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10 Tech Start-Ups Whose Sizzle Fizzled

BOSTON (MainStreet) -- For every Facebook, there is a MySpace; for every Google (GOOG), there is an Ask Jeeves. Fate is fickle in the world of tech start-ups, and it can be hard to predict which companies will have the staying power to shape global behaviors and which will end up in the digital scrapheap.

Scott Lipsky has lived "both sides of the coin," as entrepreneur and investor. An early member of Amazon's (AMZN) executive team, he was co-founder of the advertising network aQuantive, which sold to Microsoft (MSFT) in 2007 for $6 billion. His latest venture, PhotoRocket, is a Seattle-based start-up that simplifies sharing photos with contacts and social networks to a mere right click of the mouse.

By September 2010, Cuil was no more than a footnote in the history of the Internet, with its servers shut down for good. Its fatal flaw? It sucked.

In preparation for a talk he gives to college students, Lipsky says he identified 721 reasons why start-ups fail.

Among the biggest mistakes: having the wrong team in place, lacking focus, not being agile, poor market timing, product management issues, poor customer service and weak execution.

"Having smart people is one thing," he says, but that team must be pushed to constantly raise the bar. In many cases, there is "too much emphasis on pedigree and not enough on ability."

"No matter what you have as a business, investors invest in people, not companies," he says. "The team is absolutely the No. 1 thing that any investor worth their salt is looking at, above and beyond the idea."

Lipsky says that investors want to see not only vision and passion, but shrewd focus.

"One of my favorite sayings is, 'Start-ups don't starve, they drown,'" he says. "With the right team and the right product, they will not starve from lack of funds. But take that same team and same product and without focus it will drown from going in too many directions and not executing the way it should. It is all about execution with a start-up."

Keeping to a step-by-step focus can be a challenge, especially when founders get wrapped up in the big picture.

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