Syracuse University’s new career management platform raised $40 million — should LinkedIn be worried?

Career management platform Handshake dapped up some investors this week (wow, that was bad).

My peers at Syracuse University (which are probably the only 3 people reading this) will be familiar with Handshake. For those of you that are not, Handshake is a platform that helps students find internships and jobs, and companies find qualified candidates.

Fortune reported The Chan Zuckerberg Initiative and several other investors injected $40 million (Series C) into the company earlier this week. According to Crunchbase, Handshake has raised a total of $74 million over four rounds from investors such as Kleiner Perkins, Spark Capital, EQT Ventures and Omidyar Network. Handshake is currently working with more than 700 universities and 300,000 employers, and has reached more than 14 million students and young alumni. According to TechCrunch, the company is worth $275 million post-money (a post-money valuation takes into account the most recent funding round).

The questions posed by Handshake’s growth is simple: should LinkedIn be concerned? After struggling to monetize its user base for many years, LinkedIn has established a profitable business in recruiting by allowing companies to post job opportunities on its platform.  In 2015, 63 percent of LinkedIn’s almost $3 billion of revenue came from its Talent Solutions segment, per its annual report. The segment also saw year-over-year growth of 41 percent, more than any other product.

LinkedIn’s main enterprise solution — Recruiter — is targeted at traditional businesses. The platform also helps companies recruit candidates ranging from entry-level to upper management roles. Handshake specifically focuses on recruiting college students for internships and entry-level positions, which is a much smaller addressable market.

LinkedIn still has a huge advantage over Handshake thanks to the size of its network — which is now more than 562 million. Even if Handshake dominates the college market, LinkedIn still has a winning formula for helping professionals at every level find new professional opportunities. There’s evidence that suggests people are changing jobs more frequently, which is good news for LinkedIn because it can continue to service its users as they change jobs throughout their careers.

The most interesting part of this fundraising round is the involvement from The Chan Zuckerberg Initiative, Omidyar Network and Reach Capital (Omidyar is also an investor in Reach Capital). All three of these organizations follow some sort of philanthropic investment philosophy.

Reach Capital focuses on investing in innovative education products to help close the opportunity gap. The Chan Zuckerberg Initiative, a philanthropic organization funded by Mark Zuckerberg’s Facebook shares, invests in projects to “advance human potential and promote equal opportunity.” Omidyar Network is a “philanthropic investment firm” that invests in companies making a positive impact on society.

So, why are impact and philanthropic investors pouring money into a career management platform? According to Handshake’s website, its mission is to “Democratize Opportunity,” which seems to align nicely with do-good investors’ goals.

Here’s a quote from its Series C announcement that outlines the company’s mission:

“Five years ago, we started Handshake with the mission to help every student find a great job and build the foundations of a great career — regardless of where they go to school, who they know or what they major in.”

The social impact angle of Handshake’s business will likely help it compete with LinkedIn, but it’s unlikely the company can usurp the most dominant professional network that’s ever been created.

 

 

 

 

 

 

 

 

 

 

 

IPO Watch – Everyone’s favorite cooler brand, innovative couches and a blank check

YETI – $288 million

Yeti, the premium-cooler company beloved by college fraternities across the country raised close to $288 million earlier this week in its IPO. The company, which measures its coolers by how many “cans” they can hold, priced 16 million shares at $18 each, slightly below the expected $19 – $21 range, per CNBC.

According to Yeti’s most recent SEC filing, the company had a rough 2017, with revenue dropping to just more than $639 million from close to $819 million the year before. This year the company seems to be back on track to grow its revenues, and contrary to the swath of tech companies going public, Yeti is profitable.

My thoughts: As a lifestyle brand, Yeti has an incredibly loyal customer base. If you can can attract college students at a +$200 price point, you’ve got a pretty good business going (Yeti’s entry-level cooler costs $199.99, and the most expensive model is $1,299.99). But, it still remains to be seen if Yeti can avoid its customer base aging out of the brand.

According to CNBC, Yeti is trading at just under $16 in early-morning trading.

 

LoveSac – $56 million

The modular furniture designer LoveSac raised about $56 million in a better than expected public offering this week. Shares were priced at $16, a bit above the initial range of $13 to $15. The company is known for creating “Sactionals,” a rearrangeable system of individual couches. It also sells premium bean bag chairs in a variety of sizes.

According to its S-1 filing, the company wasn’t profitable in 2016 or 2017 and the majority of its revenue came from its 77 showrooms. LoveSac also plans to open an additional 15 showrooms in FY2019, bucking the trend of brick and mortar retailers closing stores (the company is shutting down five underperforming stores, but that still leaves a net gain of 10 stores, which is impressive).

My thoughts: LoveSac’s core product is a tough sell online — but it still seems to be growing its internet business. The future of physical retail is smaller and more experiential spaces, and LoveSac’s showroom model fits that trend.

According to MarketWatch, LoveSac is up almost 2 percent to $18.17 in early-morning trading.

 

FinTech Acquisition Corp III

Bancorp founder Betsy Cohen and Chairman Daniel Cohen are back with another blank check company, FinTech Acquisition Corp III, in an attempt to raise a $275 million IPO to acquire or merge with a financial technology company, per an SEC filing.

FinTech Acquisition Corp II raised $175 million in January 2017 through an IPO and eventually merged with Intermex, a wire transfer and financial solutions provider in July 2018. The group’s first blank check company, FinTech Acquisition Corp, raised $100 million in February 2015 and acquired FTS Holding Corporation in July 2016.

My thoughts: Investing in a blank check company is investing in the management teams ability to spot a profitable business opportunity. It’s more like investing in people than a business.

 

 

 

 

Y Combinator, Palantir and Opportunity Zones

Best of the best

One of Silicon Valley’s most prominent accelerators, Y Combinator, just released a list of the top 100 most valuable companies to graduate from its program.

The list includes some household names like Airbnb (which tops the list with a $30+ billion valuation) and Dropbox, the file-sharing service that hit the public markets earlier this year raising more than $750 million. It also includes some names that are more popular in the tech community like payment processor Stripe and Optimizely, a product testing platform.

One of the most notable trends throughout the list is the dominance of B2B (business to business) Software and Services companies, which make up about half of the startups.

Here are a few more highlights:

• Some of the oldest companies on the list: Reddit (Spring 2005, acquired by Conde Nast in 2006), OMGPOP (developer of facebook games, Spring 2006, acquired by Zynga in 2013), Scribd (digital library, Spring 2006)
• A few of the newest companies on the list: Brex (credit card startup, $1 billion valuation, Winter 2017), Faire (connects retailers to wholesalers, Winter 2017), The Athletic (sports news, Spring 2016)
• The total value of the 100 companies is more than $100 billion and have created more than 28,000 jobs, according to the list.

A tweet from Austen Allred, Co-Founder and CEO of Lambda School  (YC class of Spring 2017) breaks the list down a little further:

 

YC has funded ~1,900 companies.

93 are valued at >$100m
19 are valued at >$1b

Obviously this is oversimplified, but a YC founder, on average, has a 5% chance of building a $100m company, and a 1% chance of building a $1b company.

And that's probably low, as most are recent.

— Austen Allred (@Austen) October 18, 2018

 

Palo Alto’s best kept secret

Little-known Palantir Technologies Inc, a big data company co-founded by Peter Thiel, is considering going public at a valuation of up to $41 billion, according to the Wall Street Journal.

The company was founded in 2003 and created a highly-profitable niche in conducting data analysis for government agencies, and its products were reportedly used to help track down Osama Bin Laden (Bloomberg wrote a great piece in April on Palantir).

So, why is the reserved and secretive data-mining company thinking of going public now, more than 15 years after it was founded? The WSJ reported that both investors and employees have become frustrated that the company is still private and they haven’t been able to profit from their equity.

My thoughts: Thiel and company (a lot of his associates) have always seemed to march to the beat of their own drum. Investor and employee pressure might be part of it, but I think there are two other big factors. First, equity markets are hot right now and valuations are high. If a company’s looking to go public at a huge valuation,  — which most are — now looks like a pretty good time to do it. Palantir was valued around $20 billion in 2015 when it raised its last round of funding.

Tech companies are also under an immense amount of scrutiny over how they handle data. Palantir’s business is data, and if they go public, it could put them at the center of that debate. Going public in the near future could be a way for Palantir to get ahead of the inevitable crack-down on data privacy, and possibly, steer the conversation.

The rich stay rich — but also spread the wealth?

Recode reporter Theodore Schleifer published a great story this week about successful tech billionaires moving their money into “Opportunity Zones,” a new type of investment created by the 2017 tax bill.

Sean Parker, who spent time as an executive at Facebook in its early days, founded the Economic Innovation Group in 2013, a policy group that focuses on primarily on distressed communities. EIG was one of the biggest supporters of including Opportunity Zones in the tax bill, and according to the website Parker “was the primary architect” behind them.

The goal of Opportunity Zones is to divert capital to underserved communities through tax incentives. Traditionally, there’s been huge concentrations of capital in major cities like New York, Boston, Chicago, San Francisco, etc.

Opportunity Zones could be a way to bring money to the “flyover states,” or areas of the country that typically don’t see a consistent flow of capital. But, some are worried the concept might not yield its intended results, and could keep the rich well, rich.

 

 

 

 

 

 

 

 

 

 

 

 

 

So…… “Here’s the Thing”

“Don’t wait to be validated by some publication. Just start writing.”

An experienced reporter said this to me recently when I asked if they had any advice for someone my age interested in pursuing journalism.

Validation is a tricky thing, especially in writing. To a certain degree, I feel confident in my work. I’ve written about business, technology and politics for a legitimate news magazine and my university newspaper. But, for a longtime I’ve still felt unqualified to write about the topics I’m interested in unless it’s for an established publication.

Thanks to a couple of good friends and a few long talks, I’ve casted validation aside. I’m going to write about things I’m passionate about: business, technology, startups, venture capital, beer and tea. Do these topics mesh well? Maybe not, but we’ll see — welcome to “Here’s the Thing.”

For those of you that know me, the name of this blog will make sense. If you don’t know me, let’s chat: dstrauss2121@gmail.com. I’d love to connect. After a short talk, the name “Here’s the Thing” might make sense.

This blog is going to feature topics ranging from the biggest ideas and happenings in business, technology and startups, to the most obscure aspects of even more obscure industries. As a journalist, I value integrity and fact-based reporting. I’m going to infuse that into my writing here. My stories will be thoroughly researched and sourced. I don’t consider myself an expert in anything, so I’m not going to act like one. I’m going to collect facts, research and expert opinions to put together thoughtful stories that inform and educate people on topics that interest me. This is going to be a one-man operation, so if you see a typo or mistake, tear me apart. I deserve it.

Many stories will also include my own analysis — if you disagree with something, tell me. Let’s talk about it and figure out why we have different opinions. If there’s a topic you want me to report on, let me know. I’m interested in that too. If what I write about adds value to your life, read it. If not, find writing that does.

Let’s get after it.