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The return of the lean, green startup – TechCrunch

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Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here.

The market is down. The party is over. And Peloton of X startups aren’t too happy right now.

As tech stocks take a hit, the big question on my mind is how a dip in market performance impacts early-stage startups. There’s the obvious argument here that startups have been preparing for a re-correction, and that market highs were knowingly unsustainable, but just because expectations exist doesn’t mean that ripple effects float away.

Despite investor’s outward rationalization, the red, or millennial pink, flags are not going unnoticed, with some firms lowering revenue expectations even at the earliest stages. On Equity this week, Alex and I interviewed Bessemer growth partner Mary D’Onofrio, who admitted that her expectations for exit multiples have changed, and that the IPO window is mostly closed. The stocks may be sane, but that’s still kind of sad, right?

D’Onofrio is seeing rounds taking longer, VCs asking more questions and the return of full due diligence (which, for anyone who has been reading this newsletter, is music to my paranoid ears).

My take, after speaking to a handful of venture investors and founders, is that we’re going to see the return of the lean, green startup. In the past, stock market dips may have caused a retraction in venture capital dollars, leaving startups to crumble under lack of capitalization. In today’s market however, there’s never been more capital in the venture world.

A venture-backed early-stage startup has an elusive line to toe, because a decline in valuations isn’t a decline in capital. I expect to see founders with cash in the bank take on a leaner mindset, maybe spending more conservatively or thinking about runway again. Vernacular will change: If becoming the “Amazon of X” isn’t the smartest target, founders could instead focus on building out key capabilities that will help them survive an even bigger slowdown. It may be a while before a founder tells me that their capital is offensive, not defensive.

The return to normalcy feels foreign, but that’s because we’ve been in wonky times for an extended period of time. Going forward, I am paying attention to how startups speak about growth in the coming months. You’re raising money, but is it to hire, develop, acquire or just be able to exist?

For my full take on this topic, check out my latest TechCrunch+ column: 3 views: How should founders prepare for a decline in startup valuations and investor interest? I’d also love to know how you’re reacting to the news, so tweet me @nmasc_ and change my mind.

In the rest of this newsletter, we’ll get into education’s emotional pivot, fintech proactiveness and some insidery buzz in the VC and startup world.

Education’s inevitable pivot to emotion

I wrote a TechCrunch+ story about edtech’s inevitable pivot to emotion-based learning. In the story, I explore how three venture-backed companies — Wayfinder, Empowerly and Learnfully — are navigating the longstanding challenges of personalized education with fresh takes.

Here’s why it’s important: For education enthusiasts, personalized learning isn’t a new phenomenon, it’s simply a rebranding of adaptive learning. What’s fresh, then, is that newly venture-backed startups are cooking up products that look at students beyond their grades and scores. Edtech entrepreneurs are betting that the future of learning depends on understanding the more subjective traits of learners, which feels hard to argue with. The tension ahead, though, is how to apply a venture-like mindset to something as hard to scale as a sense of belonging.

Other lessons:

Image Credits: Dual Dual (opens in a new window) / Getty Images

Deal of the week

Parthean recently raised $1.1 million at $12 million valuation to build a personal finance company that educates users, and helps them track their finances at the same time. The big vision behind it, per co-founder and CEO Arman Hezarkhani, is the idea of pro-active learning.

“Anyone who tells you that people want to learn, largely they are wrong,” he said. “[Founders] want to believe in the best of humanity and that people are going to dedicate time to wanting to learn something, but we always come back to this vitamin versus painkiller problem.” A big area where this exists prominently is in finance, he argues, leaving consumers in a spot where they need a financial platform that helps them when they have a fever (overspend) instead of when they’re feeling ambitious (after their New Year’s resolution).

Here’s why it’s important: By combining edtech and fintech, Parthean has an opportunity to track a metric that traditional education companies are unable to measure: connection rates. Part of Parthean’s progress is measured by whether users, after they complete a crypto course, end up doing the action item that’s tacked onto the end of the lesson, whether it’s setting up a crypto wallet on Coinbase or growing a credit score.

It can only do that because it has your spending information, but that sort of integration could lead to fascinating outcomes. It’s less about consumption, and more about creation.

Honorable mentions:

Financial risk concept with dollar sign pit and footprints on blue background. 3D Rendering

Image Credits: Peshkova (opens in a new window) / Getty Images

In the DMs

  • Hustle Fund is raising a $50 million third fund, per SEC filings. This would be Hustle Fund’s second swing at an investment fund of this size, with its second fund ultimately missing the mark and closing at $30 million.
  • Clubhouse is building out a child safety team, which could work on “establishing new investigation procedures, developing new safety features or researching the latest child safety regulations,” per a job listing. The social audio platform, which has attracted significant investor and user interest, has been scrutinized for its inaction on the moderation front, giving the hiring goals likely more haste than usual.
  • Y Combinator wants to invest more in software tooling for its admissions process, both from a platform perspective for applicants and for a triage flow so reviewers can wade through the data set to find signals. That’s good, given Y Combinator’s batch size admissions and the fact that there are only five people on the admissions team.
  • Speaking of YC, its favorite competitor On Deck appears to be taking another swing: On Deck Daily, a forum for techies to chat (or, if you really think about it, a Hacker News competitor). It’s also building a Startup School.

Across the week

Equity, the tech news podcast I co-host alongside Alex Wilhelm and Mary Ann Azevedo, is going live! Join us for a virtual, live recording of our show on February 10th — tickets are free, puns will come at the cost of our producers’ sanity.

Seen on TechCrunch

How one founder is putting the power of home ownership back in the hands of actual homeowners

Atlassian acquires Percept.AI

10,000 subscribers later, This Week in Fintech has a venture fund

Joby Aviation wants to conduct dramatic eVTOL flights over San Francisco Bay

Seen on TechCrunch+

Why Robinhood is getting hammered today

Hard cash and soft skills: How to successfully manage an acquisition

How our SaaS startup broke into the Japanese market without a physical presence

More tech drama, please

Dear Sophie: 3 questions about immigration and naturalization

Crypto pioneer David Chaum says web3 is ‘computing with a conscience’

Until next time,

N



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Identity in the metaverse: Creating a global identity system

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With the advent of the metaverse, the need for a global identity system has become apparent. There are many different ways to create an identity in the metaverse, but no single system is universally accepted. 

The challenge is usually two-fold: first, how to create an identity that is accepted by all the different platforms and services in the metaverse, and second, how to keep track of all the different identities a person may have.

There are many proposed solutions to these challenges, but no clear consensus has emerged. Some believe that a single, global identity system is the only way to ensure interoperability between different platforms and services. Others believe that multiple identities are necessary to allow people to maintain their privacy and security.

The debate is ongoing, but it is clear that the need for a global identity system is becoming more urgent as the metaverse continues to grow.

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In this article, we will explore the various options for creating a global identity system in the metaverse. We will discuss the pros and cons of each option, and try to identify the best solution for the future.

Option 1: A single global identity

The simplest solution to the problem of identity in the metaverse is to create a single, global identity system. This would be a centralized system that would be responsible for managing all identities in the metaverse. 

The advantages of this approach are obvious: It would be much easier to keep track of identities, and there would be no need to worry about different platforms and services accepting different identities. In addition, a centralized identity system would allow for better security and privacy controls, as well as the ability to track identity theft and fraud.

However, this approach also has several disadvantages. First, it would be very difficult to create a global identity system that is accepted by everyone. Also, a centralized system would be vulnerable to attack and could be used to track people’s movements and activities. Third, it would be difficult to protect the privacy of users in a centralized system.

Option 2: Multiple identities

Another solution to the problem of identity in the metaverse is to allow each person to have multiple identities. This would mean that each person could have one or more identities that they use for different purposes. 

One of the main advantages of this approach is that it would allow people to maintain their privacy and security. Each person could choose which identity to use for each situation, and they would not have to worry about their entire identity being exposed. In addition, this approach would be more resilient to attack, as it would be much harder to take down multiple identities than a single one.

The limitations of such an approach would be that it could be difficult to keep track of all the different identities, and there would be no guarantee that different platforms and services would accept all of them. In addition, multiple identities could lead to confusion and could make it more difficult for people to build trust with others.

Option 3: A decentralized identity system

A third solution to the problem of identity in the metaverse is to create a decentralized identity system. This would be an identity system that is not controlled by any one centralized authority but rather is distributed among many different nodes. 

This might seem like the ideal approach, since decentralization is a common theme in the metaverse. However, there are still some challenges that need to be overcome. For instance, it would need to be ensured that all the different nodes in the system are properly synchronized and that the system as a whole is secure. In addition, it might be difficult to get people to adopt such a system if they are used to the more traditional centralized approach.

One solution would be to get the nodes in the system to be run by different organizations. This would help to decentralize the system and make it more secure. Another advantage of this approach is that it would allow different organizations to offer their own identity services, which could be more tailored to their needs.

Another would be to incorporate an edge computing solution into the system. This would allow for more decentralized processing of data and could help to improve performance. It would also make the system more resilient to attack since there would be no centralized point of failure.

The best solution for the future of identity in the metaverse is likely to be a combination of these approaches. A centralized system might be necessary to provide a basic level of identity services, but it should be supplemented by a decentralized system that is more secure and resilient. Ultimately, the goal should be to create an identity system that is both easy to use and secure.

The ideal identity standards of the metaverse

Now that we have explored the various options for identity in the metaverse, we can start to identify the ideal standards that should be met by any future global identity system. 

It is no easy task to create a global identity system that meets all of the criteria, but it is important to strive for an ideal solution. After all, the metaverse is still in its early stages, and the decisions made now will have a lasting impact on its future. 

Current iterations of the metaverse have used very traditional approaches to identity, but it is time to start thinking outside the box. The ideal solution will be one that is secure, private, decentralized, and easy to use. It will be a solution that allows people to maintain their privacy while still being able to interact with others in the metaverse. 

Most importantly, it will be a solution that can be accepted and used by everyone. Only then can we hope to create a truly global identity system for the metaverse.

The bottom line on identity in the metaverse

The question of identity in the metaverse is a complex one, but it is an important issue that needs to be addressed. 

The challenges associated with creating an implementation that is secure, private and decentralized are significant, but they are not insurmountable. For one, it will be important to get buy-in from organizations that have a vested interest in the metaverse. These organizations can help to promote and support the adoption of identity standards. 

It is also important to keep in mind that the metaverse is still evolving, and the solution that is ideal today might not be ideal tomorrow. As such, it will be critical to have a flexible identity system that can adapt as the needs of the metaverse change. 

Ultimately, the goal should be to create an identity system that is both easy to use and secure. Only then can we hope to create a truly global identity system for the metaverse.

Daniel Saito is CEO and cofounder of StrongNode

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How to Eliminate Scheduling Inefficiencies in Your Business

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What do salons, consultancies, and home service providers all have in common? This question may seem like the prime setup for a joke, but there’s no punchline to look forward…

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Why You Should Start a Business Only While You Have a Job

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Opinions expressed by Entrepreneur contributors are their own.

Many people that I meet tell me that they dream of starting their own . I always ask them, “Then why don’t you?” They typically respond by saying that they have so many financial and personal responsibilities, that they can’t just quit their job to start a company, etc. Then I tell them my story …



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Related: How to Use Your Current Job to Start Your Next Business

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