Funding in an uncertain market: using venture debt to bridge the gap

While a handful of tech companies like Zoom and Shopify are enjoying massive gains as a result of COVID-19, that’s obviously not the case for most. Weaker demand, slower sales cycles, and customer insistence on pricing concessions and payment deferrals have conspired to cloud the outlook for many tech companies’ growth.

Compounding these challenges, a lot of tech companies are struggling to raise capital just when they need it most. The data so far suggests that investors, particularly those focused on earlier stage financings, are taking a more cautious approach to new deals and valuations while they wait to see how individual companies perform and which way the economy will go. With the outcome of their planned equity financings uncertain, some tech companies are revisiting their funding strategies and exploring alternative sources of capital to fuel their continued growth.

Forecasting growth in a pandemic: a difficult job just got harder

For certain businesses, COVID-19’s impact on revenue was immediate. For others, the effects of slower economic activity and tighter budgets surfaced more gradually with deals in the funnel before the pandemic closing in April and May. Either way, in the second half of 2020, technology CFOs face a common challenge: How do you accurately forecast sales when there’s very little consensus around key issues such as when business activity will return to pre-COVID levels and what the long-term effects of the crisis might be?

Unfortunately, navigating this uncertainty is just as daunting a challenge for investors. These days, equity investors’ assessment of a company’s growth potential, and the value they are willing to pay for that growth, aren’t just impacted by their view of the company itself. Equally important is their assumptions about when the economy will recover and what the new normal might look like. This uncertainty can lead to situations where companies and their potential investors have materially different views on valuation.

Longer funding cycles, more investor-friendly deals

While the full impact of COVID was felt too late to have a material impact on Q1 deal volumes, recently released data from Pitchbook and the NVCA suggest that 2020 will see a significant decrease in the number of companies funded, possibly by as much 30 percent compared to 2019 among early stage companies. And, while it often takes several months to see evidence of broad trends in investment terms, anecdotal evidence indicates investors are seeking to mitigate risk by demanding additional protective provisions.

Technologists: Consider Canada

America’s technology industry, radiating brilliance and profitability from its Silicon Valley home base, was until recently a shining beacon of what made America great: Science, progress, entrepreneurship. But public opinion has swung against big tech amazingly fast and far; negative views doubled between 2015 and 2019 from 17% to 34%. The list of concerns is long and includes privacy, treatment of workers, marketplace fairness, the carnage among ad-supported publications and the poisoning of public discourse.

But there’s one big issue behind all of these: An industry ravenous for growth, profit and power, that has failed at treating its employees, its customers and the inhabitants of society at large as human beings. Bear in mind that products, companies and ecosystems are built by people, for people. They reflect the values of the society around them, and right now, America’s values are in a troubled state.

We both have a lot of respect and affection for the United States, birthplace of the microprocessor and the electric guitar. We could have pursued our tech careers there, but we’ve declined repeated invitations and chosen to stay at home here in Canada . If you want to build technology to be harnessed for equity, diversity and social advancement of the many, rather than freedom and inclusion for the few, we think Canada is a good place to do it.

U.S. big tech is correctly seen as having too much money, too much power and too little accountability. Those at the top clearly see the best effects of their innovations, but rarely the social costs. They make great things — but they also disrupt lives, invade privacy and abuse their platforms.

We both came of age at a time when tech aspired to something better, and so did some of today’s tech giants. Four big tech CEOs recently testified in front of Congress. They were grilled about alleged antitrust abuses, although many of us watching were thinking about other ills associated with some of these companies: tax avoidance, privacy breaches, data mining, surveillance, censorship, the spread of false news, toxic byproducts, disregard for employee welfare.

But the industry’s problem isn’t really the products themselves — or the people who build them. Tech workers tend to be dramatically more progressive than the companies they work for, as Facebook staff showed in their recent walkout over President Donald Trump’s posts.

Big tech’s problem is that it amplifies the issues Americans are struggling with more broadly. That includes economic polarization, which is echoed in big-tech financial statements, and the race politics that prevent tech (among other industries) from being more inclusive to minorities and talented immigrants.

We’re particularly struck by the Trump administration’s recent moves to deny opportunities to H-1B visa holders. Coming after several years of family separations, visa bans and anti-immigrant rhetoric, it seems almost calculated to send IT experts, engineers, programmers, researchers, doctors, entrepreneurs and future leaders from around the world — the kind of talented newcomers who built America’s current prosperity — fleeing to more receptive shores.

One of those shores is Canada’s; that’s where we live and work. Our country has long courted immigration, but it’s turned around its longstanding brain-drain problem in recent years with policies designed to scoop up talented people who feel uncomfortable or unwanted in America. We have an immigration program, the Global Talent Stream, that helps innovative companies fast-track foreign workers with specialized skills. Cities like Toronto, Montreal, Waterloo and Vancouver have been leading North America in tech job creation during the Trump years, fuelled by outposts of the big international tech companies but also by scaled-up domestic firms that do things the Canadian way, such as enterprise software developer OpenText (one of us is a co-founder) and e-commerce giant Shopify.

“Canada is awesome. Give it a try,” Shopify CEO Tobi Lütke told disaffected U.S. tech workers on Twitter recently.

But it’s not just about policy; it’s about underlying values. Canada is exceptionally comfortable with diversity, in theory (as expressed in immigration policy) and practice (just walk down a street in Vancouver or Toronto). We’re not perfect, but we have been competently led and reasonably successful in recognizing the issues we need to deal with. And our social contract is more cooperative and inclusive.

Yes, that means public health care with no copays, but it also means more emphasis on sustainability, corporate responsibility and a more collaborative strain of capitalism. Our federal and provincial governments have mostly been applauded for their gusher of stimulative wage subsidies and grants meant to sustain small businesses and tech talent during the pandemic, whereas Washington’s response now appears to have been formulated in part to funnel public money to elites.

American big tech today feels morally adrift, which leads to losing out on talented people who want to live the values Silicon Valley used to stand for — not just wealth, freedom and the few, but inclusivity, diversity and the many. Canada is just one alternative to the U.S. model, but it’s the alternative we know best and the one just across the border, with loads of technology job openings.

It wouldn’t surprise us if more tech refugees find themselves voting with their feet.

Dear Sophie: Can I bypass H-1B and sponsor a grad for a green card?

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.”

“Dear Sophie” columns are accessible for Extra Crunch subscribers; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.


Dear Sophie:

A very bright and promising foreign national who graduated from a U.S. university has been working for our firm and just received a STEM OPT extension. We would like to keep her on after her STEM OPT ends. We registered her in this year’s H-1B lottery, but unfortunately, she wasn’t selected.

Given the challenges of getting an H-1B through the lottery and the #h1bvisaban, how can we bypass the H-1B and potentially sponsor her for a green card?

— Eager in Emeryville

Dear Eager,

Happy to hear you’re willing to sponsor a promising graduate from an American university for a green card. Sounds like you’re interested in exploring the EB-2 or EB-3 green card with the PERM process. For additional resources, feel free to check out my recent podcast on PERM.

Just because U.S. immigration policy often runs counter to retaining the best and the brightest college graduates in the U.S. doesn’t mean there isn’t hope. Some options exist for these talented folks and the companies that want to hire them, even though many employment-based green cards require candidates who are outstanding in their field. Recent graduates often haven’t yet built up their work experience and credentials, but there can be paths forward.

Although it may present some immigration risks to the candidate that should be weighed carefully in collaboration with an experienced business immigration attorney, many employers have been doing as you suggested: sidestepping the H-1B visa and directly pursuing a green card. This is often due to the extremely competitive H-1B lottery and high denial rates for initial H-1B petitions and extensions. Also, a moratorium on all green cards, H-1B, H-2B, J and L visas for individuals currently outside the U.S. is in effect until the end of this year. This now makes it nearly impossible for most employers to sponsor individuals to come to the U.S. unless their work is in the national interest or essential to the U.S. food supply chain.

So, many people are seeking solutions. First, the basics: Because your STEM OPT employee is already in the U.S., and the H-1B lottery now only costs $10 to register a candidate, I suggest that your company continue to enter her in the lottery as a backup option in case her F-1 STEM OPT status ends before you can secure her a green card.

The green cards for which most recent graduates would be eligible require the sponsoring employer to go through the PERM labor certification process before filing a green card petition. Separately there are other green cards for extraordinary ability which I’ve also written about.

PERM, which stands for Program Electronic Review Management, is the system used for applying for labor certification from the U.S. Department of Labor . Please speak with an attorney about the timing of this process and consider any risks to your employee’s personal immigration situation given her current F-1 nonimmigrant status.

Labor certification must be submitted to U.S. Citizenship and Immigration Services (USCIS) with EB-2 and EB-3 green card petitions. Labor certification confirms that no U.S. workers are qualified and available to accept the job offered to the green card candidate and employing the green card candidate won’t adversely affect the wages and working conditions of American workers.

Without knowing more about your STEM OPT employee’s background and qualifications, I would surmise that she might be able to qualify for one of these employment-based green cards:

Both of these green card categories require the employer sponsor to go through the PERM labor certification process. Because PERM is a complex process and will determine if you can proceed with sponsoring your employee for a green card, I recommend that you work with an experienced immigration attorney.

In general, PERM requires employers to take these steps:

  • Determine in detail the duties and minimum requirements of the position
  • File a prevailing wage request
  • Go through an extensive recruitment process
  • Get a certification

The duties and requirements of the position should be detailed and typical for your company — not tailored to the green card candidate. These duties and requirements will be used for job posting during the recruitment process.

In more detail, employers must file a prevailing wage request to the National Prevailing Wage Center of the Labor Department. The prevailing wage is determined based on the position, the geographical location of the position and economic conditions. The employer must pay the prevailing wage or higher for the position to ensure that hiring a foreign national would not adversely affect the wages of U.S. workers in similar positions. This process can take a few months.

The most time-consuming of these steps is the recruitment process to determine whether qualified U.S. workers are available for the position. To do that, an employer must advertise the job in two Sunday editions of a local newspaper, submit a job order with the state workforce agency (CalJOBS in California) and file an internal company notice of the filing. Plan ahead with your legal team to consider running some things in parallel to decrease the overall time.

For professional positions, employers need to use three additional recruitment methods, such as using a job recruiting website, an employment firm, a job fair, a posting at a career placement center at a local university or college, or incentives for employee referrals.

The job order with the state workforce agency must run for at least 30 consecutive days. The internal job posting must be up for 10 consecutive business days. Employers must allow 30 days for candidates to apply and interview U.S. workers who apply.

Generally, if there are no qualified applicants, employers then file ETA Form 9089 to the Labor Department. No supporting documents need to be submitted with the form, but the documents must be maintained for five years, especially as there could be an audit. The Labor Department will send a verification email to the employer along with a sponsorship questionnaire, which the employer should fill out within a week of receiving it. It’s important to not miss this email!

The PERM process can take anywhere from three to eight months as long as the Labor Department does not audit your case. The Labor Department conducts two types of audit: random audits and targeted audits. Random audits are done to make sure employers are following the PERM procedure.

Some common reasons for targeted audits could include:

  • The employer recently laid-off employees
  • The candidate appears unqualified for the position
  • The job does not require a bachelor’s degree
  • A company executive is related to the candidate

The Labor Department usually issues an audit notice within six months of receiving the labor certification application, and the employer must respond within 30 days. An audit does not mean an employer’s PERM will not be approved. However, it can add nine to 18 months to the process. If an employer does not respond to the audit notice, the Labor Department will deem the case abandoned, and for any future PERM applications, the employer may be required to conduct supervised recruitment.

Once the Labor Department approves the PERM Labor Certification for that position, you must file the green card petition to USCIS within 180 days. If your employee was born in any country other than China or India and you are sponsoring her for an EB-2 green card, you can file the I-140 green card petition and the I-485 adjustment of status from F-1 STEM OPT to EB-2 at the same time, assuming the “priority date” is still current.

If eligible, your STEM OPT employee could also enter the diversity green card lottery in the fall to increase her chances of getting a green card. Each year, 50,000 green cards are reserved for individuals born in countries that have low rates of immigration to the U.S.

Let me know if you have any other questions. Good luck!

— Sophie


Have a question? Ask it here. We reserve the right to edit your submission for clarity and/or space. The information provided in “Dear Sophie” is general information and not legal advice. For more information on the limitations of “Dear Sophie,” please view our full disclaimer here. You can contact Sophie directly at Alcorn Immigration Law.

Sophie’s podcast, Immigration Law for Tech Startups, is available on all major podcast platforms. If you’d like to be a guest, she’s accepting applications!

What Q2 fundraising data tells us about the rest of 2020

It’s safe to say that no one could have predicted how this year’s fundraising marketplace was going to shape up. The beginning of the year saw us trending toward a blockbuster start, similar to 2018, rather than the steady burn of 2019. But after March there was no clear road map for how VCs and founders were going to react.

We’ve been tracking three key data metrics from the 2020 DocSend Startup Index to show us real-time trends in the fundraising marketplace. Using aggregate and anonymous data pulled from thousands of pitch deck interactions across the DocSend platform, we’re able to track the supply and demand in the marketplace, as well as the quality of pitch deck interactions.

The main two metrics are Pitch Deck Interest and Founder Links Created. These are leading indicators for how the fundraising marketplace is shaping up as it measures the activity happening around the pitch deck. As that interest peaks, we expect the amount of funds deployed to increase in the months after. Pitch Deck Interest is measured by the average number of pitch deck interactions for each founder happening on our platform per week, and is a great proxy for demand.

Founder Links Created is how many unique links a founder is creating to their deck each week; because each person you send a document to in DocSend gets a unique link, we can use this as a proxy for supply by looking at how many investors a founder is sharing their deck with per week.

Here’s what we saw in Q2 and how that will affect the rest of the year.

VCs are shopping

VC interest has been at an all-time high over the last quarter. Interest rebounded over the course of a few weeks after the pandemic was declared and shelter-in-place orders were given. But once interest rebounded to pre-pandemic levels it did something surprising. It kept climbing. In fact, the top 10 weeks for VC interest this year were all in Q2. Overall, interest was up 21.6% QoQ and 26% YoY. This means we’re looking at VCs viewing more pitch decks than they have any time in the last two years.

This is in spite of VC interest traditionally declining from late spring into summer, before bottoming out during the last two weeks of August. After the initial peak in the spring, VC interest typically doesn’t rebound until October.

But not only can we see that VCs are interacting with a lot of decks, we also can determine the quality of those interactions. We measure how long a VC spends reading each deck. From our previous research we know that the average pitch deck interaction is less than 3.5 minutes. But the amount of time VCs spent reading each deck in Q2 steadily declined, going below two minutes toward the end of the quarter. This tells us VCs are speeding through decks. That means they either know what they’re looking for and aren’t wasting time, or they’re scrutinizing decks less, opting for a Zoom call to hear more from a founder.

For founders, this means having a tight deck is even more important than before. Don’t have more than 20 slides, don’t send your appendix in your send-ahead deck and keep your slides concise and thoughtful (read our guide on how to put together a send-ahead deck here).

If you’re still not able to get a meeting with a VC during this intense shopping season, you may want to consider changing your fundraising strategy.

Founder timelines have changed

We can see over the last quarter that there have been clear spikes in the amount of links founders are sending out. Founders sent out 11% more deck links in Q2 than they did in Q1, but what’s interesting is that the number of links created actually dropped below 2019 levels on three separate occasions. So while founders might have been rushing to send their deck out during unstable times, there were plenty of weeks where founders were hanging back.

This conflicting story can tell us several things. First, founders have most likely condensed their fundraising efforts. According to our research earlier this year, the average pre-seed round takes longer than three months to complete. For those fundraising during a pandemic, three months can seem like a lifetime. This is not only due to the logistics of setting meetings with VCs who have packed calendars, but also the iteration process of receiving feedback from a potential investor, working on your deck, then sending it out to new targets. With global uncertainty, many founders likely decided to shorten their time away from their business by reducing their fundraising efforts to just a few weeks.

Second, due to aggressive cost cutting at the beginning of the pandemic, many founders found themselves with more runway than they expected. In fact, according to a recent survey we did, nearly 50% of founders changed their fundraising timeline by either moving it forward or delaying it. Founders that could afford to decided to avoid the volatile fundraising marketplace in an effort to preserve their valuations.

We’re looking at more than displaced interest from March

While it was easy during April and early May to think the fundraising marketplace was experiencing delayed activity due to the crash in March, the sustained interest makes it hard to believe that’s still the case, especially taking into account seasonality. The last week of the quarter saw a 37% increase in interest over 2019 and an 18% increase over 2018. With that level of activity, we’ve clearly entered a new normal for fundraising.

While valuations might be fluctuating, it’s quite clear VCs are shopping. To figure out why, you don’t have to look any further than the 2008 financial crisis. The businesses born out of crises tend to address real, systemic problems that require big, bold fixes. And the pandemic has certainly laid bare many societal issues that are worth addressing.

What Q3 and Q4 could look like based on current trends

If it’s clear that VCs are shopping, and it’s clear that this isn’t displaced interest from earlier this year, what does that mean for the future? We would normally see an increase in founder activity starting in late summer, leading to peak VC interest in the fall. Founder activity has been up and down, and VC interest has been steadily rising, which tells us there’s still pent-up demand to deploy capital. We should also see many founders who delayed their fundraising efforts enter the marketplace in the next few months. If pandemic conditions worsen, we might also see founders who had decided to push their fundraising efforts to next year moving their timelines forward.

If the current level of interest represents the new normal for VCs, we expect it to only increase as we enter the fall. And with more founders coming online in early to late fall, that pent-up demand should result in an increasingly active market. If you’re a founder, I would recommend kicking off your fundraise now in order to capitalize on the increased interest from investors and decreased competition for at least the first pitch meeting.

Q3 2020 is primed to be an intense shopping season for VCs

With the high possibility of an extremely active fundraising marketplace for the rest of the year, founders need to know how to take advantage of it. As you can see from the DocSend Pitch Deck Interest Metrics, spikes in the marketplace previously have resulted in some pretty specific behaviors by VCs.

Here are some tips on how to use the increasing levels of VC interest to your advantage.

VCs are spending less time on your deck, so get to the point

We’re seeing record low time spent per pitch deck. We know from previous research that VCs spend on average 3.5 minutes per pitch deck. But over the last quarter that time has dipped below three minutes. That can actually be a good and a bad thing. It implies that VCs are streamlining their process of looking at decks, which means they most likely know what they want. The downside of this is if you break a few cardinal rules right now your deck could end up in the reject pile.

From our research, VCs expect a deck to be around 20 pages. They expect a straightforward narrative that starts with your problem, leading to the solution, and then your product and business model. Our data found that VCs respond best to 35-50 words per slide (too few words per slide is also an issue; you want to offer enough context for your deck to make sense without you presenting it). The only place you can increase your word count is on your Team page. Our data shows the average number of words on a successful Team slide is 80. This gives you room to highlight the founding team’s relevant experience and show how you’re uniquely suited to build your business.

You have to include a “why now” slide and it should mention COVID-19

We already know that investors respond well to a Why Now slide. Our research shows that 54% of successful pitch decks included a Why Now slide, where only 38% of failed decks included it. That slide now has to work twice as hard. We’re hearing from investors that they expect to see information in your pitch deck about how your business has been affected by COVID-19 and how you plan to manage that impact moving forward. Even if the pandemic has had no material effect on your business, the investor will still have the question. Get out in front of it with a well-formed response near the beginning of your deck.

US tech needs a pivot to survive

Last month, American tech companies were dealt two of the most consequential legal decisions they have ever faced. Both of these decisions came from thousands of miles away, in Europe. While companies are spending time and money scrambling to understand how to comply with a single decision, they shouldn’t miss the broader ramification: Europe has different operating principles from the U.S., and is no longer passively accepting American rules of engagement on tech.

In the first decision, Apple objected to and was spared a $15 billion tax bill the EU said was due to Ireland, while the European Commission’s most vocal anti-tech crusader Margrethe Vestager was dealt a stinging defeat. In the second, and much more far-reaching decision, Europe’s courts struck a blow at a central tenet of American tech’s business model: data storage and flows.

American companies have spent decades bundling stores of user data and convincing investors of its worth as an asset. In Schrems, Europe’s highest court ruled that masses of free-flowing user data is, instead, an enormous liability, and sows doubt about the future of the main method that companies use to transfer data across the Atlantic.

On the surface, this decision appears to be about data protection. But there is a choppier undertow of sentiment swirling in legislative and regulatory circles across Europe. Namely that American companies have amassed significant fortunes from Europeans and their data, and governments want their share of the revenue.

What’s more, the fact that European courts handed victory to an individual citizen while also handing defeat to one of the commission’s senior leaders shows European institutions are even more interested in protecting individual rights than they are in propping up commission positions. This particular dynamic bodes poorly for the lobbying and influence strategies that many American companies have pursued in their European expansion.

After the Schrems ruling, companies will scramble to build legal teams and data centers that can comply with the court’s decision. They will spend large sums of money on pre-built solutions or cloud providers that can deliver a quick and seamless transition to the new legal reality. What companies should be doing, however, is building a comprehensive understanding of the political, judicial and social realities of the European countries where they do business — because this is just the tip of the iceberg.

American companies need to show Europeans — regularly and seriously — that they do not take their business for granted.

Europe is an afterthought no more

For many years, American tech companies have treated Europe as a market that required minimal, if any, meaningful adaptations for success. If an early-stage company wanted to gain market share in Germany, it would translate its website, add a notice about cookies and find a convenient way to transact in euros. Larger companies wouldn’t add many more layers of complexity to this strategy; perhaps it would establish a local sales office with a European from HQ, hire a German with experience in U.S. companies or sign a local partnership that could help it distribute or deliver its product. Europe, for many small and medium-sized tech firms, was little more than a bigger Canada in a tougher time zone.

Only the largest companies would go to the effort of setting up public policy offices in Brussels, or meaningfully try to understand the noncommercial issues that could affect their license to operate in Europe. The Schrems ruling shows how this strategy isn’t feasible anymore.

American tech must invest in understanding European political realities the same way they do in emerging markets like India, Russia or China, where U.S. tech companies go to great lengths to adapt products to local laws or pull out where they cannot comply. Europe is not just the European Commission, but rather 27 different countries that vote and act on different interests at home and in Brussels.

Governments in Beijing or Moscow refused to accept a reality of U.S. companies setting conditions for them from the outset. After underestimating Europe for years, American companies now need to dedicate headspace to considering how business is materially affected by Europe’s different views on data protection, commerce, taxation and other issues.

This is not to say that American and European values on the internet differ as dramatically as they do with China’s values, for instance. But Europe, from national governments to the EU and to courts, is making it clear that it will not accept a reality where U.S. companies assume that they have license to operate the same way they do at home. Where U.S. companies expect light taxation, European governments expect revenue for economic activity. Where U.S. companies expect a clear line between state and federal legislation, Europe offers a messy patchwork of national and international regulation. Where U.S. companies expect that their popularity alone is proof that consumers consent to looser privacy or data protection, Europe reminds them that (across the pond) the state has the last word on the matter.

Many American tech companies understand their commercial risks inside and out but are not prepared for managing the risks that are out of their control. From reputation risk to regulatory risk, they can no longer treat Europe as a like-for-like market with the U.S., and the winners will be those companies that can navigate the legal and political changes afoot. Having a Brussels strategy isn’t enough. Instead American companies will need to build deeper influence in the member states where they operate. Specifically, they will need to communicate their side of the argument early and often to a wider range of potential allies, from local and national governments in markets where they operate, to civil society activists like Max Schrems .

The world’s offline differences are obvious, and the time when we could pretend that the internet erased them rather than magnified them is quickly ending.

More thoughts on growing podcasts

We’ve aggregated many of the world’s best growth marketers into one community. Twice a month, we ask them to share their most effective growth tactics, and we compile them into this Growth Report.

This is how you stay up-to-date on growth marketing tactics — with advice that’s hard to find elsewhere.

Our community consists of startup founders and heads of growth. You can participate by joining Demand Curve’s marketing training program or its Slack group.

Without further ado, on to our community’s advice.


More thoughts on growing podcasts

Insights from Harry Morton of Lower Street.

Podcast growth is all about relationships. To increase your listenership, consider partnering with:

  1. Other podcasters. Do an episode swap where you play an episode of your show on theirs, and vice versa. Make sure the two podcasts share similarly minded audiences.
  2. Curators. Every podcast aggregator has someone responsible for curating their featured content. Look them up on LinkedIn. Reach out via email. Be their friend. Send them only your best stuff.
  3. Subscribers. You rise in Apple’s podcast charts (which account for 60% of podcast listenership) by having a subscriber growth spurt in a concentrated period of time (24-48 hours). So, when you release an episode, immediately run your audience promotions aggressively and all at once.

Increasing referral incentives might not increase referrals

Autonomous vehicle reporting data is driving AV innovation right off the road

At the end of every calendar year, the complaints from autonomous vehicle companies start piling up. This annual tradition is the result of a requirement by the California Department of Motor Vehicles that AV companies deliver “disengagement reports” by January 1 of each year showing the number of times an AV operator had to disengage the vehicle’s autonomous driving function while testing the vehicle.

However, all disengagement reports have one thing in common: their usefulness is ubiquitously criticized by those who have to submit them. The CEO and founder of a San Francisco-based self-driving car company publicly stated that disengagement reporting is “woefully inadequate … to give a meaningful signal about whether an AV is ready for commercial deployment.” The CEO of a self-driving technology startup called the metrics “misguided.” Waymo stated in a tweet that the metric “does not provide relevant insights” into its self-driving technology or “distinguish its performance from others in the self-driving space.”

Why do AV companies object so strongly to California’s disengagement reports? They argue the metric is misleading based on lack of context due to the AV companies’ varied testing strategies. I would argue that a lack of guidance regarding the language used to describe the disengagements also makes the data misleading. Furthermore, the metric incentivizes testing in less difficult circumstances and favors real-world testing over more insightful virtual testing.

Understanding California reporting metrics

To test an autonomous vehicle on public roads in California, an AV company must obtain an AV Testing Permit. As of June 22, 2020, there were 66 Autonomous Vehicle Testing Permit holders in California and 36 of those companies reported autonomous vehicle testing in California in 2019. Only five of those companies have permits to transport passengers.

To operate on California public roads, each permitted company must report any collision that results in property damage, bodily injury, or death within 10 days of the incident.

There have been 24 autonomous vehicle collision reports in 2020 thus far. However, though the majority of those incidents occurred in autonomous mode, accidents were almost exclusively the result of the autonomous vehicle being rear-ended. In California, rear-end collisions are almost always deemed the fault of the rear-ending driver.

The usefulness of collision data is evident — consumers and regulators are most concerned with the safety of autonomous vehicles for pedestrians and passengers. If an AV company reports even one accident resulting in substantial damage to the vehicle or harm to a pedestrian or passenger while the vehicle operates in autonomous mode, the implications and repercussions for the company (and potentially the entire AV industry) are substantial.

However, the usefulness of disengagement reporting data is much more questionable. The California DMV requires AV operators to report the number and details of disengagements while testing on California public roads by January 1 of each year. The DMV defines this as “how often their vehicles disengaged from autonomous mode during tests (whether because of technical failure or situations requiring the test driver/operator to take manual control of the vehicle to operate safely).”

Operators must also track how often their vehicles disengaged from autonomous mode, and whether that disengagement was the result of software malfunction, human error, or at the option of the vehicle operator.

AV companies have kept a tight lid on measurable metrics, often only sharing limited footage of demonstrations performed under controlled settings and very little data, if any. Some companies have shared the occasional “annual safety report,” which reads more like a promotional deck than a source of data on AV performance. Furthermore, there are almost no reporting requirements for companies doing public testing in any other state. California’s disengagement reports are the exception.

This AV information desert means that disengagement reporting in California has often been treated as our only source of information on AVs. The public is forced to judge AV readiness and relative performance based on this disengagement data, which is incomplete at best and misleading at worst.

Disengagement reporting data offers no context

Most AV companies claim that disengagement reporting data is a poor metric for judging advancement in the AV industry due to a lack of context for the numbers: knowing where those miles were driven and the purpose of those trips is essential to understanding the data in disengagement reports.

Some in the AV industry have complained that miles driven in sparsely populated areas with arid climates and few intersections are miles dissimilar from miles driven in a city like San Francisco, Pittsburgh, or Atlanta. As a result, the number of disengagements reported by companies that test in the former versus the latter geography are incomparable.

It’s also important to understand that disengagement reporting requirements influence AV companies’ decisions on where and how to test. A test that requires substantial disengagements, even while safe, would be discouraged, as it would make the company look less ready for commercial deployment than its competitors. In reality, such testing may result in the most commercially ready vehicle. Indeed, some in the AV industry have accused competitors of manipulating disengagement reporting metrics by easing the difficulty of miles driven over time to look like real progress.

Furthermore, while data can look particularly good when manipulated by easy drives and clear roads, data can look particularly bad when it’s being used strategically to improve AV software.

Let’s consider an example provided by Jack Stewart, a reporter for NPR’s Marketplace covering transportation:

“Say a company rolls out a brand-new build of their software, and they’re testing that in California because it’s near their headquarters. That software could be extra buggy at the beginning, and you could see a bunch of disengagements, but that same company could be running a commercial service somewhere like Arizona, where they don’t have to collect these reports.

That service could be running super smoothly. You don’t really get a picture of a company’s overall performance just by looking at this one really tight little metric. It was a nice idea of California some years ago to start collecting some information, but it’s not really doing what it was originally intended to do nowadays.”

Disengagement reports lack prescriptive language

The disengagement reports are also misleading due to a lack of guidance and uniformity in the language used to describe the disengagements. For example, while AV companies used a variety of language, “perception discrepancies” was the most common term used to describe the reason for a disengagement — however, it’s not clear that the term “perception discrepancies” has a set meaning.

Several operators used the phrase “perception discrepancy” to describe a failure to detect an object correctly. Valeo North America described a similar error as “false detection of object.” Toyota Research Institute almost exclusively described their disengagements vaguely as “Safety Driver proactive disengagement,” the meaning of which is “any kind of disengagement.” Whereas, Pony.ai described each instance of disengagement with particularity.

Many other operators reported disengagements that were “planned testing disengagements” or that were described with such insufficient particularity as to be virtually meaningless.

For example, “planned disengagements” could mean the testing of intentionally created malfunctions, or it could simply mean the software is so nascent and unsophisticated that the company expected the disengagement. Similarly, “perception discrepancy” could mean anything from precautionary disengagements to disengagements due to extremely hazardous software malfunctions. “Perception discrepancy,” “planned disengagement” or any number of other vague descriptions of disengagements make comparisons across AV operators virtually impossible.

So, for example, while it appears that a San Francisco-based AV company’s disengagements were exclusively precautionary, the lack of guidance on how to describe disengagements and the many vague descriptions provided by AV companies have cast a shadow over disengagement descriptions, calling them all into question.

Regulations discourage virtual testing

Today, the software of AV companies is the real product. The hardware and physical components — lidar, sensors, etc. — of AV vehicles have become so uniform, they’re practically off-the-shelf. The real component that is being tested is software. It’s well known that software bugs are best found by running the software as often as possible; road testing simply can’t reach the sheer numbers necessary to find all the bugs. What can reach those numbers is virtual testing.

However, the regulations discourage virtual testing as the lower reported road miles would seem to imply that a company is not road-ready.

Jack Stewart of NPR’s Marketplace expressed a similar point of view:

“There are things that can be relatively bought off the shelf and, more so these days, there are just a few companies that you can go to and pick up the hardware that you need. It’s the software, and it’s how many miles that software has driven both in simulation and on the real roads without any incident.”

So, where can we find the real data we need to compare AV companies? One company runs over 30,000 instances daily through its end-to-end, three-dimensional simulation environment. Another company runs millions of off-road tests a day through its internal simulation tool, running driving models that include scenarios that it can’t test on roads involving pedestrians, lane merging, and parked cars. Waymo drives 20 million miles a day in its Carcraft simulation platform — the equivalent of over 100 years of real-world driving on public roads.

One CEO estimated that a single virtual mile can be just as insightful as 1,000 miles collected on the open road.

Jonathan Karmel, Waymo’s product lead for simulation and automation, similarly explained that Carcraft provides “the most interesting miles and useful information.”

Where we go from here

Clearly there are issues with disengagement reports — both in relying on the data therein and in the negative incentives they create for AV companies. However, there are voluntary steps that the AV industry can take to combat some of these issues:

  1. Prioritize and invest in virtual testing. Developing and operating a robust system of virtual testing may present a high expense to AV companies, but it also presents the opportunity to dramatically shorten the pathway to commercial deployment through the ability to test more complex, higher risk, and higher number scenarios.
  2. Share data from virtual testing. Voluntary disclosure of virtual testing data will reduce reliance on disengagement reports by the public. Commercial readiness will be pointless unless AV companies have provided the public with reliable data on AV readiness for a sustained period.
  3. Seek the greatest value from on-road miles. AV companies should continue using on-road testing in California, but they should use those miles to fill in the gaps from virtual testing. They should seek the greatest value possible out of those slower miles, accept the higher percentage of disengagements they will be required to report, and when reporting on those miles, describe their context in particularity.

With these steps, AV companies can lessen the pain of California’s disengagement reporting data and advance more quickly to an AV-ready future.

The essential revenue software stack

From working with our 90+ portfolio companies and their customers, as well as from frequent conversations with enterprise leaders, we have observed a set of software services emerge and evolve to become best practice for revenue teams. This set of services — call it the “revenue stack” — is used by sales, marketing and growth teams to identify and manage their prospects and revenue.

The evolution of this revenue stack started long before anyone had ever heard the word coronavirus, but now the stakes are even higher as the pandemic has accelerated this evolution into a race. Revenue teams across the country have been forced to change their tactics and tools in the blink of an eye in order to adapt to this new normal — one in which they needed to learn how to sell in not only an all-digital world but also an all-remote one where teams are dispersed more than ever before. The modern “remote-virtual-digital”-enabled revenue team has a new urgency for modern technology that equips them to be just as — and perhaps even more — productive than their pre-coronavirus baseline. We have seen a core combination of solutions emerge as best-in-class to help these virtual teams be most successful. Winners are being made by the directors of revenue operations, VPs of revenue operations, and chief revenue officers (CROs) who are fast adopters of what we like to call the essential revenue software stack.

In this stack, we see four necessary core capabilities, all critically interconnected. The four core capabilities are:

  1. Revenue enablement.
  2. Sales engagement.
  3. Conversational intelligence.
  4. Revenue operations.

These capabilities run on top of three foundational technologies that most growth-oriented companies already use — agreement management, CRM and communications. We will dive into these core capabilities, the emerging leaders in each and provide general guidance on how to get started.

Revenue enablement

A few words for DHS agents who have no intention of becoming immigration whistleblowers

In the wake of last week’s report that the U.S. Department of Homeland Security compiled “-intelligence reports” on journalists who published leaked documents, I’m concerned about all the DHS agents who might now be afraid of retaliation for being a whistleblower — perhaps one who legally leaks information such as, let’s say, unclassified information about government activities related to immigration. Not that you’re thinking of doing that, of course.

Assuming the disclosure of the information to a journalist is legal (for which I would suggest it would be prudent to consult an attorney who is well-versed in national security law, freedom of speech constitutional claims and government accountability), there are several steps that someone — not you, of course, but someone — might want to take to avoid retaliation for this completely legal act.

Assuming disclosure is legal and there are no criminal consequences that could be faced, one might also want to address whether the leak could result in employment-based discipline or retaliation. For this reason, seeking proper legal counsel and ensuring anonymity would probably be in the best interest of a would-be whistleblower, who is totally, definitely, not you or any of your colleagues.

For the sake of argument, however, let’s say someone actually were to be interested in bringing to light an egregious misdeed ordered by the federal government that goes against the freedoms the United States was founded on. In that situation, someone — not me, of course, but someone — might point them toward organizations that exist for those considering taking whistleblowing action. Organizations like Whistleblower Aid, which offers free aid and alternatives to illicit leaks, and Whistleblower.org, which has been engaging in whistleblower advocacy, education and litigation since 1977. Not to say that YOU would use these resources, per se, but it might be fun to take a look at them in a hypothetical, “Haha what if I were to expose gross injustices being perpetuated by my department?” kind of way. Probably not on a work computer, though — not that it matters, of course! (I’m sure it’s of no interest to you, but one interested in understanding how the disclosure of information can come to light might be interested in checking out the information that can be found here: How to Organize Your Workplace Without Getting Caught.)

Now, I know what you’re thinking: Sophie, if there is such a need to protect whistleblowers with this sensitive information, doesn’t that suggest there are systemic issues at play? Would someone (who isn’t you) even recommend that a DHS employee (who isn’t me) partake in this historically necessary and honorable action?

Such a person, if they were to read this article, might feel proud of the fact that since the leak, DHS has ceased compiling these “intelligence reports” and ordered an inquiry:

In times such as these, times in which children in custody at the border are again at risk of being separated from parents during the COVID-19 pandemic; when the freedoms this country was built on seem to be under attack from within; when an employee of the DHS might find themselves handling the fragile responsibility of truth at the crossroads of powerlessness and obligation — in times like these, sometimes drastic actions must be undertaken to ensure that America is a country we can believe in.

This is the onus on someone — not you, of course, but some someone — who has a whistle to blow, and perhaps an identity to protect.