Online shopping guide SMZDM surges 44% on China stock market debut

When Chinese internet companies seek initial public offerings, they tend to look to the United States where rules for profitability are less strict. SMZDM, an online shopping guide that few people outside China have heard of, has joined a small rank of internet startups that are trading on public markets in mainland China.

SMZDM, short for Shen Me Zhi De Mai or “what’s worth buying” in Chinese, saw its shares soar nearly 44% on its first day of trading in Shenzhen. After pricing its IPO at 28.42 yuan ($4.13) and opening the day at 34.1 yuan, SMZDM closed at 40.92 yuan. This values the company at about 2.18 billion yuan ($320 million).

The company is raising 330 million yuan from the public offering and plans to spend the money on upgrading its big data capabilities so it can deliver more personalized content and services to users.

Before applying for an A-share listing on China’s main bourses, firms generally need a three-year track record of profitability, though the country has made progress to smooth the way for loss-making, high-potential tech firms. SMZDM clocked (in Chinese) net income of 19.35 million yuan ($2.81 million), 35.16 million yuan and 86.24 million yuan in 2015, 2016 and 2017. Its revenue climbed from 97.29 million in 2015 to 367 million yuan in 2017.

Since its founding nine years ago, SMZDM has only raised from one institutional investor, China Growth Capital. Why sell shares to the public when the company was already earning good money?

“For an internet startup to keep attracting talents, it needs to have a transparent corporate structure and an employee stock ownership plan,” Wu Haiyan, managing partner at China Growth Capital, told TechCrunch in an interview. “Of course, going public is another way to raise capital.”

SMZDM began life as founder Sui Guodong’s blog where he reviewed a range of gadgets as a pastime. Over time, the WordPress site blossomed into a public platform where people share guides to purchasing products of all sorts — from baby milk formula to Nikon’s latest lens — and where to get the best deal. When a transaction happens on its partnering marketplaces, SMZDM gets a commission.

The model means shopping guides like SMZDM rely overwhelmingly on shopping portals for success and are susceptible to the changes at the e-commerce behemoths. Indeed, over 85% of SMZDM’s commission and marketing revenues in 2018 came from Alibaba, JD.com, Amazon and its other major clients.

For now, at least, Alibaba and the like seem to show enough interest in third-party product review sites. As Wu argued, “the heart of e-commerce portals is to drive sales instead of building a community for giving and receiving unbiased feedback,” which is SMZDM’s value proposition. The key performance index of an online community, she added, is the level of user interaction and amount of content they generate.

That’s why both Alibaba and Tencent — which has backed e-commerce companies JD.com, Pinduoduo and Mogu — threw money at Xiaohongshu (“The Little Red Book” in Chinese), a part marketplace, part social media platform for learning lifestyle trends.

While shoppers on Xiaohongshu are predominantly female as is the case with most Chinese e-commerce services, over half of SMZDM’s users are male, a result largely attributable to its abundant content about hardware and home appliances.

That library of product reviews, Wu argues, is what sets SMZDM apart from its competitors.

“Building any community takes time and capital alone can’t help it grow,” the investor observed. “People stay for high-quality content and interaction with like-minded users. When a community starts to have its own vibe, people will stick around.”

Amazon Prime Day’s top device deals include discounted Echo speakers and Fire TV’s

Amazon’s list of Prime Day deals has finally dropped. The retailer’s Black Friday-style sale for its Prime members is one of the biggest online shopping days of the year, as other retailers now take part with their own competitive sales. But some of the best deals to be found on Prime Day are those on Amazon’s own devices. This year, Amazon is pushing its Echo speaker and Fire TV Stick devices in particular, with sale prices that are 50% off or higher from the regular list prices.

According to an analysis of this year’s deals by Offers.com, the three biggest device deals this year are the $49.99 Echo Smart Speaker 2nd Generation (50% off its regular price of $99.99); the $14.99 Fire TV Stick (63% off its regular price); and the $24.99 Fire TV Stick 4K (50% off its regular price).

These prices don’t officially go live until Prime Day’s now two-day sale begins on Monday, July 15 at 12 AM PT.

However, the devices may not be selling for their “list” price today — Amazon has discounted some items ahead of Prime Day to encourage early shopping. And some will go on sale ahead of Prime Day on Saturday, July 13 — but only if you ask Alexa “what are my deals?” to gain early access.

Compared with Prime Day 2018, 70% of this year’s deals are better and three are tied, with an average price decrease of 14.5%, according to Offers.com’s report. And compared with Black Friday 2018, 72% of the deals are better, and three are tied, with an average price decrease of 17%.

Screen Shot 2019 07 12 at 10.32.27 AM

Above: Prime Day deals comparison via Offers.com

What’s interesting is that last year’s Prime Day and Black Friday/Cyber Monday bestseller, the standard Echo Dot, isn’t included on the Prime Day 2019 device deals list. Instead, Amazon is listing discounts for its Echo, Echo Show, Echo Plus, Echo Input, Echo Dot Kids Edition, and even Facebook’s Portal (which has Alexa built-in), along with its Alexa-powered Fire TV devices.

That being said, the Echo Dot was marked down ahead of Prime Day to its lowest-ever price of $24.99 — half off its list price of $49.99.

Other Amazon’s device deals span Kindle tablets and e-readers, Ring and Blink home security products, as well as smart home products from ecobee, eero, and Amazon itself.

More broadly, Amazon says it will offer over a million deals during the sales event, with a special focus this year on “celeb deals” from Jaden Smith, Marshmello, Zac Brown, and others, including the exclusive launch of Lady Gaga’s HAUS Laboratories beauty collection.

The full list of Amazon’s device deals is below.

Fire TV

  • Save $25 on Fire TV Stick with Alexa Voice Remote, $14.99
  • Save $25 on Fire TV Stick 4K with Alexa Voice Remote, $24.99
  • Save $50 on Fire TV Cube, $69.99
  • Save $100 on Fire TV Recast, now starting at $129.99
  • Get a $45 Sling TV Credit, which can be applied to $15 off your first three months when you buy a Fire TV Stick, Fire TV Stick 4K, Fire TV Cube, or Fire TV Recast
  • Get 50% off for three months when you subscribe to SHOWTIME or STARZ on Prime Video channels or in-app
  • Get 50% off for three months when you subscribe to CBS All Access on Prime Video channels
  • Get SEGA Classics for $4.99

Echo & Alexa

  • Save $50 on Echo, $49.99
  • Save $70 on Echo Show $159.99
  • Save $40 on Echo Plus, $109.99
  • Save $20 on Echo Input, $14.99
  • Save $120 on Portal from Facebook with Alexa Built-in, $79

Fire tablets

  • Save $20 on the all-new Fire 7 tablet, $29.99, or get two for $49.98—a $50 savings
  • Save $30 on the Fire HD 8 tablet, $49.99, or get two for $79.98—an $80 savings
  • Save $50 on the Fire HD 10 tablet, $99.99, or get two for $179.98—a $120 savings

Kids Devices

  • Save $40 on the all-new Fire 7 Kids Edition tablet, $59.99, or get two for $99.98—a $100 savings
  • Save $50 on the Fire HD 8 Kids Edition tablet, $79.99, or get two for $139.98—a $120 savings
  • Save $50 on the Fire HD 10 Kids Edition tablet, $149.99, or get two for $279.98—a $120 savings
  • Save $25 on Echo Dot Kids Edition, $44.99

Kindle

  • Save up to $80 on Kindle Oasis (9th generation), plus get a $5 eBook credit and three months free Kindle Unlimited, starting at $174.99
  • Save up to $50 on Kindle Paperwhite, plus get a $5 eBook credit and three months free Kindle Unlimited, starting at $84.99
  • Save $30 on the all-new Kindle, plus get a $5 eBook credit and three months free Kindle Unlimited, $59.99

Home Security

  • Save $30 on Ring Video Doorbell, $69.99
  • Save $80 on Ring Video Doorbell Pro, $169
  • Save $130 on a Ring Alarm 14-Piece Kit, $199
  • Save $60 on Ring Spotlight Cam, $139
  • Save $55 Ring Stick Up Cam, $124.99
  • Save $60 on a Blink Indoor Cam 2-Cam System, $79.99
  • Save $80 on the all-new Blink XT2 2-Cam System, $99.99

Smart Home

  • Save up to $200 on eero WiFi systems
  • Save $100 on an eero Router, just $99
  • Get an Amazon Smart Plug and Echo for $54.98
  • Save $50 on the all-new ecobee Smart Thermostat with Alexa Built-in, $199

Amazon’s Prime Day 2019 non-device deals, meanwhile, can be found here.

 

Three great opportunities for startups in the entertainment space

With over-the-top (OTT) changing the way we consume entertainment across devices, most of the media attention is going to the big players trying to elbow their way into the streaming space with big new subscription services and original programming. Less discussed is the suite of technologies that pave the way for those services to connect to their audience and monetize the content.

Okay, it’s true video compression, identity management, analytics, front-end personalization and device-specific experience optimization are not the sexiest topics in the media world. But without those core features and functions, the OTT revolution would be dead in its tracks. And with the big providers focused on content development, user acquisition and business model optimization, development of those technologies is wide open for innovative startups.

As always, entrepreneurs should look for cracks and gaps in the existing processes to find better solutions. Right now, the biggest systemic pains in the emerging OTT ecosystem are around the complexity of the fragmented user experience – having to sign in and out of multiple systems to get to the content we want to watch – and around adapting old mass-audience advertising models to the new era of multi-device, multi-platform, personalized viewing.

Here are three areas where small, nimble startups could make a real contribution to the industry.

Enabling the Evolving Advertising Model

Currently the streaming market is divided between ad-supported services and premium-fee subscription models, but that hard division is unlikely to survive the next wave of market disruption. Premium services like Netflix will need to introduce a lower-fee ad-based tier to expand their audience and compete with lower-priced offerings like Disney+. More fundamentally, streamers will need additional sources of revenue once they have harvested all the low-hanging fruit in terms of subscriber base growth. And because streamers have access to so much user-specific data, the potential for personalized advertising is vast.

Online ad-tech platforms are already scrambling to retool their marketplaces to serve streamers. Is that the right way to look at the new OTT ecosystem, or does the way we sell, serve and measure ads for streaming services need to evolve to address audiences binge-watching longform content rather than snacking on short-form listicles, GIFs and short videos?

There’s also a blue sky opportunity to monitor and measure the performance of interactive ads that provide click-through transactions for viewers watching on tablets or handheld devices. Early data shows these ads can be extremely effective… or they can be so annoying and intrusive that they risk alienating viewers entirely. Do we trust the big companies to get this balance right? Sounds to me like this is a job for small, focused, innovative startups with a single-minded devotion to solving one facet of this problem for the industry.

Screen Shot 2019 07 11 at 1.26.04 PM 1

Reducing Platform Friction

One byproduct of the fragmentation of the old bundled cable viewing experience is the demise of the relatively simply program grid. What we found in the 00’s is that, even with 500+ channels available through some cable systems, you can make that simple and consumable for viewers if you present it intuitively and augment it with a little bit of intelligence.

Now that we’re entering a world which each content provider requires membership in its private OTT service to access original content plus its archive of movies and shows, it’s no longer so simple. In fact, there’s a lot of friction and overhead between the user and their shows.

We see a huge opportunity for startups to address this by creating a meta-layer on top of the fragmented streaming environment that abstracts away the complexity for viewers while preserving the underlying integrity of the individual services. This layer would act like a web browser, passing user access credentials seamlessly to each site to simplify sign in, standardizing the presentation of content and ads, and securely passing user data to each back end system.

The big players have invested specifically in making these platforms closed and proprietary to maximize their own competitive advantage. You can’t count on them to fix a situation that they perceive as being in their individual interests, even if it ends up hurting the industry and the ecosystem as a whole. But there’s a great opportunity for an outside innovator to come in and disrupt this model before it ossifies into a near-monopoly situation for a few carriers.

Telephone switchboard operators circa 1914. Photo courtesy Flickr and reynermedia.

Personalizing Content

The third big opportunity also addresses this big consumer pain point of complexity, specifically around having too many content choices and no road map for finding the programs we want to see. Once again, this is a problem we were able to solve in the old bunded cable era with smart collaborative filtering technologies, recommendations, and automation that allowed people to essentially build their own personalized content channels featuring stuff they already liked and might possibly like.

Fragmentation of content across closed services makes that more challenging. Luckily, AI capabilities have evolved as well, to the point that we don’t need to think only in terms of personalizing viewing options, but personalizing the entire viewing experience.

Again, business incentives dictate that each OTT service develop its own UX to differentiate itself from competitors, but those incentives work against the desires of viewers to have a simple way to find and view content that’s standard across whatever services they use. There’s a great opportunity for startups to bring forward all that we’ve learned about UX design, customization and personalization, plus a layer of AI to simplify search and discovery of content users prefer, to make the whole streaming world much simpler.

Open Innovation Starts with IP

These are just a few examples of areas where disruptive innovators can fix problems that the industry leaders can’t or won’t. We believe that an open model for innovation needs to be part of the conversation around the future of entertainment, and that conversation must include small insurgent companies as well as the giant incumbents. But for that model to work, we need to ensure that the IP rights of those companies are protected and respected.

If we can stick by those principles, we can create a more stable foundation for the post-cable world of TV entertainment, bring new solutions to market more quickly and more efficiently, and continue to delight audiences with great content rather than frustrating them with complexity and impossible choices.

Walmart-owned Sam’s Club launches same-day pickup across the U.S.

Walmart’s grocery pickup business has been scaling quickly in recent years, and is now on track to reach 3,100 U.S. stores by year-end. Now, Walmart’s Sam’s Club business is making its own move to satisfy consumers’ demand for online ordering with same-day pickup. The retailer this week announced that same-day Club Pickup is now available at its nearly 600 U.S. locations.

The company began testing pickup at select locations starting last summer.

To order from Sam’s Club, members can either go online to SamsClub.com or use the Sam’s Club app to shop for items, check out, and pay. The orders will be ready for pick up within four hours — and often quicker, the retailer notes. The members will receive a text or email when their order is ready.

sams club pickup 0mh21380

 

However, unlike Walmart, Target, or Amazon-owned Whole Foods order pickup programs, Sam’s Club has put a cap on order size. To qualify for same-day pickup, orders can’t exceed more than 15 items, the company says. To some extent, this limit makes sense, as many Sam’s Club shoppers use the warehouse club to shop in bulk to restock a large household — or even their small business — with various essentials. There may not be enough staff and time for Sam’s Club personnel to pull and prep more sizable orders for same-day pickup.

That said, knowing there’s a limit on how much you can order could dampen consumers’ use of the same-day pickup option — or have them turning to rivals instead.

Sam’s Club says members can order a range of items through the new service, including groceries, paper goods, electronics, and even alcohol. Produce and meat have so far been the most frequently ordered items.

Pickup is offered after 10 AM Monday through Friday, and after 9 AM on Saturday. Sam’s Club Plus members, who also have the option of shopping early, now will also have access to early pickup hours, too. These members can opt to schedule pickups between 7 AM and 10 AM, Monday through Friday.

sams club pickup1

Like parent company Walmart, some Sam’s Club location will offer a drive-up pickup area where employees will bring the order out to the car and load it.

Same-day grocery pickup has been one of the many ways U.S. retailers have been challenging Amazon. By leveraging their existing brick-and-mortar footprint and proximity to shoppers’ homes, businesses like Walmart, Target, and even local grocers (often in partnership with Instacart), have been making it easier for shoppers to order online for same-day pickup.

Sam’s Club, too, has an Instacart deal in place. The partnership, focused on same-day grocery delivery, was first announced in February 2018 and significantly expanded to over half of Sam’s Club locations in October. Last month, the Instacart partnership expanded again to include alcohol delivery at 215 stores across nearly a dozen U.S. states.

The company also last year announced free shipping by way of its Plus membership, as an alternative to Amazon Prime.

 

 

Amazon invests $700 million to retrain a third of its U.S. workforce by 2025

Amazon announced this morning a plan to invest over $700 million to retrain workers across the U.S. to allow them to move into skilled technical and non-technical roles across its corporate offices, tech hubs, fulfillment centers, retail stores, and transportation network. The company’s goal is to “upskill” 100,000 of its U.S. employees for more in-demand jobs by 2025 — or, one in three of Amazon’s U.S. workers.

In particular, Amazon has its eye on job roles like data mapping specialist, data scientist, solutions architect, and business analyst, as well as logistics coordinator, process improvement manager and transportation specialist, it says. Based on a review of its workforce and U.S. hiring, these are the fastest-growing, highly skilled jobs over the past five years.

For example, data mapping specialists have seen job growth of 832% in the past five years, based on Amazon’s own data, while data scientists jobs grew 505%, solutions architect grew 454%, security engineer jobs grew 229%, and business analyst jobs grew 160%. Meanwhile, the highly-skilled job roles in customer fulfillment have grown by 400%.

Amazon’s U.S. workforce is expected to reach 300,000 employees this year, and it will reach 630,000 employees worldwide.

The retraining investment breaks down to around $7,000 per worker, and it one the largest corporate retraining programs to date.

The funding will be distributed across a range of programs, including both existing programs and new initiatives. It will also be focused on training people both with and without existing technical backgrounds.

These programs include the new Amazon Technical Academy, which will train non-technical Amazon employees with skills that allow them to transition to software and engineering careers; the new Associate2Tech program that will train fulfillment center associates to move into technical roles; and the new Machine Learning University, to train those with a tech background to branch into machine learning.

Amazon will also expand its Career Choice program, launched in 2012, which offers pre-paid tuition to fulfillment center associates who want to move into high-demand jobs; plus Amazon Apprenticeship, a Department of Labor certified program offering paid classroom training and on the job apprenticeships with Amazon; and its AWS Training and Certification programs focused on closing the skills gap.

“Through our continued investment in local communities in more than 40 states across the country, we have created tens of thousands of jobs in the U.S. in the past year alone,” said Beth Galetti, Senior Vice President, HR, in a statement released this morning. “For us, creating these opportunities is just the beginning. While many of our employees want to build their careers here, for others it might be a stepping stone to different aspirations. We think it’s important to invest in our employees, and to help them gain new skills and create more professional options for themselves. With this pledge, we’re committing to support 100,000 Amazonians in getting the skills to make the next step in their careers,” she added.

The investment follows Amazon’s raising of its minimum wage to $15 for all U.S. employees last year, after the retailer was increasingly under attack for how its workers were treated and paid. Senator Bernie Sanders, in particular, had called out Amazon for engaging in “corporate welfare,” noting that Amazon wages were so low that workers couldn’t take care of their families — meaning thousands were on government subsidy programs, like food stamps.

Amazon CEO Jeff Bezos later challenged other retailers to follow his lead, and raise their minimum wages too. But that’s easier said than done as Amazon is so far ahead that its nearest e-commerce competitor, Walmart, is losing $1 billion this year on its e-commerce division as it tries to catch up.

The news also comes at a time when the role of technology’s impact on jobs is starting to take shape. As warehouses become more automated and jobs, overall, become more technology-dependent, it makes sense that Amazon would want to look internally to fill these new roles.

 

Amazon invests $700 million to retrain a third of its U.S. workforce by 2025

Amazon announced this morning a plan to invest over $700 million to retrain workers across the U.S. to allow them to move into skilled technical and non-technical roles across its corporate offices, tech hubs, fulfillment centers, retail stores, and transportation network. The company’s goal is to “upskill” 100,000 of its U.S. employees for more in-demand jobs by 2025 — or, one in three of Amazon’s U.S. workers.

In particular, Amazon has its eye on job roles like data mapping specialist, data scientist, solutions architect, and business analyst, as well as logistics coordinator, process improvement manager and transportation specialist, it says. Based on a review of its workforce and U.S. hiring, these are the fastest-growing, highly skilled jobs over the past five years.

For example, data mapping specialists have seen job growth of 832% in the past five years, based on Amazon’s own data, while data scientists jobs grew 505%, solutions architect grew 454%, security engineer jobs grew 229%, and business analyst jobs grew 160%. Meanwhile, the highly-skilled job roles in customer fulfillment have grown by 400%.

Amazon’s U.S. workforce is expected to reach 300,000 employees this year, and it will reach 630,000 employees worldwide.

The retraining investment breaks down to around $7,000 per worker, and it one the largest corporate retraining programs to date.

The funding will be distributed across a range of programs, including both existing programs and new initiatives. It will also be focused on training people both with and without existing technical backgrounds.

These programs include the new Amazon Technical Academy, which will train non-technical Amazon employees with skills that allow them to transition to software and engineering careers; the new Associate2Tech program that will train fulfillment center associates to move into technical roles; and the new Machine Learning University, to train those with a tech background to branch into machine learning.

Amazon will also expand its Career Choice program, launched in 2012, which offers pre-paid tuition to fulfillment center associates who want to move into high-demand jobs; plus Amazon Apprenticeship, a Department of Labor certified program offering paid classroom training and on the job apprenticeships with Amazon; and its AWS Training and Certification programs focused on closing the skills gap.

“Through our continued investment in local communities in more than 40 states across the country, we have created tens of thousands of jobs in the U.S. in the past year alone,” said Beth Galetti, Senior Vice President, HR, in a statement released this morning. “For us, creating these opportunities is just the beginning. While many of our employees want to build their careers here, for others it might be a stepping stone to different aspirations. We think it’s important to invest in our employees, and to help them gain new skills and create more professional options for themselves. With this pledge, we’re committing to support 100,000 Amazonians in getting the skills to make the next step in their careers,” she added.

The investment follows Amazon’s raising of its minimum wage to $15 for all U.S. employees last year, after the retailer was increasingly under attack for how its workers were treated and paid. Senator Bernie Sanders, in particular, had called out Amazon for engaging in “corporate welfare,” noting that Amazon wages were so low that workers couldn’t take care of their families — meaning thousands were on government subsidy programs, like food stamps.

Amazon CEO Jeff Bezos later challenged other retailers to follow his lead, and raise their minimum wages too. But that’s easier said than done as Amazon is so far ahead that its nearest e-commerce competitor, Walmart, is losing $1 billion this year on its e-commerce division as it tries to catch up.

The news also comes at a time when the role of technology’s impact on jobs is starting to take shape. As warehouses become more automated and jobs, overall, become more technology-dependent, it makes sense that Amazon would want to look internally to fill these new roles.

 

GetAccept’s workflow and e-signature platform for sales secures $7M Series A funding

Many years ago every sales deal was sealed with a handshake between two people. Today, digitization has moved into the sales process, but it hasn’t necessarily improved the experience. In fact, it’s often become a more time-consuming affair because information and communications are scattered across multiple channels and the number of people involved in a deal has increased. That means lots of offers and quotes are get lost in the mix.
GetAccept a startup which provides an all-in-one sales platform where video, live chat, proposal design, document tracking and e-signatures come together to simplify the life of a sales team.

It’s now convinced investors there is such a need, raising a $7 million Series A funding round led by DN Capital, with participation from BootstrapLabs, Y Combinator and a number of Spotify’s early investors including ex-CFO of Spotify, Peter Sterky. The former CMO of Slack and Zendesk, Bill Macaitis, will also join the company’s Board of Directors.

The new capital will be used to scale sales and marketing, and accelerate product innovation for GetAccept’s industry leading document workflow solution for sales.
This round brings GetAccept’s total financing raised to $9M after then won their first seed round in 2017.
Samir Smajic, CEO, GetAccept says while CRM systems have made it easier for sales teams to manage pipeline and broker deals, “60 percent of all contracts are lost to indecision or simply go unanswered… Prospects no longer have to interact with reps to get basic information about a product or service, making the sales process highly impersonal. But prospects still need a rep to guide them through an increasingly complex B2B sales process in order to make better-informed buying decisions.” He believes GetAccept bridges this growing “engagement gap”.
GetAccept integrates into a company’s sales pipeline through technology partnerships with CRM and sales automation platforms including Salesforce, HubSpot, Microsoft Dynamics 365 and others.
It’s pitched as an all-in-one sales platform which compete with several separate tools including well-financed solutions likeDocsend, Pandadoc, Showpad, Highspot, Docusign, and Adobe Sign. Their ‘sales pitch’ is that companies can do all of the things in those products but the single GetAccept platform is actually geared toward to sales reps and includes the important features that help sales reps to actually move deals forward.
“Getting a deal to the point of contract has become increasingly difficult because buyers now get most of their information online,” said Thomas Rubens, Partner at DN Capital. “GetAccept honed in on this growing issue early on and built a best-in-class platform for managing document workflow and engagement across the entire sales cycle.”
GetAccept has so far signed customers including Samsung, Stanley and Siemens . It’s also expanded to the US and EMEA including Norway, Denmark and France.

Amazon expands Transparency anti-counterfeit codes to Europe, India and Canada

Amazon is no stranger to the nefarious forces of e-commerce: fake reviews, counterfeit goods and scams have all reared their heads on its marketplace in one place or another, with some even accusing it of turning a blind eye to them since, technically, Amazon profits from any transactions, not just the legit ones. The company has been working to fight that image, though, and today it announced its latest development in that mission: it announced that Transparency — a program to serialize products sold on its platform with a T-shaped QR-style code to identify when an item is counterfeit — is expanding to Europe, India and Canada. (More detail on how it actually works below.)

“Counterfeiting is an industry-wide concern – both online and offline. We find the most effective solutions to prevent counterfeit are based on partnerships that combine Amazon’s technology innovation with the sophisticated knowledge and capabilities of brands,” said Dharmesh Mehta, vice president, Amazon Customer Trust and Partner Support, in a statement. “We created Transparency to provide brands with a simple, scalable solution that empowers brands and Amazon to authenticate products within the supply chain, stopping counterfeit before it reaches a customer.”

The growth of Transparency has been quite slow so far: it has taken more than two years for Amazon to offer the service outside of the US market, where it launched first with Amazon’s own products in March 2017 and then expanded to third-party items. Even today, while Transparency is launching to sellers in more markets, the app for consumers to scan the items themselves is still only available in the US, according to Amazon’s FAQ.

In that time, take-up has been okay but not massive. Amazon says that some 4,000 brands have enrolled in the program, covering 300 million unique codes, leading to Amazon halting more than 250,000 counterfeit sales (these would have been fake versions of legit items and brands enrolled in the Transparency program).

There is some evidence that all this works. Amazon says that 2019, for products fully on-boarded into the Transparency service, there have been zero reports of counterfeit from brands or customers who purchased these products on Amazon.

But how wide ranging that is, though, compared to the bigger problem, is not quite clear. While it’s not an apples-to-apples comparison — Amazon doesn’t disclose collectively how many brands are sold on its platform, although Amazon itself accounts for 450 brands itself — there are some 2.5 million sellers on its platform globally, and my guess is that 4,000 is just a small fraction of Amazon’s branded universe.

Recent developments have put an increased focus on what role Amazon has been playing to keep in check rampant activity around counterfeiting and other illegal activity.

The NYT published a damning expose in June that highlighted how one medical publisher found rampant counterfeiting of one of its books, a guide for doctors prescribing medications to help them determine dosages of drugs, an alarming situation considering the subject matter. Regulators like the FCC have also taken action to ask Amazon (among others like eBay) to make a better effort to remove the sale of products in specific categories, such as fake pay-TV boxes.

Coupled with other kinds of dodgy activity on the platform like fake reviews, Amazon has been making more moves of late to get a grip and create more channels for brands and sellers to help themselves, from product launches and expansions, to taking legal measures to go after bad actors.

Transparency is part of former category, and it sits alongside one of the company’s other recent, big initiatives called Project Zero, an AI-based continuous monitoring of products and activities launched four months ago to proactively identify counterfeit sellers and items on the platform.

Screenshot 2019 07 10 at 11.47.45Transparency works by way of a unique code — which looks a bit like a “T” — printed on each manufactured unit. When a customer orders the product, Amazon scans the code to verify that the product it’s shipping is legit. Customers can also scan the code after receiving the item to verify authenticity. Other details that are encoded in the T are manufacturing date, manufacturing place, and other product information like ingredients.

This system also throws some light on some of the strange workings of e-commerce, supply chains, and how marketplaces operate.

On Amazon, an item you buy that might be branded — say, a North Face jacket — may not actually be sold by North Face itself, but a reseller. And those resellers may just as likely never even touch the item: they are working off stock that is distributed from another place altogether, or perhaps manufactured and sent in bulk to Amazon or another fulfilment provider that sends the item when the order is made. All of these tradeoffs within the supply chain create an environment where counterfeit goods might creep in.

Amazon’s system, by working directly with brands and not sellers, is trying to provide an over-arching level of monitoring and control into the mix, and it notes in its announcement that its Transparency codes are trackable “regardless of where customers purchased their units.”

Ironically for a service called “Transparency”, Amazon doesn’t seem to list the price for sellers to use this service, but four months ago, when Amazon launched Project Zero, we reported that the serialization service are charged between $0.01 and $0.05 per unit, based on volume. It’s a price that especially smaller brands, which are even less immune to copycats than well-capitalized big brands, are willing to pay:

“Amazon’s proactive approach and investment in tools like Transparency have allowed us to grow consumer confidence in our products and prevent inauthentic product from ending up in the hands of our customers,” said Matt Petersen, Chief Executive Officer at Neato Robotics, a maker of smart robotic vacuum cleaners, in a statement.

“Blocking counterfeits from the source has always been a tough task for us – it’s something all brand owners face through nearly all channels around the world,” said Bill Mei, Chief Executive Officer at Cowin, a manufacturer of noise cancelling audio devices, in his own statement. “After we joined Transparency, our counterfeit problem just disappeared for products protected by the program.”

Firefox maker blocks spy firm DarkMatter ‘to protect’ users

Firefox maker Mozilla said it will not trust certificates from surveillance maker DarkMatter, ending a months-long effort to be whitelisted by the popular browser.

Months earlier, the United Arab Emirates-based DarkMatter had asked Mozilla to formally trust its root certificates in the Firefox certificate store, a place in the browser reserved for certificate authorities that are trusted and approved to issue HTTPS certificates. Mozilla and other browser makers use this store to know which HTTPS certificates to trust, effectively allowing these certificate authorities to confirm a website’s identity and certify that data going to and from it is secure.

But a rogue or malicious certificate authority could allow the interception of encrypted internet traffic by faking or impersonating websites.

DarkMatter has a history of controversial and shady operations, including developing malware and spyware to be used in surveillance operations, as well as the alleged targeting of journalists critical of the company. Just weeks ago, Reuters reported that the Emirati company — which employs former U.S. National Security Agency hackers — targeted several media personalities and dissidents at the behest of the Arab monarchy.

But the company has a clean record as a certificate authority, putting Mozilla in a tough spot.

Either Mozilla could accept DarkMatter’s record as a certificate authority or reject it based off a perceived risk.

As it turns out, the latter won.

“Our foremost responsibility is to protect individuals who rely on Mozilla products,” said said Wayne Thayer, certification authority program manager at Mozilla, in a discussion group post on Tuesday. He added that DarkMatter poses “a significant risk to our users.”

“I believe this framing strongly supports a decision to revoke trust in DarkMatter’s intermediate certificates,” he wrote.

Thayer added that although both sides of DarkMatter’s business were taken into account, the browser maker cited a core Mozilla principle — “individuals’ security and privacy on the internet are fundamental and must not be treated as optional” — as a reason to reject the proposal.

Mozilla said it would also distrust six intermediary certificates in the meanwhile.

DarkMatter did not respond to a request for comment Tuesday.

From seed to Series A: Scaling a startup in Latin America today

It’s not easy to raise growth-stage capital in Latin America, but it’s getting easier. As startups begin to flourish in the region’s largest markets, available funding is evolving to suit the needs of these maturing companies. However, Silicon Valley-style Series A rounds in Latin America are still rare, especially outside of Brazil and Mexico.

Even in Silicon Valley, only a small percentage of startups can bring together enough pieces to raise a Series A round. Jacob Mullins, a partner at Shasta Ventures, recently published an article on Medium on what it takes to raise a Series A round in San Francisco today, which inspired my take for the Latin American ecosystem.

In the piece, he lays out the table stakes for any startup looking to raise Series A capital, including product-market fit, a strong revenue model, 2x or 3x YOY growth, a data-driven go-to-market strategy, a compelling market opportunity, a great team and a great story. These prerequisites apply to startups anywhere in the world. However, if these requirements are the minimum needed for a Series A in San Francisco, startups outside of the Valley, including in Latin America, will have to work even harder.

Latin America’s exceptional growth in VC funding over the past 12 months speaks to the growing number of later-stage rounds startups are raising across the region. 2018 was Latin America’s inflection point for startups, with four big trends:

Record-breaking rounds: Mexico’s Grin Scooters raised Latin America’s largest seed round, and Brazilian bike and scooter-sharing startup Yellow raised Latin America’s largest Series A round to date (then they merged!). Food delivery startup Rappi became Colombia’s first unicorn, raising $200 million (and then $1 billion from SoftBank shortly thereafter), and Brazil’s iFood also raised $400 million, one of Latin America’s biggest rounds ever.

A closer examination reveals patterns in what it takes to raise scale capital in the Latin American market today.

Soaring Asian investment: Brazil’s most popular ride-hailing app, 99, was acquired by Didi Chuxing, China’s version of Uber . Tencent invested in Brazilian fintech Nubank; Ant Financial invested in Brazilian POS company StoneCo; SoftBank invested in Brazil’s logistics provider Loggi, Brazil’s Gympass and Colombia’s largest hotel chain, Ayenda Rooms. SoftBank also committed a $5 billion fund for Latin America, outstripping all previous funds by an order of magnitude.

Exits to Latin American and U.S. corporates: Chilean-Mexican grocery delivery startup Cornershop went to Walmart for $225 million and e-commerce company Linio was acquired by Falabella for $138 million. These deals reveal a growing concern from large companies in Latin America about competition from startups.

More YC grads: Latin America sent at least 10 startups to the Y Combinator, and many more to other international accelerators, in the past year. These companies include Grin, Higia, Truora, Keynua, The Podcast App, SkyDrop, UBits, Cuenca, BrainHi, Pachama, Calii, Cuanto, Pronto and Fintual.

2018 really was a breakout year for Latin American startups.

So who is raising Series A rounds in the region?

Within the list of 30 or so companies that have managed to raise a Series A in Latin America in the past year, most of the startups fit into a few categories. There is also significant overlap between the investors who are pursuing tickets of this size, most of whom are located in major markets like Mexico and Brazil, or have offices in Silicon Valley. A closer examination of these startups reveals patterns in what it takes to raise scale capital in the Latin American market today.

Copycats

Copycats — or startups that copy a successful business model from another market — are a good business in Latin America. Among those to raise Series A rounds within the past year were:

  • Grin and Yellow (now Grow Mobility): Bird/Lime clones raised $150 million as Grow Mobility from GGV Capital and Monashees.

  • LentesPlus: 1-800-Contacts clone raised $5 million from Palm Drive Capital, with participation from IGNIA and InQLab.

  • Mercadoni: Instacart clone raised $9 million from Movile.

  • Uala and Albo: Monzo/Revolut clones raised $10 million from Soros, Greyhound Capital, Recharge Capital and Point 72 Ventures, and $7.4 million from Omidyar, Greyhound and Mountain Nazca, respectively.

International investors often see copycat models as less risky, because the model has been tested before.

Logistics and last-mile delivery

Brazil’s CargoX, the “Uber for trucks,” is leading the market for logistics solutions in Latin America, receiving international investment from Valor Capital and NXTP Labs starting in their first round. They have also received funding from Soros, Goldman Sachs and Blackstone in later rounds. Recently, logistics startups like Colombia’s Liftit and Mexico’s Skydrop have raised multimillion-dollar rounds from Silicon Valley investors, including IFC, Monashees, MercadoLibre Fund, Variv Capital, Sierra Ventures and Sinai Ventures . Startups like Rappi, Loggi and Mandaê have also raised Series A rounds, and beyond.

Brazilian startups

In many ways, the Brazilian market operates separately from the rest of Latin America, and not only because of the language difference. Brazil has Brazil-centric funds and its startups follow their own rules, because the market is big enough to accommodate companies that only operate locally. Brazil also receives a majority of international VC funding and has produced a significant portion of Latin America’s unicorns.

Brazilian (and some Mexican) startups in edtech, healthtech and fintech, including Neon, Sanar, Mosyle, UnoDosTres and Nexoos, raised Series A rounds in 2018. Key investors included Quona Capital, e.Bricks Ventures, Elephant and Peak Ventures. Brazilian startups tend to scale more quickly at all sizes; Creditas and Loggi were able to raise their Series A in 2016 and 2014 respectively. In 2018, they were already raising $55 million at Series C and $100 million+ Series D from investors such as Vostok Emerging Capital, Kaszek Ventures, IFC, Naspers and SoftBank. However, startups in these industries in other Latin American countries might not find it as easy to raise larger rounds.

How much to raise in a Latin American Series A

Latin American valuations are noticeably lower than their Silicon Valley equivalents. A Series A round in a small or medium Latin American market like Chile or Colombia might end up looking a lot like a San Francisco seed round. Valuations and amount are bifurcated: those that have access to Silicon Valley-style capital can get higher valuations and bigger checks (still lower and smaller than the U.S.), while those that don’t have access have lower valuations.

The startup’s team, story and revenue model should all align to create an unbeatable business.

Outside of Brazil or Mexico, startups should not expect to raise more than $5 million in a Series A, even if they are receiving co-investments from the U.S. The average Series A round in the U.S. hit $11.29 million in 2018; however, the top 10% of deals averaged more than $60 million.

In Latin America, a Series A could range from as little as $1 million to around $10 million in most countries. Brazil and Mexico might break the mold, but startups looking for growth capital in Latin America should not expect to raise more than $5 million if they are not in a massive market. For example, Chile’s Destacame raised $3 million in their Series A from Chilean funds in early 2019. By comparison, Brazil’s Neon raised $22 million in their Series A in the same year. While these are different industries and comparing apples to oranges, the orders of magnitude seem right.

If we compare in the same industry but different years, the results are similar. Nubank’s Series A in 2014, led by Sequoia Capital, was $14.3 million. Neobanks in smaller markets, like albo and Uala, raised $7.4 million and $10 million, respectively, in their Series A rounds.

To date, the largest Series A raised in the region went to Yellow, Brazil’s bike-share and e-scooter company, created by the founders of 99, Ariel Lambrecht, Eduardo Musa, and Renato Freitas. Yellow raised a $63 million Series A within a year after launch, then merged with Mexico’s Grin Scooters.

Where to look for investment: Latin America or USA?

There are still very few entirely Latin American funds investing at Series A. Most of the time, Latin American startups must look to Mexico and Brazil, or beyond the region to Asia and the U.S., to fund rounds beyond the seed stage.

Within Latin America, some of the actors in this investment sector include Brazil’s Monashees and Valor Capital, Argentina’s Kaszek Ventures, Peru and Mexico’s Angel Ventures and Mexico’s ALLVP, MITA Ventures and Ignia. Startups might also find Series A-level investment from major regional tech leaders who are scouting acquisition opportunities, like Movile’s investment in Mercadoni. Movile is Brazil’s leader in mobile technology, with a mission to impact one billion people, following in the footsteps of China’s giant conglomerate, Tencent. Movile has invested in and acquired many Latin American startups to increase their mobile offerings for its customers.

While some funds in Latin America participate in investments of this scale, most Latin American startups target at least a part of their Series A rounds from outside the region. Latin American startups have been able to reach U.S. VCs in one of three ways: through top-tier accelerators, by selling to consumers in the U.S. market or by taking on a copycat model. U.S.-based VCs Accel Partners, Sequoia Capital, Andreessen Horowitz, Base10, Liquid2 Ventures, Quona Capital, QED, IFC and Sierra Ventures have all made multiple contributions to Series A rounds in Latin America within the past year.

Raising a Series A round in Latin America today

Raising a Series A round anywhere means checking a lot of boxes. Beyond bringing a great product to market, the startup’s team, story and revenue model should all align to create an unbeatable business. In Latin America, raising a Series A also means knowing where to look for capital, and which models are receiving funding.

Although there is no instruction manual for raising a Series A anywhere, following in the footsteps of companies that have done so successfully can be a wise way to start. Latin America’s Series A success stories outline a list of investors that are interested in this stage, as well as how much they are investing in Latin American companies. Founders can use this information to structure their fundraising efforts and optimize their time to raise a Series A and continue to scale.