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Monthly Archives: March 2020

How to value a startup in a downturn



The value of technology companies has fallen as the broader public markets have repriced themselves in light of COVID-19-related market and economic disruptions.

And as the public markets sort out the new value of a huge piece of global business, private companies are being shaken as well.

What happens in the public markets trickles into the private markets, so if we’re seeing the value of public tech companies fall, startups are going to take a hit. To understand that dynamic, we spoke with Mary D’Onofrio, an investor with Bessemer Venture Partners. She’s the right person to chat with about the links between private valuations and public share prices as she not only helps put capital into growing startups, she also helps run the Bessemer cloud index (now a partnership with Nasdaq, and trackable on a day-to-day basis).

As she’s versed on both sides of the public-private divide, we asked her how she values startups in normal market conditions and in more turbulent times like today. We also dug into how founders are reacting to the changing world that may no longer be as amenable to their business plans. Pulling from our conversation, D’Onofrio told TechCrunch that startups want to be valued like companies were a few months ago, while investors want to pay today’s market prices.

But enough introduction, let’s get to the conversation. This interview has been edited for length and clarity; thanks to Holden Page and Walter Thompson for help with the transcription.

TechCrunch: During our last conversation, we discussed how to value startups. You explained a method in which you consider the future value of cash flows. How do you value startups today versus how much you think they’ll be worth down the road?

Mary D’Onofrio: I think what’s important to know is that outside of a market disruption, which I think was the the nature of the question to begin with, cloud software tends to trade on revenue and revenue growth. Companies should fundamentally be valued on the present value of their future free cash flows. But I think with cloud software, in particular, there’s a prioritization of taking [market]share, and then applying a very long term healthy margin structure on a very massive revenue base once you get there, and generating cash then.

And so I think in bull markets, when capital is readily available, prioritizing growth makes a lot of sense because you want to capture as much share as you can. And then losses are also tolerable because the capital is available to fund that massive growth. And there are actual measurable metrics that validate that structure, with CLTV to CAC [customer lifetime value to customer acquisition costs] being one of them.

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Daily Crunch: Amazon warehouse workers walk out



Amazon faces worker complaints over its response to the COVID-19 pandemic, General Motors says it’s moving fast to manufacture face masks and we’ve got some numbers quantifying the video conferencing boom. Here’s your Daily Crunch for March 31, 2020.

1. Amazon warehouse workers are walking out and Whole Foods workers are striking

Yesterday, warehouse workers on Staten Island in New York walked off the job in protest of Amazon’s treatment amid the crisis. Meanwhile, workers at Whole Foods, which is owned by Amazon, are organizing a “sick out” strike to demand better protections on the job, Vice reports.

“We have taken extreme measures to keep people safe, tripling down on deep cleaning, procuring safety supplies that are available, and changing processes to ensure those in our buildings are keeping safe distances,” an Amazon spokesperson said. “The truth is the vast majority of employees continue to show up and do the heroic work of delivering for customers every day.”

2. General Motors spins up global supply chain to make 50,000 face masks a day

The automotive giant said in a released statement that it expects to deliver 20,000 masks on April 8 — and soon after, it should be able to produce 50,000 masks a day once the production line is at full capacity.

3. Videoconferencing apps saw a record 62M downloads during one week in March

According to a new report from App Annie, business conferencing apps have been experiencing record growth and just hit their biggest week ever in March, topping 62 million downloads during the week of March 14-21. Meanwhile, social networking video app Houseparty has also seen phenomenal growth in Europe during lockdowns and home quarantines.

4. Uber co-founder Garrett Camp steps back from board director role

Camp is relinquishing his role as a board director and switching to board observer, where he says he’ll focus on product strategy for the ride hailing giant. In his Medium post announcing the shift, Camp signs off by saying he’s looking forward to helping Uber “brainstorm the next big idea.”

5. Leading VCs discuss how COVID-19 has impacted the world of digital health

We asked several of the VCs who participated in our last digital health survey to update us on how COVID-19 is impacting digital health startups and broader healthcare systems around the world. (Extra Crunch membership required.)

6. Niantic squares up against Apple and Facebook with acquisition of AR startup 6D.ai

The studio behind Pokémon Go has acquired 6D.ai, a promising augmented reality startup focused on building software that allowed smartphone cameras to rapidly detect the 3D layouts of spaces around them.

7. Disney+ to launch in India on April 3

The service, available globally in about a dozen markets, will launch in India on Hotstar, one of the most popular on-demand streaming services in the country (it’s also owned by Disney). The company said it is raising the yearly subscription cost of the combined entity, Disney+Hotstar, to Rs 1,499 ($20), up from Rs 999 ($13.20).

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

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Color is launching a high-capacity COVID-19 testing lab and will open-source its design and protocols



Genomics health technology startup Color is doing its part to address the global COVID-19 pandemic, and has detailed the steps it’s taking to support expansion of testing efforts in a new blog post and letter from CEO Othman Laraki on Tuesday. The efforts include development of a high-throughput lab that can process as many as 10,000 tests per day, with a turnaround time of within 24 hours for reporting results to physicians. In order to provide the most benefit possible from the effort of standing this lab up, Color will also make the design, protocols and specifics of this lab available open-source to anyone else looking to establish high-capacity lab testing.

Color’s lab is also already nearly ready to begin processing samples — it’s going live “in the coming week,” according to Laraki. The Color team worked in tandem with MIT’s Broad Institute, as well as Harvard and Weill Cornell Medicine to develop its process and testing techniques that can allow for higher bandwidth results output versus standard, in-use methods.

The focus of Color’s efforts in making this happen have been on using automation wherever possible, and seeking techniques that source parts and components, including reagents, that can come from different supply chains. That’s actually a crucial ingredient to being able to ramp efforts at scale nationally and globally, because if everyone is using the same lab processing methods, you’re going to run up against a bottleneck pretty quickly in terms of supplies. Being able to process tens of thousands of tests per day is great on paper, but it means nothing if one ingredient you need to make that happen is also required by every other testing lab in the country.

Color has also made efforts to address COVID-19 response in two other key areas: testing for front-line and essential workers, and post-test follow-up and processing. To address the need for testing for those workers who continue to operate in public-facing roles despite the risks, Color has redirected its enterprise employee base to providing, in tandem with governments and employers, onsite clinical test administration, lab transportation and results reporting with patient physicians.

For its post-test workflow, Color is working to address the challenges reported by other clinicians and health officials around how difficult it is to be consistent and effective in following up on the results of tests, as well as next steps. So the company is opening up their own platform for doing so, which they’ve re-tooled in response to their experience to date, and making that available to any other COVID-19 testing labs for free use. These resources include test result reporting, guidelines and instructions for patients, follow-up questionnaires around contact tracing and support for how to reach out to potentially exposed individuals tied to a patient who tests positive.

To date, Color says that it has been able to operate at cost, in part backed by support by philanthropic public and private donations. The company is encouraging direct outreach via its covid-response@color.com email in case anyone thinks they can contribute to or benefit from the project and the resources being made available.

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Brandless founder Tina Sharkey joins the board of PBS



Tina Sharkey, the founder and former CEO of the recently closed D2C brand Brandless, has today been appointed to the board of directors of PBS. Sharkey is an independent board member.

Before her time at Brandless, Sharkey spent years in the media world. She scaled Johnson & Johnson’s platform for new and expecting moms called Baby Center, oversaw AOL’s transition from a closed network to the open web, and cofounded iVillage. She also served as President of the Sesame Street Digital Group, the non-profit behind Sesame Street with a mission of making educational storytelling available to anyone.

PBS, celebrating its 50th anniversary this year, has more than 300 partner stations and a presence on most digital platforms.

“PBS is so committed to universal access to the arts and educational storytelling,” said Sharkey in an interview with TechCrunch. “You may not know that they invented closed captioning. They still maintain the Public Emergency Broadcast System. They have all kinds of streaming services with distribution on Amazon, Roku, YouTube. They have their own app. But most importantly, they are able to quickly adapt in this moment of Covid-19 to become one of the world’s largest classrooms.”

Sharkey joins a 27-person board that includes Professional Directors (station leaders), General Directors (lay members of the board) and the PBS President and CEO Paula Kerger.

Sharkey is best known in the tech world for her time at Brandless, a D2C brand that sold household supplies, grocery items, and pet products for $3/item. The company controlled most of the full stack, from manufacturing through to sales, and delivered an interesting alternative to Amazon. Also garnering attention from the tech world: Brandless raised nearly $300 million in funding, including $240 million from Softbank’s Vision Fund.

Brandless shuttered in February of this year, but Sharkey says there are lessons that can be carried over from her experience at the D2C startup.

“Brandless tapped into something very powerful around democratizing access to better things,” said Sharkey. “Better should be available to everyone. With Brandless, it was about better stuff. For PBS, it’s about better access and better educational tools and better stories. So it’s a different product, but it’s the same belief system, and that’s that communities want to be convened and be seen and everyone has a story to tell.”

Sharkey added that some of her favorite PBS programming includes FrontLine, News Hour, and the shows that offer more democratized access to the arts, such as live performances and Broadway shows.

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AT&T to increase mobile hotspot data by 15GB in April



We’re all leaning on our mobile data a little more these days, which is why AT&T is giving mobility customers and small businesses a boost to help them through the COVID-19 crisis.

From April 2 through May 13, the telecom will automatically increase mobile hotspot data by 15GB a month for each line on an unlimited plan (that currently includes a monthly tethering allotment). For instance, those on the Unlimited Elite plan will receive 45GB a month of tethering per line.

“AT&T’s commitment … is to keep our customers and employees connected in these unprecedented times—whether that’s a video call to a loved one, learning in a virtual classroom, collaborating with colleagues or streaming your favorite shows,” David Christopher, executive vice president and general manager of AT&T Mobility, said in a statement. Read more…

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