⚰️ Zeus Living Shuts Down

Zeus Living shuts down after raising $150M, indicators of PMF and how ChatGPT is killing AI startups                                                                                                                                                                                                                                                                                                                                                                                                                 November 16, 2023 | [Read Online]( [fb]( [tw]( [in]( [email](mailto:?subject=Post%20from%20Failory&body=%E2%9A%B0%EF%B8%8F%20Zeus%20Living%20Shuts%20Down%3A%20Zeus%20Living%20shuts%20down%20after%20raising%20%24150M%2C%20indicators%20of%20PMF%20and%20how%20ChatGPT%20is%20killing%20AI%20startups%0A%0Ahttps%3A%2F%2Fnewsletter.failory.com%2Fp%2Fzeus-living-shuts-raising-150m) Together With Hey — It's Nico. 90% of startups fail. Learn how not to in Failory's newsletter. Here's what I got today: - 🚀 Launch: Failory’s Referral Program - 🔗 Weekly Picks - ⚰️ Failed Startup: Zeus Living Shuts Down After Raising $150M - 🧠Framework: Indicators Of Product-Market Fit - 🤔 Strategy: Optimal Phase For Joining a Startup - 🤖 Trend: Startups Fail Victim Of ChatGPT This issue is brought to you by[Auth0 by Okta](, the platform that makes customer login experiences awesome. 🚀 Launch: Failory’s Referral Program I’ve launched Failory’s referral program! What? If you recommend Failory to friends and these friends subscribe to the newsletter, you win rewards. Why? We want to expand our vision about learning from failures and mistakes, and you probably know many founders who’d benefit from our stories and guides. How? You simply have to share your referral link, which you can find in every newsletter: What are the rewards? - 1 referral and you get access to our weekly gated failed startup story, my favorite section of the newsletter. - 3 referrals and you win a free copy of[my PMF eBook](. - 10 referrals and you win an[FTX “Risk Management Intern” T-shirt](. - 20 referrals and you get a free copy of[my Fundraising Bundle](. - 50 referrals and you get a free 1-hour consultancy call with me.​​​ Has your team thought about Customer Identity? Eligible startups can use Auth0 by Okta’s Identity platform free for one year. By joining Auth0 for Startups, you’ll get access to the full, rich feature set of Auth0 including SSO, MFA, and Universal Login. Get your application to market faster while giving your customers a great login experience. Let us handle Identity, so your team can focus on innovation. [Get Started]([→]( 🔗 Weekly Picks Balancing profit and purpose in business ([Link](). What venture studios look for in founders ([Link](). Why growth loops are the future of scaling your startup? ([Link](). Lessons from getting acquired by Google ([Link](). Why European startups are expanding to Asia ([Link](). ⚰️ Failed Startup: Zeus Living Shuts Down After Raising $150M Proptech startup Zeus Living, which had received backing from Airbnb, is [reportedly shutting down its operations](. The company raised $150 million in debt and equity, with investors including Initialized Capital, CEAS Investments, and Y Combinator. Refer Failory to one friend to unlock the three reasons why Zeus Living failed. Here’s your referral link: ⚰️ Failed Startup: Zeus Living Shuts Down After Raising $150M Proptech startup Zeus Living, which had received backing from Airbnb, is [reportedly shutting down its operations](. The company raised $150 million in debt and equity, with investors including Initialized Capital, CEAS Investments, and Y Combinator. Zeus Living initially focused on redecorating landlords’ homes and renting out furnished properties to relocated workers on short-term stays. However, it later evolved to offer more flexibility to individuals, not just corporate employees, who were looking for temporary housing options. Why did they fail? - Rising Interest Rates: The increase in interest rates to their highest levels in two decades adversely affected Zeus Living’s business model. Higher interest rates made it more expensive to purchase homes, which was a critical part of Zeus Living’s operational model. This increase in costs likely eroded the company’s profit margins. - Changing Market Dynamics: While the company initially benefited from the remote work revolution fuelled by COVID-19, the market dynamics have since changed. The normalization of the real estate market post-pandemic and shifts in work-from-home policies could have reduced the demand for their services. - Operational Model Challenges: Zeus Living’s business model was really capital and operationally intensive. This could have contributed to high operating costs, making it challenging to obtain profits in a tightening economic environment. By contrast, Anyplace, another flexible living startup, recently [raised $8.27M]( in Series B funding. [Link to Article →​]( You’re viewing this story because you’ve referred one friend to Failory. Thanks! 🧠Framework: Indicators Of Product-Market Fit Product/Market Fit is a term that is often debated and difficult to define, but it’s an essential concept for startups to understand. It refers to a point in a company’s growth where there is a clear traction and demand for their product. It’s a subjective experience, and when a company achieves it, there is a noticeable shift in momentum. Jason Cohen from A Smart Bear recently shared some indicators of a startup achieving PFM: - A sudden, sustained spike in growth rate. This is often an unanticipated surge in user sign-ups or sales, marking a departure from previous efforts to drum up business. - High retention. This shows that the product is continually meeting customer needs. For B2B companies, it means maintaining a monthly cancellation rate of 3% or less. For B2C companies, it’s about 5% or less. - Reaching a specific revenue threshold (like $20,000/month) or a consistent increase in active users. This signals that the product appeals to a broader market segment beyond a niche audience. After achieving PMF, the growth that occurs often doesn't follow the expected exponential increase. Instead, it’s usually linear, albeit at a faster rate. This pattern holds across different business models, whether bootstrapped or VC-funded. [Link to Article →​](​ 🤔 Strategy: Optimal Phase For Joining a Startup Joining a startup comes with perks like excitement, career growth, and being part of meaningful conversations. But the real reason most people are interested in startups is the potential to earn big if it exists. Startups that exit for over $500 million not only provide life-changing paychecks but also become prominent names on resumes, supported by a strong alumni network. What is the best time to join a startup considering the trade-off between risk and reward? A study of 14,000 US-based startups that raised funding in 2014 or 2015 found that the more funding rounds a startup raises, the more likely it is to exit. Joining a later-stage startup like SpaceX or Uber can offer stability and still significant growth opportunities. However, when evaluating the growth potential of a late-stage company, remember that not all of them will provide the same opportunities as the few high-profile cases mentioned. At the same time, the study says that the earlier you join a startup, the larger your potential payout, since you’re given more percentage of equity. However, joining a seed-stage startup is considerably riskier, as only 6.9% of these startups exit for more than they raised. The best chances of earning a substantial check and advancing your career seem to come from joining a startup at Series C, A, or B stages (in that order). [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: Startups Fail Victim Of ChatGPT OpenAI has released two new features for its ChatGPT: 1) allow users to upload multiple types of documents, including PDFs, images, and CSVs, and 2) create your own GPT. While this update has been well-received by ChatGPT users, it has had a significant impact on startups that have built their businesses around providing similar functionalities. The article below shares some takeaways from how this release affects the AI startup ecosystem: - Rapid obsolescence of niche startups: Startups that focus on specific limitations of large AI models, such as PDF processing, will become quickly outdated as ChatGPT continues to improve. - Risks for AI-packaged startups: Startups that base their products on AI technologies (like ChatGPT’s APIs) are at significant risk. Even tiny tweaks in the model can ruin their USP. - Opportunities in vertical specialization: Despite these challenges, there is optimism about growth opportunities for startups that focus on specific market solutions and user-friendly interfaces. [Chat & Ask AI]( and [AI Chat Smith]( wouldn't have earned $3.38M or $1.72M, respectively, without establishing a specialized market. This suggests a shift from a general-purpose AI approach to more specialized, industry-focused applications. - Generative AI as a key driver for startups: The generative AI market is a significant driver for startup growth and investment, with a[large portion of new “unicorns” emerging in this space.]( There is a broad and growing interest in AI applications beyond the capabilities of large AI platforms. [Link to Article →​]( ✉️ Recommended Newsletter: Unicorner One hot startup in your inbox every week. 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