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The DL - An inside view into Pacific Northwest Tech

Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.
January 21 · Issue #31 · View online
The DL
Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.

This week’s issue covers what’s happening at Madrona, Seattle’s top enterprise startups, the two models for startups today, and the age of peak unhappiness.

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What's new at Madrona
This year is Madrona’s 25th birthday 🎂, and we are starting the year off with a lot of exciting news! Here’s a quick overview of what’s going on at Madrona and our portfolio companies:
  • Steve Singh joins Madrona as a managing director (LinkedIn)
  • Apple acquires for price in $200M range (Geekwire)
  • AI2 raises $10M for its incubator from Madrona, Sequoia, Kleiner Perkins, and Two Sigma (TechCrunch)
  • Portfolio news: UpLevel emerges from stealth with $7.5M raise (GW), ExtraHop expects $100M ARR in 2020 (TC), Rainway launches on iOS and Android (VB), Twinstrand raises $16M Series A (GW)
  • Madrona launches the second season of its podcast (Apple Podcasts)

Seattle's top 18 enterprise startups
Is it just me or are LinkedIn listicles the new thing? (My theory is everyone who grew up reading Buzzfeed listicles on Facebook has grown up and graduated to LinkedIn.) In any case… here is the latest list of top enterprise startups to watch in Seattle:

Accolade - “healthcare concierge” service to help employees navigate healthcare benefits and resources
Algorithmia - artificial intelligence products and algorithms for companies to use for data science
Amperity - customer data platform that uses artificial intelligence to help users know who their customers are and make business decisions
Auth0 - cybersecurity software startup that manages user authentication and secures the login pages for large consumer and enterprise businesses

If you want to see the full list (beyond the As), you can read it on Business Insider (but there’s a paywall, so I also put it up on my site here).

Get rich (selling software) or die tryin' (anything else)
It seems to me there are two dominant startup models in tech today.
1. You can make money selling software.
2. You can lose money selling anything else.

blue = software, other colors = not "pure" software
blue = software, other colors = not "pure" software
I found this tweet and chart while reading about Casper last week. It’s a thought-provoking take on successful startups.

Basically, the author says that even though many startups are struggling in the public markets, all of the “real” technology companies (i.e., companies that sell software and have near-zero marginal costs) are doing well. The hardware + software, hardware-only, and marketplace businesses are the ones that are struggling.

Thoughts on this rule? What are the best exceptions, and is this trend going to change over the next five years?

Other stuff Dan's talking about
📉📈 All downhill (or uphill) from here - A Dartmouth economist who studies happiness analyzed data from 132 countries to come up with the age when people reach peak unhappiness: 47 years old. Is it a coincidence that the average founding age of successful Silicon Valley founders is also 47?
✈️ How to beat jet lag (according to esports pros) - I just got back from Australia and did a bunch of googling on how to beat jet lag. Thanks to Reddit, I found this great article on how world-class esports players manage jet lag while competing in tournaments all over the world
🤖 AI Index 2019 - Stanford publishes an annual report on AI, looking at data like the number of AI papers, number of AI jobs, investment in AI, top ethical challenges with AI, etc. Here are the highlights from the 2019 report
💨 Zoom - “When Yuan flew to New York for the IPO, it was just his eighth work trip in five years.” Great profile on Eric Yuan, the founder of Zoom, and his journey to building a profitable $20B company with 50K+ customers (without ever traveling for customer meetings)

Please hit reply! (Or subscribe or forward!)
About me: I work as an investor at Madrona Venture Group, a Seattle-based venture capital firm that has been early partners with companies like Amazon, Smartsheet, Apptio, and Redfin.

If you have thoughts, questions, or comments, hit reply!

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