Startups Weekly - Dear Startups: Don’t repaint, reinvent

I feel hungover. No, not in the traditional sense, but in the dizzying way you feel when half of your world is celebrating double vaccinations and no masks, and the other half, across the world, is mourning death and not a shred of light at the end of the tunnel. The privilege of watching this unfold is like playing the worst game of musical chairs, except some seats are clouds and others are simply rows of knives.

For tech, the questions that we will be debating are bigger than if “that conference will be virtual or in-person.” Instead, we’re now trying to figure out what the future of work and education are for the second time in a year. The United States is reopening and that means a lot of the culture of how we work will be rewritten. Shifting from an individual mindset to a collective, more distributed world is going to be harder than taking a mask off and popping an aspirin.

Startup founders new and old are about to start making decisions on how to lead in this changed world. They will have to consider things far more consequential than if free lunches come back. More serious questions abound: How do you give flexibility along with accountability? How do you repair the universal toll on mental health? How do you offer opportunity equally between remote employees and in-person employees? What happens when half of your workforce can go to happy hours while the other half is in a city under lockdown?

Naj Austin, the founder and CEO of Somewhere Good and Ethel’s Club, spoke to me about intention this week. She explained how repainting something is easier than reinventing the entire process, but the latter has the opportunity to disrupt far more than the former. It made me think about the return to offices, and how the frictionless option might not be the best option long term.

I’ve learned that the best founders embody this ethos and pick the harder bucket. It stands out when you are intentional about recruitment, the return and potential relief that comes with optionality.

In the rest of this newsletter, we’ll get into stock market volatility, Expensify’s origin story, and what one founder learned after getting rejected by YC 13 times. As always, you can support me by subscribing to Extra Crunch and following me on Twitter. 

What goes up, must go down

The edtech public market is on that kind of fire this week, with many stocks slashing share prices nearly in half compared to 52-week highs.

Here’s what to know: Alex and I wrote about how the carnage in the public markets is expected in edtech, a sector filled with pandemic bumps. We predicted that bullish VCs will remain bullish, and the correction in the market is upon us.

In September 2020, Larry Illg, CEO of Prosus Ventures, told us that edtech was filled with “tourists” and “faddish money,” making it a hard time to assess companies and find accountable bets.

“It’s quite dangerous,” he said. “We’ve seen over the years in geographic context at different points in time that people are attracted to India or are attracted to Brazil and they start pumping money in and then two or three years later, they exit with their tail between their legs.”

Plus, two SPACs, two IPO updates and SoftBank:

• Digging into digital mortgage lender Better.com’s huge SPAC
• Bird’s SPAC filing shows scooter-nomics just don’t fly
• As Procore looks to nearly double its private valuation, the IPO market shows signs of life
• 5 investors discuss the future of RPA after UiPath’s IPO
• Plus, on Equity, Danny and I discussed SoftBank and its impressive earnings.

StartmeupHK Festival returns virtually from May 24-28

Sponsored by Invest Hong Kong

Organized by InvestHK, this year’s festival is fully packed with 14 events throughout the week that will unlock business opportunities in Hong Kong and the Greater Bay Area for global startups. Sign up to access startups, investors and partners.

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The origin of expense management

Expensify has managed to become a leader in the expense management market, with 10 million users, only 130 employees, and of course, an upcoming IPO. For these reasons, and many more, it’s the latest company in our EC-1 series. The first installment, penned by Anna Heim, went live this week.

Here’s what to know: While managing finances feels like a pretty clearcut business, Expensify’s origin was far more chaotic. Think P2P hacker culture, consensus-driven decision-making, and, as always, an Uber angle. The origin story explores how a motley crew created a unique expense management system.

The deep dives continue:

• Behind the scenes on my Duolingo EC-1 
• How one founder realized the potential of sustainable energy stored deep below our feet
• How one founder partnered with NASA to make tires puncture-proof and more sustainable

Around TC

We are revving up to TC Sessions: Mobility, this year’s virtual dive into the world of transportation. Book your general admission pass for $125 today, and I promise you won’t regret it.

Among the growing list of speakers at this year’s event are GM’s VP of Global Innovation Pam Fletcher, Scale AI CEO Alexandr Wang, Joby Aviation founder and CEO JoeBen Bevirt, investor and LinkedIn founder Reid Hoffman (whose special purpose acquisition company just merged with Joby), investors Clara Brenner of Urban Innovation Fund, Quin Garcia of Autotech Ventures and Rachel Holt of Construct Capital, Starship Technologies co-founder and CEO/CTO Ahti Heinla, Zoox co-founder and CTO Jesse Levinson, community organizer, transportation consultant and lawyer Tamika L. Butler, Remix co-founder and CEO Tiffany Chu and Revel co-founder and CEO Frank Reig.

Across the week

Seen on TechCrunch

• Why SPACs aren’t targeting African startups
• Three students sue coding bootcamp Lambda School alleging false advertising and financial shenanigans
• Echelon exposed riders’ account data, thanks to a leaky API

Seen on Extra Crunch

• 4 lessons I learned about getting into Y Combinator (after 13 applications)
• Don’t hate on low-code and no-code
• Is there a creed in venture capital?
• Even startups on tight budgets can maximize their marketing impact

• Network Operations Engineer at i3D.net (Pasadena, CA, USA)
• Senior Product Designer at Only One (Anywhere)
• Front End Developer at Squigl (Minneapolis, MN, USA)
• Software Developer at HindSite Software (St Paul, MN, USA)
• Software Developer / DevOps Engineer - Aliso Viejo, CA at AWM Smart Shelf (Aliso Viejo, CA, USA)

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