It’s time to defeat the zombie startups

Beware the zombies

You’ve heard the maxim that nine out of 10 startups fail. That has big implications for everyone involved, including a heavy dose of survivorship bias: the fallacy that those companies that do succeed had something unique going for them besides, say, luck. And the financial structure of venture capital makes it easy — even necessary — to ditch the losers and look for the next winner.

There are dogs, stars and zombies, as investor Sean Wise once put it. The zombies are the dangerous ones, because they haven’t failed quite hard enough for everyone involved to work up the energy to shut them down. The illusion of life ties up capital and talent that could be doing something else.

Zombies live on because no one’s watching; only the most egregious startup blow-ups get any press. Layoffs, bankruptcy filings and a spectacular waste of money are guaranteed to get attention.

• You might have heard of Color Labs’ post-launch implosion, Path's fire sale and Clinkle's, well, whatever that was. Theranos sold off its intellectual property after limping along for a few years. You know those stories.
• But what about The Fancy, a mobile commerce pioneer that still has its app installed on some 2 million phones?
• Or ImageShack, which inexplicably won an award from Bob Vila last year for its 19-year-old photo-sharing service?
• And say, whatever happened to Zaarly, the local-services marketplace that was once the hottest way to get beer delivered at SXSW?

Celebrity backing and splashy corporate partnerships are often touted as a key to success. But that didn't help these firms, which might call that whole playbook into question.

• Startup kingmaker Sequoia funded ImageShack in 2008. Its Yfrog service soon got integrated into Twitter's mobile app as a default photo-sharing option.
• Thanks to founder Joe Einhorn's relentless networking, Jack Dorsey joined The Fancy's board. Will Smith and Ashton Kutcher invested. Apple reportedly took an interest in the startup after Einhorn and Tim Cook met at Sun Valley.
• Kutcher also backed Zaarly, followed by Kleiner Perkins, which invested $14 million. Meg Whitman joined the board.

Once you lose momentum, it's almost impossible to gain it back. Then the slow fade begins.

• ImageShack's Yfrog made headlines when it became the vehicle for a lewd crotch shot shared on then-Rep. Anthony Weiner's Twitter account in 2011. But it couldn't capitalize on that moment of infamy: Twitter soon replaced third-party pic-sharing services with a built-in photo tool. A successor company, Nventify, markets an image-compression service called Imagizer, and shares an office address with ImageShack. A PR rep for Nventify did not respond to an emailed request for comment. Sequoia didn’t respond when asked what happened to its investment.
• The Fancy laid employees off in 2014, and its revenues faded away after that. A turnaround CEO, Greg Spillane, tried to cut spending and revive the brand in 2019. It didn't work. A crowdfunding campaign raised under half a million dollars. Spillane, who didn’t respond to a LinkedIn message, no longer appears to be affiliated with The Fancy. He’s now CEO of a blockchain tools company.
• Zaarly nearly gave up the ghost “after 10 years of grinding,” founder Bo Fishback told customers in April 2021. But then Airtasker, an Australian services marketplace, bought what was left of it for $2.6 million. Lockdowns slowed sales last year, Airtasker CEO Tim Fung recently told Australian news site Stockhead, but he added that business was “accelerating” since then.

Is it worth it to revive a zombie? Should you keep it on life support? Once investors, employees and customers sour on a company, there’s often little left to salvage. In an industry filled with neophiliacs, it’s easier to launch something new than it is to resuscitate a damaged brand. VCs can just write off the investment. The lesson from zombies may be simple, but valuable: Fail faster and harder.

A MESSAGE FROM ESRI

The global nature of business makes tracking your company's operations trickier than ever before. Overseeing supply chains and an international, dispersed workforce is tough. Maintaining visibility over all aspects of your operations is even tougher. The changing norms of business make location services no longer a "nice to have" but a "need to have" — and at the forefront of the geospatial intelligence revolution is Esri.

Learn more

People are talking

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• “Visualize what it would be like to go make a coffee and visualize what it would be like to actually get to Inbox Zero. The guilty pleasure of procrastination will actually seem less attractive.”

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• “After all, we eat three times a day. That’s over 100 shopping occasions a month.”

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• "I've come to realize that the most profound opportunity to fight poverty lies in Web3 technologies."

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• “A single ledger in bitcoin consumes enough energy to power your house for almost a day … That’s not OK.”

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Never enough Olympics

The closing ceremonies are Sunday, but that doesn’t mean the Olympics have to be over.

There’s the official Olympics TikTok account, which features highlights, moments with the athletes and behind-the-scenes action. U.S. snowboarder Tessa Maud answers comments from fans, like how many restaurants are in Olympics Village. Figure skater Adam Rippon walks through his day doing media in Beijing, and Australian snowboarder Scotty James gives a tiny tour of his tiny room. And if you run out of content, the Summer Games are only a couple years away.

A MESSAGE FROM ESRI

The global nature of business makes tracking your company's operations trickier than ever before. Overseeing supply chains and an international, dispersed workforce is tough. Maintaining visibility over all aspects of your operations is even tougher. The changing norms of business make location services no longer a "nice to have" but a "need to have" — and at the forefront of the geospatial intelligence revolution is Esri.

Learn more