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Protocol Pipeline
The inside story of the venture capital and startup world by Biz Carson.

Hello and welcome to Pipeline. This week: Brandless is "back," the new @VC, and what top VCs think will be different about this year's startup class.

Some housekeeping: Pipeline will take a break next week for the holiday weekend. Just remember to wear a mask, however you're celebrating.

If you were forwarded this email, be sure to sign up here.

Overheard

  • Brandless is back! Sort of. The SoftBank-backed ecommerce site had a buzzy launch, a turbulent couple of years trading, then shuttered in February. But in June the website turned back on and is now selling bundles of Brandless products shipped in carry-on suitcases as it teases a relaunch. Turns out, Utah-based Clarke Capital Partners bought the assets, along with a digital marketing company called Ikonifi (an SEO firm is also riding the coattails of the relaunch).
  • "Canada is awesome. Give it a try." The tech industry is none too happy with President Trump after he signed an executive order banning new visas, but Shopify's Tobi Lutke issued an invitation to join him up north.
  • Now you can tweet @VC. Alpha Bridge Ventures' Jake Chapman scored the Twitter handle from a dormant account, much to the jealousy of … well, every other VC out there. Now if I can only convince Twitter's co-founder Biz Stone to give up @Biz …
  • 👁️👄👁️ If you see this, just reply, "It is what it is." The team behind it played up tech's FOMO and obsession with exclusive social apps (cough, Clubhouse, cough) to get tech twitter into a frenzy over the three emojis. Only to unveil a day later that it was just a great way to raise money for social movements.

Biz on Biz

The 'breakthrough' class of 2020

It's time to build! Or at least that's what the tech community is saying. But companies aren't built in a bubble, and the backdrop of a global pandemic, an economic downturn with massive unemployment, and a social justice movement means companies will be built differently.

  • The question is: How will the startups created today, the class of 2020, be different from the companies built before?
  • I turned to a handful of VCs, including LinkedIn co-founder and Greylock partner Reid Hoffman and Floodgate co-founding partner Ann Miura-Ko, to get some answers.

Two major themes became clear: The way startups are built is going to change, and so will the problems they choose to tackle — think more diverse and distributed teams and fewer startups that are re-creating your mom.

New startups won't fall for the routine. "Because these long-overdue issues have surfaced and cracked the outdated veneer of status quo, this breakthrough class of startups will be reevaluating long-held business values and instead lead with compassion to make a real social impact," said Forerunner Ventures' Kirsten Green.

  • As part of that, they'll embrace real talk. "These startups won't be afraid of having important and often difficult or uncomfortable conversations and will understand their ability to influence for good," Green said.

One huge change: saying goodbye to the Silicon Valley startup garage. "It will be more difficult — and more important than ever — that co-founders find ways to quickly connect and align. And when people are sheltering in place, the geographic density of talent in Silicon Valley is much less relevant," Hoffman said.

  • That means winners can come from anywhere. "The next generation's big winner could be based anywhere with sufficient access to financial capital and virtual access to technological expertise," Hoffman said.
  • That will help increase diversity — something that will already be front and center for new startups. "Founders are taking a hard look at the composition of their founding teams, their cap tables, their board rooms, and their early hires — and will be less willing to let 'diversity debt' accrue as the costs are impossible to ignore," said First Round's Phin Barnes.

You can also expect a sense of lean ruthlessness: Think about Marie Kondo, but for businesses. "Companies started this year will know what is essential and what is not," Miura-Ko said.

  • "Employees will not be bogged down by face time but will be evaluated on the quality of their work and measured by the contributions they make to their company," she added. "Many of us have applied the Marie Kondo principles of decluttering our 凯发k8官网下载手机版homes to decluttering our work lives and businesses."

Founders will have to shift their fundraising strategies: Pitches will need to be less "tell me the story" and more "show me the proof," according to Barnes.

  • "Conversations around contribution margins and unit economics are starting much earlier on in a company's life," Barnes said.
  • And investment won't all be venture-backed. "Funding will come from a more diverse set of vehicles, from alternative VC funds to equity crowdfunding, to debt to newly activated diverse angels," said NextGen VP's Lolita Taub. "Underestimated founders will build the companies of the future — ones that represent the diversity of our population and produce the products and services that the mass market sorely needs."

This time has accelerated the future, whether that's adoption of telehealth or an increasing move toward cloud computing, and that is going to change markets and the way startups operate.

  • Older adults now have market power. "Not previously early adopters of telemedicine, the elderly are now developing what is likely to be a lasting habit, accelerating the industry adoption cycle by several decades," Hoffman said.
  • Startups will also buy more tech than build their own. "We expect to see developer-focused API services proliferate," Barnes said. "We're excited about this trend because it empowers new companies to focus as much as possible on their core product and creates a new category of developer-focused companies for us to partner with as investors."
And there is much more where this all came from. For more of their thoughts, read the investors' full answers.

A MESSAGE FROM PALO ALTO NETWORKS

PAN

The State of Cloud Native Security Virtual Summit

Palo Alto Networks and Accenture recently surveyed 3,000 cloud architecture, InfoSec and DevOps professionals to uncover today's security trends around moving to the cloud as well as securing cloud native architectures and methodologies. Watch this on-demand virtual summit to get exclusive results from The State of Cloud Native Security 2020 Report, plus hear from our ecosystem partners, customers and cloud native security leaders on solving critical security issues in the age of cloud native applications.

Learn more here.

_________________________________________________________________________________________

Join Protocol this Tuesday at Dyndrite's Digital Manufacturing Investor Day, a virtual pitch event featuring 12 innovative companies and an industry panel with The North Face founder Hap Klopp along with industry executives and investors. RSVP here.

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Inside Track

  • For years, PlanGrid's founder, Tracy Young, thought her startup journey was the same as any other CEO's, regardless of gender. It wasn't until she became pregnant in 2017 that she realized her experiences as a female founder was different and worth acknowledging. After selling her company, she's published a powerful reflection on being a female founder.
  • Neo founder Ali Partovi and his twin brother, Code.org's Hadi Partovi, were deported from the U.S. when they were 12 years old. His reminder that immigrants are humans.
  • For years, many successful women have thrived within the system rather than reforming it. But "the end of the girlboss is here," says and Bindercon founder Leigh Stein.
  • Boards often wait until they're about to go public to diversify — just look at Palantir's board additions this week. But that's not good enough, says Union Square Ventures' Fred Wilson, who has some ideas on how startups can do better from the beginning.

Need to Know

  • Amazon bought Zoox. The price wasn't disclosed, but The Information reported that it was for $1 billion — well below its highest valuation of $3.2 billion, but apparently its most recent investors negotiated ratchets so they would get their money back first.
  • Tech Twitter doesn't want one of its favorite blogs to go away. Slate Star Codex, was deleted after The New York Times planned to publish the 's name. Its future remains uncertain.
  • Alexis Ohanian is leaving Initialized. The Reddit cofounder is not going to be involved in the firm's new fund, Axios reports, opting to focus on pre-seed investments instead.
  • Valence united a bunch of top-tier firms. The LinkedIn-style network for Black talent launched a new funding network involving investors from Accel, Sequoia, GGV, First Round Capital, Bessemer Ventures, Greylock, Upfront Ventures and Collab Capital.
  • From Protocol: Here's who is hiring Magic Leap's how The New York Times described Salesforce ahead of its IPO in 2004 (an offering that was delayed … because of that interview with the Times). The company went public with a $1.1 billion valuation, and it's now valued at $160 billion. It wasn't a big win for traditional venture capitalists: Most had turned co-founder Marc Benioff down.
  • And your weekend reading: Those videos of the Jump bikes being destroyed were more than a story of corporate waste. To former Jump employees, it was symbolic. Motherboard has the story on how Uber turned Jump into "literal garbage."

Five Questions for …

TCV's Tina Hoang-To

What's a secret obsession of yours that most people don't know about?

I used to sell cars when I was in college, so I love going car shopping with people. It's no big surprise, but I enjoy the thrill of negotiating deals and the game theory behind all of it!

What's a pitching pet-peeve?

Saying "we don't have any competitors." It's not often that I hear it during a pitch, but when I do, it always gives me pause. If you think you don't have any competitors and that an incumbent in the space doesn't have the slightest chance to replicate what you've built, you are probably thinking too narrowly and not long term.

What's one of your new quarantine habits?

I've learned to master the art of cutting my husband's hair. With barbershops being closed, his mane was getting a bit out of hand, so I did some work with the hair clippers. Given we're still married, I didn't mess it up too badly!

What's one problem you wish an entrepreneur would solve?

I heard an idea the other day that was interesting: How can you get all your important docs in one place, and why is it not digitally stored yet? If you ask me where my Social Security card, marriage license or birth certificate is, I'd probably have to spend hours searching through boxes to locate it. There has to be a better way.

What's a startup area that's over-hyped right now? What's under-hyped?

For over-hyped, definitely the use of the word "telehealth." I swear to you every company is pitching themselves as a telehealth company right now! On the flip side, I think interest in fertility care and women's health is underrated. I hear questions around market size and investors pegging TAM to just spend on IVF, but I think the bigger question long term is if you make fertility care more affordable, how much would this market expand? How many more employers and consumers would be the addressable market?

A MESSAGE FROM PALO ALTO NETWORKS

PAN

The State of Cloud Native Security Virtual Summit

Palo Alto Networks and Accenture recently surveyed 3,000 cloud architecture, InfoSec and DevOps professionals to uncover today's security trends around moving to the cloud as well as securing cloud native architectures and methodologies. Watch this on-demand virtual summit to get exclusive results from The State of Cloud Native Security 2020 Report, plus hear from our ecosystem partners, customers and cloud native security leaders on solving critical security issues in the age of cloud native applications.

Learn more here.

Thanks for reading this week's Protocol Pipeline. If you like what you're reading, sign up here to get it in your inbox. We'll be taking a break next week for the holiday weekend. Send story tips, Pipeline feedback and your best brisket recipes that I should make on July 4 to biz@szjqgzf.com.

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