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Omni storage & rentals fails, shutters, sells engineers to Coinbase

Published November 25, 2019

$35 million-funded Omni is packing up and shutting down after struggling to make the economics of equipment rentals and physical on-demand storage work out. It’s another victim of a venture capital-subsidized business offering a convenient service at an unsustainable price.

The startup fought for a second wind after selling off its physical storage operations to competitor Clutter in May. Then sources tell me it tried to build a whitelabel software platform for letting brick-and-mortar merchants rent stuff like drills or tents as well as sell them so Omni could get out of hands-on logistics. But now the whole company is folding, with Coinbase hiring roughly 10 of Omni’s engineers.

“They realized that the core business was just challenging as architected” a source close to Omni tells TechCrunch. “The service was really great for the consumer but when they looked at what it would take to scale, that would be difficult and expensive.” Another source says Omni’s peak headcount was around 70.

The news follows TechCrunch’s report in October that Omni had laid off operations teams members and was in talks to sell its engineering team to Coinbase. Omni had internally discussed informing its retail rental partners ahead of time that it would be shutting down. Meanwhile, it frantically worked to stop team members from contacting the press about the startup’s internal troubles.

“We’ll be winding down operations at Omni and closing the platform by the end of this year. We are proud of what we built and incredibl y thankful for everyone who supported our vision over the past five and a half years” an Omni spokesperson says. Omni CEO Tom McLeod did not respond to multiple requests for comment. Oddly, Omni was still allowing renters to pay for items as of this morning, though it’s already shut down its blog and hasn’t made a public announcement about its shut down.

“Coinbase has reached an agreement with Omni to hire members of its engineering team. We’re always looking for top-tier engineering talent and look forward to welcoming these new team members to Coinbase” a Coinbase spokesperson tells us. The team was looking for more highly skilled engineers they could efficiently hire as a group, though it’s too early to say what they’ll be working on.

Omni originaly launched in 2015, offering to send a van to your house to pick up and index any of your possession, drive them to a nearby warehouse, store them, and bring them back to you whenever you needed for just a few dollars per month. It seemed too good to be true and ended up being just that.

Eventually Omni pivoted towards letting you rent out what you were storing so you and it could earn some extra cash in 2017. Sensing a better business model there, it sold its storage business to Softbank-funded Clutter and moved to helping retail stores run rental programs. But that simply required too big of a shift in behavior for merchants and users, while also relying on slim margins.

Omni Rentals

One major question is whether investors will get any cash back. Omni raised $25 million from cryptocurrency company Ripple in early 2018. Major investors include Flybridge, Highland, Allen & Company, and Founders Fund, plus a slew of angels.

The implosion of Omni comes as investors are re-examining business fundamentals of startups in the wake of Uber’s valuation getting cut in half in the public markets and the chaos at WeWork ahead of its planned IPO. VCs and their LPs want growth, but not at the cost of burning endless sums of money to subsidize prices just to lure customers to a platform.

It’s one thing if the value of the service is so high that people will stick with a startup as prices rise to sustainable levels, as many have with ride hailing. But for Omni, ballooning storage prices pissed off users as on-demand became less afforable than a traditional storage unit. Rentals were a hassle, especially considering users had to pick-up and return items themselves when they could just buy the items and get instant delivery from Amazon.

Startups that need a ton of cash for operations and marketing but don’t have a clear path to ultra-high lifetime value they can earn from customers may find their streams of capital running dry.

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European smartphone shipments grew in Q3, driven by Samsung

Published November 25, 2019

Europe bucked global smartphone stagnation in the third quarter, marking an 8% year over year growth in device shipments. That number, provided by Canalys, puts the region at the top of smartphone growth figures, beating out Asia/Pacific’s six percent.

Once again, Samsung was the biggest winner here. The Korean manufacturer saw a healthy 26%, year over year growth. As noted back in Q2, Samsung’s growth comes as the company floods the market with a variety of different devices. Its mid-tier A Series accounted for all four of its top spots during that time period.

Huawei held steady in second place, as the company refocuses on Europe amid US/China trade tensions. Huawei accounted for 22.2 % of units shipped, versus Samsung’s 35.7%. Fellow Chinese manufacturer Xiaomi saw an extremely healthy boost for the quarter, jumping 73 percent for the year, to nab fourth place behind Apple.

While the numbers are positive in the face of larger negative trends, politics are still having a marked impact on figures.

“On the negative side, Brexit has already had an impact,” analyst Ben Stanton said in a release. “In the UK, shipments of premium devices from Samsung and Apple accelerated before each Brexit deadline this year, in March and recently October, followed by a large dip, as distributors were forced to stockpile product and hedge against impending tariff risk. This shot-term artificial boost distorts the market and the accompanying risk, costs and uncertainty, is a drain on the industry.”

Like much of the rest of the world, the European market is looking forward to a 5G rollout to help further juice shipments moving forward.

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Max Q: NASA signs up new Moon delivery companies

Published November 25, 2019

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There were lot of highlights in the space industry this past week (even though a rocket launch that was supposed to happened is now pushed to Monday). The biggest news for commercial space might just be that NASA signed on five new companies to its list of approved vendors for lunar payload delivery services, bringing the total group to 14.

SpaceX is among them, and Musk’s company had its own fair share of news this week, too – some good, some bad. One things’ for sure: Even going in to the last week in November, there’s still plenty of news to come in this industry before the year’s out.

  1. NASA selects five new vendors for commercial lunar payloads

Artist’s rendering of Blue Origin’s Blue Moon lander.

The five include Blue Origin, SpaceX, Ceres Robotics, Sierra Nevada Corporation and Tyvak Nano-Satellite Systems. This doesn’t necessarily mean all or any of these companies will actually fly anything to the Moon on behalf of NASA, but it does mean they can officially bid for the chance. Alongside 9 other companies selected previously by NASA, their bids will be considered by the NASA based on cost, viability and other factors.

  1. SpaceX Starship prototype blows its lid

This is the bad news I referred to earlier: SpaceX’s Starship Mk1 prototype in Texas blew up just a little bit during cryo testing. This test is designed to simulate extreme cold conditions that the spacecraft could endure during flight, and it clearly didn’t. But Elon Musk was optimistic, saying just after the incident that they’ll move on to a more advanced design right away.

  1. Sierra Nevada Corporation details an expendable cargo container for its Dream Chaser spaceship

SNC’s Shooting Star module. Credit: SNC.

One of the companies that is now included in NASA’s lunar payload service provider list is Sierra Nevada Corporation (SNC). They’re currently developing and building their Dream Chaser spacecraft, which is reusable and lands like the Space Shuttle. At an event at Cape Canaveral in Florida, they unveiled what they call the ‘Shooting Star’ – an ejectable single use cargo container for the Dream Chaser that can really add to its versatility.

  1. Nanoracks will launch a test craft that can convert old spaceships into orbital habitats

This demonstration mission is just a start, but the tech that Nanoracks is launching aboard a future SpaceX launch will be able to cut metal in space, marking the first time a robotic piece of equipment has done that. The ultimate goal is to use this tech to take spent spacecraft upper stages and give them new life – as research platforms, satellites or even habitats in orbit.

  1. NASA’s JPL is using the Antarctic to test a rover for a trip to Enceladus

That’s one of Saturn’s moons, and it’s made up of icy oceans. Normally, that’s not an optimal place for a rover to get around, but the agency’s laboratory has been testing a design in the Earth’s coldest oceans to see how viable it will be, and now they’re going to use the Antarctic, which is where it’ll test it for months at a time.

  1. Tesla’s Cybertruck is made of Starship steel

Elon Musk revealed Tesla’s crazy, beautiful, ugly, strange Cybertruck pickup last week, and he noted that the stainless steel alloy that makes up its skin is the same material that SpaceX is developing and using on its new Starship spacecraft. Sometimes, being CEO of both a car company and a space company at the same time really pays off.

  1. Space is inspiring new kinds of startups

A lot of large companies outsource at least part of their innovation management and design, and with the space boom on, there’s a new opportunity for companies to emerge that specialize in helping those same large companies find out where they fit in this new frontier. Luna is one such co, putting the puzzle pieces together for health tech companies.

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This Week in Apps: Honey’s $4B exit, a new plan for iOS 14, Apple’s new developer resource

Published November 23, 2019

Welcome back to This Week in Apps, the Extra Crunch series that recaps the latest OS news, the applications they support, and the money that flows through it all. What are developers talking about? What do app publishers and marketers need to know? How are politics impacting the App Store and app businesses? And which apps are everyone using?

This week, we’re looking at several major stories, including the whopping $4 billion PayPal just spent on browser extension and mobile app maker, Honey, as well as the release of the Apple Developer app, a new plan for iOS 14, Google Stadia’s launch, AR gaming’s next big hit (or flop?), e-commerce app trends, Microsoft’s exit from voice assistant mobile apps, and so much more.

Plus, did you hear the one about the developer who got kicked out from his developer account by Apple, leaving his apps abandoned?

Headlines

Apple to overhaul iOS development strategy after buggy iOS 13 launch

apple ios 13Apple’s iOS 13 release was one of its worst, in terms of bugs and glitches. Now Apple is making an internal change to how it approaches software development in an effort to address the problem. According to Bloomberg, Apple’s Software chief Craig Federighi and other execs announced its plans at an internal meeting. The new process will involve having unfinished and buggy features disabled by default in daily builds. Testers will then have to optionally enable the features in order to try them. While this change focuses on making internal builds of the OS more usable (or “livable”), Apple hopes that over time it will improve the overall quality of its software as it will give testers the ability to really understand what’s supposed to now be working, but isn’t. The testing changes will also apply to iPadOS, watchOS, tvOS, and macOS, the report said.

Apple launches the Apple Developer App

Apple rebranded and expanded its existing WWDC app to become a new Apple Developer app that can stay with its 23 million registered developers year-round. Instead of only including information about the developer event itself, the app will expand to include other relevant resources — like technical and design articles, developer news and updates, videos and more. It also will offer a way for developers to enroll in the Apple Developer program and maintain their membership. Apple says it found many developers were more inclined to open an app than an email, and by centralizing this information in one place, it could more efficiently and seamlessly deliver new information and other resources to its community.

PayPal buys Honey for $4 billion

PayPal has made its biggest-ever acquisition for browser extension and mobile app maker, Honey. TechCrunch exclusively broke the news of the nearly all-cash deal, noting that Honey currently has 17 million monthly actives. But PayPal was interested in more than the user base — it wanted the tech. The company plans to insert itself ahead of the checkout screen by getting involved with the online shopping and research process, where customers visit sites and look for deals. Honey’s offer-finding features from its mobile app will also become part of PayPal and Venmo’s apps in the future.

Cloud gaming expands with Google Stadia launch

Cloud-based gaming could benefit from the growing investment in 5G. Google Stadia, which launched this week, is a big bet on 5G in that regard. Though the early reviews were middling, Google believes the next generation of gaming will involve continuous, cross-device play, including on mobile devices. This trend was already apparent with the successes of cross-platform games like Fortnite, Minecraft, Roblox, and PUBG, for example. Meanwhile, console makers like Microsoft are working to build out their own cloud infrastructure to compete. (Microsoft’s xCloud launches in May 2020.) Google could have a head start, even if Stadia today feels more like a beta than a finished product. But one question that still arises is whether Google is serious about gaming, or only sees Stadia as a content engine for YouTube?

Microsoft kills Cortana mobile apps

Microsoft this week belatedly realized it can’t compete with the built-in advantages that Siri and Google Assistant offer users, like dedicated buttons, hands-free voice commands, workflow building and more. The company decided to shut down its Cortana mobile applications on iOS and Android in a number of markets, including Great Britain, Australia, Germany, Mexico, China, Spain, Canada, and India. Any bets on when the U.S. makes that list?

SF Symbols expands

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Code and compete in the TC Hackathon at Disrupt Berlin

Published November 23, 2019

We’re in the home stretch to the TC Hackathon going down at Disrupt Berlin 2019 on 11-12 December. If you have what it takes to compete against some of the best hackers, developers, engineers and code poets, apply to the TechCrunch Hackathon now. We have fewer than 50 seats left, and they’ll be gone before you can say deep hack mode.

The Hackathon is free — no fee to apply or to compete. It’s a thrilling, fun and exhausting ride. Designing, creating and pitching a working product in roughly 24 hours will test your physical, mental and technical limits. It’s an adrenaline rush like no other.

What do you get for messing with your circadian rhythm? For starters, we’ll keep you fed, watered and caffeinated. And every participant receives a free Innovator pass to enjoy Disrupt Berlin. Then there’s the prize money associated with each sponsored contest and, on top of that, TechCrunch editors will award an additional $5,000 prize to the team they choose for creating the best overall hack.

When you and your team arrive on site, you’ll pick one of several sponsored contest hacks to tackle and complete. Arriving solo? No worries. We’ll help you find a team when you get here.

After the 24-hour hackathon clock runs out, sponsor representatives and TechCrunch editors will review all completed projects. They’ll select 10 teams to move on to the finals the following day. Each team gets two minutes to power pitch and present their products live on the Extra Crunch Stage.

After 10 sleep-deprived presentations, the judges announce the winners of the sponsor challenges and TechCrunch reveals the winner of best overall hack and awards them $5,000.

Curious about the types of challenges you’ll find on tap? We’ll announce this year’s sponsors and their specific contests before the month is out, but here’s an example of the type of challenges you can expect.

Last year at Disrupt SF, BYTON sponsored a contest challenging the Hackathon participants to create a product that addressed this question: What will people want to do in a car that has a 49-inch screen and drives autonomously? The $5,000 first prize went to CAR-O-KE, a karaoke app for autonomous vehicles. Check out the other sponsored contests, prizes and winners from DSF ’18.

TC Hackathon takes place during Disrupt Berlin 2019 on 11-12 December. Love to code? Love to compete? Love to win money and recognition? Then apply to the Hackathon today before the last remaining seats disappear.

Is your company interested in sponsoring or exhibiting at Disrupt Berlin 2019? Contact our sponsorship sales team by filling out this form.

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More than 1 million T-Mobile customers exposed by breach

Published November 23, 2019

T-Mobile has confirmed a data breach affecting more than a million of its customers, whose personal data (but no financial or password data) was exposed to a malicious actor. The company alerted the affected customers but did not provide many details in its official account of the hack.

The company said in its disclosure to affected users that its security team had shut down “malicious, unauthorized access” to prepaid data customers. The data exposed appears to have been:

  • Name
  • Billing address
  • Phone number
  • Account number
  • Rate, plan and calling features (such as paying for international calls)

The latter data is considered “customer proprietary network information” and under telecoms regulations they are required to notify customers if it is leaked. The implication seems to be that they might not have done so otherwise. Of course some hacks, even hacks of historic magnitude, go undisclosed sometimes for years.

In this case, however, it seems that T-Mobile has disclosed the hack in a fairly prompt manner, though it provided very few details. When I asked, a T-Mobile representative indicated that “less than 1.5 percent” of customers were affected, which of the company’s approximately 75 million users adds up to somewhat over a million.

The company reports that “we take the security of your information very seriously,” a canard we’ve asked companies to stop saying in these situations.

The T-Mobile representative stated that the attack was discovered in early November and shut down “immediately.” They did not answer other questions I asked, such as whether it was on a public-facing or internal website or database, how long the data was exposed and what specifically the company had done to rectify the problem.

The data listed above is not necessarily highly damaging on its own, but it’s the kind of data with which someone might attempt to steal your identity or take over your account. Account hijacking is a fairly common tactic among cyber-ne’er-do-wells these days and it helps to have details like the target’s plan, home address and so on at one’s fingertips.

If you’re a T-Mobile customer, it may be a good idea to change your password there and check up on your account details.

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Facebook prototypes Favorites for close friends microsharing

Published November 22, 2019

Facebook is building its own version of Instagram Close Friends, the company confirms to TechCrunch. There are a lot people that don’t share on Facebook because it can feel risky or awkward as its definition of “friends” has swelled to include family, work colleagues and distant acquaintances. No one wants their boss or grandma seeing their weekend partying or edgy memes. There are whole types of sharing, like Snapchat’s Snap Map-style live location tracking, that feel creepy to expose to such a wide audience.

The social network needs to get a handle on microsharing. Yet Facebook has tried and failed over the years to get people to build Friend Lists for posting to different subsets of their network.

Back in 2011, Facebook said that 95% of users hadn’t made a single list. So it tried auto-grouping people into Smart Lists like High School Friends and Co-Workers, and offered manual always-see-in-feed Close Friends and only-see-important-updates Acquaintances lists. But they too saw little traction and few product updates in the past eight years. Facebook ended up shutting down Friend Lists Feeds last year for viewing what certain sets of friends shared.

Then a year ago, Instagram made a breakthrough. Instead of making a complicated array of Friend Lists you could never remember who was on, it made a single Close Friends list with a dedicated button for sharing to them from Stories. Instagram’s research found 85% of a user’s Direct messages go to the same three people, so why not make that easier for Stories without pulling everyone into a group thread? Last month I wrote that “I’m surprised Facebook doesn’t already have its own Close Friends feature, and it’d be smart to build one.”

How Facebook Favorites works

Now Facebook is in fact prototyping its a feature similar to Instagram Close Friends called Favorites. It lets users designate certain friends as Favorites, and then instantly send them their Facebook Story or a  camera-based post from Messenger to just those people, each in their own message thread.

The feature was first spotted inside Messenger by reverse engineering master and frequent TechCrunch tipster Jane Manchun Wong. Buried in the Android app is the code that let Wong generate the screenshots (above) of this unreleased feature. They show how when users go to share a Story or camera post from Messenger, they can instantly send it over chat to everyone on in their Favorites, and edit who’s on that list by adding up to 10 people manually or from algorithmic suggestions. For now Favorites isn’t an audience for sharing Stories like Instagram Close Friends is, but you could imagine Facebook expanding Favorites to have that functionality down the line.

[Update: Facebook had originally confirmed Favorites was for sharing via Stories, but later corrected itself saying posts are sent to Favorites via Messenger.]

 

A Facebook spokesperson confirmed to me that this feature is a prototype that the Messenger team created. It’s an early exploration of the microsharing opportunity, and the feature isn’t officially testing internally with employees or publicly in the wild. The spokesperson describes the Favorites feature as a type of shortcut for sharing to a specific set of people. They tell me that Facebook is always exploring new ways to share, and as discussed at its F8 conference this year, Facebook is focused on improving the experience of sharing with and staying more connected to your closest friends.

Unlocking creepier sharing

There are a ton of benefits Facebook could get from a Favorites feature if it ever launches. First, users might share more often if they can make content visible to just their best pals, as those people wouldn’t get annoyed by over-posting. Second, Facebook could get new, more intimate types of content shared, from the heartfelt and vulnerable to the silly and spontaneous to the racy and shocking — stuff people don’t want every single person they’ve ever accepted a friend request from to see. Favorites could reduce self-censorship.

“No one has ever mastered a close friends graph and made it easy for people to understand . . . People get friend requests and they feel pressure to accept,” Instagram director of product Robby Stein told me when it launched Close Friends last year. “The curve is actually that your sharing goes up and as you add more people initially, as more people can respond to you. But then there’s a point where it reduces sharing over time.” Google+, Path and other apps have died chasing this purposefully selective microsharing behavior.

Facebook Favorites could stimulate lots of sharing of content unique to its network, thereby driving usage. After all, Facebook said in April that it had 500 million daily Stories users across Facebook and Messenger posting from the camera, and the same number as Instagram Stories and WhatsApp Status.

Before Instagram launched Close Friends, it actually tested the feature under the name Favorites and allowed you to share feed posts as well as Stories to just that subset of people. And last month Instagram launched the Close Friends-only messaging app Threads that lets you share your Auto-Status about where or what you’re up to.

Facebook Favorites could similarly unlock whole new ways to connect. Facebook can’t follow some apps like Snapchat down more privacy-centric product paths because it knows users are already uneasy about it after 15 years of privacy scandals. Apps built for sharing to different graphs than Facebook have been some of the few social products that have succeeded outside its empire, from Twitter’s interest graph, to TikTok’s fandoms of public entertainment, to Snapchat’s messaging threads with besties.

Instagram Threads

A competent and popular Facebook Favorites could let it try products in location, memes, performances, Q&A, messaging, live streaming and more. It could build its own take on Instagram Threads, let people share exact location just with Favorites instead of just what neighborhood they’re in with Nearby Friends or create a dedicated meme resharing hub like the LOL experiment for teens it shut down. At the very least, it could integrate with Instagram Close Friends so you could syndicate posts from Instagram to your Facebook Favorites.

The whole concept of Favorites aligns with Facebook CEO Mark Zuckerberg’s privacy-focused vision for social networking. “Many people prefer the intimacy of communicating one-on-one or with just a few friends,” he writes. Facebook can’t just be the general purpose catch-all social network we occasionally check for acquaintances’ broadcasted life updates. To survive another 15 years, it must be where people come back each day to get real with their dearest friends. Less can be more.

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Making sense of a multi-cloud, hybrid world at KubeCon

Published November 22, 2019

More than 12,000 attendees gathered this week in San Diego to discuss all things containers, Kubernetes and cloud-native at KubeCon.

Kubernetes, the container orchestration tool, turned five this year, and the technology appears to be reaching a maturity phase where it accelerates beyond early adopters to reach a more mainstream group of larger business users.

That’s not to say that there isn’t plenty of work to be done, or that most enterprise companies have completely bought in, but it’s clearly reached a point where containerization is on the table. If you think about it, the whole cloud-native ethos makes sense for the current state of computing and how large companies tend to operate.

If this week’s conference showed us anything, it’s an acknowledgment that it’s a multi-cloud, hybrid world. That means most companies are working with multiple public cloud vendors, while managing a hybrid environment that includes those vendors — as well as existing legacy tools that are probably still on-premises — and they want a single way to manage all of this.

The promise of Kubernetes and cloud-native technologies, in general, is that it gives these companies a way to thread this particular needle, or at least that’s the theory.

Kubernetes to the rescue

Photo: Ron Miller/TechCrunch

If you were to look at the Kubernetes hype cycle, we are probably right about at the peak where many think Kubernetes can solve every computing problem they might have. That’s probably asking too much, but cloud-native approaches have a lot of promise.

Craig McLuckie, VP of R&D for cloud-native apps at VMware, was one of the original developers of Kubernetes at Google in 2014. VMware thought enough of the importance of cloud-native technologies that it bought his former company, Heptio, for $550 million last year.

As we head into this phase of pushing Kubernetes and related tech into larger companies, McLuckie acknowledges it creates a set of new challenges. “We are at this crossing the chasm moment where you look at the way the world is — and you look at the opportunity of what the world might become — and a big part of what motivated me to join VMware is that it’s successfully proven its ability to help enterprise organizations navigate their way through these disruptive changes,” McLuckie told TechCrunch.

He says that Kubernetes does actually solve this fundamental management problem companies face in this multi-cloud, hybrid world. “At the end of the day, Kubernetes is an abstraction. It’s just a way of organizing your infrastructure and making it accessible to the people that need to consume it.

“And I think it’s a fundamentally better abstraction than we have access to today. It has some very nice properties. It is pretty consistent in every environment that you might want to operate, so it really makes your on-prem software feel like it’s operating in the public cloud,” he explained.

Simplifying a complex world

One of the reasons Kubernetes and cloud-native technologies are gaining in popularity is because the technology allows companies to think about hardware differently. There is a big difference between virtual machines and containers, says Joe Fernandes, VP of product for Red Hat cloud platform.

“Sometimes people conflate containers as another form of virtualization, but with virtualization, you’re virtualizing hardware, and the virtual machines that you’re creating are like an actual machine with its own operating system. With containers, you’re virtualizing the process,” he said.

He said that this means it’s not coupled with the hardware. The only thing it needs to worry about is making sure it can run Linux, and Linux runs everywhere, which explains how containers make it easier to manage across different types of infrastructure. “It’s more efficient, more affordable, and ultimately, cloud-native allows folks to drive more automation,” he said.

Bringing it into the enterprise

Photo: Ron Miller/TechCrunch

It’s one thing to convince early adopters to change the way they work, but as this technology enters the mainstream. Gabe Monroy, partner program manager at Microsoft says to carry this technology to the next level, we have to change the way we talk about it.

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FCC bans spending on Huawei, ZTE and other ‘national security threats’

Published November 22, 2019

The FCC has finally put the seal of approval on its plan to cut funding going to equipment from companies it deems a “national security threat,” currently an exclusive club of two: Huawei and ZTE.

No money from the FCC’s $8.5 billion Universal Service Fund, used to subsidize purchases to support the rollout of communications infrastructure, will be spent on equipment from these companies.

“We take these actions based on evidence in the record as well as longstanding concerns from the executive and legislative branches,” said FCC Chairman Ajit Pai in a statement. “Both companies have close ties to China’s Communist government and military apparatus. Both companies are subject to Chinese laws broadly obligating them to cooperate with any request from the country’s intelligence services and to keep those requests secret. Both companies have engaged in conduct like intellectual property theft, bribery, and corruption.”

The Chinese companies have faced federal scrutiny for years, and vague suspicions of selling compromised hardware that the government there could take advantage of, but it was only at the beginning of 2019 that things began to heat up with the controversial arrest of Huawei CFO Meng Wanzhou. The companies, it hardly needs mentioning, have vehemently denied all allegations.

Increasingly complicated relations between China and the U.S. generally compounded the difficulty of ZTE and Huawei operating in the States, as well as selling to or purchasing from American companies.

The FCC’s new rule was actually proposed well before things escalated, a fact that Commissioner Jessica Rosenworcel, though she supported the measure, emphasized.

“This is not hard,” she wrote in a statement accompanying the new rule. “It should not have taken us eighteen months to reach the conclusion that federal funds should not be used to purchase equipment that undermines national security.”

Working out the details may have been difficult, however, given the generally chaotic state of the federal government right now. For instance, one month this summer it was going to be illegal for U.S. firms to sell their products to Huawei — and then it wasn’t. Just yesterday several senators wrote to protest the Department of Commerce issuing licenses to firms doing business with Huawei.

Another proposal discussed today but not yet adopted would require companies that receive USF funds to remove equipment from those companies that they may have already installed.

Admittedly it may be a financial burden for smaller carriers to comply with these rules. There’s a plan for that, though, as Chairman Pai explained: “To mitigate the financial impact of this requirement, particularly on small, rural carriers, we propose to establish a reimbursement program to help offset the cost of transitioning to more trusted vendors.”

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VTEX, an e-commerce platform used by Walmart, raises $140M led by SoftBank’s LatAm fund

Published November 22, 2019

E-commerce now accounts for 14% of all retail sales, and its growth has led to a rise in the fortunes of startups that build tools to enable businesses to sell online. In the latest development, a company called VTEX — which originally got its start in Latin America helping companies like Walmart expand their business to new markets with an end-to-end e-commerce service covering things like order and inventory management, front-end customer experience and customer service — has raised $140 million in funding, money it will be using to continue taking its business deeper into more international markets.

The investment is being led by SoftBank, specifically via its Latin American fund, with participation also from Gávea Investimentos and Constellation Asset Management. Previous investors include Riverwood and Naspers; Riverwood continues to be a backer, the company said.

Mariano Gomide, the CEO who co-founded VTEX with Geraldo Thomaz, said the valuation is not being disclosed, but he confirmed that the founders and founding team continue to hold more than 50% of the company. In addition to Walmart, VTEX customers include Levi’s, Sony, L’Oréal and Motorola . Annually, it processes some $2.4 billion in gross merchandise value across some 2,500 stores, growing 43% per year in the last five years.

VTEX is in that category of tech businesses that has been around for some time — it was founded in 1999 — but has largely been able to operate and grow off its own balance sheet. Before now, it had raised less than $13 million, according to PitchBook data.

This is one of the big rounds to come out of the relatively new SoftBank Innovation Fund, an effort dedicated to investing in tech companies focused on Latin America. The fund was announced earlier this year at $2 billion and has since expanded to $5 billion. Other Latin American companies that SoftBank has backed include online delivery business Rappi, lending platform Creditas and property tech startup QuintoAndar.

The common theme among many SoftBank investments is a focus on e-commerce in its many forms (whether that’s transactions for loans or to get a pizza delivered), and VTEX is positioned as a platform player that enables a lot of that to happen in the wider marketplace, providing not just the tools to build a front end, but to manage the inventory, ordering and customer relations at the back end.

“VTEX has three attributes that we believe will fuel the company’s success: a strong team culture, a best-in-class product and entrepreneurs with profitability mindset,” said Paulo Passoni, managing investment partner at SoftBank’s Latin America fund, in a statement. “Brands and retailers want reliability and the ability to test their own innovations. VTEX offers both, filling a gap in the market. With VTEX, companies get access to a proven, cloud-native platform with the flexibility to test add-ons in the same data layer.”

Although VTEX has been expanding into markets like the U.S. (where it acquired UniteU earlier this year), the company still makes some 80% of its revenues annually in Latin America, Gomide said in an interview.

There, it has been a key partner to retailers and brands interested in expanding into the region, providing integrations to localise storefronts, a platform to help brands manage customer and marketplace relations, and analytics, competing against the likes of SAP, Oracle, Adobe and Salesforce (but not, he said in answer to my question, Commercetools, which builds Shopify -style API tools for mid and large-sized enterprises and itself raised $145 million last month).

E-commerce, as we’ve pointed out, is a business of economies of scale. Case in point: While VTEX processes some $2.5 billion in transactions annually, it makes a relatively small return on that — $69 million, to be exact. This, plus the benefit of analytics on a wider set of big data (another economy of scale play), are two of the big reasons VTEX is now doubling down on growth in newer markets like Europe and North America. The company now has 122 integrations with localised payment methods.

“At the end of the day, e-commerce software is a combination of knowledge. If you don’t have access to thousands of global cases you can’t imbue the software with knowledge,” Gomide said. “Companies that have been focused on one specific region are now realising that trade is a global thing. China has proven that, so a lot of companies are now coming to us because their existing providers of e-commerce tools can’t ‘do international.’ ” There are very few companies that can serve that global approach and that is why we are betting on being a global commerce platform, not just one focused on Latin America.”

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