Hey — It’s Nico.

2024 started intensely. Shutdowns, acquisitions, layoffs, raised funds, a Twitter fight, a founder crossing the Atlantic.

And most importantly, a re-design of Failory’s newsletter. More visual content (as requested), clearer definitions of sections, and better readability. It’s still WIP, but I think it already looks x10 better than before.

Can I ask you a favor? If you read today’s issue, please answer the two polls at the bottom. It really helps me keep improving Failory.

Here’s what I got today:

• InVision, once valued at $2B, is shutting down by the end of 2024 💀

• Carta’s reputation hangs on balance as Twitter heats up 🔥

• Mercury’s founder's idea on building an AI shopping agent 💡

• GPT Store’s launch generates new opportunities 📈

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This Week in Startups

💰 Fundraising

OnCusp Therapeutic raises $100M Series A for cancer treatment.

Perplexity AI secures $73.6M for its AI-powered search engine.

Fintech startup Bumper secures $48M to expand to Europe.

Nabla raises $24M for its AI assistant for doctors.

📰 News

Airtable acquires developer platform Airplane.

Proptech startup Here shuts down.

Pitch lays off two-thirds of staff and CEO steps down.

🔗 Resources

Why targeting the right ICP brings 10x more customers.

Why Airplane had to sell to Airtable and what it means for M&A.

Founder shares why a Series A round killed his startup.

😮 Cool Stuff

James Ivings has crossed the Atlantic in 17 days while bootstrapping 2 startups.

This startup sends a drone to your house when you call 911.

Adding testimonials where customers don’t expect them.

Fail(St)ory

InVision, From $2B Valuation to 0

On Saturday, I received an email from a company I hadn’t heard of for a while: InVision. The email came from InVision’s CEO claiming they had taken the decision to shut down the company by the end of 2024.

I remember using InVision for the last time, 3 or 4 years ago, to collaborate with a design agency on Failory’s website re-design. Since then, every time I had to do some design work, I had undoubtedly chosen Figma.

InVision was the first tool in the design collaboration space. It launched in 2011 as a “companion platform,” first to Photoshop, then to Sketch, allowing design teams to collaborate on their work. Designers would design on Sketch/Photoshop and then synced to InVision for sharing, feedback and interactive prototyping.

During many years, InVision grew exponentially. They knew how to ride the wave of Sketch replacing Photoshop in the UI design space and acquired all of Sketch’s customers who needed an easy way to collaborate on designs. This allowed them to raise $350M+ over 10 rounds, reaching Unicorn status in 2017.

While building on top of another tool helped InVision grow, they knew it was a risky strategy, since nothing prevented Sketch from building InVision collaboration features within their tool. That’s why they began to quietly build their own design tool (their own Sketch), which would later become InVision Studio.

In March 2016, Adobe launched Adobe XD, its own UI-oriented design software. This was an existential threat to InVision, which counterattacked by launching a Sketch plugin that had many of the differentiation features that XD had.

Adobe XD failed to gain market share, but in September 2016, a new existential threat to InVision surged: Figma. Over the following months, Figma started to rapidly steal Sketch’s market share, inevitably affecting InVision.

That’s when InVision realized that if they wanted to survive, they needed to build their own Sketch/Figma competitor. But it was probably too late. Despite hiring smart people and investing millions in development, InVision Studio could never compete against Figma.

Since 2020, InVision has been shrinking, going from 1,200+ employees in early 2020 to 600 at the moment. In November 2023, they sold a part of their business to Miro, which I believe was an attempt to liquidate the company.

InVision’s story is an amazing example of the dynamics of competition between startups. Adobe was the #1 player in the space with Photoshop. Then came Sketch, and it quickly stole most of Adobe’s market. Then came Figma and quickly dethroned Sketch. And tomorrow, something will kill Figma. Even if you have 100% of the market share, you aren’t in a safe position.

InVision’s story is also a good illustration of how risky it is to build businesses on top of a platform. I don’t say it’s not possible (Syed Balkhi built a 9-figure WordPress plugin empire) — it just has its risks. You’re always at risk of the platform copying your solution if they see it’s something a lot of people want, and you’re always subject to changes in your SOM, if users migrate to another platform.

I’m interested in seeing what happens to other players in the design software space, like Sketch and Abstract. My guess is they end up being acquired by one of the bigger players.

If you want to go deeper into InVision’s story, Clark Valberg, InVision’s former CEO and co-founder, has shared the story from his point of view on what I think it’s an amazing reading on the dynamics of startup competition.

I also recommend reading the comments on Hacker News, where people are discussing what went wrong with the product and the company.

Founder’s Drama

Carta's Reputation Hangs in Balance

On Friday, Karri Saarinen, founder of Linear, published a thread on X exposing that a Carta employee had contacted one of Linear's angel investor, telling them Carta had a “firm buy order” for the angel’s shares in Linear.

Carta is a key player in the venture capital world, hosting and managing the cap tables of 40,000+ startups. The company has, therefore, information about who owns shares in each startup, how much they own, at what price they bought them, etc.

The problem here was that, according to Karri, Carta was using private cap table information to reach out to startups’ stakeholders to get them to sell their shares without the startups’ approval.

Over the following hours, other Linear angel investors and other founders started to claim this was something that had happened to them as well.

Karri offered some reasoning for Carta’s motivation to do this. He claims Linear is paying $10k/year to Carta for their software. But that’s nothing compared to the $100k they could have made from their 2% transaction fee on secondary sales.

The next day, Henry Ward, Carta’s CEO, shows up. In a strange communication, he claims this was an employee’s violation of their internal procedures, but Karri and other founders don’t believe him.

That afternoon, Karri and Henry get on a call. After that, Karri shared he’s not changing his position on the issue. Then Henry hits back, accusing Karri of posting the thread to get “Twitter and LinkedIn exposure.” The round finishes with an uppercut from Karri: “My trust in Carta is lost.”

Twitter startup’s community is divided on the issue, but it seems like the general belief is that this was a practice Carta was doing, which was at least morally reprehensible, if not also illegal.

Alternatives to Carta started to surge. AngelList Cap Table software lead product shared their roadmap for the week, and Octolane AI quickly launched an open-source cap table manager called ByeByeCarta.

On Monday, Henry published an announcement: Carta is exiting the secondaries business. "Because we have the data, if we are trading secondaries, people will always worry that we are using the data, even if we are not."

This was a bold move that even got Karri’s recognition. However, the crisis was objectively wrongly handed by Carta’s team and the loss of confidence in the platform will be hard to reverse.

Want to go deeper? This great tweet by Hari Raghavan explains the secondary market, Carta as a company and the problem with Carta’s actions.

Your Next Startup

AI Shopping Agent

Mercury’s founder, Immad Akhund, shared on Twitter a startup idea in the intersection of AI and Fintech.

The idea: An AI shopping agent for consumers. 1) The user sees something to buy; 2) The agent finds the best price for that product, searches and applies discounts, navigates the shopping funnel, and carries out the purchase.

There are a few startups doing some of these things but not a single solution integrating everything:

• Honey, acquired by PayPal for $4B, finds discount codes.

• Spoken finds the store with the best price for a product.

• Nate, now shut down, used AI to fill shoppers’ contact and payment information on eCommerce.

Technology will be a challenge. Particularly anti-fraud systems, which detect when someone making a purchase is a bot and not a person. Checkout flows can also sometimes be a little bit insane for an AI to be able to navigate them.

If you’re able to get around the technology difficulties, this is a startup idea with Unicorn potential.

Trend Radar

GPT Store

After many months of waiting, OpenAI has finally launched the GPT Store. This allows users to easily share, discover, and monetize their custom GPTs (which they released in November 2023).

The release claims they’ll be launching a revenue-sharing program in Q1. Monetization will be based on user engagement with GPTs, and will first work only for US builders. Not many details have been given on this aspect yet.

GPTs are built on a chat interface, so it’s super easy to create your own. I’ve created the FailoryGPT, for example, which tells you why your startup will fail.

The opportunity: Build your own GPT to monetize it or as a distribution channel for your startup. Here’s a directory of the most popular GPTs.

How Can I Help?

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That's all of this week.

Cheers,

Nico