Weekend Briefing No. 228
Welcome to the weekend.
84.2 B – Startup funding reached a record decade-long high in 2017, with $84.2 billion in funding raised over the course of the year.
13.2 B – 2017 was the first year that debit card payments - totaling 13.2 billion pounds - surpassed cash payments in the UK.
1 B – About a billion people have no access to electricity. It is still likely to be at least 870 million in 2020.
Valuations, Capital & Talent
Everyday there are headlines that a company raised capital at some eye popping valuation. Of course, valuation matters, but it mostly matters at exit. Interim valuations being put on startups is different. Sure the price that they can finance themselves is interesting. But not more interesting than the products and services they are bringing to market, how they are building their teams and cultures, and the underlying technologies they are using to do that. CEOs and their talent organizations frequently note that it is easier to recruit people to companies that have raised at eye popping values. This is particularly peverse because the higher the valuation, the less money the employee will make on their equity. But, it seems, the talent market is looking to the investment community to signal to them what companies are worth working for. It should work the other way around. Capital should follow talent, not talent following capital. AVC (6 minutes)
This week the U.S. Supreme Court freed states and local governments to start collecting billions of dollars in new sales taxes from online retailers, overturning a ruling that had made much of the internet a tax-free zone and put traditional retailers at a disadvantage. The court’s 1992 decision involving catalog sales had shielded retailers from tax-collection duties if they didn’t have a physical presence in a state. Writing for the 5-4 court Thursday, Justice Anthony Kennedy said that ruling was obsolete in the e-commerce era. Kennedy wrote that "each year, the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the states." Bloomberg (5 minutes)
This year the SOCAP Entrepreneur Scholarship program will bring up to 150 of the most innovative social entrepreneurs from around the world to the SOCAP conference in San Francisco. Scholarship winners get a free full conference pass (valued at $1495) and a day of education, networking and workshops, accommodations, and of course access to funders. Divine Nabaweesi, founder of Divine Bamboo Charcoal won last year. This was her take, “The experience exceeded my expectations in terms of networking value, lessons learnt from other social entrepreneurs, and from practical knowledge and insight from industry experts. I will be coming back to SOCAP every year from now on; there is nothing else like this out there!” Applications for the scholarship are due on June 30th. SOCAP (sponsored)
It has been almost 16 years since a missile fired from a drone struck a Toyota Land Cruiser in northwest Yemen, killing all six of its passengers and inaugurating a new era in American warfare. Today, targeted killings by drones have become the centerpiece of U.S. counterterrorism policy. American drones have been used to carry out airstrikes in at least eight different countries, analysts believe. U.S. drone strikes have killed between 7,584 and 10,918 people, including 751 to 1,555 civilians, in Pakistan, Afghanistan, Yemen and Somalia. The drone program has been very effective and is justified because it puts few American lives in danger. But what about the drone operators themselves, what impact is the program having on them – working kill missions in Pakistan from an airconditioned room in Las Vegas? Even soldiers who fight wars from a safe distance have find themselves traumatized. Could their injuries be moral ones? New York Times Magazine (24 minutes)
Streaming & Vinyl
As streaming gives the music industry its biggest profits in a decade, the CD business continues to plunge. CD sales have fallen 80 percent in the past decade, from roughly 450 million to 89 million. Since Tesla began manufacturing cars without CD players, other companies like Ford and Toyota have recently followed. Downloads – once seen as the CD’s replacement – have plummeted 58 percent since peaking in 2012, their profits now even smaller than physical sales. When vinyl sales started to climb in 2006, some experts saw it as a fad. No longer: Those sales hit a 25-year high last year, and labels are investing in more sophisticated packaging than ever. Jack White, arguably the most visible vinyl advocate in recent years, agrees: “I definitely believe the next decade is going to be streaming plus vinyl – streaming in the car and kitchen, vinyl in the living room and the den. Those will be the two formats. And I feel really good about that.” Rolling Stone (5 minutes)
Food to Fashion
Around the world, people eat around 100 billion bananas every year. That creates around 270 million tons of waste–from peels to stalks–which are often burned or left to rot. Isaac Nichelson, a three-decade veteran of the sustainable fashion industry, learned of the magnitude of this waste and saw an opportunity. Food crop waste like banana by-products, pineapple leaves, flax and hemp stalk, and the waste from crushing sugar cane can be collected and spun into a natural fiber that can be woven into garments. While this concept is progressive, it’s really a reversion to the past–as recently as 1960, 97% of the fibers we used in garments and materials were naturally derived. Today, it’s only around 35%. Through his new materials startup Circular Systems, which converts these natural waste fibers into usable materials, Nichelson wants to set the fashion industry on a new path toward more sustainable production and sourcing. Fast Company (4 minutes)
We all start out joyful, but as we get older, being colorful or exuberant opens us up to judgment. Adults who exhibit genuine joy are often dismissed as childish or too feminine or unserious or self-indulgent, and so we hold ourselves back from joy, and we end up in a world that looks like this. But bright bold aesthetics actually create joy in the human brain. Ingrid Fetell Lee spent that last two years scouring the planet, looking for different ways that people have answered this question. For example, schools, transformed by the non-profit Publicolor. What's interesting is that Publicolor has heard from school administrators who say that attendance improves, graffiti disappears and kids actually say they feel safer in these painted schools. And this aligns with research conducted in four countries, which shows that people working in more colorful offices are actually more alert, more confident and friendlier than those working in drab spaces. TED (4 minutes)
Last week’s Reply All question was: What do you think of this new X-Ray technology? You responded: 22% Cool; 16.7% Creepy; 55.6% Both; 5.6% Neither.
From the Community
My dear friend and co-lecturer at Harvard Suzanne McKechnie Klahr made a big announcement this week that she’s stepping out of her role as CEO of the organization BUILD. BUILD works with students often left behind, teaching them how to start small businesses in high school to propel them to college and career success. She founded and led the organization for 19 years. Read her reflection here. I’m wishing her the best in her next chapter.
I think that sometimes love gets in the way of itself - you know, love interrupts itself. We want things so much that we sabotage them. - Jack White
About the Weekend Briefing
Photo by Adrian Korte