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Hello and welcome to Daily Crunch for July 12, 2021. You likely spent yesterday watching a football game, watching a space plane or both. We have a little bit more on the latter than the former today in the newsletter, but we can all agree with this regardless of whether you were waving an English or Italian flag yesterday. — Alex

The TechCrunch Top 3

• Flipkart now worth $37.6B: An anticipated investment into Flipkart has come to be, with the Indian e-commerce player raising some $3.6 billion in a single deal. It’s a massive round and a huge endorsement of the larger Indian startup ecosystem. Now we have just to wait for the company to go public!
• Virgin Galactic goes to space (mostly): Quite a few folks tuned into the Virgin Galactic rocket-plane space dalliance this weekend. The production had a few hiccoughs and more than a few self-indulgent moments that could have been edited out, but largely went off without a hitch. The recently SPAC’d former startup quickly decided to raise a half-billion dollars after its success. Unlike its space tourism vehicle, however, shares of Virgin Galactic did not take off on the news.
• Let the billionaires fight: Your humble servant dove into the controversy surrounding the current contest between various billionaires building space companies and fighting to be the first to various space feats. Tax the rich, I think, but let them fight it out in the meantime.

Startups/VC

We have our regular list of funding rounds in a moment, but today we’re kicking off our startup coverage with this headline from earlier today: “Elevate Brands banks $250M to roll up third-party merchants selling on Amazon’s marketplace.”

The headline should feel somewhat familiar as we’ve seen comparable bits of news from other groups. As our own Ingrid Lunden reports, we’ve seen similar deals from Thrasio, The Razor Group, Branded, SellerX, Perch and others. The idea of buying up smaller Amazon retailers is such a potentially lucrative wager that kajillions of dollars are flooding the zone. How many winners that we will see is the next question.

Now, back to our regularly scheduled programming:

• Gembah wants to make product creation easier: The Austin-based startup now has $11 million to follow its vision. How does it go about meeting its mission? By building a platform/marketplace that helps guide users through the work of product creation. Did we need more stuff? Probably. Gembah wants to help.
• India’s next tech IPO: This time it’s MobiKwik, a mobile wallet startup that is targeting a $255 million IPO. We have some of its financials, including that revenue in its most recent fiscal year dipped to $40.5 million. So, it’s a smaller company, but we do love seeing IPOs regardless of their scale.

To close out startup coverage today, fake toys. If you’ve been on Twitter today there’s a good chance that you’ve seen folks posting pictures of toys that look like failed tech products. Think Theranos’ unit or the Juicero machine.

TechCrunch Grand Duke Matthew Panzarino wrote that an “idea factory/art house” called MSCHF is making the “hardness of hardware” more real by selling Dead Startup Toys made of vinyl.

Don’t laugh. This is actually somewhat neat. Think of this: Don’t you want a fake, small Juicero on your desk to throw at the wall here and there when you get mad? I do.

The most important API metric is time to first call

Publishing an API isn’t enough for any startup: Once it’s released, the hard work of cultivating a developer base begins.

Postman’s head of Developer Relations, Joyce Lin, wrote a guest post for Extra Crunch based on the findings of a study aimed at increasing adoption of APIs that utilize a public workspace.

Lin found that the most important metric for a public API is time to first call (TTFC). It makes sense — faster TTFC allows developers to begin using new tools quickly. As a result, “legitimately streamlining TTFC results in a larger market potential of better-educated users for the later stages of your developer journey,” writes Lin.

This post isn’t just for the developers in our audience: TTFC is a metric that product and growth teams should also keep top of mind, they suggest.

“Even if your market is defined as a limited subset of the developer community, any enhancements you make to TTFC equate to a larger available market.”

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

There was a lot going on with the larger tech companies of the world today, so let’s dive right in:

• A modest improvement to Android: If you are running Android 12, you will be able to start playing games a bit faster in the future. Google just announced a feature that will allow users to launch new games before they are fully downloaded. This has been accessible for some PC games for a while, but it’s nice to see on the mobile platform. That said, we’re really at the end of the innovation cycle for the current era of smartphones.
• Microsoft buys more cybersecurity: Microsoft confirmed earlier reports that it was looking to buy RiskIQ. The price was not disclosed, but Bloomberg previously reported that it would be more than $500 million in cash. On the podcast this morning, we noted that that wasn’t a huge price for Microsoft, though the larger company has a huge vested interest in more folks being more secure.
• Elon defends the SolarCity deal: Today’s MuskWatch is all about a deal from the past. Namely the Tesla-SolarCity deal that was worth $2.6 billion. Some shareholders call the deal a bailout. Musk blamed various factors for what could be called underperformance at his car company’s solar division.
• WhatsApp takes flak in Europe: Facebook’s ability to annoy regulators is a global affair, with the company being accused of “multiple breaches of European Union consumer protection law as a result of its attempts to force WhatsApp users to accept controversial changes to the messaging platforms’ terms of use,” TechCrunch reports.

TechCrunch Experts: Growth Marketing

Image Credits: SEAN GLADWELL (opens in a new window) / Getty Images

We’re reaching out to startup founders to tell us who they turn to when they want the most up-to-date growth marketing practices. Fill out the survey here.

Read one of the recommendations we’ve received below!

Marketer: Maya Moufarek, Marketing Cube

Recommender: Nikki O’Farrell, www.KatKin.club

Recommendation: “Expert ear and eye from the world of startups/scaleups and growth. Her functional and direct approach allows you to execute at speed and see results quickly.”

In nearly every Google algorithm update in recent memory, Google has rewarded old, megatraffic sites, sending their search rankings soaring at the expense of smaller, newer sites. Big sites have increased their search traffic by 28% year over year, according to GrowthBar’s organic search data on the 100 most visited sites.

Why? Large sites such as Wikipedia, LinkedIn, Pinterest, Amazon, Home Depot and Target have something the rest of us don’t — they’ve got years of built-up Google trust signals.

I’d contend that Google favors large sites more than ever before — and it’s a trend that doesn’t seem to be slowing down. After all, Google exists to deliver the best search experience to users. Bad search results would be a death sentence for their business, since Googlers would flock to alternatives like DuckDuckGo and Bing.

Especially today, where distrust of the media is at an all-time high, Google can’t risk its reputation by surfacing bad search results, so I think their algorithm errs on the side of caution. It’s simply safer for their business to surface household names at the top of the search engine results page, particularly in ultrasensitive your money, your life categories.

John Mueller, Google’s SEO mouthpiece, practically settled the debate that older sites are preferred by the algorithm when he said, ” … freshness is always an interesting one because it’s something that we don’t always use. Because sometimes it makes sense to show people content that has been established (SEJ).”

So, how can you hope to compete if you’re deploying an SEO strategy on one of the billions of smaller sites?

Help TechCrunch find the best growth marketers for startups.

Provide a recommendation in this quick survey and we’ll share the results with everybody.

Of course, you should start with best practices like making incredible content and securing backlinks to your best web pages, but you should also be willing to think a bit outside the box. The cards aren’t in your favor, so you need to be even more strategic than the big guys. This means executing on some cutting-edge hacks to increase your SEO throughput and capitalize on some of the arbitrage still left in organic search. I call these five tactics “advanced-ish,” because none of them are complicated, but all of them are supremely important for search marketers in 2021.

Scaling your time with content generators

Businesses spent over $300 billion on content marketing last year. That’s in part because creating new content is the most straightforward way to draw in organic search traffic. Whether you’ve got a mature site or you’re just starting a WordPress SEO site, content is likely a large part of your SEO strategy.

But to scale content like a startup, you’ll need to devote a lot of time to it and/or manage a fleet of writers. Your time is probably better spent building your product or helping customers than on planning hundreds of blog articles. This is precisely where a content generator tool comes into play.

A whole new era of SEO tools is emerging, and some of these are augmented by OpenAI’s GPT-3 technology, the most advanced artificial intelligence language model. These tools have changed the game for SEOs and content creators by automating parts of the content creation cycle. Several tools utilize SEO signals and combine them with OpenAI to help you create blog outlines that include SEO-optimized titles, word counts, keywords, headlines, intro paragraphs and much more.

Today we have new filings from Couchbase and Kaltura: Couchbase set an initial price range for its IPO, something we’ve been waiting for, and Kaltura’s offering is back from hiatus with a new price range and some fresh financial information to boot.

Both bits of news should help us get a handle on how the Q3 2021 IPO cycle is shaping up at the start.

TechCrunch has long expected the third quarter’s IPO haul to prove strong; investors said as 2020 closed that quarters one, three and four would prove very active in terms of public market exits this year. Then the second quarter surpassed expectations, with more companies going public than at least some market observers anticipated.

With that in mind, you can imagine why the newly launched Q3 could prove an active period.

So! Let’s start with a dig into the filing from NoSQL provider Couchbase, working to understand its first price range and what the numbers may say about market demand for technology debuts. Here’s our first look at the company’s value. Then we are taking the Kaltura saga back up, checking into the pricing and second-quarter results from the technology company that provides video-streaming software and services.

Frankly, I’ve been waiting for these filings to drop. So, let’s cut the chat and get into the numbers:

Couchbase’s IPO price range

In its new S-1/A filing, Couchbase reports that it anticipates a $20 to $23 per share IPO price. With a maximum sale of just over 8 million shares, Couchbase could raise as much as $185.15 million in its public offering.

The company will have 40,072,801 shares outstanding after its IPO, not including 1,050,000 shares that are reserved for possible release. The math from here is simple. To calculate Couchbase’s possible simple IPO valuation we can just do a little multiplication:

• Couchbase simple valuation at $20 per share: ~$802 million.
• Couchbase simple valuation at $23 per share: ~$922 million.

If you want to include the company’s reserved shares, add $21 million to the first figure, and $24.2 million to the second. Notably, TechCrunch wrote before it priced that using a historical analog from the Red Hat-IBM sale — both Couchbase and Red Hat work in the OSS space — the company would be worth around $900 million. So, we were pretty close.

Allan Jones dropped out of college and spent a decade learning how to run a startup. In 2016, that education resulted in the launch of Los Angeles-based Bambee, which helps small companies by acting as their HR department with the goal of keeping them in compliance with government rules and regulations.

But he found getting funded a challenge in spite of his background. He said that as a Black man, he had to move more carefully in the startup world.

“I think it came as part of the complexities of navigating a mostly white male ecosystem, a mostly straight cis white male ecosystem that either helps you create some skills that make you really effective at the job, or generates so much resentment that it becomes hard to be effective. […] I think that I was always one comment away from the opposite direction [I ended up going],” he explained.

Fortunately, that didn’t happen, and he kept on climbing and gaining skills and single-handedly founded his own company, one which has reached Series B and raised $33 million, a significant amount of money for any startup, but particularly for a startup run by a Black founder.

A study published by Crunchbase in February found that VC firms distributed $150 billion in venture funding in 2020. Of that, less than 1%, or around $1 billion, went to Black founders. That highlights just how difficult it has been for him to raise from such a limited pool of money in spite of having a great idea and the business skill and acumen to pull it off.

Jones got his start at the age of 20 at a startup called Helio, which targeted the youth market for multimedia services on mobile phones. It was eventually acquired by Virgin Mobile. He went on to run product at a couple of companies before landing as CMO at ZipRecruiter in 2013. He left that position after three years to launch Bambee in 2016.

In spite of all that experience, he felt that as a gay Black man in Silicon Valley that he was continually saddled with the label of “the kid with potential,” and not always taken as seriously as his straight white counterparts. “And I don’t think those intentions necessarily were bad, I think it was quite the opposite, which actually makes them almost worse because they were entrenched in a bias of how to characterize [my abilities].”

Jones launched Bambee, a startup that is going after SMBs with fewer than 500 employees, most of which are operating without an HR department, and could be out of compliance with federal mandates because they don’t have anyone in charge who is aware of the rules.

“Bambee aims to put an HR manager in every American small business. We’ve done so by building a model that allows you to hire one on our platform for $99 a month. So you pay us a flat fee and you get access to our platform and your own dedicated HR professional. […] She acts as your human resource manager and your human resource arm for your company. And our platform helps keep those companies compliant,” Jones explained.

Jones says that while he might not encounter direct bias as he builds his business, there is an unconscious bias that investing in Bambee could be riskier than investing in someone who fits the prototypical startup founder mold, and this is especially true in early-stage investing when investors are essentially betting on the entrepreneur.

“They take bets that they deem as a bit safer — entrepreneurs that look like a certain profile — white cis-gender males that come from Stanford and Harvard that match the profile of confidence and they have kind of built in an anti-bias determination around, so they automatically get the benefit of the doubt to those pedigrees, and those profiles,” Jones said.

He says that means that Black founders have to work that much harder to overcome those biases. Today Bambee has some decent metrics to show investors with revenue reaching tens of millions, growing 300% year over year with thousands of customers across all 50 states, according to Jones. With 100 employees, he plans to double that number by the end of this year.

Even with that, he says there are still barriers to entry he has to deal with. Even if it’s harder for investors to ignore the company’s numbers, he still sees a tendency to accentuate the negative.

“Building a great company with the deficit in belief in you that starts so early on in the venture process, the [obstacles] that you have to [overcome] to get here. It seems impossible with less than 1% of venture capital dollars going to Black founders, and it isn’t because Black founders don’t exist, it’s because the belief in us is not there at scale,” he said.

As Jones continues to build the company, he has learned to look for investors who believe in him and his vision for the company. If he senses that negativity from a potential investor, he moves on because he wants to work with people who want to help build the company and believe in it as much as he does. He says this won’t change when he goes to raise his C round, a stage few Black entrepreneurs reach.

“Is it going to be easier for me going forward? I don’t think so. I think the type of bias that I have to combat based on the class of entrepreneur I’m becoming, it starts to shift and change, and I’ve seen that in every round and I’m prepared for it in my Series C, as well.”

He says that the progress he’s made in the company and his belief in the business will help him find the right partners to continue on that journey, just as he has in previous rounds.

“We will navigate this […] and I think we’ll build a really great business, and ultimately the partners we discover along this journey will be the exact right ones who we were meant to.”

Jake Rothstein is the co-founder of Papa, a Miami-based company that offers care and companionship to seniors. The business, which pairs elderly Americans with uncertified-yet-vetted pals, helps offer casual services, such as technology support, grocery delivery or even a fun conversation. It has raised upwards of $91 million in venture capital to date.

While Rothstein left day to day responsibilities at Papa in 2017, his experience there gave him a deeper look into the priorities of older adults and families as they go through the aging journey. While Papa was about meeting the elderly where they are, the co-founder began to think of a more complex question: What if “where they are” isn’t as supportive as it should be 24/7?

After a stint at another tech company, Rothstein launched a more modern take on senior living communities in January 2020, alongside co-worker turned co-founder Peter Badgley. UpsideH?M is a fully managed, tech-enabled living space for older adults in the United States. After a year of beta testing, the duo announced today that they have raised a $2.25 million seed round for UpsideH?M, led by Triple Impact Capital and Freestyle Capital, with participation from Techstars.

Alongside the funding, UpsideH?M announced its next big bet, dubbed a relaunch, that will sit atop furnished and furnished apartments that sit throughout Raleigh, Atlanta, Jacksonville, Tampa and South Florida: a software platform to take out all the clutter from move-in and maintenance. The platform will give residents one spot to chat with their house manager, pay bills and access perks such as on-demand tech support, house-keeping and companion visits thanks to a partnership with Papa. The company also offers add-on services and amenities, including freshly prepared meals, grocery delivery, fitness programming and accompanied transportation.

Image Credits: UpsideH?M

Part of UpsideH?M’s focus is in creating personalized solutions. Elders are diverse in age, needs and financial circumstances — which means the turnkey solution needs to be easily adaptable to service needs when they pop up. The company needs to be careful though: It can’t offer traditional caregiver services due to state by state compliance; instead Rothstein describes the offerings as supportive services, not in replacement of health assistant caregivers.

Image Credits: UpsideHoM

When the company first launched, it was betting on a more unconventional idea.

“I thought, let’s solve loneliness even more completely than what Papa is doing by building in companionship,” Rothstein said, instead of letting people order it on demand. The company decided to offer roommate matching services for elders as one of its core services, alongside the aforementioned supported living characteristics. It didn’t fully stick. Over half of inbound participants responded to the marketing efforts by saying that they liked the idea, but didn’t want to share the space. Today, 50% of UpsideH?M’s business covers individuals or people with spouses or significant others; the other half covers those looking to share units.

The synergies between UpsideH?M and Papa, Rothstein’s previous company, are clear beyond an overlapping customer base. Papa offered up to and almost including actual care, stopping at traditional care-giving services, which require their own vetting and compliance measures. UpsideH?M offers up to and almost including traditional senior living services, but gives supportive services instead of assisted living services, which similarly have their own logistic hurdles to figure out.

As for why Rothstein didn’t just launch supportive living services as a new product vertical within his earlier company, he chalked it up to the “tremendous” opportunity in the former, which warranted it’s own company. He also said that customer acquisition looks different between the two companies.

“At Papa, what we found was that acquiring customers in this space was incredibly challenging [so we went through] the Medicare Advantage route,” he said. “But senior living is a completely different segment.”

The millions in new venture capital money are coming as UpsideH?M prepares for aggressive growth. While the company did not disclose revenue or total residents, it did say it has hit 1,000% in new resident headcount in the first half of 2021 as a vague proxy. As the startup prepares for its next phase of growth, the co-founders will need to focus heavily on sustainable customer acquisition.

Rothstein thinks that downsizing elders into homes that work for them is a simple argument to make.

“You can age in place for as long as it’s practical, but there’s going to be a day and time when it’s not [going to] be practical,” Rothstein said. “Why would you want to make this decision after you’ve broken your hip, after you run out of money or after your spouse died?”

Editor’s note: A previous version of this story wrote that Rothstein had spent six years scaling Papa. This is incorrect. He left in 2017 but remains an investor in the company. 

API publishers among Postman’s community of more than 15 million are working toward more seamless and integrated developer experiences for their APIs. Distilled from hundreds of one-on-one discussions, I recently shared a study on increasing adoption of an API with a public workspace in Postman. One of the biggest reasons to use a public workspace is to enhance developer onboarding with a faster time to first call (TTFC), the most important metric you’ll need for a public API.

To understand a developer’s journey, let’s first take a look at factors influencing how much time and energy they are willing to invest in learning your technology and making it work.

• Urgency: Is the developer actively searching for a solution to an existing problem? Or did they hear about your technology in passing and have a mild curiosity?
• Constraints: Is the developer trying to meet a deadline? Or do they have unlimited time and budget to explore the possibilities?
• Alternatives: Is the developer required by their organization to use this solution? Or are they choosing from many providers and considering other ways to solve their problem?

Developer journey to an API

With that context in mind, the following stages describe the developer journey of encountering a new API:

Step 1: Browse

A developer browses your website and documentation to figure out what your API offers. Some people gloss over this step, preferring to learn what your tech offers interactively in the next steps. But judgments are formed at this very early stage, likely while comparing your product among alternatives. For example, if your documentation and onboarding process appears comparatively unorganized and riddled with errors, perhaps it is a reflection of your technology.

Step 2: Signup

Signing up for an account is a developer’s first commitment. It signals their intent to do something with your API. Frequently going hand-in-hand with the next step, signing up is required to generate an API key.

Step 3: First API call

Making the first API call is the first payoff a developer receives and is oftentimes when developers begin more deeply understanding how the API fits into their world. Stripe and Algolia embed interactive guides within their developer documentation to enable first API calls. Stripe and Twitter also use Postman public workspaces for interactive onboarding. Since many developers already use Postman, experiencing an API in familiar territory gets them one step closer to implementation.

Bioengineering may soon provide compelling, low-carbon alternatives in industries where even the best methods produce significant emissions. Utilizing natural and engineered biological process has led to low-carbon textiles from AlgiKnit, cell-cultured premium meats from Orbillion and fuels captured from waste emissions via LanzaTech — and leaders from those companies will be joining us onstage for the Extreme Tech Challenge Global Finals on July 22.

We’re co-hosting the event, with panels like this one all day and a pitch-off that will feature a number of innovative startups with a sustainability angle.

I’ll be moderating a panel on using bioengineering to create change directly in industries with large carbon footprints: textiles, meat production and manufacturing.

AlgiKnit is a startup that is sourcing raw material for fabric from kelp, which is an eco-friendly alternative to textile crop monocultures and artificial materials like acrylic. CEO Aaron Nesser will speak to the challenge of breaking into this established industry and overcoming preconceived notions of what an algae-derived fabric might be like (spoiler: it’s like any other fabric).

Orbillion Bio is one of the new crop of alternative protein companies offering cell-cultured meats (just don’t call them “lab” or “vat” grown) to offset the incredibly wasteful livestock industry. But it’s more than just growing a steak — there are regulatory and market barriers aplenty that CEO Patricia Bubner can speak to, as well as the technical challenge.

LanzaTech works with factories to capture emissions as they’re emitted, collecting the useful particles that would otherwise clutter the atmosphere and repurposing them in the form of premium fuels. This is a delicate and complex process that needs to be a partnership, not just a retrofitting operation, so CEO Jennifer Holmgren will speak to their approach convincing the industry to work with them at the ground floor.

It should be a very interesting conversation, so tune in on July 22 to hear these and other industry leaders focused on sustainability discuss how innovation at the startup level can contribute to the fight against climate change. Plus it’s free!

At its Game Developer Summit, Google today announced a new feature for Android game developers that will speed up by almost 2x the time from starting a download in the Google Play store to the game launching — at least on Android 12 devices. The name of the new feature, “play as you download,” pretty much gives away what this is all about. Even before all the game’s assets have been downloaded, players will be able to get going.

On average, modern games are likely the largest apps you’ll ever download, and when that download takes a couple of minutes, you may have long moved on to the next TikTok session before the game is ever ready to play. With this new feature, Google promises that it’ll take only half the time to jump into a game that weighs in at 400MB or so. If you’re a console gamer, this whole concept will also feel familiar, given that Sony pretty much does the same thing for PlayStation games.

Now, this isn’t Google’s first attempt at making games load faster. With “Google Play Instant,” the company already offers a related feature that allows gamers to immediately start a game from the Play Store. The idea there, though, is to completely do away with the install process and give potential players an opportunity to try out a new game right away.

Like Play Instant, the new “play as you download” feature is powered by Google’s Android App Bundle format, which is, for the most part, replacing the old APK standard

Image Credits: Google

Microsoft has confirmed it’s buying RiskIQ, a San Francisco-based cybersecurity company that provides threat intelligence and cloud-based software as a service for organizations.

Terms of the deal, which will see RiskIQ’s threat intelligence services integrated into Microsoft’s flagship security offerings, were not disclosed, although Bloomberg previously reported that Microsoft will pay more than $500 million in cash for the company. Microsoft declined to confirm the reported figure.

The announcement comes amid a heightened security landscape as organizations shift to remote and hybrid working strategies.

RiskIQ scours the web, mapping out details about websites and networks, domain name records, certificates and other information, like WHOIS registration data, providing customers visibility into what assets, devices and services can be accessed outside of a company’s firewall. That helps companies lock down their assets and limit their attack surface from malicious actors. It’s that data in large part that helped the company discover and understand Magecart, a collection of groups that inject credit card stealing malware into vulnerable websites.

Microsoft says that by embedding RiskIQ’s technologies into its core products, its customers will be able to build a more comprehensive view of the global threats to their businesses as workforces continue to work outside of the traditional office environment.

The deal will also help organizations keep an eye on supply-chain risks, Microsoft says. This is likely a growing priority for many: An attack on software provider SolarWinds last year affected at least 18,000 of its customers, and just this month IT vendor Kaseya fell victim to a ransomware attack that spread to more than 1,000 downstream businesses.

Eric Doerr, vice president of cloud security at Microsoft, said: “RiskIQ helps customers discover and assess the security of their entire enterprise attack surface — in the Microsoft cloud, AWS, other clouds, on-premises, and from their supply chain. With more than a decade of experience scanning and analyzing the internet, RiskIQ can help enterprises identify and remediate vulnerable assets before an attacker can capitalize on them.”

RiskIQ was founded in 2009 and has raised a total of $83 million over four rounds of funding. Elias Manousos, who co-founded RiskIQ and serves as its chief executive, said he was “thrilled” at the acquisition.

“The vision and mission of RiskIQ is to provide unmatched internet visibility and insights to better protect and inform our customers and partners’ security programs,” said Manousos. “Our combined capabilities will enable best-in-class protection, investigations, and response against today’s threats.”

The acquisition is one of many Microsoft has made recently in the cybersecurity space. The software giant last year bought Israeli security startup CyberX in a bid to boost its Azure IoT business, and just last month it acquired Internet of Things security firm ReFirm Labs.

Elon Musk is testifying Monday morning in a lawsuit over Tesla’s 2016 acquisition of SolarCity, a $2.6 billion transaction that a group of shareholders allege was a “bailout” of the failing solar company. The shareholders are seeking repayment to Tesla of the cost to purchase SolarCity.

The suit, filed in the Delaware District Court in 2017, alleges that SolarCity was near bankruptcy at the time of the acquisition. Musk, who was the ailing company’s chairman of the board of directors and its largest stockholder, directly benefited from the transaction, as did some of his friends and family, the lawsuit alleges. SolarCity’s founders, Lyndon and Peter Rive, are Musk’s cousins.

SolarCity “had consistently failed to turn a profit, had mounting debt, and was burning through cash at an unsustainable rate,” the plaintiffs say. The suit goes on to note that the company had accumulated over $3 billion in debt in its 10-year history, nearly half of which was due for repayment before the end of 2017. The purchase by Tesla was approved by vote by 85% of shareholders.

Attorneys for Musk say that the acquisition was part of the CEO’s longer-term vision to transform Tesla into a transportation and energy company. In a blog post titled “Master Plan, Part Deux,” published to Tesla’s website around the time of the deal’s closing, Musk says that combining SolarCity and the electric vehicle startup was key to realizing his vision of combining Powerwall (Tesla’s home and industry battery storage product) and solar roof panels.

A Model X stood ready for inspection by attendees at the Kauai solar storage facility launch. Tesla acquired SolarCity in November 2016. Image Credits: Darrell Etherington

In his testimony Monday, Musk said Tesla was forced to shift focus away from its solar business to meet production deadlines for the Model 3 sedan, The Washington Post’s Will Oremus tweeted from outside the courtroom. USA Today reporter Isabel Hughes, also at the courtroom, tweeted that Musk blamed the pandemic for poor performance of the company’s solar division. He was being questioned by attorney for the plaintiffs Randall Baron, whom Musk called “a shameful person” at a 2019 deposition.

Musk’s lawyers say that he recused himself from board discussions and negotiations relating to the acquisition — but the plaintiffs maintain that the recusal was “superficial.” A primary question for the court will be whether Musk exerted undue influence over the transaction, and whether he and other board members concealed information relating to the transaction from shareholders.

The other board members named in the suit — Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Kimbal Musk and Stephen Jurvetson — settled for $60 million last year, plus $16.8 million in legal fees and expenses, paid for by insurance. The trial, with Musk as the sole defendant, was postponed a year due to the coronavirus pandemic.

The trial is expected to last 10 business days. The Delaware Court of Chancery, where the suit is being heard, does not have a jury; instead, the case will be heard by judge Vice-Chancellor Joseph Slights III. Even if Slights finds that the deal was improper, he could order Musk to pay far less than the $2.6 billion that Tesla paid for SolarCity at the time.

The Amazon roll-up play — where one company creates economies of scale by buying up and consolidating multiple smaller third-party merchants that sell their goods via Amazon’s marketplace — continues to be a strong e-commerce trend, and in the latest development, one of the hopefuls in this space is announcing a major injection of capital to fuel its own place in the field.

Elevate Brands, a New York- and Austin-based startup that acquires and runs third-party Amazon merchants, has picked up $250 million in funding, money that it will be using both to continue investing in its technology, as well as to buy up more small businesses.

Elevate is already profitable, with 25 brands currently in its stable, many of which also have come to Elevate with patents for their products, CEO and founder Ryan Gnesin told TechCrunch. The plan will be to continue to enhance the systems it has in place for evaluating potential M&A and analyzing the landscape overall — today its algorithms use some 100 million data points, it says, to find suitable acquisition targets — and to continue building out other organizational efficiencies.

Elevate’s funding is coming as a mix of debt and equity — quite standard for these e-commerce businesses that are raising huge rounds to go after the roll-up opportunity — with backers including a number of individuals and investors with track records in fintech and e-commerce. They include FJ Labs, Novel TMT, Adam Jacobs (who founded The Iconic in Australia), the founders of buy now, pay later business QuadPay, Intermix (acquired by Gap) founder Khajak Keledjian, Ron Suber (of YieldStreet and MoneyLion) and more. No valuation is being disclosed.

It’s estimated there are some 5 million third-party sellers on Amazon today, with some 1 million sellers joining the platform in 2020 alone. Thrasio — one of Elevated’s larger consolidator-competitors — believes that around 50,000 of them are making $1 million or more annually in sales. Elevate estimates that the Amazon marketplace, currently valued at $300 billion, will double in the next five years.

Unsurprisingly, all that has led to a number of companies like Elevated racking up hundreds of millions of dollars in debt and equity to consolidate the most promising of these businesses. Their rationale: The founders and management of these third-party sellers may lack the appetite to stay with their businesses for the longer-term, or they may lack the capital to scale to the next level; so consolidating these businesses to leverage investments in technology for better market analytics, marketing, manufacturing and supply chains is the logical solution.

Given the size of the market opportunity, that’s led to a lot of investment. Thrasio has raised nearly $2 billion — in both debt and equity — for its efforts; Heyday recently raised $70 million from General Catalyst; The Razor Group in Berlin raised $400 million. Others with huge war chests include Branded; Heroes; SellerX; Perch; Berlin Brands Group (X2); Benitago; Latin America’s Valoreo and emerging groups out of Asia including Rainforest and Una Brands.

Elevate’s pitch to the market is that it’s a little different from the rest of the roll-up pack, in that it started out as one of the millions of third-party sellers itself.

“We started selling at the end of 2016, testing the waters by selling a few private label products,” Ryan Gnesin, the CEO and founder of Elevated, told TechCrunch in an interview. That gave the company an early look at how to handle supply chains in manufacturing, and to think about how to differentiate its products from similar ones that are sold alongside them on Amazon. By 2017, Elevate was managing some 8,000 SKUs under that model.

That shifted in 2018 to a wholesale model, he said, reselling established brands on Amazon. It ran into trouble multiple times in that period, with Amazon shutting it down three times under suspicion of running counterfeit activities. 

“We got caught up in an algorithm because we were scaling so quickly,” he said. “They assumed we were doing something wrong.” All of that helped Elevate learn how to navigate the waters more adeptly, with the first shut down taking three months to fix, but the second only one month, and the third a mere 24 hours. Eventually, in 2019, the company decided to take what it had learned and apply it to a wider range of brands, which it would pick up by way of acquisition.

“We began as third-party merchants and so we truly relate to them,” he said. “We didn’t just wake up and start buying Amazon businesses. This is what we are in our core, operators first. Anyone can buy a business, but the ones who can grow them are the most successful. That is our long-term view.”

Companies that become the target of roll-up acquirers are an interesting lot. As Gnesin describes it, in many cases the businesses Elevate talks to were built as side-hustles, and so when they take off, the founders are just as happy to pass them on to someone else for a decent exit than they are to stay the course. This is one reason why some of the acquisitions end up staying confidential, he said. Another is that the sellers are simply getting on, looking to retire and don’t have anyone to pass the business on to. Other times, this is just how entrepreneurs work. “If they make $5 million in a sale to Elevate, they will keep back $4 million for themselves, and use $1 million to start their next business,” he said.

As for target companies, Elevate right now doesn’t focus on any specific product categories as other roll-up players might, although that may change in the future as the company gets more focused. What is a priority, however, is intellectual property — which to me is notable, given what sometimes feels like a genuine lack of differentiation when you look for products on Amazon.

“We have preferences for businesses with patents, since those tend to be more differentiated,” he said. From there, it goes to those that have strong traction and brand pull. “When a product is doing well on Amazon, there is an enormous amount of data there, and so you tend to have copycats. We look for business that can maintain a competitive position, adding new variations and taking that to other marketplaces. And all of that is important in the building of communities. If you can build it that gives you an additional competitive advantage.”

Acquisition valuations vary, he added, but on average are around four times a company’s EBITDA, but might go as high as five times or as low as 2.5x, depending on how competitive bidding is. Elevated’s acquisitions typically are already making between $2 million and $3 million in sellers’ discretionary earnings, he added.

Hardware is hard. You can browse the archives of this site and come up with dozens of bold attempts to make new consumer electronics gadgets work — some of them very close to home. But, like all startups, most hardware companies run into the hard-core grind of turning atoms into something worth buying. 

To commemorate the hardness of hardware, idea factory/art house MSCHF is releasing a set of five Dead Startup Toys as vinyl figurines that you can buy for $39.99 each or $159.99 for the set. It bills these as “iconic failed startups” and the sales site offers a brief history of the rise and fall of each endeavor. They range from products that never really existed, like the Theranos minilab, to poorly timed early movers like Jibo, to exercises in over-engineering like Juicero. 

Given that I have spent much of my career absorbing and trying to understand the difficult and complicated process of bringing consumer hardware to market, I love these things. There could be a lens of malice here, but I choose not to see it that way. Fraud is fraud and the people behind Theranos and debacles like the Coolest Cooler have or will see the business end of the legal system. 

But big visions and hardware dreams are not always so clearly pocketed into the hole of “failure.” Sometimes the hardware works but the supply chain doesn’t. Sometimes the vision is sound but the product is just too early. There are any number of reasons products fail — but (in as much as they were actually real) you often have to give it up for the teams of people and visionaries that wanted a thing to exist in the universe and dragged it kicking and screaming to that point. And off the cliffs.

Image Credits: MSCHF

The figures themselves are really well done, with crisp stamping and accurate detailing with readable text and nicely printed logos. Some of them are articulated as well, and accessorized. The Coolest Cooler gets its infamous blender and the Juicero has a removable (proprietary of course) “fresh veg” pouch. The quality on these is quite high overall; I’d rank them up with some of the better novelty toys I’ve bought over the years — it’s not phoned in, much like the Cooler’s feature set.

The packaging, too, is quite impressive; each gets a customized box and the big set of all of them comes in a bigger rack box. Each one also comes with a “cause of death” on the back that tells you why each venture went under. MSCHF went the lengths to make this a pretty premium “toy” drop, which is only fitting, given that it’s a monument to physical products. 

As with much of MSCHF’s work, there’s an element of “wait, is this legal?” as well, because there are likely a bunch of holes that the IP connected to these products fell into but some of those holes could still have legal entities attached. But that element of danger is what has made many of its projects resonate so far. so I don’t think they’re worried. 

After all, none of these products have the sign of the beast on them. Physically, anyway. (Image Credits: MSCHF)

I was 4 years old when I started playing what I’ve come to think of as “the game.” It was dressing-up time at school, and, as I ran over to a costume box, my teacher grabbed me by the shoulders. Right up in my face, she admonished: “That’s the girls’ box — the boys’ stuff is over there.”

I was taken aback; I didn’t understand what I’d done wrong. But I remember thinking: “Oh! There are rules to how we live together in the world.” Right then and there, I started conforming to the parameter of the game that so many of us operate by: the game that gives us unwritten codes on what is acceptable and how to behave — at school, in work or in society at large.

This game meant I spent years dialing down my “gayness,” even after I came out in my 20s, and the impulse was particularly acute at the early stage of my career. With each new meeting or business deal, I was constantly preempting what parts of me were “OK”’ or what might put people off. Just how much gay was too much?

In some ways, then, the endemic “brogrammer” culture in tech — the industry I call home — is no great surprise to me. When everyone is busy filtering their core identity, sanding down the edges to fit the collective mold, it’s inevitable that minority voices will be pushed out. Follow this picture to its natural conclusion and Silicon Valley — the home of bold disruptors, the armada of innovation — is reduced to a narrow few.

In many ways, Pride Month and the celebrations we’ve just seen are the antidote to this hegemony. Pride, with its rainbow symbolism, is a cornucopia of all that is free, true and uninhibited. With Pride Month drawn to a close, it’s my greatest hope that we can use its particular kind of open-minded energy to activate deeper change.

Show up for your team first

I truly love Pride and the meaningful action that goes with it, but it can’t be denied that some brands are venturing into the territory of window dressing. “Performative activism,” whereby companies mobilize the Pride flag for marketing purposes without necessarily making tangible changes in their own backyards, is on the rise. So too are the businesses that pay lip service to Pride from one side of their mouth while covertly supporting politicians behind anti-transgender legislation on the other.

If you are a leader who’s really committed to diversity in the workplace, it stands to reason that you look within to help your own team first. How can you create a culture where employees can be present in the fullness of themselves — regardless of gender, race, sexuality or even incidental things like taste in clothes or music?

According to a 2019 study by the Yale School of Public Health, an estimated 83% of those who identify as lesbian, gay or bisexual keep their sexuality hidden from all or most of the people in their lives.

This inhibition is magnified in the workplace, where it is woven into the fabric of myriad discriminatory behaviors that are particularly prominent in tech. Almost 40% of LGBTQ tech employees polled by anonymous workplace chat app Blind say they’ve witnessed homophobic discrimination and harassment at work.

Annual diversity reports show that Big Tech companies employ far fewer women and underrepresented minorities than other industries, too. This is a sector that routinely labels people from nonmajority culture groups as “diversity hires,” doling out discrimination in everything from pay to promotions — as reported by thousands of personal experiences shared under the hashtag #SiliconValleySoWhite. The same industry is also hardwired to marginalize women, says Emily Chang, the Bloomberg Technology anchor whose book, “Brotopia,” lifts the lid on Silicon Valley’s culture of machismo.

These aren’t easy issues to solve, but I believe authenticity has an important part in the solution. It’s about calling time on that game that I used to play. When I finally learned that I could show up as I pleased at work and not worry about how people judge me, the freedom was so sweet I could practically taste it. After years of faking it without fully realizing it — in a draining, relentless loop — I was able to be the person and CEO I wanted to be. The more familiar I became with California’s tech scene, and the farther up the ladder I progressed, the more confident I became to be me.

You shouldn’t have to wait until you run a company for the permission to express your full self, however. As the research shows, the price paid for not doing so reaches far beyond personal freedom alone. Though we’ve made steps with important conversations around diversity in recent years, the world we work in is still, overwhelmingly, one-dimensional. It’s full of people not able or willing to reveal the genuine, hi-def version of who they are.

The power of listening and shared vulnerability

If we, as tech leaders, are unable to roll our sleeves up and dig deep on the issue of authenticity, we have little hope of chipping away at the “brogrammer” attitude that seems all too pervasive in our industry.

Not only does this kind of climate engender unsaid fear, fatigue and anxiety, it also affects the bottom line. Research is clear on the fact that happy employees are more productive, while companies with more diverse management teams have greater profitability, creativity and problem-solving abilities. Having the freedom to be your authentic self at work is a conduit to success and fulfillment.

So, how can tech CEOs and management get to this place? In my mind, a dual-sided approach is called for. First, efforts to harness authentic expression have to be enacted as policies. Leaders must give their teams direct responsibility for helping employees to bring their full selves to work. Help make your people accountable for an inside effort allowing all voices in your organization to be heard.

In GumGum’s case, this includes the formation of a STRIDE (Seeking Talent Representation Inclusion Diversity & Equity) Council. Made up of employees from all divisions, locations and levels of seniority across the company, council members make tangible recommendations to improve diversity and inclusivity in the company as part of their paid daily roles.

Unconscious bias training is also vital for empowering authentic expression in the workplace. If I walked down the street in glitter shorts and a crop top, everyone around me would have some kind of reaction to my chosen outfit — regardless of whether they’d admit it. Building awareness of subconscious judgments like this is the first step to reining them in, and creates understanding of how bias inevitably impacts decision-making at work.

Second, the quest for business authenticity lies with CEOs and senior management and their ability to lead by example. I think today’s cancel culture has made leaders hypersensitive about the need to keep it together, to toe the line with their behavior, to be professional and not make mistakes.

Professionalism has its time and a place, of course, but I’ve always made it a point to be as open as possible as a CEO — to shine a light over every element of my personality, even the aspects that other people may judge or find less desirable. My determination to do this comes directly from the hidden identity that I used to struggle with. The fear I felt over being gay is now my fuel to showing my true self. By doing so, I aim to give those around me permission to do the same.

No one really wants their tech company to breed a bro culture where only one type of person can thrive. But it’s not enough to simply say that. You have to start by showing that it’s OK to be different, to turn up in every shade of gray. I have a penchant for flamboyant fashion, for example, so I don’t think twice about attending a Zoom meeting in a baby blue fedora. That’s just how I express myself as a CEO.

Showing up like this involves an element of fear, and I think it’s important to be open about that, too. As CEOs, we should share our vulnerabilities, our struggles with identity, the secret parts of ourselves that we’re tempted to keep masked away. This includes owning up to failures — CEOs are only human, and that humanity should be put on a pedestal if authenticity is the goal.

People need to feel that their vulnerabilities are heard without judgment. Whether they’re in an interview or taking on a new project, one of my favorite questions to ask employees is simply, “What are you afraid of?”

We all have fears, and by answering that question, you get to access someone’s vulnerable side. They might be scared of failing, making the wrong decision or upsetting the apple cart in some way. Tapping into that emotion is a great way of giving people permission to be their full selves.

A turning point for tech

Pride Month is part of a wider narrative around acceptance and freedom of being. Companies that jump on the rainbow bandwagon without fully living those values aren’t only hypocritical — they’re also doing themselves a disservice. Pride isn’t a revenue opportunity, and even if it was, those brands that attach messaging to it without substance are missing a trick.

Beneath the LGBTQ+ Pride gift wrap lies a thousand work environments in urgent need of the values that the Pride movement espouses. Making those values a living, breathing part of everyday work life is no mean feat. But allowing people to untether from who they “should” be at work is a vital starting point for a change that is long overdue.

I know the shame of hiding my true self away, which is why I make every effort for others to avoid that experience. Nowadays, I show up at work as more myself than I’d ever dared in my younger years. In this one small act, I challenge my co-workers to follow suit. It’s only when, together, we embark on that exploration of what authenticity in business looks like that the endless game-playing can stop — and the real work gets underway.

Richard Branson’s Virgin Galactic went to space (or the vicinity of space) in a PR-suffused event over the weekend. It was all rather twee, packed with maudlin riffs about childhood dreams and riddled with hero worship. And the stream kept stuttering while some of the planned vehicle-to-Earth communications failed.

The Exchange is continuing its look into Q2 venture capital results this week. If you’re a VC with a hot take on the numbers, we’re collecting comments and observations at [email protected]. Use subject line “hot dang look at all this money.” Thanks! — Alex and Anna

But the launch accomplished what it set out to do: A few folks made it to into zero gravity after launching their rocket-powered space plane from a larger aircraft, flipping it around at the top of its arc so that its passengers could get a good view of our home while floating. Then it came back to the surface and, we’re sure, much champagne was consumed.

In the aftermath of the event, lots of folks are pissed. Complaints have rolled in, dissing the event and generally mocking the expense involved when there are other issues to manage. A sampling follows. Note that these are merely illustrative examples of a general vibe. I have precisely zero beef with anyone in the following tweets or articles:

And from the media side of things, this stood out today from the Tribune:

I disagree.

Sure, it’s maddening that Jeff Bezos’ new yacht will require a second boat so that he can have a mobile heliport on the go — his new boat has sails, so you can’t chopper to it — while the company that built his fortune churns through workers with abandon and squeezes its drivers so much that they have to piss in bottles due to scheduling constraints.

And, yes, Branson is annoying quite a lot of the time. He also owns an island and likes himself too much.

Gembah’s mission statement is a deceptively simple one. The Austin-based company says it’s looking to “democratize product innovation by drastically lowering barriers to entry for creation of new products.” In that respect, at least, it’s not so dissimilar from various startup initiatives that have arrived over the past decade, from crowdfunding to additive manufacturing.

The company’s product is a platform/marketplace designed to guide users through the product-creation process, promising results in “as little as 90 days.” The forum connects smaller businesses to factories, supply chain experts, designers, engineers, etc. to help speed up the process. Just ask anyone who has attempted to launch a hardware startup — these things can be massively difficult to navigate.

To help accelerate its own vision, Gembah has raised an $11 million Series A, led by local firm ATX Venture Partners along with Silverton, Flexport, Brett Hurt, Jim Curry and Dan Graham.

Image Credits: Gembah

It follows a $3.28 million seed round led by Silverton announced in April of last year, bringing its total funding up to $14.75 million.

The company says the pandemic has actually been something of a boon for its business model, as hardware startups are looking toward a more online model — and something a bit closer to home than the traditional sales channels. The company says its revenue grew 500% in 2020 and is on track to triple revenues this year. It’s impressive growth in the face of some major supply chain issues that have impacted the industry during the past year and a half.

It currently has 300 active customers, though it was yet to achieve profitability — hence the new round. “Since most of our customers are e-commerce companies we benefited from the accelerated growth of e-commerce,” CEO and co-founder Henrik Johansson tells TechCrunch. “Supply chains have been impacted to some degree, but as the global supply chain gets more complex and many companies want to diversify outside of China, they need help to navigate that change, and Gembah can help with that transition.”

The funding will go toward increasing the company’s engineering team. At present, Gembah has 55 employees in the U.S., and 19 in other locations, including Asia and Mexico. The new headcount will be focused on growing the marketplace, supply chain workflow and machine-learning capabilities. Gembah will also look to grow its global network and make additional hires in marketing and UI/UX.

“Gembah is a true innovator poised to help businesses capitalize on the growth of global eCommerce,” ATX Venture Partners’ Chris Shonk said in a statement. “The Gembah marketplace promises to unlock virtually unlimited entrepreneurial equity by enabling a whole new breed of creators to enter the market.”