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The big question on every startup’s mind for 2021
My big question for 2021, and the one that is on every startup’s mind, is how will a cataclysmic event such as a global pandemic show up in post-pandemic innovation? I think we’re in the early innings of seeing what “aha moments” have materialized into companies. And we won’t know the pandemic’s true impact on our psyches until the dust settles and we have an opportunity to reflect.
We do know it will be fascinating to watch. In 2020, innovators and investors were forced to stand still, and witness cracks, fractures and rubble in society in a way like never before. It was a humbling year that, for much of the tech community, was mostly spent inside, away and alone.
One reaction I’ve noticed so far — that isn’t necessarily new but comes with new weight — is a rush of innovation that focuses on reducing friction. Take trends like the rise of building in public or the unbundling of venture capital. Or remote work’s shift from enabling communication to now needing to enable passive and active collaboration. Apply the same idea to mental health, education and fitness. Heck, we’re even seeing people take the Y Combinator format and apply it to anything that makes sense, from helping operators turn into investors to helping employees try to turn their side gig into a full-time company.
While these movements didn’t begin because of the coronavirus, they all seem to have a huge, pandemic-sized asterisk next to it.
It would be easy to dismiss these movements as small and inconsequential. But, as my colleague and fellow Equity co-host Danny Crichton pointed out this week, “sometimes the most important changes in venture and startups more generally have come from lowering that last bit of friction to action.”
Lowering friction feels like the mantra with which we all need to enter 2021.
I already have hope that innovation will come from a more diverse set of people, whether it’s in a hacker house for undergraduate women or a student-founded service that matches undergraduate students to nonprofits. So, as we enter the new year — and bear with me here — I urge you to be optimistic.
The last year in tech hasn’t left people exhausted and hopeless, it’s left them energized and ready.
Maze, computer artwork. (Image Credits: Pasieka / Getty Images)
Will the second time be the charm for Qualtrics?
When SAP announced that Qualtrics was getting spun out in July, the full-circle moment made the Equity podcast crew jump to our mics with guesses around why. Now, months later, there’s a new S-1 filing, and more to color in. Alex Wilhelm broke down the Utah-based unicorn’s numbers, noting that it’s the second time Qualtrics has filed.
Will the second time be the charm that Qualtrics needs to actually go public this time around? I’ll let you make the call yourself once you sift through Alex’s analysis of the valuation and financials.
Blackboard Business Strategy Concept. (Image Credits: hanibaram / Getty Images)
Miami, Substack and Clubhouse
If those three words in a single subhed elicit a certain reaction from you, Danny Crichton has a bone to pick with you. He wrote a piece this week about tech’s cynicism around anything new, underscoring how Miami’s future as a tech hub, Substack’s future as a replacement for traditional journalism and Clubhouse’s future as a social media disruptor have come under fire as expected:
The cynicism of immediate perfection is one of the strange dynamics of startups in 2020. There is this expectation that a startup, with one or a few founders and a couple of employees, is somehow going to build a perfect product on day one that mitigates any potential problem even before it becomes one. Maybe these startups are just getting popularized too early, and the people who understand early product are getting subsumed by the wider masses who don’t understand the evolution of products?
Danny’s argument is to give these companies a little more grace to execute on a vision they themselves are not even close to scratching the surface of. When it comes to holding specific decision-makers and businesses to a certain standard, I prefer a more fluid conversation. But I do agree that writing off a business because it hasn’t done everything correctly from the start can hurt progress. It’s easy to be grumpy, but why not choose to be an optimist? Tell me your optimistic bets by responding to this newsletter or tweeting me @nmasc_.
Skyline of downtown Miami, Florida looking toward the Brickell neighborhood on Biscayne Bay. Brickell is one of the largest financial districts in the United States and also has many high-rise residential condominium and apartment towers. (Image Credits: John Coletti / Getty Images)
And some good news
Speaking of humbling moments and optimism, our own Sarah Perez wrote a piece this week about EarlyBird, an app that lets families and friends gift investments to children. While Acorns and Stash have similar offerings, EarlyBird is bringing a fresh UX play to financial literacy, freedom and education. There’s a ton of work left to be done, hurdles to deal with, and giant unicorns to compete with. EarlyBird, however, is only weeks old, so there’s much to watch out for.
VP Caleb Frankel, now EarlyBird COO, explained the early inspiration:
“This all started with a problem I experienced years ago when my beautiful baby niece was born. I found myself head over heels and spending hundreds and hundreds of dollars on just the most ridiculous stuff — pretty much just junk gifts,” he says. “I wanted to have a larger impact in her life and something that she could really use when she grew up.”
Image Credits: oxygen (opens in a new window) / Getty Images
Around TechCrunch
Attending CES 2021? TechCrunch wants to meet your startup
Gift Guide: Last-minute subscriptions to keep the gifts going all year
Across the week
Seen on Extra Crunch
How artificial intelligence will be used in 2021
On the diversity front, 2020 may prove a tipping point
The 2020 boom in climate tech SPACs
2021 will be a calmer year for semiconductors and chips (except for Intel)
Understanding Europe’s big push to rewrite the digital rulebook
Seen on TechCrunch
China lays out ‘rectification’ plan for Jack Ma’s fintech empire Ant
NSO used real people’s location data to pitch its contact-tracing tech, researchers say
India’s slow 2020 told through dollars and cents
An earnest review of a robotic cat pillow
@EquityPod
The Equity pod put together a 2021 predictions episode (with Chris Gates, our producer, making a guest appearance on the mic as well!). We talk about IPO candidates, San Francisco and the future of drugs.
2020 brought several million downloads to the podcast, and we’re super thankful to all of y’ all for tuning in. This year will be even bigger, better and, hey, maybe we’ll even get to make fun of each other in person too.
Till next week,
Natasha Mascarenhas
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Xometry raises $75M Series E to expand custom manufacturing marketplace
When companies need to find manufacturers to build custom parts, it’s not always an easy process, especially during a pandemic. Xometry, a seven-year-old startup based in Maryland, has built an online marketplace where companies can find manufacturers across the world with excess capacity to build whatever they need. Today, the company announced a $75 million Series E investment to keep expanding the platform.
T. Rowe Price Associates led the investment, with participation from new firms Durable Capital Partners LP and ArrowMark Partners. Previous investors also joined the round, including BMW i Ventures, Greenspring Associates, Dell Technologies Capital, Robert Bosch Venture Capital, Foundry Group, Highland Capital Partners and Almaz Capital . Today’s investment brings the total raised to $193 million, according to the company.
Company CEO and co-founder Randy Altschuler says Xometry fills a need by providing a digital way of putting buyers and manufacturers together with a dash of artificial intelligence to put the right combination together. “We’ve created a marketplace using artificial intelligence to power it, and provide an e-commerce experience for buyers of custom manufacturing and for suppliers to deliver that manufacturing,” Altschuler told TechCrunch.
The kind of custom pieces that are facilitated by this platform include mechanical parts for aerospace, defense, automotive, robotics and medical devices — what Altschuler calls mission-critical parts. Being able to put companies together in this fashion is particularly useful during COVID-19 when certain regions might have been shut down.
“COVID has reinforced the need for distributed manufacturing and our platform enables that by empowering these local manufacturers, and because we’re using technology to do it, as COVID has unfolded […] and as continents have shut down, and even specific states in the United States have shut down, our platform has allowed customers to autocorrect and shift work to other locations,” he explained
What’s more, companies could take advantage of the platform to manufacture critical personal protective equipment. “One of the beauties of our platform was when COVID hit customers could come to our platform and suddenly access this tremendous amount of manufacturing capacity to produce this much-needed PPE,” he said.
Xometry makes money by facilitating the sale between the buyer and producer. They help set the price and then make money on the difference between the cost to produce and how much the buyer was willing to pay to have it done.
They have relationships with 5,000 manufacturers located throughout the world and 30,000 customers using the platform to build the parts they need. The company currently has around 350 employees, with plans to use the money to add more to keep enhancing the platform.
Altschuler says from a human perspective, he wants his company to have a diverse workforce because he never wants to see people being discriminated against for whatever reason, but he also says as a company with an international market, having a diverse workforce is also critical to his business. “The more diversity that we have within Xometry, the more we’re able to effectively market to those folks, sell to those folks and understand how they utilize technology. We’re just going to better understand our customer set as we [build a more diverse workforce],” he said.
As a Series E-stage company, Altschuler does not shy away from the IPO question. In fact, he recently brought in new CFO Jim Rallo, who has experience taking a company public. “The market that we operate in is so large, and there’s so many opportunities for us to serve both our customers and our suppliers, and we have to be great for both of them. We need capital to do that, and the public markets can be an efficient way to access that capital and to grow our business, and in the end that’s what we want to do,” he said.
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Players Ntwrk launches celebrity gaming channel backed by WME, Daylight and Stratton Sclavos
Emerging from the smoldering wreckage of Echo Fox and Vision Venture Partners, the investor Stratton Sclavos is rising again to launch a new esports-related venture — a gaming-focused digital network also backed by the WME talent agency and Daylight Holdings.
Tapping Daylight and WME’s roster of talent, Sclavos has created Players Ntwrk, a new gaming-focused production company that will look to compete with other upstarts angling to tap into esports and competitive gaming’s newly dominant place in the entertainment firmament.
Players Ntwrk will feature original programming, unscripted series, celebrity gameplay and live events tapping talent from music, traditional pro-sports and the esports gaming world.
Sclavos and the multifaceted talent manager and president of Daylight Holdings, Ben Curtis, dreamed up Players Ntwrk as a way to tie together disparate groups of athletes and entertainers around their shared love of gaming and entertainment. The network will initially leverage relationships with WME and Klutch Sports Group, the agency founded by LeBron James’ longtime manager, Rich Paul, to find talent for programming.
The network will launch on Tuesday at 5:00 pm Pacific for two hours of gameplay featuring the New Orleans Pelicans Guard/Forward Josh Hart and Sacramento Kings point guard De’Aaron Fox on the Players Ntwrk Twitch channel. Additional live streams will be broadcast Friday and Saturday, the company said.
Over the next 12 weeks the network will add live programming featuring all of its “First Squad” talent and experimenting with different gaming and unscripted formats. Ultimately, the network will produce between 12 and 15 hours of original programming per week by the end of the second quarter and will ramp up to 20 to 24 hours of programming per-week by the end of the year.
Initial programming is going to be devoted to charity fundraising, with proceeds going to designated charities based on direct audience donations, the company said.
Players Ntwrk’s First Squad talent roster includes:
- Professional athletes: De’Aaron Fox (Sacramento Kings), Josh Hart (New Orleans Pelicans), Jarvis Landry (Cleveland Browns) and Alvin Kamara (New Orleans Saints)
- Music and Entertainment: PARTYNEXTDOOR, Murda Beatz, producer Boi-1da, actor/former athlete Donovan Carter (Ballers)
- Creators/Streamers: KatGunn, Sodapoppin, Cash, Jesser, Jericho, Octane, Sigils, Sonii and DenkOps
Players Ntwrk joins companies like Venn, which are angling to gain a slice of the roughly 37.5 million monthly viewers that are expected to watch live streams on Twitch by the end of 2020, according to research done by eMarketer.
“The number of viewers and subscribers consuming gaming entertainment across YouTube and Twitch tops other entertainment services such as Netflix, HBO, Spotify and ESPN combined,” said Sclavos, in a statement. “Entertainment spectacle is trumping hardcore gaming competition. That kind of engagement makes it clear; gaming entertainment is the next pop culture phenomena. PLAYERS NTWRK is the only platform embracing and executing this new reality by creating original content with the most influential people who also happen to be fans themselves.”
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Mobility startup Damon Motors enters e-moto arena with EV debut
Vancouver-based mobility startup Damon Motorcycles has entered the EV arena with a preview of its first e-moto, the Hypersport Pro.
The seed-stage company had previously focused on creating digital safety technology — like its 360-degree radar detection system — to augment two-wheelers made by other manufacturers.
Damon has determined to create its own EV model designed to overcome common flaws it sees in existing motorcycle offerings.
“We are for the first time being black and white about the fact that we are a full-on producer and we have a motorcycle we’re going to unveil at CES,” Damon Motorcycle founder and CEO Jay Giraud told TechCrunch.
That machine is the fully electric Damon Hypersport Pro. The news is a pre-announcement ahead of the full January debut, so Giraud would not offer much in the way of core specs — such as price, range, charge-time and performance.
He was clear the motorcycle is meant to be a direct competitor to the latest e-motos released by Harley-Davidson and California-based venture Zero Motorcycles — and to the gas-motorcycle market overall.
“We’ve come at this and the motorcycle problem in a way that no other company has,” Giraud explained.
“We’re trying to change the industry by addressing the issues of safety and handling and comfort and the problems that have persisted with everyone in the industry, including all the e-moto companies today.”
Damon’s Hypersport Pro is designed around the company’s CoPilot system, which uses sensors, radar and cameras to detect and track moving objects around the motorcycle, including blind spots, and alert riders to danger.
Damon has also taken on the problem of one-size-fits-all in motorcycle design, integrating a system on its Hypersport Pro that allows for adjustable ergonomics. The startup’s debut model will allow riders to electronically shift the motorcycle’s windscreen, seat, footpegs and handlebars to accommodate for different positions and conditions — from more upright city riding to more aggressive high-speed runs.
Damon Motorcycles is taking pre-orders for its Hypersport Pro and will skip dealers, opting to use a direct-sales and service model similar to Tesla . The startup’s Vancouver facility is equipped to build 500 motorcycles a year, according to Giraud.
The company recently brought on Derek Dorresteyn, the former CTO of e-moto startup Alta, as its COO. Full specs of the Hypersport Pro will come next month at CES, but Giraud did offer a glimpse, saying it would be more competitive and more powerful than existing e-moto offerings.
Harley-Davidson released its first e-motorcycle — the $29K LiveWire — in 2019 and California EV startup Zero Motorcycles launched its $19K SR/F, both in bids to go take e-motos mass-market. Aside from the price-gap, both have comparable charge times (about an hour), performance and range (around 100 miles for combined city and highway riding).
The U.S. motorcycle industry has been in pretty bad shape since the recession. New sales dropped by roughly 50% since 2008 — with sharp declines in ownership by everyone under 40 — and have never recovered.
Harley-Davidon’s EV pivot is likely to bring e-moto offerings from the other large gas manufacturers, such as Honda and Yamaha, which are also attempting to revive sales to younger riders.
Harley-Davidson’s LiveWire
With Damon’s pivot to e-moto production, the startup is not alone. Italy’s Energica is expanding distribution of its high-performance EVs in the U.S. Other competitors include e-moto startup Fuell, with plans to release its $10K, 150-mile range Flow in the near future.
Of course, there have already been some speed bumps and market attrition, with three e-moto startups — Alta Motors, Mission Motors and Brammo — forced to power down over the last several years.
So how does Damon Motors plan to succeed as a new entrant in a motorcycle market with stagnant new bikes sales and increased EV competition from established OEMs and startups?
“We have so many advantages the others don’t have and we’re leveraging everyone of their weaknesses,” founder Jay Giraud said. The company’s direct-sale model will lend to more competitive pricing and higher margins for R&D, he said.
Then there are what Damon Motorcycles sees as its Hypersport Pro’s purposely designed comparative advantages over existing manufacturers.
“You’re gonna love the horsepower and range and all that good stuff, but that’s not what makes Damon different from every one else,” explained Giraud.
“What’s different is that it’s a safer motorbike with the safety features and transforming ergonomics that will keep you from smashing into someone’s car,” he said.
Not crashing into other people’s cars is certainly a compelling feature to offer in a motorcycle. Time and sales will ultimately tell how Damon fares in the inevitable cycle of events — profitability, failure, acquisition — that will play out in the increasingly competitive e-moto space.
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Rapchat raises $1.6 million to help you make and share your def jams
The first thing to understand about media-sharing app Rapchat is that co-founder Seth Miller is not a rapper and his other co-founder, Pat Gibson, is. Together they created Rapchat, a service for making and sharing raps, and the conjunction of rapper and nerd seems to be really taking off.
Since we last looked at the app in 2016 (you can see Tito’s review below), a lot has changed. The team has raised $1.6 million in funding from investors out of Oakland and the Midwest. Their app, which is sort of a musical.ly for rap, is a top 50 music app on iOS and Android and hit 100 million listens since launch. In short, their little social network/sharing platform is a “millionaire in the making, boss of [its] team, bringin home the bacon.”
The pair’s rap bona fides are genuine. Gibson has opened or performed with Big Sean, Wiz Khalifa and Machine Gun Kelly, and he’s sold beats to MTV. “My music has garnered over 20M+ plays across YouTube, SoundCloud and more,” he wrote me, boasting in the semi-churlish manner of a rapper with a “beef.” Miller, on the other hand, likes to freestyle.
“I grew up loving to freestyle with friends at OU and I noticed lots of other millennials did this too (even if most suck lol) … at any party at 3am – there would always be a group of people in the corner freestyling,” he said. “At the same time Snapchat was blowing up on campus and just thought you should be able to do the same exact thing for rap.”
Gibson, on the other hand, saw it as a serious tool to help him with his music.
“I spent a lot of time, energy and resources making music,” he said. “I was producing the beats, writing the songs, recording/mixing the vocals, mastering the project, then distributing & promoting the music all by myself. With Rapchat, there’s a library of 1,000+ beats from top producers, an instant recording studio in your pocket, and the network to distribute your music worldwide and be discovered…. all from a free app. Rapchat is disrupting the creation, collaboration, distribution, & discovery of music via mobile.”
“We have a much bigger but also more active community than any other music creation app,” said Miller.
While it’s clear the world needs another sharing platform like it needs a hole in the head, thanks to a rabid fan base and a great idea, the team has ensured that Rapchat is not, as they say, wicka-wicka-whack. That, in the end, is all that matters.
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