When Startups Fail
Every founder studies success, but the most strategic entrepreneurs also study failure—because behind every high-profile collapse lies more than just a red flag; it’s a roadmap of what not to do
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Every founder studies success, but the most strategic entrepreneurs also study failure—because behind every high-profile collapse lies more than just a red flag; it’s a roadmap of what not to do.
These companies raised billions, dominated headlines, and built cults of personality around their vision. But when the cracks showed, they didn’t just unravel, they left behind very clear instructions.
Here’s what every founder, investor, and operator can still learn from ten of the most talked-about startup failures of the past decade.
Throughout this edition, we cover the following companies:
WeWork
Better.com
Zirtual
Theranos
Quibi
Juicero
Jawbone
Beepi
Homejoy
Powa Technologies
1. WeWork: When Growth Becomes Delusion
In 2019, WeWork filed for its long-anticipated IPO, but that’s when the mask slipped, exposing huge losses ($1.9 billion on $1.8 billion in revenue) and even more alarming leadership decisions.
Adam Neumann, the co-founder and CEO, had trademarked the word “We” and sold it back to the company for nearly $6 million. But he also owned several of the buildings WeWork rented, blurring lines between personal gain and fiduciary responsibility.
Neumann’s leadership style—a mix of visionary promises, tequila-fueled company events, and spiritual-sounding jargon—had always been a curiosity. But with public money on the line, the red flags became impossible to ignore and everyone from his investors, the press, and the public started paying attention.
The IPO was pulled and then SoftBank, one of WeWork’s largest backers, stepped in to save the company from total collapse. Neumann eventually stepped down, with a reported $1.7 billion exit package, and WeWork became a symbol not of innovation, but of unchecked ego.
Where is the company now?
In 2021, WeWork finally went public via a SPAC. But the glow was gone.
Years of brand damage, bloated lease commitments, and a pandemic that crushed demand for office space left the company limping. In November 2023, it filed for bankruptcy, citing $18.6 billion in lease obligations it could no longer sustain. Its valuation, once $47 billion, became a footnote.
The business still exists in name, but the story of WeWork is no longer about changing the future of work. It’s about what happens when vision outruns reality.
Lessons for Founders
1. Governance is not a technicality. It’s a lifeline.
Neumann's unchecked control, a super voting structure, an acquiescent board, and blurred financial lines, meant that no one said "no" when it mattered. If your investors, advisors, and board aren’t empowered to challenge you, you don’t have governance, you have a stage show. And the market will eventually demand a refund.
2. Culture becomes the company.
From WeWork’s yoga-infused mission statements to all-night parties, Neumann tried to make vibe the business model. But vibes don’t scale. Employees burned out. Operational focus eroded. And a lack of accountability trickled down. Founders set the tone, and if that tone is chaos, dysfunction follows.
2. Better.com: The Cost of Thoughtless Leadership
In December 2021, CEO Vishal Garg laid off 900 employees over Zoom. What he didn’t know was someone was filming the whole thing. He told his employees: ‘‘You are part of the unlucky group,” The video went viral.
Garg blamed the market, but the damage was already done, to morale, to the brand, and to public trust. Former employees described the culture as “toxic,” with Garg facing allegations of verbal abuse and erratic behavior. He stepped down temporarily, but the reputational scar stuck.
Where is the company now?
Better.com went public via a SPAC merger with Aurora Acquisition Corp in August 2023. But instead of the expected redemption arc, the debut was brutal, its valuation collapsed by over 90% , and on the first day of trading, shares dropped more than 90%.
Garg returned as CEO, but the company has struggled to regain credibility or growth momentum. Despite attempts to pivot and rebrand, Better.com remains a cautionary tale, more known for leadership missteps than product innovation.
The brand still operates, but its reputation hasn’t fully recovered—and neither has employee or investor confidence.
Lessons for Founders
Every decision, especially the hard ones, is made under the spotlight. In the age of social media, Slack leaks, and Glassdoor reviews, how you act internally will be amplified externally.
You can’t build a great brand with a broken team. So, the way your company treats people, especially during layoffs, pivots, or downturns, becomes a permanent part of your reputation. If the team is misaligned, the market will feel it.
You don’t have to sugarcoat tough news, but how you deliver it matters. Empathy builds long-term trust, with employees, customers, and investors. Founders who communicate clearly and compassionately don’t just retain talent, they attract better talent.
3. Zirtual: A Case Study in Financial Ignorance
At first glance, Zirtual looked like a breakout success. The virtual assistant startup had carved out a strong niche, secured a lot of press, and built a customer base of busy professionals and startup founders who needed help but didn’t want to hire full-time staff.
But in August 2015, without warning, the entire company shut down. Every employee was laid off, via email, overnight. The website was taken offline and clients and staff alike were blindsided.
Founder Maren Kate Donovan later revealed what many suspected: the company ran out of money and no one saw it coming including her.
The root cause was they simply moved too quickly. A shift from using independent contractors to hiring full-time employees. That shift ballooned headcount from 150 to over 400 in just 18 months. Payroll costs go much higher and burn rate went unchecked. In other words, there was no financial safety net and just when they needed capital the most, a key fundraising round fell through.
Zirtual had scaled before it stabilized. The result was a complete operational collapse.
Where is the company now?
Zirtual was briefly acquired by Startups.co just days after shutting down. It continues to exist in a much smaller capacity, but it never recovered its original momentum or brand equity.
As for Donovan, she’s been transparent about her missteps, becoming an advocate for mental health and founder support. In hindsight, her honesty helped others avoid similar pitfalls, but the lessons remain.
Lessons for Founders
Numbers before narrative.
It’s easy to get caught up in vision, press features, and growth milestones. But if you don’t know your unit economics, your runway, your burn rate, your margins, you’re gambling with your company’s future. Financial literacy is not optional, it’s leadership 101.
Headcount does not always mean success.
More people on payroll doesn’t always mean progress and this is what people often get wrong. Zirtual’s quick hiring looked like momentum but was actually a liability.
4. Theranos: The Myth of the Magnetic Founder
At its peak, Theranos was one of Silicon Valley’s brightest stars. Valued at $9 billion, it was led by a Stanford dropout in a black turtleneck who modeled herself after Steve Jobs.
Elizabeth Holmes became a movement and her promise? Revolutionary blood testing from a single finger prick. The press couldn’t get enough. Holmes graced the covers of Forbes, Fortune, Inc., and TIME. She spoke at health summits, raised nearly $1 billion in funding, and was hailed as the youngest self-made female billionaire.
There was only one problem: it didn’t work. Behind the scenes, as we’ve seen from countless documentaries, films and articles now…Theranos’ proprietary technology was unreliable. Tests were often inaccurate. In some cases, real patient outcomes were affected. Employees who raised concerns were silenced, partners were misled and reports were faked.
It all unraveled in 2015, when The Wall Street Journal broke the story that the Edison machines, Theranos’ cornerstone invention, couldn’t deliver on its claims.
Where is the company now?
Theranos shut down in 2018. Holmes reported to prison in 2023. The name is now synonymous with startup deception, a cautionary tale that transcended tech and became cultural shorthand for hype gone too far.
The legacy? A permanent reminder that vision, when unchecked by truth, becomes a liability.
Lessons for Founders
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