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The DL - Amazon Shuts Down Parler, And Haven, DoorDash on How to Compete, and SPAC Magic

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Exciting news! This week's issue of The DL is brought to you by... baby Zac, who slept for over 9 hou
 
January 19 · Issue #77 · View online
The DL
Exciting news! This week’s issue of The DL is brought to you by
 baby Zac, who slept for over 9 hours in one stretch! 👏

If you’re one of the 56 new DL readers who joined last week, welcome to the best weekly newsletter about tech, startups, and investing in the Pacific Northwest! 😄

This week’s issue looks at

  • Amazon shutting down Parler
  • Amazon shutting down Haven
  • How DoorDash won the food delivery market, and
  • How SPAC magic works

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Amazon Shuts Down Parler
This is probably the most important tech news of last week, but it’s been pretty difficult to follow, so here’s my summary of the key events leading up to Parler’s shutdown:
  • After the insurrection at the Capitol, tech leaders make public statements condemning the attack, even retweeting Chris Sacca’s post blaming the violence on Mark Zuckerberg and Jack Dorsey
  • Friday afternoon, Twitter and Facebook suspend Trump’s accounts. Google bans Parler from the Play Store
  • Friday night, Parler becomes the most popular app on the App Store
  • Saturday afternoon, Apple bans Parler from the App Store
  • Saturday evening, AWS’s Trust and Safety team tells Parler:
  • “[W]e cannot provide services to a customer that is unable to effectively identify and remove content that encourages or incites violence against others
 Because Parler cannot comply with our terms of service and poses a very real risk to public safety, we plan to suspend Parler’s account.”
  • On Sunday evening, Parler goes offline

I thought Stratechery had a great interpretation of what this really meant:
What I believe happened this weekend was a uniquely American solution to the problem of Trump’s refusal to concede and attempts to incite violence: all of corporate America collectively decided that enough was enough, and did what Congress has been unable to do, effectively ending the Trump presidency. Parler, to be honest, was just as much a bystander casualty as it was a direct target.

And now many people are worried about the power of the tech platforms:
  • Naval - If you can silence a king, you are the king
  • David Sacks - Parler did have a ToS prohibiting incitement and violence. As a hyper-growth early-stage company, it had difficulty enforcing it. But so do Facebook, Twitter, Reddit, etc with far more resources. It did not deserve the death penalty. To all my friends in the tech ecosystem
 You would not want your portfolio companies being treated this way.
  • The Economist - Silicon Valley should not be given control over free speech
  • Angela Merkel - Lawmakers should set the rules governing free speech and not private technology companies

I would love to hear what you think:
  1. Do you think the tech companies were right to shut down Parler?
  2. Do you think this is a “special case,” or is this setting a precedent for how tech companies will operate in the future?
Haven Shuts Down
Three years ago, Amazon, Berkshire Hathaway, and JPMorgan Chase teamed up to launch Haven, a joint venture to lower healthcare costs through technology solutions. Here’s what happened:
  • No one really knew what they were going to do, but all the big health care stocks dropped in anticipation of a new competitor
  • In 2019, Haven hired Atul Gawande (famous surgeon, author of Being Mortal) as CEO
  • It looked like their primary product was going to be Starfield, an app to help patients interact more frequently with primary care physicians
  • Over the next year, the Starfield launch went very poorly, and the board could not agree on what Haven should work on next
  • Now they are shutting it down, and each of the companies is pursuing its own healthcare initiatives independently

Moral of the story: Just focus on what you’re building, and don’t worry about what Amazon (or another competitor) is announcing! If an investor asks you if you’re worried about competitor XYZ, just tell them it validates your market opportunity, why you’re better, and move on.
How to Compete and Win
In contrast to the Haven story, here is a fantastic thread on how DoorDash came from behind to beat Seamless and UberEats in food delivery:
  • Three years after launching in NYC, DoorDash was stagnant and unprofitable (Seamless had a 17 year head start, and Uber had a 50x larger marketing budget)
  • DoorDash retreated from the city to focus on the suburbs, where they found product market fit and became profitable
  • DoorDash defined the food delivery market as a set of tradeoffs around selection/quality, price, and speed. They decided to focus on selection and quality instead of price (where Seamless was the leader) or speed (where Uber was the leader)
  • Analyzing their data, they found that as long as deliveries took less <42 minutes, there weren’t any marginal benefits to faster delivery (Uber focused on <30 min delivery), so they doubled down on quality and selection, trading off speed and price
  • In contrast to competitors who were primarily focused on the end customer, DoorDash weighed the needs of all three sides of their marketplace - merchant, dasher, and customer - equally
  • Finally, they built a great team and culture of operational excellence (My favorite part of their values is “Get 1% better every day”)

Moral of the story: Define your market, decide how you win (e.g., quality > speed and price), use data to improve your product (42 min delivery time), focus on all of your customers (not just the ones who pay), and build the right team and culture to support your strategy.
Other stuff Dan's talking about
🔼 SPAC magic - Matt Levine wrote a great piece this week on how the “magic” money is created in SPACs. It’s a very clever structure, and it turns out retail investors are helping hedge funds make free money (surprise!)
đŸ’» 20 Slides on 2020 PNW Tech - I had a bunch of email deliverability issues last week (I’m blaming DocSend), so in case you missed it, here’s my summary of what happened in the PNW tech market last year as a PDF
💾 “How much I made as a really good Engineer at Facebook” - Earnings of a self-described “top 1%” FB engineer over nine years. In year one, his/her comp was $229K
 Before you click, guess what it reached in year nine
đŸ„Œ Suits -> Hoodies - > Patagonia Vests -> Lab Coats - Tech wasn’t the only industry that boomed in 2020. Check out the 50 scientists, doctors, and healthcare entrepreneurs who became pandemic billionaires last year
Please hit reply! (Or subscribe or forward!)
About me: I’m an investor at Madrona, a Seattle-based venture capital firm that has been early partners with companies like Amazon, Smartsheet, Snowflake, Apptio, and Redfin.
If you have thoughts, questions, or comments, hit reply! If you’re new, check out some of the DL’s top articles from the last few months:

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