You’ve probably learned from Reid Hoffman before, either through his inventions, investments or inspirational words. The entrepreneur is the co-founder of LinkedIn, a partner at Greylock and the author of a new book based off of his hit podcast, Masters of Scale. 

His storied past makes him chock-full of interesting anecdotes and lessons, which is why we’re excited to have him back on the TechCrunch Disrupt stage happening next week from September 21-23. I’ll sit down with him to learn about his perspective on some of the biggest tensions that entrepreneurs face today. Hoffman’s advice is often fueled by his raw conversations with top tech CEOs and founders, so we’ll broaden access to his speed-dial list to understand how even his own perceptions on blitzscaling, growth and entrepreneurship are changing amid the pandemic. As I explained in my review of his new book, his words read like a well-networked mentor giving you a pep talk — so even if you’re not building a startup, there will be useful lessons to learn just by listening.

Here’s how it impacted my interview process, for example:

While press wasn’t a main character in the book, “Master of Scale” has already changed my perspective on how I interview founders. Lessons from Tristan Walker made me want to ask more questions about founders, and their most controversial beliefs, rather than how they plan to spend their new round of funding. A note from Andrés Ruzo made me realize that a startup that makes too much sense might be a comfortable read, but it might not be a moonshot that disrupts the world; in other words, pursue the startups that have too much seemingly foolish ambition — because they may be where the best strides, and stories, are made. Finally, it confirmed my belief that the best litmus test for a founder is if they are willing to talk about the hardships ahead of them in an honest, humble way.

OK, that’s all I’m hinting. Join me at Disrupt, where I’ll put Hoffman on the hot seat, balance out the cheerfulness with some cynical takes and push him to explain what his inevitable next book is about. Buy your tickets to TechCrunch Disrupt using this link, or use promo code “MASCARENHAS20” for a little discount from me.

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Businesses that don’t invest in their future may not have a future to look forward to.

Whether you’re investing in your human resources or in critical tech, some outlay in the short term is always needed for long-term success. That’s true when it comes to marketing as well — you can’t market your product or service without investing in advertising. But if that investment isn’t turning into leads and conversions, you’re in trouble.

It’s vital to identify and apply the most suitable metrics based on business goals, and there’s no one best practice or one-size-fits-all method.

However, smart use of the return on advertising spend (ROAS) data can triple lead generation, as I discovered when I joined Brightpearl to restructure the marketing campaigns. Let’s take a look at some of the ways Brightpearl used ROAS to improve campaigns and increase lead generation. The key is to work out what represents a healthy ROAS for your business so that you can optimize accordingly.

Use the right return metric

It is paramount to choose the right return metric to calculate your ROAS. This will depend partly on your sales cycle.

Brightpearl has a lengthy sales cycle. On average it’s two to three months, and sometimes up to six months, meaning we don’t have tons of data on a monthly basis if we want to use new customer’s revenue data as the return metric. A company with a shorter sales cycle could use revenue, but that doesn’t help us to optimize our campaigns.

We chose to use the sales accepted opportunity (SAO) value instead. It usually takes us about a month to measure, so we can get more ROAS data at the same time. It’s the last sales stage before a win, and it’s more in line with our company goal (to grow our recurring annual revenue), but takes less time to gather the data.

By the SAO stage, we know which leads are good quality­ — they have the budget, are a good fit, and our software can meet their requirements. We can use them to measure our campaign performance.

When you choose a return metric, you need to make sure it matches your company goal without taking ages to get the data. It also has to be measurable at the campaign level, because the aim of using ROAS or other metrics is to optimize your campaigns.

Accept that less is more

I’ve noticed that many companies harbor a fear of missing out on opportunities, which leads them to advertise on all available channels instead of concentrating resources on the most profitable areas.

Prospects usually do their research on multiple channels, so you might try to cover all the possible touch points. In theory, this could generate more leads, but only if you had an unlimited marketing budget and human resources.

The speed at which gaming has proliferated is matched only by the pace of new buzzwords inundating the ecosystem. Marketers and decision-makers, already suffering from FOMO about opportunities within gaming, have latched onto buzzy trends like the applications of blockchain in gaming and the “metaverse” in an effort to get ahead of the trend rather than constantly play catch-up.

The allure is obvious, as the relationship between the blockchain, metaverse and gaming makes sense. Gaming has always been on the forefront of digital ownership (one can credit gaming platform Steam for normalizing the concept for games, and arguably other media such as movies), and most agreed upon visions of the metaverse rely upon virtual environments common in games with decentralized digital ownership.

Whatever your opinion of either, I believe they both have an interrelated future in gaming. However, the success or relevance of either of these buzzy topics is dependent upon a crucial step that is being skipped at this point.

Let’s start with the example of blockchain and, more specifically, NFTs. Collecting items of varying rarities and often random distribution form some of the core “loops” in many games (e.g., kill monster, get better weapon, kill tougher monster, get even better weapon, etc.), and collecting “skins” (i.e., different outfits/permutation of game character) is one of the most embraced paradigms of microtransactions in games.

Now, NFTs are positioned to be a natural fit with various rare items having permanent, trackable and open value. Recent releases such as “Loot (for Adventurers)” have introduced a novel approach wherein the NFTs are simply descriptions of fantasy-inspired gear and offered in a way that other creators can use them as tools to build worlds around. It’s not hard to imagine a game built around NFT items, à la Loot.

But that’s been done before … kind of. Developers of games with a “loot loop” like the one described above have long had a problem with “farmers,” who acquire game currencies and items to sell to players for real money, against the terms of service of the game. The solution was to implement in-game “auction houses” where players could instead use real money to purchase items from one another.

Unfortunately, this had an unwanted side effect. As noted by renowned game psychologist Jamie Madigan, our brains are evolved to pay special attention to rewards that are both unexpected and beneficial. When much of the joy in some games comes from an unexpected or randomized reward, being able to easily acquire a known reward with real money robbed the game of what made it fun.

The way NFTs are currently being discussed in relation to gaming are very much in danger of falling into this very trap: Killing the core gameplay loop via a financial fast track. The most extreme examples of this phenomena commit the biggest cardinal sin in gaming — a game that is “pay to win,” where a player with a big bankroll can acquire a material advantage in a competitive game.

Blockchain games such as Axie Infinity have rapidly increased enthusiasm around the concept of “play to earn,” where players can potentially earn money by selling tokenized resources or characters earned within a blockchain game environment. If this sounds like a scenario that can come dangerously close to “pay to win,” that’s because it is.

What is less clear is whether it matters in this context. Does anyone care enough about the core game itself rather than the potential market value of NFTs or earning potential through playing? More fundamentally, if real-world earnings are the point, is it truly a game or just a gamified micro-economy, where “farming” as described above is not an illicit activity, but rather the core game mechanic?

The technology culture around blockchain has elevated solving for very hard problems that very few people care about. The solution (like many problems in tech) involves reevaluation from a more humanist approach. In the case of gaming, there are some fundamental gameplay and game psychology issues to be tackled before these technologies can gain mainstream traction.

We can turn to the metaverse for a related example. Even if you aren’t particularly interested in gaming, you’ve almost certainly heard of the concept after Mark Zuckerberg staked the future of Facebook upon it. For all the excitement, the fundamental issue is that it simply doesn’t exist, and the closest analogs are massive digital game spaces (such as Fortnite) or sandboxes (such as Roblox). Yet, many brands and marketers who haven’t really done the work to understand gaming are trying to fast-track to an opportunity that isn’t likely to materialize for a long time.

Gaming can be seen as the training wheels for the metaverse — the ways we communicate within, navigate and think about virtual spaces are all based upon mechanics and systems with foundations in gaming. I’d go so far as to predict the first adopters of any “metaverse” will indeed be gamers who have honed these skills and find themselves comfortable within virtual environments.

By now, you might be seeing a pattern: We’re far more interested in the “future” applications of gaming without having much of a perspective on the “now” of gaming. Game scholarship has proliferated since the early aughts due to a recognition of how games were influencing thought in fields ranging from sociology to medicine, and yet the business world hasn’t paid it much attention until recently.

The result is that marketers and decision-makers are doing what they do best (chasing the next big thing) without the usual history of why said thing should be big, or what to do with it when they get there. The growth of gaming has yielded an immense opportunity, but the sophistication of the conversations around these possibilities remains stunted, due in part to our misdirected attention.

There is no “pay to win” fast track out of this blind spot. We have to put in the work to win.

Whatnot, a livestreaming shopping platform for collectors to buy and sell things like rare Pokémon cards and Funko Pops, has closed a $150 million Series C — its third round of fundraising in 2021 alone. This round pins Whatnot’s valuation at $1.5 billion, earning it a spot on the ever-growing list of unicorns.

So what’s a Whatnot? The app captures a trend that had been growing popular on platforms like Instagram in the U.S. (and was already hugely popular in China): live shopping. Verified sellers can go on the air at any time, hosting on-the-fly video auctions for their goods. Sometimes buyers know exactly what they’re getting. Other times it’s more of a mystery bag; with the popular “card break” concept, for example, users buy assigned portions of an unopened (and often itself rare) box of Pokémon or sports cards and watch its contents revealed live.

This round was funded by return investors a16z and Y Combinator’s Continuity Fund, along with one new firm joining them: CapitalG (which was known as Google Capital before the Google/Alphabet name change.) They’ve also added a few well-known names to their list of angel investors, including Andre Iguodala of the Golden State Warriors, Zion Williamson of the New Orleans Pelicans and Logan Paul of the YouTube. Initial word of this round broke last week, via The Information.

Whatnot originally started as a more standard (less live) resale platform, at first focused on authenticating just one kind of collectable: Funko Pops. As the pandemic took over and everyone was suddenly stuck at home, they leaned hard into live shopping — and grew rapidly as a result.

Meanwhile, the company has been quickly expanding its scope; it grew from just Funko Pops to all sorts of other collectables, including Pokémon cards, pins, vintage clothing, sneakers and more. Whatnot co-founder Grant Lafontaine tells me that its biggest driver is sports cards, followed by Pokémon and Funko Pops. With each category it dives into, Whatnot focuses on onboarding sellers that are already known and trusted in their respective community; each streamer on the platform is currently vetted by the company before they can go live, helping them keep fraud to a minimum. Doing anything sketchy just means getting booted off the platform and burning your own reputation in the process.

A few other key bits from my conversation with Lafontaine:

He sees “thousands” of potential categories they can expand into. One they’re working on right now: NFTs. Streamers would be able to import their NFTs into Whatnot, displaying them on screen and bringing them in as (static or animated) overlays in the livestream. Users could tap an onscreen NFT to reveal its metadata and learn more about it.He says there are “a couple thousand active livestream sellers” on the platform right now.The company’s GMV (the total value of everything sold on the platform) is up 30x since its Series A back in the beginning of this year. Whatnot takes an 8% cut on each sale.They’re in the middle of rolling out a “pre-bidding” feature, which will allow users to bid on items they know they want ahead of a livestream — if, for example, the user knows they want a certain thing and want a shot at it, but won’t be able to watch live. Others could still out-bid them, of course.The company is soon rolling out a complete rebuild of both its iOS and Android apps, with a new UI meant to make the entire process smoother and easier for both buyers and sellers. Lafontaine expects it to ship to everyone in “the next week or two.”

This round brings the company’s total funds raised to $225 million — pretty much all of that in the last year. Meanwhile, competition in the space is heating up; competitors like Popshop have been raising millions for their platforms, and Miami’s Loupe raised $12 million back in June (and is opening a physical retail space soon) with its focus laser-locked on sports cards live sales. Existing giants want in on it too: YouTube is playing with the live shopping concept, and Amazon has been bringing in influencers to host live sessions. In other words: watch this space. Maybe watch it via livestream.

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It’s a story common to all sectors today: investors only want to see ‘uppy-righty’ charts in a pitch. However, edtech growth in the past 18 months has ramped up to such an extent that companies need to be presenting 3x+ growth in annual recurring revenue to even get noticed by their favored funds.

Some companies are able to blast this out of the park — like GoStudent, Ornikar and YouSchool — but others, arguably less suited to the conditions presented by the pandemic, have found it more difficult to present this kind of growth.

One of the most common themes Brighteye sees in young companies is an emphasis on international expansion for growth. To get some additional insight into this trend, we surveyed edtech firms on their expansion plans, priorities and pitfalls. We received 57 responses and supplemented it with interviews of leading companies and investors. Europe is home 49 of the surveyed companies, six are based in the U.S., and three in Asia.

The survey revealed a roughly even split of target customers across companies, institutions and consumers, as well as a good spread of home markets. The largest contingents were from the U.K. and France, with 13 and nine respondents respectively, followed by the U.S. with seven, Norway with five, and Spain, Finland, and Switzerland with four each. About 40% of these firms were yet to foray beyond their home country and the rest had gone international.

International expansion is an interesting and nuanced part of the growth path of an edtech firm. Unlike their neighbors in fintech, it’s assumed that edtech companies need to expand to a number of big markets in order to reach a scale that makes them attractive to VCs. This is less true than it was in early 2020, as digital education and work is now so commonplace that it’s possible to build a billion-dollar edtech in a single, larger European market.

But naturally, nearly every ambitious edtech founder realizes they need to expand overseas to grow at a pace that is attractive to investors. They have good reason to believe that, too: The complexities of selling to schools and universities, for example, are widely documented, so it might seem logical to take your chances and build market share internationally. It follows that some view expansion as a way of diversifying risk — e.g. we are growing nicely in market X, but what if the opportunity in Y is larger and our business begins to decline for some reason in market X?

International expansion sounds good, but what does it mean? We asked a number of organizations this question as part of the survey analysis. The responses were quite broad, and their breadth to an extent reflected their target customer groups and how those customers are reached. If the product is web-based and accessible anywhere, then it’s relatively easy for a company with a good product to reach customers in a large number of markets (50+). The firm can then build teams and wider infrastructure around that traction.

“I’ve seen startups spend thousands of dollars inefficiently as a result of not having optimal signal in their paid acquisition campaigns. I’ve also spent millions at companies such as Postmates refining our signal to the best possible state,” says growth marketer Jonathan Martinez in a guest column for Extra Crunch this week. “I’d like every startup to avoid the painful mistake of not having this set up correctly, instead making the most of every important ad dollar.”

The TechCrunch team has been busy this past week, especially with Disrupt next week and the iOS 15 release date quickly approaching. If you haven’t already registered for Disrupt, it’s not too late to get a ticket. We’re excited for all of the sessions, including “The Subtle Challenges of Assessing Product-Market Fit” on Tuesday, September 21 from 2:05 PM – 2:45 PM EDT the Extra Crunch stage. The marketing world was full steam ahead this past week, Martinez covered how to optimize signal and Miranda Halpern spoke with Vivek Sharma, CEO of Movable Ink about the impact that iOS 15 will have on email marketers. We also had guest posts from Bryan Dsouza of Grammarly and Xiaoyun TU of Brightpearl. More details below.

Help TechCrunch find the best growth marketers for startups.

Provide a recommendation in this quick survey and we’ll share the results with everybody.

If you didn’t already hear, we’re giving away one free ticket to Disrupt, through the Experts survey. Check out the schedule for Disrupt, and read on to learn about the giveaway details:

Have you already submitted a recommendation? That’s great — we’re counting all previous survey submissions as an entry for the Disrupt ticket.We’ll also enter the next 100 survey submissions into the giveaway.Do you want to submit 10 recommendations to increase your chance at winning? We love the enthusiasm, but we ask that you only submit one recommendation for each marketer that you’ve worked with.Don’t know what to say in your recommendation? Start with what traits they had, what they did to help your company, how their work affected your business and go from there!We manually go through all entries, so please don’t copy and paste the same response multiple times.Have a question about the giveaway? Send us an email at This email address is being protected from spambots. You need JavaScript enabled to view it..The survey will stay open, but we won’t be counting submissions as entries to this giveaway after Sunday, September 19, 11:59 pm PT.

Marketer: Andrew Race, Juice
Recommended by: Orin Singh, Merchant Industry
Testimonial: “We were referred to Juice by a family friend of my company’s owner and as a personal courtesy they said they were giving us their best guy. Naturally we thought that is what everyone says but they were not kidding. Andrew was singularly leagues above our previous marketing company. Having someone so knowledgeable and willing to learn a new industry proved to be the turning point for us.”

In growth marketing, signal determines success: Martinez learned from his mistakes, and share the lessons learned with us. From selecting the signal, to how to enhance it, Martinez covers key aspects including how to take advantage of iOS 14. He says, “So how do you stay ahead and continue moving the needle on your growth marketing campaigns? First and foremost, constantly question the events you’re optimizing for. And second, leave no stone unturned.”

Marketers should plan for more DIY metrics as iOS 15 nears: The release of iOS 15 will change that playing field for marketers. They’ll have to rely on metrics that use zero and first-party data rather than relying on email open rates as the main metric. Miranda spoke with Sharma about how this release will impact the industry and what marketers should focus on. One tip from Sharma is, “Focus on down funnel metrics like clicks and conversions — that’s what it really comes down to and that’s the truest indicator of engagement.”

(Extra Crunch) Demand Curve: How to get social proof that grows your startup: Nick Costelloe, head of content at Demand Curve, dives into social proof and how startups can use it to their advantage. On social proof, Costelloe says, “Have you ever stopped to check out a restaurant because it had a large lineup out front? That wasn’t by chance. It’s common for restaurants to limit the size of their reception area. This forces people to wait outside, and the line signals to people walking past that the restaurant is so good it’s worth waiting for.”

(Extra Crunch) 5 things you need to win your first customer: Dsouza, product marketing lead at Grammarly, walks us through how to win your first customer. He includes explanations, how-tos, and practice use cases. Dsouza says,” . . .ask any founder what really proves their startup has taken off, and they will almost instantly say it’s when they win their first customer.”

(Extra Crunch) 4 ways to leverage ROAS to triple lead generation: TU, global director of demand generation at Brightpearl, walks us through ways to use return on advertising spending (ROAS). She says, “When you choose a return metric, you need to make sure it matches your company goal without taking ages to get the data.”

Tell us who your favorite startup growth marketing expert to work with is by filling out our survey.

While the technology and business world worked towards the weekend, developer operations (DevOps) firm GitLab filed to go public. Before we get into our time off, we need to pause, digest the company’s S-1 filing, and come to some early conclusions.

GitLab competes with GitHub, which Microsoft purchased for $7.5 billion back in 2018.

The company is notable for its long-held, remote-first stance, and for being more public with its metrics than most unicorns — for some time, GitLab had a November 18, 2020 IPO target in its public plans, to pick an example. We also knew when it crossed the $100 million recurring revenue threshold.

The company’s IPO has therefore been long expected. In its last primary transaction, GitLab raised $286 million at a post-money valuation of $2.75 billion, per Pitchbook data. The same information source also notes that GitLab executed a secondary transaction earlier this year worth $195 million, which gave the company a $6 billion valuation.

Let’s parse GitLab’s growth rate, its final pre-IPO scale, its SaaS metrics, and then ask if we think it can surpass its most recent private-market price. Sound good? Let’s rock.

The GitLab S-1

GitLab intends to list on the Nasdaq under the symbol “GTLB.” Its IPO filing lists a placeholder $100 million raise estimate, though that figure will change when the company sets an initial price range for its shares. Its fiscal year ends January 31, meaning that its quarters are offset from traditional calendar periods by a single month.

Let’s start with the big numbers.

In its fiscal year ended January 2020, GitLab posted revenues of $81.2 million, gross profit of $71.9 million, an operating loss of $128.4 million, and a modestly greater net loss of $130.7 million.

And in the year ended January 31, 2021, GitLab’s revenue rose roughly 87% to $152.2 million from a year earlier. The company’s gross profit rose around 86% to $133.7 million, and operating loss widened nearly 67% to $213.9 million. Its net loss totaled $192.2 million.

This paints a picture of a SaaS company growing quickly at scale, with essentially flat gross margins (88%). Growth has not been inexpensive either — GitLab spent more on sales and marketing than it generated in gross profit in the past two fiscal years.

When people are uncertain, they look to others for behavioral guidance. This is called social proof, which is a physiological effect that influences your decisions every day, whether you know it or not.

At Demand Curve and through our agency Bell Curve, we’ve helped over 1,000 startups improve their ability to convert cold traffic into repeat customers. We’ve found that effectively using social proof can lead to up to 400% improvement in conversion.

This post shares exactly how to collect and use social proof to help grow your SaaS, e-commerce, or B2B startup.

How businesses use social proof

Have you ever stopped to check out a restaurant because it had a large line of people out front? That wasn’t by chance.

It’s common for restaurants to limit the size of their reception area. This forces people to wait outside, and the line signals to people walking past that the restaurant is so good it’s worth waiting for.

But for Internet-based businesses, social proof looks a bit different. Instead of people lining up outside your storefront, you’re going to need to create social proof that resonates with your target customers — they’ll be looking for different clues to signal whether doing business with your company is “normal” or “acceptable” behavior.

Social proof for B2B

People love to compare themselves to others, and this is especially true when it comes to the customers of B2B businesses. If your competitor is able to get a contract with a company that you’ve been nurturing for months, you’d be upset (and want to know how they did it).

Therefore, B2B social proof is most effective when you display the logos of companies you do business with. This signals to people checking out your website that other businesses trust you to deliver on your offer. The more noteworthy or respected the logos on your site, the stronger the influence will be.

Social proof for SaaS

Depending on the type of SaaS product or service you’re selling, you’ll either be selling to an individual or to a business. The strategy remains the same, but the channels will vary slightly.

The most effective way to generate social proof for SaaS products is through positive reviews from trusted sources. For consumer SaaS, that will be through influential bloggers and YouTubers speaking highly of your product. For B2B SaaS, it will be through positive ratings on review sites like G2 or Capterra. Proudly display these testimonials on your site.

Social proof for e-commerce brands

E-commerce brands will typically sell directly to an individual through ads, but because anyone can purchase an ad, you’re going to need to signal trust in other ways. The most common way we see e-commerce brands building social proof is by nurturing an organic social media following on Instagram or TikTok.

This signals to new customers that you’ve gotten the seal of approval from others like them. Having an audience also allows you to showcase user-generated content from your existing customers.

How to collect social proof

There are five avenues startups can tap to collect social proof:

Product reviewsTestimonialsPublic relations and earned mediaInfluencersSocial media and community

Here are a few tactics we’ve used to help startups build social proof.

Apple is planning to remove developer access to important user data as part of its iOS 15 release on Monday, leaving email marketers in a dilemma about how they will figure out metrics. To find out how the industry is approaching this problem, we spoke with Vivek Sharma, CEO of Movable Ink, a software company that helps marketers act on the data they’re collecting.

This conversation builds on our Extra Crunch post from August exploring how email marketers can prepare for Apple’s Mail Privacy Protection changes.

The game-changer for email marketers with this update is that as an Apple Mail user, you’ll have the option to hide your IP address.

How can marketers pivot their tactics to remain in control of their metrics? Sharma feels we’ll see more focus on downstream metrics rather than the open rate — on clicks, conversions and revenue. “That sounds great and everything, but you have less of that data. But by definition, that funnel kind of narrows; there are fewer people to get to at that point, so it might take you longer to know if something is working or not working for you.”

Help TechCrunch find the best growth marketers for startups.

Provide a recommendation in this quick survey and we’ll share the results with everybody.

Sharma says zero-party data is something that businesses have been focused on. “There are two components: There’s ‘open’ as a metric, and there’s some of the information you’re getting at open time, like the IP address, the time of day, and the inferred weather. Things like the IP address, time of date, etc. are perceived as data leakage. These are just a couple of the data points that marketers will lose access to. Therefore they are using first and zero-party data which they have already been investing in.”

The challenge, according to Sharma, is: How can marketers collect zero-party data in an interesting, visually appealing way, and then personalize its contents for every customer at scale?

One way that Movable Ink has collected zero-party data is displayed below:

Sharma says, “Everything in here is a polling question: ‘What do you typically shop for?’ ‘What’s your shoe size?’ And they’re giving you loyalty points in return, so there’s an exchange of value happening here. They’re learning about you in a clear way and giving you an easy way to engage with the brand you’re interested in.”

Once you have the data, the question is: How do you use it? Below we see an example from JetBlue.

Sharma outlines three takeaways from iOS 15 for email marketers:

Focus on down-funnel metrics like clicks and conversions — that’s what it really comes down to and it’s the truest indicator of engagement.Invest in your zero and first-party data assets. True personalization is what people experience and what they see. You can do that from your zero and first-party assets.Email is a great channel to engage your customers, because it’s a mature one that’s been invested in. Email is an awesome channel for building a one-to-one relationship with your customer, and far more. It has gone through lots of changes over the last 10 or 15 years. The industry will evolve and we’ll find that balance of privacy and personalization.

Ginkgo Bioworks, a synthetic biology company now valued at around $15 billion, begins trading on the New York Stock Exchange today.

Ginkgo’s market debut is one of the largest in biotech history. It’s expected to raise about $1.6 billion for the company. It’s also one of the biggest SPAC deals done to date — Ginkgo is going public through a merger with Soaring Eagle Acquisition Corp., which was announced in May. 

Shares opened at $11.15 each this morning under the ticker DNA — biotech dieharders will recognize it as the former ticker used by Genentech. 

The exterior of the NYSE is decked out in Ginkgo décor. The imagery is clearly sporting Jurassic Park themes, as MIT Tech Review’s Antonio Regalado pointed out. It’s probably intentional: Jason Kelly, the CEO of Ginkgo Bioworks, has been re-reading “Jurassic Park” this week, he tells TechCrunch. 

The décor also sports a company motto: “Grow everything.”

Ginkgo was founded in 2009, and now bills itself as a synthetic biology platform. That’s essentially premised on the idea that one day, we’ll use cells to “grow everything,” and Ginkgo’s plan is to be that platform used to do that growing. 

Kelly, who often uses language borrowed from computing to describe his company, likens DNA to code. Ginkgo, he says, aims to “program cells like you can program computers.” Ultimately, those cells can be used to make stuff: like fragrances, flavors, materials, drugs or food products. 

The biggest lingering question over Ginkgo, ever since the SPAC deal was announced, has centered on its massively high valuation. When Moderna, now a household name thanks to its COVID-19 vaccines, went public in 2018, the company was valued at $7.5 billion. Ginkgo’s valuation is double that number. 

“I think that surprises people to be honest,” Kelly says. 

How is Ginkgo going to make money? 

Ginkgo’s massive valuation seems even starker when you look at its existing revenues. SEC documents show that the company pulled in $77 million in revenue in 2020, which increased to about $88 million in the first six months of 2021 (per an August investor call). The company has also reported losses: including $126.6 million in December 2020 and $119.3 million in 2019. 

Ginkgo is aiming to increase revenue a significant amount in 2021. SEC documents initially noted that the company aimed to draw about $150 million in revenue in 2021, but the August earning call updated that total for the year to over $175 million. 

Ginkgo aims to make money in two ways: first it contracts with manufacturers during the research and development phase (i.e. while the company works out how to manufacture a cell that spits out a certain fragrance, bio-based nylon or meatless burger). That process happens in Ginkgo’s “foundry,” a massive factory for bioengineering projects. 

This source of money is already starting to flow. Ginkgo reported $59 million in foundry revenue for 2020, and anticipates $100 million in 2021, per the August investor call. 

This revenue, though, isn’t covering the full costs of Ginkgo’s operations, according to the information shared by the company in SEC documents. It is covering an increasing share, though, and as Ginkgo scales up its platform, costs will come down. Based on fees alone, Kelly projects Ginkgo will break even by 2024 or 2025. 

The second type of revenue comes from royalties, milestone payments or, in some cases, equity stakes in the companies that go on to sell products, like fragrances or meatless burgers, made using Ginkgo’s facilities or know-how. It’s this source of income that will make up the vast majority of the company’s future worth, according to its expectations. 

Once the product is made and marketed by another company, it requires little to no more work on Ginkgo’s part — all the company does is collect cash. 

The company is often hesitant to incorporate these earnings into projections, because they rely on other companies bringing products to market. That means it’s hard to know for sure when these downstream payments will emerge. “In our models, we are very sensitive that, at the end of the day, they’re not our products. I cannot predict when Roche might bring a drug to market and give me my milestones,” says Kelly. 

Kelly says there’s evidence this model will start to work in the near-term. 

Ginkgo earned a “bolus” milestone payment of 1.5 million shares of The Cronos Group, a cannabis company, for developing a commercially viable, lab-grown rare cannabinoid called CBG for commercial use (there are seven more in strains development, says Kelly). These milestone payments (in cash or shares) are earned when a company achieves some predetermined goal using Ginkgo’s platform. 

Ginkgo has also worked with Aldevron to manufacture an enzyme critical to the production of mRNA vaccines, and plans to collect royalty payments from that relationship — though no foundry fees were collected from this project. 

Finally, Ginkgo has negotiated an equity stake in Motif Foodworks, a spinout company based on its technology. That company has so far raised about $226 million, and will aim to launch a lab-grown beef product developed at Ginkgo’s foundry, paying Ginkgo the aforementioned foundry fees already for this contribution.

“The biggest value driver” of Ginkgo, according to Kelly

This rich source of cash will depend a lot on the outside contractor’s ability to manufacture and sell products made using Ginkgo’s platform. This opens the company up to some risk that’s beyond its control. Maybe, for instance, it turns people don’t want bio-manufactured meat as much as many anticipated — that means some types of downstream payments may not materialize. 

Kelly says he’s not particularly worried about this. Even if one particular program fails, he’s planning on having so many programs running that one or two are bound to succeed. 

“I’m just sorta like: some will work, some won’t work. Some will take a year, some will take three years. It doesn’t really matter, as long as everybody is working with us,” he says. “Apple doesn’t stress about what apps are going to be the next big app in the app store,” he continues.  

One key metric to watch for Ginkgo going forward will be how many new cell programs they’re managing to close. So far, Ginkgo has added 30 programs this year, says Kelly. Last year, there were 50 programs. 

Remember: Some of the projects are Ginkgo spinouts, like Motif Foodworks, not customers that come to the platform on their own. And historically, the number of companies Ginkgo has partnered with has been a point of criticism. Per SEC documents, the majority of revenue came from two large partners in 2020 — though Kelly told Business Insider that this was a pandemic-related downturn. 

The more programs Ginkgo has, the more it becomes insulated from the success or failure of any one product. Plus it’s a sign that people are at least using the “app store” for biology. 

“The biggest value driver of Ginkgo is how quickly we add programs,” Kelly says.