How will the startups created in 2020 be different from startups built before?

Co-founder of LinkedIn and general partner at Greylock
The class of 2020 startups will be unique in two ways: 1) the massive shift in market readiness, and 2) nearly every founding team will be distributed.
The pandemic has set certain markets back (e.g. coworking spaces), but it has also created the conditions for other markets to take a giant leap forward. A specific example: telehealth startups. While the majority of health visits have now moved to video calls, the implications go well beyond a simple shift in delivery mechanism.
Moreover, older adults represent a large proportion of patients, and an even larger proportion of market power. Not previously early adopters of telemedicine, older adults are now developing what is likely to be a lasting habit, accelerating the industry adoption cycle by several decades. This will speed up the deployment of new technologies such as AI and machine learning to make diagnoses via smartphone imaging, or to extract information from doctor-patient interactions and improve follow-up and follow-through. And while the pandemic will eventually recede, we will see a permanent change in how we access health care.
Another impact for the class of 2020: All founding teams will be distributed. Previously, most founding teams coalesced in a specific place, but there isn't much social distancing in a garage! Teams that want to build world-changing products together will need better ways to communicate. 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. The techniques that Silicon Valley uses to scale companies, such as Blitzscaling, can be learned and practiced by anyone. The next generation's big winner could be based anywhere with sufficient access to financial capital and virtual access to technological expertise.
Co-founding partner at Floodgate
Managing partner at Forerunner Ventures
This year has exposed so many important issues, including the crisis of COVID and the deeply important and impactful work of Black Lives Matter. Because these long overdue issues have surfaced and cracked the outdated veneer of status quo, this breakthrough class of startups will be reevaluating long-held business values and instead lead with compassion to make a real social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.
These new startups are likely to be more purpose-driven with regards to their missions, business impact and cultures. The ones that capture our attention will be built around solving customer needs versus desires; they will prioritize sustainability practices and be hyper aware of their overall footprint on the planet; and importantly, they will be building diverse teams with inclusive practices. These startups won't be afraid of having important and often difficult or uncomfortable conversations and will understand their ability to influence for good.
In terms of operating, because of the pandemic, millions of workers experimented with working from home for the first time in their careers. And given that many tech companies have already mandated work-from-home until 2021 (Twitter, Google, Microsoft), many others will likely follow suit. As we continue to adapt to remote work, employees are operating within different frameworks, and companies will need to reimagine new ways to foster bonds and build strong team dynamics, especially from the top down.
In the face of unknowns and unimaginable hurdles to growing a business, flexibility and the fortitude to make swift changes will be more essential than ever for founders. Founders set expectations on growth, and it's their responsibility to build teams that can deliver on those visions, but now more than ever they have to have the adaptability to react to and ensure solid foundations for achieving considered growth and recalibrating their businesses for ever-changing environments. Resilience is the key word here.
Venture Partner at NextGen VP
We've left the pre-COVID world, where companies can easily raise millions amid major money losses and ignore human and social dynamics. New startups will be molded by the implications of COVID and the social and racial justice movement.
Startups will be remote-first to preempt health issues and avoid unnecessary real estate costs. Startups will focus on problems that affect the many and not just the elite few because of the work-life challenges that COVID has brought about (e.g., job loss, WFH). Startups will bootstrap, prioritize revenue, profit and performance more than ever. Because of the tightening of purse strings, startups will prompt side-hustling entrepreneurs looking for extra cash. This new breed of entrepreneur will create products and services (a la passion economy) and generate additional revenue streams.
From a social and racial justice movement perspective, startups with underestimated founding teams will get their moment to shine with capital coming their way from the VC and tech ecosystem that is putting their money where their mouth is (e.g. a16z's Talent x Opportunity Fund, SoftBank's Opportunity Growth Fund, Google investing $100 million in underestimated founders and funds).
Funding will come from a more diverse set of vehicles, from alternative VC funds to equity crowdfunding, to debt to newly activated diverse angels. 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.
Partner at First Round Capital
The national conversation around race and equality is creating a renewed emphasis on the importance of diversity in the startup and venture ecosystem. I'm hopeful that this much-needed and long overdue pressure — on both the startups being built and the investors tasked with backing them — will result in a more diverse class of founders than ever before.
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. As investors, we have a tremendous amount of work to do here. That work consists of 1) acknowledging and dismantling the bias within narrow "traditional" founder archetypes, 2) putting in the legwork and process changes it will take to back more founders of different backgrounds, and 3) pushing ourselves and the companies we back to build more inclusive organizations that are more representative of the country that we live in.
Whether it's fully remote or some kind of hybrid model, we're also seeing a broader shift toward both distributed workforces and distributed systems. We're noticing that companies in our community are increasingly opting to buy rather than build, and we expect to see developer focused API services proliferate. 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.
Finally, the growth-at-all-costs mentality is becoming more muted in the 2020 startups. We are seeing a shift from a "tell me the story" fundraising environment to a "show me the proof" fundraising environment. Conversations around contribution margins and unit economics are starting much earlier on in a company's life. We think businesses without a very strong economic engine will face challenges when they go to raise money this year, and the class of 2020 founders will take this into account when balancing growth vs. profitability.
Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.
Coinbase just celebrated its 10th birthday. And the crypto powerhouse marked the milestone on a defiant note, with a snarky TV ad clapping back at crypto bashers.
“Crypto is dead. Long live crypto,” said the 30-second ad which aired Friday during the NBA Western Conference finals game between the Golden State Warriors and the Dallas Mavericks.
The ad showed tweets dating back to 2012, with the authors’ names blurred out, declaring “Crypto is dead.”
At a time when crypto is reeling from a severe downturn and Coinbase is making spending cutbacks, the reactions were understandably mixed.
Michael Fasanello, chief compliance officer of LVL, called the ad “classic and minimalist, yet effective.”
“It drives home the message that just like so many other emerging technologies and emerging markets, blockchain and crypto will have their ups and downs — but they are here to stay,” he told Protocol.
Jef Loeb, creative director at Brainchild Creative, agreed it was “effective if the objective is to let the market know Coinbase isn’t heading for the life rafts quite yet.”
“It’s also effective in preaching to an increasingly small choir not to abandon the Titanic quite yet,” he told Protocol, quipping, “Hey, the sopranos and altos may have headed for the exits, but the bros in the bass [section] are hanging in.”
Coinbase recently included a warning in its regulatory filings that in a bankruptcy scenario, customers' crypto holdings were at risk. Coinbase CEO Brian Armstrong hastened to reassure customers that it wasn't actually facing bankruptcy.
Loeb noted the dramatic shift in tone in the ad from the “celebrity-driven ‘don’t miss out’ [messages] in February’s Super Bowl" from other crypto companies "to a spin on Mark Twain’s aphorism four months later” about how ““reports of crypto’s death are both frequent and exaggerated.” Coinbase's Super Bowl ad featured a floating QR code which succeeded in bringing so many people to its website that it crashed.
The choice of the Warriors game was symbolic. Former Warriors player Kevin Durant invested in Coinbase, and Coinbase and the NBA struck the league's first cryptocurrency sponsorship deal last year, in flusher times.
The crypto exchange posted disappointing results recently amid the sharp slump in crypto prices epitomized by the UST stablecoin meltdown. In a sign of growing uncertainty, Coinbase also announced that it was freezing hiring and cutting back on other spending a week after declaring that it was pushing forward with expansion plans.
The crypto market has shed roughly $1 trillion in value the past month, while Coinbase shares have tanked more than 50%.
Google is allowing some Android apps to use their own payment systems after getting into battles with both Match Group and Epic Games' Bandcamp, but the move might be temporary. The company is facing legal action for requiring apps in the Google Play Store to use its billing, and the interim solution Google came up with is to let those apps use their own payments — with a catch.
Match Group withdrew its temporary restraining order against Google on Friday, according to TechCrunch, which it had filed amid its antitrust lawsuit against the company. Match eked out some “concessions” from Google, including making sure its apps would not be ousted from the Play Store for using alternative payment options, TechCrunch reported. Rather than pay Google, Match is putting aside $40 million in an escrow account, maintaining that the fees are illegal and awaiting a judge's ruling.
The lawsuit, which alleges that Google has "illegally monopolized" the app market for Android with its Play Store policy, is still ongoing. Google's Play Store policy requires app developers use the company's billing system, then takes a cut of the revenue. In the original complaint, Match claimed Google holding it "hostage,” while Google responded that it charges for services "like any business," and that its commission is the "lowest rate among major app platforms."
“We plan to rebut Match’s unfounded complaint and will be counter-suing for damages and breach of our developer contract," a Google spokesperson told Protocol. "Match has agreed to put up to $40 million in escrow as a reserve against damages and to work to integrate Google Play’s billing system.”
Google also settled its differences with Epic Games on Friday, and won't kick Epic subsidiary Bandcamp off of Google Play Store for using its own payment system, Music Business Worldwide reported. Under the agreement, Bandcamp will also start an escrow account for Google's fees, setting aside 10% of its revenue generated from digital sales until Epic’s case against Google is resolved, the company said in a blog post.
Epic acquired online music platform Bandcamp, which has used its own billing system on Android since 2015, in March. Bandcamp was threatened with being booted from the Google Play Store if it didn't begin using Google's proprietary billing system by June 1. Bandcamp was able to use its own system for so long because Google has an exemption from its billing rule for digital music companies, according to the blog post.
"We’ll continue to defend our business against Epic’s campaign to not pay for the value they get from Google Play," the Google spokesperson said. "Epic has now agreed to pay a standard 10% service fee into escrow as a reserve against potential damages.”
Epic, parent company of Fortnite, sued Apple for similar anti-competitive behavior.
This story was updated May 20, 2022, with comments from a Google spokesperson.
Larry Ellison was among the participants on a call in November 2020, during which top Trump allies discussed ways to contest the election results, according to The Washington Post. It's unclear what role Ellison played on the call, but The Post found evidence of Ellison's apparent involvement in court records and confirmed with one of the call's other participants.
An Oracle spokesperson didn't immediately respond to Protocol's request for comment.
The records are part of an ongoing legal case involving True the Vote, a conservative group focused on stopping supposed voter fraud, and Fair Fight, a progressive voting rights group founded by Stacey Abrams. According to documents revealed in that case, True the Vote's founder Catherine Engelbrecht described the call in a note to a donor.
“Jim was on a call this evening with Jay Sekulow, Lindsey O. Graham, Sean Hannity and Larry Ellison,” Engelbrecht wrote, according to the Post. Jim, in this case, describes Jim Bopp, True the Vote's lawyer. “He explained the work we were doing and they asked for a preliminary report asap, to be used to rally their troops internally, so that’s what I’m working on now.”
The donor, Fred Eshelman, replied days later, according to the Post, curious about Ellison's involvement. “Why was he on call with Senator Graham? Is he part of data/analysis solution, is he a potential large donor, other?” Eshelman's message read.
Bopp confirmed his participation in the call, but told the Post he couldn't recall its participants and shared a different recollection about the substance of the call. “The question that I think was being discussed was whether or not congressional hearings on how the 2020 election was being conducted would be beneficial to whatever people were doing,” he told the Post.
Ellison's support for former President Trump is, by now, well known. He was among Trump's most prominent allies in the tech industry during his time in office and held a fundraiser for him during the 2020 election. Trump, likewise, praised Oracle and looped the software giant in on the much-anticipated, but ultimately scuttled, deal to acquire TikTok in September 2020. His administration also backed Oracle in its copyright fight with Google.
Ellison, who is now chair of Oracle's board, is also part of the group of financiers who recently joined Elon Musk in his bid to take Twitter private. Musk has said if the deal goes through (and that's still a big if) that he would reinstate Trump's account.
Microsoft Bing has exported Chinese censorship abroad, according to a new report by The University of Toronto's Citizen Lab.
Bing searches for national figures, leaders within the Chinese Communist Party, dissidents and topics that Beijing considers politically sensitive did not appear in auto-suggest in North America, according to the report. Among the search terms that didn't generate autocomplete suggestions were searches for President Xi Jinping, the late human rights activist Liu Xiaobo and searches related to the Tiananmen Square massacre.
“We consistently found that Bing censors politically sensitive Chinese names over time, that their censorship spans multiple Chinese political topics, consists of at least two languages, English and Chinese, and applies to different world regions, including China, the United States and Canada,” the report said.
In response, a spokesperson for Microsoft told The Wall Street Journal said the results were unintentional. “A small number of users may have experienced a misconfiguration that prevented surfacing some valid autosuggest terms, and we thank Citizen Lab for bringing this to our attention,” the spokesperson said.
The report raises questions about the long reach of Chinese official censorship and its infamous Great Firewall, which clamps down on discussions Beijing considers destructive. "If Microsoft had never engaged in Chinese censorship operations in the first place, there would be no way for them to spill into other regions," Jeffrey Knockel, a senior research associate at Citizen Lab, told the Journal.
While other major American tech companies such as Facebook and Twitter have decided to stay out of China because of their refusal to comply with strict censorship rules, Microsoft has continued to do business there. That has led to frequent accusations that the company is acquiescing to censorship demands, including on LinkedIn, which began operating in China in 2014. In the past, the company has been found blocking the profiles of U.S. journalists in China due to "prohibited content" in their profiles.
Last year, however, the company announced that LinkedIn would be pulling out of China, citing what it described as "greater compliance requirements." In its place, the company said it would launch a stripped-down job seeking site that did not include LinkedIn's social features.
In an interview with Protocol last year, LinkedIn founder Reid Hoffman discussed that decision, saying, "[The] conflicts between society, Western society and China try to put you in the crossfire. Between them, you end up in a lot of controversy when you're trying to navigate this line."
Google had its "best year yet" for hiring Black and Latinx employees in the U.S. as well as women globally, according to its 2022 Diversity Annual Report. The hiring rate increased for Black, Latinx, Native American and female employees, although these identities are still very underrepresented compared to white and male employees.
The number of Black employees increased from 4.4% in 2021 to a little over 5% in 2022, while Latinx employees increased from 6.4% to 6.9%. White employees still make up almost half of the workforce, and Asian employees make up around 43%. Native American employees make up less than 1%. Men make up two-thirds of the company's workforce nationally and globally. Attrition rates went down among almost every demographic compared to 2021, with the exception of growing attrition among Asian employees and Native American men.
Former Black Google employees have accused the company of racism in recent years, leading to an investigation from the California Department of Fair Employment and Housing. April Curley, a former recruiter, is suing Google for allegedly underpaying and undervaluing its Black employees. Timnit Gebru, a prominent AI research ethicist, was fired by the company in 2020 after she refused to remove her name from a research paper and wrote an internal note about her concerns with Google's diversity efforts.
Protocol's diversity tracker displays diversity data across Big Tech, allowing you to look at companies' efforts side by side.
Correction: An earlier version of this story misstated the percentage of Black employees at Google in 2021. This story was updated on May 20, 2022.
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