First, some housekeeping: Thanks to our new corporate parents, TechCrunch has the day off tomorrow, so consider this the last chapter of The Exchange for this week. (The newsletter will go out Saturday as always.) Also, Alex is off next week. Anna is taking on next week’s newsletter and may have a column or two on deck as well.
But before we slow down for a few days, let’s chat about the most recent Y Combinator Demo Day in thematic detail.
If you caught the last few Equity episodes, some of this will be familiar, but we wanted to put a flag in the ground for later reference as we cover startups for the rest of the year.
The Exchange explores startups, markets and money.
What follows is a roundup of trends among Y Combinator startups and how they squared with our expectations.
In a group of nearly 400 startups, you might think it’d be hard to find a category that felt overrepresented, but we’ve managed.
To start, we were surprised by the sheer number of startups in the cohort that were pursuing software models that incorporated no-code and low-code techniques. We expected some, surely, but not the nearly 20 that we compiled this morning.
Startups in the YC batch are building no-code and low-code tools to help developers build faster internal workflows (Tantl), build branded real estate portals (Noloco), sync data between other no-code tools (Whalesync), automate HR (Zazos), and more. Also in the mix were BrightReps, Beau, Alchemy, Hyperseed, Enso, HitPay, Whaly, Muse, Abstra, Lago, Inai and Breadcrumbs.io.
At least 18 companies in the group name-dropped no- and low-code in their pitches. They are taking on a host of industries, from finance and real estate to sales and HR. In short, no- and low-code tools are cropping up in what feels like every sector. It appears that the startup world has decided that helping non-developers build their own tools, workflows and apps is a trend here to stay.
Last-mile logistics supplier AxleHire provides same-day and next-day delivery through a network that includes gig economy, couriers and traditional carriers. Over the past year, it has been quietly piloting automated repositioning startup Tortoise’s remote controlled delivery robots in Los Angeles and compact container delivery service URB-E’s e-bike container delivery in New York City. On Thursday, it announced plans to scale the two very different zero-emissions pilot programs nationally over the next 12 months.
AxleHire, which is known for parcel delivery and restaurant meal kit delivery like Blue Apron and HelloFresh, plans to bring over 100 Tortoise robots across the country. During URB-E’s summer deployment with AxleHire in NYC, it deployed 10 vehicles moving 100 containers per week. Now it will deploy 50 URB-E vehicles moving anywhere from 300 to 500 containers per week in NYC, LA and San Francisco, as well as other launch cities. The company, which raised a $20 million round in April, didn’t specify every city it would be entering with these new programs, but Tortoise and URB-E said we can look to the cities AxleHire already operates in: Chicago, Dallas, Houston, Los Angeles, San Diego, San Francisco, New York, Phoenix, Seattle and Portland, Oregon.
AxleHire’s style is to establish delivery hubs in or near dense metro areas, which makes for easier trips and less miles traveled in total. The partnerships with Tortoise and URB-E are a part of AxleHire’s mission to create more sustainable and cheaper last-mile delivery. The company says its partnerships with the two startups have also lowered its emissions by 95%. AxleHire is providing an example of one company trialing two very different greener and tech-focused forms of transporting goods, so it will likely serve as an interesting case study for other last-mile logistics providers.
Image Credits: URB-E
In New York, AxleHire and URB-E have been working together on a microcontainer delivery system between Brooklyn and Manhattan. URB-E’s vehicles are specifically designed to be able to ride in the bike lanes, despite their ability to haul over 800 pounds. AxleHire says its pilot with URB-E resulted in a six times reduction in traffic and a model that is three times cheaper than EV delivery vans, largely based on the avoidance of parking tickets.
Over the past year in Los Angeles, AxleHire stationed Tortoise’s electric, 4-mph remote-piloted carts, which carried up to 120 pounds worth of goods, in its delivery microhubs in cities, allowing the little bots with friendly smiley faces to go back and forth, making about 15 deliveries per day within a three-mile radius. In addition, AxleHire loaded a large truck with multiple packages and a Tortoise robot, which would then drive into a dense residential area. This truck would serve as a mobile delivery hub, doing its own deliveries while the bot goes back and forth delivering parcels and being reloaded all day long.
“It’s basically the hive model, where we’re augmenting the existing van or truck in terms of how many deliveries they could do in a two-hour stretch,” Dmitry Shevelenko, co-founder of Tortoise, told TechCrunch. “There’s communication happening with our subject confirming they’ll be home to receive it. If so, they get notified that the robot’s on the way when it’s about 10 minutes away, and then when it arrives, the customer will come out and get it from the containers in the robot.”
The Tortoise bots, which can ride on sidewalks or bike lanes, have both swappable batteries and can be plugged and charged, according to Shevelenko. On a single charge, they can get around 10 to 15 miles of range.
While Tortoise’s bots will be operated 100% remotely over the next year, remote positioning is not Tortoise’s end goal at all. Autonomy is the goal, and doing partnerships like this, as well as with shared e-scooter operators like Spin, allows Tortoise not only to get into markets that currently don’t have regulation for self-driving vehicles, but also to just get into the market now, rather than spending multiple years mapping it first. The only real infrastructure the bots need is 4G connectivity.
“The beauty is that we can ship the robot to a new location and because we have the benefit of human judgment oversight every inch of the journey,” said Shevelenko. “We don’t need perfect routing or perfect mapping. We’re filling in the maps over time, and that gives us a big data advantage.”
By slowly collecting routing data over the course of the next year, Tortoise will be giving its system more data to learn on and create the most optimal route for the specific use case of low-speed and lightweight delivery vehicles. Shevelenko says the long-term vision of Tortoise is to have its tech on any light electric vehicle, whether it be a delivery robot, a scooter, a cleaning robot, security robot or construction robot. Delivery is a great place to start, given the massive demand in the COVID marketplace.
“The more vehicles we have with Tortoise eyes on them, the more data we’re collecting, which means we’re doing trips with higher autonomy and lower costs,” said Shevelenko.
Aside from allowing for max data collection, remote controlled delivery bots over the next year also give Tortoise the advantage of getting the community used to this new tech.
“We think the right way to enter a community is first to reassure people that this is safe and get them comfortable with it,” said Shevelenko. “Once it’s part of daily life, then slowly over time, we can turn on more autonomy, but there’s no need to rush into that right now. The practical reality is, everybody’s claiming they’re doing autonomy but they aren’t. They always have a fallback like safety drivers or remote monitors. Nobody actually trusts their economy system, and so we’re kind of leaning into that and not trying to do something that is impossible.”
In Europe and the US we are very much getting used to groceries being delivered within 15 minutes, with a huge battleground of startups in the space. Startups across Europe and the US have raised no less than $3.1 billion in the last quarter alone for grocery deliveries within 10 or 20-minute delivery promises. But all are scrambling over a market where the average order size is pretty low. What if it was in the hundreds, and didn’t require refrigeration?
This is probably going to be the newest “15/30minute” consumer battleground, as high-end consumer goods come to last-mile deliveries.
The latest to Arive in this space is… arive – a German-based startup that delivers high-end consumer brands within 30 minutes. It’s now raised €6 million in seed funding from 468 Capital, La Famiglia VC and Balderton Capital.
But stacking its shelves with well-known brands and spinning up last-mile delivery logistics, Arive is offering fitness products, cosmetics, personal care, homeware, tech and fashion. Consumers order via an app, with the delivery coming via a bike-only fleet in 30-minutes or less.
The behavior it’s tapping into is already there. It seems the pandemic has made us all work and play from home, leaving foot traffic in inner cities still below pre-Covid levels.
Arive says it works directly with brands to offer a selection of their products for on-demand delivery, offering them a new distribution channel to a new type of customer that wants speed and convenience.
arive is currently available in Munich and has recently launched in Berlin, Frankfurt, and Hamburg. The 30-minute delivery guarantee means it doesn’t need as many micro fulfillment centers as grocery players, helping it to keep infrastructure costs low.
Maximilian Reeker, co-founder of arive, said: “While the space for hyper-fast grocery delivery is increasingly crowded, we found the brands we love are still stuck in a three-day delivery scheme. For today’s time-poor consumers, this is too long.”
Bardo Droege, investor at 468 Capital, commented: “Our cities are dynamic, fast-moving places, and people living there want the tools and services that reflect their lifestyles so it’s no wonder the 15-minute groceries category has taken off so quickly. We’re confident the arive team will take this on.”
French startup Cajoo is raising some money in order to compete more aggressively in the new and highly competitive category of food delivery companies. Interestingly, the lead investor in today’s funding round is Carrefour, the supermarket giant. Headline (formerly e.ventures) is also participating in the round as well as existing investors Frst and XAnge.
Carrefour’s investment isn’t just a financial investment. Cajoo will take advantage of Carrefour’s purchasing organization. This way, Cajoo will be able to offer more products to its customers.
Cajoo is part of a group of startups that try to create a whole new category of grocery deliveries. The company operates dark stores and manages its own inventory of products. Customers can then order items without having to think whether they’ll be home when the delivery happens. Around 15 minutes later, a delivery person shows up with your groceries.
“It’s a category that is incredibly capital intensive,” co-founder and CEO Henri Capoul told me. “We own the entire value chain. If we want to expand, we have to launch hubs, we have to buy products.”
With $40 million on its bank account, Cajoo now wants to solidify its strong market position in its home country. The service is currently live in 10 French cities — Paris, Neuilly-sur-Seine, Levallois-Perret, Boulogne-Billancourt, Lille, Lyon, Toulouse, Bordeaux and Montpellier.
And yet, the company is already facing some competition in Paris for instance. But Henri Capoul sees it as market validation. “There are a lot of players that have raised a lot of money. But it’s a regulated market. We own all our products and we have to comply with regulation. We can’t sell everything at a loss,” he said.
While Henri Capoul expects some sort of consolidation down the road, the company is doing everything to remain a big, independent company. “European champions will be national champions first. Right now, some players can overcome a lack of products with discounts. I’m convinced that the future of this category will be represented by three or four local players that are strong in other countries.” Henri Capoul said.
Cajoo is currently the only French company operating at this scale in this category. So it’s clear that the company sees itself as a market leader in France first. But the company is already looking at other markets as well — Belgium, Italy, Spain, maybe Portugal or Eastern Europe countries.
But first, the company wants to grow its team. The number of employees working in the HQ is going to double by the end of the year. Operations and delivery teams will also grow quite drastically. The company expects a fivefold increase by the end of the year on this front.
Some delivery people are directly hired by Cajoo. But the company is also relying on partners — both contracting companies and freelancers. So the company faces some of the challenges that Deliveroo and Uber Eats also face.
Cajoo might be a great business idea, but users will have to ask themselves whether it really solves an important need or they’re just using it because it exists. Instant delivery companies could have a real impact on brick-and-mortar shops over the long run.
Point Pickup Technologies, a last-mile delivery service, has acquired white label e-commerce platform GrocerKey for $42 million, according to the company. With the acquisition, Point Pickup now allows retailers to offer same-day delivery, from purchase to fulfillment to delivery, under their own brand name, rather than under third parties like Instacart.
Instacart made a killing delivering groceries and goods for retailers during the coronavirus pandemic, with a generated revenue of $1.5 billion in 2020 and $35 billion worth of sales. The company has an estimated 9.6 million active users and over 500,000 “shoppers” who pick up and deliver goods.
New entrants to the same-day delivery space are cropping up, which aligns with the expected growth of the industry to $20.36 billion by 2027, according to Allied Market Research. But companies like Amazon and Instacart that perform this service and host a delivery marketplace get far more than sales revenues – they also get all the customer data.
Tom Fiorita, founder and CEO of Point Pickup, says retailers should have a right to own that data themselves. The acquisition of GrocerKey, which brings on board the company’s front-end consumer-facing sales engine and predictive analytics, puts the data and brand recognition back in the retailer’s hands.
“If you are a customer of Instacart, you pay them a subscription, they own your buying habits, your credit cards, your data,” Fiorita told TechCrunch. “Instacart was a big thing during COVID because no one had delivery. So now retailers woke up and said, ‘Oh my god, I can’t just have an Instacart-like marketplace be selling my goods. I don’t know who my customers are, I don’t have their credit cards or data.’ And you know data runs the world now.”
Another recent, if not smaller, entrant to the space is Canadian startup Tyltgo, which operates under a similar model to what Point Pickup is now offering via GrocerKey’s technology. In both cases, the buyer goes directly onto the merchant’s platform and places the order through them, so it feels like they’re interacting with the brand they purchased from. And on Tuesday, Walmart also announced a new white-label delivery service that would allow other merchants to tap into its own delivery platform to get orders to their customers.
Fiorita founded Point Pickup in 2015 as a reaction to Amazon’s increased omnipotence with the noble, if not naive, mission to “save local America.” Walmart and Kroger, two of the largest grocery retailers in the U.S., are Point Pickup’s top customers, alongside other nationwide retailers like Albertsons, Giant Eagle and more. But Fiorita believes the service his company is offering will be even more impactful when it starts to work its way down to the mid-sized and small- to medium-sized businesses.
“We built this not only to survive against Amazon or Instacart, but because these small businesses need this for their survival,” Fiorita said. “These companies will no longer survive if they continue to allow other companies to sell their merchandise and to own their customer, including the data, the advertising, the CPG dollars and everything.”
Point Pickup offers deliveries of everything from grocery to general merchandise, pharmacy and oversized delivery. It has a network of 350,000 gig economy drivers across 25,000 ZIP codes in all 50 states.
Since the company’s network of drivers, who often pick and pack the products for the customer as well as deliver the goods, comprises all gig workers with their own vehicles, Point Pickup doesn’t have a clear picture of the percentage of its fleet that’s electric or hybrid. Fiorita speculates it’s probably on par with nationwide rates, if not higher. A recent Pew Research report found that 7% of Americans say they own an EV or hybrid.
Fiorita said that the type of car drivers own is taken into account during recruitment and that the company is looking for ways to incentivize drivers to buy less polluting vehicles. He also said Point Pickup is a vehicle-agnostic platform, meaning it’s piloting other delivery vessels like drones and autonomous robots.
To compete with the big dogs in the space like Amazon and Walmart, both of which are either testing or already have in place electric delivery vans, Point Pickup will have to also make efforts to beef up its strategy in the carbon emissions space.
More than 10 companies currently compete across Europe with an instant grocery delivery business model. Half of them were established in 2020, the year of the pandemic. These companies have raised more than $2 billion to date.
Existing and well-funded online food-delivery service players like Delivery Hero are also joining the race by launching dedicated grocery offerings. However, if lessons from the world’s largest online grocery market, China ($400 billion), matter, then it’s clear that instant delivery is not the magic bullet to crack the dominance of Europe’s incumbent supermarket chains in the overall $2 trillion-plus flat market.
Instead, China’s quick-commerce equivalents (like Dingdong Maicai, Miss Fresh and Meituan Maicai) compete alongside a wealth of other online grocery models (such as Pinduoduo, JD’s Super and Alibaba’s Taoxianda), which have helped bring total market penetration to 20% and beyond.
Quick commerce suffers from narrower profit margins compared to competing models and is addressing lower consumer demand in China than anyone in the West is expecting it to achieve in Europe and the U.S. If the performance of online grocery platforms in China (a market five to seven years ahead of Europe in terms of online retail) is anything to go by, a range of B2C business models would be more likely to displace the traditional grocery retailers.
The idea of ordering groceries online and having them delivered to consumers in less than an hour is nothing new. Back in the heyday of the dot-com bubble, a company attempted to do just that: Kozmo.com. Founded in 1998, it raised more than $250 million (around $400 million in today’s dollars) from investors, promising to deliver food, among other items, to consumers within an hour, while charging no delivery fees.
In 1999, it had revenues of $3.5 million and a loss of $1.8 million. However, in 2001, the business was shut down by its board after the company could not make the business model work at scale.
Some 15 years later, another company had a go. Gopuff was established in Philadelphia in 2013 and originally targeted students. What started out as a hookah delivery service soon expanded into a much broader convenience store offering and delivered to customers in approximately 30 minutes.
Gopuff was most recently valued at $15 billion after raising a total of $3.4 billion — 75% of which occurred in the past 12 months. Last year, Gopuff grew revenues from around $100 million to $340 million.
Kozmo.com went out of business after just three years. Meanwhile, Gopuff was turned down by several VCs in its early days, and it wasn’t until the pandemic that it saw a rapid acceleration in fundraising. Little did teams at either company know that they would later become the inspiration for a whole generation of founders in Europe.
Has anything fundamentally changed in the 20 years since Kozmo.com? Indeed, we’ve seen little technological progress that would hugely affect the operations of an instant commerce business. However, there have been much larger shifts in consumer habits.
Firstly, the number of global internet users has skyrocketed (from below 500 million to beyond 4 billion), and mobile internet has taken over. Secondly, demand for online grocery delivery has grown significantly due to the COVID-19 pandemic, as consumers have preferred to make retail purchases from home for safety reasons. Thirdly, consumers are now accustomed to paying fees for delivery services, typically around $2 per order, which Kozmo notoriously did not do.
While many online grocery business models exist, the instant grocery, quick-commerce approach has been the favorite of European entrepreneurs and VCs over the past 18 months. The model itself, also referred to as q-commerce, is not that hard to understand.
Companies maintain a small product offering of around 1,000–2,000 SKUs that consumers would otherwise find in convenience or drug stores. These products are purchased directly from brands or through distributors and are stored in self-operated microwarehouses close to customers’ locations.
Marketing tactics are aggressive, often employing vouchers for first-time users of up to $12 (50% of an average shopping basket), and many startups offer their products at supermarket price or even at a discount of 10%–15%. Delivery usually happens by bicycle, e-bike or scooter, within 10-30 minutes of an order being placed, for a fee of around $2 with no minimum order value.
Companies like Getir from Istanbul (total funding: $1 billion, last valuation: $7.5 billion) and Gorillas from Berlin (total funding: $335 million, last valuation: $1 billion) are leading the way. When Gorillas announced its $290 million Series B in March 2021, it became the fastest European startup to achieve unicorn status (nine months after launch). The company is already rumored to be seeking Series C financing at a $2.5 billion valuation.
There are more than 10 companies across Europe with more or less the same business model. Those include the 2020-established Flink (Germany-based, $300 million raised), Zapp (U.K.-based, $100 million raised), Dija (U.K.-based, $20 million raised and just acquired by Gopuff), Jiffy (U.K.-based, $7 million raised) and Cajoo (France-based, $6 million raised).
There is also JOKR, which was started by the founder of Foodpanda. JOKR was only established in Q1 2021, but right after incorporation raised one of the largest ever initial seed rounds (rumored to be $100 million) and subsequently a $170 million Series A in July to bring the model to Europe, Latin America and the U.S.
Likewise, companies coming from food delivery have pushed further into this space and received additional funding in recent months, notably Delivery Hero through Dmart and Glovo through SuperGlovo, following role models in the U.S., such as DoorDash.
As these companies approach later-stage financing sometime in the future, questions will be asked about the path to profitability in an industry of notoriously thin margins. Indeed, this is an uncomfortable truth that hasn’t changed since the early days of Kozmo.com.
The available figures show that old patterns are repeating. Gopuff recently reported an EBITDA of negative $150 million on $340 million in revenue (EBITDA margin: -45%). Furthermore, an analysis by the German business monthly Manager Magazine concluded that Gorillas was operating at negative unit economics of -6%. Additional costs, such as overhead and technology, might push this number up significantly further.
Estonia-based Membo — which is backed by Y Combinator and will be presenting at the incubator’s Summer 2021 Demo Day next week — is aiming to take a slice of the premium end of grocery shopping in Europe and a bite out of supermarket giants’ continued dominance of the traditional weekly food shop.
On-demand food delivery in Europe is of course a highly competitive business with rapid-fire market moves and bursts of consolidation among app makers making a kind of sizzling startup stir-fry. Online grocery delivery, by contrast, tends to be a bit more sedate. Although there is some overlap, with developments like dark stores.
Interest in app-based grocery shopping also had an especially big boost during the pandemic — which has fired up consumer interest in doing the weekly shop online so that’s now driving more startup activity and capacity from supermarket giants trying to meet increased demand for online delivery.
Entering this fray is Membo — which, starting in Estonia, has built an app-based marketplace for local food producers to sell directly to consumers, cutting out other middlemen as the startup handles delivery logistics and billing.
Its service is live in the Estonian cities of Tallin and Tartu, currently. So most of us can merely oggle the mouth-watering fare for now.
Food producers display their wares in Membo’s app, which it likens to a virtual farmers’ market — allowing shoppers to browse and buy from multiple high quality, local fresh food producers and have everything delivered to them in one go. Its business model is based on taking a commission on orders made via its platform.
Products ordered via Membo can be delivered to customers in one of (currently) three slots a week. So within a few days or even next day. The startup batches customer orders to send to producers who only have to send one bulk order back to Membo’s centralized warehouse — where its staff take care of the packing and distribution to fulfil all the individual customer orders.
It launched the service last December and has seen 30% month on month growth over the past eight months — with, to date, 4,000+ orders sent out and customer numbers reaching over 1,400.
While local produce — and therefore the environmental benefits of sourcing food locally (lower ‘food miles’) — is a big feature of what Membo is selling it does also offer food from further afield — shipping Spanish oranges to its Estonia-based shoppers, for example — in order that it can provide customers with a full range of groceries and do things like be able to offer certain seasonal produce at different times of the year.
A full inventory is also important for it to be able to compete with traditional supermarkets on the ‘single weekly shop’ convenience front too, of course.
At present there are 800+ items listed on Membo’s platform from some different 65 producers. (And while groceries are its core offering it says it’s keeping an open mind about how that might expand — noting it recently added a locally produced pet food producer to its inventory, for example.)
But the overarching idea is for the food Membo sells to be as locally sourced to the customer as possible — which obviously has positive knock on impact on freshness and therefore overall grocery quality.
“Everything that we’re doing stems from the insight that people ordering their weekly groceries actually care much more about freshness and quality of their food than they actually care about 15 minute deliveries,” says co-founder and CEO Vahur Hansen, who cut his startup teeth working as an early engineer for TransferWise (now Wise).
“Coming from that insight we set out to build a model that can guarantee that when you order from us, every item in your cart always arrives as the freshest version possible. As an example… when you order trout from us the same trout was caught the day before. You get dairy produce that was specifically prepared for your delivery. You get oranges that were picked from the tree 24 hours ago. That’s the sort of reality that we’re focused on.”
“The product, from a fundamental point of view, is built for Europeans — and sort of for the European mentality,” he also tells TechCrunch. “It’s not new for people [here] to have this sort of mission/feel on being able to consume local produce. Europeans all over, in every country, they know that they need to support their local producers but they also know that local producers really make the best products for them. And for us the bigger goal is to build a cross-European, high quality producer network — coupled with very efficient logistics — so that we can, anywhere, deliver high quality local producers across Europe.”
On the last mile delivery side, the team has tried a few different approaches but is currently outsourcing that to delivery partners — with Hansen reiterating it makes sense for it to stay focused on the core logistics piece.
“When we started with this product we realized that we’re more of a logistics company than an actual store. So everything that we do is logistics in trying to figure out how to organize the quickest producer to end customer delivery.”
Given the target segment is premium groceries, Membo shoppers’ baskets are unsurprisingly more valuable than the average food delivery app — which conversely cater to impulse buys and hyper quick convenience. (Toothpaste, chocolate bars, takeaways, that sort of thing.)
So although there can be some overlap in the basic nature of what’s offered for delivery by Membo vs the average on-demand food delivery app there is more than enough clear blue water separating its value proposition vs — for example — the stuff that even a dark store operator like Spain’s Glovo can bike to your door.
It is very hard for hyper speedy delivery focused players to handle fresh produce and get it intact and in date to the customer’s door. Non-perishable, long shelf life products — processed foods, bottled drinks, toiletries etc — or indeed meal deliveries from restaurants which are set up to dish up takeaway are far easier for such platforms to manage and deliver. So grocery freshness is an especially difficult USP for such apps to compete on.
The question then is how large is the market for freshness and quality in the grocery space vs hyper quick, push-button convenience.
Membo’s bet is that delivering quality groceries is ultimately the more sustainable app business to be in. And it looks like a solid one. Certainly in a wealthy region like Northern Europe.
“It’s definitely a different model to dark stores — where they need to have mini warehouses spread across all cities — and also for us, unit economics wise, it’s a very good thing, because you can really save on scale,” says Hansen, discussing how Membo’s model contrasts with on-demand delivery apps doing grocery deliveries out of networks of dark stores.
“The fact that us needing one big warehouse as opposed to like ten smaller ones really effects our unit economics positively.”
“They capture impulse buys — and we capture planned out weekly grocery baskets,” he goes on. “Based on my research, our grocery baskets are at least 50% higher than for the sort of ‘convenience’ grocery apps. Right now it’s around $50 for an average customer. So from a very practical point of view we already see that — people come to our site to really order all of our fresh produce. As opposed to just a few items.”
There is another differentiating factor in play too.
Membo isn’t relying on a retail model that requires predicting customer demand in advance — so its business can be leaner and more efficient. Which also sums to less food being wasted — something else Membo’s target buyers are probably going to appreciate too. (The typical Membo customer is a 27-55 year old suburban mother who likes to cook for their family and prepare weekly meals ahead, per Hansen — someone who “really appreciates high quality, mostly eco ingredients for the food that they make”.)
“We set out to avoid food sitting in our warehouse and all the fresh produce that comes to our warehouse in the morning — it’s based on orders and it gets sent out to end customers the same evening. And also as a side effect of that model for the local food produce that we serve — there’s no food waste,” he says, adding: “Everything that arrives to our warehouse has already been ordered by our customers and our warehouse, essentially, is empty by the end of the day.”
It’s still early days for Membo of course. But it has big expansion plans in the region.
It’s been using its home market as a “playground” for fine-tuning its model and operations ahead of planned scaling into other European markets — with an eye on potential launches in Switzerland, Germany or France.
Markets with a rich network of local food producers who can be persuaded to sell their wares more directly to consumers via its platform will take priority, per Hansen, who says a range of factors will be involved in deciding where it goes next — so clearly the local competitive mix will also be key.
(Europe-based rivals include the UK’s Farmdrop — which targets a similarly discerning grocery shopper, who cares where their food is coming from and has the money to pay a quality premium, offering farmer sourced produce direct to UK consumers via its own online platform.)
“We’ve been using Estonia as a playground to figure out what is the exact operating model under which we can guarantee freshness for every item. So we’re been fine-tuning our product and building it so that we know it’s a sustainable business before going into expansion,” he says, adding: “That’s also one of the things that YC has really taught us.
“Build a working business and don’t go into scaling mode too quickly. But we are getting to the point where we’re already mapping bigger Western European countries and really honing in — trying to figure out what is the best combination of all of these factors to go in.”
Prior to taking in investment from YC, Membo had raised a little pre-seed funding to get going — although Hansen notes that its team remains small and expenses are therefore pretty lean. Its pre-seed backers included the CEO and VP of growth at Estonian ride-hailing startup Bolt, as well as some of Hansen’s ex colleagues at (Transfer)Wise.
In a blog post this morning, Alphabet drone delivery company Wing announced that it is set to hit 100,000 customer deliveries over the weekend. The news comes on the second anniversary of the service’s pilot launch in Logan, Australia, a city of roughly 300,000 people in the Brisbane metropolitan area.
It also, notably, arrives a few weeks after Wired reported that Amazon’s own drone delivery efforts are “collapsing inwards.” Wing comms head Jonathan Bass told TechCrunch that the service is set to enter additional markets in the coming months.
“I think we’ll expand quite a bit,” Bass told TechCrunch. “I think we’ll launch new services in Australia, Finland and the United States in the next six months. The capabilities of the technology are probably ahead of the regulatory permissions right now.”
Of the existing deliveries, more than half were completed in Logan over the course of the last eight months. The first week of August, for instance, found customers place orders for 4,500 deliveries, which works out to one every 30 seconds during Wing’s delivery window.
The numbers include:
Image Credits: Wing
The drones have a range of six miles — limited by their battery life. That means the trips are fairly short, so there’s not a lot of issue with foodstuffs staying hot or cold, in spite of the package (which resembles a Happy Meal) being transported outside the drone. The primarily limitation, the company says, is weight, with capacity to carry up to three pounds. Apparently the system has had no issues carrying extremely fragile objects like eggs.
The drones cruise at around 100 to 150 feet in the air and lower down to about 23 feet when they reach their destination. From there, a tether lowers the package to the ground and unhooks it. No one is required to receive the package.
Image Credits: Wing
“If you combine the test flights with deliveries, it’s close to half-a-million flights over the past four or five years,” says Bass. “We’ve gradually moved into dense environments and listen to communities.” That last bit includes community feedback to reduce the drone’s noise levels.
Forward Kitchens was working quietly on its digital storefront for restaurants and is now announcing a $2.5 million seed round.
Raghav Poddar started the company two years ago and was part of the Y Combinator Summer 2019 cohort. Poddar told TechCrunch he has been a foodie his entire life. Lately, he was relying on food delivery and pickup services, and while visiting with some of the restaurant owners, he realized a few things: first, not many had a good online presence, and second, these restaurants had the ability to cook cuisine representative of their communities.
That led to the idea of Forward Kitchens, which provides a turnkey tool for restaurants to set up an online presence, including food delivery, where they can create multiple digital storefronts easily and without having to contact each delivery platform. The company ran pilot programs in a handful of restaurants, and this is the first year coming out of stealth.
“It’s an expansion of what they have on the menu, but is not immediately available in the neighborhood,” Poddar added. “Kitchens can keep the costs and headcount the same, but be able to service the demand and get more orders because it is fulfilling a need for the neighborhood, which is why we can grow so fast.”
Here’s how it works: Forward Kitchens goes into a restaurant and takes into account its capacity for additional cooking and the demographic area, as well as what food is available near it, and helps the restaurant create the storefront.
Each restaurant is able to build multiple storefronts, for example, an Italian restaurant setting up a storefront just to sell its popular mac n’ cheese or other small plates on demand. A couple hundred digital storefronts were already created, Poddar said.
A group of investors, including Y Combinator, Floodgate, Slow Ventures and SV Angel and angel investors Michael Seibel of YC, Ram Shriram and Thumbtack’s Jonathan Swanson, were involved in the round.
The new funding will be used to expand the company’s footprint and reach, and to hire a team in operations, sales and engineering to help support the product.
“Forward Kitchens is empowering independent kitchens to create digital storefronts and receive more online sales,” Seibel said via email. “With Forward Kitchens, a kitchen can create world-class digital storefronts at the click of a button.”
Los Angeles delivery robot startup Coco this week has announced $36 million in funding. The Series A was led by Sam Altman, Silicon Valley Bank and Founders Fund, with participation from Sam Nazarian, Ellen Chen and Mario Del Pero. It brings the company’s total funding up to around $43 million.
“I strongly believe the delivery service industry in its current state is massively under-serving merchants. We have an enormous opportunity to create a better experience for hundreds of thousands of merchants and their customers, today,” co0founder and CEO Zach Rash said in a release. “This is not a research program experimenting with technology to be productized at some unknown point in the future.”
Image Credits: Coco
The UCLA spinout, formerly known as Cyan Robotics, is operating in a crowded field that includes names like Starship, Nuro and UC Berkeley alum Kiwibot. Rather than pushing for full autonomy, Coco’s solution utilizes remote drivers (which are a more popular solution than many companies care to admit).
Coco is still young, having launched in February 2020. The company currently has a headcount of 120, with plans to “grow to over 1,000” by end of year, as the pandemic continues to fuel additional interest in robotic deliveries. The new funding will also go toward hardware and additional city launches.
Coco says it has been able to operate with a 97% on-time rate, while reducing delivery times for its clients by around 30%. The company lacks a massive partner like Nuro’s work with Domino’s, though California-based Umami Burger is probably the largest on a list of 18 restaurant partners currently listed on Coco’s site.
“We are currently operating in Santa Monica and in five different L.A neighborhoods,” the company tells TechCrunch. “Later this year we are expanding into a number of other major U.S. cities. We have partnered with national restaurant brands like SBE (Umami Burger) and are actively scaling across many locations, and we are serving a wide range of family operated restaurants like Bangkok West Thai in Santa Monica and San Pedro Brewing Company in Los Angeles. We are out of the pilot phase and are launching with dozens of new merchants every day.”
Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.
The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.
Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.
This Week in Apps offers a way to keep up with this fast-moving industry in one place with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions, and suggestions about new apps and games to try, too.
Do you want This Week in Apps in your inbox every Saturday? Sign up here: techcrunch.com/newsletters
(Photo Illustration by Jakub Porzycki/NurPhoto via Getty Images)
Creator platform OnlyFans is getting out of the porn business. The company announced this week it will begin to prohibit any “sexually explicit” content starting on October 1, 2021 — a decision it claimed would ensure the long-term sustainability of the platform. The news angered a number of impacted creators who weren’t notified ahead of time and who’ve come to rely on OnlyFans as their main source of income.
However, word is that OnlyFans was struggling to find outside investors, despite its sizable user base, due to the adult content it hosts. Some VC firms are prohibited from investing in adult content businesses, while others may be concerned over other matters — like how NSFW content could have limited interest from advertisers and brand partners. They may have also worried about OnlyFans’ ability to successfully restrict minors from using the app, in light of what appears to be soon-to-come increased regulations for online businesses. Plus, porn companies face a number of other issues, too. They have to continually ensure they’re not hosting illegal content like child sex abuse material, revenge porn or content from sex trafficking victims — the latter which has led to lawsuits at other large porn companies.
The news followed a big marketing push for OnlyFans’ porn-free (SFW) app, OFTV, which circulated alongside reports that the company was looking to raise funds at a $1 billion+ valuation. OnlyFans may not have technically needed the funding to operate its current business — it handled more than $2 billion in sales in 2020 and keeps 20%. Rather, the company may have seen there’s more opportunity to cater to the “SFW” creator community, now that it has big names like Bella Thorne, Cardi B, Tyga, Tyler Posey, Blac Chyna, Bhad Bhabie and others on board.
The TikTok logo is seen on an iPhone 11 Pro max. Image Credits: Nur Photo/Getty Images
Earlier this month, Senators Amy Klobuchar (D-MN) and John Thune (R-SD) sent a letter to TikTok CEO Shou Zi Chew, which said they were “alarmed” by the change, and demanded to know what information TikTok will be collecting and what it plans to do with the data. This wouldn’t be the first time TikTok got in trouble for excessive data collection. Earlier this year, the company paid out $92 million to settle a class-action lawsuit that claimed TikTok had unlawfully collected users’ biometric data and shared it with third parties.
Image Credits: Apple
Image Credits: Facebook
Image Source: The Pokémon Company
Image Credits: Sensor Tower
Image Credits: Samsung
South Korea’s GS Retail Co. Ltd will buy Delivery Hero’s food delivery app Yogiyo in a deal valued at 800 billion won ($685 million USD). Yogiyo is the second-largest food delivery app in South Korea, with a 25% market share.
Gaming platform Roblox acquired a Discord rival, Guilded, which allows users to have text and voice conversations, organize communities around events and calendars and more. Deal terms were not disclosed. Guilded raised $10.2 million in venture funding. Roblox’s stock fell by 7% after the company reported earnings this week, after failing to meet Wall Street expectations.
Travel app Hopper raised $175 million in a Series G round of funding led by GPI Capital, valuing the business at over $3.5 billion. The company raised a similar amount just last year, but is now benefiting from renewed growth in travel following COVID-19 vaccinations and lifting restrictions.
Indian quiz app maker Zupee raised $30 million in a Series B round of funding led by Silicon Valley-based WestCap Group and Tomales Bay Capital. The round values the company at $500 million, up 5x from last year.
Danggeun Market, the publisher of South Korea’s hyperlocal community app Karrot, raised $162 million in a Series D round of funding led by DST Global. The round values the business at $2.7 billion and will be used to help the company launch its own payments platform, Karrot Pay.
Bangalore-based fintech app Smallcase raised $40 million in Series C funding round led by Faering Capital and Premji Invest, with participation from existing investors, as well as Amazon. The Robinhood-like app has over 3 million users who are transacting about $2.5 billion per year.
Social listening app Earbuds raised $3 million in Series A funding led by Ecliptic Capital. Founded by NFL star Jason Fox, the app lets anyone share their favorite playlists, livestream music like a DJ or comment on others’ music picks.
U.S. neobank app One raised $40 million in Series B funding led by Progressive Investment Company (the insurance giant’s investment arm), bringing its total raise to date to $66 million. The app offers all-in-one banking services and budgeting tools aimed at middle-income households who manage their finances on a weekly basis.
Indian travel booking app ixigo is looking to raise Rs 1,600 crore in its initial public offering, The Economic Times reported this week.
Trading app Robinhood disappointed in its first quarterly earnings as a publicly traded company, when it posted a net loss of $502 million, or $2.16 per share, larger than Wall Street forecasts. This overshadowed its beat on revenue ($565 million versus $521.8 million expected) and its more than doubling of MAUs to 21.3 million in Q2. Also of note, the company said dogecoin made up 62% of its crypto revenue in Q2.
Image Credits: Polycam
3D scanning software maker Polycam launched a new 3D capture tool, Photo Mode, that allows iPhone and iPad users to capture professional-quality 3D models with just an iPhone. While the app’s scanner before had required the use of the lidar sensor built into newer devices like the iPhone 12 Pro and iPad Pro models, the new Photo Mode feature uses just an iPhone’s camera. The resulting 3D assets are ready to use in a variety of applications, including 3D art, gaming, AR/VR and e-commerce. Data export is available in over a dozen file formats, including .obj, .gtlf, .usdz and others. The app is a free download on the App Store, with in-app purchases available.
Jiobit, the tracking dongle acquired by family safety and communication app Life360, this week partnered with emergency response service Noonlight to offer Jiobit Protect, a premium add-on that offers Jiobit users access to an SOS Mode and Alert Button that work with the Jiobit mobile app. SOS Mode can be triggered by a child’s caregiver when they detect — through notifications from the Jiobit app — that a loved one may be in danger. They can then reach Noonlight’s dispatcher who can facilitate a call to 911 and provide the exact location of the person wearing the Jiobit device, as well as share other details, like allergies or special needs, for example.
When your app redesign goes wrong…
Prominent App Store critic Kosta Eleftheriou shut down his FlickType iOS app this week after too many frustrations with App Review. He cited rejections that incorrectly argued that his app required more access than it did — something he had successfully appealed and overturned years ago. Attempted follow-ups with Apple were ignored, he said.
Anyone have app ideas?
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.
Luis Mario Garcia grew up in Mexico making deliveries for the grocery stores in his neighborhood. After honing his startup skills in San Francisco, he returned to Mexico with the idea of building a software company.
That’s when he met his co-founder Javier Gonzalez and the pair started Orchata in 2020, a mobile app enabling consumers to get groceries delivered in 15 minutes, with no substitutes and at supermarket prices. Products delivered include fresh fruit, beverages, bread, medicine and household essentials, Garcia told TechCrunch.
Orchata does this by operating a network of micro fulfillment centers — it is already operating in two cities — with technology for efficient picking and hyperfast delivery.
Online food delivery sales in Latin America are projected to reach $9.8 billion by 2024, with the global pandemic driving demand for faster delivery, according to Statista. Garcia sees three different waves in this market: the first one being traditional supermarkets, where you can spend hours, which led to the second wave of food delivery companies, including some big players in the region — for example Rappi in Colombia, which in July raised $500 million in Series F funding at a $5.25 billion valuation in a round led by T. Rowe Price, and Cornershop in Chile, which was acquired by Uber in 2019.
However, Garcia said many of these services still take more than an hour from order to doorstep and may require phone calls if an item is not available. He wants to be part of a third wave — software that is integrated with inventory and delivery that is super fast, and no substitutions.
“This is similar to what is going on around the world, but there is a huge opportunity to bring convenience, to be the Gopuff for Latin America, and we want to build it first in the region,” Garcia said.
The Monterrey-based company was part of Y Combinator’s summer 2020 cohort and on Friday announced a $4 million seed round from a group of investors, including Y Combinator, JAM Fund, FJ Labs, Venture Friends, Investo and Foundation Capital, and angel investors Ross Lipson, Mike Hennessey, Brian Requarth and Javier Mata.
Jonathan Lewy, co-founder of Grin Scooters and founder of Investo, is also an investor in Rappi. He said Garcia was building a product for the end user, with the key being the building of the infrastructure and inventory. Lewy believes Garcia understands how quick delivery should be done and that it is not just about offering a mobile app, but building the technology behind it.
Meanwhile, Justin Mateen, general partner at JAM Fund, and co-founder of Tinder and an early-stage investor, met Garcia over a year ago and was one of the company’s first investors. He said Garcia’s and Gonzalez’s initial idea for the model of grocery stores was still not solving the problem, but then they pivoted to doing fulfillment and inventory themselves.
“He fits the mold of what I look for in a founder, and he is the type of founder that doesn’t give up,” Mateen said. “Luis finally agreed to let me double down on my investment. The model makes sense now, he is on to something and it is now going to be about execution of capital as he scales.”
Both Mateen and Lewy agree that there will be similar apps coming because food delivery is such a large market, but that Orchata has a clear advantage of owning the customer experience from beginning to end.
Having only launched four months ago, Orchata is already processing thousands of orders and is seeing 100% monthly growth. The new funding will enable Orchata to expand into three new cities in Mexico. Garcia is also eyeing Colombia, Brazil, Peru and Chile for future expansion.
The company is also targeting multiple use cases, including someone noticing a forgotten item while cooking to consumers shopping for the week or teenagers needing food for a party.
“We are going to be super convenient to customers, and we think every use case for food delivery will be this way in the future,” Garcia said. “We will eventually introduce our own brands and foods with the goal of being that app that is there anytime you need it.”
Food delivery apps offer convenience for customers, but a host of headaches for restaurants, like commissions as high as 40% and very few tools to build customer loyalty. Based in Singapore, Tablevibe wants to help restaurants reduce their reliance on third-party delivery apps and help them get more direct orders and returning customers. The startup is part of Y Combinator’s current batch, which will hold its Demo Day at the end of this month.
Tablevibe’s founding team includes two former Googlers: Jeroen Rutten, formerly head of Google Search’s product strategy in APAC and Sneep, who was responsible for its app development go-to-market strategy and led large sales teams. They are joined by Guido Caldara, a lead teacher at coding bootcamp Le Wagon and Tablevibe’s chief technology officer.
The idea for Tablevibe came after Rutten, its chief executive officer, visited a restaurant in Singapore that used paper feedback forms.
“We thought, if they use a paper feedback form, it actually creates a lot of hassle, like entering all the data into an Excel spreadsheet,” he told TechCrunch. “How’s the restaurant owner going to get actionable feedback based on data in an Excel spreadsheet?”
The team began working on the first version of Tablevibe, with simple Google Forms for dine-in customers and Google Data Studio dashboards, and tested it with three restaurants a few months before COVID-19 emerged. They found that using Tablevibe instead of paper forms increased response rates by up to 26x and also had the benefit of creating more repeat customers, since they are given an incentive for filling out surveys.
Then the pandemic hit and restaurants had to suddenly pivot to deliveries. The team kept the same idea behind their feedback forms, but started using QR codes affixed to takeout packaging. The QR codes (usually in the form of stickers so food and beverage businesses don’t need to order new packaging) also offer an incentive if customers scan it and fill out a survey—but the discount or free item can’t be redeemed through third-party delivery apps, only through direct orders with the restaurant.
Restaurants can customize surveys, but about 80% use Tablevibe’s templates, which are quick to fill out, since most questions just ask for a rating from one to five stars (there’s also an optional form for customers to write their opinions). Customers fill out their name, email addresses, and then rank the food and atmosphere (for dine-in). For delivery, customers are also asked what app they used.
Tablevibe is integrated with Google Reviews, so if someone gives the restaurant a high rating, they are asked if they want to make it public. They also have the option to follow its Facebook or Instagram profile.
For dine-in customers, Tablevibe primarily works with F&B businesses that have multiple venues, including Merci Marcel and Lo and Behold Group. For its delivery survey, most users are smaller restaurants that have one location. It also serves cloud kitchens, like CloudEats in the Philippines.
“As a restaurant, you want to own and grow your customer relationships,” said Sneep, Tablevibe’s chief operating officer. “The first part is actually knowing who your customers are, what they experienced and how you can contact them, which is how we can help. The second piece is growing a customer relationship, which we do by giving a reward, but only if a customer reorders directly with a restaurant.”
Customers have generated over 25,000 reviews through Tablevibe so far, which gives the company data to help determine what kind of incentives will convince someone to scan a restaurant’s QR code and take a survey.
Tablevibe’s founders say it can deliver more than 100x return on investment to its clients. For example, Merci Marcel did an evaluation and determined that it got a 103x ROI, based on the number of customers who claimed incentives, average order value, how many people left a five-star Google Review and how much more business those reviews drove to their venues.
The startup plans to expand into other English-speaking markets, focusing first on Northern Europe and then North America later this year. Aside from Singapore, it’s already used by customers in the Philippines, the Netherlands, Belgium, the United Kingdom and Portugal.
Rutten said that Tablevibe plans to build its development team, with the goal of becoming a “Salesforce for restaurants” that can help them build engagement through delivery or dine-ins, capture data and turn them into useful insights.
“Our roadmap has two levers—one is to get more data and the other is to provide more intelligence,” he said. “We’re working on API integrations so Tablevibe can integrate with point-of-sale systems. The second thing is to pull in more publicly available data from sources like Google Reviews. We will also build out more marketing features to leverage customer databases so businesses can send out emails about new restaurant launches, etc.” Eventually, Tablevibe also plans to use AI to help restaurants determine exactly what they need to do to improve customer experience, like change a menu item.
Home-stay giant Airbnb and on-demand delivery concern DoorDash reported their quarterly results today after the bell.
Both companies were heavily impacted by the onset of COVID-19. Airbnb saw its revenues collapse in 2020 during early lockdowns, leading the company to raise expensive capital and batten its hatches. The company recovered as the year continued, leading to its eventual IPO.
DoorDash, in contrast, managed a simply incredible 2020 as folks stayed home and ordered in. Given that we got both reports on the same day, let’s digest ’em and see how COVID has — and may — impact their results.
In the second quarter, Airbnb reported revenues of $1.3 billion, which compares favorably with its Q2 2020 result of $335 million and its 2019 Q2 revenue total of $1.21 billion. In percentage terms, Airbnb’s revenue grew 299% from its Q2 2020 level and 10% from what the company managed during the same period of 2019.
Analysts had expected $1.23 billion in revenue for the period.
Airbnb lost $68 million in the quarter when counting all costs. The company’s adjusted EBITDA, a heavily modified profit metric, came to $217 million in the quarter. Cash from operations in Q2 2021 was $791 million. Looking ahead, here’s what Airbnb had to say regarding its revenue outlook:
[We] expect Q3 2021 revenue to be our strongest quarterly revenue on record and to deliver the highest Adjusted EBITDA dollars and margin ever.
How did the market digest Airbnb’s better-than-expected growth, rising adjusted profit, falling net losses, massive cash generation and expectations of record Q3 revenue? By bidding its shares lower. Airbnb is off around 4.5% in after-hours trading.
Confused? Investors may be worried about the following note from the company, also from the guidance section of its earnings letter:
In the near term, we anticipate that the impact of COVID-19 and the introduction and spread of new variants of the virus, including the Delta variant, will continue to affect overall travel behavior, including how often and when guests book and cancel. As a result, year-over-year comparisons for Nights and Experiences Booked and GBV will continue to be more volatile and non-linear.
While Q3 2021 is looking great for Airbnb, it appears that its future growth could be lumpy or delayed thanks to the ongoing pandemic. There are public indicators pointing to travel rates declining, which could impact Airbnb.
The company’s Q2 results and Q3 anticipations are impressive when compared to where Airbnb was a year ago. But that doesn’t mean that it is entirely out of the COVID woods.
Despite generally lower COVID friction in its market during Q2 2021, DoorDash managed to set records for orders and the value of those orders. In the three-month period concluding June 30, 2021, the on-demand food delivery company turned $10.46 billion in order value (marketplace GOV) into $1.24 billion in total revenue. The marketplace GOV number was 70% greater than the Q2 2020 result, while DoorDash’s revenues expanded by 83%.
Investors had expected the company to post $1.08 billion in total revenues, so DoorDash handily bested expectations.
How profitable was DoorDash during the quarter? DoorDash was unprofitable overall, with a net loss of $102 million. In adjusted EBITDA terms, DoorDash saw $113 million in profit during Q2 2021. That’s not too bad, given that Uber cannot manage the same feat with its own food delivery business. DoorDash’s net income was worse than what it managed in Q2 2020, while its adjusted EBITDA improved.
Shares of DoorDash are off around 3.5% in after-hours trading.
Why? It’s not entirely clear. DoorDash said that it expects “Q3 Marketplace GOV to be in a range of $9.3 billion to $9.8 billion, with Q3 Adjusted EBITDA in a range of $0 million to $100 million.” Sure, that’s down a smidgen from its Q2 GOV number, but investors were anticipating DoorDash to post less revenue in Q3 than Q2, so you would think that GOV expectations were also more modest.
Is COVID the answer? Mentions of COVID-19 in the company’s earnings document tend to deal with trailing results and historical efforts to provide relief to restaurants that use DoorDash for orders or delivery. So, there’s not a lot of juice to squeeze there. However, the company did say the following toward the end of its report:
We believe the broad secular shift toward omni-channel local commerce remains nascent. However, the scale and fragmentation of local commerce suggests the problems to be solved will get more difficult, coordination between internal and external stakeholders will become more complex, and vectors for competitive threats will increase. At the same time, we expect the pace of consumer behavioral shifts to slow compared to the extraordinary pace of change in recent quarters.
Simplifying that for us: DoorDash expects slower growth in the future, a more complex business climate and rising competition as it enters new markets. That’s not a mix that would make any investor more excited, we don’t think.
Amazon’s $1.5 billion air cargo hub in Northern Kentucky opened Wednesday, the latest effort by the e-commerce giant to connect a network of 40 sites and control all aspects of delivery as demand for speed and convenience accelerates.
The Amazon Air Hub operations, located at the Cincinnati/Northern Kentucky International Airport, will be the center of its U.S. cargo network. The hub opened after more than four years of planning and construction. Amazon said the U.S. hub will eventually operate a dozen flights per day and process millions of packages every week.
The hub is comprised of an 800,000-square-foot sortation building located on a 600-acre campus that includes seven buildings, a new ramp for aircraft parking and a multistory vehicle parking structure.
Amazon said that eventually more than 2,000 people will be employed there. The air hub will also rely on robotics technology, specifically robotic arms to move and sort packages and mobile drive units to transport packages across the building.
Amazon Air launched in 2016 and has grown into a network of more than 40 locations. Last year, Amazon Air launched its European air hub at Germany’s Leipzig/Halle Airport, a 215,000-square-foot facility that hosts two Amazon-branded Boeing 737-800 aircraft.
Amazon Air also has regional air hubs at airports in Texas, Puerto Rico and Florida in the U.S., and plans to expand to San Bernardino International Airport in California and Cincinnati/Northern Kentucky International Airport in 2021.
Starship Technologies, an autonomous delivery services company, announced that it will begin delivery service on four additional college campuses this fall, adding to the 20 campuses on which it already operates.
The University of Illinois Chicago (UIC), the University of Kentucky (UK), the University of Nevada, Reno (UNR) and Embry-Riddle Aeronautical University’s Daytona Beach, Florida campus will all be graced with the Estonian-born company’s little six-wheeled, zero-emissions delivery robots.
This announcement comes the same day as Kiwibot, another autonomous sidewalk delivery robot company, has partnered with hospitality giant Sodexo to bring food delivery to college campuses. Whereas Kiwibot will focus more on delivering food from dining halls and university stores, it looks like Starship will work with on-campus merchants like Starbucks, Panda Express and Panera Bread, among others. Despite the different approaches, the outcome is the same: Delivery companies are preparing for a more “normal” school year, even though the Delta variant continues to ramp up case loads. That could either be a blessing or a problem for the Starships and Kiwibots of the world. On the one hand, more ‘Rona means more students staying inside and avoiding other humans. On the other, it could also mean school shutdowns and a bunch of useless bots.
“We see the Starship robots as an important part of safely bringing students back to campus,” said Dean Kennedy, executive director of residential life, housing and food services at UNR, in a statement. “Everyone wants to resume in-person classes and be back on campus so we’re doing everything we can to make sure it’s done responsibly. The robots offer several advantages – they make social distancing easier, they are convenient, the students we have spoken with love this idea and they continue our heritage of being an innovative campus.”
UIC will have 25 Starship robots and UNR and Embry-Riddle will get 20 robots each, all of which add to Starship’s fleet of over 1,000 delivery robots. The company says it has completed more than 1.5 million rides since its founding in 2014. It has raised a total of $102 million, including its recent $17 million funding round.
“We’ve worked hard to become a trusted and integrated partner on our campus communities and that hard work has paid off,” said Alastair Westgarth, CEO of Starship, in a statement. “We are continuing to add new schools every semester, with more to be announced this fall. The students love the robots and the schools appreciate the ability to offer this service. We can’t wait to meet the students at each of these schools and look forward to hiring students on all of the campuses to give them real world experience working with robots and AI.”
Students and faculty will be able to download the Starship Food Delivery app to choose meals and then drop a pin where they want their delivery to be sent. They can track the robot or they can wait for an alert to go outside and meet the robot once it has arrived, where they can then unlock it through the app. Starship says it aims to train and hire students at local campuses who are interested in joining the team and learning more about autonomous technology.
Kiwibot, the robotic sidewalk delivery startup, has announced a partnership with food services and facilities management giant Sodexo to bring its robots to U.S. college campuses. As of this month, students and faculty at New Mexico State University, Loyola Marymount University and Gonzaga University should have the option to order fresh meals via cute little robots from Sodexo-serviced locations on campuses.
This is not the first time Kiwibot is delivering food for over-caffeinated, hungover, exhausted college kids. Its robots, which are designed to look adorable and can move at around two miles per hour, were born at the University of Berkeley, California. There, the company was able to rack up 150,000 deliveries and prove its use case for expansion to other campuses, like the University of Denver and Stanford University.
Sodexo provides the food for the cafeterias and dining halls of hundreds of colleges across the U.S., so this partnership could prove to be massively fruitful for Kiwibot. It’ll need the boost in order to keep up with its main competition, Starship Technologies, which completed one million delivery rides in January and operates in many college campuses, as well.
Campuses are often a natural choice for startups in autonomous development. Not only are universities open to experimenting with new ideas, but given the unit economics on a campus, the revenue growth prospects are more favorable than working B2B in a city, says Diego Varela Prada, chief operating officer at Kiwibot.
“Additionally, university campuses provide an advantage as they tend to be a more controlled environment than public streets in regards to things such as public infrastructure complexity and car traffic and congestion,” Prada told TechCrunch.
As part of the partnership, students will be able to use their meal plans for Kiwibot delivery through their Sodexo Bite+ app. Those without a meal plan can pay à la carte, including $2 flat fee plus 10% of the order amount.
“We’re starting with 10 bots at Loyola, 10 bots at Gonzaga and 30 bots at New Mexico State, and that’s just the beginning,” said Prada. “We’re hoping to have many more. As a B2B business, we’re able to work very closely with our partner to increase the capacity of the bots as demand ramps up.”
Last year, many college campuses were forced to shut down amid the pandemic. Now, as school is about to be in session again, the U.S. is experiencing the highest caseload since February, averaging about 100,000 new cases every day. There’s no telling what kinds of shutdowns or lockdowns we’ll see on college campuses this year, but Prada sees Kiwibot providing an avenue for students to order food safely.
“We have a procedure to disinfect the bots between orders,” he said. “If you’re a student and you don’t want to mix into large crowds, I think it’s much safer to order food through Kiwibot and have it delivered to the library or your dorm.”
Prada says Kiwibot’s robots, which are in their fourth generation, are advancing to Level 4 autonomy, but are currently at Level 3. The Society of Automotive Engineers describes both Levels 3 and 4 as a full self-driving system, but with Level 3, a human operator may be required to take over if there’s an issue, whereas a Level 4 system is expected to handle all driving on its own.
“We have a feature that’s called corner-to-corner, and so what that does is it captures data around an indoor space and feeds that into an algorithm that basically makes decisions for the bot,” said Prada. “It handles the navigation for the robot in between high complexity situations, like cars, people, pets, little kids, people that work on campus. So we are not in a position yet to let the bot go on the campus on its own. Our remote operators have a feature where they switch to corner-to-corner and if the bot senses, for example, a street pass, then the remote operator or supervisor will take over.”
The engineers at Kiwibot are working on getting a bot to navigate indoor-to-outdoor and outdoor-to-indoor, so that it can pick up orders in a kitchen, go outside to deliver it and then navigate inside a building so that it can deliver an order to someone’s room or desk.
Merqueo, which operates a full-stack, on-demand delivery service in Latin America, has landed $50 million in a Series C round of funding.
IDC Ventures, Digital Bridge and IDB Invest co-led the round, which also included participation from MGM Innova Group, Celtic House Venture Partners, Palm Drive Capital and previous shareholders. The financing brings the Bogota, Colombia-based startup’s total raised to $85 million since its 2017 inception.
Merqueo CEO and co-founder Miguel McAllister knows a thing or two about the delivery space in Latin America, having also co-founded Domicilios.com, a Latin American food delivery company that was bought by Berlin-based Delivery Hero and later merged with Brazil’s iFood.
McAllister describes Merqueo as a “pure-play online supermarket with a fully integrated grocery delivery service” that sources directly from large brands and local suppliers, bypassing intermediaries and “delivering directly from its dark store network.” (Dark stores are traditional retail stores that have been converted to local fulfillment centers.”
Merqueo offers more than 8,000 products, including fresh foods, packaged goods, home essentials, beverages and frozen products. It currently operates in more than 25 cities in Colombia, Mexico and Brazil and has over 600,000 users.
Image Credits: Merqueo
It must be doing something right. The startup is close to $100 million in “run-rate revenue,” according to McAllister, having grown more than 2.5x in 2020. Merqueo also reached positive cash flow in Colombia, its most mature market. Over the last year, large Latin American retail chains and retailers have approached the company about potentially acquiring it, McAllister said.
Part of the company’s success might be attributed to the speed and flexibility it offers. Users can choose how and when to receive their groceries according to their needs, with the startup offering delivery in as little as 10 minutes or three to four hours. Users can also schedule delivery of their groceries in two-hour intervals for the same day or the next day.
Also, owning and controlling the “entire” vertical supply chain gives it the ability to obtain better margins, offer competitive pricing and achieve healthy unit economics, according to McAllister.
Merqueo plans to use its new capital in part to expand geographically. The company is currently in phase one of its expansion to Brazil, entering initially in Sao Paulo later this month. Next year, it expects to launch in other Brazilian cities such as Rio de Janeiro, Fortaleza and Salvador de Bahia.
The market opportunity in Latin America is massive considering that online grocery sales only represent just 1% of the market –– far lower than in the U.S., EU or China, for example. Other players in the increasingly crowded space include GoPuff in the U.S., Getir out of Turkey and Mexico-based Jüsto, which raised $65 million in a Series A led by General Atlantic earlier this year.
“The pandemic accelerated the adoption of online grocery shopping in LatAm,” McAllister told TechCrunch. “The region went from 0.3% share of online groceries to 1%. And after the pandemic, we are seeing a 50% increase in the pace of user adoption.” Overall, the $85 billion e-commerce market in Latin America is growing rapidly, with projections of it reaching $116.2 billion in 2023.
Currently, Merqueo has over 1,300 employees in LatAm, up 60% from last year. It plans to continue hiring with the proceeds from the Series C round as well work “to become the largest and most ambitious dark stores network of Latin America.”
Alejandro Rodríguez, managing partner at IDC Ventures, is naturally bullish on Merqueo’s potential.
“From all the opportunities we looked into, Merqueo is undoubtedly the most advanced in the region. … The Merqueo team has proved they know how to scale the business and how to get to profitability,” Rodríguez told TechCrunch.
Online grocery delivery is a business with many technical and operational complexities, he said. In his view, Merqueo’s technology and operational expertise allow it to tackle those issues in a way that has led to “the best customer experience that we have seen in a scalable way.”
“They have the best combination of both great service metrics and healthy unit economics,” Rodríguez added.