📈 Trend: Vertical AI

LLMs have unlocked infinite new startup opportunities                                                                                                                                                                                                                                                                                                                                                                                                                 December 14, 2023 | [Read Online]( [fb]( [tw]( [in]( [email](mailto:?subject=Post%20from%20Failory&body=%F0%9F%93%88%20Trend%3A%20Vertical%20AI%3A%20LLMs%20have%20unlocked%20infinite%20new%20startup%20opportunities%0A%0Ahttps%3A%2F%2Fnewsletter.failory.com%2Fp%2Ftrend-vertical-ai) Together With Hey — It's Nico. 2023 saw thousands of startups fail. With Failory Newsletter, you're on the right track to ensure your venture isn't among them next year. Here's what I’ve got today: - 🔗 Weekly Picks - 📈 Trend: Vertical AI - 💀 Failed Startup: Pivo - ✍️ Strategy: PostHog’s Marketing Guide - 💡 Insight: 5 Pillars of Startup Impact - 🤔 Question: What To Do In Business School? This issue is brought to you by [ContentShake AI]( (by Semrush), the all-in-one AI content writing tool. 🔗 Weekly Picks a16z shares their big ideas in tech for 2024 ([Link](). How to come up with AI startup ideas ([Link](). Greg Isenberg brainstorms startup ideas using Pinterest’s 2024 Trend Report ([Link](). Codie Sanchez on why pitch decks are overrated ([Link](). Strategies for sustained growth beyond product-market fit ([Link](). A framework to budget planning for 2024 ([Link](). Transform your online presence: ContentShake AI for streamlined SEO and social media Discover [ContentShake AI](– the ultimate content writing tool for startups and one-person teams. It merges ChatGPT's advanced language models with Semrush’s in-depth competitive insights, all wrapped in a user-friendly interface. Generate SEO-friendly, ready-to-publish articles and dynamic social media content tailored for any platform – with just a click. Boost your reach and bring in new clients without extra effort. [Try it now for free]( [→]( 📈 Trend: Vertical AI Vertical SaaS has grown significantly over the past decade, with success stories such as Toast and Shopify. Until recently, Vertical SaaS could only be applied to companies with modern tech stacks. This left out the foundational industries, which are dependent on unstructured data. However, AI is changing this. Large language models can now handle workflows with unstructured data, meaning it’s finally possible to bring technologically underserved industries into the modern era. And the opportunity for startups is enormous: 80% of the world’s data is unstructured. [Greylock suggests some points to consider]( for building a successful vertical AI startup: - Data: Build or obtain proprietary datasets to have the greatest advantage. - TAM: Vertical TAMs are small; you’ll need to get deep market penetration. - ACV: Low ACVs are common with verticals; you’ll need to go multi-product or add additional revenue streams beyond SaaS. - Founders: You should have experience and a unique perspective in your vertical domain. - GTM: Vertical sales cycles can be long; you need a GTM strategy that creates urgency and a path to dominate important distribution channels. - Product: Be prepared for a transition to fully autonomous agents. Some vertical opportunities Greylock suggests: - Professional Services: AI is transforming professional services like legal, accounting, and consulting by automating labor-intensive tasks, such as interpreting and condensing information. - Financial Services: AI is well-suited for financial services due to its capability to handle complex data and automate mundane tasks. This leads to potential applications in data collection, portfolio management, and client communication. - Healthcare: AI's potential in healthcare is more tangible than ever, with applications ranging from transcription and documentation to clinical reasoning models. [Read more →](​​​ 💀 Failed Startup: Pivo Refer Failory to one friend to unlock all the weekly failed startup stories. Here’s your referral link: 💀 Failed Startup: Pivo You’re viewing this story because you’ve referred one friend to Failory. Thanks! Pivo, a Nigerian-based fintech startup, has recently [announced]( it’s ceasing operations. The startup was founded in 2021 by [Nkiru Amadi-Emina]( (CEO) and [Ijeoma Akwiwu]( (COO) and aimed to tackle the $41B gap in supply chain financing across Africa. In late 2022, it raised [$2M]( from Y Combinator, Ventures Platform, Mercy Corp Ventures, and other investors, looking to expand into East Africa. Nkiru and Ijeoma had previously built a logistics company called SourcePro. Seeing the difficulties SourcePro faced inspired them to start Pivo. Their goal was to provide much-needed liquidity to critical players in the supply chain sector, such as logistics companies, clearing and forwarding agents, and FMCG distributors. Pivo had two main functions: Pivo Capital, a lending provider, and Pivo Business, focused on business banking. The lending service was a customer acquisition tool with the aim of becoming a neobank in the supply chain sector. Within a year of its launch, Pivo Capital had already done over $3M in loans, and Pivo Business had processed transactions worth more than $4M. Why did Pivo fail? Despite the founders' silence on Pivo’s closure, reports suggest different reasons for the company's demise. Techpoint Africa [mentions]( that its business model had flaws. It revolved around providing short-term loans to supply chain businesses. However, as a young startup, Pivo lacked customer deposits to fund these loans and relied on expensive external financing. These external sources, such as investors or financial markets, often come with higher costs compared to customer deposits. Benjamindada, another news outlet, [reported]( that co-founder conflict may have also contributed to Pivo's shutdown. In May, investors intervened, leading to Ijeoma's compensated resignation as COO. Investors also mandated exclusive founder dedication to Pivo, as Nkiru was reportedly working on another startup simultaneously. While these measures addressed some concerns, they failed to resolve the underlying issues completely. Lesson from Pivo’s failure: Disagreements between co-founders are inevitable even in the most promising startups. However, handling them thoughtfully from the start can mean the difference between collapsing and overcoming challenges together. There needs to be effective systems to handle disputes. This means open and frequent communication between co-founders and bringing in mediators like board members early when issues emerge. [Read more →]( ✍️ Strategy: PostHog’s Marketing Guide In three years, PostHog has grown to tens of thousands of users and millions in revenue and, most importantly, achieved product-market fit. [Here’s what they’ve learned about marketing for startups](: 1) Prioritize what you care about: Marketing can be overwhelming, with numerous channels and opportunities. Don’t get distracted by competitors doing something better than you. Stick to what you want to be great at. 2) Quality over quantity: Rather than matching large competitors in content output, produce high-quality content. One great article is far more valuable than 25 generic ones. For SEO efforts, invest time in updating content rather than just publishing and moving on. 3) Try to own at least one marketing channel: While mastering platforms like Twitter, LinkedIn, or Hacker News is valuable, engagement on these platforms heavily depends on their algorithms. You need to build channels that are more directly under your control. - Community-focused Discord server - Newsletter - Subreddit - Podcast 4) Have a great website: A good and distinctive website can be a powerful source of word-of-mouth marketing, attracting attention and engagement through its design and user experience. 5) Figure out which marketing efforts are leading to sales: Since traditional tracking methods are becoming increasingly difficult due to privacy regulations, you can use some alternative methods: - Include a free text box in your onboarding process asking customers where they heard about your product. - Turn off specific channels to see the impact on your sales. - Track UTMs on paid ads. 6) Don’t be afraid of paid ads: Use Google Search Ads for conversion, Twitter & LinkedIn Ads for content promotion, and newsletter sponsorships to promote your newsletter. 7) SEO efforts come after PMF: Engaging in SEO efforts before achieving PMF can be a waste of time, due to product changes and the challenge of competing against established businesses with a high domain authority. 8) Own your startup’s search presence: Rank first in search results for terms related to your startup, such as "your startup vs. another" or "alternatives to your startup." Make sure the content is genuinely useful (comparison tables, real data, user reviews, and up-to-date screenshots). [Read more →]( 💡 Insight: 5 Pillars of Startup Impact According to Rex Woodbury, [there are five main areas where startups]( are making a world impact. 1. Sustainability: Startups are innovating beyond traditional climate technologies, venturing into areas like the fashion industry. The rise of resale markets, growing 11 times faster than general retail, is one such innovation, reducing the environmental impact of fast fashion. Additionally, startups are tackling the challenge of excess inventory, which amounts to $500B annually, by finding sustainable solutions to prevent these goods from ending up in landfills. 2. Healthcare: Startups are focusing on consumerization, making healthcare products and services more user-friendly and enjoyable. Additionally, there's a growing interest in longevity, particularly in pet health. 3. Education and Learning: Startups are leveraging platforms like ChatGPT and YouTube to make education more accessible and affordable. These startups are emphasizing practical, skills-based learning, aligning with workforce needs, and shifting away from conventional educational models. 4. Community Building: Startups are addressing the growing issue of loneliness, particularly among younger generations, by creating digital platforms that foster connections based on shared interests. These platforms range from fitness and film to language learning. 5. Job Creation: Startups are not only direct employers but also creators of expansive ecosystems that support various forms of employment. Platforms like Amazon, Roblox, and Etsy exemplify this, offering opportunities for millions to earn income beyond traditional employment models​​. [Read more →](​ 🤔 Question: What To Do In Business School? A Harvard Business School alumni [shared her insights about the role of business schools]( in the entrepreneurial world. The traditional MBA path receives mixed feelings in startup areas like Silicon Valley. Yet many successful entrepreneurs are MBA grads. What do you do if you find yourself at a business school? Start your own business. The article suggests it’s the best way to make the most of the resources in business school. Plus, you can access a wealth of resources and a network of mentors and potential customers, including professors, peers, and alums. If you cannot start your own business or are unsure if it is the right path for you, the next best thing you can do is get as close to the experience as possible. One way to do this is to get a job or internship at an early-stage startup that interests you. This will allow you to learn about the startup process, work with experienced entrepreneurs, and see if you would enjoy the startup world. [Read more →](​ 📰 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](. 👂 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 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](