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This is The Startup Breakdown, the newsletter where we breakDOWN startUPs (just had to make sure you appreciated the word play). By joining this growing community of hundreds of curious individuals, you're getting firsthand access to my observations and opinions on the current state of the startups and venture scene. If you'd like to receive these newsletters directly in your inbox once a week, go ahead and subscribe to never miss an email!
Happy Monday, folks.
The team at Beehiiv shipped yet another massive update, including columns, so I decided to play around with them. If you’re not failing, you’re not trying! At least that’s what I tell myself about that hellish phase when I experimented with highlights.
Let me know what you guys think. Or, if you’re one of those people who doesn’t need a coloring book to make #art, any suggestions would be greatly appreciated 🙏
Finally Getting Some Credit Around Here
Stripe has set up camp in headlines this year, first through its decision to raise a massive $6.5 billion round rather than test the choppy public market waters and now through a decision to try its hand at expanding credit for businesses.
 | The company announced that Stripe Issuing, its charge card service for businesses, is now offering credit, an expansion from its previous product which only offered cards for prefunded accounts. This gets confusing, so let’s label Stripe A, its direct customers (mostly fintechs) B, and these businesses’ end customers, mostly small- and medium-sized businesses, C. Pretty much, this service allows A’s customers, B, to issue their own cards to their own customers, C. In the past, these SMEs were only able to use their B-issued cards if they had prepaid to fund an account with them. Now, these users, C, will be able to splurge on things they can’t afford to try to rack up those United points like the rest of us! |
For Stripe, this offers yet another way to bring in money while addressing what the company considers to be one of B’ biggest complaints. For B, it allows them to provide C with more flexibility when using these company-issued cards, improving their own service for their users while leaving the dirty work to Stripe and adding another source of revenue through interest payments.
This also signals yet another step in Stripe’s evolution to being a full bank, offering some of the services which have been increasingly difficult to access as startups and small businesses alike search between couch cushions for some loose change.
Now, the question remains; is the company fintech with traditional bank stripes, or traditional bank with fintech stripes???
SPAC Hack
Finance bros love to complicate things with acronyms, and if there’s one word that they used in every single sentence in 2021 to ensure that you know their words are so precious, it was SPAC.
Special purpose acquisition companies are shell organizations which exist with the sole purpose of acquiring a private company, taking it public in the process. These companies became popular among investors when every other stock did, almost a scratch off ticket where traders didn’t know who they were buying.
They were also popular among bankers who enjoyed lower disclosure requirements than would typically be required of a private company looking to IPO like companies did in your grandpa father two-years-older brother’s day.
Popular names taking advantage of this trick were Trump with Truth Social and Chamath Palihapitiya, an investor and entrepreneur who became the de facto face of all things SPAC. Unfortunately for most investors, the boom ended as abruptly as it did for the rest of the market, wiping out $100 billion from the market caps of these companies.
Except, not everyone was spanked like a misbehaved child. In fact, execs in these newly public companies made quite the killing. Company insiders made $22 billion in total by selling shares shortly before the flame ran out of wick on its route to the dynamite stick. Who managed to time the market as well as Nancy Pelosi? |  |
Inside sales were reported in 232 of the 460 companies, notably by Tom Gore of Platinum Equity, Richard Branson of bankrupt Virgin Galactic, and Trevor Milton, convicted fraudster/founder of Nikola. Each sold their overvalued shares with the precision of stopping your phone stopwatch at 1:00:00.
Considering that 100 of these companies are now running low on cash and another 12 have actually declared bankruptcy, it’s no surprise that fewer companies are going public via SPACs. Maybe, just maybe, having comprehensive disclosure requirements is a good thing for investors? Idk just spitballing here.
It might not technically be illegal, but can’t deny that having an inside look at their companies’ true underlying value and performance against the valuations provided to them by the frothy market certainly doesn’t hurt. Guess it pays to have insider information really do your due diligence.
Will Ferrel Sighting: President Business
Jamie Dimon watches Succession just like the rest of us!
The retiring CEO of JPMorgan Chase has been cosplaying as Logan Roy, setting up a battle to replace him as the head of the biggest bank in the US. While the primary candidates to take the throne might not be his actual kids (though i’m sure they’re all family at JPM!), I am confident that the internal drama is no less juicy.
As for Dimon’s next steps, after first convincing me that he isn’t the face of a boyband (c’mon the name is too perfect), he might be walkin’ across the US, starting in New Hampshire and making his way around the country on the campaign trail.
In a recent interview, Dimon expressed interest in serving his country, and sources close to the exec claim that he has his eyes on President rather than retiring in St. Pete’s.
 | Given his experience, and some of the challenges facing the country recently (cough debt ceiling cough), his business acumen might be needed. Then again, the last “business guy” we threw into office turned out to be pretty bad at the whole business thing, so who really knows? |
Dimon might not be the only retiring exec with an eye on the Oval Office. After enjoying some theme park popcorn while watching Florida Governor Ron DeSantis’ public feud with Mickey, Disney CEO Bob Igor might have realized “hey, I think I can do this” and has people close to him encouraging a run of his own.
Disney had grown more expressive in public statements, including its criticism of the state’s “Don’t say gay” law. Maybe it’s time to trade the magical decrees for some executive orders?
You’d have to think that either would be supportive of business-friendly policy, hopefully creating an environment ripe for innovation and progress for early stage companies for the next four years. Plus, it’s still early. You never know which other business personalities (🚗⚡️🚀🐤🤖) might decide to play around and enter.
Which founder would you want to run, and which ones do you think would be most likely to? Shoot me a reply or hit the comments and let me know :)
There’s only so much I can fit into one newsletter. If you’re a startup nerd like I am, though, you’re prolly craving even more coverage of the latest and greatest in the space. Fall into your Lewis Carroll era and take a trip down the Startup Rabbithole.
Disclaimer: Despite the name, if you see a giant purple cat, you might want to get that checked out.
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A few of you got your panties in a wad when I said that AI is a bubble, so here we go again.
To be absolutely, positively, explicitly clear, I totally, completely 100% think that AI will have tremendous positive impacts on society. I am so convicted and bullish on the technology’s transformative potential and think its effects will be fully apparent in a decade.
BUT
I think we’re getting ahead of ourselves. Most of these valuations being thrown at startups in the space are just silly for companies that are a ChatGPT API and a pretty interface.
Frankly, I think most AI startups will fail. The winners in the space will be the massive, well-capitalized companies with the resources to build their own models, and the survivors are going to be those building models for specific industries and use cases.
On that note, it smells like updawg code in here…
“What’s ‘updawg code’” you ask? (nothing much dawg wby)
UpCode is building the future of construction code compliance, ensuring that professionals from across the design and construction process are coloring within the lines with their buildings.
For starters, the service provides a database of searchable code information, ensuring users always have access to the latest laws and regulations. In case you’re not in the weeds that are building codes, they can be extremely specific, covering everything from building occupancy to emergency exits, and many are even location-specific.
For example, buildings in Florida have to comply with strict hurricane mitigation efforts to account for storm frequency. Construction in New York City has to adhere to requirements around the shadow that buildings would cast on social areas like parks. Buildings in DC cannot be taller than the Washington Monument in case some very large aliens are in a rush but are in desperate need of a toothpick.
Not only are these codes complex and hyper-specific, but they’re also constantly changing. UpCodes accounts for this by keeping an updated log of these changes, establishing relationships with policymakers to ensure that they’re fully aware of incoming changes and how they might affect customers.
Codes on the site can be filtered by jurisdiction, issuer, and topic and are available directly or through diagrams. Now, there is even an AI chatbot to help users ask questions and get specific answers instantly.
While it’s generally a good idea to go into the design process with these requirements front of mine, sometimes things happen. Luckily, the company even has an AI tool, creatively called UpCodes AI, which can scan existing 3D models and flag any potential violations. I’d hate to see what it had to say about H.H. Holmes’ place…
The 2016-founded San Fran startup began its journey by taking part in YC. Since, it has been a serious hit within the architecture, engineering, and construction community, scaling to more than 600K active MAUs, and attracting a total of $7.6 million in funding, a number I had to quickly adjust when the team announced a $3.5 million Series A last week led by Building Ventures.
Customers include the biggest names in the architecture industry like Ennead but also cities like Berkeley and even proptech companies like Airbnb. With more than 5 million sections of code, 1.7K different states and cities represented, 1.1K building plan diagrams, and 160K local amendments added ,with 7K updated monthly on average, it’s easy to see why so many people trust them.
It’s a built world, and we’re all just living in it. The construction industry contributes a crazy $1.44 trillion to the US economy annually, and even when we’re all hangin’ out on Meta Horizons or whatever other metaverse takes off, our demand for physical structures isn’t subsiding any time soon.
Inefficiencies in construction processes cost companies billions of dollars in wasted time and resources. Any solution to this problem that saves so much time and money will be a big hit among cost-conscious stakeholders.
UpCodes has emerged as the real leader in the industry, likely aided by its extensive roster of highly revered users. However, there are other companies still looking to carve out their own niches.
Measurabl’s (also recently raised a phat round) focus is on a sustainability and building performance management platform, but it also helps companies track compliance with relevant building codes and regulations. Similarly, BuildingConnected offers a platform for construction bid management and preconstruction workflows which can aid in compliance processes without directly offering the same services.
SiteCompli and SafeSite each offer software platform for compliance, the former for property owners and managers in tracking and maintaining compliance with building codes, regulations, and local ordinances and the latter simplifying safety compliance processes on construction sites. While each focuses on compliance, their solutions focus on more niche audiences within the broader industry, though they could certainly look to expand to the broader building code compliance space.
The traction, and existing market still available, already established by UpCodes positions them well to service a massive need, and as their models continue to improve, the range of improvements and additional features added will only continue to grow.
The team is also rapidly growing, hitting 23 full-time members (and hiring👀) which blend expertise and experience in the architecture, engineering, and compliance sectors. Cofounders Garrett and Scott Reynolds similarly demonstrate this breadth of understanding of the industry, including Garrett as software engineer at PlanGrid and Scott as an architect at KPF.
The rapid growth and adoption of the technology by leaders in the architectural, development, and even research spaces has been astounding, and combined with the company’s new AI tools to better serve its users, UpCodes is ready to become as instrumental a player as Up Dawg.
TLDR: UpCodes is building the go-to tool for construction code compliance, allowing users to find the most up-to-date legislation and requirements all the way down to the city level. Further, the team has introduced an AI tool to scan 3D construction models to flag any potential violations before any real building has taken place, potentially saving billions of dollars in wasted resources and time for the construction market. This is an example of AI for X which seems certain to stick.
Cheers to another day,
Trey
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