Massachusetts Attorney General Maura Healey gave a coalition of app-based service providers like Uber and Lyft the go-ahead to start collecting signatures needed to put a proposed ballot measure before voters that would define drivers as independent contractors rather than employees.
Backers of the initiative, which is essentially a MA version of Proposition 22, would need to gather tens of thousands of signatures for the measure to make it to the November 2022 ballot. Despite the fact that last year Healey filed a lawsuit that challenged Uber and Lyft’s classifications of drivers as contractors who are therefore not entitled to benefits like sick leave, overtime or minimum wage, on Wednesday, the AG certified the current measure met constitutional requirements.
The news comes nearly two weeks after a superior court judged ruled California’s Prop 22, which was passed in 2020, unconstitutional. The union-backed Coalition to Protect Workers’ Rights urged Healey to reject the measure under the same grounds, and told Reuters that it is considering suing to challenge the measure.
The Massachusetts Coalition for Independent Work, the coalition of members including Uber, Lyft, DoorDash and Instacart, filed the petition for this ballot initiative last month, a move that Uber CEO Dara Khosrowshahi said he thinks is “the right move.” The proposed initiative would also allow drivers to earn a minimum of $18 per hour in 2023 before tips and provide those who work for at least 15 hours per week with healthcare stipends. Drivers would also be guaranteed at least 26 cents per mile to cover vehicle upkeep and gas.
The coalition has until December 1 to collect and file 80,239 signatures from voters. If they miss that deadline, they can gather an additional 13,374 signatures by July 6, 2022 to get the initiative on the ballot.
Russian internet and ride-hail giant Yandex has acquired Uber’s stake in its Self-Driving Group (SDG), as well as Uber’s indirect interest in Yandex.Eats, Yandex.Lavka and Yandex.Delivery. The total cost of the deal came to $1 billion, giving the Russian company 100% ownership over all four businesses.
Yandex SDG is an autonomous technology spinout from MLU B.V., the ride-hailing and food delivery joint venture Yandex formed with Uber in 2018 by merging Yandex.Taxi and Uber’s Russian operations. At the time, Uber had a 36.6% stake in the new company. Last year, when SDG was spun out into a separate business, Uber was left with an 18.2% stake in the company, which has just been bought out by Yandex. Yandex also purchased Uber’s 33.5% collective interest in Yandex’s food delivery service, last-mile logistics service and 15-minute convenience store delivery service.
Back in 2019, Yandex and Uber were reportedly considering an IPO for their JV, which Morgan Stanley estimated to be valued at around $7.7 billion. Yandex says autonomous driving technology is “highly synergistic to the Yandex ecosystem, which includes ride-hailing, e-commerce and food-tech businesses.” It makes sense that the company would want to control all of that potential growth. Uber, which reported a Q2 loss of $509 million before EBITDA this year, might be looking to make a lucrative exit and refocus its priorities closer to home.
“This acquisition will enable Yandex to further increase its capacity for strategic management and flexibility when it comes to self-driving technology,” a Yandex spokesperson told TechCrunch. “It will unlock further growth potential for both Yandex and Yandex SDG, creating new sources of value for shareholders.”
The acquisitions are part of a larger restructuring of the MLU B.V. and Yandex SDG joint ventures, according to Uber’s SEC filing on Monday. They will happen in two stages. Stage 1, which is expected to close by the end of Q3 this year, will give Yandex a 4.5% interest in the newly restructured MLU, which will focus on mobility businesses like ride-hailing and car-sharing. This gives Yandex a total of 71% ownership in the JV, 2.8% of which is reserved for an employee equity incentive program. Uber’s total 18.2% stake in SDG is also expected to be sold during the first stage.
Stage 2, which is expected to close by the end of this year, includes the demerger of Yandex.Eats, Yandex.Lavka and Yandex.Delivery from MLU and subsequent acquisition of Uber’s interest in these businesses.
Yandex will also receive a two-year American call option to acquire the rest of Uber’s interest in MLU at a more or less fixed price of $1.8 billion, depending on agreed increases over the option period. This number will increase to $2 billion if exercised in 2023. The Russian company will also continue to use the Uber brand exclusively in Russia and other countries until August 2030.
Yandex will also get an extension of the current license for the exclusive right to use the Uber brand in Russia and certain other countries until August 2030, assuming the exercise of the option. Yandex’s stock was up 5.16% on Tuesday at market close.
Hello friends, and welcome back to Week in Review! Last week we dove into Bezos’s Blue Origin suing NASA. This week, I’m writing about the unlikely and triumphant resurgence of the NFT market.
If I could, I would probably write about NFTs in this newsletter every week. I generally stop myself from actually doing so because I try my best to make this newsletter a snapshot of what’s important to the entire consumer tech sector, not just my niche interests. That said, I’m giving myself free rein this week.
The NFT market is just so hilariously bizarre and the culture surrounding the NFT world is so web-native, I can’t read about it enough. But in the past several days, the market for digital art on the blockchain has completely defied reason.
Back in April, I wrote about a platform called CryptoPunks that — at that point — had banked more than $200 million in lifetime sales since 2017. The little pop art pixel portraits have taken on a life of their own since then. It was pretty much unthinkable back then but in the past 24 hours alone, the platform did $141 million in sales, a new record. By the time you read this, the NFT platform will have likely passed a mind-boggling $1.1 billion in transaction volume according to crypto tracker CryptoSlam. With 10,000 of these digital characters, to buy a single one will cost you at least $450,000 worth of the Ethereum cryptocurrency. (When I sent out this newsletter yesterday that number was $300k)
When I published this back in April, the cheapest CryptoPunks were $30k, today the cheapest one available for sale is just shy of $300k https://t.co/X4iTSl6FjC
— Lucas Matney (@lucasmtny) August 27, 2021
It’s not just CryptoPunks either; the entire NFT world has exploded in the past week, with several billions of dollars flowing into projects with drawings of monkeys, penguins, dinosaurs and generative art this month alone. After the NFT rally earlier this year — culminating in Beeple’s $69 million Christie’s sale — began to taper off, many wrote off the NFT explosion as a bizarre accident. What triggered this recent frenzy?
Part of it has been a resurgence of cryptocurrency prices toward all-time-highs and a desire among the crypto rich to diversify their stratospheric assets without converting their wealth to fiat currencies. Dumping hundreds of millions of dollars into an NFT project with fewer stakeholders than the currencies that underlie them can make a lot of sense to those whose wealth is already over-indexed in crypto. But a lot of this money is likely FOMO dollars from investors who are dumping real cash into NFTs, bolstered by moves like Visa’s purchase this week of their own CryptoPunk.
I think it’s pretty fair to say that this growth is unsustainable, but how much further along this market growth gets before the pace of investment slows or collapses is completely unknown. There are no signs of slowing down for now, something that can be awfully exciting — and dangerous — for investors looking for something wild to drop their money into… and wild this market truly is.
Here’s some advice from Figma CEO Dylan Field who sold his alien CryptoPunk earlier this year for 4,200 Eth (worth $13.6 million today).
Just getting into NFT’s? Welcome!! It’s a fascinating world and this is just the very start :)
My unsolicited advice: exercise caution + restraint. There are a lot of speculators in the space right now. Buy things you love / plan to hold forever and don’t expect prices to go up!
— Dylan Field (@zoink) August 28, 2021
Image Credits: Kanye West
Here are the TechCrunch news stories that especially caught my eye this week:
OnlyFans suspends its porn ban
In a stunning about-face, OnlyFans declared this week that they won’t be banning “sexually explicit content” from their platform after all, saying in a statement that they had “secured assurances necessary to support our diverse creator community and have suspended the planned October 1 policy change.”
Kanye gets into the hardware business
Ahead of the drop of his next album, which will definitely be released at some point, rapper Kanye West has shown off a mobile music hardware device called the Stem Player. The $200 pocket-sized device allows users to mix and alter music that has been loaded onto the device. It was developed in partnership with hardware maker Kano.
Apple settles developer lawsuit
Apple has taken some PR hits in recent years following big and small developers alike complaining about the take-it-or-leave-it terms of the company’s App Store. This week, Apple shared a proposed settlement (which still is pending a judge’s approval) that starts with a $100 million payout and gets more interesting with adjustments to App Store bylines, including the ability of developers to advertise paying for subscriptions directly rather than through the app only.
Twitter starts rolling out ticketed Spaces
Twitter has made a convincing sell for its Clubhouse competitor Spaces, but they’ve also managed to build on the model in recent months, turning its copycat feature into a product that succeeds on its own merits. Its latest effort to allow creators to sell tickets to events is just starting to roll out, the company shared this week.
CA judge strikes down controversial gig economy proposition
Companies like Uber and DoorDash dumped tens of millions of dollars into Prop 22, a law which clawed back a California law that pushed gig economy startups to classify workers as full employees. This week a judge declared the proposition unconstitutional, and though the decision has been stayed on appeal, any adjustment would have major ramifications for those companies’ business in California.
Image Credits: guirong hao (opens in a new window) / Getty Images
Some of my favorite reads from our Extra Crunch subscription service this week:
Future tech exits have a lot to live up to
“Inflation may or may not prove transitory when it comes to consumer prices, but startup valuations are definitely rising — and noticeably so — in recent quarters. That’s the obvious takeaway from a recent PitchBook report digging into valuation data from a host of startup funding events in the United States…”
OpenSea UX teardown
“…is the experience of creating and selling an NFT on OpenSea actually any good? That’s what UX analyst Peter Ramsey has been trying to answer by creating and selling NFTs on OpenSea for the last few weeks. And the short answer is: It could be much better...“
Are B2B SaaS marketers getting it wrong?
“‘Solutions,’ ‘cutting-edge,’ ‘scalable’ and ‘innovative’ are just a sample of the overused jargon lurking around every corner of the techverse, with SaaS marketers the world over seemingly singing from the same hymn book. Sadly for them, new research has proven that such jargon-heavy copy — along with unclear features and benefits — is deterring customers and cutting down conversions…”
Connecting to all the services and microservices that a modern cloud native enterprise application requires can be a complicated task. It’s an area that startup Solo.io is trying to disrupt with the new release of its Gloo Mesh Enterprise platform.
Based in Cambridge, Massachusetts, Solo has had focus since its founding on a concept known as a service mesh. A service mesh provides an optimized approach to connect different components together in an automated approach, often inside of a Kubernetes cloud native environment.
Idit Levine, founder and CEO at Solo, explained to TechCrunch that she knew from the outset when she started the company in 2017 that it might take a few years till the market understood the concept of the service mesh and why it is needed. That’s why her company also built out an API gateway technology that helps developers connect APIs, which can be different data sources or services.
Until this week, the API and service mesh components of Solo’s Gloo Mesh Enterprise offering were separate technologies, with different configurations and control planes. That is now changing with the integration of both API and service mesh capabilities into a unified service. The integrated capabilities should make it easier to set up and configure all manner of services in the cloud that are running on Kubernetes.
Solo’s service mesh, known as Gloo Mesh, is based on the open source Istio project, which was created by Google. The API product is called Gloo Edge, which uses the open source Envoy project, originally created by ride sharing company Lyft. Levine explained that her team has now used Istio’s plugin architecture to connect with Envoy in an optimized approach.
Levine noted that many users start off with an API gateway and then extend to using the service mesh. With the new Gloo Mesh Enterprise update, she expects customer adoption to accelerate further as Solo will be able to differentiate against rivals in both the service mesh and API management markets.
While the service mesh space is still emerging including rivals such as Tetrate, API gateways are a more mature technology. There are a number of established vendors in the API management space including Kong which has raised $71 million in funding. Back in 2016, Google acquired API vendor Apigee for $625 million and has been expanding the technology in the years since, including the Apigee X platform announced in February of this year.
With the integration of Gloo Edge for API management into Gloo Mesh Enterprise, Solo isn’t quite covering all the bases for API technology, yet. Gloo Edge supports REST based APIs, which are by far the most common today, though it doesn’t support the emerging GraphQL API standard, which is becoming increasingly popular. Levine told us to ‘stay tuned’ for a future GraphQL announcement for Solo and its platform.
Solo has raised a total of $36.5 million across two rounds, with an $11 million Series A in 2018 and a $23 million Series B announced in October 2020. The company’s investors include Redpoint and True Ventures.
Just days after Elastic announced the acquisition of build.security, the company is making yet another security acquisition. As part of its second-quarter earnings announcement this afternoon, Elastic disclosed that it is acquiring Vancouver, Canada based security vendor CMD. Financial terms of the deal are not being publicly disclosed.
CMD‘s technology provides runtime security for cloud infrastructure, helping organizations gain better visibility into processes that are running. The startup was founded in 2016 and has raised $21.6 million in funding to date. The company’s last round was a $15 million Series B that was announced in 2019, led by GV.
Elastic CEO and co-founder Shay Banon told TechCrunch that his company will be welcoming the employees of CMD into his company, but did not disclose precisely how many would be coming over. CMD CEO and co-founder Santosh Krishan and his fellow co-founder Jake King will both be taking executive roles within Elastic.
Both build.security and CMD are set to become part of Elastic’s security organization. The two technologies will be integrated into the Elastic Stack platform that provides visibility into what an organization is running, as well as security insights to help limit risk. Elastic has been steadily growing its security capabilities in recent years, acquiring Endgame Security in 2019 for $234 million.
Banon explained that, as organizations increasingly move to the cloud and make use of Kubernetes, they are looking for more layers of introspection and protection for Linux. That’s where CMD’s technology comes in. CMD’s security service is built with an open source technology known as eBPF. With eBPF, it’s possible to hook into a Linux operating system for visibility and security control. Work is currently ongoing to extend eBPF for Windows workloads, as well.
CMD isn’t the only startup that has been building based on eBP. Isovalent, which announced a $29 million Series A round led by Andreessen Horowitz and Google in November 2020, is also active in the space. The Linux Foundation also recently announced the creation of an eBPF Foundation, with the participation of Facebook, Google, Microsoft, Netflix and Isovalent.
Fundamentally, Banon sees a clear alignment between what CMD was building and what Elastic aims to deliver for its users.
“We have a saying at Elastic – while you observe, why not protect?” Banon said. “With CMD if you look at everything that they do, they also have this deep passion and belief that it starts with observability. “
It will take time for Elastic to integrate the CMD technology into the Elastic Stack, though it won’t be too long. Banon noted that one of the benefits of acquiring a startup is that it’s often easier to integrate than a larger, more established vendor.
“With all of these acquisitions that we make we spend time integrating them into a single product line,” Banon said.
That means Elastic needs to take the technology that other companies have built and fold it into its stack and that sometimes can take time, Banon explained. He noted that it took two years to integrate the Endgame technology after that acquisition.
“Typically that lends itself to us joining forces with smaller companies with really innovative technology that can be more easily taken and integrated into our stack,” Banon said.
In a late Friday night blow to Uber, Lyft and other gig worker-centered companies, a superior court judge ruled that California’s Proposition 22, which was passed in 2020 and designed to overrule the state’s controversial AB-5 law on the employment status of gig workers, violates the state’s constitution.
Frank Roesch, a superior court judge in Alameda County, which encompasses Oakland, Berkeley and much of the East Bay, ruled that the law would limit “the power of a future legislature” to define the employment status of gig workers. The lawsuit was filed by the Service Employees International Union (SEIU) in January, after a similar lawsuit was rebuffed by the California Supreme Court and referred to a lower court.
The court’s decision will almost certainly be appealed and further legal arguments are to be expected.
The superior court’s decision is just the latest in a long line of victories and defeats in the battle between companies that heavily rely on gig workers like Uber and DoorDash, and unions and advocates representing workers. Much of the debate centers on the legal distinction between a freelancer and an employee, and to what extent companies are responsible for the care and benefits of their workers.
Such a distinction is big business: Uber, Lyft and other companies spent more than $200 million collectively to push Prop 22 to victory last year. California voters passed the proposition roughy 59% to 41% in what was widely perceived as a major victory for gig worker platforms.
Such fights are not limited to merely Silicon Valley’s home state, however. Earlier this year in the United Kingdom, Uber lost a legal battle over its employment classification decisions and ultimately reclassified tens of thousands of its drivers as workers, a decision which offered them a range of benefits not previously guaranteed.
Newly reported financial data from Bird, an American scooter sharing service, shows a company with an improving economic model, and a multi-year path to profitability. However, that path is fraught unless a number of scenarios all work out, in concert and without a glitch.
Bird, well-known for its early battles with domestic rival Lime, is pursuing a SPAC-led deal that will see it go public and raise fresh capital. The former startup is merging with Switchback II Corporation in a deal that values it at around $2.3 billion, including a $160 million PIPE (private investment in public equity) component. (Note: The group purchasing TechCrunch’s parent company from its own parent company, is part of the Bird PIPE.)
The Exchange explores startups, markets and money.
COVID-19 hasn’t been kind to Bird and similar companies around the world. As many around the world stayed home, usage of shared-asset services and ride-hail applications fell sharply. Bird saw rides decline. Airbnb took a temporary hit. Uber and Lyft saw ride demand fall.
Responses to the crisis were varied. Airbnb cut costs, and raised external capital. Lyft cut expenses and focused on its core model, while Uber grew its food delivery business, which saw transaction volume soar as demand fell for its traditional business.
Meanwhile, Bird flipped its entire business model. That decision has helped the scooter outfit improve its economics markedly, giving it a shot at generating profit in the future — provided its forecasts prove achievable.
This morning, let’s talk about how Bird has changed its business, their impacts on its operating results, and how long the company thinks its climb to profitability is.
In their initial forms, Bird and Lime bought and deployed large fleets of electric scooters. Not only was this capital intensive, the companies also wound up with costs that were more than sticky — charging wasn’t simple or cheap, moving scooters around to balance demand took both human capital and vehicles, and the list went on.
Throw in vehicle depreciation — the pace at which scooters in the wild degraded from use or abuse — and the businesses proved excellent vehicles for raising capital and throwing that money at more scooters, costs, and, as it turned out, losses.
Results improved somewhat over time, though. As scooter-share companies increasingly built their own hardware, their economics improved. Sturdier scooters meant lower depreciation, and better battery tech could allow for more rides per charge. That sort of thing.
But the model wasn’t incredibly lucrative even before COVID-19 hit. Costs were high, and the model did not break even even on a gross margin basis, let alone when considering all corporate expenses. You can see the financial mess from that period of operations in historical Bird results.
Although older adults are one of the fastest-growing demographics, they’re quite underserved when it comes to consumer tech.
The global population of people older than 65 will reach 1.5 billion by 2050, and members of this cohort — who are leading longer, active lives — have plenty of money to spend.
Still, most startups persist in releasing products aimed at serving younger users, says Lawrence Kosick, co-founder of GetSetUp, an edtech company that targets 50+ learners.
“If you can provide a valuable, scalable service for the older adult market, there’s a lot of opportunity to drive growth through partnerships,” he notes.
Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.
Image Credits: Sukhinder Singh Cassidy
On Thursday, August 19, Managing Editor Danny Crichton will interview Sukhinder Singh Cassidy, author of “Choose Possibility,” on Twitter Spaces at 2 p.m. PDT/5 p.m. EDT/9 p.m. UTC.
Singh Cassidy, founder of premium talent marketplace theBoardlist, will discuss making the leap into entrepreneurship after leaving Google, her time as CEO-in-Residence at venture capital firm Accel Partners and the framework she’s developed for taking career risks.
They’ll take questions from the audience, so please add a reminder to your calendar to join the conversation.
Thanks very much for reading Extra Crunch this week! Have a great weekend.
Senior Editor, TechCrunch
Image Credits: Bryce Durbin/TechCrunch
I want to extend an offer to an engineer who has been working in the U.S. on an H-1B for almost five years. Her current employer is sponsoring her for an EB-2 green card, and our startup wants to hire her as a senior engineer.
What happens to her green card process? Can we take it over?
— Recruiting in Richmond
Image Credits: Dmitrii_Guzhanin (opens in a new window) / Getty Images
In a candid guest post, Scott Lenet, president of Touchdown Ventures, writes about the cognitive dissonance currently plaguing venture capital.
Yes, there’s an incredible amount of competition for deals, but there’s also a path to bringing soaring startup valuations back to earth.
For example, early investors have an inherent conflict of interest with later participants and many VCs are thirsty “logo hunters” who just want bragging rights.
At some point, “venture capitalists need to stop engaging in self-delusion about why a valuation that is too high might be OK,” writes Lenet.
Image Credits: Getty Images under a GK Hart/Vikki Hart (opens in a new window) license.
Aesop’s fable about the determined tortoise who defeated an arrogant hare has many interpretations, e.g., the value of perseverance, the virtue of taking on bullies, how an outsized ego can undermine natural talent.
In the case of venture capital, the allegory is relevant because a slow, steady and more personal approach generates better outcomes, says Marc Schröder, managing partner of MGV.
“We simply must take the time to get to know founders.”
Image Credits: Getty Images under a jayk7 (opens in a new window) license.
As the pandemic changed consumer behavior and regulations began to reshape digital marketing tools, advertisers are turning to retail media.
Using the reams of data collected at the individual and aggregate level, retail media produce high-margin revenue streams. “And like most things, there is a bad, a good and a much better way of doing things,” advises Cynthia Luo, head of marketing at e-commerce marketing stack Epsilo.
“We lied when we said that The Exchange was done covering 2021 venture capital performance,” Anna Heim and Alex Wilhelm admit.
Yesterday, they reviewed a detailed report from NYC-based VC group Work-Bench on the city’s enterprise tech startups.
“New York City’s enterprise footprint is now large enough that it must be considered a leading market for the startup varietal,” Anna and Alex conclude, “making its results a bellwether to some degree.”
“And if New York City is laying the groundwork for a huge wave of unicorn exits in the coming four to eight quarters, we should expect to see something similar in other enterprise markets around the world.”
Image Credits: PM Images (opens in a new window) / Getty Images
Given the rapid pace of digital transformation, nearly every business will eventually migrate some — or most — aspects of their operations to the cloud.
Before making the wholesale shift to digital, companies can start getting comfortable by using disaster recovery as a service (DRaaS). Even a partially managed DRaaS can make an organization more resilient and lighten the load for its IT team.
Plus, it’s also a savvy way for tech leaders to get shot-callers inside their companies to get on board the cloud bandwagon.
Image Credits: PeopleImages (opens in a new window) / Getty Images
“The decisions of government, the broader legal system and its combined level of scrutiny toward a particular subject” can affect market timing and the durability of an idea, Noorjit Sidhu, an early-stage investor at Plug & Play Ventures, writes in a guest column.
There are three areas currently facing regulatory scrutiny that have the potential to “provide outsized returns,” Sidhu writes: taxes, telemedicine and climate.
“China’s technology scene has been in the news for all the wrong reasons in recent months,” Anna Heim and Alex Wilhelm write about the Chinese government’s crackdown on a host of technology companies.
“The result of the government fusillade against some of the best-known companies in China was falling share prices,” they write.
But has it affected the venture capital market? SoftBank this week said it would pause investments in China, but the numbers through Q2 indicate China is steadier than Alex and Anna expected.
Image Credits: Westend61 (opens in a new window) / Getty Images under a license.
If you’re a startup founder, odds are, at some point, you’ll raise a Series A (and B and C and D, hopefully), perform a strategic acquisition, and maybe even sell your company.
When those things occur, you’ll need to know how to do a quality of earnings (QofE) to maximize value, Pierre-Alexandre Heurtebize, investment and M&A director at HoriZen Capital, writes in a guest column.
He walks through a framework for thinking and organizing a QofE for “every M&A and private equity transition you may be part of.”
Image Credits: Getty Images under a akinbostanci (opens in a new window) license.
“What was once solely an internal project at Google has since been open-sourced and has become one of the most talked about technologies in software development and operations,” Ben Ofiri, the co-founder and CEO of the Kubernetes troubleshooting platform Komodor, writes of Kubernetes, which he calls “the new Linux.”
“This technology isn’t going anywhere, so any platform or tooling that helps make it more secure, simple to use and easy to troubleshoot will be well appreciated by the software development community.”
Market timing — how relevant an idea is to the current state and direction of a market — is the most important factor in determining the durability of that idea.
Several inputs inform market timing: The skew of consumer preferences in response to a pandemic. The price of goods for a resource that is finite and becoming scarce. The creation of a novel algorithmic or genetic technique that enlarges the potential of what can be streamlined, repaired and built.
But market timing is also defined by a less discussed area that is born not in capital markets but in the public sector — the regulatory landscape — namely, the decisions of government, the broader legal system and its combined level of scrutiny toward a particular subject.
We can understand the successes and challenges of several valuable companies today based on their combustion with the regulatory landscape.
We can understand the successes and challenges of several valuable companies today based on their combustion with the regulatory landscape, and perhaps also use it as an optic to see what areas represent unique opportunities for new companies to start and scale.
“The tech comes in and moves faster than regulatory regimes do, or can control it,” Uber co-founder and former CEO Travis Kalanick said at The Aspen Institute in 2013.
The brash statement downplayed that the regulatory landscape had, in fact, driven a number of pivotal outcomes for the company up to that event. It changed its name from UberCab to Uber after receiving a cease-and-desist order in its first market, California. Several early employees left because of the startup’s regulatory challenges and iconoclastic ethos. It shut down its taxi service in New York after just a month of operations, and then in early 2013 received its lifeline in the city after being approved through a pilot program.
Fast forward to the present, and Uber has a market cap of about $82 billion, with the ousted Kalanick having a personal net worth in the neighborhood of $2.8 billion.
Still, even at its scale, many of its most important questions on growth centered around how favorably the regulatory landscape would treat its category. Most recently, this came with the U.K. Supreme Court ruling that Uber drivers could not be classified as independent contractors.
The regulatory fabric has had similar leverage over other sharing-economy companies. In October 2014, for example, Airbnb’s business model became viable in San Francisco when Mayor Ed Lee legalized short-term rentals. In November 2015, Proposition F in the city aimed to restrict short-term rentals like Airbnb, and the startup spent millions in advertisements to mobilize voters in opposition.
Airbnb’s current market cap stands at $92 billion, and its CEO, Brian Chesky, has an estimated net worth over $11 billion. Like Uber, its regulatory tribulations continue, most recently being fined and judged to owe $9.6 million to the city of Paris.
The stories of these two companies and others in the sharing economy space demonstrate the value that the regulatory fabric can add or subtract from a company’s wealth, but also underscore the value — for founding teams, early employees, investors and customers — of navigating the gray areas.
The present regulatory fabric has precipitated market timing for ideas in a number of categories. Solutions that enable data privacy, like BigID, and ones that embed data privacy into larger customer value propositions, like Blotout, are on streamlined growth tailwinds from the GDPR in Europe and their inspired analogs in the U.S.
Before you hire a marketing consultant who doesn’t understand your products or commit to a CMO who has several years of experience — but none in your sector — consider influencer marketing.
If the phrase evokes images of celebrities hawking hard seltzer, think again: An influencer can be as humble as an enthusiastic Reddit user who manages your Telegram channel.
According to Uber growth marketing manager Jonathan Martinez:
“ … You don’t need to find influencers with millions of followers. Instead, lean toward microinfluencers for testing, which will bring cost efficiency and the ability to sponsor a diverse range of people.”
If your startup has a clear brand pitch, “an enticing offer” and “clear next steps,” you’re ready to reach out to influencers, he says.
In a guest post, Martinez explains how to structure offers that will maximize conversions and keep your representatives motivated to promote your products and services.
Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.
Image Credits: Julian Shapiro
This morning, we published an interview with growth expert Julian Shapiro, a founder and angel investor who also advises startups on the best way to present themselves.
Marketing is data-driven, but good storytelling is an art, says Shapiro.
To connect with consumers on an emotional level, “you need a mix of goodwill, what-we-stand-for ideology, social prestige and customer delight — among other affinity-building ingredients.”
Thanks very much for reading Extra Crunch this week!
Senior Editor, TechCrunch
“In celebration of Coinbase’s earnings report today, investors poured a mountain of cash into one of the company’s global competitors,” Alex Wilhelm writes in The Exchange.
Rolling up his sleeves, he dug into numbers from Coinbase, FalconX and FTX to give readers some perspective on the state of cryptocurrency exchanges.
Image Credits: tomertu (opens in a new window) / Getty Images
Companies that have reached $5 million to $10 million in annual revenue are more likely to assemble growth teams; it’s a smart investment for any startup that’s achieved product-market fit.
It can also be potentially disruptive: Early marketing and product managers may feel sidelined by new cross-functional teams that suddenly take a leadership role.
In a detailed walkthrough, senior director of growth at OpenView Sam Richard explains the core players needed to build a growth team and how to integrate them into the organization smoothly, and shares some useful experiments to run.
“Don’t expect a single hire to scratch the growth itch for you,” Richard warns.
“A brilliant hire is going to come up with ideas, but will absolutely need a team to support them, turn them into experiments and then make them a reality.”
Image Credits: Bryce Durbin
In an interview with Brian Heater, Indiegogo CEO Andy Yang spoke about how the pandemic has impacted the crowdfunding platform, the challenges of stepping into the role after the previous CEO departed, and how the company reached profitability.
The company wasn’t profitable when you joined?
We weren’t profitable. I joined and then we cut to profitability, or at least kind of a neutral state, and with any kind of change in leadership, some tenured folks opted out, and we basically became a new team overnight to kind of re-found the company, and we’ve been slowly adding people over the last couple years, but always with that eye on profitability and controlling our own destiny.
Image Credits: Bryce Durbin
Last week, Kickstarter announced that people have backed more than 200,000 projects with $6 billion in pledges since the company launched in 2009. Just 15 months ago, it crossed the $5 billion threshold.
Brian Heater spoke to CEO Aziz Hasan, who took over in 2019, about last year’s substantial of layoffs, the pandemic’s long-term impact on crowdfunding, and how he’s working to build a more resilient company:
I think for us some of the most important things are to really just understand how we’re operating the business, making sure that we are sufficient in the buffer that we have for the business to make sure that we’re operating in a way that we can feel confident that the team is going to have some stability, that they’re going to have this resilience.
We frequently run articles with advice for founders who are working on pitch decks. It’s a fundamental step in every startup’s journey, and there are myriad ways to approach the task.
Michelle Davey of telehealth staffing and services company Wheel and Jordan Nof of Tusk Venture Partners appeared on Extra Crunch Live recently to analyze Wheel’s Series A pitch.
Nof said entrepreneurs should candidly explain to potential investors what they’ll need to believe to back their startup.
” … It takes a lot of guesswork out of the equation for the investor and it reorients them to focus on the right problem set that you’re solving,” he said.
“You get this one shot to kind of influence what they think they need to believe to get an investment here … if you don’t do that … we could get pretty off base.”
Image Credits: TravelCouples (opens in a new window) / Getty Images
Going up against global e-commerce behemoth Amazon might seem futile, but smaller players can leverage value adds that give them a leg up when it comes to ensuring a loyal customer base, says Kenny Small, vice president SAP and Enterprise at Qualitest Group.
“The reality is that Amazon’s true unique selling proposition is its distribution network,” he writes in a guest post. “Online retailers will not be able to compete on this point because Amazon’s distribution network is so fast.
“Instead, it’s important to focus on areas where they can excel — without having to become a third-party seller on Amazon’s platform.”
Edtech and fintech have been in the Chinese Communist Party crosshairs in recent weeks — now, chat apps and gaming are among the targets.
Beijing filed a civil suit against Tencent over claims that its WeChat Youth Mode flouts laws protecting minors, and state media criticized the gaming industry as the digital equivalent of passing out drugs to kids, Alex Wilhelm writes in The Exchange.
He writes that the “news appears to indicate that we should expect more of the same as we’ve seen in recent months from the Chinese government: More complaints about the impact of ‘excessive’ capital in its industries, more tumbling share prices and more held IPOs.”
Image Credits: Yuichiro Chino (opens in a new window) / Getty Images
In an increasingly on-demand world, shipping delays and disruptions are a major roadblock to customer happiness.
AI can help, says Ahmer Inam, chief artificial intelligence officer at Pactera EDGE, who offers five strategies for using AI that can help startups understand supply chain disruptions and prepare for a Plan B.
“While AI won’t protect startups, manufacturers and retailers from these types of disruptions in the future, it can help them sense, anticipate, reroute and respond to them more effectively.”
Traditional MBA programs can be costly, lengthy and often lack the application of real-world skills. Meanwhile, big global brands and companies who need product managers to grow their businesses can’t sit around waiting for people to graduate. And the edtech space hasn’t traditionally catered to this sector.
This is perhaps why Product School says it has secured $25 million in growth equity investment from growth fund Leeds Illuminate (subject to regulatory approval) to accelerate its product and partnerships with client companies.
The growth funding for the company comes after bootstrapping since 2014, in large part because product managers (PMs) are no longer needed just inside tech companies but have become sought after across almost virtually all industries.
Product School provides certificates for individuals as well as team training, and says it has experienced an upwelling of business since COVID switched so many companies into digital ones. It also now counts Google, Facebook, Netflix, Airbnb, PayPal, Uber and Amazon amongst its customers.
“Product managers have an outsized role in driving digital transformation and innovation across all sectors,” said Susan Cates, managing partner of Leeds Illuminate. “Having built the largest community of PMs in the world validates Product School’s certification as the industry standard for the market and positions the company at the forefront of upskilling top-notch talent for global organizations.”
Carlos Gonzalez de Villaumbrosia, CEO and founder of Product School, who started the company after moving from Spain, said: “There has never been a better time in history to build digital products and Product School is excited to unlock value for product teams across the globe to help define the future. Our company was founded on the basis that traditional degrees and MBA programs simply don’t equip PMs with the real-world skills they require on the job.”
Its main competitor is MindTheProduct, a community and training platform, which has also boostrapped.
I worked at Google for six years. Internally, you have no choice — you must use Kubernetes if you are deploying microservices and containers (it’s actually not called Kubernetes inside of Google; it’s called Borg). But what was once solely an internal project at Google has since been open-sourced and has become one of the most talked about technologies in software development and operations.
For good reason. One person with a laptop can now accomplish what used to take a large team of engineers. At times, Kubernetes can feel like a superpower, but with all of the benefits of scalability and agility comes immense complexity. The truth is, very few software developers truly understand how Kubernetes works under the hood.
I like to use the analogy of a watch. From the user’s perspective, it’s very straightforward until it breaks. To actually fix a broken watch requires expertise most people simply do not have — and I promise you, Kubernetes is much more complex than your watch.
How are most teams solving this problem? The truth is, many of them aren’t. They often adopt Kubernetes as part of their digital transformation only to find out it’s much more complex than they expected. Then they have to hire more engineers and experts to manage it, which in a way defeats its purpose.
Where you see containers, you see Kubernetes to help with orchestration. According to Datadog’s most recent report about container adoption, nearly 90% of all containers are orchestrated.
All of this means there is a great opportunity for DevOps startups to come in and address the different pain points within the Kubernetes ecosystem. This technology isn’t going anywhere, so any platform or tooling that helps make it more secure, simple to use and easy to troubleshoot will be well appreciated by the software development community.
In that sense, there’s never been a better time for VCs to invest in this ecosystem. It’s my belief that Kubernetes is becoming the new Linux: 96.4% of the top million web servers’ operating systems are Linux. Similarly, Kubernetes is trending to become the de facto operating system for modern, cloud-native applications. It is already the most popular open-source project within the Cloud Native Computing Foundation (CNCF), with 91% of respondents using it — a steady increase from 78% in 2019 and 58% in 2018.
While the technology is proven and adoption is skyrocketing, there are still some fundamental challenges that will undoubtedly be solved by third-party solutions. Let’s go deeper and look at five reasons why we’ll see a surge of startups in this space.
Docker revolutionized how developers build and ship applications. Container technology has made it easier to move applications and workloads between clouds. It also provides as much resource isolation as a traditional hypervisor, but with considerable opportunities to improve agility, efficiency and speed.
From vaccine distribution plans to fire trackers to bar crawls for your best friend’s birthday, maps help people visualize space and express impact. And Felt, a new Oakland-based startup co-founded by Sam Hashemi and Can Duruk, is on a mission to make the medium more mainstream.
Felt is a collaborative software company that wants to make it easier for people to build maps on the internet. It announced today that it has raised $4.5 million led by Bain Capital Ventures, with participation from Designer Fund, Allison Pickens, Akshay Kothari (COO of Notion), Dylan Field (CEO of Figma) John Lily (former CEO of Firefox), Julia and Kevin Hartz, and Keval Desai.
The millions will be used to help Felt grow its fully distributed six-person team to bring on more front-end, back-end and product engineers, as well as product and brand designers. Along with the financing, the company announced it is launching a private beta to better understand what early adopters it attracts, and how those users engage with the platform.
Felt allows users to build a map with data sets integrated into it. A user can open a map of California, for example, and then turn to Felt’s data library to add information about bits like wildfires and smoke patterns. The map’s power grows as more integrations are used to build out its background; using the prior anecdote, for example, the wildfire map integrated with census data could allow decision makers to see how many businesses could be impacted by incoming smoke.
Over time, Felt users will be able to see other user-generated maps and team projects on the interface — which they can then copy to add their own flair, or leave comments to support the community.
While consumers will eventually be able to access a free tier, the big test for Felt is if it can find a customer base that is willing to pay, and consistently use mapping software in meaningful ways. The company is in a unique spot. It’s not a GPS service, so it won’t serve the consumer who only turns to maps for directions. Instead, its build-a-map service is better suited for companies that already use it in their day-to-day.
Felt is meant to be a continuation of the collaborative software movement underscored by everyday tools like Google Docs and top companies like Notion and Figma, as well as a sequel to Hashemi’s previous company, Remix. Recently bought by Via for $100 million, Remix is a city transportation planning startup born out of Code for America Hackathon. As Hashemi spent nearly seven years building Remix, he was introduced to the inadequacies of map-making, namely that there are many use cases for maps but not many people who have the skill set to create a professional product. He hopes Felt will take mapping beyond city planning and into a variety of industries, from education to science to media.
“We really want to be much more aspirational in what we’re trying to accomplish and go much more broader [so it] results in a totally different kind of company,” Hashemi said. Perhaps its biggest competitor is ESRI’s GIS, a mapping software tool founded in 1969 and still used by hundreds of thousands of companies today.
Climate change could be a catalyst that brings more customers into the collaborative mapping space. Duruk, who built products at Uber and VGS, spoke about the importance of crisis response after last year’s wildfires and the resulting eerie orange sky in the Bay Area.
“Everyone in the Bay Area would wake up, go to the air quality map, weather map and the fire map,” Duruk said. “Everyone was trying to do something with maps, but only a few companies in the world had the resources to build something….it was broken.” Felt wants to go broad in its integrations, but did confirm that climate data will be a priority.
The challenge with building a powerful, creative tool is that there is a chance for people to misuse maps for abuse or targeting, Duruk said. Felt is thinking about ways to build in accountability and systematic processes to limit bad actors from using mapping information in the wrong way.
In the meantime, though, the early-stage startup is focusing on expression as a key way to understand its own product’s bounds. With millions more, Felt is aiming at increasing the capability of people by growing the map-ability of the world.
By the time Porter co-founders Trevor Shim and Justin Rhee decided to build a company around DevOps, the pair were well versed in doing remote development on Kubernetes. And like other users, they were consistently getting burnt by the technology.
They realized that for all of the benefits, the technology was there, but users were having to manage the complexity of hosting solutions as well as incurring the costs associated with a big DevOps team, Rhee told TechCrunch.
They decided to build a solution externally and went through Y Combinator’s Summer 2020 batch, where they found other startup companies trying to do the same.
Today, Porter announced $1.5 million in seed funding from Venrock, Translink Capital, Soma Capital and several angel investors. Its goal is to build a platform as a service that any team can use to manage applications in its own cloud, essentially delivering the full flexibility of Kubernetes through a Heroku-like experience.
Why Heroku? It is the hosting platform that developers are used to, and not just small companies, but also later-stage companies. When they want to move to Amazon Web Services, Google Cloud or DigitalOcean, Porter will be that bridge, Shim said.
However, while Heroku is still popular, the pair said companies are thinking the platform is getting outdated because it is standing still technology-wise. Each year, companies move on from the platform due to technical limitations and cost, Rhee said.
A big part of the bet Porter is taking is not charging users for hosting, and its cost is a pure SaaS product, he said. They aren’t looking to be resellers, so companies can use their own cloud, but Porter will provide the automation and users can pay with their AWS and GCP credits, which gives them flexibility.
A common pattern is a move into Kubernetes, but “the zinger we talk about” is if Heroku was built in 2021, it would have been built on Kubernetes, Shim added.
“So we see ourselves as a successor’s successor,” he said.
To be that bridge, the company will use the new funding to increase its engineering bandwidth with the goal of “becoming the de facto standard for all startups.” Shim said.
Porter’s platform went live in February, and in six months became the sixth-fastest growing open-source platform download on GitHub, said Ethan Batraski, partner at Venrock. He met the company through YC and was “super impressed with Rhee’s and Shim’s vision.
“Heroku has 100,000 developers, but I believe it has stagnated,” Batraski added. “Porter already has 100 startups on its platform. The growth they’ve seen — four or five times — is what you want to see at this stage.”
His firm has long focused on data infrastructure and is seeing the stack get more complex, saying “at the same time, more developers are wanting to build out an app over a week, and scale it to millions of users, but that takes people resources. With Kubernetes it can turn everyone into an expert developer without them knowing it.”
Uber wants to overcome the language barriers you’ll sometimes encounter when hailing a ride. The Verge says Uber has partnered with Rosetta Stone to offer free language lessons through its Driver app. Both Uber and Uber Eats drivers can use the feature to learn any of Rosetta Stone’s 24 languages. They’ll even get material tailored to common ridesharing scenarios.
Drivers will need to have reached Gold, Platinum or Diamond status through the Uber Pro program in a qualifying country (including large parts of the Americas, the UK, India and Spain).
The courses arrive alongside another career initiative. Drivers in some countries (including many of those from the Rosetta program) can request an achievements letter that will help them with job applications.
Uber wasn’t shy about the official rationale for both moves. Many of its drivers are either immigrants (and less likely to be familiar with local languages) or see languages and rideshare work as key to expanding their opportunities. Uber is aware that driving for the company might just be a “temporary stop” on a career path — this gives workers a better chance to move upward.
There are practical incentives for Uber. The more languages its drivers speak, the more likely those drivers are to get favorable ratings and encourage repeat business. The career incentives could also encourage more drivers to sign up for Uber in the first place, even if they ultimately spend less time in the role.
Editor’s note: This post originally appeared on Engadget.
Leaders become great not because of their power, but because of their ability to empower others.
It’s no secret that most tech companies tout their culture as “unique” or “open,” but when you take a closer look, it’s often merely surface level. Yes, you may be dog-friendly or offer unlimited beer on tap, but how are you helping your employees become the best versions of themselves? We’re at our best when our employees are at their best, so we do everything in our power to make that a reality.
We’re at our best when our employees are at their best, so we do everything in our power to make that a reality.
After successfully running Vincit in Finland and Switzerland, in 2016 we made the jump to the United States, setting up an office in California. Although we had moved over 5,000 miles to a new country, it was important that our two main KPIs remain the same: Employee happiness and customer satisfaction. We believe that happy employees make clients happy, and happy clients refer you to others. Therefore, it was essential that this positive and prosperous workplace environment followed us to the United States.
So beyond traditional benefits, like full medical coverage, 401k matching and standard office amenities, we tapped into our Finnish roots to build and provide our employees with an uninhibited, supportive workplace. We keep our company culture as transparent as possible and fully believe in the power of empowering our employees. We have no managers and no real role hierarchy. Employees do not have to go through an approval process on anything they are working on.
We encourage our employees to make a trip to Finland to visit our headquarters. Instead of “Lunch & Learn” meetings, we host “Fail & Learn” meetings where employees get to share something that didn’t work and what they learned from it. And once a month, we let an employee become the CEO for a day.
Unsurprisingly, the “CEO of the Day” program is one of our most popular initiatives. The program gives our employee the reins for 24 hours with an unlimited budget. The only requirement? The CEO must make one lasting decision that will help improve the working experience of Vincit employees. Whatever the CEO of the Day decides, the company sticks with. They can purchase something for the company, change a policy, update a tool we use … Really, anything that they come up with can be done.
In the United States, same-day and next-day Amazon Prime deliveries have become the de facto standard in e-commerce. People want convenience and instant gratification, evidenced by the fact that an astonishing ~45% of U.S. consumers are Amazon Prime members.
Most major retailers are scrambling to catch up to Amazon by partnering with last-mile delivery startups. Walmart has become a major investor in Cruise for autonomous-vehicle deliveries, and Target acquired Shipt and Deliv last-mile delivery startups to increase its delivery speed. Costco partnered with Instacart for same-day deliveries, and even Domino’s Pizza has jumped in by partnering with Nuro for last-mile delivery using autonomous vehicles.
E-commerce in LatAm has taken off at a compound annual industry growth rate of 16% over the past five years.
Venture capitalists have been investing heavily in last-mile delivery over the past five years on a global scale, but Latin America (LatAm) has lagged behind. Over $11 billion has been invested globally in last-mile logistics over the past decade, but Latin America only saw about $1 billion over the same period (Source: PitchBook and WIND Ventures research).
Within this, only about $300 million was in Spanish-speaking Latin America — a surprisingly small amount for a region that has 110 million more consumers than in the U.S.
Brazil-based Loggi accounts for about 60% of last-mile VC investment in Latin America, but it only operates in Brazil. That leaves major Spanish countries like Mexico, Colombia, Chile and Argentina without a leading independent last-mile logistics company.
In these countries, about 60% of the last-mile delivery market is dominated by small, informal companies or independent drivers using their own trucks. This results in inefficiencies due to a lack of technologies such as route optimization as well as a lack of operating scale. These issues are quickly becoming more pronounced as e-commerce in LatAm has taken off at a compound annual industry growth rate of 16% over the past five years.
Retailers are missing an opportunity to give customers what they want. Customers today expect free, reliable same- or next-day delivery — on-time, all the time, and without damage or theft. All of these are challenging in LatAm. Theft, in particular, is a significant problem, because unprofessional drivers often steal products out for delivery and then sell them for a profit. Cost is a problem, too, because free same- and next-day deliveries are simply not available in many places.
Why does Latin America lag when it comes to the last mile? First, traditional LatAm e-commerce delivery involves multiple time-consuming steps: Products are picked up from the retailer, delivered to a cross-dock, distributed to a warehouse, delivered to a second cross-dock, and then finally delivered to the customer.
By comparison, modern delivery operations are much simpler. Products are picked up from the retailer, delivered to a cross-dock, and then delivered directly to the customer. There’s no need for warehousing and an extra pre-warehouse cross-dock.
And those are just the operational challenges. Lack of technology also plays a significant role. Most delivery coordination and routing in LatAm are still done via a spreadsheet or pen and paper.
Dispatchers have to manually pick up a phone to call drivers and dispatch them. In the U.S., computerized optimization algorithms dramatically cut both delivery cost and time by automatically finding the most efficient route (e.g., packing the most deliveries possible on a truck along the route) and automatically dispatching the driver that can most efficiently complete the route based on current location, capacity and experience with the route. These algorithms are almost unheard of in the Latin America retail logistics sector.
Uber Freight, the logistics business spun out of Uber in 2018, has acquired Transplace for about $2.25 billion from private equity group TPG Capital, according to regulatory filings. The deal announced Thursday will involve $750 million in Uber stock with the remainder in cash.
The acquisition of Transplace marks a ramping up of Uber Freight’s business as it aims to carve out market share in its existing markets and an expansion in Mexico. Uber Freight also sees the acquisition as a means to accelerate the company’s path to profitability and help the segment to break even on an Adjusted EBITDA basis by the end of 2022, according to the company.
The union will fold one of the largest managed transportation and logistics networks into Uber Freight’s platform, which connects truck drivers with shippers that need cargo delivered. Uber Freight’s brokerage will continue to operate independently from Transplace’s services, the company said.
“This is a significant step forward, not just for Uber Freight but for the entire logistics ecosystem,” Lior Ron, head of Uber Freight, said in a statement. “This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform that will transform shippers’ entire supply chains, delivering operational resilience and reducing costs at a time when it matters most.”
Transplace CEO Frank McGuigan said as a result, the combined company expects shippers will see greater efficiency and transparency. “All in all, we expect to significantly reduce shipper and carrier empty miles to the benefit of highway and road infrastructures and the environment,” he said.
Uber Freight launched in 2017. In August 2018, it was spun off into a separate business unit, a move that simultaneously allowed it to gain momentum and burn more cash. After spinning off of Uber, the freight company underwent an expansion. Uber Freight redesigned its app, an improvement that included adding new navigation features to make searching for and filtering loads easier to customize.
The company expanded to Canada and Europe. Uber Freight also established a headquarters in Chicago as part of its parent company’s broader plan to invest more than $200 million annually in the region, including hiring hundreds of workers. Uber said in September 2019 it would hire 2,000 new employees in the region over the next three years; most would be dedicated to Uber Freight.
Uber sold a stake in the freight business last year when investor group led by New York-based investment firm Greenbriar Equity Group committed to invest $500 million in a Series A preferred stock financing for the business. The deal valued the unit at $3.3 billion on a post-money basis.
Uber maintained majority ownership in Uber Freight and used the funds gained from Greenbriar to continue to scale its logistics platform, which helps truck drivers connect with shipping companies.
has announced the first major expansion of its in the US. The company is more than doubling the number of service areas this week to north of 400 cities and towns. It now serves several major markets through the Uber and Uber Eats apps, including San Francisco, New York City and Washington DC.
The rapid expansion was partly fueled by a partnership with and its 1,200 grocery stores across the country. Albertsons owns brands including Safeway, Jewel-Osco, Acme, Tom Thumb and Randalls. Uber also offers delivery from regional chains such as Southeastern Grocers and New York’s Red Apple Group. Uber Pass and Eats Pass subscribers don’t need to pay delivery fees on grocery orders over $30.
Grocery delivery became an important component of Uber’s business during the toughest parts of the COVID-19 pandemic, because the number of rides people were taking dropped significantly. The company is also that led to higher prices for rides. Uber bought several delivery startups over the last couple of years to fuel its growth in that sector, such as Cornershop, and .
Editor’s note: This post originally appeared on Engadget.