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Ars online IT roundtable tomorrow: What’s the future of the data center?

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Ars online IT roundtable tomorrow: What’s the future of the data center?

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If you’re in IT, you probably remember the first time you walked into a real data center—not just a server closet, but an actual raised-floor data center, where the door wooshes open in a blast of cold air and noise and you’re confronted with rows and rows of racks, monolithic and gray, stuffed full of servers with cooling fans screaming and blinkenlights blinking like mad. The data center is where the cool stuff is—the pizza boxes, the blade servers, the NASes and the SANs. Some of its residents are more exotic—the Big Iron in all its massive forms, from Z-series to Superdome and all points in between.

For decades, data centers have been the beating hearts of many businesses—the fortified secret rooms where huge amounts of capital sit, busily transforming electricity into revenue. And they’re sometimes a place for IT to hide, too—it’s kind of a standing joke that whenever a user you don’t want to see is stalking around the IT floor, your best bet to avoid contact is just to badge into the data center and wait for them to go away. (But, uh, I never did that ever. I promise.)

But the last few years have seen a massive shift in the relationship between companies and their data—and the places where that data lives. Sure, it’s always convenient to own your own servers and storage, but why tie up all that capital when you don’t have to? Why not just go to the cloud buffet and pay for what you want to eat and nothing more?

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

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Flextock is a YC-backed e-commerce fulfillment provider for Africa and the Middle East

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When merchants launch their e-commerce businesses, they can easily manage the end-to-end operations in the early stages. But as they begin to grow, managing their own operations, from warehousing and logistics to delivery and cash collection, can become difficult. This can prevent them from scaling effectively despite having a steady inflow of demand.

Now, there’s a need to offload some of this workload. This is where e-commerce fulfillment services come in handy.

Today, Flextock, one such company providing this service to businesses and consumers in Egypt, is announcing that it is part of Y Combinator’s Winter 2021 batch. Founded by Mohamed Mossaad and Enas Siam in September 2020, the Egyptian company launched in stealth this January.

According to COO Siam, the founders noticed that as e-commerce activities in the Middle East and North African regions accelerated due to the pandemic, merchants were left overwhelmed with the volume of orders they received.

“We saw it as an opportunity to build a tech-enabled platform to be able to help anyone that wanted to grow their own independent brand or store,” she told TechCrunch. “We wanted them to focus on their products and marketing while leaving the supply chain and logistics bit to us, which we do through our end-to-end proprietary software.”

Mossaad, the company’s CEO, describes Flextock as a tech-enabled fulfillment provider. When merchants sign up to the platform, they send their products to one of the company’s fulfillment centers. Flextock takes the whole catalog and tags the products for tracking purposes. Then, integration is made between Flextock and any online store they use, be it Shopify, WooCommerce, Wix and Odoo, among others

As orders are made, Flextock packages and ships the products from the fulfillment center to the customers. Flextock doesn’t own any delivery vehicles, so to achieve this, the company partners with existing logistics companies in Egypt. This model has helped the startup to create a marketplace for different last-mile delivery companies in the country.

Image Credits: Flextock

There’s also a dashboard for these merchants to track each order, get more visibility into their shipping process and know how well their products sell.

Flextock makes money on a per-order basis. That means the merchants on the platform pay a flat fee that changes with respect to the volume of products moved.

Mossaad says that since the company beta launched in January with more than 20 businesses, it has been growing 50% week on week. It has also completed over 300,000 orders across 28 cities in the country.

According to the CEO, Flextock is the first end-to-end fulfillment service in Egypt. And in a market that will likely see more competition in the next couple of years, Mossaad thinks Flextock has the opportunity to become the market leader.

Behind this rationale is that the six-month-old startup is backed by Y Combinator and has also raised $850,000 which is just the first part of its million-dollar pre-seed round that will close sometime this year.

“We were able to very quickly get the acceptance of YC given the size of the opportunity we are focused on. We believe that commerce is expected to change in the Middle East and Africa, and Flextock is going to be at the forefront of powering this next generation of commerce,” he said.

The founders combine a wealth of corporate experience and a strong track record of scaling tech startups in the MENA region.

L-R: Mohamed Mossaad (CEO) and Enas Siam (COO)

Siam started her career managing supply operations at Nestle across the Middle East and North Africa. Later, she became the General Manager of Careem Bus, a mass-transit service and Uber subsidiary, where she helped build the product from scratch and grew it to 150,000 monthly rides in a year.

Mossaad, on the other hand, has worked on multiple turnarounds across different African countries during his time at Bain & Company. He joined Egyptian online food delivery platform, Elmenus, as Chief Strategy Officer. He helped scale the company’s revenues 5x in less than a year and was instrumental to its $8 million Series B round.

The CEO says Flextock has its sights on other African and Middle Eastern markets — specifically Saudi Arabia — and the plan is to provide its services to over 1 million businesses in these regions over the next decade.

“We are on a mission to enable more than 1 million merchants in Africa and the Middle East to sell online without carrying out the hassle of running their own operations. We are well-positioned to do that, and hopefully, we will be able to achieve that in a record time.”

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China’s cosmetics startup Yatsen to buy 35-year-old skincare brand Eve Lom

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In China’s cosmetics world, where foreign brands were historically revered, indigenous startups are increasingly winning over Gen-Z consumers with cheaper, more localized options. One of the rising stars is the direct-to-consumer brand Perfect Diary, which is owned by five-year-old startup Yatsen.

Yatsen impressed the capital market with a $617 million initial public offering on NYSE in November. Its flagship brand Perfect Diary consistently ranks among the top makeup brands by online sales next to giants like L’Oreal and Shiseido. Now the company is plotting another big move as it set out to buy Eve Lom, a 35-year-old skincare brand owned by British private equity firm, Manzanita Capital.

On Wednesday, Yatsen, named after the father of modern China, Sun Yat-sen, announced it has entered into a definitive agreement to acquire Eve Lom, which is known for its cleanser. The deal is expected to close within the next few weeks and Manzanita will retain a minority stake in the business and serve as a strategic partner.

The size of the deal wasn’t disclosed but Bloomberg reported in February that Manzanita was looking to sell Eve Lom for as much as $200 million.

Perfect Diary rose to prominence in China by partnering with influencers who reviewed the brand’s lipsticks, eyeshadow palettes, foundation and other products on Chinese social commerce platforms like Xiaohongshu. It took advantage of its vicinity to China’s abundant cosmetics and packaging suppliers, many of whom also work with top international brands. The strategies have allowed Perfect Diary to offer affordable prices without compromising quality, and earn it the moniker, “Xiaomi for cosmetics.”

Growth has skyrocketed at Yatsen since its founding. Its gross sales more than quadrupled to 3.5 billion yuan ($540 million) in 2019 from 2018, thanks to an effective e-commerce strategy. But losses also ballooned. The company recorded a net loss of 1.16 billion yuan ($170 million) in the nine months ended September 2020, compared to a net income of 29.1 million yuan in the year before.

Yatsen has been on the hunt for potential acquisitions to diversify its product portfolio, as it noted in its prospectus. Through the Eve Lom marriage, the company hopes to “enrich our global brand-building capabilities and product offerings,” said Jinfeng Huang, founder and CEO of Yatsen in the announcement.

Yatsen has already embarked on international expansion, landing in Southeast Asia first where it is selling on e-commerce sites like Shopee. It said in the prospectus that it plans on “selectively cooperating with local partners to accelerate our international expansion and localize our product offerings.” In the competitive and entrenched makeup world, Yatsen’s overseas expedition is definitely a curious one to watch.

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‘Flying taxi’ startup Volocopter picks up another $241M, says service is now two years out

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In a year where mass transit on airplanes, trains and buses has had lower traveler numbers in the wake of the Covid-19 pandemic, one of the startups hoping to pioneer a totally new approach to getting individuals from A to B — flying taxis — has raised some significant funding.

Volocopter, a startup out of southern Germany (Bruchsal, specifically) that has been building and testing electric VTOL (vertical take-off and landing) aircraft, has picked up €200 million (about $241 million) in a Series D round of funding. Alongside its aircraft, Volocopter has also been building a business case in which its vessels will be used in a taxi-style fleet in urban areas. CEO Florian Reuter tells us that live services are now two years out for the two vehicle models it has been developing.

“We are actually expecting to certify our VoloCity in around two years and start commercial air taxi operations right after,” he said. “Paris and Singapore are in pole position [as the first cities], where Paris wants to get have electric air taxis established for the 2024 Olympics. With our VoloDrone we expect first commercial flights even earlier than with our VoloCity.”

To date, Volocopter has shown off its craft in flights in Helsinki, Stuttgart, Dubai, and over Singapore’s Marina Bay. In addition to Europe and Asia, it also wants to launch services in the U.S..

For some context, this is basically on track with what the company had previously projected: in 2019 — when Volocopter raised an initial $55 million in funding for its Series C (finally closed out at €87 million, around $94 million) — the company said it was three years away from service.

This latest (oversubscribed) Series D includes investments from a mix of financial and strategic backers. Funds managed by BlackRock; global infrastructure company Atlantia S.p.A.; Avala Capital; automotive parts behemoth Continental AG; Japan’s NTT via its venture capital arm; Tokyo Century, a Japanese leasing company; multiple family offices are all new investors, among others. Volocopter also said that all of its existing investors — that list includes Geely, Daimler, DB Schenker, Intel Capital, btov Partners, Team Europe, and Klocke Holding and more — also contributed to the round.

If that sounds like a big list, it’s somewhat intentional, as the task of what Volocopter is complex and requires a wide ecosystem of other players, said Rene Griemens, the company’s CFO.

“Getting urban air mobility off the ground requires a full ecosystem that we are developing right now. Many of our strategic partners will support us on different aspects of the supply chain, scaling components, entering markets, improving operations amongst others. Most of them know certain aspects of our business model really well (eg. Japan Airlines for aviation, Atlantia for infrastructure),” he said. “Their investment is a reflection of their excitement about Volocopter as a leader in building the entire ecosystem of UAM, thereby giving credibility and comfort for purely financial investors.”

He added that many of these companies have a very “hands-on partnership” with Volocopter. “DB Schenker, for example, is rolling out leading-edge heavily-load electric logistics drones together with us around the globe.”

The company has now raised nearly $390 million. We’re asking for an updated valuation, but for some context, PitchBook data estimates its valuation now at $624 million.

Moonshots and sunsets

Founded in 2011, Volocopter has now been working on its idea — distinctive for its very wide circular design that sits where the rotor on a helicopter would be — for a whole decade, and in many regards it’s the classic idea of a moonshot in action.

It has yet to make any money, and the product that it’s building to do so is very groundbreaking — flying into completely unchartered territory, so to speak — and therefore ultimately untested.

It’s not the only one working on “flying taxi” concepts — there are other very well-capitalised companies like Lilum, Joby Aviation, Kitty Hawk and eHang.

However, all of these have faced various hurdles ranging from investor lawsuits to bankruptcies, accidents, mothballed projects and divestments (perhaps most notably, Joby scooped up Elevate last year as Uber stepped away from costly moonshots).

And most importantly, none of them are flying commercially yet. With Volocopter (as with the others), investors have taken a long-term bet here on a concept and a team it believes can deliver.

For now, the company says that technology is no longer the barrier, and neither it seems are regulators, who are, in the pandemic, more focused on considering new approaches to old problems to improve efficiency and acknowledge that we might have to do things a little differently from now on, in the wake of new demands from public health, and the public.

In the case of VTOL craft, the promise has always been that they could bypass a lot of the issues with street congestion in urban areas, and provide a more environmental alternative to gas-guzzling, present-day transportation modes.

The challenge, on the other hand, has been determining the safety both of completely new devices, and also of the traffic and other systems that they would operate under. With the idea being that ultimately these craft would be autonomous, that adds another complex twist.

Interestingly, regulators in different markets that might have been more skeptical of new concepts seem to be more open to considering them differently now with the pandemic at hand. This has played out in other arenas, too, such as the electric scooter market in the UK, which saw a bump in activity after regulators long skeptical gave them a provisional nod last year, citing the need for more individualized transportation options in a pandemic-hit country.

Volocopter’s model is based around transporting one person or small parties, so in a sense might be attractive here too.

“There aren’t any major hurdles anymore in terms of the technology as such,” said Retuer. “It is now all about execution. EASA has defined what is necessary to get electric air taxis certified to the highest safety level in aviation. We have the best technology in the market to certify to EASA’s high safety standards and will keep our heads down to finalize the few remaining steps to certification.”

In contrast, he said the other challenges that remain are those of any highly technical startup: “Our largest challenge right now is talent acquisition,” he said. “We are looking for the best talents worldwide and growing our team quickly now, so that we can accelerate on the technical and market development sides. Especially in the markets where we will open early routes, such as Paris, Singapore, China and Japan, we are going full speed in preparing everything necessary from digital infrastructure to landing sites, city approvals and more.”

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