Business Learning from Startups' Failures

New Business in Three Years? Is this a common industry fact? Do CEOs who can't provide concrete examples fail? Is everyone working without knowing what the goal is?”

Some companies, such as Meta, are withdrawing from the NFT business, while others, such as Lunar Embassy in the U.S., have established a “dream business” that has already generated sales of 1.1 billion yen with more than 6 million people worldwide by selling “moon land.

Why is this difference created?

Small and medium-sized business owners move to “cost cutting,” “personnel reduction,” and “new business” when their company's performance deteriorates.

When we checked, we found that many small and medium-sized companies do not have a website, and we heard that some companies, especially those whose business performance slumped during the Corona disaster, made a renewed effort to “go digital,” and the first and foremost of these efforts was “website production.

As if to prove the high demand, we often saw homepage production companies such as “Peraichi” advertising their services in prime time TV commercials.

But is a website necessary for the company in the first place? If so, does it have the “necessary functions”? Perhaps the management does not think that far ahead. After six months or a year has passed, they probably think, “Well, no one visits our website,” and think of it as nothing more than an extension of their business card.

In May 2023, interest payments on the “Zero Zero Loan,” as it is commonly called, will begin. For companies whose business conditions are still deteriorating due to the effects of the new coronavirus infection, failure to successfully use the loan proceeds for corporate growth will be quite painful.

90% of startups disappear within 5 years

The Corona Disaster, for example, actually had a variety of start-ups.

A certain restaurant that used a proprietary app to provide contactless service attracted the attention of many investors by reducing the number of employees by specializing in takeout and instead setting high raw material costs to achieve high quality and low unit prices that were not seen in the same industry.

However, when the stores actually opened, customers were impatient to know if there was an eat-in space, and as a result, the company had to increase the number of employees, which resulted in a significant reduction in the targeted number of franchise openings.

No matter how brilliant a business plan may be, as a business, it has to deal with living people. This is where we can see a customer reaction that is different from the narrow world of businessmen who get excited by the sympathy of other businessmen.

When McDonald's switched to paper straws in consideration of the SDGs, they were inundated with complaints that it was “like sucking on toilet paper core,” and they ended up distributing plastic straws for some products and for children.

It is easy to say that UX (user experience) is important, but in these confusing times, with pandemics and wars occurring in just a few years, isn't it a “step forward” to look at “failures” and consider “how to prevent them from happening?

Kitty Hawk, a company founded by Sebastian Thrun, co-founder of Google's moonshot project, Google X, was a company that developed a “flying car” that men would be excited about.

However, in fact, the development of electric autonomous aircraft is very competitive, and although it is a dream, “a business model problem emerged.

Compared to the drone industry, which is highly versatile, the company's business model has not been developed, and some within the company have voiced their doubts.

Udayy is an India-based company that has developed an interactive digital learning platform for children. The company believed that demand would be high due to the Corona disaster, and it had prepared a highly unique curriculum, such as practicing math skills through play.

However, the company decided that once children started attending school, it would be difficult to continue the business. After failing to sell the English learning course business, the company was shut down and about 120 employees were laid off.

Sometimes even major companies lose ground.

80% of digital investments are in maintaining and running existing businesses.

Many people cite “cafes” as a major success story of UX design. Before long, the Japanese have become terribly coffee-loving people.

Why pay 500 yen for a canned coffee when you can get it from a vending machine for 110 yen? Some say it is because they are “making a business out of the experience.

The best example of this is Starbucks. In the Showa era (1926-1989), coffee shops were frequented by businessmen taking a break from work and the interior was hazy with cigarette smoke, but in the Heisei era (1989-1989), cafes have become beautiful and fashionable spaces.

Starbucks' concept is “The Third Place. It is designed with the image of users experiencing a richer and calmer environment than everyday life, and in fact, people flock there every day to pay 500 yen. I would love to see a new Starbucks born from a Japanese startup.

Services that might have continued without Corona

Each of these services had a solid need and potential for further development, but demand and sales plummeted when the Corona disaster reduced the number of people working there. Now that the mandatory wearing of masks has been put to rest, we hope that the services will be revived once again.



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