In remembrance 

Tony Hsieh

"The world lost you way too soon," Jeff Bezos said. It was shocking and tragic to hear of the death of Tony Hsieh last weekend. He was a universally loved figure in the tech community who was renowned for his kindness and vision, but also one who had struggled in his final months. He had a pretty incredible path through the tech industry, and one of my favorite things to learn, thanks to a tweet thread from Sheel Mohnot, was about the restaurant he owned, run by his mom, that served dishes like SoftBank Satay, Business 2.0 Bok Choy and CNET Salmon. My sympathies to his family and friends and the many members of the startup and venture community who are grieving his loss. You can find a collection of memories being compiled by his friends and family here.

Overheard

• Will the real @VCBrags please stand up? The identity of @VCBrags creator has been one of the more contentious culture points in Silicon Valley, but it escalated again over rumors surfaced that someone behind the account was known for harassing behavior. The drama finally forced a U.K.-based researcher for the NHS to claim he was the creator and clear up who is actually behind the account, hopefully ending the mystery in tech circles. Now we just need to solve who wrote "Iterating Grace."
• Genuine Information lives up to its name. An anonymous Twitter account called Genuine Information has been tweeting out deal scoops, like the most recent rounds for Discord and Scale. It's another mystery who is behind it, but Semil Shah already compared it to the past days of TechCrunch: "2010 : TechCrunch :: 2020 : @genuinfo."
• "Slack went from one of the hottest companies in the next generation of work tools to something more like MySpace or Friendster, a company clearly on the right track but unable to win the market," my colleague David Pierce wrote. Normally a $28 billion exit would be resoundingly cheered, but Salesforce's purchase of Slack was mourned by many in the enterprise community as a sign of how hard it is to compete against goliaths like Microsoft and potentially the end of an era where workers could have a voice in the tech they want to use at work.
• "I don't necessarily think that we're being too harsh on women founders and CEOs.I think we're being too lenient on male CEOs," former Carta employee Emily Kramer told Fortune. There's been a lot of talk about whether female CEOs are being unfairly targeted for "takedown" pieces by the media, but Fortune argues the double standard may actually be on the VCs and boards who have kept the male CEOs in their jobs while female CEOs have been forced out.

Biz on Biz

When one size fits all doesn't work

Ask many startup founders what their total addressable market is, and they'll come back with some comically big statements: Anyone with an email account! Anyone who moves! Anyone with blood! (OK, that one is from a TikTok meme and hopefully not actually used by an entrepreneur.) Still, the idea stands that, for a lot of startups, the opportunity is capturing as big a market as possible.

But more and more startups are going for targeted solutions for specific communities rather than trying to build the next one-size-fits-all company.

• Co-working startups are segmenting into new groups. The Wing was designed for women, but has since struggled with inclusivity. Now there's a wave of co-working spaces like Ethel's Club designed for the Black community.
• Beatriz Acevedo, the co-founder of Latino youth-focused media company Mitú, announced in October that she is back with a new fintech startup targeted at U.S.-born Latinos.

The opportunity couldn't be more clear in health care, a system where primary care has traditionally followed the "general store owner on the prairie" model of trying to be everything to anyone, Folx founder A.G. Breitenstein told me this week. The explosion of femtech companies is just one example of where we're already seeing startups try to target communities with unmet and underserved needs. Breitenstein's startup, Folx Health, launched on Thursday for the queer and trans community.

• "I think this is the beginning of a wave of very specific companies that need to meet people and patients where they are in their lives — based on who they are, where they come from, what their experiences are — as opposed to the traditional primary care model, which treats all people as the same," Breiteinstein said.

There's two things at work here:

• Direct-to-consumer companies are changing the relationship, which works in favor of building these more specialized companies. The problem with a lot of health care companies is that they're building the experience for their patients, but really they're selling to insurance companies or employers at the end of the day, Breitenstein says. Being DTC-centered has helped Folx and a lot of other personalized startups be able to focus on a sole constituency and cater to their needs, not the insurance industry's.
• There's also a clear unmet need — at least once investors learn about it. One of the reasons femtech startups were slow to take off was anecdotes of a male-dominated investor base having to go ask their wives about it. Breitenstein said she got a similar question of why does the LGBTQ community need its own platform when pitching. "It really took some time to explain the whole of the experience to folks: What does it mean to be deadnamed? What does it mean to be misgendered? What does it mean to go to the gynecologist as a trans man?" Breitenstein said. "People just didn't have the awareness, so it was a lot of work to bring that up."

The main reason Folx stood out to me is that once someone can see and understand the problem Folx is solving, you don't wonder whether people will need this kind of service. The real question is why hasn't it existed sooner. And Breitenstein thinks it's an opportunity that can be repeated over and over again, from specializing on Black women's health to senior care.

Plus, limiting a startup's focus doesn't mean closing the doors to a large market. While Folx launched with a DTC platform for things like PrEP, STI testing and hormone replacement therapy, there are more services Folx can layer in, from mental care to even pediatrics. And Breitenstein's experience in the insurance industry has her thinking about ways she could also build an insurance product tailored to the LGBTQ community. It may not be a TAM of anyone who needs health care, but narrowly focused communities can be novel businesses.

A MESSAGE FROM MICRON

At Micron, we see an opportunity to establish memory and storage platform capabilities that will unleash software developers to deliver solutions that speed insight and ultimately support emerging customer requirements. The data-centric era has ushered in a new opportunity to tap data for business growth, but many companies continue to struggle to transform mounting data stores into competitive advantage.

Learn how here.

Inside Track

• What's the first piece of software a startup buys or installs? Surprisingly, it's not Zoom. Slack, Google Workspace and GitHub are the top three, according to a survey from Lenny Rachitsky, followed by tools like Notion, Figma and Zapier.
• "The best partnerships can win in the long run, but the bar has been raised," says Nikhil Basu Trivedi. He coined the term "solo capitalist" earlier this summer, but it doesn't mean there are advantages and disadvantages to going it alone.
• I've been enjoying The Generalist'sthorough IPO breakdowns, and its deep dive into Airbnb's S-1 and how it's emerged as a "disaster artist" is worth the read if you're looking for an in-depth analysis.
• Every venture claims to be invested in a founder's success, but what does it mean to actually have the job of "Founder Success" inside a firm? Felicis' Dasha Maggiobreaks down how founder success is the equivalent of customer success.
• A lot of events have moved online, but finding what is actually happening and when it happens is still a challenge — and an opportunity for investors, writes Lightspeed's Ashley Brasier.

Need to Know

• Airbnb and DoorDash raise the IPO stakes. Both companies are targeting higher than expected valuations, with Airbnb expecting a range of $30 billion to $33 billion and DoorDash eyeing up to $32 billion. And in a headline you don't see every day, DoorDash's IPO is "set to deliver SoftBank a big hit."
• Carta is launching a new way to get liquidity. The company unveiled its plans to launch a "private market stock exchange" to make it easier for startups to have public market liquidity levels — a move that puts it in more direct competition with AngelList.
• Sorry Kylie Jenner. The world's newest youngest self-made billionaire is Luminar founder Austin Russell, a 25-year-old Thiel Fellow who just took his autonomous driving tech company public through a SPAC.
• 50 startups under 30, according to VCs. It was listapalooza the last two weeks. Business Insider published a list of the 100 startups of 2020, according to VCs. The Information debuted its startup list, The Information 50, of its take on the most promising startups. And Forbes published its second most-popular list for VCs: the 30 Under 30 venture capital list, which highlighted Blck VC's Sydney Sykes and Frederik Groce.
• Making moves: The journalist to VC tradition is alive and well as CNBC's Chrissy Farr joined OMERS Ventures to invest in health tech. Former Greylock investor Josh Elman is joining Apple to work on the App Store. Meanwhile, former Greylock EIR Adam Nash has a new fintech startup.
• From Protocol: The pandemic has upended the retail industry, with supply chains in disarray and consumers flocking to new ways to shop in droves. We published a new Manual into how retail comes back, including my look into how Faire went from hyper-growth to hyper-support in a pandemic.
• More from Protocol: Software ate the world. Now it's eating software companies. Protocol Cloud's Tom Krazit published an in-depth Manual this week, The New Enterprise.
• This week in VC history: It's been 10 years since Groupon turned down Google's $6 billion acquisition offer. The Chicago Tribune has a good look back on what's happened to the company since (it's valued at around $900 million in market cap today).
• Your weekend reading: Yes, The New Yorker did list Theranos as a Silicon Valley investment, but don't dismiss Charles Duhigg's piece on "how venture capitalists are deforming capitalism" because of it. It's a rare glimpse into the boardroom drama between Benchmark and WeWork as its IPO fell apart.

Five Questions for ...

Initialized Capital's Garry Tan

A self-described "honey badger," Garry Tan is the founder and managing partner of Initialized Capital, a seed firm that raised $230 million for its fifth fund in August. Some of his latest investments include agriculture supply chain company Silo and videoconferencing startup Around.

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

I'm definitely addicted to YouTube! Which is funny, I normally am an early adopter, but in this case I feel like I was a very late adopter. I underestimated how powerful video is as a medium, and luckily my AV nerd/photography skills translated well to start my YouTube channel in 2019. 50,000 subscribers and 1 million views later, I am still blown away at how powerful that channel is, even in 2020. I think COVID made YouTube grow 15% instantly, which is crazy because they're already at tremendous scale.

SPACs: Overrated or underrated?

Underrated. SPACs are a release valve. We've seen a steady increase in valuations over the last decade in private markets, but it's not a democracy, and it's a closed system. Too often, the private capital markets are made inefficient by cabal-like behavior where one or two startups are blessed with insane amounts of capital. One good example of this is Blue Apron: Look at how it raised money faster than everyone, but then soured the space, even as European-based HelloFresh or Initialized-funded company Gobble shows you can absolutely create a meal kit that is high retention and a great business that generates earnings.

More often than not, the cabal chooses the wrong company. I predict that SPAC-ed companies will be able to bypass the cabal, which can lead to inefficiency, and, in some cases, outperform its peers. The world is so full of capital, and it is seeking yield. Microsoft IPO-ed at $700 million market cap, and now it is worth $1.6 trillion — all of that was accessible to normal investors with no special access. More access to better startups and a more level playing field through the public markets is absolutely a great thing for the investing public.

What problem do you want to see a startup solve?

The process of becoming a YouTube creator was long, there are very few resources, and then you are basically flying blind. I think there is a large opportunity in making that path a lot simpler. Online teaching and entertainment remain the biggest opportunities for people on the internet, and I've been interested in seeing the whole stack develop. Whether it is creating the next version of Final Cut Pro X but focused on spoken word (like what Andrew Mason is doing with Descript) or creating new communities for fostering creation, like 368 — there are going to be new models for this, and I'm interested in seeing startups bring content creation to the next level.

What's a pitching pet peeve?

Sometimes founders come in and are a mile-a-minute brag-fest. Nonstop name-dropping. I think that works for some founders and some investors, but my sense is it tends to only work with the lowest tier of investor. The best investors I know and have worked with are pretty much focused on bottom-up-first principles. It matters a lot less whether you went to Stanford or worked at Google. It matters a lot more that you created something people want, and that you learned something that other people didn't know from direct experience. The worst pitches are basically just checking the box on saying buzzwords and credentials. The best pitches are stories that teach me about a part of the world I might not know about yet, but present a clear and large opportunity.

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

I was working with the meal replacement company Soylent at Y Combinator. They originally were working on networking hardware, and then the founder started working on Soylent in his spare time, and it hit a nerve in the community. I told them they shouldn't name it Soylent — but in the end I now realize I was wrong. People talked about Soylent, and that was worth perhaps tens of millions of dollars of earned media all acquired organically for free. It didn't matter if most people hated the name: The one out of 10 people who heard about it [and] wanted it loved it and bought it. It was a big lesson for me around marketing and the nature of creating brands in 2020. The opposite of love is not hate, it is indifference. The true lesson is that the ultimate nature of brands, regardless of how you feel about Soylent, is that you need to make consumers feel something. Every business is a meme now. For founders, what will your meme be?

A MESSAGE FROM MICRON

At Micron, we see an opportunity to establish memory and storage platform capabilities that will unleash software developers to deliver solutions that speed insight and ultimately support emerging customer requirements. The data-centric era has ushered in a new opportunity to tap data for business growth, but many companies continue to struggle to transform mounting data stores into competitive advantage.

Learn how here.