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?

🗣 Sam Parr’s 6-step process to finding +$1M business ideas.

🤖 A16z explains what AI-enabled software startups need to sell globally.

📈 PitchBook writes a guide on how to pitch in a VC downturn.

🧠 Elastic Path’s practical guide to implementing product-led growth.

🔍 Greg Isenberg shares his 11 most intriguing startup ideas.

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What happened this week?

👀 Meta plans retention strategies for Threads after usage drops by half.

📉 Delivery startup, Getir will be closing its operations in Italy, Spain, and Portugal.

👎 EV startup Arrival announces a 50% workforce reduction to cut costs.

📊 Coatue Management raised $331M for its third early-stage fund, 34% below its $500M target.

🔪 Sequoia Capital cuts crypto fund amid startup slowdown.

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Failed startup story: Pearl Automation

Pearl Automation, a Silicon Valley-based Auto Tech startup founded by former Apple engineers, ceased operations in 2018.

The startup specialized in producing $500 vehicle backup cameras that could wirelessly transmit data to the driver's smartphone. The easy-to-install devices targeted the numerous older vehicles lacking pre-installed backup cameras.

However, the company closed its doors, citing economic constraints, despite having raised about $50M from reputable investors, including Venrock, Accel, and Shasta Ventures.

In Between the Lines:

Pearl Automation faced challenges primarily rooted in its unit economics. The devices were too expensive for a market saturated with less sophisticated but more affordable options.

Moreover, the company was not able to sustain its cash burn rate without a clear pathway to a popular product, leaving it unable to secure further venture funding.

Pearl Automation tried to find potential buyers but could not agree on terms, leading to the company's demise.

Lessons Learned:

While Pearl Automation’s product was innovative and targeted the millions of older vehicles without backup cameras, the company overlooked a critical aspect of the market - the consumer’s willingness to pay for that product.

The device's high price tag ($500) made it unattractive compared to cheaper alternatives in the market, regardless of its enhanced features and aesthetics. Understanding your market involves not just identifying a gap or need in the market but also gauging what consumers are willing to pay to fill that gap or meet that need.

Moreover, Pearl Automation had 75 employees, most of which were drawn from Apple, meaning a high cash burn rate. This serves as a reminder that having a brilliant team is undoubtedly an asset, but it must be complemented by a clear vision, in-depth market understanding, and sustainable growth strategies.

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Hot startup of the week: Airvet

​Airvet, a pet telehealth startup, announced a $18.2M in a Series B funding round, following its Series A round of $14M in 2020. This funding is aimed at supporting the company's expansion, product development, and building its sales and marketing teams.

Founded in 2018, Airvet aims to alleviate the growing problem of vet shortages by connecting pet owners with practicing veterinarians for telehealth consultations anytime, anywhere.

In Between the Lines:

Despite the increasing demand for veterinary services, not all companies in the sector have found success. A notable example is Fuzzy, a digital pet care network that, despite raising $80M in venture capital, shut down. Observing this, Airvet identified the need for a more sustainable business model.

In an interview with TechCrunch, the CEO Brandon Werber mentioned, “When the markets shifted, it put back into focus that you can’t just build fast and recklessly.”

The startup pivoted from a DTC model to a B2B model, serving large enterprises by offering their services as an employee benefit.

Lessons Learned:

Airvet did a great job at pivoting its business model after analyzing the shortcomings that led to Fuzzy's failure.

However, one of the most notable aspects of Airvet is its ability to create a new market segment. While the concept of providing employee benefits is not new, Airvet successfully aligned its business model with this traditional offering in a fresh and innovative way.

By offering pet telehealth services as an employee benefit, they appeal to companies looking to provide comprehensive and unique benefits packages to their employees while also serving pet owners who face difficulties in accessing and affording pet care.

This shows the importance for startups of understanding their industry's pain points and customer needs and finding creative ways to address these needs.

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What do you think of today's newsletter?

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• ​😒 Meh​
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Cheers,

Nico