September 21, 2023 | Read Online
Hey — It's Nico.
90% of startups fail. Send Failory's newsletter to your founder friend and help him avoid it ;)
Here's what I got today:
- 📃 Story: Taking an Agency from $24K/Mo to Zero
- 📈 Trend: Nicotine Pouches
- 🎯 Strategy: Using Content to Validate Ideas
- 🔗 Weekly Picks
This is brought to you by Pre-Sell to Validate, my online course on how to validate your startup ideas.
Brought to you by Pre-Sell to Validate
34% of the startups I've interviewed failed because they lacked Product-Market Fit.
They had built products that the market didn't strongly want.
Validating your startup ideas is key.
In this online course, I go over my 4-step framework to validate ideas using pre-sales.
Learn how to validate your startup ideas →
📃 Story: Taking an Agency from $24K/Mo to Zero
After college, Mat Sherman began writing blog posts for a few startups, charging them $100/article.
Months went by, and the business, called PubLoft, started growing. Mat got a co-founder, increased prices, and eventually reached $24K in MRR.
With such traction, he convinced Jason Calacanis to invest $100K into the business.
However, things soon started to take a different direction. Months later, the agency shut down.
The Growth of PubLoft
The real growth came after Mat increased prices to $500/article and focused on startups paying this higher price point.
To find customers, he used cold emails. For example, he found a list of hundreds of startups that had gone through YC batches and cold-emailed their founders.
As he started securing clients, he began outsourcing writing to various freelancers. He wanted PubLoft to eventually become a marketplace for writing services.
At $24K/mo in revenue, he contacted Jason Calacanis looking for funding. Jason ended up investing $100K and inviting PubLoft into his accelerator program.
In this article, Mat shares how he was able to secure that funding by keeping Jason updated every month on the performance of PubLoft.
The Demise of PubLoft
According to Mat, they “did all the things you're not supposed to do when you've just secured funding,” and that led them to shut down.
After going through the accelerator program, Mat and his co-founder shifted their focus toward fundraising only.
They delegated client acquisition to a salesperson, which didn’t work out. This summed up the fact that their biggest client dropped their service as a result of being acquired.
As money was running out, they had to let go of their staff and shut down.
Veering away from their core strengths and overly prioritizing fundraising were the two reasons behind PubLoft’s demise.
📈 Trend: Nicotine Pouches
As nicotine vaporizers like Juul have come up against regulatory bodies, another nicotine product has been gaining popularity in the last years: nicotine pouches.
Sales of nicotine pouch products have increased from $126M from August to December 2019 to $808M from January to March 2022.
Let’s dive into two companies riding this wave: Zyn and Lucy.
Zyn
Zyn has by far the largest share of overall sales of nicotine pouches, which can be seen reflected in the growing interest in the brand over the past few years.
Zyn’s parent company, Swedish Match, was recently acquired by Philip Morris for $16B.
The concept of nicotine as a brain-enhancing substance has been growing lately. Zyn seems to be the brand exploiting this most effectively, getting famous people like Tucker Carlson to claim Zyn is a “massive life-enhancer”.
Lucy
Lucy is not even within the five main nicotine pouches brands in terms of market share, but it's relevant to us as it’s a YC-backed startup operating in an industry led by giant companies.
Lucy positions their products as “nicotine for normal people”. They seem to be orientated to younger generations with their colorful packages and fruit tastes.
It was co-founded by Soylent’s co-founders, John Coogan and David Renteln, and Samy Hamdouche.
According to PitchBook, they have raised four rounds of funding, being the latest one a Series A round of $10M. According to their website, their products are available in +1,300 stores across the US.
🎯 Strategy: Using Content to Validate Ideas
There’s a well-known mantra in product circles: "If you build it, they will come."
Parabol’s team operates under another one: “If they come to us, we will build it."
In this article, they explain how they use content to validate their product ideas. The SEO results and reader interest define what they build next.
Why Use Content?
When validating ideas, you need to stay as lean as possible. It doesn't make sense to invest resources in something you don’t know if it will work.
Content is the leanest way to begin product exploration. Making a few pieces of content on your target topic takes a few days rather than the months it takes to create the product.
For this reason, discarding content is easy. The cost of pivoting is really low.
Moreover, investing in content helps verify that there’s organic traffic you can tap into to market your product or feature.
And if you invest early in content, by the time you launch the product, your content will be already ranking on Google.
How Does This Work?
For each of the product areas you want to validate, you have to create three types of content:
- An early access landing page ranking for a keyword that described the product idea and with a way of collecting emails of users interested in using the tool.
- How-to articles that speak to the people who are problem-aware and that frame your idea as a solution to that problem.
- Supporting resources that help establish your topical authority and let you discover some related topics that interest your audience.
So, if people come to these pages and sign up for the waitlist, you’ll build it.
🔗 Weekly Picks
Fundraising:
Antler shares five differences between angel investors and VCs (Link).
50+ questions you need to answer when fundraising (Link).
AcceleratorCON is a New York event connecting founders and accelerators. Use the code “ACCONFY30” to get a 30% discount (Link).
Startup Ideas:
How AI’s security challenges open opportunities for founders (Link).
AlleyCorp’s CEO on how he gets $20B+ business ideas (Link).
Erik Torenberg’s idea: bundling accountability, coaching, and therapy (Link).
Growth:
Insights from 1,000 companies' GTM strategies (Link).
5 strategies to reduce SaaS churn (Link).
Other:
This founder spent $95K creating a marketplace that no one used (Link).
Josh Pigford acquired a small web app and is turning it into a business (Link).
Gagan Biyani shares his lessons building Maven, his 3rd startup (Link).
News:
YC clashes with Neo over who has the better startup accelerator (Link).
Sierra Ventures raises $265M for early-stage B2B founders (Link).
Databricks raises $500M at a $43B valuation (Link).
👂 How Was Today's Newsletter?
❓ Looking For More?
💡 Struggling to validate your startup idea? I've created a course on how to use pre-sales to validate it.
📈 Struggling to achieve PMF? I've written an eBook about the exact strategies used by Slack, Intercom, and Airbnb to achieve it.
💰 Struggling to raise funding? I've curated lists of 2,100 accelerators and incubators and 1,000 VC firms.
📊 Looking to get in front of +40k startup founders? Sponsor Failory's newsletter.
📞 Looking for help with your startup? Book a one-hour-long consultancy call with me.
That's all of this week.
Cheers,
Nico
