Why Social Media Startups Failed and What to Learn From Their Failures?

Social media is a word that has changed the lives of people. From posting pictures to scrolling feeds, it has engaged us, right?

Hardly can some people do not have a single social media app on their phones. It even makes us forget the important tasks around us when these apps catch our eyes.

Well, you must have noticed people using social media apps, and often there are 2 to 3 names that appear the most.

Wondered why no other apps had engaged them so well. What makes other social media businesses fail to reach such potential users?

Relax. We are here to find the reasons behind it.

Here we will discuss social media start-ups that failed and the reasons behind them. We will also have a view on what makes other social networking apps succeed and tips that you can adopt to avoid failure.

Shall we begin the journey?

List of Social Media Start-Ups that Failed

We will start by discussing the list of social media start-ups that have failed.

Here are some points to check, along with reasons for their failure.

1. MySpace

MySpace was one of the most famous social media platforms. In the mid-to-late 2000s, 75 million users was its highest. It was launched prior to Facebook but lost to it later. The platform has become a powerhouse for most of the entertainers and musicians.

But then why did it fail?

Reasons for Failure

• Unable to adapt to changing user needs
• Poor user interface
• Lack of technology updates
• Unclear target audience

2. Friendster

Friendster was launched in 2001 as a gaming site and was popular across Asia. The site allowed users to create profiles, connect with multiple friends, and share content over different media forms. This platform allows users to participate in online games, messages, and posts.

Reasons for Failure

• High Competition
• Poor Website Performance
• Failed to become a social network
• Didn’t Have a Monetization Strategy

3. Vine

Vine was initiated in 2012 and aimed to be one of the greeted microblogging platforms, where users can perform 6-second looping videos. The startup aimed at YouTube and Facebook with short-term video content, which made it famous. Although it failed due to certain reasons.

Reasons for Failure

• Unmet Marketing Needs
• Not Open to Multiple Monetization Options
• Didn’t stick to its aim
• Lack of attention to business

4. iTunes Ping

iTunes Ping was a software-based startup aimed at providing music-oriented social networking and recommender systems. It was developed and operated by Apple Inc. Once the platform had over 160 million users, that gave the brand an expectation to succeed in the future. Although it failed, let’s find out why.

Reasons for Failure

• Lack of integration with other social media platforms
• It offers to share small snippets instead of the complete songs
• No user-specific recommendations
• Do not offer any unique feature

5. Six Degrees

Six Degrees was the first online social network, launched in 1997. It offers its users a platform to connect with their real-world contacts by developing a profile that has a database. The platform was the first digital network that facilitated communication and contributed to growth.

Reasons for Failure

• Not able to generate enough return on investment
• Poor data security policy
• Cannot engage a large user base
• Highly competitive market

6. Gowalla

Gowalla became one of the essential apps that brought friends together, and it became widely available to people. It was a location-based social networking platform that aimed to engage friends who usually share the same location.

Reasons for Failure

• Does not use the latest technology
• Not having enough social media users
• Overcomplicated features
• Mismanagement of resources

7. Secret

Secret was an Android and iOS-based app that helped users post content among their circle of friends. It also has a feature that helps users to post content widely to the public. The app is the most secure, reliable, and simple chat platform.

Reasons for Failure

• Users engaged in all forms of cyberbullying and harassment
• USP has become the largest problem
• Attracted a lot of negative media attention
• Highly Competitive Platforms

8. Yik Yak

YikYak was a location-based app that helped its users post content anonymously. The posts over the social media platform were known as yaks and were visible to people within a proximity of 5 5-mile radius. The app is popular in communities such as schools and college campuses.

Reasons for Failure

• The content posted was misused for cyberbullying
• Legal challenges
• Anonymity became an issue
• Facing issues with digital security

These are certain case studies of social media startup failures that can help you take lessons on what not to do when you wear the same shoes.

Let’s assist you in analyzing the particular reasons from the above case studies that you can take away.

Common Reasons Behind Why Social Media Start-Ups Fail

After learning about the case study, do you want to know some common reasons behind the failure of social media apps?

Here is a list of the common reasons why social media start-ups fail.

• Unclear Objective

The aim of launching a social media startup should be clear. A startup with unclear aims has a high possibility of shutting down.

You need to know the target audience, and then you need to structure the features of social media apps accordingly.

Here, conducting detailed market research can provide you with a wide scope to understand the actual demands of the target audience.

• Mismanagement of Resources

Resource allocation is one of the most important elements that should be considered before you decide to launch a social media startup.

Here you should make a detailed plan representing all the steps that need to be adopted for setting up a social media startup.

While undertaking loans, you should be attentive to taking risks and also to finding successful monetization measures.

• Inexperienced Development Team

A mobile app development team plays a prominent role in this position. Thus, you need to hire mobile app developers with more focused objectives.

It will result in wasting a lot more resources than you expect. Hiring an experienced team plays an important role here.

An effective team can not only guide you through the process but also know how to save your investment in an app.

• Highly Competitive Market

One of the vital factors that leads to the failure of startups is high competition in the market. A competitive market can drive out a larger user base and can impact your potential users.

There are many other apps available in the market including Instagram, Facebook, and others. To beat such a highly competitive market is difficult and is a challenge in itself.

However, the right measures such as organizing resources and setting up the USP of the start-up from the very beginning can help you fight the competition.

• Insufficient Budget

A startup often does not have good capital, which impacts its overall productivity. Insufficient budget can be a significant challenge for your social media startup.

However, you can overcome it by taking corrective financial measures. You can take a loan from financial institutions that can charge you a minimum interest and can serve you over the period.

Inappropriate handling of resources can affect your overall budget which can even result in increasing the cost of developing a social media platform.

• Poor Risk Management

A lack of risk management capacity can impact your overall aim of launching a social media startup. The inability to monitor future risk can be an issue to your success in the industry.

Hence, adopting prominent risk management initiatives is the only solution. You should keep an eye on the future risk to make it an emerging opportunity for earning revenue.

If you are not able to manage risk, it can hit your start-up’s image and the overall capital invested in it.

• Improper Monetization Models

From the case studies of the failed social media startups, you have evaluated that deciding on multiple methods of monetization through the app is important.

Failing to adopt such models can cost you even more than you have invested. Hence, you should create monetization options based on your social media startup.

You can opt for advertising, in-app purchases, data monetization, and various other social media app monetization strategies to sustain the market.

• Avoidance of the Latest Technology Use

With time, technology changes, and you need to bring it up with your start-up by implementing the latest version of it.

Use of old or outdated technology will automatically kick your social media start-up out of the competition.

In the current era, you can adopt AI, machine learning, IoT, and various other new technologies while developing social media apps.

• Lack of Differentiation and Innovation

If you miss out on the differentiation and implementation of new innovative measures during the app development process then it can turn out table against your strategies.

Offering users a new update or an effective and engaging feature is the only option to keep on going with the social media start-up.

To innovate a new feature, you should conduct market research as it is the only medium to know the existing gap. Here you can evaluate the competitor’s strategies to engage users.

• Ignorance Over Compliance With Regulations

Many social media startups fail when they are not aligned with the changing laws and policies of the social network.

Hence, avoiding such legal compliances can be a big issue that can impact your overall start-up reputation.

To avoid this, you need to read all the social media start-up guidance under governance carefully.

• Avoiding Data Security

Avoiding the mobile app security protocol or the mismanagement of the user’s data are certain parameters impacting the growth of start-ups.

You should know that the users will provide their data only when they are assured of it.

Hence, adopting robust technology to safeguard the user’s data is the only way to protect your social media start-up from failing.

These were some of the challenges that can stop you from being the best.

Alright, we have come so far by learning the case studies and reasons that make social media start-ups fail. Now, can we learn about the measures adopted by the top social media apps that made them hit a bullseye? The next section discusses it very well.

Reasons Behind the Success of Top Social Media Startups

Till now, we have learned the case studies and reasons that made social media start-ups fail.

Now, it’s time to learn a lesson from those who have made it a success. Here we will study the case studies of the best social media apps and the strategies that make them succeed.

1] Instagram

Have you used Instagram or are you using it?

Think of what made you use it this much, and there is the hidden secret of its success.

Currently, Instagram has 1.4 billion monthly active users. You can develop an app like Instagram by implementing its unique features as briefed below.

Reasons for Success

• Creativity with Reels
• Share Stories
• Starting a conversation with a messenger
• Safe connectivity with friends

2] Facebook

One of the oldest yet most effective social media apps is Facebook.

It connects approximately. 3 billion monthly active users. Want to know the features that made it a success? Here you go.

Reasons for Success

• Facebook Live
• Events
• Facebook Messenger
• News Feed

3] WhatsApp

Privacy and security are two essential tools of WhatsApp.

The platform has crossed over 2 billion monthly active users worldwide. You can develop an app like WhatsApp that contains effective features. Let’s see what makes the app so popular.

Reasons for Success

• Data Encryption
• Voice Messaging
• Group Chats
• Media Sharing

4] TikTok

TikTok is a Chinese app that offers a short-form video hosting platform.

The main purpose of the platform is to create, share, and discover short videos. The platform had 656 million global users in 2021. It is projected to increase to 955.3 million global users.

Reasons for Success

• Short video format algorithm
• Provides a Personalized Experience
• Filters and editing options
• Track users’ changing preferences

Bonus Read: Apps Like TikTok

5] Snapchat

Snapchat is a multimedia and social media platform where users share pictures and videos.

The mission is to empower people and help them to express their feelings. In the first quarter of 2024, it had 422 million daily active users across the world. Develop an app like Snapchat by using the mentioned features.

Reasons for Success

• Use of the latest technology
• A platform connecting users
• Filters and editing software
• Attractive user interface

6] Twitter (X)

Twitter (X) is an American social media company that ensures that people have a free and safe platform.

The platform has 415 million users worldwide and among them, 95 million belong to the United States. You can develop an app like Twitter by identifying the top reasons of its success.

Reasons for Success

• Provides an opportunity to discover current trends
• Character Limit
• Two-way communication platform
• A platform to interact and connect

7] YouTube

YouTube is an American platform that provides everyone with a voice to share with the world.

The main purpose of the platform is to provide a free video as well as a sharing website to watch videos online. Between 2024 and 2029, the global number of users increased by in total 232.5 million users.

Reasons for Success

• A platform to watch videos
• Provides a space to share videos
• The best way to communicate
• Creative Content

Also Read: Make an App Like YouTube

8] LinkedIn

LinkedIn is the largest business and employment-focused social media platform.

The platform aims to find the right job or internship and to strengthen professional relationships. It has 571 million global users and 174 million premium subscribers.

Reasons for Success

• Showcasing a Unique Professional Story
• Platform to Discover Business Opportunities
• Offers unique opportunities to connect
• Engage with decision-makers

These are the best social media apps from which you can learn to stand out from the competition with effective features.

Do you want to know the unique ways that can help avoid Social media startup failure? Head to the next section for the same.

Unique Ways to Adapt to Avoid Failure

Now, as you know well, the reasons for social media apps’ failure, along with what unique approach the top social networking platforms adopt to succeed.

We understand that you might be worried about how to avoid social networking startup failure and what ways can assist you in this process.

Let’s get started with the effective measures that can be adopted to avoid failure. Here is the list to proceed.

► Perform Market Research

Conducting market research is the foremost step that can bring you closer to understanding the existing gap among users’ demands.

Studying social media statistics can assist you in this process. This will help you to identify the demands of the users and to work accordingly.

► Make a Strategic Plan

Now, it’s time to make a strategic plan after analyzing the market research results. The plan should be realistic in order to achieve business objectives.

Planning should include the type of business model you will use along with deciding on the technologies and social media app designs.

► Thorough Testing

Mobile app testing is one of the important parts to achieve success. Its failure can cause bugs, crashes, and compatibility issues.

Here, you should implement robust technology that can provide you with comprehensive testing comprising of unit, integration, and user acceptance.

► Consider Platform Guidelines

Before you launch the app, it is essential to read the platform guidelines briefly. This will help you to avoid any kind of platform issues.

Here, you should adhere to the platform guidelines, which are set by stores including Apple and the Google Play Store.

► Conducting Mobile App Maintenance

You should learn the importance of mobile app maintenance. It is essential to detect bugs and mitigate errors at an early stage.

Along with mitigating errors, mobile maintenance is essential to adding new features or maintaining existing ones. You can hire mobile app maintenance services to know more.

► Perform Adequate Marketing

Promoting the app is important to get the attention of potential app users. It will help you develop a comprehensive marketing plan.

Here you can perform different types of marketing. Mobile app marketing is about driving user engagement and generating revenue.

► Develop Monetization Strategy

App monetization can help you sustain the market by earning an adequate amount of revenue. Hence, you need to analyze the different types of monetization strategies.

Developing a monetization strategy can assist you in attaining monetary benefits from diversified sources.

Along with the above-mentioned techniques, one effective way is to select the right team that can help you to avoid failures.

Why Collaborate with Nimble AppGenie to Develop a Social Media App?

Do you want a team that is experienced and can understand your app’s dream?

Collaborate with Nimble AppGenie. We understand how it matters to invest such a high cost in app development.

With the best social media app development company, you will experience the journey of success. We will develop the app as per your needs and demands.

Conclusion

Various reasons lead to the failure of social media startups. The reasons behind the failure include insufficient budget, high market competition, lack of innovation and differentiation, ignorance over compliance, and avoiding data security.

The given case studies have provided the reasons that should be avoided to avoid failure. Apart from this, multiple reasons make social media apps successful, including thorough testing, conducting strategic plans, adopting marketing, and performing mobile app maintenance. These practices can help you avoid failures.

FAQs

Niketan Sharma

Niketan Sharma is the CTO of Nimble AppGenie, a prominent website and mobile app development company in the USA that is delivering excellence with a commitment to boosting business growth & maximizing customer satisfaction. He is a highly motivated individual who helps SMEs and startups grow in this dynamic market with the latest technology and innovation.