Dear Investor,
The story of entrepreneurship is often reminiscent of David and Goliath: a small and nimble startup rises up to challenge the large, evil incumbent. But with time, David becomes Goliath. Courage is replaced with defenses, and innovation with brute-force. That's why the symbolism of Epic Games' attack on Apple is genius...
In August, Apple removed the popular game Fortnite from the App Store after it introduced a direct payment option that circumvented Apple's 30% revenue cut policy. Immediately after, Fortnite's maker Epic Games published a parody of the "1984" ad called "Nineteen Eighty-Fortnite." (In the unlikely event you have never heard us talk about the original ad, you can see it here.) In the Fortnite parody, the villain is an apple while the heroine is Fortnite. The parody ends with a call to action: "Apple is blocking Fortnite. Join the fight to stop 2020 from becoming '1984.'"
Despite a $2 trillion market cap, Apple had thus far managed to maintain its David-like image. Epic Games has put a crack in that narrative. How this fight ends remains unclear, but the crack is here to stay. And so is the underlying message: Monopolies are bad for innovation. We tip our hat to Epic Games for its fight (and highly recommend watching the Fortnite commercial below).
Fund News
This month two of our companies announced their Series A rounds. Routable, which provides an API and B2B payment platform, announced a Series A led by Lee Fixel. And PadSplit, which applies tech to the Gordian Knot of America's affordable housing challenges, announced a Series A led by Core. In other news, our portfolio company Properly has been featured in this front page story in Canada's Financial Times for its innovative solution for homebuying during the current economic crisis. And our startup Fairmarkit was named in CB Insights' list of fastest-growing fintech startups.
Without further ado, here are your must-reads for September
1, Epic's Epic 1984 Video
A brilliant parody. (If you have not seen the original from 1984, you should watch it first here.)
Read Article →
2. Rethinking the App Store
In this thoughtful (and slightly philosophical) article, Stratechery's Ben Thompson chronicles the evolution of the App Store and how a 30% take from application revenue by Apple on the iPhone or by Google on Android has become the norm. (Compared with 0% on the desktop.)
Read Article →
3. Walmart+ will finally launch in September. Can it compete with Amazon Prime?
Walmart is finally launching a response to Amazon Prime, Walmart+. But will Walmart+'s (we realize it does not roll off the tongue) offer of lower-priced grocery delivery, discount gas and a self-checkout experience at Walmart stores beat Amazon Prime's menu of benefits? It looks like an uphill climb for Walmart. But as we said above, monopolies are bad for innovation. We look forward to seeing how the entry of a new player benefits innovation and consumers.
Read Article →
4. Five Things We Learned From the Surge of Cloud Software Filings
It's a busy month for tech IPO filings, particularly Cloud Software. This month Snowflake, Asana, Palantir, JFrog and Sumo Logic all filed to go public. This article summarizes some of the learnings from the filings. Tl;dr: cloud software providers have amazing retention rates (in the case of Snowflake 158%), most have saved money during the pandemic due to the cancelation of business travel and the virtualization of company and sales events, and some cited "political influence" as a potential risk, a subtle reference to the Trump administration's unusual involvement in a recent cloud deal.
Read Article →
5. This startup will teach your dog to talk
Ever wondered what your dog is thinking? Now you can ask and get an answer - maybe. Check out this startup, and definitely watch the video on the homepage.
Read Article →