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Startups Weekly: Spotify gets acquisitive and Instacart screws up

Posted by on Feb 9, 2019 in alex wilhelm, anchor, Bessemer Venture Partners, consumer reports, CrunchBase, funding, Fundings & Exits, Fusion Fund, gimlet, gimlet media, Instacart, josh constine, lime, Mark Suster, Megan Rose Dickey, Mike McNamara, Reddit, Sanjay Jha, Spotify, Startups, steve huffman, TC, Uber, upfront ventures, Venture Capital, web summit, Y Combinator | 0 comments

Did anyone else listen to season one of StartUp, Alex Blumberg’s OG Gimlet podcast? I did, and I felt like a proud mom this week reading stories of the major, first-of-its-kind Spotify acquisition of his podcast production company, Gimlet. Spotify also bought Anchor, a podcast monetization platform, signaling a new era for the podcasting industry.

On top of that, Himalaya Media, a free podcast app I’d never heard of until this week, raised a whopping $100 million in venture capital funding to “establish itself as a new force in the podcast distribution space,” per Variety.

The podcasting business definitely took center stage, but Lime and Bird made headlines, as usual, a new unicorn emerged in the mental health space and Instacart, it turns out, has been screwing its independent contractors.

As mentioned, Spotify, or shall we say Spodify, gobbled up Gimlet and Anchor. More on that here and a full analysis of the deal here. Key takeaway: it’s the dawn of podcasting; expect a whole lot more venture investment and M&A activity in the next few years.

This week’s biggest “yikes” moment was when reports emerged that Instacart was offsetting its wages with tips from customers. An independent contractor has filed a class-action lawsuit against the food delivery business, claiming it “intentionally and maliciously misappropriated gratuities in order to pay plaintiff’s wages even though Instacart maintained that 100 percent of customer tips went directly to shoppers.” TechCrunch’s Megan Rose Dickey has the full story here, as well as Instacart CEO’s apology here.

Slack confidentially filed to go public this week, its first public step toward either an IPO or a direct listing. If it chooses the latter, like Spotify did in 2018, it won’t issue any new shares. Instead, it will sell existing shares held by insiders, employees and investors, a move that will allow it to bypass a roadshow and some of Wall Street’s exorbitant IPO fees. Postmates confidentially filed, too. The 8-year-old company has tapped JPMorgan Chase and Bank of America to lead its upcoming float.

Reddit CEO Steve Huffman delivers remarks on “Redesigning Reddit” during the third day of Web Summit in Altice Arena on November 08, 2017 in Lisbon, Portugal. (Horacio Villalobos-Corbis/Contributor)

It was particularly tough to decide which deal was the most notable this week… But the winner is Reddit, the online platform for chit-chatting about niche topics — r/ProgMetal if you’re Crunchbase editor Alex Wilhelm . The company is raising up to $300 million at a $3 billion valuation, according to TechCrunch’s Josh Constine. Reddit has been around since 2005 and has raised a total of $250 million in equity funding. The forthcoming Series D round is said to be led by Chinese tech giant Tencent at a $2.7 billion pre-money valuation.

Runner up for deal of the week is Calm, the app that helps users reduce anxiety, sleep better and feel happier. The startup brought in an $88 million Series B at a $1 billion valuation. With 40 million downloads worldwide and more than one million paying subscribers, the company says it quadrupled revenue in 2018 from $20 million to $80 million and is now profitable — not a word you hear every day in Silicon Valley.

Here’s your weekly reminder to send me tips, suggestions and more to kate.clark@techcrunch.com or @KateClarkTweets

I listened to the Bird CEO’s chat with Upfront Ventures’ Mark Suster last week and wrote down some key takeaways, including the challenges of seasonality and safety in the scooter business. I also wrote about an investigation by Consumer Reports that found electric scooters to be the cause of more than 1,500 accidents in the U.S. I’m also required to mention that e-scooter unicorn Lime finally closed its highly anticipated round at a $2.4 billion valuation. The news came just a few days after the company beefed up its executive team with a CTO and CMO hire.

Databricks raises $250M at a $2.75B valuation for its analytics platform
Retail technology platform Relex raises $200M from TCV
Raisin raises $114M for its pan-European marketplace for savings and investment products
Self-driving truck startup Ike raises $52M
Signal Sciences secures $35M to protect web apps
Ritual raises $25M for its subscription-based women’s daily vitamin
Little Spoon gets $7M for its organic baby food delivery service
By Humankind picks up $4M to rid your morning routine of single-use plastic

We don’t spend a ton of time talking about the growing, venture-funded, tech-enabled logistics sector, but one startup in the space garnered significant attention this week. Turvo poached three key Uber Freight employees, including two of the unit’s co-founders. What’s that mean for Uber Freight? Well, probably not a ton… Based on my conversation with Turvo’s newest employees, Uber Freight is a rocket ship waiting to take off.

Who knew that investing in female-focused brands could turn a profit for investors? Just kidding, I knew that and this week I have even more proof! This is L., a direct-to-consumer, subscription-based retailer of pads, tampons and condoms made with organic materials sold to P&G for $100 million. The company, founded by Talia Frenkel, launched out of Y Combinator in August 2015. According to PitchBook, it was backed by Halogen Ventures, 500 Startups, Fusion Fund and a few others.

Speaking of ladies getting stuff done, Bessemer Venture Partners promoted Talia Goldberg to partner this week, making the 28-year-old one of the youngest investing partners at the Silicon Valley venture fund. Plus, Palo Alto’s Eclipse Ventures, hot off the heels of a $500 million fundraise, added two general partners: former Flex CEO Mike McNamara and former Global Foundries CEO Sanjay Jha.

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase editor-in-chief Alex Wilhelm and I chat about the expanding podcast industry, Reddit’s big round and scooter accidents.

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Source: The Tech Crunch

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Bird CEO on scooter startup copycats, unit economics, safety and seasonality

Posted by on Feb 3, 2019 in bird, Mark Suster, Startups, Transportation, Travis VanderZanden, Venture Capital | 0 comments

Bird’s electric scooters were on full display at the Upfront Summit in Malibu last week, a two-day event that brings together the likes of Hollywood, Silicon Valley and Washington, DC’s elite. 

Not only were a dozen or so brand spanking new scooters available to ride throughout the event but Upfront general partner Mark Suster, an investor in the startup, was seen riding a Bird on stage to the tune of Chamillionaire’s ‘Ridin’ Dirty.’ Plus, Bird founder and chief executive officer Travis VanderZanden was on site to mingle with attendees before closing the summit with a fireside chat with Suster himself.

The pair hit on a number of topics, including the unit economics, safety and seasonality of the scooter business. Neither confirmed Bird’s latest raise; the startup is said to be in the process of securing another $300 million at a $2.3 billion valuation, according to PitchBook. In a 12-month period, the company brought in more than $250 million at a roughly $1 billion valuation.

On unit economics: When Bird bursted onto the scene in 2017, VanderZanden knew he had to move quickly to beat copycats, he explained. Operating under Reid Hoffman’s ‘Blitzscaling’ philosophy, he dispersed hundreds of Alibaba-imported electric scooters that were, well, pretty shitty.

“Those things were fragile,” VanderZanden told Suster. “Clearly the unit economics didn’t work on those scooters but that was a test anyway … Once we knew people liked riding them, we quickly scrambled and started creating our own scooters. Bird Zero is the first iteration of that. What we see on the unit economics of those, it’s like night and day.”

The company unveiled Bird Zero, in October, equipped with a digital screen to display riders’ speed, a tougher exterior and improved battery life.

“2018 was about scaling,” he said. “2019 is about really focusing on the unit economics of the business.”

On seasonality: Some have critiqued Bird for poor unit economics, while others have pointed out that the success of the business is heavily dependent on…weather. No one wants to ride a Bird in the snow, slashing its revenue potential in the cold months. VanderZanden said he’s not concerned with seasonality and revealed Bird operates on a $100 million revenue run rate even in the winter. He did not, however, clarify if that run rate is based on fourth quarter 2018 projections — when Bird introduced Bird Zero — or 2018 annual revenue.

“Obviously, there is seasonality in the scooters business, there’s no doubt about that,” he said. “Yes, it’s slower in December but this market is so big, even in our slow [weeks] most companies would love to have that in their worst [month] … We used to say when we’re heading into the holiday season that the Birds would migrate south but it turns out the logistics are really expensive, so the Birds hibernate. That’s a lesson we learned.”

On safety: In the year or so that scooters hit the mainstream in the U.S., there were casualties. Moreover, many — kids included — realized just how easy it is to get away with scootering sans helmet, while others rode throughout the night. Bird, to keep children off scooters, at least, requires customers to provide a driver’s license when they sign up. Given the number of issues that have arisen as scooters become increasingly popular, improved safety measures are bound to be in the news in the year ahead.

“Safety has to be prioritized over growth,” VanderZanden said. 

On electric bikes: Bird is one of few scooter businesses that doesn’t offer bikes. With all the capital its raised, will Bird make the leap? VanderZanden seemed lukewarm toward the prospect.

“Yeah, we think about it,” he said. “We [aren’t] religious [about] scooters per se, we just think it’s the thing people like the most so that’s where we started and we think that’s the best thing to do now. We get excited about micromobility generally… We are open and looking at all sorts of different short-range electric vehicles in the future.”

On Bird Platform: Last year, Bird began selling its electric scooters to entrepreneurs and small business owners, who can then rent them out as part of a service called Bird Platform. VanderZanden said the service has opened Bird up to tons of new markets.

“From early on at Bird, we had people asking ‘hey, how do we take Bird to my city,’” he said. “We thought why don’t we empower the local entrepreneurs to take Bird to their market… Now we have people from 77 countries from around the world that are interested in taking Bird to their market, which is exciting because there is no way we as a company could get there in the short-term. This is a way to bring Bird to the world.”

On growth: Given the number of stories on Bird and its competitors in the tech press, it’s easy to forget that most of the startups in the space have launched in the last year or so. VanderZanden took a moment to remind the venture capitalists in the audience that in that time, Bird has expanded to 100 cities. Impressive, yes, but let’s remember the manner in which Bird introduced scooter fleets to new markets. The company showed up unannounced in Santa Monica, for example, a decision that resulted in a lawsuit in the startup’s own hometown.

“It’s pretty incredible that 100 cities have opened their arms and embraced electric scooters,” VanderZanden said.

On Bird’s future: VanderZanden explained that despite a long-held interest in transportation — his mother was a public school bus driver for 30 years — he’s only recently come to understand the industry’s most urgent needs. He plans to put more energy in transportation infrastructure in 2019 as a result.

“The deeper I get into transportation, the more I realize we don’t need autonomous vehicles, we need tunnels, all we need are more bike lanes,” he said.

 


Source: The Tech Crunch

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