April 12, 2024


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Venture Capitalist Sarah Guo on the New Challenges Facing Startups – Tech News Briefing

This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.

Zoe Thomas: This is your Tech News Briefing for Wednesday, November 24th. I’m Zoe Thomas with The Wall Street Journal. The pandemic changed a lot about the way we work, but for startups trying to get their businesses off the ground, there were particular sets of challenges, from cybersecurity to maintaining the company’s culture. Investors, especially ones focused on seed stage companies, are used to helping startups navigate bumps in the road. But how are they going about that now? At this year’s WSJ Tech Live conference, I spoke with venture capitalist Sarah Guo about the difficulties and opportunities this new environment created for tech startups and investors. We’ll have the highlights from that conversation after these headlines.
Samsung says it’ll build a new chip-making plant in central Texas. On Tuesday, Texas governor Greg Abbott announced the plans appearing alongside the president of Samsung semiconductor business.

Greg Abbott: The implications of this facility extend far beyond the boundaries of Texas. It’s going to impact the entire world. As you all know, we face a global shortage of semiconductor chips, and I want you to know that Texas is working with Samsung to provide long term solutions for the world’s growing chip shortage.

Zoe Thomas: The 17 billion project comes as the Biden administration is pushing for an expansion of U.S. semiconductor production. Taylor, Texas, where the new plant will be built, has offered Samsung incentives that include the equivalent of property tax breaks of up to 92 and a half percent for the first 10 years. Samsung said the factory would produce high end chips for devices such as smartphones and for artificial intelligence applications. Chip production starts in late 2024.
Investors are pouring money into companies that gather data from space and more of these businesses are going public through deals with special purpose acquisition companies, or SPACs. The companies, which use satellites to take photos of earth, track radio signals and use radar to peer through clouds, raised phone 5.2 billion last year and 4.5 billion this year through November 10th. That’s up from just 1.4 billion in 2015, according to PitchBook. Our aerospace reporter, (Micah Maidenberg), says the companies and their investors are betting the data they gather could attract a wide range of new clients.

Micah Maidenberg: Historically, today the biggest buyers of remote sensing data has been military and intelligence agencies, but increasingly executives at remote sensing companies are looking at companies to sell to. You could sell satellite data to insurers, which could use it to assess disaster risk for properties or energy companies could use the data to monitor pipeline. Agriculture enterprises could take the data to help farmers or ranchers manage land or yields. Another idea is that businesses that are working on sort of environmental and social commitments could sort of use satellite data to show that they’re actually following through, that kind of ESG movement is really important or has grown in importance for regulators and investors as well.

Zoe Thomas: You may have bought clothes, luggage or jewelry from Macy’s, but now the department store has a new item; non-fungible tokens or NFTs. Macy says it’s auctioning off 10 images of Thanksgiving day parade balloons as digital collectibles. They’ll include pictures of a floating firefighter from the 1940s and a gold Macy’s star from the ’70s. The company will also be giving away 9,500 NFTs on its website on Thanksgiving morning. Macy’s said it created the NFTs to celebrate the parade’s 95th anniversary. Other brands that recently entered the NFT market include Nike and Martha Stewart.
All right, coming up, we’ll have my conversation with venture capitalist Sarah Guo, how the pandemic and remote working has changed the way tech startups operate. That’s after the break.
At this year’s WSJ Tech Live conference, I spoke with Sarah Guo, general partner at the venture capital firm Greylock. We talked about some of the new challenges the pandemic created for early stage startups and their investors. Here are highlights from that conversation.
Hi, Sarah.

Sarah Guo: Great to be here. Hey, Zoe.

Zoe Thomas: So let’s talk about then one of the areas that you have been active in, cyber security. A couple of years ago, you mentioned that you didn’t really think Americans were taking cyber security seriously. Now we’re working remotely, companies have to deal with their employees not working on the safe systems that they set up in the office. We’re hearing about ransomware attacks seemingly every other day. Do you think Americans are taking cybersecurity more seriously, and has that changed your investing strategy?

Sarah Guo: I think that we have to be taking it more seriously, right? We’ve seen critical infrastructure and supply chain attacks against large energy and technology companies that the country runs on. Right? But I’d say I’m both a technology optimist and somewhat of a security pessimist, in that if you think about the growth of computing overall, and then the growth of security, insecure computing is growing faster than security. That’s fundamentally how I look at it. I’d say for society, this is a really fundamental problem. I don’t know what the structural answer is because every time you … we’re building so much more software, software powers so many more things, every time you add something to that software, a feature, a layer of abstraction, you’re adding a tax surface and you’re making the attack surface more important and you’re often doing it much faster.
I’d say in that pace of doing business, we can’t teach all developers to write secure code all the time. Right? If they’re writing all of this code that’s a lot faster, doing many more important things with growing complexity, we think that security is an area of investment more than ever and especially some of the areas around people building their own technology.

Zoe Thomas: I want to touch on something you just said there. The sort of move fast and break things has always been Silicon Valley’s mentality. It’s been the thing that people get excited about startups for, but working in a startup, the culture is changing. It’s changing particularly with the pandemic and I’m wondering what you are seeing, if companies are changing their habits, or if you’re encouraging them in any way to change their work structures given what we’re seeing with COVID and maybe not returning to work so much.

Sarah Guo: I believe strongly that the pandemic has just massively accelerated a total rethinking of our relationship to technology at work to one another at work, when you talk about culture, and even restructuring of the global labor market. Right? Anybody who doesn’t believe that and thinks that we’re returning to some sort of normal that is very similar to the old normal, I think is fooling themselves. So if you just approach it systematically as to like, “Okay, I’m the CEO of a business. What has changed? What do I need to address?” So if we go down the line, we’re like, “All right, let’s say you’re going to have a bunch of employees who move to other locations. You’re going to hire people who work in more flexible arrangements like contractors, and you need to do international payroll and contractors are invoice, not paid through payroll so you need better HR and administration software.” Right?
You need to think about how to manage that complexity, even as a young business. I have companies that are under 20 people who are like, “Oh, well, we have people in three countries.” Right? I think that was rather abnormal a few years ago. Then I think when you think about just how we actually get work done, the question is like, “Can you figure out your new rituals and how you’re going to communicate with one another.” So this is one reason we’ve been investing in sort of productivity and creative software. We think all of this next generation business software, it’s all collaboration software in my mind. I think the last one that is just the most unsolved right now, even beyond productivity, is the thing you mentioned, which is culture and sense of connection.

Zoe Thomas: One of the things that made startup culture so enjoyable for many people was despite the 24/7 work that you were doing, you had snacks with your friends, you had ping pong tables, you had those outings. So you could kind of, in some ways, get over the burnout or the burnout became more acceptable because there were all these extra perks that you were getting, but now most of those are gone. So how do you keep your team engaged? How do you coach these companies or talk about dealing with burnout, particularly given the pandemic?

Sarah Guo: The first is recognition of that problem and leadership understanding that. I think the other is you describe productivity and being constantly connected to people, but there’s different types of connection, right? It is re-energizing to be like, “Zoe’s one of my favorite coworkers. We work on this thing together. I’m going to have a coffee and a snack with Zoe,” walking around the office in a way that … and I love Zoom. Don’t get me wrong. It absolutely saved the world economy over the last, last two years, but we can do better than that in terms of quality of experience for other use cases for workplace connection. So I don’t know if that’s virtual events or coworking like (inaudible), but I think we’re going to see a lot of innovation here.

Zoe Thomas: I want to touch on something that’s connected to this, which is diversity in tech. Silicon Valley particularly was not really known for its diversity. This is something you’ve spoken about. I wonder as the impacts of the pandemic, the impacts of working from home, these kind of different interactions that people are having kind of shake out, if you think that’s going to change, if you think companies are going to become more diverse, or if VC maybe has to put their foot on the gas a little bit to encourage more diversity in these companies.

Sarah Guo: I think it’s both, right? That’s a conversation I have in an ongoing way with every single company I’m invested in. If we do not think about diversity consciously in the new world of work, it will have negative impacts, right? So I’m a mom of two, right? It’s very common for parents of young children to be excited about the benefits of hybrid work because of the flexibility it allows them to manage their caregiving as well as their careers. But if you do hybrid work, but then you don’t think consciously about how to create an even playing field for the different audiences and it’s like how that would impact the diversity of your company, you’re going to have a less diverse company. Right?
I don’t think that it can’t be mitigated. It’s just it requires effort. How do we make sure that people who choose hybrid are also on the leadership track or could be stars or know the right people in the organization? I think that’s important to invest in. I think on the other hand, there’s a huge opportunity here. If you tell me … I think this is still unreasonable, but if you tell me we cannot hire women or engineers of color in the Bay Area, that’s ridiculous, but it becomes even more ridiculous. I mean, it’s challenging, but it’s not impossible and it becomes even more possible if you broaden the scope of where you’re hiring from. Right? So I think there’s both challenge and opportunity there, but it’s not going to automatically solve itself.

Zoe Thomas: So that pipeline argument doesn’t really hold up as well when your pipe can go a lot further, I guess.

Sarah Guo: Exactly.

Zoe Thomas: Has it changed at all the kinds of companies that you’re seeing kind of pitch the early stage companies?

Sarah Guo: Yeah, I’d say most of the companies that I have personally invested in during the pandemic are not based in the Bay Area. They may have Bay Area tech routes, but we are certainly very open-minded.

Zoe Thomas: That’s great. Thank you, Sarah, for joining us, and that’s it for today’s Tech News Briefing. If you want more tech stories, check out our website, wsj.com. If you like our show, please write and review it. You can do that wherever you get your podcasts. One more thing, we’ll be off tomorrow for Thanksgiving and back on Friday with more tech news. I’m Zoe Thomas for The Wall Street Journal. Hope you have a great holiday. Thanks for listening.

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