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Bird shows improving scooter economics, long march to profitability
Newly reported financial data from Bird, an American scooter sharing service, shows a company with an improving economic model and a multiyear 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.)
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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.
Fleet management → Fleet managers
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.
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Growth tactics that will jump-start your customer base
Five years ago, the playbook for launching a new company involved a tried-and-true list of to-dos. Once you built an awesome product with a catchy name, you’d try to get a feature article on TechCrunch, a front-page hit on Hacker News, hunted on ProductHunt and an AMA on Quora.
While all of these today remain impressive milestones, it’s never been harder to corral eyeballs and hit a breakout adoption trajectory.
In this new decade, it is possible to first out-market your competitor, and then raise lots of money, hire the best team and build, rather than the other way around (building first, then marketing).
Looks like @stripe redesigned their landing page.
How long until we see these colorful gradients on other startups’ landing pages?
https://t.co/c6DL5mEUm4 pic.twitter.com/cCh8NyXawy
— Marc Köhlbrugge (@marckohlbrugge) July 7, 2020
Outbound marketing tools and company newsletters are useful, but they’re also a slow burn and offer low conversion in the new creator economy. So where does this leave us?
With audiences spread out over so many platforms, reaching cult status requires some level of hacking. Brand-building is no longer a one-hit game, but an exercise in repetition: It may take four or five times for a user to see your startup’s name or logo to recognize, remember or Google it.
Below are some growth tactics that I hope will help jump-start the effort to building an engaged user base.
Laying the groundwork for user-generated content
Before users are evangelists, they are observers. Consider creating a bot to alert you of any product mentions on Twitter, or surface subject-matter discussions on Reddit (“Best tools to manage AWS costs?” or “Which marketplace do you resell your old electronics on?”), which you can then respond to with thoughtful commentary.
Join relevant communities on Discord, infiltrate Slack groups of relevant conferences (including past iterations of a conference — chances are those groups are still alive with activity), follow forums on StackOverflow and engage in the discussions on all these channels.
The more often you post, the better your posts convert. The more your handle appears on newsfeeds, the more likely it will be included on widely quoted “listicles.”
My list of coolest startups around today:@Replit – no more dev environments@highlightrun – understand how people use your app@DoNotPayLaw – saves
+
@Superhuman – first pleasant email app@Railway_App – what Heroku should have been@pipe – recurring revenue = assets
— Zain Allarakhia (@zallarak) May 18, 2021
Most “user-generated content” in the early innings should be generated by you, from both personal accounts and company accounts.
Build in public …
Building in public is scary given the speed at which ideas can be copied, but competition will always exist, since new ideas are not born in vacuums. Companies like Railway and Replit post to Twitter every time they post a new changelog. Stir brands its feature releases as “drops,” similar to streetwear drops.
Building in public can also lend opportunities for virality, which requires drama, comedy or both. Hey.com’s launch was buoyed by Basecamp’s public fight against Apple over existing App Store take rates.
Mmhmm, the virtual camera app that adds TV-presenter flair to video meetings, launched with a viral video that hit over 1.5 million views. The company continues to release entertaining YouTube demos to showcase new use cases.
Help TechCrunch find the best growth marketers for startups.
Provide a recommendation in this quick survey and we’ll share the results with everybody.
… or build in private
Like an artist teasing an upcoming album, some companies are able to drum up substantial anticipation ahead of exiting stealth mode. When two ex-Apple execs founded Humane, they crafted beautiful social media pages full of sophisticated photography without revealing a single hint of what they set out to build.
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Product School raises $25M in growth equity to scale its product training platform
Traditional MBA programs can be costly, lengthy and often lack the application of real-world skills. Meanwhile, big global brands and companies who need product managers to grow their businesses can’t sit around waiting for people to graduate. And the edtech space hasn’t traditionally catered to this sector.
This is perhaps why Product School says it has secured $25 million in growth equity investment from growth fund Leeds Illuminate (subject to regulatory approval) to accelerate its product and partnerships with client companies.
The growth funding for the company comes after bootstrapping since 2014, in large part because product managers (PMs) are no longer needed just inside tech companies but have become sought after across almost virtually all industries.
Product School provides certificates for individuals as well as team training, and says it has experienced an upwelling of business since COVID switched so many companies into digital ones. It also now counts Google, Facebook, Netflix, Airbnb, PayPal, Uber and Amazon amongst its customers.
“Product managers have an outsized role in driving digital transformation and innovation across all sectors,” said Susan Cates, managing partner of Leeds Illuminate. “Having built the largest community of PMs in the world validates Product School’s certification as the industry standard for the market and positions the company at the forefront of upskilling top-notch talent for global organizations.”
Carlos Gonzalez de Villaumbrosia, CEO and founder of Product School, who started the company after moving from Spain, said: “There has never been a better time in history to build digital products and Product School is excited to unlock value for product teams across the globe to help define the future. Our company was founded on the basis that traditional degrees and MBA programs simply don’t equip PMs with the real-world skills they require on the job.”
Product School has also produced the The Product Book, The Proddy Awards and ProductCon.
Its main competitor is MindTheProduct, a community and training platform, which has also boostrapped.
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Meet Justos, the new Brazilian insurtech that just got backing from the CEOs of 7 unicorns
Here in the U.S. the concept of using a driver’s data to decide the cost of auto insurance premiums is not a new one.
But in markets like Brazil, the idea is still considered relatively novel. A new startup called Justos claims it will be the first Brazilian insurer to use drivers’ data to reward those who drive safely by offering “fairer” prices.
And now Justos has raised about $2.8 million in a seed round led by Kaszek, one of the largest and most active VC firms in Latin America. Big Bets also participated in the round, along with the CEOs of seven unicorns, including Assaf Wand, CEO and co-founder of Hippo Insurance; David Vélez, founder and CEO of Nubank; Carlos Garcia, founder and CEO of Kavak; Sergio Furio, founder and CEO of Creditas; Patrick Sigrist, founder of iFood and Fritz Lanman, CEO of ClassPass. (There’s a seventh CEO who wishes to remain anonymous). Senior executives from Robinhood, Stripe, Wise, Carta and Capital One also put money in the round.
Serial entrepreneurs Dhaval Chadha, Jorge Soto Moreno and Antonio Molins co-founded Justos, having most recently worked at various Silicon Valley-based companies including ClassPass, Netflix and Airbnb.
“While we have been friends for a while, it was a coincidence that all three of us were thinking about building something new in Latin America,” Chadha said. “We spent two months studying possible paths, talking to people and investors in the United States, Brazil and Mexico, until we came up with the idea of creating an insurance company that can modernize the sector, starting with auto insurance.”
Ultimately, the trio decided that the auto insurance market would be an ideal sector considering that in Brazil, an estimated more than 70% of cars are not insured.
The process to get insurance in the country, by any accounts, is a slow one. It takes up to 72 hours to receive initial coverage and two weeks to receive the final insurance policy. Insurers also take their time in resolving claims related to car damages and loss due to accidents, the entrepreneurs say. They also charge that pricing is often not fair or transparent.
Justos aims to improve the whole auto insurance process in Brazil by measuring the way people drive to help price their insurance policies. Similar to Root here in the U.S., Justos intends to collect users’ data through their mobile phones so that it can “more accurately and assertively price different types of risk.” This way, the startup claims it can offer plans that are up to 30% cheaper than traditional plans, and grant discounts each month, according to the driving patterns of the previous month of each customer.
“We measure how safely people drive using the sensors on their cell phones,” Chadha said. “This allows us to offer cheaper insurance to users who drive well, thereby reducing biases that are inherent in the pricing models used by traditional insurance companies.”
Justos also plans to use artificial intelligence and computerized vision to analyze and process claims more quickly and machine learning for image analysis and to create bots that help accelerate claims processing.
“We are building a design-driven, mobile first and customer experience that aims to revolutionize insurance in Brazil, similar to what Nubank did with banking,” Chadha told TechCrunch. “We will be eliminating any hidden fees, a lot of the small text and insurance-specific jargon that is very confusing for customers.”
Justos will offer its product directly to its customers as well as through distribution channels like banks and brokers.
“By going direct to consumer, we are able to acquire users cheaper than our competitors and give back the savings to our users in the form of cheaper prices,” Chadha said.
Customers will be able to buy insurance through Justos’ app, website or even WhatsApp. For now, the company is only adding potential customers to a waitlist but plans to begin selling policies later this year..
During the pandemic, the auto insurance sector in Brazil declined by 1%, according to Chadha, who believes that indicates “there is latent demand raring to go once things open up again.”
Justos has a social good component as well. Justos intends to cap its profits and give any leftover revenue back to nonprofit organizations.
The company also has an ambitious goal: to help make insurance become universally accessible around the world and the roads safer in general.
“People will face everyday risks with a greater sense of safety and adventure. Road accidents will reduce drastically as a result of incentives for safer driving, and the streets will be safer,” Chadha said. “People, rather than profits, will become the focus of the insurance industry.”
Justos plans to use its new capital to set up operations, such as forming partnerships with reinsurers and an insurance company for fronting, since it is starting as an MGA (managing general agent).
It’s also working on building out its products such as apps, its back end and internal operations tools, as well as designing all its processes for underwriting, claims and finance. Justos’ data science team is also building out its own pricing model.
The startup will be focused on Brazil, with plans to eventually expand within Latin America, then Iberia and Asia.
Kaszek’s Andy Young said his firm was impressed by the team’s previous experience and passion for what they’re building.
“It’s a huge space, ripe for innovation and this is the type of team that can take it to the next level,” Young told TechCrunch. “The team has taken an approach to building an insurance platform that blends being consumer-centric and data-driven to produce something that is not only cheaper and rewards safety but as the brand implies in Portuguese, is fairer.”
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Extra Crunch roundup: Lordstown Motors’ woes, how co-CEOs work, Brian Chesky interview
Lordstown Motors released its Q1 earnings yesterday, and the electric vehicle manufacturer is facing a few challenges.
Expenses were higher than expected, it plans to slash production by about 50%, and the company reported zero revenue and a net loss of $125 million. Oh, it also needs more capital.
“But there’s more to the Lordstown mess than merely a single bad quarter,” writes Alex Wilhelm. “Lordstown’s earnings mess and the resulting dissonance with its own predictions are notable on their own, but they also point to what could be shifting sentiment regarding SPAC combinations.”
In light of the company’s lackluster earnings report (and a pending SEC investigation), Alex unpacks the company’s Q1, “but don’t think that we’re only singling out one company; others fit the bill, and more will in time.”
May 27 Clubhouse chat: How to ensure data quality in the era of Big Data
Image Credits: TechCrunch
Join TechCrunch reporter Ron Miller and Patrik Liu Tran, co-founder and CEO of automated real-time data validation and quality monitoring platform Validio, on Thursday, May 27 at 9 a.m. PDT/noon EDT for a Clubhouse chat about ensuring data quality in the era of Big Data.
The world produces 2.5 quintillion bytes of data daily, but modern data infrastructure still lacks solutions for monitoring data quality and data validation.
Among other topics, they’ll discuss the build versus buy debate, how to better understand data failures, and why traditional methods for identifying data failures are no longer operational.
Click here to join the conversation.
Thanks very much for reading Extra Crunch; have a great week!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
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Use discount code ECFriday to save 20% off a one- or two-year subscription.
How Expensify shed Silicon Valley arrogance to realize its global ambitions
Image Credits: Nigel Sussman
Expensify may be the most ambitious software company ever to mostly abandon the Bay Area as the center of its operations.
The startup’s history is tied to places representative of San Francisco: The founding team worked out of Peet’s Coffee on Mission Street for a few months, then crashed at a penthouse lounge near the 4th and King Caltrain station, followed by a tiny office and then a slightly bigger one in the Flatiron building near Market Street.
Thirteen years later, Expensify still has an office a few blocks away on Kearny Street, but it’s no longer a San Francisco company or even a Silicon Valley firm. The company is truly global with employees across the world — and it did that before COVID-19 made remote working cool.
It makes sense that a company founded by internet pirates would let its workforce live anywhere they please and however they want to. Yet, how does it manage to make it all work well enough to reach $100 million in annual revenue with just a tad more than 100 employees?
As I described in Part 2 of this EC-1, that staffing efficiency is partly due to its culture and who it hires. It’s also because it has attracted top talent from across the world by giving them benefits like the option to work remotely all year as well as paying SF-level salaries even to those not based in the tech hub. It’s also got annual fully paid month-long “workcations” for every employee, their partner and kids.
Brian Chesky describes a faster, nimbler post-pandemic Airbnb
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Managing Editor Jordan Crook interviewed Airbnb co-founder and CEO Brian Chesky to discuss the future of travel and what it was like leading the world’s biggest hospitality startup during a global pandemic.
“Our business initially dropped 80% in eight weeks. I say it’s like driving a car. You can’t go 80 miles an hour, slam on the brakes, and expect nothing really bad to happen.
Now imagine you’re going 80 miles an hour, slam on the brakes, then rebuild the car kind of while still moving, and then try to accelerate into an IPO, all on Zoom.”
Embedded finance will help fill the life insurance coverage gap
Image Credits: alexsl (opens in a new window)/ Getty Images
There’s latent demand for life insurance currently unaddressed by much of the financial services industry, and embedded finance can be the solution.
It’s imperative for companies to consider product lines and partnerships to expand markets, create new revenue streams and provide added value to their customers.
Connecting consumers with products they need through channels they already know and trust is both a massive revenue opportunity and a social good, providing financial resilience to families at a time when they need it most.
Zeta Global’s IPO filing uncovers modest growth, strong adjusted profitability
Image Credits: Nigel Sussman (opens in a new window)
Zeta Global raised north of $600 million in private capital in the form of both equity financing and debt, making it a unicorn worth understanding.
The gist is that Zeta ingests and crunches lots of data, helping its users market to their customers on a targeted basis throughout their individual buying lifecycles. In simpler terms, Zeta helps companies pitch customers in varied manners depending on their own characteristics.
You can imagine that, as the digital economy has grown, the sort of work Zeta Global supports has only expanded. So, has Zeta itself grown quickly? And does it have an attractive business profile? We want to know.
5 predictions for the future of e-commerce
Image Credits: Busakorn Pongparnit (opens in a new window) / Getty Images
In 2016, more than 20 years after Amazon’s founding and 10 years since Shopify launched, it would have been easy to assume e-commerce penetration (the percentage of total retail spend where the goods were bought and sold online) would be over 50%.
But what we found was shocking: The U.S. was only approximately 8% penetrated — only 8% for arguably the most advanced economy in the world!
Despite e-commerce growth skyrocketing over the past year, the reality is the U.S. has still only reached an e-commerce penetration rate of around 17%. During the last 18 months, we’ve closed the gap to South Korea and China’s e-commerce penetration of more than 25%, but there is still much progress to be made.
Here are five key predictions for what this road to further penetration will hold.
Develop a buyer’s guide to educate your startup’s sales team and customers
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Every company wants to be innovative, but innovation comes with its share of difficulties. One key challenge for early-stage companies that are disrupting a particular space or creating a new category is figuring out how to sell a unique product to customers who have never bought such a solution.
This is especially the case when a solution doesn’t have many reference points and its significance may not be obvious.
Some buyers could use a walkthrough of the buying process. If you are building a singular product in a nascent market that necessitates forward-looking customers and want to drastically shorten sales cycles, create a buyer’s guide.
When to walk away from a VC who wants to invest in your startup
Image Credits: cruphoto (opens in a new window) / Getty Images
Pay attention to red flags when meeting with VCs: If they cancel late or leave you waiting, it’s a sign, just like being asked generic questions that demonstrate little or no understanding of the proposition. If they critique you or your business, that’s fine (obviously), but make sure you find out what’s behind their assertions to judge how well informed they are.
If you’re going to face these people each month and debate the direction of your business, the least you can expect is a robust argument outlining precisely why you may not have all the right answers.
If you fail to spot the warning signs, you’ll live to regret it. But do your due diligence and work constructively with them and, together, you might actually build a sustainable future.
Deep Science: Robots, meet world
Image via Getty Images / Westend61
This column aims to collect some of the most relevant recent discoveries and papers — particularly in, but not limited to, artificial intelligence — and explain why they matter.
In this edition, we have a lot of items concerned with the interface between AI or robotics and the real world. Of course, most applications of this type of technology have real-world applications, but specifically, this research is about the inevitable difficulties that occur due to limitations on either side of the real-virtual divide.
2 CEOs are better than 1
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Netflix has two CEOs: Co-founder Reed Hastings oversees the streaming side of the company, while Ted Sarandos guides Netflix’s content.
Warby Parker has co-CEOs as well — its co-founders went to college together. Other companies like the tech giant Oracle and luggage maker Away have shifted from having co-CEOs in recent years, sparking a wave of headlines suggesting that the model is broken.
While there isn’t a lot of research on companies with multiple CEOs, the data is more promising than the headlines would suggest. One study on public companies with co-CEOs revealed that the average tenure for co-CEOs, about 4.5 years, was comparable to solitary CEOs, “suggesting that this arrangement is more stable than previously believed.”
Furthermore, it’s impossible to be in two places at once or clone yourself. With co-CEOs, you can effectively do just that.
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Amount raises $99M at a $1B+ valuation to help banks better compete with fintechs
Amount, a company that provides technology to banks and financial institutions, has raised $99 million in a Series D funding round at a valuation of just over $1 billion.
WestCap, a growth equity firm founded by ex-Airbnb and Blackstone CFO Laurence Tosi, led the round. Hanaco Ventures, Goldman Sachs, Invus Opportunities and Barclays Principal Investments also participated.
Notably, the investment comes just over five months after Amount raised $86 million in a Series C round led by Goldman Sachs Growth at a valuation of $686 million. (The original raise was $81 million, but Barclays Principal Investments invested $5 million as part of a second close of the Series C round). And that round came just three months after the Chicago-based startup quietly raised $58 million in a Series B round in March. The latest funding brings Amount’s total capital raised to $243 million since it spun off from Avant — an online lender that has raised over $600 million in equity — in January of 2020.
So, what kind of technology does Amount provide?
In simple terms, Amount’s mission is to help financial institutions “go digital in months — not years” and thus, better compete with fintech rivals. The company formed just before the pandemic hit. But as we have all seen, demand for the type of technology Amount has developed has only increased exponentially this year and last.
CEO Adam Hughes says Amount was spun out of Avant to provide enterprise software built specifically for the banking industry. It partners with banks and financial institutions to “rapidly digitize their financial infrastructure and compete in the retail lending and buy now, pay later sectors,” Hughes told TechCrunch.
Specifically, the 400-person company has built what it describes as “battle-tested” retail banking and point-of-sale technology that it claims accelerates digital transformation for financial institutions. The goal is to give those institutions a way to offer “a secure and seamless digital customer and merchant experience” that leverages Amount’s verification and analytics capabilities.
Image Credits: Amount
HSBC, TD Bank, Regions, Banco Popular and Avant (of course) are among the 10 banks that use Amount’s technology in an effort to simplify their transition to digital financial services. Recently, Barclays US Consumer Bank became one of the first major banks to offer installment point-of-sale options, giving merchants the ability to “white label” POS payments under their own brand (using Amount’s technology).
“The pandemic dramatically accelerated banks’ interest in further digitizing the retail lending experience and offering additional buy now, pay later financing options with the rise of e-commerce,” Hughes, former president and COO at Avant, told TechCrunch. “Banks are facing significant disruption risk from fintech competitors, so an Amount partnership can deliver a world-class digital experience with significant go-to-market advantages.”
Also, he points out, consumers’ digital expectations have changed as a result of the forced digital adoption during the pandemic, with bank branches and stores closing and more banking done and more goods and services being purchased online.
Amount delivers retail banking experiences via a variety of channels and a point-of-sale financing product suite, as well as features such as fraud prevention, verification, decisioning engines and account management.
Overall, Amount clients include financial institutions collectively managing nearly $2 trillion in U.S. assets and servicing more than 50 million U.S. customers, according to the company.
Hughes declined to provide any details regarding the company’s financials, saying only that Amount “performed well” as a standalone company in 2020 and that the company is expecting “significant” year-over-year revenue growth in 2021.
Amount plans to use its new capital to further accelerate R&D by investing in its technology and products. It also will be eyeing some acquisitions.
“We see a lot of interesting technology we could layer onto our platform to unlock new asset classes, and acquisition opportunities that would allow us to bring additional features to our platform,” Hughes told TechCrunch.
Avant itself made its first acquisition earlier this year when it picked up Zero Financial, news that TechCrunch covered here.
Kevin Marcus, partner at WestCap, said his firm invested in Amount based on the belief that banks and other financial institutions have “a point-in-time opportunity to democratize access to traditional financial products by accelerating modernization efforts.”
“Amount is the market leader in powering that change,” he said. “Through its best-in-class products, Amount enables financial institutions to enhance and elevate the banking experience for their end customers and maintain a key competitive advantage in the marketplace.”
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How 4 New Jersey pools turned into a startup that just raised $10M
As the oldest of 12 children, Bunim Laskin spent much of his teen years looking for ways to help keep his siblings entertained. Noticing that a neighbor’s pool was often empty, Laskin reached out to ask if his family could use her pool. To make it worth her while, he suggested that they could help cover her expenses for maintaining the pool.
Soon after, five other families had made the same arrangement with her and the pool owner had six families covering 25% of her expenses. This meant that the neighbor was actually making money off her pool. The arrangement sparked a business idea in Laskin’s mind. At the age of 20, he founded Swimply, a marketplace for homeowners to rent out their underutilized pools to local swimmers, with Asher Weinberger.
The Cedarhurst, New York-based company launched a beta in 2018, starting with four pools in the New Jersey area.
“We used Google Earth to find houses, and then knocked on 80 doors with a pool,” CEO Laskin recalls. “We got to 100 pools organically. Word of mouth really helped us grow.” The site was pretty bare bones, he admits, with potential customers only able to view photos of the pools and connect with the pool owner by phone.
That year, Swimply did around 400 reservations and raised $1.2 million from friends and family.
In 2019, Swimply launched what he describes as a “proper” website and app with an automated platform. It grew “four to five times” that year, again mostly organically. In an episode that aired in March 2020, the company appeared on Shark Tank but went home without a deal.
Then the COVID-19 pandemic hit. Swimply, Laskin said, pivoted right into the pandemic.
“We were the perfect solution for people when the world was falling on its head,” he said. The company restructured its offering to ensure that pool owners did not have to interact with guests. “It was the perfect, contact-free, self-serve experience to hang out and be with people you quarantined with.”
The CDC then came out to say that it was safe to swim because chlorine could help kill the virus, and that proved to be a big boon to its business.
“On one end, it was a way for people to have a normal day and on the other, it helped give owners a way to earn an income, at a time when many people were being affected financially,” Laskin told TechCrunch.
Business took off in 2020 with revenue growing 4,000% and now Swimply is announcing a $10 million Series A round. Norwest Venture Partners led the financing, which also included participation from Trust Ventures and a number of angel investors such as Poshmark founder and CEO Manish Chandra; Rob Chesnut, former general counsel and chief ethics officer at Airbnb; Ancestry.com CEO Deborah Liu and Michael Curtis.
Swimply is now operating in a total of 125 U.S. markets, two markets in Canada and five markets in Australia. It plans to use its new capital in part to expand into new markets and toward product development.
Image Credits: Swimply
The way it works is pretty straightforward. Swimply simply connects homeowners that have underutilized backyard spaces and pools with those seeking a way to gather, cool off or exercise, for example. People or families can rent pools by the hour, ranging in price from $15 to $60 per hour (at an average of $45/hour) depending on the amenities. New markets that Swimply has recently expanded to include Portland, Oregon; Raleigh, North Carolina and the California cities of Oakland, San Luis Obispo and Los Gatos.
“The shifting mindset from younger generations about ownership is a huge contributor to increased growth of the Swimply marketplace,” said co-founder Weinberger, who serves as Swimply’s COO. “Swimming is the third most popular activity for adults and number one for children, and yet no other company has tackled the aquatic space to make swimming more affordable and accessible…until now.”
While the company declined to provide hard revenue figures, Laskin said Swimply was seeing “seven digits a month in revenue” and 15,000 to 20,000 reservations a month. Families represent the most popular reservation.
“People can book and pay through our platform, and only 20% of hosts ever meet their guests,” Laskin said. “We’re enabling a new kind of consumer behavior with what we’re doing.”
The company is planning to use its new capital to also rebuild much of its tech infrastructure and boost its customer support team to be more “readily available.”
It is also now offering a complimentary up to $1 million worth of insurance per booking for liability as well as $10,000 for property damage.
Swimply has a little over 20 employees, up 10 times from two people in December of 2020. It plans to double that number over the next few months.
The company’s model has proven quite lucrative for some owners, according to Laskin.
“Last year, there were some owners who earned $10,000 a month. One owner in Denver earned $50,000 last year and he had signed up toward the end of the summer. He should make over $100,000 this year,” Lasken projects.
Its only criteria is that owners offer a clean pool. Eighty-five percent of hosts offer restrooms as well. If they don’t, they are limited to one-hour reservations with a max of five guests. Swimply has also partnered with local pool companies, and if they pay one of its owners a visit and certify that pool, that owner gets a badge on the site “so guests get an additional level of security,” Laskin said.
Ed Yip of Norwest Venture Partners admits that when he first heard of the concept of Swimply, he “didn’t know what to make of it.”
But the more he heard about it, the more excited he got.
“This is the Holy Grail for a consumer investor. We’re not changing consumer behavior, but rather [we] productize the experience and make it safer and easier on both sides,” Yip told TechCrunch.
What also gets the investor excited is the potential for Swimply beyond just swimming pools in the future.
“We’re seeing a ton of demand from hosts wanting to list hot tubs and tennis courts, for example,” Yip said. “So this can turn into a marketplace for shared outdoor resources and that’s a huge market opportunity that adds value on both sides.”
Indeed, the concept of monetizing underutilized space is a growing concept. Earlier this year, we reported on Neighbor, which operates a self-storage marketplace, raising $53 million in a Series B round of funding. Neighbor’s unique model aims to repurpose under-utilized or vacant space — whether it be a person’s basement or the empty floor of an office building — and turn it into storage.
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Fraud prevention platform Sift raises $50M at over $1B valuation, eyes acquisitions
With the increase of digital transacting over the past year, cybercriminals have been having a field day.
In 2020, complaints of suspected internet crime surged by 61%, to 791,790, according to the FBI’s 2020 Internet Crime Report. Those crimes — ranging from personal and corporate data breaches to credit card fraud, phishing and identity theft — cost victims more than $4.2 billion.
For companies like Sift — which aims to predict and prevent fraud online even more quickly than cybercriminals adopt new tactics — that increase in crime also led to an increase in business.
Last year, the San Francisco-based company assessed risk on more than $250 billion in transactions, double from what it did in 2019. The company has over several hundred customers, including Twitter, Airbnb, Twilio, DoorDash, Wayfair and McDonald’s, as well a global data network of 70 billion events per month.
To meet the surge in demand, Sift said today it has raised $50 million in a funding round that values the company at over $1 billion. Insight Partners led the financing, which included participation from Union Square Ventures and Stripes.
While the company would not reveal hard revenue figures, President and CEO Marc Olesen said that business has tripled since he joined the company in June 2018. Sift was founded out of Y Combinator in 2011, and has raised a total of $157 million over its lifetime.
The company’s “Digital Trust & Safety” platform aims to help merchants not only fight all types of internet fraud and abuse, but to also “reduce friction” for legitimate customers. There’s a fine line apparently between looking out for a merchant and upsetting a customer who is legitimately trying to conduct a transaction.
Sift uses machine learning and artificial intelligence to automatically surmise whether an attempted transaction or interaction with a business online is authentic or potentially problematic.
Image Credits: Sift
One of the things the company has discovered is that fraudsters are often not working alone.
“Fraud vectors are no longer siloed. They are highly innovative and often working in concert,” Olesen said. “We’ve uncovered a number of fraud rings.”
Olesen shared a couple of examples of how the company thwarted fraud incidents last year. One recently involved money laundering through donation sites where fraudsters tested stolen debit and credit cards through fake donation sites at guest checkout.
“By making small donations to themselves, they laundered that money and at the same tested the validity of the stolen cards so they could use it on another site with significantly higher purchases,” he said.
In another case, the company uncovered fraudsters using Telegram, a social media site, to make services available, such as food delivery, with stolen credentials.
The data that Sift has accumulated since its inception helps the company “act as the central nervous system for fraud teams.” Sift says that its models become more intelligent with every customer that it integrates.
Insight Partners Managing Director Jeff Lieberman, who is a Sift board member, said his firm initially invested in Sift in 2016 because even at that time, it was clear that online fraud was “rapidly growing.” It was growing not just in dollar amounts, he said, but in the number of methods cybercriminals used to steal from consumers and businesses.
“Sift has a novel approach to fighting fraud that combines massive data sets with machine learning, and it has a track record of proving its value for hundreds of online businesses,” he wrote via email.
When Olesen and the Sift team started the recent process of fundraising, Insight actually approached them before they started talking to outside investors “because both the product and business fundamentals are so strong, and the growth opportunity is massive,” Lieberman added.
“With more businesses heavily investing in online channels, nearly every one of them needs a solution that can intelligently weed out fraud while ensuring a seamless experience for the 99% of transactions or actions that are legitimate,” he wrote.
The company plans to use its new capital primarily to expand its product portfolio and to scale its product, engineering and sales teams.
Sift also recently tapped Eu-Gene Sung — who has worked in financial leadership roles at Integral Ad Science, BSE Global and McCann — to serve as its CFO.
As to whether or not that meant an IPO is in Sift’s future, Olesen said that Sung’s experience of taking companies through a growth phase such as what Sift is experiencing would be valuable. The company is also for the first time looking to potentially do some M&A.
“When we think about expanding our portfolio, it’s really a buy/build partner approach,” Olesen said.
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Outdoor startups see supercharged growth during COVID-19 era
After years of sustained growth, the pandemic supercharged the outdoor recreation industry. Startups that provide services like camper vans, private campsites and trail-finding apps became relevant to millions of new users when COVID-19 shut down indoor recreation, building on an existing boom in outdoor recreation.
Startups like Outdoorsy, AllTrails, Cabana, Hipcamp, Kibbo and Lowergear Outdoors have seen significant growth, but to keep it going, consumers who discovered a fondness for the great outdoors during the pandemic must turn it into a lifelong interest.
Outdoorsy, AllTrails, Cabana, Hipcamp, Kibbo and Lowergear Outdoors have seen significant growth, but to keep it going, consumers who discovered a fondness for the great outdoors during the pandemic must turn it into a lifelong interest.
Social media, increased environmentalism and high urbanization were already fueling a boom in popularity. There was a 72% increase in people who camp more than three times a year between 2014 and 2019, mostly spurred by young millennials, young families with kids and nonwhite participants.
But 2020 was a different animal: After months of shelter-in-place orders, widespread shutdowns and physical distancing, outdoors became the only location for safe socializing. In South Dakota, the Lewis and Clark Recreation Area saw a 59% increase in visitors from 2019 to 2020. In the pandemic year, consumers spent $887 billion on outdoor recreation according to the Outdoor Industry Association, more than pharmaceuticals and fuel combined.
And it’s going to continue to grow. Hiking equipment alone is supposed to reach a $7.4 billion market size by 2027, a 6.3% compound annual growth rate. Camping and caravanning is having an even more drastic moment. Without international travel, vacations shifted from flights to exotic resorts to domestic road trips, self-contained rentals and camping. In 2020, the market for camping and caravanning was almost $40 billion and is predicted to rise 13% to just over $45 billion this year.
After the initial and extreme drop-off in engagement early as national parks closed, private camping sites shut down and domestic travel ceased, many outdoor startups have had a breakout year. Outdoorsy, the peer-to-peer camper van rental marketplace, said it saw 44% of all bookings in the company’s history in 2020.
Campsite booking platform Hipcamp said it sent three times as much money to landowners in 2020 as compared to 2019. And it’s not just experienced outdoor veterans taking advantage of the work-from-home lifestyle: in 2020, Cabana, a camper van rental startup, said 70% of its customers had never rented a camper van or an RV before and another 26% had only done it once.
But a report commissioned by the Outdoor Industry Association showed that the most popular outdoor activities were ones that people could do close to home, not the traveling kind Hipcamp, Cabana and Outdoorsy traffic in. The three most popular outdoor activities for newbies: walking, running and bicycling.
But the pandemic did create a small boost for camping, climbing, backpacking and kayaking; fueled by an increase in women, younger, more ethnically diverse, urban and slightly less wealthy people pushing into the outdoors. This class of outdoor startups will need to engage the new demographic shift to capitalize on the pandemic’s outdoor boom because, according to the report, a quarter of those who started new outdoor activities during the pandemic don’t plan on continuing once it’s over.
Startups are increasing accessibility to the outdoors
But getting into the outdoors can be overwhelming: there’s gear to buy, skills to learn, exploring unfamiliar areas and the added stressor of safety. Outdoor startups are working to lower the barrier to entry to help grow their businesses.
“I think anytime you have like 2,000 articles with two dozen tips on how to use a product, that tells me that it is really, really too hard to use,” said Cabana founder Scott Kubly. “To me, that says there’s nothing but friction in this process. If you want to build something that’s mainstream, you need to make it super consistent and really easy to use.”
Kubly said only half a percent of the U.S. population takes a rental van or RV trip each year. Planning an outdoor adventure can be time-consuming — choosing a location, finding an open campsite, planning meals and water, and figuring out dump stations for trash or septic. That planning is multiplied tenfold if you are going for a road trip or backpacking and need to find new places every other night.
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Roblox raises at $29.5 billion valuation, readies for direct listing
Roblox is now one of the world’s most valuable private companies in the world after a monster Series H raise brings the social gaming platform a stratospheric $29.5 billion valuation. The company won’t be private for long, though.
The $520 million raise led by Altimeter Capital and Dragoneer Investment Group is a significant cash influx for Roblox, which had previously raised just over $335 million from investors according to Crunchbase. The Investment Group of Santa Barbara, Warner Music Group, and a number of current investors, also participated in this round.
In February of 2020, the company closed a $150 million Series G led by Andreessen Horowitz which valued the company at $4 billion.
The gaming startup had initially planned an IPO in 2020, but after the major first-day pops of DoorDash and Airbnb, the company leadership reconsidered their timeline, according to a report in Axios. Those major day-one share price pops left significant money on the table for the companies selling those shares, an outcome Roblox is likely looking to avoid. Today, the company also announced that it plans to enter the public markets via a direct listing.
Roblox’s 7x valuation multiple signals just how feverish public and private markets are for tech stocks. The valuation also highlights how investors foresee the company benefiting from pandemic trends which pushed more users online and toward social gaming platforms. In a 2019 prospectus, the company shared that it had 17.6 million users, now Roblox claims to have 31 million daily active users on its platform.
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