A fistful of IPOs, Affirm’s Peloton problem, Zoom Apps and more – ProWellTech
DoorDash, Says, Roblox, Airbnb, C3.ai, and Wish have all come out public in the past few days, meaning some venture capitalists are having the best week of their lives.
Tech companies that go public capture our imagination because they are literally a happy ending. An Initial Public Offering is the promised land for starting pilgrims who can wander the desert for years in search of products suitable for the market. After all, the “I” in “ISO” stands for “incentive”.
A flurry of new S-1s in just one week forced me to rearrange our editorial calendar, but I didn’t care; our 360 degree coverage let some air escape from various advertising balloons and discovered several unique angles.
For example: I knew Affirm, the service that allows consumers to finance purchases, but I had no idea that Peloton accounted for 30% of its total revenue in the last quarter.
“What happens if Peloton puts on the brakes?” I asked Alex Wilhelm as I edited his analysis of Affirm’s S-1. We decided to use it as a subtitle for his analysis.
The stories below are an overview of Extra Crunch from the past five days. Full items are only available to members, but you can use the discount code ECFriday to save 20% on a one or two year subscription. Details here.
Thank you so much for reading Extra Crunch this week; Hope you have a relaxing weekend.
Senior Editor, ProWellTech
How much is Roblox worth?
Gaming company Roblox went public yesterday afternoon, so Alex Wilhelm took out a scalpel and dissected his S-1. Using his patented maths, Roblox analyzed fundraising history and reported revenue to estimate where your valuation might land.
Noting that “public markets appear to be even riskier than the private world in 2020”, Alex set the number at “just a hair under $ 10 billion.”
What Chinese fintech can teach the world
Despite all the hype about new forms of payment, the way I transact hasn’t been radically transformed in recent years, not even in tech-centric San Francisco.
Of course, I use NFC card readers to touch and pay and I tipped a busking musician using Venmo last weekend. But my landlord still requires paper checks and there’s a worn “CASH ONLY” attached to the cashier in my nearest coffee shop.
In China, it’s a different story: Alibaba’s employee canteen uses facial recognition and artificial intelligence to determine which foods a worker has selected and whom to charge. Many consumers use the same app to pay for bills, movie tickets, and burgers.
“Today, no one but the Chinese outside of China is using Alipay or WeChat Pay to pay for anything,” says financial researcher Martin Chorzempa. “So this is a big unexplored side that I think can carry a lot of geopolitical risks.”
Affirm IPO Presentation: A Look at Its Economy, Profits and Revenue Concentration
On Wednesday evening, the Affirm consumer loan service filed for public utility, so Alex used Thursday’s column to unravel the company’s financials.
After reviewing COVID-19’s profitability, revenue, and impact on its bottom line, Affirm asked (and answered) three questions:
- What does Affirm’s loss rate look like on consumer loans?
- Are your gross margins improving?
- What does the unicorn have to say about the profit from the contribution from its lending business?
If you haven’t earned $ 1 billion this week, you’re not doing VC well
“The only thing rarer than a unicorn is a unicorn out,” notes editor-in-chief Danny Crichton, who looked back at Exitpalooza 2020 to answer “a simple question: who made the money?”
Covering each outing from the perspective of founders and investors, Danny makes it clear who will take home the biggest slice of each pie. TL; DR? “Some truly colossal winners among the founders and several venture capital firms returning home with billions of dollars in capital.
5 questions from Airbnb’s IPO filing
The S-1 Airbnb released earlier in the week provided insight into the home rental platform’s key financial data, but also raised several questions about the company’s health and long-term profitability, according to Alex Wilhelm:
- How much did Airbnb bookings drop during the first and second quarters?
- How long have Airbnb bookings been back?
- Did long-term local stays save Airbnb?
- Has Airbnb ever really made money?
- Is the company wealthy despite the pandemic?
Autodesk CEO Andrew Anagnost explains the strategy behind the Spacemaker acquisition
Earlier this week, Autodesk announced the purchase of Spacemaker, a Norwegian company that develops AI-supported software for urban development.
ProWellTech reporter Steve O’Hear interviewed Autodesk CEO Andrew Anagnost to learn more about the acquisition and asked why Autodesk paid $ 240 million for Spacemaker’s team of 115 people and IPs, especially when they were around. other startups closer to the Bay Area headquarters.
“They have created a real, practical and usable application that helps a segment of our population use machine learning to actually create better outcomes in a critical area, which is urban regeneration and development,” said Anagnost.
“So it’s totally in line with what we’re trying to do.”
Unpacking the IPO C3.ai documentation
On Monday, Alex dived into the IPO filing for corporate artificial intelligence company C3.ai.
After carefully examining its ownership structure, service offerings, and the last two years of revenue, it asks and answers the question, “Is the company itself damn good?”
Is the Internet Advertising Economy About to Implode?
In his new book, Subprime Attention Crisis, writer / researcher Tim Hwang attempts to answer a question I’ve been asking myself for years: Does advertising really work?
Chief Editor Danny Crichton interviewed Hwang to learn more about his contention that there are parallels between today’s advertising industry and the subprime mortgage crisis that helped spur the Great Recession.
So, are online ads effective?
“I think companies are very reluctant to give up data that would allow a truly definitive answer to this question to be found,” says Hwang.
Will Zoom Apps be the next hot boot platform?
Even after much of the population has been vaccinated against COVID-19, we will continue to use Zoom’s video conferencing platform in large numbers.
That’s because Zoom isn’t just an app – it’s also a platform game for startups that add functionality using APIs, an SDK, or chatbots that act like smart assistants.
Corporate reporter Ron Miller spoke to entrepreneurs and investors who are leveraging Zoom’s platform to create new applications with an eye to the future.
“By offering a platform to build applications that leverage meeting software, it’s possible it could be a valuable new ecosystem for startups,” says Ron.
Will Edtech strengthen or cancel the need for higher education?
Without a campus experience, many students (and their parents) wonder how much value there is in attending classes via a laptop in a dorm.
Even worse: the decline in enrollments is leading many institutions to eliminate majors and find other ways to reduce costs, such as layoffs and cutting athletic programs.
Edtech solutions could bridge the gap, but there is no real consensus in higher education on which tools work best. Many colleges and universities use a variety of “third-party solutions to keep operations afloat,” reports Natasha Mascarenhas.
“It’s a stress test that could lead to a showdown among edtech startups.”
3 growth tactics that helped us overcome Noom and Weight Watchers
I look for Extra Crunch stories written by guests that will help other entrepreneurs be more successful, which is why I regularly reject proposals that seem overly promotional.
However, Henrik Torstensson (CEO and co-founder of Lifesum) sent a post about the techniques he has used to scale his nutrition app for the past three years. “It’s a strategy any startup can use, regardless of size or budget,” he writes.
According to Sensor Tower, Lifesum is growing almost twice as fast as Noon and Weight Watchers, so putting his company at the center of the story made sense.
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Every year we ask ProWellTech reporters, VCs, and our Extra Crunch readers to recommend their favorite books.
Have you read a book this year that you want to recommend? Send an email with the title and a brief explanation of why you liked it email@example.com.
We will compile the suggestions and publish the list as we get closer to the holidays. These books are not to be published this calendar year – any book you read this year qualifies.
Please share your comments by 30 November.
Dear Sophie: Can an H-1B co-founder own a Delaware C Corp?
My partner VC and I are working with 50/50 co-founders on their startup, let’s call it “NewCo”. We are exploring pre-seed terms.
A founder has a green card and already works there. The other founder is from India and is working on an H-1B at a large tech company.
Can the H-1B co-founder lead this company? What’s the timing to fix everything? If we make the investment, we want them to start working.
– Diligent in Daly City