Overheard

• R.I.P. The Creamery. In a non-pandemic time, this coffee shop would've been the ideal spot to report from for an overheard section. The San Francisco hangout was deal central and a hotbed for gossip, including when people would casually tweet things from there like Microsoft buying Yammer (which was true!). Here's my free idea: VCs should give 1% of their carry back to the local businesses where they signed/sourced the deals, and boom, the Creamery is saved.
• "This is it — you are openly in support of Biden/Harris or you are pro-Trump,"tweeted Telepath's Marc Bodnick after Harris' VP nomination. There's no question the former Quora exec is against Trump, and that may be a good thing: Reid Hoffman said this week that CEOs should be talking about politics more. "In an increasingly politicized world, it's harder and harder for CEOs to keep business and politics separate," Hoffman said. "And in an increasingly politicized world, they shouldn't."
• Is there a better word for "mafia"? The last Pipeline edition on Square's founder "mafia" left some readers thinking there needs to be a better word for these alumni networks. Cabal or coterie could be options, but send me some of your best ideas: biz@protocol.com.

Biz on Biz

Inside what happened to Y Combinator's W20 batch

Do you remember where you were on March 16? It was the worst single-day point drop in the Dow's history and also the day that San Francisco was ordered to start sheltering in place. For me, I was at the UCSF hospital with an inconclusively fractured elbow that could only be diagnosed with more testing — if the hospital wasn't locking down thanks to COVID-19.

But for 500 entrepreneurs, the day marked something very different, although maybe just as painful. March 16 was Y Combinator's Winter 20 cohort's Demo Day. Normally a celebratory launch pad for up-and-coming startups and a FOMO-inducing investor schmoozefest, the Demo Day had already been moved online, becoming a list of companies and one-page slides, and pulled forward by an entire week.

Five months later, I was curious about the companies in the class and how they did launching straight into the pandemic. After talking to over 20 founders and investors, I published a story Friday on Protocol about how COVID-19 rewrote Y Combinator's W20 Demo Day — and the checks investors were writing, too.

• YC saw mixed results from the class: The top startups were able to raise as normal, but many more struggling companies got nothing.
• "In past batches, there was a wider distribution of dollars, so more companies raised something," Y Combinator partner Aaron Harris told me. "There were more companies this time that weren't able to raise anything, but also a lot of companies raising quite a lot."
• Investors noticed a change, too: "YC companies often set their own valuation caps, and about one-third of the companies I talked to came back within a week or two of Demo Day and asked if a lower cap would affect our investment decision," Susa Ventures' Leo Polovets told me over email.

Turns out that moving Demo Day forward a week was a good call. YC had told founders to go out and raise quickly ahead of Demo Day — the opposite of their usual advice — and the founders who heeded that ended up having an easier time raising than those who waited until afterward.

• "On Twitter, people were like, 'VCs are open to business,' and that's definitely not true from my perspective because they were busy buying toilet paper from Costco or trying to move to their vacation home in Tahoe," one founder told me.
• Typical YC FOMO also helped: Many investors were forced to make investment decisions on Zoom for the first time and couldn't drag their feet on it.

One thing COVID hasn't yet changed: YC's power. That's something that really stood out to me during the reporting process but didn't make it into my article, so I thought I'd dive into it a little more here.

• To start, Y Combinator still has a lot of influence over the startup ecosystem: the power of its network — and the potential pain of being exiled from it — is seen as a real threat. Many investors (both angels and institutions) I spoke to didn't want to do so on the record because they feared being uninvited from future Demo Days or having their status in the YC network tarnished.
• Behind closed doors, there's a lot of complaining from investors about the huge size of the YC batches these days. After all, 240 companies is a lot of new companies to study. But it's not like investors have pulled back on their investment levels as a result of batch sizes; in fact, Harris says they've instead increased it.
• It's also a good reminder that YC likes to think of itself as providing a quality experience to founders and enabling more entrepreneurship, rather than trying to optimize outcomes for investors. "The customer of YC should be the founder and not the investor," Battlecard's founder Mathew Pregasen told me.

With YC's Summer Demo Day just around the corner — mark your calendars for Aug. 24 and 25 — I'll be curious to see how different the experience will be for this class.

• The Summer 20 batch has been entirely remote from the start and will have its Demo Day in two batches via Zoom. Y Combinator also moved up when it starts talking to founders about funding, meaning there's a good chance some of the hottest rounds are already coming together right now.
• But no matter the outcome, how much a company raises on Demo Day may not be the best indicator. "If we look at the numbers, and look at the successful companies, honestly there is almost no correlation to a rapid round after Demo Day, and the long-term success of the company — or between the amount of money raised at Demo Day and the success of the company," YC's Harris said. "It's just not the thing that matters."

Join us Wednesday

During the 2020 national political conventions, Protocol will host a two-event series on the tech and policy needed to enable a diverse future workforce and a strong economy. Join us at noon ET on Wednesday for the first event in the series, hosted in partnership with ITI.

Register here.

Inside Track

• Lighting and a good background are just the start. NFX talked to investors like Upfront's Mark Suster, Floodgate's Ann Miura-Ko and Precursor's Charles Hudson on how VCs are judging your startup over Zoom. And the judging is hard, as it turns out.
• As kids get ready to go back to school, Figma CEO Dylan Fieldinterviewed A16Z's Marc Andreessen on what the purpose of college really is, how the value of a degree is changing, and what A16Z thinks about funding college dropouts (like Field himself).
• Three weeks ago, Pipeline talked to Sahil Lavingia about his new AngelList rolling fund. He ended up raising $5 million, but the news set VC Twitter off. If you're still trying to understand what a rolling fund is, K2 Global's Minal Hasan has the best breakdown I've read of how the funds work, and they could be a big deal for the venture industry.
• Maybe you should raise less money? The point of raising venture capital isn't to extend runway but to accelerate growth, wrote YC's Aaron Harris in an interestingly timed blog post.
• "Innovation kill zones are real. Try pitching a venture firm on your new search engine." Many VCs think the market will sort itself out and shy away from regulation, but Switch Ventures' Paul Arnoldargues that the U.S needs to lead on antitrust regulation again in order to let startups thrive.

Need to Know

• An Epic battle royale: Epic Games' blow-up with Apple and Google got its game Fortnite kicked out of the app stores, so now it's sued in response. It's the biggest challenge to what Epic considers Apple's and Google's "anti-competitive" practices, and companies including Tinder and Spotify have chimed in to say they're taking Epic's side. Anyone building or investing in an app should be keeping a close eye on how these suits resolve.
• Sequoia's Doug Leone could be the bridge between Trump and TikTok. The Trump backer has been "pressing contacts" like Steven Mnuchin and Jared Kushner to help keep TikTok in the U.S., The Wall Street Journal reported.
• Trouble inside Talkspace: The therapy-by-text company has become a lifeline during the pandemic, but a New York Times report claimed that the company used burner phones to create fake reviews, and didn't respect client privacy.
• From Protocol: One of America's hottest productivity startups, Notion, wants to become a global company. It's harder than it looks.
• This week in VC history: AirBed And Breakfast launched 12 years ago this week. It was technically Airbnb's third launch, but like they say: If no one notices the first two, just keep launching. Another fun fact: Breaker CEO Erik Berlin (who helped pull together Pipeline's podcast-loving VCs list in June) is the host who's pictured in Airbnb's original marketing materials from 2008.
• And your weekend reading: Even a pandemic hasn't stopped GaryVee, the "patron saint" of hustle culture, from preaching the grind — and it could be more dangerous than ever during this time of desperation, Sarah Kessler reports for Marker.

Five Questions With...

Mayfield's Navin Chaddha

What's an idea you wish you had first?

TikTok, given that my first startup as a founder, VXtreme (acquired by Microsoft), pioneered the use of streaming video back in the mid '90s. Plus, I would look so cool to my kids.

What was your first check?

While at Microsoft (post the acquisition of VXtreme), I led the investment in Akamai. I saw that the internet would require a new content delivery network that would enable high-quality streaming video and content-rich websites.

What's your favorite piece of advice to give to first-time founders?

Startups die of indigestion, not starvation. I'm a huge fan of focus both in terms of priorities and concentration. While we are not traveling these days, one product I love are Sennheiser noise-canceling headphones as they help me be productive on long flights.

What's one of the worst predictions you've ever made?

[The] rise of VDI (virtual desktops) in 2008-2009 before the iPad came into action. I invested in a company that did not make it along with many others that failed — hundreds of millions of VC dollars were invested in the space that were all lost. A huge silver lining was that the founder of that company, Aly Orady, came to Mayfield as an EIR and went on to found a consumer fitness company, Tonal, where we were the seed and series A investors.

What product or service are you totally, even irrationally, loyal to?

Willow Cricket. I sacrifice a lot of sleep to stay up and watch cricket matches live from all around the world!