Hey — It's Nico.

This is Failory, where we learn from other startups’ mistakes and failures.

Here's what I got today:

• 10 resources and news of this week.
• A 30-day playbook for raising funds, from Supademo's founder, Joseph Lee.
• The failure story of Checkout X, a Shopify app that was once making €600k/mo.

This issue is brought to you by Conjointly Market Test, the tool to validate your branding and marketing assets.

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🔥 This Week’s Picks

a16z explains why investors care so much about LTV:CAC (Link).

How Nick Huber plans to build a $1B empire (Link).

How Pieter Levels repeatedly creates million-dollar startups when most fail (Link).

Teachable’s founder shares how to use monthly updates to raise funding (Link).

TechCrunch shares the list of 200 startups participating in their Startup Battlefield competition (Link).

A playbook for defining user personas with lessons from Webflow and Nextdoor (Link).

How Miro’s user onboarding changed over their journey from 50 to 1,800 users (Link).

Product lessons from Threads: Cold starts, distribution, timing, and leveraging new entrant status (Link).

AI startup Hugging Face raises $235M at a $4.5B valuation (Link).

Indian grocery delivery startup Zepto raises $200M at a $1.4B valuation (Link).

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💰 A Founder’s Playbook to Raising in a Down Market​

Capital raised in 2023 is about to hit a 7-year low.

Joseph Lee, founder of Supademo, is one of the few founders who has recently succeeded in raising VC money.

​In a guest post published this week in Failory, Joseph shares his 30-day playbook for raising funding. Here are the main takeaways.

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Days 0–3: Do You Want to Raise VC Money?

Remember: VC only works for startups with the potential of becoming unicorns.

If that’s not the case, you should search for other funding sources or bootstrap.

Going the VC path? Mentally prepare yourself for the string of rejections and internalize the difficulties of raising during an economic downturn.

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Days 3–7: Prepare Your Stack

• Create a 2–3 sentence overview explaining what you do, market opportunity, traction, and team.
• Craft an engaging, visual-first, and short (> 15 slides) pitch deck.
• Build and practice a script for each slide of your pitch deck.
• Build a list of investors who have funded founders in your network.
• Create an interactive product demo.
• Build a data room with metrics like MRR, LTV, Churn, and Retention.

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Days 7–15: Get Intros

1. Look at your network and identify everyone who has raised funding.
2. Make a list of the investors they are connected with.
3. Ensure the investors’ fund thesis aligns with your company and that they haven’t invested in a direct competitor.
4. Reach out to the specific founder with an intro request. Make it as easy as possible for them to introduce you.

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Days 15–30: Meet and Iterate

Target 3–5 investor meetings every single day. Push for high density as this creates FOMO, drives momentum, and helps you close faster.

Throughout these meetings, write down objections from every investor that passes. Update and address these by tweaking your pitch or presentation accordingly.

Be prepared for a string of rejections and be ready to expect 20–30 no’s for every yes.

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☠️ Bootstrapping to €600k MRR & Getting Killed by Shopify​

Can you imagine going from €600k/mo to shutting down overnight?

CheckoutX’s story is the clearest evidence of how risky it is to build a business on top of another.

His founder, Ruslan Leteyski, has recently published an article sharing the startup’s story.

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Checkout X’s Story

While in Bulgaria, Ruslan wanted to build an online pharmacy.

But there was a problem: no Bulgarian payment providers would work on Shopify.

Checkout X was born to allow Shopify merchants to integrate other payment providers not offered within Shopify.

However, the app got little traction during its first months.

That’s when a big company contacted Ruslan. They wanted a custom “one-page checkout with post-purchase upsells.”

He built that solution for them and realized he could productize that and sell it to other companies.

Checkout X was launched in September 2018, offering one-page checkouts for Shopify stores.

The first 100 customers came from:

• A partnership with payment provider Bluesnap.
• Stores copying their competitor’s one-page checkout pages.

Over the years, they grew to 6,000 customers, with an ARPU of $100/month.

Ruslan started to scale the team. At the peak, 16 people were working at Checkout X.

But in the spring of 2019, things started to change.

Shopify updated its Terms of Service and claimed building public checkout apps was forbidden.

Ruslan got out of that one by getting a written permission from Shopify for Checkout X to continue operating.

However, in April 2020, Shopify decided to block Checkout X’s partner account, quoting a violation of their ToS.

Checkout X was forced to shut down. They announced the news, gave people 14 days heads up, and closed installations.

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Platform Risk

There are thousands of successful startups built on top of other platforms: Shopify Apps, Webflow Apps (launched this week), Zoom Apps, etc.

Leveraging a customer base and a series of services another startup has built for years seems like an incredible strategy.

The problem is platform risk:

• Platform may change its ToS and legally forbid your business.
• Platform may change rates and kill your business’ unit economics
• Platform may copy your business and integrate it into its features.
• Platform may change visibility and smash your main customer acquisition channel.
• Platform may even shut down, and so will your business.

Anything that happens to the platform affects your business, and you have no choice.

To mitigate this risk, you should:

• Focus on building features that are non-core to the platform, minimizing the risk of the platform copying you.
• Diversify quickly onto other platforms, limiting your dependency.
• Establish communication with the platform to ensure you aren’t breaking any of their current or future policies.

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That's all of this week.

Cheers,

Nico