Protocol Index: Three things startups should do now



Good morning, and welcome to Protocol Index, your daily pop-up report about the financial movements that matter to tech during the COVID-19 crisis. Want Index in your inbox each morning? Subscribe here.

Today: Entrepreneur First's Matt Clifford on shrinking valuations, Facebook CPMs hit an all-time low, and angles are back in fashion.

What Matters This Week

  • Earnings season kicks off tomorrow, led by the big banks. Keep an eye out for TSMC's results on Thursday.
  • In economic data, Wednesday's March U.S. retail sales data is expected to show an 8% month-on-month plunge. Chinese GDP figures, out Friday, will likely be equally grim.

Layoff Watch

  • 19,871 employees across 233 startups have been laid off since March 11, with the pace accelerating in the past week, according to tracker
  • Siemens CEO Joe Kaeser said no one will be fired "because of a temporary fluctuation in activity."

Today's News

As of 4.10 a.m. PDT: Nasdaq Futures: -0.82% | Nikkei: -2.33% | Hang Seng: 1.38%



  • Facebook's worldwide CPMs hit an all-time low of $1.95 last week, according to Gupta Media, with U.S. CPMs at $2.65 compared to a $4.67 average in the past two years.
  • San Francisco's mayor capped food delivery commissions at 15%.
  • Global PC shipments declined 8% year-on-year last quarter, reports Canalys, citing supply chain issues. Of major manufacturers, Apple's shipments were the hardest hit.
  • Amazon is putting new grocery delivery customers on waiting lists and will reduce Whole Foods store hours in a bid to serve existing delivery customers better.
  • The telecoms industry could lose $25 billion in roaming revenue this year, according to Juniper Research.
  • 5G conspiracy theories have spread to the Netherlands, leading to arson attacks on cell towers there.
  • Turkey may require social media companies to appoint local representatives, with bandwidth reductions if they don't.


  • Kargo Technologies, a logistics startup founded by former Uber exec Tiger Fang, raised $31 million.
  • "Crossover investors" such as hedge funds and sovereign wealth funds are pulling back from startup investing, according to CB Insights.


Focus on the 'new urgency'

Last week I caught up with Matt Clifford, co-founder and CEO of Entrepreneur First. With incubator programs in five different cities, Clifford's got a pretty great sense of what's currently happening in the startup and venture capital scene — as well as tons of advice for entrepreneurs. You can read our full conversation on Protocol, but here are some highlights:

On what's happening to fundraising:

  • "My rough estimate would be that most seed funds intend to cut their pace by about 50% … I expect valuations to fall 30 to 40%, even in seed, and at least that further up the chain."
  • "I haven't yetat seed seen any unusual terms other than probably slightly lower prices. I think we've had the first three term sheets [from demo day] now. So far, prices seem maybe a little lower, but not crazy low: It's not halved or anything."
  • But at Series B and above, terms like participating preferences are "definitely coming back."
  • He thinks VCs should be careful about their behavior, though, saying he's seen some try to change the terms on signed deals. "It seems crazy to me to be willing to throw away a reputation on the basis of one deal in one fund."

On the potential benefits of the crisis:

  • "I think we definitely had got to the point where valuations were getting pretty frothy. And I think free money is always nice, but I think it's useful for founders to learn the discipline of hard times."
  • Clifford also doesn't think wanton bailouts are a good idea. "The reality is that the failure rate of startups is part of what makes the ecosystem work," he said. Artificially lowering that failure rate could "massively distort the market."

Three things startups should be doing right now:

  • "Look at all the waste that you're potentially accumulating in the current version of what you're doing, and cut everything that isn't absolutely core."
  • "Focus on what it takes to succeed on the other side of the crisis." That means not cutting the functions that'll create value after the crisis.
  • "Really understand what is urgent and important right now. I think startups that focus on the new urgency — what has just become urgent because of the crisis — they're the ones most likely to succeed."

We've got lots more interviews coming your way — and if you're working in this area, I'd love to hear from you too: Get in touch at


  • "I don't think companies know what's going on." — BMO Wealth Management's Mike Stritch thinks you shouldn't expect too much from managers' forecasts.
  • "If you have a lot of resources and you're hiring and other companies are struggling, that's when you pick off the right people." — Former Google HR chief Laszlo Bock. The Wall Street Journal reports that startups might struggle to recruit in the face of big tech.
  • "The Fed and Congress have precluded the prospect of a complete economic collapse." — Goldman Sachs, which thinks stocks may have bottomed out.
  • "On a daily basis, as of 3/28, Uber Eats was 2.5x Uber's revenue." — Greycroft's Teddy Citrin, citing Second Measure data.
  • "[Ritesh] Agarwal could be in trouble soon if he faces a margin call. He might need to sell shares at a massive discount." — United First Partners' Justin Tang on the Oyo CEO, who borrowed $2 billion to buy Oyo shares. Masa Son, who personally guaranteed those loans, might also be in trouble.

Closing Bell

Angles are cool again

That Bloomberg iPhone report I mentioned above has another interesting detail: The new iPhones will reportedly borrow the iPad design, with sharp corners and iPhone 5-esque flat sides. I am extremely into that, and it furthers my theory that we're headed for a renaissance in industrial-looking, edgy design. Mark my words: Give it five years and everything will look like the Cybertruck.

Thoughts/feedback/tips? Email me — — or anonymously contact Protocol. And subscribe to get Index in your inbox each morning. Thanks for reading, see you tomorrow.

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