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Gillmor Gang: Leave Quietly

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It turns out the most important decision made was not the vote to choose (and remove) in the election but Twitter’s permanent banning of the former President from the social network. Suddenly the temperature cooled, the new administration engaged with the details of vaccine rollout, and the second impeachment trial ended with an expected outcome. Twitter’s move was bipartisan if the trial was not.

Twitter’s other big move was the acquisition of Revue, a Substack competitor we’re moving to in production of the Gillmor Gang newsletter. It features tools to drag and drop articles from Twitter, Feedly, and other newsletters, but crucially the ability to reorganize these chunks as the writing develops. It’s my bet that the newsletter container will absorb blogs, podcasts, and streaming into a reorganized media platform available to creators small and large.

This kind of organic process development meshes well with the newsletter model. It encourages more timely releases, and an editorial feel that prizes quality over quantity. As newsletters proliferate, an evaluation of time over volume becomes most significant. It’s less an eyeballs pattern than a prioritization of what is not chosen and then what is, consumed or annotated with social recommendations. As with the Gang’s Frank Radice Nuzzel newsletter, the focus becomes less flow and more authority or resonance.

Daily Commentary

I have made the decision to cover the media exclusively in “The Radice Files” There are plenty of general news aggregators out there, and I for one, am just tired of those stories. I hope you’ll stay with me.

Instead of non-stop Trump, the only political story in the revamped Radice File is about how Fox News cut away from House manager video testimony to a commentary on the futility of covering the violence given the lack of votes for conviction. This shadow dance happens not just on Fox but the other centrist or left networks like CNN and MSNBC. The slant is not what’s interesting; the networks’ business model and the subtle effect on media programming is.

No wonder that streaming’s impact is being felt in the latest unicorn from Silicon Valley, Clubhouse. The audio streaming podcast disruptor is marketed as a FOMO inside hallway conversation, with a Twitter social cloud viral onboard mechanism that digs deep into your contact list and never lets go. Big ticket items such as a keynote-like conversation with Elon Musk are overbooked from the first minute. I tried unsuccessfully to join this week’s follow up with Marc Andreessen and his VC partner Ben Horowitz but it was sold out at 5000 after 30 minutes.

But there is definitely something tugging at me as I get notifications of people joining and creating rooms on various glitzy Valley topics. The live feeling of serendipity and catch it as you can promises the possibility of lightning in a bottle, the sensation of history being made, not just observed. Probably just an illusion, but it’s reminiscent of the feeling we used to get when putting a record on the turntable and daring the artist(s) to succeed. I still get that every time Miles’ Kind of Blue resumes, the awe with which time is reorganized at the atomic level.

People say a Clubhouse can go easily from 1 to 5 hours. I think RSS was killed by the red unread marks indicator. Size matters? Probably, if my college research suggests. But more important than length is ROI, and that’s where the Clubhouse effect dovetails with the newsletter moment. The ingredients of both are intuition, choice, the organic breadcrumb trail, and the payload.

Intuition

Does this notification fit in with what pattern I’m trying to discern this moment. I love movies like Citizen Kane and North By Northwest for the mirage that they project of a universe fated by a biologically innate DNA. Sometimes we call it fate, other times dumb luck, but always that dumbest of phrases: It is what it is. Only this time the conceit is: It is what it’s about to be is. And if something happens, yes, I knew it. Not specifically, but given the mood the planet is in, it figures this could happen.

In a newsletter: the game is not to read everything, but only what and when and in what order. The prize is the analytics, which reward the reader with more stuff, and the publisher with validation of the impact of the combination of choice (citations) and context (writing.) In Clubhouse, it’s being in the room and what — knowing when to bail? For me it’s escaping the inevitability of the point being made in a podcast, or the filter of the business model of what I’m going to do next. If it’s Sunday, it’s Meet the Press. Maybe…

Choice

There’s a bunch of choice: Choice of room, people, time invested, moment of throwing good money after bad. Choice of what I’m playing hookey on — work, cable news, family fun, sleep. Clubhouse lets you publicly eavesdrop, a broadcast @mention that doesn’t give you the option of lurking. But you can do the closest thing to multitasking: doing the dishes, playing with the dog, monitoring. cable news with the sound off, DJ-ing for a private room, driving, etc. It is the new radio, pandemic be damned. Wherever you go, there you still are.

Newsletters? People, time reading, research replacement, subscription development, form of payment (money, authority, trust), influence or eyeballs. The game is trading current media for future rebundling, where the new publishers, studios, and artists are grown.

Breadcrumb trail

These choices create the breadcrumb trail, plowing under the old and furrowing the new. Newsletters are the leading edge of this refactoring, tilling the memes, models, and markets for the trends that become viral. The analytics of opens, email vs. web clicks, and notification triage are implicit for the most part in their signal. Harvesting these breadcrumbs requires the impact of new content created in response to the earlier data. Once you’ve identified a valuable consumer, your real work has just begun.

First, you look for the signature of exultation, the embedded essence of the experience that a certain combination of intuition and action rewards the detective. For that is what this new media is: an information thriller that taps into deep reading, listening, and sharing. Every catch phrase — round up the usual suspects, or we are not the droids you are looking for — represent uber themes we crave to navigate a terrifying treacherous world. We are the droids we’re looking for, and these new medias represent possible parallel worlds where we can not just survive but honor values of our choosing.

In the movies, it’s called the plotline. Clubhouse presumes there’s a story worth waiting for, the moments where we gain power by sharing and decorating reactions with clues as to what part of the same elephant we are investigating. We know intuitively that we’re not going to learn business secrets, but there is gold to be retrieved from the participants as they share their sense of humor or lack of it, their rhythm of when they join, raise their hand, are successful at being invited on stage, when they leave, whether they boomerang, and only a little what they actually say. The price for this is your breadcrumbs.

The Payload

As much as I’m intrigued by Clubhouse, I’ve only actually joined or started a room twice. Once was by accident, as I realized by clicking on a link to see who was there. Me, I found out. Another was a conversation about a Techmeme podcast by the podcaster and Chris Messina of hashtag fame. I never could get into the big A16Z attractions. Like Frank Radice’s newsletter pivot, I was primarily interested in the atmospherics surrounding Andreessen Horowitz’s media strategy. But that doesn’t obviate the steady feeling that something substantial is going on here.

Media generally is swallowing its pride in the wake of the political nightmare we’ve been living through. Notice I say media, not mainstream media or social media. Smarter people than me can debate the distinction, but I think the difference between the two is overstated, and more importantly, not that indicative of what the value of these new media surges will turn out to embody. More and more, the substantial writing that filters in on Twitter, RSS (through Feedly), and aggregators like Nuzzel and Medium is significant in its approach to the central issues we’re struggling with. That includes traditional players like the New York Times, Wall Street Journal, The Information, and the tech journals, as they combine newsletter techniques with their substantial resources.

We’re seeing a merger of the medias, with the consensus around value and weight being measured by new metrics. In television, it’s the NewFronts combining digital and linear TV; in music it’s at the song level, not the album. Streaming has shaken the old networks to their core, with a horse race between Netflix, Amazon Prime, and Hulu, and ABC, NBC, and the old CBS. M&A has swallowed Fox, Time Warner, FX, and even an old studio, Paramount. And radio? You could say the usual suspects Apple, Google, Amazon, and Spotify, but Clubhouse? Like Zoom, I think so. Twitter and Facebook have bigger fish to fry, but Apple Car and Glasses are the key platforms Clubhouse will play in as we move into the autonomous work from anywhere reality. The payload is value, time management, and notifications at the core of the move to digital.

from the Gillmor Gang Newsletter

__________________

The Gillmor Gang — Frank Radice, Michael Markman, Keith Teare, Denis Pombriant, Brent Leary and Steve Gillmor. Recorded live Friday, February 19, 2021.

Produced and directed by Tina Chase Gillmor @tinagillmor

@fradice, @mickeleh, @denispombriant, @kteare, @brentleary, @stevegillmor, @gillmorgang

Subscribe to the new Gillmor Gang Newsletter and join the backchannel here on Telegram.

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UK challenger bank Starling raises $376M, now valued at $1.9B

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Challenger banks continue to see huge infusions of cash from investors bullish on the opportunity for smaller and faster-moving tech-based banking startups to woo customers from their larger rivals. In the latest development, UK-based Starling announced that is has closed £272 million ($376 million at current rates), at a pre-money valuation of £1.1 billion.

This means that the round, a Series D, values the company at £1.372 billion ($1.9 billion) post-money.

Starling — which competes against incumbent banks, as well as other challengers like Monzo and Revolut — said it will be using the money to continue its growth. The bank is already profitable. In updated financials posted today, Starling said it generated revenue of £12 million ($16.6 million) in January of this year, up 400% compared to a year ago, with an annualized revenue run rate of £145 million. It posted operating profits for a fourth consecutive month, and net income currently exceeds £1.5 million per month.

Starling, founded in 2017, has now pased 2 million accounts, with 300,000 business accounts among them. It’s not clear how many of those accounts are active: the figures are for opened accounts, Starling said. Gross lending has passed £2 billion, with deposits at £5.4 billion.

Starling said it plans to use the funding both to expand its lending operations in the UK, to expand into other parts of Europe, and make some strategic acquisitions.

“Digital banking has reached a tipping point,” said Anne Boden, founder and CEO of Starling Bank, in a statement. “Customers now expect a fairer, smarter and more human alternative to the banks of the past and that is what we are giving them at Starling as we continue to grow and add new products and services. Our new investors will bring a wealth of experience as we enter the next stage of growth, while the continued support of our existing backers represents a huge vote of confidence.”

The round is being led by Fidelity Management & Research Company, with Qatar Investment Authority (QIA); RPMI Railpen (Railpen), the investment manager for the £31 billion Railways Pension Scheme; and global investment firm Millennium Management also participating, and it comes on the heels of us reporting in November that it was raising at least £200 million.

The funding comes at a critical time in consumer banking. The trend in the UK — the market where Starling is active — for the last several year has been a gradual shift to online and mobile banking, with those trends rapidly accelerating in the last year of lock-downs and enforced social distancing to slow down the spread of Covid-19.

Challenger (neo) banks have been some of the biggest winners of evolving consumer habits. Using rails provided as white-label services by way of APIs from banking infrastructure providers (another startup category in itself with companies like Rapyd, Plaid, Mambu, CurrencyCloud and others all involved) they will offer the same basic services such as checking and deposit, but they will typically do so with considerably  more flexibility, and additional savings and financial tips, and savings services to customers — all carried out over digital platforms.

Big, incumbent banks have scrambled to keep up with innovation, but newer generations of users are less beholden to their brands and incumbency, not least a result of the banking crisis last decade that revealed many of them to be cosiderably less competent and solid than many might have assumed.

That bigger market picture has also meant a surge of many neobanks, and so Starling competes with more than just the incumbents. Others include Monese, Revolut, Tide, Atom and Monzo — the latter a particularly acute competitor, founded by the ex-CTO of Starling.

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Deliveroo posted narrowed loss of $309M, with gross transactions surging to $5.7B in 2020, EITF shows

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The clock has officially started ticking on Deliveroo’s plans to go public in April. After announcing last week that it planned to list on the London Stock Exchange, today the on-demand food delivery company backed by Amazon and others published selected updated financials for the previous fiscal year, along with its Expected Intention to Float (EITF) — a more formal document that marks the two-week period until the company publishes its prospectus and, at the start of April, embarks on its subsequent IPO.

The bottom line is that Deliveroo is still unprofitable. It posted a 2020 underlying loss of £223.7 million ($309 million), but that figure was down by nearly £100 million from 2019, when it chalked up a loss of £317 million ($438 million). It did not disclose revenues (sometimes called turnover) in today’s statement.

The company said that it now serves some 6 million customers, with its three-sided marketplace also including more than 115,000 restaurants, takeaways and grocery stores, and 100,000 riders in 800 locations among 12 markets.

At the same time, Deliveroo showed some clear momentum in a year where many restaurants had to close their doors and shift operations to take-away models because of Covid-19.

It notes that it has been profitable on an “Adjusted EBITDA basis” over two quarters, with underlying gross profit up by 89.5% to £358 million ($495 million) compared to £189 million in 2019.

Its gross transaction volume (total amount spent by consumers ordering food) grew by 64% to £4.1 billion ($5.67 billion) with the run-rate in Q4 surging to £5 billion. This figure is unsurprising when you consider that Q4 represented the holiday period, and additionally the UK market (Deliveroo’s primary market and its home) went through not one but two different periods of being locked down in that quarter (the second of these is still in place).

It also notes that gross profit margin as a percentage of GTV has grown from 5.8% in 2018 to 8.8% in 2020, with some markets getting to 12%.

“The company remains focused on investing in driving growth in a nascent online food market,” it noted in the EITF, although I’m not sure nascent is exactly the word I’d use. Its drivers are easily the most visible of the many delivery services that exist in London. Deliveroo estimates that the restaurant and grocery sectors represent an addressable market of £1.2 trillion ($1.66 trillion) across the 12 regions where it offers services. In that figure, it says that just 3% of sales are estimated to be online, “equivalent to less than 1 out of the 21 weekly meal occasions being online.”

The company was valued at over $7 billion in it last fundraising, a $180 million round from Durable, Fidelity and others, as recently as January of this year.

It’s a huge leap that is the stuff that tech myths are made of (with untold hours of blood, sweat and tears, and a lot of luck too). I met Will Shu, the CEO and founder, when he was just really getting started at Deliveroo, and he seemed somewhat bewildered by how fast the startup was growing and where it was leading him. It’s interesting that he himself hasn’t forgotten those early days, either, which surely help keep the company focused at a time when there are a lot of opportunities, and therefore a lot of potential for focus unravelling.

“I never set out to be a founder or a CEO. I was never into start-ups, I didn’t read TechCrunch. I’m not one of those Silicon Valley types with a million ideas,” he noted in his letter published in the EITF. “I had one idea. One idea born out of personal frustration. An idea that I was fanatically obsessed with: I wanted to get great food delivered from amazing London restaurants.”

The prospectus will tell us how much the company intends to raise in its IPO so we’ll know those numbers soon. In the meantime, Deliveroo said that it plans to “invest in its long-term proposition by developing its core marketplace, enhancing its superior consumer experience, providing restaurant and grocery partners with unique tools to help them grow their businesses, and providing riders with the flexible work they value alongside security.”

It’s also going to continue building out “dark kitchens” (which it brands Editions); Signature, a white-label service for restaurants to offer delivery via their own online channels; Plus, a Prime-style loyalty subscription service; and on-demand grocery — which is also shaping up to be a huge market in Europe and the rest of the world.

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Porsche raises stake in electric car and components maker Rimac Automobili

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Rimac Automobili, the Croatian company known for its electric hypercars and battery and powertrain development, has gained yet another investment from Porsche AG.

Porsche said Monday it has invested 70 million euros ($83.3 miilion) into Rimac, a move that increases its stake from 15% to 24%.

This is the third time Porsche has invested into Rimac. The German automaker made its first investment into Rimac in 2018. Porsche increased its equity stake into Rimac in September 2019. A few months earlier, Hyundai Motor Company and Kia Motors jointly invested €80 million ($90 million at the time) into Rimac.

Rimac was founded by Mate Rimac in 2009 and is perhaps best known for its electric hypercars, such as the two-seater C Two that it debuted in 2018 at the Geneva International Motor Show. The vehicle produces an eye-popping 1,914 horsepower, has a top speed of 256 miles per hour and can accelerate from 0 to 60 mph in 1.85 seconds. Rimac plans to unveil C Two in its final form in 2021.

However, Rimac does more than produce hypercars. The company, which employs 1,000 people, also focuses on battery technology within the high-voltage segment, engineers and manufactures electric powertrains and develops digital interfaces between humans and machines.

Porsche is most interested in Rimac’s development of components, according to comments made by Lutz Meschke, the deputy chairman of Porsche AG’s executive board. Meschke noted that Rimac is “excellently positioned in prototype solutions and small series” and “is well on its way to becoming a Tier 1 supplier for Porsche and other manufacturers in the high-tech segment.”

Porsche has already placed its first orders with Rimac for the development of highly innovative series components, according to Meschke.

Despite its continued investments, Porsche said it doesn’t have a controlling stake in Rimac.

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