Tag: Column

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A scalable plan for onboarding your first 500 employees

Amanda Mulay Contributor
Amanda Mulay is the Senior Talent Manager at Lerer Hippeau, where she helps connect founders with top-tier talent. She previously held talent roles at Andreessen Horowitz and Twilio .

Employee onboarding isn’t all desk balloons and company T-shirts — it’s a critical moment when new hires begin integrating into the culture and workflows of their new company. So, it’s no surprise that one of the most frequently-asked questions among first-time founders is how to run a successful onboarding process.

It’s a delicate balance. Founders don’t want to immediately throw new employees into the deep end. But, at the same time, they must help recent hires develop an understanding of the company’s history, vision, structure and goals, as well as introduce them to all the tools, processes, projects and information they’ll need to get started. When it’s done well, employees should find the process professional, rewarding and motivating.

Research shows that 28% of turnover happens during the first 90 days of employment and that structured onboarding programs increase retention by 82%. In my own experience working in recruiting at tech companies Twilio and AirBnb and in talent for venture firms Andreessen Horowitz and Lerer Hippeau, I’ve seen this to be true first-hand.

Onboarding looks different at each stage of a growing startup and responsibilities change hands over time. Here’s a breakdown of who’s typically in charge of the process at each phase of growth in a startup’s journey, as well as a pro tip from a company currently operating at that stage.

0-10 employees

In the very early days, the founder or CEO is the appropriate person to lead employee onboarding. It’s usually she or he that gave the employee the initial offer. This person should make sure that new employees have guidance regarding how to find their place within the lean team. The new hire should be introduced to everyone, shown how employees communicate within the company, be given the rundown on policies, shown where to sit and helped with their computer and benefits setup. Plus, they should receive a personalized, warm welcome that makes them excited to be part of the brand-new venture.

“The little things matter: the welcome email, the Slack announcement that it’s their first day, bios including fun facts about them, the company swag on their desk, buying their favorite snack for the office and more all help to make them feel welcomed, which helps support a successful onboarding process,” says Florent Peyre, cofounder of Small Door, a tech-enabled veterinary practice.

10-50 employees

At this stage, a startup is adding real headcount and its leadership team should be thinking about hiring its first dedicated HR or People person. After the company brings on a recruiter or HR manager, she or he can take over the bulk of the onboarding responsibilities, which should begin before new staffers’ official start dates.

“One typical mistake is thinking that onboarding starts on someone’s first day,” says Nora Apsel, co-founder of online mortgage broker Morty. “In the week prior to starting, we send new teammates an onboarding document customized to their role which includes everything from resources on the finance and mortgage industry to the services that we use at Morty, what their first week will look like and who on the team they’ll be working with.”

50-100 employees

Once a company starts approaching 100 employees, its HR leader will likely need additional support. That’s when it’s time to make a second HR hire—typically an HR assistant or coordinator. She or he will handle administrative tasks such as managing the HRIS (Human Resource Information System), filing paperwork, helping run onboarding for all new hires and assisting with recruiting efforts, such as posting open roles.

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How tech companies measure “legal”

Daniel Doktori Contributor
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In a working environment obsessed with metrics dashboards, key performance indicators, and objectives and key results, the legal function presents an elusive target. Compared to sales, marketing and product, “legal” in a growing tech company can seem an inaccessible alchemy of risk, contracting and policy.

But interviews with general counsels at tech companies and a survey conducted by TechGC — a private community of top lawyers at technology companies across the United States — reveal how innovative in-house attorneys measure both productivity and quality and position their teams as central to advancing enterprise-wide goals.

The Status Quo

Legal lags behind other departments in the metrics game. While more than three-quarters of general counsels surveyed said their companies collected regular, department-specific metrics, only 29% indicated that the metrics regime extended to the legal department.

Many point to the unpredictable and reactive nature of a GC’s work as a key barrier to collecting informative metrics. As Sarah Feingold, former general counsel at Etsy and Vroom, explains, “if there’s a dispute or there’s an employment issue, everything else drops.” Absent an established operating history against which to measure, it can be hard to identify trends and put those disputes in context. “I could say, ‘oh we didn’t get sued this quarter,’ but that’s not necessarily so indicative of my performance as the general counsel,” adds Katherine Hooker, Head of Legal at Greenhouse.

Productivity & Quality

Faced with these challenges, many general counsels first turn to a “goal cadence” — a set of time-bound, objectively measurable goals against which to report progress. Goal Cadences come in many forms including “Objectives and Key Results [OKRs],” “Management by Objective [MBOs],” and “Goals/Signals/Metrics [GSMs].”

“At the beginning of the planning period, I map out key projects — closing a financing, data security audits, updating TOS and privacy policies — and lay those out across the period. Then it’s simply: did I finish projects on time yes or no,” says David Pashman, former GC at Meetup and current GC at JW Player . More than 40% of GCs surveyed collect OKRs or something similar (the second-most commonly collected metric after legal spend [74%]).

Measuring outputs and productivity has its rewards, as Colin Sullivan, head of legal at Patreon explains. “When you measure, there are two purposes: one is to improve and the other is to demonstrate the value you are providing to the company.”  Many GCs stressed the power of metrics collection and presentation as key in characterizing how the company at large viewed the legal department.

But over-reliance on OKRs risks treating productivity as a proxy for quality, which can be more challenging to pin down. A full 45% of GC’s characterized the method they use to judge the performance of their own direct reports as “kind of a Potter Stuart Thing (‘I know it when I see it’),” a phrase famously used by Supreme Court Justice Potter Stuart to characterize hardcore pornography in Jacobellis v. Ohio. 

To to penetrate the qualitative side, GCs turn primarily to flash surveys of internal clients (e.g. the sales team) and to “360 reviews” — recurring professional feedback from both direct reports, lateral colleagues and managers. Regular reviews offer minimal disruption and a cost-effective method for generating metrics that can be compared over time to illustrate trends. As Ben Alden, GC at Betterment assesses it, 360 reviews offer an efficiency play. “A fully-scoped procurement process could include metrics on speed, cost and comparisons against benchmarked best practices. But that takes a lot of overhead to set up; versus a solid 360 review process makes sure that people are performing at their best and is ready out of the box.”

Version 2.0

More sophisticated metrics regimes yield more granular measures. In addition to core financial metrics like spend on outside counsel and performance against budget and spend as a percentage of overall operating expense, general counsels focus on tracking items like deal terms and risk exposure.

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The present and future of food tech investment opportunity

Ingrid Fung Contributor
Ingrid Fung is an associate at Finistere Ventures.

There is no bigger industry on our planet than food and agriculture, with a consistent, loyal customer base of 7 billion. In fact, the World Bank estimates that food and agriculture comprise about 10% of the global GDP, meaning that, food and agriculture would be valued at about $8 trillion globally based on the projected global GDP of $88 trillion for 2019.

On the food front, a record $1.71 trillion was spent on food and beverages in 2018 at grocery stores and other retailers and away-from-home meals and snacks in the United States alone. During the same year, 9.7% of Americans’ disposable personal income was spent on food — 5% at home and 4.7% away from home — a percentage that has remained steady amidst economic changes over the past 20 years.

However, despite a stalwart customer base, the food industry is facing unprecedented challenges in production, demand and regulations stemming from consumer trends. Consumer demands and focus have changed in recent years. An increasing focus by consumers on sustainability, health and freshness has placed significant pressure on the food industry to innovate.

Innovation imperative

In recent years, agtech innovators have created exciting new ways to harness the power of technology to enhance the world’s food supply. Agtech innovations are protecting crops and maximizing outputs — enabling structural changes in the agriculture system that could achieve important sustainability goals of lowering greenhouse gasses, reducing water use, ending deforestation and potentially even sequestering carbon back into soil.

But this is just the beginning. As everyone needs to eat (multiple times a day!), there remains a huge opportunity for investments in innovative food and beverage technology, or food tech, that better the health of our food ecosystem through novel ingredients and improved diets via better food distribution, preservation and access.

The opportunity to use technology to improve food is massive and extends to improving food usage and decreasing waste — a key to minimizing the environmental impacts of a growing human population. Cognizant of this huge opportunity, venture capitalists are closely tracking this space. According to PitchBook, funding for food tech has skyrocketed from about $60 million in 2008 to more than $1 billion in 2015. And unique investments from VCs and private equity funds have doubled from 223 in 2015 to 459 in 2017, according to CB Insights. In examining total investments made, along with exit activity, food tech has now surpassed agtech on both fronts. This is still relatively small, given the food tech sector’s large potential customer base globally of more than 7 billion people (and growing).

Key drivers of food tech investments

Consumers are getting pickier about what they eat. They are juggling hectic work and personal lives, and demand convenience when it comes to their meals. But this convenience cannot come at the expense of quality. Now more than ever, people want to know what’s in their food, where it came from and how its production and sourcing impacts the environment.

An increasing focus by consumers on sustainability, health and freshness has placed significant pressure on the food industry to innovate.

In years past, consumer packaged goods (CPG) incumbents rushed to deliver on these heightened demands — promising convenient, superior-quality food. But falling margins on commodity ingredients, coupled with industry consolidation, have discouraged these efforts, and many have refocused their attention — leaving the door open for a new wave of hungry (pun intended) innovators and startups.

Today’s consumers are not only looking for convenience and consistency, but are also seeking nutritious food that can be accessed with ease, limits waste creation and aligns with their personal brands. In reality, it has never been more difficult to be a food company. Consumer demands have expanded to include ethical mantras but have not given way to requirements of convenience. However, spending trends show that consumers are ready and willing to pay a premium for food tech innovations that can meet their ever-increasing needs of convenience, health and low environmental impact. The opportunity for food innovators to capitalize on these market demands is growing!

Food tech present

Today, grocery ordering and delivery represents the largest food tech category, while meal ordering comprises the greatest number of privately held, venture-backed startups in food tech globally. Last year was an exceptional year for food tech, with a record-breaking $16.9 billion in funding recorded. According to Crunchbase, the three biggest deals of the year included $1 billion for Swiggy, India’s leading online restaurant marketplace; $600 million for Instacart, a U.S. grocery delivery service; and $590 million for iFood, a Brazil-based restaurant marketplace.

While consumers still have an appetite (again with the puns!) for grocery ordering and delivery plays, investors are becoming increasingly cautious in the wake of meal kit service Blue Apron’s high-profile failure (among others), which emphasized challenges like scalability, the inability to patent food and spoilage and contamination concerns across the supply chain. These missteps have led many investors to turn their attention to new food tech frontiers.

Food tech future

There are three key areas in which food tech innovations are beginning to deliver completely new and novel approaches along the value chain. These areas represent technological approaches addressing serious pain points within the food industry, and we anticipate that these sectors will experience significant growth and investment attention in the coming years.

Consumer food tech

Consumer food tech is the segment within food technology investment that focuses on development of technologies primarily marketed toward the consumer. Be it plant-based meats, novel distribution systems or nutrition-based tech, this segment aims to assuage consumer-driven demands. Examples of consumer food tech innovators include alternative protein/diary, nutrition and meal kit distribution companies.

As the organic food trend reached its peak and began to commoditize, another food trend has risen to take its place. Plant-based, meatless, animal-free … regardless of the moniker given, it seems like everyone is getting into the meatless craze. News or ads trumpeting the arrival of “meatless meat” are unavoidable.

Fast food giants Burger King (via Impossible Foods) and McDonald’s (via Beyond Meat) are now serving meatless burgers on their menus, attracting new customers that typically shop for food at Trader Joe’s or Whole Foods. Memphis Meats is another example, as is the retail giant Ikea, which is working on a vegetarian version of its infamous Swedish meatballs.

But it doesn’t end there. Other innovative companies are working on the commercialization of alternative proteins such as Clara Foods (egg whites from cell cultures), and Ripple Foods and Oatly that are focused on developing dairy and nut-free milk alternatives. UBS estimates that the market for plant-based proteins alone could expand from just under $5 billion at present to some $85 billion over the next decade, at a roughly 28% growth rate year-over-year.

Meanwhile, companies like Brightseed, Just and Renaissance Bioscience are blazing new trails on the biological and nutraceuticals front, seeking ways to produce food and nutritional supplements in cleaner, smarter and more sustainable ways.

Industrial food tech

While some companies focus on the food itself, many others are exploring how to process, package and distribute this new wave of sustainable, healthy and innovative food. Industrial food tech is the sub-segment of food tech that focuses on addressing fundamental business model and B2B pain points within the food industry. The companies include innovators in novel processing and packaging technology and new/functional ingredients that have improved nutritional, labeling or formulation characteristics.

Investments in food tech will continue to increase to help deliver on the promise of healthier, more sustainable food systems.

Food preservation technology companies like Apeel Sciences and Hazel Technologies are leading the way in reducing food waste, while improving produce quality during transportation. This is a massive issue ripe for innovation, as pre-consumer food waste comprises 40% of all food wasted in the U.S. Improved food-waste profiles could enable an overall reduction in required arable land.

Food processing/grading technologies will also be at the forefront of this segment; for example, food inspection startup P&P Optica has received financing to develop their food quality and foreign object detection technology. This hyperspectral tech has the potential to provide not only food-safety improvements in automated foreign object detection, but also to enable meat quality grading to be standardized and improved over time.

Coupled with a burgeoning sector in industrial ingredients like emulsifiers, sweeteners and firming agents, among other additives, this segment is growing quickly as large-scale food producers are facing consumer pressure to not only innovate, but also to do so sustainably. Companies like Aromyx are working to quantify things like taste and smell to help enhance production processes across a range of industries, from pharmaceuticals and chemicals to agriculture, food and beverages and consumer packaged goods.

Supply chain & procurement

The Chipotle contamination crisis (and others like it) underscores the importance of improving visibility into food supply chains. Safe Traces and other startups are helping to increasing food traceability by commercializing new modes of tracking food provenance. Consumer awareness regarding food fraud and requirements for food traceability, as well as records of provenance, are increasing. This has created a strong business case for innovation in the food supply chain to satisfy these demands. Changing consumer preferences for quality, convenience and gourmet products in food service has led to a rise in the category of fast-casual restaurants and placed pressure on fast food restaurants to rethink their delivery models.

Startups like Farmer’s Fridge (a Finistere portfolio company) and BingoBox package chef-curated meals and snacks in conveniently placed vending machines or unmanned, automated convenience stores. 6D Bytes uses AI and machine learning to prepare healthy food, like smoothies, while Starship Electronics has, in partnership with local stores and restaurants, introduced a fleet of robots that deliver food to people.

Innovators in this segment are focused on traceability, sustainability, improving freshness and eliminating food waste. For example, Good Eggs and Farmdrop deliver fresh and sustainably sourced grocery food in reusable packaging, while Full Harvest encourages the food supply chain to “shop ugly” by using imperfect or surplus produce that would have otherwise gone to waste.

Technology will continue to play an increasingly critical role in how the food we eat is produced, how it is packaged, how it is delivered, how it tastes, feels and smells and how it is reused and repurposed. Investments in food tech will continue to increase to help deliver on the promise of healthier, more sustainable food systems for the world. After all, we are what we eat.

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Should we rethink the politics of ‘blocking’?

Jillian C. York Contributor
Jillian C. York is the director for international freedom of expression at the Electronic Frontier Foundation.

Years ago, I wrote a piece criticizing a cover story by a well-known writer and political commentator that I’d met a few times, with whom I’d occasionally sparred on Twitter. The piece wasn’t merely a representation of my own views, but pulled in snarky tweets from other journalists disparaging her work too. It was a pile-on, and not my proudest moment.

The Writer wasn’t exactly thin-skinned; in fact, quite the contrary: She was a brash, sometimes obnoxious feminist with strong opinions, unafraid to speak her mind. I often agreed with her, even when I found her delivery abrasive. Still, after a couple of years with me as a thorn in her side, she decided she’d had enough—and so she did something that many readers will find familiar: She blocked me on Twitter.

The block button is an important tool that allows women and other vulnerable people to have some semblance of the same Twitter experience that the average white man might, free from constant harassment. I couldn’t tell you how many times I’ve used it over the years to drown out nasty ad hominems, sea lions, and of course, sexual harassment and worse. 

Twitter wasn’t always the “hell site” we know it as today. Many early users like me found professional advancement and lasting friendship in 140-character missives. But as the site grew, so did its potential for misuse. By 2014—two years shy of its tenth anniversary—Twitter had become central to the GamerGate controversy, ostensibly a dispute about issues of sexism and progressivism in gaming but on Twitter, a free-for-all of harassment and doxing of any woman even tangentially involved in the discussion. The harassment was so severe that it drove some women off the site permanently.

Out of GamerGate emerged better tools for blocking, tools like BlockTogether that allow individual users to share a list of people they’ve blocked. The idea behind these tools is that harassers are likely to have multiple targets, so why not make it easier for potential targets of harassment to block numerous would-be harassers all at once?

But BlockTogether and similar tools are not without flaws. Once you’re on a blocklist, it can be hard to get your name removed and if you end up, for whatever reason, on one created by a prominent or well-respected user, you may find yourself blocked by people you don’t know and would’ve enjoyed following. Some might call this reasonable collateral damage.

Numerous journalists and others have complained of finding themselves on a blocklist after a disagreement with an individual who uses them. I’m unfortunately on one used by a number of journalists. Why, you might ask, was I blocked in the first place? I remember quite clearly: It was for disagreeing with someone about the life sentence handed to Ross Ulbricht, the creator of the Silk Road website. For my opinion, I’ve lost the ability to follow or interact with dozens of journalists whose work I read.

Despite that, I don’t blame women or other minorities who’ve experienced harassment for using the block button liberally. Blocking someone isn’t a matter of free speech (unless of course the blocker in question is an elected official), as some of my harassers have claimed—rather, it’s often a matter of preserving one’s sanity. The block button, along with blocklists, are useful tools for curating space—not a safe space per se, but one free from random harassers, spammers, and the like. Think of it more as a large invite-only event, as opposed to a New York City street.

And yet, I can’t help but wonder if our liberal use of the block button prevents us from experiencing the kind of reconciliation that can happen in our offline communities. We often remove someone from our life, only for them to apologize their way back in later on. Even the Amish, who practice shunning as a matter of faith, allow for the repented to return.

twitter logo sketch wide inverted

Twitter’s architecture has changed over time, sometimes for better and sometimes for worse. Presently, its algorithm sometimes surfaces replies from people you do follow, to tweets from individuals you don’t, based on some assumption that you mind find them interesting. Occasionally, it will surface a reply from a friend to someone with a locked account or, in rare cases, to someone who blocks you, as it did for me the other day. Someone I follow had replied with an interesting comment to a tweet from The Writer—a tweet that, of course, I couldn’t see without logging out and going directly to her profile. And so I did.

What I found was someone who, with that same fierce energy, seemed a lot more thoughtful, with views more similar to mine than I remembered. I felt a momentary pang of sadness for the camaraderie that might have been. I realized the obvious: That we’ve both grown, alongside the backdrop of the horrific political environment that’s accompanied us through the past half-decade. “Have you thought about reaching out to her?” a friend asked.

Therein lies the rub: In the case of The Writer, I could reach out to her; we’ve met in person a few times, and we retain mutual friends. She might respond favorably, or with a “thanks but no thanks”, but either way, it’s unlikely she would deem my approach to be harassment. But there’s this other journalist I’ve never interacted with, who no doubt signed up to a blocklist that I happened to be on. I discovered that she blocked me when I went to read a tweet someone had DM’d me, and was disappointed—but reaching out to her through some other channel would seem weird, invasive. It isn’t worth it.

I recently reviewed my own list of blocked accounts (you can do so through your settings), a list that numbers well into the hundreds. Most aren’t worth revisiting—there’s sexual harassers and transphobes, Bahraini bots and Roseanne Barr, some Trumpites and a few high-profile right-wing accounts. But among them, close to the bottom of the list (coinciding with the early days of the block button), I spotted a few outliers, and decided to give them a second chance.

Technology is constantly changing and progressing and yet, the block button—and blocklists—remain in rudimentary form. They’re simply not priorities for companies whose focus is on profit. But were we to redesign them, perhaps we could find a way to make blocks time-limited, or at least provide users with more nuanced options. One such existing feature is Facebook’s “snooze” button, which allows users to “mute” another person for 30 days, with a reminder when that time period is up; I found that one particularly handy last summer while a friend was going heavy on self-promotion. I use Twitter’s “mute” function to rid my feed of people with whom I have to interact professionally and thus can’t block. And then there’s the “soft block”—a feature or bug, it isn’t clear—wherein one can block and unblock someone quickly on Twitter so that the user no longer follows them…at least until they wisen up (this feature/bug is made easier by the fact that Twitter seems to be perpetually plagued by an “unfollow bug”). These tools are helpful, but with all the riches these companies have, they could design something—with input from those most affected by harassment—that is less blunt, more elegant, more thoughtful.

Ultimately, the block button is an imperfect solution to a pervasive problem, and therefore remains as necessary as ever. I know that I’ll continue to use it as long as I’m on social media. But…don’t we deserve something better?

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Getting press for your startup: the true role of communications

Tim Hsia & Neil Devani Contributor
Tim Hsia is the CEO of Media Mobilize and a Venture Partner at Digital Garage. Neil Devani is an angel investor and venture capitalist focused on companies solving hard problems.
More posts by this contributor

Welcome to this edition of The Operators, a recurring Extra Crunch column produced by insiders with executive experience at companies like AirBnB, Brex, Dropbox, Facebook, Google, Lyft, Slack, Square, Twitter, and Uber, sharing their stories and insights. It’s made for founders who are navigating domains outside their expertise, covering topics they may be learning for the first time like enterprise sales, product management, and finance/accounting.

In this episode:

  1. When and how should a company seek press coverage?
  2. The difference between marketing and communications
  3. Building relationships with reporters
  4. Being or identifying a great communications leader

Early on, most founders and investors focus on getting positive press, but if they’re unfortunate or make mistakes, mitigating bad coverage becomes a common goal. Broadly, communications consists of how and what information to share, both inside and outside of the company, touching domains like management, recruiting, marketing, and business development. It’s also highly optimizable and often, mission critical — the difference between dramatic success and catastrophic failure.

We spoke with three communications experts to learn more:

  • Sean Garrett was Twitter’s first VP of Communications. He previously worked for Governor Pete Wilson of California and has founded two separate communications firms, with clients including Slack, Cisco, and Disney. He’s currently a Managing Partner at Pramana Collective.
  • Faryl Ury is a former reporter with experience at NPR and the Associated Press. Her communications experience also began in government, working for US Senator Jeanne Shaheen before managing comms at Square and Uber. She was then a marketing executive at Dropbox before becoming the Director of Communications at Aurora, a leading autonomous vehicle company, with investors including Sequoia Capital, Amazon, and Hyundai.
  • Adi Raval started as a journalist at ABC News and the BBC, covering 9/11, the Iraq War, and the White House. He moved into government as a diplomat for the State Department serving in Afghanistan, and later, as a spokesperson and Director of Communications at USAID. After leaving government, Adi was the top communications executive for the Bechtel Corporation, the Head of Comms and PR for TaskRabbit, and now the Head of Communications at Kodiak Robotics. He’s also a term member for the Council on Foreign Relations.

Below is a synthesized summary of our conversation; check out The Operators for the full episode.

When and how should a company seek press coverage?

Investors love to see public recognition of their portfolio companies, and founders sometimes believe press coverage will solve all their problems, yielding a panacea of inbound customers, employees, and new backers. Whether it’s a fundraising announcement or a product launch, more exposure can only help, right? Of course, that’s not always true. Being unprepared for an influx of inbound interest can lead to bad experiences and a negative reputation.

What’s more likely than a bad response? No response at all: reporters are constantly pitched by entrepreneurs seeking coverage who don’t have a compelling story to share, which means most of them are primed to say “no.”

Faryl told us that when she asks founders why they want to do press, they often answer, “our investors told us to,” or “I talked to other entrepreneurs and they do press.” Being prepared for the response means knowing what you want the response to be, which in turn means knowing what you have to say, and why anyone will listen and respond the right way. Thinking through this exercise involves asking questions, said Sean, specifically, “what is your positioning? What is your messaging? And for some organizations, that’s the right first step to figure out, at a high level, what are we even trying to accomplish here…?”

Having a clear purpose in mind before approaching reporters will also help you execute. For some startups, landing a story with trade press may be better than being written up by a generalized tech publication. On the other hand, if you’re spending a ton of money on Facebook and Google to advertise directly to consumers, getting coverage in the right publications may be much more efficient and impactful. 

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The battle to become the Mexican Nubank just started

Thiago Paiva Contributor
Thiago Paiva is a fintech entrepreneur, writer and investor. He is the co-founder of Liquia Digital Assets, an investment platform for international investments using blockchain technology.

Banks in Latin America have long dominated the market as oligopolies, becoming highly profitable but not serving well the population.

In the region, Brazil was the first market to have the banks’ oligopoly challenged by neobanks, with Nubank proving that it was possible to break them up. Providing a superior product and exceptional customer support, it was able to attract more than 15 million customers, valuing the company at an astonishing US$10 billion in its latest round.

Although Brazil has been the center of the neobanks’ emergence in Latin America, attention has been shifting toward another country in the region.

The Mexican opportunity

Mexico, the second-largest economy in the region, has become a relevant market for the fintechs in the region.

The reason is not exactly the most flattering; Mexico is a large country with almost 130 million population, but a large share are still unbanked. Indeed, 63% of the adult population still doesn’t have access to financial services, according to the Global Findex database, and banks haven’t been able (or are not interested) to serve them.

Furthermore, Mexicans are very suspicious of banks because of their lack of transparency, as well as recent financial crises.

Because of this skepticism toward banks, together with a cash-based economy, 90% of all consumer transactions are still made in cash, which prompts a rather peculiar situation — twice a month (quincena) there are long lines at ATMs all across the country with people withdrawing all their wages.

On the other hand, Mexico has a digitally engaged population (Mexico is the fifth largest market for Facebook, ninth for YouTube and the third for Uber), with high smartphone penetration (85.8% according to The Competitive Intelligence Unit).

All these elements put together create a rather attractive opportunity for the emergence of neobanks.

Mexico becomes the next battleground

Mexico had a few neobank pioneers in the past couple of years; Bankaool launched its services in 2015, but was too early in the market; later on came Broxel and Albo in 2016 followed by Flink in 2018.

However, the market started to garner more attention in April 2018 when the Iranian Matin Tamizi raised US$2 million from Andreessen Horowitz (a16z) and Kaszek Ventures to create a neobank in Mexico (Cuenca). It is interesting to note that Matin, at that time, had never been to Mexico and only had a slide deck to demonstrate the opportunity.

Neobanks aren’t the only ones trying to get a share of the Mexican wallets.

This event, together with the success of neobanks in Brazil, sparked attention for the potential of the market.

A couple of months after, Albo announced a Series A, raising US$7.4 million. It is currently the leading player in the market, with 150,000 customers and the third debit card issuer in Mexico.

Shortly thereafter, Fondeadora raised a US$1.5 million seed round to enter the neobank market, pivoting from a crowdfunding platform.

Late in September, a new entrant closed a relevant round; Klar raised US$7.5 million in equity and US$50 million in debt financing with the goal to become the “Chime of Mexico.”

Vexi is another player in the market, though it is focused on providing credit cards to people at the base of the pyramid. It has issued, so far, more than 20,000 credit cards and, recently, raised US$2 million in equity and US$1 million in debt financing.

Regional and international players are also becoming interested in the opportunity. The Brazilian giant Nubank announced this year officially that it would be expanding there. From overseas, the leading Spanish neobank, Bnext, announced it would be entering the Mexican market, fueled by a fresh new round of €22.5 million. Different from other neobanks, Bnext partners with fintechs and financial institutions to provide services to its customers via a marketplace.

Nonetheless, there are rumors that other heavyweights, such as the Europeans Revolut and N26, are planning to enter the market, as well as the Argentinian Ualá.

Neobanks aren’t the only ones trying to get a share of the Mexican wallets. Many tech companies such as Cabify, Weex and Rappi are launching digital wallets and issuing debit cards, leveraging their large user base.

To add a final spice to the market, traditional banks are making a significant effort to improve their digital offers — some even going as far as launching digital branchless initiatives. The Spanish Banco Sabadell entered the Mexican market with a full digital strategy, while Banregio (a local medium-sized bank) launched Hey Banco, a new digital account.

On the sidelines, there also are a few neobanks focusing on a different segment. Oyster and Evva are targeting the unattended market of freelancers, startups and SMEs, long neglected by the incumbents.

The stage is set for an upcoming battle

Although the market is still in its early stage with just a handful of neobanks with running services, the stage is set for an amusing upcoming battle. Most players will be launching in the next couple of months, which will trigger a race for acquiring customers and raising more money.

This competition will definitely change the landscape of the financial industry in Mexico, bringing better and more affordable services to its population.

It will be indubitably interesting to watch how the market will unfold in the following years, and the prize for the winners can be quite attractive, as Nubank proved in Brazil.

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With Alibaba, Pivotal and Lightbend on board, Reactive flexes its ROI muscle in the microservices world

Mahendra Ramsinghani Contributor
Mahendra Ramsinghani is the founder of Secure Octane, a Silicon Valley-based cybersecurity seed fund.
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The Linux Foundation recently announced the launch of the Reactive Foundation. Its founding members are Alibaba, Lightbend, Pivotal and Netifi. So what exactly is this Reactive Kool-Aid, and why are all these companies guzzling it down so fast?

If you buy the premise that developers live in a cloud-native microservices world, then you also understand that most applications are distributed and elastic. The compute is spread across clusters, as is all the data. It could be a few users, or a spike of thousands. Systems need to be architected to handle these spikes. Yet the dark secret of microservices is complexity — the management of resources, costs, performance and latency remain a challenge.

If we break down any application into hundreds of moving parts (such as containers and microservices), then we better have an elegant way to manage those moving parts. These services need to talk to each other, exchange data and ensure that overall performance is reliable, at all times. Easier said than done.

The “big unsolved problem of the cloud”

According to Daniel Berg, Distinguished Engineer at IBM Cloud, “The network is the unsolved problem of the cloud…. We need the network to be a first-class citizen of a cloud system.” Why does the network remain a problem? Is it because we fall back on our old ways, when we need to rethink the new? We have designed the car with the big clunky wheels of a horse buggy. Conceptually, it sounds fine — but it can be a pretty rough ride.

In the layered cake of network protocols, we have the middle layer of transportation (Transmission Control Protocol / Internet Protocol or TCP/IP), and right at the top, we have the application layer. We use a protocol called hypertext transfer protocol (or HTTP) to make sure the web applications can talk to each other. TCP was born in 1974 and is called a “chatty protocol” — it has to go back and forth many times just to do some basic stuff. A TCP joke circulating around proves this point.

HTTP Joke

HTTP came in 15 years later, in 1989, and was used to serve documents in a client-server era. This was when we all had desktops being cooled with whirring fans. We would use a Netscape browser to launch a web page (hypertext) and the web-server would say, “Wait a sec – let me fetch that for you.”

Three decades later, we are trying to make do with HTTP, when the compute layer has exploded. Does HTTP work in the world of millions of interactions with machine-to-machine communications? Our mobile, IoT and edge devices are not quite requesting pages and walls of text. And there is no client-server as much as peer-to-peer exchange. But the network layer is stuck with us and we are trying to make sure these microservices can stay put using some archaic methodologies. “As much as 89% of all microservices architecture is based on HTTP, says Stéphane Maldini, principal software engineer at Pivotal. Pivotal is one of the founding members of the Reactive Foundation. In the process, we are creating a big trade-off in efficiency. We are still using two cans and a piece of string to communicate, when we should use the next iPhone.

HTTP is unsuitable for microservices

If we use HTTP in the micro-services world, we have fundamental challenges. For one, there is no flow control — “which means that data flows from a fire hose,” says Robert Roeser, co-founder of Netifi. Because the data can be dumped at a rapid pace, and multiple threads are opened up, we end up building control features to ensure the application does not crash.

Reactive programming is a paradigm shift at the architectural level. It’s about speed and performance.

Stuff like circuit breakers, retry logic, thundering herd (where a large number of processes wake up, but only one wins, often leading to freezing up) needs to be managed effectively. In HTTP, everything is a request / response, but if we look at a simple notification for an app, we don’t need to keep polling all the time. The request is like a grumpy kid sitting in the backseat whimpering, “Are we there yet?,” when the journey has just begun.

Such inefficient mechanisms cause a huge waste of compute resources when we use the wrong protocol. IBM documented the inefficiency of microservices and concluded that the performance of the microservices is ~ 79% (s)lower than the monolithic model. “We identified that Node.js and Java EE runtime libraries for handling HTTP communication consumed significantly more CPU cycles in the microservice model than in the monolithic one,” conclude the researchers.

Goodbye HTTP, hullo Reactive

The Reactive Foundation sits under the Linux Foundation and aims to accelerate the next generation of networked technologies. It espouses the merits of Reactive Programming Frameworks and builds the community. Ryland Degnan, chair of the Reactive Foundation and co-founder of Netifi, lived the HTTPain while he was a member of the Netflix edge platform.

Ryland understands scale, latency and user experience better than most people. At Netflix, the platform would have billions of requests from over several hundred million members. He says, “We live in a multi-dimensional universe where user experience matters. Developers have to deal with three axes of (a) deployments (b) frameworks and (c) protocols. Spotty connections are unacceptable. Why can’t we pick the stream up from where you left off? If we do that alone, we reduce 90% of our infrastructure.”

Indeed, Facebook has adopted RSocket to reduce the dropped connections over mobile network hops and reduced its edge infrastructure significantly. Steve Gury, a software engineer at Facebook speaking at SpringOne Platform said, “The future is R-Socket.”

Reactive programming is a paradigm shift at the architectural level. It’s about speed and performance. One of the major strengths of Reactive is asynchronous I/O, which allows reduction of edge infrastructure by orders of magnitude.

Andy Shi, developer advocate at AliCloud (a unit of Alibaba), is one of the founding members of the Reactive Foundation. He says, “Alibaba has thousands of developers as we are one of the world’s biggest e-commerce platforms. As we adopt microservices and see that compute is utilized only around 10%, throwing more infrastructure at the service mesh is not the answer. Pods are talking to each other using REST API which is not the way to go.”

REST APIs require multiple endpoints and round trips to get the data. Another founding member of the Reactive Foundation, Viktor Klang, deputy CTO at Lightbend, has been evangelizing Reactive for well over a decade, and feels like the time has finally come. “Our systems need to produce results in the required time frame. Imagine if you could compute an answer to a grand question — like the meaning of life — but if the answer is delivered after you die, the system has failed,” he says.

Comparing service meshes and use cases

While Istio is the 18-wheeler truck best suited for lift and shift, RSocket is the Ferrari — speed and elegance. Experts foresee a world where the two may coexist. Yet there are applications, such as IoT use cases, where RSocket has a clear edge (pun intended). Istio offers load balancing, service discovery, logging and traffic management but with heavy overhead.

In studies, Netifi was able to process 16X more requests and delivered four times higher throughput in comparison while maintaining three times better latency — 372% faster throughput with 300% less latency. “Netifi has the potential to be like a Cisco — the router of the microservices,” says Creighton Hicks, investor at Dell Technology Capital.

Istio was launched by Google, IBM and Lyft, so it is a strong incumbent and with serious brand cachet. But when the likes of Alibaba and Facebook start to showcase the RSocket ROI, the fun has just begun. During a recent presentation in London, the Reactive mafia was in full swing. Ondrej Lehecka, a software engineer at Facebook, and Andy Shi talked about how RSocket is addressing real-world architectural challenges. Shi said, “RSocket is designed to shine in the era of microservice and IoT devices. Projects built on top of RSocket protocol and Reactive streams in general will disrupt the landscape of microservices architecture. The Reactive Foundation is the hub of these exciting projects.”

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Founder’s guide to the pre-IPO secondary market

Ryan Conner Contributor
Ryan Conner is a corporate attorney at Atrium part of the General Counsel Group representing early-stage startups.

The increase in activity in the pre-IPO secondary market means that founders, early employees, and investors are receiving liquidity much sooner in a company’s lifecycle than ever before. For most startups and privately held companies, liquidity is often an issue for stockholders as no market exists for selling shares and/or transfer restrictions prevent their sale. Secondary stock transactions, however, are a way to work around this problem.

Here’s a quick look at how they work and what to keep in mind, especially if you’re going through the process for the first time. (If you’re not familiar, secondaries are transactions in which an existing stockholder sells their stock for cash to third parties or back to the company itself before the company undergoes an exit; traditionally, an exit refers to an M&A or an IPO.)

Offering secondary transactions to founders is a tool VCs have been using to win deals. For example, if a VC promises that the founders will receive $1,000,000 in cash through a secondary sale from a $15,000,000 venture financing round, the founders will likely prefer that VC’s term sheet to a term sheet from a VC that does not offer that deal.

Why would a founder consider a secondary sale of their equity?

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Your mass consumer data collection is destroying consumer trust

Jascha Kaykas-Wolff Contributor
Jascha Kaykas-Wolff is CMO of Mozilla.

These are dark days for trust. Darkest of all for marketers and advertisers.

Only 3% of people trust marketing and advertising, the lowest of any industry or practice, and that trust is falling fastest among millennials, an ominous sign for the future.

We have no one to blame but ourselves.

Like everyone else, we’ve been blinded by the promise of tech’s false promise of “Big Data Solves Everything.” Martech is driving the dialog in our industry right now, and they’re telling us that collecting as much consumer data as possible — regardless of the actual value of that data, and regardless of our consumer’s best interests — will reveal a magic growth formula.

That’s a farce. There is no magic growth formula, and tech won’t do your job for you. Believing that amassing data will save your business instead of focusing on fundamentals has only led to lazy marketing, plummeting consumer trust and a two-fold increase in the number of expensive martech solutions over the last two years.

Public awareness of the surveillance economy is sharpening. The press is increasingly paying attention to business AND advertising practices. Consumers are voting with their wallets and choosing to walk away from companies that don’t practice the values they preach. This is a trend that will speed up, not slow down. The skepticism that has recently emerged around Amazon’s new Alexa announcements is just the most recent example of this.

How soon before marketers and advertisers end up on The New York Times naughty list? How much longer will consumers tolerate the hypocrisy of brands claiming to care for them while they vacuum up their personal data? Is it worth the risk to your brand and your business?

Doing what’s right for your business means doing what’s right for your consumers.

If you are a marketer reading this: You can do better.

Being a lean data company doesn’t mean being a martyr — just the opposite. The top 10 U.S. most trustworthy S&P 500 companies outperform the market by 25-50%.

But it does mean doing something counterintuitive for many marketers in the era of big tech and adtech. It means striving to collect only the consumer data that you really need to give equal or greater value back to your customer — and protecting it. It means no more selling, sharing and buying user data. It means being transparent about your marketing practices.

Doing so will take your focus off data collection for the sake of data collection and put that focus where it belongs — on understanding your customer’s needs, delivering them more and more value and regaining their trust and respect.

This isn’t just empty talk.

At Mozilla we’re backing up this lean data commitment with action. In the spirit of truly putting our users’ interests first, the latest release of the Firefox browser blocks third-party cookies by default. Frankly, we had anticipated some pushback from publishers, but instead they’ve told us they haven’t experienced the impact they expected, which is pushing them to question the actual value of the data they’d been collecting and revisit their own practices.

A lean data movement is growing. Others have taken action too, and there are many more who believe that doing what’s right for your business means doing what’s right for your consumers.

So whatever your own lean data commitment looks like, make it now, before it’s too late. As marketers and advertisers, we’ve survived some seismic shifts over the last few years, but no one can survive 0% trust.

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Apple Watch Series 5’s banner feature needs to be turned up to 11

Steven Aquino Contributor
Steven Aquino is a freelance tech writer and iOS accessibility expert.
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Reviewing Apple Watch Series 5 is not hard. It is so largely similar to last year’s Series 4. It carries with it all the things that made its predecessor great — the large display, haptics-enhanced Digital Crown and fall detection — and marches forward with one defining feature: the always-on display. Back-to-back years of seminal moments for the Watch is an impressive feat.

From an accessibility perspective, everything that was (and remains) great about Series 4 is there in Series 5. It is the best Apple Watch to date, and it is certainly the most accessible smartwatch on the market, period. But there are a few caveats.

Always-on

The longer I wear Apple Watch Series 5, a 44mm space-gray aluminum review unit from Apple, the more torn I feel about the device’s always-on display.

On one hand, I readily acknowledge the significance of the new display as it relates to the watch as a whole. On the other hand, however, I find the always-on display to be somewhat of a letdown in practice. It isn’t that the always-on display is bad; it’s not. It’s that the current implementation isn’t that conducive to my visual needs.

The issue is brightness. The always-on display right now isn’t bright enough for me to quickly glance down at my wrist to see the time. As someone who requires maximum brightness on all my devices in order to see well, this is problematic. Other reviewers have mentioned how nice it is to just casually look down at the watch to see the time, as you would on a mechanical watch. My peers must have substantially better eyesight than I do, because I literally cannot do that. In my usage, I have found I’m still flicking my wrist like I have any previous Apple Watch to see the time. When you do so, the Apple Watch’s screen fully illuminates (to max brightness, per my display settings), and that’s how I can tell time.

The whole point of buying Series 5 is for the always-on display. I could turn it off, but that defeats the purpose.

It makes no difference whether I’m using an analog or digital watch face. The exception is when using the new Numerals Duo face with the “filled” styling. The digits are so large that I have no trouble seeing the time. This face would be a good solution for my woes if not for the fact it doesn’t support complications. Otherwise, Numerals Duo is a great workaround for the always-on display’s lack of light.

At a technical level, I understand why watchOS dims the display. Nonetheless, it’s unfortunate there is no way to adjust the brightness while in “always on” mode. Perhaps Apple will add such a feature in the future; it would make sense as an accessibility setting. As it stands today, as good as the always-on display is in general, I can’t say it makes much sense for me. I’m effectively using Series 5 the same way I use my Series 4. Because of this, Series 5 loses some of its appeal. The whole point of buying Series 5 is for the always-on display. I could turn it off, but that defeats the purpose, and I may as well stick with last year’s model.

On the flip side, if and when the always-on display improves for me, another benefit is it will save me from having to raise my arm so often. I wear my watch on my right wrist, which is notable because the right side of my body is partially paralyzed due to cerebral palsy. As such, raising my wrist to tell time or check a notification can sometimes be painful and fatiguing. The always-on display mitigates this because, by virtue of its persistence, you don’t necessarily have to contort your arm to look at your watch — thereby alleviating pain and fatigue for me and others.

Apple watch series 5 personalization of watch band 091019 big.jpg.large

Problematic packaging

From the original Apple Watch (colloquially known as “Series 0”) through Series 3, Apple packaged the watch as an “all-in-one” product. Which is to say, the band was fastened to the watch. You could grab it and go — take the watch out of the box and immediately see how it looks on you, even before pairing it with your iPhone.

With last year’s Series 4, Apple changed how they package Apple Watch, whereby the band and watch were separate entities. In order to wear it, you first need to attach the band to the watch. In my review, I called out this change as regressive despite recognizing why it made sense operationally. The revised layout continues in Series 5, which is disappointing.

Everything should be as accessible as possible.

The issues this setup raises are the same ones I expounded upon last year. To wit, it’s easy to see how some people could get flustered with the watch and band being piecemeal; it can be challenging in terms of cognitive load and fine-motor skills. Even as a seasoned product reviewer, I freely admit to again feeling a tad disjointed as I was piecing together my review unit.

Like the always-on display’s dimmed state, I totally get why Apple chose to overhaul how they package Apple Watch. It makes complete sense in context of the new Apple Watch Studio, where you can mix and match finishes and bands. This is a prime example of why reporting on accessibility and assistive technology matters so much: esoteric details like how a product is packaged can really matter to a person with disabilities. Part of the reason Apple products are so revered is precisely because of the elegant simplicity of its packaging. The unboxing is supposed to be one of the best parts of a new Apple Watch or iPhone or iMac — especially for disabled people, the initial experience leaves a lasting impression if you have to fiddle as if it were a jigsaw puzzle. I can manage, but many cannot. And it’s important to bear in mind. Everything should be as accessible as possible.

The bottom line

There is no doubt Apple Watch Series 5 is great. It retains the title of Best, Most Accessible Apple Watch Yet, but with an asterisk. I don’t have a burning desire to upgrade — although admittedly, the titanium’s siren song has been calling me ever since last month’s event. The problem I have with the display can be easily remedied with a software update; if Apple shipped a brightness slider tomorrow, I’d order one pronto. Today, though, always-on isn’t always bright — and that sucks.

In the end, I still heartily recommend Apple Watch Series 5 to everyone. My low vision makes the always-on display difficult to see as-is, and I surely can’t be the only one. But that doesn’t take away from the fact that the watch is still the best, most accessible smartwatch by a country mile. I’m confident the always-on display will be iterated and refined over time. In the meantime, Series 4 and watchOS 6 is a pretty bad-ass combination for me.