Hey — It's Nico.

This newsletter contains:

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

This week's must-read: Why AI Will Save the World, by Marc Andreessen.

This issue is brought to you by Divvy:

With Divvy, BILL’s spend and expense management solution, budgets become a powerful tool to control spending. Our free-to-use software gives you real-time reporting and easy-to-use financial controls, so you can see every cent spent and stop overspending before it happens. All without a single spreadsheet.

With Divvy, you’ll always be able to:

• See transactions instantaneously.
• Set spend limits tied to employee cards.
• Get credit, earn rewards, and more.
• Plus get a $100 gift card for hopping on a demo.

​

What to read this week?

🧠 Marc Andreessen’s essay on why AI will save the world.

🚀 A thread on how BetterLegal started as a single Zapier Automation that turned into a $2M+ business.

👀 Arvid Kahl explains how to build in public without revealing too much.

✍️ Kyle Poyar on why traditional metrics fall short for modern SaaS businesses.

👨‍💻 Jasper Polak writes a practical guide to McKinsey's problem-solving framework.

​

What happened this week?

🥽 Apple acquires Mira, a startup creating lightweight AR devices.

🚫 Reddit communities boycott the site over API changes.

🤖 Salesforce to invest $500M in generative AI startups.

🦄 AI startup Cohere raises $270M, now valued at over $2.1B.

📈 A16z to open London office for crypto startups amid U.S scrutiny.

​

Failed startup story: Airware

Airware, a San Francisco-based drone startup, ceased operations in late 2018. The startup aimed to revolutionize the drone industry with a cloud software system to assist enterprises such as construction companies, mining operations, and insurance firms.

Its software enabled these businesses to utilize drones to gather and analyze data, replacing the need for expensive helicopters or hazardous human inspections.

Airware raised $118M in capital from investors, including Andreessen Horowitz, Google’s GV, and Kleiner Perkins. However, despite such financial backing and a pool of top-tier talent, the startup shut down.

In Between the Lines:

Despite its promising start, strategic and management missteps contributed to Airware's downfall. The startup made a crucial mistake in trying to manufacture its drones when market leaders were already offering competitive products.

The startup also had a habit of overspending in hopes of achieving product-market fit. Rather than adopting a lean approach and iterating based on customer feedback, Airware decided to burn through its cash reserves fast. This approach strained the company's financial health and reduced the time it had to effectively test and refine its products.

Lastly, Airware did not exhibit enough patience in waiting for the market to adopt its drone technology.

Lessons Learned:

Airware's journey offers crucial lessons for startups. The first is to spend wisely to achieve Product-Market Fit. Achieving product-market fit is crucial for any startup. However, getting there often requires many iterations, testing, feedback loops, and adjustments.

While spending heavily on product development and marketing may be tempting to accelerate the path to PMF, this approach can be risky. Startups should adopt a lean approach to reaching PMF. By testing minimally viable versions of the product and refining based on customer feedback, startups can iteratively and economically work toward PMF.

Moreover, startups need to ensure they have a longer runway to cover operational costs, especially in the face of unpredictable situations or a slower than anticipated uptake of their product. This means managing the burn rate effectively and not spending money prematurely. Effective cash flow management is crucial.

Lastly, customer adoption can take time, particularly in industries dealing with new or emerging technologies. This process involves educating the market, demonstrating value, and building trust. In the case of Airware, they were dealing with drone technology in 2018, a time when potential customers may have taken longer to understand and appreciate the benefits of the product.

​

Hot startup of the week: SpotHopper

​SpotHopper, a Milwaukee-based restaurant technology startup, recently announced the closing of a $12M Series B funding round.

The company has raised a total capital of $26M to provide its all-in-one marketing and operations platform to help independent restaurants with their online presence. SpotHopper aims to use this new funding to enhance its platform with AI capabilities and consolidate its position as the industry leader.

In Between the Lines:

SpotHopper's success and rapid growth can be attributed to its innovative approach to addressing the operational and marketing challenges faced by small restaurants.

Their all-in-one platform offers easy-to-use solutions that save restaurant operators both time and money. However, the company's decision to raise additional funds signifies a strategic move to advance its technological capabilities.

The focus of the investment - to enhance and expand the platform's AI capabilities suggests SpotHopper is seeking to maintain its competitive advantage, meet the growing demands of its customers, and stay ahead of the curve.

Lessons Learned:

There are several key takeaways for startups and growth-phase companies. Investing in emerging technologies like AI can provide a significant competitive advantage. In SpotHopper's case, integrating AI into their platform can result in unique features and functionalities that set them apart in the market, offering their customers a more robust and advanced solution.

The ultimate beneficiary of any technological advancement should be the customer. AI, in particular, has immense potential to deliver high value with capabilities like personalized service, predictive analytics, and intelligent automation. By providing clients with these valuable tools, businesses can enhance customer satisfaction, retention, and, ultimately, revenue.

Moreover, companies that leverage cutting-edge technologies like AI often command higher valuations, as investors perceive them as forward-thinking and positioned for growth.

​

What do you think of today's newsletter?

• ​🔥 Great​
• ​😒 Meh​
• ​👎 Not interesting​

Cheers,

Nico