Blog Analysis

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This essay is aimed to identify and analyse five main insights among eight blog posts of new enterprises’ failure.  In addition, the value proposition, business opportunities and business model will be utilized to explain the reasons why these new start-ups failed. Frederick, O'Connor and Kuratko (2013) explained that the business model is used to concern on establishing the rationality of origination and how to create the company’s value. The blog analysis is divided into five parts to point out the main problems and learn from the mistakes of blog posts and demonstrate how to improve our own new venture

1. Deliver a reliable customer service to match prices

According to Edvardsson (1992), Service quality plays an important role for the new ventures to create value and control details in the service delivery. Moreover, service quality can be seen as cornerstone or driving force for improving customer satisfaction, profitability and competiveness. In blog 1 (Christina, 2015), Homejoy failure is related to its business model emphasized on attracting customers with low price on the Groupon instead of delivering a consistently high-quality customer service. The value proposition of Homejoy is on-line home-cleaning service. The low price of first time Homejoy cleaning leaded to high cost of customer acquisition. Furthermore, it takes a lot of money to attract second full-time engineer to join company instead of customers. Homejoy is impossible to spend more money on training high level of cleaners to meet fixed standards. Therefore, it is challenging to deliver a reliable and high quality service to customers, if they wish to cost savings and retain profit. Moreover, Homejoy as on-demand economy relied on contract-for-hire system, where the cleaners are independent contractors instead of employees. Kelley and Means (2013) stated that hiring a contractor do not have to pay income tax, social security funds and lower the risk of legal action, which could reduce the cost. Meanwhile it also caused four worker classification lawsuits to impact on Homejoy financing and operation model. Besides, the professional skills of some contractors may not be trained as same as the employers, so they may not delivery a reliable service to Homejoy customers. As the result, most of customers never used Homejoy bad cleaning service again. The failure of BitShuva Radio in blog 5 (Judah,2015) indicated that continually building customizable software rather than custom software would lead to spend more costs on post purchase without receiving any money from customers because customers would want more and take many times. Therefore, the reliable customers service does not match its low price.

On the basis of this blog’s analysis, the first lesson for our new ventures, our start-up should not only reduce price to attract customers’ attention, but also emphasize on long-term strategy to deliver a reliable customer service, avoid poor customer retention and build the relationship of mutual trust with customers. What is more, we should also pay attention to the cost of services and increase adequate price in the future in order to build a sustainable business model.

1. Distribute the responsibility of team members

Frank, Gruber, Harhoff and Henkel (2008) indicated that the start-up team plays an essential element for venture capitalists to evaluate the business opportunities of venture proposals and potential risks. Therefore, how to distribute the team’s responsibility and investment is significant process for new ventures to create the best value and revenue. According to Bunderson and Sutcliffe (2002), separating the different forms of functional diversity between departments have very effective implications for team’s operation and performance. As the leaders in the company, they are responsible for overseeing the production, marketing, customers and distribution of the teams’ value. According to blog 2 (Moran, 2015), entrepreneurs in the Duet Media only concerned on trying different products and the various of business models instead of utilizing the team members and investors to grow their new venture. Although they were always looking for building sustainable business model, the final result was so disappointing and dejected. Because the leaders were lack of leadership and distributing their team members’ duties between different departments such as marketing, product department and technology department. Furthermore, the leaders failed to make the final correct decisions regardless of product positioning, marketing and producing process, since Duet Media lacked of useful suggestions from other departments’ experts. In blog 7 (Don, 2015), Kinley’s failure means it ignored to consider about the importance of leadership and the distribution of team members between different functional departments especially the marketing department. No matter how innovative the products or service, it is more necessary of the marketing budget implemented by marketing department rather than ignoring the distribution importance. Moreover, On the other blog 8 (Melissa, 2014), Cusoy failure means the problem of predictable way, it didn’t have a team or funding to execute clear and predictable ways to make sure the sustainable business model on the long term. As the result, Cusoy have to spend high cost and much time being evaluated whether it is a profitable venture in the future before entering into the market. Moreover, Cusoy may miss the uncommon opportunity to earn more money, the chance would not wait for you. So it is very essential for new ventures to distribute the responsibility of a team to formulate realizable and valuable business plan.