All posts in “eCommerce”

Sick of managing your Airbnb? Vacasa raises $64M to do it for you

Airbnbing can be a ton of work. Between key pickups, tidying, and maintenance emergencies, renting out your place isn’t such a passive revenue source. But Vacasa equips owners with full-service vacation home management, including listings on top rental platforms like Airbnb and HomeAway, as well as local cleaners who come between guests. It now manages 10,000 vacation rental properties in over 16 countries.

With the peer-to-peer housing market maturing and Airbnb looking to go public, private equity firms see an opportunity in who controls the end relationship with home owners like Vacasa does. So today the startup is announcing it’s raised $64 million in a Series B bridge round led by Riverwood, and joined by Level Equity, Assurant, and Newspring. The cash will fuel Vacasa’s expansion into real estate as it seeks to sell property to people who want to own and rent out a vacation home.

Vacasa was impressively bootstrapped from 2009 until 2015. “I’ve always been passionate about vacation rentals. When traveling with friends or family, I love having common spaces to come together in” says CEO Eric Breon. He founded the company after owning a vacation cabin on the Washington Coast. He’d go up in the Spring, spend a weekend fixing up the place, it’d sit idle all summer, and then he’d have to spend another weekend closing it up. He considered a local property manager, but they massively underestimated how much he could earn off renting it out. So Breon built Vacasa to make it easy for home owners to earn the most money without a hassle.

After years growing the business organically, Vacasa raised a $35 million series A from Level Equity in 2015, then $5 million more from Assurant. Then in fall of 2017, it raised an $103.5 million series B. Now it’s topping up that round with $64 million and a new valuation warranted by the startup’s growth this past year. That brings Vacasa to a total of $207.5 million in funding

While that’s just a fraction of the over $4.4 billion Airbnb has raised. But Vacasa caters to a more upscale market that don’t want to manage the properties themselves. With plenty of popular listings sites out there, Vacasa gets easy distribution. But eventually as the other giants in the space become public companies, they’ll be forced to chase bigger margins that could see them compete with Vacasa after years of partnership.

Breon remains confident, though. When I ask him the biggest existential threat to the business, he declares that “We’ve reached a point where failure isn’t a realistic outcome. We have great retention of our homeowners, and strong recurring revenue. The question is more about how quickly we can continue scaling into the huge $32 billion market we’re focused on.” Getting to an exit might not be quite so straightforward, but with life seeming to get more stressful by the year, there’ll be no shortage of people seeking a getaway.

Sidestepping App Stores, Facebook Lite and Groups get Instant Games

HTML5 almost ruined Facebook when baking in the mobile web standard to speed up development slowed down the performance of the social network’s main iOS and Android apps. It eventually ditched HTML5, rebuilt the apps natively, and Facebook became one of the most powerful players in mobile.

Now Facebook is giving HTML5 another shot as a way to expand its Instant Games like Pac-Man and Words With Friends to the developing world through Facebook Lite, and to interest communities via Facebook Groups.

Instead of having to download separate apps for each game from the Apple App Store or Google Play, Instant Games launch in a mobile browser. That keeps Facebook Lite’s file size small to the benefit of international users with slow connections or limited data plans. And it lets Instant Games integrate directly into Groups so you can challenge not only friends but like-minded members to compete for high scores.

90 million people each month actively participate in 270,000 Facebook Groups about gaming, and now they’ll see Instant Games in the Groups navigation bar next to the About and Discussion tabs. Facebook is also considering making games an opt-in feature for non-gaming Groups. In Facebook Lite, Instant Games will appear in the More sidebar so they’re not too interruptive.

The expansion demonstrates how serious Facebook is about becoming a gaming company again. Back in its desktop days, the games platform dominated by devleopers like Zynga racked up tons of usage, virality, and in-game payments revenue for Facebook. That revenue declined for years after mobile usage began to dominate in 2014, but recently stabilized at around $190 million per quarter. Apparently someone is still playing FarmVille.

Facebook launched Instant Games in late-2016 to give people something to do while they’re waiting from friends to reply to their messages. Around the same time, Facebook launched Gameroom — a Steam-like desktop software hub for mid-core gamers, though there’s been less news on that product since. Instant Games rolled out worldwide in mid-2017, and opened to all developers in March of this year. It’s since been expanding monetization options for developers to make building Instant Games a sustainable business. That includes making Instant Games compatible with Facebook’s playable ads that let developers lure in users from the News Feed.

Facebook won’t actually be earning money from in-app purchases on Instant Games on iOS where it doesn’t allow IAP due to Apple’s policies, or on Android since it began forgoing its cut last month. It does take 30 percent on desktop though. But the bigger monetization play is in ads where Facebook is a juggernaut.

With Instant Games on Messenger, Facebook’s desktop site via a bookmark, its new Fb.gg standalone gaming community app, and now Facebook Lite and Groups, the company is prioritizing the space again. That seems wise as gaming becomes more mainstream thanks to players livestreaming their commentary and phenomena like Fortnite. And with Facebook’s expansion into hardware with the Portal smart screen and a forthcoming TV set-top box, it will have more places than ever for people to play or watch others duke it out.

Instacart raises another $600M at a $7.6B valuation

Instacart chief executive officer Apoorva Mehta wants every household in the U.S. to use Instacart, a grocery delivery service that allows shoppers to order from more than 300 retailers, including Kroger, Costco, Walmart and Sam’s Club, using its mobile app.

Today, the company is taking a big leap toward that goal.

San Francisco-based Instacart has raised $600 million at a $7.6 billion valuation, just six months after it brought in a $150 million round and roughly eight months after a $200 million financing that valued the business at $4.2 billion.

D1 Capital Partners, a relatively new fund led by Daniel Sundheim, the former chief investment officer of Viking Global Investors, has led the round.

Instacart is raking in cash aggressively but spending it cautiously. The company still has all of its Series E, which ultimately totaled $350 million, and the majority of its $413 million Series D in the bank, a source close to the company told TechCrunch. That means, in total, Instacart has $1.2 billion at its fingertips. Currently, according to the same source, the company is only profitable on a contribution margin basis, meaning it’s earning a profit on each individual Instacart order.

In a conversation with TechCrunch, Mehta said the company didn’t need the capital and that it was an “opportunistic” round, i.e. the capital was readily available and Instacart has ambitious plans to scale, so why not fundraise. Instacart plans to use the enormous pool of capital to double its engineering team by 2019, which will include filling 300 open engineering roles in its recently announced Toronto office, he said.

As far as an initial public offering, it will happen — eventually.

“It will be on the horizon,” Mehta told TechCrunch.

“2018 has been a really big year for us,” he added. “The reason why we are so excited is because the opportunity ahead of us is enormous. The U.S. is a $1 trillion grocery market and less than 5 percent of that is bought online. It’s an enormous category that’s highly under-penetrated.”

In the last six months, Instacart has announced a few notable accomplishments.

As of August, the service has been available to 70 percent of U.S. households. That’s due to the expansion of existing partnerships and new deals entirely, like a recently announced pilot program between Instacart and Walmart Canada that gives Canadian Instacart users access to 17 different Walmart locations across Winnipeg and Toronto, Ontario.

The company has also completed several executive hires. Most recently, it tapped former Thumbtack chief technology officer Mark Schaaf as CTO. Before that, Instacart brought on David Hahn as chief product officer and Dani Dudeck as its first chief communications officer.

In early September, the company confirmed its chief growth officer Elliot Shmukler would be leaving the company.

The 6-year-old Y Combinator graduate has raised more than $1.6 billion in venture capital funding from Coatue Management, Thrive Capital, Canaan Partners, Andreessen Horowitz and several others.

Walmart is working with Eko to create interactive content

Walmart and Eko announced a partnership this morning to create a joint venture for interactive content called W*E Interactive Ventures.

The best example of the interactivity that Eko enables is probably “That Moment When,” a comedy web series that the startup created last year in partnership with Sony. In a series of short videos, you take on the role of Jill, a young-ish woman struggling to get her life together — the viewer decides what Jill says and also plays mini-games to help her achieve her goals.

According to the announcement, W*E content will include a variety of formats like cookings shows and interactive toy catalogues.

Eko CEO Yoni Bloch said they aren’t announcing any specific shows yet, but they will be “free and distributed everywhere,” and will be united by an aim to make the viewer “be the hero, be a part of the decision-making in the story.” The plan is to start releasing this content sometime next year.

Walmart might not seem like the most obvious partner on something like this, but the company has been expanding into digital media with efforts like Vudu (it just announced a partnership with MGM) and, more recently, Walmart eBooks.

Bloch said the deal also includes a Walmart investment of undisclosed size into Eko. Apparently the joint venture will work primarily as “the funding vehicle” for this new content, with Walmart staying out of the creative decisions.

“Walmart has been an incredible partner, allowing us to have creative control, which we are passing on to the creators,” Bloch said.

Tribeca Productions co-founder Jane Rosenthal will serve as strategic advisor to W&E Interactive Ventures, and Eko Chief Media Officer Nancy Tellem will be on the board.

“Our partnership with Eko will help us accelerate efforts to deepen relationships with customers and connect with new audiences in innovative ways and is one part of an overall entertainment ecosystem we’re building,” said Scott McCall, senior vice president for entertainment, toys and seasonal at Walmart U.S, in the announcement.

Origin launches protocol for building cheaper decentralized Ubers & Airbnbs

The sharing economy ends up sharing a ton of labor’s earnings with middlemen like Uber and Airbnb . $38 million-funded Origin wants the next great two-sided marketplace to be decentralized on the blockchain so drivers and riders or hosts and guests can connect directly and avoid paying steep fees that can range up to 20 percent or higher. So today Origin launches its decentralized marketplace protocol on the Ethererum mainnet that replaces a central business that connects users and vendors with a smart contract.

“Marketplaces don’t redistribute the profits they make to members. They accrue to founders and venture capitalists” Origin co-founder Matt Lie, who was the third product manager at YouTube. “Building these decentralized marketplaces, we want to make them peer-to-peer, not peer-to-corporate-monopoly-to-peer.” When people transact through Origin, it plans to issue them tokens that will let them participate in the governance of the protocol, and could incentivize them to get on these marketplaces early as well as convince others to use them.

Origin’s in-house marketplace DApp

Today’s mainnet beta sees Origin offering its own basic decentralized app that operates like a Craigslist on the blockchain. Users can create profile, connect their ethereum wallet through services like MetaMask, browse product and service listings, message each other to arrange transactions through smart contracts with no extra fees, leave reviews, and appeal disputes to Origin’s in-house arbitrators.

Eventually with the Origin protocol, developers will be able to quickly build their own sub-marketplaces for specific services like dog walking, house cleaning, ride sharing, and more. These developers can opt to charge fees, though Origin hopes the cost-savings from its blockchain platform will let them undercut non-blockchain services. And vendors can offer a commission to any marketplace that gets their listing matched/sold.

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It might be years before the necessary infrastructure like login systems and simple wallets make it easy for developers and mainstream users to build and adopt DApps built on Origin. But it has plenty of runway thanks to $3 million in seed token sale funding from Pantera Capital, $6.6 million raised through a Coinlist token sale, plus $26.4 million in traditional venture funding from Pantera Capital, Foundation Capital, Garry Tan, Alexis Ohanian, Gil Penchina, Kamal Ravikant, Steve Jang, and Randall Kaplan.

“Marketplaces are at the core of what makes the internet so valuable and useful and the Origin team has one of the most promising blockchain platforms for the new sharing economy — with currency baked in — this could be really disruptive (and one of the best utilizations of the ethereum blockchain)” says Ohanian, the Reddit and Initialized Capital co-founder.

Liu and co-founder Josh Fraser came up with the idea after trying to imagine the downstream effects of Ethereum. Liu recalls thinking, “What if we could replace dozens of multi-million and multi-billion dollar companies with open source protocols that aren’t owned or controlled by anyone?”

Origin co-founders (from left): Matthew Liu and Josh Fraser

So why would marketplaces want to build on Origin instead of creating their own blockchain or traditional proprietary system? Fraser tells me smart contracts can save money, but that “these individual pieces are incredibly difficult to build” so he sees Origin as “analogous to Stripe — able to abstract away all the friction of building on the blockchain.” 40 marketplaces have already signed letters of intent to build on the protocol.

If Origin reaches critical mass, it could also benefit from the concept of shared network effect. Users only have to sign up once, and can then interact with any marketplace built on Origin. That means new marketplaces the builds on the protocol instantly has a registered user base.

Origin will face some stiff challenges, though. There’ll be a chicken-and-egg problem of getting the first marketplaces signed up before there are users on its self-sovereign identity platform, or geting those users aboard when there’s little for them to do. Liu admits that timing is the startup’s biggest threat. “We believe that decentralized marketplaces are inevitable, but a lot of smart people seem to think we’re too early and that we should be focused on building lower-level infrastructure instead” the co-founder says. For us, we’d rather be too early than too late.”

There’s also the trouble of leaving actors in a capitalist system to treat each other properly without a centralized authority. If an Uber driver treats you terribly, you can complain and get them kicked off the platform. Even with Origin’s review system, abusers of the system may be able to continue operating. It’s easy to imagine its arbitration service becoming completely overwhelmed with disputes. Luckily, Origin has made some strong hires to tackle these challenges, including Yu Pan who it says was a PayPal co-founder, former head of Dropbox’s NYC engineering tream Cuong Du, and Franck Chastagnol who previously led engineering teams at Paypal, YouTube, Google, and Dropbox.

Origin’s success will all come down to usability. Your average Uber driver or Airbnb host is no blockchain expert. They vend through those apps because it’s easy. Those centralized organizations are also highly incentivized to fulfill transactions quickly and smoothly in ways prohibited by eliminating fees. Origin will have to effectively make the blockchain aspects of its service disappear so all users and vendors know is that they’re paying less or earning more.