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Protocol Pipeline
The inside story of the venture capital and startup world by Biz Carson.

The hot thing to fund this year? The election

The hot thing to fund this year? The election

Hello and welcome to Pipeline. It's finally Halloween and that means no more October surprises — congrats on getting through one heck of a month. We're three days out from the presidential election, so this week: How tech folks spent their money, what Section 230 means for startups and the #ClubhouseChallenge.

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Overheard

  • Expensify's CEO David Barrett has done a lot of shocking things in the past week, like telling his millions of customers to vote for Biden, but 2020 is still full of surprises. After Business Insider's Melia Russell reached out to ask for introductions to employees who worked on the memo, Barrett forwarded her note to the entire company and told his employees they were welcome to speak with her — something I have never seen happen to a reporter's inquiry, ever.
  • The startups people want to quit their jobs for: DoNotPay, Ramp, Luminous, Pipe, Bolt, to name a few. VC Guide, the team behind the Glassdoor for VCs, released its new Wishlist that highlights the top startups nominated and voted on by founders on its platform. There's some obvious ones, like Stripe and Discord, but also some newer companies like a reboot of Gowalla.
  • The "stay private longer" penchant may be dying — and that's a good thing, according to Benchmark's Bill Gurley. In an interview with Dot.LA, he compared a startup going public to a star quarterback going out for the NFL draft and why it doesn't make sense to say you're going to stay private/in college to cultivate your company/talent.
  • If you want to hear what Clubhouse sounds like without joining, just search for the hashtag #ClubhouseChallenge on Twitter where people are mocking how Clubhouse users speak on Twitter's new voice notes. Several people pointed out that this TikTok video pretty much sums it up. Or, just read The New York Times' summary of a petty war over Clubhouse room names that ended with A16Z's Marc Andreessen creating a room just called "Silence" — which honestly sounds comforting at this point in 2020.

Biz on Biz

Who is spending big bucks on the 2020 election

For better or worse, Greylock's Reid Hoffman may be seen as the face of political donations from Silicon Valley, but he's far from the only investor or founder to be playing an active role in the 2020 election cycle. While last week's Pipeline focused on what will happen to startup funding with the election, this week, let's take a look at who is funding the election itself.

On to the other donors (outside of Hoffman) you should know:

Karla Jurvetson: A surprise megadonor of the 2020 cycle is the ex-wife of DFJ founder Steve Jurvetson. The psychiatrist is a top 10 giver in America this election cycle, according to the CRP. She donated millions to support Elizabeth Warren's candidacy early in the race and more recently has been spending millions to support Democrats in state legislative races.

Jessica Livingston, Y Combinator: She's in the top 60 donors in the country this election cycle, according to the CRP. The co-founder of Y Combinator has given most of her money to Tech for Campaigns, a group once called the "Democratic Geek Squad." In September, her husband, Paul Graham, tweeted that the couple had donated more to defeating Trump than to any other cause: "Which sucks. As in literally sucks huge amounts of money away from important problems. This is a hidden but very significant cost of increasing polarization."

  • Other donors from Y Combinator include other Tech for Campaigns supporters Geoff Ralston, Jared Friedman, Tim Brady and Michael Seibel. YC partner Gustaf Alströmer also donates a lot of smaller checks (often just $250) to Democractic candidates around the country.

Mike Moritz and Doug Leone, Sequoia: The firm dynamics inside Sequoia are something to keep an eye on as we go through the election.

  • Billionaire Mike Moritz has been funneling money into Democratic media efforts like The Lincoln Project and Pacronym. He's also considered one of the top donors of the election cycle at number 78 (just behind Quibi's Jeff Katzenberg), according to the CRP.
  • But the real VC to be watching at Sequoia this election is Doug Leone. He's one of the rare public Trump supporters in the Valley, who was tapped for the president's reopening committee and was a part of the TikTok deal negotiations. So far, Leone has given money to a mix of political causes from the RNC to Donald Trump to the Republican Committee of South Carolina.
  • As my friend Eric Newcomer smartly pointed out in his new newsletter on startups and venture, Leone's support puts Sequoia in a bit of a "political paradox," as he called it, since the firm derives so many wins from its Sequoia China investments. "Putting aside Trump's racist and authoritarian tendencies, how can Sequoia's leader so viscerally support an anti-China American president when the firm makes so much of its money in China? Leone helped set up Sequoia's China strategy, but he supports a president who has made attacking China one of his signature issues," Newcomer wrote.
  • What's been interesting to watch is just the lack of blowback on Sequoia, and Leone in particular, for his support of Trump. Contrasted with the flack that Founders Fund took for Peter Thiel's support, Leone's already low-key nature and the fact that he's supporting the sitting president has meant that the firm hasn't faced the same level of attention.

Rob Stavis, Bessemer: Despite being one of the top 100 donors in the country this cycle, the New York-based partner at Bessemer maintains a relatively low profile in terms of his giving. While he describes himself as a "moderate," Stavis has supported Democratic causes, including big checks to the Senate Majority PAC and Forward Majority Action, and smaller ones to groups like the Democratic Party of Arizona. In a 2018 interview with Recode on his giving for the midterm cycle, he said his "political awakening" was spurred after Trump was first nominated.

Of course, this is just a snapshot of some of the biggest donors with ties to the venture community. Many politically active investors have continued their support of Democrats, including SV Angel's Ron Conway, Khosla Ventures' Vinod Khosla and angel investor Chris Sacca. Founders Fund's Peter Thiel has continued to donate money to Republicans, but he's toned down his support for Trump.

The question is whether all this money spent will have the return on investment these VCs are seeking. So far, some big bets, like millions plowed into data firm Alloy, have yet to find product-market fit. We'll see on Tuesday (or in the weeks thereafter) if the money is well spent.

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Inside Track

  • Founders don't interview prospective venture capitalists enough (case in point: the letter to the board member from CircleUp's former CEO). Alpha Bridge Ventures' Jake Chapman has 11 questions founders should be asking their investors, including asking for an investors' pitch deck to LPs.
  • For any leadership geeks, there's a new must-read out from HBR on how Apple has retained the same kind of organizational structure today as it did when Steve Jobs came back as CEO in the '90s. Now 40 times its size, Apple University's dean and a faculty member break down how Apple has internally organized itself for innovation and what it looks like when you have execs managing so many pieces of the company.
  • Plenty of startups begin as academic research projects, but making the jump from academia to starting a company can be hard. Y Combinator's Jared Friedman went on a tour to a bunch of schools and came to distill the experience into a guide for how to spin scientific research out of a university and into a startup.
  • Where are all the unicorns? Serial entrepreneur Elad Gil analyzed where the most valuable startups are based in 2020, and while Silicon Valley still leads the U.S., it's also the place where many more unicorns have declared remote-first policies in the future.
  • If you're going to pitch an investor on Zoom, Pegasus Tech Ventures' Anis Uzzaman says you should at least make the effort to wash your T-shirt first.

Need to Know

  • Visa's deal to buy Plaid is in jeopardy. The $5.3 billion acquisition of the fintech startup could be in trouble, The WSJ first reported, and already the DOJ is trying to force Bain & Co. to cooperate. At least it hasn't dragged out quite as long as the FitBit-Google acquisition.
  • "This is baloney, folks" might have summed up the pettiness of the Section 230 hearing this week, but there were a few comments from senators like, Republican Jerry Moran (R-Kan.), who were concerned about the impact reforms could have on startups — a concern shared by Facebook's Mark Zuckerberg, too. "If we were subject to a larger number of content lawsuits, because 230 didn't exist, that would have likely made it prohibitive for me as a college student in a dorm room to get started with this enterprise," he told the committee. It could be an existential threat for many companies, and smaller networks like Reddit are watching if there's any fallout from Big Tech's actions very closely. "It's frightening as well as sad," Reddit general counsel Benjamin Lee told Protocol.
  • India's caste system is thriving in Silicon Valley. Thirty female Indian engineers who are Dalits told The Washington Post how they're concerned that India's caste-based system translates to the U.S. and can get perpetuated inside tech companies. Companies like Cisco are now facing lawsuits over the alleged discrimination.
  • San Francisco startups are (finally) returning to the office. The city has been slow to reopen, but companies like Fast and Founders Fund have made the leap to go back, catered lunches and Ping-Pong games included.
  • Sometimes you should just choose to fire people. Vice reported that employees at surveillance startup Verkada were using their own cameras to share photos of female colleagues and make sexually explicit jokes inside a private Slack channel. At first, the employees were given the option to be fired or take a reduction in stock — and it's no shock which one they chose. It wasn't until after Vice's report that Verkada's CEO changed his mind and decided firing was the right call.
  • From Protocol: Discord (somewhat accidentally) invented the future of the internet — so why hasn't anyone bought it?
  • This week in VC history: Four years ago, Twitter announced it was shutting down Vine, a move that was baffling then and looks even worse in hindsight now that TikTok has taken over.
  • And your weekend reading: Chris Lehane is one of my favorite executives to spar with (and probably one of the fastest talkers I know). The Information's Cory Weinberg has a great profile on how the "spin master" and former "master of disaster" became the longest tenured exec at Airbnb outside of its founders and a trusted ally of Brian Chesky.

Five Questions With...

Upfront Ventures' Kara Nortman

Upfront's Kara Nortman was promoted this week to co-managing partner of the LA-based firm. Outside of her investments in companies like Fleetsmith and Parachute Home, Nortman is also one of the co-founders of nonprofit All Raise and LA women's soccer team Angel City.

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

It's not an obscure product — it's my Apple AairPods. My kids literally refer to them as my "fourth child." They play a large role in my joy and happiness, because my day is spent primarily talking to people (and occasionally listening to podcasts or music). I know I'm irrationally loyal because let's just say I lose them a lot, and I have to choose to buy them again; I'm on my fourth or fifth pair.

What's one startup or product that failed or was shut down that you wish was still here today?

Believe it or not, I miss SETI@home, which I used as my screensaver in the early 2000s. It took unutilized compute power from volunteer computers to analyze radio signals, looking for extraterrestrial intelligence. I was a bit of a space nerd as a kid; I actually competed in debate tournaments with a speech on the search for extraterrestrial life. So I've always just loved thinking that there's life beyond us, and I wanted to participate in finding it.

What's a secret obsession of yours that most people don't know about?

Other than the search for ETs? I'm the wrong person to ask because if I have an obsession, it quickly becomes very loud. This is actually what led to the starting of Angel City FC, because I was talking about my secret obsession with women's soccer after the 2015 World Cup to anyone who would listen, and it went from an obsession to a reality.

More secretly, I was a huge "Game of Thrones" fan, as many of us were, but it was such an obsession that I used to joke that if I weren't in venture capital, I should become a professor teaching the history of certain regions through the lens of "Game of Thrones," the characters and fiefdoms. I would watch until about midnight with my husband, and then when he went to sleep, I would spend hours on fan forums and Wikis.

New TV obsession? "Ted Lasso."

What problem do you want to see a startup solve?

I spend my time heavily focused on cybersecurity and dev ops, mostly in the enterprise space, and I really want a startup to help make a safer and more secure consumer internet. Not just from a "not getting hacked" perspective, which is deeply interesting, but getting people back to understanding what is true, what is fake, and how we can feel comfortable participating as who we are in the real world. I would love to see democracy, life, liberty and the pursuit of happiness solved on the internet — talk about a trillion-dollar opportunity! I think we can start simply by building different moderation tools to protect people from a technology standpoint as well as a "comfort in the environment" standpoint.

Who is somebody in tech you've never met, but would love to have dinner with?

True story: I have a recurring reminder on my calendar that says, "Oprah, Musk, Bezos," meant to remind me that if this meeting actually happened, what would I want to talk to them about? It's there to remind me that as a VC, I should spend my day on the important things, which to me means helping founders and finding inspiring founders who want to solve really big problems. (I've only met one of them, BTW.)

I'd also love to have dinner with Mellody Hobson or Mackenzie Scott, both of whom greatly inspire me with their authentic points of view and powerful way of conveying how to drive impact around important issues, and to inspire more capitalists to perhaps approach philanthropy differently. I think they're just incredible. They also both happened to go to my alma mater, Princeton University, so I have always felt some sort of cosmic connection to them. Whether they have felt it to me is a different story!

[Biz's note: Mellody Hobson gave one of my favorite talks I've ever seen at a tech conference at the Upfront Summit in 2019. It's worth listening, but particularly her thoughts on tying diversity to compensation at the 26:00 mark.]

Thanks for reading this week's Protocol Pipeline. Don't forget to go vote! And when you're done, you can switch to voting on whether a fridge belongs to a Trump supporter or a Biden supporter.

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