[mattmaroon]

Zynga's not a great example because startups got a foothold and are now doing well why Zynga flounders. Kabam, Kixeye, etc. Zynga's audience was 100% casual users, and they've been unable to use any cross-promotional muscle to get into the mid to hard-core segment. Also there aren't real economies of scale and there is no third party distribution problem.

[jseliger]

Flip video isn't a great example either, for reasons I left in a comment there:

One example of this was the Flip video camera. [...] These huge companies put pricing and margin pressure on the category, and about a year from the acquisition, Cisco shut down the Flip business altogether

I'm not sure this is a great example: most of the press at the time claimed that Flip was still profitable and that Cisco shut Flip down not so much because of the company's profitably as because it wasn't profitable enough for Cisco, which had too many product lines and distractions.

Was this analysis accurate? It's hard to say, and I liked the company but found the narrative around itself shutdown unlikely: http://jseliger.wordpress.com/2011/05/08/will-we-ever-find-o....

Perhaps the strangest thing, as noted at the link, is that Flip had a new suite of products ready for rollout the same week Cisco shut the company down.

[uptown]

Seems like GoPro validated the market that Flip could have continued to serve. They've seemingly done well (though I have no clue whether their financials agree) despite increased competition from cell phones.