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Digital acceleration in the time of coronavirus: Europe

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This MIT Technology Review Insights report is part of a series examining the degree to which business preparedness, particularly in technology strategy, contributed to corporate resilience during the ongoing coronavirus pandemic in three world regions: Asia-Pacific, Europe, and North America. Based on survey research and in-depth executive interviews, the series also seeks to understand how technology priorities are changing as a result of ongoing business-continuity efforts.

No business strategist could have foreseen that the world would have been thrown into the economic and social crisis wreaked by a fast-moving pandemic, even in Europe, where covid-19’s spread began to take its toll nearly a year ago. Even those with the clearest of crystal balls would not have been able to sidestep the impact of a virulent disease that has cost the global economy 14% of its working hours in the second quarter of this year, according to the International Labour Organization—equivalent to 400 million full-time jobs. A recent survey of 600 technology decision-makers worldwide, conducted by MIT Technology Review Insights, in association with VMware, found that 67% of European respondents had business-continuity plans in place, although less than half of them found them effective.

That said, one segment of tech leaders saw their continuity efforts pay off: European organizations that already invested in digital transformation—defined in the survey as efforts to incorporate modern technology into processes and strategies to achieve business goals. These organizations have fully implemented at least one digital transformation project, all of them report that their recovery plans were effective, and more than a third of them say they were very effective. This “digital leader” cohort—representing some 15% of European respondents—points to an important intersection between planning for business disruption and a commitment to investment in enabling technology. These efforts have allowed digital leaders to absorb the shock of the pandemic and transition to remote working processes and online commerce with relative ease.

‘We had to reinvent ourselves’

Digital leaders in Europe and elsewhere were therefore largely prepared for what they hadn’t anticipated: a near complete move to online commerce and at-home working. “We have seen over the last few months a massive shift in how firms operate, and how people operate. We are all looking through glass: using digital channels to work from home, bank from home, shop from home, socially interact from home,” observes Mike Dargan, chief information officer at Zurich-based investment bank UBS. The company’s investment in technology approximately $3.5 billion a year—has armed his team with the capabilities to make the shift. “The way we’ve operated, we could have basically everyone working from home—more than 95% of our people are enabled to work remotely.” UBS had up to three million calls on communication service Skype a week and at one point a 70% increase in customer engagement onboarding through its mobile app.

UBS’s experience was largely in line with survey results: ensuring that infrastructure remained robust and essential applications stayed online throughout the ensuing lockdowns were European respondents’ top priorities. In all, 73% say their responses to the pandemic have caused them to step up their digital transformation efforts. But they’re building on a solid foundation of digital investment—and this, in turn, has helped them navigate the upheaval. “Fifteen years ago, it would have a completely different result—we would not be prepared culturally or technically,” says João Günther Amaral, chief development officer at Sonae, a Portuguese retail, communications, and finance conglomerate. “We would not have the capacity to send 6,000 people home and have them work immediately and effectively.”

Amaral says “digitally assisted confinement,” as he calls it, has worked surprisingly well, in part because expectations for working almost entirely online were low. “We were really surprised with the quality of everything: the quality of videoconferencing and collaboration tools most of the staff had never used before, the quality of life without commuting. With all this technology, we are managing to create a good overall quality and experience for our employees and our customers.”

Sonae’s diverse businesses—from shuttered shopping centers to food shops that remained open—had to adapt to the new reality. “We had to reinvent ourselves. We needed to be creative,” Amaral says. “People started contacting their customers through every digital channel. People started opening windows in their stores—so the store was closed, but you could buy safely through a window.”

Amaral describes how the company expanded an existing e-commerce app into a fully mobile customer engagement tool: “Our app already was taking touchless payments, but it was really important for our customers to be able to use their phones along their entire journey, both in and out of our stores: providing information, supporting new events, and helping people feel safe.” Increasing demand for online retail placed enormous pressure on Sonae’s supply chain management and other IT management systems. “Suddenly, our IT systems had to support eight times what we were supporting before,” Amaral says.

Download the full report.

This content was produced by Insights, the custom content arm of MIT Technology Review. It was not written by MIT Technology Review’s editorial staff.

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

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Extra Crunch roundup: antitrust jitters, SPAC odyssey, white-hot IPOs, more

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Some time ago, I gave up on the idea of finding a thread that connects each story in the weekly Extra Crunch roundup; there are no unified theories of technology news.

The stories that left the deepest impression were related to two news pegs that dominated the week — Visa and Plaid calling off their $5.3 billion acquisition agreement, and sizzling-hot IPOs for Affirm and Poshmark.

Watching Plaid and Visa sing “Let’s Call The Whole Thing Off” in harmony after the U.S. Department of Justice filed a lawsuit to block their deal wasn’t shocking. But I was surprised to find myself editing an interview Alex Wilhelm conducted with with Plaid CEO Zach Perret the next day in which the executive said growing the company on its own is “once again” the correct strategy.


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In an analysis for Extra Crunch, Managing Editor Danny Crichton suggested that federal regulators’ new interest in antitrust enforcement will affect valuations going forward. For example, Procter & Gamble and women’s beauty D2C brand Billie also called off their planned merger last week after the Federal Trade Commission raised objections in December.

Given the FTC’s moves last year to prevent Billie and Harry’s from being acquired, “it seems clear that U.S. antitrust authorities want broad competition for consumers in household goods,” Danny concluded, and I suspect that applies to Plaid as well.

In December, C3.ai, Doordash and Airbnb burst into the public markets to much acclaim. This week, used clothing marketplace Poshmark saw a 140% pop in its first day of trading and consumer-financing company Affirm “priced its IPO above its raised range at $49 per share,” reported Alex.

In a post titled A theory about the current IPO market, he identified eight key ingredients for brewing a debut with a big first-day pop, which includes “exist in a climate of near-zero interest rates” and “keep companies private longer.” Truly, words to live by!

Come back next week for more coverage of the public markets in The Exchange, an interview with Bustle CEO Bryan Goldberg where he shares his plans for taking the company public, a comprehensive post that will unpack the regulatory hurdles facing D2C consumer brands, and much more.

If you live in the U.S., enjoy your MLK Day holiday weekend, and wherever you are: thanks very much for reading Extra Crunch.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

 

Rapid growth in 2020 reveals OKR software market’s untapped potential

After spending much of the week covering 2021’s frothy IPO market, Alex Wilhelm devoted this morning’s column to studying the OKR-focused software sector.

Measuring objectives and key results are core to every enterprise, perhaps more so these days since knowledge workers began working remotely in greater numbers last year.

A sign of the times: this week, enterprise orchestration SaaS platform Gtmhub announced that it raised a $30 million Series B.

To get a sense of how large the TAM is for OKR, Alex reached out to several companies and asked them to share new and historical growth metrics:

  • Gthmhub
  • Perdoo
  • WorkBoard
  • Ally.io
  • Koan
  • WeekDone

“Some OKR-focused startups didn’t get back to us, and some leaders wanted to share the best stuff off the record, which we grant at times for candor amongst startup executives,” he wrote.

5 consumer hardware VCs share their 2021 investment strategies

For our latest investor survey, Matt Burns interviewed five VCs who actively fund consumer electronics startups:

  • Hans Tung, managing partner, GGV Capital
  • Dayna Grayson, co-founder and general partner, Construct Capital
  • Cyril Ebersweiler, general partner, SOSV
  • Bilal Zuberi, partner, Lux Capital
  • Rob Coneybeer, managing director, Shasta Ventures

“Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder,” says Matt, noting that the pandemic fueled wide interest in fitness startups like Mirror, Peloton and Tonal.

Bonus: many VCs listed the founders, investors and companies that are taking the lead in consumer hardware innovation.

A theory about the current IPO market

Digital generated image of abstract multi colored curve chart on white background.

Digital generated image of abstract multi colored curve chart on white background.

If you’re looking for insight into “why everything feels so damn silly this year” in the public markets, a post Alex wrote Thursday afternoon might offer some perspective.

As someone who pays close attention to late-stage venture markets, he’s identified eight factors that are pushing debuts for unicorns like Affirm and Poshmark into the stratosphere.

TL;DR? “Lots of demand, little supply, boom goes the price.”

Poshmark prices IPO above range as public markets continue to YOLO startups

Clothing resale marketplace Poshmark closed up more than 140% on its first trading day yesterday.

In Thursday’s edition of The Exchange, Alex noted that Poshmark boosted its valuation by selling 6.6 million shares at its IPO price, scooping up $277.2 million in the process.

Poshmark’s surge in trading is good news for its employees and stockholders, but it reflects poorly on “the venture-focused money people who we suppose know what they are talking about when it comes to equity in private companies,” he says.

Will startup valuations change given rising antitrust concerns?

GettyImages 926051128

financial stock market graph on technology abstract background represent risk of investment

This week, Visa announced it would drop its planned acquisition of Plaid after the U.S. Department of Justice filed suit to block it last fall.

Last week, Procter & Gamble called off its purchase of Billie, a women’s beauty products startup — in December, the U.S. Federal Trade Commission sued to block that deal, too.

Once upon a time, the U.S. government took an arm’s-length approach to enforcing antitrust laws, but the tide has turned, says Managing Editor Danny Crichton.

Going forward, “antitrust won’t kill acquisitions in general, but it could prevent the buyers with the highest reserve prices from entering the fray.”

Dear Sophie: What’s the new minimum salary required for H-1B visa applicants?

Image Credits: Sophie Alcorn

Dear Sophie:

I’m a grad student currently working on F-1 STEM OPT. The company I work for has indicated it will sponsor me for an H-1B visa this year.

I hear the random H-1B lottery will be replaced with a new system that selects H-1B candidates based on their salaries.

How will this new process work?

— Positive in Palo Alto

Venture capitalists react to Visa-Plaid deal meltdown

A homemade chocolate cookie with a bite and crumbs on a white background

OLYMPUS DIGITAL CAMERA

After news broke that Visa’s $5.3 billion purchase of API startup Plaid fell apart, Alex Wilhelm and Ron Miller interviewed several investors to get their reactions:

  • Anshu Sharma, co-founder and CEO, SkyflowAPI
  • Amy Cheetham, principal, Costanoa Ventures
  • Sheel Mohnot, co-founder, Better Tomorrow Ventures
  • Lucas Timberlake, partner, Fintech Ventures
  • Nico Berardi, founder and general partner, ANIMO Ventures
  • Allen Miller, VC, Oak HC/FT
  • Sri Muppidi, VC, Sierra Ventures
  • Christian Lassonde, VC, Impression Ventures

Plaid CEO touts new ‘clarity’ after failed Visa acquisition

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Alex Wilhelm interviewed Plaid CEO Zach Perret after the Visa acquisition was called off to learn more about his mindset and the company’s short-term plans.

Perret, who noted that the last few years have been a “roller coaster,” said the Visa deal was the right decision at the time, but going it alone is “once again” Plaid’s best way forward.

2021: A SPAC odyssey

In Tuesday’s edition of The Exchange, Alex Wilhelm took a closer look at blank-check offerings for digital asset marketplace Bakkt and personal finance platform SoFi.

To create a detailed analysis of the investor presentations for both offerings, he tried to answer two questions:

  1. Are special purpose acquisition companies a path to public markets for “potentially-promising companies that lacked obvious, near-term growth stories?”
  2. Given the number of unicorns and the limited number of companies that can IPO at any given time, “maybe SPACS would help close the liquidity gap?”

Flexible VC: A new model for startups targeting profitability

12 ‘flexible VCs’ who operate where equity meets revenue share

Spotlit Multi Colored Coil Toy in the Dark.

Spotlit Multi Colored Coil Toy in the Dark.

Growth-stage startups in search of funding have a new option: “flexible VC” investors.

An amalgam of revenue-based investment and traditional VC, investors who fall into this category let entrepreneurs “access immediate risk capital while preserving exit, growth trajectory and ownership optionality.”

In a comprehensive explainer, fund managers David Teten and Jamie Finney present different investment structures so founders can get a clear sense of how flexible VC compares to other venture capital models. In a follow-up post, they share a list of a dozen active investors who offer funding via these non-traditional routes.

These 5 VCs have high hopes for cannabis in 2021

Marijuana leaf on a yellow background.

Image Credits: Anton Petrus (opens in a new window) / Getty Images

For some consumers, “cannabis has always been essential,” writes Matt Burns, but once local governments allowed dispensaries to remain open during the pandemic, it signaled a shift in the regulatory environment, and investors took notice.

Matt asked five VCs about where they think the industry is heading in 2021 and what advice they’re offering their portfolio companies:

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GitLab oversaw a $195 million secondary sale that values the company at $6 billion

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GitLab has confirmed with TechCrunch that it oversaw a $195 million secondary sale that values the company at $6 billion. CNBC broke the story earlier today.

The company’s impressive valuation comes after its most recent 2019 Series E in which it raised $268 million on a 2.75 billion valuation, an increase of $3.25 billion in under 18 months. Company co-founder and CEO Sid Sijbrandij believes the increase is due to his company’s progress adding functionality to the platform.

“We believe the increase in valuation over the past year reflects the progress of our complete DevOps platform towards realizing a greater share of the growing, multi-billion dollar software development market,” he told TechCrunch.

While the startup has raised over $434 million, this round involved buying employee stock options, a move that allows the company’s workers to cash in some of their equity prior to going public. CNBC reported that the firms buying the stock included Alta Park, HMI Capital, OMERS Growth Equity, TCV and Verition.

The next logical step would appear to be IPO, something the company has never shied away from. In fact, it actually at one point included the proposed date of November 18, 2020 as a target IPO date on the company wiki. While they didn’t quite make that goal, Sijbrandij still sees the company going public at some point. He’s just not being so specific as in the past, suggesting that the company has plenty of runway left from the last funding round and can go public when the timing is right.

“We continue to believe that being a public company is an integral part of realizing our mission. As a public company, GitLab would benefit from enhanced brand awareness, access to capital, shareholder liquidity, autonomy and transparency,” he said.

He added, “That said, we want to maximize the outcome by selecting an opportune time. Our most recent capital raise was in 2019 and contributed to an already healthy balance sheet. A strong balance sheet and business model enables us to select a period that works best for realizing our long-term goals.”

GitLab has not only published IPO goals on its Wiki, but its entire company philosophy, goals and OKRs for everyone to see. Sijbrandij told TechCrunch’s Alex Wilhelm at a TechCrunch Disrupt panel in September that he believes that transparency helps attract and keep employees. It doesn’t hurt that the company was and remains a fully remote organization, even pre-COVID.

“We started [this level of] transparency to connect with the wider community around GitLab, but it turned out to be super beneficial for attracting great talent as well,” Sijbrandij told Wilhelm in September.

The company, which launched in 2014, offers a DevOps platform to help move applications through the programming lifecycle.

Update: The original headline of this story has been changed from ‘GitLab raises $195M in secondary funding on $6 billion valuation.’

 

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Facebook blocks new events around DC and state capitols

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As a precaution against coordinated violence as the U.S. approaches President-elect Joe Biden’s inauguration, Facebook announced a few new measures it’s putting in place.

In a blog post and tweets from Facebook Policy Communications Director Andy Stone, the company explained that it would block any events slated to happen near the White House, the U.S. Capitol or any state capitol building through Wednesday.

The company says it will also do “secondary” sweeps through any inauguration-related events to look for violations of its policies. At this point, that includes any content connected to the “Stop the Steal” movement perpetuating the rampant lie that Biden’s victory is illegitimate. Those groups continued to thrive on Facebook until measures the company took at the beginning of this week.

Facebook will apparently also be putting new restrictions in place for U.S. users who repeatedly break the company’s rules, including barring those accounts from livestreaming videos, events and group pages.

Those precautions fall short of what some of Facebook’s critics have called for, but they’re still notable measures for a company that only began taking dangerous conspiracies and armed groups seriously in the last year.

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