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Failure to start can easily be viewed as a kind of martyrdom for progress, especially if the founders start out shabby in the first place, trying to save the world. The heroic narrative gets complicated, however, when the start-up mistake includes the biggest names in entertainment, dubious product choices, and losses well over $ 1 billion in an already highly competitive sub-category of consumer technology.
I wanted to skip any mention of Quibi because like me you've heard more than enough already. But this week the shutdown announcement turned into a debate on Twitter about what type of startup error it was and whether it was still the right type. Many in the startup world said it was still good, basically because most ambitious startup efforts lead to progress. Danny Crichton, in turn, argues that the negativity in this case was completely justified.
Let's be honest: most startups fail. Most ideas are wrong. Most entrepreneurs will never make it. That doesn't mean that nobody should build a startup or pursue their passions and dreams. When success occurs, we like to talk about it, report on it and try to explain why it occurs – because ultimately more entrepreneurial success is good for us all and helps to drive progress in our world.
But let's also make it clear that there are bad ideas, and then obviously there are bad ideas with billions of dollars from smart people who otherwise should know better. Quibi wasn't the spark of the proverbial college dropout with a passion for entertainment who tried to invent a new format for cell phones with ramen money from friends and family. Quibi was led today by two of the most powerful and influential leaders in the United States who raised more money for their project than other female founders collectively this year.
Ouch. However, I think this is still missing the greater momentum.
Quibi was so easy to criticize that it provided an opportunity to plausibly defend themselves for anyone who wants to show that they are here for the startups, no matter how crazy. By defending Quibi, you are defending your own process and making it clear to the next generation of startups that you personally are not afraid of other people with crazy ideas and have the will to try, even if the result is great chaos. Which is who founders want to hire in the early days and who investors want to bet on
I support both sides of this mass signaling game. Analysts and journalists have provided a wide range of valuable insights into how Quibi got it wrong that are no doubt internalized by founders of all kinds. Meanwhile, Quibi's defenders are no doubt scouring their incoming admirers for great new deals. All in all, Quibi and the debate about it could ultimately improve future businesses a bit. Which one we all wanted, right?
Root Insurance plans the pricing when Datto goes public
The IPO market has not (yet) closed for election campaigns and so on. First off, managed service provider Datto went out on Wednesday and has been improving since then – a strong result for the company and its private equity owner, even if third parties haven't benefited from an additional pop. A few more notes from Alex Wilhelm:
Tim Weller, CEO of Datto, told TechCrunch in a call that the company will continue to be well capitalized after the public offer and that it will have a very strong cash position.
The company should have places where it can use its remaining money. In its S-1 filing, Datto highlighted a COVID-19 tailwind coming from companies accelerating their digital transformation efforts. TechCrunch asked the company's CEO if there was an international component to this story and if digital transformation efforts were accelerating globally, not just domestically. In good omen for startups that are not based in the US, the executive said it was.
Next to the market, Root Insurance released its share price this week, raising the target to a valuation of over $ 6 billion. It's definitely on the right track to be the largest tech IPO in Ohio to date. Here again, comparing Alex with Lemonade, another recently publicized insurance technology provider for Extra Crunch:
(I) It appears that at around $ 6 billion, Root is cheap compared to Lemonade's prices today. So, if you want to assume that Root will increase their IPO price range to get them closer to multiples of Lemonade, you are welcome to be mistaken, as you are probably not wrong. Are we saying that Root will double his rating to match Lemonade's current metrics? No, but close the gap a bit? For sure.
For Insurtech startups, even Root's current pricing is strong. Remember, Root was worth $ 3.65 billion just last August. At $ 6.34 billion, the company only massively appreciated and changed last year. A small re-rating could quite easily increase Root's rating differential to 100%.
So for MetroMile and ClearCover and the rest of the related gamers, enjoy these good times while they last….
AR / VR is coming (earlier than expected)
A year ago the market looked quite young. But now the pandemic has made the value of augmented and virtual reality clearer to the world. Lucas Matney, who has covered the topic for years, just conducted a survey of seven top investors in the field. While they usually see the vertical a little early, they see that it quickly becomes relevant. Here is a key answer from Brianne Kimmel of Work Life Ventures about Extra Crunch:
Most of the investors I chat with seem optimistic about AR over the long term, but are reluctant to invest in an explicitly AR-focused startup today. What do you want to see before you play here?
I think it all comes down to unique insight and a competitive advantage in sales. I will use these new (zoom) apps as an example. I think they are a great example of where there are certain aspects of roles and certain highly specialized skills that teaching and doing your day-to-day work at Zoom has won. & # 39; t actually cut it. I anticipate that AR applications will become an integral part of certain types of work. I also think that now that a lot of the bigger platforms like Zoom are more open people are starting to build on the platforms and there will be AR specific use cases that can help industries where, as you know, a traditional video conferencing experience it doesn't quite cut.
The talented Zurich startup scene
In other survey reports, Mike Butcher continues his (unfortunately virtual) tour of European startup hubs for EC and this week contacts investors in Zurich, Switzerland. Here is a neat explanation of the in-depth technical experience of the city and country by Michael Blank of investiere:
Which industries in your city and region seem well positioned to thrive in the long term or not? Which companies are you looking forward to (your portfolio or not), which founders?
Switzerland has always been a leader in technological innovations in areas such as precision engineering or life sciences. We firmly believe that Switzerland will prosper in the long term in these areas too. Think, for example, of additive manufacturing startups like 9T Labs or Scrona, drone companies like Verity or Wingtra, or health technology startups like Aktiia or Versantis.
Brussels investors, Mike is on his way to meet you. You can contact him here.
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Hello and welcome back to Equity, TechCrunch's venture capital-focused podcast (now on Twitter!) Where we unpack the numbers behind the headlines.
I myself had a lot to do with Danny and Natasha and more to say than expected. A big thank you to Chris for cutting the show down.
What have we achieved now? Aside from a little bit of everything, we went through:
Quibi's fall, and who lost money in the mix. TechCrunch has a little more to say about the demise of the video service here.
The Netflix quarter and why its stocks lost ground on its report. The Quibi Netflix stories show that the online video market is not doing well.
When Netflix stumbled, Snap rose with stronger than expected growth. The company is still losing a lot of money but is nearing reasonable results and has a lot of money.
Then we turned to some media startups that raised $ 4 million for Stir and $ 2.5 million for Quake. Quake the podcasting company, not the excellent FPS.
A handful of apartment rounds followed next, including the very decent Abodu and the somewhat controversial RVshare, which separated the three of us over whether it would work or not.
Then we had some great reports from Natasha to analyze including her article on startup hacker houses and her report on a new class of accelerators aimed at women.
Angry! It was a lot, but also very fun. Search for clips on YouTube if you want and we'll keep you all entertained next Monday.