Hey — It’s Nico.

Another week writing from the bay!

I have to say ramen is expensive in SF. Are ramen-profitable startups the new unicorns?

If you’re up for a coffee/beer, let me know. I’m looking to meet founders and investors who read Failory :)

Today’s edition is brought to you by PartnerHero, the platform for hiring fractional CXOs for your startup.

Here’s what I got today:

• Remote driving startup Phantom Auto shuts down after raising $95M 🔥

• Humanoid robots are finally becoming a thing 📈

Presented by PartnerHero

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This Week In Startups

🫡 ICYMI

How MasterClass is dominating Google SERPs

🔗 Resources

Founder shares lessons from a failed AI startup.

A guide to niche vs mass market segments.

Solo founder on how he built an internet business using AI. 

A guide on how to build a Custom GPT.

Founders share their GTM basics for technical founders.

Pitfalls of strictly using LTV/CAC metrics.

YC startup founder explains how they’ve grown on X/twitter.

📰 News

Midjourney bans Stability AI workers over alleged data scraping.

Discord now allows app development within its chat platform.

EV startup Fisker prepares to file for bankruptcy.

Onyx Private tells customers it’s closing their accounts.

Applied Intuition raises $250M in a Series E round for its autonomous vehicle software.

Lagos raises $22M after successfully pivoting into an open-source billing platform.

Fail(St)ory

Phantom Auto, From $95M to 0

In recent years, the buzz surrounding self-driving cars has been impossible to ignore. From Elon’s Teslas to the cutting-edge technology of Waymo and even the 10-year failed venture of the Apple Car, it seems like everyone is eager to jump on the autonomous driving bandwagon.

However, while this was happening, a few startups began to approach the challenge from a unique angle.

Enter Phantom Auto. Rather than pursuing the holy grail of fully autonomous vehicles, they focused on remotely driven vehicles.

Founded in 2017, they aimed to revolutionize the field by making vehicles that could be driven from anywhere. Utilizing their teleops technology, drivers could control the cars from anywhere in the world, much like navigating a vehicle in a video game.

In other words, drivers would now become remote workers as well.

Initially, Phantom Auto attempted to implement their technology on vehicles operating on open roads. Picture robotaxis and self-driving trucks, but with remote driving capabilities rather than being entirely autonomous.

However, the company's leaders soon understood that even with their tech, it would take many years before driverless vehicles could be widely used on public roads.

So, in 2019, they decided to pivot and began offering their remote driving system to the logistics sector. Vehicles like forklifts and reach trucks could now be operated remotely by a single driver.

It was a smart move. Putting this technology on public roads is tough due to strict safety rules, but it's easier in warehouses. Forklifts move slowly and stay inside, so there's less risk of hurting people.

This also helped address the shortage of drivers in the logistics industry. Now, drivers didn't have to relocate to different states, and employers could find workers from a much larger pool.

Unfortunately, Phantom Auto announced it was shutting down last week. Shai Magzimof, Founder and CEO, made a LinkedIn post announcing the closure and blaming the “market conditions and insufficient funding” for the failure.

Milestones

• They raised $95M in their lifetime.

• Their last funding round was $25M in 2023.

• They had 120 employees.

• They acquired Voysys, a startup focusing on video communication solutions over unreliable public 4G networks.

• They were awarded as one of Time’s best inventions of 2022.

• They worked with 4 of the top 12 third-party logistics companies in the US. 

Reasons for Failure

Phantom Auto was about to close another round of investment, but the deal fell through. Reliant on external funding to survive, Phantom Auto was having trouble raising more money, so it had to shut down. 

This is part of a general trend: investment in the autonomous driving industry peaked in 2021 but has been on a decline since then.

This has caused other startups in the same industry to struggle to find new rounds of investment. For instance, Argo AI, despite having amassed over 3.6 billion in funding, faced closure by the end of 2022.

Future of Remote Driving

Vay, another startup focusing on remote driving, has recently launched in Las Vegas. Their technology closely resembles that of Phantom Auto, allowing cars to be operated by individuals in distant locations.

However, Vay focuses on the taxi industry, offering customers rides in its cars, much like Uber. The key distinction is that Vay's vehicles are piloted by individuals remotely overseeing operations via screens in their homes. 

It is still too early to see if Vay will be able to succeed where Phantom Auto failed, but the fact that they have managed to raise $95M by a Series B round is indicative that there is still a lot of interest in the remote driving technology.

Trend Radar

Humanoid Robots Become a Thing?

Last week, humanity got another step closer to fully embracing our inevitable future of becoming the main characters of “Terminator” or “I, Robot.”

Over the last few years, we have seen massive advancements in AI, and we now have LLMs that are getting closer and closer to finally passing the Turing Test.

One area we have not seen that much progress, however, is robotics. 

Sure, Boston Dynamic dogs are cute as hell, but they are not the Terminator. If humanity is to be replaced in the workforce (or exterminated?) by robots, I would very much prefer that these robots do not look like my dog.

Luckily, it seems like Figure has listened to our pleas because last week, they announced the Figure 01, one of the first humanoid robots I am actually excited about.

Just look at this picture and tell me it doesn’t look like something out of a science fiction movie.

What Can It Do?

Figure is marketing the robot as the first “general purpose humanoid” and the first “humanoid by our side on the workforce.”

The robot is powered by GPT, so it can listen to humans and respond accordingly. This includes not only answering our questions like ChatGPT does but also interacting with the physical world and performing tasks we request it to do.

For example, we could request the Figure 01 to fetch something for us, move boxes around, or serve our food. 

In many ways, we just gave GPT a body. The potential applications for this technology are boundless, ranging from streamlining mundane tasks involving physical manipulation to reducing the number of workers in hazardous environments and even providing care for the elderly.

According to Figure, these humanoids will initially be tasked with structured and repetitive jobs, but over time, the robots should be able to perform more complex functions. 

The Company

Figure is a San Francisco-based startup now valued at $2.6B. It recently announced a $675M Series B with investments from companies such as Microsoft, Nvidia, Amazon, and OpenAI.

It was funded in 2022 by Brett Adcock, who assembled a team of engineers from Boston Dynamics, Tesla, and Apple.

Their mission is to make autonomous humanoid workers that will support humanity and fix all labor shortages.

Robots for Everyone?

So, is there a trend here? Are humanoids the next trillion-dollar industry?

Well, it is hard to say this early on. We still have to see if Figure 01 can live up to the expectations, and there are many questions still unanswered: 

• How good is Figure 01 at moving around in human spaces?

• How good is it at understanding the tasks and acting on them?

• Is it truly autonomous, or does it require to be constantly monitored?

One way to try to determine the future of this industry is to look at the other companies doing things similar to Figure.

• Agility Robotics is also making bi-pedal robots that have begun to be adopted to perform logistic tasks, although the use cases are still limited. 

• Boston Dynamics' iconic dog, Spot, is mostly being used to perform inspections in hazardous places or to monitor construction sites. 

• Apptronik’s humanoid robot is now being tried out by Mercedes in an attempt to automate “low-skill, physically challenging, manual labor.”

We can see that most of these robots are still being tried out or have very niche applications. 

It is, however, very easy to see how this technology could be groundbreaking in many industries in the future.

Figure seems really optimistic about the prospect of robots. In their Master Plan, they foresee a future in which robots will be so widely adopted by every industry that humans will not have to work anymore. 

If this is the case, we are looking at probably the most valuable industry in human history. But even if not all industries embrace humanoid robots, the significant potential applications in sectors such as logistics or construction are compelling enough to justify the excitement for this new opportunity.

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That's all of this edition.

Cheers,

Nico