Lyft
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Curri rolls out nationwide delivery service for construction materials industry
A little over a year after its graduation from Y Combinator’s demo day, the on-demand construction materials delivery service Curri is beginning to offer its services in all 50 states.
Co-founded by Matt Lafferty and Brian Gonzalez, Curri aims to solve one of the major hurdles for local construction suppliers who miss out on sales because of an inability to deliver to contractors when they need it.
The company estimates that it saves its customers roughly half the cost of deploying an in-house fleet for delivery.
“They act as a wholesaler doing all the sales, but they’re also acting as a logistics company as well,” said Lafferty. “We provide a solution for them to flex up or down and save money.”
After graduating from Y Combinator in the summer of 2019, the company tested its services in the Southern California region. Now, as construction looks ready to return to a more normal schedule in the aftermath of the COVID-19 epidemic, the company is capitalizing on increased demand to offer its services nationwide.
“Construction has stayed essential through this whole crisis,” said Lafferty. “Depending on how states were handling it there were different levels of what was seen as essential construction. Industry-wide there was what I would call a great pause… [But] since April we’ve grown week-over-week and even more so now when things are really lifting.”
The company charges its customers by mile traveled and operates with a similar business model to Uber or Lyft, says Lafferty. The drivers are all gig workers, but Lafferty says they’re paid a premium to other delivery services because of the urgency of the company’s deliveries. “We have high-dollar items that are going out and they’re typically more urgent,” Lafferty said. “We’re able to pay our driver 25% to 30% better.”
The Los Angeles-based company raised seed funding from Initialized Capital, the firm founded by Garry Tan and Alexis Ohanian (which also employs former TechCrunch staffer, Kim-Mai Cutler… Hi Kim-Mai!)
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Former Tesla president and Lyft COO Jon McNeill on what both companies have gotten right and wrong
We recently interviewed Jon McNeill to learn more about his newest project, a startup studio called DeltaV Ventures. But we also wanted to hear about what it’s like to work inside of Tesla and Lyft.
McNeill spent two-and-a-half years as the carmaker’s president, heading up global sales, marketing, delivery and government relations before heading to Lyft in early 2018, where he served as COO for 18 months. (He left four months after the ride-hail company’s IPO last year.)
He shared his take on his experience at both places, and what, from each, he is using and eschewing at DeltaV. Our conversation has been edited lightly for length and clarity.
TechCrunch: What was it like working with Elon Musk?
Jon McNeill: To me, it was fascinating. He’s the best practitioner of my craft as an entrepreneur. It’s hard to name another entrepreneur who has started four companies, all of which are worth more than $10 billion in market cap [and] several of which are worth more than $50 billion.
We were in hyper-growth mode, and there were no playbooks. Like, literally, when I started, the company had about $2 billion in annual run rate revenue, and three years later, it had $20 billion in annual run rate revenue. And there are no playbooks for that, so we were innovating constantly to either try to get ahead of that growth or just to keep up with it.
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IPOs, crypto funds and other things I missed this week
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
What a week it’s been. I’m exhausted. Not only are we another cycle deeper into the COVID-19 quarantine, but there seems to be more news than ever to sift through. I’ve fallen behind. So, today, this little column is taking look back at things that it missed but wanted to cover. (There may come a day when we run out of stuff to talk about, but it’s not coming any time soon.)
So let’s talk about a16z’s new crypto fund, recent economic data, the Ebang F-1, Lime’s layoffs, Procore’s IPO delay and fresh valuation, stocks, Luckin, and, if we have time, Twitter’s changing jobs data. Let’s get this all out of our heads and into the world.
Odds, ends
To annoy my editors, we’re using bullet points this morning. Bullet points are great way to convey a bloc of information in a neat format. Let the haters hate, we have a lot of ground to cover:
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As Uber and Lyft continue to melt, the 2019 unicorn class loses its shine
You’d be excused for feeling that mid-2019 was in a different decade as far as venture-backed IPOs go.
Last year saw a number of successful flotations of venture-backed technology and technology-enabled companies, and most performed well after they began trading. But despite some early success, a number of the most famous 2019 IPOs have seen their valuations decline rapidly in ensuing quarters.
In some cases, once richly valued public unicorns are off more than twice the market’s recent declines, have given up all their gains earned as public companies, or fallen under their final private market valuations. It’s a stunning reversal for several of the most-lauded companies to come out of the venture capital machine in a decade.
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Uber and Lyft plunge, erasing recent gains after promising profits
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
A few weeks ago, Uber and Lyft, kicking bags of the 2019 stock market and regularly cited as examples of venture-backed excess, were back to fighting form.
After encouraging Q3 2019 reports from both ride-hailing giants that included fresh profitability promises and timelines, Uber upped the ante by moving its profitability goal up when it reported Q4 results earlier this year. Shares of the famous company rallied. When Lyft failed to mimic the declaration in its own Q4 earnings report, it was dinged by investors. But from the time of their Q3 2019 earnings reports to recently, Uber and Lyft were coming back up for air.
Suddenly, it was perfectly reasonable to be optimistic about the two ride-hailing companies that had become more famous for their sticky losses than their growth potential; as the pair had matured from upstart to public company, their money-losing methods appeared increasingly permanent, making the Q3 2019 and Q4 2019 profit declarations investor balm.
But after the rally came the novel coronavirus and COVID-19. Since then, the two companies have lost huge amounts of ground. Their shares fell 9.8% (Uber) and 11.8% (Lyft) yesterday alone. In pre-market trading this morning, they are down even more. I wanted to get my head around what could be causing this, so let’s run through each company’s most recent profit forecasts, results, share price gains and losses, and what investors are telling the world through their recent selloff. (Hint: DoorDash’s IPO probably isn’t happening soon.)
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Facebook Messenger ditches Discover, demotes chat bots
Chat bots were central to Facebook Messenger’s strategy three years ago. Now they’re being hidden from view in the app along with games and businesses. Facebook Messenger is now removing the Discover tab as it focuses on speed and simplicity instead of broad utility like China’s WeChat.
The changes are part of a larger Messenger redesign that reorients the People tab around Stories as Facebook continues to try to dominate the ephemeral social media format it copied from Snapchat. The People tab now defaults to a full-screen sub-tab of friends’ Stories, and requires a tap over to the Active sub tab to see which friends are online now.
The changes could push users to spend more time visually communicating with friends and consuming content than exploring chat bots for shopping, connecting with businesses and playing games. That in turn could help Facebook earn more money from Messenger as it’s now showing Stories ads.
TechCrunch was tipped off to the redesign by social media director Jeff Higgins, who provided us with extensive screenshots of the update. These show the absence of Discover tab, the switch to just Chat and People tabs and the People sub-tabs for Stories and Active. We poked around some more and noticed the Instant Games and Transportation options missing from the chat composer’s utility tray. That formerly offered quick Uber and Lyft hailing. Messenger’s M Suggestions also no longer recommend the Transportation feature.
When we asked Messenger about the changes, a spokesperson confirmed that this redesign will soon start rolling out, removing Discover and splitting the People tab. Some users already have the update, and more will likely get it this week. They noted that Facebook had announced last August that it planned to eventually axe Discover, and that the added emphasis on Stories was motivated by users’ affinity for the ephemeral social media format. They also told us that Transportation was removed in late 2017, and Instant Games’ removal from the composer is part of the migration to Facebook Gaming announced last July.
A look at the old Messenger Discover tab that’s being removed
Chat bots, businesses and games are being hidden, but not completely banished from Messenger. They’ll still be accessible if users purposefully seek them through the Messenger search bar, Pages and ads on Facebook, buttons to start conversations on businesses’ websites, and m.me URL that create QR codes which open to business accounts in Messenger. The spokesperson diplomatically claimed that businesses are still an important part of Messenger.
But without promotion via Discover, businesses will have to rely on their owned or paid marketing channels to gain traction for their chat bots. That could discourage them from building on the Messenger platform.
The rise and fall of Facebook chat bots
The update feels like the end of a four-year era for Facebook. Back in 2016, it saw artificially intelligent chat bots as a way for businesses to scalably communicate with people, deliver customer service and push e-commerce. But when it launched the chat bot platform at its F8 conference that year, it arrived half-baked.
The typing-based semantic user interfaces were confusing, the AI necessary to make chat bots seem human (or at least reliably understand their human conversation partners hadn’t evolved yet) and several of the launch partner bots like Poncho The Weather Cat were laughably useless. The public soured on the idea of chat bots, and attempts to improve them felt insufficient.
Messenger launched Discover in 2017 in hopes that free promotion and visibility might convince developers to invest in building better chatbots. Yet by early 2018, even Facebook was backpedaling, shelving its plan to build out a full-service AI personal assistant called M that you could ask to do anything. Instead, it’d merely make AI suggestions of different Messenger features to use, like Stickers or reminders based on what you typed. Then it announced last year that it would move Instant Games out of Messenger and into Facebook’s dedicated Gaming tab.
There is still an opportunity to use chat bots for gathering initial info from people with sales or customer service inquiries. Everyone hates dealing with this stuff over the phone, waiting on hold and wading through touch-tone menus. Using asynchronous messaging makes communicating with businesses much more convenient. I’d bet Facebook will still be pushing this as an enterprise use case for Messenger. But this still usually requires a human in the loop at some point, and these are better structured as reactive utilities users search for than as experience proactively promoted by a Discover tab.
A laughably bad interaction with old Messenger chat bot Poncho The Weather Cat
Now with Discover disappearing, Messenger seems to be surrendering the fight to become a WeChat-style monolithic utility. In China, WeCat serves not just as a messaging app but as a way to make payments, hail a taxi, book flights, top up your mobile data, get a loan, find housing or shop at businesses via mini programs.
But while that centralized all-in-one style fit Chinese culture, Western markets have experienced more of an unbundling with different apps emerging to handle each of these use cases. Facebook’s constant privacy scandals and increasing anti-trust scrutiny also inhibited this approach with Messenger. Users and the U.S. government weren’t ready to trust Facebook to handle so much of our daily lives. Facebook Messenger also has to jockey with competition like iMessage and Snapchat that could undercut it if it gets too bloated.
So now Messenger is going in the opposite direction. It’s becoming more WhatsApp-like — simple, speedy and centered around peer-to-peer communication. Visual communication through Stories, with replies to them delivered as messages, feels like a natural extension of this focus while conveniently offering a path to monetization. If Messenger can be the best-in-class place to chat, unencumbered by promotion of chat bots and businesses, users might stay locked into the Facebook ecosystem.
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Profitability expectations ding Lyft despite better-than-expected growth
Hello and welcome back to our regular look at private companies, public markets and the gray space in between.
This afternoon we’re digging into Lyft’s earnings results, unpacking the company’s performance, the market’s expectations and why shares in the American ride-hailing giant are off in after-hours trading.
Lyft’s earnings — following Uber’s own results that promised investors a quicker-than-anticipated path to (adjusted) profits — and the market’s reaction to its performance, provide a good frame for evaluating investors’ appetite for profits against growth. It’s a topic that’s important for startup founders and private-market investors alike.
Our investigation today is contentedly straightforward. We’ll start with the big numbers, drill into comparative performance and then weigh what the market is telling us.
Lyft’s key Q4 2019 results
In the fourth quarter of 2019, Lyft’s revenue came in at $1.017 billion, a gain of 52% compared to its year-ago result of $669.5 million. Sticking to the growth side of things, the company’s “active rider” count rose from 18.59 million to 22.91 million from Q4 2018 to Q4 2019, a gain of 23%. Lyft’s active riders also spent 23% more year-over-year, reaching $44.40 in the final quarter of last year.
Turning to losses, Lyft’s net loss (a metric that includes all costs) was $356.0 million in the quarter, a sharply worse result than its $248.9 million net loss in Q4 2018. The company’s adjusted net loss, however, was $121.4 million, an improvement from its year-ago $238.5 million adjusted net loss.
Turning to adjusted EBITDA, a heavily adjusted profit metric, Lyft lost $130.7 million in Q4 2019, an improvement on its Q4 2018 adjusted EBITDA loss of $251.1 million.
Investors had expected Lyft to report just $985.8 million in revenue and an adjusted EBITDA loss of $163.2 million. The street had also anticipated 100,000 fewer active riders and slightly slimmer revenue per active rider. So, Lyft beat expectations regarding growth, user count and health and for adjusted losses.
And yet Lyft’s shares are off over 4% in after-hours trading. While Lyft’s stock has recovered from lows set in October, 2019, the company’s equity is now more than $20 down from its IPO price, taking into account its post-earnings movement.
Why Lyft’s stock should fall after beating expectations and not changing its profit forecast might appear a bit confusing. It’s not.
Damn you, Uber
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Rappi and Oyo pare staff as Vision Fund companies trim costs, target profits
This week we’ve covered layoffs at unicorns both inside the Vision Fund and out. This afternoon we add two more to our list: Oyo and Rappi.
The staff reductions are surprising — and not. They are surprising, as Oyo (India-based, low-cost hotels) and Rappi (Latin America-focused e-commerce) were bright lights in the Vision Fund’s crown. And the layoffs are not surprising as other famous unicorns have recently cut staff in a bid to reduce costs, diminish losses and aim closer to profitability.
Our net lack of shock is underscored by the Vision Fund itself, which signaled late last year that it wants portfolio companies to get profitable and get public. The cuts are therefore a little more than unsurprising; we should have anticipated them.
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How gig economy giants are trying to keep workers classified as independent contractors
Now that 2020 has started, Uber, DoorDash and Lyft are taking additional steps to undermine a new California law that would help more gig workers qualify as full-time employees. These moves entail product changes, lawsuits and ramped-up efforts to get a ballot initiative in front of voters that would roll back the new legislation.
Let’s start with the most recent development; yesterday, Uber sent a note to users announcing that it’s getting rid of upfront pricing in favor of estimated prices, unless they’re Uber Pool rides.
“Due to a new state law, we are making some changes to help ensure that Uber remains a dependable source of flexible work for California drivers,” Uber wrote in an email to customers. “These changes may take some getting used to, but our goal is to keep Uber available to as many qualified drivers as possible, without restricting the number of drivers who can work at a given time.”
Uber says it also has to discontinue rewards benefits like price protection on a route and flexible cancellations for trips in California. For drivers, that means they won’t see estimated earnings and drivers in surge arteas will no longer see fixed dollar amounts.
“AB5 threatens to restrict or eliminate opportunities for independent workers across a wide spectrum of industries, including trucking, freelance journalism and ridesharing,” an Uber spokesperson told TechCrunch. “As a result of AB5, we’ve made a number of product changes to preserve flexible work for tens of thousands of California drivers. At the same time, we’ve put forward a progressive package of new protections for drivers, including guaranteed minimum earnings and benefits, so voters can choose to truly improve flexible work in November.”
While Uber is essentially saying this is something the company must do, it’s worth noting that this is not some requirement of the new law; this is Uber’s attempt to beef up its case that it’s legally allowed to classify drivers as independent contractors. Since much of the rationale for determining whether or not a worker is an employee comes down to control, removing upfront fares and ditching penalties for rejecting fares could help Uber make a case that its drivers are operating on their own accord.
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6 VCs explain why seed investors now favor enterprise startups
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Today we’re digging into seed-stage companies, the vanguard of the venture market. In particular, we’re trying to understand why the ratio of seed deals now favor enterprise startups over their consumer-focused brethren. The fact that seed investors recently inverted their preferences, cutting more checks to enterprise (B2B) startups in 2019 than consumer-oriented companies (B2C) was news.
We wrote about the trend here, as regular readers will recall.
To better understand what’s going on, I spoke with a number of early-stage venture investors who recently dropped by Equity, came highly recommended by peers, and several I know personally. The goal was to get a handful of inputs from different firms to get under the skin of the trend.
What in the hell is going on in seed? Let’s find out.
Why are enterprise seed deals on top?
This morning we’ll hear from Jenny Lefcourt at Freestyle Capital, Jomayra Herrera of Cowboy Ventures, Hunter Walk from Homebrew, Iris Choi of Floodgate, Sarah Guo from Greylock and Ajay Agarwal of Bain Capital Ventures. As you can see, we picked a list of investors form firms of different sizes, theses and focus. However, each investing group either focuses on early-stage investments that include seed deals or dabbles in them.
Here’s what we want to know: why did the the majority of seed deals swap from consumer-focused startups to enterprise-focused deals?
Our investing group detailed a number of explanations, a handful of which echoed each other. To best convey their thinking, we’ll quote each investor at moderate length. If you are in a hurry, the most common point made against consumer-focused seed deals is go-to-market difficulty in the current market.
Other reasons include price, secular changes to the technology landscape, and the changing experience profile of the investing class themselves. (Minor edits made to select responses for clarity.)
Freestyle’s Jenny Lefcourt said via email that consumers are an increasingly difficult cohort to sell to, because they “became fickle with the proliferation of VC-backed, consumer-focused startups over the past few years.” As a result, consumers became “harder and more expensive to acquire and even harder to retain,” meaning higher customer acquisition costs (CAC) and lower lifetime value (LTV).
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