Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
Natasha and Alex and Grace and Chris gathered to dig through the week’s biggest happenings, including some news of our own. As a note, Equity’s Monday episode will be landing next Tuesday, thanks to a national holiday here in the United States. And we have something special planned for Wednesday, so stay tuned.
Ok! Here’s the rundown from the show:
That’s a wrap from us for the week! Keep your head atop your shoulders and have a great weekend!
California DoorDash workers protested outside of the home of DoorDash CEO Tony Xu on Thursday, prompted by a recent California Superior Court Judge ruling calling 2020’s Proposition 22 unconstitutional. Prop 22, which was passed last November in California, would allow app-based companies like DoorDash, Uber and Lyft to continue classifying workers as independent contractors rather than employees.
A group of about 50 DoorDash workers who are affiliated with advocacy groups We Drive Progress and Gig Workers Rising traveled caravan style to the front of Xu’s house in the Pacific Heights neighborhood of San Francisco. They demanded that DoorDash provide transparency for tips and 120% of minimum wage or around $17 per hour, stop unfair deactivations and provide free personal protective equipment, as well as adequate pay for car and equipment sanitizing.
“Dasher concerns and feedback are always important to us, and we will continue to hear their voices and engage our community directly,” a DoorDash spokesperson told TechCrunch. “However, we know that today’s participants do not speak for the 91% of California Dashers who want to remain independent contractors or the millions of California voters who overwhelmingly supported Proposition 22. The reality is, the passage of Prop 22 has addressed in law many of the concerns raised today through its historic benefits and protections: workers earn 120% of their local minimum wage per active hour in addition to 100% of their tips, receive free PPE and enjoy access to healthcare funds.”
DoorDash drivers say getting paid for the time they’re “active,” meaning actively driving to either pick up food and drop it off, rather than when they’re online and waiting for gigs to come through, leads to inadequate pay. They also say much of their living wage comes from tips, which should be an added bonus, but ends up helping make ends meet based on DoorDash’s pay structure. Prop 22 is also meant to guarantee a reimbursement of 30 cents per engaged mile, which drivers say “would be great if it were true.” DoorDash did not respond to follow ups regarding its pay structure or claims from dashers that they have not been given free PPE.
Rondu Gantt, a gig worker who’s been working for DoorDash for two and a half years and also drives for Uber and Lyft to get by, says his base pay from DoorDash is often as low as $3 per hour, and that around 40% to 60% of his money comes from tips. Although this model sounds similar to the restaurant industry in the United States, which can be quite lucrative for servers and bartenders, for a delivery driver, it’s an unsustainable way to make a living because tipping culture isn’t nearly as strong.
“DoorDash pays so low because they want to make it affordable for the customer, but I would say for the driver it becomes unaffordable,” Gantt told TechCrunch, citing the costs of owning, maintaining, parking and fueling a vehicle as potentially crippling. “Last week, I drove for 30 hours and I made $405. That’s $13.50 per hour, which is below minimum wage.”
Gantt said drivers also have had to deal with pressure to drive in unsafe conditions, and we can look to the images of delivery drivers in New York City during Hurricane Ida as an example of some conditions drivers feel compelled to accept. Over the past two years, DoorDash drivers have also been deemed essential workers, interacting with and providing services for many people during a pandemic at the risk of their health.
Gig Workers Rising says DoorDash workers “have received little to no safety support” with some workers reporting “being reimbursed as little as 80 cents per day for cleaning/sanitizing equipment and PPE that they use to keep themselves and customers safe.”
“Right now gig work isn’t flexible,” a spokesperson for Gig Workers Rising told TechCrunch. “Workers are at the mercy of when there’s demand. If they were employees the work would change as they’d work in the knowledge that they’ve healthcare and can take a sick day off.”
Because Prop 22 was ruled unconstitutional, the spokesperson said by rights it shouldn’t be in operation.
“The gig corporations violate that law everyday by choosing not to comply with it,” he said.
For Gantt’s part, he doesn’t necessarily want to be an employee, he just wants to make sure that he’s being paid what he deserves.
“Which is not minimum wage,” he said. “Minimum wage would be unacceptable as well. The cost of doing this, the danger, makes minimum wage unacceptable pay. And realistically, they’re only sometimes paying you minimum wage before taxes. After taxes you’re definitely making less.”
TechCrunch was given access to DoorDash workers’ dashboards that break down their pay. For the week of July 12 to July 19, one dasher was paid a total of $574.21 for 53 deliveries, $274 of which came from customer tip. His “active time” was 14 hours and 21 minutes, and his “dash time,” or when he was logged onto the app waiting for gigs to come through and doing deliveries, was about 30 hours.
The dasher’s “guaranteed earnings” from DoorDash for the week was $300.21. (DoorDash did not respond to clarification on how guaranteed weekly earnings are calculated or what they’re based on, but a post on the company’s site says that guaranteed earnings are incentives for dashers in specific areas.) His base pay ended up at about $257.62, but DoorDash added an additional $42.59 to adjust to guaranteed earnings. If we divide the amount DoorDash paid by the number of hours of “active time,” the worker was paid about $21 per hour. If we divide it by the “dash time,” it looks more like $10 per hour.
Again, this is before tax. Independent contractors are usually advised to put aside around 30% of their paycheck because they have to pay self-employment tax, which is 15.3% of taxable income, federal income tax, which varies depending on tax bracket, and potentially state income tax. After taxes, this dasher’s total pay for 30 hours of work, including his $274 worth of tip, would be around $402, which comes out to $13.40 per hour.
Tips were of concern at the protest on Thursday as drivers called for transparency. Gantt says dashers can see a cumulative amount of tip earnings per week, as well as how much tip they’re receiving from each order, but they don’t trust the amount they’re receiving is actually the amount customers are tipping them.
Gantt and other drivers aren’t just being paranoid. Last November, DoorDash agreed to pay $2.5 million to settle a lawsuit alleging the company stole drivers’ tips and allowed customers to think their tip money was actually going to the drivers. The suit, filed by Washington, D.C. attorney general Karl Racine, alleged DoorDash reduced drivers’ pay for each job by the amount of any tip.
One of the rallying cries of the protest was for Xu to “share the wealth.” In 2020, the CEO was reportedly the highest paid CEO in the Bay Area, making a total salary of $413.67 million. During the second quarter, DoorDash saw a $113 million profit adjusted for EBITDA, but was overall unprofitable with a net loss of $102 million.
“We all work for money and how that money gets distributed when they go through their earnings is telling you who matters and who doesn’t matter,” said Gantt. “It’s a clear sign of who’s important, who has value. If they don’t pay you, they don’t value you.”
Market research and insights are often underutilized assets for enterprises but it’s usually too hard to find content and there’s a lot of duplication, or information isn’t used well.
Swedish startup Stravito says it can centralize internal and external data sources and create something more akin to a ‘Spotify or Netflix’ for these kinds of assets, making them far more usable and consumable, they say.
It’s clearly onto something, since it’s now raised a €12.4million ($14.6million USD) series A funding round led by Endeit Capital, with additional investment from existing investors HenQ, Inventure and Creades. To date, Stravito has raised €20.1million ($23.7million USD).
Founded in 2017 by market research veterans and former iZettle employees, Stravito counts among its customers Carlsberg, Edwards Lifesciences, Pepsi Lipton, Danone, Electrolux and Comcast.
Thor Olof Philogène, CEO and co-founder at Stravito said: “It has never been more important for the world’s largest enterprises to understand and react to their customer’s changing behaviors using centralized, vetted company insights. Stravito’s technology and platform makes it fast and easy for companies to use research to make better decisions.”
On a call with me he added: “We provide a search technology, and a great design, all combined to deliver an intuitive, highly automated cloud service that allows these big companies to centralise internal and external data sources so they can pull out the nuggets they need.”
Jelle-Jan Bruinsma, Partner at Endeit Capital, added: “Endeit Capital is always looking for the next generation of international software scale-ups, and Stravito stood out in the Nordics through its impressive work to raise the bar in the multibillion dollar market research and data industry.”
Stravito also appointed Elaine Rodrigo, Chief Insights & Analytics Officer at Reckitt Benckiser, to its board of directors.
Cheese is one of those foods that when you like it, you actually love it. It’s also one of the most difficult foods to make from something other than milk. Stockeld Dreamery not only took that task on, it has a product to show for it.
The Stockholm-based company announced Thursday its Series A round of $20 million co-led by Astanor Ventures and Northzone. Joining them in the round — which founder Sorosh Tavakoli told TechCrunch he thought was “the largest-ever Series A round for a European plant-based alternatives startup,” was Gullspång Re:food, Eurazeo, Norrsken VC, Edastra, Trellis Road and angel investors David Frenkiel and Alexander Ljung.
Tavakoli previously founded video advertising startup Videoplaza, and sold it to Ooyala in 2014. Looking for his next project, he said he did some soul-searching and wanted the next company to do something with an environmental impact. He ended up in the world of food, plant-based food, in particular.
“Removing the animal has a huge impact on land, water, greenhouse gases, not to mention the factory farming,” he told TechCrunch. “I identified that cheese is the worst. However, though people are keen on shifting their diet, when they try alternative products, they don’t like it.”
Tavakoli then went in search of a co-founder with a science background and met Anja Leissner, whose background is in biotechnology and food science. Together they started Stockeld in 2019.
Pär-Jörgen Pärson, general partner at Northzone, was an investor in Videoplaza and said via email that Stockeld Dreamery was the result of “the best of technology paired with the best of science,” and that Tavakoli and Leissner were “using their scientific knowledge and vision of the future and proposing a commercial application, which is very rare in the foodtech space, if not unique.”
The company’s first product, Stockeld Chunk, launched in May, but not without some trials and tribulations. The team tested over 1,000 iterations of their “cheese” product before finding a combination that worked, Tavakoli said.
Advances in the plant-based milk category have been successful for the most part, not necessarily because of the plant-based origins, but because they are tasty, he explained. Innovation is also progressing in meat, but cheese still proved difficult.
“They are typically made from starch and coconut oil, so you can have a terrible experience from the smell and the mouth feel can be rubbery, plus there is no protein,” Tavakoli added.
Stockeld wanted protein as the core ingredient, so Chunk is made using fermented legumes — pea and fava in this case — which gives the cheese a feta-like look and feel and contains 30% protein.
Chunk was initially launched with restaurants and chefs in Sweden. Within the product pipeline are spreadable and melting cheese that Tavakoli expects to be on the market in the next 12 months. Melting cheese is one of the hardest to make, but would open up the company as a potential pizza ingredient if successful, he said.
Including the latest round, Stockeld has raised just over $24 million to date. The company started with four employees and has now grown to 23, and Tavakoli intends for that to be 50 by the end of next year.
The new funding will enable the company to focus on R&D, to build out a pilot plant and to move into a new headquarters building next year in Stockholm. The company also looks to expand out of Sweden and into the U.S.
“We have ambitious investors who understand what we are trying to do,” Tavakoli said. “We have an opportunity to think big and plan accordingly. We feel we are in a category of our own in a sense that we are using legumes for protein. We are almost like a third fermented legumes category, and it is exciting to see where we can take it.”
Eric Archambeau, co-founder and partner at Astanor Ventures, is one of those investors. He also met Tavakoli at his former company and said via email that when he was pitched on the idea of creating “the next generation of plant-based cheese,” he was interested.
“From the start, I have been continuously impressed by the Stockeld team’s diligence, determination and commitment to creating a truly revolutionary and delicious product,” Archambeau added. “They created a product that breaks the mold and paves the way towards a new future for the global cheese industry.”
Michael Chernow is already known as a restaurateur, chef, television host and entrepreneur, but now he can also add lifestyle and wellness guru to that list.
Chernow raised $2.2 million to launch Kreatures of Habit, a lifestyle and wellness brand, with the goal of helping people establish healthy habits.
Seasoned entrepreneur and investor Gary Vaynerchuk led the funding round and was joined by a group of entrepreneurs, media executives and professional sports figures, including Sports 1 Marketing co-founder David Meltzer, Elevator Studio founder Dan Fleyshman, author Dean Graziosi, angel investor Josh Bezoni, author Joel Marion, “Entrepreneurs on Fire” host John Lee Dumas, LA Dodgers player Justin Turner, Philadelphia Eagles general manager Howie Roseman and Evan Yurman.
The idea for Kreatures of Habit stemmed from Chernow’s own life, celebrating 17 years of sobriety. He said he adopted positive habits that enabled him to replace alcohol with nutrition and fitness.
It is the latest venture for Chermow, who also founded The Meatball Shop and Seamore’s in New York. The brand originally started out as a café concept, but Chermow pivoted to the consumer goods space when the global pandemic hit.
“I had put a plan together in 2019, was away for a few weeks when the news of COVID hit,” he told TechCrunch. “I called up my investors and said ‘I am not going to invest in this and neither should you. I’m going to reassess and get back to you.’ However, through my journey of scaling restaurants, I didn’t love doing it because I went from being a culture entrepreneur to a project manager. It was a far cry from connecting to human beings around a brand.”
He started with breakfast — his favorite meal of the day — and began looking at his sustenance of choice: oatmeal, protein and vitamins. Now he is targeting the $3.3 billion pre-packed oats market with his first product, a direct-to-consumer instant oatmeal called The PrOATagonist.
Kreatures of Habit oatmeal. Image Credits: Kreatures of Habit
It is a plant-based, gluten and allergen-free meal that has his three favorite breakfast go-tos — oats, protein and vitamins, plus minerals and Omega-3 fatty acids. Chernow spent over a year testing the formula, which comes in three flavors, including chocolate, blueberry-banana and vanilla.
To help Chernow tap into the industry, he brought on former RX Bar chief marketing officer Victor Lee to lead the brand’s go-to-market strategy. The PrOATagonist comes in a box of seven for $34, and can be obtained via a monthly subscription of $33.
He is also working with one of his investors, Elevator Studios’ Fleyshman, who Chernow referred to as “the best marketer today.”
Fleyshman said he was eager to invest after getting off of a Zoom call with Vaynerchuk.
“The combination of Michael’s resume and passion to build a business with Gary’s passion for building a brand had its advantages as did the cool factor of making a brand with a physical product,” he added. “Gary got 30 people together on the call and almost half had committed within the week.”
In addition to funneling much of the new funding into marketing, it will also be used on product development.
“We have a pipeline of products that will live in the beginning of the day and snack space, several that are in development right now,” Chernow added. “We will always have a capsule collection drop three times a year, a seasonal line and full suite of SKUs over the next three to five years.”
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.
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.”
Developing new packaged foods and consumer goods can take a couple years as companies research, prototype and test products. In a society that runs on social media, however, people expect to see trends land on store shelves much more quickly. Founded in 2018, Ai Palette uses machine learning to help companies spot trends in real time and get them retail-ready, often within a few months. The startup, whose clients include Danone, Kellogg’s, Cargill and Dole, announced today it has raised an oversubscribed $4.4 million Series A co-led by pi Ventures and Exfinity Venture Partners. Both will join Ai Palette’s board.
The round also included participation from returning backers food tech venture firm AgFunder and Decacorn Capital, and new investor Anthill Ventures. It brings Ai Palette’s total raised to $5.5 million, including a seed round announced in 2019.
Ai Palette is based in Singapore, with an engineering hub in Bangalore. Its customer base started in Southeast Asia, before expanding into China, Japan, the United States and Europe.
Its customer base started in Southeast Asia and India, and expanded to China, Japan, the United States and Europe. Ai Palette supports 15 languages, which the company claims is the most of any AI-based tool for predicting consumer packaged goods (CPG) trends. Its funding will be used to expand into more markets and fill engineering and data science roles.
Ai Palette was founded in 2018 by chief executive officer Somsubhra GanChoudhuri and chief technology officer Himanshu Upreti, who met through Entrepreneur First, the “talent investor” that recruits and teams up potential founders.
Before Ai Palette, GanChoudhuri worked in sales and marketing at Givaudan, the world’s largest manufacturer of fragrances and flavors. This allowed him to see how product innovation is done for many types of consumer products, ranging from snacks and fast food to packaged goods. Many of the companies he worked with were beginning to realize that a two-year product innovation cycle could no longer meet demand. Upreti, an advanced machine learning and big data analysis expert, previously worked at companies including Visa, where he built models that can handle petabytes of data.
Ai Palette’s first product is Foresight Engine, which tracks trends like ingredients or flavors, analyzes why they are popular and predicts how long demand will last. It also identifies “white space opportunities,” or situations where there is unmet demand. For example, GanChoudhuri said the COVID-19 pandemic has changed the way people eat — they are now eating health snacks up to six times a day in front of screens — so companies have the chance to release new kinds of products.
Foresight Engine gives contextual information, said Upreti. “For example, is a food item eaten on the go, or at a café. Is a product consumed socially or individually? What’s trending at kids’ birthday parties? For a specific product or ingredient, images provide information on product pairings and product format.”
The platform uses data from sources like social media, search, blogs, recipes, menus and company data. “Data sets popular to each market are prioritized, like a local recipe or a food delivery app,” said GanChoudhuri. “And they are tracked over the years to determine growth trajectory with a strong degree of confidence.”
Some specific examples of how Ai Palette’s tech has translated into new products include brands that want to launch a new flavor, like for a potato chip or soda, in a specific country. They can use the Foresight Engine to not only see what trends are rising, but which ones have the potential to become long-term favorites, so they don’t invest in a product that will almost instantly lose its popularity.
Many of Ai Palette’s clients have used it to react to new trends and consumer behavior patterns during the COVID-19 pandemic. Not surprisingly, people in many markets are interested in healthy food or ones that are supposed to boost immunity. For example, in Southeast Asia there is more demand for lemon and garlic, while acerola and yerba mate are trending in the United States.
On the other hand, “in China, taste is paramount, even over health, because people are looking for food that brings back a sense of normalcy,” said GanChoudhuri. Meanwhile in India, there is demand for products with longer shelf life as people continue to cope with the pandemic, but many consumers are also seeking interesting snacks to ease the boredom of lockdown, with kimchi and other Korean flavors becoming especially popular.
Ai Palette’s ability to work with many languages is one of the ways it differentiates from other machine learning-based trend-prediction platforms. It currently supports English, simplified Mandarin, Japanese, Korean, Thai, Vietnamese, Bahasa Indonesian, Bahasa Melayu, Tagalog, Spanish, French and German, with plans to add more as it targets new European countries, Mexico, Latin America and the Middle East.
When Clarisse Beurrier was getting her education in Chemical Engineering and Biotechnology, she already knew she wanted to make a difference; hence her participation in Effective Altruism Cambridge, an organization dedicated to helping smart and capable people target their philanthropic urges at the problems that will have the biggest actual impact on the world. She’s now a co-founder at Animal Alternative Technologies, a startup aiming to expedite the commercialization of cultured — aka ‘lab-grown’ — meat.
Clarisse joined us for this week’s episode of Found, our interview podcast where we speak to a different founder every week. We talk about what Clarisse learned about the cultured meat and animal protein alternative industry from her work experience at a couple of startups, including HigherSteaks, and how that dovetailed with the work she was doing at school to help her identify a crucial gap between science and industry. We get into everything from convincing big, entrenched industry heavyweights to embrace change, and the challenges of being a firs-time founder right out of school.
We loved our time chatting with Clarisse, and we hope you love yours listening to the episode. And of course, we’d love if you can subscribe to Found in Apple Podcasts, on Spotify, on Google Podcasts or in your podcast app of choice. Please leave us a review and let us know what you think, or send us direct feedback either on Twitter or via email at email@example.com, or leave us a voicemail at (510) 936-1618. And please join us again next week for our next featured founder.
Hello friends, and welcome back to Week in Review!
I’m back from a very fun and rehabilitative couple weeks away from my phone, my Twitter account and the news cycle. That said, I actually really missed writing this newsletter, and while Greg did a fantastic job while I was out, I won’t be handing over the reins again anytime soon. Plenty happened this week and I struggled to zero in on a single topic to address, but I finally chose to focus on Bezos’s Blue Origin suing NASA.
I was going to write about OnlyFans for the newsletter this week and their fairly shocking move to ban sexually explicit content from their site in a bid to stay friendly with payment processors, but alas I couldn’t help myself and wrote an article for ole TechCrunch dot com instead. Here’s a link if you’re curious.
Now, I should also note that while I was on vacation I missed all of the conversation surrounding Apple’s incredibly controversial child sexual abuse material detection software that really seems to compromise the perceived integrity of personal devices. I’m not alone in finding this to be a pretty worrisome development despite Apple’s intention of staving off a worse alternative. Hopefully, one of these weeks I’ll have the time to talk with some of the folks in the decentralized computing space about how our monolithic reliance on a couple tech companies operating with precious little consumer input is very bad. In the meantime, I will point you to some reporting from TechCrunch’s own Zack Whittaker on the topic which you should peruse because I’m sure it will be a topic I revisit here in the future.
Now then! Onto the topic at hand.
Federal government agencies don’t generally inspire much adoration. While great things have been accomplished at the behest of ample federal funding and the tireless work of civil servants, most agencies are treated as bureaucratic bloat and aren’t generally seen as anything worth passionately defending. Among the public and technologists in particular, NASA occupies a bit more of a sacred space. The American space agency has generally been a source of bipartisan enthusiasm, as has its goal to return astronauts to the lunar surface by 2024.
Which brings us to some news this week. While so much digital ink was spilled on Jeff Bezos’s little jaunt to the edge of space, cowboy hat, champagne and all, there’s been less fanfare around his space startup’s lawsuit against NASA, which we’ve now learned will delay the development of a new lunar lander by months, potentially throwing NASA’s goal to return astronauts to the moon’s surface on schedule into doubt.
Bezos’s upstart Blue Origin is protesting the fact that they were not awarded a government contract while Elon Musk’s SpaceX earned a $2.89 billion contract to build a lunar lander. This contract wasn’t just recently awarded either, SpaceX won it back in April and Blue Origin had already filed a complaint with the Government Accountability Office. This happened before Bezos penned an open letter promising a $2 billion discount for NASA which had seen budget cuts at the hands of Congress dash its hoped to award multiple contracts. None of these maneuverings proved convincing enough for the folks at NASA, pushing Bezos’s space startup to sue the agency.
This little feud has caused long-minded Twitter users to dig up this little gem from a Bezos 2019 speech — as transcribed by Gizmodo — highlighting Bezos’s own distaste for how bureaucracy and greed have hampered NASA’s ability to reach for the stars:
“To the degree that big NASA programs become seen as jobs programs and that they have to be distributed to the right states where the right Senators live, and so on. That is going to change the objective. Now your objective is not to, you know, whatever it is, to get a man to the moon or a woman to the moon, but instead to get a woman to the moon while preserving X number of jobs in my district. That is a complexifier, and not a healthy one…[…]
Today, there would be, you know, three protests, and the losers would sue the federal government because they didn’t win. It’s interesting, but the thing that slows things down is procurement. It’s become the bigger bottleneck than the technology, which I know for a fact for all the well meaning people at NASA is frustrating.
A Blue Origin spokesperson called the suit, an “attempt to remedy the flaws in the acquisition process found in NASA’s Human Landing System.” But the lawsuit really seems to highlight how dire this deal is to the ability of Blue Origin to lock down top talent. Whether the startup can handle the reputational risk of suing NASA and delaying America’s return to the moon seems to be a question very much worth asking.
Photo: ROBYN BECK/AFP via Getty Images
Here are the TechCrunch news stories that especially caught my eye this week:
OnlyFans bans “sexually explicit content”
A lot of people had pretty visceral reactions to OnlyFans killing off what seems to be a pretty big chunk of its business, outlawing “sexually explicit content” on the platform. It seems the decision was reached as a result of banking and payment partners leaning on the company.
Musk “unveils” the “Tesla Bot”
I truly struggle to even call this news, but I’d be remiss not to highlight how Elon Musk had a guy dress up in a spandex outfit and walk around doing the robot and spawned hundreds of news stories about his new “Tesla Bot.” While there certainly could be a product opportunity here for Tesla at some point, I would bet all of the dogecoin in the world that his prototype “coming next year” either never arrives or falls hilariously short of expectations.
Facebook drops a VR meeting simulator
This week, Facebook released one of its better virtual reality apps, a workplace app designed to help people host meetings inside virtual reality. To be clear, no one really asked for this, but the company made a full court PR press for the app which will help headset owners simulate the pristine experience of sitting in a conference room.
Yes, this looks dumb. But avatar-based work apps are coming for your Zooms, and Facebook made a pretty convincing one here. https://t.co/aGvOW6zm8U
— Lucas Matney (@lucasmtny) August 19, 2021
Social platforms wrestle with Taliban presence on platforms
Following the Taliban takeover of Afghanistan, social media platforms are being pushed to clarify their policies around accounts operated by identified Taliban members. It’s put some of the platforms in a hairy situation.
Facebook releases content transparency report
This week, Facebook released its first ever content transparency report, highlighting what data on the site had the most reach over a given time period, in this case a three-month period. Compared to lists highlighting which posts get the most engagement on the platform, lists generally populated mostly by right wing influencers and news sources, the list of posts with the most reach seems to be pretty benign.
Safety regulators open inquiry into Tesla Autopilot
While Musk talks about building a branded humanoid robot, U.S. safety regulators are concerned with why Tesla vehicles on Autopilot are crashing into so many parked emergency response vehicles.
Image Credits: Nigel Sussman
Some of my favorite reads from our Extra Crunch subscription service this week:
The Nuro EC-1
“..Dave Ferguson and Jiajun Zhu aren’t the only Google self-driving project employees to launch an AV startup, but they might be the most underrated. Their company, Nuro, is valued at $5 billion and has high-profile partnerships with leaders in retail, logistics and food including FedEx, Domino’s and Walmart. And, they seem to have navigated the regulatory obstacle course with success — at least so far…”
A VC shares 5 keys to pitching VCs
“The success of a fundraising process is entirely dependent on how well an entrepreneur can manage it. At this stage, it is important for founders to be honest, straightforward and recognize the value meetings with venture capitalists and investors can bring beyond just the monetary aspect..“
A crash course on corporate development
“…If you’re going to get acquired, chances are you’re going to spend a lot of time with corporate development teams. With a hot stock market, mountains of cash and cheap debt floating around, the environment for acquisitions is extremely rich.”
Thanks for reading! Until next week…
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.
Last time I was in Hong Kong, a startup gave me a jar of mealworms as a snack. They were crunchy and a bit odd looking (as one might expect from a jar full of baked larvae). They really didn’t offer much in the way of flavor, though, so maybe supply your own seasoning.
For all sorts of sustainability reasons, there’s been a good deal of interest in these sorts of alternative protein sources — for humans and otherwise. Beta Hatch’s farming efforts are squarely focused on the latter, citing livestock and pets as primary targets for a farming process it says is “virtually zero-waste.”
Today the St. Louis-based firm announced $10 million in funding in a round led by Lewis & Clark AgriFood, with participation from Cavallo Ventures and Innova Memphis, which are both signed on as existing investors. The money comes as Beta Hatch is eyeing the expansion of its flagship farm in Cashmere, Washington.
“We are proud to be a part of building the future of farming as a member of the Washington agricultural community,” founder and CEO Virginia Emery said in a release. “We are excited for our presence in rural America to grow, as we employ and partner with the people in those communities to feed a growing global population.”
The company says the new facility will be the largest of its kind in North America, helping to push Beta Hatch to 10x its current output over the next year. The location is currently powered by renewably sourced energy.
Mealworms have proven intriguing as food sources for food sources, as evidenced by Ÿnsect’s $125 million raise way back in 2019.
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.”
A group of senators sent new Amazon CEO Andy Jassy a letter Friday pressing the company for more information about how it scans and stores customer palm prints for use in some of its retail stores.
The company rolled out the palm print scanners through a program it calls Amazon One, encouraging people to make contactless payments in its brick and mortar stores without the use of a card. Amazon introduced its Amazon One scanners late last year, and they can now be found in Amazon Go convenience and grocery stores, Amazon Books and Amazon four-star stores across the U.S. The scanners are also installed in eight Washington state-based Whole Foods locations.
In the new letter, Senators Amy Klobuchar (D-MN), Bill Cassidy (R-LA) and Jon Ossoff (D-GA) press Jassy for details about how Amazon plans to expand its biometric payment system and if the data collected will help the company target ads.
“Amazon’s expansion of biometric data collection through Amazon One raises serious questions about Amazon’s plans for this data and its respect for user privacy, including about how Amazon may use the data for advertising and tracking purposes,” the senators wrote in the letter, embedded below.
The lawmakers also requested information on how many people have enrolled in Amazon One to date, how Amazon will secure the sensitive data and if the company has ever paired the palm prints with facial recognition data it collects elsewhere.
“In contrast with biometric systems like Apple’s Face ID and Touch ID or Samsung Pass, which store biometric information on a user’s device, Amazon One reportedly uploads biometric information to the cloud, raising unique security risks,” the senators wrote. “… Data security is particularly important when it comes to immutable customer data, like palm prints.”
The company controversially introduced a $10 credit for new users who enroll their palm prints in the program, prompting an outcry from privacy advocates who see it as a cheap tactic to coerce people to hand over sensitive personal data.
There’s plenty of reason to be skeptical. Amazon has faced fierce criticism for its other big biometric data project, the AI facial recognition software known as Rekognition, which the company provided to U.S. law enforcement agencies before eventually backtracking with a moratorium on policing applications for the software last year.
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.
Nigeria’s less than two-decade-old ecosystem is evolving fast. But behind the funding and legitimate hype, there’s without a doubt plenty of learning that needs to be done in running a startup.
In retrospect, founders in Nigeria do tremendous work when you consider the kind of harsh market they operate in. They are deserving of all the praise they get. However, some questionable antics require addressing.
There are instances when founders know their companies are dying but would rather sink with it (without having a plan) than let someone else lead. Or other instances where founders know there’s a need to hire someone as CEO to blitz scale their companies but would rather settle for mediocre growth.
Stories where startups take drastic actions to save or scale a company are few and far between.
Despite a relatively short time in the startup scene, Adia Sowho, one of the well-known operators around the region, has been fortunate to experience and live through one. Last year, she became the CEO of Thrive Agric, an agriculture fintech company, guiding it through a turnaround after the COVID-19 pandemic induced a crisis in the business.
Before that, she worked as the VP of Growth and managing director, Nigeria, for fintech platform Migo. And outside the startup scene, she was the director of Digital Business at telecom operator 9mobile and is currently the chief marketing officer of mobile telecoms giant MTN Nigeria.
TechCrunch sat down with Sowho to share her experience working as a telecom executive, an operator with Thrive Agric and Migo, her view on how operators can work with founders, her decision to leave the startup scene and how her new journey is all according to plan.
What was your career like before becoming an operator in tech?
I had a long career across different parts of the mobile telecom space, specifically, with my last role being responsible for digital business. Digital business in a telco is essentially that arm of the telco that interfaces with third parties, often startups who have products more innovative than what the telco might have, in its current portfolio, and of interest to customers.
I got that department in its inception at 9mobile and grew it to a $100 million revenue aspect of the business. In doing that, I interacted with various sectors and launched a couple of music apps, gaming platforms, content platforms from like, short-form two minutes to longer forms.
We also did mobile advertising, the Internet of Things and financial services. But the telco industry is very massive, and the infrastructure is very old and difficult to shift into the internet economy. After that, I was looking for something else to do and having been bitten by the startup bug because my team was essentially the internal startup to 9mobile, I was looking for more of that excitement. And I guess I wanted to put my money where my mouth was.
So, why Migo, since a lot of startups existed at the time? I mean, we’re talking early 2018 here.
After 9mobile, I decided to go to Migo because I felt like financial services was critical and the bedrock of a holistic financial system with four elements — savings, credit, insurance and payments.
So in the Nigerian tech scene, a little bit was happening in savings, but to me, it was not a priority in a country that didn’t have a massive GDP per capita. This period was also still in the early stages of Flutterwave and Paystack and we had just started waking up to payments in a big way.
But there was very little happening in credit. I could walk into my bank and get a loan only if the company I worked for was known to that bank, and the bank had some visibility of that company’s finances as well. It was still tough to access credit. That’s why I joined Migo, because I felt like if you don’t solve your financial services problem, you can’t really do anything else. After all, it’s the underlying infrastructure that everything else needs.
How was your experience at the fintech startup?
When I joined, the team was very small at that time. Everyone could fit into one conference room, and then, I started building out the Nigeria business as the managing director.
I hired the team to start delivering products through partnerships and got the userbase to over a million users before leaving. So that was definitely a fun but trying experience. It taught me a lot about myself, and I definitely got first-hand experience of the challenge of building and leading a startup in emerging markets.
Did anything transpire within the startup that led to you leaving?
Let’s say I wanted to start a new journey. I mean, look, COVID hit a lot of businesses hard, and in your startup journey, you have to make some directional changes.
Migo has now more cleanly focused on embedded finance, which required making some changes within the organization, and that happened with COVID. It just seemed like a good time to leave, which I did, plus I might have been a bit burnt out, as I was exhausted when I left.
But you joined Thrive Agric four months after leaving?
Yeah, it was a few months after, that’s interesting [laughs]. So I mean, we’ve talked about how I was drawn to financial services because that’s sort of fundamental to economic development. With Thrive Agric, I definitely felt the same: we eat food. There are millions of smallholder farmers in Nigeria. What Thrive does in consolidating their output to be sold to local off-takers is a critical aspect of Nigeria’s future.
It’s food security. If you sit down and think about the Global Sustainable Development Goals, food security shows up somehow, right? So for me, even though I was still trying to rest, I couldn’t say no. It felt like a call to service to help them figure out what was wrong and try to get them out of the crisis; I really didn’t want to see a company like that die.
I remember it was a rough period for the company. How challenging was it, as it was a new experience for you?
Oh, it was pretty tough. I don’t think I’ve apologized for anything I’ve ever done in my life as much as I did that period. It was definitely intense to be confronted with the rage of thousands of people at the same time. It’s a one-of-a-kind experience. It definitely wasn’t enjoyable, but then again, everybody was under pressure.
The rage was definitely understandable. I couldn’t challenge or argue with it. It was valid, but at the same time, so many companies worldwide suffered due to the pandemic. Sure, Thrive could have handled things better; obviously, that’s why I joined.
But it was a tough job keeping customers happy and protecting the founders because there were many people ready to take some very extreme measures, as you can imagine, but we managed to all largely survive it.
In a nutshell, how did you bring the company out of the crisis it was facing?
When I stepped in, I was extremely focused on addressing the problem. It took me a while to meet the whole company because I was keenly focused on the specific teams, people and resources required to solve the problem first.
It was only after creating a plan that I could start looking at the rest of the company to address what systemic issue led to the problem. There’s no chronic problem in a startup that is not led or supported by something systemic within the startup.
Let’s talk about the problem. What exactly happened?
Essentially, the challenge with Thrive was a timing issue. Thrive works with the farmers to grow crops. They deliver fertilizer and seeds, and the farmers grow the crops. We support farmers during harvest and manage them getting the harvest to the warehouse. Then we take the goods from the warehouse into the market and sell them to our clients.
So COVID prevented farmers from accessing the farms. It prevented us from accessing the markets to sell the goods. It prevented us from going to the farms to gather the produce and take them to sell.
During the lockdown, you can’t do any of that because you can’t move. You can’t deliver seeds to the farmers; the farmers cannot plant, you cannot get people to support them with harvest, you cannot receive the goods. So the fundamental ability for the company to make money was compromised.
When that happened, it wasn’t a problem anybody had seen before. The team didn’t know how to react and did not pass on the bad news to subscribers. And bad news is always tough to deliver. What it created was this timing issue and that’s why though we were able to pay back, we did with delay. We wanted to honor the obligations to subscribers. The business model does work. It’s just that Thrive wasn’t prepared for a pandemic, but eventually, we’ve been able to catch up a little bit.
Your case with Thrive Agric is quite unique because you were brought as someone with managerial experience to help the company. That’s not the case generally within the ecosystem. Some founders rarely want to relinquish their position even if the company is going downhill. Why do you think this is so?
I think part of it is because startup culture comes from Silicon Valley and startup culture there prefers to rely on less-experienced people at the beginning. And to be honest, experience and innovation are not comfortable bedfellows because when you have experience, you will lean on what is tried and tested. When you’re trying to be innovative, you are throwing away what is tried and tested.
Adia Sowho (Ex-CEO, Thrive Agric; CMO, MTN Nigeria)
So essentially, the challenge that African founders now have is that we have to find a way to localize that context. But going to my first point, we can also see that Google and Facebook made changes when necessary. With Facebook, it was Sheryl Sandberg. Google did with Eric Schmidt. Maybe our startups have to do it a little bit earlier and a little bit more informally first, and that’s fine because of the lack of infrastructure existing in the country.
Experience helps you know where someone may have tried something or made a mistake before. That’s why my joining Thrive made sense. I’m happy to see that there is more interest in welcoming people with experience and quite a few more people feel emboldened to make the jump into startups.
So I believe that the trend is changing, although it can be definitely difficult when you want a long career. To jump into the startup culture, you have to throw away many comforts and embrace an extremely dynamic environment.
How would you say Thrive Agric is faring now?
Because I took a systemic approach to manage the team and the startup, I believe they are on better footing. Now, the founders and the senior team can a little bit more comfortably see around corners. The only thing you can do with risk is to manage it or prevent it.
When I got into Thrive, I was highly focused on what went wrong, understanding the causality and retraining the team to better see around those kinds of corners. That work continues. I stay on as an advisor because I want to ensure the company’s continued success for the same reason I gave before: food security.
I mean, Thrive is one of three companies that the Central Bank of Nigeria is satisfied with giving support to deliver food security nationwide. It means that the sky is the limit in terms of growth because Thrive is aggregating 100,000 farmers in the country just this year. The growth potential for this company is astounding.
So, in all this, what does your experience at Thrive tell you about startups and the Nigerian tech ecosystem in general?
Startup life is hard in countries that are infrastructure rich. It is harder in countries that are infrastructure light. In Nigeria and Africa, that internally forces startups to build infrastructure that they don’t have. But the problem for some is that when they build it, they individualize it, which kind of sucks.
But at the same time, the low-hanging fruit around here is just amazing. I’m excited by the potential and possibility of creating a new version of what the economy can look like by tapping into the internet and connectivity.
So for me, there are definitely opportunities to support startups differently. I think maybe that’s going to be the focus of my work with the ecosystem going forward. Figuring out how to help the ecosystem build better products and run better startups based on my experience.
Since I can’t obviously go in and do that for everybody, I’ll try to figure out a way to share my knowledge at scale.
How will you do that now that you’ve left the startup scene and gone back to the corporate world with MTN?
Well, let’s talk about infrastructure. You know, if you think about your startup with MTN as a partner, what does the trajectory of that startup now look like? It’s massive. So that’s why I took this role.
I’m still doing a lot of startup ecosystem work. For me, there is a telco role in all future unicorn stories. That requires empathy on both sides to happen. It’s something I’ve talked about, written about, been working for years, just figuring out how to make these relationships work better. I guess that’s why, you know, a candidate like me was appealing to the company. I’m keen to go there and continue the same work at scale with the knowledge I have.