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Of many entrepreneurial buzzwords, the one that annoys me the most is, “It’s not what you know, it’s who you know.” The phrase may be meant to remind people with impostor syndrome of the importance of a simple cold email, but he often comes along as a rebranded method to remind people that exclusive networks rule the world.
So I hope this is the year that a backchanneling social media platform actually takes off. At its best, backchanneling can help someone without a Stanford seal of approval vouch for it and then bet on it. The process can also help deter predatory investors from making deals. The implications of the process are clear, but the incentives for all parties to participate are slightly misaligned. Some investors still scoff at the idea that their portfolio companies might be asked to review what it’s like to partner with them. Similarly, founders are surprised when honest feedback really comes to life in stories rather than Cultureamp surveys. Why? In a world where due diligence is becoming something frivolous in the early stages, backchanneling is simultaneously evolving from an in-depth conversation about strengths and weaknesses into a thumbs-up or thumbs-down affair.
Superficial banter aside, some of the most powerful people in technology today have their balls in many, many baskets — meaning those who want or could speak critically of them may be either financially (or emotionally) limited from saying so .
My pitch? We finally get a trusted platform where backchanneling can happen in an accessible and fair way. An anonymous, private subreddit for founders already exists in so many different forms, but I’d love to see an app that expands access so anyone can review a proposed value proposition.
For more on my thoughts, check out this TechCrunch+ column I created with my Equity co-hosts, Alex Wilhelm and Mary Ann Azevedo: 3 views on how due diligence will change in 2022. We also recorded a podcast if you prefer the newsletter for your ear route, instead of this.
In the rest of this newsletter we talk about Wordle, future revenue as a business model and why I think Y Combinator is reading my text messages. As always, you can follow my thoughts on Twitter @nmasc_.
A word about Wordle
The creator behind the app that’s on everyone’s lips and not on anyone’s app store chatted to TechCrunch on Wordle’s underdog rise. The game, which takes users six tries to guess a five-letter word, grew from fewer than 1,000 players to 2 million players in a matter of weeks.
Here’s what you should know: As Owen Williams explains, Wordle’s nostalgic feel isn’t loved by everyone. The game will being penalized by app stores for going open web. As he puts it in his latest column for TechCrunch:
Wordle faces a threat we haven’t seen before: the game’s developer is essentially being penalized by app stores for choosing to use open web technologies instead of using a native app. Not only is this type of behavior allowed by the Apple App Store, there’s little recourse – because as far as Apple is concerned, Wordle doesn’t exist since it’s not a native app.
There is no way for a developer of a full-featured, high-performance web app like Wordle to claim their name on the App Store, nor is there a way to get their website listed to put users in the right place and protect themselves from imitators protection. Google actually allows developers to upload some types of progressive web apps to the Play Store, although Wardle doesn’t seem to have opted into that at the time of writing. If he wanted to defend his game on the Play Store when a clone shows up there, at least he would have the choice to do so.
Love of consumption, a fickle thing:
Photo credit: Bryce Durbin/TechCrunch
And the startup of the week is…
Arc! The SaaS-friendly fintech platform emerged from covert this week with $150 million in debt Funding and $11M seed funding with a Stripe partnership. As our own Mary Ann reports, “Arc is building what it calls a ‘community of premium software companies’ that gives SaaS startups the ability to borrow, save and spend all on a single technology platform.”
Here’s what you should know: As we discussed in Equity this week, Arc is one of those startups – similar to Brex – that couldn’t have existed 20, not even 10 years ago. The company is betting its own earnings entirely on the future revenue assumed by other startups, which is a sign of the maturing of this once-ailing SaaS scene.
Recognitions:
Plastic pipes bar chart peak on purple colored background just above view.
Does Y Combinator read my texts?
Last week I wrote a newsletter about accelerators needing a refresher on what they consider a “value-added service.” Then, days later, Y That’s what Combinator announced it increases its check size and ownership percentage, in its accelerator companies. My argument then, as now, is that accelerators need to offer more than ever to remain competitive; and YC’s new check shows they want to get more aggressive in the same swing.
Here’s what you should know: Despite the somewhat anticipated change, it was controversial among seed-stage investors, who viewed the move as competition rather than complement to the broader early-stage ecosystem. In Equity we discussed both sides and why it might be harder for international founders to embrace the new deal.
The new, new:
Photo credit: Getty Images
All about TechCrunch
If you’re like me, talk about the future of finance at least twice a day. But even for the nerdiest of us, the decentralization of regulation, money and culture is hard to deal with – which makes our upcoming event even more exciting. On March 30, 2022, TechCrunch will host DeFi & The Future of Programmable Money alongside Sommelier Finance. It penetrates everything from the basics to the moonshots, So register soon for this virtual event.
About the week
Seen on TechCrunch
The Dorm Room Fund returns to campus with a new $10.4 million fund
Be aware: your company is watching you
Take-Two acquires mobile gaming giant Zynga for $12.7 billion
Fintech Brex confirms valuation of USD 12.3 billion and hires Meta Executive as Head of Product
Career Karma raises $40M to grow into an edtech employee benefit
Seen on TechCrunch+
What else can we learn from Theranos? to have friends
A guide for startup founders on equity grants
Fintech and insurtech innovation in Brazil will benefit from regulatory tailwinds
Despite the play-to-earn aspect of blockchain gaming, I prefer to pay
Data shows 2021 was a record-breaking insane year for venture capital
Until next time,
