According to CB Insights, 42% of startups fail because they build products for markets that don’t have market needs. That’s nearly half of all startups making the same mistake—spending millions on products that no one really wants. In the past few years, over 10,000 startups globally have collapsed, burning through $50 billion in funding.
These startups weren’t short on ambition or resources, but most of them failed for a simple reason: they built products the market didn’t need.
Let’s look at some well-known examples to understand how even big names have fallen into this and learn how you can avoid making the same startup mistakes.
Famous Failed Startup Stories
Google Glass
Google invested nearly $1 billion in developing their product, Google Glass, a futuristic augmented reality product, just to know or learn that people don’t want it.
Privacy concerns, high costs, and lack of practical, everyday use made it unattractive to the mainstream market. Google misjudged the readiness of its audience, which led to the end of the product.
Snapdeal
Snapdeal used to be India’s largest company, valued at $6.5 billion. After raising some $1.8 billion in investments, it couldn't compete with its big rivals like Amazon and Flipkart.
Despite massive financial backing, Snapdeal couldn't offer something special that kept customers coming back. It struggled because it couldn't meet the fast-changing needs of online shoppers.
Paytm Mall
Paytm Mall, which is part of the very successful brand Paytm, wanted to challenge big e-commerce companies like Amazon and Flipkart. Even after raising more than $800 million, its value dropped by over 90%.
The problem? It didn't fit well in the market and had a bad customer experience. Even though it had a well-known parent company, Paytm Mall couldn't stand out in a crowded market.
Housing.com
Housing.com, one of the examples of a failed startup, raised $146 million and was once considered a big deal in India's real estate market. However, the company didn't understand what agents and buyers really needed.
Their ambitious vision didn’t match the market demand, so they went out of business, and investors lost a lot of money.
Jet Airways
Jet Airways, which was once the top airline in India, suddenly stopped working in 2019. While some problems happened with how they worked, the airline also didn't change to meet new market needs—especially with cheaper airlines becoming popular.
They didn't change their plans fast enough, so they lost customers and eventually had to close due to product-market fit failure.
Quikr
Quikr, a website for classified ads, raised over $440 million in investments and was once worth $1.5 billion in 2019. However, it didn't work well in the market because it had many small parts that didn't connect well and a lack of unique selling points.
Quikr couldn't grow properly, using up its money without building a business that could last.
These examples show that even giants can fall when they don’t align their products with market needs.
What are the Startup Failure Reasons?
Lack of Thorough Market Research
- Many unsuccessful startups didn't do enough market analysis. They were more focused on their idea instead of finding out what the market really needed.
Poor Understanding of Customer Pain Points
- Founders sometimes get too attached to their product idea and miss the actual problems customers face. This leads to creating solutions that don't solve urgent issues or, even worse, solutions that nobody wants.
Competing in a Saturated Market
Even with lots of money, entering a crowded market is risky. Products that don't offer something very different or better often struggle to get noticed.
Startup Mistakes to Avoid
Before investing time and money into building your product, follow these steps to ensure it meets market demand:
Conduct Deep Market Research
- Surveys and Interviews: Ask users about their issues, what they currently use to solve them, and what features they wish they had.
- Competitor Analysis: Look at what your competitors offer. Find out what they lack and make sure your product addresses them.
Develop and Test a Minimum Viable Product (MVP)
Create an MVP to get user feedback. Keep improving it based on what users say to make sure it really solves their problems, which helps to avoid the reasons for startups shutting down.
Use Data to Validate Your Assumptions
Use tools like Google Trends, social media analytics, and customer feedback platforms to measure interest. If the data shows low engagement or negative feedback, adjust your approach.
Follow the Lean Startup Methodology
Begin with a small scale, test your ideas, and make changes when needed. Continuously check your assumptions with customer feedback to ensure you’re creating something people truly want.
What if the Product Isn’t a Market Fit?
Sometimes, even after thorough research, your product may still not fit the market perfectly. Here’s how you can revolve and adjust:
Revolve Your Value Proposition
- Pay attention to user feedback. If your initial product isn't fixing the right issues, change it. Make it simpler if needed, or add important features that users want.
Identify a New Target Audience
- If your current market isn’t responding, look for other groups. For example, if your B2C app isn't working, try selling to B2B, where there might be more interest.
Use Partnerships for Better Market Entry
- Collaborate with industry influencers or experts; they can introduce your product to the right audience. This makes your product seem more trustworthy and helps you get it out there.
Focus on Keeping Customers Early
- Keeping old customers is harder than getting new ones. Keep updating your features, make the user experience better, and offer great customer service to keep people interested.
Keep Improving Your MVP
- Don’t be afraid to continue improving your MVP. Many successful startups didn’t get it right the first time but kept making changes until they found what worked best for their market.
Key Takeaway
Don’t just build something because you’re excited about it. Learn from the failures of big companies like Google Glass, Snapdeal, and Paytm Mall. If your product isn’t working well in the market, change it, improve it, and keep adjusting until it fits perfectly.
Keep changing and adapting, and you’ll find success where others have failed.
