Mads Jensen draws three lessons from 2022: Twitter under Elon Musk showed software scales with few staff, Gorillas' sale to Getir showed unit economics matter, and ChatGPT showed even Google can be disrupted.
- Elon Musk laid off more than half of Twitter and the service still seemed to run, showing how well software scales.
- Gorillas, valued at up to $3bn in 2021, was sold to Getir in 2022 for $1.2bn, less than the $1.3bn it had raised, with only $40m in cash.
- Gorillas investors swapped full ownership of their company for a 12% stake in Getir plus $40m.
- The Microsoft and OpenAI partnership and ChatGPT prompted Google's CEO Sundar Pichai to declare a code red.
- The post summarises: software is the ultimate scaling asset, unit economics matter more than ever, and even Goliath isn't invincible.
2023 is well underway. But there were some great lessons (or reminders!) from 2022.
Let’s dive in.
Lex Twitter
AKA demonstrating that: yes – you can run tech companies with very little staff. And software does really scale incredibly well.
Elon Musk took over Twitter and laid off more than half of the company. And proved that it could still run seemingly just fine. Agreed – the story isn’t over yet. But – like him or loathe him – this was a seismic event in the tech sector.
Lex Gorillas
AKA What happens when you invest in companies with upside-down unit economics.
Delivery group Gorillas was valued at as much as $3bn in 2021. In 2022 it was sold to Getir for $1.2bn. That was less than the $1.3bn the company had raised. And – here is the clincher: Only $40m of the purchase price was in cash. So Gorillas investors swapped their 100% ownership of one delivery company for a small stake (12%) in another delivery company. Plus $40m spare change. Probably not the outcome they were looking for.
Lex OpenAI
AKA what happens when tech’s most unassailable moat suddenly looks vulnerable.
For years the world looked enviously at Google’s profit margins. Google search was ubiquitous, and Google’s ad revenue looked impervious to assaults. And suddenly, the partnership between Microsoft and OpenAI throws all that up in the air. Note: this movie is going to play out in 2023. And Google still looks formidable. But ChatGPT was enough of a scare for Google’s CEO Sundar Pichai for him to declare a “code red”. Lesson: even the seemingly most invincible organisations can be disrupted.
In summary:
- software is the ultimate scaling asset
- unit-economics matter more than ever
- even Goliath isn’t invincible
Frequently Asked Questions
What did the Gorillas sale to Getir show about startup investing?
That investing in companies with upside-down unit economics can go badly. Gorillas sold for $1.2bn, less than it had raised, mostly in Getir shares, leaving investors with a 12% stake in another delivery company and $40m in cash.
Why did ChatGPT worry Google?
Google's search ad revenue had looked impervious, but the Microsoft and OpenAI partnership suddenly made that moat look vulnerable, enough for Sundar Pichai to declare a code red, though the post notes Google still looked formidable.