🚀 Should the SEC regulate crypto?
Plus, how Coinbase "won" the Super Bowl!
Shopify reported earnings this week (more below) - and the platform officially crossed 2M merchants! As you can see from the graph above, COVID was a massive accelerant for Shopify, which saw a 75% jump in merchants in 2020.
This growth has fueled another category of companies: e-commerce enablement tools. These companies sell software that helps merchants run their online stores, tackling everything from SMS marketing to package tracking and customer support.
If you’re interested in this space, Alloy Automation has a great overview of the e-commerce “stack.” It includes companies you might know - like Zendesk, Happy Returns, and Affirm - as well as newer entrants like Skio, Okendo, and Canal.
I’m doing an independent study this quarter with GSB classmates about e-comm enablement tools, with a focus on how they sell into brands. We’re gathering data from people who work at these companies - I’d really appreciate if you could send this quick survey to anyone you know who works in this space!
🎙️ Spotify buys more podcast startups. Despite the Joe Rogan controversy, Spotify isn’t giving up on its podcasting ambitions. This week, Spotify announced acquisitions of Podsights and Chartable (terms weren’t disclosed). These companies match advertisers with podcasts and enable both sides to measure the results of their campaigns. Over the past two years, Spotify has been making a hard push to better monetize podcasts, as revenue per user meaningfully trails other media.
💊 D2C healthcare updates. It’s been a while since we discussed D2C telemedicine companies! To recap: we saw a wave of these businesses launch in the late 2010s, centered around increasing access to care by making it easier to get medication online. Many raised lots of VC $ and quickly scaled nationwide, sparking questions about regulation and competitive moats. It’s been fascinating to watch these businesses mature - a few updates from the past two weeks:
Nurx (originally known for birth control) merged with Thirty Madison, which runs brands like Keeps (hair loss), Cove (migraines), and Picnic (allergies). The combined company expects to do $300M in revenue this year.
hims & hers, which went public via SPAC last year, has struggled a bit in the public markets. It now appears to be doubling down on selling non-prescription products (e.g. supplements, medicated shampoo) in retail stores - the company just announced a distribution partnership with GNC.
📊 Earnings continue. It was yet another busy week for tech earnings:
Airbnb beat expectations for both earnings and revenue, and reported a quarterly profit! The company continues to see growth in length of stay as people work remotely - 20% of Airbnb trips are now for over a month.
DoorDash also had a strong outing, setting records for total orders, GMV, and MAUs. The company now has over 10M DashPass subscribers and has also been successful in driving more customers to make non-restaurant orders.
Shopify reported solid Q4 earnings, but the company’s stock dropped 20% thanks to a slower growth outlook for 2022. Over the next two years, Shopify plans to heavily invest in its fulfillment network (with the goal of 2 day delivery).
Roblox had a tough outing - the stock had its worst day of trading since the IPO. As kids get vaccinated & emerge from lockdown, hours of play and bookings per DAU both declined YoY - though international & older users are still driving growth.
It feels like all of these earnings updates are better suited to a “grandkid roundup” (Encanto reference) - I’m honestly considering it for next time…
If you somehow weren’t watching the Olympic ice dance last weekend, you may have been tuning in to another sporting event: the Super Bowl.
And you likely saw the Coinbase ad, which featured a bouncing QR code reminiscent of the DVD logo. If you scanned the code, you were directed to a website offering $15 in free BTC if you created a Coinbase account (and entry to a $3M sweepstakes).
what i’m following 👀
How TikTok is on the front lines of the Russia / Ukraine conflict.
A look at the rise of the “me, an empath” meme.
It’s already been a huge year for firms raising $1B+ funds.
The SEC is considering new regulations that would require some private startups and VC firms to publicly disclose performance metrics.
It’s been an eventful week in the SEC’s ongoing battle to regulate crypto. The biggest news was BlockFi settling a case with the SEC and paying $100M in penalties. The company’s high-yield interest accounts, which allowed users to lend out crypto (and earn up to 9.5% interest), was charged with violating securities laws.
The SEC alleges that this product met the legal definition of a security, and therefore should have gone through the agency’s registration process. In addition to paying the penalties, BlockFi has also agreed to stop onboarding new customers to its high yield accounts - though it plans to create a new product that is SEC compliant.
As the headlines above (all from this week!) illustrate, the BlockFi case is not the SEC’s only move into regulating crypto. SEC Chair Gary Gensler, who took office in April 2021, has serious concerns with crypto as an asset class - he believes it is “rife with fraud, scams, and abuse” and has even compared it to subprime mortgages before the 2008 financial crisis.
It’s impossible to deny that there have been high profile scams in crypto, and that asset prices can swing wildly. However, crypto advocates have questioned whether it’s inherently more dangerous than other assets that the SEC does regulate - even “normal” stocks now see immense volatility that doesn’t appear to be driven by underlying fundamentals (and meme stocks are an extreme example).
I would argue that SPACs are the most egregious case. I spend an embarrassing amount of time perusing the SEC’s EDGAR database, and I’ve seen some truly insane SPAC filings. I’m not referring to the Chamath-backed SPACs, which have largely performed poorly but have real traction. I’m talking about companies that have little to no revenue and questionable business models. A few examples:
Helbiz: a sub-scale e-scooter business that decide to buy livestreaming rights to minor league Italian soccer games and open ghost kitchens
Trump Media & Technology Group: regardless of your political affiliations, a social app + streaming platform with zero users and no product is a tough sell
I think these SPACs illustrate an important point: registering an asset with the SEC doesn’t guarantee that it’s “safe” for retail investors. Crypto is probably too much of a “Wild West” today - but I’m not yet convinced that putting every crypto product under the purview of the SEC will stop the scams. And I worry that forcing early stage projects to comply with heavy regulation may slow the pace of innovation we’re seeing in this space (by making it too time intensive / costly).
I’m admittedly new to this space, so if you’ve spent time thinking about crypto regulation and have an opinion on how it should (or shouldn’t) happen, I’d love to hear from you! Feel free to comment below or find me on Twitter @venturetwins.
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Meet Ryley, a 27-month-old golden retriever from Syracuse, NY.
She enjoys annoying her dad by napping on prohibited furniture, hiking, chewing balls, and finding sunlight to nap under. She's also an avid reader of Accelerated!