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Outreach nabs $50M at a $1.33B valuation for software that helps with sales engagement

CRM software has become a critical piece of IT when it comes to getting business done, and today a startup focusing on one specific aspect of that stack — sales automation — is announcing a growth round of funding underscoring its own momentum. Outreach, which has built a popular suite of tools used by salespeople to help identify and reach out to prospects and improve their relationships en route to closing deals, has raised $50 million in a Series F round of funding that values the company at $1.33 billion. 

The funding will be used to continue expanding geographically — headquartered in Seattle, Outreach also has an office in London and wants to do more in Europe and eventually Asia — as well as to invest in product development.

The platform today essentially integrates with a company’s existing CRM, be it Salesforce, or Microsoft’s, or Kustomer, or something else — and provides an SaaS-based set of tools for helping to source and track meetings, have to-hand information on sales targets, and a communications manager that helps with outreach calls and other communication in real time. It will be investing in more AI around the product, such as its newest product Kaia (an acronym for “knowledge AI assistant”), and it has also hired a new CFO, Melissa Fisher, from Qualys, possibly a sign of where it hopes to go next as a business.

Sands Capital — an investor out of Virginia that also backs the likes of UiPath and DoorDash — is leading the round, Outreach noted, with “strong participation” also from strategic backer Salesforce Ventures. Other investors include Operator Collective (a new backer that launched last year and focuses on B2B) and previous backers Lone Pine Capital, Spark Capital, Meritech Capital Partners, Trinity Ventures, Mayfield and Sapphire Ventures.

Outreach has raised $289 million to date, and for some more context, this is definitely an up round: the startup was last valued at $1.1 billion when it raised a Series E in April 2019.

The funding comes on the heels of strong growth for the company: More than 4,000 businesses now use its tools, including Adobe, Tableau, DoorDash, Splunk, DocuSign and SAP, making Outreach the biggest player in a field that also includes Salesloft (which also raised a significant round last year on the heels of Outreach’s), ClariChorus.aiGongConversica and Afiniti. Its sweet spot has been working with technology-led businesses and that sector continues to expand its sales operations, even as much of the economy has contracted in recent months. 

“You are seeing a cambric explosion of B2B startups happening everywhere,” Manny Medina, CEO and co-founder of Outreach, said in a phone interview this week. “It means that sales roles are being created as we speak.” And that translates to a growing pool of potential customers for Outreach.

It wasn’t always this way.

When Outreach was first founded in 2011 in Seattle, it wasn’t a sales automation company. It was a recruitment startup called GroupTalent working on software to help source and hire talent, aimed at tech companies. That business was rolling along, until it wasn’t: In 2015, the startup found itself with only two months of runway left, with little hope of raising more. 

“We were not hitting our stride, and growth was hard. We didn’t make the numbers in 2014 and then had two months of cash left and no prospects of raising more,” Medina recalled. “So I sat down with my co-founders,” — Gordon Hempton, Andrew Kinzer and Wes Hather, none of whom are at the company anymore — “and we decided to sell our way out of it. We thought that if we generated more meetings we could gain more opportunities to try to sell our recruitment software.

“So we built the engine to do that, and we saw that we were getting 40% reply rates to our own outreaching emails. It was so successful we had a 10x increase in productivity. But we ran out of sales capacity, so we started selling the meetings we had managed to secure with potential talent directly to the tech companies themselves,” in other words, the other side of its marketplace, those looking to fill vacancies.

That quickly tipped over into a business opportunity of its own. “Companies were saying to us, ‘I don’t want to buy the recruitment software. I need that sales engine!” The company never looked back, and changed its name to work for the pivot.

Fast-forward to 2020, and times are challenging in a completely different way, defined as we are by a global health pandemic that affects what we do every day, where we go, how we work, how we interact with people and much more. 

Medina says the impact of the novel coronavirus has been a significant one for the company and its customers, in part because it fits well with two main types of usage cases that have emerged in the world of sales in the time of COVID-19.

“Older sellers now working from home are accomplished and don’t need to be babysat,” he said, but added they can’t rely on their traditional touchpoints “like meetings, dinners and bar mitzvahs” anymore to seal deals. “They don’t have the tools to get over the line. So our product is being called in to help them.”

Another group at the other end of the spectrum, he said, are “younger and less experienced salespeople who don’t have the physical environment [many live in smaller places with roommates] nor experience to sell well alone. For them it’s been challenging not to come into an office because especially in smaller companies, they rely on each other to train, to listen to others on calls to learn how to sell.”

That’s the other scenario where Outreach is finding some traction: They’re using Outreach’s tools as a proxy for physically sitting alongside and learning from more experienced colleagues, and using it as a supplement to learning the ropes in the old way.

“Outreach’s leadership position in the market, clear mission, and value-added approach make the company a natural investment choice for us,” said Michael Clarke, partner at Sands Capital’s Global Innovation Fund, in a statement. “Now more than ever, companies need an AI-powered sales engagement platform like Outreach. Enterprise sales teams are rapidly adopting sales engagement platforms and Outreach’s rapid growth reflects this.”

Like a lot of sales tools that are powered by AI, Outreach in part is taking on some of the more mundane jobs of salespeople.

But Medina doesn’t believe that this will play out in the “man versus machine” scenario we often ponder when we think about human obsolescence in the face of technological efficiency. In other words, he doesn’t think we’re close to replacing the humans in the mix, even at a time when we’re seeing so many layoffs.

“We are at the early innings,” he said. “There are 6.8 million sales people and we only have north of 100,000 users, not even 2% of the market. There may be a redefinition of the role, but not a reduction.”

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So you want to talk about race in tech with Ijeoma Oluo

“A lot of people denigrate the value of talking about race and racism in technological spaces,” said Ijeoma Oluo, author of So You Want to Talk About Race, which has surged to the top of the New York Times best sellers list in paperback nonfiction, two and a half years after its initial January 2018 publication. “…I don’t think there’s a more important space to be talking about it.”

Oluo and I were talking this January, just before the global pandemic struck, at One Cup Coffee: a no-frills, “more than profit” coffee shop that shares a storefront with a church, and is just down the road from a methadone clinic. The cafe is not far from Oluo’s home in Shoreline, Washington, a city just north of Seattle.

“I’ve seen the absolute best and the absolute worst in race and racism in America on the web,” Oluo continued, “in ways that have had true-life consequences for me and for people I love. [The internet] is a space that is just as real as face-to-face space. And we absolutely have to be looking at it politically and socially, as to how it’s contributing to the way in which we look and deal with each other and how we address issues of inequality and injustice.”

To drive to Shoreline from the posh Seattle neighborhood in which I’d been researching Amazon’s growing campus which exceeds anything at Harvard and MIT, the two campuses at which I work as a chaplain, in terms of glittering architectural swank I’d had to pass directly by probably the largest homeless encampments I’ve ever seen in my life. And I’ve led interfaith groups of students to study and volunteer in large homeless encampments. 

Speaking of religion and faith, Oluo and I began our 90-minute conversation (edited highlights below) by bonding a bit over our shared interest in “humanism,” a semi-organized movement of atheists, agnostics, and allies who try to do good and live meaningfully without belief in a God. I work as the Humanist Chaplain at Harvard and MIT, and write about humanist philosophy as a kind of secular alternative to religion.

For her part, Oluo accepted an award for feminist humanism from the American Humanist Association in 2018. She delivered her acceptance speech to a mostly white liberal crowd who tended to think of themselves as enlightened and broad-minded and thus took it in stride when she opened by telling them to ‘buckle up,’ as they ate chicken breasts on white plates and black table cloths, busily passing rolls and butter and accidentally clinking their water glasses. But when Oluo told them, “I need for you to not always be looking for the harm others are doing, but look for the harm you are doing,” as my friend Ryan Bell tweeted at the time, “you could hear a pin drop in here. 

Back to this past January, however: as we sipped simple cups of coffee and tea, I told Oluo about the thesis I’ve developed over the course of my year-plus here as TechCrunch’s “Ethicist in Residence”: that the world we call “technology” has grown bigger than any industry, and more impactful than a single culture. Technology has become a secular religion: quite possibly the largest, most influential religion human beings have ever created.

As you’ll see below, Oluo kindly tolerated, maybe even enjoyed the idea, riffing on several possible tech/religion comparisons. Like this one:

One thing tech fundamentally has in common with many religions, at least in America is that it is a white man’s version of Utopia. And tech especially has this cult-like adherence to a white man’s vision of a Utopia that fundamentally disempowers and endangers women and people of color.

I consider myself an agnostic (not necessarily an atheist) toward this new religion of technology, because I want to view tech the way I’ve always tried to view traditional faith: as a mixed bag, something that can do both good and harm, depending on the circumstance. But as multi-billionaire entrepreneurs like Mark Zuckerberg and Jeff Bezos accumulate power; as social media misinformation sways the fate of democracies while artificial intelligence intrudes on justice systems; and as the current pandemic drives more of our life online, I sometimes wonder if I’ll be forced to re-evaluate my own would-be “prophesy.” If we’re not careful, tech could become the most dangerous cult of all time.

Just a bit more context before the interview below, which Oluo and I agreed to call “So You Want to Talk About Race in Tech,” after her bookwhich was already a major success, but has now reached iconic status nationwide in the wake of George Floyd’s murder.

This article is the last installment of the roughly year-long series I’ve done for TechCrunch, offering in-depth analysis of people and issues in the ethics of technology. So let me just mention that up to now my editors and I have produced 38 articles, with over 150,000 words about mostly women and people of color who happen to be leading efforts to reform and re-envision the ethics of our new technological world.

The series included interviewed Anand Giridharadas on “Silicon Valley’s inequality machine“; Taylor Lorenz on “the ethics of internet culture“; and James Williams on “the adversarial persuasion machine” of efforts by his former employer Google — among others — to distract us to death.

It featured CEOs and venture capitalists disclosing childhood traumas before debating the moral merits of their creations; employees and gig workers speaking painful truth to their powerful employers; as well as deep dives into perspectives on tech feminism, intersectionality, and socialism, alongside heroic efforts to combat cultures of abuse and violent immigration policing within the industry.

Now, to introduce the interview with Oluo: which was, again, completed weeks before the current crisis, but is even more relevant today. To paraphrase the self-described “zillionaire” venture capitalist Nick Hanauer, another Seattle resident with whom I met the same week as I met Oluo, the pitchforks have finally come for American plutocrats. We’ve come to the point, across this country, where my fellow white people and I are not talking about race and racism because we’re woke, or because we want to do everything we can to make the world a better place,” but because we fucking have to. As Kim Latrice Jones says in her viral video that has become emblematic of this period, we’re “lucky what black people are looking for is equality, and not revenge.

This is perhaps doubly so in the tech world, where perhaps not all our neighborhoods and offices are literally burning at this moment, but where there is the most to lose because … they could be. Tech is immune neither to COVID-19 nor to pitchforks. If Black people aren’t able to achieve more sustainable forms of equality in the tech world in the coming years, revenge could become the next goalpost. And it could be justified.

But I trust no one wants to go there. As Malcolm X once said on a visit to Coretta Scott King while Martin Luther King, Jr. was in a Birmingham jail:

Mrs. King, will you tell Dr. King . . . I didn’t come to make his job more difficult. I thought that if the white people understood what the alternative was that they would be willing to listen to Dr. King.

MLK has become an almost literal civil rights deity over recent generations, deservedly so. But we may one day, hopefully a long and peaceful time from now, look back on the life and work of Ijeoma Oluo (along with several of her peers, many of them Black women) as having achieved a level of influence and inspiration that at least approaches King’s.

And while some readers might need to buckle up in order to take in what she has to say, they should remember that her vision is the more optimistic alternative for how things could go in the coming years.

So you want to talk about race in tech? Let’s talk.


Editor’s note: This interview has been edited for clarity.

Greg Epstein: To what extent has the work you’ve been doing, particularly since your book So You Want to Talk About Race came out, intersected with the tech world?

Ijeoma Oluo: I wrote the book as a black woman who grew up in Seattle, which is such a tech-centric city, and who worked in tech for over 10 years before I moved over to writing. So it’s very much shaped by these environments — environments that think they’ve transcended race and racism and clearly have not, and also a place where people of color are extreme minorities, especially women of color.

So the tech industry was very present in the book even when I wasn’t talking about tech. Because a lot of people in tech recognized themselves and their peers in the examples used in the book.

Probably one of the most watched videos of a talk I’d given is the one I gave at Google. And a lot of the tech industry, especially here in Seattle, immediately adopted the book, like, “Oh, she lives here. Let’s read this, this will be the thing we do for the year, as far as race and racism.” 

But when I walk into a tech space, I think about it the way I think about just about any other white-majority, liberal-leaning space. Which is that there’s a very limited amount I can do in the time I’m there; the most I can do is reinforce what the extreme minority of people of color in that room are feeling and experiencing. Because I’ve lived it to an extent many other speakers cannot.

[The idea of the book as relevant to tech] also applies because as a black woman, and as a writer, I wouldn’t be [where] I am today if it weren’t for social media, the access that it granted me.

But the cost that [social media has] had, and the way in which it’s giving, via tech, the exact same if not larger platforms to hate, division, and abuse, especially of people of color and women of color, and LGBTQ community, is something that needs to be discussed.

There’s this argument in tech that anyone can prosper in this space. They’ve removed all the boundaries to prosperity. But the truth is, they’ve moved their own personal boundaries, and left all the boundaries to people of color and women in place because they just don’t exist in these origin stories, as anything other than props.

A lot of people denigrate the value of talking about race and racism in technological spaces; I don’t think there’s a more important space to be talking about it. I’ve seen the absolute best and the absolute worst in race and racism in America on the web, in ways that have had true-life consequences for me and for people I love. It is a space that is just as real as the face-to-face space. And we absolutely have to be looking at it politically and socially as to how it’s contributing to the way in which we look and deal with each other and politically how we address issues of inequality and injustice.

Epstein: Great summary: [tech as] the best and the worst. I mean, I’ve learned so much from Black Twitter, which is extraordinarily empowering. Then there’s White Supremacist Twitter. And then there’s just the sort of White Supremacist Lite Twitter, that is, sort of…Twitter.

Oluo: It’s interesting [that you talk about] looking at [tech] like a religion. I think one thing tech fundamentally has in common with many religions, at least in America, is that it is a white man’s version of Utopia. And tech especially has this cult-like adherence to a white man’s vision of a Utopia that fundamentally disempowers and endangers women and people of color.

Epstein: I love that image; I’d love for you to brainstorm with me: what are the characteristics of this white man’s vision of Utopia that we see in tech culture?

Oluo: It starts with the mythologizing of white-male struggle that’s at the core of tech culture. The idea that these men were outcasts who built things up from nothing — the shunned ones. And they’re going to fix the problems standing in their way. This is their success story, their ascension. So what stands in their way, are people of color, the women that aren’t sleeping with them, the popularity and the wealth they aren’t automatically getting, old-class structures that are keeping them away from the new class structure [based on] who has these skills that they, as white men, have?

And the mythology built around it feels very cult-like, very religious-like. There’s this whole origin story that’s not true.

If we look at the founding of our biggest technological advances, we’re going to see a lot of extreme privilege, and this idea that there are rules, merits that are purely good, [things] you can do to ascend in these spaces that are going to revolutionize things. And in the tech space it’s really these guys saying [the criteria for inclusion are] going to be: How good are you at coding? Can you debate better than this person?

What it starts with is a fundamental centering of white maleness. And the goal is the ascension of white maleness. People of color can aid it, they can mimic it, or they’re in the way, to be overcome. There’s this argument in tech that anyone can prosper in this space. They’ve removed all the boundaries to prosperity. But the truth is, they’ve moved their own personal boundaries, and left all the boundaries to people of color and women in place because they just don’t exist in these origin stories, as anything other than props.

If you can’t get your shit together first and foremost for the people in the office, you’re never going to get it together for the products you serve.

What cracks me up is, for a dogma that likes to talk about change and adaptation as much as tech does, how completely closed they are to actual change, especially for any sort of ideological change, and how terrified they are of looking around a room and not seeing people who look just like them, of taking things down to bare bones and asking, did we do this right?

There is nothing revolutionary about what many in tech are calling revolutionary right now. And many complaints people have about organized religion — “Wait, we’re still sticking to these rules from 2000 years ago? We’re still threatened by change and progress?” — are things you can see in tech already. And it’s worrying, considering how recent this industry is, that [we already see tech leaders] saying, “No, no, no, this is the way it’s always been done.” 

Well, where does the change come in then? Are we locking in at these prototype stages and saying, this is the way it’s always been done? For what, the last 20, 30 years? It’s ridiculous.

But the fervor with which I’ve seen white men defend [that status quo of the last 20 to 30 years] and the ways in which they talk about threats to it, also have that kind of religious fervor — the same fervor that launched the internet — even for people who are beyond religion.

Wrter Ijeoma Oluo

Epstein: To what extent have you talked or written publicly about your work in the tech industry?

Oluo: I don’t write a lot about [my experiences in tech]. In my book there’s a couple of anecdotes about work; any time I write about work, chances are it was in the tech industry, but it’s not specific. 

The one thing I will definitely say is, I have never been more sexually harassed in my life than [while] working in tech. I have never faced more blatant accusations about my race, and whether it helps or hinders my career, than I have in tech. I’ve literally been asked to my face, “Do you think you got that promotion because you’re black?” 

I have never felt more of an outsider than in tech, and it’s an incredibly gaslighting environment because it likes to pretend it has that all figured out.

Do you believe there is a profitable future in racial justice? Do you believe you can build products and goals around racial justice? Do you believe people of color are your customers?

I’ve worked in places that suck on race and gender. And they very clearly suck in a way that you know [what you’re getting into]. I worked in the auto industry: I knew what I was getting into there. But in tech they’re like, “Oh, no. That doesn’t matter here. That’s not a problem here.” And it most certainly is a problem. A lot of people think everyone joins tech because they love tech, and that’s going to be the thing that gets them all together, right? This great passion that’s going to help you realize that gender doesn’t matter, sexuality doesn’t matter, race doesn’t matter. 

That’s absolutely not true, because the pitfall that tech falls into is the same one that every other corporation, or actually any other group in America falls into. Which is the idea that true diversity and racial justice is going to be painless for white people and there will be no adjustment. And that people of color want the exact same things you want, and value the same things you value. And somehow at the end of that, they’re going to still see you as superior in some way. None of that is true in real diversity, and in real racial justice and gender justice.

And we need to talk about it, because it’s not just a work environment. I’ve talked to some of the biggest tech or tech-adjacent companies in the world: not only [are] real human beings going into an office every day and facing the realities of a space that does not want to acknowledge issues of racism and sexism, but [that same company] creates products that shape how we interact with each other in the world, in a way that replicates those same issues. 

If you can’t get your shit together first and foremost for the people in the office, you’re never going to get it together for the products you serve. You can’t have an all white male environment, or a majority white male environment, and think the product you have isn’t going to replicate bias and harm. 

And you can’t create a product that you think eradicates bias and harm, while you have a work environment [in which] the people are creating it are suffering under extreme duress, and exclusion, and harm. It has to both be tackled at once. And a lot of times I find that environments try to do one or the other, and not well, and it’s impossible. And the ramifications of not attacking it in tech hurt more than just the people sitting in cubicles doing the work. It really hurts everyone.

Epstein: When you say “it really hurts everyone,” you’re talking about the lack of commitment to actual justice?

Oluo: Yes. And the lack of valuing marginalized people. Even when we’re looking not just from a, ‘do you like your neighbor?’, but even from a profit-level standpoint.

Do you believe there is a profitable future in racial justice? Do you believe you can build products and goals around racial justice? Do you believe people of color are your customers? Do you believe that your product should adapt to them instead of them adapting to your products? Do you want their children using your products, and their grandchildren using your products? Do you want them feeling welcome and well-served by you? 

If we’re looking at capitalism — and this is a capitalist enterprise, we can’t [act] like it’s divorced from it — it matters.

And even these platforms that don’t think they’re related to capitalism, think they don’t sell a thing: it’s bullshit. It’s all part of the capitalist world. And it’s about what you value. Do you think the voices of people of color matter? Because if they do, then the way you tackle issues around harassment and abuse looks starkly different than if you just value the voices of white men.

Epstein: A final question I’ve asked of everyone I’ve interviewed for this TechCrunch series on ethics: how optimistic are you about our shared human future?

Oluo: I’m not more or less optimistic than I ever was. I worry. I worry about how easy it is for people in Western utilization of tech to feel like technology means they don’t actually have to see anyone face to face, and they don’t have to form deep connections with people, or try to build real alliances, or tie their futures and their sense of safety and community and belonging to other people. 

The one thing I would definitely say, that [there] is an incredibly Western-centric view of tech. I’m Nigerian American. The way in which tech is utilized in Nigeria is completely different than the way it’s utilized here. In Nigeria it’s about utility first and foremost. And about bringing people together face to face, to make African businesses run more smoothly, to help undo legacies of colonialism that have taken away physical infrastructure. To build that infrastructure online so that it can exist somewhere.

When we look at even the ways in which Nigerians use the internet to reach across diaspora, it’s so fundamentally different to the Western view of what the internet’s for and how it should be used, and I feel like there’s so much to be learned there. If you want to look at where real pioneering is being done, look at the ways in which tech and internet [are] being used in Central America, South America, African nations, and many Asian nations. Look at what it looks like when communities of color say, “I’m going to build technology that solves the problems that we have, within these limitations of white supremacist structure.”

Look at what it looks like when you’re creating the internet in a society that values the group over the individual. What does the internet look like then? Because it’s not the dream of extreme independence in Nigeria, that’s not what the internet’s built for, that’s not a goal, that’s not what you want for your kids or your family, that’s not what you set out for. So then, what does the internet look like when you have a different social structure? When you think that maybe it isn’t the idea that we’re all here pulling ourselves by our bootstraps, maybe we’re pulling our communities up, what does it look like then when you’re creating platforms? Whole platforms created for that? That’s where if you want to feel hopeful about what tech can do that’s where you need to be.

Epstein: What a beautiful answer to that question. Thank you. That’s in many ways the best answer I’ve received to that question, and I’ve asked it of a lot of smart people.

Oluo: Oh, thank you.

Epstein: Thank you so much for taking the time, on behalf of myself and TechCrunch.

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Bonusly, the platform for employee recognition, raises $9 million Series A

Bonusly, a platform that involves the entire organization in recognizing employees and rewarding them, closed on a $9 million Series A financing round led by Access Venture Partners. Next Frontier Capital, Operator Partners and existing investor FirstMark Capital also participated in the round.

Bonusly launched in 2013 when co-founder and CEO Raphael Crawford-Marks saw the opportunity to reinvent the way employers and colleagues recognize and reward their employees/coworkers.

“I knew that, in order to be successful, companies would be shifting their approach to employee experience and I thought software could enable that shift,” said Crawford-Marks. “Bonusly was this elegant idea of empowering employees to give each other timely, frequent and meaningful recognition that would not only benefit employees because they would feel recognized but also surface previously hidden information to the entire company about who was working with whom and on what and what strengths they were bringing to the workplace.”

Most employers use year-end bonuses and performance reviews to motivate workers, with some employers providing some physical rewards.

Bonusly thinks recognition should happen year-round. The platform works with the employers on their overall budget for recognition and rewards, and breaks that down into “points” that are allotted to all employees at the organization.

These employees can give out points to other co-workers, whether they’re direct reports or managers or peers, at any time throughout the year. Those points translate to a monetary value that can be redeemed by the employee at any time, whether it’s through PayPal as a cash reward or with one of Bonusly’s vendor partners, including Amazon, Tango Card and Cadooz. Bonusly also partners with nonprofit organizations to let employees redeem their points via charitable donation.

In fact, Crawford-Marks noted that Bonusly users just crossed the $500,000 mark for total donations, and have donated more than $100,000 to the WHO in six weeks.

Bonusly integrates with several collaboration platforms, including Gmail and Slack, to give users the flexibility to give points in whatever venue they choose. Bonusly also has a feed, not unlike social media sites like Twitter, that shows in real time employees who have received recognition.

The company has also built in some technical features to help with usability. For example, Bonusly understands the social organization of a company, surfacing the most relevant folks in the point feed based on who employees have given or received points to/from in the past. In a company with tens of thousands of employees, this keeps Bonusly relevant.

Bonusly has also incorporated tools for employers, including an auto-scale button for employers with workers in multiple jurisdictions or companies. The button allows employers to scale up or down the point allotments in different geographies based on cost of living.

There are also privacy controls on Bonusly that allow high-level employees and leadership to give each other recognition for projects that may not be widely known about at the company yet, like say for an acquisition that was completed.

Bonusly says that peer-to-peer recognition is more powerful than manager-only recognition, saying it’s nearly 36% more likely to have better financial outcomes.

The company also cites research that says that a happy workforce raises business productivity by more than 30%.

Bonusly competes with Kazoo and Motivocity, and Crawford-Marks says that the biggest differentiation factor is participation.

“We set a very high bar for how we measure participation and engagement in the platform,” he said. “You’ll see other companies claiming really high participation rates, but typically if you dig into that they’re talking about getting recognition every six months or every year or just logging in, rather than giving recognition every single month, month over month.”

He noted that 75% of employees on average give recognition in the first month of deployment with an organization, and that number gradually increases over time. By the two-year mark, 80% of employees are giving recognition every month.

Bonusly has raised a total of nearly $14 million in funding since inception.

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Why localized compensation in a work-anywhere world isn’t so simple

Last Thursday, Mark Zuckerberg told Facebook’s 48,000 employees that he expects upwards of 50% of the company will be working remotely within 10 years. After outlining many of the advantages that remote work confers — including to “potentially spread more economic opportunity around the country and potentially around the world” — he added that those who choose to move to other places in the U.S. or elsewhere will be paid based on where they live.

“We’ll localize everybody’s comp on January 1,” Zuckerberg said. “They can do whatever they want through the rest of the year, but by the end of the year they should either come back to the Bay Area or they need to tell us where they are.”

Facebook isn’t pioneering something entirely new. The concept of localized compensation has been around for some time, and it’s used by tech companies like GitHub that have primarily distributed workforces. Still, questions about whether it’s fair to pay employees based on their location are sure to grow as more outfits adopt remote-work policies.

Despite Facebook’s uncharacteristic transparency about its thinking, not everyone thinks the tactic makes sense.

One longtime Bay Area recruiter who typically focuses on executive searches calls “disparate pay for the same work” a “dangerous place to be.” Explains the recruiter, Jon Holman, “Even if you invoke the geographic disparity arithmetic based almost entirely on housing costs, what if a new openness to telecommuting means that more women or people of color can aspire to some of these jobs? Are you going to pay them less than the mostly white and Asian-American engineers in the Bay Area? I doubt it.”

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How freight master Flexport’s Ryan Petersen learned to CEO

“I didn’t know what the term ‘freight forwarder’ meant until a year into starting the business.” Considering his shipping logistics startup Flexport was last valued at $3.2 billion, that quote from my first interview with CEO and founder Ryan Petersen back in 2016 seems even more surprising now.

But it also hints at why he’s one of the most talented and exciting executives in tech: He learns. Humbly. Relentlessly. About whatever the role requires as it evolves.

Right now, it means learning that 1.15 million medical masks can fit in a pasenger plane if you strap boxes to the seats like they’re people. Flexport has delivered around 62 million pieces of personal protective equipment, with delivery of over 10 million of those funded by the company’s impact arm Flexport.org. Petersen and Flexport meanwhile helped create the Frontline Responders Fund that’s raised over $7 million for COVID relief.

Flexport.org packed 3 million pieces of PPE into a repurposed passenger plane to get them to frontline responders

“He’s one of the most impressive founders I’ve known” said fellow FRF leader and Science co-founder Peter Pham . “Ryan just wants to solve problems without ego.”

In this profile, TechCrunch charts Petersen’s growth across our six interviews with him over the past four years as he raised $1.3 billion and reached hundreds of millions in revenue.

Overcoming Shlep Blindness

Petersen soon found out that ‘freight forwarding’ means coordinating all the shipping and hand-offs to get pallets and containers of goods on one side of the world, through trucks and boats and planes, to a retailer on the other. By then Flexport was going through Y Combinator in 2014, preparing to take on the trillion-dollar freight industry.

Ryan Petersen

“I thought the problem was too big, and that I wouldn’t be able to solve it” he recalls. “How am I going to fix global trade? Only much later did I realize that, well, let’s try it! It can’t just sit there broken forever.” Somehow, freight forwarding was still being organized with faxed logs and paper manifests, or Excel files and email if a client was lucky.

Freight forwarding had plagued plenty of founders but none had tackled it because it seemed so insurmountable that it engendered ‘schlep blindness’, as YC’s co-creator Paul Graham termed it.

“Schlep blindness is something so hard that your brain won’t think about it. I think it’s a necessary feature of our brains. Otherwise we’d sit here contemplating our mortality all day and never be able to do anything” Petersen explains. “Anyone who ever sold anything on the internet pre-Stripe went through this terrible process. 100% of internet entrepreneurs saw that problem and then went about their way.” With its 100 year-old shipping incumbents and endless regulatory acronyms, who’d want to wade in?

“Ryan is what I call an armor-piercing shell: a founder who keeps going through obstacles that would make other people give up” says Graham, who donated $1 million to Flexport.org’s COVID-19 relief efforts. “But he’s not just determined. He sees things other people don’t see. The freight business is both huge and very backward, and yet who of all the thousands of people starting startups noticed?” Petersen.

Flexport gettyimages robuart shipping factory

What really irked him was that the big freight forwarders didn’t want those clients to learn what influenced prices and timelines to keep them in the dark about how sub-optimal their routes were. “They just made money off the fact that I didn’t understand how it all works. And I assumed at the time that that was just something about entrepreneurs who are new to this space but it turns out even the biggest companies struggle with this stuff. They’re afraid forwarders are trying to take advantage of them.”

But Petersen wasn’t so naive. He’d actually been in the freight business his whole life.

From Slinging Soda To Founding Startups

“Maybe without her realizing it, she was training us to be entrepreneurs” Petersen reflects. He and his brother David grew up with a biochemist mom who ran her own food safety business while their dad did the company’s programming. “All of our childhood conversations were around using software to make government regulations more accessible.” When would Flexport would eventually be jumping through the hoops of the 43 different US trade regulators, it felt natural for its CEO.

Ryan Petersen back in 2015 before Flexport had its own planes

Petersen exudes a kinetic energy that subtly coveys that he’s always itching for the next knot to unwind. “At the time I was terribly bored by everything”. So his Mom put him to work. “She paid my allowance as a kid by having me deliver sodas to stock their office. My dad would drive me to Safeway to buy sodas for four bucks a case and sell them for nine.” With a laugh, he considers, “It was potentially a way for her to make my allowance tax-free.”

Soon Petersen was moving bigger items longer distances, buying scooters in China and selling them online in the States. By 2005, Petersen was living in China to get closer to the supply chains. The next year, he co-founded ImportGenius with his brother and Michael Klanko. They’d realized there was a ton of valuable information locked up in paper shipping manifests, so they began scanning and selling the data to importers and exporters so they could keep tabs on competitors.

Petersen’s first moment in the spotlight came in 2008 when he accidentally butted heads with Steve Jobs. ImportGenius had identified that Apple was shipping a large number of “electronic computers”, a new classification for the company. “We scooped the launch of the iPhone 3G with our public manifest data. Steve Jobs called US Customs, who called me” he told me back in 2016.

Though ImportGenius eventually plateaued, Petersen had accumulated the knowledge to lift the veil and pierce his schlep blindness. “I realized the largest problem was staring me in the face. Global trade is too hard, and there’s not software to manage it” he remembers. “I thought there was no software for SMBs. What I discovered was that there’s NO software.”

At first he wanted to build what would become Flexport inside of ImportGenius, but it was tough to get existing investors to stomach the risk. It’d be scary, but also exciting to start something separate. “My brother is my best friend and my best advisor” Petersen tells me. They’d always pushed each other with a jovial sense of competition — Ryan’s Twitter handle is @TypesFast. David’s is @TypesFaster.

So David made the first move, founding BuildZoom, which has gone on to raise $23 million to coordinate the logistics (are you sensing a pattern?) of hiring contruction contractors. In 2013, Ryan lept. “I think part of me wanted to go out on my own and prove myself . . . to prove that I was capable of running the show. It was a really, really challenging to do it. Then the day I did it, it was the most liberating, awesome feeling ever.”

They Laugh At You, Then You Raise $1 Billion

It took a few years to get all its regulatory approvals and develop the basis of the Flexport product. But with early capital from Founders Fund, Petersen built the freight software he’d spent so long pining for. Still, “Senior execs at big companies were making fun of us. One of them compared us to Doc Emett Brown [from Back To The Future] and his ‘flex capacitor’ but we he missed is that Doc invented a time machine and it worked.”

By 2016, Flexport was serving 700 clients across 64 countries. I described it as the unsexiest trillion-dollar startup, attacking an enormous industry that was so boring that it repelled earlier innovation. Oversaturation in consumer startup verticals was pushing investors to look to where tech was evolving previously untouched markets. Flexport raised a high-profile $110 million round led by DST at a $910 million post-money valuation in 2017, and Silicon Valley was starting to take notice.

Flexport Dashboard

The Flexboard Platform dashboard offers maps, notifications, task lists, and chat for Flexport clients and their factory suppliers.

Luckily, the freight big-wigs were still laughing despite Flexport moving 7000 shipping containers per month for 1800 customers. “I don’t worry about startup competitors. I worry the big guys will stop thinking of us as such a joke” Petersen said that year. Soon incumbents like 25-year-old Chinese private delivery giant S.F. Express were allying with Flexport, leading another $100 million round in 2018. Meanwhile, Flexport was trying to sound more like its older competition. Petersen told me “We’re trying to retire the word ‘startup’. [Our clients] want a company that will help them grow, not the fly-by-night startup.”

At that point, Petersen didn’t care if freight was appealing or not. “I never thought it was sexy or unsexy. I just thought it was a backstage pass to the world economy” he’d later say. Yet SoftBank’s Saudi-backed Vision Fund felt the attraction. Flexport was vertically integrating, adding freight financing so retailers could pay factories for good they’d sell months later. It was also chartering its own plane and operating its own warehouses where it could experiment with next-generation logistics, scanning the physical dimensions of everything that came through its doors to optimize future shipments.

By then, Flexport had plenty of exit options. But Petersen was enjoying the ride. “I’m just having fun. You have a purpose. You get invited to interesting things. Once you sell your business, you’re just another rich guy. I never want to sell the business.” Luckily, the potential to grab more of the freight forwarding profits convinced SoftBank to invest a jaw-dropping $1 billion into Flexport in early 2019 at a $3.2 billion post-money valuation.

“It was controversial with our board. They thought it was a lot of dilution to take on but I convinced them that, this was going to go up and down and we wanted we to have cash to ride out the cycles. My view is that the world’s uncertain. You should be prepared for all outcomes” Ryan explains. As long as it could weather the storm, “we’re going to win on some time horizon.”

That strategy soon paid off. When trade with China effectively halted as COVID-19 exploded in the country and Flexport had far fewer containers to coordinate, it didn’t have to execute mass layoffs like fellow late-stage startups. It proactively cut 3% of its staff or around 50 people on February 4th, centered in recruiting that it plans to slow. “It’s painful to disappoint people” Petersen reveals.

Flexport chartered its own plane for several years to ship freight

Transitioning to a recession-era CEO and learning to reduce headcount with empathy became Petersen’s new objective. “I wanted people to know that I take personal responsibility for it. I wanted people to know that there’s transparency here” he tells me, his voice straining under the gravity of the situation. “If people feel fear and then they look at the leadership and they think the leadership is not feeling fear, then the fear amplifies. Whereas if people feel fear and they see, ‘oh the leaders are feeling fear also? Then okay, they’re going to behave appropriately.’”

Taking decisive action before COVID-19 spread widely stateside kept Flexport’s momentum strong and its runway long. Petersen is proving he can guide the company through bust as well as boom.

Flexport’s Tricks To Management

“My big learning in the last 18 months or so is that you can’t do everything. You can do anything you want, but you can’t do everything” Petersen outlines. “I see good ideas and I say ‘DO THAT!’” he tells me with a wry smile. “Soon, you’re spread pretty thin. You need some top down discipline to say ‘no’ to things. We really lacked that in the early years.”

The quest for discipline led him to develop and lean on two major frameworks for prioritizing customer needs and preserving company culture. They’re crucial now that Flexport has grown to 1800 employees across 14 offices and 6 warehouses, and 10,000 clients including Sonos, Kleen Kanteen, and Timbuk2.

Ryan Petersen whiteboards his management frameworks

The first framework is from Petersen’s mentor and American business mogul Charlie Munger. It lays out the six stake-holders or ‘customers’ a business must satisfy to succeed. Here’s how Petersen describes them:

  1. Clients: The people who pay you money. For Flexport, we have both importers and exporters
  2. Vendors: The people you pay. For Flexport, who own the planes, ships, and trucks
  3. Employees: Make sure they’re treated well. It has to be a win-win trade.
  4. Investors: They deserve a return on their money. They took a risk
  5. Regulators: They decide who to give licenses to. For Flexport, there are 43 regulators in just the US who take an interest in imported products.
  6. Communities: Where you operate. Maybe one day that’s global society

“If you don’t have at least a B grade in everything and ideally an A, you’re probably not long-term sustainable” Petersen explains. It’s a smart lens for anyone assessing companies, whether that’s ones to work at, invest in, work with, or one you’re leading and trying to improve.

Take Airbnb for example. Clients generally love its alternative to hotels, they’ve been able to continuously recruit employees effectively, and investors have offered it billions and kicked in to help it survive COVID-19. But its vendor hosts and their neighbors have struggled with disruptive guests, and communities and their local regulators have clashed with the startup over its impact on housing supply. The six customers concept identifies where Airbnb needs to work harder.

The second framework Petersen developed himself for how to ensure a company’s core values persist as it scales. It lays out the six culture questions:

  1. Why?: Why do you exist? What’s your purpose, mission, vision, and impact?
  2. Who?: Who do you hire and what values and behaviors do you look for?
  3. What?: What are you focused on and what metrics do you use to measure success?
  4. How?: How do decisions get made and how do you shorten the feedback loop for improvement?
  5. When?: When should things get done and when should you ship your product?
  6. Where?: Where does your team feel like it belongs and how do you become more inclusive?

Petersen likens these tenets to addressing a medical condition. It’s easier if leaders build them into their culture early than trying to fix them later. “If you were to get these things right in any company, you’ll outperform” he believes.

To execute on these, Petersen built a team close to him that just “makes sure our OKRs (objectives and key results) are clear, that we’re running inclusive meetings with good documentation, that we’re holding people accountable.” The method is heavily influenced by Amazon’s corporate style. As Petersen told me last year, “The English language lacks a positive word for bureaucracy.”

Ryan Petersen

Taking process seriously has made the CEO a hit with his employees. “Working for Ryan accelerated my career at least a decade. He has the uncanny ability to push people to their peak performance” said Flexport’s long-time former VP of product Sean Linehan, who went on to found Placement. “Ryan is building the playbook for operationally-intense tech businesses. Building a global logistics behemoth from scratch is an insanely complex job. But Ryan thrives in complexity. Where most entrepreneurs fall apart, he hits his stride.”

With the economics headwinds we’re facing, Petersen will need that drive if he wants to bring Flexport public. As you might expect, he’s learning about it. “I like reading annual reports. It’s like a hobby of mine, particularly with my competitors” Petersen says.I want to go public. But I don’t want to go public until we’re profitable because I don’t want to be at Wall Street’s whims. If you’re losing money and you’re public and Wall Street doesn’t like your stock, you can get into this death cycle.”

Being the CEO of a company that outperforms has opened doors to new mentors too, like executive coach Matt Messari, and Microsoft’s Satya Nadella. Petersen asked Nadella “How can you make learning and development measurable?”. Redmond’s head honcho answered “You don’t have to measure everything.” Petersen took the note. Sometimes, you just do what you think is right.

The Wartime CEO

Leading with his heart has steered Flexport to join the coronavirus relief effort in huge ways. “We were not put on this earth to lay in bed staying warm under the blankets. It’s time to step up and do something for the world” Petersen tweeted.

Flexport’s response started in January with multiple blog posts per week laying out how COVID-19 was impacting global trade, how aid organizers could navigate supply chain issues, and how governments and private companies could help. Then it launched the Frontline Responders Fund and began routing all Flexport.org contributions to the cause, massively discounting freight forwarding costs to help get PPE wherever it’s needed.

Flexport.org launched the Frontline Responders Fund

“100% of your donation to this cause will go directly toward shipping masks to people on the front lines as fast as possible. I give you my word that we won’t waste a penny of your money” Petersen tweeted. Despite his business encountering its own troubles with global trade and demand disrupted, he shifted to spending his full time running Flexport.org and promoting the FRF. With the help of celebs like Arnold Schwarzenegger and Edward Norton, it’s raised over $7 million. The FRF has delivered over 6.9 million masks, 240,000 gowns, 1,000 ventilators, 155,000 gloves, and 250,000 meals for vulnerable populations.

Petersen hasn’t been shy about rallying more leaders to the cause, writing this expansive guide to the major bottlenecks blocking relief. “Philanthropists should also step up, lending money to organizations that have received purchase orders for PPE, but that can’t afford to buy the equipment unless they are paid upfront. Because they’ll get their money back when the pandemic subsides, this is one of the highest impact forms of philanthropy out there right now.”

That willingness to get involved has inspired his employees to roll up their sleeves too. “During a crisis, leaders really show the values they embody” says Susy Schöneberg, head of Flexport.org. “After the COVID-19 outbreak, Ryan immediately offered us more resources to support our commercial and nonprofit clients. Over the last weeks, my days started and ended by talking to him – no matter what time is was.”

Ryan Petersen

From his vantage point, Petersen also has special visibility into who is trying to exploit the crisis. “Effective immediately Flexport will not ship personal protective equipment unless the customer can demonstrate which hospital system or other frontline emergency responder they are being provided to” Petersen wrote. “There are global shortages of these products, and it is immoral to allow war-profiteering from entrepreneurs looking to make an easy dollar.”

In the absence of proper federal crisis management, Petersen has become a defacto general in the war against coronavirus. “Given the scale of the problem and the complexity of the market failures outlined above, there’s no way for the US government to solve this on its own. But it can and must provide leadership, breaking down obstacles and coordinating the response of the private sector.” Until then, Petersen’s learning as fast as he can to become the wartime CEO needed right now.

Paraphrasing Kobe Bryant, Petersen concludes, “When you know what your goal is, the entire world is your library.”

For more of this author Josh Constine’s thoughts on tech, subscribe to his newsletter Moving Product

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Human Capital is an engineering talent agency and a VC fund all in one

Michael Ovitz didn’t invent the idea of a talent agency, but one might argue that he perfected it. He founded the CAA in 1975, and grew it into the world’s leading talent agency, serving as chairman for 20 years. Now, Ovitz is investing in a brand new type of talent agency called Human Capital.

Human Capital is a hybrid organization, one part VC fund, one part recruiting business and one part creative agency. (Human Capital did not invest in its agency startup from its VC fund.) The Human Capital VC fund has $210 million in assets under management.

The Human Capital recruitment/agency company, founded by former General Catalyst associate Armaan Ali and Stanford grad Baris Akis, looks to provide for tech engineers the same services that Ovitz provided to actors and creatives back in the 70s, 80s and 90s. Engineers are some of the most sought-after talent in Silicon Valley and across the globe. And while big corporations and high-growth startups duke it out over these young engineers, the candidates themselves have little to no guidance around where they should go, what they should expect during the process, and, in some cases, what they should expect to earn.

Ovitz — alongside Qasar Younis, founder of Applied Intuition and former partner and COO of YC; Adam Zoia, founder and chairman of Glocap; Stephen Ehikian, co-founder and CEO of Airkit; and other financial institutions and LPs — recently injected $15 million into Human Capital, which is valued in the hundreds of millions according to the company.

Human Capital looks to pair the brightest engineers with the right company for them, while giving startups a new way to approach recruitment. Thus far, the company has 5,000 members (engineers) and has placed them at startups like Brex, Grammarly, Robinhood and more.

Human Capital starts by doing outreach on university campuses with outstanding engineering programs, setting up coffee with engineers who have been recommended or referred by alumni of the program. Once accepted as a member, the engineer explains to Human Capital what type of role they’re interested in, whether it’s at a big corporation, a high-growth startup or an early-stage company where they have the opportunity to build something from scratch.

The recruitment team at Human Capital then coaches the engineer through the interview process and beyond, helping with decision-making around promotions, understanding equity and negotiating new offers.

The org never charges the engineer, but rather takes a commission on the engineer’s annual income for the first year from the startup that recruited them.

Ali explained to TechCrunch how Human Capital is operating during the coronavirus pandemic, describing a situation in which the top talent that is in the market right now has a level of uncertainty about the future, leading them to seek positions at huge companies like Facebook and Google.

“Our hypothesis when we started this was that there are amazing businesses that are being run better at an earlier stage and have a proxy for that same type of stability [at a Google or Facebook] via their access to capital, alongside other foundational pieces of business security, such as their business model, unit economics, long-term vision for the company, gross margin rate, and growth opportunities for individuals at those companies.”

He said that Human Capital believed that, if a macro event occurred in the market place — we’re right in the middle of one of the least predictable and most impactful macro economic events ever — some of those “stable” earlier-stage businesses wouldn’t be hit in the same way as public companies who have to worry about short-term profitability.

“The issue is that you have to know a lot about those businesses in order to be able to discern that, and that’s our job,” said Ali. “And what we’ve seen is that a number of the companies in that position are actually ramping up recruiting right now.”

There is no mandatory link between Human Capital’s venture capital fund and their recruiting/agency entity, though the fund does like to invest in engineers who have gone through the program and move on to start their own businesses. Those types of investments include Brex, Bolt and Qualia, among others. Human Capital also invests in companies for whom they’ve recruited, such as Livongo, Snowflake, Clumio, Wildlife and Trackonomy. Human Capital has a preference for leading rounds only for companies that are started by its engineer members.

The model isn’t unlike SignalFire or Glocap, founded by Adam Zoia (investor in Human Capital). The idea is that VC funds are great for capital injections, but with the cut-throat recruiting atmosphere and a finite number of engineers, that money can be relatively useless if it can’t be used to bring on the best talent. So firms like SignalFire (in the tech world) and Glocap (in the business/finance world) put recruitment front and center in their value proposition. (Glocap doesn’t invest, but is the premier recruitment platform in the financial sector.)

Human Capital is also starting to look at potential acquisitions that can beef up its agency business, recently acqui-hiring Khonvo Corporation, a recruitment agency founded by Archit Bhise and Andrew Rising.

Ovitz explained to TechCrunch that his ultra-successful career as an agent stemmed from his ability to make decisions about people and projects quickly. He sees the same type of intuition in Ali and Akis at a much younger age and with less experience than he had.

“It’s a checklist in your head,” said Ovitz. “It’s a combination of when your brain meets your stomach, your intellect meets your gut that lets you know you’ve hit a winner. The thing that’s allowed Ali and Akis to build a company that’s worth the hundreds of millions in such a short period of time is that they had that when I met them without having an enormous amount of experience.”

He added that access to the internet, which he did not have during his agency days, is an amazing learning tool and an “epic crutch” that, when paired with good instincts, can accelerate the learning curve on building a business.

(It’s worth noting that this isn’t Ovitz’s first foray into Silicon Valley. The entertainment powerhouse was one of the earliest advisors to Marc Andreessen and Ben Horowitz during the formation of the legendary VC firm a16z, helping them model the firm after CAA itself. Ovitz has been quietly investing in and advising tech startups for the past 15 years.)

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Clubhouse voice chat leads a wave of spontaneous social apps

Forget the calendar invite. Just jump into a conversation. That’s the idea powering a fresh batch of social startups poised to take advantage of our cleared schedules amidst quarantine. But they could also change the way we work and socialize long after COVID-19 by bringing the free-flowing, ad-hoc communication of parties and open office plans online. While “Live” has become synonymous with performative streaming, these new apps instead spread the limelight across several users as well as the task, game, or discussion at hand.

The most buzzy of these startups is Clubhouse, an audio-based social network where people can spontaneously jump into voice chat rooms together. You see the unlabeled rooms of all the people you follow, and you can join to talk or just listen along, milling around to find what interests you. High-energy rooms attract crowds while slower ones see participants slip out to join other chat circles.

Clubhouse blew up this weekend on VC Twitter as people scrambled for exclusive invites, humblebragged about their membership, or made fun of everyone’s FOMO. For now, there’s no public app or access. The name Clubhouse perfectly captures how people long to be part of the in-crowd.

Clubhouse was built by Paul Davison, who previously founded serendipitous offline people-meeting location app Highlight and reveal-your-whole-camera-roll app Shorts before his team was acquired by Pinterest in 2016. This year he debuted his Alpha Exploration Co startup studio and launched Talkshow for instantly broadcasting radio-style call-in shows. Spontaneity is the thread that ties Davison’s work together, whether its for making new friends, sharing your life, transmitting your thoughts, or having a discussion.

It’s very early days for Clubhouse. It doesn’t even have a website. There’s no telling exactly what it will be like if or when it officially launches, and Davison and his co-founder Rohan Seth declined to comment. But the positive reception shows a desire for a more immediate, multi-media approach to discussion that updates what Twitter did with text.

Sheltered From Surprise

What quarantine has revealed is that when you separate everyone, spontaneity is a big thing you miss. In your office, that could be having a random watercooler chat with a co-worker or commenting aloud about something funny you found on the internet. At a party, it could be wandering up to chat with group of people because you know one of them or overhear something interesting. That’s lacking while we’re stuck home since we’ve stigmatized randomly phoning a friend, differing to asynchronous text despite its lack of urgency.

Clubhouse founder Paul Davison. Image Credit: JD Lasica

Scheduled Zoom calls, utilitarian Slack threads, and endless email chains don’t capture the thrill of surprise or the joy of conversation that giddily revs up as people riff off each other’s ideas. But smart app developers are also realizing that spontaneity doesn’t mean constantly interrupting people’s life or workflow. They give people the power to decide when they are or aren’t available or signal that they’re not to be disturbed so they’re only thrust into social connection when they want it.

Houseparty chart ranks via AppAnnie

Houseparty embodies this spontaneity. It’s become the breakout hit of quarantine by letting people on a whim join group video chat rooms with friends the second they open the app. It saw 50 million downloads in a month, up 70X over its pre-COVID levels in some places. It’s become the #1 social app in 82 countries including the US, and #1 overall in 16 countries.

Originally built for gaming, Discord lets communities spontaneously connect through persistent video, voice, and chat rooms. It’s seen a 50% increase in US daily voice users with spikes in shelter-in-place early adopter states like California, New York, New Jersey, and Washington. Bunch, for video chat overlayed on mobile gaming, is also climbing the charts and going mainstream with its user base shifting to become majority female as they talk for 1.5 million minutes per day. Both apps make it easy to join up with pals and pick something to play together.

The Impromptu Office

Enterprise video chat tools are adapting to spontaneity as an alternative to heavy-handed, pre-meditated Zoom calls. There’s been a backlash as people realize they don’t get anything done by scheduling back-to-back video chats all day.

  • Loom lets you quickly record and send a video clip to co-workers that they can watch at their leisure, with back-and-forth conversation sped up because videos are uploaded as they’re shot.

  • Around overlays small circular video windows atop your screen so you can instantly communicate with colleagues while most of your desktop stays focused on your actual work.

  • Screen exists as a tiny widget that can launch a collaborative screenshare where everyone gets a cursor to control the shared window so they can improvisationally code, design, write, and annotate.

Screen

  • Pragli is an avatar-based virtual office where you can see if someone’s in a calendar meeting, away, or in flow listening to music so you know when to instantly open a voice or video chat channel together without having to purposefully find a time everyone’s free. But instead of following you home like Slack, Pragli lets you sign in and out of the virtual office to start and end your day.

Raising Our Voice

While visual communication has been the breakout feature of our mobile phones by allowing us to show where we are, shelter-in-place means we don’t have much to show. That’s expanded the opportunity for tools that take a less-is-more approach to spontaneous communication. Whether for remote partying or rapid problem solving, new apps beyond Clubhouse are incorporating voice rather than just video. Voice offers a way to rapidly exchange information and feel present together without dominating our workspace or attention, or forcing people into an uncomfortable spotlight.

High Fidelity is Second Life co-founder Philip Rosedale’s $72 million-funded current startup. After recently pivoting away from building a virtual reality co-working tool, High Fidelity has begun testing a voice and headphones-based online event platform and gathering place. The early beta lets users move their dot around a map and hear the voice of anyone close to them with spatial audio so voices get louder as you get closer to someone, and shift between your ears as you move past them. You can spontaneously approach and depart little clusters of dots to explore different conversations within earshot.

An unofficial mockup of High Fidelity’s early tests. Image Credits: DigitalGlobe (opens in a new window) / Getty Images

High Fidelity is currently using a satellite photo of Burning Man as its test map. It allows DJs to set up in different corners, and listeners to stroll between them or walk off with a friend to chat, similar to the real offline event. Since Burning Man was cancelled this year, High Fidelity could potentially be a candidate for holding the scheduled virtual version the organizers have promised.

Houseparty’s former CEO Ben Rubin and Skype GM of engineering Brian Meek are building a spontaneous teamwork tool called Slashtalk. Rubin sold Houseparty to Fortnite-maker Epic in mid-2019, but the gaming giant largely neglected the app until its recent quarantine-driven success. Rubin left.

His new startup’s site explains that “/talk is an anti-meeting tool for fast, decentralized conversations. We believe most meetings can be eliminated if the right people are connected at the right time to discuss the right topics, for just as long as necessary.” It lets people quickly jump into a voice or video chat to get something sorted without delaying until a calendared collab session.

Slashtalk co-founder Ben Rubin at TechCrunch Disrupt NY 2015

Whether for work or play, these spontaneous apps can conjure times from our more unstructured youth. Whether sifting through the cafeteria or school yard, seeing who else is at the mall, walking through halls of open doors in college dorms, or hanging at the student union or campus square, the pre-adult years offer many opportunities for impromptu social interation.

As we age and move into our separate homes, we literally erect walls that limit our ability to perceive the social cues that signal that someone’s available for unprompted communication. That’s spawned apps like Down To Lunch and Snapchat acquisition Zenly, and Facebook’s upcoming Messenger status feature designed to break through those barriers and make it feel less desperate to ask someone to hang out offline.

But while socializing or collaborating IRL requires transportation logistics and usually a plan, the new social apps discussed here bring us together instantly, thereby eliminating the need to schedule togetherness ahead of time. Gone too are the geographic limits restraining you to connect only with those within a reasonable commute. Digitally, you can pick from your whole network. And quarantines have further opened our options by emptying parts of our calendars.

Absent those frictions, what shines through is our intention. We can connect with who we want and accomplish what we want. Spontaneous apps open the channel so our impulsive human nature can shine through.

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Tips, tactics and cashflow strategies for startup survival during a crisis

Joe White
Contributor

Joe is general partner of Entrepreneur First, a Greylock-backed early-stage deep tech fund; co-chair of GBx, a curated network of British entrepreneurs in the Bay Area; and a former co-founder of Moonfruit.com, a website and e-commerce platform.

We’re in unprecedented times and are likely at the beginning of a long journey back to normal  —  whatever the new “normal” turns out to be.

While governments rush to get debt-relief packages in place, the high-risk, high-reward tech sector will need something different. To survive, the community requires fancy footwork, hard choices and a lot of shared pain between founders, staff, investors, suppliers and customers.

With my startup Moonfruit, a DIY website and e-commerce platform I co-founded with Wendy Tan-White (now a VP at X) and eirik pettersen (currently CTO at Secret Escapes), we survived the 2001 dot-com crash, when the entire tech sector was decimated for years to come, as well as the 2008 financial crisis, when we were lucky enough to experience rapid countercyclical growth. These experiences made us stronger and ultimately led to our successful exit in 2012 and post-acquisition growth to $150 million ARR.

I’ve spent the last five years as a general partner at Entrepreneur First, raising $200 million of funds and advising hundreds of startups through formation, growth and fundraising — but right now I work with many of them daily on survival.

For most companies, I think this crisis will look more like 2001 than 2008, though there will be some who are lucky enough to grow through it. The good news is, having been through this before, I know there are things you can do as a founder or as an investor that can mitigate the damage. In the U.K., I’m in several conversations about making emergency equity funding more available, and I hope this happens all over the world too.

Here is a tactical guide to surviving the crisis.

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IRL pivots into virtual event calendar In Remote Life

What do you do if you’re an event discovery startup and suddenly it’s illegal to attend events? You lean into the cultural shift and pivot. Today, $11 million-funded calendar app IRL is morphing from In Real Life to In Remote Life. It will now focus on helping people find, RSVP for, plan, share and chat about virtual events, from live-streamed concerts to esports tournaments to Zoom cocktail parties.

Coronavirus could make IRL relevant to a wider audience because before an event “only mattered if it was around you. But now with In Remote Life, content has no geographical limitations,” says IRL co-founder and CEO Abe Shafi. “The need is exponentially greater because everyone’s routines have been shattered.” IRL ranked No. 138 in the U.S. App Store today, making it the top calendar app, even above Google’s (No. 168).

Robinhood’s Josh Elman joins IRL

IRL has some fresh product development talent to lead it through the transition. The startup has hired stock trading app Robinhood’s VP of Product Josh Elman . The former Greylock investor is well known for his product chops from jobs at Facebook, Twitter and LinkedIn. Elman joined Robinhood in early 2018 but left late last year, notably before its rash of recent outages that enraged users.

“I just realized more than anything that the company needed people who had 110% to give, and it wasn’t clear that was going to be me,” Elman said of Robinhood, now valued at $7.6 billion and struggling to scale. “My first passions and all the things I’ve talked about over the years have been social and media.”

For now, IRL is a part-time gig, where he’ll be heading up a Secret Projects division. While most apps “try to suck more of our time,” he sees IRL as a chance to give this precious resource back to people. Though he insists “Robinhood’s great, I’m a very happy shareholder.”

Events without borders

“We were on a tear, hitting a stride with usaging and growth related to real life events,” says Shafi. “Then this happened,” motioning on our Zoom call to the COVID-19 reality we’re now stuck in. “We realized we had to pull all of our content because it wasn’t happening.”

Today IRL’s iOS app launches a redesign of its Discover home screen content to center on virtual events people can attend from home. There’s now tabs for gaming, podcasts, TV and EDU, as well as music, food, lifestyle and a catch-all “fun” section. Each event can be added to your calendar that syncs with Google Cal, or Liked to add it to your profile that friends and fans can follow. You also can instantly launch a group chat about the event in IRL, or share it to Instagram Stories or another messaging app.

If you can’t find something public to do, you can make plans with friends using the composer with suggestions like “Let’s video chat,” “Zoom workout,” “gaming sesh” or “Netflix party.” That instantly sets up a calendar event you can invite people to. And if you’re not sure when you want to host, IRL’s “Soon” option lets you keep the schedule vague so you and friends can figure out when everyone’s available. Indeed, 50% of IRL plans start out as “Soon,” Shafi reveals, identifying a gap in rigid time/date calendars.

Beyond individual events, IRL also wants to make it easier to develop habits by letting you subscribe to workout, meditation and other schedules. With sports seasons suspended, IRL lets people sync with calendars of hip-hop album releases and more instead. Or you can subscribe to an influencer’s life and digitally accompany them to events. The goal is that IRL will be able to merge offline events back into its content recommendations as social distancing subsides.

The biggest challenge for IRL will be tuning its event recommendation algorithm. It has lost a lot of the traditional relevance signals about events, like how close they are to your home, how much they cost or if they’re even in your city. Transitioning to In Remote Life means a global range of happenings is now available to everyone, and because they’re often free to host, many lonely low-quality events have sprung up. That makes it much tougher for IRL to determine what to show.

For now, it’s basing recommendations on what you engage with most on its home screen, but I found that can make the initial experience very hit-or-miss. The top events in each category were rarely exciting. But IRL is planning to beef up its onboarding process to ask about your interests, and integrate with Spotify so it knows which musicians’ online concerts you’d want to attend.

Still, Shafi thinks IRL is already better than asocial alternatives. “Our main age range is 13 to 25, college and post-college metropolitan areas and across college campuses. Our average user has never used a calendar before, or they’ve just used a default calendar like Gcal or iCal.

A cure for loneliness

Hopefully, IRL will take a more serious swing at helping friends realize they’re free at the same time and can hang out. While Down To Lunch failed in this space, now Facebook Messenger and Instagram are exploring it with their auto-status feature, and location apps like Snap Map and Zenly could adapt to share not just where you are, but if you have the intention to hang out.

“How can we use just a little bit of nudging, transparency or suggestion to get people to just do one more thing per month?,” Shafi asks. IRL is trying to figure out how to let you passively share that “I have 2 hours free” in a way that “never makes you feel rejected if they don’t respond.”

Facebook did launch a standalone Events calendar app back in 2016, but later paired down the calendaring features, folded it in with restaurant recommendations and renamed it Local. “As big as Facebook is, it can only do so many things insanely well,” Elman says of his old employer. “They could do more [on Events], but it’s never been the juggernaut like photos.”

Shafi is happy to have the opportunity in such a foundational space. He describes the concept of the calendar as one he’s sure will outlive him, so it’s worth the effort to make it social no matter how long it takes — though I’m sure his investors like Goodwater Capital, Founders Fund, Kleiner Perkins and Floodgate hope it’ll find a way to monetize eventually.

Revenue could come in the form of selling access to events through the app, or letting promoters and local businesses pay for enhanced discovery. For now, though, IRL is building a deeper connection with event and content publishers with the upcoming launch of its free Add To Calendar button they can build into their sites and emails. Elman says several services charge for these buttons that integrate with Apple and Google’s calendars, but IRL hopes giving them away will help fill its app with things to do, whatever that might be.

“Our tagline is ‘live your best life.’ It’s not judgmental. If your best life is playing video games on your couch with your homies, we don’t judge you for that.”

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A former chaos engineer offers 5 tips for handling online disasters remotely

Kolton Andrus
Contributor

Kolton is co-founder and CEO of Gremlin, the chaos engineering company helping the world build a more reliable internet.

I recently had a scheduled video conference call with a Fortune 100 company.

Everything on my end was ready to go; my presentation was prepared and well-practiced. I was set to talk to 30 business leaders who were ready to learn more about how they could become more resilient to major outages.

Unfortunately, their side hadn’t set up the proper permissions in Zoom to add new people to a trusted domain, so I wasn’t able to share my slides. We scrambled to find a workaround at the last minute while the assembled VPs and CTOs sat around waiting. I ended up emailing my presentation to their coordinator, calling in from my mobile and verbally indicating to the coordinator when the next slide needed to be brought up. Needless to say, it wasted a lot of time and wasn’t the most effective way to present.

At the end of the meeting, I said pointedly that if there was one thing they should walk away with, it’s that they had a vital need to run an online fire drill with their engineering team as soon as possible. Because if a team is used to working together in an office — with access to tools and proper permissions in place — it can be quite a shock to find out in the middle of a major outage that they can’t respond quickly and adequately. Issues like these can turn a brief outage into one that lasts for hours.

Quick context about me: I carried a pager for a decade at Amazon and Netflix, and what I can tell you is that when either of these services went down, a lot of people were unhappy. There were many nights where I had to spring out of bed at 2 a.m., rub the sleep from my eyes and work with my team to quickly identify the problem. I can also tell you that working remotely makes the entire process more complicated if teams are not accustomed to it.

There are many articles about best practices aimed at a general audience, but engineering teams have specific challenges as the ones responsible for keeping online services up and running. And while leading tech companies already have sophisticated IT teams and operations in place, what about financial institutions and hospitals and other industries where IT is a tool, but not a primary focus? It’s often the small things that can make all the difference when working remotely; things that seem obvious in the moment, but may have been overlooked.

So here are some tips for managing incidents remotely:

There were many nights where I had to spring out of bed at 2 a.m., rub the sleep from my eyes and work with my team to quickly identify the problem… working remotely makes the entire process more complicated if teams are not accustomed to it.

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