Trying to figure out the right lessons from a failed consumer web product

I created a web application that allowed users to share their ideas using a twitter like interface with some decent capabilities like location,search,voting and (ideas as response) , response chains , bookmarking and tagging ideas etc. It took me over a month to build the app using rails and work on the frontend.

I envisioned this product to be one of the simplest idea sharing platform with matured features.

It went closed beta on May this year and it was there for one month. The response was barely any and I didn't know how to get people to sign up. Only a handful of friends in social networks joined in and none of them seemed to be active. I had no prior experience in promotions or marketing so decided to go off with a invitation only model. I closed it eventually after a month.

It has been 2 months now since I have been trying to jolt down the reasons why it did not work out.While most of the time the reason apparent is the idea itself was not upto the mark and perhaps the consumers do not need it at the time, however somewhere at the back of my mind it keeps telling me that the app had the right thing to offer but I rushed it up a little quick without investing much time in creating awareness and market it in correct places.

So I have a few questions regarding this:-

1. To launch a successful web 2.0 app how important is it to spend time and money in marketing ?
2. What is the right way to validate at an early stage whether your application has the right thing to offer? By this I mean does it matter who are my intial users or I can let anyone become a beta user and get the feedback ?
3. Another reason which I think might have triggered lack of interest among users is the fact that it had no seed data. The site had only 4 or 5 ideas to begin with. So is it really important to have atleast some amount of data before users are invited ?

We can't tell any reasons why it failed from your description, you don't provide enough context and really this site isn't for business specific reviews either.

If I was to wager a guess though, I'd say your app wasn't useful. Make sure there is a need you are filling.

What you are asking is very important and very tough thing imho. People often say "do only what end users really need, find users before create a product etc." what is totally right but it's very difficult to understand if people really need your product. Because people very often just don't know what they need and why.
Actually from my experience we can live without thousands services that Internet can offer now. Notepad and calculator are my tools. But even with this approach there are huge amount of soft and services that can make our life easier. So let me try to give you couple pieces of advice.

1. Don't give up. It's the most important thing. Keep believing in your product. You just started it's pretty naturally that you don't have much feedback.
2. Try to do some marketing. I think it's very important too. People should know about your product, right? So do something to tell them. Firstly you can run small Google Adwords campaign. $30 - $50 dollars would be enough and Google then will give you another $100. You will see how often people click your ad, you will learn which key words better to use and so on and probably you will change your mind about your product, or description, or motto, or whatever.
3. Do free marketing. Tell everyone around you about your product. Register on some forums where people discuss something, and add the link to your signature. Sometimes you can create kind of advertising post telling about your product (you need to arrange it firstly with a moderator else you will be banned).
4. Create "fake" ideas. Try to generate as many as possible discussions, posts, whatever to create an impressions of live there.
5. Do some SEO. Each page should have key words, different titles and anything to improve your Google rank. You can read about it here https://static.googleusercontent.com/external_content/untrusted_dlcp/www.google.com/en//webmasters/docs/search-engine-optimization-starter-guide.pdf
6. Keep working on your site. If you don't have a blog, start it. You can write articles, or even pdf book or brochure to tell how to use the product, free of course.

I think that would be enough so far. Good luck!

Make sure you have at least some users BEFORE you start building the product. Not your friends, who will compliment you and give you encouragement no matter if the product sucks.

As Joel said

I'd say your app wasn't useful. Make sure there is a need you are filling.

We made a mistake, from which I'm now trying to crawl out, by making the product who nobody among the founders needed. All 4 of us never needed this product for ourselves but we still thought there's a need for it on the market. We spent 1 year building something that nobody wanted and releasing it to real people proved that. Needless to say we had to go and rework the product so badly that it is as if we're building it from scratch. It is like starting a pizza shop with 5 friends, none of whom like pizza or would want to eat it.

Don't spend any more time building features, just try and acquire users by any means possible and hear their feedback. Your friends - they are not users. Fussy primadonas - they are not good users either. Get one real user at least and build it from there.