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Venture

New data shows how SaaS founders have been dealing with whiplash from public markets • ZebethMedia

What a difference a year makes. If you are looking for proof, go no further than OpenView Venture Partners’ 2022 SaaS benchmarks report, which couldn’t be more different from the 2021 edition. Both reports come from an annual survey of SaaS companies, and with 660 global respondents, the 2022 sample doesn’t look very different from last year. But boy, the mood has changed. Among other findings we’ll dive into shortly, OpenView learned that “an overwhelming majority of respondents are slashing spending regardless of cash runway.” This need to cut cash burn is of course an answer to the public SaaS selloff and the “whiplash” that ensued. Being set off by macro concerns, there’s no reason to think that it won’t continue for some time, which explains why companies are gearing up. Founders don’t just need to cut burn, though — they also need to turn their startups into the kind of companies that investors will back, and that’s definitely not the same as it was in 2020 or 2021. But then, what does a great SaaS company look like these days? And how to become one? Well, benchmarks are a good start to answering these questions — knowing what the top of the class is doing can help other entrepreneurs steer their companies in the right direction. OpenView has some how-to advice on the nitty-gritty, too, which we discussed with the report’s co-authors, operating partner Kyle Poyar and senior director of growth Curt Townshend. “One thing that we saw in talking to CFOs, as well as looking at the data,” Townshend said, “is that it’s just a really hard time to be a founder today — and you need to be very, very specific about where you’re going to put your dollars.” Let’s explore what the answer(s) might be.

One day all tech news will merely be updates to Twitter moderation policies • ZebethMedia

Equity drops at 7 a.m. PT every Monday and Wednesday, and at 6 a.m. PT on Fridays, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. ZebethMedia also has a great show on crypto, a show that interviews founders, one that details how our stories come together, and more!

Making DAOs accessible for normals on ZebethMedia Live • ZebethMedia

Want to start a DAO? It’s not that hard. Want to join a DAO? It’s even easier, but there are several steps to get connected. Some of those steps are daunting. That’s why Alex Taub started Upstream, which attempts to make starting and onboarding for a DAO much easier. Tune in to the next ZebethMedia Live to hear form Alex and investor Karin Klein (Bloomberg Beta) on Upstream’s novel approach to decentralized autonomous organizations. This ZebethMedia Live event opens on November 9 at 11:30 a.m. PDT/2:30 p.m. EDT with networking. The interview begins at 12:00 p.m. PDT followed by the TCL Pitch Practice at 12:30 p.m. PDT. Apply for TCL Pitch Practice by completing this application. If you haven’t joined us before on Grip — our TCL online platform — click here to register for free and gain access to all ZebethMedia Live events, including ZebethMedia Live, City Spotlight, Startup Pitch Practice, Networking and other ZebethMedia community events, with just one registration. Already part of the ZebethMedia Live on Grip community? Click this link to add this session to your agenda!

Bitwise, Paradigm and Perkins Coie talk regs at TC Sessions: Crypto

Crypto entities ranging from major exchanges to small projects are on the road to stateside regulation. Whether it comes through the Securities and Exchange Commission or the Commodity Futures Trading Commission, many actors in the space are looking for concrete future guidance on how to build compliant businesses in an emerging sector while navigating rules built for traditional finance. And, while crypto founders and investors know regulation is inevitable, they’re also looking to find the sweetest deal possible as they try to influence policymakers. It’s a challenging balance — enough regulation to protect retail investors from a hostile environment but not so much that it stifles the crypto sector’s growth and future innovation in the space. This regulatory tug-of-war is just one reason why we’re thrilled that Katherine Dowling, general counsel and chief compliance officer at Bitwise Asset Management; Sarah Shtylman, partner at Perkins Coie; and Justin Slaughter, policy director at Paradigm, will join us for a session called, “Is Crypto Regulation Ready” at TC Sessions: Crypto in Miami on November 17. We’ll discuss whether or not there’s been an increase in institutional adoption and how the regulatory framework might impact adoption going forward. Given the frustration over the lack of clarity in regulatory guidance, we’ll ask Dowling, Shtylman and Slaughter how legal crypto firms and counsels advise clients to navigate the present landscape while still operating in a compliant way. Dowling brings a unique perspective to the table, having experience working both in private equity firms and as a federal prosecutor in the Economic Crimes Unit of the U.S. Attorney’s Office. Shtylman brings deep knowledge of fintech and blockchain and Slaughter brings legal and advisory experience in both the public and private sectors. We’ll dive into the latest insights on how emerging regulatory frameworks will affect the digital asset industry and get their take on whether we can expect to see clarity on this in the U.S. by the end of the year. Prior to joining Bitwise, Dowling served in general counsel, CCO and COO roles at several financial and private equity firms. She also co-founded Luminate Capital Partners, where she held positions as GP, managing director and COO. A Harvard Law graduate, Dowling spent more than a decade as a federal prosecutor, most recently in the Economic Crimes Unit of the U.S. Attorney’s Office for the Northern District of California, where she worked with the FBI, SEC, IRS and other agencies to prosecute insider trading, fraud and money laundering cases, among others. She also serves on the boards of two nonprofit organizations. As a partner at Perkins Coie, Sarah Shtylman focuses on the fintech and blockchain industries. The clients she advises range from entrepreneurs and startups to big tech and regulated financial institutions. Shtylman counsels on a variety of regulatory, commercial, compliance and product development projects — including NFTs, regulated digital asset platforms, in-game currencies and payment services integrations.  Shtylman has advised clients through the application and compliance processes for state and federal trust charters, money transmission licensing and registration and lending licenses. She has engaged directly with state and federal regulators to discuss the applicability of various financial services regulatory regimes to emerging blockchain technology platforms and protocols that her clients are developing.  Prior to Perkins Coie, Shtylman served as in-house regulatory counsel at Coinbase and has experience with cryptocurrency network development and launches, asset-backed digital tokens (including stablecoins), peer-to-peer lending, corporate governance, Bank Secrecy Act (BSA) compliance, Financial Industry Regulatory Authority (FINRA) arbitration and financial services litigation. Prior to joining Paradigm, Justin Slaughter was director of the office of Legislative and Intergovernmental Affairs and senior advisor to Acting Securities and Exchange Commission Chair Allison Herren Lee. He has also served as chief policy advisor and special counsel to former Commissioner Sharon Bowen at the Commodity Futures Trading Commission and general counsel to Senator Edward J. Markey.  Slaughter has also served as a consultant in private practice focusing on fintech and smaller technology companies, and he began his career as a law clerk to Judge Jerome Farris on the United States Court of Appeals for the Ninth Circuit. Justin has a B.A. from Columbia University and a J.D. from Yale Law School. Take advantage of our early bird pricing and save $150 on General Admission passes. Buy your pass today, and then join the blockchain, crypto, DeFi, NFT and web3 communities at TC Sessions: Crypto on November 17 in Miami. Is your company interested in sponsoring or exhibiting at TC Sessions: Crypto? Contact our sponsorship sales team by filling out this form.

How to land investors who fund game-changing companies • ZebethMedia

A lot of problems worth solving aren’t ones that you can solve in a year or two or even 10. For founders and investors alike, such long timelines can seem daunting. But for Gene Berdichevsky, co-founder and CEO of battery tech startup Sila, hard tech problems are also some of the most tantalizing. “It’s always a good time to be a hard tech startup,” Berdichevsky said at ZebethMedia Disrupt. “One of the reasons is that the world doesn’t change just because it should. It changes because someone goes after something insanely hard and actually succeeds at it.” Such hard.tech startups run the gamut from advanced batteries like those made by Sila to nuclear fusion, quantum computing, automation and robotics. Any tech that has the potential for such broad impact also has a massive potential market, and that means a certain class of investors are willing to be in it for the long haul. “Hire people to do the technical stuff. Keep an eye on it, but then go learn the other pieces.” Gene Berdichevsky, co-founder and CEO, Sila “We look for real step-change, game-changing technologies that are going to benefit everyone and we think that will drive a huge [total addressable market],” said Milo Werner, a general partner at The Engine. When Berdichevsky founded Sila, he believed his company’s technology, a silicon-based anode that promises to improve lithium-ion battery energy density by 20%–40%, would be a significant enough advance that it would have no problem finding a market. What he didn’t expect was how long it would take. When Sila’s first product debuted inside the Whoop 4.0 wearable last year, the path to market had been twice as long as Berdichevsky had expected.

TAM tough love, ‘building in public,’ 6 key SaaS metrics • ZebethMedia

Are you ready to launch a bajillion-dollar startup? Before you start: Are you planning to build a centaur, a unicorn or perhaps a decacorn? Startup pitching has become an existential drama, in part because so many founders exaggerate the size of the total addressable market (TAM) in which they hope to compete. At ZebethMedia Disrupt, I spoke to three investors about how they use TAM to guide their decision-making. Everyone agreed that the number itself is far less important than the process that produced it. “The way it’s calculated and the way the founder is thinking about it tells us not necessarily about the business or its future, but about how the founder thinks about company creation,” said Deena Shakir, a partner at Lux Capital. Full ZebethMedia+ articles are only available to members.Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription. “It is almost guaranteed you’re going to be wrong,” said Aydin Senkut, the founder and managing partner of Felicis Ventures. “It’s either going to be too large or too small.” Kara Nortman, a managing partner at Upfront Ventures, said the TAM numbers given in a pitch do not control whether she’s likely to invest. “I would say [it is] more important to be able to articulate how big something can become and to show that you have a thought process around TAM, if it’s early,” she said. Choosing a mythical TAM won’t put dollar signs in investors’ eyes, as unrealistic numbers reflect unrealistic expectations, a red flag for any VC. As Senkut said, “the plan doesn’t have to be accurate — the plan has to be directionally correct.” Thanks very much for reading TC+ this week! Walter ThompsonEditorial Manager, ZebethMedia+@yourprotagonist 3 investors explain how finance-focused proptech startups can survive the downturn Image Credits: Kuzma (opens in a new window) / Getty Images How are finance-oriented property tech investors reacting to the ongoing downturn in public markets? Senior reporter Mary Ann Azevedo interviewed three VCs to learn more about how they’re counseling the companies in their portfolios, which types of startups are best positioned to weather the downturn and how they’re managing risk: Pete Flint, general partner, NFX Zach Aarons, co-founder and general partner, MetaProp Nima Wedlake, principal, Thomvest Ventures How Metafy founder Josh Fabian caught the attention of 776 by building in public Image Credits: Kelly Sullivan / Getty Images At ZebethMedia Disrupt, Josh Fabian, CEO of video game coaching platform Metafy, explained why he’s committed to “building in public,” or sharing aspects of his founder’s journey with an audience. “Consumers don’t trust corporations; I don’t trust corporations,” he said. “I don’t think any of you do, even if you’re running your own.” Katelin Holloway, a founding partner at 776 (an investor in Metafy), said Fabian’s approach was a breath of fresh air. “We were able to just engage and talk like humans, and Josh told us his story in a very different way,” she said. “Not only was it incredibly compelling from a business perspective, it was incredibly compelling from a human perspective,” she said. Is the modern data stack just old wine in a new bottle? Image Credits: Mikhail Dmitriev (opens in a new window) / Getty Images Before Ashish Kakran became a principal at Thomvest Ventures, he was a data engineer who transformed disparate consumer data points into optimized offers for consumer telecoms. “Part of my job involved unpacking encrypted data feeds, removing rows or columns that had missing data and mapping the fields to our internal data models,” he writes in a TC+ guest post. “Our statistics team then used the clean, updated data to model the best offer for each household.” Because today’s datasets contain exponentially more information, “the rules are being rewritten on how data will be used for competitive advantage, and it won’t be long before the winners emerge,” he asserts. In a deep dive, he compares modern and legacy data stacks to identify key trends for enterprises and opportunities for founders and investors. “Practitioners are spoilt for choices when building enterprise data pipelines,” says Kakran. Investor’s advice during a downturn: Don’t panic Image Credits: Kelly Sullivan / Getty Images Fewer investors are writing checks these days, but what kind of advice have they been giving their portfolio companies in recent months? Mary Ann Azevedo spoke to three executives at ZebethMedia Disrupt to learn more about the strategies they’re promoting to preserve runway and their peace of mind. Eric Glyman, CEO, Ramp Thejo Kote, CEO, Airbase Ruth Foxe Blader, partner, Anthemis “It behooves everybody to be really lucid about the macro environment that we’re entering,” said Blader. “It’s likely to be long-lived, and it’s very important to be judicious but not lose sight of your goals and the reason you founded the business in the first place.” 6 key metrics that can help SaaS startups outlast this downturn Image Credits: Andy Ryan (opens in a new window) / Getty Images The most successful companies I’ve worked at fostered parasocial relationships with customers in much the same way many of us invest emotional energy while following the lives of celebrities. During a downturn, “the goal is to pick up on warning signs early and course-correct as you go, and those signs are often hidden in the breadcrumbs,” writes Sudheesh Nair, CEO of ThoughtSpot. “Not all industries are affected equally, so don’t assume your customers will cut spending this year just because the headlines are bleak.” Tips for e-commerce brands that want to win more market share this holiday season Image Credits: Justin Sullivan (opens in a new window) / Getty Images Santa Claus makes a list and checks it twice before each holiday season. Can your e-commerce startup make the same claim? “Consumers are now living with inflation and an unofficial recession, and we can expect more selective and price-conscious shopping behavior,” writes Guru Hariharan, CEO and founder of CommerceIQ. Now that people “are feeling the squeeze on their everyday essential purchases” and the holiday shopping season is

What investors really think about the TAM slide in your pitch deck • ZebethMedia

We’re encouraged to think of pitch meetings as a trial by fire: If an entrepreneur can negotiate deadly traps and slay the doubt monsters that bedevil tech investors, they’ll be rewarded with a golden SAFE note at the end of their quest. Particularly for first-timers, the pitch has become an existential drama, which can lead to poor decisions like overlong slide decks, failing to prepare investors before a meeting, and fatally, exaggerating the size of the total addressable market (TAM) in which they hope to compete. “With TAM, it is almost guaranteed you’re going to be wrong,” Aydin Senkut, the founder and managing partner of Felicis Ventures, said at ZebethMedia Disrupt. “It’s either going to be too large or too small.” Kara Nortman, a managing partner at Upfront Ventures, said the TAM numbers given in a pitch do not control whether she’s likely to invest. “I would say [it is] more important to be able to articulate how big something can become and to show that you have a thought process around TAM, if it’s early.” According to Deena Shakir, a partner at Lux Capital, TAM, along with the associated metrics serviceable addressable market (SAM) and serviceable obtainable market (SOM), aren’t meant to be carved in stone. They’re simple planning tools that help founders show investors their company’s upside potential, while SOM and SAM help them offset risk. “If we’re taking the meeting, we all sensibly think there’s something there that’s interesting enough to be potentially venture-bankable,” she said. “The way it’s calculated and the way the founder is thinking about it tells us not necessarily about the business or its future, but about how the founder thinks about company creation. And that’s much more important at the earliest stage.” All three panelists said TAM, SAM and SOM numbers offer a window into a founder’s mindset, but they’re not determinative factors, since they already have a general understanding of the sectors in which founders hope to compete.

Most of the unicorns aren’t • ZebethMedia

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines. Oh what a week. What a week. Things are busier than ever at ZebethMedia, where we’re coming out of our post-conference stupor and charing straight back into a packed news cycle. Sure, Musk is still making waves, but there are startup rounds to cover, layoffs to chew on, earnings coverage, unicorn reports, new data, and more. After cutting back sharply on material and still going long, here’s what Mary Ann, Natasha, and Alex got into this week: Rewind wants to help people with their memory. We talk about how the startup, which launched this week, uses recording technology to help you get what you see, hear and say at your finger tips. We talked about Onward, a startup that wants to help divorced or separated parents fight less about money and how it just raised nearly $10 million despite being pre-revenue. The somewhat odd, possible Byju’s IPO-spinoff of Aakash, a tutoring company that it bought the other year. Our views can be summarized in meme format: An edtech IPO? In this economy? Unicorns face an incredibly uphill journey to get public, which may explain in part why Byju’s is not itself going public (recall that it had had plans, but like with so many other companies those are on hold). And then there was Brex, which announced a new partnership with Techstars despite a big push into the enterprise space. Stripe revealed that it has cut 14% of its staff, or over 1,100 people, and its CEO and co-founder Patrick Collison admitting that the payments giant had “overhired for the world we’re in.” And finally, there’s a new VC ratings company in the neighborhood. How do we feel? Better than some VCs, at least. Got all that? Good. More Monday morning. Equity drops at 7 a.m. PT every Monday and Wednesday, and at 6 a.m. PT on Fridays, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. ZebethMedia also has a great show on crypto, a show that interviews founders, one that details how our stories come together, and more!

WhatsApp’s new discussion groups offer end-to-end encryption and support up to 1,024 users • ZebethMedia

To get a roundup of ZebethMedia’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here. Oh heeeey! How are you doing today? We’ve had a pretty busy day on the site today, with a veritable cornucopia of news spilling all over the internet. We’ve selected some of the most interesting slices for you below. Enjoy (as far as you can enjoy another day of news about cutbacks and whispered advice to try and panic as little as possible). — Christine and Haje The ZebethMedia Top 3 WhatsUp over at WhatsApp: The messaging giant has been preparing us for this moment since August, and it is finally here: Communities! The new discussion group enables more people to be included and features voice and video calls for up to 32 people, as well as emojis galore, polls and large file sharing, Sarah reports. Might want to switch to polka dots: Stripe cuts 14% of its workforce, and Paul writes that its CEO points to “overhiring for the world we’re in” as having caused the reduction. Unfortunately, it is a layoffs kind of day, so head down to Big Tech Inc. if you can stomach reading more. Where in the world is Ajit Mohan?: Well, the former head of Meta India is now over there at Snap and will serve as the president of the company’s APAC business, Manish and Jagmeet write. Startups and VC “Most designers don’t have real-life manufacturing experience and they are drawing things that aren’t useable by the factory,” Xianfeng Wang, founder and CEO of Pacdora, tells ZebethMedia. To bridge the gap between designers and manufacturers. Wang’s team developed Pacdora, which is like Canva plus Figma for packaging, Rita reports. The platform offers thousands of packaging templates for all kinds of products, from shipping boxes and coffee bags to lotion bottles and yogurt pouches. “I was always looking for that piece of software that could help us do this internally,” Juan Meisel told Christine. He is building a logistics solution with his new startup, Grip.  “I started advising some companies on the side. They got their ButcherBox in the mail and were trying to ship anything from frozen milk to chocolate, flowers and pharmaceuticals.” Okay, fine, have another handful of startup news stories: Proptech in Review: 3 investors explain how finance-focused proptech startups can survive the downturn Image Credits: Kuzma (opens in a new window) / Getty Images How are finance-oriented property tech investors reacting to the ongoing downturn in public markets? Senior reporter Mary Ann Azevedo interviewed three VCs to learn more about how they’re counseling the companies in their portfolios, which types of startups are best positioned to weather the downturn, and how they’re managing risk: Pete Flint, general partner, NFX Zach Aarons, co-founder and general partner, MetaProp Nima Wedlake, principal, Thomvest Ventures Three more from the TC+ team: ZebethMedia+ is our membership program that helps founders and startup teams get ahead of the pack. You can sign up here. Use code “DC” for a 15% discount on an annual subscription! Big Tech Inc. Step right up, folks! We know you don’t like carrying around a paper grocery list — heck, we know scrolling on that small phone screen is a nuisance, too. Well, Amazon and Mojo Vision have a treat for you, or rather, your eyeballs. Today, they introduced a proof of concept feature that Brian says is “the first major third-party consumer application on a smart contact lens.” That’s right, an Alexa Shopping List integration for a contact lens that has a computing interface. Layoffs, layoffs as far as the eye can see today. While we already shared the Stripe news with you, and as you’ve likely been hearing for the past week, Elon Musk is also doing some workforce reduction at Twitter. Natasha L reports that he now plans to slash Twitter’s headcount by half. Meanwhile, Kirsten writes that Lyft is laying off 13% of its workforce in an effort to cut operating expenses. And we have five more for you:

I reviewed 1,000+ pitch decks. These are the most common mistakes • ZebethMedia

Over the last six months, I’ve written up 25 Pitch Deck Teardowns — the popular series of articles where I review a pitch deck in detail, celebrating the wins and gently (and sometimes not-so-gently) suggesting improvements. We’ve seen 74-slide decks (yes, really), decks that are riddled with spelling mistakes and bogged down by hideous design (but still work incredibly well), and decks where the founders don’t fully seem to understand what market they are in. For every deck I reviewed for my ZebethMedia series, I saw dozens of other decks as well. Don’t tell my bosses, but I have a side hustle as a pitch coach, and through that, I see a lot of decks. I also am friends with a bunch of lovely VCs and accelerators who often forward decks for me to take a look at. I have a folder with hundreds and hundreds of pitch decks, ranging from $10,000 angel rounds to multibillion-dollar deals in progress. People on occasion send me screenshots of slides, too (I like to think of those as “unsolicited deck pics.” Ahem.) In any case, I have long since lost count, but I’ve probably seen a few thousand pitch decks over the past few years. Suffice it to say: I have opinions about ’em. In this post, I want to break down the top 11 (yes, it had to be 11) most common mistakes I see in pitch decks, along with a bunch of examples of how these mistakes show up. Oh, and if you want to submit your own deck for a potential pitch deck teardown, you’re in luck: Instructions are here. Let’s gooooo. Not knowing your audience A pitch is a story, and stories have audiences. You wouldn’t put a child in front of Arnold Schwarzenegger hacking and slashing his way through various parts of the Predator. Similarly, the story you use to sell to your customers is not the same story that you need to get across to your would-be investor audience. You need to understand how VC works; that’s non-negotiable. If you don’t, it means that you have no way of knowing how to tell your story, and you don’t truly understand what they are buying. Get that resolved for yourself! Examples of decks that get this right: Examples of decks that get this wrong: Not fully understanding your market sizing It’s painful to read a pitch deck and realize that the founders have no idea how to size their own market. At the earliest stage, your company needs to prove exactly two things: Can you build a venture-scale business in this market? Is this the right team to build that business? The way you answer the first question is by having sensible things to say about the market you operate in, and how you see the size and trajectory of that market. If you fail to do that, guess what — you’re proving that you’re not a good founder, and you’re probably not the right team to build the business. Yes, calculating the TAM, SAM and SOM for your market can be really hard, and sometimes it involves assumptions and guesswork, but that’s OK — you’re not getting graded on how accurate your numbers are but on how you view and think about the market you are in. If the numbers are “wrong,” but you can defend why you thought about them this way, it tells your potential investors a lot about your quality as a founder. Examples of decks that get this right: Examples of decks that get this wrong:

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