Link: lots of capital, little control

With all the money sloshing around looking to find a home, startup funding might be a bit of a sellers market:

Venture capitalists are now relatively less in the business of choosing the best startups in which to invest, and relatively more in the business of getting the best startups to choose them as investors. Money is plentiful and good startups are relatively (relatively!) scarce, and so the startups can be picky. And venture capitalists are increasingly doing public relations to try to become famous, so that the startups that will become famous will choose them as investors. “Some firms are realizing, ‘Huh, maybe awareness doesn’t just magically grow on trees,’” says the founder of a public relations firm.

And once startups are public, investors get little control:

So here too the founders seem to have the power and the people writing the checks don’t. In private markets, investors have to demonstrate their merit to be allowed to invest. In public markets, anyone can invest, but they don’t really get any control over the company. Capital is plentiful, and the people with the companies just don’t have to do that much to cater to the people with the capital. I suppose it makes sense so many unicorns are, in Griffith’s words, “a financial sinkhole”: If you don’t have to be too solicitous of the people with the money, you might as well spend a lot of it.

Source: The Unicorns Are in Charge Now

Link: Elizabeth Holmes and her firm Theranos show why we must stop fetishising entrepreneurs

As well as capturing enduring gender anxieties, the Theranos story is also a reflection of the technological zeitgeist. Gibney believes Holmes was so successful because of Silicon Valley’s “fetishisation of the entrepreneur”. Holmes’s entire persona, after all, seems to have been an exercise in myth-making. She dropped out of college, like Mark Zuckerberg. She borrowed Steve Jobs’s trademark black turtleneck and bizarre eating habits. She faked a deep baritone to make herself more authoritative. If you were to come up with a piece of performance art reflecting our expectations of “tech geniuses”, you could not have done a better job than Holmes. What an incredibly scary thought.

Source: Elizabeth Holmes and her firm Theranos show why we must stop fetishising entrepreneurs

Link: Software was important, but civics hacking is the real enabler

Techmeme’s summary is all you need to read:

Three recent books argue that big tech became powerful not because of “software disruption” but by ducking regulation, squeezing workers, strangling competitors
Original source: Software was important, but civics hacking is the real enabler

Link: Mesosphere revenue, etc.

“Last year in Q4 we issued news about hitting a $50m+ run rate and this year’s Q2 marks our biggest quarter ever, beating our numbers over the last 14 quarters. In fact, according to a recent report from Inc, we are the third fastest-growing software company in the U.S. with a revenue growth of 7,507 percent.”
Original source: Mesosphere revenue, etc.

Link: New Tech Spotlight: Fintech Investments Reach All-Time High In Q2 2018

“In Q2 of this year, fintech startups raked in a total of $19 billion in funding, pushing the overall category to well north of $100 billion in total funding raised.”
Original source: New Tech Spotlight: Fintech Investments Reach All-Time High In Q2 2018

Link: Lessons from Elad Gil and High Growth Handbook

It’d be useful at some point to compare the “how to be a startup” advice to “how to modernize and suite of enterprise applications.” For example, an enterprise often knows its product/market fit (e.g., selling kidnapping insurance to executives). However, it may not know the best product/technology approach (it needs a mobile app that tracks when the executive leaves the country), or product/design fit (the executive’s assistant does most of the interaction with the software, so you need to add a secondary user).

For enterprises, there’s much to be learned from startup think, but there’s also much that’s different.
Original source: Lessons from Elad Gil and High Growth Handbook

Link: The State Of The Kubernetes Ecosystem

Overview of the (vendor) players.

Also:

  • “According to predictions from 451 Research, the market is set to grow from $762 million in 2016 to $2.7 billion by 2020.”

  • “A Forrester study found that 66% of organizations who adopted containers experienced accelerated developers efficiency, while 75% of companies achieved a moderate to significant increase in application deployment speed.”
    Original source: The State Of The Kubernetes Ecosystem

Link: The State Of The Kubernetes Ecosystem

Overview of the (vendor) players.

Also:

  • “According to predictions from 451 Research, the market is set to grow from $762 million in 2016 to $2.7 billion by 2020.”

  • “A Forrester study found that 66% of organizations who adopted containers experienced accelerated developers efficiency, while 75% of companies achieved a moderate to significant increase in application deployment speed.”
    Original source: The State Of The Kubernetes Ecosystem

Link: There is no “technology industry”

‘But today, the major players in what’s called the “tech industry” are enormous conglomerates that regularly encompass everything from semiconductor factories to high-end retail stores to Hollywood-style production studios. The upstarts of the business can work on anything from cleaning your laundry to creating drones. There’s no way to put all these different kinds of products and services into any one coherent bucket now that they encompass the entire world of business.’
Original source: There is no “technology industry”

Link: Docker founder Solomon Hykes leaving company, cites need for enterprise-focused CTO

“To take advantage of this opportunity, we need a CTO by Steve’s side with decades of experience shipping and supporting software for the largest corporations in the world. So I now have a new role: to help find that ideal CTO, provide the occasional bit of advice, and get out of the team’s way as they continue to build a juggernaut of a business.”
Original source: Docker founder Solomon Hykes leaving company, cites need for enterprise-focused CTO

Link: Fintech Has Grown Up

“Fintech has lost its direct-to-consumer ambition. Previous editions of Finovate have seen presentations by now established brands like Fidor Bank, eToro, Kabbage, rPlan, and Scalable Capital. Most of these startups have since shifted their business model from just direct to customers – consumers or businesses – to some form of B2B2C, working with incumbents as their distribution partners. That’s because despite all the claims about incumbents neglecting their customers’ needs, customer acquisition in financial services remains hard and expensive.”
Original source: Fintech Has Grown Up

Link: Fintech Has Grown Up

“Fintech has lost its direct-to-consumer ambition. Previous editions of Finovate have seen presentations by now established brands like Fidor Bank, eToro, Kabbage, rPlan, and Scalable Capital. Most of these startups have since shifted their business model from just direct to customers – consumers or businesses – to some form of B2B2C, working with incumbents as their distribution partners. That’s because despite all the claims about incumbents neglecting their customers’ needs, customer acquisition in financial services remains hard and expensive.”
Original source: Fintech Has Grown Up

Link: The Majority of Top Performing IPOs Were Never Unicorns | Jeff Richards | Pulse | LinkedIn

“Given the data we shared at the beginning of this post – 75% of the top 20 performing IPOs from the last four years went out at valuations below $1 billion – one would think we’d see this trend picking up steam. Recent sub-$1 billion IPOs by companies like SendGrid, Blackline and TradeDesk have all done very well. Our bet, however, is small cap IPOs will continue to be few and far between until a) the late stage private capital market gets more difficult, b) investment banks decide to focus on smaller deals, or c) the regulatory requirements of public companies are reduced. None of these is likely to happen soon.”

The gate keepers want the biggest pound of flesh possible. It’s how percentages work.
Original source: The Majority of Top Performing IPOs Were Never Unicorns | Jeff Richards | Pulse | LinkedIn

Five banking startups: back office optimatition and retail analytics

You can get a sense of the types of projects and applications of cloud native banks are interested in by looking over these Capital One startup contest winners:

– Credit Kudos – an alternative credit scoring platform that measures credit worthiness using real-time transaction data captured automatically from the borrower, providing a transparent and up-to-date view of a person’s credit profile. Freddy Kelly, CEO of Credit Kudos, said: “Our aim is to change the way credit scoring works, from an opaque black box system to something that allows individuals to get the most value from their data. As a pioneer in lending, we believe Capital One is the perfect partner for us to bring Credit Kudos to the market.”
– Multisense – a secure end-to-end solution put together as a user-friendly mobile platform which includes face, voice and fingerprint recognition which can be combined with GPS and NFC. Aviram Siboni, CEO of Multisense, said: “Being part of this accelerator programme is an amazing opportunity. Not only to get the chance to join forces with Capital One, but also to bring our biometrics authentication platform a step closer to the UK market – it’s such an incredible time for us to innovate alongside Capital One.”
– Pariti – a mobile banking app enabling users to take control of their money, reduce interest payments and start saving. The app connects to separate bank accounts and credit cards and automatically identifies income and bills so users know what they can safely spend each week. Matthew Ford, CEO and Founder of Pariti, said “It is extremely exciting to have been selected to go forward in this process and I look forward to working very closely with Capital One to further develop Pariti and enhance the future of banking.”
– Warwick Analytics – a provider of automated predictive analytics that can remove the 80% of time data scientists need to organise and process data prior to analysis. Dan Somers, CEO of Warwick Analytics, said: “We’re delighted to be part of Growth Labs and working with Capital One – one of the most innovative financial services companies. We are looking forward to collaborating to develop disruptive solutions for them and for this sector.”
– WealRo – a real-time assistant for savings and investing that aims to use AI technology and machine learning to find areas of a user’s budget where savings can be made. Owen Haggith-Khonje, WealRo’s founder, said: “Growth Labs presents a fantastic opportunity for WealRo to receive world-class mentoring, with the hope of building a long term relationship with Capital One that positively shapes the financial landscape.”

There’s a mixture of optimizing existing services (better authenticating, credit scoring, improving data analysis), but also analytics-drive services that encourage customers to keep more money in the bank (savings).

Source: Capital One announces finalists for startup accelerator

Link: Billionaire CEO and investor Marc Benioff says unicorn startups manipulated private markets and he’s done investing in them

“The unicorn thing, I’ve been saying for a while now, is not great,” Benioff told Stephanie Ruhle on Bloomberg GO earlier this week. “The reason why it’s not great is not necessarily that these companies are not worth this much money or whatever — we don’t actually know because they’ve manipulated the private markets to achieve these valuations.”

“There is no reason why these companies who claim to be worth billions of dollars and making billions of dollars to stay private,” he continued. “They need to get out on the market, run their companies with the right level of governance, and let the market rationalize these valuations.”

“Being a public company is good. It forces us to make sure we keep the cadence…we have to keep our eye on the ball,” Benioff said. “The unicorn mania that’s going on, that’s dangerous for our Silicon Valley economy.”

Hey, he’s got all sorts of biases where this view favors him and Salesforce…but that doesn’t mean it’s wrong-think.

Source: Billionaire CEO and investor Marc Benioff says unicorn startups manipulated private markets and he’s done investing in them

The 100 person limit

Size and internal vs. external coordination costs matter a lot. North of 100 people in a company, employees don’t all know each other. Politics become important. Incentives change. Signaling that work is being done may become more important than actually doing work. These costs are almost always underestimated. Yet they are so prevalent that professional investors should and do seriously reconsider before investing in companies that have more than one office. Severe coordination problems may stem from something as seemingly trivial or innocuous as a company having a multi-floor office. Hiring consultants and trying to outsource key development projects are, for similar reasons, serious red flags. While there’s surely been some lessening of these coordination costs in the last 40 years—and that explains the shift to somewhat smaller companies—the tendency is still to underestimate them. Since they remain fairly high, they’re worth thinking hard about.

The 100 person limit