Which startup sectors are most affected by coronavirus? Roger Lee is maintaining <a href="http://layoffs.fyi/tracker/">Layoffs.fyi</a>, which is a table of all the startups who have unfortunately cut staff. On the brighter side, it is a resource for startups looking to hire as they grow.
Over the weekend, I analyzed Roger’s data to answer this question. First, let’s look at layoffs by day.
Before March 23, there wasn’t a meaningful volume. But starting that week, startups began reducing headcount by about 700 per day. On March 23, many states and countries started implementing lockdowns. Friday spike to more than 1800. The following week saw similar patterns with the most volume on Thursday and Friday. However, there doesn’t yet seem to be a daily or weekly increase in the data.
If we tally the reductions by category, travel, retail, fitness, real estate, transportation, and recruiting constitute the top 6 categories. Aside from Continue reading "The Startup Sectors Most Impacted by the Coronavirus"
With all the breaking news every hour, I found myself looking for a longer-term perspective on the world. I read a book that fit the bill: <a href="https://www.amazon.com/dp/B07RB1HMRM/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1">Peter Zeihan’s Disunited Nations</a> is a political economy book, a sort of Guns, Germs, and Steel for the future. I wish my economics classes had been taught in Zeihan’s style.
Zeihan structures the book as a series of scorecards for the major countries of the world. These scorecards discuss four main pillars of healthy economies and governments.
He starts with an explanation of the importance of transport to trade. A country’s manufacturers benefit from low-cost transport. It’s a long-term competitive advantage to ship goods by water than overland.
Second, he discusses the demographics of the major nations in the world. Countries with younger populations are significantly better off because these young workers earn salaries to support geriatrics’ benefits.
Third, natural resources are essential for Continue reading "The Next 30 Years of Geopolitics – What Could They Look Like"
Venture rounds are closing. We’ve seen seeds, As, Bs, and growth rounds in the past few weeks. And round announcements continue. Valuations are coming down a bit, but they are all over the map. It’s too early to draw any conclusions about pacing, however.
In fundraising conversations, founders are candid. Founders share the growth story of the business before the onset of the virus, and few of them have the visibility to project end of year performance. Some founders in market today are running dual track processes, choosing between raising capital and pushing toward profitability within a certain time frame. When asked about the decision criteria for selecting a venture partner, one founder replied with a single phrase: speed to close.
Many founders are wondering about the SBA programs and are looking for clarity on the rules. There are several programs including unemployment benefits for Continue reading "Observations about Silicon Valley Two Weeks into Quarantine"
I was reading an article in the <a href="https://www.nytimes.com/2020/03/26/business/coronavirus-internet-traffic-speed.html">NY Times about how we’re all using much more internet than we have been</a>. Consequently, YouTube is throttling video quality, and some of our services are slower than before. I’ve also heard anecdotally that some forms of content marketing are doing well in an era when knowledge workers sit before our laptops all day.
I wondered where I could find some interesting data about these patterns. I couldn’t find real-time data about bandwidth, but Google’s Trends product does show near up to date Google queries, which is a good proxy.
First, I started with the two behemoths of working from home software: Slack and Zoom. Stewart Butterfield tweeted about the growth of active users in the last few weeks, from 10m to 12.5m. Take a look at the differences in search queries between Zoom and Slack. Zoom is basically vertical.
In 2015, we partnered with two young founders to build Dremio. Tomer Shiran and Jacques Nadeau had just left MapR, and they came to work from our offices in Menlo Park. We shared a vision for a new way of working with data. Today, the company is announcing a $70M Series C to help them along that journey.
More data is being stored in data lakes like Amazon S3 and Azure Data Lake Storage. At the same time, the BI landscape has blossomed. Analysts and product managers and sales operations teams deploy Tableau, Power BI, Looker, Superset, and many other tools to parse their data. There needs to be a layer between them to make all that data accessible to these users - a data lake engine. That’s Dremio.
If you keep data in cloud data lake stores, and need a system to make that data accessible to analysis tools Continue reading "Data Lake Engines – The Essential Layer of the Next Generation Data Architecture"
I read an op-ed in Bloomberg last week written by a stock trader who was on the floor of the New York Stock Exchange during the 1989 crash. His manager brought him into his office. The trader feared his manager would fire him. Instead, his manager told him that these kinds of crises accelerate change and that he should embrace them. I’m struggling to find the link now, but if I do, I will update this blog post with it.
Since then, I’ve been asking myself, what changes will this crisis accelerate? Obviously, telecommuting/videoconferencing adoption will have accelerated. As many of us learn how to manage our days and our businesses exclusively through video, it will be more natural in the future to do so even when we can meet in person.
In a related vein, my partner Alex suggested to me that telemedicine will become normalized. For those with Continue reading "What Will this Crisis Accelerate in Your Ecosystem?"
I wrote <a href="https://tomtunguz.com/estimating-impact-to-growth-coronavirus/">earlier this week</a> about estimating the impact to growth rates during this challenging time. Speaking with startups, I’ve collected a list of disciplines that are going to become very important in the next period.
As we readjust to the impacts of the coronavirus, I’ve been asking myself: what is a basic useful model for estimating the growth impact to a software company? Of course, every business should develop a more conservative model, focused primarily on cash management to provide a longer runway. I expect the venture market to slow round counts for a quarter, but then resume. As growth rates fall, valuations should move similarly. My hunch originates from <a href="https://tomtunguz.com/analogy-coronavirus-2008-crash/">this analysis of the 2008 crisis</a>. But it’s too early to say for sure.
What could happen to the fundraising market in the coronavirus era where organizers cancel events, the financial markets suffer from a bear market, and there is a lot of uncertainty? The most recent event to use as an analogy is the 2008 financial crisis. In 2008, I had just joined the venture industry, and then Lehman fell. So this was a bit of a trip down memory lane. Let’s look at the data.
In 2006, VCs invested about $3.5B per quarter in seed, A, B, and C rounds. That grew to about $5B per quarter in 2007 and early 2008. Then the investing velocity fell by half to $2.9B, $2.7B, and $2.3B in the quarters following the crash. The market bounced back to similar levels once in Q2 2010, but needed eight quarters to return to its previous volumes.
Let’s break down the trends by series.
Recently, we welcomed Lisa Lawson to SaaS Office Hours to talk about building a channel go-to-market strategy for SaaS companies. Lisa built the channel at Optimizely, which accounted for a meaningful fraction of new business. I learned quite a bit from the sessions with the five companies who attended the one-on-one sessions. Here are my notes.
Where to Start
The first place to start is to learn to sell your startup’s product well. To make a partnership successful, your startup will need to teach another sales team to sell your product. That means understanding your ideal customer profile, developing enablement materials to close those customers, and training new account executives to succeed in that effort consistently.
Different roles in a company may have different goals for channel development. The CEO may want a partnership for brand association. The sales team asks for more leads. The customer success team Continue reading "Notes from Office Hours with Lisa Lawson"