Hopin’ into lessons from Peloton
Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here.
In the beginning of the pandemic, we learned which companies were unprepared to handle a cataclysmic event. Now, as the world slowly starts to reopen in light of vaccinations, we’re learning which companies that soared during the pandemic also lost their discipline amid it.
Over the past two years, tech rightfully became more critical than ever for the services that it provided to the average human, whether it was empowering an entirely distributed workforce or helping us get access to health services via a screen. It also became vulnerable. Pandemic-era growth has always had a caveat: The tech companies that found product-market fit, and demand beyond their wildest dreams, are the same tech companies that knew their win was at least partially dependent on a rare, once-in-a-lifetime event that (hopefully) would go away one day.
Every growth round, mega-valuation, impressive IPO pop and total-addressable-market bump gave the appearance of strength amid the crisis. But the same tailwinds that drove so much value creation also quieted money-saving conversations and planning for a future deceleration.
Yet, a reckoning, or at least a re-correction, is starting to play out, as shown by recent layoffs at Peloton and Hopin. In Peloton’s case, the layoff is less of a response to a pandemic jolt, and more of a deflation after experiencing a surge of pandemic-fueled demand. Live events platform Hopin is facing a similar mountain. On the podcast over a year ago, we called Hopin the fastest growth story of this era. This week, I heard that Hopin cut 12% of its staff, citing the goal of more sustainable growth.
For my full take on this topic, check out my TC+ column: It’s not a startup reckoning, it’s a re-correction.
In the rest of this newsletter, we’ll crawl into the metaverse and the Big Takeaway from some recent tech twitter drama. We’ll also learn about why Udemy execs left to build a better Udemy. As always, you can support me by sharing this newsletter, following me on Twitter or subscribing to my personal blog.
Deal of the week
Former president of Udemy Business, Darren Shimkus, left the edtech company months before it went public to investigate a feeling. The result, after six months of interviewing heads of data, talent development and engineering, was Modal.
This week I published a first look at the stealthy business, built by Shimkus and former Udemy CEO Dennis Yang, and its recently capitalized strategy of cohort-based learning for the enterprise. Ironically, it’s the duo’s second swing at building the world’s biggest enterprise education company, albeit with an entirely different approach from their shared alma mater.
Here’s why it’s important: At a high level, Modal’s product is simple, and refreshing workforces is clearly in demand, given the spree of financing rounds for upskilling and reskilling companies. The moonshot instead is that edtech veterans are betting on the concept of curated, cohort-based learning, instead of asynchronous learning, as the future of how people comprehend information.
The one time tech twitter drama actually taught me something
Last week, right after I finished up this newsletter, I turned to Twitter and saw controversy over whether venture capitalists should charge founders for advice on their pitch decks. The anger came from the potential that founders could get confused on whether that advice could lean to a future investment from the same VC. In other words, does offering this as a service create a “pay to pitch” type of environment?
Here’s why it’s important: It struck a chord. People were upset about what this says about ethics in a founder-friendly era, why underrepresented founders could be disproportionately impacted by these services and how important it is to be explicit when you are a person in a position of power. It made us ask how much a pitch deck is truly worth, and if we should change our expectations for emerging fund managers versus a GP at Accel.
Ultimately, the Equity team landed on the fact that this type of set up is common among small fund VCs simply as a way to monetize talent and supplement income, but specificity and clarity is necessary when offering services.
Crawling toward the metaverse
Alex and I jumped on the mic this week to unpack a big question: Will work, or play, bring the metaverse mainstream? Virtual worlds aren’t anything new, but investment in a new metaverse from Facebook and Microsoft has left us scratching our heads on what the future holds.
Here’s why it’s important: I vote that the most effective use case of the metaverse will thus be a little bit more nuanced than our current work stack of productivity tools, calendar, e-mail, Zoom and Slack. The metaverse is best when it feels like a place to congregate around a shared reason or event, unpack a big question or celebrate. Kind of like my Twitter DMs whenever something controversial happens in tech twitter. Check out our three views on metaverse use cases that just dropped on TC+, as well.
All the news that’s fit to tweet:
In the DMs
Nothing too scoop-y from my end this week, other than my piece about Hopin’s layoffs. I’d love to work on a follow-up story, so if you are a current or former employee at Hopin, or just recently laid off at any tech company, contact me on e-mail at email@example.com or on Signal, a secure encrypted messaging app, at 925 609 4188. You can also direct message me on Twitter @nmasc_.
Across the week
Thanks to all who tuned into our first-ever Equity Live of the year. We’ll be back in two weeks, but in the meantime, how about tuning into our newest podcast and its live debut? Here’s what you need to know:
Found, TechCrunch’s podcast that focuses on the stories behind the startups, talks to founders about the peaks and pits of running a business, including the fundraising process, hiring, leadership tactics and the reality of what it’s like to be a founder.
My favorite recent episode featured Elizabeth Ruzzo from Adyn. From the co-hosts: “Not only did she develop the only test for women to ensure they are prescribed the birth control that will be the least likely to have detrimental side effects, she also founded the company and fundraised as the sole employee of the company. She talks to Darrell and Jordan about the challenges she faced as a solo founder/employee raising money for a solution for birth control, why she decided to leave academia, and the complicated regulatory maze she had to navigate to get adyn off the ground.”
Seen on TechCrunch
A Twitter slap fight goes wrong
How Texas is becoming a bitcoin mining hub
Donation site for Ottawa truckers’ ‘Freedom Convoy’ protest exposed donors’ data
The Spotify-Rogan saga highlights the distinction between publishers and platforms
Peter Thiel to leave Facebook board, which you probably forgot he was still on
Seen on TechCrunch+
Why Affirm’s stock is getting hit, and what the selloff means for the BNPL startup market
What’s driving China’s autonomous vehicle frenzy?
3 warning signs that your investor will leave you on the sidelines
Dear Sophie: How can early-stage startups compete for talent?
Until next time,
Tesla more than tripled its Austin gigafactory workforce in 2022
Tesla’s 2,500-acre manufacturing hub in Austin, Texas tripled its workforce last year, according to the company’s annual compliance report filed with county officials. Bloomberg first reported on the news.
The report filed with Travis County’s Economic Development Program shows that Tesla increased its Austin workforce from just 3,523 contingent and permanent employees in 2021 to 12,277 by the end of 2022. Bloomberg reports that just over half of Tesla’s workers reside in the county, with the average full-time employee earning a salary of at least $47,147. Outside of Tesla’s factory, the average salary of an Austin worker is $68,060, according to data from ZipRecruiter.
TechCrunch was unable to acquire a copy of the report, so it’s not clear if those workers are all full-time. If they are, Tesla has hired a far cry more full-time employees than it is contracted to do. According to the agreement between Tesla and Travis County, the company is obligated to create 5,001 new full-time jobs over the next four years.
The contract also states that Tesla must invest about $1.1 billion in the county over the next five years. Tesla’s compliance report shows that the automaker last year invested $5.81 billion in Gigafactory Texas, which officially launched a year ago at a “Cyber Rodeo” event. In January, Tesla notified regulators that it plans to invest another $770 million into an expansion of the factory to include a battery cell testing site and cathode and drive unit manufacturing site. With that investment will come more jobs.
Tesla’s choice to move its headquarters to Texas and build a gigafactory there has helped the state lead the nation in job growth. The automaker builds its Model Y crossover there and plans to build its Cybertruck in Texas, as well. Giga Texas will also be a model for sustainable manufacturing, CEO Elon Musk has said. Last year, Tesla completed the first phase of what will become “the largest rooftop solar installation in the world,” according to the report, per Bloomberg. Tesla has begun on the second phase of installation, but already there are reports of being able to see the rooftop from space. The goal is to generate 27 megawatts of power.
Musk has also promised to turn the site into an “ecological paradise,” complete with a boardwalk and a hiking/biking trail that will open to the public. There haven’t been many updates on that front, and locals have been concerned that the site is actually more of an environmental nightmare that has led to noise and water pollution. The site, located at the intersection of State Highway 130 and Harold Green Road, east of Austin, is along the Colorado River and could create a climate catastrophe if the river overflows.
The site of Tesla’s gigafactory has also historically been the home of low-income households and has a large population of Spanish-speaking residents. It’s not clear if the jobs at the factory reflect the demographic population of the community in which it resides.
Launch startup Stoke Space rolls out software tool for complex hardware development
Stoke Space, a company that’s developing a fully reusable rocket, has unveiled a new tool to let hardware companies track the design, testing and integration of parts. The new tool, Fusion, is targeting an unsexy but essential aspect of the hardware workflow.
It’s a solution born out of “ubiquitous pain in the industry,” Stoke CEO Andy Lapsa said in a recent interview. The current parts tracking status quo is marked by cumbersome, balkanized solutions built on piles of paperwork and spreadsheets. Many of the existing tools are not optimized “for boots on the ground,” but for finance or procurement teams, or even the C-suite, Lapsa explained.
In contrast, Fusion is designed to optimize simple inventory transactions and parts organization, and it will continue to track parts through their lifespan: as they are built into larger assemblies and go through testing. In an extreme example, such as hardware failures, Fusion will help teams connect anomalous data to the exact serial numbers of the parts involved.
“If you think about aerospace in general, there’s a need and a desire to be able to understand the part pedigree of every single part number and serial number that’s in an assembly,” Lapsa said. “So not only do you understand the configuration, you understand the history of all of those parts dating back to forever.”
While Lapsa clarified that Fusion is the result of an organic in-house need for better parts management – designing a fully reusable rocket is complicated, after all – turning it into a sell-able product was a decision that the Stoke team made early on. It’s a notable example of a rocket startup generating pathways for revenue while their vehicle is still under development.
Fusion offers particular relevance to startups. Many existing tools are designed for production runs – not the fast-moving research and development environment that many hardware startups find themselves, Lapsa added. In these environments, speed and accuracy are paramount.
Brent Bradbury, Stoke’s head of software, echoed these comments.
“The parts are changing, the people are changing, the processes are changing,” he said. “This lets us capture all that as it happens without a whole lot of extra work.”
Amid a boom in AI accelerators, a UC Berkeley-focused outfit, House Fund, swings open its doors
Companies at the forefront of AI would naturally like to stay at the forefront, so it’s no surprise they want to stay close to smaller startups that are putting some of their newest advancements to work.
Last month, for example, Neo, a startup accelerator founded by Silicon Valley investor Ali Partovi, announced that OpenAI and Microsoft have offered to provide free software and advice to companies in a new track focused on artificial intelligence.
Now, another Bay Area outfit — House Fund, which invests in startups with ties to UC Berkeley — says it is launching an AI accelerator and that, similarly, OpenAI, Microsoft, Databricks, and Google’s Gradient Ventures are offering participating startups free and early access to tech from their companies, along with mentorship from top AI founders and executives at these companies.
We talked with House Fund founder Jeremy Fiance over the weekend to get a bit more color about the program, which will replace a broader-based accelerator program House Fund has run and whose alums include an additive manufacturing software company, Dyndrite, and the managed app development platform Chowbotics, whose most recent round in January brought the company’s total funding to more than $60 million.
For founders interested in learning more, the new AI accelerator program runs for two months, kicking off in early July and ending in early September. Six or so companies will be accepted, with the early application deadline coming up next week on April 13th. (The final application deadline is on June 1.) As for the time commitment involved across those two months, every startup could have a different experience, says Fiance. “We’re there when you need us, and we’re good at staying out of the way.”
There will be the requisite kickoff retreat to spark the program and founders to get to know one another. Candidates who are accepted will also have access to some of UC Berkeley’s renowned AI professors, including Michael Jordan, Ion Stoica, and Trevor Darrell. And they can opt into dinners and events in collaboration with these various constituents.
As for some of the financial dynamics, every startup that goes through the program will receive a $1 million investment on a $10 million post-money SAFE note. Importantly, too, as with the House Fund’s venture dollars, its AI accelerator is seeking startups that have at least one Berkeley-affiliated founder on the co-founding team. That includes alumni, faculty, PhDs, postdocs, staff, students, dropouts, and other affiliates.
There is no demo day. Instead, says Fiance, founders will receive “directed, personal introductions” to the VCs who best fit with their startups.
Given the buzz over AI, the new program could supercharge House Fund, the venture organization, which is already growing fast. Fiance launched it in 2016 with just $6 million and it now manages $300 million in assets, including on behalf of Berkeley Endowment Management Company and the University of California.
At the same time, the competition out there is fierce and growing more so by the day.
Though OpenAI has offered to partner with House Fund, for example, the San Francisco-based company announced its own accelerator back in November. Called Converge, the cohort was to be made up of 10 or so founders who received $1 million each and admission to five weeks of office hours, workshops and other events that ended and that received their funding from the OpenAI Startup Fund.
Y Combinator, the biggest accelerator in the world, is also oozing with AI startups right now, all of them part of a winter class that will be talking directly with investors this week via demo days that are taking place tomorrow, April 5th, and on Thursday.
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