Sep 24, 2020
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What Should Startups And VCs Build? How To Make Money In Post-COVID-19 Times

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What Should Startups And VCs Build? How To Make Money In Post-COVID-19 Times PROPY INC. It certainly feels strange to read articles on the way to earn money during these COVID-19 times especially now – when the realm is in a state of turmoil. Quite contrary to capitalist principles the pandemic seems to have brought humans together in empathy

 

Unity after tragedy is taking effect helping us focus more on each other in preference to on our personal selves. During this case we will credit ourselves for selecting life over money. This can be a hard time for all of us. We must re-evaluate our businesses investments the established order and even our core values while preparing to crawl out of shelter-in-place directives to a brand new reality

 

What should we focus our energy on during this major transition period? As Marc Andreessen recently noted It s time to build. However his statement sparks a group of questions inclusive of What should we be building? Below I share my thoughts on what’s relevant for startups and VCs within the tech real estate and blockchain industries: As a former real estate developer I created real-world tangible assets

 

I could see happy people living in my buildings a transparent indication that my efforts were well worth the result. In my current role as a software developer things are more complicated. I have to evaluate the fundamentals and the importance of my creations. This is not relevant to only me

 

The total tech community must evaluate its contributions. Are the projects we’re building becoming portion of the core infrastructure of the long run or are they only window dressings (or icing on the cake )? In the past fundamental technologies inclusive of e-signatures and e-notaries have not been recognized as essential pills but rather as know-how that is equivalent to vitamins a minimum of in the genuine estate industry

 

Everyone understood the inevitable uniqueness of the emerging innovative tech branches but nobody desired to look ahead to governments and industries to make the shift toward this direction. Today years later we see DocuSign (founded by Tom Gonser) and Notarize (a five-year-old company founded by Pat Kinsel) among the top-performing stocks. These firms are finally getting the eye that they deserve

 

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An Important Step To Success For Young People Starts With #WhyApply On September 18 The pandemic forces old-fashioned industries inclusive of real estate to adopt new technologies

 

It also forces overhyped emerging tech inclusive of blockchain and AI to be re-evaluated and shifted toward incentivizing startups to buidl useful apps that are relevant for the future. Changes Imposed By COVID-19 On The Real Estate Industry The genuine estate market and proptech companies are in an ambivalent situation: the market is alive but uncertain and the demand for more digital transactions is surging

 

Some business models inclusive of iBuyer platforms aren’t viable for operating during crises (you can learn more in my Forbes article); iBuyer companies inclusive of Opendoor (founded by entrepreneurs including Eric Wu and Keith Rabois) at the moment are just beginning to resume their operations. Business models that do survive the hostile pandemic environment will ultimately find themselves in much better shape than ever

 

Fortunately the united states real estate industry reached a level of digitalization that allowed the market to avoid itself from coming to a whole halt in the course of the pandemic. When it comes to furthering digitalization there are enormous opportunities for entrepreneurs existing tech-driven companies and investors. My company as a part of the genuine estate digital ecosystem felt the demand for property deal transactions to take place firsthand and exclusively online reminiscent of Notarize

 

com (which is leading in its niche by offering notary public services 24/7 in a completely digital way). Other industry participants are offering virtual tours improvements of self-made pictures and virtual staging inclusive of BoxBrownie. com and other digital services. However complete digitalization of the genuine estate space is barely the first step

 

To completely meet the needs of shoppers modern-day companies also will have got to face and tackle other challenges. One such challenge is affordability. This is crucially important that tech products are affordable for consumers taking into account current financial and economic uncertainties. This rule is very true when it comes to recurrent payments inclusive of commitments to SaaS subscriptions

 

Last but not least a much greater challenge is citing the overall health of the genuine estate market. This is obvious that if a housing crisis develops and sales stop software products seriously is not renowned until the market bounces back. There are currently signs of a housing crisis in some areas inclusive of NYC s Manhattan and SoCal

 

Other areas including China are showing rapid recoveries within the post-COVID-19 market space. We have yet to work out COVID-19 s full impact on the genuine estate industry. In one in all his recent tweets Redfin CEO Glenn Kelman predicts stability: Prices aren t dropping now. Supply is down 25% YoY

 

Buying demand is nearing pre-pandemic levels. Urban condos & vacation homes are hard to sell. Other homes aren t. Mortgage forbearance & the drop in working-class home-ownership have precluded the immediate foreclosures of 08. A Shift Toward Useful Apps In The Blockchain Space I also expect to work out further changes within the emerging technologies fields inclusive of blockchain technology

 

Last year the load of federal regulations imposed on Facebook prevented the corporate from launching its new digital currency alongside the network supporting it. Recently Telegram became contractually obligated to pay its investors back 72% of their investments for missing the Telegram network launch. The reality is that we do not need more protocols and more networks; we’d like products

 

Facebook can build a digital wallet experimenting first with existing stablecoins and/or bitcoin. Such exposure to the masses would help to bring real innovation to the world. The same applies to Telegram (although I feel that Pavel Durov the founding father of Telegram will further deliver great products). The ugly truth is that inventors and VCs within the blockchain space are trying to find overhyped newborns that could potentially make 10x ROIs within several years

 

This leaves me with the impression that no-one cares about the genuine uses of the underlying technologies. Many first-layer networks inclusive of EOS Algorand NEO and Tezos received much capital that they created funds to fund applications on top of their networks. Oddly enough almost no impactful apps have been launched from these new networks

 

One reason may well be that the main target of the aforementioned funds falls on the second-layer application in preference to on the actual product design for end users. The doors for hype and speculation are wide open. However our focus shouldn’t bypass the core human principles of improving the standard of people s lives

 

We ought to be concentrating on products that could make a metamorphosis tomorrow or next year not only the products that could make a metamorphosis 10 to 20 years down the road from now. The main target ought to be on how one investment or technology could make the lives of people better and of higher quality especially once we witness how fragile our world is when confronted with a devastating pandemic

 

Fortunately blockchain technology is coming back to the conversation due to governmental privacy control dynamics in many countries and diverse conspiracy theories caused by the pandemic. Members of society are concerned concerning the sharing and storage of their very own data limited choices and imposed controls by governments over an unlimited number of layers of daily life

 

However with assistance from decentralized protocols for votes and the storing and sharing of information the problem is fortunately solvable. Those people who are fighting for change on the state level can improve the way that governance works today. These key individuals can start learning about and dealing on consensus mechanisms that blockchain technology is able to offering; this can be a space in which there are currently skilled engineers but not enough leaders with soft skills

 

What Changes Do We Need In Venture Capital? Andreessen encourages us to build. There are various interpretations of his encouragement: from concentrating on physical infrastructure and buildings to continuing developing software tools. What we’re building often is dependent upon venture capitalists like Andreesen who’re betting on the future that they foresee

 

Depending on the decisions of those VCs the journeys of many inventors and entrepreneurs will be affected for the years to come. The venture capital industry which has been driving innovation alongside entrepreneurs can improve. As of now this is broken in lots of aspects. Startups are being taught to be short-minded to overhype and to deliver revenue

 

A majority of these companies burn cash within 12 months simply to get to the subsequent round of investment (as we have witnessed with WeWork). Thus the companies may prioritize fundraising and unhealthy metrics over true innovation and value creation. In my previous article on proptech I gave an example of how the current framework between startups and VCs force proptech companies to show themselves into brokerages lenders or title companies in preference to firms that focus on fundamental innovation

 

The system is broken because raising a successful series A round depends solely on finding one lead investor. Everyone else comes along after the only lead is onboarded due to the hype amongst investors. Oftentimes the due diligence that is conducted neglects the experts feedback team s achievements and focuses on verifying demand amongst other investors in preference to concentrating on engineers consumers or industry experts

 

(I often witness this pattern in Silicon Valley and notably within the crypto space. ) The ICO period the professionals consisting of the cons gave us hope regarding problems involving the traditional venture capital model. With ICOs inventive crowdfunding opportunities startup founders were now not depending on an exceedingly narrow pool of institutional investors

 

The token sale approach represented the democratization of access to non-public equity. However the key problem with the ICO model was that it was too immature and opportunistic; it had a lack of limitations and a lack of control over valuations exchanges and the sizes of capital that were raised by founders

 

There ought to be a middle ground in place where founders can negotiate and work with multiple investors (and not only one lead) to win investments. One option may well be fixing the capital size in order that it covers an extended runway; however the funds would have got to be delivered in tranches that depend on the achievement of certain milestones

 

This for my part would work better than having just nine to 12 months of capital for the runway before the founder would have got to get keen on six months of fundraising to make sure the expansion of the corporate for the subsequent twelve months. Actually the same idea was proposed by Vitalik Buterin who introduced an answer that might help to revolutionize the ICO process and ultimately tackle the current flaws and imperfections of the ERC20 standards

 

Andreessen Horowitz demonstrated the first signs of willingness to change the venture capital industry. The important thing to notice is that the aforementioned firm is a believer in blockchain tech; actually founders Marc Andreessen and Ben Horowitz were also two of the earliest and strongest believers within the Internet. The corporate recently announced its second crypto fund and a team led by Chris Dixon and Kathie Huan as well as the addition of recent member Ariana Simpson

 

Furthermore a16z changed the structure of its fund allowing the corporate to now bet on riskier investments. This is crucially important that we re-evaluate what we fund and what we build. We must talk about making 9x in three years in preference to 3x in a single year. Inventors should invent

 

Builders should build. The funding loop should increase in length for startups that aim to make fundamental changes; there ought to be more milestones and more complex deliverables-based financing. I’ll believe that adjust is occurring when hard-working builders like James Ehrlich a Stanford-based entrepreneur concentrating on resilient habitats get extensive financing; when scientists get more attention from VCs when startups in modular construction and construction analytics like TraceAir receive more media and investor attention and when companies like Notarize obtain valuations reminiscent of that of the not-so-useful Juicero

 

These companies probably now have the eye and demand that they deserve attributable to the pandemic. However this was not the case a year or two ago (I have been following the progress of those teams). It’d sound like naive idealism but I am a true believer that entrepreneurship is not just about making money

 

It has a more robust purpose: creating value building tangible products and delivering on innovations that humanity needs. Over the long term investors and founders should capitalize on creating value in preference to on creating hype and betting on speculation. Money is an effect not a cause. Building useful products will not only make society happier and safer; it’s going to also earn money for everyone involved

 

We just have got to figure out the way to fix the system to make it talk about usefulness

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