Rise And Fall: 3 Massive Startups That Disappeared

If you are reading this blog that means you are very likely interested in startups. It seems everyday there is a new groundbreaking startup that hogs the headlines for a few days than disappears off the face of the web. Where has it gone? Well, according to Forbes, 90% of the time it has gone nowhere. Even if a startup does get its legs under it, there are no guarantees. For every Facebook there are dozens of MySpaces, Friendsters, and Google+-s, all of which had a large degree of success or hype and fell into relative obscurity. Startups can fail for any number of reasons, both internal and external. Lets take a look at three massive startup failures.


Founded in 2003, MySpace became the first social network of consequence in the collective consciousness of the internet. Reaching profoundly a teenage and young adult audience, the site quickly became a place to discover music, connect with friends, and build customized profiles (seriously, everything I know about coding I learned making profiles on MySpace). The social network behemoth even turned down an offer to buy Facebook in 2005 for $75 million. That decision would come back to haunt the company as the rise of Facebook played a major part in the downfall of MySpace. In addition to overwhelming competition, MySpace truly suffered from a lack of innovation. As a primarily entertainment centric platform MySpace couldn’t keep up on the product side with the technical gurus at Facebook who made the brilliant move of allowing outside developers to improve Facebook by developing games and innovative social apps. One could even hypothetically tie the downfall of MySpace to Farmville, a farming simulator game, which drew millions to Facebook while MySpace dragged their feet when it came to innovation. Simply put, MySpace couldn’t out-innovate in an industry they largely created. They were truly beat at their own game by Facebook.


The service that brought P2P sharing to the masses. If you have ever downloaded a movie, song, or album (which, of course, is none of us have right?), you can probably thank Napster. Originally reserved for the technically affluent, Napster created a platform that anyone could use to tap into a huge p2p library. Launched in 1999, the digital heyday didn’t last long, with several high-profile music artists like Metallica and Dr. Dre launching massive lawsuits against the company in 2000. The network officially went down in July of 2001. What remains is a music industry that is still recovering (though many argue Napster was good for the majority of musicians), a file-sharing revolution that is ongoing, and a changed media landscape that still doesn’t really know what to do in the digital age. At the end of the day, Napster changed the world, but did so within a legal environment that closed in around them. While a few attempts to resurrect Napster were carried out over the following years, it never again approached its original heights.

Pay By Touch

Sometimes you are just ahead of your time. Founded in 2002, Pay By Touch brought forward a secure biometric payment system that, if it had succeeded, would have been the predecessor of Apple Pay. Instead of building a solution into a smartphone, devices that largely didn’t exist or weren’t largely adopted in the early 2000s, Pay By Touch required a physical unit in-store that would read your fingerprint to process payment. Because of this, the company, despite over $300 million in funding, quickly ran into monetary issues tied to unit cost and training and folded. While undoubtedly a forward thinking product, it is possible to be too innovative and bring forth a product the world simply isn’t ready for. This is the case when it comes to Pay By Touch, who deserved much more than being a startup afterthought.