Year: 2021

Coinbase shares tumbled today to their their lowest point since the company began trading publicly on April 14. The market often moves in mysterious ways, but several drivers could be at play, including Coinbase’s high opening price at the time of its direct listing, its reliance on margins that are all but certain to drop owing to growing competition, and the lack of a lock-up period, meaning more insiders might now be offloading some of their highly valued shares, driving down their price in the process.

Whether Coinbase’s shares fall further still is an open question, but one early investor, Garry Tan, has said that what outsiders misunderstand about the company is its potential going forward. Indeed, Tan, believes a major revenue driver for the company could ultimately tie to a startup called Bison Trails (also backed by Tan) that Coinbase quietly acquired late last year for an estimated $80 million in stock and that Tan recently likened to an AWS inside of the cryptocurrency exchange.

Curious to learn more, we talked recently with Joe Lallouz, the cofounder and CEO of Bison Trails, which is now being run as an independent product line by Coinbase. We talked with Lallouz, who previously cofounded and sold a company to Etsy, about the opportunity he’s chasing, and how it fends off what appears to be a growing number of direct competitors. Our conversation has been edited for length below. To listen in on our full conversation, including far more specifics about Bison’s operations, you can do that here.

TC: How much did you raise from investors before the acquisition?

JL: We raised about $35 million total in across a  couple of years, including a $25.5 million Series A last year that was led by Blockchain Capital and Kleiner Perkins was involved Notation Capital and Garry at Initialized, who also led our seed deal with Accomplice. It was a decent amount of capital given the size of the company and the time. Bison Trails was born in the very chilly winters of the crypto bear market.

TC: Why was that? Your last company connected hardware makers with buyers. What led you to start a crypto infrastructure business?

JL: First, I often speak in the plural we because I have a co founder [Aaron Henshaw] who I’ve worked with on every company for about 20  years. Prior to Bison Trails, the company that was acquired by Etsy was a pretty large marketplace and I [remained] on the leadership team for a few years, and it was actually there that my interest in crypto and Bitcoin and the blockchain space was really piqued — mostly in the form as an investor. I do have a technical background, I’m an engineer. Aaron is an engineer. And so this idea of programmable money was really interesting to me, and I start doing some angel investing, and suddenly, some of the weirdest and smartest people I’ve ever met were switching careers and focusing on building blockchains or blockchain technology. And [Aaron] and I couldn’t get away from this idea that blockchains and the technology that powers blockchains —  crypto protocols — were going to be super influential in every piece of software that’s built over the next 20 years,

TC: What was the next step?

JL: It was a lot of a whole lot of experimentation. [Aaron and I] built probably each built about three or four different products that weren’t Bison Trails before we built Bison Trails. For one reason or another, they probably weren’t valuable or viable as products but they did give us an incredible amount of insight into what the blockchain ecosystem needed. There was a huge gap in the blockchain market in the infrastructure space. Just really simple things like connecting to a blockchain network, reading from the blockchain network, writing to that blockchain network, doing very blockchain-native things like staking and mining — all that stuff that you may have heard about or read about, it just took a tremendous amount of time.

TC: So you created this company to make it easier for folks to not have to spend time on those things. But you’re not alone. Last week, a company called Alchemy raised money from Coatue and Addition to do something similar. Are you direct rivals?

J: Not exactly. This isn’t a zero sum community. Everyone who’s focused on building blockchain products — whether they’re new blockchains, or infrastructure, or companies around it — is incredibly collaborative.

I do know Alchemy and another company that does similar stuff called Infura and a couple other companies that maybe haven’t raised financing recently so [haven’t been in the news] but are doing really great work in the space to make it easier for people to build. And this isn’t uncommon in a nascent technology space, where companies come in and say, ‘This is a really hard piece of technology to work.’ With blockchains, in particular, we need to make it easier, and different companies are doing that from different angles.

TC: Whose life are you making easier?

JL: We’ve seen a lot of success in supporting the world’s biggest crypto companies. Prior to Coinbase acquiring Bison Trails, we’d announced partnerships with Coinbase to help power their staking nodes proof-of-stake protocols, which is a paradigm shift in the blockchain space. But we’ve also been helping a lot of the other companies that are getting into the space, everyone from that one person who has a smart contract and a dream, all the way to the world’s biggest financial institutions that are building new crypto new products. Whether banks or neobanks, all of them are trying to build on top of these blockchains and a lot of them have been Bison Trail customers for years.

TC: You mentioned the shift to proof of stake from proof of work. Proof of work centers on mining cryptocurrency and proof of stake sounds a little like tenured voting, meaning people are getting rewarded for holding on to currencies longer than others and having a bigger position in them. Is that anywhere near accurate?

JF: It’s almost simpler than that. At its core, the blockchain is a ledger, and a whole lot of people who don’t work together maintain that ledger, which is how mining works. Proof of stake works the same way, but if you hold currency in that blockchain, you vote on what the state of the ledger is. So rather than relying on complex mining algorithms and these large mining operations like Bitcoin does, it relies on people who are incentivized for the state of the blockchain to be right to be correct, because they hold the currency to vote. So really all it is, is a mechanism to incentivize everyday holders of any token to vote on the blocks that are being produced.

TC: And this is is already happening.

JL: So it’s already happening. One of the major blockchains that’s in the middle of this shift is Ethereum 1.0 to Ethereum 2.0. Ethereum has obviously become a very popular blockchain because it was one of the first to enable very intricate, smart contracts, which enables folks to build applications on top of it. And the reason Ethereum has been making the shift is to help it scale. The process of proof of work — mining — can bog down the scalability of a blockchain, meaning how fast it is, how expensive it is, how easy it is to post transactions, and to update the ledger and to maintain the ledger. So this has been a pretty serious trend because it enables blockchains to reach more people and power more intricate applications. It’s a really key piece to blockchain adoption.

TC: And to underscore what Bison Trails is offering to do, what are the features exactly that you’re promising your customers, and do you charge a conventional monthly subscription for these features and services?

JL: We’re a platform not unlike Google Cloud or an AWS where if you’re a builder or someone who wants to participate in a chain, you come to us and instead of needing a team of engineers to spin up nodes and run those and make sure that they’re up and running so that, say, your wallet app is able to connect to a blockchain or that you can take on a new chain or stake on Ethereum; you can instead just click a few buttons in our interface and do that really easily.

The business model is really what we call crypto native SaaS, so folks will pay us in a combination of U.S. dollars, or the crypto equivalent — in some cases like a stablecoin. But also each of the proof-of-stake protocols, as you participate in them, you’re rewarded for participating them, and Bison Trails as a company takes a small cut of that reward.

Again, for more of this conversation, including a look at which nascent crypto startups Lallouz is backing as an investor, you can hear it in its entirety here.

SoftBank has picked its bet in China’s flourishing industrial robotics space. Youibot, a four-year-old startup that makes autonomous mobile robots for a range of scenarios, said it has notched close to 100 million yuan ($15.47 million) in its latest funding round led by SoftBank Ventures Asia, the Seoul-based early-stage arm of the global investment behemoth.

In December, SoftBank Ventures Asia led the financing round for another Chinese robotics startup called KeenOn, which focuses on delivery and service robots.

Youibot’s previous investors BlueRun Ventures and SIG also participated in the round. The startup, based in Shenzhen where it went through SOSV’s HAX hardware accelerator program, secured three financing rounds during 2020 as businesses and investors embrace industrial automation to minimize human contact. Youibot has raised over 200 million yuan to date.

Founded by a group of PhDs from China’s prestigious Xi’an Jiaotong University, Youibot develops solutions for factory automation, logistics management, as well as inspection and maintenance for various industries. For example, its robots can navigate around a yard of buses, inspect every tire of the vehicles and provide a detailed report for maintenance, a feature that helped it rack up Michelin’s contract.

Youibot’s “strongest suits” are in electronics manufacturing and electric power patrol, the company’s spokesperson told TechCrunch.

The startup is also seeing high growth in its semiconductor business, with customers coming from several prominent front-end wafer fabs, which use the firm’s robots for chip packaging, testing, and wafer production. Youibot declined to disclose their names due to confidentiality.

Chinese clients that it named include CRRC Zhuzhou, a state-owned locomotive manufacturer, Huaneng Group, a state-owned electricity generation giant, Huawei, and more. China currently comprises 80% of Youibot’s total revenues while overseas markets are rapidly catching up. The firm’s revenues tripled last year from 2020.

Youibot plans to spend the fresh proceeds on research and development in its mobile robots and propietary software, team building and market expansion.

As expected, Bill.com is buying Divvy, the Utah-based corporate spend management startup that competes with Brex, Ramp and Airbase. The total purchase price of around $2.5 billion is substantially above the company’s roughly $1.6 billion post-money valuation that Divvy set during its $165 million, January 2021 funding round.

Per Bill.com, the transaction includes $625 million in cash, with the rest of the consideration coming in the form of stock in Divvy’s new parent company.

Bill.com also reported its quarterly results today: Its Q1 included revenues of $59.7 million, above expectations of $54.63 million. The company’s adjusted loss per share of $0.02 also exceeded expectations, with the street expecting a sharper $0.07 per share deficit.

The better-than-anticipated results and the acquisition news combined to boost the value of Bill.com by more than 13% in after-hours trading.

Luckily for us, Bill.com released a deck that provides a number of financial metrics relating to its purchase of Divvy. This will not only allow us to better understand the value of the unicorn at exit, but also its competitors, against which we now have a set of metrics to bring to bear. So, this afternoon, let’s unpack the deal to gain a better understanding of the huge exit and the value of Divvy’s richly funded competitors.

Divvy by the numbers

The following numbers come from the Bill.com deck on the deal, which you can read here. Here are the core figures we care about:

• “~$100 million annualized revenue,” calculated using the company’s March results multiplied by 12. That puts Divvy’s March, 2021 revenues at around $8.3 million.
• “>100% revenue growth YoY,” again calculated by leaning on the company’s March results. So, we can’t be sure that its full Q1 2021 growth was over the 100% mark. Still having its most recent Q1 month generate a three-figure growth rate is good. It also lets us know that the company did no more than $4 million or so in March 2020 revenue.
• “~$4 billion annualized TPV,” or total payment volume. Again, this is a March number annualized.

This lets us price the company somewhat. Divvy sold for around 25x its current revenue rate. That’s a software-level multiple, implying that the company has either incredibly strong gross margins, or Bill.com had to pay a multiples-premium to buy the company’s future growth today. I suspect the latter more than the former, but we’ll have to scout for more data when Divvy shows up in Bill.com results after the deal closes; that data is a few quarters away.

Succession is a major issue for many venture firms. Institutional investors, founders — even reporters — often get attached to individual members of a team, and when one of those individuals, particularly a firm cofounder, decides to hang up his cleats, it can be tricky for the rest of the partnership if it hasn’t planned far enough ahead.

For its part, Emergence, a highly successful enterprise-focused venture firm, has been thinking for many years about succession for at least the last decade, suggests Jason Green, who cofounded the outfit with Gordon Ritter and Brian Jacobs in the winter of 2002. While Jacobs spun out a few years ago to cofound a seed-stage fund called Moai Capital, Green says been very focused on hiring the right younger investors who Emergence expects will one day steward the firm.

Certainly, that planning seems to be paying off. Emergence’s institutional investors just committed $950 million collectively to the firm, which yesterday announced it had closed two new funds. And they did this even though Green, who has enjoyed the highest profile of the team, let them know he is ready to move on to new endeavors. We talked with Green about that decision, and what’s he’s planning next, earlier this week. Our chat has been edited for length and clarity.

TC: A lot of your peers are starting to segue out of their longtime venture roles, but a lot are sticking around. What was the impetus for you?

JG: Well, I’m not leaving; I would say I’m transitioning to a different role. I’m still on eight boards and going to be actively involved in mentoring. But it’s the kind of thing we planned when we started the firm. We wanted to build an enduring franchise and grow from within and ultimately have the founders kind of step aside and let the next generation take over. Gordon is obviously still fully engaged, but it felt like the right time [for me to do this]. The firm is in such a great position, and you know, for me personally, I’ve been doing this for 30 years and I’ve achieved a lot — probably more than I expected, frankly — and I’m interested in having an impact in some other ways going forward.

TC: What’s the plan?

JG: I started a family foundation that’s going to be doing philanthropic work in a few areas of interest — climate change, ending mass incarceration, working on homelessness, working on educational opportunities for disadvantaged youth. I’m also excited to become an LP in emerging funds run by diverse managers. I’ve [invested in] half a dozen teams with African American leads or female leads or Latino leads, but while our industry has made some progress over the last, whatever, 10 to 15 years, it’s not nearly enough.

When I think about how slow it is to hire somebody and groom them from within — generally that’s the way we’ve done it in Emergence — the only way to really accelerate [the creation of more] firms that are started and led by diverse folks who are likely to invest in diverse founders [it to actively help them] and that’s somewhere where I think I can move the needle. I’ve been at three venture firms and started one from scratch, so for me, in some ways, I feel even more confident [in] coaching and mentoring other emerging managers than I do entrepreneurs.

TC: Is there someone who transitioned out of a firm that you’re modeling your move after or consulting with as you shift out of Emergence?

JG:  A guy who has been a mentor of mine for many years is Russ Carson, who started [the private equity firm] Welsh, Carson, Anderson & Stowe. He has kind of become a role model of what I’d like to do for the next phase of my career. He’s on the boards of Rockefeller University and funded charter schools and been really impactful in the community. I definitely have interest in supporting the local community in the Bay Area, but I also think some of these [areas I’ll be focusing on ] are almost global in scope and part of [leaving Emergence] is having the freedom to just be curious and learn about things as I go and then figure out where where I can make a difference and have some fun along the way.

TC: Did you and Gordon arm wrestle over who’d get to bounce first? 

JG: [Laughs.] Yeah, we’re around the same age. I think the difference is that I’ve been in the venture business 30 years and he’s been in the business 15 years; he really started in the venture business with Emergence and I think he’s totally jazzed to stay totally in the game for the foreseeable future [whereas] I’m reading to shift from hunting to farming.

TC: You’ve brought in newer investors over time to eventually lead Emergence. Any related advice for other firms that are contemplating how to handle succession?

JG: We hired somebody every couple of years and we made the decision not to hire multiple people at the same level. We basically said, Everybody that we hire in this firm can be successful long term here, and your job is to make other people around you successful. That’s the best way of ensuring your own success.’ And so there was this shared sense of success and failure that I think that we institutionalize in the firm.

At a lot of firms, it’s a little bit more of an eat-what-you- kill kind of mentality. I think in the venture business that’s a little bit misplaced, because there’s so much luck involved in the business. You never know which partner is going to have that big home run. It can take 10 years to actually figure out what were the big wins [in a fund] so you’re going to judge somebody based on the deals they’ve done in the first two years or three years of the business? So we tend to focus a lot more on the inputs than the outputs because the outputs are very variable and have a lot of uncertainty associated with them, but the inputs you can control and, I mean, this is a long term game. It’s a marathon.

TC: What fun thing are going to pick up now that you’ll maybe have more time? 

JG: I’m trying to squeeze as much time as I can with my kids, who are juniors and senior in high school right now. They’ll be off to college soon and spending time with them is a priority, for sure. Health and wellness is also important and  something that tends to take a backseat given how busy we all are, so that’s going to become more of a priority. But also just building and spending time with great friends and hopefully having more opportunities to create some great memories. I have no doubt like my plate will be full.

The City of New York has filed a lawsuit against JOCO, the docked electric bike share service, just weeks after the company launched operations in the city.

The city alleges JOCO is operating illegally because all bike-sharing systems within the city require prior written authorization from the Department of Transportation. JOCO has argued that it’s not violating any laws since its docking stations are all on private property and thus outside the jurisdiction of the city’s regulation. In late April, the city issued a cease and desist notice to JOCO, which the company ignored. 

The court denied Thursday the city’s request to temporarily halt JOCO’s operations in advance of a hearing scheduled for June 16. 

“We are pleased with the result in court today, and in the months ahead we will be expanding our operations to help New Yorkers with more mobility options as they return to work and begin to again enjoy the city as it re-opens and recovers from the pandemic,” said the co-founders of JOCO, Johnny Cohen and Jonny A. Cohen, in a statement.

JOCO launched 300 e-bikes at 30 stations around Manhattan in April, and said it plans to nearly triple that number by June. The company has partnerships with parking garages in the city, including the iconic Icon Parking, the city’s largest operator of private garages.

The lawsuit filed this week, which includes a request to impose a civil penalty against JOCO of $5,000 for every day a violation occurs, specifies that Citi Bike, a subsidiary of Lyft, is the only company presently authorized by the DOT to operate a bike share in any of New York’s five boroughs. The Citi Bike system, which launched in 2012 and has recorded more than 111 million trips, originated in a request for bike share proposals from the department that would benefit the public, including mandated safety, service levels and maintenance standards, as well as privacy and consumer protections. 

“We’re committed to the highest safety standards,” the two Cohens told TechCrunch. “We have fleet management, we give free helmets to all our members. We are a responsible startup making sure we have all our bases covered in this regard, and to add onto that, we’re using a very reputable bike.”

A JOCO spokesperson declined further comment regarding the city’s justification for regulation and exclusivity with Citi Bike.

“We all live on top of each other in NYC,” tweeted New York State Senator Liz Krueger in response to the lawsuit. “Our street space requires thoughtful regulation to be functional and safe. Any transportation service that moves people in large numbers on the public right-of-way needs oversight, public accountability and to obey the laws that exist.”

The exclusive operations rights afforded Citi Bike are also an incentive for the investment of private capital needed to expand the system, according to language in the lawsuit. The city’s contract with Lyft, which was most recently amended in 2020, includes an investment of $300 million to expand the system.

A Lyft spokesperson declined to comment on the lawsuit.

It’s safe to say WhatsApp didn’t have the ideal start to 2021. Less than a week into the new year, the Facebook-owned instant messaging app had already annoyed hundreds of thousands of users with its scary-worded notification about a planned policy update. The backlash grew fast and millions of people, including several high-profile figures, started to explore rival apps Signal and Telegram.

Even governments, including India’s — WhatsApp’s biggest market by users — expressed concerns. (In case of India, also an antitrust probe.) The backlash prompted WhatsApp to offer a series of clarifications and assurances to users, and it also postponed the deadline for enforcing the planned update by three months. Now with the May 15 deadline just a week away, we are able to quantify the real-world impact the aforementioned backlash had on WhatsApp’s user base: Nada.

The vast majority of users that WhatsApp has notified about the planned update in recent months have accepted the update, a WhatsApp spokesperson told TechCrunch. And the app continues to grow, added the spokesperson without sharing the exact figures. The company also didn’t share how many users it has notified about the planned update.

Facebook’s recent earnings call gives us some idea: The company’s family of apps had 3.45 billion monthly active users as of March 31, 2021, up from 3.3 billion on December 31, and 3.21 billion on September 30.

Users who don’t agree to the new terms, as TechCrunch has previously reported, won’t lose access to their accounts or any feature on May 15, WhatsApp said. But after an unspecified number of weeks, such users will lose several core functionalities — though not at the same time.

“We’ll continue to provide reminders to those users within WhatsApp in the weeks to come,” the spokesperson added.

Since 2016, WhatsApp’s privacy policies have granted the service permission to share with Facebook certain metadata such as user phone numbers and device information.

The new terms allow Facebook and WhatsApp to share payment and transaction data in order to help them better target ads as the social juggernaut broadens its e-commerce offerings and looks to merge its messaging platforms.

This is a developing story. More to follow…

In April, real estate tech company Compass forged ahead with its initial public offering and is now valued at nearly $6.4 billion.

At that time, TechCrunch Senior Editor Alex Wilhelm caught up with founder and CEO Robert Reffkin to chat about his company’s debut in the market’s suddenly choppy waters for tech and tech-enabled debuts.

This week, I caught up with Reffkin on a whole other topic: his path to entrepreneurship as a child raised by a disowned single mother whose father had died homeless. Reffkin is so passionate about inspiring others from nontraditional backgrounds to pursue their dreams that he wrote a book about it.

In our discussion, Reffkin shared what he believes are the secrets to his success (hint: one of them involves lots of listening) and his advice for his young entrepreneurs, especially those from non-privileged backgrounds.

This interview has been edited for brevity and clarity.

TC: As the mother of a teen who is already trying to start his own business, I’m intrigued by your DJing as a teenager. What finally got you motivated to care about school and how did you manage to graduate in such a short amount of time?

Reffkin: Well, I think your son might just be on the right track! Please give him a word of encouragement from me, from one entrepreneur to another.

My mom says that a lot of other parents thought she was crazy for letting me launch my DJ business. But starting a successful DJ business in high school helped me learn about myself and my passion for entrepreneurship — and it ultimately helped me get into Columbia, forming the core of both my personal statement and the relationships I built with several members of the admissions team.

I believe the first step is always to dream big. For me, my big dreams for my college future started on a trip to New York City. I toured Columbia and fell in love with it, but I knew it was going to be hard for me to get in. In fact, my high school guidance counselor said, “Don’t even apply. It wouldn’t be worth your time and money on the application fee.” In that moment, my desire to go to Columbia went from strong to absolute, because suddenly it felt like it was about something larger than myself — not just where I went to school, but about a broader struggle for opportunity for people like me. So I poured myself into my SAT prep to show that even though I had a C average, I had what it took to keep up at a top school. And thankfully, it paid off. 

In high school and college, I was a C-student in part because I didn’t see how studying calculus or Western Civilization related to my life or my dreams. I knew that excelling in school wasn’t going to be the way I was going to distinguish myself in the world. At the same time, I was energized by my entrepreneurial efforts and my summer internships. I moved as quickly as I could to get through school and have my real life begin, because the real world made so much more sense to me.

TC: How do you think being raised by a single mother without privilege helped shape you as a man, and entrepreneur? How would you say being a person of color impact your path?

Reffkin: Growing up, it was just me and my mom. She’s an Israeli immigrant, disowned by her parents because I was Black. My father abandoned us and died, homeless, when I was young. What shaped me most as an entrepreneur was learning from my mother. She embodied the entrepreneurial spirit and taught me one of the most important principles: every time you get knocked down, you’ve got to bounce back with passion. I saw her face bad relationships, bankruptcy, and the stream of daily rejections that comes from being an agent. And she always bounced back. So when the world told me I couldn’t do something or that I was destined to fail, I was ready for them. Thanks to my mom, I already knew how to bounce back.

Being Black and Jewish, I’ve felt out of place my entire life. In most classes in Hosch school and college, I was the only Black person. In almost every meeting early in my career, I was the only Black person. When I was raising capital for Compass, I almost never saw someone Black on the other side of the table. But I’ve been very fortunate. I’ve been lucky to get terrific advice along the way from so many Black mentors, from the late Vernon Jordan, to Ken Chenault, the former CEO of American Express, to Bayo Ogunlesi, who is lead director for Goldman Sachs. There’s a really strong community of people who’ve all supported each other.

TC: You’ve had some impressive mentors over the years. How did those relationships develop? How have they been valuable besides the obvious? 

Growing up, I was hungry for advice. Coming from a single-parent home, I looked for guidance and wisdom on how to create a better life wherever I could find it. My mom connected me to several non-profits when I was in high school that helped open my eyes to how much opportunity and support there was out there in the world. 

The most important lesson I’ve learned in my life is that feedback is a gift. Even when it’s hard to hear, feedback is a gift. My relationships with many of my mentors deepened because I started asking them for really tough, candid feedback — the sort of things they thought other people wouldn’t tell me. And then, I’d actually take their advice, apply it in my life, and let them know how it had helped me. That did two two things: First, it led to more honest and practical advice that helped me get better faster. Second, it made the people who had given me advice feel far more invested in my success and the success of whatI was working on.

The other thing my mentors gave me was the sense that even though the world was telling me I couldn’t be successful, I could be. Meeting someone like Vernon Jordan who advised presidents and CEOs alike, had a profound impact on me. He was a father figure to me. I met him when I was 23 years old, and at that time, it wasn’t clear to me that you could be successful in the business world as a Black man. I just hadn’t seen it before. When I started at Lazard, Vernon Jordan was the only other Black investment banker there. He was not just a senior partner, he was a legend, widely known for serving on more Fortune 500 boards than anyone in history. He took a strong interest in me, and with his support and advice, he made me feel like I belonged and helped me see a path where I could be as successful as I wanted to be. 

I founded a nonprofit in my twenties called America Needs You that has provided mentorship, career development, and college support to thousands of students. I wrote my new book, No One Succeeds Alone, as a way to pay it forward by making the lessons I’ve been fortunate enough to learn from so many remarkable people available to everyone — and it’s why I’m donating all of my proceeds to nonprofits that help young people realize their dreams.

TC: What advice you would give to young, aspiring entrepreneurs, especially those from non-privileged backgrounds?

Reffkin: Here’s the advice I’d give to someone from an underrepresented group who just graduated college and is in their first job:

1) Don’t let anyone get in the way of your dream. Not society, not your colleagues, not even yourself. Whenever anyone tells you to slow down, speed up.

2) Spend the next 10 years learning as much as you can from the smartest people you can. Find mentors in your job and outside that will give you the honest feedback that others won’t. Feedback is a gift. It’ll be hard for you to hear, but it’s actually even harder for them to give it to you. So you may have to ask for it directly and let people know that you can take it.

3) Learn how to turn negativity into positive energy that fuels you. There will always be skeptics, doubters, and haters telling you that you can’t do something or that you don’t belong. 

TC: What next after Compass?

Reffkin: I believe that to be truly successful, you can’t have a Plan B. As a CEO, you have to be all-in, and that’s what I am for Compass: 100% dedicated to our 23,000 agents and employees. One of my mentors told me about the “shower test” once — that if you’re not excited enough about your job to think about it in the shower, you’re probably not in the right job. And I’ll tell you: I’m so passionate about the company we’re building that I’m still thinking about Compass in the shower. At Compass, we’ve accomplished much in the past eight years, but we’re truly just getting started. 

What would have been a celebratory earnings call in just about any other quarter ended on a somber note today, as Peloton CEO John Foley kicked things off with an apology.

“We are a members-first organization,” the executive stated. “And that means for all of us at Peloton, the safety of our member community comes first. I want to be clear, though. Peloton made a mistake in our initial response to the Consumer Product Safety Commission’s Request that we recall our Tread+ product. We should have been more open to a productive dialogue with them from the outset.”

The tone marks something of a 180, from the company that pushed back against CPSC statements last month, when Foley said the company was “troubled” by the commission’s “inaccurate and misleading” filings. Yesterday, Peloton and the CPSC issued a joint announcement of a voluntary recall for the Tread+ product, which has been linked with 72 reported incidents, including 29 injuries to children and one death.

The company also agreed to an additional recall for the lower-cost Tread, which thus far has only officially launched in Canada and the U.K., with availability to “select users” in the U.S. The recall will result in a delayed launch of the product in the States.

The issue, while potentially serious, has thus far amounted to far less than the Tread+’s belt issues. “While the new Tread as been well received, there have been some minor quality issues related to how the tablet console is attached to the Tread,” Foley explained. “The touchscreen attaches to the tread with screws. In a handful of cases, we’ve had reports of the screws loosening, causing the console to detach from the unit.”

While the company reported more excellent financial news, amid strong lockdown home fitness growth and a loosening of the supply chain constraints that hampered delivery early on the pandemic, the massive recall had an almost instantaneous impact on the company’s stock price. Alex noted late yesterday a 13.6% dip in shares.

Following Foley’s presentation, CFO Jill Woodworth laid out the expected impact to company revenue. “We estimate the revenue impact of Tread and Tread+ recall will be approximately $165 million,” the executive noted.

The figures include $105 million for ending deliveries on the impacted products. The offer of a full refund on the products will hit the company’s return reserves next quarter to the tune of $50 million, while the decision to waive three months of monthly fees for the All Access subscription to Tread and Tread+ users will make up the remaining $10 million. The company says it will continue to produce content while the CPSC evaluates the product.

The company is working on a hardware fix to the Tread’s dislodging tablet. Foley says the process generally takes six to eight weeks, but could take longer.

 

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Hello friends, welcome to Daily Crunch, where we bring you the day’s most important startup, tech and venture capital news in a single package.

The fintech world is front and center today, with big news from Chime lighting up the analytics boards here at TechCrunch. But we also explored impressive earnings from fintech giants today, asking ourselves how much market the PayPals and Squares of the world will leave for startups as they build ever-broader product sets.

The answer could matter for more than just the buy-now-pay-later world, a hot startup category in recent quarters. We don’t buy into the idea of hard kill-zones around the biggest tech companies, but all the same, the competitive fintech landscape is changing. Especially in emerging markets, where startup activity has been blistering.

Finally, if you reply to this email I will receive the note directly in my inbox. Feel free to say hi!

Alex — @alex on Twitter

When is a neobank not a bank?

Fintech darling Chime has agreed to not refer to itself as a bank after running afoul of California regulators. As TechCrunch reported, Chime has mostly avoided calling itself a bank. In a televised interview, for example, as Connie wrote, its CEO, Chris Britt, said that his company is “more like a consumer software company than a bank.”

Sure. Anyway, we aren’t going to stop calling Chime a neobank, because that’s what it is. We’ll leave the linguistic nuance to the regulators.

The dustup with the Cali powers isn’t itself a huge deal, but it does underscore how Chime and its myriad global competitors are not in too much hot water with governments. Ask yourself: When was the last time you saw Chime in the news for misbehaving? Now, repeat the same experiment with, say, Robinhood? Totally different, right?

The neobank game is expensive, but potentially lucrative. Chime is generating positive EBITDA, for example. That’s a fancy way of saying that it no longer burns much, if any, cash. Something that Uber and Lyft are still struggling to do.

Startups and venture capital

We’ll get into a host of startup funding rounds shortly, but first I want to talk business models. Namely the evolution of SaaS. SaaS is just a fancy way of saying “modern software,” of course; the sort of stuff you pay a regular fee to use, and someone else hosts and delivers to your browser.

SaaS became the de facto startup business model some time ago. Why? It’s lucrative with strong revenue quality (high gross margins) and dependable (recurring) incomes. But in recent quarters, there’s been a shift toward more on-demand pricing (here’s the investor perspective). Which is like SaaS, but potentially even better.

And the trend away from SaaS toward on-demand is not slowing. For example, I chatted with Twilio’s CFO yesterday. Despite having bought some more SaaSy companies lately, he said that his company will keep its center of gravity in the on-demand world. We’re not surprised, but it was a data point worth sharing. (More on this below.)

Now, the day’s hottest funding rounds:

• Personal skin problems lead founder to launch skincare startup Nøie, raises $12M Series A — Mike’s coverage of Nøie is notable for two reasons. First, because it’s fun to write “ø,” and second, because the skin care market is massive.
• Bitski raises $19 million from a16z to become the ‘Shopify for NFTs’ — Either NFTs are going to be with us forever and venture bets like this one are brilliant, or NFTs won’t provide durable consumer value, and the current rage is merely a passing kerfuffle. Investors are placing their bets.
• From bootstrapped to a $2.1B valuation, ReCharge raises $227M for subscription management platform — Look, SaaS is evolving, but that doesn’t mean that it’s going away. As Mary Ann reports, the company’s software “is designed to give e-commerce merchants a way to offer and manage subscriptions for physical products.” Cool.
• Metafy adds $5.5M to its seed round as the market for games coaching grows — I wrote this one. Metafy is building a marketplace for game coaching. But don’t think that it’s just an esports play. Metafy has a much broader vision.
• Lightmatter’s photonic AI ambitions light up an $80M B round — This round is a bit outside my domain expertise (I have none), so I’ll let Devin explain: “Lightmatter plans to leapfrog Moore’s law with its ultrafast photonic chips specialized for AI work, and with a new $80 million round, the company is poised to take its light-powered computing to market.” If that works, bring on the future!

Freemium isn’t a trend — it’s the future of SaaS

While we adopted new pandemic habits like rearranging house plants to create pleasing Zoom backgrounds and having groceries delivered, top SaaS companies also tried something new — offering their products for free or at deep discounts.

Because many enterprises had to make snap decisions to digitize their operations, decision-makers were averse to making long-term plans. As a result, companies like Shopify, GoDaddy and GitHub roiled out free, free-trial and low-priced offerings aimed at end users.

Freemium conversion and expansion is here to stay, says Kyle Poyar, VP of Growth at VC firm OpenView. “The merits of launching a free plan should no longer need to be debated,” he says.

“Instead, more companies should be asking: Are we giving enough away for free?”

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

The tech giants 

Let’s talk about Google. Namely its Chromebook push. Anyone who recalls the UMPC boom, or even the ill-fated netbook phenom, could have been forgiven for dismissing Chromebooks. After all, they were nearly the same idea. But, unlike their predecessors, Chromebooks are kinda working? TechCrunch reported earlier this week that Chromebook sales were up 257% in Q1, for example. And today Google dropped some docks to try and get big companies to buy Chromebooks? For work? The latter bit makes no sense to me, though I will heartily admit that as far as couch computers go, Chromebooks are amazing.

Today, instead of another item or two from another Big Tech conglomerate, we’re turning to China. Recall that the Chinese Communist Party is in the process of cutting its fintech sector to a smaller size. The country’s tech industry seems to be in a general retreat as the government works to assert more control over its operations and influence.

We’ll see what impact that has on venture capital numbers over time. But there’s news from the country that matters to you and me. First, Chinese EV company Nio — which also has a Formula E team — is starting to sell cars in another country. A first. Norway, you win! And China is irked that India is not allowing Chinese companies to compete for a piece of its 5G hardware market. I am surprised that China is making noise about the matter, because after India banned apps from its companies, you would imagine that it would take a similar stance toward hardware that many countries eschew over security concerns.

Community

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Apple’s new AirTag item trackers are pretty small, but not quite small enough to slip into most wallets without adding an obvious bit of bulk.

Fortunately, as one talented AirTag owner has found, that’s nothing you can’t fix with a heat gun, a bit of soldering, and an understanding that you could totally fry your shiny new AirTag in the blink of an eye. Oh, and a 3D printer.

When Andrew Ngai realized that much of AirTag’s thickness came from its PCB and its battery being stacked atop each other, he set out to instead arrange them side-by-side. With the help of some iFixit guides (which, by the way, provide an awesome peek inside the AirTag if you’re curious what’s in there but aren’t looking to dissect one yourself), Andrew tore the AirTag down to its key components. After making sure everything still worked in its freshly disassembled state, he 3D printed a new case, soldered in wires to connect the board to the battery at a distance, and put everything back together. Success! And he did it all within just days of AirTag being released.

While this sort of project requires a pretty broad set of skills to pull off, Andrew has kindly handled one of the steps for anyone looking to take it on: he’s uploaded the STL file for the 3D-printed card holder as a free download on Thingiverse. (Or you could, of course, just buy a Tile Slim. But that doesn’t involve soldering irons and 3D printing, so where’s the fun in that?)

[via 9to5mac]