Every startup has a tipping point. How to recalibrate? – TechCrunch

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I’ve spent the past month interviewing current and former employees of Ro, the health-tech unicorn, about the growing tensions at the company as it struggles to reach its $5 billion valuation. Many employees who bought into Roh’s mission said the company’s execution began to struggle after raising a $500 million Series D. The co-founders began expanding on a new focus for the company: Become the “Amazon of Healthcare.” Ro CEO and co-founder Zacharia Reitano, who was not available for comment for my story, released a statement in response to my piece.

While my story goes into the specific issues that Ro is dealing with, from stagnant ARR to a race to the bottom, I want to focus on what other startups can learn from this story.

Let’s be clear: it’s not unusual for a startup to go through trials and tribulations, especially in pursuit of profit and a moonshot of a vision. After all, every startup has a tipping point where management needs to take a step back and see what went wrong to avoid failure. Current and former staffers I spoke to for the story — as well as more than a dozen who reached out after publication — felt that Roe needed a recalibration to truly overcome his growing pains. The common solutions that emerged? Transparency, more balance and openness to deal with failure so that lessons can be learned for the future.

Here’s how one former employee put it:

“The first year I was there, I was like the happiest person on earth,” said a recently departed employee. “The part that needs to be realigned is, ‘what’s the end vision?’ What do you mean when you say ‘vertically integrated, patient-centered health system?’ And are the actions moving you toward that? And ultimately that’s why I left, because I didn’t feel like what was being said on the outside was actually happening on the inside.”

As more startups get hyped by venture capital and the incentives that come along with it, an industry-wide recalibration between the Big Pitch and the companies’ actual product strategy feels inevitable.

Founders should prepare to have conversations about the impact of distributed work on culture and the impact of venture capital on priorities. Investors will need to question the pressure they put on portfolio companies and show value by navigating ups and downs. The press will have to go deeper than the funding round story and poke holes in the narratives that the decision makers are creating. And employees, more emboldened than ever, will have to make choices based on the balance and importance of self-defense.

This shift fits right into a perspective I’ve leaned heavily on during the pandemic: It’s okay to change your mind about what’s important and let go of what you thought was non-negotiable.

In the rest of this newsletter we will talk about the future of VC, AWS of crypto and the future of farming. As always, you can follow me on Twitter @nmasc_ or contact me on Signal (DM for number).

Even PR is getting into VC

VSC, a public relations firm that has helped startups like ClearCo, Poshmark, Tonal and Tile create their stories, has raised millions to invest in the companies they work with. The move is further confirmation of a trend we’ve been talking about in this newsletter for months: Venture is becoming a complete package, and one of the most sought-after services is storytelling.

Here’s what you need to know: While VSC’s move feels justified, it is somewhat unprecedented. Despite the mix of media and risk, PR firms may have avoided going down this path because their clients—other startups—need them as a shoulder, not an investor. In other words, one could argue that founders may feel less incentivized to be vulnerable to a PR firm about struggles if they are also their investors, the same people they are incentivized to impress.

“Because we’re not the lead investor, we never put that kind of peer pressure on them,” Chatta said. “We have enough skin in the game to be honest and vulnerable with them, but not so much that we steer them in the wrong direction for their business.”

Staying meta (not that kind of meta):

And the startup of the week is…

Image Credits: Getty Images

Alchemy! As Mary Ann Azevedo reports, exactly six months after raising $80 million at a $505 million valuation, the blockchain and Web3 development SaaS startup has raised $250 million in a Series C funding round that values ​​the company at $3.5 billion dollar.

Here’s what you need to know: It is the backbone of many of the major crypto platforms, including MakersPlace, OpenSea, Nifty Gateway, SuperRare, CryptoPunks, Dapper Labs, and Axie Infinity. As we discussed at Equity, Alchemy is particularly well positioned to ride the crypto wave given the portfolio it is a part of.

Honorable Mentions:

Bowery TC-1

Image Credits: Nigel Sussman

For many researchers, activists and entrepreneurs, vertical farms are the answer to growing concerns about our climate crisis and its impact on food production. To find out one leader in the space, the inimitable Brian Heater took us all down a 12,000-word vertical farming rabbit hole with his Bowery Farming TC-1.

Here’s what you need to know: Bowery Farming, which has raised nearly $500 million in venture capital to date, wants to bring indoor farming to the masses in the United States. That requires the company to collect data to optimize taste, balance environmental benefits with technology, and battle an unlikely enemy: the produce section of the local grocery store.

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During the week

Seen on TechCrunch

Facebook is changing its corporate branding to Meta

The company formerly known as Facebook is unceremoniously killing off the ‘Oculus’ brand.

Thrasio, the Amazon aggregator, raises $1 billion in new funding at a valuation of up to $10 billion

LinkedIn launches its freelance services marketplace globally after attracting 2 million users in smaller US beta

Tesla surpasses $1 trillion market cap

Seen on TechCrunch+

Ever since Big Tech came to Denver, investors can’t buy enough local startups

Balancing Risk: The Role of Modern Architecture in BNPL Management

Quick observations on edtech unicorn Udemy’s IPO

How 2 companies used organic and inorganic growth

Creating a pitch deck that can’t be ignored

Have a nice and safe weekend

n