TechCrunch+ Review: Stripe vs. Plaid, intellectual property litigation, what VCs really think about the downturn

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If I received a note from an investor that said, “Although this data is grim, it should not alarm you,” well, I might be alarmed.

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But this quote from Reach Capital is a slew of memos sent out in recent days by VC firms to portfolio companies offering advice and asking questions about how founders are prepared for the downturn.

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Natasha Mascarenhas received emails from Y Combinator, Lightspeed, Reach, and January Ventures, which contained standard proposals to keep the runway and rethink valuations in a “highly limited capital environment.”

In short: save your money, and if you plan on asking for more, expect less generous terms.

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My time in tech spanned a couple of recessions, so a lot of it feels familiar. If history is any guide, the entrepreneurial class will bounce back — I’m more concerned about the state of mid- and entry-level startups whose personal runway may consist of months of rent.

Unicorns and decacorns have already laid off thousands of employees over the past few months, and layoffs are just beginning. Ignore the Memorial Day sales; Winter is coming.

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If you’re at a startup, here’s some frank advice: Your managers don’t give you a complete picture of your company’s financial situation because opacity helps them maintain productivity and reduce layoffs.

And if/when layoffs come, they will be awkward and poorly organized because your boss has probably never fired anyone before.

Technicians in highly specialized, non-interchangeable roles usually turn off the lights on the last day. Other? Save your paychecks, rethink your summer vacation plans, and find ways to support friends and colleagues during this time of uncertainty.

Thank you very much for reading

Walter Thompson
Senior Editor at TechCrunch+

Intellectual property and cybersecurity disputes are top legal challenges for tech companies

data breach identity theft

Image credits: wild pixel (Opens in a new window) / Getty Images

Litigation can be a drain on resources even in the best of times, so it’s understandable that tech companies are stepping up their legal defenses ahead of a looming recession.

In its annual review of litigation trends, law firm Norton Rose Fulbright found that patent and intellectual property disputes are the top legal challenges for technology managers, “followed by cybersecurity and data protection.”

Latest Cisco Results Indicate Reckoning May Be Coming Soon

Glowing logo above Cisco Systems Inc. booth.  on the opening day of MWC Barcelona at the Fira de Barcelona in Barcelona, ​​Spain on Monday, February 28, 2022. More than 1,800 exhibitors and visitors from 183 countries will take part in the annual event The event runs from February 28 to March 3.  Photographer: Angel Garcia/Bloomberg.

Image credits: Bloomberg/Getty Images

Networking leader Cisco in decline?

Ron Miller and Alex Wilhelm examined the company’s recently released quarterly results and found that year-on-year revenue was flat, with future earnings forecast to fall short of expectations.

Last week, CEO Chuck Robbins told analysts that the company is feeling the effects of global supply chain problems and Russia’s invasion of Ukraine, but it’s growing unclear whether strong software revenues can offset its declining hardware business.

“Even when the supply chain problems are resolved, Cisco must find a way to innovate and monetize networks, which it has struggled with for the past four to six years,” said Holger Müller, an analyst at Constellation Research.

Why an economic downturn could separate recession-resistant startups from crackers

Domino effect.  Business solution to stop the chain reaction.  Successful intervention.  Man pushing falling domino line problem solving business concept.  Vector illustration.

Image credits: Maxim Yuremenko / Getty Images

If managed well, startups that meet the demands of the market and have a reasonable burnout rate are likely to survive this era.

But that was true before the crash in tech stocks started to drive down the value of startups.

“Companies that make painkillers rather than vitamins, especially solutions that are technically or difficult to develop or anticipate fundamental but not yet mainstream industry shifts, are particularly well equipped to weather macroeconomic conditions that are beyond their control. ”, said Malloon Yen, founder and CEO of Operator Collective.

“Painkillers include products that measurably increase revenue or significantly reduce costs.”

Striped and checkered suits for battle

Silhouette of two girls pulling a rope with a dollar sign on a sunset background.

Image credits: Banfote Kamolsanei (Opens in a new window) / Getty Images

Plaid and Stripe didn’t start out as competitors, but both parties’ recent moves to expand their reach with new financial products could put them on a collision course, according to Alex Wilhelm and Mary Ann Azevedo.

Citing “recent skirmishes during the Great FinTech War,” Mary Ann and Alex are tracking a series of acquisitions and product launches that have seen these fintech companies “now stand head-to-head, if not already on each other’s toes.”

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