🍳 Brunch Briefing | Globalization
MS-13, witchfluencers, and Geraldo Rivera
|Jan 19, 2020|
You’ll notice something a little different today. In an effort to bring you the most interesting thinking from the world of VC and startups, The Generalist is kicking off a new feature: 1x a month, someone from the community will share a thesis they’ve been researching. You’ll still get the same writing from yours truly, just with added insights from someone I respect and trust.
Today, I’m excited to welcome Aashay Sanghvi, an investor at Haystack. He’s a thoughtful writer, a sharp investor, and a lovely person.
In this week’s BB, you’ll learn about…
⚔️ Plaid’s $7MM war
🇸🇻 The social media profiles of El Salvador’s gangsters
🍄 Telltale signs you’re a witch
🌏 Why taking over the world is good business
🕵️♂️ The stealth startup hiring a founding team member
🐢 Lime’s biblical fallout, Korey’s return, and the ‘sex machine’ of San Diego
🎻 Riddlers that hit the high-notes
🤖 If you’re new to The Generalist, check out last week’s edition. You’ll find a rundown of CES, Softbank, and Gwyneth Paltrow. For those of you enjoying what we’re building here, please do share with a friend that might enjoy it.
(Quotes from clever people)
Plaid has always been a wartime company…When we were eight people we fought a patent lawsuit for about two and a half years. I raised a Series A and a Series B into the patent lawsuit…[It] didn’t end up affecting our company long term. But, that does kind of cement that, call it wartime mentality. That mentality of needing to grind to get through the challenges.
Over a span of several years, CEO Zach Perret spent $7MM defending his company from spurious legal action. This week, Plaid celebrated winning both the battle and the war, announcing the sale of the financial API platform to Visa for $5.3B. That represented a 2x increase on the company’s last $250MM round; a pretty nifty IRR for leads Index and KPCB. NEA is also in line for a big payout: partner Rick Yang served on the company’s board and accrued a stake worth a reported $700MM.
In many ways, it’s surprising a deal like this has not happened sooner. Plaid succeeded in building a fundamental piece of financial infrastructure, serving as the connection between bank accounts and consumer products. It scaled rapidly, ultimately covering 11K banks, 2.6K fintech companies, and 200MM accounts, and facilitated the flourishing we are now seeing in fintech.
When the banks realized they had fallen behind in the peer-to-peer payments space, they took action with JP Morgan, Capital One, Bank of America and others banding together to create Zelle. That app now rivals Venmo in reach; in 4Q19 the PayPal owned business processed $27B in payments, while Zelle handled $23.8B. With Plaid off the table, stay alert to a similar narrative playing out as banking’s megalodons sniff blood in the water. For Plaid, the war is over. For Visa, it may be just about to start.
🖼️ 1000 words
(Something to look at)
The difference 50 meters makes. Researchers have released a study showing the impact of gangs on local areas. Analyzing data from El Salvador, the Princeton and UC Berkeley team illustrated that those living under the thumb of MS-13 and 18th Street — two of Latin America’s largest criminal enterprises — have significantly less wealth, lower literacy rates, and depressed income compared to those that live outside of these territories. Remarkably, differences can be found among inhabitants a mere 50 meters away; the chart above illustrates that those on one side of a boundary earn ~$500/month, while neighbors across the divide earn ~$800/month.
Critically, the researchers found that these inferior socio-economic outcomes were not the consequence of increased exposure to violence, lower provision of public goods, or migration away from gang-controlled areas. Rather, differences were attributable to constrained mobility and the subsequent reduced employment choices.
These problems occur closer to home, too. MS-13 began in the United States and boasts 10K members across the country. Many congregate in Nassau County, NY. While traditional methods like community building are critical to stemming the flow of gang influence, social media monitoring may also play a role, illuminating relationships between individuals, and adding context to illicit activity. “Being young men, [they] are very active on social media,” one researcher noted.
😱 Signs of the apocalypse
(Look on my Works, ye Mighty, and despair!)
Two tickets to the gun show. Armslist.com, a sort of Craigslist-for-guns has become a a popular hub for extralegal buyers and sellers. The "gun show that never ends” showcases hundreds of illicit weapons including machine guns and rocket launchers and leaves background checks up to the individual sellers. The results are disastrous: police officers, teenagers, service members, men and women have been killed by illegal Armslist weapons. The platform itself bears no liability per Section 230 of the Communications Decency Act, the law that protects social media platforms from being culpable for what users post. Biden has said he would revoke this protection.
The locus for hocus pocus. Concurrent with rising interests in astrology and the occult, paganism has seen a surge in popularity with an estimated 1-1.5MM Americans identifying as Wicca or pagan, as of 2014. Increasingly, ‘witch influencers’ — followed by hundreds of thousands for their mystical tips — are taking their talents to Bytedance-owned TikTok. “It humanizes witches,” witchfluencer Chelsea Selby notes, “With TikTok, I can show the more personal side of myself.” According to one TikTok video, signs you might be a witch include: being drawn to the stars, enjoying animals, and being able to smell rain before it arrives. Spooky.
🌎 Monitoring: The Globalization Stack
(From Aashay — one space worth keeping an eye on)
Last summer, I started to notice that startups of all shapes and sizes are increasingly looking to expand their borders to reach larger audiences, customer bases, or labor pools. If you look at the other end of the corporate spectrum, the largest multinational enterprises in the world are adopting technology and software as it becomes more and more critical to their operations and customer touchpoints. I spent some time trying to understand what types of infrastructure tooling can not only enable global expansion, but also expand the surface area of companies going global. In the same way that Stripe’s payment APIs opened up the market for online businesses, a similar dynamic could play out here for globalized companies.
I originally wrote a piece called “The Internationalization Stack.” In retrospect, I would take back that title. The better name would be The Globalization Stack (which I’ve shortened to g11n), which encompasses both internationalization and localization. The former includes the design of applications and products so they can support multiple languages and audiences, and the latter process is about specifically tailoring a product or company operations to work in a new country or geography.
Broadly, my thinking on internationalization and localization segments two ways. One set of infrastructure allows new companies to tap into global markets from day one — this can take the form of language translation, acceptance of cross-border payments, etc. The other set of globalization tooling helps big companies manage their operations across time zones, geographies, and borders. To the first point, Chicago-based Cameo (3 years old) has already expanded to reach India, connecting Bollywood stars and cricket players with mass audiences. SF-based Faire (3 years old) just announced an initiative in Canada. Companies that internationalize at this pace are unprecedented, and I’m curious to find more tools that speed up and support that process even more, serving products and services bottoms-up through APIs, developer tools, or workflow software.
Looking at the other side of the coin, orchestrating global reach comes with a different set of challenges than scaling to it. There are countless contractors and counter-parties, payroll requirements (check out Papaya), legal entity creation, bank accounts, physical location expansion necessities, etc. I’ve also recently come across businesses in the cross-border data management space like dataPlor and InCountry, which look interesting.
If you’re a founder building something in this space or an investor looking to learn more, you can reach me at aashay[at]haystack.vc. I’d like to thank Mario for including me! I’m a huge fan of The Generalist, so this is an honor.
(The jobs you need, and no more.)
Chief of Staff - GOAT (LA). Work directly with the co-founders at this sneaker reseller. For hypebeast generalists only.
Product Designer - Stealth (SF). COO of shuttered storage company Omni, Ryan Delk, is building something new in the homeschooling space. An opportunity to join a sharp-seeming operator tackling a meaningful market.
BD Manager - Bison Trails (NYC). If I’ve shared a Bison Trails gig previously, it’s only because I love what they’re doing. A place where the 0.2% of equity offered might be life-changing.
Chief of Staff - Oscar Health (NYC). This week, the healthcare provider announced they have 400K members and expect to reach $2B in revenue over the next 12 months. Not a bad place to be flexing your organizational skills.
Account Executive - Snaps (NYC). An awesome CEO, an award-winning product, and an annual offsite in the Catskills.
VC Summer Associated - Lerer Hippeau (NYC). The OGs of NYC VC are looking for two summers to help them track down the best brands. Expect to hear about the coolest skincare/seltzer/salad co’s before the rest of us.
Head of Communications - Notion (SF). The makers of modular word processing software are staffing up across departments. This is an interesting opportunity to tell the tale of a startup that nearly died before rebounding to an $800MM valuation.
New Business Associate - Plaid (SF). While the upside might have been slightly curtailed by this week’s news, Plaid is building a genuinely revolutionary product. With deeper pockets, expect product line expansion and more robust service — helpful for a software salesperson.
Senior Strategy Associate - Axios (DC). The consistently excellent newsletter mill are looking for an “analytical thinker” that will have exposure to the company’s founders.
BD Associate - RigUp (Austin). The hiring platform for the oil and gas industry is looking for someone to seal new deals, and scout for promising acquisitions. Sounds fun.
🐒 Long tail
(Best of the rest)
Heeeere’s Korey! Sending chills across Away’s customer experience team, disgraced founder Steph Korey returned to her post at the luggage-maker. Just a few weeks ago, Korey had agreed to step down, giving control to new hire Stuart Haselden — they’ve now agreed to share the CEO spot. The upheaval may not matter, the company has apparently continued to grow.
The sins of Uber visited upon Lime. Top-line growth is no longer enough. While VCs might have been willing to pour capital into high-engagement money-incinerators 12 months ago, tough times for WeWork, Uber, and Lyft have forced scooter companies to focus on profitability. That’s forced Lime to layoff 14% of their workforce and shutdown 12(!) markets. Competitors Bird, Scoot, and Skip have taken similar action over the past year.
Put a ring on it. Last year, Spotify spent $400MM snapping up Gimlet and Anchor in an effort to expand their podcast offerings. That may have simply whetted their appetite with the company sniffing around sports and pop-culture outlet The Ringer, home to a podcast network that sees 100MM downloads a month and realizes $15MM in revenue per year. Keep an eye out for more activity in the space; we may see audio take the shape of the video streaming wars with Apple and Spotify spending heavily on content and talent.
Slow and steady saves the race. This week’s hero is Diego, a giant Española tortoise described as a ‘sex machine.’ While the species once seemed to be on the brink of extinction, Diego — on loan from San Diego Zoo — sired 800 offspring bringing the population to a healthy level. He’s 100 years old.
(A question, conundrum, or riddle to mull over)
I have keys but no locks, space but no rooms. You can enter, but you cannot go outside. What am I?
CLL is quickly becoming this section’s postman — he always delivers. He was first to drop the correct answer to last week’s riddle into The Generalist’s mailbox, recognizing the musical pattern of the woman’s previous children:
DO-minique, RE-ginlad, MI-chael, FA-wn, SO-phie, and LA-ra. Of the available options, the next child should be named TI-mothy. If there’s any justice in the world.
NMT also answered correctly after a hint, but showed most ingenuity in his first response, writing, “Trick question: she would name her child Geraldo Rivera.” It would certainly make for quite an origin story.
I hope you enjoyed today’s edition. Wishing you all an excellent weekend. For American readers, one final suggestion: watch this. No better time to remind ourselves why we have Monday off. 💙