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Embedded finance, or why fintech mega VC rounds have become so common
Every day there seems to be another multi-hundred million dollar venture round for a fintech startup. Why? I’ve been chatting with a bunch of leading fintech VCs and CEOs, and my analysis is a first sketch of why fintech is the hot darling of the growth equity markets these days. In short: fintech is finally embedding itself where customers already are.
The more interesting dynamic is on the consumer side though, where a wide number of growth strategies are being employed. Brex, whose business charge cards are targeted at startups, blanketed San Francisco’s Caltrain station with advertising to drive attention. Oxygen, which offers banking services to freelancers, bought ad space on the back of SF Muni buses since that is where delivery couriers and Uber drivers (i.e. their target customers) were most likely to see them.
Meanwhile, the smartest strategy has been embedding technology where customers are already located. Shopify processed nearly $4.9 billion in payments volume through its platform during its first quarter, driving huge gains in revenue. Uplift, which finances travel, works with partners like United Airlines and Southwest to offer their services at the point-of-sale, much the way Affirm has done in consumer financing through partnerships with retail outlets like Walmart.
Known for its electric scooters, Gogoro moves toward its future as a mobility platform
Meanwhile, transportation and scooters remains a massive target for investment from VCs and for new product launches from founders. Taiwan-based Gogoro produces one of the world’s most popular electric scooters, but as our Taipei-based correspondent Catherine Shu describes, the company has much more ambition for its future than merely being a hardware vendor.
Called the Gogoro Network, battery exchange infrastructure includes GoChargers, small chargers about the size of a step stool meant for personal use, and larger ones called GoStations, located at gas stations, retail stores and other locations. Gogoro’s batteries, about the size of a shoebox, can be removed from their chargers and slide into scooters in a few seconds.
“If everybody goes home at the same time, charges their vehicles at the same time, while the family cooks, and turns on their microwave and TVs at the same time, we have a problem,” he says. “But charging batteries and letting consumers swap batteries is the only way we can offset the demand on the grid.”
The road ahead for Waymo, AV engineering and mobility, with Waymo CTO Dmitri Dolgov
We held our Sessions: Mobility event a few weeks ago in sunny San Jose, and from the conference came a number of great talks with leaders in the transportation space. One of the most illuminating of those conversations was with Waymo CTO Dmitri Dolgov, who chatted about all aspects of Waymo and the industry with TechCrunch’s Kirsten Korosec. We have an exclusive transcript from the conference for Extra Crunch members.
Korosec:There are probably a number of engineers in the audience. So I’m going to let you get even more technical for just a moment.
What are the critical areas? Is it sensor fusion, for example? Or is it some other aspect on the technical side where there’s still a lot of work and also opportunity.
Dolgov:So essentially, what makes this problem interesting in my mind is that it’s not one or two things that you say “there’s only this one challenge that remains and then you solve everything.” It’s really across a whole number of different areas, a whole number of different disciplines from hardware, to more advanced sensors, more powerful sensors, sensors you can manufacture at scale, cheaper sensors, more powerful compute, cheaper compute software.
You mentioned sensor fusion, this is actually where the software plays very nicely with the hardware and that connection is very deep. And our approach at Waymo is interesting in that we build our own software and hardware in house.
So this is where having access to very powerful sensors, and not just have the increased range and increased resolution, but also having access to the raw sensor data, like the raw measurements that you get from lidars from cameras from radars, and doing sensor fusion at a later stage, where you can really bring to bear modern, deep learning algorithms to have models that learn to pick out the best signal from those different sensing modalities. That’s a very active area of improvement.
This is just step one, perception, right? Seeing the world and then reasoning about it, and the object level of detecting different objects, understanding what they are classifying pedestrians, cyclists, cars, background, vegetation, and so forth, and so on.
But it really gets super interesting beyond that. This is kind of like the step one, self-driving one to one, you have to see the world and the different types of objects.
From liberal arts PhD to pre-IPO startup CEO with Shift’s Toby Russell
Meanwhile, I had a conversation with online used car marketplace Shift co-CEO Toby Russell, whose career has spanned a PhD in international relations, starting the first Uber before Uber called Taxi Magic, managing a multi-billion dollar program at the Department of Energy, and now preparing his startup for its anticipated IPO. We talk about how his career has spanned so many different arenas, and the lessons he learned from his experiences.
Crichton: How did things [at Taxi Magic] go from there?
Russell: Our problem was not believing that a regulated industry couldn’t change. Our problem was not pushing it far enough. So we saw Uber. Uber and Lyft came along one day. In fact, Bill Gurley came and did a deep dive on Taxi Magic, the stuff we were doing, put in a term sheet. For a bunch of reasons, our board didn’t accept that term sheet, and he went on to fund Uber having picked up a bunch of knowledge from us.
I think that we were a little early and we couldn’t assume that things like mobile phones would be ubiquitous. Whereas by the time Uber came on, literally just a mere two years later, Uber, Lyft, Sidecar — they began to be able to assume that everybody would have a mobile phone and they could create a proprietary dispatch system. We should have done that, but we didn’t. We were actually working through the existing taxi companies, the existing infrastructure.
In spite of slowing growth, Microsoft has been flexing its cloud muscles
Among legendary tech companies, few have bested Microsoft in terms of gaining multiple massive monopolies (Windows, Office, Internet Explorer), then losing pretty much all of them in the tech transformations over the past two decades, and then recovering and building whole new businesses from scratch to retake the leadership crown.
Our enterprise reporter Ron Miller analyzes Microsoft’s current status, looking at how the company’s SaaS and cloud revenues have grown with the company’s new enterprise focus despite headwinds from the market.
Yet [Ray Wang, founder and principal analyst at Constellation Research] says, the company could do better if it built up its offerings in areas where its rivals excel. “Azure is seen as a safe choice and a hedge against Amazon as buyers are afraid of Amazon lock-in. To step up the game, Microsoft needs to build coalitions and data-driven digital networks to combat Amazon, and needs to up its game in AI and ML to catch up to GCP,” Wang explained.
Even as the cloud growth numbers begin to fall, Microsoft came in with a strong earnings report last week with overall revenue up 12%, operating income up 20% and net income up 49%, numbers analyst Patrick Moorhead from Moor Research and Strategy saw as mostly positive.
“Microsoft is firing on all cylinders now, growing big in growing markets, and even managing growth in mature markets like PCs. In the cloud, Microsoft is cementing its spot as the #2 provider in IaaS, PaaS, and SaaS services,” Moorhead told TechCrunch.
The roles tools play in employee engagement
Finally, Slack’s Director of Research & Analytics Christina Janzer offers Extra Crunch her thoughts on how to build software to engage employees. Given her visibility into Slack’s data, she has unique insights on how different platforms engage — and don’t engage — employees and how to adjust your own product strategy to maximize its value.
With the majority of work happening online, we’ve lost much of the ability to pick up on emotional cues. Without physical cues that gauge whether a colleague is reacting positively or negatively by their facial expression, people tend to be more reticent to communicate with co-workers online with the fear that more communication can lead to miscommunication. That said, we think a lot about how to add social and emotional context to help indicate significant emotional cues.
One way we did this at Slack was with features such as emoji reactions and customizable statuses that help users talk more informally and show personality. This helps translate into feeling more like face-to-face communication, empowering employees to voice doubts or opinions and taking more creative risks together as a team.
Thanks
To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people, and companies. If I can ever be of assistance, hit reply, or send an email to danny@techcrunch.com.