Sequoia shares wisdom with Disrupt SF Battlefield competitors and Startup Alley Top Picks

Editor’s note: James Buckhouse is design partner at Sequoia. 

Last Tuesday, the teams competing in Startup Battlefield at Disrupt SF, as well as founders chosen as Top Picks in Startup Alley, visited Sequoia Capital’s office in San Francisco for a discussion with partners Jess Lee, Roelof Botha, Mike Vernal, Alfred Lin and James Buckhouse. The following is a partial transcript of the session, which was moderated by Buckhouse.

James Buckhouse: We partner from idea to IPO and beyond, but it’s partnering at the idea stage that we love the most — that moment when anything is possible. And it’s happened throughout Sequoia’s history. YouTube incubated in our office. Dropbox was an unreleased demo. Stripe didn’t have a single line of code. Apple was just two dudes named Steve. And so our favorite place to be is in the earliest moments.

We’re not here tonight to share with you lessons of our great wisdom on how company building ought to go. We’re here tonight to say that we understand how hard it is. And the three partners that you’ve got here to talk with tonight — Roelof BothaJess Lee and Mike Vernal — are people who have actually been in the trenches building companies themselves.


James Buckhouse: Great companies like Apple, Amazon and Zoom all have this one thing in common: customer obsession. That’s an easy thing to think about when you already have a billion customers, and you already have a bunch of money. But what do you do when you’re at the pre-seed stage and you want to be customer-obsessed but you don’t even have a product yet, let alone any customers? How do you even begin?

Jess Lee: I think at the very earliest of stages, all that really matters is product market fit. A common mistake we see is that a founder is only obsessed with the product, and then goes on to think, “I have my product. Let me go find a market that works for this,” when it should actually be the other way around. You should look at the market first, and then get to know the customers in that market by doing customer research.

There’s a great book by Erika Hall where she discusses how to ask the right questions to customers in order to really understand their pain points, their motivations and their needs. That’s a hallmark of some of the best companies that we’ve seen, even at the earliest stages. They spend a lot of time talking to customers and understanding what they want. Something we at Sequoia like to recommend when we work with seed and pre-seed-stage companies is to actually take the time to write down a set of customer personas. Who are your prototypical or your archetypes of different types of customers? In the very early days, you might think, “I know the customer. I can remember this. I don’t need to write it down.” But as soon as you add one new team member, who maybe isn’t as familiar with your customer, a lot of things get lost in translation.

For my company Polyvore, which was in the women’s fashion space, I had a lot of engineers on my team who were men and didn’t understand women’s fashion very well. I would always beat my head against the wall wondering why a feature they designed didn’t quite make sense, and it’s because we did the personas exercise a little bit too late. It made me wish we’d done it earlier. Once we had three very clear personas, I started to notice everything ran more smoothly. I found, whether it was the sales team or the engineering team, people started to clearly communicate the idea of what our customer really wanted. People made better decisions at all levels. That’s why at Sequoia we always encourage even our earliest-stage companies to write their customer research down immediately, way before they think they need it.


James Buckhouse: How does an early-stage startup make sure that they’re on the right track and building the right product?

Mike Vernal: The key thing to me is actually not being data-driven; it’s much more about being hypothesis-driven. The problem is people think about product as art. But I actually think of product as being equal parts art and science. And I think the science part of it, which is really important, especially at an early stage, is being clear about what your hypotheses are, what you think is going to work, why you think it’s going to work and really sort of pressure-testing that on a logical level. And, if you are able to, actually pressure-testing it with real data.

One of Jess’s techniques, which I think is great, is the notion of fake doors. If you want to know whether something’s actually going to hum in the market, whether people are going to care about it, build a landing page for it. Build a sign-up button for it. Run a bunch of ads for it. Test a bunch of different marketing copy and see if people actually want the product. I’ve seen a bunch of companies use this to great effect.

I think that in general the mistakes people make with product is, one, being too artistic and not scientific enough about things. And then two, to Jess’s point, the most important thing before you have a product is finding product market fit. Usually, finding product market fit in a category is a function of two or three important things. Identifying those important things and testing them to get clarity around that first, then designing the full product, is way better than just starting with a masterpiece, and then slowly painting over and over the masterpiece until you get to something that is great.

James Buckhouse: For enterprise companies, Roelof, can you talk a little bit about the Sales Ready Product and Templeton compression approach?

Roelof Botha: If you go to our website and search for Sequoia Sales Ready Product or Templeton, you’ll find very useful content that we put together. The insight came from one of the best leaders that we’ve worked with, in a variety of companies, who argued to not just go for an MVP, a Minimal Viable Product, if you’re building an enterprise company, but what he termed a Sales Ready Product, an SRP.

The difference is that a Minimal Viable Product just gets over the hurdle but doesn’t convince your customer to jump out of their seats to buy your product. When we invested in Cisco in the late 1980s, the first product they shipped had so many bugs it didn’t work. But the product solved such an important need for the customer that they came back to Cisco and asked if they could fix it since they needed the product to work so badly because there was a fundamental problem in trying two networks at the time. And that to me was a Sales Ready Product. You’ve got something that, even if it’s not perfect, really solves your customer’s pain point.

And so to condense the whole theory behind this: Spend a little bit more time, probably another three months, maybe another four, five months, from when you would otherwise ship an MVP to ship an SRP. The reason it matters for an enterprise company is that your sales organization will be so much more effective. Your sales team will ramp up a curve far more steeply and you’ll get sales momentum much, much faster if you sell an SRP.


James Buckhouse: I’m going to do something a little bit unexpected here and call on Alfred in the back. Could you talk a little bit about what it was like at Airbnb, where they started with culture very early on?

Alfred Lin: Brian, Joe and Nate came and visited Zappos, where we offered tours, to see what the culture was all about (Alfred was COO of Zappos). At Zappos, we started writing down our core values a little late, when we were at about 300 people. And I told Brian, Joe and Nate that that was too late.

After that trip, they went back and wrote down their core values, before hiring their first employee. They knew that they had to create a new category. Home-sharing was not something that people really thought about. And so they needed people who were willing to champion the mission. And that was one of the first core values that they wrote down.

James Buckhouse: Oftentimes, people think that culture is the thing you do later on, once your business has grown large and suddenly you have a lot of people. But that’s not true. Culture matters a lot more than people think. And it matters earlier than people think. Jess, can you talk about your framework on core values?

Jess Lee: This is something we spend a lot of time on with seed and pre-seed companies, who think, “Oh, I already know my culture. I’ll wait to write it down later.” But it’s important to get it right up front. We encourage people to not pick too many core values. Generally, you want a framework that’s a core value and the behaviors you want that exemplify that core value. And most importantly, you need a story. You need some legendary anecdote or example from inside the company that really brings the core value to life.

To use Airbnb as an example, one of its core values is to be a cereal entrepreneur. The reason it’s cereal with a “C” is because at the time, Airbnb was running out of money. They weren’t sure they had product market fit, but they went to the Democratic National Convention to try the Airbnb idea when they were down to the wire in terms of money. In order to just get the word out about the business they made boxes of cereal that said “Obama-Os” and “Captain McCain.” It’s a good example of rolling up your sleeves and doing whatever it takes to get your business launched. Somehow, they actually managed to generate revenue that they put back into the business. The really memorable part of that is the cereal anecdote. Whatever it might be at your company, make sure that the lore lives on. That’s really what brings culture to life. It’s not just the value itself.

James Buckhouse: Roelof, can you talk a little bit about the culture at PayPal in the early days?

Roelof Botha: There are a couple of elements in that. One is this idea of intercept versus slope. For those of you that are fans of math or science, it comes naturally, but sometimes you get to hire people who have a high intercept. They have a lot of experience. In our case, we needed to hire people who knew a lot about financial services, because we as the early, young team didn’t. You hire people with intercept, but then you want people with slope. People who are going to learn very quickly. And at the end of the day, part of what made PayPal successful was that we had a good slope and we learned very, very quickly.

Our culture was very hard-working. We faced a bit of a crunch in June of 2000. We’d raised a bunch of money during the dot-com era, and then we were sitting with seven months of runway and no revenue, burning $10 million a month. It was a “you’re all-in” culture. Management meetings were on Saturdays, because that’s the kind of sacrifice we were going to make as a team to get to the other side. Culture was really important to the success of the company. We had a strong bond between us as team members because we were in the trenches. We had to figure out how to make this business work when the odds were against us and the press had given up on us.

Most people on the outside are going to think that you’re going to fail. Expect that. Don’t be surprised by that. Draw strength from that, and rally your team around your cause. You should ignore that kind of feedback.


James Buckhouse: How do you discern a strong founding team?

Roelof Botha: My favorite, especially with companies at the seed stage, is to have no slides and to have a conversation with you about your business. What I find compelling is, the more I dig, the more excited I get, because your depth of knowledge, of understanding the problem that you’re trying to solve, shows itself. There are a lot of people who start companies for the wrong reasons, and they have very superficial knowledge. So as soon as you start to pressure test it, it’s clear that there’s no depth.

The founders who are the best are the ones that are so motivated to solve the problem they’re working on, they’ve researched everything. You would have found a simpler solution to the problem if you could, and you didn’t. That inspired you to start this company. As I ask you questions, you just have this depth of knowledge. You’ve thought about it so many levels deep. Those founders are the ones that keep coming up with new ideas, and that’s why their imitators don’t do so well. We see this in our industry. You come up with a great idea, TechCrunch writes about it, everybody around the world reads about it and now you’ve got 15 competitors in other countries going after what you’re doing. But guess what? They didn’t have the idea, you did. Since you had the original idea, you’ve thought about it more deeply and you can iterate faster than they can.

James Buckhouse: Jess, how about you? What do you look for to discern a strong founding team?

Jess Lee: I do agree, and I think different investors look for very different things. There is probably a notion of founder/investor fit to some extent. For me, I especially appreciate a unique insight and depth of understanding of that customer and that market. But on top of that, the other thing I think about is grit. I think that being a founder is so hard. I felt like I was on the struggle bus the entire time. Either we weren’t doing well, which was a struggle, or we were doing really well and then we were in a state of hyper-growth, and that’s also really hard. Your job changes underneath you every six months. Because even if you’re successful, everything that used to work for you as the CEO or founder is now broken because your team is now 50 people instead of 10.

What is it driving you, to either solve this problem or just driving you in general? Because it’s just not easy, and folks who give up too easily or came into this because they thought being a founder was going to be really cool, it’s not that cool all the time, so I look for that. Sometimes it shows up in the form being really mission-driven, and you have some burning desire to solve the problem. Sometimes it’s just that you’ve been underestimated your whole life and you’re really mad about it, and you want to prove yourself. There are a lot of different ways to suss out grit, but that’s one big thing that I look for.

One thing I also like to see, that is not a must-have but I find very compelling, is if you’re a good storyteller. I think that at the end of the day you have to convince your family that you’re not crazy for quitting your job to pursue this thing. You’ve got to convince early employees to join you when you can’t pay them any money. You’ve got to convince early-stage seed investors to take a chance on you and give you money when there is nothing there yet. And you’ve got to convince customers. Being able to tell a good story, both taking something complicated and making it sound simple, as well as being able to influence and talk about why your approach is interesting and different, not just better than the competitors. I look for that as well. I think that’s important.

One area where I do disagree with Roelof is that I do prefer to see slides. I think it showcases your storytelling ability. I look at a lot of consumer companies and your attention to design and detail is also an interesting thing that you can suss out with slides.

James Buckhouse: How about you, Mike?

Mike Vernal: If you can’t describe the business in a minute or two, then you need to keep iterating. Some bad meetings end up as the following: Someone will come in with 40 slides and want to convey all of the knowledge in the 40 slides in excruciating detail.

I think a couple of things. One is, many investors look at a lot of companies all day long so they might actually know more about your space than you might think. Then two, if you need 40 minutes to explain the business, marketing and all of these other things, then for an investor meeting that might work because you have that time scheduled, but for the random engineer you meet at a party who you want to get excited about joining your company, that’s going to be really hard.

The best pitch is when I’m two minutes in and I’m like, “I get the business. This is super interesting. Let’s ask all these questions.” The tough ones are 40 minutes of being talked at, where there is no real interaction.

Capital strategies

James Buckhouse: Different types of companies need different types of capital strategies. How do you all think about how founders ought to think about their strategy for capital?

Jess Lee: It’s really important to think about three things: First, what is the actual cash you need for your business? If you’re a pure software business you don’t usually need as much as if you’re building hardware or you’re making physical goods.

Second, what is the valuation that actually makes sense? True valuation, when you become a public company, when you do M&A, is actually a function of your free cash flow, or a multiple of your revenue, so just being able to understand in the long, long-term what is a likely five, 10-year-out valuation, and then making sure you don’t overshoot that just because you can. That’s another first principle.

The third thing is ownership. Doing the math, if you don’t need to raise a lot of money, if you don’t need to raise as many rounds, at the end of the day when ideally your company is acquired for hundreds of millions of dollars, or billions of dollars, or you IPO, what is your ownership at that moment? We have founders like Dropbox, that when they went public, Drew and Arash owned nearly 40% of the company. So you have to think — would you rather have 40% of a $10 billion company, or would you rather have 2% of a $20 billion company? That ownership at the end of the day is really important. So you have to think about those three things, which is a pretty complicated equation.

It really hit home for me when my company, Polyvore, went through the M&A process and it suddenly hit me that all the acquirers were not using funny VC math. They were looking at our cash flow and the multiple of revenue. Luckily, we hadn’t raised that much money, as I’d wanted to keep as much ownership as possible. I was optimizing for ownership for the team. Because of that, we actually had a really nice outcome, where everybody made money because we hadn’t over-raised since we didn’t need to. We were a pure software-based, capital-efficient kind of company, but I think not enough founders think about that from first principles, starting from the early days. They just look at who’s raising what, and how much they could possibly get. They want to maximize that, when in reality, it’s not actually the right way to think about it.

Roelof Botha: When you raise money, you’re recruiting a partner. I see too many companies, especially seed-stage companies, make the mistake of accepting funding from whoever shows up, when that’s probably the most expensive equity you’ll ever sell in your business. You could potentially be selling it to people that are not going to be there six months or six years from now, helping you close a candidate, helping you wrestle with an important strategic decision or helping you refine your business model. Those people aren’t going to be there, so it’s a recruiting decision. Take it seriously. It’s also important to check their references. Your investor is going to do references on you. Why aren’t you doing references on them?

Ellen Pao calls out Twitter’s ‘public town square’ model as flawed

Project Include CEO Ellen Pao, who has been working to foster diversity, inclusion and ethics in the tech industry, called out Twitter’s “public square” model as flawed — and a decision that indicates a lack of ethical consideration, on Twitter’s part.

The topic of Twitter came up on a panel at TechCrunch Disrupt SF 2019 this morning, when Pao was asked her opinion as to whether Twitter should make exceptions to its platform rules for public figures — like President Trump, for example.

She said doesn’t believe that it should. And not just because the decision in and of itself raises ethical questions, but because of how these decisions can ultimately shape the direction of Twitter’s platform as a whole.

“I think it’s a question of ethics to break these exceptions — because you want to drive this growth that you want to use to fuel your stock price and to fuel recruiting, and to fuel this capitalism — that’s driving all sorts of decisions without thinking about the long-term direction of where your platform is going,” Pao explained.

She also questioned whether Twitter has been successful in creating an online version of the public town square, which is how Twitter CEO Jack Dorsey has repeatedly described the social media platform.

“Jack talks about this public square, where you have this digital version of the public square. But people aren’t screaming at you on the public square, they’re not calling you racist things, they’re not throwing pictures of like horrible things…I don’t want to be in a public square like that,” Pao said. “And I don’t want to have a public square that’s digital create these horrible events in real life,” she added.

On Twitter (or really, on social media in general) the hateful words and sentiments can often spill over into real-world action.

“I don’t think that’s an ethical decision. I don’t think that’s a values-driven decision. I don’t think that’s creating a good public square, I don’t think that’s doing a service for your users who are from the groups that are being hated on,” Pao said. “I think you really have to think about your whole community. You have to think about the types of conversations you want to have.”

She clarified that it’s not about censoring speech, but the challenges in creating a place where people can actually engage in conversations — even those in which they disagree, and even those where there may be conflict.

Twitter’s failure has been not understanding where free speech ends and moderation begins. And this is not a problem unique to its platform. All of social media is struggling with this same issue.

In Pao’s mind, it’s a question of where meaningful conversation ends and outright harassment begins.

“Using the F-word, and the C-word, and the N-word? That’s not a conversation, right? That’s not an exchange of ideas,” she said. “I don’t think people think enough about what they want their platforms to be, what they want the platforms to encourage.”

The lack of cybersecurity talent is “a national security threat,” says DHS official

One of the most senior officials tasked with protecting U.S. critical infrastructure says that the lack of security professionals in the U.S. is one of the leading threats to national cyber security.

Speaking at TechCrunch Disrupt SF, Jeannette Manfra, the assistant director for cybersecurity for the Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA), said that the agency was making training for new cybersecurity professionals a priority.

“It’s a national security risk that we don’t have the talent regardless of whether it’s in the government or the private sector,” said Manfra. “We have a massive shortage that is expected that will grow larger.”

Homeland Security is already responding, working on developing curriculum for potential developers as soon as they hit the school system. “We spend a lot of time invested in K-12 curriculum,” she said.

The agency is also looking to take a page from the the tech industry’s playbook and developing a new workforce training program that’s modeled after how recruit and retain individuals.

For Manfra, it’s important that the tech community and the government agencies tasked with protecting the nation’s critical assets work more closely together and the best way to do that is to encourage a revolving door between cybersecurity agencies and technology companies. That may raise the hackles of privacy experts and private companies given the friction between what private companies wish to protect and what governments wish were exposed — through things like backdoors — but Manfra says close collaboration is critical.

Manfra envisions that government will pay for scholarships for cybersecurity professionals who will spend three to five years in government before moving into the private sector. “It builds a community of people with shared experience [and] in security we’re all trying to do the same things,” she said.

Priorities for Homeland Security are driving down the cost of technologies so that the most vulnerable institutions like states, municipalities and townships or the private companies who are tasked with maintaining public infrastructure — who don’t have the same money to spend as the federal government — can protect themselves.

“When you think about a lot of these institutions that are the targets of nation sates… a lot of them have resources at their disposal and many of them do not,” said Manfra. “[So] how do we work with the market to build more secure solutions — particularly with industrial control systems.”

The public also has a role to play, she said. Because it’s not just the actual technological infrastructure that enemies of the U.S. are trying to target, but the overall faith in American institutions — as the Russian attempt to meddle in the 2016 election revealed.

“It’s also about building a more resilient and aware public,” said Manfra. “And adversaries have learned how they can manipulate the trust in these institutions.”

Lora DiCarlo founder says CES award snub did company ‘a pretty big favor’

CES parent the Consumer Technology Association created a public relations disaster in January when it unceremoniously revoked an award from sex tech startup, Lora DiCarlo and its product Osé.

“Vela [now Osé] does not fit into any of our existing product categories and should not have been accepted for the Innovation Awards Program,” the organization wrote at the time. “CTA has communicated this position to Lora DiCarlo. We have apologized to the company for our mistake.”

The CTA would go on to apologize and reinstate the award. During a panel today at TechCrunch Disrupt, founder and CEO Lora Haddock told the audience, that in hindsight, “I think they actually did us a pretty big favor.”

Back in May, we noted that the CTA’s apology serendipitously coincided with a $2 million funding raise for the company’s advanced sex toy. Haddock noted that, while the CTA’s initial move was understandably both “disheartening” and “devastating,” the startup’s decision to push back on historical biases, including booth babes and the underrepresentation of female speakers, ultimately became a win.

“We started to really look at some of their policies and recent procedures in the last few years,” Haddock said. “A lot of booth babes products that were on the floor are geared towards male sexuality, but apparently something geared towards a female gaze was frowned upon. So, we fought it, and eventually we ended up winning, we ended up on an international press circuit, we got a ton of ton of coverage.”

Maisie Williams’ startup Daisie is preparing for new partnerships, funding

Maisie Williams, best known as ‘Arya’ on Game of Thrones, is preparing to take her startup Daisie to the next stage. Right now, the app works to connect creators with one another to work on each others’ projects, but now Williams wants to help those projects find an audience.

On the app, creators establish a profile, similar to other social networks, but the focus is not on gaining fans and likes, but rather on helping creators find collaborators for their art — whether that’s film, music, photography, or art, or anything else.

The actress-turned-entrepreneur spoke this morning at TechCrunch Disrupt SF about the decision to make Daise less focused on traditional “popularity” metrics.

Maisie Williams DSC03141


“We didn’t want follower counts — I think that rewarding people for these typical kinds of metrics can be quite damaging, and can make you feel like just because you’re not popular then maybe you’re not talented. And that’s just not true. The thing about creative endeavors is that the things that are popular aren’t necessarily like the best things and just because something that you do isn’t liked by many people it doesn’t mean it’s not incredible.”

The startup passed 100,000 members earlier this year, and raised a seed round of $2.5 million. Now Daisie is looking to raise again, Williams said in passing, noting the startup would begin the fundraising process “soon.”

She also briefly touched on the plans to help creators take the next step in their journeys.

Maisie Williams DSC03175

“It’s actually where the company is heading right now,” said Williams. “We want to work on partnerships where our users can have like a real brief from a real client, and pitch their ideas, then get them made — and have a budget and be paid for their work which is — one of the most difficult things within the creative industry is to get paid for what you’re doing,” she said.

“At the moment we’ve got a really wonderful community that’s thriving and creating these amazing projects. But in terms of transferring that into the real world and helping people actually get jobs — these partnerships are going to be really really great for that,” she said.


No near-term IPO for Impossible Foods, CEO says

The market was receptive to meat replacement products, as the Beyond Meat public offering recently indicated. But rival meat alternative maker Impossible Foods doesn’t see an IPO on its near-term roadmap, according to its founder and CEO, Patrick Brown.

Speaking to the audience at TechCrunch Disrupt SF 2019 on Wednesday, Brown said the company has its hands full growing its business, and going public isn’t something it wants to do anytime soon.

Asked onstage how Impossible Foods will get the money to achieve its goals as a company, and if that meant an IPO was coming soon, the exec agreed that, yes, Impossible Foods does have hugely ambitious goals that require a lot of resources. But it’s not going to the public markets to acquire them, at this point.

disrupt patrick brown 0576

“We’ll have to get those resources either from investors, or from getting our profit margins to the point where we can scale at the velocity that we want to scale with the profit we make from our business,” said Brown. “It’ll be a while before we’re at that point. So we’ll definitely have to raise more money, I would say we are not looking in the near-term future toward an IPO,” he continued.

“As anyone here probably knows, there’s a lot of complications that come with that. We have our hands full, growing our business, doing our core job. And we have great investors, and we have a lot of private investors who are willing to bet on us and so forth,” Brown pointed out.

“So at this point, it’s not, it’s not something that we need, And, and we can just take our time about it, basically,” he said.

The exec also laid out some of the company’s longer-term plans for how he sees the product line growing.

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Impossible Foods chose to focus on beef as its initial product because beef production, by far, has the most destructive impact on the environment. However, the company says its future is in R&D — a team that has 120 people today, and Brown says he plans to double.

Impossible Foods had already made steak prototypes, but isn’t near scaling in that area, the CEO said. The interviewer, TechCrunch editor Johnathan Shieber, also noted he had tried some of the fried chicken products the company had in the works.

“We want to have the know-how and the technology platform to be able to make this entire gamut of products,” Brown said. Ultimately, he explained, the goal is to make the products that consumers prefer to the products that come from animals.

This will present a variety of technology, food science, chemistry, and material sciences challenges, to address factors like flavor, texture, juiciness, and more.

It may also require the company to address the health concerns some have with the meat alternatives, which tend to have higher sodium levels. (Lowering the burger’s sodium is something the company is working on in the next version, we’re told.)

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Brown also briefly touched on the nature of Impossible Foods’ existing business partnerships, such as the recent one with Burger King which sells an Impossible Whopper, as well as others like White Castle and Fatburger.

Those chains sell burgers at low price points, which raises questions about how much money Impossible Foods is making from those deals.

“I can’t give you the exact data because it’s confidential information. I mean, I would, but my CFO would kill me,” joked Brown.

“So the but I can say that basically our product is being sold in lots of mass market places — Burger King, White Castle, Fatburger — tons of these burger chains that sell their burgers at a price that’s affordable to mainstream consumers. It’s great for their business; it’s usually profitable for them. And we’re not losing money on those sales, either. So you can draw your own conclusions,” he added.

The BK deal also was non-exclusive, Brown said, which means the company could continue to work with other fast food businesses, like McDonald’s.

In fact, the CEO believes places like that will eventually come knocking on his door, not the other way around.

“We’re not trying to outperform veggie burgers, we’re trying to outperform the cow. And if we focus on that, and produce the most delicious, healthiest, affordable ground beef on the market, I don’t think we’re going to have to beg McDonald’s or anyone else to put it on their menu,” he said.




Will Smith just dropped $10K on a startup that pitched him on Disrupt’s stage

Actor and Hollywood media mogul Will Smith surprised the TechCrunch Disrupt SF 2019 audience this afternoon by announcing he would invest $10K in a startup that pitched to him on stage as part of “elevator pitch” contest, where the winner would get to take a selfie with the star. The company,, helps companies with their social media presence. However, what got Smith’s attention was their well-delivered pitch, he said.

The startups didn’t get much time to prepare, having been plucked from the Startup Alley earlier in the day.

In addition to responding well to the pitch itself, Smith also liked the concept and the business model.

“As I built out my social media team, that was the idea — I wanted to take back my storytelling,” said Smith. “I think that’s hugely important.”

“That was really the best pitch so we’re gonna rock a selfie,” Smith said, jumping up to snap a photo with the founder.

Smith’s investment strategy isn’t usually this off-the-cuff, however.

Speaking on stage at the Disrupt conference, he also offered more details on his plans for Dreamers VC, the investment firm founded with Japanese soccer star, Keisuke Honda, which was announced last year by Honda’s management firm KSK Group.

Smith noted the firm has an interest in “doing good” with its funds — pointing, in particular, to an investment in “Boring tech.” (He actually means The Boring Company, per the Dreamers VC website, where it’s listed alongside a host of others.)

He also offered a little background on how Dreamers VC came to be in the first place.

“Well, you know, I met with [Keisuke Honda]  and we just hit it off immediately. And, you know, we felt like there was a beautiful intersection between being able to create businesses, but also to stay focused on solving problems of the world,” Smith explained. Honda already had banking relationships in Japan that were looking to make their way into the U.S.

“So the relationship worked out well,” he said.

Plus, Smith adds, “I had already been investing and he had already been in investing and our values were were in alignment. We want to solve some of the world’s problems. We want to do well by doing good.”

Brex wants to replace startup bank accounts with Brex Cash

Brex, a Silicon Valley fintech darling, has lofty plans to battle big banks —and Stripe.

Code-named “Gemini,” Brex today announced a new product designed to replace and improve the functionality of traditional bank accounts. Brex Cash, as it will be known publicly, is a business cash management account integrated with the Brex Card, a corporate card for startups launched in 2018.

Brex tells us they’ve built the core banking infrastructure from scratch, allowing the company to forgo third-party processing fees and provide a much-needed tech infusion to antiquated banking systems. In partnership with Boston’s Radius Bank, Brex Cash will allow customers to send payments quickly and easily with no fees attached. Rather, Brex plans to reward its users for making or receiving payments using Brex Cash with points redeemable for cash back, travel and air miles. Customers will also receive 1.6% interest on deposits.

It’s not a bank, but in practice, it can replace a bank, says Brex co-founder and co-chief executive officer Henrique Dubugras .

“Our idea is that new businesses —the new Y Combinator companies we hope a big percent of them never open a bank account,” Dubugras tells TechCrunch.

Brex now has many similarities to a bank. What differentiates it is its lack of physical branches — it’s exclusively digital — and it’s insurance. Traditional banks are insured by the Federal Deposit Insurance Corporation (FDIC), which protects up to $250,000 per depositor. Brex Cash is backed by the Securities Investor Protection Corporation (SIPC), a nonprofit agency overseen by the U.S. Securities and Exchange Commission that insures up to $500,000 and specializes in protecting customers of brokerage firms from the loss of cash and securities.

We think we’ve won a lot of credibility. Before, who was going to give their money to a random-ass startup called Brex? -Brex co-CEO Henrique Dubugras

Additionally, Brex invests its customers’ money in a money market mutual fund of U.S. treasury bonds. “If Brex goes out of business, customers’ money will be safe,” the company writes in a press statement. “The only scenario where money could be lost is if the U.S. government defaults.”

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Brex Cash user interface

“It’s not that we are inventing this — this model exists with Fidelity,” says Dubugras. “Fidelity isn’t necessarily a bank — we are bringing that concept to businesses to give lower fees, better interest rates, better experiences and more security.”

Brex, a graduate of the winter 2017 Y Combinator cohort, has quickly become a Silicon Valley success story for the ages. The rapid adoption of its startup credit card, which doesn’t require a personal guarantee, and its ability to issue cards instantly and provide higher limits than other options on the market has attracted thousands of customers and venture capitalists. The business, led by a pair of young Brazilian repeat entrepreneurs, including Dubugras and co-CEO Pedro Franceschi, has collected more than $300 million in equity funding, including a $100 million C-2 financing that valued the company at $2.6 billion earlier this year.

“There will always be customers that are skeptical, but I think by starting out with a card, we built a lot of trust,” Dubugras said. “It was us giving them money instead of them giving us money. A few years in … We think we’ve won a lot of credibility. Before, who was going to give their money to a random-ass startup called Brex?”

In the weeks ahead of TechCrunch Disrupt San Francisco, where Dubugras announced Brex Cash on Wednesday, the CEO told TechCrunch that Brex had no immediate fundraising plans and that they were “waiting for the right time” to raise again. As for what’s next, he said the company is discussing the launch of a debit card and plans to add another 100 employees in the next year, bringing the Brex headcount to 400.

The Brex news follows the launch of Stripe Capital, a new offering from payments behemoth Stripe that will make instant loan offers to customers on its platform, and the announcement of the Stripe Corporate Card. Akin to Brex, Stripe will issue a no-fee, no interest rate credit card intended for Stripe customers. Brex and Stripe, two Y Combinator grads, will go head-to-head in a battle for customers, particularly YC grads looking for friendly financial tools.

Immediately following Stripe’s announcements, the business announced a $250 million funding at a $35 billion valuation. Brex may be following a similar playbook, announcing a major product on the heels of a large capital infusion.

Brex Cash represents a new era for the company. Though the product may be costly for Brex, it opens the business up to thousands more potential customers. Now, any startup, regardless of funding, can create a Brex account to store cash, explains Dubugras, and all companies using Brex Cash will be immediately issued a Brex corporate credit card.

“If you’re starting out, if you don’t have funding yet, you can still receive your payments using Brex,” Dubugras said. “That’s a super big deal for us.”

Brex Cash was built under product lead Ritik Malhotra, who joined the team as part of an acquisition of his startup, Elph. Brex poached the company, which was focused on blockchain infrastructure, right out of YC for an undisclosed amount. In retrospect, the deal looks much more like an acqui-hire of Malhotra, who had the digital payments infrastructure acumen necessary to complete this project.

“It’s an easy way to move money, which is the lifeblood of a business,” Malhotra tells TechCrunch of the new product.

Brex Cash is itself not a cash cow for Brex; rather, the startup makes money on purchases made on its corporate card, in which it charges the merchant, not the customer. This model is particularly beneficial when its customers are spending a lot of money, growing quickly and raising capital. In a downturn, however, this model isn’t as attractive.

Brex seems unconcerned with the possibility of an impending recession. Brex writes that even in downturns, entrepreneurs will start companies and attempt to raise money. The Brex Cash product, regardless of the economy, will help Brex better underwrite Brex Cards, as it gives them better access to a customer’s financial health.

In a battle against Stripe, Brex is at a disadvantage. At only two years old, the company may have garnered a lot of credibility in a short time but it doesn’t have the decade of experience building fintech products that Stripe has and, more importantly, it doesn’t have 10 years of customer loyalty.

Foursquare’s location-aware Pilgrim SDK gets a free tier

Ten years later, Foursquare is far past its scrappy consumer days as it builds out its B2B services, but its latest announcement is thrusting it back into the scrappy consumer business.

Onstage at TechCrunch Disrupt SF, Foursquare co-founder Dennis Crowley announced that the company is launching a free version of their Pilgrim SDK, which allows developers to push contextual notifications to their users based on their location data.

The SDK “powers most of the most interesting stuff we do as a company,” Crowley told TechCrunch, but there’s also “been a super high bar for [customers] getting involved with Pilgrim.”

The company has previously had to interface pretty directly with potential customers so adopting freemium model could open a sales pipeline for smaller customers that rely on Foursquare since birth.

Free-tier customers won’t be paying by dumping their user data onto Foursquare’s servers, the company says.  “This is about lowering the bar for just being able to play with it,” Crowley says.

The free-tier has a pretty high ceiling before things get premium, apps that utilize the SDK will have to cross 100,000 MAUs before they have to break out the credit card. Free-tier users aren’t going to get access to Foursquare Panel, which synthesizes data and trends from customers based on location data. You also lose access to integrations with CRMs and marketing automation systems.

Foursquare has seen plenty of success getting developers to utilize their Places API, which is part of Pilgrim. The company says there are 150,000 developers that have registered for the API including customers like Uber, Samsung and Twitter.

Developers will have to apply to get access, though the company says this is largely to weed out blatant would-be ToS violators from accessing the SDK.

To sign up, you’ll need to visit

“A lot of this software hasn’t existed before,” said Crowley. “We’re just entering this era of contextual computing — there’s a lot of building blocks that need to get built. We’ve built a lot of them and we’re excited to share it with as many developers as possible and see what people do with it,” he added.

Introducing the Startup Battlefield Companies at TechCrunch Disrupt SF 2019

TechCrunch is excited to announce the 20 startups competing in Startup Battlefield at TechCrunch Disrupt San Francisco 2019. Over the next three days, these elite companies will compete on tech’s biggest stage for the Disrupt Cup, the attention of global press and investors, and $100,000 in equity-free prize money.

The selection process for Startup Battlefield is extremely competitive: The startups you will see on stage are the top 2.6% of those that applied. Startup Battlefield showcases the most promising early-stage and fundamentally disruptive startups.

This year’s batch is no exception. From rapid cholera detection to developer tools, strawberry picking robots to regulatory and compliance monitoring, these startups run the gamut. Companies have made innovations in satellite launch technology, wildfire predictive modeling, financial trading, gardening hardware and even chemical synthesis for rapid medicine creation.

Over the past two months, teams have trained tirelessly with the Startup Battlefield and TechCrunch editorial teams to strengthen their business case, enhance their product framing and create a strong stage pitch. On Wednesday and Thursday, teams have six minutes to pitch in front of a panel of esteemed judges and a live audience, followed by an intensive Q&A session from expert judges. On Friday, a select number of companies will be chosen to compete for the grand prize in the final Startup Battlefield round, with a brand new set of judges.

Startup Battlefield starts today, Wednesday, October 2nd, at 12:50 pm with Startup Battlefield moderator and TechCrunch Senior Writer Anthony Ha.

To learn more about Startup Battlefield, click here. Tune in to watch the TechCrunch Disrupt live stream here.

Let’s check out the companies:


Session 1: 12:30pm – 1:55pm

Traptic, Delos, Sendmi, Render, Mutiny

Session 2: 4:20pm-5:20pm

OmniVis, Ozone.AI, Leo Aerospace, Molecule.One, *WildCard


Session 3: 1:00pm-2:05pm

Osano, Vise AI, Civic Champs, T4, OrbitFab

Session 4: 4:15pm-5:15pm

Avalow, Criam, LifeCouple, StrattyX, *WildCard


Finals begin at 1:15pm. Companies will be announced online Thursday night.

**As a part of Startup Alley, companies are eligible for the Wild Card. These are the companies selected for Wild Card and can compete in Startup Battlefield. These teams only learned of their acceptance last night.