The simple boot ideas were made - the ones that only required some homebrew hardware hacking or dormitory PHP code to take off. These days, you may need more advanced technical degrees to get meaningful results. At least that's what Danny Crichton bleakly reflects this week in an essay entitled "The Two PhD Problems of Startups Today". Here is an example of what's new:
Take synthetic biology and the future of pharmaceutical products. There is a popular and now well-funded thesis on the cross between machine learning and biology / medicine to create the next generation of pharmaceutical and clinical treatments. The datasets are there, the patients are ready to buy and the old ways of discovering new candidates for the treatment of diseases seem positively ancient against a more deliberate and automated approach offered by modern algorithms.
Moving the needle even slightly here, however, requires enormous knowledge of two very difficult and disparate fields. AI and bio are domains that become extremely complex extremely quickly and also where researchers and founders quickly reach the frontiers of knowledge. These fields are not "solved" by any stretch of the imagination, and it is not uncommon to quickly reach an "Nobody really knows" answer to a question.
Even when trying to create teams with the right combinations of knowledge, he argues, each domain is now so complex that the network of skills required is much more difficult to achieve than previous efforts.
In part I disagree, because innovation doesn't associate with existing domains in such a simple way. Computer scientists in the 1960s didn't expect personal computing to be a thing until Apple's homebrewers proved it. Corporate software experts over the past decade have not expected consumer app developers to apply their bottom-up growth capabilities and beat sophisticated traders' offerings. I expect all sorts of arcane academic ideas to merge with market demand in unexpected ways that break the patterns we have today, led by people who may not be checking all the boxes in traditional fields.
This includes the doctorate itself and the education sector. This is where we agree with Danny. Applying software to education was a struggle because success requires understanding two disciplines and concludes that the way we learn will need to be broken down and reformed:
"We can't wait until 25 years of school is complete and people graduate at 40 before they can take a shot at some of these fascinating crossroads. We must build escape flows towards these gaps where innovation has not yet arrived. "
The best future of Edtech
As if to prove Danny's first point, some of the largest edtech companies today were founded by technical experts who were also university professors. Companies like Coursera today are gathering their late-round funding rounds on top of a pandemic-fueled boom in online higher learning.
But this generation of edtech unicorns already looks quite different from anything previous generations of education experts had imagined, as you can read an overview of Natasha Mascarenhas on Extra Crunch. For example, Udemy was founded by a group of serial entrepreneurs and focused on practical skills from the start (longtime ProWellTech readers can remember our CrunchU program focused on starting with them around 2013).
Of course, this generation of so-called MOOCs is widely viewed as limited success. In an Extra Crunch column, Rish Joshi writes about the falling "graduation" rates that many have shown to students over the past decade. Instead, he sees a new wave of trends, including a deeper concert-based experience and automated niche learning, which will help anyone acquire more complex skills more quickly, at every stage of the educational process. Here is more about the approach to the concert:
A potential concert economy for education created through small group online learning would have a large impact on the supply and demand side of online education. Giving educators the opportunity to teach online from home opens the opportunity for many more people around the world who may not have otherwise considered teaching, and this can significantly increase the supply of teachers around the world. It also has the ability to mitigate the discrepancy between the quality of teaching in urban and rural areas, allowing students to access the same quality of teachers regardless of their position.
Companies in this space such as Outschool and Camp K12 are pre-college. But take a look at everyone who tries to teach data science, product management and other concepts that traditional industries need to integrate to innovate faster and you can see the solution that Danny hopes to start emerging. One day early, you may be able to quickly study a new skill that you need to find a job or medical breakthrough.
For more information on the latest news in space, be sure to check out the second part of Natasha's survey with edtech's best investors.
Planning of equity after an IPO
Do you think your unicorn employer is the next Amazon or Google? Are you ready to hold back the actions of a potential winner through all the ups and downs that happen to any company? If you haven't already, consider diversification sooner or later, startup financial adviser Peyton Carr writes in a series on the subject this week:
We consider any position or exposure above 10% of a portfolio to be a concentrated position. There is no fixed number, but the appropriate level of concentration depends on several factors, such as liquidity needs, the overall value of the portfolio, risk appetite and the longer term financial plan. However, more than 10% and the returns and volatility of that single position may begin to dominate the portfolio, exposing you to high levels of portfolio volatility.
The corporate "stock" in your portfolio is often only a fraction of the overall financial exposure to your company. Think about your other sources of possible exposure such as limited shares, MSW, options, employee share purchase programs, 401k, other equity compensation plans, as well as your current and future wage flow linked to the company's success. In most cases, the prudent path to achieving your financial goals involves a well diversified portfolio.
A new ProWellTech newsletter: The Exchange
In addition to the popular Equity podcast and regular appearances on ProWellTech and Extra Crunch, my colleague Alex Wilhelm is launching a new newsletter called The Exchange. It's his weekly summary of the week, based on his daily writing for Extra Crunch and ProWellTech on startup technology and finance. You can sign up here. For a taste of Alex's work, if you are unfamiliar, in an article this week, he took a look at the explosion in the still new area of software without code, compiling investment activities in an incomprehensible space that is disappearing with this analysis:
From this we can say it to very minimum, the first quarter 2020 VC totals for no-code / low-code startups were north of $ 80 million, although the real figure is likely to be much higher. In the second quarter, we can see at least $ 140 million in cash, just between the rounds that I was able to dig this morning.
This puts low-code / no-code startups in step to raise around $ 500 million Just in the end in 2020. The real number is larger and can swell sharply depending on how broad your definition of space is. This means that the world of startups is not waiting for risk dollars to realize their vision. The capital is already flowing in large quantities.
The next question is whether launching and the wider software world can make the world's codeless services easy enough for many people to train. The increased power and skills that can be offered in exchange for learning a new way of interacting with the software will likely help determine how much adoption has been adopted and how long.
Around ProWellTech
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Four steps for drafting a model of practices on ethical data
Ann Miura-Ko's framework for creating a startup
From the farm to the telephone: a paradigm shift in shopping
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Building and investing in the "economy of human needs"
#EquityPod
Hi and welcome back to Equity, ProWellTech's risk-focused podcast (now on Twitter!), Where we unpack the numbers behind the headlines. On top of the crew this week was the regular contingent: Danny Crichton, Natasha Mascarenhas and myself. As a little programming note, we'll be back to post some videos on YouTube in a few weeks, so be sure to peek at the ProWellTech channel if that's your problem. And we did a special episode on the SPAC boom, if you like financial arcana. For more information on SPAC -> here. The Equity crew tried something new this week, which is to focus our main conversation on a topic to watch out for: the resilience of technology during the current pandemic-led recession. As of recent economic news, it is surprising that technology layoffs have slowed down. And, as we saw recently, there is still a lot of money flowing into startups, although there are some drops on an annual basis. Why are things still good enough for startups and good enough for major tech companies? We have some ideas, like accelerating digital transformation (more here and here) and software that eats the world. The latter concept, of course, is related to the first. Then it was time to go through some careful financing rounds of the week, including: All of this and I have a newsletter launched this weekend that if you read, you will automatically be 100% fresher. It's called ProWellTech Exchange and you can get it for free here.About Alex:
