I worked at a startup with a sick product that wowed every person we demoed it to, from investors to users to consumers that would see it on their devices. It was ahead of its time, now all the major phone manufacturers have their own variation baked into their OS.

It failed for a few reasons, none overtly technical. The product was feature complete by the time we ran out of funding. All we needed was someone to pay for it, which proved harder than you'd think.

The first problem was that it wasn't possible to advertise direct to consumers. For technical reasons it needed buy in lower in the stack, it wouldn't work as an app. Even if we hacked that together we'd either need users to jailbreak their devices for it to be seamless, or to get it into one of the major existing apps. We actually had the latter lined up with one of the biggest platforms out there today, which was around 6 months from launch when we folded.

The problem was that the tech itself was well defined. It was a piece of software users were very familiar with. However, the way that software is typically purchased is by individual users and not platforms - we wanted to innovate in that regard by giving the software away for free, but licensing the stuff made with it on the platform. Not only was this unheard of, the real money in the industry was hardware solutions - think multimedia chips. License the protocol for free to anyone that wants it (or even pay people to use it!), but sell chips to hardware manufacturers for the decoder. Since we didn't need hardware we couldn't go that route, and convincing someone to pay for something that they had never spent money on was inherently difficult.

Compounding that difficulty were some major issues: the first was that it could never directly translate into higher revenue. We'd need a months long pilot program to indirectly measure that. Secondly, the way the businesses purchase technology like it meant that it required individuals with tons of sway in business to get together and agree to fund and purchase it. At the time, meetings got delayed months and months because remote work hadn't taken off.

And lastly, possibly most importantly, the client that had the best odds to make the first big sale, and had a handshake agreement to buy it, was also an investor. Once it became clear that things weren't great for us they would rather let the company die and buy it out from under them at a discount, well below what they would have paid for the product. Like I said, it was virtually feature complete - you don't even need to retain staff to just buy the widget and have anyone they already paid to keep it up to spec.

The lesson I took away from this was that users are more important than demos, even if they don't pay. And chasing big paydays from large companies with complicated decision making processes is extremely risky, and not worth the time investment from a small team if you can be iterating on better product market fit. Finally, not all innovative business models have legs and you need to cut your losses early.