Extra Crunch
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As tech companies like Twitter and Facebook gear up for longer-term remote work solutions, the future of work is becoming one of the more exciting opportunities in venture capital, Charles River Ventures general partner Saar Gur told TechCrunch.
And as loneliness mounts with shelter-in-place orders implemented in various forms across the world, investors are looking for products and services that foster true connection among a distributed workforce, as well as a distributed society.
But the future of work doesn’t just entail spinning up home offices. It also involves gig workers, freelancers, hiring tools, tools for workplace organizing and automation. The last couple of years have particularly brought tech organizing to the forefront. Whether it was the Google walkout in 2018 or gig workers’ ongoing actions against companies like Uber, Lyft and Instacart for better pay and protections, there are many opportunities to help workers better organize and achieve their goals.
Below, we’ve gathered insights from:
What are you most excited about in the future of work?
Future of work is one of the most exciting opportunities in venture.
Pre-COVID, few tech companies were fully remote. While it seems obvious in retrospect, the building blocks for fully remote technology companies now exist (e.g. high-speed internet, SaaS and the cloud, reliable video streaming, real-time documents, etc.). And while SIP may be temporary, we feel the TAM of fully remote companies will grow significantly and produce a number of exciting investment opportunities.
I don’t think we have fully grokked what it means to run a company digitally. Today, most processes like interviewing, meetings and performance/activity tracking still live in the world of atoms versus bits. As an example, imagine every meeting is recorded, transcribed and searchable — how would that transform how we work?
There is an opportunity to re-imagine how we work. And we are excited about products that solve meaningful problems in the areas of productivity, brainstorming, communication tools, workflows and more. We also see a lot of potential in infrastructure required to facilitate remote and global teams.
We are also excited by companies that are enabling new types of work. Companies like Etsy (founded 2005), Shopify (2004), TaskTabbit (2008), Uber (2009), DoorDash (2013) and Patreon (2013) have helped create a new workforce of entrepreneurs. But many of these companies are over a decade old and we fully expect a new wave of companies that give more power to the individual.
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Intuitively, stores that sell online should be making a killing during the COVID-19 pandemic. After all, everyone is stuck at home — and understandably more willing to shop online instead of at a traditional retailer to avoid putting themselves and others at medical risk. But the truth is, most smaller online stores have seen better days.
The primary challenge is that smaller shops often don’t have the logistics networks that companies like Amazon do. Consequently, they’re seeing substantially delayed delivery timelines, especially if they ship internationally. Customers obviously aren’t thrilled about that reality. And in many cases, they’re requesting refunds at a staggering rate.
I saw this play out firsthand in April. At that point, my stores were down 20% or in some cases even 30% in revenue. Needless to say, my team was freaking out. But there’s one thing we did that helped us increase our revenue over 200% since the pandemic, decrease refund requests and even strengthen our existing customer relationships.
We implemented a 24-hour live chat in all of our stores. Here’s why it worked for us and why every digital brand should be doing it too.
When I started my first online store in 2006, challenges that bogged my team down often meant that my team’s first priority became resolving those challenges so that we could serve our customers faster. But admittedly, when these challenges came up, it became more difficult to balance communicating with our customers and resolving the issues that prevented us from fulfilling their orders quickly.
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Due to COVID-19, business continuity has been put to the test for many companies in the manufacturing, agriculture, transport, hospitality, energy and retail sectors. Cost reduction is the primary focus of companies in these sectors due to massive losses in revenue caused by this pandemic. The other side of the crisis is, however, significantly different.
Companies in industries such as medical, government and financial services, as well as cloud-native tech startups that are providing essential services, have experienced a considerable increase in their operational demands — leading to rising operational costs. Irrespective of the industry your company belongs to, and whether your company is experiencing reduced or increased operations, cost optimization is a reality for all companies to ensure a sustained existence.
One of the most reliable measures for cost optimization at this stage is to leverage elastic services designed to grow or shrink according to demand, such as cloud and managed services. A modern product with a cloud-native architecture can auto-scale cloud consumption to mitigate lost operational demand. What may not have been obvious to startup leaders is a strategy often employed by incumbent, mature enterprises — achieving cost optimization by leveraging managed services providers (MSPs). MSPs enable organizations to repurpose full-time staff members from impacted operations to more strategic product lines or initiatives.
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Edtech is booming, but a short while ago, many companies in the category were struggling to break through as mainstream offerings. Now, it seems like everyone is clamoring to get into the next seed-stage startup that has the phrase “remote learning” on its About page.
And so begins the normal cycle that occurs when a sector gets overheated — boom, bust and a reckoning. While we’re still in the early days of edtech’s revitalization, it isn’t a gold mine all around the world. Today, in the spirit of balance and history, I’ll present three bearish takes I’ve heard on edtech’s future.
Quizlet’s CEO Matthew Glotzbach says that when students go back to school, the technology that “sticks” during this time of massive experimentation might not be bountiful.
“I think the dividing line there will be there are companies that have been around, that are a little more entrenched, and have good financial runway and can probably survive this cycle,” he said. “They have credibility and will probably get picked [by schools].” The newer companies, he said, might get stuck with adoption because they are at a high degree of risk, and might be giving out free licenses beyond their financial runway right now.
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Shortly after its use exploded in the post-office world of COVID-19, Zoom was banned by a variety of private and public actors, including SpaceX and the government of Taiwan. Critics allege its data strategy, particularly its privacy and security measures, were insufficiently robust, especially putting vulnerable populations, like children, at risk. NYC’s Department of Education, for instance, mandated teachers switch to alternative platforms like Microsoft Teams.
This isn’t a problem specific to Zoom. Other technology giants, from Alphabet, Apple to Facebook, have struggled with these strategic data issues, despite wielding armies of lawyers and data engineers, and have overcome them.
To remedy this, data leaders cannot stop at identifying how to improve their revenue-generating functions with data, what the former Chief Data Officer of AIG (one of our co-authors) calls “offensive” data strategy. Data leaders also protect, fight for, and empower their key partners, like users and employees, or promote “defensive” data strategy. Data offense and defense are core to trustworthy data-driven products.
While these data issues apply to most organizations, highly-regulated innovators in industries with large social impact (the “third wave”) must pay special attention. As Steve Case and the World Economic Forum articulate, the next phase of innovation will center on industries that merge the digital and the physical worlds, affecting the most intimate aspects of our lives. As a result, companies that balance insight and trust well, Boston Consulting group predicts, will be the new winners.
Drawing from our work across the public, corporate, and startup worlds, we identify a few “insight killers” — then identify the trustworthy alternative. While trustworthy data strategy should involve end users and other groups outside the company as discussed here, the lessons below focus on the complexities of partnering within organizations, which deserve attention in their own right.
From the beginning of a data project, a trustworthy data leader asks, “Who are our partners and what prevents them from achieving their goals?” In other words: listen. This question can help identify the unmet needs of the 46% of surveyed technology and business teams who found their data groups have little value to offer them.
Putting this to action is the data leader of one highly-regulated AI health startup — Cognoa — who listened to tensions between its defensive and offensive data functions. Cognoa’s Chief AI Officer identified how healthcare data laws, like the Health Insurance Portability and Accountability Act, resulted in friction between his key partners: compliance officers and machine learning engineers. Compliance officers needed to protect end users’ privacy while data and machine learning engineers wanted faster access to data.
To meet these multifaceted goals, Cognoa first scoped down its solution by prioritizing its highest-risk databases. It then connected all of those databases using a single access-and-control layer.
This redesign satisfied its compliance officers because Cognoa’s engineers could then only access health data based on strict policy rules informed by healthcare data regulations. Furthermore, since these rules could be configured and transparently explained without code, it bridged communication gaps between its data and compliance roles. Its engineers were also elated because they no longer had to wait as long to receive privacy-protected copies.
Because its data leader started by listening to the struggles of its two key partners, Cognoa met both its defensive and offensive goals.
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What does a global mindset look like in a world where most of us no longer travel? And what does it mean to be local when everyone is connected?
Those are the first questions we had in mind when we read GGV Capital’s Twitter bio, which asserts that the investing shop with offices in five cities is a “global venture capital firm that invests in local founders.”
Certainly, some of its investments are far from home, including Khatabook (based in Bangalore), Keep (Beijing), Coder, (Austin) and Slice (New York City). And those are just GGV deals from the last few months.
But what constitutes a local investment in a world where, until recently, no deal was more than a plane ride or two away? Hans Tung and Jeff Richards, managing partners at GGV Capital, are swinging by Extra Crunch Live next week, and we’re going to dive into the above to figure it out.
Of course, we’ll also ask critical, founder-focused questions about their current investing pace, check sizes and how they are adapting to the COVID-19 era. But after that, there’s a lot of work to do.
We’ll call on Tung to share some of what he’s learned from his time investing in China’s tech landscape, with a specific focus on what he sees in the future that might prove encouraging. The other GGV partner joining, Richards, also has international experience working in Asia and Latin America, so the conversation should be interesting.
In February, the firm published a mom-and-pop shop investment thesis. GGV Capital wants to invest in startups that help small retailers digitize operations and work with better supply chains. It is also interested in startups that want to establish logistic and online payment infrastructure. (Surely Shopify can’t be this entire market, right?)
The thesis hinges on consumer shopping habits and retailers open for business, so we’ll see how Tung and Richards are changing their appetite, or further shaping it.
Details are below for Extra Crunch subscribers; if you need a pass, get a cheap trial here.
Chat with you all in a week!
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The COVID-19 pandemic is accelerating the adoption of new technologies and cultural shifts that were already well underway. According to a clutch of heavy-hitting investors, this dynamic is particularly strong in gaming and extended reality.
Unlike other segments of the startup and tech world, where valuations have been slashed, early-stage companies focused on building new games, gaming infrastructure and virtual or extended reality entertainment are having no trouble raising money. They’ve even seen valuations rise, investors said.
“Valuations have increased pretty significantly in the gaming sector. Valuations have gone up 20 to 25% higher than I would have seen prior to this pandemic,” Phil Sanderson, a co-founder and managing director at Griffin Gaming Partners, told fellow participants on a virtual panel during the Los Angeles Games Conference earlier this month.
Driving the appetite for new investments is the entertainment industry’s bearhug of virtual events, animated features, games and social media platforms after widespread shelter-in-place orders made physical events an impossibility.
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It may have entered the game later than other leading regions such as Europe and North America, but Latin America’s fintech industry is dynamic and growing fast. The sector was recently given a valuation of more than $150 billion and continues to expand year-on-year.
And while the longer-term impact of COVID-19 on the sector is yet to be determined, there’s no doubt that the demand for certain fintech solutions is on the rise. As smaller financial institutions across the region are under pressure to digitize, many are calling on fintechs to help them along this journey. In addition, a number of SMEs are seeking out digital loan services to help them get through the crisis.
The sector’s speedy expansion has meant that regulators in LatAm are under increasing pressure to enact legislation that addresses the murky waters of fintech activity, providing confidence to consumers and investors alike. However, regulation across the region must be careful to not quash innovation, while startups must figure out how to be agile in an environment which is becoming increasingly regulated. Let’s take a closer look at what impact regulation has had so far in LatAm, and what needs to happen to strike a balance between sector growth and public trust.
Mexico is currently leading the way when it comes to fintech regulation in LatAm, thanks to its comprehensive 2018 fintech Law. The law covers most fintech activities, including crowdfunding, virtual wallet, transactions carried out with cryptocurrencies and open banking. In addition, Mexico has certain financial laws that regulate financial entities in their execution of transactions using fintech. The law also provides a regulatory sandbox for both licensed and non-licensed companies.
Brazil is the furthest ahead after Mexico, as it individually legislates crowdfunding and peer-to-peer lending, while a special congressional commission is working on a broader legislative strategy. Brazil’s Central Bank also endeavors to make open banking legislation effective by the third quarter of 2020, which will pave the way for a thriving open banking ecosystem.
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This week, Verizon Communications CEO Hans Vestberg joined us for an episode of Extra Crunch Live.
Vestberg is leading the company through the midst of one its biggest rollouts to date with the push into 5G connectivity. In our discussion, he spoke about how he’s managing the organization during this global crisis, his thoughts on work from home and acquisition strategy, and the ways in which 5G will change the way we work and live.
(Disclosure: Verizon Communications is TechCrunch’s parent company.)
Extra Crunch members can check out a partial transcript of the conversation (edited for length and clarity) or watch it in its entirety via YouTube video below.
Extra Crunch Live features some of the brightest minds in tech and VC, including Aileen Lee, Roelof Botha, Kirsten Green and Mark Cuban. Upcoming episodes will include Aaron Levie from Box, GGV’s Hans Tung and Jeff Richards, Eventbrite’s Julia Hartz and others. Extra Crunch members can submit questions to speakers in real time, so please sign up here if you haven’t already.
We’re a large company with 135,000 employees in 70 different countries around the globe. So, of course, we had an early warning when it started actually in Asia. We have employees in Asia, so we got the feeling that this could be really serious. It was early in the first week of February, we moved to the highest emergency or crisis level in the company. That means that we go to a certain crisis mode on how we organized and how we galvanized the company.
That’s usually put into place every time there is a big national disaster because you need to split between people taking care of the crisis and people taking care of running the business. So we were very early on with that. In the beginning of February, we started the emergency crisis operations center that was taking care of employee questions and prioritization of important things. At the same time, we continued to run the business. That was the first thing we did very early on.
Upcoming Extra Crunch Live episodes include discussions with Aaron Levie from Box, GGV’s Hans Tung and Jeff Richards, and Eventbrite’s Julia Hartz.
The other thing we did very early on is that we understood that this was something unprecedented. I mean, you have been in crisis before. I mean, I’ve been in the telecom crisis, and we’ve been in the banking crisis when everything just went boom. This is something totally different. You cannot use any of your historical experience when it comes to this pandemic, which actually impacts each and every one of us when it comes to health. So I was honest, and thought that they’re going to be a lot of questions. We decided very early on to run our noon live webcast to our employees. We are on our… I think it’s the 11th week, where at noon every day, we run the webcast for all our employees. That was two of the first things we did.
We didn’t think we were going to run for 11 weeks on the new live webcast, but we have done it because we see there’s a very good tool to communicate with all our employees.
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We’ve talked a bit publicly about our ideation process, but to be honest, it’s constantly evolving. With every piece of content we create and promote, we gain a better understanding of what works and what doesn’t.
But part of that process has always been allowing for the creative freedom to come up with ideas and then — and most importantly — kill your darlings if they don’t meet the criteria for a good idea.
It’s not always easy; creativity is personal. But culling the list of ideas is necessary for a successful content plan.
So how do you know which ones to cut?
Ask yourself these questions.
Make a list of all the emotions associated with your idea. If you can’t think of any, it means the idea may need some tweaking, or you need to explore it in more depth.
Even helpful how-to content is tied to emotion. Take, for example, “Give Your Kids the Gift of Automotive Repair Skills While You’re Home Together,” a genius piece of content by Car and Driver.
There’s the emotional component of it being in the context of COVID-19, yes, but it’s more than that. It’s about spending quality time with your children and teaching them crucial skills. Related emotions include love, pride, empowerment, accountability, parental responsibility and more.
And the content creators were smart enough to call out the emotional component, like they did here:
Image Credits: Fractl (opens in a new window)
The post garnered nearly 5,000 engagements on Facebook, which to me indicates it hit the sweet spot of being helpful while also tapping into our emotions.
Fractl did a study back in 2013 that explored which type of emotions were the most prevalent in viral images, and, as it turns out, positive emotions had more representation than negative ones. Most prevalent of all? Surprise. People enjoy being astonished, delighted and unexpectedly joyful. Do any of your content ideas fit this bill?
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