Money in the Metaverse, Y Combinator Writing Bigger Checks, Crypto Talent Wars, and Grit and Grind 2.0
Stretch Four Insights Volume 11
Happy Saturday.
We are back for Volume 11 and I am back in SF resuming the normal WFH routine.
This week brought big stories in the startup and investing news cycle. We had Y Combinator increase nearly 4X their initial investment size leaving seed and pre-seed investors are running for the hills.
Beyond that, this week I will cover:
Money in the Metaverse
My thoughts on YC writing bigger checks
Crypto Talent Wars & Coinbase’s new policy
How Grit and Grind 2.0 is Taking Over the NBA
If you’re a new subscriber:
Check out my first long-form piece on how I got scammed in my first foray into Web3.
My long-form piece on new startup Column Tax.
With that said, let's get into it. And if you want to hear more or spread the word, subscribe and tell your friends!
Let’s dive in.
📰 📚 Some article recaps for the week
Money In The Metaverse \ Anna Wiener
I played Words with Friends but I never played Farmville. This week it was announced that the maker of Farmville, Zynga, is being acquired for $12.7 billion by Take-Two Interactive. This creates a monopoly of sorts with the Take-Two now owning Farmville, Words With Friends in addition to Grand Theft Auto, and NBA 2K. One of Wiener’s main points in her piece: the metaverse is a forum for transaction and extraction. She also delves deep into more topics like fully monetized games, gold-farming, and the growing $80 billion market that is all going to be in the metaverse.
Crypto Talent Wars Fuel Sweeter Salaries, Better Perks for Employees | Mark Matousek
More and more money is flowing into crypto startups and the industry has come a long way from the notoriously intense work culture. It wasn’t long ago we were criticizing the lack of benefits and work culture offered at Coinbase. Just this week, FTX announced a $2B venture fund and Matousek claims that crypto companies who are flush with cash are getting creative to lure talent to their companies. Changpeng Zhao (C.Z.), the founder of Binance, is reportedly worth $97B individually and their U.S. business is beefing up staff for an IPO. They are offering their own token as well as sweetening offers with compensation with a mix of tokens, equity, and big cash offers. My conclusion is crypto is eating startup compensation. No longer is equity and cash enough to lure talent, you need to be issuing tokens, offering a salary in cryptocurrency, and offering upfront bonuses in crypto as well to compete.
What Insiders Think About YC's New Deal Terms | Eric Newcomer
The evolution of venture capital is top of mind as a founder and emerging investor. It is transformative to see institutions like YC and Sequoia innovate. This week, YC announced they are increasing their investment from $125,000 to $500,000 as they look to grow their accelerator to 1,000 companies per year. I think YC had to make this change with inflation and rising valuations. Previously, check sizes of $125,000 does not move the needle enough for talented founders. The main value of YC still remains the network and social proof to raise money from other investors. In a way YC is “buying now and paying later”, they still take their 7%, but adding the additional funds allows them to get more equity. The big winner is YC with the biggest losers being second-time founders and angel investors. Founders will likely be reluctant to take smaller checks if $500k from YC is on the table.
🏀 NBA League Pass Team:
Memphis Grizzlies
Once again, the Grizzlies are the most exciting team to watch on League Pass right now. Ja Morant continues to impress and I think he’s an all-NBA player who will likely be starting alongside Steph Curry in the All-Star game. This team is built to succeed regardless of who is playing and they have built what is maybe the deepest team in the NBA. They took a loss last night, Friday, to the Dallas Mavericks but have been 9-1 in their last 10.
What's Next?
ModernTax
Things are picking up with our new product roadmap, we are growing in the mortgage and insurance verticals the most and looking to expand our team.
If you are interested in learning more about open roles email me directly at matt@moderntax.io.
The mission of ModernTax is to create an open tax data system for the US. With tax season coming up, the emergence of new tax solutions is paramount. We as a country, lag behind others and taxes are only getting more complicated with new asset classes, compensation structures, and the creator economy. At ModernTax, we are building a suite of solutions with the goal to make the filling, sharing, managing, and tracking tax data across multiple personal and business apps easier for all. We need your help.
Stretch Four
Later this week, I plan to explain more about deep dives.
I am also going to launch an audio format and I have a very special first guest ; ).
Lastly, if you found this newsletter interesting and know someone else who would, please forward it to them or tell them to subscribe here. It would make my day if you do!
Back to the trenches.
How did you like this week’s Stretch Four Insights Newsletter?
Best,
Matt