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Hello, and welcome to Protocol Pipeline! I'm Biz Carson, Protocol's venture capital and startup reporter, and this is my new weekly newsletter about that community. Thank you to everyone who signed up to get this in their inboxes for the first time this week. (You have my full permission to consider yourself an early adopter.) If this was forwarded to you, sign up to get it every Saturday morning.
Don't forget to also join us Thursday for a Protocol Virtual Meetup where I'll be talking with top investors like Sequoia's Andrew Reed about the state of venture capital.
Anyway, on with business. This week: A VC's COVID moonshot, the cycle every health care (or edtech) startup goes through, and backcasting to a breakthrough.
- "Elon Musk is a national treasure," Marc Andreessen told The Washington Post, a day after Musk's rant on freeing America from lockdown derailed Tesla's earnings call. But what Musk said publicly is what a lot of investors have been murmuring to me about privately, and now there's a gaggle who are echoing Musk on Twitter in wanting to lift the lockdown. But NEA's Vanessa Larco pointed out that one part of the return to work conversation everyone is missing: What will the working parents do?
- First comes consolidation, then come the wind-downs. One startup whisperer I talked to this week expects the next few weeks to be filled with startups pulling back on business lines outside their core (just look at WeWork cutting its on-demand option and Lyft pulling back from its scooter business this week). By June, they said, we'll start seeing the full business wind-downs. Still, investor Elad Gil bets that the next two months will be the time for some startups to raise money when there's "false hope" that we're over this thing.
- The slope of enlightenment for health care startups ends with every company as a services business. Same for education startups, too.
- "Better dancing, better body and better bark" (the brisket kind): There's only one investor whom Jason Calcanis could be describing.
- Is it a V-shaped recovery? A U-shaped recovery? Or a narwhal shaped recovery? Investor Billy Draper has the only video you need to watch to get caught up with six weeks of Tech Twitter™.
Biz on Biz
A very venture capital approach to COVID
Gmail creator and Y Combinator partner Paul Buchheit has an audacious goal: Test everyone, every day and wipe out COVID-19 by the end of 2020.
- It may sound unrealistic, but that's part of Buchheit's point. People need to think about big ideas — the moonshot goals — and try everything, he says, even if they know that most startups won't succeed in hitting them.
- Testing everyone is "definitely not easy, but it is in my estimation substantially easier than landing on the moon. I feel like we've lost our ambition as a nation," Buchheit told me. "Why is it in the 1940s we were suddenly able to produce 300,000 aircraft? And now we're completely helpless to test even a few million people. To me, that just seems horribly defeatist."
In March, Buchheit turned to BookFace, Y Combinator's internal messaging board, to solicit ideas about what to do about coronavirus and how startups could help. "I figured one thing I can do with my anxiety is see if I can find solutions to this," he said.
- Since the callout, Buchheit has made around 10 investments in startups working on things from antivirals to vaccines to new testing equipment to see what will help.
- "It's not because I think it's all going to work, but if one thing works in a big way, then it will definitely be worth it, and I'm willing to take a chance," Buchheit said. "I wish the government were doing the same thing."
One YC company called PreDxion Bio seems particularly promising to Buchheit — and he views its work as a possible "third solution" to the pandemic.
- The idea: a test that would allow people to return to school and work by simply spitting in a tube every day. Buchheit ended up investing and footing the bill to repurpose PreDxion Bio's protein-detection tests to spot COVID.
- "Technically we're not quite there yet, but it turns out we can get to a point where you spit into a tube and wait 10 minutes, which isn't ideal, but that's a whole lot better than just having to shut things down," he said. He imagines a future where these tests are part of someone's daily hygiene, like brushing your teeth.
But there's still a tremendous hurdle of both regulation and proving the science works. Then there's the matter of scale. And cost, obviously: Buchheit's goal is to get that down to around 10 cents for the raw materials, or under $1 all-in, for each test.
- "We really just need to be pursuing 100 vaccines or whatever takes," he said, pointing out Bill Gates' multiple vaccine factories. "That's the mindset we need to have. Not 'let's spend a bunch of time figuring out what solution is guaranteed to work,' but 'let's think of all the things that can possibly work and do all of them.'"
- "Even if the odds are against you, if you have a chance to make a big difference, I feel like that's something you've got to do," Buchheit said.
He's also far from alone in trying, and it was the talk of the town this week on what people are doing to help: There's renewed calls for a Manhattan project. A secret group of investors, scientists and billionaires have already been pushing their own version of it. Tech entrepreneurs, backed by Eric Schmidt, created their own coalition to deliver PPE. Salesforce's Marc Benioff went on a $25 million buying blitz. And Stanford's StartX launched its own brain trust.
- "I just feel like it's a responsibility for citizens who are doing really well in the community to do more," Spark Capital's Nabeel Hyatt told me after he and a band of tech entrepreneurs tried to raise $500K for East Bay FeedER to provide food to hospitals. "We can't be here just because we think the commute is good, we have to be here for this community."
A MESSAGE FROM NASDAQ
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- VC dictionary entry No. 3021: Backcasting, verb, to start at a point in the future and work backward toward a starting point. Amazon is infamous for a similar approach for its product design, starting with a press release. Now Floodgate's Mike Maples, Jr. has a post on how to use the idea to build a breakthrough for startups.
- Human Ventures' Heather Hartnett explained how to spend 15 minutes a day making your team feel a little more human.
- There's not enough dry powder to keep every startup alive, and a capital crunch is coming, the NVCA said in a white paper this week.
- Is there a ceiling on how big a contract you can sign over Zoom? Redpoint's Tomasz Tunguz talked to The Full Rachet about what's changed in SaaS amid coronavirus, but I won't spoil his answer to that great question.
- Pana CEO Devon Tivona's note on processing this pandemic felt like its own kind of therapy: "Inviting My Travel Startup Team (and You) To Feel All of the Feelings." I highly recommend taking the time to read it and digest your own feelings, too.
Need to Know
- The CEO of surveillance startup Banjo was once tied to Neo-Nazis and helped a KKK leader shoot up a synagogue, reported OneZero. Hours after the story was published, Utah's attorney general suspended its contracts with Banjo and the company has since reportedly suspended all Utah state contracts as it undergoes an audit.
- First Round launched a "second-round guarantee" to invest its pro rata in the next follow on round after investment. It was a suspiciously timed announcement, given that two weeks ago, Y Combinator backed off its promise to unilaterally do follow-on rounds.
- SoftBank is writing down WeWork by $6.6 billion and the co-working startup is starting a round of global cuts over the next month.
- On your radar: Protocol's Janko Roettgers spotted that Sandbox VR's CEO Siqi Chen has left the A16Z-backed VR company and is founding a new startup — no details yet. Houseparty creator Ben Rubin published a manifesto on his new company, which is called /talk (that's not a typo, and applications are now open for its alpha test).
- On this day in VC history: All the VCs were hanging out on Google+ and not Clubhouse. And also a certain 26-year-old VC who's now big in politics had just cashed in on Instagram.
- And your weekend reading: How one Silicon Valley engineer got $69 million from New York for ventilators after one tweet to Trump — and never delivered them.
Five Questions for...
Greylock's Sarah Guo
Do you have any new quarantine habits?
The positive of it is I'm home for dinner with my kids now. You're going to laugh about this because it's going to be so VC, but there's a wormhole of all my supposedly copious free time is being sucked into Clubhouse, Paul Davison's new audio app, which is fun. It feels very intimate.
What is a pitching pet peeve that you have?
To me, it's a really strong anti-pattern if an entrepreneur spends a half an hour talking about the macro backdrop with a bunch of high-level statistics versus approaching it from "this is my user or my customer and this is the need and desire we're filling."
What is the biggest misconception of what your job is like?
When people think it's a financial job. I've had a financial job before when I worked at Goldman Sachs for a year. We do need to understand it and it informs strategy: the company's cost structure, the business structure, gross margin, how efficiently it can scale — all of that really matters. But I have built five — maybe 10? — detailed financial models in 6.5 years at Greylock. The vast majority of the job is people and product and not financial at all.
What's one of the worst predictions you've ever made?
The fun thing about making predictions on the internet is you'll mostly be wrong, and it will be obvious to everyone. This is in the internet archives, and I've left it there, but back in 2016, I wrote a series of blog posts about the conversational economy. This was like the emergence of the Messenger platform, bots, NLP, and I spent a lot of time looking at companies in that space. I still definitely believe in audio and AI-enabled interactions, and the voice-controlled everywhere hardware has come through. But, I and a bunch of other people very much underestimated the complexity of getting automated human interaction with bots correct. There was definitely a hype cycle, and I was wrong on timing there.
Who is somebody you've never met in tech that you'd like to have dinner with?
I actually met Tobi [Lütke, Shopify's CEO] over audio recently, but I've never had dinner with him. So Tobi from Shopify seems like a really interesting visionary founder.
PROTOCOL VIRTUAL MEETUP
After years of bubble talk, the startup and venture capital world is bracing for a correction. It's going to be tough — but it's also a moment when many founders will be inspired to build and a new generation of companies will crop up, fueled by VCs eager to back them. Join Protocol's Biz Carson on Thursday, May 7 at noon PDT for our Protocol Virtual Meetup with senior guests from the venture and startup community.
Thanks for reading the first official newsletter edition of Protocol Pipeline. A special thank you to my London-based editor Jamie Condliffe for handling the time zone challenges and for being a sounding board, no matter the hour. Also a thank you to Tim Grieve, Tammy Wincup, Vivyan Tran, Bennett Richardson, Karyne Levy and Amanda Farnan for all their help in getting Pipeline up and running. If you like what you're reading, sign up here to get it in your inbox. Send story tips to firstname.lastname@example.org. Otherwise, stay safe, stay healthy and stay home. See you next week.