Hey — It’s Nico.

Welcome to another Failory edition. This issue takes 5 minutes to read.

These are the 5 most important things:

• Canoo, an EV startup, announced it is shutting down — learn why below.

• Insights from 6,500 tech professionals on their favorite tools.

• The Stargate Project will invest $500B in building AI infrastructure in the US.

• Stoke Space raised $260M to build a reusable rocket.

• The TikTok ban can teach a lot about Platform Risk— learn more below.

Let’s get into it.

This Week In Startups

🔗 Resources

Insights from 6,500 tech professionals on their favorite tools.

How Superhuman built an engine to find Product Market Fit.

The uneven arrival of AI.

Mapping the future of open vs closed AI development.

📰 News

OpenAI announced the Stargate Project which intends to invest $500 billion building AI infrastructure in the US.

Abandoned Nuclear Reactors are being revived due to AI demand.

o3 is now finalized and will be launched soon.

AI apps saw over $1 billion in consumer spending in 2024.

💸 Fundraising

Neko, the body-scanning startup, raises $260M.

Truveta, a health data startup, raised $230M to create a giant genomic dataset.

Stoke Space raised $260M to build a reusable rocket.

Tune Therapeutics, an epigenetic programming startup, raised $175M.

Fail(St)ory

Another EV Bites the Dust

Last week, the EV startup Canoo filed for bankruptcy. By now, this feels like a recurring segment in this newsletter: ambitious electric vehicle startups burning through millions and leaving little behind but debt and disappointment. 

Canoo’s demise wasn’t exactly shocking. In the months leading up to the announcement, the company had seen a string of executive departures, announced furloughs, and admitted in November it had only $700,000 in the bank. With $164 million owed to hundreds of creditors and no lifeline from the Department of Energy’s loan program, the end was inevitable.

What Was Canoo: Founded in 2017, Canoo was one of many startups trying to revolutionize transportation.

Its big debut came in 2019 with the Lifestyle Vehicle, a seven-seat van that was supposed to launch via a subscription model. The plan sounded novel: no ownership hassles, just pay to drive.

But by 2021, Canoo had pivoted to commercial vehicles, showcasing the MPDV (Multi-Purpose Delivery Vehicle) and later a futuristic cab-forward pickup truck. None of these vehicles ever made it to market.

Canoo eventually zeroed in on the LDV (Lifestyle Delivery Vehicle), a commercial van based on the original Lifestyle Vehicle. This focus brought some high-profile deals—NASA chose Canoo to provide crew transportation for its Artemis program, and Walmart signed on to purchase 4,500 LDVs. But despite these partnerships, only a handful of vehicles were ever delivered.

The Numbers:

• 📅 Founded in 2017.

• 👷 Employed over 800 people.

• 💸 Raised $125M in funding.

• 📉 Owed $164 million to creditors.

Reasons for Failure: 

• Another EV Casualty: If Canoo’s story sounds familiar, it’s because it is. The EV industry has become a graveyard for startups. Making electric vehicles is incredibly expensive, and competing with established giants takes far more than a flashy prototype or clever marketing. To survive in this space, a startup must secure substantial funding and sustain it over several years.

• Burning Cash Like There’s No Tomorrow: The financial mismanagement at Canoo was staggering. In 2023, the company earned less than $1 million but spent $1.7 million on private jet reimbursements for its CEO. Over three years, $4.8 million was paid to Aquila Family Ventures—owned by the CEO—for jet hires. This kind of spending might make sense if you’re running a global corporation, but for a struggling startup, it’s hard to justify.

• Too Many Pivots: Startups often pivot, but Canoo seemed to make it an annual event. From subscription-based vehicles to commercial vans to military prototypes, the company’s strategy shifted so often that it’s hard to tell what its actual focus was.

• Misplaced Priorities: Canoo’s focus on signing high-profile deals like NASA and Walmart seemed more aimed at creating buzz than building operational capacity. These deals didn’t translate into meaningful output or revenue, leaving them stretched thin and overextended.

Why It Matters: 

• Lavish spending on non-essential perks, like private jets, shows how misaligned priorities can erode trust with investors.

• High-profile deals mean nothing without the operational ability to deliver.

• The failure of yet another EV startup underlines how difficult it is to compete without deep resources and clear focus.

Trend

TikTok’s Platform Risk

This week, TikTok narrowly avoided a nationwide ban in the U.S., igniting debates about its implications. Was it the right move? What are the geopolitical stakes? And who deserves credit for its swift return?

While these questions dominated headlines, there’s another critical aspect to consider: the devastating impact such a ban could have had on millions of startups and small businesses that depend on TikTok to acquire users. More importantly, this near-miss highlights a broader challenge that countless businesses face every day: Platform Risk.

So, what exactly is Platform Risk, and why does it matter?

What Is Platform Risk?

Platform Risk is the degree to which a company depends on a platform or ecosystem to operate. If your business relies heavily on a third party—whether it’s for hosting, user acquisition, or delivering your product—you have Platform Risk.

Take Failory, for example. I use Webflow to design and host the website. While Webflow makes building and maintaining the site simple, it also means I’m dependent on their decisions. If they were to suddenly change their pricing model (as they attempted in the past), it could disrupt my operations overnight.

A more dramatic illustration of Platform Risk was the Unity Runtime Fee debacle two years ago. Unity, a widely-used game engine, introduced a new retroactive fee based on the number of game installations—a move that caught developers off guard. 

Many small studios, which had built their businesses entirely around Unity, suddenly faced costs they hadn’t accounted for.  It was a textbook example of Platform Risk—a dependency on a platform that can suddenly impose unfavorable changes.

Marketing Platform Risk

Platform Risk isn’t always about pricing. Sometimes, it’s about your ability to acquire users. If a company relies too heavily on acquiring its users through a third-party app, that too is Platform Risk.

Consider the Substack and Twitter’s clash in 2023. Substack launched Notes, a feature resembling Twitter, and Twitter didn’t take kindly to the competition.

In response, Twitter flagged Substack links as “potentially unsafe,” adding warnings and reducing their reach. For writers who relied on Twitter to drive traffic to their Substack newsletters, this was a massive blow. Their audiences shrank overnight—not because of anything they did, but because of a platform-level conflict.

The TikTok ban presents a similar, albeit larger-scale, scenario. Had the TikTok ban gone through, it wouldn’t just have impacted the platform itself—it would have severely harmed the businesses that depend on it.

TikTok is a lifeline for user acquisition for many small businesses, with over 5M U.S. companies using the platform in 2023. These businesses, which include everything from local artisans to direct-to-consumer brands, have built their customer bases by leveraging TikTok’s algorithm. Losing access to that platform would have been catastrophic.

However, the fact that the ban didn’t happen shouldn’t make anyone complacent. A platform being banned outright is just one extreme form of Platform Risk—and a relatively rare one. A much more common threat comes from platforms making changes to their algorithms, which can dramatically alter how businesses acquire users.

Whether it’s decreasing organic reach, prioritizing certain types of content, or introducing new rules for monetization, these changes happen far more frequently and can still deal a significant blow to businesses reliant on them. The risk doesn’t disappear just because the platform remains available—it simply evolves.

The good news is that Platform Risk can be managed and even mitigated. So, what steps can businesses take to protect themselves from these vulnerabilities?

What To Do:

• Overlap your acquisition channels: Use platforms to funnel users into channels you control, like email or a private community.

• Stay ahead of changes: Monitor platform updates and industry news to adapt before changes hurt your business.

• Choose open systems: Prioritize tools and platforms that allow you to migrate your audience or data if needed.

• Diversify: Avoid relying on a single platform by spreading your efforts across multiple channels to reduce dependency.

Help Me Improve Failory

That's all of this edition.

Cheers,

Nico