Wow, what a Q2 (and, well, a bit of Q3)!
Hi, it’s Danny Crichton again. My weekly but really quarterly but really like every other quarter digest of all of my writing is coming your way again.
My biggest scoop ever at TechCrunch happened last week when I got a pre-release leak of the entirety of Palantir’s S-1 filings with the SEC (Palantir formally published them a few days later). I wrote a spate of articles on Palantir’s finances, its direct listing strategy, its governance, and its customers:
- Palantir targeting 3 class voting structure according to leaked S-1, giving founders 49.999999% control in perpetuity
- Leaked Palantir S-1 shows company has 125 customers after 17 years
- Leaked S-1 screenshots show Palantir losing $579M in 2019
- In unique approach, Palantir will have a lockup period after its direct listing
One of the frustrations I have with the business press is how much ink gets spilled on certain companies with barely any fundamentals, while extraordinarily strong and fast-growing companies seem to languish in journalistic oblivion. Palantir may be a mysterious company, an image that it has purposely cultivated along with the press itself. But it is a weak business, losing hundreds of millions of dollars, and that’s after 17 years of existence.
Ultimately, it’s a software-augmented services business. It does important work for certain government agencies and clients, and it has a commercial line that seems to be okay if not great. I can understand the political and ethics controversies and why reporters delve into them regularly, but for the business and financial press, there is frankly little to see here that’s interesting.
Palantir seems to have done a lot to clean up its financials and growth in the last year as it prepared to file with the SEC. Maybe it can continue some of that expense cutting and customer onboarding over time to improve its results. Until then, I think we can mostly skip talking about the company, at least from the business perspective.
The TechCrunch List
One of the largest projects I conducted the past few months was compiling and publishing The TechCrunch List, which used data and feedback from founders to identify several hundred VCs for quality by vertical and depth of experience.
We got literally thousands of founders to submit data to us, and since its launch, tens of thousands of people have used the product to find potential fundraising targets for their startups. As with most data projects, the hundreds of hours of data munging and analysis eventually led to a nice, clean Excel spreadsheet, but given the feedback we’ve gotten so far, a well-informed spreadsheet can be immensely valuable. Two related articles:
Over the last few months, China has been pretty heavily in the news, and I have been covering it from the tech perspective. China put the final touches on its GPS competitor Beidou, has fought off the Trump administration’s attacks on Huawei, and is now dealing with this whole TikTok sale process. Meanwhile, Washington has been empowering Team Telecom to have more say over telecom infrastructure while simultaneously investing in 5G.
The most in-depth piece I wrote on the subject was in City Journal, where I discussed the currents state of Chinese venture capital dollars flowing through Silicon Valley. This piece, in line with research I did at TechCrunch on the slowing trickle of startup fundraising disclosures to the SEC, calls for more mandatory disclosures of fundraising data, particularly from companies raising capital from overseas investors in critical technology areas. Today, there is next to no information on where the money for a startup comes from, and employees, customers, and potential investors have no way to know who is sitting around the cap table. That has to change.
In other news, two friends of mine and I are writing a report for the Foreign Policy Research Institute on the semiconductor industry and the future of America’s supply chain. We’re doing background interviews now on that project, which is slated for completion in — gasp — 2021. Drop me a line if you have thoughts.
The future of neighborhoods and remote work
COVID-19 has proven that many jobs can be done remotely, and that’s upending how we think about work and also how we think about the places where we live. Unsurprisingly, my most popular article with quite literally millions of reads the last few months was “Work From Home is dead, long live Work From Anywhere,” whose headline is basically the story.
The more interesting analysis I did was around the future of neighborhoods:
Leaving suburban neighborhoods and the commute to the suburban office park (a great history here by the way is Pastoral Capitalism: A History of Suburban Corporate Landscapes by Louise A. Mozingo) has meant that I can now walk — at pleasure — to dozens of restaurants, bookstores, coffee shops, working nooks and crannies, and public parks. I can take calls from a bench outside. I can walk and think about new article ideas and ways to analyze a new dataset. And of course, when I actually need to write words or write Python to process that data, I can do it at home or from a wonderful coffee shop with great internet and the aromas and pleasure that comes with living life.
Sadly, such great and vital neighborhoods are astonishingly hard to find in the United States, but work from home is here to stay and is going to change that fundamental calculus. Few of us can live in the dreary confines of a suburban enclave our entire workweek. And so I expect to see a revitalization of the classic “main street” clusters that once dotted towns across America as people appreciate the close proximity of amenities that they need throughout their day and remote work makes it possible to skip the commute to the central business district.
The dual PhD problem of today’s startups
Startups are getting harder to build. Before, you just needed a website or a mobile app to do something interesting. And then you had to become an expert on a vertical like sales performance or enterprise resource planning. Now, we are entering a new phase of startup where it isn’t enough to just be an expert in one domain of knowledge — you actually have to be an expert on two domains (or more!) simultaneously:
Perhaps there is no greater and more obvious example of these domain requirements than the response to COVID-19. Epidemiology and public health are quite possibly the two most difficult fields out there in terms of the number of specializations required simultaneously to do them well. You need to know medicine and human physiology to understand the etiology of diseases, have the social science background to understand how humans interact individually and in groups, understand the economic and public policy implications of different prophylactics to comprehend the trade-offs involved, and finally, master the statistical training to read, understand, and build correct data models.
All this, and all at the same time. Is it any wonder that so little consensus emerges when so few people have all the requisite skills in their head?
I talk about why teams are often a poor substitute for this expertise lodged in a single individual’s head, and what that all portends for the future of synthetic biology, blockchain, and more.
Meet the anti-antitrust startup club
There is huge movement underway in DC and other global capitals to rein back the big tech giants. But what if the answer to breaking them up wasn’t found in a policy doc at all, but is sitting in a pitch deck in San Francisco?
The “Anti-Antitrust Startup Club” looks at the startups that aren’t nibbling at the edges of companies like Google, Microsoft, or Amazon, but rather targeting the core of these companies’ revenues and trying to outcompete with new and differentiated products:
Big Tech companies are big precisely because they own some of the most profitable markets available. Search, email, browsers, video conferencing — these are just a few of the valuable territories companies like Google, Microsoft, Apple and others have accrued. […]
For years, founders, product builders and VCs shied away from these markets given the uphill spring any new entrant faces: It’s hard to break into a sector when your competitors literally have infinite resources. Nonetheless, the anti-antitrust club shows that more people are willing to throw caution to the wind and go after these core segments with gusto.
It’s a tough road, but that’s the beauty of the VC bet: it’s a huge return if the startup is successful.