Cappuccino lets you share short, intimate audio stories with your friends

You might call Cappuccino the anti-Clubhouse, but the company has been iterating on its app concept for a couple of years — its CEO doesn’t have any strong opinions on Clubhouse. And it’s true that Cappuccino is an interesting social app on its own. It has been attracting a loyal user base, especially after a TikTok video went viral.

The startup says it is building an app that helps you record podcasts with friends. Many people have discovered podcasts over the past few years. Podcasts let you subscribe to audio shows and listen to episodes on demand.

At first, people subscribe to podcasts because of their interests. But if you talk about podcasts with your friends, they’ll tell you that they like a show in particular because of the personalities of the hosts.

Listening to a podcast is a content consumption experience that feels like nothing else out there. You might watch all videos released by a particular YouTuber and you might think you know a lot about someone’s personal life by following them on Instagram.

But listening to someone for hours at a time with earbuds in your ears is a very intimate experience. When a podcast works, it feels like you’re sitting in a room with a few friends and just listening to what they have to say.

And yet, chances are your favorite podcast hosts are not your friends.

This is where Cappuccino fits. The app lets you create groups with your friends or your families. Members of the group can record a short audio message — a bean, as the startup calls it. They talk about what’s on their mind for a couple of minutes. The next morning, group members receive a notification saying that your morning cappuccino has been brewed.

When you hit play, a chill intro music starts playing followed by audio messages from your friends. It isn’t just a succession of voice memos — it feels like a relaxing mix of happy, funny, caring, thoughtful messages from your friends.

While Cappuccino is a social app, it is focused on your close friends and your family. You aren’t trying to get more followers and you are not sharing public posts. Everything is private by design and focused on groups of real-life friends.

In many ways, it reminds me of Snapchat’s group stories. But Snapchat wasn’t the main inspiration for Cappuccino — it was podcasting.

Image Credits: Cappuccino

Prototype early, iterate often

I talked with the company’s co-founder and CEO Gilles Poupardin about the origin story of the app. Cappuccino isn’t Poupardin’s first startup. He had worked on Whyd for several years and lived the full startup experience — he raised founding rounds, chose to pivot, attended Y Combinator in San Francisco, parted ways with his company’s CTO and chose to shutter the startup.

Among other things, Whyd worked on a voice-controlled connected speaker before Amazon’s Echo product lineup and Google’s Nest speakers really took off. It’s hard to compete with tech giants, even harder when you’re competing on the hardware front.

After that, the Whyd team worked on a service that lets you create your own voice assistant. That didn’t really take off as expected either.

During the summer of 2019, Olivier Desmoulin reached out to Poupardin. Back then, Desmoulin was heading design for Jumbo, an app that helps you stay on top of your online privacy.

“At the time, I didn’t know if I wanted to start a company again — I pivoted 15 times [with Whyd],” Poupardin told me.

But they started discussing about podcasts and AirPods — and audio at large — as the next frontier for social apps. The basic premise was simple. A lot of people were listening to podcasts, but very few people were creating their own podcasts.

There are three reasons why your neighbor doesn’t have its own podcast but sometimes posts stuff on Instagram and Snapchat:

  • Podcasts are long-form content
  • It’s technically complicated to record and release a podcast
  • You are trying to attract an audience of people who don’t know you.

With Cappuccino, the idea is to take a reverse stance on these three points: short content, easy to record and personal. It’s supposed to be a better experience for both people recording audio and people listening to audio.

The first version of Cappuccino isn’t an app, it’s a side project. “We created a group on WhatsApp, we invited 10 to 15 people and we asked them to record voice memos and send them all to Olivier,” Poupardin told me.

Every night, Olivier Desmoulin would fire up GarageBand and create a mix of all voice memos. In the morning, he would send a message to the group conversation on WhatsApp and write: “Hey, your cappuccino is here.”

Image Credits: Cappuccino

After getting some positive feedback from group members, Pouparding and Desmoulin chose to move forward and create something that feels more like an app. But they both knew that creating a social app was incredibly hard when it comes to attracting users. They developed something quickly so that they weren’t wasting time developing something that nobody would use.

“We built the first version of the app in four days by using a hack — we were using Airtable as the backend service,” Poupardin said.

Once again, feedback from beta users was pretty good. They showed the app to some investors and ended up raising $1.2 million from Alexia Bonatsos (Dream Machine, also a former TechCrunch editor), SV Angel, Kevin Carter (Night Capital), Niv Shrug Capital, Jean de La Rochebrochard (Kima Ventures), Kevin Kuipers, Willy Braun, Marie Ekeland, Solomon Hykes (founder of Docker), Pierre Valade (founder of Sunrise and Jumbo Privacy), Moshe Lifschitz (Basement Fund), Anthony Marnell, Bryan Kim and a bunch of others.

Gawen Arab who was the CTO at Whyd teamed up once again with Poupardin, proving that time is a flat circle. He’s now co-founder and CTO at Cappuccino.

Image Credits: Cappuccino

Letting people talk about you

The Cappuccino team hasn’t been active when it comes to press relations or ads. It’s been a slow build up with some interesting spikes.

Last summer, Product Hunt super user Chris Messina created a post about Cappuccino. It was a bit of a surprise as the startup wasn’t trying to get featured on Product Hunt. Still, the co-founders diligently answered questions from the Product Hunt community.

The following day, Product Hunt’s newsletter featured Cappuccino. It was titled “The next big audio social network?” That brought some new users to the app.

Image Credits: Cappuccino

But things really started to take off when Brittany Kay Collier shared a video on TikTok about Cappuccino a few weeks ago. She sent a direct message to Poupardin on Instagram, telling him that it was attracting a lot of views. The video ended up attracting around 3.8 million views and 850,000 likes.

Two days later, Poupardin sent her a job offer to join the team. He was secretly hoping she would say yes, and she was secretly dreaming about getting a job at a company like Cappuccino.

Over the past couple of weeks, Cappuccino attracted 225,000 new users. They created 130,000 groups and sent around one million audio stories.

When the team is reading public posts about Cappuccino on Twitter, it feels like the app has found its core user base. The most loyal users seem to be young women in their twenties. They want to keep in touch with long-distance best friends.

They might be graduating from college and moving to a different part of the country. They might be stuck at home because of the current pandemic.

And it seems like new users have no issue hitting the record button and telling stories — everybody is familiar with voice messages on WhatsApp and iMessage after all.

“Something that is interesting with audio messages as a medium is that you tell different stories from what you would tell by taking a photo for Instagram, sending a Snap or creating a video on TikTok,” Poupardin said.

But what about the elephant in the room then? Clubhouse has topped 8 million downloads already. Poupardin listed all the differences in social graph, audio format and user base. According to him, there’s enough room for multiple audio apps.

“With video, you have YouTube, Twitch and TikTok — those are all different formats. Audio is potentially going to follow the same trend,” Poupardin said. Social apps first took advantage of the camera in your smartphone, because the camera was the killer hardware feature. And audio seems like the natural next step.

He feels like he isn’t competing with other audio startups for now. He wants people to wake up and listen to Cappuccino instead of random music on Spotify. “It’s going to help people who feel lonely,” he said.


Source: Tech Crunch

Murmur, still in private beta, wants to help startups make private work agreements public

As building in public continues to gain popularity with early-stage startup founders, Murmur, coming out of stealth today, wants to leverage that natural transparency to a louder frequency.

Founded by Aaron Dignan, Murmur helps startups create work agreements based on the policies of other startups. “Work agreements” is an intentionally broad phrase, but encapsulates everything that a team decides about how work works, from paternal leave strategies to strategic priorities to how hiring works.

“It’s everything you’ve ever argued about [within your startup],” Dignan said.

It requires a healthy level of transparency within the ecosystem, meaning that a startup would have to be open with sharing its policies to the public in the first place. But, if Murmur works, it could help early-stage founders save time on the pain-staking process of figuring out how to build policies from scratch around hiring, OKR goals and vacation policies.

Instead, a new founder could just rely on other, seasoned founders, who have shared their policies for anyone to enjoy, and customize their own plan based around those practices.

Today, Murmur announced that it has raised $1.8 million to scale its working agreements platform in a round led by Lerer Hippeau, with participation from SemperVirens, Human Ventures and Remote First Capital. Other investors include Steve Schlafman, Mariano Suarez-Battan (the CEO of Mural), Brian Sugar (the CEO of PopSugar) and Adam Pisoni (the co-founder of Yammer).

The company, still in private beta, will be launching to the public in early summer 2021.

Murmur is a web-based platform that allows startups to author, customize and plan policies that will shape a team’s culture. The platform helps teams go from proposal to decision with features like voting, edits and feedback throughout the process of creating an agreement. Instead of pushing a copy and paste of another startup’s policy, Murmur prompts founders to use the outsourced policies as seeds, and add customization as they go.

“Anybody can Google and find some company’s years-old processes; the trick is in making an inclusive ‘agreement’ with a real team all participating [and] the magic of keeping it and iterating it, and improving it,” Dignan said.

Image Credits: Murmur

Right now, it is free for anyone to see listed company public agreements. But it costs money to use the Murmur platform to create and customize your own agreements off of this information. With this format, you can see that Dignan thinks that the conversion power of the company lies more in its platform than the content.

Dignan tells me that the team is still testing pricing strategies, but the current plan is a free trial followed by a monthly per-seat fee of $12 to $15 per month, per user. One day, companies could charge a premium for a “kit” of tools on their platform.

Murmur’s initial target for customers are startups that are growing fast and already work in public, such as Buffer, Basecamp, Lattice and Blinkist, but in the future, big enterprises could also see it useful.

Murmur is launching amid a general trend of companies that are pitching themselves as best-practices-as-a-service. Companies in this space aren’t simply enabling other startups to use a fancy SaaS tool, they are not-so-gently pushing them to use those tools in the best possible way for the best possible outcome. Murmur, if it hits scale, could help the next generation of startups figure out the best way to start companies.

Dignan says that the startup “aims to do for working practices what GitHub did for code.”

Remote work is obviously a key catalyst for the company, since the transition has reminded teams that transparency, standards and communication is vital to a functioning organization.

While the startup currently only has Murmur working agreements on the platform, it plans to onboard the agreements of dozens of companies in the coming months. Even though the platform is what makes Murmur special, it’s clear that curating agreements from top companies plays a vital role in Murmur’s success.

It is not paying companies to publicly list their agreements, and the branding benefit of transparency is well worth the confidentiality cost of sharing due to recruitment benefits.

Dignan says connections from his book about the future of work will help land those agreements. Writing a book about a changing world of work before a global pandemic turned everything upside down is ironic, but Dignan, it appears, doesn’t view Murmur as a pandemic pivot.

“I’ve been thinking about this tool for seven years,” he said. But he didn’t think an opinionated tool would have a large enough total addressable market, and that anything that would scale would just reinforce the status quo. He didn’t build Murmur for a while because he thought that the ecosystem didn’t need “yet another customer engagement tool.”

So, he waited. And the pandemic, another peak of the Black Lives Matter movement and the election happened within one year.

“It was all signaling that the complexity is too much,” he said. “We need new ways of working, making decisions and organizing as people. And that felt like this huge moment where we plant the seed and in a few years’ time, the market will be huge.”


Source: Tech Crunch

Why your organization needs product principles

At Slack, every one of our processes and features has been designed with the primary goal of making Slack a workplace tool that feels human. We see ourselves as our users’ hosts, and we want them to feel comfortable and happy every time they’re in Slack. Our product isn’t just built for work — it’s built for people doing work, and everything we create is meant to forward our mission of making work life simpler, more pleasant and more productive.

Our job is to understand what people want, and then translate that value through thoughtfully designed, well-functioning products and features.

Against the backdrop of an unprecedented shift to remote work, we’ve seen an influx of people turning to Slack to make the transition to a digital-first workplace. Building thoughtful, intuitive products that add value, delight and human-centric experiences into peoples’ working lives has never been more important.

Product principles are essential guidelines that help teams evaluate work across functions.

To ensure we’re meeting our customers where they’re at, we created a set of guiding “product principles” that inform everything we build, and which serve as the foundation for our entire product decision-making process.

There’s business value in improving an organization’s processes, and we’ve been able to provide better experiences for our customers by enacting ever-evolving product principles and using them to evaluate our products and features. Any company can benefit from having product principles — it’s all about how you develop and deploy them across your organization.

First, what are product principles?

Product principles are essential guidelines that help teams evaluate work across functions, as well as up and down the decision-making chain, by ensuring all work ladders up to the organization’s ultimate goals. Better alignment, in turn, leads to better and faster product decisions.

Product principles should always evolve to keep up with the changing ways you work and what your customers need. At Slack, we currently have five principles that guide us:

  1. Don’t make me think.
  2. Be a great host.
  3. Prototype the path.
  4. Don’t reinvent the wheel.
  5. Make bigger, bolder bets.

By implementing these principles into all we build across teams — design, legal, marketing and more — they provide a shared framework for decision-making that keeps us aligned and therefore able to make better decisions, faster.

The idea of having principles themselves isn’t a new concept, but the creation process behind building and promoting these principles is often overlooked or underdeveloped.

Start with your product philosophy

Before building the principles themselves, it’s important to first establish your product philosophy, which will inform how your organization will ultimately view and abide by its principles.

At Slack, we embrace an approach we call “getting to the next hill.” While there is a long-term product strategy, we don’t spend a lot of time debating exactly where we’ll be in one or two years from now. Instead, we focus on more immediate, incremental moves to improve our customers’ working lives.

We’ve found that because Slack is used in so many different ways by so many different companies, it’s better to learn from how our customers use our features than from endlessly debating aspirational future ideas.


Source: Tech Crunch

Walmart drops the $35 order minimum on its 2-hour ‘Express’ delivery service

In a move designed to directly challenge Amazon, Walmart today announced it’s dropping the $35 minimum order requirement for its two-hour “Express” delivery service, a competitor to Amazon’s “Prime Now.”  With Walmart Express Delivery, customers can order from Walmart’s food, consumables or general merchandise assortment, then pay a flat $10 fee to have the items arrive in two hours or less.

The service is useful for more urgent delivery needs — like diapers or a missing ingredient for a recipe, SVP of Customer Product, Tom Ward, noted in an announcement. They’re not meant to sub in for larger shopping trips, however — Express orders are capped at 65 items.

Today, Express Delivery is available in nearly 3,000 Walmart stores reaching 70% of the U.S. population, Walmart says. It builds on top of stores’ existing inventory of pickup and delivery time slots as a third option, instead of giving slots away to those with the ability to pay higher fees.

Like Walmart’s grocery and pickup orders, Express orders are shopped and packaged for delivery by Walmart’s team of 170,000 personal shoppers and items are priced the same as they are in-store. This offers Walmart a potential competitive advantage against grocery delivery services like Instacart or Shipt, for example, where products can be priced higher and hurried or inexperienced shoppers aren’t always able to find items or search the back, having to mark them as “out of stock.”

In theory, Walmart employees will have a better understanding of their own store’s inventory and layout, making these kind of issues less common. It will also have direct access to the order data, which will help it better understand what sells, what replacements customers will accept for out-of-stocks, when to staff for busy times and more.

In addition to grocery delivery, Express Delivery competes with Amazon’s Prime Now, a service that similarly offers a combination of grocery and other daily essentials and merchandise. Currently, Prime Now’s 2-hour service has a minimum order requirement of $35 without any additional fees in many cases — though the Prime Now app explains that some of its local store partners will charge fees even when that minimum is met, and others may have higher order minimums, which makes the service confusing to consumers.

Walmart’s news comes at a time when Amazon appears to be trying to push consumers away from the Prime Now standalone app, too.

When you open the Prime Now app, a large pop-up message informs you that you can now shop Whole Foods and Amazon Fresh from inside the Amazon app. A button labeled “Make the switch” will then redirect you. Meanwhile, on Amazon’s website touting Prime’s delivery perks, the “Prime Now” brand name isn’t mentioned at all. Instead, Amazon touts free same-day (5-hour) delivery of best sellers and everyday essentials on orders with a $35 minimum purchase, or free 2-hour grocery delivery from Whole Foods and Fresh.

When asked why Amazon is pushing Prime Now shoppers to its main app, Amazon downplayed this as simply an ongoing effort to “educate” consumers about the option.

Walmart, on the other hand, last year merged its separate delivery apps into one.

After items are picked, Walmart works with a network of partners, including DoorDash, Postmates, Roadie and Pickup Point, as well as its in-house delivery services, to get orders to customers’ doorsteps. This last-mile portion has become a key area of investment for Walmart and competitors in recent months — Walmart, for example, acquired assets from peer-to-peer delivery startup JoyRun in November. And before that, a former Walmart delivery partner, Deliv, sold to Target.

This is not the first time Walmart has dropped order minimums in an attempt to better compete with Amazon and others.

In December, Walmart announced its Prime alternative known as Walmart+ would remove the $35 minimum on non-same day Walmart.com orders. But it had stopped short of extending that perk to same-day grocery until now.

To some extent, Walmart’s ability to drop minimums has to do with the logistics of its delivery operations. Walmart has been turning more of its stores into fulfillment centers by converting some into small, automated warehouses in partnership with technology providers and robotics companies, including Alert Innovation, Dematic and Fabric.

And because its stores are physically located closer to customers than Amazon warehouses, it has the ability to deliver a broad merchandise selection, faster, while also turning large parking lots into picking stations — another thing that could worry Amazon, which is now buying up closed mall stores for its own fulfillment operations. 

Walmart today still carries a $35 minimum on other pickup and delivery orders and same-day orders from Walmart+ subscribers.


Source: Tech Crunch

Hear how to nail your virtual pitch meeting at Early Stage 2021

On a recent episode of Extra Crunch Live, Bain Capital Ventures’ Matt Harris said that if you had asked him a year ago what would happen to venture capital during a pandemic lockdown, he would have replied “it would have fallen off a cliff.” Before the world changed so fundamentally, VCs and founders alike believed they needed to meet in person to build trust before signing paperwork that would financially and emotionally bond them together for years and years.

Today, the landscape is very different. More institutional capital is flowing into startups at much faster rates and a good deal of credit must go to the virtual pitch meeting. Founders can now take 30+ meetings in a single day, but are they making the most of those meetings?

At TechCrunch Early Stage in April, Melissa Bradley will talk us through how to nail your virtual pitch meeting and take questions from the audience.

Bradley is the co-founder of Ureeka, a venture-backed mentorship platform for SMBs that pairs founders with experts and mentors. Bradley is also founder and managing partner of 1863 Ventures, a business development program that accelerates underrepresented entrepreneurs (a group Bradley calls the New Majority) into their hyper-growth phase.

She’s also a professor at Georgetown University’s business school, teaching impact investing, social entrepreneurship, P2P economies and innovation.

In short, Bradley deeply understands what it’s like to sit on both sides of the table, as a VC and a founder, and even more deeply understands what it takes to have a successful virtual meeting from her experience building Ureeka (which is entirely virtual).

Bradley joins an all-star cast of speakers at TC Early Stage, an event that is packed with breakout sessions focused on all the core competencies that a startup needs to be successful. Here’s a preview of some of the sessions going down at TC Early Stage:

  • How to Get An Investor’s Attention (Marlon Nichols, MaC Venture Partners)
  • Four Things to Think About Before Raising a Series A (Bucky Moore, Kleiner Perkins) 
  • How Founders Can Think Like a VC (Lisa Wu, Norwest Venture Partners) 
  • Finance for Founders (Alexa von Tobel, Inspired Capital) 
  • Building and Leading a Sales Team (Ryan Azus, Zoom CRO)
  • Keys to Nailing Product Market Fit (Rahul Vohra, Superhuman)

That’s not all. The TC Early Stage curriculum is being spread across two events, with fundraising and operations represented on April 1 & 2 and fundraising and marketing deep dives on July 8 & 9. Folks who buy a ticket to just one event will get three months of Extra Crunch for free, and folks who buy a dual-event ticket will get six months of Extra Crunch membership for free.

An Extra Crunch membership comes with access to:

And much more! Really, what are you waiting for? Pick up a ticket to TC Early Stage here or use the widget below:

( function() {
var func = function() {
var iframe = document.getElementById(‘wpcom-iframe-dde292b93a5f3017145419dd51bb9fce’)
if ( iframe ) {
iframe.onload = function() {
iframe.contentWindow.postMessage( {
‘msg_type’: ‘poll_size’,
‘frame_id’: ‘wpcom-iframe-dde292b93a5f3017145419dd51bb9fce’
}, “https://tcprotectedembed.com” );
}
}

// Autosize iframe
var funcSizeResponse = function( e ) {

var origin = document.createElement( ‘a’ );
origin.href = e.origin;

// Verify message origin
if ( ‘tcprotectedembed.com’ !== origin.host )
return;

// Verify message is in a format we expect
if ( ‘object’ !== typeof e.data || undefined === e.data.msg_type )
return;

switch ( e.data.msg_type ) {
case ‘poll_size:response’:
var iframe = document.getElementById( e.data._request.frame_id );

if ( iframe && ” === iframe.width )
iframe.width = ‘100%’;
if ( iframe && ” === iframe.height )
iframe.height = parseInt( e.data.height );

return;
default:
return;
}
}

if ( ‘function’ === typeof window.addEventListener ) {
window.addEventListener( ‘message’, funcSizeResponse, false );
} else if ( ‘function’ === typeof window.attachEvent ) {
window.attachEvent( ‘onmessage’, funcSizeResponse );
}
}
if (document.readyState === ‘complete’) { func.apply(); /* compat for infinite scroll */ }
else if ( document.addEventListener ) { document.addEventListener( ‘DOMContentLoaded’, func, false ); }
else if ( document.attachEvent ) { document.attachEvent( ‘onreadystatechange’, func ); }
} )();


Source: Tech Crunch

Justworks’ Series B pitch deck may be the most wonderfully simple deck I’ve ever seen

It may be tough to remember, but there was a time long ago when Justworks wasn’t a household name. Though its monthly revenue growth charts were up and to the right, it had not even broken the $100,000 mark. Even then, Bain Capital Venture’s Matt Harris felt confident in betting on the startup.

Harris says that, with any investment (particularly at the early stage of a company), the decision really comes down to the team and more importantly, the founder.

Two of the main reasons this deck “sings” is the line it draws to the Justworks culture and that the deck isn’t “artificially simple.”

“Isaac is a long-term mercenary, but short- and medium-term missionary,” said Harris. “The word that really comes to mind is ‘structured.’ If you ask him to think about something and respond, he’ll think about it and come back with an answer that has four pillars underneath it. He’ll create a framework that not only answers your specific question, but can prove to be a model that will answer future questions of the same type. He’s a systems thinker.”

In 2015, Justworks closed its $13 million Series B, led by Bain Capital Ventures. Harris took a seat on the board. Since, the duo have been working closely together as Justworks has grown into the behemoth it is today.

But these relationships work both ways. Oates said that one of the main things he looks for in an investor is how they’ll react when the chips are down.

“Different people behave different ways under stress,” said Oates. “And people show their values and integrity in those types of situations. That’s when these things are tested. The simple way I think about this is, will this person pick me up from the airport in a pinch?”

Though he’s never asked, he believes Harris absolutely would.

On Extra Crunch Live, Harris and Justworks CEO Isaac Oates sat down to talk through how they resolve disagreements, why Oates never changed what must be one of the most simple pitch decks I’ve ever seen in my life, and how founders should think about pricing their products.

They also gave live feedback on pitch decks submitted by the audience in the Pitch Deck Teardown. (If you’d like to see your deck featured on a future episode, send it to us using this form.)

We record Extra Crunch Live every Wednesday at 12 p.m. PST/3 p.m. EST/8 p.m. GMT. You can see our past episodes here and check out the March slate right here.

Episode breakdown

  • Working through disagreements — 11:30
  • The Justworks Series B Deck — 15:00
  • Pricing the product — 25:00
  • Pitch deck teardown — 33:00

Working through disagreements

Despite their glowing praise of one another at the top of the episode, the founder/investor duo haven’t always seen eye to eye. But they did provide an excellent framework around how founders and VCs should wade through disagreements around the business.

Oates gave an example from 2017. He was considering putting in a dual-class stock, which would give a kind of high-vote, low-vote structure to the company. He said that it interested him because he’d seen other companies out there who were vulnerable after going public, whether it be activist shareholders or other outside forces, and that that might prevent a CEO from thinking about the long term.

Harris disagreed and gave a long list of reasons why that neither shared on the episode. However, Oates said that one of the great things to come out of that disagreement was seeing how Harris went about this decision.

Harris introduced Oates to every expert on this particular subject that he knew, asking them to have meetings and discuss it further.

In the end, Oates ultimately stuck to his guns and decided to go forward with the dual-class stock, but armed with all the information he needed to feel confident in the decision.

“I learned a lot about how Matt thinks and how he approaches decisions,” said Oates. “The process of making decisions is just as important as the content. As I’ve gotten to know him more, it means that when we find something where we don’t necessarily agree, we’re able to step back and make sure we have an intellectually rigorous way to process it.”

The story reminded me of a similar conversation with Ironclad CEO Jason Boehmig and Accel’s Steve Loughlin. They explained how much time and energy they spent early on in their investor/founder relationship talking about the “why” behind opinions and strategies and decisions, plotting out the short-, medium- and long-term plan for the company.

“I want to know what you want the company to look like so that I can push you and we can have constructive conversations around the plan,” said Loughlin. “That way, I’m not getting a phone call about whether or not they should hire a head of customer success without any context or a true north in mind.”


Source: Tech Crunch

How investors are valuing the pandemic

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday morning? Sign up here.

Ready? Let’s talk money, startups and spicy IPO rumors.

Kicking off with a tiny bit of housekeeping: Equity is now doing more stuff. And TechCrunch has its Justice and Early-Stage events coming up. I am interviewing the CRO of Zoom for the latter. And The Exchange itself has some long-overdue stuff coming next week, including $50M and $100M ARR updates (Druva, etc.), a peek at consumption based pricing vs. traditional SaaS models (featuring Fastly, Appian, BigCommerce CEOs, etc.), and more. Woo! 

This week both DoorDash and Airbnb reported earnings for the first time as public companies, marking their real graduation into the ranks of the exited unicorns. We’re keeping our usual eye on the earnings cycle, quietly, but today we have some learnings for the startup world.

Some basics will help us get started. DoorDash beat growth expectations in Q4, reporting revenue of $970 million versus an expected $938 million. The gap between the two likely comes partially from how new the DoorDash stock is, and the pandemic making it difficult to forecast. Despite the outsized growth, DoorDash shares initially fell sharply after the report, though they largely recovered on Friday.

Why the initial dip? I reckon the company’s net loss was larger than investors hoped — though a large GAAP deficit is standard for first quarters post-debut. That concern might have been tempered by the company’s earnings call, which included a note from the company’s CFO that it is “seeing acceleration in January relative to our order growth in December as well as in Q4.” That’s encouraging. On the flip side, the company’s CFO did say “starting from Q2 onwards, we’re going to see a reversion toward pre-COVID behavior within the customer base.”

Takeaway: Big companies are anticipating a return to pre-COVID behavior, just not quite yet. Firms that benefited from COVID-19 are being heavily scrutinized. And they expect tailwinds to fade as the year progresses.

And then there’s Airbnb, which is up around 16% today. Why? It beat revenue expectations, while also losing lots of money. Airbnb’s net loss in Q4 2020 was more than 10x DoorDash’s own. So why did Airbnb get a bump while DoorDash got dinged? Its large revenue beat ($859 million, instead of an expected $748 million), and potential for future growth; investors are expecting that Airbnb’s current besting of expectations will lead to even more growth down the road.

Takeaway: Provided that you have a good story to tell regarding future growth, investors are still willing to accept sharp losses; the growth trade is alive, then, even as companies that may have already received a boost endure increased scrutiny.

For startups, valuation pressure or lift could come down to which side of the pandemic they are on; are they on the tail end of their tailwind (remote-work focused SaaS, perhaps?), or on the ascent (restaurant tech, maybe?). Something to chew on before you raise.

Market Notes

It was one blistering week for funding rounds. Crunchbase News, my former journalistic home, has a great piece out on just how many massive rounds we’re seeing so far this year. But even one or two steps down in scale, funding activity was super busy.

A few rounds that I could not get to this week that caught my eye included a $90 million round for Terminus (ABM-focused GTM juicer, I suppose), Anchorage’s $80 million Series C (cryptostorage for big money), and Foxtrot Market’s $42 million Series B (rapid delivery of yuppie and zoomer essentials).

Sitting here now, finally writing a tidbit about each, I am reminded at the sheer breadth of the tech market. Termius helps other companies sell, Anchorage wants to keep your ETH safe, while Foxtrot wants to help you replenish your breakfast rosé stock before you have to endure a dry morning. What a mix. And each must be generating venture-acceptable growth, as they have not merely raised more capital but raised rather large rounds for their purported maturity (measured by their listed Series stage, though the moniker can be more canard than guide.)

I jokingly call this little section of the newsletter Market Notes, a jest as how can you possibly note the whole market that we care about? These companies and their recent capital infusions underscore the point.

Various and Sundry

Finally, two notes from earnings calls. The first from Root, which is a head scratcher, and the second from Booking Holdings’ results.

I chatted with Alex Timm, Root Insurance’s CEO this week moments after it dropped numbers. As such I didn’t have much context in the way of investor response to its results. My read was that Root was super capitalized, and has pretty big expansion plans. Timm was upbeat about his company’s improving economics (on a loss ratio and loss-adjusted expenses basis, for the insurtech fans out there), and growth during the pandemic.

But then today its shares are off 16%. Parsing the analyst call, there’s movement in Root’s economic profile (regarding premium-ceding variance over the coming quarters) that make it hard to fully grok its full-year growth from where I sit. But it appears that Root’s business is still molting to a degree that is almost refreshing; the company could have gone public in 2022 with some of its current evolution behind it, but instead it raised a zillion dollars last year and is public now.

Sticking our neck out a bit, despite fellow neo-insurnace player Lemonade’s continued, and impressive valuation run, MetroMile’s stock is also softening, while Root’s has lost more than half its value from its IPO date. If the current repricing of some neo-insurance players continues, we could see some private investment into the space slow. (Fewer things like this?) It’s a possible trend we’ll have eyes on this year.

Next, Booking Holdings, the company that owns Priceline and other travel properties. Given that Booking might have notes regarding the future of business travel — which we care about for clues regarding what could come for remote work and office culture, things that impact everything from startup hub locations to software sales — The Exchange snagged a call slot and dialed the company up.

Booking Holdings’ CEO Glenn Fogel didn’t have a comment as to how his company is trading at all-time highs despite suffering from sharp year-over-year revenue declines. He did note that the pandemic has shaken up expectations for conversations, which could limit short-term business travel in the future for meetings that may now be conducted on video calls. He was bullish on future conference travel (good news for TechCrunch, I suppose), and future travel more generally.

So concerning the jetting perspective, we don’t know anything yet. Booking Holdings is not saying much, perhaps because it just doesn’t know when things will turn around. Fair enough. Perhaps after another three months of vaccine rollout will give us a better window into what a partial return to an old normal could look like.

And to cap off, you can read Apex Holdings’ SPAC presentation here, and Markforged’s here. Also I wrote about the buy-now-pay-later space here, riffed on the Digital Ocean IPO with Ron Miller here, and doodled on Toast’s valuation and the Olo debut here.

Hugs, and have a lovely weekend!

Alex

 


Source: Tech Crunch

How capital-as-a-service can help you get your first check in 2021

“A lot of founders mix up raising money with making money.”

This quote, which Career Karma founder Ruben Harris mentioned off-hand on a phone call with me, has been on my mind for months. In fact, raising money can cost you money, in the form of that sweet, sweet ownership and equity.

That’s why Clearbanc, a startup I have covered for years, has always had a compelling pitch.

The company, co-founded by Michele Romanow and Andrew D’Souza, positions itself as an alternative equity-free capital solution for early-stage founders. Flexing its “20-minute term sheet” the startup uses an algorithm to shift through a startup’s data, and if it has positive ad spend and positive unit economics, they make an investment worth anything from $10,000 to over $10 million. It makes money through a revenue-share agreement versus an equity stake.

“While we’ve invested in over 4,000 businesses using this model, we’ve also turned away over 50,000 who weren’t at this scale or level of repeatability,” D’Souza tells TechCrunch. So, the startup told me this week that they have raised $10 million to create a new product: ClearAngel.

The startup is trying to back anyone with an online business that has early revenue, but pre-broad traction. Clearbanc wants to replace friends and family money, a concept that D’Souza says is “quite elitist,” with its own version of an angel check, while also offering founder services such as supply chain analysis, introductions to networks and competitive landscape analysis.

The startup just needs to make around $1,000 in monthly revenue to qualify for cash. In return for an investment between $10,000 to $50,000, founders have to pay up to 2% of their revenue over four years.

Clearbanc’s repayment works for some startups, but for others, a traditional bank loan could work better. Its biggest hurdle, I’d argue, is that if a startup has great revenue already, you might not want to take a revenue-share agreement loan.

As for if a startup takes ClearAngel capital and doesn’t make the minimum revenue?

“Then the ClearAngel product isn’t working,” he said. “There are bound to be some companies who still can’t make it, that’s the risk we take.”

Alternative capital has pros and cons, just like venture capital has pros and cons. If the end goal is to become a billion-dollar business, what’s the best route to do that? Is taking a revenue-share agreement going to hurt your chances as a pre-seed startup trying to raise capital? Does YC care at all?

Those are some of my biggest questions, and we’ll explore all (and more!) in my alternative financing panel next week for TC Sessions: Justice. It costs $5 to attend the entire conference, and speakers include Backstage Capital’s Arlan Hamilton and Congresswoman Barbara Lee.

Remember that you can get Startups Weekly in your inbox before anyone else, if you subscribe. It’s free! As always, you can find me @nmasc_ on Twitter or e-mail me at natasha.m@techcrunch.com. That is free too!

Coinbase files to go public

After being valued at $100 billion in the secondary markets, Coinbase has finally filed to go public. The S-1, as Winnie founder Sara Mauskopf tweeted, is #goals. The crypto unicorn, as my colleague Alex Wilhelm notes, grew just over 139% in 2020, a massive improvement on its 2019 results.

Here’s what to know:

Other notes:

Coinbase Co-founder and CEO Brian Armstrong

SAN FRANCISCO, CA – SEPTEMBER 07: Coinbase Co-founder and CEO Brian Armstrong speaks onstage during Day 3 of TechCrunch Disrupt SF 2018 at Moscone Center on September 7, 2018 in San Francisco, California. (Photo by Steve Jennings/Getty Images for TechCrunch)

Mobility-as-a-service

I caught up with Eric Eldon, managing editor at TechCrunch and former Startups Weekly writer, about the recent work he’s been doing with Kirsten Korosec, our transportation editor.

Here’s what he had to say: Startup employees may not be going into the office as often again — or ever. But everyone will still need to go places, or at least want to! How will they do it? What will we do? How will our altered set of needs and wants reshape cities, right as new technologies are fundamentally altering transportation, too? We’re going to be covering this topic in-depth this year, as we all figure out how to go back to work.

Other reading:

TechCrunch Mobility

Crazy ride on the night by car. Image Credits: franckreporter/Getty Images.

Spain wants startups to succeed on its soil

The Spanish government, led by Prime Minister Pedro Sanchez, has announced plans to turn itself into an entrepreneurial nation. The Startup Act is the first piece of dedicated legislation meant to help create tech innovation within Spain. The goals are to promote innovation, new capital through domestic and foreign investments, and to seed the future of Spain as a hub for new companies.

Here’s what to know: Driving innovation can start with relaxing on regulatory concerns.

Among a package of some 50 support measures, the entrepreneurial strategy makes a reference to “smart regulation” and floats the idea of sandboxing for testing products publicly (i.e. without needing to worry about regulatory compliance first).

Other news this week:

Image Credits: MHJ (opens in a new window) / Getty Images

Some personal news

As loyal Equity listeners may have already noticed, we’ve been quietly experimenting with the concept of adding on a third show to our weekly production. This week, we told the world! Along with our current shows, which help listeners start and end the week with tech news, we’re going to bring on a Wednesday deep dive into a topic, subject area or person. Our first mid-week episode went live this week, and it was all about space (so yes, expect a lot of puns and Elon jokes).

The show is about to celebrate its four-year anniversary, and I’m about to celebrate my one-year anniversary as a co-host. We’re all so thankful for your support, and can’t wait to bring you more laughs and learnings.

Our latest episodes:

Across the week

Seen on TechCrunch

The startup bootcamp you’ve always needed is finally here

Scoop: VCs are chasing Hopin upwards of $5-6B valuation

Lisbon’s startup scene rises as Portugal gears up to be a European tech tiger

Sources: Lightspeed Venture Partners is close to hiring a London-based partner to put down roots in Europe

Contra wants to be a community for independent workers

Seen on Extra Crunch

Ironclad’s Jason Boehmig: The objective of pricing is to become less wrong over time

As BNPL startups raise, a look at Klarna, Affirm and Afterpay earnings

4 essential truths about venture investing

And that’s the jam-packed week! As an insider tip to those that subscribe, I’m starting to cover health tech (along with edtech) for the TC team. So throw me the smartest person you know on the topic, and extra points if that’s you.

N


Source: Tech Crunch

Storm Ventures promotes Pascale Diaine and Frederik Groce to partners

Storm Ventures, a venture firm that focuses on early stage B2B enterprise startups, announced this week that it has promoted Pascale Diaine and Frederik Groce to partners at the firm.

The two new partners have worked their way up over the last several years. Groce joined Storm in 2016 and has invested in enterprise SaaS startups like Workato, Splashtop, NextRequest and Camino. Diaine joined a year later and has invested in firms like Sendoso, German Bionic, InEvent and Talkdesk.

Groce, who is also a founder at BLCK VC and helped organize the Black Venture Institute to create a network of Black investors, says that these promotions show that venture needs to be more diverse, and Storm recognizes this.  “If you think about the way our team works, that’s the way I think venture teams will need to work to be able to be successful in the next 40 years. And so the hope is that over time everyone does this and we’re just early to it,” Groce told me.

Unfortunately, right now that’s not the case, not even close. According to research by Crunchbase, just 12% of venture capitalists are women and two-thirds of firms don’t have any female investors. Meanwhile, only about 4% of ventures investors are Black.

Those numbers have an impact on the number of Black and female founders because as Groce points out the lack of founders in underrepresented groups is in part a networking problem. “In a business that’s predicated on networks if you don’t have diversity in the network, or the teams that are driving those networks, you just can’t make sure you’re seeing great talent across all ecosystems,” he said.

Diaine, who is French and started her career by founding Orange Fab, the corporate accelerator of the European Telco Orange, has brought her international business background to Storm where they helped her tune that experience to an investor focus and supported her as she learned the nuances of the investment side of the business.

“I don’t come from the VC world. I come from the innovative corporate world. So they had to train me and spend time getting me up to date. And they did spend so much time making sure I understood everything to make sure I got to this level,” she said.

Both partners bring their own unique views looking beyond Silicon Valley for investment opportunities. Diaine’s investment include a German, Brazilian and Portuguese company, while Groce’s investments include companies in Chicago, Atlanta and Seattle.

The two partners have also developed an algorithm to help find investments based on a number of online signals, something that has become more important during the pandemic when they couldn’t network in person.

“Frederik and I have been working on [an algorithm to find] what are the signals that you can identify online that will tell you this company’s doing well, this company growing.You have to have a nice set of startup search tracking [signals], but what do you track if you can’t just get the revenue in real time, which is impossible. So we’ve developed an algorithm that helps us identify some of these signals and create alerts on which startups we should pay attention to,” Diaine explained.

She says this data-driven approach should be helpful and augment their in-person efforts even after the pandemic is over and increase their overall efficiency in finding and tracking companies in their portfolios.

 


Source: Tech Crunch

If you haven’t followed NFTs, here’s why you should start

NFTs (non-fungible tokens) — or scarce digital content represented as tokens — are driving a new wave of crypto adoption.

Thanks to the Ethereum blockchain, artists, gaming companies and content creators alike are utilizing token standards, which ascribe provenance to uniquely distinguishable assets. NFTs first made headlines in 2017 when Dapper Labs’ game CryptoKitties accounted for 95% of Ethereum network usage at its peak. While someone paying $170,000 for a digital cat seemed like an anomaly, what’s happening today blows that headline out of the water.

Platforms like Nifty Gateway, SuperRare, Foundation and Zora are quickly emerging as the leading players for creatives to monetize work in a digital world.

The estimated total value of crypto art has now passed $100 million according to cryptoart.io/data — just one vertical of a growing ecosystem of NFTs.

Image Credits: https://cryptoart.io/data

Collectible mania

Just as we’ve seen an alternative asset class form around physical collectibles like Pokémon cards, NFTs are starting to showcase what this universe of rare hallmark brands looks like online.

NBA Top Shot has seen close to $10 million in 24h volume according to CryptoSlam, with more than $100 million of “moments” being sold in less than one year of being live. The parent company behind NBA Top Shot, Dapper Labs, is said to be raising a $250 million round at a $2 billion valuation, as reported by The Block.

Niche collectibles like CryptoPunks — or 10,000 unique collectible characters with scarce traits and qualities — now have a base floor of roughly $18,000 a piece. Just recently, Punk 4156 sold for 650 ETH, equivalent to roughly $1.3 million at today’s prices.

Crypto art paradigms

Graphic designs and 3D designers are finding new platforms to showcase their work, with marketplaces like Nifty Gateway facilitating Supreme style drops for exclusive digital art.

Mad Dog Jones recently set a record for $3.9 million worth of art sold in one sale, topping the previous record held by beeple for his $3.5 million “Everydays 2020 Collection” drop. No wonder top art galleries like Christies are asking to team up.

With Bitcoin and Etherium reaching all-time high prices and investors looking for new places to allocate capital, the crypto art movement has given power back to the creatives.

Vibrant collector communities like FlamingoDAO are forming around these drops, while protocols like Zora are quickly starting to support NFTs of all different verticals.

Musicians like Mike Shinoda of Linkin Park and Fort Minor has released NFTs as a part of their strategy for his new single “Happy Endings” featuring popstar Iann Dior. EDM DJ and producer 3LAU is tokenizing his debut album “Ultraviolet” and Grammy-award winning musician RAC broke the SuperRare record for the highest NFT primary sale with his piece “Elephant Dreams.”

I even sold a blog post for 2 ETH (or roughly $4,000) using a crypto media publication called Mirror!

Why should I care?

NFTs have exposed a creative side of crypto that is not only fun to play, but digestible and accessible to new users. As bigger names host their first NFT drops, they bring a new wave of attention to their millions of followers noticing crypto for the first time.

This leaves people in a unique position to curate and discover this growing wave of scarce digital content. Showtime is aggregating NFTs to offer an Instagram-like experience, and the forthcoming music-specific NFT marketplace Catalog is creating a digital record store.

As Nifty Gateway drops continue to sell out in seconds thanks to credit card payments and free transactions, new collectors are finding ways to collect their favorite artists and brands — a trend that is likely to take better form over the coming years.

Areas of improvement

While the sales figures showcase a clear demand for NFTs, it’s not without hiccups.

More on NFT

The vast majority of NFT platforms today require users to be familiar with Ethereum wallets like MetaMask. This means collectors need to purchase ETH from an exchange like Coinbase and send it to a non-custodial address that consists of a long string of numbers and letters to get started.

Once they’re there, they need to pay upwards of $100 worth of fees to make a transaction and place a bid. The same goes for artists creating NFTs, causing community funds like MintFund to pop up and cover the operational costs of launching their first NFT.

Luckily, platforms like Audius are addressing these pain points head on. With 2 million monthly active users — the most of any Ethereum application today — Audius replaced MetaMask with an email and password login wallet called Hedgehog. By removing key management and transaction costs, users are able to access the wonderful world of crypto without significant start-up costs.

NFT bubble?

What’s happening in the NFT ecosystem today is nothing short of a paradigm shift for a maturing sector of cryptocurrencies. As avid collectors frame their digital art using companies like Infinite Objects, there’s no denying the vast majority of buyers are here to speculate. This increased demand signals interest, but is highly reminiscent of the 2017 ICO boom that caused the market to crash many years ago.

However, out of that multi-year bear market came a strong wave of foundational companies and products like Uniswap and Compound that are here to stay. It’s this writer’s bet that the same will happen with NFTs.

Until then, remember that digital content does have value, and crypto collectors are flocking to lay their namesake on the biggest collections of tomorrow.


Source: Tech Crunch