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Hello and welcome to Daily Crunch for June 11, 2021. As a small note I am off next week, so my dear friend and TechCrunch lifer Henry Pickavet will be taking over. He’s more fun and a better writer than I am, so consider him a temporary upgrade. See you in a week or so! — Alex

p.s. Cheap tickets to TC Early Stage 2021: Marketing & Fundraising are nearly gone. Flagging in case you needed a ticket and also like saving money. 

The TechCrunch Top 3

• Technology companies are trying to figure out post-pandemic work: Minor tech CEOs look to major tech companies for signals about what to do. Google, for example, is a famous cultural bellwether for other tech firms. But when it comes to post-pandemic work every tech company — big and small — is scrambling to come up with a plan that will keep control-oriented managers happy and staff from quitting en masse. TechCrunch has the rundown you need on what the majors are deciding.
• Didi’s going public! If you thought that the Uber and Lyft IPOs were fun, oh boy is this good news for you. TechCrunch has notes on the venture capital winners’ list and more on the company’s economics for your reading pleasure.
• The tech labor market is brutal: So brutal, in fact, two companies that help their customers find remote, freelance technology talent are now in a legal fight. Toptal is taking Andela to court over “the theft of trade secrets in pursuit of a perfect clone of its business,’” TechCrunch reports.

Startups and VC

• Vertical SaaS is still hot: How do we know? Fresha just raised $100 million. The company provides software for hair and nail salons, yoga instructors, and other health, beauty, and wellness SMBs. Vertical SaaS companies can often have both attractive software incomes and strong payments revenues.
• More money for neobanks: My general philosophy that there is infinite money available for neobanking startups around the world is holding up as TechCrunch broke news that “Bangalore-based neobank Open is in advanced stages of talks to raise about $100 million” from possibly Temasek and General Atlantic. The neobank could be worth $600 million after the deal, TechCrunch reported.
• The edtech boom is not over: Sure, COVID-19 is receding in some countries, and economic activity is rebounding globally, but that’s not stopping edtech companies that got a pandemic bump from raising more cash. This week it’s Indian edtech company Classplus, which could raise $30 million from Tiger Global we reported, at a valuation of up to $250 million. That’s real money.
• Neither is global interest in funding more insurtech startups: That’s what TechCrunch learned chatting up a bunch of EU-based VCs, who said that the European insurtech market is super busy, if perhaps not quite as frenetic as the market for insurance technology startups in America.

Insurtech is hot on both sides of the Atlantic

This morning, The Exchange dug into the EU insurtech market, interviewing European VCs and collating the biggest recent rounds to get a temperature of the waters across the pond:

• Alex Timm, CEO, Root
• Dan Preston, CEO, Metromile
• Luca Bocchio, partner, Accel
• Florian Graillot, investor, Astorya.vc
• Stephen Brittain, director and founder, Insurtech Gateway

Several European-based insurtech startups entered unicorn territory this year, such as Bought By Many, which offers pet insurance, London-based Zego and Alan, a French startup that raised a $220 million round.

According to Brittain, EU startups in this sector are “still at the very early stages of innovation,” having only shown “a fraction of what’s possible” in a market that is “as large as banking.”

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

Big Tech Inc.

• Everyone sucks at cybersecurity: This week’s its Volkswagen, via a third-party vendor. The vendor in question exposed 3.3 million customers’ data. At some point the fines for this sort of error have to rise to the level of pain that will force corporations to stop fucking up. Enough is enough.
• Apple hires from Canoo for car can-do: This week Apple confirmed that it hired “former co-founder and CEO [Ulrich Kranz] of electric vehicle company Canoo. Though the company declined to say what he’s working on. It’s 1,000% a new cube-shaped, six-screen iBloc, right? Without wheels?
• Sticking to the Apple beat, the company announced its “Design Award” winners. TechCrunch has the run-down you need here.

TechCrunch Experts: Growth Marketing

Image Credits: SEAN GLADWELL (opens in a new window) / Getty Images

TechCrunch wants you to recommend growth marketers who have expertise in SEO, social, content writing and more! If you’re a growth marketer, pass this survey along to your clients; we’d like to hear about why they loved working with you.

The results from this survey will help influence our editorial coverage of growth marketing. Today, we have a guest column from Fuel Capital CMO Jamie Viggiano: 5 questions startups should consider before making their first marketing hire.

AutoX, Momenta and WeRide took the stage at TC Sessions: Mobility 2021 to discuss the state of robotaxi startups in China and their relationships with local governments in the country.

They also talked about overseas expansion — a common trajectory for China’s top autonomous vehicle startups — and shed light on the challenges and opportunities for foreign AV companies eyeing the massive Chinese market.

Enterprising governments

Worldwide, regulations play a great role in the development of autonomous vehicles. In China, policymaking for autonomous driving is driven from the bottom up rather than a top-down effort by the central government, observed executives from the three Chinese robotaxi startups.

Huan Sun, Europe general manager at Momenta, which is backed by the government of Suzhou, a city near Shanghai, said her company had a “very good experience” working with the municipal governments across multiple cities.

In China, each local government is incentivized to really act like entrepreneurs like us. They are very progressive in developing the local economy… What we feel is that autonomous driving technology can greatly improve and upgrade the [local governments’] economic structure. (Time stamp: 02:56)

Shenzhen, a special economic zone with considerable lawmaking autonomy, is just as progressive in propelling autonomous driving forward, said Jewel Li, chief operation officer at AutoX, which is based in the southern city.

Facebook has bought several virtual reality game studios over the past couple years, and they added one more to their portfolio Friday with the acquisition of Seattle-based BigBox VR.

The studio’s major title, Population: One, was one of the big post-launch releases for Facebook’s Oculus Quest 2 headset and is a pretty direct Fortnite clone, copying a number of key gameplay techniques while adapting them for the movements unique to virtual reality and bringing in their own lore and art style.

As has been the case for most of these studio acquisitions, terms weren’t disclosed. BigBox raised $6.5 million according to Crunchbase, with funding from Shasta Ventures, Outpost Capital, Pioneer Square Labs and GSR Ventures.

“POP: ONE stormed onto the VR scene just nine months ago and has consistently ranked as one the top-performing titles on the Oculus platform, bringing together up to 24 people at a time to connect, play, and compete in a virtual world,” Facebook’s Mike Verdu wrote in a blog post.

It’s not unusual for a gaming hardware platform owner to build up their own web of studios building platform exclusives, but in the VR world things are a little different given that Facebook has few real competitors.

While many of the developers inside Oculus Studios continue to build titles for Valve’s Steam store which are accessible with third-party headsets, most non-Facebook VR platforms seem to be a shrinking piece of the overall VR pie, having been priced out of the market by Facebook’s aggressive pursuit of a mass market audience. Facebooks Oculus Quest 2 retails for $299 and the company has said that it outsold all of its previous devices combined in its first few months.

In April, Facebook acquired Downpour Interactive, maker of the VR shooter Onward.

Facebook has bought several virtual reality game studios over the past couple years, and they added one more to their portfolio Friday with the acquisition of Seattle-based BigBox VR.

The studio’s major title, Population: One, was one of the big post-launch releases for Facebook’s Oculus Quest 2 headset and is a pretty direct Fortnite clone, copying a number of key gameplay techniques while adapting them for the movements unique to virtual reality and bringing in their own lore and art style.

As has been the case for most of these studio acquisitions, terms weren’t disclosed. BigBox raised $6.5 million according to Crunchbase, with funding from Shasta Ventures, Outpost Capital, Pioneer Square Labs and GSR Ventures.

“POP: ONE stormed onto the VR scene just nine months ago and has consistently ranked as one the top-performing titles on the Oculus platform, bringing together up to 24 people at a time to connect, play, and compete in a virtual world,” Facebook’s Mike Verdu wrote in a blog post.

It’s not unusual for a gaming hardware platform owner to build up their own web of studios building platform exclusives, but in the VR world things are a little different given that Facebook has few real competitors.

While many of the developers inside Oculus Studios continue to build titles for Valve’s Steam store which are accessible with third-party headsets, most non-Facebook VR platforms seem to be a shrinking piece of the overall VR pie, having been priced out of the market by Facebook’s aggressive pursuit of a mass market audience. Facebooks Oculus Quest 2 retails for $299 and the company has said that it outsold all of its previous devices combined in its first few months.

In April, Facebook acquired Downpour Interactive, maker of the VR shooter Onward.

This morning, Anna Heim and Alex Wilhelm dug into the EU insurtech market, interviewing European VCs and collating the biggest recent rounds to take the temperature of the waters across the pond:

• Alex Timm, CEO, Root
• Dan Preston, CEO, MetroMile
• Luca Bocchio, partner, Accel
• Florian Graillot, investor, Astorya.vc
• Stephen Brittain, director and founder, Insurtech Gateway

Several European-based insurtech startups entered unicorn territory this year, such as Bought By Many, which offers pet insurance; London-based Zego; and Alan, a French startup that raised a $220 million round.

According to Brittain, EU startups in this sector are “still at the very early stages of innovation,” having only shown “a fraction of what’s possible” in a market that is “as large as banking.” Interestingly, he predicted that AI will play a larger role in the future as companies deploy it for fraud detection, improved customer experiences and processing claims more quickly.

“We are fully expecting the next generation of AI-driven business to unlock real-time risk analysis, pricing and claims resolution in the next few years,” he said.

Thanks very much for reading Extra Crunch; I hope you have a safe, relaxing weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

What do these 4 IPOs tell us about the state of the market?

Image Credits: Nigel Sussman (opens in a new window)

Earlier this week, The Exchange assessed the looming Monday.com IPO before reading the tea leaves about that flotation and three others to sum up the overall state of the market.

So what do the Marqeta, Monday.com, Zeta Global and 1stDibs debuts tell us? We may have been too conservative.

Toast’s Aman Narang and BVP’s Kent Bennett on how customer obsession is everything

Image Credits: Bessemer Venture Partners / Toast

On a recent episode of Extra Crunch Live, we spoke to Toast founder Aman Narang and Kent Bennett of Bessemer Venture Partners about how they came together for a deal, what makes the difference for both founders and investors when fundraising, and the biggest lessons they’ve learned so far.

The episode also featured the Extra Crunch Live Pitch-Off, where audience members pitched their products to Bennett and Narang and received live feedback.

Extra Crunch Live is open to everyone each Wednesday at 3 p.m. EDT/noon PDT, but only Extra Crunch members are able to stream these sessions afterward and watch previous shows on-demand in our episode library.

AI startup investment is on pace for a record year

Image Credits: Nigel Sussman (opens in a new window)

Alex Wilhelm and Anna Heim solicited feedback from investors to get a temperature on the market for AI startup investments.

“The startup investing market is crowded, expensive and rapid-fire today as venture capitalists work to preempt one another, hoping to deploy funds into hot companies before their competitors,” they write. “The AI startup market may be even hotter than the average technology niche.”

But that’s not surprising. The Exchange was on it.

“In the wake of the Microsoft-Nuance deal, The Exchange reported that it would be reasonable to anticipate an even more active and competitive market for AI-powered startups,” Alex and Anna note. “Our thesis was that after Redmond dropped nearly $20 billion for the AI company, investors would have a fresh incentive to invest in upstarts with an AI focus or strong AI component; exits, especially large transactions, have a way of spurring investor interest in related companies.”

Their expectation is coming true: Investors reported a fierce market for AI startups.

Dear Sophie: What is a diversity green card and how do I apply for one?

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

I started a tech company about two years ago, and ever since I’ve dreamed of expanding my company in the United States.

I would love to have a green card. Someone mentioned that I should apply for a diversity green card. Would you please provide me with more details about it and how to apply?

— Technical in Tanzania

How to start a company in 4 days

Image Credits: MediaProduction (opens in a new window) / Getty Images

Pulley founder and three-time YC alum Yin Wu offers a tactical guide to getting a startup running in four days. Yes, just four days.

“The logistics of setting up a startup should be simple, because over the long run, complicated equity setups and cap tables cost more money in legal fees and administration time,” Wu notes.

Read on for guidance on how to get your business going in less than a week.

Health clouds are set to play a key role in healthcare innovation

Image Credits: Natali_Mis / Getty Images

Innovaccer founder and CEO Abhinav Shashank and CTO Mike Sutten write in a guest column that the U.S. healthcare industry is in the middle of a massive transformation.

This shift, they write, “is being stimulated by federal mandates, technological innovation, and the need to improve clinical outcomes and communication between providers, patients and payers.”

Improving healthcare now means we need to process tremendous amounts of healthcare data. How do we do it? The cloud, which “plays a pivotal role in meeting the current needs of healthcare organizations.”

What SOSV’s Climate Tech 100 tells founders about investors in the space

Image Credits: MrJub / Getty Images

SOSV’s Benjamin Joffe and Meghan Hind round up a “who’s who” from the venture capital firm’s SOSV Climate Tech 100, a list of the best startups addressing climate change that SOSV has supported from the very beginning.

“What can founders learn from the list about climate tech investors? In other words, who invested in the Climate Tech 100?” they ask.

The fintech endgame: New supercompanies combine the best of software and financials

Image Credits: Donald Iain Smith (opens in a new window) / Getty Images

Now that we can transact from anywhere, a new, hybrid class of software companies with embedded financial services are scooping up consumers — and investors are following the action.

Using data from a Battery Ventures report about “the intersection of software and financial services,” this post examines why these companies can be so hard to value and offers a framework for better understanding their business models and investor appeal.

After 30 years, ‘Crossing the Chasm’ is due for a refresh

Image Credits: Grant Faint (opens in a new window) / Getty Images

Geoffrey Moore’s “Chasm,” a framework for marketing technology products that has been one of the canonical foundational concepts to product-market fit for three decades, needs a bit of an upgrade, Flybridge Capital’s Jeff Bussgang writes.

“I have been reflecting on why it is that we venture capitalists and founders keep making the same mistake over and over again — a mistake that has become even more glaring in recent years,” he writes.

Bussgang goes on to consider the Chasm — and propose tweaks for thinking about market size in the modern era.

“Who should my first marketing hire be?”

This is (by far) the most common question I’ve received since starting as Fuel’s CMO, and for good reason. Your first marketer will have an outsized impact on team dynamics as well as the overall strategic direction of the brand, product and company.

The nature of the marketing function has expanded significantly over the past two decades. So much so that when founders ask this question, it immediately prompts multiple new ones: Should I hire a brand or growth marketer? An offline or an online marketer? A scientific or a creative marketer?

Once upon a time, the number of marketing channels was fairly limited, which meant the function itself fit into a neater, tighter box. The number of ways to reach customers has since grown exponentially, as has the scope of the marketing role. Today’s startups require at least four broad functions under the umbrella of “marketing,” each with its own array of subfunctions.

Here’s a sample of the marketing functions at a typical early-stage startup:

Brand marketing: Brand strategy, positioning, naming, messaging, visual identity, experiential, events, community.

Product marketing: UX copy, website, email marketing, customer research and segmentation, pricing.

Communications: PR and media relations, content marketing, social media, thought leadership, influencer.

Growth marketing: Direct response paid acquisition, funnel optimization, retention, lifecycle, engagement, reporting and attribution, word of mouth, referral, SEO, partnerships.

Have you worked with a talented individual or agency who helped you find and keep more users?
Respond to our survey and help us find the best startup growth marketers!

As you can imagine, that’s a lot for one person to manage, let alone be an expert in. What’s more, the skill set and experience required to excel in growth marketing is quite different from the skill set required to succeed in brand marketing. The reality is that anyone who excels across all marketing functions is a unicorn and nearly impossible to find.

So who do you hire first?

Unless you’re lucky enough to nab that unicorn, your first hire should be a generalist who can tend to the full stack of the marketing function, learn what they don’t know, and roll up their sleeves to get things done. Someone smart, savvy and super scrappy who understands how to experiment across marketing channels until they find the right mix.

Mate Rimac, the founder and CEO of Croatian electric hypercar and components developer Rimac Automobili, started a separate company nearly three years ago to work on electric robotaxis.

Little is known about the company, which still operates in stealth. Rimac told TechCrunch this week at TC Sessions: Mobility 2021 he hopes to keep this separate company under wraps until the team is ready to showcase what it has been working on.

Rimac did provide some details on what he described as an electric robotaxi company. He said the company has offices in Croatia and the U.K. and could expand to other locations. Rimac also said the company intends to be a global operator and he expects to reveal what the team has been working on early next year.

“Why stealth mode?,” Rimac asked during the interview. “Because there’s so much hot air in this industry, and so many PowerPoint companies, you know, announcing big things and not delivering and so on. We didn’t want to be that company, we wanted to do a lot of stuff — and like under-promise, over-deliver.”

Few even knew of the company’s existence until last month when local media discovered a Croatia Ministry of Transport filing that described a proposed project involving an urban mobility ecosystem that used electric autonomous vehicles. While Rimac noted that was an unfortunate discovery, he wants to reveal their work properly.

“People see us as the hypercar company,” Rimac said, noting the company is viewed as one focused on ultra-high net worth individuals. (Indeed, Rimac Automobili unveiled a production version of its Concept 2 vehicle. The renamed Nevera has a $2.44 million price tag.) “We have many other things cooking and have a longer-term outlook. I think that the new mobility will be really a shift in society. Just like phones didn’t just change the phone industry. Apple didn’t just disrupt Nokia, but changed our lives. I think the next big change that we’ll have is mobility.”

Rimac didn’t get into details about the autonomous driving system, sensors or design of the vehicle.

“We think that a lot of people are missing the bigger picture and focusing on some of the building blocks, like the autonomous driving system itself,” he said. “We believe maybe that’s not the differentiator itself, that there are some other differentiating factors within the ecosystem of autonomous mobility.”

Rimac later added that the user experience of the robotaxi is one area that he is focused on and believes it can be different than what others are developing.

NASA said Friday it was seeking proposals from commercial companies for two new private crewed missions to the International Space Station. The first mission would likely take place between fall of 2022 and mid-2023. The second one would follow sometime between mid-2023 and the end of 2023.

Private astronaut missions are a relatively recent initiative from NASA, part of its Commercial low-Earth Orbit (LEO) Development program. For most of humanity’s history in space, trips to the ISS were reserved for astronauts from countries’ respective space agencies.

Houston-based startup Axiom Space was awarded the first private astronaut mission, to take place in January 2022. That mission will carry four private astronauts for an eight-day mission from the Kennedy Space Center in Florida. NASA will pay Axiom $1.69 million for services associated with the mission.

Each of the new missions can be up to 14 days and proposals are due by July 9. The agency specified that the missions must be brokered by a U.S. company and use approved U.S. transportation spacecraft. (Axiom’s private mission will use a SpaceX Crew Dragon.)

NASA said that enabling private manned missions such as this one may help “develop a robust low-Earth orbit economy where NASA is one of many customers, and the private sector leads the way.” Thanks to the significantly decreased launch costs – due in large part to innovations in rocket reusability, led by SpaceX – as well as a whole new ecosystem of ‘new space’ companies that have sprung up over the last five years, space has become busier than ever.

The agency also said LEO could eventually be used as a “training and proving ground” for the planned Artemis program – humanity’s long-awaited return to the moon – and missions even deeper into the solar system.

In Friday acquisition news, Shopify shared today that they’ve acquired augmented reality startup Primer, which makes an app that lets users visualize what tile, wallpaper or paint will look like on surfaces inside their home.

In a blog post, co-founders Adam Debreczeni and Russ Maschmeyer write that Primer’s app and services will be shutting down next month as part of the deal. Debreczeni tells TechCrunch that Primer’s team of eight employees will all be joining Shopify following the acquisition.

Primer had partnered with dozens of tile and textile design brands to allow users to directly visualize what their designs would look like using their iPhone and iPad and Apple’s augmented reality platform ARKit. The app has been highlighted by Apple several times including this nice write-up by the App Store’s internal editorial team.

Terms of the deal weren’t disclosed. Primer’s backers included Slow Ventures, Abstract Ventures, Foundation Capital and Expa.

There’s been a lot of big talk about how augmented reality will impact online shopping, but aside from some of the integrations made in home design, there hasn’t been an awful lot that’s found its way into real consumer use. Shopify has worked on some of their own integrations — allowing sellers to embed 3D models into their storefronts that users can drop into physical space — but it’s clear that there’s much more room left to experiment.

Didi filed to go public in the United States last night, providing a look into the Chinese ride-hailing company’s business. This morning, we’re extending our earlier reporting on the company to dive into its numerical performance, economic health and possible valuation.

Didi is approaching the American public markets at a fortuitous moment. While the late-2020 IPO fervor, which sent offerings from DoorDash and others skyrocketing after their debuts, has cooled, valuations for public companies remain high compared to historical norms. And Uber and Lyft, two American ride-hailing companies, have been posting numbers that point to at least a modest recovery in the ride-hailing industry as COVID-19 abates in many parts of the world.

As further grounding, recall that Didi has raised tens of billions worth of private capital from venture capitalists, private equity firms, corporations and other sources. The size of the bet riding on Didi is simply massive. As we explore the company’s finances, then, we’re more than vetting a single company’s performance; we’re examining what sort of returns an ocean of capital may be able to derive from its exit.

In that vein, we’ll consider GMV results, revenue growth, historical profitability, present-day profitability, and what Didi may be worth on the American markets, given current comps. Sound good? Into the breach!

Inside Didi’s IPO filing

Starting at the highest level, how quickly has gross transaction volume (GTV) scaled at the company?

GTV

Didi is historically a business that operates in China but has operations today in more than a dozen countries. The impact and recovery of China’s bout with COVID-19 is therefore not the whole picture of the company’s GTV results.

COVID-19 began to affect the company starting in the first quarter of 2020. From the Didi F-1 filing:

Core Platform GTV fell by 32.8% in the first quarter of 2020 as compared to the first quarter of 2019, and then by 16.0% in the second quarter of 2020 as compared to the second quarter of 2019.

The dips were short-lived, however, with Didi quickly returning to growth in the second half of the year:

Our businesses resumed growth in the second half of 2020, which moderated the impact on a year-on-year basis. Our Core Platform GTV for the full year 2020 decreased by 4.8% as compared to the full year 2019. Both our China Mobility and International segments were impacted, but whereas the GTV for our China Mobility segment decreased by 6.6% from 2019 to 2020, the GTV for our International segment increased by 11.4% from 2019 to 2020.

Holding to just the Chinese market, we can see how rapidly Didi managed to pick itself up over the last year. Chinese GTV at Didi grew from 25.7 billion RMB to 54.6 billion RMB from the first quarter of 2020 to the first quarter of 2021; naturally, we’re comparing a more pandemic-impacted quarter at the company to a less-affected period, but the comparison is still useful for showing how the company recovered from early-2020 lows.

The number of transactions that Didi recorded in China during the first quarter of this year was also up more than 2x year over year.

On a whole-company basis, Didi’s “core platform GTV,” or the “sum of GTV for our China Mobility and International segments,” posted numbers that are less impressive in growth terms:

Image Credits: Didi F-1 filing

You can see how quickly and painfully COVID-19 blunted Didi’s global operations. But seeing the company settle back to late-2019 GTV numbers in 2021 is not super bullish.

Takeaway: While Didi managed an impressive GTV recovery in China, its aggregate numbers are flatter, and recent quarterly trends are not incredibly attractive.

Revenue growth