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EC-exclusive interview with Tim Cook, Slacklash, and tech inclusion

Posted by on May 11, 2019 in Amazon Web Services, app developers, Chanda Prescod-Weinstein, Deezer, Geoff Cook, Google, Groupon, IBM, Kate Clark, kidbox, Matthew Panzarino, Microsoft, om malik, San Francisco, The Extra Crunch Daily, Tim Cook, Travis Kalanick, True Ventures, Uber, WeWork | 0 comments

An EC-exclusive interview with Apple CEO Tim Cook

TechCrunch editor-in-chief Matthew Panzarino traveled to Florida this week to talk with Tim Cook about Apple’s developer education initiatives and also meet with high school developer Liam Rosenfeld of Lyman High School. Apple wants to attract the next set of app developers like Liam into the Xcode world, and the company is building a more ambitious strategy to do so going forward:

But that conversation with Liam does bring up some questions, and I ask Cook whether the thinks that there are more viable pathways to coding, especially for people with non-standard education or backgrounds.

“I don’t think a four year degree is necessary to be proficient at coding,” says Cook. “I think that’s an old, traditional view. What we found out is that if we can get coding in in the early grades and have a progression of difficulty over the tenure of somebody’s high school years, by the time you graduate kids like Liam, as an example of this, they’re already writing apps that could be put on the App Store.”

Against the Slacklash

TechCrunch columnist Jon Evans often writes on developer tools and productivity (see, for example, his Extra Crunch overview of the headless CMS space). Now, he sets his sights on Slack, and finds the product … much better and more productive than many would have you believe, and offers tips for maximizing its value:


Source: The Tech Crunch

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Unicorns aren’t profitable, and Wall Street doesn’t care

Posted by on Mar 26, 2019 in Amazon, Exit, Facebook, Fundings & Exits, Groupon, jeff bezos, Lyft, Pinterest, Snap, snap inc, Startups, TC, Uber, unicorns, Venture Capital, WeWork, Zimride | 0 comments

In Silicon Valley, investors don’t expect their portfolio companies to be profitable. “Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies,” a bible for founders, instead calls for heavy spending on growth to scale in an Amazon -like fashion.

As for Wall Street, it’s shown an affinity for stock in Jeff Bezos’ business, despite the many years it spent navigating a path to profitability, as well as other money-losing endeavors. Why? Because it too is far less concerned with profitability than market opportunity.

Lyft, a ride-hailing company expected to go public this week, is not profitable. It posted losses of $911 million in 2018, a statistic that will make it the biggest loser amongst U.S. startups to have gone public, according to data collected by The Wall Street Journal. On the other hand, Lyft’s $2.2 billion in 2018 revenue places it atop the list of largest annual revenues for a pre-IPO business, trailing behind only Facebook and Google in that category.

Wall Street, in short, is betting on Lyft’s revenue growth, assuming it will narrow its loses and reach profitability… eventually.

Wall Street’s hungry for unicorns

Lyft, losses notwithstanding, is growing rapidly and Wall Street is paying attention. On the second day of its road show, reports emerged that its IPO was already oversubscribed. As a result, Lyft is said to have upped the cost of its stock, with new plans to raise more than $2 billion at a valuation upwards of $25 billion. That represents a revenue multiple of more than 11x, a step up multiple of more than 1.6x from its most recent private valuation of $15.1 billion and, of course, Wall Street’s insatiable desire for unicorns, profitable or not.

New data from PitchBook exploring the performance of billion-dollar-plus VC exits confirms Wall Street’s leniency toward unprofitable tech companies. Sixty-four percent of the 100+ companies valued at more than $1 billion to complete a VC-backed IPO since 2010 were unprofitable, and in 2018, money-losing startups actually fared better on the stock exchange than money-earning businesses. Moreover, U.S. tech companies that had raised more than $20 million traded up nearly 25 percent of 2018, while the S&P 500 technology sector posted flat returns.

Wall Street is still adapting to the rapid growth of the tech industry; public markets investors, therefore, are willing to deal with negative to minimal cash flows for, well, a very long time.

A tolerance for outsized exits

There’s no doubt Lyft and its much larger competitor, Uber, will go public at monstrous valuations. The two IPOs, set to create a whole bunch of millionaires and return a number of venture capital funds, will provide Silicon Valley a lesson in Wall Street’s tolerance for outsized exits.

Much like a seed-stage investor must bet on a founder’s vision, Wall Street, given a choice of several unprofitable businesses, has to bet on potential market value. Fortunately, this strategy can work quite well. Take Floodgate, for example. The seed fund invested a small amount of capital in Lyft when it was still a quirky idea for ridesharing called Zimride. Now, it boasts shares worth more than $100 million. I’m sure early shareholders in Amazon — which went public as a money-losing company in 1997 — are pretty happy, too.

Ultimately, Wall Street’s appetite for unicorns like Lyft is a result of the shortage of VC-backed IPOs. In 2006, it was the norm for a company to make its stock market debut at 7.9 years old, per PitchBook. In 2018, companies waited until the ripe age of 10.9 years, causing a significant slowdown in big liquidity events and stock sales.

Fund sizes, however, have grown larger and the proliferation of unicorns continues at unforeseen rates. That may mean, eventually, an influx of publicly shared unicorn stock. If that’s the case, might Wall Street start asking more of these startups? At the very least, public market investors, please don’t be swayed by WeWork‘s eventual stock offering and its “community adjusted EBITDA.” Silicon Valley’s pixie dust can’t be that potent.


Source: The Tech Crunch

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The next frontier in real estate technology

Posted by on Mar 14, 2019 in affordable housing, Airbnb, Column, homeshare, loopnet, property, Real Estate, Trinity Ventures, Trulia, WeWork, Zillow | 0 comments

From entertainment to transportation, technology has upended nearly every major industry — with one notable exception: real estate. Instead of disrupting the sector, the last generation of real estate technology companies primarily improved efficiencies of existing processes. Industry leaders Zillow/Trulia and LoopNet* helped us search for homes and commercial real estate better and faster, but they didn’t significantly change what we buy or lease or from whom or how.

The next generation of real estate technology companies is taking a more expansive approach, dismantling existing systems and reimagining entirely new ones that address our growing demand for affordability, community and flexibility.

The increasing need for affordability

Home ownership has long been integral to the American dream, but for many young Americans today it’s an unattainable dream. A third of millennials live at home, and as a cohort, they spend a greater share of their income on rent than previous generations did — about 45 percent during their first decade of work. This leaves little money left over for savings, much less for home ownership, the largest financial expenditure of most people’s lifetimes.

The increasing need for affordable housing is driving some creative tech-enabled solutions. One segment of startups is focused on making existing homes more affordable, especially in high-cost markets like New York and the Bay Area. Divvy helps consumers, many of them with low credit scores, rent-to-own homes, which are assessed for viability by a combination of contractors and machine learningLandedfunded by the Chan Zuckerberg Initiative, helps educators afford homes in the communities in which they teach. Homeshare divides luxury apartments into multiple more-affordable units, and Bungalow takes a similar approach with houses. Both companies have built technology platforms to manage their tenant listings and to allocate tenant expenses and streamline payments.

Consumers aren’t just craving affordability, they’re also seeking company.

Another segment of startups is aiming to reduce the costs of building new homes, such as with modular, prefab housing to reduce construction costs. Katerra, which just raised $865 million, is aiming to create a seamless, one-stop shop for commercial and residential development, managing the entire building process from design and sourcing through the completion of construction. Taking a “full stack” approach to every step of the building process should enable them to find efficiencies and reduce costs.

If the economy weakens, the need for more affordable housing will only grow, making these startups not only recession-proof but even recession-strong. Collectively, they’re helping Americans right-size their dreams to something more broadly attainable.

In search of community

Consumers aren’t just craving affordability, they’re also seeking company. More than half of Americans feel lonely, and the youngest cohort in their late teens and early-to-mid-twenties are the loneliest of the bunch (followed closely by millennials). Millennials are the first generation to enter the workforce in the era of smartphones and laptops. While 24/7 connectivity enables us to work anywhere, anytime, it also creates expectations of working anywhere, anytime — and so many people do, bleeding the lines between work life and personal life. Longer work hours make community harder to build organically, so many millennials place value on employers and landlords who facilitate it for them.

Airbnb and WeWork were early to capitalize on the demand for community, with one changing how we travel and the other redefining the modern office space. Co-working companies like WeWork, as well more targeted providers like The Assembly*, The Wing and The Riveter, offer speaker series, classes and other free member events aimed at building connections. Airbnb, once focused only on lodging, has broadened its platform to include community-building shared experiences.

Shared living and hospitality startups are also investing in community to attract and retain customers. StarCity provides dorms for adults, Common and HubHaus rent homes intended to be shared by roommates and Ollie offers luxury micro apartments in a co-living environment. These companies are leveraging technology to foster in-person connections. For example, Common uses Slack channels to communicate with and connect members, and HubHaus uses roommate matching algorithms.

Within the hospitality sector, Selina offers a blended travel lodge, wellness and co-working platform geared toward creating community for travelers and remote workers, complete with high-tech beachside and jungle-side office spaces. Meanwhile, experience-driven lifestyle hotel company Life House* connects guests through onsite locally rooted food and beverage destinations and direct app-based social introductions to other travelers.

Modern life requires flexibility

Life can be unpredictable, especially for young people who tend to change jobs frequently. Short job tenures are especially common within the growing gig economy workforce. People who don’t know how long their jobs will last don’t want to be burdened with long-term lease commitments or furniture that’s nearly as expensive to move as it is to buy.

The next frontier in real estate technology is as boundless as it is exciting.

Companies like FeatherFernish and CasaOne rent furniture to people seeking flexibility in their living environments. Among consumers ready to buy their homes but looking for some extra help, Knock, created by Trulia founding team members and which recently raised a $400 million Series B, provides an end-to-end platform to enable home buyers to buy a new home before selling their old one. Also emphasizing flexibility, OpenDoorvalued at more than $2 billion, pioneered “instant offers” for homeowners looking to sell their homes quickly, leveraging algorithms to determine how much specific houses are worth.

It’s not just residents who seek flexible leases; many companies do as well, particularly those accommodating distributed employees or experiencing periods of uncertainty or rapid growth. To enable flexibility, several commercial real estate technology companies have developed platforms that balance pricing, capacity and demand.

Knotel, a “headquarters as a service” for companies with 100-300 employees, builds out and manages office spaces at lower risk and with more flexibility than is typically possible through commercial real estate leases, enabling tenants to quickly add or shrink office space as needed. WeWork allows members to pay only for the time periods when they come in to work. Taking flexibility to an even greater level, Breather lets workers rent rooms by the hour, day or month.

The next frontier in real estate technology is as boundless as it is exciting. A whole new generation of startups is designing innovative solutions from the ground up to address our growing demands for affordability, community and flexibility. In the process, they’re fundamentally reimagining how we live, work and play by transforming the modern workplace, leisure space and even our definition of home. We look forward to seeing — and experiencing — what lies ahead.

*Trinity Ventures portfolio company.


Source: The Tech Crunch

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WeWork Labs is launching a food tech accelerator

Posted by on Mar 14, 2019 in coworking, roee adler, Startup Accelerator, Startups, WeWork, wework labs | 0 comments

WeWork Labs, the coworking giant’s startup program that relaunched just over a year ago, is announcing a new initiative focused on food and agriculture startups — WeWork Food Labs.

Roee Adler, the global head of WeWork Labs, told me that there will be two main pieces to the Food Labs program.

First, there will be the space itself, at 511 W 25th in New York City, which Adler described as “a very inclusive workspace” for members who may be in “the very early stages” of pursuing a food-related startup idea, and who would benefit from introductions to commercial packaged goods brands, access to commercial kitchens and access to farmland — the kinds of things that Adler said WeWork can provide.

Second, there will be a startup accelerator. While we’ve compared WeWork Labs to an accelerator in the past, WeWork Food Labs is closer to a traditional accelerator, signing up a limited group of entrepreneurs up for a half-year program, and making an equity investment in their companies.

Adler said he’ll be revealing more details about Food Labs’ investments down the road, but initially, WeWork is committing $1 million to back the first batch of companies.

When asked whether this could provide a template for WeWork to launch other industry-focused programs, Adler said, “It is likely that there will be more verticalized Labs programs over time.”

But he added, “I do have to say, food carries a disproportionate amount of weight and attention. We think it is one of the most exciting areas in the world right now, because this isn’t merely about encouraging businesses — this is about the future of the world, no less than what our children will eat.”

While Adler portrayed the program as one driven by a clear mission, he also said he doesn’t want to get too narrow or prescriptive with startups.

“The initial approach we’re starting with is to go wide and inclusive and really allow people to think through the problem across its very intricate hierarchies,” he said. “We expect to have startups producing innovative products that you can eat, but we are also looking at startups that we expect to produce software that farmers can use or corporations can use.”

To help guide the program, WeWork has also created  an advisory board that includes by CHLOE. founder Samantha Wasser and acclaimed food scholar Marion Nestle.

Adler said the plan is to open a temporary Food Labs office on May 1, then move into the permanent “flagship” space on October 1. Applications for the accelerator are open now.


Source: The Tech Crunch

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Tiger Global and Ant Financial lead $500M investment in China’s shared housing startup Danke

Posted by on Mar 1, 2019 in affordable housing, alibaba, Ant Financial, apartment, Asia, Baidu, Beijing, business intelligence, China, danke apartment, jack ma, LinkedIn, major, property, Real Estate, renting, Tiger Global Management, WeWork, Xi Jinping | 0 comments

A Chinese startup that’s taking a dorm-like approach to urban housing just raised $500 million as its valuation jumped over $2 billion. Danke Apartment, whose name means “eggshell” in Chinese, closed the Series C round led by returning investor Tiger Global Management and newcomer Ant Financial, Alibaba’s e-payment and financial affiliate controlled by Jack Ma.

Four years ago, Beijing-based Danke set out with a mission to provide more affordable housing for young Chinese working in large urban centers. It applies the coworking concept to housing by renting apartments that come renovated and fully furnished, a model not unlike that of WeWork’s WeLive. The idea is by slicing up a flat designed for a family of three to four — the more common type of urban housing in China — into smaller units, young professionals can afford to live in nicer neighborhoods as Danke takes care of hassles like housekeeping and maintenance. To date, the startup has set foot in ten major Chinese cities.

With the new funds, Danke plans to upgrade its data processing system that deals with rental transactions. Housing prices are set by AI-driven algorithms that take into account market forces such as locations rather than rely on the hunches of a real estate agent. The more data it gleans, the smarter the system becomes. That layout is the engine of the startup, which believes an internet platform play is a win-win for both homeowners and tenants because it provides greater transparency and efficiency while allowing the company to scale faster.

“We are focused on business intelligence from day one,” Danke’s angel investor and chairman Derek Shen told TechCrunch in an interview. Shen was the former president of LinkedIn China and was instrumental in helping the professional networking site enter the country. “By doing so we are eliminating the need to set up offline retail outlets and are able to speed up the decision-making process. What landlords normally care is who will be the first to rent out their property. The model is also copiable because it requires less manpower.”

“We’ve proven that the rental housing business can be decentralized and done online,” added Shen.

danke apartment

Photo: Danke Apartment via Weibo

Danke doesn’t just want to digitize the market it’s after. Half of the company’s core members have hailed from Nuomi, the local services startup that Shen founded and was sold to Baidu for $3.2 billion back in 2015. Having worked for a business of which mission was to let users explore and hire offline services from their connected devices, these executives developed a propensity to digitize all business aspects including Danke’s day-to-day operations, a scheme that will also take up some of the new funds. This will allow Danke to “boost operational efficiency and cut costs” as it “actively works with the government to stabilize rental prices in the housing market,” the company says.

The rest of the proceeds will go towards improving the quality of Danke’s apartment amenities and tenant experiences, a segment that Shen believes will see great revenue potential down the road, akin to how WeWork touts software services to enterprises. The money will also enable Danke, which currently zeroes in on office workers and recent college graduates, to explore the emerging housing market for blue-collar workers.

Other investors from the round include new backer Primavera Capital and existing investors CMC Capital, Gaorong Capital and Joy Capital.

China’s rental housing market has boomed in recent years as Beijing pledges to promote affordable apartments in a country where few have the money to buy property. As President Xi Jinping often stresses, “houses are for living in, not for speculation.” As such, investors and entrepreneurs have been piling into the rental flat market, but that fervor has also created unexpected risks.

One much-criticized byproduct is the development of so-called “rental loans.” It goes like this: Housing operators would obtain loans in tenants’ names from banks or other lending institutions allegedly by obscuring relevant details from contracts. So when a tenant signs an agreement that they think binds them to rents, they have in fact agreed to take on loans and their “rent” payments become monthly loan repayments.

Housing operators are keen to embrace such practices for the loans provide working capital for renovation and their pipeline of properties. On the other hand, the capital allows companies like Danke to lower deposits for cash-strapped young tenants. “There’s nothing wrong with the financial instrument itself,” suggested Shen. “The real issue is when the housing operator struggles to repay, so the key is to make sure the business is well-functioning.”

Danke alongside competitors Ziroom and 5I5J has drawn fire for not fully informing tenants when signing contracts. Shen said his company is actively working to increase transparency. “We will make it clear to customers that what they are signing are loans. As long as we give them enough notice, there should be little risk involved.”


Source: The Tech Crunch

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Airbnb, Automattic and Pinterest top rank of most acquisitive unicorns

Posted by on Feb 23, 2019 in Aileen Lee, Airbnb, Automattic, blockspring, coinbase, Column, Commuting, cowboy ventures, CrunchBase, Docker, flatiron school, Italy, Lyft, M&A, neologisms, Neutrino, Pinterest, Sprinklr, Startups, SurveyMonkey, TC, transport, Uber, unicorn, unity-technologies, Venture Capital, vox media, WeWork | 0 comments

It takes a lot more than a good idea and the right timing to build a billion-dollar company. Talent, focus, operational effectiveness and a healthy dose of luck are all components of a successful tech startup. Many of the most successful (or, at least, highest-valued) tech unicorns today didn’t get there alone.

Mergers and acquisitions (M&A) can be a major growth vector for rapidly scaling, highly valued technology companies. It’s a topic that we’ve covered off and on since the very first post on Crunchbase News in March 2017. Nearly two years later, we wanted to revisit that first post because things move quickly, and there is a new crop of companies in the unicorn spotlight these days. Which ones are the most active in the M&A market these days?

The most acquisitive U.S. unicorns today

Before displaying the U.S. unicorns with the most acquisitions to date, we first have to answer the question, “What is a unicorn?” The term is generally applied to venture-backed technology companies that have earned a valuation of $1 billion or more. Crunchbase tracks these companies in its Unicorns hub. The original definition of the term, first applied in a VC setting by Aileen Lee of Cowboy Ventures back in late 2011, specifies that unicorns were founded in or after 2003, following the first tech bubble. That’s the working definition we’ll be using here.

In the chart below, we display the number of known acquisitions made by U.S.-based unicorns that haven’t gone public or gotten acquired (yet). Keep in mind this is based on a snapshot of Crunchbase data, so the numbers and ranking may have changed by the time you read this. To maintain legibility and a reasonable size, we cut off the chart at companies that made seven or more acquisitions.

As one would expect, these rankings are somewhat different from the one we did two years ago. Several companies counted back in early March 2017 have since graduated to public markets or have been acquired.

Who’s gone?

Dropbox, which had acquired 23 companies at the time of our last analysis, went public weeks later and has since acquired two more companies (HelloSign for $230 million in late January 2019 and Verst for an undisclosed sum in November 2017) since doing so. SurveyMonkey, which went public in September 2018, made six known acquisitions before making its exit via IPO.

Who stayed?

Which companies are still in the top ranks? Travel accommodations marketplace giant Airbnb jumped from number four to claim Dropbox’s vacancy as the most acquisitive private U.S. unicorn in the market. Airbnb made six more acquisitions since March 2017, most recently Danish event space and meeting venue marketplace Gaest.com. The still-pending deal was announced in January 2019.

WordPress developer and hosting company Automattic is still ranked number two. Automattic <a href=”https://www.crunchbase.com/acquisition/automattic-acquires-atavist–912abccd”>acquired one more company — digital publication platform Atavist — since we last profiled unicorn M&A. Open-source software containerization company Docker, photo-sharing and search site Pinterest, enterprise social media management company Sprinklr and venture-backed media company Vox Media remain, as well.

Who’s new?

There are some notable newcomers in these rankings. We’ll focus on the most notable three: The We CompanyCoinbase and Lyft. (Honorable mention goes to Stripe and Unity Technologies, which are also new to this list.)

The We Company (the holding entity for WeWork) has made 10 acquisitions over the past two years. Earlier this month, The We Company bought Euclid, a company that analyzes physical space utilization and tracks visitors using Wi-Fi fingerprinting. Other buyouts include Meetup (a story broken by Crunchbase News in November 2017) reportedly for $200 million. Also in late 2017, The We Company acquired coding and design training program Flatiron School, giving the company a permanent tenant in some of its commercial spaces.

In its bid to solidify its position as the dominant consumer cryptocurrency player, Coinbase has been on quite the M&A tear lately. The company recently announced its plans to acquire Neutrino, a blockchain analytics and intelligence platform company based in Italy. As we covered, Coinbase likely made the deal to improve its compliance efforts. In January, Coinbase acquired data analysis company Blockspring, also for an undisclosed sum. The crypto company’s other most notable deal to date was its April 2018 buyout of the bitcoin mining hardware turned cryptocurrency micro-transaction platform Earn.com, which Coinbase acquired for $120 million.

And finally, there’s Lyft, the more exclusively U.S.-focused ride-hailing and transportation service company. Lyft has made 10 known acquisitions since it was founded in 2012. Its latest M&A deal was urban bike service Motivate, which Lyft acquired in June 2018. Lyft’s principal rival, Uber, has acquired six companies at the time of writing. Uber bought a bike company of its own, JUMP Bikes, at a price of $200 million, a couple of months prior to Lyft’s Motivate purchase. Here too, the Lyft-Uber rivalry manifests in structural sameness. Fierce competition drove Uber and Lyft to raise money in lock-step with one another, and drove M&A strategy as well.

What to take away

With long-term business success, it’s often a chicken-and-egg question. Is a company successful because of the startups it bought along the way? Or did it buy companies because it was successful and had an opening to expand? Oftentimes, it’s a little of both.

The unicorn companies that dominate the private funding landscape today (if not in the number of deals, then in dollar volume for sure) continue to raise money in the name of growth. Growth can come the old-fashioned way, by establishing a market position and expanding it. Or, in the name of rapid scaling and ostensibly maximizing investor returns, M&A provides a lateral route into new markets or a way to further entrench the status quo. We’ll see how that strategy pays off when these companies eventually find the exit door .


Source: The Tech Crunch

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First China, now Starbucks gets an ambitious VC-funded rival in Indonesia

Posted by on Feb 1, 2019 in alibaba, alibaba group, android, Apps, army, Asia, carsharing, China, Companies, East Ventures, economy, funding, Fundings & Exits, go-jek, Google, grab, Indonesia, Insignia Ventures Partners, internet access, Jakarta, JD.com, managing partner, mcdonalds, online food ordering, online marketplaces, Pizza Hut, Singapore, Southeast Asia, starbucks, temasek, Tencent, United States, WeWork | 0 comments

Asia’s venture capital-backed startups are gunning for Starbucks .

In China, the U.S. coffee giant is being pushed by Luckin Coffee, a $2.2 billion challenger surfing China’s on-demand wave, and on the real estate side, where WeWork China has just unveiled an on-demand product that could tempt people who go to Starbucks to kill time or work.

That trend is picking up in Indonesia, the world’s fourth largest country and Southeast Asia’s largest economy, where an on-demand challenger named Fore Coffee has fuelled up for a fight after it raised $8.5 million.

Fore was started in August 2018 when associates at East Ventures, a prolific early-stage investor in Indonesia, decided to test how robust the country’s new digital infrastructure can be. That means it taps into unicorn companies like Grab, Go-Jek and Traveloka and their army of scooter-based delivery people to get a hot brew out to customers. Incidentally, the name ‘Fore’ comes from ‘forest’ — “we aim to grow fast, strong, tall and bring life to our surrounding” — rather than in front of… or a shout heard on the golf course.

The company has adopted a similar hybrid approach to Luckin, and Starbucks thanks to its alliance with Alibaba. Fore operates 15 outlets in Jakarta, which range from ‘grab and go’ kiosks for workers in a hurry, to shops with space to sit and delivery-only locations, Fore co-founder Elisa Suteja told TechCrunch. On the digital side, it offers its own app (delivery is handled via Go-Jek’s Go-Send service) and is available via Go-Jek and Grab’s apps.

So far, Fore has jumped to 100,000 deliveries per month and its app is top of the F&B category for iOS and Android in Indonesia — ahead of Starbucks, McDonald’s and Pizza Hut .

It’s early times for the venture — which is not a touch on Starbuck’s $85 billion business; it does break out figures for Indonesia — but it is a sign of where consumption is moving to Indonesia, which has become a coveted beachhead for global companies, and especially Chinese, moving into Southeast Asia. Chinese trio Tencent, Alibaba and JD.com and Singapore’s Grab are among the outsiders who have each spent hundreds of millions to build or invest in services that tap growing internet access among Indonesia’s population of over 260 million.

There’s a lot at stake. A recent Google-Temasek report forecast that Indonesia alone will account for over 40 percent of Southeast Asia’s digital economy by 2025, which is predicted to triple to reach $240 billion.

As one founder recently told TechCrunch anonymously: “There is no such thing as winning Southeast Asia but losing Indonesia. The number one priority for any Southeast Asian business must be to win Indonesia.”

Forecasts from a recent Google-Temasek report suggest that Indonesia is the key market in Southeast Asia

This new money comes from East Ventures — which incubated the project — SMDV, Pavilion Capital, Agaeti Venture Capital and Insignia Ventures Partners with participation from undisclosed angel backers. The plan is to continue to invest in growing the business.

“Fore is our model for ‘super-SME’ — SME done right in leveraging technology and digital ecosystem,” Willson Cuaca, a managing partner at East Ventures, said in a statement.

There’s clearly a long way to go before Fore reaches the size of Luckin, which has said it lost 850 million yuan, or $124 million, inside the first nine months in 2018.

The Chinese coffee challenger recently declared that money is no object for its strategy to dethrone Starbucks. The U.S. firm is currently the largest player in China’s coffee market, with 3,300 stores as of last May and a goal of topping 6,000 outlets by 2022, but Luckin said it will more than double its locations to more than 4,500 by the end of this year.

By comparison, Indonesia’s coffee battle is only just getting started.


Source: The Tech Crunch

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WeWork could challenge Starbucks in China with new on-demand service

Posted by on Jan 29, 2019 in Asia, China, executive, Go, Luckin Coffee, mobile payments, naked hub, operating systems, qr code, Real Estate, real-time, Seattle, shanghai, social network, starbucks, WeChat, WeWork | 0 comments

The rise of Starbucks in China, like that in the west, is closely linked to its function as a “third space” for people to hang out between home and work. In recent years, a bevy of coffee entrepreneurs are trying to topple the American giant’s dominance in China and lately, an unexpected contender — WeWork — has joined their camp.

This month, the office tenant and workplace service provider launched WeWork Go, a new feature that allows China-based users to rent a desk by the minute so they are no longer tied to long-term leases. While Starbucks provides free accommodation and charges for coffee, WeWork flips the equation to offer free coffee and paid space. Starbucks is already being squeeze in China by emerging rival Luckin Coffee, a well-funded startup that explicitly pledges to take on the Seattle-based giant with a model that focuses on coffee delivery.

WeWork Go works a bit like other shared services, with an app that lets users check the occupancy of a list of offices in real time before they travel over. Upon arrival, users scan a QR code at the gate, pop the door open, get seated in the common area and the billing begins.

wework go china

WeWork Go available through a WeChat mini program. Screenshot: TechCrunch

The firm says it monitors traffic flow closely so the common space isn’t flooded with fleeting users. Booking private rooms require additional fees. Go claims to have picked up 50,000 registered users so far after piloting for three months across an inventory of 18 locations in Shanghai, where WeWork nestles its China headquarters.

Made for China

Instead of building a native app, WeWork Go operates via a WeChat mini program, a form of a stripped-down app that works within China’s largest social network. Mini programs are an increasingly popular way for startups to trial ideas thanks to their relative ease to develop. “[Go] is a key development of our China localization,” a WeWork spokesperson told TechCrunch.

Go is tailoring to the so-called “part-time users.” “These people would not purchase the monthly membership. They would work at home or a coffee shop, restaurant, or library,” Dominic Penaloza, who heads innovation and technology at WeWork China, told TechCrunch. He first conceptualized the on-demand workplace service at Naked Hub, a smaller local rival WeWork China bought out for $400 million last year. After the merger, the executive alongside his tech team joined WeWork and continued with the project that would later become Go.

The pay-as-you-go feature is also getting rolled out stateside at a new Manhattan location last week.

Penaloza admits Go could be competing with coffee shops for it offers “an alternative type of the third space for freelancers, mobile workers, business travellers or those who want to briefly step aside from their offices for a mental break.” The obvious target is Starbucks, which commands a whopping 51 percent share of the country’s booming coffee market.

Made for WeWork

For WeWork, Go serves as a trial for those deciding whether to sign on monthly subscriptions. What they are weighing is the 1,830 yuan ($271) price tag for a hotdesk in downtown Shanghai. By comparison, Go starts at 15 yuan and goes up to 30 yuan an hour at more prime locations, offering the same perks as the full-time hotdesking plan, which includes access to common spaces, beverages and wifi.

Users can do their math. “If you started as a WeWork Go member, and if you use our service quite a lot, you will realize it’s much more economical to purchase monthly subscriptions. WeWork Go enables WeWork to reach an entirely new market segment,” suggests Penaloza.

The flexible pricing may help WeWork — which generates the bulk of its revenues from large corporations — reach a wider user base. The shared office industry in China has entered what real-estate researcher Jones Lang LaSalle calls the “second phase,” with big firms moving into premium workplaces like WeWork and local player Soho 3Q. Cash-strapped startups, on the other hand, increasingly turn to government-backed incubators for lower costs.

wework china

Photo: WeWork China

Several early users of Go told TechCrunch they found the service delivering a “quieter” and “more comfortable” vibe than most cafes, but distance is key when they are in a rush. WeWork currently has about 60 locations across a dozen major Chinese cities, whereas Starbucks reaches a dense network of 3,330 stores and is shooting for 6,000 by the end of 2022. WeWork China got a boost for locations with the Naked Hub acquisition last year and says it’s open to adding third-party spaces such as restaurants into its inventory, though it has not taken a solid step towards that vision.

“There is a very interesting opportunity in the really downtown area, where WeWork locations and Naked Hub locations are quite full starting from after lunch until 5 pm,” notes Penaloza. “What’s amazing is that restaurants around those locations are quite empty at exactly the same time, so there’s a fascinating opportunity there but we haven’t done anything about it yet.”


Source: The Tech Crunch

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WeWork gets into the food business, backing the superfood startup of big wave surfer Laird Hamilton

Posted by on Jan 11, 2019 in Recent Funding, Startups, WeWork | 0 comments

WeWork CEO Adam Neumann has been described as an avid surfer, one who has been known to grab his board and go, both in the Hamptons in Long Island, where he reportedly owns a home, as well as in Hawaii.

Maybe it’s no surprise, then, that WeWork is now also investing a so-called superfood company that was created several years ago by big wave surf star Laird Hamilton, who Neumann was apparently surfing alongside just last week. In a video call with Neumann on Monday, a Fast Company reporter noted that Neumann is currently sporting a cast on one of his fingers, having broken it during the outing.

How much WeWork is investing in the startup, Laird Superfood, is not being disclosed, but according to the food company, the money will be used to fuel product development, acquisitions, and to hire more employees. A press release that was published without fanfare earlier today also notes that Laird Superfood products will be made available to WeWork members and employees at select locations soon.

Some of those offerings are certainly interesting, including “performance mushrooms” that it says “harnesses the benefits” of Chaga, a fungus believed by some to stimulate the immune system; Cordyceps, another fungus that’s been used for kidney disorders and erectile dysfuntion; and Lion’s Mane, yet another fungus believed by some to stimulate nerve growth in the brain.

The company suggests adding one teaspoon of the mushrooms each day to one’s coffee, tea, or health shake.

Laird Superfood also sells beet- and turmeric-infused powdered coconut waters, “ultra-caffeinated” coffee, and a variety of coffee creamers, including a mint-flavored creamer and a turmeric-flavored number.

It’s for a very specific consumer, in other words — presumably one who really likes turmeric, for example. Then again, what works for Laird Hamilton will undoubtedly work for a lot of people who’ve watched his decades-long career with amazement.

Hamilton seems to be selling what he actually ingests, too. As he told The Guardian last spring of his own diet: “I love espresso. You could give me five shots of espresso, a quarter stick of butter, a quarter stick of coconut oil and other fat, and I’ll drink that. I could go for five or six hours and not be hungry, because I’m burning fat.”

Organic food startups have been raising money left and right in recent years, including from traditional food companies, as well as from venture investors, who’ve poured billions of dollars into healthy snacks and drinks, with mixed results.

For WeWork’s part, the investment isn’t the first that has seemed somewhat far afield for the company. In one of its more surprising bets to date, WeWork invested in a maker of wave pools in 2016. The size of that funding was also undisclosed.


Source: The Tech Crunch

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For SoftBank, no majority stake in WeWork as it scales down talks from a new $16 billion investment to $2 billion

Posted by on Jan 7, 2019 in adam neumann, Community, Masayoshi Son, Real Estate, Recent Funding, Softbank, WeWork | 0 comments

Several weeks after it was reported by the WSJ that two of the biggest investors in SoftBank’s massive Vision Fund vehicle were cool on its planned $16 billion investment in the coworking company WeWork, those plans have changed radically, says the Financial Times.

According to its sources — and confirmed by our own — SoftBank is now in “detailed negotiations” to invest a comparatively modest $2 billion more into WeWork, plans that could be firmed up as soon as the end of this week.

A WeWork spokesperson at the company’s New York headquarters declined to comment.

The development is both surprising and unsurprising. The government-backed funds of Saudi Arabia and Abu Dhabi, which committed $45 billion and $15 billion, respectively, to the Vision Fund, haven’t been been known before to push back against the person pulling its levers, SoftBank CEO Masayoshi Son .

Indeed, given the vast sums of money that the Vision Fund has put to work since being announced in late 2016, it seemed there were few if any checks on Son or the 80-plus people who work for the Vision Fund.

Just some of its many bold bets include, most recently, a $500 million investment in Cambridge Mobile Telematics, an eight-year-old, Boston-area company that had earlier raised just one round of funding of less than $20 million to build out its technology. The Vision Fund also recently led a $400 million round into Emeryville, Ca.-based Zymergen, which manufacturers molecules for a wide array of industries and already counted SoftBank as an investor.

Still, according to that Journal piece, the two anchor investors were less enthusiastic about a giant new investment in nearly nine-year-old WeWork for numerous reasons, including that they see WeWork as a real estate play and both already have plenty of real estate in their portfolios; that WeWork CEO Adam Neumann would still control the company even while SoftBank was looking to acquire a majority stake; and because SoftBank has already committed $8 billion into WeWork in recent years, including through an agreement last year to invest a fresh $4 billion into the company via a convertible note and a $3 billion warrant that gave it the right to buy additional equity in WeWork.

As it stands, including the $2 billion that WeWork looks to receive from SoftBank imminently, SoftBank will have sunk $10 billion into the company. Perhaps it’s no wonder that the newest $2 billion is not coming from the Vision Fund but from SoftBank directly. (Son sometimes invests off SoftBank’s balance sheet directly,  expediency’s sake and, presumably in a case such as this one, when there may be pushback from Vision Fund investors.)

Either way, two billion dollars more from SoftBank is “hardly a stinging rebuke” of WeWork or its business model, says one person familiar with SoftBank’s thinking. This same source also notes that the $16 billion figure bandied about last year was “never a lock. There were always numerous options on the table.”

Whether SoftBank regrets what remains a huge bet can only be known in time. A shifting public market certainly seems like reason for worry, given that unprofitable WeWork relies increasingly on freely spending companies for its revenue, both customers that install their employees at WeWork’s coworking spaces, as well as those that have more recently begun licensing the company’s technology and aesthetic to WeWork-ify their own offices.

Unsurprisingly, Neumann, when asked how WeWork would fare in a downturn, told us at a Disrupt event in 2017 that it was positioned perfectly for one. “Business is a flexible thing,” he’d said at the time. “Space is fixed. Being able to give people that flexibility if a recession comes or when a recession comes is actually going to be a very needed product.”

According to the FT, SoftBank’s earlier plans for WeWork included SoftBank and the Vision Fund paying $10 billion to buy out all outside investors in WeWork. A further $6 billion of capital would have been injected directly into the company, including a $2 billion commitment this year, and a commitment to invest a further $4 billion based on agreed-up performance targets for WeWork in 2020 and 2021.

Our sources say that, as of this writing, the $2 billion being discussed will be split evenly to purchase both primary and secondary shares from earlier investors. We’re also told the company’s post-money valuation, assuming the deal is completed, will be $47 billion, a total that includes $1 . billion that Softbank invested in WeWork last year via that convertible note and the $3 billion more than the SoftBank committed last year to invest in the company this year.

WeWork’s losses in the first nine months of 2018 nearly quadrupled from a year earlier to $1.2 billion, says the FT, which says it viewed an investor presentation. The company’s sales meanwhile hit $1.5 billion during the same period.


Source: The Tech Crunch

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