Edit №62 — Bubblicious — Weekly Newsletter on Corporate Innovation & Venture
by Stu Iverson and Clay Maxwell
The Recap
Feb 14, 2021
As the word “bubble” proliferates, it’s hard not to look at the various manias and wonder which are symptoms, which are causes. We had the GameStop frenzy. Bitcoin has remained newsworthy, especially with Elon throwing a lot of Tesla’s cash into the stuff ($1.5B, to be exact). Then there’s the prolonged SPAC boom. Even plain old IPOs aren’t boring these days, as they seem to be riding extra high as part of this uniquely exuberant, buoyant period.
Something to watch as the markets look for corrective catalysts, here’s a dive into the current state of the recently listed, via Crunchbase: “Today’s buzziest offerings are much more highly valued than cohorts that went public a couple years ago. But not only that — they’re often losing more money relative to revenue, too.
The vast majority of tech companies tapping public markets post both high growth rates and persistent losses. Scaling costs money, and both public and private investors are pretty comfortable watching favored companies post losses en route to becoming dominant players in their respective markets. But losses still say something about a company’s expected trajectory.
So, do these kinds of losses matter for long-term investors? … The ability to lose money and sustain a high valuation is essentially a form of privilege extended to venture-backed companies in tech, biotech, and other hot industries. … This privilege can go away rather quickly when market sentiments turn. On the other hand, a company with a hot brand can lose money for quite a long time. Tesla, which went public in 2010, only posted its first full year of profitability last year. In its nine years as an unprofitable public company, it still ranked for years as the highest valuation automaker on U.S. exchanges. Amazon, which went public in 1997, didn’t post its first profitable year until 2003, but managed to remain a market favorite until then.
In short, losses paired with growing revenue might not matter much now, since investors themselves don’t seem to mind. But down the road they could start to matter, and that sentiment shift has a history of happening rather quickly.”
So as not to leave things on a brooding note, this effervescent environment is no doubt spurring plenty of corporate innovation as cash piles have grown while consumers and their behaviors have shifted. In response, lots of interesting moves are being made:
After having reclaimed the top-selling automotive brand podium spot and a good earnings roundup to go with it, Toyota is feeling bullish on all future-focused fronts. It’s partnered with Aurora to advance its self-driving ambitions considerably, and announced three new electric vehicles.
Doordash acquired some salad-making robots, which is likely to further the company’s ghost kitchen operations (and also to live up to the “ghost” concept, as “Sally” — the Chowbotics salad machine’s moniker — is not quite the same as your typical fast-casual front-line employee).
Shopify has left its own domain with its Shop Pay payment offering, now launching across Facebook and Instagram. An interesting move for both big co’s, this likely opens up a new revenue stream for the Facebook companies despite the obvious competition with Facebook “Shop”, whilst giving Shopify expansive access to feed its e-commerce ambitions.
Also happening at Facebook, a less exciting, more dubious form of “innovation”… As the hot new app Clubhouse takes off, Facebook is said to be furiously working on a competitive clone. Twitter too is said to be after a share of this space, and it’s easy to see why as the app, still in “beta,” reached a $1B valuation in January this year and is logging 2 million weekly active users. For Facebook, this is nothing new as it rationalizes against its breadth…
“We’ve been connecting people through audio and video technologies for many years and are always exploring new ways to improve that experience for people,” Emilie Haskell, a Facebook spokeswoman, said (via the NYT).
…and flexes its might. Will be interesting to see how this all shakes out.
Quick Links — Interesting reads from the rest of the market
United Airlines to buy 200 flying electric taxis to take you to the airport.
Nationwide bolsters venture arm’s war chest from $100m to $350m.
Lufthansa Innovation Hub spins off mobility startup RYDES alongside Porsche.
Ikea acquires 49% stake in Ikano Bank.
Sephora’s new incubator brands are all BIPOC-owned.
Target’s newish athletic line is now its 10th billion-dollar store brand.
Hyundai is getting serious about building a ‘walking car’ with four legs.
Tesla invests heavily in bitcoin and will accept it as payment.
The Water Cooler — Conversation starters for around the (virtual) office
Trouble training your dog? Researchers train AI to reward dogs for responding to commands. 90-year-old man spends $10,000 on 2 ads in WSJ to tell AT&T CEO about his slow internet service. Americans ate a record 1.42 billion chicken wings this Super Bowl Sunday. Google’s free app analyzes your selfie and then finds your doppelganger in museum portraits. The amazing story of a gorilla who was brought up as a boy in an English village.
The Corporate Card — Corporate Venture Deals
CapitalG joined the $125m Series D of IoT security startup Armis Security.
GV joined the $90m Series D of medical imaging startup Hyperfine Research.
Allianz X invested $53.5m into Toronto based FinTech startup Purpose Financial.
Boeing HorizonX Ventures joined the $40m Series B of satellite startup Isotropic Systems.
HSBC Venture Capital Coverage Group & Citigroup joined the £14m Series A of data management startup Solidatus.
GV invested $15m in the Series A of consumer tech startup Nothing.
Barclays joined the $7m Seed Round of millennial credit startup TomoCredit.
Barclays joined the £4.2 Series B of dB2B capital raising startup HUBX.
Aflac Corporate Ventures joined the $5m Series B of service workflow automation startup Ushur.
Stripe led the Seed Round of Pakistani FinTech startup Safepay.
The Bulletin Board — Job openings and opportunities
Manager at Visa Ventures. The Manager will work with the Ventures team across all aspects of deal sourcing, evaluation, and execution, including landscape research, theme development, company prospecting, term sheet drafting, financial modeling, due diligence, negotiation, and preparation of investment committee materials. The employee will interface with entrepreneurs, other investors, and Visa stakeholders and leadership.
Director, Cross-Company Strategic Initiatives at Facebook. The Cross Company Strategic Initiatives team works in small project teams to find solutions to thorny business challenges selected by Facebook’s leadership, or bring order and structure to unblock critical work streams across the company. At its core, CSI operates like an internal consulting group with the added complexity of (i) managing by influence, (ii) dealing with extreme ambiguity and (iii) working on only projects that are a top priority for executives.
