Why prospects aren't buying - even when they need it
Plus: How to use AI to determine a startup's valuation
· 744 words
Melanie Gabriel & Christian Woese
November 12, 2024 • Read time: 4 minutes
Dear hustlers, founders, operators and visionaries,
We hope you bought Bitcoin last week. The figures in a personal Crypto wallet may also help EU regulators smile during the next phase. With Donald Trump’s election, headwinds for the EU are coming: the Digital Markets Act and Digital Services Act have positioned the EU in favour of regulating digital platforms - a philosophy Trump’s new poster child Elon Musk strongly opposes. The new administration is also likely to push back on recent EU tax fines for US Big Tech like Apple and Google. Tumultuous times lie ahead. Follow the Gradient and stay tuned.
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Your talk track for this week’s cocktail party
Layoffs at Personio
Munich’s HR Tech unicorn Personio announced layoffs of 115 people (6% of its workforce) to trim costs and tackle slowed growth rates. A stark reminder that profitability is the new priority amid a difficult economic environment.
Off to the US, off to a financing round
Gen-AI startup 11x announced a $50m Series B led by VC firm a16z. Just a couple of weeks ago, the firm made headlines that it was leaving its founding place UK and relocating the entire team and company to the US - naming access to funding as a major driver. Well, for now, this seems to have paid off.
Where you watch, there you pay
Offices of streaming giant Netflix were raided in Amsterdam and Paris in a probe against tax fraud by French authorities. The company is accused of underreporting on subscription revenue generated in France but captured by its subsidiary in the Netherlands. Although not connected to recent specular tax fraud cases against US Big Tech, like Apple being fined $10bn, the move comes in line with EU law enforcement cracking down on US tech companies.
What do you meme?
Happy 2025 planning
Food for thought
AI policy what?
As AI regulations evolve rapidly across markets, staying compliant and responsible can be a challenge. Balderton’s Founder’s Guide to AI Policy and Regulation offers straightforward insights to help founders understand and navigate the AI policy landscape, covering essentials like compliance in key regions (UK, EU, US), building responsibly to avoid ethical pitfalls, and practical tips for engaging with policymakers.
Domains - OpenAI spends its Marketing budget
OpenAI has bought the domain chat.com for an undisclosed amount. It should have been one of the more expensive plays: the domain was acquired for $15.5m in 2023 by one of the Hubspot co-founders, who now confirmed the sell to OpenAI - having been compensated in OpenAI shares. An expensive buy: will it be worth it?
Why people don't buy solutions to their problems
The "Venn Diagram of Suffering" illustrates a common startup trap: building solutions for problems that customers aren't motivated to solve. Identifying pain points and offering high-ROI solutions isn't enough—people often ignore issues they're not actively prioritizing. Your job as founder is to find the one to-do item on an endless list of open tasks which people are prioritizing to complete. The key question: why do customers need to take action now?
Mark your calendar
Germany
electronica in Munich, 12-15 November [Program]
Semicon in Munich, 12-15 November [Program]
Portugal
Web Summit in Lissabon, 11-14 November [Program]
Switzerland
Digital Economy Award, 14 November [Tickets]
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Smart hack
VC partner Andreas Goeldi shared a practical use of AI in a recent LinkedIn post: he used ChatGPT-4 to help reason through a startup valuation. By prompting it to weigh factors like growth expectations and potential overcapitalization, the AI provided a balanced perspective—a bit like having a second opinion from an experienced advisor.
Founders can use this approach, too. Need a clear view on funding round sizes, valuation trade-offs, or other strategic decisions? Use AI to walk through both sides of the issue. It’s not perfect, yet a low-cost way to sharpen your thinking.