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The failure of a startup is easy to argue as a kind of martyrdom for progress, especially if the founders are starting off loosely and trying to save the world. But the heroic narrative thickens when the startup’s failure involves the biggest names in entertainment, dubious product decisions and more than $ 1 billion in losses in an already highly competitive consumer tech subcategory.
I was about to omit any mention of Quibi because, like me, you have already heard more than enough. But this week, his closure announcement turned into a Twitter debate about the nature of a startup’s failure and whether he was still the right person. Many in the startup world said it was still good, basically because more ambitious startup efforts lead to progress. Danny Crichton, in turn, argues that the negativity was fully justified in this case.
Let’s be honest: most startups fail. Most of the ideas are wrong. Most entrepreneurs will never make it. This does not mean that no one should build a startup or pursue their passions and dreams. When success happens, we like to talk about it, report it, and try to explain why it happens, because ultimately, more business success is good for everyone and helps drive progress in our world.
But also be clear that there are bad ideas, and then there are blatantly bad ideas with billions in funding from smart people who should otherwise know better. Quibi was not the spark of the proverbial dropout from college with a passion for entertainment trying to invent a new cell phone format with ramen money from friends and family. Quibi was led by two of the most powerful and influential female executives in the United States today, who raised more funds for their project than other founders gathered collectively this year.
Oh. However, I think this still lacks the bigger dynamic that is happening.
Quibi was so easy to criticize that he created an opportunity to plausibly defend anyone who wants to prove they are here for startups, no matter how insane. When you stand up for Quibi, you stand up for your process and make it clear to the next generation of startups that you personally are not afraid of other people with crazy ideas and are willing to give it a try even if the result is a major disaster. Who the founders want to hire in the early days and who the investors want to bet on.
I support both sides of this massive reporting game. Analysts and journalists have provided a wide range of invaluable information on how Quibi was doing things wrong, which has no doubt been internalized by founders of all stripes. Meanwhile, Quibi advocates are no doubt targeting their incoming fans for big new deals. Still, Quibi and the debate surrounding him could improve future businesses a bit. What did we all want in the first place, right?
Root Insurance plan pricing as soon as Datto goes public
The IPO market has not closed (yet) due to election riots and so on. First, managed service provider Datto came out on Wednesday and has since seen a gradual rise, a positive outcome for the company and its private equity owner, even if third parties have not benefited from an increase in population. A few more notes from Alex Wilhelm:
Datto CEO Tim Weller told ProWellTech in a call that the company will still be well capitalized after the public offering, and said it will have a very strong cash position.
The company must have places to distribute the remaining money. In his S-1 documentation, Datto highlighted a favorable COVID-19 wind stemming from companies accelerating their digital transformation efforts. ProWellTech asked the CEO of the company if there was an international component to that story and if digital transformation efforts are accelerating globally and not just domestically. Auspicious for startups outside the United States, the executive said.
Next to the market, Root Insurance released the stock price set this week, bringing the target to a valuation of more than $ 6 billion. It is definitely on its way to becoming Ohio’s largest tech IPO to date. Here’s Alex again, with a comparison to Lemonade, another insurance technology provider that recently made an initial public offering for Extra Crunch:
[I]It seems that Root at around $ 6 billion is cheap compared to current lemonade prices. So if you want to anticipate that Root increases its IPO price range to bring you closer to the multiples that Lemonade enjoys, feel free because you are probably not wrong. We are saying that Root Double your rating to match Lemonade’s current metrics? No. But close the gap a bit? Of course.
For insurtech startups, including Root Current the price is strong. Remember that Root was worth $ 3.65 billion last August alone. At $ 6.34 billion, the company has appreciated tremendously in the last year alone and changed. A small price change could raise Root’s valuation margin to a 100% jackpot quite easily.
So for MetroMile and ClearCover and the rest of the related players, enjoy these good times while they last …
AR / VR is coming (earlier than expected)
A year ago, the market seemed quite young. But now, the pandemic has clarified to the world the value of virtual and augmented reality. Lucas Matney, who has been discussing the issue here for years, just conducted a survey of the top seven space investors. While they mostly keep seeing the vertical a bit earlier, they see it quickly become relevant. Here’s a key answer, from Brianne Kimmel of Work Life Ventures, about Extra Crunch:
Most of the investors I speak to seem to be long-term bullish on AR, but are now reluctant to invest in a startup explicitly focused on AR. What do you want to see before performing here?
I think it all comes down to a single vision and competitive advantage when it comes to distribution. And so I’ll wear these new [Zoom] app as an example, I think they are a great example where there are some aspects of roles and some highly specialized skills where teaching, educating and doing your daily work in Zoom is really not enough. I anticipate that AR applications will become an integral part of certain types of work. I also think that now that a lot of the bigger platforms like Zoom are more open, people will start to build on the platforms and there will be specific AR use cases that can help industries where, you know, a traditional video conferencing experience won’t. it is. . cuts it off completely.
Zurich’s startup scene is loaded with talent
In other survey news, Mike Butcher continues his (sadly virtual) journey through European startup hubs for EC, this week checking out investors in Zurich, Switzerland. Here is a clear explanation of the deep technical expertise of the city and the country, from Michael Blank to invest:
What industries in your city and region appear to be well positioned to prosper, or not, in the long term? What companies are you excited about (your portfolio or not), what founders?
Switzerland has always been at the forefront of technological innovation in areas such as precision engineering or life sciences. We strongly believe that Switzerland will also prosper in those areas in the long term. Thinking, for example, of additive manufacturing startups like 9T Labs or Scrona, drone companies like Verity or Wingtra or healthcare technology startups like Aktiia or Versantis.
Investors from Brussels, Mike is coming to you. You can reach it here.
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Hello and welcome back to Equity, ProWellTech’s venture capital podcast (now on Twitter!), Where we break down the numbers behind the titles.
Myself, with Danny is Natasha, he had a lot to do and more to say than expected. Big thanks to Chris for downsizing the show.
Now what have we come to? Apart from a bit of everything, we have analyzed:
- Quibi’s downfall and who lost money in the mix. ProWellTech has a bit more on the video service downfall here.
- Netflix’s quarter and why its shares lost ground after its report. The Quibi-Netflix stories show that the online video marketplace is not easy to navigate.
- If Netflix stumbled, Snap came up with stronger growth than expected. The company still loses a lot of money, but it is approaching reasonable results and has a lot of money.
- We then turned to a few media startups who raised, including $ 4 million for Stir and $ 2.5 million for Quake. Rock the podcast company, watch out, not the excellent FPS.
- Then there were a handful of case rounds, including the very clean Abodu and the controversial RVshare, which split us in three on whether or not it would work.
- We then got some great reports from Natasha to discuss, including her article on hacker startups and her report on a new class of female-centric accelerators.
Phew! It was a lot of fun, but also a lot of fun. Look for clips on YouTube if you want, and we’ll talk to all of you next Monday.