We can’t help but wonder what the future of work will look like in the wake of this global pandemic. That’s the timely topic of today’s interactive webinar, COVID-19’s Impact on the Startup World.
The second of three in our free series of interactive webinars — exclusively for founders exhibiting in Digital Startup Alley at Disrupt 2020 — gets underway today, August 19 at 1pm PT/4pm ET. Exhibitors, be sure to register to attend.
Still on the fence about exhibiting at Disrupt? Hop off and get to it — buy a Disrupt Digital Startup Alley Package, tune in to the remaining webinars, and then get ready to reap the benefits that come with introducing your startup to a global Disrupt audience. More on those in a minute.
You’ll hear from Nicola Corzine, Executive Director of the Nasdaq Entrepreneurship Center and Cameron Stanfill, a VC Analyst at PitchBook. Jon Shieber, a TechCrunch Editor who covers venture capital and private equity investments will moderate the discussion. No one can predict the future, but these three bring years of experience to the table, and they’ll offer a data-informed perspective, tips and advice on how startups can adapt and what they need to think about both during and after COVID-19. It’s interactive, folks — got questions? Get answers.
Exhibiting in Digital Startup Alley is opportunity on steroids. Network with thousands of Disrupt attendees from around the globe. Expose your tech and talent to influencers of every stripe across the startup ecosystem — investors, R&D teams, advisors, potential customers. Make and nurture connections that can result in exciting partnerships.
CrunchMatch, our AI-powered networking platform bridges the physical distance of a virtual conference. It helps you quickly find and connect with the people who can help take your business to the next level. The platform’s up and running right now. Once you register for Disrupt, you can reach out to attendees and start expanding your network immediately.
Ready to exhibit? Great — be sure to mark your calendar for the final exclusive webinar. Tune in on August 26 for Fundraising and Hiring Best Practices with panelists Sarah Kunst of Cleo Capital and Brett Berson of First Round Capital.
We can’t predict the future, but there’s one thing we do know. It’s going to take every opportunity and every advantage to survive and thrive in these tumultuous times.
No company is completely insulated from the macroeconomic fallout of COVID-19, but we are seeing some companies fare better than others, especially those providing ways to collaborate online. Count Atlassian in that camp, as it provides a suite of tools focused on working smarter in a digital context.
At a time when many employees are working from home, Atlassian’s product approach sounds like a recipe for a smash hit. But in its latest earnings report, the company detailed slowing growth, not the acceleration we might expect. Looking ahead, it’s predicting more of the same — at least for the short term.
Part of the reason for that — beyond some small-business customers, hit by hard times, moving to its new free tier introduced last March — is the pain associated with moving customers off of older license revenue to more predictable subscription revenue. The company has shown that it is willing to sacrifice short-term growth to accelerate that transition.
We sat down with Atlassian CRO Cameron Deatsch to talk about some of the challenges his company is facing as it navigates through these crazy times. Deatsch pointed out that in spite of the turbulence, and the push to subscriptions, Atlassian is well-positioned with plenty of cash on hand and the ability to make strategic acquisitions when needed, while continuing to expand the recurring-revenue slice of its revenue pie.
The COVID-19 effect
Deatsch told us that Atlassian could not fully escape the pandemic’s impact on business, especially in April and May when many companies felt it. His company saw the biggest impact from smaller businesses, which cut back, moved to a free tier, or in some cases closed their doors. There was no getting away from the market chop that SMBs took during the early stages of COVID, and he said it had an impact on Atlassian’s new customer numbers.
Image Credits: Atlassian
Still, the company believes it will recover from the slow down in new customers, especially as it begins to convert a percentage of its new, free-tier users to paid users down the road. For this quarter it only translated into around 3000 new customers, but Deatsch didn’t seem concerned. “The customer numbers were off, but the overall financials were pretty strong coming out of [fiscal] Q4 if you looked at it. But also the number of people who are trying our products now because of the free tier is way up. We saw a step change when we launched free,” he said.
Sophie Alcorn is the founder of Alcorn Immigration Law in Silicon Valley and 2019 Global Law Experts Awards’ “Law Firm of the Year in California for Entrepreneur Immigration Services.” She connects people with the businesses and opportunities that expand their lives.
Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.
“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”
I’m employed at a major Silicon Valley tech company in H-1B status. I want to found a startup. How can I work at the startup?
—Enterprising in Emeryville
Hiya Enterprising,
Thanks — you’re in good company; a lot of people are inspired by amazing new ideas during the pandemic. It’s a great opportunity to seek life transitions and new adventures.
The broader market melt-up has helped buoy shares of Apple to new highs this morning. In early trading today, the market capitalization of the tech industry giant and FAAMG member crossed the $2 trillion mark before slipping just beneath the threshold.
Shares of Apple have advanced just over 59% in 2020, despite the company’s most recent earnings report bearing news of a more modest 11% year-over-year revenue gain. Earnings per-share advanced 18% in the same quarter, a more impressive metric but still a far smaller result than the value increase that Apple’s equity has managed.
Many technology companies are enjoying a strong market rebound after seeing sharp lows in the immediate wake of COVID-19-related restrictions at home and abroad. The market sentiment appears to argue that when the global economy is back to full-power, the market position of tech companies within it will be one of greater strength than before. This argument is doubled among companies that offer digital services, such as Apple.
Tech shares have set new all-time highs this year, with the Nasdaq Composite worth more than 11,000 points in recent days, a record tally after a eye-popping rally.
Around three years ago the “Big Five” American tech companies — Alphabet, Amazon, Microsoft, Apple, and Facebook — were worth $3 trillion in aggregate, big news at the time. Today Apple and Microsoft are alone worth around $3.6 trillion.
The rise of the tech giants has been the story of a decade, their recent gains the story of the year. If the market cohort is now overvalued is, of course, up to the investing public even if warning signs abound that things are getting a bit too hot.
For startups, this is nearly all good news. Excited public markets for tech shares make private shares appear more valuable, and desirable. Public rallies can help advance IPOs, and acquisitions. So today’s news is that Apple is now sufficiently rich to shame Croesus, means that your friendly, local startup might be able to close that next round at a price that it likes.
When you start a company, it can be tempting to keep it simple. You want something that investors and customers can easily understand. While it might be easier to go that route, that is not something that CloudFlare did when it launched a decade ago at TechCrunch Disrupt. Instead, the company decided to go big or go home, and went with the wild idea of building a faster and safer internet. Not too much pressure.
It launched in 2010 with a free product and a paid tier and grew that original notion of delivering speed and security into a suite of products and services. Today, a decade later, CloudFlare is a public company with a market cap of nearly $12 billion.
We are going to talk to company co-founder and chief operating office Michelle Zatlyn in a One on One interview at TechCrunch Disrupt 2020 about what it took to build off that vision as an early stage company. They were going after established giants like Akamai at the time. They needed to build a network of data centers around the world, starting with 5 on 3 continents at launch.
None of this could have been easy from an operations perspective. They were offering the bold assertion that they could make the world’s websites faster and safer and do it in a way that didn’t require any additional hardware and software. As an early adherent to the notion of cloud computing, they were giving customers the ability to do things that up until that point were only in reach of the largest internet properties, selling a value proposition that is common today, but was pretty unusual at the time.
We’re going to ask Zatlyn, how they built this early product, how they grew the product set and expanded their data center coverage to over 200 around the world, and what it took do all that and eventually become a public company.
Instagram has found a new place to display ads: at the end of your Feed. The Facebook-owned app in 2018 introduced a feature that will alert users when they’ve scrolled through all the new content in their Instagram Feed, with a notice reading “You’re All Caught Up” that appears on the screen. Now, Instagram says it will use this space to suggest new, organic posts for users to view as well as ads.
The original idea behind the “You’re All Caught Up” notice was to help curtail overuse of Instagram’s addictive, social app. At the time, the feature was one of several Facebook had implemented to provide insights into screen-time usage, having arrived alongside dashboards that would help people see how much time they they’ve spent in Facebook and Instagram’s apps, daily reminders when you hit your total time for the day, and tools for silencing notifications.
The changes were part of a larger movement in tech that questioned if social apps had been built to become too addictive, which could have negative consequences on users’ mental health. Around this time, Google and Apple released their own screen time management tools, and YouTube rolled out features to track time spent watching videos and reminders that encouraged users to take a break.
In more recent months, the growth of the addictive, Chinese-owned social video app TikTok in the U.S. combined with a global pandemic has seen many people backtracking on their earlier self-imposted screen time limits. This, in turn, may have pushed Instagram to roll back its own efforts in screen time management, too.
A chief rival to Facebook’s social dominance, TikTok has already been slammed for being too addictive, thanks to its advanced algorithms quickly learn what sort of content holds users’ attention then uses that information to personalize users’ feeds. With its short-form content and quick-fire interface, TikTok users are finding themselves spending an increasing amount of time in the app. According to data from 2019, the average U.S. TikTok user opened the app 8 times per day, and spent 46 minutes, on average, viewing its content. Newer reports says this number has increased to 52 minutes per day, and one recent study found that younger users may be spending as much as 80 minutes per day in the app. It’s no surprise, then, that Instagram may now be reconsidering its decision to push users to stop scrolling and leave its app.
“Our goal is to make it clear when you’re all caught up so you can decide how you want to best use your time,” says Instagram Director of Product, Robby Stein. “We see people continuing to seek out more posts they’re interested in after catching up with their feeds, so we wanted to learn from that and make it easier to go a little deeper for those who choose to do so.”
The company also adds that people who follow a larger number accounts may never reach the end of their Feed to begin with, and don’t see the “You’re All Caught Up” message.
The “Suggested Posts” feature gives Instagram a new surface where it can display ads which will appear alongside the suggested content from accounts you don’t follow, but Instagram thinks you might like. For advertisers, that means more chances for people to see their pitch.
This increased ad space is the more significant impact, from a business perspective. But Instagram’s decision to dial back its digital well-being efforts could have longer-term impacts to its app and the larger screen time movement in general. Already, many parents have ditchedtheir children’s screen time limitsamid coronavirus lockdowns, and many adults are finding themselves online more often these days, as well. Some experts even argue that online networking has increased value in our socially-distanced world. These new attitudes could lead to Instagram’s “Suggested Posts” feature being launched with little to no backlash.
Instagram says the feature is rolling out now, globally.
Thinking back to the last time I accepted a job, I can’t recall actually reading any of the material that was sent over. I think I skimmed some docs to make sure the numbers written down matched what I had been told over the phone, but after that it was a blur of digital signing and emailing and precisely no due diligence from myself.
Not great, really. I bet that your experience accepting new gigs has been somewhat similar. In startups, jobs are offered with exotic types of pay, chock full of startup stock options in all their 409a and vesting-period glory. Some folks might not really understand what is being offered. Like what the value of their full comp package really is, when performance pay and other sweeteners are stacked on top of base rates. With remote learning in the equation, it’s even more confusing.
This is the market space that Welcome, a startup that is announcing a $1.4 million fundraise, wants to fix.
The company told TechCrunch it is a “first offer management and closing platform.” Its service helps provide a clear picture of total comp to candidates, helping them accept or deny an offer that they can fully understand.
Here’s a screengrab, from the candidate’s side of the employer-employee divide:
If “offer management and closing” sounds like a small niche to target, it both is and is not.
It is, in that if Welcome stayed in its current market-position forever it would have a smaller product target than most startups. But the company has plans to expand its product-set over time. For example, its co-founders Nick Gavronsky and Rick Pereira explained that Welcome wants to offer real-time salary data in the future, based on the information that will flow through its service.
Want to close a engineer in North Carolina with a high level of confidence in the offer? Welcome should be able to tell you, later on, what a comp package should look like if you want make sure the candidate will accept.
Gavronsky and Pereira have experience in product and people work, respectively, making their union at Welcome a good fit. The company’s team is currently just four folks, though the startup expects that it will double in size this year. The capital it raised in January, but is only talking about now, is making the hiring possible.
Now, the $1.4 million number is pretty dated. Normally I’d skip over a round so far from the past, but Welcome caught my eye as I’ve recently written about another HRtech provider, Sora, and the Welcome deal felt like an illustrative event: This is how Seed rounds are announced, long after the fact, which makes reporting on Seed-stage trends really hard. Something to keep in mind.
Welcome is barking up a winsome tree with its product, not only because the offer/offer acceptance process is garbage today — let’s email some PDFs and hand a candidate off between departments! — but because it has seen strong early demand from potential customers. Its service is currently in a private alpha that was a bit oversubscribed, though the company is not yet charging for its service. (Welcome will be a SaaS play, priced on company size, which seems reasonable).
Past all that, what’s exciting about Welcome is that if it can get a number of customers aboard when it makes it to beta or launch, the company will have placed itself in a position where it can expand in several directions. It could, for example, extend its feature set to help with pre-onboarding or onboarding itself, given that it already knows a new candidate and their new employer. Of course, the startup wants to talk more about what it’s building today, but it’s also fun to look ahead.
That’s enough on Welcome, we’ll chatter about them again when they formally launch, or share some neat growth metrics. Until then, good luck getting into the alpha.
Finmark, a member of Summer 2020 Y Combinator cohort, is not your typical YC startup. In fact company co-founder Rami Essaid has already built Distil, a security startup and saw it through to exit when he sold the company to Imperva last year.
As he pondered what to do next, he took a quick turn at InsightFinder before turning his attention to a problem every startup founder faces: modeling what your financial future could look like. “Finmark is financial modeling for startups. We want to help founders understand their runway, their cash flow, their hiring plans and be able to do it in an easy way,” Essaid told TechCrunch.
It’s a problem he saw first-hand when he was co-founder at Distil. Like most startups, these projections were kind of a crapshoot in Excel. He wants to make it more precise and easy to get the big picture of your company’s finances before you can afford more sophisticated financial tracking software
“One of the biggest pain points was always understanding where our projections were relative to what we were actually doing as a company. So many times we were running our entire business off of Excel, and so many times the forecasts of what we thought we were going to do were wrong,” he said.
He says it’s tough enough, even after you hire your first CFO and have professional rigor applied to your projections. As he sees it, the problem is you’re always looking back and always playing catchup. What’s more, because it’s done manually in Excel, he says that it introduces a lot of room for error.
Image Credits: Finmark
He admits this isn’t exactly a new idea. Companies like Anaplan and Adaptive Insights have been able to move modeling like this beyond Excel, but up until now he says that these tools have been designed for large enterprises, and he wanted to come up with a tool within reach of anyone, regardless of their size.
If you think it’s too limited a market, Essaid doesn’t agree. He sees a need and he thinks he can turn early stage startups into paying customers, who eventually will pay significant money to have a tool like this to help them manage all of their finances in a professional manner. One way to build his customer base could be to partner with early stage venture capitalists, whose portfolio companies could benefit from a service like this, an avenue he intends to pursue.
So why does an experienced entrepreneur join Y Combinator? Essaid candidly says that he saw the program as a good way to market the product. YC companies are his prime target audience. “Even as a repeat founder with some gray hair, I thought access to the network alone was worth the equity of YC,” he said.
But beyond the practical aspects, he says he still has plenty to learn. “Even with all of the lessons that I have learned, you don’t know everything, and they see a lot more companies than the ones that I’ve had a chance to operate, so I still find nuggets of wisdom in going through the program,” he said.
While Essaid has a company under his belt, which dedicated hundreds of thousands of dollars to scholarships for women in STEM, he admits that it’s hard to build a diverse organization and it’s something he’s still working on. He co-founded the company with two ex-Distil engineers, and he says there is a natural inclination to go back to the people he worked with before at Distil as he adds early employees, but he recognizes that he will not necessarily grow a diverse group of employees that way.
“I don’t have an answer to solving it yet. […] We’ve been hiring from ex-Distilers but once we look outside of that, I think it’s really important to set up things in a way where you can look […] at resumes with an unbiased lens,” he said.
For now with 15 employees on the payroll, he’s just trying to build the company. He hinted that he is working on obtaining funding, but didn’t have anything definitive to say just yet.
After yesterday’s look into the somewhat lackluster pace of investment into e-commerce-focused startups this year, a few VCs sent in notes that added useful context. So this morning let’s discuss why the pace of e-commerce startup fundraising has been so milquetoast in 2020.
To frame the oddity of e-commerce startups not raising a flood of cash during what are historic boom times, we noted Walmart’s staggering online sales growth in Q2, which TechCrunch’s Sarah Perezbroke out into a separate piece. Today, for a soupçon more, Target reported its Q2 earnings. Its results are similar to Walmart’s own, if even more extreme.
The American retailer reported that its “store comparable” sales were up 10.9% in the quarter, which was rather good. But Target also reported that its “digital comparable sales grew 195 percent,” which is staggering. And Target’s revenue mix moved from 7.3% digital in its year-ago quarter to 17.2% in its most recent.
Damn.
If you’ve been around the internet lately, you can’t help but trip over more data detailing this extraordinary moment in e-commerce history — there are years of change happening in just a quarter’s time. For a taste, former Andreessen denizen Benedict Evans has some great data on U.S. and UK e-commerce growth, and here’s yet another great chart to chew on. It goes on and on.
So the e-commerce boom is real, and the startup funding funk is as well, per the data we ingested yesterday via CB Insights. What gives? GGV’sJeff Richards had an idea, and we chatted with Canaan’sByron Ling as well. And we’ve also done a little digging into some of the largest, recent e-commerce rounds to get some flavor on who is raising in the space. Ready?
Why e-commerce VC isn’t going straight up
If you recall, our thesis yesterday was that, perhaps, the killzone theory often posited concerning Amazon meant that the e-commerce space is less investable than we’d otherwise imagine and that because some things are “sorted” to a degree, there is less green space available in the sector for startups to tackle.
Observing the microscopic creatures that fill our oceans is important work, but keeping your eye on one in the wild is practically impossible — and doing so in a dish isn’t the same. This ‘hydrodynamic treadmill’ however provides the best of both worlds: An unending water column for the creatures to swim in, without ever leaving the watchful eye of an automated microscope.
The Gravity Machine, as it’s called, is the brainchild of Stanford researchers under bioengineering professor Manu Prakash. He and some students, during a research trip to Madagascar, had built a slightly clunky meter-long tube with an attached microscope that could follow a creature as it moved up and down. But these microorganisms sometimes travel hundreds of meters a day to chase the sun or nutrients in the water.
“We haven’t had the opportunity to observe this life in its own habitat… or the last 200 years, we’ve been doing microscopy with confinement. You’d have to have a kilometer-long tube if you wanted to track an organism over a kilometer,” Prakash said. “While we were thinking about this problem, it dawned on us — there was this ‘aha!’ moment where we thought, instead of a long tube, what if the two ends of the tube were connected?”
Image Credits: Stanford University
The gadget is, in retrospect, almost obvious. Instead of having a microscope pointing downwards at a dish where the creatures swim around in a shallow pool of water — nothing like their natural environment — you have one pointed sideways at a closed glass loop filled with water and the organisms of interest. They can swim freely up and down, and as they do so the loop slowly spins to keep them within the frame of the microscope.
A computer vision system attached to the 3D microscope carefully tracks the location of the target creature and keeps it in focus, while auxiliary systems note the exact distances traveled and other metrics.
The team has used the device to capture all manner of beautiful and scientifically interesting behaviors by microscopic organisms.
“It’s fair to say that every time we have put an organism into this instrument, we have discovered something new,” Prakash said.
One such novelty is the fact — obvious upon inspecting these creatures in this way — that despite living in a fluid environment and at a scale of microns, gravity is a major factor in their lives. “They’re all aware of gravity, and they all care about gravity,” said Prakash. Exactly how would be very difficult to say until the creation of this machine, which lets the scientists observe these behaviors directly — hence the name.
Image Credits: Stanford University
Image Credits: Stanford University
The imagery produced by the instrument is visually arresting and interesting even to a layperson, as well — and capturing the interest of the general public is remarkably difficult to do when it comes to the field of marine microbiology. People’s eyes tend to glaze over when you talk about the diurnal migratory habits of dinoflagellates, but seeing one of these beautiful creatures up close and in focus, doing what it does best (whatever that is), is simply fascinating.
While the water stays in the loop (ideally — “we do explode wheels in our lab,” noted Prakash) that doesn’t mean that it’s a totally closed system.
“We can introduce things based on what the creature is doing,” said grad student Deepak Krishnamurthy. “We can introduce nutrients, tie the light intensity to it — it’s a feedback loop between the organism and its environment. We’re also working on doing that with pressure, temperature, and other aspects of the ocean.”
I couldn’t shake the idea that I’d seen something like this before, and well into development of the Gravity Machine, Prakash himself came across a similar idea from the ’50s, a much larger loop that a marine biologist named Hardy used to allow jellies to swim endlessly in a similar fashion. Of course the present device could only happen with the advance machine learning and robotics tech that we have today, but as Prakash said, “the historic context is quite beautiful, actually. We got a big kick out of that in the lab.”
Stanford’s Gravity Machine wasn’t quite the first, then, and the team means to make sure it isn’t the last, either, by publishing all the details on how to build and run the instrument.
“We were careful to make it as open as possible, and that affected our choices of harware and software,” said Krishnamurthy. “The intention is for it to be completely open source for research purposes. We use open source algorithms for tracking, we wrote our own for the controls that keep it in focus, the UI for watching and collecting data.”
“We’ll be putting instructions for people to build this on the gravitymachine.org site itself,” added Prakash. An ordinary microscope can be used with some modification and a few easy to get parts, and ultimately it’s no more than a lab might do to create or customize its own equipment anyway. He even hinted at a “home edition” that could show a curious user what critters in the endless water column were up to. Sort of like having your sea monkeys live on TV.
The exact specifications of the Gravity Machine will be published soon, as will the team’s first paper using the device to discover something new and extremely weird: diatoms that can voluntarily control their own density to rise or fall in the water column. You can read more about the device at its site or this Stanford news post.
