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Shogun raises $10M to help e-commerce brands build faster websites

By Anthony Ha

Amazon may have a market cap of more than $1 trillion, but Finbarr Taylor, CEO of Y Combinator-backed startup Shogun, said the e-commerce giant is “kind of dropping the ball.”

Specifically, he argued that the experience of shopping on Amazon — not what happens after you buy the product, but browsing the website itself — is pretty bad, full of sponsored results and fake products.

“What we’re seeing happen is that all this vast wave of direct-to-consumer brands is nibbling around edges of Amazon and beating them on buying experience,” Taylor said.

Shogun was designed to support those brands. Taylor and his co-founder Nick Raushenbush created the first product in 2015, and they treated it as a side project at first. But Taylor said that by May 2017, “It ate up all of our free time and it was obviously much bigger than we expected,” so they quit their jobs (Taylor was working as a software engineer at Y Combinator) and devoted themselves to it full-time.

The company now has 11,000 customers, including MVMT, K-Swiss and Leesa. And today, Shogun is announcing that it has raised a $10 million Series A, led by Initialized Capital, with participation from VMG Partners and YC. (The startup has now raised a total of $12 million.)

The company’s first product, Page Builder, offers a drag-and-drop interface to make it easier for e-commerce brands to build their storefronts on Shopify, BigCommerce, Salesforce and Magento.

Shogun Frontend

And there’s a new product, Shogun Frontend, which allows brands to create a web-customized storefront that’s entirely customized while still using one of the big commerce platforms as their back end.

Taylor pitched this as part of a broader trend toward “headless commerce,” where the e-commerce front end and back end are handled separately. He suggested that this is a “mutually beneficial” split, as Shopify and its competitors are going “super deep” on building the infrastructure needed to operate a store online, while Shogun focuses on the actual experience of the customer visiting that store.

Meanwhile, website builders like Squarespace and Weebly (owned by Square) have introduced e-commerce features, but Taylor suggested that they’re still “not really a professional choice” for most e-commerce businesses.

As one of the key features of Shogun Frontend, Taylor pointed to the fact that it creates progressive web apps that should be as fast and smooth as a native app.

Brett Gibson, general partner at Initialized Capital and a Shogun board member, made a similar point in a statement:

For DTC brands competing against goliaths like Amazon, Shogun Frontend now gives them features and capabilities once only reserved for enterprise companies. And when it comes to speed, Shogun Frontend’s sub-second load time is the critical difference between retaining or losing a customer.

Taylor added that the company will be “continuing to invest in Page Builder too,” but he suggested that Frontend is “more of an enterprise offering” that can help Shogun’s biggest customers “future proof themselves.”

Liquid Death raises $9M to make canned water cool

By Anthony Ha

It sounds like Liquid Death has won over investors with its promise to “murder your thirst” — the startup is announcing that it’s raised $9 million in Series A funding.

Liquid Death sells water in a tallboy aluminum can, and it’s expanding the lineup with a sparkling water can that it plans to start shipping in March. A 12-pack of either regular or sparkling mountain water currently costs $18.99 on the Liquid Death website.

Co-founder and CEO Mike Cessario has worked as a creative director and copywriter at companies like VaynerMedia, and he told me that his goal is to create a brand that’s healthy and sustainable while being “just as exciting, if not more exciting, than energy drinks, soda, alcohol and candy.”

Hence the “murder your thirst” tagline, as well as a generally tongue-in-cheek approach to marketing, including aggressive, heavy metal-influenced art. The startup is expanding those efforts with a new “Keep the Underworld Beautiful” campaign that asks customers to save Hell itself from plastic bottles.

“When you’re launching a new brand, if you don’t have millions and millions of dollars to push it out there with [advertising], your only chance of survival is the product itself has to be insanely shareable,” Cessario said. “You’re going to have a hard enough time funding production. You’re not going to have the money to compete with the Cokes and the Pepsis, so the only way get it out there is if people organically want to share it because of the funny, irreverent marketing.”

As one piece of evidence that the message is resonating, the company says there are at least 20 “random customers” who have received Liquid Death tattoos.

The emphasis on branding left me wondering whether the water itself was a bit of a sidenote. Cessario responded that when it comes to food and beverage products, branding is the biggest differentiator, because “consumers aren’t stupid.” They don’t actually believe that one product is dramatically better than the other; it’s more about which brand they feel affinity with.

At the same time, he said that when it comes to turning Liquid Death into more than a one-time novelty purchase, “The most important thing, first and foremost, is that when someone buys it, they enjoy drinking this water from a can. When they actually have a freezing cold can of Liquid Death, people will continue to come back because they like the product experience.”

I’ll note that I’ve tried out Liquid Death myself and can confirm that it’s perfectly fine water. Most notably, there’s something genuinely fun and satisfying about cracking open a new can (though if you do it work, you also risk drawing some suspicious or amused stares from your coworkers).

Cessario also argued that the brand is about “so much more than loud marketing, it’s about sustainability.” The company makes a big point out of the fact that its aluminum cans are made out of more than 70% recycled material, and that aluminum is “infinitely recyclable,” making the packaging much more environmentally friendly than plastic bottles. Liquid Death also donates 5 cents for every can sold to nonprofits like 5 Gyres (which fights plastic pollution) and Thirst Project (which works on providing access to clean drinking around the world).

The sustainability message has prompted criticism around the fact that packaged water — even if it’s in an aluminum can — is less sustainably than simply filling up a reusable container with tap water.

“We’re definitely not against reusable bottles,” Cessario said when I brought this up. “But the reality is: Do you think it’s possible to actually get 300 million people, people in the Midwest, to do that 100 percent of the time? It’s highly unrealistic.”

Instead, he suggested that he’s happy for people to drink tap water from reusable bottles when it makes sense, and they can turn to Liquid Death at other times — “at a concert venue, when you’re having a house party, when you’re at a bar.”

Liquid Death’s Series A was led by Velvet Sea Ventures, a new firm created by Buddy Media co-founder Michael Lazerow. Ring founder Jamie Siminoff, TOMS founding members Jake Strom and Blake Mycoskie, GirlBoss founder/CEO Sophia Amoruso and Thrive Market CEO Nick Green also participated, as did existing investors Science Inc. and Away co-founder Jen Rubio. Liquid Death has now raised a total of $11.25 million.

Cessario said that until now, the majority of the startup’s sales have either come from its website or from Amazon, but one of the main aims with the funding is to get the water into brick-and-mortar stores. In fact, it’s already taking a big step in that direction, with nationwide availability in Whole Foods stores planned for next month.

Retail optimization startup Teikametrics raises $15M as it expands beyond Amazon and beyond ads

By Anthony Ha

Teikametrics, a startup that helps retailers optimize their online ad spending, has raised $15 million in additional funding.

The company launched with the goal of helping Amazon sellers advertise more effectively. More recently, it launched a similar partnership with Walmart.

CEO Alasdair McLean-Foreman said that on both platforms, the startup’s Flywheel platform can improve the ad-buying process using retailer data about things like transactions, inventory and pricing.

McLean-Foreman praised Amazon for creating “an incredible closed loop” where “millions of consumers [are] meeting millions of suppliers across the long tail.” And of the other online platforms, he said Walmart is “the one that’s closest to parity.”

He added that by working with Teikametrics, retailers (whether they’re third-party sellers, or brands promoting products that Amazon and Walmart are selling themselves) can optimize their campaigns across both marketplaces, and eventually on other platforms as well.

McLean-Foreman added that the company will be launching products that go beyond advertising later this year. His vision is for Teikametrics to use that same data to create a retail “operating system” that optimize every aspect of a retailer’s business, including inventory and pricing.

“It’s about creating very simple solution to a very, very complicated problem that is much more dynamic and much more complicated than just the ads,” he said.

The Boston-headquartered startup raised a $10 million Series A in 2018. The new round was led by Jump Capital, with participation from Granite Point Capital, Jerry Hausman (an MIT econometrics professor who also serves as a scientific advisor) and Ed Baker (former head of growth at Facebook and Uber).

Teikametrics says it’s working with more than 3,000 brands, including Clarks, Razer, Power Practical, Zipline Ski and Mark Cuban’s Brands. It also recently hired former Amazon ad executive Srini Guddanti as its chief product officer.

Looking at the broader retail and advertising landscape, McLean-Foreman acknowledged, “AI is almost a buzzword,” but he argued, “We are actually AI-first. The product itself is automation, it is intelligent decision-making.”

He added, “Advertising is a huge lever to pull and a really good problem for AI to solve, but I’m super excited to apply those same AI components or solutions to an even bigger problem at the same time.”

Daily Crunch: Blue Apron might sell itself

By Anthony Ha

Blue Apron considers “strategic alternatives,” Facebook experiments with different News Feed formats and Twitter buys a startup focused on the Stories format. Here’s your Daily Crunch for February 19, 2020.

1. Blue Apron is considering selling itself

Meal kit company Blue Apron has been struggling for a long time, with its lackluster debut on the public market, employee lawsuits and layoffs. So it should come as no surprise that the company announced that it’s exploring “strategic alternatives” like selling itself, merging or raising more capital.

“Our strategic alternatives process, together with our cost optimization initiatives, is intended to best position the company for the future, including to support our growth strategy,” said CEO Linda Findley Kozlowski in a statement. “These efforts reflect the commitment of the Board, management and myself to doing what’s in the best interest of the business, Blue Apron’s shareholders and other stakeholders.”

2. Facebook prototypes tabbed News Feed with Most Recent & Seen

Facebook may make it easier to escape its ranking algorithm and explore the News Feed in different formats. The company has internally prototyped a tabbed version of the News Feed for mobile that includes the standard Most Relevant feed, along with the existing-but-buried Most Recent feed of reverse chronological posts and an Already Seen feed of posts that was only available on desktop via a largely unknown URL.

3. Twitter acquires Stories template maker Chroma Labs

Is a Twitter Stories format on its way? The company has just acquired Chroma Labs, a startup co-founded by Instagram Boomerang inventor John Barnett with an app to let you fill in stylish layout templates and frames for posting to Instagram Stories, Snapchat and elsewhere.

4. Adobe celebrates Photoshop’s 30th anniversary with new desktop and mobile features

The marquee feature here is probably the addition of the Object Selection tool in Photoshop on the iPad. With this tool, Adobe is giving creatives a way to select and manipulate one or multiple objects in complex scenes.

5. Do trade shows still matter in the age of online business?

One of countless unintended consequences of the coronavirus-prompted cancellation of MWC will be a broader debate about trade shows in general. In many ways, it’s an extension of a conversation that’s been going on for years: Are trade shows worth it? (Extra Crunch membership required.)

6. Coinbase becomes a Visa Principal Member to double down on debit card

Cryptocurrency company Coinbase has been working with Paysafe to issue the Coinbase Card, a Visa debit card that works with your Coinbase account balance. The company is now a Visa Principal Member, which should help Coinbase rely less on Paysafe and control a bigger chunk of the card payment stack.

7. ForgePoint raises a massive new $450M fund for early-stage cybersecurity startups

The aim is to try to cash in early on an increasing number of startups in the cybersecurity space that could go on to become the next CrowdStrike or Cloudflare — which both saw massive exits last year when they went public at valuations of several billion apiece.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

Walmart reports lower-than-expected Q4 earnings, despite e-commerce sales growth of 35%

By Sarah Perez

Walmart’s holiday quarter didn’t perform as expected. That’s the big news today from the retailer’s weak Q4 2019 earnings, which saw revenue of $141.67 billion versus the $142.55 expected and adjusted earnings per share of $1.38 versus the $1.44 expected. The company cited a number of factors, including “softer” than anticipated holiday sales in U.S. stores — particularly softer sales of toys, media and gaming, and apparel during the month of December.

Overall, the earnings point to the challenges for Walmart in a market where more consumers than ever are choosing to shop online. Walmart, meanwhile, still makes the bulk of its money from retail stores, not online, though it’s heavily investing in the latter. That leaves it at mercy of the sort of problems it faced in Q4 — like the trouble with the toy industry (that also hit Target), a lack of newness in gaming, a shorter holiday shopping season, and even a warmer winter than has depressed apparel sales across retailers.

Even as large as Walmart’s stores are, they’re still constrained by shelf space and square footage. And when inventory doesn’t move as quickly as it should, sales suffer. In Q4, Walmart’s U.S. same-store sales were up 1.9%, which was short of the 2.3% expected.

By comparison, Amazon’s holiday results crushed expectations. It reported record sales, Prime membership that soared to 150 million paying subscribers, and one-day and same-day deliveries that quadrupled over the same quarter the prior year.

So far, Walmart, like Target and others, has been fairly successful in taking the hybrid approach to retail — meaning its brick-and-mortar business and online side aren’t separated, but rather work together to drive shoppers into stores to pick up their online purchases. Walmart’s pickup business, including online grocery pickup, is helping capture market share and grow Walmart’s overall e-commerce sales.

That remained true in Q4, as e-commerce sales were up 35% with online grocery helping drive those increases. Walmart even boasted grocery sales on a two-year stacked basis were its “best in the past 10 years.” The retailer has also been quickly expanding the number of stores that support online grocery, and ended the year with nearly 3,200 grocery pickup locations and 1,600 stores offering grocery delivery.

However, in a quarter that’s all about boosting business by way of holiday shopping, it’s worth noting that Walmart’s e-commerce sales were up by 41% last quarter, more than the 35% in Q4.

One area where Walmart may need to more quickly expand in the months ahead is its Delivery Unlimited service. Launched in 2019, the membership program for grocery delivery competes with Instacart and others by allowing grocery delivery customers to save on their per-delivery fees by way of a monthly or annual subscription. The company didn’t offer an update on where the program is now available, though it had planned for 50% coverage across the U.S. by year-end.

Meanwhile, Target has now expanded its Shipt same-day grocery delivery service to include non-grocery items from its stores, and has integrated Shipt directly with its own app and on Target.com. And of course, Amazon’s Prime members can shop grocery thanks to Whole Foods, as well as rush their everyday orders courtesy of Amazon’s ever-faster ship times.

In addition, Walmart’s still unprofitable e-commerce business faced other struggles in 2019. Some of its acquisitions in apparel haven’t paid off as anticipated. Last year Walmart sold off Modcloth, Bonobos laid off staff and founder Andy Dunn left. Walmart also shut down Jet.com’s city grocery business, and it just wrapped up its experimental shopping service Jet black.

Walmart additionally pointed to issues in Q4 related to political unrest in Chile, which disrupted the majority of its stores. However, Sam’s Club, Walmex, China and Flipkart did well.

“The holiday season delivered positive transaction growth and underlying expense leverage was strong for the
quarter. However, it wasn’t as good as expected due to lower sales volumes and some pressure related to
associate scheduling,” said Walmart CFO Brett Biggs, in a statement. “We understand the factors that affected our results and are developing plans to address them. We remain confident in our business strategy and our ability to deliver value and convenience for our customers through an integrated omnichannel offering across the globe,” he added.

The retailer also offered lowered 2021 guidance, with earnings expected in the range of $5.00 to $5.15, below analysts’ estimates of $5.22. Walmart said this doesn’t include any impact from the coronavirus outbreak, but it’s continuing to monitor the situation.

GGV Capital says mom-and-pop shops can boost e-commerce in emerging markets

By Catherine Shu

Despite the rapid growth of e-commerce in India, Southeast Asia and other emerging markets, the vast majority of retail transactions there still happen offline in small stores that also serve as neighborhood hubs.

The central role these stores play in their communities led GGV Capital to develop what the firm refers to as its mom-and-pop shop investment thesis. This means backing startups that help small retailers digitize operations, tap into better supply chains and serve as delivery points in markets where logistics and online payment infrastructures are still developing. In turn, GGV’s managing partners believe this will lay the groundwork for stronger e-commerce growth.

Companies that GGV has already invested in under this thesis include B2B e-commerce platform Udaan and Telio, bookkeeping app KhataBook and social commerce startup Shihuituan (also called Nice Tuan) in China.

A sociological approach to e-commerce investment

GGV managing partner Hans Tung says the mom-and-pop shop thesis means looking at consumers’ shopping habits across countries and understanding why they are different from a historical and social perspective. During his career, Tung has observed e-commerce develop in markets including the United States, China, Japan, Taiwan, India, Southeast Asia and Latin America. Offline shopping habits, population density, transportation infrastructure and credit card penetration all played a factor in how e-commerce evolved in each of those places.

“You realize e-commerce doesn’t exist in a vacuum. It exists as a substitute for what is happening in the offline world,” he says. “Mobile payment doesn’t happen in a vacuum. It just fulfills the same needs with a different method. It was a substitution for what was happening in the offline world with credit card and debit card penetration.”

Tinder founder funds sex tips app Lover

By Josh Constine

Want to spice up the bedroom without paying for pills or awkward visits to a sex therapist? A new app called Lover lets you take a sexual personality quiz, explore carnal knowledge tutorials, and discretely figure out which turn-ons you share with your partner. Built by board certified sexual medicine clinical psychologist Dr. Britney Blair, Lover launches today on iOS with $5 million in seed funding from Tinder founder Sean Rad and other investors.

“It is strange that there are such taboos around sex when it is something we all do…whether we enjoy ourselves or not. We think it is time to start the conversation around this important aspect of our health” says Dr. Blair. “We believe Lover can help build confidence, facilitate communication, improve partner connection and just raise consciousness about sex and sexuality.”

A solid portion of Lover’s content is free for the first seven days, including audio guides to oral sex, video explainers on how to be generous in bed, and multi-step “playlists” of content like “Getting Hard, Made Easy”. Lover charges $9.99 to keep using it to dive deeper into themed educational materials like “Coreplay Not Foreplay” and “Fantasy To Reality” that are recommended based on the result of your sexual style questionnaire.

Almost 50% of women and 40% of men have a sexual complaint . . . [but] most people don’t realize how common and treatable their issues are” Dr. Blair tells me. “In our [pre-launch tests] focused purely on erectile dysfunction, 62% of users reported improvements to their erections within three weeks of using the app. That’s pretty wild when you think Viagra’s efficacy rate is approximately 65% and it lasts only five hours.”

With startups like digital pharmacy Ro scoring a $500 million valuation just 18 months after launching by prescribing and selling men’s health drugs like viagra, Lover sees a market for education-based alternative approaches to sexual wellness.

Lover co-founders (from left): Jas Bagniewski, Dr. Britney Blair, and Nick Pendle

Dr. Blair got interested in the space a decade ago after a Stanford grad school lecture illuminated how prevalent sexual problems are but how quickly they can be resolved with learning and communication. She teamed up with her CEO Jas Bagniewski who’d been the manager of Europe’s largest ecommerce business Zalando in the UK, and a founder of City Deal that sold to Groupon. Bagniewski and fellow Lover co-founder Nick Pendle started European Casper mattress competitor Eve Sleep and brought it to IPO.

The plan is to combine Dr. Blair’s educational materials with Bagniewski and Pendle’s ecommerce chops to monetize Lover through subscriptions and eventually recommending products like sex toys for purchase. Now they have $5 million in seed funding led by Lerer Hippeau, and joined by Manta Ray Ventures, Oliver Samwer’s Global Founders Capital, Fabrice Grinda, and Jose Marin. The cash will go towards building out an Android app and adding games that partners can play together in bed.

There are plenty of random sex tip websites out there. Lover tries to differentiate itself by personalizing content based on the results of a Myers-Briggs-esque quiz that asks you how adventurous, communicative, and assertive you are. You then receive a classification like “The Muse” with a few pages of explanation, for example revealing how you like to inspire others while being the center of attention.

From there, Lover can suggest guides for mastering your own sexual personality or branching out into new behavior patterns. There’s also a feature copied from another app called XConfessions for figuring out what you and your partner like. You connect your apps and then separately swipe yes or no on questions about whether you’d like “having your partner drip candle wax on you” or “your partner dressing as a strict cop”. If you and they match, the app tells you both so you can try it out.

Overall, Lover’s content is a lot higher quality and more compassionate than where most people learn about sex: from pornography. Having a real sexual medicine doctor overseeing the app lends credibility to Lover. And the design and tone throughout make you feel empowered rather than sleazy.

Still, Dr. Blair admits that “it’s hard to motivate people into behavioral change, people already have subscription apps on their phones and we may run into ‘subscription fatigue'”. People might feel natural paying for viagra because the impact is obvious, the value of a subscription to sex tips might feel too vague or redundant to what’s free online.

To get a lot of users opening their wallets, not just their pants, Lover will need to do a better job of previewing what’s behind the paywall, and offering more interactivity that online content lacks. But if it can give users one unforgettable night thanks to its advice, it may be able to seduce them for the long-run.

7-month-old Simsim secures $16M for its social commerce in India

By Manish Singh

Simsim, a social commerce startup in India, said on Friday it has raised $16 million in seven months of its existence as it attempts to replicate the offline retail experience in the digital world with help from influencers.

The Gurgaon-based startup said it raised $16 million across Seed, Series A, and Series B financing rounds from Accel Partners, Shunwei Capital, and Good Capital. (The most recent round, Series B, was of $8 million in size.)

“Despite e-commerce players bandying out major discounts, most of the sales in India are still happening in brick-and-mortar stores. There is a simple reason for that: Trust,” explained Amit Bagaria, co-founder of Simsim, in an interview with TechCrunch.

The vast majority of Indians are still not comfortable with reading descriptions — and that too in English, he said.

Simsim is taking a different approach to tackle this opportunity. On its app, users watch short-videos produced in local languages by influencers who apply beauty products or try out dresses and explain the ins-and-outs of the products. Below the video, the items appear as they are being discussed and users can tap on them to proceed with the purchase.

“Videos help in education users about the category. So many of them may not have used face masks, for instance. But it becomes easier when the community influencer is able to show them how to apply it,” said Rohan Malhotra, Managing Partner at Good Capital, in an interview with TechCrunch.

Influencers typically sell a range of items and users can follow them to browse through the past catalog and stay on top of future sales, said Bagaria, who previously worked at the e-commerce venture of financial services firm Paytm .

“This interactiveness is enabling Simsim to mimic the offline stores experience,” said Malhotra, who is one of the earliest investors in Meesho, also a social commerce startup that last year received backing from Facebook and Prosus Ventures.

“The beauty to me of social commerce is that you’re not changing consumer behavior. People are used to consuming on WhatsApp — and it’s working for Meesho. Over here, you are getting the touch and feel experience and are able to mentally picture the items much clearer,” he said.

Simsim handles the inventories, which it sources from manufacturers and brands, and it works with a number of logistics players to deliver the products.

“Several Indian cities and towns are some of the biggest production hubs of various high-quality items. But these people have not been able to efficiently sell online or grow their network in the offline world. On Simsim, they are able to work with influencers and market their products,” said Bagaria.

The platform today works with more than 1,200 influencers, who get a commission for each item they sell, said Bagaria, who plans to grow this figure to 100,000 in the coming years.

Even as Simsim, which has been open to users for six months, is still in its nascent stage, it is beginning to show some growth. It has amassed over a million users, most of whom live in small cities and towns, and it is selling thousands of items each day, said Bagaria.

He said the platform, which currently supports Hindi, Tamil, Bengali, and English, will add more than a dozen additional languages by the end of the year. In about a month, Simsim also plans to start showing live videos, where influencers will be able to answer queries from users.

A handful of startups have emerged in India in recent years that are attempting to rethink the e-commerce market in the nation. Amazon and Walmart, both of which have poured billions of dollars in India, have taken a notice too. Both of them have added support for Hindi in the last two years and have made several more tweaks to their platforms to expand their reach.

Walmart shuts down its experimental personal shopping service, Jet black

By Sarah Perez

Walmart is shutting down its personal shopping service, Jet black, on February 21, after struggling to find adoption or additional investment. The service had allowed New York-area customers to text message orders for home delivery. According to its website, Jet black will now no longer accept new orders and will refund its customers their most recent $50 monthly membership fee.

The retailer is trying to spin the shutdown as a learning experience, noting that part of the initiative was to test and build technology that could eventually be applied to other parts of Walmart’s business. In Jet black’s case, Walmart learned about conversational commerce and how customers could use text messages to shop.

But according to an earlier report from The Wall Street Journal, Walmart had discussed investment with several potential partners, including Microsoft and VC firm NEA. Those talks didn’t pan out. Jet black, the report said, had gained fewer than 1,000 customers and remained a money-losing business.

To be fair, a high-end shopping service was largely an experimental concept for Walmart to dabble in, and it’s not surprising that it didn’t take off. After all, the Walmart brand today is aligned with cost savings and mainstream America, not necessarily the well-to-do, time-strapped urban parents to whom Jet black aimed to cater. It also overlapped with Walmart’s own home delivery options, including its successful Walmart Grocery service, which could deliver the fresh food Jet black could not.

Jet black received more attention than it likely warranted, given its concept and limited reach, for a few reasons. The service, which arrived in May 2018, was the first project to debut from Walmart’s tech incubator, Store No. 8, which drew interest. In addition, Jet black’s co-founder and CEO Jenny Fleiss previously co-founded Rent the Runway, a popular clothing rental startup catering to a similar upwardly mobile demographic.

Jet black also arrived at a time when a few startups had been trying text-based shopping, including Hello Alfred, Magic, GoButler, Operator, Fetch, Scratch and others. (Most have since failed or pivoted.) Walmart’s entry into this market, at the time, was then considered notable.

Walmart claimed last July Jet black’s customers were spending $1,500 per month, on average. But there weren’t enough customers — or efficiency in the business model — to make Jet black profitable.

In addition, Fleiss left the business last year, signaling Jet black’s struggles. She was replaced by Nate Faust, Walmart senior vice president of e-commerce logistics. The Journal reported Jet black was losing as much as $15,000 per year per member, as of last summer. Today it says 293 Jet black employees will be laid off as a result of the shutdown.

A Walmart spokesperson confirmed this figure to TechCrunch, as well, noting that 58 other employees are being retained to help apply Jet black’s learning to other areas, including Walmart Grocery.

“We’ve learned a lot through Jet black, including how customers respond to the ability of ordering by text as well as the type of items they purchase through texting,” said Scott Eckert, SVP, Next Generation Retail and Principal, Store No 8, in an announcement. “We’re eager to apply these learnings from Jet black and leverage its core capabilities within Walmart,” he added.

FTC votes to review influencer marketing rules & penalties

By Josh Constine

Undisclosed influencer marketing posts on social media should trigger financial penalties, according to a statement released today by the Federal Trade Commission’s Rohit Chopra. The FTC has voted 5-0 to approve a Federal Register notice calling for public comments on questions related to whether The Endorsement Guides for advertising need to be updated.

“When companies launder advertising by paying an influencer to pretend that their endorsement or review is untainted by a financial relationship, this is illegal payola,” Chopra writes. “The FTC will need to determine whether to create new requirements for social media platforms and advertisers and whether to activate civil penalty liability.”

Currently the non-binding Endorsement Guides stipulate that “when there is a connection between an endorser and a seller of an advertised product that could affect the weight or credibility of the endorsement, the connection must be clearly and conspicuously disclosed.” In the case of social media, that means creators need to note their post is part of an “ad,” “sponsored” content or “paid partnership.”

But Chopra wants the FTC to consider making those rules official by “Codifying elements of the existing endorsement guides into formal rules so that violators can be liable for civil penalties under Section 5(m)(1)(A) and liable for damages under Section 19.” He cites weak enforcement to date, noting that in the case of department store Lord & Taylor not insisting 50 paid influencers specify their posts were sponsored, “the Commission settled the matter for no customer refunds, no forfeiture of ill-gotten gains, no notice to consumers, no deletion of wrongfully obtained personal data, and no findings or admission of liability.”

Strangely, Chopra fixates on Instagram’s Branded Content Ads that let marketers pay to turn posts by influencers tagging brands into ads. However, these ads include a clear “Sponsored. Paid partnership with [brand]” and seem to meet all necessary disclosure requirements. He also mentions concerns about sponcon on YouTube and TikTok.

Additional targets of the FTC’s review will be use of fake or incentivized reviews. It’s seeking public comment on whether free or discounted products influence reviews and should require disclosure, how to handle affiliate links and whether warnings should be posted by advertisers or review sites about incentivized reviews. It also wants to know about how influencer marketing affects and is understood by children.

Chopra wisely suggests the FTC focus on the platforms and advertisers that are earning tons of money from potentially undisclosed influencer marketing, rather than the smaller influencers themselves who might not be as well versed in the law and are just trying to hustle. “When individual influencers are able to post about their interests to earn extra money on the side, this is not a cause for major concern,” he writes, but “when we do not hold lawbreaking companies accountable, this harms every honest business looking to compete fairly.”

While many of the social media platforms have moved to self-police with rules about revealing paid partnerships, there remain gray areas around incentives like free clothes or discount rates. Codifying what constitutes incentivized endorsement, formally demanding social media platforms to implement policies and features for disclosure and making influencer marketing contracts state that participation must be disclosed would all be sensible updates.

Society has enough trouble with misinformation on the internet, from trolls to election meddlers. They should at least be able to trust that if someone says they love their new jacket, they didn’t secretly get paid for it.

SoftBank-backed Brandless shuts its doors for good

By Connie Loizos

It was a roller coaster ride — a short one.

Brandless, a San Francisco-based e-commerce company that made and sold an assortment of “cruelty-free” products in beauty and personal care, household, baby and pet categories, has shut its doors less than three years after officially opening them in July 2017.

In a statement provided to the news outlet Protocol, the company cited a “fiercely competitive” retail market. As part of its shut-down, the company will reportedly lay off 70 employees, with 10 staying aboard to resolve outstanding orders and presumably figure out how to sell its remaining assets.

The company’s short run won’t come as a complete surprise to industry watchers. In July of 2018, Brandless announced that SoftBank’s $100 billion Vision Fund had invested $240 million in the company in a deal that valued Brandless at a little over $500 million. It was a surprising development, given the company’s relatively nascent business.

As has happened across numerous companies backed by the Vision Fund, including Wag and more recently WeWork, it also meant an executive shake-up. Indeed, by March of last year,  CEO Tina Sharkey, who’d co-founded the company with Ido Leffler, resigned from her position, saying she was moving into a “more focused role” as the board’s co-chair.

At the time, Evan Price, Brandless’s then CFO, became the company’s interim CEO. In May, John Rittenhouse, the former COO of Walmart.com, took the job. His plan, according to Protocol, was to get more of Brandless’s products into brick-and-mortar stores, but by this past December, he’d quietly stepped down and left Brandless. (Sharkey, meanwhile, left the company’s board last fall.)

Impacts

Certainly, the development undermines SoftBank’s already shaky reputation for savvy deal-making. Though in fairness, Brandless did enter into an industry that has grown cluttered with new entrants, many of them with a good story about the quality of their products but also in heated competition with products that taste and perform similarly to many others on the market in similar price brands.

It’s also worth noting that of the $240 million in SoftBank dollars announced in 2018, less than half that amount ultimately made it to Brandless, says a source close to the company.

According to a report last year in The Information, SoftBank, eager to see Brandless turn a profit, was providing some of its promised funding to Brandless via installments and was holding back a large chunk of capital until the company met certain financial targets.

Because that didn’t happen, SoftBank wound up investing $100 million altogether, and, according to Protocol, Brandless’s board, including Price, Leffler, SoftBank managing director Jeff Housenbold, Redpoint’s Jeff Brody and Colin Bryant of NEA, decided to close the company while still able to provide severance packages for employees.

7-Eleven is the next retailer to test cashierless stores

By Sarah Perez

7-Eleven is the latest retailer to test the “cashierless” store concept, following Amazon’s big push into the market with its Amazon Go convenience stores that use technology, instead of people, to monitor stock levels, track purchases, and process payments. This week, 7-Eleven announced it’s piloting its own take on the cashierless concept with a 700-square-foot store at its corporate HQ in Irving, Texas, open only to company employees.

The store stocks 7-Eleven’s most popular products, including beverages, snacks, food, groceries, over-the-counter drugs, and non-food items. This product mix may be refined over the course of the testing.

Similar to Amazon Go, the 7-Eleven pilot store will involve a mobile app that customers use to check into the store, pay for items, and view their receipts.

Meanwhile, to differentiate shoppers and their purchases, 7-Eleven is using a proprietary mix of algorithms and predictive technology, it says.

“Ultimately, our goal is to exceed consumers’ expectations for faster, easier transactions and a seamless shopping experience,” said Mani Suri, 7-Eleven Senior Vice President and Chief Information Officer, in a statement. “Introducing new store technology to 7-Eleven employees first has proven to be a very productive way to test and learn before launching to a wider audience. They are honest and candid with their feedback, which enables us to learn and quickly make adjustments to improve the experience. This in-house, custom-built technology by 7-Eleven engineers is designed for our current and future customers. We continue to innovate, and coupling fresh, innovative, healthy food options with a frictionless shopping experience could be a game-changer,” he added.

The company has been working to adapt to the changes needs of customers in other ways, before now, including through its on-demand delivery service and mobile checkout, for example. But given Amazon’s intention to directly compete in 7-Eleven’s market, it likely had no choice but to begin experimenting with cashierless technology sooner, rather than later.

7-Eleven is not alone on that front.

Since Amazon introduced its Amazon Go concept in 2018, other retailers have followed suit. Walmart and Walmart-owned Sam’s Club and supermarket chain Giant Eagle are testing A.I. technology similar to Amazon Go, among others. And several companies sell cashierless technology to retailers, including Standard Cognition, Zippin, Grabango, AiFi, and Trigo, to name a few.

The pilot program at 7-Eleven is underway now, but the company didn’t give any indication as to how long the tests would run or if and when it would expand to the public. It also didn’t detail the proprietary technology it’s using. But typically, cashierless stores use a combination of sensors, cameras, and A.I.

The retailer today operates, franchises and licenses more than 70,000 stores in 17 countries, including 11,800 in North America.

Foxtrot picks up $17 million to reimagine the convenience store

By Jordan Crook

Amidst the staggering rise of on-demand delivery services, the convenience store has been left relatively untouched. Until very recently.

Foxtrot, founded in 2013, is looking to reimagine the corner convenience store, offering customers the option to buy in store or order online for delivery.

The company today announced the close of a $17 million growth round, co-led by Imaginary and Wittington Ventures, with investment from Fifth Wall, Lerer Hippeau, Revolution’s Rise of the Rest Seed Fund, M3 Ventures, The University of Chicago, Collaborative VC, and Wasson Enterprise, as well as new investors Bluestein Associates and Barshop Ventures.

Foxtrot offers a wide variety of products to customers, including craft beer and natural wines, familiar brands like Oreo, everyday goods like Bounty paper towels, as well as products under the Foxtrot label like sandwiches and prepped meals, as well as coffee. It’s an impressive mix of local, emerging and heritage brands all under one roof. In total, Foxtrot works with more than 100 vendors to supply customers with upwards of 800 different products.

Founder and CEO Mike LaVitola says that there is an even breakdown between Foxtrot’s own products (coffee, sandwiches, gummy candies), emerging brands (Hims, MatchaBar, etc.), and staple products and brands (Bud Light and Oreo).

But the roof isn’t necessarily all that important. Foxtrot offers on-demand delivery of its full product suite via an app. And moreover, Foxtrot’s loyalty program offers free delivery for a month for folks who spent more than $100 (either in store or online) last month at Foxtrot.

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Foxtrot has stores in Dallas and Chicago, with plans to expand its footprint in those markets, as well as launch in D.C.

The company says its experiencing 2x year-over-year revenue growth, with 150 percent YOY growth of its ecommerce customer base. It’s revenue is split 50/50 between offline and online sales.

In terms of employment, the workers inside the store who pick and pack and serve offline customers are W2 employees. Couriers are contractors but are employed directly by Foxtrot based on the company’s own best practices around on-demand delivery.

LaVitola identifies maintaining a cohesive experience across retail and online as one of the greatest challenges.

“They’re fundamentally different,” said LaVitola. “the things that make one successful are very different from the things that make the other side successful. Going forward, to be as successful as we’ve been in these first markets, we need to make sure that the customer is coming to us online and in the store, and that they feel that they’re seeing the same brands and the same ecosystem.”

Deliverr lands $40M Series C to bring two-day shipping to any merchant

By Ron Miller

Deliverr doesn’t own a warehouse or a delivery truck, but the startup is helping e-commerce companies not named Amazon achieve Amazon-like two-day shipping. The startup does it with intelligent algorithms, and today it announced a $40 million Series C investment.

Activant Capital led the round. Other investors in the company include 8VC, GLP and Flexport founder and CEO Ryan Peterson. The company reports it has raised a total of $70 million.

“What we enable a merchant to do is offer free two-day delivery anywhere they sell, whether it’s Walmart eBay, even Amazon because we integrate into Prime or their own website,” Deliverr CEO and co-founder Michael Krakaris told TechCrunch. They also added a recent program for merchants who want next-day delivery.

The question is how do they do this without owning a single warehouse or a single delivery truck, but Krakaris says he cut his teeth at Twilio, a company that delivered message services without being a carrier. As he learned there, if you have good data and a good algorithm, you can build a business.

They have also built relationships with a network of warehouses across the country, and as Krakaris pointed out, most warehouses have unused space. So based on their understanding of markets, they move goods to different parts of the country, store them in available warehouse space, and use the warehouse’s own picking systems to grab the goods.

The big thing is that they integrate into the warehouse’s Warehouse Management System software, so that orders coming through their system will integrate with the warehouse’s, get picked, processed and put on a truck. The system also helps find the fastest, cheapest way to deliver the goods on time.

This involves two algorithms, an in-bound algorithm and an outbound one. “Inbound is when a merchant is getting started sending inventory into the Deliverr network. And so we’re doing a few things. If it’s a repeat item, we already have a demand graph for that item so we’re just optimizing that existing demand,” he explained.  He says that there is some common sense in that you’ll see certain items tend to be consistent throughout the year, but you don’t want to put warm jackets in Florida and California.

The other piece is Outbound, figuring the fastest, cheapest way to deliver that item. They have relationships with a variety of national and regional carriers, and when an order comes in, they look at the inventory and location and figure out the optimal choice, based on price and ability to get there in the delivery window. Krakaris says they have a success rate of over 95%, which is near the top of the industry.

The company launched in 2017. They are serving 1000s of merchants using data with just 60 employees. That’s a testament to the power of data and good algorithms.

Instamojo acquires Times Internet’s GetMeAShop to serve more small businesses in India

By Manish Singh

Instamojo, a Bangalore-based startup that helps merchants and small businesses accept digital payments, establish presence and sell on the web, has acquired Times Internet-owned Gurgaon-based startup GetMeAShop.

The deal is worth $5 million and includes Times Internet making an investment in Instamojo, Sampad Swain, co-founder and chief executive of the Bangalore-based startup, told TechCrunch in an interview.

GetMeAShop runs a platform that allows businesses to set up their website, build an online store, and make it easier for merchants or individuals to engage with — and sell to — their customers through social apps such as WhatsApp and Facebook.

More to follow shortly…

Real estate startup Homie plans to expand to more cities with $23 million in Series B funding

By Sarah Buhr

Homie has made an impression among younger, first-time home buyers in the Utah and Arizona markets for cutting out the traditional closing costs, 6% real estate commissions and arduous paperwork associated with traditional home sales. It now plans to explore opening up in three new markets and will begin a Vegas launch in March with a fresh infusion of $23 million in Series B equity financing.

While most real estate outfits now cater to customers online, Homie takes a different approach, employing real estate agents who will help them through the process but who don’t take a commission. Instead, sellers get a $1,500 flat fee and buyers and sellers are guaranteed built-in attorney assistance for the negotiation process.

The 6% traditional commission associated with the home-buying process has been around for decades. However, it has also come under fire from the Department of Justice, which recently disagreed with a motion from the National Association of Realtors to dismiss several civil lawsuits lobbied against the organization. The move hints that the U.S. government may see these fees as archaic and unjustified, as well.

How do traditional agents feel about a proposed loss of commission? Those outside of Homie TechCrunch spoke to on anonymity have said it often takes more work with less pay to close a deal this way. However, that structure seems to resonate with Homie users. Through Homie, the company claims to have saved over $55 million in commissions, with a revenue growth of 150% over the past year. This bodes well for the company, if true.

The ability to expand is also a possibly good marker for the health of the company. Homie co-founder Johnny Hanna told TechCrunch previously he’d looked at the Vegas area, as well as Dallas for expansion.

A few other places we could see Homie pop up in the next year include Boise, Seattle, Colorado Springs and Nashville.

The other new news out of Homie this year is the addition of real estate adjacent services like Homie Loans™, Homie Title™ and Homie Insurance™, all of which serve to streamline the process for customers.

“Buying or selling a home is expensive and time-consuming because of all the different companies you have to work with,” Hanna said in a statement. “Communication becomes a game of telephone because of all the parties involved. We are disrupting the traditional model and saving customers thousands of dollars by combining technology, a team of experts, and a one-stop-shop for real estate. Technology has changed everything except the real estate business model. That time has finally come.”

Shopping via smart speakers is not taking off, report suggests

By Sarah Perez

U.S. consumers aren’t adopting voice-based shopping as quickly as expected, according to a new report today from eMarketer. While consumers have been happy to bring smart speakers into their home, they continue to use them more often for simple commands — like playing music or getting information, for example — not for making purchases. However, the overall number of voice shoppers is growing. It’s just slower than previously forecast, the analysts explain.

By the end of this year, eMarketer estimates that 21.6 million people will have made a purchase using their smart speaker. That’s lower than the Q2 2019 forecast which then expected the number to reach 23.6 million.

Still, it’s important to point out that the overall number of people making purchases via a smart speaker is growing. It will even pass a milestone this year, when 10.8% of all digital buyers in the U.S. will have made a purchase using their smart speaker.

eMarketer attributes the slower-than-anticipated growth to a number of factors, including security concerns are leading people to not yet fully trust smart speakers and their makers. Many consumers would also prefer a device with a screen so they could preview the items before committing to buy. Apple and Google have addressed the latter by introducing smart home hubs that include screens, speakers and built-in voice assistants. But consumers may have already bought traditional Echo and Google Home devices and don’t feel the need to upgrade.

In addition, the report upped the estimates for percentage of users listening to audio (81.1%) or making inquiries (77.8%).

“Though there are thousands of smart speaker apps that do everything from let you order takeout to find recipes or play games, many consumers don’t realize that they need to take extra and more specific steps to utilize all capabilities,” said eMarketer principal analyst Victoria Petrock. “Instead, they stick with direct commands to play music, ask about the weather or ask questions, because those are basic to the device.”

To be fair, a forecast like this can’t give a complete picture of smart speaker usage. Many consumers do ask Alexa to add items to a shopping list, for instance, which they then go on to buy online at some point — but that wouldn’t be considered voice-based purchasing. Instead, the smart speaker sits as the top of the funnel, capturing a consumer’s intention to buy later, but doesn’t trigger the actual purchase.

That said, Amazon, in particular, has failed to capitalize on the potential for voice shopping, given how easily it can tie a voice command to a purchase from its site. Perhaps it became a little gun-shy from all those mistaken purchases, but the company hasn’t innovated on voice shopping features. There are a number of ways Amazon could make voice shopping a habit or turn one-time purchases into subscriptions, just by way of simple prompts.

Amazon could also develop a set of features, similar to Honey (now owned by PayPal), that allow users track prices drops and sales, then alert Echo owners using Alexa’s notifications platform or even an “Amazon companion” skill, that could be added to users’ daily Flash Briefings. (E.g. The item you were watching is now $50 off. The new price is…$X…would you like to buy it?”) The companion could also track out-of-stock items, alert you to new arrivals from a favorite brand, or even send product photos to the Alexa companion app, as suggested deals.

Instead, Alexa voice shopping remains fairly basic. Without improvements, consumers will likely continue to avoid the option.

eMarketer also today adjusted its forecast for overall smart speaker usage. Instead of the 84.5 million U.S. smart speaker users, the 2020 estimate has been dropped to 83.1 million users, indicating slightly slower adoption.

 

 

 

Emerge raises $20M to take its digital freight marketplace for truckers up a gear

By Ingrid Lunden

Trucking is currently the most popular mode of transporting freight in the U.S., accounting for around $12.5 billion of the $17 billion freight market, according to the Bureau of Transportation Statistics. But with thousands of small and single-vehicle operators and legacy (often paper-based) systems underpinning communications, it’s also one of the most inefficient.

Now, there are signs that this is changing. A startup out of Phoenix, Arizona called Emerge, which has built a  platform for shippers and brokers to find and allocate truck freight more effectively across the long tail of available truck-based carriers (a little like a Flexport but for trucks), is announcing a round of $20 million, funding it will use to continue building out its technology, as well as to keep expanding business.

The Series A — led by NewRoad Capital Partners, with previous investors Greycroft and 9Yards Capital also participating — comes on the heels of some already-strong traction for Emerge. Since being founded in 2018 by brothers Andrew and Michael Leto, the company has processed more than $1 billion in freight with 1,500% year-over-year growth between 2018 and 2019. Emerge has now raised just over $40 million and we understand that its valuation is currently at over $100 million. 

Some of its traction so far is down to the founders. Both are vets of the trucking industry whose previous company, a multimodal shipment visibility/supply chain solutions platform called 10-4, sold to Trimble in a $400 million deal. And some of that is down to the gap in the market that Emerge is filling.

“Gap” is actually the operative word here. How shipments are booked on trucks today is quite inefficient, with orders often leaving empty spaces on truck beds that could be filled with goods going in the same direction; and in about 20% of all journeys carrying no load at all.

Part of the reason for this is the antiquated way that shippers book space on trucks, and part of the reason is because there is just simply too much fragmentation in the system, with 80% of all shipments today contract-based and the remaining 20% operating as a “spot market” and booked on the fly, and neither of them particularly efficient when it comes to truck occupancy. (Most of the latter spot market is booked through spreadsheets and email, Michael Leto, the CEO, said in an interview.)

Emerge’s solution is something of a stick-and-carrot approach that reminds me a little also of how advertising exchanges work.

A shipper that wants to use the Emerge platform essentially activates/lists its entire inventory of truck providers on the platform to get started. That list and inventory, in turn, become part of a bigger database of other providers: and again, this is a long-tail approach, with typically the trucking companies on the platform having no more than 200 trucks (and often less) in their fleets.

Then, when a shipper goes to Emerge to book a shipment, options are provided that might include previous truckers, but might also include others. The idea is that this provides a more efficient picture, and that in turn gets passed on as cost savings to the customers, who can typically reduce shipping costs by as much as 20% using the platform.

If the cost savings and expanded choice are the carrots, the stick comes in the form of the requirement to upload truck data and share it with other shippers: you can’t use the system without doing it.

“But it’s a network effect,” Leto explained when I asked if Emerge ever saw resistance to the model. “We allow these companies to share capacity to drive efficiencies, and to drive and lower costs with less deadhead miles. There are a lot of benefits to capacity sharing.” It doesn’t seem to have deterred too many in any case. There are currently some 30,000 carrier profiles the platform, and 12,000  transportation entities — including carriers, brokers, or other shippers — transacted in Q4 alone, speaking to activity on the platform being strong. 

Emerge is not the only company that has identified the opportunity in providing a better and more updated platform to communicate and book space in the fragmented truck market. Sennder out of Berlin — which last year raised a sizeable round of funding — has also built a platform to centralise communications around booking shipments. It, however, seems to have less of an emphasis on encouraging shippers to take the lead in expanding that network effect that Leto describes.

Others that are tackling the wider shipping and logistics market and trying to improve how it runs include Sendy out of Kenya, which recently also announced a $20 million raise; Flexport, which now has a $3.2 billion valuation; Zencargo, which has also raised $20 million; and FreightHub ($30 million); Bringg ($25 million); and NEXT ($97 million).

But within that, Emerge’s performance so far, coupled with the Leto brothers’ history as founders, are giving the startup some extra mileage as we enter the next phase of what trucking might hold, which could include a critical mass of autonomous and electric vehicles on pre-defined routes.

“Uniquely, Emerge combines an exciting new technology designed to serve existing, unmet market need with experienced industry operators and entrepreneurs,” said Tracy Black of NewRoad in a statement. “Andrew and Michael are building the most innovative marketplace we’ve seen in the freight and digital marketplace industry — bringing contracts and carriers together to create new capacity. We are excited to be leading their Series A and I am thrilled to join the board to support their growth.”

Nomagic, a startup out of Poland, picks up $8.6M for its pick-and-place warehouse robots

By Ingrid Lunden

Factories and warehouses have been two of the biggest markets for robots in the last several years, with machines taking on mundane, if limited, processes to speed up work and free up humans to do other, more complex tasks. Now, a startup out of Poland that is widening the scope of what those robots can do is announcing funding, a sign not just of how robotic technology has been evolving, but of the growing demand for more automation, specifically in the world of logistics and fulfilment.

Nomagic, which has developed way for a robotic arm to identify an item from an unordered selection, pick it up and then pack it into a box, is today announcing that it has raised $8.6 million in funding, one of the largest-ever seed rounds for a Polish startup. Co-led by Khosla Ventures and Hoxton Ventures, the round also included participation from DN Capital, Capnamic Ventures and Manta Ray, all previous backers of Nomagic.

There are a number of robotic arms on the market today that can be programmed to pick up and deposit items from Point A to Point B. But we are only starting to see a new wave of companies focus on bringing these to fulfilment environments because of the limitations of those arms: they can only work when the items are already “ordered” in a predictable way, such as on an assembly line, which has mean that fulfilment of, for example, online orders is usually carried out by humans.

Nomagic has incorporated a new degree of computer vision, machine learning and other AI-based technologies to  elevate the capabilities of those robotic arm. Robots powered by its tech can successfully select items from an “unstructured” group of objects — that is, not an assembly line, but potentially another box — before picking it up and placing it elsewhere.

Kacper Nowicki, the ex-Googler CEO of Nomagic who co-founded the company with Marek Cygan (an academic) and Tristan d’Orgeval (formerly of Climate Corporation), noted that while there has been some work on the problem of unstructured objects and industrial robots — in the US, there are some live implementations taking shape, with one, Covariant, recently exiting stealth mode — it has been mostly a “missing piece” in terms of the innovation that has been done to make logistics and fulfilment more efficient.

That is to say, there has been little in the way of bigger commercial roll outs of the technology, creating an opportunity in what is a huge market: fulfilment services are projected to be a $56 billion market by 2021 (currently the US is the biggest single region, estimated at between $13.5 billion and $15.5 billion).

“If every product were a tablet or phone, you could automate a regular robotic arm to pick and pack,” Nowicki said. “But if you have something else, say something in plastic, or a really huge diversity of products, then that is where the problems come in.”

Nowicki was a longtime Googler who moved from Silicon Valley back to Poland to build the company’s first engineering team in the country. In his years at Google, Nowicki worked in areas including Google Cloud and search, but also saw the AI developments underway at Google’s DeepMind subsidiary, and decided he wanted to tackle a new problem for his next challenge.

His interest underscores what has been something of a fork in artificial intelligence in recent years. While some of the earliest implementations of the principles of AI were indeed on robots, these days a lot of robotic hardware seems clunky and even outmoded, while much more of the focus of AI has shifted to software and “non-physical” systems aimed at replicating and improving upon human thought. Even the word “robot” is now just as likely to be seen in the phrase “robotic process automation”, which in fact has nothing to do with physical robots, but software.

“A lot of AI applications are not that appealing,” Nowicki simply noted (indeed, while Nowicki didn’t spell it out, DeepMind in particular has faced a lot of controversy over its own work in areas like healthcare). “But improvements in existing robotics systems by applying machine learning and computer vision so that they can operate in unstructured environments caught my attention. There has been so little automation actually in physical systems, and I believe it’s a place where we still will see a lot of change.”

Interestingly, while the company is focusing on hardware, it’s not actually building hardware per se, but is working on software that can run on the most popular robotic arms in the market today to make them “smarter”.

“We believe that most of the intellectual property in in AI is in the software stack, not the hardware,” said Orgeval. “We look at it as a mechatronics problem, but even there, we believe that this is mainly a software problem.”

Having Khosla as a backer is notable given that a very large part of the VC’s prolific investing has been in North America up to now. Nowicki said he had a connection to the firm by way of his time in the Bay Area, where before Google, Vinod Khosla backed a startup of his (which went bust in one of the dot-com downturns).

While there is an opportunity for Nomagic to take its idea global, for now Khosla’s interested because of the a closer opportunity at home, where Nomagic is already working with third-party logistics and fulfilment providers, as well as retailers like Cdiscount, a French Amazon-style, soup-to-nuts online marketplace.

“The Nomagic team has made significant strides since its founding in 2017,” says Sven Strohband, Managing Director of Khosla Ventures, in a statement. “There’s a massive opportunity within the European market for warehouse robotics and automation, and NoMagic is well-positioned to capture some of that market share.”

Money-transfer startup Remitly launches Passbook, a neobank aimed at immigrants

By Ingrid Lunden

Last summer, the Seattle-based startup Remitly closed a $135 million round to go beyond money-transfer services into a wider range of financial products catering to its primarily-immigrant customer base.

Today, it’s taking the wraps off a new product that puts paid to that plan: it’s launching Passbook, a new bank aimed at immigrants that lets a person use any form of picture ID — whether it’s from the US or not — to sign up. The service is starting first in the US — Remitly’s biggest market today among its 15 “send from” countries and 40 “send to” countries. The long-term plan is to roll out Passbook anywhere that Remitly is active over time.

Aimed at the 44 million immigrants in the country that Remitly already targets with services to send money back to their home countries, the idea is to give them options to open and use bank accounts even if they are not in possession of Social Security numbers or other forms of US-originated identification, as long as they are living in the US, have another form of identification (for example a passport from another country), and in cases where the ID lacks an address, proof of where they live.

Passbook is tapping into a problem that extends into both developed and developing markets, where collectively some 1.7 billion people globally remain “unbanked,” with no access to bank accounts and therefore mostly off the financial grid, and therefore unlikely to have access to services like credit that can potentially help them improve their financial station in life.

Passbook is interesting not just because it’s addressing a gap in the market of financial services, but because of the timely subject matter.

The subjects of migrant workers, immigration, nationality — and how to best to handle the influx of new populations of people within a country’s borders coming for a variety of reasons — are all being hotly debated in the US and elsewhere. Large political shifts and platforms are being built and pivoting around how people view the movement of people.

But while those subjects get lots of attention in the media, in the halls of government, at the bar and around the proverbial dinner table, ironically the subject of those arguments — the people themselves — regularly get overlooked when it comes to building new services and calibrating tech to focus on them, two things that could clearly improve their individual lots and the economy as a whole. Immigrants globally represent some $1.3 trillion in wages and $900 billion in spending power annually.

“No-one should be excluded from banking and financial services,” said Matt Oppenheimer, the CEO and co-founder of Remitly, in an interview in London last week about Passbook.

Passbook is a logical expansion for Remitly because there is a strong overlap between the typical Remitly’s target customer, a country’s immigrant population, and those living in a country like the US who are underbanked.

Today many of the individuals who use money transfer services are immigrants, who use them to send money to family and friends in their “home” countries. Those immigrants, in turn, are the most likely US residents to lack social security numbers and other kinds of US-issued identification.

Up to now, that has made it harder for them to open bank accounts, since many banks in the US — in an effort to avoid risk, not because of a legal requirement — often require those US-originated identification documents to open the accounts in the first place.

But that opens an opportunity for a company like Remitly, which can use a banking service to expand its services funnel with its existing users — it has to date sent some $6 billion in funds on behalf of its users — and to open a new front in adding in other customers who may not already be using it for money transfer.

Since the main requirement is to satisfy “Know Your Customer” compliance, Remitly can do this using other documentation that a person is likely to have.

Remitly has set Passbook up like a typical challenger bank (these days often referred to as a “neobank”), in that it operates as a virtual, online-only bank with no physical office and has partnered with another banking partner called Sunrise that runs all the services under the hood and provides FDIC guarantees for deposits up to $250,000. On top of that, Remitly has worked in a number of features that it believes give customers not just a bank account, but one that has features specific to those that might appeal to its specific customer base.

That includes, in addition to basics like having an account into which money can be paid in and out, and having a Visa-based debit card to make cashless transactions, users getting the ability to “choose your flag” to personalise a card, no fees for transactions when the payment card is used abroad, no account maintenance fees, no overdraft fees, no ATM fees and no minimum balance.

As you would expect, Remitly will soon be adding in the ability to link the Passbook accounts to their money transfer feature to make the process more seamless, and presumably cheaper to entice more cross-service signups. No loans on the platform yet, but you can imagine credit, mortgages and other kinds of lending to make its way there over time as well.

Given the focus on immigrants as users, I asked Oppenheimer about the potential risk that they would be providing services to people who are in the US undocumented and potentially illegally, and wether that could pose problems for the company. He replied that the company is committed to protecting the privacy of its customers and since all that is needed is to satisfy KYC compliance, Remitly would never have information on a users’ immigration status one way or the other, leaving the question off the ledger altogether.

I also asked Oppenheimer where the company stands on funding. It has now raised just under $400 million, and for now is in no hurry to raise any more, he said. But when and if financing is added into the mix of services, you might imagine that will change again.

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