We’ll tell you about Cruise and the last 6 meters, about Convoy and unnecessary cargo, about collapse after collapse, deceiving investors and about a bot farm bankruptcy.
Let’s talk about tech startups that raised multibillion-dollar capital but failed. One example is Cruise, which was one of the first to introduce autonomous driving at a commercial level.
“For example, in the case of Cruise, a startup developing self-driving systems, a fatal accident was fatal to the company. However, this could have been avoided if the analytical department had worked with full dedication,” emphasizes Lado Okhotnikov, founder of the Meta Force metaverse.
Last October, there was an accident involving an autonomous car in San Francisco. As you know, before this, leaders promised to reduce the number of accidents, reduce traffic jams and optimize city traffic. However, the result of the work was a collision in which a person died.
“After the collision, the car dragged the woman 6 meters and only then stopped,” eyewitnesses say.
After this incident, Cruise was banned from operating, and the transport regulator began a large-scale audit. The company’s refusal to provide recordings from drone cameras at the time of the accident caused widespread public outcry and negative reaction in the media.
Before the accident, Cruise had some problems with control, but it was considered one of the leaders in the field of autonomous public transport. The company attracted investments and had a sought-after fleet of vehicles – hundreds of cars took to the streets of San Francisco alone every day.
However, this fatal incident not only destroyed Cruise’s reputation, but also highlighted its vulnerability in the eyes of the public and investors. Despite the fact that the company itself was not public, its close relationship with the giant General Motors damaged the financial stability and reputation of the parent corporation.
The collapse of Cruise clearly demonstrated the risks and consequences of poorly thought-out deployment of self-driving technology.
Lado Okhotnikov About Technological Chaos
Lado Okhotnikov about unnecessary cargo during Covid pandemy
Convoy, a leading US company in the field of IT solutions for freight, connected shippers and carriers on a single platform.
Despite a promising start, the company went bankrupt in 2023. The reasons for the collapse were multifaceted and reflected the complexity of the logistics market.
The COVID-19 pandemic has triggered an unexpected surge in demand and price increases in the industry. Convoy was the first to take advantage of the situation by investing in business expansion. However, a year later the crisis hit the industry with full force and the company was unable to quickly rebuild.
An important factor was the increase in the key rate of the US Federal Reserve, which reduced investment in cargo transportation and worsened Convoy’s financial position.
The collapse was exacerbated by the company’s aggressive expansion strategy. Convoy quickly expanded operations, investing in equipment and personnel. This strategy worked during the boom, but proved unsustainable as demand declined and competition intensified.
Despite a promising product and financial backing, Convoy failed due to a combination of macroeconomic factors and questionable business decisions. This highlights the importance of sustainable growth strategies, responsible leadership and the ability to anticipate and adapt to market fluctuations.
WeWork – huge losses, questionable performance indicators
WeWork, a coworking space startup, has experienced a meteoric rise and an equally rapid fall. Founded in 2010, the company has attracted billions of dollars in investment and was ambitiously valued at $47 billion in preparation for its 2019 IPO. However, aggressive international expansion and huge operating losses have raised doubts about the sustainability of the business model.
The failure to go public in 2019 was a tipping point. WeWork’s valuation collapsed to $8 billion, and the company found itself on the brink of survival. Although they were able to go public in 2021, the COVID-19 pandemic and the remote work trend have seriously undermined demand for office space leasing.
As Lado Okhotnikov notes, WeWork’s business was built on the wrong marketing strategy. That is, the purchase of office space at inflated prices led to the fact that the company experienced a colossal burden on the budget during a drop in demand.
When rent prices fell in 2022, but loan payments remained the same, the startup couldn’t cope. This led the company to bankruptcy in less than a year.
To prevent this outcome, WeWork should have pursued a more conservative financial strategy, diversified its business model, ensured sustainable growth, adapted to market changes, and effectively managed risks. This would minimize risks and ensure long-term business sustainability in rapidly changing conditions.
About the unicorn and the most expensive bot farm
IRL positioned itself as a platform for organizing real-life meetings and events away from screens. However, as a result of an SEC investigation in April 2023, it turned out that out of the declared 19 million users, only 1 million were real, and the rest were fake bots.
It goes without saying that the IRL team has taken a number of strategic steps to adapt to the pandemic and remain relevant. They switched to organizing virtual events in collaboration with giants such as Twitch, YouTube, Live Nation, Ticketmaster.
This allowed them to expand their audience and create unique online content such as concerts and e-sports tournaments. However, despite efforts to pivot the business model, fraud to increase the number of users completely discredited the company in the eyes of its partners.
Instead of growing a real user base, they resorted to deception, which ultimately led to IRL shutting down in June 2023.
The example clearly demonstrates how one unethical decision can undo all the achievements of a startup. The company clearly went against the principles that it declared – creating real social connections. As a result, they had to pay with loss of confidence and bankruptcy.
Byju’s is an unknown company that finds itself next to SpaceX, OpenAI, Miro, Epic Games
Byju’s meteoric rise to become a decacorn in 2020 with a valuation of over $10 billion looked like a model success story. However, a couple of years later, when the company was planning to go public, serious problems began to emerge.
Investors and auditors found deficiencies in corporate governance and management’s failure to effectively integrate the multiple EdTech startups it acquired. Overly aggressive growth through acquisitions, made possible by infusions of investment, ultimately backfired.
Transparency was in question – financial statements for 2021 were not provided at all. When the audit did take place, it turned out that the losses amounted to $570 million, and the valuation of the shares collapsed by at least 4 times.
At the beginning of 2024, Byju’s capitalization is estimated at only $200 million – just 1% of its peak of $20 billion in better times. Such a fall for a former unicorn is simply catastrophic.
This example clearly demonstrates that unbridled growth alone does not guarantee long-term success. Lack of attention to corporate governance, financial discipline and hasty multi-billion dollar deals ultimately crippled Byju’s.
This serves as an important lesson for startups to not only focus on attracting investment and expansion at any cost. It is necessary to build long-term operational processes, introduce financial transparency and adhere to proper integration with other market participants. Otherwise, rapid growth risks turning into an equally rapid decline.
“Byju’s has shown how rapid growth can be the downfall of a company. It is impossible to effectively manage countless processes, especially when they were not properly established in the beginning. Expansion without taking into account the infrastructure and management system can lead to chaos and loss of control over processes,” emphasized Lado Okhotnikov.
Indeed, the most damaging consequence of rapid growth is the loss of investor confidence. Lying or inflating your numbers is just a short-term solution that usually ends in disastrous consequences.
The reputation of the company’s founders and management is at stake, and any attempts to defraud investors will be detected sooner or later.
Mistakes you should not make – Lado Okhotnikov about business
These stories demonstrate that even giant startups that achieve high valuations can face serious challenges. Causes of failure include external factors as well as internal problems such as poor management, deception of investors or an unsustainable business model that destroy billion-dollar companies.
Using Meta Force as an example, it becomes clear that the company does not put its investors and users at risk. For this purpose, a strategic plan and a number of tools have been developed to diversify the investment portfolio.
The project grows gradually and evenly, which ensures the sustainability of the business model. Therefore, all innovations are implemented smoothly as errors are debugged and corrected. One of the main goals is to work for the long term, since virtual reality and metaverses are the future.
At the very least, it is clear that the company is setting itself the ambitious goal of becoming a leader in the field of virtual reality and metaverses. There is a clear roadmap for this, including continuous improvement of technology and innovation. At the same time, Meta Force pays great attention to security and stability, striving to provide a reliable platform for users and investors who work in the direction of GameFi and DeFi.
Based on Dan Michael materials
The head of Meta Force Press Center
press@meta-force.space
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News Source: BusinessNewsRelease.com
