Category: UNCATEGORIZED

To say that COVID-19 has dominated the past year would be an understatement. We’ve seen the pandemic reorient how we interact with businesses, each other and the world around us. It’s accelerated many trends in business — from e-commerce to digital payments — by several years in a matter of months.

The cannabis industry is no exception. Cannabis was already the country’s fastest-growing industry, but 2020 has taken the space to another level. A record-high percentage of Americans now support cannabis legalization.

By all accounts, cannabis was one of the biggest winners on Election Day, with legalization passing in Arizona, Montana, Missouri, New Jersey and South Dakota. More than one-third of the country — over 111 million people — now live in a state with legal recreational cannabis. By 2021, the legal industry is expected to be worth $24.5 billion.

Never has it been more clear that cannabis is now a staple in mainstream America. As we look toward 2021, this upward trajectory not only opens new doors for the industry, but the economy as a whole, with greater innovation, investment and employment opportunities flowing into the space.

A green economy

More than 57 million Americans have filed for unemployment since March. While the financial and employment opportunities around cannabis are not a silver bullet, they’re certainly not something we should ignore.

Legal cannabis sales reached nearly $20 billion this past year and are expected to top $40 billion annually within the next four years. As the industry continues to grow, companies are hiring to keep pace. The legal cannabis market supports 243,700 full-time-equivalent American jobs, which are set to multiply by 250% between 2018 and 2028. This makes the cannabis industry America’s largest source for new jobs.

Cannabis can also strengthen state economies and generate opportunities for increased tax revenue, particularly as state and local budgets dwindle. For example, with its new legalization measure, Arizona will issue a 16% tax on cannabis sales that will go toward community colleges, police, fire departments and public health programs.

Accelerating cannabis e-commerce

If there’s one point that’s been reinforced this year, it’s that cannabis is a highly demanded and indispensable consumer good.

At the height of widespread shelter-in-place orders this spring, dispensaries were classified as “essential” in many states alongside grocery stores, gas stations and pharmacies. While people couldn’t shop at department stores or go to the movies, they could still purchase from their local dispensary. This government recognition was a major signal to the market that the space has been elevated to the mainstream.

A resounding response from consumers followed with record cannabis sales. Unprecedented demand forced cannabis retailers to revolutionize the ways they do business and how customers purchase products. To minimize direct person-to-person contact that can potentially spread the virus, dispensaries turned quickly to e-commerce and digital payment solutions to keep employees and consumers safe while modernizing their business.

As a result of these changes across industries, online sales will reach $794.5 billion by the end of the year, far surpassing original estimates. Experts estimate that the pandemic accelerated the shift to e-commerce by five years. At Dutchie, we’ve seen this firsthand. Since March, we’ve experienced a 700% surge in online orders and a 32% increase in average order size.

Looking ahead to 2021

These political and business transformations were milestones that we’ve fast-forwarded to at breakneck speed. So, what comes next?

I see technological innovation at the forefront of the legal industry moving forward. Technology will enable dispensaries to streamline operations in a highly regulated space where compliance is essential. In turn, data will increasingly become more important as retailers will need to better understand their data to make more proactive, informed decisions. This will be a focus for dispensaries of all sizes, but in particular larger businesses that are looking for an increasingly high level of sophistication for their online experiences.

To meet this need, we’re finally seeing new enterprise-level solutions on the market that empower dispensaries to fully leverage their data to design their unique online identity so they can remain competitive as more players join the space.

As legalization continues to spread, wider adoption will further legitimize the industry and de-stigmatize cannabis sales and use. We will likely see cannabis companies attracting more top talent from some of the most notable companies across mainstream industries, and more software platforms, businesses and investors that were formerly hesitant to enter the space begin to work with and invest in cannabis-related businesses. Federal legalization of cannabis also has the potential to enhance liquidity and open the floodgates to more investment deals.

Additionally, as we’ve already begun to see, there will be an increasing trend toward consolidation across the space as retailers continue to make big acquisitions and mergers. More multistate operators will consume smaller players and smaller players will combine forces, creating a space that is more cohesive and less fragmented.

The future of cannabis

The cannabis industry is still in its infancy, but its potential is crystal clear.

As more states legalize and the industry grows and matures, we will see the needle move even closer to where we want to be: Where legal cannabis is afforded the same technological and financial resources as other mainstream industries; innovators can more freely come together to develop modern technology solutions to push the space forward; and where consumers and patients can get what they want more conveniently.

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and don’t forget to check out the first of our two holiday eps, the last one talking to VCs about what surprised them in 2020.

Anyhoo, from vacation, here’s what Chris and I got up to:

• A report looking at how ecommerce changed during 2020.
• The epic carnage surrounding the Chinese government’s clamping down on its tech sector (more here, and here from TechCrunch).
• Lalamove raised $515 million in a Series E.
• Yuanfudao raised another $300 million.
• Indian startups did not have the strongest year of venture fundraising, which felt a bit surprising.
• And it doesn’t appear that Japan did either.
• But here in the United States, holy shit things were bonkers.

Tune in Thursday for one more fun episode, and then we’re back to regular programming the week after!

Equity drops every Monday at 7:00 a.m. PST and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

During my five years with Global Founders Capital, Rocket Internet’s $1 billion VC arm, I saw more than a hundred of Rocket’s incubated companies attempt to internationalize. For background, Rocket Internet has helped launch some very successful businesses internationally, including HelloFresh ($12.9 billion market cap), Lazada ($1 billion exit to Alibaba), Jumia ($3.2 billion market cap), Zalando ($21.2 billion market cap) and many others. Rocket often followed the Blitzscaling model popularized by Reid Hoffman — earning them an appearance in his book of the same name.

After an initial success helping Groupon scale internationally via a merger with Rocket’s incubation firm CityDeal, Rocket’s team have aggressively scaled businesses from Algeria to Zimbabwe — sometimes in a matter of weeks. No surprise, Rocket also has a graveyard of failed companies that were victims of bad internationalization efforts.

My personal observations on Rocket’s successes and failures start with this crucial point: These learnings might not apply to your unique combination business model, market and timing. No matter how well you prepare and plan your internationalization, in the end you need to be agile, alert and smart as you dip your toes into your first foreign market.

Fail fast and cheaply

Internationalization can be a big driver of growth and consequently enterprise value, which is why investors always push for it. But going abroad can also destroy value just as quickly. As a founder, it’s your job to manage financial and operational risks. Finding the right balance between keeping costs in check and not underinvesting can mean doing things more slowly than your board would like. For example, you might launch new markets sequentially instead of rolling 10 out at the same time.

Adopt a “hire slow, fire fast” mentality for your expansion strategy. Don’t be afraid to pull the plug if things don’t work out.

Our team at Heartcore Capital use the following framework and learnings to guide internationalization strategies for our portfolio companies. A successful internationalization strategy needs to answer and address the “Four Ws”: When, Where, Which and With whom to internationalize. (Regarding the fifth W from journalism, you should not need to ask the “Why” question if you want to build a large business!)

1. When is the right time to start?

Many companies make the costly mistake of launching abroad too soon. They look at internationalization as a detached function, isolated from the rest of the business and then launch their second market prematurely. Follow this simple rule: Wait to internationalize until you hit product/market fit.

How do you know exactly when you’ve reached product/market fit? According to Marc Andreessen, “Product/market fit means being in a good market with a product that can satisfy that market.” He adds that experienced entrepreneurs can usually feel if they’ve reached this point.

Let’s take the man for his word and move on to the actual argument: Until you have product/market fit, you will not be able to distinguish between what you’ve learned from your business model and what you’ve learned from your in-country experience. Mistakes will compound. Complexities and costs will multiply. I contend that insufficient understanding of their business and operating model is the main reason why companies fail with their expansion strategies.

Founders should also consider the underlying costs of internationalizing before they decide to expand (more about this in the “What” section below). Some companies are global by default — think mobile gaming companies — or simply require language localization. Others need to build new warehouses, hire local teams or build entirely new products. The costs and respective risks of expanding prematurely depend heavily on the business model.

There are edge cases where companies need to move quickly to internationalize for strategic reasons — despite uncertainty about their market fit. For instance, companies like Groupon or those engaged in food delivery face winner-takes-most markets, where opportunities for product differentiation are limited. “Blitzscaling” makes sense in cases like these.

However, you should tread carefully if your only reason to start scaling abroad is a large fundraise or to match a competitor’s internationalization efforts. Scaling prematurely for the wrong reasons might just cost you your entire company.

When Rocket Internet announced it would launch the Homejoy model into European markets with Helpling, the American “original” company launched quickly in Germany in an effort to squash their new competitor. In the early days of “on-demand everything,” a managed marketplace for cleaning services sounded like the next unicorn in the making.

In 2013, Homejoy had a fresh $24 million Series A from Google Ventures and First Round — considered a huge round at a time when Instacart had just raised an $8 million Series A and Snapchat had done a $13 million Series A round. It must have seemed like a good idea to squash the German competition early.

As it turned out, Homejoy’s product was not yet ready to scale internationally. Just 13 months after launching in Germany, Homejoy had to cease operations globally, while Rocket’s Helpling is still alive and kicking. Helpling focused carefully on product, automation and making their unit economics work. A rush to crush an international competitor caused the demise of a would-be unicorn.

Homejoy expanded internationally in 2014 in a rush to squash a new German competitor Helpling. Their websites in 2020 show starkly different outcomes. Image Credits: Homejoy/Helpling

2. Where should you internationalize?

When deciding which new international market to tackle, it is vital to do your homework. Analyze the competitive environment, partner availability, infrastructure, culture, regulation and synergies with your home market.

In the early days of e-commerce, it was rather easy to analyze if a market was an expansion target. In the absence of professional competition, Rocket chose new countries based solely on GDP and internet penetration.

The rivalry between China’s top online learning apps has become even more intense this year because of the COVID-19 pandemic. The latest company to score a significant funding round is Zuoyebang, which announced today (link in Chinese) that it has raised a $1.6 billion Series E+ from investors including Alibaba Group. Other participants included returning investors Tiger Global Management, SoftBank Vision Fund, Sequoia Capital China and FountainVest Partners.

Zuoyebang’s latest announcement comes just six months after it announced a $750 million Series E led by Tiger Global and FountainVest. The latest financing brings Zuoyebang’s total raised so far to $2.93 billion. The company did not disclose its latest worth, but Reuters reported in September that it was raising at a $10 billion valuation.

One of Zuoyebang’s main competitors is Yuanfudao, which announced in October that it had reached a $15.5 billion valuation after closing a $2.2 billion round led by Tencent. This pushed Yuanfudao ahead of Byju as the world’s most valuable ed-tech company. Another popular online learning app in China is Yiqizuoye, which is backed by Singapore’s Temasek.

Zuoyebang offers online courses, live lessons and homework help for kindergarten to 12th grade students, and claims about 170 million monthly active users, about 50 million of whom use the service each day. In comparison, there were about 200 million K-12 students in 2019 in China, according to the Ministry of Education (link in Chinese).

In fall 2020, the total number of students in Zuoyebang’s paid live-stream classes reached more than 10 million, setting an industry record, the company claims. While a lot of the growth was driven by the pandemic, Zuoyebang founder Hou Jianbin said in the company’s funding announcement that it expects online education to continue growing in the longer term, and will invest in K-12 classes and expand its produt categories.

What a whirlwind holiday for Jack Ma and his fintech empire. The People’s Bank of China, the country’s central bank, summoned Ant Group for regulatory talks on December 26th, announcing a sweeping plan for the fintech firm to “rectify” its regulatory violations.

The meeting came less than two months after China’s financial authorities abruptly halted what could have been a record-setting initial public offering of Ant over the firm’s regulatory compliance issues. The company, which started out as a payments processor for Alibaba’s online marketplaces and spun out in 2011, lacked a sound governance structure, defied regulatory requirements, illegally engaged in arbitrage, excluded competitors using its market advantage and hurt consumer rights, said the central bank.

Concurrently, Jack Ma’s e-commerce giant Alibaba is under investigation by China’s top market regulator over alleged monopolistic behavior.

The banking authority laid out a five-point compliance agenda for Ant, which is controlled by Alibaba’s billionaire founder Jack Ma. The fintech company should return to its roots in payments and bring more transparency to transactions; obtain the necessary licenses for its credit businesses and protect user data privacy; establish a financial holding company and ensure it holds sufficient capital; revamp its credit, insurance, wealth management and other financial businesses according to the law; and step up compliance for its securities business.

Following the closed-door meeting, Ant said it has established an internal “rectification workforce” to work on all the regulatory requirements.

The shakeup could take months to carry out and likely dent Ant’s valuation, which surpassed $300 billion around the time it was scheduled to go public. For instance, the government recently announced plans to raise the bar for third-party technology platforms like Ant to provide loans to consumers, a segment that made up about 35% of Ant’s annual revenue. The proposed change, which is part of Beijing’s effort to control the country’s debt risks, also sets a new requirement for online microlenders to provide at least 30% of the loan they fund jointly with banks, which could put pressure on Ant’s cash flow.

Some remain optimistic about Ant’s future. “[Ant] creates a lot of value. If you take the long view, the temporary suspension of its IPO has a limited impact on its business,” Bill Deng, founder of cross-border payments operator Xtransfer and a former executive at Ant, said to TechCrunch.

“From the regulator’s standpoint, [Ant’s] lending size is getting so big that it has extended beyond the old regulatory perimeters. To some extent, it has also encroached on the core interests of traditional financial players,” he added.

The clampdown on Ant has no doubt sent a warning to the rest of the industry. In a surprising move, JD.com’s fintech unit, a challenger to Ant, appointed its former chief compliance officer to steer the fintech firm as the new chief executive officer.

Tencent also has a sprawling fintech business, but it may not receive the same level of scrutiny because the social and gaming giant is “not nearly as aggressive” as Ant, said a partner of Tencent’s overseas fintech business who asked not to be named.

The coronavirus pandemic — and a handful of other factors — slowed dealmaking for startups in India this year.

Compared to their record $14.5 billion fundraise last year, Indian startups are ending 2020 with about $9.3 billion. This is the first time since 2016 that startups in India, one of the world’s largest startup communities, has raised less than $10 billion in a year, according to consultancy firm Tracxn.

The number of deals fell from 1,185 last year to 1,088 in 2020. There were fewer larger sized rounds, too. Rounds with dealsize $100 million or larger fell from 26 in 2019 to 20 (these rounds delivered $3.6 billion this year, compared to $7.5 billion last year), and similarly rounds with dealsize $50 million to $100 million fell from 27 to 13. (The figures do not include investments in telecom giant Jio Platforms, which alone raised over $20 billion this year.)

Despite the slowdown, Indian startups saw substantial rebound in the second half of this year. In the first half, startups in the world’s second largest internet market had raised just $4.2 billion from about 461 deals, said Tracxn.

Other than the coronavirus, which has impacted startups worldwide, another factor that impacted the dealmaking was absence of — or reduced participation from — some of the biggest investors.

Chinese giants such as Alibaba — and its affiliate Ant Group — and Tencent wrote fewer checks this year to Indian startups amid tension between the two neighboring nations. SoftBank also delivered less capital as many of its high-profile portfolio firms including Paytm, Oyo Rooms, and Ola did not raise money.

But the virus also accelerated growth of some startups. Byju’s is now valued at over $11 billion, up from $8 billion in January this year. Unacademy, another high-profile startup in the online learning space, raised two rounds at the height of the pandemic, increasing its valuation from about $500 million in February this year to over $2 billion.

Bond, a firm started by Mary Meeker and other high-profile investors, backed Byju’s this year. Bond believes that Byju’s will be worth over $30 billion in three years, a person who was briefed by the investment firm told TechCrunch. Several startups in India operating on a SaaS model and catering to customers worldwide also picked up momentum this year.

11 Indian startups including RazorPay, Unacademy, DailyHunt, and Glance became a unicorn this year. (On a side note, Google and Facebook wrote several checks to Indian firms this year. Google backed Glance and DailyHunt last week, while Facebook invested in Unacademy. Both the firms also invested in Jio Platforms this year.)

“I am old enough (unfortunately!) to have seen the 2001 and 2008 downturns so when Covid hit and there were stories of doom and gloom everywhere, I remembered what I saw happening in the past downturns — a beginning of a new generation of teams who built the next generation of companies,” said Vaibhav Domkundwar, founder and managing partner at Better Capital. Better Capital, which backs early stage startups in India, wrote 43 investment and follow-on checks this year.

M&A activities also accelerated this year. Byju’s acquired WhiteHat Jr for $300 million, while Unacademy acquired PrepLadder, which offers courses aimed at medical students, for $50 million in July. It also led an investment round of $5 million to acquire a majority stake in Mastree.

Reliance Industries acquired online pharmacy Nedmeds and, in a fire sale, Urban Ladder.

But for the first time, Indian startups are on the verge of seeing another kind of exit. Zomato, Flipkart, and Policybazaar are among some startups that plan to go public next year. Analysts at Bernstein have identified Paytm, Byju’s, PhonePe, and Delhivery among those who could also go public by 2022.

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Remember when it was news that venture capitalists were open for business? Or when Zoom investing was only done by that one guy in Ann Arbor (ha, I kid!)? These past few months have felt busier than ever, with no holiday slowdown in sight when it comes to startup growth, hot IPOs and new financings.

Even with a distracting bull market, I wanted to reflect and see how the youngest startups are faring. Alex Wilhem and I dove into data, provided by Pitchbook, to see if the next DoorDashes and Airbnbs are getting their first financings.

The answer is that seed investing flourished but in a complicated way. COVID-19 shook up which startups were considered attractive by private investors. And that changeup came at risk to certain sectors and people.

Here’s how two investors explained the dynamics:

Freestyle’s Jenny Lefcourt:

I think seed prices are being driven up by the larger [venture] firms playing earlier and feeling like they cannot afford to miss the next DoorDash. I think the larger firms have so much capital to put to work and feel they are better off burning some [cash] at seed for the upside of being in the right [startups] where they can double, triple, 10x down on their winners.

Eniac Ventures’ Nihal Mehta:

Because you can’t meet in person, investors felt way more comfortable investing in ‘proven’ entrepreneurs that had pre-existing connections to their social circle.

The long-term ramifications of this tunnel vision means that female founders lost out during this time, since social circles in venture capital are largely white and male. From a sector perspective, e-commerce and edtech have had an easy time raising, but at the cost of travel and hospitality.

The data brings a sort of dissonance to startup-land: Even though seed investing has never looked more busy and fruitful, this is good news for some, and bad news for others. It’s a healthy reminder that a boom and bust can be true at the same time.

How’s that for a 2020 sign-off? We’ll be off next week but in the meantime, two bits of homework: take advantage of this Extra Crunch holiday sale and send me tips and thoughts to natasha.mascarenhas@techcrunch.com or tweet me @nmasc_ in between your holiday treats.

I’ll chat with you all in the New Year.

Image Credits: Getty Images

Edtech’s biggest challenge in 2021

No sector has had a year quite like edtech. The sector attracted $10 billion in funding globally, and remote learning went from a tool to a necessity.

Here are my favorite edtech stories I wrote this year:

• Edtech investors are panning for gold
• Teachers are leaving schools. Will they come to startups next?
• Edtech is surging, and parents have some notes 
• Edtech startups prepare to become ‘not just a teaching tool but a necessity’ 
• Will edtech empower or erase the need for higher education

Finally, in my end of year op-ed for TechCrunch, I propose that the ubiquity of remote learning surely brought a boom to new users, but it may have in fact limited the sector’s ability to innovate in lieu of fast, easy scale.

Here’s my biggest tip for the year ahead:

For edtech in 2020, flexible and scrappy was a survival tactic that led to profits, growth and most of all, aha moments that technology was needed in the way we learn. Now, as we enter the rest of the decade, the sector will have to shake off its short-term-fix mentality to evolve from tunnel vision to wide-pan ambition.

Image: Bryce Durbin / TechCrunch

A $16B checkbook for space startups

Funding for space startups is defying odds – which is the poetic flair we need once in a while. As part of our TC Sessions: Space 2020 event, a number of TechCrunch reporters dove deep into what kind of money is going into … the space.

• Some think that space startup funding didn’t slow, despite the economic downturn, because of government involvement providing a budget buffer.
• The man who handles the money for the Air Force’s $16 billion checkbook wants startups to slide into the DMs.
• Three VCs talk about space junk, sustainability, and the merits of space manufacturing.

Chris Boshuizen of the venture firm DCVC and a co-founder of Planet Labs notably said:

We don’t yet live in the sci-fi future, where you can just fly up, grab a piece of debris and bring it back. That’s really, really hard — I think probably five years away — but something we want to support and see happen.

Image of Uncle Sam floating in space with the Space Force logo above his left shoulder.

Remembering the startups we lost in 2020 

Building a startup is always difficult, but the pandemic was a plot twist that led to a not-so-happy ending for many companies this year. So, as part of an annual TechCrunch tradition, we paid homage to the startups we lost in 2020. 

Here are my takeaways:

• This is not a fun list. Failure is hard, but you can learn a thing or two when you sort through the ashes. For example? Big names, big plans, and a boatload of money isn’t a replacement for actually making money.
• List includes short-form video app Quibi, to lawyer tech startup Atrium, to a slew of travel startups which fell apart as the virus dragged on. 
• While some businesses chalked up failure to COVID-19, the cracks and fundamental business flaws were often peeking through far before the pandemic began.
  

Around TechCrunch

TechCrunch’s Favorite Things of 2020

Gift Guide: Last-minute subscriptions to keep the gifts going all year

Video: TechCrunch editors choose their top stories of 2020

Across the week

Seen on TechCrunch

Snoop Dogg’s Casa Verde Capital closes on $100 million as the cannabis industry bounces back

Activism platform actionable helps users be proactive about the causes they love

Letterhead wants to be the Shopify of email newsletters

Telegram, nearing 500 million users, to begin monetizing the app

The Biden administration can change the world with new crypto regulations

Seen on Extra Crunch

With a $50B run rate, can anyone stop AWS?

Looking ahead after 2020s epic M&A spree

Dear Sophie: What’s ahead for US immigration in 2021?

The built environment will be one of tech’s next big platforms

@EquityPod

Finally, Equity is ending the year with two holiday episodes. This week, we’ve got reflections on this dumpster fire year. I teamed up with Danny, Chris and Alex to just sit back and think about this eventful year. We also got five venture capitalists who we got to leave us their notes as well.

The goal for this episode was to sit down and think a year that no one could have ever predicted, but with a specific angle, as always, on venture capital and startups.

We asked about the biggest surprise, non-portfolio companies to watch, and trends they got wrong and right. There was also banter on Zoom investing (Alex came up with Zesting, not me) and startup pricing.

Equity drops every Monday at 7:00 a.m. PST and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

“The Mandalorian” just wrapped up its second season on Disney+, with an action-packed and surprise-filled finale.

In many ways, it feels like a seamless continuation of the first season’s storylines, with the titular bounty hunter searching for a Jedi who can take responsibility for the alien moppet known to the internet as Baby Yoda, while the pair is pursued by the sinister Moff Gideon.

But as we explain on the latest episode of the Original Content podcast, where the first season of “The Mandalorian” felt accessible to anyone, regardless of their level of Star Wars fandom, season two deepens its ties to the rest of the fictional universe.

That includes bringing in live action versions of characters from the animated “Clone Wars” series, as well as setting up the many other Star Wars shows that are in the works for Disney+. This approach prompted very different responses from your podcast hosts — Darrell was delighted since he understood all the Ester Eggs, Jordan was exhausted trying to keep up and Anthony was happy to let many of the references go over his head.

At least the show’s other virtues remain intact, with enjoyably grungy and tactile space opera settings, spectacular big budget battles and an adorable baby Jedi.

In addition to reviewing “The Mandalorian,” we also discuss HBO Max’s arrival on Roku (which somehow prompts Anthony to explain his disappointment in the new Christopher Nolan movie “Tenet”), and Darrell and Jordan offer their latest thoughts on “The Bachelorette.”

You can listen to our review in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also follow us on Twitter or send us feedback directly. (Or suggest shows and movies for us to review!)

And if you’d like to skip ahead, here’s how the episode breaks down:
0:00 Intro
4:14 HBO Max/”Tenet” discussion
13:35 “The Bachelorette” discussion
28:42 “The Mandalorian” Season 2 review
50:40 “The Mandalorian” spoiler discussion

“Are you okay?”

I don’t have a good answer to the question. Knowing full well that I’m talking back to an algorithm — even one asking the same question of everyone with a different band mad-libbed in — doesn’t soften the blow. Am I? Are we? Is anyone, really?

In this case, it’s referring to Waxahatchee. I mean, yeah, I totally listened to a lot of Waxahatchee this year. Waxahatchee is good. Saint Cloud was one of my favorite albums of the year. Katie Crutchfield’s music doesn’t exist in the Elliott Smith, Leonard Cohen bin for me. It’s not time to send up the signal flares when you see the band all over my Spotify social feed.

The Spotify roasting AI that’s been making the rounds this week is a fun exercise in music snobbery. It also may be brushing against some larger truth here. Something I think we all considered at least in passing this year when Spotify offered its annual “Wrapped” year in review.

What’s the soundtrack to the worst year, ever? What do we listen to while the world burns? In 2009, a former CNN intern stumbled across a video tape in the archives labeled with the title, “Turner Doomsday Video.” The minute-long video features a band playing, “Nearer My God To Thee,” believed to be the final song played by the band on the Titanic. It carried the explicit instructions, “HFR [Hold for Release] till end of the world confirmed.”

Barring any sort of last-minute surprise, it seems likely we’ll make it through 2020 shy of a full-on apocalypse (in spite of, perhaps, the best efforts of some). But for me, Spotify’s year in review was a testament to hell year, just as my Apple Watch exercise bars saw a zeroing out in late-March and April, as the pandemic bore down on my home of Queens, New York and I dealt with some personal health issues.

What was pitched as a celebratory aggregation of my listening habits over the previous 12 months exited the machine as a testament to the long stretches of time where engaging with music felt like an impossibility. Ambient music and post-rock got me listening again when lyrics seemed like too much to process. And I’m sure I’m not alone in having listened to some comfort tracks with an alarming frequency.

Looking back is a useful reminder of the role music played in what undoubtedly qualifies as the worst year to date for many. It would be an overstatement to suggest that music saved my life in 2020, but it certainly cushioned the blow of one too many emotional gut punches.

“Music can lift us out of depression or move us to tears – it is a remedy, a tonic, orange juice for the ear,” the late-neurologist, Oliver Sacks wrote. “But for many of my neurological patients, music is even more – it can provide access, even when no medication can, to movement, to speech, to life. For them, music is not a luxury, but a necessity.”

Louis Armstrong put it even more succinctly: “music is life itself.”

It’s a cruel irony that, in a year when music has meant so much to so many, most musicians have struggled to make ends meet. The musical field certainly isn’t unique in that respect this year, but their struggles have been pronounced in an era when streaming revenues offer fractions of cents what musicians make in record sales, and touring has become the most important revenue stream for all but the biggest names. For the past 10 months, that all but dried up.

“The pandemic utterly decimated the live-music industry,” Wilco frontman Jeff Tweedy noted in a recent interview. “There’s been almost an entire year now of absolutely zero revenue.”

In May, a survey from the Musician’s Union noted that 19% of musicians said they might end up giving up their careers due to the impact of COVID-19. Seven months later, one wonders whether that figure might have been optimistic.

Tweedy adds, “There will be places to play. But the landscape won’t ever look the same. I imagine that a lot of the more intimate music venues will be gone, just like a lot of small businesses and restaurants.”

Bandcamp has been a beacon for many. The service’s “Bandcamp Fridays,” which waive its revenue cut, have raised $40 million to date. The site has promised to continue offering the feature at least through May of next year.

This year’s struggles have served to highlight concerns over streaming royalties. Spotify has understandably been the focal point for this conversation, all while the company has spent hundreds of millions to bolster its podcast programming. CEO Daniel Ek didn’t do himself any favors in July when he noted, “Some artists that used to do well in the past may not do well in this future landscape, where you can’t record music once every three to four years and think that’s going to be enough.”

In October, Justice at Spotify rep (and Galaxie 500 member) Damon Kurkowski told me “[R]esponse from certain corners of the industry has been as cold as we expected: ‘You’re just musicians and don’t understand business,’ is the basic gist of it. To which I would say: The problem we are calling attention to is precisely that musicians have been left out of the conversation! We always come last in payment and in consultation — even though our work is what the streaming business is built on.”

The struggle to survive on music is nothing new, of course. Jazz genius Thelonious Monk famously had a benefactor in Baroness Pannonica de Koenigswarter. But just because we’ve failed musicians in the past doesn’t mean we can’t and shouldn’t do better.

Am I okay? I’m still not sure, but listening to music seems to help.