Hi, all, good morning, and happy Earth Day! Hope it’s off to a good start.
Quick mention: Highway1, the San Francisco-based accelerator program for hardware startups, has asked us to tell you it’s opening up applications today for its fall program. (It’ll accept 15 companies.) Teams can apply here
Top News in the A.M.
Google is set to unveil its new U.S. wireless service as early as today.Hope you like your Apple Watch; it’s reportedly going to be a pain to return it.Yahoo‘s first-quarter revenue fell short of analysts’ estimates. More here.
The battle to baby your car is heating up. This morning, Zirx, a year-old, San Francisco-based company that will park your car, wash it, fill up its gas tank, and rotate its tires, is announcing $30 million in new funding. The round comes roughly a month after Luxe, another San Francisco-based valet app, raised $20 million. (Luxe has now raised roughly $25 million altogether, while Zirx has raised around $36 million.)Yesterday, we talked with Luxe CEO Curtis Lee – a former product manager at Zynga, YouTube, Google, Skype, and Groupon — about the competition, and whether and when these types of companies turn profitable. Our chat has been edited for length.You now have 40 full-time employees and hundreds of contract workers parking customers’ cars in San Francisco, L.A., and Chicago. Yet you say that parking cars is step one. What’s next?
We’re more of a services platform than anything else. We happen to park your car, but we’re already doing gas fill-ups, car washes, and oil changes . . . Your car is effectively an urban locker, and we want to get stuff delivered to your car, as well as do things with it, like pick up your keys, get your groceries . . .
How do you decide when to roll out new services?
I’m a product manager. My cofounder [CTO Craig Martin] is a engineer. We worked at Zynga together, and we tend to like to do experimental things often. If they work, we double down. If they don’t, we won’t. And we saw that early on, the primary reason customers decided to use us was for our additional services.
What are you charging for some of these services?
Our rates vary depending on the city, but in San Francisco it’s $5 an hour [to have your car valet parked] and $15 per day. Car washes are $40. Gas fill-ups are the cost of the gas plus a $7.99 surcharge.
Are you dealing with much poaching?
Certainly, other companies are trying, especially because our guys are so obvious on the streets [wearing the Luxe uniform, which are bright-blue jackets]. We’re the only company that shows customers where our lots and our valets are on a map. That makes us vulnerable sometimes, but our retention remains very high. We think [our workforce] is fairly happy. We also have more demand than our competitors, and [valet pay] is hourly based, so [our valets are] not going to make as much money elsewhere. It’s like Uber; people want to work for Uber because it has the [consumer] demand.
What of allegations that on-demand startups short-change workers by classifying them as independent contractors?
We’re not obsessed or worried about it. I think it’s more a philosophy thing than the letter of the law. You treat employees – and independent contractors – with respect. It’s not as much about classifications. Who knows what will happen. [Any potential legal changes] aren’t in our hands. But we’re keeping an eye on it.
Do you pay your valets minimum wage? Do they make much in tips?
It’s completely optional, but our customers can give tips [via our app] because they were trying to do it regardless, through cash. Our guys make way more than minimum wage for sure because of the demand we get.
Also, our guys don’t need to own cars. There’s no equipment necessary [beyond a scooter to get to customers more quickly]. Twenty percent of Uber drivers’ salaries go toward wear and tear and gas.
It’s seems like potentially hazardous work, zipping around town to pick up and drop off customers’ cars as quickly as possible.
We put [our valets] through extensive training so they understand where they need to drop off people’s cars, as well as make sure they aren’t doing anything that puts them at risk. Our bright blue jackets are also designed to ensure people see them. And we have a valet office where people can hang out and eat free food and relax and, if there are issues, go to office hours and talk with us.
Your arrangement with city garages is pretty central to your future profitability. Are these typically monthly arrangements for spots?
We have different agreements with different parking lots all the time — everything from monthly to yearly to daily arrangements. But parking lot owners take care of us and we take care of them, turning over the space enough times that we can make a profit on a per unit basis. The best analogy is to Priceline. For hotels, unused rooms are sunk costs. Priceline has created a billion-dollar business just by providing discounts to customers and getting [hotels paid] for their underutilized inventory.
Still, some VCs think services businesses like yours are too cost intensive. What are they missing?
We’re basically creating a behavioral change. Those days of searching for parking, wasting time, wasting gas – they’ll disappear in time. Also, parking alone is a $100 billion market globally and a $30 billion market in the U.S. And you’re seeing tremendous growth of car ownership internationally, including in Brazil, China, and India, all of which are undergoing massive urbanization without enough infrastructure to keep up. There are just huge opportunities for us.
Will you be fundraising again this year?
We’re open to raising [again] when the time is right.
(Bay Area readers, to learn more about the shifts in on-demand startups, you might want to check this out next month. We’ll be there to moderate a panel.)
Ariste Medical, an eight-year-old, Memphis, Tn.-based company that’s developing drug-eluting surgical implants to prevent common causes of device failure, has raised $4.6 million from undisclosed sources. in funding. In 2012, the company raised $1.3 million, also from undisclosed backers.
CompareAsiaGroup, a nearly two-year-old, Hong Kong-based, Asia-focused financial comparison platform, has raised $40 million in Series A funding led by Goldman Sachs Investment Partners, with participation from Nova Founders Capital, Jardine Pacific, Ace & Company, Route 66 Ventures, and individuals Mark Pincus and Owen Van Natta. The company has now raised roughly $45 million to date. More here.
ConXtech, an 11-year-old, Pleasanton, Ca.-based modular building company that creates structures to enable the mass customization of buildings, has raised $25 million in Series D funding led by Saudi Aramco Energy Ventures and a venture fund associated with the George Kaiser Family Foundation. More here.
Gengo, a 6.5-year-old, Tokyo, Japan-based crowdsourced translation service, has raised $5.4 million in Series C funding led by Recruit, with participation from SBI Investments, MUFJ Capital and CrowdWorks. The company has now raised $23 million altogether, including from Intel Capital, Atomico, and 500 Startups. TechCrunch has more here.
Gravie, a two-year-old, Minneapolis, Mn.-based health insurance marketplace that helps employers transition their employees to the individual health insurance market, has raised $12.5 million in Series B funding led by new investor Split Rock Partners, with participation from earlier backers Aberdare Ventures and FirstMark Capital.The company has now raised $25.6 million to date, shows Crunchbase. The Minneapolis/St. Paul Business Journal has more here.
Honey, a three-year-old, New York-based social intranet for employees to discover, discuss and archive content, has raised $1 million in seed funding led by Point Nine Capital. Honey was incubated by the ad giant Interpublic Group as part of its Labs program, which develops new technologies to solve client challenges. It has now raised $2.3 million altogether.
Onfleet, a three-year-old, San Francisco, Ca.-based company that provides a white-label backend infrastructure to numerous on-demand and delivery services (helping them coordinate couriers with their assignments, for example), has raised $2 million in funding, including from CrunchFund, Winklevoss Capital, Playfair Capital, Stanford-StartX Fund, Lee Linden, Semil Shah, Fadi Ghandour and Andy Rachleff. More here.
Poshmark, a four-year-old, Menlo Park, California-based fashion community marketplace where visitors can buy or sell their things, has raised $25 million in new funding from Mayfield, Menlo Ventures, Inventus Capital, Union Grove Venture Partners, Shea Ventures and SoftTech VC. The company has now raised $47.2 million altogether. TechCrunch has more here.
ReShape Medical, a 6.5-year-old, San Clemente, Ca.-based company that develops non-surgical weight loss “balloons” to support the treatment of obese and overweight patients, has closed a $12 million senior secured term loan from Oxford Finance and Silicon Valley Bank. The company, which will reportedly seek out an equity round soon, has now raised $62.3 million in equity and debt, shows Crunchbase. Earlier investors include New Leaf Venture Partners, U.S. Venture Partners, and SV Life Sciences.
Scalyr, a four-year-old, Portola Valley, Ca.-based log-monitoring service that gives developers more insight into how their applications are performing, has raised $2.1 million in seed funding led by Susa Ventures, with participation from Bloomberg Beta, Google Ventures and Sherpalo Ventures. TechCrunch has more here.
Shots, a 1.5-year-old, San Francisco-based mobile app for sharing selfies (Justin Bieber, an early investor, uses it regularly), has raised $8.5 million in new funding led by WI Harper. Other participants in the round include Launch Fund, Upfront Ventures, 500 Startups, music producer Rodney Jerkins and the venture arm of Major League Baseball. The WSJ has much more here.
Shyp, a two-year-old, San Francisco-based on-demand shipping service, has officially raised $50 million in Series B funding led by Kleiner Perkins Caufield & Byers, with participation from earlier backers, including Homebrew, Sherpa Ventures, enterpreneur-investor Kevin Rose and Rent The Runway CEO Jennifer Hyman. The company has now raised $62.2 million altogether.
Zirx, a year-old, San Francisco, Ca.-based provider of on-demand valet and related car services (like car washes, oil changes, and tire changes), has raised $30 million in Series B funding led by Bessemer Venture Partners, with participation from earlier backers Norwest Venture Partners and Trinity Ventures. The company has now raised $36.4 million altogether.
Russian president Dmitry Medvedev’s Skolkovo Foundation for technical development and China’s Cybernaut Investment Group are teaming up to create a $200 million venture fund, a startup incubator for Russian businesses, and a new Chinese robotics center. Fortune has more here.
Path may sell its original social networking app, known as Path Classic, to the makers of South Korean messaging app KakaoTalk, according to Recode. According to its report: “The potential acquisition — the terms of which are still unknown — would give KakaoTalk’s parent company Daum Kakao a major foothold in Indonesia, where Path is a leading social app.” Recode’s sources add that Path, which has raised more than $75 million in funding, would continue to operate independently after selling off the social networking app.
Peter Hazlehurst, who joined the delivery startup Postmates just seven months ago as COO, is out the door, saying CEO Bastian Lehmann isn’t quite ready to relinquish control of the company’s day-to-day operations.“The business is doing great and I’m very proud of being part of that,” Hazlehurst tells Recode. “But I also want to have a role where I have full control and autonomy to drive things, and Bastian was not quite ready for that and that’s cool.” Hazlehurt had previously spent two-and-a-half years at Google, where he was a senior product manager working on the company’s payments initiatives. Before that, he spent nearly eight years at Yodlee, where he was chief product officer.
Venture capitalist Dmitry Kaminskiy of the Hong Kong-based venture firm Deep Knowledge Ventures, is offering a $1 million prize to the first person to reach his or her 123rd birthday. The goal of the prize, says Forbes, is “to get the public interested in longevity research and to motivate people to live longer live.” It has nothing to do with generating press for Kaminskiy, at all.
Sources are telling Recode to expect “a lot of movement” at Yahoo as CEO Marissa Mayer “rejiggers her favorites” and slowly squeezes out others, including Americas head Ned Brody. In fact, according to Recode’s spies, Brody already “seems to have joined the witness protection program . . . after he lost much of his job to Americas ad sales head Lisa Utzschneider and waits around in what insiders describe as a fire-me-and-pay-me standoff with Mayer.”
Jeff Rowbottom, the head of capital markets for North America at KKR, is leaving to join Israeli venture-capital firm Pontifax Group, which invests in biopharmaceutical companies and medical devices. Bloomberg has the story here.
SRI International is looking for a managing director. The job is in Menlo Park, Ca.
U.S. medical startups raised a record $3.9 billion in venture capital in the first quarter of this year, surpassing the previous high record of $3.42 billion invested in the second quarter of last year, according to Dow Jones VentureSource. The WSJ has more here.
Facebook and Google are scrambling to reach people without web access. Meanwhile, the internet’s reach among new users is slowing.
Europe’s plan to compete with Silicon Valley.
The Department of Homeland Security is opening a satellite office in Silicon Valley. More here.
The Floyd Mayweather-Manny Pacquiao fight is less than two weeks away, yet no one has a ticket.
A supercut of all 110(!) car crashes from the “Fast and the Furious” franchise.
“Mad Men” cartoon countdown: The fifth-to-last episode.
High-tech “eco” homes, in just a few weeks.
Shhh. Our kids must never learn about this car.