Welcome to Startups Weekly, a nuanced take on this week\u2019s startup news and trends by Senior Reporter and Equity co-host <\/em>Natasha Mascarenhas.<\/em><\/a> To get this in your inbox, subscribe here.<\/em><\/p>\n \u201cThere\u2019s more dry powder powder than ever before.\u201d<\/p>\n \u201cThere\u2019s never been a better time to start a startup.\u201d<\/p>\n \u201cDiscipline is the new scale.\u201d (OK, OK, I made that last one up, but didn\u2019t you kind of believe it?).<\/p>\n The tech industry loves generalizations \u2014 and don\u2019t worry, I enjoy my fair share too \u2014 but as the downturn continues to play out, it\u2019s increasingly important to think about the structural changes that may be forming in the venture capital landscape. Venture firms, unlike unicorns, often don\u2019t have hundreds of employees to cut. Instead, venture firms cut costs in quieter ways.<\/p>\n At Disrupt last week, General Catalyst\u2019s Niko Bonatsos<\/a> said that venture firms have to go through natural selection cycles and that it will be \u201csurvival of the fittest.\u201d<\/p>\n \u201cIt\u2019s a very painful activity for anyone who has gone through that stuff,\u201d Bonatsos said on stage with Coatue\u2019s Caryn Marooney<\/a>. He talked about how the hundreds of new VC firms will either decide to merge with each other to \u201cbuild a more enduring franchise,\u201d saying some will leave the VC profession and others will lose senior partners to retirement and have tp figure out what the future of their firms will look like.<\/p>\n Tracking personnel activity in venture land offers a few examples. For example, Initialized Capital\u2019s co-founder Garry Tan is leaving the firm to join Y Combinator as president. Tan\u2019s exit is shaking up the firm he helped found. He held down the fort after the firm\u2019s other co-founder, Reddit\u2019s Alexis Ohanian, stepped away in 2020.<\/p>\n Another team that has had its fair share of internal changes over the pandemic is Backstage Capital. The firm cut the majority of staff four months ago, impacting nine of the 12-person team. The layoff comes nearly three months after Backstage Capital narrowed its investment strategy to only participate in follow-on rounds of existing portfolios. This workforce reduction further underscores that the venture capital firm is struggling to grow, both externally due to its lack of dry powder and internally.<\/p>\n Marooney, a GP at Coatue, says that firms \u201chave to earn the right\u201d to survive. \u201cThere was the path where you did some investments and made money. It\u2019s like, no, you\u2019ve got to earn the right and not everybody is going to earn that right \u2026 and I think that is healthy,\u201d the investor said.<\/p>\n I\u2019ll end with a term we\u2019ve been dancing around all through the intro, which is \u201cquiet quitting.\u201d Bloomberg Beta investor Roy E. Bahat posted a thread describing how seasoned venture capitalists may be quietly going into \u201ceasy mode,<\/a>\u201d aka, becoming a less active, minimum viable player of the team. Maybe their name helps the firm close new funds with LPs, and maybe their calendar doesn\u2019t need to be busy with a ton of introduction calls, just annual investor meetings.<\/p>\n If we combine quiet quitting with natural selection cycles and the difficulty of tracking just how active a venture capitalist is, we experience a confusing, fragmented landscape. No one is incentivized to say that they aren\u2019t doing business as usual, which creates a landscape of extremes.<\/p>\n Sure, there are natural career cycles, but I imagine it is getting harder to track who is doing what and how often in a remote world where a partner at a VC firm has been diluted to mean many, many things. Today, there are the investors doing the ghosting due to the sheer deal flow out there, and there are the investors who are becoming ghosts themselves. Ha.<\/p>\n Just something to keep in mind. In the rest of this newsletter, we\u2019ll talk about Clubhouse, the latest in tech layoffs and why $1 billion in capital can\u2019t save AV tech.<\/p>\n If you like this newsletter, do me a quick favor? Forward it to a friend, share it on Twitter, and follow my personal blog for more content.<\/p>\n One of my favorite interviews<\/a> from Disrupt last week was with Clubhouse CEO and co-founder Paul Davison. We jumped on the TC+ stage to talk about competition and, of course, what happens when the beginning of your company is defined by hype and celebrities.\u00a0<\/p>\n Here\u2019s why it\u2019s important: <\/strong>Davison addressed his competition, namely Twitter Spaces, and how Clubhouse views its differentiation long term. As you\u2019ll read in the piece, he\u2019s bullish on a more private version of social audio \u2014 a space he thinks will only be won by an app solely committed to the medium instead of committed to a suite of different services.<\/p>\n Over 780 companies cut a portion of their staff this year according to data tracker layoffs.fyi. The workforce reductions have impacted at least 92,558 known people. The real figure is likely higher given reporting delays.<\/p>\n Here\u2019s why it\u2019s important:<\/strong> The same data source suggests that the tide is somewhat shifting on the cadence of tech layoffs. Nearly 70% of people who have been laid off this year lost their jobs during May, June, July and August.<\/p>\n Since the summertime of sadness, staff cuts have decreased. September had half the number of layoff events than August, and in October, new layoff events slowed while people impacted slightly inched upward from August. Read more about how the tide is shifting in my latest for .<\/p>\n Transportation editor and one of my favorites Kirsten Korosec broke major news this week: Argo AI, backed by Ford and Volkswagen, is shutting down. The autonomous vehicle startup raised $1 billion after launching in 2017.<\/p>\n Here\u2019s why it\u2019s important via Korosec: <\/strong>Commercializing AV tech has always been a capitally intensive game, meaning the barrier to entry is more like a wall than a speed bump. The winds have shifted over the past two years toward driver assistance systems and monetizing passenger vehicles that exist today.<\/p>\n Seen on <\/em><\/p>\n Duolingo\u2019s owl will now shout fractions at you<\/p>\n Meta is in trouble<\/p>\n Twitter\u2019s Elon problem could soon become Apple\u2019s Elon problem, too<\/p>\n Thoma Bravo, Sunstone Partners to acquire UserTesting for $1.3B and combine it with UserZoom<\/p>\n Seen on +<\/em><\/p>\n The UserTesting sale to private equity is bad news for unicorns<\/p>\n How to raise funds when you aren\u2019t in the Bay Area<\/p>\n Dear Sophie: How can early-stage startups improve their chances of getting H-1Bs?<\/p>\n Big Tech falls short in the first salvos of the Q3 earnings cycle<\/p>\n The lack of VC funding to women is a Western societal shortfall<\/p>\n Same time, same web page, next week?<\/p>\n N<\/a><\/p>\n Image Credits:<\/strong> Bryce Durbin \/ <\/p>\n<\/div>\n<\/div>\nClubhouse and the bird app<\/h2>\n
The tide is shifting on tech\u2019s layoff wave. Kind of.<\/h2>\n
Argo AI says bye bye<\/h2>\n
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