🌽 AI-Video from Pika, risks of startups of different stages and how Sam Altman was "fired" from YC
Migranotes s2e23. Seven useful materials for entrepreneurs for all days of the week
Hi, everyone.
It's time to pour coffee and read a selection of useful materials for startup founders and entrepreneurs. Don't forget to share useful links from it. Sharing is caring!
Let's go!
1. Productivity: From idea to video with Pika
Pika can turn anything into a video. To be more precise, it is based on three main concepts:
text-to-video - where you simply describe what you want to see in the video
image-to-video - to bring static images to life
video-to-video - where you make a video from another video that acts as a source of information
Pika has been on the market for a relatively long time - I've been following them for six months. But recently the company announced an $80 million investment, so I'll be following them even more closely.
2. Report: The Global Payments Report
Worldpay has released an extensive annual report on the electronic payments market. I recommend it to everyone who is making a startup in the FinTech category - the focus is on user behavior, or rather, paying users.
In particular, the researchers note that despite the fact that many EU countries are under a common regulatory umbrella, the European e-commerce payment landscape is extremely diverse.
Digital wallets are the leading e-commerce payment method in Europe and accounted for 30% of the value of e-commerce transactions in 2023. Wallets are projected to grow at a 17% CAGR until 2027, when they will account for around 40% of e-commerce value.
The value of cash transactions has halved to around 20% between 2019 and 2023 across the 14 European markets covered by the report. With a projected CAGR of -5% until 2027, cash will account for 16% of the value of POS transactions by 2027, according to Worldpay.
https://worldpay.globalpaymentsreport.com/en
3. Startup development: Risks of startups depending on the stage
Inaki Berenguer emphasizes the differences in the risks faced by pre-seed and later startups. In particular, at the pre-seed stage, he identifies the following main risks, the realization of which can lead to the death of the company.
Conflicts between founders and their departure
Too long product development time
Technical feasibility issues. Sometimes startups find that their product cannot be developed as intended.
Problems with monetization: Just because someone liked your product, tested it and left a positive review, solved a real problem, or signed a letter of intent doesn't mean they will pay for it.
Vitamin vs. painkiller. Many products are divided into "nice to have" and "must have" categories.
Limited pricing power. When your solution contributes to a value chain (e.g., B2B2C), the cost savings or incremental revenue it generates does not always directly impact the price you can charge, and whoever owns the end customer has most of the leverage.
Selling critical systems. Most startups fail or turn around at the seed funding stage. Therefore, experienced clients often treat startups with skepticism, doubting that they will survive in the long run, which is especially true when the startup's solution is an integral part of the client's critical operations (for example, managing hospital patient data or bank credit cards, or purchasing life insurance from a startup).
Future versus status quo competition. Startups often claim that their product will be better than existing competition and the current status quo. However, it takes time to bring a product to market, and even after the launch, it also takes time for customers to learn about the company's offerings.
Read the original article about risks at the seed stage and series A
4. Useful services for startups: More stories from storeez
When it comes to stories, all users can be divided into two types. The former hate them because stories are now available on literally every website and mobile app. The latter understand that they need to integrate stories into their product, because stories are now available on literally every website and mobile app
The storeez service will make the first category angry and the second happy. With its help, you can easily integrate stories into your product by linking them to your own domain. It also works in apps.
5. Relations with VCs: What to look for when studying LOI
So, someone wanted to buy your company. And they went beyond words and sent you a Letter Of Intent, which makes the offer concrete. After you "celebrate" the fact of receiving the offer, pay attention to the following components of the document.
Purchase price and form of consideration. Ideally, the purchase price should be set for 100% of the company's outstanding shares. Simply put, this should be equity only (equity value), which means that cash and debt on the balance sheet are not included (enterprise value).
Purchase price adjustment. The proposal should include a detailed description of the proposed method of calculating the purchase price adjustment related to any excess or shortfall in net working capital relative to the mutually agreed target.
Source of financing. It is appropriate for the buyer to indicate where they are getting the funds to buy your company. Does the buyer have cash on its balance sheet, or does it need to raise external debt or equity to finance the deal?
What happens to management. The offer should include a summary of the intentions with respect to management and, if applicable, the key terms that will be offered to management in the employment agreement, retention agreement or other contractual document to be entered into at closing.
Due diligence. The extent of due diligence conducted prior to the submission of the proposal is important. The offer should include a list of all outstanding issues, the time required to resolve them and any third-party advisors that may be required to assist in the due diligence.
Indemnification. Selling your company involves assuming legal liability; you make representations about the business and the buyer also makes representations about themselves.
Transaction Timing. The timing of the closing of the transaction is important and should take into account any further due diligence, regulatory approvals and financing required, as well as any other facts or circumstances that may affect the timing and/or certainty of the timely closing and receipt of financing.
Approvals. The Offer shall not be subject to any corporate approvals by the participants, such as the board of directors, committee or limited partners.
https://blog.acquire.com/what-do-the-legal-terms-mean-in-a-letter-of-intent-loi/
6. Video: Roger Federer's speech to students at Dartmouth
7. Opinion: Paul Graham on how Sam Altman left YC
People have been claiming YC fired Sam Altman. That's not true. Here's what actually happened. For several years, he was running both YC and OpenAI, but when OpenAI announced that it was going to have a for-profit subsidiary and that Sam was going to be the CEO, we (specifically Jessica) told him that if he was going to work full-time on OpenAI, we should find someone else to run YC, and he agreed. If he'd said that he was going to find someone else to be CEO of OpenAI so that he could focus 100% on YC, we'd have been fine with that too. We didn't want him to leave, just to choose one or the other.