Business Autopsy: Why Fintech Startup Fast Failed

Alex Lieberman: What's up, everyone. This is Alex Lieberman, co-founder and Executive Chairman of Morning Brew. Welcome back to Founder’s Journal, my personal audio diary, where I give you, the business builder, the tools you need to think better in order to build better, whether that's building a business, a team, or a new product. I recently sat down with my good friend, fellow entrepreneur, and all-star investor Codie Sanchez. And we tried out talking through three different topics that we thought would be exciting to the Founder’s Journal audience. Now we're going to release those as three different episodes. And then we're going to ask you the audience to tell us which of those three you liked and why. This episode is part three of the series. If you haven't listened to parts one and two, make sure to go back and check them out. Part one was all about buying an oddly satisfying slime business. Part two was Codie breaking down my mini golf empire that I'm in the process of building. And today's episode is a conversation between me and Codie about the now-dead checkout startup, Fast. We break down what went wrong and what other business builders can learn from Fast mistakes. Let's hop into it. Did you see, so did you see what happened with Fast, this company?

Codie Sanchez: Yeah, I hate, I hate, I hate shitting on companies postpartum, ‘cause like this shit's hard. I get it. But like tell me there was somebody who was a founder or an investor, like who didn't see that? Who didn't see once they were doing the crazy hoodie things every 30 seconds in their video? 

Alex Lieberman:  What do you mean? They’re a hoodie company, obviously.

Codie Sanchez: They didn't even know what they were doing. I was so not surprised by that. And I don't think anybody was, but I guess except all the employees and investors, but I think it's sad. What's your take? 

Alex Lieberman: So I'm going to read you a few numbers about this business and I guess this is kind of leading you because I know you have very specific opinions about VC-backed businesses, but, and, and you can caveat as much as you want, but let me, let me just describe the business. So for those who have, have not heard of Fast, Fast is a one-click checkout startup. So you've seen basically this grouping of companies that have been built in the last five-to -six years, who effectively wanted to replicate the Amazon “buy now” button, which interestingly enough, that technology was created in 1999. The patent was up on it in 2017. So that's when people could actually start building, reverse engineering, the technology that Amazon uses for their, their buy button. But the whole idea of what Fast does, uh, Bolt is another company that does it, who has had more success, is how do you add the one-click checkout to every other store on the internet that is not Amazon? So you go to Best Buy's website. How do you have one-click checkout on best buy since you're buying from best buy and not Amazon? And so for context, Fast was founded by this guy, Domm. Domm is a very polarizing character who was very active on Twitter. He had a former startup called tow.com, which was quote unquote, the Uber of towing, It also failed, and supposedly it failed as part of a multimillion dollar billing dispute with his company and the Australian government over towing and impounding fees that led them to having to liquidate the business. Fast raised $20 million in March of 2020. This was their Series A, raised a $102 million as their Series B in November of 2020. Reportedly was at a $580 million valuation. And so the business raised $120 million and they were basically burning $10 million a month while generating $50,000 in revenue a month. So the businesses in the last year did $600,000 in revenue and they were burning $10 million a month. What is, what is your reaction to that? And what are the biggest questions that come to your head when you hear some of these things?

Codie Sanchez: I think it's great. Let's invest in that company. I–is Bolt like Ryan Breslow's company? 

Alex Lieberman:  Yeah, exactly. Bolt, Bolt is Breslow's company. Similar business. So they've raised over a billion dollars in funding. They most recently raised at an $11 billion valuation. I believe you're, we're going to have to fact check me on this, I believe they're doing $60 million a year, ARR, so obviously way more significant than $600,000, but I believe they're effectively the same business and they're going against some of like, you know, the old guard call it like, uh, Stripe who has built this technology internally within their business. And that's, by the way, that's the craziest part of this whole thing In Fast’s most recent round, the round was led by Stripe. And then right after this round, Stripe went and built the exact technology that Fast was, and just uses their own technology.

Codie Sanchez: Wow. That's fascinating. Well, it's interesting because I have red flags on Bolt, too, actually just from what the founder does for that. I mean Ryan, sorry. I don't know. You're probably awesome, and I'm probably totally wrong, but like tool storm and a half, you know. I sort of think anybody who's in–I remember when I was building like my first startups and I was really like, did I have Twitter? God no. Why? Because I was like working like an animal. And so any founder that has the time to put together tweet threads that are like, have hooks and 57 caveats to them and images, I'm like an immediate no. I don't know if you've, I mean, I know how hard it is to write tweet threads. And so if that's what you're doing, like no. 

Alex Lieberman:  Oh yeah. I, it it's like a, it's like an unspoken thing that a lot of just founders I've spoken with talk about, which is like, if you start seeing a founder of a company ramp up their tweet game by like 50 to 100 percent in a month and start doing threads, you can assume that they're going to be leaving their company, shutting down their company, or starting a new company within the next few months.

Codie Sanchez: That's a business. Why don't, somebody should create like a founder thread tracker. And let's like, basically see if that's true. Like if, if we went out and like reverse engineered through like [inaudible] KPIs or analytics, the founders who tweet the most or whatever, that are in startup phase, what is the correlation to actual–? 

Alex Lieberman:  Yeah. What's the correlation. Yeah. What's yeah. What's the correlation to performance of the business? 

Codie Sanchez: Yeah. Because I think the only businesses that make sense for it are media businesses, you know, and anything that's not that, I guess it works, too, if you're hyper-targeting  your threads to their audiences. But like, Ryan's not targeting his, like e-commerce, you know, he should be only focusing on e-commerce, the same as, as Fast. But yeah, I think my biggest red flag with Fast was just the, the hoodie videos. Now, like, let me say a caveat. I think it's fucking amazing that people want to go out there and actually build these companies that are likely to fail. Like, thank God. So like, I've got nothing against that. And I've got nothing against companies that burn a ton of money. I just don't want to put all of my own capital in them. And I think we already know this. I mean, VCs are going to get killed in the next two years, I think, because of how aggressive they price these rounds. And you're going to see founders have to take a bunch of down rounds and we're already starting to see it on the growth equity side. So I think this is just sort of the beginning. And I imagine the reason Fast shut down is their investors wouldn't keep funding like a money-bleeding machine. 

Alex Lieberman:  I mean, there's so much there, but first of all, does that mean, like you're not writing angel checks or do you have a certain type of criteria that you need to see whenever you're writing a check into a startup now?

Codie Sanchez: Yeah. Well, I think you and I are similar. So when I write a check into a startup; one, I didn't do a fund or any type of investing over the last few years in a meaningful way in angel space because the valuations are too high and I'm just not good enough. I'm not big enough to be able to blow a bunch of money in order to get those couple of ones that will make up for the massive overspending of the others. And so, and I don't think most VCs are. So I actually think right now is a really good time to raise, coming into this next year, because I think deploying it on the backend of down rounds will be interesting. And so I'm in for that model, but yeah, when we invest in companies right now, you know, I want to invest early enough and at valuations that are reasonable enough where, you know, you're not going to see my guys on the next WeCrash of, you know, seen on Netflix or whatever

Alex Lieberman: Totally.

Codie Sanchez: Easier said than done. But that's why I don't think you build multibillion dollar VC funds that have to deploy all of this capital. Instead, you know, do it small and nimbly.

Alex Lieberman: Yeah. I think it's so interesting because to your point, I give founders who kind of take these big swings so much credit, because if I'm being honest about myself, like at least where I am in my life, I don't know if I would have the risk tolerance to go and run a business that has not yet found product-market fit and is spending $10 million a month burning money. Like, I, I actually don't think I would have the, I wouldn't have the head to be able to do that and go to sleep at night. And it makes sense, like, Domm is a thrill-seeker. The guy has done like marketing videos racing cars, and jumping out of planes with the Fast logo on it. So it makes sense given what his MO is, but yeah, to me, this is also why when people say to me, oh yeah, you took so much risk starting Morning Brew. It's like, yeah, maybe, but one, I was very privileged where I had the opportunity to go start a business and have a cushion, but also we already had 30,000 readers. We knew that there was gonna be some opportunity to monetize. We didn't know what it was. That is very different than going out and raising a $20 million Series A, burning millions of dollars a month, and still not finding product-market fit.

Codie Sanchez: Yeah. I agree. Yeah. I have nothing but love for people who do this. I just think the real founders, they don't have all this noise around them. You see a lot of the very tech-enabled founders, like heads down.

Alex Lieberman: Oh yeah. They're under the radar.

Codie Sanchez: Yeah. They're not doing all of this marketing shenanigans. And I love marketing. It's my favorite thing. But if your company is just marketing, I think you'll fail. And if your company doesn't have enough marketing, I think you'll fail. So we've got a Goldilocks, you know, sort of situation there.

Alex Lieberman: Yeah. I mean, I think that's the thing. I always have to remind myself because I, sometimes I have an unhealthy relationship with Twitter, is like, when you're, when you're on Twitter, when you're doomedscrolling Twitter, it feels like your entire world. But at the end of the day, it is such a small piece of all of society. Like I, especially, I'm just pointing the finger at myself, need to lift my head out sometimes.

Codie Sanchez: Yeah, totally. I just bought a shirt that says nobody cares because I need to remind myself of it because I don't think anybody actually cares. Nobody actually pays attention to anything we're doing at a massive scale.

Alex Lieberman: No one gives a shit.

Codie Sanchez: No. 

Alex Lieberman: They're too busy worrying about their own shit or worrying about that other people care about them.

Codie Sanchez: Totally. And so I think it's a, Aad it all lasts 20 seconds. I was actually with a couple of people that are like big YouTubers last night. And they were talking about this girl, Rachel Hollis. I don't really know the story, but I guess she got canceled. 

Alex Lieberman: Yeah, yeah.

Codie Sanchez: For something or other, and anyway, and so they were saying, you know, does Rachel care, how is she doing, what's going on? And they were like, oh yeah, no, she doesn't care. She’s hanging out on the beach, she's made millions of bucks and you know, she's, she's moving right along. And so I sort of, yeah, I think nobody really cares about any of this.

Alex Lieberman:  I totally agree. So that was part three of my conversation with my good friend, Codie Sanchez As you can probably tell things at Fast were a shit show, but for all of us, it's an amazing case study and things we can learn from a failed business. Now, I'd love to hear from you: What are other failed startups or companies that fascinate you, that you want to learn more about that potentially Codie and I talk about in an upcoming episode? Shoot an email to alex@morningbrew.com and that might just be our next Business Autopsy. Lastly, we want to send out a survey to get more feedback from you all. So please subscribe to our show newsletter at foundersjournal.morningbrew.com and get your chance to weigh in on the future of this show. As always, thank you so much for listening and we'll catch you next episode.