Venture Trends Newsletter, Issue #20
This week’s venture trends includes news of layoffs, decisions to move to 100% or some % of employees working remotely, evidence that individuals can have business models (no need to work for an employer). Marc Andreessen famously said software will eat the world. Is it eating work (as in paid employment)?
This week includes content from Om Malik, Auren Hoffman, Andrew Keen, Tomasz Tunguz, Ben Thompson, Dan Rose, David Cummings, Elad Gil, Elizabeth Yin, Lolita Taub, Turner Novak, The Information, The New York Times and many more. The topics are the ones that dominated the week.
Video interview with Andrew Keen here:
Remote Work and Employment
- The End of TechCrunch Disrupt? – TechCrunch
- Google wants to Largely Stay in the office – Sundar Pichai
- Remotely Shifting Costs to Employees? – by Om Malik
- Fewer Employees is in our Future – Auren Hoffman
- Hard to get a “Remote” Promotion – David Cummings
- Software Eating the World – Andrew Keen
The Rise & Rise & Rise of the Influencer
- The Rise of TikTok – Turner Novak
- Instagram to Pay Influencers? – by Wired
- Why Silicon Valley Likes Clubhouse – Wired
- The Rise and Rise and Rise of the Influencer – New York Times
Why BlockChain and Crypto are Game Changers
- Why Andreessen believes in Crypto – Forbes
- Tencent and Blockchain
- Coinbase – Growth through Acquisition
- Goldman Sachs doesn’t like Bitcoin
Lots more on Startup strategy, Venture Strategy. This is a big issue….
I email the newsletter each weekend. There is little or no commentary included, it is the things I found compelling or interesting.
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TechCrunch Disrupt 2020 is Going Virtual
But it also gives us a chance to make our event even more accessible to more people than ever before, and we’re incredibly excited about that.One of the things we’re most excited about is that anyone from anywhere around the globe can join us in a virtual event.
Sundar Pichai Says Google Doesn’t Plan to Go Entirely Remote
I was very closely involved with Larry and Sergey in thinking through and setting up Alphabet back in 2015.We recently brought outside investors in Waymo , so it’s more of a functioning company.
Real reasons why tech giants are hugging “Remote Work”
In order to do so, companies like Twitter, Square, and Facebook would have to completely re-tool their offices to accommodate all their employees and meet the right health protocols.For employers trying to keep up with the Joneses, each employee in the San Francisco Bay Area costs an extra $20,000 to $35,000 per year, depending on how big you are as a company.
Where Are Most Tech Layoffs? Not Silicon Valley
Some of San Francisco’s most well-known tech firms have cut deep into their staffs in recent months. But much of the pain is being felt outside the Bay Area. An analysis of public filings from 20 tech firms based in the region, including Uber, Lyft and Airbnb, show that three-quarters of employees laid off worked outside the region, typically in satellite offices around the world or in lower-cost locations like Portland, Ore., and Nashville, Tenn.
Remote Work’s Role in the Future of Work
Office space, whether shared or dedicated, becomes primarily for collaboration, meetings, and the subset of employees that don’t have access to a high quality work setup (e.g. poor internet connection or kids at home).As companies move to the modern work arrangement, and away from traditional, dedicated offices, co-working fills the space need for in-person meetings and collaboration, but in a way that is 10x more flexible and affordable.
The New Status Game for Companies: Fewer Employees
Every good CEO should be spending time trying to increase their employees’ productivity, which is the strongest form of leverage the company retains.These new companies like Twilio (APIs as a service) change the game – they’re a significant reason why companies aren’t hiring as many full-time employees.
People who have studied or practiced remote work say leaders like Zuckerberg and their executives will have to tear themselves from their Bay Area roots—in some cases physically—if they are to avoid making their new legions of remote workers second-class employees.Tech workers hired outside the Bay Area are generally paid less; Zuckerberg said Facebook will reduce salaries for people who move to cheaper places.
The Ultimate Actionable Guide To (Remote) Work
Quick intro to Kyber By installing Kyber on Slack, every employee has immediately access to: Task tracking Project management Message scheduling Asynchronous meetings Surveys Polls Reminders Personal productivity Tens of customizable and configurable micro-apps All inside Slack, all with one app.More importantly, managing projects is more than assigning tasks or looking at fancy dashboards: it’s making decisions, it’s understanding tasks’ scope and details, it’s sharing status updates, it’s asking for help, it’s celebrating intermediate milestones, it’s reviewing the project or sprint just completed, it’s working as a team.
So how will historians remember 2020? Having interviewed 100 writers about its significance for my daily Keen On Lit Hub radio show, they all agreed about one thing: more than just another year, 2020 represents a world historical moment—an 1848, a 1914 or a 1989. They believe that 2020 represents what the former US Treasury Secretary Lawrence Summers calls a “hinge in history”—a year in which the foreign becomes familiar and everything, the entire world, will be irretrievably different.
A hinge is, of course, a simple piece of technology—a hardware that enables the opening and shutting of a door. But what grand historical forces, exactly, are being opened and shut by the 2020 pandemic?
The Rise of TikTok
TikTok has become the best way to create and consume short videos on mobile. It rode the wave of AirPods and audio memes to over 1 billion DAU’s (Daily Active Users), and is likely worth ~$200 billion. This would make it not only the world’s most valuable “startup” but one of the world’s most valuable companies, period.
Its most successful individual voices — like the China expert Bill Bishop and the liberal political writer Judd Legum — are earning well into six figures annually for sending regular newsletters to subscribers, though no individual has crossed the million-dollar mark, the company said.It’s hard to imagine even the most successful writers, like Mr. Bishop and Ms. Atkin, posing a major threat to the titans of media anytime soon, especially as a few big institutions — whether in news or streaming video — dominate each market.
What Is Clubhouse, and Why Does Silicon Valley Care?
Or at least, Clubhouse fans say, it’s a much closer approximation to real-world socializing than Twitter, or TikTok. Austen Allred, the cofounder of the coding bootcamp Lambda School, says an audio-based network has a very different feel than text-based ones, like Twitter.Kurt Schrader, the CEO and cofounder of Clubhouse, knew that Clubhouse had become Silicon Valley’s idée fixe when, in early May, his Twitter mentions became flooded with people desperate to get on the app.
Instagram Will (Finally) Pay Influencers
More influencers are turning to video formats like Instagram Live to broadcast fitness classes, create informal cooking shows, or offer some form of entertainment to their increasingly bored followers.Instagram has made clear that its new monetization tools are meant as supplements to the way influencers make money, not as a replacement for the existing ecosystem of sponsorship deals and brand ambassadorships.
Goldman Sachs denies Bitcoin is an asset class
Today, Goldman Sachs, one of the world’s largest investment banks, will be holding a conference with investors discussing the current state of the economy, inflation, and Bitcoin among other things.According to an image shared by Coindesk’s Zack Voell on Twitter, Goldman Sachs has outright slammed cryptocurrencies like Bitcoin, stating plain and simply “cryptocurrency including Bitcoin are not an asset class.” The slide goes on to list all the reasons why cryptocurrencies are not an asset class, including noting that they do not generate cash flow like bonds, cannot be used to dampen volatility, and “do not show evidence of hedging inflation.”
Why Andreessen Horowitz believes so deeply in ‘crypto’
Chris Dixon, who co-leads Silicon Valley investment firm Andreessen Horowitz’s “crypto” funds, explains why he’s so bullish on blockchains. Source: Why Andreessen Horowitz believes so deeply in ‘crypto’ | Fortune
Tencent to Invest $70 Billion in New Technologies Including Blockchain
Tencent, creator of messaging service WeChat, is investing 500 billion yuan ($70 billion) into “new infrastructure” based on emerging technologies over the next five years, according to market sources.The Most Diverse Audience to Date at FMLS 2020 – Where Finance Meets Innovation In an interview with state media Tuesday, Dowson Tong, Tencent’s senior executive vice president, confirmed the company had also earmarked investment for sectors such as cloud computing, artificial intelligence, and cybersecurity.
Coinbase Buys Tagomi as ‘Foundation’ of Institutional Trading Arm
“We are going to be integrating the Tagomi platform into our product suite and it will form the foundation for the future of our institutional trading business,” said Shan Aggarwal, head of corporate development at Coinbase.San Francisco-based cryptocurrency exchange Coinbase is finally acquiring Tagomi, a prime brokerage platform specializing in digital asset trading.
Moats Before (Gross) Margins
And when faced with a low gross margin business, you need to focus even more on moats: without those extra points of revenue to invest in sales & marketing strategies or research & development, you need other ways to generate cash flow over time.Despite having low gross margins, many public company internet marketplaces, such as Lyft and Uber, have leveraged network effects to drive organic growth, increase switching costs, and build scaled businesses.
Here’s Why Economic Downturns Are Good For Innovators and Bad For Everyone Else
Photo by Bethany Legg on Unsplash
All the way back in 2008, I wrote a piece about why economic downturns are good for innovators and bad for pretty much everyone else. As we face a recession in 2020 due to COVID-19, this is still true.
How My Company Failed @gaganbiyani
We looked @Postmates + thought: – the food arrived sloppy / restaurants don’t care about delivery – it took forever (1hr) – too expensive We struggled through product iterations until we found “magic”: 3 taps and $15 for a healthy meal delivered in 15 min To make it possible, we had to run the restaurant ourselves; it would be expensive but worth it We recruited @n8keller , Morgan Springer + @mattkent as founders We launched and had immediate success.Sprig’s peak was Feb 2016: 4,500 meals per day (largest restaurant in SF) $22M run-rate (SF + Chi) 1,300 employees (incl delivery) $60M raised I had never felt better.
Funding in the Time of Coronavirus with Mark Suster (Video + Transcript)
It’s much harder to look at companies maybe that were overvalued six, nine, 12 months ago, and are trying to raise at lower prices today because investors generally don’t like to invest at cheaper prices.Triage means it’s a term that comes from [inaudible 00:11:15] where you have an acute thing that happens all at once and you have to decide which patients are going to die and therefore don’t warrant the limited resources we have.
Can Your Marketplace Company Survive COVID-19? Battery Ventures Growth Metrics
It may sound counter-intuitive that spending less on sales-and-marketing can help your performance, but we often find companies effectively create success through product-led growth, encouraging organic traffic and network effects, versus human-led growth, depending on headcount (and salespeople) to drive business development and acquire new customers.Companies arrive at the number by subtracting their combined sales/marketing spend, as a percentage of revenue, from their annual revenue growth percentage.
Platforms in an Aggregator World
However, suggesting that Shopify take responsibility for directly acquiring customers (as opposed to building tools to help merchants do so) is not only out of step with Shopify’s position in the value chain, but there is also no particularly good reason to believe that Shopify will be any better at this than their merchants.Google and Facebook may collect the customers, but it is Shopify (and WooCommerce, its open-source competitor) that provides the infrastructure for merchants to actually sell things online; Shopify is also working to help merchants get the things they sell into customers hands with the Shopify Fulfillment Network, which I wrote about in Shopify and the Power of Platforms .
‘The best companies never have trouble raising money’
Then came the financial crisis of 2008-2009 and Klein, co-founder of London-based seed investment firm LocalGlobe and Executive Fellow at London Business School, continued to operate businesses and invest in promising early-stage companies.The serial founder and investor who has two decades of experience building and exiting companies in Europe and the US launched his first angel fund to invest in early-stage technology companies in 1999 during peak tech boom.
Understanding VC cycles for post-pandemic success
The pace of investment will be slow, and they’ll be most interested in 1) companies with a capital-efficient model that shows some growth and 2) businesses that will benefit from changes in the market (e.g.: think remote learning).The pandemic certainly brings distinct challenges beyond the economic shocks, but I’ve worked through two prior recessions and believe there are commonalities between these events when it comes to how venture capital investors will react, how their thinking will evolve, and how entrepreneurs should strategize about raising funds during this time.
The Story of Yuri Milner and DST by ex Facebook Corp Dev lead Dan Rose.
“In 2009, an unknown investor from Russia came out of nowhere to make one of the greatest late stage venture bets in the history of Silicon Valley. Why did FB choose an outsider to lead our Series D round? Here’s the inside story:”
“Israel Doesn’t Have to Choose Sides in the Hegemony War Between the U.S. and China”
We need to make adjustments and pay attention to American sensitivities to things like defense or infrastructure projects but, in most cases, it is not about choosing sides,” Gal-Or said.“The Chinese government plans to return to routine as fully as possible given the decrease in production demand, the limitations on global travel, and the hegemony war,” Gal-Or said.
1/ I had a call with one of our angel investors yesterday to catch up on company progress. The last time we caught up was right before the world changed. After some small talk, he asked, “So this must all be affecting you right? Are you guys going to come out of this ok?”
SoftBank’s second Vision Fund could be shelved after the first one posted a record $18 billion loss
He added: “If the performance is not very good then of course the money for Vision Fund 2 cannot be asked for.” Son, who compared himself to a misunderstood Jesus Christ , while defending his investment strategy, said that he won’t try to raise capital from other companies and individuals until companies in Vision Fund 1 start performing better.Alessandro Di Ciommo | NurPhoto | Getty Images The future of SoftBank ‘s second Vision Fund is in jeopardy after the first one reported record losses of $18 billion on Monday — thanks in large part to the collapsing valuations of firms like Uber and WeWork, which SoftBank has pumped billions into.
Narrative Economics and the Power of Stories
Robert Shiller wrote Narrative Economics , in which he explores how stories impact the economy.If there’s reason to believe stories are powerful economic forces at the country level, there’s reason to believe stories are just as compelling for individual companies.
The Fundraising Market Has Changed, But Not in the Way I Thought
By the time a company raises a Series B or C, they have established relationships with later-stage investors. Seed and Series A rounds are first to bear the compression in the market.
To efficiently give founders access to investors and capital, Josh Taub and I created a free startup-investor matching tool. Learn more about the backstory, the tool itself, and feel free to submit your co!