TechCrunch+

Plenty of companies that launched during downturns went on to be phenomenally successful.

During the Great Depression, Stanford grads David Packard and William Hewlett famously set up shop in a Palo Alto garage. Microsoft was founded as the U.S. was recovering from a years-long oil embargo that hobbled the economy. Slack, Airbnb, Uber and Square all rose from the ashes of the Great Recession.

As of September 2022, investors have amassed almost $300 billion in dry powder, and VC funds are still raising money by the boxcar. That’s because even during recessionary times, VC funds tend to outperform public markets.

Which explains why I’ve never heard an investor say it’s a bad time to launch a startup. But ask a few entrepreneurs, and you may get a different story.

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Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.

According to a pre-seed report by DocSend, founders took an average of 52 meetings with investors in 2022 compared to 39 last year. At the same time, they are submitting 30% more pitch decks, but VC engagement has fallen 23%.

In Q4 2022, it takes more time to raise less money.

“Founders may be discouraged in this environment, but they need to remember that they have ‘currency,’ too,” said Russ Heddleston, co-founder and former CEO of DocSend at Dropbox.

Because investors spend less time reviewing pitches, concise, data-driven storytelling is more important than ever. DocSend’s report recommends using no more than 50 words per slide.

The sections of the deck that address purpose, product and business model are the meat in the sandwich, so founders should spend the most time polishing those points.

“Investors spent the third-highest amount of time reviewing the company purpose slide in pre-seed pitch decks, behind only the business model and product slides,” said Heddleston.

The idea that there’s a “good” time to launch a startup is just a bedtime story investors tell founders, and I regret any role I had in promoting it. Starting a company is an uphill slog on an uncertain path, and it’s not for everyone.

But if that’s your path, don’t let anyone talk you out of it.

Thanks for reading.

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

Interim rate of return: A better approach to valuing early-stage startups

Low valuation caps allow early-stage investors to gain a larger ownership stake and reduce their risk.

However, these caps are increasingly being used as a proxy for the value of the company at the time of the investment, which in turn creates “unnecessary complexity for inexperienced founders and investors,” write attorneys Andrew Ritter, Adam Silverman and Jack Sousa, partners at Wiggin and Dana.

“With the interim rate of return method, you simply negotiate a rate of return (like an interest rate) that applies to the convertible instrument investment solely for purposes of future conversion or the amount payable in a pre-conversion exit.”

3 mistakes to avoid as an emerging manager

Deep tech VC Champ Suthipongchai is a successful fund manager, but he claims to have made plenty of mistakes along the way.

As co-founder and general partner of Creative Ventures, he raised $65 million “with fewer than 25 LPs.” Looking back, he says he initially wasted too much time chasing investors and failed to use FOMO to his advantage.

“While there’s no one right way to go about fundraising, there are a few wrong ways — and failure is a wonderful teacher,” says Suthipongchai.

Lessons for raising $10M without giving up a board seat

Over the last two years, intelligent calendar platform Reclaim.ai raised $10 million “using a more incremental approach,” writes co-founder Henry Shapiro.

“We’ve done all this without giving up a single board seat, and Reclaim employees continue to own over two-thirds of the company’s equity,” rejecting conventional wisdom that founders should “raise as much as you can as fast as you can.”

In a TC+ post, Shapiro reviews the process they used to identify follow-on investors, shares the email template they used to pitch the SAFE and explains why “a larger cap table means more founder control.”

Pitch Deck Teardown: Juro’s $23M Series B deck

Legal tech startup Juro raised a $23 million Series B earlier this year to scale its web-based contract negotiation platform.

Juro’s founders shared their 15-slide pitch deck with TC+ and only “blurred out part of its future road map and the actual numbers for the financials.”

Dear Sophie: Are there any visas or green cards I can get on my own?

Dear Sophie,

I’m so worried and stressed about all the layoffs! I’m safe for now, but it has made me realize I need to take control of my own destiny.

Are there any visas or green cards that I can apply for on my own without relying on my employer?

— Silicon Stressed

4 ways to use e-commerce data to optimize LTV pre- and post-holiday

E-commerce startups make as much as one-fifth of their yearly revenue in the months after Black Friday/Cyber Monday. But how can brands convert shoppers who respond to a holiday promotion into repeat customers who come back all year long?

In a TC+ post, Dan LeBlanc, CEO and co-founder of data and analytics firm Daasity, provides a detailed strategy guide aimed at helping marketers boost ROI and perform cohort analysis to track lifetime value against customer acquisition cost.

“Consumer brands who know how to use their data to maximize LTV will win the holidays and set their brand up for growth well into the new year.”

Top 3 riskiest misconfigurations on the Salesforce platform

No-code technology can be a double-edged sword.

Platforms like Zapier and Salesforce make it easy to automate tasks and workflows, but “configuring a low-code platform is so easy that the low-code administrator often does not understand the impact of checking a box,” writes David Brooks, senior vice president of product at Copado.

In a post for TC+, he breaks down the three riskiest Salesforce misconfigurations:

Modify All Data (MAD) and View All Data (VAD)
Sharing & Sharing Groups
Running Apex code without the “runAs” method

Startup founders need to be data-informed, not just ‘data-driven’

According to Ann Lai, a general partner at Bullpen Capital, many startups that put core metrics front and center during fundraising are sabotaging themselves.

“Using raw, unfiltered data is common at startups that donʼt know how to properly filter their information, and they often end up offloading data irrelevant to their company and mission,” says Lai.

In a post aimed at both investors and founders, Lai offers three strategies that will help “ensure that you arenʼt just data-driven, but data-informed.”

TechCrunch+ roundup: Fundraising under scrutiny, optimizing LTV, visa bulletin update by Walter Thompson originally published on TechCrunch

Cloud tech companies are facing a significant cloud skills shortage, making it hard to hire people and difficult to make sure their current workforce’s skills are up to date. Australia- and US-based Saasguru wants to narrow the gap with an edtech platform designed for new graduates and tech workers who want to become better at using cloud platforms like Salesforce or AWS. The company announced today it has raised a seed round of $4 million AUD (or about $2.7 million USD) led by Square Peg Capital, along with returning investors Black Nova and Antler.

Saasguru’s last funding was nine months ago, when it raised a pre-seed round of $1.3 million AUD. The company was founded in 2021 by Amit Choudhary, Atif Saad and Prateek Kataria. Choudhary and Saad sold their last startup SaaSfocus, a Salesforce consulting company, to Cognizant in in 2018.

So far, Salesguru has been used by 40,000 students in 20 countries, and has worked with 20 cloud consulting companies that want to train new workers, as well as refresh the skills of their existing teams. Its students range from new graduates who are starting their first jobs in cloud tech to professionals who want to earn more training certificates.

The search for people with cloud computing skills in the Asia Pacific region is urgent, with a report by AWS showing that workers needed will triple by 2025, going from 37 million workers in 2020 to 109 million. Saasguru wants to help its learners become ready for cloud tech jobs, while creating more talent at scale.

Choudhary told TechCrunch that the idea for Saasguru was planted while he and Saad were still working on SaaSfocus and struggled to compete for talent with large cloud consulting companies.

“This forced us to look at organic talent creation by hiring people from diverse non-technology backgrounds and upskilling them through a homegrown program tailor-made for Salesforce job readiness,” he said. “This became a bit of a ‘secret sauce’ for us and it helped us scale the business to over 360 consultants, with over 80% of them being trained through this program.”

SaaSfocus’ training program included hyper-personalized study plans, “TikTok-like” micro-modules of content, mentoring, peer-to-peer learning and hands-on assignments.

After selling SaaSfocus, Choudhary and Saad used this approach in a pro-bono program to help people get new jobs during COVID by teaching them Salesforce skills. Of the 50 people who took part in the program, almost all got placed in Salesforce-related jobs.

“It was the lightbulb moment when we realized this could be scaled with tech into a global business,” Choudhary said. Saasguru was launched in early 2021, combining the components of the pro-bono program with a deep tech platform.

Saasguru’s 15 programs includes ones for learning Salesforce, ServiceNow, AWS, GCP and Azure. It plans to use its funding to add more cloud certifications. Choudhary said Saasguru personalizes courses, which can take from 30 hours for self-paced cloud certification program to 300 hours for a career bootcamp, by using a two-step process. The first step is an initial assessment that analyzes the readiness of a learner and creates a learning pathway for them. Then as they start taking a course, the platform recommends the next best step to take.

Saasguru acquires customers by running free webinars with its teachers, or gurus. They also offer free one-on-one mentoring sessions on careers, interview tips and certifications, and run a Slack community. Saasguru serves both individuals and cloud consulting companies that want to build the skills of new and existing employees.

In a statement about the funding, Square Peg Capital principal Lucy Tan said, “There is a massive cloud skills shortage in the industry that is slowing down digital transformation initiatives undertaken by businesses. Universities are not well equipped to solve this skills shortage as the skills update so quickly. This means post-university upskilling is critical for continued business growth and Saasguru provides a personalised learning pathway for cloud professionals to embark on, helping them get skilled and certified in cloud technologies. This can make a meaningful impact on people’s lives from either landing them in a new career or getting salary increases.”

Edtech Saasguru wants to fix the cloud talent shortage at scale by Catherine Shu originally published on TechCrunch

Crypto lending platform BlockFi filed for Chapter 11 bankruptcy on Monday, just a few weeks after once-major crypto exchange FTX did the same. While BlockFi has been struggling to stay afloat for months now (and was even potentially going to be acquired by FTX), this latest filing signals that the bankruptcy contagion may run deeper than what the crypto industry sees at the surface.

“It is another example that the crypto winter is not over, and with the FTX debacle, it’s going to persist longer than previously expected,” Ric Edelman, founder of Digital Assets Council of Financial Professionals (DACFP) and author of “The Truth About Crypto,” said to TechCrunch.

With BlockFi now in the midst of bankruptcy proceedings alongside FTX, Celsius, Three Arrows Capital and Voyager, others in the crypto space are wondering if and when the next crypto firm will find itself on the chopping block.

“The level of intercompany investment within the blockchain and crypto community is unusually high, so the level of contagion is likely to be much higher than what we saw within the traditional financial community in 2008-2009,” Sam Dibble, partner at Baker Botts, said to TechCrunch.

“Unfortunately, the complexity of these intercompany investments is not fully known at this point and so the companies themselves probably don’t know how badly they will be impacted,” Dibble added. “My guess is that the entire industry will be impacted somewhat by the FTX and BlockFi bankruptcies, with a significant number of severe casualties.”

As BlockFi files for bankruptcy, how contagious will FTX’s downfall become? by Jacquelyn Melinek originally published on TechCrunch

Snapchat is adding a new privacy setting that enables users based in California to better protect their sensitive personal information. The company confirmed it’s rolling out a feature designed to comply with the California Privacy Rights Act (CPRA), which takes effect on Jan. 1, 2023, and applies to personal data collected on or after Jan. 1, 2022.

In November 2020, California residents voted to pass the CPRA, also known as Proposition 24, which builds on an earlier consumer privacy law, the California Consumer Privacy Act (CCPA) of 2018.

While the CCPA gave residents the right to access and delete personal information held by businesses and opt out of the sale of that data, the new law puts into place further requirements for businesses around their data collection practices and data retention. It additionally introduces new notification requirements and clarifies that users have the right to opt out of both the sharing and the sale of their personal information, while also adding a new category of “sensitive data.”

The law created the California Privacy Protection Agency to enforce the state’s privacy laws, as well as investigate violations, and assess penalties if warranted.

Consumers based in California, meanwhile, are to gain the right to not only know who’s collecting their information, but also be able to access it, correct it, delete it and transfer it, and to stop its sale and sharing, without being penalized as a result. As part of this, they’re also to gain the ability to access their options through “easily accessible” self-serve tools.

Snapchat’s implementation would seemingly address the latter as it presents a simple toggle switch under its Privacy Controls section in the app’s Settings screen. Here, users will be presented with a new option at the bottom of the list that reads “California Privacy Choices.”

A tap into this screen, (as spotted by competitive intelligence provider Watchful — see below image) reveals a new option to “Limit the Use of Sensitive Personal Information.” This page explains that enabling the setting would require Snapchat to limit the use of users’ personal info, including things like precise geolocation.

The setting, however, is appearing in the Snapchat app for all U.S. users — even those who don’t live in the state.

Snapchat confirmed the new privacy feature is rolling out in compliance with the CPRA, but notes it only functions for those users in California.

The addition is interesting as it demonstrates how a popular mobile app has chosen to comply with the new legislation. And unlike on Facebook — where settings are buried, difficult to find, and constantly being relocated — Snapchat’s new privacy feature is relatively easy to find. All of the app’s settings are available from one main screen, organized into sections. So the new CPRA-compliant setting isn’t something users have to dig around to find.

Snapchat complies with the California Privacy Rights Act with a new toggle switch for users by Sarah Perez originally published on TechCrunch

At its re:Invent conference, AWS today announced Amazon DataZone, a new data management service that can help enterprises catalog, discover, share and — most importantly — govern their data. The nifty part here is that AWS is using machine learning to help businesses build these data catalogs and generate the metadata to make it searchable.

“To unlock the full power the full value of data, we need to make it easy for the right people and applications to find, access and share the right data when they need it — and to keep data safe and secure.” AWS CEO Adam Selipsky said in today’s keynote.

The tool will provide users with fine-graned controls to manage and govern this data. That’s long been a major problem for enterprises, but it has only gotten harder as the amount of data has increased, ensuring that the right users have access to the right data, without compromising personally identifiable information, for example.

“Data zone enables you to set data free throughout the organization safely by making it easy for admins and data stewards to manage and govern access to data,” Selipsky explained. “And it makes it easy for data engineers, data scientists, product managers, analysts and other business users to discover, use and collaborate around that data to drive insights for your businesses.”

DataZone users will get access to a portal where they can set up their data catalog and define the taxonomy. Once DataZone is connected to a data source, it’ll use machine learning to populate its catalog with its metadata and users can add additional labels and descriptions as needed.

In a somewhat related announcement, AWS also yesterday launched its Digital Sovereignty Pledge, promising to give users the tools they need to control where their data is stored and accessed. DataZone does offer some of those controls, though its focus is obviously not on digital sovereignty.

AWS launches DataZone, a new ML-based data management service by Frederic Lardinois originally published on TechCrunch

Lordstown Motors has starting shipping its all-electric Endurance pickup trucks manufactured by Foxconn, a milestone that seemed impossible earlier this year.

Lordstown Motors, which has experienced investigations, executive upheaval and a shortage of capital, said Tuesday that its full-sized EV truck received full homologation with certification from both the EPA and CARB that clears the way for the company to start customer sales.

The first batch of 500 EV pickups, made at an Ohio factory now owned by Taiwanese hardware manufacturing company Foxconn, are on their way to fleet customers, according to the company. The announcement sent shares of Lordstown Motors stock up 3.79%.

Lordstown Motors has moved from one dramatic event to another in its short life as a company. Workhorse Group founder and former CEO Steve Burns started Lordstown Motors in 2018. The startup immediately gained attention for its deal with GM to buy the legacy automaker’s soon-to-be-shuttered factory in Lordstown, Ohio. GM invested $75 million into Lordstown.

The company became a political tool at times; the unveiling of its Endurance pickup truck geared towards contractors was largely used as a campaign stop for then-Vice President Mike Pence. Lordstown also sustained a series of setbacks, which seemed to ramp up after it became a publicly traded company through a merger with a special purpose acquisition company.

In March 2021, Hindenburg Research, the short-seller firm whose report on Nikola Motor led to an SEC investigation and the resignation (and ultimately the indictment) of its founder, issued a report disputing Lordstown’s claims it had booked 100,000 pre-orders for its truck. The firm also alleged that Burns paid consultants for every truck pre-order as early as 2016 while he was leading Workhorse.

By summer 2021, Burns and CFO Julio Rodriguez had resigned, the company warned it was running low on capital and investors learned it was being investigated by the Department of Justice.

Foxconn, best known as the maker of Apple’s iPhone, came to the rescue in September 2021 and bought the Lordstown factory for $230 million. Foxconn also agreed to manufacture the pickup truck for Lordstown under a joint venture contract. Foxconn increased its investment in Lordstown Motors in November 2022 by buying $170 million in common stock and newly created preferred shares.

Foxconn holds all of Lordstown’s outstanding preferred stock and 18.3% of its common stock on a pro forma basis.

Lordstown Motors begins shipping its Foxconn-made EV pickup trucks by Kirsten Korosec originally published on TechCrunch

Amazon announced today the launch of “Create with Alexa,” a new AI tool for kids that generates animated stories. The company first revealed the feature in September. “Create with Alexa” launched in the U.S. today, November 29, across supported Echo Show devices and is available in English.

To craft a story, a child says, “Alexa, make a story,” and then answers prompts, the company explains in its blog post. The child selects from three themes: “space exploration,” “underwater” or “enchanted forest,” and then chooses the story’s hero, a color scheme and adjectives like “silly,” “happy” or “mysterious.”

The AI then generates a five-to-ten-line story based on the answers. The story comes with a background image, animations, sound effects, music and more. Amazon claims that the story will be different every time, even if the same child chooses the same exact prompts.

Users can also save the story in their personal media gallery and replay it whenever they want. Soon, they’ll be able to share the story with their family and friends, Amazon added.

Nico Bishop, a UX designer, said that Alexa’s AI-assisted story creation would evolve over time. “Kids will want to be able to say, ‘I want to see a wall of chocolate,’ and soon we expect we’ll be able to do that,” Bishop said in a statement. She also noted that the company is working to improve graphic latency, sound effects and music capabilities.

“We envision a world where anyone can bring their ideas to life in the form of digital creations just by using a few spoken words,” said Eshan Bhatnagar, head of product for Alexa AI. “And Alexa will be right with them, assisting them as their co-creator.”

Some AI art systems like Stable Diffusion lack safeguards, making it easy for users to generate inappropriate artwork. However, Amazon’s “Create with Alexa” is targeted toward young kids, so there are content filters in place, Bhatnagar explained. And since it’s a child-directed Alexa feature, a parent needs to enable it on the device before their child can use it.

Amazon’s new Alexa feature uses AI to create animated kids’ stories on Echo Show by Lauren Forristal originally published on TechCrunch

Abby started its journey selling 120 or so of its “All-In-One Smart Hydroponic Grow Box” on Kickstarter, with a relatively modest $100,000 raised on the crowdfunding platform. The device promises to help you make growing your favorite plants more or less foolproof, especially if your “favorite plants” are marijuana. In its marketing, the company is careful to share that you can grow any plant you like, but realistically, there are not a lot of plants that need “replacement carbon filters delivered to your house every 3 months,” and the website issues a “you must be 21 or older to enter this site” warning. The community is eager and ardent about its love for smokable plants. Let’s just say that if you’re going to spend $1,000 on a single-plant hydroponic box, you’d really have to love tomatoes for it to make sense; most of its users appear to be growing a more, er, valuable crop.

Being based in California, where these things are legal, I figured I’d give it a whirl. I bought some seeds, got the plant to about 3 inches in height, and planted it in the Abby to see what would happen.

On paper, the product should be such a solid solution. The device features a water culture system with advanced automatic intelligent lighting with Samsung’s LM301H Full Spectrum Plant Lights and high-power LEDs that are specifically designed to maximize plant photosynthesis growth potential. It supposedly has “advanced sensors to consistently track growth, with ultrasonic, temperature/humidity, water temperature, water level, and 5.8G radar sensors so you never have to worry about plant growth again.”

The product is an elegantly designed cabinet. Sleek and white, with wooden legs and a wooden top, with a bunch of smart features on the inside of the device: water pumps, lighting and what it claims are “advanced algorithms, state-of-the-art sensors” and more. Measuring around 16x16x48 inches (40x40x122 cm), it’s sleek and you could probably find a spot for it in any home.

When the device arrived at my house, it had a dented door and a missing door hinge (!) which could presumably be attributed to shipping rather than poor QA. The Abby team was quick to get a replacement door shipped out, along with replacement instructions for the door, which involved unscrewing and re-screwing nine screws. I’m no stranger to taking tools to equipment, but it wasn’t the best first impression. On the whole, the hardware seems very well designed, which makes it all the more painful that, at every turn, the product’s software tries to prevent you from being able to grow efficiently. The list of issues is as long as my arm; there wasn’t an Android app for starters (the company did finally release an Android app last month), and from there, it just got worse.

The app and integration with Abby is so bad that I originally had just given up on writing a review altogether, but when the cabinet flooded my apartment floors due to a software error, I figured it might be best to write up some of my experiences…

One thing after another

Connecting to the device in the first place was impossible, and it took a fair chunk of troubleshooting to figure out what was going on; it turns out that the Abby only supports 2.4Ghz Wi-Fi, which I didn’t have set up in my house.

The app supposedly is able to give you 1-on-1 expert live support from the company, but the first few times I tried to submit a photo on my (admittedly old) iOS device, the app kept crashing. When I was finally able to upload a message, the message simply vanished. I don’t believe I ever got a reply from Abby. The app itself is riddled with typos and bugs, and I’d almost be able to look past that if it hadn’t been for the fact that the device itself doesn’t seem to have any interest in notifying me about what I need to do with the plants.

The Abby occasionally chimes at me, and pulses a pretty green light, but whenever it does that, the app doesn’t seem to have an opinion on what I need to do, and the display on the device itself — which would have been such a good place to communicate what the device needs — just shows the Abby logo.

The water needs changing every once in a while, but the app never notified me when that needed to happen. The Abby box itself has a small display on it, which rotates left and right, and has a button — much like a Nest thermostat. However, the display never shows anything useful. Such as “hey, you need to change the water,” for example.

When I finally did figure out that I needed to change the water manually, the app gives you simple instructions: Take the hose out of the box, and put it in a “minimum 1-gallon container.” Which I did, but it didn’t stop automatically after a gallon, and the app crashed when I pressed the “stop pumping water” button, which meant that the pump just kept going and sent the full amount of water in the device’s tank all over my floor as I was running to the sink with my overflowing one-gallon container. Not… ideal.

The box comes with a really clever nutrient system: It has two spots where you can place the “silver” and “gold’ nutrient packs. It does this because one of the packs needs to dissolve fully before the other one is added, to avoid a chemical reaction between the two packs. Unfortunately, this only worked the very first time I set up the machine: After that, it never asked for additional nutrition packs, so the packs I had so diligently placed in the supply holes eventually just dissolved in place, and made a sticky mess all over the machine.

Toward the end of my review period, the plant had grown quite a bit — I eventually just resorted to dumping the nutrition packets in manually, since the cabinet and app never asked for nutrients. Which seemed suspect; for my own, home-built hydroponic system, I have to balance and add more nutrients every few weeks at least. Unfortunately, because Abby never warned me that the thirsty plant drank almost all of the water, the plant went for a few days with almost all of its roots out of the water, leading to a lot of the leaves on the plant dying. Not great, and another strike against the “foolproof” nature of the Abby cabinet.

I had the Abby plugged into a power meter to see how much power it was consuming during my review. Over the course of 108 days, it burned through 198 KwH, which translates to around $50 spent for a crop of weed.

The final complaint I have about Abby is that the charcoal filters aren’t as efficient as they might need to be; especially toward the end there, my apartment stank to high heaven of weed. Not the best first impression for my landlord and a plumber when they came by to repair something. I did manage to stammer “Er, it’s for work?” which was true, of course, but… yeah. Not great.

I should add that the app is in active development, and a lot of the original complaints I had about the device have been addressed, at least partially. The company launched an Android version, and the process for changing water was “optimized” last month. How-tos and troubleshooting instructions are built in to the app, and more detailed instructions are being added. The company is also adding a growing calendar, metric units and later batches of the device are quieter than the one I reviewed (the company claims it hums along at 40 dB now, which is an improvement).

All in all, you’d have to be very interested in growing a plant indoors if you’re willing to drop a grand for the admittedly neat hardware that’s so heavily hampered by impossible-to-use, buggy software) and $50 worth of power to keep it all growing. It’s frustrating; I really wanted to love Abby, but ultimately it needed way too much manual babysitting to warrant the cost. If someone launches a product that actually delivers on Abby’s promises, I can imagine it being a great buy. This ain’t it yet.

We review Abby, a sleek one-plant weed farm for your apartment by Haje Jan Kamps originally published on TechCrunch

The 2022 perspective that startups should cut their losses and chart a clearer path to profitability does not only apply to upstart tech companies. After a multiyear spending binge, larger technology companies are also pulling back on costs.

For some major tech concerns, the cuts have come in the form of explicit layoffs and staffing reductions created by not backfilling departing employees, while other tech shops are cutting costs, including perks and related employment-enticement efforts. But while some major technology companies are trimming spending to bolster profitability, others remain miles away from making money.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

Such is the case of Bilibili, a Chinese online video service with a social component. Today, shares of Bilibili are performing strongly, up sharply after the company reported better-than-anticipated Q3 earnings results. Naturally on the hunt for some good news amid a year of bearish headlines, compressing multiples, and chaos, we took a look.

What we found was a business further from profitability than we expected. The Chinese company, worth around $5 billion today per financial databases including Yahoo Finance, has done a fantastic job capturing a growing audience in its home market and keeping those netizens engaged. But when it comes to building a more profitable company — its stated goal, as we’ll examine shortly — it has much work ahead of it.

That shares of Bilibili are up more than 20% today is good news, albeit in a limited sense. The company’s shares trading on U.S. exchanges crested the $150 per-share threshold in booming 2021. They closed yesterday at $12.59 per share, before today’s uptick of nearly $3 per share.

The work ahead of Bilibili to reach profitability — measured in GAAP terms, mind — reminds us of other tech companies that saw their values skyrocket and losses stick during the 2021 era. Some of those concerns, like Twilio, are still growing quickly, and at scale, but their losses appear to have set a weight around their shoulders, compressing their total value.

Put more simply, Bilibili’s unprofitability tells us that unwinding 2021’s excesses will take years, in some cases. For already-public tech companies, this can mean a painful march to the black. For startups, it serves more as a warning about what happens when growth fails to generate sufficient operating leverage.

As tech companies seek to limit losses, a reminder of how far some have to go by Alex Wilhelm originally published on TechCrunch

TechCrunch Early Stage — our premier event designed for budding entrepreneurs and founders at the very start of their startup journey — returns by popular demand on April 20, 2023. And we’re excited to announce that this year, we’re taking it on the road to Boston, Massachusetts.

We’re mixing the East Coast vibe with unparalleled opportunity. This is our only event where you get hands-on training with top industry experts to help you build a successful business.

Register, save and secure your place: We have a limited number of passes available for a special launch price. They’re here until they’re not — get ’em while they’re hot. Buy your TC Early Stage pass now, and reserve your seat for just $149.

During small group sessions, roundtables and workshops, you’ll learn best practices and gain valuable insights from successful startup founders, subject-matter experts and seasoned investors. We’re talking core topics that anyone interested in building their own business needs to know. TC Early Stage has your name written all over it if you:

Dream of starting your own business and want to learn how to turn your idea into a viable startup.
Work your startup on the side and need to figure out the next steps that will move you closer to being your own boss.
Code, develop and engineer new products and wonder what it takes to monetize your ideas.
Need to move beyond friends-and-family financing and learn how to attract institutional investors.
Want to join a supportive community of like-minded businesspeople sharing a similar path.

You’ll engage with the experts and other founders and get real-time feedback about issues facing your company. Plus, you’ll walk away with actionable strategies and advice. We’re talking tips that you can use now — when you need them most.

TC Early Stage, which takes place on April 20, 2023, in Boston, Massachusetts, provides access to essential information, resources and community connection to help you realize your entrepreneurial potential. Buy your $149 pass now, and shift your startup dream into high gear.

Is your company interested in sponsoring or exhibiting at TC Early Stage 2023? Contact our sponsorship sales team byfilling out this form.

See you in Boston for TechCrunch’s Annual Founder Summit by Lauren Simonds originally published on TechCrunch