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Are the good times over for tech start-ups as the easy money that powered growth with little demand for profits dries up?

Back in 2008 as the international financial crisis was sweeping through the world economy,…
The post Are the good times over for tech start-ups as the…

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Back in 2008 as the international financial crisis was sweeping through the world economy, the renowned Silicon Valley VC firm Sequoia Capital sent a now famous presentation out to its portfolio of start-ups. The presentation was directly titled “RIP Good Times” and consisted of 56 slides.

Those slides started by listing the problems the U.S. and global economies were facing as follows:

  • HOUSING LED RECESSION
  • OVER LEVERAGED FINANCIALS
  • FALLING ASSET PRICES
  • FROZEN CREDIT MARKETS
  • WEAK HOUSEHOLD BALANCE SHEET
  • GLOBALLY SYNCHRONIZED SLOWING EXACERBATING ALL OF ABOVE
  • FORCES OF INFLATION VERSUS FORCES OF DEFLATION

It was designed to explain to the portfolio of start-ups that counted Sequoia as an investor why they could no longer count on further cash flowing into their coffers. The message was that the broader environment had suddenly changed. And Sequoia’s investment case, which had expertly and lucratively spotted the potential in tech companies including Apple, Google and Instagram, with it.

market cycles

Source: Sequoia Capital

The next 50 or so slides contained graphs and concise texts outlining what had changed and why. It also contained a number of slides spelling out exactly what the new reality meant for the promising tech start-ups Sequoia had invested in.

our take

Companies were told in no uncertain terms that if they were currently in a funding cycle raising fresh investment, they should close it as quickly as possible and raise as much as possible. Sequoia predicted that any company that wasn’t yet self-sustaining and didn’t have “at least a year of cash minimum in the bank”, was “in trouble”.

The presentation concluded with a list of actions the VC firm titled “The Solution”:

  • PERFORM SITUATION ANALYSIS
  • ADAPT QUICKLY
  • USE A ZERO-BASED BUDGETING APPROACH
  • MAKE CUTS
  • REVIEW SALARIES
  • EMPLOY A HEAVILY COMMISSIONED SALES STRUCTURE
  • BOLSTER BALANCE SHEETS
  • BECOME CASH FLOW POSITIVE AS SOON AS POSSIBLE
  • SPEND EVERY DOLLAR AS IF IT WERE YOUR LAST

Two months ago, the San Francisco-based venture capital firm NFX sent out a communication to its portfolio of start-ups that was eerily reminiscent of Sequoia’s 2008 RIP Good Times presentation. It indicated that investors, across venture capital, private equity, and public markets, as well as lenders, would soon be making tough calls on which high growth but low, or no, profit enterprises they would be prepared to let go to the wall rather than prop up with more cash over coming months.

James Currier, a partner at NFX, commented:

“It’s going to be similar to 2000. How it plays out is going to be dependent on how much capital was raised over the past 18 months versus the fear that’s about to grip the tech space.”

In a nutshell, tech companies that have raised enough funds to finance continued growth over the next year or two might be ok. Otherwise, they have two choices. Make enough money and/or cut costs by enough to make it last until economic conditions and investor sentiment improve. Or prepare to perish.

Tech start-ups have already started to cut their cloth in the realisation that the good times have, indeed, again come to an end as another long bull market cycle turns into a new, bearish, cycle.

Last week Steven Galanis, founder of the Chicago-based start-up Cameo which allows customers to order a personal greeting from celebrities willing to speak into a camera for a stranger for varying sums of cash, announced the company was letting go 87 members of staff. A year ago Cameo, which did very well during the lockdown periods of the pandemic, raised $100 million at a $1 billion valuation.

Cameo is now on a mission to conserve whatever part of that $100 million it hasn’t already spent in the realisation it probably won’t be able to raise any more anytime soon. At least not without existing investors taking a massive hit on the company’s valuation.

U.S. GDP shrank by 1.4% last quarter and if it doesn’t return to growth this quarter, which currently looks doubtful, the world’s largest economy will have officially entered recession. The old adage is that when the U.S. economy catches a cold the rest of the world sneezes and it is likely to prove true once again. Especially for high growth, low income, tech companies that rely on positive investor sentiment in the USA to keep funding their loss-making growth.

Even the big tech companies that do make huge revenues and profits and are unlikely to come under any pressure as going concerns are suffering from the change in the economic cycle from bull to bear. Shopify, whose platform lets anyone set up an e-commerce website and is seen as the only genuine potential challenger to Amazon’s dominance of the sector, has seen its valuation slump by almost 78% since its record high set on November 19 last year.

shopify inc

Facebook-owner Meta Platforms has seen its value plunge by over 46% since early last September when its decline began. Netflix currently trades at less than $181-a-share after seeing its market capitalisation pluge 70% this year. The last time the market-leading video content streaming service was worth so little was September 2017. Five years ago it had around 100 million paying subscribers compared to 200 million now and about one third of current revenues.

There are other reasons why investors have punished Netflix so hard, including growing competition, market saturation and its increasing overheads as it spends on proprietary content to remain competitive. But the main reason why it has lost so much value is simply a change in investor sentiment. The good times are over, for now.

Still private tech start-ups are already feeling the pinch and having to face up to the fact a new cycle has started. Some have already proactively self-reduced their valuations ahead of recent funding rounds.

And there have been early casualties of the shift in investor sentiment. Online one-click online checkout start-up Consider Fast closed last month after investors refused to refund it with more cash at a $1 billion valuation. It had burned through $120 million over the previous 12 months to generate less than $1 million in sales.

Payments giant Stripe and VC firm Index Ventures were among the existing investors who decided it would be better to cut their losses rather than throw good money after bad. Just a few months earlier they may well have put their hands in their pockets again.

The venture capital sector itself could well be in trouble over the months ahead. U.S.-based VCs invested $333 billion in start-ups in 2021, a new record. Their numbers have also multiplied rapidly, from 1328 at the end of 2019 to 2889 by the end of last year. Around 60% of these VCs have only ever raised one fund and many may well not survive the next year.

But such changes in economic cycle also bring opportunities and the birth of new generations of tech giants. Slumps in valuation need not be fatal as long as tech companies have a sound underlying business model. Netflix itself is a prime example.

netflix inc

In 2011 it also lost around 70% of its value and questions were raised about its ability to survive. It did and as a quick glance at the chart above shows, that 70% drop in valuation would now, in cash terms, barely register.

Investors exposed to start-ups, either through VC funds or as private investors, or growth companies already publically listed, would do well to audit that exposure. The key thing to assess is cash flow. Do these companies have enough cash to fund themselves for the next one to two years without having to raise significant fresh investment capital?

If the answer is yes and you still believe in the business model it could well be worth persevering or even increasing your investment at the lower valuations likely over the period ahead. If the answer is no, it might be worth seriously considering getting out now while you still can.

The post Are the good times over for tech start-ups as the easy money that powered growth with little demand for profits dries up? first appeared on Trading and Investment News.

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Coronavirus may be linked to cases of severe hepatitis in children

A chain of events possibly triggered by unrecognized infection with the SARS-CoV-2 coronavirus could be causing the mysterious cases of severe hepatitis…

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Coronavirus may be linked to cases of severe hepatitis in children

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(Reuters) – The following is a summary of some recent studies on COVID-19. They include research that warrants further study to corroborate the findings and that has yet to be certified by peer review.

SARS-CoV-2 could be at root of mysterious hepatitis in kids

A chain of events possibly triggered by unrecognized infection with the SARS-CoV-2 coronavirus could be causing the mysterious cases of severe hepatitis reported in hundreds of young children around the world, researchers suggest.

Children with COVID-19 are at significantly increased risk for liver dysfunction afterward, according to a report posted on Saturday on medRxiv ahead of peer review. But most of the children with acute hepatitis – which is generally rare in that age group – do not report a previous SARS-CoV-2 infection. Instead, the majority have been found to be infected with an adenovirus called 41F, which is not known to attack the liver. It is possible that the affected children, many of whom are too young to be vaccinated, may have had mild or asymptomatic COVID infections that went unnoticed, a separate team of researchers suggest in The Lancet Gastroenterology & Hepatology. If that were true, they theorize, then lingering particles of the coronavirus in the gastrointestinal tract in these children could be priming the immune system to over-react to adenovirus-41F with high amounts of inflammatory proteins that ultimately damage the liver.

A firefighter from the Marins-Pompiers of Marseille (Marseille Naval Fire Battalion) administers a nasal swab to a child at a testing site for coronavirus disease (COVID-19) in Marseille, France, September 17, 2020. REUTERS/Eric Gaillard

“We suggest that children with acute hepatitis be investigated for SARS-CoV-2 persistence in stool” and for other signals that the liver damage is happening because the spike protein of the coronavirus is a “superantigen” that over-sensitizes the immune system, they said.

Face-down position unhelpful for awake patients

For hospitalized COVID-19 patients who are breathing on their own but with supplemental oxygen, lying face down might not help prevent them from eventually needing mechanical ventilation, according to a new study.

In the study, 400 patients were randomly assigned to usual care or to standard care plus intermittently lying on their stomach, a position known to improve the course of illness in sedated patients on mechanical ventilators. Over the next 30 days, 34.1% in the prone-positioning group and 40.5% in the usual-care group needed to be intubated and put on a ventilator, a difference that was not statistically significant. There might have been a reduction in the risk for intubation with prone positioning among some of the patients, researchers said on Monday in JAMA, but they could not confirm it statistically from their data. The average duration of prone positioning per day was roughly five hours, less than the target of eight to 10 hours per day.

“Long hours of awake prone positioning are challenging and highly influenced by patient comfort and preference,” the researchers said. “The most common reason for interruption of prone positioning was patient request, which might have been related to overall subjective improvement or related to discomfort from prone positioning.”

Click for a Reuters graphic on vaccines in development.

Reporting by Nancy Lapid and Megan Brooks; Editing by Bill Berkrot

Our Standards: The Thomson Reuters Trust Principles.

 

Reuters source:

https://www.reuters.com/business/healthcare-pharmaceuticals/coronavirus-may-be-linked-cases-severe-hepatitis-children-2022-05-16

 

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The Battle For Control Of Your Mind

The Battle For Control Of Your Mind

Authored by Aaron Kheriaty via The Brownstone Institute

In his classic dystopian novel 1984, George…

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The Battle For Control Of Your Mind

Authored by Aaron Kheriaty via The Brownstone Institute

In his classic dystopian novel 1984, George Orwell famously wrote, “If you want a picture of the future, imagine a boot stamping on a human face—for ever.” This striking image served as a potent symbol for totalitarianism in the 20th Century. But as Caylan Ford recently observed, with the advent of digital health passports in the emerging biomedical security state, the new symbol of totalitarian repression is “not a boot, but an algorithm in the cloud: emotionless, impervious to appeal, silently shaping the biomass.”

These new digital surveillance and control mechanisms will be no less oppressive for being virtual rather than physical. Contact tracing apps, for example, have proliferated with at least 120 different apps in used in 71 different states, and 60 other digital contact-tracing measures have been used across 38 countries. There is currently no evidence that contact tracing apps or other methods of digital surveillance have helped to slow the spread of covid; but as with so many of our pandemic policies, this does not seem to have deterred their use.

Other advanced technologies were deployed in what one writer has called, with a nod to Orwell, “the stomp reflex,” to describe governments’ propensity to abuse emergency powers. Twenty-two countries used surveillance drones to monitor their populations for covid rule-breakers, others deployed facial recognition technologies, twenty-eight countries used internet censorship and thirteen countries resorted to internet shutdowns to manage populations during covid. A total of thirty-two countries have used militaries or military ordnances to enforce rules, which has included casualties. In Angola, for example, police shot and killed several citizens while imposing a lockdown.

Orwell explored the power of language to shape our thinking, including the power of sloppy or degraded language to distort thought. He articulated these concerns not only in his novels Animal Farm and 1984 but in his classic essay, “Politics and the English Language,” where he argues that “if thought corrupts language, language can also corrupt thought.”

The totalitarian regime depicted in 1984 requires citizens to communicate in Newspeak, a carefully controlled language of simplified grammar and restricted vocabulary designed to limit the individual’s ability to think or articulate subversive concepts such as personal identity, self-expression, and free will. With this bastardization of language, complete thoughts are reduced to simple terms conveying only simplistic meaning.  

Newspeak eliminates the possibility of nuance, rendering impossible consideration and communication of shades of meaning. The Party also intends with Newspeak’s short words to make speech physically automatic and thereby make speech largely unconscious, which further diminishes the possibility of genuinely critical thought.

In the novel, character Syme discusses his editorial work on the latest edition of the Newspeak Dictionary:

By 2050—earlier, probably—all real knowledge of Oldspeak [standard English] will have disappeared. The whole literature of the past will have been destroyed. Chaucer, Shakespeare, Milton, Byron—they’ll exist only in Newspeak versions, not merely changed into something different, but actually contradictory of what they used to be. Even the literature of The Party will change. Even the slogans will change. How could you have a slogan like Freedom is Slavery when the concept of freedom has been abolished? The whole climate of thought will be different. In fact, there will be no thought, as we understand it now. Orthodoxy means not thinking—not needing to think. Orthodoxy is unconsciousness.

Several terms of disparagement were repeatedly deployed during the pandemic, phrases whose only function was to halt the possibility of critical thought. These included, among others, ‘covid denier,’ ‘anti-vax,’ and ‘conspiracy theorist’. Some commentators will doubtless mischaracterize this book, and particularly this chapter, using these and similar terms—ready-made shortcuts that save critics the trouble of reading the book or critically engaging my evidence or arguments.

A brief comment on each of these may be helpful in illustrating how they function.

The first term, ‘covid denier,’ requires little attention. Those who sling this charge at any critic of our pandemic response recklessly equate covid with the Holocaust, which suggests that antisemitism continues to infect discourse on both the right and the left. We need not detain ourselves with more commentary on this phrase.

The epithet ‘anti-vax,’ deployed to characterize anyone who raises questions about the mass vaccination campaign or the safety and efficacy of covid vaccines, functions similarly as a conversation stopper rather than an accurately descriptive label. When people ask me whether I am anti-vax for challenging vaccine mandates I can only respond that the question makes about as much sense to me as the question, “Dr. Kheriaty, are you ‘pro-medication’ or ‘anti-medication’?” The answer is obviously contingent and nuanced: which medication, for which patient or patient population, under what circumstances, and for what indications? There is clearly no such thing as a medication, or a vaccine for that matter, that’s always good for everyone in every circumstance and all the time.

Regarding the term “conspiracy theorist,” Agamben notes that its indiscriminate deployment “demonstrates a surprising historical ignorance.” For anyone familiar with history knows that the stories historians recount retrace and reconstruct the actions of individuals, groups, and factions working in common purpose to achieve their goals using all available means. He mentions three examples from among thousands in the historical record.

In 415 B.C. Alcibiades deployed his influence and money to convince the Athenians to embark on an expedition to Sicily, a venture that turned out disastrously and marked the end of Athenian supremacy. In retaliation, Alcibiades enemies hired false witnesses and conspired against him to condemn him to death. In 1799 Napoleon Bonaparte violated his oath of fidelity to the Republic’s Constitution, overthrowing the directory in a coup, assumed full powers, and ending the Revolution. Days prior, he had met with co-conspirators to fine-tune their strategy against the anticipated opposition of the Council of Five Hundred.

Closer to our own day, he mentions the March on Rome by 25,000 Italian fascists in October 1922. Leading up to this even, Mussolini prepared the march with three collaborators, initiated contacts with the Prime Minister and powerful figures from the business world (some even maintain that Mussolini secretly met with the King to explore possible allegiances). The fascists rehearsed their occupation of Rome by a military occupation of Ancona two months prior.

Countless other examples, from the murder of Julius Caesar to the Bolshevik revolution, will occur to any student of history. In all these cases, individuals gathering in groups or parties to strategize goals and tactics, anticipate obstacles, then act resolutely to achieve their aims. Agamben acknowledges that this does not mean it is always necessary to aver to ‘conspiracies’ to explain historical events. “But anyone who labelled a historical who tried to reconstruct in detail the plots that triggered such events as a ‘conspiracy theorist’ would most definitely be demonstrating their own ignorance, if not idiocy.”

Anyone who mentioned “The Great Reset” in 2019 was accused of buying into a conspiracy theory—that is, until World Economic Forum founder and executive chairman Klaus Schwab published a book in 2020 laying out the WEF agenda with the helpful title,Covid-19: The Great Reset. Following new revelations about the lab leak hypothesis, U.S. funding of gain-of-function research at the Wuhan Institute of Virology, vaccine safety issues willfully suppressed, and coordinated media censorship and government smear campaigns against dissident voices, it seems the only difference between a conspiracy theory and credible news was about six months.

*  *  *

Originally posted at 'Human Flourishing' Substack.

Tyler Durden Mon, 05/16/2022 - 23:45

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World-first study reveals why people with COPD are more susceptible to COVID-19

Researchers from the Centenary Institute and the University of Technology Sydney have published the first study showing why people with chronic obstructive…

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Researchers from the Centenary Institute and the University of Technology Sydney have published the first study showing why people with chronic obstructive pulmonary disease (COPD) are at higher risk of developing severe COVID-19.

Credit: Centenary Institute

Researchers from the Centenary Institute and the University of Technology Sydney have published the first study showing why people with chronic obstructive pulmonary disease (COPD) are at higher risk of developing severe COVID-19.

The findings, reported in the American Journal of Respiratory and Critical Care Medicine, could lead to the development of new therapeutic interventions that reduce COVID-19 infection in COPD patients.

An inflammatory lung condition, COPD causes airway blockage and makes it difficult to breathe. It affects around 400 million people globally. The increased susceptibility to COVID-19 of COPD patients is still to be fully understood.

In the study, the researchers infected differentiated airway cells from COPD patients and healthy people with SARS-CoV-2 (the virus that causes COVID-19).

The researchers found that the COPD airway cells had 24-fold greater infection with SARS-CoV-2 than the healthy cells.

“We examined the genetic information of infected cells through advanced single cell RNA-sequencing analysis,” said lead author of the study, Dr Matt Johansen, from the Centenary UTS Centre for Inflammation.

“Seven days after SARS-CoV-2 infection, there was a 24-fold increase of viral load in the COPD patient airway cells compared to the cells taken from healthy individuals.”

Significantly, the team found that the infected COPD cells had increased levels of transmembrane protease serine 2 (TMPRSS2) and cathepsin B (CTSB). Both are enzymes that SARS-CoV-2 uses to enter into the host cell.

“These two enzymes are increased in COPD patients and favour greater SARS-CoV-2 infection compared to healthy people. Simply put, easier and increased cell infection makes it far more likely that individuals with COPD will have more severe disease outcomes,” said Dr Johansen.

Other results from the study showed additional reasons for COPD patient susceptibility to severe COVID-19.

Key anti-viral proteins (interferons) that protect against infection were largely blunted in the COPD patient airway cells. This was a likely trigger in causing increased viral production in COPD patients.

Dr Johansen said that infected COPD patient airway cells also had higher levels of pro-inflammatory cytokines, which are linked to more severe COVID-19 and COPD outcomes.

“COPD is an inflammatory disease with patients having increased inflammation at baseline compared to healthy people. It’s highly likely that SARS-CoV-2 exacerbates this existing high inflammation level which leads to even poorer outcomes,” he said.

Initial laboratory drug testing by the researchers, to inhibit the enzymes TMPRSS2 and CTSB, and to target the high inflammation levels, successfully and substantially reduced SARS-CoV-2 viral levels in COPD patient cells, ultimately confirming the study’s results.

“Collectively, these findings have allowed us to understand the mechanisms of increased COVID-19 susceptibility in COPD patients,” said Professor Phil Hansbro, the study’s senior author and Director of the Centenary UTS Centre for Inflammation.

“We believe that new drug treatments targeting relevant enzymes and pro-inflammatory responses in SARS-CoV-2 infection could have excellent therapeutic potential in reducing the severity of COVID-19 in patients with COPD.”

Professor Hansbro said the research was critical with hundreds of millions of people affected by COPD globally and with COVID-19 likely to be around for many years to come.

[ENDS]

Publication:

Increased SARS-CoV-2 Infection, Protease and Inflammatory Responses in COPD Primary Bronchial Epithelial Cells Defined with Single Cell RNA-Sequencing.

https://www.atsjournals.org/doi/10.1164/rccm.202108-1901OC

Images:

Dr Matt Johansen: https://drive.google.com/file/d/1Wc5WxHcS1fSWE68Q7xu8jT53Dki2ZBo4/

 

Professor Phil Hansbro:

https://drive.google.com/file/d/1GaHOyCjXfSb3hsE_bS-g2Cxs81dEhL4G/

 

For all media and interview enquiries, please contact

Tony Crawshaw, Media and Communications Manager, Centenary Institute on 0402 770 403 or email: t.crawshaw@centenary.org.au

 

About the Centenary Institute

The Centenary Institute is a world-leading independent medical research institute, closely affiliated to the University of Sydney and the Royal Prince Alfred Hospital. Our research focuses on three key areas: cancer, inflammation and cardiovascular disease. Our strength lies in uncovering disease mechanisms and applying this knowledge to improve diagnostics and treatments for patients.

For more information about the Centenary Institute, visit centenary.org.au

 

About the University of Technology Sydney (UTS)

The University of Technology Sydney (UTS), located in central Sydney, is one of

Australia’s leading universities of technology. It is known for fusing innovation, creativity

and technology in its teaching and research and for being an industry-focused university.

For more information go to uts.edu.au


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