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Yesterday — July 8th 2020Your RSS feeds

In pandemic era, entrepreneurs turn to SPACs, crowdfunding and direct listings

By Jonathan Shieber

If necessity is the mother of invention, then new business owners are getting very inventive in the ways in which they access cash. Relying on some long-tested and some new avenues to raise money, entrepreneurs are finding more ways to get public market cash faster than they would have in the past.

Whether it’s from Reg A crowdfunding dollars, Special Purpose Acquisition Companies (SPACs) or direct listings, these somewhat arcane and specialized financing vehicles are making a comeback alongside a rise in new funding mechanisms to get to market quickly and avoid the dilution that comes from private market rounds (especially since those rounds are likely to come at a reduced valuation given market conditions).

Some of these tools have existed for a while and are newly popular in an era where retail investors are driving much of the daily fluctuations of the public markets. Wall Street institutions are largely maintaining their conservative postures with regard to new offerings, so secondary market retail volume growth is outpacing institutional. Retail investors want into these new issues and are pouring into the markets, contributing to huge pops to new public offerings for companies like Lemonade this Thursday and creating an environment where SPACs and crowdfunding campaigns can flourish.

The rise of zero-commission brokerages and the popularization of fractional trading led by the startup Robinhood and adopted by every one of the major online brokers including Charles Schwab, TD Ameritrade, E-Trade and Interactive Brokers has created a stock market boom that defies the underlying market conditions in the U.S. and globally. For instance, daily trades on Robinhood are up 300% year-over-year as of March 2020.

According to data from the BATS exchange, the total trade count in the U.S. was up 71% and May trading was up more than 43% over 2019. Meanwhile, E-Trade daily average revenue trades posted a 244% increase in May over last year’s numbers.

Don’t call it a comeback

The appetite for new issues is growing and if many of the largest venture-backed companies are holding off on going public, smaller names are using SPACs to access public capital and reach these new investors.

Before yesterdayYour RSS feeds

Agora starts life as a public company by more than doubling to $50 a share

By Alex Wilhelm

Shares of Agora, a China and U.S.-based “real-time engagement” API company, soared today after it went public.

Yesterday Agora priced 17.5 million shares at $20 apiece, up from its target range of $16 to $18 per share. The firm raised $350 in its debut, or around 10 times its Q1 2020 revenue and is now amply capitalized and has runway for effectively forever, given its modest cash consumption as an ongoing concern.

But while the debut was a success, seeing Agora’s share price rise as quickly as it did was not universally popular. Regular critic of the traditional IPO process Bill Gurley — a venture capitalist, so someone with a stake in this particular gambit — weighed in:

Pretty amazing that there is a financial exercise on this planet involving hundreds of millions of dollars where its OK to not even get to 50% of the actual end result. The process is so rigged/broken at this point. They missed by more than the original guess. #marketpricing pic.twitter.com/MqmmYRw3ZM

Bill Gurley (@bgurley) June 26, 2020

Let me translate. Gurley is irked — rightly, to at least some degree — that as Agora opened at $45 per share, the company’s IPO was awfully priced. By that we mean that the company should have sold its IPO shares not at $20, but at $45, the value at which the market quickly repriced them.

As $45 is more than twice $20, its bankers “missed by more than [their] original guess.” Given the number of shares the company sold, the mis-pricing could be worth up to $437.5 million!

There’s merit to this argument, but it’s not as complete a slam dunk as it might appear. Chat with CEOs of public companies and they will tell you about how important it is to have steady, stable, long-term shareholders of their equity. Those you might, say, meet on a roadshow and get to invest in your IPO shares.

Those groups — the long-term investors that tech folks claim to love so dearly — are likely a bit more price conscious than the momentum traders eager to find upside in recent debuts. That is, folks more likely to hold onto shares for a shorter period of time.

So, if you want long-term shareholders, you may have to price you IPO under the price the market may initially bear once trading begins.

 

Still, holy shit $20 per share is not close to $45. Gurley has a point.

The future

Change may be coming. The Agora news rotates back to what the NYSE, an American exchange, is doing. Namely trying to come up with a way to let companies direct list (to just start trading, sans pricing or raising new capital), and raise capital. This gets rid of the issues that Gurley highlighted above. At least in theory.

Obviously, if that model becomes possible and long-term investors are willing to pay for shares in a slightly different manner, the new method will be far superior than the old for companies that are great. What sort of companies get burned from first-day pops the most? I reckon it’s the most attractive, or hyped companies.

The companies that would make the most attractive IPOs would use the new method, leaving — what? The detritus to go out the old-fashioned way? Signaling issues abound!

Anyway, it was a zany first day for Agora.

13 Boston-focused VCs share the advice they’re giving portfolio companies

By Natasha Mascarenhas

TechCrunch is focusing a bit more on the Boston-area startup and venture capital ecosystem lately, which has gone pretty well so far.

In fact, we had originally intended on releasing this regional investor survey as a single piece, but since so many VCs took part, we’re breaking it into two. The first part deals with the world we live in today, and the remainder will detail what Boston-area investors think about the future.

We broke our questions into two parts to better track investor sentiment. But, we were also curious what was going to come when things got back closer to normal. So, this first entry in our Boston investor survey covers our questions concerning what’s going on now. On Thursday we’ll have the second piece, looking at what’s ahead.

Here’s who took part:

What follows is a quick digest of what stood out from the collected answers, though there’s a lot more that we didn’t get to.

Boston VC in the COVID-19 era

Parsing through thousands of words and notes from our participating VCs, a few things stood out.

Boston startups aren’t having as bad a time — yet, at least — as area investors expected

Fewer companies than they anticipated are laying off staff for example. From our perspective, the number of Boston investors who noted that their portfolio companies were executing layoffs or furloughs (we asked for each to be precise) was very low; far more Boston-area startups are hiring than even freezing headcount. Layoffs appear somewhat rare, but as we all know cost cutting can take many forms for startups. Especially startups on the seed and early-stage side, which makes up the majority of these firm’s portfolio companies.

According to Glasswing’s Rudina Seseri, startup duress has come in “significantly under what [her firm was] expecting at the beginning of COVID-19.”

This may be due to a strong first quarter helping companies in the city and its surrounding area make it another few quarters. We might not know the full bill of COVID-19 and its related disruptions until next year.

More investors than we expected noted that their Boston portfolio companies aren’t raising this year

So what we’re gleaning from that fact is that any decline in Q2 and Q3 VC data is not because companies can’t raise, but because they don’t need to. Comments echoed a theme we wrote about in April: Boston broke records in Q1 in terms of dollars raised, but saw a dip in the number of checks cut.

Pillar VC’s Jamie Goldstein said that “about 15% of our companies are planning to raise capital this year,” which felt about average. Underscore VC’s Lily Lyman simply noted that, “Yes,” her Boston-area portfolio companies would hunt for new capital this year. Bill Geary of Flare Capital is on the other side of that coin, saying that “each of [his firm’s] Boston-based investments has successfully recently raised capital and will not be raising additional funds until 2021.”

It’s hard not to wonder if what happened to Boston unicorns Toast and EzCater was the exception and not the rule

 You see, Boston’s startup scene skews relatively early stage, so smaller companies don’t have high-profile cuts because, to be frank, there isn’t much staff to cut in the first place. It puts Boston in a unique setting to focus in on its early stage market, and investors all agreed that this is an important moment for the ecosystem.

The March-era stress tests are now months in the rearview mirror, and every startup has shaken up their spend and growth plans. Perhaps we have met the new normal, and it’s time to let the runway do the talking.

With that, let’s get into full questions and answers.

Rudina Seseri, Glasswing Ventures

What is the top-line advice you’re giving your portfolio companies right now?

This is a pivotal time, be efficient and drive execution. Cut costs where possible but at the same time don’t be afraid to spend for growth acceleration.

What percentage of your Boston-based portfolio companies are still hiring, not including those merely backfilling?

About 60%.

What percentage of your Boston-based portfolio companies have frozen new hires?

About 20%.

What percentage of your Boston-based portfolio companies have furloughed staff?

None.

What percentage of your Boston-based portfolio companies have cut staff?

One company that represents about 4% of the portfolio.

Are your Boston-based portfolio companies looking to raise new capital this year?

Most have raised recently, and consequently are not looking to raise at this time.

If not, are they often delaying due to COVID-19?

No, because of their recent raises, their fundraising considerations will take place in 2021.

Has duress amidst your Boston-based portfolio companies undershot, matched or overshot your expectations from March?

It has been significantly under what we were expecting at the beginning of COVID-19.

How has your investment appetite changed in terms of pace and location, if at all?

We have been very active and closed deals in this environment. Our expectation is that our investment appetite will remain the same going forward.

Are you making investments in Q2 into net-new founders and companies?

Yes, as a matter-of-fact we just closed a yet-to-be announced investment this month.

Are there particular sectors of startups in Boston that you expect to do well, aside from SaaS businesses that are benefiting from secular trends? Are there any sectors you have become newly bearish on?

Yes, those that are in our core focus areas — solutions that bring down the cost of cloud and data, platforms and tools leveraging AI, those that facilitate cost reduction, and intelligent solutions in cybersecurity that protect the enterprise.

How does the uncertainty of schools reopening impact the startup ecosystem?

This will further drive and institutionalize distributed teams and remote working as a go-forward mode of operating.

Aspiration, the LA-based fintech focused on conscious consumerism, raises $135 million

By Jonathan Shieber

When former Bill Clinton speechwriter and political wunderkind Andrei Cherny launched Aspiration four years ago, the upstart fintech startup was one of Los Angeles’ early entrants into a  financial services market dominated by players from Europe and the financial capital of the U.S. in New York City.

Fast forward four years and the big New York fintechs are still around, but Cherny’s Aspiration remains undimmed and has today disclosed a $153 million funding round to get even bigger.

Unlike other financial services startups that compete around a suite of product offerings designed to offer no-fee checking and deposits or upfront cash payments and short-term no-interest loans, Aspiration differentiates itself with a focus on sustainability and conscious consumerism.

The company first pitched the market with an investment management service like those from Betterment and Wealthfront, but one where customers could choose their own fees. It also guaranteed investments in sustainable companies and a portfolio that would not include fossil fuel companies or other businesses deemed to be less-than-friendly to Mother Nature.

The conscious consumerism is a through-line that knits together the other products in the Aspiration portfolio including its Impact Measurement Score product that gives customers a window into how their shopping habits measure up with their desires to be more earth-friendly.

The company’s just-announced $135 million cash infusion brings the total capital raised to $200 million and was led by local investor Alpha Edison. Additional new and existing investors including UBS O’Connor Capital Solutions, DNS Capital, Radicle Impact, Sutter Rock, Jeff Skoll, Joseph Sanberg, Social Impact Finance, the Pohlad Companies, and AGO Partners, also participated in the financing.

So far, 1.5 million Americans have signed up to use Aspiration’s financial management and banking services and the company has seen $4 billion in transactions pass through its accounts.

There’s a whole suite of new services designed to help customers go green too. The company launched a matching feature where the company plants a tree for every debit card purchase that its customers make, when they round up to the nearest dollar. And it’s offering a premium subscription tier that includes debit cards made from recycled ocean plastic. The card offers higher cash back and interest rates and a feature that offsets the carbon emissions of every mile a customer drives.

Finally, Aspiration has inked partnerships with other socially conscious companies like Toms and Warby Parker giving its customers extra cash back rewards when they shop at those businesses.

“Aspiration has built deep, trusting customer relationships that are beginning to unlock latent demand for financial services among the tens of millions of conscious consumers,” said Nate Redmond of Alpha Edison, in a statement. “We are excited to lead a great group of investors to fuel Aspiration’s durable growth and lasting impact.”

General Atlantic to invest $870M in India’s Reliance Jio Platforms

By Manish Singh

Mukesh Ambani’s Jio Platforms has agreed to sell 1.34% stake to General Atlantic, the latest in a series of deals the top Indian telecom operator has secured in recent weeks.

On Sunday, New York-headquartered private equity firm General Atlantic said it would invest $869.8 million in the Indian telecom operator, a subsidiary of India’s most valued firm (Reliance Industries), joining Facebook, Silver Lake, and Vista Equity Partners that have also made sizeable bets on the three-and-a-half-year old Indian firm.

General Atlantic’s investment values Jio Platforms at $65 billion — the same valuation implied by the Silver Lake and Vista deals and a 12.5% premium over Facebook’s deal, the Indian firm said.

Sunday’s announcement further illustrates the growing appeal of Jio Platforms, which has raised $8.85 billion in the past one month by selling about 14.7% stake in the firm, to foreign investors that are looking for a slice in the fast-growing world’s second largest internet market.

General Atlantic, a high profile investor in consumer tech space that has invested in dozens of firms such as Airbnb, Alibaba, Ant Financial, Box, ByteDance, Facebook, Slack, Snapchat, and Uber, has also been a key investor in India. It has cut checks to several Indian startups including NoBroker, a Bangalore-based startup that helps those looking to rent or buy an apartment connect directly with property owners, edtech giants Unacademy and Byju’s, payments processor BillDesk, and National Stock Exchange of India.

Reliance Industries chairman Ambani, who poured more than $30 billion to build Jio Platforms, said the telecom network would “leverage General Atlantic’s proven global expertise and strategic insights across 40 years of technology investing.”

“General Atlantic shares our vision of a digital society for India and strongly believes in the transformative power of digitization in enriching the lives of 1.3 billion Indians,” he added.

Reliance Jio

Prepaid SIM cards of Reliance Jio at a retail store. (Photo: INDRANIL MUKHERJEE/AFP via Getty Images)

Launched in the second half of 2016, Reliance Jio upended India’s telecommunications industry with cut-rate data plans and free voice calls. Jio Platforms, a subsidiary of Reliance Industries, operates the telecom venture, called Jio Infocomm, that has amassed 388 million subscribers since its launch to become the nation’s top telecom operator.

Reliance Jio Platforms also owns a suite of services including music streaming service JioSaavn (which it says it will take public), smartphones, broadband business, on-demand live television service and payments service.

“In just three and a half years, Jio has had a transformational impact in democratizing data and digital services, propelling India to be positioned as a leading global digital economy,” said Sandeep Naik, MD and Head of India & Southeast Asia at General Atlantic, in a statement.

The new capital would help Ambani, India’s richest man, further cement his last year’s commitment to investors when he said he aimed to cut Reliance’s net debt of about $21 billion to zero by early 2021. Its core business — oil refining and petrochemicals — has been hard hit amid the coronavirus outbreak. Its net profit in the quarter that ended on March 31 fell by 37%.

In the company’s earnings call last month, Ambani said several firms had expressed interest in buying stakes in Jio Platforms in the wake of the deal with Facebook . Bloomberg reported last week that Saudi Wealth Fund was also in talks with Ambani for a stake in Jio Platforms.

Facebook said that other than offering capital to Jio Platforms for a 9.99% stake in the firm, it would work with the Indian giant on a number of areas starting with e-commerce. Days later, JioMart, an e-commerce venture run by India’s most valued firm, began testing an “ordering system” on WhatsApp, the most popular smartphone app in India with over 400 million active users in the world’s second largest internet market.

Technology and ethics in the coronavirus economy

By Walter Thompson
Javier Saade Contributor
Javier Saade serves on several boards, is venture partner at Fenway Summer and is a senior advisor at FS Vector, Fenway Summer’s advisory affiliate. Previously, he was associate administrator and chief of investment and innovation at SBA.

The last two decades have ushered in significant change and transformation. I believe the 2020s will be dispositive in redefining the pillars of our economy, and COVID-19 magnifies this greatly. As of this writing there are 3,611,394 confirmed cases, and the U.S. accounts for 33% of those. We are now dealing with a 4.8% Q1 GDP contraction and expectations for Q2’s shrinking runs into the 25% range, more than 30 million unemployed and a $7 trillion federal intervention — in a span of six weeks.

Eric Schmidt recently predicted that the coronavirus pandemic is strengthening big tech. It is hard to disagree with him; it almost feels obvious. Big tech and other digital companies are net beneficiaries of new habits and behaviors. Some of this shift will be permanent, and well-capitalized tech companies are likely to expand their power by grabbing talent and buying companies for their IP — then dissolving them.

With power comes political backlash and public wariness. One flavor of that counter pressure is already in full effect. Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez have proposed new legislation that seeks to curtail acquisition activity via the Pandemic Anti-Monopoly Act. I’ll reserve judgment on their effort, but the theme is familiar: the strong get stronger and the weak get weaker, which further widens gaps and calcifies disparity.

The COVID-19 shock is highlighting a chasm that has evolved over decades. The digital divide, lack of capital access, sporadic paths to education and microscopic levels of wealth accumulation in communities of color and the implicit/explicit bias against non-coastal “elites” are some contributing factors.

During the 2008 crisis, the combined value of the five biggest companies — ExxonMobil, General Electric, Microsoft, AT&T and Procter & Gamble — was $1.6 trillion. Microsoft is worth almost that today — all by itself. No need to talk about FAANG, because since the pandemic’s economic halt, Peloton downloads went up five-fold in a month, Zoom grew to 200 million users from 10 million in December and Instacart users grew six times in that period.

Roelof Botha of Sequoia Capital was recently quoted as saying, “Like the killing off of the dinosaurs, this reorders who gets to survive in the new era. It is the shock that accelerates the future that Silicon Valley has been building.” It is hard to argue with his views.

To be clear, I am a beneficiary of and a big believer in technology. Throughout my career I have managed it, invested in it and made policy on it. For example, one of the multi-billion-dollar programs I oversaw, the Small Business Innovation Research (SBIR) program, has invested more than $50 billion in tens of thousands of startups, which have collectively issued 70,000 patents and raised hundreds of billions of capital — and 700 of them have gone public, including tech titans such as Qualcomm, Biogen and Symantec.

My point: I think about technology a lot, and, lately, about its repercussions. There is a massive shift afoot where more power and influence will be consolidated by these remarkable companies and their technology. Besides the economic consequences of the strong crushing the weak, there are serious ethical issues to consider as a society. Chamath Palihapitiya has been pretty vocal about the moral hazard of what is essentially a massive transfer of wealth and income. On one side you have mismanaged and/or myopic corporations and on the other, the counterparty is the American people and the money we need to print to bankroll the lifeline. I am not talking about Main Street here, by the way.

It is not hard to imagine a world in which tech alone reigns supreme. The ethical dilemmas of this are vast. A recent documentary, “Do You Trust this Computer,” put a spotlight on a frantic Elon Musk ringing the alarm bell on machines’ potential to destroy humanity. Stephen Hawking argued that while artificial intelligence could provide society with outsized benefits, it also has the potential to spiral out of control and end the human race. Bill Gates has been less fatalistic, but is also in the camp of those concerned with synthetic intelligence. In an interesting parallel, Bill has for years been very vocal on the risks pandemics pose and our lack of preparedness for them — indeed.

These three men have had a big impact on the world with and because of technology. Their deep concern is rooted in the fact that once the genie is out of the bottle, it will make and grant wishes to itself without regard to humanity. But, is this doomsday thinking? I don’t know. What I do know is that I am not alone thinking about this. With COVID-19 as a backdrop, many people are.

Algorithmic sophistication and computer horsepower continue to evolve by leaps and bounds, and serious capital continues to be invested on these fronts. The number of transistors per chip has increased from thousands in the 1950s to over four billion today. A one-atom transistor is the physical boundary of Moore’s Law. Increasing the amount of information conveyed per unit, say with quantum computing, is the most realistic possibility of extending Moore’s Law, and with it the march toward intelligent machines and a tech first world. The march has been accelerated, even if peripherally, by the pandemic.

While the promise of technology-driven progress is massive, there are some serious societal costs to exponential discovery and unleashed capability acceleration. Dartmouth’s Dr. James Moor, a notable thinker at the intersection of ethics and technology, believes that the use and development of technologies are most important when technologies have transformative effects on societies. He stipulates that as the impact of technology grows, the volume and complexity of ethical issues surrounding it increases. This is not only because more people are touched by these innovations, they are. It is because transformative technology increases pathways of action that outstrip governance systems and ethical constructs to tame it.

So what? The twists and turns of technology application lead to consequences, sometimes unknowable — and for that reason we should be increasingly vigilant. Did Zuckerberg ever imagine that his invention would have been so central to the outcome of the 2016 election? Unknowable consequences, exhibit one. Interconnected systems touch every aspect of society, from digital terrorism to bioengineering to brain hacking and neural cryonics to swarm warfare, digital assets, intelligent weapons, trillions of IoT connected devices — the list goes on.

As a society, we should be open to innovation and the benefits it ushers in. At the same time, we must also remain committed to sustainable tech development and a deployment mechanism that does not fail to shine a light on human dignity, economic inequality and broad inclusiveness. These seem like esoteric issues, but they are not, and they are being put to the test by COVID-19.

A fresh example of this thematic happened recently: Tim Bray, a VP and engineer at Amazon’s AWS, resigned because of the company’s treatment of employees, and was quoted as saying, in part, “…Amazon treats the humans in the warehouses as fungible units of pick-and-pack potential. Only that’s not just Amazon, it’s how 21st-century capitalism is done… If we don’t like certain things Amazon is doing, we need to put legal guardrails in place to stop those things.”

Eliminating human agency has been at the core of innovation during the last four decades. Less human intervention in a call center, a hedge fund trading desk, a factory, a checkout line or a motor vehicle seems fine — but in cases of greater importance, humans should remain more active or we will, at best, make ourselves irrelevant. In the past, labor displacement has been temporary, but it seems to me that the next wave is likely to be different in terms of the permanence of labor allocation, and big tech getting bigger will likely hasten this.

Innovative capability has been at the center of progress and living standard improvements since we harnessed fire. The world’s technology portfolio is an exciting one, but potentially terrifying to those who could be more hampered by it, such as the front-line workers on Main Street shouldering the health and economic brunt of the coronavirus.

Years ago, Peter Drucker pointed out that technology has transformed from servant to master throughout our history. Regarding the assembly line, he noted that “it does not use the strengths of the human being but, instead, subordinated human strengths to the requirements of the machine.”

In my opinion, Drucker’s quote is at the very core of our point in time, happening on a scale and speed that is hard to fathom and changing the digital divide amongst us into a digital canyon between us and technology.

Bill Gates details how his foundation shifted focus ‘almost entirely’ to addressing COVID-19

By Darrell Etherington

Microsoft founder Bill Gates spoke to the Financial Times (via Fast Company) about how the work of the Bill & Melinda Gates Foundation has shifted “almost entirely” to working on addressing COVID-19, in the interest of making the post impact possible in the ongoing effort to contain and combat the global coronavirus pandemic. Gates told the FT that the spread of COVID-19 could have dire economic consequences which will result in more suffering globally than anyone could’ve anticipated, hence the need to address it with the full weight of the resources of one of the world’s most well-capitalized charitable organizations.

The Bill & Melinda Gates foundation has been funding vaccine trials, clinical studies and basic research related to drug and therapy development for COVID-19 since basically the disease debuted on the world scene. It means that the exiting mandate of the foundation, which includes seeking to eradicate polio and AIDS worldwide, will be temporarily slowed or paused while the organization focuses its resources on the pandemic, but Gates’ decision to focus the group’s significant resources here should only emphasize the seriousness of the situation.

The foundation’s temporary shift is actually, long-term, the best way it can serve its core goals, since the global impact of the coronavirus crisis is likely to have repercussions for every aspect of human life, including access to medical care, testing and therapies, not to mention food and basic necessities. Curbing the disease’s spread early could have the most significant impact in economies ill-prepared to deal with the fallout, and any impact there will eventually result in better ability to work on eradicating those other diseases in a reasonable timeline, instead of undermining local infrastructure and allowing them a longer foothold.

In a 2015 TED talk, Gates predicted the coming of a global outbreak and urged global health organizations and governments to come together to prepare for what to do in case of a large, widespread contagion. Gates was working mostly from the perspective of the 2014 Ebola outbreak, which exposed many of the existing gaps and flaws in the system, but his advice seems prescient in retrospect.

Unfortunately, Gates has been subject to a lot of spreading misinformation and bogus conspiracy theory nonsense owing to heightened paranoia and activity among groups that normally peddle in this kind of falsehood. Based on this interview, Gates seems to essentially expect that as something of a matter of course for high-profile individuals, however, and it doesn’t appear to be impacting the foundation’s ability to focus on potential fixes.

Bill Gurley is stepping away from an active role at Benchmark, 21 years after joining the firm

By Connie Loizos

According to a new WSJ report and confirmed subsequently by TechCrunch, Bill Gurley, among the most famous of Silicon Valley’s venture capitalists, is stepping way from Benchmark, the early-stage venture firm that was founded in 1995 and which Gurley joined soon after, in 1999. According to its sources, he will not be investing the firm’s 10th venture fund, which is targeting $425 million in capital commitments.

Gurley’s segue out of the firm won’t surprise many. Benchmark — which has always run a fairly small operation — has routinely groomed new investors as veterans of the firm have moved on. When Benchmark raised its last fund — another $425 million vehicle in 2018 — it parted ways with Mitch Lasky and Matt Cohler, who’d joined the firm in 2007 and 2008, respectively.

The firm’s cofounders — Bob Kagle, Kevin Harvey, Andy Rachleff, and Bruce Dunlevie — also stepped away years ago from actively investing on behalf of Benchmark, with Kagle saying in 2011 that he wanted to sail more, while Harvey got into the wine-making business, where he has since developed at least seven estate vineyards from Santa Cruz to Mendocino under his company’s brand, Rhys Vineyards.

Each continues to list himself publicly as a general partner at the firm, to maintain ties, and, on rare occasion, to represent Benchmark on a board of directors, as happened with Dunlevie, who joined the board of 10-year-old WeWork when Benchmark led the company’s $17 million Series A round in 2012. (Dunlevie is now part of a special committee of WeWork’s board of directors that is suing SoftBank for alleged breaches of contract related to its recent decision to cancel a $3 billion tender offer for WeWork shares.)

Still, Gurley’s presence will be missed. He is the longest-standing partner of Benchmark and certainly the highest profile, thanks partly to an active presence on Twitter, along with Gurley’s highly regarded blog posts and, earlier in his career, a regular column with Fortune magazine.

He is also credited with some of the firm’s most lucrative investments, including, most profitably, a $10 million Series A bet in 2011 on a then-nascent Uber — a deal that has gone on to produce many billions of dollars in returned capital to Benchmark’s investors.

The deal also sullied Gurley’s reputation to an extent, after Gurley –who sat on Uber’s board — engineered the 2017 ouster of Uber’s cofounding CEO, Travis Kalanick. At the time, the manuever raised questions both about how founder friendly Benchmark is and also why, if Uber was being mismanaged, Benchmark waited so long to take action.

In the meantime, partly because Uber took its time in becoming a publicly traded company, Gurley had become renowned in recent years for warning founders to take their companies public sooner — and to stop spending frivolously.

At a Goldman Sachs technology conference in 2018, for example, he cautioned — not for the first time — that easy money was making founders less and less accountable to their investors while also driving up valuations to undeserving heights.

“Watch out,” he’d said on stage. “It’s a dangerous time.”

As the most senior member of Benchmark, Gurley has been credited with maintaining the firm’s unwavering focus on early-stage investments, turning down hundreds of millions of investing capital to raise fund after fund in the range of $400 million while other firms have established bigger and more numerous funds to manage.

In 2016, Gurley marveled at the trend in conversation with this editor. “It’s not just the size of the funds but the velocity” at which VCs are returning to their investors, he said at the time. “The Kauffman fund said that billion dollar funds sucked, then everybody went out and raised billion-dollar funds.”

Benchmark itself raised one $1 billion fund during the go-go dot-com days, after an investment in eBay established the young outfit as a top firm. But Benchmark quickly reverted back to smaller vehicles, deciding it was mistake.

We reached out earlier today to Gurley for comment on his plans. In the interim, a source confirms that Gurley, whose 11 board seats include those of e-tailer Stitch Fix, cyber security company HackerOne, and neighborhood social network Nextdoor, will keep those seats.

Other general partners at Benchmark include its newest hire, general partner Chetan Puttagunta, along with GPs Sarah Tavel, Eric Vishria, and Peter Fenton.

In Gurley’s absence, Fenton will become the most senior partner on the team, having joined Benchmark in 2006 from Accel, where Fenton was an investor previously.

According to the WSJ, Benchmark will up be able up to invest one-fifth of the fund it is raising in public companies or more mature, later-stage companies. Sources tell the WSJ that the move reflects the current coronavirus-impacted environment, wherein later-stage and publicly traded companies have seen their values plummet despite what may be strong fundamentals in many cases.

However, a source close to the firm tells us that Benchmark has always maintained the option to pour 20% of its capital into mature private companies, as well as public ones.

Google switches its Shopping search service to mostly free listings

By Natasha Lomas

Google is making a change to its product search offering meaning that unpaid listings picked by algorithm will dominate results displayed on the Google Shopping tab, instead of mostly paid product listings.

In a blog post announcing the move, Bill Ready, president of Google’s commerce division, cited the coronavirus pandemic as a catalyst for Google to speed up a pre-existing plan to switch from Shopping results being determined by paid ad auction to mostly free listings.

Making Shopping listings free for merchants is one way the tech giant is looking to support struggling retailers through the COVID-19 crisis, he suggested.

“Beginning next week, search results on the Google Shopping tab will consist primarily of free product listings, helping merchants better connect with consumers, regardless of whether they advertise on Google,” wrote Ready. “With hundreds of millions of shopping searches on Google each day, we know that many retailers have the items people need in stock and ready to ship, but are less discoverable online.”

The expansion of free listings is slated to be completed by the end of April. Initially it will only take place in the US — but Google says it intends to roll out the change globally before the end of the year.

While Google is packaging the change as a gesture to help cash-strapped retailers during a time of economic crisis there’s no doubt the tech giant is also spying strategic opportunity to expand its role in ecommerce in the midst of a coronavirus-shaped boom.

With millions of people stuck at home, and scores of physical stores closed or with heavily restricted access, online shopping has seen huge uplift.

So far, Amazon’s Jeff Bezos has been the most notable winner, adding a reported $24BN to his personal wealth since the shutdown began — while ad giants like Google are facing heavy exposure to the crisis, as advertisers hunker down and rip up their 2020 marketing budgets.

If Google Shopping can start returning better results for products, and indeed results for more products, there’s an opportunity for the search giant to grow its share of shopping traffic and grab listings clicks from shoppers who might otherwise have run product queries directly on Amazon.

Google is also using the new free product listings feature as a value add ‘carrot’ — to encourage advertisers to (keep) paying it for ads.

“For retailers, this change means free exposure to millions of people who come to Google every day for their shopping needs. For shoppers, it means more products from more stores, discoverable through the Google Shopping tab. For advertisers, this means paid campaigns can now be augmented with free listings,” is how Ready pitches the switch.

As SearchEngineLand points out, this is actually Google returning to its roots — given the first version of its Shopping service (which was then called Froogle) was also free to list.

The switch to purely paid came in 2012. Though the changes now will still see paid product listings slotted into the top of Google search results if users search for product keywords, as well as into the top of the Shopping tab. So Google isn’t giving up all product ad revenue.

In terms of how it works, existing users of Google’s Merchant Center and Shopping Ads who have already opted into the “surfaces across Google program” won’t have to do anything else — and may already be eligible to show products in what Google’s help center describes as “the unpaid experiences”.

Those needing to opt in can do so by selecting “Growth” and then “Manage programs” in the left nav menu and then choosing the “surfaces across Google” program card.

“You can also add products to your product feed, to make even more products discoverable in these free listings,” Google adds.

For new users of its Merchant Center it says it’s aiming to ramp up the onboarding process “over the coming weeks and months”. But presumably there may be some delay in getting access.

Accompanying the switch is a “new partnership” with PayPal — which Google says will allow merchants to link their accounts in order to “speed up our onboarding process and ensure we’re surfacing the highest quality results for our users”.

Existing partnerships to help merchants manage products and inventory, including those with Shopify, WooCommerce, and BigCommerce, are ongoing, it adds.

What’s not mentioned in Google’s blog post is that its Shopping service has faced antitrust intervention in the European Union which slapped Google with a $2.7BN fine back in 2017 — finding it had systematically given prominence to its own shopping comparison service in results while also demoting rival comparison shopping services.

The company later rolled out tweaks to the Shopping service in Europe that it said are intended to comply with the antitrust ruling.

Let’s give tech philanthropists the benefit of the doubt on COVID-19

By Danny Crichton
Scott Bade Contributor
Scott Bade is a former speechwriter for Mike Bloomberg and co-author of "More Human: Designing a World Where People Come First."

Tuesday afternoon saw two big announcements from the tech world in the fight against COVID-19.

First, Jack Dorsey, CEO of Twitter and Square, announced he would give $1 billion to COVID-19-related causes. A few hours later, a group of tech billionaires, including LinkedIn founder Reid Hoffman, Stripe’s Collison brothers, Y Combinator’s Paul Graham and venture capitalist Chris Sacca, announced a rapid-response grant program for researchers working on COVID-19. These two announcements come on the heels of an initiative led by Bill Gates to build factories for the most promising COVID-19 vaccines and a host of smaller efforts by tech industry leaders, including importing and donating personal protective equipment (PPE), building ventilators and supporting local businesses.

Even as tech philanthropists ramp up their responses to the COVID-19 pandemic though, critics of philanthropy lament the need for philanthropy to fulfill a role that should be played by government. Meanwhile, other commentators criticize it as a power grab. As Theodore Schleifer wrote in Recode this week:

And yet the critique of billionaire philanthropy revolves around the idea that these donations are an expression of private power. Indeed, philanthropists like Moskovitz are some of the most important people in determining the shape of America’s response to an unprecedented crisis. They are imbued with unaccountable, untransparent, and undemocratic influence. Power grabs can happen. And their donations can legitimize the philanthropists as heroes, which can discourage scrutiny of their business practices.

But this is the wrong premise. Even if the government had fully funded a pandemic response, and even if tech leaders’ COVID efforts were a power grab (of which there is no evidence), there would still be a role for the tech sector — and tech philanthropists — to play.

The question we should be asking is whether or not their efforts are properly leveraging tech’s unique capabilities and resources. If Tesla (or GM) can make ventilators, software companies can help public health officials, programmers can help state labor departments update their outdated unemployment systems and philanthropists can rush money to researchers more quickly than the government can, then they should. It’s no different than hotels supplying empty rooms for first responders or the homeless to stay in during this tragedy.

Invoking the Defense Production Act to compel manufacturers to produce masks and ventilators was uncontroversial precisely because everyone knew that capacity rested exclusively with private industry; why wouldn’t we expect the tech sector to similarly contribute in this moment of national emergency? And in the absence of a fully-funded national medical research establishment, the more resources going toward rapidly developing a vaccine, the better.

Which brings me to the oft-cited, variably defined concept of “impact” that I’ve tried to focus on throughout my interviews at TechCrunch. How do you know when charitable giving is making a difference? How do you discern the difference between a PR stunt and a well-designed program? How do you know that the right problem is even being solved?

I’ve found that even the most earnest, data-driven philanthropists don’t always ask the right questions. Just because there is a measurable outcome doesn’t mean that it should define success. And just because a company or foundation is doing some good doesn’t mean it is maximizing the social impact it can have.

After all, sometimes maximizing social impact simply means a company is performing its core competency. If tech companies — and the billionaire philanthropists they create — happen to have a skill set that is useful in a public emergency, then the responsible thing to do is to do it and do it well.

We’ve spent so long asking tech to turn its attention to real-world problems. Let’s not complain when they do so now. 

That doesn’t mean we shouldn’t criticize tech firms when they fall short, of course. People have rightly criticized firms like Amazon (and Whole Foods), Instacart, Seamless and DoorDash for their deficiencies in protecting their front-line staff. Tech companies still must be held accountable even when they are fulfilling essential functions.

It’s clear though that beyond keeping the supply chain going, technology will play a central role in implementing any strategy to overcome the novel coronavirus pandemic. Moving PPE around the world requires the logistical expertise companies like Flexport and Apple have mastered. Mass testing will require the rapid rollout of new devices from biotech firms like Gilead Sciences. A tracing regime will require massive data collection and analysis like that done by Verily or Palantir. And of course we’ll have to manufacture and distribute vaccines and other treatments at scale. Like Amazon or not, I suspect it might have a role to play.

Which brings me to Bill Gates, whose announcement that he will start building factories for promising vaccines now has made him the most central tech figure in responding to COVID-19. Bill Gates isn’t just a tech philanthropist. He is — after years of study — one of the world’s leading experts on pandemic preparedness. When we look to him for guidance, we’re not asking for a tech billionaire to assert his power. We’re embracing the leadership of someone who has a proven track record bringing his engineering and project management skills to bear on some of the most intractable public health problems of the last few decades.

Of course in an ideal world, the void Gates is filling would already be filled by the government. It’s inexcusable that it isn’t. But good democracy also means asking for all of society to contribute. And good public policy means looking for the best solutions wherever they are found.

Sometimes that means an anonymous bureaucrat in the suburbs of DC. And sometimes it means a billionaire public health nerd tech mogul.

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