Know your startup’s value so you can communicate it to investors

Blair Silverberg Contributor

Blair Silverberg is co-Founder and CEO of Capital, a financial services company using technology to accelerate the fundraising process. Prior to founding Capital, Blair was a principal investor at Draper Fisher Jurvetson where he sourced and managed venture investments during his four-year residency.

I’ve always told companies that investors have a much easier job than they do. To be good at their jobs, investors have to know how to do math and make decisions. As a business owner, you have to do both while also running your business.

The math piece can seem cumbersome, but it’s vital for understanding whether your company is creating or destroying value. A few simple metrics can demonstrate to investors the health and viability of your company, and they can show you which levers to pull that will best optimize your company for investor interest (and secure a higher price). But before you can ever hope to communicate your business’ value to an investor, you must understand it yourself.

The numbers are simple; it’s the calculations that are complex

Investment math itself is not complicated. In essence, it’s just about understanding whether your company is creating or destroying value by asking:

• Where is your company investing its financial resources? Most growing companies invest heavily in sales and marketing or research and development.
• What is the return on this investment?  For example, how much gross profit (revenue x gross margin percentage) does a given sales and marketing investment produce?
• How does that number compare to your cost of capital? If it’s higher, your company is creating value. If it’s lower, you’re destroying it.

Investors use this information to determine if their return would be higher than their expectation (e.g., 15% hurdle rate), should you continue down your current path of creating or destroying value. Then, they make their decision based on that calculation.

A caveat I’ll add here is that it’s not necessarily a deal-breaker if your company is declining in value. Oil rigs, after all, are considered investment assets, even though they are perpetually declining and will eventually run out (i.e., destroy all of their value). Although this article focuses on calculations that demonstrate value creation, all investment assets can be financed at the right price.

A deep dive into calculating value

One of the best metrics you can use to demonstrate value creation is your cohort-level return on investment. It’s a calculation most investors are familiar with, but it may not be as straightforward to companies who don’t see it as often. Again, while the metrics and concepts of investment math are simple, it’s the process of getting there that requires complex analysis.

Whether you are evaluating these metrics yourself or bringing in outside counsel to assist you, use the process below to show investors you are creating value.

Determine which information to analyze

The first step in calculating value is to understand which information from your income and cash flow statements to analyze as “investments.”

Start by dividing your capital allocation into three main buckets: short-term investments, long-term investments and expenses. In general, short-term investments will be the ones you want to focus on, but it’s helpful to walk through each.

• Short-term investments (pay back within 24 months)
  
  
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LA warns of ‘juice-jacking’ malware, but admits it has no cases

Los Angeles’ district attorney is warning travelers to avoid public USB charging points because “they may contain dangerous malware.”

Reading the advisory, you might be forgiven for thinking that every USB outlet you see is just waiting for you to plug in your phone so it can steal your data. This so-called “juice-jacking” attack involves criminals loading malware “on charging stations or cables they leave plugged in at the stations so they may infect the phones and other electronic devices of unsuspecting users,” it reads. “The malware may lock the device or export data and passwords directly to the scammer.”

But the county’s chief prosecutor’s office told TechCrunch said that it has “no cases” of juice-jacking on its books, though it said there are known cases on the east coast.When asked where those cases were, the spokesperson did not know. And when asked what prompted the alert to begin with, the spokesperson said it was part of “an ongoing fraud education campaign.”

Which begs the question — why?

Security researcher Kevin Beaumont tweeted that he hasn’t seen “any evidence of malware being used in the wild on these things.” In fact, ask around and you’ll find very little out there. Several security researchers have dropped me messages saying they’ve seen proof-of-concepts, but nothing actively malicious.

Juice-jacking is a real threat, but it’s an incredibly complicated and imperfect way to attack someone when there are far easier ways.

The idea, though — that you can plug in your phone and have your secrets stolen — is not entirely farfetched. Over the years there have been numerous efforts to demonstrate that it’s possible. As ZDNet points out in its coverage of the juice-jacking warning, the FBI sent out a nationwide alert about the threat after security researcher Samy Kamkar developed an Ardunio-based implant designed to look like a USB charger to wirelessly sniff the air for leaky key strokes. And just earlier this year, a security researcher developed an iPhone charger cable clone that let a nearby hacker run commands on the vulnerable computer.

LA recommend using an AC power outlet and not a charging station, and to take your cables with you. That’s sound advice, but it’s just one of many things you need to do to keep your devices and data safe.

This hacker’s iPhone charging cable can hijack your computer

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The new AirFly Pro is the perfect travel buddy for your AirPods Pro

Accessory maker TwelveSouth has a solid lineup of gadgets, many of which fill a niche that their products uniquely address – and address remarkably well. The AirFly Pro ($54.99) is a new iteration on one of those, providing a way to connect Bluetooth headphones to any audio source with a 3.5mm headphone jack. It’s being sold at Apple Stores, too, as part of its launch today – and there’s good reason for that: This is the ideal way to make sure you can use your AirPods Pro just about everywhere, including with airplane seatback entertainment systems.

The AirFly Pro will work with any Bluetooth headphones, not just AirPods Pro – but the latest noise cancelling earbuds from Apple are among the best available when it comes to both active noise cancellation and sound quality, both great assets for frequent travellers and people more likely to encounter an in-flight entertainment system. But the AirFly Pro has additional tricks up its sleeve that earn it the ‘Pro’ designation.

This is the first version of the product from TwelveSouth that offers the ability to stream audio in, as well as out. That means you can use it with a car stereo system that only access auxiliary audio-in, for instance, to stream directly from your iPhone to the vehicle’s sound system. The AirFly Pro can also serve that function for home stereo sound equipment, speakers or other audio equipment that accepts audio in, but not Bluetooth streaming connections.

One other neat trick the AirFly Pro packs: Audio sharing, so that you can connect two pairs of headphones at once. This is similar to the native audio sharing feature that Apple introduced for its own AirPod line in the most recent iOS update, but it works through the AirFly with any audio source, and any Bluetooth headphones. That’s yet another great feature for when you’re traveling with a partner.

I’ve had a bit of time to spend with the AirFly Pro, and so far it’s been rock solid, with easy pairing and set up, and a convenient keychain ring/3.5mm connector cap for making it easier to keep with you. It charges via USB-C, and there’s a USB-A to USB-C cable included, too. The on-board battery lasts for 16 or more hours, which is more than enough time for even the longest of flights, and again you’re getting that audio sharing feature which is super handy even around the house for just checking something out on the iPad on your couch.

Alongside the AirFly Pro, TwelveSouth also introduced new AirFly Duo and AirFly USB-C models. The difference is that neither of these offer that wireless audio input mode – but you get up to 4 more hours of battery life for the trade-off. The USB-C model also offers USB-C audio compatibility, for connecting to devices that use that connection for sound instead of 3.5mm, and both of these still also offer dual headphone connectivity, for $5 less at $49.99 each.

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The new AirFly Pro is the perfect travel buddy for your AirPods Pro

Accessory maker TwelveSouth has a solid lineup of gadgets, many of which fill a niche that their products uniquely address – and address remarkably well. The AirFly Pro ($54.99) is a new iteration on one of those, providing a way to connect Bluetooth headphones to any audio source with a 3.5mm headphone jack. It’s being sold at Apple Stores, too, as part of its launch today – and there’s good reason for that: This is the ideal way to make sure you can use your AirPods Pro just about everywhere, including with airplane seatback entertainment systems.

The AirFly Pro will work with any Bluetooth headphones, not just AirPods Pro – but the latest noise cancelling earbuds from Apple are among the best available when it comes to both active noise cancellation and sound quality, both great assets for frequent travellers and people more likely to encounter an in-flight entertainment system. But the AirFly Pro has additional tricks up its sleeve that earn it the ‘Pro’ designation.

This is the first version of the product from TwelveSouth that offers the ability to stream audio in, as well as out. That means you can use it with a car stereo system that only access auxiliary audio-in, for instance, to stream directly from your iPhone to the vehicle’s sound system. The AirFly Pro can also serve that function for home stereo sound equipment, speakers or other audio equipment that accepts audio in, but not Bluetooth streaming connections.

One other neat trick the AirFly Pro packs: Audio sharing, so that you can connect two pairs of headphones at once. This is similar to the native audio sharing feature that Apple introduced for its own AirPod line in the most recent iOS update, but it works through the AirFly with any audio source, and any Bluetooth headphones. That’s yet another great feature for when you’re traveling with a partner.

I’ve had a bit of time to spend with the AirFly Pro, and so far it’s been rock solid, with easy pairing and set up, and a convenient keychain ring/3.5mm connector cap for making it easier to keep with you. It charges via USB-C, and there’s a USB-A to USB-C cable included, too. The on-board battery lasts for 16 or more hours, which is more than enough time for even the longest of flights, and again you’re getting that audio sharing feature which is super handy even around the house for just checking something out on the iPad on your couch.

Alongside the AirFly Pro, TwelveSouth also introduced new AirFly Duo and AirFly USB-C models. The difference is that neither of these offer that wireless audio input mode – but you get up to 4 more hours of battery life for the trade-off. The USB-C model also offers USB-C audio compatibility, for connecting to devices that use that connection for sound instead of 3.5mm, and both of these still also offer dual headphone connectivity, for $5 less at $49.99 each.

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Apple Research app arrives on iPhone and Apple Watch with three opt-in health studies

Apple in September announced its plans for a research app that would allow U.S. consumers to participate in health studies from their Apple devices. Today, that app has gone live for both iPhone and Apple Watch for customers in the U.S. From the new app, Apple Research, users can currently opt to participate in three health studies, including a women’s health study, hearing study, and a heart and movement study.

Apple had teamed up with researchers and health organizations on previous studies, but those would require participants to install a dedicated app on their iOS device for each study alone. The new Research app instead offers a dedicated place for this opt-in activity and makes it simpler for people who want to join multiple studies at once.

The data collected from Apple devices (and their numerous sensors) offers researchers the ability to conduct large-scale health studies in a way that hasn’t been possible before. Before, these sorts of studies were expensive and time-consuming, Apple says, but now users can opt into sharing health-related information directly with researchers — like signals from their heart, motion level and activity, and sound exposure.

Apple’s privacy promises come into play here as well, as it puts data-sharing in users’ control, and offers commitments that data will be encrypted, won’t be sold, and that studies have to inform users how your data will support their research. Participants can also withdraw at any time.

Among the first three studies is a women’s health study in partnership with the Harvard T.H. Chan School of Public Health and National Institute of Environmental Health Sciences. It aims to advance understanding of women’s menstrual cycles and their relationship to infertility, osteoporosis, menopause, and polycystic ovary syndrome (PCOS). This will collect users’ cycle tracking logs from the Health app on the iPhone or the Cycle Tracking app on Apple Watch.

Another heart and movement study is in partnership with the American Heart Association and Brigham and Women’s Hospital, and will use Apple Watch data collected during workouts, plus heart rate and activity data, along with short surveys. This data will be used to understand how certain mobility signals and details about heart rate and rhythm could serve as potential early warning signs of atrial fibrillation (AFib), heart disease or declining mobility, among other things.

The hearing study from the University of Michigan and the World Health Organization collects data about users’ sound exposure from the iPhone and Noise app on Apple Watch, along with surveys and hearing tests. The study will also test if Health app notifications will encourage users to modify their listening behavior, when loud sounds are detected.

“Today marks an important moment as we embark on research initiatives that may offer incredible learnings in areas long sought after by the medical community,” said Jeff Williams, Apple’s chief operating officer, in a statement about the app’s launch. “Participants on the Research app have the opportunity to make a tremendous impact that could lead to new discoveries and help millions lead healthier lives.”

The Research app is rolling out now to iPhone and Apple Watch in the U.S.

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New NASA app puts you in the pilot’s seat of Boeing’s Starliner or SpaceX’s Crew Dragon

NASA has a new app (or web-based game, if you’re on desktop) that provides a simplified simulation of what it’s like to plan and run a commercial crew mission — meaning one of the planned varieties of mission that will actually take place aboard the SpaceX Crew Dragon and Boeing Starliner once they begin flying crews next year.

The app takes you through each part of the process, from spacecraft choice, to mission type, to crew selection, and then to the actual launch and docking process. It’s mostly about providing some education about each part of the process, rather than offering up an exhaustively realistic flight simulator — but the docking process with the International Space Station can be handled either on full automatic or on manual mode — and manual mode is fairly challenging and fun.

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NASA has included plenty of great info on both the Crew Dragon and the Starliner, and the respective rockets they will launch atop. It also included great bios for 10 actual astronauts you can select from to staff your mission. The launch assembly stage was a bit buggy when I gave it a try on my iPhone, but still workable, and it also provides key info about each element of the launch spacecraft, from boosters to crew capsules and everything in between.

The ‘Rocket Science: Ride 2 Station’ app is a free download, out now on iOS, and also available on the web.

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Daily Crunch: Meet Apple’s new MacBook Pro

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. MacBook Pro 16” first impressions: Return of the Mack

Over the past few years, Apple’s MacBook game had begun to suffer from complacency — as problems with the models started to mount (unreliable keyboards, low RAM ceilings and anemic graphics offerings), the once insurmountable advantage that the MacBook had compared to the rest of the notebook industry started to show signs of dwindling.

So the new 16” MacBook Pro is an attempt to rectify most, if not all, of the major complaints of its most loyal, and vocal, users.

2. Google to offer checking accounts in partnership with banks starting next year

Google is calling the project “Cache,” and it’ll partner with banks and credit unions to offer the checking accounts, with the banks handling all financial and compliance activities related to the accounts.

3. A US federal court finds suspicionless searches of phones at the border is illegal

A federal court has ruled that the government is not allowed to search travelers’ phones or other electronic devices at the U.S. border without first having reasonable suspicion of a crime. The case was brought by 11 travelers — 10 of whom are U.S. citizens — with support from the American Civil Liberties Union and the Electronic Frontier Foundation.

4. Convoy raises $400 million to expand its on-demand trucking platform

Convoy co-founders Dan Lewis and Grant Goodale set out in 2015 to modernize freight brokerage, a fragmented and oftentimes analog business that matches loads from shippers with truckers. The company has gone from hundreds of loads per week in 2016 to tens of thousands per week across the U.S.

5. The AI stack that’s changing retail personalization

To be forward-looking, brands and retailers are turning to startups in image recognition and machine learning to know, at a very deep level, what each consumer’s current context and personal preferences are and how they evolve. (Extra Crunch membership required.)

6. These sneakers vibrate

Invented by a man named Brock Seiler, and led by former Beats by Dre CEO Susan Paley, DropLabs aims to take audio to a whole new level by syncing music, movies and other audio to shoes that vibrate the soles of your feet.

7. Elon Musk picks Berlin for Tesla’s Europe Gigafactory

Musk said Tesla is also going to create an engineering and design center in Berlin because “I think Berlin has some of the best art in the world.”

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