The pandemic forced many employees to begin working from home, and, in doing so, may have changed the way we think about work. While some businesses have slowly returned to the office, depending on where you live and what you do, many information workers remain at home.
As that happens, it is likely that more offices will reopen. We’ve already heard from major employers like Salesforce, which indicated it will be allowing a percentage of its workforce back to the office this month, starting with the company’s San Francisco headquarters. The CRM giant plans to move slow and follow the government’s lead, allowing 20% capacity at first and hoping to build to 70% over time.
Most companies aren’t the size of Salesforce, which boasts a worldwide workforce of more than 50,000 employees. These smaller companies often don’t control entire skyscrapers, as Salesforce does in San Francisco. That creates complicating factors, including managing people who aren’t willing to be vaccinated, dealing with social distancing and masking, and sharing buildings or floors with other companies.
Even more, many companies have discovered that their employees work just fine at home. And some workers don’t want to waste time stuck on congested highways or public transportation now that they’ve learned to work remotely. But other employees suffered in small spaces or with constant interruptions from family. Those folks may long to go back to the office.
On balance, it seems clear that whatever happens, for many companies, we probably aren’t going back whole-cloth to the prior model of commuting into the office five days a week.
Last August, we spoke to a number of tech company executives about what returning to the office could look like. We recently went back to most of those same executives, as well as a Rhode Island state official and a medical expert we spoke to then to revisit the idea and talk about what’s changed and what work could look like as move slowly toward the post-pandemic era.
The office will never be the same
While their approaches vary, all of the executives I spoke to said that they foresee adopting a hybrid model when they can return in earnest, although there were definitely different interpretations of what that means, and what the office structure will look like.
CircleCI, the continuous delivery pioneer, announced a $100 million Series F today on a $1.7 billion valuation. At the same time, the company announced it has acquired Vamp, a release orchestration startup that should fit nicely in the CircleCI platform. The companies did not share the purchase price.
The funding was led by Greenspring Associates with participation from Eleven Prime, IVP, Sapphire Ventures, Top Tier Capital Partners, Baseline Ventures, Threshold, Scale, Owl Rock and Next Equity Partners. Today’s round comes a little over a year since the late stage startup announced a $100 million Series E, and brings the total raised to over $315 million, according to the company.
CircleCI CEO Jim Rose says part of the reason for taking on $200 million in two years is because even though the company was founded in 2011, the continuous delivery approach is still really just getting started.
“We believe in the development space that it’s really early days […] and there’s so much potential growth in front of us, and so many opportunities to create centers of gravity in the development space […] and we expect to to be one of those [key companies], and we are doing everything we can from an investment perspective and from an operations perspective to make sure that we fulfill that vision,” Rose told me.
Like so many kinds of automation, Rose says that he has seen things accelerate during the pandemic as software development teams look for ways to eliminate manual processes as they moved to work from home.
“Once everyone got pushed remotely they realized, holy moly, we need to automate more and more of this process because that’s the only way that we can actually deliver things, but it’s also the way that we can build a system that’s resilient to these kinds of shocks,” he said.
As for the acquisition, acquiring Vamp takes care of what happens after the application gets deployed, and that fills in a big missing piece in the product map.
“It was just great opportunity to not just for us to accelerate roadmap, and just sort of accelerate the addition of this kind of solidification from a first class perspective on our platform, but it was also a great way for the Vamp team to continue to realize their vision, to continue to invest in this problem that they’ve been focused on for awhile, and we can learn from it,” Rose said.
Vamp launched in 2013 in Amsterdam and raised around €3 million, according to Crunchbase data. Vamp CEO Nico Vierhout sees a natural fit between the two companies.
“We have worked hard over the last eight years to build a platform that makes software releases self-driving and self-healing for users. Joining CircleCI was an organic fit that will provide enhanced visibility and control for developers to build software in a more streamlined way,” he said in a statement.
The 15 member Vamp team will be joining CircleCI and continuing to support the product, even as the functionality gets folded into the broader platform. CircleCI now has over 550 employees, a number that has doubled since last year.
While a Series F with a fat valuation sometimes signals the end of the private fundraising cycle, Rose wasn’t quite ready to talk IPO just yet, even while acknowledging his investors would want to cash out at some point.
“Obviously investors are going to expect liquidity at some point, but we are less focused on what the next kind of funding event, or what the next kind of company event in that transition will be and more focused on figuring out how to stay close to the customer and what’s necessary to build this out. The rest of it kind of takes care of itself,” he said.
Snowman, the small studio behind award-winning iOS games Alto’s Adventure, Alto’s Odyssey, Skate City, and others, is spinning out a new company, Pok Pok, that will focus on educational children’s entertainment. Later this month, Pok Pok will debut its first title, Pok Pok Playroom, aimed at inspiring creative thinking through play for the preschool crowd.
The launch takes Snowman back to its roots as an app maker, not a games studio.
In fact, the company’s first iOS app, Checkmark, had been in the productivity space, offering location-based reminders to iPhone users. But Snowman later shifted to making games, tapping into the demand for mobile games with early launches like Circles and Super Squares. But it wasn’t until Alto’s Adventure came out that Snowman really kicked off its foray into gaming.
“We’ve never really considered Snowman to be a video game studio,” explains Snowman co-founder and Creative Director Ryan Cash. “A lot of people would assume that because it’s really all that we’re known for at the moment. It’s kind of our core business. But we like to think of ourselves more as like a team of tinkerers who like working on creative stuff. And for now, it happens to be video games, but you never know kind of what might be around the corner,” he says.
Image Credits: Snowman
Pok Pok actually emerged from Snowman’s culture of tinkering.
Snowman employees Mathijs Demaeght and Esther Huybreghts, now Pok Pok Design Director and Creative Director, respectively, had gone looking for an app to entertain their young son James when he was a toddler. They soon found that there weren’t many options that fit what they had been hoping to find.
They had wanted something that wouldn’t rile him up, something that wasn’t too technical, and something that wasn’t gamified, Esther explains.
When they later had their second son Jack, they decided to just built the app they wanted for themselves. After showing a rough prototype to Ryan, he saw the potential and told them to run with it.
Ryan’s sister, Melissa Cash, whose background was in developing products at Disney for babies and toddlers, had been helping with the Alto’s Odyssey launch at the time. When she saw what Esther and Mathijs were working on, she was impressed.
Image Credits: Snowman
“I’ve worked in the kid space for five years, and I’ve never seen anything that’s even remotely like this. And then, I just knew this is what I wanted to work on for the next 20 years,” she says. Melissa became involved with the project and is now CEO of the Pok Pok spinout.
Although legally a distinctive entity, Pok Pok remains closely tied to Snowman.
“We’ve been incubating the company within Snowman. We moved desks to a corner and we all work together as mentor, colleagues, and collaborate as a group,” Melissa notes. Ryan is still involved, as well. “Ryan is everything — our advisor, our helper — we haven’t even come up with a title for him,” she adds.
Today, the Pok Pok team is six full-time employees, but works with contractors and educators on its projects. Snowman, meanwhile, is over 20 people, mostly in Toronto. However, some Snowman employees spend 30% to 50% of their time on Pok Pok, Ryan says.
For the time being, Pok Pok is self-funded thanks to Snowman’s success on other fronts, which not only includes the Alto’s series, but also Apple Arcade’s Where Cards Fall and Skate City, both of which are now expanding to PC and console. The company is also working on DISTANT, a collaboration with Slingshot and Satchel.
Pok Pok Playroom, which is aimed at kids ages 2 to 6, will be the first title to go live from Pok Pok, arriving on May 20th. The app itself will initially contain six “digital toys,” so to speak, which encourage kids to creatively play. These toys also grow with the child as they age up.
For example, a stacking blocks toy could appeal to toddlers who just want to move the shapes around, but an older child might build a town with them. A drawing toy can encourage scribbles at younger ages or become a real canvas for art when the child is older. There’s also a calming toy called “musical blobs” that’s sort of like a lava lamp with differently-shaped that bounce around and respond to touches.
What’s different about Pok Pok, compared with games and “digital toys” from rivals like Toca Boca, for example, is that they’re designed to be more educational and realistic.
“We take a more educational approach, and we still plan to do that for future apps and for whatever Pok Pok Playroom will grow into after launch,” says Esther. “For example, we have no unicorns or no wizards in Pok Pok Playroom. Everything is grounded in reality. I think we want to explore with children what the world looks like and how it works. We have tons of ideas for taking a more education-based approach for all the children, as well, that isn’t necessarily the ABCs, 1,2,3’s pedagogical, so to speak.”
Image Credits: Snowman
Pok Pok also won’t use talking animals or fantasy characters in order to avoid the subject of diversity. Instead, its apps will features all races, all genders, all family constructs, all different sorts of abilities and disabilities, as they’re built.
“I think it’s very important to us to have kids be able to recognize themselves, and family members and friends in the app,” says Esther. “It’s really important to our entire team that everyone feels respected in who they are and what their family looks like, and… I think that’s still really lacking in the kid space right now. We want to be the front-runner there,” she notes.
The new app will be priced on a subscription basis with more “digital toys” added over time.
Though Pok Pok will aim more at the preschool crowd, the company envisions a future where it designs creative projects for the next age group up and for other types of learning.
Pok Pok Playroom has been beta tested with around 250 families ahead of its launch.
It will be available on iPhone and iPad starting on May 20th at 9 AM ET, with a 14-day free trial. It will then be priced at $3.99 per month or $29.99 per year, and will not feature in-app purchases.
The Hamburg data protection agency has banned Facebook from processing the additional WhatsApp user data that the tech giant is granting itself access to under a mandatory update to WhatsApp’s terms of service.
The controversial WhatsApp privacy policy update has caused widespread confusion around the world since being announced — and already been delayed by Facebook for several months after a major user backlash saw rivals messaging apps benefitting from an influx of angry users.
Globally, WhatsApp users have until May 15 to accept the new terms (after which the requirement to accept the T&Cs update will become persistent, per a WhatsApp FAQ).
The majority of users who have had the terms pushed on them have already accepted them, according to Facebook, although it hasn’t disclosed what proportion of users that is.
But the intervention by Hamburg’s DPA could further delay Facebook’s rollout of the T&Cs — at least in Germany — as the agency has used an urgency procedure, allowed for under the European Union’s General Data Protection Regulation (GDPR), to order the tech giant not to share the data for three months.
A WhatsApp spokesperson disputed the legal validity of Hamburg’s order — calling it “a fundamental misunderstanding of the purpose and effect of WhatsApp’s update” and arguing that it “therefore has no legitimate basis”.
“Our recent update explains the options people have to message a business on WhatsApp and provides further transparency about how we collect and use data. As the Hamburg DPA’s claims are wrong, the order will not impact the continued roll-out of the update. We remain fully committed to delivering secure and private communications for everyone,” the spokesperson added, suggesting that Facebook-owned WhatsApp may be intending to ignore the order.
We understand that Facebook is considering its options to appeal Hamburg’s procedure.
The emergency powers Hamburg is using can’t extend beyond three months but the agency is also applying pressure to the European Data Protection Board (EDPB) to step in and make what it calls “a binding decision” for the 27 Member State bloc.
We’ve reached out to the EDPB to ask what action, if any, it could take in response to the Hamburg DPA’s call.
The body is not usually involved in making binding GDPR decisions related to specific complaints — unless EU DPAs cannot agree over a draft GDPR decision brought to them for review by a lead supervisory authority under the one-stop-shop mechanism for handling cross-border cases.
In such a scenario the EDPB can cast a deciding vote — but it’s not clear that an urgency procedure would qualify.
In taking the emergency action, the German DPA is not only attacking Facebook for continuing to thumb its nose at EU data protection rules, but throwing shade at its lead data supervisor in the region, Ireland’s Data Protection Commission (DPC) — accusing the latter of failing to investigate the very widespread concerns attached to the incoming WhatsApp T&Cs.
(“Our request to the lead supervisory authority for an investigation into the actual practice of data sharing was not honoured so far,” is the polite framing of this shade in Hamburg’s press release).
We’ve reached out to the DPC for a response and will update this report if we get one.
Ireland’s data watchdog is no stranger to criticism that it indulges in creative regulatory inaction when it comes to enforcing the GDPR — with critics charging commissioner Helen Dixon and her team of failing to investigate scores of complaints and, in the instances when it has opened probes, taking years to investigate — and opting for weak enforcements at the last.
The only GDPR decision the DPC has issued to date against a tech giant (against Twitter, in relation to a data breach) was disputed by other EU DPAs — which wanted a far tougher penalty than the $550k fine eventually handed down by Ireland.
GDPR investigations into Facebook and WhatsApp remain on the DPC’s desk. Although a draft decision in one WhatsApp data-sharing transparency case was sent to other EU DPAs in January for review — but a resolution has still yet to see the light of day almost three years after the regulation begun being applied.
In short, frustrations about the lack of GDPR enforcement against the biggest tech giants are riding high among other EU DPAs — some of whom are now resorting to creative regulatory actions to try to sidestep the bottleneck created by the one-stop-shop (OSS) mechanism which funnels so many complaints through Ireland.
The Italian DPA also issued a warning over the WhatsApp T&Cs change, back in January — saying it had contacted the EDPB to raise concerns about a lack of clear information over what’s changing.
At that point the EDPB emphasized that its role is to promote cooperation between supervisory authorities. It added that it will continue to facilitate exchanges between DPAs “in order to ensure a consistent application of data protection law across the EU in accordance with its mandate”. But the always fragile consensus between EU DPAs is becoming increasingly fraught over enforcement bottlenecks and the perception that the regulation is failing to be upheld because of OSS forum shopping.
That will increase pressure on the EDPB to find some way to resolve the impasse and avoid a wider break down of the regulation — i.e. if more and more Member State agencies resort to unilateral ’emergency’ action.
The Hamburg DPA writes that the update to WhatsApp’s terms grant the messaging platform “far-reaching powers to share data with Facebook” for the company’s own purposes (including for advertising and marketing) — such as by passing WhatApp users’ location data to Facebook and allowing for the communication data of WhatsApp users to be transferred to third-parties if businesses make use of Facebook’s hosting services.
Its assessment is that Facebook cannot rely on legitimate interests as a legal base for the expanded data sharing under EU law.
And if the tech giant is intending to rely on user consent it’s not meeting the bar either because the changes are not clearly explained nor are users offered a free choice to consent or not (which is the required standard under GDPR).
“The investigation of the new provisions has shown that they aim to further expand the close connection between the two companies in order for Facebook to be able to use the data of WhatsApp users for their own purposes at any time,” Hamburg goes on. “For the areas of product improvement and advertising, WhatsApp reserves the right to pass on data to Facebook companies without requiring any further consent from data subjects. In other areas, use for the company’s own purposes in accordance to the privacy policy can already be assumed at present.
“The privacy policy submitted by WhatsApp and the FAQ describe, for example, that WhatsApp users’ data, such as phone numbers and device identifiers, are already being exchanged between the companies for joint purposes such as network security and to prevent spam from being sent.”
DPAs like Hamburg may be feeling buoyed to take matters into their own hands on GDPR enforcement by a recent opinion by an advisor to the EU’s top court, as we suggested in our coverage at the time. Advocate General Bobek took the view that EU law allows agencies to bring their own proceedings in certain situations, including in order to adopt “urgent measures” or to intervene “following the lead data protection authority having decided not to handle a case.”
The CJEU ruling on that case is still pending — but the court tends to align with the position of its advisors.
Better.com, a venture-backed digital mortgage lender, announced this morning that it will combine with a SPAC, taking itself public in the second half of 2021. The unicorn’s news comes as the American IPO market is showing signs of fresh life after a modest April.
The Better.com deal comes just over a month after it sold $500 million of its existing shares to SoftBank at a valuation of $6 billion. At the time, TechCrunch described the deal as “further proof” that unsexy industries were able to secure attractive valuations despite their relative lack of pizzazz.
But the company’s SPAC combination will affix an even higher price than its April round managed, providing the Kleiner Perkins-backed Better with what it describes as a “post-money equity value of approximately $7.7 billion.”
SoftBank is doubling down on Better, putting together a $1.5 billion private investment in the deal’s public equity, or PIPE, in effect repricing its own preceding investment. For the Japanese telecom and investing powerhouse, making successive bets in companies at ever-higher prices is essentially gospel. So, don’t read too much into the commitment.
As with all SPAC combinations, we have a pile of new data from the company that is going public as part of the transaction. So, this morning, we’re getting our hands dirty.
Our goals are simple: We want to understand whether Better is a weak business, an acceptably strong business, or a great business. To get there, we’ll have to start by digging into how the company functions. From there, we’ll discuss its valuation stacked against its trailing metrics. We’ll also take a look at its growth expectations and bring in the recent Compass IPO, a company that focuses on a different part of the mortgage market, to see if we can get a better handle on Better’s new valuation.
If you have heard of Better but really had no idea what it does before this morning, welcome to the club. Mortgage tech is like pre-kindergarten applications — it applies to a very specific set of folks at a very particular moment. And they care a lot about it. But the rest of us aren’t really aware of its existence.
For the rest of us: Better is an online mortgage lender that aims to offer lower-than-standard fees to consumers looking for credit to help them buy a house. As the company explains on its website, it generates income by selling loans that it helps generate. Per its investor deck, Better also derives top line from selling insurance products.
A startup that has built a neobank specifically to address the needs of freelancers and sole traders has picked up a growth round to continue expanding its business after seeing its usage grow by 1500% in a year.
Lili, which provides a way for freelancers to use a single account both to manage their work and personal financial lives, along with tools to help manage the particular financial and accounting demands that come with being a one-person business, has picked up $55 million in a Series B round that it will be using to continue expanding its platform.
Today the company already provides users with a single account and payment card that can be used both for personal and business expenses, and an “assistant” that analyses expenses and budget for paying future taxes based on your incomings. Down the line it will also be expanding into invoicing, payment management and credit (eg, loans or cash advances) for its customers.
“This is about financial services for freelancers,” co-founder and CEO Lilac Bar David said in an interview. “We are redefining a new kind of user, who is between a consumer and a business and has specific needs. If you look at the economy and what the future of work will look like, this really needs to be addressed.”
Lili is based out of New York and Israel, and its focus is primarily on the U.S. market, where Bar David said the opportunity is big enough to keep Lili occupied for some time. It is estimated that currently 40% of workers are freelance, and that proportion is projected to rise to just over 50% of all working people by 2027.
The funding is being led by Group 11, a VC with a strong focus on fintech, with Target Global, AltaIR and previous investors also participating. (That list of past backers include Zeev Ventures, Foundation Capital and the Google for Startups accelerator.) The company has now raised $80 million and is not disclosing its valuation yet.
Launched in January 2020, just before the pandemic really kicked off, Lili has picked up 200,000 customers to date, Bar David tells me.
Its growth was very much on the back of a significant shift in the working world put into motion by the Covid-19 crisis, both in terms of a new cadre of potential users; and in terms of how the product is delivered.
On new users, while freelancers have always been present in the economy, their numbers suddenly swelled.
In some cases, people were being forced into pausing their normal employment, for example when say a public venue like a theater had to temporarily close its doors. In others they were simply laid off as businesses no longer appeared viable. In both cases, it led to a sudden surge of people becoming enterprising with their skills to make a living, rather than trying to apply for new full-time work during the pandemic.
It turns out this was a particularly acute predicament for women. More than 5 million women lost jobs in the wake of the pandemic, Bar David said, and many of them turned to freelance work. Lili says that more than half, almost 60%, of its new users are women.
In terms of the technology, Bar David noted that those looking for a new kind of account to help manage finances needed something flexible and completely usable without the need to visit a physical bank branch.
“We were definitely in the right place at the right time,” she said. “Not only did Covid have an impact on the freelance economy, but it meant no access to bank branches. That meant a greater willingness to adopt a service like ours, and that had a huge effect.”
Freelancing — whatever your actual skill or profession happens to be — has a lot to recommend it.
You are, as they say, your own boss: you can choose which hours your work, what work you take on, how to execute it, and whether you want to promote yourself to work on other things without worrying if your manager will endorse or beat down or perhaps worst of all ignore or dismiss your ambition. You have only your own motivation, and luck, to praise or constructively criticize or sympathize with in your annual reviews with yourself about how you have been doing.
But — and I can say this from very direct experience — it can also be a real pain in the ass.
You have to figure out how to healthily manage your time well, and not take on too much, or panic when not enough work is coming in. You are constantly fighting your own corner when those contracting your services to exploit you or underpay you, with the understanding that pushing back too much might find out you out of a job altogether. You may not get the chances and work you were hoping to get, and then you don’t get paid for the shots you never take.
And that is before the considerable efforts you need to put in to effectively become your own business manager.
That includes tracking your expenses, deciding how to itemize things that you spend money on to align them with your taxes, and of course budgeting yourself each month based on your incomings, and using that budget wisely in ways that make the most sense for you as a consumer in the world, and you as a business person. And if this kind of stuff is not your strongest suit, well, that’s tough. You have to do it anyway.
Lili is an interesting and catchy idea because of how it’s identified all of those transactional issues, and is building tools to help people manage all of it.
This is not just about having a business card to manage payments, but a bigger system that tracks what you are spending and learns from it to give you advice on how to manage your taxes and expenses, what you should be keeping back each month to pay towards income tax filings, and more. Typically, freelancers either do this on the fly from their personal accounts or set up separate business accounts to try to manage it, but neither of those options really presents a clean and easy to use user experience.
Over time, the plan will be to continue adding in more tools and integrate with a wider set of third-party applications that freelancers might use to invoice customers or pay out invoices themselves. It already has integrations with Venmo and QuickBooks, and more will be coming, Bar David said, “whatever a self-employed person needs to be successful,” she said.
There are now dozens of neobanks on the market, but Lili’s specific focus on these self-employed freelancers is what has helped it stand out.
“We anticipate the freelancer economy will continue to robustly grow well beyond the pandemic tailwinds,” said Group 11 Founding Partner Dovi Frances, in a statement. “Lili is poised to see exponential growth by continuing to offer this demographic essential, effective and intuitive tools to manage what was previously an extremely complex and inefficient way of doing business.”
And to be honest, Lili is not the only neobank out there targeting freelancers — others include all of the usual neobanks as well as specialists like Lance Bank — but it’s putting everything it can into tech to try to make itself the most effective and best at it.
DataRobot, the Boston-based automated machine learning startup, had a bushel of announcements this morning as it expanded its platform to give technical and non-technical users alike something new. It also announced it has acquired Zepl, giving it an advanced development environment where data scientists can bring their own code to DataRobot. The two companies did not share the acquisition price.
Nenshad Bardoliwalla, SVP of Product at DataRobot says that his company aspires to be the leader in this market and it believes the path to doing that is appealing to a broad spectrum of user requirements from those who have little data science understanding to those who can do their own machine learning coding in Python and R.
“While people love automation, they also want it to be [flexible]. They don’t want just automation, but then you can’t do anything with it. They also want the ability to turn the knobs and pull the levers,” Bardoliwalla explained.
To resolve that problem, rather than building a coding environment from scratch, it chose to buy Zepl and incorporate its coding notebook into the platform in a new tool called Composable ML. “With Composable ML and with the Zepl acquisition, we are now providing a really first class environment for people who want to code,” he said.
Zepl was founded in 2016 and raised $13 million along the way, according to Crunchbase data. The company didn’t want to reveal the number of employees or the purchase price, but the acquisition gives it advanced capabilities, especially a notebook environment to call its own to attract those more advanced users to the platform.The company plans to incorporate the Zepl functionality into the platform, while also leaving the stand-alone product in place.
Bardoliwalla said that they see the Zepl acquisition as an extension of the automated side of the house, where these tools can work in conjunction with one another with machines and humans working together to generate the best models. “This [generates an] organic mixture of the best of what a system can generate using DataRobot AutoML and the best of what human beings can do and kind of trying to compose those together into something really interesting […],” Bardoliwalla said.
The company is also introducing a no-code AI app builder that enables non-technical users to create apps from the data set with drag and drop components. In addition, it’s adding a tool to monitor the accuracy of the model over time. Sometimes, after a model is in production for a time, the accuracy can begin to break down as the data the model is based is no longer valid. This tool monitors the model data for accuracy and warns the team when it’s starting to fall out of compliance.
Finally the company is announcing a model bias monitoring tool to help root out model bias that could introduce racist, sexist or other assumptions into the model. To avoid this, the company has built a tool to identify when it sees this happening both in the model building phase and in production. It warns the team of potential bias, while providing them with suggestions to tweak the model to remove it.
DataRobot is based in Boston and was founded in 2012. It has raised over $750 million and has a valuation of over $2.8 billion, according to Pitchbook.
Israeli security startup Cycode, which specializes in helping enterprises secure their DevOps pipelines and prevent code tampering, today announced that it has raised a $20 million Series A funding round led by Insight Partners. Seed investorYL Ventures also participated in this round, which brings the total funding in the company to $24.6 million.
Cycode’s focus was squarely on securing source code in its early days, but thanks to the advent of infrastructure as code (IaC), policies as code and similar processes, it has expanded its scope. In this context, it’s worth noting that Cycode’s tools are language and use case agnostic. To its tools, code is code.
“This ‘everything as code’ notion creates an opportunity because the code repositories, they become a single source of truth of what the operation should look like and how everything should function, Cycode CTO and co-founder Ronin Slavin told me. “So if we look at that and we understand it — the next phase is to verify this is indeed what’s happening, and then whenever something deviates from it, it’s probably something that you should look at and investigate.”
Cycode Dashboard. Image Credits: Cycode
The company’s service already provides the tools for managing code governance, leak detection, secret detection and access management. Recently it added its features for securing code that defines a business’ infrastructure; looking ahead, the team plans to add features like drift detection, integrity monitoring and alert prioritization.
“Cycode is here to protect the entire CI/CD pipeline — the development infrastructure — from end to end, from code to cloud,” Cycode CEO and co-founder Lior Levy told me.
“If we look at the landscape today, we can say that existing solutions in the market are kind of siloed, just like the DevOps stages used to be,” Levy explained. “They don’t really see the bigger picture, they don’t look at the pipeline from a holistic perspective. Essentially, this is causing them to generate thousands of alerts, which amplifies the problem even further, because not only don’t you get a holistic view, but also the noise level that comes from those thousands of alerts causes a lot of valuable time to get wasted on chasing down some irrelevant issues.”
What Cycode wants to do then is to break down these silos and integrate the relevant data from across a company’s CI/CD infrastructure, starting with the source code itself, which ideally allows the company to anticipate issues early on in the software life cycle. To do so, Cycode can pull in data from services like GitHub, GitLab, Bitbucket and Jenkins (among others) and scan it for security issues. Later this year, the company plans to integrate data from third-party security tools like Snyk and Checkmarx as well.
“The problem of protecting CI/CD tools like GitHub, Jenkins and AWS is a gap for virtually every enterprise,” said Jon Rosenbaum, principal at Insight Partners, who will join Cycode’s board of directors. “Cycode secures CI/CD pipelines in an elegant, developer-centric manner. This positions the company to be a leader within the new breed of application security companies — those that are rapidly expanding the market with solutions which secure every release without sacrificing velocity.”
The company plans to use the new funding to accelerate its R&D efforts, and expand its sales and marketing teams. Levy and Slavin expect that the company will grow to about 65 employees this year, spread between the development team in Israel and its sales and marketing operations in the U.S.
There has been a flurry of investments in startups focused on acquiring third-party sellers on Amazon and helping them build their businesses.
The latest is Acquco, which aims to stand out from the others in that it was formed by a pair of founders — Raunak Nirmal and Wiley Zhang — who actually worked at Amazon, and then built multimillion-dollar businesses on its platform.
The New York City-based startup has raised $160 million in debt and equity in a Series A round that it says will fund its “aggressive growth plans.” CoVenture, Singh Capital Partners, Crossbeam and other notable investors such as GoDaddy CEO Aman Bhutani put money in the equity portion of the round. Acquco would not disclose the valuation at which the money was raised, nor the exact breakdown of debt and equity, other than to say “a significant portion was equity.” But CEO Raunak Nirmal did share a few other notable things.
For one, the company has already scaled to over $100 million in revenue since its founding (in a year’s time) while deploying less than $2 million of equity capital. Plus, it’s been profitable “since day one,” he said.
Nirmal also claims that Acquco’s proprietary technology and “proven playbooks” give it an edge against competitors such as Thrasio and Perch. Specifically, the company says it helps Amazon sellers exit their business within 30 days and continue to scale their business “to the next level” post-acquisition. It also claims to offer flexible terms and that it does not prevent entrepreneurs from selling again on Amazon.
Acquco says it identifies the best businesses to acquire, and leverages what it describes as “flexible founder-friendly deal structures,” which essentially gives sellers a way to make money from the exit and then still get a cut of revenues down the line. The company claims that it on average achieves over 100% revenue growth after migrating brands onto its platform.
Forming Acquco was not an overnight story, but rather was years in the making.
“My first job out of college was actually at Amazon. I worked as a business analyst on the merchant technologies team there, which was really focused on third-party selling and helping empower third-party sellers to grow on the platform and then just growing that segment of the business,” Nirmal recalls. “At the time, third-party selling was smaller than the retail side for Amazon.”
A lot has changed since then, of course, as that segment of the e-commerce giant’s business has grown dramatically.
In recent years, most sales on Amazon have come through Amazon Marketplace, where millions of outside sellers compete to find customers. Many pay Amazon to store and ship their goods, making them eligible for Prime shipping through an arrangement known as Fulfillment by Amazon, or FBA. This is where Acquco is focusing.
While at Amazon years ago, Nirmal was tasked with starting a brand on the site so he could better understand sellers’ pain points, as well as the tools that could be built “to really help them grow.”
Eventually, Nirmal left Amazon to pursue selling on Amazon full time because the brand he’d started ended up selling over $7 million in its first year. After that, he and COO Zhang built and sold multiple brands in the Amazon ecosystem before going on to consult for “some of the largest sellers in the marketplace,” primarily based in China but selling in the U.S. market.
“A lot of these guys are actually public companies now,” Nirmal said.
The duo went on to co-found a seller outsourcing firm in the Philippines, which helps to minimize the cost of operating the brands for sellers and make it more accessible for sellers that don’t have a huge team to build something on Amazon.
Then they founded a company called Refund Labs, a seller tool that helps sellers essentially automatically identify issues in the payments that they receive from Amazon as well as recover money on their behalf for things like inventory that gets damaged or lost or the fees that are being charged that might be incorrect.
Nirmal stepped down as CEO of Refund Labs to form Acquco.
“What we wanted to do is take this knowledge and experience that we really have built up over the last seven years, and apply it in the best way possible,” Nirmal told TechCrunch. “And rather than building brands from the ground up, or consulting for some of these large sellers, we thought, ‘Why not go and buy the best brands, and then help grow them using our expertise?’ ”
The company says its proprietary algorithms analyze thousands of criteria sets and millions of data inputs “to automate and maximize the performance of the core functions within supply chain and brand management” across their portfolio.
Acquco plans to use its new capital to enter “hypergrowth mode,” according to Chief Strategy Officer Jerel Ho, who most recently led corporate development and strategy at WeWork, where he closed over $40 billion in M&A deals.
The startup has the ambitious goal of scaling its portfolio to over $500 million in revenue by 2022. It plans to put the new money toward continuing to build out its technology platform — including tools that can automate the management of an entire brand on Amazon and across other retail channels — as well as continuing to acquire brands. It’s also, naturally, going to do some hiring.
“We’ve done a lot with very little,” Ho told TechCrunch. “But hyper growth plans require a much larger team across all functions.”
CoVenture founder Ali Hamed says that the Amazon third-party seller ecosystem does $200 billion of revenue and is growing at a compounded annual growth rate (CAGR) of over 50%.
“It’s the most attractive market we’ve seen since founding our firm,” he told TechCrunch. “And of all the people we’ve talked to, Raunak is as plugged into the Amazon ecosystem as anyone we could find. In many ways, he taught us how to look, think and deploy capital into the market.”
To say Hamed is bullish on Acquco would be an understatement. Since first investing in the company in 2020, Nirmal “has exceeded” all of CoVenture’s expectations.
“We’ve been begging him to take more money every three months since writing our first check,” Hamed added. “Raunak is able to help buy businesses and make them better than they ever were before. He has a vision of how to operate these assets post-purchase that other operators who are not Amazon-native just don’t have.”
Ultium Cells LLC, a joint venture between General Motors and LG Chem, has been steadily building up its battery cell manufacturing capacity in the U.S. since the venture was first announced in December 2019. But with each battery cell they produce, they’ll also produce waste – tricky-to-handle waste that also has too much inherent valuable to toss into a landfill.
Instead of throwing it away, Ultium is sending it to a recycler. The venture has executed an agreement with Canadian company Li-Cycle to recycle critical materials from the scrap produced from Ultium’s manufacturing processes from its Lordstown plant, starting later in 2020. The materials from the Lordstown location will be sent to Li-Cycle’s recycling location in Rochester, New York, to be processed and returned to the battery supply chain.
General Motors and LG Chem are clearly determined to scale their battery cell manufacturing. Around 5-10% of the output of a cell manufacturer is this excess scrap. Considering that the Lordstown facility will be capable of producing 30 gigawatt hours of capacity annually, it’s sure to produce a sizable amount of waste material. (For perspective, Tesla’s factory in Nevada has a 35 GW-hour capacity.)
Li-Cycle’s approach is different from more traditional recycling processes, co-founder Ajay Kochhar told TechCrunch. Traditional recycling use a pyrometallurgical, or high temperature, process. With this process, batteries go into a furnace and excess material, like plastics and the electrolyte, are burned off, leaving around a 50% recovery rate for the valuable raw materials.
Li-Cycle also differs from competitors like Redwood Materials, which also use high-temperature, Kochhar explained. Redwood processes things like consumer electronics, which requires different approaches. Li-cycle uses a hydrometallurgical process that shreds – actually shreds, like a paper shredder – the battery materials in a submerged, proprietary solution. Doing it this way reduces the thermal risk of a fire and recovers up to 95% of the battery materials (Redwood also claims a recovery rate of 95-98%). By not burning anything off, the company also avoids producing potentially toxic emissions, Kochhar said.
The cathode and anode material is converted into battery-grade chemicals, like lithium carbonate, nickel sulfate and cobalt sulfate. Li-Cycle works with a company Traxys, which buys the chemical material.
“And where it goes from there is back into cathode making and back into the broader economy and battery supply chain,” Kochhar said. The next step would be a “true circular economy closed loop” where the same material used by a manufacturer is returned back to it.
The company has two recycling “spokes,” where shredding and mechanical separation occurs, in Rochester and Ontario, Canada, with a third commercial facility being built in Arizona. Once the Arizona facility becomes operational, Li-Cycle will be able to process around 20,000 metric tons, or 4 gigawatt-hours, of lithium-ion batteries annually. It’s also building what it calls a “hub” to make the battery chemicals in Rochester, which will have an annual capacity to process around 60,000 metric tons of battery scrap and “black mass” (a mix of cathode and anode material, and one of the outputs from the company’s “spokes”).
It works with 14 different automotive and battery manufacturers (though not all of those deals are public), as well as auto dealers and auto recyclers to accept and process spent lithium-ion batteries.
Ultium in April announced a second $2.3 billion U.S.-based battery factory in Spring Hill, Tennessee that is due to open in 2023. Both factories will supply the automaker with the cells needed for the 30 electric vehicle models it plans to launch by mid decade. However, it is not known if Li-Cycle will process waste from this plant, too.
Notably, the company also recycles R&D scrap from various automakers, giving Li-Cycle “a kind of first look at what’s coming down the pipe” in terms of battery technology, Kochhar said. That helps the company stay on top of the newest battery chemistries and technologies, like solid-state or lithium iron phosphate (LFP), and develop recycling processes accordingly. Li-Cycle already processes some LFP batteries; in those instances it remakes the phosphate back into a fertilizer additive.
In this case, Kochhar said he hopes people see this partnership as a proof point for the economic and environmental case for electric vehicles.
“This should be one commercial example [. . .] that EV batteries will not go into a landfill,” he said. “They’re very valuable. The technology’s here to deal with that in an economically and environmentally friendly fashion.”
