October 25, 2019

And it’s Friday! [Throws frisbee into tree.] Before we dive into the newsletter, one more bit of great news about our upcoming event (which we promise we’ll stop talking about soon): Michael Grimes, the star tech banker from Morgan Stanley at the center of Uber’s IPO (and Facebook IPO, and Slack’s and Spotify’s), has been persuaded to come and talk about direct listings, which we’re very excited about. If you’re as confused as we are about whether these make sense for more than a couple of companies each year (current status: we don’t think they do), you won’t want to miss this rare conversation with “Wall Street’s Silicon Valley whisperer.” Note that seats are almost gone. Giant thanks to NextWorld, the early-stage enterprise-focused firm that’s hosting all of us; to KCPR, the boutique tech PR and strategy firm; and to Carta, a platform that helps companies and VCs manage their cap tables, valuations, investments, and equity plans, for their support. See you Monday.:) Ben Horowitz, the co-founder of the venture firm Andreessen Horowitz, has a new book coming out this coming Monday titled “What You Do is Who You Are,” that takes a look at how to create “culture” at a company. It’s a word that’s thrown around a lot but that’s very hard to grasp, let alone implement in a sustainable way. Horowitz learned firsthand as a CEO how elusive it can be when he took stock of his company, only to discover it was made up of “screamers who intimidated their people,” others who “neglected to give any feedback,” and at least one compulsive liar who excelled at sucking up to Horowitz and also making up stories from whole cloth. Horowitz says creating culture was a missing part of his education, and in this new book — a follow-up to his best-selling “The Hard Thing About Hard Things” — he does his best to fill that gap for other CEOs, using his own experience, as well as lessons gleaned from historical figures Toussaint Louverture and Genghis Khan, along with Shaka Senghor, a contemporary who served time for murder and today is a criminal justice reform advocate. It’s an instructive and novel combination, and we suggest picking up the book, especially if you love history. In the meantime, we sat down recently with Horowitz to talk about its timing and whether some of the biggest cultural blow-ups in the startup industry — Uber and WeWork — could have been avoided. These excerpts have been edited for length and clarity. Note that we’ll have more of the conversation — including Horowitz’s thoughts about dual-class shares — for readers of Extra Crunch on Monday. You’ve just written a book about culture that’s coming out just as a lot of questions are being raised about culture because of WeWork. What happened there? [Cofounder Adam Neumann] had a certain kind of culture there. He had some holes — some great strengths and great holes. And sometimes that happens. When you’re really good at part of it, you can delude yourself into thinking that you’ve got everything you need when you have some massive incompleteness. Adam is so amazing. Like, the way they got all the money and everything. And the vision was so spectacular. And everybody there believed it, and they recruited some phenomenal talent. But when you’re that optimistic, it does help to have something in the culture that says [allows] people to bring you the bad news, like, if the accounting is all over the place or what have you. As with Uber’s Travis Kalanick, whose culture also came under fire, Neumann operated in very plain sight. He wasn’t hiding who he was or what he was spending. Right, everybody knew how Travis was running the company. Everyone in Silicon Valley knew, let alone everyone on the board. The culture was published. You can look up Uber’s values [from that period]. Travis designed, I think, a really compelling culture, and believed in it, and published it. And the consequences of what he was missing were also super well-known. It’s only when board members think people are coming after them that [they take an interest in these things]. What are the biggest lessons in these two cases? I obviously know more about Uber [as a Lyft investor who follows the space]. In Uber’s case, it’s a very subtle thing. Travis had a really good code. But he had a bug in it. I think it was reported that, like, Travis encouraged bad behavior. I don’t think he did at all. I just think he didn’t make it clear that legal and ethical [considerations] were more important than competitiveness. As a result, when left to their own devices, in a distributed organization where there was a lot of distributed power, that combination had people doing things that were out of bounds. And he was making everybody so much money. And the company was growing so fast that, for the board members, I suspect they were like, ‘As long as it’s making money, I’m not going to worry about what happens next.’ To me, the unfair part is, like, they shouldn’t get any credit at the end. Whatever you’re blaming Travis for [you should blame them, too] because they didn’t see it, either. I think that’s a charitable way of putting it. Fountain Medical, a 12-year-old, Beijing, China-based contract research organization for pharma, has raised $62 million in Series D funding led by Goldman Sachs, with participation from Lilly Asia Ventures. More here. IonQ, a four-year-old, College Park, Md.-based quantum computing startup, has raised $55 million in Series B funding co-led by Samsung Catalyst and Mubadala. Other investors in the round include ACME Capital, Airbus Ventures, Hewlett Packard Pathfinder, Tao Capital Partners, Correlation Ventures, A&E Investment and earlier backers Amazon, NEA, GV, and Osage University Partners. Bloomberg has more here. Pollen, a nearly six-year-old, London-based invite-only marketplace for group experiences and events, has raised $60 million in funding led by Northzone. Other investors in the deal include Sienna Capital and earlier backers Draper Esprit, Backed, and Kindred. The WSJ has more here. Current, a four-year-old, New York-based mobile banking app that began as a teen debit card controlled by parents and has since expanded to offer personal checking accounts, just raised $20 million in Series B funding. Investors include Wellington Management Company, Galaxy Digital, and CUNA Mutual Group. TechCrunch has more here. DAZN, a three-year-old, London-based over-the-top subscription sports streaming service, is reportedly in the middle of raising at $500 million from investors, according to Bloomberg. DAZN is owned by billionaire Len Blavatnik and led by former ESPN President John Skipper, and the capital will “mostly likely be used to support DAZN’s expansion efforts,” says the outlet. More here. Modern Animal, an 11-month-old, L.A.-based veterinary startup that charges a membership fee in exchange for unlimited exams and other perks like in-app prescription requests, has raised $13.5 million in seed funding. Founders Fund led the round, joined by Upfront Ventures, Susa Ventures, BAM Ventures, BoxGroup, DCM, LJ Ventures, and Wonder Ventures. More here. Ginger, a nine-year-old, San Francisco-based behavioral health coaching app, has raised $7.5 million in funding from Health Velocity Capital. More here. HowNow, a three-year-old, London-based workforce learning platform, has raised £2.4 million in seed funding led by Fuel Ventures. TechCrunch has more here. Incode, a four-year-old, San Francisco-based facial recognition company designed to verify identities, has raised $10 million in seed funding from investors the company has declined to disclose. VentureBeat has more here. Speechmatics, a 10-year-old, Cambridge, England-based developer of speech recognition software, has raised £6.35 million in Series A funding led by AlbionVC, with participation from IQ Capital. More here. StepLadder, a four-year-old, London-based savings platform that helps users set aside a deposit on a future home, has raised £1.5 million in seed fundin…