📶 Bessemer bets big on AI

Bessemer's billion-dollar bet, Vice files for Chapter 11, plus our 8 favorite links of the week

May 18, 2023 • Estimated Reading Time: 11 minutes

Hola 👋

Memorial Day is 11 days.

That means that you have 11 days to lock in important meetings before summer officially starts.

After that?

Good luck getting on the calendar before September.

If you think we’re right, wrong, way wrong on any of the stories this week, let us know in the comment section.

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Let’s get into this week’s piece.

This Week in Venture

Bessemer bets $1b on AI 💰

Source

Last week, Bessemer Venture Partners raised $1 billion in their latest fund focused on AI.

Why it matters: Bessemer has existed for over a century, they have invested in some of the biggest winners over that time period, and they have built up one of the most-established brands in the industry.

When they make moves like this, others take notice.

The fund wrote over the summer that they believed that AI generation was the next platform shift. That was a bold statement at the time, but it has become a shared belief in the venture world since they made that statement (this and this were published months later).

This latest fund is putting money where their mouth is.

To get up-to-speed on AI, check out Bessemer’s generative AI report from Talia Goldberg.

What happens next: The rest of the startup market is hurting, but AI funding keeps holding things afloat. We’ve already seen an explosion of AI funding announcements, and it looks like that isn’t going to change any time soon.

Predicting what happens next is tricky.

Things are moving faster than ever, and it’s become impossible to predict the next two quarters, much less the next two years.

One thing that we’re confident in is that every company will be forced to adopt some elements of AI if they want to compete. If you’re a business owner and you choose not to, you’re playing with a bum hand.

Vice shuts it down 💀

Source

Vice filed for Chapter 11 bankruptcy protection earlier this week, and it plans to sell itself to a group of creditors for $225 million.

That number doesn’t seem small until you realize the company was valued at $5.7 billion in five years ago.

Talk about a turn for the worst.

It’s the latest in a string of digital media companies to stumble recently after advertising revenue became harder to come by. Vice’s filing also made it one of seven large companies to head to bankruptcy court in a 48-hour period—the largest number of filings during a two-day period since 2008, according to Bloomberg.

Why it matters: Vice is the latest reminder: building your business on attention alone is building a house on sand.

Vice made a name for itself by running cutting edge journalism focused on uncovering corruption and big-name stories in third-world countries. That worked for the company, and it helped build their brand from zero to one.

Then they realized there weren’t enough edgy stories to cover in order to get the type of attention they wanted.

So they made the same mistake that other media companies have played and started prioritizing attention over every other metric.

So as the media company evolved, it started prioritizing the wrong kind of attention.

They put out more news, but less were worth sharing. The ones that were being shared were typically being shared for the wrong reasons.

That created a polarizing view for advertisers which ultimately resulted in ad dollars being pulled back. Once this happened, it became too difficult to unwind.

For a more detailed breakdown, read Adam’s take on the collapse. It’s worth checking out, and he’s worth a follow.

Vice was supposed to be the next CNN.
At their peak, they had a $5.7B valuation and turned down an acquisition play from Disney.
Now, Vice is the latest new media group prepping for bankruptcy.
What happened to this media giant? A few thoughts.
— Adam Ryan 🤝 (@AdamRy_n)
1:00 PM • May 12, 2023

What happens next: The shareholders of Vice will lose most if not all of their principal, but that’s not what we’re focusing on. We’re focused more on lessons that other content creators can take from this collapse.

Business is a series of chess moves, and avoiding mistakes is as important as doing the right thing. In Vice’s case, their mistake was abandoning their core competency (cutting edge journalism) in exchange for polarizing news catering to the woke crowd.

Traditional media businesses are fragile institutions, and once the right kind of attention dies off, so does the entire business. Vice had nothing to offer businesses other than advertising slots, and those advertising slots began to lose appeal when the content skewed away from its original format.

Being reliant on a single source of income means that there is a single point of failure.

Independent media arms understood this from the start, and most of the notable independent businesses today have already incorporated multiple sources of income (subscriptions, advertising, digital products, consulting services, etc.) as a way to de-risk themselves. We do this ourselves and can vouch that it is a far better way to build a business compared to advertising alone.

Links We Like

😢 After 18 Months, Your Investment Probably Isn’t Getting Marked Up: Sobering statistics from AngelList

🧲 Are you attracting the best audience? Scale isn’t everything

📺 The Unified Content Business Model: Ben Thompson breaks down the biggest issues with media businesses today

🎨 Ultimate Design Guide: 500+ design resources to bookmark

🤖 The AI Hot 75: NFX shares the startups worth watching

🪒 Favorite Rules & Razors: George Mack’s favorite rules for better thinking

🧠 There’s An AI For That: AI database for thousands of tasks

🎯 Best Venture Capital Recruiters: 29 of the best recruiters we’ve found

Have an article you like that we should include in this section? Let us know by responding to this email.

What We’re Learning

Email CTRs vs. web CTRs

Over the past 30 days, we’ve tested engagement of our newsletters based on where they are discovered (inbox vs. online). The results surprised us.

CTRs for posts delivered through email over this period were 5.10%. Not bad.

CTRs for posts discovered online (through search, Twitter, LinkedIn, Reddit, or another platform)? 13.61% - 2.67x higher engagement.

The biggest takeaways from this experiment?

Always share your work on other platforms. You’re leaving attention on the table if you don’t.
Give readers on other platforms a reason to click. Platforms like Twitter, LinkedIn, and Google are free; your audience is there to consume information. Hint at what information you are offering in exchange, and tweak this based on what works for that platform. Here’s an example of how we tease newsletters on Twitter.
Find ways to re-engage stale newsletter subscribers. Not all of your email list will be active readers. Experiment ways to re-engage those that have fallen off, whether that’s through giving away valuable resources for free, asking for input on what type of content they’d like to see, or something else. (Tip: beehiiv makes it easy to segment and send emails based on however you decide to split up your email list.)

Tools: beehiiv

Tweet of the Week

OpenAI cap table

This is INSANE.
Sam Altman saying he owns 0% equity in OpenAI.
Surely there's something more to this story.
Otherwise, @sama is just a very, VERY unique person.
— Sam Parr (@thesamparr)
7:27 PM • May 16, 2023

Incentives rule the world.

Don’t trust people without skin in the game.

Together with Brex

Wait … you guys manage your spend?

Obvious statement alert: managing invoices and team spend is a nightmare.

Chasing down receipts, uploading to a spreadsheet, sending to another team to approve, and reimbursing your employees sounds … super fun.

Brex takes this archaic process from the Stone Ages to the modern era by giving finance teams the tools they need to operate. Dashboards, automations, integrations, and financial modeling instead of manual work that makes you want to reconsider jobs.

Give your finance team the tools they need to operate in today’s world.

Member of the Week

Joe Botsch (Investor @ RTP Global)

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