June 4, 2022
Illustration: Christopher T. Fong/Protocol
Hello, and welcome to Pipeline. My name is Biz Carson and I’m such a huge fan of the British royals that I once slept on the street to be in the front row on the Mall for William and Kate’s wedding. Congrats to the queen on her Platinum Jubilee! This week in the startup world: the craziest VC lawsuit since Benchmark sued Travis Kalanick, more fallout from layoffs and a stubborn pay gap for startup CEOs.
At the beginning of the pandemic, early-stage female startup CEOs took disproportionately higher pay cuts. A year later, things aren’t much better for them, according to new data provided to Pipeline by Kruze Consulting, which publishes annual reports on the early-stage startup CEO salaries.
The early-stage startup CEO gender salary gap is worse today than it was in 2019, even after a record-breaking funding year in venture capital.
“Women have raised their salaries back up, but we still have this tremendous gap, which is kind of weirdly really persistent and weirdly large in my mind,” said Healy Jones, Kruze’s VP of Financial Planning and Analysis.
The challenge for CEOs is that there’s very little transparency into what they should be paid. And if they do receive advice from venture capitalists, it can often be conflicting. This week, Vitalize’s Justin Gordon asked founders and investors what pre-seed startup founders should be paid — a stage at which a founder typically doesn’t necessarily have a board to consult.
The changing times means a rising concern that women could fall further behind. In today’s market, there’s going to be a lot of conversations around how to cut costs. It’s easy for founders to feel the call to sacrifice when employees are feeling the pinch, so that may be a time for investors to step in and make sure that they’re not unfairly shortchanging themselves.
“I am concerned that women are going to pull their salaries back more than that if history is a guide,” Jones said. Hopefully, with a warning to be on the lookout, history won’t repeat itself.
Dear Diary … In this week’s odd PR move, Rent The Runway’s PR team offered a Fast Company journalist a look at its CEO’s diary during the pandemic, which backfired when the entries “read like a mission statement in progress” and didn’t really address the struggle at all.
“Please stop using the word Girlboss thank you,” tweeted “Girlboss” author Sophia Amoruso. This isn’t some copyright claim, but a plea in response to an article from the New York Times that took alotofheat for saying Glossier’s Emily Weiss leaving the CEO role was the “sunsetting of the girlboss.” While we’re retiring sexist language, I’d add to that petition to also ban the phrase “crypto bros,” especially when it’s an article about crypto startups buying real estate. “I guess women who work at crypto companies based in NYC don’t count!” Haun Ventures’ Rachael Horwitz tweeted.
The irony: “Most of the venture capitalists instructing us how to put out the fires were arsonists until fairly recently,” said BVP’s Adam Fisher.“Heroes or Villains”? That’s supposedly the title of a drafted press release at the heart of a lawsuit between European VC firm Solid and startup Heroes. In a truly wild story, Heroes claims that the VC firm fabricated documents to claim it had invested and promised a “media war” against the founders. The lawsuit has now been settled, according to Sifted.
For the last 50 years, SAP has worked closely with our customers to solve some of the world’s most intricate problems. We have also seen, and have been a part of, rapid accelerations in technology in response. Across industries, certain paths have emerged to help businesses manage the unexpected challenges over the last few years.
The days of chasing high-TAM businesses that incinerate cash are over, says Slow Ventures’ Sam Lessin. It’s trendy again to care about capital efficiency.
It’s not just SaaS companies that have to watch their burn. Craft Ventures’ Jeff Fluhr took the burn multiple and adjusted it for marketplaces, warning any company above a 2.5 to lower burn.
Why did Coinbase’s CEO write that “mission-driven” company memo? In an interview on the Good Time Show, Brian Armstrong talked about what led up to that moment and how other CEOs can challenge social activism in their companies. Plus, Marc Andreessen made the case that employees shouldn’t bring their “whole self” to work but their “professional self.”
Tiger Global hit a new low. Its losses reached 52% and now it’s cutting management fees. Meanwhile Fidelity marked down tech startups like Stripe, Reddit and Instacart.
Two dozen SPACs may die out. There could be a big SPAC shakeout around the corner, according to the Wall Street Journal.
The crypto VC winter is coming*. Investment levels are reportedly down and crypto startups are trimming staff to cope. Coinbase also announced it was going to rescind already-extended job offers. (*That’s if a16z’s new $4.5B fund doesn’t artificially inflate the investing market.)
The DOJ also has crypto in its crosshairs with its first-ever NFT insider trading charge.
Layoff watch: Carbon Health cut 250 people. PolicyGenius trimmed a quarter of its staff just months after raising $125 million. Investors’ favorite email app Superhuman laid off 22% of its staff, while investors’ favorite fundraising pitch format Loom laid off 14%, or 34 people. Social app IRL let go of around 20 employees. Crypto-related startups had a hard week too. Coinbase-backed Rain laid off dozens, while Gemini trimmed 10% of its headcount. In case it’s helpful, Protocol is keeping track of a bunch of layoffs and hiring freezes here.
Layoff fallout: Bolt employees are wondering why its outspoken founder Ryan Breslow hasn’t commented on the layoffs. Gergely Orosz published an account of what happened inside Klarna, including a “night of dread” when U.S. employees had been let go but there was no word in Sweden of who would be losing their jobs.
From Protocol: Kabbage’s co-founders are back with a new startup that offers forgivable loans to employees to help retention.
Also on Protocol: Startups are hard. War is harder. Here’s how startups in Ukraine are surviving.Your weekend reading: “It’s like a collective Theranos. A wildly unproven product with nobody at the helm,” one VC told Vice. They weren’t talking about a specific company, but instead, the entirety of Web3. Even if you disagree, it’s worth taking in the critique.
Jordan Kong is a principal at Atomic where she works on starting and building companies, particularly in Web3. She worked at IVP and Barclays before moving into the crypto world in 2017 when she worked at Expa to co-create Eco. She later joined Polychain Capital before starting at Atomic three years ago.
We're potentially entering a downturn. What's a piece of counterintuitive advice you'd offer to other company builders right now?
Build relationships with strategic and corporate investors. Since their mandate is equally strategic as it is financial, they are less at the mercy of public market swings. A strong strategic relationship could help generate more revenue if the investor is a potential customer or tee you up for an acquisition down the line.
What's different about building Web3 startups versus other startups you've worked with?
It's easy to forget that crypto is as much a social innovation as a technological one. Web3 builders need to think about community and network effects as foundational, not as features on top of the core product. In crypto, the network itself is often the product.
What product or service are you totally, even irrationally, loyal to?
I'm a die-hard Goodreads fan. The product needs an overhaul, but it remains the best social recommendation engine for a good book.
What problem do you want to see a startup solve?
Anxiety and depression are at an all-time high. Many of us have had a tough couple of years due to the pandemic. This generation of kids is growing up with the emotional baggage that comes hand-in-hand with social media. We need better and more accessible options for mental health. We'd all be in a better place if we could give everyone the right outlets and tools to be more mentally resilient.
What book do you think every startup founder should read?
“Creativity, Inc.” by Ed Catmull highlights the power of storytelling and how to manage a team of creatives and builders effectively. I am so inspired by how Pixar pioneered the studio model and a whole new way of organization management.
When companies invest in maintaining their “green ledger” with the same commitment they have to their financial ledgers, they will be able to connect their environmental, social, and financial data holistically so they can steer their business towards sustainability. At the end of the day, what gets measured, gets managed.
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