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A year later, Equifax lost your data but faced little fallout

A lot can change in a year. Not when you’re Equifax.

The credit rating giant, one of the largest in the world, was trusted with some of the most sensitive data used by banks and financiers to determine who can be lent money. But the company failed to patch a web server it knew was vulnerable for months, which let hackers crash the servers and steal data on 147 million consumers. Names, addresses, Social Security numbers and more — and millions more driver license and credit card numbers were stolen in the breach. Millions of British and Canadian nationals were also affected, sparking a global response to the breach.

It was “one of the most egregious examples of corporate malfeasance since Enron,” said Senate Democratic leader Chuck Schumer at the time.

Yet, a year on from following the devastating hack that left the company reeling from a breach of almost every American adult, the company has faced little to no action or repercussions.

In the aftermath, the company’s response to the breach was chaotic, sending consumers scrambling to learn if they were affected but were instead led into a broken site that was vulnerable to hacking. And when consumers were looking for answers, Equifax’s own Twitter account sent concerned users to a site that easily could have been a phishing page had it not been for a good samaritan.

Yet, the company went unpunished. In the end, Equifax was in law as much a victim as the 147 million Americans.

“There was a failure of the company, but also of lawmakers,” said Mark Warner, a Democratic senator, in a call with TechCrunch. Warner, who serves Virginia, was one of the first lawmakers to file new legislation after the breach. Alongside his Democratic colleague, Sen. Elizabeth Warren, the two senators said their bill, if passed, would hold credit agencies accountable for data breaches.

“With Equifax, they knew for months before they reported, so at what point is that violating securities laws by not having that notice?,” said Warner.

“There was a failure of the company, but also of lawmakers.”
Sen. Mark Warner (D-VA)

“The message sent to the market is ‘if you can endure some media blowback, you can get through this without serious long-term ramifications’, and that’s totally unacceptable,” he said.

Lawmakers held hearings and grilled the company’s former chief executive, Richard Smith, who retired with his full $90 million retirement package, adding insult to injury. Equifax further shuffled its executive suite, including the hiring of a new chief information security officer Jamil Farshchi and former lawyer turned “chief transformation officer” Julia Houston to oversee “the company’s response to the cybersecurity incident.”

Equifax declined to make either executive available for interview or comment when reached by TechCrunch, but Equifax spokesperson Wyatt Jefferies said protecting customer data is the company’s “top priority.”

But there’s not much to show for it beyond superficial gestures of free credit monitoring — provided by Equifax, no less — and a credit locking app which, unsurprisingly, had its own flaws. In the year since, the company has spent more than $240 million — some $50 million was covered by cyber-insurance. That’s a drop in the ocean to more than $3 billion in revenue in the year since, according to quarterly earnings filings — or more than $500 million in profits. And although Equifax’s stock price initially collapsed in the weeks following, the price bounced back.

Financially, the company looks almost as healthy as it’s ever been. But that may change.

Former Equifax chief executive Richard Smith prepares to testify before the lawmakers. Smith later retired after hackers broke into the credit reporting agency and made off with the personal information of nearly 145 million Americans.

Earlier this year, the company asked a federal judge to reject claims from dozens of banks and credit unions for costs taken to prevent fraud following the data breach. The claims, if accepted, could force Equifax to shell out tens of millions of dollars — perhaps more. The hundreds of class action suits filed to date have yet to hit the courts, but historically even the largest class action cases have resulted in single dollar amounts for the individuals affected.

And when the credit agent giant isn’t fighting the courts, federal regulators have shown little interest in pursuit of legal action.

An investigation launched by a former head of the Consumer Financial Protection Bureau, responsible for protecting consumers from fraud, sputtered after the new director reportedly declined to pursue the company. And, although the company is under investigation by the Federal Trade Commission for the second time this decade, fines are likely to be limited — if levied at all.

Warren sent a letter Thursday to the heads of both agencies lamenting their lack of action.

“Companies like Equifax do not ask the American people before they collect their most sensitive information,” said Warren. “This information can determine their ability to access credit, obtain a job, secure a home loan, purchase a car, and make dozens of other transactions that are critical to their personal financial security.”

“The American people deserve an update on your investigations,” she said.

To date, only the Securities and Exchange Commission has brought charges — not for the breach itself, but against three former staffers for allegedly insider trading.

Escaping any local action, Equifax agreed with eight states, including New York and California, to take further cybersecurity steps and measures to prevent another breach, escaping any fines or financial penalties.

“The American people deserve an update on your investigations”
Sen. Elizabeth Warren (D-MA)

Warner blamed much of the inaction to the patchwork of data breach laws that vary by state.

“We’ve got different laws and you don’t have any standard, and part of the challenge around the data breach is that every industry wants to be exempted,” said Warner. It’s not a partisan issue, he said, but one where every industry — from telecoms to retail — wants to be exempt from the law.

“If we really want to improve our business cyber-hygiene, you have got to have consequences for failing to keep up those cyber-hygiene standards,” he said.

It’s a tough sell to posit Equifax, which fluffed almost every step of the breach process, before and after its disclosure, as a victim. While the millions affected can take solace in the beating Equifax got in the press, those demanding regulatory action might be in for a disappointingly long wait.


Source: Tech Crunch

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Deep-linking startup Branch is raising more than $100M at a unicorn valuation

Branch, the deep-linking startup backed by Andy Rubin’s Playground Ventures, will enter the unicorn club with an upcoming funding round.

The four-year-old company, which helps brands create links between websites and mobile apps, has authorized the sale of $129 million in Series D shares, according to sources and confirmed by PitchBook, which tracks venture capital deals. The infusion of capital values the company at roughly $1 billion.

In an e-mail this morning, Branch CEO Alex Austin declined to comment.

The Redwood City-based startup closed a $60 million Series C led by Playground in April 2017, bringing its total equity raised to $113 million. It’s also backed by NEA, Pear Ventures, Cowboy Ventures and Madrona Ventures. Rubin, for his part, is a co-founder of Android, as well as the founder of Essential, a smartphone company that, though highly valued, has had less success.

Branch’s deep-linking platform helps brands drive app growth, conversions, user engagement and retention.

Deep links are links that take you to a specific piece of web content, rather than a website’s homepage. This, for example, is a deep link. This is not.

A Brief History Of Deep Linking

Deep links are used to connect web or e-mail content with apps. That way, when you’re doing some online shopping using your phone and you click on a link to an item on Jet.com, you’re taken to the Jet app installed on your phone, instead of Jet’s desktop site, which would provide a much poorer mobile experience.

Branch supports 40,000 apps with roughly 3 billion monthly users. The company counts Airbnb, Amazon, Bing, Pinterest, Reddit, Slack, Tinder and several others as customers.

Following its previous round of venture capital funding, Austin told TechCrunch that the company had seen “tremendous growth” ahead of the raise.

“[We] have been fortunate enough to become the clear market leader,” he said. “There’s so much more we can accomplish in deep linking and this money will be used to fund Branch’s continued platform growth.”


Source: Tech Crunch

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Trump wants to just tariff the hell out of China

Another day, another whopper of a tariff. The Trump administration has been busy finalizing the rulemaking process to put 25% tariffs on $200 billion of Chinese goods, which will almost certainly affect the prices of many critical technology components and have on-going repercussions for Silicon Valley supply chains. That followed the implementation of tariffs on $50 billion of goods earlier this year.

Now, President Trump, as reported by reporters on Air Force One this morning, has said that he is prepared to triple down on his tariffs strategy, saying that he is ready to add tariffs to another $267 billion worth of Chinese goods. Although the president has a flair for the dramatic in many of his policies, the China tariffs are one arena in which his rhetoric has matched the actions of his administration.

Each set of these tariffs have been vociferously opposed by tech industry trade groups, but their concerns seem to have had little effect on the administration’s final thinking. Jose Castaneda, a spokesperson for the Information Technology Industry Council, called this next wave of potential tariffs “grossly irresponsible and possibly illegal.”

Yet, despite the constant threat of more tariffs, CFIUS reforms, and the ZTE debacle, China continues to dominate trade with America. Numbers released by the Department of Commerce this week showed that America’s trade deficit with other nations reached five-year highs in July, surpassing $50 billion for the month, with the China trade goods deficit hitting $36.8 billion. These numbers may well have triggered the president’s latest comments.

They may also have been triggered by the recent anonymous op-ed in the New York Times, in which a Trump “senior administration official” said that “Although he was elected as a Republican, the president shows little affinity for ideals long espoused by conservatives: free minds, free markets and free people….In addition to his mass-marketing of the notion that the press is the ‘enemy of the people,’ President Trump’s impulses are generally anti-trade and anti-democratic.”

Anti-trade or not, it is clear that the package of tariffs and other policy reforms have done little to dampen the trade deficit or trigger a broad restructuring of the supply chains underpinning American brands.

In my discussions at the Disrupt SF 2018 conference the past few days, one persistent theme has been the durability of certain Chinese cities — particularly Shenzhen but not exclusively — to weather these trade storms. The depth of expertise, fast turnaround times, extreme flexibility, and cheap costs of hardware supply chains there are sustainable advantages that the U.S. can’t hope to fight with a couple of measly tariffs — even on $500 billion worth of goods.

Indeed, as one prominent venture capitalist put it to me, hardware investing is now significantly easier for those with the right knowledge of the Chinese ecosystem. Just a few years ago, a couple of millions in capital could get a startup a working prototype. Now, startups can raise $1-2 million in some cases and get a working product into sales channels. The Chinese ecosystem around hardware has just continued to improve with alacrity.

For Trump, a much more robust policy will be needed to move the trade numbers in the other direction. Better funding for universities to produce the right talent. Pushing for a region in the U.S. to become the “Shenzhen of America” through a combination of private and public funding. Greater preferential treatment around taxes for keeping manufacturing in the U.S.

And maybe tariff the hell out of them.


Source: Tech Crunch

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How Adidas and Carbon are changing the sneaker supply chain

While the Adidas Futurecraft 4D shoes are cool looking sneakers, the story behind those shoes is even more interesting. The sportswear company has partnered with Carbon to design a new kind of sneakers.

Behind the Futurecraft 4D, you can find a process that is not that new — 3D printing. Many companies promised an industrial revolution by bringing back factories to service-driven countries, such as the U.S. and European countries. But this partnership between Adidas and Carbon could turn that wild dream into a reality.

“What you saw there was basically this integration of hardware, software and chemistry all coming together to take a digital model, print it very fast, but do it out of the materials that have the properties to be final parts,” Carbon co-founder and CEO Joseph DeSimone told TechCrunch’s Matthew Panzarino.

And the secret sauce behind Carbon’s process is its cloud-based software tool. You use a primitive CAD, define some mechanical properties and it gets manufactured in front of your eyes.

It’s quite hard to buy Futurecraft 4D shoes right now because production is still extremely limited. Adidas CMO Eric Liedtke is hopeful that it’s going to change over the coming years.

“Ultimately, we're still ramping up the innovation. It will be faster, more limited material. Ideally, the vision is to build and print on demand,” he said. “Right now, most of our products are made out of Asia and we put them on a boat or on a plane so they end up on Fifth Avenue.”

You could imagine Adidas reducing the stock in its warehouse. “Instead of having some sort of micro-distribution center in Jersey, we can have a micro-factory in Jersey,” Liedtke said. When it comes to material, this manufacturing process lets you partly use corn-based material.

And it’s not just design. Making shoes on demand lets you optimize the structure of the shoe for different sports and bodies.

“In this case, we took 10 years plus — maybe 20 years — of science that we had on foot strikes, and running, and how runners run, and where the impact zones are, and what we need to design into it from a data standpoint. And then, we let the creative takeover,” Liedtke said.

Carbon isn’t just working with Adidas. The company is quite active on the dental market for instance, working on resins. “We now also have the world's first 3D-printed FDA-approved dentures,” DeSimone said.

It’s interesting to see that a simple product, such as a pair of shoes, can become the representation of a long process of research and development, engineering and design.


Source: Tech Crunch

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Glossier CEO Emily Weiss on why the company won’t sell on Amazon

E-commerce beauty startup founder, Glossier CEO Emily Weiss, dished on stage at TechCrunch Disrupt SF 2018 this morning about some of the company’s top competitors in the e-commerce space, including Amazon as well as the forthcoming threat from Instagram – which is building out its own standalone shopping app, according to reports. 

Glossier, founded in 2014 and backed by $87 million, has created a massive beauty brand that’s now a household name among women. And it’s done so without being on Amazon.

The company doesn’t work with Amazon, and Weiss said that it doesn’t intend to.

When asked if the company would sell into Amazon, she responded with an emphatic “no, no, no.”

Glossier may have been acquisition target for Amazon, however – when asked if Amazon ever approached Glossier about about a deal, Weiss didn’t deny it, but instead demurred, “a lot of people have approached Glossier,” before quickly moving on.

Weiss, clearly, doesn’t think that Amazon is the best place for beauty brands.

“The interesting thing about Amazon and how they’ve addressed obviously one of the biggest consumer needs, which is solving buying, is that in the process, in some ways, they’ve kind of killed shopping,” Weiss said.

“I think in terms of breadth of product, obviously, no one will ever beat them. They have done the most phenomenal job,” she continued.

But going to Amazon for everything, every time doesn’t make sense, she believes. It’s only one kind of shopping experience.

And even though Amazon is massive, it doesn’t mean there’s no room for others outside of its shadow to grow.

“E-commerce is 10% of global commerce – that’s nothing,” Weiss pointed out. “We are at the dawn of e-commerce, and this is one user experience,” she said, referring to Amazon.

Plus, Amazon’s user experience may not be the best fit for beauty and fashion products – even though Amazon is quickly ramping up in those areas with its own private labels, Amazon Fashion, Prime Wardrobe, beauty boxes, and other initiatives.

“I think it’s exciting that we are really at the dawn of  e-commerce, and that there’s going to be so many paradigms. What we’re focused on building is an emotional commerce experience which is focused on a breath of connection, and not a breath of product,” Weiss explained.

While Glossier may not be on Amazon, it does leverage Instagram to reach customers, possibly making Instagram’s shopping app a bigger rival, if launched.

“It makes sense,” Weiss said, when asked her thoughts about Instagram’s plans in this space. “72% of millennials make their purchasing decisions for beauty and fashion products through Instagram,” she said.

Glossier itself has a long history with Instagram. It launched on Instagram before it even had its website up, for example. They also just hired Keith Peiris, who led DMs and Camera at Instagram, as Head of Product.

“Instagram’s an incredible tool,” Weiss admitted, but also cautioned that it could still face difficulties as a shopping app.

“I think of the challenges might be these platforms were not built around specific topics, they were built around specific media expressions,” said Weiss.

That said, Instagram could have more potential in the beauty market than Amazon.

“When you look at a platform like Amazon, no woman has ever told me that their criteria for best mascara was what was fastest or cheapest. That’s not how people are buying emotional things – like a fashion or beauty product,” said Weiss. “But the leading paradigm of what an e-commerce experience gives you is one of efficiency, and one of breadth of product. When what users are actually doing and wanting is one of breadth of connection,” she said.

 


Source: Tech Crunch

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ConsenSys details the first cohort of companies to enter its new accelerator, Tachyon

Tachyon, the accelerator of the blockchain powerhouse ConsenSys which launched earlier this year, has announced the first cohort for its 10 week accelerator program which is aimed at taking early stage blockchain projects from idea to a viable product. Sixteen companies were selected from around the world and will be brought together in San Francisco to participate in programming and accelerate their businesses. The projects are placed into one of three tracks:  Blockchain for-profit projects, open source and social impact. The program will culminate with a demo day for investors on November 17th.

Kavita Gupta (Managing Partner, ConsenSys Ventures) said: “We launched Tachyon with the intention of finding extremely promising early-stage companies and providing them with hands on support from the get-go. Among this inaugural group, I feel confident that we’ve found the next crop of game-changing projects that will drive innovation across the blockchain ecosystem.” 

Joe Lubin (Founder, ConsenSys) commented: “One thing that excites me about this first Tachyon cohort is that it demonstrates the degree to which our Ethereum community remains decentralized, even as it continues to grow. In this first batch, I see companies coming from Israel, China, India, Europe, the South Atlantic and Pacific Northwest all coming together to drive innovation beyond their geographical boundaries.”

Here’s a run-down of each company selected, in their own words:

BULVRD:  BULVRD is Washington DC based map and navigation app that tokenizes and gamifies the community aspect of navigation apps like Waze, rewarding users to report route information in the app making maps more real-time and community driven. 

Decompany: Decompany is a Korea based decentralized and incentivized knowledge trading system coming from Polaris Office (Infraware is publicly traded parent company). Decompany will be using the blockchain to build a global and monetizable version of Slideshare, utilizing network effects and a lone currency for transactions.

Elkrem: Elkrem is a Cairo based company creating hardware that will make it easy for IOT devices to interact with the Ethereum blockchain. Using proprietary software, Elkrem’s boards can force devices to interact with the Ethereum stack in an efficient and scalable way.  

Eth Status Codes (Open Source Grant):  A Candian company, ETH Status Codes, also known as the ERC-1066 proposal, outlines a common set of Ethereum status codes in the same vein as HTTP statuses or BEAM tagged tuples. These shared set of signals allow smart contracts to react to situations autonomously and expose localized error messages to users. 

Expercoin:  Out of the Harvard innovation lab, Expercoin is a decentralized AI powered marketplace protocol empowering non-technical individuals to create specialized learning economies with the ability to instantly monetize them. 

FastX:  China based high throughput decentralized exchange protocol built on Plasma. At scale, FastX will combine the security of a DEX with the UX and low fees of a centralized offering, offering a low-latency decentralized platform to serve Web 3.0’s largest use-case to date: the exchange of digital assets.

GlobalXplorer (Non-profit grant, Social impact track): A TED prize recipient,  GlobalXplorer is a crowdsourced archaeology initiative that allows for locals to participate in archaeology and legitimize findings in their region. The GXº Blockchain is a global registry for antiquities and an Ethereum-based marketplace for the sustainable distribution of an antiquity’s cultural heritage data which can be curated and collected. 

Groundhog (Open Source): Out of the Nova Scotia based Blockcrushr labs, The Groundhog Wallet is a multi-blockchain crypto wallet, browser, and hub for decentralized access to Web 3.0 that includes Groundhog Pay, a payment platform that lets merchants world accept all types of crypto currencies including subscription payments over Ethereum. 

MWC Vision: MWC Vision is a Berlin based studio spinning up decentralized, on-chain video games, the first of which is Chainmonsters. ChainMonsters is an Ethereum-based game in which users can catch, collect, and battle with monsters known as ChainMonsters (much like the handheld Pokemon games). Utilizing non-fungible Ethereum tokens, users can fully control and own an in-game avatar and explore  a digital world, catching and training ‘monsters’ represented by tokens which can be sold and used elsewhere.

Net Ninjas:  Net Ninjas is an Israel based protocol for all things decentralized compute and storage, starting with an offering that will use the blockchain to create a decentralized VPN that can be used by enterprises. 

Nuo: Nuo is an India based project facilitating decentralized crypto lending on-chain. Borrowers on the platform can stake tokens as collateral and get ETH as a result. The protocol has already processed $15,000 worth of loans and provides an entirely on-chain lending solution for digital assets.

Pulse: The Pulse protocol allows users to tokenize their ‘intent’ to procure a service that potential sellers can bid on, aiming to become the defacto protocol for service customer acquisition and a simpler way for users to connect directly with service providers. In this decentralized network, relayers and market makers help organize ‘intent’ and any dApp or current publisher can plug directly into the Pulse infrastructure to participate, contribute, and earn tokens. 

Quidli: Quidli is a France based protocol building the technological infrastructure that makes equity based employee compensation possible – with a particular focus on the startup space . Currently a centralized protocol, integrating an Ethereum-based solution will allow for the tokenization of equity – making equity based compensation programs programmable and tradeable.

Stealth Project: A member of our cohort still in stealth mode is a project re-imagining databases by building a P2P network with an open participation model aiming to be a decentralized version of an SQL database, providing a fundamental data storage building block enterprises and future dApps.

TapTrust (Open source): SF based, TapTrust is building a a self sovereign wallet that utilizes a standard username and password login and allows users easy set-up without ever needing to back up a seed phrase. In addition to their wallet offering, TapTrust is incorporating a commercial feature called TrustFund that provides loss protection for smart contract security exploits. The loss protection offered with TrustFund along with the ease of setup for the TapTrust wallet should make it easy for people to get started with using dApps without the major risk factor of losing their crypto.

WalletConnect (Open Source Grant): WalletConnect is a simple solution that bridges communication between browser-based dApps and mobile wallets using a QR code scan to establish the initial connection. It is an open protocol and does not require a dApp user to install a browser extension. The protocol is agnostic to specific mobile wallets a user may want to use and will enable dApp developers to integrate with multiple wallets and reach users through a single implementation.


Source: Tech Crunch

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The SEC has never been busier investigating both private and public companies in the Bay Area, suggests agency head

Yesterday at TechCrunch Disrupt, Jina Choi, the longtime head of the SEC’s San Francisco unit, declined to confirm that her agency is investigating Tesla CEO Elon Musk for his now infamous tweet about securing funding for a take-private maneuver.

Choi did pull back the curtain substantially with regard to how the agency — which has never worked harder as it relates to private company investigations — operates.

The uptick in activity is no surprise. As companies linger as private entities for longer periods of time — often raising hundreds of millions, if not billions, of dollars along the way — the SEC has found itself spending more time understanding who the players are, as well as watching them more closely. In fact, while Cho’s 130-person unit covers much more than the Bay Area — its reach extends to Portland, Seattle, Idaho, Montana, and Alaska  — it could easily pour all of its resources into Silicon Valley and San Francisco because it’s so “incredibly busy.”

One of its most famous cases to date has centered on Theranos, the blood-testing company that is right now dissolving but was charged with massive civil fraud by the SEC back in March. It was a case that the SEC spent nearly two years building, and when we talked with Choi about what took so long, she explained how resource intensive the process really is.

She also talked about how much of the agency’s tips come through media accounts (the WSJ famously blew the covers off what had gone so wrong at Theranos) versus other means, including the SEC’s whistleblower program.

And we talked about how the SEC determines settlements in those frequent cases where it settles with a party it has charged with fraud. Recently, for example, the SEC settled with Bay Area investor Mike Rothenberg, who it accused of misappropriating millions of dollars of investor capital. Rothenberg didn’t admit to wrongdoing, but he did agree to be banned from the investment advisory and brokerage business for five years — a move that some industry observers thought didn’t go far enough, while others viewed as onerous.

As it happens, barring people from the industries in which operate is about as extreme a punishment as the SEC can deliver, she explained. “We’re a civil law enforcement agency, so that means that we’re we don’t have the power to take away people’s liberties . . . We can’t put people in jail . . . but one of our most impactful remedies is to bar people from [their] profession” when such a penalty is deemed appropriate.

In fact, she continued, “a lot of times [the target of the SEC’s investigations will say] ‘I can pay a bigger penalty,’ ‘I’ll pay you more money; just don’t ban me from this industry.’ And I think that that’s where we have a tough negotiation, because I think that’s where we can have our greatest impact.”

If you’re interested in how the SEC operates, as well as its evolving stance on ICOs and main street investors accessing private companies, you can learn a lot more by watching here.


Source: Tech Crunch

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Uber CEO: ride-hailing will be eclipsed by scooters, bikes, and even flying taxis

A decade from now, ride-hailing will be less than 50% of Uber’s business, in terms of transactions, CEO Dara Khosrowshahi said Thursday at Disrupt SF.

The on-stage prediction is in line with recent moves by Uber and its CEO to be part of, and make money from, all the different ways people might move within an urban environment. Since Khosrowshahi’s one year as CEO, Uber has made a multimillion-dollar acquisition of JUMP bikes, launched UberRENT, announced plans to launch a dockless electric scooter service and launched a new modalities organization created to figure out out what this multi-modal future might look like for Uber.

Ride-hailing, the company’s first and primary revenue driver, and its delivery app UberEATS will both be enormous in the future, Khosrowshahi said. But the long-term vision, and one that is already in motion, is to move away from travel that relies on passenger cars.

“We want to be the Amazon of transportation,” Khosrowshahi said. “And hopefully, 10 years from now no one in the audience is going to own a car.”

Dockless scooters and bikes—and someday even flying taxis—are central to that plan.

“I’m actually very, very bullish on personal individual electric vehicles,”Khosrowshahi said. “We’ve got to deconstruct that car and that’s a big part of the mission going forward.”


Source: Tech Crunch

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Whole Foods workers seek to unionize, says Amazon is ‘exploiting our dedication’

A group of workers at Whole Foods Market are leading an effort to establish a union for the Amazon-owned company’s 85,000+ workforce.

In a letter addressed to Whole Foods employees, the group — members of Whole Foods’ cross-regional committee — wrote that they are “concerned about the direction” of Whole Foods in an Amazon era. The letter outlines several demands, including a $15 minimum wage for all employees, 401k matching, paid maternity leave, lower health insurance deductibles and more.

“We cannot let Amazon remake the entire North American retail landscape without embracing the full value of its team members. The success of Amazon and [Whole Foods] should not come at the cost of exploiting our dedication and threatening our economic stability,” they wrote.

The grocery store chain was acquired by Amazon one year ago in a $13.7 billion deal that sent shockwaves through the e-commerce and brick-and-mortar retail industries. In that 12-month period, the e-commerce giant has implemented changes to the grocery chain’s nearly 500 stores. Amazon Echos have become part of the inventory in some locations and Amazon lockers have shown up to facilitate Amazon.com pick-ups and returns, for example.

The Amazonization of Whole Foods, one year in

The letter, which calls out both Jeff Bezos and Whole Foods’ CEO John Mackey directly, says there will “continue to be layoffs in 2019 and beyond as Amazon aims to aggressively trim our labor force before it expands with new technology and labor models.”

Since the Amazon acquisition, several hundred Whole Foods workers have been laid-off as Amazon infuses “Whole Foods with its efficient, data-driven ethos,” per The Wall Street Journal. Shoppers, however, have saved millions as a result of the shake-up.

In a statement provided to TechCrunch, a representative of Whole Foods said they respect the “individual rights of [their] team members.”

“[We] have an open-door policy that encourages team members to bring their comments, questions and concerns directly to their team leaders,” they said. “We believe this direct connection is the most effective way to understand and respond to the needs of our workforce and creates an atmosphere that fosters open communication and empowerment. We offer competitive wages and benefits and are committed to the growth and success of our team members.”

Amazon provided a virtually identical statement, adding that they encourage anyone concerned about employee treatment to take a tour of one of their fulfillment centers.

Here’s the full letter, obtained by New Food Economy.

 


Source: Tech Crunch

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Benchmark and Tiger double down on going public

In an ecosystem enthralled with private capital and delayed public debuts, Bill Gurley has been something of a maverick. The former dot-com equity analyst and long-time partner at Benchmark has pushed hard for companies to go public and “grow up,” including at his portfolio company Uber, where he was formerly a board member.

Earlier this year, he noted that “it’s cool to go public again,” and now we are starting to see the fruits of Benchmark’s labors. Over the past 24 hours, two companies – Elastic and Upwork – have submitted their S-1 registration statements to the SEC, and Benchmark is the largest shareholder in both. That follows last year’s IPO for Stitch Fix, where Gurley was the lead investor.

The story of these two public aspirants are certainly divergent. Upwork is the rebranded merger of two companies, Elance and oDesk, which merged in 2013. Benchmark got involved through oDesk, leading a Series B round of investment in the company in 2006, with founding partner Kevin Harvey joining the board. Considering oDesk was founded in 2003, and Elance in 1999, it has certainly been a circuitous route to the public markets for the company.

Elastic, on the other hand, is a relatively rare case of a company going public quite early in its evolution. The startup was founded just a few years ago in 2012 according to Crunchbase, and Benchmark’s Peter Fenton led a $10m series A into the company that same year. Only six years later, the company is heading to the public markets, with a projected unicorn valuation.

While Upwork has certainly been a journey, it’s Elastic that best exemplifies the startup trajectory that I think Gurley has been advocating for the past few years. Given its rapid revenue growth and key ownership of the search engine market, it is doubtful the company would have struggled to raise additional capital from the private markets. Indeed, six years from founding to IPO is more reminiscent of the 1990s, when the IPO was a key early milestone in the development of a startup since private investment was just not available.

The other interesting dynamic here is around capital efficiency. Elastic raised just $162 million in venture capital according to Crunchbase, a surprisingly low number considering its revenues, growth, and valuation. Enterprise startups have been raising more capital over time as sales and marketing costs have soared and the standards required to publicly debut have become more exacting. That capital efficiency is mirrored on the consumer side by Stitch Fix, which had raised just $42 million in venture capital before its IPO.

These are early data points, but it is clear that Gurley’s and Benchmark’s words around capital efficiency and public markets are influencing their advice to their startup boards and leading to very different actions from these founders. It’s a contrast to companies like Palantir and SpaceX, which have seemed to have committed to staying private for as long as possible.

Tiger Global and other crossover hedge funds are also pushing IPOs

Benchmark is not the only company that has had some good S-1 news this week. The lead investor in the other two prominent tech IPOs so far this season — Eventbrite and SurveyMonkey — is Tiger Global, the quiet but prolific crossover hedge fund. The fund owns 21.3% of Eventbrite and 29.3% of SurveyMonkey.

The rise of these crossover funds is driving renewed interest in early public liquidity. Unlike traditional venture firms, which typically have a decade investment horizon (plus frequent multi-year extensions), these hedge funds face greater pressure to get returns on a compressed timeline.

That’s indicative here with Tiger Global. It’s investments in Eventbrite and SurveyMonkey took place in 2013, so it is just roughly five years from investment to IPO. Certainly, the hedge fund targets growth-stage opportunities which have shorter liquidity times in general, yet, the speed of liquidity is still notable even for growth investors.

For an ecosystem that has in many ways avoided the public markets, these changing norms will not just increase the pressure to go public, but may also present challenges for boards where discordant voices may be simultaneously pushing the exec team to stay private or go public. It’s a dynamic that founders are going to have to increasingly think through as they select investors through each of their venture rounds, in order to ensure that every investor is on the same page regarding the timeline for the public markets.


Source: Tech Crunch