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Image: Christopher T. Fong/Protocol

SPACs' great stumble

Protocol Pipeline

Hello, and welcome to Pipeline. My name is Biz Carson and this week I’ve been geeking out reading some of the best in business journalism before I go to LA to judge the Loeb Awards.

This week in the startup world: accusations of VC gaslighting, the nasty side effects of cutting growth and a look back on SPACs.

How SPACs got smacked

Just over seven months ago, Bird debuted on the public markets with a $2.3 billion valuation, closing its first day of trading at $8.40 a share. At their peak, shares climbed to $11.25.

Today, Bird’s stock is trading around 55 cents. This week it began layoffs of nearly a quarter of its staff. And it’s far from alone.

SPACs are performing worse than VC-backed IPOs — but only if you take the long view. PitchBook released new indexes comparing de-SPAC companies with VC-backed and PE-backed IPOs.

  • Since 2018, PitchBook shows de-SPAC performance down 63.3% while VC-backed and PE-backed IPOs are up 14.8% and 11.5% respectively.
  • In the last year though, both VC-backed and de-SPAC companies have been hit hard and have moved down in tandem. Since July 2021, VC-backed IPOs and de-SPACs are both down roughly 57-58%. PE, on the other hand, has done marginally better, down only 35%. In other words, SPACs as a category are doing just as bad as the VC-backed companies in this downturn, but worse overall since 2018.

SPACs have another crash to contend with, though: market sentiment.

  • In 2020, SPACs became the talk of the town. The vehicle felt like a new innovation and alternative to an IPO (despite existing well before 2020). Founders lauded it for being able to get to markets faster and with more price certainty. Venture capitalists liked that it was a path that didn’t involve the traditional IPO, but could raise cash unlike a direct listing. Chamath Palihapitiya was labeled “king of the SPACs” and appeared in everything from talk shows to the New Yorker to hype them.
  • You won’t find cheerleading today. Instead, the people talking about SPACs, like the SEC’s Gary Gensler, are not the ones investors and startups are excited to hear from. Goldman Sachs already exited most of its SPACs, worried about investor liability. The latest headlines about SPACs (outside of a myriad of layoffs) are warnings that two dozen of them could go bust.

The bold ones still going public are facing a bumpy ride. The markets are practically frozen over, but there are some that are forging ahead.

  • There are still lots of SPACs out there looking for acquisition targets, but the market has slowed down considerably. PitchBook tallied that there were 111 VC-backed tech acquisitions last year. This year’s deal count is 26 so far, close to the midpoint.
  • This week, robot startup Symbotic started trading after completing its merger with a SoftBank-affiliated SPAC. At first, it doubled in its debut — jumping 120% to close over $20 on Wednesday — but those gains couldn’t be sustained. By Friday, Symbotic’s stock had erased most of the bump.

In 2020, my colleague wrote that the hottest acronyms of the year were COVID and SPAC. Two years later, I’d say everyone’s sick of both.


“When they advertise a ping-pong table in the job listing, it's a huge 🚩 for me.” Normally perks are supposed to be a bonus, but some extras like free booze or in-office fitness centers are seen as anti-perks.

How frozen is the market? SaaStr’s Jason Lemkin ranked it from 33% at the seed stage (not so bad) to 95% at the crossover stage (pretty bad).

“Is a16z gaslighting us?” The war of words over Web3 entered another chapter after entrepreneur Liron Shapira published a blog post saying a16z’s State of Crypto report was “nonsensical” at best and gaslighting at worst. He also posted a video snippet of a16z Crypto advisor Packy McCormick fumbling to explain a Web3 use case (McCormick admitted to being "off [his] game" during recording). That didn’t sit well with a16z folks. Sriram Krishnan said there was a “rise of the 'anti-crypto media personality'” even when their jobs have nothing to do with the sector. Box’s Aaron Levie argued that because of the hype, everyone’s job is suddenly crypto-related since they’re being asked about it. Like any argument, it will never be solved on Twitter, so the parties agreed to fight on a more neutral ground — a podcast.

“The older I get the more embarrassing VC websites look,” said Niantic’s Megan Quinn (aka a former investor herself). At least Root Ventures brought back the ’90s aesthetic in a good way.


At the same time that the pandemic demonstrated all that is possible in an interconnected world, we saw in new and increasingly stark ways how certain communities continue to be marginalized and harmed by a persistent digital divide and how effectively that divide exacerbates our society’s other inequities.

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Inside track

“Reducing airspeed to avoid a mountain is of no use if the airplane stalls and falls from the sky,” writes Frontline’s Stephen McIntyre. While there’s a lot of talk about how startups need to cut burn, there can be some nasty side effects, too, and startups need to avoid stalling out when throttling back.

And if you do have to throttle back, Initialized’s Jennifer Wolf recommends leading with empathy. For example, if you’re having to cut salaries, switch employees to a four-day work week instead of five so that the pay cut is equal to the time cut.

Normally founders write glowing blog posts about customers who fell in love with their product — not as much about what happens when they fall out of love. Substack co-founder Hamish McKenzie reflected this week on a writer who joined Substack only to grow frustrated by some of the other voices on the platform and leaving, something that “sucks” for Substack as McKenzie acknowledges but is a good thing for the world.

Whatever happened to YC’s W11 batch? Liquid2 Ventures’ Michael Ma went through it as a founder and decided to look back on how all the companies in his batch did. Only one of them is a unicorn today, but roughly a third of the cohort ended up acquired. The breakdown of the batch is not only an interesting trip down memory lane, but a good example of typical startup outcomes.

How should you evaluate job offers for Web3 companies? It’s not too dissimilar to Web 2.0, but unlike those jobs, Paradigm’s Devon Lloyd argues candidates have access to a lot more public information and should think like an investor when evaluating a Web3 startup.

Need to know

Peter Thiel and Eric Schmidt want to boost chip production. The unlikely duo are both backing America’s Frontier Fund, a new nonprofit venture capital fund that wants to push for more deep tech and chipmaking in the U.S. and plans to work closely with the government to do so.

Saudi Arabia wants to invest up to $1 billion (a year!) into anti-aging research. This includes taking stakes in biotech startups and potentially funding its own X Prize equivalent.

Sorry, but Stanford doesn’t have the best coders. An engineering proficiency test used by companies like Meta, Square, Zoom and Asana found that the top CS grads came from a school that doesn’t have a renowned program.

Chime at $15 billion? Canva at $27 billion? Data from Next Round shows that some startups are already trading lower in the secondary markets. faces a whistleblower lawsuit over its SPAC deal. Its former VP of Sales alleges the CEO misled investors and then pushed her out after a confrontation over it. (Better says the claims are without merit.)

A Bolt employee borrowed almost $100,000 for his options before layoffs, Insider reported. In what’s totally just a coincidence I’m sure, the CFPB said it was going to look into “employer-driven debt.”

Moves: Greylock’s Sarah Guo left the firm to build something new, but details are scarce. Amazon’s Dave Clark joined Flexport; the former CEO of Amazon’s consumer division will start as co-CEO with founder Ryan Petersen before taking over the supply chain startup.

Layoff watch: Crunchbase estimates 17,000 tech workers have now lost their jobs with companies like Stitch Fix, Bird, Convoy, Sonder,, OneTrust and Hologram adding to the count with layoffs this week.

From Protocol: “[Tech workers] aren’t storming the beaches of Normandy nor climbing out of coal mines,” Lux Capital co-founder Josh Wolfe told my co-worker Allison Levitsky. “They’re asked to suffer the inconvenience of showing up into fancy modern offices to be with their teammates.” In the debate of funding IRL vs. remote startups, suddenly having an office is cool again.

Also on Protocol: There’s still a talent war, but employers are getting the upper hand. Here’s why that could benefit startups.

Your weekend reading: When a billionaire buys an island, it doesn’t mean the wealth follows. Instead, after Larry Ellison bought Lanai and effectively became everyone’s employer, landlord or both, the wealth gap has only gotten worse, according to Bloomberg in its story on how Lanai “isn’t for you — or the people who live there.”


There is so much more we need to do to make sure our future is more equitable and inclusive and maximizes America’s potential. It is not enough just to ensure everyone is connected. We also need to extend the full scope of digital opportunity to the people, the communities, and the institutions.

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