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Startups rethink what it means to be high-touch during a pandemic

Glossier NYC, in normal times, is typically visited by more than 2,000 people every day, with lines of people from all over the world curling out the door. And when you enter, it’s tempting to touch, well, everything.

The walls are adorned with flowers, mirrors and giant versions of the makeup company’s flagship product: Boy Brow. Makeup is sold on communal tables, where customers are encouraged to try products. Emily Weiss, the founder of the unicorn startup, calls customer meetups as she sees them: community events.

And, of course, in the store, there are also a few sinks to wash off your makeup (and your hands).

The challenge of running a startup that has a high physical component has become one of the big themes in the world of tech in the last several weeks. Indeed, as companies like Google, Facebook and Zoom do their parts to help people stay connected during the novel coronavirus pandemic, and research for cures, another story has taken shape in a different area of the tech world: startups and larger tech companies with “high touch” models — not just based on customer relationships but literally business models with strong physical components — are facing a world of challenges at a time when people are being asked to stay indoors, and stay away from each other.

To stave off cash shortages and closures, businesses are taking a variety of approaches, and rethinking how they run their businesses, to keep going. In some countries, governments are stepping in to keep businesses from collapsing, while some startups are hoping that their investors will continue to support them as the pandemic continues to spread.

In other cases, startups are quietly coming together to compare notes on how best to tackle legal and other hurdles in an unprecedented environment. (So quietly, in fact, that they didn’t want to talk about this on the record.) When is the right time to talk to insurance companies? How do you negotiate with them and will you ever get anything out of those discussions? What recourse does a company have for forfeiting some payments that are coming due? How do you handle headcount if you lack the liquidity to survive a big dip in your business? What are the best practices for running a business in a reduced or altered form?

“This has been the most difficult five continuous days in all of my team’s careers,” Vibhu Norby, the CEO and founder of b8ta — a chain of retail stores that act as a marketplace between consumers and lots of different hardware and other companies, letting potential buyers try out products before buying — said in an interview. “We don’t have any other business other than our physical one, that’s all we do. But we have an amazing team and there are things that we’re doing that are useful, but there is no playbook for this.”

It’s not all doom and gloom. With people home-bound and spending a significantly higher amount of time online, tech companies that innately support social distancing are getting a huge boost in purchasing. Think in particular e-commerce delivery services such as online grocers, and Amazon. Some are finding that they’ve had to curtail services to be able to meet demand. Others like streaming services are seeing giant spikes in their traffic.

(Haven’t) been there, (haven’t) done that

The trajectory of impact on startups has been a wide one, starting earliest with major events. Conferences and expositions have become something of a cornerstone of how startups come together and do business in a global economy. While we clearly have tech hubs where face-to-face contact is as easy as grabbing a coffee, events become a place where you can catch people from many other corners, or even those who don’t regularly come out of the woodwork.

All of that has changed this year, with just about every major confab this year (so far) getting cancelled. CES, at the beginning of January, just made it through; RSA surprisingly went ahead last month. But many events have been taken off the table: MWC in Barcelona, SXSW in Austin, events from Google, Apple, Facebook and Amazon, E3, GDC and so many more.

People love to complain about how conferences and expositions are a noisy mess, but the fact of the matter remains that they have no rival when it comes to meeting people and doing deals at scale.

The events themselves are tech businesses in their own right, marketplaces that generate billions of dollars in revenues, and connecting hundreds of thousands people for potential B2B sales. “This is going to impact our business for sure,” one exec at a startup (who didn’t want to be named) told TechCrunch when the huge mobile confab in Barcelona was cancelled over coronavirus fears. “MWC is a major event for us…the largest source of qualified sales leads on our calendar. No other event comes close.”

If events businesses were the first wave of “high touch” tech outfits to be impacted by coronavirus, following closely behind has been the transportation and tourism industries — connected to the events business but also far exceeding it in scope.

People have chosen, been requested and sometimes been forced, to stop moving around in an attempt to mitigate the spread of the virus — creating a significant knock-on effect not just for transportation companies, but also the wider tourism industry, “The biggest nuclear winter in online travel,” as one founder put it last week. As people increasingly stay put, Airbnb this week extended its own extenuating circumstances refund policy so that people can rebook already reserved stays that were supposed to happen in the next month.

Transportation, of course, hasn’t only seen restriction for long-distance travel, or even for the carriage of just humans. Uber and Lyft have both cut back on rides, specifically shared, carpool-style services, in an attempt to “flatten the curve” to reduce the frequency of new cases brought on by too much contact, and food delivery services have introduced “contactless” delivery to minimise contact with customers, especially with those who might be infected and are quarantining at home.

“The health and wellbeing of our couriers and customers is our top priority and we think these practices will help give some peace-of-mind to our fleet, while also decreasing the interaction and contact between both parties,” a spokesman for Glovo, a European delivery startup, said last week when the measures were introduced.

But the impact extends beyond obvious sectors like transportation and tourism. Take makeup, for instance.

While Glossier does a majority of its sales online, it temporarily closed its retail locations last week to limit customer interactions. In some ways makeup is innately an industry that requires you (or someone else) to touch your face. Glossier is brainstorming ways to stay in contact with customers, such as FaceTime consultations and Slack groups.

Per Glossier, it hasn’t yet received questions from customers on how to handle the aspect of makeup application in a time when we are told to not touch our faces. It is, however, telling people to wash their hands.

There’s also Revel, which is a marketplace for women over 50 to host and attend small gatherings and stay connected. Given the age group and social aspect of the company, Revel has cancelled all in-person Revel events through at least the end of March.

“The decision to cancel in-person events has an immediate business impact for us,” the co-founders wrote in an email to TechCrunch.

Revel is working on a speaker series over Zoom, virtual walks where members can be connected via FaceTime or audio to go on walks together, and happy hours. The list goes on with book clubs and writing groups.

Similarly, London startup Jolt built a business around a concept of “pay-monthly” business classes that had a strong in-person component: not only was the idea to learn in a physical classroom, but those involved got opportunities to network with other students before and after courses, participate in breakout sessions, work in partner groups with other students and access presentations.

Now with those in-person classes on hold, Jolt has moved up the launch of “Jolt Remote,” an online version that it had previously planned to ship in 2021, which aims to preserve all the dynamics of the startup’s previous, offline efforts. “The company felt it necessary to expedite its rollout in order to keep their students safe, and to reduce the need for their education to be disrupted in the wake of COVID-19,” a spokesperson said.

Jolt‘s teachers will continue to work as they always did, she continued. But instead of their students meeting up in Jolt campuses, they’ll now be able to access the courses virtually.

While Revel’s shifts are likely to have an impact on its bottom line, they said, it was the right decision. Few startups and investors have even started to point at the new innovation that will come out of this pandemic as a bittersweet externality.

Revel, while it only operates in the Bay Area, has more than 200 members from geographies as far as South Africa. They’re planning to join the upcoming virtual gatherings.

The founders say it is helping Revel to build virtual capabilities that they will be able to use in the future when geographic distance, illness or other factors isolate members who need connection.

It’s helping an in-person company think what it means to be in-person.

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Conan O’Brien will return to TV with shows shot on iPhone and over video chat

Apple’s promise of high-quality videoshot on iPhone” is getting another real-world stress test, as late-night TV host Conan O’Brien announced on Wednesday he will return to doing full shows that will be shot using Apple’s mobile device. On Monday, March 30, new episodes of O’Brien’s show “Conan” will air on TBS, with production staff working from home, video that’s shot on iPhone and interviews filmed over video chat.

The news was first reported by Variety and confirmed by O’Brien in the form of a tweet, where he jokes the experience “will not be pretty.”

I am going back on the air Monday, March 30th. All my staff will work from home, I will shoot at home using an iPhone, and my guests will Skype. This will not be pretty, but feel free to laugh at our attempt. Stay safe.

— Conan O’Brien (@ConanOBrien) March 19, 2020

The move to shoot shows remotely is an interesting attempt at restarting daily TV production at a time when everyone’s been ordered to work from home.

Typically, late-night shows are put on with a sizable crew of writers and producers and filmed in front of a live audience. With the CDC advising people to stay at home and gather in groups of no more than 10 due to the threat of the coronavirus outbreak, TV production industry-wide is being shut down.

Until now, that also included all major late-night productions, like Stephen Colbert, Jimmy Fallon, Jimmy Kimmel and James Corden .

O’Brien’s team consists of 75 people and, like others, it went on hiatus in order to protect staff safety. But during the shut down, O’Brien continued to film short videos, which led the team to this idea of doing a full show, but in a different format.

“Conan” isn’t the only show trying to work around the shutdown. Jimmy Fallon has been filming YouTube videos that are incorporated into the evening’s rerun of the “Tonight Show.” Colbert has been filming a new monologue for “The Late Show” reruns. And Kimmel has been sharing his own “#minilogue” on social media.

However, “Conan” is promising full episodes, not just new segments.

“The quality of my work will not go down because technically that’s not possible,” O’Brien said in a statement shared by Variety.

Image credit: Kevin Mazur/Getty Images for WarnerMedia

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Venture investment in esports looks light as Q1 races to a close

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Today we’re taking a look at the world of esports venture capital investment, largely through the lens of preliminary data that we’ll caveat given how reported VC data lags reality. That phenomenon is likely doubly true in the current moment, as COVID-19 absorbs all news cycles and some venture rounds’ announcements are delayed even more than usual.

All the same, the data we do have paints a picture of a change in esports venture investment, one sufficient in size to indicate that an esports VC slowdown could be afoot. As with all early looks, we’re extending ourselves to reach a conclusion. But… no risk, no reward.

We’ll start by looking at Q1 2020 esports venture totals to date, compare them to year-ago results, and then peek at Q4 2019’s results and its year-ago comparison to get a handle on what else has happened lately in the niche. The picture that the quarters draw will help us understand how esports investing is starting a year that isn’t going as anyone expected.

Venture results

Today we’re using Crunchbase data, looking at both global and U.S.-specific venture totals in both round and dollar volume. To get a picture of the competitive gaming world, we’re examining investments into companies that are tagged as “esports” related in the Crunchbase database. Given that this is a somewhat wide cut, the data below is more directional than precise and should be treated as such.

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Female-led Robin Games raises $7M to combine lifestyle content with fantasy gaming

As a former Jam City executive, Jill Wilson led teams behind some of the top-grossing gaming franchises, like Cookie Jam and Panda Pop. Now she’s running her own startup, Robin Games, where a team of mostly women is working to create a new niche in mobile entertainment they’re calling “lifestyle gaming.” As the name implies, the idea is to create a mobile gaming experience — in this case, fantasy gaming — that’s more like the sophisticated and stylish lifestyle content that’s popular today.

Robin Games is backed by $7 million in seed funding, the company announced on Thursday, as it made its public debut. The round was led by early-stage fund LVP, which has invested in other to game companies including Supercell, Playfish, and NaturalMotion . Additional investors in the oversubscribed round include 1Up Ventures, Alpha Edison, Everblue Management, firstminute Capital, Greycroft Tracker Fund, Hearst Ventures, and Third Kind Venture Capital.

“Traditionally in gaming, when you say ‘fantasy,’ you mean dragons and other mythical creatures, disproportionately built women, armies and battles and explosions and glory,” explained Wilson, Robin Games’ sole founder and CEO. “As a lifelong gamer, I love (most) of these themes, but traditional gamers are no longer in the majority. Thanks to the smartphone, everyone now has access to a gaming console in their pockets. We are expanding the definition of “fantasy” for this modern wave of gamers, whose fantasies are just as diverse as they are,” she added.

Wilson clarified that she’s not meaning to stereotype women as not enjoying fantasy games about things like warriors and dragons. Instead, Robin Games aims to expand the types of fantasies being explored through gaming — including those mobile gaming has yet to include.

While the company isn’t yet announcing its first titles or specific details, like launch dates, the games are said to cover content you’d typically find in a lifestyle magazine, on an Instagram influencer’s profile or on a lifestyle blog for example.

“We are focused on developing games that are deeply sophisticated under the hood, with an elevated, real-world, approachable style that reflects more of the lifestyle content you’d previously see outside of gaming,” Wilson told TechCrunch .

All this will be wrapped up in the free-to-play business model that powers most top-grossing games. In addition, Robin Games’ strategy will allow it to expand to include a partnership strategy, which will diversify its revenue streams further down the road.

Wilson said the idea for Robin Games was something she had in mind for some time, as she was personally looking for games to like this to play herself — only to find they didn’t exist.

“I’ve always designed products for myself first and foremost, which allows me to deeply connect with what the end-user really wants — since the end-user is me,” said Wilson. “Recently, I realized that not only did we have a unique answer to a pretty major gap in the market, but also that the timing was right and, most importantly, that we could pull together the exact right team to execute this vision.”

The startup is currently a team of nine based in Venice Beach. Management is 80% women and everyone had worked together to make hit games in years prior. In terms of hiring, the company is focused on building out a diverse team in order to better realize its vision, Wilson said, and, more broadly, change the face of the gaming industry as it stands today.

“Our mission goes beyond filling a gap in the market. We’re really looking to shake up the games industry, not only redefining what a modern game team looks like, but also changing the definition itself of what it means to be a gamer,” noted Wilson.

In previous studies, female players have been shown to prefer match-3 and social farming games, among others, with fantasy and MMOs further down the list, and sports and shooting games last. But the types of games Robin Games is proposing don’t really fit into any one category that exists today, so it’s still unknown how female gamers will respond.

However, it makes sense to target this underserved market, given that women account for 46% of all U.S. game enthusiasts.  

“Jill Wilson and her incredible team are already further along than most developers starting out,” added Are Mack Growen, partner at LVP and member of Robin Games’ Board of Directors, about the firm’s investment. “This team has developed and operated some of the world’s most successful games for a decade, and now they have assembled to bring premium experiences to the massively underserved audience of women. In addition to their industry expertise, they fundamentally understand their audience and the ingredients for powerful entertainment. We are proud to have led their seed round and look forward to helping them redefine what it means to be a gamer.”

 

 

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Storj brings low-cost decentralized cloud storage to the enterprise

Storj, a startup that developed a low-cost, decentralized cloud storage solution, announced a new version today called Tardigrade Decentralized Cloud Storage Service.

The new service comes with an enterprise service level agreement (SLA) that promises 99.9999999% file durability and over 99.95 percent availability, which it claims is on par with Amazon S3.

The company has come up with an unusual system to store files safely, taking advantage of excess storage capacity around the world. They are effectively doing with storage what Airbnb does with an extra bedroom, enabling people and organizations to sell that excess capacity to make extra money.

It’s fair to ask if that wouldn’t be a dangerous way to store files, but Storj Executive Chairman Ben Golub says that they have come up with a way of distributing the data across drives on their network so that no single file would ever be fully exposed.

“What we do in order to make this work is, first, before any data is uploaded, our customers encrypt the data, and they hold the keys so nobody else can decrypt the data. And then every part of a file is split into 80 pieces, of which any 30 can be used to reconstitute it. And each of those 80 pieces goes to a different drive on the network,” Golub explained.

That means even if a hacker were able to somehow get at one encrypted piece of the puzzle, he or she would need 29 others, and the encryption keys, to put the file back together again. “All a storage node operator sees is gibberish, and they only see a portion of the file. So if a bad person wanted to get your file, they would have to compromise something like 30 different networks in order to get [a single file], and even if they did that they would only have gibberish unless you also lost your encryption keys,” he said.

The ability to buy excess capacity allows Storj to offer storage at much lower prices than typical cloud storage. Golub says his company’s list prices are one-half to one-third cheaper than Amazon S3 storage and it’s S3-compatible.

The company launched in 2014 and has 20,000 users on 100,000 distributed nodes today, but this is the first time it has launched an enterprise version of the cloud storage solution.

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The 20 best startups from Y Combinator’s W20 Demo Day

With world events overtaking the tech world’s preferences to meet for coffees and convene at events, Y Combinator skipped its famous two-day live Demo event and went for a radical experiment: no demos at all, but instead a long list of the nearly 200 startups in its Winter 2020 batch, with links to their sites and one-page slides. We’ve done the legwork for you in giving you a full rundown of who does what, and we have also come together on a group video chat on Zoom to talk through our takeaways of the format this year (missed it? here’s the recording). Now, in no particular order, here is our shortlist of some of our overall favorites.

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Listen to the TechCrunch staff’s YC Demo Day wrap-up call here

It’s been a bonkers week in the world, with markets gyrating, companies fretting, investors tweeting and founders re-cutting their 2020 forecasts. But for one collection of startups, the past few days weren’t about work crises or the latest Slack share price. Instead, for Y Combinator’s Winter batch, it was Demo Day week.

TechCrunch has covered Y Combinator companies since time immemorial. And we’ve been present throughout a number of format changes over the years. We’ve been around for things like the old single-day events in the South Bay computer history museum, and we’ve been around for the SF era. Hell, we were there for the two-stage concept.

But this year’s Demo Day brought with it something altogether new: No in-person pitches and demos. Yep, in response to COVID-19, Y Combinator made its demo day virtual, even scooting up its presentations by a full week. Obviously we tuned in en masse, writing a host of posts about the presenting companies (read them here, here, here and here). We also caught up with CEO of Y Combinator, Michael Seibel, to here his take on what’s ahead for the accelerator.

Given the scale of change, however, we weren’t content with just those entries. So, we gathered the TechCrunch crew, hopped on a Zoom, invited in our friends until our Zoom account maxed out (we didn’t know that that was a thing; more capacity coming) to chat over observations and the most interesting startups. We didn’t even miss the usual slew of Y Combinator live tweets — for the most part.

Hit the jump and we’ve got the recording for you. And see which companies the TechCrunch staff liked the most.

The Chat

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Focused on health in the home, Novi lands $1.5M to help CPG companies source clean, safe ingredients

Kimberly Shenk has been focused for a while now on “clean” products that are made without harmful chemicals. In 2017, Shenk and friend Jaleh Bisharat launched NakedPoppy, a site that curates and sells cosmetics that have been vetted by chemists (including some of its own products).

Interestingly, as the young startup was announcing $4 million in seed funding last summer from Cowboy Ventures, among others, Shenk — who remains on the board of Naked Poppy — was splitting off to launch a second company. Called Novi, it hopes to address the same need that Shenk and Bisharat discovered, but it plans to go much broader.

Specifically, Novi is developing a platform that it hopes will eventually become a go-to service for beauty brands, as well as a lot of other businesses that sell to the growing number of consumers concerned about what, exactly, is in their homes. Think carpet sellers, medical device makers, developers of house cleaning products like detergents. If it needs to be formulated, Novi wants to assess it and give it its stamp of approval.

It’s not an easy thing to pull together, concedes Shenk, a graduate of the United States Air Force Academy and MIT who spent several years as the head of Eventbrite’s data science operation. Just one of the many steps involved is building connections to far-flung and disparate raw suppliers, like makers of the surfactants used for cleansing, foaming, thickening and other special effects in cosmetics. The reason: Novi will need to learn about and certify as safe their manufacturing processes.

It’s a major piece of the overall puzzle, and it’s harder than it might sound to nail down, as many manufacturers are hesitant to share information that they view as proprietary.

Still, Novi thinks it can persuade them to be more forthcoming by touting an AI-driven platform that it says can ingest and manage manufacturers’ proprietary data at scale — and make it easier, in turn, for consumer companies that are focused on using vetted ingredients and chemicals to find them. Indeed, where Novi will really shine, suggests Shenk, is in data management.

Investors who know her seem to think she has what it takes. Brian Rothenberg, a partner at Defy Partners who helped scale Eventbrite across six years before he joined the world of venture capital, just led a $1.5 million seed round for Novi. (“We see a groundswell of consumer consciousness in this area,” Rothenberg said in an emailed statement to us.)

The startup further has the backing of Eventbrite co-founders Kevin and Julia Hartz.

Also working in its favor: Novi says it’s already working with a large beauty retailer that likes the results it has seen as a customer of Novi’s software-as-a-service. (Shenk declines to name the outfit, but she says another reason she had to split off from NakedPoppy was the high likelihood that Novi would be working with competitors to the company.)

It’s certainly progress, considering that Novi is still fairly nascent, with a team of just four people as it ramps up.

In addition to Shenk, it’s run by Bisharat, who remains CEO of NakedPoppy but is also a co-founder of Novi and a board member; an engineer; and a chemist who previously worked for another “clean” beauty company, called Beautycounter.

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Why is Blue Apron’s stock skyrocketing?

Back in 2017, a formerly hot, formerly profitable company called Blue Apron went public. It didn’t go well. Today as the global stock market continues to fall, shares in the former venture darling are soaring, up more than 140% in midday trading.

Before its IPO, the company had to reduce its price range from $15 to $17 per share to $10 to $11 per share. That pricing change limited the company’s worth, and reduced the capital it raised in its debut. The meal kit delivery company finally priced at $10 per share. It opened up a hair, but closed the day a mere penny above its IPO price.

Then things got worse. In fact, Blue Apron’s share price decline got so bad that in mid-2019 Blue Apron had to execute a 1-for-15 reverse split. In most stock splits, a company’s share price gets too high for comfort. So, the firm decides to give its investors the same value of the company, but in new, smaller chunks. So a concern trading for $1,000 per share that wanted to split would normally give, say, its investors 10 new shares worth $100 apiece in exchange for their single $1,000 share.

A reverse split is the other way. You get fewer shares at a higher per-share value. It’s what you do if you need to avoid slipping under $1 per share, or other, similar fates.

Time passed, and everyone forgot about Blue Apron in the same manner as they did Grubhub, companies that came, made an impact, went public and then slowly dissolved.

The latest

Until now. Suddenly Blue Apron is the hottest stock in the world, skyrocketing as other companies shed value. Today in regular trading, American indices fell so far that they triggered protective circuit breakers. At the same time, Blue Apron was doing this (via Google Finance):

Bear in mind that we are looking at the company after its reverse split. So, no, the company is not worth 60% more than its IPO price of $10 per share. It’s worth far less. Indeed, Blue Apron is worth just $211 million today including its day’s gains, according to Google Finance.

Blue Apron was worth about $1.9 billion when it went public, for reference.

Anyway, why is the company skyrocketing? TechCrunch thinks it figured it out. Walk with us:

  1. Everyone is looking for something to buy that will go up as everything else goes down
  2. Blue Apron makes meal kits that folks can make at home
  3. Over the weekend, many U.S. cities began shutting down
  4. That meant less dine-in service
  5. So people are now, putatively, cooking more
  6. That means Blue Apron might benefit!
  7. Enter a hilarious momentum trade in a low-cap stock
  8. Kaboom goes its share price

Don’t pop the champagne. Blue Apron is still worth about what it raised as a private company; its market cap is only about 40% of the money it raised while private in addition to its IPO haul. This company is still priced like it’s on life support.

And that makes some sense. Here are some facts from its Q4 and full-year 2019 report:

  • 1.62 million Q4 orders, down from both Q3 2019 (1.73 million) and Q4 2018 (2.42 million)
  • $94.3 million in Q4 revenue, down 33% compared to the year-ago period
  • A net loss of $21.9 million

Not great! Perhaps Blue Apron will explode, beating guidance and earning its newly resurrected share price. Maybe. But before you pile into the company, pause, and then probably don’t.

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Big opening for startups that help move entrenched on-prem workloads to the cloud

AWS CEO Andy Jassy showed signs of frustration at his AWS re:Invent keynote address in December.

Customers weren’t moving to the cloud nearly fast enough for his taste, and he prodded them to move along. Some of their hesitation, as Jassy pointed out, was due to institutional inertia, but some of it also was due to a technology problem related to getting entrenched, on-prem workloads to the cloud.

When a challenge of this magnitude presents itself and you have the head of the world’s largest cloud infrastructure vendor imploring customers to move faster, you can be sure any number of players will start paying attention.

Sure enough, cloud infrastructure vendors (ISVs) have developed new migration solutions to help break that big data logjam. Large ISVs like Accenture and Deloitte are also happy to help your company deal with migration issues, but this opportunity also offers a big opening for startups aiming to solve the hard problems associated with moving certain workloads to the cloud.

Think about problems like getting data off of a mainframe and into the cloud or moving an on-prem data warehouse. We spoke to a number of experts to figure out where this migration market is going and if the future looks bright for cloud-migration startups.

Cloud-migration blues

It’s hard to nail down exactly the percentage of workloads that have been moved to the cloud at this point, but most experts agree there’s still a great deal of growth ahead. Some of the more optimistic projections have pegged it at around 20%, with the U.S. far ahead of the rest of the world.

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