Twitter wanted to buy Clubhouse for $4 billion.

CH is still adding new users like crazy but doesn't have any stickiness and real reason for people to return to it since the content discovery experience is just horrible.

Last week it announced launching a marketplace feature allowing sponsorships for creators - aka people hosting events being able to get payments from followers. Next step is hosts selling event tickets - not implemented yet as I suspect it has something to do with Apple not letting them handle in-app payments without getting the 30% we-are-not-a-monopoly cut.

But the move seems right - creating an economy on top of a consumer tech is a smart play and this should be at least a temporary user retention fix that could transfer the stickiness problem to event organisers, aligning them with a revenue model.

This direction is what’s most interesting at Clubhouse from a TAM perspective - the ad-hoc opportunity of organising an audio meeting which you can charge for on the spot. It is the low end market for small events, launches, conferences, workshops, trainings, social media influencers, AMAs and even replaces the traditional VC cold pitching sessions. No or low setup costs and no tech knowledge required to be part for a low friction marketplace.

As for the $4bn valuation - that simply reflects a new paradigm shift in the social media, with the hope of a first mover being able to reap sizeable returns from what will be a huge ecosystem in 3 to 5 years.

Meanwhile, CH’s core proposition will soon be commoditised by all the big tech working to launch their own version of it. But they will simply grow the pie, not take from CH’ share.

And when/if this marketplace takes off, expect VC investments in CH-based projects - that’s when CH will become a platform and a16z can call it another home run.

Also note that a16z is very early investor in two of the most interesting consumer trends this years: text (Substack - valued at only $650M) and audio (CH), both marketplace driven. Both will become fundamental social media pillars, at odds with dinosaurs like Facebook and Linkedin.

Chesterman, the canny deal maker

FT profiled Alex Chesterman, one of Europe’s best entrepreneurs who, in three years, raised money, built a SH car marketplace business and now flipped it on the US stock exchange via a SPAC.

This is not his first rodeo - he also did Lovefilm, a DVD rental biz he built in the 2000s, backed by VCs and sold to Amazon for £200m and Zoopla, a real estate service flipped in 5 years to private equity for £2.2bn.

The dude is that good also because it is rare to find a founder in Europe mastering the entire cycle from taking an idea over a cup of coffee to a business that he is then capable to structure into a multi billion exit.

That is hard to do and not too many people can pull it off. Three times!

I mean, just look at Deliveroo’s Will Shu, he will not put on the resume his IPO exit skills, will he?

Chesterman is also a very active angel investor, likely one of those guys who does business because it’s in his DNA, regardless of the context.

Do you think that a guy like him would ever complain about the VC value-add? :-)

Was the Deliveroo IPO really a flop?

It is dubbed as one of the worst European IPO tech in history.

It does not indeed look good because high expectations were met by a public market pricing them at almost 30% off from the initial ask ($6bn market cap at Friday close) and $1bn less than the pre-IPO $7bn valuation in February.

Money was lost and the market consensus is that the whole IPO process was badly timed and mis-priced.

Which is not false. However.

Make no mistake, what we see now is not a true reflection of the company’s fundamentals (which is a PR-fed media refrain). It’s rather a simple result of a manly dispute involving money and egos that took place when negotiations were held during the listing process.

That fight still did not get a resolution.

On one side, we have the people with market power, aka the buy side on the public markets, which btw don’t have to explain not buying a particular stock - they need justifying the buying. As long as their portfolios make money they owe no justifications for their no-trades to their shareholders or anybody else.

On the other, we have a few investors which didn’t make as much money as they expected at the liquidity event. The largest ones are Amazon (which doesn’t really matter in this), 3 American hedge funds (T Rowe Price, Fidelity and Greenoaks) and 3 VC funds (Index Ventures, DST Global and General Catalyst).

And in between - Will Shu, the founder, who apparently caused all this since he wanted some involvement in the matter.

Why did he do that? Likely because he is an entrepreneur first and not an investor first. He trusts the fundamentals of his company and he probably didn’t want to play some old dudes’ games, who have been making and breaking the local stock exchange since, umm, the period before internet was invented?

One other detail: Will Shu is American not Brit. So he, by default, doesn't belong to the cool London boys club either. Which is an old known issue in the City.

And this equation brings us to the main problem, which is structural.

The truth is, later stage investment, pre-IPO, is still very much underdeveloped in Europe.

There is a missing link from series B or C, let’s say, to IPO, that you can easily see in the US market, for example - namely round series D, E or F which mainly involve pension funds and other large asset managers, which also have vested interests in the public markets dealers.

Their later stage involvement is a de-risking process, a validation that a company will smoothly sail towards an IPO, with no surprises, where everybody will make money and be happy.

Should they have existed in Deliveroo’s cap table, it is likely that we wouldn’t have had a CEO situation and unhappy people doing bad things to each other.

That is why I think this whole situation is an indicative image of an old European financial market doing business in the 21st century - sure, it is evolving, but it takes time until dinosaurs are replaced by the new blood.

As for Deliveroo - apart from a group of investors losing money (some amateurs included), the company is fine.

The fundamentals didn’t change over night because of unhappy traders sentiments. Yes, there may be concerns, there always are - they’re called risks and addressing them is part of the journey.

Deliveroo still raised some $2.1bn from the IPO, so they have the financial resources to execute, giving it firepower to take on rivals such as Uber and Just Eat

The opportunity in front of them is still sizeable, part of it validated by a bunch of early stage investors, and it is still up to them to grow revenue, become profitable and pay dividends, the only fundamental that makes shareholders happy and can fix the traders concerns.

a look into Klarna's valuation and business model

It’s hard to review what happened this week in the Euro startup land without at least mentioning Klarna raising $1 billion at a 6X valuation since 2019. It now stands at $31 billion.

If you take a step back and look at the big picture, you have to wonder what all this means and what the trajectory looks like in the next 3 to 5 to 10 years.

What is Klarna trying to accomplish and what did the investors see in the company’s plans so that they made their equity bets accordingly?

In other words, is the 31 billion valuation really worth it?

When trying to find answers, the first thing you look at is sizeable markets the company can attack in order to command growth rates on sustainable basis. Hyper growth!

They are leaders in the Euro BNPL sector and started to get legs in US but is that ambitious enough? Is being a BNPL market leader the end game here?

I don’t think so, those are just natural baby steps, market-getting moves, which are a mean to an end. The big picture is different, and this is a chess game, not backgammon.

The low hanging fruit, of course, is attacking more of the financial services sector, a natural horizontal play across segments after Klarna established itself vertically as a significant payment processor. It is a good bet to cross-sell more types of products to the same consumers, on the infrastructure Klarna already built.

However, there is another move in play, a ballsy step that could be a game changing power move.

Klarna built a virtuous loop between the merchants and the consumers and it stands exactly in the middle of it. And this makes you wonder - do they extract all the economic value from this loop? What pieces is the puzzle missing for being a dominant player?

This is the position where you at least diligently think about becoming a market maker in the e-commerce space. Needless to say that e-commerce is a huge market, as sizeable as the financial sector.

If you look closer at those two pillars and at the business fundamentals, you will realise that Klarna’s label as a BNPL company is simply mis-representing what they do and the huge opportunity ahead.

And so, that makes the 31 billion simply peanuts now if you understand Klarna’s big picture in the future. As always though, the devil is in the execution but the upside is certainly there.

Since this is already a too long for an argument, I put all this thinking into a more detailed report analysing Klarna’s future. Got numbers and pictures too.

The conclusion: long Klarna!

Getting a job offer from Americans vs from Europeans - signs of hyper growth.

What do you do when you are one of the better American companies and want to grow quickly in Europe?

You simply hire top people from Europe to do it for you. Makes sense, right?

How do you make sure of that? You make an offer that cannot be refused.

The offer is based on an analysis of the opportunity ahead and the compounded growth the prospective employee would contribute to in 3-5 years. The analysis also includes a look at the market and job competition.

And if Americans really want to get that person, they would make an offer at 1.5-2X+ above the market rate, compounded with performance-based incentives, usually a cut of the future value created.

That last part is very important. Americans will want to make sure you say yes because that is the best offer you can get. The offer is about the employee first and getting them committed.

Europeans usually hiring other Europeans look at the local market and if they really want you badly they will offer 1.1-1.2X. They will probably tell you about the number of the holiday days and that you get free coffee at the office, usually with not too much sharing of the future value created.

The last part is not that important. Europeans will want to make sure they are not out of the market and this is the best offer they can make. The offer is about them first.

It is also true that the risk is also correlated - the better the offer, the higher the risk.

European employees usually think in terms of job security whereas American employees think in terms of maximising the money they can make in a year. That is why you hear frequently about stories of American companies letting people go on the spot when they do not perform or when the shit hits the fan.

One final point - this reasoning applies much better to hyper growth situations, when it is extremely important to have strong functional leaders steering the ship and executing against a sizeable opportunity that needs to be won over.


Anecdotes and generalisations aside - after Sequoia recruited Luciana Lixandru from Accel last year, Lighspeed hired Paul Murphy from Northzone.

American VCs really want to do business in Europe - we’ve got a hyper growth situation here, don’t we?

Who is Lightspeed Venture Partners:

Lightspeed is one of the four American investment giants, sitting next to Tiger, NEA and A16Z.

It was founded in 2000 and had 2020 LP commitments announced at $4bn across three funds, covering all stages, geographies and verticals.

In Europe, they have had a partner active in London since 2019 - Lithuanian Rytis Vitkauskas - backed by two other US-based partners - Brad Twohig and Nicole Quinn.

This is the Lightspeed excerpt from a report about the American investors from Europe.