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Hello friends! I had a little something saved for this email, but it wound up being pushed back to next week, so expect to read about that in a few days. The good news is that we now have some more room to play with today.

So let’s chat tech’s response to Ukraine, API startups, and startup valuations, yeah? This will be fun.

Tech shows spine

I was worried that when Russia invaded Ukraine that the world would not step up to the task of giving a shit. Happily, however, the opposite has largely happened. And even more, tech has taken a stand.

And not just a positioning or verbal response to the ridiculous and tragic invasion, but a business-impacting response. When Microsoft and others stop selling stuff in Russia, Airbnb pulls out, and other tech companies large and small make noise, it’s encouraging.

What do the actions add up to? We don’t know yet, but Russia is taking a similar tack, banning social services in the country that its citizens might have used to, you know, figure out what is actually going on. So we’re seeing a blackout of tech products and services from both internal and external sources in the country. Given how much of the world Russia touches, in both geographic and economic terms, we’re in experimental territory.

Perhaps the tech moves will prove footnote to the larger international sanctions push. But they do indicate to any other nation considering using its military power to crush smaller nations that the response to such action won’t only come from nation-states, perhaps adding a little weight against such belligerence.

Let’s hope we keep hearing news about how tech is decoupling from autocratic imperialism.

API startups

Oh boy. This week I wrote up some notes on GGV’s new API startup index. It’s a nascent project from the venture firm, but one that I liked. In short, GGV is building a database of sorts of private API startups that are doing cool stuff. Naturally, the VC wants to be in the center of the API conversation, so the effort is at once a research project and some form of content marketing.

But it did provide a good excuse to list out roughly 8,392 different API startups, or startups with strong API components to their model. And more keep coming in. One such startup is Highnote, which has built APIs to allow other companies to build card-issuance services into their products.

I wasn’t going to add more names to the mix of API startups that we already listed, because I still have carpal tunnel from finding all the links, but something about Highnote caught my eye. Its website argues that using its service is a faster way to get up and running with card issuance. Yes, you are saying, that is literally the point of an API-delivered service, the abstraction of complexity away from where a product, and not a problem, is needed.

Yes, but I just spent two days digging through the corporate venture world, and I see a parallel. Basically when Airbase raised capital from Amex Ventures and put together a deal to bring its software to Amex’s customers, part of the latter’s argument in favor of the deal was time to market. It could move more quickly with a partnership and investment than it could in building its own version of what Airbase had already cooked up.

Sound familiar? In some sense, then, API startups allow companies of all sorts to access and test products more quickly than ever before. This also means that they can sort the build-versus-buy argument more quickly and clearly than ever before. So API products are to smaller companies what corporate venture capital firms are to incumbents? Kinda!

A Friday thought, I know, but it was on my mind so I figured I’d share it.

Everyone is hosed

Closing out, the bad news. SaaS multiples have compressed back to the single digits for even middle-growth companies. For startups, this means that if they are targeting a double-digit revenue (ARR, etc.) multiple, they had best be growing faster than nearly all their peers. The public markets have taken back essentially all the gains afforded to software companies during COVID. We’re back to where we were before, or worse, from a valuations perspective.

For the startups that raised fat rounds at 100x ARR, good luck.

Alex