Scaling in the wrong direction
Why direction is more important than traction & capital

In 2015 i have started an audio search engine called Trevx, to make the audio part of the web searchable, we have got funded, we have built traction and we have generated advertising revenues, yet we have failed.
Here is what happened, we have reached scale very fast, we managed to get 700,000 active user and more than 9,000,000 page views in 2016.
People loved what we did, tweeted about it, published youtube tutorials on how to benefit from the service. We did it, we have succeed or that what we have thought !?
We started to get global attention, and with it, we have got the attention of Copyright owners, because people was abusing the service, using it to find and download copyrighted Sound Effects, Audiobooks, and Music.
We have even ranked on top of Youtube in Arabic audio searches.
This user behaviour costed us so much. Google blocked our Adsense account, so our source of income had stoped, after a short period of time they removed us from the search results page, we used to have more than 12 million link indexed at Google search engine, so we have lost our traffic & revenue sources in a very short time.
This was a shocker, it seemed as if we have hit a wall, an invisible wall, that was their from the beginning, but some how we ignored it.
I have been aware that we might face these issues, but never thought it would be this fast and this fierce, i have could diversified our income and traffic channels, or changed our direction. But i always thought “With scale, things change”.
It’s not only Trevx, almost half of the 25 companies that passed the rigorous tests for inclusion in Tom Peters and Robert Waterman 1982 book, “In Search of Excellence” today no longer exist, are in bankruptcy or have performed poorly.
Numerous large, once-successful companies have failed in recent years. Some have gone bankrupt; others have been substantially reduced in size and fallen from an industry leadership position.
No matter what the size of your company is. it is subject to fall into the trap of “The invisible wall”, Lehman Brothers, Kodak and Nokia are examples of how big and deeply rooted companies can hit that wall.
In the Dark Knight Movie the Joker says to Harvey Dent “Nobody panics when things go according to plan. Even if the plan is horrifying!”.
I believe entrepreneurs and VCs should give more serious attention to their companies direction and understand how it is influenced and where it’s taking the company. As the company direction can be influenced by many internal factors (Resources, Capabilities, Company legacy & Past, Board Of Directors and Company Vision & Focus) to name few and company’s external forces such as (Competition, Industry and the Market).
I was surprised to know that, 75% of venture-backed companies fail according to Shikhar Gosh’s research.
Companies fail not because of lack of money, they fail due to lack of a successful direction.
References
Why Most Venture-Backed Companies Fail By Faisal Hoque — 2012 (https://www.fastcompany.com/3003827/why-most-venture-backed-companies-fail)
Corporate Decision-Making: Why do large, once-successful companies fail? By Gary Cokins — 2012 (http://analytics-magazine.org/corporate-decision-making-why-do-large-once-successful-companies-fail/)
