Year: 2020

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

As investors struggle to price the stock market as economic and political news continues to break, the private market is entering a rough period. It seems increasingly likely that the period of disruption due to COVID-19 will persist for months, if not quarters. That means missed Q1 and Q2 revenue growth, bookings, and the like from startups domestically and around the world.

And that’s the bullish case. For some cohorts of startups, the outlook is even worse. Think about travel startups, ride-hailing upstarts, and any grouping of private companies that pursued a high-burn, high-growth model; that final category is about to run into the twin issues of the inflexibility of cost structure and the impact of slowing sales. That alone would make fundraising more difficult; toss in a deflating stock market and possible recession, and the mixture is a downright mess.

But we owe it to ourselves to survey what is going on in an attempt to answer our own questions about IPOs, exits, unicorn tallies, and who might be in trouble. Unlike when things were less bad, there will be no laughing this morning and no jokes. Just notes on what’s going wrong and what it might mean for private companies.

Smart rings are still a relatively young category in the wearable hardware world, but the Oura Ring seems to be a standout in terms of early success. The Oura Ring hardware is sleek and packed with sensors, allowing it to measure a user’s sleep patterns, take your body temperature and track activity, and now Oura has raised $28 million in Series B funding to bring on new key hires and product updates.

In a Medium post announcing the raise, Oura CEO Harpreet Singh Rai revealed that to date, the company has sold over 150,000 of its rings since launch (which was in early 2018) and that its team has grown to over 100 people globally. The Series B funding comes from Forerunner Ventures, which has a strong track record when it comes to direct-to-consumer product company investments, as well as from Gradient Ventures and Square.

Along with the investment, Oura gains two new board members, and one new board observer all with expertise in different aspects of the startup’s business: Forerunner’s Eurie Kim and Square’s hardware lead Jesse Dorogusker are the new board members, and Gradient partner (and former VP of engineering at Google) Anna Patterson joins as the observer.

Oura will be revamping its website and adding a new web-based portal for Oura Ring users that offers “actionable insights,” the company says, and it’s going to be doing more in terms of collaborating with academic researchers on ensuring its products measurements and guidance remain as accurate and useful as possible.

Oura prioritizes the role of sleep in terms of its contribution to health, and has also recently ventured into the realm of meditation, but it acts as a general fitness tracking device as well. It has attracted a number of fans among the plugged-in tech elite, too, including Twitter and Square CEO Jack Dorsey. The company deserves kudos for delivering a solid, attractive and feature-rich gadget in a category that seemed like a tough sell in the early offing, and this new funding is a good vote of confidence.

By now, we know that Kubernetes is a wildly popular container management platform, but if you want to use it, you pretty much have to choose between having someone manage it for you or building it yourself. Spectro Cloud emerged from stealth today with a $7.5 million investment to give you a third choice which falls somewhere in the middle.

The funding was led by Sierra Ventures with participation from Boldstart Ventures.

Ed Sim, founder at Boldstart says he liked the team and the tech. “Spectro Cloud is solving a massive pain that every large enterprise is struggling with; how to roll your own Kubernetes service on a managed platform without being beholden to any large vendor.” Sim told TechCrunch.

Spectro co-founder and CEO Tenry Fu says that an enterprise should not have to compromise between control and ease of use. “We want to be the first company that brings an easy-to-use managed Kubernetes experience to the enterprise, but also gives them the flexibility to define their own Kubernetes infrastructure stacks at scale,” Fu explained.

Fu says that the stack in this instance consists of the base operating system to the Kubernetes version to the storage, networking and other layers like security, logging, monitoring, load balancing or anything that’s infrastructure related around Kubernetes.

“Within an organization in the enterprise you can serve the needs of your various groups, down to pretty granular level with respect to what’s in your infrastructure stack, and then you don’t have to worry about lifecycle management,” he explained. That’s because they handle that for you, while still giving you that control.

That not only gives enterprise developers greater deployment flexibility, it gives them the ability to move between cloud infrastructure providers more easily, something that is top of mind today as companies don’t want to be locked into a single vendor.

“There’s an infrastructure control continuum that forces enterprises into trade offs against these needs. At one extreme, the managed offerings offer a kind of nirvana around ease of use, but it’s at the expense of control over things like the cloud that you’re on or when you adopt new ecosystem options like updated versions of Kubernetes.”

Fu and his co-founders have a deep background in this, having previously been part of CliQr, a company that helped customers manage applications across hybrid cloud environments. They sold that company to Cisco in 2016, and began developing Spectro Cloud last spring.

It’s early days, but the company has been working with 16 Beta customers.

Is there an audience for a center-right news publication focused on original reporting and analysis? That’s the proposition that The Dispatch set out to test when it launched last October, and the early results are promising — the startup says it’s now approaching 10,000 paying subscribers, adding up to more than $1 million in annualized revenue.

Editor and CEO Stephen Hayes (former editor in chief of the now-defunct Weekly Standard) told me that his vision for The Dispatch was to “slow down the news cycle.” That doesn’t mean ignoring the day’s headlines. But rather than just recycling the same stories about, say, Bernie Sanders or the COVID-19 pandemic, The Dispatch aims to “take a breath” and try to approach important news in a fresh way.

In order to do that, Hayes said that building a subscription business with newsletter-focused digital media platform Substack (with the Substack team handling all of The Dispatch’s technical and product needs) was key.

“We’re not trying to monetize eyeballs,” he said. “What Substack was doing fit pretty much exactly with what we wanted to build — a company with an editorial-first philosophy.”

As part of that strategy, The Dispatch has gradually been rolling out its membership program and paywall. At launch, it offered a lifetime membership ($1,500), then added an annual membership ($100) when it launched its full site in January, and finally introduced a paywall and a monthly membership ($10) less than a month ago.

Hayes said it’s been largely “an ad hoc process” of figuring what should and shouldn’t go behind the paywall. Apparently, one piece of advice that has been helpful is, “Don’t hide your good stuff behind the paywall. You need to be serving some of your best, most substantive work in front of the paywall, so that you get people into the top of the funnel.”

On top of its paying subscribers, Hayes said The Dispatch is reaching about 60,000 people with its newsletters. And it’s partnering with podcast company Sounder, with plans to participate in Google’s Play Me The News program for Google Home, where it will offer short-form audio news stories.

The startup has also raised $6 million in funding from individual investors (none of it comes from venture capital firms).

Hayes acknowledged that one of the constant questions he had to answer during the fundraising process was whether he was aiming for too narrow an audience — namely, the #NeverTrump slice of the political right.

It might look that way on “the traditional political spectrum,” but in Hayes’ view, it’s more accurate to see the spectrum as a “hardcore 15 percent” on the left, and another 15 percent on the right, that’s “more partisan than ideological” and will root for their party no more what. And while The Dispatch is “unapologetically center-right,” he’s hoping to appeal to the remaining 70 percent, who are looking for a publication that can “help you make sense of all this stuff that doesn’t make sense,” regardless of political leanings.

And while The Dispatch is in many ways the flagship among full-fledged news organizations built on Substack, the list of publications now includes Asia Sentinel, Let’s Go Warriors and Write for California. The startup is also announcing that it’s now reaching more than 100,000 paying subscribers across its platform.

Substack CEO Chris Best said that The Dispatch’s success so far shows that there’s “a hunger out there.”

He added, “Are readers willing to pay for something that helps them make sense of the world and adds value to their lives? I think the answer is unequivocally yes.”

AMC this morning formally announced that it will close all locations in the United States for between six to 12 weeks, beginning today. The move comes on the heels of a partial shutdown by the largest theater chain in the U.S. last week and a similar announcement for competitor Regal last night. Regal’s announcement was a less specific “until further notice.”

AMC currently operates 661 theaters in the States, comprising more than 8,000 screens. The move is major, but not unexpected, as people and companies deal with the realities of living through a pandemic.

Movie attendance has already begun dropping shortly as people have begun to practice social distancing. AMC and other events companies have had to grapple with both concerns over employee and attendee safety, as well as an increasing push on the part of cities and States to close down business and require citizens to stay home in order to curb the spread of COVID-19.

As it notes in a press release issued today, more than a states and cities have mandated such closures over the last few days. As part of the closure, the chain will pause payments on its A-List  memberships during the months-long shut down. No word yet on whether the massive chain has a plan in place to support employees during the closure. We’ve reached out to the company for additional comment.

“We are ever so disappointed for our moviegoing guests and for our employee teams that the new CDC guidelines that Americans should not gather in groups larger than 10 people make it impossible to open our theatres,” CEO Adam Aron said in a release. “Still, the health and wellbeing of AMC guests and employees, and of all Americans, takes precedence above all else. We will continue to monitor this situation very closely and look forward to the day we can again delight moviegoers nationwide by reopening AMC movie theatres in accordance with guidance from the CDC and local health authorities.”

Meantime, the company is encourage housebound movie buffs to use its on demand service. Recently, NBCUniversal announced plans to offer new releases on-demand. Others will likely follow suit in the wake of these major closures.

The Trump administration is heading to Congress to ask for a $850 billion stimulus package to stabilize an economy shaken by the dramatic response to the novel coronavirus, according to multiple reports. Citing multiple sources, stories in the Washington Post, New York Times, and CNBC report that Treasury Secretary Steven Mnuchin is presenting details to Senate Republicans later on Tuesday.

While the specifics of the planned stimulus package are limited, the White House is pushing for a payroll tax cut and another $50 billion in direct stimulus to help the airline industry, which has cratered as global quarantine rules have stymied air travel.Reportedly, the White House is also hoping to add more economic benefits for small businesses and employees in a new stimulus package, according to administration officials cited by The Washington Post.

The aid package is on top of another $100 billion in funding for programs aimed at providing paid sick leave, food assistance, and other aid to American workers which was passed by the House of Representatives last week.

Details surrounding these legislative maneuvers remain sketchy as the country’s political leadership continues to jockey for political points around aid as the country’s economy crashes, frozen by the need for social distancing and health precautions necessary to save off the worst effects of the global pandemic.

As the price tag for aid approaches $1 trillion, the differences in approach from Democrats and Republicans are becoming apparent and could threaten to slow down efforts to get the economy moving. The White House and its supporters are pushing for a payroll tax cut that would essentially help wage earners who keep their jobs during the downturn along with direct assistance to the businesses that are affected. Meanwhile Democrats are focused on assistance to workers, public health care providers, schools and senior citizens.

In a sign of how fractured the political class remains, Senate Democrats are conferencing to discuss a $750 billlion aid proposal which would include expansions to unemployment insurance, school financing, public transportation, Medicaid, additional healthcare funding, loan assitance and a freeze on evictions and foreclosures. Republicans are discussing the White House proposal with Secretary Mnuchin.

Some of the opposition to payroll tax cuts stems from their position at the heart of the current benefits system as the primary source of funding for Medicare and Social Security. The concern among Democrats is that a payroll tax cut won’t benefit people who have lost their jobs as small businesses shutter because of lost income.

They’re not alone. On Sunday, Utah’s Republican Senator, Mitt Romney, embraced a modified version of a policy popularized by Democratic Presidential candidate Andrew Yang — universal basic income. Romney’s proposal, made with Arkansas Republican Senator Tom Cotton called for the federal government to send checks directly to Americans.

Romney called for a $1000 one-month payment to Americans to help cover costs of rent, food, and other necessities for citizens impacted by the COVID-19 outbreak.

The last time Congress threw around these kinds of numbers was in 2008, when a $700 billion relief package moved through government to respond to the global financial crisis which had wrecked the world’s economy. That last economic crisis was caused by financial speculation and overleveraging in America’s housing markets. This new crisis is impacting American businesses more directly as business in restaurants, bars, hotels, travel and tourism broadly, airlines and manufacturing grinds to a halt under the weight of social distancing requirements to stop the disease’s spread.

Amazon’s ‘Fulfillment by Amazon’ (FBA) program, through which it provides warehousing and shipment services for products from third-party sellers, was well as its larger vendor shipment services, are being partially suspended through April 5 due to the global coronavirus outbreak. This suspension will allow Amazon to prioritize shipment of “household staples, medical supplies and other high-demand products” the company said in a support document on its website, and confirmed to TechCrunch in an email.

The commerce giant notes in the email that it is “seeing increased online shopping” in the wake of the COVID-19 pandemic, and will focus on prioritizing the reception, restocking and delivery of the essential products that are most in demand from this new uptick in activity from Amazon shoppers. For all other products, Amazon says it’s disabled the creation of new inbound shipments for FBA members, as well as for retail vendors (their business-to-business selling platform).

Any existing shipments created prior to today are still going to be processed at Amazon’s fulfillment centers as usual, the company says, but otherwise new orders won’t be processed until such time as Amazon alerts sellers that things are back to normal. The tentative date for the program to resume in full is April 5 as mentioned, but it sounds like Amazon could extend these limitations depending on how the pandemic progresses.

Amazon is prioritizing goods in baby, health and household, beauty and personal care, grocery, industrial and scientific and pet supplies categories, the company says on a support document explaining the new limitations. Products outside of these categories that are already in Amazon’s fulfillment centers, or that are on their way to those facilities ahead of March 17 can still be sold through the platform.

This also doesn’t block sellers from selling their products on the platform and fulfilling the shipments themselves, the help document notes. That might be the only option available to sellers and retailers who want to continue offering their non-prioritized goods to Amazon buyers through at least the next few weeks.

An Amazon spokesperson provided TechCrunch the following statement regarding the suspension:

We are seeing increased online shopping and as a result some products such as household staples and medical supplies are out of stock. With this in mind, we are temporarily prioritizing household staples, medical supplies, and other high-demand products coming into our fulfillment centers so we can more quickly receive, restock, and deliver these products to customers. We understand this is a change for our selling partners and appreciate their understanding as we temporarily prioritize these products for customers.

Amazon has taken other steps to address the increased demand its seeing on the platform as more and more countries and cities implement isolation and quarantine measures, including shelter-in-place orders. The company announced on Monday that it would be looking to hire as many as 100,000 additional warehouse and delivery employees to address the increase.

Addapptation, a startup that wants to build a practical design layer on top of Salesforce and other enterprise tools, announced a $1.3 million seed investment today.

2048 Ventures led the round with participation from East Coast Angles, The Millworks II Fund and additional angel investors from New Hampshire, where the firm is located

Co-founder Sumner Vanderhoof says the startup’s goal is to build a user experience platform for enterprise tools like Salesforce . “Our goal is to help make simple, easy to use Salesforce.com solutions built on the addapptation UX platform.

“At the end of the day, we’re really helping transform the way companies work, making their employees more efficient, making the job they do easier and more consistent, so they have a bigger impact on the companies that they work for,” Vanderhoof told TechCrunch.

He says they do this by looking at the company workflow and what issue the customer is trying to solve — such as a problem converting deals through the sales cycle. They will then help build tools and an interface to make it easier to pinpoint this information with the goal of being able to reuse whatever solutions they create for other customers.

He says the platform is template-driven and designed to quickly go from idea to solution. A typical solution takes no longer than two weeks to build and implement. Once a customer is using addapptation, employees can log into the addapptation platform or it can be a layer built into Salesforce providing a more guided experience.

The company has built around 40 plug-ins for the platform, including a heat map that identifies where sales is likely to find the best opportunities to close a deal. The solutions they build are designed to work online or on mobile devices as needed.

Photo: addapptation

Vanderhoof says that the company has a good relationship with Salesforce, and it doesn’t compete directly with the company. “Their main focus is providing tools for a wide audience. Ours is extending the platform beyond what it can do,” he said.

The two founders, Vanderhoof and his wife Carla, took three years building the platform, essentially bootstrapping before taking today’s funding.  The company has 15 employees in its Exeter, NH, headquarters and has 20 customers including Comcast and Ingram Micro.

The era of social distancing is going to be put a lot of existing systems to the test. Nintendo’s online services for the Switch have been experiencing outages in the U.S. and parts of Europe. The company noted the issues on social media, adding that it’s “looking to rectify the situation as soon as possible.”

The official Network Maintenance Information page noted that it is currently, “Unable to connect to the network service.”

Surely not the most dire of situations, though many are no doubt relying on such services to help pass the time, as more and more cities enact bans on gatherings and closures of schools and restaurants to encourage social distance in order to curb COVID-19’s spread. Microsoft’s Xbox Live also experienced a multiple hour outages over the weekend.

Nintendo is currently readying the system for the release of Animal Crossing: New Horizons. The latest entry in the series looks perfectly positioned to help eat away some hours when it’s released March 20. 

Investors seem to be taking a wait-and-see approach to the markets right now, after a bumpy evening where a Presidential tweet and commitment of economic support seemingly sent traders to smash buy buttons before realizing that there was no new substance behind Monday’s night moves.

Economies around the world are in for a rough ride as businesses shut down and social distancing measures take effect to limit the spread of the novel coronavirus, which is already a global pandemic and an epidemic in the US.

After their worst day of trading since 1987, stocks rose sharply in overnight trading. The pattern of shares falling sharply, followed by a rebound of sorts continues, then, as traders continue to look for signals amidst the global noise; how to value one promise of further government stimulus, for example, against more border shutdowns and bad corporate news is now daily labor.

But as stocks opened domestically, they did manage slight gains, a welcome sight after yesterday’s sharply negative trading. Here’s the morning report at the open:

• Dow Jones Industrial Average: rose 314.81 to 20,503.33 for a gain of 1.56%
• S&P 500: rose 52.91 to 2,439.04 for a gain of 2.22%
• Nasdaq Composite: rose 147.45 to 7,052.05 +147.45 for a gain of 2.14%

Even cryptocurrencies are seeing a bit of a comeback, though they, like stocks, remain depressed when compared to recent highs. Bitcoin, the most famous of all cryptos, as the distributed tokens are sometimes called, is off by about half.

The latest economic forecasts are bleak. Goldman Sachs expects a Q1 contraction of perhaps 5%, a shocking figure. Even more, per reporting, the bank sees it likely that the US will enter a recession. If you were waiting for the correction, this is it. We have now seen the end of the long-running bull cycle that brought companies like Dropbox and Airbnb and Slack and Zoom from little to nothing to giant-status. This is the downturn. A new generation of startups will soon be born that will lead the markets higher in the future. But, given the economic data we’re seeing, not yet.

The TechCrunch crew will keep tracking the public markets so long as they are fascinating. More on how select companies performed when the day closes.