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Circle is a good example of why SPACs can be useful

Published July 8, 2021

In the wake of Coinbase’s direct listing earlier this year, other crypto companies may be looking to go public sooner than later. That appears to be the case with Circle, a Boston-based technology company that provides API-delivered financial services and a stablecoin.

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Circle will not direct list or pursue a traditional IPO. Instead, the company is combining with Concord Acquisition Corp., a SPAC, or blank-check company. The transaction values the crypto shop at an enterprise value of $4.5 billion and an equity value of around $5.4 billion.

The offering marks an interesting moment for the crypto market. Unlike Coinbase, which operates a trading platform and generates fees in a manner that is widely understood by public-market investors, Circle’s offerings are a bit more exotic.

Circle’s SPAC presentation details a company whose core business deals with a stablecoin — a crypto asset pegged to an external currency, in this case, the U.S. dollar — and a set of APIs that provide crypto-powered financial services to other companies. It also owns SeedInvest, an equity crowdfunding platform, though Circle appears to generate the bulk of its anticipated revenues from its other businesses.

For more on the deal itself, TechCrunch’s Romain Dillet has a piece focused on the transaction. Here, we’ll dig into the company’s investor presentation, talk about its business model, and riff on its historical and anticipated results and valuation multiples.

In short, we get to have a little fun. Let’s begin.

How Circle’s business works

As noted above, Circle has three main business operations. Here’s how it describes them in its deck:

Image Credits: Circle investor presentation

Let’s consider each one, starting with USDC.

Stablecoins have become popular in recent quarters. Because they are pegged to an external currency, they operate as an interesting form of cash inside the crypto world. If you want to have on-chain buying power, but don’t want to have all your value stored in more volatile, and tax-inducing, cryptos that you might have to sell to buy anything else, stablecoins can operate as a more stable sort of liquid currency. They can combine the stability of the U.S. dollar, say, and the crypto world’s interesting financial web.

Rootly nabs $3.2M seed to build SRE incident management solution inside Slack

Published July 8, 2021

As companies look for ways to respond to incidents in their complex microservices-driven software stacks, SREs — site reliability engineers — are left to deal with the issues involved in making everything work and keeping the application up and running. Rootly, a new early-stage startup wants to help by building an incident-response solution inside of Slack.

Today the company emerged from stealth with a $3.2 million seed investment. XYZ Venture Capital led the round with participation from 8VC, Y Combinator and several individual tech executives.

Rootly co-founder and CEO Quentin Rousseau says that he cut his SRE teeth working at Instacart. When he joined in 2015, the company was processing hundreds of orders a day, and when he left in 2018 it was processing thousands. It was his job to make sure the app was up and running for shoppers, consumers and stores even as it scaled.

He said that while he was at Instacart, he learned to see patterns in the way people responded to an issue and he had begun working on a side project after he left looking to bring the incident response process under control inside of Slack. He connected with co-founder JJ Tang, who had started at Instacart after Rousseau left in 2018, and the two of them decided to start Rootly to help solve these unique problems that SREs face around incident response.

“Basically we want people to manage and resolve incidents directly in Slack. We don’t want to add another layer of complexity on top of that. We feel like there are already so many tools out there and when things are chaotic and things are on fire, you really want to focus quickly on the resolution part of it. So we’re really trying to be focused on the Slack experience,” Rousseau explained.

The Rootly solution helps SREs connect quickly to their various tools inside Slack, whether that’s Jira or Zendesk or DataDog or PagerDuty, and it compiles an incident report in the background based on the conversation that’s happening inside of Slack around resolving the incident. That will help when the team meets for an incident post-mortem after the issue is resolved.

4 women in engineering discuss harassment, isolation and perseverence

The company is small at the moment with fewer than 10 employees, but it plans to hire some engineers and sales people over the next year as they put this capital to work.

Tang says that they have built diversity as a core component of the company culture, and it helps that they are working with investor Ross Fubini, managing partner at lead investor XYZ Venture Capital. “That’s also one of the reasons why we picked Ross as our lead investor. [His firm] has probably one of the deepest focuses around [diversity], not only as a fund, but also how they influence their portfolio companies,” he said.

Fubini says there are two main focuses in building diverse companies including building a system to look for diverse pools of talent, and then building an environment to help people from underrepresented groups feel welcome once they are hired.
“One of our early conversations we had with Rootly was how do we both bring a diverse group in and benefit from a diverse set of people, and what’s going to both attract them, and when they come in make them feel like this is a place that they belong,” Fubini explained.

The company is fully remote right now with Rousseau in San Francisco and Tang in Toronto, and the plan is to remain remote whenever offices can fully reopen. It’s worth noting that Rousseau and Tang are members of the current Y Combinator batch.

How you react when your systems fail may define your business

Dropbox is reimagining the workplace with Dropbox Studios

Published July 8, 2021

The pandemic has been a time for a lot of reflection on both a personal and business level. Tech companies in particular are assessing whether they will ever again return to a full-time, in-office approach. Some are considering a hybrid approach and some may not go back to a building at all. Amidst all this, Dropbox has decided to reimagine the office with a new concept they are introducing this week called Dropbox Studios.

Dropbox CEO and co-founder Drew Houston sees the pandemic as a forcing event, one that pushes companies to rethink work through a distributed lens. He doesn’t think that many businesses will simply go back to the old way of working. As a result, he wanted his company to rethink the office design with one that did away with cube farms with workers spread across a landscape of cubicles. Instead, he wants to create a new approach that takes into account that people don’t necessarily need a permanent space in the building.

“We’re soft launching or opening our Dropbox Studios [this] week in the U.S., including the one in San Francisco. And we took the opportunity as part of our focus to reimagine the office into a collaborative space that we call a studio,” Houston told me.

Houston says that the company really wanted to think about how to incorporate the best of working at home with the best of working at the office collaborating with colleagues. “We focused on having really great curated in-person experiences, some of which we coordinate at the company level and then some of which you can go into our studios, which have been refitted to support more collaboration,” he said.

Dropbox Studio coffee shop. Image Credits: Dropbox

To that end, they have created a lot of soft spaces with a coffee shop to create a casual feel, conference rooms for teams to have what Houston called “on-site off-sites” and classrooms for organized group learning. The idea is to create purpose-built spaces for what would work best in an office environment and what people have been missing from in-person interactions since they were forced to work at home by the pandemic, while letting people accomplish more individual work at home.

As tech offices begin to reopen, the workplace could look very different

The company is planning on dedicated studios in major cities like San Francisco, Seattle, Tokyo and Tel Aviv with smaller on-demand spaces operated by partners like WeWork in other locations.

Dropbox Studio classroom space. Image Credits: Dropbox

As Houston said when he appeared at TechCrunch Disrupt last year, his company sees this as an opportunity to be on the forefront of distributed work and act as an example and a guide to help other companies as they undertake similar journeys.

“When you think more broadly about the effects of the shift to distributed work, it will be felt well beyond when we go back to the office. So we’ve gone through a one-way door. This is maybe one of the biggest changes to knowledge work since that term was invented in 1959,” Houston said last year.

He recognizes that they have to evaluate how this is going to work and iterate on the design as needed, just as the company iterates on its products and they will be evaluating the new spaces and the impact on collaborative work and making adjustments when needed. To help others, Dropbox is releasing an open-source project plan called the Virtual First Toolkit.

The company is going all-in with this approach and will be subletting much of its existing office space as it moves to this new way of working and its space requirements change dramatically. It’s a bold step, but one that Houston believes his company is uniquely positioned to undertake, and he wants Dropbox to be an example to others on how to reinvent the way we work.

Dropbox CEO Drew Houston says the pandemic forced the company to reevaluate what work means

European challenger bank Bunq raises $228 million at $1.9 billion valuation

Published July 7, 2021

Amsterdam-based challenger bank Bunq has been self-funded by its founder and CEO Ali Niknam for several years. But the company has decided to raise some external capital, leading to the largest Series A round for a European fintech company.

The startup is raising $228 million (€193 million) in a round led by Pollen Street Capital. Bunq founder Ali Niknam is also participating in the round — he’s investing $29.5 million (€25 million) while Pollen Street Capital is financing the rest of the round.

As part of the deal, Bunq is also acquiring Capitalflow Group, an Irish lending company that was previously owned by … Pollen Street Capital.

Founded in 2012, Ali Niknam has already invested quite a bit of money into his own company. He poured $116.6 million (€98.7 million) of his own capital into Bunq — that doesn’t even take into account today’s funding round.

But it has paid off as the company expects to break even on a monthly basis in 2021. The company passed €1 billion in user deposits earlier this year. So why is the company raising external funding after turning down VC firms for so many years?

“Everything has a right time. In the beginning of Bunq, it was important to get a laser user focus in the company. Having to also focus on fundraises and the needs of investors distracts. Bunq now is mature enough to start scaling up significantly, so more capital is welcome,” Niknam said.

In particular, the company expects to acquire smaller companies to fuel its growth strategy. Challenger banks have also represented a highly competitive market over the past years in Europe. It’s clear that there will be some consolidation at some point.

Bunq offers bank accounts and debit cards that you can control from a mobile app. It works particularly well if your friends and family are also using Bunq as you can instantly send money, share a bunq.me payment link with other people, split payments and more.

In particular, if you’re going on a weekend trip, you can start an activity with your friends. It creates a shared pot that lets you share expenses with everyone. If you live with roommates, you can also create subaccounts to pay for bills from that account.

The company offers different plans that range from €2.99 per month to €17.99 per month — there’s also a free travel card with a limited feature set. By choosing a subscription-based business model, the startup has a clear path to profitability as most users are paid users.

Maybe neobanks will break even after all

The single vendor requirement ultimately doomed the DoD’s $10B JEDI cloud contract

Published July 7, 2021

When the Pentagon killed the JEDI cloud program yesterday, it was the end of a long and bitter road for a project that never seemed to have a chance. The question is why it didn’t work out in the end, and ultimately I think you can blame the DoD’s stubborn adherence to a single vendor requirement, a condition that never made sense to anyone, even the vendor that ostensibly won the deal.

In March 2018, the Pentagon announced a mega $10 billion, decade-long cloud contract to build the next generation of cloud infrastructure for the Department of Defense. It was dubbed JEDI, which aside from the Star Wars reference, was short for Joint Enterprise Defense Infrastructure.

The idea was a 10-year contract with a single vendor that started with an initial two-year option. If all was going well, a five-year option would kick in and finally a three-year option would close things out with earnings of $1 billion a year.

While the total value of the contract had it been completed was quite large, a billion a year for companies the size of Amazon, Oracle or Microsoft is not a ton of money in the scheme of things. It was more about the prestige of winning such a high-profile contract and what it would mean for sales bragging rights. After all, if you passed muster with the DoD, you could probably handle just about anyone’s sensitive data, right?

Regardless, the idea of a single-vendor contract went against conventional wisdom that the cloud gives you the option of working with the best-in-class vendors. Microsoft, the eventual winner of the ill-fated deal acknowledged that the single vendor approach was flawed in an interview in April 2018:

Leigh Madden, who heads up Microsoft’s defense effort, says he believes Microsoft can win such a contract, but it isn’t necessarily the best approach for the DoD. “If the DoD goes with a single award path, we are in it to win, but having said that, it’s counter to what we are seeing across the globe where 80% of customers are adopting a multicloud solution,” Madden told TechCrunch.

Perhaps it was doomed from the start because of that. Yet even before the requirements were fully known there were complaints that it would favor Amazon, the market share leader in the cloud infrastructure market. Oracle was particularly vocal, taking its complaints directly to the former president before the RFP was even published. It would later file a complaint with the Government Accountability Office and file a couple of lawsuits alleging that the entire process was unfair and designed to favor Amazon. It lost every time — and of course, Amazon wasn’t ultimately the winner.

Oracle loses $10B JEDI cloud contract appeal yet again

While there was a lot of drama along the way, in April 2019 the Pentagon named two finalists, and it was probably not too surprising that they were the two cloud infrastructure market leaders: Microsoft and Amazon. Game on.

The former president interjected himself directly in the process in August that year, when he ordered the Defense Secretary to review the matter over concerns that the process favored Amazon, a complaint which to that point had been refuted several times over by the DoD, the Government Accountability Office and the courts. To further complicate matters, a book by former defense secretary Jim Mattis claimed the president told him to “screw Amazon out of the $10 billion contract.” His goal appeared to be to get back at Bezos, who also owns the Washington Post newspaper.

In spite of all these claims that the process favored Amazon, when the winner was finally announced in October 2019, late on a Friday afternoon no less, the winner was not in fact Amazon. Instead, Microsoft won the deal, or at least it seemed that way. It wouldn’t be long before Amazon would dispute the decision in court.

Why the Pentagon’s $10 billion JEDI deal has cloud companies going nuts

By the time AWS re:Invent hit a couple of months after the announcement, former AWS CEO Andy Jassy was already pushing the idea that the president had unduly influenced the process.

“I think that we ended up with a situation where there was political interference. When you have a sitting president, who has shared openly his disdain for a company, and the leader of that company, it makes it really difficult for government agencies, including the DoD, to make objective decisions without fear of reprisal,” Jassy said at that time.

Then came the litigation. In November the company indicated it would be challenging the decision to choose Microsoft charging that it was was driven by politics and not technical merit. In January 2020, Amazon filed a request with the court that the project should stop until the legal challenges were settled. In February, a federal judge agreed with Amazon and stopped the project. It would never restart.

In April the DoD completed its own internal investigation of the contract procurement process and found no wrongdoing. As I wrote at the time:

While controversy has dogged the $10-billion, decade-long JEDI contract since its earliest days, a report by the DoD’s inspector general’s office concluded today that, while there were some funky bits and potential conflicts, overall the contract procurement process was fair and legal and the president did not unduly influence the process in spite of public comments.

Last September the DoD completed a review of the selection process and it once again concluded that Microsoft was the winner, but it didn’t really matter as the litigation was still in motion and the project remained stalled.

Judge temporarily halts work on JEDI contract until court can hear AWS protest

The legal wrangling continued into this year, and yesterday the Pentagon finally pulled the plug on the project once and for all, saying it was time to move on as times have changed since 2018 when it announced its vision for JEDI.

The DoD finally came to the conclusion that a single-vendor approach wasn’t the best way to go, and not because it could never get the project off the ground, but because it makes more sense from a technology and business perspective to work with multiple vendors and not get locked into any particular one.

“JEDI was developed at a time when the Department’s needs were different and both the CSPs’ (cloud service providers) technology and our cloud conversancy was less mature. In light of new initiatives like JADC2 (the Pentagon’s initiative to build a network of connected sensors) and AI and Data Acceleration (ADA), the evolution of the cloud ecosystem within DoD, and changes in user requirements to leverage multiple cloud environments to execute mission, our landscape has advanced and a new way ahead is warranted to achieve dominance in both traditional and nontraditional warfighting domains,” said John Sherman, acting DoD chief information officer in a statement.

In other words, the DoD would benefit more from adopting a multicloud, multivendor approach like pretty much the rest of the world. That said, the department also indicated it would limit the vendor selection to Microsoft and Amazon.

“The Department intends to seek proposals from a limited number of sources, namely the Microsoft Corporation (Microsoft) and Amazon Web Services (AWS), as available market research indicates that these two vendors are the only Cloud Service Providers (CSPs) capable of meeting the Department’s requirements,” the department said in a statement.

That’s not going to sit well with Google, Oracle or IBM, but the department further indicated it would continue to monitor the market to see if other CSPs had the chops to handle their requirements in the future.

In the end, the single vendor requirement contributed greatly to an overly competitive and politically charged atmosphere that resulted in the project never coming to fruition. Now the DoD has to play technology catch-up, having lost three years to the histrionics of the entire JEDI procurement process and that could be the most lamentable part of this long, sordid technology tale.

Despite JEDI loss, AWS retains dominant market position

Nobody wins as DoD finally pulls the plug on controversial $10B JEDI contract

Opaque raises $9.5M seed to secure sensitive data in the cloud

Published July 7, 2021

Opaque, a new startup born out of Berkeley’s RISELab, announced a $9.5 million seed round today to build a solution to access and work with sensitive data in the cloud in a secure way, even with multiple organizations involved. Intel Capital led today’s investment with participation by Race Capital, The House Fund and FactoryHQ.

The company helps customers work with secure data in the cloud while making sure the data they are working on is not being exposed to cloud providers, other research participants or anyone else, says company president Raluca Ada Popa.

“What we do is we use this very exciting hardware mechanism called Enclave, which [operates] deep down in the processor — it’s a physical black box — and only gets decrypted there. […] So even if somebody has administrative privileges in the cloud, they can only see encrypted data,” she explained.

Company co-founder Ion Stoica, who was a co-founder at Databricks, says the startup’s solution helps resolve two conflicting trends. On one hand, businesses increasingly want to make use of data, but at the same time are seeing a growing trend toward privacy. Opaque is designed to resolve this by giving customers access to their data in a safe and fully encrypted way.

Data is the world’s most valuable (and vulnerable) resource

The company describes the solution as “a novel combination of two key technologies layered on top of state-of-the-art cloud security—secure hardware enclaves and cryptographic fortification.” This enables customers to work with data — for example to build machine learning models — without exposing the data to others, yet while generating meaningful results.

Popa says this could be helpful for hospitals working together on cancer research, who want to find better treatment options without exposing a given hospital’s patient data to other hospitals, or banks looking for money laundering without exposing customer data to other banks, as a couple of examples.

Investors were likely attracted to the pedigree of Popa, a computer security and applied crypto professor at UC Berkeley and Stoica, who is also a Berkeley professor and co-founded Databricks. Both helped found RISELabs at Berkeley where they developed the solution and spun it out as a company.

Mark Rostick, vice president and senior managing director at lead investor Intel Capital says his firm has been working with the founders since the startup’s earliest days, recognizing the potential of this solution to help companies find complex solutions even when there are multiple organizations involved sharing sensitive data.

“Enterprises struggle to find value in data across silos due to confidentiality and other concerns. Confidential computing unlocks the full potential of data by allowing organizations to extract insights from sensitive data while also seamlessly moving data to the cloud without compromising security or privacy,” Rostick said in a statement

He added, “Opaque bridges the gap between data security and cloud scale and economics, thus enabling inter-organizational and intra-organizational collaboration.”

To guard against data loss and misuse, the cybersecurity conversation must evolve

Cloverly snags $2.1M seed to continue developing API to measure and offset carbon usage

Published July 7, 2021

Cloverly, an Atlanta-based, early-stage startup, has developed an API that helps companies measure and then offset their carbon emissions. Today the company announced a $2.1 million seed round.

TechSquare Ventures led the round with participation from SoftBank Opportunity Fund and Panoramic Ventures along with Circadian Ventures, Knoll Ventures and SaaS Ventures .

While it was at it, the company announced that founder Anthony Oni has stepped back from running the company day-to-day, but will remain on the board as advisor. The company has hired former eBay exec Jason Rubottom as CEO in his place.

“We’re a Sustainability as a Service company that helps other companies measure and reduce their carbon footprint. Our API measures the carbon emissions from various activities or processes within a business and allows that business or its customers to offset those emissions. And then it provides comprehensive reporting on that,” Rubottom explained.

Rudy Krehbiel, who runs operations for the company, says that the API is designed to be flexible to meet the needs of each company accessing the services, but once developers create an application, it works automatically to measure emissions and purchase the offsets. “The solution itself is automated. Most of the work happens up front, and once we get integrated it becomes a fully productized and operationalized ongoing measurement and offsetting solution,” he said.

Corporate sustainability initiatives may open doors for carbon offset startups

As customers build solutions using the tool, they can then offset their carbon usage by buying carbon offsets from the public markets, and this can be automated based on the usage of a given company. Cloverly monitors the offset market to ensure that the sources are credible and are adding new ones as they develop.

The company is working with over 600 brands, which have offset over 55 million pounds of carbon to this point. The API was originally conceived by Oni when he was working at the Southern Company and spun out as a startup on Earth Day in 2019.

Oni, who is Black, is moving away from day-to-day operations as he hands the baton to Rubottom, but he recognizes the significance of this funding from a diversity perspective.

“As a Black tech founder of a climate tech company, it’s incredibly validating to have TechSquare Ventures and SoftBank’s Opportunity Fund as investors. It will take diverse people and teams to find solutions to create a more sustainable future,” he said.

A growing number of startups are creating APIs to assess and offset corporate carbon emissions

AnyVision, the controversial facial recognition startup, has raised $235M led by SoftBank and Eldridge

Published July 7, 2021

Facial recognition has been one of the more conflicted applications of artificial intelligence in the wider world: using computer vision to detect faces and subsequent identities of people has raised numerous questions about privacy, data protection, and the ethics underpinning the purposes of the work, and even the systems themselves. But on the other hand, it’s being adopted widely in a wide variety of use cases. Now one of the more controversial, but also successful, startups in the field has closed a big round of funding.

AnyVision — an Israeli startup that has built AI-based techniques to identify people by their faces, but also related tech such as temperature checks to detect higher temperatures in a crowd — has raised $235 million in funding, the company has confirmed.

This Series C, one of the bigger rounds for an AI startup, is being co-led by SoftBank’s Vision Fund 2 and Eldridge, with previous investors also participating. (They are not named but the list includes Robert Bosch GmbH, Qualcomm Ventures and Lightspeed.) The company is not disclosing its valuation but we are asking. However, it has to be a sizable hike for the company, which had previously raised around $116 million, according to PitchBook, and has racked up a big list of customers since its last round in 2020.

Worth noting, too, that AnyVision’s CEO Avi Golan is a former operating partner at SoftBank’s investment arm.

AnyVision said the funding will be used to continue developing its SDKs, specifically to work in edge computing devices — smart cameras, body cameras, and chips that will be used in other devices — to increase the performance and speed of its systems.

Its systems, meanwhile, are used in video surveillance, watchlist alerts, and scenarios where an organization is looking to monitor crowds and control them, for example to keep track of numbers, to analyse dwell times in retail environments, or to flag illegal or dangerous behavior.

“AnyVision’s innovations in Recognition AI helped transform passive cameras into proactive security systems and empowered organizations take a more holistic view to advanced security threats,” Golan said in a statement in the investment announcement. “The Access Point AI platform is designed to protect people, places, and privacy while simultaneously reducing costs, power, bandwidth, and operational complexity.”

You may recognize the name AnyVision because of how much it has been in the press.

The startup was the subject of a report in 2019 that alleged that its technology was being quietly used by the Israeli government to run surveillance on Palestinians in the West Bank.

The company denied it, but the story quickly turned into a huge stain on its reputation, while also adding more scrutiny overall to the field of facial recognition.

That led to Microsoft, which had invested in AnyVision via its M12 venture arm, to run a full audit of the investment and its position on facial recognition investments overall. Ultimately, Microsoft divested its stake and pledged not to invest in further technology like it.

Since then, AnyVision has been working hard to spin itself as the “ethical” player in this space, acknowledging that there is a lot of work and shortcomings in the bigger market of facial recognition. But controversy has continued to court the company.

A report from Reuters in April of this year highlighted just how many companies were using AnyVision’s technology today, ranging from hospitals like Cedars Sinai in Los Angeles to major retailers like Macy’s and energy giant BP. AnyVision’s connections to power go beyond simply having big customers: it also turns out that the White House Press Secretary, Jen Psaki, once served as a communications consultant to the startup.

Then, a report published just yesterday in The Markup, combed through various public records for AnyVision, including a user guidebook from 2019, which also painted a pretty damning picture of just how much information the company can collect, and what it has been working on. (One pilot, and subsequent report resulting from it, involved tracking children in a school district in Texas: AnyVision collected 5,000 student photos and ran more than 164,000 detections in just seven days.)

There are other cases where you might imagine, however, that AnyVision’s technology might be deemed helpful or useful, maybe even welcomed. Its ability to detect temperatures, for example, and identify who may have been in contact with high-temperature people, could go a long way towards controlling less obvious cases of Covid-19, for example, helping contain the virus at mass events, providing a safeguard to enable those events to go ahead.

And to be completely clear, AnyVision is not the only company building and deploying this technology, nor the only one coming under scrutiny. Another, the U.S. company Clearview AI, is used by thousands of governments and law enforcement agencies, but earlier this year it was deemed “illegal” by Canadian privacy authorities.

Indeed, it seems that the story is not complete, either in terms of how these technologies will develop, how they will be used, and how the public comes to view them. For now, the traction AnyVision has had, even despite the controversy and ethical questions, seems to have swayed SoftBank.

“The visual recognition market is nascent but has large potential in the Western world,” said Anthony Doeh, a partner for SoftBank Investment Advisers, in a statement. “We have witnessed the transformative power of AI, biometrics and edge computing in other categories, and believe AnyVision is uniquely placed to redefine physical environment analytics across numerous industries.”

Extra Crunch roundup: Video pitch decks, Didi’s regulatory struggles, Nothing CEO interview

Published July 6, 2021

The numbers don’t lie.

According to DocSend, the average pitch deck is reviewed for just three minutes. And if you think a senior VC is studying the presentation your team crafted for months as if it were a Fabergé egg — well, you might be disappointed.

Even if you are lucky enough to land a meeting, it’s more likely that a junior person went through your pitch and ran it up the chain.

“The biggest lie in venture capital is: ‘Yes, I read through your deck,’” says Evan Fisher, founder of Unicorn Capital and Minimal Capital.

“Because those words are immediately followed by, ‘ … but why don’t you run us through it from the beginning?’”

Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.

According to Fisher, the pro forma pitch deck is a thing of the past. Instead, the founders he’s worked with who made video pitches netted two to five times as many investor meetings as people who sent traditional pitch decks.

They also received up to five times more in terms of investor commitments from the first 20 meetings.

“Even if the only benefit was that other investment committee members heard the story direct from the founder, that alone would make your video pitch worth it,” says Fisher.

Thanks very much for reading Extra Crunch this week!

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

Don’t send VC a cold deck ever again: Start sending video pitches

Nothing founder Carl Pei on Ear (1) and building a hardware startup from scratch

Image Credits: TechCrunch

In an exclusive interview with Hardware Editor Brian Heater, Nothing Founder Carl Pei discussed the product and design principles underpinning Ear (1), a set of US$99/€99/£99 wireless earbuds that will hit the market later this month.

“We’re starting with smart devices,” said Pei. “Ear (1) is our is our first device. I think it has good potential to gain some traction.”

Despite Apple’s market share and the number of players already competing in the space, “we’ve just focused on being ourselves,” said Nothing’s founder, who also shared initial marketing plans and discussed the inherent tensions involved with manufacturing consumer hardware.

“Everything is a trade-off. Like if you pursue this design, that has a ton of implications. Battery life has ton of implications on size and on cost. The materials you use have implications on cost. Everything has an implication on timeline. It’s like 4D chess in terms of trade-offs.”

Nothing founder Carl Pei on Ear 1 and building a hardware startup from scratch

Will Didi’s regulatory problems make it harder for Chinese startups to go public in the US?

Image Credits: Nigel Sussman (opens in a new window)

Last week, just days after its U.S. IPO, cybersecurity regulators in China banned ride-hailing company Didi from onboarding new members.

Over the weekend, authorities called for Didi to be removed from several app stores due to “serious violations of laws and regulations in collecting and using personal information.”

The move suggests that China’s government “is willing to sacrifice business results for control,” writes Alex Wilhelm in this morning’s edition of The Exchange.

“For China-based companies hoping to list in the United States, the market likely just got much, much colder.”

Will Didi’s regulatory problems make it harder for Chinese startups to go public in the US?

79% more leads without more traffic: Here’s how we did it

Image Credits: Peter Dazeley (opens in a new window)/ Getty Images

Jasper Kuria, the managing partner of CRO consultancy The Conversion Wizards, walks through an A/B test showing how research-driven CRO (conversion rate optimization) techniques led to a 79% increase in conversion rates for China Expat Health, a lead-generation company.

“Using research-based CRO principles to optimize a landing page for PPC (pay per click) traffic produced a 79% conversion lift, dramatically reducing the cost per lead for the company,” Kuria writes.

“They could then afford to bid more per click, which increased their overall monthly leads. CRO can have this kind of transformative effect on your business.”

79% more leads without more traffic: Here’s how we did it

Sarah Guo, Kobie Fuller & Casey Aylward headline investor panel at TC Sessions: SaaS

Published July 6, 2021

While SaaS has become the default way to deliver software in 2021, it still takes a keen eye to find the companies that will grow into successful businesses, maybe even more so with so much competition. That’s why we’re bringing together three investors to discuss what they look for when they invest in SaaS startups.

For starters, we’ll have Sarah Guo, who has been a partner at Greylock since 2013 where she concentrates on AI, cybersecurity, infrastructure and the future of work — all in a SaaS context of course. Among her investments are Obsidian, Clubhouse and Awake. Her exits include Demisto, which Palo Alto acquired for $560 million in 2019 and Skyhigh Networks, which McAfee bought for $400 million in 2018.

Prior to joining Greylock, she worked for Goldman Sachs investing in growth-stage companies and advising SaaS companies like Dropbox and Workday.

Next we’ll have Kobie Fuller, a partner at Upfront Ventures, who looks at SaaS as well as AR and VR. Fuller has been at Upfront since 2016 when he joined after a three-year stint at Accel. He oversaw a pair of billion dollar exits while at Accel including ExactTarget to Salesforce for $2.5 billion and Oculus to Facebook for $2 billion. Upfront investments include Bevy, community building software, which recently got a $40 million investment with 20% of that coming from 25 Black investors.

Finally, we’ll have Casey Aylward, a principal at Costanoa Ventures where she concentrates on early-stage enterprise startups. Among her investments have been Aserto, Bigeye and Cyral. She tends to concentrate on developer tools. “My entire career so far has been focused on developers: whether it was building tools for developers, building software myself or now investing in enabling technologies for the next generation of technical users,” she wrote on her bio page.

This prestigious group will share their thoughts at TC Sessions: SaaS, a one-day virtual event that will examine the state of SaaS to help startup founders, developers and investors understand the state of play and what’s next. We hope you’ll join us.

The single-day event will take place 100% virtually on October 27 and will feature actionable advice, Q&A with some of SaaS’s biggest names and plenty of networking opportunities. Importantly, $75 Early Bird passes are now on sale. Book your passes today to save $100 before prices go up.