Cendana Capital, which has been backing seed funds for a decade, has $278 million more to invest

When in 2010, former VC Michael Kim set out to raise a fund that he would invest in a spate of micro VC managers, the investors to which he turned didn’t get it. Why pay Kim and his firm, Cendana Capital,  a management fee on top of the management fees that the VC managers themselves charge?

Fast forward to today, and Kim has apparently proven to his backers that he’s worth the extra cost. Three years after raising $260 million across a handful of vehicles whose capital he plugged into up-and-coming venture firms, Kim is now revealing a fresh $278 million in capital commitments, including $218 million for its fourth flagship fund, and $60 million that Cendana will be managing expressly for the University of Texas endowment.

We talked with Kim last week about how he plans to invest the money, which differs slightly from how he has invested in the past.

Rather than stick solely with U.S.-based seed-stage managers who are raising vehicles of $100 million or less, he will split Cendana into three focus areas. One of these will remain seed-stage managers. A smaller area of focus — but one of growing importance, he said — is pre-seed managers who are managing $50 million or less and mostly funding ideas (and getting roughly 15% of each startup in exchange for the risk).

A third area of growing interest is in international managers. In fact, Kim says Cendana has already backed small venture firms in Australia (Blackbird Ventures), China (Cherubic Ventures, which is a cross-border investor that is also focused on the U.S.), Israel (Entree Capital), and India (Saama Capital), among other spots.

Altogether, Cendana is now managing around $1.2 billion. For its services, it charges its backers a 1% management fee and 10% of its profits atop the 2.5% management fee and 20% “carried interest” that his fund managers collect.

“To be extremely clear about it and transparent,” said Kim, “that’s a stacked fee that’s on top of what our [VC] fund managers charge. So Cendana LPs are paying 3.5% and 30%.” One “might think that seems pretty egregious,” he continued. “But a number of our LPs are either not staffed to go address this market or are too large to actually write smaller checks to these seed funds. And we provide a pretty interesting value proposition to them.”

That’s particularly true, Kim argues, when contrasting Cendana with other, bigger fund managers.

“A lot of these well-known fund of funds are asset gatherers,” he says. “They’re not charging carried interest. They’re in it for the management fee. They have shiny offices around the world, they have hundreds of people working at them, they’re raising billion-dollar-plus kind of funds, and they’re putting 30 to 50 names into each one, so in a way they become index funds. [But[ I don’t think venture is really an asset class. Unlike an ETF that’s focused on the S&P 500, venture capital is where a handful of fund managers capture most of the alpha. Our differentiation is that we’re taking we’re creating very concentrated portfolios.”

Specifically, Cendana typically holds positions in up to 12 funds, plus makes $1 million bets on another handful of more nascent managers that it will fund further if they prove out their theses.

Some of the managers it has backed has outgrown Cendana from an assets standpoint. It caps its investments in funds that are $100 million or less in size.

But over time, it has backed 22 managers over the years. Among them: 11.2 Capital, Accelerator Ventures, Angular Ventures, Bowery Capital, Collaborative Fund, Forerunner Ventures, Founder Collective, Freestyle Capital, IA Ventures, L2 Ventures, Lerer Hippeau, MHS Capital, Montage Ventures, Moxxie Ventures, Neo, NextView Ventures, Silicon Valley Data Capital, Spider Capital, Susa Ventures, Uncork VC (when it was still SoftTech VC), Wave Capital and XYZ Ventures.

As for its pre-seed fund managers, Cendana is now the anchor investors in 10 funds, including Better Tomorrow Ventures, Bolt VC, Engineering Capital, K9 Ventures, Mucker Capital, Notation Capital, PivotNorth Capital, Rhapsody Venture Partners, Root Ventures, and Wonder Ventures.

As for its returns, Kim says that Cendana’s very first fund, a $28.5 million vehicle, is “marked at north of 3x” and “that’s net of everything.”

He’s optimistic that the firm’s numbers will look even better over time. According to Kim, Cendana currently has 38 so-called unicorns in its broader portfolio. It separately hold stakes in 160 companies that are valued at more than $100 million.

Strap in — a virtual Tour de France kicks off this weekend on the online racing platform Zwift

The pandemic has wreaked havoc on all manner of professional sports this year, and cycling has not been immune. For example, the best-known race on the planet, the Tour de France, normally staged in July, has had to be pushed back to August 29 through September 20.

That doesn’t mean that the world — and professional cyclists — can’t enjoy world-class racing this summer. In fact, beginning this coming weekend, 23 top men’s teams and 17 women’s teams will participate in a virtual version of the event that’s being hosted by six-year-old Zwift, after it was chosen by the official race organizer of the real tour, Amaury Sport Organization (ASO), as its partner on the event.

It’s a coup for the Long Beach, Calif., company whose multiplayer video game technology is used by both amateur and pro cyclists and that, according to Outside magazine, is now the biggest player in the growing online racing world.

Investors have noticed, funding the company to the tune of $170 million so far, says cofounder and CEO Eric Min.

This Tour has the potential to drive many more users its way, too.

For one thing, the virtual version of the event, which will feature six stages that last roughly hour over the next three weekends beginning this Saturday — it gets underway with the first women’s stage, followed immediately by the men — will be broadcast in more than 130 countries. (In the U.S., it will be broadcast on NBC Sports.) It’s hard to imagine another way for a company like Zwift to get so much exposure as quickly.

The race is also open to any cyclists on its platform who want to race on the same roads as the professionals, meaning anyone who wants to “compete” in this virtual tour needs to sign up for an account, though it’s worth noting a few things.

First, mere mortals won’t be racing at the same time as the cyclists in the Tour but during mass participation events during the week that will ostensibly provide them the chance to experience exactly what the pros went through and to compare their power, heart rate, cadence and other data to their pro rider heroes.

Also, Zwift is a subscription service. Users can check out the platform for a free, seven-day trial, but after that, Zwift charges $15 per month. Riders also need a smart trainer, which costs around $300. Zwift doesn’t make its own trainers — yet — but its software works with the hardware of a dozen or so companies.

Unsurprisingly, Min sounded both excited and terrified when we caught up with him last week to talk about the race, whose first two stages will be held in Zwift’s existing game world, Watopia, with the other stages orchestrated in virtual versions of real courses from the race.

Though Zwift has staged virtual races before —  including the Giro d’Italia, which is basically the Tour de France for Italy, and the Vuelta a Espana, an annual multi-stage race in Spain — it “doesn’t get any bigger than this,” said Min, who told us the idea was hatched six weeks ago with ASO and that Zwift has been working furiously to prepare for the race ever since.

It could prove a turning point for the outfit. It already has nearly two million accounts, and while subscribers ebb and flow, depending on the time of year, the virtual Tour is an opportunity for some of those riders to “reengage,” Min says, adding that Zwift has been growing 50 percent year over year, and has unsurprisingly seen pick-up accelerate throughout the pandemic.

Zwift doesn’t just cater to competitive athletes, Min stresses, saying that more than half the company’s customers are overweight and that, unlike Peleton, its customers are drawn less to particular instructors and more to the idea of being part of a club where they can train, take part in events, and compete with one another another, either in a public way or by via private rides wherein users share maps with friends, for example.

Either way, both amateur rider and professional racers will undoubtedly have high expectations of the Tour itself, even while it comes with more inherent challenges, including less time to break away from fellow riders than in the real-world tour, where each stage can take five or six hours.

Min thinks Zwift is ready. On our call, he discussed how Zwift convincingly creates drag, for example, walking through the software’s calculations, including a rider’s weight and body mass and the terrain they’re on and whether a rider is receiving draft from riders in front. Apply resistance to the machine  or easing it is what gives riders a sense of motion and inertia. “It’s not exactly like outdoor riding,” said Min, but combined with the software’s visual tools, meant to fool the mind, “it gets pretty darn close.

And that software, including the Tour maps, is now largely done, Min said. Now, Zwift just needs to ensure that its broadcast tools work as well as possible, among other last-minute priorities.

“We’ll do some dry runs [this] week. Then it’s showtime,” he said, before adding: “The stakes are pretty high. It has to be rock solid.”

With DOJ charges, former VC Mike Rothenberg could now be facing serious jail time

While many in Silicon Valley might prefer to forget about investor Mike Rothenberg roughly four years after his young venture firm began to implode, his story is still being written, and the latest chapter doesn’t bode well for the 36-year-old.

While Rothenberg earlier tangled with the Securities & Exchange Commission and lost, it was a civil matter, if one that could haunt him for the rest of his life.

Now, the U.S. Department of Justice has brought two criminal wire fraud charges against him, charges that he made two false statements to a bank, and money laundering charges, all of which could result in a very long time in prison depending on how things play out.

How long, exactly? The DOJ says the the two bank fraud charges and the two false statements to a bank charges “each carry a maximum of 30 years in prison, not more than five years supervised release, and a $1,000,000 fine,” while the money laundering charges “carry a penalty of imprisonment of not more than ten years, not more than three years of supervised release, and a fine of not more than twice the amount of the criminally derived property involved in the transaction at issue.”

The damage done in the brief life of his venture outfit — even while understood in broad strokes by industry watchers – is rather breathtaking. As laid out by the DOJ, Rothenberg raised and managed four funds between the inception of his firm, Rothenberg Ventures, in 2013 and 2016, and his criminal activities began almost immediately.

According to the DOJ’s charges, after closing that initial fund, he partially funded his own capital commitment to the second fund by making false statements about his wealth to his bank while refinancing his home mortgage and while obtaining a $300,000 personal loan, some of which he poured in the fund.

That’s bank fraud. Yet according to the DOJ, that was merely Rothenberg’s opening gambit.

The following year, in 2015, Rothenberg “took excess money in venture capital fees from one of the funds he was raising and managing” and because he then “faced a shortfall at the end of the year that he did not wish to report to his investors,” he found an illegal workaround. Specifically, alleges the DOJ, he “engaged in a scheme to defraud a bank by making false statements and misrepresentations to the bank in order to obtain a $4 million line of credit to pay back the fund from which he had taken excess fees.”

The idea, says the DOJ, was to “deceive his investors into believing the fund was well-managed,” which apparently worked at the time.

Of course, in reality, Rothenberg was digging an ever bigger hole for himself, suggests the DOJ. Meanwhile, he seemingly had appearances to keep up. It could be why in February 2016, according to the allegations laid out by the DOJ, he “engaged in a scheme to defraud an investor with respect to a $2 million investment that it believed it was making directly into a virtual reality content production company operating as River Studios that Rothenberg contended he wholly owned.”

The DOJ says that that instead, Rothenberg used most of it for purposes having nothing to do with that production company.

Rothenberg also — judging by the DOJ’s report — began to throw caution to the wind, perhaps because he thought he might get away with it or because he was increasingly desperate.

To wit, its complaint alleges that in July 2016, five months after defrauding that first investor, Rothenberg “engaged in a scheme to defraud as many as five separate investors when he induced them to wire a total of $1.35 million under the premise of investing in the untraded stock of a privately-held software company.” The complaint charges Rothenberg with “knowingly engaging in a scheme to defraud one investor by representing to that organization that its money would be used to purchase the software company’s shares. According to the complaint, on the same day the money was wired, Rothenberg took the money from the bank account designed to make the investment and sent it to RVMC’s main operating bank account, from which it was used for many purposes.”

No stock in the software company was ever purchased, according to the DOJ’s investigation. The agency says Rothenberg also “induced investments in his [funds] under the premise he would use the money for investments in ‘frontier edge’ technologies and take only certain limited fees for the management of the funds.” Instead, he “took more fees than to which he was entitled and invested far less of the money he raised than the operating agreements disclosed to the investors contemplated.”

Altogether, says the DOJ, it has collected evidence that Rothenberg fraudulently obtained at least $18.8 million.

We’ve reached out to Rothenberg — who has consistently denied any wrongdoing — for comment. It isn’t the only bad news he has faced lately, in any case.

In January of this year, Rothenberg was ordered to pay more than $31 million relating to an SEC complaint that alleged he misappropriated millions of dollars from his firm’s funds, then used the money to support personal business ventures.

In October 2018, Rothenberg also agreed to be barred from the securities industry with a right to reapply after five years.

All have been incredible developments in what was already a nearly unbelievable story of hubris and its consequences. Rothenberg had entered the venture scene with a splash, landing a feature story in TechCrunch, in early 2013, and touting his connections and his youth — he was 27 at the time — as advantages he enjoyed over older VCs who might not have a shot at the same companies.

Two years later, BusinessWeek dubbed him Silicon Valley’s “party animal,” as his firm became renowned in the Bay Area for “throwing bashes for entrepreneurs,” including expensive parties at San Francisco’s Oracle Park baseball field (known at the time as AT&T Park). Rothenberg, a self-described former math Olympian who attended Stanford before getting an MBA from Harvard Business School, said at the time, “The way we build a scalable network is by hosting a lot of events.”

He seemed to dismiss questions about how they were paid for, but he did tell BusinessWeek that he provided some of the earliest funding to Robinhood, the stock-trading app that was most recently valued at $7.6 billion and whose cofounders and CEOs attended Stanford at the same time as Rothenberg.

It was an auspicious start, in short. Alas, by the summer of 2016, the firm’s employees were scattering to the winds, and investigators were beginning to take notes.

Airvet, a telehealth veterinary platform, just clawed its way to a $14 million Series A round

Telemedicine is becoming more widely embraced by the day — and not just for humans. With a pet in roughly 65% of U.S. homes, there is now a dizzying number of companies enabling vets to meet with their furry patients remotely, including Petriage, Anipanion, TeleVet, Linkyvet, TeleTails, VetNOW, PawSquad, Vetoclock and Petpro Connect.

One of these — a two-year-old, 13-person, LA-based startup called Airvet — unsurprisingly thinks it is the best among the bunch, and it has persuaded investors of as much. Today, the company is announcing $14 million in Series A funding led by Canvas Ventures, with participation by e.ventures, Burst Capital, Starting Line, TrueSight Ventures, Hawke Ventures and Bracket Capital, as well as individual investors.

The pandemic played a role in Canvas’s decision, as did a smart model, suggests general partner Rebecca Lynn, who says she has looked at many telemedicine startups over the last 11 years and that she fell for Airvet after using the service for the animals that live on her own small farm. Plus, “COVID has been a massive accelerant to adoption.”

We asked Airvet’s founder and CEO, Brandon Werber, to make the company’s case to us separately.

TC: Why start the company?

BW: My dad is one of the most well-known vets in the U.S. — celebrity vet Dr. Jeff Werber. We saw the impact that telehealth was making in the human world and wanted to bring the same access and level of care we get for ourselves to our pets. Since I grew up in the pet space, I know it intimately and recognized a lot of inefficiencies in the delivery of care and how vets have been unable to meet the evolving expectations of pet owners.

TC: How are you connecting vets with their pet patients?

BW: We have two apps. One is for pet-owners to download to talk with a vet, and one is for vets to download to organize workflows and talk to their clients. We do not usurp any existing vet relationships. Instead, we partner with vet clinics and enable them to conduct telehealth visits and simultaneously enable pet-owners to have access to vets 24/7, even if they don’t live nearby a vet hospital.

A huge portion of pet owners in the U.S. don’t even have a primary vet. For serious health issues like surgery, animals still need to go in-person, and network vets can even refer them. We’ve also seen Airvet used as curbside check-in, where pet-owners can chat and follow their pet’s in-person vet appointment via live video from the parking lot.

TC: I see there is a minimum charge of $30 per visit. How do you make this model work financially for vets?

BW: Vets view us as an additional revenue-generating tool on top of their base income. We don’t hire vets. Our network of 2,600+ vets are largely the same vets who use Airvet within their own hospital. They can decide at will, like an Uber driver, to swipe online to be part of the on-demand network and take calls from pet parents anywhere in the country to generate additional income.

TC: What have you learned from startups that tried this model before?

BW: All the startups that came before us are not consumer-first and are just focused on building tools for vets, so their platforms cannot be used by every pet owner. Instead, they can only be used by pet owners whose own vets use that specific platform, which is a tiny fraction of vets and therefore a tiny fraction of pet parents.

TC: Do you have ancillary businesses? Beyond these vet visits, are you selling anything else?

BW: For now, just the vet visits, which range from a $30 minimum to higher, based on the vet and specialty. Over time, we have plans and partnerships lined up to expand into other pet health verticals.

A projected $99 billion will be spent on pets in the U.S. alone in 2020, and for us, telemedicine is only the beginning.

TC: Does Airvet involve specific practice management software?

BW: No. We provide the workflow layer enabling vets to schedule virtual appointments, which will soon be able to be fully integrated with their existing systems and workflows.

TC: When a customer calls a vet for $30, is there a time limit?

BW: There is no time limit and cases will usually stay open for three full days, so pet parents can continue to access the vet via chat for any follow-up questions or concerns.

TC: Are you competing at all on pricing?

BW: Our goal is to work alongside the hospitals, not to compete with them or replace them. You can’t take blood virtually or feel a tumor or do a dental. People always will need to go to the vet.

What we want to do is help [pet owners] understand when [to come in]. The average pet parent only goes to the vet 1.5 times a year. A huge segment of users on Airvet have already connected with a vet six times more than that and save time and stress in doing so.

It’s not about competing for us, it’s about being the provider of care in between office visits [and helping] pet parents who have used our service ultimately avoid an unnecessary emergency visit.

Tim O’Reilly makes a persuasive case for why venture capital is starting to do more harm than good

Tim O’Reilly has a financial incentive to pooh-pooh the traditional VC model, wherein investors gamble on nascent startups in hopes of seeing many times their money back. Bryce Roberts, who is O’Reilly’s longtime investing partner at the early-stage venture firm O’Reilly AlphaTech Ventures (OATV), now actively steers the partnership away from these riskier investments and into companies around the country that are already generating revenue and don’t necessarily want to be blitzscaled.

Yet in an interview with O’Reilly last week, he nonetheless argued persuasively for why venture capital, in its current iteration, has begun to make less sense for more founders who genuinely want to build sustainable businesses. The way he sees it, the venture industry is no longer as focused on finding small companies that might one day change the world but more on creating financial instruments for the wealthy — and that shift has real consequences.

Below, we’re pulling out parts of that conversation that may be of interest to readers who are either debating raising venture capital, debating raising more venture capital, and even those who have been turned away from VCs and perhaps dodged a bullet in the process. At a minimum, O’Reilly — who bootstrapped his own company, O’Reilly Media, 42 years ago and says it now produces “a couple hundred million dollars in revenue” yearly — provides a lot of food for thought.

TechCrunch: A lot of companies celebrated Juneteenth this year, which is a big deal. There’s been a lot of talk about making the venture industry more inclusive. How far — or not — do you think we’ve come in the venture industry on this front?

Tim O’Reilly: The thing that I would say about VC and about really everything in tech is, this concept of structural racism [is really the problem]. People think that all it matters is, ‘Well, my values are good, my heart’s in the right place, I donate to charities,’ and we don’t actually fix the systems that cause the problems.

With VCs, the networks from which they’re drawing entrepreneurs are not that different [than they have been historically]. But more importantly, the goals of the VC model are not that different. The industry sets a goal, and it has a certain kind of financial shape, which is inherently exclusionary.

How so?

The typical VC model is looking for this high-growth company with exit potential, because it’s looking for this big financial return from an IPO or acquisition, and that selects for a certain type of founder. My partner Bryce decided two funds ago [to] look for companies that are kind of disparaged as lifestyle companies that are trying to build sustainable businesses with cash flow and profits. They’re the kind of small businesses, and small business entrepreneurs, that have vanished from America, partly because of the VC myth, which is really about creating financial instruments for the wealthy.

He came up with a version of a SAFE note that allows the founders to buy out the VC at a predetermined amount if they ever become sufficiently profitable, but also gives them the optionality, because periodically, some of them do end up becoming a rocket ship. But the founder is not on the treadmill of: You have to get out.

When you start saying, ‘Okay, we’re going to look for sustainable businesses,’ you look all over the country, and Bryce ended up [with a portfolio] that’s made up of more than 50% women founders and 30% people of color, and it has been an incredible investment strategy.

That’s not to say that people who are African American or women can’t also lead companies that are part of the high-growth VC model that’s typical of Silicon Valley.

No, of course not. Of course they could lead. The talent pool is just much greater [when you look outside of Silicon Valley]. There’s a certain kind of bro culture in Silicon Valley and if you don’t fit in, sure [you could find a way], but there are a lot of impediments. That’s what we mean by structural racism.

To your point about insular networks, a prominent Black VC, Charles Hudson, has noted that a lot of [traditional VCs] just don’t have regular or professional associations with Black people, which hampers how they find companies. How has Bryce fostered some of these connections? Because it does feel like traditional VCs are right now trying to figure out how to better do this.

It’s breaking the geographic isolationism of Silicon Valley. It’s breaking the business model isolationism of Silicon Valley that says: Only things that fit this particular profile are worth investing in. Bryce didn’t go out there and say, ‘I want to go find people of color to invest in.’ What he said was, ‘I want to have a different kind of investment in different places in the United States.’ And when he did that, he naturally found entrepreneurs who reflect the diversity of America.

That’s what we have to really think about. It’s not: How do we get more Black and brown founders into this broken Silicon Valley model? It’s: How do we go figure out what the opportunities are helping them to grow businesses in their communities?

Are LPs interested in this kind of model? Does it have the kind of growth potential that they need to service their endowments?

It was a bit of a struggle when we did fund four, which was focused on [this newer model]. It was about a third of the size of fund three. But for fund five, the fundraising is [going] like gangbusters. Everybody wants in because the model has proven itself.

I don’t want to name names, but there are two companies [in the portfolio] that are kind of in similar businesses. One was in our third fund and was sort of a traditional Silicon Valley-style investment. And the other was an investment in Idaho, of all places. The first company, which involved a more traditional seed round, we’ve ended up putting in $2.5 million for a 25% stake. The one in Idaho we put in $500,000 for a 25% stake, and the one in Idaho is now twice the size of the Silicon Valley one and growing much faster.

So from what you’re seeing, the returns are actually going to be better than with a traditional Silicon Valley venture [approach].

As I said, I’ve been really disillusioned with Silicon Valley investing for a long time. It reminds me of Wall Street going up to 2008. The idea was, ‘As long as someone wants to buy this [collateralized debt obligation], we’re good.’ Nobody is thinking about: Is this a good product?

So many things that VCs have created are really financial instruments like those CDOs. They aren’t really thinking about whether this is a company that could survive on revenue from its customers. Deals are designed entirely around an exit. As long as you can get some sucker to take them, [you’re good]. So many acquisitions fail, for example, but the VCs are happy because — guess what? — they got their exit.

But now, because funds are raised so quickly, VCs have to show much more traction, which is where things like blitzscaling come in.

Just the way you’re describing it. Can’t you hear what’s wrong with that? It’s for the benefit of the VCs, the VCs have to show, not the entrepreneurs have to show.

Aren’t the LPs addicted to that crack? Don’t they want to see that quick financial traction?

Yeah, but you know that VC returns have actually lagged public markets for four decades now. It’s a little bit like the lottery. The only sure winners are the VCs because the VCs who don’t return their fund get their management fees every year.

A huge amount of the VC capital doesn’t return. Everybody just sees the really big wins. And I know when they happen, it’s really wonderful. But I think [those rare wins] have gotten an outsize place, and they’ve displaced other kinds of investment. It’s part of the structural inequality in our society, where we’re building businesses that are optimized for their financial return rather than their return to society.

Even amid the pandemic, this newly funded travel startup is tackling the stodgy timeshare market

The world is rife with me-too startups, which makes it all the more refreshing when a founder comes along that manages to find a broken market that’s hiding in plain sight.

That’s what Mike Kennedy appears to be doing with Koala, a young outfit determined to update the stodgy world of property time-share management, wherein people acquire points or otherwise pay for a unit at a timeshare resort that they intend to regularly use or swap or rent out (or all three).

It’s a big and growing market. According to data published last year by EY, the U.S. timeshare industry grew nearly 7% between 2017 and 2018 to hit $10.2 billion in sales volume.

It’s a market that Kennedy became acquainted with first-hand as a sales executive at the Hilton Club in New York, which, at least in 2018, was among 1,580 timeshare resorts up and running, representing approximately 204,100 units, most of them with two bedrooms or more.

Despite this growth, timeshares don’t jump to travelers’ minds as readily as hotel rooms or Airbnb stays, and therein lies the opportunity.

Part of the problem, as Kennedy see it, is that timeshares are harder to rent out than they should be. If a timeshare owner wants to reserve a week outside of the week that he or she purchased, for example, that person has to go through an antiquated exchange system like RCI (owned by Wyndam) or Interval International (owned by Marriott). Kennedy, who spent 10 years with Hilton, says he saw a number of his customers grow frustrated over time with their inability to better control their units’ usage.

A look at tech salaries and how they could change as more employees go remote

Each year, the hiring platform Hired produces a look at tech salaries based on the data it says it gleans from hundreds of thousands of interview requests and job offers. This year, as in past years, it looked at salaries around the globe for software engineers, product managers, DevOps engineers, designers, and data scientists.

Of course, this year is a very funky year, one that, owing to the pandemic, looks to see an accelerated shift toward more remote work. So this year, Hired split its findings its two parts — pre COVID-19 and post. It published data about who was being paid what in 2019, but also how those numbers might change going forward, particularly if more companies adopt localized compensation as Facebook has said it will do with its own employees.

First, a look at the world before the coronavirus swept through and upended so much.

From San Francisco to London, everyone working in tech was seeing steady gains leading into 2020, according to Hired. San Francisco salaries jumped 7% last year, with the average tech worker pulling down $155,000 annually, followed closely by New York, where the average tech worker’s salary was $143,000 (up 8% from 2018); Seattle, where pay hit $142,000 (up 3%); and L.A. and Austin, where workers averaged $137,000. (In L.A, that represented an 8% bump from 2018; in Austin, it was 10%.)

In the U.S., project managers were paid the most, averaging $154,000. Software engineers were meanwhile paid on average $146,000; data scientists were paid $139,000; and designers were paid $134,000.

A question being asked increasingly in 2020 is how those numbers change if these same workers leave behind pricey cities like San Francisco and head to more affordable spots. Hired has answer that question specific to the Bay Area, and the unsurprising news that local workers’ wages — assuming they go unchanged — go a lot further elsewhere.

For example, making $155,000 in the Bay Area is akin to making $224,000 in Austin, thanks to its lower cost of living. In Denver, it would be like making $202,000.

Still, the calculations won’t be so easy for companies wanting to hang onto top talent. Based on a survey of 2,300 tech workers, Hired says that nearly one-third of respondents said they’d be willing to accept a reduced salary if their employer made work from home permanent (while more than half said they would not); 53% said permanent work from home would make them “likely” or “very likely” to move to a city with a lower cost of living; and half said they’d want to return to their office “at least once a week” post-COVID.

It’s headache inducing. The only crystal clear finding is that almost no one wants to land back at the office Monday through Friday. Specifically, just 7% of respondents said they wanted to head into work every day.

Of course, how flexible tech workers really are about whether they live and what they are paid depends very much on their job stability or how they perceive it. Perhaps in a sign of the times, there is little consensus on this front, too, shows Hired’s survey.

Of the thousands of tech workers surveyed, 42% said they were concerned about being laid off in the next six months, and 39% said they agreed with the statement: “I want to leave my current job but am afraid to do so because I’m worried about finding another job.”

In both cases, more respondents said that they aren’t concerned about being laid off or their ability to find another role elsewhere.

Going forward, Hired CEO Mehul Patel tells us the company will be tracking closely how the rise of remote work impacts those expectations, including around salary.

For now, he says he hopes that just publishing metrics around how localized salaries are computed will help put job seekers — and job holders — at ease during turbulent times. “It’s a big part of the reason we do this research and publish these kinds of reports,” he says.

Stacy Brown-Philpot is stepping down as CEO of TaskRabbit

TaskRabbit CEO Stacy Brown-Philpot announced today that she is stepping down from her role at the freelance labor marketplace.

Brown-Philpot joined TaskRabbit seven years ago as the company’s chief operating officer and was promoted to CEO in the spring of 2016. In the fall of 2017, the company was acquired by Ikea for undisclosed financial terms in a stock deal and has continued to operate independently as a subsidiary of the company.

Brown-Philpot, who began her career in investment banking at Goldman Sachs, previously spent nearly nine years in a variety of roles at Google, beginning as a sales director, later managing a 1,000-person team in India, and leaving as a senior director of global consumer operations.

TaskRabbit has sent us a statement regarding Brown-Philpot, stating in part that, “Under her leadership, TaskRabbit has become a successful global business that is strongly positioned for continued year-over-year growth.” The company adds that she will remain in the role until August 31 as it conducts a search for a new CEO.

Brown-Philpot, who is among a small number of Black women who have led tech companies as chief executive — others include former Xerox CEO Ursula Burns and Zoox CEO Aicha Evans — told the New York Times in an interview earlier today that she made plans to leave the company before global protests erupted roughly one month ago in reaction to the killing of George Floyd by Minneapolis police.

She suggests that they have impacted her deeply nonetheless, telling the outlet, “Every time somebody asks me how I’m doing, I process either consciously or subconsciously some form of racism that I’ve experienced. It’s torn apart families and communities. I’m just deeply frustrated by it all.”

Brown-Philpot says she has not yet decided on her next moves quite yet, but will seemingly be busy nonetheless. In addition to board director roles with HP, Nordstrom, and Black Girls Code, she recently agreed to serve as an adviser to a new $100 million fund that SoftBank announced two weeks ago to support companies led by people of color.

TaskRabbit, like many gig-economy companies, has been hard hit by the pandemic, but the company has remained open for business throughout, including connecting “Taskers” with virtual tasks and launching in April Tasks for Good, which connects vulnerable individuals in need with Taskers willing to volunteer their time to help.

In 2018, Brown-Philpot appeared on the “Masters of Scale” podcast, hosted by LinkedIn co-founder Reid Hoffman, and recounted memories from her first job, delivering newspapers on a paper route that she shared with her older brother in their hometown of Detroit.

As she told Hoffman then, “I grew up on the west side of Detroit. It wasn’t the best neighborhood, it wasn’t the worst neighborhood, but people looked out for each other. Of course, later on, things got worse for a lot of people very, very fast, but it was home for me. . . We would deliver the papers in the mornings, and then on the weekends we had to go collect from people. Of course, there were always people who didn’t want to pay, so I had to make sure we got paid.”

As with many business leaders, that early work experience proved formative for her, suggested Brown-Philpot, who said she was about 10 years old at the time.

Some people would see us and it’s like, four degrees outside, and they would just give us that extra dollar. That just meant so much,” she told Hoffman, “because I know it came from people who didn’t have a whole lot of money, but they were proud of us for doing real work, good work, legal work, in a community where a lot of people did illegal work to make money. I think that helped inspire me probably later on, that if you do good work for good people, it’ll pay off.”

Former Facebook exec thinks big tech will get broken up “over the next 10 years”

Investor Chamath Palihapitiya made part of his fortune at Facebook, where he was a vice president for more than four years, leaving one year before its 2012 IPO.

Though he has voiced concerns numerous times since about his former employer, he also believes it has played an active role in enabling users to report and disseminate important information. For example, he suggests it was smart phones and social media that has made so many Americans aware of the George Floyd tragedy and enabled citizens in the U.S. and at least 12 other countries to organize protests against racism. Without these platforms, he suggests, we might even be engaged in a traditional civil war in this country.

That doesn’t mean Facebook or others of its gigantic peers are any more immune to be regulated, however — not in his view.  As Palihapitiya said today of the companies during an online tech event: “Are they going to get broken up? Yes. Will every single government go after them? Absolutely.”

His more specific prediction is that Facebook, as well as Amazon, Google, and Apple, will continue to be investigated and fined by regulators around the world until they are no longer the leviathans they have become. “First, they’ll taxed to death, then they’ll get trust-busted,” said Palihapitiya.

He doesn’t think it will take all that much longer, either.

While investors are currently being rewarded for “going long” on the companies as they grow largely unabated, Palihapitiya said that, “on the margin, over the next 10 years . . . regulators will get their way” because “these internet companies undermine what regulators want, which is power. And the more you distribute power and information to the edges, the more in the crosshairs you will be.” (Palihapitiya noted that the only big tech company that hasn’t become a target of antitrust regulators is Microsoft, and he suggested it won’t be spared forever, either. He more or less thinks the company was given a break, following the consent decree approved in 2002 that curbed some of Microsoft’s practices and that only expired in 2011.)

Interestingly, no matter Facebook’s size going forward, Palihapitiya thinks the “pendulum will swing for it to be more sort of Middle America, the sort of ‘Fox News,'” of social media, as Twitter meanwhile swings to the “coastal cities in the United States.” It’s already easy to see these “demographic segmentations that are happening amongst these huge products,” he said.

The latter development may be much closer at hand. Kevin Roose, a New York Times columnist covering the intersection of technology, business and culture, occasionally tweets about the top-performing posts on Facebook. Yesterday, as is often the case, the searches skewed heavily toward conservative figures and themes.

Teased by interviewer Robin Wigglesworth of the FT about how Facebook might react to the comparison, Palihapitiya said matter-of-factly of the different platforms, “The content reinforces the kind of person that wants to be using them. It’s no different today than when you choose to watch MSNBC versus CBS versus Fox News.”

Google lays out a spate of changes designed to diversify its management, its products, and startups

As the world awakens to the ubiquity of longstanding police violence against Black people and the many other ways that people of color are systematically discriminated against, companies whose future depends on their ability to address their own role in these deeply entrenched and complicated societal issues are taking some action.

For its part, on the heels of weeks of protests around the U.S. and world to defeat racism, Alphabet just announced a number of related promises as part of its commitment to “translating the energy of this moment into lasting, meaningful change.

Among its commitments is a stated goal of improving leadership representation of underrepresented groups within the corporate colossus to 30 percent by 2025.

Toward that end, writes Alphabet CEO Sundar Pichai, Google will “post senior leadership roles externally as well as internally, and increase our investments in places such as Atlanta, Washington DC, Chicago, and London, where we already have offices. We’ll take the same approach across regions . . . and hire more underrepresented Googlers in communities where the social infrastructure already supports a sense of belonging and contributes to a better quality of life.”

Alphabet is also promising to “do more to address representation challenges and focus on hiring, retention, and promotion at all levels,” including via a “new talent liaison within each product and functional area to mentor and advocate for the progression and retention of Googlers from underrepresented groups.”

Whether this placates Googlers would be interesting to know, given the pressure that the company has been under for years to diversify, and the seemingly sluggish pace at which it has moved on this front.

According to Google’s most recent diversity report, 67.5% of its employees are male, which is down only so slightly from the 69.3% of men who made up the company in 2014.

Meanwhile, just 3.5% of its tech employees are Black, compared with 2% in 2014. (It has more than 120,000 employees today; it had 53,000 in 2014.)

Alphabet will also focus increasingly on creating “products and programs that help Black users in the moments that matter most,” including a way to give merchants in the U.S. the option of adding a opt-in “Black-owned” business attribute to their business profile on Google to help people find and support Black-owned local businesses by using Search and Maps, and by strengthening its product policies against hate and harassment.

A more tangible part of the announcement is an increased financial package meant to support Black business owners, startup founders, and employees.

Specifically, while Alphabet last week announced a $100 million fund out of its YouTube subsidiary to amplify Black creators and artists, Pichai today is announcing new, separate, $175 million commitment that includes: $50 million in financing and grants for small businesses and $100 million in funding participation in Black-led capital firms, startups and organizations supporting Black entrepreneurs.

By the way, this includes increasing its investment in Plexo Capital, whose founder, Lo Toney, we interviewed last week. (Asked for more information about this capital commitment, Toney tells us he “cannot comment at this time.”)

Alphabet is also investing a smaller amount ($15 million) in job training through the National Urban League, among other partners, and $10 million to “help improve the Black community’s access to education, equipment and economic opportunities in our developer ecosystem, and increase equity, representation and inclusion across our developer platforms, including Android, Chrome, Flutter, Firebase, Google Play and more.” (It isn’t clear from Pichai’s announcement how this will work.)

These are, of course, small amounts for one of the most powerful companies on the planet, and the efforts will invariably be seen by critics of the company’s extensive power (and balance sheet) as not going far enough.

Indeed, though Pichai notes that Google.org this month pledged $12 million to advance criminal justice reform, he notes that the company had previously contributed $32 million to the cause over the previous five-year period, dating back to the 2015 Charleston shooting in which nine African Americans were killed during a Bible study at the Emanuel African Methodist Episcopal Church.

It’s very possible that that related organizations can’t absorb the capital faster, but nevertheless, it’s not a jaw-dropping amount to highlight. Consider that Netflix CEO Reed Hastings alone announced today that he and his wife will donate $120 million to support scholarships at historically black colleges and universities, including Spelman College, Morehouse College and the United Negro College Fund, each of which will receive $40 million.

Still, Alphabet’s newest efforts will hopefully help the company — and the broader tech world — more quickly achieve better balance. It’s long overdue, in any case.

You can find more on Alphabet’s newest initiatives here.