🦄 From Unicorn to Shutdown

The downfall of Convoy, how Duolingo retains users, and the origin of Unicorns                                                                                                                                                                                                                                                                                                                                                                                                                 October 26, 2023 | [Read Online]( [fb]( [tw]( [in]( [email](mailto:?subject=Post%20from%20Failory&body=%F0%9F%A6%84%20From%20Unicorn%20to%20Shutdown%3A%20The%20downfall%20of%20Convoy%2C%20how%20Duolingo%20retains%20users%2C%20and%20the%20origin%20of%20Unicorns%0A%0Ahttps%3A%2F%2Fnewsletter.failory.com%2Fp%2Funicorn-shutdown) Together With Hey — It's Nico. 90% of startups fail. With Failory's newsletters you won't. Here's what I got today: - 🦄 Story: Convoy, From Unicorn To Shutdown - 🔗 Weekly Picks - ⚰️ Failed Startup: From €2M Seed Round To Bankruptcy - 🚀 Growth Tactic: How Duolingo Retains Users -  📈 Trend: The Origin Of Unicorns - 📊 Strategy: The Challenge of Freemium 🦄 Story: Convoy, From Unicorn To Shutdown Digital freight brokerage [Convoy](, once valued at $3.6 billion, recently announced it will cancel all shipments and shut down operations. [tw profile: adam keesling] adam keesling @adam_keesling [tw] Convoy, a digital freight brokerage valued at $3.6 billion (!), announced yesterday that they are canceling all shipments and shutting down operations What happened and what does it mean for other supply chain tech companies? In short, it was a liquidity crunch: Convoy has… twitter.com/i/web/status/1… Oct 19, 2023 236 Likes 28 Retweets 7 Replies Convoy, which connected shippers with carriers, thrived during a period of booming demand in the industry. This decline has been attributed to a severe liquidity crisis due to a combination of rapid growth, and delayed payments by shippers. With venture funding harder to come by, the company was forced to take on debt. The loans had strict covenants to protect the lenders, which were breached when Convoy's margins dropped, forcing the company into liquidation. Diversifying their sources of capital, maintaining stronger financial reserves, and closely monitoring market conditions could have helped them weather the storm. What's next for the freight brokerage industry remains uncertain. Healthy firms may acquire struggling ones, while bankruptcies may become more common. ​[Link to Post →](​ 🔗 Weekly Picks How crypto hype misled a startup from solving real problems ([Link](). ChatGPT’s growth story ([Link](). How to avoid cofounder drama from killing your startup ([Link](). Tech layoff predictions for 2024 ([Link](). Why startups fail according to HBS ([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: From €2M Seed Round To Bankruptcy ​​The e-bike industry faces another setback with [Revonte](, a Finnish e-bike drive system manufacturer, declaring bankruptcy and putting its intellectual property (IP) up for sale. This development adds to the recent challenges in the e-bike sector, including [VanMoof's bankruptcy]( and [subsequent acquisition by Lavoie](, concerns about [Flyer's performance](, and the headline-grabbing [dispute between Cowboy and eBikeLabs](. Revonte, which [secured a €2M Seed round in 2019](, struggled to secure additional funding, leading to its bankruptcy filing. The e-bike market has seen a slowdown in sales post-COVID-19, prompting the need for market consolidation. Revonte gained recognition for its Revonte One e-bike drive system featuring an integrated automatic stepless transmission, which is popular among riders. The company had been seeking funding since 2022 to develop a lighter-weight e-bike motor. Now, in the bankruptcy proceedings, it is urgently selling its IP. [Link to Article →](​ 🚀 Growth Tactic: How Duolingo Retains Users [Duolingo]( is one of the world’s most successful learning-based businesses. In 2022, it made nearly half a billion dollars in revenue (a 46% increase from the year prior) and had 16.3M daily active users. While MIT's research indicates a mere 4% retention rate for online courses, Duolingo excels with a 55% daily active user retention rate by designing to create habits. First, they create triggers using emotional manipulation through their owl mascot: “You made Duo sad 😢” or “Keep Duo happy,” and incorporate push notifications, email reminders, etc. Then, the product creates routines. Duolingo’s customer experience is full of psychological strategies that get people hooked on the “routine” of learning a language, including pre-commitment, social motivation, and goal gradient effect & chunking. The crowning part focuses on rewards. Celebration, achievements, and badges leverage the psychological phenomenon known as Confirmation Bias, which asserts that people naturally favor information that aligns with their pre-existing beliefs and actions. How can you leverage the Habit Loop (Trigger, Routine, Reward) model to design for great user engagement and retention? [Link to Article →](​​ 📈 Trend: The Origin Of Unicorn A recent Endeavor Insight study analyzed the career paths of 100 top unicorn founders in the U.S. and another 100 in key emerging markets. Key findings from the study include: Global Citizen Founders A significant 55% of top U.S. unicorn founders are either immigrants or second-generation immigrants. 32% of unicorn founders in emerging markets also have immigrant backgrounds. Non-Elite Education Only one-third of unicorn founders have a Bachelor’s degree from a prestigious university. Slightly less than half pursued master's or PhD programs at an elite school. Science and Engineering Education 61% of founders majored in science and engineering, while business majors comprised only 19%. Experience Matters Most unicorn founders gained their foundational experience at startups, often holding C-suite positions or growing within the ranks. Approximately 49% of the founders are serial entrepreneurs. On average, unicorn founders had a decade of work experience following their undergraduate education. Emerging Markets vs. U.S. Unicorns Emerging market unicorns frequently focus on solving real, large-scale problems, with a strong presence in fintech, e-commerce, and logistics. U.S. unicorns follow VC fads and span various high-tech sectors, including blockchain and cryptocurrency. ​[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](. 📊 Strategy: The Challenge of Freemium Equals CEO Bobby Pinero last year decided to make their spreadsheet platform free. The aim was to drive massive adoption and mimic the success of companies like Notion, Figma, and Airtable. Initially, the move to freemium seemed to work, with a significant increase in sign-ups and daily usage. However, over the next six months, the SaaS startup faced several challenges, including a drop in customer retention and conversion of free users to paid subscriptions. The root of the problem lay in a lengthy onboarding process and a complex user funnel. Despite introducing innovative features, the business couldn't regain its momentum. After evaluating the situation, the company decided to introduce more friction by ending the free plan and requiring credit card information for a free trial. Surprisingly, this decision led to increased growth and user engagement. The experience taught Equals that adding some friction, such as requiring a trial commitment, creates a sense of urgency and results in a more engaged user base and better business outcomes. While Equals may revisit a freemium model in the future, the focus now is on building a successful pricing strategy and creating a cutting-edge product. [​Link to Article →​]( 👂 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](