Join GamesBeat Summit 2021 this April 28-29. Register for a free or VIP pass today. I’ve been spending a lot of time enjoying the Sega Genesis during 2021. That includes revisiting one of my favorite games from my childhood, 1991’s QuackShot. Sega created QuackShot as something of a follow-up to Castle of Illusion. But while Castle of I…Read More

This is not a boast, but a warning: I could write a how-to article on almost any topic.

Give me enough time to do some research, and I can put together a reliable step-by-step for building a custom gaming PC, installing a hot water heater or interpreting public health data. But since I’ve never actually done those things, I would encourage you to ignore any advice I have to offer.

Trusted advice comes from experience. That’s why Ron Miller interviewed three entrepreneurs who have each built multiple companies to uncover some essential truths about achieving product-market fit:

Pouyan Salehi, CEO and co-founder, ScratchpadRami Essaid, CEO and founder,  FinmarkMelonee Wise, CEO and co-founder, Fetch Robotics

The basic tenets presented in Ron’s story will resonate with anyone who’s launched a startup.

Alex Wilhelm was particularly prolific this morning: For The Exchange, he studied UiPath’s 2020 quarterly results to get a clearer picture of its first S-1/A filing. Is the “somewhat slack news regarding UiPath’s potential IPO valuation” a harbinger of things to come?

Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.

In a follow-up, he recapped news from the public debuts of Coinbase, UiPath, Zenvia, AppLovin and Grab, all of which “adds up to a somewhat muddled picture of the current IPO market.” It feels like we’re in a turbulent window, but it’s also possible that we’re in the calm after the storm, he suggests.

Final note: I asked TechCrunch graphic designer/illustrator Bryce Durbin to create an image to accompany this primer on raising a Series A round. He didn’t just exceed my expectations — it’s my favorite TechCrunch illustration ever. Thanks, Bryce!

I hope you got something out of reading Extra Crunch this week. Have a great weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

 

Building the right team for a billion-dollar startup

From building out Facebook’s first office in Austin to putting together most of Quora’s team, Bain Capital Ventures managing director Sarah Smith has done a bit of everything when it comes to hiring.

At TechCrunch Early Stage, she spoke about how to ensure the critical early hires are the right ones to grow a business. As an investor, Smith has a broad view into the problems companies face as they search for the right candidates to spur organizational success.

She touched on a number of issues, such as who to hire and when, when to fire and how to ensure diversity from the earliest days.

So you want to raise a Series A

During a seed-funding round, a founder needs to convince a venture capital investor on a vision. But during a Series A fundraise, napkin-stage ideas don’t make the cut — a founder needs product progress, numbers and revenue (or at least a plan to eventually generate some).

In many ways, the stakes are higher for a Series A — and Bucky Moore, a partner at Kleiner Perkins, joined TechCrunch Early Stage last week to give founders tactical advice on the process of raising one.

Moore spoke about storytelling over semantics, pricing and where his firm sees itself “raising the bar” for startups.

With the right tools, predicting startup revenue is possible

For a long time, “revenue” seemed to be a taboo word in the startup world. Fortunately, things have changed with the rise of SaaS and alternative funding sources such as revenue-based investing VCs.

Still, revenue modeling remains a challenge for founders. How do you predict earnings when you’re still figuring it out?

How we dodged risks and raised millions for our open-source machine learning startup

If you have a great idea within the open-core framework, expect your risks to be much lower than with a traditional business structure.

Clearly communicate this fact to venture capitalists for the best chance at securing the seed funding your organization needs.

But it takes more: Boasting a strong community around an emerging open-source product essentially serves as an “introduction letter” to venture capitalists. It highlights the founders’ ability to successfully execute their vision, as well as the mission to bring their product to a commercial reality.

Additionally, the iterative nature of open-source projects leads to fostering a sense of teamwork between the founders, their team and investors and stakeholders.

Founder and investor Melissa Bradley outlines how to nail your virtual pitch meeting

Melissa Bradley is the co-founder of a startup called Ureeka, an investor at 1863 Ventures and a professor at Georgetown’s business school. So it’s not an understatement to say that she understands the fundraising process from every angle.

She both invested and fundraised for her own startup during this last year, where the landscape has shifted drastically. At TechCrunch Early Stage, she led a session on how to nail your virtual pitch meeting.

Bradley covered how to allocate your time during the meeting, how to prepare, how to close out the meetings with a clear list of action items and what to avoid.

Scale CEO Alex Wang and Accel’s Dan Levine explain why sometimes unconventional VC deals are best

Scale CEO and co-founder Alex Wang credits its success since founding — which includes raising over $277 million and achieving breakeven status in terms of revenue — to early support from investors, including Accel’s Dan Levine.

Accel haș participated in four of Scale’s financing rounds, and Levine wrote one of the company’s very first checks. So on this past week’s episode of Extra Crunch Live, we spoke with Levine and Wang about how that first deal came together, and what their working relationship has been like in the years since.

 

Ride-hailing’s profitability promise is in its final countdown

Let’s parse Uber’s latest, vet its profit promise, consider its rivals and their performance, then ask ourselves if the great ride-hailing and food-delivery booms will ever make back the money they cost to scale.

 

UiPath’s first IPO pricing could be a warning to late-stage investors

For UiPath, its initial IPO price interval is a disappointment, though the company could see an upward revision in its valuation before it does sell shares and begins to trade.

But more to the point, the company’s private-market valuation bump followed by a quick public-market correction stands out as a counter-example to something that we’ve seen so frequently in recent months.

Is UiPath’s first IPO price interval another indicator that the IPO market is cooling?

 

How to choose and deploy industry-specific AI models

As artificial intelligence becomes more advanced, previously cutting-edge — but generic — AI models are becoming commonplace, such as Google Cloud’s Vision AI or Amazon Rekognition.

While effective in some use cases, these solutions do not suit industry-specific needs right out of the box. Organizations that seek the most accurate results from their AI projects will simply have to turn to industry-specific models.

Any team looking to expand its AI capabilities should first apply its data and use cases to a generic model and assess the results.

Let’s dive into each of these approaches and how businesses can decide which one works for their distinct circumstances.

Atomico’s talent partners share 6 tips for early-stage people ops success

In the earliest stages of building a startup, it can be hard to justify focusing on anything other than creating a great product or service and meeting the needs of customers or users.

However, there are still a number of surefire measures that any early-stage company can and should put in place to achieve “people ops” success as they begin scaling, according to venture capital firm Atomico‘s talent partners, Caro Chayot and Dan Hynes.

Long story short: You need to recruit for what you need, but you also need to think about what is coming down the line.

5 questions about Grab’s epic SPAC investor deck

Southeast Asian superapp Grab is going public via a SPAC.

Grab, which provides ride-hailing, payments and food delivery, will trade under the ticker symbol “GRAB” on the Nasdaq exchange when the combination is complete.

Let’s walk through several key points from Grab’s SPAC investor deck, including growth, segment profitability, aggregate costs and COVID-19, among other factors.

Expect an even hotter AI venture capital market in the wake of the Microsoft-Nuance deal

Microsoft’s huge purchase of health tech AI company Nuance led the technology news cycle this week. The $19.7 billion transaction is Microsoft’s second-largest to date, only beaten by its purchase of LinkedIn some years ago.

For the AI space, the sale is a coup. Nuance was already a public company, but to see Microsoft offer a firm premium over its public-market value demonstrates the value that AI technology can have to wealthy companies. For startups working in the AI space, the Nuance deal is good news; the value of AI revenue was repriced by the acquisition’s announcement — and for the better.

In light of the megadeal, The Exchange dug into the AI venture capital market. What’s happening on the startup side of the coin in the artificial intelligence and machine learning (AI/ML) space?

What’s fueling hydrogen tech?

When the word “hydrogen” is uttered today, the average non-insider’s mind likely gravitates toward transportation — cars, buses, maybe trains or 18-wheelers, all powered by the gas.

But hydrogen is, and does, a lot of things, and a better understanding of its other roles — and challenges within those roles — is necessary to its success in transportation.

Hydrogen is now capturing the attention of governments and private sector players, fueled by new tech, global green energy legislation and post-pandemic “green recovery” schemes.

5 product lessons to learn before you write a line of code

Before a startup can achieve product-market fit, founders must first listen to their customers, build what they require and fashion a business plan that makes the whole enterprise worthwhile.

The numbers will tell the true story, but when it happens, you’ll feel it in your bones because sales will be good, customers will be happy and revenue will be growing.

Reaching that tipping point can be a slog, especially for first-time founders. To uncover some basic truths about building products, we spoke to three entrepreneurs who have each built more than one company.

Inside the US’ epic first-quarter venture capital results

In broad strokes, the United States had a crushing venture capital start to the new year, pandemic be damned.

That is especially true when we consider 2020’s full-year figures. Last year, venture capitalists deployed some $166 billion into U.S.-based startups across 12,546 rounds. In contrast, if the first quarter’s pace was maintained during the rest of 2021, the United States would see around 16,000 rounds worth around $280 billion.

Of course, we cannot see the future, so those projections are merely shared to underscore how active the first quarter proved to be.

Dear Sophie: How can I get an H-1B without the lottery?

Dear Sophie:

For the past few years, our company has put very promising candidates into the annual H-1B lottery. None of them have been selected — and none of them meet the requirements for other work visas like an O-1A.

We lost out again in this year’s H-1B lottery. Are there any other ways we can obtain H-1Bs for our team members?

— Soldiering on in Sunnyvale

 

Alexa von Tobel outlines how founders should manage personal finances

Few people are more knowledgeable on the topic of how founders should manage their finances than Alexa von Tobel.

She is a certified financial planner, started her own company in the midst of the recession (which happened to be a wildly successful personal finance startup that sold for hundreds of millions of dollars) and is now a VC who invests and advises founders.

You’ll need to prick up your ears for this slice of deepfakery emerging from the wacky world of synthesized media: A digital version of Albert Einstein — with a synthesized voice that’s been (re)created using AI voice cloning technology drawing on audio recordings of the famous scientist’s actual voice.

The startup behind the “uncanny valley” audio deepfake of Einstein is Aflorithmic (whose seed round we covered back in February).

While the video engine powering the 3D character rending components of this “digital human” version of Einstein is the work of another synthesized media company — UneeQ — which is hosting the interactive chatbot version on its website.

Alforithmic says the “digital Einstein” is intended as a showcase for what will soon be possible with conversational social commerce. Which is a fancy way of saying deepfakes that make like historical figures will probably be trying to sell you pizza soon enough, as industry watchers have presciently warned.

The startup also says it sees educational potential in bringing famous, long-deceased figures to interactive “life”.

Or, well, an artificial approximation of it — the “life” being purely virtual and Digital Einstein’s voice not being a pure tech-powered clone either; Alforithmic says it also worked with an actor to do voice modelling for the chatbot (because how else was it going to get Digital Einstein to be able to say words the real-deal would never even have dreamt of saying — like, er, “blockchain”?). So there’s a bit more than AI artifice going on here too.

“This is the next milestone in showcasing the technology to make conversational social commerce possible,” Alforithmic’s COO Matt Lehmann told us. “There are still more than one flaws to iron out as well as tech challenges to overcome but overall we think this is a good way to show where this is moving to.”

In a blog post discussing how it recreated Einstein’s voice the startup writes about progress it made on one challenging element associated with the chatbot version — saying it was able to shrink the response time between turning around input text from the computational knowledge engine to its API being able to render a voiced response, down from an initial 12 seconds to less than three (which it dubs “near-real-time”). But it’s still enough of a lag to ensure the bot can’t escape from being a bit tedious.

Laws that protect people’s data and/or image, meanwhile, present a legal and/or ethical challenge to creating such “digital clones” of living humans — at least not without asking (and most likely paying) first.

Of course historical figures aren’t around to ask awkward questions about the ethics of their likeness being appropriated for selling stuff (if only the cloning technology itself, at this nascent stage). Though licensing rights may still apply — and do in fact in the case of Einstein.

“His rights lie with the Hebrew University of Jerusalem who is a partner in this project,” says Lehmann, before ‘fessing up to the artist licence element of the Einstein “voice cloning” performance. “In fact, we actually didn’t clone Einstein’s voice as such but found inspiration in original recordings as well as in movies. The voice actor who helped us modelling his voice is a huge admirer himself and his performance captivated the character Einstein very well, we thought.”

Turns out the truth about high-tech “lies” is itself a bit of a layer cake. But with deepfakes it’s not the sophistication of the technology that matters so much as the impact the content has — and that’s always going to depend upon context. And however well (or badly) the faking is done, how people respond to what they see and hear can shift the whole narrative — from a positive story (creative/educational synthesized media) to something deeply negative (alarming, misleading deepfakes).

Concern about the potential for deepfakes to become a tool for disinformation is rising, too, as the tech gets more sophisticated — helping to drive moves toward regulating AI in Europe, where the two main entities responsible for “Digital Einstein” are based.

Earlier this week a leaked draft of an incoming legislative proposal on pan-EU rules for “high risk” applications of artificial intelligence included some sections specifically targeted at deepfakes.

Under the plan, lawmakers look set to propose “harmonised transparency rules” for AI systems that are designed to interact with humans and those used to generate or manipulate image, audio or video content. So a future Digital Einstein chatbot (or sales pitch) is likely to need to unequivocally declare itself artificial before it starts faking it — to avoid the need for internet users to have to apply a virtual Voight-Kampff test.

For now, though, the erudite-sounding interactive Digital Einstein chatbot still has enough of a lag to give the game away. Its makers are also clearly labelling their creation in the hopes of selling their vision of AI-driven social commerce to other businesses.

By 2025, 463 exabytes of data will be created each day, according to some estimates. (For perspective, one exabyte of storage could hold 50,000 years of DVD-quality video.) It’s now easier than ever to translate physical and digital actions into data, and businesses of all types have raced to amass as much data as possible in order to gain a competitive edge.

However, in our collective infatuation with data (and obtaining more of it), what’s often overlooked is the role that storytelling plays in extracting real value from data.

The reality is that data by itself is insufficient to really influence human behavior. Whether the goal is to improve a business’ bottom line or convince people to stay home amid a pandemic, it’s the narrative that compels action, rather than the numbers alone. As more data is collected and analyzed, communication and storytelling will become even more integral in the data science discipline because of their role in separating the signal from the noise.

Yet this can be an area where data scientists struggle. In Anaconda’s 2020 State of Data Science survey of more than 2,300 data scientists, nearly a quarter of respondents said that their data science or machine learning (ML) teams lacked communication skills. This may be one reason why roughly 40% of respondents said they were able to effectively demonstrate business impact “only sometimes” or “almost never.”

The best data practitioners must be as skilled in storytelling as they are in coding and deploying models — and yes, this extends beyond creating visualizations to accompany reports. Here are some recommendations for how data scientists can situate their results within larger contextual narratives.

Make the abstract more tangible

Ever-growing datasets help machine learning models better understand the scope of a problem space, but more data does not necessarily help with human comprehension. Even for the most left-brain of thinkers, it’s not in our nature to understand large abstract numbers or things like marginal improvements in accuracy. This is why it’s important to include points of reference in your storytelling that make data tangible.

For example, throughout the pandemic, we’ve been bombarded with countless statistics around case counts, death rates, positivity rates, and more. While all of this data is important, tools like interactive maps and conversations around reproduction numbers are more effective than massive data dumps in terms of providing context, conveying risk, and, consequently, helping change behaviors as needed. In working with numbers, data practitioners have a responsibility to provide the necessary structure so that the data can be understood by the intended audience.

Today Squarespace, a well-known software-and-hosting provider for SMB websites, released its S-1 filing. The company is pursuing a direct listing on the New York Stock Exchange, or NYSE. It will trade under the ticker symbol “SQSP.”

The company’s financial results paint the picture of a rapidly growing company that has a history of profitability. Squarespace also has listed financial results that are inclusive of some share conversions, among other matters. Its pro forma results presume that “all shares of our convertible preferred stock had automatically converted” into different types of common stock. The pro forma results are also inclusive of a private placement, and its recent acquisition of Tock.

It will take some time to unspool that particular knot. For now we’ll stick to Squarespace’s historical results through 2020 without those accoutrements; if you intend to buy shares in the company, you’ll want to understand the more complicated math. For now let’s focus on Squarespace’s own metrics.

In 2019, Squarespace generated revenues of $484.8 million, leading to gross profit of $402.8 million, operating income of $61.3 million and net income of $58.2 million. In 2020 those numbers changed to revenues of $621.1 million, gross profit of $522.8 million, operating income of $40.2 million and net income of $30.6 million.

Squarespace’s revenue grew just over 28% in 2020, compared to 2019.

For reference, its pro forma results for 2020 include a modest revenue gain to $644.2 million, gross profit of $530.5 million, an operating loss of $246.4 million and a net loss of $267.7 million.

Squarespace has a history of cash generation, including operating cash flow of $102.3 million in 2019 and $150.0 million in 2020. The company’s cash flow data explains why Squarespace is not pursuing a traditional IPO. As Squarespace can self-fund, it does not need to sell shares in its public debut.

Turning to Squarespace-specific metrics, the company’s “unique subscriptions” rose from 2.984 million in 2019 to 3.656 million in 2020. Its annual recurring revenue (ARR) rose from $549.2 million to $705.5 million in 2020.

Squarespace’s ARR grew around 28.5% in 2020, a faster pace of expansion than its GAAP revenues.

Per the company’s SEC filing, the company “completed its estimate of the fair value of its Class A common stock for financial reporting purposes as a weighted-average $63.70 per share for shares granted prior to March 11, 2021.” That should help form a reference price measuring stick for now.

Finally, who owns the company? Major shareholders include the company’s founder and CEO Anthony Casalena, who owns just around 76% of the company’s Class B shares, or 49,086,410 total units. Accel has 15,514,196 Class A shares. General Atlantic has 22,361,073 Class A shares and 4,958,345 Class B shares, while Index Ventures has 19,460,619 of the Class A equity.

The majority of voting power rests with the company’s CEO, with 68.2% control. Public market investors will have to vet how much they like having zero say in the company’s future direction.

Regardless, this is going to be a fascinating debut. More shortly.

Soona, a startup aiming to satisfy the growing content needs of the e-commerce ecosystem, is announcing that it has raised $10.2 million in Series A funding led by Union Square Ventures.

When I wrote about Soona in 2019, the model focused on staging shoots that can deliver videos and photos in 24 hours or less. The startup still operates studios in Austin, Denver and Minneapolis, but co-founder and CEO Liz Giorgi told me that during the pandemic, Soona shifted to a fully virtual/remote model — customers ship their products to Soona, then watch the shoot remotely and offer immediate feedback, and only pay for the photos ($39 each) and video clips ($93 each) that they actually want.

In some cases, the studio isn’t even necessary — Giorgi said that 30% of Soona’s photographers and crew members are working from home.

Soona has now worked with more than 4,000 customers, including Lola Tampons, The Sill and Wild Earth, with revenue growing 400% last year. Giorgi said that even as larger in-person shoots become possible again, this approach still makes sense for many clients.

“There’s nothing we sell online that does not require a visual, but not every single visual requires a massive full-day shoot,” she said.

Giorgi also suggested that Soona’s approach has unlocked a “new level of scalability,” adding, “Internally at Soona, we really believe in the remote-shoot experience. It’s not only more efficient, it’s a lot more fun not having to fly a brand manager from Miami and have them spend a full day at a warehouse in New York. That’s not only cost-prohibitive, it’s also a time-consuming and exhausting process for everyone.”

The new funding follows a $1.2 million seed round. Giorgi said the Series A will allow Soona to develop a subscription product with more collaboration tools and more data about what kinds of visual content is most effective.

“There’s an opportunity to own the visual ecosystem of e-commerce from beginning to end,” she said.

Giorgi also noted that Soona continues to employ its “candor clause” requiring investors to disclose whether they’ve ever faced complaints of sexual harassment or discrimination. In fact, the clause has been expanded to cover complaints around racism, ableism or anti-LGBTQ discrimination.

“In some ways it’s a gate that prevents bad actors from being involved […] but it really drives a deeper connection with the investor and the founder,” Giorgi said. “We can have conversations about our values and how we see the world. We get to have a conversation about equality and justice at at time when we’re talking a lot about equity and the cap table.”

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Buy now, pay later is a way of paying for purchases via installment loans that generally have no interest. The concept has grown in popularity in recent years, especially in markets such as the United States, Europe and Australia. Numerous players abound, all fighting for market share — from Affirm to Klarna to Afterpay, among others.

But notably, none of these bigger players have yet to penetrate another very large market — Latin America. Enter Nelo, a startup founded by former Uber international growth team leads, which is building buy now, pay later in Mexico. The company is already live with more than 45 merchants and over 150,000 users.

San Francisco-based fintech-focused VC firm Homebrew led its recent seed round of $3 million, which also included participation from Susa Ventures, Crossbeam, Rogue Capital, Unpopular Ventures and others. With the latest capital infusion, Nelo has raised a total of $5.6 million since its 2019 inception.

Nelo is not the only player in the Mexican market. A number of others, including Alchemy and Addi, have recently outlined plans for buy now, pay later offerings in the region. But where Nelo has an advantage, believes CEO Kyle Miller, is its established relationships with about 45 merchants.

“What I’m excited about is the relationship with the merchants,” Miller told TechCrunch. “If we find a large global one and increase conversion for them, that is our defensibility [against competitors]. What’s important here is signing on merchants, since they usually only have one offering in their checkout.”

He and co-founder Stephen Hebson used to work for Uber’s international growth team, growing financial services products in India, Mexico, China and Brazil.

“We got to see a cross market where countries were accelerating and where others weren’t,” Miller recalls. “For example, China was a leader in mobile payments and digital finance in India was completely transformed.”

But in markets like Mexico, the percentage of cash payments for trips was very high. And to Miller and Hebson, this spelled opportunity.

Nelo launched its first product in Mexico in January 2020, similar to a debit card offering from a neobank. In the middle of the year, the company launched credit installment loans.

“It became immediately clear that it was going to be our most popular feature,” Miller said. “By the end of the year, it was the vast majority of our business and something that our users were telling their friends about. We were solving a real pain point.”

Indeed, cash remains the dominant method of payment in Mexico, with an estimated 86% of all payments being in the form of cash. According to eMarketer, the region was the fastest-growing e-commerce market in the world in 2020, with 37% year over year growth.

“Access to credit is something we take for granted in the U.S.,” Miller said. “By the end of the year, we realized this was the future of business, and we decided to focus just on credit.”

In March, Nelo launched its first product via an Android app and will be launching a web app soon.

Customers can use its offering like a credit card, connecting directly with merchants such as Netflix and Spotify. Many users are paying for things like utility bills and cell phone bills, turning them from prepaid to postpay.

With its current product, the company has lent about $2 million, and is seeing growth of about 20% month over month.

“We’re seeing massive demand for this new product in the way of organic signups,” Miller said, “for all the reasons Buy Now, Pay Later has been successful in markets like the U.S., Europe and Australia.”

Paying for installments is already common in Latin America, particularly in Brazil, so the concept is not foreign to residents in the region.

“We expected this is soon going to be a competitive market, so we’re hiring data scientists and engineers to continue improving our product, and grow,” Miller said.

Nelo has about 14 employees with an engineering team in New York.

Homebrew Partner Satya Patel says he’s excited about Nelo because he believes the startup “solves a serious problem related to the lack of credit for Mexican consumers.”

“Credit card penetration is less than 10% in Mexico and other forms of credit are effectively non-existent,” he wrote via email. “Nelo makes it possible for Mexicans to easily and inexpensively increase their purchasing power at the point of sale. And importantly, Nelo is delivering this solution online, supporting growing interest in e-commerce, and also offline, where consumers regularly shop today.”

Patel adds that what Nelo is building is valuable because he is not aware of any reliable, comprehensive consumer credit rating data set in Mexico.

“They are building underwriting models based on proprietary data and growing the merchant network at an incredible rate,” he said. “This buy now, pay later opportunity is untapped in Mexico but requires a very different approach than what has been successful in other markets.”

The Nelo team, according to Patel, understands the nuances of the market and “is executing at an exceptional pace.”

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If you only stayed up to date with the Coinbase direct listing this week, you’re forgiven. It was, after all, one heck of a flotation.

But underneath the cryptocurrency exchange’s public debut, other IPO news that matters did happen this week. And the news adds up to a somewhat muddled picture of the current IPO market.

To cap off the week, let’s run through IPO news from UiPath, Coinbase, Grab, AppLovin and Zenvia. The aggregate dataset should help you form your own perspective about where today’s IPO markets really are in terms of warmth for the often unprofitable unicorns of the world.

Recall that we’re in the midst of a slightly more turbulent IPO window than we saw during the last quarter. After seemingly watching every company’s IPO price above-range and then charge higher on opening day, several companies pulled their offerings as the second quarter started. It was a surprise.

Since then we’ve seen Compass go public, but not at quite the level of performance it might have anticipated, and, then, this week, much has happened.

What follows is a minidigest of IPO news from the week, tagged with our best read of just how bullish (or not) the happening really was:

UiPath’s first IPO price interval: Neutral to bearish. Though we anticipate that UiPath will set a higher IPO price interval before it begins to trade, that its first swing at-bat was a valuation cut of around $9 billion did not set our hearts aflame. And we could be wrong about it getting valued more richly before starting to trade.

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Robotic process automation platform UiPath filed its first S-1/A this week, setting an initial price range for its shares. The numbers were impressive, if slightly disappointing because what UiPath indicated in terms of its potential IPO value was a lower valuation than it earned during its final private fundraising. It’s hard to say that a company looking to go public at a valuation north of $25 billion is a letdown, but compared to preceding levels of hype, the numbers were a bit of a shock.

The Exchange explores startups, markets and money. 

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.

Here at The Exchange, we wondered if the somewhat slack news regarding UiPath’s potential IPO valuation was a warning to late-stage investors; the number of unicorns being minted or repriced higher feels higher than ever, and late-stage money has never been more active in the venture-backed startup world than it has been recently.

If UiPath were about to eat about $10 billion in worth to go public, it wouldn’t be the best indicator of how some of those late-stage bets will perform.

But in good news for UiPath shareholders, most everyone — ourselves included! — who discussed the company’s price range didn’t dig into the fact that the company first disclosed quarterly results to the same S-1/A filing that included its IPO valuation interval. And those numbers are very interesting, so much so that The Exchange is now generally expecting UiPath to target a higher price interval before it debuts.

That should either limit or close its private/public valuation gap, and, we imagine, lower a few investors’ blood pressure. Let’s look at the numbers.

UiPath’s fascinating 2020

The top-line numbers for UiPath’s 2020 are impressive. As we’ve discussed, the company grew its revenues from $336.2 million in 2019 to $607.6 million in 2020, while boosting its gross profit margin by 7 percentage points to 89% last year. That’s great!

And it improved its net margins from -155% in 2019 to just -15% in 2020. The company’s rapid growth, improving revenue quality and extreme deficit reduction were among the reasons it was a bit surprising to see its estimated public-market value come in so far underneath its final private price.

But let’s dig into the company’s quarterly results — a big thanks to the reader who sent us in this direction — to get a clearer picture of UiPath. Here’s the data:

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I listened to Wintering: The Power of Rest and Retreat in Difficult Times on Audible over the past week. It was spectacular.

Danielle Morrill recommended it to me. We had an intense up and down journey together with Mattermark, which was doing great until we made a fundamentally bad decision around the company’s strategic direction. The ride down, especially against the backdrop of what I expect would have been a success if we hadn’t made that strategic decision, was extremely challenging. We both learned from it, and it’s been awesome to see the journey that Danielle has been on since.

While I often run without listening to anything, I’ll occasionally listen to a book on Audible on long runs. I started Wintering last week during a run at Hall Ranch. I did another run at Hall Ranch the next day and listened to some more. I run a long loop from my house around McIntosh Lake in the dark and almost finished it two nights ago. Yesterday, I did a few miles in a classic Boulder spring snowstorm at the end of the day and finished it up.

Danielle recommended that I listen to it rather than read it, which turned out to be a great recommendation. The narrator (Rebecca Lee) was incredible. There was so much emotional impact and resonance that I thought it was the author (Katherine May) for a while until I looked it up.

Our entire species has been wintering since the Covid crisis hit. We are just starting to emerge from a literal winter, although the four inches of snow that fell at my house yesterday one of the last gasps of winter trying to hold on. Of course, whether we want to or not, personal winters often appear out of nowhere, even in the summertime.

There’s a paragraph from an NPR interview that sums up whatever review of the book I could write.

Wintering is refreshingly free of self-pitying navel-gazing and trite exhortations to buck up. In fact, May complains about a culture in which we are “endlessly cheerleading ourselves into positivity while erasing the dirty underside of real life…The subtext of these messages is clear: Misery is not an option.” Although she agrees that “Happiness is the greatest skill we’ll ever learn,” she insists that it’s also important to learn about sadness. What she calls wintering is “the active acceptance of sadness.”

I love the phrase “the active acceptance of sadness.” It’s a thing. It’s part of life. I can be for an hour or years. Passively accepting it or actively denying it makes it worse. Actively accepting it is profound.

The post Book: Wintering appeared first on Feld Thoughts.

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