🚯 Issue #60: Never Waste A Good Crisis
Gavin Teo shares why this is a great time to build for startups and how the opportunity is always greatest during times of volatility
💬 Welcome to issue #60 of Between the Lines
Good morning & happy Thursday. September is here, and while the verdict may still be out on whether or not we are “technically” in a recession, I think it’s unfortunately clear that the summer rally has ended (womp womp). School is about to be back in session for the next generation of Claremonsters, though…good timing! 🎓
This week, Gavin Teo, Claremont-grad and General Partner at SE Asia-focused venture firm Altara Ventures, shares some helpful thoughts for founders and management teams building in this strange environment and economy.
~ Josh & Miles
📢 👥 Community Voices: How To Never Waste A Good Crisis And Survive The Recession
Author: Gavin Teo
Gavin is a Claremont graduate and a GP at Altara Ventures — an early-stage venture capital firm backing founders in Southeast Asia. He’s been an institutional VC for over a decade and was previously a senior product manager and consultant. He shares advice with e27 for founders and management on how to survive the recession and take advantage of the opportunity to build, and we’re resharing the great read here in Between the Lines.
As an institutional VC for over a decade and a startup guy before that, I’ve learned a few hard lessons about building companies across economic cycles. Churchill once said, “Never waste a good crisis,” and for startups, a recession is a great time to build.
Necessity is the mother of invention
When I graduated from university in 2003, the US had yet to emerge from the tech winter which followed the dot.com boom and bust. I distinctly recall interning in the tech M&A group of a Silicon Valley investment bank, where I came to work one day to learn that all of my colleagues in the private equity team had been dismissed.
We all thought the world was coming to an end. And yet, while many unsustainable Web1 e-comm companies like WebVan and Pets.com went bust, emerging platforms like Google developed defensible technology (e.g. search algorithms) to create business models that could scale profitably, raising substantial funding in a challenging climate.
Many years later, as I graduated from business school in 2010, the world was again reeling from the Great Recession. I spent half of my MBA summer interning with a private equity fund where we were buying and levering up sunset assets like newspapers at deep value discounts, and the other half at Microsoft Xbox, where cloud gaming was beginning to upend traditional boxed software.
My colleagues and I all wondered when the economy was going to turn back to growth. And yet, while some over-leveraged financial institutions like Lehman Brothers shut their doors, new cloud-based Web2 platforms emerged in digital payments, social media, and content delivery to generate tremendous value, startups like Facebook and games-as-a-service pioneer Zynga, which I joined as a PM, staying through their IPO.
Expect the best; prepare for the worst
There is no question that we are now in another tech winter. The Nasdaq lost 25% in YTD June 2022 before bouncing back slightly, and multiples are predicted to compress another 25-30%, suggesting valuations will come down further.
Moreover, high inflation is disincentivizing savings and investment. Federal funds reached 2.25% in July and are expected to hit 3% by the end of the year, leading to the highest borrowing costs since 2019. A technical recession is two-quarters of negative growth, and on a macro basis, we are absolutely in the thick of it.
However, startups are all about micro execution bucking macro trends. In addition to the examples above like Google, Facebook, and Zynga, here in Asia, Alibaba and Taobao were forged in the midst of the Asian Financial Crisis, while Grab and Uber were both founded during the Great Recession.
In the Southeast Asia of 2022, we have the benefit of a young, regional population, rising middle class purchasing power and strong and growing employment (as does the US which despite everything, just added 528,000 jobs in July).
Certainly, many fledging SEA companies will fail, but startups with strong leadership and a path to profitability have the potential to thrive. Some may even gobble up their competitors, establish market leadership, disrupt incumbents and accelerate the transformation of the industries in which they compete.
I expect that founders and management teams that do the following will be best placed to succeed:👇
🚨Claremonster Call-Out: Justin Fenchel
Over a decade ago, after previous stints as a financial and equity analyst and entrepreneur, Claremont alumnus Justin Fenchel co-founded beverage business BeatBox Beverages. In 2014, BeatBox secured a $1M check from Mark Cuban, and they’ve since raised ~$10M from their Series A, debt financing, and equity crowdfunding. The company is now the #1 fastest-selling ready-to-drink cocktail & wine brand in the U.S. In 2020, the company shipped 380K cases, 850K in 2021, and they’re on track for 1.8M in 2022. VinePair recently highlighted the incredible yet overlooked rise of wine-based BeatBox RTDs.
Fenchel co-founded the brand along with a handful of his classmates from the McCombs School of Business at the University of Texas at Austin, with an early iteration of the drink appearing on store shelves in 2013. They weren’t just a cohort of MBA students, they were a collective of music festival buddies, and that spirit was infused into BeatBox’s ethos.
💼 Who’s Hiring?:
In 2017, Claremont alumnus Arjun Lall co-founded Rocket – an AI-enabled recruiting solution for high-growth companies. Rocket is a next-generation recruiting agency that believes data, machine learning, and automation paired with experienced recruiters creates the best experience for both clients and candidates. Their team supports companies across various stages and sectors, from clients like PayPal to Thrive Global.
Rocket is headquartered in the heart of Silicon Valley but has recruiters all over the US & Canada serving the needs of their growing client base. They’re currently hiring for a Salesforce Administrator:
Affinity, incubated and co-founded by Claremont alumnus Drew Oetting, whose first business hire was Claremont alumnus Josh Rosenberg, is a relationship intelligence platform built to expand and evolve the traditional CRM. They make the most advanced, high-throughput infrastructure for syncing and understanding data from communication streams and 3rd-party sources. They’ve recently partnered with Zoom to release Affinity Meetings – a new app that provides dealmakers access to intelligence about the people and companies they’re meeting live.
Affinity has raised over $120M in venture funding and is backed by some of Silicon Valley’s best. They were recently ranked Inc.’s Best Workplaces of 2022 and Great Places to Work 2022. They’re growing quickly and have several open positions:
Check out the other ~5,000 open jobs at 400+ Claremont-affiliated companies here on our Storyboard. Plus, create a profile and enter your preferences to get alerted to new job postings relevant to you, be they the 1,000+ remote jobs, 100+ internships, or 40+ part-time positions available. We’ve published research that shows that Claremont-founded companies that disproportionately hire Claremont talent outperform — so pay attention, Claremonsters!
If any of these roles catch your eye 👀 , apply and mention Between the Lines. Or, if you are an employer looking to hire tip-top Claremont talent, fill out this form to have your jobs featured.
🗣️ Conversations on the Interwebz:
This week’s top Claremont financing 💸
Yesler Solution is a single platform of software tools built specifically for managing and optimizing buying and selling of lumber and building materials. Claremont alumnus Jeff Lubetkin is the CTO and co-founder at Yesler, and they just closed $5M led by Crosslink Capital. Business Wire has more.
This week’s top listen 🎧
Claremont graduate Jesse Pollak currently leads all Coinbase efforts to build, support, and integrate protocols into the Coinbase products. He shares more about the highly anticipated Ethereum merge.
Everything else you need to know….💡
Tristan Zajonc is a Claremont grad and co-founder/CEO of Continual — the leading operational AI platform for the modern data stack. He joins the Data Stack Show to talk future of machine learning and all things ML and how it relates to SQL and real-time data.
Can’t get enough of Between the Lines? Follow and connect with us on Twitter!
🍽️ BTL Snacks:
🌳 The Startup Setting Down Roots….. GreenBiz shares a bit behind the founding story of Living Carbon, founded by Claremont alumnus Maddie Hall. "We’re already working on something that is decades in the future and what the world will sort of look like. You start to think a lot more about existential threats to humanity, and climate is one of them. So I did a deep dive looking for something similar to AI but for climate change."
🌿 $41.5M In Cannabis CRE Financing….. Lev, the commercial real estate (CRE) financing platform co-founded by Claremont graduate Sammy Greenwall, announced the completion of over $40 million in cannabis CRE loans across five different sponsors, with an additional $50 million in the pipeline. Lev works with investors to navigate complex hurdles at the federal and state levels to close cannabis deals. Lev is building the future of commercial real estate financing and helps others access thousands of lenders and complete the right financings easily.
👩💻 Remote Workers Need To Network….. While a tight job market might make it easier to land a job without going to college, for industries where the strength of your network is a crucial asset, people working remotely might find that going to college has even more value than it did pre-pandemic. Conor Sen is a Claremont alumnus, Bloomberg Opinion columnist, and founder of Peachtree Creek Investments. He shares the growing importance of networking for professionals spending less and less time in the office.
🚕 Ride-Hailing Goes Green & Driverless….. In June 2022, electric vehicle maker Cruise, founded by Claremont alumnus Daniel Kan, became the first and only company to operate a commercial, driverless ride-hail service in a major US city. The SF-based company piloted the program in its home city and has completed over 4,000 rides. It is also operating in Dubai, with several more cities to come. But Cruise’s goal is even more ambitious than transforming ridesharing in cities.
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