Contrary Research Rundown #19
The designer class deep dive, and new memos on Flexport, 6sense, and more
Research Rundown
Our focus this week revolved around the world of design. The rise of mobile in 2007, and the ubiquitousness of social media starting in 2012 drove the consumerization of software. The more time everyone is spending on screens, the more they start to form opinions about the types of digital experiences they prefer. In 2009, the average person spent ~1 hour a day in front of screens; in 2022 this had grown to over 7 hours a day. This week, we dug into the designer class. But what is the designer class? All of the people, both professionals and casual content creators, who shape our digital experiences.
The most obvious evolution in the world of design was the progression from legacy design software, like Adobe, to the new paradigm introduced by Figma. We unpacked the leaps of faith Figma had to take. Historically, design had been something that happened in a back-office. Designers put together mockups and sent it down the value chain. Increasingly, the role of design has become an integrated function. More people were involved in design, which put collaboration front and center. Figma became the leader behind the wave of changes in professional designers.
But professional designers aren't the only ones shaping our digital experiences. Canva rose to become the tool of choice for "citizen designers," the marketers, entrepreneurs, and digital storytellers looking to communicate more effectively through visual artifacts. In a recent interview, Cliff Obrecht, one of Canva's co-founders, described the early skepticism of what Canva was trying to accomplish when they were founded in 2012. Fast forward 10+ years, and Canva's platform is powering over 3.5 billion designs per year.
Finally, we reflected on the way design is changing and what the future of design will look like. Generative AI, the battle to own the website and application layers, the increasing importance of AR/VR, and the way gaming engines like Unity and Unreal Engines will play a more prominent role as the physical and digital worlds continue to overlap.
The Designer Class
To bring all these trends together, we released our latest deep dive; The Designer Class: From Figma to Canva. As more of our lives are digitized, more of our lives are designed. The designer class includes everyone responsible for shaping an aspect of our digital experience–from the professional designer to the casual marketer. In this deep dive, we unpack the history of design platforms like Adobe, how the prevalence of design opened the way for new-age competitors like Figma, and the rise of the "citizen designer" that Canva has been purpose built for.
Snackpass is a social commerce platform offering mobile ordering for local restaurants. Its product enables local restaurants to offer discounts & rewards for online orderers. To learn more about the business, read our full memo here.
Nova Labs (Helium) uses decentralized hotspots owned by individuals to provide low-cost telecom services. The company incentivizes users with a blockchain-based economic system. To learn more about the business, read our full memo here.
Impossible Foods offers plant-based meat products including burgers, pork, sausage, and more. Their products are available in grocery stores, restaurants, and online. To learn more about the business, read our full memo here.
6sense is a B2B predictive intelligence engine for sales and marketing. The platform uses machine learning algorithms and time-sensitive behavioral data to identify interested buyers. To learn more about the business, read our full memo here.
Flexport is a cloud-based platform offering freight forwarding services, and a technology platform including shipment visibility, order management, and customs brokerage. To learn more about the business, read our full memo here.
The world of generative AI hasn't slowed down. Microsoft and OpenAI shared more details of their expanding partnership, including Microsoft's Azure OpenAI Service that will enable "enterprises and developers to build on top of GPT, DALL·E, and Codex." The reality is that OpenAI's massive demand for computing power will likely "keep them tethered to Microsoft." You can learn more about OpenAI in our deep dive here.
While OpenAI has occupied much of the oxygen in the AI conversation lately, the company is not without its critics. Yann LeCun, Chief AI Scientist at Meta, explained his skepticism of how much of a breakthrough ChatGPT really is vs. simply an effectively marketed distribution of a well-known paradigm in AI.
As the fascinating applications of generative AI continue to unfold, Google has entered the chat. This week Google announced their music model, MusicML, a generative AI model for creating music from text.
Stripe started the week off with an interesting partnership announcement with Amazon dramatically increasing its usage of Stripe's payment processing services. However, every startup continues to feel the pressure of current macroeconomic conditions. Late this past week, news broke that Stripe is seeking to raise capital at a valuation of $55B to $60B, down from their $95B valuation in May 2021.
There is likely still a fair bit of room for pain in the world of private company valuations. Janelle Teng, an investor at Bessemer Venture Partners, made the point that while there are 800+ private companies with $1B+ valuations, there are only ~270 in the public markets.
The team at Meritech released a report called "The 10x ARR Club" unpacking the changes that have happened in public company valuations. The report details the history of the massive valuation spike in 2021 as companies approach 50-100x ARR valuations, before dropping dramatically in 2022. The team also details the common metrics for these companies.
As painful as the broader market is, this isn't stopping a lot of companies from continuing to execute. Alex Bouaziz, the CEO of Deel, shared that the company had grown from $57M to $295M in revenue during 2022, all while reaching EBITDA profitability.
The team at Replit announced that they have enabled PostgresSQL, allowing users to have access to production-grade databases right in their IDE product without requiring installation or configuration. You can learn more about Replit in our memo here.