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The inside story of the venture capital and startup world by Tomio Geron.
November 7, 2020
Hello and welcome to Pipeline. If you're like me, all you've probably consumed this week is hours of election results plus an inordinate number of Nevada slow-counting TikTok videos. So let's take a (small) break to recap what happened in the venture and startups world. This week: The VC version of a news dump, the rise of "Small Tech" and my new favorite merger name: GoPuffMo!
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- A GitHub page won the election. Some people may have watched CNN nonstop, but a lot of the tech industry ended up staring at a GitHub page created by a group of engineers that tracked every time the count was updated in swing states.
- "Most of California voted on a service, while the Bay Area voted on a company," Stratechery's Ben Thompson wrote this week, summarizing what I thought was one of the most interesting election results (in what's already an interesting election). Prop 22 passed in California, but the Bay Area delivered a "no" verdict against the measure, going against its hometown companies of Uber, Lyft, DoorDash, Postmates and Instacart.
- There's a VC version of a news dump. While Election Day was expected to be a day for companies to bury their bad news, venture capital firms tried to be sneaky and file Form D paperwork for new fundraises. TechCrunch caught the filings, which showed that Precursor Ventures, Insight Partners and Hustle Fund are all raising new money.
- Pencils (momentarily) down. Two weeks ago, Pipeline published three different election scenarios and what could happen to investor interest in funding rounds depending on how the election went. DocSend's CEO Russ Heddleston predicted then that it'd be "pencils down" if the election were contested — and that came true. "On Monday and Tuesday, pitch deck interest fell fractionally, and on Wednesday we saw a big dip likely fueled by election uncertainty," he said. "On Thursday, interest rebounded." DocSend will update its pitch deck interest index on Monday for a deeper look at how things are playing out as this drags on.
- "Is that the 'Gilligan's Island' theme?" It sounds like a 2020 television plot. In the backdrop of giant world problems, a tech exec and a billionaire are squabbling over a Dale Chihuly sculpture, ocean views and whether playing the "Gilligan's Island" theme song warrants a restraining order.
Biz on Biz
Talk of the town: What people in the VC world are thinking following the election
Election Day dragged into election week, and frankly left a lot of people with more questions than answers about what it will look like for our nation moving forward. It's already been dissected what a Biden or Trump win would do for venture capital (if Biden pulls through, think higher capital gains taxes) — but that's not what's on investors' minds.
Instead, I reached out to a handful of people in the venture capital world to see how they spent their election nights and what's on their mind now as they process the outcome from the last few days. From watching WrestleMania 3 to pondering what a Republican-led Senate might mean for governing, here's a snapshot at how a few investors are thinking:
Ann Miura-Ko, Floodgate:
- How she spent election night: "My husband grilled steaks and Caesar salad, and my 9-year-old made garlic mashed potatoes, and we sat down and channel surfed between CNN, ABC and Fox News to get a sense of what everyone was saying. I think I had my nose in Twitter half the night as well."
- On her mind now: "In general I think that having a majority Republican Senate with Biden as president may generally be better for the country. This close election suggests that there isn't a universal mandate in any direction, and while I believe that it makes things harder to get things done, my hope is that it moderates any actions that we do take so that we aren't swinging from one extreme to the other every four years. Ultimately I want to see a more unified country, which means we need to create economic opportunity for all, pride in and respect for all forms of work and a renewed trust that collective truth can exist. I believe that tech can play a role in creating this type of abundance for our country and for the world."
Trae Stephens, Founders Fund:
- How he spent election night: "I spent election night with my family, watching the election returns and talking with my kids (5 and 7) about how blessed we are to live in a democracy where we have the ability to pick our leaders, vote on policies, and be civically engaged in building a better society, especially with people with whom we may not agree about everything.
- On his mind now: "While it has certainly been exciting to watch an election filled with so many unprecedented moments unfold, I'm even more interested in what a potentially new (or continuation of the current) administration means for the future of defense. Specifically, it is critical to ensure new and emerging technologies are supported and fielded within the defense department and that we continue to look for pathways for Silicon Valley and the department to work together more effectively."
Pam Kostka, All Raise:
- How she spent election night: "My family and I watched "'The Mandalorian" as a distraction from politics while my husband and I kept surreptitious watch on our cell phones of the early returns and texted with friends. I went to bed at 10 figuring the only way to make myself feel worse was to be sleep-deprived …and I got a solid eight hours!"
- On her mind now: "We have deep schisms that are separating us, and it's time we begin to bridge the gap rather than cementing into our poles. One of the things I believe everyone can get behind, no matter their political affiliation, is the need for more diversity in leadership, in both government and the private sector. It was heartening to see that like 2018, 2020 has been a record-breaking year for women running for office. At All Raise, we're inspired by that as we work on lifting women into positions of power in tech and venture capital."
Hunter Walk, Homebrew:
- How he spent election night: "Once it became clear that we were in for 48-72 hours of vote counting, I stopped tracking results, put my kid to bed and watched parts of WrestleMania 3 — comfort food content from my childhood where I knew the good guy won in the end."
- On his mind now: "How my daughter was born into an Obama presidency and now gets to see Kamala Harris as our first female VP. And the work I need to do, we all need to do, to reknit the country together. None of the startup stuff matters if we don't build our companies on top of healthy solid ground."
Josh Felser, formerly Freestyle:
- How he spent election night: "At home in Marin with my partner, Jessica Scorpio, medicating with Joe's Stone Crabs, cream spinach and key lime pie while meditating to desperately calm our frayed psyches."
- On his mind now: "There have never been two candidates so diametrically opposed to such a global, foundational and existential challenge: climate change. Biden has a $2-trillion-dollar climate plan that might just save the world, create millions of new jobs and restore the USA's leadership. Trump is pushing the equivalent of a negative trillion-dollar plan, injecting gigatons of C02 into our atmosphere and increasing global suffering. So yes this election is top of mind for so many of us directly engaged in battling climate change."
Mitchell Green, Lead Edge Capital:
- How he spent election night: "I sat on CNN, and around 10 p.m. I got bored so I turned it off."
- On his mind now: He shared a text message from a friend that he thinks sums it up: "Amazing that market rallying — the only thing people seem confident about is technological progress, which is good for us! Elections are like family reunions. This one felt like everyone got older and fatter. All they wanted to do is bitch and realized they really don't like each other. Ugly. I think America is waking up to the fact that [its] dysfunctional behavior has less to do with Trump and more to do with a society that doesn't want to change, to take on new challenges. It should open the door to new opportunities for China to become more of a global leader. But then they act just as reactionary as the U.S. with this Ant fiasco. What a crazy world! I wish we could just check out and go to a beach or casino!"
What else is on your mind? Email email@example.com and I may include a few answers in next week's Pipeline edition.
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- Section 230 challenges aren't going away — no matter the presidential election outcome. But instead of repealing it, Craft Ventures' David Sacks thinks Section 230 should be amended, and the First Amendment could become tech's "life preserver."
- Of the millions of people who got Expensify's email to vote for Biden, 0.5% ended up responding to the company. Among the chief complaints: Trump is not a threat, Biden is a socialist, politics and business shouldn't mix, and also how the email violated their trust (and why Expensify disagrees).
- Investors are distracted and trying to wrap up rounds already in progress, says Hustle Fund's Elizabeth Yin. Here's why she thinks right now is a terrible time to fundraise.
- The ethics of tech companies were back in the news this week, but where should people start to learn more? Several people pointed to the Omidyar Network's Ethical Explorer pack as a starting resource for people to learn how to build ethical tech tools and companies.
Need to Know
- The U.S. sued to block Visa's acquisition of Plaid. The DOJ says Visa will take out a nascent competitor while Visa argues that Plaid isn't a payments company. Either way, expect the SPACs to be circling if this thing falls through.
- "Small Tech" is becoming a thing now. With the government coming for Big Tech, The Information reported that smaller internet companies, from Etsy to startups like Reddit and Patreon, are looking to form their own political coalition to fight back against policy decisions. Reddit has already been vocal about how revisions to things like Section 230 could devastate its business, so expect "small tech" or "little tech" to start fighting back.
- GoPuffMo! The SoftBank-backed essentials delivery service GoPuff was nearing a deal to buy California liquor store chain BevMo! for $350 million, according to Bloomberg. I had no idea BevMo! was so cheap, but it does give GoPuff a way into the California markets to compete with DoorDash, Instacart and Postmates on under-an-hour delivery. My best read of it is that it's a very small-scale Amazon-Whole Foods deal and one to keep an eye on.
- Making moves: More people leave SoftBank, including its COO and four other partners. Trinity Ventures loses top deal-maker after pausing fundraising for its new fund earlier this year, according to The Information. There's been a lot of chatter this year around what will happen to the firm, which was already going out to raise a smaller fund, but now there's a bigger question mark on its future.
- From Protocol: Facebook and Twitter are finally calling out election misinformation. Is it working?
- This week in VC history: I looked back fondly on the stories I wrote for Business Insider on the 2016 election night, which gave us some gems like investor Shervin Pishevar calling for California to form its own nation.
- And your weekend watching: You probably need to relax after this week, so I'll recommend the Netflix limited series "The Queen's Gambit" for a show that turns chess into a gripping drama.