Category: TECHNOLOGY
How to run growth marketing during a recession
They say pressure makes diamonds. I’d say that’s also true for recessions creating amazing startups. Airbnb, Uber and Groupon are great examples of companies that emerged during the recession in 2008.
How does one build, scale and navigate the headwinds of a recession, especially as consumer behavior changes dramatically? That’s without even going into the complexities of 2022, such as the degradation of ad targeting (due to Apple’s App Tracking Transparency program) and post-pandemic behavioral shifts.
But there is a path we can follow to strategize and execute during a recession — my Triple R model: Re-forecast, re-prioritize and refine.
Re-forecast your models
If new channels and major experiments were in the picture, it’s probably best to shelve those for when the markets recover.
It’s no secret that average revenue per user (ARPU) is dropping at companies across the board. A prime example is the stock-trading platform, Robinhood, which reported an ARPU decline of 62% — that’s $53 compared to a high of $137 during the first quarter of 2021.
That’s a massive decline. If Robinhood was once comfortable acquiring users at $137 to break even, it would now be acquiring users at nearly three times the revenue it brings in.
A simulation of Robinhood’s CAC/ARPU by channel. Image Credits: Jonathan Martinez
In the chart above, ARPU drops from $137 to $53. More specifically, the colored bubbles represent channels and their CAC/ARPU relationships. Robinhood was acquiring users in the $130 CAC range and expecting ARPU of $137. The shift in these channels depicts how CAC remains constant while ARPU drops.
https://techcrunch.com/2022/08/02/how-to-run-growth-marketing-during-a-recession/
Sprig raises $30M to help companies gauge users’ reactions to products
Sprig, a startup offering tools for user and software product research, today announced that it raised $30 million in a funding round from Andreessen Horowitz, Accel, First Round Capital, Elad Gil and Figma Ventures. It brings the company’s total raised to $90 million, which CEO Ryan Glasgow says is being put toward expanding Sprig’s service line, support sales and marketing efforts, and dedicating resources to integrations and partnerships.
Glasgow founded Sprig in 2019. Prior to starting the company, he was an early team member and product manager at website builder Weebly and search app Vurb. While at Weebly, Glasgow says he realized how difficult it was to research across the product development life cycle, especially when timelines are tight and research resources are in high demand.
“While I had access to a variety of tools ranging from product analytics and A/B testing to feature flagging and roadmaps, I lacked a tool that would make it fast and effortless to understand [Weebly’s] customers in real-time,” he told TechCrunch. “I knew there was a better way, and in January 2019, I started Sprig, then called UserLeap.”
To Glasgow’s point, public metrics suggest that user experience research is rarely prioritized. A 2019 survey from UserZoom found that companies struggle to integrate user research into product development and that budgets remain stagnant, even as the majority of CEOs see user and customer experience as a competitive differentiator. According to one report, only 55% of companies currently conduct any user experience testing — despite the fact that every dollar invested in user experience is estimated to net a $100 return, a Forrester Research study found.
Image Credits: Sprig
Sprig provides surveys and templates for research teams conducting user experience studies. But it also goes beyond this, analyzing open-ended question responses in the surveys to summarize the results into themes. Leveraging AI, Sprig recognizes “thematic similarities” between the answers, Glasgow said — even in the absence of overlapping words and phrases.
“Sprig’s surveys are built on an events-based architecture to trigger based on specific actions or inactions (e.g., dropped out of onboarding, didn’t use a specific feature) and user characteristics (e.g,. plan type or geography) after a low or no code one-time integration,” Glasgow explained. “Companies operating at … scale often consider building an in-house survey tool, which requires a dedicated team of engineers to operate and maintain it. With the cost of a fully loaded engineer costing upwards of $200,000 annually, investing in Sprig is a no-brainer.”
Indeed, research is often costly — software-as-a-service companies spend an estimated 23% of their revenue on R&D, for example — and there’s no guarantee it’ll lead to a successful outcome. Forty-two percent of companies in a recent CB Insights poll cited “no market need” as the reason that one of their products failed to gain traction.
Sprig recently launched Concept & Usability Testing, a service that allows companies to test ideas, concepts, designs and prototypes before …read more
Shopify makes $100M strategic investment in marketing automation startup Klaviyo
E-commerce marketing automation platform Klaviyo has received a $100 million strategic investment from Shopify, according to documents filed with the U.S. Securities and Exchange Commission. The disclosure coincided with the announcement that Klaviyo and Shopify will strengthen their existing partnership by making Klaviyo the recommended email product for Shopify’s premium merchant plan, Shopify Plus, while granting Klaviyo early access to in-development Shopify features.
“We’ve been working closely with Shopify for years and this is a great next step,” Klaviyo CEO Andrew Bialecki told TechCrunch via email. “I’ve talked with their product team and CEO many times — they’re big believers in our mission of empowering creators and they have a lot of respect for the products we’ve built and our customer-first, product-led culture. Shopify’s been key to our growth and a great team to work with and we’re excited that this will help us go faster in helping more of their customers.”
Founded in 2012, Boston-based Klaviyo — which TechCrunch has profiled extensively — integrates with existing platforms (e.g., Octane AI, Recharge) to automate the sending of emails and text messages to customers. Using Klaviyo, businesses can set up triggers for messages about abandoned carts, product recommendations and more, leveraging an array of templates and predictive analytics tools.
There’s no shortage of competition in the marketing automation tech space (see Sendlane, Sendinblue and Cordial to name a few). But Klaviyo has done incredibly well for itself, reaching over 100,000 paying customers including Unilever, Dermalogica, Solo Stove and Citizen Watches.
To date, Klaviyo, which has over 1,000 employees, has raised around $775 million. As of May 2021, the startup was valued at $9.5 billion by investors including Sands Capital, Counterpoint Global, Accel and Summit Partners.
For Shopify, Klaviyo is the latest in a string of investments and acquisitions aimed at broadening the e-commerce platform’s reach. In May, Shopify snapped up shipping logistics startup Deliverr for $2.1 billion — the largest purchase in Shopify’s history — to launch an “end-to-end” logistics platform for merchants. Just this week, Shopify invested in Single, a music and video app used by many businesses on Shopify, following an equity pledge in CMS developer Sanity.
To the extent that they have a focus, Shopify’s past year of investments have leaned in the direction of recommendations and martech. Last September, Shopify put money toward and entered into a partnership with Yotpo, which provides marketing tools and products for consumer sellers. The e-commerce giant more recently injected capital into Crossing Minds, a startup offering a platform that delivers “personalized experiences” ostensibly without using personal data.
There’s certainly pressure on Shopify to better weather what’s likely to be an extended economic downturn. Last month, the company laid off 10% of its workforce — about 1,000 employees — in what CEO and founder Tobi Lütke described as a “necessary” move in response to users pulling back on online orders and returning to old shopping habits. …read more
Kenyan logistics startup Sendy cuts 10% of its workforce
Kenyan logistics startup Sendy has laid off 10% of its 300-strong workforce, or 30 employees, according to pan-African news publication TechCabal. This is the latest public layoff news from Africa over the past couple of months after Swvl, Vezeeta and Wave trimmed their staff sizes to reduce costs amid a series of global downturn and venture capital slowdown events.
In a statement, CEO Mesh Alloys said Sendy made this decision in June in response to the “current realities impacting tech companies globally.” He further stated that it was in July that the company downsized its workforce, “which affected 10% of our headcount.”
Alloys co-founded Sendy in 2015 with Kenyans Evanson Biwott, Don Okoth and American Malaika Judd. As of 2020, the startup had over 5,000 vehicles on its platform that move all sorts of goods. Sendy offers e-commerce, enterprise and freight delivery services for a client list that includes Unilever, DHL, Maersk, Safaricom and African online retailer Jumia. The company uses an asset-free model, with an app that coordinates contract drivers who own their vehicles while confirming deliveries, creating performance metrics and managing payment. Some of its competitors include Goldman Sachs-backed Kobo360 and Chinese-backed Lori Systems.
In 2021, Judd told Bloomberg that the Kenyan startup, which facilitates door-to-door deliveries between individuals and businesses, was seeking to raise $100 million this year to fund its expansion plans into western and southern Africa (particularly Nigeria, Ghana and South Africa) and Egypt.
However, judging by its Crunchbase profile, that money is yet to be raised. The logistics company has received over $26 million from investors, including its $20 million Series B round in 2020 from Atlantica Ventures and Toyota Tsusho Corporation, a trade and investment arm of Japanese automotive company Toyota. Also, some of its expansion plans have been shelved. According to TechCabal, a source said Sendy, which currently operates in Nigeria, Kenya, Ivory Coast and Uganda, will be halting its expansion into Egypt and South Africa.
The rest of the statement addressing the layoffs reads: “This move was done in full adherence to applicable laws and industry best practice. All employment and contractual terminal benefits were duly paid to every affected employee. Our staff have always been our biggest asset as a company. We have always valued their diverse talents and, more critically, their welfare. Decisions impacting them are not taken lightly. We will continue to focus on creating solutions for businesses across the continent in line with our mission of empowering people and businesses by making it easier to trade.”
https://techcrunch.com/2022/08/02/kenyan-logistics-startup-sendy-cuts-10-of-its-workforce/
French iOS developers file antitrust suit over Apple’s App Store fees
Apple is facing yet another antitrust lawsuit over its App Store fees, this time filed by a group of French iOS app developers who are suing the tech giant in its home state of California. The plaintiffs are accusing Apple of anticompetitive practices in allowing only one App Store for iOS devices, which gives it a monopoly in iOS app distribution and the ability to force developers to pay high commissions on in-app purchases.
The complaint argues that these commissions, on top of Apple’s $99 annual developer program fees, cut into developers’ earnings and stifle innovation — and yet developers aren’t permitted to offer alternative payment methods per Apple’s App Store rules nor can they distribute their apps to iOS users outside of the App Store, despite Apple allowing this on Mac computers.
The case is now one of several antitrust legal battles Apple is facing, including the high-profile lawsuit with Fortnite maker Epic Games, which is under appeal and another by alternative app store Cydia.
The iOS developers in the suit include France-based developers Société du Figaro, the developer of the Figaro news app; L’Équipe 24/24, the developer of L’Équipe sports news and streaming app; and le GESTE, a French association comprised of France-based publishers of online content and services, including iOS app developers.
The group is being represented by U.S.-based Hagens Berman law firm, which last year won a $100 million settlement against Apple over App Store policies and recently filed a $1 billion case against Apple over antitrust issues with Apple Pay.
Hagens Berman’s managing partner Steve Berman has a history of winning against the tech giants, having secured a $560 million settlement against Apple regarding e-book price-fixing and a $90 million settlement on behalf of Android developers. He’s working with Paris-based antitrust lawyer Fayrouze Masmi-Dazi on the proposed class action lawsuit.
“We’re fresh off the heels of our hard-won settlement with Apple and ready to get back in the ring,” said Berman, in a statement. “Our firm is happy to see iOS developers from other countries seeking the same justice we were able to achieve for U.S. developers. We believe they too have been wrongfully subjected to the stifling policies of Apple’s App Store, and we intend to hold Apple to the law.”
The suit aims to force Apple to allow competition in iOS app distribution and remove pricing mandates which restrict developers from setting their own rates for in-app purchases. It also wants to Apple to reimburse developers for “overcharges,” and prevent Apple from raising the current 15% commission for developers in its Small Business Program for at least three years.
In addition, the proposed settlement would allow Apple’s U.S. iOS developers to communicate with their customers outside their apps about other ways to purchase beyond Apple’s in-app purchase system. Developers would be allowed to communicate with customers using information collected by their apps, subject to consumer consent and opt-outs. Apple, however, already announced a settlement that allows such …read more
Human cyborgs, passion economy and more — check out these Disrupt roundtable winners
Roundtable discussions are a huge and popular part of TechCrunch Disrupt, and this year, we asked you to vote for the topics you want to learn about most. We’ve already announced the first and the second groups of winners from our Audience Choice vote-a-thon, and we’re back with a third wave of exciting topics.
If you’re not familiar with them, roundtables are 30-minute, expert-led discussions designed for up to 20 attendees who share an interest in a particular subject. The format allows for deeper conversation, questions and answers and time for attendees to connect and explore collaborative opportunities.
Of course, if you want to participate in any of these awesome discussions, you’ll need a pass. Hot tip: You can save more than $1,000 — if you buy your pass to Disrupt before prices go up on Friday, August 5 at 11:59 pm PT.
These five roundtables represent a diverse range of topics, including why having genuine passion for your industry gives you a competitive edge, how to use flat wins to overcome obstacles, how to scale products that have never existed, how to price for competitive advantage and the challenge of raising up-front capital to build as-yet proven technology.
Love What You Do: Lessons from the passion economy
Speaker: Robin Åström, the co-founder and CEO at Wehype
In this roundtable session, Robin Åström, co-founder and CEO of Wehype, an influencer marketing platform and agency, will lead a discussion on how the passion economy has democratized the ability to make money from creativity — and at scale. He’ll also talk about why it’s important that startup founders operate within industries they are genuinely, deeply passionate about.
Robin will draw on his experience of turning his gaming obsession into a competitive edge. He identified and filled a gap in the gaming influencer market with co-founders he met playing Counter-Strike as a teenager.
Their love of gaming gave them the extra motivation to overcome challenges, allowing them to build Wehype into a rapidly growing and profitable business working with some of the world’s biggest brands, including EA, Microsoft and Ubisoft.
The value of flat wins
Speaker: Alex Hersham, the co-founder and CEO at Zencargo
Founding a business can be one of the most rewarding and gratifying things a person does, but there will always be difficult challenges to overcome. By adopting the concept of flat wins — celebrating when you find a solution and returning to where you started after a period of difficulty — within your operations, you can stay on track and push through the obstacles you face.
In this roundtable session, Zencargo’s Alex Hersham will lead a discussion about how flat wins have shaped his mentality and created resilience in his mindset as a founder. Hersham’s touch points will include:
- Defining flat wins and examining the psychology behind them
- Examples of how flat wins shaped both his career and the success of his company
- How flat wins can create resilience not just in founders, but across entire …read more
Uber turns the corner, generates massive pile of free cash flow in Q2
The question of whether Uber would be able to self-support was at least partially answered Tuesday with the company’s second quarter earnings report.
In its Q2 digest, the American ride-hailing and food delivery giant reported positive free cash flow, indicating that it can now self-fund, putting to rest — at least in today’s market — lingering concerns that it would one day run out of cash.
The former unicorn and present-day public company traded sharply higher in pre-market trading after reporting its second-quarter financial performance. Shares are now up 14.4% as of 10:30 a.m. EDT.
That Uber was able to generate free cash flow in the second quarter should not be entirely surprising; the company’s first quarter numbers included positive operating cash flow and sharply less negative free cash flow. Operating cash flow indicates how much a business’s operations consumed, or generated cash, while free cash flow is the same metric, less capital expenses.
Free cash flow is not profitability in traditional terms, as other expenses, including the non-cash cost of share-based employee compensation and changes in the value of equity investments, come into play.
Uber was unprofitable in net income terms in the second quarter. Still, positive free cash flow and other signs of health were more than enough to put wind in Uber’s sails — gas in its tank? electrons in its battery?
Let’s talk about the results.
Uber’s second quarter
In the three months ending June 30, Uber’s gross bookings — the value of all commerce executed on its platform — rose 33% to $29.1 billion from $21.9 billion in the year-ago Q2. From that total volume, Uber generated revenues of $8.1 billion, up 105% from its year-ago revenues of $3.9 billion in the same period.
The company’s revenue growth was impacted, the company notes, by “a change in the business model for our U.K. Mobility business and the acquisition of Transplace by Uber Freight,” so we should read the percentage-growth figure for Uber’s top line with a grain of salt.
Regardless, the company’s gross bookings expansion and resulting revenue lift provided operating leverage. Uber’s adjusted EBITDA rose from -$509 million in Q2 2021 to $364 million in Q2 2022. Similarly, Uber’s free cash flow rose from -$398 million in the year-ago quarter to $382 million in the second quarter of 2022.
Ride-hailing vs. delivery
Notably Uber’s growth engine has once again flipped. Before the pandemic, Uber’s ride-hailing business was its leading unit. However, during early COVID-19-impacted quarters, Uber’s food delivery business took over as its growth driver.
Now with the pandemic waning in economic terms, the company’s expansion driver has once again changed hands, with ride-hailing gross bookings rising 120% in the second quarter on a year-over-year basis, and its food delivery gross bookings rising a more modest 7%.
Delivery still hung on as the unit leader, in terms of gross bookings, a smidge ahead of ride-hailing and far beyond its Freight …read more
I’m so over customer experience surveys
I’m sick and tired of being surveyed after every interaction with anyone these days, whether it’s my dentist, an airline or Home Depot.
A few weeks ago, I bought a spray nozzle for $5. I got an email survey from Home Depot asking how my experience was.
It was life-changing: I went into my local store, found my way to the garden center, looked at the selection and chose one. I went to the register and paid, and then I drove home. I was glowing for days. It was the best big box experience of my life.
It’s worth noting that Home Depot sees value in sending out these surveys. “We want to give customers every opportunity to share feedback on their experiences with us. Customers can always opt out, but by asking questions directly, even about small purchases, we can gain insights that make our shopping experience more seamless and convenient,” spokesperson George Lane told TechCrunch.
While businesses are hungry for feedback, I’m not the only one who is tired of this endless stream of surveys. Just about everyone seems to be right there with me. There is a constant onslaught of this stuff, and people are definitely feeling the survey fatigue. It seems that by constantly asking about our experience, they are creating a bad one.
They seem to come from everywhere: My dentist queried me after my last visit asking how they did. (I’ve never had cleaner teeth.) Wingstop, a chicken wing chain, queries customers after every order, but at least the company offers you free fries next time in exchange for your feedback.
Many companies are hungry for feedback. Image Credits: TechCrunch
The idea behind this approach is well intentioned. Companies want to understand how they are doing, but when you ask over and over, people get numb and stop paying attention. What makes it worse is that, in some cases, it’s not clear if anyone actually cares or looks at the survey, or does anything about it, whether the feedback is positive or negative.
I recently had an experience with an airline (not the one cited in the image above) — those of you who follow me on social media know which one I’m talking about. The no good, horrible, terribly bad experience started with booking — and the airline sent me a survey at every step of the way. The problem? It didn’t seem to actually be paying attention to what I was saying.
I tried to change my seats online to pay extra for more legroom. I got a message on the website saying I needed to call customer service. You want to talk about an easy place to reduce call volume and improve my experience? How about making it simple for customers to make changes on the website. Then when you call, there’s a message stating you could save time by using the website. Um, yeah, I wish I could.
You want to talk about a terrible experience? I paid extra for a changeable ticket. When I actually …read more
https://techcrunch.com/2022/08/02/im-so-over-customer-experience-surveys/
TikTok-style dating app Desti filters matches by date destinations
A new video-focused dating app Desti just launched over the weekend to give users a chance to find potential matches based on a preferred date destination. Users who live in the app’s debut market of Austin, Texas, can scroll through a vertical feed where profiles highlight what destinations (aka “destis”) they want to experience on a first date — whether that’s wake surfing at Lake Travis, trying a new sushi place or even going to a beer garden that allows dogs. The “destis” are discovered by swiping through in-house TikTok-style videos that show off the Austin area.
What also makes Desti different than other dating apps such as Tinder or Bumble is that it doesn’t have a “like” feature, so people are forced to start conversations. Users can send a message to the person, and the receiver can accept or reject the message. They can only see one at a time and must pass or reply to the message to move on to the next.
The app is initially available for iOS device users in the Austin area. It will be available on Android devices in the coming weeks. The startup plans on expanding to other areas down the road, it says.
The example below shows a video of the destination at the forefront, with the profile picture in the bottom left corner.
When setting up a profile, the user must pick three “destis,” selecting from categories like Breweries, Rooftops, Live Music, Food Trucks, Dog Dates, etc. There are also hundreds of prompts to choose from alongside the video such as “Someone teach me … ,” “The CDC recommends … ” or “Tonight we should … ” To complete their profile, the user uploads four photos and creates a bio.
Since so many millennials and Gen Z users turn to TikTok or Instagram to discover restaurants and new things to do in their area, Desti uses the same idea for its destination-based dating app.
“We decided to bet on short-form video being the future,” Nick Dominguez, COO and lead designer/developer of Desti told TechCrunch.
The company isn’t the only dating app to have TikTok-style videos as the focus. Snack, for instance, allows users to post videos to a feed and swipe on videos from potential matches. French app Feels had a similar idea.
When asked if each destination would have the address or descriptions, the company said this was something it was working on. Desti wants to build a more robust Discovery tab to allow users to browse different locations, venues, restaurants, events and local businesses.
Other features in the works include a subscription plan and paid features that will remove limitations such as daily message limits. Currently, users can …read more
Uber plans to sell 7.8% stake in Indian food delivery firm Zomato
Uber plans to sell its 7.8% holding in Indian food delivery firm Zomato as early as Wednesday, a source familiar with the matter told TechCrunch.
The ride-hailing giant, which acquired a stake in the Indian firm when it sold its local Uber Eats business to Zomato in early 2021, plans to sell its stake through a block deal of over $350 million, for which it is working with Bank of America Securities, the source said, requesting anonymity as the details are private.
The U.S. firm, which reported a net loss of $2.6 billion for the second quarter, said Tuesday that it assumed an unrealized loss of $707 million on its Zomato investment in the first half of this year and the quarter that ended in June 30, 2022.
Uber sold its food delivery business in India to the local rival Zomato for $206 million, following years of aggressive attempts to compete with local food giants Zomato and Swiggy. As part of the deal, Uber acquired a 9.99% stake in the loss-making Indian food delivery startup. Uber didn’t immediately respond to a request for comment.
Shares of Zomato have been performing poorly throughout this year and tumbled to an all-time low last week after the end of the lock-in period of investors who had stakes in the company prior to the initial public offering.
The stock closed at 55.55 Indian rupees (72 cents) apiece Tuesday, giving the company a market cap of $5.5 billion, far below the $13.2 billion valuation it accrued on its debut day a year ago. Zomato said on Tuesday that it aims to reach EBIDTA break-even by the Q4 of next year and it had downgraded its investment in quick commerce Blinkit from $400 million to $320 million.