Startups do not have a great survival rate.
Nine out of ten will fail, and those that persist will likely need at least three to four years to become profitable.
Entrepreneurs who are fortunate enough to make it across the finish line of an exit often still find themselves running uphill: reorganizations and layoffs create profound cultural shifts that few are prepared for.
Last month, enterprise reporter Ron Miller spoke to executives who’ve managed acquisitions to learn about how they oversee the process.
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For balance, he also interviewed three executives who worked at the companies that were acquired:
- Will Conway, CEO, Pathwire
- Matthew Gonnering, former CEO, Widen
- Nick Gaehde, president, Lexia Learning
The trio generally agreed that transparency is key for a smooth transition. Fundamental changes are inevitable, but a collaborative process can smooth out some of the bumps and potholes on the journey.
“Though they aren’t about to talk crap about their new overlords, you do get the sense that they landed in a pretty decent spot, all things considered,” writes Ron.
Thanks very much for reading TC+ this week!
Walter Thompson
Senior Editor, TC+
@yourprotagonist
Wag’s recovery is a bet on you going back to work
Image Credits: Nigel Sussman (opens in a new window)
Approximately 23 million American households acquired a pet since the pandemic began. For non-essential workers, spending time with a new canine companion quickly became one of the top benefits of working remotely.
But as companies resume working out of offices, dog-walking app Wag hopes that its services will be in demand once again, Alex Wilhelm reported in The Exchange.
The company, which recently said it would go public via a SPAC merger, is seeing demand recover after sales fell off a cliff when the pandemic struck.
“The deal may serve as a reminder that bad times don’t last forever, and if your business tanks due to market conditions, those old conditions may come back. In time.”
4 signs to look for when evaluating ESG investments
Image Credits: Jonathan Kitchen (opens in a new window) / Getty Images
Consumers who are concerned about sustainability appreciate seeing their contributions quantified: the company that delivers my weekly grocery box keeps a running total of how many pounds of food, water and CO2 my purchases have conserved.
Similarly, investors care about the potential impact of the companies they’re backing. But how do you tell if a startup will live up to its environmental, social and corporate governance (ESG) goals?
In a post for TC+. Bruce Dahlgren, CEO of MetricStream, identifies four signals investors can check for to see if an ESG investment is viable.
“Investors need to start thinking about ESG risk in the same way they consider investment risk, as a first step,” he says.
How to recruit when your software startup is in stealth mode
Image Credits: Maartje van Caspel (opens in a new window) / Getty Images
Hiring for an early-stage startup is challenging, but recruiting for a company that’s still in stealth brings a unique set of problems.
How do you get a developer excited about an upcoming interview if you can’t share any details beforehand? Black box testing is one thing, but few engineers are looking forward to a black box interview.
In a TC+ article, Michael Fey, co-founder and CEO of Island, described the process he and his co-founder used “to turn interviewees into believers without actually divulging the details of what we were working on.”
From movies to shipping, AWS is driving Amazon’s revenue diversification
Image Credits: Michael Nagle/Bloomberg via Getty Images
Most businesses tend to struggle to diversify in the face of competition, regulation, and changing market forces.
But for Amazon, revenue from its fast-growing AWS business is allowing the company to experiment, invest and venture into new areas that will bolster its core e-commerce offering, report Ron Miller and Alex Wilhelm.
“Yes, Amazon has done well by offering its internal compute services externally, allowing other companies to leverage the work it has done on building low-cost, high-quality cloud services.
But it is also able to use AWS to cover operating losses posted by its global e-commerce businesses.”
3 views: How should creators weigh monetization strategies in the platform era?
Image Credits: VladSt
A friend of mine is a well-known YouTube content creator.
They spent years building a following with tutorials, topical commentary and other material that has created real value for viewers — and advertisers.
But they don’t rely on YouTube: they also write books, make paid appearances, and offer group and private instruction.
Diversification is a core tenet for many creators, but given how frequently major platforms rewrite their terms of service agreements, how should they monetize their work?
- Amanda Silberling: I’m tired of everything being an ad
- Alex Wilhelm: Not your platform, not your money
- Natasha Mascarenhas: De-risk where possible
Why 2022 insurtech investment could surprise you
Image Credits: Nigel Sussman (opens in a new window)
No one seems to want public insurtech stocks, but VCs were as hungry as ever for insurtech startups in 2021: funding reached 566 deals and $15.4 billion in capital.
But insurtech startups’ fortunes in 2022 might be different depending on where they stand: purely insurance players stand to lose value, while those innovating could benefit, report Alex Wilhelm and Anna Heim.
“Insurtech startups that are more tech than insurance might do just fine, while insurtech startups that are more insurance than tech are going to see their multiples cut until they fit with a whole set of comps they wanted to avoid.”
Should tech bootcamps keep using job placement metrics in their advertising?
Image Credits: Jeffrey Coolidge (opens in a new window) / Getty Images
It’s easy to get lured in when a course promises a job placement, but what happens if students don’t land a job once the course is over?
Natasha Mascarenhas delves deep into the ethics and issues around placement rates promised by tech bootcamps, and whether transparency is the key to delivering a fair deal to customers who have high expectations.
“When you promise jobs, that gives you the liberty to increase your cost as much as you want because you promise the job,” said Nucamp CEO Ludovic Fourrage, who plans to cease using the stats in advertising materials.
