gm. gm. Yes, it appears that slap was real. No, we can't believe it either. 

What a night. 

VALUATIONS

Instacart gets a haircut

On Friday, Instacart sat down in the private market’s barbershop chair and gave an instruction not often heard: “Can you take a little off the top please?” According to a Bloomberg report, Instacart has reduced its valuation from around $39 billion to $24 billion, a roughly 40% markdown in the company’s value. 

• The details: The slash in valuation is not a decrease in the value of shares sold in its last round. Instead, TechCrunch’s Alex Whilem reports that the new valuation was set by a 409a price change, which is determined by third party companies, not a startup or its investors. 

Why do it? 

There are a few trends at play that can help explain Instacart’s willingness to downshift a bit. 

1. Pandemic tailwinds are dying down: In 2020, Instacart’s revenues roughly tripled to around $1.5 billion as everyone ordered groceries to go from the safety of their homes. That growth was never going to be sustainable (Instacart only grew roughly 10% last year) so its new valuation reflects the more modest post-pandemic growth environment. 

2. Shrinking public market valuations: Doordash, an Instacart competitor, is currently trading at a 7.7x revenue multiple. At its prior valuation, Instacart’s 2021 revenues would have given it a 21.7x multiple. That discrepancy could explain some of the pressure Instacart felt to bring its valuation in check. 

3. Attracting talent: By reducing its valuation, new hires essentially get more shares for the same dollar amount. Palantir actually did something similar back in 2019, cutting its valuation in half in order to make stock options more enticing. Instacart is hoping that its newfound lower market value will boost recruiting and retention.

Zoom out: Prior to Friday’s recalibration, Instacart laid out a tasty new platform growth play that doesn’t rely on any pandemic trends. Called Instacart Platform, it’s a suite of software that offers e-comm support and fulfillment help, ad tech, analytics, and some in-store tech support to any retailers who are trying to enter the online age of groceries. 

ENTERTAINMENT

Clash of the streaming titans

The Oscars returned to Los Angeles’ Dolby Theatre on Sunday for an evening of outlandish outfits, movies we haven’t heard of, and slaps heard round the world. The viewership and cultural prominence of Hollywood’s biggest night has certainly declined, but the star-studded ceremony has become an arena for streaming giants to square up.

Apple steals the show

Streamers are pumping tens of millions of dollars into awards campaigns to raise their profile over their rivals. Netflix and Apple went into this year’s ceremony as the night’s biggest contenders.

• With 27 nominations for 10 films, it looked like Netflix would spend the night in the limelight. But Apple made a late-season surge, mounting a fierce $10 million best picture campaign for Coda.

• In the end it was Apple who got the last laugh with Coda nabbing a well-deserved Best Picture.

Zoom out: Streamers have written blank checks and built campaign teams to chase golden statues, but it might not be worth it. A high-profile award may lend a streaming service some prestige, but the Academy has lost some of its former glory: 2021 saw a 56% drop in viewership and a 60% drop among the 18 to 49 demographic.

QUICK HITS

Seed Round

Stat: Instacart has taken a 40% trim in valuation, but that hasn’t been the norm in recent months. In the fourth quarter of 2021, a record 99% of all VC rounds were up rounds, a huge jump from 80% in 2020. Don’t let Instacart’s new cut fool you: VCs are still an optimistic bunch.

Startup: ShopThing, a Toronto based live shopping marketplace, allows influencers to walk into stores and livestream their shopping habits. With 500,000 users across North America, it’s targeting “the busy female aged somewhere between 25 and 45” according to founder Maggie Adhami-Boynton. (TechCrunch)

Rabbit hole: How top online marketplaces monetize. (Sharetribe)

WHAT ELSE IS GOING ON

• Uber secured a 30-month license to keep operating in London after a dispute with the city’s transportation authority.

• Elon Musk tweeted about creating a new social media platform after questioning Twitter’s commitment to free speech.

• Kaspersky, a Russian antivirus developer, was added to the FCC’s list of national security threats.

• Tesla suspended operations at its Shanghai factory as the city went into a lockdown for COVID testing.

TRIVIA

Who is the only person who has ever won four Oscars in a single night?

A. Bong Joon Ho

B. Walt Disney

C. Peter Jackson

D. Alejandro González Iñárritu

MONDAY MUSING

Would you be more or less inclined to join a startup that slashed valuation in the name of providing employees with more equity? 

Let us know here.   

TIDBITS

🤔 The internet teaches Tim Urban something interesting in one sentence. 

🧲 A history of the vacuum tube’s forgotten rival, magnetic amplifiers.

📺 Rate this dual 75” 4K monitor setup.

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TRIVIA ANSWER

B. Walt Disney. Everyone else on the list has won three awards at a single ceremony. Bong Joon Ho would have a fourth, but Parasite’s win for best international feature film is credited to the country rather than to the director.