Personal blog of Yzmir Ramirez

Facebook has been making a big play to be a go-to partner for small and medium businesses that use the internet to interface with the wider world, and its messaging platform WhatsApp, with some 50 million businesses and 175 million people messaging them (and more than 2 billion users overall) has been a central part of that pitch.

Now, the company is making three big additions to WhatsApp to fill out that proposition.

It’s launching a way to shop for and pay for goods and services in WhatsApp chats; it’s going head to head with the hosting providers of the world with a new product called Facebook Hosting Services to host businesses’ online assets and activity; and — in line with its expanding product range — Facebook said it will finally start to charge companies using WhatsApp for Business.

Facebook announced the news in a short blog post light on details. We have reached out to the company for more information on pricing, availability of the services and whether Facebook will provide hosting itself or work with third parties, and we will update this post as we learn more.

Update: Facebook responded and we are putting the replies below, in-line where it makes sense.

Here is what we know for now:

In-chat Shopping: Companies are already using WhatsApp to present product information and initiate discussions for transactions. One of the more recent developments in that area was the addition of QR codes and the ability to share catalog links in chats, added in July. At the same time, Facebook has been expanding the ways that businesses can display what they are selling on Facebook and Instagram, most recently with the launch in August of Facebook Shop, following a similar product roll out on Instagram before that.

Today’s move sounds like a new way for businesses in turn to use WhatsApp both to link through to those Facebook-native catalogs, as well as other products, and then purchase items, while still staying in the chat.

At the same time, Facebook will be making it possible for merchants to add “buy” buttons in other places that will take shoppers to WhatsApp chats to complete the purchase. “We also want to make it easier for businesses to integrate these features into their existing commerce and customer solutions,” it notes. “This will help many small businesses who have been most impacted in this time.”

Although Facebook is not calling this WhatsApp Pay, it seems that this is the next step ahead for the company’s ambitions to bring payments into the chat flow of its messaging app. That has been a long and winding road for the company, which finally launched WhatsApp Payments, using Facebook Pay, in Brazil, in June of this year only to have it shut down by regulators for failing to meet their requirements. (The plan has been to expand it to India, Indonesia and Mexico next.)

Facebook Hosting Services: These will be available in the coming months, but no specific date to share right now. “We’re sharing our plans now while we work with our partners to make these services available,” the company said in a statement to TechCrunch.

No! This is not about Facebook taking on AWS. Or… not yet at least? The idea here appears that it is specifically aimed at selling hosting services to the kind of SMBs who already use Facebook and WhatsApp messaging, who either already use hosting services for their online assets, whether that be their online stores or other things, or are finding themselves now needing to for the first time, now that business is all about being “online.”

“Today, all businesses using our API are using either an on-premise solution or leverage a solutions provider, both of which require costly servers to maintain,” Facebook said. “With this change, businesses will be able to choose to use Facebook’s own secure hosting infrastructure for free, which helps remove a costly item for every company that wants to use the WhatsApp Business API, including our business service providers, and will help them all save money.” It added that it will share more info about where data will be hosted closer to launch.

This is a very interesting move, since the SMB hosting market is pretty fragmented with a number of companies, including the likes of GoDaddy, Dream Host, HostGator, BlueHost and many others also offering these services. That fragmentation spells opportunity for a huge company like Facebook with a global profile, a burgeoning amount of connections through to other online services for these SMBs and a pretty extensive network of data centers around the world that it has built for itself and can now use to provide services to others — which is, indeed, a pretty strong parallel with how Amazon and AWS have done business.

Facebook already has an “app store” of sorts with partners it works with to provide marketing and related services to businesses using its platform. It looks like it plans to expand this, and will sell the hosting alongside all of that, with the kicker that hosting natively on Facebook will speed up how everything works.

“Providing this option will make it easier for small and medium size businesses to get started, sell products, keep their inventory up to date, and quickly respond to messages they receive – wherever their employees are,” it notes.

Charging tiers: As you would expect, to encourage more adoption, Facebook has not been charging for WhatsApp Business up to now, but it has charged for some WhatsApp business messages — for example when businesses send a boarding pass or e-commerce receipt to a customer over Facebook’s rails. (These prices vary and a list of them is published here.) Now, with more services coming into the mix, and businesses tying their fates more strongly to how well they are performing on Facebook’s platforms, it’s no surprise to see Facebook converting that into a pay to play scenario.

“What we’ve heard over the past couple years is how the conversational nature of business messaging is really valuable to people. So in the future we may look at ways to update how we charge businesses that better reflect how it’s used,” the company told us. Important to note that this will relate to how businesses send messages. “As always, it’s free for people to send a business a message,” Facebook added.

Frustratingly, there seems so far to be no detail on which services will be charged, nor how much, nor when, so this is more of a warning than a new requirement.

“We will charge business customers for some of the services we offer, which will help WhatsApp continue building a business of our own while we provide and expand free end-to-end encrypted text, video and voice calling for more than two billion people,” it notes.

For those who might find that annoying, on the plus side, for those who are concerned about an ever-encroaching data monster, it will, at the least, help WhatsApp and Facebook continue to stick to its age-old commitment to stay away from advertising as a business model.

Doubling-down on SMBs

The new services come at a time when Facebook is doubling down on providing services for businesses, spurred in no small part by the coronavirus pandemic, which has driven physical retailers and others to close their actual doors, shifting their focus to using the internet and mobile services to connect with and sell to customers.

Citing that very trend, last month the company’s COO Sheryl Sandberg announced the Facebook Business Suite, bringing together all of the tools it has been building for companies to better leverage Facebook, Instagram and WhatsApp profiles both to advertise themselves as well as communicate with and sell to customers. And the fact that Sandberg was leading the announcement says something about how Facebook is prioritizing this: it’s striking while the iron is hot with companies using its platform, but it sees/hopes that business services can a key way to diversify its business model while also helping buffer it — since many businesses building Pages may also advertise.

Facebook has also been building more functionality across Facebook and Instagram specifically aimed at helping power users and businesses leverage the two in a more efficient way. Adding in more tools to WhatsApp is the natural progression of all of this.

To be sure, as we pointed out earlier this year, even while there is a lot of very informal use of WhatsApp by businesses all around the world, WhatsApp Business remains a fairly small product, most popular in India and Brazil. Facebook launching more tools for how to use it will potentially drive more business not just in those markets but help the company convert more businesses to using it in other places, too.

Smaller businesses have been on Facebook’s radar for a while now. Even before the pandemic hit, in many cases retailers or restaurants do not have websites of their own, opting for a Facebook Page or Instagram Profile as their URL and primary online interface with the world; and even when they do have standalone sites, they are more likely to update people and spread the word about what they are doing on social media than via their own URLs.

Facebook’s also made a video to help demonstrate how it sees these WhatsApp Business in action, which you can here:

Dropbox CEO and co-founder Drew Houston, appearing at TechCrunch Disrupt today, said that COVID has accelerated a shift to distributed work that we have been talking about for some time, and these new ways of working will not simply go away when the pandemic is over.

“When you think more broadly about the effects of the shift to distributed work, it will be felt well beyond when we go back to the office. So we’ve gone through a one-way door. This is maybe one of the biggest changes to knowledge work since that term was invented in 1959,” Houston told TechCrunch Editor-In-Chief Matthew Panzarino.

That change has prompted Dropbox to completely rethink the product set over the last six months, as the company has watched the way people work change in such a dramatic way. He said even though Dropbox is a cloud service, no SaaS tool in his view was purpose-built for this new way of working and we have to reevaluate what work means in this new context.

“Back in March we started thinking about this, and how [the rapid shift to distributed work] just kind of happened. It wasn’t really designed. What if you did design it? How would you design this experience to be really great? And so starting in March we reoriented our whole product road map around distributed work,” he said.

He also broadly hinted that the fruits of that redesign are coming down the pike. “We’ll have a lot more to share about our upcoming launches in the future,” he said.

Houston said that his company has adjusted well to working from home, but when they had to shut down the office, he was in the same boat as every other CEO when it came to running his company during a pandemic. Nobody had a blueprint on what to do.

“When it first happened, I mean there’s no playbook for running a company during a global pandemic so you have to start with making sure you’re taking care of your customers, taking care of your employees, I mean there’s so many people whose lives have been turned upside down in so many ways,” he said.

But as he checked in on the customers, he saw them asking for new workflows and ways of working, and he recognized there could be an opportunity to design tools to meet these needs.

“I mean this transition was about as abrupt and dramatic and unplanned as you can possibly imagine, and being able to kind of shape it and be intentional is a huge opportunity,” Houston said.

Houston debuted Dropbox in 2008 at the precursor to TechCrunch Disrupt, then called the TechCrunch 50. He mentioned that the Wi-Fi went out during his demo, proving the hazards of live demos, but offered words of encouragement to this week’s TechCrunch Disrupt Battlefield participants.

Although his is a public company on a $1.8 billion run rate, he went through all the stages of a startup, getting funding and eventually going public, and even today as a mature public company, Dropbox is still evolving and changing as it adapts to changing requirements in the marketplace.

Four years after the Great Recession, France’s newly elected socialist president François Hollande raised taxes and increased regulations on founder-led startups. The subsequent flight of entrepreneurs to places like London and Silicon Valley portrayed France as a tough place to launch a company. By 2016, France’s national statistics bureau estimated that about three million native-born citizens had moved abroad.

Those who remained fought back: The Family was an early accelerator that encouraged French entrepreneurs to adopt Silicon Valley’s startup methodology, and the 2012 creation of Bpifrance, a public investment bank, put money into the startup ecosystem system via investors. Organizers founded La French Tech to beat the drum about native startups.

When President Emmanuel Macron took office in May 2017, he scrapped the wealth tax on everything except property assets and introduced a flat 30% tax rate on capital gains. Station F, a giant startup campus funded by billionaire entrepreneur Xavier Niel on the site of a former railway station, began attracting international talent. Tony Fadell, one of the fathers of the iPod and founder of Nest Labs, moved to Paris to set up investment firm Future Shape; VivaTech was created with government backing to become one of Europe’s largest startup conference and expos.

Now, in the COVID-19 era, the government has made €4 billion available to entrepreneurs to keep the lights on. According to a recent report from VC firm Atomico, there are 11 unicorns in France, including BlaBlaCar, OVHcloud, Deezer and Veepee. More appear to be coming; last year Macron said he wanted to see “25 French unicorns by 2025.”

According to Station F, by the end of August, there had been 24 funding rounds led by international VCs and a few big transactions. Enterprise artificial intelligence and machine-learning platform Dataiku raised a $100 million Series D round, and Paris-based gaming startup Voodoo raised an undisclosed amount from Tencent Holdings.

We asked 12 Paris-based investors to comment on the state of play in their city:

• Alison Imbert, partner, Partech
• Alexandre Mordacq, partner, 360 Capital Partners
• Emmanuel Delaveau, partner, Partech
• Boris Golden, partner, Partech
• Jean de La Rochebrochard, managing partner, Kima Ventures
• Paul Bolardi, associate, AXA Venture Partners
• Shiraz Mahfoudhi, Speedinvest
• Guillaume Dupont, founding partner, CapHorn
• Martin Mignot, partner, Index Ventures
• Bartosz Jakubowski, principal, Alven
• Pierre Entremont, founding partner, Frst Capital
• Pierre-Eric Leibovici, founding partner, Daphni

Alison Imbert, Partech

What trends are you most excited about investing in, generally?

All the fintechs addressing SMBs to help them to focus more on their core business (including banks disintermediation by fintech, new infrastructures tech that are lowering the barrier to entry to nonfintech companies).

What’s your latest, most exciting investment?

77foods (plant-based bacon) — love that alternative proteins trend as well. Obviously, we need to transform our diet toward more sustainable food. It’s the next challenge for humanity.

What are you looking for in your next investment, in general?
Impact investment: Logistic companies tackling the life cycle of products to reduce their carbon footprint and green fintech that reinvent our spending and investment strategy around more sustainable products.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
D2C products.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
100% investing in France as I’m managing Paris Saclay Seed Fund, a €53 million fund, investing in pre-seed and seed startups launched by graduates and researchers from the best engineering and business schools from this ecosystem.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Deep tech, biotech and medical devices. Paris, and France in general, has thousands of outstanding engineers that graduate each year. Researchers are more and more willing to found companies to have a true impact on our society. I do believe that the ecosystem is more and more structured to help them to build such companies.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Paris is booming for sure. It’s still behind London and Berlin probably. But we are seeing more and more European VC offices opening in the city to get direct access to our ecosystem. Even in seed rounds, we start to have European VCs competing against us. It’s good — that means that our startups are moving to the next level.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
For sure startups will more and more push for remote organizations. It’s an amazing way to combine quality of life for employees and attracting talent. Yet I don’t think it will be the majority. Not all founders are willing/able to build a fully remote company. It’s an important cultural choice and it’s adapted to a certain type of business. I believe in more flexible organization (e.g., tech team working remotely or 1-2 days a week for any employee).

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel and hospitality sectors are of course hugely impacted. Yet there are opportunities for helping those incumbents to face current challenges (e.g., better customer care and services, stronger flexibility, cost reduction and process automation).

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Cash is king more than ever before. My only piece of advice will be to keep a good level of cash as we have a limited view on events coming ahead. It’s easy to say but much more difficult to put in practice (e.g., to what extend should I reduce my cash burn? Should I keep on investing in the product? What is the impact on the sales team?). Startups should focus only on what is mission-critical for their clients. Yet it doesn’t impact our seed investments as we invest pre-revenue and often pre-product.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
There is no reason to be hopeless. Crises have happened in the past. Humanity has faced other pandemics. Humans are resilient and resourceful enough to adapt to a new environment and new constraints.

Now that the great Y Combinator rush is behind us, we’re returning to a topic many of you really seem to care about: no-code and low-code apps and their development.

We’ve explored the theme a few times recently, once from a venture-capital perspective, and another time building from a chat with the CEO of Claris, an Apple subsidiary and an early proponent of low-code work.

Today we’re adding notes from a call with Appian CEO Matt Calkins that took place yesterday shortly after the company released its most recent earnings report.

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Appian is built on low-code development. Having gone public back in 2017, it is the first low-code IPO we can think of. With its Q2 results reported on August 6, we wanted to dig a bit more into what Calkins is seeing in today’s market so we can better understand what is driving demand for low- and no-code development, specifically, and demand for business apps more generally in 2020.

As you can imagine, COVID-19 and the accelerating digital transformation are going to come up in our notes. But, first, let’s take a look at Appian’s quarter quickly before digging into how its low-code-focused CEO sees the world.

Results, expectations

Appian had a pretty good Q2. The company reported $66.8 million in revenue for the three-month period, ahead of market expectations that it would report around $61 million, though collected analyst estimates varied. The low-code platform also beat on per-share profit, reporting a $0.12 per-share loss after adjustments. Analysts had expected a far worse $0.25 per-share deficit.

The period was better than expected, certainly, but it was not a quarter that showed sharp year-over-year growth. There’s a reason for that: Appian is currently shedding professional services revenue (lower-margin, human-powered stuff) for subscription incomes (higher-margin, software-powered stuff). So, as it exchanges one type of revenue for another with total subscription revenue rising a little over 12% in Q2 2020 compared to the year-ago quarter, and professional services revenue falling around 10%, the company’s growth will be slow but the resulting revenue mix improvement is material.

Most importantly, inside of its larger subscription result for the quarter ($41.4 million) were its cloud subscription revenues, worth $29.6 million for the quarter and up 30% compared to the year-ago period. Summing, the company’s least lucrative revenues are falling as its most lucrative accelerate at the fastest clip of any of its cohorts. That’s what you’d want to see if you are an Appian bull.

Shares in the technology company are up around 45% this year. With that, we can get started.

In what felt like strange timing, Salesforce has confirmed a report in yesterday’s Wall Street Journal that it was laying off around 1,000 people, or approximately 1.9% of the company’s 54,000 strong workforce. This news came in spite of the company reporting a monster quarter on Tuesday, in which it passed $5 billion in quarterly revenue for the first time.

In fact, Wall Street was so thrilled with Salesforce’s results, the company’s stock closed up an astonishing 26% yesterday, adding great wealth to the company’s coffers. It seemed hard to reconcile such amazing financial success with this news.

Yet it was actually something that president and chief financial officer Mark Hawkins telegraphed in Tuesday’s earnings call with industry analysts, although he didn’t come right and use the L (layoff) word. Instead he couched that impending change as a reallocation of resources.

And he talked about strategically shifting investments over the next 12-24 months. “This means we’ll be redirecting some of our resources to fuel growth in areas that are no longer as aligned with the business priority will be now deemphasized,” Hawkins said in the call.

This is precisely how a Salesforce spokesperson put it when asked by TechCrunch to confirm the story. “We’re reallocating resources to position the company for continued growth. This includes continuing to hire and redirecting some employees to fuel our strategic areas, and eliminating some positions that no longer map to our business priorities. For affected employees, we are helping them find the next step in their careers, whether within our company or a new opportunity,” the spokesperson said.

It’s worth noting that earlier this year, Salesforce CEO Marc Benioff pledged there would be no significant layoffs for 90 days.

The 90-day period has long since passed and the company has decided the time is right to make some adjustments to the workforce.

It’s worth contrasting this with the pledge that ServiceNow CEO Bill McDermott made a few weeks after the Benioff tweet, promising not to lay off a single employee for the rest of this year, while also pledging to hire 1,000 people worldwide the remainder of this year, while bringing in 360 summer interns.

As COVID-19 infections surge in parts of the U.S., many workplaces remain empty or are operating with skeleton crews.

Most agree that the decision to return to the office should involve a combination of business, government and medical officials and scientists who have a deep understanding of COVID-19 and infectious disease in general. The exact timing will depend on many factors, including the government’s willingness to open up, the experts’ view of current conditions, business leadership’s tolerance for risk (or how reasonable it is to run the business remotely), where your business happens to be and the current conditions there.

That doesn’t mean every business that can open will, but if and when they get a green light, they can at least begin bringing some percentage of employees back. But what that could look like is clouded in great uncertainty around commutes, office population density and distancing, the use of elevators, how much you can reasonably deep clean, what it could mean to have a mask on for eight hours a day, and many other factors.

To get a sense of how tech companies are looking at this, we spoke to a number of executives to get their perspective. Most couldn’t see returning to the office beyond a small percentage of employees this year. But to get a more complete picture, we also spoke to a physician specializing in infectious diseases and a government official to get their perspectives on the matter.

Taking it slowly

While there are some guidelines out there to help companies, most of the executives we spoke to found that while they missed in-person interactions, they were happy to take things slow and were more worried about putting staff at risk than being in a hurry to return to normal operations.

Iman Abuzeid, CEO and co-founder at Incredible Health, a startup that helps hospitals find and hire nurses, said her company was half-remote even before COVID-19 hit, but since then, the team is now completely remote. Whenever San Francisco’s mayor gives the go-ahead, she says she will reopen the office, but the company’s 30 employees will have the option to keep working remotely.

She points out that for some employees, working at home has proven very challenging. “I do want to highlight two groups that are pretty important that need to be highlighted in this narrative. First, we have employees with very young kids, and the schools are closed so working at home forever or even for the rest of this year is not really an option, and then the second group is employees who are in smaller apartments, and they’ve got roommates and it’s not comfortable to work at home,” Abuzeid explained.

Those folks will need to go to the office whenever that’s allowed, she said. For Lindsay Grenawalt, chief people officer at Cockroach Labs, an 80-person database startup in NYC, said there has to be a highly compelling reason to bring people back to the office at this point.

The biggest story to come out of the post-March stock market boom has been explosive growth in the value of technology shares. Software companies in particular have seen their fortunes recover; since March lows, public software companies’ valuations have more than doubled, according to one basket of SaaS and cloud stocks compiled by a Silicon Valley venture capital firm.

Such gains are good news for startups of all sizes. For later-stage upstarts, software share appreciation helps provide a welcoming public market for exits. And, strong public valuations can help guide private dollars into related startups, keeping the capital flowing.

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For software-focused startup companies, especially those pursuing recurring revenue models like SaaS, it’s a surprisingly good time to be alive.

Indeed, after COVID-19 hit the United States, layoffs and rising software sales churn were key, worrying indicators coming out of startup-land. Since then, the data has turned around.

As TechCrunch reported in June, startup layoffs have declined and software churn has recovered to the point that business and enterprise-focused SaaS companies are on the bounce.

But instead of merely recovering to near pre-COVID levels, software stocks have continued to rise. Indeed, the Bessemer Cloud Index (EMCLOUD), which tracks SaaS firms, has set an array of all-time highs in recent weeks.

There’s some logic to the rally. After speaking to venture capitalists over the past few weeks, notes from EQT Ventures‘ Alastair Mitchell, Sapphire’s Jai Das, and Shomik Ghosh from Boldstart Ventures paint the picture of a possibly accelerating digital transformation for some software companies, nudged forward by COVID-19 and its related impacts.

The result of the trend may be that the total addressable market (TAM) for software itself is larger than previously anticipated. Larger TAM could mean bigger future sales for and more substantial future cash flows for some software companies. This argument helps explain part of the market’s present-day enthusiasm for public tech equities, and especially the shares of software companies.

We won’t be able explain every point that Nasdaq has gained. But the TAM argument is worth understanding if we want to grok a good portion of the optimism that is helping drive tech valuations, both private and public.

Email is one of those things that no one likes but that we’re all forced to use. Superhuman, founded by Rahul Vohra, aims to help everyone get to inbox zero.

Launched in 2017, Superhuman charges $30 per month and is still in invite-only mode with more than 275,000 people on the waitlist. That’s by design, Vohra told us earlier this week on Extra Crunch Live.

“I think a lot of folks misunderstand the nature of our waitlist,” he said. “They assume it’s some kind of FOMO-generating technique or some kind of false scarcity. Nothing could be further from the truth. The real reason we have the waitlist is that I want everyone who uses Superhuman to be deliriously happy with their experience.”

Today, the app is only available for desktop and iOS. Superhuman started with iOS because most premium users have iPhones, Vohra said. Still, many users have Android, so Superhuman’s waitlist consists mostly of Android users.

“We don’t think that if we onboard them they’d have the best experience with Superhuman because email really is an ecosystem product,” he said. “You do it just as much on the go as you do from your laptop. There’s a lot of reasons like that. So if you’re a person who identifies that as a must-have, well, we’ll take in the survey, we’ll learn about you so we know when to reach out to you. Then when we have those things built or integrated, we’ll reach out.”

We also chatted about his obsession with email, determining pricing for a premium product, the impact of COVID-19, diversity in tech in light of the police killing of George Floyd and so much more.

Throughout the conversation, Vohra also offered up some good practical advice for founders. Here are some highlights from the conversation.

On competition from Hey, the latest buzzy email app

Yeah, I’m not at all worried. I used to get worried about this. You know, 10 years ago, even as recently as five years ago, I would get worried about competitors. But I think Paul Graham has really, really great advice on this. I think he says pretty much verbatim: Startups don’t kill other startups. Competition generally doesn’t kill the startup. Other things do, like running out of money being the biggest one, or lack of momentum or lack of motivation or co-founder feuds; these are all really dangerous things.

Competition from other startups generally isn’t the thing that gets you and you know, props to the Basecamp team and everything they’ve done with Hey. It’s really impressive. I think it’s for an entirely different demographic than Superhuman is for.

Superhuman is for the person for whom essentially email is work and work is email. Our users kind of almost personally identify with their email inbox, and they’re coming from Gmail or G Suite. Typically it’s overflowing so they often receive hundreds if not thousands of emails a day, and they send off 100 emails a day. Superhuman is for high-volume email for whom email really matters. Power users, essentially, though power users isn’t quite the right articulation. What I actually say is prosumers because there’s a lot of people who come to us at Superhuman and they’re not yet power users of email, but they know they need to be.

That’s what I would call a prosumer — someone who really wants to be brilliant at doing email. Now Hey doesn’t seem to be designed for that target market. It doesn’t seem to be designed for high-volume emailers or prosumers or power users.

TechCrunch is focusing a bit more on the Boston-area startup and venture capital ecosystem lately, which has gone pretty well so far.

In fact, we had originally intended on releasing this regional investor survey as a single piece, but since so many VCs took part, we’re breaking it into two. The first part deals with the world we live in today, and the remainder will detail what Boston-area investors think about the future.

We broke our questions into two parts to better track investor sentiment. But, we were also curious what was going to come when things got back closer to normal. So, this first entry in our Boston investor survey covers our questions concerning what’s going on now. On Thursday we’ll have the second piece, looking at what’s ahead.

Here’s who took part:

• Rudina Seseri, Glasswing Ventures
• Lily Lyman, Underscore VC
• Jamie Goldstein, Pillar VC
• The Victress Capital team (Lori Cashman, Suzanne Norris, Kate Castle, Madeline Keulin. Molly Sellers)
• Rob Go, NextView Ventures
• Bill Geary, Flare Capital
• Michael Greeley, Flare Capital
• Jeff Bussgang, Flybridge Ventures
• Neeraj Agarwal, Battery Ventures

What follows is a quick digest of what stood out from the collected answers, though there’s a lot more that we didn’t get to.

Boston VC in the COVID-19 era

Parsing through thousands of words and notes from our participating VCs, a few things stood out.

Boston startups aren’t having as bad a time — yet, at least — as area investors expected

Fewer companies than they anticipated are laying off staff for example. From our perspective, the number of Boston investors who noted that their portfolio companies were executing layoffs or furloughs (we asked for each to be precise) was very low; far more Boston-area startups are hiring than even freezing headcount. Layoffs appear somewhat rare, but as we all know cost cutting can take many forms for startups. Especially startups on the seed and early-stage side, which makes up the majority of these firm’s portfolio companies.

According to Glasswing’s Rudina Seseri, startup duress has come in “significantly under what [her firm was] expecting at the beginning of COVID-19.”

This may be due to a strong first quarter helping companies in the city and its surrounding area make it another few quarters. We might not know the full bill of COVID-19 and its related disruptions until next year.

More investors than we expected noted that their Boston portfolio companies aren’t raising this year

So what we’re gleaning from that fact is that any decline in Q2 and Q3 VC data is not because companies can’t raise, but because they don’t need to. Comments echoed a theme we wrote about in April: Boston broke records in Q1 in terms of dollars raised, but saw a dip in the number of checks cut.

Pillar VC’s Jamie Goldstein said that “about 15% of our companies are planning to raise capital this year,” which felt about average. Underscore VC’s Lily Lyman simply noted that, “Yes,” her Boston-area portfolio companies would hunt for new capital this year. Bill Geary of Flare Capital is on the other side of that coin, saying that “each of [his firm’s] Boston-based investments has successfully recently raised capital and will not be raising additional funds until 2021.”

It’s hard not to wonder if what happened to Boston unicorns Toast and EzCater was the exception and not the rule

 You see, Boston’s startup scene skews relatively early stage, so smaller companies don’t have high-profile cuts because, to be frank, there isn’t much staff to cut in the first place. It puts Boston in a unique setting to focus in on its early stage market, and investors all agreed that this is an important moment for the ecosystem.

The March-era stress tests are now months in the rearview mirror, and every startup has shaken up their spend and growth plans. Perhaps we have met the new normal, and it’s time to let the runway do the talking.

With that, let’s get into full questions and answers.

Rudina Seseri, Glasswing Ventures

What is the top-line advice you’re giving your portfolio companies right now?

This is a pivotal time, be efficient and drive execution. Cut costs where possible but at the same time don’t be afraid to spend for growth acceleration.

What percentage of your Boston-based portfolio companies are still hiring, not including those merely backfilling?

About 60%.

What percentage of your Boston-based portfolio companies have frozen new hires?

About 20%.

What percentage of your Boston-based portfolio companies have furloughed staff?

None.

What percentage of your Boston-based portfolio companies have cut staff?

One company that represents about 4% of the portfolio.

Are your Boston-based portfolio companies looking to raise new capital this year?

Most have raised recently, and consequently are not looking to raise at this time.

If not, are they often delaying due to COVID-19?

No, because of their recent raises, their fundraising considerations will take place in 2021.

Has duress amidst your Boston-based portfolio companies undershot, matched or overshot your expectations from March?

It has been significantly under what we were expecting at the beginning of COVID-19.

How has your investment appetite changed in terms of pace and location, if at all?

We have been very active and closed deals in this environment. Our expectation is that our investment appetite will remain the same going forward.

Are you making investments in Q2 into net-new founders and companies?

Yes, as a matter-of-fact we just closed a yet-to-be announced investment this month.

Are there particular sectors of startups in Boston that you expect to do well, aside from SaaS businesses that are benefiting from secular trends? Are there any sectors you have become newly bearish on?

Yes, those that are in our core focus areas — solutions that bring down the cost of cloud and data, platforms and tools leveraging AI, those that facilitate cost reduction, and intelligent solutions in cybersecurity that protect the enterprise.

How does the uncertainty of schools reopening impact the startup ecosystem?

This will further drive and institutionalize distributed teams and remote working as a go-forward mode of operating.

In a typical month, an IT department might deal with a small percentage of employees working remotely, but tracking a few thousand employees is one thing — moving an entire company offsite requires next-level planning.

To learn more about how large organizations are adapting to the rapid shift to working from home, we spoke to Liberty Mutual CIO James McGlennon, who helped orchestrate his company’s move about the challenges he faced as he shifted more than 44,000 employees in a variety of jobs, locations, cultures and living situations from office to home in short order.

Laying the groundwork

Insurance company Liberty Mutual is headquartered in the heart of Boston, but the company has offices in 29 countries. While some staffers in parts of Asia and Europe were sent home earlier in the year, by mid-March the company had closed all of its offices in the U.S. and Canada, eventually sending every employee home.

McGlennon said he never imagined such a situation, but the company saw certain networking issues in recent years that gave them an inkling of what it might look like. That included an unexpected incident in which two points on a network ring around one of its main data centers went down in quick succession, first because a backhoe hit a line, and then at another point because someone stole the fiber-optic cable.

That got the CIO and his team thinking about how to respond to worst cases. “We certainly hadn’t contemplated needing to get 44,000 people working from home or working remotely so quickly, but there have been a few things that have happened over the last few years that made me think,” he said.