How to land the top spot in Google search with featured snippets in 2021

Search is changing. Most search engines now don’t just bring up a page of 10 search results and two ads at the top when you type in a query. Instead, Google search queries can bring up a whole range of results, and sometimes answer your questions without you ever having to click through to a page.

Take, for example, a search like this: “how many days until halloween.”

Example of a featured snippet

A featured snippet counting down the days to Halloween. Image Credits: Ryan Sammy

You can see that instead of displaying the top result right away, Google answers the question for you in a rich snippet. It also gives you related search queries featuring countdowns for other holidays. On the right is a knowledge panel from Wikipedia about Halloween, and below that, you’ll see the featured snippets section. These snippets will expand when clicked with answers for related questions.

Featured snippets are collections of sentences or words that Google pulls directly from a webpage relevant to the search query.

Finally, after these answers to your queries and any related questions, you get to the first result. At this point, do you even need to visit the website?

Google search is not what it used to be. We all want to be No. 1 on the search results page, but these days, getting to that position isn’t enough. It might be worth your while to instead go after the top featured snippet position.

What’s a featured snippet?

Featured snippets are collections of sentences or words that Google pulls directly from a webpage relevant to the search query. These snippets are displayed right below the search box and are meant to answer search queries quickly. The snippets can appear in the form of lists, how-to steps, tables, short paragraph boxes and other formats.

#advertising-tech, #ahrefs, #column, #digital-marketing, #ec-column, #ec-how-to, #ec-marketing-tech, #ecommerce, #featured-snippet-optimization, #featured-snippets, #google-search, #search-engine-optimization, #search-results, #seo

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Seed is not the new Series A

The incredible success of the cloud business applications space in recent years has driven up valuations and fundraising across all stages of venture investment. That has in turn increased VC fund sizes, led to massive cloud IPOs and brought a new cadre of investors to further fuel the fire.

The median Series A raised by cloud companies these days is about $8 million and can often go well above $10 million, according to PitchBook data from the first quarter of 2021. Series Cs now routinely include secondary capital for founders, and many Series Ds are above $100 million with valuations in the billions.

There is a widening gap in the funding continuum between angel/seed funding at inception and the new-age $10 million Series A at $2 million in ARR.

Such an influx of capital and interest has upended many structures and long-held norms about how startups are funded. Venture funds continue to grow and must write larger checks, but ever-higher valuations force many firms to hunt for opportunities earlier. The VC alphabet soup has been spilled, making A rounds look like Bs used to, and the Bs seem like the Cs of old.

Which begs an interesting question: Is the seed round the new Series A?

We don’t think so.

Seed rounds have certainly grown — averaging about $3 million nowadays from around $1 million to $2 million previously — but otherwise, seed investments are the same as before and remain very different from Series As.

#angel-investor, #cloud, #column, #corporate-finance, #ec-cloud-and-enterprise-infrastructure, #ec-column, #ec-news-and-analysis, #private-equity, #saas, #seed-money, #startup-company, #startups, #venture-capital

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How to launch a successful RPA initiative

Robotic process automation (RPA) is rapidly moving beyond the early adoption phase across verticals. Automating just basic workflow processes has resulted in such tremendous efficiency improvements and cost savings that businesses are adapting automation at scale and across the enterprise.

While there is a technical component to robotic automation, RPA is not a traditional IT-driven solution. It is, however, still important to align the business and IT processes around RPA. Adapting business automation for the enterprise should be approached as a business solution that happens to require some technical support.

A strong working relationship between the CFO and CIO will go a long way in getting IT behind, and in support of, the initiative rather than in front of it.

A strong working relationship between the CFO and CIO will go a long way in getting IT behind, and in support of, the initiative rather than in front of it.

More important to the success of a large-scale RPA initiative is support from senior business executives across all lines of business and at every step of the project, with clear communications and an advocacy plan all the way down to LOB managers and employees.

As we’ve seen in real-world examples, successful campaigns for deploying automation at scale require a systematic approach to developing a vision, gathering stakeholder and employee buy-in, identifying use cases, building a center of excellence (CoE) and establishing a governance model.

Create an overarching vision

Your strategy should include defining measurable, strategic objectives. Identify strategic areas that benefit most from automation, such as the supply chain, call centers, AP or revenue cycle, and start with obvious areas where business sees delays due to manual workflow processes. Remember, the goal is not to replace employees; you’re aiming to speed up processes, reduce errors, increase efficiencies and let your employees focus on higher value tasks.

#automation, #business-process-automation, #business-process-management, #column, #ec-column, #ec-enterprise-applications, #ec-how-to, #enterprise, #robotic-process-automation, #rpa, #saas, #workflow

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Apple AirTags UX teardown: The trade-off between privacy and user experience

Apple’s location devices — called AirTags — have been out for more than a month now. The initial impressions were good, but as we concluded back in April: “It will be interesting to see these play out once AirTags are out getting lost in the wild.”

That’s exactly what our resident UX analyst, Peter Ramsey, has been doing for the last month — intentionally losing AirTags to test their user experience at the limits.

This Extra Crunch exclusive is a simplified conversation around this Built for Mars article, which helps bridge the gap between Apple’s mistakes and how you can make meaningful changes to your product’s UX.

For an industry that’s often soured by privacy concerns, Apple has an unusually strong stance on keeping your data private.

AirTag not reachable

There are two primary purposes of an error message:

  1. To notify the user what has gone wrong (and how it affects them).
  2. To help the user resolve the issue.

Most businesses do a decent job at the first one, but it’s rare that a product will proactively obsess over the second.

Typically, Apple is one of the few examples that do — it’s indisputably one of the leaders in intuitive design. Which is why I was surprised to see Apple’s error message when an AirTag is not reachable:

Image Credits: Built for Mars screenshot

There’s a huge amount of ambiguity in the statement “move around to connect,” and it fails to mention that this error could be because the AirTag’s batteries have been removed.

Instead, Apple should make this message clickable, which opens a modal to learn more about this issue.

#airtag, #apple, #apps, #column, #ec-column, #ec-consumer-applications, #iphone, #privacy, #tc, #user-experience

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5 tips for brands that want to succeed in the new era of influencer marketing

If I told you a decade ago that a spin bike would be a social community, you’d have had a good laugh. But that’s precisely what Peloton is: A spin bike with a social community where the instructors are the influencers.

Peloton is just one example of how social is being integrated into every aspect of the customer experience in an increasingly digital world. Whether it’s considering a new restaurant to check out, a movie to see or a product to buy, most people look at reviews before making a final decision. They want social proof as an indicator of quality and relevance.

Influencers are a natural byproduct of this desire for social validation, and as social permeates the customer journey, creators have become an essential source of validation and trust.

Influencers are a natural byproduct of this desire for social validation, and as social permeates the customer journey, creators have become an essential source of validation and trust. Indeed, social validation is what social platforms are built on, so it’s a significant component of how we derive relevance online — and the deeper integration of social is changing the dynamic between brands and digital creators.

The shifting economy of creator monetization

Brand sponsorships are the holy grail for creators hoping to monetize their online influence. According to an eMarketer report, brand partnerships are still the No. 1 source of revenue for most digital creators.

However, digital creators have a lot more monetization options to choose from, thanks to Patreon, affiliate platforms, paid content platforms and platform revenue sharing, making it easier to earn a living without relying so heavily on brand sponsorships.


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As a result, creators are diversifying their revenue streams, which, for some creators, allows them to be more selective about the brands they work with. What’s more, creators aren’t reliant on just one channel or one form of revenue.

YouTube creators probably have the most diversified revenue, often combining brand sponsorships, subscription models, affiliate deals, tipping/donations, their line of branded products and revenue share. However, it’s important to note that not all monetization options apply to every creator. But with so many options to choose from, making a living as a digital creator is more accessible than ever.

Here are a few of the ways online creators can monetize their content:

Ad revenue sharing: Advertising is the most traditional form of revenue for online creators. With this model, ads are injected into and around the creator’s content, and they make a certain percentage of revenue based on impressions. However, the revenue split can vary based on the platform, and some platforms have a specific threshold creators must hit before they can participate in ad revenue sharing.

Affiliate marketing: Similar to advertising or a brand sponsorship, affiliate marketing is an agreement for a share of revenue based on products sold. This kind of arrangement generally works best when the creator has a blog, website or YouTube account. Affiliate links allow the influencer to proactively choose the products they want to talk about and earn from, rather than having to wait for a brand deal to come their way.

#advertising-tech, #celebrity, #column, #ec-column, #ec-marketing-tech, #influencer-marketing, #marketing, #online-advertising, #online-creators, #patreon, #social, #social-media, #tiktok, #youtube

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Companies should utilize real-time compensation data to ensure equal pay

Diversity, equity and inclusion (DEI) initiatives are often thought to be an issue that can be solved by intuition by some segment of the HR team. However, in reality, it needs to come from a data-driven approach that encompasses the entire workforce.

The primary aspect that companies usually look to, in terms of treating employees fairly, is remuneration. However, having the conversation and agreeing on the need for equality doesn’t mean it will be achieved on an organizational scale.

Particular attention should be paid to addressing inequities in the areas of attracting and hiring candidates, integration, performance assessment, compensation and promotion.

In a recent survey from Mercer that included data from more than 1,000 companies in 54 countries, 81% agreed that it was important to have a plan for advancing gender equality, but just 42% actually had one in place. This points toward a tokenism attitude indicating companies are happy to talk around the issue without addressing it directly.

Despite the fact that women make up roughly half of all college-educated workers in the United States, they are underrepresented in positions of power — just 8% of Fortune 500 companies are led by women, and, incredibly, just 1% by women of color. Furthermore, the last U.S. census revealed that women who are employed full time are paid on average 17% less than men.

While there have been steps to ensure equal pay, such as Canada’s Pay Equity Act, which states that men and women in the public sector should be paid equally, it does not cover the private sector. Given that the Institute for Women’s Policy Research estimates that equal pay will not be reached until 2059, there is still plenty of work to be done.

Particular attention should be paid to addressing inequities in the areas of attracting and hiring candidates, integration, performance assessment, compensation and promotion. Companies need to think about initiatives that are supported by objective tools to drive progress, identify problems and strategize solutions. This is where data can be a great tool to provide insight into DEI: by highlighting shortcomings and areas where there is bias.

Start with data collection

The first step is to create a data set so that tangible metrics can be utilized and turned into actionable decisions. To do this, diversity and inclusion officers need to be given the opportunity to weed out bias.

Obviously, the data would drive decisions on areas such as compensation. But far too often, director-level discussions don’t involve the talent acquisition team. To eradicate the pay gap and ensure compensation is equalized on individual merit, this needs to change. Line managers and talent acquisition teams have the best knowledge of their staff and are well placed to procure the right information to help senior managers make equitable decisions.

#business-intelligence, #column, #dei, #diversity, #diversity-and-inclusion, #ec-column, #ec-future-of-work, #human-resource-management, #mckinsey, #sexism, #tc

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Dear Sophie: Is it possible to expand our startup in the US?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.


Dear Sophie,

My co-founders and I launched a software startup in Iran a few years ago, and I’m happy to say it’s now thriving. We’d like to expand our company in California.

Now that President Joe Biden has eliminated the Muslim ban, is it possible to do that? Is the pandemic still standing in the way? Do you have any suggestions?

— Talented in Tehran

Dear Talented,

Yes, it’s possible! Unfortunately, yes, the COVID-19 pandemic is still making the immigration process a bit challenging, but remember, where there’s a will, there’s most often, in immigration law, a way.

On his first day in office in January, Biden rescinded the ban on visas for many majority-Muslim countries, including Iran. The ban had been in place since 2017 and nearly 42,000 visa applications were denied, according to the U.S. Department of State.

Biden also allowed the bans on the issuance of H-1B, L-1, and J-1 visas and green cards at U.S. embassies and consulates that the previous administration put in place last year to lapse.

That means international startup founders like you and other international talent living outside the United States can start thinking about obtaining these visas and green cards without necessarily requiring exceptions to do so. In a recent podcast episode, I talked about these and other immigration-related changes, as well as those promised by the Biden administration. Take a listen to find out more!

As you probably know, most travelers from Iran are currently not allowed entry into the U.S. because of the COVID-19 travel ban, and most U.S. embassies and consulates are not open for routine visa and green card application processing. Because the United States has not had an embassy or consulate in Iran since the Iran hostage crisis of 1979, you and your co-founders should find out which U.S. embassies or consulates are currently processing routine visa and green card applications — and are in countries that are not on the suspended entry list — and apply there. We’re still waiting for detailed information from the State Department on the equivalent of reparations for individuals who were affected by the Muslim ban.

In addition, I recommend that you consult with an experienced immigration attorney who can help you devise an immigration strategy for yourself, your co-founders and your families based on your personal and professional goals. Now, here are a few options for you to consider.

L-1A visa to open a U.S. office for your startup

#column, #dear-sophie, #diversity, #ec-column, #ec-future-of-work, #green-card, #h-1b-visa, #immigration-law, #iran, #lawyers, #policy, #sophie-alcorn, #startup-visa, #startups, #verified-experts

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How to identify unicorn founders when they’re still early-stage

As an early-stage VC, you spend time with hundreds of fantastic startups, trying to identify potential winners by thinking about market size, business model and competition. Nevertheless, deep down you know that in the long run, it all comes down to the team and the founder(s).

When we look at the most successful companies in our portfolio, their amazing performance is in large part thanks to the founders. However, even after 20 years in the industry, I have to admit that analyzing the team is still the most challenging part of the job. How do you evaluate a young first-time entrepreneur of an early-stage company with little traction?

The best founders are humble and well aware of their weaknesses and limitations as well as the potential challenges for their startup.

At Creandum, in the past 18 years, we have been fortunate to work with some of Europe’s most successful startup founders such as Daniel Ek from Spotify, Sebastian Siemiatkowski from Klarna, Johannes Schildt from Kry, Jacob de Geer and Magnus Nilsson from iZettle, Emil Eifrem from Neo4J, Christian Hecker from Trade Republic and many more.

After a while, we realized that these incredible entrepreneurs all share some fundamental characteristics. They all have lots of energy, work hard, show patience, perseverance and resilience. But on top of that, all these unicorn founders share five key traits that, as an investor, you should look for when you back them at an early stage.

They know what they don’t know

Many people expect a typical startup founder to be very confident and have a strong sales mentality. While they should definitely live up to those expectations, the best founders are also humble and well aware of their weaknesses and limitations as well as the potential challenges for their startup.

They keep wanting to learn, improve and grow the business beyond what average people have the energy and drive to manage.

#column, #daniel-ek, #ec-column, #ec-how-to, #entrepreneur, #europe, #funding, #johannes-schildt, #klarna, #paypal, #sebastian-siemiatkowski, #spotify, #startups, #sweden, #trade-republic, #venture-capital, #vivino

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As the economy reopens, startups are uniquely positioned to recruit talent

We are amidst a sprawling renegotiation between employers and employees as to the very nature of work, and no one has more leverage than skilled technologists — many of whom feel unmoored from their current jobs.

Our 2021 Technologist Sentiment Report — which in the second quarter polled technology professionals who mostly work at bigger organizations — shows 48% tech professionals expressed an interest in changing companies this year, up from 40% in the fourth quarter of 2020, and a big jump from 32% in the second quarter last year.

It’s a unique moment, one that creates an unusual opportunity for startup founders on the hunt for talent.

Fast growing upstarts have a lot of advantages. Bigger companies may be more likely to attempt to recreate the office environment of the past — especially if they have leased space and a built environment that will be difficult to unwind. Startups are often non-traditional and may be able to react to create the hybrid work environments many technologists crave as the economy reopens.

While all startups are certainly not focused on being disruptive, they often rely on cutting-edge technology and processes to give their customers something truly new. Many are trying to change the pattern in their particular industry. So, by definition, they generally have a really interesting mission or purpose that may be more appealing to tech professionals.

A migration of tech talent just as the economy is revving up would be disruptive and could also play to startup strengths. The market for tech talent is already strong: tech hiring has increased every month since November, according to our last tech jobs report released in May. Great data engineers, developers, business analysts and the like are in red-hot demand, and unemployment in tech is just above 2.4% percent, versus 5.5.% percent in the economy overall.

#column, #ec-column, #ec-future-of-work, #entrepreneurship, #labor, #personnel, #recruiting, #recruitment, #startups, #tech-jobs, #tech-recruitment

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The demise of browser cookies could create a Golden Age of digital marketing

Depending on whom you ask, the digital advertising industry is either counting down the minutes to doomsday or entering an exciting new era for engaging with consumers. Apple’s iOS 14.5 update — which effectively ends automatic opt-ins to online tracking and data collection — is finally at hand, and Google aims to phase out third-party cookies next year.

The future could see a wave of innovations that help consumers opt out of data collection. So it’s up to the advertising industry to find ways to get these educated, empowered consumers to opt back in.

Whether these changes set digital advertisers back 15 years or pave the way to more fruitful interactions with customers remains to be seen. But one thing is clear: This is big. Allowing users to decide what browsing data can be collected, by whom and under what circumstances is a move that will change the direction of the advertising industry.

But the new direction does not have to lead digital marketers to oblivion, failure or poverty. In fact, it’s quite the opposite.

With a few changes to short-term strategy — and a longer-term plan that takes into account the fact that people are awakening to the value of their online data — advertisers can form a new type of relationship with consumers. It can be built upon trust and open exchange of value.

It’s up to advertisers to grasp, accept and reap the benefits of the upcoming changes. Because with iOS 14.5, cookie deprecation, and regulations like GDPR and CCPA, one era is ending and a new one is beginning. There’s a new seat at the table in the great bargaining session between advertisers and technology giants. It’s occupied — for the first time — by the user.

The short-term strategy

Advertisers can weather big changes in the short term by implementing several steps.

For starters, developers should update their application SDKs to support Apple’s new SKAdNetwork solution and then verify attribution across each channel. For example, after SDK updates, verify that the number of installs reported from your Facebook Ads matches up to the number of installs you’re seeing reported in the App Store developer console or your preferred analytics provider.


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This can become more complicated the more channels you’re on, but it is important to verify all of your advertising channels’ reporting. Also important is setting your conversion value, because this is the key to getting granular information on your ad campaigns and ensuring the right entity controls the flow of information.

#advertising-tech, #column, #digital-marketing, #ec-column, #ec-marketing-tech, #facebook, #google, #marketing, #online-advertising, #online-tracking, #privacy, #social-media, #targeted-advertising, #tc

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5 questions startups should consider before making their first marketing hire

“Who should my first marketing hire be?”

This is (by far) the most common question I’ve received since starting as Fuel’s CMO, and for good reason. Your first marketer will have an outsized impact on team dynamics as well as the overall strategic direction of the brand, product and company.

The reality is that anyone who excels across all marketing functions is a unicorn and nearly impossible to find.

The nature of the marketing function has expanded significantly over the past two decades. So much so that when founders ask this question, it immediately prompts multiple new ones: Should I hire a brand or growth marketer? An offline or an online marketer? A scientific or a creative marketer?

Once upon a time, the number of marketing channels was fairly limited, which meant the function itself fit into a neater, tighter box. The number of ways to reach customers has since grown exponentially, as has the scope of the marketing role. Today’s startups require at least four broad functions under the umbrella of “marketing,” each with its own array of subfunctions.

Here’s a sample of the marketing functions at a typical early-stage startup:

Brand marketing: Brand strategy, positioning, naming, messaging, visual identity, experiential, events, community.

Product marketing: UX copy, website, email marketing, customer research and segmentation, pricing.

Communications: PR and media relations, content marketing, social media, thought leadership, influencer.

Growth marketing: Direct response paid acquisition, funnel optimization, retention, lifecycle, engagement, reporting and attribution, word of mouth, referral, SEO, partnerships.


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As you can imagine, that’s a lot for one person to manage, let alone be an expert in. What’s more, the skill set and experience required to excel in growth marketing is quite different from the skill set required to succeed in brand marketing. The reality is that anyone who excels across all marketing functions is a unicorn and nearly impossible to find.

So who do you hire first?

Unless you’re lucky enough to nab that unicorn, your first hire should be a generalist who can tend to the full stack of the marketing function, learn what they don’t know, and roll up their sleeves to get things done. Someone smart, savvy and super scrappy who understands how to experiment across marketing channels until they find the right mix.

#brand-management, #brand-marketing, #column, #content-marketing, #ec-column, #ec-how-to, #growth-marketing, #marketing, #product-management, #product-marketing, #startups

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After 30 years, ‘Crossing the Chasm’ is due for a refresh

When I was at Open Market in the 1990s, our CEO gave out the recently published book “Crossing the Chasm” to the executive team and told us to read it to gain insight into why we had hit a speed bump in our scaling. We had gone from zero to $60 million in revenue in four years, went public at a billion-dollar market cap, and then stalled.

We found ourselves stuck in what author Geoffrey Moore called “the chasm,” a difficult transition from visionary early adopters who are willing to put up with an incomplete product and mainstream customers who demand a more complete product. This framework for marketing technology products has been one of the canonical foundational concepts to product-market fit for the three decades since it was first published in 1991.

Why is it that in recent years, wild-eyed optimistic VCs and entrepreneurs keep undershooting market size across the tech and innovation sector?

I have been reflecting on why it is that we venture capitalists and founders keep making the same mistake over and over again — a mistake that has become even more glaring in recent years. Despite our exuberant optimism, we keep getting the potential market size wrong. Market sizes have proven to be much, much larger than any of us had ever dreamed. The reason? Today, everyone aspires to be an early adopter. Peter Drucker’s mantra — innovate or die — has finally come to pass.

A glaring example in our investment portfolio is database software company MongoDB. Looking back at our Series A investment memo for this disruptive open-source, NoSQL database startup, I was struck that we boldly predicted the company had the opportunity to disrupt a subsegment of the industry and successfully take a piece of a market that could grow as large as $8 billion in annual revenue in future years.

Today, we realize that the company’s product appeals to the vast majority of the market, one that is forecast to be $68 billion in 2020 and approximately $106 billion in 2024. The company is projected to hit a $1 billion revenue run rate next year and, with that expanded market, likely has continued room to grow for many years to come.

Another example is Veeva, a vertical software company initially focused on the pharmaceutical industry. When we met the company for their Series A round, they showed us the classic hockey stick slide, claiming they would reach $50 million in revenue in five years.

We got over our concerns about market size when we and the founders concluded they could at least achieve a few hundred million in revenue on the backs of pharma and then expand to other vertical industries from there. Boy, were we wrong! The company filed their S-1 after that fifth year showing $130 million in revenue, and today the company is projected to hit $2 billion in revenue run rate next year, all while still remaining focused on just the pharma industry.

Veeva was a pioneer in “vertical SaaS” — software platforms that serve niche industries — which in recent years has become a popular category. Another vertical SaaS example is Squire, a company my partner Jesse Middleton angel invested in as part of a pre-seed round before he joined Flybridge.

#column, #ec-column, #ec-marketing-tech, #mongodb, #nosql, #startups, #tc, #venture-capital

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The fintech endgame: New supercompanies combine the best of software and financials

If money is the ultimate commodity, how can fintechs — which sell money, move money or sell insurance against monetary loss — build products that remain differentiated and create lasting value over time?

And why are so many software companies — which already boast highly differentiated offerings and serve huge markets— moving to offer financial services embedded within their products?

A new and attractive hybrid category of company is emerging at the intersection of software and financial services, creating buzz in the investment and entrepreneurial communities, as we discussed at our “Fintech: The Endgame” virtual conference and accompanying report this week.

These specialized companies — in some cases, software companies that also process payments and hold funds on behalf of their customers, and in others, financial-first companies that integrate workflow and features more reminiscent of software companies — combine some of the best attributes of both categories.

Image Credits: Battery Ventures

From software, they design for strong user engagement linked to helpful, intuitive products that drive retention over the long term. From financials, they draw on the ability to earn revenues indexed to the growth of a customer’s business.

Fintech is poised to revolutionize financial services, both through reinventing existing products and driving new business models as financial services become more pervasive within other sectors.

The powerful combination of these two models is rapidly driving both public and private market value as investors grant these “super” companies premium valuations — in the public sphere, nearly twice the median multiple of pure software companies, according to a Battery analysis.

The near-perfect example of this phenomenon is Shopify, the company that made its name selling software to help business owners launch and manage online stores. Despite achieving notable scale with this original SaaS product, Shopify today makes twice as much revenue from payments as it does from software by enabling those business owners to accept credit card payments and acting as its own payment processor.

The combination of a software solution indexed to e-commerce growth, combined with a profitable payments stream growing even faster than its software revenues, has investors granting Shopify a 31x multiple on its forward revenues, according to CapIQ data as of May 26.

How should we value these fintech companies, anyway?

Before even talking about how investors should value these hybrid companies, it’s worth making the point that in both private and public markets, fintechs have been notoriously hard to value, fomenting controversy and debate in the investment community.

#banking-as-a-service, #column, #customer-service-software, #e-commerce, #ec-column, #ec-ecommerce-and-d2c, #ec-fintech, #enterprise, #finance, #financial-services, #insurance, #tc, #venture-capital

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What SOSV’s Climate Tech 100 tells founders about investors in the space

On Earth Day, April 22, SOSV published the SOSV Climate Tech 100, a list of the best startups that we’ve supported from their earliest stages to address climate change. There are always valuable insights embedded in a list like the 100. A TechCrunch story captured the investment perspective, and an SOSV post went deeper into the companies’ category breakdown and founder profiles.

But what can founders learn from the list about climate tech investors? In other words, who invested in the Climate Tech 100? We dug into the “who’s who” of the list, which had more than 500 investors, and here’s what we found.

An active but fragmented landscape

If you think 500 investors in 100 companies is a lot of investors, you’re right. There are clearly a lot of investors interested in climate tech, and most are generalists just testing the waters. For the Climate Tech 100, about 10% of investors put their money in more than one startup and only seven (less than 2%) wrote a check to four or more. These included Blue Horizon, CPT Capital, EF, Fifty Years, Hemisphere Ventures and Horizons Ventures.

That pattern tracks well with data from PwC, which found that 2,700 unique investors had backed 1,200 startups in its State of Climate Tech 2020 report covering the 2013-2019 period. The report found that only 10 firms out of 2,700 made four or more climate tech deals per year, on average, over the 2013-2019 period. The most active firms are listed in the table below.

Most active investors in SOSV Climate Tech 100

Image Credits: PwC, 2020; additional research by SOSV

Capital deployed in climate tech grew at five times the venture capital overall growth rate over the 2013-2019 period.

There is reason to believe that the fragmentation will diminish with the launch of more funds focused on climate tech. Four funds worth more than a billion dollars each have launched since 2020 that fit the description (see chart below).

It’s also encouraging to see that capital deployed in climate tech grew at five times the venture capital overall growth rate over the 2013-2019 period.

Even so, climate tech still only represented 6% of total venture capital deployed in 2019, so there is plenty of room to grow.

#column, #ec-column, #ec-food-climate-and-sustainability, #energy, #funding, #greentech, #sosv, #sosv-climate-tech-100, #startups, #venture-capital

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Health clouds are set to play a key role in healthcare innovation

The U.S. healthcare industry is amidst one of the biggest transformations any industry has seen since the dot-com boom of the late 1990s. This massive change is being stimulated by federal mandates, technological innovation, and the need to improve clinical outcomes and communication between providers, patients, and payers.

An aging population, increase in chronic diseases, lower reimbursement rates, and a shift to value-based payments—plus the COVID-19 pandemic—have added pressure and highlighted the need for new technology to enhance virtual and value-based care.

Improving medical outcomes now requires processing massive amounts of healthcare data, and the cloud plays a pivotal role in meeting the current needs of healthcare organizations.

Challenges in healthcare

Most of today’s healthcare challenges fall into two broad categories: rapidly rising costs, and an increased burden on resources. Rising costs — and the resulting inadequacy of healthcare resources — can stem from:

An aging population: As people age and live longer, healthcare gets more expensive. As medicine improves, people aged 65 and above are expected to account for 20% of the U.S. population by 2030, per the U.S. Census Bureau. And as older people spend more on healthcare, an aging population is expected to contribute to increasing healthcare costs over time.

Prevalence of chronic illnesses: According to a National Center for Biotechnology Information report, chronic disease treatment makes up 85% of healthcare costs, and more than half of all Americans have a chronic illness (diabetes, high blood pressure, depression, lower back and neck pain, etc.)

Higher ambulatory costs: The cost of ambulatory care, including outpatient hospital services and emergency room care, increased the most of all treatment categories covered in a 2017 study in the Journal of the American Medical Association.

Rising healthcare premiums, out-of-pocket costs, and Medicare and Medicaid: Healthcare premiums rose by an estimated 54% between 2009 and 2019. The COVID-19 pandemic has spurred enrollment into government programs like Medicaid and Medicare, which has increased the overall demand for medical services, contributing to rising costs. A 2021 IRS report highlighted that a shift to high-deductible health plans — with out-of-pocket costs of up to $14,000 per family — has also increased the cost of healthcare.

Delayed care and surgeries due to COVID-19: A poll by the Kaiser Family Foundation (KFF) in May 2020 indicated that up to 48% people have avoided or postponed medical care due to concerns about the COVID-19 pandemic. About 11% of those people reported that their medical condition worsened after skipping or postponing care. Non-emergency surgeries were frequently postponed, as resources were set aside for COVID-19 patients. These delays make treatable conditions more costly and increase overall costs.

A lack of pricing transparency: Without transparency, it’s difficult to know the actual cost of healthcare. The fragmented data landscape fails to capture complete details and complex medical bills, and does not give patients a complete view of payments.

The need to modernize

To mitigate the impact of increased costs and inadequate resources, healthcare organizations need to replace legacy IT programs and adopt modern systems designed to support rapid innovation for site-agnostic, collaborative, whole-person care — all while being affordable and accessible.

#articles, #chronic-disease, #cloud, #column, #digital-services, #ec-column, #ec-healthtech, #health, #healthcare, #healthcare-data, #healthcare-industry, #saas, #united-states

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How to start a company in 4 days

Running a startup can be a complicated, difficult process fraught with pitfalls and ample opportunities to make mistakes. But the logistics of setting up a startup should be simple, because over the long run, complicated equity setups and cap tables cost more money in legal fees and administration time.

The logistics of setting up a startup should be simple, because over the long run, complicated equity setups and cap tables cost more money in legal fees and administration time.

My company, Pulley, has helped more than a thousand founders build their cap table and equity structure.

Here’s a tactical guide to get your startup running in just four days.

Day 1: Incorporate

It is now standard to incorporate your company at the seed stage itself. In the U.S., startups incorporate as Delaware C Corporations with 10 million authorized shares. This is the standard setup when you use services like Stripe Atlas or Clerky.

Post incorporation, you need to answer a few questions on how to grant equity to founders and future employees.

First, you should determine how you want to split the equity between the founders. There is no standard for doing so — some founders split shares equally, while others do 49/51 splits for control. Some founders even may have an 80/20 equity split because one founder spent an extra year on the idea.

At the end of the day, a good equity split is one that all founders find fair. If you can’t agree on a structure, you should have a deeper discussion on whether this is the right team to work with for the next decade or more.

#business-incubators, #cap-table, #column, #ec-column, #ec-how-to, #entrepreneurship, #funding, #fundraising-tactics, #startups, #stripe-atlas, #venture-capital

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Dear Sophie: What is a diversity green card and how do I apply for one?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.


Dear Sophie,

I started a tech company about two years ago, and ever since I’ve dreamed of expanding my company in the United States.

I would love to have a green card. Someone mentioned that I should apply for a diversity green card. Would you please provide me with more details about it and how to apply?

— Technical in Tanzania

Dear Technical,

As a startup founder from Tanzania, you have several immigration options available to you, including the Diversity Immigrant Visa (green card) Program.

My law partner, Anita Koumriqian, and I recently discussed the Diversity Immigrant Visa Program (DV Program) on a podcast episode. Take a listen for how to apply and tips for applying. Each year, the U.S. Department of State, which oversees the DV Program, reserves 50,000 green cards for individuals born in countries that have low rates of immigration to the United States. The State Department publishes instructions each year, which includes the countries whose natives are eligible to register for the annual diversity lottery. Here is the latest version.

How does the diversity lottery work?

You must register online in the fall — usually from early October through early November — for the annual random lottery by completing the Electronic Diversity Visa Entry Form (DS-5501). There is no cost to register for the lottery, but be aware that you will be automatically disqualified if you register yourself more than once, and incomplete forms will not be accepted.

Once you complete the online registration form, you will get a confirmation number. Do not lose this number! It is the only way to access the online system that will tell you whether you were selected in the lottery and are eligible to submit a green card application. In May, registrants can log into the online system to find out whether they’ve been selected. No notification will be sent by email or snail mail; checking online by entering your confirmation code is the only way to find out. After you enter your confirmation code online, you will receive a diversity visa number, which you will use to determine when you can file your green card application.

#africa, #column, #dear-sophie, #diversity, #ec-column, #green-card, #h-1b-visa, #lawyers, #nigeria, #sophie-alcorn, #startups, #tanzania, #tc, #u-s-department-of-state, #united-states, #verified-experts

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6 career options for ex-founders seeking their next adventure

Hey, founders between gigs: What now?

If you exited your last company for airplane money and are now independently wealthy, congratulations! If you want to build another company, just self-fund. If you want outside capital, VCs will chase after you to invest.

Unfortunately, most founders are not in that position: nine out of 10 startups fail. Even if you achieve a high valuation, you might end up like FanDuel’s founders: Their investors got the benefit of a $465 million exit; the founders got zero.

As someone with “founder” on your resume, you face a greater challenge when trying to get a traditional salaried job. You’ve already shown that you really want to lead a company and not just rise up the ladder, which means some employers are less likely to hire you. One research paper found:

[F]ormer founders receive fewer callbacks than non-founders; however, all founders are not disadvantaged similarly. Former founders of successful ventures receive even fewer [emphasis added] callbacks than former founders of failed ventures. Through 20 interviews with technical recruiters, we highlight the mechanisms driving this founder-experience discount: concerns related to the applicant’s capability and ability to fit into and remain committed to the wage employment and the hiring firm.

At my prior firm, ff Venture Capital, we invested in a company co-founded by Nate Jenkins, who had a successful exit, but not quite enough to buy a private plane. He’s now researching his next opportunity and interviewing for some jobs. At the end of a recent interview, the interviewer summarized, “I’ll hire you, but is this what you really want to do?”

That said, Samuel Sabin, CEO of HireBlue, observed, “Some founders who work better with more resources at their disposal may be tapped for intrapreneurship roles. Also, some companies value a self-starter mentality.”

So what should you do? Especially if your life partner and/or bank account are burnt out on the income volatility of startups?

I’ve been in this situation myself when I shut down one startup and exited two others. I think you have six main options:

Full-time initiatives

  1. Launch a new company.
  2. Get a job.

Part-time activities

  1. Angel investing, venture capital and mentoring.
  2. Consulting.
  3. Sell information products.
  4. Education and self-improvement.

At Versatile VC, our new VC fund, we’re creating an online community just for founders who are in transition, Founders’ Next Move. We hope you will join us!

Full-time initiatives

Launch a new company

If you want to work on your startup idea, the bar for starting a company should always be very high. VCs have a diversified portfolio and most of their investments die. You don’t have a diverse portfolio and so you’re taking far more risk than the VCs. For free resources to help research your ideas, see What startup will you build? Identifying market white space.

#angel-investing-tips, #becoming-an-angel-investor, #career-advice, #column, #consulting, #consulting-networks, #ec-column, #ec-how-to, #entrepreneurship, #expert-networks, #founder-advice, #scout-programs, #startups, #venture-capital

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The hidden benefits of adding a CTO to your board

The pandemic forced companies around the world to adjust to a “new normal,” which caused many leaders to pivot their business strategies and adopt new technologies to continue operations. In a time of chaos and change, there is no senior leader that can navigate this sort of change better than a CTO.

Not only do CTOs understand the ever-changing tech landscape, they also provide invaluable insights to help organizations go beyond traditional IT conversations and leverage technology to successfully scale businesses.

Boards are facing pressure to be strategic and thoughtful on how to evolve in the rapidly iterating world of technology, and a CTO is uniquely positioned to address specific challenges.

There are now more reasons than ever to consider adding a CTO to your board. As a CTO myself, I know how important and impactful it can be to have technical-minded leaders on a company’s board of directors. At a time when companies are accelerating their digital transformation, it’s critical to have diverse technical perspectives and people from varying backgrounds, as transformations are a mix of people, process and technology.

Drawing on my experience on Lightbend’s board of directors, here are five hidden benefits of making space at the table for a CTO.

A unique mind (and skill) set

Currently, most boards of directors are composed of former CEOs, CFOs and investors. While such executives bring vast experience, they have very specific expertise, and that frequently does not include technical proficiency. In order for a company to be successful, your board needs to have people with different backgrounds and expertise.

Inviting different perspectives forces companies out of the groupthink mentality and find new, creative solutions to their problems. Diverse perspectives aren’t just about the title –– racial ethnicity and gender diversity are clearly a play here as well.

Deep understanding of tech

For a product-led company, having a CTO who has been close to product development and innovation can bring deep insights and understanding to the boardroom. Boards are facing pressure to be strategic and thoughtful on how to evolve in the rapidly iterating world of technology, and a CTO is uniquely positioned to address specific challenges.

#agile-software-development, #board-of-directors, #business, #chief-technology-officer, #column, #corporate-governance, #cto, #ec-column, #hiring, #lightbend, #puppet, #software-engineering, #startups

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It’s time for security teams to embrace security data lakes

The average corporate security organization spends $18 million annually but is largely ineffective at preventing breaches, IP theft and data loss. Why? The fragmented approach we’re currently using in the security operations center (SOC) does not work.

Here’s a quick refresher on security operations and how we got where we are today: A decade ago, we protected our applications and websites by monitoring event logs — digital records of every activity that occurred in our cyber environment, ranging from logins to emails to configuration changes. Logs were audited, flags were raised, suspicious activities were investigated, and data was stored for compliance purposes.

The security-driven data stored in a data lake can be in its native format, structured or unstructured, and therefore dimensional, dynamic and heterogeneous, which gives data lakes their distinction and advantage over data warehouses.

As malicious actors and adversaries became more active, and their tactics, techniques and procedures (or TTP’s, in security parlance) grew more sophisticated, simple logging evolved into an approach called “security information and event management” (SIEM), which involves using software to provide real-time analysis of security alerts generated by applications and network hardware. SIEM software uses rule-driven correlation and analytics to turn raw event data into potentially valuable intelligence.

Although it was no magic bullet (it’s challenging to implement and make everything work properly), the ability to find the so-called “needle in the haystack” and identify attacks in progress was a huge step forward.

Today, SIEMs still exist, and the market is largely led by Splunk and IBM QRadar. Of course, the technology has advanced significantly because new use cases emerge constantly. Many companies have finally moved into cloud-native deployments and are leveraging machine learning and sophisticated behavioral analytics. However, new enterprise SIEM deployments are fewer, costs are greater, and — most importantly — the overall needs of the CISO and the hard-working team in the SOC have changed.

New security demands are asking too much of SIEM

First, data has exploded and SIEM is too narrowly focused. The mere collection of security events is no longer sufficient because the aperture on this dataset is too narrow. While there is likely a massive amount of event data to capture and process from your events, you are missing out on vast amounts of additional information such as OSINT (open-source intelligence information), consumable external-threat feeds, and valuable information such as malware and IP reputation databases, as well as reports from dark web activity. There are endless sources of intelligence, far too many for the dated architecture of a SIEM.

Additionally, data exploded alongside costs. Data explosion + hardware + license costs = spiraling total cost of ownership. With so much infrastructure, both physical and virtual, the amount of information being captured has exploded. Machine-generated data has grown at 50x, while the average security budget grows 14% year on year.

The cost to store all of this information makes the SIEM cost-prohibitive. The average cost of a SIEM has skyrocketed to close to $1 million annually, which is only for license and hardware costs. The economics force teams in the SOC to capture and/or retain less information in an attempt to keep costs in check. This causes the effectiveness of the SIEM to become even further reduced. I recently spoke with a SOC team who wanted to query large datasets searching for evidence of fraud, but doing so in Splunk was cost-prohibitive and a slow, arduous process, leading the team to explore alternatives.

The shortcomings of the SIEM approach today are dangerous and terrifying. A recent survey by the Ponemon Institute surveyed almost 600 IT security leaders and found that, despite spending an average of $18.4 million annually and using an average of 47 products, a whopping 53% of IT security leaders “did not know if their products were even working.” It’s clearly time for change.

#column, #computer-security, #crowdstrike, #cybersecurity, #data-security, #developer, #ec-column, #ec-cybersecurity, #machine-learning, #security, #splunk, #tc

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For SaaS startups, differentiation is an iterative process

Software as a service has been thriving as a sector for years, but it has gone into overdrive in the past year as businesses responded to the pandemic by speeding up the migration of important functions to the cloud. We’ve all seen the news of SaaS startups raising large funding rounds, with deal sizes and valuations steadily climbing. But as tech industry watchers know only too well, large funding rounds and valuations are not foolproof indicators of sustainable growth and longevity.

To scale sustainably, grow its customer base and mature to the point of an exit, a SaaS startup needs to stand apart from the herd at every phase of development. Failure to do so means a poor outcome for founders and investors.

As a founder who pivoted from on-premise to SaaS back in 2016, I have focused on scaling my company (most recently crossing 145,000 customers) and in the process, learned quite a bit about making a mark. Here is some advice on differentiation at the various stages in the life of a SaaS startup.

Launch and early years

Differentiation is crucial early on, because it’s one of the only ways to attract customers. Customers can help lay the groundwork for everything from your product roadmap to pricing.

The more you know about your target customers’ pain points with current solutions, the easier it will be to stand out. Take every opportunity to learn about the people you are aiming to serve, and which problems they want to solve the most. Analyst reports about specific sectors may be useful, but there is no better source of information than the people who, hopefully, will pay to use your solution.

The key to success in the SaaS space is solving real problems. Take DocuSign, for example — the company found a way to simply and elegantly solve a niche problem for users with its software. This is something that sounds easy, but in reality, it means spending hours listening to the customer and tailoring your product accordingly.

#as-a-service, #cloud, #cloud-applications, #column, #docusign, #ec-cloud-and-enterprise-infrastructure, #ec-column, #ec-enterprise-applications, #product-management, #saas, #software-as-a-service, #startup-company, #startups

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3 lessons we learned after raising $6.3M from 50 investors

It was August 2019, and the fundraising process was not going well.

My co-founder and I had left our product management jobs at New Relic several months prior, deciding to finally plunge into building Reclaim after nearly a year of late nights and weekends spent prototyping and iterating on ideas. We had bits and pieces of a product, but the majority of it was what we might call “slideware.”

When you can’t raise big on the vision, you need to raise big on the proof. And the proof comes from building, learning, iterating and getting traction with your first few hundred users.

When we spoke to many other founders, they all told us the same thing: Go raise, raise big, and raise now. So we did that, even though we were puzzled as to why anyone would give us money with little more than a slide deck to our names. We spent nearly three months pitching dozens of VCs, hoping to raise $3 million to $4 million in a seed round to hire our founding team and build the product out.

Initially, we were excited. There was lots of inbound interest, and we were starting to hear a lot of crazy numbers getting thrown around by a lot of Important People. We thought for sure we were maybe a week away from term sheets. We celebrated preemptively. How could it possibly be this easy?

Then in July, almost in an instant, everything started to dry up. The verbal offers for term sheets didn’t materialize into real offers. We had term sheets, but they were from investors that didn’t seem to care much about what we were building or what problems we wanted to solve. We quickly realized that we hadn’t really built momentum around the product or the vision, but were instead caught up in what we later learned to be “deal flow.”

Basically, investors were interested because other investors were interested. And once enough of them weren’t, nobody was.

Fortunately, as I write this today, Reclaim has raised a total of $6.3 million on great terms across a group of incredible investors and partners. But it wasn’t easy, and it required us to embrace our failure and learn three important lessons that I believe every founder should consider before they decide to go out and pitch investors.

Lesson 1: Build big before you raise big

In 2019, we were hunting for what some referred to as a “mango seed” — that is, a seed round that was large enough that it was perceptibly closer to a light Series A financing. Being pre-product at the time, we had to lean on our experience and our vision to drive conviction and urgency among investors. Unfortunately, it just wasn’t enough. Investors either felt that our experience was a bad fit for the space we were entering (productivity/scheduling) or that our vision wasn’t compelling enough to merit investment on the terms we wanted.

When we did get offers, they involved swallowing some pretty bitter pills: We would be forced to take bad terms that were overly dilutive (at least from our perspective), work with an investor who we didn’t think had high conviction in our product strategy, or relinquish control in the company from an extremely early stage. None of these seemed like good options.

#column, #ec-column, #ec-how-to, #index-ventures, #new-relic, #startups

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How to win consulting, board and deal roles with PE and VC funds

Would you like to work with private equity and venture capital funds?

There are relatively few jobs directly inside private equity and venture capital funds, and those jobs are highly competitive. However, there are many other ways you can work and earn money within the industry — as a consultant, an interim executive, a board member, a deal executive partnering to buy a company, an executive in residence or as an entrepreneur in residence.

Venture capitalists often have an operations background. However, historically most private equity professionals were former investment bankers and other finance professionals. Then private equity players gradually realized that value cannot be created through financial engineering alone. A BCG study of 121 investments found that operational improvement drives 48% of value creation in PE-backed companies. PE funds now almost always require an upgrade in management and change management teams if necessary.

Not surprisingly, the tighter your relationship with the firm, the more money you will earn:

PE fund structural options in working with operating executives

 Image Credits: David Teten

At Versatile VC, we’ve used all these models. We are soon launching Founders’ Next Move, a selective, free community for founders researching their next move, which will be a key tool for working with outside talent.

The simplest path forward is to identify funds in your industry of expertise and reach out. You can explore all of the models below with them. First, start by identifying the firms that invest in companies that you’ve worked with. Then, more broadly, look for investors in the industries in which you have expertise. You can identify institutional investors through one of multiple online databases:

All investors Private equity Venture capital
Preqin (free demo)

Grey House (free demo)

S&P Global Market Intelligence

Pratt’s Guide

Thomson One

PitchBook (free trial)

PrivateEquityFirms.com
(free trial)

Eurekahedge

AngelList (free)

CrunchBase (free)

PWC MoneyTree (free)

VentureDeal (free trial)

Asian Venture Capital Journal (free trial)

Let’s take a look at the different ways you can work with the investment community.

Expert networks

Expert network firms source subject matter experts from various domains and pair them with clients seeking topical or industry insights. They typically charge clients up to $1,200 per hour, and pay the expert $100 to $500 an hour. I founded Circle of Experts, an expert network that I sold to Evalueserve.

The expert network industry has grown an average 4.5% annually between 2015 and 2020, its market size topping $1.3 billion in 2020. While the major clients were initially hedge funds and private equity firms, consulting firms now comprise 32% of total demand for expert network services.

Inex One, an expert network marketplace, has compiled a list of 80 expert networks, summarized in the graphic below:

80 expert networks

Image Credits: Inex One and Integrity Research

The largest expert networks include: GLG, which accounts for approximately 50% of the industry’s revenue; AlphaSights is the second biggest generalist expert network; Guidepoint services six major categories of clients globally across several industries; and Third Bridge hires and retains talent to “democratize the world’s human insights and upend the traditional research model.”

Other notable expert networks include Atheneum Partners, Coleman Research Group, Dialectica, ENG, Lynk Global, Mosaic, PreScouter, ProSapient and Tegus. There are also expert networks with sector or geography specialization. For example, SERMO is a global social media network for physicians to exchange knowledge and share challenging patient cases, and Clarity.fm connects startups to experts in building new businesses.

#column, #ec-column, #ec-how-to, #expert-networks, #private-equity, #scout-programs, #senior-advisor-networks, #startups, #venture-capital

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Twitter’s acquisition strategy: eat the public conversation

The last few months have been interesting for Twitter.

After years of no innovation at all, Twitter is making big product changes. It has acquired Breaker and Revue, and presumably has more M&A coming. It’s coming out with Spaces. The only thing it clearly isn’t working on is an edit button.

The core idea is that Twitter is doubling down on multichannel engagement for creators so that they never have to leave for anywhere else.

Strategically, though, what is a microblogging service doing buying a social podcasting company and a newsletter tool while also building a live broadcasting sub-app? Is there even a strategy at all?

I humbly propose this: There is a strategy. Twitter is trying to revitalize itself by adding more contexts for discourse to its repertoire. The result, if everything goes right, will be an influence superapp that hasn’t existed anywhere before. The alternative is nothing less than the destruction of Twitter into a link-forwarding service.

Let’s talk about how Twitter is trying to eat the public conversation.

Why now?

Twitter’s problem is pretty simple. It’s this.

Twitter revenue quarterly growth 2013-21

Twitter revenue quarterly growth 2013-21. Image Credits: Macrotrends

Another way of putting it is: Twitter is not generating as much money from ads as it used to. Ad revenue has failed to grow because Twitter is generally considered to have a poorly performing product for marketers. As a result, its stock price has been flat for years.

The irony, though, is that Twitter became more socially important during this period of financial stagnation to the point that the president of the United States nearly launched several wars on the platform!

The core reason is that since becoming a public company, Twitter has been considered by most to be one of the most boring tech companies productwise. Yes, people joke about the lack of an edit button, but the platform really has been slow to innovate in any real way.

Twitter was one of the most dynamic companies around, going from the fail whale company to being the company that invented the hashtag and acquiring some of the hottest companies, from Periscope to Vine.

But it all failed. Twitter rarely used acquisitions successfully. It stopped putting out new features and barely even managed simple improvements. Despite describing itself as “what’s happening now,” it missed every boat. Until this year.

What changed?

  1. Twitter started to face its first real competition in years due to the social media renaissance. Twitter’s strength has always come from being where the news happens. Podcasts, Clubhouse, newsletters and other new channels are true competitive threats.

    #clubhouse, #column, #ec-column, #ec-media, #ec-news-analysis, #eventbrite, #kayvon-beykpour, #periscope, #revue, #snap, #social, #social-media, #spotify, #substack, #twitter

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4 proven approaches to CX strategy that make customers feel loved

Customers have been “experiencing” business since the ancient Romans browsed the Forum for produce, pottery and leather goods. But digitization has radically recalibrated the buyer-seller dynamic, fueling the rise of one of the most talked-about industry acronyms: CX (customer experience).

Part paradigm, part category and part multibillion-dollar market, CX is a broad term used across a myriad of contexts. But great CX boils down to delighting every customer on an emotional level, anytime and anywhere a business interaction takes place.

Great CX boils down to delighting every customer on an emotional level, anytime and anywhere a business interaction takes place.

Optimizing CX requires a sophisticated tool stack. Customer behavior should be tracked, their needs must be understood, and opportunities to engage proactively must be identified. Wall Street, for one, is taking note: Qualtrics, the creator of “XM” (experience management) as a category, was spun-out from SAP and IPO’d in January, and Sprinklr, a social media listening solution that has expanded into a “Digital CXM” platform, recently filed to go public.

Thinking critically about customer experience is hardly a new concept, but a few factors are spurring an inflection point in investment by enterprises and VCs.

Firstly, brands are now expected to create a consistent, cohesive experience across multiple channels, both online and offline, with an ever-increasing focus on the former. Customer experience and the digital customer experience are rapidly becoming synonymous.

The sheer volume of customer data has also reached new heights. As a McKinsey report put it, “Today, companies can regularly, lawfully, and seamlessly collect smartphone and interaction data from across their customer, financial, and operations systems, yielding deep insights about their customers … These companies can better understand their interactions with customers and even preempt problems in customer journeys. Their customers are reaping benefits: Think quick compensation for a flight delay, or outreach from an insurance company when a patient is having trouble resolving a problem.”

Moreover, the app economy continues to raise the bar on user experience, and end users have less patience than ever before. Each time Netflix displays just the right movie, Instagram recommends just the right shoes, or TikTok plays just the right dog video, people are being trained to demand just a bit more magic.

#brand-management, #column, #customer-experience, #customer-experience-analytics, #customer-experience-management, #customer-satisfaction, #cx, #ec-column, #ec-marketing-tech, #enterprise, #marketing, #qualtrics, #sap, #sprinklr, #startups

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Opting for a debt round can take you from Series A startup to Series B unicorn

Debt is a tool, and like any other — be it a hammer or handsaw — it’s extremely valuable when used skillfully but can cause a lot of pain when mismanaged. Fortunately, this is a story about how it can go right.

At the beginning of 2020, my company, Quantum Metric, was on a tremendous growth curve. We couldn’t have been more excited — and then COVID hit. Suddenly, everything was up in the air. Customer behavior quickly began to reflect the uncertainty we all felt, and my team wasn’t immune to it, either. Like most, we sweated through the first few months of the pandemic.

If companies want to preserve equity, debt can be an advantageous choice.

On the one hand, we felt it might be our time to shine, as digital solutions rose to the surface even in industries that were previously slow to adopt them (think banking and airlines). On the other, companies were trying to lock up as much cash as they could, as fast as they could. What if our customers weren’t able to pay us?

One thing became crystal clear: We needed cash, too. First and foremost, we needed it to protect the company against the income loss we anticipated from customers who were having an especially tough time — namely, those who relied on in-person business as a major revenue source.

Second, we needed cash in order to scale. As the weeks following the initial shelter-in-place orders ticked by, the rush toward digital grew exponentially, and opportunities to secure new customers started piling up. A solution to our money problems, perhaps? Not so fast — it was a classic case of needing to spend in order to make.

Most startups face this dilemma at some point. Some face it continuously. We needed a way to funnel capital into growth and manage to stay cash strong, which was important for another reason: As we headed downstream toward a Series B funding round, we were hesitant to devalue the company (and employee shares) any more than was absolutely necessary.

“There are no solutions, there are only trade-offs,” Thomas Sowell wrote about politics. It’s no different in business. We knew that for Quantum Metric to succeed, we had to give up something in the future in order to get what we needed in the short term. Choosing a debt round as a younger company ran the risk of cash-flow misalignment down the road, but in the same vein, an equity round might have made subsequent funding rounds more challenging.

Whatever we did, we had to do fast, and we had to do it in a chaotic venture capital environment (that may be an understatement). In some meetings, it felt as if VC money had dried up completely. In others, record deals were being made. Startups were bypassing IPOs and going public via SPACs and direct listings. Factoring in the amount of hype that was permeating the market (something I’ve never been a fan of), the “wise” decision felt elusive. As you know from the headline of this piece, though, we chose debt, and it paid off.

The benefits of choosing debt over equity

There ended up being two “layers” of benefits to our debt round. The benefits of the first layer correspond directly with the goals I mentioned above; we got the cash we needed in order to expand — which meant investing in our team, product, marketing and infrastructure — and avoided diluting the company’s value for existing shareholders in the process.

#column, #corporate-finance, #debt, #ec-column, #ec-how-to, #entrepreneurship, #private-equity, #quantum-metric, #startups, #tc, #venture-debt

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SaaS needs to take a page out of the crypto playbook

By the time I joined Box in late 2012, the “consumerization of the enterprise” movement was well underway. The playbook was clear: The lessons and tactics from the rise of consumer apps — viral loops, social referrals, frictionless onboarding — could be distilled, packaged and ported over to enterprise.

And the promise was subversive — great products could galvanize a loyal user base and wrest free the fates of multimillion-dollar contracts from suited salespeople peddling unusable software behind closed doors.

While the consumerization of SaaS has taught us how to more effectively get in front of users, this next decade will be about how to properly incentivize them to do the necessary work to have the right product experience.

A decade later, this promise has largely proven true. The consumer playbook contributed to the meteoric rise of Slack, Zoom, Airtable and others, specifically around user acquisition and onboarding. They are beautiful products that are discovered from the bottom up, self-serve, free to start and pay as you grow.

But while this might seem like one of the best times to build a SaaS company, one look at Product Hunt might paint a different story. For every success story like Airtable, there are a dozen lookalikes employing the same consumer-inspired playbook that are getting drowned out.

And for any first-mover startup in a new category thinking they’re reaching escape velocity, there are a dozen copycats in YC waiting around the corner, complete with their beautifully designed apps, and the promise of being “blazingly fast and delightfully simple.”

Image Credits: Fika Ventures

Conventional wisdom suggests that many of these newcomer apps will fall short because they don’t clearly communicate their differentiation, or their signup process isn’t streamlined enough, or they have poor documentation and tutorial videos, or they haven’t courted the right influencers on Twitter, or just plain poor execution.

While some (or all) of these might be true on the individual app level, there is something bigger happening on the aggregate level, and it comes back to one insidious assumption carried over from the consumer playbook: the myth of frictionless onboarding.

The reality is that onboarding is never frictionless. In fact, it’s quite the opposite — it demands that the user uproot their old habits and switch to this new way of being or doing. Just like with a new fitness program, participants feel good after completing the workout, but it takes a lot of activation energy to start and hard work to get there. Similarly, it takes work on the user’s part to get results, and most apps expect users to do this work for free.

But in a crowded marketplace with infinite alternatives, the only way to capture and hold a user’s attention is to directly incentivize them to experience the product, not just be exposed to it. Today’s growth playbook overindexes on spending ad dollars (with diminishing returns) to get premium placement and eyeballs on Google, Facebook or Product Hunt, but very few have tried putting those dollars to work toward ensuring users are actually having the experience they are supposed to.

2019 subscription customer acquisition cost study. Image Credits: Profitwell

To do this, SaaS needs to take a page out of the crypto playbook. So while the past decade of the consumerization of SaaS has taught us how to more effectively get in front of users, this next decade will be about the cryptofication of SaaS and how to properly incentivize users to do the necessary work to have the right experience with your product.

#column, #customer-experience, #ec-column, #ec-enterprise-applications, #saas, #software-as-a-service, #software-platform, #tc, #usability

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Poor onboarding is the enemy of good hiring

The world of hybrid work is here, and the usual 10-minute intro call, swag bag and first-day team lunch are just not enough to make your new employee feel welcome.

While many companies have found a way to interview and select candidates in a fully remote environment, fewer have spent time and resources on aligning the “pre-boarding” and onboarding process for the new hybrid world of work. Many employers still rely on old ways of welcoming new hires, despite our totally changed work environment.

It’s important to capitalize on candidates’ enthusiasm and eagerness from the moment the offer is signed, instead of when they log in on Day One.

In our experience at Greenhouse, where we help companies as diverse as BuzzFeed, HubSpot and Intercom hire talent across their organization, first impressions can make or break a candidate’s chances of staying at a company.

In fact, 69% of employees will stay for more than three years if their onboarding experience is good, while 20% will leave within 45 days if it’s bad. That difference is costly, as it takes, on average, around $4,129 and 42 days to fill a position.

Replacing someone can cost up to 50%-60% of their annual salary. At the same time, 58% of organizations said they were guilty of centering their onboarding processes on administrative and paperwork requirements alone.

Here is how we advise our clients to set up every new hire for success right from the start.

The company’s Day One comes long before the candidate’s Day One

Most of us can remember the excitement (and anxiety) of receiving and signing an offer for a new job. It’s important to capitalize on candidates’ enthusiasm and eagerness from the moment the offer is signed, instead of when they log in on Day One.

#column, #ec-column, #ec-future-of-work, #ec-how-to, #employment, #human-resource-management, #labor, #onboarding, #recruitment, #startups, #telecommuting

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7 questions to ask before relocating your startup to Florida

If it seems like everyone you know is moving to Florida these days, there is evidence to back that up. Recent data from LinkedIn published in Axios put Tampa Bay, Jacksonville and the Miami-Fort Lauderdale metro areas among the top 10 U.S. cities seeing in-migration.

When I relocated from Chicago to Tampa in early 2018, I found myself in a city that countered the stereotypes I’d heard about the state. Since then, I’ve come to appreciate the advantages that came with building my organization in Florida, and I’m often asked how I made the call.

To help you weigh the benefits of relocating your startup to Florida, here are some FAQs I’ve encountered. And if the Sunshine State isn’t on your startup’s shortlist, don’t hesitate to apply these answers to a different destination.

1. What are your company’s needs?

While you may have personal reasons for wanting to relocate to a new state, it’s a good idea to map out your company’s needs as you think through this decision.

Does a move bring you closer to a great pool of talent? Are you looking for a headquarters near a specific material resource or type of infrastructure? Do you need to be local to a target customer base or community?

For example, Florida is a terrific location for companies that stand to benefit from the presence of retired military talent and the prevalence of military bases, which creates a strong market for certain types of tech innovation, including cybersecurity and aviation.

If you’re a startup leader who is looking to land in a place with a strong, welcoming network, take the time to reach out to local community leaders and other founders like you.

Whatever it is you need to fuel your company’s growth, listing out your company’s requirements will make it easier to compare your needs with what your potential destination has to offer.

2. Which community do you want to be a part of?

If you haven’t found the tech community you’re looking for in your current location, pause to articulate what qualities you’re looking for. With this in mind, you can begin to establish the kinds of local connections you’re hoping to grow before you make any big moves.

I moved to Florida to participate in the diverse tech communities in Tampa and Miami, and I knew I was headed to the right place because I tested the waters before jumping in. As a relative newcomer myself, I’ve found the landscape in Florida to be more open and accessible than in other more established startup hubs, but don’t take my word for it.

If you’re a startup leader who is looking to land in a place with a strong, welcoming network, take the time to reach out to local community leaders and other founders like you. Whether that means sending a tweet to the mayor of Miami or connecting to local startup hubs, these interactions will give you a good sense of the local culture.

Because so many people are migrating down to Florida, we’ve put together a database of recent transplants to make it even easier to connect new residents to the existing tech community.

3. What are the potential benefits of moving your company to Florida?

When I think about what brought me to Florida and why I see other entrepreneurs headed this way, three big things come to mind:

#column, #ec-column, #ec-future-of-work, #florida, #miami, #startup-company, #startups, #tampa, #tc

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2 CEOs are better than 1

Netflix has two CEOs: Co-founder Reed Hastings oversees the streaming side of the company, while Ted Sarandos guides Netflix’s content.

Warby Parker has co-CEOs as well — its co-founders went to college together. Other companies like the tech giant Oracle and luggage maker Away have shifted from having co-CEOs in recent years, sparking a wave of headlines suggesting that the model is broken.

It’s impossible to be in two places at once or clone yourself. With co-CEOs, you can effectively do just that.

While there isn’t a lot of research on companies with multiple CEOs, the data is more promising than the headlines would suggest. One study on public companies with co-CEOs revealed that the average tenure for co-CEOs, about 4.5 years, was comparable to solitary CEOs, “suggesting that this arrangement is more stable than previously believed.”

The study’s authors also found that co-CEOs were spread across industry types and that splitting the role can “complement each other in terms of educational background or executive responsibilities.”

I serve as co-CEO of an organic meal delivery company with my sister Laureen. Having two CEOs has helped us take Fresh n’ Lean to new heights. We closed 2020 with $87 million in revenue, more than double from the year before, and project similar growth this year.

We complement each other well, and the results bear that out. During the decade that we’ve served as co-CEOs, the company has grown from a very small team to 475 full-time employees and 40 part-time employees. We’ve delivered more than 17 million meals, launched four different meal lines, expanded our retail offerings, partnered with some great names in sports and fitness, and saw our annual revenues climb exponentially.

The leadership structure isn’t for every company, but it’s been a great fit for Fresh n’ Lean. Here’s why.

Divide and conquer to shorten your learning curve by 50%

Laureen launched the company in 2010 out of her one-bedroom apartment.

“Those early years were especially tough,” she said. “I consistently worked 20-hour days as I performed just about every role — cooking dishes, preparing labels, making deliveries and performing customer service duties. I was devoting so much energy into product, packaging and logistics, but in order for the company to grow, I needed help with marketing, tech and finance.”

Those areas happened to be my strengths. There was too much for one person to oversee as CEO and not enough hours in the day. But given the equal challenges that both sides of the company presented and the trust we shared, it made sense for us to be side by side on the organizational chart.

#ceo, #chief-executive-officer, #co-founder, #column, #ec-column, #ec-future-of-work, #ec-how-to, #entrepreneurship, #leadership, #startups

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When to walk away from a VC who wants to invest in your startup

Venture capitalists add value in a number of ways. For example, one of my business’ backers has a deep tech “pod” that generates events and content we are always welcomed to be a part of. Another one of our investors gives us full commercial support through its network of mentors that are there to support the business, not the VC.

I might not expect that from every VC, but if they promise those “assets” by saying that they are here to drive innovation and growth, then I expect them to deliver, just as I have to back up the claim of having a team of super-smart machine learning researchers.

They might know the forks in the road, directions to take, and whom to speak to based on having been through the process with similar companies. They might have venture partners that can mentor you and a network of investors that can participate in follow-on rounds. That is where they add value.

The best ones will seek to connect with you personally. They’ll have prepared thoroughly beforehand and are brimming with questions. While they may have preconceived and potentially ill-informed ideas, they demonstrate enthusiasm by starting sentences with “what if,” and they leave me emboldened but contemplative. I fully expect to be provoked in the right way.

However, some also play God. One experience offered up a major warning sign, one that would make me walk on by.

I’m pleased to say my business has some outstanding investors who totally get it. Our investors’ head of investment told representatives at one of New York’s top funds that one of their leading deep tech portfolio companies was coming to town for a “blitz meeting session.” They announced that they were committing to the round I was raising and that we were looking for a new lead investor.

So, put it this way: I wasn’t a guy who walked off the street with a crazy idea, but you might have thought otherwise, given the experience that followed. To be clear, I don’t expect all VCs to open their arms and embrace everyone, but there are rules of engagement.

The transparency and value of DocSend

After a very positive morning meeting, I’d scheduled a couple of hours for a quick chance to grab a breather at my hotel. Flicking through my phone, an email from the associate at the VC I was due to meet next pinged into my inbox.

“Hey Ofri, it’s Jessica [not her real name] really sorry, I’m not feeling great so am thinking I might cut the day short. I know you’re only in New York the next two days, so let’s catch up later on a call and next time you’re over I’m sure we can revisit.”

I started composing a polite response: “Really sorry to hear that. Absolutely fine to reschedule. Let me know your availability etc. etc.” In truth, I was irritated — this had been in the diary for two months and was one of six meetings scheduled. I was not sorry; I was annoyed.

#column, #ec-column, #ec-how-to, #entrepreneurship, #fundraising, #startups, #venture-capital

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