Weekend Briefing No. 371
Welcome to the weekend.
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19 trillion—The channel 5-Minute Crafts has made 4,600 of these videos that have been viewed 19 trillion times, making it the 11th most followed channel on YouTube. The channel is estimated to make $11.7 million per year from YouTube ads alone.
2 trillion—After a pandemic boom, the combined market value of 60-plus publicly traded cloud companies tracked by the BVP Nasdaq Emerging Cloud Index are now collectively worth $2 trillion.
60—The first two months of 2021 brought us 60 new unicorns, and private companies values over $1B.
I had a great time chatting with venture capitalist Matt Cohen about how we’ve reimagined the law firm to be more startup-friendly. That conversation was on his Tank Talks podcast. Some of the topics we touch on are: (1) The tension between lawyers and startups. His first question was literally, “Why do startups hate lawyers?” (2) How do you find a balance between risk and optimism? (3) What is the right blend of legal services for startups, namely, when should startups work with an independent firm v. big firm. (4) Why did we create our flat monthly fee “Legal as a Service” product called General Counsel? (5) You also get to hear why I love my two favorite books. I hope you enjoy the conversation. Tank Talks (35 minutes)
This time last year, Admiral Brett Giroir, then an assistant secretary for health at the Department of Health and Human Services, had been put in charge of COVID-19 testing. He was mostly concerned about one essential component of the testing process: swabs. Specifically, the particular 6-inch swab flexible enough to sweep the depths of the nasopharynx where the coronavirus replicates, the one now known as the brain tickler and the only one approved for testing for such respiratory viruses. One of his aids had to inform him, “Sir, I’m sorry to inform you [that] what we initially thought were 10 to 15 swab producers are in fact only distributors.” Giroir was further told that only two companies in the world make the swabs: Copan Diagnostics Inc. in northern Italy, an area then being ravaged by Covid-19, and a small, family-owned business in Maine called Puritan Medical Products Co. Never before had Puritan, founded a century ago in the tiny town of Guilford, been more important. And never before had it been so dysfunctional. A yearslong feud between the two owners, Templet and his cousin John Cartwright had left the business in a management crisis. Three weeks before the pandemic hit, Templet had filed a lawsuit in Cumberland County Superior Court to dissolve their joint ownership of Puritan and its other business because of “major, longstanding and irreconcilable disagreements” between him and his cousin. The rift resulted in delayed investments to modernize manufacturing lines, stagnant wages for a dwindling workforce and an outdated back-office information technology system. “The general partners’ deadlock has created a dangerous situation, leaving the companies close to a point where something is going to break,” the lawsuit read. “Cartwright and Templet no longer speak, no longer make joint decisions, and are essentially unable even to be in the same room together.” This is the story of how the pandemic brought the business opportunity of a lifetime to Puritan. But even a $250 million infusion from the U.S. government has done little to quell an epic family feud. Bloomberg (21 minutes)
White-collar workers, armed with college degrees and specialized training, once felt relatively safe from automation. But recent advances in artificial intelligence (AI) and machine learning have created algorithms capable of outperforming doctors, lawyers and bankers at certain parts of their jobs. And as bots learn to do higher-value tasks, they are climbing the corporate ladder. The trend—quietly building for years, but accelerating to warp speed since the pandemic—goes by the sleepy moniker “robotic process automation (RPA).” And it is transforming workplaces at a pace that few outsiders appreciate. Nearly eight in 10 corporate executives surveyed by Deloitte last year said they had implemented some form of RPA. Another 16 percent said they planned to do so within three years. Executives generally spin these bots as being good for everyone, “streamlining operations” while “liberating workers” from mundane and repetitive tasks. But they are also liberating plenty of people from their jobs. New York Times (11 minutes)
While early employees help set implicit norms, building systems early in a company's lifecycle sets explicit norms. How do decisions get made? How are meetings structured? How are goals set? These systems are much easier to build when the company is small and very challenging to put into place as the company grows. Founders: Care about your first 10 systems as much as you care about your first 10 hires. The earlier you can understand what practices are important to you, the better. Turn those practices into systems as soon as you can. Free will is overrated, and our willpower is overstated. We're actually much more influenced by the environments that we're put in. These points are really well-made in “Atomic Habits.” If you want to eat better or exercise, don't rely on your willpower. Instead, change some of your environmental influences that lead to those behaviors, such as having sugar in your house. The same is true in company building. Instead of relying completely on the willpower and independence of all your employees, think about how to build better systems and create an environment where people can do their best work. First Round Review (18 minutes)
Stripe is so clean and simple. I remember setting it up myself (no software developers), finishing and saying, “That’s it?” Then all of our payments were processed super simply every day. So, I was glad to hear about good news for the Stripe team. Patrick and John Collison have got the luck of the Irish. Stripe—the Irish brothers’ digital payments brainchild—has reportedly raised $600m at a $95B valuation. Here’s why: It’s the platform other platforms use to process money. Some 90% of US adults have bought from companies that use Stripe. The company counts Amazon, Salesforce, Microsoft, Shopify, Uber and Zoom among its customers—and at least 50 of these customers process more than $1 billion on Stripe annually. In 2020, the company signed up more than 200K new European customers and handled 5K requests per second. Stripe plans to invest heavily in Europe and creates 1K jobs at its Dublin HQ, a plus for a budding Irish startup community that saw total venture capital (VC) funding jump 13% in 2020. But Stripe didn’t even need the funding … “It will just sit on the balance sheet” as a “rainy day fund,” according to Mike Moritz, partner at Sequoia and a Stripe board member. Stripe, whose mission is to increase the gross domestic product (GDP) of the internet, sees a wide-open road ahead, with just 14% of commerce happening online today, up from 10% a year ago. Stripe’s already done well at achieving that mission: The company has greater payment volume today than the entire e-commerce market when it was founded a decade ago. Patrick and John, the next round of Guinness is on you. The Hustle (3 minutes)
I’m also a huge fan of Zapier (I just counted and I currently have 71 zaps running). They have been a key driver of efficiency in our firm. But they haven’t played the typical Silicon Valley game. Just because Zapier hasn’t played the game—raising just $1.3 million in funding, going fully remote long before the pandemic made it commonplace, and targeting a customer set left overlooked by many software companies—doesn’t mean it hasn’t built a big business. Last summer, Zapier reached $100 million in annualized recurring revenue; it’s passed $140 million by now. And in January, investors found a way into the business, just not through Foster. Sequoia and Steadfast Financial bought shares at a $5 billion valuation from some of Zapier’s original investors. Zapier also set up a $1 million small business assistance fund for struggling customers a year ago as the pandemic spread. Foster predicts that coming out of COVID-19, a new wave of mom-and-pop style small businesses of $5 million to $10 million in revenues will flourish having made the digital jump. Zapier’s hiring and expanding software tools are also a rarity in that they’re fueled entirely by the company’s sales. Employees are eligible to receive bonuses from the company’s profits should they hit certain milestones twice a year. “We've never felt like our balance sheet has been the thing that was holding us back from reaching our goal,” says Foster. The company announced its first acquisition of a no-code education business called Makerpad on Monday. Forbes (9 minutes)
The secret curse of the nonprofit world is restricted donations. If you haven't been involved with nonprofits, you may never have heard this phrase before. But if you have been, it probably made you wince. Restricted donations mean donations where the donor limits what can be done with the money. This is common with big donations, perhaps the default. And yet it's usually a bad idea. Usually the way the donor wants the money spent is not the way the nonprofit would have chosen. Otherwise there would have been no need to restrict the donation. But who has a better understanding of where money needs to be spent, the nonprofit or the donor? If a nonprofit doesn't understand better than its donors where money needs to be spent, then it's incompetent and you shouldn't be donating to it at all. This means a restricted donation is inherently suboptimal. It's either a donation to a bad nonprofit, or a donation for the wrong things. Paul Graham (9 minutes)
The Fifth Season by N. K. Jemisin. At the end of the world, a woman must hide her secret power and find her kidnapped daughter, in this intricate and extraordinary Hugo Award-winning novel of power, oppression and revolution. This is the way the world ends for the last time. It starts with the great red rift across the heart of the world's sole continent, spewing ash that blots out the sun. It starts with death, with a murdered son and a missing daughter. It starts with betrayal and long dormant wounds rising up to fester. This is the Stillness, a land long familiar with catastrophe, where the power of the earth is wielded as a weapon and where there is no mercy. Amazon
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Canals—This is a captivating 4K time-lapse video of a boat navigating the canals and waterways of the Netherlands.
Scorpions—New Yorker writer Patrick Radden Keefe hears a rumor from a source: the Scorpions didn’t actually write “Wind of Change.” The CIA did. This is Patrick’s journey to find the truth.
NFTs—The thing that has been hard for me to wrap my head around with Non Fungible Tokens (NFTs) is that, in the digital world, copies are indistinguishable from originals. In a trivial sense, this is true. But it’s also so untrue.
About the Weekend Briefing
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This is magic we're talking about. It's supposed to go places science can't, defy logic, wink at technology, fill us all with the sensawunda that comes of gazing upon a fictional world and seeing something truly different from our own. –N. K. Jemisin
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