Category Archives: Tech News

Daily Crunch: Zoom reports spectacular growth

Posted by on 3 June, 2020

This post was originally published on this site

Zoom’s latest earnings report was even better than expected, SoftBank announces a new fund to invest in founders of color and Google pulls a trending app that targets apps from China.

Here’s your Daily Crunch for June 3, 2020.

1. Remote work helps Zoom grow 169% in one year, posting $328.2M in Q1 revenue

Zoom’s customer numbers were similarly sharp, with the firm reporting that it had 265,400 customers with more than 10 seats (employees) at the end of the quarter, which was up 354% from the year-ago period.

Not all of the news coming out of its latest earnings report was positive, however. CEO Eric Yuan confirmed that a plan to implement end-to-end encryption does not in fact extend to non-paying users.

2. SoftBank launches $100M+ Opportunity Growth Fund to invest in founders of color

The Opportunity Growth Fund “will only invest in companies led by founders and entrepreneurs of color,” according to an internal memo from SoftBank’s COO Marcelo Claure, who said the fund will initially start with $100 million — meaning there is room for SoftBank or other limited partners to add more over time.

3. Google pulls ‘Remove China Apps’ from Play Store

The top trending app in India, which was downloaded more than 5 million times since late May and enabled users to detect and easily delete apps developed by Chinese firms, was pulled from Android’s marquee app store for violating Google Play Store’s Deceptive Behavior Policy.

4. Facebook and PayPal invest in Southeast Asian ride-hailing giant Gojek

Facebook and PayPal are joining Google and Tencent as high-profile tech firms that have backed the five-year-old Southeast Asian ride-hailing startup, which also offers food delivery and mobile payments.

5. The fundraising marketplace has stabilized. Or has it?

DocSend CEO Russ Heddleston said the last two weeks could be establishing a new normal for fundraising this year. Even though most VCs aren’t taking in-person meetings, they were more active in the past month than they were in May of both 2019 and 2018. (Extra Crunch membership required.)

6. Venture firms rush to find ways to support Black founders and investors

Firms like Benchmark, Sequoia, Bessemer, Eniac Ventures, Work-Bench and SaaSTR Fund founder Jason Lemkin all tweeted in support of the cause and offered to take steps to improve the lack of representation in their industry. But some Black entrepreneurs and investors are questioning the firms’ motivations.

7. Lili raises $10M for its freelancer banking app

CEO Lilac Bar David suggested that no traditional banking solutions are really designed to solve the problems faced by freelancers — whether they’re designers, programmers, fitness instructors, chefs or beauty professionals. She described Lili as the first “all-in-one” solution, offering both a bank account and a broader suite of financial tracking tools.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

Watchful is a mobile product intelligence startup that surfaces unreleased features

Posted by on 3 June, 2020

This post was originally published on this site

Meet Watchful, a Tel Aviv-based startup coming out of stealth that wants to help you learn more about what your competitors are doing when it comes to mobile app development. The company tries to identify features that are being tested before getting rolled out to everyone, giving you an advantage if you’re competing with those apps.

Mobile app development has become a complex task, especially for the biggest consumer apps, from social to e-commerce. Usually, mobile development teams work on a new feature and try it out on a small subset of users. That process is called A/B testing as you separate your customers in two buckets — bucket A or bucket B.

For instance, Twitter is trying out its own version of Stories called Fleets. The company first rolled it out in Brazil to track the reaction and get some data from its user base. If you live anywhere else in the world, you’re not going to see that feature.

There are other ways to select a group of users to try out a new feature — you could even take part in a test because you’ve been randomly picked.

“When you open the app, you’ll probably see a different version from the app I see. You’re in a different region, you have a different device,” co-founder and CEO Itay Kahana told me. He previously founded popular to-do app Any.do.

For product designers, it has become a nightmare as you can’t simply open an app and look at what your competitors are doing. At any point in time, there are many different versions of the same app as there are multiple A/B tests going on at the same time.

Watchful lets you learn from competition by analyzing all those different versions and annotating changes in user flows, flagging unreleased features and uncovering design changes.

It is different from other mobile intelligence startups, such as App Annie or Sensor Tower. Those services mostly let you track downloads and rankings on the App Store and Play store to uncover products that are doing well.

“We’re focused on everything that is open and visible to the users,” Kahana said.

Like other intelligence startups, Watchful needs data. App Annie acquired a VPN app called Distimo and a data usage monitoring app called Mobidia. When you activate those apps, App Annie captures data about your phone usage, such as the number of times you open an app and how much time you spend in those apps.

According to a BuzzFeed News report, Sensor Tower has operated at least 20 apps on iOS and Android to capture data, such as Free and Unlimited VPN, Luna VPN, Mobile Data and Adblock Focus. Some of those apps have been removed from the stores following BuzzFeed’s story.

I asked a lot of questions about Watchful’s source of data. “It’s all real users that give us access to this information. It’s all running on real devices, real users. We extract videos and screenshots from them,” Kahana said.

“It’s more like a panel of users that we have access to their devices. It’s not an SDK that is hidden in some app and collects information and do shady stuff,” he added.

You’ll have to trust him as the company didn’t want to elaborate further. Kahana also said that data is anonymized in order to remove all user information.

Images are then analyzed by a computer vision algorithm focused on differential analysis. The startup has a team in the Philippines that goes through all that data and annotates it. It is then sent to human analysts so that they can track apps and write reports.

Watchful shared one of those reports with TechCrunch earlier this year. Thanks to this process, the startup discovered that TikTok parent company ByteDance has been working on a deepfake maker. The feature was spotted in both TikTok and its Chinese sister app Douyin.

But Watchful’s customers aren’t news organizations. The company sells access to its service to big companies working in the mobile space. Kahana didn’t want to name them, but it said it is already working with “the biggest social network players and the biggest e-commerce players, mainly in the U.S.”

The startup sells annual contracts based on the number of apps that you want to track. It has raised a $3 million seed round led by Vertex Ventures.

Remote work helps Zoom grow 169% in one year, posting $328.2M in Q1 revenue

Posted by on 2 June, 2020

This post was originally published on this site

Today after the bell, video-chat service Zoom reported its Q1 earnings. The company disclosed that it generated $328.2 million in revenue, up 169% compared to the year-ago period. The company also reported $0.20 per-share in adjusted profit during the three-month period.

Analysts, as averaged by Yahoo Finance, expected Zoom to report $202.48 million in revenue, and a per-share profit of $0.09. After its earnings smash, shares of Zoom were up slightly Update: Zoom shares are now up 2.3% ahead of its earnings call; investors had priced in this outsized-performance, it seems.

Zoom grew 78% in its preceding quarter on an annualized basis. The company’s growth acceleration is notable.

Investors were expecting big gains. Before its earnings, shares in the popular business-to-business service were up by more than 3x during the year; Zoom has found itself in an updraft due in part to COVID-19 driving workers and others to stay home and work remotely. Zoom’s software has also seen large purchase amongst consumers hungry for a video chatting solution that was simple and that works.

If the company could sustain its valuation gains going into this earnings report was an open question that has now been answered.

Gains

Zoom’s growth in its Q1 fiscal 2021 generated some notable profit results for the firm. The firm’s net income, an unadjusted profit metric, rose from $0.2 million in the year-ago quarter to $27.0 million in its most recent three months.

And Zoom’s cash generation was astounding. Here’s how the company described its results:

Net cash provided by operating activities was $259.0 million for the quarter, compared to $22.2 million in the first quarter of fiscal year 2020. Free cash flow was $251.7 million, compared to $15.3 million in the first quarter of fiscal year 2020.

It’s difficult to recall another company that has managed such growth in cash generation in such a short period of time, driven mostly by operations and not other financial acts. Zoom’s customer numbers were similarly sharp, with the firm reporting that it had 265,400 customers with more than 10 seats (employees) at the end of the quarter, which was up 354% from the year-ago period.

Though not all news for Zoom was good. Indeed, the company’s gross margin fell sharply in the quarter, compared to its year-ago result. In is Q1 fiscal 2020, Zoom reported a gross margin of around 80%. In its most recent quarter that number slipped to around 68%. In short, the company managed to convert many free users to paying customers, but still had to carry the costs of free usage of its product, something that has exploded in recent months.

Looking ahead, Zoom expects the current quarter to be another blockbuster period. The company noted in its release that it expects “between $495.0 million and $500.0 million” in revenue for Q2 of its fiscal 2021 (the current period). Looking ahead for the full fiscal year, Zoom anticipates revenues “between $1.775 billion and $1.800 billion,” numbers that take into account “the demand for remote work solutions for businesses” and “increased churn in the second half of the fiscal year” when some customers might no longer need Zoom if they can return to their offices.

Its shares might have priced in these results, but the numbers themselves are simply massive. Just three months ago Zoom turned in revenues of just $188.3 million. That’s less than it generated in free cash flow during its next three months.

Pitch deck teardown: The making of Atlassian’s 2015 roadshow presentation

Posted by on 2 June, 2020

This post was originally published on this site

In 2015, Atlassian was preparing to go public, but it was not your typical company in so many ways. For starters, it was founded in Australia, it had two co-founder co-CEOs, and it offered collaboration tools centered on software development.

That meant that the company leaders really needed to work hard to help investors understand the true value proposition that it had to offer, and it made the roadshow deck production process even more critical than perhaps it normally would have been.

A major factor in its favor was that Atlassian didn’t just suddenly decide to go public. Founded in 2002, it waited until 2010 to accept outside investment. After 10 straight years of free cash flow, when it took its second tranche of investment in 2014, it selected T. Rowe Price, perhaps to prepare for working with institutional investors before it went public the next year.

We sat down with company president Jay Simons to discuss what it was like, and how his team produced the document that would help define them for investors and analysts.

Always thinking long term

Simons said co-founders Scott Farquar and Mike Cannon-Brooke always had a vision of building a public company from the early days.

“Mike and Scott were intent on building an iconic, multigenerational company. They were always talking about a company that outlasted them. And one of the examples that we always used was Hewlett-Packard, in that they wanted to build a company that stood the test of time,” Simons said. That aspiration was associated with their desire to behave with the discipline of a company that was publicly traded.

“Being a public company demands a level of athleticism and rigor and accountability and discipline in planning and thinking and execution,” he said. “And so I think if you set your sights on being an iconic company, more than likely you will choose the path of being a publicly-traded company because it sort of raises your game.”

It’s worth noting that when the company accepted funding in 2010 from Accel and again in 2014, these were secondary investments, meaning the investors were buying equity directly from the company’s founders and employees. As a result, the first time it raised primary capital was at its IPO.

Moving beyond Australia

Long before the company decided to go public, Atlassian began expanding internationally. By the time the team began drafting the roadshow deck, it had offices in San Francisco and Austin, along with a robust international customer base.

“We were proud of our heritage [as a company started in Australia], but we definitely positioned ourselves as a global company. We had a really strong concentration employee base in both San Francisco and Austin by the time we decided to go public, and we had customers in 140 different countries with 50,000 active customers at the time, and so we were a significant global company,” Simons said.

He said their origins also meant they had to cultivate international markets from early on. By the time the company went public, he said, unlike a lot of startups at that stage, half their market was in North America and half was in other countries, and that was a big selling point for investors.

Gearing up

Simons said the roadshow deck they would create was adapted from the deck they developed when they approached VCs in 2010 for the first round of investment capital. That would eventually lead to a $60 million investment from Accel.

“In many ways that [early investor deck] was the first version where you had to really explain the business, and not just at a high level kind of value proposition to somebody that would potentially buy the software. We needed to explain the business and how it operated and what our financials looked like and how we thought about our market opportunity and what we thought was unique about our company, our business model and our culture.”

Well before Atlassian filed an S-1, big banks began expressing interest in getting to know the company, believing correctly that it would eventually go public. So they prepared a presentation for bankers that introduced the company and explained its mission to people who may not have been familiar, an exercise that also helped them create their roadshow deck.

“This particular deck continued to evolve and take shape from those conversations as we used it,” he said.

Getting down to business

Once the company decided to file for an IPO, it hired a bank and began drafting the S-1 document that would announce its intent to go public. As they went through this process, it laid out much of the information the company would want to include in the roadshow deck.

“There were parts of what we already had communicated in deck form that we could incorporate into the S-1 in a narrative form, and then parts of writing that long-form narrative that we wanted to incorporate back into the deck. A relatively small team worked on both the S-1 document and then recalibrating the deck around the S-1 and vice versa,” Simons said.

The process began in August 2015, but the roadshow deck went through dozens of iterations until they crafted the final version in November 2015. The team also prepared a video of the presentation; around that time, companies were moving away from releasing videos with talking heads standing in front of a backdrop, so they decided to improve their production values.

Hitting the road

Once the deck was ready, the company hit the road and delivered the presentation across the country, starting on the West Coast, moving through the Midwest and ending up in New York City.

They rarely presented the deck start to finish as most investors had seen it ahead of time; instead, presentations tended to be more interactive with attendees asking questions. “Nobody wants to just watch an infomercial, so we were digging into things that either weren’t totally clear to them in the deck or there was a level of detail that they wanted to try to see; so it was not uncommon to have it be conversational,” he said.

The roadshow team flew their spouses out to NYC to meet them for a free weekend, took in a Nets game and a Broadway show and generally relaxed before they went public on December 9, 2015. If the first day was any indication, the offering was a rousing success finishing up 32% on a valuation of $5.8 billion.

The company went public at $21 a share. Today the price sits at more than $188 with a market cap above $46 billion. It seems to have all worked out just the way they planned when they started thinking of going public all those years ago, but there was no way to know that when they sat down to write the deck. No matter how well prepared they were.

Atlassian launches new DevOps features

Posted by on 2 June, 2020

This post was originally published on this site

Atlassian today launched a slew of DevOps-centric updates to a variety of its services, ranging from Bitbucket Cloud and Pipelines to Jira and others. While it’s quite a grabbag of announcements, the overall idea behind them is to make it easier for teams to collaborate across functions as companies adopt DevOps as their development practice of choice.

“I’ve seen a lot of these tech companies go through their agile and DevOps transformations over the years,” Tiffany To, the head of agile and DevOps solutions at Atlassian told me. “Everyone wants the benefits of DevOps, but — we know it — it gets complicated when we mix these teams together, we add all these tools. As we’ve talked with a lot of our users, for them to succeed in DevOps, they actually need a lot more than just the toolset. They have to enable the teams. And so that’s what a lot of these features are focused on.”

As To stressed, the company also worked with several ecosystem partners, for example, to extend the automation features in Jira Software Cloud, which can now also be triggered by commits and pull requests in GitHub, Gitlab and other code repositories that are integrated into Jira Software Cloud. “Now you get these really nice integrations for DevOps where we are enabling these developers to not spend time updating the issues,” To noted.

Indeed, a lot of the announcements focus on integrations with third-party tools. This, To said, is meant to allow Atlassian to meet developers where they are. If your code editor of choice is VS Code, for example, you can now try Atlassian’s now VS Code extension, which brings your task like from Jira Software Cloud to the editor, as well as a code review experience and CI/CD tracking from Bitbucket Pipelines.

Also new is the ‘Your Work’ dashboard in Bitbucket Cloud, which can now show you all of your assigned Jira issues. as well as Code Insights in Bitbucket Cloud. Code Insights features integrations with Mabl for test automation, Sentry for monitoring and Snyk for finding security vulnerabilities. These integrations were built on top of an open API, so teams can build their own integrations, too.

“There’s a really important trend to shift left. How do we remove the bugs and the security issues earlier in that dev cycle, because it costs more to fix it later,” said To. “You need to move that whole detection process much earlier in the software lifecycle.”

Jira Service Desk Cloud is getting a new Risk Management Engine that can score the risk of changes and auto-approve low-risk ones, as well as a new change management view to streamline the approval process.

Finally, there is a new Opsgenie and Bitbucket Cloud integration that centralizes alerts and promises to filter out the noise, as well as a nice incident investigation dashboard to help teams take a look at the last deployment that happened before the incident occurred.

“The reason why you need all these little features is that as you stitch together a very large number of tools […], there is just lots of these friction points,” said To. “And so there is this balance of, if you bought a single toolchain, all from one vendor, you would have fewer of these friction points, but then you don’t get to choose best of breed. Our mission is to enable you to pick the best tools because it’s not one-size-fits-all.”

Is Zoom the next Android or the next BlackBerry?

Posted by on 1 June, 2020

This post was originally published on this site

In business, there’s nothing so valuable as having the right product at the right time. Just ask Zoom, the hot cloud-based video conferencing platform experiencing explosive growth thanks to its sudden relevance in the age of sheltering in place.

Having worked at BlackBerry in its heyday in the early 2000s, I see a lot of parallels to what Zoom is going through right now. As Zooming into a video meeting or a classroom is today, so too was pulling out your BlackBerry to fire off an email or check your stocks circa 2002. Like Zoom, the company then known as Research in Motion had the right product for enterprise users that increasingly wanted to do business on the go.

Of course, BlackBerry’s story didn’t have a happy ending.

From 1999 to 2007, BlackBerry seemed totally unstoppable. But then Steve Jobs announced the iPhone, Google launched Android and all of the chinks in the BlackBerry armor started coming undone, one by one. How can Zoom avoid the same fate?

As someone who was at both BlackBerry and Android during their heydays, my biggest takeaway is that product experience trumps everything else. It’s more important than security (an issue Zoom is getting blasted about right now), what CIOs want, your user install base and the larger brand identity.

When the iPhone was released, many people within BlackBerry rightly pointed out that we had a technical leg up on Apple in many areas important to business and enterprise users (not to mention the physical keyboard for quickly cranking out emails)… but how much did that advantage matter in the end? If there is serious market pull, the rest eventually gets figured out… a lesson I learned from my time at BlackBerry that I was lucky enough to be able to immediately apply when I joined Google to work on Android.

Salesforce names Vlocity founder David Schmaier CEO of new Salesforce Industries division

Posted by on 1 June, 2020

This post was originally published on this site

When Salesforce announced it was acquiring Vlocity for $1.33 billion in February, it was a deal that made sense for both companies. Today, the company announced that the deal has closed and Vlocity CEO David Schmaier has been named CEO of a new division called Salesforce Industries.

Vlocity has built several industry-specific CRM tools such media and entertainment, healthcare and government on top of the Salesforce platform. While Salesforce has developed some of its own industry solutions, having a division devoted to verticalized tools creates additional market opportunities for the company.

Schmaier sees the new division as a commitment from the company on the value of an industry-focused approach.

“As Vlocity becomes part of what we’re calling Salesforce industries, this will be a larger group within Salesforce to really focus on bringing these industry-specific solutions to the customer, helping them go digital and working in a whole new way,” Schmaier told TechCrunch.

Salesforce president and COO Bret Taylor will be Schmaier’s boss. Writing in a blog post announcing the new division, Taylor said that like so many aspects of technology solutions these days, the industry focus is about helping companies with digital transformation. As the world changes before our eyes during the pandemic, companies are being forced to move operations online, and Salesforce wants to provide more specific solutions for customers who need it.

“Companies in every industry have a digital transformation imperative like never before — and many are accelerating their plans for a digital-first, work-from-anywhere environment. With Salesforce Customer 360 and Vlocity, our customers have the most advanced industries platform as well as tools and expert guidance completely tailored to their specific needs,” Taylor wrote.

Schmaier says the fact that his company’s tooling was already built on top of Salesforce allows them to really hit the ground running without the integration challenges that combining organizations typically face after an acquisition like this one.

“I’ve been involved in various mergers and acquisitions over my 30-year career, and this is the most unique one I’ve ever seen because the products are already 100% integrated because we built our six vertical applications on top of the Salesforce platform. So they’re already 100% Salesforce, which is really kind of amazing. So that’s going to make this that much simpler,” he said.

It’s likely that Salesforce will continue to build on the new division and add additional applications over time given the platform is already in place. “We basically have a platform now inside Salesforce to build verticals. So the cost to build new verticals is a fraction of what it was for us to build the first one because of this industry cloud platform. So we are going to look at opportunities to build new ones but we’re not ready to announce that today. For starters, we are forming this one organization,” Schmaier said.

The company reported a record quarter last Thursday, but light guidance for next quarter spooked investors and the stock was down on Friday (It is up .77% today as of publication). The company does not rest on its laurels though and having a division in place like Salesforce Industries provides a more focused way of dealing with verticals and another possible source of revenue.

India’s richest man built a telecom operator everyone wants a piece of

Posted by on 1 June, 2020

This post was originally published on this site

As investors’ appetites sour in the midst of a pandemic, a three-and-a-half-year-old Indian firm has secured $10.3 billion in a month from Facebook and four U.S.-headquartered private equity firms.

The major deals for Reliance Jio Platforms have sparked a sudden interest among analysts, executives and readers at a time when many are skeptical of similar big check sizes that some investors wrote to several young startups, many of which are today struggling to make sense of their finances.

Prominent investors across the globe, including in India, have in recent weeks cautioned startups that they should be prepared for the “worst time” as new checks become elusive.

Elsewhere in India, the world’s second-largest internet market and where all startups together raised a record $14.5 billion last year, firms are witnessing down rounds (where their valuations are slashed). Miten Sampat, an angel investor, said last week that startups should expect a 40%-50% haircut in their valuations if they do get an investment offer.

Facebook’s $5.7 billion investment valued the company at $57 billion. But U.S. private equity firms Silver Lake, Vista, General Atlantic, and KKR — all the other deals announced in the past five weeks — are paying a 12.5% premium for their stake in Jio Platforms, valuing it at $65 billion.

How did an Indian firm become so valuable? What exactly does it do? Is it just as unprofitable as Uber? What does its future look like? Why is it raising so much money? And why is it making so many announcements instead of one.

It’s a long story.

Run up to the launch of Jio

Billionaire Mukesh Ambani gave a rundown of his gigantic Indian empire at a gathering in December 2015 packed with 35,000 people including hundreds of Bollywood celebrities and industry titans.

“Reliance Industries has the second-largest polyester business in the world. We produce one and a half million tons of polyester for fabrics a year, which is enough to give every Indian 5 meters of fabric every year, year-on-year,” said Ambani, who is Asia’s richest man.

Equinix is buying 13 data centers from Bell Canada for $750M

Posted by on 1 June, 2020

This post was originally published on this site

Equinix, the data center company, has the distinction of recently recording its 69th straight positive quarter. One way that it has achieved that kind of revenue consistency is through strategic acquisitions. Today, the company announced that it’s purchasing 13 data centers from Bell Canada for $750 million, greatly expanding its footing in the country.

The deal is financially detailed by Equinix across two axes, including how much the data centers cost in terms of revenue, and adjusted profit. Regarding revenue, Equinix notes that it is paying $750 million for what it estimates to be $105 million in “annualized revenue,” calculated using the most recent quarter’s results multiplied by four. This gives the purchase a revenue multiple of a little over 7x.

Equinix also provided an adjusted profit multiple, saying that the 13 data center locations “[represent] a purchase multiple of approximately 15x EV / adjusted EBITDA.” Unpacking that, the company is saying that the asset’s enterprise value (similar to market capitalization, a popular valuation metric for public companies) is worth about 15 times its earnings before interest, taxes, deprecation and amortization (EBITDA). This seems a healthy price, but not one that is outrageous.

Global reach of Equinix including expanded Canadian operations shown in left panel. Image: Equinix

The acquisition not only gives the company that additional revenue and a stronger foothold in the 10th largest economy in the world, it also gains 600 customers using the Bell data centers, of which 500 are net new.

As much of the world is attempting to digitally transform in the midst of the pandemic and current economic crisis, Equinix sees this as an opportunity to help more Canadian customers go digital more quickly.

“Equinix has been serving the Canadian market in Toronto for more than a decade. This expansion and scale gives the Canadian market a clear and rapid migration path to digital transformation. We’re looking forward to deepening our relationships with our existing Canada-based customers and helping new companies throughout the country position themselves for digital success,” Jon Lin, Equinix President, Americas told TechCrunch.

This is not the first time that Equinix has taken a bunch of data centers off of the hands of a telco. In fact, three years ago, the company bought 29 centers from Verizon (which is the owner of TechCrunch) for $3.6 billion.

As telcos move away from the data center business, companies like Equinix are able to come in and expand into new markets and increase revenue. It’s one of the ways it continues to generate positive revenue year after year.

Today’s deal is just part of that strategy to keep expanding into new markets and finding new ways to generate additional revenue as more companies use their services. Equinix rents space in its data centers and provides all the services that companies need without having to run their own. That would include things like heating, cooling, racks and wiring.

Even though public cloud companies like Amazon, Microsoft and Google are generating headlines with growing revenues, plenty of companies still want to run their own equipment without going to the expense of actually owning the building where the equipment resides.

Today’s deal is expected to close in the second half of the year, assuming it clears all of the regulatory scrutiny required in a purchase like this one.

Bonusly, the platform for employee recognition, raises $9 million Series A

Posted by on 1 June, 2020

This post was originally published on this site

Bonusly, a platform that involves the entire organization in recognizing employees and rewarding them, closed on a $9 million Series A financing round led by Access Venture Partners. Next Frontier Capital, Operator Partners, and existing investor FirstMark Capital also participated in the round.

Bonusly launched in 2013 when cofounder and CEO Raphael Crawford-Marks saw the opportunity to reinvent the way employers and colleagues recognize and reward their employees/coworkers.

“I knew that, in order to be successful, companies would be shifting their approach to employee experience and I thought software could enable that shift,” said Crawford-Marks. “Bonusly was this elegant idea of empowering employees to give each other timely frequent and meaningful recognition that would not only benefit employees because they would feel recognized but also surface previously hidden information to the entire company about who was working with whom and on what and what strengths they were bringing to the workplace.”

Most employers use year-end bonuses and performance reviews to motivate workers, with some employers providing some physical rewards.

Bonusly thinks recognition should happen year round. The platform works with the employers on their overall budget for recognition and rewards, and breaks that down into ‘points’ that are allotted to all employees at the organization.

These employees can give out points to other coworkers, whether they’re direct reports or managers or peers, at any time throughout the year. Those points translate to a monetary value that can be redeemed by the employee at any time, whether it’s through PayPal as a cash reward or with one of Bonusly’s vendor partners, including Amazon, Tango Card, and Cadooz. Bonusly also partners with nonprofit organizations to let employees redeem their points via charitable donation.

In fact, Crawford-Marks noted that Bonusly users just crossed the $500K mark for total donations, and have donated more than $100k to the WHO in six weeks.

Bonusly integrates with several collaboration platforms including Gmail and Slack to give users the flexibility to give points in whatever venue they choose. Bonusly also has a feed, not unlike social media sites like Twitter, that show employees who has received recognition in real time.

The company has also built in some technical features to help with usability. For example, Bonusly understands the social organization of a company, surfacing the most relevant folks in the point feed based on who employees have given or received points to/from in the past. In a company with tens of thousands of employees, this keeps Bonusly relevant.

Bonusly has also incorporated tools for employers, including an auto-scale button for employers with workers in multiple jurisdictions or companies. The button allows employers to scale up or down the point allotments in different geographies based on cost of living.

There are also privacy controls on Bonusly that allow high-level employees and leadership to give each other recognition for projects that may not be widely known about at the company yet, like say for an acquisition that was completed.

Bonusly says that peer-to-peer recognition is more powerful than manager-only recognition, saying its nearly 36 percent more likely to have better financial outcomes.

The company also cites research that says that a happy workforce raises business productivity by more than 30 percent.

Bonusly competes with Kazoo and Motivocity, and Crawford-Marks says that the biggest differentiation factor is participation.

“We set a very high bar for how we measure participation and engagement in the platform,” he said. “You’ll see other companies claiming really high participation rates but typically if you dig into that they’re talking about getting recognition every six months or every year or just logging in, rather than giving recognition every single month, month over month.”

He noted that 75 percent of employees on average give recognition in the first month of deployment with an organization, and that number gradually increases over time. By the two-year mark, 80 percent of employees are giving recognition every month.

Bonusly has raised a total of nearly $14 million in funding since inception.

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