Why my startup failed

Well, this is a very interesting writeup

"Unfortunately, over time we found that while people used the site once or twice, they quickly reverted back to emails and phone calls. We always knew that people bought this wine for fun."

Do you know why is that? It's not only about 'fun'. It's about knowing about the wine.

For the technically minded people it is easy to assume this 'wine talk' is BS (I'm not saying there isn't BS) but most of it isn't.

So the experience of buying it with someone who understands it is superior to seeing lists of pictures, prices and generic descriptions.

Also, I bet most wine consumers that would go for this service don't care to learn an iPhone app.

1st lesson for startups: Know your market! I can't make a "disruptive marketplace removing inefficiencies" for selling sand at a beach (absurd example, but you get the spirit)

How is it done today? Remove the pains, but don't take the good things out.

Another analogy. People won't exchange eating pineapples for bananas because bananas are easier to eat, rather, remove the pain of peeling the pineapple, but sell pineapple.

Thanks for sharing this. You clearly understand well what your core challenges were.

The interesting part is that you probably knew all of this going in. Perhaps you were so enamored with your idea, that you wanted to believe these were not the insurmountable challenges that they were. Reminds me of couples who marry knowing of certain glaring problems, but proceed anyway because they are "in love". Whether they downplay the problems, convince themselves they can overcome them or otherwise, these are frequently the very problems that lead them to failure (divorce).

But, more frequently, we probably just think these challenges will melt away or work themselves out somehow. Maybe that's why these businesses always look so good going in!

This is not to lambast you--quite the opposite actually. I have been there and I am still susceptible. I applaud you for acknowledging your challenges and getting out relatively early.

Good luck to you on your next venture!

" Another round, and more time, was possible, but it wouldn't have been right to take more money for something that I no longer believed would work."

While I understand the sentiment, and I don't suspect it was done lightly, the rationale here is superficial. "I no longer believed would work". Well, whether it would work or wouldn't at one point you believed, and now you've got a team of people working for you. Closing primarily on the basis of your beliefs (which, apparently, were faulty before - perhaps they're faulty now too? market might turn around? network connections might kick in in 6-12 months?) comes across as selfish.

I don't think you actually were or are - I've no doubt there was a lot more going on that you didn't summarize in this one blog post, and it came across a bit off-handed. I say this as someone who's had to close down something with a team of people - I don't think anyone ever takes this decision lightly.

This is a truly wonderful writeup. I especially appreciated the insight that "Marketplaces need a big disconnect between buyers and sellers".

I try to tell this to startups that try to add indoor location-based technology to businesses like Men's Warehouse. What they fail to understand is that those places run better because they are staffed by people who understand their customers. When someone drives into the parking lot of a Men's Warehouse, they are already there to buy a suit. They don't need discounts or information about the products from an app on their smartphone, they need real customer service.

A skilled salesperson can upgrade anyone on warranties and other items. Having a piece of software do it, especially one built by a group of programmers and marketers that know nothing about suits, is ridiculous, and so is the idea of training skilled salespeople to also be system administrators for software that's not needed.

Reading this post I can't help but think that if they had built services that the middlemen needed that they would have succeeded. For example, take the following two quotes:

"We wanted to revolutionise the fine wine industry, a market with many layers of middle men, and one that has traditionally eschewed technology, failing to patch it's many inefficiencies."

"Unfortunately, the service offered by all of these warehouses is poor. Again, we see little technology (basic online systems, preset passwords, refusal to spend money on an SSL certificate), and lots of human errors (such as very expensive wine being moved to the wrong accounts)."

If these statements are true then there are very real pain points here. Selling services to these vendors, solving their pains, is likely where there is money to be made.