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Wednesday, September 28, 2022

What do you call the opposite of the startup halo effect? – londonbusinessblog.com

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Welcome to Startups Weekly, a fresh look at this week’s start and startup trends. To get this in your inbox, subscribe here.

Just as the success of one company shouldn’t cast a halo on the brethren of its vertical, the layoffs of one company don’t quite mean its competitors are equally screwed. Instead, I think changes within a particular startup can be used as benchmark questions for their larger market; in other words, we can use the micro to better understand the macro.

With that in mind, I want to talk about MasterClass’s decision to lay off 20% of its staff, about 120 people, in all teams. The staff reduction, according to CEO David Rogier on Twitter, was made “to adapt to the deteriorating macro environment and become self-reliant more quickly.” In other words, the company – which sells subscriptions to classes taught by celebrities – is looking for operational discipline and needs to cut staff to get there.

The layoffs put a spotlight on the premise behind MasterClass. When I first reported on the company in March 2020, I got stuck in the field of ambitious learning.

[MasterClass] also touches on the audience’s innate curiosity about how famous people think and work. MasterClass is kind of pulling on that idea by also offering classes that basically don’t make sense to be ‘digitized’. Think of sports with a lot of contact, such as a tennis lesson from Serena Williams or a basketball lesson from Steph Curry. Or just general comments from RuPaul on self-expression and Neil deGrasse Tyson on scientific thinking and communication.

Despite its flashy array of stars, MasterClass isn’t selling admission, but instead a window into one’s work calendar. Celebrities don’t interact with students on a daily basis, and sometimes not at all.

About a year later, I came back to this idea while trying to figure out what MasterClass fame meant to edtech. Fiveable founder Amanda DoAmaral said at the time that MasterClass raises the bar for content quality across edtech, while Toucan founder Taylor Nieman pointed out that MasterClass faces the same issues “as so many other consumer products trying to save time.” steal from the very busy days.”

So what is MasterClass? A high bar for edtech quality? Or a more educational Netflix?

For my full opinion, read my londonbusinessblog.com+ column, “Startup layoffs, the art of reinventing and a masterclass in change.”

In the rest of this newsletter, we’ll talk about multiplayer fintech and the world of grocery delivery. As always, you can support me by forwarding this newsletter to a friend or follow me on twitter or subscribe to my blog.

Offer of the week

Well, here’s a first: Accel is introducing a new $4 billion fund at a late stage, just as certain rivals are losing momentum, Connie Loizos reports. Here’s my deal of the week, namely because it’s a subtweet to Tiger Global and SoftBank’s slow down, but in the classy way that only a 39-year-old firm would dare.

Here’s why it’s important: For venture history nerds, this news isn’t just about a large number. As Loizos explains below, Accel has a history of returning money to its investors during a time of market uncertainty.

In 2001, Accel raised what was then its largest fund ever – a $1.4 billion vehicle – to reduce the fund’s size to $950 million in 2002 after the technology market – which first opened in the spring of 2000 soured – not bounced and frustrated limited partners, or LPs, started to stink.

LPs seem highly unlikely to push back this time, given what happened next. Before reducing that $1.4 billion fund, Accel suggested splitting it into two $700 million funds: one to invest as planned and a second $700 million fund to begin investing in 2004. The LPs that voted against that idea — and the majority of them did — are probably still kicking themselves.

One of them is Chris Douvos, an investor for Princeton’s equity fund at the time. After the 2001 fund uproar, he passed on Accel’s next fund, from which Accel led Facebook’s $12.7 million Series A round in 2004. It became one of the best performing venture capital funds of all time (ouch). Meanwhile, Douvos lost his access to Accel. (“Let’s just say I’m not on their speed-dial number,” he joked to this reporter in 2016)

Image Credits: Bryce Durbin/londonbusinessblog.com

Tech companies respond to US Supreme Court abortion decision

After a leak just months earlier, the US Supreme Court overturned Roe v. Wade, declaring that the US Constitution does not guarantee the right to abortion. Companies such as Microsoft, eBay, Zillow, Airbnb, Netflix, Twilio, Lyft, Momentive, Bumble, The Match Group and others have shared statements in response to the overthrow. Twitter declined to comment.

Here’s why it’s important: I mean, it’s both surreal and natural. Here’s a quote from Wiggers:

It’s important to note, of course, that many companies—even those that publicly support abortion rights or provide benefits—have donated to campaigns advocating for abortion restrictions. Like Slate recently reportedCitigroup has given more than $6.2 million to the Republican Party and nearly half a million to various GOP candidates in Texas alone. JPMorgan donated more than $100,000 in abortion-ban sponsors. Yelp, Uber and Lyft have also collectively contributed tens of thousands of dollars to anti-abortion lawmakers in recent years.

light bulb flickers on and off

Image Credits: Bryce Durbin / londonbusinessblog.com

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Until next time,

N


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