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Protocol Pipeline: 'The IPO market is dead for 2020'

Protocol Pipeline

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 my first newsletter last week or tuned in to my Virtual Meetup on Thursday. If you were forwarded this email, be sure to sign up here.

Anyway, on with business. This week: The ultrawealthy's new obsession, is Blitzscaling over, and the important asterisk that comes with declaring the IPO market entirely dead.


  • Investors are starting to emerge from triage mode after weeks of spending time looking after their portfolio companies. Data shows that VCs already have more time on their hands for pitch decks; expect that trend to increase in the next few weeks.
  • "I do worry about being caught in the crossfire," Lambda School's Austen Allred told my colleague Shakeel Hashim. He says a lot of people who are trying online learning for the first time frankly hate it, and that could cast a cloud over the entire edtech industry.
  • The ultrawealthy can't stop talking about UBI. One person who works with super-high-net-worth family offices told me that there has been a sudden resurgence in interest around universal basic income as a result of COVID-19: "It's like someone sent out a memo to anyone worth over $100M that they need to be thinking about UBI."
  • VC by day, music video star by night. Sheel Mohnot pioneered a new kind of VC cultural leadership with a cameo in Justin Bieber and Ariana Grande's new video. (He's the mustachioed man hugging himself.)
  • X Æ A-12 isn't the only kid with a name inspired by stealth aircraft. Y Combinator founder Paul Graham claimed on Twitter that his eldest son called himself SR-71, the successor to the A-12 aircraft that inspired the Musk baby name, for a year before he started kindergarten. For any new parents, I think variants like the M-21 and YF-12 are still open.
  • Move over Patagonia jackets. Company-branded face masks are the new corporate swag.

Biz on Biz


When 2020 started out, it looked like another banner year for unicorn IPOs. Airbnb was supposed to finally take the leap, and DoorDash and Asana had already confidentially filed to go public. GitLab had even specifically targeted Nov. 18 (publishing the date being part of its culture of radical transparency.)

All those plans may have to be put on hold.

  • "The IPO market is dead for 2020," IVP's Somesh Dash told me during a Protocol Virtual Meetup this week. "I hate to admit it." As an investor at a firm that specializes in late-stage and pre-IPO rounds, he knows he's sticking his neck out by making such a controversial statement — but he also thinks predictability is the one thing every public investor craves.
  • "How can you, with a straight face, go out and say you can predict what's going to happen when you have a global pandemic where nobody, even the experts, has any idea about how long it's going to last and how deep it's going to be?" Dash said. (Although you could argue that his reasoning kind of undermined his own prediction?)
  • The best companies have already prepared for a world in which IPOs don't happen in the second half of this year — or even in the first half of next year, he said. Unprofitable companies will look for other money sources, and profitable companies could look to do M&A.

But his statement should come with an asterisk, as some investors think the window isn't shut to everyone.

  • NetScreen is one good historical IPO example, said Sequoia's Andrew Reed during the Virtual Meetup. (Although he did admit that he was 11 at the time, so this is some firm tribal knowledge.) NetScreen went public in December 2001 and raised twice what it expected. "I think that the market window for great companies is always open," he said. Plus, the activity from crossover investors "suggests to me that they will be interested in IPOs, too."
  • "I think if you were Zoom and you were pre-public, you would still be able to go public in this market," said Cowboy Ventures founder Aileen Lee in response. "Anything that is going to do well during COVID times I think could still go out."

Even if the IPO window is (debatably) closed, the window to start a company is wide open — and Lee expects to be busier than ever this year and into 2021.

  • "The companies that are started in this period are actually going to be probably some of the best of the decade," she said.

For more on the kinds of problems VCs want solved by founders, catch our full conversation here.



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Inside Track

  • Theranos would be thriving in the coronavirus pandemic, says Flux Biosciences founder Tyler Shultz. He would know: He was one of its whistleblowers.
  • Greylock's Reid Hoffman asked a question on a lot of people's minds: Is Blitzscaling over?
  • Will LPs invest in new fund managers via Zoom? The jury is still out, but it's likely a no. Pear VC's Mar Hershenson polled 59 LPs and has advice for emerging fund managers on what to expect in the time of COVID.
  • Should you fundraise right now? Benchmark's Sarah Tavel and Peterson Ventures' Ilana Sternbreak down what consumer startups should be thinking about. Basis Set Ventures' Lan Xuezhao and Aligned Partners' Jodi Sherman Jahic have the answers for enterprise.
  • The 2008 financial crisis made big banks bigger. This pandemic is going to make big tech bigger — and fast. True Ventures' Om Malik on how the inevitable has happened. (Full disclosure: I worked for him at Gigaom.)

Need to Know

  • Consolidation has started in scooter land. Lime took a massive haircut to its valuation, and had to accept some particularly rough terms, as part of a deal led by Uber to help it stay alive. (The deal also saw the ride-hailer emerge victorious, having offloaded a money-losing business, Jump, in the process.) But Lime's new CEO told me that micromobility has a place in the post COVID world: "This gives us a chance to fight back to whatever valuation happened before." Expect to see more deals like this soon, as Pipeline foreshadowed last week.
  • Airbnb laid off 25% of its staff, just weeks after cutting all of its contractors. The cuts also reignited chatter that it maybe should've gone public last year. "Had they gone public earlier, they would've been forced through market pressure to cut some of their fat, and their employees may not have been underwater on restricted stock," Haystack's Semil Shah told me. "I also believe they'll get through it, but they have to have a 5- to 10-year mentality for how they plan for it."
  • Most active VC firms haven't seen a recession, according to a new poll from SVB.
  • From Protocol: It might be time to build, but building isn't cheap. Just ask Sidewalk Labs, which walked away from its Toronto experiment, and its new spin-off, which has an equally daunting task ahead of it.
  • On this day in VC history: In a sign of a bubble in 2014, Arista Networks called Fortune's Adam Lashinsky with the offer — or, as Valleywag called it, "bribe" — of pre-IPO stock.
  • And your weekend reading: The easy questions that stump computers by The Atlantic. (Or: How the smartest machines can't figure out what happens when you drop a match on some logs.)

Five Questions For...

Haystack and Lightspeed's Semil Shah

What was your first check?

Hired.Com. At that time it was called DeveloperAuction. My third, fourth and eighth checks were in HashiCorp, Instacart and DoorDash. I got so lucky when I started.

What's your pitching pet peeve?

There are so many. One is people who complain that raising a seed round is so hard. It's literally been the easiest thing ever in the last 10 years. Raising a fund is hard. The other is people who haven't done extraordinary in their life before and expect to raise money having not done something extraordinary.

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

I tweeted [in 2014] the companies I thought would be unstoppable: Airbnb, Uber, Coinbase, AngelList. I still don't think they will be stopped, but I didn't think there would be a global pandemic.

What's one problem you wish an entrepreneur would solve?

Office, home and life paperwork.

What's something you learned about yourself in the last three months that you didn't know before?

I look better on Zoom than in person — I think?

Thanks for reading Protocol Pipeline and hope you enjoyed this week's Virtual Meetup. If you like what you're reading, sign up here to get it in your inbox. Send story tips and Pipeline feedback to biz@protocol.com. Otherwise, stay safe, stay healthy and stay home. See you next week.

Correction: A previous version of this newsletter misspelled the name of Tyler Shultz. Corrected May 9, 2020.

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