failed to achieve the growth momentum an internet start-up needs. They also acknowledged that they had not managed to build an organisation capable of meeting the responsibilities of the role they had taken on. The platform was not affiliated with any commercial organisation, and all its costs were covered from the founders' own pockets. The 36,743 TL in donations raised in around two years of operation showed that the idea created value, but it never reached a scale that could sustain a team. ## The story The idea for BenVarım emerged in San Francisco in December 2010. A team of graduates of Boğaziçi University and Middle East Technical University (ODTÜ), including Levent Baş and Gerçek Karakuş, decided to build a social giving platform that would strengthen the fundraising and outreach work of non-governmental organisations in Turkey. The team was spread across San Francisco, Istanbul and Ankara, and included a lawyer, an accountant, a designer and computer engineers. According to a Webrazzi report from August 2011, the first version of the platform went live in April that year. The system was simple: only foundations and associations authorised to collect donations could add their projects to the platform, after having their legal documents and bank accounts verified. Volunteers launched their own campaigns for these projects and collected donations from their circles through Facebook and Twitter. Payments were taken through PayPal and banks' virtual POS systems. Gerçek Karakuş and his wife provided one of the platform's first examples, raising 1,535 TL from 13 people through a campaign they set up for their wedding. In May 2013 a farewell message was published on benvarim.com. The team wrote that raising donations for 12 of Turkey's leading non-governmental organisations proved that the idea created value. The counter on the site showed that 36,743 TL had been raised thanks to 1,069 volunteers. Even so, the founders openly acknowledged that they had failed to achieve the growth momentum an internet start-up needs and had not managed to build an organisation capable of carrying the responsibilities of the role they had taken on. The platform was not affiliated with any commercial organisation; its technical, administrative and promotional costs had been paid out of the founders' own pockets. BenVarım matters as one of the early experiments with crowd-giving and crowdfunding in Turkey. In Capital's 2017 survey of closed start-ups, the platform was described as Turkey's first crowd-giving platform. By sharing their mistakes and lessons in their farewell message, the team also turned the closure into a lesson for the ecosystem. ## Lessons - To sustain a venture that starts on volunteer effort, you need either a revenue model or a full-time team. - Creating social impact does not remove the need for growth momentum. - Sharing what you have learned openly when you close is one of the most lasting contributions you can leave to the ecosystem. ## Sources - [A social giving platform: BenVarım!](https://webrazzi.com/2011/08/22/sosyal-yardim-platformu-benvarim/) - [Closure syndrome](https://startup.capital.com.tr/arastirmalar/kapanma-sendromu.html) - [Goodbye! BenVarım.com (archive capture)](http://web.archive.org/web/20130721005425/http://benvarim.com/) --- # Better Place (2007 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/better-place/ - Sector: Mobility and transport - Country: United States - Total funding: $850 million - Cause of closure: Business model failed ## What did it do? Better Place was an international start-up that developed and sold charging and battery-swapping services for electric cars. Its official headquarters were in Palo Alto, but most of its planning and operations were run from Israel, where founder Shai Agassi and its main investors lived. Customers would buy driving range on subscription, much as they bought mobile phone minutes, while the battery stayed in the company's ownership. ## Why did it shut down? Building the charging and battery-swap infrastructure consumed around USD 850 million of private capital. Agassi had expected 100,000 cars on Israeli roads by 2010, but fewer than 1,000 Renault Fluence Z.E. cars were delivered in Israel and about 400 in Denmark. The company spread its resources thin with pilot projects and feasibility work in many countries; according to Wikipedia's assessment, mismanagement was also among the causes of its financial troubles. In October 2012 Agassi stepped down as CEO and the company asked investors for around USD 100 million in emergency funding. Better Place filed for bankruptcy in Israel on 26 May 2013, and its remaining assets were sold in November 2013 for just USD 450,000. ## The story Shai Agassi's vision began with a question. At the World Economic Forum in Davos in 2005, Klaus Schwab had asked how we could make the world a better place by 2020. Better Place was Agassi's answer. Unveiled as Project Better Place on 29 October 2007, the company quickly became one of the most ambitious ventures in clean technology. The model borrowed from the mobile phone industry: customers would buy kilometres instead of minutes, and the expensive battery would remain the company's property. On long journeys a depleted battery would be swapped for a charged one at robotic stations within a few minutes. Renault-Nissan would supply the cars and Better Place would build the infrastructure. A USD 111 million Series A round was raised at the end of 2007, and in January 2010 a Series B round led by HSBC brought in another USD 350 million. The company announced networks in Israel, Denmark and Hawaii and said it was in talks with more than 25 regions. The first charging station opened near Tel Aviv in December 2008, but customer deliveries only began in the second quarter of 2012. By September 2012, 21 battery-swap stations were operating in Israel. Demand, however, fell far short of expectations: Agassi had forecast 100,000 cars on Israeli roads by 2010, but in the end fewer than 1,000 Renault Fluence Z.E. cars were delivered in Israel and about 400 in Denmark. It was also the only car that could use the network. In October 2012 Agassi stepped down as CEO and, a week later, left the board. The company asked investors for around USD 100 million in emergency funding; according to Ynet, it was preparing to cut 150 to 200 of its 400 staff. In January 2013 the new CEO, Evan Thornley, was also removed. After burning through around USD 850 million of private capital, Better Place filed for bankruptcy in Israel on 26 May 2013. Two takeover attempts failed, and the remaining assets were sold to Gnrgy in November 2013 for just USD 450,000. The lesson of Better Place is that scale and timing are unforgiving in infrastructure-heavy models. Running pilots in many countries at once spread resources thin, and demand tied to a single car model never reached the volume needed to carry the cost of the infrastructure. ## Lessons - In an infrastructure-heavy model, do not expand into new countries until you have proved in one small market that you can win enough customers to cover the cost of the infrastructure. - Depending on a single vehicle model and a single manufacturing partner ties the company's entire future to that product when demand stays low. - Ambitious targets that attract investment erode trust quickly when they are missed; base your internal plans on realistic scenarios. ## Sources - [Better Place (company)](https://en.wikipedia.org/wiki/Better_Place_(company)) - [Israeli Venture Meant to Serve Electric Cars Is Ending Its Run](https://www.nytimes.com/2013/05/27/business/global/israeli-electric-car-company-files-for-liquidation.html?_r=0) - [Another Clean Tech Startup Goes Down: Better Place Is Bankrupt](https://www.theatlantic.com/technology/archive/2013/05/another-clean-tech-startup-goes-down-better-place-is-bankrupt/276257/) - [https://www.wikidata.org/wiki/Q832434](https://www.wikidata.org/wiki/Q832434) --- # DayBuyDay (2011 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/daybuyday/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? DayBuyDay was a Turkish private shopping site launched in March 2011 as a partnership between Hepsiburada, one of Turkey's largest e-commerce platforms, and Cem Hakko and Dinç Artman. It sold fashion, accessories, cosmetics and children's products at a discount through time-limited campaigns. Unlike its rivals, it did not hide its campaigns behind a membership wall but kept them open to all visitors. ## Why did it shut down? The company did not give a detailed reason for the closure. According to Webrazzi, there had been talk for some time that the site would be transferred to Hepsiburada and that its employees had begun moving over; a message published on 16 December 2013 announced that sales of its brands and products would continue under the Hepsiburada.com umbrella. The site had entered a crowded market in 2011, at a time when private shopping sites were multiplying rapidly in Turkey; in October 2011 it trailed rivals such as Markafoni, Limango, Trendyol and VIPDükkan in traffic. The fact that one of the partners already owned a large e-commerce site may have weakened the case for keeping a separate brand going; this is an interpretation. ## The story In early 2011 private shopping sites were opening one after another in Turkey. Hepsiburada chose to join the wave not with its own brand but with a joint venture. According to a Webrazzi report from March 2011, Hepsiburada's e-commerce experience was combined with capital from Cem Hakko and Dinç Artman, and the result was DayBuyDay.com. The site went live on 3 March 2011. The launch was ambitious. Starting with Vakko, the Turkish luxury fashion house, thanks to Cem Hakko's influence, the site opened the traditional Vakko Shopping Tent to its members and brought Vakko Outlet products online; brands such as Valentino and Prada were said to be going on sale in the days ahead. Campaigns were run in the fashion, accessories, cosmetics and children's categories. According to Webrazzi's market review in autumn 2011, DayBuyDay, unlike its rivals, did not hide its campaigns behind membership but kept them open to all visitors. The market, however, was crowded. According to comScore data shared by Webrazzi, DayBuyDay ranked eighth among private shopping sites in October 2011 with 953,000 unique visitors. Markafoni, Limango, Trendyol and VIPDükkan led with millions of visitors. Webrazzi nonetheless wrote that the site was among the companies that could grow their traffic with Hepsiburada's support. Two years later the paths diverged. There had been talk for some time that the site would be transferred to Hepsiburada and that its employees had begun moving over. On 16 December 2013, in a message published on its home page, DayBuyDay announced that sales of the brands and products it offered would continue under the Hepsiburada.com umbrella, and closed. Order tracking was provided for those who had made last-minute purchases. Habertürk's 2017 list of closed e-commerce sites also included it among the ventures that had closed after being transferred to Hepsiburada. DayBuyDay's story is that of one of the short-lived ventures that opened at the peak of the private shopping wave and, as the wave receded, was folded into its big partner's platform. ## Lessons - If you enter a crowded market late, you need to turn your difference into measurable growth quickly. - A big partner's backing is also an exit door; when the partner prefers its own platform, the separate brand's life is cut short. - Launching with luxury brand partnerships attracts attention, but lasting demand needs a regular and predictable flow of products. ## Sources - [Daybuyday closes after transfer to Hepsiburada](https://webrazzi.com/2013/12/16/daybuyday-hepsiburadaya-devredilerek-kapandi/) - [DayBuyDay.com: Hepsiburada and Cem Hakko join forces for private shopping](https://webrazzi.com/2011/03/02/daybuyday/) - [October visitor numbers for private shopping sites, according to comScore](https://webrazzi.com/2011/11/21/comscore-ozel-alisveris-ekim/) - [Turkish e-commerce sites that closed before Markafoni! Why did the online shopping sites shut down?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) --- # DesignLocks (2012 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/designlocks/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: No market need ## What did it do? DesignLocks was an online shop selling design-led products, launched in Turkey in August 2012. It offered its users different, original designs every day. Its team was made up of former employees of Rocket Internet, which decided to pull out of Turkey that same month. ## Why did it shut down? According to a round-up by Habertürk, DesignLocks was shut down in 2013 because it failed to reach the expected sales figures. In an assessment published in November 2013 and later quoted by Turkishtime in 2016, co-founder Engin Gökdiken said the metrics had been good, but the biggest mistake had been trying to operate in a market that was not mature at all. According to Gökdiken, the audience interested in design was very limited. The second weakness was a lack of buying power: purchases made in small volumes did not leave enough margin for the company to survive. ## The story August 2012 was a turbulent month for Turkish e-commerce. The German company builder Rocket Internet had decided to close its Turkish operation; according to Webrazzi, the Turkish tech news site, most of its roughly 400 employees were expected to lose their jobs. That same month, a small team made up of some of those employees embarked on a new venture: DesignLocks. As reported by Turkishtime, DesignLocks was a site set up to sell distinctive, design-led products. Every day it offered its users a new selection of original designs. Its co-founders included Engin Gökdiken. The model resembled flash-sale sites built on a daily selection, but its focus was on design products rather than big brands. The site did not last long, however. According to a list of closed e-commerce sites compiled by Habertürk in 2017, DesignLocks was shut down in 2013 because it failed to reach the expected sales figures. According to an e-commerce round-up published in November 2013, the site had opened in August 2012 and closed in February 2013. Co-founder Engin Gökdiken explained the reasons for the closure in the same round-up; his words were also quoted in Turkishtime in 2016. "Our metrics were pretty good," said Gökdiken, but in his view the biggest mistake was trying to do business in a market that was not mature at all in Turkey; people interested in design were a very limited audience. Gökdiken pointed to a second weakness as well: a lack of buying power. In a narrow category such as design products, bargaining power with suppliers could only be won through volume. Purchases made in small volumes did not leave enough margin for the company to grow. In his view, e-commerce was really retail, and without a strong buying operation it was impossible to keep a growing organism alive on thin margins. DesignLocks' story shows that the right product selection and an experienced team may not be enough to overcome the limits created by a small market and weak bargaining power. ## Lessons - Before entering a niche category, measure whether that niche is big enough to sustain a company. - E-commerce is really retail; without buying power, there is no margin. - Good metrics alone do not add up to a sustainable business if the market is small. ## Sources - [50 failed start-ups and 50 lessons from their mistakes (30-50)](https://turkishtimedergi.com/dijital-girisim/%EF%BB%BF-50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-30-50/) - [Turkish e-commerce sites that closed before Markafoni! Why did online shopping sites shut down?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri/) - [Rocket Internet is closing its Turkish operation! [Breaking News]](https://webrazzi.com/2012/08/17/rocket-internet-turkiye-kapaniyor/) - [Entrepreneurs' Failures in E-Commerce](https://www.isfikirleri-girisimcilik.com/girisimcilerin-e-ticarette-basarisizliklari) --- # Dopplr (2007 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/dopplr/ - Sector: Travel - Country: United Kingdom - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Dopplr was a free social network that let users share their travel plans and see which acquaintances would be in the same city on the same dates. The service also calculated the carbon footprint of journeys, and in later years offered a social atlas of user recommendations for cities. ## Why did it shut down? Founded in London in 2007 by Marko Ahtisaari, Matt Biddulph and Matt Jones, Dopplr was backed by well-known angel investors such as Reid Hoffman and Joichi Ito. Nokia announced on 28 September 2009 that it had bought the company. According to a September 2010 report in The Guardian, Dopplr's blog had stopped being updated two days after the acquisition, and monthly unique users had fallen from 39,000 to 29,000. The service stayed open for four more years. With a notice posted on the home page in October 2013, Nokia shut Dopplr down on 1 November 2013. ## The story Dopplr was born in 2007 in Silicon Roundabout, the London district where tech start-ups clustered. Named after Christian Doppler, the physicist who discovered the Doppler effect, the service asked frequent-travelling professionals a simple question: who do you know who will be in the city you are going to, on those dates? Users added their trip plans, and Dopplr showed journeys that overlapped with their friends'. The service also calculated the carbon footprint of journeys. The founders, Marko Ahtisaari, Matt Biddulph and Matt Jones, won backing from well-known names in the tech world. In the first round Martin Varsavsky, Joichi Ito, Reid Hoffman and The Accelerator Group, run by Saul Klein, invested; the second round, in autumn 2008, was joined by names such as Esther Dyson and Joshua Schachter. In a survey of technology leaders conducted by Guardian Media Group in early 2008, Dopplr was named among the companies to watch. On 28 September 2009 Nokia announced that it had bought Dopplr. But the acquisition did not mark the beginning of a new period of growth for the service. A year later The Guardian wrote that Dopplr's blog had stopped being updated two days after the acquisition and that monthly unique users had fallen from 39,000 to 29,000. The service lived on for a while as a social atlas of city recommendations. In October 2013 Nokia posted a notice on the Dopplr home page: the service would end on 1 November 2013, and users could access their data until then. Like many small social products sold to big companies, Dopplr got lost among its new owner's priorities. ## Lessons - When selling to a big company, be clear about where your product fits in the buyer's strategy; otherwise the team scatters and the product slowly fades. - Creating network effects is hard in an area used as infrequently as travel; design a habit that brings users back between trips too. - Well-known investors and buzz in tech circles are no substitute for mass-market growth; test your product with users beyond the early adopters too. ## Sources - [Dopplr](https://en.wikipedia.org/wiki/Dopplr) - [Dopplr home page announcing that the service would end on 1 November 2013 (archived copy)](https://web.archive.org/web/20131024131909/http://dopplr.com/) - [Dopplr, a trip-sharing site for the jet set](https://venturebeat.com/2007/09/04/dopplr-a-trip-sharing-site-for-the-jet-set/) - [The slow death of Dopplr](https://www.theguardian.com/technology/pda/2010/sep/10/slow-death-of-dopplr) --- # Everpix (2011 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/everpix/ - Sector: Consumer apps - Country: United States - Total funding: $1.8 million - Cause of closure: Ran out of cash ## What did it do? Everpix was a San Francisco-based photo service that gathered all the photos on users' phones and computers in the cloud, automatically picked out the best ones and resurfaced old memories. Alongside a free version, it offered an unlimited-storage subscription for $4.99 a month. Praised by critics, the product was considered one of the best photo solutions of its time. ## Why did it shut down? Despite strong subscription conversion, the product did not grow fast enough; by March 2013 it had gathered fewer than 19,000 sign-ups. The company spent almost all of its $1.8 million seed investment on the product and could set aside no budget for marketing. Its search for a $5 million Series A coincided with the Series A crunch, when investors were being highly selective, and failed. When acquisition talks also came to nothing, the company announced its closure in November 2013. ## The story In October 2013 the seven-person Everpix team, gathered in a co-working space in San Francisco, was facing an Amazon Web Services bill of about $35,000. The company stored its users' 400 million photos on those servers and had no money to pay the bill. Founder Pierre-Olivier Latour had been paying his staff the minimum wage for a month. The Everpix story began with two French computer scientists who met at Apple. Latour had sold his first company to Apple in 2003; Kevin Quennesson was the lead on Apple's Quartz Composer project. Latour developed the idea in 2009 after struggling to organise hundreds of photos on his return from a holiday, and he founded the company in August 2011; designer Wayne Fan joined the team as co-founder. That same year Everpix was a finalist at TechCrunch Disrupt SF. The product gathered all the photos on a phone and computer in the cloud, automatically picked the best ones and sent a daily email recalling shots taken on the same day in previous years. Users loved the product. Some 12.4 per cent of free users upgraded to the $4.99 monthly or $49 annual subscription, roughly twice Evernote's rate. The company reached 55,000 users and 6,800 paying subscribers. But next to free photo apps that were gathering millions of users, growth remained slow, and almost all of the $1.8 million raised from Index Ventures and 500 Startups had been spent on the product. Latour's search for a $5 million Series A coincided with the period known as the “Series A crunch”. Investors praised the team but did not believe a $100 million subscription business could be built in photos in an age of free tools. Index provided a $500,000 bridge loan but declined to lead a new round. In the final months an acquisition deal collapsed at the signing stage, and an offer for only part of the team also came to nothing. On 5 November 2013 Everpix announced that it would close: new sign-ups stopped, the apps switched to read-only mode, and the service ended completely on 15 December. The company tried to sell its technology so that it could refund subscribers. Everpix is a classic case of the difference between a loved product and a fundable business. Its conversion rate was high, but the capital ran out before the user base reached the scale investors expected. ## Lessons - Even if your paid conversion rate is good, investors gauge the size of the market by user numbers and growth rate; report both together. - Do not spend your entire seed investment on the product; set aside a small marketing budget from the start to test user acquisition. - Keep a cash reserve that covers unavoidable costs such as the cloud bill even in a shutdown scenario; returning users' data safely is a company's final responsibility. ## Sources - [Everpix, The Cloud-Based Photo Startup, Is Shutting Down](https://techcrunch.com/2013/11/05/everpix-shutting-down/) - [Out of the picture: why the world’s best photo startup is going out of business](https://www.theverge.com/2013/11/5/5039216/everpix-life-and-death-inside-the-worlds-best-photo-startup) --- # Flowtab (2011 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/flowtab/ - Sector: Food and drink - Country: United States - Total funding: $75K - Cause of closure: Business model failed ## What did it do? Flowtab was a mobile app that let bar customers browse the drinks menu on their phones and order by prepaying with a saved credit card. Orders appeared on iPad screens in front of the bartenders, and a text message went to the customer when the drink was ready. ## Why did it shut down? Started by Mike Townsend and Kyle Hill in 2011, the start-up released the app in February 2012 before it had signed a single bar. The first launch party in Santa Monica looked promising, but in July 2012 the servers crashed during a bar crawl organised with Uber and Thrillist. Although 12 bars in three cities were active in January 2013, usage remained patchy, organic growth never materialised and winning new users required constant marketing spend. In February 2013, as rivals BarTab and Coaster collapsed, Flowtab had $20,000 left in the bank and its target of a $300,000 round fell through. Having spent $110,000 in total and reached fewer than 2,000 users, the company shut down on 17 April 2013. ## The story Flowtab started from a problem everyone has had in a crowded bar: how do you get your drink faster? In 2011 Mike Townsend and Kyle Hill decided to answer that question with a phone app. The customer would browse the menu on their phone and pay with a saved card, the bartender would see the order on an iPad in front of them, and the customer would get a message when the drink was ready. The team released the app in February 2012 before it had signed a single bar. At the launch party held at Copa d'Oro in Santa Monica it took 150 orders and processed $1,200 in transactions. In July 2012, however, during a three-bar crawl organised with Uber and Thrillist, the servers crashed under the load of 300 participants. The team raised $50,000 in investment in its first month in San Francisco, and in January 2013 an investor from Palo Alto added another $25,000. At that point 12 bars in three cities were active. The numbers, however, showed the product was not catching on. There was no organic growth, usage varied widely from bar to bar and no density of venues had formed where users could use the app every time. Each of the 92 new users won at an event on Super Bowl night cost $5.50. In February 2013, as rivals BarTab and Coaster collapsed, Flowtab had $20,000 left and could not reach its target of a $300,000 round. Having spent $110,000 in total and reached fewer than 2,000 users, the company shut down on 17 April 2013. The founders turned the site into a farewell page listing lessons such as doing things that do not scale, talking to customers at the earliest possible moment and, if you are going to fail, failing fast. ## Lessons - In a venue-based app, do not expand to new cities before you have built, in one area, a density of venues where users can use the app every time they go out. - If you have to win every new user through events and campaigns and users do not come back of their own accord, the problem lies in the product, not the marketing. - Load-test your infrastructure before a big launch event; a crash that spoils first impressions may be impossible to make up for on a limited budget. ## Sources - [The Decline And Fall Of Flowtab, A Startup Story](https://techcrunch.com/2013/08/31/the-decline-and-fall-of-flowtab-a-startup-story/) - [Flowtab: Lessons (archived copy)](https://web.archive.org/web/20131019161553/http://flowtab.com/) --- # Flud (2010 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/flud/ - Sector: Consumer apps - Country: United States - Total funding: $2.1 million - Cause of closure: Failed pivot ## What did it do? Flud was a social news reader that gathered RSS feeds from blogs and news sites into visual streams. Users could save articles to a reading list, share them on networks such as Facebook, Twitter and Tumblr, create profiles and follow one another. The app was released for iPad, iPhone, Android and Windows Phone. ## Why did it shut down? The company got by on $2.1 million of seed funding, but the new $5 million to $8 million round discussed in 2012 never closed. In December 2012 it unveiled an enterprise version that let employees discuss news related to their work, and in 2013 it shifted its focus entirely to that product. A waiting list of 1,500 companies formed for the enterprise version, but enterprise sales turned out to be a much longer and very different process from the consumer business the team was used to. According to founder Bobby Ghoshal, investors wanted to see three to six months of data before backing the new model, while the company had only two months' worth. With money and time running out, Flud closed on 8 August 2013. ## The story Flud grew out of a project Bobby Ghoshal and Matthew Ausonio worked on in San Diego in the summer of 2010. The idea was to gather blog and news feeds from around the internet on a single visual screen and turn reading the news into a shared experience. The first iPad version came out in August 2010, followed by versions for iPhone, Android and Windows Phone. The company positioned itself as the Instagram of news, and Fast Company named the app among the best interface designs of 2010. A total of $2.1 million was raised from investors including Detroit Venture Partners, Ludlow Ventures and Behance founder Scott Belsky. With version 2.0, released in December 2011, users could create profiles and follow one another. But the social news-reading space quickly became crowded, and the big $5 million to $8 million round the company was aiming for in 2012 never happened. The team then changed course towards companies. Unveiled in December 2012, the enterprise version let a company's employees talk about news related to their work, and 1,500 companies signed up to the waiting list. Within a few months the four-person team made its first enterprise sales too. But enterprise sales demanded very different skills and patience from a consumer app. As Ghoshal told it, investors wanted to see three to six months of data before backing the new model; the company had only two months' worth. On the last day of July 2013 Flud told its users it would shut down on 8 August 2013 and that they could download their data until then. In a brief statement Ghoshal said that first the money had run out, and therefore the time. Flud's story shows that even a pivot in the right direction cannot save a company if there is not enough runway to produce the evidence. ## Lessons - When you pivot, work out how long it will take to generate the evidence for the new model that investors will want to see; if your cash will not cover that time, extend your runway first. - Moving from consumer to enterprise is not just a product change; bring someone who knows the enterprise sales cycle into the team before the pivot. - Announcing an innovative product loudly before it is proven inflates expectations; Ghoshal later said too that it is better to grow a new product quietly. ## Sources - [Flud folds: News reader startup is shutting down](https://venturebeat.com/2013/07/31/flud-folds-news-reader-startup-is-shutting-down/) - [Why Startups Fail: A Postmortem For Flud, The Social Newsreader](https://techcrunch.com/2013/09/22/why-startups-fail-a-postmortem-for-social-newsreader-flud-and-what-to-take-from-sonars-demise/) - [Flud](https://en.wikipedia.org/wiki/Flud) --- # Formspring (2009 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/formspring/ - Sector: Social media - Country: United States - Total funding: $14 million - Cause of closure: Ran out of cash ## What did it do? Formspring was a Q&A site where users publicly answered questions sent to their profiles, often anonymously. Launched in Indianapolis in November 2009 by Ade Olonoh, founder of the form software company Formstack, the service later became a separate company and moved to San Francisco. ## Why did it shut down? The service reached 1 million registered users in its first 45 days, but that early momentum did not turn into lasting growth. Big platforms such as Tumblr adding an anonymous question feature to their own products made the feature that set Formspring apart commonplace. Anonymity also brought cyberbullying controversies; in 2011 the company had to attend the White House conference on bullying prevention and announce new safeguards. Having raised a total of $14 million, the company announced on 15 March 2013 that it would shut down, saying it was struggling to sustain its resources. The assets passed to Spring.me in May 2013, and that new brand also came to an end when it began redirecting to Twoo from August 2015. ## The story In November 2009 in Indianapolis, Ade Olonoh, founder of the form software company Formstack, opened a simple site where users asked each other questions and published the answers on their profiles. The fact that questions could be asked anonymously spread the service fast, especially among teenagers, and Formspring reached 1 million registered users in its first 45 days. Success came so quickly that the service took on a separate identity to avoid confusion with the parent company and moved to San Francisco as an independent company. A $2.5 million seed investment came from backers including SV Angel, Lowercase Capital, Kevin Rose and Dave Morin; the total capital the company raised eventually rose to $14 million. In June 2011 the 25 millionth user signed up, and by early 2012 the number of answers given on the site had passed 4 billion. But anonymity was also creating problems. Abusive messages sent through the site were mentioned in news stories about the suicides of several teenagers, and Formspring found itself at the centre of the cyberbullying debate. In 2011 the company attended the White House conference on bullying prevention and announced it would work with the MIT Media Lab to detect bullying. Over the same period big platforms such as Tumblr added an anonymous question feature to their own products, and what set Formspring apart became commonplace. The user base stopped growing, and key people left, including director of operations Ro Choy. On 15 March 2013 Olonoh announced the closure, saying it had become increasingly difficult to secure the resources to keep the service going. Under a last-minute deal the assets were transferred to Spring.me, and the service reopened under its new name in November 2013. In August 2015, however, the site was redirected to Twoo, and that attempt also came to an end. Formspring is remembered today as the pioneer of anonymous Q&A apps. ## Lessons - A product built on a single feature is left defenceless when big platforms copy that feature; build a second layer of value that keeps users early on. - Anonymity boosts engagement quickly but also inflates moderation costs and reputational risk; develop safety tools at the same pace as growth. - Do not mistake a viral burst in the first weeks for lasting demand; base your spending plan on regular usage and return rates, not on sign-ups. ## Sources - [Formspring, The Pioneering 'Ask Me Anything' Anonymous Q&A Platform, Is Shutting Down](https://techcrunch.com/2013/03/15/formspring-the-pioneering-anonymous-qa-platform-is-shutting-down/) - [Q&A Site Formspring Shuts Down](https://allthingsd.com/20130315/qa-site-formspring-shuts-down/) - [Spring.me](https://en.wikipedia.org/wiki/Spring.me) --- # Gamoba (2012 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/gamoba/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Gamoba was a games and electronics shop launched in autumn 2012 that billed itself as Turkey's first entertainment-focused vertical e-commerce site. Alongside PC games, it sold games for PS3, Xbox 360, Wii and Nintendo platforms, console and computer accessories, and tablets. Behind it were the founders of Markafoni, the Istanbul-based fashion e-commerce company, and Emir Aral, owner of the games distributor Aral. ## Why did it shut down? No official statement on Gamoba's closure was found in the sources; Turkishtime wrote that the site closed in November 2013, while Habertürk wrote that it managed to stay open for little more than a year. In a comparison by Sosyalmedya.co at launch, games such as PES 2013, FIFA 13 and Call of Duty were more expensive on Gamoba than on D&R and Hepsiburada, or the same price. This suggests that, in a price-sensitive games market, the site could not offer a clear advantage over the big general e-commerce players; this is an interpretation. Goboti, a T-shirt site in which Markafoni's founders were also partners, had closed in November 2013 too, because there was no certainty that further investment would pay off. ## The story Gamoba was a venture that brought well-known names from the Turkish internet sector together in the games market. According to a CNN Türk report in November 2012, the site was founded as a partnership between Akinon, an investment company whose partners included Markafoni founders Sina Afra, Tolga Tatari and Ahmet Emre Sarı; Emir Aral, owner of Aral, one of Turkey's largest games and electronics distributors; and Krombera, the investment company of Hakan Baş and Alper Afşin Özdemir. The project was led by general manager N. Onur Atahan. The site went live in beta in October 2012 and officially launched in November. It offered a wide product range, from PC games to PS3, Xbox 360, Wii and Nintendo games, and from console accessories to tablets. According to Sosyalmedya.co's launch report, the site also had games for 1 TL and 10 TL, and sales of downloadable products and special promotions were planned. The comparison in the same report, however, was telling: popular games such as PES 2013, FIFA 13 and Call of Duty were more expensive on Gamoba than on D&R and Hepsiburada, or the same price. Gamoba did not live long. According to a list of failed start-ups compiled by Turkishtime, the site closed in November 2013; Habertürk also wrote that the site managed to stay open for little more than a year. No detailed statement on the closure can be found in the sources. That same month Goboti, a designer T-shirt site in which Markafoni's founders were also partners, had closed as well; Nevzat Aydın, one of that site's founders, had said they could not be sure further investment would pay off. Gamoba's short story shows that a strong founding team and distributor backing may not be enough on their own in a category where you compete with general e-commerce giants on price. ## Lessons - If you open a vertical store, you must offer a clear edge over general e-commerce sites in price, selection or service. - A distributor partnership secures supply, but on its own it does not bring customers to your site. - Strong founders running several experiments at once may shut down the one with weak returns quickly; accept that from the start. ## Sources - [PC and Console Games Sales Platform Gamoba Launches](https://sosyalmedya.co/gamoba/) - [Entertainment-focused e-commerce site Gamoba launches](https://www.cnnturk.com/2012/teknoloji/internet/11/14/eglence.odakli.e.ticaret.sitesi.gamoba.acildi/684544.0/index.html) - [50 failed start-ups and 50 lessons from their mistakes (30–50)](https://turkishtimedergi.com/dijital-girisim/%EF%BB%BF-50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-30-50/) - [Turkish e-commerce sites that closed before Markafoni! Why did online shopping sites close?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri/) --- # Gaxxi (? – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/gaxxi/ - Sector: Enterprise software (SaaS) - Country: Turkey - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Gaxxi was a Turkish content management system developed by brothers Umut and Şafak Akyol while they were students at Ankara University, offering a paid blog and website building service through Gaxxi.com. It offered features such as multi-site support, photo albums, guest authors, scheduled posting, IP blocking and multilingual support. According to its later owner, Devrim Demirel, it was Turkey's first paid blogging service and it was profitable. ## Why did it shut down? Gaxxi closed not because it was losing money but because its new owner could not develop it. According to Devrim Demirel, founder of Beriltech, the company failed to build a dedicated team for Gaxxi after the acquisition; blogging was not an attractive field for developers, and it was hard to work on a complex system written by someone else. While open-source platforms such as WordPress added new features every month, Gaxxi fell behind and its customer numbers dwindled over time. Demirel likened the product to the living dead and chose to close it in line with the company's decision to focus on its core areas. Selling it to another company, he said, would have been unfair to customers and to the buyer. ## The story Gaxxi was a content management system developed by brothers Umut and Şafak Akyol while they were students at Ankara University. According to a 2006 write-up by Webrazzi, the Turkish tech news site, it offered people who wanted to set up a personal website or blog features such as generous disk space, technical support, multiple sites, photo albums, guest authors and scheduled posting, and competed as a paid service with domestic and foreign rivals. The brothers also ran other projects such as PetArkadas.com and SitelerHakkinda.com. In 2007 they had drawn attention by putting 10 per cent of their social network project, alanturka.com, up for sale in 1 per cent slices. In early 2010 Gaxxi was sold to Beriltech, also based in Ankara. In fact, such an acquisition was not in Beriltech's plans. According to its founder, Devrim Demirel, the brothers wanted to hand Gaxxi over to a company that could take ownership of the business and grow it, and to devote time to their other projects. The non-compete agreement that Demirel, the founder of Blogcu.com, had signed with Nokta had also just expired. Beriltech bought the whole company. At the time Gaxxi had more than 10,000 registered users, and the modest investment paid for itself in nine months. Growth, however, never came. Beriltech could not build a dedicated team for Gaxxi; blogging was no longer attractive to developers, and it was hard to work on a complex system written by someone else. While WordPress added new features every month, Gaxxi stood still and its customer numbers dwindled over time. Demirel wrote openly that he himself had been using WordPress rather than Gaxxi since 2010. On 27 November 2012 Beriltech announced that it would close Gaxxi, which was still making money, on 1 February 2013. Customers would be able to export their data and move to Beriltech's WordPress service or any other platform they wished. Demirel said he considered selling the product to another company unfair, and that open-sourcing the code no longer made sense. On his own blog he described Gaxxi as "a perfect example of a zombie". Gaxxi's story shows that even a profitable product may not survive if it stops developing. The first lesson Demirel drew was not to rush strategic decisions: they had lived for two and a half years with an acquisition decision made in two days. ## Lessons - If you settle an acquisition that was never in your plan in two days, you will live with the consequences for years. - A product that is profitable but not being developed slowly loses its value while competitors move fast. - When you shut a product down, offering customers data export and a migration path protects the brand's reputation. ## Sources - [Beriltech is closing its profitable project Gaxxi. But why?](https://webrazzi.com/2012/11/27/beril-tech-karli-projesi-gaxxiyi-kapatiyor-peki-neden/) - [Why would you close a project that makes money?](http://web.archive.org/web/20240412110327/http://www.devrimdemirel.com/2012/11/27/para-kazanan-bir-proje-neden-kapatilir/) - [Gaxxi acquired by Beril Tech - is Blog.com.tr on the way?](https://webrazzi.com/2010/02/26/gaxxi-beril-tech-tarafindan-satin-alindi-blog-com-tr-mi-geliyor/) - [Your website ready in an instant with Gaxxi](https://webrazzi.com/2006/08/24/gaxxi-ile-web-siteniz-aninda-hazir/) --- # Goboti (2012 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/goboti/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Goboti was an e-commerce site launched in May 2012 that sold T-shirts by Turkish designers only. Each day it featured one designer and a T-shirt available that day. The site also partnered with the designer pool of Tasarti.com. ## Why did it shut down? Although Goboti brought together some of the best-known names in the Turkish internet sector, it lasted only about a year and a half. Co-founder Nevzat Aydın told the daily Hürriyet that they had entered a phase requiring more investment and doubted they would get a return on it. According to Aydın, interest and sales were going well and there was growth potential. Writing on Pazarlamasyon, Ogün Coşkun suggested, as his own interpretation, that the site may have struggled to reach its sales targets and that T-shirt buying habits in Turkey played a part in this. Going by the founder's account, the decisive factor was less a lack of demand than concern about not getting a return on the investment that growth required. ## The story In spring 2012 a partnership that caught the eye of the Turkish internet sector was formed. Markafoni's founders Sina Afra, Tolga Tatari and Ahmet Emre Sarı, Yemeksepeti's founder Nevzat Aydın and Mynet's founder Emre Kurttepeli came together in a company called Tasera Elektronik Hizmetler ve Ticaret A.Ş. The company's partners also included Kıvanç Arkaç and Bülent Haksal, who had earlier founded the designer T-shirt site Tasarti.com. Tasera's first project was Goboti.com, which went live on 24 May 2012. Goboti's model was simple: the site sold only T-shirts by Turkish designers, featuring one designer and one T-shirt each day. Designers could apply through Tasarti.com, and designs entered into competitions there could also go on sale on Goboti. The site drew particular attention with T-shirts made for special occasions. In Pazarlamasyon's view, Goboti quickly became one of the important players in the T-shirt vertical. In early November 2013 a short farewell message headed “Hoşçakalın” (“Goodbye”) appeared on the site. It thanked designers, customers and staff. Nevzat Aydın told Hürriyet that the company had reached a stage requiring more investment, but that they had doubts about the return on that investment. According to Aydın, sales and interest were actually going well; even so, they decided to part ways with the staff and close the site. Goboti became an example showing that even experienced entrepreneurs can decide quickly and pull back from a new line of business. Rather than burning more money on growth, the team chose to close early. Hürriyet ran the story under the headline that this time the internet veterans had shut up shop early. ## Lessons - A strong founding team does not prove that a business model will be profitable once it scales. - Even when sales are going well, work out the unit economics of the next growth step. - Selling a niche product in a daily-deal format creates constant pressure to find new customers. ## Sources - [Goboti.com, co-owned by Sina Afra and Nevzat Aydın, launches (in Turkish)](https://sosyalmedya.co/goboti-acildi/) - [Farewell from Goboti, a key start-up in the T-shirt vertical (in Turkish)](https://www.pazarlamasyon.com/tisort-dikeyinin-onemli-girisimi-gobotiden-veda) - [This time the internet veterans shut up shop early (in Turkish)](https://www.hurriyet.com.tr/ekonomi/internet-duayenleri-bu-kez-dukkani-erken-kapatti-25066352) - [The site founded by internet veterans has closed too (in Turkish)](https://www.patronlardunyasi.com/internet-duayenlerinin-kurdugu-site-de-kapandi) --- # Gurunzi (2012 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/gurunzi/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Gurunzi was a shopping platform launched in early 2012 that offered followers discounts on products celebrities, experts or popular figures had tried and liked. It operated in the style and design, food, personal care and children's categories. Products were sold first through short campaigns and then at normal prices in the Gurus' collections. ## Why did it shut down? According to the founders' statement to Webrazzi, the Turkish tech news site, the main reason Gurunzi closed was that it could not find the new investment needed to grow. In its final months it had held talks with existing investors and many funds in Turkey and abroad, without result. In an assessment published in 2013 and also quoted by Turkishtime in 2016, co-founder Tolga Esin explained that customer acquisition costs rose as big players entered the market, making it impossible to compete. According to Esin, the low equity stakes held by the full-time founders were also seen as a risk by investors. The metrics were not bad, but the resources ran out before it could scale. ## The story Gurunzi emerged in January 2012 with an invitation-only launch campaign. Its founders were Can Elbeyli, İlkut Uras and Tolga Esin. As Elbeyli told Webrazzi, the Turkish tech news site, the idea was based on a model similar to Opensky.com but with no local equivalent in Turkey: celebrities, experts or popular figures recommended products they had tried and loved to their followers, and members could buy those products at a discount. Instead of brand boutiques the site had Gurus; a product a Guru had not approved did not appear on the site. The site opened to everyone in February 2012. In the style and design, food, personal care and children's categories, products were sold in four- to five-day campaigns and then remained in the Gurus' collections at market price. The figures the founders shared at closure showed the model was beginning to take hold: 9 Gurus were recommending around 1,500 products from 140 brands, the average basket was 80 TL, 38 per cent of monthly sales came from repeat purchases and the ratio of customer lifetime value to acquisition cost was 3.1. But the model needed strong financial backing to grow. On 13 February 2013 the founders announced they had halted operations. According to the statement, talks held in recent months with existing investors and many funds in Turkey and abroad had produced no result. The founders saw continuing without the necessary resources and team as a major risk, and put Gurunzi into liquidation without any debt or bankruptcy. In an assessment published in November 2013 and also quoted by Turkishtime in 2016, Tolga Esin said the key factor they had missed was the rise in customer acquisition costs as big players entered the market. “We couldn't reach the levels we wanted in terms of scale,” said Esin, adding that securing capital before the project began would have made things easier. ## Lessons - Proving a different business model takes time; secure the capital to carry you through that period before you start. - When big players enter the market, customer acquisition costs rise fast; plan accordingly. - Founders holding meaningful equity in the company is a serious signal of confidence in investor meetings. ## Sources - [Shopping with celebrities: Gurunzi.com (in Turkish)](https://webrazzi.com/2012/01/09/gurunzi/) - [Gurunzi.com has closed! (in Turkish)](https://webrazzi.com/2013/02/13/gurunzi-com-kapandi/) - [50 failed start-ups and 50 lessons from their mistakes (30–50) (in Turkish)](https://turkishtimedergi.com/dijital-girisim/%EF%BB%BF-50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-30-50/) - [Turkish e-commerce sites that closed before Markafoni: why did online shopping sites close? (in Turkish)](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri/) - [Entrepreneurs' failures in e-commerce (in Turkish)](https://www.isfikirleri-girisimcilik.com/girisimcilerin-e-ticarette-basarisizliklari) --- # Kno (2009 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/kno/ - Sector: Education - Country: United States - Total funding: $73.4 million - Cause of closure: Acquired and shut down ## What did it do? Kno was an education technology company offering students digital textbooks and learning content. It first designed a dual-screen tablet for reading textbooks, then focused on an interactive textbook app for iPad, Android, Windows and the web. ## Why did it shut down? The 14.1-inch dual-screen tablet unveiled in June 2010 was overshadowed by the iPad, launched the same year, and in April 2011 the company licensed its hardware designs to Intel and switched to software. Although it raised a total of $73.4 million in venture capital, including a $37.5 million Series C in 2011, students' move to digital textbooks remained slow. According to Om Malik, its deals with publishers left the company with only 15 per cent of gross revenue, and an attempted merger with CourseSmart also came to nothing. Intel bought Kno in November 2013; the price was not disclosed but, according to Malik, was around $15 million. Kno's website was shut down and the service was folded into Intel's education products as Intel Education Study. ## The story Kno was founded in Santa Clara in May 2009 by Osman Rashid, a co-founder of Chegg, and Babur Habib, who came from the semiconductor industry. The aim was to build a device that would take students' textbooks digital. The first design, unveiled in June 2010, was a textbook tablet with two 14.1-inch touchscreens. At the same time, however, Apple's iPad was beginning to dominate the tablet market. In April 2011 the company changed course, licensed its hardware designs to Intel and focused on software. Its textbook app for the iPad came out in June 2011, followed by Android, Windows and web versions, and in August 2012 it entered the K-12 market. It raised a total of $73.4 million from investors including Andreessen Horowitz, Goldman Sachs, FLOODGATE, GSV Capital and Intel Capital, which put in $20 million. Kno signed deals with 75 publishers and built a catalogue of more than 225,000 titles. But the business model was weak. According to Om Malik, the publisher deals left the company with only 15 per cent of gross revenue. Students were not moving to digital textbooks as fast as expected, and a planned merger with CourseSmart did not happen. On 8 November 2013 Intel announced that it had bought Kno. The price was not disclosed; according to Malik's report it was around $15 million, a small fraction of the capital raised. Intel took the team and the technology, while founding CEO Rashid did not join Intel because of a disagreement over the company's direction. Kno's website was shut down and the service was added to Intel's education portfolio as Intel Education Study. Kno shows that a hardware start-up whose first product is overshadowed by a giant rival may not be able to rescue an expensive journey by switching to software. ## Lessons - If your hardware plans coincide with a giant rival's launch schedule, prepare a move to software before you spend most of your capital. - In a model where you license content from others, work out your revenue share from the start; after paying publishers, Kno was left with a small slice of gross revenue. - A large strategic investor may later turn out to be your only realistic buyer; Intel bought a company it had both invested in and licensed from at a low price. ## Sources - [Kno](https://en.wikipedia.org/wiki/Kno) - [Intel Has Acquired Kno, Will Push Further Into The Education Content Market With Interactive Textbooks](https://techcrunch.com/2013/11/08/intel-has-acquired-kno-to-push-further-into-the-education-market/) - [How much Kno sold for & why it failed](https://om.co/gigaom/how-much-kno-sold-for-why-it-failed/) - [Intel acquires Kno to boost its digital education library](https://www.engadget.com/2013-11-09-intel-acquires-kno.html) --- # Memurfoni (2011 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/memurfoni/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Memurfoni was a Turkish group-buying site launched in May 2011 to offer exclusive discounts to the roughly 1.1 million verified members of Memurlar.net, a popular news site for civil servants. Ankara-based İhtiyaç Grup handled operations, while Memurlar.net handled promotion. The site also experimented with different sales formats, such as 1-lira campaigns announced in live broadcasts. ## Why did it shut down? The group-buying market swelled rapidly in 2010 and 2011, after which customer complaints and a crisis of trust grew. According to Memurfoni's closure statement, companies in the sector ignoring customer satisfaction was deepening the crisis of trust between deals sites and buyers by the day. The company also wrote that Chinese goods flooding the market were further damaging the sector's reputation. According to Webrazzi, Memurfoni had attracted attention despite entering the market late, but the deteriorating balance of the market led it to step back. General manager Hakan Yiğit said a return might be possible if measures were taken against these problems. ## The story In mid-2010 deals sites suddenly multiplied in Turkey. Memurlar.net, a widely read site among civil servants and civil service candidates, decided to join the wave with its own audience. According to project manager Mahmut Yıldırım, speaking to Webrazzi, the idea grew out of a collaboration between Memurlar.net and İhtiyaç Grup's distance-learning site. Ankara-based İhtiyaç Grup took on operations, while Memurlar.net took on promotion. Memurfoni.com went live in May 2011 with a starting reach of around 1.1 million verified members. The first campaign was a discount on a driving school in Ankara. In July 2011 the site tried different sales models, such as 1-lira deals announced in a live broadcast every two weeks. Products tailored to its civil service audience were also sold, such as an annotated edition of Law No. 657 on Civil Servants for 9.90 lira and 1-lira KPSS (civil service exam) study sets. Despite entering the market late, Memurfoni kept growing; according to information general manager Hakan Yiğit gave Webrazzi, membership approached 250,000 and sales were made to a total of 74,518 people. Meanwhile, however, the balance of the group-buying market was breaking down. A statement published on the site on 6 March 2013 said that the crisis of trust was growing by the day because of practices by companies in the sector that ignored customer satisfaction. According to the statement, Chinese goods flooding the market were also pushing the sector's already falling reputation to an even worse point. For these reasons, Memurfoni announced that it was pausing sales indefinitely, while pending orders would be delivered. Hakan Yiğit did not rule out a return if solutions to the problems were found. Four years later, however, in 2017, Memurfoni appeared in Habertürk's round-up of closed e-commerce sites as a site that had operated between 2011 and 2013. Memurfoni's story shows that even a ready-made audience cannot on its own save a collapsing business model. ## Lessons - Having a ready-made audience does not protect you from the problems of a market that is deteriorating fast. - A business model's reputation can be only as strong as the worst player in the sector; make trust a differentiator. - When the market is souring, halting sales in a controlled way is an exit that preserves the customer relationship. ## Sources - [Memurlar.net's group-buying site Memurfoni.com launches [Interview]](https://webrazzi.com/2011/05/16/memurfoni/) - [Memurfoni joins the group-buying sites that have closed](https://webrazzi.com/2013/03/07/memurfoni-kapandi/) - [Turkish e-commerce sites that closed before Markafoni! Why did the online shopping sites shut down?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri/) - [Shopping sites that have closed so far](https://www.kartal24.com/73531-kapanan-alisveris-siteleri) --- # Pakette (2011 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/pakette/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Pakette, a Turkish online shop, sold a single, different discounted product every day. The home page showed the products from the last three days, and users who added all three to their basket paid no shipping fee. Over time it also put previously sold products back on sale and positioned itself as a store of curated products. ## Why did it shut down? Pakette announced with a short note on its website that it had stopped selling on 11 August 2013, but gave no reason. According to a 2016 round-up by the Turkish business magazine Turkishtime, the main reasons for its failure were that the one-product-a-day format had already been tried in Turkey without success, and that the products on sale were chosen less to meet a genuine need than as things people would not miss if they did not buy them. When it covered the launch in 2011, Webrazzi had also pointed out that keeping a start-up alive without capital, on low margins and low sales volumes, would not be easy. It could be argued that shipping and advertising costs ate into the profit on small, low-value orders; this is an interpretation. ## The story In 2011, flash-sale and private shopping sites were booming in Turkey. A team of four decided to reinterpret a format that had been tried before without success: one product a day. According to a Webrazzi report from October 2011, the idea took shape in 2010, and the team spent ten months on everything from supplier and market research to the software. Pakette went live in mid-May 2011 and opened to everyone after a short live test. What set the model apart was small but clever. The site sold a different discounted product every day and showed the products from the last three days together on the home page. Users who put all three into their package paid no shipping fee. As co-founder Soner Eker told Webrazzi, the team used only its own capital and, to keep costs down, even handled the trademark application and company registration itself. Sales were low in the first month; in the following months orders rose with advertising and email marketing. Being able to add older products still in stock to the package let some users build baskets of more than ten items. Internet Archive records show that throughout 2012 Pakette sold small, cheap products ranging from kitchen utensils to LED torches. In 2013 the site began presenting itself as a store of curated products. But a snapshot from October 2013 shows a short note at the very top of the home page: Pakette had stopped selling as of 11 August 2013. In 2014 snapshots the note had been updated to say that sales had ended. The company gave no reason for the closure. Turkishtime's 2016 round-up cited the fact that the one-product format had already been tried without success, and the choice of products that met no genuine need, as the main reasons for its failure. The same round-up said Pakette closed within a year, but the site's own announcement shows it stayed online for roughly two years. Pakette's story is a reminder that careful execution cannot make up for weak demand. The team cut costs meticulously and took care over its product images, but the one-product-a-day format never tapped into a need strong enough to bring users back every day. This is an interpretation. ## Lessons - In a one-product-a-day format, product selection is everything; people will not visit every day for things they do not need. - If you sell low-priced products, work out shipping and customer acquisition costs per order; a free shipping offer can wipe out your margin on its own. - If you started with your own money, decide early whether growth will need outside funding; low-margin models cannot finance themselves for long. ## Sources - [pakette.com closure notice, Internet Archive snapshot](https://web.archive.org/web/20131003130901/http://pakette.com/) - [50 failed start-ups and 50 lessons from their mistakes (15–30)](https://turkishtimedergi.com/dijital-girisim/50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-15-30/) - [Pakette.com: a one-product-a-day site with a difference](https://webrazzi.com/2011/10/10/pakette-com) - [pakette.com home page, Internet Archive snapshot](https://web.archive.org/web/20140601220335/http://pakette.com/) --- # Posterous (2008 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/posterous/ - Sector: Social media - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Posterous was a simple blogging platform launched in May 2008 and designed especially for mobile blogging. Users could publish a post by sending an email with photos, audio, documents and video attached, and could automatically push their content to Flickr, Twitter and Facebook. The San Francisco-based company was backed by Y Combinator. ## Why did it shut down? Posterous lost its independence in March 2012, when most of its team was brought in by Twitter. The team was moved onto Twitter's products and, according to TechCrunch, the platform went on serving a dwindling user base. On 15 February 2013 Posterous announced that, in order to focus entirely on Twitter, the service would close on 30 April 2013. Users were given time to back up their content and move it to other platforms. ## The story Posterous's promise fitted into a single sentence: send an email and your blog is ready. On the platform, which went live in San Francisco in May 2008, users could publish a post with an email carrying photos, MP3s, documents and video, and the content could be pushed to Flickr, Twitter and Facebook at the same time. The Y Combinator-backed start-up was founded by Sachin Agarwal and Garry Tan together with Brett Gibson. The simplicity quickly caught on. In June 2008 TechCrunch wrote that Posterous beat Tumblr on simplicity. Many social media commentators saw the platform as the leading free app for lifestreaming; interest grew further when social media expert Steve Rubel announced that he was moving his blogging entirely to Posterous. The company built its own URL shortener, let users publish on their own domain names and released mobile apps. the3six5, a storytelling project built on Posterous, was nominated for a Webby award in 2011. Convenience came at a price, too. Which blog a post landed on was determined by the email's sender address; because these addresses could easily be spoofed, there was a risk of unwanted content being published on someone else's blog. Posterous said it weeded out fake emails with various filters but did not disclose its methods. In March 2012 Twitter brought most of the Posterous team on board. As the team was moved onto Twitter's products, the platform stayed open for a while longer, but in TechCrunch's words it was serving a dwindling user base. On 15 February 2013 Posterous announced that, in order to focus entirely on Twitter, it would close the site and mobile apps on 30 April; users were given time to download their content. After the closure, a farewell page featuring an image of an astronaut appeared at Posterous addresses. On the same day, Garry Tan and Brett Gibson announced Posthaven, a paid alternative at USD 5 a month; they pledged that it would never be sold and would never seek investors. The lesson of Posterous is that the future of a product hosting user content is no longer in its own hands from the moment it is acquired. ## Lessons - When selling a platform that hosts user content, have export and migration routes ready from the outset in case it closes. - For convenience features such as publishing by email, build strong authentication; spoofed sender addresses create a risk of unwanted content. - A promise of permanence is a powerful competitive advantage; Posthaven pitched itself to users of the closing Posterous with a pledge never to be sold. ## Sources - [Posterous](https://en.wikipedia.org/wiki/Posterous) - [Posterous Will Shut Down On April 30th, Co-Founder Garry Tan Launches Posthaven To Save Your Sites](https://techcrunch.com/2013/02/15/posterous-will-shut-down-on-april-30th-co-founder-garry-tan-launches-posthaven-to-save-your-sites/) - [Posterous for iPhone: Instant Photo and Video Blogging](http://mashable.com/2009/08/20/picposterous/) - [https://www.wikidata.org/wiki/Q892309](https://www.wikidata.org/wiki/Q892309) --- # PostRocket (2011 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/postrocket/ - Sector: Advertising and marketing - Country: United States - Total funding: $610K - Cause of closure: Product problems ## What did it do? PostRocket was software that generated recommendations to help posts on brands' Facebook pages reach more followers. By analysing Facebook's analytics data, it gave page owners daily checklists covering the type, frequency, content and timing of posts. ## Why did it shut down? The young founders, who had dropped out of Babson College, joined the 500 Startups accelerator and raised USD 610,000 in seed funding in May 2012. The company stood out with a promise to double reach at a time when the average page post reached only 16 per cent of followers. But the product was plagued by outages and bugs; in his closure letter, chief executive Tim Chae wrote that they had never reached the high bar they had set themselves. At the same time Facebook was rolling out its revamped Insights tool, and Chae advised customers to switch to it. On 7 August 2013 the company announced that it would shut down the service on 15 August and refund remaining credits. ## The story PostRocket's story began with a young team who dropped out of Babson College and joined the 500 Startups accelerator. The Boston-born company's chief executive, Tim Chae, was the youngest founder Dave McClure's accelerator had ever backed, and the average age of the five-person team was 21. The starting point was a simple observation: as TechCrunch reported, the average post on a Facebook page reached only 16 per cent of followers. PostRocket examined Facebook's analytics data and gave page owners daily recommendations on what kind of content to post, how often and at what time. The showcase example was the musician Pitbull's page: weekly reach was said to have risen from 650,000 to 1.3 million in three weeks. In May 2012 a USD 610,000 seed round closed, with participation from Polaris Ventures, 500 Startups and angel investors including Mehdi Maghsoodnia and Maneesh Arora. But the product could not consistently deliver on its promise. Outages and bugs wore customers down. In 2013, as Facebook revamped its own Insights tool and opened it up to users, PageLever, which did similar work, had been sold to another company. On 7 August 2013, in a letter to customers, Chae admitted that they had never reached the high bar they had set themselves, thanked the users who had stuck with them despite the problems and said they would refund remaining credits. Chae advised customers to switch to Facebook's new tool. PostRocket closed on 15 August 2013. The story shows how fragile tools built on another platform's data become once that platform starts doing the same job itself. It is also a reminder that an early success story cannot cover for long the shortcomings of a product that does not work reliably. ## Lessons - A tool built on a single platform's data needs a separate value proposition that will survive when that platform offers the same feature for free. - An early result with a famous client draws attention, but a product that scales before its reliability problems are solved quickly burns through that reputation. - If closure is unavoidable, refunding users' remaining fees and pointing them to the right alternative, as PostRocket did, leaves goodwill for the founders' next ventures. ## Sources - [SEO Was Yesterday. 500 Startups' PostRocket Fires Up $610K For Facebook News Feed Optimization](https://techcrunch.com/2012/05/31/postrocket/) - [Facebook Publishing Optimizer PostRocket To Shut Down On August 15](https://techcrunch.com/2013/08/07/postrocket-shuts-down) - [PostRocket to Shut Down on August 15, 2013](https://www.americaninno.com/boston/postrocket-to-shut-down-on-august-15-2013/) --- # Salorix (2009 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/salorix/ - Sector: Advertising and marketing - Country: United States - Total funding: $3.5 million - Cause of closure: Team problems ## What did it do? Salorix developed an analytics platform that let brands scan real-time conversations on social media and rank the most important topics and the most influential people. With its product Amplfy, brands could monitor the people talking about them, engage with them and run their social marketing campaigns from one place. ## Why did it shut down? Founded by a team from digital media companies such as AOL and Yahoo, Salorix raised a USD 3.5 million Series A round from Inventus Capital Partners and Nexus Venture Partners in November 2011. The Santa Clara-based company's product team was in Bangalore. According to The Economic Times, in a March 2014 report confirmed by CEO Santanu Bhattacharya, an acquisition offer from Google set the founder against the investors; the investors were warm to the offer, but Bhattacharya was not convinced. The disagreement could not be resolved and the company ceased operations in May 2013; the closure only became public in March 2014. Bhattacharya joined Facebook in 2014. ## The story Salorix was founded in 2009 by a team from digital media companies such as AOL and Yahoo. With its headquarters in Santa Clara and its product team in Bangalore, the company was led by Santanu Bhattacharya, previously the founding director of AOL's analytics solutions centre. Salorix's platform scanned social media conversations in real time and ranked the most important topics and the most influential people, allowing brands to engage with those people and measure their campaigns. After raising a USD 3.5 million Series A round from Inventus Capital Partners and Nexus Venture Partners in November 2011, the company was working with United Online, HP's Palm unit and media agencies such as Mediacom and OMD. Later, with its product Amplfy, it won customers such as Nielsen, LinkedIn, Levi Strauss and Microsoft. In the end it was not the product or the market that finished the company but an offer that landed on the table. According to The Economic Times, in a March 2014 report confirmed by Bhattacharya, an acquisition offer came from Google. The investors were warm to the offer, but Bhattacharya was not convinced, and the two sides could not reach agreement. Only with this report did it emerge that the company had quietly ceased operations in May 2013. Nexus Venture Partners declined to comment. There was a Facebook angle to the story too. According to a TechCrunch report cited by MediaNama, acquisition talks with Facebook in October 2013 had come to nothing, and Facebook had hired Bhattacharya in early 2014. A partner at Inventus, however, said that report was wrong on almost every point. The closure of Salorix showed how even a company with well-known customers can fall apart when founder and investors have not built a shared understanding about an exit. ## Lessons - Before any acquisition offers arrive, discuss with your investors the terms on which each side would agree to a sale and set out a shared framework. - The sale, consent and drag-along or tag-along rights in your shareholders' agreement decide the company's fate when an offer comes in; negotiate these clauses carefully at an early stage. - If a deadlock between founder and board drags on, even strong customers will not keep the company alive; appoint an independent board member or mediator for such moments. ## Sources - [Social Media Marketing Startup Salorix Lands $3.5M Series A](https://techcrunch.com/2011/11/14/social-media-marketing-startup-salorix-lands-3-5m-series-a/) - [Salorix, Bangalore-based data analytics startup that said no to Google, shuts operations](https://economictimes.indiatimes.com/tech/internet/salorix-bangalore-based-data-analytics-startup-that-said-no-to-google-search-shuts-operations/articleshow/31367096.cms) - [Social Media Analytics Startup Salorix Shuts Down](https://www.medianama.com/2014/03/223-salorix-shuts-down/) - [Santanu Bhattacharya (data scientist)](https://en.wikipedia.org/wiki/Santanu_Bhattacharya_(data_scientist)) --- # Sonar (2011 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/sonar/ - Sector: Social media - Country: United States - Total funding: unknown - Cause of closure: No market need ## What did it do? Sonar was a free mobile app that combined public profile and location data from Foursquare, Facebook and Twitter to show users how they were connected to the people around them. It ranked people nearby by mutual friends, accounts followed and shared interests. Its founder positioned the product not only as a way to meet people but also as a local customer relationship tool for businesses. ## Why did it shut down? Sonar was unveiled at TechCrunch Disrupt New York in May 2011 and, finishing the competition as runner-up, quickly attracted attention. When media interest shifted to its rival Highlight ahead of SXSW in March 2012, the team spent its energy responding to that competition instead of settling its own business model; events, agency work and side projects also scattered its focus. According to founder Brett Martin, the category of discovering people nearby cooled in spring 2012, and the company spent nine months trying to sell itself to a daily-deals company, without success. Although investment came from Microsoft's Bing Fund in February 2013, the app had not become a habit users opened every day. Its chief technology officer left in August 2013, and in September 2013 it emerged that the app had been taken offline and that Martin had walked away from the project a few months earlier. ## The story When Sonar took the stage at TechCrunch Disrupt New York in May 2011, its promise was simple: open the app and you could see that the person at the next table was Facebook friends with your college roommate, or that an investor you followed on Twitter was in the same room. The app combined Foursquare check-ins with public information from Facebook and Twitter, ranking people nearby by their connections to you. Founded by Brett Martin, a native of Ocean City, Maryland, Sonar was the fourth start-up to come out of K2 Media Labs, a mobile incubator in New York. Finishing the Disrupt competition as runner-up, Sonar soon made a name for itself. According to the team, on the day it reached the final the app was being used in 35 countries. The team, which started with three people, grew to nine within a year, and Sonar became one of the most talked-about location-based social apps at crowded events such as SXSW. Ahead of the 2012 SXSW festival, however, media attention shifted to its rival Highlight. Martin later explained that the team had busied itself responding to that competition instead of establishing its own business, and had been scattered by events, agency work and side projects. When the category of discovering people nearby cooled in spring 2012, the company spent nine months trying to sell itself to a daily-deals company, but no deal emerged. In February 2013 Microsoft's Bing Fund invested; even so, the app had not become a habit users opened every day. When it was noticed in September 2013 that Sonar had been taken offline, Martin said he had walked away from the project a few months earlier, having concluded that a fresh start was a better bet for everyone. One of its investors, ENIAC Ventures, said it was ready to back Martin again. Sonar remains one of the examples showing that early interest and conference applause do not translate into lasting use. ## Lessons - Instead of reacting to the media attention a rival is getting, measure why your own users do or do not come back. - If an app that takes off during conference weeks does not get opened on an ordinary day, it has not yet tapped into a lasting need; measure success by daily use, not by event peaks. - Do not pin your hopes on a single acquisition talk that drags on for months; while that search goes on, the product stalls, the team drifts apart and the market window closes. ## Sources - [Sonar (mobile application)](https://en.wikipedia.org/wiki/Sonar_(mobile_application)) - [Interview with Sonar: The inside story on the hyperlocal, realtime networking app](https://thenextweb.com/news/the-world-just-got-smaller-with-sonar-a-hyperlocal-realtime-networking-app) - [From Disrupt Battlefield Runner-Up To Veterans Of Proximity-Based Social, Sonar Tells All](https://techcrunch.com/2012/05/15/from-disrupt-battlefield-runner-up-to-veterans-of-proximity-based-social-sonar-tells-all/) - [Social Discovery App Sonar Gets New Investment From Bing Fund, Announces It Via Vine](https://techcrunch.com/2013/02/28/social-discovery-app-sonar-gets-new-investment-from-bing-fund-announces-it-via-vine/) - [Yep, Social Discovery Startup Sonar Is Dead (And Its CEO Explains Why)](https://techcrunch.com/2013/09/17/rip-sonar/) --- # StilSOS (2012 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/stilsos/ - Sector: E-commerce - Country: Turkey - Total funding: $230K - Cause of closure: Business model failed ## What did it do? StilSOS was a Turkish social commerce site founded by Reyhan Baylan in July 2012. It brought products from many brands and designers together in a single showcase; users could put together their own outfits and follow brands and shops. It sent users on to the site where the product was sold and took a commission on any resulting sale. ## Why did it shut down? Founder Reyhan Baylan told Webrazzi that the first investment had brought significant growth, but that this growth was not enough to reach a tipping point. In a business model based on affiliate revenue, income per member was low, and profitability was possible only if membership grew enormously. That required scaling up marketing; talks were held on a new investment round, but the parties could not agree. Webrazzi also wrote that it had heard the founders had been trying to sell the site for some time before it closed. A 2017 round-up by the Turkish news outlet Habertürk likewise attributed the closure to growth falling short of the tipping point. ## The story In 2012 social commerce was one of the hottest topics in the start-up world. Examples such as Pinterest were changing the way people discovered products. In July 2012 Reyhan Baylan founded StilSOS, which would become one of the Turkish representatives of this wave; the site went live on 28 September 2012. It brought products from different brands and designers together in a single social fashion showcase, letting users put together their own outfits and follow brands and shops. StilSOS soon attracted attention. According to a Webrazzi report from January 2013, the site offered its users 40 shops and 100,000 different products. At the 11th Winter Summit of the European Business Angels Network, held in Istanbul, it had competed against many start-ups from across Europe and taken first place. The same month it received its first investment, USD 230,000, from members of Galata Business Angels; the investors included well-known names such as Melih Ödemiş, Burak Divanlıoğlu and Serkan Borançılı. But the model had a weak spot. StilSOS did not sell its own stock; it sent users on to the e-commerce site where the product was sold and took a commission on the resulting purchase. In this affiliate revenue model, income per member was low; for the company to turn a profit, membership needed to grow much faster. That meant a bigger marketing budget, which in turn meant a new investment round. The round never came. According to a Webrazzi report dated 11 November 2013, the site had been unreachable since the previous day, Saturday night, and had closed. Speaking to Webrazzi, Baylan said the first investment had brought significant growth, but that the growth was not enough to reach a tipping point. When talks on a new round failed to produce a result acceptable to both sides, they had decided to close the site. Webrazzi also noted that it had heard there had been attempts to sell the site for some time before the closure. StilSOS closed about 16 months after it was founded. Its story shows that a model which brings in traffic but not enough revenue can survive only on investors' patience. ## Lessons - In a model where you take a small cut of each sale, revenue per unit is low; work out from the start how many users you need to be profitable. - Awards and praise from judges open the door to investors, but metrics are what win the next round. - A seed investment should give you a runway long enough to produce the evidence that will get you to the next round. ## Sources - [Social commerce start-up StilSOS has closed! [Updated]](https://webrazzi.com/2013/11/11/sosyal-ticaret-girisimi-stilsos-kapandi/) - [StilSOS receives a USD 230,000 investment from Galata Business Angels](https://webrazzi.com/2013/01/19/stilsos-yatirim-galata-is-melekleri/) - [A new example of social e-commerce: StilSOS.com](https://webrazzi.com/2012/10/16/stilsos/) - [Turkish e-commerce sites that closed before Markafoni: why did online shopping sites shut down?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) --- # Totsy (2009 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/totsy/ - Sector: E-commerce - Country: United States - Total funding: $23.5 million - Cause of closure: Ran out of cash ## What did it do? Totsy was a members-only flash-sale site for mothers and families. It sold brands' products, from maternity goods and baby equipment to toys and clothing, at discounts of up to 90 per cent in campaigns lasting 72 hours. ## Why did it shut down? Having closed an $18.5 million Series B in July 2012, the company invested in rapid growth while competing with Zulily, which had raised far more money, and aimed to turn a profit in 2013. That target was missed; according to an e-commerce expert at Forrester Research, the company probably spent more than it had and could not raise enough money to survive. Across the sector, too, as the economy recovered there was less surplus stock for brands to offload at deep discounts. In May 2013 Totsy went into liquidation and laid off all 83 of its employees for economic reasons. In July 2013 the company's assets were put up for sale. ## The story Totsy was founded in New York in 2009 by Guillaume Gauthereau and Christophe Garnier. Gauthereau, a vet who had previously worked at Louis Vuitton and Lalique, wanted to adapt the private-sale model for mothers and families. The site worked like an invitation-only club: brands supplied products on consignment, and Totsy sold them at discounts of up to 90 per cent in campaigns lasting 72 hours. The model quickly drew interest. In January 2012 the company had 115 employees and 2 million members; at one point monthly growth had reached 40 to 50 per cent. In July 2012 an $18.5 million Series B with DFJ Gotham and Rho Ventures took total investment to $23.5 million. By then membership had passed 3 million and revenue had risen 125 per cent on the previous year. The company worked with more than 4,000 brands and aimed to turn a profit in 2013. But Totsy was competing in the same market as Zulily, which had raised $43 million and reached about 5 million users. The hoped-for profitability did not come. In May 2013 the company went into liquidation and laid off all 83 of its employees for economic reasons. According to an e-commerce expert at Forrester Research, Totsy had probably spent more than it had and failed to raise enough money to survive. By July 2013 the company's assets had been put up for sale. Totsy's collapse coincided with a period when the flash-sale sector as a whole was struggling. As the economy recovered, there was less surplus stock that brands wanted to offload at deep discounts, which weakened the model's core promise. Growth accelerated by investors' money carried the company to its end within a year once profitability proved out of reach. ## Lessons - Do not tie your profitability target to the next funding round; in low-margin models such as flash sales, calculate your cash runway on the worst-case scenario. - In a business model built on surplus supply, allow for cheap stock drying up when the economy recovers, and develop alternative sources of supply. - If the market leader has raised far more money than you, look for a defensible niche or a different value proposition rather than playing the same game on a smaller budget. ## Sources - [Flash Deals Site Totsy Lands $18.5M To Take On Zulily In The Battle For Shopping Moms](https://techcrunch.com/2012/07/17/totsy-series-b/) - [Flash-sale site Totsy is toppling](https://www.crainsnewyork.com/article/20130517/RETAIL_APPAREL/130519886/flash-sale-site-totsy-is-toppling) - [Why the flash sale boom may be over and what's next](https://www.retaildive.com/news/why-the-flash-sale-boom-may-be-overand-whats-next/396546/) - [Totsy.com: Three men and their baby](https://www.cbsnews.com/news/totsycom-three-men-and-their-baby/) --- # Turntable.fm (2011 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/turntable-fm/ - Sector: Media and entertainment - Country: United States - Total funding: $7 million - Cause of closure: Business model failed ## What did it do? Turntable.fm was a social media site where users listened to music together in virtual rooms. The DJs in a room took turns playing songs, while listeners, represented by avatars, voted on the tracks and chatted. The service was born of a pivot after the team's first product, Stickybits, failed. ## Why did it shut down? Because the service relied on the DMCA's provisions for non-interactive radio rather than striking deals with record labels one by one, it was initially available only in the US. In March 2012 it signed licensing deals with the four major labels, but the cost of running a music service remained high. According to Comscore data, by September 2013 the site had fallen to around 89,000 unique visitors a month. Saying it could not cover its costs through revenue and savings, the company shut the site on 2 December 2013 to focus on Turntable Live. ## The story In January 2011 the Stickybits team faced a hard truth: their app, which let people scan barcodes that brands stuck on their products and earn rewards, had drawn interest from some brands but had failed to win over users. So Billy Chasen, Seth Goldstein, Joseph Perla and a few teammates tried something completely different: a music site where people took turns playing DJ in a virtual room. It was called Turntable.fm. Launched in May 2011, the site went viral within weeks. Users entered rooms as avatars, stepped up to play a song if a DJ seat was free, and listeners voted the tracks up or down; a DJ who collected enough negative votes was skipped. By the end of June active users had reached 140,000, and by September 2011 more than 600,000 people had used the site, with around 1 million songs being played a day. In July 2011 it raised USD 7 million at a USD 35 million valuation in a round led by Union Square Ventures; Lady Gaga and Kanye West were among the investors. But the model had weak spots. Rather than striking deals with record labels one by one, the site initially relied on the DMCA's provisions for non-interactive radio, which is why it could only be used from the US. It signed a licensing deal with ASCAP in July 2011 and with the four major labels in March 2012. Users, meanwhile, drifted away; according to Comscore data, by September 2013 the site was down to around 89,000 unique visitors a month. Chasen said removing the music upload feature saved around USD 20,000 a month, but it was not enough. On 22 November 2013 the company announced it would close Turntable.fm, saying the music service was too expensive to run and that it could not offset this through revenue and savings. Over two years, more than 400 million songs had been played in roughly a million rooms. The site closed on 2 December 2013; Turntable Live, the live concert platform chosen as the new focus, was also short-lived. In 2021 former executives Chasen and Perla set out to revive the brand with two separate new versions. Turntable.fm shows that a product being loved is not the same as it being sustainable. As TechCrunch observed, people mostly listen to music in the background; the need to spend time actively in a room never became a lasting habit beyond a loyal core audience. ## Lessons - If your licensing costs grow with usage, work out your revenue per user before viral growth arrives. - An experience that demands active participation may not become a lasting habit for a kind of content that is usually consumed in the background; measure frequency of use early. - Famous investors and the buzz of the first few weeks are not proof of product-market fit; look at retention data a few months later. ## Sources - [Turntable.fm](https://en.wikipedia.org/wiki/Turntable.fm) - [Turntable.fm Shutting Down So Company can focus on Turntable Live Events Platform](https://techcrunch.com/2013/11/22/turntable-fm-shutting-down-so-company-can-focus-on-turntable-live-events-platform/) --- # Tutorspree (2010 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/tutorspree/ - Sector: Education - Country: United States - Total funding: $1.8 million - Cause of closure: Business model failed ## What did it do? Tutorspree was an online marketplace that matched students and parents with private tutors in their city. Combining a matching algorithm with human education advisers, the company operated in Chicago, San Francisco, New York, Brooklyn, Washington and Los Angeles. ## Why did it shut down? Almost all of the company's customers came from Google's organic search results; other channels it tried, such as paid advertising, partnerships and promotions, did not deliver the same returns. In March 2013 a change on Google's side cut traffic by 80 per cent overnight. Although traffic had largely recovered by June, its quality was not what it had been. Commentators also saw the fact that a matched tutor and family could bypass the platform and deal directly as a weak point in the model. In September 2013 the founders decided the business would not scale the way they had intended, closed the company and planned to return the remaining money to investors. ## The story Tutorspree, founded in 2010 by Aaron Harris, Josh Abrams and Ryan Bednar, was billed as the Airbnb of tutoring when it joined Y Combinator's winter 2011 batch. The New York-based company matched students and parents with tutors in their city. In 2011 it raised a $1 million seed round with participation from Sequoia Capital, Founder Collective, Lerer Ventures, SV Angel and Thrive Capital. According to the assessment Harris later wrote, almost all of the company's customers came from Google's organic search results. Because search engine optimisation was free, the team had focused on it and become expert at it. In March 2012 the team moved to a new model called Agency, which combined the one-to-one attention of a traditional agency with its own matching system. Revenue doubled within a month, tripled again six months later, and margins rose from 15 per cent to 40 per cent. By December 2012 the company was almost profitable, and at the start of 2013 it raised a further $800,000 from Resolute.vc. Then came March 2013. In Harris's words, Google pulled the ground out from under their feet overnight, and traffic fell by 80 per cent. Although traffic had largely recovered by June, its quality was not what it had been. Over time the team had tried channels such as paid advertising, partnerships, discount promotions and targeted mailings, but none came close to the returns of search. Commentators also pointed out that the ability of a matched tutor and family to bypass the platform and deal directly weakened the model. In September 2013 the founders announced that they were closing Tutorspree. Harris said they had built something they were proud of but had realised the business would not scale the way they had intended. The company had reached more than 5,000 tutors in six cities and still had money in the bank when it closed; once creditors and employees had been paid, the remainder would be returned to investors. ## Lessons - Do not tie customer acquisition to a single channel, especially a search engine you do not control; build a second channel while growth is going well. - The good unit economics a free channel provides can mask product problems; test in advance whether the model survives if that channel closes. - In service marketplaces where the two sides can bypass the platform after being matched, give them a reason to find staying on the platform worthwhile for repeat business too. ## Sources - [Tutorspree, The Tutor-Matching Startup Backed By Sequoia And YC, Shuts Down](https://techcrunch.com/2013/09/08/tutorspree-shut-down/) - ['Airbnb for tutoring' startup Tutorspree shuts down](https://venturebeat.com/2013/09/08/airbnb-for-tutoring-startup-tutorspree-shuts-down) - [When SEO Fails: Single Channel Dependency and the End of Tutorspree](https://blog.aaronkharris.com/when-seo-fails-single-channel-dependency-and-the-end-of-tutorspree) --- # VIPDükkan (2010 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/vipdukkan/ - Sector: E-commerce - Country: Turkey - Total funding: $5 million - Cause of closure: Ran out of cash ## What did it do? VIPDükkan was a members-only flash-sale site that sold branded products to its members at a discount through short-lived campaigns. It was remembered as one of the first private shopping sites in Turkey. It built its own logistics centre and tried to win members through television advertising. ## Why did it shut down? According to what co-founder Oğuz Şenol told Webrazzi, ePlanet Capital, which owned roughly half the company, did not want to invest in a new round. When no investment could be found from other sources either, the founders concluded they could not carry on under the competitive conditions in the sector and decided to close. Şenol said many companies in the private shopping market were in a similar position but survived by continually raising new investment. According to a 2017 round-up by the Turkish news outlet Habertürk, the closure came at a time when revenues were falling and operations were getting harder; the company could find neither new investment nor a partner. ## The story Founded in 2010, the year private shopping sites took off in Turkey, VIPDükkan was one of the first players to offer branded goods to members at a discount through short-lived campaigns. In June 2011 it received $5 million from ePlanet Capital. In Webrazzi's 2011 market review, the company's post-investment focus was described as member acquisition. The investment quickly turned into traffic. According to comScore data shared by Webrazzi, in October 2011 VIPDükkan ranked fourth among private shopping sites with 2.07 million unique visitors, behind Markafoni, Limango and Trendyol. The company was spending heavily on advertising, including television, and building its own logistics centre. In November 2012 a second round of undisclosed size came from ePlanet Capital, raising the fund's stake to 47.82 per cent. Chairman Oğuz Şenol was planning innovations for the sector in 2013. According to a 2016 round-up by the Turkish magazine Turkishtime, VIPDükkan had reached close to 4 million members before it closed in 2013, and ePlanet had paid $5 million for a 28 per cent stake in the first round. In mid-2013, however, rumours of a closure began circulating in the ecosystem. Speaking to Webrazzi on 1 July 2013, co-founder Oğuz Şenol confirmed the process. As he explained it, ePlanet Capital, which owned roughly half the company, did not want to join a new round, and no investment could be found from other sources. In a market where competition was so fierce, there was no way to carry on. Şenol added that many companies in the private shopping market were in a similar position but kept going by continually raising new investment. Habertürk's 2017 round-up of e-commerce sites that had closed noted that VIPDükkan could find neither investment nor a partner at a point when revenues were falling and operations were getting harder. In a Bloomberg HT report on the closure of Markafoni, a supplier said he had lost money at VIPDükkan, a sign of the marks the closure left behind. VIPDükkan's story shows how quickly a growth model accelerated by investment can grind to a halt when the investment tap is turned off. ## Lessons - If you depend on a single institutional investor, have a back-up plan in case it decides not to join the next round. - In a model that grows through expensive customer acquisition, growth stops when the flow of investment stops. - If everyone in your sector is constantly raising money and your own unit economics are not solid, you will be the first to reach the end. ## Sources - [Private shopping site Vipdukkan.com is closing](https://webrazzi.com/2013/07/01/vipdukkan-kapaniyor/) - [Vipdükkan receives a second round of investment from ePlanet Capital](https://webrazzi.com/2012/11/22/vipdukkan-eplanet-capital-ikinci-tur-yatirim/) - [October Visitor Numbers for Private Shopping Sites According to comScore](https://webrazzi.com/2011/11/21/comscore-ozel-alisveris-ekim/) - [Turkish e-commerce sites that closed before Markafoni! Why did online shopping sites close?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) - [Why did Markafoni close?](https://www.bloomberght.com/markafoni-neden-kapandi-2018229) - [50 failed start-ups and 50 lessons from their mistakes (1-15)](https://turkishtimedergi.com/dijital-girisim/50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-1-15/) - [Private shopping sites that closed before Markafoni](https://webrazzi.com/2017/06/01/markafoni-kapanisi/) --- # Wantful (2011 – 2013) - URL: https://girisimcikafasi.com/en/startup-graveyard/wantful/ - Sector: E-commerce - Country: United States - Total funding: $5.5 million - Cause of closure: Ran out of cash ## What did it do? Wantful was an online gifting and e-commerce service that offered personalised product recommendations based on the tastes of the person receiving the gift. Working through its website as well as an iPad app, a printed magazine and in-store products, the company shipped orders directly to customers through a network of around 650 retailers. ## Why did it shut down? Wantful released well-received products but could not achieve the rapid growth curve venture capitalists look for in e-commerce. Its expansion from gifts into personalised shopping pitted it against many rivals, such as Wanelo, Wish, Fancy and Polyvore. Nordstrom, which had become a minority shareholder in 2013 and launched a joint gifting venture with the company, did not go ahead with a planned additional investment about a week before the closure. With no time left to find other funding, the company ceased operations on 6 September 2013 and laid off its 16 employees. ## The story Founded by John Poisson, Wantful went live just before the 2011 holiday shopping season. With teams in San Francisco and New York, the company offered users personalised recommendations based on the tastes of the person they were buying a gift for. About a year later it released an iPad app and a printed magazine; going beyond gifts, it moved towards a personalised e-commerce experience in which users could also shop for themselves. Wantful raised a $5.5 million Series A led by Polaris Venture Partners, with Harrison Metal, Greylock Partners and Forerunner Ventures taking part; names such as Dave Morin, Dennis Crowley and Matt Mullenweg were among its angel investors. Orders were shipped directly to customers through a network of around 650 retailers. In 2013 Nordstrom became a minority shareholder, and the two companies launched a joint gifting venture. The shift to personalised e-commerce, however, put Wantful up against a crowded field of rivals such as Wanelo, Wish, Fancy and Polyvore, and the company could not achieve the rapid growth investors expected. The real blow came when the planned Nordstrom investment fell through about a week before the closure. Nordstrom said it had met its obligations and that the company had not met the conditions. Poisson, for his part, said that after Nordstrom pulled back they had no time left to respond. On 6 September 2013 Wantful abruptly shut down and laid off its 16 employees. Nordstrom provided $100,000 to support the employees. Poisson stressed that it is hard for e-commerce companies at later stages to achieve the growth curves venture capital looks for, and that it is not possible to expect a strategic partner to fund the whole business. Wantful's story shows how quickly funding tied to a single partner can turn into a cliff edge. ## Lessons - Do not treat a strategic partner's conditional investment as a done deal; plan your cash runway as if that money will never come. - Rather than expecting a single strategic partner to fund the whole business, keep talking to financial investors while the deal is in progress. - Expanding from a niche value proposition into general e-commerce puts you up against far more crowded competition; strengthen your core product's growth data before expanding. ## Sources - [Personalized E-commerce Startup Wantful Shuts Down](https://techcrunch.com/2013/09/06/personalized-e-commerce-startup-wantful-shuts-down/) - [Gift-Giving Service Wantful Shuts Down Suddenly](https://allthingsd.com/20130906/gift-giving-service-wantful-shuts-down-suddenly/) - [Online Gifting Retailer Wantful Ceases Operations](https://wwd.com/fashion-news/fashion-scoops/online-gifting-retailer-wantful-ceases-operations-7169563/) --- # Bamarang Türkiye (2012 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/bamarang-turkiye/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Bamarang Türkiye was an e-commerce site launched by Rocket Internet in February 2012 that sold design products through short-lived campaigns on the private shopping model. Webrazzi described the site as a clone of the US-based Fab.com. It had no direct competitor in the design products category in Turkey. ## Why did it shut down? No official statement was made about the closure. According to Webrazzi's assessment in May 2012, the site had reached 64,000 visitors a month but was down 6 per cent on the previous month. In early August 2012 Webrazzi wrote that it had heard Bamarang's operations had recently been wound up and that the site had been removed from Rocket's official list; a few days later Rocket Internet decided to shut down its Turkish operation entirely. Habertürk's 2017 round-up also noted that Bamarang closed when its investor pulled out of the country. The view of the founder of DesignLocks, set up the same year to sell design products, that the audience interested in such products was very limited offers a clue to how hard the category was at the time. ## The story In 2011 and 2012 Rocket Internet opened one site after another in Turkey. The German company's method was well known: quickly copy an internet model that worked abroad and grow it with a local team. In February 2012 a new one joined sites such as Zidaya, Sporena, Evimister and Westwing: Bamarang. Bamarang sold design products on the private shopping model, in other words through short-lived campaigns. In its May 2012 dossier on Rocket Internet Turkey, Webrazzi described the site as a clone of the US-based Fab.com. According to the same assessment, Bamarang had no direct competitor in Turkey and, according to Google Ad Planner data, was drawing 64,000 visitors a month in May 2012. However, the site's only known growth figure showed a 6 per cent fall on the previous month. By the summer, Rocket's priorities in Turkey had changed. When Webrazzi checked the Turkey list on the company's official website in early August 2012, Bamarang was missing, and it wrote that it had heard the site's operations had recently been wound up. A few days later, on 17 August 2012, Rocket Internet decided to shut down its Turkish operation entirely, and the other sites also sold off their stock and closed. Bamarang's closure was never a news story in its own right. When the Turkish business site Patronlar Dünyası listed e-commerce sites that had closed in 2013, it added Bamarang.com.tr to the list. Habertürk's 2017 round-up included the site among the ventures that opened in 2012 and closed the same year, attributing the closure to the investor's withdrawal from the country. That same month, a team of former Rocket employees launched DesignLocks for design products; that site too would close a few months later. Bamarang's story shows that there is no guarantee a copied model will find an audience in another market, and how quickly start-ups can disappear when decisions are made not by the local team but by a distant board. ## Lessons - When copying a model that works in another market, measure the size of the target audience in your own market separately. - If traffic starts falling in the first months, look at the repeat buyer rate before expanding your campaign calendar. - If your fate depends on a single investor's decision about a country, think in advance about what could be saved if that decision changes. ## Sources - [Rocket Internet Turkey dossier](https://webrazzi.com/2012/05/08/rocket-turkiye-dosya/) - [Rocket Internet's ventures in Turkey](https://webrazzi.com/2012/08/07/rocket-internet-turkiye-girisimleri/) - [Rocket Internet is shutting down its Turkish operation](https://webrazzi.com/2012/08/17/rocket-internet-turkiye-kapaniyor/) - [The site founded by internet veterans has closed too](https://www.patronlardunyasi.com/internet-duayenlerinin-kurdugu-site-de-kapandi) - [Turkish e-commerce sites that closed before Markafoni](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) --- # Color Labs (2010 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/color-labs/ - Sector: Social media - Country: United States - Total funding: $41 million - Cause of closure: Product problems ## What did it do? Color Labs was a Palo Alto-based start-up that developed a mobile photo-sharing app of the same name. The app let users take photos and see photos taken by others nearby, grouping them according to the user's circle of friends. ## Why did it shut down? Raising $41 million before the product was out sent expectations sky-high; at the March 2011 launch users did not understand the app's interface or its purpose. The app started with a rating of 2 out of 5 on the App Store, and despite around 1 million downloads at launch, it had just under 100,000 active users by September 2011. Co-founder Peter Pham and product director DJ Patil left within three months of the launch. In October 2012 reports emerged that the board had decided to shut the company and that the team would move to Apple for between $2 million and $7 million, and the app was shut at the end of 2012. ## The story In March 2011 Silicon Valley was asking one question: how had a photo app that nobody had yet used managed to raise $41 million? Behind Color Labs were Bill Nguyen, a serial entrepreneur who had earlier founded the music service Lala and sold it to Apple, and Peter Pham. Sequoia Capital had put in $25 million and Bain Capital $9 million, and Silicon Valley Bank had provided $7 million in debt financing. In December 2010 the company had bought the Color.com domain for $350,000. The app arrived on the App Store on 24 March 2011. The idea was to bring together photos taken by people in the same vicinity and group them according to the user's circle of friends. Its name was a nod to the colourful logo of the Apple II, which Nguyen said had changed his life at the age of seven. Sequoia partner Douglas Leone later revealed that the fund had invested only three days before the launch. According to reports in July 2011, Google had wanted to buy Color for $200 million before the launch, and the company had turned the offer down. The launch was a disappointment. Users understood neither the app's interface nor its purpose, and its App Store rating started at 2 out of 5. A week later explanatory text and new tabs were added to the interface, but the first impression had already formed. In an April 2011 interview with Robert Scoble, Pham and Nguyen admitted that the launch had been a wasted opportunity; they said they had piled up a network, a mountain almost, in front of users who did not know how to use it well. Although there were around 1 million downloads at launch, active users numbered fewer than 100,000 by September 2011. The team began to break up too. In June 2011 co-founder Pham left the company, followed by product director DJ Patil. In October 2012 reports emerged that the board had decided to shut the company; some sources denied this and spoke of a possible acquisition. The team was reported to be moving to Apple for between $2 million and $7 million. In November 2012 Color Labs announced that the app would be shut at the end of the year. Color is a case that reminds us that product-market fit is the one thing money cannot buy. The huge investment raised before launch inflated expectations rather than the product, and when the first impression was poor, those expectations turned against the company. ## Lessons - Announcing a large investment before launch raises expectations beyond what the product can carry; test the first impression with a small group of users. - If you cannot explain in one sentence, the first time the app opens, what it is for, downloads will not turn into lasting users. - In a product that relies on network effects, solve before launch the question of what a user sees when nobody around them is using it. ## Sources - [Color Labs](https://en.wikipedia.org/wiki/Color_Labs) - [Color, The $41 Million App, Really Is Shutting Down Now](http://www.businessinsider.com/color-shutdown-2012-11) - [Google Tried To Buy Color For $200 Million. Color Said No.](https://techcrunch.com/2011/07/21/google-tried-to-buy-color-for-200-million-color-said-no/) --- # Evimister (2011 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/evimister/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Evimister was a home-goods e-commerce site launched in Turkey by Rocket Internet in November 2011. It sold a wide range of products, from decor items to home electronics. It quickly became one of Rocket's most visited sites in Turkey. ## Why did it shut down? Evimister's traffic grew rapidly, but the site's future depended on Rocket Internet's decision about Turkey. On 17 August 2012 Rocket decided to close its Turkish operation entirely, and the sites stopped buying new products and began running down their stock. Webrazzi, the Turkish tech news site, reported hearing that some groups were interested in buying Evimister, but no report of a sale actually taking place has been found. Rocket gave no reason; writing as a guest author on Webrazzi, Nurettin Özdoğan argued that the vertical e-commerce model did not suit the campaign-driven Turkish market and that profit margins were low. Crowded competition in the home category may also have played a part: Evim.net, and even Rocket's own site Westwing, were targeting the same customers. ## The story Rocket Internet made a rapid entry into Turkey in the second half of 2011, setting up seven e-commerce companies in about six months. Evimister was one of them. According to a Webrazzi feature from May 2012, the site went live in November 2011 and sold a wide range of products, from home decor to home electronics. The growth was impressive. According to Google Ad Planner data, Evimister reached 570,000 unique monthly visitors within a few months, with visitor numbers up 414 per cent in the previous three months; it ranked 371st in Turkey on Alexa. But the category was crowded. Webrazzi named Evim.net, with 700,000 monthly visitors, as the strongest rival; Evmanya, acquired by Doğan Online, and Dekoreko, backed by e-tohum, were also in the same space. On top of that, Rocket's own private shopping site Westwing also sold home decor. On 17 August 2012 Webrazzi announced that Rocket Internet was closing its Turkish operation. According to the report, Rocket's sites would from then on only sell the stock they had, make no new purchases and then close. The same report also mentioned hearing that a few groups were interested in buying Sporena and Evimister. In early September the Teknokulis page of the daily Sabah wrote that customer complaints that Evimister, Sporena and Zidaya had closed had turned out to be true. No report of a sale actually taking place has been found. In a 2017 round-up of e-commerce sites that had closed, Habertürk counted Evimister among the companies that shut after Rocket Internet's withdrawal from Turkey. Years later, Hürriyet columnist Sefer Levent also recalled that Rocket had sold the products in its warehouses to rival sites. Evimister remains a brief experiment in which traffic growth alone was not enough to extend a company's life. ## Lessons - If you are competing in a crowded category with another company owned by the same investor, you may not be the priority when portfolio decisions are made. - Rapid traffic growth does not guarantee a buyer; a saleable company must also show a path to profitability. - In inventory-based e-commerce, an exit plan must also cover how the stock in the warehouse will be cleared. ## Sources - [A look at the Turkish operations of Rocket Internet, the lord of the clones [Feature] (in Turkish)](https://webrazzi.com/2012/05/08/rocket-turkiye-dosya/) - [Rocket Internet is closing its Turkish operation! [Breaking] (in Turkish)](https://webrazzi.com/2012/08/17/rocket-internet-turkiye-kapaniyor/) - [Why did Rocket Internet leave Turkey? (in Turkish)](https://webrazzi.com/2012/08/19/rocket-internet-neden-turkiyeden-cikti/) - [E-commerce site Zidaya.com has been shut down (in Turkish)](https://www.sabah.com.tr/teknokulis/haberler/2012/09/05/zidayacom-adli-eticaret-sitesi-kapatildi) - [The clone brothers at work (in Turkish)](https://www.hurriyet.com.tr/yazarlar/sefer-levent/klon-kardesler-isbasinda-28936918) - [Turkish e-commerce sites that closed before Markafoni: why did online shopping sites close? (in Turkish)](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri/) --- # Fyonk (2012 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/fyonk/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: No market need ## What did it do? Fyonk was a Facebook-based social gifting service launched in spring 2012 by Deniz Oktar and Barış Can Daylık in Turkey. Users could send gift vouchers from partner shops on a friend's birthday or simply to say thank you. A gift would start with a free voucher provided by a brand, and other friends could chip in money to make it bigger. ## Why did it shut down? According to a retrospective Deniz Oktar wrote in 2016, the rush of sign-ups in the early days was driven by a crowd of around 10,000 people who chased every promotion going; they used the free voucher and never spent anything on top. The team built an algorithm that identified these users with close to 95 per cent accuracy, but the real problem remained: very few people wanted to send a friend a gift voucher with their own money. The vouchers could not be used in physical shops, Facebook announced its own gifting service, and, by Oktar's account, investors held back once Wrapp, the heavily funded Swiss start-up, announced it was coming to Turkey. Oktar's own summary was blunt: the idea did not suit Turkey. ## The story At the start of 2012, Deniz Oktar and Barış Can Daylık had just left SocialWire, the company they had spent four years building and had moved to San Francisco. By Oktar's account, they threw themselves into the next venture very quickly. The idea was simple: in the Facebook era, birthdays had shrunk to a short message posted on someone's wall, and Fyonk would turn that moment into a small gift. Oktar later wrote that Fyonk was an adaptation of Wrapp, a Swiss start-up, and that it remained the first and only copycat business of his life. The team went from idea to launch in 30 days. Webrazzi, the Turkish tech news site, featured the start-up at the end of April 2012, and the service opened to the public on 8 May. It worked through users' Facebook accounts, finding friends' birthdays and suggesting gifts. A friend could send the brand's free voucher once, and others could add money to make the gift bigger. According to figures Oktar shared on stage at Webrazzi Startup'12, six days after launch the service had reached 4,500 active users and 3,500 gift vouchers had been sent. Eleven shops were on board, including Tchibo, Ebebek, Çiçeksepeti and BuldumBuldum. But there was something odd behind the numbers. According to Oktar's 2016 retrospective, with more than a thousand sign-ups a day, the team examined who was coming in and spotted a group of around 10,000 people who followed every kind of promotion. These users redeemed the free voucher and bought nothing on top. The team wrote an algorithm that identified them with close to 95 per cent accuracy and stopped showing them the valuable free vouchers. The office then started receiving complaint calls. Other obstacles appeared too. There was no practical way to let people redeem vouchers in physical shops. Facebook announced its own gifting service. By Oktar's account, when the heavily funded Wrapp announced it would enter Istanbul, investors and websites that had initially seemed keen chose to wait; Wrapp never actually launched in Turkey. Even so, Oktar did not hide the real reason: nobody wanted to send anybody a gift voucher. About three months after launch, the team shut the project down and turned its technical know-how to other work. Fyonk's story shows that a fast start and impressive early numbers mean little without an audience willing to pay. In Oktar's own words, users chasing freebies were not a good audience. ## Lessons - Before celebrating an early surge in sign-ups, look at who those users are and how much they actually transact with money. - Do not scale a product that grows on free incentives until you have seen whether people still use it once the incentive is gone. - If you are adapting a model from abroad, factor in the original company preparing to enter the same market with far greater resources. ## Sources - [Fyonk, a Story of Failing Fast](https://denizoktar.wordpress.com/2016/01/28/fyon-basarisizlik-hikayesi/) - [50 failed start-ups and 50 lessons from their mistakes (1-15)](https://turkishtimedergi.com/dijital-girisim/50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-1-15/) - [Fyonk.com: Wrap your gifts through Facebook](https://webrazzi.com/2012/04/27/fyonk-com-hediyelerinizi-facebook-uzerinden-paketleyin/) - [Fyonk.com reaches 4,500 active users and 11 shops - Webrazzi Startup'12](https://webrazzi.com/2012/05/15/fyonk-com-webrazzi-startup12) --- # Glitch (2009 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/glitch/ - Sector: Gaming - Country: Canada - Total funding: unknown - Cause of closure: No market need ## What did it do? Glitch was a two-dimensional, multiplayer online game played in the browser, developed by Tiny Speck. It deliberately steered clear of combat mechanics, focusing instead on players gathering, making and shaping the world together. The game was free, and players could spend money on options such as avatar customisation. ## Why did it shut down? Glitch officially launched on 27 September 2011, but two months later it went back into beta, citing problems with accessibility for new players and depth for experienced ones. According to Wired, the game did not take off commercially, just as Butterfield's earlier Game Neverending, which turned into Flickr, had not. In November 2012 Tiny Speck announced that the game would close because of limited audience interest, and Glitch was shut down on 9 December 2012. The company turned the internal messaging tool it had used during development into Slack, and was renamed Slack Technologies. ## The story Stewart Butterfield had seen this film before. In 2002, while he was working on a game called Game Neverending, financial difficulties pushed the team towards a side project, and that side project became Flickr. Years after selling Flickr to Yahoo, Butterfield returned to his dream of a never-ending game: in 2009 he went back to British Columbia, founded Tiny Speck and named the new game Glitch. Glitch was a two-dimensional, multiplayer world played in the browser that deliberately left combat out. Players gathered and made things together, grew plants and cooked food, and changed the persistent world through quests. The game was free; revenue was to come from optional purchases such as avatar customisation. Ars Technica found it fun and full of small, witty details. Having moved from closed alpha to beta in February 2011, Glitch opened to everyone on 27 September 2011. After the launch came an unexpected decision. On 30 November 2011 Tiny Speck put Glitch back into beta, citing problems with accessibility for new players and depth of gameplay for experienced ones, and called the move an 'unlaunch'. The game was developed for another year, but the audience did not grow. In November 2012 Tiny Speck announced that it would close the game because of limited audience interest, and Glitch shut down on 9 December 2012 with a final party. The company was praised for giving players access to some of the game's resources and for the care it showed the employees it laid off. The real turning point happened outside the game. While developing Glitch, the team had used an internal messaging tool, which it turned into a separate product. That tool became Slack, and Tiny Speck was renamed Slack Technologies. According to a 2014 profile in Wired, Slack had reached more than 120,000 daily users a few months after its public launch in February 2014. Traces of Glitch live on today: the jazz track played to a participant left alone in Huddles, Slack's audio call feature, was originally composed for Glitch. Fans, meanwhile, used the publicly released source code to build remakes such as Eleven and Odd Giants. The lesson of Glitch is that a product's failure does not mean the team has failed. The game never found an audience, but the tool the team built to solve its own problem spoke to a far bigger market than the game itself. ## Lessons - In a game or consumer product, measure the learning curve of the first session; losing new users kills faster than a lack of content. - Look at the by-products of a failed product; sometimes the real value lies in a tool the team built to solve its own internal problem. - Treating users and employees with care when you shut down builds reputational capital for your next venture. ## Sources - [Glitch (video game)](https://en.wikipedia.org/wiki/Glitch_(video_game)) - [How Stewart Butterfield Created Slack From a Failed Video Game](https://www.wired.com/2014/08/the-most-fascinating-profile-youll-ever-read-about-a-guy-and-his-boring-startup/) - [Butterfly milking and pig nibbling: building the strange world of Glitch](https://arstechnica.com/gaming/2011/11/glitch-the-battle-to-build-a-massive-multiplayer-game-without-combat/) --- # Gowalla (2007 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/gowalla/ - Sector: Social media - Country: United States - Total funding: $10 million - Cause of closure: Acquired and shut down ## What did it do? Gowalla was a location-based social network where users checked in at the places they visited, shared this with friends and kept a record of where they had been. The Austin-based app was also integrated with Facebook Places, Twitter and Tumblr. ## Why did it shut down? In the heyday of location-based apps, Gowalla was chasing exactly the same users as Foursquare. In December 2009 it raised USD 8.4 million in a round led by Greylock Partners, bringing its total funding to around USD 10 million; by November 2010 it had around 600,000 users. Facebook bought the company for an undisclosed sum on 2 December 2011; the deal did not include user data, and the team moved to Facebook in January 2012. The service closed in March 2012, and the site went offline before users could be offered the data download they had been promised. ## The story Gowalla was a start-up launched in Austin by Josh Williams and Scott Raymond, and the app went live in 2009. Users checked in at the places they visited, shared this with friends and kept a record of where they had been. The app also linked up with Facebook Places, Twitter and Tumblr. In the location-based app race of the day, Gowalla's rival was Foursquare, and the two companies were fighting for the same early-adopter audience. In December 2009 a USD 8.4 million round closed, led by Greylock Partners and joined by angel investors such as Chris Sacca, Kevin Rose and Jason Calacanis. The capital raised from investors, Founders Fund among them, reached around USD 10 million. By November 2010 the app had around 600,000 users. On 2 December 2011 Facebook announced it had bought Gowalla for an undisclosed sum. The deal did not include user data. In January 2012 Williams, Raymond and the team moved to Facebook's headquarters in Palo Alto and started working on Timeline. Gowalla closed in March 2012. Users had been told they would be able to download their check-in history, photos and lists, but the site went offline before this was offered. One investor told The Next Web that he had received his small investment back as Facebook shares of lower value. In October 2020 Williams announced he would revive the brand, and the new Gowalla was released for iPhone in March 2023. But the comeback was short-lived; in April of the same year it was reported that active development had stopped. Gowalla's original story is a reminder that a product left in the shadow of a strong rival is often sold together with its team and then shut down. ## Lessons - When you compete with a bigger rival in the same category, doing similar features more elegantly is not enough; give users a reason to come back that they cannot find with the rival. - If you promise users they can export their data, have the tool ready before you close; the site shut down before Gowalla users could download their check-in history. - Team-focused sales paid in shares may not meet early investors' expectations; talk to investors early about the terms of a sale and the product's fate. ## Sources - [Gowalla](https://en.wikipedia.org/wiki/Gowalla) - [Well that's that. Gowalla shuts down.](https://thenextweb.com/news/well-thats-that-gowalla-shuts-down) - [Gowalla returns to see if location-based networking is ready for its mainstream moment](https://techcrunch.com/2023/03/10/gowalla-location-based-social-app/) --- # Monster Türkiye (2008 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/monster-turkiye/ - Sector: HR and workforce - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Monster Türkiye was the local edition, published at monster.com.tr, of Monster, the global job listings site founded in the US in 1994. The site published employers' vacancies and connected job-seeking professionals with career opportunities. Its operations in Turkey were run through Monster Recruitment İnsan Kaynakları ve Danışmanlık Ltd. Şti. ## Why did it shut down? When Monster arrived in Turkey, the market was in the hands of local sites such as Kariyer.net, Yenibiris.com and SecretCV.com. The company gave no reason in its closure email. According to Digital Age, industry figures said Monster had struggled to compete with these local sites and had pulled out for that reason. Monster also exited other emerging markets such as Brazil and Mexico on the same day, which suggests that the decision was part of a narrowing of the company's global priorities (interpretation). ## The story Monster, founded in the US in 1994 by Jeff Taylor, was one of the few internet companies to survive the dotcom crash. Webrazzi, the Turkish tech news site, noticed that the Turkish version of the site had quietly gone live in January 2007, and greeted with curiosity the arrival of a global rival in a market dominated by local players such as Kariyer.net, Yenibiris.com and SecretCV.com. Later reports stated that Monster Türkiye began operating in 2008. Under the slogan Kariyer Canavarı (“Career Monster”), monster.com.tr published job listings and connected employers with job-seeking professionals. In 2011 the site was nominated in the Best Job Search Site category at the Webrazzi Awards. Leadership of the local market, however, lay with the long-established local sites. An email sent to users on 20 December 2012 announced that the Turkish website would close on 28 December 2012 and go completely out of service. In line with the privacy policy, all personal information and CVs would also be deleted from Monster's database. Webrazzi wrote that, after the closure news from e-commerce, a new one had now been added from the human resources field, and noted that there was no clear information about the company's performance. Digital Age, citing Hürriyet, reported that Monster exited other emerging markets such as Brazil and Mexico on the same day as Turkey. According to the same report, industry figures said the company had struggled to compete with local careers sites such as Yenibiris.com, Kariyer.net and Secretcv.com and had decided to pull out for that reason. A note added to the page stated that the country page had been discontinued as of 28 December 2012. Monster's Turkish adventure lasted around four years. When the company was bought by Randstad for $429 million in 2016, it operated in 40 countries, and Turkey was not among them. Monster Türkiye's story shows that, in job listings markets with strong network effects, a global brand name alone may not overcome the advantage of local leaders. ## Lessons - In markets with strong network effects, such as job listings, you cannot overtake the local leader on the strength of a global brand name alone. - When entering a new market, plan from the outset how you will win over the local employer and candidate base. - The local arm of a global company can be one of the first items cut when headquarters downsizes. ## Sources - [Monster Türkiye is closing!](https://webrazzi.com/2012/12/20/monster-turkiye-kapaniyor/) - [Monster.com.tr has closed](https://digitalage.com.tr/monster-com-tr-kapandi/) - [Monster Türkiye is live](https://webrazzi.com/2007/01/20/monster-turkiye-yayinda/) - [Monster.com, the veteran of the job listings vertical, sold for $429 million](https://webrazzi.com/2016/08/09/is-ilanlari-dikeyinin-kadim-sitesi-monster-com-satildi/) --- # Pabbuc.com (2005 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/pabbuc/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Team problems ## What did it do? Pabbuc.com was a vertical e-commerce site selling shoes, bags and accessories, founded by Serdar Yaman in Izmir in 2005. It was remembered as Turkey's first online shoe retailer and sold products from more than 70 brands. In 2009 it received investment from the founders of GittiGidiyor, the Turkish online marketplace. ## Why did it shut down? Founder Serdar Yaman told Webrazzi that for a long time they had been talking to investors in Turkey to raise new funding for the company, without success. According to Yaman, a difference in vision emerged between him and his partners, particularly after the sale of GittiGidiyor, and they decided to part ways. No new stock had been bought in the six months before the closure; talks to sell the site as it stood also came to nothing. A 2017 round-up by Habertürk likewise attributed the closure to a disagreement between partners. The company stated that it had not gone bankrupt but had entered liquidation. ## The story When Serdar Yaman set out to sell shoes online in Izmir in 2005, it was an idea that had barely been tried in Turkey. As Webrazzi later reported, there was a time when he had to keep the stock in his own home. Pabbuc.com grew by adding bags and accessories to shoes and came to be remembered as Turkey's first online shoe retailer. In September 2009 a partnership arrived that changed the site's fortunes. Burak Divanlıoğlu and Serkan Borançılı, the founders of GittiGidiyor, the Turkish online marketplace, each took a 20 per cent stake, and Burak Büyükdemir, founder of Goril Bilişim, took 4.2 per cent. The amount invested was not disclosed. According to figures shared in February 2012, Pabbuc.com had grown by 500 per cent two years running. Monthly visitors had passed 1 million, there were more than 80,000 products in the warehouse, and 99 per cent of more than 11,000 customer reviews were positive. Behind that picture, however, another story was unfolding. As Yaman later explained, a difference in vision emerged between him and his partners, particularly after the sale of GittiGidiyor. He talked to investors in Turkey to find new funding for the company, without success. No new stock could be bought in the last six months, and attempts to sell the site also failed. On 30 November 2012 Pabbuc.com announced that it was suspending sales indefinitely. The statement said orders placed up to that day would be delivered and thanked the suppliers of more than 70 brands and the staff. Yaman said the company had not gone bankrupt but had entered liquidation. According to a 2016 round-up by Turkishtime, Yaman had said at the time of the 2012 closure that sales were going well, that they were selling more than 10,000 pairs of shoes a month and that 2,500 pairs had been sold even in the last four days; the company had once employed 49 people, but by the closure the number had fallen to 19. The closure made such waves in the ecosystem that a few days later Webrazzi published an article drawing 13 lessons for founders from the Pabbuc case; the first was that looking for investment can take months even for a company that is doing well. Pabbuc.com's story shows how a start-up that began with the right partners at the right time can be left on its own when those partners' priorities change. ## Lessons - When your investors' own priorities change, so does the way they look at your company; set up your shareholder agreement with that in mind. - Start looking for investment before you need it; the process takes months even for a company that is doing well. - Stopping restocking is the first signal customers get before a closure; draw up your cash plan before it comes to that. ## Sources - [Pabbuc.com has closed [Updated]](https://webrazzi.com/2012/11/30/pabbuc-com-kapandi-son-dakika/) - [Investment in Pabbuc.com from the founders of GittiGidiyor!](https://webrazzi.com/2009/09/14/gittigidiyor-kurucularindan-pabbuc-coma-yatirim/) - [Pabbuc.com grows 500 per cent two years running [infographic]](https://webrazzi.com/2012/02/14/pabbuc-com-iki-yildda-ust-uste-yuzde-500-buyume-gosterdi-infografik/) - [13 lessons to learn from e-commerce start-ups that have closed](https://webrazzi.com/2012/12/03/kapanan-e-ticaret-girisimlerinden-cikarmaniz-gereken-13-ders/) - [The Turkish e-commerce sites that closed before Markafoni! Why did online shopping sites shut down?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) - [50 failed start-ups and 50 lessons from their mistakes (1-15)](https://turkishtimedergi.com/dijital-girisim/50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-1-15/) --- # Saklışehir (2011 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/saklisehir/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: No market need ## What did it do? Saklışehir was a Turkish deals site launched in 2011 that sold discounted experiences using the group-buying model. It targeted conservative users with traditionally themed deals, such as a calligraphy workshop in Istanbul's Grand Bazaar or a photo shoot in Ottoman costumes. At first it offered deals only in Istanbul. ## Why did it shut down? In the self-critique he wrote after the closure, founder Ömer Ekinci named the target audience as the first mistake: conservatism was not a definable customer profile. He had not set aside a separate budget for the site, thinking he could keep it going on revenue from his main company, Desnet; so instead of an experienced team, he started out with young people who did not know e-commerce. He also admitted that he had not invested enough in technical infrastructure and marketing skills, and that he could not focus fully because he kept his role at Desnet. The difficulty and fast-changing dynamics of the group-buying market made things harder still. About a year later Ekinci closed the site and returned to his main business. ## The story Ömer Ekinci had grown Desnet, the company he founded with his father, in barcode and field sales systems, and won the Young Entrepreneur of the Year award in 2009. In 2011, as group-buying sites were multiplying rapidly in Turkey, he decided to enter that market too. According to GZT, the idea was born when a friend who made modest Islamic clothing said they could not sell their products on every platform; it later evolved into a platform for selling services and experiences. Saklışehir opened in June 2011 as a deals site aimed at conservative users. Its first deals included a calligraphy workshop in the Grand Bazaar, a liver menu at Ciğeristan and a photo shoot in Ottoman costumes. According to Webrazzi, the Turkish tech news site, the site sold nearly 150 deals on its first day. In an interview before the launch, Ekinci said they had worked on the project for six months and had attracted investor interest before going live. A year later the picture had changed. In a post published on his own blog in November 2012, Ekinci described the moment he realised Saklışehir was not succeeding and listed his mistakes one by one. The first was the target audience: conservatism was not a measurable customer profile. He had not set aside a separate budget for the site, thinking he could cover its costs from Desnet's revenue. So instead of an experienced team, he worked with young people who did not know e-commerce but were keen to learn; he made do with off-the-shelf software and did not invest enough in technical infrastructure. Because he did not give up his role at Desnet, he could not focus fully, and after a while he realised he had also been neglecting his main company. He did not raise investment either; in his post he said that, as an investor, he would not have invested in himself at the time. According to an e-commerce round-up published in November 2013, Saklışehir had closed in September 2012. Ekinci turned his full attention to Desnet. Speaking to GZT years later, he summed up the reason in a single sentence: "We failed because I didn't really know my target audience." Following Ekinci's post, Webrazzi also cited Saklışehir, together with Pabbuc.com, which closed the same week, as examples e-commerce entrepreneurs could learn from. Saklışehir's story stands out as one of the rare Turkish failure stories in which a founder wrote openly about his own mistakes. ## Lessons - Define your target audience by measurable needs and behaviours, not by a label. - Do not start a new business without a separate and sufficient budget; good intentions are no substitute for capital. - Starting a venture as a side project while running your existing business can put both at risk. - Enter a field you do not know with an experienced team that does. ## Sources - [Why did Saklışehir fail? Why did I flop in e-commerce? [A failure story]](https://web.archive.org/web/20121204022955/http://www.omerekinci.com:80/e-ticarette-neden-cuvalladim-bir-basarisizlik-hikayesi.html) - [13 lessons to learn from e-commerce start-ups that closed](https://webrazzi.com/2012/12/03/kapanan-e-ticaret-girisimlerinden-cikarmaniz-gereken-13-ders/) - [Saklışehir, the Turkish-style player in the deals market, launches](https://webrazzi.com/2011/06/07/saklisehir-acildi/) - [Ömer Ekinci turned his entrepreneurial failures into success](https://www.gzt.com/hayat/omer-ekinci-girisimcilikte-basarisizliklari-basariya-donusturdu-3768494) - [Entrepreneurs' failures in e-commerce](https://www.isfikirleri-girisimcilik.com/girisimcilerin-e-ticarette-basarisizliklari) - [50 failed start-ups and 50 lessons from their mistakes (30-50)](https://turkishtimedergi.com/dijital-girisim/%EF%BB%BF-50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-30-50/) --- # Sosyomat (2006 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/sosyomat/ - Sector: Social media - Country: Turkey - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Sosyomat was a tag-based social network launched in 2006 by Pilli Network, the Turkish owner of sites such as hafif.org and bildirgec.org. Users added friends, connected through shared interests, wrote comments on topics and could create their own pages. A new version in 2007 added groups run by users under their own rules, status messages and personal blogs. ## Why did it shut down? According to Hasan Yalçınkaya, one of Pilli's founders, the site's advertising revenue had been far below its hosting costs for the past few years, and Sosyomat was opening a significant hole in Pilli's budget every month. Increasing advertising revenue or building a new revenue model required investment, but the company had no resources to spare for it. In the assessment of Webrazzi, the Turkish tech news site, Facebook's outpacing of almost every local social network was the main reason Sosyomat lost users. The closure announcement also noted that nobody left at the company understood the site's code. The site closed on 20 September 2012. ## The story In the summer of 2006 Facebook was still unknown in Turkey. At the time Pilli Network, known for user-generated content sites such as hafif.org, bildirgec.org and 22dakika.org, was working on a new project: Sosyomat, a tag-based social network. The first start-up profile published by Webrazzi, the Turkish tech news site, in August 2006 was also about Sosyomat. Users added friends, connected with people who shared their interests, wrote comments on topics and could create their own pages. The new version that arrived in 2007 changed the site considerably. Users could set up public, approval-only or completely private groups and run them under their own rules. Status messages showing what friends were doing, a follow feature and personal blogs were also added. According to NTV, Sosyomat was among the top three friendship and social networking sites in a vote by Webrazzi members choosing the best of 2009. But Facebook's rapid spread in Turkey left most home-grown social networks behind. Hasan Yalçınkaya, who became Pilli's sole owner through a sale of shares between the partners in 2011, announced that the company was abandoning the model in which it shared advertising revenue with writers and would rewrite its infrastructure from scratch. Sosyomat's fate became clear a year later. In September 2012 visitors to the site were met with a note saying Sosyomat would close on 20 September. Users were asked to back up their posts and collect their friends' contact details. The note also contained a striking admission: “Nobody left at Pilli understands Sosyomat's code.” In a statement to Webrazzi, Yalçınkaya explained that the site's advertising revenue had fallen far below its hosting costs over the past few years and that Sosyomat was opening a significant hole in Pilli's budget every month. Investment was needed to raise revenue, but those resources did not exist. Sosyomat's story shows how quickly the home-grown social networks that built their own communities in the pre-Facebook era fell silent once a global platform began meeting the same need on a far larger scale. ## Lessons - On a community site that relies on advertising revenue, losing users rapidly erodes income while costs stay fixed. - If you meet the same need as a global platform, make your difference clear and defensible. - When the team that knows the product breaks up, the product becomes technically unsustainable too. ## Sources - [The end of a legend: Sosyomat.com is closing (in Turkish)](https://webrazzi.com/2012/09/10/sosyomat-kapaniyor/) - [ntvmsnbc is the best again (in Turkish)](https://www.ntv.com.tr/turkiye/ntvmsnbc-yine-en-iyisi,B3VP6QkUF0StIDDQkGMRZA) - [Pilli Network's new venture: Sosyomat (in Turkish)](https://webrazzi.com/2006/08/10/pillinetworkun-yeni-girisimi-sosyomat/) - [Sosyomat's new version and first screenshots (in Turkish)](https://webrazzi.com/2007/08/03/sosyomatin-yeni-versiyonu-ve-ilk-ekran-goruntuleri/) - [Pilli Network sheds its skin (in Turkish)](https://webrazzi.com/2011/06/17/pilli-network-degisim/) --- # Sporena (2011 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/sporena/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Sporena was a sports-focused e-commerce site that Rocket Internet opened in Turkey in November 2011. It sold sports shoes, clothing and accessories from nearly 40 brands, with free shipping and returns within a month. Its goal was to be the online sports store with the widest choice of brands in Turkey. ## Why did it shut down? Sporena gained traffic quickly, but it was in no position to decide its own fate. In early August 2012 Webrazzi, the Turkish tech news site, reported that Rocket Internet planned to continue in Turkey only with Zidaya, which was doing better, and that Sporena would go offline in September; Zidaya was already selling Sporena's products too. A few days later Rocket decided to close its Turkish operation altogether. According to Nurettin Özdoğan, writing as a guest author on Webrazzi, the vertical e-commerce model may not have reached the expected scale in a Turkish market dominated by campaign-driven shopping. Habertürk also wrote that Sporena closed with Rocket's exit from Turkey. ## The story Sporena was one of the pieces of the rapid investment wave Rocket Internet launched in Turkey in the second half of 2011. According to a Webrazzi report in December 2011, the site went live as a joint effort by Serhat Karahan and Aslı Fidangenç. Targeting users who loved sportswear and were interested in alternative sports, Sporena sold shoes, clothing and accessories from nearly 40 brands. Free shipping and the option to return or exchange within a month were the promises the site put front and centre. Aslı Fidangenç summed up their goal as becoming Turkey's most comprehensive online sports store. The first months went by fast. According to a comparison Webrazzi made in May 2012 using Google Ad Planner data, Sporena had reached 350,000 monthly unique visitors, and its traffic had grown by 171 per cent over the previous three months. Sporcum.com, cited as its closest rival, had around 120,000 monthly visitors. But Sporena's future depended on its place in Rocket's Turkish portfolio. On 7 August 2012 Webrazzi, citing sources close to the company, wrote that Sporena would go offline in September and that Rocket would continue in Turkey only with Zidaya, which was doing better. Zidaya was already selling Sporena's products too. Ten days later Rocket Internet decided to close its Turkish operation altogether; according to Webrazzi, most of the company's roughly 400 employees were expected to lose their jobs. According to the same report, Rocket's sites in Turkey would take in no new products from then on, would sell only the stock they had on hand and would then go offline. In September 2012 Sabah's Teknokulis page wrote that complaints that Sporena, Evimister and Zidaya had closed had turned out to be true. Habertürk, in a list compiled in 2017, also counted Sporena among the sites that closed with Rocket's exit from Turkey. ## Lessons - If you sell the same products to the same customers as sister companies under the same roof, you may be the first to be shut down. - Traffic growth is no substitute for profitable unit economics. - A vertical store struggles to scale if it does not offer a better selection or experience than general sites. ## Sources - [A new vertical e-commerce site for sports enthusiasts from Rocket Internet (in Turkish)](https://webrazzi.com/2011/12/06/sporena-rocket-internet/) - [A look at the Turkish operations of Rocket Internet, master of clones [Dossier] (in Turkish)](https://webrazzi.com/2012/05/08/rocket-turkiye-dosya/) - [Rocket Internet showcases its ventures with a new website (in Turkish)](https://webrazzi.com/2012/08/07/rocket-internet-turkiye-girisimleri/) - [Rocket Internet is closing its Turkish operation! [Breaking] (in Turkish)](https://webrazzi.com/2012/08/17/rocket-internet-turkiye-kapaniyor/) - [Why did Rocket Internet leave Turkey? (in Turkish)](https://webrazzi.com/2012/08/19/rocket-internet-neden-turkiyeden-cikti/) - [E-commerce site Zidaya.com shut down (in Turkish)](https://www.sabah.com.tr/teknokulis/haberler/2012/09/05/zidayacom-adli-eticaret-sitesi-kapatildi) - [Turkish e-commerce sites that closed before Markafoni: why did online shopping sites shut down? (in Turkish)](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri/) --- # Vimjo (2010 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/vimjo/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Vimjo was an Istanbul-based e-commerce site launched in 2010 to sell more than 25,000 personal care products, from oral and dental care and home medical devices to cosmetics and healthcare products. It became known for its TV adverts, promotions and fast delivery within Istanbul. The company also opened a physical shop in Ümraniye and planned to build a nationwide network of stores. ## Why did it shut down? According to a 2012 report in the Turkish daily Sabah, Vimjo was unable to sell the goldenberry ('altın çilek') capsules it had stockpiled in large quantities after the product was banned following deaths linked to counterfeit production, and it slid into a financial crisis. According to the same report, former executives said uncontrolled spending had also played a part; millions of dollars had been paid for adverts featuring celebrities. It was also reported that the technical infrastructure and distribution system had not been set up properly. Sabah wrote that nearly 40 creditor companies had filed enforcement proceedings over claims worth millions of dollars. Turkishtime also noted that the site closed in 2012 with debts of millions of dollars, and that the main causes were stock management and a lack of corporate governance. ## The story Vimjo's story began in a small shop in Istanbul owned by the Küçükoğlu family from Aydın. According to Sabah, Murat Küçükoğlu got into business selling slimming products online, then began marketing personal care products imported from Europe and other countries through Küçükoğlu Gıda. Run together with his brothers Mehmet and Mesut Küçükoğlu, the business turned into a large e-commerce venture under the Vimjo brand in 2010. At a press conference in September 2010 the targets were ambitious. According to a report by BThaber, general manager Ahmet Hakan Özgür said they would have invested more than USD 15 million by the end of 2010 and that the site offered more than 25,000 products, from oral and dental care to cosmetics. Vimjo cast celebrities in its TV adverts, promised delivery within a few hours inside Istanbul and opened its first physical shop in Ümraniye. The plan was to reach 3 shops in Istanbul and 17 nationwide. Membership rose to 130,000. By March 2012 the picture had changed completely. Sabah wrote that the company had reached the point of halting operations. According to the report, Vimjo had stockpiled large quantities of goldenberry capsules, one of the most popular products of the day; when the product was banned following deaths linked to counterfeit production, that stock was left on its hands. Former executives said uncontrolled spending, above all expensive adverts featuring celebrities, had also put the company in difficulty. The site had become unable to deliver products to customers, and online complaints ran into the thousands. According to the same report, nearly 40 creditor companies had filed enforcement proceedings against Vimjo over claims worth millions of dollars. Years later, in a list of failed start-ups it compiled, Turkishtime wrote that Vimjo closed in 2012 with debts of millions of dollars, and that the main causes were weak stock management and a lack of corporate governance. Presented as one of the biggest investments in the sector, the venture passed into history in less than two years. ## Lessons - Loading up on large stocks of a single popular product puts the whole company at risk when that product is banned. - Your advertising budget should grow in proportion to revenue and unit economics. - Get stock management and distribution on a solid footing before aiming for a network of stores. ## Sources - ["vimjo.com" wants to be the one-stop shop for personal care](https://www.bthaber.com/vimjo-com-kisisel-bakimin-tek-adresi-olmak-istiyor/) - [It was the biggest e-commerce investment](https://www.sabah.com.tr/ekonomi/2012/03/30/altin-cilekle-altin-vurgun) - [50 failed start-ups and 50 lessons from their mistakes (30–50)](https://turkishtimedergi.com/dijital-girisim/%EF%BB%BF-50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-30-50/) --- # Zidaya (2012 – 2012) - URL: https://girisimcikafasi.com/en/startup-graveyard/zidaya/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Zidaya was an e-commerce site launched in Turkey in February 2012 by the German company builder Rocket Internet. It sold shoes, clothing, accessories and cosmetics, and occasionally featured technology products too. It quickly became one of Rocket's most visited sites in Turkey. ## Why did it shut down? Zidaya's fate depended less on its own performance than on Rocket Internet's decision about Turkey. On 17 August 2012 the company decided to close its Turkish operation, and most of its roughly 400 employees lost their jobs. Rocket gave no official reason for the exit; according to commentary reported by Wamda, returns in Turkey did not cover the cost of teams built on high salaries. Nurettin Özdoğan, writing as a guest author on Webrazzi, also argued that the vertical e-commerce model did not suit the Turkish market, where campaign-driven shopping dominated, and that profit margins were low. Zidaya carried on selling off its stock for a short while and then closed. ## The story Rocket Internet was a German company builder known for rapidly transplanting successful internet models to other countries. According to a feature Webrazzi put together in May 2012, the company entered Turkey in the second half of 2011, quickly reached around 400 employees and set up seven separate e-commerce ventures. The most prominent of these was Zidaya, launched in February 2012. There had been talk that Rocket would bring the Zalando brand to Turkey; instead, a new brand was created. Zidaya sold shoes, clothing, accessories and cosmetics, and occasionally featured different products such as the new iPad. According to Webrazzi's calculations based on Google Ad Planner data, within a few months the site reached 550,000 unique visitors a month and climbed to 204th place in Turkey's visitor rankings. In early August Webrazzi reported that, because Zidaya was doing well, Rocket was considering carrying on in Turkey with this site alone. A few days later the picture changed. On 17 August 2012 Webrazzi, citing information confirmed from inside the company, wrote that Rocket Internet was shutting down its Turkish operation entirely; the news was also picked up by foreign outlets such as The Next Web. A Zidaya official speaking to Sabah's Teknokulis page said the site had been closed to sales, that layoffs which began on 31 August would be completed on 14 September, and that the site would close once its stock ran out. Years later, Hürriyet columnist Sefer Levent recalled that Rocket had sold the products in its warehouses to rival sites. Rocket Internet did not explain the reasons for its decision. Commentators converged on the view that the vertical e-commerce model did not suit the campaign-driven Turkish market and that returns did not cover the cost of teams built on high salaries. Zidaya's story shows that even when growth figures look good, a company's future can depend on the calculations made at headquarters. ## Lessons - If you are part of a foreign company builder, your fate depends more on headquarters' portfolio decisions than on your local performance. - A team built on high salaries for rapid growth can be dismantled just as quickly when return expectations are not met. - Copying a model that works in another country without understanding a market's shopping habits is risky. ## Sources - [A look at the Turkish operations of Rocket Internet, lord of the clones [Feature]](https://webrazzi.com/2012/05/08/rocket-turkiye-dosya/) - [Rocket Internet showcases its ventures with a new website](https://webrazzi.com/2012/08/07/rocket-internet-turkiye-girisimleri/) - [Rocket Internet is closing its Turkish operation! [Breaking]](https://webrazzi.com/2012/08/17/rocket-internet-turkiye-kapaniyor/) - [Why did Rocket Internet leave Turkey?](https://webrazzi.com/2012/08/19/rocket-internet-neden-turkiyeden-cikti/) - [Rocket Internet Exits Turkey, May Fire 400 People](https://thenextweb.com/news/rocket-internet-reportedly-exits-turkey-despite-fast-growing-internet-economy-sheds-400-staff) - [UPDATED: Rocket Internet Exits Turkey, Mizado, Expands Amazon Clone in Egypt and Morocco](https://www.wamda.com/2012/08/rocket-internet-to-exit-turkey-mizado-refocus-on-egypt-and-north-africa) - [E-commerce site Zidaya.com has been closed](https://www.sabah.com.tr/teknokulis/haberler/2012/09/05/zidayacom-adli-eticaret-sitesi-kapatildi) - [The clone brothers at work](https://www.hurriyet.com.tr/yazarlar/sefer-levent/klon-kardesler-isbasinda-28936918) - [Turkish e-commerce sites that closed before Markafoni! Why did the online shopping sites shut down?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri/) --- # İçkisepeti (2008 – 2011) - URL: https://girisimcikafasi.com/en/startup-graveyard/ickisepeti/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? İçkisepeti was an e-commerce site launched in Istanbul in the summer of 2008 that delivered alcoholic drinks ordered online or by phone to customers' doors. It operated 24 hours a day, every day of the week, delivering in an average of 30 minutes by motorbike and car from its warehouse in Sefaköy. Alongside around 300 kinds of drink, it also sold cigarettes, cigars and snacks. ## Why did it shut down? İçkisepeti's closure stemmed not from a market or team problem but from a change in the law. In March 2011 the company announced on its own Twitter account that it had stopped its online ordering service under Article 175 of Law No. 6111. According to a 2017 round-up by the Turkish news outlet Habertürk, the site was forced to close after this law banned the sale of alcohol online. Because the entire business model was built on online and phone orders, the regulation wiped out the core product at a stroke. It was a textbook example of how a start-up in a regulated industry can be rendered completely unviable by a single change in the law. ## The story Cenk Dilbaz got the idea when he ran out of drink at his home in Yeşilköy and found all the shops nearby closed. The owner of a travel company called Kuzen Turizm, Dilbaz decided to turn this small annoyance into a business. İçkisepeti launched in Istanbul in the summer of 2008. According to a report by the Turkish news site Ensonhaber in July 2008, the site was open 24 hours a day, every day of the week. Couriers on motorbikes and in cars delivered from the warehouse in Sefaköy to anywhere in Istanbul in an average of 30 minutes. The catalogue held around 300 kinds of drink, and cigarettes, cigars and snacks were sold too. Users could order online or by phone and pay at the door in cash or by credit card. Dilbaz said the site had 50,000 visitors on its opening day, that they had started with a team of 20 and that they had spent around YTL 700,000 (new Turkish lira) on infrastructure in a year. Franchise requests had come in from Bursa, Ankara, İzmir and Antalya. Dilbaz argued that by making it unnecessary to get in the car to buy drink, the service would also reduce drink-driving. İçkisepeti ran on this model for about two and a half years. But Law No. 6111, passed in 2011, changed the ground the company stood on. On 7 March 2011 İçkisepeti announced in a post on its Twitter account that it had stopped its online ordering service under Article 175 of Law No. 6111. In Habertürk's 2017 list of closed e-commerce sites, İçkisepeti also appeared as the site forced to close after the ban on selling alcohol online. İçkisepeti's story highlights a risk that founders often fail to factor in: the rules changing. There was demand, the logistics worked and the idea had quickly drawn interest. But because the whole business relied on online sales, a single change in the legal framework wiped out the core product overnight. The company had no other channel or product to switch to. ## Lessons - With products exposed to regulation, keep track from the start of the legal basis for your business model and of any possible changes. - If you depend on a single sales channel, have a plan B you can switch to if that channel closes. - A promise of fast delivery can create strong demand, but demand alone does not remove legal risk. ## Sources - [Turkish e-commerce sites that closed before Markafoni: why did online shopping sites shut down?](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri/13) - [When the drink runs out at home](https://www.ensonhaber.com/ekonomi/evde-icki-bitince-117826) - [We have stopped our online ordering service under Article 175 of Law No. 6111](https://twitter.com/ickisepeti/status/44728119193645056) - [Shopping sites that have closed so far](https://www.kartal24.com/73531-kapanan-alisveris-siteleri) --- # Solyndra (2005 – 2011) - URL: https://girisimcikafasi.com/en/startup-graveyard/solyndra/ - Sector: Energy and climate - Country: United States - Total funding: $198 million - Cause of closure: Lost to competitors ## What did it do? Solyndra was a Fremont-based solar company that made cylindrical panels built from copper indium gallium selenide (CIGS) thin-film cells. The panels were designed for large, flat commercial roofs and, laid horizontally in dense rows, promised to generate more electricity per roof. In 2009 the company received a $535 million federal loan guarantee. ## Why did it shut down? Between 2009 and mid-2011 the price of polysilicon, the key input for rival technologies, fell by around 89 per cent, and Chinese manufacturers' conventional silicon panels became very cheap. Solyndra's custom-designed panels could not compete at those prices; in November 2010 the company consolidated production into a single plant and made layoffs. Fab 2, the new $733 million factory built largely with the federal loan guarantee, became a heavy fixed-cost burden. On 31 August 2011 the company announced it had halted all operations, laid off its 1,100 employees and would file for Chapter 11 bankruptcy. ## The story Fab 2, opened in Fremont in September 2010, was a $733 million, robot-equipped, next-generation solar panel factory. Its construction had drawn on a $535 million federal loan guarantee and at least $198 million from private investors. A year later the factory was silent, and Solyndra was at the centre of one of the most controversial bankruptcies in US history. Chris Gronet founded the company in May 2005. Solyndra made cylindrical panels built from copper indium gallium selenide (CIGS) thin-film cells; laid horizontally in dense rows on large, flat commercial roofs, with wind able to pass between them, the panels were meant to generate more electricity per roof. Its investors included the George Kaiser Family Foundation, U.S. Venture Partners, CMEA Ventures, Redpoint Ventures and Virgin Green Fund. In 2009 the Obama administration guaranteed a $535 million loan; the company reported revenue of $100 million that year and around $140 million in 2010. The market, however, turned against it. Between 2009 and mid-2011 the price of polysilicon, the key input for rival technologies, fell by around 89 per cent. Conventional panels from Chinese manufacturers such as Suntech and Yingli became very cheap, and Solyndra's custom design could not compete at those prices. In November 2010 the company consolidated production into a single plant, laid off around 40 employees and did not renew the contracts of 150 temporary workers. On 31 August 2011 it announced it had halted all operations, laid off its 1,100 employees and would file for Chapter 11 bankruptcy. The bankruptcy quickly became a political row. In September 2011 the FBI searched the company's offices; reports that the company had used inaccurate information that misled the Department of Energy when obtaining the loan guarantee fuelled the controversy. A four-year joint investigation by the Department of Justice and the Department of Energy's Inspector General, however, closed in 2015 without any criminal charges or finding of political corruption. The loan programme lost $528 million on Solyndra; the company later secured settlements totalling around $52.5 million in predatory-pricing lawsuits it brought against Chinese manufacturers. Solyndra shows the price an ambitious hardware start-up pays for misreading the cost curve. When raw-material prices collapsed, an expensive factory and a custom design stopped being advantages and became burdens. ## Lessons - In hardware, a sharp fall in a raw-material price can make a rival technology cheap overnight; test your cost advantage against different price scenarios. - Investing in a giant factory before demand is proven creates an immovable fixed cost when the market turns; add capacity in stages. - Companies that receive public support are closely watched; keep your statements and records ready for independent scrutiny at all times. ## Sources - [Solyndra](https://en.wikipedia.org/wiki/Solyndra) - [Solar panel firm Solyndra to cease operations](https://www.latimes.com/business/la-xpm-2011-sep-01-la-fi-solar-shutdown-20110901-story.html) - [FBI searches shuttered Solyndra offices, plant in California](https://web.archive.org/web/20201116162816/https://www.washingtonpost.com/politics/fbi-searches-shuttered-solyndra-offices-plant-in-california/2011/09/08/gIQAu4kRCK_story.html) - [https://www.wikidata.org/wiki/Q3271267](https://www.wikidata.org/wiki/Q3271267) --- # EventVue (2007 – 2010) - URL: https://girisimcikafasi.com/en/startup-graveyard/eventvue/ - Sector: Enterprise software (SaaS) - Country: United States - Total funding: $256K - Cause of closure: No market need ## What did it do? EventVue was a software start-up that offered conference organisers private social networks for their events, helping attendees find one another before and during the event. The company later turned into a web widget aimed at drawing more attendees to events, and finally into a service offering a real-time conversation stream about events. ## Why did it shut down? Started by Rob Johnson and Josh Fraser at the TechStars programme in 2007, EventVue raised its first angel investment on the strength of heavy usage at a single free customer. After the investment, instead of developing the product, it focused on selling the existing tool to conference organisers within its own network. Although it won customers such as IDG, Techweb and IBM, the combination of a low price and a sales cycle of more than six months meant the enterprise sales model did not work. The EventVue Discover widget, designed to bring in attendees, lost its first customers money, and the team never fully committed to that pivot. Having turned itself into a real-time conversation service as a last move in January 2010, the company failed to attract enough interest and, with its capital exhausted, announced its closure on 5 February 2010. ## The story EventVue took shape in 2007 in Boulder, Colorado, in the hands of Rob Johnson and Josh Fraser during the TechStars programme. The idea was to build private social networks for conferences so that attendees could get to know one another before the event. During the programme the product, used free of charge at a conference for technology enthusiasts, drew strong interest, and the team closed its first angel round on the back of that data. According to the Failed Startups blog, the company raised $256,000 in total. According to the assessment the founders published at the closure, the first big mistake came straight after the investment. Instead of strengthening the product so that it would draw more attendees to events, the team set about selling the existing social network tool to conference organisers it already knew. A few customers were won, but the team never learned what the wider market wanted. The price was low, and because organisers planned their events six months or more in advance, the sales cycle was long. So the team turned to large publishers; deals were signed with IDG, Techweb and IBM, but the hoped-for company-wide contract never came. The first big pivot was the EventVue Discover widget, designed to bring new attendees to events. The product lost its first customers money, and the team never fully committed to that direction. Noticing that users liked the real-time stream of tweets about an event, the company relaunched itself in January 2010 entirely around that conversation feature. The founders described the move as the last hope of a team that had run out of capital and was trying to buy time with consulting work. When enough interest failed to materialise, EventVue announced its closure on 5 February 2010. In their write-up, the founders admitted that they had built the product as a nice-to-have rather than a must-have for users, that they had embraced learning fast and failing fast far too late, and that in their early hires they had prioritised speed over talent. ## Lessons - Do not mistake heavy usage at a single friendly customer for market demand; before raising your first round, measure how customers you do not know adopt the product. - Selling a low-priced product through enterprise sales with a long sales cycle breaks your unit economics from the start; change either the price or the sales model. - When pivoting, half-heartedly keeping the old product running for revenue splits your focus; either commit fully to the new direction or do not go there at all. ## Sources - [EventVue post-mortem (archived copy)](https://web.archive.org/web/20100309065644/http://blog.eventvue.com/post/372936164/post-mortem) - [A letter from the founders (archived copy)](https://web.archive.org/web/20100413070441/http://www.eventvue.com/) - [EventVue](https://failedstartups.wordpress.com/2011/07/03/eventvue/) --- # Hemalhemsat (2005 – 2010) - URL: https://girisimcikafasi.com/en/startup-graveyard/hemalhemsat/ - Sector: Marketplaces - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Hemalhemsat was a Turkish shopping and marketplace site that ran under the slogan "Buy, sell, earn". Individual sellers and shops listed products across a broad range of categories, from antiques to electronics and from clothing to motoring, and buyers shopped from those listings. According to a round-up by Habertürk, the site began operating after absorbing Pazaryerim.com. ## Why did it shut down? According to the farewell message the company published on its site, Hemalhemsat ceased publication from 2 August 2010 in order to create a new business model and a different structure in future. The announced new platform, however, never arrived; the farewell page stayed unchanged on the domain for eight years. According to a tip reported by Webrazzi in 2008, Doğan Group had decided to close the site as it pulled out of its internet ventures and had let its staff go with severance pay, then brought the site back into operation after acquisition interest emerged. A report the same year of a majority stake sale was denied by the company concerned. It is arguable that the site never reached the scale needed to compete with rivals that were growing stronger in the marketplace space; this is an interpretation. ## The story In the mid-2000s buying and selling second-hand and new goods online was spreading fast in Turkey. Hemalhemsat emerged on that wave. According to a 2017 round-up by Habertürk, the site began operating in 2005 after absorbing Pazaryerim.com; the internet archive also shows the pazaryerim.com address redirecting to Hemalhemsat in 2006. The site ran under the slogan "Buy, sell, earn". According to an archive capture from December 2008, it had a broad category tree ranging from antiques and art to baby products, from computers to collectibles and from jewellery to motoring; shops sat alongside individual sellers, and credit card instalment options were offered. According to Webrazzi, the Turkish tech news site, Hemalhemsat was one of the internet ventures of Doğan Group, the Turkish media conglomerate. 2008 was the year the group's internet strategy changed. In July 2008 Webrazzi wrote that it had heard Doğan Group was starting to exit its internet ventures and that Hemalhemsat would also be closed. According to the tip, staff had been let go with severance pay, but when would-be buyers for the site appeared, the employees were called back and the site was kept running. In November 2008 Webrazzi reported that Alibaba.com had bought a majority stake, but the same story was soon updated when Alibaba said no such partnership existed. Another Webrazzi article in January 2009 also listed Hemalhemsat among the e-commerce sites that had made negative headlines in 2008. Despite this uncertainty, the site stayed live for two more years. In August 2010 a farewell letter appeared on the home page: Hemalhemsat was ceasing publication from 2 August 2010 in order to create a new business model and a different structure in future. The letter said goodbye to visitors in the hope of meeting again on a brand-new platform. Habertürk's 2017 round-up also listed the site among those that had ended operations for the purpose of a new structure. That new platform never arrived. According to the internet archive, the farewell page stayed unchanged on the domain until 2018, after which the site disappeared entirely. Hemalhemsat's story shows how fragile a marketplace launched with the backing of a large group can be when the group's priorities change. This is an interpretation. ## Lessons - If you are going to announce a closure as a new beginning, also pin down the timetable and the owner of the new model; otherwise the announcement is merely a farewell. - A marketplace inside a group needs a revenue model that can stand on its own when the group's strategy changes. - When the market leader is getting stronger, being a clear number two requires a distinct edge in category, price or trust. ## Sources - [hemalhemsat.com closure announcement, internet archive capture](https://web.archive.org/web/20111004225513/http://www.hemalhemsat.com/) - [Turkish e-commerce sites that closed before Markafoni](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) - [A move from HemAlHemSat.com that seems like a joke](https://webrazzi.com/2008/07/23/hemalhemsatcomdan-saka-gibi-bir-hareket/) - [AliBaba.com becomes a partner in HemAlHemSat.com](https://webrazzi.com/2008/11/13/alibabacom-hemalhemsatcoma-ortak-oldu/) - [Contradiction in e-commerce: Hepsiburada.com and estore.com.tr](https://webrazzi.com/2009/01/05/e-ticaret-alaninda-celiski-hepsiburadacom-ve-estorecomtr/) - [hemalhemsat.com shopping page, internet archive capture](https://web.archive.org/web/20081204023129/http://www.hemalhemsat.com/Shop/) - [hemalhemsat.com farewell page, internet archive capture](https://web.archive.org/web/20180108020058/http://www.hemalhemsat.com/) --- # Lala (2006 – 2010) - URL: https://girisimcikafasi.com/en/startup-graveyard/lala/ - Sector: Media and entertainment - Country: United States - Total funding: $20 million - Cause of closure: Acquired and shut down ## What did it do? Lala was a Palo Alto-based online music service that began by brokering second-hand CD swaps between users. It later moved to a model in which users could upload and play their own music, listen to any song once for free, and then buy unlimited web playback for 10 cents or an MP3 for 89 cents. It had deals with the major record labels and said it offered more than 8 million licensed songs. ## Why did it shut down? The company changed its business model several times: first CD swapping, then free streaming in 2007, which was withdrawn without explanation shortly afterwards, and in 2008 the 10-cent web song. In the swapping business, shipping and unused stamped envelopes created a risk of lost revenue. According to a New York Times report cited by TechCrunch, Lala's executives concluded that the chances of reaching profitability in the near term were slim and approached Apple themselves. Apple acquired Lala on 4 December 2009 and announced on 30 April 2010 that the service would close on 31 May. ## The story Lala's first incarnation may look odd today: users mailed each other second-hand CDs, and the site kept track of who had sent and who was owed how many. The Palo Alto company was founded by serial entrepreneur Bill Nguyen together with Billy Alvarado, Anselm Baird-Smith and John Cogan III. Opened as an invitation-only beta in March 2006, the site had reached around 300,000 members and more than 500,000 CD swaps by December 2006, with a team of just 23. The economics of swapping were thin. Lala charged $1 for each disc received and covered the shipping. At first members were given stamped envelopes, but unused or lost envelopes posed a serious risk of lost revenue; in July 2006 it switched to a 75-cent shipping fee per swap. Lala 2.0, launched in 2007, shifted the focus to uploading music and free, legal full-track streaming, but the streaming feature was withdrawn a few weeks later without any explanation to users. With Lala 3.0, opened to the public in June 2008, the model changed once again. Members could listen to any song once for free, then buy a web song with unlimited playback for 10 cents or an MP3 for 89 cents. Backed by Bain Capital and Ignition Partners, the company also took $20 million from Warner Music Group and said it offered more than 8 million licensed songs. In autumn 2009 Lala was integrated into Google's search results and Facebook's gift shop. None of this was enough. According to a New York Times report cited by TechCrunch, Lala's executives decided that the chances of turning a profit in the near term were slim and themselves approached Eddy Cue, the Apple executive in charge of iTunes. Apple bought Lala on 4 December 2009; according to the report, its real interest lay in the company's engineers and its cloud-based music experience. The swapping service was shut down the same month. On 30 April 2010 it was announced that no new members were being accepted and that the service would close on 31 May; users' balances were converted into iTunes Store credit. Lala caught on to the idea of music in the cloud early, but took refuge with a buyer before it could settle on a profitable model. The lesson is plain: a company that keeps changing its business model burns through a little more user trust and cash at every turn. ## Lessons - Changing your business model frequently shakes user trust; when you remove a feature, tell users clearly why. - In models that involve physical logistics, build the cost of lost or unused shipping materials into your pricing from the outset. - In acquisition talks, settle what happens to the rights users have paid for, and plan compensation in case the service closes. ## Sources - [Lala (music service)](https://en.wikipedia.org/wiki/Lala_(music_service)) - [Apple Has Acquired Lala](https://techcrunch.com/2009/12/04/apple-acquires-lala/) - [Popularity crunch: Lala's free streaming goes dark, will return](https://arstechnica.com/old/content/2007/07/the-day-the-music-died-lalas-free-streaming-goes-dark-will-return.ars) --- # LimeWire (2000 – 2010) - URL: https://girisimcikafasi.com/en/startup-graveyard/limewire/ - Sector: Media and entertainment - Country: United States - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? LimeWire was a free peer-to-peer file-sharing program for Windows, Mac OS X, Linux and Solaris, created by Mark Gorton in 2000. Alongside the free version, New York-based Lime Wire LLC sold a paid LimeWire PRO that promised faster downloads. Running on the Gnutella network and the BitTorrent protocol, the program was known as one of the tools most widely used to download pirated music. ## Why did it shut down? In 2005 the US Supreme Court's ruling in MGM v. Grokster opened the way to holding file-sharing software companies liable for inducing infringement. In the case brought by Arista Records, federal judge Kimba Wood ruled in 2010 that LimeWire and Gorton had committed copyright infringement, engaged in unfair competition and induced others to infringe. An injunction issued on 26 October 2010 required the software's search, download, upload and sharing functions to be disabled. The company stopped distributing the software and remotely disabled new versions. In May 2011 Gorton agreed to a settlement under which the company would pay 13 record labels around $105 million. ## The story In the RIAA's new 2011 case against LimeWire, the statutory damages claimed reached $72 trillion, more than three times the world's annual gross product. The figure rested on estimates of thousands of downloads for each of 11,000 songs on the platform. The calculation was exaggerated, but it also showed the legal dead end one of the most popular file-sharing programs of the 2000s had walked into. LimeWire was created by Mark Gorton in 2000. New York-based Lime Wire LLC distributed a free version of the program, which ran on the Gnutella network, and LimeWire PRO, sold at prices starting from $21.95 and promising faster downloads and 66 per cent better search results. The program soon became one of the best-known tools for downloading pirated music; the paid version, too, was often shared without permission over the same network. The warning signs came early. In June 2005 The New York Times reported that the company was considering ending distribution of the program after the Supreme Court's ruling in MGM v. Grokster, a decision that gave judges a powerful tool for finding inducement to infringe. The same year the US Federal Trade Commission issued a warning about the identity-theft and litigation risks of file-sharing networks. One study found malware in 37 of 123 randomly downloaded files. The company carried on regardless. In the case brought by Arista Records, federal judge Kimba Wood ruled in 2010 that LimeWire and Gorton had committed copyright infringement, engaged in unfair competition and induced others to infringe. An injunction issued on 26 October 2010 required the software's search, download, upload and sharing functions to be disabled. The company stopped distributing the program and remotely disabled new versions; older versions, however, kept working. In May 2011 Gorton agreed to a settlement providing for around $105 million to be paid to 13 record labels. In 2022 the LimeWire name was reused, to Gorton's displeasure, for an unrelated NFT platform. LimeWire's story shows that a product users love cannot survive without legal footing. The Grokster ruling was a clear warning; the company did not use it to change its business model, and five years later it was shut down on the same grounds. ## Lessons - If the most common use of your product is illegal, the fate of your business model will be decided in court; pursue licensing with rights holders early. - Track precedent-setting rulings that affect your sector (such as Grokster) as a risk signal and update your strategy accordingly. - Revenue from a paid tier does not offset the legal risk of a product built on unlicensed content; build the revenue model and the legal footing together. ## Sources - [LimeWire](https://en.wikipedia.org/wiki/LimeWire) - [Court shuts down LimeWire music-sharing service](https://www.reuters.com/article/idUSN2616212420101026?pageNumber=1) - [LimeWire shut down by federal court](https://www.theguardian.com/technology/2010/oct/27/limewire-shut-down) --- # Wesabe (2005 – 2010) - URL: https://girisimcikafasi.com/en/startup-graveyard/wesabe/ - Sector: Fintech - Country: United States - Total funding: $4.7 million - Cause of closure: Lost to competitors ## What did it do? Wesabe was a personal finance management site that analysed users' financial data and offered suggestions to help them save money. Founded in December 2005, the site went live in November 2006. Users could also share financial advice with one another on its Groups page. ## Why did it shut down? Wesabe was overshadowed by its rival Mint, which took the stage at TechCrunch50, won the competition and was later sold to Intuit for $170 million. The growth that came with its iPhone app, launched in April 2009, did not last, and traffic fell steadily. In its final months the company ran on a very tight budget and could not give users enough support. According to CEO Marc Hedlund, running such sensitive data with a limited operations and security team was not acceptable; on 30 June 2010 Wesabe announced it would shut down its services on 31 July. ## The story On 30 June 2010 a letter to users appeared on Wesabe's home page: download your account data by 31 July. After that date almost all of the service's features would be switched off and the data deleted. So one of the first enthusiastic start-ups in personal finance management said goodbye. Wesabe was founded in December 2005 and went live in November 2006. The site analysed users' financial data to offer suggestions for saving money, and its Groups page let users give one another financial advice. According to TechCrunch, the company raised $700,000 from O'Reilly AlphaTech Ventures in February 2007 and $4 million in a round led by Union Square Ventures the same year. In the same market a rival pulled ahead fast. Mint took the stage at the TechCrunch50 conference, won the competition and was later sold to Intuit for $170 million. When Wesabe released its iPhone app in April 2009 it saw growth for a while, but traffic fell steadily after that. In TechCrunch's assessment, the site had largely been left in Mint's shadow. In its final months the company was staying afloat on a tight budget, supported by a few developers and operations staff from the core team. In his letter CEO Marc Hedlund wrote that they could not give users the support they needed and that running such sensitive data with a limited operations and security team was unacceptable. Users were able to export their data, and it was announced that an open-source version of the site would be released; the Groups page lived on after being taken over by a customer. Hedlund later also wrote a piece explaining why Wesabe lost to Mint. Wesabe's story holds two lessons for fintech start-ups. First, when a more visible rival pulls ahead in the same market, user acquisition can quickly seize up. Second, for a product that handles financial data, security is not an option but a condition of existence; when there are no longer the resources to meet it, closing in a controlled way can be a responsible decision. ## Lessons - For a product that handles sensitive data, calculate the cost of the minimum team needed to keep it secure as your shutdown threshold and plan your cash accordingly. - Do not underestimate the visibility of a rival pulling ahead in your category; publicity moments such as Mint's TechCrunch50 win can decide user acquisition. - Letting users export their data when you close preserves trust; Wesabe offered a way to download data and promised an open-source version. ## Sources - [Wesabe](https://en.wikipedia.org/wiki/Wesabe) - [Online Finance Startup Wesabe Heads To The Deadpool](https://techcrunch.com/2010/06/30/wesabe-shuts-down/) - [Wesabe Secures $4 Million Investment Round](https://web.archive.org/web/20100617002201/https://www.wired.com/epicenter/2007/06/wesabe_secures_/) --- # Bravoo (2007 – 2009) - URL: https://girisimcikafasi.com/en/startup-graveyard/bravoo/ - Sector: Advertising and marketing - Country: Turkey - Total funding: unknown - Cause of closure: Macroeconomic crisis ## What did it do? Bravoo was an online directory and local business search service set up as a joint venture between Doğan Yayın Holding, the Turkish media group, and the Italian directories company SEAT Pagine Gialle. Users could search for businesses or products by city, district and address, see the results on a map and get directions. Its revenue model relied on advertising sold to small and medium-sized businesses; alongside the website, it also distributed a printed directory. ## Why did it shut down? In a fax sent to its customers, Bravoo said the economic crisis had hit the company's profitability and efficiency and that its business plans were being reassessed (Webrazzi, 2009). An employee who wrote to Webrazzi on condition of anonymity said the crisis had hurt advertising sales at the start of the year but was not the sole reason for the closure. According to this employee, the partners, who had set out with a five-year plan, decided that under changed economic and political conditions there was no longer a case for backing the project; it was not big enough to matter to two large groups. The high cost of the printed directory was also one of the business's heaviest expenses. By way of interpretation, a joint venture between big companies was easily written off when it failed to deliver the expected results in its first year. ## The story Bravoo was an ambitious entry by big players into Turkey's local search and online directory market. In November 2007 Doğan Yayın Holding and the Italian directories company SEAT Pagine Gialle agreed on a five-year plan and put capital into the project. The idea was to combine the technology SEAT had developed in Europe with Doğan's experience of the local market, and to offer small and medium-sized businesses new advertising models. The site went live in beta in November 2008. Users could search by product or company name, by city, district and address, see the results on a map and get directions. Webrazzi's first impressions were positive; the map and directions feature in particular stood out. Bravoo did not stop there: the Istanbul edition of its printed directory was sent to homes and offices in a run of 1,250,000 copies. According to a MediaCat report from February 2009, the service held information on tens of thousands of businesses across more than 350 categories and offered video ads and interactive maps. Less than a year after launch, on 1 October 2009, Bravoo announced in a fax to its customers that it would close. The reason given was that the economic crisis had hit the company's profitability and efficiency and that its business plans were being reviewed. Webrazzi wrote that it found this explanation puzzling at a time when the worst of the crisis was already over. The same day, an employee whose contract had been terminated contacted Webrazzi and filled in more of the picture. According to this employee, the crisis had hurt advertising sales at the start of the year but was not on its own the reason for the closure. The printed directory was very costly but brought in business; the system had bedded in, the team had been trained and money had started coming in. The partners, however, had decided that under changed conditions the case for backing the project no longer existed. The employee feared the closure would once again shake the trust in such platforms that small businesses and advertisers had only just begun to rebuild. Bravoo's story shows how fragile joint ventures between large groups can be. A project that was small by the standards of two big groups was written off in its first difficult year. ## Lessons - Backing from big partners gives you strength, but if the project stays small relative to their scale, it can be written off in the first difficult year. - Shutting down a business launched on a five-year plan after just one year leaves lasting mistrust among your target audience. - Growing print and digital at the same time multiplies costs; measure early which channel actually brings in revenue. ## Sources - [Bravoo is closing!](https://webrazzi.com/2009/10/01/bravoo-kapaniyor/) - [Exclusive details for Webrazzi on Bravoo's closure](https://webrazzi.com/2009/10/01/bravoonun-kapanmasi-ile-ilgili-webrazziye-ozel-bilgiler/) - [A new client for Nexum Creative](https://mediacat.com/nexum-creativee-yeni-musteri/) - [Doğan Group's directory bravoo! is live!](https://webrazzi.com/2008/11/18/dogan-grubunun-rehberi-bravoo-yayinda/) --- # Dodgeball (2000 – 2009) - URL: https://girisimcikafasi.com/en/startup-graveyard/dodgeball/ - Sector: Social media - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Dodgeball was a location-based social network built for mobile devices. Users told the service where they were by text message, and it let them know about nearby friends, friends of friends, people they were interested in and interesting places. It was founded by Dennis Crowley and Alex Rainert, students at New York University. ## Why did it shut down? Google bought Dodgeball in May 2005 for an undisclosed sum, but the service never got the integrations people expected. The founders left Google in April 2007, and Crowley described his experience there as extremely frustrating. In 2007 TechCrunch wrote that the acquisition had largely come to nothing. In January 2009 Google announced that it would close Dodgeball within a few months, and in February 2009 the service gave way to Google Latitude. ## The story Before smartphones and app stores existed, Dodgeball users told the service where they were with a text message. Shortly afterwards a message would arrive on their phones letting them know that friends, friends of friends and people they liked were nearby. It was one of the first examples of what we now know as location-based social apps. Dodgeball was born out of New York University's Interactive Telecommunications Program (ITP); its founders, Dennis Crowley and Alex Rainert, were students there. When a user checked in somewhere with a registered phone, friends nearby were notified, and those who wanted to could arrange to meet. Over time the service became available in 22 US cities, from Seattle to Miami and from Boston to Denver. In May 2005 Google bought Dodgeball for an undisclosed sum. Engadget wrote that day that the service was practically begging to be merged with Google's mobile maps and local search. The expected integration never came. Crowley and Rainert left Google in April 2007; Crowley described his experience at the company as extremely frustrating. That same year, announcing that Google had bought the Finnish microblogging service Jaiku, TechCrunch noted that the Dodgeball acquisition had largely come to nothing. In January 2009 Vic Gundotra, Google's vice-president of engineering, announced that Dodgeball.com would be closed within a few months and the service would no longer be available. The same farewell post on Google's developer blog also covered changes to Jaiku's future. Dodgeball closed in February 2009 and was replaced by the location-sharing service Google Latitude; Latitude itself was shut down in 2013. The most striking part of the story came afterwards. After leaving Google, Crowley founded Foursquare with Naveen Selvadurai in 2009 and carried the check-in idea into the smartphone era. For years Foursquare kept as its core product the location-based sharing idea that Dodgeball had left unfinished. Dodgeball's lesson is that being acquired is not always a safe harbour for a product: when the buyer's priorities change, even a good idea can be left forgotten on the shelf. ## Lessons - When selling to a large company, ask for written commitments on the product roadmap, team resources and decision-making authority; otherwise the product can join the queue and be forgotten. - An idea shelved by its acquirer is not necessarily wrong; Crowley brought the same location and check-in idea back to life with Foursquare. - A product held back by the limits of technology can be tried again once the infrastructure matures; keep watching for the moment the market is ready. ## Sources - [Dodgeball (service)](https://en.wikipedia.org/wiki/Dodgeball_(service)) - [Google buys Dodgeball](https://www.engadget.com/2005/05/12/google-buys-dodgeball/) - [Where Are You? Show 'Em With Google Latitude](https://archive.nytimes.com/bits.blogs.nytimes.com/2009/02/04/where-are-you-show-em-with-google-latitude/) --- # GeoCities (1994 – 2009) - URL: https://girisimcikafasi.com/en/startup-graveyard/geocities/ - Sector: Consumer apps - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? GeoCities was a hosting service that let users build and publish websites for free. Pages were placed in neighbourhoods named after real places according to their content: technology sites lived in SiliconValley, entertainment sites in Hollywood. The service was bought by Yahoo in 1999. ## Why did it shut down? Yahoo bought GeoCities in January 1999, close to the peak of the dotcom bubble, for $3.57 billion in stock. After the acquisition, new terms of service handing the company the rights to users' content sparked a mass backlash and users began to leave. Making money from a free service was hard; in 2001 paid hosting was introduced and data transfer on free accounts was restricted. Monthly unique visitors in the US fell from 18.9 million in March 2006 to 11.5 million in March 2009. Yahoo announced the closure in April 2009, and the US version shut down on 26 October 2009. ## The story Opening a web page on GeoCities was like owning a plot of land in a virtual city. Users were called 'homesteaders', and pages were built in neighbourhoods such as SiliconValley, Hollywood or WallStreet according to their content. Launched by David Bohnett and John Rezner in November 1994 as Beverly Hills Internet, the company took off in mid-1995 when it began offering users 2 MB of free home page space. The growth was dizzying. By December 1995 thousands of new members were signing up every day and more than six million pages were being viewed each month. On 2 October 1997 the millionth homesteader registered. Adverts and a watermark added to pages drew criticism, but the growth continued. Floated at $17 a share in August 1998, the stock rose above $100, and by 1999 GeoCities was the third most visited site on the web after AOL and Yahoo!. In January 1999, close to the peak of the dotcom bubble, Yahoo! bought the company for $3.57 billion in stock. The merger got off to a bad start: new terms of service handing the company all rights to users' content triggered a mass exodus, and Yahoo! soon backed down. In July 1999 neighbourhood addresses gave way to addresses based on member names. In 2001, amid analyst talk that GeoCities was still not making a profit, Yahoo! introduced paid hosting and restricted data transfer on free accounts. Visitors steadily drifted away. Monthly unique visitors in the US fell from 18.9 million in March 2006 to 11.5 million in March 2009. On 23 April 2009 Yahoo! announced that it would close the US service and stopped new sign-ups. GeoCities shut down on 26 October 2009, leaving behind at least 38 million pages. Groups such as the Internet Archive and Archive Team moved to rescue that legacy. The Japanese version lived on until 31 March 2019. GeoCities was one of the first big communities to get millions of people used to publishing their own page on the internet. Its story shows that even a hugely popular product may not survive without making money, and that a place where users feel they belong can quickly fall apart when the acquiring company's priorities change. ## Lessons - In a community built on user content, consult the community before changing your terms of service; a single clause can trigger a mass exodus. - Build the revenue model for a free service while your user base is growing; restrictions introduced later quickly kill interest. - When selling your company, ask where the product will sit in the buyer's strategy; when the buyer's priorities change, the product can be shut down. ## Sources - [GeoCities](https://en.wikipedia.org/wiki/GeoCities) - [Yahoo Quietly Pulls The Plug On GeoCities](https://techcrunch.com/2009/04/23/yahoo-quietly-pulls-the-plug-on-geocities/) - [Yahoo pulls the plug on GeoCities](http://news.bbc.co.uk/1/hi/technology/8016211.stm) --- # Koysepete (2003 – 2009) - URL: https://girisimcikafasi.com/en/startup-graveyard/koysepete/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Macroeconomic crisis ## What did it do? Koysepete was an Ankara-based online shopping site. It launched in 2003 as a joint project of Epdata Bilgisayar, a computer distributor, and the search portal arabul.com. Opening with a handful of categories, the site gradually expanded into computers, mobile phones, electronics, home textiles and natural products, and promoted long-term instalments at the cash price. ## Why did it shut down? Koysepete made no public statement when it closed. In February 2009 Webrazzi wrote that it had learned of the site's closure some time earlier and described it as a player that could be considered popular compared with many sites in the sector. A 2017 round-up by Habertürk reports that the closure was accompanied by rumours that it could not withstand the economic crisis. Sites such as Estore, Teketek and Yeterkiiste had also closed in the same months; it is plausible that the downturn at the end of 2008 squeezed small sites that relied on instalment sales and dealer relationships, but this has not been confirmed for Koysepete specifically; this is an interpretation. ## The story In the early 2000s few people in Turkey shopped online, but companies selling computers had begun to try out the channel. That is how Koysepete was born. According to the site's About page preserved in the Internet Archive, Koysepete was an Ankara-based online shopping site that began operating in 2003 under Epdata Elektronik Ticaret. The project was a joint venture between Epdata Bilgisayar, a computer distributor, and the search portal arabul.com. The archive also holds the site's first snapshot, dated March 2003. According to that page, the site would initially sell products from well-known brands in six categories and add new categories over time. And so it did. In a snapshot from early 2006, categories ranging from clothing to games, and from audio-visual systems to communications technology, were on display, along with instalments of up to 12 months at the cash price. In a December 2008 snapshot Koysepete, now billing itself as a budget shopping site, offered a wide range of products, from computers to GPS devices and from natural foods to duvet cover sets. A few weeks later the picture had changed. In an Internet Archive snapshot dated January 2009, the home page showed nothing but a logo image. In February 2009, listing e-commerce sites that had recently closed, Webrazzi included Koysepete: it wrote that the site had held a position that could be considered popular compared with many sites in the sector and that it had heard of its closure some time earlier. The same list included Estore, Weblebi, Tio, Yeterkiiste and Teketek. The company gave no reason for the closure. A round-up published by Habertürk in 2017 reported that Koysepete closed amid rumours that it could not withstand the economic crisis. The logo page remained unchanged on the domain for more than a decade. Koysepete's story is one of the quiet examples of the first shake-out wave that the 2008 crisis brought to Turkish e-commerce. Without any big announcement or controversy, it went from an active shop to a single logo within a month. This is an interpretation. ## Lessons - In a model built on instalment sales, work out in advance how your financing costs will change in a crisis. - An e-commerce site set up as a side project of a distribution company may be the first item cut when the core business hits hard times; give it its own budget and targets. - When you close, leave your customers and suppliers a short explanation; a silent closure leaves nothing behind but rumour. ## Sources - [Which e-commerce sites have closed recently?](https://webrazzi.com/2009/02/12/son-zamanlarda-kapatilan-e-ticaret-siteleri-hangileri/) - [The Turkish e-commerce sites that closed before Markafoni](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) - [koysepete.com About page, Internet Archive snapshot](https://web.archive.org/web/20051124040118/http://www.koysepete.com/Hakkimizda.htm) - [koysepete.com home page, Internet Archive snapshot](https://web.archive.org/web/20081201101631/http://www.koysepete.com/) - [koysepete.com home page, Internet Archive snapshot](https://web.archive.org/web/20090131224313/http://koysepete.com/) --- # Lookery (2007 – 2009) - URL: https://girisimcikafasi.com/en/startup-graveyard/lookery/ - Sector: Advertising and marketing - Country: United States - Total funding: $3.1 million - Cause of closure: Business model failed ## What did it do? Lookery was an ad network born when Facebook opened its developer platform in 2007, selling ad space in Facebook apps to advertisers. The company later turned to a targeting service that collected anonymous demographic data from websites and sold it to advertisers, social networks, dating sites and e-commerce companies. ## Why did it shut down? Selling ads in Facebook apps brought in very little revenue; in January 2008 the company guaranteed advertisers 12.5 cents per thousand impressions, but by July 2008 it had cut that guarantee to 7.5 cents. Facebook's redesign in the summer of 2008 hurt the app ecosystem and the network's performance. The ad network, which served around 3 billion impressions a month, was sold to Adknowledge in November 2008 and the company turned to data targeting, but according to Rafer this second product was built before the market needed it. Having raised $3.15 million from angel investors over two years, Lookery announced in August 2009 that it would wind down in an orderly way. ## The story Lookery was born at the same time as Facebook opened its platform to third-party developers in 2007. Its founder, Scott Rafer, was a seasoned entrepreneur who had previously sold MyBlogLog to Yahoo. Rafer and his business partner built infrastructure that matched ad space in apps running on Facebook with advertisers. Rather than chasing the highest price, Lookery focused on filling large volumes of ad inventory. The network grew fast and reached around 3 billion ad impressions a month, but those impressions were worth very little. Having guaranteed advertisers 12.5 cents per thousand impressions in January 2008, the company raised the guarantee to 25 cents for European traffic but was forced to cut it to 7.5 cents in July 2008. That same summer, Facebook's redesign of its site shook the app ecosystem and dragged down the network's performance. When Rafer realised Facebook would not share anonymised user data in time, he changed direction. In November 2008 the ad network was sold to Adknowledge, and Lookery focused on a targeting business that sold anonymous demographic data collected from websites to advertisers, social networks, dating sites and e-commerce companies. Despite difficult economic conditions, the company had raised a new round in September 2008; angel investment over two years totalled $3.15 million. In August 2009 Rafer announced in a blog post that the company would wind down in an orderly way. He listed his mistakes as staying dependent on a single large partner, failing to let go of a failing asset in time and building a product ahead of the market. In his view, for a start-up, depending on Facebook was no different from depending on a mobile operator. ## Lessons - In a business bound by a single platform's rules, one design change by the platform can wipe out your revenue; build channels that reduce that dependence as soon as you gain traction. - Do not put off the decision to sell a weakening asset; Rafer later admitted he should have sold the ad network much earlier. - Rather than building infrastructure the market does not yet want, go with a product that solves an existing need, and if possible raise money when you have a scaling problem, not a survival problem. ## Sources - [Advertising And User-Targeting Network Lookery Heads To The Deadpool](https://techcrunch.com/2009/08/21/advertising-and-user-targeting-network-lookery-heads-to-the-deadpool/) - [Lookery's Scott Rafer: Advice in the Aftermath](https://readwrite.com/lookerys-scott-rafer-advice-in/) - [Interview With Scott Rafer of Lookery](https://www.adweek.com/performance-marketing/scott-rafer-lookery/) --- # TeeBeeDee (2007 – 2009) - URL: https://girisimcikafasi.com/en/startup-graveyard/teebeedee/ - Sector: Social media - Country: United States - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? TeeBeeDee was a social network where adults aged 40 to 60 shared their experiences, asked and answered questions and got to know one another. Running at tbd.com, the site offered forums, Q&A sections and guides to difficult conversations on midlife topics such as relationships, working life and parenting. ## Why did it shut down? The site drew interest at launch, but its user base did not grow fast enough to survive. Traffic peaked at 200,000 unique visitors and 9 million page views a month, far below the level successful social networks reached. Sales of virtual goods, tried as a source of revenue, did not bring in enough money. Its target audience increasingly preferred established platforms such as Facebook. Unable to find further venture capital, the company announced in July 2009 that it would shut down. ## The story Robin Wolaner was an entrepreneur who had founded Parenting magazine and served as a senior executive at CNET. In 2007 she decided to build an online community that would bring together the over-40 generation in the way the magazine had brought parents together. The result, TeeBeeDee, aimed to occupy the gap between Facebook's young users and Eons, which targeted the over-50s. The San Francisco-based company closed its first round of $4.8 million in August 2007, led by Shasta Ventures with participation from Monitor Ventures. Figures such as Ron Conway and former AOL marketing executive Jan Brandt had backed the company earlier. The site went live at tbd.com in September 2007. Users shared their experiences in forums, answered questions and read guides prepared for difficult conversations with teenage children or at work. Even the design used legible typefaces with ageing eyes in mind. But growth did not come at the expected pace. At its best the site reached 200,000 unique visitors and 9 million page views a month, far behind successful social networks. Sales of virtual goods, tried as a revenue source, did not bring in enough money either. The targeted generation, meanwhile, was increasingly turning to platforms such as Facebook, where everyone already was. In July 2009, in a note to members, Wolaner said the business opportunity had been disappointing and that they did not have the resources to keep developing the site. Unable to find new investment, TeeBeeDee closed within two weeks. Wolaner told VentureBeat that they had not found a way to get deeper into this generation's market. TeeBeeDee's story remains an early example showing that a demographic niche is not a business model in itself. ## Lessons - Before building a separate platform for an age group, measure the need of that audience that general platforms fail to meet; age alone may not justify a separate network. - Calculate from the outset the traffic threshold a social network needs to fund itself, and share openly with investors how long it will take to reach it. - Scale up revenue experiments such as virtual goods only after confirming your audience's payment habits with small tests. ## Sources - [Baby boomer social network TeeBeeDee implodes](https://venturebeat.com/2009/07/06/baby-boomer-social-network-teebeedee-implodes/) - [paidContent - Baby Boomer Social Network TeeBeeDee Closes; Cites "Disappointing" Business Opportunity](https://www.cbsnews.com/news/paidcontent-baby-boomer-social-network-teebeedee-closes-cites-disappointing-business-opportunity/) - [TeeBeeDee, the network for the 40+ generation](https://venturebeat.com/business/teebeedee-the-network-for-the-40-generation) - [New Boomer Site Hits The Right Note](https://www.mediapost.com/publications/article/67883/new-boomer-site-hits-the-right-note.html) --- # Teketek (2005 – 2009) - URL: https://girisimcikafasi.com/en/startup-graveyard/teketek/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Teketek was an e-commerce site affiliated with the Turkish technology distributor Kont Bilişim. It sold mainly computers, phones and consumer electronics, and over time expanded its categories to everything from white goods to baby products. The site also had a points system, gift vouchers, an affiliate programme and a business sales section for resellers. ## Why did it shut down? Teketek made no public statement when it closed. According to a 2017 round-up by Habertürk, the site failed to reach its target turnover. In February 2009 Webrazzi listed Teketek among the e-commerce sites that were frequently talked about but had closed some time earlier; Estore, Koysepete and Yeterkiiste were on the same list. It is conceivable that a distributor's own retail site struggled to compete on price with its resellers selling the same products and with the big e-commerce sites; but this is not confirmed in Teketek's case, and this is an interpretation. ## The story For companies distributing technology products wholesale, there was an obvious move to make in the mid-2000s: selling the stock in the warehouse directly to consumers online. Teketek was a product of that idea. According to the site's About page in the Internet Archive, Teketek moved into e-commerce in 2005 and presented itself as a fast-growing shopping site run by a trained team. According to the footer in a capture dated December 2008, the site was an affiliate of the technology distributor Kont Bilişim. In a January 2007 capture in the archive, Teketek offered a wide list of categories, from phones and computers to white goods, and from furniture to car accessories. There was a points system, gift vouchers, an affiliate programme and a business sales section for resellers. By 2008 the site, under the slogan "Size özel alışveriş" (“Shopping just for you”), had narrowed its focus to computers, phones and consumer electronics. In December 2008 the shop was still open. In the February 2009 archive capture, however, there were no longer any products on the home page; only information about returns and warranty procedures remained. That same month Webrazzi, listing e-commerce sites that had recently closed, included Teketek and described it as one of the sites whose name had been heard a great deal. The company gave no reason for the closure. Habertürk's 2017 round-up wrote that Teketek, Kont Bilişim's sales site, had failed to reach its target turnover. In 2011 the domain name was put up for sale. Teketek's story is a reminder that being close to the product is not enough to win in retail. For a distributor, selling to consumers means an entirely new business that, alongside the warehouse and supply advantage, involves marketing, customer service and relations with resellers. This is an interpretation. ## Lessons - Even if you have a supply advantage, calculate the cost of acquiring customers on the retail side separately; cheap products alone do not bring traffic. - If you sell the same products to consumers as your resellers do, manage the channel conflict from the outset. - Set the closure criteria in advance for a side venture that misses its turnover target, so that the decision does not drag on. ## Sources - [Which e-commerce sites have closed recently?](https://webrazzi.com/2009/02/12/son-zamanlarda-kapatilan-e-ticaret-siteleri-hangileri/) - [Turkish e-commerce sites that closed before Markafoni](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) - [teketek.com About Us page, Internet Archive capture](https://web.archive.org/web/20060513235452/http://www.teketek.com/default.asp?git=2&islem=1) - [teketek.com home page, Internet Archive capture](https://web.archive.org/web/20081206185321/http://www.teketek.com/) - [teketek.com home page, Internet Archive capture](https://web.archive.org/web/20090223232301/http://www.teketek.com/) --- # Yeterkiiste (2005 – 2009) - URL: https://girisimcikafasi.com/en/startup-graveyard/yeterkiiste/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Business model failed ## What did it do? Yeterkiiste (Turkish for “just ask”) was an online shop run by Teknopazar A.Ş., an affiliate of İş Bankası, one of Turkey's largest banks. In the company's own words it had been serving customers since November 2005, offering technology enthusiasts a wide, electronics-heavy product range. According to a 2017 round-up by Habertürk, the site made an ambitious entry into the sector with 100,000 products. ## Why did it shut down? In a notice published on its website, the company announced that it had been forced to suspend its online retail operations indefinitely from 23 January 2009, but gave no reason. Webrazzi treated the notice as a closure and counted the site among the e-commerce sites that closed in late 2008 and early 2009. According to Habertürk's 2017 round-up, problems with staff, software and strategy were thought to have arisen around the time of the closure. It is also notable that the closure coincided with the months when the global crisis was hitting Turkey, but the sources do not confirm what part this played in the decision; this is an interpretation. ## The story In the mid-2000s banks in Turkey, too, had begun to see the potential of e-commerce. Yeterkiiste was a product of that interest. According to Webrazzi, the site was an affiliate of İş Bankası; according to the company's own notice, the site was run by Teknopazar Teknoloji, Yazılım ve Elektronik Pazarlama A.Ş. and had been serving customers since November 2005. According to Habertürk's 2017 round-up, Yeterkiiste made an ambitious entry into the sector with 100,000 products. The company described itself as one of Turkey's most honest and most reliable online shops and targeted technology lovers. In January 2009 the site closed its doors. In an Internet Archive capture dated February 2009, the home page carried a letter from the company to its customers. According to the letter, the company had been forced to suspend its online retail operations indefinitely as of 23 January 2009. Orders placed up to that date but not yet delivered would be delivered without any problems, and contact channels would stay open for past orders. Teknopazar would carry on with its business outside online retail. In February 2009, listing e-commerce sites that had recently closed, Webrazzi included Yeterkiiste, writing that the site had gone offline indefinitely as of 23 January 2009, in other words that it had closed. Estore, Koysepete and Teketek were on the same list. The indefinite pause never ended: according to the archive, the same notice page stayed on the domain unchanged for years. Habertürk's round-up reports that problems with staff, software and strategy were thought to lie behind the closure; the company itself gave no reason. Yeterkiiste's story shows that a strong partner and a broad product catalogue are not enough on their own without a working operation. This is an interpretation. ## Lessons - Having a powerful financial partner is no substitute for the trio of working software, a team and a strategy. - Product counts look impressive in the shop window, but the real measure is how many of those products can be sold profitably. - If you suspend operations, state clearly how outstanding orders will be delivered; doing so preserved customer trust for Yeterkiiste even as it closed. ## Sources - [yeterkiiste.com closure notice, Internet Archive capture](https://web.archive.org/web/20090205053121/http://yeterkiiste.com/) - [Which e-commerce sites have closed recently?](https://webrazzi.com/2009/02/12/son-zamanlarda-kapatilan-e-ticaret-siteleri-hangileri/) - [Turkish e-commerce sites that closed before Markafoni](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) --- # Estore (1998 – 2008) - URL: https://girisimcikafasi.com/en/startup-graveyard/estore/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Estore was a general e-commerce site founded in Turkey in the early years of online shopping. Its range, which started with music, books and toys, gradually broadened to everything from electronics to white goods and from cameras to jewellery. After being sold to Çukurova Group, one of Turkey's large conglomerates, in 2006, it also opened a television shopping channel, Estore.tv, on Digiturk. ## Why did it shut down? According to a January 2009 report by Webrazzi, the Turkish tech news site, Estore, owned by Çukurova Group, could not survive the hard conditions of 2008; the same report said staff had not been paid salaries or severance because the company had declared bankruptcy. A 2017 round-up by Habertürk links the closure to a debt of 4.5 million TL, while a 2016 round-up by Turkishtime highlights mistakes in management and on the Estore.tv side. The fact that rival Hepsiburada kept growing over the same period suggested, according to Webrazzi, that the problem may have lain less in the market itself than in the company's management and supply side. Neither the company nor its executives made any public statement about the closure. ## The story Estore was live when online shopping in Turkey was still a curiosity. According to a 2016 round-up by Turkishtime, the site was founded in 1998; in an Internet Archive snapshot dated June 2000, Estore was selling music CDs by album and artist, books, toys, mobile phones and small household appliances, and offered flower delivery. At the bottom of the page was a 1999 copyright notice. The site grew over the years and, according to Turkishtime, was for a time seen as the biggest rival to Hepsiburada, today one of Turkey's largest online retailers. According to the same round-up, Estore was sold to Çukurova Group in 2006. In an archive snapshot from January 2007 the range had broadened from white goods to jewellery and from computers to magazine subscriptions; the site had separate store sections for Apple and HP, a points system and a department called Estore TV. The group had also set up a television shopping channel called Estore.tv on Digiturk. 2008 was a hard year for Turkish e-commerce. That year Webrazzi reported that sites such as Tio, HemAlHemSat and Weblebi had made the news for bad reasons or had closed. Towards the end of the year similar news came for Estore. In January 2009 Webrazzi announced that even a site backed by Çukurova Group had been unable to survive. According to the report, staff had not been paid salaries or severance because the company had declared bankruptcy; former employees had started a blog and launched a legal fight over what they were owed. In the Internet Archive the store pages cannot be found from February 2009 onwards, and the home page stays blank for years. The same Webrazzi piece drew an interesting comparison: over the same period Hepsiburada was announcing that its turnover had grown. To the author, this suggested the problem should be sought less in the market than in management problems at Estore and in the rival's strong supplier relationships. Turkishtime's 2016 round-up also attributed the closure to management mistakes and to errors made with Estore.tv. According to Habertürk's 2017 round-up, Estore closed because of a debt of 4.5 million TL. In February 2009 Webrazzi put Estore at the top of its list of e-commerce sites that had closed amid turmoil. Estore's story shows that starting early is not an advantage in itself. One of the first to open up the market, the company fell behind rivals that later grew stronger when, despite the backing of a large group, it could not manage its costs and supply chain. This is an interpretation. ## Lessons - Coming under the umbrella of a large group does not protect a company if its cash flow and supplier confidence are not healthy. - Before opening a new sales channel, make sure the main channel is running profitably; expensive channels such as television wear down a weak structure even further. - If things are going badly, talk to staff and suppliers early and openly; silence turns a closure into a crisis of trust. ## Sources - [A contradiction in e-commerce: Hepsiburada.com and estore.com.tr (in Turkish)](https://webrazzi.com/2009/01/05/e-ticaret-alaninda-celiski-hepsiburadacom-ve-estorecomtr/) - [Which e-commerce sites have closed recently? (in Turkish)](https://webrazzi.com/2009/02/12/son-zamanlarda-kapatilan-e-ticaret-siteleri-hangileri/) - [50 failed start-ups and 50 lessons from their mistakes (30–50) (in Turkish)](https://turkishtimedergi.com/dijital-girisim/%EF%BB%BF-50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-30-50/) - [Turkish e-commerce sites that closed before Markafoni (in Turkish)](https://www.haberturk.com/ekonomi/teknoloji/haber/1517700-markafoniden-once-kapanan-turk-e-ticaret-siteleri) - [estore.com.tr home page, Internet Archive snapshot](https://web.archive.org/web/20000621152030/http://www.estore.com.tr/) - [estore.com.tr home page, Internet Archive snapshot](https://web.archive.org/web/20070105071909/http://www.estore.com.tr/) --- # Monitor110 (2005 – 2008) - URL: https://girisimcikafasi.com/en/startup-graveyard/monitor110/ - Sector: Fintech - Country: United States - Total funding: $20 million - Cause of closure: Product problems ## What did it do? Monitor110 built a service for hedge funds and institutional investors that scanned blogs, news and other sources on the internet and filtered out information relevant to their portfolios and investment theses. The company launched its web-based portal in March 2008 and a research report service called Alphadesk in April 2008. ## Why did it shut down? Founded in 2005, the company delayed its launch while the first version was already working, in favour of a more powerful natural language processing version, and stayed away from customers for years. According to a later assessment by Roger Ehrenberg, a two-headed structure jointly run by the technology and business sides left decisions dragging on. Appearing on the front page of the Financial Times raised expectations, and a total of $20 million was raised, including an $11 million round in 2006; Ehrenberg wrote that this abundance made it easier for bad decisions to persist. Data quality, kept low by spam and duplicate content, sparked a strategy fight inside the company that lasted for months. In June 2008 a third of the staff were laid off, and when a funding round launched in May failed to close, the company ceased operations on 15 July 2008. ## The story The idea for Monitor110 came in early 2005 from Jeff Stewart, an entrepreneur who had already founded three companies. More valuable information was being published on the internet every day, and institutional investors were struggling to access it systematically. Stewart approached Roger Ehrenberg, an executive with a Wall Street background; Stewart took on technology and product, while Ehrenberg took charge of investment, human resources and client relationships. The New York-based company's long-term goal was to become a kind of Bloomberg for the web. By mid-2005 the first version was working, but growing spam on the internet was spoiling the results. Rather than bring the product to market, the team decided to develop a more ambitious version based on natural language processing and statistical text analysis. Meanwhile the company appeared on the front page of the Financial Times, expectations rose, and a total of $20 million was raised from investors including DFJ, DFJ Gotham and Acadia. According to Ehrenberg's candid later assessment, the abundance of money allowed the team to stay away from customers and persist with flawed decisions. The technology team was running the product on its own, while those close to customers wanted to build a smaller but clean data set from highly reputable sources. The argument went on for months and eroded both morale and the cash pile. The web portal finally opened only in March 2008, the Alphadesk research service followed in April, and more than 100 trial customers were signed up at more than 60 institutions. In June 2008, however, a third of the staff were laid off, and reports emerged that the company had held sale talks with Reuters. The funding round launched in May failed to close in one of the toughest quarters for venture capital. CEO Brennan Carley announced that operations had ceased as of 15 July 2008. ## Lessons - Delaying launch to perfect the product also delays customer feedback; put a working first version in front of demanding customers early. - In companies jointly run by the technology and business sides, decide from the outset who has the final say; at Monitor110 that ambiguity dragged out the strategy fight for months. - Raising more money than you need loosens discipline; large rounds raised without proof of revenue make it easier for a company to hide from the market. ## Sources - [Monitor 110 Shuttered](https://www.businessinsider.com/2008/7/monitor-110-shuttered) - [Monitor110: A Post Mortem](https://informationarbitrage.com/post/698402433/monitor110-a-post-mortem) - [Monitor110: A Post Mortem](https://www.businessinsider.com/2008/7/monitor110-a-post-mortem) --- # Tio (2007 – 2008) - URL: https://girisimcikafasi.com/en/startup-graveyard/tio/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Tio was a Turkish price comparison and shopping site launched in 2007 by Embrio, the investment arm of Teknoloji Holding. Users could compare products across different online shops and buy the cheapest directly through Tio with a single account. It also let businesses open their own shops, let individuals sell second-hand goods and, through an app called TioMobile, let people shop from their mobile phones. ## Why did it shut down? According to a message the company sent to its members in October 2008, reported by ShiftDelete, the site ceased operations on 27 October 2008 for financial reasons. According to a tip reported by Webrazzi in July 2008, the holding company's management was unhappy with Tio's progress, had demanded either a sale or a closure within a month, and the group had decided to pull out of its internet ventures in Turkey. The same piece observed that corporate internet ventures run with large advertising campaigns and high staff costs were shut down quickly when they failed to meet expectations. Just before the closure, Tio appeared to have dropped direct sales, its real point of difference, and reverted to price comparison alone. ## The story In Turkey in 2007, price comparison sites and shopping sites were separate worlds. Users found the cheapest price in one place and went to another site to buy. Embrio, the investment arm of Teknoloji Holding, tried to merge these two steps with Tio, its third venture after SüperTeklif and KolayTedarik. According to Webrazzi's write-up in November 2007, Tio let users buy products from different online shops at the lowest price directly through the site itself. It offered products in 11 categories, let businesses open shops and let individual users sell second-hand goods. With a small app called TioMobile, users could compare prices and buy products from their mobile phones; Webrazzi saw this as the service's most valuable feature. According to an Internet Archive snapshot from October 2008, the site listed around 250,000 products and 68 member shops. After launch, Tio ran a big advertising campaign and made changes to its design and features. But according to a tip reported by Webrazzi in July 2008, the holding company was unhappy with its progress and had demanded either a sale or a closure within a month. According to the same report, sale talks were under way and the group had decided to withdraw from internet ventures of this kind in Turkey. At the end of October 2008, Webrazzi wrote that Tio had dropped its direct sales service and turned into a price comparison service that sent users on to the relevant shopping site. A day later ShiftDelete published the message the site had sent to its members: Tio had decided to cease operations from 27 October 2008, and no orders would be taken after that date. The report said the site was closing for financial reasons. A 2016 round-up by the Turkish business magazine Turkishtime also listed Tio among the start-ups that closed in 2008 because of financial difficulties. Tio's story shows that a good idea cannot grow without corporate patience and the right cost structure. Webrazzi's comment at the time was similar: ventures set up with big budgets and high expectations were shut down rather than given time when they failed to meet those expectations. ## Lessons - If you are building an internet venture under a corporate umbrella, put the patience period and the measure of success in writing from the start. - Launching with a big advertising budget is no substitute for measuring whether the product genuinely helps users. - If you are forced to drop the feature that sets you apart because of cost, ask again why anyone would choose what is left. ## Sources - [Tio.com.tr has closed!](https://shiftdelete.net/tio-com-tr-kapandi-6700) - [Is the countdown for Tio nearly over?](https://webrazzi.com/2008/10/30/tio-icin-geri-sayimda-sona-mi-gelindi/) - [Is Tio.com.tr being sold or shut down?](https://webrazzi.com/2008/07/23/tiocomtr-satiliyor-mu-kapaniyor-mu/) - [Tio takes e-commerce to a new dimension](https://webrazzi.com/2007/11/05/e-ticaret-tio-ile-boyut-degistiriyor/) - [50 failed start-ups and 50 lessons from their mistakes (30–50)](https://turkishtimedergi.com/dijital-girisim/%EF%BB%BF-50-basarisiz-startup-ve-hatalarindan-cikarilacak-50-ders-30-50/) - [tio.com.tr home page, Internet Archive snapshot](https://web.archive.org/web/20081002021058/http://www.tio.com.tr/) --- # Weblebi.com (2000 – 2008) - URL: https://girisimcikafasi.com/en/startup-graveyard/weblebi/ - Sector: E-commerce - Country: Turkey - Total funding: unknown - Cause of closure: Ran out of cash ## What did it do? Weblebi.com was a general online shopping site founded by three childhood friends, which went live in October 2000 with a team of 12. From 2003 it operated under the umbrella of Pro-Net İnternet Hizmetleri A.Ş. Known for its promotions, the site was described in the press at the time of its closure as Turkey's second-largest shopping site. ## Why did it shut down? According to the company's own statement, economic difficulties in Turkey and around the world, together with the collapse of some firms in the sector, led suppliers and banks to take a negative view of e-commerce. The statement said this chain of events had left the company unable to continue operating. In the months before the closure, complaints about orders not arriving had risen rapidly; CNN Türk reported that there were 1,736 complaints about the site on Şikayetvar, Turkey's consumer complaints platform. Kaan Dönmez, chair of the Association of E-Commerce Operators, said he did not agree that banks and suppliers took a negative view of e-commerce and criticised the site for closing without meeting its obligations. ## The story Weblebi.com set out in October 2000 with a team of 12, at a time when shopping online was not yet widespread in Turkey. According to a report in the newspaper Zaman, the site had been founded in a flat by three childhood friends: Nafiz Kerim Kotan, Ziya Alemdar and Osman Gündoğar. As reported by CNN Türk, the site went on to operate under the umbrella of Pro-Net İnternet Hizmetleri A.Ş., set up in 2003. Known for its promotions, the site grew over time; on the day it closed, MediaCat described it as Turkey's second-largest shopping site. According to the same report, about eight months before the closure the site had reached a turnover of $20 million; at the time, the partners said individual investors and some funds from the Middle East had approached them. Kotan had also said that with 60 to 70 firms in the sector, making a profit was hard. In the summer of 2008 things went wrong. Complaints that began in July and multiplied in August showed that the site was in trouble. Customers were writing that products they had paid for had not arrived. On 5 August 2008 Weblebi.com posted a statement on its home page announcing that it was ending its business. According to the statement, economic difficulties and the collapse of some big firms in the sector had made suppliers and banks wary of e-commerce, leaving the company unable to continue operating. The company explained that customers whose orders could not be delivered could get their money back through credit card chargebacks. The closure sparked debate in the industry. According to a Haber7 report based on the İHA news agency, Kaan Dönmez, chair of the Association of E-Commerce Operators and general manager of Hepsiburada, the Turkish online retailer, disputed the view that banks and suppliers looked unfavourably on e-commerce. Dönmez said obligations should have been met first and the site closed afterwards. Arda Kutsal of Webrazzi, the Turkish tech news site, asked why such a valuable start-up had failed to appear on investors' radar. Together with other e-commerce companies that struggled in the same period, Weblebi.com's closure became one of the symbols of the sector's fragility during the 2008 crisis. The story also shows how quickly customer trust can melt away for an e-commerce company. ## Lessons - The trust of suppliers and banks is e-commerce's invisible capital; lose it and you cannot ship products even if you can still make sales. - Hiding problems right up to the day you close only magnifies the reaction from customers and the industry. - When you get into trouble, fulfil the open orders first, then close the doors. ## Sources - [The end of the road for Weblebi.com...](https://webrazzi.com/2008/08/05/weblebicomda-sona-gelindi/) - [Weblebi.com announces it has gone bankrupt](https://mediacat.com/weblebi-com-iflas-ettigini-acikladi/) - [Weblebi.com goes bankrupt](https://www.milliyet.com.tr/ekonomi/weblebi-com-iflas-etti-975007) - [Shopping site Weblebi.com dissolves itself](https://www.cnnturk.com/teknoloji/alisveris-sitesi-weblebi-com-kendini-feshetti-378178) - [Bankrupt online shopping site had a turnover of $20 million!](https://www.memurlar.net/haber/117227/iflas-eden-sanal-alisveris-sitesi-20-milyon-dolarlik-ciro-yapmis.html) - [Weblebi's bankruptcy sparks debate](http://ekonomi.haber7.com/ekonomi/haber/336787-weblebinin-iflasi-tartisma-cikardi) --- # Kiko (2005 – 2006) - URL: https://girisimcikafasi.com/en/startup-graveyard/kiko/ - Sector: Consumer apps - Country: United States - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Kiko was an online calendar service that brought the features of desktop calendar software to the browser with an Ajax interface. A start-up from Y Combinator's very first batch, it offered users a free calendar and developers an API. It aimed to develop an enterprise version. ## Why did it shut down? About a month after Kiko went live, Google Calendar launched and overshadowed the start-up. The company could not make money from its free users and never brought its planned enterprise product to life. Co-founder Justin Kan later admitted that they had built the product without talking to users. In August 2006 the site was put up for auction on eBay and sold to Tucows. ## The story In August 2006 an unusual listing appeared on eBay: up for sale was an internet company. The founders of an online calendar service called Kiko had put the site up for auction with an opening price of $50,000. According to the listing, the site drew around 40,000 visitors a month. A start-up that had only recently been greeted with praise had turned into a listing in search of a buyer. Kiko was founded by Justin Kan and Emmett Shear, childhood friends who had grown up in the same Seattle neighbourhood and been classmates at Yale. In 2005 the pair were accepted into the first batch of Paul Graham's Y Combinator and set up the Massachusetts-based company. Their goal was to build a calendar that combined the power of Microsoft Outlook with Gmail's modern take on the web. Written in Ruby on Rails, offering an API and catching the eye with its sleek interface, Kiko won praise on technology blogs. However, as Vox recounted in 2014, about a month after Kiko went live Google Calendar launched and overshadowed the start-up. According to TechCrunch's write-up of its closure, the company could not make money from its free users and never brought its planned enterprise solution to life; the online calendar market was already crowded in any case. Years later, in a talk at a start-up event, Kan said they had never talked to users and that this had been a huge mistake. In the final two minutes of the auction the price jumped by more than $100,000, and Kiko was sold to Tucows for around $250,000; Vox puts the figure at $258,000. Some 14 months after it was founded, the company changed hands, and the story was over for its founders. As Kan tells it, the pair, who had expected $50,000 at most, felt they had “won the lottery”. That money kept them going: in 2007 they received backing from Y Combinator a second time and founded Justin.tv, the platform that years later became Twitch. Kiko shows the risk of building a product without allowing for the possibility that a giant rival will enter the same category. It is also a reminder that a small, well-timed exit can fund the founders' next, far bigger attempt. ## Lessons - If your product is a natural extension of a giant like Google, choose a niche it will not serve, such as the appointment-booking needs of a particular industry. - Talk to your target users before you start writing code; testing the need and the willingness to pay through conversation is cheaper than months of development. - Closing down a product that is not working with a small sale can buy the team capital and time for its next attempt. ## Sources - [Kiko Flatlines](https://techcrunch.com/2006/08/16/ajax-calendar-kikocom-goes-on-ebay-offers-to-delete-accounts/) - [Interview With Kiko Acquiror Elliot Noss](https://techcrunch.com/2006/09/06/interview-with-kiko-acquiror-elliot-noss/) - [How Twitch’s Founders Turned an Aimless Reality Show Into a Video Juggernaut](https://www.vox.com/2014/7/5/11628568/how-twitchs-founders-turned-an-aimless-reality-show-into-a-video) - [How A Site That Streams People Playing Video Games Became A Billion Dollar Business](https://www.buzzfeednews.com/article/mattlynley/how-a-site-that-streams-people-playing-video-games-became-a) --- # ArsDigita (1997 – 2002) - URL: https://girisimcikafasi.com/en/startup-graveyard/arsdigita/ - Sector: Enterprise software (SaaS) - Country: United States - Total funding: $38 million - Cause of closure: Team problems ## What did it do? ArsDigita was a software and consultancy company that developed the open-source ArsDigita Community System, a toolkit for building database-backed community sites, and used it to build web applications for organisations. Its clients included companies such as AOL, HP, Levi Strauss and Oracle. ## Why did it shut down? The company was profitable in 1999, and its monthly service contracts had reached an annual revenue run rate of $20 million. After it took $38 million from Greylock Partners and General Atlantic in March 2000, a professional CEO was brought in from outside and headcount grew rapidly. According to Greenspun, $20 million was spent between April 2000 and March 2001 just to get back to the same revenue; meanwhile the dot-com crash swept away clients, and offices began closing from September 2000. When the founders tried to retake control in April 2001, the company and its investors sued Greenspun; the dispute was settled with a payment of $7.6 million to Greenspun. The shrunken company's main assets were sold to Red Hat in 2002, and ArsDigita ceased to operate independently. ## The story ArsDigita was a web software company founded in Cambridge, Massachusetts, in 1997 by a group of programmers led by Philip Greenspun. The team had an open-source toolkit that made it easier to build database-backed community sites: the ArsDigita Community System. With it, the company built web applications for clients such as AOL, HP, Levi Strauss and Oracle. According to Greenspun's account, ArsDigita was profitable in 1999, had paid about $1 million in tax on its profits, and its regular service contracts had reached an annual revenue run rate of $20 million. To attract talented programmers the company offered unusual rewards such as a Ferrari, while also supporting ArsDigita University, a free and intensive computer science programme. In March 2000 the company took $38 million from Greylock Partners and General Atlantic. The investors gained two seats on the seven-member board, and a professional CEO was brought in from outside. Headcount passed 180, and new, highly paid executive positions were created. According to Greenspun, $20 million was spent between April 2000 and March 2001 just to get back to the same level of revenue. Over the same period the bursting of the dot-com bubble wiped out clients, and office closures began in September 2000. In April 2001 the founders moved to change the management and reinstate Greenspun as CEO. The company and its investors sued, arguing that this breached the shareholders' agreement signed in March 2000. The dispute ended with a payment of $7.6 million to Greenspun. The shrunken company's main assets passed to Red Hat in 2002; Red Hat took on a group of employees and continued the Java version of the software under its own name. The community, meanwhile, lived on through OpenACS, the toolkit's open-source branch. ## Lessons - Before taking large venture capital into a profitable, self-funding company, be clear about which concrete growth problem the money will solve and how control rights will be shared. - Read every approval and veto clause in the shareholders' agreement before signing; a majority of the shares stays on paper if the agreement hands decision-making power to someone else. - Rapidly inflating headcount and executive salaries with new capital leaves the company more fragile than before if revenue does not grow. ## Sources - [ArsDigita](https://en.wikipedia.org/wiki/ArsDigita) - [ArsDigita: From Start-Up to Bust-Up](https://random.waxy.org/arsdigita/) - [ArsDigita CEO & VCs Sue Philip Greenspun](https://slashdot.org/story/01/04/19/1158245/arsdigita-ceo-vcs-sue-philip-greenspun) - [Red Hat Explains ArsDigita Purchase](https://linux.slashdot.org/story/02/03/13/2036203/red-hat-explains-arsdigita-purchase) --- # Broadcast.com (1995 – 2002) - URL: https://girisimcikafasi.com/en/startup-graveyard/broadcast-com/ - Sector: Media and entertainment - Country: United States - Total funding: unknown - Cause of closure: Acquired and shut down ## What did it do? Broadcast.com was one of the first companies to stream radio and live broadcasts over the internet. It carried 448 radio and 65 television stations online, along with the 24-hour feeds of the BBC and CNN, and held licensing agreements with 450 college and professional sports teams. Its catalogue included 1,500 films, 1,600 audiobooks and more than 3,000 music albums. ## Why did it shut down? The company lost its independence with Yahoo's decision to acquire it on 1 April 1999; the deal closed in July 1999 for Yahoo shares worth around USD 5 billion. The service became part of Yahoo Broadcast Services, and its future was tied to the buyer's priorities. In 2002 Yahoo shut down its broadcasting services, including Broadcast.com. The acquisition later came to be remembered as one of the worst internet acquisitions of all time. ## The story When the Victoria's Secret fashion show was streamed live online in February 1999, 1.5 million people tuned in. Glitches in picture and sound sent engineers into a panic, but history's first big webcast was judged a success. The company behind it was Broadcast.com, and two months later it would become the subject of one of the most expensive acquisitions in internet history. The story began in 1989 with Cameron Audio Networks, founded by Cameron Christopher Jaeb. Jaeb wanted people to be able to listen to out-of-town sports games. In 1994, through the lawyer Todd Wagner, he met Mark Cuban; Cuban invested USD 10,000 in return for a 2 per cent stake. In September 1995 Cuban and Wagner took control of the company, Jaeb was left with a 10 per cent stake and the company was renamed AudioNet. Cuban started out streaming a local radio station's broadcast onto the internet from his bedroom. AudioNet was renamed Broadcast.com in 1998 and went public in July 1998. Its shares rose 250 per cent on the first day, setting a record; after the IPO the company's value rose to USD 1 billion. The platform carried 448 radio and 65 television stations, had licensing agreements with 450 sports teams and offered thousands of films, audiobooks and albums. On 1 April 1999 Yahoo! announced it would acquire Broadcast.com, which had 570,000 users. In the deal, completed in July, 28.6 million Yahoo! shares worth around USD 5 billion changed hands. Cuban sold most of his shares the same year, making a return of more than USD 1 billion; Jaeb, whose stake had fallen below 1 per cent, received around USD 50 million. Broadcast.com became part of Yahoo! Broadcast Services. But in 2002 Yahoo! shut down its broadcasting services, including Broadcast.com, and the acquisition is now remembered as one of the worst internet acquisitions of all time. The Broadcast.com story has two faces. For the founders the timing was perfect; Cuban has said many times that he was very lucky to sell the company before the bubble burst. For the buyer, the enormous price it paid turned into a service that was shut down within three years. ## Lessons - When weighing an acquisition offer, ask how your product will connect to the buyer's revenue model; if there is no connection, the product may soon be shut down. - In an all-share sale, factor in the risk that the shares you receive will lose value; Mark Cuban cashed in most of his shares the same year. - Agree from the outset how far early shareholders' stakes will be diluted in later rounds; the founder Jaeb's stake fell below 1 per cent. ## Sources - [Broadcast.com](https://en.wikipedia.org/wiki/Broadcast.com) - [Yahoo Plans to Shut Down Some Broadcast Services](https://www.wsj.com/articles/SB1025052018485386440) - [Yahoo completes Broadcast.com acquisition](https://www.cnet.com/tech/services-and-software/yahoo-completes-broadcast-com-acquisition/) --- # General Magic (1990 – 2002) - URL: https://girisimcikafasi.com/en/startup-graveyard/general-magic/ - Sector: Hardware - Country: United States - Total funding: $200 million - Cause of closure: Bad timing ## What did it do? General Magic was spun out of an internal Apple project in 1990 to build the Magic Cap operating system for handheld devices and the Telescript programming language. It formed partnerships with giants such as Sony, Motorola and AT&T, and Magic Cap ran on the Sony Magic Link and Motorola Envoy, both launched in 1994. In later years the company turned to a voice assistant service called Portico. ## Why did it shut down? The Magic Cap devices that launched in 1994 reached the market without any real infrastructure to support them: AT&T's PersonaLink network did not connect to the emerging internet and was shut down in 1996. Unlike rival devices, they offered no handwriting recognition, which put them at a disadvantage in marketing; they never sold in large volumes, and the partners had stopped making them by 1997. The company pivoted to Portico, a voice assistant service, but according to Forbes, losses, layoffs and missed forecasts sent the share price tumbling. Most of the executives who had brought Portico to life left in early 2000, and an attempt to reinvent the business as enterprise software failed to save it. On 18 September 2002 General Magic announced it would cease operations. ## The story In 1989 Marc Porat, then at Apple, persuaded chief executive John Sculley that the next generation of computer could only emerge from a partnership between computing, communications and consumer electronics companies. When the project, called Paradigm, struggled for resources inside Apple, the team proposed going it alone, and in May 1990 Porat, Andy Hertzfeld and Bill Atkinson founded General Magic. Apple took a minority stake and Sculley joined the board. The company quickly became the most talked-about start-up in the Valley. By 1992 Sony, Motorola, Matsushita, Philips and AT&T were both partners and investors; by 1994 the alliance had grown to 16 companies. In February 1993 The New York Times described General Magic as Silicon Valley's most closely watched start-up. The company built Magic Cap, an operating system for handheld devices, and Telescript, a language that ran across networks. Its IPO in February 1995 raised $96 million and the share price doubled; total investment reached $200 million. When the products met the world, however, the ground was not ready. The Sony Magic Link and Motorola Envoy, launched in the summer of 1994, relied on AT&T's closed PersonaLink network, which did not connect to the internet and was shut down in 1996. The lack of handwriting recognition hurt the marketing, the devices never sold in large numbers, and the partners stopped production in 1997. The company changed course towards Portico, a voice assistant service, which at its peak reached around 2.5 million users. Even so, the company never recovered. Forbes attributed the steep fall in its share price to losses, layoffs and missed forecasts. Most of the executives who had launched Portico moved on to internet start-ups in early 2000. A new team led by Kathleen Layton tried to turn the voice technology into enterprise software, but on 18 September 2002 the company announced it would cease operations. The liquidation was completed in 2004, and Paul Allen bought most of the patents. General Magic's legacy is bigger than its demise. It brought many ideas to life early, from software modems to small touchscreens and rich-content email. In 2018 a documentary told the company's story through interviews with figures such as Marc Porat, Andy Hertzfeld and Tony Fadell. The lesson is plain: when the right vision arrives at the wrong time, a company can run out of breath before the infrastructure needed to carry it has matured. ## Lessons - If your product depends on someone else's infrastructure (a network, a payment system, a device), test whether that infrastructure is genuinely ready for users before you launch. - If you deliberately leave out a core feature your competitors offer, have a clear message explaining to customers why it does not matter. - Even when the vision is right, a product that arrives early needs a cash runway long enough to wait for the market to mature. - Build ownership and incentive structures from the outset so you keep the team that delivers success after a pivot. ## Sources - [General Magic](https://en.wikipedia.org/wiki/General_Magic) - [General Magic: The Most Important Dead Company in Silicon Valley?](https://www.forbes.com/sites/michaelkanellos/2011/09/18/general-magic-the-most-important-dead-company-in-silicon-valley/) --- # Be Inc. (1990 – 2001) - URL: https://girisimcikafasi.com/en/startup-graveyard/be-inc/ - Sector: Hardware - Country: United States - Total funding: unknown - Cause of closure: Lost to competitors ## What did it do? Be Inc. was a computer company founded in 1990 by former Apple executive Jean-Louis Gassée, which developed the BeOS and BeIA operating systems and the BeBox personal computer. BeOS first ran only on the BeBox, then was ported to the Power Macintosh and the Intel x86 architecture. In its final years the company turned to internet appliances. ## Why did it shut down? Although BeOS was largely well received, it never achieved commercial success. At the end of 1996 Apple, in search of a new operating system, chose between Be and NeXT, and bought NeXT. Hardware and financial problems led to the BeBox being discontinued in early 1997. After its 1999 IPO, the company was unable to spread BeOS because of the agreements most computer manufacturers had with Microsoft, and the hoped-for deal with a major manufacturer never materialised. In 2001, amid reports that it was about to run out of cash, the company sold its assets to Palm for $11 million. ## The story The story goes that work on a prototype computer began the day after Jean-Louis Gassée left Apple on 1 October 1990. Having parted ways with Apple CEO John Sculley, Gassée founded Be with Steve Sakoman; supercomputer pioneer Seymour Cray also put up capital. Even the company's name came out of a conversation: when Sakoman said that, tired of leafing through the dictionary, he had stopped at the letter B, Gassée liked the name Be. The team worked behind closed doors for more than four years. When AT&T dropped its Hobbit processor, they switched to PowerPC, and in October 1995 the BeBox came out, with light strips on its front panel showing processor load. Its powerful multimedia capabilities attracted a great deal of interest, but years of development had strained the coffers; in April 1996 new investment was secured from Silicon Valley funds. At the end of 1996 a big opportunity arose: the last two candidates in Apple's search for a new operating system were BeOS and NeXTSTEP. Apple chose NeXT, swayed by Steve Jobs's powers of persuasion and by the unfinished state of BeOS, which lacked features such as printing, and bought it for $400 million. Gassée denied rumours that Be had asked for $500 million. In early 1997 the BeBox was discontinued and the company focused on software; in 1998 Intel took a 10 per cent stake and BeOS was ported to x86. Be went public on Nasdaq in July 1999 but could not get BeOS pre-installed on machines because of the agreements most computer manufacturers had with Microsoft; when the hoped-for deal with a major manufacturer failed to materialise, the shares fell. In February 2000 the company turned to internet appliances with BeIA, gave BeOS 5 away for free and formed partnerships such as Sony's eVilla device. But cash was draining fast. On 16 August 2001 it was announced that Palm would buy Be's assets for $11 million; once shareholders approved the deal in November, the company went into liquidation. The antitrust lawsuit that Be, by then in liquidation, had brought against Microsoft ended in a $23.25 million settlement in September 2003. The Register interpreted Be's survival for a decade without a meaningful revenue stream as proof of its engineering prowess. The legacy of BeOS lives on today in the open-source Haiku project. Be's lesson is that technical superiority does not turn into a market without access to distribution channels. ## Lessons - In a platform business, weigh up from the outset the risk of conflict with whoever controls distribution (computer manufacturers, app stores); a good product alone will not get you onto the shelf. - Before sitting down to negotiate with a big buyer, close the gaps in your product's core features (printing, in Be's case); missing pieces weaken your hand at the table. - Changing strategy often redistributes limited resources every time; do not move into a new area before proving revenue in the current one. ## Sources - [Be Inc.](https://en.wikipedia.org/wiki/Be_Inc.) - [Ex-Apple brains to lead Palm software revival](https://www.theregister.com/2001/08/28/exapple_brains_to_lead_palm/) - [BeIA Here Now](https://www.wired.com/2000/02/beia-here-now/) --- # eToys (1997 – 2001) - URL: https://girisimcikafasi.com/en/startup-graveyard/etoys/ - Sector: E-commerce - Country: United States - Total funding: unknown - Cause of closure: Macroeconomic crisis ## What did it do? eToys.com was a retail site that sold toys online. It went live on 3 November 1997 within the incubator Idealab and quickly became one of the toy sites regarded as the benchmark in the sector. ## Why did it shut down? After its IPO in January 1999 the company's value soared on dotcom euphoria; shares offered at $20 closed their first day at $76. That rapid rise made eToys one of the emblems of the dotcom bubble, and when the bubble burst nothing was left to support the valuation. At the end of 1999 a domain-name lawsuit against the Swiss art group etoy also brought the company a fierce online backlash. Around March 2001 most of the remaining assets were sold to KB Toys for $5 million. The company went bankrupt on 1 April 2001 and shut down shortly afterwards. ## The story eToys shares began trading on 4 January 1999, offered at $20, and closed their first day at $76. For a toy seller, this was a dazzling debut even in the midst of the dotcom frenzy. At the time the research firm eMarketer also described eToys as the benchmark against which every other toy site was measured. eToys went live on 3 November 1997 within Idealab, an incubator that produced internet start-ups. The idea was to move toy shopping from store shelves to the screen. After the IPO the company's value rose rapidly and eToys soon became one of the emblems of the dotcom bubble. At the end of 1999 the company found itself dealing with an unexpected reputational crisis. eToys sued etoy, a Swiss art group founded long before it, on the grounds that the etoy.com domain could be confused with its own name, and obtained a court order barring the group from using the domain. A huge backlash erupted online, etoy's supporters called for a “virtual uprising” and message boards filled with angry comments. According to a Wired report from December 1999, eToys announced under public pressure that it would not pursue the suit. When the bubble burst, nothing was left to support eToys' valuation. According to a Wall Street Journal report in March 2001, KB Toys, owned by Bain Capital, bought most of eToys' remaining assets for $5 million. The company went bankrupt on 1 April 2001 and shut down shortly afterwards. During the bankruptcy, a business relationship between a partner at the law firm representing the creditors and the company's new CEO sparked a conflict-of-interest debate; a judge later found no wrongdoing. The brand, however, lived on as it changed hands. The assets passed from KB Toys to the hedge fund D. E. Shaw, and the site was relaunched by eToys Direct. Its parent, Parent Company, filed for bankruptcy in December 2008, and the domain passed to Toys "R" Us in February 2009. eToys' story is a reminder that a valuation lifted by stock-market euphoria is no substitute for a lasting business. ## Lessons - The price on IPO day is not a business plan; your valuation should rest on your own cash flow, not on market appetite. - Before suing a small community in the name of brand protection, weigh the reputational cost; online opinion reacts fast and hard. - Know what your assets are worth on a bad day; in hard times the sale price can be a tiny fraction of the valuation in good times. ## Sources - [EToys.com](https://en.wikipedia.org/wiki/EToys.com) - [EToys Relents, Won't Press Suit](https://www.wired.com/1999/12/etoys-relents-wont-press-suit/) - [Parent Company, a Retailer, Files for Bankruptcy](https://www.nytimes.com/2008/12/30/business/30shop.html?_r=1&adxnnl=1&ref=business&adxnnlx=1244694327-mytT8mvOALlccVDE+/ks3A) --- # Excite@Home (1996 – 2001) - URL: https://girisimcikafasi.com/en/startup-graveyard/excite-at-home/ - Sector: Telecoms - Country: United States - Total funding: unknown - Cause of closure: Business model failed ## What did it do? @Home Network was a joint venture set up in 1996 to deliver high-speed internet over the two-way infrastructure of cable television networks. In January 1999 it absorbed the Excite portal in a $6.7 billion merger and became known as Excite@Home. At its peak it served 4.1 million subscribers in the United States, Canada, Japan, Australia and the Benelux countries. ## Why did it shut down? A profitable broadband network was combined with a loss-making search engine and portal, and costs ran far ahead of revenue. The merger was followed by expensive acquisitions such as iMall and Blue Mountain Arts; Blue Mountain was sold less than two years later for under 5 per cent of the price paid. The bursting of the dotcom bubble in March 2000 and the collapse of the online advertising market made fresh capital hard to find. As cash ran out in 2001, bondholders demanded immediate repayment of $50 million of debt, and Cox and Comcast announced they would leave the service. The company filed for Chapter 11 bankruptcy protection on 1 October 2001. ## The story On 19 December 1998, encouraged by the venture capital firm Kleiner Perkins, Thomas Jermoluk, chairman and CEO of @Home Network, met Excite's CEO George Bell. Excite was in merger talks with Yahoo! at the time; the meeting ended instead with a decision for Excite to join @Home. The $6.7 billion merger, completed in January 1999, was one of the largest deals ever struck between two internet companies. @Home had been founded in 1996 as a joint venture between Milo Medin, William Randolph Hearst III and cable operators such as TCI, Comcast and Cox. The aim was to turn the two-way infrastructure of cable television into high-speed internet. At its peak it served 4.1 million subscribers across the United States, Canada, Japan, Australia and the Benelux countries; in the first quarter of 1999 its shares hit $128.34 and its market value reached $35 billion. The merger wedded a profitable access network to a loss-making search engine and portal. Excite@Home soon bought iMall for around $425 million in stock, and the e-greetings company Blue Mountain Arts for around $430 million in stock plus $350 million in cash. The new CEO worked from his home in Massachusetts, while the finance director flew in to headquarters from Los Angeles once a week. Costs ran far ahead of revenue, and the bursting of the dotcom bubble in March 2000, together with the collapse of the online advertising market, made new money hard to raise. A $100 million financing package secured in June 2001 had to be repaid immediately if the shares were delisted from Nasdaq. In August bondholders demanded immediate repayment of $50 million of debt, and Cox and Comcast announced they would leave the service. In September Blue Mountain was sold to American Greetings for $35 million, less than 5 per cent of what had been paid for it. On 1 October 2001 the company filed for Chapter 11 bankruptcy protection; access to its national fibre network was sold to AT&T for $307 million, and the remaining 1,350 employees were laid off by the first quarter of 2002. The @Home brand lived on with partners in Japan and the Benelux. Excite@Home shows that merging two strong businesses does not automatically create a strong company. Once an infrastructure business earning regular income from subscribers took on the risks of an advertising-dependent portal, the two went down together as soon as the market turned. ## Lessons - Before merging a business that generates steady subscription revenue with a loss-making one that depends on the advertising cycle, stress-test the cash flow of each side separately. - If your partners control your distribution channel, write down in advance what happens if they walk away, and your plan for it. - Read the terms of easy money; early repayment clauses tied to your stock-market listing can sink a company fast in a crisis. ## Sources - [@Home Network](https://en.wikipedia.org/wiki/@Home_Network) - [Cable partners replace @Home with ease](https://www.cnet.com/tech/mobile/cable-partners-replace-home-with-ease/) - [https://www.wikidata.org/wiki/Q4570714](https://www.wikidata.org/wiki/Q4570714) --- # Flooz.com (1999 – 2001) - URL: https://girisimcikafasi.com/en/startup-graveyard/flooz/ - Sector: Fintech - Country: United States - Total funding: $35 million - Cause of closure: No market need ## What did it do? Flooz.com was a New York-based dotcom start-up that tried to create a virtual currency for online shops. Users earned flooz credits as promotions from certain sites or bought them directly, and could then spend them at participating online stores. The company was promoted with television adverts starring Whoopi Goldberg. ## Why did it shut down? Flooz was never adopted widely enough by either merchants or consumers; without broad acceptance, its usefulness and appeal stayed limited. In 2001 the FBI told the company that a Russian and Filipino organised crime ring had bought USD 300,000 worth of flooz with stolen credit cards to launder money. According to founder Robert Levitan, by mid-2001 19 per cent of consumer credit card transactions were fraudulent. The company burned through venture capital reported at between USD 35 million and USD 50 million and announced its closure on 26 August 2001. ## The story The name Flooz was derived from fuloos, the Arabic word for money, and the idea behind it was at least as ambitious as the name: to create a currency that worked only in online shops. The New York-based company was started by Robert Levitan, one of the co-founders of iVillage; the site went live in February 1999. The model resembled airline mileage programmes or supermarket loyalty cards. Users could earn flooz credits through promotions offered by certain internet companies or buy them directly from flooz.com. The credits they accumulated could be spent on products at participating online stores. The company went big on awareness; the comedian Whoopi Goldberg promoted flooz in a series of television adverts. Over its short life the company was reported to have spent between USD 35 million and USD 50 million in venture capital. But a two-sided payment network needed merchants and shoppers to be persuaded at the same time, and that did not happen. Flooz was never adopted widely enough by either shops or consumers, and a currency without broad acceptance naturally remained of little use and little appeal. On top of that, in 2001 the FBI told the company that a Russian and Filipino organised crime ring had bought USD 300,000 worth of flooz with stolen credit cards and used it to launder money. According to Levitan, by mid-2001 19 per cent of consumer credit card transactions were fraudulent. The day after the closure announcement, The New York Times wrote that the company may have been a victim of fraud. Flooz announced its closure on 26 August 2001. Unspent credits became worthless overnight and were not refunded. Around 325,000 creditors were reported in the bankruptcy proceedings. The closure was read as one of the early signs that the dotcom crash was deepening. Flooz's story shows the hardest problem for payment and wallet start-ups: a payment network has value only if both sides are on it. And growing without strong fraud controls can make losses rise faster than revenue. ## Lessons - In a two-sided payment network, win one side completely first (for example, a specific group of merchants); trying to persuade both sides at once burns money fast. - For any product where balances are topped up by card, put fraud controls in place before launch; fraudulent transactions can grow faster than the business. - If you hold user balances, plan from the start what happens to that money if the company closes; otherwise you will face thousands of creditors. ## Sources - [Flooz.com](https://en.wikipedia.org/wiki/Flooz.com) - [E-Commerce Report; Seller of Online Currency May Have Been Victim of Fraud](https://www.nytimes.com/2001/08/27/business/e-commerce-report-seller-of-online-currency-may-have-been-victim-of-fraud.html) - [Where are they now? New York City's Dot Com Entrepreneurs: Part One](https://thenextweb.com/news/where-are-they-now-new-york-citys-dot-com-entrepreneurs-part-one) --- # Kozmo.com (1998 – 2001) - URL: https://girisimcikafasi.com/en/startup-graveyard/kozmo/ - Sector: Logistics and delivery - Country: United States - Total funding: $250 million - Cause of closure: Business model failed ## What did it do? Kozmo.com was a New York-based online delivery company that brought videos, games, DVDs, music, magazines, books, food and basic essentials to the door within an hour, with no delivery fee. Couriers made deliveries by bicycle, car, van or public transport. At its peak in July 2000 it operated in 11 US cities. ## Why did it shut down? Carrying low-value orders free of charge and at great speed pushed the cost per order above the revenue it brought in. According to filings with the SEC, the company made a net loss of $26.3 million on revenue of $3.5 million in 1999. A promotional deal with Starbucks, which committed it to paying $150 million over five years, inflated fixed costs; the deal was terminated in March 2001 after $15 million had been paid. Although it filed for an IPO, the company never made it to the stock market. Right after the dotcom bubble burst, Kozmo closed in April 2001, laying off its 1,100 employees. ## The story In April 2001 staff arriving for their shifts at many of Kozmo.com's 18 locations found the doors locked; that is how most of them learned the company had closed. Yet only shortly before, Kozmo had been delivering on one of the boldest promises of the dotcom era in 11 US cities: a film, a game, a magazine, a snack or a Starbucks coffee at your door within an hour, with no delivery fee. The company was founded in New York in March 1998 by two young investment bankers, Joseph Park and Yong Kang. Couriers made deliveries by bicycle, by car or by public transport. The founders' thesis was that not paying shop rent would more than cover the cost of delivery. Investors were convinced: in 1999 a group including Flatiron, Oak and Chase invested $28 million, and in 2000 Amazon put in $60 million. Total investment is estimated at around $250 million. In February 2000 a five-year deal was signed with Starbucks; Kozmo agreed to pay $150 million in return for promotion in its coffee shops. The numbers, however, did not bear out the thesis. According to filings with the SEC, the company made a net loss of $26.3 million on revenue of $3.5 million in 1999. In April 2000 MSNBC.com published a report alleging that Kozmo excluded predominantly African-American neighbourhoods from its service. The company denied that race played any part in its decisions; the civil rights organisation following the issue later launched a joint initiative with Kozmo. It filed for an IPO with Credit Suisse First Boston, but the company never went public. Shortly after the dotcom bubble burst, Kozmo terminated the Starbucks deal in March 2001 by paying $15 million, and a month later closed, laying off its 1,100 employees. The brand was sold to Yummy.com in 2013 and relaunched as a wholesale shopping club in 2018; as of July 2023 the site was once again unreachable. MaxDelivery, a similar service founded in Manhattan in 2005 by former technology director Chris Siragusa, showed that the idea could survive in a small, dense area. Therein lies Kozmo's lesson: fast delivery can only survive when basket size and order density cover the cost. ## Lessons - Free, instant delivery is only sustainable if the average basket size and density of the area cover the cost; run those numbers city by city. - Do not take on the fixed payments of long-term promotional deals with big brands before your revenue is proven. - Document the criteria you use to choose your service areas transparently; decisions about coverage can turn into a reputational risk. ## Sources - [Kozmo.com](https://en.wikipedia.org/wiki/Kozmo.com) - [Kozmo.com Pedaling To The Precipice?](https://www.forbes.com/2000/06/22/mu3.html) - [Kozmo.com will pay Starbucks $150M](http://www.bizjournals.com/seattle/stories/2000/02/14/daily1.html) - [https://www.wikidata.org/wiki/Q6435354](https://www.wikidata.org/wiki/Q6435354) --- # Napster (1999 – 2001) - URL: https://girisimcikafasi.com/en/startup-graveyard/napster/ - Sector: Media and entertainment - Country: United States - Total funding: unknown - Cause of closure: Regulation and legal issues ## What did it do? Napster was a peer-to-peer application launched in June 1999 by Shawn Fanning and Sean Parker that let users share MP3 music files with one another. Thanks to its easy interface and recordings that were hard to find anywhere else, it quickly went mainstream. The list of every shared song was kept in a central database hosted by Napster. ## Why did it shut down? In December 1999 A&M Records and other record labels, acting through the RIAA, sued Napster for contributory copyright infringement; Metallica and Dr. Dre filed separate suits. The injunction issued after a court ruling in February 2001 required Napster to monitor its network and restrict access to copyrighted content. In early July 2001 the company shut its network down completely and never reopened it. Its proposed USD 1 billion settlement with the labels was rejected, and it could not secure licences from the major labels to move to a paid model. When the bankruptcy court blocked a sale to Bertelsmann, its assets were sold at auction. ## The story The name Napster came from Nappy, a nickname Shawn Fanning had been given at school because of his hair. With the app he launched together with Sean Parker in June 1999, Fanning changed the way music moved around the internet within a few months. Unlike other sharing networks, Napster focused solely on MP3s, offered an easy interface and put content that could not be found elsewhere, such as old songs, unreleased recordings and live recordings, a few clicks away. The spread was dizzying. When MP3 transfers came to account for as much as 61 per cent of external network traffic in university halls of residence, many institutions blocked Napster. In February 2001 the number of verified users worldwide reached 26.4 million; some unofficial estimates spoke of 80 million registered users. Radiohead's album Kid A spreading on Napster before its release was thought to have boosted sales, and some artists openly backed the platform. The music industry, however, went on the counter-attack. In December 1999 A&M Records and other labels, acting through the RIAA, sued on grounds of contributory copyright infringement. In April 2000 Metallica filed a suit documenting around 335,000 people it had found sharing its songs; Dr. Dre brought a similar case. An injunction issued in July 2000 was temporarily stayed pending appeal, but after the ruling of February 2001 the court required Napster to monitor its network and block access to copyrighted content. The company's offer of a USD 1 billion settlement spread over five years was rejected. In early July 2001 Napster shut down its entire network and never reopened it. In September 2001 it agreed to pay rights holders USD 26 million, but it could not obtain licences from the major labels for a paid version. In May 2002 it agreed to sell its assets to Bertelsmann for USD 85 million and filed for bankruptcy in June; the bankruptcy judge blocked the sale on conflict-of-interest grounds. In November 2002 the brand and logo were sold to Roxio for USD 5.3 million. In the years that followed, the Napster name was used for paid music services by Roxio, Best Buy, Rhapsody and other owners; these were not a continuation of the original company but reuses of the brand. Napster's closure did not stop sharing; decentralised methods such as Gnutella and BitTorrent emerged. The lesson of the story for founders is that proving strong user demand and putting a business model on a legal footing are two separate jobs. ## Lessons - If you are growing on content that rests on other people's rights, start licensing talks with the rights holders before the user explosion. - In a product with high legal risk, architectural choices can place liability squarely on the company; design it together with legal counsel. - User numbers alone are not bargaining power; despite 26 million users, the labels rejected a USD 1 billion offer. ## Sources - [Napster](https://en.wikipedia.org/wiki/Napster) - [Napster Suffers Setback in Appeals Court Ruling](https://www.nytimes.com/2001/02/13/technology/napster-suffers-setback-in-appeals-court-ruling.html) - [Metallica fingers 335,435 Napster users](https://www.cnet.com/tech/services-and-software/metallica-fingers-335435-napster-users/) --- # Webvan (1996 – 2001) - URL: https://girisimcikafasi.com/en/startup-graveyard/webvan/ - Sector: Logistics and delivery - Country: United States - Total funding: $771 million - Cause of closure: Business model failed ## What did it do? Webvan was an online grocery company based in Foster City; customers placed orders on the internet and chose a 30-minute window for delivery. The company built its own warehouses and fleet of lorries, served 10 regions of the US at its peak and aimed to reach 26 cities by 2001. ## Why did it shut down? Under pressure from investors to secure first-mover advantage, the company expanded into many cities without proving its business model in its first market. It placed a $1 billion order with Bechtel for warehouses, and infrastructure built from scratch created very high fixed costs. In 2000 it ran up $525.4 million in expenses against $178.5 million in sales. Targeting price-sensitive customers kept margins thin, and none of the senior executives had any supermarket experience. With losses exceeding $800 million, the company ceased operations and filed for bankruptcy in July 2001. ## The story On the day it went public in November 1999, Webvan was worth more than $4.8 billion. Yet the company's total revenue up to that point was just $395,000, and its accumulated losses exceeded $50 million. That gulf foreshadowed one of the most expensive lessons of the dotcom era. Webvan was founded in 1996 by Louis Borders, co-founder of the Borders bookshop chain. The idea was simple: customers would place their grocery orders online and choose a 30-minute window for delivery. Benchmark Capital, Sequoia Capital and Borders each invested $3.5 million in 1997; then Softbank put in $160.3 million and Goldman Sachs $50 million, and Sequoia added another $50 million. Venture funding totalled more than $396 million, and the IPO brought in $375 million. George Shaheen, the former head of Andersen Consulting, took the helm. Investors wanted rapid growth to secure first-mover advantage. Webvan started taking orders in the San Francisco Bay Area in June 1999, placed a $1 billion order with Bechtel for its warehouses, built its own fleet of lorries and in 2000 bought its loss-making rival HomeGrocer in a $1.2 billion share deal. At its peak the company served 10 US regions, and in 2000 it had $525.4 million in expenses against $178.5 million in sales. Nobody in senior management had experience of running supermarkets, and the price-sensitive customers it targeted did not leave enough margin to carry such expensive infrastructure. Shaheen resigned in April 2001. In July 2001 Webvan ceased operations and filed for bankruptcy, leaving behind losses of more than $800 million and 2,000 employees out of work. Non-perishable food was donated to local food banks, and some executives later moved to Amazon. Webvan's real mistake lay not in the idea but in the sequencing. The model was rolled out nationwide through warehouses built from scratch before it had become profitable in its first city. Peapod, which used existing supermarkets' infrastructure, survived the dotcom crash, while Webvan passed into history. When rapid grocery delivery took off again in the 2020s, Webvan's story became the warning most often cited to those start-ups. ## Lessons - Prove profitability per order in your first city before opening in a new one; scaling fast multiplies losses. - Using existing supermarket and warehouse infrastructure takes far less capital than building automated warehouses from scratch. - Make sure at least one person in the leadership team brings hands-on operational knowledge of the sector; general management experience is no substitute for grocery logistics. ## Sources - [Webvan](https://en.wikipedia.org/wiki/Webvan) - [Webvan goes under / Online grocer shuts down -- $830 million lost, 2,000 workers fired](https://www.sfgate.com/news/article/Webvan-goes-under-Online-grocer-shuts-down-2901586.php) - [Webvan Stock Price Closes 65% Above Initial Offering](https://www.nytimes.com/1999/11/06/business/webvan-stock-price-closes-65-above-initial-offering.html) - [https://www.wikidata.org/wiki/Q17087287](https://www.wikidata.org/wiki/Q17087287) --- # Boo.com (1998 – 2000) - URL: https://girisimcikafasi.com/en/startup-graveyard/boo-com/ - Sector: E-commerce - Country: United Kingdom - Total funding: $135 million - Cause of closure: Ran out of cash ## What did it do? Boo.com was a London-based online fashion retailer that aimed to sell branded sportswear and fashion to stylish, well-off 18 to 24-year-olds. The site stood out for letting shoppers inspect products on three-dimensional models and for a virtual shopping assistant called Miss Boo. After a launch that was postponed several times, it went live in autumn 1999. ## Why did it shut down? The company spent USD 135 million in 18 months; USD 25 million went on advertising and PR before a single sale was made. Pages weighing hundreds of kilobytes and an unusual navigation structure frustrated users at a time when broadband was not widespread. A free returns service produced a higher return rate and higher logistics costs than expected, and headcount was expanded before needs were clear. The business plan assumed that fresh capital would be found until sales caught up with costs, and that door closed with the Nasdaq slide in the second quarter of 2000. The company was placed in receivership on 18 May 2000 and liquidated. ## The story The Boo.com domain had been bought from a broker for USD 2,500; everything else about the company would cost far more. In 1998 three Swedish entrepreneurs, Ernst Malmsten, Kajsa Leander and Patrik Hedelin, set up a company on London's Carnaby Street to sell branded sportswear and fashion online. The trio had previously founded an online bookshop in Sweden called Bokus.com, and investors regarded them as among Europe's most experienced internet entrepreneurs. The target audience was stylish, well-off 18 to 24-year-olds. The site let shoppers inspect clothes on three-dimensional models and offered a virtual shopping assistant called Miss Boo. Developing the 3D technology alone cost more than USD 6 million, and maintaining it cost USD 500,000 a month. The launch was postponed several times; when the site finally opened in autumn 1999, the company had offices in Amsterdam, Munich, New York, Paris and Stockholm and 400 employees. USD 25 million had been spent on advertising and PR before a single sale. The first impression was poor. The home page weighed hundreds of kilobytes and, at a time when broadband was not widespread, could take minutes to load; a fixed-size window and navigation logic that changed from page to page wore users out. These problems were largely fixed over time and sales rose quickly; in the two weeks before the collapse, sales reached around USD 500,000. But the free returns service brought a higher return rate than expected, and headcount ballooned before needs were clear. The real problem was the plan itself: it assumed that new venture capital would always be available until sales caught up with costs. That door closed with the sharp Nasdaq slide in the second quarter of 2000. Having spent USD 135 million in 18 months, the company was placed in receivership on 18 May 2000. The biggest loser was the Omnia fund, backed by members of Lebanon's Hariri family, which had invested around GBP 20 million. The technology was sold to Bright Station for USD 250,000; the brand passed to Fashionmall.com and relaunched in autumn 2000 on a far smaller budget. The lesson of Boo.com is clear: a growth plan built on the assumption that capital will always flow cannot save a company when the market turns, even if the product has improved. ## Lessons - Base your financing plan not on the assumption that the next round will come whatever happens, but on how close you can get to profitability with the cash you have. - Test technical showmanship against your target audience's real connection speeds and devices; a shop window that loads slowly loses sales. - Price in the logistics cost of promises such as free returns from the start, together with an estimate of the return rate. ## Sources - [Boo.com](https://en.wikipedia.org/wiki/Boo.com) - [INTERNATIONAL BUSINESS; Fashionmall.com Swoops in for the Boo.com Fire Sale](https://www.nytimes.com/2000/06/02/business/international-business-fashionmallcom-swoops-in-for-the-boocom-fire-sale.html) - [Boo back in business, this time on a budget](https://www.telegraph.co.uk/finance/4470630/Boo-back-in-business-this-time-on-a-budget.html) --- # Pets.com (1998 – 2000) - URL: https://girisimcikafasi.com/en/startup-graveyard/pets-com/ - Sector: E-commerce - Country: United States - Total funding: $93 million - Cause of closure: Business model failed ## What did it do? Pets.com was a San Francisco-based online shop selling pet supplies such as food, litter and toys directly to consumers. Thanks to its sock-puppet mascot, which appeared in a Super Bowl advert and in the 1999 Macy's Thanksgiving Day Parade, it became one of the best-known internet brands of its day. ## Why did it shut down? The company sold products below cost; even in its second financial year, sales came in about 27 per cent below cost. In a sector with profit margins of 2 to 4 per cent, absorbing the shipping cost of heavy bags of food and litter turned almost every sale into a loss. In its first financial year it spent $11.8 million on advertising against revenue of $619,000, and no independent market research was carried out before launch. The more it sold, the more it lost, and PetSmart's takeover offer came in below the company's net cash value. Unable to secure enough funding, Pets.com stopped taking orders in November 2000 and went into liquidation. ## The story In January 2000, Super Bowl viewers were introduced to a sock puppet holding a microphone, in an advert that cost the company $1.2 million. The puppet was the mascot of San Francisco-based Pets.com, and it quickly became a nationally recognised figure. The Pets.com domain had been bought in 1994 by the entrepreneur Greg McLemore; the site launched in November 1998, and Julie Wainwright took over as head of the company in early 1999. Amazon took a 54 per cent majority stake in the first funding round, investing $10.5 million in March 1999 alongside Hummer Winblad and Bowman Capital. The marketing machine ran at full throttle. The puppet appeared on Good Morning America, gave an interview to People magazine and floated through the 1999 Macy's Thanksgiving Day Parade as a giant balloon. The company went public on Nasdaq in February 2000, raising $82.5 million, and in June 2000 it bought its biggest online rival, Petstore.com, for $10.6 million. Before it closed, it had reached around 570,000 customers. But the equation behind the sales was broken from the start. In its first financial year, from February to September 1999, the company earned $619,000 in revenue and spent $11.8 million on advertising. In a sector where profit margins hovered between 2 and 4 per cent, covering the shipping of heavy bags of food and cat litter turned almost every sale into a loss. In the second financial year products were still being sold about 27 per cent below cost; the more sales grew, the bigger the losses became. Not even an independent market study had been carried out before launch. Attempts to sell the company came to nothing; PetSmart's offer was rejected because it was below the company's net cash value. On 7 November 2000 Pets.com announced that it would stop taking orders two days later and lay off 255 of its 320 employees. The shares, priced at $11 at the IPO, had fallen to 19 cents that day. The domain and brands were sold to PetSmart in December 2000, and the liquidation was completed in January 2001. Pets.com became one of the starkest examples of awareness not equalling profitability. The fact that the same idea later succeeded with Chewy suggests the problem lay not in selling pet supplies online but in a pricing and logistics set-up that lost money on every order. ## Lessons - Work out the contribution margin on every order before setting an advertising budget; growing with negative unit economics only grows the losses. - With heavy, low-margin products, do not promise free shipping until you have verified the logistics cost per order. - Before launch, use a small market test to measure how much customers will actually pay to shop online. - Do not mistake brand awareness for profitable demand; test advertising spend against repeat-customer data. ## Sources - [Pets.com](https://en.wikipedia.org/wiki/Pets.com) - [TECHNOLOGY; Pets.com, Sock Puppet's Home, Will Close](https://www.nytimes.com/2000/11/08/business/technology-petscom-sock-puppet-s-home-will-close.html) - [Pets.com raises $82.5 million in IPO](https://www.cnet.com/news/pets-com-raises-82-5-million-in-ipo/)