Connect with us

Uncategorized

Extra Crunch roundup: A fistful of IPOs, Affirm’s Peloton problem, Zoom Apps and more

Published

on

DoorDash, Affirm, Roblox, Airbnb, C3.ai and Wish all filed to go public in recent days, which means some venture capitalists are having the best week of their lives.

Tech companies that go public capture our imagination because they are literal happy endings. An Initial Public Offering is the promised land for startup pilgrims who may wander the desert for years seeking product-market fit. After all, the “I” in “ISO” stands for “incentive.”

A flurry of new S-1s in a single week forced me to rearrange our editorial calendar, but I didn’t mind; our 360-degree coverage let some of the air out of various hype balloons and uncovered several unique angles.

For example: I was familiar with Affirm, the service that lets consumers finance purchases, but I had no idea Peloton accounted for 30% of its total revenue in the last quarter.

“What happens if Peloton puts on the brakes?” I asked Alex Wilhelm as I edited his breakdown of Affirm’s S-1. We decided to use that as the subhead for his analysis.

The stories that follow are an overview of Extra Crunch from the last five days. Full articles are only available to members, but you can use discount code ECFriday to save 20% off a one or two-year subscription. Details here.

Thank you very much for reading Extra Crunch this week; I hope you have a relaxing weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist


What is Roblox worth?

Gaming company Roblox filed to go public yesterday afternoon, so Alex Wilhelm brought out a scalpel and dissected its S-1. Using his patented mathmagic, he analyzed Roblox’s fundraising history and reported revenue to estimate where its valuation might land.

Noting that “the public markets appear to be even more risk-on than the private world in 2020,” Alex pegged the number at “just a hair under $10 billion.”

What China’s fintech can teach the world

Alibaba Employees Pay For Meals With Face Recognition System

HANGZHOU, CHINA – JULY 31: An employee uses face recognition system on a self-service check-out machine to pay for her meals in a canteen at the headquarters of Alibaba Group on July 31, 2018 in Hangzhou, Zhejiang Province of China. The self-service check-out machine can calculate the price of meals quickly to save employees’ queuing time. (Photo by Visual China Group via Getty Images)

For all the hype about new forms of payment, the way I transact hasn’t been radically transformed in recent years — even in tech-centric San Francisco.

Sure, I use NFC card readers to tap and pay and tipped a street musician using Venmo last weekend. But my landlord still demands paper checks and there’s a tattered “CASH ONLY” taped to the register at my closest coffee shop.

In China, it’s a different story: Alibaba’s employee cafeteria uses facial recognition and AI to determine which foods a worker has selected and who to charge. Many consumers there use the same app to pay for utility bills, movie tickets and hamburgers.

“Today, nobody except Chinese people outside of China uses Alipay or WeChat Pay to pay for anything,” says finance researcher Martin Chorzempa. “So that’s a big unexplored side that I think is going to come into a lot of geopolitical risks.”

Inside Affirm’s IPO filing: A look at its economics, profits and revenue concentration

Consumer lending service Affirm filed to go public on Wednesday evening, so Alex used Thursday’s column to unpack the company’s financials.

After reviewing Affirm’s profitability, revenue and the impact of COVID-19 on its bottom line, he asked (and answered) three questions:

  • What does Affirm’s loss rate on consumer loans look like?
  • Are its gross margins improving?
  • What does the unicorn have to say about contribution profit from its loans business?

If you didn’t make $1B this week, you are not doing VC right

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

“The only thing more rare than a unicorn is an exited unicorn,” observes Managing Editor Danny Crichton, who looked back at Exitpalooza 2020 to answer “a simple question — who made the money?”

Covering each exit from the perspective of founders and investors, Danny makes it clear who’ll take home the largest slice of each pie. TL;DR? “Some really colossal winners among founders, and several venture firms walking home with billions of dollars in capital.

5 questions from Airbnb’s IPO filing

The S-1 Airbnb released at the start of the week provided insight into the home-rental platform’s core financials, but it also raised several questions about the company’s health and long-term viability, according to Alex Wilhelm:

  • How far did Airbnb’s bookings fall during Q1 and Q2?
  • How far have Airbnb’s bookings come back since?
  • Did local, long-term stays save Airbnb?
  • Has Airbnb ever really made money?
  • Is the company wealthy despite the pandemic?

Autodesk CEO Andrew Anagnost explains the strategy behind acquiring Spacemaker

Andrew Anagnost, President and CEO, Autodesk.

Andrew Anagnost, president and CEO, Autodesk.

Earlier this week, Autodesk announced its purchase of Spacemaker, a Norwegian firm that develops AI-supported software for urban development.

TechCrunch reporter Steve O’Hear interviewed Autodesk CEO Andrew Anagnost to learn more about the acquisition and asked why Autodesk paid $240 million for Spacemaker’s 115-person team and IP — especially when there were other startups closer to its Bay Area HQ.

“They’ve built a real, practical, usable application that helps a segment of our population use machine learning to really create better outcomes in a critical area, which is urban redevelopment and development,” said Anagnost.

“So it’s totally aligned with what we’re trying to do.”

Unpacking the C3.ai IPO filing

On Monday, Alex dove into the IPO filing for enterprise artificial intelligence company C3.ai.

After poring over its ownership structure, service offerings and its last two years of revenue, he asks and answers the question: “is the business itself any damn good?”

Is the internet advertising economy about to implode?

Image Credits: jayk7 / Getty Images

In his new book, “Subprime Attention Crisis,” writer/researcher Tim Hwang attempts to answer a question I’ve wondered about for years: does advertising actually work?

Managing Editor Danny Crichton interviewed Hwang to learn more about his thesis that there are parallels between today’s ad industry and the subprime mortgage crisis that helped spur the Great Recession.

So, are online ads effective?

“I think the companies are very reticent to give up the data that would allow you to find a really definitive answer to that question,” says Hwang.

Will Zoom Apps be the next hot startup platform?

Logos of companies in the Zoom Apps marketplace

Image Credits: Zoom

Even after much of the population has been vaccinated against COVID-19, we will still be using Zoom’s video-conferencing platform in great numbers.

That’s because Zoom isn’t just an app: it’s also a platform play for startups that add functionality using APIs, an SDK or chatbots that behave like smart assistants.

Enterprise reporter Ron Miller spoke to entrepreneurs and investors who are leveraging Zoom’s platform to build new applications with an eye on the future.

“By offering a platform to build applications that take advantage of the meeting software, it’s possible it could be a valuable new ecosystem for startups,” says Ron.

Will edtech empower or erase the need for higher education?

Image Credits: Bryce Durbin

Without an on-campus experience, many students (and their parents) are wondering how much value there is in attending classes via a laptop in a dormitory.

Even worse: Declining enrollment is leading many institutions to eliminate majors and find other ways to cut costs, like furloughing staff and cutting athletic programs.

Edtech solutions could fill the gap, but there’s no real consensus in higher education over which tools work best. Many colleges and universities are using a number of “third-party solutions to keep operations afloat,” reports Natasha Mascarenhas.

“It’s a stress test that could lead to a reckoning among edtech startups.”

3 growth tactics that helped us surpass Noom and Weight Watchers

3D rendering of TNT dynamite sticks in carton box on blue background. Explosive supplies. Dangerous cargo. Plotting terrorist attack. Image Credits: Gearstd / Getty Images.

I look for guest-written Extra Crunch stories that will help other entrepreneurs be more successful, which is why I routinely turn down submissions that seem overly promotional.

However, Henrik Torstensson (CEO and co-founder of Lifesum) submitted a post about the techniques he’s used to scale his nutrition app over the last three years. “It’s a strategy any startup can use, regardless of size or budget,” he writes.

According to Sensor Tower, Lifesum is growing almost twice as fast as Noon and Weight Watchers, so putting his company at the center of the story made sense.

Send in reviews of your favorite books for TechCrunch!

Image via Getty Images / Alexander Spatari

Every year, we ask TechCrunch reporters, VCs and our Extra Crunch readers to recommend their favorite books.

Have you read a book this year that you want to recommend? Send an email with the title and a brief explanation of why you enjoyed it to bookclub@techcrunch.com.

We’ll compile the suggestions and publish the list as we get closer to the holidays. These books don’t have to be published this calendar year — any book you read this year qualifies.

Please share your submissions by November 30.

Dear Sophie: Can an H-1B co-founder own a Delaware C Corp?

Image Credits: Sophie Alcorn

Dear Sophie:

My VC partner and I are working with 50/50 co-founders on their startup — let’s call it “NewCo.” We’re exploring pre-seed terms.

One founder is on a green card and already works there. The other founder is from India and is working on an H-1B at a large tech company.

Can the H-1B co-founder lead this company? What’s the timing to get everything squared away? If we make the investment we want them to hit the ground running.

— Diligent in Daly City

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

Continue Reading
Comments

Uncategorized

YC-backed LemonBox raises $2.5M bringing vitamins to Chinese millennials

Published

on

Like many overseas Chinese, Derek Weng gets shopping requests from his family and friends whenever he returns to China. Some of the most wanted imported products are maternity items, cosmetics, and vitamin supplements. Many in China still uphold the belief that “imported products are better.”

The demand gave Weng a business idea. In 2018, he founded LemonBox to sell American health supplements to Chinese millennials like himself via online channels. The company soon attracted seed funding from Y Combinator and just this week, it announced the completion of a pre-A round of $2.5 million led by Panda Capital and followed by Y Combinator .

LemonBox tries to differentiate itself from other import businesses on two levels — affordability and personalization. Weng, who previously worked at Walmart where he was involved in the retail giant’s China import business, told TechCrunch that he’s acquainted with a lot of American supplement manufacturers and is thus able to cut middleman costs.

“In China, most supplements are sold at a big markup through pharmacies or multi-level marketing companies like Amway,” Weng said. “But vitamins aren’t that expensive to produce. Amway and the likes spend a lot on marketing and sales.”

Inside LemonBox’s fulfillment center

LemonBox designed a WeChat-based lite app, where users receive product recommendations after taking a questionnaire about their health conditions. Instead of selling by the bottle, the company customizes user needs by offering daily packs of various supplements.

“If you are a vegetarian and travel a lot, and the other person smokes a lot, [your demands] are going to be very different. I wanted to customize user prescriptions using big data,” explained Weng, who studied artificial intelligence in business school.

A monthly basket of 30 B-complex tablets, for instance, costs 35 yuan ($5) on LemonBox. Amway’s counterpart product, a bottle of 120 tablets, asks for 229 yuan on JD.com. That’s about 57 yuan ($9) for 30 tablets.

Selling cheaper vitamins is just a means for LemonBox to attract consumers and gather health insights into Chinese millennials, with which the company hopes to widen its product range. Weng declined to disclose the company’s customer size, but claimed that its user conversion rate is “higher than most e-commerce sites.”

With the new proceeds, LemonBox is opening a second fulfillment center in the Shenzhen free trade zone after its Silicon Valley-based one. That’s to provide more stability to its supply chain as the COVID-19 pandemic disrupts international flights and cross-border trade. Moreover, the startup will spend the money on securing health-related certificates and adding Japan to its sourcing regions.

Returnees adapt

Screenshot of Lemonbox’s WeChat-based store

In the decade or so when Weng was living in the U.S., the Chinese internet saw drastic changes and gave rise to an industry largely in the grip of Alibaba and Tencent. Weng realized he couldn’t simply replicate America’s direct-to-customer playbook in China.

“In the U.S., you might build a website and maybe an app. You will embed your service into Google, Facebook, or Instagram to market your products. Every continent is connected with one other,” said Weng.

“In China, it’s pretty significantly different. First off, not a lot of people use web browsers, but everyone is on mobile phones. Baidu is not as popular as Google, but everybody is using WeChat, and WeChat is isolated from other major traffic platforms.”

As such, LemonBox is looking to diversify beyond its WeChat store by launching a web version as well as a store through Alibaba’s Tmall marketplace.

“There’s a lot of learning to be done. It’s a very humbling experience,” said Weng.

Continue Reading

Uncategorized

Health tech venture firm OTV closes new $170 million fund and expands into Asia

Published

on

OTV (formerly known as Olive Tree Ventures), an Israeli venture capital firm that focuses on digital health tech, announced it has closed a new fund totaling $170 million. The firm also launched a new office in Shanghai, China to spearhead its growth in the Asia Pacific region.

OTV currently has a total of 11 companies in its portfolio. This year, it led rounds in telehealth platforms TytoCare and Lemonaid Health, and its other investments include genomic machine learning platform Emedgene; microscopy imaging startup Scopio; and at-home cardiac and pulmonary monitor Donisi Health. OTV has begun investing in more B and C rounds, with the goal of helping companies that already have validated products deal with regulations and other issues as they grow.

OTV focuses on digital health products that have the potential to work in different countries, make healthcare more affordable, and fill gaps in overwhelmed healthcare systems.

Jose Antonio Urrutia Rivas will serve as OTV’s Head of Asia Pacific, managing its Shanghai office and helping its portfolio companies expand in China and other Asian countries. This brings OTV’s offices to a total of four, with other locations in New York, Tel Aviv and Montreal. Before joining OTV, Rivas worked at financial firm LarrainVial as its Asian market director.

OTV was founded in 2015 by general partners Mayer Gniwisch, Amir Lahat and Alejandro Weinstein. OTV partner Manor Zemer, who has worked in Asian markets for over 15 years and spent the last five living in Beijing, told TechCrunch that the firm decided it was the right time to expand into Asia because “digital health is already highly well-developed in many Asia-Pacific countries, where digital health products complement in-person healthcare providers, making that region a natural fit for a venture capital firm specializing in the field.”

He added that OTV “wanted to capitalize on how the COVID-19 pandemic has thrust the internationalized and interconnected nature of the world’s healthcare infrastructures into the limelight, even though digital health was a growth area long before the pandemic.”

Continue Reading

Uncategorized

WH’s AI EO is BS

Published

on

An executive order was just issued from the White House regarding “the Use of Trustworthy Artificial Intelligence in Government.” Leaving aside the meritless presumption of the government’s own trustworthiness and that it is the software that has trust issues, the order is almost entirely hot air.

The EO is like others in that it is limited to what a president can peremptorily force federal agencies to do — and that really isn’t very much, practically speaking. This one “directs Federal agencies to be guided” by nine principles, which gives away the level of impact right there. Please, agencies — be guided!

And then, of course, all military and national security activities are excepted, which is where AI systems are at their most dangerous and oversight is most important. No one is worried about what NOAA is doing with AI — but they are very concerned with what three-letter agencies and the Pentagon are getting up to. (They have their own, self-imposed rules.)

The principles are something of a wish list. AI used by the feds must be:

lawful; purposeful and performance-driven; accurate, reliable, and effective; safe, secure, and resilient; understandable; responsible and traceable; regularly monitored; transparent; and accountable.

I would challenge anyone to find any significant deployment of AI that is all of these things, anywhere in the world. Any agency claims that an AI or machine learning system they use adheres to all these principles as they are detailed in the EO should be treated with extreme skepticism.

It’s not that the principles themselves are bad or pointless — it’s certainly important that an agency be able to quantify the risks when considering using AI for something, and that there is a process in place for monitoring their effects. But an executive order doesn’t accomplish this. Strong laws, likely starting at the city and state level, have already shown what it is to demand AI accountability, and though a federal law is unlikely to appear any time soon, this is not a replacement for a comprehensive bill. It’s just too hand-wavey on just about everything. Besides, many agencies already adopted “principles” like these years ago.

The one thing the EO does in fact do is compel each agency to produce a list of all the uses to which it is putting AI, however it may be defined. Of course, it’ll be more than a year before we see that.

Within 60 days of the order, the agencies will choose the format for this AI inventory; 180 days after that, the inventory must be completed; 120 days after that, the inventory must be completed and reviewed for consistency with the principles; plans to bring systems in line with them the agencies must “strive” to accomplish within 180 further days; meanwhile, within 60 days of the inventories having been completed they must be shared with other agencies; then, within 120 days of completion, they must be shared with the public (minus anything sensitive for law enforcement, national security, etc.).

In theory we might have those inventories in a month, but in practice we’re looking at about a year and a half, at which point we’ll have a snapshot of AI tools from the previous administration, with all the juicy bits taken out at their discretion. Still, it might make for interesting reading depending on what exactly goes into it.

This executive order is, like others of its ilk, an attempt by this White House to appear as an active leader on something that is almost entirely out of their hands. To develop and deploy AI should certainly be done according to common principles, but even if those principles could be established in a top-down fashion, this loose, lightly binding gesture that kind-of, sort-of makes some agencies have to pinky-swear to think real hard about them isn’t the way to do it.

Continue Reading

Trending