What Happened To Xeround & Why Did It Fail?

Xeround was a cloud database software provider founded in 2005, offering MySQL Database as a Service (DBaaS). Initially successful, it gained recognition for its innovative technology. However, the company struggled to convert free users into paying customers, leading to its shutdown in 2013.

What Was Xeround?

Xeround's main product was a MySQL Database as a Service (DBaaS), offering scalable and reliable cloud-based database solutions. Its unique value proposition included high availability and the ability to move databases between cloud platforms without downtime. Despite raising significant funding and being used by 2000 organizations, it ultimately failed due to insufficient revenue from paid users.

What Happened to Xeround?

The story of Xeround is a classic example of a promising startup that couldn't sustain its initial success:

• Initial Success and Growth: Founded in 2005 by Sharon Barkai and Gilad Zlotkin, Xeround initially focused on distributed database software for telecom providers. The company quickly gained recognition, being ranked as one of Israel's most promising startups in 2006.
• Pivot to Cloud Services: In 2009, Xeround repositioned its product as a cloud database service with a MySQL front-end. This pivot aimed to capture the growing demand for cloud-based solutions, leading to the launch of its beta version in 2010 and general availability in 2011.
• Revenue Challenges: Despite its innovative technology, Xeround struggled to convert free users into paying customers. The reliance on free instances of their DBaaS did not generate enough revenue to sustain the business, leading to significant financial difficulties.
• Geographical and Cultural Disconnect: Xeround's executives and staff were based in Tel Aviv, which hindered effective collaboration with customers. This geographical and cultural disconnect made it difficult to adapt to market demands and tailor products to customer needs.
• Final Decline: A sudden strategic shift by CEO Razi Sharir from targeting big companies to midsize ones failed to yield the desired results. The inability to effectively collaborate with customers and adapt to their needs ultimately led to Xeround's shutdown on May 15, 2013.

When Did Xeround Shut Down?

Xeround officially shut down on May 15, 2013. The company announced the closure to its customers on May 1, 2013, giving them two weeks to migrate their data before the service was terminated.

Why Did Xeround Shut Down?

1. Revenue Challenges:

   Xeround struggled to convert free users into paying customers, which severely impacted its revenue stream. Despite having a user base of 2000 organizations, the reliance on free instances of their DBaaS did not generate enough income to sustain the business, leading to significant financial difficulties.

2. Market Competition:

   Facing stiff competition from major players like Amazon's Relational Database Service and Salesforce's Database.com, Xeround found it difficult to capture a significant market share. The presence of these well-established competitors made it challenging for Xeround to stand out and attract paying customers.

3. Geographical Disconnect:

   Based near Tel Aviv, Xeround's location hindered effective collaboration with its primarily U.S.-based customers. This geographical and cultural disconnect made it difficult to adapt to market demands and tailor products to customer needs, ultimately affecting the company's ability to grow and succeed.

4. Operational Challenges:

   Managing the complexity of running and scaling databases on the cloud posed significant operational challenges for Xeround. The technical difficulties associated with ensuring high availability and scalability of their DBaaS product added to the company's struggles.

5. Strategic Missteps:

   A sudden strategic shift by CEO Razi Sharir from targeting big companies to midsize ones failed to yield the desired results. This abrupt change in focus, coupled with better-positioned competitors, contributed to Xeround's inability to sustain its business operations.

Lessons Learned from Xeround's Failure

• Revenue Model: Ensure a sustainable revenue model from the start to avoid over-reliance on free users.
• Market Fit: Continuously adapt to market demands and customer needs to stay relevant and competitive.
• Geographical Strategy: Align your operational base with your target market to facilitate better customer collaboration.
• Competitive Analysis: Understand your competition thoroughly and identify unique value propositions to stand out.
• Operational Efficiency: Streamline operations to manage technical complexities and ensure product reliability.
• Strategic Focus: Maintain a clear and consistent strategic direction to avoid abrupt and ineffective pivots.

We Shut Down Startups

Xeround's story is a stark reminder of how quickly a promising startup can face insurmountable challenges. If you're in a similar situation, Sunset can help you navigate the complexities of winding down your business.

We handle all the legal, tax, and operational burdens, allowing you to avoid penalties and reduce liabilities. Book a demo today to see how we can help you move on to your next venture seamlessly.