Startups
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As we mentioned in part 1 of this EC-1, David Velez had two key co-founding roles he needed to fill to get started building Nubank. For one, he needed a CTO to lead the engineering side of the business, as Velez didn’t have an engineering background.
Edward Wible, an American computer science graduate who spent most of his career in private equity, would take that responsibility. He didn’t bring years of coding experience, but he had qualities that Velez considered more important: A strong belief in the potential of the product and an equally intense commitment to working on it.
Given the occasionally hostile reaction of most incumbent banks to their customers in Brazil, Nubank’s starkly contrasting openness and transparency has garnered a huge following.
That left an even more important role to fill — one that was much harder to define. This other co-founder would need to blend knowledge of the Brazilian market and local savvy with expertise in banking, all while embodying a Silicon Valley ethos of focusing on customers. This person would also have to work in São Paulo for minimal wages out of a small office with just one bathroom, all in the belief that their equity (both stock and sweat) would one day be worth it.
Velez would eventually stumble upon Cristina Junqueira, who was qualified to do all this, and much, much more.
“Once someone said I was the glue of the operation, and that someone else was the brains. And I said, ‘No, I’m the glue and the brains, and I bet my brain is even better than his,”’ Junqueira said.
Junqueira didn’t just lead Nubank’s drive into the Brazilian market, she also upended age-old notions of what it means to be a 21st-century bank. Her inspiration was nothing short of Disney, and her mission was to create a bank as popular as the magical kingdom itself.
A bank. As popular as Disney. Sounds like a fairy tale, frankly.
Unlike her co-founders Velez and Wible, Junqueira grew up in Nubank’s home market of Brazil. The eldest of four sisters, she remembers her parents — both dentists — always assiduously working to maintain their practice.
Their work ethic trickled down, but so did responsibility. As the oldest at home, she was forced to grow up quickly and take on responsibilities from an early age. “I remember being 11 years old and doing grocery shopping for the month,” she said. “I did everything very young.”
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As we saw in parts 1 and 2 of this EC-1, by mid-2013, Nubank CEO David Velez had most of what he needed to get started. He’d brought on two co-founders, assembled ambitious engineering and operations teams, raised $2 million in seed funding from Sequoia and Kaszek, rented a tiny office in São Paulo, and was armed with a mission to deliver the kind of banking services that customers in a market as large and lucrative as Brazil’s should expect.
Despite being named Nubank, however, the startup couldn’t actually be a bank: Brazil’s laws made it illegal at the time for a foreigner-run company to operate a bank. That restriction required the team to develop an inventive product strategy to find a foothold in the market while they waited for a license directly from the country’s president.
Nubank was so adamant about differentiating itself from other banks that it chose Barney purple for its brand color and first credit card.
Nubank therefore pursued a credit card as its first offering, but it had to race against a clock counting quickly down to zero. At the time, Brazil didn’t have ownership restrictions on this product segment like it did with banking, but new rules were coming into force in just a few months in May 2014 that would block a company like Nubank from launching.
The company needed to execute rapidly over the next eight months if it wanted to be grandfathered into the existing regulations. The speed of operations was frantic to say the least, and the company would go on to work even faster, ultimately propelling itself into the stratosphere of fintech startups.
It’s easy to assume that the name Nubank refers to “new bank,” but that’s not really what the founders were going for. The word “nu” in Portuguese means “naked,” and Velez and his team wanted the name to reflect their vision: To build a 21st-Century bank without any of the shackles imposed by the traditional banks in Brazil.
The team wanted to offer services to as many people as possible, as there is a huge wealth gap in Brazil, where the minimum wage is around $200 a month.
Launching with just a credit card was both a strategic and practical business decision. Credit cards were widely used in the country, and everyone understood how they worked. Additionally, you could only use credit cards to shop online in Brazil, because debit cards weren’t accepted.
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Nubank’s first office, on California Street in the Brooklin neighborhood of São Paulo, makes for a great beginning to the company’s story. It wasn’t a Silicon Valley garage, but this tiny, one-bathroom rented house, where 30 people worked insane hours to push out the company’s debut credit card, lends just as well to an image of entrepreneurial spirit and drive.
As Nubank continues to make international waves, more and more VC investors are taking a look at the Brazilian ecosystem and could potentially fund other upstarts in the years to come.
But as Nubank’s story continued, the team eventually had to move out of that early office, and the next several offices, too. Eventually Nubank had to relocate to an eight-story building in São Paulo, which houses a large part of the company’s now 3,000-person team.
The startup reached decacorn status in far less than a decade, and it is growing faster than ever. When I interviewed CEO David Velez back in January to discuss Nubank’s $400 million Series G, he said, “We’ve gone from 12 million customers in 2019 to 34 million solely based on word of mouth.” By September last year, the company was onboarding 41,000 new customers per day.
In the five months since our interview, Nubank has managed to rope in a whopping 6 million customers to reach 40 million. It’s now valued at $30 billion.
Nubank’s present day headquarters in São Paulo, Brazil. Image Credits: NELSON ALMEIDA/AFP / Getty Images
Getting there hasn’t been easy. The company’s three co-founders, Velez, Edward Wible and Cristina Junqueira, had to make key strategic decisions about how to scale themselves to retain the company’s lead in the neobanking market. That lead is getting tougher to sustain every day. Nubank’s proliferating offerings and broader geographical remit has painted a massive target on its back, and a wide number of competitors have cropped up to run on the paths it pioneered.
Like most Disney films, a fairy-tale ending seems in order, but it’ll take a few more rotations of the film wheel to get to the ending.
For the co-founding trio, it became increasingly clear that Nubank’s growing scale demanded critical strategic decisions on how to bring order to the company.
By 2018, the company had thousands of employees, millions of customers, and they still didn’t have a head of HR. Growth until then had been somewhat unstructured. According to Junqueira, waiting so long to hire a head of HR was one of their early mistakes, because it stunted their ability to grow. “[Good] people continue to be our biggest bottleneck,” she says.
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In January, former Uber executive Liz Meyerdirk announced that she took over as chief executive of The Pill Club. The company, which offers an online birth control prescription and delivery service to hundreds of thousands of women, had hit record revenues, crossing $100 million in annual run rate for the first time in its four-year history.
She found the bridge between ride-sharing to healthcare to be smoother than some might expect, saying that she focused on how to apply technology “to logistics for an everyday use case, [to know] how that simplifies your everyday life.”
Now, six months into her new job, Meyerdirk announced that her company has raised more capital to capitalize on the momentum in women’s health right now. The Pill Club announced today that it has raised a $41.9 million Series B extension round led by Base 10. Existing investors, including ACME, Base10, GV, Shasta Ventures and VMG, participated in the round, as well as new investors, including Uber’s Dara Khosrowshahi and Honey’s George Ruan and iGlobe.
The extension round comes over two years after the company announced its initial Series B investment, a $51 million financing led by VMG Partners. After reportedly being valued at $250 million, the company declined to provide its latest valuation, other than saying that the extension was an up-round.
When a customer joins The Pill Club, they are given a medical questionnaire and a digital form to input personal information. The company gives them a sense of how much the service will cost, and if the price works, it connects them to a nurse either live or via text.
“In a happy case, you can see a nurse immediately,” she said. “Obviously if it’s midnight, we haven’t figured that out yet.” The nurse walks though different options, since, Meyerdirk added, “contraception is not one size fits all.”
Once a customer makes a decision, The Pill Club can then prescribe birth control through their own pharmacy, which will be delivered to their door within two or three days.
The Pill Club launched in 2016 with an at-home delivery service of birth control. Between 2016 and January 2021, it launched in 43 states plus the District of Columbia. It has added five states in the past six months, and plans to get to 50 states by the end of 2021.
The company makes money from medical visits, insurance reimbursement for prescription drugs and cash patients who aren’t covered by insurance.
The chief executive views a big part of its value proposition as embedding with existing insurance plans of its customers, including Medi-CAL and Family PACT. In the last three months, 16% of The Pill Clubs’ new patients were on Medicaid.
“You’ve got companies like Oscar [Health] that are reimagining health insurance, and you’ve got Ro, Hims and Hers, who are [taking] cash as a primary…way to serve…patients,” she said. “That’s fantastic for those who can afford it, but for us, because so much of our value system is around access to equity, we believe everyone should have the right to get access to birth control.”
The company believes that it has to work within the system of insurance to have true innovation.
“Telemedicine that ignores the reality of insurance is always going to have a limited piece of the pie,” a spokesperson from the company said said. “Cash-only systems simply aren’t a product built for a scale. A truly innovative healthcare platform exists within the realities of the system.”
Long-term, The Pill Club wants to replace the old model of going to a primary care provider for annual visits with ongoing care for women.
“I’m generally healthy [but] I actually do have questions on mammograms…colonoscopies, or anything,” Meyerdirk said. “And being able to have a person other than my mom” to talk to that doesn’t require a trip to the doctor or urgent care is the gap that The Pill Club wants to fill.
“We think it’s too good to be true, when we actually get what we deserve,” Meyerdirk said when describing women’s health. Part of her goal going forward is to think bigger, beyond contraception, and figure out how The Pill Club could bring a digital refresh to other areas of women’s health.
In March, the company launched a dermatology pilot, and also expanded its 2020 period care pilot. A portion of the new capital is earmarked toward launching new services for its members.
The Pill Club also shared the diversity metrics of its 350-person staff as part of its announcement.
The Pill Club has 72% of employees identifying as women, and 28% of employees identifying as male. The executive leadership similarly sees predominantly women, with the ratio being 62.5% women and 37.5% male. As for racial diversity, the overall company identifies as 33% white, 19% Asian, 16% Hispanic or Latino and 14% Black or African American; 13% of employees declined to identify.
“We’re by women for women,” Meyerdirk said. “It’s very, very different when you’re by men, for women.” Her appointment came as The Pill Club’s founder and former chief executive officer Nick Chang stepped down from day to day operations. He didn’t take a board seat, but does still have shares in the company.
Liz Meyerdirk, chief executive of The Pill Club. Image Credits: The Pill Club
The wave of prescription, for-delivery medication is only getting bigger, with The Pill Club joined by startups such as Nurx and SimpleHealth, and bigger corporations such as Walmart and Amazon.
“The idea of creating more choice and flexibility across healthcare is long overdue,” she said. “Everyone deserves to have great options when they consider who can best address their daily needs.”
Editor’s note: A prior version of this story noted that The Pill Club does birth control for pick up. This is incorrect. It delivers birth control through its own pharmacies. A correction has been made to reflect this change.
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Dataiku is going downstream with a new product today called Dataiku Online. As the name suggests, Dataiku Online is a fully managed version of Dataiku. It lets you take advantage of the data science platform without going through a complicated setup process that involves a system administrator and your own infrastructure.
If you’re not familiar with Dataiku, the platform lets you turn raw data into advanced analytics, run some data visualization tasks, create data-backed dashboards and train machine learning models. In particular, Dataiku can be used by data scientists, but also business analysts and less technical people.
The company has been mostly focused on big enterprise clients. Right now, Dataiku has more than 400 customers, such as Unilever, Schlumberger, GE, BNP Paribas, Cisco, Merck and NXP Semiconductors.
There are two ways to use Dataiku. You can install the software solution on your own, on-premise servers. You can also run it on a cloud instance. With Dataiku Online, the startup offers a third option and takes care of setup and infrastructure for you.
“Customers using Dataiku Online get all the same features that our on-premises and cloud instances provide, so everything from data preparation and visualization to advanced data analytics and machine learning capabilities,” co-founder and CEO Florian Douetteau said. “We’re really focused on getting startups and SMBs on the platform — there’s a perception that small or early-stage companies don’t have the resources or technical expertise to get value from AI projects, but that’s simply not true. Even small teams that lack data scientists or specialty ML engineers can use our platform to do a lot of the technical heavy lifting, so they can focus on actually operationalizing AI in their business.”
Customers using Dataiku Online can take advantage of Dataiku’s pre-built connectors. For instance, you can connect your Dataiku instance with a cloud data warehouse, such as Snowflake Data Cloud, Amazon Redshift and Google BigQuery. You can also connect to a SQL database (MySQL, PostgreSQL…), or you can just run it on CSV files stored on Amazon S3.
And if you’re just getting started and you have to work on data ingestion, Dataiku works well with popular data ingestion services. “A typical stack for our Dataiku Online Customers involves leveraging data ingestion tools like FiveTran, Stitch or Alooma, that sync to a cloud data warehouse like Google BigQuery, Amazon Redshift or Snowflake. Dataiku fits nicely within their modern data stacks,” Douetteau said.
Dataiku Online is a nice offering to get started with Dataiku. High-growth startups might start with Dataiku Online as they tend to be short on staff and want to be up and running as quickly as possible. But as you become bigger, you could imagine switching to a cloud or on-premise installation of Dataiku. Employees can keep using the same platform as the company scales.
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It’s easier than ever to build a product and sell it around the United States, or the world. But if you want to do so without incurring the wrath of any particular state, or nation-state, you’d best have your tax matters in order. This is why Stripe’s news last week that it has built tax-focused tooling to help its customers manage their state bills mattered.
But for SaaS companies, things can be more complicated from a tax perspective. That’s what Anrok, a startup working to build sales tax software for SaaS firms, told TechCrunch.
The company’s CEO, Michelle Valentine, said that modern software companies need specialized help. And her startup is announcing a $4.3 million fundraise today to back its efforts. The capital event was led by Sequoia and Index, the latter firm a place where Valentine used to work.
Anrok delivers its service via an API, and charges based on the total dollar value of sales that it helps a customer manage. Its percentage-fee falls with volume, and you can’t pay more than 0.19% of managed revenue, so it’s pretty cheap regardless, given how strong software gross margins tend to be.
The Anrok founding team: Michelle Valentine, and Kannan Goundan. Via the company.
Valentine said that there are three things that make SaaS tax issues more complex than other products. The first deals with addresses. Software companies have to pay sales tax where customers are located, and often only have partial information. Anrok will help with that problem. The CEO also said that variable SaaS billing makes charging the right amount of tax an interesting issue, and that states have tax laws specifically aimed at the software market that must be navigated.
So, a more mass-market solution might not be the best fit for SaaS companies looking to avoid both trouble with states and the work of handling tax matters themselves.
It’s not hard to see why Anrok was able to raise capital. The company is early-stage with its first customers onboarded, so it’s not posting the sort of revenue growth that investors covet at the later stages. What then were its more fetching attributes? From our perspective, on-demand pricing and a simply gigantic market.
Sure, Anrok is serving SaaS businesses, but it’s doing so using what could be described as a post-SaaS business model; on-demand, or usage-based pricing is an increasingly popular way to charge for software products today, putting Anrok closer to the cutting edge in business-model terms. And the company’s market is essentially every software business out there. That’s a lot of TAM to carve into, something that investors love to see.
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Twelve years ago, Joby Aviation consisted of a team of seven engineers working out of founder JoeBen Bevirt’s ranch in the Santa Cruz mountains. Today, the startup has swelled to 800 people and a $6.6 billion valuation, ranking itself as the highest-valued electric vertical take-off and landing (eVTOL) company in the industry.
As in any disruptive industry, the forecast may be cloudier than the rosy picture painted by passionate founders and investors.
It’s not the only air taxi company to reach unicorn status. The field is now dotted with new or soon-to-be publicly traded companies courtesy of mergers and special purpose acquisition companies. Partnerships with major automakers and airlines are on the rise, and CEOs have promised commercialization as early as 2024.
As in any disruptive industry, the forecast may be cloudier than the rosy picture painted by passionate founders and investors. A quick peek at comments and posts on LinkedIn reveals squabbles among industry insiders and analysts about when this emerging technology will truly take off and which companies will come out ahead.
Other disagreements have higher stakes. Wisk Aero filed a lawsuit against Archer Aviation alleging trade secret misappropriation. Meanwhile, valuations for companies that have no revenue yet to speak of — and may not for the foreseeable future — are skyrocketing.
Electric air mobility is gaining elevation. But there’s going to be some turbulence ahead.
Taking an eVTOL from design through to manufacturing and certification will likely cost about $1 billion, Mark Moore, then-head of Uber Elevate, estimated in April 2020 during a conference held by the Air Force’s Agility Prime program.
That means in some sense, the companies that will come out on top will likely be the ones that have managed to raise enough money to pay for all the expenses associated with engineering, certification, manufacturing and infrastructure.
“The startups that have successfully raised or that will be able to raise significant amounts of capital to get them through the certification process … that’s the number one thing that’s going to separate the strong from the weak,” Asad Hussain, a senior analyst in mobility technology at PitchBook, told TechCrunch. “There’s over 100 startups in the space. Not all of them are going to be able to do that.”
Just consider some of the expenses accrued by the biggest eVTOLs last year: Joby Aviation spent a whopping $108 million on research and development, a $30 million increase from 2019. Archer spent $21 million in R&D in 2020, according to regulatory filings. Meanwhile, Joby’s net loss last year was $114.2 million and Archer’s was $24.8 million, though, of course, neither company has brought a product to market yet. Operating expenses will likely only continue to grow into the future as companies enter into manufacturing and deployment phases.
What that means for the future of the industry is likely two things: more SPAC deals and more acquisitions.
Mobility companies, including those working on electrified transport, are often pre-revenue and have capitally intensive business models — a combination that can make it difficult to find buyers in a traditional IPO. SPACs have become increasingly popular as a shorter, less expensive path to becoming a public company. SPACs have also historically received less scrutiny than IPOs. Should the U.S. Securities Exchange Commission start to take a closer look at SPAC mergers in the future, it may impair the ability of other air taxi companies to go public this way, Hussain said.
That means market consolidation is nearly guaranteed, as smaller companies may find it more advantageous to sell than continue to raise more capital. It’s already begun: At the end of April, eVTOL developer Astro Aerospace announced the acquisition of Horizon Aircraft.
Horizon cited “greater access to capital” as one of the many benefits of the transaction, and other companies will likely find the buy or sell route to be the most beneficial on the road to commercialization. And just last week, British eVTOL Vertical Aerospace, which has an order for 150 aircraft from Virgin Atlantic, said it would go public via a merger with Broadstone Acquisition Corp. at an equity value of around $2.2 billion.
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This morning, Anna Heim and Alex Wilhelm dug into the EU insurtech market, interviewing European VCs and collating the biggest recent rounds to take the temperature of the waters across the pond:
Several European-based insurtech startups entered unicorn territory this year, such as Bought By Many, which offers pet insurance; London-based Zego; and Alan, a French startup that raised a $220 million round.
According to Brittain, EU startups in this sector are “still at the very early stages of innovation,” having only shown “a fraction of what’s possible” in a market that is “as large as banking.” Interestingly, he predicted that AI will play a larger role in the future as companies deploy it for fraud detection, improved customer experiences and processing claims more quickly.
“We are fully expecting the next generation of AI-driven business to unlock real-time risk analysis, pricing and claims resolution in the next few years,” he said.
Thanks very much for reading Extra Crunch; I hope you have a safe, relaxing weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Image Credits: Nigel Sussman (opens in a new window)
Earlier this week, The Exchange assessed the looming Monday.com IPO before reading the tea leaves about that flotation and three others to sum up the overall state of the market.
So what do the Marqeta, Monday.com, Zeta Global and 1stDibs debuts tell us? We may have been too conservative.
Image Credits: Bessemer Venture Partners / Toast
On a recent episode of Extra Crunch Live, we spoke to Toast founder Aman Narang and Kent Bennett of Bessemer Venture Partners about how they came together for a deal, what makes the difference for both founders and investors when fundraising, and the biggest lessons they’ve learned so far.
The episode also featured the Extra Crunch Live Pitch-Off, where audience members pitched their products to Bennett and Narang and received live feedback.
Extra Crunch Live is open to everyone each Wednesday at 3 p.m. EDT/noon PDT, but only Extra Crunch members are able to stream these sessions afterward and watch previous shows on-demand in our episode library.
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim solicited feedback from investors to get a temperature on the market for AI startup investments.
“The startup investing market is crowded, expensive and rapid-fire today as venture capitalists work to preempt one another, hoping to deploy funds into hot companies before their competitors,” they write. “The AI startup market may be even hotter than the average technology niche.”
But that’s not surprising. The Exchange was on it.
“In the wake of the Microsoft-Nuance deal, The Exchange reported that it would be reasonable to anticipate an even more active and competitive market for AI-powered startups,” Alex and Anna note. “Our thesis was that after Redmond dropped nearly $20 billion for the AI company, investors would have a fresh incentive to invest in upstarts with an AI focus or strong AI component; exits, especially large transactions, have a way of spurring investor interest in related companies.”
Their expectation is coming true: Investors reported a fierce market for AI startups.
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
I started a tech company about two years ago, and ever since I’ve dreamed of expanding my company in the United States.
I would love to have a green card. Someone mentioned that I should apply for a diversity green card. Would you please provide me with more details about it and how to apply?
— Technical in Tanzania
Image Credits: MediaProduction (opens in a new window) / Getty Images
Pulley founder and three-time YC alum Yin Wu offers a tactical guide to getting a startup running in four days. Yes, just four days.
“The logistics of setting up a startup should be simple, because over the long run, complicated equity setups and cap tables cost more money in legal fees and administration time,” Wu notes.
Read on for guidance on how to get your business going in less than a week.
Image Credits: Natali_Mis / Getty Images
Innovaccer founder and CEO Abhinav Shashank and CTO Mike Sutten write in a guest column that the U.S. healthcare industry is in the middle of a massive transformation.
This shift, they write, “is being stimulated by federal mandates, technological innovation, and the need to improve clinical outcomes and communication between providers, patients and payers.”
Improving healthcare now means we need to process tremendous amounts of healthcare data. How do we do it? The cloud, which “plays a pivotal role in meeting the current needs of healthcare organizations.”
Image Credits: MrJub / Getty Images
SOSV’s Benjamin Joffe and Meghan Hind round up a “who’s who” from the venture capital firm’s SOSV Climate Tech 100, a list of the best startups addressing climate change that SOSV has supported from the very beginning.
“What can founders learn from the list about climate tech investors? In other words, who invested in the Climate Tech 100?” they ask.
Image Credits: Donald Iain Smith (opens in a new window) / Getty Images
Now that we can transact from anywhere, a new, hybrid class of software companies with embedded financial services are scooping up consumers — and investors are following the action.
Using data from a Battery Ventures report about “the intersection of software and financial services,” this post examines why these companies can be so hard to value and offers a framework for better understanding their business models and investor appeal.
Image Credits: Grant Faint (opens in a new window) / Getty Images
Geoffrey Moore’s “Chasm,” a framework for marketing technology products that has been one of the canonical foundational concepts to product-market fit for three decades, needs a bit of an upgrade, Flybridge Capital’s Jeff Bussgang writes.
“I have been reflecting on why it is that we venture capitalists and founders keep making the same mistake over and over again — a mistake that has become even more glaring in recent years,” he writes.
Bussgang goes on to consider the Chasm — and propose tweaks for thinking about market size in the modern era.
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“Who should my first marketing hire be?”
This is (by far) the most common question I’ve received since starting as Fuel’s CMO, and for good reason. Your first marketer will have an outsized impact on team dynamics as well as the overall strategic direction of the brand, product and company.
The nature of the marketing function has expanded significantly over the past two decades. So much so that when founders ask this question, it immediately prompts multiple new ones: Should I hire a brand or growth marketer? An offline or an online marketer? A scientific or a creative marketer?
Once upon a time, the number of marketing channels was fairly limited, which meant the function itself fit into a neater, tighter box. The number of ways to reach customers has since grown exponentially, as has the scope of the marketing role. Today’s startups require at least four broad functions under the umbrella of “marketing,” each with its own array of subfunctions.
The reality is that anyone who excels across all marketing functions is a unicorn and nearly impossible to find.
Here’s a sample of the marketing functions at a typical early-stage startup:
Brand marketing: Brand strategy, positioning, naming, messaging, visual identity, experiential, events, community.
Product marketing: UX copy, website, email marketing, customer research and segmentation, pricing.
Communications: PR and media relations, content marketing, social media, thought leadership, influencer.
Growth marketing: Direct response paid acquisition, funnel optimization, retention, lifecycle, engagement, reporting and attribution, word of mouth, referral, SEO, partnerships.
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Respond to our survey and help us find the best startup growth marketers!
As you can imagine, that’s a lot for one person to manage, let alone be an expert in. What’s more, the skill set and experience required to excel in growth marketing is quite different from the skill set required to succeed in brand marketing. The reality is that anyone who excels across all marketing functions is a unicorn and nearly impossible to find.
Unless you’re lucky enough to nab that unicorn, your first hire should be a generalist who can tend to the full stack of the marketing function, learn what they don’t know, and roll up their sleeves to get things done. Someone smart, savvy and super scrappy who understands how to experiment across marketing channels until they find the right mix.
But this utility player should also bring deeper expertise in one of the big marketing functions: brand, product, communications or growth. Before making this key hire, you need to figure out which marketing priorities are most urgent and, consequently, which marketing “persona” is most appropriate for your business at the earliest stages.
To figure out which skill set you need most in-house, consider these five questions:
If you’ve done some marketing experimentation previously, have there been any bright spots? Which channels are proving the most efficient from a customer acquisition, conversion, retention, engagement, whatever your key KPI is, perspective? If you find a promising area, find a candidate that has expertise in it. For example, if you are seeing good results with Instagram ads, hiring a candidate who has expertise in growth marketing makes sense.
If you don’t have much data from channel testing, consider how your target customers are currently finding competitive products or services. At TaskRabbit, we knew from early customer research that clients were finding help with home services either through recommendations from friends or by asking Google (i.e., SEO and SEM).
So, that was a natural place for us to start. Our focus from a resource and staffing perspective in the early days was on growth marketing — driving more word of mouth, plus optimizing our SEO and SEM.
How competitive is the category you’re playing in? Are there dominant players with strong brands? Do these brands have endless marketing budgets? Are CACs exorbitant because well-capitalized competitors are outbidding each other? If so, you might want to focus on building an exceptional brand and product/customer experience.
That means disseminating a unique story through organic channels (word of mouth, PR, influencers and organic social media). A brand marketer or someone with deep PR and communications experience makes sense in this scenario.
Another aspect to consider is the skills the founder(s) — or other members of the founding/early team — bring to the table. If a founder has a strong vision for the brand and extensive experience building brands, then focus less on a brand marketing hire and rather supplement the branding skill set with another marketing priority (i.e., product marketing). Likewise, if a founder has a strong vision for the brand but no one on the team knows how to build one, that’s a skill gap that your first marketing hire should fill.
Trust building has become an increasingly important aspect for brands as customers become more and more discerning. But trust building tends to be more critical in certain areas than others: New, nascent industries or markets, sectors with a lot of human interaction (services businesses, dating platforms, etc.), industries that are fundamentally changing consumer behavior (ride-sharing in its earliest days), or industries where the stakes or cost is relatively high (luxury goods).
If trust building is critical, consider a branding expert who understands how to build trust and credibility, and build an experience that consumers are passionate about. This person will likely have deep expertise in PR and brand building, as these channels tend to inspire the most trust among consumers.
Once you’ve answered these five questions, you should have a pretty good idea of the type of marketing experience you want. But just how much experience should that person have? I typically recommend that seed-stage founders look for senior manager or director-level candidates at midsized companies.
At this experience level (six to 10 years), these candidates’ salaries tend to be more in line with a young company’s budget. Moreover, at this stage of their career, they tend to be both strategic and tactical. This means they can level up and think strategically about the business and the marketing function, but they are also happy to get their hands dirty and execute — actually dive into the Facebook platform and create ads, plan and host an event, or pitch a journalist.
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Didi filed to go public in the United States last night, providing a look into the Chinese ride-hailing company’s business. This morning, we’re extending our earlier reporting on the company to dive into its numerical performance, economic health and possible valuation.
Recall that Didi has raised tens of billions worth of private capital from venture capitalists, private equity firms, corporations and other sources. The size of the bet riding on Didi is simply massive.
Didi is approaching the American public markets at a fortuitous moment. While the late-2020 IPO fervor, which sent offerings from DoorDash and others skyrocketing after their debuts, has cooled, valuations for public companies remain high compared to historical norms. And Uber and Lyft, two American ride-hailing companies, have been posting numbers that point to at least a modest recovery in the ride-hailing industry as COVID-19 abates in many parts of the world.
As further grounding, recall that Didi has raised tens of billions worth of private capital from venture capitalists, private equity firms, corporations and other sources. The size of the bet riding on Didi is simply massive. As we explore the company’s finances, then, we’re more than vetting a single company’s performance; we’re examining what sort of returns an ocean of capital may be able to derive from its exit.
In that vein, we’ll consider GMV results, revenue growth, historical profitability, present-day profitability and what Didi may be worth on the American markets, given current comps. Sound good? Into the breach!
Starting at the highest level, how quickly has gross transaction volume (GTV) scaled at the company?
Didi is historically a business that operates in China but has operations today in more than a dozen countries. The impact and recovery of China’s bout with COVID-19 is therefore not the whole picture of the company’s GTV results.
COVID-19 began to affect the company starting in the first quarter of 2020. From the Didi F-1 filing:
Core Platform GTV fell by 32.8% in the first quarter of 2020 as compared to the first quarter of 2019, and then by 16.0% in the second quarter of 2020 as compared to the second quarter of 2019.
The dips were short-lived, however, with Didi quickly returning to growth in the second half of the year:
Our businesses resumed growth in the second half of 2020, which moderated the impact on a year-on-year basis. Our Core Platform GTV for the full year 2020 decreased by 4.8% as compared to the full year 2019. Both our China Mobility and International segments were impacted, but whereas the GTV for our China Mobility segment decreased by 6.6% from 2019 to 2020, the GTV for our International segment increased by 11.4% from 2019 to 2020.
Holding to just the Chinese market, we can see how rapidly Didi managed to pick itself up over the last year. Chinese GTV at Didi grew from 25.7 billion RMB to 54.6 billion RMB from the first quarter of 2020 to the first quarter of 2021; naturally, we’re comparing a more pandemic-impacted quarter at the company to a less-affected period, but the comparison is still useful for showing how the company recovered from early-2020 lows.
The number of transactions that Didi recorded in China during the first quarter of this year was also up more than 2x year over year.
On a whole-company basis, Didi’s “core platform GTV,” or the “sum of GTV for our China Mobility and International segments,” posted numbers that are less impressive in growth terms:
Image Credits: Didi F-1 filing
You can see how quickly and painfully COVID-19 blunted Didi’s global operations. But seeing the company settle back to late-2019 GTV numbers in 2021 is not super bullish.
Takeaway: While Didi managed an impressive GTV recovery in China, its aggregate numbers are flatter, and recent quarterly trends are not incredibly attractive.
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