📉 WeLearn from WeWork

The decline of WeWork, the future of SaaS funding, and GenAI startups reign supreme                                                                                                                                                                                                                                                                                                                                                                                                                 October 19, 2023 | [Read Online]( [fb]( [tw]( [in]( [email](mailto:?subject=Post%20from%20Failory&body=%F0%9F%93%89%20WeLearn%20from%20WeWork%3A%20The%20decline%20of%20WeWork%2C%20the%20future%20of%20SaaS%20funding%2C%20and%20GenAI%20startups%20reign%20supreme%0A%0Ahttps%3A%2F%2Fnewsletter.failory.com%2Fp%2Fwelearn-from-wework) Together With Hey — It's Nico. 90% of startups fail. Dive into today's insights and be part of the thriving 10%. Here's what I got today: - 📉 Story: From $47 Billion To Bare Survival - 🔗 Weekly Picks - ⚰️ Failed Startup: Consumer Payments Startup Braid Shuts Down - 💰 Trend: SaaS Funding, Capital Efficiency & AI Strategy - 📊 Strategy: Pricing Annual Subscription Plans - 📈 Trend: GenAI Startups Reign Supreme 📉 Story: From $47 Billion To Bare Survival WeWork, the workspace-sharing startup once valued at $47 billion, is struggling to stay afloat amid cash shortage and steep losses. The decline of the New York-based company [has been attributed]( to a combination of factors, including an unsustainable business model, financial mismanagement and leadership instability. WeWork failed to strike a balance between long-term leases and short-term desk rental offerings. When the pandemic hit, remote work became the norm, jeopardizing WeWork's short-term rentals. The company saw substantial financial losses, with no profits since its [failed IPO in 2019](, which resulted in the departure of co-founder Adam Neumann and a change in leadership. WeWork then faced turmoil with the resignations of top executives, including new CEO Sandeep Mathrani and CFO Andre Fernandez. WeWork [announced]( this summer that it has "substantial doubt" about its ability to continue operating unless it boosts liquidity and profitability over the next year. But some say the fault lies with investors who pumped billions of dollars into the company, inflating its valuation to an unsustainable level. [Link to Article →]( 🔗 Weekly Picks VC returns are at a 10+ year low ([Link](). Atlassian to acquire former unicorn Loom for $975M ([Link](). Reevaluating LTV:CAC to measure performance ([Link](). 8 best user onboarding examples from 150+ companies ([Link](). Guide to measuring what marketing activities drive revenue ([Link](). How this investor email got a VC to say yes right away ([Link](). 📈 CX Powers Your Growth​ Successful brands invest in customer experience and smart founders use PartnerHero to up-level their CX without breaking the bank. PartnerHero is a customer operations outsourcing company built for the needs of startups, from seed to scale. Let us help your brand build financial resilience and extend your operational runway without sacrificing quality with flexible, affordable, high-quality outsourced customer ops. ​[Invest in Customer Experience →​]( 🧑‍🤝‍🧑 Refer & Get Access to Our Weekly Failure Story Do you want access to our weekly failed startup analysis like the one below? Going forward, you just need to refer Failory to one friend to unlock it. Here’s your link: ⚰️ Failed Startup: Consumer Payments Startup Braid Shuts Down ​​[Braid](, a startup founded in 2019 with the goal of popularizing shared wallets, has ceased operations. Amanda Peyton and Todd Berman (who left in 2020) created the San Francisco-based venture, offering FDIC-insured multi-user accounts for pooling, managing, and spending money collectively. They secured $10 million in funding from investors like Index Ventures and Accel. In [a blog post](, Peyton took responsibility for Braid's closure, emphasizing the importance of sharing her story. She described struggles with a sponsor bank, which left the company dormant from July 2022 to January 2023. Peyton also realized that relying on third-party software slowed their progress and eroded margins, leading them to build in-house solutions. After the shutdown, Peyton acquired Braid's intellectual property in an auction, expressing her passion for fintech and its vast potential. Before Braid, Peyton worked at Google and Etsy and co-founded Grand St., which Etsy acquired in 2014. [Link to Article →]( 💰 Trend: SaaS Funding, Capital Efficiency & AI Strategy At the annual [SaaStr]( conference in San Mateo, Christoph Janz, Managing Partner at Point Nine, shared insights into the 2023 SaaS funding trends. One key theme was investors' growing emphasis on efficiency over rapid growth. During the conference, Janz unveiled the [Funding Napkin](, which shed light on key aspects of SaaS funding in 2023. The findings were based on data on 86 funding rounds from the end of 2022 and 2023, as well as a [Carta]( dataset, encompassing over 3,300 financing rounds within U.S.-based SaaS companies in 2023. These were the major takeaways: - Despite a decrease in early-stage financing rounds since 2021, seed and Series A valuations have held steady at around $13.5 million. - Series B and later-stage valuations have declined. - Fewer startups secure early funding, but those that do receive favorable terms. - Startups seek capital at a later stage, impacting burn, runway, and fundraising strategies. - Capital efficiency and a strong AI strategy are crucial for success in the current investment landscape. According to 35 investors who were asked the question “What matters in 2023,” capital efficiency is the most important factor with 91%, followed by valuation (71%), and convincing AI strategy (50%). [Link to Article →](​ 📊 Strategy: Pricing Annual Subscription Plans Dan Layfield, who led the growth team at Codeacademy, discovered that setting the annual plan price 1-2 months longer than the average monthly user retention can boost customer lifetime value (LTV) by 25%. Here’s how it works: 1) Short lifecycle products Short-lifecycle products address specific needs like finding a job, losing weight, or learning a skill. They inherently have limited user retention. Subscription companies use the ratio of annual to monthly plans to estimate user retention in the industry. For example, Noom's ratio of 2.99 (Annual $209 / Monthly $70) suggests users stay for 2-3 months. A good "Plan Mix" can boost business value, cash flow, and customer acquisition and reduce churn. 2) Longer lifecycle products The monthly to annual plan tactic does not work if your average user stays for 12+ months. Instead of annual plans, longer lifecycle products usually offer: - Bundling Products - E.g. insurance companies offering you to buy your home and auto together. - Selling Packages - E.g. Netflix offering family accounts. - Service Tiers - Charging you more if you use the product more. E.g. Mailchimp charging on the number of monthly emails: ​[Link to Article →](​ 📰 Classifieds 💡 Struggling to validate your startup idea? [I've created a course]( on how to use pre-sales to validate it. 📈 Struggling to achieve PMF? I've [written an eBook]( about the exact strategies used by Slack, Intercom, and Airbnb to achieve it. 💰 Struggling to raise funding? I've curated lists of [2,100 accelerators and incubators]( and [1,000 VC firms](. 📈 Trend: GenAI Startups Reign Supreme According to a report just launched from Accel Partners, generative AI startups have been dominating the cloud and SaaS unicorn space in 2023. These startups, which use artificial intelligence to create new and unique content, have attracted significant investment, with $18 billion being pumped into the industry this year alone. The report found that around 60% of all new unicorns in the SaaS and cloud sectors were "GenAI native," indicating the significant impact that generative AI is having on the industry. In fact, the United States has already produced nine generative AI startups worth over $1 billion, while Europe and Israel have produced three. The report predicts that generative AI will extend beyond traditional content creation and into industries like healthcare and legal, where specific use cases can benefit from AI. [​Link to Report →​]( 👂 How Was Today's Newsletter? - [🔥 Great]( - [😒 Meh]( - [👎 Not Interesting]( 📊 Looking to get in front of +40k startup founders? [Sponsor this newsletter](.​ That's all of this week. Cheers, Nico Thanks to [PartnerHero]( for sponsoring this issue. Update your email preferences or unsubscribe [here]( © 2023 Failory 1309 Coffeen Avenue Ste 1200, Sheridan, Wyoming 82801, United States of America [[beehiiv logo]Powered by beehiiv](