Market Mix - 📉 WeLearn from WeWork

📉 Story: From $47 Billion To Bare Survival

WeWork, the workspace-sharing startup once valued at $47 billion, is struggling to stay afloat amid cash shortage and steep losses.

The decline of the New York-based company has been attributed to a combination of factors, including an unsustainable business model, financial mismanagement and leadership instability.

WeWork failed to strike a balance between long-term leases and short-term desk rental offerings. When the pandemic hit, remote work became the norm, jeopardizing WeWork's short-term rentals.

The company saw substantial financial losses, with no profits since its failed IPO in 2019, which resulted in the departure of co-founder Adam Neumann and a change in leadership. WeWork then faced turmoil with the resignations of top executives, including new CEO Sandeep Mathrani and CFO Andre Fernandez.

WeWork announced this summer that it has "substantial doubt" about its ability to continue operating unless it boosts liquidity and profitability over the next year.

But some say the fault lies with investors who pumped billions of dollars into the company, inflating its valuation to an unsustainable level.

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🔗 Weekly Picks

VC returns are at a 10+ year low (Link).

Atlassian to acquire former unicorn Loom for $975M (Link).

Reevaluating LTV:CAC to measure performance (Link).

8 best user onboarding examples from 150+ companies (Link).

Guide to measuring what marketing activities drive revenue (Link).

How this investor email got a VC to say yes right away (Link).

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⚰️ Failed Startup: Consumer Payments Startup Braid Shuts Down

​​Braid, a startup founded in 2019 with the goal of popularizing shared wallets, has ceased operations.

Amanda Peyton and Todd Berman (who left in 2020) created the San Francisco-based venture, offering FDIC-insured multi-user accounts for pooling, managing, and spending money collectively. They secured $10 million in funding from investors like Index Ventures and Accel.

In a blog post, Peyton took responsibility for Braid's closure, emphasizing the importance of sharing her story.

She described struggles with a sponsor bank, which left the company dormant from July 2022 to January 2023. Peyton also realized that relying on third-party software slowed their progress and eroded margins, leading them to build in-house solutions.

After the shutdown, Peyton acquired Braid's intellectual property in an auction, expressing her passion for fintech and its vast potential. Before Braid, Peyton worked at Google and Etsy and co-founded Grand St., which Etsy acquired in 2014.

Link to Article →

💰 Trend: SaaS Funding, Capital Efficiency & AI Strategy

At the annual SaaStr conference in San Mateo, Christoph Janz, Managing Partner at Point Nine, shared insights into the 2023 SaaS funding trends.

One key theme was investors' growing emphasis on efficiency over rapid growth.

During the conference, Janz unveiled the Funding Napkin, which shed light on key aspects of SaaS funding in 2023.

The findings were based on data on 86 funding rounds from the end of 2022 and 2023, as well as a Carta dataset, encompassing over 3,300 financing rounds within U.S.-based SaaS companies in 2023.

These were the major takeaways:

According to 35 investors who were asked the question “What matters in 2023,” capital efficiency is the most important factor with 91%, followed by valuation (71%), and convincing AI strategy (50%).

Link to Article →​

📊 Strategy: Pricing Annual Subscription Plans

Dan Layfield, who led the growth team at Codeacademy, discovered that setting the annual plan price 1-2 months longer than the average monthly user retention can boost customer lifetime value (LTV) by 25%.

Here’s how it works:

1) Short lifecycle products

Short-lifecycle products address specific needs like finding a job, losing weight, or learning a skill. They inherently have limited user retention.

Subscription companies use the ratio of annual to monthly plans to estimate user retention in the industry. For example, Noom's ratio of 2.99 (Annual $209 / Monthly $70) suggests users stay for 2-3 months.

A good "Plan Mix" can boost business value, cash flow, and customer acquisition and reduce churn.

2) Longer lifecycle products

The monthly to annual plan tactic does not work if your average user stays for 12+ months.

Instead of annual plans, longer lifecycle products usually offer:

​Link to Article →​

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📈 Trend: GenAI Startups Reign Supreme

According to a report just launched from Accel Partners, generative AI startups have been dominating the cloud and SaaS unicorn space in 2023.

These startups, which use artificial intelligence to create new and unique content, have attracted significant investment, with $18 billion being pumped into the industry this year alone.

The report found that around 60% of all new unicorns in the SaaS and cloud sectors were "GenAI native," indicating the significant impact that generative AI is having on the industry.

In fact, the United States has already produced nine generative AI startups worth over $1 billion, while Europe and Israel have produced three.

The report predicts that generative AI will extend beyond traditional content creation and into industries like healthcare and legal, where specific use cases can benefit from AI.

​Link to Report →​

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