Extra Crunch Roundup: Toast, Freshworks S-1s & Startup Advice

Digital Transformation in the Restaurant Industry

A widespread digital shift is currently impacting numerous facets of modern life, and this trend has extended to the hospitality sector, including many restaurants you frequent.

Founded in 2013 and headquartered in Boston, Toast provides a comprehensive software solution for bars and restaurants, streamlining operations related to order management, payment processing, and delivery services.

Significant Payment Volume Processed

In the past year alone, businesses utilizing the Toast platform have collectively processed over $38 billion in gross payment volume. This substantial figure prompted Alex Wilhelm to conduct a detailed analysis of the company’s S-1 filing for The Exchange.

According to Crunchbase data, Toast’s previous valuation stood just under $5 billion during its last funding round. Speculation suggests a potential valuation of $20 billion upon its initial public offering. Wilhelm’s analysis investigates whether these projections align with the available financial data.

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Comparison to Other Y Combinator Alumni

Companies like Airbnb, DoorDash, and Coinbase all initially showcased their concepts at past Y Combinator Demo Days. Collectively, these organizations currently employ a workforce of 10,000 individuals.

Coverage of YC’s Summer 2021 Demo Day

TechCrunch reporters are presently covering the events unfolding at Y Combinator’s Summer 2021 Demo Day, both today and tomorrow. Their coverage includes detailed reports on founder presentations and rankings of the most promising ventures.

A strong sense of anticipation is evident among our team, even in a remote setting. YC Demo Day is known for its potential for groundbreaking developments, so subscribing to Extra Crunch is recommended to stay informed.

Thank you for your readership. We wish you a productive week.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

The Evolution of Amazon EC2: From Concept to Cloud Computing Cornerstone

The launch of Amazon’s EC2 cloud-based virtual computer in August 2006 marked a pivotal moment in the progression of the cloud infrastructure leader, AWS.

Enterprise reporter Ron Miller emphasizes the significance of Amazon’s achievement, stating it was truly transformative.

Over the subsequent 15 years, EC2 has empowered organizations of all scales to deploy and evaluate their applications utilizing AWS’s virtual machines.

To gain deeper insight into this crucial technological advancement, which “played a key role in fostering a new wave of startups,” Ron conducted an interview with Dave Brown, VP of EC2 and the original leader of the Amazon EC2 Frontend team.

Brown’s team was instrumental in the initial development and launch of the service.

The Initial Vision for EC2

The core idea behind EC2 was to provide developers with on-demand access to computing resources.

Previously, acquiring server capacity involved significant upfront investment and lengthy procurement processes.

EC2 fundamentally altered this paradigm by offering a pay-as-you-go model, allowing businesses to scale their infrastructure rapidly and efficiently.

This flexibility proved particularly attractive to startups and companies experiencing rapid growth.

Impact on the Startup Ecosystem

Amazon EC2 democratized access to computing power, removing a major barrier to entry for new businesses.

Startups could now focus on innovation rather than infrastructure management.

The ability to quickly spin up and scale resources enabled faster iteration and experimentation.

This, in turn, fueled a surge in entrepreneurial activity and the development of groundbreaking technologies.

Key Features and Capabilities

EC2 offers a wide range of instance types, optimized for various workloads.

These instances vary in terms of CPU, memory, storage, and networking capacity.

Users can choose the instance type that best suits their specific application requirements.

Furthermore, EC2 integrates seamlessly with other AWS services, creating a comprehensive cloud platform.

The Future of EC2

Amazon continues to innovate and expand the capabilities of EC2.

New instance types are regularly introduced to support emerging technologies like machine learning and artificial intelligence.

The platform is also evolving to address the growing demand for serverless computing and containerization.

EC2 remains a foundational element of cloud computing, and its influence is expected to grow in the years to come.

Enhancing Managerial Effectiveness in the Remote Work Landscape

A consensus among managers is that OKRs (Objectives and Key Results) promote both openness and responsibility within teams.

However, leading a team presents unique obstacles when employees participate in meetings and collaborate from their homes.

Integrating OKRs into Daily Operations

Jeremy Epstein, CMO at Gtmhub, suggests moving beyond periodic discussions of key metrics.

Instead, integrate OKRs into the regular, daily workflow of the team.

This approach fosters a more consistent focus on goals and progress.

Building Team Cohesion Through Transparency

Epstein emphasizes the importance of cultivating genuine workplace transparency.

Utilizing data and quantifiable metrics serves as a common language for all team members.

This shared understanding provides context and meaning to the team’s collective efforts.

Strengthening Teams with a Numbers-Based Approach

By leveraging numbers, managers can effectively communicate the significance of their team’s contributions.

This strategy helps to reinforce the value of each individual’s work within the broader organizational objectives.

Ultimately, it strengthens the team’s overall performance and alignment.

Establishing Rapport: Seven Strategies for Cultivating VC Relationships

A number of founders experience emotional challenges before feeling prepared to present their business directly to prospective investors.

To lessen this anxiety, Evan Fisher, the founder of Unicorn Capital, suggests that entrepreneurs utilize pre-pitch meetings to foster connections and build rapport prior to requesting funding.

He describes this approach as a meeting where the primary goal isn't immediate capital, but rather establishing a preliminary connection: “It’s about getting on an investor’s radar, so when you’re ready to seek funding for your subsequent round, they’re more inclined to respond because they already have some familiarity with you.”

The benefits of pre-pitches extend beyond simply reducing nervousness. These discussions provide founders with valuable insights into the thought processes of Venture Capitalists and can occasionally result in unexpected positive developments.

Fisher notes that investors are inherently opportunity-driven. Therefore, if they perceive potential in a business, there’s a possibility that a sense of urgency – or fear of missing out – could be triggered.

Why Conduct a Pre-Pitch?

Pre-pitch meetings serve as a crucial step in building trust and understanding. They allow founders to gauge investor interest and receive early feedback on their business model.

This initial contact can significantly increase the likelihood of a positive response when formal funding requests are made.

Seven Ways to Build Relationships with VCs

• Focus on Building a Connection: Prioritize getting to know the investor as an individual, not just as a potential source of funds.
• Share Your Vision: Clearly articulate your company’s long-term goals and how you plan to achieve them.
• Seek Advice: Ask for their perspective on industry trends and challenges.
• Be a Good Listener: Actively listen to their feedback and demonstrate that you value their insights.
• Provide Updates: Keep them informed of your progress, even if you’re not actively seeking funding.
• Offer Value: Share relevant articles or insights that might be of interest to them.
• Follow Up: Maintain consistent communication and nurture the relationship over time.

Establishing these relationships proactively can prove invaluable when the time comes to secure investment.

The Importance of Adaptable Funding for Alternative Lenders: Insights from the COVID-19 Pandemic

Deeba Goyal and Archita Bhandari of FischerJordan analyze how the COVID-19 pandemic affected alternative lenders. Their analysis focuses on the strategies employed by these lenders to navigate the crisis.

The study specifically examines smaller lending institutions such as Credibly, Kabbage, Kapitus, and BlueVine.

Successfully weathering the pandemic required lenders to skillfully manage their existing capital sources. Those who lacked this adaptability faced significant challenges.

According to Goyal and Bhandari, lenders unable to navigate these complexities either failed or were compelled to seek alternative funding options.

Key Findings on Lender Resilience

The ability to adapt funding strategies proved crucial for survival during the unprecedented economic disruption caused by the pandemic.

Lenders with rigid funding structures were particularly vulnerable. They struggled to respond to the rapidly changing market conditions.

Flexible funding allowed lenders to maintain operational performance and continue serving their customers.

• Maintaining performance hinged on navigating existing capital.
• Lenders without adaptable capital faced failure or the need for new funding.

The experiences of Credibly, Kabbage, Kapitus, and BlueVine offer valuable lessons for the future of alternative lending.

A Deep Dive into Freshworks’ IPO Documentation

Freshworks, a provider of customer engagement software, has submitted its S-1 filing, revealing a business characterized by increasingly rapid revenue expansion. This accelerating growth is considered a positive indicator of the company’s overall financial health, as detailed by Alex Wilhelm in The Exchange.

Typically, as organizations increase in size, their growth percentages tend to decrease due to the impact of larger base numbers.

However, analysis of the company’s documentation with the SEC indicates that Freshworks demonstrates robust performance without requiring significant adjustments to metrics like EBITDA. The company appears prepared to operate under standard, rigorous financial scrutiny.

Key Observations from the Filing

Wilhelm’s assessment highlights that Freshworks is presenting itself as a mature organization, capable of meeting the demands of public market investors.

The filing suggests the company is not reliant on modified financial figures to showcase its progress. It is, instead, built on “Big Kid metrics,” signifying a strong foundation for future growth.