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Strava CEO Mark Gainey on Community, Competition and L0ve-Hate Relationships with Partners
People love Strava, the 95-person, San Francisco-based company whose training app for cyclists and runners has garnered an almost fanatical following. The company keeps its number of “members” close to the vest, but among the passionate acts of its users was one recent job hopeful who employed the company’s mobile app to spell out “Hire Me” over the course of an 8.1-mile run that ended at Strava’s offices. Another user plotted out a bike ride in the shape of a turkey. In the U.K., where the company’s app has taken off (70 percent of Strava users are now outside the U.S.), the press has even asked of its obsessed users: “Is Strava Destroying Your Marriage?”
Last week, at a StrictlyVC event in San Francisco, Strava’s likable cofounder, Mark Gainey, talked at length about his business with Sigma West managing director Greg Gretsch, who wrote Strava one of its first checks. During the conversation, Gainey opened up about what he views as the biggest weak spot of the sporting goods goliath Under Armour, his “love-hate” relationship with the navigation equipment company Garmin, and the one thing that keeps him up at night. Some of that chat follows here, edited for length.
When Strava started [in 2009], it had 5,000 users. How has it evolved into a global brand with the most engaged social fitness community in the world?
It’s been a fascinating ride. [Cofounder] Michael Horvath and I . . .wanted to motivate and entertain the world’s athletes. At first, we were a web company that supported Garmin devices for cyclists. We basically tried to surprise and delight cyclists using the data they’d just uploaded. [Editor’s note: users had access to all of Strava up to five rides; afterward, they were asked to pay $6 a month, or $60 per year for the use of all of its features.] In 2011, in trying to figure out a cheaper way for people to participate in Strava, we launched a mobile app that put us on a completely different path. The good news was that wow did that create growth, domestically, internationally – everywhere. The bad news was that we had to completely reconstruct our team and rethink the way we were building ourselves out.
What types of athletes are using Strava?
We started with cycling and really focused on them; cyclists are data geeks who are used to [logging their data]. But now, almost half the activity coming in is from the running community, You can upload up to 28 different activities into Strava, though. We see everything from yoga to skiing to kite surfing. We want people to capture their athletic life on Strava.
What’s the business model and how has it evolved?
You can use Strava for free as long as you like, or you can upgrade to $6 a month or $60 a year [to access premium features]. It’s a very straightforward model that has worked very well for us over the past five years. By going direct to athlete, we’ve been able to maintain that one-to-one relationship and really create long-term customer value.
A year-and-a-half ago, we also began developing a second direct-to-athlete revenue model, with integrated commerce. We’re not trying to be the Amazon for athletes or create a shop where you can buy stuff but [rather] integrating opportunities into the Strava experience. You can sign up for a monthly “Gran Fondo” — we basically challenge for you to ride roughly 100 miles on a given Saturday — and if you finish, you get an email from us and you “unlock” the ability to buy a limited-edition jersey. We routinely get more than 100,000 people who sign up for these challenges, and it turns out that rewards for athletes is really powerful. We’re simply trying to keep them motivated.
We also launched something six months ago called Strava Metro, which is an opportunity for us to begin working with urban planners and local governments, taking ride and run data in any given population and giving them an anonymized version of it so they can plan bike paths and pedestrian walkways. That’s something we’ve begun to license out and we think it’s another interesting part of our business going forward.
Under Amour has been busily acquiring companies. It bought MyFitnessPal and Endomondo last week for $475 million and $85 million, respectively. Over a year ago, it acquired MapMyFitness [for $150 million]. Can you comment on what’s going on, and how you see the market evolving?
We’re pretty excited about our future. We did a Series D [last fall] led by Sequoia. We didn’t need the capital; we’ve been pretty efficient with our capital. But we were sending a clear signal to the market that we intend to go and grow a global brand. We think there’s a great opportunity to build a sports brand using digital as the platform, so we’ve watched with interest as there has been some consolidation. Under Armour has been especially aggressive over the last year and a half. What we’re finding is that they’re just very different businesses.
When you listen to Under Armour CEO Kevin Plank, he’s very clear. His business is selling apparel and shoes, and he needs channels to do so. And he has figured out that he can get 100 million email addresses when he pulls together these sites.
At Strava, we have a strict definition of community. Community is about getting our customers to interact with one another. That’s when community happens, [that’s] when you have network effect. I’m not judging. Under Armour has a loyal customer base, Nike has a loyal customer base, Apple has a loyal customer base. I’m not saying that community is the way to go, but in our case, we’re a community-based business. We’re akin to a LinkedIn or a Facebook, and our business is very much predicated on the way the network interacts. And when you look at things like MyFitnessPal and Endomondo, the challenge they’ve had is there’s tremendous churn with them because there isn’t network effect. So it’ll be interesting to watch how it plays out.
For more of this interview, click here.
17zuoye, an eight-year-old, China-based online education platform, has raised $100 million in Series D funding led by H Capital, with participation from Temasek Holdings, DST Global, and Shunwei Capital Partners. Tech in Asia has more here.
6sense, a year-old, San Francisco-based big-data analytics software company, has raised $20 million in Series B funding led by Bain Capital Ventures, with earlier backers Battery Ventures and Venrock participating. The company has now raised $36 million altogether.
Better Walk, a nearly two-year-old, Atlanta-based medical device company whose crutches are designed to prevent underarm strain, has raised $450,000 in Series A funding led by MB Venture Partners. The company has raised $600,000 to date. MedCity News has more here.
Betterment, a 6.5-year-old, New York-based online platform for personal investment management, has raised $60 million in new funding led by Francisco Partners, with participation from earlier backers Citi Ventures, Globespan Capital Partners, Northwestern Mutual Capital, Bessemer Venture Partners, Menlo Ventures and Anthemis Group. The company has now raised $105 million altogether, shows Crunchbase.
BlueTalon, a nearly two-year-old, Redwood City, Calif.-based database security startup, has raised $5 million in new funding from Signia Venture Partners, Biosys Capital, Bloomberg Beta, Stanford-StartX Fund, Divergent Ventures and return backer Data Collective. The company has now raised $6.5 million. GigaOm has more here.
BookingPal, a 1.5-year-old, Irvine, Ca.-based company that increases vacation rentals visibility and bookings by connecting property managers and owners to online travel sites and agencies, has raised $5 million in Series B funding led by Thayer Ventures. New investors PAR Capital Ventures and Amadeus Ventures also participated in the round, along with earlier backers Camp One Ventures and Plug and Play Ventures. BookingPal has raised $7.5 million altogether to date.
Credible Labs, a 2.5-year-old, San Francisco-based company that matches recent graduates who have loans to repay with companies that can refinance their debt, has raised $2.7 million in seed funding from Carthona Capital, Cthulhu Ventures and Redbus Group.
K2, a 15-year-old, Bellevue, Wa.-based company that makes business application platforms and services for running business apps, has raised $100 million in funding from Francisco Partners. The company had previously raised $16 million in 2006. TechCrunch has more here.
Konekt, a 1.5-year-old, Chicago-based company whose technology enables engineers and others to connect their devices to wireless data and manage their billing as they grow, has raised $1.3 million in funding, including from Mucker Capital, NextView Ventures and individual investors.
Grovo Learning, a 4.5-year-old, New York-based training platform for digital and professional skills, has raised $15 million in Series B financing from earlier backers Accel Partners, Costanoa Venture Capital, SoftTechVC and Greg Waldorf. The company has raised $22 million to date. TechCrunch has more here.
Lineage Labs, a year-old, Boston-based maker of a hybrid physical storage and cloud backup device for family photos and video, has raised $4 million in Series A funding led by Blade, the consumer technology incubator created by Kayak cofounder Paul English. More here.
Lineagen, a 13-year-old, Salt Lake City, Ut.-based molecular-diagnostics company that’s focused on providing genetic evaluation services for autism, developmental delays and other genetic disorders, has raised the second and last tranche of its $15.8 million Series C financing led by HealthQuest Capital. Other new investors in the round include Mountain Group Partners and Petra Capital Partners. The company has now raised $55.2 million to date.
Instructure, the 6.5-year-old, Salt Lake City, Ut.-based company that sells cloud-based learning management software to educational institutions and other organizations, has raised $40 million in funding led by Insight Venture Partners, reports Business Insider. Other investors in the round include OpenView Venture Partners and EPIC Ventures. The company has now raised roughly $90 million altogether.
Merganser Biotech, a four-year-old, Newton Square, Pa.-based company that’s developing peptides as therapeutics to treat rare hematological and iron overload diseases, has raised $28 million in Series A funding led by Novartis Venture Fund, with participation from Frazier Healthcare, Sutter Hill Ventures and Osage University Partners. Seed investors BioAdvance and Stateside Developments also participated in the round.
Onfido, a 2.5-year-old, London-based data-driven platform designed to conduct background checks for on-demand companies, has raised $4.5 million in Series A funding led by Wellington Partners, with participation from CrunchFund and numerous angel investors. The company has now raised $5.4 million altogether.
Pindrop Security, a four-year-old, Atlanta, Ga.-based maker of phone-fraud prevention and call-center authentication software, has raised $35 million in Series B funding led by Institutional Venture Partners, with participation from earlier backers Andreessen Horowitz, Citi Ventures, Felicis Ventures, Redpoint Ventures, and Webb Investment Network. The company has now raised $47 million to date, shows Crunchbase.
Pinterest, the 5.5-year-old, San Francisco-based social bookmarking site, is in talks to raise $500 million at around an $11 billion valuation, according to WSJ sources. It is unclear whether any new investors will join the round, which is expected to close in the coming weeks, says the Journal. When Pinterest last raised money — it has so far raised $762.5 million from investors — it was in May of last year and its valuation was $5 billion.
Radius Networks, a 3.5-year-old, Washington, D.C.-based company that provides beacons and other services used by retailers and brick-and-mortar operations, has raised $6.5 million in seed funding led by Core Capital Partners, Contour Venture Partners, and Trilogy Partners.
Revmetrix, a two-year-old, Washington, D.C.-based customer intelligence platform for retailers, has raised $2.2 million in seed funding co-led by Genacast Ventures and .406 Ventures, with participation by Neu Venture Capital, and numerous angel investors, including Millennial Media cofounder Chris Brandenburg. VentureBeat has more here.
Science, a 3.5-year-old, Santa Monica, Ca.-based startup studio that invests in media and online commerce companies, has raised $20 million in growth financing from Silver Lake Waterman, part of technology-focused firm Silver Lake. The company, which says it has backed more than 13 startups and helped launch 24 others, had previously raised $40 million in funding from Hearst Ventures, White Star Capital, and Rustic Canyon Partners. Fortune, which was first to report the news, has more here.
ScienceLogic, a 12-year-old, Reston, Va.-based IT monitoring company, has raised $43 million in fresh funding led by Goldman Sachs, with participation from earlier backers New Enterprise Associates and Intel Capital. The company has now raised $84 million altogether. Venture Capital Dispatch has more here.
SkyGiraffe, a 2.5-year-old, Menlo Park, Ca.-based startup that helps companies quickly build and deploy apps, has raised $3 million in Series A funding led by Trilogy Equity Partners, with participation from earlier backer 500 Startups. The company had previously raised $1.5 million, including from Microsoft Ventures. TechCrunch has more here.
Stayzilla, a 4.5-year-old, Chennai, India-based online platform that enables individuals to research and reserve hotels and apartments across India, has raised $20 million in Series B funding led by Nexus Venture Partners and earlier backer Matrix Partners. TechCrunch has more here.
Triptease, a 1.5-year-old, London-based SaaS company that aims to bring hotels and their guests closer, including by providing them a realtime display of their pricing (and others’ pricing for their rooms from across the web), has raised $2 million in seed funding led by Episode 1 Ventures and Notion Capital.
Uber, the 5.5-year-old, San Francisco-based ride-hailing service, has expanded its Series E round of venture financing by $1 billion, according to documents flagged by the New York Times yesterday. The funding brings the total capacity for the round up to $2.8 billion. Uber’s $40 billion valuation remains unchanged, though Matt Levine of Bloomberg View notes that “at some point they’re going to have more than that just in cash.”
Wooplr, a three-year-old, Bangalore, India-based social commerce startup that runs an online platform for fashion enthusiasts, has raised $5 million in Series A funding from Helion Ventures. The company had previously raised $225,000 in seed funding.
Bessemer Venture Partners has closed a new, $1.6 billion fund. Much more here.
Social Leverage, a 6.5-year-old, Coronado, Ca.-based seed-stage venture firm cofounded by serial entrepreneur Howard Lindzon, is looking to raise up to $30 million for its new fund, shows an SEC filing. Social Leverage typically invests between $100,000 and $500,000 in companies. Among its investments is Kensho Technologies, whose data crunching software attracted funding from Goldman Sachs last November; ApplePie Capital, an online loan business focused on franchise funding; and Robinhood, a brokerage firm whose lets customers trade stocks without paying commission.
Inotek Pharmaceuticals, a biopharmaceutical company developing therapies for glaucoma, sold 6.7 million shares at a price of $6 per share in its IPO yesterday, raising $40.2 million for the company.
Always Prepped, a three-year-old, Bethesda, Ma.-based company whose online tools help teachers manage student and classroom data, has been acquired by educational technology provider Alma for undisclosed terms. The company had raised $650,000 in seed funding in 2012 led by True Ventures.
LoopPay, a two-year-old, Burlington, Ma., mobile payment company, has been acquired by Samsung Electronics for undisclosed terms. Samsung is reportedly planning on including LoopPay’s technology in an upcoming smartphone that will take on Apple and its Apple Pay system. LoopPay had raised $13 million from investors, including Visa.
Rocketmiles, a 2.5-year-old, Chicago-based hotel booking startup, is being snapped up by Priceline Group for a reported $20 million. According to Crunchbase, Rocketmiles had raised $8.5 million from investors, including Corazon Capital, Chicago Ventures, Atlas Venture, Link Ventures, Peterson Ventures, and August Capital.
The electric-car battery maker A123 Systems has sued Apple for poaching a handful of its engineers to build a large-scale battery division — further evidence, suggests Reuters, that Apple may be developing a car.
A court filing from Kleiner Perkins Caufield & Byers as part of its defense against former partner Ellen Pao, shows at least five key points the firm plans to make, reports Recode. Among them, Kleiner Perkins will argue that it paid Pao better than some of her male peers. It will also, apparently, try making her look unreasonable. Says the brief: “Pao’s complaints that she did not sit in the front row at a meeting, was not sitting at a table during an event, her office was not on ‘the power corridor’ (whatever that means), she was not included on someone’s interview schedule, she was asked to take notes during a meeting — among many, many others — are simply not even close to being adverse employment actions sufficient to constitute retaliation.”
The White House has finally, officially, named DJ Patil as its first ever Chief Data Scientist and Deputy Chief Technology Officer for Data Policy.Wired says the idea is for Patil — who has worked inside LinkedIn, eBay, PayPal, Skype, and venture capital firm Greylock Partners—to press for new applications of big data across all areas of government, with a particular focus on healthcare.
Vice Media CEO Shane Smith is himself in the news for spending$300,000 for a dinner at the Prime Steakhouse at the Bellagio in Las Vegas during the CES trade show last month. Technology Crossover Ventures and A+E Networks each invested $250 million for 10 percent stakes in the company last year, though a guest of Smith says he used his more than $1 million in blackjack winnings to splash out on the meal.
At a conference in Munich last month, Business Insider founder Henry Blodget walked attendees through our ever-evolving digital landscape. His slides, just posted on Business Insider, are worth scanning.
The U.S. Marshals Service is planning to auction 50,000 bitcoins, worth nearly $12 million, on March 5, reports Dealbook. The auction will be the government’s third. The bitcoins were seized from the computer hardware of Ross Ulbricht, who was convicted earlier this month on charges related to the operation of Silk Road, an online bazaar for illegal drugs and other illicit activities.
Meet the startups focused on the so-called hyperloop, a “fifth mode” of travel that aspires to be as fast as a plane, cheaper than a train and available in any weather.
YouTube is clamping down on video creators who work directly with brands, forcing them instead to rely on Google’s sales team for deals.