Hey — It’s Nico.

Today’s issue takes 5 minutes to read. If you only have one, here are the five main things:

• Slync’s founder has been convicted to 20 years in prison for committing fraud — read Slync’s failure story below.

• Uber #99 employee shares how the startup got its first 1M drivers.

• AI startups Skild AI and Hayden AI raise $300M and $90M.

• Sequoia Capital offers to buy Stripe shares from investors at a $70B valuation.

• Failory almost fails this week — find below my thoughts on the trend of vendor lock-in.

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This Week In Startups

🔗 Resources

How Uber signed their first 1M drivers.

Why A16z is excited about AI scribes.

Techniques to improve your startup's cash flow.

How guided AI agents will revolutionize the SMB sector.

Product lead at Stripe talks about building product.

📰 News

SoftBank acquires AI chipmaker Graphcore.

Sequoia confirms $70B Stripe valuation and offers to buy shares back from investors.

Kearny Jackson secures $65M targeting B2B SaaS and Fintech infrastructure startups.

Intuit lays off 1,800 staff and labels many as underperformers.

Alpine Space Ventures secures $184M to invest in space startups.

💸 Fundraising

Defense tech startup Helsing secures $487M at a $5.4B valuation.

Skild AI raises $300M to build an AI-powered brain for robots.

Vision AI startup Hayden AI secures $90M to enhance public transit efficiency.

Caliza raises $8.5M to enable money transfers in Latin America using USDC.

Fail(St)ory

20 Years in Prison

What does a $500K Richard Mille watch, a $16M private jet, and a $60M acquisition of the Derby County Football Club have to do with a tech logistic startup?

Nothing.

Christopher Kirchner, founder of Slync, thought otherwise — for that reason, 8 months after his company’s shutdown, this week he was sentenced to 20 years in prison and ordered to pay $65M in restitution.

Slync’s Numbers:

• 📅 Founded in 2017.

• 🚀 Raised over $80 million and reached a $240M valuation.

• 💰 Misappropriated over $25 million by the CEO for personal use.

What Was Slync: Slync was a startup building a platform for major logistic companies to track their shipments and streamline their various processes.

Kirchner founded the company in 2017 and remained as Chief Executive until he was sacked by the board of directors in 2022.

Throughout these years, he raised $80M from investors like Goldman Sachs and Blumberg Capital, valuing the company at $240M in their Series B round.

What Went Wrong: In July 2022, a Forbes investigation started uncovering what was going on with Kirchner and Sync.

According to the report, Kirchner had fraudulently raised these rounds, based on false representations about its financials and customers and false promises on revenue projections.

They found that while Kirchner had reported to the board that Slync had generated close to $30M in revenue in 2021 from about 20 customers, the real figure was close to $1M and fewer than 5 customers.

The report also talked about Kirchner’s incredibly high standard of living, playing golf with Saudi princes and flying to exotic places on his $16M private jet. He rode exotic vehicles, including a black Ferrari Superfast 812, and wore luxury jewelry, like a $500,000 Richard Mille watch.

In late 2021, while Slync’s employees were getting delayed or missed paychecks, Kirchner even tried to purchase the bankrupt English football team Derby County for $60M but the deal fell off.

With the recent conviction, we came to know that Kirchner was using investors’ money to fund this lifestyle. 

Kirchner did nearly 100 wire transfers to move money from Slync’s SVB account into the company’s JPMorgan Chase Bank account, which only he had access to. Additionally, he wired $20M directly from the SVB account into his personal checking account.

Why It Matters:

• The sentence is among the harshest for a fraudulent tech founder — Elizabeth Holmes of Theranos only got 11 years.

• Kirchner's case has sparked calls for better governance in both the tech and sports industries.

• Slync’s story is a cautionary tale about the critical importance of ethical leadership and transparent operations in the tech industry.

Go Deeper:

• Read the Forbes investigation to find more about Kirchner’s lifestyle and management of the company.

• Read the recent Forbes news about Kirchner being sentences to prison.

• Read the BBC news to learn more about Kirchner’s attempt to buy the Derby County football team.

Trend

Vendor Lock In

This week I tweeted about a situation I was going through with Webflow, the tool I use to design Failory’s site and publish content. The tweet got out of control:

What’s Going On: I’ve been a Webflow user and advocate for 8 years. I love the tool and have recommended it to an uncountable number of people.

A few weeks ago, they launched a new feature — a “bandwidth usage” dashboard, which shows how much bandwidth your website uses.

Since Failory’s traffic is high and the website contains many images, my bandwidth was high — way higher than the bandwidth limit of my “Business” plan (the most expensive plan before the custom-priced “Enterprise” plan).

Note 1: It’s important to say that the bandwidth limit is a new thing. It was not in the plan’s limits when I decided to use Webflow to create Failory’s site.

Last week, a Webflow sales representative reached out to me telling me I had to upgrade to Enterprise. On Friday, I had a call to learn more about the plan.

The price, she said, is $15,000/year — a x32 increase from the current $468/year price tag.

The worst: I had one week (which maybe could be extended to two) to decide if I wanted to upgrade or move to another CMS.

Note 2: I didn’t need any of the Enterprise features. I just needed bandwidth.

What Happened Next: The Webflow team contacted me immediately. They explained that the one-week limit was a mistake and that they’d not enforce the Enterprise upgrade.

They have also been working on launching a series of fixes on the platform, as well as changes on Failory’s site, oriented to reducing bandwidth consumption.

I’m currently evaluating a few different options. There might be a few solutions to reduce bandwidth significantly and stay with Webflow. But I’m not discarding migrating to other open-source no/low-code solutions (WordPress, Webstudio) or building something custom.

I love the Webflow product (not their pricing model) and the cost of migrating to something else is very high. Changing to another CMS won’t provide value to Failory’s users, which is how I think I should spend my time. But the risk of this situation happening again in the future worries me a lot.

A Bigger Trend: What happened to me is part of a bigger trend going on — call it “vendor lock-in”.

The events are frequently the same:

• SaaS company surges, with a great product and affordable prices.

• People start using it — they move in their data, create components, integrate it with the rest of their tools. They build a business on top of it.

• The SaaS decides to abruptly increase prices (in this case, x32).

• The company doesn’t have much to do other than pay, since the cost of leaving the platform is very high.

Bubble and Cloudflare are only two other SaaS that have gone through similar price increases and customer complaints.

After many years of not caring, open source technology starts to make a lot of sense to me.

Help Me Improve Failory

That's all of this edition.

Cheers,

Nico