Monthly Archives: April 2021

News: Ride-hailing’s profitability promise is in its final countdown

Last month was Uber’s best in history in terms of gross sales on its platform. That’s good, but not as good as you might think.

After a short hiatus, The Exchange is back. We’ll spend part of this week digging into the global venture capital scene’s Q1 performance, but today, we’re kicking off with a quick dive into Uber, Lyft, Deliveroo and DoorDash — and the ability of on-demand companies of various stripes to generate profit.

Uber is our lodestone today because it dropped a new SEC filing that includes some notes on its recent performance. And, most critically, a piece of guidance for investors concerning its ability to make money this year.


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By “make money,” we don’t mean traditional net income on a GAAP — generally accepted accounting principles — basis. We mean Uber is providing its public investors with notes on its future adjusted profitability. Real profits are still somewhere out in the uncharted future.

So let’s parse Uber’s latest, vet its profit promise, consider its rivals and their performance, and then ask ourselves if the great ride-hailing and food-delivery booms will ever make back the money they cost to scale.

Uber’s planned profits

In 2019, Lyft told investors to expect positive adjusted EBITDA by the final quarter of 2021; at the time, Uber said it would generate full-year positive adjusted EBITDA. Those are slightly different (if related) promises. Later, Uber moved up its profitability promise to Q4 2020, but that was not to be.

After Uber changed up its profitability timeline, COVID-19 came. The pandemic forced the American ride-hailing company to revert to its previous adjusted profitability promises.

Uber and Lyft took huge revenue hits as their core ride-hailing businesses dried up faster than water on a Texas sidewalk after COVID-19 lockdowns took effect. In response, Uber fell back on its Uber Eats business, while Lyft had to get by without a second business line.

News: EV automaker Rivian partners with Samsung SDI in battery cell supply deal

Rivian, the Amazon-backed EV manufacturer aiming to bring an electric pickup to market later this year, has partnered with Samsung SDI as its battery cell supplier, the company said Monday. The two companies did not disclose the value of the deal or its term length, but in a statement released Monday Rivian said it had

Rivian, the Amazon-backed EV manufacturer aiming to bring an electric pickup to market later this year, has partnered with Samsung SDI as its battery cell supplier, the company said Monday.

The two companies did not disclose the value of the deal or its term length, but in a statement released Monday Rivian said it had been working with Samsung SDI “throughout the vehicle development process.”

Rivian pointed out that its anticipated R1T pickup and R1S SUV, which Rivian calls “adventure vehicles,” require a battery module and pack that can handle extreme temperatures and durability use cases.

South Korea-based Samsung SDI already supplies battery cells to other automakers. In 2019, the company signed a $3.2 billion deal with BMW Group for a 10-year supply agreement.

“We’re excited about the performance and reliability of Samsung SDI battery cells combined with our energy-dense module and pack design,” Rivian CEO Rj Scaringe said in a statement. “Samsung SDI’s focus on innovation and responsible sourcing of battery materials aligns well with our vision.”

News: Microsoft goes all in on healthcare with $19.7B Nuance acquisition

When Microsoft announced it was acquiring Nuance Communications this morning for $19.7 billion, you could be excused for doing a Monday morning double take at the hefty price tag. That’s surely a lot of money for a company on a $1.4 billion run rate, but Microsoft, which has already partnered with the speech-to-text market leader

When Microsoft announced it was acquiring Nuance Communications this morning for $19.7 billion, you could be excused for doing a Monday morning double take at the hefty price tag.

That’s surely a lot of money for a company on a $1.4 billion run rate, but Microsoft, which has already partnered with the speech-to-text market leader on several products over the last couple of years, saw a company firmly embedded in healthcare and it decided to go all in.

And $20 billion is certainly all in, even for a company the size of Microsoft. But 2020 forced us to change the way we do business from restaurants to retailers to doctors. In fact, the pandemic in particular changed the way we interact with our medical providers. We learned very quickly that you don’t have to drive to an office, wait in waiting room, then in an exam room, all to see the doctor for a few minutes.

Instead, we can get on the line, have a quick chat and be on our way. It won’t work for every condition of course — there will always be times the physician needs to see you — but for many meetings such as reviewing test results or for talk therapy, telehealth could suffice.

Microsoft CEO Satya Nadella says that Nuance is at the center of this shift, especially with its use of cloud and artificial intelligence, and that’s why the company was willing to pay the amount it did to get it.

“AI is technology’s most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud in Healthcare and Nuance,” Nadella said in a post announcing the deal.

Microsoft sees this deal doubling what was already a considerable total addressable market to nearly $500 billion. While TAMs always tend to run high, that is still a substantial number.

It also fits with Gartner data, which found that by 2022, 75% of healthcare organizations will have a formal cloud strategy in place. The AI component only adds to that number and Nuance brings 10,000 existing customers to Microsoft including some of the biggest healthcare organizations in the world.

Brent Leary, founder and principal analyst at CRM Essentials, says the deal could provide Microsoft with a ton of health data to help feed the underlying machine learning models and make them more accurate over time.

“There is going be a ton of health data being captured by the interactions coming through telemedicine interactions, and this could create a whole new level of health intelligence,” Leary told me.

That of course could drive a lot of privacy concerns where health data is involved, and it will be up to Microsoft, which just experienced a major breach on its Exchange email server products last month, to assure the public that their sensitive health data is being protected.

Leary says that ensuring data privacy is going to be absolutely key to the success of the deal. “The potential this move has is pretty powerful, but it will only be realized if the data and insights that could come from it are protected and secure — not only protected from hackers but also from unethical use. Either could derail what could be a game changing move,” he said.

Microsoft also seemed to recognize that when it wrote, “Nuance and Microsoft will deepen their existing commitments to the extended partner ecosystem, as well as the highest standards of data privacy, security and compliance.”

We are clearly on the edge of a sea change when it comes to how we interact with our medical providers in the future. COVID pushed medicine deeper into the digital realm in 2020 out of simple necessity. It wasn’t safe to go into the office unless absolutely necessary.

The Nuance acquisition, which is expected to close some time later this year, could help Microsoft shift deeper into the market. It could even bring Teams into it as a meeting tool, but it’s all going to depend on the trust level people have with this approach, and it will be up to the company to make sure that both healthcare providers and the people they serve have that.

News: Equity Monday: Microsoft buys Nuance, Uber isn’t dead, and Austin has a new unicorn

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines. This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here. It is good to be back!

There was a lot to get through, so, in order that we discussed the topics on the show, here’s our rundown:

Don’t forget that Coinbase is listing this week, yeah? Chat soon!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

News: Hardware is still hard in the Motor City

“It’s a little bit of a messy story,” Adam Leeb says with a laugh. The story that landed Astrohaus in Detroit on two separate occasions is a bit tangled, certainly. The hardwre startup’s cofounder and CEO isn’t the sort of hometown cheerleader you often encounter when speaking with executives who’ve opted to keep their organizations

“It’s a little bit of a messy story,” Adam Leeb says with a laugh. The story that landed Astrohaus in Detroit on two separate occasions is a bit tangled, certainly. The hardwre startup’s cofounder and CEO isn’t the sort of hometown cheerleader you often encounter when speaking with executives who’ve opted to keep their organizations outside cities like San Francisco or New York.

Hailing from Detroit’s outer suburbs, Leeb cofounded the company in the Motor City in Fall 2014 with Patrick Paul. Astrohaus’s first – and best known – product was born as an attempt to offer users a “distraction-free writing experience.”

“I’m not even a writer,” Leeb says of the product’s inception. “What interests me about the product – what got me going – is yes, it’s about writing, but common among all of the things I’m interested in, is it’s more about process and productivity. That’s something I’m super passionate about. And making things easier that get out of your way and are really fun to use.”

Leeb, an MIT mechanical engineering graduate and Philips, a Michigan State graduate and software developer met through the Detroit startup community and got to work prototyping a word processing device that delivered the benefits of modern, without the sort of inherent distractions of computers and tablets that today’s writers know all too well.

The young company introduced itself to the world by way of Kickstarter, launching a campaign in 2014.

“The Hemingwrite combines the best features of all previous writing tools with the addition of modern technology,” the company wrote. “It is dedicated like a typewriter, has a better keyboard and battery life than your computer and is distraction free like a word processor. Finally, we sync your documents to the cloud in real-time so you never have to worry about saving, syncing or backing up your work.”

The product was greeted with excitement and some gentle-ribbing (and some not-so-gentle, including one review that called it “pretentious hipster nonsense”) over a $500 reinvention of the typewriter. The crowfunding community went wild, with nearly $350,000 raised. In June of 2015, the product was renamed.

“We are updating our brand with a more demonstrative name that also no longer ties us to the persona of a certain famous writer,” the company wrote in a June 2015 Kickstarter updated. Two months later, Astrohaus relocated to New York City.

“I was really itching to leave. I didn’t know how we were going to make it in Detroit,” Leeb says. “There’s not really a hardware scene and my connections were mostly in New York. I pushed Patrick – we had raised some money and gotten going, so I was like, ‘let’s move to New York.’ There’s definitely more of a hardware scene and we were definitely a part of it.”

Once again, life intervened. Philips left the company and Leeb married Kacee Must, a Detroit resident – and owner of local yoga chain, Citizen Yoga. In 2018, he found himself building Astrohaus up again in the city where it started life. Three years later, the team is still a fairly lean one, with five full time employees in Detroit and a more distributed team of contractors.

Leeb’s feelings about launching a hardware startup in Detroit are clearly mixed. He bemoans the difficult it recruiting and finding funding locally, while acknowledging a sense of local cheerleading one really finds in larger cities. “With these smaller ecosystems, you really get to know people everywhere,” he says. “Everyone is so accessible. As far as anywhere I’ve ever been, Detroit companies really cheer or each other. There’s so much Detroit pride.”

For all of the talk of returning manufacturing to Detroit, Leeb says he’s had little luck in his pursuit to get the Freewrite and subsequent products created in the U.S.

“There’s a whole other world of advanced manufacturing startups that definitely get a lot of benefits from being in a manufacturing hub,” he says. “I think for software companies and for us it’s not so beneficial. We make our goods in China, and I don’t see that changing any time soon. I have good relationships with our factories and I spend a lot of time in China. That’s what they’re geared toward. They make consumer electronics.”

Astrohaus' Freewrite Traveler on a table

Image Credits: Darrell Etherington

Leeb says he’s found the Andrew Yang-founded Venture for America nonprofit a useful source of hiring locally. In the years following Astrohaus’ launch, impressions of the city have changed radically from a depressed byproduct of rust belt boom and bust to a viable place to launch a business.

“The last 10 years, there’s a massive difference in the city,” Leeb says. “[Quicken Loans cofounder] Dan Gilbert almost single-handedly brought the city back. There are a lot of people who hate him, but the reality is that, while he wasn’t the billionaire in town, he’s the only one who heavily invested in Detroit. He consolidated all of his suburban offices and put them in downtown and he convinced all of these companies to do the same.”

The Covid-19 pandemic will no doubt continue to have repercussions, as remote work becomes the norm for many or most tech outlets. Though hardware startups will always have a compelling reason to keep things in close quarters, as companies develop and test products. For his part, Leeb says Astrohaus’ next device aims to address concerns about remote collaboration.

“I’m very aggressively starting to work on a new hardware product that is a collaboration and communication too,” he says. “It was a problem before, and now it’s such a widespread problem that I feel we’re lacking in certain communication. There’s a lot to be done there. I don’t feel as connected as we could be, even with the technology we have.”

News: Dive into Detroit’s growing startup scene with TechCrunch’s Detroit City Spotlight and meetup

Don’t sleep on Detroit. The city that put America in motion is quickly growing into a startup hub with a wide variety of successes. From sneakers to mortgages to houseplants, companies are finding success in Southeast Michigan thanks to welcoming investors, access to amazing engineering talent, and a deep history of creating lasting businesses. Throughout

Don’t sleep on Detroit. The city that put America in motion is quickly growing into a startup hub with a wide variety of successes. From sneakers to mortgages to houseplants, companies are finding success in Southeast Michigan thanks to welcoming investors, access to amazing engineering talent, and a deep history of creating lasting businesses. Throughout the coming days, TechCrunch is going to publish additional stories from Detroit including interviews with local heros and promising startups.

StockX is leading the way as explained in this multi-part feature that explores the company’s founding, strategies, and future. Located in the heart of downtown Detroit, StockX is leaving a lasting mark on the city as the company marches towards an initial pubic offering.

The StockX EC-1 comprises four main articles numbering 11,700 words and a reading time of 47 minutes.

  • Part 1: Origin storyHow StockX became the stock market of hype” (2,500 words/10 minute reading time) — Investigates how StockX evolved from a basic aggregation of price data into the multibillion dollar juggernaut we see today.
  • Part 2: E-commerce authenticationAuthentication and StockX’s global arms race against fraudsters” (3,700 words/15 minute reading time) — A deeply nuanced analysis of StockX’s key product of authentication and the challenges of building a trusted market against an onslaught of scammers heavily incentivized to get a fake good sold.
  • Part 3: Competitive and consumer landscape Where StockX fits in the business of sneakers” (2,800 words/11 minute reading time) — Explores how the company connected buyers and sellers, as well as its long-term impact on both groups.
  • Part 4: Future and impact The consequences of scaling up sneaker culture” (2,700 words/11 minute reading time) — Looks at how StockX and the changes it has wrought have led to a massive change in the culture of sneakers and what that portends long term.

On Thursday, April 15, we’re hosting a small virtual meetup in Detroit featuring a pitch-off with local startups, interviews with local investors, and we’ll chat with the author of the StockX EC-1. This event is free. Register here. We hope you can join us to learn more about the modern Detroit

It’s important to note Detroit’s success trails a larger, more important ecosystem in Southeast Michigan. Ann Arbor is located 45 minutes away, and should not be pushed aside. This university town has long produced world-class companies and products. The majority of the VC funding in Michigan goes to Ann Arbor-based startups. There are advantages to both areas, though, and TechCrunch loves the cooperation between the two regions.

News: IonQ now supports IBM’s Qiskit quantum development kit

IonQ, the trapped ion quantum computing company that recently went public via a SPAC, today announced that it is integrating its quantum computing platform with the open-source Qiskit software development kit. This means Qiskit users can now bring their programs to IonQ’s platform without any major modifications to their code. At first glance, that seems

IonQ, the trapped ion quantum computing company that recently went public via a SPAC, today announced that it is integrating its quantum computing platform with the open-source Qiskit software development kit. This means Qiskit users can now bring their programs to IonQ’s platform without any major modifications to their code.

At first glance, that seems relatively unremarkable, but it’s worth noting that Qiskit was founded by IBM Research and is IBM’s default tool for working with its quantum computers. There is a healthy bit of competition between IBM and IonQ (and, to be fair, many others in this space), in part because both are betting on very different technologies at the core of their platforms. While IonQ is betting on trapped ions, which allows its machines able to run at room temperature, IBM’s technique requires its machine to be supercooled.

IonQ has now released a new provider library for Qiskit that is available as part of the Qiskit Partner repository on GitHub and via the Python Package Index.

“IonQ is excited to make our quantum computers and APIs easily accessible to the Qiskit community,” said IonQ CEO & President Peter Chapman. “Open source has already revolutionized traditional software development. With this integration, we’re bringing the world one step closer to the first generation of widely-applicable quantum applications.”

On the one hand, it’s hard not to look at this as IonQ needling IBM a bit, but it’s also an acknowledgment that Qiskit has become somewhat of a standard for developers who want to work with quantum computers. But putting these rivalries aside, we’re also in the early days of quantum computing and with no clear leader yet, anything that makes these various platforms more interoperable is a win for developers who want to dip their feet into writing for them.

News: Microsoft is acquiring Nuance Communications for $19.7B

Microsoft agreed today to acquire Nuance Communications, a leader in speech to text software, for $19.7 billion. Bloomberg broke the story over the weekend that the two companies were in talks. In a post announcing the deal, the company said this was about increasing its presence in the healthcare vertical, a place where Nuance has

Microsoft agreed today to acquire Nuance Communications, a leader in speech to text software, for $19.7 billion. Bloomberg broke the story over the weekend that the two companies were in talks.

In a post announcing the deal, the company said this was about increasing its presence in the healthcare vertical, a place where Nuance has done well in recent years. In fact, the company announced the Microsoft Cloud for Healthcare last year, and this deal is about accelerating its presence there. Nuance’s products in this area include Dragon Ambient eXperience, Dragon Medical One and PowerScribe One for radiology reporting.

“Today’s acquisition announcement represents the latest step in Microsoft’s industry-specific cloud strategy,” the company wrote.

Nuance CEO Mark Benjamin will remain with the company and report to Scott Guthrie, Microsoft’s EVP in the cloud and AI group.

Nuance has a complex history. It went public in 2000 and began buying speech recognition products including Dragon Dictate from Lernout Hauspie in 2001. It merged with a company called ScanSoft in 2005. That company began life as Visioneer, a scanning company in 1992.

Today, the company has a number of products including Dragon Dictate, a consumer and business text to speech product that dates back to the early 1990s. It’s also involved in speech recognition, chat bots and natural language processing particularly in healthcare and other verticals.

The company has 6,000 employees spread across 27 countries. In its most recent earnings report from November 2020, which was for Q42020, the company reported $352.9 million in revenue compared to $387.6 million in the same period a year prior. That’s not the direction a company wants to go in, but it is still a run rate of over $1.4 billion.

At the time of that earnings call, the company also announced it was selling its medical transcription and electronic health record (EHR) Go-Live services to Assured Healthcare Partners and Aeries Technology Group. Company CEO Benjamin said this was about helping the company concentrate on its core speech services.

“With this sale, we will reach an important milestone in our journey towards a more focused strategy of advancing our Conversational AI, natural language understanding and ambient clinical intelligence solutions,” Benjamin said in a statement at the time.

It’s worth noting that Microsoft already has a number speech recognition and chat bot products of its own including desktop speech to text services in Windows and on Azure, but it took a chance to buy a market leader and go deeper into the healthcare vertical.

The transaction has already been approved by both company boards and Microsoft reports it expects the deal to close by the end of this year, subject to standard regulatory oversight and approval by Nuance shareholders.

This would mark the second largest purchase by Microsoft ever, only surpassed by the $26.2 billion the company paid for LinkedIn in 2016.

News: Clim8 raises $8M from 7pc Ventures, launches climate-focused investing app for retail investors

Ethical investing remains something of a confusing maze, with a great deal of ‘greenwashing’ going on. A new UK startup is hoping to fix that with the launch of its new app and platform for retail investors. Clim8 Investhas raised $8 million from 7pc Ventures (early backers of Oculus, acquired by Facebook),  British Business Bank

Ethical investing remains something of a confusing maze, with a great deal of ‘greenwashing’ going on. A new UK startup is hoping to fix that with the launch of its new app and platform for retail investors.

Clim8 Investhas raised $8 million from 7pc Ventures (early backers of Oculus, acquired by Facebook),  British Business Bank Future Fund and a numbers of technology entrepreneurs and executives including Marcus Exall (Monese), Marcus Mosen (N26),  Paul Willmott (Lego Digital, McKinsey), Doug Scott (Redbrain), Matt Wilkins (Thought Machine), Andrew Cocker (Skyscanner), Steve Thomson (Redbrain), Monica Kalia (Neyber, Goldman Sachs), Doug Monro (Adzuna), Erik Nygard (Limejump). 

Consumers will be able to invest in companies and supply chains that are focused on tackling climate change. It will be competing with similar startups in the space such as London-based Tickr (backed by $3m from Ada Ventures), Helios in Paris, and Yova in Zurich.

Duncan Grierson, CEO of Clim8 said in a statement: “We are launching at an exciting time for sustainable investing. 2020 was an exceptional year for environmentally-focused investment offerings, as investors looked harder at climate-related opportunities. Sustainable investments have continued to outperform markets since the beginning of the Covid-19 Crisis and we believe this will continue.”

Grierson has 20 years of experience in the green space and was a winner of the EY Entrepreneur of Year Cleantech award.

The startup will take advantage of new, higher EU rules around the disclosure requirements for sustainable investment funds. Users can choose between either stocks and shares ISAs (up to £20k) or a taxable general investment account.

News: Jack Ma’s Ant called to end anti-competition in payments

The details for Ant’s restructuring plan after its IPO was called off have arrived. Ant Group, the fintech affiliate of Alibaba controlled by Jack Ma, will be restructuring as a financial holding company, China’s central bank said on Monday. Ant, which provides online infrastructure for payments and other financial services, needs to “correct its anti-competitive

The details for Ant’s restructuring plan after its IPO was called off have arrived. Ant Group, the fintech affiliate of Alibaba controlled by Jack Ma, will be restructuring as a financial holding company, China’s central bank said on Monday.

Ant, which provides online infrastructure for payments and other financial services, needs to “correct its anti-competitive practices” and “give consumers more options in payments methods,” the regulator said. It should also end its monopoly on user information.

More to come…

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