34% of startups fail due to lack of product-market fit. Learn how to avoid it for only $15!
A big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed. Learn from mistakes, and avoid being part of the 90% of businesses that fail.
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Internet of things startup on switching technology
Lumos was an Internet of Things startup that sought to provide customers with the ultimate smart switching technology. The first-time entrepreneurs who came with Lumos wanted to create internet-connected devices that used machine learning and could adjust and personalize home appliances settings based on the behavior and routines of the user.
Lumos had to shut down in less than a year and the founders recognized that they “were not the right team to build a hardware company”. The founders admitted to at least seven major problems that lead to the downfall of the company.
First of all, they were working in a sector in which they had no expertise in. They’ve also overestimated the utility value of the product and somehow disregarded the fact that the product needed to be sold about five times higher than the production costs to be profitable. Instead, they had designed a product that would not have been by any means cost-effective.
Lumos had no customer persona it could target its marketing to and the startup ended up trying to sell the product both as an energy saving device and a luxury utility. The founders tried to make Lumos make too many things too soon driven by the illusion that often blinds inexperienced entrepreneurs that they were smarter than the rest of the lot and could beat their competitors easily. And to top it all, there was a lack of communication and transparency between the startup team towards the late part of their venture. They started to keep their doubts to themselves instead of working on solving them.
Most of the reasons that caused Lumos failure could have been avoided had the founders sought the counselor mentorship of an experienced entrepreneur or business analyst early on. But then again, maybe they were supposed to learn each of the lessons that the journey presented them with on their own skin so as to be better prepared for the launch of their next startup.
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