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DON'T Do This If You Fail

Lessons from the mistakes of a viral failed startup founder

Hey — It’s Nico.

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Here’s what I got today:

  • A case study on what not to do if your startup fails 💀

  • A pattern of big companies shutting down acquired startups 📈

  • An opportunity to build a business on top of VisionOS 💡

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This Week In Startups

🔗 Resources

How a $700k/year SaaS pivoted and found PMF a year later.

How to launch on Product Hunt by Maker of the Year 2023.

Extreme brainstorming questions to trigger new, better ideas.

Why Building in Public is a superpower and how to do it right.

A 5-step formula to create a product pitch.

📰 News

Neuralink has implanted the first brain chip in a human.

AI startup Krutrim raises $50M and becomes India’s first AI unicorn.

Byju's seeks new funding, slashing valuation from $22B to under $2B.

M&A falls 31% among VC-backed startups in 2023.

Infinite Roots raises $58M to develop a mushroom-based food alternative.

😮 Cool Stuff

The realistic journey of a founder before it found success.

A recommendation for bootstrapped founders: remove your free trials.

The “Michelin guide for startups” for those looking for jobs.


LinkedIn post

Self-Awareness on Startup Failures

This week, a founder’s post on LinkedIn went viral. In it, the founder shared that his startup had failed because he had not hired “A players”, but “B and C players,” which apparently caused their “productivity to lag” and “customers to send dishes back for revision.”

This was not the first time this founder had blamed his startup problems on hiring the wrong people. A week before, he had made another post stating that he had “lost 9 months' worth of work” because he had hired the wrong CTO.

Suffice it to say, these posts received a lot of negative feedback from people, suggesting that maybe the real problem was the post’s author and not his workers.

What Is Wrong: In my opinion, there are many problems here:

  • As a startup’s CEO, accountability is a must. Great CEOs take responsibility for their decisions, including hiring choices.

  • Labeling employees as A, B, or C oversimplifies the complexity of team dynamics. As a CEO, it’s your job to make everyone perform the best.

  • Publicly blaming other people (even without giving their names) damages the morale and trust not only of those people, but also of the team at his current startup.

What Really Happened: Some days later, the founder made a new LinkedIn post apologizing for the previous ones and offering some better reasons why his business had failed:

  • Scope-creep: The product scope exceeded the available resources. In the early stages, focusing on fewer and more specific features is usually better.

  • Pursuing the wrong early customer: Looking to show some early revenue, they took service projects that caused them to hire a team they soon had to let go.

  • Building sales before product readiness: They tried to sell their product before it was completed. Instead of chasing PMF, they simply went for revenue.

Grief: In this newsletter, I usually analyze businesses that have failed. I focus on their stories, the reasons for the failure, and the ways it could have been avoided.

However, there is one aspect of any failing business that often goes overlooked: the emotions of the founders and their ability to cope with failure. 

Zak Kann wrote a great article on the emotions behind his startup’s failure. He gives a detailed description of the process many founders have to go through when their ideas fail:

  • Grieving always starts with denial, and business failures are no exception. Founders usually avoid all signals that suggest that their business is not working.

  • Then comes denial. It’s common for founders to try to blame someone/something other than themselves for their business failure. Exactly what the founder did on his LinkedIn posts.

  • Finally comes distress and depression as the founders come to realize about their business’ failure and take responsibility for it.

Being able to acknowledge this emotional process and being self-conscious of how one feels about startup failure is another important skill for anyone who wants to be into startups.

Go Deeper:

Trend Radar

Big Companies Shutting Down Acquired Startups

Uber has shut down Drizly, an alcohol delivery startup it had acquired 3 years ago for $1.1B.


  • Drizly was founded in 2012 when three friends wondered why they could not get any alcohol delivered.

  • After several rounds of investment, Drizly became the largest online marketplace for alcohol in North America.

  • In February 2021, it was acquired by Uber. The plan was to integrate it into Uber Eats, but this never happened.

  • Three years later, Uber decided to close Drizly in a push to consolidate Uber’s product delivery offerings into Uber Eats.

"After three years of Drizly operating independently within the Uber family, we've decided to close the business and focus on our core Uber Eats strategy of helping consumers get almost anything — from food to groceries to alcohol — all on a single app," Pierre-Dimitri Gore-Coty, Uber's SVP of delivery.

Trend: This is not an isolated event. Many big companies have been shutting down startups they had previously acquired.

In our Google Cemetery and Amazon Cemetery, you can find plenty of startups that were acquired by Google and Amazon and shut down afterward.

  • Quidsi was an e-commerce company acquired by Amazon in 2010 for $500M and shut down 7 years later.

  • Fabric was a mobile app development software acquired by Google in 2017 and shut down in 2020.

  • TenMarks Education was a platform with personalized math programs for struggling students acquired by Amazon in 2013 and closed after 6 years.

This trend leads me to wonder: What is the future like for Postmates, the alternative to Uber Eats, acquired by Uber in 2020 for $2.65B?

If Uber continues with its plan of making Uber Eats the only app in which “consumers get almost anything,” then things do not look so bright for Postmates.

Reflection: Selling your business and then seeing it shut down after a few years suck. It's like seeing your hard work and late-night hustle vanish into thin air. Plus your awesome team, the folks you've probably shared countless coffee breaks with, might end up jobless.

Therefore, this is something important to consider when selling your business. Sometimes, the highest bidder might not be the best owner for your brainchild.

History underscores the cautionary tale of selling to industry giants like Uber, Amazon, or Google. While they may bring considerable resources, their track record suggests a willingness to make tough decisions, even if it means shutting down a once-vibrant startup.

Your Next Startup

VisionOS Launches Tomorrow

Tomorrow (February 2) Apple is releasing the Vision Pro. This $3,500 device aims to ignite the revolution of “spatial computing,” creating a whole new industry full of business opportunities.

It is hard to predict whether Apple’s gamble of dabbling into the VR/AR world will pay off because a big part of this success will depend on developers building new apps on VisionOS.

Opportunities: Every time there’s a new platform, there are new opportunities for a startup.

  • Building apps: The platform necessitates a robust ecosystem of applications to enhance its functionality. Presently, there exist approximately 200 applications tailored for VisionOS, leaving substantial room for the development of new apps.

  • Create a business on top of Vision Pro: One option is to create educational content for developers or users of Vision Pro. Another could be to provide consultancy for cross-platform optimization, helping existing apps get into the Vision Pro ecosystem.

Get Inspired:

  • Sergio Abril is building is building Nuits, a collection of cozy scenes that can be used while you work and focus.

  • Ethan Sherbondy is creating Mahjong.space, which lets you play Mahjong in Augmented Reality.

  • Ravi Krishnan built XploreD, which displays projections of tourist attractions all around the world.

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