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 Because these long overdue issues have surfaced and cracked the outdated veneer of status quo, this breakthrough class of startups will be reevaluating long-held business values and instead lead with compassion to make a real social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.
Mobile game revenue will decline for the first time in history this year, market research firm Newzoo now says in a revised outlook for the 2022 global games market. While the whole game industry is expected to contract by 4.3% — another first since Newzoo began tracking the market in 2007 — the company is predicting a 6.4% decline in mobile game spending on top of a 4.2% decline in console game spending.
Back In May, Newzoo was forecasting a year of growth for the game industry, with its outlook predicting more than $200 billion in global games industry spending thanks to a nearly 6% increase in the mobile gaming sector to a $103.5 billion. But this summer, as warning signs emerged about the effects of inflation and a severe downturn in the digital ads market, analysts and market researchers began to predict a unprecedented decline for the game industry, which in 2020 and 2021 grew at staggering rates due to excess spending on and time spent playing video games. In particular, mobile gaming declined in the first half of the year for the first time ever.
Mobile gaming has typically offset the losses in console and PC gaming and has been the largest and fastest-growing sector in the industry for years. But this year's decline marks a surprising downturn for mobile. “Mobile game spend in the U.S. continues to decline as consumers contend with both economic uncertainties and a new post-pandemic normal,” said Sensor Tower gaming insights lead Dennis Yeh last week. “While there is still a decent chance this year’s U.S. mobile game revenue will surpass 2021 levels, worsening headwinds have firmly shifted the conversation away from the question of by how much.”
A confluence of factors has created a particularly difficult time for game developers, and not just mobile ones. For one, consumers are spending less on gaming due to inflation increasing the price of everyday goods. A number of high-profile console and PC games have also suffered from delays this year, setting up a return to growth in 2023.
"Some of the drivers of the decline include the return of experiential spending, higher prices in everyday spending categories such as food and fuel, the uncertain supply of video game console hardware and certain accessories such as gamepads, and a lighter release slate of games, among others," explained NPD game director Mat Piscatella back in July, when NPD forecast a 8.7% decline in the U.S. game market.
Additionally, the digital advertising market on which many mobile games rely for revenue is also having a tough year, in part because Apple's iOS privacy changes have made it more difficult to track the effectiveness of the install ads through which many mobile developers both acquire new users and also earn money from other app makers. (Many mobile games allow players to earn digital currency by watching ads prompting them to install competing games.)
Advertisers are also simply spending less. "The timing here is clear: The declines take place as the world’s banks increased interest rates and the specter of recession was everywhere in the press,” Unity CEO John Riccitiello said on an earnings call this month. "When we talk with our advertisers, the sense we get is clearly one of caution and reticence to commit to the aggressive campaign spends." Unity, the game engine of choice for mobile developers, also runs a digital ads business. Some major publishers like Zynga owner Take-Two Interactive have also cited mobile when downgrading annual outlooks in recent weeks.
Newzoo in a press release said, "2022 is a corrective year following two years of lockdown-fueled growth, but our long-term outlook for the games market remains positive," and the firm says it still expects gaming to hit surpass $211 billion in global spending by 2025.
"While this may seem like a setback for the games market, we note that the sum of revenues generated from 2020 to 2022 is almost $43 billion higher than we originally forecast pre-pandemic," the company said.
Amazon is planning to lay off thousands of employees, Protocol has learned, ahead of what the company has cautioned will be a slow holiday shopping season.
As many as 10,000 workers could be impacted, according to a source familiar with the deliberations. That number could ultimately change. The layoffs could largely affect new hires, including those who have not yet started but who have signed an employment contract, they added. Among those impacted will be employees in the devices, human resources, and retail divisions, according to The New York Times, which first reported the layoffs.
An Amazon spokesperson declined to comment.
Amazon has been in cost-cutting mode for a while. Among other measures, it currently has a hiring freeze in place, according to a note from HR leader Beth Galetti that Amazon published publicly earlier this month.
Google agreed to pay $391.5 million and make changes to its user privacy controls as part of a settlement with a coalition of 40 state attorneys general. The coalition accused Google of misleading customers about location-tracking practices that informed ad targeting.
The deal represents the largest privacy settlement won by states in U.S. history. Even so, the payout amounts to a drop in the bucket for Google’s parent company Alphabet, which reported $13.9 billion in profit from the last quarter alone. In January, a smaller coalition of AGs sued Google over the location-tracking issue. And last month, Arizona attorney general Mark Brnovich won an $85 million settlement from Google over it.
State AGs had been working on this case since 2018, following an Associated Press report that found Google tracked users’ location data even when they explicitly turned off “Location History” tracking in Android or iOS settings. At the time, Google denied wrongdoing and maintained that users could further limit location-tracking services by turning off “Web and App Activity.” The AGs weren’t convinced, likely in part because Google’s in-house copy at the time told customers that “with Location History off, the places you go are no longer stored.”
A Google spokesperson told Protocol that the settlement was consistent with improvements made in recent years, and that the case involved “outdated product policies that we changed years ago.” As part of the settlement, Google will further clarify location-tracking disclosures beginning next year, The New York Times reports.
“The transparency requirements of this settlement will ensure that Google not only makes users aware of how their location data is being used, but also how to change their account settings if they wish to disable location-related account settings, delete the data collected and set data retention limits,” Michigan attorney general Dana Nessel wrote in a press release.
State AGs have had to compensate for a lack of online privacy regulation at the federal level. That may soon be changing, however, as Politico reported on Monday that a bipartisan group of lawmakers intends to push the American Data Privacy and Protection Act through in the lame duck session.
ADPPA includes provisions protecting user geolocation data, including its transfer to third parties. The bill leaves enforcement up to the FTC, state AGs, state privacy authorities, and the California Privacy Protection Agency.
Figures such as House Speaker Nancy Pelosi and Reps. Fred Upton and Billy Long shared concernsover ADPPA preempting state legislation. ADPPA sets out to supersede the existing patchwork of state laws, but in so doing it could crystalize the legislative landscape and make it more difficult for relatively nimble state legislatures to respond to evolving technologies.FTX has filed for bankruptcy and the crypto company also announced that founder Sam Bankman-Fried has resigned as CEO.
FTX, Bankman-Fried's trading firm Alameda Research, and roughly 130 affiliated companies have begun bankruptcy proceedings “to begin an orderly process to review and monetize assets for the benefit of all global stakeholders,” the company announced on Twitter Friday.
The filing includes FTX.US, a separate operation Bankman-Fried had previously claimed was isolated from the parent group's woes. FTX.US had recently warned customers that it would have to stop trading in the coming days.
John J. Ray III, a lawyer who helped run Enron post-bankruptcy, has been named CEO of the FTX Group. Bankman-Fried, often known as SBF, will remain “to assist in an orderly transition,” the company said.
FTX's fall was a sudden, jarring collapse of a crypto powerhouse, evident in Ray’s initial statement as CEO. He appealed to stakeholders to “understand that events have been fast-moving and the new team is engaged only recently.”
“I want to assure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder[s] that we are going to conduct this effort with diligence, thoroughness and transparency,” Ray said in a statement.
The announcement capped a wild week for FTX and the entire crypto industry.
FTX had been one of crypto’s largest exchanges. But disclosures about its questionable finances triggered a meltdown. Binance announced early this week that it had agreed to buy the company but then announced that FTX had financial issues that were “beyond our control or ability to help.”
Even before its filing, FTX's woes were having spill-on effects on other companies. BlockFi, a crypto lender FTX had agreed to backstop earlier this year with a credit line and an option to buy the company, said Thursday it could not conduct "business as usual" and had stopped customer withdrawals.
The broader crypto market, which was already reeling from a dramatic crash that wiped out $2 trillion in value, took another hit as the market value of issued tokens fell below $900 million. The price of bitcoin dipped below $17,000.
Salesforce recently updated its internal policies to make it easier for managers to terminate employees for performance issues without HR involvement, Protocol has learned, a move that comes as the software giant looks to shed as many as 2,500 jobs.
Previously, Salesforce’s employee relations team was heavily involved behind the scenes in the process of putting employees on performance improvement plans or terminating them for failing to hit certain metrics, including prior to any formal discussions with workers.
Now, managers will be able to put employees on performance improvement plans, or PIPs, and ultimately terminate them with little HR oversight, according to sources with knowledge of the deliberations. Managers were recently asked to sign a document indicating that, under this new system, they would treat employees fairly, one source added.
A Salesforce spokesperson and Chief People Officer Brent Hyder did not respond to request for comment.
Salesforce’s HR team was scrambling last week to update the company’s policies ahead of Monday’s layoffs, according to sources and internal documents reviewed by Protocol. As part of the so-called “Performance Improvement Framework” revisions, internal resources including “Termination Talking Points” and the “Global PIP Template” were changed to reflect the greater authority given to managers and provide additional resources to help leaders act with a degree of autonomy.
By empowering managers, Salesforce can more easily shed its ranks as it looks to trim potentially thousands of jobs. Such a system is not unheard of in the industry, but it could open Salesforce up to legal challenges if, for example, someone in a protected class believes they are wrongly terminated.
Salesforce is taking cost-cutting measures seriously. Salespeople who were laid off on Monday were given two months' severance, according to both a current and former employee, a much less lucrative package than the company previously provided. It’s also noticeably less generous than others. Meta, for example, offered 16 weeks of pay to the 11,000 employees it laid off this week.
And while Meta based a portion of the severance on tenure, Salesforce employees who had been at the company for over a decade received the same package as those who had been there for much less time, the sources said.
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