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Startups Weekly: A Silicon Valley for everyone

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Many in the tech industry saw the threat of the novel coronavirus early and reacted correctly. Fewer have seemed prepared for its aftereffects, like the outflow of talented employees from very pricey office real estate in expensive and troubled cities like San Francisco.

And few indeed have seemed prepared for the Black Lives Matter protests that have followed the death of George Floyd. This was maybe the easiest to see coming, though, given how visible the structural racism is in cities up and down the main corridors of Silicon Valley.

Today, the combination of politics, the pandemic and the protests feels almost like a market crash for the industry (except many revenues keep going up and to the right). Most every company is now fundamentally reconsidering where it will be located and who it will be hiring — no matter how well it is doing otherwise.

Some, like Google and Thumbtack, have been caught in the awkward position of scaling back diversity efforts as part of pandemic cuts right before making statements in support of the protesters, as Megan Rose Dickey covered on TechCrunch this week. But it is also the pandemic helping to create the focus, as Arlan Hamilton of Backstage Capital tells her:

It is like the world and the country has a front-row seat to what Black people have to witness, take in, and feel all the time. And it was before they were seeing some of it, but they were seeing it kind of protected by us. We were kind of shielding them from some of it… It’s like a VR headset that the country is forced to be in because of COVID. It’s just in their face.

This also putting new scrutiny on how tech is used in policing today. It is renewing questions around who gets to be a VC and who gets funding right when the industry is under new pressure to deliver. It is highlighting solutions that companies can make internally, like this list from BLCK VC on Extra Crunch.

As with police reforms currently in the national debate, some of the most promising solutions are local. Property tax reform, pro-housing activism and sustainable funding for homelessness services are direct ways for the tech industry to address the long history of discrimination where the modern tech industry began, Catherine Bracy of TechEquity writes for TechCrunch. These changes are also what many think would make the Bay Area a more livable place for everyone, including any startup and any tech employee at any tech company (see: How Burrowing Owls Lead To Vomiting Anarchists).

Something to think about as we move on to our next topic — the ongoing wave of tech departures from SF.

Where will VCs follow founders to now?

In this week’s staff survey, we revisit the remote-first dislocation of the tech industry’s core hubs. Danny Crichton observes some of the places that VCs have been leaving town for, and thinks it means bigger changes are underway:

“Are VCs leaving San Francisco? Based on everything I have heard: yes. They are leaving for Napa, leaving for Tahoe, and otherwise heading out to wherever gorgeous outdoor beauty exists in California. That bodes ill for San Francisco’s (and really, South Park’s) future as the oasis of VC.

But the centripetal forces are strong. VCs will congregate again somewhere else, because they continue to have that same need for market intelligence that they have always had. The new, new place might not be San Francisco, but I would be shocked just given the human migration pattern underway that it isn’t in some outlying part of the Bay Area.

And then he says this:

As for VCs — if the new central node is a bar in Napa and that’s the new “place to be” — that could be relatively more permanent. Yet ultimately, VCs follow the founders even if it takes time for them to recognize the new balance of power. It took years for most VCs to recognize that founders didn’t want to work in South Bay, but now nearly every venture firm of note has an office in San Francisco. Where the founders go, the VCs will follow. If that continues to be SF, its future as a startup hub will continue after a brief hiatus.

It’s true that another outlying farming community in the region once became a startup hub, but that one had a major research university next door, and at the time a lot of cheap housing if you were allowed access to it. But Napa cannot be the next Palo Alto because it is fully formed today as a glorified retirement community, Danny.

I’m already on the record for saying that college towns in general are going to become more prominent in the tech world, between ongoing funding for innovative tech work and ongoing desirability for anyone moving from the big cities. But I’m going to add a side bet that cities will come back into fashion with the sorts of startup founders that VCs would like to back. As Exhibit A, I’d like to present Jack Dorsey, who started a courier dispatch in Oakland in 2000, and studied fashion and massage therapy during the aftermath of the dot-com bubble. His success with Twitter a few years later in San Francisco inspired many founders to move as well.

Creative people like him are drawn to the big, creative environments that cities can offer, regardless of what the business establishment thinks. If the public and private sectors can learn from the many mistakes of recent decades (see last item) who knows, maybe we’ll see a more equal and resilient sort of boom emerge in tech’s current core.

Insurance provider Lemonade files for IPO with that refreshing common-stock flavor

There are probably some amazing puns to be made here but it has been a long week, and the numbers speak for themselves. Lemonade sells insurance to renters and homeowners online, and managed to reach a private valuation of $3.5 billion before filing to go public on Monday — with the common stockholders still comprising the majority of the cap table.

Danny crunched the numbers from the S-1 on Extra Crunch to generate the table, included, that illustrates this rather unusual breakdown. Usually, as you almost certainly know already, the investors own well over half by the time of a good liquidity event. “So what was the magic with Lemonade?” he ponders. “One piece of the puzzle is that company founder Daniel Schreiber was a multi-time operator, having previously built Powermat Technologies as the company’s president. The other piece is that Lemonade is built in the insurance market, which can be carefully modeled financially and gives investors a rare repeatable business model to evaluate.”

(Photo by Paul Hennessy/NurPhoto via Getty Images)

Adapting enterprise product roadmaps to the pandemic

Our investor surveys for Extra Crunch this week covered the space industry’s startup opportunities, and looked at how enterprise investors are assessing the impact of the pandemic. Here’s Theresia Gouw of Acrew Capital, explaining how two of their portfolio companies have refocused in recent months:

A common theme we found when joining our founders for these strategy sessions was that many pulled forward and prioritized mid- to long-term projects where the product features might better fit the needs of their customers during these times. One such example in our portfolio is Petabyte’s (whose product is called Rhapsody) accelerated development of its software capabilities that enable veterinarians to provide telehealth services. Rhapsody has also incorporated key features that enable a contactless experience when telehealth isn’t sufficient. These include functionality that enables customers to check-in (virtual waiting room), sign documents, and make payments from the comfort and safety of their car when bringing their pet (the patient!) to the vet for an in-person check-up.

Another such example would be PredictHQ, which provides demand intelligence to enterprises in travel, hospitality, logistics, CPG, and retail, all sectors who saw significant change (either positive or negative) in the demand for their products and services. PredictHQ has the most robust global dataset on real-world events. Pandemics and all the ensuing restrictions and, then, loosening of restrictions fall within the category of real-world events. The company, which also has multiple global offices, was able to incorporate the dynamic COVID government responses on a hyperlocal basis, by geography, and equip its customers (e.g., Domino’s, Qantas, and First Data) with up to date insights that would help with demand planning and forecasting as well as understanding staffing needs.

Around TechCrunch

Extra Crunch Live: Join Superhuman CEO Rahul Vohra for a live Q&A on June 16 at 2pm EDT/11 AM PDT
Join us for a live Q&A with Plaid CEO Zach Perret June 18 at 10 a.m. PDT/1 p.m. EDT
Two weeks left to save on TC Early Stage passes
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Stand out from the crowd: Apply to TC Top Picks at Disrupt 2020

Across the Week

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Zoom admits to shutting down activist accounts at the request of the Chinese government

Extra Crunch

TechCrunch’s top 10 picks from Techstars’ May virtual demo days
Software’s meteoric rise: Have VCs gone too far?
Recession-proof your software engineering career
The complicated calculus of taking Facebook’s venture money
The pace of startup layoffs may be slowing down

#EquityPod

From Alex:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

After a pretty busy week on the show we’re here with our regular Friday episode, which means lots of venture rounds and new venture capital funds to dig into. Thankfully we had our full contingent on hand: Danny “Well, you see” CrichtonNatasha “Talk to me post-pandemic” MascarenhasAlex “Very shouty” Wilhelm and, behind the scenes, Chris “The Dad” Gates.

Make sure to check out our IPO-focused Equity Shot from earlier this week if you haven’t yet, and let’s get into today’s topics:

  • Instacart raises $225 million. This round, not unexpected, values the on-demand grocery delivery startup at $13.7 billion — a huge sum, and one that should make it harder for the well-known company to sell itself to anyone but the public markets. Regardless, COVID-19 gave this company a huge updraft, and it capitalized on it.
  • Pando raises $8.5 million. We often cover rounds on Equity that are a little obvious. SaaS, that sort of thing. Pando is not that. Instead, it’s a company that wants to let small groups of individual pool their upside and allow for more equal outcomes in an economy that rewards outsized success.
  • Ethena raises $2 million. Anti-harassment software is about as much fun as the dentist today, but perhaps that doesn’t have to be the case. Natasha talked us through the company, and its pricing. I’m pretty bullish on Ethena, frankly. Homebrew, Village Global and GSV took part in the financing event.
  • Vendr raises $4 millionVendr wants to help companies cut their SaaS bills, through its own SaaS-esque product. I tried to explain this, but may have butchered it a bit. It’s cool, I promise.
  • Facebook is getting into the CVC game. This should not be a surprise, but we were also not sure who was going to want Facebook money.
  • And, finally, Collab Capital is raising a $50 million fund to invest in Black founders. Per our reporting, the company is on track to close on $10 million in August. How fast the fund can close its full target is something we’re going to keep an eye on, considering it might get a lot harder a lot sooner. 

And that is that; thanks for lending us your ears.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Source: https://techcrunch.com/2020/06/13/startups-weekly-a-silicon-valley-for-everyone/

CNBC

Tide is making the first laundry detergent for space

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Astronauts don’t have the luxury of tossing clothes in the hamper after a single use — without laundry equipment, they’re often left wearing items multiple times. Tide thinks it can come to the rescue, though. The Procter & Gamble brand has teamed with NASA to develop the first laundry detergent meant for space. The fully degradable detergent should take care of stains and odors while working properly in a closed-loop water system like the one you’d find aboard the International Space Station.

It won’t take long before you see a rea world (or rather, real off-world) trial run. NASA will test Tide’s detergent aboard the ISS in 2022. “Mission PGTide,” as it’s called, will gauge ingredient stability in space as well as the effectiveness of the stain removal ingredients using Tide’s pens and wipes.

Other studies will explore the possibility of a washer-dryer combo that could be use for long-term Moon and Mars missions.

The advantages for space are fairly self-evident. Those lunar and martian explorers won’t have any choice but to clean their clothes — this detergent could make that possible without subtracting from their precious water supply. It could also save weight and space aboard both the ISS and cargo capsules, as NASA wouldn’t need to send so many clothes into orbit.

 This could also be helpful for laundry back on Earth, for that matter. A fully degradable detergent would be more environmentally friendly, reducing waste and conserving water. Don’t be surprised if you eventually buy detergent that’s kind to the planet precisely because it’s designed to be used off-planet.

All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.

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Source: https://www.engadget.com/tide-laundry-detergent-for-space-151235606.html?src=rss_b2c

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EdTech

Merlyn Mind emerges from stealth with $29M and a hardware and software solution to help teachers with tech

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We’ve chronicled, in great detail, the many layers of technology, services and solutions, that have been wrapped around the world of education in recent years — and especially in the last year, which became a high watermark for digital learning tools because of Covid-19. Today, a startup called Merlyn Mind is coming out of stealth with a proposition that it believes helps tie a lot of this together in the K-12 classroom — a “digital assistant” that comes in the form of a piece of custom hardware and software to “read” natural voice and remote control commands from a teacher to control multimedia apps on a screen of choice. Along with this, Merlyn Mind is announcing $29 million in initial funding to build out its vision.

The funding is being led by specialist edtech investor Learn Capital, with other unnamed investors participating. It comes after Merlyn Mind spent about three years quietly building its first release and more recently piloting the service in 50+ classrooms in more than 20 schools.

Co-founded by longtime IBM scientists Satya Nitta (the CEO), Ravi Kokku, and Sharad Sundararajan — all of whom spent several years leading education efforts in IBM’s Watson AI research division — Merlyn Mind is coming to the market with a patented, vertically integrated solution to solve what Nitta told me in an interview he believes and has seen first-hand to be a fundamental pain point in the world of edtech.

In effect, education and technology may have now been merged into a single term as far as the tech world is concerned, but in terms of practical, on-the-ground application, many teachers are not making the most of the tools they have in the classroom. The majority are, he believes, facing “cognitive overload” (which is not to mention the kids, who themselves probably are facing the same: a problem for it to tackle down the road, I hope), and they need help.

To be fair, this problem existed before the pandemic, with research from McKinsey & Co. published in 2020 (and gathered earlier) finding that teachers were already spending more than half of their time on administrative tasks, not teaching or thinking about how and what to teach or what help specific students might need. Other research from Learn Platform found that teachers potentially have as many as 900 different applications that they can use in a classroom (in practice, Nitta told me a teacher will typically use between 20 and 30 applications, sites and tech services in a day, although even that is a huge amount).

Post-Covid-19, there are other kinds of new complications to grapple with on top of all that. Not only are many educators now playing catch-up because of the months spent learning at home (it’s been widely documented that in many cases, students have fallen behind), but overall, education is coming away from our year+ of remote learning with a much stronger mandate to use more tech from now on, not less.

The help that Merlyn Mind is proposing comes in the form of what the startup describes as an “AI hub.” This includes a personal assistant called Symphony Classroom, a kind of Alexa-style voice interface tailored to the educational environment and built on a fork of Android; a smart speaker that looks a bit like a soundbar; and a consumer-style remote that can be used also for navigation and commands.

These then work with whatever screen the teacher opts to use, whether it is a TV, or an interactive whiteboard, or something else; along with any other connected devices that are used in the classroom, to open and navigate through different apps, including various Google apps, NearPod, Newsela, and so on. (That could potentially also include kids’ individual screens if they are being used.)

The idea is that if a teacher is in the middle of a lesson on a specific topic and a question comes up that can best be answered by illustrating a concept through another app, a teacher can trigger the system to navigate to a new screen to find that information and instantly show it to the students. The system can also be used to find a teacher’s own materials on file. The demo I saw worked well enough, although I would love to see how an ordinary teacher — the kind they’re hoping will use this — would fare.

Everyone knows the expression “hardware is hard,” so it’s interesting to see Merlyn addressing its problem with a hardware-forward approach.

Nitta was very ready with his defense for this one:

“I’ll tell you why we built our own hardware,” he told me. “There’s a bunch of AI processing that’s happening on the device, for various reasons, including latency and security. So it’s kind of an edge AI appliance. And the second thing is the microphones. They are designed for the classroom environment, and we wanted to have complete control over the tooling of these microphones for the processing, for the environment, and that is very hard to do. If you are taking a third-party microphone array off the shelf, it’s impossible, actually, you simply cannot.”

The startup’s early team is rounded out with alums from the likes of HP Education, Amazon, Google, Facebook, Broadcom and Roku to help build all of this, knowing the challenges they were tackling, but also the payoff once it would be finished if it all works.

“We have a very, very talented team, and we basically said, right, this is going to be a lot of hard work that will take us three and a half years. We have to build our own piece of hardware… and we ended up building the entire voice stack from from scratch ourselves, too,” Nitta continued. “It means we have end to end control of everything from the hardware all the way to the language models.”

He did point out though that over time, there will be some elements that will be usable without all the hardware, in particular when a teacher may suddenly have to teach outside the classroom again in a remote learning environment.

It’s a very ambitious concept, but where would education and learning be if not for taking leaps once in a while? That’s where investors stand on the startup, too.

“Just as we saw with the breakthrough edtech company Coursera which reached IPO this year and was started a decade ago by two machine learning professors, in today’s hypercompetitive market the best edtech companies need to start with an advanced technological core,” said Rob Hutter, founder and managing partner of Learn Capital. “Merlyn is one of the first companies to focus on the enhancement of live teaching in classrooms, and it is developing a solution that is so intuitive it allows teachers to leverage technology with mastery while using minimal effort.  This is a very promising platform.”

The proof will be in how it gets adopted when it finally launches commercially later this year, with pricing to be announced later.

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Source: https://techcrunch.com/2021/06/22/merlyn-mind-emerges-from-stealth-with-29m-and-a-hardware-and-software-solution-to-help-teachers-with-tech/

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CNBC

Several Anker charging gizmos hit record low prices for Prime Day

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All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.

A slew of Anker charging gadgets are on sale for Prime Day, with several products dropping to the lowest prices we’ve seen for them to date. Take the Anker 63W 4 Port PIQ 3.0 & GaN Fast Charger Adapter, for example. It’s a slim charging hub with two USB-A ports and a pair of USB-C ports, allowing you to juice up four devices at once. One of the USB-C ports supports fast charging at up to 45W and the other at up to 18W. The adapter is currently on sale for $39, down $22 from the standard price of $61.

Buy Anker 63W 4 Port Fast Charger Adapter at Amazon – $39

Several powerbanks are on sale as well. The PowerCore III 10K Wireless has a 10,000mAh capacity, as the name suggests. The Qi-certified product can charge devices wirelessly at up to 10W, or up to 18W through the USB-A and USB-C ports. It’s currently $32, down from $50.

Buy Anker PowerCore III 10K Wireless at Amazon – $32

If you’re looking for a powerbank with slightly faster charging and a larger capacity, consider the PowerCore Essential 20000, which can provide up to five full battery charges to an iPhone 12, according to Anker. It has a 20W USB-C port, and it’s currently down from $50 to $35.

Buy Anker PowerCore Essential 20000 at Amazon – $35

Elsewhere, you can save on the Anker PowerCore 26800 Portable Charger, which usually costs $65, but is $40 for Prime Day. The external battery can juice up most phones at least six times on a single charge, Anker claims. It doesn’t have a USB-C port, but you can charge up to three devices at the same time through USB-A connections.

Buy Anker PowerCore 26800 at Amazon – $40

There’s a smaller discount on the PowerCore 10000, a compact 10000mAh powerbank. It’s down from $20 to $17. Anker has other products on sale for Prime Day, including headphones, earbuds and cables. You can check out all of the deals on the company’s Amazon storefront.

Buy Anker PowerCore 10000 at Amazon – $17

Get the latest Amazon Prime Day offers by visiting our deals homepage and following @EngadgetDeals on Twitter.

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Source: https://www.engadget.com/amazon-prime-day-anker-charging-hub-powerbank-sale-143926180.html?src=rss_b2c

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SaaS

How much to pay yourself as a SaaS founder

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“If you’re the founder of a seed-stage [company and] you’re worried about your electricity staying on this month, then your salary is too low. If you’re saving $10,000/mo, then your salary is probably higher than necessary,” investor Leo Polovets wrote in a Twitter thread.

Ultimately, a good test is to ask how you’ll feel if your startup fails: Will you wonder if your salary contributed to its fall? Or will you regret sacrificing more than you can recover?

This tweet is just one of many in a now burgeoning conversation about how founder pay needs to change. The startup and investor communities are beginning to realize that many founders can’t go without pay for months.

Founders of SaaS startups are at an advantage in this scenario as the sector now has many companies generating revenue almost from day one, sometimes without needing to raise any funding at all.

However, the success still doesn’t tell founders how much to pay themselves, or what others are doing. To help with this, we’ve gathered insights from founders and VCs and narrowed down the most important factors and benchmarks to guide your decision.

A framework for compensation

Founder compensation is often referred to as a “founder salary,” but anchoring the conversation around the salary framework can create the wrong expectation. For example, you could try to establish a correlation between what you plan to pay yourself and your past or current value on the job market. Instead, the data we gathered indicates that founders typically take a pay cut from their previous salaries.

Chris Sosnowski is an interesting example: Before he “took the plunge” at the beginning of 2020 to work full time on his water data management startup Waterly, he used to earn “well over” $100,000. But he says his previous salary wasn’t a key factor when he set his compensation. “I decided to pay myself based on what I thought it would take to keep the company running,” he wrote to TechCrunch.

That brings to mind deferred compensation, which will be familiar to anyone who owns equity. Having put his own money into the company and owning the majority of it, Sosnowski is set to be compensated for his efforts if all goes well. “For the record, I do hope to pay myself back [a] salary for the year or so [it is] reduced like this,” he said.

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Source: https://techcrunch.com/2021/06/22/how-much-to-pay-yourself-as-a-saas-founder/

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