Y Combinator
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YC-backed Tango Builder wants to use aerospace engineering to build a house
Housing has been constructed for millennia, and while clearly our modern abodes are ever so slightly better than the elk tents we used to live in, the construction techniques behind housing today haven’t progressed all that much. What has progressed are prices — it’s more expensive than ever to build a modern unit, and that’s just for housing — head over to commercial real estate and the numbers don’t look much better.
For Martin Diz and his team, that’s a problem. Diz is not exactly a lifelong builder — in fact, he was building proverbial rockets as an aerospace engineering PhD researcher several years ago. As he was talking to his roommate back then, who was studying structural engineering, he realized that some of the techniques that his roommate’s field was trying to pioneer had already been discovered by the aerospace folks decades ago.
His roommate was trying to simulate an earthquake to model how the tremors would affect objects like a table inside a building. As Diz recalled, he said “Hey dude, did you know that in aerospace engineering, we did the same thing for the space station 50 years ago? … I learned this in grad school, you know, in our basic course because it’s a very old technique.”
Diz is legitimately a nice chap, and totally not the kind of aerospace engineer who goes around talking about how aerospace solved everything a century ago (okay, maybe just a tad of that). But the interaction and followup conversation got him thinking about what aerospace as a field had solved, and whether some of those techniques could be used in other domains.
Diz and his roommate kept talking over the years, and eventually, the two formed Tango Builder. Tango’s main premise is to bring more sophisticated engineering techniques to construction, improving performance and quality while lowering costs. It’s part of the current YC batch, and previously raised a small seed round, which included participation from Tracy Young, co-founder and CEO of PlanGrid.
The two, plus one employee, have already worked on a handful of projects, with some early promising results. Tango helped to design a hospital for COVID-19 patients in Ecuador that saw total savings of $1 million by lowering structural costs by a third. They consulted on the creation of a justice center in Mexico, and were able to reduce the required steel in the project by 40%. And they used their platform to optimize wall thickness in a masonry home to bring total cost down by 15%. All numbers are reported by the company and have not been independently verified.
A look at Tango’s masonry home project. Photo from Tango Builder.
A look at Tango’s masonry home project. Photo from Tango Builder.
There is a heavy focus on structural integrity (as there should be in construction), but Tango particularly shines around seismic modeling. While earthquakes are perhaps most pronounced in places like California and Mexico, both of which suffered major tremors this past week, earthquakes are a lingering threat throughout the world, and buildings need to be designed to handle them even if they are rare.
Diz and his team want to give designers better tools to model what happens in different scenarios while understanding the trade-offs of various building materials and designs. “You’re building with steel stock, but it’s much more expensive now, so it’s up to the user or the owner to decide which of the paths he wants to take,” he said. Safety is always important, but how much steel do you place in a building that might see an earthquake once a century? That’s what Tango wants to help answer.
Beyond improving structural modeling, Tango’s big ambition is to find additional efficiencies in the construction process by helping everyone involved with construction work together through a better workflow. “Each person has benefits from the platform, the architect will get the approvals … faster, the engineer can focus on the creative side of things, the contractor” can bid earlier knowing what design is coming, Diz explained. Saving time in all these processes ultimately translates directly to a project’s bottom line.
It’s very early days of course, with just Diz, his co-founder Juan Aleman, and one employee “working extremely hard.” The hope though is that melding some aerospace engineering techniques with a much more robust and technical platform will help push construction to better quality while saving costs as well. After all, aerospace did all this a century ago.
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Karat launches a credit card for online creators
Karat is a new startup promising to build better banking products for the creators who make a living on YouTube, Instagram, Twitch and other online platforms. Today it’s unveiling its first product — the Karat Black Card.
The startup, which was part of accelerator Y Combinator’s Winter 2020 batch, is also announcing that it has raised $4.6 million in seed funding from Twitch co-founder Kevin Lin, SignalFire, YC, CRV and Coatue.
Co-founder and co-CEO Eric Wei knows the creator world well, thanks to his time as product manager for Instagram Live. (His co-founder Will Kim was previously an investor with seed fund Lucky Capital.) Wei told me that although many creators have significant incomes, banks rarely understand their business or offer them good terms when they need capital.
“Traditional banks care a lot about FICO [credit scores],” he said. “A lot of YouTubers, when they’re blowing up, they don’t have time to think: Let me make sure my FICO is awesome as well.”
At the same time, he argued that creators have become suspicious of potentially scammy financial offers, to the point that if you were to attend a pre-COVID VidCon and tried to give out $3,000, “The good creators will not take it, even if you tell them there are no strings behind it.”
Karat co-founders Will Kim and Eric Wei
With the Karat Black Card, the startup is giving creators a credit card that they can use for their business-related expenses. When creators are approved, they receive a $250 bonus that can be applied to any future purchases of electronics or equipment. The card also comes with custom designs, 2% to 5% cash back on purchases and it even offers advances on sponsorship payments.
Underlying it, Wei said Karat has developed an underwriting model that works for creators. Instead of looking at credit scores, Karat focuses on the size of a creator’s following, their current revenue and whether or not they’re “business savvy.”
“It’s not just the number of followers you have, but what platforms,” Wei added. “I would rather have 100,000 subscribers on YouTube than 1 million on TikTok, because on TikTok, it’s all algorithmically driven.”
Karat has already provided the card to an initial group of creators, including TheRussianBadger, TierZoo and Nas Daily. Wei said the model is working so far, with no defaults.
For now, the card is aimed at professional, full-time creators who have at least 100,000 followers. Wei estimated that that’s a potential customer base of 1 million creators. Eventually, he wants to provide those creators with more than a black card.
“We’re building a vertical financial and biz ops experience,” he said. “People in earlier stages, we do want to get to them eventually, but only after we feel like we’ve developed enough of an underwriting model.”
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Atmos wants to make building a house a one-click effort
Homebuilding is not for the faint of heart, particularly those who want to build something custom. Selecting the right architect and designer, the myriad contractors, the complexity of building codes and siting, the regulatory approvals from local authorities. It’s a full-time job — and you don’t even have a roof built over your head.
Atmos wants to massively simplify homebuilding, and in the process, democratize customization to more and more homeowners.
The startup, which is in the current Y Combinator batch, wants to take both the big decisions and the sundries of construction and combine them onto one platform where selecting a design and moving forward is as simple as clicking through a Shopify shopping cart.
It’s a vision that has already piqued the attention of investors. The company disclosed that it has already raised $2 million, according to CEO and co-founder Nick Donahue, from Sam Altman, former YC president and now head of OpenAI, and Adam Nash, former president and CEO of Wealthfront, along with a bunch of other angels.
It’s also a vision that is a radical turn from where Atmos was before, which was centered in virtual reality.
Donahue comes from a line of homebuilders — his father built home subdivisions as a profession — but his interests initially turned toward the virtual. He dropped out of college after realizing process engineering wasn’t all that exciting (who can blame him?) and headed out to the Valley, where he built projects like “a Burning Man art installation and [an] open-source VR headset.” That headset attracted the attention of angels, who funded its development.
The concept at the heart of the headset was around what the team dubbed the “spatial web.” Donahue explained that the idea was that “the concept of the web would one day flow from the 2D into the 3D and that physical spaces would function more like websites.” The headset he was developing would act as a sort of “browser” to navigate these spaces.
Of course, the limitations around VR hit his company as much as the rest of the industry, including limits on computation performance to build these 3D environments and the lack of scaling in the sector so far.
The thinking around changing physical spaces though got Donahue pondering about what the future of the home would look like. “We think the next kind of wave of this is going to be an introduction to compute,” he said, arguing that “every home will have like a brain to it.” Homes will be digital, controllable and customizable, and that will revolutionize the definition of the home that has remained stagnant for generations.
The big vision for Atmos going forward then is to capture that trend, but for today at least, the company is focused on making housing customization easier.
To use the platform, a user inputs the location for a new home and a floor plan for the site, and Atmos will find builders that best match the plan and coordinate the rest of the tasks to get the home built. It’s targeting homes in the $400,000-$800,000 range, and its focus cities are Raleigh-Durham, Charlotte, Atlanta, Denver and Austin.
It’s very much early stages for the company — Donahue says that the company has its first few projects underway in the Raleigh-Durham area and is working to partner and scale up with larger homebuilders.
Image Credits: KentWeakley / Getty Images
Will it work? That’s the big question with anything that touches construction. Customization is great — everyone loves to have their own pad — but the traditional challenge for construction is that the only way to bring down the cost of housing is to make it as uniform as possible. That’s why you get “cookie-cutter” subdivisions and rows of identical apartment buildings. The sameness allows a builder to find scale. Work crews can move from one lot to the next in synchronicity saving labor costs and time while building materials can be bought in bulk to save costs.
With better technology and some controls, Atmos might be able to find synergies between its customers, particularly if it gets market penetration in individual cities. Yet, I find the longer-term vision ultimately more compelling for the company. Redefining the home may not have made much sense three months ago, but as more people work from home and connect with virtual worlds, how should our homes be redesigned to accommodate these activities? If Atmos can find an answer, it is sitting on a gold mine.
Atmos team pic (minus two). Image Credits: Atmos
In addition to Altman and Nash, Mark Goldberg, JLL Spark, Shrug Capital, Daniel Gross’ Pioneer, Venture Hacks, Yuri Sagalov, Brian Norgard and others participated in the company’s angel/seed round.
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TaxProper raises $2M to automate getting your property taxes lowered
If you own your home, how much do you pay for property taxes? Too much? Sounds about right.
If you disagree with how much you’re paying in property taxes, you can appeal the assessment. Most people don’t, though — perhaps because they are unaware they can, or because they just don’t have the time to deal with the lawyers and paperwork.
TaxProper, a company out of Y Combinator’s Summer 2019 batch, has raised $2 million to simplify the process. The round was led by Khosla Ventures, backed by Global Founders Capital, Clocktower Ventures and a handful of angel investors.
Once you’ve punched in your address, TaxProper’s algorithm looks at the assessments of similar homes in your surrounding area, looking at things like size, number of rooms, construction materials, etc.
If the algorithm determines that you’re paying more than your share, they generate the required paperwork and send it off to the county. The company estimates that their part of the process takes 3-5 minutes (after which you’re waiting on the county’s response, which they say takes 6-8 weeks).
They’re offering up two different pricing models, charging either a $149 up-front fee or 30% of total first-year tax savings. If their algorithm says your taxes can’t be lowered, you don’t pay — nor do you pay if the appeal gets denied. The company tells me they’re currently seeing an average per customer savings of around $700.
TaxProper’s two co-founders have a good bit of experience in the space of taxes and government. Geoff Segal was previously an actuarial statistician and research analyst for State Farm, while Thomas Dowling was a municipal finance advisor for Chicago Mayor Lori Lightfoot.
One thing to note: TaxProper is only up and running in select areas right now, as the company tests different strategies and makes sure they’re doing everything right region-by-region. It’s currently available in Chicago and the surrounding Cook County area, with plans to roll out “in the coming months” in New York and Texas.
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GO1, an enterprise learning platform, picks up $40M from Microsoft, Salesforce and more
With a large proportion of knowledge workers doing now doing their jobs from home, the need for tools to help them feel connected to their profession can be as important as tools to, more practically, keep them connected. Today, a company that helps do precisely that is announcing a growth round of funding after seeing engagement on its platform triple in the last month.
GO1.com, an online learning platform focused specifically on professional training courses (both those to enhance a worker’s skills as well as those needed for company compliance training), is today announcing that it has raised $40 million in funding, a Series C that it plans to use to continue expanding its business. The startup was founded in Brisbane, Australia and now has operations also based out of San Francisco — it was part of a Y Combinator cohort back in 2015 — and more specifically, it wants to continue growth in North America, and to continue expanding its partner network.
GO1 not disclosing its valuation but we are asking. It’s worth pointing out that not only has it seen engagement triple in the last month as companies turn to online learning to keep users connected to their professional lives even as they work among children and house pets, noisy neighbours, dirty laundry, sourdough starters, and the rest (and that’s before you count the harrowing health news we are hit with on a regular basis). But even beyond that, longer term GO1 has shown some strong signs that speak of its traction.
It counts the likes of the University of Oxford, Suzuki, Asahi and Thrifty among its 3,000+ customers, with more than 1.5 million users overall able to access over 170,000 courses and other resources provided by some 100 vetted content partners. Overall usage has grown five-fold over the last 12 months. (GO1 works both with in-house learning management systems or provides its own.)
“GO1’s growth over the last couple of months has been unprecedented and the use of online tools for training is now undergoing a structural shift,” said Andrew Barnes, CEO of GO1, in a statement. “It is gratifying to fill an important void right now as workers embrace online solutions. We are inspired about the future that we are building as we expand our platform with new mediums that reach millions of people every day with the content they need.”
The funding is coming from a very strong list of backers: it’s being co-led by Madrona Venture Group and SEEK — the online recruitment and course directory company that has backed a number of edtech startups, including FutureLearn and Coursera — with participation also from Microsoft’s venture arm M12; new backer Salesforce Ventures, the investing arm of the CRM giant; and another previous backer, Our Innovation Fund.
Microsoft is a strategic backer: GO1 integrated with Teams, so now users can access GO1 content directly via Microsoft’s enterprise-facing video and messaging platform.
“GO1 has been critical for business continuity as organizations navigate the remote realities of COVID-19,” said Nagraj Kashyap, Microsoft Corporate Vice President and Global Head of M12, in a statement. “The GO1 integration with Microsoft Teams offers a seamless learning experience at a time when 75 million people are using the application daily. We’re proud to invest in a solution helping keep employees learning and businesses growing through this time.”
Similarly, Salesforce is also coming in as a strategic, integrating this into its own online personal development products and initiatives.
“We are excited about partnering with GO1 as it looks to scale its online content hub globally. While the majority of corporate learning is done in person today, we believe the new digital imperative will see an acceleration in the shift to online learning tools. We believe GO1 fits well into the Trailhead ecosystem and our vision of creating the life-long learner journey,” said Rob Keith, Head of Australia, Salesforce Ventures, in a statement.
Working remotely has raised a whole new set of challenges for organizations, especially those whose employees typically have never before worked for days, weeks and months outside of the office.
Some of these have been challenges of a more basic IT nature: getting secure access to systems on the right kinds of machines and making sure people can communicate in the ways that they need to to get work done.
But others are more nuanced and long-term but actually just as important, such as making sure people remain in a healthy state of mind about work. Education is one way of getting them on the right track: professional development is not only useful for the person to do her or his job better, but it’s a way to motivate people, to focus their minds, and take a rest from their routines, but in a way that still remains relevant to work.
GO1 is absolutely not the only company pursuing this opportunity. Others include Udemy and Coursera, which have both come to enterprise after initially focusing more on traditional education plays. And LinkedIn Learning (which used to be known as Lynda, before LinkedIn acquired it and shifted the branding) was a trailblazer in this space.
For these, enterprise training sits in a different strategic place to GO1, which started out with compliance training and onboarding of employees before gravitating into a much wider set of topics that range from photography and design, through to Java, accounting, and even yoga and mindfulness training and everything in between.
It’s perhaps the directional approach, alongside its success, that have set GO1 apart from the competition and that has attracted the investment, which seems to have come ahead even of the current boost in usage.
“We met GO1 many months before COVID-19 was on the tip of everyone’s tongue and were impressed then with the growth of the platform and the ability of the team to expand their corporate training offering significantly in North America and Europe,” commented S. Somasegar, managing director, Madrona Venture Group, in a statement. “The global pandemic has only increased the need to both provide training and retraining – and also to do it remotely. GO1 is an important link in the chain of recovery.” As part of the funding Somasegar will join the GO1 board of directors.
Notably, GO1 is currently making all COVID-19 related learning resources available for free “to help teams continue to perform and feel supported during this time of disruption and change,” the company said.
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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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Kustomer acquires Reply.ai to enhance chatbots on its CRM platform
Last December, when CRM startup Kustomer was announcing its latest round of funding — a $60 million round led by Coatue — its co-founder and CEO Brad Birnbaum said it would use some of the money to build more RPA-style automations into its platform to expand KustomerIQ, its AI-based product that helps understand and respond to customer enquiries to take some of the more repetitive load off of agents. Today, Kustomer is announcing some M&A that will help in that strategy: it is acquiring Reply.ai, a startup originally founded in Madrid that has built a code-free platform for companies to create customised chatbots to handle customer service enquires that use machine learning to, over time, become better at responding to those inbound contacts.
Kustomer, which has raised more than $170 million and is now valued at $710 million (per PitchBook), said it is not disclosing the financial terms of the deal.
Reply .ai — whose customers include Coca-Cola, Starbucks, Samsung, and a number of retailers and major ad and marketing agencies working on behalf of clients — had by comparison raised a modest $4 million in funding (with the last round back in 2018). Its list of investors included strategic backers like Aflac and Westfield (the shopping mall giant), as well as Seedcamp, Madrid’s JME Ventures, and Y Combinator, where Reply.ai was a part of its Startup School cohort in 2017.
Birnbaum said that the conversation for acquiring Reply.ai started before the global health pandemic — the two already worked together, as part of Reply.ai’s integrations with a number of CRM platforms. But active discussions, due diligence, and the closing of the deal were all done over Zoom. “We were fortunate that we got to meet before corona, but for the most part we did this remotely,” he said.
Reply.ai was founded back in 2016 — the year when chatbots suddenly became all the rage — and it managed to make it through that and then the subsequent trough of disillusionment, when a lot of the early novelty wore off after they were discovered to be not quite as effective as many had hoped or assumed they would be. One of the reasons for Reply.ai’s survival was that it had proven to be a builder of effective applications in one of the only segments of the market to become a willing customer and user of chatbots: customer service.
While a large part of the CRM industry — estimated to be worth some $40 billion in 2019 — is still based around human interactions, there has been a growing push to leverage advances in AI, cloud services, and use of the internet as a point of interaction to bring more automation into the process, both to help those who are agents deal with more tricky issues, and to help bring overall costs down for those who rely on customer support as part of their service proposition.
That trend, if anything, is only getting a boost right now. In some cases, agents are unable to work because of social distancing rules in cases where customer queries cannot be handled by remote workers. In others, companies are seeing a lot of financial pressure and are looking to reduce expenses. But at the same time, with more people at home and unable to make physical queries at stores, the whole medium of customer support is seeing new levels of usage.
Kustomer has been taking on the bigger names in CRM, including Salesforce (where Birnbaum and his cofounder Jeremy Suriel previously worked), Zendesk and Oracle, by providing a platform that makes it easier for human agents to handle inbound “omnichannel” customer requests — another big trend, leveraging the rise of multiple messaging and communications platforms as potential routes to both speaking to customers and seeing them complain for all the world to see. So moving deeper into chatbots and other AI-powered tools is a natural progression.
Birnbaum said that one of its key interests with Reply.ai was its focus on “deflection” — the term for using non-human tools and services to help resolve inbound requests before needing to call in a human agent. Reply.ai’s tools have been shown to help deflect 40% of initial inbound queries, he noted.
“Some companies have been dealing with a significant increase in inbound volume, and it’s been hard to scale their teams of agents, especially when they are remote,” he said. “So those companies are looking for ways to respond more rapidly. So anything they can do to help with that deflection and let their agents be more productive to drive higher levels of satisfaction, anything that can enable self-service, is what this is about.”
Other tools in the Reply toolkit, in addition to its chatbot-building platform and deflection capabilities, include agent-assistant tools for suggesting relevant answers, as well as suggestions for tagging (for analytics) and re-routing.
“We are excited for Reply to join Kustomer and share its mission to make customer service more efficient, effective and personalized,” said Omar Pera, one of Reply.ai’s founders, in a statement. “As a long-time partner of Kustomer, we are able to seamlessly integrate our deflection and chatbots technologies into Kustomer’s platform and help brands more cost-effectively increase efficiency. We look forward to working with Brad and the entire team.”
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FeaturePeek moves beyond Y Combinator with $1.8M seed
FeaturePeek’s founders graduated from Y Combinator in Summer 2019, which for an early-stage startup must seem like a million years ago right now. Despite the current conditions though, the company announced a $1.8 million seed investment today.
The round was led by Matrix Partners with some unnamed angel investors also participating.
The startup has built a solution to allow teams to review front-end designs throughout the development process instead of waiting until the end when the project has been moved to staging, co-founder Eric Silverman explained.
“FeaturePeek is designed to give front-end capabilities that enable developers to get feedback from all their different stakeholders at every stage in the development process and really fill in the missing gaps of the review cycle,” he said.
He added, “Right now, there’s no dedicated place to give feedback on that new work until it hits their staging environment, and so we’ll spin up ad hoc deployment previews, either on commit or on pull requests and those fully running environments can be shared with the team. On top of that, we have our overlay where you can file bugs, you can annotate screenshots, record video or leave comments.”
Since last summer, the company has remained lean with three full-time employees, but it has continued to build out the product. In addition to the funding, the company also announced a free command line version of the product for single developers in addition to the teams product it has been building since the Y Combinator days.
Ilya Sukhar, partner at Matrix Partners, says as a former engineer, he had experienced this kind of problem firsthand, and he knew that there was a lack of tooling to help. That’s what attracted him to FeaturePeek.
“I think FeaturePeek is kind of a company that’s trying to change that and try to bring all of these folks together in an environment where they can review running code in a way that really wasn’t possible before, and I certainly have been frustrated on both ends of this where as an engineer, you’re kind of like, ‘okay, I wrote it, are you ever going to look at it?’ ” he said.
Sukhar recognizes these are trying times to launch a startup, and nobody really knows how things are going to play out, but he encourages these companies not to get too caught up in the macro view at this stage.
Silverman knows that he needs to adapt his go to market strategy for the times, and he says the founders are making a concerted effort to listen to users and find ways to improve the product while finding ways to communicate with the target audience.
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UpKeep raises $36 million Series B to help facilities and maintenance teams go mobile
UpKeep, a mobile-first platform for maintenance and operations collaboration, has today announced the close of a $36 million Series B financing round. The round was led by Insight Partners, with participation from existing investors Emergence Capital, Battery Ventures, Y Combinator, Mucker Capital and Fundersclub.
UpKeep was founded by Ryan Chan. Chan worked at Trisep Corporation, a chemical manufacturing company, before founding UpKeep and saw first-hand how plant maintenance was handled. Despite the fact that the plant had purchased software for facilities maintenance and operations, most of the data was written down on pen and paper before being input into the system because that software was desktop only.
The idea for UpKeep was born.
UpKeep meets maintenance workers where they are, which could be just about anywhere.
With any maintenance job, from changing a lightbulb in an office building to repairing a complicated piece of machinery on the floor of a manufacturing plant, there are usually three parties involved: the requester, the facilities manager, and the technician.
Before UpKeep, the requester would either send an email to the facilities manager or perhaps use some other software to let them know of the problem. The facilities manager would prioritize the various requests of the day and send out technicians to resolve them.
Technicians have to log plenty of information when they’re out on the job, but this usually involved writing this info down on paper and then returning to a desk to input the data into the system.
With UpKeep, the requester can use the app itself to notify the facilities manager of problems, or send an email that flows directly into the UpKeep system. Facilities managers use UpKeep to prioritize and assign issues to their team of technicians, who then receive the work orders right on UpKeep.
Instead of logging information on paper, these technicians can take pictures of the problem and note the parts they need or other details of the job right in the app. No duplication of effort.
UpKeep operates on a freemium model, allowing technicians to manage their own work for free. Collaborative use of the product across an organization costs on a per user on both an annual or monthly basis. The company offers various tiers, from a Starter Plan ($35/month/user) to an Enterprise Plan ($180/month/user).
Higher tier plans offer more in-depth reporting and analysis around the work that gets done. Chan explained that these reports are not necessarily about tracking people, though.
“Yes, we track technicians and it’s a tool to manage work done by people,” said Chan. “But a manufacturing facility really cares much more about the equipment. They can use UpKeep to manage things like how many hours of downtime a piece of equipment has, etc. It’s more targeted toward the actual asset and the equipment versus the person completing their work.”
Chan said that around 80 percent of the company’s 400,000 users are on the free version of the app. Some brands on the app include Unilever, Siemens, DHL, McDonald’s, and Jet.com. Chan said UpKeep saw a 206 percent increase in revenue in 2019.
Important to the company’s future, UpKeep is working with OSHA and a group called SQF (Safe Quality Food) to offer templates around best practices during the pandemic. Now, maintenance workers and facilities staffs have a whole new checklist around sanitation and safety that many businesses are just getting up to speed on. UpKeep is working to make these new practices easier to adopt by providing those checklists directly to facilities managers.
This latest funding round brings UpKeep’s total funding to $48.8 million.
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Daily.co raises $4.6M video chat API service
API-powered startups are having a good year, with Plaid’s mega-exit to Visa still fresh in mind. And digital video-powered startups are also having a good year, as the world stays home more than before and work shifts to a more remote-friendly landscape. What about a company that does both?
Well, they’d probably raise money and see their usage spike, right? That’s precisely the case with Daily.co, a startup that has both raised new capital this year and has seen usage of its product rapidly rise.
New capital
In simple terms, Daily.co is a startup that provides an API that lets users and customers quickly integrate video chat into their product or website.
Today’s news is that Daily.co put together a $4.6 million round that was led by Jenny Lefcourt from Freestyle. The round was closed in January, but announced this week. (It’s common for venture rounds to close and then ripen in a dark cellar before they are uncorked and shared with the world, though increased Form D vigilance is changing the game.)
Freestyle was not alone in the new round. The investment was funded by a bevy of investors, including three new institutional investors (Moxxie, Slack Fund, SV Angel), and a host of angels (April Underwood, Sarah Imbach, Ellen Levy and Elizabeth Weil, among others). Three prior investors also took part: Haystack, TenOneTen and Root.
If the round didn’t have a lead investor the deal would feel like a unicorn-era party round. Daily.co previously raised $2.5 million in 2016, co-founder Kwindla Hultman Kramer told TechCrunch in an interview. TechCrunch’s first question was how the startup lasted so long on just a few million dollars. The answer was a surprise.
Hardware is … easy?
Daily.co’s path to an API-powered service was not as simple as you’d imagine. In fact, it’s the first startup I’ve ever spoken to that used a hardware product as a temporary method of funding itself.
According to Kramer, his company built and sold a video-conferencing hardware box that it sold for a few hundred dollars and a regular stream of SaaS payments (you can read more about it here, and here, if you want to go spelunking). The income its boxes generated helped the startup keep at its longer-term plan of building a WebRTC-powered API.
According to the firm, handling a “non-trivial” number of minutes via that first product was also an important learning mechanism.
Daily.co’s thesis that the live video tooling that large companies built into expensive conference rooms would come to everyone’s pocket now feels somewhat obvious. But back in 2015 when the company got started (it went through Y Combinator in 2016) the future wasn’t as clear.
A few market trends came together to make the company’s original vision bear out, including growing device power (your new iPhone has more oomph than your old iPhone), better, faster internet penetration, and the uptake of the WebRTC protocol. As each trend matured, Daily.co’s product wager has gone from possible to likely to existing in the market.
After moving away from the hardware world, Daily.co launched its video chat API in 2019, a year in which the company did not grow its staffing. However, 2020 has seen the startup’s headcount quickly expand (recall that this round was closed in January) and its usage skyrocket — according to Kramer, Daily.co has seen 12x usage growth in the last six weeks.
Daily.co charges a hybrid price for its service, including a small SaaS fee and usage costs. Given that it is a SaaS company, effectively, TechCrunch was curious about its margins. According to Kramer, the firm’s margins are attractive, and there are ways for the startup to actively manage its bandwidth costs (thus lowering revenue costs, and bolstering its gross margin profile). So, the startup should be valued at a SaaS multiple during its life.
Looking ahead, Daily.co is seeing increased attention from larger companies, it told TechCrunch, something that could power future growth. But those clients will require hand-holding, we presume, which means an ever-larger staff. It will be interesting to see how much Daily.co can grow in people and revenue terms in 2020 while the rest of the global economy slips into negative territory. More when we have it.
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