Your startup has secured a $50 million Series B at a $550 million valuation to start the year.
Over the next six months things go well, by all accounts — you don’t run into any major crises and you 4x your users, including a devoted community of superfans.
But you decide to abandon the product entirely and hard pivot into something new.
That really happened this week.
You might think that sounds crazy and, at first, it does. But it’s one of the most interesting strategic moves I’ve seen a startup make this year, and it’s brave with the potential to be brilliant too.
Let me explain…
On the Pod: Andrew Yeung
Andrew left behind his dream job and a $300k salary at Google to go all-in as a founder, and it’s paid off — he’s become known as the Gatsby of NYC’s startup scene with his frequent, varied IRL events for founders and investors.
He’s become a good friend too, and I had him on the pod this week.
We talked about his…
Transition from cushy big tech job to being responsible for people’s paychecks
Journey to getting a permanent visa as a first-generation immigrant
Tactics for getting the press on your side and building trust with people quickly
Check it out below on YouTube, Spotify, or Apple Podcasts.
New Case Studies
Verified (Seed) → FinTech startup that met Tim Draper by losing a pitch deck contest. Then he led their round.
Thanks for being a member! Since this is one of our ✨ members-only ✨ posts, you can read it below.
There’s No Room for Ego In Software
What’s Going On?
The startup in question is The Browser Company and they build, you guessed it, a web browser called Arc.
It’s my daily web browser, and I’ve recommended it to everyone from my wife to my chief of staff. It’s a great product for anyone who has a lot of tabs (and just to be clear, they aren’t paying me anything for this and I haven’t invested in them — I just love the product).
They set out to build the best browser and, arguably, achieved it. The problem is that they began this mission in 2020.
When you’re trying to disrupt a product category with such highly entrenched incumbents, there’s an extremely high bar. You need to hit parity, and then considerably exceed it with something unique and new. Maybe by more than 10x.
Browsers are one of those categories. Other good, relatively recent examples are Notion, Airtable, and Figma. These are tools that had to spend years in development before being ready to scale.
Arc has spent the last 4 years doing this for the browser. So, why is that a problem?
Timing.
Since 2020, LLMs have made it clear that the way humans interact with computers and the internet will be drastically different by the end of the decade.
For example, just this week Anthropic released the ability for Claude to actually control your computer so you don’t need to (a little dystopian, a little cool).
Browsers are our most common way of interacting with the internet, and it’s undeniable that change is coming.
All of a sudden that $550 million valuation looks daunting to grow into.
What’d They Do?
Their founder posted on X that they are:
Not continuing to work on Arc (but supporting it indefinitely)
Building a brand new browser, based on LLMs, from the ground up
He said they talked with users and realized their existing users loved Arc and would reject some of the big feature cuts they thought would be required to add what they wanted to add.
But, at the same time, Arc would likely struggle to get wide enough adoption to justify their valuation.
Basically, they missed their window and the world would move on too quickly for them to reach venture scale.
Here’s the full video (it’s worth a watch just to see how direct communication in these situations can help immensely):
We're building a second browser @browsercompany
— Josh Miller (@joshm)
7:30 PM • Oct 25, 2024
There’s No Ego in Software
I mentioned above, but this is one of my favorite founder-led decisions I’ve seen a startup make this year.
It’s incredibly brave, and bold.
Most founders with a growing, successful product would be content to try to iterate their way to grow enough, try “growth hacks” and ultimately end up either building a zombie, recapping the company, or selling it for less than they were valued at and make $0 from it.
It’s hard to admit failure or that you didn’t nail it.
Arc isn’t a failed product, but if they’d kept working on it then The Browser Company would have ended up as a failed business.
It still might.
Maybe their second browser is an epic failure. It will be easy to look back and criticize them then.
But they decided back in 2020, when they raised their first round, that they’re shooting for the moon with this company and they’re remarkably sticking to that.
But now they have a shot to build something special (again), taking all the lessons from Arc with them. There’s probably no one better positioned to build an LLM-centric internet browsing experience.
I’d highly encourage other founders to follow in their footsteps when the situation calls for it and be willing to put the user and the business above their own ego.