TechCrunch+ Roundup: Zero-Day Exploits, Japan, and Algorithmic VC

Expanding into Japan: Lessons from Bitrise's Experience

Our team collaborates with contributors to produce guest posts designed to provide practical solutions for TechCrunch+ readers. Therefore, we are pleased to share a detailed “how to” guide.

This article details the experiences of Barnabas Birmacher, CEO of Bitrise, a Platform as a Service provider, as his company navigated the challenges of entering the Japanese market.

The Challenges of a New Market

For growing businesses, launching a product in a foreign country with an unfamiliar language and culture is often essential. However, Birmacher points out that Japan presents significant hurdles to entry.

Building a strong community was therefore paramount to their expansion strategy. Rather than depending exclusively on strategic alliances, the team prioritized direct engagement.

Before scaling their efforts, they undertook visits to Japan to host events and connect with potential early adopters.

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Innovative Community Building Tactics

Departing from conventional marketing and media approaches, Bitrise commissioned a manga artist to illustrate a comic centered around a mobile developer.

They also created exclusive “Japan-first” merchandise for distribution and even designed a life-sized mascot costume for use at industry conferences.

“The costume was left with a client, and now it’s frequently worn during social gatherings,” Birmacher shares.

Key Takeaways for International Expansion

If your startup is contemplating international expansion, this post offers several adaptable strategies for testing and implementation.

Birmacher emphasizes that, regardless of the specific tactics employed, the most crucial action is to actively participate in the local community.

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Responding to Zero-Day Exploits: A CISO’s Guide

The widespread impact of the Log4Shell vulnerability, which allowed for the remote execution of harmful code on compromised systems, garnered significant media attention and disrupted the work of numerous cybersecurity teams.

Unfortunately, a considerable number of organizations remain unprepared with a dedicated incident response strategy, according to Jonathan Trull, SVP of Customer Solutions, Architecture and Engineering at Qualys.

Leveraging his background as a Chief Information Security Officer (CISO), Trull details three crucial actions organizations should undertake to formulate an effective response playbook.

Key Steps for Playbook Development

• Develop a standardized operational procedure.
• Conduct thorough and continuous asset inventory.
• Prioritize information collection, dissemination, and analysis.

A well-defined standard operating procedure is the foundation of any successful response. This ensures consistent and effective actions during a crisis.

Comprehensive asset inventory is paramount. Knowing what systems and software you have is the first step in protecting them.

Effective information gathering, coupled with proactive sharing and analysis, allows for rapid identification and mitigation of threats.

These three elements, when combined, empower organizations to navigate the complexities of zero-day exploits with greater confidence and resilience.

Profitability Surpasses Growth: A Shift in Venture Capital Focus

For the initial time in a four-year period, profitability is being prioritized over sheer growth by venture capital firms.

Revenue has traditionally been the primary indicator for investors, serving as a direct measure of potential expansion.

However, a recent trend reveals a change in strategy, with profitability now taking precedence.

The Rising Importance of Profitability

Jeremy Abelson and Jacob Sonnenberg, partners at Irving Investors, have observed this shift in investor preferences.

They note that investors are increasingly focusing on companies demonstrating actual profits rather than simply rapid revenue increases.

This change is prompting a reevaluation of investment portfolios, with a move away from high-growth, yet unprofitable, ventures.

Factors Driving the Change

Abelson and Sonnenberg detail the underlying reasons for this evolving dynamic.

They explain how macroeconomic conditions and market realities are influencing investor decisions.

The current environment encourages a focus on sustainable business models and demonstrable financial health.

Key Metrics for Investors

As the emphasis on profitability versus growth continues, investors are refining their analytical approaches.

Abelson and Sonnenberg highlight specific metrics they find particularly valuable in assessing investment opportunities.

These metrics provide a more nuanced understanding of a company’s financial performance and long-term viability.

Investor Behavior and Portfolio Adjustments

The shift towards profitability is manifesting in tangible changes in investor behavior.

There's a growing tendency to divest from companies prioritizing growth at the expense of profitability.

This trend suggests a recalibration of risk tolerance and a preference for more stable, income-generating investments.

2022 Cryptocurrency Market Forecasts by Prime Trust CFO Rodrigo Vicuna

The Mayor of New York City, Eric Adams, notably converted his initial salary payment into Ether and Bitcoin. Furthermore, Burger King is implementing a strategy of including QR codes on six million food package containers, unlocking access to NFTs.

While cryptocurrency is currently experiencing a surge in cultural relevance, widespread adoption remains unrealized, despite promotional efforts.

Rodrigo Vicuna, serving as the Chief Financial Officer at the fintech-centered bank Prime Trust, has outlined his projections for the current year’s crypto market.

He posits that increased regulatory oversight could potentially attract a larger consumer base.

Vicuna’s Perspective on Regulation

It may appear paradoxical, but enhanced regulation offers clearer direction.

This clarity, in turn, fosters confidence among both institutional investors and the general public, encouraging greater participation.

Institutional and widespread utilization are both expected to benefit from a more defined regulatory landscape.

Is the Recent Market Decline Set to Reshape Startup Valuation Approaches?

Despite recent downturns in public markets, investment in early-stage startups continues at a robust pace.

A potential change is occurring where investors are moving away from prioritizing rapid revenue growth and instead focusing on a company’s actual profitability, as detailed by Alex Wilhelm in the Exchange.

This transition toward valuing tech companies based on price-to-earnings (P/E) ratios, rather than price-to-sales (P/S) ratios, would inherently reward profitable businesses.

Consequently, this shift could significantly alter investment strategies and priorities for companies, including those in the startup ecosystem.

The Implications of a Profit-Focused Valuation Model

Prioritizing profitability could lead to a re-evaluation of how startups allocate resources.

Companies might focus more on achieving sustainable profits and less on aggressive expansion at all costs.

Profitability, under a P/E-focused model, would become a key driver of company valuation, increasing its importance.

• A move to P/E ratios emphasizes financial health.
• Startups may need to demonstrate a clear path to profitability.
• Revenue growth alone may no longer be sufficient for high valuations.

This change in valuation methodology could ultimately foster a more sustainable and financially responsible startup landscape.

The Intersection of Algorithmic Investment and Thorough Due Diligence

A growing trend in the investment landscape involves a heightened focus on quantitative data, with investors dedicating more attention to numerical analysis and comparatively less to evaluating the characteristics of company founders before committing capital.

The Potential for New Biases

According to Natasha Mascarenhas, who explored the use of algorithmic investment strategies, efforts to eliminate existing biases in investment decisions can inadvertently introduce new, less obvious shortcomings in the evaluation process.

These newly created blind spots can prove more challenging to recognize and address effectively.

Challenges to Widespread Adoption

Michele Romanow, co-founder of Clearco, expressed skepticism regarding a complete shift towards algorithmic investment.

She stated that while the concept appears appealing, practical implementation is difficult.

The Need for Specialized Expertise

Successfully deploying algorithmic investment requires significant technical expertise and the development of a sophisticated, purpose-built product.

Consequently, many investors tend to revert to established, conventional methods that rely on human judgment and subjective assessments of intangible qualities.

Traditional Systems Remain Prevalent

The traditional investment system, characterized by human decision-makers evaluating factors beyond purely quantifiable data, continues to be the dominant approach.

This suggests that a full-scale transition to algorithmic investment may not be as imminent as some predict.

Evaluating NFT Investment Potential: A Guide for Investors

While NFTs are often considered a speculative investment, identifying promising opportunities isn't overly complex. Clara Bullrich, co-founder of TheVentureCity, emphasizes that indicators of success are readily apparent for those who understand where to focus their attention.

A foundational understanding of NFTs and their capabilities is crucial for investors. However, Bullrich points out that extensive technical expertise isn’t a prerequisite for making informed decisions.

The core determinant of an NFT project’s worth resides in the team responsible for its development and ongoing maintenance.

Key Areas for Investor Assessment

Investors should concentrate their due diligence on the individuals and groups driving the project forward. This involves evaluating several critical aspects.

• Team Transparency: Is the team publicly known and readily accessible?
• Community Engagement: How actively does the team interact with its community?
• Long-Term Vision: Does the project have a clearly defined roadmap extending beyond initial sales?

A strong team demonstrates commitment and builds trust within the NFT ecosystem.

Projects lacking transparency or a clear vision should be approached with caution. Investors should prioritize opportunities where the team’s dedication is evident.

Understanding the Importance of Community

A vibrant and engaged community is a significant indicator of an NFT project’s potential. Active communities often contribute to the project’s growth and sustainability.

Genuine community interaction, fostered by the development team, suggests a strong foundation for long-term success. This is a key element to consider during evaluation.

Focus on Sustainable Development

Investors should look beyond immediate profits and assess the project’s long-term viability. A well-defined roadmap demonstrates foresight and a commitment to ongoing development.

Projects with a sustainable vision are more likely to deliver lasting value, making them more attractive investment opportunities. Prioritizing long-term growth over short-term gains is essential.