The interesting thing is what the founders of those companies pointed to as the major factors in their demise.
Ten months after Wesabe’s introduction, a competitor, Mint.com, appeared. As Mr. Hedlund acknowledges, Mint had a better name and better design and was easier to use...
LOOKING BACK Mr. Hedlund wishes he had simplified the consumer’s experience. “We wanted to help people,” he said, “but it was too much work to get that help.”
They didn't put enough focus on user experience.
Too much time and money were spent on enhanced functionality, like text-alert reminders about appointments and the ability to turn family photos into refrigerator magnets. “All the bells and whistles diluted our premise — to be a community for parents and families,” Mr. Milley said.
In other words, feature creep. They weren't able to see which features were important and which were not.
Both of these cases are failures of product design. It's possible these companies would have failed anyway -- they were both facing stiff competition -- but what the founders saw in retrospect was that the design of their product was one of the key causes of the company going out of business.