Hey — It’s Nico.

Last week in SF — going back to Argentina on Saturday.

Then, in a few weeks, maybe I’ll be back in SF 👀. I will be writing further about this soon…

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

Here’s what I got today:

• The failure story of Round, a community for tech leaders 🔥

• An analysis of the brain chip industry and Neuralink’s latest news 📈

Presented by PartnerHero

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This Week In Startups

🫡 ICYMI

How Linear gets a 96% worker retention rate using work trials.

🔗 Resources

ActiveCampaign’s GTM strategies to reach $250M ARR.

A16z on how to price and package your B2B AI features.

Why communication needs to be direct and done by founders.

An idea to build in a boring industry.

Why AI startups require different strategies to stand out.

📰 News

Michael Seibel stands down from the managing director position at YC. 

Adam Neumann tries to buy WeWork back with a $500m bid.

YC-backed digital bank Onyx Private is terminating its bank operations.

Marc Lore's food delivery startup Wonder raises $700M to scale its operations.  

Foundry secures $80M to build a public cloud for AI/ML workloads.

The Browser Company raises $50M at a $550M valuation to build the “Internet computer.”

Fail(St)ory

A Failed Community

Last week, Round, a community platform for tech leaders, announced it was closing down.

Round was founded in 2021, and in 2022, they got a $12 million investment in Series A.

Their main goal was to bring tech leaders together in a friendly and helpful community. They wanted to connect people who cared about things like kindness, openness, and wanting to learn.

Round was an exclusive community: only product and engineering leaders with more than 15 years of experience could join. 

Upon acceptance, members gained access to a Slack community, could attend exclusive quarterly in-person events, enrolled in immersive 4-8 week cohort courses covering diverse topics, and benefited from a dedicated network concierge, orchestrating personalized 1:1 introductions and helping you network.

In a short time, Round grew to over $1 million in ARR, which showed that they were onto something big. But sadly, they couldn't keep it going.

Their business model was centered around individual annual memberships, priced at $2400 per year for the basic membership and up to $7200 per year for the Premium membership. Because of these steep prices, many members' companies paid the bill for their memberships.

This model thrives when companies expand and have resources to spare but struggles during economic downturns like the 2022 tech slump. During this period, fewer companies were willing to invest in employee memberships, significantly impacting Round's operations.

This forced them to start pivoting, trying to find a business model that was more prepared for macroeconomic fluctuations. Ultimately, they realized they would not be able to attain the rapid growth they needed to secure further investment and decided to shut down.

Reasons For Failure:

• Market Conditions: The tech downturn of 2022, coupled with widespread layoffs across the industry, posed significant challenges to Round's business model. Companies were hesitant to invest in pricey memberships for their employees, and employees felt uneasy requesting memberships amid cost-cutting measures.

• Funding Challenges: Like many other failed startups discussed in this newsletter, Round raised a lot of money when tech investments were at an all-time high. Ryan Fuller, CEO and co-founder, stated that they were able to “raise money back when money was kind of free.” However, when VC investment dropped in 2022, Round could not secure any new investments.

• Challenges of Scaling a Community: Growing a community is tough. You want more users and money, but you also want to keep that close-knit feel among members. It's like walking a tightrope. As you grow, costs increase, and you must make more money to stay afloat. But if you push too hard for profit, you might lose what makes the community unique. This balance is not hard to maintain if you are willing to sacrifice some profit, but if VCs are pressuring you to show exponential user growth, then you have a problem.

• VC Misfit: Not every company has to go the VC path. There are many types of businesses, like community-based businesses, that would benefit more from going for a more bootstrapped way. Fuller said that Round “did not work as a venture-backed business” but that it does “work really well as a community that gives a lot of value to a lot of people.”

Go Deeper

• The shutdown announcement by CEO Ryan Fuller.

• This article has more details about Round’s failure.

Trend Radar

Brain Chips

Last week, Neuralink, the brain interfacing company, hosted a 9-minute livestream showcasing Noland Arbaugh, the first human implanted with their neuro chip, playing chess on his computer by simply moving the cursor with his mind.

The video quickly went viral as viewers marveled at what appeared to be magic. Despite being paralyzed, Nolan could interact with his computer solely by thinking about the cursor's movements.

How Does it Work?

Nolan was implanted with a small chip in his brain called the N1 Sensor. This chip has 1024 electrodes that read the activity of different neurons in the region of the brain that is in charge of body movement.

The electrodes read the neurons that activate, and then the chip translates this activation into what Nolan is trying to do. For example, if Nolan thinks about moving the mouse toward the bottom of the screen, the chip can read the neurons and understand the movement Nolan is trying to perform.

Finally, the chip sends this information to the computer via Bluetooth, and the cursor moves to the desired position.

Other Startups in the Field:

Although Neuralink is the most advanced and renowned company working on brain interfacing technology, some other startups have begun to make waves.

• Kernel: A California startup trying to create brain-machine interfaces. Their flagship product, Kernel Flow, is a wearable helmet designed to read neural activity. Additionally, the company has developed software called Sound ID, which is capable of discerning the speech or song a person is listening to solely from brain data.

• BlackRock Neurotech: A longstanding player in the field, specializing in building chips capable of reading and comprehending brain activity. Their primary objective is to assist individuals with paralysis or other neurological disorders in regaining functions such as walking, talking, hearing, and seeing.

• Paradromics: Specializes in developing rapid data-transfer brain-computer interfaces (BCI) to aid those with neurological issues. Their initial focus is on assisting severely motor-impaired individuals to communicate.

The Future?

Is brain-machine interfacing the future? Will we eventually control computers with our minds and download information directly into our brains like in the Matrix? 

It's a tempting possibility, but the reality is complex. Despite rapid advancements in Neuroscience and Neurotechnology over recent decades, we still do not know much about the brain.

While the widespread adoption of technologies like the Neuralink chip and brain interfaces are still very distant, it doesn't mean the field lacks opportunities today.

Currently, there's a pressing demand for more precise and cost-effective Neurotechnology. Companies like Bitbrain, focusing on developing affordable EEG and Eye-Tracking Devices, are capitalizing on this burgeoning market. Their applications range from neuroscience research to product testing and UX/UI design, highlighting the immediate opportunities within the field.

Go Deeper:

• This great article about brain-computer interfaces.

• Understand more about how Neuralink’s chip works.

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That's all of this edition.

Cheers,

Nico