Thou doth protest too much
Where is tech headed
Sabermetrics was one of the inspirations behind CB Insights. For those unfamiliar, sabermetrics is the application of statistical analysis to baseball data to evaluate and compare players.
We are doing the same for tech, startups, etc.
Moneyball, the book by Michael Lewis and eventually the movie featuring Brad Pitt, helped to bring sabermetrics to the masses. Billy Beane is the main subject of the famous book which documents how his Oakland A’s changed the way baseball management runs its industry.
And so I'm really excited to announce that Billy Beane, EVP of Baseball Operations and part owner of the Oakland A's, is joining us at The Innovation Summit in Santa Barbara, CA from Jan 10-12th.
You should be there.
My inbox done blown up
A couple of weeks ago, we crossed 200k subscribers. In the last 2 weeks, we've grown to 204,600+. Not sure the reason for the pop, but I like it.
Except for the OUTRAGE.
(cartoon by Matt Bors)
The one thing I've noticed as the newsletter has gotten bigger is that there is a very small but vocal group of folks (usually American) who love getting outraged, upset and/or offended.
For example, in Monday's newsletter, we talked about the hubris of Y Combinator. I also made a reference to loving the CB Insights platform so much, I wanted to kiss it. I got 112 emails from folks who were upset, threatened to unsubscribe, thought our comments were inappropriate.
In yesterday's newsletter, we showed a graph and asserted that vegetarian restaurants are the driver of Silicon Valley's success, and I got 13 emails from folks saying that we're dumb and confusing correlation with causation. C'mon people.
And then we got lots of emails about the results of our most admired CEO/founder bracket and how we're perpetuating institutional bias. Yes, I do agree that Jean Liu of Didi Chuxing got robbed.
In closing, I hope my outrage about reader outrage doesn't outrage you.
By itself, a startup’s bio doesn’t usually make for great reading. But in aggregate, company descriptions reveal important trends shaping technology innovation. We mined startup company descriptions from the CB Insights platform to identify which technologies are trending up and which are falling out of favor.
Lots in the analysis but one thing the data revealed - "social" and "apps" are on the decline while "VR" and "AI" are hot.
Farhad Manjoo had a great writeup about one of my favorite companies, MailChimp, last week (see The Blurb below). The company is bootstrapped and doing $400M in revenue. Whoa.
I love the revenue-funded mantra and MailChimp is the embodiment of it.
AppLovin', which was recently acquired for over a billion, only raised $4 million of outside capital. Minecraft, acquired by Microsoft for $2.5B, was bootstrapped. Qualtrics and now public Atlassian both were bootstrapped for a long time and raised very late.
What's interesting given these successes is that while the cost of launching a startup has come down (thanks AWS, Azure, etc.), the funding methods for them haven't evolved that much. Bryce Roberts with his Indie.VC effort is doing interesting things, but overall, we've not seen a lot of innovation in how private tech companies get funded.
Instead, investors continue to "foie-gras" startups with investor cash to help them "own the market." As a result, we currently have 177 unicorns (full list here) with significant uncertainty about their ability to grow into their outsize private market valuations. This graphic we did on the increasingly crowded unicorn club shows the foie-gras'ing in full effect.
Anyone else working on interesting new structures for financing tech companies?
NYC vs. LA vs. Boston
Silicon Valley may lead tech funding and exits by a wide margin, but the race for second place is actually pretty competitive. Nearly half of all the exits in the three cities over the last five years were in the New York area. However, Boston bests New York with a higher share of $100M+ exits, while LA saw a greater proportion of the biggest winners ($1B+) among the three metro areas.
The Industry Standard
Millennials don't care about money
We look at Industrial IoT vs. broad IoT and find that industrial is accounting for an increasing share of total IoT funding, in terms of both deals and dollars. Large deals have gone to IoT cybersecurity and enterprise IoT platforms.
CB Insights data is the most trusted by those in the industry and the media. A few recent hits.
Fox Business. Steve Tobak (@SteveTobak) writes about the hedge fund suing Theranos, with reference to CB Insights data on VC funding to startups.
San Francisco Business Times. Emily Fancher (@SFBIZefancher) reports on Square's failed attempts to sell its food delivery service Caviar and notes CB Insights data on top VC funding rounds to food delivery in 2016.
Investment News. Lowell Putnam highlights banks' increasing investment in fintech startups and refers to CB Insights research on fintech funding.
2PM Links. Web Smith’s (@web) daily e-commerce newsletter features our retail IoT market map in issue no. 143.
Have a great rest of the week.
I love you.
P.S. Billy Beane of Moneyball fame is going to be at The Innovation Summit. Boom.