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The first rule of BookClub? No boring book clubs.
Book clubs can be magical. Bring together a group of friends, tear apart a book and all of a sudden the words have a second, paperless, life.
But what if the author could join in the banter? Imagine riffing with Roxane Gay, debating with Ta-Nehisi Coates and eavesdropping on Jhumpa Lahiri. The experience would resemble that of an epilogue, but one reserved exclusively for your friend group.
For those intrigued, a new Salt Lake City startup wants to talk. BookClub launched today to bring author-led book clubs to readers. The platform will allow authors to join personal book groups, share exclusive video-based interviews and engage in questions you might have (including cliffhanger complaints).
The startup is founded by some familiar names: Degreed co-founders David Blake and Eric Sharp, as well as early product leader at Degreed, Emily Campbell.
“When you think of Instagram Stories and TikTok, the mainstream social media movement is mostly video-based,” Blake said. “But the book world has not yet caught up. If you think of Goodreads, it’s kind of like the internet, circa 2010.” BookClub, he hopes, will lead to more modern experiences with authors that are, at the same time, easily scalable.
To better picture the experience, see how BookClub produced a video based on the novel “The Suspect,” by Kent Alexander and Kevin Salwen.
Image Credits: David Blake
Readers can also request an author to join their club.
Image Credits: BookClub
BookClub is taking a MasterClass approach to education and entertainment. MasterClass, which raised $100 million in May, sells celebrity-taught classes with a big focus on production. For a subscription fee, MasterClass users can learn how to cook from Gordon Ramsay or how to play tennis from Serena Williams.
Blake wants to offer a similar experience, but with authors.
“MasterClass has authors already on their platform, but they are all 100% teaching the skill of how to be a good writer,” Blake said. “Our platform is being built from the ground up, exclusively for this use case — and will be feature rich with things that can help tag, explore, discuss by characters, themes, questions.”
He did not share any big author names that BookClub has secured just yet, although those partnerships will be vital to BookClub’s success.
Blake declined to share specific details on pricing, but said that it will be a consumer subscription business with shared economic benefits for authors and moderators.
Although the product is pre-launch, Blake is clear about what BookClub is not.
“Rather than doing what’s easiest or most accessible, we’re trying to step back and say ‘what will it take to unlock the power of a great book?’ ” he said. “We’re giving [the book] the justice it deserves, rather than being Zoom for authors.”
One benefit of going with Zoom is that it is already a household name and millions of people have downloaded the client. BookClub will live as a media platform, not a downloaded client, and is going mobile-first. The decision to go mobile before desktop was driven by the fact that most people don’t want to hold a laptop during their book clubs. Instead, BookClub wants to recreate a FaceTime-like experience with an author.
It has been a busy pandemic for the co-founders of Degreed, which raised over $32 million in June. In April, the duo founded Learn In, a venture that plugs into company HR software to help decisionmakers manage sabbaticals for their employees. The startup raised $3.5 million from Album, GSV and Firework Ventures. BookClub will be their third company in the edtech space, and second startup launched within five months.
When asked how he’s handling juggling all of the startups, Blake simply said that he was “travelling 200 days a year, and got all that time back.” He added that he is now only at Degreed at an operational capacity, so will be evenly splitting his time between Learn In and BookClub. Still, leading two startups at the same time is a challenge, since most people can’t even handle one.
BookClub tells TechCrunch that it successfully secured funding. The startup has raised $6 million in a seed round led by Maveron . Other investors include Signal Peak Ventures, Pelion Venture Partners, Mike Levinthal and GSV (a firm that has invested in all three of Blake’s ventures).
The money will be used for video production costs.
“Unless the author has been on Oprah’s book club, this will be the highest video treatment that an author will have ever received,” he said. “We’re trying to do Hollywood cinematic levels.”
Join the waitlist here.
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Learning how to ask questions is an essential skill for startup founders
Mercedes Bent is a partner at Lightspeed where she invests in consumer, edtech and fintech companies.
More posts by this contributor
For many of us, learning to ask questions was a matter of the five W’s: who, what, where, when, why (and how).
As I interviewed founders about the most valuable learning resources that allowed them to grow into the leaders they are today, I realized that many of them leaned heavily on carefully crafted approaches to asking questions. In all the interviews, inquiry was by far the most cited learning process. I found these founders to be incredibly methodical, brave, curious, disciplined and efficient in their pursuit of learning.
Founders showed incredible discipline by approaching information gathering as a structured process. Some founders have a highly systematic approach in how they target their outreach:
I learned by being systematic about talking to people smarter than myself. I needed to know hundreds of people and know what they know. I made a table matrix of who I talk to and for what topic. For example, Eric Schmidt is one of six experts I turn to on establishing management OKRs.
— Reid Hoffman, co-founder of LinkedIn
And in how they catalog/store information about who is an expert …
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Entrepreneurship and investing as social good
Sree Kolli is co-founder of Conduit, a premium investment platform that connects founders with successful operators, family offices and select VCs worldwide.
2020 has been a year of social upheaval. Around the world, society is identifying different problems in our culture and pushing for widespread change. While there are notable steps we can all take, from altering exclusionary company policies to signing action-oriented petitions, the VC and investment world has another, often overlooked option: Investing in change-the-world startups.
Increasingly, angel investors and institutional funds have begun allocating a portion of their funds to startups focused on diversity and social good, whether focused on democratized access to healthcare and education, or larger scale issues like climate change.
Initially, shifting funds to empower social good may seem like a hefty feat, however investors can embrace this mindshift in three simple steps: (1) redistributing stagnant investments; (2) leveraging democratized access to change-making startups; and (3) identifying founders tracking toward success.
Allocating more investments to foster change
Most of the world’s money is tied up in stagnant places. Whether invested in real estate, bonds or other traditional vehicles, this capital typically often shows conservative returns to investors — and has negligible impact on society. The intent isn’t malicious.
Most family offices and private wealth managers strive to minimize losses and these sorts of uniformed portfolios are safe. Even the most seasoned investors should incorporate more variety into their portfolios, determining where they can make profitable investments that yield higher returns while advancing societal good. Investors can take small steps to get more confident in expanding their strategies.
To start, reframe your thinking into seeing the potential opportunity rather than the risk. A good way to do this: Look at how high-risk public equities performed over the last five years and compare it to ventures within tech. Investors will see a significant disparity and the opportunity to make different returns.
The idea is not to put an entire profile in a single venture. Rather, an investor should take a portion of their portfolio in a high-risk investment sector, like public equities or fund structures, and put it in a similar risk profile with a better return. Gradually increasing these increments, starting at 15% and slowly scaling up, can help investors to see outsized returns while making a difference in the process.
A world of passion at your fingertips
For startups of all sizes, democratized access to investors will accelerate the use of capital for social good. Until recently, only the world’s wealthiest people had exposure to premium capital, but crowdfunding and accelerator programs have ushered in new opportunities, forging connections that might not have otherwise been possible.
These avenues have opened new doors for investors and startups. Access to developed networks or innovation hubs like Silicon Valley are no longer make-or-breaks for those looking to raise capital. Extended global opportunity for startups also means investors have more options to find promising ventures that align with their values, regardless of their location.
But while crowdfunding and accelerators have made the world more accessible, they come with sizable challenges. Despite making early-stage investment more obtainable, crowdfunding often does not bring the most valuable investors to the table.
Crowdfunding also inundates platforms with poor-quality deal flow, making it more strenuous for investors to connect with fruitful opportunities. Meanwhile, various accelerators and incubation platforms have emerged, which have advanced global connection, but tend to be quite noisy.
To succeed, entrepreneurs need more than capital. Rather, they need strategic support from experienced investors who can help them make decisions and scale in an impactful way. With a world of ideas at their fingertips, investors should take time to sift through their options and find the ideas that move them the most, prioritizing quality deals and looking toward platforms that curate promising connections.
Empowering entrepreneurs poised for success
Now is the right time to invest in startups. People who innovate during the pandemic have triple the hustle of those who build in safer economies. But while the timing is right, it’s equally important that the fit is right. I’m a big believer in investing in potential: Ambition, unwavering tenacity and empathy are desirable qualities that can help bring game-changing ideas to fruition.
If an investor funds a passionate leader with a strong vision and ability to attract talent, then the groundwork is laid to build something meaningful. When considering the change-makers to invest in, ask: Is this the right person to be building this company? Do they have the ability to attract and lead talent? Is the market big enough, and is there a significant enough problem to build a company around?
If the answer isn’t yes to all of these questions, it’s important to gauge if you can see a theoretical exit, or if the company is pre-seed or Series A, if they have the ability to scale to a decent size.
Despite this, investing in startups, no matter how good their intentions, can scare investors. One way to overcome trepidation is to invest in larger-stage startups that seem less risky and then wade into earlier-stage startups at your own pace. Special purpose acquisition companies (SPACs) are also becoming an interesting investment option.
SPACs are corporations formed for the sole purpose of raising investment capital through an IPO. The proceeds are then used to buy one or more existing companies, an option that could decrease anxiety for risk-averse investors looking to expand their comfort zone.
Any strategy an investor chooses to embrace social good is a step in the right direction. Capital is a tangible way to fuel innovation and bring about impactful change.
Democratized access to startups yields more opportunity for investors to find ventures that align with their values while diversifying their profiles can provide tremendous results. And when that return means disrupting the status quo and empowering societal change? Everyone wins.
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As tech stocks dip, is insurtech startup Root targeting an IPO?
During the week’s news cycle one particular bit of reporting slipped under our radar: Root Insurance is tipped by Reuters to be prepping an IPO that could value the neo-insurance provider at around $6 billion.
Coming after two 2020 insurtech IPOs, Root’s steps toward the public markets are not surprising. But they are good news all the same for a number of insurance startups that have raised lots of capital and will eventually need to prepare their own debuts if they don’t find a larger corporate home.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
Programming note: The Exchange column is off starting tomorrow through next week. The newsletter will go out as always on Saturdays. I’m taking a week to sit and do nothing.
The Root IPO will also help clarify Lemonade’s own public offering and ensuing valuation. Lemonade’s debut brought a strong price to the rental-focused insurance provider, leading to a more buoyant attitude toward the valuation of its class of startups. More precisely, the public price assigned to Lemonade when it floated was, no bullshit, very bullish.
If Root can repeat the feat it would cast a warm light on the yet-private players in its niche that will have their eyes pinned to the flotation. Names like MetroMile and Hippo could be next if Root’s IPO goes well.
But, first, does Root make sense at a $6 billion valuation? We can do a little digging on that this morning, using Lemonade’s present-day valuation to get a handle on the figure. Let’s go!
Root’s valuation in a Lemonade world
Before we get into the numbers, bear in mind that we’re going to compare apples and oranges today, and that we’ll have to use some dated numbers as well. That said, we can still get somewhere about what Root could be worth. So, roll with me but don’t take every number as engraved onto an obelisk.
Back in July of this year, in the wake of the Lemonade IPO and Hippo’s latest funding round, a $150 million investment at a $1.5 billion post-money valuation, we started to do some math. Lemonade’s valuation was much richer than Hippos’ when you look at their multiples, which got us thinking about private and public neo-insurance provider valuations: Why was Lemonade worth so much more than its peers per dollar of written premium?
To better understand the situation, we dug up some 2019 data on the dollar value of gross written premium Hippo and Lemonade wrote and found new valuation multiples for them based on those numbers. Lemonade was worth 28.4x its Q1 annualized gross written premium, while Hippo was worth just 5.6x its own.
Then we also found Root and MetroMile gross written premium numbers for 2019, which allowed us to calculate their own effective valuations (albeit using dated numbers).
As before when we found that Hippo’s private valuation looked light compared to Lemonade’s public valuation when we contrasted their valuation/gross written premium multiple, we discovered that MetroMile and Root also looked cheap. Very cheap.
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Rephrase.ai raises $1.5M to use synthetic media for personalized sales pitches
Bangalore-based Rephrase.ai has an ambitious vision for reshaping how movies and videos are made.
CEO Ashray Malhotra laid it out for me yesterday, saying that his co-founder Nisheeth Lahoti “came up with this concept — he wants to build an engine that can take any script as input and create a professional movie,” no filming required.
But Rephrase.ai is starting with what Malhotra said is a more “short-term, monetizable” goal: Offering technology that makes it easy to create personalized sales videos.
The startup was part of the Techstars Bangalore program in 2019 and is announcing today that it has raised $1.5 million in seed funding led by Lightspeed Venture Partners and AV8 Ventures.
Malhotra demonstrated the technology for me, showing me how a salesperson can select a model, a background and a voice, and enter text that the model will recite. They can then export that video for use in a variety of sales tools.
This is valuable for, he said, because sending personalized video messages in sales emails can lead to “an insane increase” in clickthrough rates. But creating all those videos can be a huge chore, if not downright impossible.
And while there are plenty of other startups working on synthetic media, Malhotra said Rephrase.ai is set apart by the 18 months the team spent developing technology that can take 10 minutes of footage and “predict how the lip movements of the person would have been if you’d shot them [saying any phrase] in an actual studio.”
You can see the results for yourself in the video above. Personally, I was impressed by the lip movements but disconcerted by the fact that Rephrase.ai customers can pair any model with any voice, leading to some strange combinations that feel more like badly dubbed movie than an effective sales pitch.
When I brought this up, Malhotra replied that some clients will want to take the time “perfecting it out, finding the right voices, the right costumes, the right personality of the actors,” while other clients might be fine spending less time to create something a little less convincing.
It’s also worth noting that Rephrase.ai has several policies designed to prevent the creation of deceptive deepfakes: Presenters can control who has the authority to create videos using their faces, the platform is only open to authorized businesses and videos are created from scratch, rather than transferring someone’s face onto an existing person.
Malhotra said Rephrase.ai is currently talking to a number of potential customers, but those discussions are in early stages. He also suggested that the technology could expand fairly quickly into areas like chatbots and education.
“I think it’s going to open a whole new world of creativity,” he said. “When you and I want to express something, we’re most likely to write a text document, but as a viewer, we want to see a video. They’ve been disconnected because video creation is really difficult.”
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NUVIA raises $240M from Mithril to make climate-ready enterprise chips
Climate change is on everyone’s minds these days, what with the outer Bay Area on fire, orange skies above San Francisco, and a hurricane season that is bearing down on the East Coast with alacrity (and that’s just the United States in the past two weeks).
A major — and growing — source of those emissions is data centers, the cloud infrastructure that powers most of our devices and experiences. That’s led to some novel ideas, such as Microsoft’s underwater data center Project Natick, which just came back to the surface for testing a bit more than a week ago.
Yet, for all the fun experiments, there is a bit more of an obvious solution: just make the chips more energy efficient.
That’s the thesis of NUVIA, which was founded by three ex-Apple chip designers who led the design of the “A” series chip line for the company’s iPhones and iPads for years. Those chips are wicked fast within a very tight energy envelope, and NUVIA’s premise is essentially what happens when you take those sorts of energy constraints (and the experience of its chip design team) and apply them to the data center.
We did a deep profile of the company last year when it announced its $53 million Series A, so definitely read that to understand the founding story and the company’s mission. Now about one year later, it’s coming back to us with news of a whole bunch of more funding.
NUVIA announced today that it has closed on a $240 million Series B round led by Mithril Capital, with a bunch of others involved listed below.
Since we last chatted with the company, we now have a bit more detail of what it’s working on. It has two products under development, a system-on-chip (SoC) unit dubbed “Orion” and a CPU core dubbed “Phoenix.” The company previewed a bit of Phoenix’s performance last month, although as with most chip companies, it is almost certainly too early to make any long-term predictions about how the technology will settle in with existing and future chips coming to the market.
NUVIA’s view is that chips are limited to about 250-300 watts of power given the cooling and power constraints of most data centers. As more cores become common pre chip, each core is going to have to make do with less power availability while maintaining performance. NUVIA’s tech is trying to solve that problem, lowering total cost of ownership for data center operators while also improving overall energy efficiency.
There’s a lot more work to be done of course, so expect to see more product announcements and previews from the company as it gets its technology further finalized. With $240 million more dollars in the bank though, it certainly has the resources to make some progress.
Shortly after we chatted with the company last year, Apple sued company founder and CEO Gerald Williams III for breach of contract, with the company arguing that its former chip designer was trying to poach employees for his nascent startup. Williams counter-sued earlier this year, and the two parties are now in the discovery phase of their lawsuit, which remains ongoing.
In addition to lead Mithril, the round was done “in partnership with” the founders of semiconductor giant Marvell (Sehat Sutardja and Weili Dai), funds managed by BlackRock, Fidelity, and Temasek, plus Atlantic Bridge and Redline Capital along with Series A investors Capricorn Investment Group, Dell Technologies Capital, Mayfield, Nepenthe LLC, and WRVI Capital.
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Airship acquires SMS commerce company ReplyBuy
Airship is announcing that it has acquired mobile commerce startup ReplyBuy.
The startup (which was a finalist at TechCrunch’s 1st and Future competition in 2016) works with customers like entertainment venues and professional and college sports teams to send messages and sell tickets to fans via SMS. It raised $4 million in funding from Sand Hill Angels, Kosinski Ventures, SEAG Ventures, Enspire Capital, MRTNZ Ventures and others, according to Crunchbase.
Airship, meanwhile, has been expanding its platform beyond push notifications to cover customer communication across SMS, email, mobile wallets and more. But CEO Brett Caine said this is the first time the company is moving into commerce.
While sports and concerts tickets might not be a booming market right now, Caine suggested that the company is actually seeing increased purchasing activity “in and around the Airship platform” as businesses try to drive more in-app purchases. He also suggested that both the COVID-19 pandemic and increased restrictions on mobile data collection and ad targeting are going to “accelerate direct-to-consumer motion by large brands.”
Airship isn’t disclosing the deal price, but Caine said the seven-person ReplyBuy team will be joining the company, with CEO Brandon O’Halloran becoming Airship’s general manager of commerce and CTO Anthony Saia leading the commerce engineering team.
“Nobody directly connects more brands to mobile consumers than Airship,” O’Halloran said in a statement. “Joining Airship offers ReplyBuy the opportunity to serve the global market with a more comprehensive solution across more industries, and provide more valuable mobile customer experiences.”
Caine added, “These are really key roles, demonstrating the importance, in our view, of extending commerce to the customer engagement experience.”
He also said that Airship will continue to support ReplyBuy as a standalone product, while also integrating and extending its capabilities to other areas of the Airship platform.
“This one-to-one commerce at scale is a key part of the ReplyBuy solution,” he said. “We’re going to bring it into all the digital channels that Airship powers [to create] a seamless, fast, easy experience around commerce.”
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Peterson Ventures, a firm that quietly backed Allbirds and Bonobos, just closed a $65 million fund
Peterson Ventures, a 12-year-old, Salt Lake City, Utah-based seed-stage fund, has long operated fairly quietly, but many of its bets have become known brands in the respective worlds of consumer and enterprise software investing. Among these is the shoe company Allbirds; the men’s clothing company Bonobos (acquired a few years ago by Walmart); and Lucid Software, which closed its newest, $52 million round back in April.
Thanks to a newly raised $65 million fund — more than double the size of its $33 million second fund — Peterson has even more money now to write checks in the range of $250,000 to $1 million in a wide variety of startups.
We were in touch this week with Peterson partner Ilana Stern, whose own consumer startup, Weddington Way, raised money from Peterson before selling to the Gap in 2016. Stern, who joined the outfit last fall and is based in San Francisco, shared a bit more about the firm’s newest fund and where it’s looking to shop. Our exchange has been edited lightly for length.
TC: Peterson is part of a bigger platform called Peterson Partners. How many asset classes is Peterson Partners funding?
IS: Peterson Ventures is part of the Peterson Partners platform with funds that invest in lower-middle-market private equity and search funds. There are over 30 people firm-wide, including a four-person full-time investing team [on the venture side]. We’ll be looking to add one to two more members in the next year.
TC: How does the firm think about consumer versus SaaS, and is this different than in past years? For example, First Round Capital used to invest half its capital in consumer-facing startups, and that’s not the case right now, as Josh Kopelman told us a couple of weeks ago.
IS: Our first, $25 million fund, was close to a 50/50 split; in the second fund, we shifted to 65%/35%, focusing more heavily on B2B SaaS than consumer. Going forward, we expect to be investing around 60% to 70% SaaS and around 30% to 40% consumer.
The bread and butter of the Utah market is SaaS, and we expect to continue to back great SaaS companies in Utah. That said, there is a growing ecosystem of compelling e-commerce and consumer companies, including in healthcare and financial services where we see a continued ‘consumerization’ of those two sectors.
TC: What are two of the firm’s most recent bets, and what do they say about the way your team operates?
IS: Via and Tava Health are two of our new seed investments. Via connects businesses to their consumers on their favorite messaging and voice platforms. Commerce infrastructure is an area where we’ve been very active over the last five or so years, [including because it’s a] perfect cross section of SaaS companies selling into e-commerce and retail. Tava Health is a telemedicine platform for mental health for employees paid by employers, and healthcare SaaS is an area that we’ve also invested in a lot. In fact, its founder, Dallen Allred, is someone whose earlier company, Artemis Health, is another portfolio company.
TC: Out of curiosity, how did Peterson get involved with Bonobos?
IS: Co-founders Andy Dunn and Brian Spaly were students of our founding partner, Joel Peterson, at Stanford GSB. GSB is a key area of deal flow for us. Joel has been teaching there for almost 30 years. Ben [Capell, a partner with Peterson since 2010] has been involved in backing over 20 companies in the last eight years led by Stanford GSB alumni, and I’ve been guest lecturing there for seven years.
TC: You don’t invest exclusively in Utah, but you spend much of your time with local startups. How has the Utah scene changed since Peterson swung open its doors?
IS: Peterson dates back to 1995, so we’ve been fixtures in the Utah market for 25 years as a firm. When we started Peterson Ventures in 2008 investing Joel’s personal capital — it’s now a mix of institutions, family offices and high-net-worth individuals — there were no seed-stage firms. Now there are three institutional seed-stage firms, several Series A firms that will also invest in seed-stage startups, and active family offices and angel investors.
Also, where the firm used to have to work hard to convince coastal firms to invest in Utah we now have an abundance of mid- and late-stage investors from both coasts spending significant time and
investing meaningful dollars here.
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TC Sessions Mobility 2020 kicks off in two weeks
Holy cats, it’s less than two weeks until TC Sessions: Mobility 2020 kicks off for two program-packed days focused squarely on mobility and transportation technology. On October 6-7, thousands of people from around the world will gather virtually to talk trends, demo products, share insight and discover new opportunities to drive their business into the future.
Don’t have your pass yet? We offer different price levels to accommodate a range of budgets: General admission, group discounts, student discounts and our brand-new Expo Ticket — just $25. Want to showcase your startup in the expo? Buy an Early-Stage Startup Exhibitor Package while you can. We have only a few spots left.
Don’t wait: Buy your pass today. Prices increase on October 5.
Now that we have the housekeeping out of the way, let’s talk about what you can expect at TC Sessions: Mobility 2020.
We packed the event agenda with world-class speakers. You’ll hear from and engage with the industry’s top leaders and innovators across the mobility spectrum. Interested in electric vehicles? No one knows more about the batteries that fuel them than JB Straubel, co-founder and CEO of Redwood Materials and Celina Mikolajczak, vice president of battery technology for Panasonic Energy of North America. There’s a conversation you won’t want to miss.
Does Polestar have enough of what it takes to go head-to-head with Tesla? Get the info when Polestar CEO, Thomas Ingenlath joins us for a fireside chat about the company and the future of electric vehicles.
Nothing happens without funding, but are VC dollars enough to move the industry needle in the right direction? Investors Reilly Brennan, Amy Gu and Olaf Sakkers will debate the uncertain future of mobility technology.
You’ll find more than 40 early-stage startups (and even a few more established companies) holding forth in our expo. Whether you’re looking for new partners, potential customers, a baby unicorn for your portfolio, employment opportunities or simple inspiration, explore the expo and get your networking mojo running.
Love it or hate it, networking is essential to success. Take advantage of CrunchMatch, our free AI-powered platform. It’s the perfect tool for navigating a virtual conference. Answer a few quick questions when you register and CrunchMatch will search for and find attendees who align with your business goals. You can use it for random, free-form searching, too. Schedule 1:1 video calls to talk shop, view product demos, pitch investors or impress potential employers.
We added a new event this year — Pitch Night. Ten early-stage startups will compete in front of a panel of VC judges on October 5, the night before Mobility 2020 officially opens. Five of those intrepid startups will earn the right to pitch from the main stage on October 6. Talk about a must-see throwdown.
So much to do in just two short days — we haven’t even talked about the breakout sessions. TC Sessions Mobility 2020 is right around the corner. Get excited, get focused and get ready to take advantage of every juicy opportunity. But first, get your pass — whatever flavor floats your autonomous boat — before the prices go up.
Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2020? Contact our sponsorship sales team by filling out this form.
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Selling a startup can come with an emotional cost
Every founder dreams of building a substantial company. For those who make it through the myriad challenges, it typically results in an exit. If it’s through an acquisition, that can mean cashing in your equity, paying back investors and rewarding long-time employees, but it also usually results in a loss of power and a substantially reduced role.
Some founders hang around for a while before leaving after an agreed-upon time period, while others depart right away because there is simply no role left for them. However it plays out, being acquired can be an emotional shock: The company you spent years building is no longer under your control,
We spoke to a couple of startup founders who went through this experience to learn what the acquisition process was like, and how it feels to give up something after pouring your heart and soul into building it.
Knowing when it’s time to sell
There has to be some impetus to think about selling: Perhaps you’ve reached a point where growth stalls, or where you need to raise a substantial amount of cash to take you to the next level.
For Tracy Young, co-founder and former CEO at PlanGrid, the forcing event was reaching a point where she needed to raise funds to continue.
After growing a company that helped digitize building plans into a $100 million business, Young ended up selling it to Autodesk for $875 million in 2018. It was a substantial exit, but Young said it was more of a practical matter because the path to further growth was going to be an arduous one.
“When we got the offer from Autodesk, literally we would have had to execute flawlessly and the world had to stay good for the next three years for us to have the same outcome,” she said at a panel on exiting at TechCrunch Disrupt last week.
“As CEO, [my] job is to choose the best path forward for all stakeholders of the company — for our investors, for our team members, for our customers — and that was the path we chose.”
For Rami Essaid, who founded bot mitigation platform Distil Networks in 2011, slowing growth encouraged him to consider an exit. The company had reached around $25 million run rate, but a lack of momentum meant that shifting to a broader product portfolio would have been too heavy a lift.
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