Lyft’s IPO is hot, YC demo day, two new unicorns, and what’s Boy Brow?

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week Kate Clark and Alex Wilhelm took us through an IPO, a big round, 943 startup pitches, two new unicorns, and some scooter news. A very 2019 mix, really.

Up first we took a peek at the latest from the Lyft IPO saga. Recall that Lyft is beating Uber to the public markets, and we can report that it’s having a good time doing so. The popular ride-hailing company, second-place by market share in its domestic market, is oversubscribed at an already-healthy valuation. If the company will raise its price or the number of shares that it sells isn’t yet known, but early indications hint that Lyft timed its IPO well.

Next, we took a look at the recent OpenDoor round that has been long-rumored. Tipping the scales at $300 million, and valuing the home-buying-and-selling startup at $3.8 billion, the company’s latest equity event was a bit higher than expected. There are other players in its space, and the firm isn’t yet recession-tested. All the same, a Murderers’ Row of capital lined up for the latest round.

Moving on, Kate went to Y Combinator’s Demo Day and got a closer look at the accelerator’s latest batch. There were a ton of two-minute pitches, many of which sounded the same, but chances are we’ll see a few unicorns emerge from the bunch. And, interesting tidbit, some of the companies actually forwent Demo Day and raised capital before they could hit the stage!

Later, we discuss two new unicorns. This week’s unicorns had a theme and one that was new to Equity. This time, both the billion-dollar businesses mentioned on the show were founded by women. As Kate noted, there aren’t too many of those, so to see two in the same week is great.

Glossier, founded by Emily Weiss, brought in a $100 million Series D led by Sequoia Capital . The round values the beauty business at a whopping $1.2 billion, tripling the valuation it garnered with a $52 million Series C in 2018. As for Rent The Runway, a startup founded by Jen Hyman and Jennifer Fleiss, it closed a $125 million round led by Franklin Templeton Investments and Bain Capital Ventures. This round values the company at $1 billion. Hyman took to Twitter to share some inspirational words on raising capital as a woman, a pregnant woman, in heels!

And finally, we took a look at a Parisian scooter tax. Mostly because Alex wanted to talk about Paris.

And that’s Equity for the week. We’ll see you soon!

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocket Casts, Downcast and all the casts.

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North Korea’s new website and pro rata rights

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From Extra Crunch We have published the transcript for Brian Heater’s conference call on robotics. Arman published report reviews on China’s luxury goods and consumer spending as well as on perceptions of automation in Europe. We have Lucas Matney and Eric Peckham scheduled for today at 3pm EST / noon PST discussing GDC on our […]

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Facebook staff raised concerns about Cambridge Analytica in September 2015, per court filing

Further details have emerged about when and how much Facebook knew about data-scraping by the disgraced and now defunct Cambridge Analytica political data firm.

Last year a major privacy scandal hit Facebook after it emerged CA had paid GSR, a developer with access to Facebook’s platform, to extract personal data on as many as 87M Facebook users without proper consents.

Cambridge Analytica’s intention was to use the data to build psychographic profiles of American voters to target political messages — with the company initially working for the Ted Cruz and later the Donald Trump presidential candidate campaigns.

But employees at Facebook appear to have raised internal concerns about CA scraping user data in September 2015 — i.e. months earlier than Facebook previously told lawmakers it became aware of the GSR/CA breach (December 2015).

The latest twist in the privacy scandal has emerged via a redacted court filing in the U.S. — where the District of Columbia is suing Facebook in a consumer protection enforcement case.

Facebook is seeking to have documents pertaining to the case sealed, while the District argues there is nothing commercially sensitive to require that.

In its opposition to Facebook’s motion to seal the document, the District includes a redacted summary (screengrabbed below) of the “jurisdictional facts” it says are contained in the papers Facebook is seeking to keep secret.

According to the District’s account a Washington D.C.-based Facebook employee warned others in the company about Cambridge Analytica’s data-scraping practices as early as September 2015.

Under questioning in Congress last April, Mark Zuckerberg was asked directly by congressman Mike Doyle when Facebook had first learned about Cambridge Analytica using Facebook data — and whether specifically it had learned about it as a result of the December 2015 Guardian article (which broke the story).

Zuckerberg responded with a “yes” to Doyle’s question.

Facebook repeated the same line to the UK’s Digital, Media and Sport (DCMA) committee last year, over a series of hearings with less senior staffers

Damian Collins, the chair of the DCMS committee — which made repeat requests for Zuckerberg himself to testify in front of its enquiry into online disinformation, only to be repeatedly rebuffed — tweeted yesterday that the new detail could suggest Facebook “consistently mislead” the British parliament.

The DCMS committee has previously accused Facebook of deliberately misleading its enquiry on other aspects of the CA saga, with Collins taking the company to task for displaying a pattern of evasive behavior.

The earlier charge that it mislead the committee refers to a hearing in Washington in February 2018 — when Facebook sent its UK head of policy, Simon Milner, and its head of global policy management, Monika Bickert, to field DCMS’ questions — where the pair failed to inform the committee about a legal agreement Facebook had made with Cambridge Analytica in December 2015.

The committee’s final report was also damning of Facebook, calling for regulators to instigate antitrust and privacy probes of the tech giant.

Meanwhile, questions have continued to be raised about Facebook’s decision to hire GSR co-founder Joseph Chancellor, who reportedly joined the company around November 2015.

The question now is if Facebook knew there were concerns about CA data-scraping prior to hiring the co-founder of the company that sold scraped Facebook user data to CA, why did it go ahead and hire Chancellor?

The GSR co-founder has never been made available by Facebook to answer questions from politicians (or press) on either side of the pond.

Last fall he was reported to have quietly left Facebook, with no comment from Facebook on the reasons behind his departure — just as it had never explained why it hired him in the first place.

But the new timeline that’s emerged of what Facebook knew when makes those questions more pressing than ever.

Reached for a response to the details contained in the District of Columbia’s court filing, a Facebook spokeswomen sent us this statement:

Facebook was not aware of the transfer of data from Kogan/GSR to Cambridge Analytica until December 2015, as we have testified under oath

In September 2015 employees heard speculation that Cambridge Analytica was scraping data, something that is unfortunately common for any internet service. In December 2015, we first learned through media reports that Kogan sold data to Cambridge Analytica, and we took action. Those were two different things.

Facebook did not engage with questions about any of the details and allegations in the court filing.

A little later in the court filing, the District of Columbia writes that the documents Facebook is seeking to seal are “consistent” with its allegations that “Facebook has employees embedded within multiple presidential candidate campaigns who… knew, or should have known… [that] Cambridge Analytica [was] using the Facebook consumer data harvested by [[GSR’s]] [Aleksandr] Kogan throughout the 2016 [United States presidential] election.”

It goes on to suggest that Facebook’s concern to seal the document is “reputational”, suggesting — in another redacted segment (below) — that it might “reflect poorly” on Facebook that a DC-based employee had flagged Cambridge Analytica months prior to news reports of its improper access to user data.

“The company may also seek to avoid publishing its employees’ candid assessments of how multiple third-parties violated Facebook’s policies,” it adds, chiming with arguments made last year by GSR’s Kogan who suggested the company failed to enforce the terms of its developer policy, telling the DCMS committee it therefore didn’t have a “valid” policy.

As we’ve reported previously, the UK’s data protection watchdog — which has an ongoing investigation into CA’s use of Facebook data — was passed information by Facebook as part of that probe which showed that three “senior managers” had been involved in email exchanges, prior to December 2015, concerning the CA breach.

It’s not clear whether these exchanges are the same correspondence the District of Columbia has obtained and which Facebook is seeking to seal. Or whether there were multiple email threads raising concerns about the company.

The ICO passed the correspondence it obtained from Facebook to the DCMS committee — which last month said it had agreed at the request of the watchdog to keep the names of the managers confidential. (The ICO also declined to disclose the names or the correspondence when we made a Freedom of Information request last month — citing rules against disclosing personal data and its ongoing investigation into CA meaning the risk of release might be prejudicial to its investigation.)

In its final report the committee said this internal correspondence indicated “profound failure of governance within Facebook” — writing:

[I]t would seem that this important information was not shared with the most senior executives at Facebook, leading us to ask why this was the case. The scale and importance of the GSR/Cambridge Analytica breach was such that its occurrence should have been referred to Mark Zuckerberg as its CEO immediately. The fact that it was not is evidence that Facebook did not treat the breach with the seriousness it merited. It was a profound failure of governance within Facebook that its CEO did not know what was going on, the company now maintains, until the issue became public to us all in 2018. The incident displays the fundamental weakness of Facebook in managing its responsibilities to the people whose data is used for its own commercial interests.

We reached out to the ICO for comment on the information to emerge via the Columbia suit, and also to the Irish Data Protection Commission, the lead DPA for Facebook’s international business, which currently has 15 open investigations into Facebook or Facebook-owned businesses related to various security, privacy and data protection issues.

An ICO spokesperson told us: “We are aware of these reports and will be considering the points made as part of our ongoing investigation.”

Last year the ICO issued Facebook with the maximum possible fine under UK law for the CA data breach.

Shortly after Facebook announced it would appeal, saying the watchdog had not found evidence that any UK users’ data was misused by CA.

A date for the hearing of the appeal set for earlier this week was canceled without explanation. A spokeswoman for the tribunal court told us a new date would appear on its website in due course.

This report was updated with comment from the ICO

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Indonesia’s Kargo comes out of stealth with $7.6M from Travis Kalanick, Sequoia and others

Travis Kalanick may be busy cooking up a cloud kitchen business, but that hasn’t stopped the former Uber CEO’s VC fund from making its first investment in Southeast Asia. 10100, the firm that Kalanick launched last year for investments in Asia, just took part in a $7.6 million seed round for Kargo, an early-stage ‘Uber for trucks’ startup that is based in Indonesia and — you guessed it — founded by a former Uber Asia executive.

Kargo takes some of the concepts behind Uber and applies them to trucking and logistics. That’s to say that business customers order trucks using a mobile app or website but the scope is wider, Kargo CEO and co-founder Tiger Fang told TechCrunch.

The goal is to remove middlemen who broker logistics and trucking deals to provide greater transparency, better quality service and improved financials for clients and those operating the services — so cheaper pricing for companies and a larger share of the revenue for those actually out driving. So rather than being subject to closed discussions and chains of brokers, each taking their cut, Kargo wants to offer a direct connection.

“This is a huge opportunity,” Fang said in an interview. “We’ve been looking at what types of problems we can go and solve [since the Uber-Grab deal]… starting another e-commerce startup was probably not the best idea.

“We hope we can lower the price for shippers and raise the earnings from shippers and transporters,” he added. “We think there are hundreds of thousands of smaller companies who all get their hobs from agents and middleman.”

Fang — whose stint at Uber included time in the U.S, launches across Southeast Asia and managing its business in Chengdu, once the company’s busiest city on the planet based on daily trip volume — started Kargo late last year with Yodi Aditya, its CTO, following “months” of research after Uber sold its local business to Grab . They went on to close the financing deal before the end of 2018 and launch in beta early this year.

Operationally, Fang said Kargo is currently piloting with “a couple of big FMG companies” while, on the supply side, it has access to “thousands” of trucks. The initial focus is strictly on FMCG, he added, because each industry and segment requires different types of trucks.

As those figures suggest, Kargo is in its early stages and that makes a $7.6 million seed round pretty notable. Yes, valuations and rounds have been ratcheted up in Southeast Asia, where investors and tech companies see potential as internet access grows among the region’s 600 million-plus consumers, but this is a large check for a venture that is literally just kicking off. But that’s not all, the caliber of the backers is also quite unlike your average seed deal.

Kalanick’s 10100 firm is participating, but the round is led by Sequoia India and Southeast Asia, which announced its new $695 million fund six months ago and has since added an early-stage accelerator program. Other names involved including China’s Zhenfund, Indonesia-focused Intudo Ventures, a personal investment from Patrick Walujo — co-founder of Indonesian hedge fund group North Star — ATM Capital, Innoven Capital and Agaeti Ventures from Indonesian businessman Pandu Sjahrir.

Kalanick is, in many ways, the headline investor given his profile and connections to Fang and others at Kargo. TechCrunch understands that Kalanick agreed to invest last year when he visited Southeast Asia on a trip that combined hiring for his CloudKitchens startup and more generally catching up with the Uber alumni in Asia.

Fang declined to comment on the circumstances, but he said Kalanick “has been a big mentor” to him.

Clearly, a lot of the interest in Kargo stems from the team’s credentials — Fang said a large chunk of Kargo’s 50 person team are ex-Uber Asia — but there are also promising examples of what Kargo is doing in other parts of the world.

China’s two trucking platform unicorns which merged to create Full Truck Alliance Group, a startup reportedly valued at $10 billion that counts Google and SoftBank among its investors, while in India, Blackbuck is reportedly raising at an $800 million valuation. It’s logical, then, that Indonesia — the world’s fourth largest population and Southeast Asia’s largest economy — would also come under the radar, and Fang believes that his team is ideally suited to go after the problem.

The focus is entirely on Indonesia for now, where Fang believes logistics accounts for close to one-quarter of the national $1 trillion GDP, but further down the line he anticipates that there will be expansions across Southeast Asia and potentially beyond.

“We definitely want to build a global company,” he said.

Uber had a tough run in Indonesia. Taxi drivers and those with interests in the industry staged often-violent demonstrations in protest at this ‘foreign’ entrant that posed a threat to their businesses and financial returns. Trucking feels a lot like that with decades of inefficiencies in place, and certain parties profiting from those extended chains of deal-making. Like taxis, those who are being disintermediated aren’t likely to take a threat lying down, so it remains to be seen if Fang, and his fellow ex-Uberites, will run into similar conflict in the future. But Kargo is certainly off to a bright start with plenty of money to go out and test its thesis.

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Keatz, a European ‘cloud kitchen’ startup, raises further €12M

Keatz, one of a growing number of so-called “cloud kitchens” — delivery only restaurant brands running on the rails of Deliveroo and UberEats — has raised €12 million in new funding.

Backing the round are existing investors Project A Ventures, Atlantic Labs, UStart, K Fund and JME Ventures, who are joined by RTP Global. It adds to €7 million raised last May and will be used by the Berlin-based company to further expand its roll-out of cloud kitchens across Europe.

Launched in Spring 2016, Keatz now operates 10 cloud kitchens across Europe, having expanded beyond Berlin to Amsterdam, Madrid, Barcelona and Munich. The startup’s network of satellite kitchens are designed to negate the high front-of-house costs found in conventional restaurants, while also selling takeout food that is better suited to delivery.

“We believe the last unsolved part in food delivery is the preparation of food itself,” Keatz co-founder Paul Gebhardt tells TechCrunch. “Delivery food today is often compromised and sold by companies focusing on hospitality and not delivery food. Classic brick and mortar restaurants simply have a different business model, namely hospitality, which is all about the experience and location and the food is meant to be eaten immediately. Nobody at Nandos or Byron Burger designed the food keeping in mind that the food might travel on a Deliveroo bike for another 15 miles, mostly upside down in a delivery bag”.

Similar to other cloud kitchen startups, such as France’s Taster, Gebhardt says Keatz is changing this by focusing exclusively on food “made for delivery,” including designing dishes that can withstand a minimum 15 journey. The startup has a portfolio of eight delivery-only food brands, which are all prepared in the same shared kitchens.

“Our kitchens are usually between 100-200 square metres big and serve a delivery radius of 1-2 kilometres and we sell exclusively on existing delivery platforms, such as Deliveroo, UberEats, Glovo, JustEat, Delivery Hero, and TakeAway. Food arrives warm in nice sustainable packaging,” he says.

Meanwhile, although Gebhardt thinks the future of takeout food will ultimately be drones delivering robot-cooked meals, he says autonomous kitchens are much more in reach than autonomous food delivery and already forms a large part of Keatz’s vision to build “highly automated kitchens”.

“It is much easier for us to iteratively automate our kitchens compared to drone-delivery, which is a fairly binary technological transition,” he explains. “Our existing cloud kitchens today are already much more automated than traditional kitchens, from WiFi-connected convection ovens to a software supported food assembly process. At the end of the day high quality food preparation is an on-demand manufacturing problem: a customer orders a Burrito on UberEats and expects a warm meal 20 minutes later. This is quite a technological challenge we are trying to solve”.

To that end, Keatz’s cloud kitchens can be thought of as akin to a “factory operator”. Rather than developing autonomous kitchen hardware of its own, Gebhardt says the company is partnering with kitchen equipment and automation companies in a similar way to BMW partnering with companies to build its car manufacturing plants.

“Despite our ambition to automate the kitchen, we are also very keen on being a great employer,” he adds, citing above market pay and comprehensive training opportunities. Today, Keatz employs around 200 people across its 10 kitchens in Europe.

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