Affirm, Airbnb, C3.ai, Roblox, Wish file for tech IPO finale of 2020

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.

The wait was long but this week the time was right: Airbnb finally filed its S-1 and so did Affirm, C3.ai, Roblox, and Wish. We are likely to see these five price on public markets before the end of an already superlative year for tech IPOs. The ongoing pandemic and political turmoil were not scary enough, apparently.

This coming decade, you have to think that we’ll see a more even spread of tech companies going public. Many of the companies above have been bottled up for years behind privately funded growth strategies. Today, however, the industry has a better grasp of SPACs and direct listings, and various funding routes. Companies have more options from their founding for how they might grow and exit one day. Public investors in 2020 also seem to have a deeper appreciation for the current revenue numbers and future growth opportunities for tech companies. Why, I can still remember all the geniuses who bragged about shorting the Facebook IPO not so long ago.

Will we see a more even spread of where IPOs come from? While all of this week’s filers are headquartered in San Francisco or environs, that now feels almost like a coincidental reference to the years when these companies were founded. More states have been minting their own unicorns, with Ohio-based Root Insurance recently going public and Utah-based Qualtrics heading (back) that way. Tech startups are now global, meanwhile, and plenty of countries are working to keep their unicorns closer to home than New York.

On to the headlines from TechCrunch and Extra Crunch:

If you didn’t make $ 1B this week, you are not doing VC right (EC)

Affirm files to go public

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

Airbnb files to go public

5 questions from Airbnb’s IPO filing (EC)

The VC and founder winners in Airbnb’s IPO (EC)

Roblox files to go public

What is Roblox worth? (EC)

Wish files to go public with 100M monthly actives, $ 1.75B in 2020 revenue thus far

Unpacking the C3.ai IPO filing (EC)

With a 2021 IPO in the cards, what do we know about Robinhood’s Q3 performance? (EC)

(Photo by Win McNamee/Getty Images)

What does a Biden administration mean for tech?

What does Joe Biden intend as president around technology policy? On the one hand, tech companies might not be returning to the White House too fast. “All told, we’re seeing some familiar names in the mix, but 2020 isn’t 2008,” Taylor Hatmaker explains about potential presidential appointments from the industry. “Tech companies that emerged as golden children over the last 10 years are radioactive now. Regulation looms on the horizon in every direction. Whatever policy priorities emerge out of the Biden administration, Obama’s technocratic gilded age is over and we’re in for something new.”

However, tech industries and companies focused on shared goals might find support. In a review of Biden’s climate-change policies, Jon Shieber looks at major green infrastructure plans that could be on the way.

Any policies that a Biden administration enacts would have to focus on economic opportunity broadly, and much of the proposed plan from the campaign fulfills that need. One of its key propositions was that it would be “creating good, union, middle-class jobs in communities left behind, righting wrongs in communities that bear the brunt of pollution, and lifting up the best ideas from across our great nation — rural, urban and tribal,” according to the transition website. An early emphasis on grid and utility infrastructure could create significant opportunities for job creation across America — and be a boost for technology companies. “Our electric power infrastructure is old, aging and not secure,” said Abe Yokell, co-founder of the energy and climate-focused venture capital firm Congruent Ventures. “From an infrastructure standpoint, transmission distribution really should be upgraded and has been underinvested over the years. And it is in direct alignment with providing renewable energy deployment across the U.S. and the electrification of everything.”

Rebar is laid before poring a cement slab for an apartment in San Francisco CA.

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

The future of construction tech

A skilled labor shortage is piling on top of the construction industry’s traditional challenges this year. The result is that tech adoption is getting a big push into the real world, Allison Xu of Bain Capital Ventures writes in a guest column for Extra Crunch this week. She maps out six main construction categories where tech startups are emerging, including project conception, design and engineering, pre-construction, construction execution, post construction and construction management. Here’s an excerpt from the article about that last item:

  • How it works today: Construction management and operations teams manage the end-to-end project, with functions such as document management, data and insights, accounting, financing, HR/payroll, etc.
  • Key challenges: The complexity of the job site translates to highly complex and burdensome paperwork associated with each project. Managing the process requires communication and alignment across many stakeholders.
  • How technology can address challenges: The nuances of the multistakeholder construction process merit value in a verticalized approach to managing the project. Construction management tools like ProcoreHyphen Solutions and IngeniousIO have created ways for contractors to coordinate and track the end-to-end process more seamlessly. Other players like Levelset have taken a construction-specific approach to functions like invoice management and payments.

Virtual HQs after the pandemic?

Pandemic-era work solutions like online team meeting spaces are heading towards a less certain, vaccine-based reality. Have we all gone remote-first enough that they will have a real market, still? Natasha Mascarenhas checks in with some of the top companies to see how it’s looking, here’s more:

With the goal of making remote work more spontaneous, there are dozens of new startups working to create virtual HQs for distributed teams. The three that have risen to the top include Branch, built by Gen Z gamers; Gather, created by engineers building a gamified Zoom; and Huddle, which is still in stealth.

The platforms are all racing to prove that the world is ready to be a part of virtual workspaces. By drawing on multiplayer gaming culture, the startups are using spatial technology, animations and productivity tools to create a metaverse dedicated to work.

The biggest challenge ahead? The startups need to convince venture capitalists and users alike that they’re more than Sims for Enterprise or an always-on Zoom call. The potential success could signal how the future of work will blend gaming and socialization for distributed teams.

Around TechCrunch

Head of the US Space Force, Gen. John W. ‘Jay’ Raymond, joins us at TechCrunch Sessions: Space

Amazon’s Project Kuiper chief David Limp is coming to TC Sessions: Space

Across the week

TechCrunch

Against all odds: The sheer force of immigrant startup founders

S16 Angel Fund launches a community of founders to invest in other founders

Pre-seed fintech firm Financial Venture Studio closes on debut fund to build on legacy of top investments

How esports can save colleges

Why are telehealth companies treating healthcare like the gig economy?

A court decision in favor of startup UpCodes may help shape open access to the law

Extra Crunch

Will Zoom Apps be the next hot startup platform?

Is the internet advertising economy about to implode?

Surging homegrown talent and VC spark Italy’s tech renaissance

Why some VCs prefer to work with first-time founders

3 growth tactics that helped us surpass Noom and Weight Watchers

A report card for the SEC’s new equity crowdfunding rules

#EquityPod

From Alex Wilhelm:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This week wound up being incredibly busy. What else, with a week that included both the Airbnb and Affirm IPO filings, a host of mega-rounds for new unicorns, some fascinating smaller funding events and some new funds?

So we had a lot to get through, but with Chris and Danny and Natasha and your humble servant, we dove in headfirst:

What a week! Three episodes, some new records, and a very tired us after all the action. More on Monday!

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Startups – TechCrunch

Airbnb files to go public

Airbnb filed to go public today, bringing the well-known unicorn one step closer to being a public company.

The company’s financial results show a company on the rebound, but smaller than it was. Its more granular financial results also make clear how hard the pandemic was on the travel-reliant unicorn. Regarding Airbnb’s worth, investors will have to balance how they value recovery and recent profits over the company’s disrupted historical growth arc.

How did we get here?

The home-sharing startup had a tumultuous year, with the COVID-19 pandemic harming its business in the first and second quarter of the year, and Airbnb later recovering on the strength of more local bookings.

Its filing comes mere days after fellow unicorns DoorDash and C3.ai themselves filed to go public in what could be a rush to the public markets by richly-valued startups.

Airbnb’s S-1 filing was expected to come last week, but was delayed due to purported election concerns, a concept that TechCrunch staff did not find entirely convincing.

We’ve scraped together quite a lot about Airbnb’s recent financial performance, but its S-1 is the real treasure trove. What follows is a dive into the company’s high-level numbers. From there, TechCrunch will dig into the company’s financial nuances and ownership stakes.

Airbnb’s financial performance

What we want to know is how the pandemic impacted Airbnb’s business; its year-to-date results, and what we can suss out from its quarterly trends.

Up top in Airbnb’s S-1 is a chart that shows monthly bookings on its platform. The implication is somewhat simple; namely that Airbnb knows what we want to know and wanted to share. Here are those numbers:

As expected, Airbnb took a huge hit in March. But by May things were back to year-over-year growth, where they stayed.

Now, the company has seen precious little bookings growth since June — indeed it has seen bookings fall in the months since — but as it is doing more in bookings than the year-ago period, it can call the results a comeback.

So, what does all of that look like in more traditional accounting figures? Here’s Airbnb’s reported income statement:

As expected, Airbnb’s year has not been tremendous. Indeed, the company is on track to match its 2018 size, if we have our math correct.

What changed from the first three quarters of 2019 to the first three quarters of 2020? The biggest thing, apart from expected lowers revenue costs — less revenue costs less — is the huge decline in sales and marketing spend at the company. Airbnb slashed S&M outlays from $ 1.18 billion in the first three quarters of 2019 to just $ 545.5 million in the same period of 2020.

So, where will Airbnb wind up in 2020 once it’s all done? We’ll need to peek at its quarterly results for that. Here they are:

Airbnb’s growth continues in year-over-year terms right until the March 31, 2020 quarter, when it was effectively flat compared to Q1 2019. Or, the company would have grown sans COVID-19. In the June 30, 2020 quarter we see the real damage, with Airbnb’s revenue falling from $ 1.2 billion in the year-ago quarter to just $ 334.8 million. That’s a shocking decline.

But, looking ahead to Q3 2020 and we see a large return to form. Yes, Airbnb’s third quarter was smaller than its Q3 2019, with $ 1.34 billion in top line instead of $ 1.65 billion in 2019, but the company effectively quadrupled from its preceding quarter. If the company manages another Q3 worth of revenue in Q4, it would be larger than it was in 2018 by a few hundred million.

Critically, Airbnb managed to swing from a number of unprofitable quarters to a profit in Q3, akin to its 2019 Q3 when it was also in the black. Of course, Airbnb’s $ 219.3 million in GAAP net income during the third quarter pales compared to its losses tallied earlier in the year. The company will not break even in 2020.

Airbnb also reported adjusted profit metrics. Its adjusted EBITDA results are based on the following definition:

Adjusted EBITDA is defined as net income or loss adjusted for (i) provision for income taxes; (ii) interest income, interest expense, and other income (expense), net; (iii) depreciation and amortization; (iv) stock-based compensation expense; (v) net changes to the reserves for lodging taxes for which we may be held jointly liable with hosts for collecting and remitting such taxes; and (vi) restructuring charges.

The decision to remove restructuring costs raised eyebrows, with Amy Cheetham, an investor at Costanoa Ventures saying that “it feels like leaving out restructuring costs is a little aggressive?” We agree, as it gives the company too much flexibility to count the good in its results, like lower operating costs, while discounting what it took to get those results, like restructuring its business operations.

That’s having your cake and eating it as well and not counting the calories.

Still, who are we to withhold numbers from you. Here is the very adjusted EBITDA that Airbnb claims:

The numbers are still not good even after ripping out so very any costs. Worse, perhaps is the company’s cash burn in the year. That deficit helps explain why Airbnb took on more capital when it did earlier this year.

It’s hard to put a firm grade on this S-1. It contains what we expected, but how investors weigh the company’s year-over-year revenue declines in Q3 2020 against its rapid comeback from Q2 2020 should help decide its eventual value. On the whole Airbnb has managed something incredibly impressive — bouncing back from so low a low.

But, now that it’s going public we can’t merely say good job; it wants to price itself well and trade strongly. So, all eyes on its first IPO range as that should tell us what investors just might be willing to pay for the famous company’s equity,

Startups – TechCrunch

Equity Monday: SAP’s warning, and IPO updates for both Airbnb and Databricks

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest big news, chats about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and don’t forget to check out last Friday’s episode that includes some high-quality Quibi jokes, if I recall correctly.

This was a busy morning, with lots to talk about it. Here’s what we got into:

Shoutout Lewis Hamilton and that G2 series. Ok, chat Thursday!

Equity drops every Monday at 7:00 a.m. PT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Startups – TechCrunch

Merging Airbnb and the traditional hotel model, Mexico City’s Casai raises $23 million to grow in Latin America

With travel and tourism rising across Latin America, Casai, a startup combining Airbnb single unit rentals with hotel room amenities, has raised $ 23 million to expand its business across Latin America.

The company, which initially was hit as hard by regional responses to the COVID-19 pandemic as other businesses in the hospitality industry, has recovered to reach nearly 90% of total capacity on the 200 units it manages around Mexico City.

The company was co-founded by chief executive Nico Barawid, a former head of international expansion at Nova Credit and consultant with BCG, and chief operating officer María del Carmen Herrerías Salazar, who previously worked at one of Mexico’s largest hotel operators, Grupo Presidente.

The two met two years ago at a barbecue in Mexico City and began speaking about ways to update the hospitality industry, taking the best of Airbnb’s short-term rental model of individual units and pairing it with the quality control and standards that guests expect from a hotel chain.

“I wanted to define a product from a consumer angle,” said Barawid. “I wanted this to exist.”

Before the SARS-Cov-2 outbreak, Casai’s units were primarily booked through travel partners like HotelTonight or Expedia. Now the company has a direct brisk direct booking business thanks to the work of its chief technology officer, a former engineer at Google named Andres Martinez.

The company’s new financing was led by Andreessen Horowitz and included additional commitments from the firm’s Cultural Leadership Fund, Kaszek Ventures, Monashees Capital, Global Founders Capital, Liquid 2 Ventures and individual investors, including the founders of Nova Credit, Loft, Kavak and Runa .

Casai also managed to nab a debt facility of up to $ 25 million from TriplePoint Capital, bringing its total cash haul to $ 48 million in equity and debt.

Image Credit: Casai

The big round is in part thanks to the company’s compelling value proposition, which offers guests not only places to stay equipped with a proprietary smart hardware hub and the Casai app, but also a Google Home, smart lights and Chromecast-kitted televisions, as well as a lounge where guests can stay ahead of their check-in or after check-out.

And while the company’s vision is focused on Latin America now, its management team definitely sees the opportunity to create a global brand and business.

The founding team also includes a chief revenue officer, Alberto Ramos, who worked at McKinsey, and a chief growth officer, Daniel Hermann, who previously worked at the travel and lifestyle company, Selina . The head of design, Alexa Backal, used to work at GAIA Design, and its vice president of experience, Cristina Crespo, formerly ran WeWork’s international design studio.

“To successfully execute on this opportunity, a team needs to bring together expertise from consumer technology, design, hospitality, real estate and financial services to develop world-class operations needed to deliver on a first-class experience,” said Angela Strange, a general partner at Andreessen Horowitz, who’s taking a seat on the Casai board. “It was obvious when I met Nico and Maricarmen that they are operationally laser-focused and have uniquely blended expertise across verticals, with unique views on the consumer experience.”

Startups – TechCrunch

Two of Europe’s largest rental platform startups, Flatio and NomadX, join forces to fend off Airbnb 

Today Brno-based Flatio (founded in 2015), a mid-term rental platform aimed at professionals and students, today announced it has merged with Lisbon-based NomadX (founded in 2017), an affordable digital nomad housing marketplace. Both businesses, which have an estimated combined worth of over €11 million, hope the merger will establish them as market leaders and thwart…

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EU-Startups

Airbnb nears IPO as Asana and Palantir land their direct listings

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.

The going has not always been easy but the tech IPOs keep coming. Airbnb itself is almost here, in what is likely to be the ultimate stock market listing of this dramatic year. After the pandemic triggered mass layoffs for the short-term rental marketplace, it has managed to make up all of the lost ground to pre-pandemic projections, TechCrunch and others have reported. Now, news is leaking out that it could seek to raise up to $ 3 billion at a $ 30 billion valuation.

The US presidential election in a month, Trump’s positive COVID-19 diagnosis, and various other world events have yet to stop the tech IPO momentum.

This past Wednesday, Palantir and Asana both opted to put a limited number of shares up for sale directly instead of working with a bank to pre-sell portions to favored clients, following in the direct-listings footsteps of Spotify and Slack.

Palantir, which is continuing to get political scrutiny around its government data businesses, and Asana both finished the first few days of trading without any pop to speak of for initial public investors (although other things have been impacting markets in the same time frame). However, both companies have already turned billions of paper funding rounds into liquid money that can start going back to the employees and investors, as intended. And now, each can sail the high seas of public markets with a smaller, friendlier group of stockholders than many, many other public companies have.

We’ve been covering Palantir in great detail recently, but Asana’s entrance provides a broader lesson for the many aspiring SaaS startups out there.

Dustin Moskovitz, who has retained a huge amount of control as a cofounder/investor, told Danny Crichton for Extra Crunch that more than 40% of the task-focused work management provider’s revenue is now coming from outside of North America, with ongoing growth, high customer loyalty and big integrations with other SaaS providers. The results bode well for other SaaS companies considering direct listings, as Alex Wilhelm analyzes for EC:

Asana grew 63% in the six months ending July 31, 2020, compared to the same period of 2019, though that growth rate decelerated to around 57% when only looking at the most recent quarter and its historical analog. Good growth then, if slowing. And Asana’s gross margins were good and improving, coming in at 86% in the six months ending July 31, 2019, and 87% in the same period of 2020. But the company’s net losses were rising in gross and relative terms at the same time. In the six months ending July 31, 2020, Asana lost $ 76.9 million, up from $ 30.5 million in the same period of 2019. And, the company’s 77% net loss as a percent of revenue in the two quarters ending in July of 2020 was up from a 50% loss during the same period of the preceding year. Asana also consumed more cash this year than last year, with its operating cash burn rising from $ 13.1 million during the six months ending July 31, 2019 to $ 40.3 million in the same period of 2020.

And yet, from a reference price of $ 21, valuing the company at around $ 4 billion on a fully diluted basis, shares of Asana have risen to $ 25.14 at the open of trading this morning (though Asana lost several points today thanks to general market carnage). Current market trackers value the company at $ 3.86 billion.

Now, on to Airbnb! (And also, Datto!)

Source: Getty Images

Pandemic upsides arrive for cannabis, mental health and language learning

As the world tries to make sense of fresh Q3 data, we took a closer look at a few fresh startup trends. First, the cannabis market seems to be as strong as you’d expect. Matt Burns caught up with a range of weed-tech founders, investors and analysts, who shared almost entirely good news for the emerging sector. Here’s a highlight from Andy Lytwynec, VP, Global Vape Business at Canopy Growth, the cannabis holding company for a range of brands, including the vaporizer preferred by your self-medicated correspondent:

Lytwynec points to Storz & Bickle as a barometer of sorts in judging the impact of COVID-19. The German-based vaporizer company saw an uptick in sales, as reported in Canopy Growth’s latest quarterly report. The company reported a 71% increase during the first quarter ending on June 30. The financial report pointed to Storz & Bickel’s increased sales and distribution expansion as a primary reason for the increase. 

Just try getting a replacement for that mouthpiece you tragically broke at the start of quarantine. And don’t fall for that fake stuff on Amazon or you’ll be huffing plastic. Anyway…

Alex also checked in on mental health funding, which were already coming into their own before the pandemic. The first half of the year was the sector’s biggest yet, with a focus on remote therapy, virtual coaching and anxiety alleviation, although Q2 was down slightly from Q1. More, from Extra Crunch:

Investors are putting dollars to work in 2020 to further the growth mental health startups managed in 2018 and 2019. Per the CB Insights dataset, in Q1 and Q2 2020, these startups saw 106 rounds worth $ 1.08 billion. In the year-ago period, the figures were 87 rounds worth $ 750 million. (Unlike some subcategories of wellness startups that CB Insights detailed, mental health upstarts have enough regular VC volume to make year-over-year comparisons reasonable.)

In a different sector of tech-powered mind improvement, Duolingo is now on track to hit $ 180 million bookings, chief executive Luis von Ahn tells Natasha Mascarenhas for EC. While the language-learning company has seen usage surge from 30 million to 42 million monthly active users this year, it only makes money from 3% of them (those who want to pay to avoid seeing ads, get download access, and other features).

The future of transportation

From Kirsten Korosec, our resident mobility expert and host of our next event:

If you’re interested in tech, transportation and startups — of course you are — you should make our next event a priority. And it’s coming up in just a few days. TechCrunch is hosting TC Sessions: Mobility 2020 on October 6 & 7, a virtual event that will bring together the best and brightest minds working on automated vehicle technology, shared micromobility and electrification. We’ll be talking to former Tesla co-founder and CTO JB Straubel about his new venture Redwood Materials, the CEOs of EV newcomers Polestar and Lucid Motors, Formula E driver Lucas di Grassi about a new kind of racing event (hint, scooters!), early stage-investors from Trucks VC, Hemi Ventures and Maniv as well as Uber’s director of policy for cities Shin-Pei Tsay, to name a few. Plus there will be a dedicated networking time, a pitch night on October 5 and a virtual expo. There are a variety of ticket prices to meet your budget, including one for students. But I’m also here bearing gifts: Startups Weekly readers can get 50% off the full price at this link. If you’d just like to check out the startups expo portion, Startups Weekly readers can get in free with this link.

Photographer: Anindito Mukherjee/Bloomberg via Getty Images

Top Indian app developers join global platform rebellion

Manish Singh, our lead reporter covering Indian startups, has been breaking news on the growing dissent against app platform policies. It’s getting epic:

More than 150 startups and firms in India are working to form an alliance and toying with the idea of launching an app store to cut their reliance on Google, five people familiar with the matter told TechCrunch.

The list of entrepreneurs includes high-profile names, such as Vijay Shekhar Sharma, co-founder and chief executive of Paytm (India’s most valuable startup); Deep Kalra of travel ticketing firm MakeMyTrip; and executives from PolicyBazaar, RazorPay and ShareChat. The growing list of founders expressed deep concerns about Google’s “monopolistic” hold on India, home to one of the world’s largest startup ecosystems, and discussed what they alleged was unfair and inconsistent enforcement of Play Store’s guidelines in the country.

Their effort comes days after a small group of firms — including Epic Games, Spotify, Basecamp, Match Group and ProtonMail — forged their own coalition to pressure Apple and Google to make changes to their marketplace rules.

“Where else do these dollars go?”

Danny interviewed SF-based Index Ventures partners Nina Achadjian and Sarah Cannon about the latest trends in startup fundraising. Here’s a key part about the macro trends, that also explains why all those tech IPOs continue to happen (and do well):

TechCrunch: Given the amount of capital flowing into venture these days, have you noticed any LPs starting to pull back from the market?

Cannon: They’re not pulling back. In fact, it’s like, “Could you potentially take more allocation? And what do you think of these other seed managers?”

I think the way that I’ve got my mind around this is, where else would these dollars go? What are the alternatives for the dollars that are rushing into tech? I don’t know the latest numbers, but it was something like 40% of stock market returns are actually concentrated in Apple [and FAANG]. And then we’re seeing IPOs perform the same.

We’re in a global pandemic that could easily cause [another] recession. A lot of industries like airlines and travel have more exposure. Tech is just relatively more attractive. So if the interest rates are low, which they are, and [economists] have said that they’re going to be low for the coming decades, then you’re going to have lots of capital chasing returns.

Across the week

TechCrunch

Allbirds CEO Joey Zwillinger on the startup’s $ 100 million round, profitability and SPAC mania

How Twilio built its own conference platform

Working for social justice isn’t a ‘distraction’ for mission-focused companies

Apple removes two RSS feed readers from China App Store

Calling VCs in Rome and Milan: Be featured in The Great TechCrunch Survey of European VC

Extra Crunch

News apps in the US and China use algorithms to drive engagement, discovery

Which neobanks will rise or fall?

9 VCs in Madrid and Barcelona discuss the COVID-19 era and look to the future

Spain’s startup ecosystem: 9 investors on remote work, green shoots and 2020 trends

Healthcare entrepreneurs should prepare for an upcoming VC/PE bubble

#EquityPod

From Natasha:

Hello and welcome back to Equity, TechCrunch’s VC-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This week, Alex is on a much-deserved vacation (but not from Twitter, it seems) so Danny Crichton and I chatted through the news and happenings of the week. Somehow we winded our way through the latest tech controversies, gave Chris Wallace a shout out and ended with some funding rounds. I’ll be out next week so don’t miss me too much, but expect the entire Equity team to be back full-speed in mid-October. Thanks, as always, to our producer Chris Gates for his patience and diligence.

Now, onto a sneak peek of what we got into:

  • Moderation continues to be the root of all problems. We got into the anti-semitic comments that were spewed on Clubhouse, and what that means for the future of the audio-only platform. As Danny so eloquently put it: if Clubhouse is having moderation problems even with an exclusive invite-only user base, the problem will grow.
  • We also talked about Coinbase CEO Brian Armstrong’s blog post, which triggered a debate between us on whether tech companies can even choose to not be political. For the record, Black Lives Matter is not a political statement. It’s a human statement. Read this op-ed for more.
  • I wrote a piece about how a new program wants to be the Y Combinator for emerging fund managers. The whole “YC for X” model usually makes me roll my eyes, but listen to hear why I’m actually optimistic and bullish on programs like these taking off within tech.
  • Silver Lake added a $ 2 billion “long-term” hedge fund backed by Abu Dhabi to its tech finance toolkit. The strategy is a signal to privately backed startups, and potentially a slap in the face to SoftBank.
  • For a quick edtech note, I caught up with Duolingo’s CEO this week in one of his rare press interviews. Luis von Ahn explained the app’s surge in bookings, and there’s one key metric we pull out to noodle over.
  • Danny explained Gusto’s latest product launch with, wait for it, Gusto. In all seriousness, he brings up interesting points about the future of fintech feeling more full-suite, and free.
  • Funding round chatter continued when we unpacked Lee Fixel’s latest investment in India’s Inshorts.
  • Finally, we ended with LiquidDeath, which is not the name of a drinking game, but instead the name of a startup that has successfully attracted millions in venture capital for mountain water.

And with that, we will be back next week. Vote like your life depends on it, because it does.

Equity  drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Startups – TechCrunch

Online Marketplace Startups Market is Booming Worldwide By Key Players: Airbnb, Alibaba, Etsy, Freelancer, Fivver, Uber, Upwork. – The Daily Chronicle

Online Marketplace Startups Market is Booming Worldwide By Key Players: Airbnb, Alibaba, Etsy, Freelancer, Fivver, Uber, Upwork.  The Daily Chronicle
“nigeria startups when:7d” – Google News

Former Airbnb Chief Ethics Officer Says Integrity is a Superpower in Business

The following is adapted from “Intentional Integrity: How Smart Companies Can Lead an Ethical Revolution” by Rob Chesnut (St. Martin’s Press, July 28, 2020)

At Airbnb, the founders of the company realized from the beginning that integrity had to be the foundation of a business based on hosting complete strangers in your home. For one thing, we have data about some of our customers’ most personal activities—where and how they live and where they travel. Beyond that, our Airbnb hosts welcome strangers into their homes; our business model relies on our customers’ basic trust that this will be a safe, pleasant, as-advertised experience where both parties benefit. The damage to our reputation can be swift and severe if any of us—the hosts, the guests, or Airbnb as the facilitator—do not act with integrity.

More and more companies accept that a commitment to diversity and inclusion, a preference for less environmental impact, and a promise to avoid suppliers with offensive labor practices and even customers who exhibit behavior inconsistent with their values are positions they should embrace publicly. These companies are well positioned to lead broader progress in each of these areas—if they act with integrity.

It’s also true, by the way, that forging a better relationship with stakeholders will give them insights that support every facet of their business.


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For example, an Airbnb employee named Srin Madipalli helped open our eyes to a very important set of stakeholders in our guest community: individuals with physical disabilities.

Put simply, these guests need more information about listings than we used to provide. Srin has a medical condition that requires him to use a powered wheelchair, which he has done for his entire life. He also loves to travel, but travel becomes challenging when accommodations are not as described, or when listings lack the details he needs to determine if they will work for him.

After Srin came to work at Airbnb, he not only helped improve how we help hosts be specific about access issues (in fact, we’ve added 27 different measures to our host profile forms), but he also helped us make sure our own activities and facilities don’t unintentionally exclude employees with physical challenges.

Seeing the world through the eyes of a single stakeholder acting on authentic concerns and issues can help a company create a more inclusive corporate culture, and in this case, it literally made the world easier to navigate for millions of other people with physical challenges.

To me, that’s a bold endorsement of Intentional Integrity.


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Intentional integrity

Srin was born in London. He began his career as a genetics researcher before becoming a corporate lawyer. Later, he realized what he really enjoyed was business, and so he enrolled in Oxford to get an MBA. After that, he taught himself to code and launched a startup.

As his resume would suggest, Srin is a high-energy person with a bias for action, even though he was born with spinal muscular atrophy and has been in a powered wheelchair since childhood. His family never had the resources to travel with him when he was growing up, so before he went to Oxford, he and another wheelchair-bound friend decided to take a four-month trip around the world. And what they discovered was that for individuals in wheelchairs, to say travel can be difficult is a profound understatement. The overall supply of accessible accommodations is low, and there are few resources to help people find them.

So Srin started his own company called Accomable to both gather data on wheelchair-accessible travel options and encourage hoteliers and others to outfit their accommodations to be reliable choices for disabled travelers. He wrote software tools that made it easier for the hospitality industry to specifically describe and display photographs of their physical grounds and features so travelers with special needs could make good decisions.

Imagine navigating a world where you have taken a long flight, arrive in the middle of the night, pick up your key, and then realize that there are two significant steps between you and your motel room—and no ramp. You call the innkeeper for help and say, “This room is supposed to be ADA compliant,” and then you hear, as Srin once did, “Well, once you get past the steps, it is.”

In the beginning, the Airbnb platform treated wheelchair accessibility as a yes/no question. The host might check yes, not realizing that the question is not just about stairs and ramps. Wheelchairs often require extra-wide doorways, especially in bathrooms. A guest who needs assistance from a person or a special sling for getting in and out of bed needs extra room around the bed.

When Airbnb CEO, Brian Chesky, realized there was a gap between what some of our listings promised and the experience of people with disabilities, he challenged us to address that gap.

In 2017 we acquired Accomable, and Srin and his team joined us to work on shrinking that gap. Today, Srin is a product manager helping to create products that provide hosts and guests with much more specific information about accessibility in our reservation system. Employees like Srin are critical to giving us the insights to understand some of our customers and do a better job. He can help us make the world better for disabled travelers.


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I was thinking about our intentional efforts to address needs of physically disabled travelers when I read Apple CEO Tim Cook’s 2019 commencement speech at Stanford. Cook noted that too many tech companies invent innovative technologies but then shrug and throw their hands up when there are complications or consequences for society that they didn’t anticipate:

“It feels a bit crazy that anyone should have to say this. But if you’ve built a chaos factory, you can’t dodge responsibility for the chaos. Taking responsibility means having the courage to think things through.”

“Intentional Integrity” is available wherever books are sold and can be purchased via StartupNation.com.

The post Former Airbnb Chief Ethics Officer Says Integrity is a Superpower in Business appeared first on StartupNation.

StartupNation

PadSplit uses the Airbnb model to tackle the country’s affordable housing crisis

The United States is currently in the middle of an affordable housing crisis that’s putting the nation’s most economically insecure citizens at risk of becoming homeless even as a pandemic continues to spread across the country.

But one Atlanta startup called PadSplit is using the same model that Airbnb created (which ultimately drove up rental and housing prices across the country) to bring down costs for subsidized housing and provide relief for some of the people most at risk.

America’s second housing crisis

Twelve years after the last housing crisis in the United States caused a global economic meltdown, the U.S. is once again on the brink of another real estate-related economic disaster.

This time, it’s not speculators and investors that will carry the weight of the coming collapse, but low-income renters faced with still sky-high housing costs and no income thanks to historic unemployment caused by the nation’s COVID-19 epidemic, as Vox reported.

Before COVID-19 swept across the world, half of U.S. renters were spending roughly 30% of their income on apartments and homes. One-fifth of the population actually spent over half of their income on rent, and now, with roughly 10% of the country unemployed, that population faces eviction and the prospect of homelessness.

One-third of American families failed to make rent in June, and by September more than 20 million renters could be evicted by landlords.

Can an Airbnb model provide relief?

To solve the problem of housing insecurity, PadSplit borrows a page from the Airbnb playbook by creating a marketplace where homeowners can list rooms for rent for long-term stays.

Each room comes furnished with Wi-Fi and includes access to laundry facilities. And the company provides access to free telemedicine services and reports weekly payments to credit agencies so renters can build their credit scores.

Currently, the company manages 1,000 units in the Atlanta area and has expanded its presence into Maryland. The company’s renters include teachers, grocery store employees, restaurant workers — all people whose services are considered essential during the COVID-19 epidemic. “Forty percent of our population has been functionally homeless,” said company founder, Atticus LeBlanc. “The average income [for our renters] is $ 25,000 per year.”

The average age of an occupant in a PadSplit room is 39, but renters have been as young as 19 or as old as 77, according to the company.

A quick scan of PadSplit rates in the Atlanta area shows rents of roughly $ 140 to $ 250 per week for rooms in existing homes. “We are focused on longer-term stays for lower income,” said LeBlanc.

The company screens tenants and landlords, including criminal background checks and employment verification. “We sit between a hotel provider and a longer-term apartment,” said Leblanc. “Where we need to both be an immediate housing provider for people who are in difficult situations while also underwriting that [person].” Owners looking to rent on PadSplit also need to prove that they haven’t been convicted of a felony within the last seven years.

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

Launching PadSplit

LeBlanc, a New Orleans native turned Atlanta entrepreneur was named for Atticus Finch, the fictional lawyer whose fight for social justice in “To Kill a Mockingbird” is a staple of schoolroom lit assignments, and a model for white liberal southern gentry.

“My mother… said she wanted to give me someone to live up to,” says LeBlanc. 

With a degree in architecture from Yale University, LeBlanc has run a real estate development and construction business in Atlanta for over 12 years. He launched PadSplit in 2017 after writing up the idea for the business in response to a competition from the Atlanta housing nonprofit House ATL and the nonprofit Enterprise Community Partners.

LeBlanc’s plan was selected as one of the finalists and he received a small grant from the organization and the JPMorgan Chase foundation to pursue the business.

With the help of John O’Bryan, a serial entrepreneur who had built businesses in the vacation rental industry, LeBlanc built up the marketplace that would become PadSplit, starting first in Atlanta and moving out to surrounding suburbs and into Maryland. LeBlanc later brought in Frank Furman, a Naval Academy graduate, U.S. Marine Corps veteran and former McKinsey consultant, to help grow the business. 

Now the company, a Techstars accelerator graduate, has $ 10 million in new financing from Core Innovation Capital, Alate Partners, the Citi Impact Fund, Kapor Capital, Impact Engine and Cox Enterprises to expand PadSplit into Texas, starting with Houston, and quickly ramp up hiring.

“PadSplit provides a truly unique solution to a complicated national problem that’s becoming more dire each day,” said Arjan Schütte, founder and managing partner of Core Innovation Capital, in a statement. “We’re proud to support Atticus and the PadSplit team as they expand into new markets and introduce critical housing supply at a time when so many require affordable housing.”

Making money in affordable housing

According to LeBlanc, affordable housing is built around two things. One is the subsidy owners receive from the federal government and the second is a percentage of the cost of rentals. To convince owners that being in the affordable housing market was a good idea, LeBlanc just proved to them that they could get higher risk-adjusted returns versus other long-term rentals.

So far, that’s been proven out, he says. Through its model of fixed costs and weekly rent payments, PadSplit occupants have been able to save roughly $ 516 per month, according to data supplied by the company. Lowering rent has also allowed tenants to build credit, move into their own apartments and buy vehicles — or even, in some cases, houses of their own.

The company estimates it has also saved taxpayers over $ 203 million in subsidies by eliminating the need to build subsidized housing units. Property owners have also benefited, the company said, increasing revenues on properties by more than 60%.

And LeBlanc isn’t just the founder of PadSplit, he’s also a customer. “I rent a room downstairs in my personal home,” he said.

Ultimately, LeBlanc sees housing stability and a path to home ownership as one of the key tenets of economic equality in the United States.

“Every zoning law in America was based on a system that had no racial equity. We’re still battling those vestiges that exist in almost every jurisdiction,” he says.

And for LeBlanc the problem goes back to nearly 100 years. “If you acknowledge that racial inequality led to income stratification where it was impossible for returning Black GIs to get access to the same wealth-building opportunities that white returning GIs had… it’s no surprise that you have lower incomes by a substantial margin for African Americans as you do for whites.”

LeBlanc sees his business providing an additional revenue stream for the owners who rent properties, and an on-ramp to the financial system for people who are at risk or historically disenfranchised.

“We wanted to create a value proposition that is valuable to anyone in the housing space,” said LeBlanc. 

Startups – TechCrunch

Airbnb has confidentially filed to go public

In a turn of fortune, Airbnb today announced that it has filed to go public, albeit confidentially.

The move puts the home-sharing service on a path to a public offering sooner rather than later, and comes after reports that the company was prepping an IPO filing this month. Those same reports indicated that Airbnb could go public as soon as the end of the year.

A Q3 or Q4 Airbnb offering is therefore a distinct possibility.

Airbnb has mounted a comeback since COVID-19-related shutdowns slammed the travel market, tanking its revenues at the same time. Airbnb laid off nearly 2,000 workers, and took on expensive capital from external sources.

The company promised in 2019 that it would go public in 2020, but that pledge seemed far-off in the middle of the year. Since then, Airbnb has made noise about different parts of its business coming back to life, although changed by new travel and work and vacation patterns from its users.

If Airbnb has filed, we can presume that present results are good enough to get it life, else the firm would have not filed and would have simply gone public later. The question now becomes if its Q2 numbers were good enough to get it out the door, or if the company intends to update its S-1 filing with Q3 numbers, push the filing live and go public with more recovery time in its results.

Of course, such a course of action would put its public debut perilously close to the American election. And, Airbnb’s Q2 numbers are down not only from Q1 in revenue terms, but even more sharply from its year-ago results for the same calendar period. In short, Airbnb’s growth story may not be clear until Q3 numbers are tallied, a month and a half from now.

Airbnb joins other companies that have filed privately like DoorDash in waiting by the wings for the right moment to go public, or the right set of results.

We’ll see, but the company’s public debut is back to being impending. Now the question becomes whether Airbnb intends to go public in an IPO, as the wording of its filing appears to suggest, or if a direct listing could still be in the cards. We think it’s more likely the former and not the latter, but, hey, in 2020 you never know.

Startups – TechCrunch