INSUBCONTINENT EXCLUSIVE:
Every year, the tech industry experiences moments that serve as guideposts for future entrepreneurs and investors looking to profit from the
wisdom of the past.
In 2017, Susan Fowler published her heroic blog post criticizing Uber for its culture of sexual harassment, helping
spark the #MeToo movement within the tech industry; 2018 was the year of the scooter, in which venture capitalists raced to pour buckets of
cash into startups like Bird, Lime and Spin, hoping consumer adoption of micro-mobility would make the rushed deals worth it.
These last
twelve months have been replete with scandals, new and interesting upstarts, fallen CEOs and big fundraises
Theranos founder Elizabeth Holmes finally got a court date, SoftBank Masayoshi Son admitted defeat (see: &In the case of WeWork, I made a
mistake&), venture capitalist Bill Gurley advocated for direct listings and denounced big banks&underwriting skills, sperm storage startups
battled for fundingand Away dirty laundry was aired in an investigation conducted by The Verge.
The list of top moments and over-arching
trends that defined this year is long
Below, I&ve noted what I think best represent the largest conversations that occurred in Silicon Valley this year, with a particular focus
on venture capital, followed by honorable mentions
As always, you can email me (kate.clark@techcrunch.com) if you have thoughts, opposing opinions, strong feelings or relevant
anecdotes.
SoftBank Group Corp
chairman and CEO Masayoshi Son speaks during a press conference on November 6, 2019 in Tokyo, Japan
(Photo by Alessandro Di Ciommo/NurPhoto via Getty Images)
1
SoftBank admitted failure: We&ll get to WeWork in a moment, but first, let talk about its multi-billion-dollar backer
SoftBank announced its Vision Fund in 2016, holding its first major close a year later
Ultimately, the Japanese telecom giant raised roughly $100 billion to invest in technology startups across the globe, upending the venture
capital model entirely with its ability to write $500 million checks at the flip of a switch
It was an ambitious plan and many were skeptical; as it turns out, that model doesn&t work too well
Not only has WeWork struggled despite billions in funding from SoftBank, several other of the firm bets have wavered under pressure
Most recently, SoftBank confirmed it was selling its stake in Wag, the dog-walking business back to the company, nearly two years after
funneling a whopping $300 million in the then-three-year-old startup
Wag failed to accumulate value and was struck by scandal, leading to SoftBank exit
Why it matters: ditching one of its more high profile bets out of the monstrous Vision Fund wasn&t even the first time this year SoftBank
Once an unstoppable giant, SoftBank has been forced to return to reality after years of prolific dealmaking
No longer a leader in VC or even a threat to other top venture capitalists, SoftBank deal activity has become a cautionary tale
Here more on SoftBank other uncertain bets.
2
The biggest story of 2019 was WeWork
Another SoftBank portfolio, in fact the former star of its portfolio, WeWork filed to go public in 2019 and gave everyone full access to its
financials in its IPO prospectus
In August, the business disclosed revenue of about $1.5 billion in the six months ending June 30 on losses of $905 million
The IPO was poised to become the second-largest offering of the year behind only Uber, but what happened instead was much different:WeWork
scrapped its IPO after ousting its founding CEO Adam Neumann, whose eccentric personality, expensive habits, alleged drug use, desire to
become Israel prime minister and other aspirations led to his well-publicized ouster
There a lot more to this story, click here for more coverage of the 2019 WeWork saga
Why it matters: WeWork unforgiving IPO prospectus painted a picture of a high-spending company with no path to profit in sight
For years, Silicon Valley (or New York, where WeWork is headquartered) has allowed high-growth companies to raise larger and larger rounds
of venture capital, understanding that eventually their revenues would outgrow their expenses and they would achieve profitability
WeWork, however, and its fellow ‘unicorn,& Uber, made it all the way to IPO without carving out a strategy of reaching profitability
These IPOs ignited a wide-reaching debate in the tech industry: does Wall Street care about profitability? Should startups prioritize
Meanwhile, the threat of a downturn had startups across industries cutting back and putting cash aside for a rainy day
For the first time in years, and as The New York Times put it, Silicon Valley began trying out a new mantra: make a profit.
3
A whole bunch of CEOs stepped down:Adam Neumann wasn&t the only high profile CEO to move on from their company this year
In a move tied to The Verge investigation, Away co-founder and CEO Steph Korey stepped down from the luggage company, instead becoming its
Lime CEO Toby Sun stepped down, shifting to another role within the company
On the public end of the ecosystem, McDonald&s, REI, Rite Aid and many others replaced their leaders
According to CNBC, nearly 150 CEOs left their post in November alone, setting up 2019 to break records for CEO departures with nearly 1,500
Why it matters: All of these departures were caused by varying factors
I will focus on WeWork and Away, which took center stage of the startups and venture capital universe
The recent Away debacle reinforces the role of the tech media and its ability to present well-reported facts to the public and enact
significant change to business as a result
Similarly, much of Adam Neumann ouster came as a result of strong reporting from outlets like The Wall Street Journal, Bloomberg and more
From facilitating a toxic, cutthroat culture to paying millions in company dollars for an unnecessary private jet, Away and WeWork
situations proved standards for startup CEOs has shifted
Whether that shift is here to stay is still up for debate.
Ah the list we've all been waiting for
pic.twitter.com/PndSjQf8yt
— Kate Clark (@KateClarkTweets) December 3, 2019
4
The IPO market was unforgiving to unicorns: WeWork never made it to the stock markets, but Uber, another scandal-ridden unicorn, did
The company (NYSE: UBER), previously valued at $72 billion, priced its stock at $45 apiece in May for a valuation of $82.4 billion
It began trading at $42 apiece, only to close even lower at $41.57, or down 7.6% from its IPO price
Not stellar, in fact, quite bad for one of the largest venture-backed companies of all time
Uber, however, wasn&t the only one to struggle with its IPO and first few months on the stock market
Other companies like Lyft and Peloton had disappointing results this year confirming the damage inflated valuations can cause
startups-turned-public companies
Though a rocky IPO doesn&t mark the end of a company, it does tell you a lot about Wall Street appetite for Silicon Valley top companies
Why it matters: 2019 tech IPOs illustrated a disconnect between the public markets and venture capitalists, whose cash determines the value
of these high-flying companies
Wall Street has realized these stocks, which NYT journalist Erin Griffith recently described as &Publicly Listed Unicorns Miserably
Performing,& are far less magical than previously assumed
As a result, many companies, particularly consumer tech businesses, may delay planned offerings, waiting until the markets stabilize and
become hungry again for big-dreaming tech companies.
