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Tailscale raises $12 million for its WireGuard-based corporate VPN

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Tailscale has raised a $12 million funding round. Accel is leading the round with Heavybit and Uncork Capital also participating. The company is building a better corporate VPN by leveraging a modern protocol and focusing on ease of implementation.

A VPN, or a virtual private network, is an encrypted tunnel between two devices. Many companies rely on a VPN for remote employees, multi-office setups and internal services that are supposed to be visible to employees exclusively. For instance, if you’re working remotely, chances are you can connect to your company’s intranet and internal services by connecting to a VPN server from your corporate laptop.

Over the past few years, there have been multiple trends when it comes to accessing your company’s internal network. Some companies rely on sophisticated access policies. Google has been going down this path with its BeyondCorp zero trust system.

Other companies still rely on corporate VPNs and firewalls as they are easy to implement. They often use the IPsec protocol with a VPN gateway that handles the connection to the internal network.

If you’ve been working remotely lately, you may have noticed that this traditional VPN setup doesn’t scale well. The gateway is a bottleneck and you can experience long loading times when there are a lot of people connected at the same time.

Going back to Tailscale, the startup is trying to modernize the corporate VPN. It starts with a different VPN protocol. Tailscale chose WireGuard, a lightweight VPN protocol that relies on a combination of public and private keys to establish an encrypted tunnel between two clients.

But Wireguard itself is just a protocol. It doesn’t tell you how you’re supposed to handle public keys, add new devices to your network, etc. Tailscale acts as the glue that brings all the separate pieces together.

“Architecturally, I would describe Tailscale as the Control Plane and WireGuard is the data plane,” co-founder and CEO Avery Pennarun told me.

Image Credits: Tailscale

Let’s take an example. Your company has an internal Git server and an internal documentation wiki. You have a corporate laptop and you want to access those two services. You can install the Tailscale client on three different machines — your laptop, the Git server and the wiki server.

When you want to connect to the internal services, Tailscale asks you to log in using your company’s identity provider, such as G Suite, Okta, Active Directory, etc.

All Tailscale clients check a coordination server to see if the connection is authorized. “It’s a drop box for public keys,” Pennarun said. When somebody leaves the company, the public key is removed from the coordination server and Tailscale no longer works. Keys are rotated regularly for improved security.

A connection is then established between your laptop and the Git server or your laptop and the wiki server. There’s no bottleneck due to the VPN gateway as the Git server and the wiki server act as their own VPN gateways. There’s no need to expose your documentation wiki to the internet as employees first use Tailscale to access the server.

You don’t have to open the SSH port on the server as Tailscale can find a way to establish a connection through firewalls.

The company is still quite small but pretty efficient. With around 20 employees, Tailscale is generating tens of thousands of client installs per month.

You can get started for free with a single user and multiple devices. Some users have tried it with a Raspberry Pi at home so that they can connect to their local network when they’re on the move. They bring it to work later.

By keeping customer acquisition costs very low, Tailscale has managed to raise $12 million. Twingate is another company trying to solve the same issue, but it has made different technical choices — they rely on TLS tunnels and relays.

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SoftBank takes a $690M stake in cloud-based Swedish CRM company Sinch

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On the heels of Facebook taking a big step into customer service with the acquisition of Kustomer for $1 billion, another big move is afoot in the world of CRM. Sinch, a Swedish company that provides cloud-based “omnichannel” voice, video and messaging services to help enterprises communicate with customers, has announced that SoftBank is taking a $690 million stake in the company. Sinch said that it plans to use the proceeds of the share sale for M&A of its own.

“We see clearly how our cloud-based platform helps businesses leverage mobile technology to reinvent their customer experience,” said Oscar Werner, Sinch CEO, to TechCrunch. “Whereas people throughout the world have embraced mobile messaging to interact with friends and family, most businesses have yet to seize this opportunity. We are establishing Sinch as a leader in a global growth market that is still very fragmented, and we’re excited that SoftBank is now helping us realize that vision.”

Specifically, Sinch has issued and sold 3,187,736 shares worth SEK 3.3 billion, and large shareholders have sold a further 5,200,000 shares — with SoftBank the sole buyer.

The move underscores the growing opportunity that those in the world of CRM — which include not just Sinch and Kustomer but Salesforce and many others — are seeing to double down on their services at the moment. With people working and doing everything else remotely, and with the general upheaval we’ve had in the global economy due to Covid-19, there has been an increased demand and strain put on the digital channels that people use to communicate with organizations when they have questions or problems.

The catch is that customer relations has grown to be more than just 1-800 numbers and being on hold for endless hours: it includes social media, email, websites with interactive chats, chatbots, messaging apps, and yes those phone calls.

Organizations like Sinch and Kustomer — which build platforms to help businesses manage all of those fragmented options in what are described as omnichannel offerings, have been capitalising on the demand and are now investing and looking for the next step in their strategies to grow.

For Kustomer that has been leaping into the arms of Facebook, which itself has spotted an opportunity to build out a CRM business to complement its other services for businesses. Recall that it’s also been experimenting and working on its latest Nextdoor competitor to promote local businesses; and it has added a ton of business tools to its messaging apps too.

It will be interesting to see what Salesforce does next. While acquiring Slack gives the company an obvious channel into workplace communications, don’t forget that Slack is also a very popular tool for engaging with people outside of your employee network, too. It will be worth watching how and if Salesforce looks to develop that aspect of the business, too.

For Sinch, its strategy has been around making acquisitions of its own, including paying $250 million to pick up a business unit of SAP, Digital Interconect, which has 1,500 enterprise customers mostly in the US using it to run “omnichannel” CRM. Now the plan will be to do more, since there are still huge swathes of the market that have yet to upgrade and update their CRM approaches.

Sinch, notably, is traded publicly on Sweden’s stock exchange and it currently has a market cap of SEK70 billion ($8.2 billion at current rates). It is profitable and generating cash so has “no need to raise funding for our ongoing business,” Thomas Heath, Sinch’s chief strategy officer and head of investor relations, told TechCrunch.

For SoftBank, the investment marks another step in the company taking sizable stakes in fast-growing public or semi-public tech companies in Europe.

In October, it put $215 million into Kahoot, the online education platform aimed both at students and enterprises, built around the concept of users themselves creating “learning games” that can then be shared with others. Kahoot trades a proportion of its shares publicly on the stock exchange in Norway and like Sinch, the plan is to use a good part of the money for acquisitions.

Not all of SoftBank’s investments in scaled-up European businesses have panned out. Having put around $1 billion into German payments company Wirecard, the company turned out to be one of the biggest scandals in the history of European fintech, facing accounting scandals before collapsing into insolvency earlier this year.

Sinch, as a profitable and a steady business with predictable lines of recurring revenue, looks like a safer bet for now. Even with Salesforce, Facebook and others raising their game, there as Sinch’s CEO says, there is enough of an untapped market that playing well might be enough to do well.

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Despite everything, Oyo still has $1 billion in cash

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India’s Oyo has been one of the worst impacted startups with the coronavirus, but it has enough cash to steer through the pandemic and then look at funding further scale, a top executive says.

In a townhall with employees last week, Oyo founder Ritesh Agarwal said the budget lodging firm “continued to hold on to close to a billion dollars of cash” across its group companies and joint venture firms and has “tracked to runway very closely.”

“At the same time, we’ve been very disciplined in making sure that we can respond to the crisis in a good way to try and ensure that we can come out of it at the right time,” he said in a fireside chat with Rohit Kapoor, chief executive of Oyo India and SA, and Troy Alstead, a board member who previously served as the chief executive officer of Startbucks.

The revelation will reassure employees of Oyo, which eliminated or furloughed over 5,000 jobs earlier this year and reported in April that the pandemic had cut its revenue and demand by more than 50%.

Oyo also reported a loss of $335 million on $951 million revenue globally for the financial year ending March 31, 2019, and earlier this year pledged to cut down on its spending.

Agarwal said the startup is recovering from the pandemic as nations relax their lockdowns, and with recent progress with vaccine trials, he is hopeful that the travel and hospitality industries will bounce back strongly.

“Together globally, we were able to get to around 85% of the gross margin dollars of our pre COVID levels. This I can tell you was extremely hard. But in my view was probably only possible because of the efforts of our teams in each one of the geographies,” he said, adding that Oyo Vacation has proven critical to the business in recent months delivering “packed” hotels and holiday homes.

During the conversation, a transcript of which was shared with employees and obtained by TechCrunch, Agarwal was heard talking about making Oyo — which was privately valued at $10 billion last year when it was in the process of raising $1.5 billion last year — ready for IPO. He, however, did not share a timeline on when the SoftBank-backed startup plans to go public and hinted that it’s perhaps not in the immediate future.

“And last but not the least, for me, it is very critical. I want the groups to know that I, our board and our broader management are fully committed to making sure that long-term wealth creation for our OYOpreneurs — beyond that of just the compensation, but the wealth creation by means of your stocks can be substantially grown.”

“At the end of the day, what is the right time to go out is frankly a decision of the board to make and from the management side, we’ll be ready to make sure that we build a company that is ready to go public. And we will look at various things like that of the market situation, opportunities outside and so on, that the board will consider and then potentially help advise on the timeline,” he said.

Alstead echoed Agarwal’s optimism, adding, “I think that OYO is made up of a combination of assets, its hotels, its homes, its vacation homes. That’s unique, I think in the industry in the category, I think it makes it probably a little more challenging sometimes for people externally to measure and compare and benchmark a unique portfolio company like this. But I’d also tell you, I think that makes OYO resilient. It makes OYO balanced for the future. It gives OYO several sorts of vertical opportunities to address both customer needs at any time, whether it be a hotel or a small hotel or a vacation home.”

“And it also gives opportunities and expands that interaction in a good healthy way with the property owners, with the partners, who have an opportunity depending on what asset type they have partnered with OYO in different ways, and also to have the access to a technology platform and a continued investment in that innovative platform for customers. So all those things, I think a balanced portfolio, a technology platform, a heavy focus on putting the customer first, putting the business partner first — all those things, in my view, are what positioned OYO for the future.”

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GoSite snags $40M to help SMBs bring their businesses online

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There are 12 million small and medium businesses in the US, yet they have continued to be one of most underserved segments of the B2B universe: that volume underscores a lot of fragmentation, and alongside other issues like budget constraints, there are a number of barriers to building for them at scale. Today, however, a startup helping SMBs get online is announcing some significant funding — a sign of how things are changing at a moment when many businesses have realised that being online is no longer an option, but a necessity.

GoSite, a San Diego-based startup that helps small and medium enterprises build websites, and, with a minimum amount of technical know-how, run other functions of their businesses online — like payments, online marketing, appointment booking and accounting — has picked up $40 million in funding.

GoSite offers a one-stop shop for users to build and manage everything online, with the ability to feed in up to 80 different third-party services within that. “We want to help our customers be found everywhere,” said Alex Goode, the founder and CEO of GoSite. “We integrate with Facebook and other consumer platforms like Siri, Apple Maps, and search engines like Google, Yahoo and Bing and more.” It also builds certain features like payments from the ground up.

The Series B comes on the back of a strong year for the company. Driven by Covid-19 circumstances, businesses have increasingly turned to the internet to interact with customers, and GoSite — which has “thousands” of SMB customers — said it doubled its customer base in 2020.

This latest round is being led by Left Lane Capital out of New York, with Longley Capital, Cove Fund, Stage 2, Ankona Capital and Serra Ventures also participating. GoSite is clearly striking while the iron is hot: Longley, also based out of San Diego, led the company’s previous round, which was only in August of this year. It has now raised $60 million to date.

GoSite is, in a sense, a play for more inclusivity in tech: its customers are not companies that it’s “winning” off other providers that provide website building and hosting and other services typically used by SMBs, such as Squarespace and Wix, or GoDaddy, or Shopify.

Rather, they are companies that may have never used any of these: local garages, local landscapers, local hair salons, local accountancy firms, local dentists and so on. Barring the accounting firm, these are not businesses that will ever go fully online, as a retailer might, not least because of the physical aspect of each of those professions. But they will need an online presence and the levers it gives them to communicate, in order to survive, especially in times when their old models are being put under strain.

Goode started GoSite after graduating from college in Michigan with a degree in computer science, having previously grown up around and working in small businesses — his parents, grandparents and others in his Michigan town all ran their own stores. (He moved to San Diego “for the weather” he joked.)

His belief is that while there are and always will be alternatives like Facebook or Yelp to plant a flag, there is nothing that can replace the value and longer term security and control of building something of your own — a sentiment small business owners would surely grasp.

That is perhaps the most interesting aspect of GoSite as it exists today: it precisely doesn’t see any of what already exists out there as “the competition.” Instead, Goode sees his purpose as building a dashboard that will help business owners manage all that — with up to 80 different services currently available — and more, from a single place, and with minimum need for technical skills and time spent learning the ropes.

“There is definitely huge demand from small businesses for help and something like GoSite can do that,” Goode said. “The space is very fragmented and noisy and they don’t even know where to start.”

This, combined with GoSite’s growth and relevance to the current market, is partly what attracted investors.

“The opportunity we are betting on here is the all-in-one solution,” said Vinny Pujji, partner at Left Lane. “If you are a carpet cleaner or house painter, you don’t have the capacity to understand or work with five or six different pieces of software. We spoke with thousands of SMBs when looking at this, and this was the answer we heard.” He said the other important thing is that GoSite has a customer service team and for SMBs that use it, they like that when they call, “GoSite picks up the phone.”

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