Phishers who breached Twilio and fooled Cloudflare could easily get you, too

Phishers who breached Twilio and fooled Cloudflare could easily get you, too

Enlarge (credit: Getty Images)

At least two security-sensitive companies—Twilio and Cloudflare—were targeted in a phishing attack by an advanced threat actor who had possession of home phone numbers of not just employees but employees’ family members as well.

In the case of Twilio, a San Francisco-based provider of two-factor authentication and communication services, the unknown hackers succeeded in phishing the credentials of an undisclosed number of employees and, from there, gained unauthorized access to the company’s internal systems, the company said. The threat actor then used that access to data in an undisclosed number of customer accounts.

Two days after Twilio’s disclosure, content delivery network Cloudflare, also headquartered in San Francisco, revealed it had also been targeted in a similar manner. Cloudflare said that three of its employees fell for the phishing scam, but that the company’s use of hardware-based MFA keys prevented the would-be intruders from accessing its internal network.

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#biz-it, #cloudflare, #mult-factor-authentication, #phishing, #twilio

Inside GitLab’s IPO filing

While the technology and business world worked towards the weekend, developer operations (DevOps) firm GitLab filed to go public. Before we get into our time off, we need to pause, digest the company’s S-1 filing, and come to some early conclusions.

GitLab competes with GitHub, which Microsoft purchased for $7.5 billion back in 2018.

The company is notable for its long-held, remote-first stance, and for being more public with its metrics than most unicorns — for some time, GitLab had a November 18, 2020 IPO target in its public plans, to pick an example. We also knew when it crossed the $100 million recurring revenue threshold.

Considering GitLab’s more recent results, a narrowing operating loss in the last two quarters is good news for the company.

The company’s IPO has therefore been long expected. In its last primary transaction, GitLab raised $286 million at a post-money valuation of $2.75 billion, per Pitchbook data. The same information source also notes that GitLab executed a secondary transaction earlier this year worth $195 million, which gave the company a $6 billion valuation.

Let’s parse GitLab’s growth rate, its final pre-IPO scale, its SaaS metrics, and then ask if we think it can surpass its most recent private-market price. Sound good? Let’s rock.

The GitLab S-1

GitLab intends to list on the Nasdaq under the symbol “GTLB.” Its IPO filing lists a placeholder $100 million raise estimate, though that figure will change when the company sets an initial price range for its shares. Its fiscal year ends January 31, meaning that its quarters are offset from traditional calendar periods by a single month.

Let’s start with the big numbers.

In its fiscal year ended January 2020, GitLab posted revenues of $81.2 million, gross profit of $71.9 million, an operating loss of $128.4 million, and a modestly greater net loss of $130.7 million.

And in the year ended January 31, 2021, GitLab’s revenue rose roughly 87% to $152.2 million from a year earlier. The company’s gross profit rose around 86% to $133.7 million, and operating loss widened nearly 67% to $213.9 million. Its net loss totaled $192.2 million.

This paints a picture of a SaaS company growing quickly at scale, with essentially flat gross margins (88%). Growth has not been inexpensive either — GitLab spent more on sales and marketing than it generated in gross profit in the past two fiscal years.

#computing, #crowdstrike, #datadog, #ec-news-analysis, #enterprise-software, #fundings-exits, #git, #github, #gitlab, #ipo, #microsoft, #saas, #software, #software-engineering, #startups, #tc, #twilio, #version-control

Affinity, a relationship intelligence company, raises $80M to help close deals

Relationships ultimately close deals, but long-term relationships come with a lot of baggage, i.e. email interactions, documents and meetings.

Affinity wants to take what Ray Zhou, co-founder and CEO, refers to as “data exhaust,” all of those daily interactions and communications, and apply machine learning analysis and provide insights on who in the organization has the best chance of getting that initial meeting and closing the deal.

Today, the company announced $80 million in Series C funding, led by Menlo Ventures, which was joined by Advance Venture Partners, Sprints Capital, Pear Ventures, Sway Ventures, MassMutual Ventures, Teamworthy and ECT Capital Partners’ Brian N. Sheth. The new funding gives the company $120 million in total funding since it was founded in 2014.

Affinity, based in San Francisco, is focused on industries like investment banking, private equity, venture capital, consulting and real estate, where Zhou told TechCrunch there aren’t customer relationship management systems or networking platforms that cater to the specific needs of the long-term relationship.

Stanford grads Zhou and co-founder Shubham Goel started the company after recognizing that while there was software for transactional relationships, there wasn’t a good option for the relationship journeys.

He cites data that show up to 90% of company profiles and contact information living in traditional CRM systems are incomplete or out of date. This comes as market researcher Gartner reported the global CRM software market grew 12.6% to $69 billion in 2020.

“It is almost bigger than sales,” Zhou said. “Our worldview is that relationships are the biggest industries in the world. Some would disagree, but relationships are an asset class, they are a currency that separates the winners from the losers.”

Instead, Affinity created “a new breed of CRM,”  Zhou said, that automates the inputting of that data constantly and adds information, like revenue, staff size and funding from proprietary data sources, to assign a score to a potential opportunity and increase the chances of closing a deal.

Affinity people profile. Image Credits: Affinity

He intends to use the new funding to expand sales, marketing and engineering to support new products and customers. The company has 125 employees currently; Zhou expects to be over 200 by next year.

To date, the company’s platform has analyzed over 18 trillion emails and 213 million calendar events and currently drives over 500,000 new introductions and tracks 450,000 deals per month. It also has more than 1,700 customers in 70 countries, boasting a list that includes Bain Capital Ventures, Kleiner Perkins, SoftBank Group, Nike, Qualcomm and Twilio.

Tyler Sosin, partner at Menlo Ventures, said he met Zhou and Goel at a time when the firm was looking into CRM companies, but it wasn’t until years later that Affinity came up again when Menlo itself wanted to work with a more modern platform.

As a user of Affinity himself, Sosin said the platform gives him the data he cares about and “removes the manual drudgery of entry and friction in the process.” Affinity also built a product that was intuitive to navigate.

“We have always had an interest in getting CRMs to the next generation, and Affinity is defining itself in a new category of relationship intelligence and just crushing it in the private capital markets,” he said. “They are scaling at an impressive growth rate and solving a hard problem that we don’t see many other companies in the space doing.”

 

#advance-venture-partners, #affinity, #artificial-intelligence, #bain-capital-ventures, #brian-n-sheth, #crm, #customer-relationship-management, #enterprise, #funding, #investment-banking, #kleiner-perkins, #machine-learning, #massmutual-ventures, #menlo-ventures, #nike, #pear-ventures, #qualcomm, #ray-zhou, #real-estate, #recent-funding, #saas, #shubham-goel, #softbank-group, #sprints-capital, #startups, #tc, #twilio, #tyler-sosin, #venture-capital

Fin names former Twilio exec Evan Cummack as CEO, raises $20M

Work insights platform Fin raised $20 million in Series A funding and brought in Evan Cummack, a former Twilio executive, as its new chief executive officer.

The San Francisco-based company captures employee workflow data from across applications and turns it into productivity insights to improve the way enterprise teams work and remain engaged.

Fin was founded in 2015 by Andrew Kortina, co-founder of Venmo, and Facebook’s former VP of product and Slow Ventures partner Sam Lessin. Initially, the company was doing voice assistant technology — think Alexa but powered by humans and machine learning — and then workplace analytics software. You can read more about Fin’s origins at the link below.

In 2020, the company pivoted again to the company it is today. The new round was led by Coatue, with participation from First Round Capital, Accel and Kleiner Perkins. The original team was talented, but small, so the new funding will build out sales, marketing and engineering teams, Cummack said.

“At that point, the right thing was to raise money, so at the end of last year, the company raised a $20 million Series A, and it was also decided to find a leadership team that knows how to build an enterprise,” Cummack told TechCrunch. “The company had completely pivoted and removed ‘Analytics’ from our name because it was not encompassing what we do.”

Fin’s software measures productivity and provides insights on ways managers can optimize processes, coach their employees and see how teams are actually using technology to get their work done. At the same time, employees are able to manage their workflow and highlight areas where there may be bottlenecks. All combined, it leads to better operations and customer experiences, Cummack said.

Graphic showing how work is really done. Image Credits: Fin

Fin’s view is that as more automation occurs, the company is looking at a “renaissance of human work.” There will be more jobs and more types of jobs, but people will be able to do them more effectively and the work will be more fulfilling, he added.

Particularly with the use of technology, he notes that in the era before cloud computing, there was a small number of software vendors. Now with the average tech company using over 130 SaaS apps, it allows for a lot of entrepreneurs and adoption of best-in-breed apps so that a viable company can start with a handful of people and leverage those apps to gain big customers.

“It’s different for enterprise customers, though, to understand that investment and what they are spending their money on as they use tools to get their jobs done,” Cummack added. “There is massive pressure to improve the customer experience and move quickly. Now with many people working from home, Fin enables you to look at all 130 apps as if they are one and how they are being used.”

As a result, Fin’s customers are seeing metrics like 16% increase in team utilization and engagement, a 25% decrease in support ticket handle time and a 71% increase in policy compliance. Meanwhile, the company itself is doubling and tripling its customers and revenue each year.

Now with leadership and people in place, Cummack said the company is positioned to scale, though it already had a huge head start in terms of a meaningful business.

Arielle Zuckerberg, partner at Coatue, said via email that she was part of a previous firm that invested in Fin’s seed round to build a virtual assistant. She was also a customer of Fin Assistant until it was discontinued.

When she heard the company was pivoting to enterprise, she “was excited because I thought it was a natural outgrowth of the previous business, had a lot of potential and I was already familiar with management and thought highly of them.”

She believed the “brains” of the company always revolved around understanding and measuring what assistants were doing to complete a task as a way to create opportunities for improvement or automation. The pivot to agent-facing tools made sense to Zuckerberg, but it wasn’t until the global pandemic that it clicked.

“Service teams were forced to go remote overnight, and companies had little to no visibility into what people were doing working from home,” she added. “In this remote environment, we thought that Fin’s product was incredibly well-suited to address the challenges of managing a growing remote support team, and that over time, their unique data set of how people use various apps and tools to complete tasks can help business leaders improve the future of work for their team members. We believe that contact center agents going remote was inevitable even before COVID, but COVID was a huge accelerant and created a compelling ‘why now’ moment for Fin’s solution.”

Going forward, Coatue sees Fin as “a process mining company that is focused on service teams.” By initially focusing on customer support and contact center use case — a business large enough to support a scaled, standalone business — rather than joining competitors in going after Fortune 500 companies where implementation cycles are long and there is slow time-to-value, Zuckerberg said Fin is better able to “address the unique challenges of managing a growing remote support team with a near-immediate time-to-value.”

 

#accel, #andrew-kortina, #arielle-zuckerberg, #artificial-intelligence, #automation, #business-intelligence, #business-process-management, #cloud, #cloud-computing, #coatue, #enterprise, #fin, #first-round-capital, #funding, #groupware, #kleiner-perkins, #machine-learning, #process-mining, #recent-funding, #saas, #sam-lessin, #slow-ventures, #startups, #talent, #tc, #twilio, #workflow

Bright raises $15M for its live video platform that lets you Zoom with top creators

Bright, a live video platform that lets fans Zoom with their favorite creators and celebs, has raised $15 million in new funding, the company announced today. The round was co-led by co-founder and talent manager Guy Oseary’s Sound Ventures, the fund he founded with Ashton Kutcher. RIT Capital and Regah Ventures also co-led.

Other investors in the new round include Marc Benioff’s TIME Ventures, Globo Ventures, Norwest Venture Partners, Shawn Mendes & Manager Andrew Gertler’s AG Ventures, as well as Jeff Lawson, CEO and co-founder of Twilio.

In addition, a number of artists, performers, actors and other celebrities also invested, Bright says, including Rachel Zoe, Drew and Jonathan Scott, Judd Apatow, Ashton Kutcher, Amy Schumer, Bethenny Frankel, and Ryan Tedder. Meanwhile, Jessica Alba, Kane Brown and Maria Sharapova are joining the company as advisors.

Bright, which first debuted in May, was co-founded by Madonna and U2 talent manager Guy Oseary along with early YouTube product manager Michael Powers, who had previously launched the YouTube Channels feature while at Google. The startup’s premise is to tap into the growing creator economy in a way that allows creators to better monetize their success outside of ad-supported networks, like YouTube, so they can grow their own business.

The platform itself is built on top of Zoom — a choice that not only saves Bright from starting from scratch for its real-time video technology, but also one that leverages the broad adoption Zoom has since seen due to the pandemic.

At launch, Bright announced a lineup that included over 200 prominent creators who were set to host ticketed online events where they share their stories or expertise, engage in interviews, offer advice and more. Today, Bright says now over 300 notable names have joined the service to engage with fans and continue to build their brand. The list includes Madonna, Naomi Campbell, D-Nice, the D’Amelio Sisters, Laura Dern, Deepak Chopra, Lindsey Vonn, Diego Boneta, Jason Bolden, Yris Palmer, Cat & Nat, Ronnie2K, and Chef Ludo Lefebvre, and others. Even more are on board to host future sessions.

Unlike social media creator tools, Bright is focused on knowledge-sharing rather than just gaining likes or follows. For example, one the first sessions featured actor Laura Dern speaking about personal growth, while another featured streamer and online creator Ronnie2K hosting a series about building a career in gaming. In other words, Bright doesn’t only showcase Hollywood entertainment or top artists — it’s open to anyone whose fan base would be willing to pay to hear them talk.

Today, there are sessions across a variety of interests and topics, organized into areas like craft, home, money, culture, body and mind.

Image Credits: Bright session example

Bright itself generates revenue by taking a 20% commission on creator revenue, which is somewhat lower than the traditional marketplace split of 30/70 (platform/creator) but higher than some of the newer platforms available today, like Clubhouse and its commission-free direct payments.

The startup says the funding is being used to help roll out Creator Studio, a new suite of creator tools for managing learning sessions, audience communication, and revenue performance. These sorts of analytics and tools are aimed at serving creators who are working to build a business through live sessions, in addition to growing their fan base. The funds will also help Bright to add new interactive features, like instant polls and the ability to share learning materials with attendees, it says.

These features could potentially help Bright to stand out from a growing number of competitors looking to serve online creators, which today includes major tech companies, like YouTube, Facebook, TikTok and Twitter. However, Oseary’s ability to leverage his personal network to pull in big names is, for now, the more notable differentiator.

“As a believer in lifelong learning, I’m proud to be investing in a platform like Bright, offering audiences the unique opportunity to learn directly from the artists and experts they admire the most,” said new investor, director and producer, Judd Apatow, in a statement. “Through Bright, I can directly connect and share my knowledge with fellow writers, aspiring directors and lovers of comedy,” he added.

“It’s inspiring to have the support of incredible investors as well as these notable artists and entrepreneurs. All our partners share Bright’s vision that people want to level up their lives by learning directly from those they admire,” Bright CEO Michael Powers said, in an announcement. “Through Bright, talent can better engage authentically with audiences by sharing their own knowledge and bringing their many interests and passions to the foreground. We are excited to roll out our new features to continue elevating our platform and mission” he said.

#advisors, #amy-schumer, #apps, #articles, #ashton-kutcher, #chef, #creator-studio, #creator-tools, #deepak-chopra, #google, #guy-oseary, #jeff-lawson, #jessica-alba, #marc-benioff, #media, #michael-powers, #norwest-venture-partners, #online-creators, #online-events, #product-manager, #recent-funding, #social, #social-media, #software, #startups, #time-ventures, #twilio, #twitter, #video-hosting, #youtube

How Twilio is moving beyond a diversity numbers game toward becoming an anti-racist company

When George Floyd was murdered in May 2020, it set off a firestorm of protests and shed a bright hot spotlight on the issues of racism in America and elsewhere. As a response, many companies gave messages of support to people of color, yet have failed to make substantive change since that time. One company that is attempting to move beyond lip service and diversity quotas is Twilio, whose CEO Jeff Lawson has made a commitment to work toward being an anti-racist company.

As part of that commitment, he hired Lybra Clemons, who has years of experience in corporate diversity jobs, as chief diversity officer and the two of them have worked together with the rest of the executive team to try and execute the company’s anti-racist vision.

It’s a complex and challenging task to parse personal bias and institutional and societal racism and try to build a company that actively works to combat all of this, but Lawson and Clemons seem determined to be an example to all tech companies.

As part of this effort, the company published a diversity report recently, partially to document its progress and partly to share some of the lessons it has learned as it goes on this journey to build a better and more inclusive company.

I spoke to both executives to learn about their efforts and how they think about anti-racism, deal with it on multiple levels from personal to business to societal — and how the work is never really done.

Making the effort

Clemons said that when she came on board in September 2020, it was part of an overall effort on the part of Lawson and the executive team to commit to being anti-racist, and part of her job was to help define what that meant. In part, it was an effort to move beyond some of “the perfunctory responses” from other companies, but also an honest attempt at trying to do something different to improve how they hired people, and the systems they put in place to make people feel welcome and succeed, regardless of who they were, what they looked like or where they came from.

“I’m not saying that all companies are like that, but there were a lot of perfunctory responses [after George Floyd was murdered],” Clemons told me. “I do believe that there was a full-on commitment [at Twilio] to figure out what it means to become an anti-racist company, [figuring out what] anti-racism means — which we are grappling with right now — and, if we use that lens, how we’ll be able to approach diversity, equity and inclusion in a different way.”

Lawson says that this isn’t something he just picked up on in the wake of George Floyd’s murder. He has been thinking about this for a long time. One of Twilio’s early backers was Kapor Capital. The firm’s principals, Mitch Kapor and Freada Kapor Klein, who have been preaching about diversity and inclusion for decades, encouraged Lawson to come to meetings with other founders to discuss diversity in the early days of the company, which was founded in 2008.

In an interview in 2017, Kapor Klein told TechCrunch about the importance of establishing a positive culture as early as possible in a startup’s evolution because it becomes much harder, the larger you get as a company.

“It’s almost impossible to overemphasize the importance of intentionally building a positive culture from the start. Finding time to articulate values, principles and how you want to be known is critical. There’s always too much to do, but retrofitting culture or diversity and inclusion in a big company is much harder,” she said at the time.

Lawson says these early meetings with the Kapors and other startup founders helped plant the seeds about the kind of company he wanted to build. He realized at the time that as focused as he was on building the successful business his startup would become, there was no perfect time to start thinking about DEIB (diversity, equity, inclusion, belonging), and it was his responsibility as the leader of his startup to begin thinking about it right then and there, before, as he said, “the company was a thousand white men.”

That thinking evolved over the last year on how to build an anti-racist company, a concept he picked up by reading the book ‘How To Be An Antiracist’ by Ibram X. Kendi, and he is committed to that approach.

“Anti-racism just speaks to the fact that there are systems, institutionalized systems in any society … that biases certain people over others, and that can be done intentionally or unintentionally, and the work of anti-racism is to say, let’s try to do the work and to identify what those systems are, and then ask how we can combat that,” Lawson said.

Using data to move, not prove

Clemons says that throughout the mid-2000s, the standard way of looking at diversity was simply to look at the data and pat yourself on the back if you reached your diversity goals, but she said that she wanted to help Twilio use the data to move beyond that approach to use data to drive substantive change at the company.

“The data is helping us understand that either we increased or we didn’t increase in this particular demographic or population. So how do we use the data to actually move and make some changes or shifts to our policies or practices and so forth,” she said.

“This is a full journey of really understanding the history of the U.S., the history of the world as it relates to racism, colonialism, all of the -isms, colorism and homophobia, and addressing that. Figuring out what our choices are, our individual stakes in them and then using that as a way to build out anti-racist policies and practices to actually start to make some shifts in our diversity, equity and inclusion strategy.”

In a story earlier this year about Valence, a startup with the goal of advancing Black professionals in the workplace, company CEO Guy Primus said he wants to help companies move beyond the numbers game that Clemons referenced.

“People want the numbers to go up, and there’s [this notion of] recruit, retain and promote. The problem is that everyone is focused on the recruiting pipeline, but they’re not focused on retention and promotion, which ultimately affects recruiting. So it’s an ecosystem problem, not a pipeline issue,” Primus told TechCrunch at the time.

That’s an area where Twilio is moving into actionable programs to help move beyond simply recruiting, although that’s clearly part of it, and helping build a company where every employee feels appreciated, that they can succeed based on their skills, and that they truly belong.

The Twilio report cites a number of specific programs to help make this happen.

One is called Hatch, which launched in 2017. Hatch looks for folks from non-traditional backgrounds who have been through a coding boot camp and puts them in a six-month apprenticeship program. The program is designed to teach them more advanced coding skills and learn what it takes to be a successful coder with coaching and mentorship.

Lawson says that as of last year, 93% of the folks who came through this program are still with the company. That’s a track record that suggests people are coming into the company, which is putting systems in place to help ensure their success.

Other programs include Rise Up, which helps Black and Latinx employees move into management positions via a leadership development program, and Twilio Unplugged, which teaches candidates from historically excluded backgrounds how to succeed in a tech company interview process to get through that initial step to get hired.

These and so many more programs are designed to help achieve the company’s anti-racism goals. Lawson is the first to admit that it is not a perfect system, and that with the help of Clemons and others, he and the rest of the executive team are still working and learning and trying to build a company where everyone can succeed and everyone feels a part of the team.

Twilio is still 60% male and just over 38% female, a number that was up 6% in 2020. The overall racial and ethnic makeup of the company is around 51% white, 26% Asian, 6.5% Latinx and 5.5% Black. While the ratio of whites to nonwhites is quite favorable, with a large percentage of Asians, it still has work to do when it comes to other historically excluded groups.

Twilio work demographics chart.

Image Credits: Twilio

The company certainly understands that. Lawson says that by working on an individual, company and societal level, Twilio hopes to do its part to improve its own record and continue to get better at this. Part of that is sharing what they’ve learned in the report, not to pat themselves on the back, but to bring the conversation outside the company.

As Clemons said in the video that accompanied the company’s diversity report: “Everyone has their experience. Everyone comes in with all types of experiences, whether good or bad, and we cannot change that, but what Twilio can do is provide a space for those to feel like they are part of something, and it goes back to this anti-racist framework of ensuring that there’s equity for all people to feel like they can have a great career and a great career journey at Twilio.”

#diversity, #jeff-lawson, #tc, #twilio

Twilio’s new tools will let anyone add live video and audio to their apps

Twilio, a company best known for its tools that help developers build text message/phone call-powered apps, is branching out into a new category: live streaming.

This morning the company announced Twilio Live, a platform meant to help developers more easily integrate live video/audio features into their apps.

Details are still a bit light, but here’s what we know so far:

  • Twilio Live is launching today but in invite-only Beta mode — so not everyone will get access immediately.
  • It’ll support iOS, Android, and all “major browsers”.
  • In addition to the content streaming tools, Twilio is also building out interactivity features to support things like text chat, audience polling, screen sharing, and bringing audience members up as speakers.

We saw a massive rush of Clubhouse clones hit the market after that app’s spike in popularity, with even huge names like LinkedIn, Twitter, and Discord rushing to replicate its best features. With Twilio effectively turning that feature set into a plug-and-play SDK here, I’d expect to see a lot more of that.

One of the biggest challenges of reinventing the wheel when it comes to live streaming is one of scaling; what might work beautifully for one hundred viewers could grind to a halt when you have that viral moment that brings a sudden influx of ten thousand. Twilio has spent the last decade figuring out infrastructure scaling and latency — chances are, they’re starting on pretty good footing here.

No details seem to be available currently as to how Twilio Live’s pricing will work.

#tc, #twilio, #twilio-live

WebOps platform Pantheon raises $100M from SoftBank Vision Fund

WebOps SaaS platform Pantheon, which started out as a Drupal and WordPress hosting service many years ago, today announced that it has raised a $100 million Series E round solely funded by the Softbank Vision Fund. With this round, Pantheon has now reached unicorn status, with a valuation of over $1 billion.

Pantheon co-founder and CEO Zack Rosen told me that the company wasn’t under any pressure to raise. “It really just helps us accelerate everything that we’re doing,” he said. “We didn’t need the funding. We had plenty of cash in the bank. We were planning to raise in a year or two years down the road. But we have a lot of conviction in and where this industry is going and our customers’ needs are pretty apparent, so we just used this as an opportunity to pull things in by six months to a year and accelerate all the things that were already on our operational plans for the company.”

Image Credits: Pantheon

As Rosen noted, the role of company websites has changed quite a bit since Pantheon launched almost a dozen years ago. While originally, they were mostly about brand building and having a publishing channel, these days, they are directly tied to revenue. “The majority of buying decisions get made before anyone talks to a customer these days,” Rosen said. “All the research is getting done — hopefully — on your company’s website. Any link in an advertisement or link in an email is going to route that customer back to the website. That’s your most important digital product. And so marketers are really starting to think about it like that.”

So while hosting and publishing may be solved problems, driving revenue through a company’s website — and measuring that — is where Pantheon sees a lot of opportunities going forward. Though at the core of the company’s offering, of course, is still its serverless hosting platform and developers remain its core audience. But it’s the collaboration between the marketing teams and developers that is driving a lot of what the company is now investing in. “In order to deliver a best-in-class digital experience — and be able to iterate it every single day and work with designers and developers and website owners and project managers — you need a system of record for that work. You need a solid workflow for those teams,” Rosen noted.

Companies, he argues, are looking for a solid SaaS platform that provides them with those workflows, in addition to the high-performance hosting, CDNs and everything else that is now table stakes for hosting websites. “[Teams] want to stop thinking about this stuff,” he said. “They just want a partner — like any other SaaS application, whether it’s Stripe, Twilio or Salesforce. They just want it to work and not to worry about it. And then, once you have that taken care of, then you can move up into the things that really drive the outcomes these teams care about.”

As for raising from the SoftBank Vision Fund, which features the likes of ByteDance, Perch, Redis Labs, Slack and Arm among its investments (and, infamously, WeWork), Rosen said that Pantheon had its choice of firms, but at the end of the day, SoftBank’s team turned out to be “huge believers in this category,” he said, and could help Pantheon reach the scale it needs to define the WebOps category.

“Digital transformation has accelerated the movement to the cloud for essential business infrastructure. By automating workflows and do-it-yourself with its SaaS offering, we believe Pantheon’s leading platform is transforming how modern website experiences are created,” said Vikas Parekh, Partner at SoftBank Investment Advisers. “We are excited to partner with Zack and the Pantheon team to support their ambition of helping organizations embrace a new and better way of building websites that deliver results.”

#as-a-service, #bank, #club-penguin, #computing, #drupal, #pantheon, #partner, #redis-labs, #saas, #salesforce, #serverless-computing, #softbank-vision-fund, #software, #software-as-a-service, #stripe, #tc, #technology, #twilio, #wework, #wordpress, #zack

Segment launches customer journey tool to build fine-grained personal experiences

Twilio Segment announced a tool, which is available starting today, to help marketers create fine-grained customer journeys. Up until now the company has enabled marketers to build buyer personas and broader audiences, but this enables users to have much greater control of their interactions with a customer.

Company co-founder and CEO Peter Reinhardt says that marketers have been craving the ability to build more customized customer journeys and this tool gives them that. “It’s basically taking the power that existed in personas and audiences and actually putting it fully in marketers’ hands to build their dream journeys across every channel with the best data,” he said.

This enables marketers to stitch together a whole sequence of audiences. “Say when someone comes to the top of the funnel, they want to do X, then if they want to branch it and use X or Y, then do two different things, and you can keep branching and personalizing via this whole journey to cover the whole lifecycle.”

He says this capability has existed in some tools, but the Twilio Segment offering enables it to be used in more than 300 tools in the Segment ecosystem. “This is the first time that we’re going to be able to really do that and orchestrate this way, not just for a limited subset of channels, but across all of the channels,” he said.

Marketers can build branching by dragging and dropping journey components to send people on different paths depending on things like if they are a regular customer or a first-time customer or just about anything you can think of. Reinhardt says that flexibility is a key attribute of the new feature.

While it’s competing with some major players like Adobe and Salesforce in this space, Reinhardt believes this capability really gives Twilio a leg up over the competitors. “I think if you look at more of the legacy journey builders, [their products] are not built on real time data, meaning that they’re actually missing basically all of the interesting behavioral data that marketers actually build on,” he said.

Segment was acquired by Twilio last year for $3.2 billion, and part of the reason for that was to increase its customer engagement capabilities. Segment gives Twilio a customer data platform to build on top of its other communications tooling, and today’s announcement expands on that capability.

#customer-experience, #enterprise, #marketing, #peter-reinhardt, #segment, #twilio

Sinch snaps up MessageMedia for $1.3B to compete with Twilio in business SMS services

Sinch — the Swedish company that provides a suite of services for companies to build communications and specifically “customer engagement” into their services by way of APIs — has made yet another acquisition in its global march to scale up its business and compete more squarely with Twilio. The company today announced that it has acquired MessageMedia, a provider of SMS and other messaging services for businesses to manage customer relations, user authentication, alerts and more.

The acquisition is being made for $1.3 billion — comprised of $1.1 billion in cash and the rest in shares (or in Sweden’s currency, SEK10,745 in total based on Sinch’s share price and yesterdays exchange rate). The deal is expected to close in the second half of this year.

The deal is notable not just for giving Sinch a major inroad into the world of business SMS, but also because of the timing. Less than a month ago, Sinch’s big rival Twilio announced that it would acquire ZipWhip, another big player in the same area of business SMS, for $850 million.

MessageMedia, based out of Melbourne, Australia, is currently operational also in New Zealand, the U.S. and Europe, and it focuses on providing services primarily to the SMB market with a self-service platform where customers can build and operate services, with the option of using a web portal provided by MessageMedia to handle the traffic.

It has some 60,000 customers and handles 5 billion+ messages annually, Sinch said. Growth is particularly strong in the U.S. market, where MessageMedia is adding 1,500 new customers each month. Alongside SMS, it also provides tech for companies to build MMS experiences and mobile landing pages, and it also provides them with tools to integrate other features as well as an API gateway.

Sinch itself says it handles some 150 billion mobile customer engagements for its customers annually, and it has 8 of the 10 biggest tech companies as customers.

Sinch is publicly traded in Sweden and currently has a market cap of $13.6 billion, and the deal comes just weeks after the company announced that it would be raising $1.1 billion for more acquisitions, with a big chunk of the money coming from Softbank, one of its major backers.

Given the size of this deal announced today, now we know which deal Sinch had in mind. It would be interesting to know whether Sinch’s move to buy MessageMedia predated Twilio’s for ZipWhip, which definitely do not feel like a coincidence.

“Sinch powers mobile customer engagement for some of the largest brands and technology platforms in the world. With the acquisition of MessageMedia, Sinch will now be able to bring the benefits of enhanced mobile customer engagement to every small business on the planet,” CEO Oscar Werner said to TechCrunch. “No longer will you need the deep pockets of an enterprise or the technical skills of an engineer to deliver first-class customer experiences.”

Sinch has been on a fast pace of buying up companies in recent times to scale up its existing business, tapping not just into the huge surge of people using phones and the internet to communicate in these pandemic-stricken times, but also to bulk up and have more economies of scale in the communications industry, essentially a business built on aggregating incremental revenues.

That fact has led to a lot of consolidation, with Twilio also buying up strategic, smaller businesses in quick order.

In this regard, MessageMedia is a strong buy for Sinch because it’s generating strong cash. MessageMedia is expected to make $151 million in profits for the year ending June 30, with gross profits of $94 million and Ebitda of $51 million, Sinch said. Sinch itself is also profitable.

Sinch’s other deals have included Inteliquent for $1.14 billion, ACL in India for $70 million and SAP’s digital interconnect business for $250 million.

For its part, MessageMedia very much plays into and is a product of the same API economy that has lifted the likes of Twilio, Stripe and many others built on the premise of knitting together very complex services, which customers can then use by way of simple lines of code that they integrate into their own digital operations, be it websites, apps, or internal systems.

Communications, and specifically messaging API-based systems are estimated to be a $9-13 billion market, Sinch said, with the U.S. accounting for 30% of that, and the global market projected to grow between 25-30% until 2024. SMBs, who might lack the resources to build such tools from the ground up, are a big part of that activity.

“Mobile messaging delivers tremendous ROI but smaller businesses often lack tools that cater to their specific needs,” said Paul Perrett, MessageMedia CEO, in a statement. “Serving these customers presents a tremendous opportunity, and with Sinch we can build a global leader in our field.”

#enterprise, #ma, #messaging, #mobile, #sinch, #sms, #twilio, #zipwhip

Belvo, LatAm’s answer to Plaid, raises $43M to scale its API for financial services

Belvo, a Latin American startup which has built an open finance API platform, announced today it has raised $43 million in a Series A round of funding.

A mix of Silicon Valley and Latin American-based VC firms and angels participated in the financing including Future Positive, Kibo Ventures, FJ Labs, Kaszek, MAYA Capital, Venture Friends, Rappi co-founder and president Sebastián Mejía (Rappi), Harsh Sinha, CTO of Wise (formerly Transferwise) and Nubank CEO and founder David Vélez.

Citing Crunchbase data, Belvo believes the round represents the largest series A ever raised by a Latin American fintech. In May 2020, Belvo raised a $10 million seed round co-led by Silicon Valley’s Founders Fund and Argentina’s Kaszek.

Belvo aims to work with leading fintechs in Latin America, spanning across verticals like the neobanks, credit providers and personal finance products Latin Americans use every day.

The startup’s goal with its developer-first API platform that can be used to access and interpret end-user financial data is to build better, more efficient and more inclusive financial products in Latin America. Developers of popular neobank apps, credit providers and personal finance tools use Belvo’s API to connect bank accounts to their apps to unlock the power of open banking.

As TechCrunch Senior Editor Alex Wilhelm explained in this piece last year, Belvo might be considered similar to U.S.-based Plaid, but more attuned to the Latin American market so it can take in a more diverse set of data to better meet the needs of the various markets it serves. 

So while Belvo’s goals are “similar to the overarching goal[s] of Plaid,” co-founder and co-CEO Pablo Viguera told TechCrunch that Belvo is not merely building a banking API business hoping to connect apps to financial accounts. Instead, Belvo wants to build a finance API, which takes in more information than is normally collected by such systems. Latin America is massively underbanked and unbanked so the more data from more sources, the better.

“In essence, we’re pushing for similar outcomes [as Plaid] in terms of when you think about open banking or open finance,” Viguera said. “We’re working to democratize access to financial data and empower end users to port that data, and share that data with whoever they want.”

The company operates under the premise that just because a significant number of the region’s population is underbanked doesn’t mean that they aren’t still financially active. Belvo’s goal is to link all sorts of accounts together. For example, Viguera told TechCrunch that some gig-economy companies in Latin America are issuing their own cards that allow workers to cash out at small local shops. In time, all those transactions are data that could be linked up using Belvo, casting a far wider net than what we’re used to domestically.

The company’s work to connect banks and non-banks together is key to the company’s goal of allowing “any fintech or any developer to access and interpret user financial data,” according to Viguera.

Viguera and co-CEO Oriol Tintoré founded in May of 2019, and was part of Y Combinator’s Winter 2020 batch. Since launching its platform last year, the company says it has built a customer base of over 60 companies across Mexico, Brazil and Colombia, handling millions of monthly API calls. 

This is important because as Alex noted last year, similar to other players in the API-space, Belvo charges for each API call that its customers use (in this sense, it has a model similar to Twilio’s). 

Image Credits: Co-founders and co-CEOs Oriol Tintore and Pablo Viguera / Belvo

Also, over the past year, Belvo says it expanded its API coverage to over 40 financial institutions, which gives companies the ability to connect to over 90% of personal and business bank accounts in LatAm, as well as to tax authorities (such as the SAT in Mexico) and gig economy platforms.

“Essentially we take unstructured financial data , which an individual might have outside of a bank such as integrations we have with gig economy platforms such as Uber and Rappi. We can take a driver’s information from their Uber app, which is kind of built like a bank app and turn it into meaningful bank-like info which third parties can leverage to make assessments as if it’s data coming from a bank,” Viguera explained.

The startup plans to use its new capital to scale its product offering, continue expanding its geographic footprint and double its current headcount of 70. Specifically, Belvo plans to hire more than 50 engineers in Mexico and Brazil by year’s end. It currently has offices in Mexico City, São Paulo, and Barcelona. The company also aims to  launch its bank-to-bank payment initiation offering in Mexico and Brazil.

Belvo currently operates in Mexico, Colombia and Brazil. 

But it’s seeing “a lot of opportunity” in other markets in Latin America, especially in Chile, Peru and Argentina, Viguera told TechCrunch. “In due course, we will look to pursue expansion there.” 

Fred Blackford, founding partner of Future Positive, believes Belvo represents a “truly transformational opportunity for the region’s financial sector.”

Nicolás Szekasy, co-founder and managing partner of Kaszek, noted that demand for financial services in Latin America is growing at an exponential rate .

“Belvo is developing the infrastructure that will enable both the larger institutions and the emerging generation of younger players to successfully deploy their solutions,” he said. “ Oriol, Pablo, and the Belvo team have been leading the development of a sophisticated platform that resolves very complex technical challenges, and the company’s exponential growth reflects how it is delivering a product that fits perfectly with the requirements of the market.” 

#alex-wilhelm, #api, #argentina, #bank, #banking, #barcelona, #belvo, #brazil, #ceo, #chile, #co-ceo, #colombia, #cto, #david-velez, #driver, #editor, #finance, #financial-services, #fj-labs, #founders-fund, #funding, #fundings-exits, #kaszek, #kibo-ventures, #latin-america, #mexico, #mexico-city, #nubank, #online-food-ordering, #open-banking, #open-finance, #peru, #rappi, #recent-funding, #sao-paulo, #startup, #startups, #tc, #technology, #twilio, #uber, #vc, #venture-capital, #wise, #y-combinator

Sinch, a Swedish customer engagement giant, raises $1.1B, SoftBank and Temasek participating

Sinch — a Twilio competitor based out of Sweden that provides a suite of services to companies to build communications and specifically “customer engagement” into their services by way of APIs — has been on a steady funding and acquisitions march in the last several months to scale its business, and today comes the latest development on that front.

The company has announced that it has raised another $1.1 billion in a direct share issue, with significant chunks of that funding coming from Temasek and SoftBank, in order to continue building its business.

Specifically, the company — which is traded on the Swedish stock exchange Nasdaq Stockhom and currently has a market cap of around $11 billion — said that it was making a new share issue of 7,232,077 shares at SEK 1,300 per share, raising approximately SEK 9.4 billion (equivalent to around $1.1 billion at current rates).

Sinch said that investors buying the shares included “selected Swedish and international investors of institutional character,” highlighting that Temasek and SB Management (a direct subsidiary of SoftBank Group Corp.) would  respectively take SEK 2,085 million and 0.7 million shares. This works out to a $252 million investment for Temasek, and $110 million for SoftBank.

SoftBank last December took a $690 million stake in Sinch (when it was valued at $8.2 billion). That was just ahead of the company scooping up Inteliquent in the U.S. in January for $1.14 billion to move a little closer to Twilio’s home turf.

Sinch is not saying much more beyond the announcement of the share issue for now, except that the raise was made to shore up its financial position ahead of more M&A activity.

“Sinch has an active M&A-agenda and a track record of successful acquisitions, making [it] well placed to drive continued consolidation of the messaging and [communications platform as a service, CPaaS] market,” it said in a short statement. “Furthermore, the increased financial flexibility that the directed new share issue entails further strengthens the Company’s position as a relevant and competitive buyer.”

The company is profitable and active in more than 40 markets, and CEO Oscar Werner said in Sinch’s most recent earnings report that in the last quarter alone that its communications APIs — which works across  channels like SMS, WhatsApp, Facebook Messenger, chatbots, voice and video — handled 40 billion mobile messages.

Notably, its strategy has a strong foothold in the U.S. because of the Inteliquent acquisition. It will be interesting to see how and if it continues to consolidate to build up market share in that part of the world, or whether it focuses elsewhere, given the heft of two very strong Asian investors now in its stable. 

“Becoming a leader in the U.S. voice market is key to establish Sinch as the leading global cloud communications platform,” said Werner in January.

While Sinch has focused much of its business, like Twilio, around an API-based model focused on communications services, its acquisition of Inteliquent also gave it access to a large, legacy Infrastructure-as-a-Service (IaaS) product set, aimed at telcos to provide off-net call termination (when a call is handed off from one carrier to another) and toll-free numbers.

Tellingly, when Sinch acquired Inteliquent, the two divisions each accounted for roughly half of its total business, but the CPaaS business is growing at twice the rate of IaaS, which points to how Sinch views the future for itself, too.

#apis, #communications, #enterprise, #europe, #finance, #funding, #messaging, #sinch, #twilio

Extra Crunch roundup: Selling SaaS to developers, cracking YC after 13 tries, all about Expensify

Before Twilio had a market cap approaching $56 billion and more than 200,000 customers, the cloud-communications platform developed a secret sauce to fuel its growth: a developer-focused model that dispensed with traditional marketing rules.

Software companies that sell directly to end users share a simple framework for managing growth that leverages discoverability, desirability and do-ability — the “aha!” moment where a consumer is able to incorporate a new product into their workflow.

Data show that traditional marketing doesn’t work on developers, and it’s not because they’re impervious to a sales pitch. Builders just want reliable tools that are easy to use.

As a result, companies that are looking to create and sell software to developers at scale must toss their B2B playbooks and meet their customers where they are.


Attorney Sophie Alcorn, our in-house immigration law expert, submitted two columns: On Monday, she analyzed a decision by the U.S. Department of Homeland Security not to cancel the International Entrepreneur Parole program, which potentially allows founders from other countries to stay in the U.S. for as long as 60 months.

On Wednesday, she responded to a question from an entrepreneur who asked whether it made sense to sponsor visas for workers who are working remotely inside the U.S.

Thanks very much for reading Extra Crunch this week, and have a great weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

4 lessons I learned about getting into Y Combinator (after 13 applications)

Image of a chair and a trash can in an office, with the bin surrounded by crumpled paper, representing persistence.

Image Credits: Peter Finch (opens in a new window) / Getty Images

Can you imagine making 13 attempts at something before attaining a successful outcome?

Alex Circei, CEO and co-founder of Git analytics tool Waydev, applied 13 times to Y Combinator before his team was accepted. Each year, the accelerator admits only about 5% of the startups that seek to join.

“Competition may be fierce, but it’s not impossible,” says Circei. “Jumping through some hoops is not only worth the potential payoff but is ultimately a valuable learning curve for any startup.”

In an exclusive exposé for TechCrunch, he shares four key lessons he learned while steering his startup through YC’s stringent selection process.

The first? “Put your business value before your personal vanity.”

The Expensify EC-1

The Expensify EC-1

Image Credits: Illustration by Nigel Sussman, art design by Bryce Durbin

In March, TechCrunch Daily Reporter Anna Heim was interviewing executives at Expensify to learn more about the company’s history and operations when they unexpectedly made themselves less available.

Our suspicions about their change of heart were confirmed on May 3 when the expense report management company confidentially filed to go public.

With a founding team comprised mainly of P2P hackers, it’s perhaps inevitable that Expensify doesn’t look and feel like something an MBA might envision.

“We hire in a super different way. We have a very unusual internal management structure,” said founder and CEO David Barrett. “Our business model itself is very unusual. We don’t have any salespeople, for example.”

Similar to the way companies must file a Form S-1 that describes their operations and how they plan to spend capital, TechCrunch EC-1s are part origin story, part X-ray. We published the first article in a series on Expensify on Monday:

We’ll publish the remainder of Anna’s series on Expensify in the coming weeks, so stay tuned.

As Procore looks to nearly double its private valuation, the IPO market shows signs of life

Construction tech unicorn Procore Technologies this week set a price range for its impending public offering. The news comes after the company initially filed to go public in February of 2020, a move delayed by the pandemic.

In March 2021, Procore filed again for a public offering, but its second shot ran into a cooling IPO market. The company filed another S-1/A in April, and then another in early May. This week’s filing is the first that sets a price for the Carpinteria, California-based software upstart.

But Procore is not the only company that filed and later put on hold an IPO to get back to work on floating. Kaltura, a software company focused on video distribution, also recently got its IPO back on track. Are we seeing a reacceleration of the IPO market? Perhaps.

3 golden rules for health tech entrepreneurs

Family physician Bobbie Kumar lays out the golden rules to ensure your healthcare product, service or innovation is on the right track.

Rule 1: “It’s not enough to develop a ‘new tool’ to use in a health setting,” Dr. Kumar writes. “Maybe it has a purpose, but does it meaningfully address a need, or solve a problem, in a way that measurably improves outcomes? In other words: Does it have value?”

Dear Sophie: How does the International Entrepreneur Parole program work?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

I’m the founder of an early-stage, two-year-old fintech startup. We really want to move to San Francisco to be near our lead investor.

I heard International Entrepreneur Parole is back. What is it, and how can I apply?

— Joyous in Johannesburg

Digging into digital mortgage lender Better.com’s huge SPAC

If you have heard of Better.com but really had no idea what it does before this moment, welcome to the club. Mortgage tech is like pre-kindergarten applications — it applies to a very specific set of folks at a very particular moment. And they care a lot about it. But the rest of us aren’t really aware of its existence.

Better.com, a venture-backed digital mortgage lender, announced this week that it will combine with a SPAC, taking itself public in the second half of 2021. The unicorn’s news comes as the American IPO market is showing signs of fresh life after a modest April.

As tech offices begin to reopen, the workplace could look very different

Colleagues in the office working while wearing medical face mask during COVID-19

Image Credits: filadendron (opens in a new window) / Getty Images

The pandemic forced many employees to begin working from home, and, in doing so, may have changed the way we think about work. While some businesses have slowly returned to the office, depending on where you live and what you do, many information workers remain at home.

That could change in the coming months as more people get vaccinated and the infection rate begins to drop in the U.S.

Many companies have discovered that their employees work just fine at home. And some workers don’t want to waste time stuck on congested highways or public transportation now that they’ve learned to work remotely. But other employees suffered in small spaces or with constant interruptions from family. Those folks may long to go back to the office.

On balance, it seems clear that whatever happens, for many companies, we probably aren’t going back whole-cloth to the prior model of commuting into the office five days a week.

For unicorns, how much does the route to going public really matter?

4 progressively larger balls of US $1 bills, studio shot

Image Credits: PM Images (opens in a new window) / Getty Images

On a recent episode of TechCrunch’s Equity podcast, hosts Natasha Mascarenhas and Alex Wilhelm invited Yext CFO Steve Cakebread and Latch CFO Garth Mitchell on to discuss when companies should go public, the costs and benefits of the process and when a SPAC can make sense. Yext pursued a traditional IPO a few years back; Latch is now going public via a blank-check company combination.

The chat was more than illustrative, as we got to hear two CFOs share their views on delayed public offerings and when different types of debuts can make the most sense. While the TechCrunch crew has, at times, made light of certain SPAC-led deals, the pair argued that the transactions can make good sense.

Undergirding the conversation was Cakebread’s recent IPO-focused book, which not only posited that companies going public earlier rather than later is good for their internal operations but also because it can provide the public with a chance to participate in a company’s success.

In today’s hypercharged private markets and frothy public domain, his argument is worth considering.

The truth about SDK integrations and their impact on developers

Image of three complex light trails converging against a white background to represent integration.

Image Credits: John Lund (opens in a new window) / Getty Images

Ken Harlan, the founder and CEO of Mobile Fuse, writes about the perks and pitfalls of software development kits.

“The digital media industry often talks about how much influence, dominance and power entities like Google and Facebook have,” Harlan writes. “Generally, the focus is on the vast troves of data and audience reach these companies tout. However, there’s more beneath the surface that strengthens the grip these companies have on both app developers and publishers alike.

“In reality, SDK integrations are a critical component of why these monolith companies have such a prominent presence.”

Don’t hate on low-code and no-code

The Exchange caught up with Appian CEO Matt Calkins after his enterprise app software company reported its first-quarter performance to discuss the low-code market and what he’s hearing in customer meetings. To round out our general thesis — and shore up our somewhat bratty headline — we’ve compiled a list of recent low-code and no-code venture capital rounds, of which there are many.

As we’ll show, the pace at which venture capitalists are putting funds into companies that fall into our two categories is pretty damn rapid, which implies that they are doing well as a cohort. We can infer as much because it has become clear in recent quarters that while today’s private capital market is stupendous for some startups, it’s harder than you’d think for others.

Bird’s SPAC filing shows scooter-nomics just don’t fly

A pair of Bird e-scooters parked in Barcelona. Image Credits: Natasha Lomas/TechCrunch

Historically — and based on what we’re seeing in this fantastical filing — Bird proved to be a simply awful business. Its results from 2019 and 2020 describe a company with a huge cost structure and unprofitable revenue, per filings. After posting negative gross profit in both of the most recent full-year periods, Bird’s initial model appears to have been defeated by the market.

What drove the company’s hugely unprofitable revenues and resulting net losses? Unit economics that were nearly comically destructive.

Dear Sophie: Does it make sense to sponsor immigrant talent to work remotely?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

My startup is in big-time hiring mode. All of our employees are currently working remotely and will likely continue to do so for the foreseeable future — even after the pandemic ends. We are considering individuals who are living outside of the U.S. for a few of the positions we are looking to fill.

Does it make sense to sponsor them for a visa to work remotely from somewhere in the United States?

— Selective in Silicon Valley

The hamburger model is a winning go-to-market strategy

Follow the Hamburger model for your go-to-market strategy

Image Credits: ivan101 / Getty Images

“Today, we live in a world of product-led growth, where engineers (and the software they have built) are the biggest differentiator,” says Coatue Management general partner Caryn Marooney and investor David Cahn. “If your customers love what you’re building, you’re headed in the right direction. If they don’t, you’re not.

“However, even the most successful product-led growth companies will reach a tipping point, because no matter how good their product is, they’ll need to figure out how to expand their customer base and grow from a startup into a $1 billion+ revenue enterprise.

“The answer is the hamburger model. Why call it that? Because the best go-to-market (GTM) strategies for startups are like hamburgers:

  • The bottom bun: Bottom-up GTM.
  • The burger: Your product.
  • The top bun: Enterprise sales.”

Software subscriptions are eating the world: Solving billing and cash flow woes simultaneously

the recycle logo recreated in folded US currency no visible serial numbers/faces etc.

Image Credits: belterz (opens in a new window) / Getty Images

Krish Subramanian, the co-founder and CEO of Chargebee, writes that while subscription business models are attractive, there are two major pitfalls: First, payment.

“Regardless of company size, there’s an ongoing need to convince customers to sign up long term,” Subramanian writes. “The second issue: How do businesses cover the funding gap between when customers sign up and when they pay?”

Is there a creed in venture capital?

Scott Lenet, the president of Touchdown Ventures, asks how deal-makers should think about how to handle themselves when counter-parties attempt to change an agreement. “When is it OK to modify terms, and when should deal-makers stand firm?” he asks.

“Entrepreneurs and investors should recognize that contracts are worth very little without the ongoing relationship management that keeps all parties aligned. Enforcement is so unusual in the world of startups that I consider it a mostly dead-end path. In my experience, good communication is the only reliable remedy. This is the way.”

Even startups on tight budgets can maximize their marketing impact

Maximize the impact of your marketing strategy

Image Credits: Ray Massey / Getty Images

“Search engine optimization, PR, paid marketing, emails, social — marketing and communications is crowded with techniques, channels, solutions and acronyms,” writes Dominik Angerer, CEO and co-founder of Storyblok, which provides best practice guidance for startups on how to build a sustainable approach to marketing their content. “It’s little wonder that many startups strapped for time and money find defining and executing a sustainable marketing campaign a daunting prospect.

“The sheer number of options makes it difficult to determine an effective approach, and my view is that this complexity often obscures the obvious answer: A startup’s best marketing asset is its story.”

#e-scooters, #expensify, #extra-crunch-roundup, #kaltura, #private-equity, #sophie-alcorn, #special-purpose-acquisition-company, #startups, #storyblok, #tc, #twilio, #venture-capital, #y-combinator

SaaS companies can grow to $20M+ ARR by selling exclusively to developers

With more than 200,000 customers, a market cap of nearly $56 billion, and the recent acquisition of Segment for $3.2 billion, Twilio is a SaaS behemoth.

It’s hard to imagine companies like Twilio as anything but a giant. But everybody starts out small, and you can usually trace success back to key decisions made in the early days.

First, you need to have a product that developers can actually sign up for. This means ditching demos for real-time free trials or freemium tools.

For Twilio, a big differentiator was being one of the first technology-focused SaaS organizations that focused on empowering and building for the end user (which in their case is developers) with a self-service function. Another differentiator was, the executive team designed the organization to create tight feedback loops between sales and product with national roadshows, during which CEO Jeff Lawson frequently met with users.

Moreover, Twilio’s “secret sauce” per their S-1 is a developer-focused model and a strong belief in the future of software. They encourage developers to explore and innovate with Twilio’s flexible offering, which led to an incredible 155% net-dollar expansion rate at the time of the IPO.

Most importantly, Twilio put the product in the hands of teams before the sale happened, standing by to answer hard questions about how Twilio would fit into their infrastructure. This was pretty rare at the time — sales engineering resources aren’t cheap — and it was a strong differentiating factor. So much so that when the company went public, they were growing at 106% annually.

Twilio sells to developers at large enterprises by solving a problem that developers come up against regularly: Getting in touch with customers.

But as more successful public software companies emerge, it’s clear that Twilio’s secret sauce can and will be replicated.

Why traditional marketing doesn’t work on developers

Before I started looking at successful developer-focused businesses, I understood the developer-focused playbook to look a little like this:
  1. Don’t hire marketing (or sales, either). If you do, hire someone super experienced from an enterprise sales background. And then fire them within three to six months.
  2. Just hire someone who’s passionate about the product to “manage the community.” What is community management? Lots of swag. Cool meetups. Publish 1–2 articles as a stab at content (bonus points if they’re listicles). Oh, wait. How can we show the ROI here? Make the community manager do that until she quits. Repeat.

#column, #cypress, #developer, #developer-documentation, #developer-relations, #ec-column, #ec-enterprise-applications, #enterprise, #github, #jeff-lawson, #saas, #snyk, #twilio

Fraud prevention platform Sift raises $50M at over $1B valuation, eyes acquisitions

With the increase of digital transacting over the past year, cybercriminals have been having a field day.

In 2020, complaints of suspected internet crime surged by 61%, to 791,790, according to the FBI’s 2020 Internet Crime Report. Those crimes — ranging from personal and corporate data breaches to credit card fraud, phishing and identity theft — cost victims more than $4.2 billion.

For companies like Sift — which aims to predict and prevent fraud online even more quickly than cybercriminals adopt new tactics — that increase in crime also led to an increase in business.

Last year, the San Francisco-based company assessed risk on more than $250 billion in transactions, double from what it did in 2019. The company has over several hundred customers, including Twitter, Airbnb, Twilio, DoorDash, Wayfair and McDonald’s, as well a global data network of 70 billion events per month.

To meet the surge in demand, Sift said today it has raised $50 million in a funding round that values the company at over $1 billion. Insight Partners led the financing, which included participation from Union Square Ventures and Stripes.

While the company would not reveal hard revenue figures, President and CEO Marc Olesen said that business has tripled since he joined the company in June 2018. Sift was founded out of Y Combinator in 2011, and has raised a total of $157 million over its lifetime.

The company’s “Digital Trust & Safety” platform aims to help merchants not only fight all types of internet fraud and abuse, but to also “reduce friction” for legitimate customers. There’s a fine line apparently between looking out for a merchant and upsetting a customer who is legitimately trying to conduct a transaction.

Sift uses machine learning and artificial intelligence to automatically surmise whether an attempted transaction or interaction with a business online is authentic or potentially problematic.

Image Credits: Sift

One of the things the company has discovered is that fraudsters are often not working alone.

“Fraud vectors are no longer siloed. They are highly innovative and often working in concert,” Olesen said. “We’ve uncovered a number of fraud rings.”

Olesen shared a couple of examples of how the company thwarted fraud incidents last year. One recently involved money laundering through donation sites where fraudsters tested stolen debit and credit cards through fake donation sites at guest checkout.

“By making small donations to themselves, they laundered that money and at the same tested the validity of the stolen cards so they could use it on another site with significantly higher purchases,” he said. 

In another case, the company uncovered fraudsters using Telegram, a social media site, to make services available, such as food delivery, with stolen credentials.

The data that Sift has accumulated since its inception helps the company “act as the central nervous system for fraud teams.” Sift says that its models become more intelligent with every customer that it integrates.

Insight Partners Managing Director Jeff Lieberman, who is a Sift board member, said his firm initially invested in Sift in 2016 because even at that time, it was clear that online fraud was “rapidly growing.” It was growing not just in dollar amounts, he said, but in the number of methods cybercriminals used to steal from consumers and businesses.

Sift has a novel approach to fighting fraud that combines massive data sets with machine learning, and it has a track record of proving its value for hundreds of online businesses,” he wrote via email.

When Olesen and the Sift team started the recent process of fundraising, Insight actually approached them before they started talking to outside investors “because both the product and business fundamentals are so strong, and the growth opportunity is massive,” Lieberman added.

“With more businesses heavily investing in online channels, nearly every one of them needs a solution that can intelligently weed out fraud while ensuring a seamless experience for the 99% of transactions or actions that are legitimate,” he wrote. 

The company plans to use its new capital primarily to expand its product portfolio and to scale its product, engineering and sales teams.

Sift also recently tapped Eu-Gene Sung — who has worked in financial leadership roles at Integral Ad Science, BSE Global and McCann — to serve as its CFO.

As to whether or not that meant an IPO is in Sift’s future, Olesen said that Sung’s experience of taking companies through a growth phase such as what Sift is experiencing would be valuable. The company is also for the first time looking to potentially do some M&A.

“When we think about expanding our portfolio, it’s really a buy/build partner approach,” Olesen said.

#airbnb, #artificial-intelligence, #board-member, #credit-card, #credit-card-fraud, #crime, #crimes, #cybercrime, #doordash, #federal-bureau-of-investigation, #food-delivery, #fraud, #funding, #fundings-exits, #identity-theft, #insight-partners, #jeff-lieberman, #machine-learning, #mcdonalds, #online-fraud, #private-equity, #recent-funding, #san-francisco, #sift, #startup, #startups, #stripes, #tc, #twilio, #union-square-ventures, #wayfair, #y-combinator

Sales scheduling platform Chili Piper raises $33M Series B funding led by Tiger Global

Chili Piper, which has a sophisticated SaaS appointment scheduling platform for sales teams, has raised a $33 million B round led by Tiger Global. Existing investors Base10 Partners and Gradient Ventures (Google’s AI-focused VC) also participated. This brings the company’s total financing to $54 million. The company will use the capital raised to accelerate product development. The previous $18M A round was led by Base10 and Google’s Gradient Ventures 9 months ago.

It’s main competitor is Calendly, started 21/2 years previously, which recently achieved a $3Bn valuation.

Launched in 2016, Chili Piper’s software for B2B revenue teams is designed to convert leads into attended meetings. Sales teams can also use it to book demos, increase inbound conversion rates, eliminate manual lead routing, and streamline critical processes around meetings. It’s used by Intuit, Twilio, Forrester, Spotify, and Gong.

Chili Piper has a number of different tools for businesses to schedule and calendar accountments, but its key USP is in its use by ‘inbound SDR Sales Development Representatives (SDR)’, who are responsible for qualifying inbound sales leads. It’s particularly useful in scheduling calls when customers hit websites ask for a salesperson to call them back.

Nicolas Vandenberghe, CEO, and co-founder of Chili Piper said: “When we started we sold the house and decided to grow the company ourselves. So all the way until 2019 we bootstrapped. Tiger gave us a valuation that we expected to get at the end of this year, which will help us accelerate things much faster, so we couldn’t refuse it.”

Alina Vandenberghe, CPO, and Co-founder said: “We’re proud to have so many customers scheduling meetings and optimizing their calendars with Chili Piper’s Instant Booker.”

The husband-and-wife founded company has was fully remote from day one, with 93 employees in 81 cities and 21 countries, long before the pandemic hit.

John Curtius, Partner at Tiger Global said: “When we met Nicolas and Alina, we were fired up by their product vision and focus on customer happiness.”

TJ Nahigian, Managing Partner at Base10 Partners, added: “We originally invested in Chili Piper because we knew customers needed ways to add fire to how they connected with inbound leads. We’ve been absolutely blown away with the progress over the past year, 2020 has been a step-change for this company as business went remote.”

#artificial-intelligence, #base10-partners, #co-founder, #europe, #food-and-drink, #forrester, #gradient-ventures, #intuit, #lead-generation, #managing-partner, #marketing, #sales, #spotify, #tc, #tiger-global, #twilio

Twilio to become minority owner in Syniverse Technologies with $750M investment

Syniverse Technologies, a company that helps mobile providers move communications across public and private networks, announced an extensive partnership with Twilio this morning. Under the agreement, Twilio is investing up to $750 million to become a minority owner in the company.

The idea behind the partnership is to combine Twilio’s API communications expertise with Syniverse’s mobile carrier contacts to create this end-to-end communications system. Twilio’s strength has always been its ability to deliver communications like texts without having a carrier relationship. This deal gives them access to that side of the equation.

James Attwood, executive chairman at Syniverse certainly saw the value of the two companies working together. “The partnership will provide Syniverse access to Twilio’s extensive enterprise and API services expertise, creating opportunities to continue to build on Syniverse’s highly innovative product portfolio that helps mobile network operators and enterprises make communications better for their customers,” Atwood said in a statement.

Today’s deal comes on the heels of the company’s $3.2 billion acquisition of Segment at the end of last year as it continues to look for ways to expand its markets. Will Townsend, an analyst at Moor Insight & Strategy who covers the network and carrier markets, sees this deal giving Twilio access to a broader set of technologies.

“Twilio [gets] access to Syniverse’s significant capabilities in massive industrial IoT and private 4G LTE and 5G cellular networking. Both are poised to ramp significantly given new found enterprise access to licensed spectrum via recent C-Band and CBRS auctions,” Townsend told me. He believes this will help Twilio reach parts of the enterprise not connected by WiFI or where the customers are dealing with “a mishmash of solutions that don’t scale or propagate well.”

As it turns out, it’s not a coincidence the two companies are coming together like this. In fact, Twilio has been a Syniverse customer for some time, according to Chee Chew, chief product officer at Twilio.

It’s a case of an old school company like Syniverse, which was founded in 1987 combining forces with a more modern approach to communications like Twilio, which provides developers with APIs to deliver communications services inside applications with just a couple of lines of code.

The Wall Street Journal, which broke the news of this deal, is also reporting the company could go public via SPAC at a value of between $2 and $3 billion some time later this year. That would suggest that it has not gained much value since the 2010 deal.

Holger Mueller, an analyst at Constellation Research, says the SPAC provides an interesting additional component to the deal. “The high flying stock market creates all kind of new chickens, one of the, being a SPAC, and that’s the financial opportunity that Twilio is likely pursuing with the investment into Syniverse. The more immediate benefit is for Twilio to use the messaging vendor for its services. Call it a partnership with investment upside,” Mueller said.

According to Syniverse, “the company is one of the largest private IP Packet Exchange (IPX) providers in the world and offers a range of networking solutions, excelling in scenarios where seamless connections must cross over networks – either across multiple private networks or between public and private networks.”

The company is currently owned by the Carlyle Group private equity firm, which bought it in 2010 for $2.6 billion. Twilio launched in 2008 and raised over $236 million before going public in 2016 at $15 per share. The stock was up 3.82% in early trading, suggesting that Wall Street approves of the deal.

#apis, #developer, #enterprise, #investment, #mobile, #networking, #syniverse-technologies, #tc, #twilio

How to overcome the challenges of switching to usage-based pricing

The usage-based pricing model almost feels like a cheat code — it enables SaaS companies to more efficiently acquire new customers, grow with those customers as they’re successful and keep those customers on the platform.

Compared to their peers, companies with usage-based pricing trade at a 50% revenue multiple premium and see 10pp better net dollar retention rates.

But the shift from pure subscription to usage-based pricing is nearly as complex as going from on-premise to SaaS. It opens up the addressable market by lowering the purchase barrier, which then necessitates finding new ways to scalably acquire users. It more closely aligns payment with a customer’s consumption, thereby impacting cash flow and revenue recognition. And it creates less revenue predictability, which can generate pushback from procurement and legal.

SaaS companies exploring a usage-based model need to plan for both go-to-market and operational challenges spanning from pricing to sales compensation to billing.

Selecting the right usage metric

There are numerous potential usage metrics that SaaS companies could use in their pricing. Datadog charges based on hosts, HubSpot uses marketing contacts, Zapier prices by tasks and Snowflake has compute resources. Picking the wrong usage metric could have disastrous consequences for long-term growth.

The best usage metric meets five key criteria: value-based, flexible, scalable, predictable and feasible.

  • Value-based: It should align with how customers derive value from the product and how they see success. For example, Stripe charges a 2.9% transaction fee and so directly grows as customers grow their business.
  • Flexible: Customers should be able to choose and pay for their exact scope of usage, starting small and scaling as they mature.
  • Scalable: It should grow steadily over time for the average customer once they’ve adopted the product. There’s a reason why cell phone providers now charge based on GB of data rather than talk minutes — data volumes keep going up.
  • Predictable: Customers should be able to reasonably predict their usage so they have budget predictability. (Some assistance may be required during the sales process.)
  • Feasible: It should be possible to monitor, administer and police usage. The metric needs to track with the cost of delivering the service so that customers don’t become unprofitable.

Navigating enterprise legal and procurement teams

Enterprise customers often crave price predictability for annual budgetary purposes. It can be tough for traditional legal and procurement teams to wrap their heads around a purchase with an unspecified cost. SaaS vendors must get creative with different usage-based pricing structures to give enterprise customers greater peace of mind.

tips for navigating legal and procurement teams

Image Credits: Kyle Poyar

Customer engagement software Twilio offers deeper discounts when a customer commits to usage for an extended period. AWS takes this a step further by allowing a customer to commit in advance, but still pay for their usage as it happens. Data analytics company Snowflake lets customers roll over their unused usage credits as long as their next year’s commitment is at least as large as the prior one.

Handling overages

Nobody wants to see a shock expense when they’ve unknowingly exceeded their usage limit. It’s important to design thoughtful overage policies that give customers the feeling of control over how much they’re spending.

#cloud, #column, #datadog, #ec-cloud-and-enterprise-infrastructure, #ec-column, #ec-how-to, #hubspot, #saas, #software-as-a-service, #stripe, #twilio

Sinch acquires Inteliquent for $1.14B to take on Twilio in the US

After raising $690 million from SoftBank in December to make acquisitions, the Sweden-based cloud communications company Sinch has followed through on its strategy in that department. Today the company announced that it is acquiring Inteliquent, an interconnection provider for voice communications in the U.S. currently owned by private equity firm GTCR, for $1.14 billion in cash.

And to finance the deal, Sinch said it has raised financing totaling SEK8.2 billion — $986 million — from Handelsbanken and Danske Bank, along with other facilities it had in place.

The deal will give Sinch — a competitor to Twilio with a range of messaging, calling and marketing (engagement) APIs for those building communications into their services in mobile apps and other services — a significant foothold in the U.S. market.

Inteliquent — a profitable company with 500 employees and revenues of $533 million, gross profit of $256 million, and Ebitda of $135 million in 2020 — claims to be one of the biggest voice carriers North America, serving both other service providers and enterprises. Its network connects to all the major telcos, covering 94% of the U.S. population, with more than 300 billion minutes of voice calls and 100 million phone numbers handled annually for customers.

Sinch is publicly traded in Sweden — where its market cap is current at $13 billion (just over 108 billion Swedish krona) — and the acquisition begs the question of whether the company plans to establish more of a financial presence in the U.S., for example with a listing there. We have asked the company what its next steps might be and will update this post as and when we learn more.

“Becoming a leader in the U.S. voice market is key to establish Sinch as the leading global cloud communications platform,” said Oscar Werner, Sinch CEO, in a statement. “Inteliquent serves the largest and most demanding voice customers in America with superior quality backed by a fully-owned network across the entire U.S.. Our joint strengths in voice and messaging provide a unique position to grow our business and power a superior customer experience for our customers.”

Inteliquen provides two main areas of service, Communications-Platform-as-Service (CPaaS) for API-based services to provide voice calling and phone numbers; and more legacy Infrastructure-as-a-Service (IaaS) products for telcos such as off-net call termination (when a call is handed off from one carrier to another) and toll-free numbers. These each account for roughly half of the total business although — unsurprisingly — the CPaaS business is growing at twice the rate of IaaS.

Its business, like many others focusing on services for people who are relying more on communications services as they are seeing each other in person less — saw a surge of use this past year, it said. (Revenues adjusted without Covid lift, it noted, would have been $499 million, so still healthy.)

As for Sinch, since spinning out from Rebtel in 2014 to take on the business of providing comunications tools to developers, it has been on an acquisition roll to bulk up its geographical reach and the services that it provides to those customers.

Deals have included, most recently, buying ACL in India for $70 million and SAP’s digital interconnect business for $250 million. The deals — combined with Twilio’s own acquisitions of companies like Sendgrid for $2 billion and last year’s Segment for $3.2 billon, speak both to the bigger trend of consolidation in the digital (API-based) communications space, as well as the huge value that is contained within it.

Inteliquent itself had been in private equity hands before this, controlled by GTCR based in Chicago, like Inteliquent itself. According to PitchBook, its most recent financing was a mezzanine loan from Oaktree Capital in 2018 for just under $19 million.

Interestingly, Inteliquent itself has been an investor in innovative communications startups, participating in a Series B for Zipwhip, a startup that is building better ways to integrate mobile messaging tools into landline services.

“We’re excited about the tremendous opportunities this combination unlocks, expanding the services we can provide to our customers. Combining our leading voice offering with Sinch’s global messaging capabilities truly positions us for leadership in the rapidly developing market for cloud communications“, comments Ed O’Hara, Inteliquent CEO, in a statement.

#api, #commuinications, #enterprise, #europe, #fundings-exits, #inteliquent, #sinch, #telecoms, #twilio

Citadel ID raises $3.5M for API-delivered income and employment verification

This morning Citadel ID announced a combined $3.5 million raise for its income and employment verification service. The startup provides an API to customer companies, allowing them to rapidly verify details of consumer employment.

The capital came from a blend of venture firms and angels. On the firm side, Abstract and Soma VC were in there, along with ChapterOne. Brianne Kimmel put capital in as well, according to the startup. And denizens with work histories at companies like Zynga (Mark Pincus), Stripe (Lachy Groom), Carta (Henry Ward), and others also put cash into the fundraise.

Citadel was founded back in June of 2020, before raising capital, snagging its first customer, and shipping its product all inside of the same year.

The idea for Citadel ID came when co-founder Kirill Klokov worked at Carta, the cap-table-as-a-service startup that recently built an exchange for the trading of private stock. Klokov discovered while working on the tech side of the company how hard it was to verify certain data, like employment and income and identity.

As Carta deals with money, stock, and the collection and distribution of both, you can imagine why having having a quick way to verify who worked where, and since when, mattered to the company. But Klokov came to realize that there wasn’t a good solution in the market for what Carta needed, sans building integrations to a host of payroll managers by hand and dealing with lots of data with varying taxonomies. That or using an in-the-market product, like Equifax’s The Work Number, which the founder described as expensive and offering relatively low coverage.

To fill the market void Klokov helped found Citadel ID, quickly building integrations into payrolls managers where there were hooks for code, and working around older login systems when needed. Citadel ID’s service allows regular folks to provide access to their employment data to others, allowing for the verification of their income (a rental group, perhaps), or employment (Carta, perhaps) quickly.

Per the startup the market demand for such verifications is in the hundreds of millions every year in the United States. So, Citadel should have plenty of market space to grow into. Citadel ID has around 20 customers today, it told TechCrunch, and charges on a per verification basis.

Finally, while Citadel also offers data via its website and not merely through its API, the startup still fits inside the growing number of startups we’ve seen in recent quarters foregoing traditional SaaS, and instead offering their products via a developer hook (sometimes referred to as a ‘headless’ approach). API-delivered startups are not new, after all Twilio went public years ago. But their model of product delivery feels like its gaining momentum over managed software offerings.

Let’s see how quickly Citadel ID can scale before it raises its Series A.

#brianne-kimmel, #business, #carta, #citadel-id, #co-founder, #companies, #computing, #entrepreneurship, #equifax, #fundings-exits, #henry-ward, #human-resources, #lending, #mark-pincus, #private-equity, #rental, #startup-company, #startups, #stripe, #tc, #twilio, #united-states, #verification, #zynga

Twilio CEO Jeff Lawson says wisdom lies with your developers

Twilio CEO Jeff Lawson knows a thing or two about unleashing developers. His company has garnered a market cap of almost $60 billion by creating a set of tools to make it easy for programmers to insert a whole host of communications functionality into an application with a couple of lines of code. Given that background, perhaps it shouldn’t come as a surprise that Lawson has written a book called “Ask Your Developer,” which hit the stores this week.

Lawson’s basic philosophy is that if you can build it, you should.

Lawson’s basic philosophy in the book is that if you can build it, you should. In every company, there is build versus buy calculus that goes into every software decision. Lawson believes deeply that there is incredible power in building yourself instead of purchasing something off the shelf. By using components like the ones from his company, and many others delivering specialized types functionality via API, you can build what your customers need instead of just buying what the vendors are giving you.

While Lawson recognizes this isn’t always possible, he says that by asking your developers, you can begin to learn when it makes sense to build and when it doesn’t. These discussions should stem from customer problems and companies should seek digital solutions with the input of the developer group.

Building great customer experiences

Lawson posits that you can build a better customer experience because you understand your customers so much more  acutely than a generic vendor ever could. “Basically, what you see happening across nearly every industry is that the companies that are able to listen to their customers and hear what the customers need and then build really great digital products and experiences — well, they tend to win the hearts, minds and wallets of their customers,” Lawson told me in an interview about the book this week.

Billboard for book Ask your Developer by Jeff Lawson, CEO of Twilio

Image Credits: Twilio (image has been cropped)

He says that this has caused a shift in how companies perceive IT departments. They have gone from cost centers that provision laptops and buy HR software to something more valuable, helping produce digital products that have a direct impact on the business’s bottom line.

He uses banking as an example in the book. It used to be you judged a bank by a set of criteria like how nice the lobby was, if the tellers were friendly and if they gave your kid a free lollipop. Today, that’s all changed and it’s all about the quality of the mobile app.

“Nowadays your bank is a mobile app and you like your bank if the software is fast, if it is bug free and if they regularly update it with new features and functionality that makes your life better [ … ]. And that same transformation has been happening in nearly every industry and so when you think about it, you can’t buy differentiation if every bank just bought the same mobile app from some vendor and just off the shelf deployed it,” he said.

#cloud, #developer, #enterprise, #jeff-lawson, #tc, #twilio

How Segment redesigned its core systems to solve an existential scaling crisis

Segment, the startup Twilio bought last fall for $3.2 billion, was just beginning to take off in 2015 when it ran into a scaling problem: It was growing so quickly, the tools it had built to process marketing data on its platform were starting to outgrow the original system design.

Inaction would cause the company to hit a technology wall, managers feared. Every early-stage startup craves growth and Segment was no exception, but it also needed to begin thinking about how to make its data platform more resilient or reach a point where it could no longer handle the data it was moving through the system. It was — in a real sense — an existential crisis for the young business.

The project that came out of their efforts was called Centrifuge, and its purpose was to move data through Segment’s data pipes to wherever customers needed it quickly and efficiently at the lowest operating cost.

Segment’s engineering team began thinking hard about what a more robust and scalable system would look like. As it turned out, their vision would evolve in a number of ways between the end of 2015 and today, and with each iteration, they would take a leap in terms of how efficiently they allocated resources and processed data moving through its systems.

The project that came out of their efforts was called Centrifuge, and its purpose was to move data through Segment’s data pipes to wherever customers needed it quickly and efficiently at the lowest operating cost. This is the story of how that system came together.

Growing pains

The systemic issues became apparent the way they often do — when customers began complaining. When Tido Carriero, Segment’s chief product development officer, came on board at the end of 2015, he was charged with finding a solution. The issue involved the original system design, which like many early iterations from startups was designed to get the product to market with little thought given to future growth and the technical debt payment was coming due.

“We had [designed] our initial integrations architecture in a way that just wasn’t scalable in a number of different ways. We had been experiencing massive growth, and our CEO [Peter Reinhardt] came to me maybe three times within a month and reported various scaling challenges that either customers or partners of ours had alerted him to,” said Carriero.

The good news was that it was attracting customers and partners to the platform at a rapid clip, but it could all have come crashing down if the company didn’t improve the underlying system architecture to support the robust growth. As Carriero reports, that made it a stressful time, but having come from Dropbox, he was actually in a position to understand that it’s possible to completely rearchitect the business’s technology platform and live to tell about it.

“One of the things I learned from my past life [at Dropbox] is when you have a problem that’s just so core to your business, at a certain point you start to realize that you are the only company in the world kind of experiencing this problem at this kind of scale,” he said. For Dropbox that was related to storage, and for Segment it was processing large amounts of data concurrently.

In the build-versus-buy equation, Carriero knew that he had to build his way out of the problem. There was nothing out there that could solve Segment’s unique scaling issues. “Obviously that led us to believe that we really need to think about this a little bit differently, and that was when our Centrifuge V2 architecture was born,” he said.

Building the imperfect beast

The company began measuring system performance, at the time processing 8,442 events per second. When it began building V2 of its architecture, that number had grown to an average of 18,907 events per second.

#cloud, #customer-data-platforms, #enterprise, #segment, #tc, #technical-debt, #twilio

Inside Affirm’s IPO filing: A look at its economics, profits and revenue concentration

Last night Affirm filed to go public, herding yet another unicorn into the end-of-year IPO corral. The consumer installment lending service joins DoorDash and Airbnb in filing recently, as a number of highly valued, venture-backed private companies look to float while the public markets are more interested in growth than profits.

TechCrunch took an initial dive into Affirm’s numbers yesterday, so if you need a broad overview, please head here.

This morning we’re going deeper into the company’s economics, profitability and the impact of COVID-19 on its business. The last element of our investigation involves Peloton and the historical examples of Twilio and Fastly, so it should be fun.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.


Affirm is a company that TechCrunch has long tracked. I was assigned an interview with founder Max Levchin at Disrupt 2014, giving me a reason to pay extra attention to the company over the last six years. This S-1 has been a long time coming.

But is Affirm another pandemic-fueled company going public on the back of a COVID-19 bump, or are its business prospects more durable?

Let’s get into the numbers.

Economics

First, let’s discuss Affirm’s core economics. I want to know three things:

  • What does Affirm’s loss rate on consumer loans look like?
  • Are its gross margins improving?
  • What does the unicorn have to say about contribution profit from its loans business?

These are related questions, as we’ll see.

Starting with loss rates, Affirm thinks it is getting smarter over time, writing in its S-1 that its “expertise in sourcing, aggregating, protecting and analyzing data” provides it with a “core competitive advantage.” Or, more simply, Affirm writes that it has “data advantages that compound over time.”

So we should see improving loss rates, yeah? And we do. The company has a very pretty chart up top in its IPO filing that makes its model’s improvement appear staggeringly good over time:

Image Credits: Affirm

But, things aren’t improving as fast inside its results, as Affirm later explains when discussing its aggregate, as opposed to cohort-delineated, results.

Here’s Affirm discussing its provision for credit losses in its most recent quarter (calendar Q3 2020) and the period’s year-ago analog (calendar Q3 2019):

Image Credits: Affirm

As we can see, the percentage of total revenue that Affirm has to provision for expected credit losses is going down over time. That’s what you’d hope to see.

To better explain what’s going on, let’s explore what Affirm means by “provision for credit losses.” Affirm defines the metric as “the amount of expense required to maintain the allowance of credit losses on our balance sheet which represents management’s estimate of future losses,” which is “determined by the change in estimates for future losses and the net charge offs incurred in the period.”

And it got quite a lot better in the last year, which the company says was “driven by lower credit losses and improved credit quality of the portfolio.” So, Affirm is getting better at lending as time goes along. What does that mean for its gross margins?

Well, Affirm doesn’t provide direct gross margin results. So we’re left to do the work ourselves. For reference, this is the income statement we’re working off of:

Image Credits: Affirm

Fun, right? Annoying, but fun.

How should we calculate the company’s gross margins? We can’t drill down on a per-product basis given that costs aren’t apportioned in a manner that would allow us to, so we’ll have to take Affirm’s revenue as a bloc, and its costs as a bloc as well.

#affirm, #airbnb, #ecommerce, #finance, #fundings-exits, #peloton, #startups, #tc, #the-exchange, #tiktok, #twilio