Year: 2020

Tesla turns to litigation in an attempt to reopen its California factory, we review Microsoft’s Surface Go 2 and Mount Sinai hospital starts using Nest cameras to monitor patients.

Here’s your Daily Crunch for May 11, 2020.

1. Tesla sues Alameda County to force California factory reopening

Tesla filed a lawsuit Saturday in an effort to invalidate orders that have prevented the automaker from reopening its factory in Fremont, California.

It seems that Tesla and its CEO Elon Musk has allies in the Trump Administration, since U.S. Treasury Secretary Steve Mnuchin told CNBC this morning that that California needs to work with Tesla so Musk can quickly and safely open the factory.

2. Microsoft Surface Go 2 review

Brian Heater notes that the Surface Go 2 has made a number of key sacrifices in the name of portability — the kind of thing you’d forgive in a device that you can use anywhere. The timing of the launch may be a bit awkward, since using the device exclusively at home brings its shortcomings into sharp focus.

3. Mount Sinai deploys Google Nest cameras for COVID-19 patient monitoring and communication

Using Nest Camera helps healthcare professionals, including nurses and doctors, limit their potential exposure to COVID-19. With the cameras they can centrally monitor and provide care while limiting person-to-person interaction to only extremely necessary contact.

4. Balderton Capital backs Primer, a fintech helping merchants consolidate the payments stack

Founded by ex-PayPal employees – via PayPal’s acquisition of Braintree — Primer is busy building out a payments API to (hopefully) rule them all, with the explicit aim of bringing greater transparency to a merchant’s payment stack. The thinking is that larger merchants, especially those that operate in more than one geography, have to support an array of payments methods.

5. Kingsoft Cloud IPO Defies Expectation as Vroom angles for debut

Alex Wilhelm is “nigh-incredulous” about the public debut of Kingsoft Cloud — the company has been growing quickly, but there were some real problems under the hood. (Extra Crunch membership required.)

6. Spotify officially launches a shared-queue feature called Group Session

This will allow two or more of Premium users in the same space to share control over they music being played. Think of it as a “party mode” for Spotify.

7. This week’s TechCrunch podcasts

The latest episode of Equity asks whether its’ better to be a private or public company right now, while the Original Content crew reviews “Waco” (a Paramount Network show that recently started streaming on Netflix) and the new science fictional comedy “Upload.”

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

Four years ago, Brandon Gell was an architecture student who spent most of his time working on 3D printing modular housing. Now, he’s the founder of Clyde, an extended warranty startup that wants to help small e-commerce businesses offer product protection.

Today, the company announced it has raised a $14 million Series A led by Spark Capital with participation from Crosslink, RRE, Rea Sea Ventures, and others. 

How do you go from being a product person to the founder of an insurance startup? According to Gell: a stint at a 4-person 3D scanner startup in Columbus, Ohio.

Since the team and resources were small, Gell was put in charge of finding an insurance company to work with to protect their expensive end product of scanners.  

“I spent 6 months trying to find a company,” he said. After seeing how seamless it was to work with fintech customer support tools from companies like Stripe, Shopify, Affirm, and others, he said it was clear that insurance, and especially the extended warranty space, wasn’t as mature. So he set up an office in his grandma’s New York apartment. 

Clyde is a platform that connects small retailers to insurance companies to launch and manage product protection programs. 

Using Clyde, customers can access a dashboard, and e-commerce apps to manage their protection programs. For example, a user can see how many contracts were sold, how much revenue total those bring, and gross profit in real-time. It can also see which products are most often purchased with an extended warranty contract. 

“It’s a similar type of offering as Affirm or Stripe,” he said. “We give you access to large insurance companies and we enable you to launch the program live on your website or physical point of sale and store wherever you sell.” It has a Shopify plugin so store owners on the site can add on Clyde to their small businesses. 

Clyde’s most critical metric is that it has an 18 percent attachment rate on average, which means that 18 percent of people that go through a Clyde-powered purchasing path end up purchasing extended warranties or protection plans. 

The reason businesses care about extended warranty is two-fold. First, insurance benefits the customer experience. Second, insurance purchases are often the highest-margin product that companies sell to their customers. Product protection alone is a $50 billion market. Gell said that Best Buy drives about 2 percent of its annual revenue from the sale of extended warranties, but that generates more than half of its profit. 

Clyde helps small businesses, like a 4-person startup in Columbus Ohio, get a bite of this profitable pie. Most ecommerce businesses have to work with Amazon, thus giving a lot of that cash to the big company versus putting it in their own pocket, per Gell. He says that when Amazon sells an extended warranty on a seller’s product, it doesn’t share any revenue with the seller on how the product performs, which prevents a seller from both a stream of revenue and data analytics.

“Our sort of mantra is that the retailers that we work with are basically everybody that’s not Amazon and Walmart,” he said.  

Clyde’s goal is different from Upsie, another venture-backed startup focusing on warranty. Upsie is looking to be a direct-to-consumer warranty replacement, while Clyde works on behalf of the retailer and insurance company to connect the two parties.  

Closer competitors to the startup include Mulberry and Extend, which were both founded after Clyde and have raised less in venture capital funding. Gell thinks his competitive advantage is partnerships with top insurance companies, and a strong product-focused platform. Clyde’s entire founding team is made up of a product people. 

Startups right now need to prove that they are viable in both a pre-coronavirus and post-coronavirus world. And Clyde might be exactly in that sweet spot, since it focuses on ecommerce businesses. 

The Series A round closed a few weeks ago before the COVID-19 craziness began, but he said that the pandemic has led to more inbounds and interest than ever before. Gell sas it’s a mix of ecommerce being more important than ever, and customer behavior. 

“It’s a shift of customers that want to buy online more, but also protect their purchases more than ever,” he said. “Companies are realizing how important it is.”

New cash in hand, Clyde’s growing while its customer-based is looking for new ways to bring in revenue and take care of customers. If the startup can handle the influx of attention and importance right, sticky harmony will follow. 

Facebook is announcing a handful of new features that will allow users to show their support for small businesses and get the latest updates as those businesses deal with the fallout — economic and otherwise — of the COVID-19 pandemic.

The social network is introducing a new section called Businesses Nearby, which will allow you to see the latest posts from businesses within a certain geographic radius (you can adjust it to anything from 1 mile to 500 miles), view their current hours and pickup/delivery options and make a booking or send them a message.

In a blog post, Facebook described this as a way to allow users to “more quickly find essential products and services” while also helping businesses get “more virtual foot traffic as they move online to stay open.”

Image Credits: Facebook

And if you want to show your support for a small business, you can also use the new Support Small Business sticker on Instagram or #SupportSmallBusiness hashtag in Facebook — any posts using the sticker will be added to a shared Instagram story highlighting similar posts from all the accounts you follow. Creators on Facebook will also be able to tag a post as being “in support of” a specific small business.

The company is also trying to make it easier for businesses to communicate with customers by adding a dedicated Business Inbox in the Messenger app — allowing them to use Messenger to answer questions sent to their Facebook Page — and by allowing businesses to tag all their COVID-19-related posts from the Page composer.

Image Credits: Facebook

In addition, Facebook said it will be posting COVID-19 related information, tools and tips for small businesses in both the Facebook and Instagram apps. Businesses can access this information through the Facebook app shortcuts or their Instagram business profile.

These changes come on top of a $100 million grant program for small businesses that Facebook announced in March, as well as other new features like the ability to share temporary service changes.

Consumer fintech startups were massively successful in 2019, attracting millions of new users and disrupting traditional retail banks and financial services with mobile-first, consumer-oriented products. Despite the economic downturn in public markets and the massive wave of cuts at public and private companies in recent weeks, fintech startups have been raising a ton of money.

It feels like they’re all building a war chest to survive the economic winter as traditional banks continue to iterate so they can catch up and offer more user-friendly services. This is not the time to raise fees, slow down on product development or plans to acquire new users.

Nine-figure rounds

Back in January, I looked at challenger banks and their growth trajectories, but since then, they have managed to attract even more customers. According to the most recent figures:

• Nubank has 20 million customers;
• Revolut has 10 million users;
• Chime has 8 million users;
• N26 has 5 million users;
• Monzo has 4 million users.

And that’s without mentioning Starling Bank, Atom Bank, Bunq, Bnext, Paysend, etc. At some point, there will be as many challenger banks as non-challenger banks — perhaps we shouldn’t call them challenger banks anymore.

Beyond these startups, trading app Robinhood recently reached 13 million users, international payments startup TransferWise has 7 million customers and cryptocurrency exchange Coinbase has 30 million users.

Spotify is today introducing a new feature, Group Session, that will allow two or more of its Premium users in the same space to share control over they music being played. Essentially a “party mode” of sorts, Group Session participants can control what’s playing in real-time as well as contribute to a collaborative playlist for the group.

The company notes that the feature can be used among quarantine-mates and families — groups that are now spending long hours at home together, where they now work, play, cook, dance, and more with Spotify running in the background.

To use the feature, the “host” will tap the Connect menu in the bottom-left corner of their Play screen, then share the scannable code that appears with their “guests.” The guests then join the session by scanning the host’s code. Then, using Spotify’s built-in controls, they’re able to pause, play, skip and select tracks on the queue and add in choices of their own to be played next. The changes any guest makes are immediately displayed to all participant’s devices.

Spotify already offers ways for groups to share their favorite music, but in more limited ways. The company offers a way to build Collaborative playlists with friends, where everyone can add, delete, and reorder tracks. In addition, Spotify Premium Family plan members can listen to a personalized playlist called Family Mix that combines the music that everyone enjoys.

However, neither of these options offer a way to collaborate in real-time, as Group Session does.

The Group Session feature has been in testing since last year, where it was first uncovered by noted reverse engineer, Jane Manchun Wong back in May 2019. Others had also reported seeing it appear on their own accounts later in August. That means some users may have had the feature before today. However, it’s only now being made globally available to all Premium users.

At the time of its initial development, Spotify may have envisioned the feature as a way to make its app go viral, as users would download Spotify in order to contribute to a party playlist — perhaps by scanning a code that appeared on the party host’s TV, for example. But with the coronavirus pandemic limiting gatherings and people isolating themselves at home, the company is instead positioning Group Session as a way for families and housemates to entertain themselves.

By tying a feature like this to its Premium subscription, Spotify is hoping to encourage more of its free users to make the jump to its paid, music-on-demand streaming service. It’s a good time for this sort of push, too.

More people are staying at home due to the coronavirus pandemic, and are looking for ways to be entertained. Streaming, particularly video, is up. And Spotify said during its April earnings it was seeing double-digit increases over the past few weeks in listening around in-home activities, like cooking, chores, family time, and more.

Today, Spotify says Group Session is launching into beta, meaning it’s still being tested and developed.

The version launching today is the first iteration of the feature, and Spotify expects it will evolve over time as it learns more from user feedback. It may even expand beyond people sharing the same space in the future.

Group Session is rolling out today, so you may not see it just yet. The feature will be available to all Premium users worldwide when the rollout completes.

As a number of startups get back into fundraising in earnest, one that is on a growth tear has closed a substantial debt round to hold on to more equity in the company as it inches to being cash-flow positive. MemSQL — the relational, real-time database used by organisations to query and analyse large pools of fast-moving data across cloud, hybrid and on-premise environments (customers include major banks, telecoms carriers, ride sharing giants, and even those building COVID-19 tracing apps) — has secured $50 million in debt, money that CEO Raj Verma says should keep it “well capitalised for the next several years” and puts it on the road to an IPO or potential private equity exit.

The funding is coming from Hercules Capital, which has some $4.3 billion under management and has an interesting history. On the one hand, it’s invested in companies that include Facebook (this was back in 2012, when Facebook was still a startup), but it’s also been in the news because its CEO was one of the high fliers accused in the college cheating scandal of 2019.

MemSQL does not disclose its valuation but Verma confirmed it is now significantly higher than it was at its last equity raise of $30 million in 2018 when it was valued at about $270 million, per data from PitchBook.

Why raise debt rather than equity? The company is already backed by a long list of impressive investors starting with Y Combinator, and including Accel, Data Collective, DST, GV (one of Google-owner Alphabet’s venture capital vehicles), Khosla, IA Ventures, In-Q-Tel (the CIA-linked VC) and many more. Verma said in an interview with TechCrunch that the startup had started to look at this fundraise before the pandemic hit.

It had “multiple options to raise an equity round” from existing and new investors, which quickly produced some eight term sheets. Ultimately, it took the debt route mainly because it didn’t need the capital badly enough to give up equity, and terms “are favourable right now,” making a debt facility the best option. “Our cash burn is in the single digits,” he said, and “we still have independence.”

The company has been on a roll in recent times. It grew 75% last year (note it was 200% in 2018) with cash burn of $8-9 million in that period and now has a annual recurring revenues of $40 million. Customers include three of the world’s biggest banks, which use MemSQL to power all of its algorithmic trading, major telecoms carriers, mapping providers (Verma declined to comment on whether investor Google is a customer), and more. While Verma today declines to talk about specific names, previous named customers have included Uber, Akamai, Pinterest, Dell EMC and Comcast.

And if the current health pandemic has had put a lot of pressure on some companies in the tech world, MemSQL is one of the group that’s been seeing a strong upswing in business.

Verma noted that this is down to multiple reasons. First, its customer base has not had a strong crossover with sectors like travel that have been hit hard by the economic slowdown and push to keep people indoors. Second, its platform has actually proven to be useful precisely in the present moment, with companies now being forced to reckon with legacy architecture and move to hybrid or all-cloud environments just to do business. And others like True Digital are specifically building contact-tracing applications to help address the spread of the novel coronavirus on MemSQL.

The company plays in a well-crowded area that includes big players like Oracle and SAP. Verma said that its tech stands apart from these because of its hybrid architecture and because it can provide speed improvements of some 30x with technology that — as we have noted before — allows users to push millions of events per day into the service while its users can query the records in real time. 

It also helps to have competitive pricing. “We are a favourable alternative,” Verma said.

“This structured investment represents a significant commitment from Hercules and provides an example of the breadth of our platform and our ability to finance growth-orientated, institutionally-backed technology companies at various stages. We are impressed with the work that the MemSQL management team has accomplished operationally and excited to begin our partnership with one of the promising companies in the database market,” said Steve Kuo, senior managing director technology group head for Hercules, in a statement.

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Last Friday something very odd happened: the public debut of Kingsoft Cloud, a company that we’ve covered before. I’m nigh-incredulous about this IPO for the host of issues that we discussed when the company first filed. Since then, IPOs have only gotten only stranger.

Kingsoft is not the only company looking to tap the public markets. Vroom, which has raised over $700 million according to Crunchbase, is looking to go public this summer. The company sells used cars, which makes it going public all the more fun; aren’t car sales in the toilet?

But that IPO filing is still private, pushing Vroom’s debut at least a month into the future. Today, then, let’s work understand why Kingsoft Cloud successfully going public is surprising. And why what happened after it priced is even more of a shock.

This company went public?

When Kingsoft Cloud filed its F-1 to go public, we were in awe of its wild and weird financial results.

U.S. Treasury Secretary Steve Mnuchin sided with Tesla in its ongoing fight with Alameda County. Speaking to CNBC, Mnuchin said that California needs to work with Tesla so Musk can quickly and safely open Tesla’s Fremont factory.

This comes after Musk sued the county it operates in to allow Tesla to restart manufacturing operations. In the filing, Tesla seeks to invalidate Alameda County’s closure order, which Tesla says goes against the county’s health and safety guidance. Tesla had planned to bring back about 30% of its factory workers last Friday as part of its reopening plan, defying Alameda County’s stay-at-home order.

Before filing the suit, Elon Musk said that if unable to reopen facilities, he would move Tesla’s operations to Texas or Nevada.

Mnuchin added that California should prioritize “doing whatever they need to do to solve those health issues…” before moving Tesla to a different state. He said, incorrectly, this is because Tesla “is one of the biggest employers and manufacturers in California.” According to several employment reports, Tesla, with its 10,000 employees at its Fremont facilities, is not one of the biggest employers in the state though one of the largest manufacturers and the only major automaker.

When Musk announced Tesla’s reopening plans, he said he was basing them basing the reopening on new guidance issued Thursday by California Gov. Gavin Newsom that allows manufacturers to resume operations. However, the same guidance stated that local officials, such as Alameda County, had the option of keeping more restrictive rules in place.

“Alameda County has expressly recognized and publicized that “businesses may . . . operate to manufacture” batteries and electric vehicles,” the complaint reads. “Inexplicably, however, the Third Order, as well as County officials, have simultaneously insisted that Tesla must remain shuttered, thereby further compounding the ambiguity, confusion, and irrationality surrounding Alameda County’s position as to whether Tesla may resume manufacturing activities at its Fremont Factory and elsewhere in the County.”

TechCrunch reached out to Tesla for comment.

The ongoing global COVID-19 pandemic has sparked a lot of activity around remote care, but a new project by Mount Sinai hospital, working in collaboration with Google’s Nest, shows how even on-premise care can be made safer using remote technologies. Clinicians at Mount Sinai have begun using Google Nest Cameras in patient rooms, to provide video-based patient symptom and vital sign tracking, as well as two-way communication.

Using Nest Cameras for this helps healthcare professionals including nurses and doctors to limit their potential exposure to COVID-19, allowing them to centrally monitor and provide care while limiting person-to-person interaction to only extremely necessary contact. This lessens exposure, which is crucial as frontline healthcare workers are particularly at-risk of significant viral load, which essentially means that the more you’re in contact with individuals infected with COVID-19, the more likely your immune system won’t be able to keep up and you’ll get infected yourself.

This also helps the hospital in another key way: preserving personal protective equipment (PPE). Remote monitoring means that staff will be able to use significantly fewer masks and gloves, ensuring that stock levels aren’t depleted quite as quickly as they would have been otherwise.

Google is installing the Nest Cameras in over 100 rooms at Mount Sinai in New York, and plans to provide up to 10,000 of the devices along with custom-designed monitoring consoles to hospitals across the U.S. The system is also designed so that Google doesn’t store any footage collected, and in fact doesn’t even have access to it to begin with, to preserve patient privacy.

Even with direct care is necessary to help protect lives, remote health tech clearly has a role to play in mitigating the worst potential impacts of the pandemic. This is probably still just the beginning of how we see this kind of technology be deployed to try to buttress health infrastructure under duress as the crisis continues.

The ongoing global COVID-19 pandemic has sparked a lot of activity around remote care, but a new project by Mount Sinai hospital, working in collaboration with Google’s Nest, shows how even on-premise care can be made safer using remote technologies. Clinicians at Mount Sinai have begun using Google Nest Cameras in patient rooms, to provide video-based patient symptom and vital sign tracking, as well as two-way communication.

Using Nest Cameras for this helps healthcare professionals including nurses and doctors to limit their potential exposure to COVID-19, allowing them to centrally monitor and provide care while limiting person-to-person interaction to only extremely necessary contact. This lessens exposure, which is crucial as frontline healthcare workers are particularly at-risk of significant viral load, which essentially means that the more you’re in contact with individuals infected with COVID-19, the more likely your immune system won’t be able to keep up and you’ll get infected yourself.

This also helps the hospital in another key way: preserving personal protective equipment (PPE). Remote monitoring means that staff will be able to use significantly fewer masks and gloves, ensuring that stock levels aren’t depleted quite as quickly as they would have been otherwise.

Google is installing the Nest Cameras in over 100 rooms at Mount Sinai in New York, and plans to provide up to 10,000 of the devices along with custom-designed monitoring consoles to hospitals across the U.S. The system is also designed so that Google doesn’t store any footage collected, and in fact doesn’t even have access to it to begin with, to preserve patient privacy.

Even with direct care is necessary to help protect lives, remote health tech clearly has a role to play in mitigating the worst potential impacts of the pandemic. This is probably still just the beginning of how we see this kind of technology be deployed to try to buttress health infrastructure under duress as the crisis continues.