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Fondue’s Melting Point

PLUS: “Let’s make this world our playground”
July 12, 2023

Welcome to Wednesday, futurists.

Earlier this week, cashback app Fondue announced an exit to SMS app Postscript.

The app, co-founded by former venture investor Oren Charnoff, touted “millions in revenue” in its announcement post. The revenue — presumably GMV observed by the app on behalf of customers — wasn’t enough to keep the app afloat on its own terms beyond its first year in business.

While the acquisition amount is undisclosed, it comes a few weeks shy of 10 months post-seed-round raise of $10.5 million dollars. The goal of Fondue was novel — to “help brands quit their addiction to discounts” — and the timing of their exit is novel, as well.

$10M Seed rounds in Shopify consumer eCom tech were few and far between when Fondue closed their round last September. When we had co-founder Oren Charnoff on the podcast, he said as much: 

“I think the overall key metric if you intend to exit a company, will be you have to explicitly address profitability and not just a path towards it, but people want it all. People don't want trade-offs.”

The episode was aptly titled “The Shift from Growth to Profitability” — and profitability is hard to come by these days in the B2B SaaS space. Even harder in eCom; especially when you’re retraining an industry — and the consumer — how to merchandise and promote.

While the app’s founders and investors are positioning the sale as a win, we all know that this is not how the world of angel and venture investing works; and makes for all the more cautionary of a tale when a cofounder is a former venture investor.

Postscript, fresh off their own $65M Series C, will have to learn how to acquire and integrate for the first time, as Fondue is their first foray into M&A. It also hints at yet another superapp suite emerging in growth-stage eCom SaaS that will need to compete for thinner margins, and higher operator expectations in a time where retail growth is slowing.

The real zinger? Postscript announced that anyone signing up for Fondue post-acquisition would receive 10% off SMS. 

So much for quitting the “addiction to discounts.”

— Phillip

P.S. You wanna know how to screw up an acquisition? We’ve documented the four ways that M&A goes awry. Check it out here in the Insiders column or longform with Ingrid & Orchid on the Infinite Shelf podcast.

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More Sights & Sounds. Disney theme park visitor numbers are looking thinner than usual this summer, will short wait times at rides and lots of discount offers. A judge has ruled that Microsoft can close its purchase deal with Activision. Meta’s Threads algorithm’s aren't really working yet. NPC culture is a concerning new performative social trend as evidenced in this TikTok Live.

Kramercore. With the resurgence of 90’s style, it was only a matter of time before the era’s most popular TV show had its influence on men’s style. Enter Cosmo Kramer. It seems his classic look is all the rage once again.

Caffeine Concerns. The FDA has been called upon to investigate PRIME energy drinks founded by two YouTube stars, Logan Paul and KSI. Young kids have been drinking them as a status symbol this summer, but concerns have been rising because of it’s high caffeine levels.

Eye-Rolling Robots. The United Nations held a press conference at its Geneva summit, AI For Good, where nine humanoid robots were answering questions. Some of the answers came across creepy and concerning, such as one robot saying, “Let's get wild and make this world our playground.” Another appeared to give a side eye to a reporter when asked if it would ever rebel against its creator.

Killer Chatbots. Back in 2021, a 21-year-old tried to assassinate the late Queen of England on Christmas Day. After an investigation, it was discovered that the attempt was encouraged by an AI companion chatbot

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