Month: September 2020

Slack’s shares are set to fall sharply this morning, down around 16% in pre-market trading. As the company beat analyst expectations last quarter and guided within range, the selloff might feel a little surprising.

Perhaps it shouldn’t.

I spoke with a VC last week about what the new benchmark results are for private SaaS companies, and to my surprise, he said software startups don’t have to grow at 100% to be fundable in today’s market. Given what I’d heard from other venture capitalists about how so much of their portfolios had found a COVID-19 growth bump, the perspectives felt incongruous.

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Startups wanted to grow at a pace of more than 100% pre-pandemic, and some have accelerated since. So how could a startup growing less than three figures yearly be attractive? Throw in Zoom’s impressive earnings results and some warning signs from earlier this earnings cycle that cloud growth hasn’t wound up being quite as fast as expected felt diminished.

Slack’s earnings help sort out what’s going on.

Reading the company’s SEC filing related to earnings this morning, it’s hard to miss Slack’s notes about COVID-19. The enterprise communications company describes early benefits from the pandemic, along with lingering pain associated with its economic impacts. In short, the software-related COVID-bump could wind up leaving a hangover in the short- to medium-term.

This helps us understand why a software startup could be VC-attractive in 2020 without a 100% growth rate. Perhaps more SaaS and cloud startups than have been generally told are struggling, which means slower revenue expansion is palatable provided that other indicators are flashing green.

To understand what could be happening to your favorite startup, let’s tease apart Slack’s COVID-19-related business notes, starting with the good news, before turning to what I’ve penciled in as the bad news — and the even badder tidings.

If you know one thing about Mint Mobile, it’s probably the fact that it’s owned by Pizza Place guy turned Pikachu voice, Ryan Reynolds. The actor’s been building a nice investment portfolio for himself, beginning with a piece of the Aviation American Gin company in 2018 and an ownership stake in Mint last year.

The company is a mobile virtual network operator, specializing in cheap prepaid phone plans built on top of T-Mobile network. Today it launched a new unlimited talk and text plan for the U.S. for $30. The plan includes either  35GB of 5G or LTE data,  depending on the strength of the signal in your area.

The pricing gets more complicated from there — the $30 a month is an introductory offer for three months, using the annual per month pricing. If you’re satisfied after the first three months, you can renew for another three months at $40 a month, six months at $35 a month or go in for the full year to stay at $30 a month.

To mark the occasion, Reynolds is starring in a trio of TV spots, featuring Teacher of the Year Rodney Robinson, Paul Revere descendant/Captain/fishing guide Avery Revere and fellow Canadian actor, Rick Moranis. The SCTV alum has notably eschewed Hollywood for a couple of decades now, in spite of a number of high profile reunions of franchises like Ghostbusters. In a fun and goofy little spot, set in a field for some reason.

“Like many, I’ve missed seeing Rick in movies for the past decade, so I pretty much begged him to reemerge for Mint,” Reynolds says of the spot. “There’s really no good reason for it expect this year has been weird and I thought we could all use more Rick Moranis.” Fair enough.

Moranis is set to return to films after a 23-year hiatus with the Honey, I Shrunk the Kids reboot, Shrunk.

As has been said so many times before: “Hardware is hard.”

But has building a hardware company gotten any easier over the years? Or has 2020 introduced all new challenges of its own?

At Disrupt 2020 — our first ever entirely virtual Disrupt! — we’ll be joined by two people who have tons of insight into everything that goes into making something real: Eric Migicovsky of Y Combinator and Kate Whitcomb of Chrysalis Cloud.

As the founder of Pebble, Eric Migicovsky led the team behind the first smartwatches worthy of the space on your wrist. Beating the Apple and Android watches of the world to the punch by years, the company shipped over 2 million watches before being acquired (and, sadly, shutdown) by Fitbit in 2016. Years later, Pebble still holds the records for two of the top five most funded Kickstarter campaigns ever. Today Eric is a partner at Y Combinator, where he has helped countless early-stage startups map out the road ahead and leads the accelerator’s online Startup School program.

In 2020 Kate Whitcomb co-founded Chrysalis Cloud, a platform meant to help companies collect and analyze streaming data in a cheaper, lower latency way, after spinning it out of smart baby monitor maker Cocoon Health. Before that Kate was a partner at the HAX hardware accelerator, where she helped hundreds of startups from around the world bring their product concepts into the world — and even before that, she led Growth and Innovation for Target’s Consumer IoT team. She also wrote about how to get your hardware in front of retailers for TechCrunch here!

What advice do these two experts have for anyone looking to start a hardware company in 2020? Would they start building new hardware right now, and what do they see as the biggest potential challenges in doing so? I’m excited to find out. Both Eric and Kate spent years bringing ideas into reality and spent years helping others do the same. Whether you’re working on a hardware startup or investing in hardware companies, you won’t want to miss it… and, this year, you won’t even have to leave your house to catch every bit of it.

As we announced back in May, Disrupt 2020 will be the first time we’ve done this show entirely virtually… and what a show it’ll be. We haven’t even announced the full agenda yet, and it’s already amazing. Charles Hudson! Roelof Botha! Drew Houston, Michael Seibel, and Jennifer Doudna!

And then, of course, there’s the Startup Battlefield — the startup competition where Dropbox, Fitbit, Mint, and so many others made their big debuts.

Disrupt 2020 will run from September 14th to September 18th. If you want to check it out as an attendee, the Digital Pro Pass starts at $345; if you want to exhibit in the Startup Alley, get your Digital Startup Alley Exhibitor Package. Or if you just want to catch this session, you can get a Digital Pass for just $45. meanwhile, you can find all of that info right here. Hope to see you there!

Calling all Extra Crunch members! We’ve partnered with Amazon Web Services for an Extra Crunch Partner Perk, and now eligible members can get $1,000 in AWS Activate credits as a part of an annual Extra Crunch membership plan.

If you are already an Extra Crunch member, scroll down to the bottom of the post for directions on how to claim the credits. If you are not yet a member, keep reading.

What is AWS?

AWS (Amazon Web Services) is the premier service for your application hosting needs, and we want to make sure our community is well-resourced to build. We understand that hosting and infrastructure costs can be a major hurdle for tech startups, and we’re hoping that this offer will help better support your team.

What’s included in the perk?

• $1,000 in AWS Activate credit valid for one year
• Two months of AWS Business Support
• 80 credits for self-paced labs

How do I know if my startup is eligible?

Not all companies are eligible for AWS Activate credits. To apply to AWS Activate Founders, your startup must meet the following criteria:

• New to AWS Activate Founders
• Have not previously received credits from AWS Activate Portfolio
• Have an active AWS Account
• Startup must be self-funded, unbacked or bootstrapped — no institutional funding or affiliation with an Activate Provider
• Have a LinkedIn profile (applicant)
• Have a company website or web profile
• Be an annual or two-year Extra Crunch member

Applications are processed in 7-10 days.

What is Extra Crunch?

Extra Crunch is a membership program from TechCrunch that helps you spot technology trends and opportunities, build better startups and stay connected. It features thousands of articles, including weekly investor surveys, daily market analysis and expert interviews on fundraising, growth, monetization and other work topics.

Extra Crunch also features Extra Crunch Live Q&A sessions with startup experts, a 20% discount on TechCrunch events, access to Partner Perks and better ways to use and navigate TechCrunch.com.

Join our growing community of founders, investors and startup teams here.

What are Partner Perks?

The Extra Crunch Partner Perks program is a great way for our annual members to save a few bucks on software costs. Since launching the program last fall, we’ve added more than a dozen new perks, including discounts on Crunchbase, DocSend and more. To see a full list of Partner Perks, head here.

The flagship Xbox Series X is arriving on November 10, and will carry a retail price tag of $499, Microsoft confirmed on Wednesday. The console will also be available for pre-orders beginning on September 22. Alongside the Xbox Series X console, Microsoft is also going to be selling a less powerful, but still next-gen, Xbox Series S console, which will have a $299 price tag, and also release on November 10 with pre-orders on September 22.

The Xbox Series X is Microsoft’s higher-end successor to the Xbox One, and it includes a range of very impressive hardware specs including an 8-core custom CPU, a GPU with 12 teraflops of processing power, a 1 TB NVMe SSD for super fast load and transfer speeds, and support for up to 4K resolution at both 60 and 120 FPS. The Series S is its lower-powered sibling, taking out the physical disc drive and offering lower specs including support for only up to 1440p resolution at 60fps, along with a smaller 512GB NVMe SSD. Microsoft is clearly hoping to appeal to both budget and premium gamers with its new generation of consoles.

Earlier this week, the official teaser image and trailer for the Xbox Series S leaked, along with pricing information. Microsoft subsequently confirmed those details and released a launch trailer for the less powerful, and very compact console, but we didn’t know for sure whether the Xbox Series X would share the same launch day until today’s confirmation. Also, the $499 price tag of the more premium hardware was revealed for the first time today.

Image Credits: Microsoft

Developing…

Sana Benefits, a manager of self-funded insurance plans for small businesses, said it has raised $20.8 million in a recent round of funding as it looks to roll up all of the latest startup health benefit providers into a convenient package for small businesses.

Self-financed insurance plans are set up by companies to pay out of pocket for their employees’ health care and are typically cheaper, because employers can pick and choose which services they offer.

According to Sana Health co-founder Will Young, most companies wind up spending too much because they buy off-the-shelf plans from the big insurance companies like United Healthcare, Anthem Blue Cross Blue Shield, Aetna, Cigna or Humana.

The company touts partnerships with startups like Beam Dental for dental coverage, PlushCare for telemedicine, Calm and Ginger.io for mental wellness, ClassPass for physical fitness, and Maven Clinic for maternity care.

Its pitch attracted the attention of Gigafund, Trust Ventures and mark vc, which came in to back the company’s $20.8 million series A round.

“Sana’s disruptive model for health insurance empowers small businesses to both cut costs and improve employee benefits,” said Stephen Oskoui, Managing Partner of Gigafund, in a statement. “We believe that only a win-win solution like Sana can make a real dent in the healthcare crisis.”

What do employees get? Sana’s plans range from health insurance offerings with a $4,000 deductible and $6,650 in out of pocket maximum payments of $6,650 to a $0 deductible plan with a $1,250 out of pocket maximum expense for individuals.

“We save our customers 20 percent on what they would get on a traditional plan,” according to Young. “From the perspective of our client company. Self insured means technically the company is offering insurance and buying insurance itself.”

The company makes money by managing the health insurance plans for customers and direct and distribute the plans. It currently operates in Texas and Kentucky with plans to bring its services to Illinois later this year.

Truepill, the white-label healthcare services company that provides telehealth and pharmacy fulfillment services, is adding at-home medical testing as the third branch of its services powering the offerings of companies like Hims and Hers, Ro, and other direct-to-consumer healthcare companies. 

Financing this expansion of services is a new $75 million round of financing from investors led by Oak HC/FT, with participation from Optum Ventures, TI Platform Management, Sound Ventures and Y Combinator.

“With the change in reimbursement for telemedicine, it changed the trajectory of the direct to consumer companies,” said Annie Lamot, the co-founder and managing director of new lead investors Oak HC/FT. “When we talked to every one of them they all seemed to be using Truepill .”

With its expansion into lab testing, Truepill can provide a full suite of services that used to be confined to the doctor’s office remotely. As more patients adjust to remote delivery of care, these kinds of options will become more attractive.

The move to telemedicine isn’t just something for new entrants either. Incumbents are also finding that they need to provide the same care as their direct to consumer competition, especially as the priority shifts to value-based care rather than fees for services on the reimbursement side — and consumers start demanding lower cost options on the direct pay side.

“I think it enables health plans to provide better care in targeted programs,” said Lamont, a longtime investor in healthcare.

Truepill’s executives certainly hope so.

The two co-founders, Umar Afridi and Sid Viswanathan met over LinkedIn where Viswanathan cold-emailed Afridi. At the time, Afridi was working as a pharmacist filling prescriptions at a Fred Meyer near Seattle).

Initially, Truepill’s growth came from acting as the pharmacist to companies like Hims, Ro, Nurx, and other direct-to-consumer healthcare companies focused on serving the elective health needs of people who wanted hair loss treatments, erectile dysfunction medication, and birth control.

Image Credits: Truepill

As the company has grown, so have its ambitions. By the end of the year, Truepill expects to book up to $175 million in revenue, according to Viswanathan, and that revenue will come from a more evenly distributed mix of customers among direct to consumer companies, insurance companies, and healthcare providers.

“Everything we do is white labeled from our pharmacy to the lab testing component. You can go to teladoc and use that service. What we like to think early. 80 percent of healthcare is going to happen on a digital channel.. We’re in a perfect position to build the platform company in that space,” Viswanathan said. 

At-home testing is a critical component of that platform. Expected to launch before the end of the year, Truepill is working with lab testing providers to offer hundreds of at-home tests. The company said it will focus on tests to manage chronic conditions like diabetes, heart disease, chronic kidney disease. Incidentally these are areas which have attracted a lot of interest from investors who are backing companies that provide direct to consumer or digital therapeutic solutions to treat or help address these conditions.

“To create a comprehensive, effective digital healthcare experience, there are three essential pillars: pharmacy with extensive insurance coverage, at-home lab testing and telehealth,” said Viswanathan, in a statement. “By adding diagnostics to our suite of solutions, we’ll be able to deliver direct-to-patient healthcare at scale through one platform – Truepill. We envision a future where 80% of healthcare is digital. With diagnostics, telehealth and pharmacy built on our foundation of API-connected infrastructure, Truepill will power that reality.” 

Q-CTRL and Quantum Machines, two of the better-known startups in the quantum control ecosystem, today announced a new partnership that will see Quantum Machines integrate Q-CTRL‘s quantum firmware into Quantum Machines’ Quantum Orchestration hardware and software solution.

Building quantum computers takes so much specialized knowledge that it’s no surprise that we are now seeing some of the best-of-breed startups cooperate — and that’s pretty much why these two companies are now working together and why we’ll likely see more of these collaborations over time.

“The motivation [for quantum computing] is this immense computational power that we could get from quantum computers and while it exists, we didn’t make it happen yet. We don’t have full-fledged quantum computers yet,” Itamar Sivan, the co-founder and CEO of Quantum Machines, told me.

Image Credits: Quantum Machines

For the longest time, the focus was on fundamental challenges, like building a processor, expanding the lifetimes of qubits, building the classical control hardware and software, etc. But the real challenge is bringing all of this together.

“It’s a multi-layer, multidisciplinary challenge — an extremely complex challenge — that practically requires highly focused and highly specialized themes to closely collaborate and work together in order to make the dream of quantum computers a reality,” Sivan said.

While Quantum Machines offers an integrated software/hardware stack through its Quantum Orchestration platform that uses specialized classical hardware to allow complex algorithms to run on quantum computers, Q-CTRL offers the quantum control infrastructure software — basically the firmware for quantum computers — that helps users calibrate their processors and reduce noise and the errors that come with it.

Now it surely helped that Sivan and Q-CTRL founder and CEO Michael J. Biercuk already knew each other for a while (which is no surprise, given that the quantum startup ecosystem isn’t that big, after all). But the two technologies are also naturally complementary.

“We knew that there was fantastic contact between the problems that each team was solving with the quantum controllers and the pulse processors that Quantum Machines was building — and the quantum control solutions that Q-CTRL was building — and really, because I have an academic background I spent the last 20 years in this field, my academic team builds quantum computing hardware,” Biercuk said. “I knew from the combination of that and my motion into founding a startup that the DIY approach of do everything yourself, with total vertical integration, that’s so common in academia, just does not work in this field.”

While the partnership was a natural choice, though, both companies had to reach a state of maturity in their technologies before taking this next step, Biercuk and Silvan both noted. The partnership isn’t exclusive, either, which given how much the industry is still in flux, makes a lot of sense.

Boston Dynamics this morning announced that it’s bringing Spot robot to a number of new markets, following sales in the U.S.  Interested parties in the European Union, U.K. and Canada can now purchase the technologically advanced quadrupedal robot.

Spot is Boston Dynamics’ first commercially available product, building on a quarter century of pushing the boundaries of robotics for DARPA and beyond. The company has spent a good deal of time over the past couple of years demonstrating a factotum of different jobs for the ‘bot, ranging from construction surveying to security.

The COVID-19 pandemic has put increased focus on the robotics sector, as companies are looking for a way to increase automation to keep the lights on, while reducing the risk of transmission. Boston Dynamics has used the opportunity to put Spot to work in a number of new scenarios, including teleoperation in hospitals.

Boston Dynamics notes a number of third-party partners designed to help improve the robot’s functionality going forward, including Cognite, Energy Robotics, Clearpath Robotics and Reply. The company has long look to position the robot as a kind of platform, open to a variety of different tasks. The setup takes some of the onus off of Spot’s creator to program new functionality and will hopefully demonstrate how capable the $74,500 robot (prices vary by market) can really be.

Additional markets will also have access to Spot through the company’s limited Early Adopter Program. For more on Boston Dynamics and Spot, be sure to catch our interview with new CEO Rob Playter next week at Disrupt 2020.

When we last reported on Snyk in January, eons ago in COVID time, the company announced $150 million investment on a valuation of over $1 billion. Today, barely nine months later, it announced another $200 million and its valuation has expanded to $2.6 billion.

The company is obviously drawing some serious investor attention and even a pandemic is not diminishing that interest. Addition led today’s round, bringing the total raised to $450 million with $350 million coming this year alone.

Snyk has a unique approach to security, building it into the development process instead of offloading it to a separate security team. If you want to build a secure product, you need to think about it as you’re developing the product and that’s what Snyk’s product set is designed to do — check for security as you’re committing your build to your git repository.

With an open source product at the top of funnel to drive interest in the platform, CEO Peter McKay says the pandemic has only accelerated the appeal of the company. In fact, the startup’s annual recurring revenue (ARR) is growing at a remarkable 275% year over year.

McKay says, even with the pandemic, his company has been accelerating adding 100 employees in the last 12 months to take advantage of the increasing revenue. “When others were kind of scaling back we invested and it worked out well because our business never slowed down. In fact, in a lot of the industries it really picked up,” he said.

That’s because as many other founders have pointed out, COVID is speeding up the rate at which many companies are moving to the cloud, and that’s working Snyk’s favor. “We’ve just capitalized on this accelerated shift to the cloud and modern cloud native applications,” he said.

The company currently has 375 employees with plans to add 100 more in the next year. As it grows, McKay says that he is looking to build a diverse and inclusive culture, something he learned about as he moved through his career at VMware and Veeam.

He says one of the keys at Snyk is putting every employee through unconscious bias training to help limit bias in the hiring process, and the executive team has taken a pledge to make the company’s hiring practices more diverse. Still, he recognizes it takes work to achieve these goals, and it’s always easy for an experienced team to go back to the network instead of digging deeper for a more diverse candidate pool.

“I think we’ve put all the pieces in place to get there, but I think like a lot of companies, there’s still a long way to go,” he said. But he recognizes the sooner you embed diversity into the company culture, the better because it’s hard to go back after the fact and do it.

Addition founder Lee Fixel says he sees a company that’s accelerating rapidly and that’s why he was willing to pour in so big an investment. “Snyk’s impressive growth is a signal that the market is ready to embrace a change from traditional security and empower developers to tackle the new security risk that comes with a software-driven digital world,” he said in a statement.

Snyk was founded in 2015. The founders brought McKay on board for some experienced leadership in 2018 to help lead the company through its rapid growth. Prior to the $350 million in new money this year, the company raised $70 million in 2019.