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Was Quibi the good kind of startup failure?

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Startup failure is easy to hold up as a type of martyrdom for progress, especially if the founders are starting out scrappy in the first place and trying to save the world. But heroic narrative gets complicated when the startup failure involves the biggest names in entertainment, dubious product decisions, and well over $1 billion in losses in an already very competitive consumer tech subcategory.

I was going to skip any mention of Quibi because, like me, you have heard more than enough already. But this week its shutdown announcement turned into a debate on Twitter about the nature of startup failure and whether this was still the right kind. Many in the startup world said it was still good, basically because most any ambitious startup effort leads to progress. Danny Crichton, in turn, argues that the negativity was fully justified in this case.

Let’s be honest: Most startups fail. Most ideas turn out wrong. Most entrepreneurs are never going to make it. That doesn’t mean no one should build a startup, or pursue their passions and dreams. When success happens, we like to talk about it, report on it and try to explain why it happens — because ultimately, more entrepreneurial success is good for all of us and helps to drive progress in our world.

But let’s also be clear that there are bad ideas, and then there are flagrantly bad ideas with billions in funding from smart people who otherwise should know better. Quibi wasn’t the spark of the proverbial college dropout with a passion for entertainment trying to invent a new format for mobile phones with ramen money from friends and family. Quibi was run by two of the most powerful and influential executives in the United States today, who raised more money for their project than other female founders have raised collectively this year.

Ouch. However, I think this still misses the bigger dynamic happening.

Quibi was so easy to criticize that it created an opportunity to plausibly defend for anyone who wants to show that they are here for the startups no matter how crazy. When you defend Quibi, you’re defending your own process, and making it clear to the next generation of startups that you’re personally not scared off from other people with crazy ideas and have the will to try even if the result is a big mess. Which is who founders want to hire in the early days, and who investors want to bet on.

I support both sides of this mass-signaling game. Analysts and journalists have provided a broad range of valuable insights about how Quibi was doing it wrong, that are no doubt being internalized by founders of all types. Meanwhile, Quibi defenders are no doubt sorting through their inbound admirers for great new deals. All in all, Quibi and the debate around it might ultimately make future companies a little better. Which is what we all wanted in the first place, right?

Root Insurance plans pricing as Datto goes public

The IPO market has not shut down (yet) for election turmoil and whatnot. First up, managed service provider Datto went out on Wednesday and has inched up since then — a strong outcome for the company and its private equity owner, even if third parties did not benefit from an additional pop. A few more notes from Alex Wilhelm:

Datto’s CEO Tim Weller  told TechCrunch  in a call that the company will still be well-capitalized after the public offering, saying that it will have a very strong cash position.

The company should have places to deploy its remaining cash. In its S-1 filings, Datto highlighted a COVID-19 tailwind stemming from companies accelerating their digital transformation efforts. TechCrunch asked the company’s CEO whether there was an international component to that story, and whether digital transformation efforts are accelerating globally and not merely domestically. In a good omen for startups not based in the United States, the executive said that they were.

Next to market, Root Insurance released its stock pricing set this week, raising the goal to a valuation above $6 billion. It’s definitely on track to be Ohio’s biggest tech IPO to date. Here’s Alex again, with a comparison against Lemonade, another recently IPOed insurance tech provider for Extra Crunch:

[I]t appears that Root at around $6 billion is cheap compared to Lemonade’s pricing today. So, if you’d like to anticipate that Root raises its IPO price range to bring it closer to the multiples that Lemonade enjoys, feel free as you are probably not wrong. Are we saying that Root will double its valuation to match Lemonade’s current metrics? No. But closing the gap a bit? Sure.

For insurtech startups, even Root’s current pricing is strong. Recall that Root was worth $3.65 billion just last August. At $6.34 billion, the company has appreciated massively in just the last year and change. A small repricing could boost Root’s valuation differential to a flat 100% rather easily.

So, for MetroMile and ClearCover and the rest of the related players, do enjoy these good times as long as they last….

Image Credits: Dong Wenjie (opens in a new window) / Getty Images

AR/VR is coming (sooner than expected)

A year ago, the market looked quite young. But now, the pandemic has made the value of augmented and virtual reality clearer to the world. Lucas Matney, who has been covering the topic here for years, just conducted a survey of seven top investors in the space. While they mostly continue to see the vertical as a bit early, they see it getting relevant fast. Here’s one key response, from Brianne Kimmel of Work Life Ventures, on Extra Crunch:

Most investors I chat with seem to be long-term bullish on AR, but are reticent to invest in an explicitly AR-focused startup today. What do you want to see before you make a play here?

I think it all comes down to a unique insight and a competitive advantage when it comes to distribution. And so, I’ll use these new [Zoom] apps as an example, I think that they’re a great example where there are certain aspects of roles and certain highly specialized skills where teaching educating and doing your daily job on Zoom won’t actually cut it. I do foresee AR applications becoming an integral part of certain types of work. I also think that now that as a lot of the larger platforms such as Zoom are more open, people will start building on the platforms and there will be AR-specific use cases that can help industries where, you know, a traditional video conferencing experience doesn’t quite cut it.

Busy Zurich street scene with blurred electric car and pedestrians. Luxury electric cars are popular in Zurich. In the background are retail shops and offices. Zürich often ranks in the top ten most liveable cities in the world.

Zurich startup scene loaded with talent

In other survey news, Mike Butcher continues his (sadly virtual) tour across European startup hubs for EC, this week checking in with investors in Zurich, Switzerland. Here’s a tidy explanation of the city and country’s deep technical experience, from Michael Blank of investiere:

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?

Switzerland has always been at the forefront of technological innovation in areas such as precision engineering or life sciences. We strongly believe that Switzerland will also thrive in the long run in those areas. Thinking for example about additive manufacturing startups such as 9T Labs or Scrona, drone companies such as Verity or Wingtra or health tech startups such as Aktiia or Versantis.

Brussels investors, Mike is headed your way next. You can reach him here.

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#EquityPod

From Alex:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

Myself, along with Danny and Natasha had a lot to get through, and more to say than expected. A big thanks to Chris for cutting the show down to size.

Now, what did we get to? Aside from a little of everything, we ran through:

Whew! It was a lot, but also very good fun. Look for clips on YouTube if you’d like, and we’ll chat you all next Monday.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Uber officially completes Postmates acquisition

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Uber today announced the official completion of its Postmates acquisition deal, which it announced originally back in July. The all-stock deal, valued at around $2.65 billion at the time of its disclosure, sees Postmates join Uber, while continuing to operate as a separate service with its own branding and front-end – while some backend operations, including a shared pool of drivers, will merge.

Uber detailed some of its further thinking around the newly combined companies and what that will mean for the businesses they work with in a new blog post. The company posited the move as of benefit to the merchant population they work with, and alongside the official closure announced a new initiative to encourage and gather customer feedback on the merchant side.

They’re calling it a “regional listening exercise” to be run beginning next year, wherein they’ll work with local restaurant associations and chambers of commerce to hear concerns from local business owners in their own communities. This sounds similar in design to Uber’s prior efforts to focus on driver feedback from a couple of years ago in order to improve the way it works with that side of its double-sided marketplace.

Focusing on the needs of its merchant population is doubly important given the current global pandemic, which has seen Uber Eats emerge as even more of a key infrastructure component in the food service and grocery industries as people seek more delivery options in order to better comply with stay-at-home orders and other public safety recommendations.

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Facebook-backed Libra Association rebrands as Diem

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The Libra Association, a consortium created by Facebook to support its Libra cryptocurrency efforts, announced this morning that it has a new name — the Diem Association — and made some key hires ahead of its launch.

This is just the latest course correction since the Libra project was announced last year. In an attempt to appease financial regulators around the world, the association shifted its strategy away from creating a global stablecoin and will instead launch multiple stablecoins, each tied to a different fiat currency (such as the U.S. dollar and the euro).

The project has also seen some high-profile departures, with announced partners like Visa and Stripe leaving the project. And Facebook has rebranded its cryptocurrency wallet, changing the name from Calibra to Novi.

In a statement, Diem Association CEO Stuart Levey more-or-less acknowledged that the new name is an attempt to distance the group from Facebook, and from its earlier controversies.

“The Diem project will provide a simple platform for fintech innovation to thrive and enable consumers and businesses to conduct instantaneous, low-cost, highly secure transactions,” Levey said. “We are committed to doing so in a way that promotes financial inclusion – expanding access to those who need it most, and simultaneously protecting the integrity of the financial system by deterring and detecting illicit conduct. We are excited to introduce Diem – a new name that signals the project’s growing maturity and independence.”

As for the new hires, they include Chief Technology Officer Dahlia Malkhi, Chief of Staff Christy Clark, Chief Legal Officer Steve Bunnel and Executive Vice President for Growth and Innovation/Deputy General Counsel Kiran Raj. Diem Networks, the subsidiary that will actually operate the Diem payment system, has also hired James Emmett as managing director, Sterling Daines as chief compliance officer, Ian Jenkins as chief financial and risk officer and Saumya Bhavsar as general counsel.

While today’s announcement doesn’t include any specifics about timing, it suggests the association is positioning itself for an imminent launch — albeit one that will “proceed only upon receiving regulatory approval, including a payment systems license for the operational subsidiary of the Association from FINMA.”

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Loop Team wants to give remote workers an in-office feel

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As we’ve moved to work from home during the pandemic, it’s been challenging for remote workers to feel connected. Loop Team, a new entrant into the enterprise communications space, thinks the way we are communicating needs improvement. That’s why the startup is releasing Loop Team today, a tool that is trying to use software to reproduce the in-office experience.

Company founder and CEO Raj Singh says that he learned about the problems of feeling disconnected first-hand at a previous remote-first company, but in spite of his best attempts to use technology to produce that in-office feel, he said he continued to feel out of the loop (so to speak). That’s when he decided to build the solution he wanted.

“We’ve looked at a lot of the interactions that happen when you’re physically in an office — the visual communication, the background conversations, the hallway chatter, the serendipitous bumping, things like that. And we built an experience that effectively is a virtual office. And so it tries to represent the best parts of what a physical office experience might be like, but in a virtual form,” Singh explained to me.

While he created this company prior to COVID, the pandemic has highlighted the need for a tool like this. Before he created the software, he interviewed hundreds of people who worked from home to understand their issues working outside of the office and he heard a lot of common complaints.

“There was an office and they didn’t necessarily know what was going on. They didn’t know who was available. They didn’t know who was around. It was difficult to connect. Everything was scheduled through calendar. They were missing some of that presence — and they were feeling lonely or out of touch or out of the loop,” he said.

His company’s solution tries to reproduce the office experience using AI, good, old-fashioned presence awareness and other tech to let team members know what you’re doing and if you’re available to chat. So just as you would wander down the hall and see your colleague on the phone or deeply involved with work on the laptop, and know to leave them be, you could get that same feel with Loop.

Loop Team Highlights

Image Credits: Loop Team

It gives the current status of the person, and you can know from looking at the list of people on your team, who’s available to talk and who’s busy. As you go into virtual discussions, the team can see who’s having meetings and individuals can pop in too, just as you might do in the office.

What’s more, you can set up rooms (like in Slack), but these are designed to give you a more personal connection using video and audio for actual discussion. You can work on projects via screen share and people who miss these meetings because of other obligations or time zone differences, can always review what they missed.

While you can do all of these things in Slack and Zoom, or in some combination of similar tools, Loop’s layout and presentation is designed to help you see the conversations in a clear way and expose what you want to see, while hiding parts of the day that don’t interest you.

The product is available for free starting today, but Singh wants to introduce a pricing model sometime next year based on team size. He expects there will always be a freemium version for teams under 10 people.

The company was founded in 2018 and nurtured at the Stanford SRI Institute. It has raised $4.75 million so far. Today it starts on its journey as a startup with its first product, and it’s one that comes with good timing as more teams find themselves working remotely than every before.

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