The warning signs are flashing faster and more furiously now and investors are increasingly urging their startups to take notice.
With the Dow Jones Industrial Average enduring a Christmas Eve rout of historic proportions and other indices entering bear market territory, the long-predicted end of the latest bull market is upon the technology industry.
While tech companies managed to escape the worst parts of the great recession in 2008, increasing regulatory scrutiny coupled with a broader set of economic risk factors (including a trade war with China, flagging domestic industrial spending, and — perhaps most worrying — the $9 trillion in debt sitting on corporate balance sheets) may offset projected growth in information technology outlays from companies to create a scenario where the roaring teens of the tech industry’s millennial years head into the terrible twenties of the new century.
That means venture capital investors are once again breaking out the RIP Good Times slide deck from Sequoia Capital and cautioning their portfolio companies about what comes next.
“In the course of preparing plans for 2019, most of our mature companies have internalized the risk for a downturn, but I think it’s hard to really model what the impact will be,” wrote Founder Collective managing partner David Frankel in an email. “You could imagine a slowdown in capital markets due to a rise in interest rates, that might hurt some companies that are overly dependent on VC, but leave the strong companies largely unscathed. It’s also easy to imagine a more systemic correction that decimates the verticals that were (& this will be easy with hindsight of course) ‘vitamins’ not painkillers.”
For some startups that means making hay while the sun shines and raising more capital now. As Joshua Hoffman, the chief executive of synthetic biology startup Zymergen, explained to Bloomberg when discussing his recent $400 million round led by SoftBank Vision Fund, “We wanted to have some fat on our bones for sure… The time to raise money is when people are giving it to you.” (Even if that money is tied to the dismemberment-and-beheading-happy Saudi Arabian government.)
For some, the times look very similar to the early 2000s when the dot-com bubble burst. In 2000, venture investors put around $99 billion into venture backed startups. Eighteen years later that number is roughly $96 billion.
In the first year of the new millennium a Japanese firm called SoftBank had established a worldwide network of funds to invest hundreds of millions of dollars into startup companies that were going to revolutionize the technology industry. Now, SoftBank is once again the firm throwing millions (hundreds of millions) against the proverbial wall in hopes that billions will come bouncing back.
Venture firms are expected to raise around $45 billion this year, while back in 2000 funds were sitting on about $80 billion in capital, according to a 2005 study from University of Western Ontario professor Milford Green.
There are important differences between the early part of the millennium and today’s technology and venture capital markets. Business models for technology companies are far more mature (Apple, Amazon, Alphabet, Facebook, and Microsoft are among the world’s most valuable companies) and the replacement of “eyeballs” with ad dollars can’t be overstated as an engine for economic growth and value.
At the same time, the fact that an entire generation of entrepreneurs have not experienced an economic down cycle is a sign of concern for some investors.
“There’s a large cohort of founders who haven’t seen a down economy and that’s a risk to the ecosystem,” Frankel writes. “Many founders believe that in a weak economy, that they might have to accept a down round, but few have grappled with the reality that capital markets don’t soften, they seize and capital just can’t be had, at almost any price, for months or more.”
So investors like Lux Capital’s Bilal Zuberi has begun advising portfolio companies to start preparing for times they’ve never seen. Winter… is indeed coming.
In a direct message Zuberi wrote:
“Yes, for all obvious reasons we do believe startups should be thinking hard about their capital needs going into 2019 and beyond, and how to not get caught in a firestorm. (a) the amount of money flowing in SV startups has meant startup teams and investors are not used to being frugal. Consider this, many junior partners at VC firms have never seen an economic downturn — and they are sitting on Boards of startups spending tons of money, (b) raising money sooner than later, but not increasing burn is a prudent thing to do for companies that have access to more capital, (c) when downturn hits there will be special situations opportunities to invest in good companies but at lower valuations. All VC firms know…But I wouldn’t want any of my companies to become a ‘special situation’. So fighting hard now to reach escape velocity is also prudent. And (d) you are seeing VC firms bulk up their own funds, raise debt funds, and so on…this should be a signal to startups that where capital flows from upstream is starting to worry. Smart founders should take that as a signal, and prepare accordingly.”
For Zuberi, preparation means a few things. Founders need to think about their financing plans beyond the next 12 to 18 months, and raise capital only if that cost of capital is low. Preparation also means keeping tabs on burn rates and financials in general, and begin planning on how to move aggressively should competitors start becoming “special situations” that investors may look to offload.
Of course, there’s still the possibility that all of this worrying will be for nothing. Bill Gurley warned about a culling of the unicorn herd in 2015, and there have been rumblings about a startup crash since the Brexit vote went through.
At this point though, the parallels are beginning to look more than eerie and it may behoove founders to take the warnings as more than just another instance of investors crying wolf — if only because it seems that the wolf is indeed at the door.
Facebook bans events near DC and state capitols over inauguration concerns
In light of safety concerns surrounding the upcoming US presidential inauguration, Facebook has decided to ban events on its platform that would take place near the US Capitol building and White House. As well, the platform has also banned new events that would take place near state capitols until after Inauguration Day.
Soon after the events that took place at the US Capitol last week, social media posts began surfacing with indications that rioters are planning a second attack in DC, one that will aim to disrupt the Presidential Inauguration. As well, law enforcement has warned that some groups may be planning to target state capitol buildings.
Facebook has announced a number of changes on its platform in light of these concerns, one of which is banning the creation of new events near capitol buildings and the White House until after the inauguration. In addition to preventing these new events from being created, the company also says that its team is conducting a ‘secondary review’ of all events on the platform related to the inauguration.
Any events found to violate the company’s policies will be removed, Facebook said. As well, the platform is still preventing non-US based accounts and Pages from creating events in the US.
Beyond that, Facebook says that it will use various signals like repeated policy violations to prevent some US-based accounts from accessing certain features like creating events, live-streaming videos, and making new Groups or Pages. Earlier today, the company said that it is also banning advertisements for protective equipment and weapon accessories in the US through January 22, at minimum.
Apple TV+ free trials extended again: What you should know
If you were one of the people who signed up for Apple’s lengthy one-year free trial of Apple TV+, you’ll be glad to hear that the company has extended their lengths…again. With this extension, the users who were set to lose their free trial in the coming weeks will instead get several additional months of access without charges.
Apple TV+ is the company’s streaming service. When it first launched, Apple offered a huge one-year free trial for those who purchased an Apple device. Back in October 2020, it was announced that the free trials period would be extended through to February 2021, meaning the first wave of subscribers are now weeks away from having to pay to keep watching.
According to 9to5Mac, Apple is once again extending the free trial period, this time pushing it back to July 2021. The extension will apply to free trial users whose trials were set to expire at some point up through June. Assuming you didn’t already cancel in anticipation of the trial’s end, you’ll be able to watch for free until summer.
If you’re one of these free trial subscribers, you can expect to get details about the extension in an email from Apple soon, according to the report. Some subscribers who have started paying can expect to see credits for the extra months.
The move isn’t entirely surprising — Apple TV+ is still a neophyte in a market dominated by big alternatives, and though it is cheap at $4.99/month, many critics have pointed out that it doesn’t yet have the content to compete with companies like Netflix. The pandemic and its impact on movie and TV show production has made things trickier.
The free trial extension will likely keep many people watching, giving Apple more time to roll out new content that may encourage many free users to eventually become paying customers.
Samsung Galaxy S21 Ultra vs. iPhone 12 Pro Max: The flagship battle
The two heavyweights of flagship smartphones – Samsung and Apple – are in for another blockbuster bout as the Korean smartphone maker just announced the S21 series at the Galaxy Unpacked event. This comes after the release of the Apple iPhone 12 series a couple of months ago. While the iPhone’s latest and greatest iPhone 12 Pro Max has already proved its substance, Samsung is here to spoil the party and take the laurels away.
It’s still too early to make an in-depth analysis of the Galaxy S21 Ultra – the shining new star from the house of Samsung – yet things are now clear as to what the smartphone is capable of delivering. So, without further ado, let’s get straight into comparing some prominent features of the two premium flagship phones that money can buy. The Samsung Galaxy S21 Ultra and the Apple iPhone 12 Pro Max.
The Samsung Galaxy S21 ultra gets a bit of a bump (from the S20 Ultra) in the way it looks – draped in new colors with matte finish for a classy look. The revamped camera module topped with a metal frame surely looks minimalistic and flows down into the aluminum body on the side. iPhone 12 Pro Max on the other hand adapts the sharper old-school aesthetics of the iPhone 5. The phone has a glass sandwich design housed in stainless steel frame with a frosted glass finish that makes it so desirable. The clear winner for pure design aesthetics is the iPhone 12 Pro Max.
Being the best flagships that you can buy, both the phones have a large display. The Galaxy S21 Ultra comes with a curved 6.8-inch Infinity-O Dynamic AMOLED display (3200×1440 resolution @ 515 ppi) with a center-aligned hole-punch camera. The iPhone 12 Pro Max has a 6.7-inch Super Retina XDR OLED display (2778×1284 resolution @ 458 ppi) with the notch housing the front-facing shooter.
The Galaxy S21 Ultra comes with an adaptive 120Hz refresh rate that can go as low as 10Hz for battery efficiency depending on the content being viewed. While the iPhone 12 Pro Max sticks to the contemporary 60Hz refresh rate that’s nothing much to talk of. Samsung’s flagship also takes the upper hand in peak brightness viewing with 1,500 nits while Apple’s phone has 1,200 nits value. Samsung Galaxy S21 Ultra takes the edge here promising to offer a wholesome viewing experience.
Both the devices will come in 128GB/256GB/512GB internal storage configuration as the Samsung Galaxy S21 Ultra ditches the microSD card slot for good. The Galaxy S21 Ultra will offer a massive 12GB and 16GB RAM for the buyers while iPhone 12 Pro Max has 6GB RAM on-board.
To rival the Apple A14 Bionic chip on the latest iPhone series, the Samsung series (for the US) gets the Qualcomm Snapdragon 888 processor that’s more than just a powerhouse, it’s AI-capable for taking things to the new level. While preliminary benchmarking tests show a comparable result for both the chipsets, Galaxy S21 Ultra could have a slight edge. The real-world processing capabilities will make things clearer, so we’ll reserve a verdict for now.
Rear camera capability
The camera setup on the two devices is pretty interesting. The Galaxy S21 Ultra comes with a 108MP (24mm f/1.8) main sensor with OIS, while the iPhone 12 Pro Max gets the 12MP (26mm f/1.7) primary sensor with shift stabilization. Interestingly the Samsung phone has two 10MP telephoto zoom lenses with OIS – one having 3X zoom level lens (72mm, f/2.4) and the other with 10X zoom periscope lens (240mm, f/4.9).
The flagship iPhone however gets a 12MP 2.5X zoom telephoto shooter (65mm, f/2.2) with OIS. The ultra-wide shooter is where both of them coincide with a 12MP ultra-wide 13mm lenses with the Samsung device having f/2.2 value while the Apple monster dishing out f/2.4.
For capturing videos, the Galaxy S21 Ultra comes with 8K video recording capability at 30fps, while the iPhone 12 Pro Max can manage 4K videos with support for Dolby HDR standard for richer colors. So, Galaxy S21 Ultra can shoot much cleaner looking videos while the iPhone 12 Pro Max has a higher dynamic range.
iPhone 12 Pro Max with the LiDAR sensor (for supreme focusing in low-light conditions) has been touted as being one of the best camera setups out there but with the Galaxy S21 Ultra having an upper hand as far as specs go, things could get interesting if the camera software can leverage full potential. This could be possible with the advanced capabilities of the Snapdragon Camera AI.
Battery and charging speed
The Galaxy S21 Ultra has a solid 5,000mAh battery compared to the 3,687mAh battery on the iPhone 12 Pro Max. On paper that might sound like a huge difference but Apple’s battery management is no joke, it has proven to be the best hardware-software ecosystem for years now.
Galaxy S21 Ultra with its massive battery already looks good. Additionally, with the Android 11 powering its guts and the power-efficient Snapdragon 888 promising huge leaps in battery management; things look promising for Samsung. Again Galaxy S21 Ultra gets our vote here and we are confident its battery will last longer than that of the iPhone 12 Pro Max, even if it is by a little.
The charging speed is another advantage here as Galaxy S21 Ultra gets the 25W charging speed support and the iPhone 12 Pro Max has 20W support. Both can however charge at 15W wirelessly. They ship without the charger, so that’s something you’ll have to sort for yourself, if you’re not a previous user of any of these ecosystems, or are making a shift to the other.
Samsung Galaxy S21 comes with support for the S Pen, including for the old generation S Pen and the new Wacom-powered S Pen. It can also reverse wireless charge, so you can juice up your Galaxy Buds Pro on the go from your phone. On the other hand, Apple iPhone 12 series comes with the MagSafe to enjoy the perks of the unique compatible accessories that add another dimension to the use-case scenario. More innovative ways to leverage MagSafe’s capability is a surety, so depending on your priorities both have their advantages, and it’s going to be a subjective decision.
This is where the buying decision can go one way or the other. Samsung has lowered the prices of its Galaxy S21 series lines-up to get more traction. The Galaxy S21 Ultra comes at a $1,200 for the 128GB model, $1,250 for the 256GB, and $1,380 for the 512GB variant.
Apple iPhone 12 Pro Max surprisingly is a good bargain here if you are looking at the price alone. The 128GB model comes at $1,100, 256GB model demands $1,200, and the top 512GB model can be yours for $1,400. As for the pricing, even though Galaxy S21 Ultra is cheaper than its predecessor, iPhone 12 Pro Max will make things difficult for Samsung.
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