Mailchimp and Shopify break up

Mailchimp today announced that the Mailchimp app, which let its users use their Shopify data to create targeted email campaigns, for example, is no longer available in the Shopify marketplace. The reason for this, Shopify itself says, is that it “had growing concerns about Mailchimp’s app because of the poor merchant experience and their refusal to respect our Partner Program Agreement.”

Clearly, this isn’t the most amicable divorce.

“It’s critical for our merchants to have accurate, complete insight into their businesses and customers, and this isn’t possible when Mailchimp locks in their data,” Shopify explains. “Specifically, Mailchimp refuses to synchronize customer information captured on merchants’ online stores and email opt-out preferences. As a result, our merchants, other apps, and partner ecosystem can’t reliably serve their customers or comply with privacy legislation.”

Unsurprisingly, Mailchimp’s side of the story is a bit different. “Yesterday, we asked Shopify to remove the Mailchimp for Shopify integration from their marketplace,” the company wrote. “We made this decision because Shopify released updated terms that would negatively impact our business and put our users at risk.”

Mailchimp says it refused to provide Shopify with all the customer data it asked for because Shopify’s terms simply weren’t fair or practical.

“We have been negotiating for months with Shopify on trying to get terms that were very fair and equitable to both of our businesses — and there were several points that we just weren’t willing to compromise on,” Joni Deus, Mailchimp’s director of partnerships, told me. “Anything that hurts our customers’ privacy was a non-starter for us.” She also told me that Shopify specifically asked for pretty much any data Mailchimp collects about its users, including data it collected in the past since the app was installed. “We had no way of getting that consent from our users retroactively,” Deus noted.

There may be another wrinkle to this story, too. In recent months, Mailchimp partnered with Square to launch its shoppable landing pages. That puts Mailchimp deeper into the e-commerce business and into competition with Shopify.

In its statement, Mailchimp argues that it integrates with more than 150 different apps and platforms. “We won’t compromise on that just because Shopify sees it as a competitive threat,” the company wrote. “We want people to have choices,” Deus added. “The marketplace is starting to collide and people are starting to compete with each other. Many of our other partners are also in our space and we would never limit a competitor from what they were willing to do for their business.”

In the end, we’ve got two companies that both argue they are putting their customers’ privacy first. This doesn’t strike me as a conflict where there was no reasonable compromise to be had, though, so in the end, it’s now on both companies’ customers to figure out what to do next.

For users, there are still plenty of other options, including the use of third-party integrations that link the two services together, including Zapier, Automate.io and ShopSync. Indeed, using those is Mailchimp’s recommendation for its current users.

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Gig workers need health & benefits — Catch is their safety net

One of the hottest Y Combinator startups just raised a big seed round to clean up the mess created by Uber, Postmates and the gig economy. Catch sells health insurance, retirement savings plans and tax withholding directly to freelancers, contractors, or anyone uncovered. By building and curating simplified benefits services, Catch can offer a safety net for the future of work.

“In order to stay competitive as a society, we need to address inequality and volatility. We think Catch is the first step to offering alternatives to the mandate that benefits can only come from an employer or the government,” writes Catch co-founder and COO Kristen Tyrrell. Her co-founder and CEO Andrew Ambrosino, a former Kleiner Perkins design fellow, stumbled onto the problem as he struggled to juggle all the paperwork and programs companies typically hire an HR manager to handle. “Setting up a benefits plan was a pain. You had to become an expert in the space, and even once you were, executing and getting the stuff you needed was pretty difficult.” Catch does all this annoying but essential work for you.

Now Catch is getting its first press after piloting its product with tens of thousands of users. TechCrunch caught wind of its highly competitive seed round closing, and Catch confirms it has raised $5.1 million at a $20.5 million post-money valuation co-led by Khosla Ventures, Kindred Ventures, and NYCA Partners. This follow-up to its $1 million pre-seed will fuel its expansion into full heath insurance enrollment, life insurance and more. Catch is part of a growing trend that sees the best Y Combinator startup fully funded before Demo Day even arrives.

“Benefits, as a system built and provided by employers, created the mid-century middle class. In the post-war economic boom, companies offering benefits in the form of health insurance and pensions enabled familial stability that led to expansive growth and prosperity,” recalls Tyrrell, who was formerly the director of product at student debt repayment benefits startup FutureFuel.io. “Emboldened by private-sector growth (and apparent self-sufficiency), the 1970s and 80s saw a massive shift in financial risk management from the government to employers. The public safety net contracted in favor of privatized solutions. As technological advances progressed, employers and employees continued to redefine what work looked like. The bureaucratic and inflexible benefits system was unable to keep up. The private safety net crumbled.”

That problem has ballooned in recent years with the advent of the on-demand economy, where millions become Uber drivers, Instacart shoppers, DoorDash deliverers and TaskRabbits. Meanwhile, the destigmatization of remote work and digital nomadism has turned more people into permanent freelancers and contractors, or full-time employees without benefits. “A new class of worker emerged: one with volatile, complex income streams and limited access to second-order financial products like automated savings, individual retirement plans, and independent health insurance. We entered the new millennium with rot under the surface of new opportunity from the proliferation of the internet,” Tyrrell declares. “The last 15 years are borrowed time for the unconventional proletariat. It is time to come to terms and design a safety net that is personal, portable, modern and flexible. That’s why we built Catch.”

Catch co-founders Andrew Ambrosino and Kristen Tyrrell

Currently Catch offers the following services, each with their own way of earning the startup revenue:

  • Health Explorer lets users compare plans from insurers and calculate subsidies, while Catch serves as a broker collecting a fee from insurance providers
  • Retirement Savings gives users a Catch robo-advisor compatible with IRA and Roth IRA, while Catch earns the industry standard 1 basis point on saved assets
  • Tax Withholding provides an FDIC-insured Catch account that automatically saves what you’ll need to pay taxes later, while Catch earns interest on the funds
  • Time Off Savings similarly lets you automatically squirrel away money to finance “paid” time off, while Catch earns interest

These and the rest of Catch’s services are curated through its Guide. You answer a few questions about which benefits you have and need, connect your bank account, choose which programs you want and get push notifications whenever Catch needs your decisions or approvals. It’s designed to minimize busy work so if you have a child, you can add them to all your programs with a click instead of slogging through reconfiguring them all one at a time. That simplicity has ignited explosive growth for Catch, with the balances it holds for tax withholding, time off and retirement balances up 300 percent in each of the last three months.

In 2019 it plans to add Catch-branded student loan refinancing, vision and dental enrollment plus payments via existing providers, life insurance through a partner such as Ladder or Ethos and full health insurance enrollment plus subsidies and premium payments via existing insurance companies like Blue Shield and Oscar. And in 2020 it’s hoping to build out its own blended retirement savings solution and income-smoothing tools.

If any of this sounds boring, that’s kind of the point. Instead of sorting through this mind-numbing stuff unassisted, Catch holds your hand. Its benefits Guide is available on the web today and it’s beta testing iOS and Android apps that will launch soon. Catch is focused on direct-to-consumer sales because “We’ve seen too many startups waste time on channels/partnerships before they know people truly want their product and get lost along the way,” Tyrrell writes. Eventually it wants to set up integrations directly into where users get paid.

Catch’s biggest competition is people haphazardly managing benefits with Excel spreadsheets and a mishmash of healthcare.gov and solutions for specific programs. Twenty-one percent of Americans have saved $0 for retirement, which you could see as either a challenge to scaling Catch or a massive greenfield opportunity. Track.tax, one of its direct competitors, charges a subscription price that has driven users to Catch. And automated advisors like Betterment and Wealthfront accounts don’t work so well for gig workers with lots of income volatility.

So do the founders think the gig economy, with its suppression of benefits, helps or hinders our species? “We believe the story is complex, but overall, the existing state of the gig economy is hurting society. Without better systems to provide support for freelance/contract workers, we are making people more precarious and less likely to succeed financially.”

When I ask what keeps the founders up at night, Tyrrell admits “The safety net is not built for individuals. It’s built to be distributed through HR departments and employers. We are very worried that the products we offer aren’t on equal footing with group/company products.” For example, there’s a $6,000/year IRA limit for individuals while the corporate equivalent 401k limit is $19,000, and health insurance is much cheaper for groups than individuals.

To surmount those humps, Catch assembled a huge list of angel investors who’ve built a range of financial services, including NerdWallet founder Jake Gibson, Earnest founders Louis Beryl and Ben Hutchinson, ANDCO (acquired by Fiverr) founder Leif Abraham, Totem founder Neal Khosla, Commuter Club founder Petko Plachkov, Playable (acquired by Stripe) founder Tad Milbourn and Synapse founder Bruno Faviero. It also brought on a wide range of venture funds to open doors for it. Those include Urban Innovation Fund, Kleiner Perkins, Y Combinator, Tempo Ventures, Prehype, Loup Ventures, Indicator Ventures, Ground Up Ventures and Graduate Fund.

Hopefully the fact that there are three lead investors and so many more in the round won’t mean that none feel truly accountable to oversee the company. With 80 million Americans lacking employer-sponsored benefits and 27 million without health insurance and median job tenure down to 2.8 years for people ages 25 to 34 leading to more gaps between jobs, our workforce is vulnerable. Catch can’t operate like a traditional software startup with leniency for screw-ups. If it can move cautiously and fix things, it could earn labor’s trust and become a fundamental piece of the welfare stack.

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Slowdown or not, China’s luxury goods still seeing high-end growth

Despite well-documented concerns over an economic slowdown in China, the country’s luxury goods market is still seeing opulent growth according to a new study. Behind secular and demographic tailwinds, the luxury sector is set to continue its torrid expansion in the face of volatility as it’s quickly becoming a defensive economic crown jewel.

Using proprietary analysis, company data, primary source interviews, and third-party research, Bain & Company dug into the ongoing expansion of China’s high-end market in a report titled “What’s Powering China’s Market for Luxury Goods?

In recent years, China has become one of the largest markets for luxury good companies globally. And while many have raised concern around a drop-off in luxury demand, findings in the report point to the contrary, with Bain forecasting material growth throughout 2019 and beyond. The analysis provides a compelling breakdown of how the sector has seen and will see continued development, as well as a fascinating examination of what strategies separate winners and losers in the space.

The report is worth a quick read, as it manages to provide several insightful and differentiated data points with relative brevity, but here are the most interesting highlights in our view:

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Amazon Pay inks Worldpay integration as it branches out in the wider world of e-commerce

Amazon rules the roost when it comes to e-commerce marketplaces in countries like the US, but today it’s announcing a deal that it hopes will be a start its plan to have that same kind of ubiquity outside of its walled garden. The company has inked a deal with Worldpay for the latter to become its first acquirer.

This means that Worldpay — one of the more ubiquitous providers of payment technologies, processing 40 billion transactions worth some $1.7 trillion annually through 300+ payment options and 120 currencies — will now be offering Amazon Pay as part of that mix, so that any merchant can offer this as a payment and shipping option to its customers.

Importantly, this could also allow Amazon, over time, to layer on further services into the mix for merchants, which could potentially include netting third party merchants into its popular Amazon Prime subscription scheme for free shipping and more.

“It’s a good question, but we’d prefer not to speak about our future plans,” Patrick Gauthier, VP of Amazon Pay, told TechCrunch when asked about Prime and whether it could become a part of the Worldpay offering. “Today the announcement is about the extension of our footprint. It will lead us into more opportunities to grow the value proposition for buyers and merchants, but I will reserve discussion about that for the future.”

The deal is being announced the same week that Worldpay had some other news of its own: it’s getting acquired by Fidelity National Information Services in a $43 billion deal. Asif Ramji, chief product and marketing officer at Worldpay, speaking to TechCrunch about the Amazon Pay news confirmed that the acquisition will have no impact on this Amazon deal.

Gauthier said that the initial focus of the deal will be to cover digital payments mainly for online merchants, although not just on websites per se. “The focus is on the connected experience, and we are leaning into other kinds of connected devices TVs,” he said.

The lure for merchants goes something like this: linking into Amazon Pay gives buyers an option to select from a list of active addresses and payment options that they will already be using to buy on Amazon. This, in turn, will make it less onerous to fill out details to complete the transaction — and therefore less likely for the sale to fall prey to the “shopping cart abandonment” that scuppers many an online transaction. That would be even more the case on screens where a user might not have a keyboard and so inputting information is even more of a pain, such as on a TV.

To be clear, in a nutshell, this quicker process, added convenience, and increased security (no need to re-enter card details), are the promised benefits of all digital wallets. Amazon’s unique selling point, however, is that its particular set of data is already widely used, and therefore more likely to be used again.

The other 95%

We once reported on some research that found that Amazon accounted for nearly half of all online commerce in the US, but only five percent of all retail spend. As a long-term plan to continue growing its business, Amazon has been working on ways to extend its reach outside of the world of Amazon for a while now.

While some efforts in areas like point-of-sale services, for example, have largely fallen flat, what’s interesting in this Worldpay deal is how Amazon is willing to concede a bit of control in its effort to change that track record and tap into that bigger market.

Ramji noted that Worldpay actually built Amazon a custom API to integrate Amazon Pay on to its platform and to create the ability to tap into the data around shipping and cards that Amazon can subsequently provide to merchants. That implies that this will, for now at least, be something that only Worldpay will be able to provide to customers.

What’s also very notable in this news is how Amazon Pay / Worldpay might help Amazon bring in more transactions under its Amazon Prime subscription umbrella.

While Gauthier would not comment on whether Prime might be offered as an option at checkout at any point in the Worldpay integration, he did note that the company has quietly been testing using Prime outside of Amazon for a while now.

“As a matter of fact we have had instances of doing that already,” he said, noting that the fashion retailer All Saints currently provides the same Prime shipping benefits to its customers if they happen also to be Prime subscribers. “It has been very successful in terms of customer conversion and lift, and to capture new customers.”

He also noted that the company ran tests during Prime Day in 2018, testing using Prime with third-party merchants to understand the potential opportunity it might have here. “Yes, we have had interest from merchants if and when we decide to go further with Prime.”

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Opendoor raises $300M on a $3.8B valuation for its home marketplace

Last month, we reported that Opendoor — the startup that is taking on the real estate industry with its own platform for buying up homes and selling them on to interested buyers — filed to raise $200 million on a $3.7 billion valuation. Now, we can confirm that the round has closed, and it has turned out to be higher on both counts. The company has raised an addition $300 million, and sources close to it tell TechCrunch that the valuation is now at $3.8 billion.

This latest round was led by previous investor General Atlantic, with participation also from Hawk Equity, the SoftBank Vision Fund, Access Technology Ventures, Lennar Corporation, Fifth Wall Ventures, SV Angel, Norwest Venture Partners, NEA, GGV Capital, Khosla Ventures, and GV. Opendoor has now raised $1.3 billion in equity, with some $3.0 billion in debt financing for buying in properties.

Opendoor’s funding underscores a couple of big themes. The first is the “safe as houses” maxim. That is to say, the housing market — despite some huge dips resulting either from wider economic tides, or simply scandalous mismanagement around, for example, sub-prime lending — continues to be a major draw not just for investors but also consumers.

“Our business is designed to operate in up markets, down markets and flat markets,” co-founder and CEO Eric Wu said in an email to TechCrunch. “During a slowdown, it becomes increasingly more painful to sell a home, which impacts mobility for homeowners and increases the need for reliable home sales through products like Opendoor. It is our responsibility to manage that risk and charge the proper fees to account for the volatility.” The company says that in 2018, more than 800,000 people toured Opendoor homes.

And that leads to the second theme this funding touches on: the disruption of the business model for buying and selling homes.

That process has largely remained unchanged for decades, but Opendoor is part of (and arguably leading) a new guard of startups that is trying to shake that up. In Opendoor’s case, it’s doing so by creating data modelling that lets it spot opportunities and gaps in the market for homes, as well as optimal pricing for properties, which helps the company mitigate some of the risk associated with taking assets on to its own books with the understanding that it will be able to offload them in a predictable way.

There are signs that over time, those algorithms have been getting more efficient. Eric Wu, who co-founded the company with Ian Wong, Justin Ross and Keith Rabois, told TechCrunch that the average time a home is now held on its books is now 90 days, versus 140 days when the company first launched in 2015.

Wu said that this latest round of funding will be used both for product development as well as to continue expanding to more markets in North America.

On the product side, the company wants to continue making pricing more accurate (not just for selling but for buying in homes at competitive rates). Another focus will be continuing to bring down the time it takes to convert interested sellers into actual sellers, and likewise with buyers. This will include integrating more services like mortgage tools — including title and escrow — as well as other service providers and contractors, who might be needed by buyers to help consider the work that would need to be done once the home is purchased.

(If you’ve ever bought a home, you will know that access to estimates and work commitments from contractors and others can be essential to comprehending the ‘true cost’ of home purchase, since post-purchase work can sometimes be a massive and costly effort.)

Wu said that for now, the plan will be to focus all of this around the private home buying experience, rather than move into using the Opendoor platform to tackle the selling and buying of other large assets such as commercial real estate, cars or loans. “These capabilities lend themselves well to rental/residential income,” he noted, “but that is currently not on our roadmap.”

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