• Same-Day Delivery Takes One On the Chin

    oofOver the weekend, eBay took down a standalone app for its $5 same-day delivery service “eBay Now.” The company, which continues to make the service available online, is “rethinking how it wants to handle the high costs associated with running same-day delivery services,” reported TechCrunch.

    It would be a mistake to declare same-day delivery economically unfeasible because of eBay’s sudden ambivalence about it. It’s tempting, though.

    Despite the glut of same-day delivery services to materialize in recent years – from Google and Amazon to Deliv and PostMates – same day delivery services continue to face major challenges.

    The biggest hitch appears to be the limited base of customers who are willing to pay more for faster service. Bargain hunters on eBay may be especially averse to additional fees. (Only a fraction of a small retailer’s sales come from customers who also opt for same-day delivery, as Reuters noted last week.) The same seems true of Walmart, which launched its same-day delivery pilot program in 2011 and is still testing it in just three markets.

    But they’re hardly alone. According to a recent business intelligence report by Business Insider, only 2 percent of all shoppers living in cities where same-day delivery is offered have availed themselves of the services. Meanwhile, 92 percent say they’re willing to wait four days or longer for their e-commerce packages to arrive.

    Very possibly, not all of these consumers have been educated about the new offerings they could be using — dazzling applications through which workforces are now mobilized with a few taps of a smart phone. And same-day delivery margins are surely better than during the dot.com era, when companies like Webvan invested heavily in infrastructure.

    Whether they’re good enough appears to be an open question. For example, even with an extremely efficient fulfillment system, the same-day delivery company Instacart marks up its goods meaningfully over standard grocery store prices.

    Someone seems likely to figure out how to bring the various pieces together at scale. Uber, whose logistics system grows more sophisticated by the day, may be the strongest candidate for the job.

    EBay has piles of data at its fingertips, too, though. That it’s cooling to same-day delivery after two years of experimentation — and planning to focus more on helping shoppers buy items online that can be picked up in stores — is worth slowing down to consider.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

  • StrictlyVC: November 19, 2014

    Hi, happy Wednesday, everyone! (Web visitors, here’s an easier-to-read version of what you see below.)

    —–

    Top News in the A.M.

    WhatsApp, the hugely popular instant-messaging platform, has “begun encrypting all its data by default, a move that privacy advocates say will aid dissidents and human rights activists seeking to protect their communications from governments and hackers alike,” reports the Washington Post.

    Yesterday, the Senate voted down the USA Freedom Act, a bill that would have ended the controversial phone record metadata collection by the NSA. The Verge has more here.

    —-

    On Startups’ Need for Speed

    Some of today’s fastest-growing startups act as if they’re immune to bad publicity.

    While Uber was in the news yesterday for deciding to retain it senior vice president of business, Emil Michael, despite his veiled threats against a journalist, it’s hardly alone. This past May, when troubling, years-old emails by Snapchat CEO Evan Spiegel were leaked to the media, Spiegel issued a short public apology and then went back to business as usual.

    Partly, today’s companies recognize that consumers and journalists have short attention spans. But today’s startups also realize that their window to succeed has never been smaller. As far as they’re concerned, nothing must get in their way.

    A new report tries to quantify this situation. According to the Bay Area consultancy Play Bigger, those select companies that hit the big time are meeting major milestones (including $500 million, $1 billion, and $5 billion valuations) two to three times faster than they did roughly 15 years ago.

    Indeed, poring over 500,000 venture-backed tech companies dating back to 2000, Play Bigger found that the winners founded between 2000 and 2003 took 8.5 years to reach a valuation of $1 billion, while a corresponding set of companies founded around 2009 and afterward have been hitting the same milestone in just 2.9 years. Similarly, startups founded in 2000 to 2003 took 4.5 years on average to reach a $500 million valuation, and companies founded in 2009 and afterward have been hitting the same target in just 1.6 years. The firm’s report is here.

    The reasons for this hyper-growth aren’t surprising. Thanks to social media, word-of-mouth about products and services spreads faster than ever before. The costs of scaling have fallen dramatically with cloud services. Ubiquitous mobile devices mean global distribution is easier than at any time in history. And startups have a wider variety of funding sources.

    Still, Uber and its brethren are making a mistake if they think their need-for-speed trumps good crisis management.

    Yes, the startup world forgets many of these stumbles quickly, but the public markets are much less forgiving. And when the same company keeps experiencing one public relations disaster after another, one has to wonder whether there’s some sort of systemic problem.

    Yesterday, in pardoning Michael, Uber CEO Travis Kalanick tweeted, “I believe that folks who make mistakes can learn from them – myself included.” We hope so. Time will tell.

    —–

    New Fundings

    Airware, a 3.5-year-old, San Francisco-based company behind a hardware, software, and cloud services platform for commercial drone development and operation, has raised an undisclosed amount of strategic funding from GE Ventures. Airware had raised roughly $40 million previously, including from Kleiner Perkins Caufield & ByersAndreessen Horowitz, First Round Capital, and Google Ventures.

    AllUnite, a 1.5-year-old, Copenhagen-based company that offers free Internet and location-based marketing for retailers, has raised €3 million ($3.7 million) in Series A funding led by Northzone, along with Denmark’s largest grocery chain retailer, Coop. The company had previously raised €1 million ($1.6 million), including from Danish investor Christian Stadil.

    Bigcommerce, a 5.5-year-old, Austin-based start-up whose software-as-a-service helps more than 55,000 companies create and manage their online stores, has raised $50 million in Series D funding led by SoftBank Capital, with participation from Telstra Ventures, American Express, and earlier investors General Catalyst Partners and Revolution Growth. The company has now raised $125 million altogether.

    Boost Media, a 5.5-year-old, San Francisco-based startup that uses crowdsourcing and split testing to help businesses find effective words and images for their online ads, has raised $19 million in Series C funding led by Battery Ventures. Earlier investors Javelin Venture Partners,Pinnacle Ventures, and Webb Investment Network also invested in the new round, which brings the company’s total funding to $31 million.

    Clef, a 1.5-year-old, Oakland, Ca.-based company whose two-factor service enables sites to replace passwords with verification from Apple’s Touch ID fingerprint reader, has raised $1.6 million in seed funding from Morado Ventures and angel investors.

    Cue, a 4.5-year-old, San Diego startup developing an inexpensive diagnostic screening device for the home, has raised $7.5 million in funding led by Sherpa Ventures. Actor Leo DiCaprio, Salesforce CEO Marc Benioff and former Obama campaign manager Jim Messina also participated in the round.

    Dispatch, a nearly two-year-old, Boston-based company that helps schedule and track on-demand services like home repairs, has raised $3.1 million in seed funding led by Promus Ventures and GrandBanks Capital. Other participants in the round include Kima Ventures, Launch Capital, and Salesforce Ventures, along with individual investors.

    GoGoVan, a 1.5-year-old, Hong Kong-based on-demand delivery service serving Asia, has raised $10 million from the Chinese social networkRenren in exchange for a 10 percent stake n the company, reports the WSJ. GoGoVan, which says it has access to 20,000 vehicles and 74,000 drivers, had raised $6.5 million in Series A funding led by Centurion Private Equity in August.

    Kik Interactive, a five-year-old, Waterloo, Ontario-based mobile messaging app focused on young teens, has raised $38.3 million in new funding led by Valiant Capital Partners, with participation fromMillennium Technology Value Partners and SV Angel, and earlier backers Foundation Capital, RRE Ventures, Spark Capital and Union Square Ventures. The company, which has now raised $70.5 million altogether, is using part of its new round to acquire a Toronto-based messaging service called Relay that it will integrate into its product. (Relay had raised $700,000 in funding, including from Valar Ventures and Real Ventures.) Some of the new funds are also being used to buy employee stock.

    LeddarTech, a seven-year-old, Quebec, Canada-based company that develops LED detection systems for object recognition and distance measurement applications, has raised $7 million in new funding led by earlier backers BDC Capital and GO Capital Fund. The company has now raised $16 million altogether, shows Crunchbase.

    Novaerus, a three-year-old, Chicago-based company whose technology scrubs the air using a plasma field to reduce airborne pathogens, has raised $10 million from new investors Polaris Partners and Fidelity Biosciences. Novaerus had previously received an undisclosed amount of funding from Oyster Capital Partners, an Ireland-based investment firm.

    Prezi, a five-year-old, San Francisco-based company that makes interactive, cloud-based presentation software, has raised $57 million in funding led by Spectrum Equity. Earlier backer Accel Partners also joined the round, which brings the company’s total funding to $71.3 million.

    Redbooth, a nearly six-year-old, Redwood City, Ca.-based communication and collaboration platform for enterprises, has raised $11 million in Series B funding led by Altpoint Ventures and Avalon Ventures. The company has now raised $17.5 million to date, including from Data CollectiveFJME Ventures, and individual investors.

    Seriously Digital Entertainment, a year-old, Helsinki, Finland-based mobile gaming company that was founded by two former Rovio executives, has raised $5 million from existing investors, including Daher Capital,Sunstone Capital and Upfront Ventures. The company has now raised $10 million altogether.

    Sweetgreen, a seven-year-old, Washington, D.C.-based farm-to-table healthy restaurant chain, has raised another $18.5 million from earlier investor Revolution Growth to expand to the West Coast. The company has now raised $57.5 million altogether. Venture Capital Dispatch has more here.

    WeMail, a new, Seattle-based email app maker founded by two Y Combinator alums (who happen to be brothers), has raised $1 million in funding from other founders in the YC network, including Twitch co-founders Justin Kan and Emmett Shear, Parse and Scribd co-founder Tikhon Bernstam, Flurry founder Sean Byrnes, and Reddit and Hipmunk co-founder Steve Huffman. TechCrunch has more here.

    Zipnosis, a five-year-old, Minneapolis, Mn.-based telemedicine company that offers 24/7 online diagnoses for common medical conditions, has raised an undisclosed amount of funding from Arthur Ventures, an investor in health-related software. The company, which was mostly bootstrapped prior, has now raised more than $2 million altogether, its chief executive tells VentureWire.

    Zomato, a six-year-old, New Delhi, India-based restaurant search and discovery service that provides information on hundreds of thousands of restaurants across 18 countries, has raised $60 million in new funding, this time from India’s Vy Capital and earlier backers Info Edge and Sequoia Capital. The company has now raised roughly $113 million altogether. TechCrunch has much more here.

    —–

    New Funds

    500 Startups has created a new $10 million fund focused on mobile startups called 500 Mobile Collective that will be managed by partner Edith Yeung.

    Kensington Capital Partners, an 18-year-old, Toronto-based firm has held an initial close on its Canada-focused fund of funds called Kensington Venture Fund with roughly $160 million. LPs in the fund include Royal Bank of Canada, BMO Financial Group, CIBC, and TD Bank Group, as well as the Canadian government, which owns 33 percent of the fund.

    Zetta Venture Partners, a firm launched last year by Mark Gorenberg, has raised more than it was targeting for its debut fund, shows a new SEC filing. Gorenberg, who spent more than 20 years as a managing director at Hummer Winblad Venture Partners, had initially set out to raise $40 million and fairly quickly assembled $30 million. The new filing shows he has since raised $56.5 million altogether. Zetta, where Gorenberg is the sole GP, is focused on early-stage analytics startups that are focused on the enterprise.

    —–

    IPOs

    The American Depository Shares of EHi Car Services, a Shanghai-based car rental and chauffeuring company, began trading yesterday on the NYSE and remained fairly flat. Initially sold at $12 each, raising $120 million for the company, the shares closed the day at $11.70 apiece.

    —–

    Exits

    500friends.com, a four-year-old, San Francisco-based company that creates incentive programs for businesses, has been acquired by digital marketing company Merkle for “tens of millions” of dollars, the company tells Venture Capital Dispatch. The company had raised $10.9 million from investors, including Crosslink Capital, Intel Capital and Fung Capital. Merkle, a 25-year-old company, raised its first institutional funding in 2010 — a minority investment from Technology Crossover Ventures.

    BinOptics, a 14-year-old, Ithaca, N.Y.-based maker of optoelectronic components, has been acquired for $230 million in cash by M/A-COM Technology Solutions, a 50-year-old, Santa Clara, Ca.-based company that makes semiconductor devices and components. BinOptics had raised at least $37 million from investors, shows Crunchbase. Its backers includeRand Capital, Advantage Capital Partners, and Cayuga Venture Fund.

    Galvanize, a two-year-old, Denver-based venture-backed company that runs software-development education programs, has acquired Zipfian Academy, a year-old, data-science boot camp in San Francisco. Venture Capital Dispatch has more here.

    MedeAnalytics, a 20-year-old, Emeryville, Ca.-based health-care analytics company, has acquired software provider OnFocus Healthcare, a 29-year-old, Brentwood, Tn.-based performance management software company that targets hospitals and healthcare organizations. OnFocus has raised minimal amounts of outside funding over the years; MedeAnalytics raised $50 million from Bain Capital Ventures in 2008.

    —–

    People

    Another day, another lawsuit filed by a former frat brother who says his best friends squeezed him out of the social media company they founded together. This time, it’s Yik Yak. Forbes has the story. (StrictlyVC wrote about Yik Yak’s growth in late October.)

    —–

    Job Listings

    Snapchat is looking for a product analyst. The job is in Venice, Ca.

    —–

    Essential Reads

    Twitter now lets you search for any tweet ever sent.

    —–

    Detours

    Why it’s so hard for Millennials to find a place to live and work, in graphs.

    GQ spends a few days with comedian Dave Chappelle who is, as always,hilarious.

    Please Stop Spreading Around That Meme of Me Choking on a Grilled Cheese Sandwich.

    —–

    Retail Therapy

    Like baseball? Shoot baskets? Can we perhaps interest you in a sports site?

  • StrictlyVC: September 22, 2014

    Hello and good Monday morning, everyone! (Web visitors, here‘s a version of today’s email that’s easier on the eyes than what you’ll find below.)

    —–

    Top News in the A.M.

    Apple announced this morning that it has sold more than 10 million new iPhone 6 and iPhone 6 Plus models just three days after launching them — a new record for the company.

    —–

    Kuaidi Dache Races to Become the Uber of China — Before Uber Does

    Kuaidi Dache, a two-year-old ride-sharing app and service that’s headquartered in Hangzhou, positions itself as the Uber of China. Now, it just has to outperform Uber itself, which opened an office in Shanghai in February and currently offers its marquee black car service in six major cities — with hiring underway in at least eight others.

    At the moment, Kuaidi seems well-positioned to win. The company began life as a free taxi-booking service, and it has since amassed 100 million users who place about 3 million daily orders to more than one million drivers in roughly 300 cities, says the company.

    In July, Kuaidi added a luxury car service that’s now operating in 32 cities to strengthen its challenge. But taking on Uber isn’t for the faint of heart, considering Uber’s funding ($1.5 billion to date), its famously aggressive tactics, and its designs on winning China, where more than 500 million users access the Internet from their phones. Both Uber and Kuaidi are also competing against a third player in China, Didi Taxi, which has raised $117 million so far, including from Tencent Holdings. But Kuaidi’s backers –Alibaba, Matrix Partners China, and New Horizon Fund – have pretty deep pockets of their own, and they are in it to win it, suggests Kuaidi’s cofounder, serial entrepreneur Joe Lee. We talked last week with Lee about the company’s game plan.

    You gained traction through a free taxi-hailing app. Now you have a two-month-old car service. How much traction are you seeing, and are these drivers your employees or do they also work for other car services?

    We have about 10,000 orders per day, eight weeks after its launch. And we have a combination of both types of drivers. We use licensed cars in China to ensure that we can fulfill the regulatory requirements, so most of the drivers work for us exclusively, but in some new cities, we also work with some part-time drivers.

    Are there also eventual plans for an UberX type service, using cheaper vehicles and/or a ride-sharing service like Uber launched in Beijing this past summer, allowing private individuals to pick up passengers?

    We’re exploring different opportunities in expanding our fleet. However, the way we look at this business is we have to collaborate with the government authorities to ensure we can move forward without any bumps. As you can imagine in China, to have the business grow in a big way, we have to pay extra attention to the regulatory requirements.

    Including a ban on the use of booking apps by cab drivers and private vehicles for hire during rush hour periods in both Beijing and Shanghai, correct?

    Yes, during the peak hours, they prefer that drivers not use the app. The key point behind it is safety. The traffic is so jammed that even if you operate on your phone by tapping on it, it’s not safe. So we’re in a very new business, and the law isn’t 100 percent designed to address the new technology, so we’re always talking with all stakeholders.

    Uber is known for its hardball tactics, including trying to lure drivers from competitors. Have you bumped up against the company?

    For us, it’s a respectable player in the market. In our market, we haven’t seen much of this situation. A lot of drivers are working for us exclusively, so there’s no way to lure them by offering them an extra $2 or $5 per order.

    With your car service, are you getting pushback from cab drivers whose business you’ve long helped?

    The beauty of our model is that we still work with taxi drivers, so we start off with a good relationship with the taxi industry. We also have a channel with them to talk with them, so we communicate concerns to each other. In our case, when we launched our limo service in China, we received a lot of feedback. Some said it’s a complementary service, some said they have concerns about the safety of our cars and are they licensed – they were fearful of competition. But we haven’t seen any substantial response or feedback.

    Uber has always viewed itself as a logistics company, one with plans to enter into many other lines of business. What’s your vision for Kuaidi?

    There are many possibilities. With a million drivers and a huge user base that’s specifically using our apps for transportation, we see many opportunities. We have a drink-and-drive service, for example. Along those lines, you could think about car rentals. This market isn’t as established as it is in the States, so we see many ways to leverage our user base.

    Kuaidi has announced eventual plans to go after the European and U.S. markets. Why not just focus on China right now?

    It’s true that we’ve just started in China, so we first focus on all these low hanging fruits and build a fence to ensure the fruits are protected. At the same time, we are taking small steps forward in our international plan. Our first operation out of mainland China has been launching our taxi service in Hong Kong, where, aside from the language, a lot is different — user behavior, regulations, the taxi industry, interested parties. So we’ll [pace ourselves], that’s the plan.

    —–

    New Fundings

    Club W, a three-year-old, Manhattan Beach, Ca.-based e-commerce wine business, has raised $9.5 million in Series A funding led by Bessemer Venture Partners. The company has now raised $13.1 million altogether, including from Amplify.LA, Canyon Creek Capital, Guild Capital,Wavemaker Partners, Crosscut Ventures, and 500 Startups.

    Cribspot, a 1.5-year-old Ann Arbor, Mi.-based startup that helps college students find places to live, has raised $660,000 in seed funding led byHuron River Ventures, with First Step Fund participating. Crain’s Detroit Business has more here.

    EdCast, a year-old, Mountain View, Ca.-based startup that creates online learning platforms for educators, companies, and governments, has raised $6 million in Series A funding led by Softbank Capital, with Mitch KaporMenlo Ventures, Novel TMT Ventures, Cervin Ventures, Aarin CapitalNewSchools Venture Fund, and Stanford StartX (which helped accelerate the company) participating.

    Gem, an 11-month-old, Venice, Ca.-based bitcoin startup formerly known as BitVault, has raised $2 million in seed funding led by First Round Capital and Tekton Ventures, with participation from RRE Ventures,MESA+, Amplify.LA, Birchmere Labs, Idealab, ECEG PartnersBaroda Ventures, Wavemaker Labs, Bitcoin Shop, Crypto Currency Partners and QED Associates.

    Honeybook, a 1.5-year-old, San Francisco-based invite-only planning platform that helps creative businesses and their clients collaborate, has raised $10 million in funding led by Aleph. Other participants in the round include Hillsven VC; Khosla Ventures; James Currier and Stan Chudnovsky of Ooga Labs; Ev Williams; Naval Ravikant; Michael Birch; and Ben Narasin. Earlier investor UpWest Labs also joined the round.

    Housing.com, a two-year-old, Mumbai, India-based online real estate portal that helps people rent and buy homes, is in talks to raise as much as $30 million (about Rs 180 crore) from existing and new investors including VC Yuri Milner and Tybourne Capital, reports the Economic Times. The company raised $19 million in its fourth round of funding just four months ago, from Helion Venture Partners, Nexus Venture Partners, and Qualcomm Ventures.

    iHealth, a four-year-old, Mountain View, Ca.-based maker of a wireless blood glucose monitor, has raised $25 million from Xiaomi Ventures for its first institutional round of financing. The company is a subsidiary of the medical device manufacturing company Andon Health.

    MobiKwik, a five-year-old, Gurgaon, India-based mobile wallet startup, is in talks with venture capital funds to raise $25 million (about Rs 155 crore), reports the Economic Times. The move comes “weeks after the Reserve Bank of India asked ventures providing services to domestic consumers to follow the two-step authentication process, a directive that has given a boost to India’s nascent digital payments sector,” says the report.

    QuotaDeck, a months-old, Salt Lake City, Ut.-peer-to-peer sales marketplace, has raised $400,000 in seed funding, including from Peterson Partners, Kickstart Seed Fund, TechStars, in whose accelerator program the company is currently enrolled. (The company completes the program on October 9.) Silicon Slopes has more here.

    —–

    New Funds

    Draper Nexus Ventures, a 13-year-old, San Mateo, Ca.-based early stage venture firm that backs startups in the U.S. and Japan, has raised $29.3 million for its second fund, according to an SEC filing that shows a target of $125 million.

    Restart Capital, a new St Petersburg, Russia-based venture fund formed by Dmitriy Filatov, a founder of an online dating site called Topface, has launched with $2.5 million in capital, which Filatov characterizes as a starting point. The fund will focus on Russia-based social and mobile services startups like messaging and dating services; advertising businesses and marketplace operators; and financial services, including cryptocurrencies. The London-based outlet Unquote has the story.

    The China-focused private equity firm SAIF Partners has teamed up with China-based appliance maker Haier Group to jointly establish a $52.1 million industry fund to invest in smart home products and services in the country, reports China Money Network, citing a regulatory filing. Last October, KKR agreed to acquire a 10 percent stake in Haier for $552 million as part of a strategic partnership.

    Tola Capital, a 4.5-year-old, Seattle-based venture firm, has raised $33 million for its first fund, according to an SEC filing that shows a target of $150 million. The firm’s founders include Sheila Gulati and Stacey Giard, both longtime Microsoft managers. GeekWire has much more here.

    U.S. Venture Partners, the 33-year-old, Menlo Park, Ca.-based venture firm, is targeting $275 million for its eleventh fund, according to a new SEC filing that states the first sale has yet to occur. The firm closed its tenth fund with $625 million in 2008; in the intervening years, many of its GPs left, including to start their own funds.

    —–

    IPOs

    Calithera Biosciences, a four-year-old, South San Francisco, Ca.-based clinical-stage pharmaceutical company at work on small molecule drugs directed against tumor metabolism, is planning to sell six million shares at a price range of $13 to $15 for its IPO, shows a new filing for the company. Calithera’s biggest shareholders include Delphi Ventures, which owns 19.5 percent of the company; Morgenthaler Venture Partners, which owns 18.3 percent; Advanced Technology Ventures, which owns 18.3 percent; Adage Capital Management, which owns 18.1 percent; T. Rowe Price, which owns 7.2 percent; Wellington Management Company, which owns 6.0 percent; and Longwood Fund, which owns 5.8 percent.

    Sientra, an 11-year-old, Santa Barbara, Ca.-based maker of silicon implants, has filed to raise $86.3 million in an IPO. The company has raised at least $150 million from investors, shows Crunchbase. Its biggest shareholders include Abingworth Bioventures, which owns 18.6 percent of the company; OrbiMed, which owns 33.8 percent; and Clarus Lifesciences, which owns 29.8 percent.

    —–

    Exits

    Twitpic, a photo sharing service that recently announced it would be closing its doors following a legal trademark battle with Twitter, disclosed late last week that it isn’t shutting down after all; the company is being acquired, though it’s not saying yet who its new parent company will be.

    —–

    People

    Joe Green, the president of FWD.us, has resigned from the political organization backed by numerous tech luminaries, including Facebook cofounder Mark Zuckerberg, Microsoft cofounder Bill Gates and Dropbox cofounder Drew Houston. According to an email leaked (repeatedly) to Recode, it looks like his resignation was forced, too.

    Pierre Lamond, who spent nearly 20 years at Sequoia Capital and another four or so at Khosla Ventures, which he left in June, has accepted a new advisory position at Formation 8, the venture firm founded by Joe Lonsdale, Jim Kim and Brian Koo. TechCrunch has more here.

    After abruptly resigning nine days into his role as the chief strategy officer of the food and technology startup Hampton Creek, Ali Partovi is now disputing the company’s account that he will remain an advisor in the company. “I resigned completely,” Partovi told the New York Times on Friday night. “I’m not working with Hampton Creek in any capacity.” To which Hampton Creek CEO Josh Tetrick said, “O.K. Like every person in our world, if they prefer not to be an adviser, that’s their call.”

    Oliver Samwer, co-founder of CEO Rocket Internet, is reportedly poised to increase his stake in the German venture capital firm under a stock options program that will be part of Rocket Internet’s planned stock market offering. Specifically, says Reuters, Samwer stands to receive options that entitle him to buy 4.5 million shares, or about 4 percent of the current share capital, at an unspecified discount over the next five years based on certain business performance targets.

    Victoria Song has joined Flybridge Capital Partners as a principal in New York. Song spent a couple of years as an associate with the firm before heading off to Harvard Business School to get her MBA. While at Flybridge, she had sourced two portfolio companies Tracelytics, acquiredby AppNeta, and Crashlytics, acquired by Twitter. You can learn more here.

    —–

    Job Listings

    Angie’s List, the reviews site that went public in 2012, is looking for a VP of strategy and business development. The job is in Indianapolis, In.

    BBG Ventures, the newly announced AOL-backed venture fund that’s focusing on women-led tech start-ups and led by Susan Lyne, is looking for a fall semester intern. The job is in New York.

    —–

    Data

    There are now 2,325 billionaires in the world, up 7 percent over last year, according to Wealth-X and UBS. That’s one billionaire for every three million people on the planet, notes the WSJ, and most of them are in Europe, where there are 775 billionaires. (The U.S is home to 571 billionaires, if you’re curious. It’s also home to four million millionaires, according to RBC Wealth Management data cited by the WSJ.)

    —–

    Essential Reads

    Meet the “network of connectors” in L.A. and beyond that are bringing together celebrities with startup stakes.

    Zenefits is blowing up the businesses of health insurance brokers across the country. The New York Times explains.

    A new startup finds money in email bounce-backs.

    Vox looks at how Betaworks has managed to rebuild Digg and repair its reputation.

    —–

    Detours

    The New York Times profiles social psychologist Amy Cuddy, a rising star in the business world. (I interviewed Cuddy in 2010; she shared some useful tips on how to connect quickly with others in business settings.)

    —–

    Retail Therapy

    The men’s business suit onesie hybrid. Up for a vote right now by the clothing company Betabrand. Says commenter Matt: “Tell me that it doesn’t need to be dry cleaned, and I will buy 5.”

  • Kuaidi Dache Races to Become the Uber of China, Before Uber Does

    Kuaidi OneKuaidi Dache, a two-year-old ride-sharing app and service that’s headquartered in Hangzhou, positions itself as the Uber of China. Now, it just has to outperform Uber itself, which opened an office in Shanghai in February and currently offers its marquee black car service in six major cities — with hiring underway in at least eight others.

    At the moment, Kuaidi seems well-positioned to win. The company began life as a free taxi-booking service, and it has since amassed 100 million users who place about three six million daily orders to more than one million drivers in 300 cities, says the company.

    In July, Kuaidi added a luxury car service that’s now operating in 32 cities to strengthen its challenge. But taking on Uber isn’t for the faint of heart, considering Uber’s funding ($1.5 billion to date), its famously aggressive tactics, and its designs on winning China, where more than 500 million users access the Internet from their phones. Both Uber and Kuaidi are also competing against a third player in China, Didi Taxi, which has raised $117 million so far, including from Tencent Holdings. But Kuaidi’s backers –Alibaba, Matrix Partners China, and New Horizon Fund – have pretty deep pockets of their own, and they are in it to win it, suggests Kuaidi’s cofounder Joe Lee. We talked last week with Lee about the company’s game plan.

    You gained traction through a free taxi-hailing app. Now you have a two-month-old car service. How much traction are you seeing, and are these drivers your employees or do they also work for other car services?

    We have about 10,000 orders per day, eight weeks after its launch. And we have a combination of both types of drivers. We use licensed cars in China to ensure that we can fulfill the regulatory requirements, so most of the drivers work for us exclusively, but in some new cities, we also work with some part-time drivers.

    Are there also eventual plans for an UberX type service, using cheaper vehicles and/or a ride-sharing service like Uber launched in Beijing this past summer, allowing private individuals to pick up passengers?

    We’re exploring different opportunities in expanding our fleet. However, the way we look at this business is we have to collaborate with the government authorities to ensure we can move forward without any bumps. As you can imagine in China, to have the business grow in a big way, we have to pay extra attention to the regulatory requirements.

    Including a ban on the use of booking apps by cab drivers and private vehicles for hire during rush hour periods in both Beijing and Shanghai, correct?

    Yes, during the peak hours, they prefer that drivers not use the app. The key point behind it is safety. The traffic is so jammed that even if you operate on your phone by tapping on it, it’s not safe. So we’re in a very new business, and the law isn’t 100 percent designed to address the new technology, so we’re always talking with all stakeholders.

    Uber is known for its hardball tactics, including trying to lure drivers from competitors. Have you bumped up against the company?

    For us, it’s a respectable player in the market. In our market, we haven’t seen much of this situation. A lot of drivers are working for us exclusively, so there’s no way to lure them by offering them an extra $2 or $5 per order.

    With your car service, are you getting pushback from cab drivers whose business you long helped?

    The beauty of our model is that we still work with taxi drivers, so we start off with a good relationship with the taxi industry. We also have a channel with them to talk with them, so we communicate concerns to each other. In our case, when we launched our limo service in China, we received a lot of feedback. Some said it’s a complementary service, some said they have concerns about the safety of our cars and are they licensed – they were fearful of competition. But we haven’t seen any substantial response or feedback.

    Uber has always viewed itself as a logistics company, one with plans to enter into many other lines of business. What’s your vision for Kuaidi?

    There are many possibilities. With a million drivers and a huge user base that’s specifically using our apps for transportation, we see many opportunities. We have a drink-and-drive service, for example. Along those lines, you could think about car rentals. This market isn’t as established as it is in the States, so we see many ways to leverage our user base.

    Kuaidi has announced eventual plans to go after the European and U.S. markets. Why not just focus on China right now?

    It’s true that we’ve just started in China, so we first focus on all these low hanging fruits and build a fence to ensure the fruits are protected. At the same time, we are taking small steps forward in our international plan. Our first operation out of mainland China has been launching our taxi service in Hong Kong, where, aside from the language, a lot is different — user behavior, regulations, the taxi industry, interested parties. So we’ll [pace ourselves], that’s the plan.

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  • A Billionaire Brawl in Silicon Valley

    boxing-kidsIt’s no secret that Uber and Lyft don’t like each other much. In just one kerfuffle of late, Lyft told CNN that over a recent 10-month period, Uber employees had requested, then canceled, more than 5,000 rides from Lyft drivers. Uber quickly punched back, claiming that Lyft’s employees had canceled more than twice as many trips on Uber.

    Investors in the rival ride-sharing services have mostly stayed above the fray through such public scuffles. But now, they’re starting to sling mud, too.

    The trouble started yesterday morning, when at a TechCrunch conference in San Francisco, TechCrunch founder Michael Arrington interviewed Uber CEO Travis Kalanick in what appeared to be an effort to publicly rehabilitate Kalanick, who the press has begun to portray as something of a bully.

    Arrington asked, for example, if it wasn’t true that Lyft is a copycat, partly because Uber and Lyft announced carpool options within a day of each other in early August. Kalanick, who typically seizes opportunities to trash competitors, humbly offered: “Here’s maybe a little bit of a hat tip: I don’t think Lyft copied this particular feature; companies are often working on similar things.” (According to New York magazine, Lyft began work on its program in April, but “before the Lyft news had landed,” Uber published a blog post announcing a “virtually identical service.”)

    Arrington also uniformly dismissed Uber’s competitors as “ankle biters” and called Lyft “annoying because you have to sit in the front and talk, and they have those mustaches.” Said Arrington to Kalanick: “They seem to be constantly whining that [Uber is] beating them. Would you consider buying Lyft to shut them up?” (The audience laughed as Kalanick told him that Uber isn’t acquiring companies right now.)

    Initially, the interview seemed a coup for Uber. Noting Kalanick’s gentler demeanor — Kalanick repeatedly called himself “scrappy” and misunderstood — TechCrunch reported that if “Uber can buck its perception as a ruthless, greedy company trying to put cabbies out of work and instead show the softer side of on-demand services, it could succeed far beyond taxis.” Meanwhile, the San Francisco Chronicle noted Kalanick’s “pains to exhibit his kinder, gentler side” during the on-stage interview.

    But the cozy interview almost immediately drew criticism on Twitter, with comments from people like Wall Street Journal reporter Doug MacMillan and Founders Fund partner Geoff Lewis, both of whom noted that Arrington is an investor in Uber through his investment firm CrunchFund, an affiliation that was never raised during his interview with Kalanick. Lewis, whose firm has invested in Lyft, was particularly pointed in his tweets, calling Arrington’s interview “shameful,” given its absence of any relevant disclosures.

    Things only grew more heated several hours later, when during an on-stage interview with TechCrunch’s Alexia Tsotsis, Peter Thiel of Founders Fund described Uber as “without question, the most ethically challenged company in Silicon Valley.”

    (As Twitter lit up over Thiel’s remark, venture capitalist Marc Andreessen, whose firm also owns a stake in Lyft, joyfully jumped into the fray, tweeting: “A big thank you to @arrington for all the unsolicited free publicity for Lyft this morning at Disrupt!” He also published a discount code for Lyft — DISRUPT — and in Andreessen fashion, punctuated his tweet with a disarming smiley face.)

    Arrington seemingly tried to stifle the conversation by tweeting to Lewis, “Let’s just cut to the ‘and the horse your rode in on’ and go our separate ways, you worthless d__k.” Perhaps realizing the tweet would only garner more attention, Arrington then tweeted that Thiel is an investor in Uber through Arrington’s fund, CrunchFund, and that Arrington is himself an investor in Lyft through Andreessen Horowitz, where he is a limited partner.

    By then, though, Valleywag had caught the flavor of the story, calling out Arrington and Thiel for fighting over Uber “like boys with toys.” And Arrington’s efforts to help alter Kalanick’s public reputation as a brawler were largely forgotten.

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  • A Small Entrepreneur Takes on, Gulp, Uber

    GoGreenRideAcross the U.S., new car-sharing services Lyft and Sidecar are spreading fast, while Uber, which now manages a ride-share service as well as connects passengers with career drivers, seems destined for world domination.

    In short, it doesn’t sound like a great time to launch a new car service. Yet that’s exactly what Yamandou Alexander has done with GoGreenRide, a New York-based startup that Alexander has bootstrapped with $2.5 million of his own capital. (GoGreenRide is currently halfway through raising a new, $5 million outside round of fundraising.)

    Oddly, Alexander may have had the idea of an alternative transportation fleet first. As the French-born entrepreneur tells it, he moved to New York City at 19, bussing tables at famed Upper East Side restaurant Daniel and selling Motorola Startacs to his coworkers, many of them fellow immigrants. He eventually began exporting the handsets to Africa, creating one telecom company and selling a second for enough money in 2012 to bring to life a concept he wanted, but couldn’t afford, to pursue in 2006 – a nicer, greener, more affordable version of a black car service.

    We chatted recently about how that vision is coming together and why GoGreenRide makes sense now, even in a ride-sharing economy.

    Your business differentiates itself in two key ways. For one thing, GoGreenRide owns or leases dozens of Prius cars. You also have 40 full-time employees, rather than contractors. You’re like the anti-Uber, except that Uber is so profitable precisely because it has so little overhead. Why does your strategy make sense?

    With contractors, there’s a lack of control in presentation, quality, and customer service. We want our drivers to wear a uniform; to work on a schedule, rather than when they feel like it; to open doors; and to understand when it isn’t time to talk. We want to provide good, consistent customer service. We’re also concerned with Uber’s model from a liability standpoint.

    As for the cars, based on plans to increase our fleet to 50 cars by summer, the company should reach break-even by December. Next year, the car should see a 13 percent EBITDA…and by 2018, 26 percent EBITDA.

    Where are you turning to fund those plans?

    We’re talking with VCs. Investors on the West Coast are more interested in less capital-intensive businesses, but we’re getting good traction with East Coast people who know and live the experience of trying to find transportation in New York. We’re also going out to AngelList for additional investment, and inviting GoGreenRide members to participate.

    Uber gets a lot of flack for its surge pricing. Is your pricing flexible, too?

    Pricing does fluctuate based on traffic conditions. But you always know how much you’ll pay before you get in a car via our mobile app, which sends you detailed information about your trip, including when the driver will arrive. Our metering is calculated based on the estimated time [it will take to transport a passenger from A to B], which we know based on historical data about traffic patterns.

    As an alternative to black car service, what percent of your business comes from corporate partnerships?

    About 40 percent. We cater to both customers taking long trips, who might otherwise take a black car service to the airport, and short trips, where we’re competing more directly with taxis. Our average fare is $34, which is the same as a yellow cab, but you’re getting a much nicer experience with GoGreenRide.

    Beyond expanding your fleet, what’s on your road map, so to speak?

    The short-term growth opportunity is for us to grow our model in New York, then move into L.A. or San Francisco. We’re also starting a franchising program, including [helping launch] a GoGreenRide in China.

    We glad for Uber’s success and the acceptance it has gained in New York. But we also see a lot of people coming to us from them because of pricing, level of service, reliability, and safety.


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