The end (or beginning) of start-ups?

Libertarians, Individuals and Society

By Keith Teare • Issue #275 • View online

This week’s news is dominated by Facebook, Apple, and Crypto but we ignore it and deep dive into libertarianism, DAOs, and Peter Thiel.



Ideology and Dogma are often hard to distinguish. Strongly held ideas can often come across as a “sales pitch” for a self-serving belief. They can also be the basis for transformation and innovation. The difference between a con artist and a visionary is clearly in the eye of the beholder. And the ability to tell the imposter from the revolutionary is key to determining what we think and do.

So in this week’s editorial, I want to drill down into the essay written by Elizabeth Yin from the Hustle Fund, about decentralized startups, and the Economist profile of Peter Thiel.

The profile starts out by characterizing Thiel thus:

He co-founded PayPal, a payments platform that, as a young libertarian, he hoped would undermine the world’s monetary system. Instead it gave him the money to bestride Silicon Valley, a place he disdains. He was the earliest outside investor in Facebook, a tech giant on whose board he remains, though he mocks social media. As a hedge-fund manager, he bet on an economic meltdown in America ahead of the financial crisis of 2007–09, but called the bottom of the market too soon.

It goes on, in reviewing Max Chafkin’s new book about Thiel — The Contrarian — it reports Chafkin’s view that

“he portrays his subject as a tax-avoiding “nihilist” whose right-leaning ideology is mostly aimed at increasing his wealth and power.”

And then criticizes Chafkin

And yet strangely Mr Chafkin, a business writer, only obliquely refers to the most intriguing business story. Between the lines, a picture emerges of an erratic visionary whose work, however creepy, isn’t done. Mr Thiel is applying the radicalism that inspired PayPal to cryptocurrencies and decentralised payment platforms. The “Make America Great Again” schtick that drew him to Mr Trump has led to investments in military, surveillance and space technology that have helped double his net worth in the past year. His yearning to reclaim Silicon Valley from software-loving peaceniks and return to its roots in the cold-war military-industrial complex is bearing fruit — and spreading beyond California.

Enter Elizabeth Yin. In her excellent essay The Rise of the Decentralized Startup she imagines a future in which startups are not highly centralized legal entities with equity holders and investors but rather mission-driven clusters of part-time contributors gathered around a Distributed Autonomous Organization, a DAO.

I think we will see many more DAOs formed in the coming years, and reiterating what I mentioned in 2018, I do think that some form of crypto will disrupt traditional VCs over time. But I also think decentralized startups will start to appear even without “typical crypto components”. There will be startups formed around missions that don’t start with founders nor involve crypto but have radical transparency. There may also be decentralized startups formed without Discord channels (personally, I’m unclear how anyone, myself included, can do deep work anymore with so many Discord channels) and just rely on wikis / Notion pages / Mirror / etc to document what work is being done without minute-by-minute chatter. I think we will see startups formed with people who work at multiple places simultaneously or are all contractors — such as how Gumroad is set up. And in that scenario, the need to raise so much money for the company actually becomes *less important*, because you don’t always need funds to cover someone full time and compete with much crazier full-time offers from FAANG companies. This mitigates the fight for talent issue.

Silicon Valley is full of people, across the political spectrum but most are liberal and libertarian at the same time. This vision, shared by Thiel, is of an end to the startup, and the rise of networks, platforms, DAOs, where value is delivered and held in tokens, not shares. The evolution of technology to a place where automation and value are interwoven is a commonly held view of reality.

Jeremy Allaire, quoted in the New York Times piece about impending government control of Crypto via regulations, is one of the people innovating against this broad vision. His company Circle is a major part of the stable coin known as USDC, and is poised to provide a global, digital, version of the US dollar, run by a private corporation and its partners, opening up the possibility of free global money flows without intermediaries, or at least less of them. Circle has raised over $700m in private funding and is valued at $4.5 bn in its SPAC agreement with Concord, run by the PE Firm Atlas.

The Economist quotes Thiel as saying:

“If ai is communist, crypto is libertarian,”

In reality, the end of government and its replacement by autonomous governance is an entirely legitimate end goal for humanity. It is not capitalist or communist or even libertarian. It is inevitable. For that reason, the introduction of politics into discussions of progress and innovation does nothing to clarify the path or the goal or its desirability. Governments will try to stop, slow down or control but ultimately cannot prevail. Ultimately we (humans) will not need them.

And ideological labels are entirely unhelpful. Technology is real. It is a major part of the productive energy we humans have created. AI is a tool, crypto is a tool. As are databases, the internet, and cloud services. Together they are making the world a smaller place with fewer intermediaries and giving us all the hope of a truly great future in which we, as individuals, all benefit from a collective infrastructure that helps us live long and meaningful lives.

Venture Capital is a key driver for this innovation and its growth and capacity to return more capital for more growth will be an important engine of progress until venture capital itself is automated. And it will be :-). Check out Signalrank Corp for more about data-driven capital allocation. (

More in this week’s video


Regulation Memo: Nothing Much is Happening

FTC Chair Lina Khan outlines new vision for antitrust enforcement, consumer protection

Khan has been among the leading voices for more vigorous antitrust enforcement, sparking a movement with her 2017 article, “Amazon’s Antitrust Paradox.”


  • Federal Trade Commission Chair Lina Khan encouraged her staff to prioritize addressing “dominant intermediaries” or gatekeepers, unfair contracts and better deterring “facially illegal” mergers in a new memo.
  • The memo is an early outline of her goals for the agency.
  • Khan has been among the leading voices for more vigorous antitrust enforcement and sparked a movement in the field with her 2017 Yale Law Journal article entitled “Amazon’s Antitrust Paradox.”


Goodbye Schrep, It’s been good knowing you

Facebook CTO Mike Schroepfer is stepping down, and Andrew Bosworth is taking over — Protocol — The people, power and politics of tech

Longtime Facebook Chief Technology Officer Mike Schroepfer is stepping down after thirteen years and will be replaced by Andrew Bosworth, another Facebook veteran executive.

Mark Zuckerberg announced the move in an internal company memo Wednesday. Schroepfer — or Schrep, as he’s known around the industry — has been a public face at the company for years and helped lead its AI development, VR teams and blockchain efforts. He will take a newly created “senior fellow” role in order to make time for his family and philanthropic efforts, he wrote in an internal blog post.

“It has been a privilege to lead our technology teams during a time of incredible growth & advancement,” Schroepfer tweeted. “I am proud of what the team has achieved, from unleashing the benefits of AI & bringing VR to life to connecting more people around the world through technology.” According to a new Facebook SEC filing, Schroepfer first informed the company of his plans just two days ago.

In recent years, Schroepfer has been called on repeatedly to explain and defend the way Facebook works, often in the midst of one of the company’s scandals. In 2018, following revelations about how Cambridge Analytica had abused Facebook data, a UK parliamentary committee called for Zuckerberg to testify; they got Schroepfer instead. As CTO he oversaw all of Facebook’s moderation and content systems, helped lead the company’s shift to remote work during the pandemic, and oversaw much of its push into VR and AR.

He also led a dramatic expansion in Facebook’s computing capacity, helping build a world-class engineering organization that is considered on par with cloud computing giants like AWS, Microsoft and Google. Facebook opened its first data center in Prineville, Oregon in 2009, and now operates 18 data centers around the world.


Apple is Playing Hard Ball

★ Apple Will Not Reinstate Epic’s Fortnite Developer Account, but Epic’s Other Developer Accounts Remain Active

Accounts that have never been disabled include the accounts for Rocket League (a game whose Mac support [Epic discontinued in January 2020][rl]), and separately, Unreal Engine. My understanding is that none of those accounts are affected by Apple’s decision not to reinstate the Fortnite developer account.


Apple bans Fortnite from App Store indefinitely as legal battle continues

Epic CEO condemns ‘extraordinary anticompetitive move by Apple’ in case that could take years

Apple has blacklisted Fortnite from the App Store until appeals in its legal battle with the game’s maker, Epic, are completed, Epic Games’ CEO, Tim Sweeney, said on Wednesday — a process that could take years.

On Twitter on Wednesday, Sweeney called out Apple’s move and said his company would continue to fight.

Continue reading…


Apple Unhappy as the EU Proposes Mandatory USB-C on All Devices

The European Commission, which is the executive arm of the European Union (EU), has announced plans to force electronics manufacturers, from smartphones to handheld video game consoles, to use USB-C in an effort to reduce waste, and Apple is not happy about it. The Commission says that after working with the industry to have it […]


Evil and Good in the Twitterverse

Twitter to Pay $809.5 Million to Settle Lawsuit Alleging Jack Dorsey, Others Misled Investors

Twitter disclosed a binding agreement to settle a class-action lawsuit, under which the social network will pay $809.5 million to resolve claims it provided misleading user-engagement info to inves…


Twitter accelerates again with Bitcoin tips, NFTs, recorded Spaces, creator fund and more

Twitter’s slate of new product announcements is not slowing down. The company today introduced a number of new initiatives aimed at better serving the conversations and community using its platform, including support for tipping with crypto, NFT authentication, and plans for other experiments designed to provide more context about a conversation to those just joining in. The company also said it’s preparing to launch its own creator fund in a few weeks to provide audio creators with access to financial, technical, and marketing support.

While Twitter was not yet ready to details specifics like the fund size or expected reach, in terms of creator participants, it’s a clear shot across the bow of a top competitor in social audio, Clubhouse, whose own creator “accelerator” offered to connect its participants with brand deals or $5,000 per month during their participation in its program.

Similarly, Twitter views its creator fund as one not aimed at rewarding creators for the content they produce — like some rival funds running across Facebook, Instagram, Snap, and elsewhere — but rather at helping creators get started with audio productions on Twitter Spaces.

“The goal of it really is to provide that technical and marketing expertise,” noted Twitter Product Lead for Creator Monetization, Esther Crawford. “We think of it as kind of a stopgap solution. We want to onboard these folks into other long-term monetization features. But we want to give them an initial boost,” she said.

Image credits: Twitter


Crypto and Regulation: Stable Coins

Cryptocurrency Regulators Rush To Create First Major Rules — The New York Times

Concerned about the potential for a digital-era bank run, the Treasury Department is working on an oversight framework for the fast-growing sector.

Largely known as a vehicle for speculation, cryptocurrency is increasingly starting to transform banking and finance and is stirring discussions over whether governments should issue digital currencies of their own to augment or eventually replace their traditional currencies.

Stablecoins now underpin a growing share of cryptocurrency transactions globally, at a time when the total value of outstanding crypto tokens like Bitcoin is about $2 trillion — roughly the same value as that of all United States dollars in circulation.

The regulatory push has generated a wave of lobbying by cryptocurrency executives. They have lined up in recent weeks in a series of virtual and in-person meetings with banking and financial regulators, seeking to shape the new rules while largely acknowledging that some form of federal oversight is now inevitable.

Regulators are worried about whether stablecoin firms hold enough liquid assets to back up the value of the currency they issue.


TVPI and DPI — no, really, it’s interesting

Resetting venture capital return expectations: is 10x the new 3x?

Note: TVPI stands for total value of investments net of fees / invested capital; DPI stands for distributions (= cash to LP’s) / invested capital)

Our returns are obviously very good, but in no way unique in today’s venture markets, especially among emerging managers that invest at the seed stage. So, is 10x the new 3x?

The opportunity for tech has never been larger and it seems obvious that technology companies will be the growth story for the next decade. But returns like the ones for Version One are also driven by one big factor: everyone (investors and founders alike) has underestimated the size of the addressable market for tech over the past decade. The pandemic has reset these expectations over the past 18 months, leading to huge increases in valuations for both public and private tech companies.


Venture Trends

What could stop the startup boom? — TechCrunch

We’ve spent so long staring at record venture capital results around the world from Q2 that it’s nearly Q3.

We’ve seen record results from cities, countries and regions. There’s so much money sloshing around the venture capital and startup worlds that it’s hard to recall what they were like in leaner times. We’ve been in a bull market for tech upstarts for so long that it feels like the only possible state of affairs.

It’s not.

Digging back through our notes from the last few months from data sources, investors and founders, it’s clear that there are macroeconomic factors bolstering the startup economy. And there are changes to the economy that are providing additional lift. Secular tailwinds, if you will.


The Exchange explores startups, markets and money.

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


But as the market giveth, it can also taketh away.

What might slow the startup boom? Similar to how certain macroeconomic conditions have provided a long-term boost, a reversal of those conditions could do the opposite. The secular trends powering startups — often on the demand side due to more rapid digitalization of global business — may be unconnected to the larger economy, a view underscored by software’s outsized performance during COVID-19 induced economic mess of mid-2020.

This morning, let’s talk about what’s fueling startups and their backers, and what could change. Because no bull market lasts forever.


As Investors Pivot To Seed And Growth, Who Is Left Leading Series A? — Crunchbase News

Gené Teare, @geneteare

Series A funding round sizes have grown significantly in recent years.

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Over the past decade, the average global Series A round increased from less than $6 million to more than $18 million, Crunchbase data shows. The median has grown from $3 million to $10 million over the same time period.

However, the trend is clear.

Series A funding still shows a wide range, but with both the median and average up more than threefold through the decade, raising a Series A funding round has become a high bar for startups to clear.

General partner Mark Suster of Upfront Ventures wrote in a post earlier this month on the changing venture landscape that “A-Rounds used to be $3–7 million with the best companies able to skip this smaller amount and raise $10 million on a $40 million pre-money valuation (20% dilution). These days $10 million is quaint for the best A-Rounds and many are raising $20 million at $60–80 million pre-money valuations (or greater).”


Which VCs are set to make a killing in GitLab’s IPO

The GitLab debut is set to make a lot of funds material coin.

As a private company, GitLab raised huge sums of capital — more than $400 million, per Crunchbase data. The capital came in increasingly large chunks from the company’s seed rounds back in 2015 through its late 2019 Series E.

Khosla Ventures led the company’s early rounds before GV, Goldman Sachs and ICONIQ Capital took the baton.

Unsurprisingly, those names are the ones we can spy on in the company’s major shareholder list. From the GitLab S-1 filing, what follows are share counts and percentage ownership stakes for the company’s investors that own more than 5% of its stock:

  • August Capital: 14,931,200 Class B shares, or 11.1% of that equity class.
  • GV: 8,888,776 Class B shares, or 6.6% of that equity class.
  • ICONIQ: 15,472,204 Class B shares, or 11.6% of that equity class.
  • ICONIQ: 1,150,784 Class A shares, or 100% of that equity class (to be diluted in IPO).
  • Khosla: 19,028,320 Class B shares, or 14.1% of that equity class.

Given that GitLab was valued at $6 billion earlier this year in a secondary transaction, the percentages above convert to huge sums. August Capital, for example, at that price point, is set to reap north of $600 million. That’s bigger than the entire fund from which it snagged ownership, the firm’s $450 million Fund VII.


Greylock Raises $500 Million in Battle for Seed Deals

Greylock Partners has raised $500 million to focus exclusively on seed deals, a pool of funds that will give the 56-year-old venture capital firm the ability to write large checks at “lean-in valuations” and emphasize its commitment to early-stage investing, said general partner Sarah Guo.

The money is part of an expansion of a $1.1 billion fund, which Greylock announced last year, to $1.6 billion, Guo and general partner Saam Motamedi said in an interview. The funding is among the industry’s largest devoted to seed investments, which often represent a startup’s first outside capital.

The effort by the Menlo Park, Calif.–based firm, an early investor in Facebook and LinkedIn, follows large fundraising initiatives dedicated to seed-stage deals from Silicon Valley VC firms including Sequoia Capital and Andreessen Horowitz. Firms like these are investing earlier to gain stakes that help them compete for future late-stage deals with Tiger Global Management and other nontraditional VC investors making inroads with founders.


Sport-focused NFT start-ups raise over $900 million in crypto gold rush — CNBC


  • Dapper Labs, the start-up behind digital basketball trading card platform NBA Top Shot, is now valued at $7.6 billion following a $250 million funding round.
  • Sorare, a French fantasy soccer game that incorporates NFTs, raised $680 million in a round led by SoftBank which valued the company at $4.3 billion.


Africa’s top investors of 2021

These 5 investors have been involved in 1 in 3 ‘early-stage’ deals on the continent so far this year. In total, they have already invested in 127 deals in 2021. They have been most active in Nigeria…


UK Venture Tipping Point?

Legal & General appoints Investment Director to lead strategy to deploy DC Pension money into VC growth companies

Within its SME Finance platform, LGC now has relationships with 11 venture capital managers comprising GBP128 million of committed capital and has added 5 new managers to its portfolio over the last 12 months. LGC has continued to invest in the real economy via start-up businesses in the UK and Europe. During a challenging time for smaller scale companies and newly formed businesses, LGC has remained committed to providing funding for over 300 companies, delivering enhanced returns whilst boosting job creation. Its existing portfolio includes major European VC funds such as Balderton Capital, LocalGlobe, Dawn Capital and Sofinnova Partners. Demonstrating the value of our patient investment approach, the portfolio has now delivered a 21 per cent IRR after fees, since inception.

Working closely with LGIM, LGC is making strong progress in developing investment solutions which could increase access to VC companies for investors including DC pension schemes. In his new role, Tanu will lead the next evolution of this strategy as L&G looks to share the benefits of the Innovation Economy with retirement savers in the UK and open up a significant growth market to a wider pool of investors.

Chita joins LGC from his role as a Principal at Pantheon Ventures, where he was a senior member of Pantheon’s private equity and venture capital investment team, and most recently responsible for the investment strategy of Pantheon International PLC, a leading FTSE 250 investment trust focused on private equity investments. With over 17 years experience in the sector, he has spent time working in both San Francisco and London. Previous roles include working within the Corporate Finance team at Deutsche Bank.

Jasan Fitzpatrick, Managing Director of Principal Investing, says: “Tanu’s appointment reflects an important step forward in progressing our strategy to provide access to the VC sector for investors including DC pension savers. This could unlock significant growth opportunities for a wider pool of investors and open up a sector currently dominated by international pension funds. Investing a small proportion of long-term DC pension schemes into growth companies would not only democratise access to higher returns for savers, but the sheer scale of the DC pension market means that even small allocations could be game-changing for UK VC and scale-up companies.”

Tiger Tiger Burning Bright

Tracking Tiger Global (Week 37) | 13–19 Sep 21

Welcome to the fourth edition of Tracking Tiger Global, a newsletter that provides weekly updates on Tiger Global’s latest investments.

11!! new deals with Tiger’s involvement were announced this week. The updated dataset can be accessed here. Given the number of deals, I will keep the company profiles very short in this edition…

  1. SPRING HEALTH (US | $190m Series C | SaaS | Tiger followed-on)
  2. THE ORG (US | $20m Series B | SaaS | Tiger led)
  3. ARCADIA (US | $100m Series D | SaaS | Tiger co-led)
  4. StrongDM (US | $54m Series B | SaaS | Tiger led)
  5. AMBI ROBOTICS (US | $26m Series A | Hardware | Tiger led)
  6. DEEPVISION (US | $35m Series B | Hardware | Tiger led)
  7. LOCUS ROBOTICS (US | 150m Series E | Hardware | Tiger co-led)
  8. MELIO (US | $250m Series D | Fintech | Tiger participated)
  9. OPEN (India | $100m Series C | Fintech | Tiger followed-on)
  10. XENDIT (Indonesia | $150m Series C | Fintech | Tiger led)
  11. PAPAYA GLOBAL (US | $250m Series D | SaaS | Tiger co-led)


Profile of Peter Thiel and Libertarianism

Peter Thiel, scourge of Silicon Valley — The Economist

“If ai is communist, crypto is libertarian,” he wrote last year. It would look favourably on cryptocurrencies and blockchains. He is a big backer of, a blockchain-software company whose crypto unit, Bullish, is planning to go public via a $9bn reverse merger with a special-purpose acquisition company.


The End of Startup Companies?

The Rise of the Decentralized Startup

I think we’re seeing a very big shift right now in how startups are created and operate. But before we dig into that, I want to spend some time talking about work. For centuries, work has been incredibly inefficient. In the “barter era”, one person would do work in exchange for someone else’s work. E.g. …

For all of these reasons, this is why I think we’ll see the rise in the decentralized startup. In fact, we already see many Decentralized Autonomous Organizations (DAOs) in play — this is not a new concept, and DAOs are precisely what I described above.

Continue reading The Rise of the Decentralized Startup


Startup of the Week

Canva’s now worth $40 billion. The next step? Getting users to pay.

Canva’s new $200 million funding round propelled its valuation up to $40 billion, an incredible leap that, at least on paper, makes the design software provider more valuable than other private upstarts like Databricks and SenseTime.

But Canva stands out in another way: The bulk of its customers aren’t paying for the product — and probably never will. But now, the company is making a big push into the enterprise and looking for subscribers willing to fork over actual cash.

  • Since Canva launched its official enterprise product in 2019, there’s been a “300% growth in the number of teams using it,” co-founder and Chief Product Officer Cameron Adams told Protocol.
  • “We always expect free [users] to be the bulk of our customer base,” he said. But “particularly in the enterprise collaboration space, there’s still a huge opportunity to look at the entire content creation experience and bring it down into something that you can do super simply,” Adams added.


Tweet of the Week

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