Startups are ditching the garage and getting invited to the clubhouse

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This week: It's goodbye garage, hello clubhouse for young startups

The notion of two passionate tech founders toiling in a garage is a Silicon Valley cliché, but it speaks to the seat-of-the-pants nature of a startup's early years.

Or at least, it used to. As Megan Hernbroth reports, things are different for today's generation of young startups.

Deep-pocketed investors from all over the world are scouring Silicon Valley for the next big thing, and they're inviting even the youngest, most fresh-faced startups straight into the clubhouse.

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Series A financing rounds - traditionally the time when a startup with a promising idea takes the first baby steps toward becoming a real business - have become high-stakes affairs. Instead of raising a few million dollars, startups are being encouraged to fill their plates with tens of millions of dollars, sometimes even hundreds of millions of dollars.

What do you do with all that money? You staff up, bulk up, and expand. Maybe your business is ready, maybe it's not. The key is to move fast, grab market share, grab mind share, and let everything take care of itself.

At some point, the tide is going to pull out. And one question that hasn't gotten enough attention yet is the potentially magnified impact to the economy that we could feel when these startups-on-steroids begin to falter. Two founders in a garage who call it quits is unfortunate. A company that goes belly-up with dozens of staffers on its payroll, and dozens of vendors on its books, is a different story. Let's hope it doesn't become a familiar story.

Read the full story here:

Raising a series A round used to be a victory lap for startups. Thanks to Softbank, it's become one of the most competitive rounds with the highest stakes.

Greylock Partners

Greylock Partners general partner Sarah Guo.

Girding for battle with Salesforce

Ben Pimentel has an interesting look at ThoughtSpot, an AI analytics company that recently raised $248 million in funding. Unlike some of the younger, Series A startups discussed earlier that are raising big sums, ThoughtSpot is seven years old and its product is being used by big names like Walmart and Daimler.

The new funding, which values ThoughtSpot at $1.95 billion, will help the company position itself for a battle with Salesforce, which recently acquired ThoughtSpot rival Tableau.

"A massive company like Salesforce acquiring Tableau is interesting and it could be scary," ThoughtSpot CEO Sudheesh Nair told Business Insider. "But right now, it's not usually the big beating the small. It is the fast beating the slow."

ThoughtSpot

ThoughtSpot CEO Sudheesh Nair

Read the full story here:

Here's the pitch deck $1.95 billion ThoughtSpot used to raise $248 million for an AI-powered analytics tool that's challenging Salesforce's Tableau

Peloton's Churn Concern

It's been a more than week since we got our first look at the financials of Peloton, the buzzy fitness and exercise bike startup that publicly filed its paperwork for an IPO. One topic that's gotten a lot of attention among investors and techies is Peloton's "churn rate," the amount of customers who cancel its monthly internet fitness service.

Troy Wolverton dug into the churn subject. One takeaway: The churn rate that Peloton highlights in its S-1 is not as impressive as it seems.

Peloton

Read the full story here:

Peloton says only 0.65% of its subscribers cancel each month. Here's why customer-retention experts think that number 'doesn't pass the smell test.'

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