May
23
2019
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Andreessen pours $22M into PlanetScale’s database-as-a-service

PlanetScale’s founders invented the technology called Vitess that scaled YouTube. Now they’re selling it to any enterprise that wants their data both secure and consistently accessible. And thanks to its ability to re-shard databases while they’re operating, it can solve businesses’ troubles with GDPR, which demands they store some data in the same locality as the user to whom it belongs.

The potential to be a computing backbone that both competes with and complements Amazon’s AWS has now attracted a mammoth $22 million Series A for PlanetScale. Led by Andreessen Horowitz and joined by the firm’s Cultural Leadership Fund, head of the US Digital Service Matt Cutts, plus existing investor SignalFire, the round is a tall step up from the startup’s $3 million seed it raised a year ago. Andreessen general partner Peter Levine will join the PlanetScale board, bringing his enterprise launch expertise.

PlanetScale co-founders (from left): Jitendra Vaidya and Sugu Sougoumarane

“What we’re discovering is that people we thought were at one point competitors, like AWS and hosted relational databases — we’re discovering they may be our partners instead since we’re seeing a reasonable demand for our services in front of AWS’ hosted databases,” says CEO Jitendra Vaidya. “We are growing quite well.” Competing database startups were raising big rounds, so PlanetScale connected with Andreessen in search of more firepower.

A predecessor to Kubernetes, Vitess is a horizontal scaling sharding middleware built for MySQL. It lets businesses segment their database to boost memory efficiency without sacrificing reliable access speeds. PlanetScale sells Vitess in four ways: hosting on its database-as-a-service, licensing of the tech that can be run on-premises for clients or through another cloud provider, professional training for using Vitess and on-demand support for users of the open-source version of Vitess. PlanetScale now has 18 customers paying for licenses and services, and plans to release its own multi-cloud hosting to a general audience soon.

With data becoming so valuable and security concerns rising, many companies want cross-data center durability so one failure doesn’t break their app or delete information. But often the trade-off is unevenness in how long data takes to access. “If you take 100 queries, 99 might return results in 10 milliseconds, but one will take 10 seconds. That unpredictability is not something that apps can live with,” Vaidya tells me. PlanetScale’s Vitess gives enterprises the protection of redundancy but consistent speeds. It also allows businesses to continually update their replication logs so they’re only seconds behind what’s in production rather than doing periodic exports that can make it tough to track transactions and other data in real-time.

Now equipped with a ton of cash for a 20-person team, PlanetScale plans to double its staff by adding more sales, marketing and support. “We don’t have any concerns about the engineering side of things, but we need to figure out a go-to-market strategy for enterprises,” Vaidya explains. “As we’re both technical co-founders, about half of our funding is going towards hiring those functions [outside of engineering], and making that part of our organization work well and get results.”

But while a $22 million round from Andreessen Horowitz would be exciting for almost any startup, the funding for PlanetScale could assist the whole startup ecosystem. GDPR was designed to reign in tech giants. In reality, it applied compliance costs to all companies — yet the rich giants have more money to pay for those efforts. For a smaller startup, figuring out how to obey GDPR’s data localization mandate could be a huge engineering detour they can hardly afford. PlanetScale offers them not only databases but compliance-as-a-service too. It shards their data to where it has to be, and the startup can focus on their actual product.

May
16
2019
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OpenFin raises $17 million for its OS for finance

OpenFin, the company looking to provide the operating system for the financial services industry, has raised $17 million in funding through a Series C round led by Wells Fargo, with participation from Barclays and existing investors including Bain Capital Ventures, J.P. Morgan and Pivot Investment Partners. Previous investors in OpenFin also include DRW Venture Capital, Euclid Opportunities and NYCA Partners.

Likening itself to “the OS of finance,” OpenFin seeks to be the operating layer on which applications used by financial services companies are built and launched, akin to iOS or Android for your smartphone.

OpenFin’s operating system provides three key solutions which, while present on your mobile phone, has previously been absent in the financial services industry: easier deployment of apps to end users, fast security assurances for applications and interoperability.

Traders, analysts and other financial service employees often find themselves using several separate platforms simultaneously, as they try to source information and quickly execute multiple transactions. Yet historically, the desktop applications used by financial services firms — like trading platforms, data solutions or risk analytics — haven’t communicated with one another, with functions performed in one application not recognized or reflected in external applications.

“On my phone, I can be in my calendar app and tap an address, which opens up Google Maps. From Google Maps, maybe I book an Uber . From Uber, I’ll share my real-time location on messages with my friends. That’s four different apps working together on my phone,” OpenFin CEO and co-founder Mazy Dar explained to TechCrunch. That cross-functionality has long been missing in financial services.

As a result, employees can find themselves losing precious time — which in the world of financial services can often mean losing money — as they juggle multiple screens and perform repetitive processes across different applications.

Additionally, major banks, institutional investors and other financial firms have traditionally deployed natively installed applications in lengthy processes that can often take months, going through long vendor packaging and security reviews that ultimately don’t prevent the software from actually accessing the local system.

OpenFin CEO and co-founder Mazy Dar (Image via OpenFin)

As former analysts and traders at major financial institutions, Dar and his co-founder Chuck Doerr (now president & COO of OpenFin) recognized these major pain points and decided to build a common platform that would enable cross-functionality and instant deployment. And since apps on OpenFin are unable to access local file systems, banks can better ensure security and avoid prolonged yet ineffective security review processes.

And the value proposition offered by OpenFin seems to be quite compelling. OpenFin boasts an impressive roster of customers using its platform, including more than 1,500 major financial firms, almost 40 leading vendors and 15 of the world’s 20 largest banks.

More than 1,000 applications have been built on the OS, with OpenFin now deployed on more than 200,000 desktops — a noteworthy milestone given that the ever-popular Bloomberg Terminal, which is ubiquitously used across financial institutions and investment firms, is deployed on roughly 300,000 desktops.

Since raising their Series B in February 2017, OpenFin’s deployments have more than doubled. The company’s headcount has also doubled and its European presence has tripled. Earlier this year, OpenFin also launched it’s OpenFin Cloud Services platform, which allows financial firms to launch their own private local app stores for employees and customers without writing a single line of code.

To date, OpenFin has raised a total of $40 million in venture funding and plans to use the capital from its latest round for additional hiring and to expand its footprint onto more desktops around the world. In the long run, OpenFin hopes to become the vital operating infrastructure upon which all developers of financial applications are innovating.

Apple and Google’s mobile operating systems and app stores have enabled more than a million apps that have fundamentally changed how we live,” said Dar. “OpenFin OS and our new app store services enable the next generation of desktop apps that are transforming how we work in financial services.”

May
15
2019
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Tealium, a big data platform for structuring disparate customer information, raises $55M at $850M valuation

The average enterprise today uses about 90 different software packages, with between 30-40 of them touching customers directly or indirectly. The data that comes out of those systems can prove to be very useful — to help other systems and employees work more intelligently, to help companies make better business decisions — but only if it’s put in order: now, a startup called Tealium, which has built a system precisely to do just that and works with the likes of Facebook and IBM to help manage their customer data, has raised a big round of funding to continue building out the services it provides.

Today, it is announcing a $55 million round of funding — a Series F led by Silver Lake Waterman, the firm’s late-stage capital growth fund; with ABN AMRO, Bain Capital, Declaration Partners, Georgian Partners, Industry Ventures, Parkwood and Presidio Ventures also participating.

Jeff Lunsford, Tealium’s CEO, said the company is not disclosing valuation, but he did say that it was “substantially” higher than when the company was last priced three years ago. That valuation was $305 million in 2016, according to PitchBook — a figure Lunsford didn’t dispute when I spoke with him about it, and a source close to the company says it is “more than double” this last valuation, and actually around $850 million.

He added that the company is close to profitability and is projected to make $100 million in revenues this year, and that this is being considered the company’s “final round” — presumably a sign that it will either no longer need external funding and that if it does, the next step might be either getting acquired or going public.

This brings the total raised by Tealium to $160 million.

The company’s rise over the last eight years has dovetailed with the rapid growth of big data. The movement of services to digital platforms has resulted in a sea of information. Much of that largely sits untapped, but those who are able to bring it to order can reap the rewards by gaining better insights into their organizations.

Tealium had its beginnings in amassing and ordering tags from internet traffic to help optimise marketing and so on — a business where it competes with the likes of Google and Adobe.

Over time, it has expanded and capitalised to a much wider set of data sources that range well beyond web and commerce, and one use of the funding will be to continue expanding those data sources, and also how they are used, with an emphasis on using more AI, Lunsford said.

“There are new areas that touch customers like smart home and smart office hardware, and each requires a step up in integration for a company like us,” he said. “Then once you have it all centralised you could feed machine learning algorithms to have tighter predictions.”

That vast potential is one reason for the investor interest.

“Tealium enables enterprises to solve the customer data fragmentation problem by integrating and enriching data across sources, in real-time, to create audiences while providing data governance and fidelity,” said Shawn O’Neill, managing director of Silver Lake Waterman, in a statement. “Jeff and his team have built a great platform and we are excited to support the company’s continued growth and investment in innovation.”

The rapid growth of digital services has already seen the company getting a big boost in terms of the data that is passing through its cloud-based platform: it has had a 300% year-over-year increase in visitor profiles created, with current tech customers including the likes of Facebook, IBM, Visa and others from across a variety of sectors, such as healthcare, finance and more.

“You’d be surprised how many big tech companies use Tealium,” Lunsford said. “Even they have a limited amount of bandwidth when it comes to developing their internal platforms.”

People like to say that “data is the new oil,” but these days that expression has taken on perhaps an unintended meaning: just like the overconsumption of oil and fossil fuels in general is viewed as detrimental to the long-term health of our planet, the overconsumption of data has also become a very problematic spectre in our very pervasive world of tech.

Governments — the European Union being one notable example — are taking up the challenge of that latter issue with new regulations, specifically GDPR. Interestingly, Lunsford says this has been a good thing rather than a bad thing for his company, as it gives a much clearer directive to companies about what they can use, and how it can be used.

“They want to follow the law,” he said of their clients, “and we give them the data freedom and control to do that.” It’s not the only company tackling the business opportunity of being a big-data repository at a time when data misuse is being scrutinised more than ever: InCountry, which launched weeks ago, is also banking on this gap in the market.

I’d argue that this could potentially be one more reason why Tealium is keen on expanding to areas like IoT and other sources of customer information: just like the sea, the pool of data that’s there for the tapping is nearly limitless.

Apr
25
2019
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SalesLoft nabs $70M at around $600M valuation for its sales engagement platform

Artificial intelligence and other tech for automating some of the more repetitive aspects of human jobs continues to be a growing category of software, and today a company that builds tools to address this need for salespeople has raised a tidy sum to grow its business.

SalesLoft, an Atlanta-based startup that has built a platform for salespeople to help them engage with their clients — providing communications tools, supporting data and finally analytics to “coach” salespeople to improve their processes — has raised $70 million in a Series D round of funding led by Insight Partners with participation from HarbourVest.

Kyle Porter, SalesLoft’s co-founder and CEO, would not disclose the amount of funding in an interview, but he did confirm that it is more than double its valuation from the previous round — a $50 million Series C that included LinkedIn among the investors (more on that below) — but less than $1 billion. That round was just over a year ago and would have valued the firm at $250 million. That would put SalesLoft’s current valuation at more than $500 million, and a source close to the company notes that it’s around $600 million.

While there are a number of CRM and sales tools out in the market today, Porter believes that many of the big ones might better be described as “dumb databases or repositories” of information rather than natively aimed at helping source and utilise data more effectively.

“They are not focused on improving how to connect buyers to sales teams in sincere ways,” he said. “And anytime a company like Salesforce has moved into tangential areas like these, they haven’t built from the ground up, but through acquisitions. It’s just hard to move giant aircraft carriers.”

SalesLoft is not the only one that has spotted this opportunity, of course. There are dozens of others that are either competing on single or all aspects of the same services that SalesLoft provides, including the likes of Clari, Chorus.ai, Gong, Conversica, Afiniti and not least Outreach — which is seen as a direct competitor on sales engagement and itself raised $114 million on a $1.1 billion valuation earlier this month.

One of the notable distinctions for SalesLoft is that one of its strategic investors is LinkedIn, which participated in its Series C. Before Microsoft acquired it, LinkedIn was seen as a potential competitor to Salesforce, and many thought that Microsoft’s acquisition was made squarely to help it compete against the CRM giant.

These days, Porter said that his company and LinkedIn have a tight integration by way of LinkedIn’s Sales Navigator product, which SalesLoft users can access and utilise directly within SalesLoft, and they have a hotline to be apprised of and help shape LinkedIn’s API developments. SalesLoft is also increasingly building links into Microsoft Dynamics, the company’s CRM business.

“We are seeing the highest usage in our LinkedIn integration among all the other integrations we provide,” Porter told me. “Our customers find that it’s the third most important behind email and phone calls.” Email, for all its cons, remains the first.

The fact that this is a crowded area of the market does speak to the opportunity and need for something effective, however, and the fact that SalesLoft has grown revenues 100 percent in each of the last two years, according to Porter, makes it a particularly attractive horse to bet on.

“So many software companies build a product to meet a market need and then focus purely on selling. SalesLoft is different. This team is continually innovating, pushing the boundaries, and changing the face of sales,” said Jeff Horing, co-founder and MD of Insight Venture Partners, in a statement. “This is one reason the company’s customers are so devoted to them. We are privileged to partner with this innovative company on their mission to improve selling experiences all over the world.”

Going forward, Porter said that in addition to expanding its footprint globally — recent openings include a new office in London — the company is going to go big on more AI and “intelligence” tools. The company already offers something it calls its “coaching network,” which is not human but AI-based and analyses calls as they happen to provide pointers and feedback after the fact (similar to others like Gong and Chorus, I should note).

“We want to give people a better way to deliver an authentic but ultimately human way to sell,” he said.

Apr
24
2019
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Embrace raises $4.5M for its mobile application performance management platform

Embrace, an LA-based startup that offers a mobile-first application performance management platform, today announced that it has raised a $4.5 million funding round led by Pritzker Group Venture Capital. This brings the company’s total funding to $7 million. New investors Greycroft, Miramar Ventures and Vy Captial also participated in this round, as did previous investors Eniac Ventures, The Chernin Group, Techstars Ventures, Tikhon Bernstam of Parse and others.

Current Embrace customers include the likes of Home Depot, Headspace, OkCupid, Boxed, Thrive Market and TuneIn. These companies use the service to get a better view of how their apps perform on their users’ devices.

As Embrace CEO and co-founder Eric Futoran, who also co-founded entertainment company Scopely, argues, too many similar services mostly focus on crashes, yet those only constitute a small number of the actual user experience issues in most apps. “To a large extent, crashes are solved,” he told me. “The crash percentages are often 99.8 percent crash-free and yet users are still complaining.”

That’s because there are plenty of other issues beyond code exceptions, which many tools focus on almost exclusively, that can force an app to close (think memory issues or the OS shutting down the app because it uses too many CPU cycles). “To users, that looks like a crash. Your app closed. But in no way, that’s a crash from a technical perspective,” Futoran noted.

Raising this new round, Futoran told me, was pretty easy. Indeed, Pritzker approached the company. “It was not fundraising,” he said. “They sat us down and said, ‘we want to fund you guys,’ which I find pretty unusual. So I’ve been calling it a pre-emptive round.” He also noted that having Pritzker involved should help open up the mid-west market for Embrace, which is mostly focusing on enterprise customers (though Futoran’s definition of “enterprise” includes the likes of digital-first companies like Headspace).

“We saw many organizations trust Embrace’s seamless and innovative optimization platform to quickly identify and resolve any user-impacting issues within their apps, and we’re optimistic about the future of the company in this growing market,” said Gabe Greenbaum, an LA-based partner for Pritzker Group Venture Capital. “We look forward to this next stage in the company’s growth journey and are honored to partner with Eric and Fredric to help them achieve their vision.”

The company plans to use the new funding to increase its go-to-market capabilities, and grow its team to build out its technology.

Apr
16
2019
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Logistics startup Zencargo raises $20M to take on the antiquated business of freight forwarding

Move over, Flexport. There is another player looking to make waves in the huge and messy business of freight logistics. Zencargo — a London startup that has built a platform that uses machine learning and other new technology to rethink how large shipping companies and their customers manage and move cargo, or freight forwarding as it’s known in the industry — has closed a Series A round of funding of about $19 million.

Zencargo’s co-founder and head of growth Richard Fattal said in an interview that the new funds will be used to continue building its software, specifically to develop more tools for the manufacturers and others who use its platform to predict and manage how cargo is moved around the world.

The Series A brings the total raised by Zencargo to $20 million. This latest round was led by HV Holtzbrinck Ventures . Tom Stafford, managing partner at DST Global; Pentland Ventures; and previous investors Samos, LocalGlobe and Picus Capital also participated in the round.

Zencargo is not disclosing its valuation, nor its current revenues, but Fattal said that in the last 12 months it has seen its growth grow six times over. The company (for now) also does not explicitly name clients, but Fattal notes that they include large e-commerce companies, retailers and manufacturers, including several of the largest businesses in Europe. (One of them at least appears to be Amazon: Zencargo provides integrated services to ship goods to Amazon fulfillment centers.)

Shipping — be it by land, air or sea — is one of the cornerstones of the global economy. While we are increasingly hearing a mantra to “buy local,” the reality of how the mass-market world of trade works is that components for things are not often made in the same place where the ultimate item is assembled, and our on-demand digital culture has created an expectation and competitive market for more than what we can source in our backyards.

For companies like Zencargo, that creates a two-fold opportunity: to ship finished goods — be it clothes, food or anything — to meet those consumer demands wherever they are; and to ship components for those goods — be it electronics, textiles or flour — to produce those goods elsewhere, wherever that business happens to be.

Ironically, while we have seen a lot of technology applied to other aspects of the economics equation — we can browse an app anytime and anywhere to buy something, for example — the logistics of getting the basics to the right place are now only just catching up.

Alex Hersham, another of Zencargo’s co-founders who is also the CEO (the third co-founder is Jan Riethmayer, the CTO), estimates that there is some $1.1 trillion “left on the table” from all of the inefficiencies in the supply chain related to things not being in stock when needed, or overstocked, and other inventory mistakes.

Fattal notes that Zencargo is not only trying to replace things like physical paperwork, faxes and silos of information variously held by shipping companies and the businesses that use them — but the whole understanding and efficiency (or lack thereof) that underlies how everything moves, and in turn the kinds of businesses that can be built as a result.

“Global trade is an enormous market, one of the last to be disrupted by technology,” Fattal said. “We want not just to be a better freight forwarder but we want people to think differently about commerce. Given a choice, where is it best to situate a supplier? Or how much stock do I order? How do I move this cargo from one place to another? When you have a lot of variability in the supply chain, these are difficult tasks to manage, but by unlocking the data in the supply chain you can really change the whole decision making process.”

Zencargo is just getting started on that. Flexport, one of its biggest startup competitors, in February raised $1 billion at a $3.2 billion valuation led by SoftBank to double down on its own freight forwarding business, platform and operations. But as Christian Saller, a partner at HV Holtzbrinck Ventures describes it, there is still a lot of opportunity out there and room for more than one disruptor.

“It’s such a big market that is so broken,” he said. “Right now it’s not about winner-take-all.”

Apr
11
2019
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Rasa raises $13M led by Accel for its developer-friendly open-source approach to chatbots

Conversational AI and the use of chatbots have been through multiple cycles of hype and disillusionment in the tech world. You know the story: first you get a launch from the likes of Apple, Facebook, Microsoft, Amazon, Google or any number of other companies, and then you get the many examples of how their services don’t work as intended at the slightest challenge. But time brings improvements and more focused expectations, and today a startup that has been harnessing all those learnings is announcing funding to take to the next level its own approach to conversational AI.

Rasa, which has built an open-source platform for third parties to design and manage their own conversational (text or voice) AI chatbots, is today announcing that it has raised $13 million in a Series A round of funding led by Accel, with participation from Basis Set Ventures, Greg Brockman (co-founder & CTO OpenAI), Daniel Dines (founder & CEO UiPath) and Mitchell Hashimoto (co-founder & CTO Hashicorp).

Rasa was founded in Berlin, but with this round, it will be moving its headquarters to San Francisco, with a plan to hire more people there in sales, marketing and business development; and to continue its tech development with its roadmap including plans to expand the platform to cover images, too.

The company was founded 2.5 years ago, by co-founder/CEO Alex Weidauer’s own admission “when chatbot hype was at its peak.”

Rasa itself was not immune to it, too: “Everyone wanted to automate conversations, and so we set out to build something, too,” he said. “But we quickly realised it was extremely hard to do and that the developer tools were just not there yet.”

Rather than posing an insurmountable roadblock, the shortcomings of chatbots became the problem that Rasa set out to fix.

Alan Nichols, the co-founder who is now the CTO, is an AI PhD, not in natural language as you might expect, but in machine learning.

“What we do is more is address this as a mathematical, machine learning problem rather than one of language,” Weidauer said. Specifically, that means building a model that can be used by any company to tap its own resources to train their bots, in particular with unstructured information, which has been one of the trickier problems to solve in conversational AI.

At a time when many have raised concerns about who might “own” the progress of artificial intelligence, and specifically the data that goes into building these systems, Rasa’s approach is a refreshing one.

Typically, when an organization wants to build an AI chatbot either to interact with customers or to run something in the back end of their business, their developers most commonly opt for third-party cloud APIs that have restrictions on how they can be customized, or they build their own from scratch — but if the organization is not already a large tech company, it will be challenged to have the human or other resources to execute this.

Rasa underscores an emerging trend for a strong third contender. The company has built a stack of tools that it has open-sourced, meaning that anyone can (and thousands of developers do) use it for free, with a paid enterprise version that includes extra tools, including customer support, testing and training tools, and production container deployment. (It’s priced depending on size of organization and usage.)

Importantly, whichever package is used, the tools run on a company’s own training data; and the company can ultimately host their bots wherever they choose, which have been some of the unique selling points for those using Rasa’s platform, when they are less interested in working with organizations that might also be competitors.

Adobe’s new AI assistant for searching on Adobe Stock, which has some 100 million images, was built on Rasa.

“We wanted to give our users an AI assistant that lets them search with natural language commands,” said Brett Butterfield, director of software development at Adobe, in a statement. “We looked at several online services, and, in the end, Rasa was the clear choice because we were able to host our own servers and protect our user’s data privacy. Being able to automate full conversations and the fact it is open source were key elements for us.”

Other customers include Parallon and TalkSpace, Zurich and Allianz, Telekom and UBS.

Open source has become big business in the last several years, and so a startup that’s built an AI platform that has a very direct application in the enterprise built on it presents an obvious attraction for VCs.

“Automation is the next battleground for the enterprise, and while this is a very difficult space to win, especially for unstructured information like text and voice, we are confident Rasa has what it takes given their impressive adoption by developers,” said Andrei Brasoveanu, partner at Accel, in a statement.

“Existing solutions don’t let in-house developer teams control their own automation destiny. Rasa is applying commercial open source software solutions for AI environments similarly to what open source leaders such as Cloudera, Mulesoft, and Hashicorp have done for others.”

Apr
09
2019
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PubNub nabs $23M as its IaaS network hits 1.3T messages sent each month

There’s been a huge increase in the last decade of applications and services that rely on real-time notifications and other alerts as a core part of how they operate, and today one of the companies that powers those notifications is announcing a growth round. PubNub — an infrastructure-as-a-service provider that provides a real-time network to send and manage messaging traffic between companies, between companies and apps and between internet-of-things devices — has raised $23 million in a Series D round of funding to ramp up its business internationally, with an emphasis on emerging markets.

The round adds another strategic investor to PubNub’s cap table: Hewlett Packard Enterprise is coming on as an investor, joining in this round previous backers Sapphire Ventures (backed by SAP), Relay Ventures, Scale Venture Partners, Cisco Investments, Bosch and Ericsson.

Todd Greene, the CEO of PubNub (who co-founded it with Stephen Blum), said the startup is not disclosing its valuation with this round except to say that “we are happy with it, and it’s a solid increase on where we were the last time.” That, according to PitchBook, was just under $155 million back in 2016 in a small extension to its Series C round. The company has raised around $70 million to date.

PubNub’s growth — along with that of competing companies and technologies, which includes the likes of Pusher, RabbitMQ, Google’s Firebase and others — has come alongside the emergence of a number of use cases built on the premise of real-time notifications. These include a multitude of apps; for example, for on-demand commerce (e.g. ride hailing and online food ordering), medical services, entertainment services, IoT systems and more.

That’s pushed PubNub to a new milestone of enabling some 1.3 trillion messages per month for customers that include the likes of Peloton, Atlassian, athenahealth, JustEat, Swiggy, Yelp, the Sacramento Kings and Gett, who choose from some 70 SDKs to tailor what kinds of notifications and actions are triggered around their specific services.

Greene said that while some of the bigger services in the world have largely built their own messaging platforms to manage their notifications — Uber, for example, has taken this route — that process can result in “death by 1,000 paper cuts,” in Greene’s words. Others will opt for a PubNub-style alternative from the start.

“About 50 percent of our customers started by building themselves and then got to scale, and then decided to turn to PubNub,” Greene said.

It’s analogous to the same kind of decision businesses make regarding public cloud infrastructure: whether it makes sense to build and operate their own servers, or turn to a third-party provider — a decision that PubNub itself ironically is also in the process of contemplating.

Today the company runs its own business as an overlay on the public cloud, using a mixture of AWS and others, Greene said — the company has partnerships with Microsoft Azure, AWS, and IBM Watson — but “every year we evaluate the benefits of going into different kinds of data centres and interesting opportunities there. We are evaluating a cost and performance calculation,” he added.

And while he didn’t add it, that could potentially become an exit opportunity for PubNub down the line, too, aligning with a cloud provider that wanted to offer messaging infrastructure-as-a-service as an additional feature to customers.

The strategic relationship with its partners, in fact, is one of the engines for this latest investment. “Edge computing and realtime technologies will be at the heart of the next wave of technology innovation,” commented Vishal Lall, COO of Aruba, a Hewlett Packard Enterprise company, said in a statement. “PubNub’s global Data Stream Network has demonstrated extensive accomplishments powering both enterprise and consumer solutions. HPE is thrilled to be investing in PubNub’s fast-growing success, and to accelerate the commercial and industrial applications of PubNub’s real time platform.”

Apr
03
2019
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Torch takes $10M to teach empathy to executives

When everyone always tells you “yes,” you can become a monster. Leaders especially need honest feedback to grow. “If you look at rich people like Donald Trump and you neglect them, you get more Donald Trumps,” says Torch co-founder and CEO Cameron Yarbrough about our gruff president. His app wants to make executive coaching (a polite word for therapy) part of even the busiest executive’s schedule. Torch conducts a 360-degree interview with a client and their employees to assess weaknesses, lays out improvement goals and provides one-on-one video chat sessions with trained counselors.

“Essentially we’re trying to help that person develop the capacity to be a more loving human being in the workplace,” Yarbrough explains. That’s crucial in the age of “hustle porn,” where everyone tries to pretend they’re working all the time and constantly “crushing it.” That can leave leaders facing challenges feeling alone and unworthy. Torch wants to provide a private place to reach out for a helping hand or shoulder to cry on.

Now Torch is ready to lead the way to better management for more companies, as it’s just raised a  $10 million Series A round led by Norwest Ventures, along with Initialized Capital, Y Combinator and West Ventures. It already has 100 clients, including Reddit and Atrium, but the new cash will fuel its go-to market strategy. Rather than trying to democratize access to coaching, Torch is doubling-down on teaching founders, C-suites and other senior executives how to care… or not care too much.

“I came out of a tough family myself and I had to do a ton of therapy and a ton of meditation to emerge and be an effective leader myself,” Yarbrough recalls. “Philosophically, I care about personal growth. It’s just true all the way down to birth for me. What I’m selling is authentic to who I am.”

Torch’s co-founders met when they were in grad school for counseling psychology degrees, practicing group therapy sessions together. Yarbrough went on to practice clinically and start Well Clinic in the Bay Area, while Keegan Walden got his PhD. Yarbrough worked with married couples to resolve troubles, and “the next thing I know I was working with high-profile startup founders, who like anybody have their fair share of conflicts.”

Torch co-founders (from left): Cameron Yarbrough and Keegan Walden

Coaching romantic partners to be upfront about expectations and kind during arguments translated seamlessly to keep co-founders from buckling under stress. As Yarbrough explains, “I was noticing that they were consistently having problems with five different things:

1. Communication – Surfacing problems early with kindness

2. Healthy workplace boundaries – Making sure people don’t step on each others’ toes

3. How to manage conflict in a healthy way – Staying calm and avoiding finger-pointing

4. How to be positively influential – Being motivational without being annoying or pushy

5. How to manage one’s ego, whether that’s insecurity or narcissism – Seeing the team’s win as the first priority

To address those, companies hire Torch to coach one or more of their executives. Torch conducts extensive 360-degree interviews with the exec, as well as their reports, employees and peers. It seeks to score them on empathy, visionary thinking, communication, conflict, management and collaboration, Torch then structures goals and improvement timelines that it tracks with follow-up interviews with the team and quantifiable metrics that can all be tracked by HR through a software dashboard.

To make progress on these fronts, execs do video chat sessions through Torch’s app with coaches trained in these skills. “These are all working people with by nature very tight schedules. They don’t have time to come in for a live session so we come to them in the form of video,” Yarbrough tells me. Rates vary from $500 per month to $1,500 per month for a senior coach in the U.S., Europe, APAC or EMEA, with Torch scoring a significant margin. “We’re B2B only. We’re not focused on being the most affordable solution. We’re focused on being the most effective. And we find that there’s less price sensitivity for senior leaders where the cost of their underperformance is incredibly high to the organization.” Torch’s top source of churn is clients’ going out of business, not ceasing to want its services.

Here are two examples of how big-wigs get better with Torch. “Let’s say we have a client who really just wants to be liked all the time, so much so that they have a hard time getting things done. The feedback from the 360 would come back like ‘I find that Cameron is continually telling me what I want to hear but I don’t know what the expectations are of me and I need him to be more direct,’ ” Yarbrough explains. “The problem is those leaders will eventually fire those people who are failing, but they’ll say they had no idea they weren’t performing because he never told them.” Torch’s coaches can teach them to practice tough-love when necessary and to be more transparent. Meanwhile, a boss who storms around the office and “is super-direct and unkind” could be instructed on how to “develop more empathic attunement.”

Yarbrough specifically designed Torch’s software to not be too prescriptive and leave room for the relationship between the coach and client to unfold. And for privacy, coaches don’t record notes and HR only sees the performance goals and progress, not the content of the video chats. It wants execs to feel comfortable getting real without the worry their personal or trade secrets could leak. “And if someone is bringing in something about trauma or that’s super-sensitive about their personal life, their coach will refer them out to psychotherapists,” Yarbrough assures me.

Torch’s direct competition comes from boutique executive coaching firms around the world, while on the tech side, BetterUp is trying to make coaching scale to every type of employee. But its biggest foe is the stubborn status quo of stiff-upper-lipping it.

The startup world has been plagued by too many tragic suicides, deep depression and paralyzing burnout. It’s easy for founders to judge their own worth not by self-confidence or even the absolute value of their accomplishments, but by their status relative to yesterday. That means one blown deal, employee quitting or product delay can make an executive feel awful. But if they turn to their peers or investors, it could hurt their partnership and fundraising prospects. To keep putting in the work, they need an emotional outlet.

“We ultimately have to create this great software that super-powers human beings. People are not robots yet. They will be someday, but not yet,” Yarbrough concludes with a laugh. IQ alone doesn’t make people succeed. Torch can help them develop the EQ, or emotional intelligence quotient, they need to become a boss that’s looked up to.

Apr
03
2019
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Rippling raises $45M at $270M to be the biz app identity layer

Parker Conrad’s last startup, Zenefits, drowned in busy work. Now with Rippling, he wants to boil that ocean. Instead of trying to nail one thing then expand, “very counter to conventional wisdom, we took on something that’s a lot broader and more ambitious.” That meant spending two years with 40 engineers working in stealth to build integrations with nearly every popular business tool to combine HR, IT and single-sign on services. The result is that when you hire an employee, Rippling onboards them to all those services in a single click. Goodbye, busy work. Hello, gateway to the enterprise app ecosystem.

The past few years have seen a Cambrian explosion of startups building specialty software for office productivity and collaboration. But that’s left customers struggling to get their teams set up on all these fragmented tools. As such, Rippling had a very good first year on the market with rapidly growing revenue. So when Rippling went out to raise money, Conrad was signing term sheets in just over a week.

Forty-five million dollars. “I know that rounds are bigger these days, but still, for a Series A, that’s pretty substantial,” Conrad tells me with a wide grin over coffee at San Francisco’s Four Barrel. “We want to keep doubling down on the engineering, investing and putting more money into R&D, so we have real product advantages and technology advantages over other players in our space, even though a lot of them have been around a lot longer than we have.” The Information‘s Zoe Bernard had reported Rippling was raising at least $30 million.

Rippling’s round was led by Kleiner Perkins and its enterprise guru Mamoon Hamid. As Conrad tells me, “Many of the metrics you use to evaluate SaaS companies were invented by Mamoon. He really knows his stuff. He’s also just a really great person.” Kleiner was his dream partner for Rippling. “I remember when I was in high school, Kleiner Perkins was the only VC firm I’d ever heard of. When I was a little kid, I thought ‘Oh that’d be cool some day.’ ” The round was joined by Initialized Capital, Threshold Ventures (formerly DFJ) and Y Combinator.

A source confirms the round was a stunning $270 million valuation. Hamid was also skeptical about Rippling trying to integrate with everyone before launch. But, he says, “What was a concern a few years ago is now something we like about the company.” After getting pitched so many piecemeal enterprise solutions, it suddenly clicked for Hamid why customers would want “one stop for everything. You need an independent party to be that glue layer.” 

Typically, enterprise software is an unglued mess. Apps don’t talk to each other, so when you hire a new employee, you have to manually add them, their role, their team, their manager, their permissions and more to every single tool your team uses. There are HR systems that control payroll and benefits, IT systems that determine what equipment you’re issued, productivity and collaboration apps like Slack and Dropbox and department-specific tools like Salesforce or GitHub. Conrad believes manually updating these with each hire, fire or promotion is the source of almost all administrative work at a company.

The willingness to slog through office chores rather than strategically nullify them is why Zenefits grew so fast, then suddenly hit a wall. What can be begrudgingly brute-forced at 50 employees becomes impossible to manage at 500 employees. That’s why, he says, “We don’t want to have anything that’s not software end to end in the product.” If it requires a client to call Rippling’s operations team for help, it could be built better. That maniacal focus actually allowed Conrad to temporarily hold Rippling’s only role responding to user complaints, which he also credits with propelling rapid iteration. The CEO wants to remain in that mindset, so he still lists his job title on LinkedIn as “Customer Support.”

Conrad seems to have convinced investors that though he was pushed out of his $4.5 billion-valuation HR startup Zenefits, he was more responsible for its rise than its fall. Conrad had built a script that allowed Zenefits staffers to stay logged in to the study portion of their insurance exam. Conrad insists it played no part in helping them study for or pass the certification test. Still, regulators got involved, leading to his departure and a combined $1 million SEC fine for him and Zenefits. The desire to speed things up was another symptom of busy work draining the company’s time.

There were also culture issues, with Zenefits once having to tell employees not to have sex in the office stairwells. A more measured pace and a deeper commitment to diversity are a few other ways Rippling hopes to avoid the culture troubles of Conrad’s last venture.

Rippling only truly began hiring more than engineers when it came out of stealth a year ago. Now the startup has established two lucrative business models. First, it earns reseller fees from other enterprise tool makers when people buy them through the Rippling gateway. Any developer with a well-established brand becomes an integrated Rippling partner. It’s not going to try to out-build Zoom or Mailchimp. “As Rippling is successful, what I think it can do is bring a lot of customers to these other businesses. If you can bring down the marginal cost of adding an N+1 business system, there’s a lot less hesitation about adding products.” Customers want more utility, just without the headache.

Meanwhile, Rippling develops its own in-house versions of undifferentiated parts of the HR and IT stacks, like PTO management or commuter benefits. Customers aren’t loyal to a brand in these areas yet, so it’s easy for Rippling to swoop in. And it can charge a similar rate, but beat competitors on convenience because its homegrown systems integrate directly with Rippling’s source of truth on employee details. Upstarts in the single-sign on space like Okta and LastPass claim to be identity layers, but are really just password managers. And their early growth has spurred SaaS companies to build API endpoints on which Rippling’s version RPass can piggyback.

For a while I thought Slack would emerge as the enterprise identity provider because chat is such a ubiquitous need that it could be the start of a cross-app profile. But HR and IT are an even more foundational layer, and Slack doesn’t feel like a natural place to gather employee details like Rippling is. “For slack, communication and collaboration in general are a big enough opportunity to not let identity get in the way of the core business there,” says Hamid.

Now with Rippling’s business revving up and plenty of cash to fuel the engine, Conrad tells me his biggest concern is hiring the right people. “The really challenging thing in a company is when the headcount grows too quickly. I’m making sure we don’t do things like more than double headcount in a 12-month period,” he tells me. While Zenefits was a mad blitz for scale, Conrad has tried to bias Rippling toward action without being so impulsive that the company makes mistakes. “It’s never easy, but we’re not yet at the scale where things become really scary. We have a little bit more time to hit milestones. We’re growing at a healthy clip, but nothing that’s straining things in any way and we see that because we track our NPS very closely,” he says of trying to run a business at a more livable pace while being an active dad, too.

Luckily, Zenefits taught him how to avoid many of the pitfalls of entrepreneurship. Conrad concludes that he’s happy to have gone from “playing video games on impossible mode versus medium mode.”

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