|Dec 19 2017||Public post|
Hello and welcome to Oversharing, a newsletter about the proverbial sharing economy.
If you’re returning from last week, thanks! If you’re new, nice to have you! (Over)share the love and tell your friends to sign up here. Oversharing will be off next week for the holidays, see you in 2018! This is issue eighty-seven, published December 19, 2017.
A closer look.
Hubble is a startup that sells contact lenses directly to consumers—the Warby Parker of contacts, if you will. Founded in May 2016, it's fast become a star of New York's tech scene. Hubble has raised more than $30 million and is valued at over $200 million. It's not strictly speaking the sharing economy, but its founders seem to have a similar interest in playing by the rules (that is, not much).
Earlier this month, I ordered contact lenses from Hubble using a fake prescription from a made-up doctor. I don't actually wear contacts, but the company shipped them to me all the same. Last I heard, Hubble had also shipped contacts to four of five friends and coworkers who I asked to try placing similar orders, with fake prescriptions from made-up doctors.
It turns out that people have strong feelings about contact lenses. Despite Hubble's claim that most people aren't "attempting to circumvent the system like you did," there's apparently a robust crowd of people who fake or doctor their prescriptions to obtain contacts from various online websites. Many of them have written me over the last week to complain that "eye prescriptions are a shakedown," "glasses and contacts are not like drugs," there is no "actual harm being done" by Hubble, the "original consumer safeguards are ridiculous," "there's a nearby alternative universe in which people aren't allowed to buy pants without going to get measured by an expensive, certified tailor," and the entire story is #fakenews.
Many startups, on the proverbial path to disruption, have encountered a law they didn't like. Uber ran into rules on the taxi industry, Airbnb on short-term rentals. Hubble came up against regulations on contact lenses, which in the US are classified as a medical device by the FDA and sold under specific rules from the FTC. Hubble might not like these restrictions, and maybe it's right; maybe they are bad rules.
Toward the end of the latest season of HBO's Silicon Valley, Richard, the protagonist, and his team devise a plan to trick conference-goers into downloading their software so they can launch a mobile data storage network. One member of the team gets cold feet and confronts him about it, reminding Richard they promised not to become like Hooli, the show's fictional Google. "How are we like Hooli?" Richard shoots back. "We are trying to give free internet to the entire world. If we have to bend a few rules for the greater good here and there, I mean it's all for the greater good, is it not?"
The problem isn't Hubble, it's the all-too-common startup mentality that only some laws apply, and others can be ignored in the name of "disruptive innovation" and "saving the world." It's the attitude that led to scandals at Zenefits and Theranos and, this year, Uber. The "greater good" coupled with technology can be used to justify an awful lot. If a startup is above some laws, it's above all laws.
The all-cash deal will let Target customers order groceries and other goods online, and then have the items sent directly to their doors from nearby Target stores.
Buying Shipt further beefs up Target’s logistics operations after the retailer earlier this year acquired software company Grand Junction, which also manages local and same-day deliveries. Target now offers same-day delivery in New York City and can send orders from 1,400 of its stores. Competition in this space is growing fiercer, though, as rivals Wal-Mart Stores Inc. and Best Buy Co. also offer same-day service, keeping pace with Amazon.
Shipt charges $99 a year for unlimited deliveries, competitive with Amazon's price for Prime. Target will initially use Shipt's service for groceries, household goods, and electronics, before expanding delivery to all major product groups by the end of 2019.
Founded in 2014, Shipt is based in Birmingham, Alabama, and also has an office in San Francisco. Like Instacart, Shipt had focused a lot on partnering with grocery chains to deliver and on working with consumer-packaged goods companies to promote their products. Shipt hires independent contractors to make its deliveries and, as of June, said it was profitable before operating costs in the majority of its "established markets." "We had to be smarter from day one, because I funded the company out of my own pocket," CEO Bill Smith told me in June, shortly after Shipt raised a $40 million series B.
Elsewhere in grocery innovation, Peapod is testing a "chat to cart" tool that lets customers create lists on their phone and text them to Peapod (via the toll-free number, 1-833-TXT-PEAPOD) to have the order filled. "Now, instead of texting a busy family member to pick up an extra gallon of milk, you can text Peapod and let us do the work," Peapod VP of product Cat De Merode says, sounding like she maybe hasn't heard about Amazon Alexa.
A fertile paradise.
Here is a story from Wired on "Area 51 Paradise Ranch," the "invite-only" incubator WeWork has quietly begun advertising to startups:
Area 51 differs from other startup incubators in that it doesn't offer investment or take equity in exchange for participation, or offer a free workspace for the duration of the project. (WeWork has no shortage of cash, having raised $9.8 billion from investors, including money used to buy out early shareholders, according to Crunchbase.) Rather it will charge the startups a typical WeWork desk fee (which start at $350), according to recruiting communications.
Area 51 offers "all the amenities of a fertile paradise," according to a pitchdeck featuring black-and-white photos of the Nevada desert. Those amenities include a "curated community" of startups, a workspace that is apparently designed by an algorithm meant to foster meaningful relationships, mentorship from unnamed mentors, introductions to other WeWork members, events, and funding opportunities from unnamed venture capital firms. Events will include happy hours and "weekly standups."
WeWork, in other words, is launching a private, invite-only version of WeWork. Curated communities, meaningful relationships, intros to other WeWork members, events, and happy hours were all tenets of the original shared WeWork office, where press coverage never failed to mention the "beer on tap." In summer 2016, Analytics startup Thinknum got in trouble for scraping data that suggested WeWork's efforts to create "meaningful connections" had "not been well received." The only real difference about Area 51, other than the name, seems like the artificial mystery of having to apply through a minimalist online form.
WeWork isn't pivoting so much as aggressively bolstering its social offerings, doubling down on the promise that its company builds communities. In late November WeWork bought Meetup, an app with about 35 million members that helps people meet up offline for professional networking and hobbies, for an undisclosed amount. Shortly before that it led a $32 million investment into The Wing, a New York-based women's club; acquired Flatiron School, a New York-based coding academy; opened a gym; opened a bar; and announced plans to build a grade school for kindergarteners. "There is no community in the world that provides consistent and continuous long term support and curated services to entrepreneurs," says the pitchdeck for Area 51, a thesis that seems to be driving the broader WeWorld as well.
"Unicorns likely to list."
Airbnb is set to book a profitable 2017, with the third quarter marking the "strongest" one in company history. The company shared those details and more on its home-sharing vision in a sprawling conference call led by policy chief and former Clinton administration operative Chris Lehane. "Consumers including millennials are increasingly following the African proverb and voting with their feet," Lehane said, in one of many references to Airbnb's favorite demographic, millennials.
The company is particularly bullish on its Asia business, which said it had 18 million guests traveling from Asia last year, up 80% year over year, including 5 million from China. Those China travelers included—surprise!—a lot of millennials, with 80% of the company's China base under the age of 35. "These millennials are turning to Airbnb because it's the type of authentic travel, the type of healthy travel, they're really looking for," Lehane said. Airbnb plans to hire 150 people in Beijing and put co-founder Nate Blecharczyk in charge after its former China head was ousted over a relationship with a subordinate in October.
One thing that wasn't mentioned on the call? Airbnb's much-anticipated IPO, which recently topped Reuters' list of "unicorns likely to list in 2018."
The short-term home rental service, founded in 2008 in San Francisco, has clashed with hoteliers and authorities in cities including New York, Amsterdam, Berlin and Paris, which in some cases are limiting short-term rentals. Critics accuse Airbnb of exacerbating housing shortages and driving out lower-income residents.
This isn't the first time Airbnb has made one of those lists, or even the second, or the third. Airbnb has been predicted to IPO "next year" for at least the last five years:
Wired (January 2013): Odds of an IPO: Looking good, but only if it can close its next round. This startup is the darling of the collaborative consumption movement, allowing anyone to put up their house or apartment for travelers to rent. While it’s been close to 18 months since its taken venture capital, Airbnb is already up to $230 million. Rumor has it that the company is vying for a $100 million third round of funding at a $2 billion valuation, and has plans to go public once it closes a new round.
New York Times (February 2014): Several other companies that may have under $1 billion in annual revenue are expected to go public this year, including Gilt, Airbnb and Square.
The Business Journals (January 2015): The accommodations marketplace, similar to Uber, has faced some regulatory issues in cities that are none too pleased with residents turning their homes into hotels. Still, it has a rumored valuation of $13 billion, raising the IPO buzz. CEO and cofounder Brian Chesky said no to an IPO in 2014, and has said of an IPO that "We will do it at a time when it benefits the company. When we have a good reason," in an interview with the Wall Street Journal last year.
CNBC (December 2015): Beyond January, if conditions are right, we could see a big wave of tech IPOs. Dropbox, Snapchat, Uber, Airbnb, Pinterest, Spotify, even Palantir are potential IPOs if the markets pick up.
Reuters (December 2016): The U.S. short-term home rental company has a valuation of about $30 billion and is one of the hotly anticipated debuts of next year.
Who knows! Maybe 2018 will be The Year.
Shervin Pishevar resigns from Sherpa Capital. Y-Combinator plans program for late-stage startups. The Other Tech Bubble. Instacart promotes Sarah Mastrorocco. Stride Health helps contractors sign up for health insurance. Mazda finds 71% of people still want to drive their cars. Uber VP heads to Hilton. Lyft reworks leadership team. Solano County deciding whether to renew Lyft transit program. More people are taking Uber to the doctor. Is Uber a taxi company? Bike-sharing ties up with ride-hailing in China. Tesla tells Uber drivers not to use its superchargers. Rakuten partners with Booking.com on minpaku lodging. UberEats offers couriers insurance in Europe. Go-Jek acquires three fintech startups. Ola buys FoodPanda India. Jacobs letter released in Uber-Waymo trial. Airbnb host arrested for allegedly hiding camera in rental. California consumer group took money from Airbnb's Chris Lehane. Airbnb takes listings from actual bed & breakfasts. Stolen car returned with Lyft stickers and 11,000 new miles. Restaurants built on delivery are a recipe for failure. HQ Trivia stumbles in fundraising over alleged bad behavior. Airbnb for pets. Postmates holiday giftcollection. CryptoBnB.
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