New Trifacta investors who were part of the funding round include Telstra Ventures, Energy Impact Partners, Japanese mobile operator NTT Docomo, …
Trifacta, a startup that specializes in cleaning corporate data so it can be analyzed, has raised $100 million in funding, underscoring current investor appetite for data-crunching startups amid the artificial intelligence boom.
New Trifacta investors who were part of the funding round include Telstra Ventures, Energy Impact Partners, Japanese mobile operator NTT Docomo, BMW i Ventures, and Dutch bank ABN AMRO. Trifacta declined to comment on its valuation, but a source familiar with the deal said it’s under $1 billion, which means the company is no unicorn startup, a status that requires a private valuation of over $1 billion.
The startup’s technology—referred to in the industry as data wrangling—sorts through copious amounts of data in order to standardize the information, which can often be labeled differently or duplicated when it’s stored in multiple databases.
For instance, people may describe dates differently across various databases, like putting the day before the month or vice-versa, or they may abbreviate months instead of spelling them out. This may seem like a small detail, but it can ultimately ruin the data-training process that deep learning and other statistical model building requires, because the information needs to be as uniform as possible.
In the past, coders would have to write software rules that could help clean the data, but the task can be time consuming for corporate data scientists. Data-cleaning tools will help scientists put an end to wasting time working as “glorified data janitors,” said Trifacta CEO Adam Wilson said, and instead, focus on analyzing the information, Wilson said.
“People have woken up to the fact that if your data quality is bad, your A.I. and machine learning is going to be worthless,” Wilson said. “The last thing they want to do is to automate bad decisions faster based on bad data.”
Wilson said the company plans to use some of the funding to expand into the Asia-Pacific region, which was one of the reasons Trifacta took investment from the Australian venture capital firm Telstra Ventures and NTT Docomo.
The company’s competition—which includes those who sell data-cleaning tools or have incorporated data-cleaning features into their products—include startups like Tamr, Paxata, Alteryx (which went public in 2017), Microsoft, and Tableau.
Other investors who participated in Trifacta’s latest funding round include Accel Partners, Google, Greylock Partners, and Ignition Partners.
Salzberg was a former investor at both Blackstone and Bessemer VenturePartners, as well as a graduate of Harvard Business School. Papas had …
There was a time when it really did seem like the next big thing. That’s easy to forget now, after all the losses and the layoffs. After the steadily shrinking customer base and the stock price that became locked in an inescapable tailspin. After an entire emergent industry went from red hot to ice cold. But it’s worth remembering.
Today, Blue Apron is a cautionary tale. Yet as recently as four years ago, some of the biggest investors in Silicon Valley thought the company had a chance to change the world.
In retrospect, the peak may have been June 2015, when Blue Apron pulled in $135 million in venture funding at a $2 billion valuation from names like Bessemer Venture Partners and First Round Capital. The latest low point came this June, when Blue Apron was forced to conduct a reverse stock split in order to lift its share price above $1 and avoid being kicked off the NYSE. The downward spiral has continued in the ensuing months, with Blue Apron’s market cap sinking at one point below $100 million.
What happened? It’s a question without a simple answer. It’s also one worth asking. (We tried asking Blue Apron; the company didn’t respond to an email seeking comment for this story). Not every VC bet pays off, of course. But Blue Apron seems to be in the midst of crashing and burning with a blinding brilliance rarely seen.
Not long ago, it was a well-funded startup that wanted to disrupt one of the biggest industries imaginable, a company defined by its lofty ambitions, rapid growth and rampant hype. Now, the narrative has turned to rising costs, plunging stock, a saturated market and massive losses, a saga of flying too close to the sun. And it all began seven years ago, with a former VC, a software developer and a Pilates pro packed into a tiny kitchen in Queens.
The good old days
Blue Apron was founded in New York in 2012 by Matt Salzberg, Ilia Papas and Matt Wadiak, three young men who followed three very different entrepreneurial paths. Salzberg was a former investor at both Blackstone and Bessemer Venture Partners, as well as a graduate of Harvard Business School. Papas had spent more than a decade working in software. And Wadiak was a trained chef who more recently had passed the time as the proprietor of a Pilates studio.
There are differing versions of how Blue Apron came to be, as the writer Alex Konrad detailed in a Forbes cover story on the company back in 2015. Salzberg and Papas first raised seed funding for a different idea, a crowdfunding platform for scientists, but quickly realized a pivot was in order. As the two co-founders told it to Konrad, they settled on meal kits after Papas spent hours hunting down the ingredients for and preparing a steak dinner and—in classic startup fashion—realized there must be a better way. The original name for the business was Part & Parsley.
At the very same time, and in the very same city, two other HBS alumni were getting a very similar idea off the ground. First, Josh Hix and Nick Taranto called their meal-kit startup DineIn Fresh; before long, they changed the name to Plated. The leaders of both Blue Apron and Plated say they were inspired by a Swedish company called Linas Matkasse that pioneered the idea of packaging up finely tuned ingredients and shipping them off for customers to prepare in the comfort of their own kitchens.
But Forbes posited a different idea: That both were instead inspired by HelloFresh, the Rocket Internet-backed upstart that started selling its meal kits in Europe the year prior, in 2011. One piece of evidence the magazine points to is the similarity between slogans displayed on the three companies’ sites back in 2012; “Discover the joy of cooking,” read HelloFresh’s homepage, while Plated proposed that visitors “Discover a better way to cook” and Blue Apron offered the chance to “Discover incredible recipes.” Another possible indication is that, on its original site, DineIn Fresh literally referred to itself as HelloFresh in two separate locations.
Coincidence or not, it wasn’t long before Blue Apron was up and running. In the early days, Salzberg, Papas and Wadiak packed up and shipped off the company’s meal kits themselves, reportedly operating out of a rented commercial kitchen in an industrial neighborhood in Queens. After positive initial reception, the company began to quickly gain traction and expand. In February 2013, Blue Apron raised $3 million in VC funding from Bessemer, First Round and other backers at a $9 million valuation. Six months later, it pulled in $5 million more at a $30 million valuation. And in April 2014, it collected $50 million at a $500 million valuation, marking a step-up of nearly 17x in the span of eight months.
With its bank account well-stocked, Blue Apron embarked on a period of booming growth. In 2014, it had $77.8 million in net revenue and total operating expenses of $108.6 million, with $14 million in marketing expenses to attract new customers, according to the company’s 2017 IPO filing. By 2016, those numbers had skyrocketed to $795.4 million in revenue, $850.2 million in expenses and $144.1 million in marketing costs. Blue Apron quintupled the size of its workforce, to more than 5,000. And while the company was still losing money, in the strange world of unicorn economics, it was a relatively manageable amount: a net loss of $30.8 million in 2014 increased to about $54.9 million by 2016.
It was in the middle of that run, in June 2015, that Blue Apron raised its final round of VC backing, reaching a $2 billion valuation with a $135 million funding.
Blue Apron was far from the only meal-kit company that burst onto the scene during the middle half of the decade. Along with HelloFresh and Plated, names like Sun Basket and Home Chef began establishing footholds in the space, eager to capitalize on what some saw as a widespread shift toward a more subscription-focused economy. What startups like Harry’s and Stitch Fix did for razors and clothes, the thinking went, this new class of companies could do for healthy meals.
Venture investors certainly bought in. During 2011, just one meal-kit company raised VC backing anywhere in the world, according to PitchBook data. In 2015, venture firms made 16 investments in the space worth a total of more than $440 million, as investors placed their bets on which upstarts might come to dominate the nascent sector:
The revenue was coming in. It was nearly impossible to listen to a podcast without hearing an advertisement for one meal-kit service or another. But even then, at the height of the craze, there were reasons to be skeptical about the business model’s long-term prospects.
As evidenced by Blue Apron’s rapidly escalating marketing costs, it can be expensive to attract new customers. And once you do bring customers in, it’s difficult to retain them. In 2017, an assistant professor of marketing at Emory University named Daniel McCarthy estimated that 72% of Blue Apron users canceled their subscriptions within the first six months.
One explanation is that there were so many competitors offering deals to new customers that meal-kit fans could simply jump around from one service to the next. Another, perhaps simpler hypothesis is that the idea of meal-kit services was more appealing to consumers in theory than in reality. Prospective chefs might like to think that the only thing stopping them from whipping up culinary delights is the lack of easy access to properly packaged ingredients. But sometimes, you realize you just don’t like to cook.
There’s also the potential for issues in a meal-kit supply chain. Ingredients must go from farm to fulfillment center. Then they must be packaged, often in refrigerated boxes. And the right ingredients need to go in the right boxes every time—it might only take one poorly packaged meal for a customer to cancel. Then the boxes must travel (quickly) out to their destinations, and the integrity of those boxes must be maintained. One punctured piece of cardboard could mean the chicken filets inside are spending hours at higher-than-intended temperatures. You get the idea.
Add it all up, and you get a capital-intensive industry where companies must be well-funded to pay for all that food, all those customers and all that shipping.
And if those weren’t enough different headwinds to battle, there was of course all the competition. Blue Apron was the most well-funded of the bunch, but Sun Basket, HelloFresh, Plated and the rest were combining to raise hundreds of millions from VCs to finance their efforts. It’s a lot easier to undercut your rivals’ prices when you have access to what seemed at the time like nearly limitless amounts of outside capital.
Perhaps venture firms realized they’d overplayed their hand. Both the number of VC deals and the amount of total VC funding given to meal-kit startups declined in 2016, according to PitchBook data. It declined again in 2017. Suddenly, the once-glitzy industry wasn’t gleaming quite so brightly.
The beginning of the end
By 2017, with funding for the space beginning to dry up, most of the biggest meal-kit delivery startups were searching for an exit. For Blue Apron, that meant filing for an IPO in June of that year, with initial plans to sell 30 million shares for between $15 and $17 apiece. Almost immediately, things began to go south. Two weeks after the filing dropped, Amazon announced plans to acquire Whole Foods in a mega-deal that immediately shook the food and grocery industry; if Amazon was going to go all in on the sector, it would likely be bad news for any up-and-comers trying to carve out a niche.
There were of course other reasons investors were skeptical, including major questions about Blue Apron’s path to profitability. But skeptical they were. In response, shortly before the listing, Blue Apron drastically reduced its expected price range down to just $10 to $11 per share. When the company finally did list on the NYSE in late June, it priced at $10, raising $300 million and establishing a valuation lower than the $2 billion VC-backed figure from two years prior.
A few months later, in November 2017, HelloFresh conducted an IPO of its own in Germany; like Blue Apron, the listing came at a lower valuation than the company’s final round of VC backing. Around the same time, Plated opted for a different kind of exit: It sold itself to Albertsons for a reported $200 million, uniting with an established grocer with a more finely tuned supply chain that might be better equipped than a startup to package and ship huge amounts of food at scale.
Two other meal-delivery startups also reached the end of the line in 2017: Maple, which had been valued at $115 million by VCs, sold itself to Deliveroo, connecting meal-kit deliveries with restaurant deliveries. And a startup called Sprig called it quits, going out of business about two years after raising $45 million from VCs at a $169 million valuation.
The trend continued in 2018. That June, Home Chef followed in Plated’s footsteps and sold itself to a retail giant, inking a sale to Kroger worth at least $200 million, and potentially up to $700 million based on sales milestones. And the next month, Chef’d ceased operations and sold its assets to True Food Innovations, a larger foodtech company with meal kits of its own. All in all, in the span of about a year, seven companies in the space experienced major ownership changes.
Sun Basket is perhaps the biggest company in the sector still playing the VC game: It raised $30 million in new funding this May. That ranks among the 15 biggest venture investments ever in a meal-kit delivery startup, per PitchBook data:
The IPO aftermath
From the outset, analysts and journalists were using words like “disastrous” and “insipid” to describe Blue Apron’s IPO. In their first month and a half of trading, shares in the company were down nearly 50%. And while there were a few brief periods of optimism in the next few months, the ensuing two years have largely been one long, steady decline to the bottom.
It was potentially a sign of things to come when the company’s founders started heading for the exits. Matt Wadiak, Blue Apron’s original chef, stepped down as COO less than a month after the business went public, shifting to a senior advisory role. Four months later, in November 2017, Matt Salzberg followed suit, resigning as CEO. That move came not long after Blue Apron conducted hundreds of layoffs in an ill-fated effort to get closer to profitability.
At the time of Salzberg’s departure, Blue Apron’s stock hovered at around $3 per share; a little more than a year later, in December 2018 (after another round of layoffs), it dipped below $1 for the first time, ignominious territory for a business that was once the talk of Silicon Valley.
This May, the NYSE informed Blue Apron that the company’s stock was trading at such a low price that it was in danger of being de-listed. In response, a month later, Blue Apron announced a 1-for-15 reverse stock split, reducing the quantity of the company’s Class A shares from about 100 million to 6.7 million. It’s a move that’s typically taken by public investors as a sign of distress, and that was certainly the case here. Blue Apron’s stock plunged more than 15% the day after the split was unveiled, falling to 55 cents per share.
The stock split led to an increase in Blue Apron’s share price, as the company’s value was concentrated in a much smaller number of shares. It closed its first trading day after the move at $8.18 per share. But in the weeks to come, the price just kept on sliding, other than a brief bump up to above $10 when Blue Apron revealed plans to begin selling Beyond Meat products in its meal kits—a move that linked the current next big thing in foodtech to the company that held that title a half-decade ago.
But the shine from Beyond Meat didn’t stick. At the end of August, Blue Apron’s stock sat at $6.78 per share, representing a market cap of just $88.7 million. That’s a decline of more than 95% from the $2 billion valuation that came with its final round of venture backing.
It’s possible, of course, that Blue Apron turns it around. But it doesn’t seem likely. The list of companies that have arisen from such close proximity to their deathbeds is a short one. There was a time when VCs were full of optimism about the company’s future. Yet from the moment Blue Apron started planning an IPO, the public market’s reaction has been disbelief.
Just like the customers who have left the company in droves, investors are no longer buying what Blue Apron is selling.
It wasn’t that long ago that WeWork was all confidence and bluster, aiming for the clouds with its forthcoming IPO. But expectations for the office-share …
It wasn’t that long ago that WeWork was all confidence and bluster, aiming for the clouds with its forthcoming IPO. But expectations for the office-share giant have changed in the months since, with CEO Adam Neumann’s choice to cash out more than $700 million in shares raising eyebrows, and the company setting its sights lower than the $47 billion at which it had previously estimated its value. Now, with WeWork looking to hit the market at an even lower valuation, its top investor is calling on the company to put its public offering on hold.
The Financial Times on Tuesday reported that SoftBank, WeWork’s chief investor, is urging the company to shelve its IPO for now as the start-up continues to stumble. WeWork, which had planned on going public as soon as next week, is considering dropping its valuation below $20 billion, the Wall Street Journalreported Monday, leading some investors to suggest that it should pause its IPO plans until next year. But SoftBank, the Japanese holding company that has served as the main backer for the We Company, is reportedly going even further, pressing the company to put its public offering on ice indefinitely. (Both We Company and SoftBank declined to comment to the FT.)
WeWork has seen explosive growth in recent years and had been the country’s highest valued anticipated IPO. But it has also long been dogged by skepticism, with critics arguing that it’s more of a real-estate venture than a tech company. The company has tried to right the ship as its IPO approaches, with Neumann returning the $6 million he squeezed from his own company for the “we” trademark. But such measures have failed to steady the ship. Other big unicorn startups, including Uber and Lyft, have crashed and burned upon hitting the market this year; SoftBank appears to be hoping WeWork avoids a similar, or worse, fate. Still, sources familiar with the matter told CNBC that WeWork’s IPO is “full speed ahead” and could kick off as soon as Monday.
Let’s be clear: Slack as a public company today is worth around double what it was last valued at as a private company. During its August 2018 Series H, Slack’s $427 million raise gave it a post-money valuation of just over $7 billion. As of this morning, the productivity-focused technology shop is worth $13.2 billion.
Most companies would kill for similar value creation. Slack, however is in a tricky spot. After setting a $26 per-share reference price for its direct listing, and trading as high as $42, its stock has rapidly lost altitude. Indeed, Slack shares have fallen under the $25 per-share mark, reducing its worth to the previously mentioned $13 billion.
Slack, once a private market darling is now enduring a more difficult run as a public company. Its most recent earnings call pushed its shares down by 15 percent before they recovered to a single-digit percentage loss. Later the firm’s equity depreciated anyway, falling from a pre-earnings $31 to this week’s sub-$25 range.
A good question is why; why is Slack’s stock falling? There appear to be a few possible reasons, including Microsoft, a broader SaaS repricing, and the chance that Slack’s public market valuation simply got away from it. We’ll peek at each and relate the situation back to startups as we go.
To summarize our three thoughts, Slack’s public market declines could be built on the fear that Microsoft will blunt its growth profile with its competing Teams product, that software-as-a-service (SaaS) companies are seeing a broader repricing of their revenue (SaaS firms are valued at multiples of revenue instead of a multiplication of profit), or, that Slack was simply overvalued by public market investors when it first began to trade.
Redmond is not interested in allowing Slack to burrow its way into the productivity stack of the next corporate generation. We’ve covered Microsoft’s Teams push here at Crunchbase News for years, noting that the larger company was working hard to grow its internal communication tooling after passing on buying Slack in years past.
There’s no perfect way to gauge investor sentiment in relation to a single idea. But it is hard to see how public investors could be overly worried about Teams and Microsoft today, given recent Slack performance figures.
After reporting 58 percent revenue growth in its most recent quarter, Slack’s CFO Allen Shim reported the following concerning large accounts (the very market category we’d presume that Microsoft’s Teams product would do best amongst):
We remain focused on expansion within existing customers and growing our large enterprise customer base, and ended the quarter with 720 Paid Customers greater than $100,000 in annual recurring revenue, which is up 75% year-over-year.
That’s nice and healthy. Whatever impact Microsoft is having on Slack, and it must have at least some, regardless of what people keep telling me on Twitter, it doesn’t appear to be existential to growth in the short term.
For startups, the above indicates that even when an incumbent technology behemoth enters your market aggressively, there’s still space for you provided that your brand is strong. Slack is a verb; Teams is a competitor.
But the multiple data from the Bessemer cloud index just makes plain what we can see in the markets. The same index has been mostly flat over the past few quarters while the companies that make up the index have grown. That puts natural downward pressure on revenue multiples. But all the same, the slow change in the value of SaaS revenue is insufficient to explain Slack’s value changes.
For startups, the takeaway from the above is that public markets still value SaaS companies highly, at least when compared to historical norms. That’s welcome news for quickly-growing private companies that sell code instead of widgets.
Let’s see if Slack is valued more richly now than before on a revenue basis, and how that may stack up to peers.
As we often do with SaaS companies we’ll use its quarterly revenue tally as the foundation of our ARR calculations. This blends some non-recurring revenue into the figure, but it’s the best that we can do in the case of Slack. What follows are the company’s revenue results for the past four quarters, and its implied ARR:
Slack Q3 2018 revenue: $105.6 million ($422.4 million ARR)
Slack Q4 2018 revenue: $122.0 million ($488 million ARR)
Slack Q1 2019 revenue: $134.8 million ($539.2 million ARR)
Slack Q2 2019 revenue: $145.0 million ($600 million ARR)
As we can see, Slack has rapidly grown its GAAP revenue, and its implied ARR.
Recall that Slack was worth about $7.1 billion in Q3 2018, and is worth about $13.2 billion today. Using the firm’s Q3 2018 and Q2 2019 ARR numbers, which valuation (loosely) provides the more attractive (lower) multiple?
Slack Q3 2018 implied ARR multiple: 16.9x
Slack Q2 2019 implied ARR multiple: 22x
As you can see, Slack’s ARR multiple today is higher than it was. And both its Q3 2018 and Q2 2019 ARR multiples are far above what the Bessemer index sports. (Note: we can’t directly compare the results as we are doing ARR calculations using market cap on one side, and enterprise value/revenue on the other. But the gap is large enough to show Slack as an outlier.)
Now recall that Slack was worth far more a few months ago. That means that its ARR multiple was even higher before. Slack’s declines, therefore, feel much more like the firm inching closer to market norms than it being repudiated by public investors. You simply cannot say that Slack is being dissed by public investors when it is still richly valued compared to its comps.
The lessons for startups in the above is that top-tier SaaS companies can command strong revenue multiples, but that they are not unlimited. No matter who you are.
Yesterday, Jeff Richards, a managing partner at GGV Capital shared a chart with Crunchbase News (here) that detailed the premium that faster-growing SaaS companies enjoy over their more slowly-growing peers. In this context, we can add a final wrinkle to Slack’s revenue multiple declines.
It’s perfectly reasonable to say that Slack’s falling net retention rate (from 138 percent in the quarter ending April 2019 to 136 percent in the quarter ending July 2019) implies a slower future growth rate. And that is causing investors to reprice Slack downward, akin to what Richards’ chart would lead us to understand.
But Slack is still a richly-valued SaaS company putting up quick growth from a position of wealth; the company has more cash than the ferrous financial institution. So while Slack’s falling share price makes for good headlines, upon closer look the situation appears to be more return-to-senses than dramatic diss.
Glossier reached unicorn status earlier this year when it secured $100 million in a series D funding round led by Sequoia Capital at a $1.2 billion …
Glossier reached unicorn status earlier this year when it secured $100 million in a series D funding round led by Sequoia Capital at a $1.2 billion valuation. Following this capital raise and the opening of a new corporate headquarters, the brand has been focused on building a formidable leadership team with a series of strategic executive hires.
CNBC reported that Glossier poached Melissa Eamer for its new chief operating officer. Eamer joined Amazon three years after the IPO and spent 19 years at the e-commerce giant in various roles, most recently as Vice President of sales and marketing for Amazon Devices.
Eamer said to CNBC, “When I connected with Emily, I was immediately struck … by the [Glossier] customer obsession. That’s something that has been really consistent with Amazon when I was there.”
She continued, “Going back to being a company at this stage, at this size … that’s something I am most excited about. For me, this is an opportunity to try what I think is the second wave of e-commerce.”
Meet the Glossier bench:
Chief Operating Officer: Mellisa Eamer from Amazon
Chief Financial Officer: Vanessa Wittman from Dropbox
Chief People Officer: Diane Vavrasek from Jet.com and Walmart
Vice President of Supply Chain Operations: Edith Chen from beauty industry supplier LF Beauty.
Vice President of Operations: Nick DeAngelo from Walmart’s Jet.com
Head of Content: Leah Chernikoff from Elle.com
Emily Weiss said of the strategic hires, “We’re entering into this new stage of growth at Glossier. We have the resources and the team and the business in place to build this future beauty company.”