Hey — It's Nico.

This newsletter contains:

• 5 resources for founders.
• 5 startup news.
• 1 failed startup.
• 1 hot startup.

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What to read this week?

👏 Q&A with Y Combinator Alumni on identifying a good Co-Founder match.

🧠 Packy McCormick on why it’s now easier to build apps but harder to grow enduring companies.

👀 Tibo shares his story from bootstrapping a SaaS and selling it for $10M+ in 18 months.

🔍 NFX shares their AI Startup Litmus Test.

✍️ Andrei Terteci on why he is shutting down his startup after just 6 months.

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What happened this week?

🤝 Twitter announces Linda Yaccarino as new CEO.

👎 Vice Media files for bankruptcy.

🙌 East Ventures closes a new $250M fund for early-stage tech startups.

🤖 OpenAI CEO Sam Altman raises nearly $100M for a crypto project that uses ‘Orb’ to scan eyeballs.

🗣 SoftBank Director Yoshimitsu Goto insists on not missing generative AI investment opportunities.

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Failed startup: Tink Labs

Tink Labs, a Hong Kong-based startup that equipped hotel rooms worldwide with free complimentary smartphones for guests, shut down in 2019. The startup had raised more than $150M.

The device aimed to enhance the guest experience by offering connectivity and tailored travel information to avoid roaming charges.

However, despite having its devices in over 82 countries and 600,000 hotel rooms at its peak, Tink Labs eventually had to terminate its services in several markets due to financial difficulties.

In Between the Lines:

Tink Labs fell victim to a common pitfall of many ambitious startups: prioritizing growth over profitability. The company adopted an aggressive growth strategy, setting extremely high sales targets and expanding rapidly into multiple markets. However, the startup's unit economics were not in its favor, and the company was losing money more quickly as it grew.

Another area of concern was the company's approach to employee management. The high-pressure sales environment, where employees were threatened with job loss if they didn't meet demanding quotas, likely led to a stressful work environment.

Lessons Learned:

Tink Labs needed a more balanced growth strategy and a better approach to employee management to stay afloat. It needed to ensure its growth was sustainable and financially viable and foster a supportive work culture that motivated its employees.

Fast-paced growth is desirable, particularly in the tech sector. However, it should be executed in a balanced way that aligns with the startup's financial health and capacity.

Startups should ensure their growth is financially sustainable, resources are efficiently utilized, product or service quality is maintained, and customer satisfaction remains high. Unchecked rapid growth can overextend resources and lead to a cash burnout that can cripple the business.

Another key lesson is that employees are a startup's most valuable resource, and their management and motivation are crucial for success. Threats and high-pressure work environments can lead to low morale, reduced productivity, and high employee turnover.

Startups should foster a supportive, motivating, and engaging work environment. This involves setting realistic targets, using positive reinforcement, providing continuous feedback, and investing in training and development.

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Hot startup: Senzai

Senzai is in its early stages, launching just a month ago, focusing on serving clients in the telecommunications and banking sectors.

Co-Founder Julian Lopez-Portillo explained that the company's revenue model revolves around a performance-based fee structure, which charges a percentage based on the value generated for its customers.

During this initial period, Senzai is working diligently with its first few clients to develop and refine its Minimum Viable Product (MVP).

ALLVP’s Managing Partner Jimena Pardo also commented on the funding “The new breed of LLMs (large language models) is clearly enormously powerful and is already spawning a new wave of AI tools… This is where Senzai stands out, by focusing on the outcomes, not the tools, they are perfectly placed to leverage all this innovation to deliver actual value.”

Lessons Learned:

Senzai highlights the importance of focusing on outcomes rather than tools. By concentrating on solving real problems and delivering tangible results, Senzai ensures that its services create meaningful value and address actual needs.

The increasing number of AI tools is undeniable. As our Startup Ideas newsletter discussed, developing an effective AI solution can be highly lucrative.

However, it appears that while numerous solutions are emerging, some remain untested, and businesses may struggle to see how these solutions can enhance their operations. This is why we appreciate Senzai's focus on outcomes rather than tools.

Additionally, Senzai's initial pricing strategy, based on a performance-based revenue model during its MVP stage, offers an intriguing approach to consider when launching a product.

By implementing a "pay for performance" model, Senzai addresses the concerns of businesses skeptical about investing in untested AI solutions. While this pricing strategy may not work for everyone and evolve over time, it effectively builds trust, encourages adoption, and demonstrates the founders' belief in their product.

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What do you think of today's newsletter?

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• ​👎 Not interesting​

Cheers,

Nico