📶 A $975m “disappointment”?

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Good morning 👋

Loom sold last week, and VC Twitter had mixed reviews.

Some labeled the exit a failure because the company sold for a discount to the previous round. Others labeled it a win because it was still a HUGE outcome for the early investors.

Either way, we have thoughts, and we break those down in this week’s piece.

If you think we’re right, wrong, or way wrong, let us know in the comments.

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NEWS
A $975m “disappointment”? 🤡

Last week, Loom was bought by Atlassian for $975m. It’s life-changing money for everybody involved, and somehow the media is spinning it to look like a negative outcome (look at the headlines here, here, and here).

The tech media continues to be delusional, but that’s not newsworthy. Here are the larger takeaways from this successful exit event.

Why it matters:

• Valuation resets are real: Loom last raised at a $1.5 billion valuation back in 2021, and the discounted exit price is the reason that the media is labeling this as a disappointment. The reality of the situation is that we’re not in 2021 anymore. If your company hasn’t tested the fundraising market in a few years, chances are your valuation is significantly lower than it was just a few years ago. If you’re an investor and your portfolio hasn’t raised in some time, you should be realistic about marks to market (it’s probably 20-30% lower than you’re hoping for).

• Video is the new king of communication: Personal consumption habits have made their way into the workforce, and video has become the default way for most businesses to cut down on communication time. Whether you’re remote, hybrid, or in the office, video is becoming the default way to communicate with your team (whatever you can do to avoid never-ending email chains, right?). We’re Loom users, and it’s saved us hundreds of meetings over the past three years.

• Freemium continues to attract legacy SaaS players: When I first saw this deal, there were two other M&A deals I was reminded of: Slack ($27.7 billion to Salesforce in July 2021) and Figma ($20 billion to Adobe in September 2022). One is an outlier, two is a trend, and three is a pattern. More thoughts on this below.

What happens next:

Freemium is the business model of choice for modern businesses, and legacy players are keeping up with the times.

Even a decade ago, the idea of giving away your product for free, teasing premium features, and converting a small percentage of free users to paid was taboo. Today, it’s the standard.

Legacy software businesses (think Salesforce, Oracle, ServiceNow, Cisco, etc.) are far too established to change their business model, but they have realized they are leaving money on the table by ignoring customers who need to try before they buy (aka the freemium crowd).

If you’re to predict the next big freemium acquisition, some of the most popular ones that we use are Notion, Airtable, beehiiv, and Zapier. Do with that information what you will.

LINKS

👨‍💻 Virtual family offices: Deep dive on wealthy FOs are operating virtually

🤑 A Few Laws to Getting Rich: Morgan Housel’s latest piece

💰 Assets by wealth tier: Most valuable assets by wealth class

🛠 20 tips to upgrade sleepy businesses: Tactical ways to improve “boring” businesses

📺 21st-century media platforms: Plus how to build one from scratch

🗻 16 Lessons from Brad Feld: Advice from the Foundry Group partner

👉 14 Lessons from Bob Kagle: Legendary advice from the ex-Benchmark GP

✅ VC Notion Templates: Looking to shortcut some of your process templates? Grab our best VC resources to duplicate within your own Notion account.

TWEET

There’s so much value in this post. I have this saved in my phone to constantly revisit.

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Thanks for reading this far and giving us a little bit of your attention this week.

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- Clay and Tyler

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