A not-so-public relationship

Editor’s note: The Hustle is celebrating 1,000,000 subscribers! To say thank you, each day this week, our founders will share what they’ve learned along the way. Check it out at the bottom of the email.

With 1/2 as many public companies as 20 years ago, normal investors are squeezed out

According to research from The Atlantic, there are half as many public companies listed on US stock exchanges today as there were in 1997.

In other words, despite a few widely publicized IPOs, most companies rely on private investment to grow -- creating a system where VCs can profit from the startup economy, but average investors cannot.

Where’d everyone IP-go?

The first reason companies choose not to IPO is simple: It ain’t cheap. IPOs cost an average of $4.2m in fees (plus 5% of fundraising proceeds) -- and a recurring $1.5m in annual fees after that.

But, more importantly, there are other readily available ways to raise money: Private investment assets rose from $1T in 2000 to more than $5T last year.

So, when a hot new scooter startup needs a quick $300m, all it needs to do is ask a VC like Sequoia.

The ‘acquisition economy’ is good for VCs, bad for Average Janes

Fledgling companies used to set their sights on IPOs. Today, 90% of VC-backed companies seek acquisition.

Institutional investors can privately invest in startups and make huge profits when they’re acquired, but normal investors are often barred from private markets.

When startups do make it to an IPO, they’ve often been squeezed dry of profits by VC firms, leaving small returns for normal investors.

The big old geezers are open for business

There may not be as many public companies, but now they’re huge: Today’s public companies add up to about the same percentage of US GDP as they did 20 years ago even though there are 1/2 as many.

But since public companies now need to be huge, a startup’s lucrative days of massive growth are often long gone by the time it IPOs.

Airbnb’s user growth slowed from 44.4% in 2016 to 13.2% today and is expected to drop to 7.2% by 2019, when it plans to IPO.

Companies are focusing on diversity with Textio, a new inclusive job-description startup

CNBC reports that Cisco re-upped its 2-year contract with Textio, whose technology helps people write job ads for a more diverse crowd (AKA, not just white guys).

According to Cisco’s latest diversity report, the technology conglomerate now gets 10% more female job candidates, with 24% of Cisco’s worldwide employees now female, and 47% of its US employees identifying as non-Caucasian.

What a friggin’ market

Textio Hire uses AI to grade job posts IRL, tracking words that could lead to positive and negative outcomes.

It makes sense: Tech companies have scrambled to improve since the big dawgs released stats on diversity (or lack thereof) in 2014 -- and it turns out language plays a huge role in how applicants view job descriptions.

From 2012 to 2016 the word “ninja” increased nearly 400% in descriptions. Subsequently, ninja made a list of words in a 2011 report by social scientists that made jobs sound less appealing to women -- along with a host of others.

Cisco isn’t the only company looking to automate wokeness

Before software company Atlassian partnered with Textio 3 years ago, women filled just 10% of Atlassian’s technical roles. This year, that number shot to 22.9%. Dropbox, eBay, IBM, Intel, and Twitter all also use Textio.

Buoyed by its growing client list, Seattle-based Textio has grown to more than 100 employees, raised nearly $30m in funding, and appeared on CNBC’s 2018 Upstart List.

Well, well, well: Google dropped its bid for the $10B Pentagon cloud project

Google has dropped out of the running for the Pentagon’s $10B cloud-computing contract, echoing what its employees have been saying since the jump: that the project doesn’t jibe with its “corporate values.”

In a statement, Google said they “couldn’t be assured that [the deal] would align with [their] AI Principles.”

Ya think, Google?

Google’s announcement comes just months after the company decided not to re-up its contract with a Pentagon AI program, when protests broke out from employees who didn’t think Google should be in “the business of war.”

Now, for the cloud-computing project, Google says it believes that a “multi-cloud approach” is in the best interest of all government agencies because it “allows them to choose the right cloud for the right workload.”

Only Google could turn down a $10B job

The project, known as the Joint Enterprise Defense Infrastructure cloud, (or JEDI), involves transitioning massive amounts of Defense Department data to a commercially operated cloud system.

The contract (which could last up to 10 years) gained widespread interest from tech giants consistently dwarfed by Amazon in the budding federal government market for cloud services back in May.

I’m Bock, baby: Laszlo takes his $40m-funded HR startup out of stealth

After nearly 2 years of behind-the-scenes development (and $40m in funding), Google’s former head of HR Laszlo Bock has finally taken his startup Humu out of stealth.

According to its website, Humu “drives behavioral change with the power of people science, machine learning -- and love.” The company is one of several hot new “people science” startups offering tools to improve employee behavior.

Getting a ‘Nudge’ from love… and machine learning

Humu claims its proprietary “Nudge Engine” “increase[s] action in organizations by as much as 250%.”

The Nudge Engine is based on the Nobel Prize-winning “nudge theory,” a concept in behavioral economics that argues a near-constant stream of subtle suggestions will encourage people to make better decisions.

Humu’s technology uses machine learning to deliver tiny suggestions designed to improve the workplace -- such as reminders to thank a colleague or to hold the door open.

HR management tools are so hot right now

HR startups including Chorus, Textio, and Torch all use employee data to streamline people operations.

But since many employees are still more partial to people than chatbots, these startups are developing these high-tech human resources as more, well, human. According to Bock, his team at Humu provides the one thing machines can’t: love.

[Disclosure: Torch has advertised with the Hustle in the past.]

Sheets worth remembering

When Parachute founder Ariel Kaye studied abroad in Italy, one thing about her home in the States really stuck out to her -- our sheets suck.

Think about it: What’s the last brand-name bedding you remember buying?

You can probably name the brands behind your clothes, electronics -- even soaps -- but when it comes to the thing you sleep on every day, the best you probably got is “IDK, whatever was on sale at Target.”

That’s why Parachute sweats the details

What Ariel learned is: You get what you give.

Give people hand-woven cotton from generations-old artisan weavers, and you’ll get a loyal customer base that actually remembers your name.

Just like the European sheets Ariel fell in love with, Parachute makes their linens in a family-owned mill in Portugal that’s been in the bedding game for over 80 years -- and they do it without using synthetics or harmful chemicals.

Want to know what it’s like to fall in love with your sheets? Try Parachute. And if you don't like it? Get your money back, guaranteed.

"The deals are always greener on the otherside of the hyperlink."

- Lana Moewer from Tulsa, OK

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Things we’ve learned along the way

To celebrate The Hustle hitting 1,000,000 subscribers, each day this week our founders Sam Parr and John Havel will share a few things they’ve learned along the way. Read the full list with previous days’ lessons here.

The grind never goes away

I remember when we had three employees and I thought to myself “if we had a team of ten, life would be easier.” After that, it was “man, if we can get hit our first $100k revenue month, I’ll be less stressed.”

Running a business is hard at every point. As we’ve grown, the stress has never gone away. In fact, it’s only increased.

There’s never an “I made it” feeling. If you’re growing consistently, that only means you’re consistently faced with new situations to navigate and problems to solve.

-- Sam

You can’t do everything at once

As a new startup, focus on one thing and one thing only. When we started The Hustle, we focused on email because it created a direct relationship with our readers and didn’t require a massive editorial team to pump out pageview-driven content.

Along the way, people tried to get us to create a Snapchat channel, a video team, an app, and a ton of other stuff because other companies were doing it. None of them were bad ideas, but we said no to almost all of them to lay a strong foundation for our business.

Time is your most limited resource. Prioritize what matters and put all the other distractions on the shelf until you have enough time, people, or money to do it right.

-- John