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: Bootstrapping a $2.5 Million Per Year Fitness App with Zero Employees​

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What to read this week?

👀 How Joseph Mambwe bootstrapped a fitness app with Zero Employees to $2.5M.

🔥 Sandra Djajic shares how she built a SaaS used by Netflix, Product Hunt, and Zapier teams.

🧠 Packy McCormick explains why having a moat is a crucial defense for startups against competition.

👨‍💻 Github’s guide to prompt engineering and how LLMs function.

👂 Tim Urban on This Week in Startup’s pod discussing tech history and AGI.

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What happened this week?

🤖 After raising $125M, Jasper AI cuts jobs.

📈 Cathay Capital announces a new $270M fund to invest in tech companies in North America, Europe, and Asia.

💰 Hugging Face is raising VC funds at a $4B valuation.

👎 Health tech startup Medznmore shuts down.

📉 Video startup Cameo hit with more layoffs.

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Failed startup story: Shyp

Shyp, a San Francisco-based startup founded in 2014, which aimed to disrupt the logistics and shipping industry, ceased operations in 2018.

The startup presented a simple idea - take a photo of anything you wanted to ship, and a courier would come to your location, pick up the item, package it, and then send it off for you for a $5 fee.

Shyp managed to secure $50M in 2015 from high-profile investors and grow to a $250M valuation.

In Between the Lines:

Shyp’s success came so quickly that it failed to establish a strong foundation for scalable and sustainable growth. Caught up in the success story, the founders failed to pay attention to important details such as cost management, profitability, and the limitations of their market.

The founder, Kevin Gibbon, wrote in his farewell post that they were so focused on rapid growth that they ignored the advice of people close to them and continued to chase after the consumer market, despite warnings that it was the wrong strategy.

As Gibbon put it, “Along with the initial explosive growth came the comparisons to Uber—from investors, customers, the media, even random people on the Internet. From a growth standpoint, who wouldn’t want to be compared to Uber? In a handful of years, Uber had transformed the way consumers thought about transportation. We could do the same, I was told. And I believed it.”

Lessons Learned:

Shyp's situation shows that while rapid growth can be seen as a sign of success, it can also hide underlying issues if not managed carefully.

The initial success with consumers led the founders to believe they could continue growing at the same pace, despite warnings that consumers might not ship items often enough to support the growth strategy. However, when consumer growth inevitably slowed down, the company had already spent significant resources trying to penetrate the consumer market even more.

It wasn't until later that they pivoted to focusing on small businesses, a more profitable and consistent customer base, but by then, their resources were too depleted.

So while the initial rapid growth might seem positive, the inability to adapt their strategy and manage growth prudently ended up being detrimental to Shyp's survival.

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Hot startup of the week: Craftwork

​Craftwork, a Charlotte-based home painting company that merges traditional trade services with technology, has developed a platform to simplify the process of booking and managing home painting projects. The company recently secured $4M from Y Combinator to further boost its growth.

Co-founder Tim Griffin had the idea for the company when he bought his first house in the middle of the pandemic and tried to repaint an accent wall in his kitchen. He realized "how antiquated home services are" in the process.

In Between the Lines:

Craftwork provides homeowners with an instant painting quote online and the convenience of scheduling their projects digitally. The company also differentiates itself by employing full-time painters, providing them with health care benefits and company equity.

The funding has been attributed to their sustainable business model that already generates positive unit economics, proving attractive to investors looking for resilience and profitability.

In a conversation with Axios Co-Founder, Tim Griffin mentions, “We’re fortunate to have set out from the beginning with a model that generates those positive unit economics, allowing us to focus much of our conversations with investors on painting — pun intended — the broad scale we can achieve with profitability at our foundation.”

Lessons Learned:

Craftwork has successfully identified a major problem with traditional painting services and used technology to remove uncertainty about service pricing and availability.

However, what sets Craftwork apart is its approach to its employees. Rather than relying on the standard model of hiring subcontractors on a per-project basis, Craftwork hires full-time painters and provides them with benefits and equity in the company.

This, of course, is not always possible for all startups, but it demonstrates the importance of taking care of your employees. As a result, Craftwork is able to provide consistent quality in its services, which undoubtedly contributes to customer satisfaction and repeat business.

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Cheers,

Nico