Failure stories have always been fascinating — more so when they are about the startup world. In fact, when 90% of startups fail, there is a lot of learning to absorb from the failures of others. This article will cover some insightful product-market-fit failure stories that will push you to strive for your startup’s PMF.

Why do businesses fail to achieve product-market fit? 

Product-market fit is all about catering to your target customers — be it in the form of useful features, on-point marketing, efficient pricing model, or more.

Most startup founders need help to achieve PMF, especially at the beginning. According to Bain Venture Capital Report, only 3% of startups get to PMF, even when 10% of all startups get the funding. This means achieving PMF is more important than anything else. Still, most fail at it because of the following: 

• Lack of market understanding
• Failure to listen to the voice of customers 
• Myopic vision related to product discovery and growth

Product-market fit failure stories. 

Product-market fit is a unicorn that every early-stage startup owner is chasing, day in and out. Not everyone is lucky to have a glimpse of the proverbial unicorn. Some get lost in the woods, trying to make things work, like the following startups: 

Dinnr — Failed because of no market demand. 

Dinnr was an interesting concept that failed to gauge actual market demand. The startup delivered a ‘cooking experience’ in the form of ingredients and instructions that users can use to cook dinner on special occasions for their loved ones.

The idea here was to let people enjoy the experience of cooking at home for special occasions like anniversaries, birthdays, etc.

But the startup failed to understand the customers. They over-expected demand without doing thorough market research. The product was a brainchild of personal ambitions and interests, which the founders needed to validate through market research surveys. Most customers preferred to buy ingredients from local superstores or order a readymade meal instead of choosing Dinnr.

In the end, the lack of market demand shut down Dinnr. If they had conducted market research first, things could have been different. Read More about Dinnr on Medium.com 

Navdy — Lack of market research. 

Navdy’s failure story is the perfect example of why you must keep your audience at the center of everything you do and focus on market research. The tech company offered a HUD (Heads-up Display) display on the windshield of cars that projected GPS directions. 

Feels futuristic, right? But some ideas are either way ahead of their time or simply not needed enough to build a profitable business.

The startup’s lack of market understanding and initial hiccups with pricing strategy rang a death knell from the start. 

First, customers were not ready to pay over $799 for a device that just offered directions. Even when they slashed their prices, they realized the market was highly saturated with cheap competitors. Plus, most users complained that the product did not satisfy a need but created a new problem — the HUD did not bend with the curve of the windshield and blocked the vision.

Quick market research and validation by launching an MVP prototype before the production stage could have sorted this problem. 

Moreover, their myopic obsession with creating a parallel navigation ecosystem against Google Maps proved costly for development and maintenance. 

The lack of demand/interest in paying for a subpar solution turned Navdy into a failed venture. They lost the game when they invested a lot of money without testing and achieving a product-market fit. The startup shut operations in 2018. 

Read More: Reasons why Navdy failed

Quibi — Failed to understand the market. 

Quibi’s story is the most appropriate representation of what happens when you don’t work as per customer expectations and undermine competition. 

A short-form video streaming platform, Quibi failed to add any value to the video ecosystem despite raising $2 bn from investors and having an amazing team.

Their fault — failure to realize what customers want. They launched as a mobile-only streaming service (think of a Netflix-TikTok hybrid) that charged $5-8 for a subscription that offered byte-sized episodes/videos. The hypothesis — people would like to watch episodes on the go. 

They had a library of fiction, daily shows, updates, and more, but they forgot to validate if someone would pay for a mobile-only service in a world where content is available freely over the internet.

The value proposition was not big enough for consumers to take them seriously. They failed to add features useful to their audience and never tested their MVP. It was just a ship lost in the sea. The lack of social sharing features, no clear roadmap, stiff competition from video-first social platforms like TikTok, and utter failure to understand what customers wanted, led to their demise.

If only they had performed in-depth market research, they could have brought sense to their product development and marketing efforts. 

Read More: Why is Market Research Important? 

Reach.ly — Lack of proper market feedback.  

Reach.ly was to eCommerce platforms what Hotjar is to B2B SaaS — an analytics tool for capturing behavioral insights.

Started in 2011, Reach.ly allowed website owners to personalize their on-site shopping experience through custom messages and real-time customization. They were using AI/ML to recognize behavioral patterns.

Lack of adequate market feedback and constant tech challenges led to their failure. Basically, they failed to get a grip on customer expectations and use their tech to solve any major pain points. 

Constant iterations without appropriate market feedback made them lose the path to profitability and success. Their hosting costs and a strong focus on Shopify without any market validation led to an increase in the cost of operations without any substantial growth in revenues.

They could have prevented the blunder if only they had heard what their audience needed. Once again, myopic vision disregarding general market feedback led to product-market fit failure. 

Had they conducted market research surveys, they would have known the audience they were targeting was very small for their growth goals. In the end, they had to shut the shop, citing increasing costs, a lack of long-term vision, and no market validation. 

SchoolGennie — Delay in releasing the MVP & gathering feedback.

SchoolGennie was an Indian edTech startup that aimed to digitize schools, helping them save time, reduce the cost of operations and promote data-driven decision-making. 

They were aiming to build a full-service cloud-based electronic records platform for schools. But lack of relevant experience and constant delays in launching an MVP led to the startup’s failure.

The startup founders were so adamant about building the perfect product that they ignored the market research and validation stage.

Delays (or disinterest) in reaching out to the audience for feedback using an MVP proved to be fatal for the startup. They soon lost vision, piled up expenses in development, and everything went downhill from there. 

If only they had done market research, launched an MVP faster, or listened to feedback, they could have done better. Lack of audience foresight and ignorance toward achieving a product-market fit led to their final demise.

Read More: Why SchoolGennie Failed

AskTina — No market demand. 

AskTina was a live video chat widget for websites. It allowed consultants, business owners, and professionals to provide a video chat option on their websites. The startup failed to validate its business idea through real customer interviews, which is ironic for a solution that offered a live video call option in the first place.

They did launch an MVP with over 10k page loads but failed to get even a single call paid consultation scheduled via their widget. Lack of market research and understanding of their audience wasted the founding teams’ time in developing something that no one needed.

That is why it is always better to listen to the voice of the customer, look at cues related to real problems and pain points, and then build a solution. If they had talked to the end customers — blog readers on niche websites (or tracked their online opinions), they would have understood that no one wants to place a live call. 

Entrepreneurs can avoid a similar fate by listening to the audience, performing market research, and making informed decisions related to product development. 

Read More: Why AskTina Failed

EventVue — Lack of understanding about the audience’s willingness to pay. 

EventVue functioned as a private social network for events and conferences. It aimed to improve the online conference networking experience for attendees. The goal was to allow attendees to know their fellows and interact with them even before they reached the conference. 

EventVue failed to validate its product and gauge its usefulness for its target audience. The conference organizers were not ready to pay for such a platform, even when they thought the platform was a good addition to the ecosystem.

That is why market research related to pricing is important. Sometimes, the audience appreciates the MVP, feels happy, and recommends you to others but is not keen on paying for the product. Asking market research questions related to pricing helps you ascertain the commercial demand for your solution.

Had they achieved product-market fit, they could have been a game-changing solution. But lack of understanding about the pain point of the audience and pricing strategy led to their failure.

Later, they realized that conference organizers wanted to sell more tickets and decided to pivot to an event discovery model. But their approach backfired when event attendees started to abandon events after discovering that their friends or acquaintances would not be at the event. Lack of market understanding and audience research led to the failure of EventVue.

Read More: Why EventVue Failed

Next Steps — Keep an eye on user feedback at every step

Past failures pave the pathway to future successes. These failure stories have one indicator in common — always create something your audience wants. That’s how you will get closer to achieving product-market fit. The closer you get, the higher your chances of success. So, all the best!

If you’re searching for ways to get closer to the audience, try GapScout. GapScout scans the internet and brings you audience insights derived from online public reviews of competitors in your industry or your own product. Keep an eye on reviews, stay agile in development, and delight your audience faster.

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