Atrium: How a Wrong Business Model Destroyed a Thriving Startup 🤷🏼‍♂️❌

Country: the US
Total investment amount: $75M
Operating period: 2017-2020

Over three years, the company managed to raise $75 million, particularly, from such big-name funds as Andreessen Horowitz and Y Combinator.

Before this project, its founder Justin Kan had already established Twitch and sold it to Amazon for $970 million. Seemingly, Atrium was bound to take off but something went sideways.

How did it begin?
In the new project, Justin bet on law-based software. Atrium offered juridical solutions for startups. It helped businesses solve problems associated with recruitment, contracting, and making deals.

Justin decided to automatize processes to optimize workflow and boost employees’ efficiency. By working faster, they could save customers’ time which was supposed to distinguish them from other law offices on the market.

However, when reevaluating the software and subscription package, Justin found out that it was too expensive to keep the staff of consultants for such a startup.

Then, the company pivoted and fired full-time lawyers to focus only on software release. But Atrium failed to implement the technology in other startups as they were not ready to radically change their work principles.

The startup tried to get ex-workers back but they didn’t believe in the project any longer. As a result, Justin decided to close the company, leave Atrium to his partners as an autonomous law firm and return the rest of money to investors.

Failure Cause
Justin invested all money in maintaining the staff whereas the original goal to develop disruptive software took a back seat. An attempt to reconsider the business model failed to get clients back as the startup got fragmented into several ordinary law offices and the software itself turned to be complicated to use.