internet web 20 business startups Failure And Success Rates Of ~200 Web 2.0 Internet Startup CompaniesAfter reading Mashable’s recent coverage of Meg Pickard’s post of a popular logo collage from past internet startups that launched between ~2005 and ~2007, I was inspired to further research these Web 2.0 startup businesses. On Meg’s blog, she describes her task of tracking down each web startup company’s site to see if it still exists. This was not an easy job given that the collage contains nearly 200 company logos. In the image below she has graphically displayed each failed and acquired Web 2.0 startup with an X or an O, respectively. Internet startups without an X or O indicate that the company is still in business or at least the site is still functioning.

web 20 startups logo collage Failure And Success Rates Of ~200 Web 2.0 Internet Startup Companies

Web 2.0 Companies Launched in 2005 or later

Identification and Exclusion of Websites
Over the weekend I researched these internet companies a little more to verify the accuracy of Meg’s amended logo collage and calculate the success and failure rate of this small sample of Web 2.0 company sites. While there were a few discrepancies between Meg’s classification of an intact/defunct website and mine, most of her work was accurate. Within the set of logos that were not marked with an X or an O, there were a few (3-5) of them for which I could not identify the name or origin, or it was unclear as to whether or not the old logo was referring to the same company and thus they could not be included in this analysis. Entrepreneurs should take note of such issues to design your web startup logo so that it is large enough to be viewed easily (and can therefore be read at small sizes) and the name and URL are consistent. That is, if your website’s address does not include a .com extension, display the correct extension within your logo (i.e. I had to exclude one other website, egoSurf, from the analysis because it redirected elsewhere and tried to infect my laptop with a virus.

Classification of Websites
The spreadsheet below contains 194 of the ~200 websites referred to within the logo collage. I have classified them as either Alive, Dead, or Acquired. In this case Alive means that the URL loads a website and not merely an “under construction” or a “planning to relaunch soon” or some other similar message. It does NOT indicate any success or failure. Dead refers to either a parked domain or a site that is not related to the original logo. Web startups classified as Acquired are those that have indeed been purchased by other web companies. There were three logos that Meg indicated as being acquired for which I could not find a verifiable source. Those sites are indicated with a question mark (Acquired?) and were not added to the final tally of Acquired startups.

If we examine the totals, we see that 27 (not including 3 that were unverifiable) out of 191 were successfully sold (Acquired), 51 are defunct (Dead), and 113 are still in operation (Alive). According to this small sample of Web 2.0 startups this would suggest that internet based startups have a 59% chance of survival over a short period of time (~2-4 years), a 27% chance of total failure, and a 14% chance of being sold to a major corporation. These numbers are fairly optimistic if you assume that the majority of the 58% that are still in operation are successful. I warn against making that assumption however, as success should be defined by evidence of profit and not merely a website that still loads. In contrast, there are several companies within the list that are classified as Alive that, to some, may be defined as successful because they are still in business, they are consistently displaying yearly traffic growth, and either just haven’t received purchase offers or have turned down such offers.

absolute number web startup Failure And Success Rates Of ~200 Web 2.0 Internet Startup Companies

Absolute Numbers of Web 2.0 Startups Launched ~2005 or Later

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percent web startups Failure And Success Rates Of ~200 Web 2.0 Internet Startup Companies

Percentage of Web 2.0 Startups Launched ~2005 or Later

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Limitations and Conclusion
Keep in mind that this list was derived from a collage of logos from which we do not know the initial author nor do we know the reasons why the author included these particular logos. Given that we have no information to indicate that either the author or the selection criteria used for the inclusion of these logos was biased in any way, we can assume at this time that the logos, and therefore the web startups were randomly selected. Thus the data presented herein may provide an accurate indication of the potential outcomes that are possible when launching a web-based startup company. If you have any information that is contrary to this or the data I have presented please let me know.

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