🫒 Olive AI Shuts Down

Olive AI's fall from $4B to zero, generative AI opportunities, and Toast hypergrowth secrets.                                                                                                                                                                                                                                                                                                                                                                                                                 November 09, 2023 | [Read Online]( [fb]( [tw]( [in]( [email](mailto:?subject=Post%20from%20Failory&body=%F0%9F%AB%92%20Olive%20AI%20Shuts%20Down%3A%20Olive%20AI%27s%20fall%20from%20%244B%20to%20zero%2C%20generative%20AI%20opportunities%2C%20and%20Toast%20hypergrowth%20secrets.%0A%0Ahttps%3A%2F%2Fnewsletter.failory.com%2Fp%2Ffrom-4b-to-zero) Together With Hey — It's Nico. 90% of startups fail. Failory shows you what not to do. Here's what I got today: - ⚰️ Failed Startup: Olive AI, Once Unicorn, Shuts Down - 🔗 Weekly Picks - 📈 Trend: Generative AI - 🚀 Strategy: Local Sales Reps for Hypergrowth - 🤔 Question: Should I Have Usage-Based Pricing? This issue is brought to you by [Ignite Digital](, offering a free custom SEO strategy for your startup. ⚰️ Failed Startup: Olive AI, Once Unicorn, Shuts Down Olive AI, a healthcare startup that raised $848M in venture capital, recently [announced that it is shutting down]( its operations. This decision has caused shockwaves in the industry, as Olive AI, [once valued at $4B](, was a leader in the healthcare industry and had had some initial success and several key initiatives, such as[acquiring Empiric Health](. Refer Failory to one friend to unlock the 6 reasons why Olive AI failed. Here’s your referral link: ⚰️ Failed Startup: Olive AI, Once Unicorn, Shuts Down You’re viewing this story because you’ve referred one friend to Failory. Thanks! Olive AI, a healthcare startup that raised $848M in venture capital, recently [announced that it is shutting down]( its operations. This decision has caused shockwaves in the industry, as Olive AI, [once valued at $4B](, was a leader in the healthcare industry and had had some initial success and several key initiatives, such as[acquiring Empiric Health](. Here are the 6 reasons why Olive AI failed: - Lack of focus and overextension: Olive AI reportedly pivoted 27 times and expanded into various healthcare areas without maintaining a clear focus on its core products and services. - Financial overreliance on VC money: Despite raising $848M, Olive AI struggled to convert this funding into sustainable revenue growth. The company’s financial strategy heavily depended on continuous VC investment. - Rotten culture: The company's culture and leadership suffered due to the mistreatment of employees and lack of honesty with investors by the founders. When several important leaders left the company, running the business became a struggle. - Spending too much without planning: Olive AI used much of the money it got from investors to buy other companies and start new projects. They didn’t keep a close watch on how this money was spent. - Funding plummet: Funding in the healthcare space has declined over the past two years. Startups raised [just $2.5B in the third quarter of 2023](, marking the second-lowest quarter of funding since the fourth quarter in 2019, according to Rock Health. - Legal issues: Additionally, Olive AI had commitments that were too ambitious and failed to fulfill. The state of Ohio had provided them with tax incentives worth millions of dollars in exchange for job creation, which did not materialize as promised. Now, [they are facing legal action.]( This news has raised questions about the future of healthcare automation and what it means for the industry. Olive AI served over 900 hospitals, and its closure may significantly impact these institutions and their ability to leverage AI technology in their operations. [Link to Article →​](​ Grow Your Startup Revenue Through SEO Google traffic is typically the best quality and lowest cost per acquisition, but most startups without a solid content strategy have to rely on paid acquisition channels. Ignite Digital creates custom-made SEO strategies for startups, helping them diversify their acquisition channels and become more competitive. They are a Premier Google Partner and are offering Failory subscribers a free competition analysis to find keywords and links that your competition is currently leveraging. [Claim Your Free Competitive Analysis Today]( 🔗 Weekly Picks How to prepare for an upturn ([Link](). Why didn't Braid survive? ([Link](). The basics of a startup pitch deck ([Link](). How to secure your startup’s first round? ([Link](). Less funding leaves African startups and investors on edge ([Link](). 📈 Trend: Generative AI Christoph Janz has published an article exploring the opportunities of the different areas where startups can make an impact using generative AI technology. Some key findings from his research: - General-purpose tools: There is a chance for startups to disrupt the market with innovative products designed with a “LLM (Large Language Models) first” approach. This could apply to presentation software, spreadsheets, and note-taking applications (e.g.,[Tome]( for presentations,[Rows]( for spreadsheets, and[mem]( for note-taking). - Auto-pilots: This refers to selling the results of work rather than the software itself. This concept has been seen in accounting (e.g.,[Bench](, or[Pilot]() and could also be applied to other areas. - Data leverage in existing SaaS: There is potential for startups to offer AI solutions that can utilize large datasets within specific verticals, such as legal practice management, to provide enhanced services like contract drafting assistance. - Acceleration in lagging SaaS verticals: AI might speed up the adoption of SaaS in industries that have been slow to embrace it by delivering higher value to the customer with less effort required from the user. [Link to Article →​](​​​ 🚀 Strategy: Local Sales Reps for Hypergrowth [Toast](, a leading SaaS company in the restaurant industry, has achieved explosive growth in the past few years (growing a stunning 45%/year as they blew past $1.1B ARR). In a recent interview, Toast's CRO, Jonathan Vassil, revealed Toast’s interesting configuration of their sales reps team. This team is formed by two types of sales reps: - Field-based sales reps: They’re located in high restaurant-density areas and represent 80% of the team. - Remote inside sales reps: They take care of areas that don’t have the density needed to make hiring the first reps worthwhile. For the field-based sales reps, Toast gives high importance to the division of their sales territories. Instead of having sales reps spread out over large, had-to-manage areas, they’re assigned small, specific regions. This way, the reps can get to know the local restaurant scene intimately. This strategy increases win rates and is one of the reasons why 20% of Toast’s sales can be attributed to WOM: restaurant owners, who become friends with the sales rep, end up recommending the service to others. While the startup is a leading payment solution for restaurants, with a customer base of 80,000-85,000, the company has yet to scratch the surface of the U.S. market. Considering there are approximately one million restaurants nationwide, the company has an enormous opportunity to expand its reach. [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](. 🤔 Question: Should I Have Usage-Based Pricing? Usage-based pricing is when customers are charged based on how much they use a product or service. How do you know if your startup should have usage-based pricing? a16z’s rule of thumb is that usage-based pricing works best for SaaS products whose end user is other software, while subscription-based models work best for SaaS products with human end users. This is because software-to-human products make employees more productive, while software-to-software products power their customers’ products or internal systems. Additionally, software-to-software products generally have a higher marginal service cost than software-to-human products, so charging by usage can help cover those costs. This isn't a hard-and-fast rule, and pricing is a spectrum. Companies can offer hybrid subscription-and-usage pricing models depending on their cost structures, customer needs, or the nature of their products. [Link to Article →​]( ✉️ Recommended Newsletter: Startups.fyi Every week I write this email where I share real life examples of money-making online businesses and side-projects (and how much $$$ they make). [Subscribe]( 👂 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 [Ignite Digital]( 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](