All posts in “Startups”

The canaries in a coal mine


I’ve seen startups come and go over the years and I was particularly interested to see what happened to August Smart locks today. The company originally tapped Yves Behar to make a better smart lock, one that would meld with the sensitivities of a certain kind of smart home stylist with the high-concept, high-tech design of the Nest thermostat. The products, while beautiful, were unusable in most situations that you’d want a smart lock. As Matt Burns noted, there’s a reason they were selling the locks in Best Buy and not Home Depot.

Why were they unusable? Because they essentially rethought the way locks would work. Take the deadbolt, for example. The August solution was to replace the outer lock and cylinder with their product, leaving in place the inner knob and all of the deadbolt hardware. It was the ultimate facade. This solution obviously reduced the cost and complexity but also required matching your current deadbolt to the new August actuator or buying a new deadbolt and throwing away the outside cylinder. Further, you were sunk if you wanted to put this thing onto new construction. Finally, unless you added an extra keypad, it was useless for homes with children.

While we’re throwing stones, it’s also interesting to note that the company’s latest product, a smart doorbell, could not be used in old construction. The doorbell was actually a three-by-three-inch box with a camera and button on it. This would never fit in the average home where the doorbell is a half-inch by three-inch rectangle.

In other words, the ideal August customer didn’t exist or instead existed solely in the company’s promotional photographs. They got acquired primarily for their potentially lucrative Wal-Mart contract.

If you watch startups long enough you can see interesting tells. Poor products launched haphazardly? The CEOs are focused on an acquisition or are almost out of money. Red hot hype cycle with loads of interest? Headed for a correction of Biblical proportions. Celebrity investors making the news? The company is sunk. Hot Dog costumes? You probably want to talk to your broker.

Quiet, methodical releases, year-after-year? Things are probably going OK.

In other words when you look at startups of any stripe – from social media apps to fintech to anything else – look at the products. Look at what they’re saying. Look at where they’re selling. I’ve met countless Fitbit investors who still see growth in the cards when the Venn diagram of folks who have a Fitbit has already eclipsed the circle of folks who need one. I’d wager there’s an acquisition in the future of any company that exhibits that sort of behavior. That Fitbit is still standing in a field of dead fitness bands is a testament to their previous dedication to methodical releases, year-after-year. How long that can last is anyone’s guess.

I’m not here to laugh over the corpse of August. I get no pleasure in seeing good ideas die. But it’s clear that with a little careful thought and a lot of attention you can see just where and when the next SV darling will skid off of Highway 1 and into the grass. With August it was obvious. With others – Theranos, for example – it was far less so. But the signs are there, if we heed them.

Feather raises $3.5M to rent furniture to millennials


The furniture rental industry is stuck in the last. Current options involve old-school companies like CORT where most of the inventory will make your apartment look like a dorm room, or a place like Rent-A-Center where you’ll almost certainly pay many times what the item is actually worth.

Enter Feather, a company trying to breathe some life into the aging industry by letting you rent good-looking, modern furniture from anywhere from 3 to 12 months. The startup, which recently launched from Y Combinator’s summer ’17 class, has now raised $3.5M in seed funding from Kleiner Perkins, Bain Capital Ventures, SV Angel and others.

Feather has a pretty defined target audience – millennials who have already graduated college but haven’t yet bought their first home. This demographic (myself included) moves frequently, sometimes switching apartments every year. Which can make buying furniture an expensive and cumbersome process. Not only do you have to hire movers each year, but you also are stuck with furniture that may not fit in your next space.

Which is why Jay Reno, founder and CEO of Feather, thinks you should just rent all of your furniture from him.

Right now the startup has a decent sized catalogue of furniture that comes in bundles (like a bedroom set) or a la carte. While all the pieces are generic right now they all are designed to be mid to high-end in design – like things you’d find in a CB2 or West Elm catalogue. And eventually the startup hopes to add name brand items, so your next rented couch can actually come from somewhere like West Elm.

Pricing is pretty reasonable, starting around $150 per month for a full bedroom and living room set. Delivery and assembly is free, and the startup charges a $199 pick up fee (which is probably less than you’d be paying a mover). Reno explained that renting with Feather will always be cheaper than buying the items outright, and of course by renting you get the ability to switch things out for different styles and shapes each time you move.

And for anyone that has concerns over quality, all items are throughly cleaned and inspected before being delivered and nothing is ever rented out more than three times. When you think of how many people have slept on the bed in your last hotel room, Feather’s rental guidelines suddenly don’t seem so bad.

The startup plans to use the new funding to build out its team and expand to new markets. Right now their consumer product is live in SF and NYC, but they also offer an office furniture rental service that delivers all over the U.S.

London-based on-demand delivery startup Jinn shutters


Jinn, the London-based startup that offers a same-hour ‘shop on your behalf’ delivery app that operates quite similarly to Postmates in the U.S., has shut down, with the company in the process of going into administration. TechCrunch understands that the remaining fifteen or so people still working in Jinn’s London office were let go on Tuesday, while, according to a source, payments to freelance delivery drivers and other staff are outstanding.

Founder and CEO of Jinn Mario Navarro confirmed that the startup has entered the deadpool, and issued the following statement:

“To our employees, couriers, partners and customers,

It is with a heavy heart that I share that Jinn has now stopped operating and won’t be taking any new orders.

These past few months, we have tried through all means to find solutions to keep Jinn alive. Unfortunately, we have now run out of time and we will be filing for administration. We deeply apologise to everyone who relied on Jinn in any way.

To our employees, I’d like to thank you for everything that you’ve done in these past four years. You have helped develop a platform capable of delivering orders from any store or restaurant in around thirty minutes, a first of its kind in the United Kingdom. You have helped make this service known to over a hundred thousand customers, who have received over a million deliveries. You have supported these customers and thousands of couriers and partners across these years. Your achievements have been nothing short of extraordinary and the fact that Jinn is closing does not change that.

To our couriers, partners and customers, thank you for being part of a great community and for accelerating innovation in the on-demand delivery space. Together, we have greatly improved the standards of this market, and it is stronger than ever thanks to you. We encourage you to continue working with the different companies providing solutions for on-demand delivery in the UK. I’m confident that this market will continue to grow and I’m hopeful for the future.

Mario”

Meanwhile, Business Insider is reporting that Jinn — which to varying degrees competes with Deliveroo, UberEATS, and Quiqup — had met with three rival food delivery businesses earlier this month about a potential acquisition deal, but in the end ran out of time to be able to make a sale possible.

However, my understanding is that the company began shopping itself around as early as this Summer, but with administration looking increasingly likely, accelerated efforts to find a buyer in the last week.

I also understand that the administrator Moorfields has been appointed and will now be tasked with finding an acquirer for any of Jinn’s remaining assets, namely the software platform that powered the ordering and dispatching functionality of the delivery service.

A member of Moorfields’ team confirmed that couriers working for Jinn are owed money. In a message sent by Jinn to its fleet of drivers (and seen by TechCrunch) they are advised that if they are owed any money, they will be contacted by the administrator in the coming days who will “deal with your situation on a case by case basis”.

The shuttering of Jinn comes after a turbulent time for the startup over the last year. In May, the company announced that it had raised $10 million in further funding. That, in theory, brought total raised by Jinn to a modest $20 million in comparison to other players in the on-demand delivery space. However, it isn’t clear that the full $10 million entered the startup’s balance sheet and was likely contingent on milestones and delivered in tranches, a key detail that will hopefully be made public in any postmortem of the company’s shuttering.

This was followed just two months later with news that Jinn had pulled out of all markets outside London, “pausing” operations in Edinburgh, Glasgow, Manchester, Birmingham and Leeds in the U.K., and Madrid and Barcelona in Spain. We also learned that Jinn co-founder and COO Leon Herrera had departed the startup a few weeks earlier.

Those drastic cutbacks appeared to have been enough to save the company, and one month later Jinn claimed that it was profitable at an EBITDA level, with 30 per cent contribution margins, and expecting to close the year with $22 million in sales. This evidently didn’t pan out with today’s news that Jinn has entered the deadpool. I suspect we will learn a lot more about exactly why in the next coming weeks or months, including, I hope, from the Jinn founder himself.

European house removals platform Movinga raises up to another €22M


Movinga, the European platform for house removals that was seemingly written off last year, continues to perform what appears to be an impressive turn around. The Berlin-headquartered startup has closed a new funding round of up to €22 million led by Santo Venture Capital, the venture arm of the Strüngmann family office, with participation from existing backers Earlybird Venture Capital and Rocket Internet.

In an unusual but welcome level of transparency for a privately owned company, Movinga is breaking out the investment. Santo Venture Capital’s backing is structured as two tranches and dependent on certain milestones being met: €9 million is being provided up front, with a further €9 million due in Spring 2018 if those milestones are reached, which, I understand, aren’t unrealistically onerous.

Earlybird and Rocket are investing €4.4 million in this round, and, once again, Movinga’s Series B backer Index Ventures is nowhere to be seen (and has presumably been further diluted).

Speaking earlier this week, Finn Age Hänsel, Managing Director of Movinga, told me that the new capital will be used for further growth and to achieve “operational break-even”. Specifically, the startup plans to invest more in its technology platform in order to automate more of the removals process, which at the moment includes things like being able to price a house move in real-time and dispatch work to its removal partners in the most efficient way.

In addition, Hänsel says that further European geographical expansion is on the cards. The company currently operates in Germany and France, focusing on intercity house moves, including aggregating removal jobs where appropriate in order to reduce costs and ensure vehicles don’t make return journeys empty handed unnecessarily. It claims to have facilitated over 30,000 moves since 2016 and says it is on track for annual revenues “significantly over 20 million Euros”.

Meanwhile, on the consumer front, Movinga is eyeing up additional services it can offer, such as changing your electricity provider or taking out a contract for home broadband. The company is also building out tools for its removals partners in a bid to digitise more of the removals process. This will include SaaS ERP software to simplify the management of “general planning processes” endured by removals companies.

Moving forward, Hänsel tells me that Movinga wants to expand into removals within the same city, which requires a different set of strengths, and is an area where the company doesn’t really compete at the moment. Another sector he thinks has future potential is “on-demand” removals, such as wanting to move a couch you have just purchased or sold on eBay, and would operate more along the lines of Uber for removals.

MongoDB prices its IPO at $24 per share


MongoDB has finished up what is essentially the final step in going public, pricing its IPO at $24 and raising $192 million in the process.

The company will debut on the public markets tomorrow and will once again test the waters for companies that are looking to build full-fledged businesses on the back of open-sourced software. MongoDB provides open-sourced database software that can be pretty attractive to early-stage startups as they look to get off the ground, and then look to convert those companies (and larger ones) to paying customers by offering sophisticated tools. It’s a situation not unlike Cloudera, which went public earlier this year.

The company is selling 8 million shares, with an option for underwriters to purchase an additional 1.2 million shares. MongoDB may raise as much as $220.8 million if the IPO includes that additional allotment, also called the greenshoe. At $24 per share, the company would be valued at around $1.2 billion.

While the company appears to be growing, its losses have also been quite steady — and it is, to be sure, burning a lot of cash. That’s likely why it picked up a valuation of around $1.2 billion. MongoDB at one point was able to hit a valuation of $1.6 billion, but the challenges of a market like MongoDB are clearly a harder sell for Wall Street. Still, its initial public offering is an upward revision after the company previously sought to price its shares somewhere between $20 and $22, which means there was a good amount of interest.

Here’s a breakdown of the company’s finances:

This also may end up being a big deal for the New York tech ecosystem, which has been waiting for another big highly-anticipated IPO for one of its startups. While it may be a discount from its previous valuation, MongoDB still finally getting out the door amid a time when the so-called “IPO window” is more of a question mark. The IPO could be a big win for Sequoia Capital, and also Flybridge Capital — and, of course, New York’s Kevin Ryan.

Raising money is the goal of every IPO, and after that, it’s a tricky balance to ensure that the company gets as much capital as it can while allowing a day-one “pop” for the stock. It’s as much a perception thing as it is setting up a liquidation event for investors (and eventually employees) to show that it’s going to be a strong public company. MongoDB officially filed to go public in September.

Featured Image: Garrett Heath/Flickr UNDER A CC BY 2.0 LICENSE