Tag Archives: Blog

News: Daily Crunch: In one of India’s largest exits, Swedish media giant MTG buys PlaySimple for $360M

• July 2, 2021
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Hello friends and welcome to Daily Crunch, bringing you the most important startup, tech and venture capital news in a single package.

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.

Hello and welcome to Daily Crunch for July 2. We are heading into a holiday weekend here in the United States, so you might imagine that tech news slowed down. It did not, as we’ll see shortly. Looking ahead, TC Early Stage 2021: Marketing & Fundraising is next week and Disrupt is around the corner. Get hype! — Alex

The TechCrunch Top 3

• When SPACs attack: The United States Department of Justice is investigating Lordstown Motors, the embattled EV company that went public via a SPAC. Detractors of the company have punched holes in the story it told before going public, and the company’s SPAC deck has proven to be somewhat, well, disconnected from reality. The company needs more money, it turns out, despite having told investors that it would not. Whoops.
• China v. Didi v. American investors: Sticking to the theme of companies in trouble, Chinese ride-hailing giant Didi is in hot water with its own domestic regulators. The company has been told to halt new user registration, pending a cybersecurity review. Just days after it went public in the United States. Oof.
• IBM’s President steps down: Jim Whitehurst, who made his way to IBM via its Red Hat deal, is out. His tenure as president at the firm lasted 14 months. Details were light on his exit, per Ron Miller Yeesh.

Startups/VC

Today’s startup news has a strong non-American bias. That’s because nearly everyone in the United States took most of today off, regardless of what their boss thought was going on. The rest of the world was still busy, however:

• Licious raises tasty $192M round: The Bangalore-based meat and seafood e-commerce player has now raised through a Series F. A few years back we would have joked that the F in Series F stood for “failed to go public,” but that’s no longer the case. Why not raise a Series F when money is so cheap? The company is now worth more than $650 million, TechCrunch reports.
• MTG buys PlaySimple for $360M: Why are investors betting so much money on the Indian startup ecosystem? Rising exit values, perhaps. TechCrunch noted that the sale of India’s PlaySimple to Swedish gaming giant was “one of the largest exits in the Indian startup ecosystem.”
• Tiger invests $40M into Nigerian neobank: It’s a big day for FairMoney, a Nigerian startup that has its genesis in offering consumers credit. It’s also yet another round for African fintech, a sector that has felt pretty active lately.

3 guiding principles for CEOs who post on Twitter

Did you hear about the CEO who made misleading claims about a funding round and got sued by the SEC? How about that pharmaceutical executive whose taunts to a former secretary of state led to a 4.4% decline in the Nasdaq Biotechnology Index?

In case it isn’t clear: Startup executives are held to a higher standard when it comes to what they post on social media.

“Reputation and goodwill take a long time to build and are difficult to maintain, but it only takes one tweet to destroy it all,” says Lisa W. Liu, a senior partner at The Mitzel Group, a San Francisco-based law practice that serves many startups.

To help her clients (and Extra Crunch readers) stay out of trouble, Liu has six basic questions for tech execs with itchy Twitter fingers.

And if the answer to any of them is “I don’t know,” don’t post.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

Today’s Big Tech news is a mixed bag, but a fun one. And each story has a strong California hook. Let’s begin:

• GM is investing in a California lithium extraction project: Why? Batteries. Gotta have lithium to make batteries. No batteries, no electric cars. In this case the project is actually pretty neat, having a strong hook to Salton Sea Geothermal Field near Los Angeles in the southern part of the state. The geothermal field will provide power and materials. So perhaps electric cars’ pre-driving carbon footprint will be a bit more sustainable in the future.
• Twitter tests more attention-grabbing misinformation labels: Twitter, a California-based company, is making its misinformation labeling a bit more standout. It’s fun to watch social media companies make warnings sterner at the same time as Google is making advertisements better blend into its organic results.
• Dutch court will hear another Facebook privacy lawsuit: A few Dutch nonprofits are suing Facebook over alleged “rampant collection of internet users’ data — arguing the company does not have a proper legal basis for the processing,” TechCrunch summarized. This case seems like it could have broad import, depending on how it shakes out. Given, you know, how much data collection goes on literally all the time, literally everywhere, online.

TechCrunch Experts: Growth Marketing

TechCrunch wants you to recommend growth marketers who have expertise in SEO, social, content writing and more! If you’re a growth marketer, pass this survey along to your clients; we’d like to hear about why they loved working with you.

News: This week in growth marketing on TechCrunch

• July 2, 2021
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A look back at the week’s top posts, plus recommendations for growth marketers who know how to drive results.

TechCrunch is trying to help you find the best growth marketer to work with through founder recommendations that we get in this survey. We’re sharing a few of our favorites so far, below.

We’re using your recommendations to find top experts to interview and have them write their own columns here. This week we talked to Kathleen Estreich and Emily Kramer of new growth advising firm MKT1 and veteran designer Scott Tong, and published a pair of articles by growth marketing agency Demand Curve.

Demand Curve: Email marketing tactics that convert subscribers into customers — Growth marketing firm Demand Curve shares their approaches to subject line length, the three outcomes of an email and how to optimize your format for each outcome.

(Extra Crunch) Demand Curve: 7 ad types that increase click-through rates — The growth marketing agency tells us how to use customer reactions and testimonials, and other ads types to a startup’s advantage.

MKT1: Developer marketing is what startup marketing should look like — MKT1, co-founded by Kathleen Estreich, previously at Facebook, Box, Intercom and Scalyr, and Emily Kramer, previously at Ticketfly, Asana, Astro and Carta, tell us about the importance of finding the right marketer at the right time, and the biggest mistakes founders are still making in 2021.

The pandemic showed why product and brand design need to sit together — Scott Tong shares the importance of understanding users and his thoughts on how companies manage to work together collaboratively in a remote world.

(Extra Crunch) 79% more leads without more traffic: Here’s how we did it — Conversion rate optimization expert Jasper Kuria shared a detailed case study deconstructing the CRO techniques he used to boost conversion rates by nearly 80% for China Expat Health, a lead generation company.

This week’s recommended growth marketers

As always, if you have a top-tier marketer that you think we should know about, tell us!

Marketer: Dipti Parmar
Recommended by: Brody Dorland, co-founder, DivvyHQ
Testimonial: “She gave me an easy-to-implement plan to start with clear outcomes and timeline. She delivered it within one month and I was able to see the results in a couple of months. This encouraged me to hand over bigger parts of our content strategy and publishing to her.”

Marketer: Amy Konefal (Closed Loop)
Recommended by: Dan Reardon, Vudu
Testimonial: “Amy drove scale for us as we grew to a half-billion-dollar company. She identified and exploited efficiencies and built out a rich portfolio of channels.”

Marketer: Karl Hughes (draft.dev)
Recommended by: Joshua Shulman, Bitmovin.com
Testimonial: “Karl is incredibly knowledgeable in the field of content and growth marketing to a large (and equally niche) target audience of developers. He and his team at Draft.dev are some of the best at “developer marketing,” which is a greatly underrated target audience.”

Marketer: Ladder
Recommended by: Anonymous
Testimonial: “They really get what I need. By testing different messaging on different personas, we discover what works and what doesn’t to better understand our users and prospects. This is gold for a company at our stage. Showing those results to our investors blew their minds.”

News: Extra Crunch roundup: CEO Twitter etiquette, lifting click-through rates, edtech avalanche

• July 2, 2021
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We’ll be off on Monday, July 5 in observance of Independence Day. Thanks very much for reading, and I hope you have an excellent weekend.

Yesterday, China ordered ride-hailing company Didi to stop signing up new customers after regulators announced a cybersecurity review of the company’s operations.

As of this writing, Didi’s stock price is down 5.3%. In today’s edition of The Exchange, Alex Wilhelm suggested that the move wasn’t a complete surprise, but it still “puts a bad taste in our mouths,” since the company went public days ago.

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Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.

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When Didi filed to go public, it listed several potential pitfalls facing Chinese companies that go public in the U.S., including “numerous legal and regulatory risks” and “extensive government regulation and oversight in its F-1.”

What does this news signify for other Chinese companies that are hoping for stateside IPOs?

We’ll be off on Monday, July 5 in observance of Independence Day. Thanks very much for reading, and I hope you have an excellent weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

3 guiding principles for CEOs who post on Twitter

Did you hear about the CEO who made misleading claims about a funding round and got sued? How about that pharmaceutical executive whose taunts to a former Secretary of State led to a 4.4% decline in the Nasdaq Biotechnology Index?

In case it isn’t clear: Startup executives are held to a higher standard when it comes to what they post on social media.

“Reputation and goodwill take a long time to build and are difficult to maintain, but it only takes one tweet to destroy it all,” says Lisa W. Liu, a senior partner at The Mitzel Group, a San Francisco-based law practice that serves many startups.

To help her clients (and Extra Crunch readers) Liu has six basic questions for tech execs with itchy Twitter fingers.

And if the answer to any of them is “I don’t know,” don’t post.

The 2021 edtech avalanche has just begun

A report from Brighteye Ventures on Europe’s edtech scene shows that this year’s deal flow is on pace to meet or surpass 2020, when remote instruction exploded.

According to Brighteye’s head of Research, Rhys Spence, the average deal size is now $9.4 million, a threefold increase from last year. Still, “It’s interesting that we are not seeing enormous increases in deal count,” he noted.

How Robinhood’s explosive growth rate came to be

Trading platform Robinhood has attracted enough users and activity to change the conversation around retail investing — economists will likely be discussing the 2021 GameStop saga for years to come.

After the company filed to go public yesterday, Alex Wilhelm sorted through Robinhood’s main income statement to better understand how it scaled year-ago revenue from $127.6 million to $522.2 million in Q1.

“Those are numbers that we frankly do not see often amongst companies going public,” says Alex. “300% growth is a pre-Series A metric, usually.”

So: where is all that revenue coming from?

As EU venture capital soars, will the region retain future IPOs?

Given the valuation gap between U.S. tech markets and those overseas, it’s easy to see why some foreign startups would head to our shores when it’s time to go public.

But Anna Heim and Alex Wilhelm found that a record increase in European venture capital activity is picking up the pace of IPOs this year, and many of these companies are content to go public in their native markets.

To gain some insight into where European investors believe they have an advantage, Anna and Alex interviewed:

• Franck Sebag, partner, EY
• David Miranda, partner, Osborne Clarke Spain
• Yoram Wijngaarde, founder and CEO, Dealroom

How VCs can get the most out of co-investing alongside LPs

In a recent private equity survey, 80% of respondents said their co-investments with people outside traditional VC firms outperformed their PE fund investments.

Alternative investors are highly motivated, and because they’re seeking higher returns than are generally available in public markets, they are less daunted by risk. In return, they benefit from less expensive fee structures and develop close ties with VCs, enlarging the talent pool as they build investment skills.

These relationships have direct benefits for VCs as well, such as more flexibility with diversification and consolidated decision-making power.

“With the right deal structure, deal selection and deal investigation, co-investors can significantly increase their returns,” says C5 Capital Managing Partner William Kilmer, who wrote an Extra Crunch post for VCs considering an alternative path.

Dear Sophie: How can I bring my parents and sister to the U.S.?

Dear Sophie,

My husband and I are both U.S. permanent residents.

Given what we’ve gone through this past year being isolated from loved ones during the pandemic, we’d like to bring my parents and my sister to the U.S. to be close to our family and help out with our children.

Is that possible?

— Symbiotic in Sunnyvale

How to cut through the promotional haze and select a digital building platform

Smart-building products include everything from connecting landlords with tenants to managing construction sites.

Given their widespread impact on the enterprise — and the novel nature of much of this new technology, selecting the right digital building platform (DBP) is a challenge for most organizations.

Brian Turner, LEED-AP BD&C, has created a matrix intended to help decision-makers identify the fundamental functions and desired outcomes for stakeholders.

“When it comes to the built environment, creating those comfortable, healthy and enjoyable places requires new tools,” says Turner. “Selecting a solid DBP is one of the most important decisions to be made.”

Demand Curve: 7 ad types that increase click-through rates

One perennial problem inside startups: Because no one on the founding team has significant marketing experience, growth-related efforts are pro forma and generally unlikely to move the needle.

Everyone wants higher click-through rates, but creating ads that “stand out” is a risky strategy, especially when you don’t know what you’re doing. This guest post by Demand Curve offers seven strategies for boosting CTR that you can clone and deploy today inside your own startup.

Here’s one: If customers are talking about you online, reach out to ask if you can add a screenshot of their reviews to your advertising. Testimonials are a form of social proof that boost conversions, and they’re particularly effective when used in retargeting ads.

Earlier this week, we ran another post about optimizing email marketing for early-stage startups.

We’ll have more expert growth advice coming soon, so stay tuned.

To guard against data loss and misuse, the cybersecurity conversation must evolve

Locking down data centers and networks against intruders is just one aspect of an organization’s security responsibilities; cloud services, collaboration tools and APIs extend security perimeters even farther. What’s more, the systems created to prevent the misuse and mishandling of sensitive data often depend heavily on someone’s better angels.

According to Sid Trivedi, a partner at Foundation Capital, and seven-time CIO Mark Settle, IT managers need to replace existing DLP frameworks with a new one that centers on DMP — data misuse protection.

These solutions “will provide data assets with more sophisticated self-defense mechanisms instead of relying on the surveillance of traditional security perimeters,” and many startups are already competing in this space.

News: Healthcare data sharing: How to improve patient care in the future

• July 2, 2021
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To truly lower costs and reduce inefficiencies, we have to abandon the existing structure and put the customer first.

Far too often, we see medical mixups and even deaths caused by interoperability obstacles in our healthcare system. In these situations, patients in critical conditions cannot speak to their past medical history in an emergency. Upon their recovery but through no fault of their healthcare providers, they are left footing a massive medical bill or facing other severe financial repercussions. Lack of access to data not only causes these terrible outcomes — it’s also part of the reason why our healthcare costs are nearly 18% of the GDP and growing.

Among the many reasons why healthcare data isn’t more digitally accessible is a very simple one: fear that it will be misused. Patients are scared their data will be used against them. This could happen in a number of ways, the most obvious being the threat that insurance companies will use health data to deny people coverage or that employers will use the data to exclude people when making hiring decisions. That’s why the rules and regulations surrounding health data privacy are so stringent.

So, how can investors advance (and capitalize on) tech development around this issue and help eradicate this fear?

Investors, take note

We know funding for companies in healthcare and digital health has not been a problem — but profitability has. Many of these companies are still struggling financially under a fee-for-service business as required by most insurance companies, Medicaid and Medicare. There are grave inefficiencies in the fee-for-service system: It creates the wrong alignment of interests; doesn’t favor the consumer; is complicated by CPT codes (the numerical codes used to identify medical services and procedures), high copayments and deductibles; and is riddled by waste and abuse.

If the investor community bets on companies that continue to embrace a model that many agree is broken, how can we expect outsized returns? To truly lower costs and reduce inefficiencies, we have to abandon the existing structure and put the customer first.

The key here is to look at companies that are truly trying to solve not just one piece of this puzzle, but those that are attempting to create an end-to-end solution that connects the employer, member, hospital, specialists, pharmaceutical companies, primary care doctors and claims adjusters, powered by digital health data — all while making it more affordable for the consumer.

Keep an eye out for those that are moving away from the fee-for-service structure and focused on employer-driven systems. Employers are properly aligned with patients, as bad health outcomes and financial stress both negatively impact productivity. Employers are also focused on KPIs in their business; they’re used to measuring and tracking results, making them great candidates for data-focused healthcare companies.

Most importantly, in a labor market where companies are clamoring to attract employees, employers will have to work with healthcare technology companies that put a premium on data security because their current and potential employees will demand it.

Innovation over fear

The whole future of healthcare is going to focus on the ability to securely share data. To empower providers and patients to take control of their healthcare journey, we need to build a system of trust that allows the efficient flow of personal healthcare information from stakeholder to stakeholder.

Today, with the way HIPAA works and the requirement to keep data private, that trust has to be in the hands of a provider. Imagine if your primary care physician was the quarterback of your entire healthcare journey. Simply by handling your preventative care, they have a more complete picture.

Even better, preventative care is a major focus when it comes to reducing healthcare costs. If you put the data in the hands of a trusted entity and ensure that each person has access to their full medical history, people are much more likely to grant access at times of need.

The good news? There’s hope

The future is very bright because of technology. The challenge is being able to figure out meaningful ways to utilize and integrate it. Right now, we have a system of incumbency that is disincentivized to embrace new technologies.

Telehealth is a perfect example of how the system can meaningfully change. It took a global pandemic to really be able to break through to a point where telehealth was fully embraced (and covered by insurance). Now, health insurers such as Anthem are actively trying to improve care coordination and interoperability.

Three critical technologies not used in healthcare today could be instrumental in bringing about this change. Ideally, all three will align to usher in a new era of healthcare:

Healthcare telemetry 2.0: Collection of health data on cellular devices

Through our use of social apps and e-commerce platforms on our mobile devices, people have already accepted that our cell phones are constantly collecting data on us and willingly consent to this. Sometimes this function is quite helpful — just look at court cases where detailed location data have provided alibis to suspects.

Anybody with a cell phone is carrying a medical device that counts our steps, tracks our screen actions and is attuned to us as users. So why are we not leveraging this function for optimized care — or at the very least trying to get medical insights out of our device use data?

In the future, the number of times one checks their mobile calendar in a day could be an indicator of early-onset Alzheimer’s in people of a particular age group, as one example. Technologists must continue to push the boundaries of how the computing power in our pockets and purses is used to help us, especially with so much of the groundwork already laid.

Privacy 2.0: Application of blockchain to protect medical information

In just the past six months, we have seen bad actors capitalizing on digital risk to cripple entire industries through data breaches. The Colonial Pipeline hack effectively shuttered gas distribution to a massive portion of the U.S. in a matter of hours. With healthcare data, stewards of the system need to be even more careful. It will be tricky to regulate the privacy and protection of healthcare data, but blockchain technology has proven to be an effective measure in maintaining trust between consumers and data stewards.

Portability 2.0: Ability to securely share information with approved parties

For many people with life-threatening conditions, the simple act of wearing a medical bracelet can make a difference between life and death — but at this point, medical bracelets should be obsolete. Imagine the patient benefits that could come from a next-generation medical “bracelet” that carries a patient’s entire genome, tumor profiles, long-term heart rate trends and more, and can be uploaded instantly in an emergency situation.

Right now, the absence of health record portability creates redundancies that are both expensive and harmful to patients. Doctors spend time and resources rescanning patients, while patients suffer from repeated (and sometimes risky) diagnostics, like blood draws and radiation. Nobody has cracked the code on portability, but effective solutions must navigate tricky regulatory waters while solving for standardization across data sets.

We are already seeing these technologies used in other industries. Apple and Google have turned phones into remote monitoring devices that can easily collect all types of health telemetry data. Cryptocurrency represents billions of dollars in transactions with no breach of trust in various coin exchanges. Uber and Lyft have changed the way we hire, use and pay for transportation. Applying the core technologies used in each of these examples would provide a means for disrupting the current challenges in healthcare. It’s only a matter of time.

History has proven that with innovation, investment and technology, the world has become a dramatically better place. As long as rules and regulations stay out of the way, you can expect that technology will allow us to make enormous leaps forward in the next decade.

Making data secure and meaningful, along with personalized medicine, holds the promise to reduce long-term healthcare costs in the U.S. while improving healthcare outcomes.

News: Facebook is testing a Twitter-like ‘threads’ feature on some public figures’ pages

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Get your spool-of-yarn emojis ready — threads might be coming to Facebook soon. Facebook has been spotted testing a new feature that gives public figures on Facebook the ability to create a new post that’s connected to a previous one on a related subject. This feature ties the posts together more visually so fans can

Get your spool-of-yarn emojis ready — threads might be coming to Facebook soon. Facebook has been spotted testing a new feature that gives public figures on Facebook the ability to create a new post that’s connected to a previous one on a related subject. This feature ties the posts together more visually so fans can more easily follow updates over time. When the new post appears on followers’ News Feeds, it will be shown as being connected to the other posts in a thread.

Social media consultant Matt Navarra first spotted this feature in action, and shared several screenshots of how it looks. Reached for comment, Facebook confirmed to TechCrunch it’s testing the feature with a small group of “public figures” on Facebook for the time being. A public figure is a specific type of Facebook Page category aimed at high-profile individuals or anyone else who wants to establish a more public presence on Facebook.

 

 

Facebook explained these threaded posts will have a “View Post Thread” button, which lets followers easily navigate to see all of the posts in the thread. When you tap on the button, you’ll be shown where you can see all the threaded posts connected together in one place.

Facebook was unable to confirm if or when the test would roll out more broadly to other public figures on its platform or if it would later expand to other Page categories, like Businesses, or to Facebook Groups.

Threads are useful on sites like Twitter, where the character limit makes it harder to have more nuanced conversations — that’s why we end up with those oh-so-beloved “notes app apology” posts on Twitter. (Now, Twitter promotes its Revue newsletter app when you write a thread). But on Facebook, your posts can be up to precisely 63,206 characters long (or, about 225 tweets).

Rather than inspiring longer posts, Facebook threads could be used for live commentary on an event like an award show. Or, users could post updates to their existing posts in a thread, rather than updating the original and making a clunky “edited to add…” announcement. Given that Facebook is testing this feature with public figures, perhaps its intended use is to make the sharing of news more streamlined. It’s no secret that Facebook has dealt with some misinformation issues in the past, so for journalists or government officials sharing information about developing news events, threads could provide useful context.

This testing comes after Facebook announced its Bulletin newsletter offshoot earlier this week.

News: 3 guiding principles for CEOs who post on Twitter

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Posting the wrong things at the wrong time is embarrassing, but it can also be a breach of fiduciary duties and may even run afoul of securities laws.

A CEO’s fiduciary duties to their company and its shareholders do not end when they are off the clock — they must always act in good faith. However, navigating the boundaries between a company’s official communications and a personal voice can be difficult in today’s social-media-connected environment.

What a CEO posts on Twitter can raise not only serious reputational issues for themselves and their companies but posting the wrong things at the wrong time can also cause breach of fiduciary duties and may even run afoul of securities laws.

Fiduciary duties can be divided into three buckets: (1) duty of care — CEOs must act in good faith with the care of a reasonable person in a like position with a reasonable belief that their decisions are in furtherance of their company’s best interest; (2) duty of loyalty — CEOs must put the interest of shareholders and the company above their own self-interest; and (3) duty of good faith — CEOs must act with honesty and fairness to shareholders and the company.

There is no denying that Twitter can be leveraged as a powerful tool. Used appropriately, it can fortify the reputation of a company and its CEO, forge stronger consumer relationships and drive business profits. For example, Tim Cook’s habit of tweeting about his interactions with Apple customers demonstrates his customer-service values and effort to connect with consumers, which can potentially lead to a bigger and more loyal following.

Lately, more and more CEOs are communicating their stance on issues that are important to their consumer base to exhibit authenticity, relatability and demonstrate their personal and corporate values through social media. Following last year’s murder of George Floyd and rise of the Black Lives Matter movement, nearly 60% of all S&P 100 tech CEOs, unicorn CEOs, and Fortune 500 CEOs tweeted, “Black Lives Matter.” This was the first time CEOs active on Twitter overwhelmingly voiced their position on racial and social justice issues.

Twitter can also be an opportunity to show transparency in policy. CEOs can use social media to announce new management initiatives, capability expansions and new investments in employees (diversity initiatives, new roles for women, organizational changes) that are positive in tone and speak about the future direction of the company. These can have a positive correlation with stock prices.

It wasn’t that long ago that the world was fixated on Donald Trump’s Twitter posts and their correlation with the stock market. Words have permanence and their impact can be catastrophic. Given their elevated role as a leader and representative of the company and the fiduciary duties they owe, CEOs must watch what they say and when they say it. What it all boils down to is awareness, common sense and the law.

Don’t break the law and stick to the facts

For U.S. publicly traded companies, SEC Regulation Fair Disclosure (Reg FD) says that “an issuer may not disclose material nonpublic information to certain groups, either intentionally or unintentionally, without disclosing the same information to the entire marketplace.” If companies use social media to announce key information, to comply, they must alert investors that social media will be used to disseminate such information.

Regardless of whether it is a public or private company, CEOs are corporate officers and owe fiduciary duties to their companies and their shareholders. Fiduciary duty requires CEOs to act in good faith, apply their best business judgment and to act in the best interest of the company. This is true whether they are in the boardroom or on Twitter.

News: Fetch Robotics’ CEO on the company’s acquisition and the future of warehouse robots

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Yesterday, enterprise computing corporation Zebra Technologies announced its plan to acquire Fetch Robotics. The San Jose-based startup has been a mainstay in warehouse and fulfillment robotics for a number of years, offering a modular system designed to automate companies behind the scenes. The full deal is valued at $305 million, with Zebra acquiring the remaining

Yesterday, enterprise computing corporation Zebra Technologies announced its plan to acquire Fetch Robotics. The San Jose-based startup has been a mainstay in warehouse and fulfillment robotics for a number of years, offering a modular system designed to automate companies behind the scenes.

The full deal is valued at $305 million, with Zebra acquiring the remaining 95% of the company for $290 million. It comes as interest in the category is at an all-time high, following widespread labor shortages during the pandemic.

After the news broke, we sat down with Fetch co-founder and CEO Melonee Wise to discuss the deal and the future of warehouse robotics.

Why was this acquisition the right move for Fetch?

When you look at it, over the last seven years, we’ve been building a pretty compelling cloud robotics platform. About two years ago, Zebra invested in Fetch, and we started working together through our partnership. One of the first things we did was integrating their mobile computing devices, for an out-of-the-box experience on our cloud robotics platform. When our customers got robots, they could take the hand scanner they already had today, scan a barcode and call a robot to them.

As we were fundraising for our Series D, this opportunity came out of that. I think when you look at it, over the last couple of years, we’ve had a good relationship with them. With the pandemic, there’s been a huge draw for more and more automation technology. Before the pandemic, there were already labor shortages for warehouse and logistics, and the pandemic only exacerbated it. One of the other great things about us joining Zebra is they have a strong go-to-market engine, and they can amplify our sales capability. They’re already in all of the customers we want to be working with. It helps us reach a much broader, wider and deeper audience.

I’d assumed Fetch was a good potential candidate for an acquisition, but I’d always imagined it would be something like a Walmart looking to compete with Amazon robotics. I suspect that you’ve been approached by companies over the years. Why does this kind of acquisition make more sense, ultimately?

I think the acquisition made sense because it aligns with more of our long-term vision. When we built our platform, we built it to be unifying. Not just our robots. Over the years we’ve been slowly bringing in other partners on the platform. We have a partnership with SICK, we have partnerships with other MWS providers like VARGO. That isn’t going to change. We’re still going to be partner friendly and we’re still going to bring other devices into the ecosystem. When you look at the options and the opportunities, this was a good opportunity and was well aligned with the team we wanted to build.

I know Zebra has developed their own robot and invested in other robotics companies. Are you the cornerstone of an ecosystem play? Is this Zebra building a a robotic retail and fulfillment ecosystem around Fetch?

Yes, that so far has been the discussion. It’s still evolving. I don’t have all the details for you, obviously. And of course, we still have 30 days or 35 days ‘till closing, so we’re still operating as independent businesses. In terms of vision of how we’re thinking about it, Zebra is very excited to kind of make Fetch the centerpiece of this whole new offering that they’re building out. It’s a high strategic priority for them.

Will the Fetch brand remain? Will the company stay in San Jose? Are you staying on board?

Fetch is not moving. We’re kind of becoming the centerpiece, so they want to keep the team together, in San Jose. My plan is to stay. We’re still working out the details [ … ] Fetch has a very strong brand, and so how do we get the best of both worlds.

Is acquisition something that a company like Fetch works toward? Do you consider it to be kind of an inevitability?

I think it’s complicated. When I started the company, I never really planned on anything. I just wanted to go build something. I mean that in the most sincere way. I wanted to go build something and not fail. And the question is, what does not failing look like? I think the facts are that in the last 20-something years, almost no robotics company has IPO’ed. Now we’re starting to see SPACS, but there hasn’t been a robotics company that’s IPO’ed through the traditional route.

I would say that if you were to ask me on any given day, what I thought the probability of IPO versus acquisition, I probably would have said acquisition, because there’s just not a history of robotics companies IPO’ing. That’s for lots of reasons. It’s a hardware intensive business. It takes a lot of technology and investment. Typically, they’re held privately. It’s hard for large corporate entities to have the P&L to invest in this deep technology. I think that’s starting to change. And I think now that there’s SPACs, you’ll see a lot changing in that regard. But I would say you’re still going to see more acquisitions than you’re going to see IPOs for the next 10 years.

Had you been approached about acquisition in the past?

Yeah. In the past we had been, but many times before it was just too early.

What does it mean to be too early?

It just didn’t feel like the right time for lots of reasons. Some of it has to do with what I want. Some of it has to do with what the team wants. And some of it has to do with what our investors want. There are a lot of people at the table. This is always a hard question. Previously when those things had come up, the market was so undefined and so new, we just wanted to see where it went. Now we’re starting to see more structure to the environment, and we’re starting to see an inflection point.

Is additional international expansion part of the plan?

Yeah. We’re in several companies in Europe. We’re in APAC and expanding in that region. Right now, we aren’t placing any large bets in any of those countries. We’re waiting to see how the market develops, but we’re looking to expand.

News: 79% more leads without more traffic: Here’s how we did it

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In this case study, we’ll show how we used research-driven CRO (conversion rate optimization) techniques to increase lead conversion rate by 79% for China Expat Health, a lead generation company.

In this case study, we’ll show how we used research-driven CRO (conversion rate optimization) techniques to increase lead conversion rate by 79% for China Expat Health, a lead generation company.

Help TechCrunch find the best growth marketers for startups.

Provide a recommendation in this quick survey and we’ll share the results with everybody.

The mobile site view on the left labeled “before” is the control ( “A” version) while that on the right labeled “after” is the optimized page (“B” version). We conducted a split test aka A/B test, directing half of the traffic to each version, and the result attained 95% statistical significance. Below is a description of the key changes made.

Used a headline with a more compelling value proposition

The headline on the control version is “Health Insurance in China.” If I am an expat looking for health insurance in China, at least I know I am in the right place but I don’t immediately have a reason to choose you. I have to scroll and infer this from multiple elements.

The winning version instantly conveys a compelling value proposition: “Save Up to 32% on Your Health Insurance in China,” accompanied by “evidentials” to support this claim — the number of past customers and a relevant testimonial with a 4.5 star rating (by the way, it is better to use a default static testimonial rather than a moving carousel).

As the famed old-school direct response marketer John Caples taught us, “The reader’s attention is yours only for a single instant. They will not spend their valuable time trying to figure out what you mean.” What was true in Caples’ 1920s heyday is doubly so in the mobile age, when attention spans are shorter than a fruit fly’s!

News: Department of Justice opens investigation into EV startup Lordstown Motors

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Lordstown Motors continues to stumble. The beleaguered electric vehicle startup is now being investigated by the Department of Justice, in addition to an ongoing investigation by the Securities and Exchange Commission. The investigation, first broke by the Wall Street Journal on Friday, is still in its early stages, according to unnamed sources. It is being

Lordstown Motors continues to stumble. The beleaguered electric vehicle startup is now being investigated by the Department of Justice, in addition to an ongoing investigation by the Securities and Exchange Commission.

The investigation, first broke by the Wall Street Journal on Friday, is still in its early stages, according to unnamed sources. It is being conducted by the U.S. attorney’s office in Manhattan.

“Lordstown Motors is committed to cooperating with any regulatory or governmental investigations and inquiries,” a company spokesperson told TechCrunch. “We look forward to closing this chapter so that our new leadership – and entire dedicated team – can focus solely on producing the first and best full-size all-electric pickup truck, the Lordstown Endurance.”

The probe is just the latest in a series of woes for the startup, which recently said it had to cut production volumes for its debut electric pickup, Endurance, by half — from around 2,200 vehicles to 1,000. Just a few weeks after it made that announcement, there followed news of a corporate shakeup: the resignation of founding CEO Steve Burns and CFO Julio Rodriguez. Burns started the company as an offshoot of his previous startup, Workhorse Group.

Lordstown had a strong start, with investments from General Motors that helped it purchase a 6.2-million-square-foot factory from the leading automaker in late 2019. Lordstown made positive headlines last August, when it announced it would go public via a merger with a special purpose acquisition company (SPAC). The deal injected the EV startup with around $675 million in gross proceeds and skyrocketed its market value to $1.6 billion. Less than a year later, Lordstown informed the SEC that it does not have sufficient capital to manufacture Endurance.

Then, in March, the short-seller firm Hindenburg Research released a report disputing the company’s claims that it had booked 100,000 pre-orders for the electric pickup. It wrote that “extensive research reveals that the company’s orders appear largely fictitious and used as a prop to raise capital and confer legitimacy.” The SEC opened its investigation in the wake of these accusations.

The WSJ story is unclear on the scope of the inquiry and the company declined to provide details. TechCrunch will update the story if it learns more.

News: CMU’s president discusses how Pittsburgh is building — and retaining — high-tech startups

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For a brief moment, earlier this week, it seemed as though Pittsburgh might be the center of the tech universe. Just as Carnegie Mellon alum Duolingo was announcing its IPO. Senators Bob Casey and Pat Toomey were in town, as Vice President Kamala Harris paid a visit to the City of Bridges to talk infrastructure.

For a brief moment, earlier this week, it seemed as though Pittsburgh might be the center of the tech universe. Just as Carnegie Mellon alum Duolingo was announcing its IPO. Senators Bob Casey and Pat Toomey were in town, as Vice President Kamala Harris paid a visit to the City of Bridges to talk infrastructure.

The morning of TechCrunch’s City Spotlight, the Pittsburgh Robotics Network held its own event to announce a new alliance with members of the local government and faculty from nearby universities.

“The alliance brings together leaders from top robotics companies, research institutions and universities in the Pittsburgh area, including Carnegie Mellon University (CMU), Argo AI, Aurora, the University of Pittsburgh, Kaarta, RE2 Robotics, Neya Systems, Carnegie Robotics, HEBI Robotics, Near Earth Autonomy, BirdBrain Technologies, Omnicell and Advanced Construction Robotics,” a press release noted. “The Richard King Mellon Foundation commemorated this membership milestone with a grant of $125,000 to support the continued growth of the PRN.”

Our own Spotlight event, held later that afternoon, was designed to highlight the city’s continued evolution. To many, Pittsburgh is still very much the plucky but troubled city reeling from the deindustrialization of the 70s and 80s, as the factory and industry jobs that formed its foundation moved out of town and shipped overseas. The rust belt veneer is a hard one to leave behind, but the city’s biggest cheerleaders are working hard to transform the image of Pittsburgh into one of robotics, AI, autonomy and other cutting-edge technologies.

Carnegie Mellon has — and continues to be the cornerstone of that Pittsburgh. A world-class research school by any metric, CMU is the crown jewel of the area’s dozens of colleges and universities. While the University of Pittsburgh is a huge driver for the city’s medical and science communities, CMU is the reason it can count itself among the leaders in robots and self-driving cars.

Speaking at our event, Farnam Jahanian cited the school’s The Swartz Center as a major driver in its efforts to support the startup ambitions of students and faculty alike.

“The Swartz Center for Entrepreneurship at Carnegie Mellon is a system of programming activities that offers a unique path of entrepreneurship, education, engagement, collaboration and opportunities for students, faculty and staff that are interested in entrepreneurship, from the Innovation Scholars Program, to the corporate startup lab, to essentially garages that students and faculty can essentially sign up for to launch their companies from plus a host of other programmatic things, resources that you would need,” says Jahanian, who was appointed CMU’s president in 2018.

The Swartz Center for Entrepreneurship was founded in 2015, courtesy of a $31 million donation from CMU alumnus and Accel Partners co-founder, James R. Swartz. The center built on previous efforts like 2012’s Carnegie Mellon Center and Project Olympus, founded in 2007. The Swartz Center and its recent precursors list among their success stories Duolingo, DataSquid and AbilLife.

Dave Mawhinney recently told TechCrunch that he took the role as the center’s executive director in an effort, “to make it on par with Stanford, MIT, Berkeley, Harvard and other great entrepreneurial universities.” CMU certainly isn’t outclassed by any of the above in terms of its position as a world-class research university, but Mawhinney concedes that the school and the city have traditionally grappled with entrepreneurial retention.

“You can always learn from what you have and build on it,” says Jahanian. “I would stress it is really about the entire ecosystem. It’s not about just what CMU does — that’s a critical part of it. It’s University of Pittsburgh, it’s other universities that are in our region that are also contributing significantly to our ecosystem.”

Mawhinney says that CMU’s ability to incubate and foster tech startups hit an inflection point roughly a decade and a half ago, as Big Tech took an increasing interest in the research the school was doing around things fields like AI and automation.

“Really, the seminal event was when Google put an office in Pittsburgh in 2006. They have over 1,000 employees,” he says. “Every major tech company — Amazon, Facebook, Apple — have all embedded hundreds of engineers in our community, so we’re growing really, really rapidly. Artificial intelligence was invented at Carnegie Mellon — and that sort of set off the robot revolution [ … ] Now we’re the center of the automated vehicle community. Aurora is co-located here, Argo is here, Aptiv is here. We have a very vibrant community and we do want to continue to grow it.”

Building a successful company requires a lot more than engineers, of course (there’s a decent chance you wouldn’t be reading this if that weren’t the case). In the lead up to our event, I asked several interested parties what the biggest hurdle was in continuing to attract and grow the city’s startup ecosystem. The overwhelming answer was simple: venture capital.

“What we need is more capital — angel funds, venture funds so that entrepreneurs have a variety of funding sources to go to locally,” Yvonne Campos of Next Act Fund LLC told TechCrunch. “We definitely need more funding for women-led businesses — women raise about one-third less capital than men-led companies. Not because of the business idea or leader, but because we invest in companies where we have the most comfort — we invest in people that look like us. Nationally, only about 20%-25% of all angel investors are women. We need more women to become active as investors.”

The city’s mayor, Bill Peduto, who also appeared at our event, echoed the sentiment.

“I think the biggest hurdle remains access to venture capital, especially in this stage. I think we’ve been able to convince investors from the coast that the companies don’t need to leave Pittsburgh in order to be highly successful and see their investment pay off,” he told me in an interview. “However, I believe if we had more venture capital arriving here to help to take early-stage companies into that critical next stage of expansion, it would build off itself and it would excel growth in all of the industry cluster, significantly.”

During our conversation, however, Jahanian pushed back on the sentiment. “I respectfully disagree,” he told me. “Funding is important, but great ideas get funded. I’ve seen it my entire career. They get funded at levels that really show that these companies have a shot at being really successful.”

CMU’s president points to another problem, entirely. “You need a lot more than just cool technologies or new research ideas or new concepts or products just to launch a company,” Jahanian says. “You need a lot more around it. You need marketing, product management, you need to be able to develop a business plan. So those are a lot of the resources that we do provide.”

Kleiner Perkins CPO Bing Gordon reflected the sentiment, speaking to me over email. “[Pittsburgh needs] to import CFOs, product managers, ad sales,” he wrote. Another historical concern for the city is attracting that talent. CMU hasn’t had an issue on that front, because location is less of a key concern for students applying for research universities. When it comes to careers after college, settling down and starting a family, on the other hand, suddenly quality of life rockets up the list.

Jahanian says he has long championed green spaces and other communal gathering places in his conversations over the years with Peduto. He adds that the subject should continue to be top of mind for whoever the city’s new mayor is next year.

“One of the most important things about the startup and high-tech community in Pittsburgh is the quality of life for citizens across this town,” says Jahanian. “I can tell you as a university president, an overwhelming majority of the faculty that we recruit want to live in the city and enjoy it. That’s an important part of it. Obviously, there’s a lot more going on beyond the quality of life. The more that the city does to bridge the gap between those who are prospering and those who are potentially left behind in the economies that are created the high-tech economies is important. That’s a responsibility of the private sector and the public sector. I’m really optimistic that we’ll have a great partnership with our future mayor, as we’ve done in the past mayors to catalyze the economy and lift all boats.”