Year: 2019

Wattpad, an online community for original fiction whose stories have been turned into streaming hits like Netflix’s “The Kissing Booth,” is now turning its eyes to publishing. The company today announced the launch of a new division, Wattpad Books, that aims to turn its most popular content into future best sellers.

The books division will publish six titles this year, aimed at Wattpad’s largely young adult audience of 70 million users, who collectively spend 22 billion minutes per month engagement with its site and app.

The most popular of the forthcoming titles, The QB Bad Boy & Me by Tay Marley, was read over 26.3 million times on Wattpad, and will become available in book form on August 20, 2019.

The other five titles also found a strong readership online, including Trapeze by Leigh Ansell (2.5 million reads); What Happened That Night by Deanna Cameron (over 1 million reads); Cupid’s Match by Lauren Palphreyman (46.4 million reads); Saving Everest by Sky Chase (17.2 million reads); and I’m a Gay Wizard by V.S. Santoni (404,000 reads).

These books will be released through the months of September and October 2019, and are tales of young romance – though sometimes with a fantasy or mystery twist.

Combined, the stories have over 100 million reads worldwide.

Wattpad says it select the titles for publishing using a combination of editorial curation and its “Story DNA Machine Learning technology.” This technology helps to deconstruct stories by analyzing things like sentence structure, word use and grammar, with the goal of helping to uncover the next best seller.

The company has used this machine learning tech in the past to help it select winners for its writing awards among hundreds of thousands of submissions, and it has leveraged its insights to help the company figure out which stories make the most sense to turn into TV shows and movies.

Wattpad, to date, has been doing fairly well on that front, having licensed or sold the rights to Wattpad stories to places like Sony Pictures TV, Hulu, CW Seed, Tuner, Universal Cable Productions, Paramount Pictures, Netflix, iflix, SYFY, and others.

It also has a history working with publishers, including HarperCollins, European publisher Hachette Romans and more.  So far, Wattpad says it has already turned nearly 1,000 of its stories into books through these efforts. And it will continue to work with international publishers to bring its stories to a wider audience, the company notes.

Wattpad Books, meanwhile, will give Wattpad more of a stake in taking its stories to print within its home market, North America. The new division is headed by Ashleigh Gardner, Deputy General Manager at Wattpad Studios, Publishing, with Deanna McFadden, Publishing Director for Wattpad Studios, managing operations.

The books will be distributed across retail stores in the U.S. by Wattpad’s official sales and distribution partner, Macmillan. In Canada, it’s working with Raincoast Books.

The launch of Wattpad Books comes at a time when Wattpad’s profile is on the rise. Last year, the company raised $51 million in new funding from investors including Tencent, and debuted a new service, Wattpad Next – which offers paid access to exclusive stories.

The company is also part of a larger trend among startups, where newer platforms are helping to open the doors to Hollywood and beyond, by giving creative professionals different ways to be discovered.

Microsoft today announced that it has acquired Citus Data, a company that focused on making PostgreSQL database faster and more scalable. Citus’ open source PostgreSQL extension essentially turns the application into a distributed database and while there has been a lot of hype around the NoSQL movement and document stores, relational database — and especially PostgreSQL — are still a growing market, in part because of tools from companies like Citus that overcome some of their earlier limitations.

Unsurprisingly, Microsoft plans to work with the Citus Data team to “accelerate the delivery of key, enterprise-ready features from Azure to PostgreSQL and enable critical PostgreSQL workloads to run on Azure with confidence.” The Citus co-founders echo this in their own statement, noting that “as part of Microsoft, we will stay focused on building an amazing database on top of PostgreSQL that gives our users the game-changing scale, performance, and resilience they need. We will continue to drive innovation in this space.”

PostgreSQL is obviously an open source tool and while the fact that Microsoft is now a major open source contributor doesn’t come as a surprise anymore, it’s worth noting that the company stresses that it will continue to work with the PostgreSQL community. In an email, a Microsoft spokesperson also noted that “the acquisition is a proof point in the company’s commitment to open source and accelerating Azure PostgreSQL performance and scale.”

Current Citus customers include the likes of real-time analytics service Chartbeat, email security service Agari and PushOwl, though the company notes that it also counts a number of Fortune 100 companies among its users (they tend to stay anonymous). The company offers both a   database as a service, an on-premises enterprise version and the free open source edition. For the time being, it seems like that’s not changing, though over time, I would suspect that Microsoft will transition users of the hosted service to Azure.

The price of the acquisition was not disclosed. Citus Data, which was founded in 2010 and graduated from the Y Combinator program, previously raised over $13 million from the likes of Khosla Ventures, SV Angel and Data Collective.

Putting political divisions and affiliations aside, the government partially shutting down for the third time over the last year is extremely worrisome, particularly when considering its impact on the nation’s cybersecurity priorities. Unlike the government, our nation’s enemies don’t ‘shut down.’ When our nation’s cyber centers are not actively monitoring and protecting our most valuable assets and critical infrastructure, threats magnify and vulnerabilities become further exposed.

While Republicans and Democrats continue to butt heads over border security, the vital agencies tasked with properly safeguarding our nation from our adversaries are stuck in operational limbo. Without this protection in full force acting around the clock, serious extraneous threats to government agencies and private businesses can thrive. This shutdown, now into its fourth week, has crippled key U.S. agencies, most notably the Department of Homeland Security, imperiling our nation’s cybersecurity defenses.

Consider the Cybersecurity and Infrastructure Security Agency, which has seen nearly 37 percent of its staff furloughed. This agency leads efforts to protect and defend critical infrastructure, as it pertains to industries as varied as energy, finance, food and agriculture, transportation, and defense.

As defined in the 2001 Patriot Act, critical infrastructure is such that, “the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters.” In the interest of national security, we simply cannot tolerate prolonged vulnerability in these areas.

Employees who are considered “essential” are still on the job, but the loss of supporting staff could prove to be costly, in both the short and long term. More immediately, the shutdown places a greater burden on the employees deemed essential enough to stick around. These employees are tasked with both longer hours and expanded responsibilities, leading to a higher risk of critical oversight and mission failure, as weary agents find themselves increasingly stretched beyond their capabilities.

The long-term effects, however, are quite frankly, far more alarming. There’s a serious possibility our brightest minds in cybersecurity will consider moving to the private sector following a shutdown of this magnitude. Even ignoring that the private sector pays better, furloughed staff are likely to reconsider just how valued they are in their current roles. After the 2013 shutdown, a significant segment of the intelligence community left their posts for the relative stability of corporate America. The current shutdown bears those risks as well. A loss of critical personnel could result in institutional failure far beyond the present shutdown, leading to cascading security deterioration.

This shutdown has farther reaching effects for the federal government to attract talent in the form of recent college grads or those interested in transitioning from the private sector. The stability of government was once viewed as a guarantee compared to the private sector, but work could incentivize workers to take their talents to the private sector.

The IRS in particular is extremely vulnerable, putting America’s private sector and your average taxpayer directly in the crosshairs. The shutdown has come at the worst time of the year, as the holidays and the post-holiday season tend to have the highest rates for cybercrime. In 2018, the IRS reported a 60 percent increase in email scams. Meanwhile, as the IRS furloughed much of its staff as well, cyber criminals are likely to ramp up their activity even more.

Though the agency has stated it will recall a “significant portion” of its personnel to work without pay, it has also indicated there will be a lack of support for much beyond essential service. There’s no doubt cybercriminals will see this as a lucrative opportunity. With tax season on the horizon, the gap in oversight will feed directly into cyber criminals’ playing field, undoubtedly resulting in escalating financial losses due to tax identity theft and refund fraud.

Cyberwarfare is no longer some distant afterthought, practiced and discussed by a niche group of experts in a backroom. Cyberwarfare has taken center stage on the virtual battlefield. Geopolitical adversaries such as North Korea, Russia, Iran, and China rely on cyber as their most agile and dangerous weapon against the United States. These hostile nation-states salivate at the idea of a prolonged government shutdown.

From Russian interference in the 2016 presidential election to Chinese state cybercriminals breaching Marriott Hotels, the necessity  to protect our national cybersecurity has never been more explicit.

If our government doesn’t resolve this dilemma quickly, America’s cybersecurity will undoubtedly suffer serious deterioration, inevitably endangering the lives and safety of citizens across the nation. This issue goes far beyond partisan politics, yet needs both parties to come to a consensus immediately. Time is not on our side.

AWS isn’t exactly known as an open-source powerhouse, but maybe change is in the air. Amazon’s cloud computing unit today announced the launch of Neo-AI, a new open-source project under the Apache Software License. The new tool takes some of the technologies that the company developed and used for its SageMaker Neo machine learning service and brings them (back) to the open source ecosystem.

The main goal here is to make it easier to optimize models for deployments on multiple platforms — and in the AWS context, that’s mostly machines that will run these models at the edge.

“Ordinarily, optimizing a machine learning model for multiple hardware platforms is difficult because developers need to tune models manually for each platform’s hardware and software configuration,” AWS’s Sukwon Kim and Vin Sharma write in today’s announcement. “This is especially challenging for edge devices, which tend to be constrained in compute power and storage.”

Neo-AI can take TensorFlow, MXNet, PyTorch, ONNX, and XGBoost models and optimize them. AWS says Neo-AI can often speed these models up to twice their original speed, all without the loss of accuracy. As for hardware, the tools supports Intel, Nvidia, and ARM chips, with support for Xilinx, Cadence, and Qualcomm coming soon. All of these companies, except for Nvidia, will also contribute to the project.

“To derive value from AI, we must ensure that deep learning models can be deployed just as easily in the data center and in the cloud as on devices at the edge,” said Naveen Rao, General Manager of the Artificial Intelligence Products Group at Intel. “Intel is pleased to expand the initiative that it started with nGraph by contributing those efforts to Neo-AI. Using Neo, device makers and system vendors can get better performance for models developed in almost any framework on platforms based on all Intel compute platforms.”

In addition to optimizing the models, the tool also converts them into a new format to prevent compatibility issues and a local runtime on the devices where the model then runs handle the execution.

AWS notes that some of the work on the Neo-AI compiler started at the University of Washington (specifically the TVM and Treelite projects). “Today’s release of AWS code back to open source through the Neo-AI project allows any developer to innovate on the production-grade Neo compiler and runtime.” AWS has somewhat of a reputation of taking open source projects and using them in its cloud services. It’s good to see the company starting to contribute back a bit more now.

In the context of Amazon’s open source efforts, it’s also worth noting that the company’s Firecracker hypervisor now supports the OpenStack Foundation’s Kata Containers project. Firecracker itself is open source, too, and I wouldn’t be surprised if Firecracker ended up as the first open source project that AWS brings under the umbrella of the OpenStack Foundation.

What if instead of just accepting Uber rides, gig workers could pick from higher paying skilled tasks around town like stocking shelves, checking inventory, or driving a forklift at a local grocer? When they work quickly and accurately or learn new trades, they get to choose between more complex jobs. That’s the idea that’s racked up $400 million in staffing contracts for Jyve, an on-demand labor platform that’s coming out of stealth today after 3.5 years. It already has 6,000 workers doing tasks for 4,000 stores across the country.

“I believe the skill economy is way bigger than the gig economy” says CEO Brad Oberwager. He sees Uber driving as just the low-expertise beginning of a massive new job type where people with specializations or experience are efficiently matched to retail work. Jyve’s secret sauce is the work quality review system built into its app for managers and stores that lets it know who got the job done right and deserves even better opportunities.

Jyve’s potential to become the skilled labor marketplace has quietly attracted $35 million in funding across a seed and Series A round raised over the past few years led by SignalFire and joined by Crosscut Ventures and Ridge Ventures. “Jyve is one of the fastest-growing companies we’ve seen, having already reached $400 million in bookings in three short years” writes Chris Farmer, CEO of SignalFire. “They are creating a new economic class.”

It’s all because Safeway hasn’t touched a bag of Doritos in 50 years, CEO Brad Oberwager tells me. Grocery stores have long outsourced the shelving and arrangement of products to the big brands that make them, which is why the retail consumer packaged good industry employs 10 million people in the US, or over 10% of the country’s workforce. But instead of relying on one person to drive goods to the store, load them in, and shelve them, Jyve can divide those tasks up and match them to neraby people with sufficient skills to cut costs.

“Retail isn’t dying, it’s changing, and brands that are thriving are the ones investing in their in-store experience as well as owning their e-commerce initiatives,” observed Brad Oberwager, CEO and founder of Jyve. “The question we must ask then is how do we fill this labor shortage and also enable people to refine special skills that are multi-dimensional and rewarding.”

Oberwager knows the tribulations of grocery shelving well. He built online drugstore More.com before the dot com boom, then started making his own food products. He created True Fruit Cups, one of the country’s largest importer of grapefruit, and founded and sold his Bare apple chips company. Competing for shelf space with big brands paying workers to setup elaborate displays in grocers, he saw a chance to reimagine retail labor.

But it was when his daughter got sick and he realized the surgeon who performed the operation was essentially a high-skilled mercenary that he seized on the opportunity beyond grocers. “He walks in, does the surgery, walks out. He’s a gig worker, but it’s a skill I’m willing to pay a lot for” says Oberwager.

He created Jyve to aggregate the demand from different stores and the skills from different workers. When somene signs up for Jyve, they start with easier tasks like moving boxes in the backroom. If they do that well, they could unlock higher paying shelf stocking and display arrangement, then product ordering and brand abassadorship. At each step, they take photos and leave comments about their work that are reviewed by a combination of store and brand managers, as well as Jyve’s machine vision algorithms and human quality control team. It can quickly tell if someone puts the Cheerios box on the shelf the wrong way, and won’t give them public-facing tasks if they don’t improve

“70% of our market managers were originally drivers, and they become w2 workers” Oberwager says proudly. Jyve even makes it easy for brands and retailers to hire its top giggers for full-time jobs. Why would the startup allow that? “I want to put it on  billboard, “Work hard, get promoted” he tells me. The fact that Oberwager’s last name could be interpreted as “higher wages” in German makes Jyve seem like his destiny.

But to fulfill that prophecy, Jyve will have to out-tech oldschool staffing firms like Acosta, Advantage, and Crossmark. It’s also hoping to ween grocers off of Instacart by bringing shopping for online orders back to stores’ in-house staff provided by Jyve. A worker could be stocking shelves, then use that knowledge to quickly pick up all the items for an online order and give them to a curbside driver, then return to their task.

Keeping work quality up to snuff will be a challenge, but by dangling higher wages, Jyve aligns its incentives with its workers. The bigger hurdle may be convincing big brands and retail institutions to change the way they’ve done staffing forever. Oberwager professes that it takes a long time to onboard, but also a long time to offboard so it could build a solid moat if it’s the first to win this market. Jyve is now in over 1200 cities across the US, and a real-time map showed a plethora of gigs available around San Francisco during the demo.

Oberwager admthat the unskilled gig economy is “a little dehumanizing. It makes people a cog in a machine.” But he hopes each “Jyver” as he calls them can become more like a circuit – a complex machine of its own that powers something bigger.

Google today announced that it has partnered with Sony Pictures Imageworks, Sony’s visual effects and animation studio, to launch OpenCue, an open source render manager. OpenCue doesn’t handle any of the actual rendering processes but it provides all the tools to break down those different steps and then schedule and manage the different rendering jobs across large rendering farms, both local and in the cloud.

Google, of course, is interested in bringing these workloads to its cloud and it has made a concerted effort to bring the Hollywood studios to its Cloud Platform. That includes the launch of its Los Angeles cloud region last year, as well as its acquisition of the Zync cloud renderer back in 2014. Google was also a founding member of the Academy Software Foundation, an open source foundation that focuses specifically on tools for the film industry. Sony Pictures Entertainment/Imageworks wasn’t a founding member but joined a few months after the foundation got off the ground.

Cue 3 was actually Imageworks’ internal queuing system, which is at least fifteen years old. Google worked with the company to open source the system, which Google and Imageworks have scaled to up to 150,000 cores.

“As content production continues to accelerate across the globe, visual effects studios are increasingly turning towards the cloud to keep up with demand for high-quality content,” writes Google product manager Todd Prives in today’s announcement. “While on-premise render farms are still in heavy use, the scalability and the security that the cloud offers provides studios with the tools needed to adapt to today’s fast-paced, global production schedules.”

It’s worth noting that this isn’t Sony’s for foray into open source. The company previously also open sourced and contributed to tools like OpenColorIO and Alembic.

Google today announced the launch of four new certifications and training programs for cloud developers and engineers: Professional Cloud Developer, Professional Cloud Network Engineer (beta) and Professional Cloud Security Engineer (beta), as well as a new G Suite certification.

The G Suite certification stands out a bit because its cheaper ($75) and far less technical than its counterparts in today’s release, but as Google notes, the overall idea here to address the ‘cloud skills crisis.’ The reason for the G Suite course, Google says, is that the “key to a successful cloud transformation is developing skills throughout the organization.” To ensure this, the G Suite exam tests your knowledge in key features of Gmail, Docs, Sheets, Drive and other G Suite tools. If you’re highly technical, that may seem unnecessary, but for many, making the move from Office to G Suite is surely quite a challenge.

The other exams, like the Cloud Developer certifications, test your ability to design, build, test, manage and secure applications on the Google Cloud Platform . They tend to cost around $200 and come in the form of multiple choice exams. To prepare for them, you can study with the help of both on-demand and instructor-led courses from Coursera and other Google partners.

Google notes that IT managers have a hard time finding candidates with the right skills, so it’s trying to address this with these new certification programs and the accompanying training tools.

The new certifications join Google’s existing ones, which include the Professional Cloud Architect, Professional Data Engineer, and Associate Cloud Engineer certifications.

Salesforce today dominates the world of CRM with its cloud-based, wide-ranging portfolio of software as a service. Now, a company founded by one of its alums thinks it can take it on with a more modern approach.

Kustomer — an “omni-channel” customer support platform that can call in data from just about any other software and apps that a company uses, either to manage its business internally or speak to customers externally — has raised $35 million as it expands beyond SMBs to target larger enterprise customers.

The company, based out of New York, had always seen itself as a competitor to Zendesk, co-founder and CEO Brad Birnbaum said in an interview, “but now we are starting to take on a bunch of Oracle and Salesforce conversions, larger enterprises.” He claims that these bigger companies are operating on legacy systems that are “15 years too old” and that is why it’s getting its foot in the door.

(He knows first hand about what at least one of his competitors is using, because he helped build it. With Kustomer co-founder Jeremy Suriel, Birnbaum once co-founded Assistly, which also aimed to provide a merged-view of customers to agents. The startup eventually sold to Salesforce and became a part of Desk.com.)

The Series C — led by Battery Ventures with Redpoint Ventures, Canaan Partners, Boldstart Ventures, Social Leverage (Howard Lindzon’s fund) and Cisco Investments also participating — comes just seven months after the company raised a Series B of $26 million, one mark of Kustomer’s rapid rise. Another is that it’s claiming that it is currently seeing growth of 500 percent on year-over-year revenues.

(Valuation is not being disclosed, Birnbaum said, but I understand that it’s significantly up on the previous round yet is still under $500 million. In total, the company has raised $73.5 million since 2016.)

When Kustomer first came out of stealth in 2016, the company’s original mission was to create a CRM system so easy to use and full of data, that essentially anyone in a business could be in a position to help a customer — appealing to the smaller organizations Kustomer originally targeted that might not have dedicated customer teams.

Fast-forward to 2018/2019, and customer relations specialists are now the primary users — customers include Ring, Rent the Runway, Glovo, Glossier, Away, Slice, Sweetgreen and UNTUCKit — with all that data harnessed into one place to make their jobs easier.

You can think of what Kustomer does as the CRM descendent of the “Slack effect.” The wildly successful workplace chat platform has found a lot of traction with businesses by making it possible to discuss anything work-related by way of integrations and feeds from hundreds of different apps. Kustomer is trying to create a similar effect for its own end: a company can incorporate any platform where customers are already contacting companies, along with any app that already tracks sales, complaints, questions, and more.

The number of apps is on a different level from Slack — Birnbaum said the average number for a typical customer is about 10 feeds of information — but the final effect is similar, in that it creates an “omni-channel” single view — in its case where customers’ histories and live questions exist together, so that agents can have a full picture and deal with the customer more efficiently (and hopefully more effectively). Birnbaum adds that on top of this there is also a machine learning wrapper to understand what is going on to provide the most relevant information to agents at the point of contact.

While the platform is being used now largely for support queries and sales, Birnbaum said that one growing usage is in marketing.

“A retailer, for example, might integrate its e-commerce backend. And where we have it we can proactively engage against that,” he said. That could involve proactively contacting customers who might have a specific product that has been found with a fault. Or it could mean running sentiment analysis across social media and offering customers free coupons for goods based on what they had purchased from you before, as a response to something unearthed in that analysis.

“We have this data for support, but we think customers can use it for marketing and engagement, too,” he said.

Kustomer’s funding underscores another trend that we have seen appearing a number of times throughout the startup world, but particularly I’d say in enterprise tech startups.

In a market where we’re seeing a number of VCs continue to raise large funds and continue to look for smart places to invest that money, that Series C is also an example of how startups are raising money not when they need it, but when the offer comes along from the right people.

“To be honest, we’ve been capital efficient,” said Birnbaum. “but around November, there was a tremendous amount of inbound interest after we exceeded our quarterly revenue goals by quite a large amount. We decided to take this opportunity led by Battery Ventures because it’s probably one of the best partners we could have,” he said, referring the the company’s track record with enterprise software.

With this round Battery partner Neeraj Agrawal is joining the board.

“We’ve been closely following Kustomer’s impressive growth and see a large opportunity for the company to become one of the top players in this market—owing mainly to its powerful platform, experienced team and ability to execute on its vision,” he said in a statement. “We’re excited to leverage Battery’s global network and company-scaling expertise to partner with Brad and the rest of the Kustomer team to help the company expand further into the enterprise market.”

Munchery’s vendors claim the food delivery startup took advantage of them in its final hours, knowingly allowing them to continue making deliveries it couldn’t pay for.

Earlier this week, Munchery surprised customers with an email announcing it would cease operations, effective immediately. It did not, however, notify any of its vendors of the news, according to the owners of several small San Francisco-based businesses, who told TechCrunch they are owed thousands in overdue Munchery payments.

Charles Farriér, the owner of Crumble & Whisk Patisserie, is waiting on a $1,700 payment from Munchery. Lenore Estrada of Three Babes Bakeshop said she’s owed more than $20,000. Melissa Cohen of Salty Sweet Cookies, Jennifer Roy of Dandelion Chocolate and Jennifer Nguyen of Native Baking Co. are expecting a total of $16,417.50.

Munchery was founded in 2010 by former chief executive officer Tri Tran and Conrad Chu, who have both since left the company. It had raised a total of $125 million in venture capital funding, reaching a valuation of $300 million at its peak. Supported by notable Silicon Valley investors, including Greycroft, Menlo Ventures and Sherpa Capital, the high-flying startup failed to deploy capital efficiently, then crumbled. 

Now, three days after its sudden announcement, several vendors are waiting anxiously for their final invoice checks, and say they weren’t notified of Munchery’s end, nor has the business responded to persistent requests for explanations.

Munchery has not responded to multiple requests for comment from TechCrunch . As of Thursday morning, Munchery had not officially filed for bankruptcy in the Federal Court or in the Superior Court of San Francisco.

Munchery chief executive officer James Beriker joined the startup in 2016.

Gone without a trace

Days before Christmas, Farriér was told to slow down production of his artisan cheesecakes, which he had been servicing to Munchery for three years.

Munchery provided prepared meals to residents in San Francisco, Los Angeles, Seattle and New York. In addition to preparing ingredients in-house in its South San Francisco headquarters, the startup also partnered with local businesses, like Crumble & Whisk, whose baked goods were included with its meals.

Unlike the other business owners TechCrunch spoke with, Farriér said he had caught on to Munchery’s financial struggles after multiple late payments, and was on the verge of ending his relationship with the business entirely. Little did he know they were just weeks away from an implosion, that, according to sources, even some Munchery employees weren’t aware of until 24 hours before the end of business announcement was sent to customers.

Charles Farriér, the owner of San Francisco-based bakery Crumble & Whisk Patisserie.

“Today, with a heavy heart, we’re reaching out to announce that Munchery is closing its doors,” the business wrote in an email signed “Team Munchery.” “More than anything, we want to say thank you. Thank you for all of the love and support you have shown us over the years, for sharing us with your friends and family, and for including us in your special life moments.”

Beriker, who joined the startup as CEO in November 2016 after a four-year stint as the chief executive of recruitment firm Simply Hired, was missing from the signature of the email. Beriker has gone dark, opting not to respond to media requests, as well as emails and phone calls from vendors looking for payment.

When Farriér heard the news on Monday, he went to Munchery’s headquarters seeking his final payment. To his surprise, no one, except another aggravated vendor, was there. The $1,700 Farriér is owed may be equivalent to the cost of a dinner with colleagues for some Silicon Valley entrepreneurs, but for him, it’s meant being forced to take out a loan to pay his employees.

“They just expect us to sit back and take it but we need that money to keep our businesses afloat,” Farriér told TechCrunch. “It may be pennies to them but it’s money to us, we cannot stay afloat without being paid. It hurt my business; I had to take out a loan; I had to tell my staff I couldn’t pay them this week.”

Farriér has worked with a number of tech-enabled food delivery platforms, including Good Eggs and Sprig, which similarly went out of business in May 2017. Contrary to how Munchery has handled its sudden ending, however, Sprig, he said, ensured all vendors were paid the same day the startup notified them that it would cease operations.

“The sad part about this whole situation is [Munchery] didn’t even have the courtesy or the respect to let the vendors know,” Farriér added. “It’s a real slap in the face.”

Bakers await payments

Estrada of Three Babes Bakeshop said she’s heard nothing from Munchery about its shutdown or the $20,000 owed her. Cohen, Roy and Nguyen similarly told TechCrunch they’ve attempted to reach out to Munchery, to no avail.

Dandelion Chocolate owner Jennifer Roy says Munchery owes her $6,000.

“The thing that’s really baffling to me is why they didn’t call it earlier,” Estrada told TechCrunch. “When I was there [Tuesday], there was a truck leaving with food that had been donated. Munchery ran into a wall rather than planning to shut down in an orderly fashion. That’s just crazy, as I’m sure they knew how much runway they had.”

Estrada and Nguyen said Munchery had standing orders with both Three Babes Bakery and Native Baking Co. Three Babes had planned to make their delivery Tuesday, one day after Munchery announced they were going out of business. Munchery never canceled the standing order. Native Baking Co. completed their standing order delivery Monday morning, the same day Munchery said it would cease operations.

“I’ve been hounding them to pay me for old invoices for the whole month of January,” Nguyen told TechCrunch. “During the holidays, we are so busy, so as a small business owner I wasn’t totally on top of keeping up with [payments]. I just thought I will get to January, then I will deal with it.”

Nguyen ultimately learned of Munchery’s shut down Tuesday morning from an article in the San Francisco Chronicle.

Munchery, as mentioned, had raised roughly $125 million in VC funding across rounds that closed in 2013, 2014 and 2015. Munchery didn’t raise any capital under Beriker, who was appointed amid reports the business had been struggling to improve its margins, aside from a $5 million financing in 2017.

“For a company that had raised so much money, it’s shocking to me that the CEO and the board weren’t more on top of calling it with enough time to pay their vendors,” Estrada added. “I personally will go without pay to pay my employees because of this situation. Will the Munchery CEO be doing the same? Most likely not.”

According to a 2016 report from Bloomberg, Munchery was making way too much food — much of which was thrown out — and was spending “hundreds of thousands of dollars” distributing discount flyers. For what it’s worth, Munchery told TechCrunch at the time of those reports that its “customer base and revenue [were] growing” and that it was profitable in San Francisco and “contribution margin positive” in its three other markets.

This was, however, before Munchery laid off 257 employees, or 30 percent of its workforce, and shut down its Seattle, Los Angeles and New York operations. In May 2018, at the time of the layoffs, the company said it planned to double down on the San Francisco market, “achieve profitability” and “build a long-term, sustainable business.”

Why Munchery and CEO James Beriker decided not to communicate its demise with vendors is unclear, as is what ultimately forced it to shutter so suddenly. What is clear is that Munchery ran into a brick wall and fast, left without enough cash to settle even its smallest debts.

“This feels like these guys locked the doors and ran off to another country,” Nguyen said. “I only have a couple of employees and I want to pay them. Nine-grand isn’t much to a giant company, but it makes a huge difference at our company. It feels as if we’ve been taken advantage of by the big guy and it sucks.”

Of the five businesses that spoke to TechCrunch, Munchery owes nearly $40,000 in overdue bills. What’s next? Munchery will inevitably officially file for bankruptcy and the small business owners — collateral damage of a startup that failed to overcome the brutal economics of the central kitchen model — will go without payment.

“I basically mean nothing to [Munchery],” Farriér said. “I’m just there to make sure [them] look good on paper. I’m just a number to [them].”

SoundCloud’s Eric Wahlforss is stepping away from the music and podcast streaming platform he co-founded after more than a decade at the company, most recently in the chief product officer role.

Wahlforss announced the decision to step back from day-to-day ops — and “transition into an advisory role” — in a post on social media, writing: “After more than 11 years of building up our wonderful platform for artists, DJs and audio creators, I have come to the realisation that now is the right time for me to take a break, reflect and think about what to create next.

“So I have decided to step back from day-to-day operations at SoundCloud, and transition into an advisory role for the company starting March 1st.”

Wahlforss previously served as SoundCloud’s CTO. But in early 2017 an ex-Yahoo VP of engineering, Artem Fishman, was hired to take the role as the company made a series of changes to its leadership structure in an attempt to shift focus and stem losses that, in 2015, were running at $52 million on revenues of just $22M.

Later that same year, in August 2017, SoundCloud laid off 40 percent of its staff, and shortly after that its other co-founder, Alex Ljung, announced he was stepping aside — handing the CEO role to former Vimeo CEO, Kerry Trainor, but remaining as chairman.

Wahlforss similarly appears not to want to severe ties completely with the company he helped build, and writes that his decision to step away was “not easy”.

Though he also flags the presence of the new leadership team, saying he feels SoundCloud is in “such capable hands” and that the team is “stronger than ever”.

SoundCloud raised a $170M emergency funding round in fall 2017 to keep itself in business, and senior execs remains under huge pressure to shrink costs and find a way to generate sustainable revenues. So with investor priorities shifting the sight of both founders heading for exit door is not surprising.

There have also been signs of a quickening of pace at the company in recent months.

Late last year SoundCloud finally opened up monetization — which had previously only been offered to the very biggest artists via an invite only program. And more recently it made it easier for users to share links to their tracks to Instagram Stories — looking to help its users reach a wider audience.

Attempts to boost revenue and usage while cutting costs could be signs the management team is trying to get the books in better shape to both attract a buyer and sell at a better price. And with both founders heading for the sidelines that process might be made a little easier.