Business travel and entertainment will be severely dented
Lower demand for commercial office space
Airlines and hotels will suffer for longer than anticipated
Western consumer confidence
Leaders who downplayed the crisis
The role of science in decision making
The last point Michael makes in the article is perhaps the most poignant:
“For business and political leaders Covid-19 conveys two other lessons. First, their organisations can move more quickly than they ever thought possible. Second, those who played down the warnings of the plague have now received a taste of what it will be like if they continue to ignore scientists’ warnings about a far greater scourge to humanity: climate change.”
Sequoia was one of the first venture capital firms to alert startups on the impact of Covid-19 calling it the Black Swan of 2020, and urged startups to make ‘fast adjustments’ to control spending until they can chart a course to financial independence:
Manage cash runway – trim expenses
Plan for longer fundraising cycles
Adjust sales forecasts – even if no impact is immediately felt
Raise the ROI for marketing spending
Evaluate headcount and hiring in this period
Ending on a more positive note
It’s worth mentioning that even with this warning, Sequoia mentions that the “Many of the most iconic companies were forged and shaped during difficult times”. Following Sequoia’s 2008 RIP Good Times deck, shortly after the collapse of Lehman Brothers was one of the fund’s most active investment periods that forged Airbnb, Square, and Stripe in the midst of the financial crisis.
Several European countries started announcing ‘Exit Plans’ from the current lockdowns. But as the world is starting to flatten the curves, the economic impact is just beginning.
Earlier this week the NVCA (North American Venture Capital Association) issued a white paper detailing the impact of the current capital crunch on startups:
Expect more layoffs (currently over 30,000) according to this layoffs tracker and expected to grow for up to 10%-50% as startups struggle to secure funding
Dry powder of US funds $120 billion is likely to fall short of demand, as a lot of capital is reserved for follow ons
Non-traditional startup funding sources (like family offices and corporates) expected to pull back from the market (“likely to follow economic trends in recessions of moving capital from high-risk illiquid assets to lower-risk liquid assets“)
Less flow of new capital caused by reduced LP commitments, mainly caused by institutional LPs who find themselves over exposed to the private market after pulling back from public equities
Slow down in IPOs and delay in VC liquidity, which in turn places more demand on dry powder
USA – SBA Loans and PPP
Help is not exactly on the way. The $349 billion aid package issued by the US Government and distributed in the form of SBA loans was quickly gobbled up by a large number of applications, many of which were from venture-backed or PE-backed startups. While Startups are technically eligible, having less than 500 employees and being impacted by the crisis, some of them, as the New York Times reports, didn’t turn to their investors for capital, but rather took a loan (which in some cases can be forgiven and doesn’t have to be repaid for money losing businesses) to buy them time in this crisis.
Unfortunately, this pool of capital quickly dried up, leaving many small businesses empty handed and creating public backlash on how the money was distributed, stating that banks gave concierge treatment to their richest clients (which isn’t surprising). As Bloomberg’s report states, just because you CAN apply, doesn’t mean you SHOULD.
Prominent US VCs advised startups not to apply for SBA loans. As Albert Wenger, Partner at Union Square Ventures, wrote: “there is a money grab going on right now by some venture backed startups that this program absolutely should exclude“. Mark Suster at Upfront Ventures said: “Applying for a government loan that was created to serve US small businesses and employees in the times of an economic crisis is not something you should do just because all of your peers are telling you that you should.“
UK – Future Fund, a £500 million match funding for high-growth companies
As of April 29th lockdown measures are still in place in the UK, and with over 20,000 casualties, Boris Johnson said that the UK is now at a maximum risk point, but concerns of a second waive arise. The UK chancellor announced a £1.25 billion government support package which includes two parts:
Future Fund – a new £500 million loan scheme (£125,000 to £5,000,000) for high-growth firms, in which the government will provide matched funding to investment raised from private investors
A £750 million of targeted support for small and medium sized businesses focusing on research and development.
5,070 UK companies are at a ‘severe’ or ‘critical’ risk
615K startup and scaleup jobs are at risk
Later stage startups are at the most risk
Across the board, tech sectors and verticals are the most likely to experience a positive or low impact.
VoIP, EdTech and eHealth have fared particularly well, with very few companies at risk.
Proptech is one of the few exceptions to this, with most companies falling within the moderate impact category, due to the current freeze on the property market.
Startups are preparing for tough times ahead and taking measures to extend runway and mitigate the impact of Covid-19. According to a recent survey of 200 startups, conducted by some of the largest UK VC funds, showed mixed results on impact. Sifted conveniently summarised the results:
60% have successfully renegotiated their workspace rent or are in the process of doing so
43% have stopped online advertising
30% of startups have cut salaries across the company by at least 15%
49% of respondents have frozen hiring, another 32% have slowed hiring
68% of respondents expect full-year revenues to drop more than 25%
Israel – 500M NIS to cash strapped startups
On the health front, there are signs of recovery. Earlier this week, Israel started with an alleviation of the self-quarantine measures that restricted people’s movement to no more than 100 meters from their house. With some confusing guidelines which allowed some businesses to reopen, it looks like next week many more businesses will reopen and low grade K-3 children will go back to school.
The Israeli Innovation Authority (IIA) announced last week an immediate infusion of NIS 500 million (approximately $141 million) to qualifying startups (significant IP, previous funding) and less than 12 months of runway. Startups are able to secure the matched funding up to 3 months from submitting the request. This is part of Israel’s Ministry of Finance NIS 1.2 billion (approximately $340 million) stimulus package to support the country’s struggling tech sector.
According to a survey of 87 startups by Viola Ventures, the majority of startups are taking a ‘wait and see’ approach and continue to work from home, and many will control the number of employees in the office going forward.
Meanwhile in Europe
According to the Q1 European Venture Report by Pitchbook, Q1 2020 still looked strong: the strongest quarter ever in terms of total deal value, €8.2 billion. But venture is a lagging indicator as the deals that were announced in Q1 might have been completed in the months and weeks before Covid-19.
I might go deeper on other European markets in a future post.
Startups are not immune to the economic impact of Covid-19, but have a number of funding sources at their disposal, which should reduce their dependency on government bailouts. As pointed by Albert Wenger:
many venture backed companies have many months or maybe even more than a year of burn sitting in their bank accounts. Their investors are often deep pocketed funds who should be well reserved for follow on investments. They can get sophisticated financial advice and can access the venture debt market (admittedly not right now but probably again in a couple of months). Many of these businesses operate in the digital realm and have seen limited impact on revenues – some have even seen their revenues explode
Many startups won’t survive this, but those that do will come out stronger of this crisis. What seems certain is that depending on the speed of recovery in the US, it might be a marathon, not a sprint, for the UK and Israeli startups to survive this period and they require rethinking the strategy and taking steps to conserve cash and extend runway. As Adam Fisher (Bessemer Israel) recommended:
“You need to change your projections and prepare for a deeper crisis and hope for the best. Put an emphasis on efficiency and don’t assume that at some stage everything will return to be the way it was before”
In March, we started offering virtual office hours at Remagine Ventures. Given the uncertainty about the funding environment, we wanted to offer entrepreneurs a way to engage, get feedback and ask any questions they may have about our space, both challenges and opportunities. (Also, the pace of seeing startups in lockdown was lower, and we love talking to founders, and thought this could be a neat, low-pressure way to do it).
We certainly didn’t invent the office hours format, and everyone is on Zoom anyway these days. But we are big fans. Office hours offer an opportunity to broaden the access to venture capital and, for VCs, to share best practices with entrepreneurs. After hosting 30 office hours meetings, here’s what we’ve noticed:
Create serendipity – Self isolation and cancelled events mean fewer opportunities for random (or some might say serendipitous) meetings. By setting particular times for office hours, we ended up having “chance” interactions with founders that we likely weren’t otherwise likely to run into.
Remove the red velvet rope – Office hours provide a good ‘excuse’ to get in touch. Some entrepreneurs find it daunting to connect without an intro (Don’t worry – a well written cold email will get a reply in most cases!).
Take down the pressure – Office hours feel more relaxed than a pitch. We set the expectations at the start of every meeting, and focus on one key area the founders want to discuss. The ‘relaxed’ setting is not on the expense of content – because the meetings are purposely short, they tend to be intense!
A relationship is built over interactions. Office hours offer a great way to get acquainted, and from there, grow the relationship.
Great companies can come from anywhere. But being physically close to your investors, was until not long ago, a requirement, especially in Silicon Valley. With the ‘forced experiment’ of remote work and symbols like YCombinator going remote for their next batch, entrepreneurs will benefit from access to a wider pool of capital than the one in their back yard.
For founders, here is what we would suggest as a virtual office hours strategy:
Find them – for most, remote office hours are a recent adaptation, and sign up can often take place via a short form. Take a look at who’s offering remote office hours. More and more are popping up, like this example in France, or this female founders office hours in the UK. If there’s a VC you want to connect with, you can also ask if they’re offering any form of office hours during these times.
Have an agenda – what do you want from the meeting? It’s not a formal pitch, so preparing what you’d like to cover is in your interest.
Make it a two-way conversation, not a speech. I generally recommend sending a short deck in advance, but not presenting slides during office hours (unless you’re specifically asking for feedback on your deck).
Fit and industry focus – Think about what VC you’re talking to and how they fit your startup. What’s their particular focus? What perspective or content can they provide you? Are there any companies in their portfolio that might be relevant for you to connect with?
Want to talk more? Just sign up to our next office hours ;-)
By Lihi Pinto-Fryman, co-founder and CRO and Gal Aga, VP of Sales at Syte.ai, a visual search startup and Remagine Ventures portfolio company
Working from home, banning travel, and limiting the movement of people. Social distancing measures are in place for an indefinite period, and sales teams have to quickly adapt to reach customers and prospects solely through virtual meetings and channels.
Inside sales is a method that primarily sells remotely, rather than meeting in person. Sales reps prospect, engage, and convert leads to customers over the phone and web. While the lines between inside and field sales are blurring, the situation today calls for a more inside sales approach to selling.
At Syte, inside sales has always been our focus. As field sales temporarily took a back seat, our inside sales engine proved to be effective and is helping us cope with this health and economic crisis. We compiled this blog post with all the lessons learned from running a high performing inside sales department in the past two years.
How we built our inside sales team and how to start yours
1. Define a go-to-market strategy
Go-to-market strategy (GTM) is an orchestrated plan that defines the process of bringing your product to market and reaching your customers. It should target the right pain point, have the right messaging, use the right channel and time, and implement the right sales and marketing process.
We formulated and answered a lot of questions to help us finalize our GTM. Here are some of the key elements you have to address:
Who is the target market? How do you define it?
Is your product for small and medium businesses (SMB), enterprises, or both?
Do you start from one segment or do you look further beyond the other?
Is using a freemium model feasible?
Would you consider selling more of the same product to the customer (deep selling) or more transactional?
Do you do field sales in combination with inside sales (hybrid) or just inside sales?
Are you inbound, outbound, or both?
What is the appropriate team structure?
What is your competitive advantage that can make prospects switch from competitors?
Do you plan to land and expand? Or is it mostly a new business?
We approached inside sales as a whole organization. Everyone made a contribution. In the beginning, the founders gave demos all day. Marketers and sales reps focused on outbound tactics. Product and customer support shared insights from development and existing customers. Getting everyone on board was crucial and it helped a lot to make the plan successful.
2. Build an initial sales plan
After the GTM, we started formulating our sales plan. A sales plan often includes overarching targets, specific revenue, and performance goals for a given period. It entails the specific strategies and procedures that can help achieve your sales goals.
When you create your sales plan, here are a few questions that guided us:
How much can you close?
What is your win ratio?
How much pipeline do you need to reach your goals?
How much can one enterprise business development representative (BDR) bring?
What is your annual contract value (ACV)? What factors do you include in calculating its value?
How fast can you recruit and train?
What does your ramp up process look like?
We started from the bottom up. Our goal for the first year was to build a strong foundation before scaling significantly.
3. Conduct analysis and create a second-year sales plan
Evaluation is a critical step in any strategy, especially so for your initial sales plan. It can help you determine and understand what works well, identify things to improve on, and pinpoint the best way to move forward based on data and evidence.
In the second year, we formulated conclusions and the target was very clear. We had to triple our revenue. So, we calculated our top down program this time. It included the following:
Weekly, monthly, quarterly goals
Process stability and management
We made sure all of these elements were in place and that our overall infrastructure was scalable before we clicked the scale button. Everyone in the organization knew about the changes in strategy. We made sure we were all in sync, moving towards the same mission.
It took some time. But in the end, we straightened out and found the formula in everything. Eventually, it all ticked like a lubricated machine.
Now, after going through our second year, every bolt sits in place, ready for the extra triple in revenue. We now have 30 insides sales team, made up of account executives (AEs), sales development reps (SDRs), BDRs, presales, directors, and team leaders.
How we created our sales plan and strategy after the second year and how you can develop yours
4. Build the pipeline creation machine before increasing your sales lineup
How do you envision the journey your prospects have to make to purchase your products or services? How many opportunities does your organization have to pursue to close a certain number of deals?
Creating a pipeline helps visualize the sales process. It shows the status of each prospect and sales activity. It not only identifies what works but it also adds a layer of accountability. A sales pipeline should make your goals easier to track and achieve.
Our sales pipeline has the following elements. Look through and see what you can adapt considering your existing and future sales strategy:
Outbound machine. Our outbound system has a win rate of over 20%. When selling to enterprises, an outbound approach is not necessarily harder or longer. You just need to know how to do it. What are the benefits of doing outbound sales? It is predictable. There is no competition. You will also have the possibility of communicating directly to the decision maker who can create a budget and set the rules of the game of the decision process.
Events. Not during this time but attending events is one of our key pipe generators. As events are moving to virtual conferences soon, we will definitely participate. You should too!
Partnerships. We have a 45% win rate here! It is just a gold mine. Syte has partners such as Microsoft, SAP, and resellers in Japan who function as outsourced BDRs. It works great in France and other non-native English markets as well. Leveraging resellers is a great strategy to have an inside sale machine while being able to “be everywhere” and reach the markets.
Inbound, Inbound, Inbound. Our SDR team works closely together with Marketing to constantly optimize performance. We do content marketing such as webinars, guest posts, thought leadership pieces, press releases, and more. We also do social media marketing. LinkedIn is a mighty engine for us. It also took a while, but we got there.
Expansions. We “deep sell” to our existing customers. And since it works well, we made it a method. We are proactive. We connect with our customers every quarter and try to upgrade. Our win rate here is over 50%!
5. Create a sales playbook
Organizations with an up-to-date, comprehensive sales playbook see many benefits. From onboarding new sales reps to evaluating performance. A sales playbook provides a structure for closing deals, describes the roles and responsibilities of every member of the sales team, and identifies metrics for success and improvement.
Our sales bible has been with us since day one. We constantly document and update it. Every little thing goes to the playbook. We now have 150+ pages which are built as a presentation to make it easy for everyone.
What’s inside our sales playbook and what to include in yours?
Steps for presales, sales, outbound, inbound, partnerships, and more. Why? So you can learn and find your magic formula. Of course, along the way, it also helps teach and inspire others.
Best practices of every stage. Sales process, Salesforce process, and success stories.
Boot camp on every chapter of the playbook. That is how all the training at Syte is structured. It is clear to everyone what to learn and where it is at.
6. Foster an environment where you recognize and leverage the entire organization for the benefit of transactions
Sales team morale and the whole work culture can have a huge impact on overall quota attainment and performance. Today’s crisis, joined with an existing competitive landscape, requires an inclusive and thoughtful work environment (even virtually). One that will boost your sales reps’ satisfaction and engagement to impact the bottom line.
For us, gone are the days when founders and even VPs are in the field daily. However, the most important thing is to keep connected. Feel, help, set an example, and keep learning about the people, the market, the product.
Otherwise, you will become irrelevant. You will lose grip. You will not understand your sales team. If you don’t know the essence of your organization, then how will you help when issues arise?
The same is true of the other areas and key functions in other departments. Everyone in your organization has a part to play and expertise that will help sales, nurture prospects, and engage customers.
For instance, these are the specific contributions of the different teams we have:
Customer success engages in the presales process
Product talks about future offerings
CEO brings company vision, gives confidence, and helps to promote big customers
Customer support provides input for product development
Aligning not only sales but also across departments provides visibility. As a result, it will become easier and faster to solve problems, create more growth channels, and enhance customer confidence in your products or services.
7. Work on the team’s DNA all the time—this is the key!
What is the secret to sales success and a strong inside sales team? A winner mindset embedded in the team’s DNA.
Having a mindset of “everything is possible” and “dream big” is the most important muscle for a sales rep. You can teach a sales rep everything about the product and industry. You can also coach and improve his or her skills. But the most difficult to train is the sales rep’s attitude and psychology. It doubles the power.
At Syte, we tell sales reps to work on themselves more than they work on anything else. We recommend getting up early and practicing meditation. We also suggest setting life goals and tuning in to them every day.
In the history of the department, we broke a lot of records and reached new heights we thought were unimaginable before. We strongly believe the above approach was key in achieving them.
8. Always look for growth
SaaS sales is a profession. There are a million courses, blogs, opinion leaders, and methods to follow to build yourself and your sales team from scratch.
Part of the culture we constantly cultivate is that if you do not grow, you are noble and dead. There is no benefit to merely standing in place. You must constantly grow personally and professionally.
Routine is our biggest enemy. What do we do to make sure we are constantly improving? We line up every quarter. Every manager needs to make cross-sectional conversations with their staff. We set growth goals for individuals and a common team plan for improvement.
9. Don’t start too fast, know what works first
You may have heard it too many times. Slow but steady wins the race. Taking the time to find the right formula for each sales role is another crucial element in building an inside sales powerhouse.
The most significant thing for us was finding AEs, BDRs, and managers that fit our strategy and culture:
AEs and BDRs. It is clear that we need cannon people for these roles. Those with crazy hunger, who are very intelligent, and successful. Those who move fast and make things happen. We always prefer talent over experience. When we see that someone has really learned and recognized it. When he or she sees SaaS sales as a profession, that itself is already a pro.
Management. Finding team managers and bringing in people with the potential for management from outside is very difficult. If possible, we would just like to promote from within. And that is the direction we are going for. Our sales director was an awesome AE and now a team leader. We also promoted a team leader in SDR.
In general, though, we are still experimenting with it. We are combining people with enterprise experience, and people with experience freelancing who can do retraining. We also include in the mix, people who were SMB stars in serious companies.
Sales reps know how to sell themselves well. They speak all the concepts and know how to win people. But in the end, it will always be difficult to get really good people that match what you are looking for—even though there is a big market out there. So, patience. Promise, it will be worth the wait.
10. Build your sales organization, or your startup with unrelated mission
If you approach sales management with only an “exit” goal, you can easily lose the human side of what you do. The tendency is to just focus on what affects your successes the most, without regard for anything else.
But if you desire to build people and an environment where they can feel at home and find a personal development path, the results will be meaningful. These are two of the most significant lessons we’d like to share with you:
First, when you focus on people, you will get huge satisfaction in the job. For us, it feels like coming to our second home every day, with tremendous fulfillment and desire to devour the world.
Second, your people will also feel this way. As a result, your successes will be even greater.
The health crisis we are going through right now is truly one of a kind. As we tread uncharted waters, developing or pivoting to inside sales has benefits that not only can help you ride the waves of uncertainty. If successful, it can also provide your people a new challenge and an opportunity for growth.
Lihi is the Co-founder and Chief Revenue Officer at Syte, the leader in Visual AI for Retail. Lihi has over 15 years of experience in entrepreneurship, finance, and investment banking. At Syte, Lihi leads the Marketing, Sales and Customer Success teams. Under her leadership, Syte has ascended to the top 1% of SaaS companies in terms of revenue growth. Lihi is an experienced speaker and thought-leader in the retail-tech industry, speaking at conferences such as Shoptalk, and interviewing for publications such as TechCrunch, Hubspot and more. Before Syte, Lihi was VP of Private Banking at Bank Leumi (UK).
Gal is VP Sales at Syte, the leader in Visual AI for Retail. He has over 10 years of experience in the enterprise SaaS Sales industry, with expertise in international field and enterprise inside sales. At Syte, Gal built and trained the global sales team of enterprise AEs, Sales Engineers, Directors, SDRs, BDRs, Channels and Operations. His leadership significantly contributed to Syte’s success, reaching a 300% YoY revenue growth. Gal is a skilled coach who is passionate about helping people grow and creating top winning teams with a strong culture and mindset. Prior to joining Syte, Gal was Director of Sales at Sisense
Humans are social creatures. We want to connect and communicate. In my previous post I looked at virtual events in the age of social distancing. Benedict Evans wrote an excellent piece on forced experiments on a large scale as a result of Covid-19. The first mass experiment is remote working. The tools for working from home went from a nice-to-have, to must-have, almost overnight.
The second forced experiment, I believe, is consumer entertainment, or how we fill our leisure time outside of work (but still at home). As a fund that invests in Entertainment tech and gaming, we at Remagine Ventures are naturally interested in this. What does this second experiment mean? Livestreaming is set to be a big winner. In this post, I cover the rise of why this is the case, and offer lots of examples of verticals and applications as well as opportunities for startups and streamers.
Livestreaming is increasingly key to work and play
Pre-Covid-19, livestreaming had been mostly associated with gaming. But as A16Z points out in the “The rise of lifestyle streamers“, a new audience has emerged, hungry for non-gaming content. On Twitch, for example, the fastest growing category is “Just Chatting“. IGTV (Instagram live) is where the ‘influencers’ go live to feed pop culture, and Youtube Live offers a bit of everything.
The appetite for livestreaming during lockdown has grown to:
Work – Working remotely is pretty much ubiquitous now for knowledge workers, and teams, customers and suppliers still need to connect. Zoom went from 10 million users at the end of 2019 to 200 million at the end of March – all in a matter of three months (though its worth saying that its also seen a number of organisations and governments ban its use in recent days over security concerns). Google reported that it is adding 2 million users to Hangouts every day and had over 2 billion minutes of chat in March, growing 60% day-over-day. Almost overnight, webinars, internal communications, and product demos suddenly switched to livestreaming.
Play – Livestreaming and gaming go hand in hand. Twitch, Mixer, Caffeine, Facebook Live and Youtube live are filled with gaming streamers. Some of them, like Ninja or Shroud became huge stars, making over $500,000 a month. People are craving all sorts of entertainment, to take their mind off things, so a new crop of streamers is gaining popularity – more on those below.
Social – when Epic Games acquired HouseParty, the ‘face to face’ social network, it had yet to find its moment. But quarantine has accelerated adoption, from 130,000 monthly installs to 50 million signups in the last month, more than a 70x increase in the rate of downloads, according to Houseparty’s CEO, Sima Sistani. The live group interaction, coupled with excellent video quality shot the app to the top of the social category.
The ascent of livestreaming
Livestreaming is by no means new, but the pandemic and quarantine serve as a catalyst to rapid change and adoption. Adam Fisher described this well:
“Compelling opportunities are likely to appear in previously stubborn markets that have resisted fundamental technology change for too long. The crisis may dislodge whatever was blocking technology adoption, forever altering the trajectory of markets such as telemedicine and other types of business infrastructure and service modernization”
Netflix is great, but as consumers don’t have sports or late night shows to watch on TV, streaming may now feel too pedestrian. Livestreaming of all sorts became a possible substitute, as people crave a close substitute to in-real-life engagement. Netflix knows it is competing for viewers attention, and I’ve speculated on VC Cafe in the past that the Streaming Wars might escalate from the streaming platform into live content. Coming back to Twitch as an indicator, DJs and musicians are entertaining fans from their living rooms.
Livestreaming is relevant across categories and age groups:
Watch people sleep – people are gaining thousands of followers and literally make money in their sleep by letting others watch them asleep on TikTok live. New York Times has the story.
Charity fundraising – most sporting charity events are off, so people have found creative ways to raise money. Like the inspiringstory story of 99 year old Capt Tom Moore who raised £14 million for the NHS by walking 100 lengths of his back yard.
Live entertainment shows – HQ Trivia is back from bankruptcy with an unnamed buyer and regular programming is set to return soon. In the past, Trivia attracted hundreds of thousands concurrent viewers for its interactive game shows, paying cash prizes for the winners.
Professional content – Webinars and more webinars how to deal with the impact of Covid-19 on______ (fundraising/ hiring/ sales/ marketing/ pick your word) seems to be a popular topic we can’t get enough of, but there are plenty of chats offered on a variety of topics on a daily basis. How to find them all is the question I tried to answer in my previous post.
Patreon has seen a surge in registrations. It grew from 150,000 total users by 30,000 (20% of its total base) in March alone, according to the Patreon blog.
Eating – when I was in Taiwan and Vietnam over the summer, I noticed several people livestreaming their meals (especially hot pot!). In Korea it’s a popular thing. Restaurants in Wuhan are now using live streaming models to signal customers that it’s safe to come in again.
Porn – Pornhub has made their premium tier free and strippers are moving their business to online streaming to earn an income from home.
Big opportunities remain
As social distancing is here for the next foreseeable future (some estimates say 12-18 months), travel restrictions and bans on public gatherings will make a ‘return to normal’ a gradual process. So where are the opportunities for startups?
Kids entertainment – from my own experience doing remote lessons for our kids (fitness, piano), this is a need for both kids and parents.
Live e-commerce – livestreaming e-commerce sales are already very popular in China, and one could imagine a QVC for the Gen Z generation.
Combatting loneliness/ dating – you may have read ‘my girlfriend is a chatbot‘. As dating is happening online, people will be looking for companionship online, in all forms.
Therapy/ mental health – some of the side effects of isolation are anxiety, increase in addictions, divorce, domestic abuse. More people will require help and while the category is already crowded, opportunities remain.
Until today, the main beneficiaries of the rise of livestreaming are the platforms, generating revenue from advertising, revenue share on subscriptions, etc, and the top creators who managed to make this into a living.
The rapid adoption of livestreaming during the pandemic will create new winners – tech startups supporting streamers, engagement tools for viewers, better monetization models, and hopefully can ‘win’ too: in the form of mass training, entertainment and education. If you’re building something in this space and could benefit from our feedback, please sign up to the Remagine Ventures office hours.
The conference and event circuit took a big hit on account of the pandemic. Even as governments discuss their ‘exit strategy’–meaning slowly relaxing quarantine measures over the course of weeks or months–it’s hard to imagine conferences going back to normal in the near future.
It’s in this setting that we’ve seen events emblematic of physical space and mixing, like Burning Man, go completely online. If you’re in tech, you must have been invited to a number of these discussions, likely over Zoom. But it’s not just professional events that got cancelled. It’s everything – standup, music, group meditation and poetry slams. But people want to get together. Even virtually. They are willing to pay, to get admitted into a virtual night club.
So I got curious: if virtual conferences and events are going mainstream, is there a virtual event aggregator? What is going on where? As a fund that covers Entertainment and gaming tech, this is something we think about a lot at Remagine Ventures.
Is there already a virtual events aggregator?
The answer is sort of. A few early attempts are out there but there’s by no means a ‘winner’ yet. Here are a few contenders:
If you add to these the non-live events and online experiences, like the ability to take virtual tours of the world’s top museums or watch one of the many talks, documentaries or comedy shows online, the huge inventory and lack of proper discovery turn out to be a huge missed opportunity.
The netflix for events? The TV guide for IGTV? E! Entertainment for streamers?
The current solutions leave a lot to be desired, but also create a huge opportunity. The big challenge today is discoverability and fragmentation – there’s a lot going on, but no easy way to find it. Also, the ideal solution needs to be a tool for event organisers – enable them to easily create events on the platform, and help with distribution and promotion.
There are also different user needs, and they required some dedicated features. IRL in my opinion comes closest:
“If you can’t find something public to do, you can make plans with friends using the composer with suggestions like “Let’s video chat,” “Zoom workout,” “gaming sesh” or “Netflix party.”
Why ain’t Zoom or Twitch doing it?
Bigger fish to fry. With usage exploding and the stock ($ZM) trading with a PE ratio of 1658, you’d think Zoom would have jumped on this already. But they have bigger problems to solve first; One security issue after another, challenging PR, and how to handle the massive growth in scale in the last few months (from 10 million users in Dec to over 200 million in March). So an event directory is probably not the CEO’s top priority.
Twitch is growing these days, but it’s the wild west like Youtube. Twitch must be aware of the challenges in discoverability of new emerging streams and has done little to curate the events to date.
It’s hard to predict how soon we’ll go back to traveling or attending large events during these days of social distancing. At least until there’s a vaccine widely available for Covid-19, virtual events are here to stay. Big companies are built in a time of crisis, and I can’t wait to see the many businesses that will be created to capture this potential across professional events, dating, education, entertainment, sports and more.
In a new post tomorrow, I’ll go more in depth into livestreaming of all sorts.
Startups are getting hit hard by the economic price of Covid-19. As the New York Times reported yesterday, many companies have started laying off people already. Social distancing means that in many cases, this happens via video conferencing. As a record number of Americans filed for unemployment, this is a very stressful time for job seekers.
According to an HR survey conducted by Viola Ventures, an Israeli venture capital fund, a third of respondents reported that they are planning layoffs. Most have frozen hiring as well, in an effort to reduce cash burn and extend runway until fundraising options open up. For many, including some well capitalised startups like Bird or Airbnb, layoffs are a matter of survival.
The number of people who filed for unemployment in the US shot up dramatically in the last two weeks, reaching over 6.6 million people (as of April 1st). In a report by the Washington Post, Economist Heidi Shierholz, who has spent her life studying the job market and said she is predicting 20 million Americans will be out of work by July — the worst unemployment situation since the Great Depression. That is her “best case” scenario if Congress does another big stimulus package to aid the economy.
There are questions about the role of government in supporting venture backed startups. The US just announced that startups are eligible for government support as part of the $2 trillion aid package. France has announced a €4.3 billion plan to support startups. Israel treasury approved a 650 million NIS for startups and in the UK investors are lobbying for a package.
Community job boards and lists
A few crowdsourced initiatives were quickly put together to help job seekers understand who’s hiring, who’s laying off, and who’s furloughing (forced holiday with reduced pay). Sharing it here in case it’s helpful for anyone looking for a job.
“From March Madness to Major League Baseball, auto racing to international soccer, leagues and events have been suspended, postponed, and outright canceled, all in an effort to slow the spread of the coronavirus”
The natural answer would have been eSports, but it’s not so simple. It’s hard for broadcasters to put on shooter games in primetime TV, and classic eSports games like League of Legends are too complicated for a non-gamer audience to follow. Does it just leave them with Fifa tournaments?
Another category to explore is sports and gaming. These fans have significant natural overlap and affinity, with some of the biggest gaming titles based on sports. The number of hours streamed on Twitch has increased 15% over the past few days, which suggests fans are looking for entertainment elsewhere. Sport stars have joined the action, streaming games ranging from Fifa, Fortnite and Formula 1. Mesut Ozil for example, has recently been generating over 40k views playing Fortnite.
Can this be the watershed moment for eSports?
The esports industry had to make its own pivot from massive in-person events to fully digital tournaments, but content consumption is up as sports fans are looking for entertainment while in quarantine.
As Kevin Klowden, executive director at the Milken Institute’s Center for Regional Economics mentioned to Venturebeat:
“In some ways, this is the opportunity for esports, though I’m not sure it’s the one anybody wanted. Suddenly, the major sports networks have no programming. People actually want to watch games. Nobody is in a better position to take advantage of this, in terms of having content, than esports. Productions are suspended in entertainment for a while.”
To get some clarity, I’ve asked Stefan Zant, CEO of esports.com and Managing Director of ProsiebenSat1’s 7Sports how does it look from the broadcaster side.
VC Cafe: What are the limitations for putting esports on primetime TV?
Stefan Zant: Esports has a huge potential for getting big on TV, but is still a niche phenomenon at the moment. On top to that, in german television broadcast we are still limited by youth protections. This is why we are not allowed to broadcast titles with FSK 16 (e.g. Counter-Strike) before 10 p.m. and titles with FSK 18 (e.g. Fortnite) before 11 p.m. With a view to the next years, professionalization of eSports associations as well as a stronger acceptance by society will become the most important drivers to become a mass market and get ready for primetime on television.
VC Cafe: Are you observing any changes in content consumption as people are in quarantine?
Stefan Zant: In light of the current situation we logically adjusted our content approach from aggregating event highlights and news to more situation-specific and creative formats, since most of the esports events are also postponed. For example, we created an interactive editorial meeting format with our community or included recommendations for best games while being in quarantine in our content offer. These creative formats received very good response by now and also made us break new grounds to stay innovative and add value to our content offer, especially at times like these.
VC Cafe: How do you see esports changing in 2020?
Stefan Zant: Esports has everything that is needed to be a real sport: Competitions, emotions, tactics, skill, speed and much, much more. With increasing media coverage in combination with a higher social acceptance and professionalisation of eSports associations, new viewers will be attracted although they have nothing in common with active gaming. This is why we see eSports becoming a mass media sport in the future.
As we are in the thick of a global health and economic crisis, this is hardly an “opportunity”. But technology has a big role to play in entertainment, and these newly created esports fans may continue their habits when life goes back to normal.
“Fans who pick up esports during this period may continue to follow it once sport does return, providing brands an opportunity to develop a relationship with the esports community. This goes beyond the realms of like-for-like games (e.g. basketball and NBA 2K), but also into games like Fortnite and Call of Duty which will appeal to the average gamer”
Around 20 years ago, Eli Beer identified a problem. A very young man, he had been volunteering for two years on an ambulance near his home in Jerusalem — and never saved anyone’s life. By the time that the ambulance arrived at the call, often pursuant to a heart attack, choking, an accident or stroke, the victim would be dead.
He arrived at one call in his neighbourhood for a boy who had been choking on a hot dog. When he arrived there on the ambulance, he and his fellow medics began treatment. A doctor passed by and entered the house. He told Eli and his colleagues what they probably knew: the boy was dead. And then the doctor said something haunting. He told them that he lived down the street, and was home at the time. Why didn’t anyone call him?
A light went off for Eli. He never saved anyone’s life because he always arrived too late. This was not the fault of the Jerusalem ambulance system or anyone in particular. There would never, and could never, be an ambulance near every victim. They were just too expensive. And they would never, and could never, be fast enough. They would always get stuck in traffic.
As a result, people died — all day, every day, everywhere in the world.
But Eli had a solution. He began to train people in his neighbourhood in the basics of life-saving. He got a scanner that had the emergency calls. He had a relative donate some rudimentary equipment. And he and his friends started getting to the emergency calls, minutes ahead of the ambulance, and saving lives.
I met Eli shortly thereafter, and we worked together to grow the system in Israel. In 2006, we established United Hatzalah — which he runs and I chair. We now have 6,000 volunteers throughout Israel, serving every community — Jews of all kinds, Muslims, Christians, Druze. They have all completed several hundred hours of classroom and practical training, and carry (in specially designed bags, and often in specially designed vehicles) all of the equipment necessary to save a life. All of these volunteers are connected through what is perhaps the most technologically modern dispatch center in the world. The dispatchers immediately identify the closest volunteers, and sends them to the scene equipped with specific knowledge of the case. United Hatzalah is now answering approximately 2,000 emergency calls a day, with a response time of below three minutes nationwide and below 90 seconds in cities. Consequently, the volunteers of United Hatzalah are able to save the lives of several hundred people a day who would otherwise die waiting for an ambulance.
Eli’s is one of the great entrepreneurial stories of this generation.
We have learned many things from Eli — and one of them is the absolutely critical role of philanthropic donations in life-saving work, and the genuine partnership that donors to worthy causes have with those who carry out the work. He never had to tell me that. He shows it. Eli spends hundreds of nights a year on the road, raising money. In a typical three week span from February to March, Eli was in India, London, New York, Los Angeles and Miami — raising money for the organization.
Eli was in Miami when he started to feel ill. Exactly one week ago today, he got himself to the hospital — with shortness of breath, difficulty breathing, a fever and a dry cough. He was in significant pain, and the test came back on Friday afternoon confirming what everyone knew: he had Covid-19. We spoke with him on Friday morning. Hearing Eli educated me as to what is meant by the term we had only heard and understood abstractly — difficulty breathing. Still, he told us that he was relieved that he did not have to be intubated — and put to sleep for an indefinite period of time.
On late Friday afternoon, he had to be intubated. Immediately before being sedated, he apparently recorded this video.
The context in which we viewed it was through the Book of Genesis. Jacob is on a journey to see his brother. An unnamed “man” appears and engages Jacob in a nightlong wrestling match. Jacob is injured but emerges victorious. Still, he tells his opponent: “I will not let you go until you bless me.”
One should always, we learn, emerge from a struggle with a blessing.
Eli is now in a struggle. He remains sedated, and will likely be for some time — under outstanding care at the University of Miami Hospital. There is not, as one might say in such a circumstance, “little that we can do.” There is a lot we can do — we can enable Eli to emerge from this struggle with a blessing.
It’s safe to say that we don’t yet know how long the Covid-19 situation will continue, but it has already had a major impact on public health and the economy. Tech can play a role in helping on various fronts:
Startups and tech companies working directly on tackling Coronavirus – from prevention to testing and patient care.
Startups and companies offering free or deeply discounted services to support impacted people – from educating kids in quarantine to helping teams work better remotely.
In this post, I’ll be covering #2 only. At the time of writing this post there’s already been over 110 entries from Europe and Israel. Please fill this form to add your company. Hopefully this helps inspire more action-oriented entrepreneurs to contribute to solving this global pandemic in whatever way they can. I removed spam and irrelevant entries.
A few examples worth calling out:
Touchnote – Send a free postcard to vulnerable people who are isolated due to coronavirus, using the code KINDNESS20
Guild – Offering Guild free to any event organiser who has an event cancelled in the next 6 months as a way to engage their community and provide a means to communicate, connect and collaborate.
Genially – Create stunning presentations, infographics, and more, to help our educators community and facilitate #remotelearning. Our premium templates and resources will be made available for free.
CodeSpark Academy – At home kids coding for ages 5-9. Use promo code “schoolclosed” for 3 FREE Months
Geomiq – connecting design engineers with manufacturers. Making their platform available at no cost for whoever is manufacturing parts for ventilators (hopefully manufacturers will also manufacture at cost)
100+ startups offering free products or services in response to Covid-19
I’ll keep the form open another week and will continue to update this list.
A couple more resources for startups worth calling out: