Summer recommendations
David Peterson

Exciting news on the homefront — in early July, my wife and I welcomed a baby girl to the world! Her name is Leena (check out the back of her head below). She’s amazing in every little detail and the last month has been a tiring, thrilling blur. Huge thank you to my partner Gil and the entire Angular team for shouldering the burden these past few weeks (both on this newsletter and everything else we do here at Angular) so that I could have some uninterrupted, quality time with the newest member of our little family.

One benefit of walking endless laps to lull little Leena to sleep is that I’ve finally had time to work through my backlog of podcasts, books and longreads. So, while there is tons going on in ventureland deserving of comment, I thought I’d take my first week back to share a few of my summer favorites.

Favorite Podcast: Plain English with Derek Thompson

Longtime Atlantic writer Derek Thompson launched Plain English in November, and it’s the only new podcast I’ve listened to in years that has become part of my regular rotation. Thompson is good at covering the topic du jour (like peak inflation or the Musk/Twitter debacle), but he’s at his best when he’s on the search for non-obvious answers to interesting questions.

A recent episode that does this well is: “Is Old Music Killing New Music?” I love this sort of question. It has an “obvious” answer (old music is better!), but the real answer is much more interesting. I won’t give it away, but listen for an entrepreneurial lesson in how music’s new business model, thrust upon the industry by Spotify, has altered incentives, resulting in surprising second-order effects.

Favorite Longread: Works in Progress

This is a bit of a cheat, as Works in Progress is actually a web magazine (launched just last year and recently acquired by Stripe Press). But the content is consistently top notch, which means the percentage of each issue I actually read in full is nearing 100%. Start anywhere you’d like, but as an early stage investor, I’d be remiss not to recommend this interesting piece on the role of “buyers of first resort” (i.e. entities, whether public or private, that help establish the market for a new product) in an innovation economy.

Favorite Book: Exhalation by Ted Chiang

Exhalation is a collection of science fiction short stories by Ted Chiang. While this was a re-read for me, I think it was better the second time around. As an entrepreneur and investor, I’ve always been drawn to science fiction, because the best sci-fi authors do what the best entrepreneurs and investors do as well…they imagine worlds where something big is different, and guess how it’s all going to play out. Exhalation is a classic of this form.

That’s it for now. If you’re a fan of Plain English or sci-fi or anything else, drop me a line. I’d love your recommendations. And next week I’ll be back with some more acerbic takes on what’s going on in venture!

David

EVENTS

Sep 7 / The Evolution of Collibra’s Product Positioning & How They Created a Category
Stan Christiaens, Co-Founder & Chief Data Citizen, Collibra

Sep 21 / A Talk with Jason Green
Jason Green, Founder & General Partner, Emergence Capital

FROM THE BLOG

The Right Stuff
How to build a commercial team.

Mapping the New World of Business Collaboration
Why we invested in Reco.

What do a 2003 BMW and Microsoft Excel have in Common?
Leaving users feeling empowered and energized, rather than managed and disconnected.

Fewer, but Better Than Ever
The Israeli tech eco-system ponders a slowdown in startup creation.

EUROPE & ISRAEL FUNDING NEWS

Israel/Secure Browser. Talon Cyber Security raised $100M for its specialised enterprise browser.
German/Industrial Services. LiveEO closed $19.3M for it satellite-based oil pipeline and power grid monitoring services.
Israel/Biology. Eleven Therapeutics raised $22M for its RNA development platform that uses combinatorial chemistry and AI to transform RNAi drug development into a programmable process.
UK/HR. Ben closed $16M for its employee benefits platform that allows employees to choose their benefits and proffers them flexibility.
Israel/Security. Flow Security raised $10M to help companies secure data no matter where it flows.
UK/Automation. RE:infer has been acquired for undisclosed terms by UIpath for its natural language processing tools that help enterprises automate workflows.

WORTH READING

ENTERPRISE/TECH NEWS

Thank god it’s Monday.com. Against the backdrop of the tech slowdown, Monday.com posted blowout results, with revenues surging 75% YoY. ““We continue to deliver strong top line growth with revenue growing 75% in the second quarter,” said monday.com founder and co-CEO, Roy Mann. “Our move upmarket continues at an astonishing rate, growing our enterprise customer base to more than 1,000 customers this quarter, while maintaining our best in industry net dollar retention rates.” Monday has added that “due to the concerns regarding macroeconomic conditions and the market situation, we gave a cautious but achievable forecast. We saw a certain drop in demand in Europe at the end of the second quarter, and although one month does not provide enough data to indicate a broader trend, we are closely monitoring the demand environment throughout our areas of activity and we will act transparently with investors regarding our expectations.””

TripActions nears IPO. According to a report in Bloomberg, Israeli travel spend management company TripActions is preparing for an IPO. If this takes place, it would buck the trend. “Companies seeking IPOs have largely been frustrated in recent months, though some are preparing for when the window reopens. Only five listings in the US raising more than $500 million have priced this year, compared to 100 in the same period in 2021, data compiled by Bloomberg show.”

Optimus prime. Amazon is buying Roomba for $1.7B. “While iRobot has largely stuck to vacuums and mops so far, Amazon could see a possible wider reach for the company. One growing area of interest in the robotics field is in the lawnmower space. Husqvarna, Positec Tool Corp. and Toro have all rolled out products or will do so next year. The market is still nascent in the U.S., but has grown fast in parts of Europe.
“[Buyers were] initially early adopters, which is, I think, where you are in the States today, but now in Sweden, this is mainstream,” Patrik Jagenstedt, director of advanced development at Husqvarna’s Robotics & AI Lab told Fortune. “If you buy a new mower, you would buy a robotic mower…It’s so much more than not having to do the lawnmower, it’s the relief, the peace of mind that you don’t have to think about it.””

Blockchain vulnerabilities. Chainalysis released an analysis of cross-chain bridge vulnerabilities, which it says are responsible for over $2B in stolen value.

Post-quantum vulnerabilities. Two Belgian researchers published code that was able to break through one of four encryption algorithms that had previously been determined by America’s National Institute of Standards and Technology (NIST) to be resistant to hacking even by quantum computers. The kicker is that they did it using old-school traditional computers.

HOW TO STARTUP

How to design a referral program. Andrew Chen, the A16Z partner who recently announced a move to LA, published a detailed guide to setting up a referral program. “Referral programs work very well for certain kinds of products, particularly ones that are already spreading via word of mouth. In Dropbox’s case, there is a natural use case between friends and colleagues — shared folders — which naturally complement the referral channel. Referrals drive that forward, providing an economic incentive to tell friends. As another example, at Uber where I ran the referral programs for drivers and riders at various points (and spent >$300M/year on them), the program for driver referrals was naturally successful. Drivers were often from certain sub-communities, whether newly arrived immigrants or limo drivers, and people were naturally already talking about the earning opportunity. Referrals, sometimes as high as $500/signup, accelerated that in a big way.

And yet referral programs have their limits. Of course they don’t really work that well for products that have low LTV — that’s why we don’t see free social photo sharing apps reward their users for referrals. There’s no LTV to arbitrage against, and the referral amounts create a form of customer acquisition cost. They also tend to decline in importance over time. Years after the rollout of Dropbox’s referral program, I had the opportunity to join Dropbox as an advisor, where I got a first-hand look at the data. By then, the natural virality of their core product — just the process of people sharing their folders and files with others — had come to completely dominate user acquisition. This had become the primary method of spread, and the referral program became much less important. I’ll discuss why, later on, but this seems to be the natural pattern of things — referral programs are very helpful at the beginning of a market. Eventually it becomes less important, and that’s OK.”

HOW TO VENTURE

Massive losses continue to be reported in tech land. SoftBank reported a record $23B loss on its tech portfolio. From its peak, Softbank’s startup investment arm has recorded $50B in losses. “The stock downturn of recent months has inflicted particular pain on unprofitable tech companies with fast revenue growth, which had a magnetic pull on a huge swath of investors in a decade of low interest rates. Tiger Global Management has told investors that its flagship hedge fund was down 50% in the first half of the year, while Cathie Wood’s Ark Innovation ETF was down more than 57% over the same period.” Softbank CEO Masayoshi Son spoke emotionally at a news conference, saying “When we were turning out big profits, I became somewhat delirious, and looking back at myself now, I am quite embarrassed and remorseful.”

The LP slowdown is here. The Information reports that LPs are starting to slow down their commitments to VC funds, new and old. “Less appetite from pensions, endowments and wealthy individuals for risky bets in private companies could make it harder for startups to get capital once VC firms exhaust the record amount of money they raised in the last two years. LPs say the economic downturn will accelerate a much-needed correction in VC. For years, many of these investors privately worried that VC firms were raising too much money to invest it all wisely, but they felt pressured to pony up more to maintain their stakes in top-performing funds. Now they are looking forward to having increased power in negotiations with VC firms, and what they see as a healthier pace of investing.”

PORTFOLIO NEWS

Viably recently announced that it has raised $21M in a Seed round. Viably, which has developed a financial management and banking app for small businesses, is led by Founder and CEO, Doron Gordon, who also led Samanage, which was acquired by SolarWinds in 2019 for $350M.

Reco’s CEO, Ofer Klein, spoke on the BetterTech podcast about the security of collaboration tools.

Snyk unveiled Snyk Cloud, the industry’s first developer-centric cloud security solution.