Welcome to the second issue of The Split! I'm settling back in from a long weekend on Mackinac Island celebrating a friends wedding. Cars aren't allowed, so everyone gets around on bike or horse & carriage. Its small enough that you can bike the 8.2 mile path surrounding the island in an hour. And large enough that with all the restaurants, water activities, and hiking trails we missed, we'll be making a second trip. Highly recommend adding Mackinac Island to your list.

Today, we'll dig into Carta's "State of Startup Compensation Report", look at the onshoring of US manufacturing, the chaos across US railroads, and a study confirming just how hard Instagram is pushing Reels over all other content formats.

Unpacking Carta's Startup Compensation Report

Carta's H1 2022 State of Startup Compensation report published a few weeks ago (includes 127k employee records from across Carta's platform) paints an interesting narrative on how startup hiring is evolving.

First, startups continued hiring more out-of-state than in-state across nearly all valuation bands. In H1 2022, 62% of new hires were in a different state than their employers primary HQ, compared to 55%, 43%, and 35% in 2021, 2020, and 2019, respectively. While this may indicate an increase in multi-state offices, the most likely interpretation is a continued increase in remote hiring. Notably, remote hires decreased at companies valued below $10 million - the only valuation band to do so.

Average compensation across the US continues converging with San Francisco. 84% of companies are now geo-adjusting compensation, with Miami giving significantly more adjustments beyond the BLS Cost of Living compared to SF (+22% more) than others like Phoenix (+1%), Philadelphia (+2%), and San Antonio (+2%).

Median startup salaries generally peak around a $500 million valuation. As a startup employee, the sweet spot in terms of salary + equity upside may be around the $50 to $500 million valuation range generally set between Series A and C. Just make sure your options are based on a realistic valuation, especially if set in 2021...

Involuntary departures (terminations) have increased in 2022, however layoffs made up less than 30% of all departures in 2022 through June. Comparatively, involuntary departures peaked at 60% during the height of COVID in 2020.

Our takeaways: Working in-person is preferred by startups searching for product market fit. Startups continue hiring remotely to find the best talent and compensation across the US is converging with SF. This also begs the question, how does SF-like compensation for a top % of the US or global workforce impact other cities?

Stories Worth Reading

US Manufacturing Picks Up Steam: The construction of new manufacturing facilities in the US is up 116% so far in 2022, compared to a 10% increase across all types of building projects (full story). This chart from The Daily Shot showing mentions of "re-, near-, and on-shoring" in public company earnings calls between 2006 and 2022 hints this may be a larger, structural trend that continues well-past current supply chain hiccups.

America’s railroads are in chaos: US railways are struggling to hire after years of slashing headcount. This comes amongst volume and congestion levels said to be even worse than 2021, the second largest traffic year in history. To make matters worse, amid port congestion, some shippers have started using rail containers for storage instead of their own warehouses.

Biden signed an executive order last week to prevent a planned labor strike across the industry, but members are still upset about hours, pay, and work conditions. Railroads generally move raw materials (oil, grain), but their cargoes make up the inputs across all sectors of the economy, and railroad traffic and cargo is closely linked to the ports. A strike could further strain an already stretched supply chain.

Snap Falls 39% on Poor Earnings: Following our coverage of Snapchat's paid-subscription product, Snap* announced Q2 earnings that caused the stock drop 39%. Digital advertising continues to be negatively impacted following Apple's ad tracking transparency (ATT) changes (Snap said revenue was roughly flat year-over-year as of last week), which have made it difficult for Snap and its advertisers to target its userbase. If we had to guess, we'd assume Snap leans further into its Snapchat+ subscription service going forward.

Instagram feed engagement down 44%: A study of 81 million Instagram posts found engagement on non-Reels posts were down 44% since 2019 (from 5.2% to 2.9%). Meanwhile, engagement on its TikTok-like full-screen Reels videos have increased 5x from 1.3% to 9.1% since late 2020. If not already anecdotally obvious to every user, Instagram continues heavily promoting its Reels feature in the app.

Product Launches

Millie Launches New Maternity Care Model: Built by a team of mom's, Millie* announces its first clinic will launch in Berkeley this upcoming Fall. Featuring a first visit within 48 hours of a positive pregnancy test, a collaborative OBGYN-midwifery model, insurance acceptance on day one, daily care team access, remote health monitoring and education, and in-home postpartum care and support through the first full year of parenthood, Millie is redesigning maternity care for 2022.

LA Tech Week is live! a16z recently announced LA Tech Week, seven days of events for founders and investors spanning August 15th-21st. Banana will be judging Demo Day on the 17th and speaking at the Time to Build event on the 19th.

Banana Phone

Last Thursday, we asked "In your opinion, what's the minimum runway a Seed stage startup should have in the bank right now?"

Somewhere between 12-24 months was the most popular at 36% of all responses.

Maybe we're old fashioned, but we assume Seed stage to be pre-Product Market Fit, and advise closer to 24 months of runway. This of course varies greatly depending on many factors, both internal and external.

Featured Jobs

Looking for your next job? Some to consider:

• Nexhealth* is hiring a Head of Engineering (Developer API and SaaS) (remote).

• Snackpass* is hiring Full Stack Engineers (SF, LA, NYC or remote).

• Secureframe* is hiring Sr. Digital Marketing Manager (remote).

• Secureframe* is also hiring a Senior Product Manager (remote).

Want your open role listed here? Reach out to learn more.

Additionally, interested in helping write The Split? Get in touch and lets discuss.

Monkey Business

There's a literal treehouse listed listed for $3.8 million in Prismo Beach, CA. The 6.7 acre property includes five buildings, two of which directly incorporate a tree in the building structure.

IYKYK

*Milllie, NexHealth, Secureframe, and Snackpass are Banana Capital portfolio companies. Turner personally owns SNAP stock.