Tag: direct to consumer

Posted on

Disrupting beauty’s last frontier with Keta Burke-Williams from Ourside

Welcome back to Found, where we get the stories behind the startups.

This week Darrell and Becca are joined by Keta Burke-Williams, the founder and CEO of Ourside, a direct-to-consumer fragrance company. Keta talked about what got her interested in disrupting the behemoth — and outdated — fragrance industry and what it has been like to develop a product that each consumer will experience differently. She also talked about her personal connections to scent and what it was like to raise venture money as a Black woman. Bonus! We learn that Darrell might be a “frag head.”

Subscribe to Found to hear more stories from founders each week.

Connect with us:

  1. On Twitter
  2. On Instagram
  3. Via email: found@techcrunch.com

Disrupting beauty’s last frontier with Keta Burke-Williams from Ourside by Rebecca Szkutak originally published on TechCrunch

Posted on

Haus, a VC-backed apertif startup, is up for sale after Series A falls through

Haus launched in 2019 as an answer to a generation’s craving for a more transparent alcohol brand, raising millions in venture funding from angels such as Casey Neistat, Away co-founder Jen Rubio and funds including Homebrew, Haystack Ventures, Coatue, Shrug Capital and Worklife Ventures. Haus has raised $17 million on rolling SAFE notes to date.

Today, CEO and co-founder Helena Price Hambrecht tapped into the same ethos of transparency to announce that the startup’s Series A fell through and the company is in the process of closing down. In an interview with TechCrunch, Hambrecht spoke about Haus’s transition from buzzy VC-backed startup to a business currently up for sale, as-is or in parts.

Haus sells a series of citrus, spice and flowery low ABV (alcohol by volume) apertifs, meant to be an alternative to hard liquors and a little stronger than wines. Made in Sonoma, California, Haus also promised a product made of all-natural ingredients with a key differentiator: users could order it online and get Haus bottles delivered to their doorstep. A digital-friendly, healthier alternative that replaces wine memberships set up the company to have a strong social presence.

Hambrecht, a Silicon Valley branding veteran, took over as sole chief executive of the company in 2021 after her co-founder and former husband Woody parted ways. This year, Haus shared it has crossed the $10 million in revenue threshold and recently announced that it would be hitting national distribution with Winebow, another milestone for the then solely direct-to-consumer business.

Yet, as the pandemic spread throughout the world, the company went through a series of challenges, including supply chain issues, lack of in-person word of mouth growth and iOS changes.

“It was difficult to build the business that I wanted to build during the pandemic considering we were building a social product,” Hambrecht said. “We didn’t have people gathering, we didn’t have natural word of mouth. We were a purely digital growth brand during that time, great for acquisition but not good for monitoring long-term behavior.”

The progress came as Hambrecht struggled to raise venture capital funding, largely, she says, because venture investors are unable to back alcohol companies due to vice clauses in their LP agreements. “Diligence for an alcohol round is very different from software; with software it is 4-6 weeks, with alcohol it is months. I’ve learned over time that almost every process, from operating legally to fundraising diligence, is 100x harder for alcohol,” Hambrecht told TechCrunch. Because the company was unable to fundraise from traditional VC, it took on debt financing and began looking for private equity and strategic partners.

Enter Constellation Brands, the producer and marketer of beer brands such as Corona Light, Modelo Especial and Pacifico. In 2018, the beverage company’s venture arm committed $100 million investment in women-led startups. Constellation’s dedicated fund stood out to Hambrecht because it, alongside the Winebow deal, would help expand the brand’s distribution.

Hambrecht says that Constellation committed to leading the startup’s $10 million Series A, and even offered to advance the startup money as runway began to dwindle. Then, last minute, Constellation backed out of the deal without any specific reasoning other than “timing,” she says. TechCrunch reached out to a Constellation spokesperson for further comment but did not immediately hear back.

“Here’s a Haus update that’s not fun to share,” Hambrecht said on Twitter on Monday morning. “Our lead investor recently declined to move forward with our Series A that we were in the process of closing. Without them, we do not have the cash to support continued operations at this time.” Now, Haus only has one month to sell and ship products. It is no longer manufacturing new products, but that may resume, it says. “We were just beginning to see gathering come back, and I was looking forward to that new chapter.”

The co-founder said “there’s no villain” in the shutdown story, yet Constellation’s dropout shows another example of how difficult it is to be a venture-backed, direct-to-consumer company. When Haus announced its $4.5 million seed round, Hambrecht described the company as “Glossier for Alcohol”; fast-forward, and Glossier, too, has had its fair share of struggles.

Despite the current situation, the co-founder doesn’t think that going the venture route was a mistake. “I’m grateful for the funding we did have, and what we were able to do with it. You build the company you want to see in the world and you know it is going to cost a little more upfront.” Instead, she says that if she were going to focus on becoming a more self-sufficient startup — or run operations off of its cash flow — she would have had to make that decision a year ago.

As a result of the fallen Series A deal, Haus is currently for sale via an ABC process, or an assignment for the benefit of creditors process that is a voluntary alternative to filing a formal bankruptcy claim. At its peak last year, Haus had 30 employees; now only four work alongside Hambrecht, all as contractors for the firm.

“It’s always dangerous to be low on cash. We got there, and it’s unfortunate, but I know there are many companies in this position right now,” Hambrecht says. “I have been sharing my work online for over 20 years now. It’s definitely something in my DNA. If me sharing this process is helpful for another founder in a tough spot and considering their options, then it makes all of this a little more worth it.”

As for what’s next for the entrepreneur, a Silicon Valley branding veteran, there’s no immediate plans to jump into a new startup.

“My goal, right now, is to be as helpful as I can to make this ABC process have the best outcome possible. After that, I’m going to take some time to process the last four years; it’s been so extraordinary, as well as brutal and traumatic; I’m going to rest and process that.”

Posted on

Is there hope for digital health startups post-Roe?

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This is our Wednesday show, where we niche down to a single topic, think about a question and unpack the rest. This week, Natasha asked:  How do digital health startups build in a post-Roe world?

The question comes after Natasha’s recent Startups Weekly column, “When your startup’s core mission is set to be overturned.” The piece explores the ripple effects of the looming Roe v. Wade overturn, specifically in how it impacts startups. But, let’s not hypothesize. We brought on Kiki Freedman, the CEO and co-founder of Hey Jane, to answer our big questions about building, raising, and existing when so much regulatory scrutiny is weighing on your business. A direct-to-consumer health company that specializes in the delivery of abortion pills, Hey Jane about to kick off its fundraising process which makes for an interesting tension. The startup – especially today – really sits in the middle of two intense moments: an overturn to Roe v. Wade would threaten all of its work, and a toughening, risk-averse VC market could be a hurdle toward next financing.

Enjoy the show, and let us know if you like this interview format. Also, here’s the Found interview that we referenced during the show as well!

Equity drops every Monday at 7 a.m. PT and Wednesday and Friday at 6 a.m. PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

Posted on

Kolkata Chai’s next cup includes a taste of venture funding

Co-founded by brothers Ani and Ayan Sanyal, Kolkata Chai wants to be “the place to get good chai” in the United States. It’s a big market. The Sanyal brothers estimate the national tea market represents a $12.7 billion dollar business per year.

To chase after it, the duo tells TechCrunch that Kolkata is about to embark on a new chapter of its business: after spending years bootstrapping with revenue from their agency business, Kolkata Chai is taking on external capital for the first time.

The startup recently raised a $1 million pre-seed round from investors including Boba Guys founders Andrew Chau and Bin Chen, 500 Startups partner Paul Singh, Sharma Brands CEO Niik Sharma, Immi Eats CEO Kevin Lee, and Vice Media co-founders Suroosh Alvi and Zanab Hussain Alvi.

There are easier ways to build a business than trying to disrupt a cup of Indian masala chai. The drink is extremely personal: no two homes will serve the same cup and everyone has their own preference of ginger and cardamom proportions.

But what chai demands in technique, it also receives in love: it’s a staple and shared language within Indian culture. Thus, it’s not surprising that given its cultural significance, coupled with the rising popularity of chai in Western countries, a string of direct-to-consumer businesses has emerged to launch their own masala chai mixes, bottled drinks and cafes.

Kolkata’s choice to take on venture can feel like a controversial choice these days, especially with community-grown businesses that users feel passionately about. Will quality struggle with venture-like incentives? Will the chai have to be watered down? Kolkata Chai started as a New York haunt, based on the Sanyal brothers trips to Kolkata each summer. It brands itself as a no-nonsense take on authenticity, so any threat to that ethos could hurt the business.

“You can bootstrap as long as you want, but there are certain limitations with that,” Ani Sanyal tells TechCrunch. “After two years of navigating COVID-19, we exhausted every kind of avenue possible; but at the same time, I think we’re intentional about how we raise capital.”

Indeed, the startup says it intentionally pieced together its new round of funding from high-net-worth individuals in the form of a party round rather than from a traditional venture fund or funds. The reasoning, Sanyal continues, was that they wanted “patient capital.”

Kolkata Chai didn’t go the crowdfunding route, but instead picked key executives and founders in their industry who understand the food and beverage space from whom they can learn more, including about budgeting. Ayan Sanyal added that the startup wanted to wait till the business was at a place where they felt comfortable sharing future plans and understanding what a long-term revenue mix could look like.

(Kolkata’s journey is a similar feel to that of Boba Guys, a popular tea brand that also eschewed traditional venture funding.)

Kolkata Chai hopes the money will help it graduate from a proof-of-concept business into a brand to be reckoned with. In the first nine months the startup’s DTC business it did about $160,000 in top-line revenue, and helped it build a profitable business through a pandemic. Based on this, Kolkata thinks its future is more in the e-commerce world. It will keep its New York store and use pop-ups as a marketing vehicle.

Eventually, Sanyal says, the company could expand through acquisitions and even grow through content and media that expands its initial audience. Even though the brand started by teaching people that “chai tea” was a repetitive descriptor perpetuated by Starbucks, it wants to continue to take spicier stances.

“We’ve built the premier brand for millennials and our demographic with very little resources,” Sanyal says. “I think we can really span across all these different worlds, and more importantly, not just [build] products and things for South Asian people but really be a bridge between our culture and the larger Western world.”

Photo credit: Nushrat Choudhury

 

Posted on

Disco gets brands to boogie together on customer acquisition

As more companies establish an e-commerce presence, the stakes have never been higher for brands to cut through the clutter to land new customers.

Disco, formerly known as Co-op Commerce, doesn’t think the cost of acquiring costs should be so reliant on Big Tech platforms. Instead, Conner Sherline, founder and CEO, says that when independent brands come together across partnerships, data and merchandising, they have the buying power to produce results for everyone.

Conner Sherline, disco

Conner Sherline, founder and CEO of Disco. Image Credits: Disco

The new name was actually one that Sherline had been thinking about before the company was Co-op Commerce. The leadership team decided to change the name because the company was not a co-op, and with its focus on “discovery,” Sherline explained it fit more with helping consumers find the next thing within its network and cutting through the noise. Relating to discovery on the merchant side, it was also discovering new things about customers and other merchants.

When we talked to Sherline last August for the company’s $5.8 million round, 500 brands were part of Disco’s ecosystem that streamlines the collaboration, tracking and marketplace data that the brands can use to make better decisions around their marketing and merchandising.

This approach has now gained traction. In its first year of business, Disco saw more than $1 billion of transactions across its brand network and over 40 million shoppers as brands experienced 30% to 50% lower costs than on platforms like Facebook and Instagram, Sherline said.

The company’s first full year in business was 2021, and during that time, the company’s revenue grew 10 times, while average contract value and revenue per customer values are higher because Disco is able to reduce the acquisition costs that gobble up much of a brand’s revenue.

Disco is now working with large brands in direct-to-consumer, including The Honest Company, Parade, Lovevery, Made In, Girlfriend Collective, Faherty, Lunya, Rhone, Caraway and Milk Bar.

And, it has another round of funding, this time raising $20 million Series A funding led by Felicis Ventures. Participating in the round were Shopify, Sugar Capital, Bessemer Venture Partners, Indicator Ventures, RiverPark Ventures, Vibe Capital, Not Boring Fund and a group of DTC founders and operators. To date, Disco has raised $26 million.

The new round was preempted, but came at a good time for the company, Sherline said. A cookie-less future is inevitable, but the challenge he is seeing is that companies have not had time to react or respond, and the solution is for brands to work together to lower customer acquisition costs while also improving the targeting of customers.

“With everything happening, including iOS 15 hampering businesses to effectively do marketing and Facebook being less effective in driving acquisition costs, this is our moment to shine and bring on more people to the team to go after a larger opportunity,” he added. “Because we work with brands directly and sit on larger sets of consumer data, we are able to close that loop without cookies.”

The new capital will enable the company to grow its team. Sherline aims to go from 27 employees to 75 by the end of the year. Disco will also be testing more business-to-business marketing and getting its own marketing funnel set up to build leads.

Now armed with its new funding, Disco joins other startups, like Flip, Bloomreach and Varos, to attract funding to provide their own approaches to customer acquisition.

Niki Pezeshki, general partner at Felicis, said Disco caught his eye having been an early investor in Shopify and a dozen e-commerce brands over the years. Those investments gave Felicis firsthand insights to the struggles of user acquisition, which he said had become more expensive over the past five years.

“When we heard from Conner, we were excited about the market he was going after, the problem they were solving and that Shopify was already an investor,” Pezeshki said. “DTC is growing faster than everyone else. Shopify is a bigger marketplace, but not focused on the advertising space, or customer acquisition, which is left to social media and search engines. Disco is coming in and solving that for all of those for DTC brands.”

How to acquire customer research that shapes your go-to-market strategy

Posted on

PideDirecto bags $5.25M; aims to be ‘Shopify with 30-minute deliveries’

PideDirecto, a Mexico-based company, is developing a platform that enables local businesses in Latin America to sell directly to their consumers and deliver orders in less than 30 minutes.

Hussein Fawzi and Ronni Samir launched the company with Anders Steiner and Antonio Nacoud in September 2020. Fawzi, Samir and Nacoud knew each other from Iraq and studied together in college in Sweden, which is where they met Steiner.

After going their separate ways for a bit, they met up in Mexico and launched a corporate wellness program in 2018 that connected people with restaurants to order lunch or snacks. During the pandemic, many of their customers were working from home, and the demand for home deliveries went from 10% to 80%.

At the same time, customers were telling Fawzi and Samir that 25 to 30% of every sale was going to delivery marketplaces, something that was difficult to sustain. They were also at the mercy of the drivers and reliant on the marketplaces for their deliveries.

“That is when we started PideDirecto, to enable local businesses to scale their direct-to-consumer sales channels,” Fawzi said. “We build the online storefronts for the brands and operate logistics for businesses, like pharmacies, local retailers, restaurants and CPG brands. Think of us as Shopify with 30-minute deliveries.”

Latin America’s second wave of digital transformation

Today, the company announced an oversubscribed $5.25 million round of seed funding, led by JAM FUND, with participation from Soma Capital, Acacia Ventures, Kube VC, Flexport, Y Combinator and a group of individual investors from companies including Grubhub, Jeeves, Par Technologies, Uber and Google.

“PideDirecto is making it simple and cost effective for brands to build a scalable direct to consumer sales channel within minutes,” Justin Mateen, founder of JAM FUND, said via email. “I am excited to support the team’s mission to empower brands to expand their reach and own their customer relationship.“

Since its launch a year ago, the company has grown 32% month over month, has approximately 1,000 brand clients and has processed more than 500,000 orders.

PideDirecto charges customers like a SaaS model, with pricing starting at $1,900 a month, which includes delivery service and marketing tools. Other levels include a website, unlimited ordering and advanced marketing tools. Delivery fees are paid by the consumer, Fawzi said.

While there are delivery services and ordering apps in Latin America, Samir added that very few third-party companies are offering a complete suite of products. This enables companies to be on marketplaces, but to own every sales channel and provide the same level of customer service no matter what communication method is being used.

“Their business is to sell, but many people don’t realize that logistics and e-commerce are two different businesses,” Samir added.

The new capital will be used to build out a technology team for future product features. PideDirecto will also look into marketing and to scale its presence in Mexico as well as expanding into new countries, like Colombia and Costa Rica, by the end of next year.

As it now gears up to raise a Series A round, Fawzi said the company’s aim is to build an all-in-one platform for businesses to manage and scale online sales. It is focusing on direct integration with marketplaces and onboarding brands into its operating system.

“The future of commerce is a hybrid one where you will have to service the client on every sales channel,” he added. “We are building out the necessary infrastructure that merchants need to do this and leveraging technology for the online storefront, the payment solutions, CRM data and marketing and logistics.”

VCs say there are more startup opportunities to chase in Latin America

 

Posted on

Heartcore Capital bets on Europe with a $200M fund for consumer tech startups

Heartcore Capital, one of the few VCs to focus on consumer technology, has raised a $200 million early-stage fund for those kinds of startups across Europe. Heartcore IV, the firm’s flagship investment vehicle, will be supported by Heartcore Progression Beta, a $50 million ‘opportunity fund’ for follow on rounds in consumer tech.

The firm said both vehicles were oversubscribed. Investors in the funds include Hermann Haraldsson (Boozt), Andrew Stalbow (Seriously), Phillip Chambers and Kasper Hulthin (Peakon), Paul Crusius and Marco Vietor (Audibene), Morten Strunge (Podimo, Mofibo), and Max-Josef Meier (Finn).

Most European VCs tech to be B2B/ SaaS focused, but Heartcore has specialized in consumer technology VC.

In Heartcore’s favour is the fact that there are 500 million consumers in the EU spending an annual $11 trillion, making it on-par with the US consumer market. It also has a larger middle class. And while B2B platforms must usually win the US or at least originate from there, the B2C market tends to be more local.

The pandemic has also acted as an accelerant for consumer technology, forcing po[ulations to take up digital services such as online groceries

Heartcore has had a 14-year history in consumer tech with its portfolio raising close to $1 billion in follow-on financing over the past 12 months, the company said.

Swedish consumer personal finance manager Tink’s recently sold to Visa for $2.2BN, and Heartcore was the largest venture investor at the time of acquisition.

It has also invested in virtual restaurants (Taster), open banking (Tink), quick-commerce (Weezy), fashion e-commerce (Boozt), cellular agriculture (Gourmey), digital health (Kaia Health, Natural Cycles) or subscription commerce (La Fourche, Italic).

Max Niederhofer, Heartcore Capital partner, told me: “Europe historically has been great at consumer tech. You’ve had Skype, Last fm, Spotify and Supercell. All of those are consumer companies. I think the thing that’s happening is that a lot of the consumer champions are domestic champions. Lando is huge in Germany. The biggest insurance tech company in France is actually a French company. So, as technology disrupts every consumer spend category, there’s a lot of big companies being built in Europe that are primarily domestic or regional, and that’s where we feel there’s a lot of room to play.”

Posted on

Choices and constraints: How DTC companies decide which strategy to follow

Companies typically have to settle on strategies that align with their customers, employees, investors, and regulators. The more they know about how the other side will decide, the clearer their own strategies become.

If regulators always prefer choice for consumers, then it is easy for a platform to allow multiple payment choices: Shopify allows multiple payment options from its partners, Apple doesn’t.

By regulatory intervention, it will have to now.

Nash equilibrium and Netflix time

Nash equilibrium is a fascinating, post-facto explanation for some of the interesting decisions you will often see in business.

In simple terms, Nash equilibrium states that if you have clarity on the other side’s decision, you can make yours without regret. In other words, there is no incentive to change strategy once each side knows what the optimal position of the other side is, in their combined transaction.

All physical products cannot escape retail, because ignoring retail means a smaller serviceable market. But it is a choice companies can make.

I see this playing out every weekend at home. I don’t mind reading a book alone or watching Netflix with my kid, but when I am available for Netflix and my kid decides to read a book, it is a bummer.

DTCs, DNVBs and game theory

In DTC, how companies decide their omnichannel strategy depends on how well they know what their customers’ choices are and what their ideal strategy will be. In many transactions, constraints are actually good forcing functions — they narrow down choices and help you arrive at an equilibrium faster and cheaper.

The marketing and public-market filing languages make for a fascinating read into the minds of companies.

When Warby Parker filed its IPO prospectus last month, the company referred to its digitally-native status in the past tense. The model was effectively flipped in 2020, as its share of online sales to total sales dropped from 65% to 40%. Meanwhile, its physical store count increased from 126 to 145.

Posted on

Casper cuts its CMO, CTO and COO amid further layoffs

Casper has laid off dozens of employees, including three C-Level executives: its chief marketing officer, chief technology officer and chief operating officer, sources say. The mattress company declined to comment.

The round of layoffs, communicated to employees on Friday, largely impacted retail and operations teams, signaling that the business may be undergoing a broader restructuring. Laid-off employees were offered severance packages.

Notably, the impacted executives were all fairly recent additions to the team. CTO Ben Clark has been with the company since July 2019, while former CMO Lisa Pillette joined Casper in March 2020. Casper COO Charles Liu had only been at the company for eight months before this round of layoffs.

Casper’s CFO remains at the startup, but that role has had some significant turnover as well. In an April 2020 business update, Casper announced that Gregory Macfarlane, its CFO and COO at the time, was leaving the company. Interim CFO Stuart Brown eventually took the role, and three months later resigned. The latest CFO, Michael Monahan, took the position effective August 31, 2021.

Over a year ago, Casper announced it was shutting down its European operations, cutting 21% of its global workforce. The move was then attributed to Casper’s new goal of  “achieving profitability,” which included a focus on North American operations.

The business hinted then that the temporary closure of its retail stores impacted its overall direct-to-consumer channel, forcing it to take steps to minimize operating costs. Now, the startup is going one step further by eliminating roles within its retail and operations teams.

One founder in the direct-to-consumer space, who spoke on the condition of anonymity due to her lack of direct knowledge with the company, said that Casper’s layoffs could also be a response to iOS 14.5, Apple’s latest software that will crack down on apps that track users’ data without permission. The setting restricts the advertising data that companies can access, making it harder to justify budget and understand the efficacy of their sales strategy.

“Performance marketing through paid channels, specifically Facebook and Instagram, is wonky right now,” the person said. “So, if they were really reliant on that channel that could be something that is affecting their sales.”

Casper priced its IPO shares at $12 and debuted at $14.50 a share just as the COVID-19 pandemic was gaining momentum in February 2020. The company dove nearly 72% from its opening price before recovering, reaching a more recent peak of nearly $11 in February 2021. Today, the company trades at just above $5, a decline of more than half from its opening.

Posted on

Upscribe, raising $4M, wants to drive subscription-first DTC brand growth

Upscribe founder and CEO Dileepan Siva watched the retail industry make a massive shift to subscription e-commerce for physical products over the past decade, and decided to get in it himself in 2019.

The Los Angeles-based company, developing subscription software for direct-to-consumer e-commerce merchants, is Siva’s fourth startup experience and first time as founder. He closed a $4 million seed round to go after two macro trends he is seeing: buying physical products, like consumer-packaged goods, on a recurring basis, and new industries offering subscriptions, like car and fashion companies.

Merchants use Upscribe’s technology to drive subscriber growth, reduce churn and enable their customers to personalize a subscription experience, like skipping shipments, swapping out products and changing the order frequency. Brands can also feature products for upsell purposes throughout the subscriber lifecycle, from checkout to post-purchase.

Upscribe also offers APIs for merchants to integrate tools like Klaviyo, Segment and Shopify — a new subscription offering for checkouts.

Uncork Capital led the seed round and was joined by Leaders Fund, The House Fund, Roach Capitals’ Fahd Ananta and Shippo CEO Laura Behrens Wu.

“As the market for D2C subscriptions booms, there is a need for subscription-first brands to grow and scale their businesses,” said Jeff Clavier, founder and managing partner of Uncork Capital, in a written statement. “We have spent a long time in the e-commerce space, working with D2C brands and companies who are solving common industry pain points, and Upscribe’s merchant-centric approach raised the bar for subscription services, addressing the friction in customer experiences and enabling merchants to engage subscribers and scale recurring revenue growth.”

Siva bootstrapped the company, but decided to go after venture capital dollars when Upscribe wanted to create a more merchant-centric approach, which required scaling with a bigger team. The “real gems are in the data layer and how to make the experience exceptional,” he added.

The company is growing 43% quarter over quarter and is close to profitable, with much of its business stemming from referrals, Siva said. It is already working with customers like Athletic Greens, Four Sigmatic and True Botanicals and across multiple verticals, including food and beverage, health and wellness, beauty and cosmetics and home care.

The new funding will be used to “capture the next wave of brands that are going to grow,” he added. Siva cites the growth will come as the DTC subscription market is forecasted to reach $478 billion by 2025, and 75% of those brands are expected to offer subscriptions in the next two years. As such, the majority of the funding will be used to bring on more employees, especially in the product, customer success and go-to-market functions.

Though there is competition in the space, many of those are focused on processing transactions, while Siva said Upscribe’s approach is customer relationships. The cost of acquiring new customers is going up, and subscription services will be the key to converting one-time buyers into loyal customers.

“It is really about customer relationships and the ongoing engagement between merchants and subscribers,” he added. “We are in a different world now. The first wave could play the Facebook game, advertising on social media with super low acquisition and scale. That is no longer the case anymore.”

3 issues to resolve before switching to a subscription business model