EC Newsletter Archives - Product Management Confabulation

March 24, 2023

Today’s cost-conscious business climate could give RPA a boost

As tech companies large and small shed staff in hopes of better aligning their income statements to a new market reality, it’s clear that cutting costs to delight investors is the new norm. But there are other ways to make the investing public happy, including smashing growth and profitability expectations.

The Exchange explores startups, markets and money.

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That’s what UiPath did last week when it reported its trailing financial performance, which included a top- and bottom-line beat compared to analyst expectations. Its shares soared.

It turns out that while slashing staff, curtailing projects, and treating cash with more respect is fashionable among tech companies and many of their customers today, there’s a wrinkle in the trend. One way to make your staffing cheaper is to reduce it. Another is to make it more productive, making your spend more effective on a per-dollar basis.

That’s where UiPath and the larger automation market — robotic process automation, or RPA — may have an edge on other software categories. Last month’s positive earnings report from Appian and the lengthy discussions of its automation work during its earnings call underscored that tech companies see strong demand for automation help.

There’s even more data on the point we’ve been chewing on. A recent report on software spend from Battery Ventures that we previously discussed contains even more bullish data.

In short, sure, everyone wants to save a buck on their software spend. But if your startup is building tech to automate tasks and drive quick productivity gains, you might be able to duck the downturn. Let’s talk about it.

Today’s cost-conscious business climate could give RPA a boost by Anna Heim originally published on TechCrunch

March 23, 2023

As TikTok and Coinbase face regulators, some questions are simpler than others

We learned last night that the U.S. Securities and Exchange Commission served Coinbase with a Wells notice, a prelude to taking enforcement action against the U.S. crypto giant over potential “violations of the federal securities laws.” The company intends to put up a fight, according to its CEO.

Separately, the CEO of TikTok, Shou Zi Chew, is expected to testify in front of Congress this morning. The stakes for the social media service are high. The app has engendered concerns across the U.S. political spectrum, including allegations concerning data security, user privacy and potential meddling by a foreign government.

The Biden administration wants the app’s parent company to sell it so that TikTok can have ownership in a different country under a different code of law. The Chinese Communist Party doesn’t want it to sell. Chew is stuck in the middle.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

That well-known tech products are in regulatory crosshairs should not surprise.

The aggregated value of crypto assets is north of $1 trillion, lots of consumers are involved and Coinbase is a leading company in a market that has evolved faster than its regulatory oversight.

TikTok is incredibly popular in the United States but suffers from sour relations between China, where its parent company is based, and the U.S. economy that generates a large chunk of its revenue. Even worse for TikTok, it has, at a minimum, operated in a manner in the past that has directly undercut its ability to claim that it is benign.

It strikes me how distinct in substance the Coinbase and TikTok matters are and also in how we should feel about them. In case you are in a hurry, TikTok has failed to earn the sort of trust it requires to operate in its current form and should not be allowed to continue to do so. Coinbase, in contrast, is a far more sympathetic company to consider. Let’s talk about it. (To be clear, this is my thinking out loud about these issues, not my speaking for TechCrunch as a whole.)

TikTok

As TikTok and Coinbase face regulators, some questions are simpler than others by Alex Wilhelm originally published on TechCrunch

March 22, 2023

When the tech IPO market reopens, keep an eye on HR unicorns

The back half of 2023 is expected to unlock the technology IPO market. Whether the public-offering window opens later this year or early in 2024, TechCrunch+ expects to see a few familiar names in the mix from the HR tech space.

And perhaps some less familiar names.

Regular TechCrunch readers are likely familiar with HR-tech unicorns like Rippling, Gusto and Deel, late-stage startups with valuations around or above the $10 billion mark.

Velocity Global is another name to include in the startup cluster. Worth a few billion dollars, its recent growth and profitability mean that when we consider potential exits in the HR technology market, it should be on the list.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

Even more fun, Velocity Global CEO Ben Wright shared a grip of financial data about his company with TechCrunch+ recently. The new numbers give us even more perspective into the growth and worth of startups that help other companies run payroll.

There is nuance in the HR tech space. First, the dividing line between running payroll and hiring workers: While Deel and Velocity Global appear more focused on being employers of record (EoR) for domestic companies looking to hire internationally, Rippling and Gusto are more known for running payroll for customers’ domestic workforces. But don’t try to jam the four companies into two distinct groups; Rippling also offers customers the ability to be their co-employer, and both Rippling and Gusto offer support for international staff.

In short, while the four companies may have started off with a particular focus and geographic bent, they are overlapping more over time as they broaden their product lineup to support more customer use cases and, we presume, to grow their revenue footprint with existing customers.

As we wait for some brave company to be the first IPO out of the gate, let’s chat through Velocity Global’s numbers and valuation and contrast both with what we know about some of its private-market competition. For you digit-heads out there, we’re going to close with a question about which company’s valuation makes the most sense. Ready? To work.

When the tech IPO market reopens, keep an eye on HR unicorns by Alex Wilhelm originally published on TechCrunch

March 21, 2023

Even the hottest startup categories are not immune from the venture slowdown

Upstart tech companies delivering their product or service via an API raised mammoth amounts of capital during the final year of the 2021-era startup boom. Things have slowed in the intervening quarters.

New data indicates that while the group of companies raised more capital in 2022 than in 2020, a downward trend in fundraising activity throughout the last calendar year shows that no startup cohort is immune from the venture capital slowdown. And that applies to the groupings of new tech companies that were among the hottest before the recent downturn, too.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

GGV, a venture capital firm that invests across sectors, stages and geographies, compiled an index of what it considers API-first companies that it launched last year. TechCrunch covered its launch, as we have a soft spot for trackable baskets of startups that we can observe across time; similar collections from firms like Bessemer provide useful measuring sticks for the startup market, especially in a rapidly evolving venture capital and exit climate.

The venture group recently compiled the last of its 2022 information, sharing the data with TechCrunch+ ahead of its publication. Tiffany Luck and Chelcie Taylor, investors at GGV, sat with us to chat about the data. They also provided a slightly expanded dataset encompassing an even larger group of API-first startups at our request.

How are API-first startups faring in the face of private-market headwinds and some market pessimism about the health of many startups far from their exit point? The answer is mixed. On one hand, venture capital investment in the startup business model is slowing, but there is good news to be found as well. The tech talent market is slowly unlocking as tech titans release waves of experienced personnel, meaning that well-capitalized startups — and API-first startups did raise a lot of money during 2021 — may be able to pick up new staff that were previously out of reach.

Even the hottest startup categories are not immune from the venture slowdown by Anna Heim originally published on TechCrunch

March 20, 2023

For tech titans, AI prominence is the new measuring stick

For many tech companies, investors are applying a new valuation method that has caught our eye: AI proficiency.

The current wave of AI hype has two main flavors that I’m interested in. First, the struggle between tech titans to create, or at least invest in and support, the latest and greatest in intelligent computing services. And the second, the startups levering the improving toolset to build and improve products, helping them grow quickly and attack new markets.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

Mostly here at TechCrunch, we’ve focused on the startup side of things. Given our remit as a publication — we focus on startups and their backers — that’s not surprising. But the story of Copy.ai, one of the earlier startups to leverage tools like GPT-3, reaching $10 million in annual recurring revenue is hardly the entire picture.

For tech titans, AI prominence is the new measuring stick by Alex Wilhelm originally published on TechCrunch

March 18, 2023

Let’s talk about succession plans

Welcome to Startups Weekly, a nuanced take on this week’s startup news and trends by Senior Reporter and Equity co-host Natasha Mascarenhas. To get this in your inbox, subscribe here.

Maybe it’s the fact that “Succession” is back next week, or maybe it’s the fact that Silicon Valley just experienced its first banking crisis, but I want to talk about the line of descent in startups.

As I write in my latest:

Silicon Valley Bank is a good reminder that startups, often entrenched in the world of risk and scrappiness, sometimes forget to think about the obvious: single points of failure. But just like it makes sense to rely on a community-friendly bank, so does entrusting a single person to lead your business to success. Now that we’ve seen the former not really work out, perhaps it’s time to rethink the latter.

For my full take on the new worry that founders should be thinking through, read: “Banking isn’t the only ‘single point of failure’ entrepreneurs should be rethinking.”

For more, read about the crypto corner, my latest snapshot of founder sentiment, the impact on Black founders and this timeline on all that has unfolded thus far. This is where the SVB coverage ends for the purposes of this newsletter writer maintaining her sanity and remembering that there is a world outside of the banking trenches.

In the rest of this newsletter, we’ll get into news that was buried this week and GPT-4. As always, you can follow me on Twitter or Instagram to continue the conversation. You can also send me tips at natasha.m@techcrunch.com or on Signal at +1 925 271 0912. No pitches, please.

GPT-4 didn’t write this

On Equity this week, Alex and I spoke about the above, but more interestingly, the future of AI. We talk about the technology’s impact of smart people writing books, context and general tech exuberance. We need it, and I’m not just saying that because I live a stone’s throw away from Cerebral Valley.

Here’s why it’s top of mind: GPT-4 launched this week from the team behind OpenAI. Our own Kyle Wiggers reports, “GPT-4 can generate text and accept image and text inputs — an improvement over GPT-3.5, its predecessor, which only accepted text — and performs at ‘human level’ on various professional and academic benchmarks. For example, GPT-4 passes a simulated bar exam with a score around the top 10% of test takers; in contrast, GPT-3.5’s score was around the bottom 10%.” Companies such as Stripe, Duolingo and Khan Academy were among its beta testers.

Image Credits: Microsoft

News that was buried

When there’s an obvious zeitgeist, news often gets buried — both intentionally and unintentionally. As a result, over the past week, there was lots of news that deserved more attention — both good and bad. The list includes Launch House winding down existing operations and laying off staff, as well as Klaviyo and Course Hero conducting companywide layoffs for the first time.

Here’s what else I missed sharing my two cents on:

Magnifying Glass Focusing Sunlight Into a Point Repetition on Turquoise Colored Background High Angle View; technical due diligence

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

Etc., etc.

Throwback Saturday: If you missed Startups Weekly last week, catch my last issue here: “The oh-so-biased branding risk in venture capital.”
Let’s hang on campus? TechCrunch is coming to Boston on April 20. I’ll be there with my favorite colleagues to interview top experts at a one-day founder summit. Book your pass ASAP! Speakers include Techstars’ Kerty Levy, Construct Capital’s Dayna Grayson and NFX’s James Currier.
Big shout out to all the sources that spoke to me, on and off the record, this past week to help me understand Silicon Valley’s first, real banking crisis. There’s more we need to learn and many questions ahead, so keep the trust and tips coming.
Programming note: If you’re reading this on a browser, get this in your inbox too! Subscribe here and share it with your friends.

Seen on TechCrunch

Google warns users to take action to protect against remotely exploitable flaws in popular Android phones

At Virgin Orbit, it never should’ve come to a staff furlough

Pornhub owner MindGeek sold to private equity firm

Anonymous app Sidechat picks up rival Yik Yak…and users aren’t happy

Seen on TechCrunch+

Dear Sophie: How can I return to the United States as a founder?

How to pitch me: 7 investors discuss what they’re looking for in March 2023

Zero-based budgeting: A proven framework for extending runway

Product-led growth is propelling a wave of sales tools startups

Silicon Valley has been through an exhausting stretch, and that’s saying a lot given that COVID-19 is still an on-going pandemic and the downturn continues to provide hurdles. If you’ve made it to the end, thank you, but also, take a nap. We’ll be here on Monday. You deserve some rest. I’ll probably have some sweeter words on how tech banded together during a time of immense stress, but for now, sleep.

Chat soon — and let me know if you want to live tweet “Succession” with me next week?

Let’s talk about succession plans by Natasha Mascarenhas originally published on TechCrunch

March 18, 2023

Founders, don’t put all your cash in one basket

elcome to the TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by the daily TechCrunch+ column where it gets its name. Want it in your inbox every Saturday? Sign up here.

It’s too early to fully anticipate all of the consequences of Silicon Valley Bank’s collapse. But there is one prediction I am ready to make: Bank diversification is going to be a much higher priority for startups from now on. — Anna

A mostly ignored best practice

Whether you are an individual or a company, it makes sense to have more than one bank. Yet, many startups don’t.

Founders, don’t put all your cash in one basket by Anna Heim originally published on TechCrunch

March 18, 2023

To my infinite chagrin, we’re probably not getting tech IPOs until later this year

The IPO market thus far in 2023 has been a goose egg, and we probably won’t get any interesting IPOs for another quarter or two. This is incredibly sad for your friendly, local TechCrunch+ reporting crew who love an S-1 more than anything else.

The good news is that when we do get the IPO train back on the rails, we should be able to see a pretty good run of public-market debuts.

Let’s talk about why.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

If you delve back through Silicon Valley Bank research, which now feels rather different than it did two weeks ago, you can get a pretty good idea why institutions are not expecting a flurry of IPOs in the near future. In its State of the Markets report for the first half of 2023, SVB predicted that the market for “U.S. VC-backed tech IPOs will likely remain dormant in H1 2023.”

Thus far, that’s been 100% correct.

However, the bank also predicted that as “the market gets clarity on the [interest] rate ceiling [and] forward revenue multiples align with long-term averages and pent-up demand builds from institutional investors” and unicorns, we should expect no fewer than ten IPOs in the back-half of the year from venture-backed companies.

When we first read that a while ago, it felt a touch optimistic. Why would we go from zero to double digits in such a short timeframe?

We’ve since gotten a bit more context. TechCrunch+ recently spoke with Arjun Kapur, a managing partner and founder at Forecast Labs, on the IPO question.

(Forecast Labs is a sister entity to Comcast Ventures. The latter is a venture shop that invests in areas of strategic interest to its parent company, Comcast NBCUniversal, a corporate amalgamation that stretches from Internet access to cable television to content itself. Forecast, in contrast, trades equity for access to television advertising, essentially offering lower-than-market rate CPA-based advertising on the tube for equity. It’s a pretty interesting model for companies that want to reach a larger consumer audience, but at a discount.)

To my infinite chagrin, we’re probably not getting tech IPOs until later this year by Alex Wilhelm originally published on TechCrunch

March 17, 2023

Will software for CFOs create a bright spot in a battered fintech market?

The comedown from the venture capital boom of 2021 has shaken up much of the startup world, but the dearth of capital has shown up sharply in one particular niche: fintech.

CB Insights data indicates that after reaching a peak in 2021, funding to fintech startups across the world dropped a drastic 46% to $75.2 billion from $139.8 billion a year ago. Early 2023 data is still trickling in, but we’ve yet to hear from anyone that venture funding to fintech will rebound. Yes, Stripe’s $6.5 billion raise might skew tallies somewhat, but let’s not forget that it’s also a down round.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

But fintech is broad, encompassing everything from Chime and Alpaca to Brex. In fact, it’s nearly too broad a group to be of much use. You have to dig deeper and be more specific to get a clearer picture of its evolving trends.

This brings us to CFOs, everyone’s favorite person in a company’s executive team: The naysayer, the demander of receipts, the fussbudget of budgets.

Call them what you will, CFOs are a critical part of a startup’s evolution. We don’t pay enough attention to CxOs here at TechCrunch, as we’re a bit more focused on founders, but last year, CFOs managed to breathe their way to our attention: TechCrunch reported about a wave of CFO turnovers at companies that had been on the IPO track before the market blocked that path or took the business down a peg.

That’s the bad news for CFOs: changing valuations in many startup categories took IPOs off the table, and they are now tasked with stretching cash as far as it can go in a market where capital dried up faster than a puddle in Death Valley.

But there’s good news as well: lots of fintech startups are building tools for CFOs and their larger office, often called “the CFO stack.”

Will software for CFOs create a bright spot in a battered fintech market? by Anna Heim originally published on TechCrunch

March 16, 2023

Bummed out from the last week? Here’s some bullish news for software companies

Yes, reading the tech press in the last week has been pretty brutal. And yes, you and your startup may still be rattled by the Silicon Valley Bank crisis or worried about what’s going on at First Republic. Hell, you could still be working to secure your funds somewhere new.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

The cliche about rain quantity during downpours exists because bad news tends to pile up when it arrives. That SVB imploded while startups were already struggling in the face of a sharply more conservative fundraising environment, a completely denuded IPO forecast, and antitrust making M&A a tough sell is therefore not surprising, even if a financial crisis felt like an unfair piling on.

But the news is not all bad. Amid the chaos, there are rays of good news. They include surprisingly good results from a pair software companies’ earnings reports and a bounce off recent lows for software valuations.

Bummed out from the last week? Here’s some bullish news for software companies by Alex Wilhelm originally published on TechCrunch