Startups

African tech leaders Fope Adelowo, Ken Njoroge, Tayo Oviosu to speak at Disrupt SF
African tech leaders Fope Adelowo, Ken Njoroge, Tayo Oviosu to speak at Disrupt SF 150 150 Jordan Crook

Africa’s startup scene is growing by leaps and bounds, and three tech leaders are set to share insights on this vibrant space at Disrupt San Francisco.   

Paga CEO Tayo Oviosu, Helios Investment Partners Vice President Fope Adelowo and Cellulant CEO Ken Njoroge will take the stage September 7 to discuss topics such as fintech, Africa’s founder experience, data privacy, VC investment and the continent’s future unicorn and IPO prospects.

Nearly two decades of improved stability, economic growth and reform have created some bright spots on the continent, rapid modernization and a growing technology scene among them.

Africa minted its first unicorn — e-commerce venture Jumia— in 2016, and over the last five years, just about every big-name U.S. tech company, including Facebook, Google and Netflix, has expanded there.

The continent now has 442 active tech hubs, accelerators and innovation spaces across IT hotspots in Ghana, Kenya, South Africa, Nigeria and Rwanda. Thousands of African startups are moving into every imaginable sector: from blockchain, logistics and education to healthcare and agriculture.

And hundreds of millions of dollars in venture capital is flowing to these startups, with the expectation that some of their solutions for Africa’s 1.2 billion people will produce significant ROI.

Two of those ventures are Oviosu’s Paga and Njoroge’s Cellulant. Paga has become one of Nigeria’s leading digital payments providers in a market where many people are just signing on to financial services. Since 2012 the company has processed 57 million transactions worth $3.6 billion, reached 9 million users and achieved profitability, according to Oviosu.

Cellulant — a Nairobi-headquartered pan-African payment startup — has also posted some impressive fintech stats. The company offers B2B and P2B services to clients that include some of the continent’s largest banks. In 2017 Cellulant’s payment platforms processed $2.7 billion across 33 countries, according to Njoroge. And in 2018 Cellulant raised one of the continent’s largest VC rounds — $47.5 million — led by TPG Growth’s Rise Fund.  

Paga and Cellulant have the potential to become early public African tech companies, and both Oviosu and Njoroge mentor younger startups as angel investors in their respective markets.

On IPO prospects, Helios Investment Partners’ Fope Adelowo has been on the forefront of VC into Africa’s breakout startups. She serves as board observer to two of the firm’s high-profile Africa investments, e-commerce site MallforAfrica and payments company Interswitch. MallforAfrica recently launched a global e-commerce site with DHL, and Interswitch said it plans to become one of the continent’s first tech IPOs on a major exchange by 2019.

Startups should read this checklist before they go ‘whale hunting’ for big partners
Startups should read this checklist before they go ‘whale hunting’ for big partners 150 150 Jonathan Shieber

A top-four tech company recently approached the CEO of one of our B2B portfolio companies with a tremendous offer. This company, with buy-in from its world-famous CEO, believes the startup’s core technology could help it catch up to a rival in an incredibly important space and wanted to discuss a $20 million investment on extremely favorable terms. This partnership would allow the startup to grow 10X in a year and would provide invaluable validation.

The founder was elated. I was terrified. This kind of deal is a classic “whale hunt,” and most of the startups that engage in them are doomed to end up like Captain Ahab.

While it’s immensely gratifying to receive this kind of validation from a market leader, the startup is at an early and important developmental stage. I’ve seen many promising startups blown up by ill-advised business development deals that swelled teams in a bout of euphoria only to see them wither if interest and focus from their partner wanes.

In my experience, arrangements that pair a behemoth megacorp with a seed/Series A-stage startup have a success rate well below 50 percent. I didn’t tell the founder to decline the offer outright, but I did suggest that the management team consider a few questions before pursuing it.

How much MRR will it add to your business? The project with the large company is in line with the startup’s long-term vision, but it’s a departure from their current focus. A $20 million investment is very nice indeed, but once that money is spent, what will the ongoing revenue be? And what is the opportunity cost of not supporting the current business plan? What discount rate will you apply to compensate for the small probability of this deal working out? My advice was that if he couldn’t satisfactorily answer those questions, it was probably the right move to turn down the deal. Even if the deal was structured as $20 million in revenue rather than equity, I’d hesitate.

How, in detail, will this project help your core business? There’s an argument for entering into an agreement like this even if the immediate revenue contribution is low. If the project will allow the startup to speed up the development of a core technology that is generally applicable to other customers, it would seem far more worthy of consideration — but beware our human ability to rationalize (first and foremost to ourselves).

These projects more often end up as bespoke development engagements where, despite the initial intention, the startup is producing a custom application for the big company. Founders will rationalize the deviations from their product road map, but ultimately sell out their future for a long-shot opportunity to integrate with a worldwide leader.

My advice is to not think magically about product/market fit, and instead, to try pre-selling it to other customers as a form of market development. If you can sell the product, great! If not, you’re probably using venture capital to subsidize the R&D budget of a company worth hundreds of billions of dollars.

What happens if this doesn’t work out? It’s easy to visualize success, but what happens if the deal doesn’t lead anywhere? In this scenario, imagine the big tech company decides to change its priorities and abandons the initiative. SaaS startups face a similar failure mode when they go to great lengths to impress big companies during pilot programs only to see their project die due to lack of interest. When considering a high-risk, high-reward partnership, founders need to spend time envisioning a gruesome demise.

  • What will your pitch be for a bridge round of financing when you have no revenue and you just came up short during a prolonged engagement with the best possible customer in your industry?
  • How will you reassure your most talented team members that you know what you’re doing when the deal fails and capital is running short?
  • How quickly can you reorient the company to focus on other customers and how quickly will you start generating revenue from them?

Image courtesy of Flickr/Felipe Campos

How well do you understand the Big Company? Founders with little exposure to big companies are susceptible to misreading cues. My partner Eric Paley wrote about how entrepreneurs regularly misread their likelihood of getting funding from VCs, and the pattern is similar with this kind of business development deal.

When I started an ISP in South Africa in the 1990s, I had the chance to pitch the executive team at the country’s equivalent to Walmart . We were talking about the upcoming Olympic Games, which they were sponsoring. I asked if they were bringing their biggest customers to the events. One of the VPs looked at me, bewildered, and said: “Your mother may well be our biggest customer.”

I instantly realized they didn’t have big customers; they were a big customer. Their suppliers took them to the Games and fancy dinners. I felt silly at the moment, but learned a valuable lesson about B2B power dynamics. Here are some other dynamics to be cautious of.

Are you aware of the work pace differential?

Startups measure their survival quarter to quarter, while big companies plan in five-year increments. It’s often shocking how slowly big company partners move on everything from email to product roll-outs. Decisions made by gut feel at startups have to navigate a maze of meetings and committees at a big company. Startups often drown in the number of process leviathans require to make the smallest of improvements.

Who are the internal champions?

Promising projects can die on the vine because the internal champion gets reassigned or leaves the company. Successful partnerships will involve multiple high-level people from the larger organization. They also typically involve the startup being paid a fair market rate or are paired with a strategic investment to help defray the burden of non-recurring expenses. If not, beware.

Most sponsors will say their project is critical to the company, but it’s the startup’s CEO’s job to check that out. Founders should reference the opportunity in the same way they would reference an investor. This kind of deal is often an all or nothing bet on your company; don’t make it too blithely.

Is the project a priority for the CXO/VP?

Partnerships between startups and big companies work best when it solves the problem of a VP or CXO-level executive. Below that level, we’ve seen startups spend large sums and risk their future on what amounts to a proof of concept project for a mid-level director with no real juice.

This is especially common with startups who sell to retailers. Theoretically, the brick and mortar shops need a bulwark against Amazon, but in reality, we’ve seen many of them default to be more focused on protecting their physical retail turf rather than truly investing in online sales. They’ll run pilots to assure investors that they have their eye on the future when in reality the efforts are more PR than a business plan.

Do you understand big-company logic?

A $20 million investment to a small startup is a massive deal. For a big company, it’s essentially the size of an acqui-hire and can be shut down with no repercussions. In the context of a half-billion-dollar company, $20 million bets actually fail far more than a startup may appreciate.

Are you competing with another startup?

Is this project a “bake-off,” where multiple companies are competing? The most dangerous kind of whale hunting is when a startup is competing with one or more competitors to win a large book of business. Founders considering this kind of arrangement should give serious thought to skipping the process and building out a less concentrated revenue base with fewer impediments while your competitors fight to the death.

Do you have a deep bench of vetted candidates ready to be hired? Founders often underestimate the challenge of growing 3-5X in short order. Every successful startup has to do this, but it usually happens more organically over time. The kind of business development deal our portfolio CEO is considering will change the company overnight.

Entrepreneurs need to ask if they have a long list of former co-workers, peers or vetted candidates eager to join their company? If not, massively scaling the company to meet the demands of a major partner will likely lead to sub-par hires to fill an urgent need while slowly poisoning the company’s culture. Money is rarely the most challenging part of hiring. Hiring fast when you control your destiny is hard enough; doing so in an uncertain arrangement can be very detrimental.

Beyond hiring, it’s important to view a partnership through the lens of Activity Based Costing.

How much time will this take up? Fifty percent? Eighty percent? More? Will you have to drop existing customers or products to make the project work? Are you still able to grow the business outside of this partnership or is it genuinely all-consuming?

Are you ready for the hunt?

If you can answer these questions confidently, then you may be ready to go whale hunting. When these projects work, they can be the first domino in a cascade that leads to growth and good places. More often, it results in a startup spending a year and a large chunk of its capital on a high-risk business development deal that more often fails to pan out. Chart your course accordingly.

Taiwan startup FunNow gets $5M Series A to help locals in Asian cities find last-minute things to do
Taiwan startup FunNow gets $5M Series A to help locals in Asian cities find last-minute things to do 150 150 Catherine Shu

“Instant booking” apps that let tourists sign up for activities on very short notice have been in the news a lot lately, partly because of Klook’s new unicorn status, but also because of the proliferation of startups in the space, especially in Asia. With so many instant booking apps, are there any niches left to fill? FunNow thinks so. Instead of targeting tourists, FunNow serves locals who want to find new things to do in their cities. The Taipei, Taiwan-based startup announced today that it has raised a $5 million Series A led by the Alibaba Entrepreneur Fund, with participation from CDIB, a returning investor, Darwin Venture and Accuvest. The capital will be used to expand FunNow into Southeast Asian and Japanese cities.

Along with a pre-A round closed last July, its newest funding brings FunNow’s total raised since its launch in November 2015 to $6.5 million. FunNow currently claims 500,000 members and 3,000 vendors, who provide more than 20,000 activities and services daily. Co-founder and CEO T.K. Chen says the startup will focus on building its presence in Hong Kong, Okinawa, Kuala Lumpur, Bangkok, Osaka and Tokyo.

One noteworthy fact about its Series A is the participation of Alibaba, which is beefing up its online-to-offline (or O2O, the business of enabling users to book and pay for offline services) offerings as competitor Meituan-Dianping prepares to go public in Hong Kong. A roster of Alibaba apps, including Koubei for local bookings, food delivery platform Ele.me and travel app Feizhu, compete against Meituan-Dianping, which describes itself as a “one-stop super app” because it offers all those services.

A not-for-profit initiative, the Alibaba Entrepreneurs Fund supports startups that might eventually contribute to the tech giant’s ecosystem. While Alibaba’s O2O apps are focused on capturing a bigger share away from Meituan-Dianping in China, Chen says future synergies may include listing FunNow’s activities on Koubei so Chinese tourists can continue using the app when they travel. (Chen added that Alibaba wants FunNow to expand in Southeast Asia as soon as possible.)

Even with a backer like Alibaba, however, the obvious question is how does FunNow compare with other instant booking apps? The most notable ones are Klook and KKday, but other players include Headout, Voyagin, GetYourGuide, Culture Trip, Peek and even Airbnb’s new “Experiences” feature.

Chen, who notes Klook’s Series A in 2015 was also $5 million, says FunNow’s deep dive into the local market sets it apart. Its biggest categories are last-minute hotel bookings, like hot spring resorts in Taipei that offer rooms for blocks of several hours in addition to overnight stays; restaurants and bars; massages and other spa services; and events like music festivals and parties.

Chen adds that catering to locals looking for fun stuff to do in their own cities means FunNow’s user engagement is high, with 70% of each month’s gross merchandise volume from repeat customers. The rest comes from first-time users and about 60% of people make another booking within 30 days after their first purchase. FunNow expects to make revenue of $16 million in 2018, three times what it made in 2017.

Most of FunNow’s users are young, in the 25-to-35 age bracket. “We are like Uber, but for booking restaurants, massages, hotels or other kinds of activities around you. We are also targeting spontaneous consumers, because almost all of our bookings are for the next 15 minutes to hour. If you look at our data, 80% of our bookings are for the next hour,” says Chen.

The company tailors its technology platform to local users, too, and relies on a patented algorithm that makes real-time availability calculations to prevent overbookings by syncing with merchant databases. Chen says users can see all available slots based on their location and search perimeters in less than 0.1 seconds and updates in real-time, so people don’t click on something only to find it’s no longer available.

FunNow also screens vendors before adding them to the platform and will delist businesses that rate below 3.5 stars. The convenience is what draws users back to FunNow instead of, say, just reading reviews on Google or asking friends for recommendations and then messaging or calling for a reservation.

Another challenge that potentially arise in the future is if Klook, KKday or other instant booking apps for tourists decide to start serving locals as well. Chen says he believes those startups will continue focusing on the growing tourist market and demand for half-day or all-day tours.

“If they want to cut into our play, they need to first find merchants one by one and also deploy strong systems to the merchant side,” says Chen. “However, once merchants use our system, it’s unlikely for them to use two systems to control availability, because you’d need to update all of them to avoid overbooking.”

Despite its first mover advantage, FunNow is also constantly improving its tech, Chen says. “Even in a minute, a business might have sold the seat to a walk-in customer, causing a overbooking and that’s the worst thing to see.”

Openbook is the latest dream of a digital life beyond Facebook
Openbook is the latest dream of a digital life beyond Facebook 150 150 Natasha Lomas

As tech’s social giants wrestle with antisocial demons that appear to be both an emergent property of their platform power, and a consequence of specific leadership and values failures (evident as they publicly fail to enforce even the standards they claim to have), there are still people dreaming of a better way. Of social networking beyond outrage-fuelled adtech giants like Facebook and Twitter.

There have been many such attempts to build a ‘better’ social network of course. Most have ended in the deadpool. A few are still around with varying degrees of success/usage (Snapchat, Ello and Mastodon are three that spring to mine). None has usurped Zuckerberg’s throne of course.

This is principally because Facebook acquired Instagram and WhatsApp. It has also bought and closed down smaller potential future rivals (tbh). So by hogging network power, and the resources that flow from that, Facebook the company continues to dominate the social space. But that doesn’t stop people imagining something better — a platform that could win friends and influence the mainstream by being better ethically and in terms of functionality.

And so meet the latest dreamer with a double-sided social mission: Openbook.

The idea (currently it’s just that; a small self-funded team; a manifesto; a prototype; a nearly spent Kickstarter campaign; and, well, a lot of hopeful ambition) is to build an open source platform that rethinks social networking to make it friendly and customizable, rather than sticky and creepy.

Their vision to protect privacy as a for-profit platform involves a business model that’s based on honest fees — and an on-platform digital currency — rather than ever watchful ads and trackers.

There’s nothing exactly new in any of their core ideas. But in the face of massive and flagrant data misuse by platform giants these are ideas that seem to sound increasingly like sense. So the element of timing is perhaps the most notable thing here — with Facebook facing greater scrutiny than ever before, and even taking some hits to user growth and to its perceived valuation as a result of ongoing failures of leadership and a management philosophy that’s been attacked by at least one of its outgoing senior execs as manipulative and ethically out of touch.

The Openbook vision of a better way belongs to Joel Hernández who has been dreaming for a couple of years, brainstorming ideas on the side of other projects, and gathering similarly minded people around him to collectively come up with an alternative social network manifesto — whose primary pledge is a commitment to be honest.

“And then the data scandals started happening and every time they would, they would give me hope. Hope that existing social networks were not a given and immutable thing, that they could be changed, improved, replaced,” he tells TechCrunch.

Rather ironically Hernández says it was overhearing the lunchtime conversation of a group of people sitting near him — complaining about a laundry list of social networking ills; “creepy ads, being spammed with messages and notifications all the time, constantly seeing the same kind of content in their newsfeed” — that gave him the final push to pick up the paper manifesto and have a go at actually building (or, well, trying to fund building… ) an alternative platform. 

At the time of writing Openbook’s Kickstarter crowdfunding campaign has a handful of days to go and is only around a third of the way to reaching its (modest) target of $115k, with just over 1,000 backers chipping in. So the funding challenge is looking tough.

The team behind Openbook includes crypto(graphy) royalty, Phil Zimmermann — aka the father of PGP — who is on board as an advisor initially but billed as its “chief cryptographer”, as that’s what he’d be building for the platform if/when the time came. 

Hernández worked with Zimmermann at the Dutch telecom KPN building security and privacy tools for internal usage — so called him up and invited him for a coffee to get his thoughts on the idea.

“As soon as I opened the website with the name Openbook, his face lit up like I had never seen before,” says Hernández. “You see, he wanted to use Facebook. He lives far away from his family and facebook was the way to stay in the loop with his family. But using it would also mean giving away his privacy and therefore accepting defeat on his life-long fight for it, so he never did. He was thrilled at the possibility of an actual alternative.”

On the Kickstarter page there’s a video of Zimmermann explaining the ills of the current landscape of for-profit social platforms, as he views it. “If you go back a century, Coca Cola had cocaine in it and we were giving it to children,” he says here. “It’s crazy what we were doing a century ago. I think there will come a time, some years in the future, when we’re going to look back on social networks today, and what we were doing to ourselves, the harm we were doing to ourselves with social networks.”

“We need an alternative to the social network work revenue model that we have today,” he adds. “The problem with having these deep machine learning neural nets that are monitoring our behaviour and pulling us into deeper and deeper engagement is they already seem to know that nothing drives engagement as much as outrage.

“And this outrage deepens the political divides in our culture, it creates attack vectors against democratic institutions, it undermines our elections, it makes people angry at each other and provides opportunities to divide us. And that’s in addition to the destruction of our privacy by revenue models that are all about exploiting our personal information. So we need some alternative to this.”

Hernández actually pinged TechCrunch’s tips line back in April — soon after the Cambridge Analytica Facebook scandal went global — saying “we’re building the first ever privacy and security first, open-source, social network”.

We’ve heard plenty of similar pitches before, of course. Yet Facebook has continued to harvest global eyeballs by the billions. And even now, after a string of massive data and ethics scandals, it’s all but impossible to imagine users leaving the site en masse. Such is the powerful lock-in of The Social Network effect.

Regulation could present a greater threat to Facebook, though others argue more rules will simply cement its current dominance.

Openbook’s challenger idea is to apply product innovation to try to unstick Zuckerberg. Aka “building functionality that could stand for itself”, as Hernández puts it.

“We openly recognise that privacy will never be enough to get any significant user share from existing social networks,” he says. “That’s why we want to create a more customisable, fun and overall social experience. We won’t follow the footsteps of existing social networks.”

Data portability is an important ingredient to even being able to dream this dream — getting people to switch from a dominant network is hard enough without having to ask them to leave all their stuff behind as well as their friends. Which means that “making the transition process as smooth as possible” is another project focus.

Hernández says they’re building data importers that can parse the archive users are able to request from their existing social networks — to “tell you what’s in there and allow you to select what you want to import into Openbook”.

These sorts of efforts are aided by updated regulations in Europe — which bolster portability requirements on controllers of personal data. “I wouldn’t say it made the project possible but… it provided us a with a unique opportunity no other initiative had before,” says Hernández of the EU’s GDPR.

“Whether it will play a significant role in the mass adoption of the network, we can’t tell for sure but it’s simply an opportunity too good to ignore.”

On the product front, he says they have lots of ideas — reeling off a list that includes the likes of “a topic-roulette for chats, embracing Internet challenges as another kind of content, widgets, profile avatars, AR chatrooms…” for starters.

“Some of these might sound silly but the idea is to break the status quo when it comes to the definition of what a social network can do,” he adds.

Asked why he believes other efforts to build ‘ethical’ alternatives to Facebook have failed he argues it’s usually because they’ve focused on technology rather than product.

“This is still the most predominant [reason for failure],” he suggests. “A project comes up offering a radical new way to do social networking behind the scenes. They focus all their efforts in building the brand new tech needed to do the very basic things a social network can already do. Next thing you know, years have passed. They’re still thousands of miles away from anything similar to the functionality of existing social networks and their core supporters have moved into yet another initiative making the same promises. And the cycle goes on.”

He also reckons disruptive efforts have fizzled out because they were too tightly focused on being just a solution to an existing platform problem and nothing more.

So, in other words, people were trying to build an ‘anti-Facebook’, rather than a distinctly interesting service in its own right. (The latter innovation, you could argue, is how Snap managed to carve out a space for itself in spite of Facebook sitting alongside it — even as Facebook has since sought to crush Snap’s creative market opportunity by cloning its products.)

“This one applies not only to social network initiatives but privacy-friendly products too,” argues Hernández. “The problem with that approach is that the problems they solve or claim to solve are most of the time not mainstream. Such as the lack of privacy.

“While these products might do okay with the people that understand the problems, at the end of the day that’s a very tiny percentage of the market. The solution these products often present to this issue is educating the population about the problems. This process takes too long. And in topics like privacy and security, it’s not easy to educate people. They are topics that require a knowledge level beyond the one required to use the technology and are hard to explain with examples without entering into the conspiracy theorist spectrum.”

So the Openbook team’s philosophy is to shake things up by getting people excited for alternative social networking features and opportunities, with merely the added benefit of not being hostile to privacy nor algorithmically chain-linked to stoking fires of human outrage.

The reliance on digital currency for the business model does present another challenge, though, as getting people to buy into this could be tricky. After all payments equal friction.

To begin with, Hernández says the digital currency component of the platform would be used to let users list secondhand items for sale. Down the line, the vision extends to being able to support a community of creators getting a sustainable income — thanks to the same baked in coin mechanism enabling other users to pay to access content or just appreciate it (via a tip).

So, the idea is, that creators on Openbook would be able to benefit from the social network effect via direct financial payments derived from the platform (instead of merely ad-based payments, such as are available to YouTube creators) — albeit, that’s assuming reaching the necessary critical usage mass. Which of course is the really, really tough bit.

“Lower cuts than any existing solution, great content creation tools, great administration and overview panels, fine-grained control over the view-ability of their content and more possibilities for making a stable and predictable income such as creating extra rewards for people that accept to donate for a fixed period of time such as five months instead of a month to month basis,” says Hernández, listing some of the ideas they have to stand out from existing creator platforms.

“Once we have such a platform and people start using tips for this purpose (which is not such a strange use of a digital token), we will start expanding on its capabilities,” he adds. (He’s also written the requisite Medium article discussing some other potential use cases for the digital currency portion of the plan.)

At this nascent prototype and still-not-actually-funded stage they haven’t made any firm technical decisions on this front either. And also don’t want to end up accidentally getting into bed with an unethical tech.

“Digital currency wise, we’re really concerned about the environmental impact and scalability of the blockchain,” he says — which could risk Openbook contradicting stated green aims in its manifesto and looking hypocritical, given its plan is to plough 30% of its revenues into ‘give-back’ projects, such as environmental and sustainability efforts and also education.

“We want a decentralised currency but we don’t want to rush into decisions without some in-depth research. Currently, we’re going through IOTA’s whitepapers,” he adds.

They do also believe in decentralizing the platform — or at least parts of it — though that would not be their first focus on account of the strategic decision to prioritize product. So they’re not going to win fans from the (other) crypto community. Though that’s hardly a big deal given their target user-base is far more mainstream.

“Initially it will be built on a centralised manner. This will allow us to focus in innovating in regards to the user experience and functionality product rather than coming up with a brand new behind the scenes technology,” he says. “In the future, we’re looking into decentralisation from very specific angles and for different things. Application wise, resiliency and data ownership.”

“A project we’re keeping an eye on and that shares some of our vision on this is Tim Berners Lee’s MIT Solid project. It’s all about decoupling applications from the data they use,” he adds.

So that’s the dream. And the dream sounds good and right. The problem is finding enough funding and wider support — call it ‘belief equity’ — in a market so denuded of competitive possibility as a result of monopolistic platform power that few can even dream an alternative digital reality is possible.

In early April, Hernández posted a link to a basic website with details of Openbook to a few online privacy and tech communities asking for feedback. The response was predictably discouraging. “Some 90% of the replies were a mix between critiques and plain discouraging responses such as “keep dreaming”, “it will never happen”, “don’t you have anything better to do”,” he says.

(Asked this April by US lawmakers whether he thinks he has a monopoly, Zuckerberg paused and then quipped: “It certainly doesn’t feel like that to me!”)

Still, Hernández stuck with it, working on a prototype and launching the Kickstarter. He’s got that far — and wants to build so much more — but getting enough people to believe that a better, fairer social network is even possible might be the biggest challenge of all. 

For now, though, Hernández doesn’t want to stop dreaming.

“We are committed to make Openbook happen,” he says. “Our back-up plan involves grants and impact investment capital. Nothing will be as good as getting our first version through Kickstarter though. Kickstarter funding translates to absolute freedom for innovation, no strings attached.”

You can check out the Openbook crowdfunding pitch here.

Founder Zain Jaffer may be looking to take back control of Vungle
Founder Zain Jaffer may be looking to take back control of Vungle 150 150 Anthony Ha

Zain Jaffer may be gearing up for a fight to take back control of Vungle, the mobile ad company he founded.

Jaffer was removed from his role as CEO last fall following his arrest on charges of assault with a deadly weapon and performing a lewd act on a child.

However, a San Mateo County judge subsequently dismissed the charges. The district attorney’s office released a statement offering more context for the dismissal, saying that they did not believe there was any sexual conduct on the evening in question, and that “the injuries were the result of Mr. Jaffer being in a state of unconsciousness caused by prescription medication.”

So what’s next for Jaffer and Vungle? There are hints in a recent letter from Jaffer’s attorney, John Pernick, which was sent to current Vungle CEO Rick Tallman.

TechCrunch has obtained a copy of the letter, which requests access to Vungle’s records, specifically the names and addresses of company shareholders. Pernick’s letter suggests that this could be a prelude to further action (emphasis added):

Mr. Jaffer is considering various options with respect to Vungle and his shares of Vungle. He has considered selling some portion of his Vungle shares. However, he is also considering pursuing a leadership change at Vungle through calling for a shareholders meeting for the purpose of voting on a new board of directors and/or purchasing shares of additional Vungle stock. Communicating with Vungle shareholders with respect to their interest in purchasing or selling Vungle stock or in a change in the board of directors is an entirely proper purpose for Mr. Jaffer’s request to inspect the shareholder information that will enable him to make these communications.

When TechCrunch contacted Pernick, he confirmed the authenticity of the letter but declined to comment further. A spokesperson for Jaffer also declined to comment, and Vungle did not respond to our inquiries.

As you can see in the quote above, the letter indicates that Jaffer is considering multiple courses of action.

But if he decides to pursue a leadership change at Vungle, either by winning over existing shareholders or by purchasing a controlling stake in the company, it sounds like there are investors willing to back him — for starters, Jun Hong Heng at Crescent Cove Capital Management confirmed that his firm is working with Jaffer.

“We think Zain and Vungle have incredible potential,” Heng said in a statement. “We look forward to working with Zain and giving him the support he needs to help him regain control of his company.”

We also reached out to Anne-Marie Roussel, who recently resigned from Vungle’s board of directors. Roussel said via email that “the Vungle controversy is an interesting proxy for a much larger debate: the fuzziness surrounding ethical conduct in the tech industry.”

She added, “My personal prediction is that boards of tech companies will be held increasingly accountable for the ethics of the key decisions they make.” As for how that applies to Vungle, she said:

How does it reflect on ethical values when a CEO is dismissed based on presumption of guilt? Don’t we live in a democracy where one of the key legal right is “presumption of innocence” (as in a defendant is innocent until proven guilty). Upholding that principle by collaborating with his defense team was what led to my resignation from Vungle’s board.

Letter to Vungle by TechCrunch on Scribd

Federacy wants to put bug bounty programs in reach of every startup
Federacy wants to put bug bounty programs in reach of every startup 150 150 Ron Miller

Federacy, a member of the Y Combinator Summer 2018 class, has a mission to make bug bounty programs available to even the smallest startup.

Traditionally, bug bounty programs from players like Bugcrowd and HackerOne have been geared toward larger organizations. While these certainly have their place, founders William and James Sulinski, who happen to be twins, felt there was a gap in the marketplace, where smaller organizations were being left out of what they considered to be a crucial service. They wanted to make bug bounty programs and the ability to connect without outside researchers much more accessible, so they built Federacy .

“We think that we can make the biggest impact by making the platform free to set up and incredibly simple for even the most resource-strapped startup to extract value. In doing so, we want to expand bug bounties from probably a few hundred companies currently — across Bugcrowd, HackerOne, etc. — to a million or more in the long run,” William Sulinski told TechCrunch.

That’s an ambitious long-term goal, but for now, they are just getting started. In fact, the brothers only began building the platform when they arrived at Y Combinator a couple of months ago. Once they built a working product, they started by testing it on the members of their cohort, using knowledgeable friends as security researchers.

They made the service public for the first time just last week on Hacker News and report more than 120 sign-ups already. Their goal is 1,000 sign-ups by year’s end, which William claims would make them the largest bug bounty platform by count out there.

Screenshot: Federacy

For now, they are vetting every researcher they bring on the platform. While they realize this approach probably won’t be sustainable forever, they want to control access at least for the early days while they build the platform. They plan to be especially attentive to the researchers, recognizing the value they bring to the ecosystem.

“It’s really important to treat researchers with respect and be attentive. These people are incredibly smart and valuable and are often not treated well. A big thing is just being responsive when they have a report,” Sulinski explained.

Screenshot: Federacy

As for the future, the brothers hope to keep building out the program and developing the platform. One idea they have is getting a fee should a client build a relationship with a particular researcher and want to contract with that individual. They also plan to take a small percentage of each bounty for revenue.

Unlike more typical YC participants, the brothers are a bit older, in their mid-thirties, with more than 20 years of professional experience under their belts. Brother James was director of engineering at MoPub, a mobile ad platform that Twitter acquired for $350 million in 2013. Earlier he helped build infrastructure for drop.io, a file-sharing site that Facebook acquired in 2010. As for William, he was CEO of AccelGolf and Pistol Lake, and founding member and project lead at Shareaholic.

In spite of their broad experience, the brothers have valued the practical advice Y Combinator has provided for them and found the overall atmosphere inspiring. “It’s hard not to be in awe of the incredible things that people have built in this program,” William said.

Apeel Sciences is combating food waste with plant-derived second peels
Apeel Sciences is combating food waste with plant-derived second peels 150 150 Sarah Wells

In a world bursting with abundances like self-driving cars and robotic personal assistants, you would think that basic needs like sustainable food sourcing and distribution would be a problem of the past. But that couldn’t be further from the truth.

According to the Food and Agriculture Organization of the United Nations (FAO), every year roughly a third — 1.3 billion tons — of food grown for consumption is lost or wasted. In industrialized countries like the U.S., this results in a loss of $680 billion per year, and in countries without standardized infrastructure (such as proper cooling systems), this results in a loss of $310 billion per year.

Among the billions of tons of food lost per year, the largest percentage is in vital, nutrient-rich foods like fruits and vegetables and roots and tubers (such as potatoes and carrots), each seeing about 45 percent wasted annually.

There are many factors responsible for food waste, including poorly regulated “Best By” and “Sell By” dates in the U.S. that tempt fickle customers into wasting otherwise good food, and unreliable or non-existent cooling distribution systems in less-industrialized countries.

But an underlying cause of both of these issues, especially for easily spoiled foods, is the inherent shelf life of the food itself. And that’s where Apeel Sciences steps in.

The California-based startup is combating food waste by using plant-derived materials from food itself to create an extra protective barrier to prolong its life and stave off spoilage — essentially, creating a second peel. To create it, farmers just add water to Apeel’s protective powder and apply it to produce as a spray or wash.

For founder and CEO James Rogers, who was working on a PhD in materials engineering from the University of California, Santa Barbara when he was inspired to create Apeel Sciences, the solution to the problem of quickly spoiled food could be found by looking to a problem science had already solved: rust.

“Factors that cause spoilage are water loss and oxidation,” Rogers told TechCrunch. “[This] reminded me instantly of my undergraduate days at Carnegie Mellon as a metallurgist studying steel. Steel is perishable as well. It’s perishable because it rusts — it reacts with oxygen in the environment — and [that] limits its use. [But metallurgists] designed a little oxide barrier that would physically protect the surface of that steel, [creating] stainless steel.

Rogers says he began to wonder if a similar method could be used to protect produce from spoiling effects as well.

“Could we create a thin barrier along the outside of fresh produce and in doing that lower the perishability and perhaps make a dent in the hunger problem?”

Apeel was officially founded in 2012 with a grant from the Bill and Melinda Gates Foundation for $100,000 to help reduce post-harvest food waste in developing countries that lacked refrigeration infrastructure. To combat this issue, Apeel set up self-service and hybrid distribution systems for farmers in countries like Kenya and Uganda to help protect their produce during its journey from farm to consumer, without the need for refrigeration.

While the company still has a foothold in Africa and Southern Asia, it has also started partnerships with farmers in the U.S. as well, and in May and June of this year introduced the first Apeel produce — avocados — to U.S. retailers Costco and Harps Food Stores.

Because Apeel produce is not genetically modified (but instead plant-derived), they need no special labeling at grocers, but Rogers said the produce wears its scientific design on its sleeve nevertheless.

“We’re not doing anything at the DNA level, there’s no genetic modification, but we want to be really upfront with consumers and actually have them look for the label because by identifying that label they’re going to know that bringing that produce home with them [they’ll have] higher-quality, longer-lasting produce that they’ll be less likely to throw away.”

According to Apeel, since its avocados were introduced to Harps Food Stores, the retailer has seen a 65 percent increase in margin and a 10 percent lift in sales across the avocado category.

With these successes under its belt, Apeel also announced in July the closing of a $70 million funding round led by Viking Global Investors, with Andreessen Horowitz, Upfront Ventures and S2G Ventures participating.

Rogers told TechCrunch that the capital will help the company continue its research and development of new methods to fight food waste, including Apeel sprays for produce like stone fruit and asparagus, and continue to learn from solutions found in nature, “Our [mission] at its core is looking at natural ecosystems to determine and identify what materials it’s using to solve problems and how we might be able to extract and isolate those materials to solve other problems for humanity.”

Workona helps web workers finally close all those tabs
Workona helps web workers finally close all those tabs 150 150 Sarah Perez

A new startup, Workona, this week launched software designed for those who primarily do their work in a browser. The company’s goal is to become the OS for web work – and to also save web workers from the hell that is a million open tabs. To accomplish this, Workona offers smart browser windows you set up as workspaces, allowing you a place to save your open tabs, as well as collaborate with team members, search across your tabs, and even sync your workspace to different devices.

The Palo Alto-based company was founded in fall 2017 by Quinn Morgan (CEO), previously the founding product manager at Lucidpress, and Alma Madsen (CTO), previously the first employee and Director of Engineering at Lucid Software, the makers of Lucidpress.

“Last year, Alma and I decided we wanted to build something together again, and initially began working on a different startup idea,” explains Morgan, as to how Workona began. “As a remote team at the time, we were using cloud apps like Google Docs, Asana, Slack, and Zoom to stay connected. Both of us were wearing multiple hats and juggling ten different projects at once.”

“One late night, with ten windows open for each project, the idea just struck us: ‘Why doesn’t the browser – the tool that we actually do most of our work in – not have a good way to manage all of our projects, meetings, and workflows?’”

Of course, there are already browser add-ons that can help with taming the tab chaos, like OneTab, toby, Session Buddy, The Great Suspender, TooManyTabs and others.

But the co-founders didn’t want just another tab manager; they wanted a smart browser window that would save the work you do, automatically. That way, you wouldn’t have to keep all the tabs open all the time, which can make you stressed and less focused. And you wouldn’t have to remember to press a button to save your tabs, either.

With Workona, the software guides users to create workspaces for each of the projects, meetings, and workflows they’re currently working on. (Working on…Workona…get it?).

You can also take a browser window that represents one project and save it as a workspace.

These workspaces function like a folder, but instead of holding a set of files, they can save anything on the web – cloud documents, task lists, open websites, CRM records, Slack sessions, calendars, Trello boards, and more. In each workspace, you can save a set of tabs that should reappear when that workspace is re-opened, as well as set of “saved tabs” you may need to use later.

After creating a workspace, you can use Workona to re-open it at any time. What that means is you can close the browser window, and later easily pick up where you left off without losing data.

A list of workspaces will also appear in the left-side navigation in the Workona browser tab. Within this tab, you can click to open a workspace, switch between workspaces in the same browser window, search for tabs or workspaces from the included search bar, or open workspaces from their URL.

In a shared workspace, you can also collaborate with others on things the team is working on – like everything needed for a project or meeting.

“Our vision is to build the missing OS for work on the web and workspaces are just the start,” says Morgan.

The company is currently working on making the workspaces and its search features more powerful, he adds.

Workona will be sold as a freemium product, with a free tier always available for moderate use. Pro accounts will be introduced in the future, removing the limit of 10 workspaces found in the free version.

The company has been beta testing with users from tech companies like Twitter, Salesforce and Amazon, as well as NASA.

The company is still pre-seed stage, with funding from K9 Ventures.

Traditional OS’s spent a lot of time and effort in designing the ‘desktop experience’ and switching between applications. But in a browser, all we have is tabs,” said K9 Ventures’ Manu Kumar, as to why he invested. “There are tab managers but none of them really solved my problem well enough, and none of them allowed me to maintain a shared context with other people that I’m collaborating with,” he added.

Workona is available for Chrome as a plugin you download from its website.

Google isn’t sure how to spell ‘Fortnite Battle Royale’
Google isn’t sure how to spell ‘Fortnite Battle Royale’ 150 150 Jordan Crook

The launch of Fortnite Battle Royale has left Google in a slight predicament. While Google is in no way hard up for cash, Fortnite Battle Royale for Android certainly represented the potential for a relatively big revenue stream for an app. That is, until Epic Games decided it would launch Fortnite for Android from its own website, circumventing the Play Store.

But revenue aside, there’s also the matter of Google probably not liking the idea of huge titles circumventing the Play Store as a precedent. Plus, the lack of Fortnite Battle Royale within the Play Store poses a slight security risk to users, as there are quite a few V-bucks scams and malicious clones looking to capitalize on the popularity of Fortnite.

That’s why the Google Play store now displays a message to users in response to searches for “Fortnite,” “Fortnite Battle Royale” and other similar search queries.

“Fortnite Battle Royal by Epic Games, Inc is not available on Google Play,” reads the message.

That’s right. Google misspelled the “Royale” in Battle Royale. It was likely an honest mistake, but given the fact that Epic Games is making upwards of $300 million in revenue a month, which Google is not getting a cut of, it makes for some fun back-and-forth for us spectators.

Google lists PUBG Mobile, Fortnite’s biggest competitor, at the top of all Fortnite Battle Royale queries, but doesn’t include anything in its message around how to actually find the real Fortnite Battle Royale for Android .

While Google Play’s app review process should catch the vast majority of malicious clones, the message is at least moderately helpful for folks hearing about the Android version of Battle Royale without knowing the details around Epic’s launcher.

For what it’s worth, Fortnite for Android isn’t yet available to everyone. The game launched yesterday as a Samsung exclusive for folks with a Galaxy S 7 or higher, and will become available to all Android phone owners on August 12.

[via 9to5Google]

Wonderschool raises $20M to help people start in-home preschools
Wonderschool raises $20M to help people start in-home preschools 150 150 Josh Constine

Educators already don’t get paid enough, and those that work in preschools or daycares often make 48% less. Meanwhile, parents struggle to find great early education programs where kids receive enough attention and there’s space, but they don’t need special connections or to pass grueling admissions interviews to get in.

Any time there’s a lousy experience people have an emotional connection to and spend a lot of money on, there’s an opportunity for a startup. Enter ‘Wonderschool‘, a company that lets licensed educators and caretakers launch in-home preschools or daycares. Wonderschool helps candidates get credentialed, set up their programs, launch their websites, boost enrollment, and take payments in exchange for a 10 percent cut of tuition. The startup is now helping run 140 schools in the SF Bay, LA, and NYC where parents are happy to pay to give their kids an advantage.

That chance to fill a lucrative gap in the education market has attracted a new $20 million Series A for Wonderschool led by Andreessen Horowitz. The round brings the startup to $24.1 million in total funding just two years after launch. With the cash and Andreessen partner Jeff Jordan joining its board, Wonderschool is looking to build powerful lead generation and management software to turn teachers into savvy entrepreneurs.

Finding good childcare has become one of the most difficult experiences for families. I’ve seen parents who are making a livable wage in urban cities like San Francisco and New York still struggle to find and afford quality childcare” says co-founder and CEO Chris Bennett. “We wanted to deliver a solution for parents that also had the potential to create jobs and empower the caregiver — that’s Wonderschool.”

By spawning and uniting programs across the country, Wonderschool could scale as the way software eats preschool. But without vigorous oversight of each educator, Wonderschool is also at risk of a safety mishap at one of its franchises ruining the brand for them all.

Airbnb For Schooling

Wonderschool started when co-founder Arrel Gray was having trouble finding childcare for his daughter close to home. “My little sister went to an in-home preschool, so I suggested he check them out” says Bennett. “But he wasn’t very satisfied with the options – the majority were full and some didn’t meet the expectations for his family. We also found that they didn’t use the internet much so they were hard to find and contact.”

The two were seeking to pivot their social commerce startup Soldsie after Facebook algorithm changes curtailed its growth. Their research led to the discovery of just how much lower preschool and daycare workers’ wages were. “When we had the idea we thought, ‘what the best way to test this?’ Why don’t we start a preschool ourselves’” says Bennett. “So we rented a home in the Berkeley Hills, hired an amazing educator, set up a school and started one. The school ended up being a huge success. Five-star reviews on Yelp. A high NPS. Parents loved the place.” It also netted the teacher a 3X higher salary than before.

With that proof, Wonderschool went on to raise $4.1 million from Josh Kopelman at First Round Capital, Omidyar Network, Cross Culture Ventures, Uncork Capital, Lerer Hippeau, FundersClub, and Edelweiss. That let Bennett and Gray flesh out the business. Wonderschool would recruit existing teachers and caregivers or guide people to get licensed so they could become “directors” of in-home schools. Wonderschool acts almost like Airbnb by turning them into small businesses earning money from home.

Teachers can pick whatever schedule, curriculum, or format they want, like Montesori or nature-focused learning. Wonderschool now has over 500 directors working with its software, with some making as much as $150,000 or $200,000. In exchange for its 10 percent cut of tuition, Wonderschool provides directors with a “bootcamp” to prep them for the job. It pairs them with a mentor, then helps them build their website and figure out their pricing options. Coaching guides train the directors to scout for new leads, offer appealing tours, and track their fledgling business.

The $20 million from Andreessen, OmidyarGary Community Investments, and First Round will go to expanding the Wonderschool software. Each student slot it can help director fill, the more it earns. The startup will also have to compete with  companies like Wildflower Schools, which Bennett admits has a similar business model but he says “We are focused on in home and they also focus on Montessori while we are curriculum agnostic.” There’s also Cottage Class which powers homeschooling for students up to age 18, Tinkergarten that concentrates on short-term outdoor education, and VIPKid connects kids in China with U.S. teachers over video chat.

They, like Wonderschool, are trying to scale up to meet the massive existing demand. “The challenge is that there aren’t enough programs for the number of children needing public or private schooling – 1st grade or earlier – and our goal is to provide enough supply for every child” Bennett explains.

Still, safety remains a top concern. Bennett notes that “Wonderschool has a support team that helps school Directors prepare their homes for operation. With regard to safety, each state’s licensing office covers this in their approval process for being granted a license to operate.” But could a problem at one school shake the businesses of all the rest of its franchises? “We have a system of checks in balances in place that we feel confident would allow us to anticipate any potential issues, including regular, weekly check-ins with Directors and a feedback loop with parents. We also email parents on a regular cadence to get feedback from parents and we step in and work with the Director if we find that there are issues” Bennett insists.

If Wonderschool can keep its brand clean through thorough oversight, it could both create better paying jobs in a field rife with undercompensated heroes, and open early schooling to a wider range of students. Bennett’s parents moved to the U.S. from Honduras, pouring their efforts into supporting his and his sister’s education. Now he’s building the next generation of teachers the tools to give more kids a head start in life.

  • 1
  • 2