Extra Crunch Roundup
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Extra Crunch roundup: Build a founding team, choose a VC and recruit your board
Assembling a startup team is harder than assembling 10 IKEA dressers, and the stakes are much, much higher.
Starting with the assumption that 90% of startups will fail and the most successful ones take an average of six years to IPO, founders must make careful decisions about whom they invite to join the core team.
Will that stellar engineer become a great CTO? Should your product person be opinionated or a team player? Are you even the best choice for CEO?
ThoughtSpot CEO Sudheesh Nair shared some of his thoughts about building a sturdy leadership team and drafted a thorough checklist for entrepreneurs who are putting a crew together. His initial advice?
“Investors love founder-CEOs, and founders are often fantastic candidates for this role. But not everyone can do it well, and more importantly, not everyone wants to.”
In a related article, Gregg Adkin, VP and managing director at Dell Technologies Capital, shared the framework he’s developed for helping founders set up their board.
Choosing the right mix of people can impact everything from fundraising to hiring: “Investors often ask founders about their board [because] it says a lot about their character, their judgment and their willingness to be challenged,” he writes.
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Miranda Halpern spoke to Amsterdam-based coach Ward van Gasteren for our latest growth marketing interview, which is free to read.
In their discussion, van Gasteren addressed misconceptions about growth hacking, the mistakes most startups are likely to make, and the distinctions he draws between growth hacking and growth marketing:
“Growth hacking is great to kickstart growth, test new opportunities and see what tactics work,” he tells us.
“Marketers should be there to continue where the growth hackers left off: Build out those strategies, maintain customer engagement, and keep tactics fresh and relevant.”
Thanks very much for reading Extra Crunch this week; I hope you have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
What Square’s acquisition of Afterpay means for startups
Image Credits: sureeporn / Getty Images
In his first column since returning to TechCrunch, reporter Ryan Lawler considered the potential ripples Square’s purchase of Afterpay may send across the pond of buy now, pay later startups.
For commentary and perspective, he interviewed:
- Dan Rosen, founder and general partner, Commerce Ventures
- Jake Gibson, founding partner, Better Tomorrow Ventures
- TX Zhuo, partner, Fika Ventures
- Matthew Harris, partner, Bain Capital Ventures
The investors he spoke to agreed that deferring payments helps drive e-commerce, “but scale matters and long-term margins look slim for BNPL startups,” reports Ryan.
Enterprise AI 2.0: The acceleration of B2B AI innovation has begun
Image Credits: Ivan Bajic (opens in a new window) / Getty Images
Businesses have been deploying AI solutions for 20 years, but few have achieved the outstanding gains in efficiency and profitability promised when the technology first appeared.
But there’s a burgeoning new generation of enterprise AI, Eshwar Belani, an operating partner at Symphony AI, writes in a guest column.
“Companies on the leading edge of AI innovation have advanced to the next generation, which will define the coming decade of big data, analytics and automation — Enterprise AI 2.0.”
Embodied AI, superintelligence and the master algorithm
Image Credits: Joan Cros Garcia-Corbis (opens in a new window) / Getty Images
Over the next 18 months, one technologist says the increased adoption of embodied artificial intelligence will open a path to superintelligence — incredibly powerful software that dwarfs anything the human mind could produce.
“All the crazy Boston Dynamics videos of robots jumping, dancing, balancing and running are examples of embodied AI,” says Chris Nicholson, founder and CEO of Pathmind, which uses deep reinforcement learning to optimize industrial operations and supply chains.
“The field is moving fast and, in this revolution, you can dance.”
A lot of cash and little love: An insurtech story
Image Credits: Nigel Sussman (opens in a new window)
The Exchange looks at the valuations of public insurtech companies and considers what that means for startups — but from a slightly different perspective.
“We’d typically riff on the new values of public neoinsurance companies and use that data to work our way into a guess concerning what the price declines might mean for related startups,” Alex Wilhelm writes. “Taking public-market data and using it to better understand private markets is pretty much the national pastime of this column.
“Not today.”
5 factors founders must consider before choosing their VC
Image Credits: Anastassiia (opens in a new window) / Getty Images
The fact that the globe is awash in venture capital should not be news to readers of this newsletter.
For founders, it means more than just fat checks, Kunal Lunawat, the co-founder and managing partner of Agya Ventures, writes in a guest column.
“Founders would be well served to go back to the basics and focus on the principles of fundraising when determining who sits on their cap table.”
Neobanks’ moves toward profitability could be the path to public markets
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm checks in on results from Starling Bank and Monzo to see what the neobanks’ most recent financial figures say about the state of neobanks overall.
“Although some neobanks are managing to clean up their ledgers and work toward profits — or reach profitability — not all are in the black,” he notes.
But among those that are?
“At least a portion of the neobanking world is financially stable enough to consider public offerings.”
Founders must learn how to build and maintain circles of trust with investors
Image Credits: MicroStockHub (opens in a new window)/ Getty Images
The red-hot venture capital market may give founders lots of investors to choose from, but the most important thing (if you can be choosy) is being able to trust and rely on your investors, Ripple Ventures’ Matt Cohen and True’s Tony Conrad write in a guest column.
“This … new dynamic is forcing founders to be extremely selective about exactly who is sitting around their mentorship table,” they write.
“It’s simply not possible to have numerous deep and meaningful relationships to extract maximum value at the early stage from seasoned investors.”
What’s the board’s role in an early-stage startup?
Image Credits: A-Digit (opens in a new window) / Getty Images
Assembling a board of directors is not merely about finding individuals who can aid your early-stage journey, Gregg Adkin, the vice president and managing director at Dell Technologies Capital, writes in a guest column.
The composition of the board can also impact your fundraising.
“Investors often ask founders about their board [because] it says a lot about their character, their judgment and their willingness to be challenged,” he writes.
Adkins offers a framework he calls “SPIFS” — for strategy, people, image, finance and systems for compliance — to aid founders in setting up a board.
Do bronze medals ever make sense for unicorns?
Image Credits: Nigel Sussman (opens in a new window)
In the wake of Deliveroo’s plans to abandon the Spanish market after the country passed legislation requiring companies dependent on gig workers to hire employees, Alex Wilhelm wondered about the battle for smaller markets and whether third place is sufficient.
“One company exiting a market is not a big deal, but we were curious about Deliveroo’s comments regarding the need for market leadership — or something close to it — to warrant continued investment,” he writes for The Exchange.
“Is this the common reality for startups battling for market position, no matter if those markets are cities or countries?”
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Extra Crunch roundup: Square buys Afterpay, paid search basics, career advice for devs
Square paid around a quarter of its present-day value for Afterpay, Alex Wilhelm notes in The Exchange. That seems like a lot. But was it too much?
“Afterpay brings global revenues, global users and a more diverse merchant network to Square,” Alex notes. “It would have had to spend to derive those assets over time. Square is willing to pay up to snag them now.”
Dana Stalder, a partner at Matrix Partners and Afterpay’s only institutional investor, describes the deal as part of a recurring “critical innovation cycle” in fintech that “determines the winners and losers” for decades to come.
“I’ve never seen a combination that has such potential to deliver extraordinary value to consumers and merchants,” says Stalder. “Even more so than eBay + PayPal.”
Thanks very much for reading Extra Crunch this week!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
The best way to grow your career? Treat it like an app
Image Credits: jayk7 (opens in a new window) / Getty Images
Developers may delight in solving complex technical problems, but the problem of a career path is one many don’t think much about, Juniper Networks CTO Raj Yavatkar writes in a guest column.
He offers a solution that should appeal to developers and engineers: “Treat career advancement as you would a software project.”
Design expert Scott Tong outlines 4 concepts founders should consider when designing products
Image Credits: Scott Tong
At Early Stage 2021, design expert Scott Tong shared some ways founders should think about design and branding.
If you can link your brand with your company’s reputation, I think it’s a really great place to start when you’re having conversations about brands. What is the first impression? What are the consistent behaviors that your brand hopes to repeat over and over? What are the memorable moments that stand out and make your brand, your reputation memorable?
You can’t afford to make poor decisions about incentive stock options
Image Credits: Nora Carol Photography (opens in a new window) / Getty Images
If you’re fortunate enough to be considering cashing in on vested stock options, this guest column is worth a read.
“Most companies admit they need to be better at explaining how ISOs work in general, but they can’t legally work one-on-one with employees to help them exercise and sell shares the right way,” Wealthramp’s Pam Krueger and John Chapman write.
“That’s why, when the time is right, many employees actively look for help from a qualified fiduciary financial adviser who can walk these could-be ‘options millionaires’ through various cash-in scenarios.”
Demand Curve: Questions you need to answer in your paid search ads
Image Credits: metamorworks (opens in a new window) / Getty Images
At some point, almost every early-stage startup will use paid search ads to connect with customers and throw down the gauntlet with their competitors.
Most of these initial attempts at paid search are unsuccessful. There’s a steep learning curve when it comes to transforming passive searchers into paying customers, and almost no one gets it right the first time.
In a comprehensive guest post, growth marketing expert Stewart Hillhouse identified “14 questions your paid search should answer to ensure you’re only paying for the highest-intent shoppers.”
Question 1? “What’s in it for me?”
5 lessons from Duolingo’s bellwether edtech IPO of the year
Image Credits: Duolingo
Duolingo’s debut last week was a bright spot, Alex Wilhelm and Natasha Mascarenhas write, with the language learning app’s stock price landing above a raised IPO range.
Alex and Natasha detail five lessons to take from Duolingo’s flotation:
- The IPO event will bring “more sophistication” to Duolingo’s core service.
- Roadshow investors didn’t view Duolingo as an edtech company.
- China’s edtech crackdown will have a “neutral” impact on Duolingo.
- In certain cases, post-COVID growth declines aren’t lethal.
- Growth can still absolve rising losses.
Can your startup support a research-based workflow?
Image Credits: Andriy Onufriyenko (opens in a new window) / Getty Images
In the U.S. alone, yearly spending on AI R&D is expected to reach $100 billion by 2025.
But can your humble startup attract and retain users while it conducts research and product development?
“For obvious reasons, companies want to make things that matter to their customers, investors and stakeholders. Ideally, there’s a way to do both,” says João Graça, CTO and co-founder of Unbabel, an AI-powered language operations platform.
Kodiak Robotics’ founder says tight focus on autonomous trucks is working
Image Credits: Bryce Durbin
As part of an ongoing series with transportation startup founders, Rebecca Bellan interviews Kodiak Robotics CEO and co-founder Don Burnette about why the autonomous trucking company remains private when so many of its rivals have gone public.
“I think there’s also lots of opportunity within the VCs and the private markets,” said Burnette.
“Kodiak is one of the only remaining serious AV trucking companies still in the private sector, and so I think that gives us some advantages in a lot of ways.”
How public markets can help address venture capital’s limitations
Image Credits: Nigel Sussman (opens in a new window)
After interviewing Draper Esprit co-founder Stuart Chapman, Alex Wilhelm and Anna Heim took a look at the trend of European VCs floating themselves.
Traditional VC models “can foist artificial time constraints on investors and force them to focus their deal flow into particular stages for fund-construction reasons,” Alex and Anna write for The Exchange.
“As we found out researching this piece, the public venture model highlights some of these limitations — and may be able to alleviate them in part.”
Robinhood’s CFO says it was ready to go public
Image Credits: Nigel Sussman (opens in a new window)
After Robinhood failed to burn up the stock charts, Alex Wilhelm wondered why, exactly, the investing and trading app’s IPO didn’t live up to expectations.
He spoke to Robinhood CFO Jason Warnick, who shared a few reasons why it was time for the company to float:
… Warnick indicated that there were a few factors at play, including that Robinhood had built out its leadership team and its internal processes, and that it had worked on user-safety-related tasks and expanded the site’s use cases. All of that is true.
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Extra Crunch roundup: Livestream e-commerce, growth marketing interviews, CEO for a day
This year, livestream viewers in China are projected to spend more than $60 billion on digital shopping experiences that let them interact with influencers in real time.
Promoting everything from cosmetics to food, social media stars use Taobao, TikTok and other platforms to livestream products and take questions from the audience.
On Taobao’s Singles Day in 2020, livestreams racked up $6 billion in sales, twice as much revenue as the year prior.
Sensing a trend, Western startups are getting in on the action, with companies like Whatnot and PopShop.Live raising rounds to build out their infrastructure. Looking forward, Alanna Gregory, senior global director at Afterpay, says she foresees four major trends:
- Networks
- SaaS streaming tools
- Host discovery and outreach tools
- Host marketplaces and agencies
“For brands, SaaS streaming tools will be the most impactful way to take advantage of livestream commerce trends,” Gregory writes in an Extra Crunch guest post. “All of this will be incredibly transformative.”
To help entrepreneurs take on the most fundamental challenge facing early-stage startups, our team is speaking to growth marketers to learn more about the advice they’re offering clients these days.
This week, Miranda Halpern and Anna Heim interviewed experts on growth marketing:
- The MKT1 interview: Growth marketing in 2021, hiring versus outsourcing and more
- Unmuted founder Max van den Ingh on success beyond the metrics
- Draft.dev CEO Karl Hughes on the importance of using experts in developer marketing
Growth is an existential issue, so these stories are free to read and share. If you’ve worked with an individual or an agency who helped your startup find and keep new users, please let us know.
Thanks very much for reading Extra Crunch this week; have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
Why Latin American venture capital is breaking records this year
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim’s global exploration of Q2 venture capital data wrapped up this week with an in-depth look at Latin America.
One investor told them that today’s LatAm startup market “is a story about talent, not about capital.”
“The union of talent and money is what startup markets need to thrive,” they write. “But there are other reasons why Latin American startups are so frequently in the news today, including structural factors, such as strong digital penetration and quick e-commerce growth.”
Dear Sophie: Should we sponsor international hires for H-1B transfers and green cards?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
My startup is desperately recruiting, and we see a lot of engineering candidates on H-1Bs.
They’re looking for H-1B transfers and green cards. What should we do?
— Baffled in the Bay Area
Why I make everyone in my company be the CEO for a day
Image Credits: Blake Little (opens in a new window) / Getty Images
In the reality TV series “Undercover Boss,” high-powered executives disguise themselves so they can work alongside everyday employees, ostensibly to learn from them.
Flipping that script, software company Vincit USA has a “CEO of the Day” program where staffers move into a metaphorical corner office for 24 hours and receive a very real unlimited budget. There’s just one requirement.
“The CEO must make one lasting decision that will help improve the working experience of Vincit employees,” said Ville Houttu, Vincit’s founder and CEO.
Since instituting the program, Vincit USA has received multiple awards for its workplace culture and sees reduced staff turnover.
“Though it may seem crazy, the initiative has paid off tenfold,” said Houttu.
What I’ve learned after 5 years of buying common stock in startups
Image Credits: Tim Robberts (opens in a new window) / Getty Images
Instead of giving founders standard term sheets, Boston-based seed-stage venture capital firm Pillar VC offers to buy common stock.
“There are many terms and conditions in a preferred term sheet that can misalign investors and founders,” says founding partner Jamie Goldstein.
“As with any experiment, we have learned a few things that have surprised us and faced challenges we’ve had to overcome.”
China’s regulatory crackdown is good news for startups aligned with CCP goals
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm takes stock of the wall of news out of China over the past week to see if there’s a silver lining for startups in the country as the Chinese Communist Party cracks down on everything from edtech companies to streaming platforms.
His take?
“The result may be concentrated effort and capital in sectors that Beijing favors and reduced capital and focus from entrepreneurs in sectors that have been deemed fit for strict control,” he writes. “Simply: Central planning is going to tilt business more toward centrally planned goals.”
Duolingo’s IPO pricing is great news for edtech startups
Image Credits: Nigel Sussman (opens in a new window)
The Pittsburgh-based language-learning unicorn initially aimed for an $85 to $95 per share IPO price range, then bumped that up to $95 to $100 before it began to trade. It ultimately entered the public markets at $102 per share.
Alex Wilhelm notes that based on Duolingo’s expected Q2 revenues, the company has a run-rate multiple of nearly 16x. Compare that to the median multiple for public SaaS companies of 14x.
“Duolingo, a consumer edtech company, is now more valuable per revenue dollar than the median public enterprise SaaS business,” Alex writes.
Financial firms should leverage machine learning to make anomaly detection easier
Image Credits: GOCMEN (opens in a new window) / Getty Images
“Anomaly detection is one of the more difficult and underserved operational areas in the asset-servicing sector of financial institutions,” EZOPS CEO Bikram Singh writes in a guest column.
But it’s critical to detect these anomalies amid a sea of data. That’s where unsupervised learning can offer a solution.
”With all eyes on data, it’s crucial that financial institutions find solutions to detect anomalies upfront, thereby preventing bad data from infecting downstream processes,” Singh writes.
“Machine learning can be applied to detect the data anomalies as well as identify the reasons for them, effectively reducing the time spent researching and rectifying executions.”
African startups join global funding boom as fintech shines
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim continued their global tour of Q2 2021 venture capital data, this week focusing on Africa.
“Early data indicates that Africa is set to trounce historical records in terms of venture capital raised in the year and that the first half of 2021 saw roughly twice the funds raised by African startups as was recorded in the first half of 2020,” they write.
“Startups across Africa have never had more access to capital than they do right now.”
True ‘shift left and extend right’ security requires empowered developers
Image Credits: kuritafsheen (opens in a new window) / Getty Images
The intention of DevSecOps is to wedge security and compliance into DevOps. But that’s easier said than done, says Apiiro founder and CEO Idan Plotnik.
“Shifting left and extending right doesn’t mean that a scanning tool or security architect should detect a security risk earlier in the process — it means that a developer should have all the context to prevent the vulnerability before it even happens,” he writes.
4 key areas SaaS startups must address to scale infrastructure for the enterprise
Image Credits: Stewart Sutton (opens in a new window) / Getty Images
Asana’s head of engineering, Prashant Pandey, rounds up four tips for SaaS startups looking to build up their infrastructure to meet customers’ growing needs.
“Startups and SMBs are usually the first to adopt many SaaS products. But as these customers grow in size and complexity — and as you rope in larger organizations — scaling your infrastructure for the enterprise becomes critical for success,” he writes.
He offers four areas to focus on:
- Address your customers’ security and reliability needs
- Give IT admins control over product usage
- Build data isolation into your architecture
- Support customers by interconnecting their data across applications
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Extra Crunch roundup: RapidSOS EC-1, how to prep for an M&A exit, inside Genki Forest
According to one estimate, Americans call 911 about 240 million times every year.
Sending emergency services to the right location sounds straightforward, but each 911 call is routed through one of thousands of call centers known as public safety answering points (PSAPs).
“Every 911 center is very different and they are as diverse and unique as the communities that they serve,” said Karin Marquez, senior director of public safety at RapidSOS.
One PSAP that serves New York City is a 450,000-square-foot, blast-resistant cube set on nine acres, but you also have “agencies in rural America that have one person working 24/7 and they’re there to answer three calls a day,” Marquez noted.
Founded eight years ago, RapidSOS processes more than 150 million emergencies each year across approximately 5,000 PSAPs. The company’s technology helps call centers integrate requests from cell phones, landlines and IoT devices.
“Its technology is almost certainly integrated into the smartphone you’re carrying and many of the devices you have lying around,” Managing Editor Danny Crichton writes in a four-part series that studies the company’s origins and ensuing success:
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- Part 1: The early years and why a consumer app company turned to govtech and integrated services for technology and device companies.
- Part 2: How RapidSOS made its pivot and why its current business model has performed so well.
- Part 3: To transform 911 services, RapidSOS established dozens of corporate and individual partnerships.
- Part 4: Examines the future of 911 and RapidSOS in light of limited infrastructure funding.
“I’ve honestly never met a company like RapidSOS with so many signed partnerships,” says Danny, who initially wrote about the firm six years ago.
“It’s closed dozens of partnerships and business development deals, and with some of the biggest names in tech. How does it do it? This story is about how it built a successful BD engine.”
Thanks very much for reading Extra Crunch this week!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
How to prepare for M&A, your most likely exit avenue
Image Credits: Reinhard Krull / EyeEm (opens in a new window) / Getty Images
The headlines might be littered with mega deals, IPOs and SPACs, but in all likelihood, you will exit your startup via a relatively smaller merger or acquisition, Ben Boissevain writes in a guest column.
“The IPO market is healthy again, but M&A still represents 88% of exits: So far this year, there were 503 IPOs and 5,203 deals,” writes Boissevain, founder of Ascento Capital.
“While it is good to strive for a billion-dollar-plus sale, a successful IPO or a SPAC deal, it is practical to prepare your startup for a smaller transaction.”
Duolingo boosts IPO price target in boon to edtech startups
Image Credits: Nigel Sussman (opens in a new window)
U.S. edtech company Duolingo bumped up its IPO price range Monday morning, targeting $95 to $100 per share, up from previous guidance of $85 to $95 per share.
“The fact that Duolingo is raising its IPO price range indicates that we are more likely on the path for a strong offering than a weak one,” Alex Wilhelm notes.
Data-driven iteration helped China’s Genki Forest become a $6B beverage giant in 5 years
Image Credits: VCG (opens in a new window) / Getty Images
Many Extra Crunch readers will not have heard of China’s fastest-growing bottled beverage company: Genki Forest is a direct-to-consumer startup that started selling its sodas, milk teas and other products just five years ago.
Today, its products are available in 40 countries and the company hopes to generate revenue of $1.2 billion in 2021. After closing its latest funding round, Genki Forest is valued at $6 billion.
Industry watchers frequently compare the upstart to giants like PepsiCo and Coca-Cola, but founder Binsen Tang comes from a tech background, having funded ELEX Technology, a social gaming company that found success internationally.
“China doesn’t need any more good platforms,” Tang told his team in 2015, “but it does need good products.”
Leveraging China’s robust distribution network, lighting-fast manufacturing capabilities and a vast pool of data that enables holistic digitization, Genki Forest sells more than 30% of its products online.
“Everything feels right about the company,” said VC investor Anna Fang. “The space, the founder, the products and the back end … they exemplify the new Chinese consumer brand.“
Sequoia’s Mike Vernal outlines how to design feedback loops in the search for product-market fit
Sequoia’s Mike Vernal joined us on TechCrunch Early Stage: Marketing and Fundraising to discuss how founders should approach product-market fit, with a specific focus on tempo.
It doesn’t mean fast in the kind of uncontrolled, reckless, crashing sense. It means fast in a sort of consistent, maniacal, get-a-little-bit-better-each-day kind of way. And it’s actually one of the top things that we look for, at least when evaluating a team: How consistently fast they move.
As China shakes up regulations, tech companies suffer
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm spent the end of last week and the beginning of this one looking at Chinese regulations targeting its edtech sector, aiming to understand “precisely what is going on with the various regulatory changes.”
“For startups, the regulatory changes aren’t a death blow; indeed, many Chinese tech startups won’t be affected by what we’ve seen thus far,” he writes. “But on the whole, it feels like the risk profile of doing business in China has risen.”
Automakers have battery anxiety, so they’re taking control of the supply
Image Credits: Porsche AG
To ensure a steady supply of batteries, automakers are increasingly looking to joint ventures.
“Like if you’re VW, and you say, ‘We’re going to go 50% electric by whatever year,’ but then the batteries don’t show up, you’re bankrupt, you’re dead,” Sila Nano CEO Gene Berdichevsky said in a recent interview.
“Their scale is so big that even if their cell partners have promised them to deliver, automakers are scared that they won’t.”
Pro tips from the team behind Kickstarter’s most funded app
Image Credits: AndreyPopov / Getty Images
The team at memoryOS “spent countless hours researching down the rabbit hole of crowdfunding tips and tricks” before it successfully became the most-funded app on Kickstarter, the company’s CEO, Alex Ruzh, writes in a guest column.
“We’re sharing our approach (and secrets) to building a successful crowdfunding campaign because we know just how tough it can be to launch your own product,” he writes.
SOSV partners explain how deep tech startups can fundraise successfully
Startups developing so-called deep tech often find it challenging to raise capital for various reasons.
At TechCrunch Early Stage: Marketing and Fundraising, two experienced investors, SOSV partners Pae Wu and Garrett Winther, spoke on the subject and advised startups facing a challenging fundraising path.
Checkout is the key to frictionless B2B e-commerce
Image Credits: Dilok Klaisataporn (opens in a new window)
Processing payments, credit and authorizations for B2B purchases is all handled electronically, but that’s not a panacea.
For example, volume sellers prefer to work through traditional accounts payable systems instead of paying the service fees smaller companies accept as the cost of doing business.
However, the combination of fraud and identity protection with credit handling and digital payments “creates a powerful network, the type that can not only build trust but enable one-click transactions at scale,” says Andrew Steele, an investor at Activant Capital.
Cowboy Ventures’ Ted Wang: CEO coaching is ‘about having a second set of eyes’
At TechCrunch Early Stage: Marketing and Fundraising, Cowboy Ventures’ Ted Wang spoke about why he encourages founders in his portfolio to work with executive coaches.
I don’t think you need to limit advice from people who are “been there, done that.” I think it is really important to get input from those people, but in terms of personal development, I think you want insight from people who understand how human beings listen and learn and grow.
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Extra Crunch roundup: Finding GTM, China’s edtech clampdown and how to define growth
Early-stage startups tend to claim that their go-to-market strategy is fully operational. In reality, GTM is a stark numbers game, and even with a solid plan in place, it can be easily foiled by common problems like turf battles and poor communication.
Finding GTM fit is a milestone for any startup that includes everything from expanding the engineering team to launching your first media buy. But how do you know when you’ve reached that magic moment?
“You have to consider three metrics: gross churn rate, the magic number and gross margin,” says Tae Hea Nahm, co-founder and managing director of Storm Ventures.
High churn means customers aren’t delighted, low gross margins mean poor unit economics, and that so-called magic number?
“You can calculate it by taking new ARR divided by your marketing and sales spending,” Nahm writes. “But keep in mind that the magic number is a lagging indicator, and it may take you a few quarters to see a positive result.”
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If you are methodical in your approach to building a larger customer base, it is not difficult to foster steady growth.
Marketers who shift with whichever way the wind is blowing — or blindly follow someone else’s idea of best practices — are less likely to be successful.
“The not-so-secret secret here is that the key to great retention is really simple,” said growth expert Susan Su recently at TechCrunch Early Stage: Marketing and Fundraising. “It is building a product that solves a real and especially persistent problem for people.”
In conversation with Managing Editor Eric Eldon, Su delved into several issues, including tips on how founders should discuss growth with investors, and her methods for developing a sample qualitative growth model.
“I firmly believe that every founder should try their hand at growth,” said Su.
Thanks very much for reading Extra Crunch this week!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
How we built an AI unicorn in 6 years
Image Credits: Lucas Knappe/EyeEm (opens in a new window)/ Getty Images
Few startups go to market with the exact product their founders first envisioned.
Today, Tractable is known for developing tech that allows drivers to upload photos of their vehicles after a collision so its AI can assess the damage. Its first paying customer, however, used Tractable to inspect plastic pipe welds.
And as fate would have it, that customer also fired them just as the founders were raising their first round.
“We struck gold with car insurance,” says co-founder Alex Dalyac, as it was “a huge and inefficient market in desperate need of modernization.”
In an Extra Crunch guest post, he shares several takeaways from the last six years spent scaling a unicorn that have value for founders of all stripes. Step one?
“Search for complementary co-founders who will become your best friends,” advises Dalyac.
The European VC market is so hot it may skip its summer holiday
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim continued their exploration of the scorching global VC market, this time taking a look at Europe.
For perspective, they analyzed data from Dealroom and spoke to four VCs about the continent’s investment climate:
- Diana Koziarska, SMOK Ventures
- Vinoth Jayakumar, Draper Esprit
- Simon Schmincke, Creandum
- Javier Santiso, Mundi Ventures
“There’s little indication that what we’ve seen thus far from Europe in 2021 will slow in Q3 or Q4,” Alex and Anna write.
“Even though Europe has a reputation for lengthy summer vacations, investors don’t expect much — if any — slowdown to come in Europe during this sun-drenched quarter.”
Startups and investors are turning to micromobility subscriptions
Image Credits: Bryce Durbin
“Amid the chaos of the COVID-19 pandemic and the murky path to profitability for shared electric micromobility, an increasing number of companies have turned to subscriptions,” Rebecca Bellan writes in a roundup about the future of micromobility.
“It’s a business model that some founders and investors argue hits the profit center sweet spot — an approach that appeals to customers who are wary of sharing as well as paying upfront to own a scooter or e-bike, all while minimizing overhead costs and depreciation of assets.”
What Robinhood’s warnings about crypto trading say about Coinbase’s near-term future
Image Credits: Nigel Sussman (opens in a new window)
After noting that Robinhood anticipates a decline in revenue in the third quarter as a result of slowing crypto trading, Alex Wilhelm got to thinking about what that forecast means for Coinbase.
“The now-public unicorn has lived through crypto ups and crypto downs,” he writes. “A decline in consumer interest in the next few months or quarters is not a huge deal, assuming one keeps a long enough perspective and the crypto-infused future that its fans expect comes to pass.”
But will it?
Dear Sophie: Should we look to Canada to retain international talent?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
I handle people ops as a consultant at several different tech startups. Many have employees on OPT or STEM OPT who didn’t get selected in this year’s H-1B lottery.
The companies want to retain these individuals, but they’re running out of options. Some companies will try again in next year’s H-1B lottery, even though they face long odds, particularly if the H-1B lottery becomes a wage-based selection process next year.
Others are looking into O-1A visas, but find that many employees don’t yet have the experience to meet the qualifications. Should we look at Canada?
— Specialist in Silicon Valley
Silicon Valley comms expert Caryn Marooney shares how to nail the narrative
Image Credits: MediaNews Group/Bay Area News via Getty Images (opens in a new window)/ Getty Images (Image has been modified)
Caryn Marooney, a Silicon Valley communications professional turned venture capitalist, spoke extensively on storytelling at TechCrunch Early Stage: Marketing and Fundraising.
Throughout her time in Silicon Valley, she helped companies like Salesforce, Amazon, Facebook and more launch products and sharpen their messaging. In 2019, she left Facebook, where she was VP of technology communication, and joined Coatue Management as a general partner.
Marooney uses the acronym RIBS to describe her basic strategy for startup messaging: Relevance, Inevitability, Believability and keeping it Simple.
Canada’s startup market booms alongside hot global VC investment
Image Credits: Nigel Sussman (opens in a new window)
For The Exchange, Alex Wilhelm and Anna Heim looked at Canada’s VC market in the first half of 2021, and if you’ve been reading their work, you know what’s coming.
Canada, like the rest of the globe, was absolutely scorching in the first half.
“Canada’s venture capital results now rival those of the entire Latin American region, with exits and mega-deals coming in roughly on par in the second quarter, and a similar number of total venture capital rounds in the period,” they write.
“That caught our attention.”
Greylock’s Mike Duboe explains how to define growth and build your team
With more venture funding flowing into the startup ecosystem than ever before, there’s never been a better time to be a growth expert.
At TechCrunch Early Stage: Marketing and Fundraising earlier this month, Greylock Partners’ Mike Duboe dug into a number of lessons and pieces of wisdom he’s picked up leading growth at a number of high-growth startups, including StitchFix. His advice spanned hiring, structure and analysis, with plenty of recommendations for where growth teams should be focusing their attention and resources.
Last-mile delivery in Latin America is ready to take off
Image Credits: Erlon Silva/TRI Digital (opens in a new window) / Getty Images
Thanks to sprawling fulfillment centers, seamless logistics networks and ubiquitous internet access, consumers in many regions can now order groceries and a new set of cookware during breakfast and reasonably expect everything to arrive in time for dinner.
In Latin America, a lack of technology infrastructure makes delivery operations complex, and these supply chains are often managed with spreadsheets, paper and pen.
Algorithms that manage delivery routes or automatically dispatch drivers “are almost unheard of in the Latin America retail logistics sector,” says Bob Ma, an investor at WIND Ventures.
But thanks to growing consumer demand and expanding investment in last-mile delivery startups, Ma says the region is at a turning point.
Since Latin America’s middle class has grown 50% in the last decade and e-commerce constitutes just 6% of all retail, several unicorns have emerged in recent years, with more waiting in the wings.
China’s expected edtech clampdown may chill a key startup sector
Image Credits: Nigel Sussman (opens in a new window)
China’s edtech industry is estimated to be worth $100 billion, but its leaders are reportedly considering a plan that would require these firms to operate as non-profits.
“When it comes to control, the Chinese government doesn’t mind wiping out a few dozen billion dollars in market cap here and there,” writes Alex Wilhelm in this morning’s edition of The Exchange.
“That’s not a great system.”
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Extra Crunch roundup: Think like a VC, CockroachDB EC-1, handle your stock options
Ants and camels are famously resilient, but when it was time to select a name for a startup that offers open-source, cloud-based distributed database architecture, you can imagine why “Cockroach Labs” was the final candidate.
Database technology is fundamental infrastructure, which partially explains why it’s so resistant to innovation: Oracle Database was released in 1979, and MySQL didn’t reach the market until 1995.
Since hitting the market six years ago, CockroachDB has become “a next-generation, $2-billion-valued database contender,” writes enterprise reporter Bob Reselman, who interviewed the company’s founders to write a four-part series:
Part 1: Origin story: From the creation of the popular open-source image editor GIMP to some of Google’s most well-known infrastructure products.
Part 2: Technical design: Analyzes the key differentiation that CockroachDB offers, particularly its focus on geography and data storage.
Part 3: Developer relations and business: How CockroachDB engages with developers while pivoting to the cloud at a key inflection point.
Part 4: Competitive landscape and future: A look at the fierce competition, and what possible exit routes might look like.
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Our ongoing search for the best startup growth marketers is yielding results: reporter Anna Heim interviewed SaaS and early-stage startup marketing consultant Lucy Heskins to learn more about the mistakes her clients are most likely to make before they seek her help.
“The first is hiring a marketer too soon,” said Heskins. “I’ve come into startups thinking I was coming in to set up their in-house function. However, very quickly you realize that they’ve jumped the gun and think they’ve got product-market fit when they are nowhere near it.”
Heskins shared a few pages from her early-stage marketing playbook, in which she recommends aligning content marketing with the customer experience — as opposed to just putting pages up that score well in search results.
Because their conversation contains a lot of strategic advice for startups that haven’t yet made a marketing hire, we made it available on TechCrunch.
If you know of a skilled growth marketer, please share your recommendation in this quick survey.
Thanks very much for reading!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Here are 3 things you should do with your stock options
Image Credits: z_wei (opens in a new window) / Getty Images
Congratulations: You’ve joined a startup and received an Incentive stock option grant! You now own a percentage of the company, and there’s no telling how much it could be worth one day.
A few questions: Do you know your 409A valuation? What’s your strike price? Surely, you know the preferred share price and which type of options you were granted?
No?
It’s complicated stuff, and for most ISO recipients, this may be the first time they start thinking seriously about how federal tax laws impact them personally.
To break things down, Vieje Piauwasdy, Secfi’s director of equity strategy, recently shared a post with Extra Crunch.
“If you’ve ever been confused about your equity, or haven’t thought much about it, you’re not alone.”
Where is suptech heading?
Image Credits: Peter Dazeley (opens in a new window) / Getty Images
First of all, what is suptech?
“The emergence of purpose-built technologies to facilitate regulator oversight has, over the past few years, garnered its own moniker of supervisory technology, or suptech,” Marc Gilman, the general counsel and VP of compliance at Theta Lake, writes in a guest column.
Gilman notes that “nearly every financial services regulator is engaged in some type of suptech activity.”
But as a primer, he focused on three areas: regulatory reporting, machine-readable regulation, and market and conduct oversight.
Superhuman’s Rahul Vohra explains how to optimize your startup’s products for lasting growth
Image Credits: Superhuman
Superhuman co-founder and CEO Rahul Vohra joined us last week at TechCrunch Early Stage to provide an in-depth look at how he and his company worked to optimize and refine their product early to create a version of “growth hacking” that would not only help Superhuman attract users, but serve them best and retain them, too.
Vohra articulated a system that other entrepreneurs should be able to apply to their own businesses, regardless of area or focus.
Dear Sophie: Tell me more about the EB-1A extraordinary ability green card
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
I’m a postdoc engineer who started STEM OPT in June after failing to get selected in the H-1B lottery.
A colleague suggested that I apply for an EB-1A for extraordinary ability green card, but I have not won any major awards, much less a Nobel Prize. Would you tell me more about the EB-1A?
Thanks!
— Bashful in Berkeley
India poised for record VC year as unicorns head for decisive IPOs
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim dialed in on India for today’s Exchange, noting that the country is a good example of the global trend of booming venture capital dollars invested.
“The country’s venture capital haul thus far in 2021 has nearly matched its 2020 total and is on pace for a record year,” they write. “But as the third quarter gets underway, something perhaps even more important is going on: public-market liquidity.”
They looked at recent venture capital results and considered what Zomato’s flotation means for the country’s IPO pipeline. Don’t miss this analysis of an explosive startup market.
How to navigate an acquisition without alienating your current employees
Image Credits: Peter Cade (opens in a new window) / Getty Images
Now that COVID-19 vaccines are encouraging the world to reopen, two trends are underway:
In the first half of 2021, mergers and acquisitions increased by more than 150% YOY to $2.4 trillion; in several surveys, an overwhelming majority of workers said they intend to seek employment elsewhere.
If your startup is angling toward an exit, the promise of a big payday may not be enough to retain employees who feel burned out or dissatisfied.
Many founders don’t have prior management experience, and, frankly, the uncertainty associated with an exit makes it a poor time for on-the-job learning. With that in mind, here are several communication strategies that can help you keep your winning team intact.
Emergence Capital’s Doug Landis explains how to identify (and tell) your startup story
Image Credits: TechCrunch/Emergence Capital
How do you go beyond the names and numbers with your startup pitch deck? For Doug Landis, the answer is one simple compound gerund: storytelling. It’s a word that gets thrown around a lot of late in Silicon Valley, but it’s one that could legitimately help your startup stand out from the pack amid the pile of pitches.
Landis joined the TechCrunch Early Stage: Marketing and Fundraising event to offer a presentation about the value of storytelling for startups, whittling down the standard two-hour conversation to a 30-minute version.
Though he still managed to rewind things pretty far, opening with, “400,000 years ago, men and women used to sit around the fire pit and tell stories about their day, about their hunt, about the one that got away.”
Khosla’s Adina Tecklu breaks down how to nail your pitch
Image Credits: Khosla Ventures
We kicked off our TechCrunch Early Stage 2021: Marketing and Fundraising event with a deep dive on all the tips and tricks required to get the most out of pitching and slide decks. On hand was Adina Tecklu, a principal at Khosla Ventures, and who formerly built out Canaan Beta, the consumer seed practice at Canaan Partners.
We talked about the importance of knowing your customer (aka your potential investor), focusing on story, typical slides in a deck, the appendix slides, formatting, and then alternative formats and which to avoid in a pitch deck.
What impact will Apple’s buy now, pay later push have on startups?
Image Credits: Nigel Sussman (opens in a new window)
News that Apple plans to get into the buy now, pay later game had Alex Wilhelm wondering about the impact on startups in the space.
Shares of public competitors Affirm and Afterpay dropped on the news, but it doesn’t mean a death knell for those looking to jump into the BNPL game, Alex notes.
“Provided that Apple’s BNPL solution is rolled out over time to the same markets where Apple Pay is present, the … company could consume market shares — and therefore oxygen — from generalized rival BNPL services,” he writes.
“Those startups building more niche or targeted solutions will likely enjoy some shelter from the competitive storms.”
How to make the math work for today’s sky-high startup valuations
Image Credits: Nigel Sussman (opens in a new window)
So how does the math work out for all these startups with minimal revenue, tons of cash and sky-high valuations?
Alex Wilhelm ran through the numbers, explaining why the current state of the venture capital market makes sense for startups and investors alike.
“Today we can make super-expensive startup math work out, provided that growth rates stay generally strong and public-market multiples stay rich,” he writes in The Exchange. “If the latter dips, the former has to improve, and vice versa.”
Norwest’s Lisa Wu explains how to think like a VC when fundraising
Image Credits: Getty Images / Rawpixel
At the TechCrunch Early Stage: Marketing and Fundraising event last week, Norwest Venture Partners‘ Lisa Wu took the stage to discuss how founders can think like venture capitalists in all facets of their business.
The overlapping in job roles is uncanny: The best investors and founders have to find focus through the noise, understand the weight of due diligence and pitch others with conviction.
Wu used anecdotes and exercises — such as the eyebrow test — in the tactical, engaging chat.
Revolut’s 2020 financial performance explains its big new $33B valuation
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm weeds through Revolut’s 2020 financial results again to determine if the U.K.-based consumer fintech player’s $33 billion valuation makes sense.
“The picture that emerges is one of a company with a rapidly improving financial image, albeit with some blank spaces regarding recent customer growth,” he writes.
How we got 75% more e-commerce orders in a single A/B test for this major brand
Image Credits: Abdullatif Omar/EyeEm (opens in a new window) / Getty Images
Jasper Kuria, the managing partner of The Conversion Wizards, breaks down how the CRO consultancy ran an A/B test to boost the conversion rates of a multibillion-dollar company.
“Radical redesigns that incorporate a large number of variables (instead of single-element tests) are more likely to provide substantial gains,” Kuria writes. “Another advantage to doing this is it requires much less time and traffic for your tests to reach statistical significance.”
Here’s a rundown of all the changes that led to a 75% bump in orders.
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Extra Crunch roundup: CEO Twitter etiquette, lifting click-through rates, edtech avalanche
Yesterday, China ordered ride-hailing company Didi to stop signing up new customers after regulators announced a cybersecurity review of the company’s operations.
As of this writing, Didi’s stock price is down 5.3%. In today’s edition of The Exchange, Alex Wilhelm suggested that the move wasn’t a complete surprise, but it still “puts a bad taste in our mouths,” since the company went public days ago.
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When Didi filed to go public, it listed several potential pitfalls facing Chinese companies that go public in the U.S., including “numerous legal and regulatory risks” and “extensive government regulation and oversight in its F-1.”
What does this news signify for other Chinese companies that are hoping for stateside IPOs?
We’ll be off on Monday, July 5 in observance of Independence Day. Thanks very much for reading, and I hope you have an excellent weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
3 guiding principles for CEOs who post on Twitter
Image Credits: NeONBRAND/Unsplash (opens in a new window)
Did you hear about the CEO who made misleading claims about a funding round and got sued? How about that pharmaceutical executive whose taunts to a former Secretary of State led to a 4.4% decline in the Nasdaq Biotechnology Index?
In case it isn’t clear: Startup executives are held to a higher standard when it comes to what they post on social media.
“Reputation and goodwill take a long time to build and are difficult to maintain, but it only takes one tweet to destroy it all,” says Lisa W. Liu, a senior partner at The Mitzel Group, a San Francisco-based law practice that serves many startups.
To help her clients (and Extra Crunch readers) Liu has six basic questions for tech execs with itchy Twitter fingers.
And if the answer to any of them is “I don’t know,” don’t post.
The 2021 edtech avalanche has just begun
Image Credits: Kari Shea/Unsplash (opens in a new window)
A report from Brighteye Ventures on Europe’s edtech scene shows that this year’s deal flow is on pace to meet or surpass 2020, when remote instruction exploded.
According to Brighteye’s head of Research, Rhys Spence, the average deal size is now $9.4 million, a threefold increase from last year. Still, “It’s interesting that we are not seeing enormous increases in deal count,” he noted.
How Robinhood’s explosive growth rate came to be
Image Credits: TechCrunch
Trading platform Robinhood has attracted enough users and activity to change the conversation around retail investing — economists will likely be discussing the 2021 GameStop saga for years to come.
After the company filed to go public yesterday, Alex Wilhelm sorted through Robinhood’s main income statement to better understand how it scaled year-ago revenue from $127.6 million to $522.2 million in Q1.
“Those are numbers that we frankly do not see often amongst companies going public,” says Alex. “300% growth is a pre-Series A metric, usually.”
So: where is all that revenue coming from?
As EU venture capital soars, will the region retain future IPOs?
Image Credits: Nigel Sussman (opens in a new window)
Given the valuation gap between U.S. tech markets and those overseas, it’s easy to see why some foreign startups would head to our shores when it’s time to go public.
But Anna Heim and Alex Wilhelm found that a record increase in European venture capital activity is picking up the pace of IPOs this year, and many of these companies are content to go public in their native markets.
To gain some insight into where European investors believe they have an advantage, Anna and Alex interviewed:
- Franck Sebag, partner, EY
- David Miranda, partner, Osborne Clarke Spain
- Yoram Wijngaarde, founder and CEO, Dealroom
How VCs can get the most out of co-investing alongside LPs
Image Credits: Diana Ilieva (opens in a new window) / Getty Images
In a recent private equity survey, 80% of respondents said their co-investments with people outside traditional VC firms outperformed their PE fund investments.
Alternative investors are highly motivated, and because they’re seeking higher returns than are generally available in public markets, they are less daunted by risk. In return, they benefit from less expensive fee structures and develop close ties with VCs, enlarging the talent pool as they build investment skills.
These relationships have direct benefits for VCs as well, such as more flexibility with diversification and consolidated decision-making power.
“With the right deal structure, deal selection and deal investigation, co-investors can significantly increase their returns,” says C5 Capital Managing Partner William Kilmer, who wrote an Extra Crunch post for VCs considering an alternative path.
Dear Sophie: How can I bring my parents and sister to the U.S.?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
My husband and I are both U.S. permanent residents.
Given what we’ve gone through this past year being isolated from loved ones during the pandemic, we’d like to bring my parents and my sister to the U.S. to be close to our family and help out with our children.
Is that possible?
— Symbiotic in Sunnyvale
How to cut through the promotional haze and select a digital building platform
Image Credits: Andreus (opens in a new window) / Getty Images
Smart-building products include everything from connecting landlords with tenants to managing construction sites.
Given their widespread impact on the enterprise — and the novel nature of much of this new technology, selecting the right digital building platform (DBP) is a challenge for most organizations.
Brian Turner, LEED-AP BD&C, has created a matrix intended to help decision-makers identify the fundamental functions and desired outcomes for stakeholders.
“When it comes to the built environment, creating those comfortable, healthy and enjoyable places requires new tools,” says Turner. “Selecting a solid DBP is one of the most important decisions to be made.”
Demand Curve: 7 ad types that increase click-through rates
Image Credits: Octavian Iolu / EyeEm (opens in a new window)/ Getty Images
One perennial problem inside startups: Because no one on the founding team has significant marketing experience, growth-related efforts are pro forma and generally unlikely to move the needle.
Everyone wants higher click-through rates, but creating ads that “stand out” is a risky strategy, especially when you don’t know what you’re doing. This guest post by Demand Curve offers seven strategies for boosting CTR that you can clone and deploy today inside your own startup.
Here’s one: If customers are talking about you online, reach out to ask if you can add a screenshot of their reviews to your advertising. Testimonials are a form of social proof that boost conversions, and they’re particularly effective when used in retargeting ads.
Earlier this week, we ran another post about optimizing email marketing for early-stage startups.
We’ll have more expert growth advice coming soon, so stay tuned.
To guard against data loss and misuse, the cybersecurity conversation must evolve
Image Credits: Jose Fontano/Unsplash (opens in a new window)
Locking down data centers and networks against intruders is just one aspect of an organization’s security responsibilities; cloud services, collaboration tools and APIs extend security perimeters even farther. What’s more, the systems created to prevent the misuse and mishandling of sensitive data often depend heavily on someone’s better angels.
According to Sid Trivedi, a partner at Foundation Capital, and seven-time CIO Mark Settle, IT managers need to replace existing DLP frameworks with a new one that centers on DMP — data misuse protection.
These solutions “will provide data assets with more sophisticated self-defense mechanisms instead of relying on the surveillance of traditional security perimeters,” and many startups are already competing in this space.
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Extra Crunch roundup: influencer marketing 101, spotting future unicorns, Apple AirTags teardown
With the right message, even a small startup can connect with established and emerging stars on TikTok, Instagram and YouTube who will promote your products and services — as long as your marketing team understands the influencer marketplace.
Creators have a wide variety of brands and revenue channels to choose from, but marketers who understand how to court these influencers can make inroads no matter the size of their budget. Although brand partnerships are still the top source of revenue for creators, many are starting to diversify.
If you’re in charge of marketing at an early-stage startup, this post explains how to connect with an influencer who authentically resonates with your brand and covers the basics of setting up a revenue-share structure that works for everyone.
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Our upcoming TC Early Stage event is devoted to marketing and fundraising, so expect to see more articles than usual about growth marketing in the near future.
We also ran a post this week with tips for making the first marketing hire, and Managing Editor Eric Eldon spoke to growth leader Susan Su to get her thoughts about building remote marketing teams.
We’re off today to celebrate the Juneteenth holiday in the United States. I hope you have a safe and relaxing weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
As the economy reopens, startups are uniquely positioned to recruit talent
Image Credits: ballyscanlon (opens in a new window) / Getty Images
The pandemic forced a reckoning about the way we work — and whether we want to keep working in the same way, with the same people, for the same company — and many are looking for something different on the other side.
Art Zeile, the CEO of DHI Group, notes this means it’s a great time for startups to recruit talent.
“While all startups are certainly not focused on being disruptive, they often rely on cutting-edge technology and processes to give their customers something truly new,” Zeile writes. “Many are trying to change the pattern in their particular industry. So, by definition, they generally have a really interesting mission or purpose that may be more appealing to tech professionals.”
Here are four considerations for high-growth company founders building their post-pandemic team.
Refraction AI’s Matthew Johnson-Roberson on finding the middle path to robotic delivery
Image Credits: Bryce Durbin
“Refraction AI calls itself the Goldilocks of robotic delivery,” Rebecca Bellan writes. “The Ann Arbor-based company … was founded by two University of Michigan professors who think delivery via full-size autonomous vehicles (AV) is not nearly as close as many promise, and sidewalk delivery comes with too many hassles and not enough payoff.
“Their ‘just right’ solution? Find a middle path, or rather, a bike path.”
Rebecca sat down with the company’s CEO to discuss his motivation to make “something that is useful to the general public.”
How to identify unicorn founders when they’re still early-stage
Image Credits: RichVintage (opens in a new window)/ Getty Images
What are investors looking for?
Founders often tie themselves in knots as they try to project qualities they hope investors are seeking. In reality, few entrepreneurs have the acting skills required to convince someone that they’re patient, dedicated or hard working.
Johan Brenner, general partner at Creandum, was an early backer of Klarna, Spotify and several other European startups. Over the last two decades, he’s identified five key traits shared by people who create billion-dollar companies.
“A true unicorn founder doesn’t need to have all of those capabilities on day one,” Brenner, writes “but they should already be thinking big while executing small and demonstrating that they understand how to scale a company.”
Founders Ben Schippers and Evette Ellis are riding the EV sales wave
Image Credits: TechCrunch
EV sales are driving demand for services and startups that fulfill the new needs of drivers, charging station operators and others.
Evette Ellis and Ben Schippers took to the main stage at TC Sessions: Mobility 2021 to share how their companies capitalized on the new opportunities presented by the electric transportation revolution.
Scale AI CEO Alex Wang weighs in on software bugs and what will make AV tech good enough
Image Credits: Alexandr Wang
Scale co-founder and CEO Alex Wang joined us at TechCrunch Sessions: Mobility 2021 to discuss his company’s role in the autonomous driving industry and how it’s changed in the five years since its founding.
Scale helps large and small AV players establish reliable “ground truth” through data annotation and management, and along the way, the standards for what that means have shifted as the industry matures.
Even if two algorithms in autonomous driving might be created more or less equal, their real-world performance could vary dramatically based on what they’re consuming in terms of input data. That’s where Scale’s value prop to the industry starts, and Wang explains why.
Edtech investors are flocking to SaaS guidance counselors
Image Credits: Getty Images / Vertigo3d
The prevailing post-pandemic edtech narrative, which predicted higher ed would be DOA as soon as everyone got their vaccine and took off for a gap year, might not be quite true.
Natasha Mascarenhas explores a new crop of edtech SaaS startups that function like guidance counselors, helping students with everything from study-abroad opportunities to swiping right on a captivating college (really!).
“Startups that help students navigate institutional bureaucracy so they can get more value out of their educational experience may become a growing focus for investors as consumer demand for virtual personalized learning increases,” she writes.
Dear Sophie: Is it possible to expand our startup in the US?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
My co-founders and I launched a software startup in Iran a few years ago, and I’m happy to say it’s now thriving. We’d like to expand our company in California.
Now that President Joe Biden has eliminated the Muslim ban, is it possible to do that? Is the pandemic still standing in the way? Do you have any suggestions?
— Talented in Tehran
Companies should utilize real-time compensation data to ensure equal pay
Image Credits: Rudzhan Nagiev (opens in a new window) / Getty Images
Chris Jackson, the vice president of client development at CompTrak, writes in a guest column that having a conversation about diversity, equity and inclusion initiatives and “agreeing on the need for equality doesn’t mean it will be achieved on an organizational scale.”
He lays out a data-driven proposal that brings in everyone from directors to HR to the talent acquisition team to get companies closer to actual equity — not just talking about it.
Investors Clara Brenner, Quin Garcia and Rachel Holt on SPACs, micromobility and how COVID-19 shaped VC
Image Credits: TechCrunch
Few people are more closely tapped into the innovations in the transportation space than investors.
They’re paying close attention to what startups and tech companies are doing to develop and commercialize autonomous vehicle technology, electrification, micromobility, robotics and so much more.
For TC Sessions: Mobility 2021, we talked to three VCs about everything from the pandemic to the most overlooked opportunities within the transportation space.
Experts from Ford, Toyota and Hyundai outline why automakers are pouring money into robotics
Image Credits: TechCrunch
Automakers’ interest in robotics is not a new phenomenon, of course: Robots and automation have long played a role in manufacturing and are both clearly central to their push into AVs.
But recently, many companies are going even deeper into the field, with plans to be involved in the wide spectrum of categories that robotics touch.
At TC Sessions: Mobility 2021, we spoke to a trio of experts at three major automakers about their companies’ unique approaches to robotics.
Apple AirTags UX teardown: The trade-off between privacy and user experience
Image Credits: James D. Morgan/Getty Images
Apple’s location devices — called AirTags — have been out for more than a month now. The initial impressions were good, but as we concluded back in April: “It will be interesting to see these play out once AirTags are out getting lost in the wild.”
That’s exactly what our resident UX analyst, Peter Ramsey, has been doing for the last month — intentionally losing AirTags to test their user experience at the limits.
This Extra Crunch exclusive helps bridge the gap between Apple’s mistakes and how you can make meaningful changes to your product’s UX.
How to launch a successful RPA initiative
Image Credits: NanoStockk (opens in a new window) / Getty Images
Robotic process automation (RPA) is no longer in the early-adopter phase.
Though it requires buy-in from across the organization, contributor Kevin Buckley writes, it’s time to gather everyone around and get to work.
“Automating just basic workflow processes has resulted in such tremendous efficiency improvements and cost savings that businesses are adapting automation at scale and across the enterprise,” he writes.
Long story short: “Adapting business automation for the enterprise should be approached as a business solution that happens to require some technical support.”
Mobility startups can be equitable, accessible and profitable
Image Credits: TechCrunch
Mobility should be a right, but too often it’s a privilege. Can startups provide the technology and the systems necessary to help correct this injustice?
At our TC Sessions: Mobility 2021 event, we sat down with Revel CEO and co-founder Frank Reig, Remix CEO and co-founder Tiffany Chu, and community organizer, transportation consultant and lawyer Tamika L. Butler to discuss how mobility companies should think about equity, why incorporating it from the get-go will save money in the long run, and how they can partner with cities to expand accessible and sustainable mobility.
CEO Shishir Mehrotra and investor S. Somasegar reveal what sings in Coda’s pitch doc
Image Credits: Carlin Ma / Madrona Venture Group/Brian Smale
Coda CEO Shishir Mehrotra and Madrona partner S. Somasegar joined Extra Crunch Live to go through Coda’s pitch doc (not deck. Doc) and stuck around for the ECL Pitch-off, where founders in the audience come “onstage” to pitch their products to our guests.
Extra Crunch Live takes place every Wednesday at 3 p.m. EDT/noon PDT. Anyone can hang out during the episode (which includes networking with other attendees), but access to past episodes is reserved exclusively for Extra Crunch members. Join here.
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Extra Crunch roundup: EU insurtech, 30 years of ‘Crossing the Chasm,’ embedded finance’s endgame
This morning, Anna Heim and Alex Wilhelm dug into the EU insurtech market, interviewing European VCs and collating the biggest recent rounds to take the temperature of the waters across the pond:
- Alex Timm, CEO, Root
- Dan Preston, CEO, MetroMile
- Luca Bocchio, partner, Accel
- Florian Graillot, investor, Astorya.vc
- Stephen Brittain, director and founder, Insurtech Gateway
Several European-based insurtech startups entered unicorn territory this year, such as Bought By Many, which offers pet insurance; London-based Zego; and Alan, a French startup that raised a $220 million round.
According to Brittain, EU startups in this sector are “still at the very early stages of innovation,” having only shown “a fraction of what’s possible” in a market that is “as large as banking.” Interestingly, he predicted that AI will play a larger role in the future as companies deploy it for fraud detection, improved customer experiences and processing claims more quickly.
“We are fully expecting the next generation of AI-driven business to unlock real-time risk analysis, pricing and claims resolution in the next few years,” he said.
Thanks very much for reading Extra Crunch; I hope you have a safe, relaxing weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
What do these 4 IPOs tell us about the state of the market?
Image Credits: Nigel Sussman (opens in a new window)
Earlier this week, The Exchange assessed the looming Monday.com IPO before reading the tea leaves about that flotation and three others to sum up the overall state of the market.
So what do the Marqeta, Monday.com, Zeta Global and 1stDibs debuts tell us? We may have been too conservative.
Toast’s Aman Narang and BVP’s Kent Bennett on how customer obsession is everything
Image Credits: Bessemer Venture Partners / Toast
On a recent episode of Extra Crunch Live, we spoke to Toast founder Aman Narang and Kent Bennett of Bessemer Venture Partners about how they came together for a deal, what makes the difference for both founders and investors when fundraising, and the biggest lessons they’ve learned so far.
The episode also featured the Extra Crunch Live Pitch-Off, where audience members pitched their products to Bennett and Narang and received live feedback.
Extra Crunch Live is open to everyone each Wednesday at 3 p.m. EDT/noon PDT, but only Extra Crunch members are able to stream these sessions afterward and watch previous shows on-demand in our episode library.
AI startup investment is on pace for a record year
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim solicited feedback from investors to get a temperature on the market for AI startup investments.
“The startup investing market is crowded, expensive and rapid-fire today as venture capitalists work to preempt one another, hoping to deploy funds into hot companies before their competitors,” they write. “The AI startup market may be even hotter than the average technology niche.”
But that’s not surprising. The Exchange was on it.
“In the wake of the Microsoft-Nuance deal, The Exchange reported that it would be reasonable to anticipate an even more active and competitive market for AI-powered startups,” Alex and Anna note. “Our thesis was that after Redmond dropped nearly $20 billion for the AI company, investors would have a fresh incentive to invest in upstarts with an AI focus or strong AI component; exits, especially large transactions, have a way of spurring investor interest in related companies.”
Their expectation is coming true: Investors reported a fierce market for AI startups.
Dear Sophie: What is a diversity green card and how do I apply for one?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
I started a tech company about two years ago, and ever since I’ve dreamed of expanding my company in the United States.
I would love to have a green card. Someone mentioned that I should apply for a diversity green card. Would you please provide me with more details about it and how to apply?
— Technical in Tanzania
How to start a company in 4 days
Image Credits: MediaProduction (opens in a new window) / Getty Images
Pulley founder and three-time YC alum Yin Wu offers a tactical guide to getting a startup running in four days. Yes, just four days.
“The logistics of setting up a startup should be simple, because over the long run, complicated equity setups and cap tables cost more money in legal fees and administration time,” Wu notes.
Read on for guidance on how to get your business going in less than a week.
Health clouds are set to play a key role in healthcare innovation
Image Credits: Natali_Mis / Getty Images
Innovaccer founder and CEO Abhinav Shashank and CTO Mike Sutten write in a guest column that the U.S. healthcare industry is in the middle of a massive transformation.
This shift, they write, “is being stimulated by federal mandates, technological innovation, and the need to improve clinical outcomes and communication between providers, patients and payers.”
Improving healthcare now means we need to process tremendous amounts of healthcare data. How do we do it? The cloud, which “plays a pivotal role in meeting the current needs of healthcare organizations.”
What SOSV’s Climate Tech 100 tells founders about investors in the space
Image Credits: MrJub / Getty Images
SOSV’s Benjamin Joffe and Meghan Hind round up a “who’s who” from the venture capital firm’s SOSV Climate Tech 100, a list of the best startups addressing climate change that SOSV has supported from the very beginning.
“What can founders learn from the list about climate tech investors? In other words, who invested in the Climate Tech 100?” they ask.
The fintech endgame: New supercompanies combine the best of software and financials
Image Credits: Donald Iain Smith (opens in a new window) / Getty Images
Now that we can transact from anywhere, a new, hybrid class of software companies with embedded financial services are scooping up consumers — and investors are following the action.
Using data from a Battery Ventures report about “the intersection of software and financial services,” this post examines why these companies can be so hard to value and offers a framework for better understanding their business models and investor appeal.
After 30 years, ‘Crossing the Chasm’ is due for a refresh
Image Credits: Grant Faint (opens in a new window) / Getty Images
Geoffrey Moore’s “Chasm,” a framework for marketing technology products that has been one of the canonical foundational concepts to product-market fit for three decades, needs a bit of an upgrade, Flybridge Capital’s Jeff Bussgang writes.
“I have been reflecting on why it is that we venture capitalists and founders keep making the same mistake over and over again — a mistake that has become even more glaring in recent years,” he writes.
Bussgang goes on to consider the Chasm — and propose tweaks for thinking about market size in the modern era.
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Extra Crunch roundup: Security data lakes, China vs. Starlink, ExtraHop’s $900M exit
News broke this morning that Bain Capital Private Equity and Crosspoint Capital Partners are purchasing Seattle-based network security startup ExtraHop.
Part of the Network Detection and Response (NDR) market, ExtraHop’s security solutions are for companies that manage assets in the cloud and on-site, “something that could be useful as more companies find themselves in that in-between state,” report Ron Miller and Alex Wilhelm.
Just one year ago, ExtraHop was closing in on $100 million in ARR and was considering an IPO, so Ron and Alex spoke to ExtraHop CTO and co-founder Jesse Rothstein to learn more about how (and why) the deal came together.
Have a great week, and thanks for reading!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Full Extra Crunch articles are only available to members.
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Xometry is taking its excess manufacturing capacity business public
Image Credits: Prasit photo (opens in a new window)/ Getty Images
Xometry, a Maryland-based service that connects companies with manufacturers with excess production capacity around the world, filed an S-1 form with the U.S. Securities and Exchange Commission last week announcing its intent to become a public company.
As the global supply chain tightened during the pandemic in 2020, a company that helped find excess manufacturing capacity was likely in high demand.
But growth aside, it’s clear that Xometry is no modern software business, at least from a revenue-quality profile.
It’s time for security teams to embrace security data lakes
Image Credits: Malorny (opens in a new window) / Getty Images
The average corporate security organization spends $18 million annually but is largely ineffective at preventing breaches, IP theft and data loss. Why?
The fragmented approach we’re currently using in the security operations center (SOC) does not work. It’s time to replace the security information and event management (SIEM) approach with security data lakes.
The reduced reliance on the SIEM is well underway, along with many other changes. The SIEM is not going away overnight, but its role is changing rapidly, and it has a new partner in the SOC — the security data lake.
China’s drive to compete against Starlink for the future of orbital internet
Image Credits: STR/China News Service (CNS)/AFP (opens in a new window)/ Getty Images
There has been a wave of businesses over the past several years hoping to offer broadband internet delivered from thousands of satellites in low-Earth orbit (LEO), providing coverage of most of the earth’s surface.
In tandem with the accelerated deployment of SpaceX’s Starlink constellation in 2020, China has rapidly responded in terms of policy, financing and technology. While still in early development, a “Chinese answer to Starlink,” SatNet, and the associated GuoWang are likely to compete in certain markets with Starlink and others while also fulfilling a strategic purpose from a government perspective.
With considerable backing from very high-level actors, we are likely to see the rollout of a Red Star(link) over China (and the rest of the world) over the coming years.
This SPAC is betting that a British healthcare company can shake up the US market
Image Credits: Nigel Sussman (opens in a new window)
Babylon Health, a British health tech company, is pursuing a U.S. listing via a blank-check company, or SPAC.
While we wait for Robinhood’s IPO, The Exchange dove into its fundraising history, its product, its numbers and, bracing ourselves for impact, its projections.
The hidden benefits of adding a CTO to your board
Image Credits: Westend61 / Getty Images
Conventional wisdom says your board should include a few CEOs who can offer informed advice from an entrepreneur’s perspective, but adding a technical leader to the mix creates real upside, according to Abby Kearns, chief technology officer at Puppet.
Beyond their engineering experience, CTOs can help founders set realistic timelines, help identify pain points and bring what Kearns calls “pragmatic empathy” to high-pressure situations.
They can also be an effective advocate for founder teams who need help explaining why a launch is delayed or new engineering hires are badly needed.
“A CTO understands the nuts and bolts,” says Kearns.
6 career options for ex-founders seeking their next adventure
Image Credits: Marie LaFauci / Getty Images
As someone with “founder” on your resume, you face a greater challenge when trying to get a traditional salaried job.
You’ve already shown that you really want to lead a company, not just rise up the ladder, which means some employers are less likely to hire you.
So what should you do? Especially if your life partner and/or bank account are burnt out on the income volatility of startups?
Here are six options for ex-founders planning their next move.
How bottom-up sales helped Expensify blaze the path for SaaS
Image Credits: Nigel Sussman
In the fifth and final part of Expensify’s EC-1, Anna Heim explores how the company built its business, true to form, in an unexpected way.
“You’d expect an expense management company to have a large sales department and advertise through all kinds of channels to maximize customer acquisition, Anna writes. But “Expensify just doesn’t do what you think it should.
“Keeping in mind this company’s propensity to just stick to its guts, it’s not much of a surprise that it got to more than $100 million in annual recurring revenue and millions of users with a staff of 130, some contractors, and an almost non-existent sales team.”
How is that much growth possible without a sales team? Word of mouth.
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