Author: azeeadmin

Tyltgo wants to make it easier for restaurants and small businesses to compete with same-day delivery services offered by the likes of Amazon and HelloFresh. The Canadian company, which recently raised CAD $2.3 million (USD $1.8 million) in a seed round, is akin to a white label Uber Eats, providing businesses an on-demand delivery platform under their own branding that connects them to gig economy couriers.

“I think about us as a post-purchase experience company,” co-founder and CEO Jaden Pereira told TechCrunch. “The recipient goes directly onto the merchant’s platform and places orders through them, so it feels like they’re interacting with the brand they purchased from throughout the entire experience. Our messages, notifications, tracking pages and delivery are all customized under the merchant’s brand name, but it’s powered by Tyltgo.”

The necessity of having products delivered during the pandemic’s shelter-in-place orders combined with the massive reach of e-commerce giants like Amazon has created a society that expects same-day deliveries. Tyltgo recognized the exclusionary nature of that reality on smaller businesses with less time and fewer resources, and contrived to remedy the situation with some innovative tech and gig economy couriers.

In July 2018, Pereira, 22, co-founded the company with fellow student and developer Aaron Paul while studying at the University of Waterloo. Pereira originally did deliveries himself as a side hustle, while building up a consumer-facing service on Shopify. In October 2019, Pereira and Paul shifted focus to B2B, identifying the real problem as merchants struggling to offer quality same-day delivery at an affordable price.

From December 2019 to December 2020, Tyltgo’s revenue grew 2000%, says Pereira. The company started 2020 with two staff members and ended with nine, including former head of Uber Eats Canada’s marketplace operations, Joe Rhew, and former director of engineering at Goldman Sachs-acquired fintech company Financeit, Adnan Ali.

Aided by funding from VC firm TI Platform Management, Y Combinator and angel investor Charles Songhurst, Tyltgo projects another 1500% revenue growth for 2021. The company’s goal is to expand its team, develop an API and app-based platform, and add 100 more merchants across Ontario.

Pereira said Tyltgo originally focused on florists, and occasionally pharmacies, but demand from the restaurant industry led to the company’s new target — meal kit deliveries.

Meal kit services that provide the culinarily challenged with perfectly portioned ingredients and cooking instructions were already gaining popularity in the before times. When the pandemic hit, services like HelloFresh and Blue Apron saw even more growth. As restaurants struggled to keep their businesses open, many started to get in on the action, delivering restaurant-quality meals with instructions for heating and serving.

The global meal kit delivery services market is expected to reach almost $20 billion by 2027, with heat-and-eat options taking a large share of that market. Tyltgo is counting on the success of this industry. It has already secured partnerships with restaurants like General Assembly Pizza and Crafty Ramen, as well as with more traditional meal kit delivery services from grocery stores and organic farms.

Pereira said working in the “quasi-perishable space” of flowers and meal kits is both a challenge and a differentiator for the company. Depending on the contents of the delivery, Tyltgo will determine its perishability window and make sure to match that window with a driver. It’s also got an advanced fleet management platform that assigns a number of deliveries to suit the size of a courier’s vehicle.

“In the earlier days, the hardest part was being able to match those perishability windows without causing damage to the products,” said Pereira. “We all know that in logistics, you have to account for traffic, weather conditions, all these other things, but you have an eight hour delivery window to get out 35 deliveries.”

Another challenge is ensuring the top quality service Tyltgo advertises while working in the gig economy. Selecting for reliable couriers has slowed the company down at points, but Tyltgo aims to grow capacity only if it can simultaneously maintain a low error threshold.

“We won’t bring on a merchant if we don’t think we have the capacity to handle their deliveries and meet those expectations,” said Pereira.

Whether or not Tyltgo’s meal kit focus will end up driving scalability in the long run, the platform itself has legs. Pereira’s goal is to see Tyltgo become a part of every post-purchase customer experience for all retail trade categories, and that includes expanding into customer service, branding and transactions on top of delivery.

“The main reason why we’re doing this is because a lot of these smaller, brick-and-mortar retailers don’t have the time and resources to be able to compete with the Amazons of the world,” said Pereira. “We want to be able to put that power in their hands.”

E-commerce is booming as retailers race to transform their brick-and-mortar footprints into online storefronts. By some counts, the market grew an astonishing 42% in 2020 in the wake of the COVID-19 pandemic, and estimates show that online spending in the U.S. will surpass $1 trillion by 2022. It’s a bonanza, and everyone is figuring out this new terrain.

Consumers are likely familiar with the front-end brands for these storefronts — with companies like Amazon, Shopify, Square, and Stripe owning attention — but it’s the tooling behind the curtain that is increasingly determining the competitiveness of individual stores.

Klaviyo may not be a household name to consumers (at least, not yet), but in many ways, this startup has become the standard by which email marketers are judged today, triangulating against veterans Mailchimp and Constant Contact and riding the e-commerce wave to new heights.

Founded in 2012, this Boston-based company helps marketers personalize and automate their email messaging to customers. By now, most people are intimately familiar with these kinds of emails; if you’ve ever given your email address to an online store, the entreaties to come back to your abandoned cart or browse the latest sale are Klaviyo’s bread and butter.

It may seem obvious in retrospect that email would grow to become a premier platform for marketing, but this wasn’t the case even a few years ago when social ads and search engine marketing were the dominant paradigm. Today, owned marketing and customer experience management are white-hot trends, and Klaviyo has surged from a lifestyle business to a multi-billion dollar behemoth in just a few short years. Its story is at the heart of the internet economy today, and the future.

TechCrunch’s writer and analyst for this EC-1 is Chris Morrison. Morrison, who previously wrote our EC-1 on Roblox, has been a writer and independent game developer covering the video game industry and the marketing challenges that come with publishing. As an analyst and a potential user, he’s in a unique position to explain the Klaviyo story. The lead editor for this package was Danny Crichton, the assistant editor was Ram Iyer, the copy editor was Richard Dal Porto and illustrations were created by Nigel Sussman.

Klaviyo had no say in the content of this analysis and did not get advance access to it. Morrison has no financial ties to Klaviyo or other conflicts of interest to disclose.

The Klaviyo EC-1 comprises four main articles numbering 9,700 words and a reading time of 43 minutes. Let’s take a look:

• Part 1: Origin story “How Klaviyo transformed from a lifestyle business into a $4.15B email titan” (2,600 words/10 minutes) — Explores the rise of Klaviyo from a database for e-commerce data into a modern email powerhouse as it successively learned from customers and bootstrapped in the absence of funding from accelerators and early VCs.
• Part 2: Business and growth “How Klaviyo used data and no-code to transform owned marketing” (3,000 words/12 minutes) — Analyzes Klaviyo’s recent growth and how marketers increasingly focus on owned marketing channels and customer experience management.
• Part 3: Dynamics of e-commerce marketing “Marketing in 2021 is emotional and not just transactional” (2,200 words/9 minutes) — To fully understand Klaviyo and this new world of martech, this article contextualizes how and why marketers are increasingly trying to personalize and build deeper emotional bonds with their customers outside of social media channels.
• Part 4: Lessons on startup growth “Drama and quirk aren’t necessary for startup success” (1,900 words/8 minutes) — Founders shouldn’t have to keep learning the same lessons over and over again. Klaviyo offers a number of tried-and-true tutorials to understand how to build a competitive startup and not get bogged down in finding product-market fit and scaling.

We’re always iterating on the EC-1 format. If you have questions, comments or ideas, please send an email to TechCrunch Managing Editor Danny Crichton at danny@techcrunch.com.

Startups are stories of feverish dreams and obsessive fears. Short of hearing it from the source, a glimpse into the inbox of a founder would be the best way to experience the travails they endure on the way to building a business. A customer finally makes a purchase, a VC invests or walks away, an employee signs their offer letter — all of the major and minor milestones of a startup are communicated via that now-ancient medium of email.

Email’s ubiquity is only part of the story, though. It’s also a symbol of freedom: The last social platform that remains relatively open and free from the clutches of a single monopoly owner. It’s a market rife with entrenched incumbents, but one that simultaneously continues to invite founders to find some new take on this venerable communications channel and make it better for everyone.

That was the mission that Andrew Bialecki and Ed Hallen undertook when they founded Klaviyo back in 2012. What they perhaps didn’t bank on was just how long of a route they were about to take — or how many rejections they might find in their own inboxes from accelerators and VCs who never thought a new generation of email service providers could make it.

So they bootstrapped, kept things lean. They debated canceling dinners to pay the bills when customers churned. And along the way, they built a special startup that is today valued at a whopping $4.15 billion. Klaviyo is the story of how two scrappy, inexperienced entrepreneurs set out to build a lifestyle business — and ended up creating an email titan.

Racing to the starting line

Klaviyo’s origin story sounds a bit like the generic advice given by every book on entrepreneurship. Andrew Bialecki — he goes by AB — had a need that no existing company filled. So, he started a company to address that need.

It began with what he calls a side hustle: a website devoted to cataloging the dates and locations of running races. Bialecki had the technical chops to build it, but the data wasn’t already available online and he needed race organizers to provide it. That, in turn, meant he needed to let them know his site existed and constantly follow up to make sure they were using it.

“I realized I’m on the phone with people and it’s never going to scale. After a while, I was working on that while I was at another startup, and I said I have two options here. Either I can go all-in on road races, or all-in on the problem: ‘How do we help these businesses connect with the people using their software or products?’” recalls Bialecki.

By then, he already had a co-founder in mind. Bialecki had been a student together with Ed Hallen at MIT, but the pair actually met while working at Applied Predictive Technologies (APT), a Washington, D.C. tech consultancy.

“I’d read all those books on, hey, when you’re looking for someone to start a business with, you want someone with similar values who’s also complementary,” says Bialecki. “I’d known he was kind of interested in starting a company, and we had really complementary skillsets. I loved the engineering and design and product, and he was a big product guy too, but was used to working with customers and clients.”

An email company that didn’t (initially) do email

Current Klaviyo users may be surprised to hear that email was not part of the product that emerged. Instead, Bialecki and Hallen built a database to collect all the e-commerce data that was falling through the cracks.

“Once we really talked to a lot of e-commerce people, it was clear there were long-standing problems,” says Hallen.

Bialecki adds, “There are facts you know, like their name, their email address, their favorite color or something they told you about their birthday. But some of the harder stuff was, jeez, how many times has this person visited my website, bought something from me, what products did they buy and how is that trending over time? Were they a really frequent customer that dropped off the face of the Earth?”

As they spoke to customers, the founders realized that handling customers’ data and making it useful to them was going to be critical to Klaviyo’s success. It just so happened that gathering data matched well with their experiences working at APT.

“We had a ton of experience stitching together data sources,” says Hallen. “We took that expertise and put it as our foundation. What’s the most broken, largest market, and let’s really tie data to it, not as an afterthought.”

Klaviyo’s two co-founders Andrew Bialecki and Ed Hallen in July 2012. Image Credits: Klaviyo

What that required, in practical terms, was spending the initial months building a custom database to store the disparate data types that come up during e-commerce transactions — events, documents and object data models. Conor O’Mahony, who joined the company in 2018 as chief product officer and departed this month to become an advisor, says that the company’s early time investment in its database laid the foundations for its later success in scaling up.

Email is the communication medium that refuses to die.

“Eventually, every technology is trumped by something new and better. And I feel that email is ready to be trumped. But by what?” wrote the venture capitalist Fred Wilson in 2007. Three years later, he updated readers that other forms of messaging had outgrown email. “It looks like email’s reign as the king of communication is ending and social networking is now supreme,” he said. (To be fair to Wilson, his view was nuanced enough to continue investing in email tech.)

Investors weren’t alone — marketers have also spent years anticipating the next big thing.

“It was SMS, it was YouTube, it was Instagram. Before that it was Facebook, then it was Snapchat and TikTok. I kinda feel like individually all those things are fleeting. I think people found: You know what? Everyone still opens their emails every day,” says Darin Hager, a former sneaker entrepreneur who is now an email marketing manager at Adjust Media.

Email has an estimated four billion users today and continues to grow steadily even as mature social networks plateau. Estimates of the number of nonspam messages sent each day range from 25 billion to over 300 billion.

Unsurprisingly for a marketing channel with so much volume, there’s voluminous competition to send and program those emails. Yet, despite the competition, Klaviyo didn’t just break into the market — it has also achieved an unusual level of excitement and loyalty among marketers despite its youthful history.

“If you’re not using Klaviyo and you’re in e-commerce, then it’s not very professional. If you see ‘Sent by Constant Contact or Mailchimp’ at the bottom of an email by a brand, it makes it look like they’re not really there yet,” Hager said.

How did Klaviyo become the standard solution among email marketers?

In Klaviyo’s origin story, we delved into part of the answer: The company began life as an e-commerce analytics service. Once it matured to compete as an email service provider, Klaviyo benefited from the edge given by its deeper, more comprehensive focus on data.

However, that leaves several questions unanswered. Why is email so important to e-commerce? What are the substantive differences between Klaviyo’s feature set and those of its competitors? And why did several large, well-funded incumbents fail to capitalize on building an advantage in data first?

In this section, we’ll answer those questions — as well as laying out the significance of COVID-19 on the e-commerce market, and how newsletters and AI figure into the company’s future.

A positive Outlook on email’s longevity

Email is one of the oldest tech verticals: Constant Contact, one of the most venerable email service providers (ESPs), was founded in 1995, went public in 2007 and was taken private in 2015 for $1 billion. By the time Klaviyo started in 2012, the space was well served by numerous incumbents.

Brands are emotions made physical. The clothes we wear, the media we consume, the devices we use — all signal not only to others what we value and see in ourselves, they also are a way to construct our very identities. Experimenting to deepen that bond has been at the core of the marketing profession for a century; its origins rooted in Freudian psychoanalysis.

There had always been one critical limitation, though: Marketers had to appeal to the masses. Radio, television and print media allowed brands to deliver only one message to everyone, no matter if their product conferred luxury or smart cost-consciousness.

On the internet, the masses have been shattered into ever smaller shards, shifting that marketing calculus toward targeted audiences and social network interest groups. Today, niche brands, large corporations and every business in between are reaching ever-narrower audiences.

Yet, advertising and social networks are competitive marketplaces. Over time, prices to reach niche audiences rise, and strategies that once worked become unviable. In 2021, these perpetual challenges are joined by two new factors: a fresh influx of new e-commerce brands and changing privacy policies on third-party platforms.

Klaviyo benefits from these secular trends. While the cost or difficulty of acquiring new customers may increase, as we looked at in the second part of this EC-1, the cost of emailing an existing one remains much the same. Marketers who become expert at personalization, especially for existing customers through owned marketing platforms like email, will hold an edge over their competitors. It’s no longer about marketing to narrow slices of audiences — it’s about building an emotional bond with an audience of one.

To a booming economy, now ad inflation

While 2020 was a banner year for e-commerce in the wake of the COVID-19 pandemic, the early months of 2021 have brought about a new problem: Customer acquisition costs are rising, sometimes to a worrying degree. For instance, one company interviewed by TechCrunch that did not wish to be named said it has seen its return on investment for Facebook ads fall by nearly half in the first months of 2021. Such inflation has also been predicted by firms like ECI Media Management.

There are two possible reasons for this increase. First, an unprecedented number of companies are moving online, spurred by COVID-19 and worldwide lockdowns.

Many of the stories in our EC-1 series tell tales of startups in the wilderness hacking out green field opportunities. Klaviyo is a different breed of company: One that went into an established market and challenged powerful incumbents, ultimately finding success with a new, more data-oriented generation of email marketers.

As such, the lessons that it offers are, perhaps, more subtle; its insights bordering on common sense.

But as the saying goes, common sense to an uncommon degree becomes wisdom. Here are four pieces of wisdom I’ve gleaned from Klaviyo’s story:

Lesson 1: Drama and quirk aren’t necessary for startup success

Silicon Valley has become a showcase for oddity. Ironically, we all enjoy “Silicon Valley” (the show) or “The Social Network.” Unironically, we toss around phrases like “the hustle” and “sweat equity.” Hot companies often stand out with stories of intense struggle and failure, a larger-than-life founder or a chaotic (and often toxic) management structure.

Drama and sizzle help companies stand out, undoubtedly. But are they necessary for success? Klaviyo’s story suggests otherwise.

Tel Aviv-based ultra-high resolution radar startup Arbe Robotics has a new customer: Chinese autonomous driving company AutoX, which has procured 400,000 Arbe-based radar systems to go in its Level 4 fleet.

The companies said in a statement that Arbe’s platform addresses “core issues” that have been the source of recent AV motor accidents, such as correctly identifying vulnerable road users like cyclists and pedestrians, detecting stationary objects, and removing false alarms caused by ambiguities in the radar image.

It does so using proprietary 2K-resolution, 30 frames per second imaging technology, that the company says is 100 times more detailed than any other radar currently on the market.

Arbe already has partnerships with five tier one automotive supplier customers, and with chipmaker NVIDIA, CEO Kobi Marenko said in a recent webcast. He further added that the company has two additional purchase orders from an unnamed delivery robot company and from “one of the largest car companies in the world.”

AutoX, whose backers include Alibaba, Shanghai Motors and MediaTek, has been at the forefront of AV deployment in China. It was the first company in China to test AVs on public roads without safety drivers, in Shenzhen, one of the country’s largest cities and the location of the company’s headquarters. And it launched a self-driving taxi service, RoboTaxi, in Shanghai.

AutoX was also awarded a permit in California to start driverless testing without a human safety driver, the third company after Waymo and Nuro to have landed such a permit.

The partnership was announced just weeks after Tel Aviv-based Arbe said it would go public via a merger with special purpose acquisition company Industrial Tech Acquisitions, at an equity valuation of $722 million. The move was supported by a $100 million PIPE )private investment in public equity) from investors that include M&G Investment Management, Varana Capital, Texas Ventures and Eyal Waldman.

Markenko estimated during the webcast that Arbe’s revenue will only be $7 million in 2021, so investors are clearly bullish on the company’s technology. To that point, Markenko said he expects to exceed $300 million in revenue in 2025 — a 4,185% increase in just four years.

Many emerging and mature organizations survive or die based on their ability to scale. Scale quicker. Scale cheaper. Scale right.

Typically the IT team bears that burden — on top of countless other demands. IT teams move mountains for their organizations while scaling the tech platform as fast as possible, putting out the latest infrastructure fire and responding to countless day-to-day requests.

The most helpful gift any chief information officer or chief technology officer can give their IT teams is more time. Many people think that means adding another team member. Maybe it does in some cases (if you can find a developer in this tough job market), but giving my team Boomi’s low-code integration platform was one of the best strategic moves for HealthBridge.

As the least skilled coder on the team, low-code let me develop and deliver four customer-centric self-service portals a year ahead of schedule while my team focused on building and scaling our revenue-driving, custom platform by hand-writing code.

Low-code is quickly becoming commonplace and a popular topic among IT decision-makers. Over the last few years, the market has exploded. Gartner expects it to total $13.8 billion in 2021. That means low-code technology, which we’ve been hearing about for years, is ready for widespread adoption. Today, low-code enables you to streamline (and scale) everything from integration to artificial intelligence.

It’s a secret only some organizations are clued in on, but it’s a great way to scale fast, save on resources and give your team more time. Here’s how.

When to use low-code and when to write code

The best time to use low-code is when you need to add something to your organization that isn’t unique or doesn’t drive significant business value.

For instance, a customer portal is not unique; don’t waste time hand-coding it.

While it’s certainly an extremely helpful feature for our customers, it’s unlikely to drive significant shareholder or investor value. However, it’s key for scaling. Using low-code for a must-have but undifferentiated feature will allow your team to work on more important projects while scaling.

When we started working on the timeline for a customer portal project at HealthBridge, we estimated it would take several sprints per portal to develop, but more pressing development work kept pushing it down the list in our backlog. Waiting a year for a basic feature didn’t seem reasonable to me, so we looked for a workaround.

As online identity management grows in importance, Mastercard swooped in this morning and bought identity verification company Ekata for $850 million.

Mastercard certainly sees the rapid digital transformation that is happening in online commerce, a move that was accelerated by COVID. It’s a transformation that once started isn’t likely to change back to the old ways of doing business, even when we get past the pandemic.

With Ekata, the company gets a solution that can verify the online identity of a person making the transaction in real time using various signals that can indicate if this is fraudulent or true as they open an account or transact business. The company provides a score and other data that predicts the likelihood this person is who they say they are. It’s not unlike a credit risk score, except for identity.

That was one of the primary reasons Mastercard decided to acquire Ekata, according to Ajay Bhalla, president of cyber and intelligence solutions at the company. “With the addition of Ekata, we will advance our identity capabilities and create a safer, seamless way for consumers to prove who they say they are in the new digital economy,” Bhalla said in a statement.

The two companies believe that by combining Mastercard’s fraud detection solutions with Ekata’s scoring approach, they will help prevent bad actors from using online platforms to conduct business. “The acceleration of online transactions has thrust global digital identity verification to the forefront as one of the biggest opportunities to build digital trust and combat global fraud,” Rob Eleveld, CEO at Ekata said in a statement.

The company, which was previously known as White Page Pro, was spun out as Ekata in June 2019. It has not raised any additional money, according to both Pitchbook and Crunchbase data. It would seem that $850 million represents a nice exit for a company that hasn’t raised a dollar, but it’s clearly more mature than your average startup with 2000 customers including Lyft, Stripe, Equifax, Checkout.com and Intuit.

It appears that Mastercard was willing to pay to get the company it wanted at a time when a solution like this is becoming more essential than ever. The acquisition is subject to standard regulatory approval, but remember regulators quashed the Visa-Plaid deal last year. If it passes muster, it should close some time in the next six months, according to the company.

Cannabis financing company Bespoke Financial today announced it raised $8 million in a Series A financing round. Through this round, the company brought new, key investors into its corner as it fights to bring financing solutions to companies in the cannabis space.

Bespoke is a direct lender and provides several financing solutions to companies operating in cannabis. These short-term loans allow the companies to build credit with Bespoke, which then offers better terms on subsequent loans and products. The company says its loan origination volume has grown exponentially, outgrowing forecasts by 25% over the proceeding year. The company has deployed $120 million in gross merchandise volume over 2,000 cannabis license holders with zero defaults to date.

With this new round of capital, Bespoke intends to launch new financing structures and expand its financing options across various distribution channels.

CEO and Co-founder George Mancheil calls this round a pivotal moment for his company and stamp of validation on the direction and products offered by Bespoke Financial. As he tells TechCrunch, this round provides several key partners to the growing startup.

The financing round was co-led by Snoop Dogg’s Casa Verde Capital and Sweat Equity Ventures, along with Ceres Group Holdings, Greenhouse Capital Partners, DoubleLine Capital’s co-founder and former president Philip Barach, and Robery Stavis, a VC based in New York.

This is Sweat Equity Ventures’ (SEV) first investment into a cannabis company. SEV, backed and in part funded by LinkedIn founder Reid Hoffman, is led by Dan Portillo and works differently from traditional venture funds. SEV works with founders to provide top engineering and business talent to its portfolio companies. In exchange for these services, SEV takes equity from the companies instead of just writing checks.

“This is our firm’s first investment in the cannabis industry, and we are excited to partner with Bespoke as more and more states legalize cannabis use, and the Federal government contemplates nationwide legalization. This partnership combines Bespoke’s finance and cannabis acumen with our team’s expertise scaling innovative tech companies, and will provide cannabis companies greater access to streamlined financing while benefiting investors with increased transparency and enhanced risk surveillance,” says Dan Portillo, Managing Partner of Sweat Equity Ventures, in a released statement.

Karan Wadhera, managing partner at Casa Verde Capital, says Bespoke Financial addresses real needs in a growing industry. Casa Verde Capital previously invested in Bespoke Capital including in a $7 million round in 2019.

Bespoke CEO Mancheil tells TechCrunch his company is focused on being more than just a lender; it wants to be a modern financing company that allows it to act as a true partner with the cannabis industry.

With this $8 million in financing, Bespoke Financial has raised $28 million to date. The company was founded in 2019 and, as of this announcement, has 12 employees.