It has been just about a year since the relaunch of WeWork Labs, an accelerator-type program operating under the WeWork umbrella. Since then, it has grown to 37 locations in 22 cities. And it’s truly international, operating in 12 countries, including Brazil, China, Germany and India.

These Labs offices are often — but not always — housed within a larger WeWork space, and, like an accelerator, they offer mentorship and programming. However, WeWork doesn’t take any equity; instead, it simply makes money by charging rent. (In New York, a desk costs between $450 and $550 a month, but the price varies by location.)

I spoke to Roee Adler, the program’s global head, about how Labs has evolved over the past year. Adler actually has a long history with startups — in fact, his company Soluto won the very first Startup Battlefield at TechCrunch Disrupt. He’s held a number of positions at WeWork, including chief product officer, and he said that as his role was evolving, he found himself asking, “What is the next startup we can build inside WeWork?”

The answer: “We decided to reevaluate our level of commitment and investment with the earliest of stages for startups.”

WeWork actually had a startup program called WeWork Labs back in 2011, but it languished in the years since. Adler relaunched the program with its first New York space in January of last year, and he’s been opening locations at a furious pace since then.

Roee Adler

Each Labs office is supervised by a Labs manager, who Adler said is usually “a former entrepreneur whose life’s mission is to manage startups.” For example, before Mor Barak joined the program last year to launch Labs in Tel Aviv, she was the general manager of Israel’s oldest accelerator program, The Junction.

“I got to a point where I felt like I finally found what I loved to do, which is to work with startups and to support startups and understand how our connections and our network can help them move forward,” Barak said. “And then I wanted to take that and do that on a bigger scale, as part of a company that can reach new geographies and bring forward local entrepreneurs.”

As a Labs manager, Barak said her main role is to “be that business connector for the startups,” which means meeting with the entrepreneurs on a weekly basis to understand their needs and challenges. At the same time, she emphasized that Labs is a global program: “As a Labs manager in Tel Aviv, I can quite easily connect to my colleagues around the world to find the people that I need to get to in order to help the startup.”

Adler made a similar point about sharing resources between the different locations.

“A lecture that is at our Najing Xi Lu Road space in Shanghai will get captured, summarized, translated and become available to all of the entrepreneurs around the world,” he said. “Does that mean every piece of information is relevant for everyone? No. But truthfully, who knows?”

Adriana Vazquez of Lilu

To celebrate the one-year anniversary, WeWork Labs held a pitch competition at the company’s New York City headquarters last week, with $250,000 in funding distributed among the winners. The $150,000 grand prize went to Lilu, a startup making a compression bra that helps mothers pump milk. (It’s another Startup Battlefield alum.)

CEO and co-founder Adriana Vazquez told me that Lilu has been working out of the WeWork Labs in Dumbo since August. Vazquez has participated in other accelerator programs and worked out of other co-working spaces, and she said Labs is something else — it allows you to “get the community of an accelerator without the prescribed schedule,” and it offers a very different feeling from a co-working space.

“There is that understanding and respect that everyone’s really busy and has fires to put out,” she said. “We had a brief stay at another co-working space with creatives and small businesses, and there wasn’t that camaraderie, where you see someone that’s working on a weekend and you know you’re not here because they want to hang out on a Friday. It’s almost an unspoken understanding: Yeah, I know what you’re going through.”

As for what Adler has planned for Labs’ second year, he said he wants to do more work connecting startups with larger corporations: “WeWork has really become the only natural nexus in the world where you can have a three-month-old startup entrepreneur bumping shoulders with a senior vice president of Microsoft going to get coffee from the same machine and engaging in a conversation about the future.”

WeWork Labs Dumbo

And of course, he plans to open more offices, with the goal of reaching 100 locations by the end of 2019.

“The three of us are sitting in Manhattan right now, one of the wealthiest cities in the world … but it’s not about here,” Adler said. “It’s about the people who aren’t sitting in the big tech hubs or bubbles. That is exciting.”

Source: Tech Crunch Startups | Rebooted startup program WeWork Labs celebrates its one-year anniversary

If you are a web developer, you know how complex many of the traditional web content management systems have been. One of the big problems has been managing the underlying infrastructure for the system. Cosmic JS, a member of the Winter 2019 Y Combinator class, wants to simplify that by taking care of the infrastructure part for you, while providing a flexible front end for content creators.

“Our customers benefit from using Cosmic because they can avoid the pain of building and maintaining their own CMS infrastructure. For a monthly service fee, we provide a seamless infrastructure for them, and it allows them to focus on what really matters, building great products and user experiences,” Cosmic JS CEO and co-founder Tony Spiro told TechCrunch.

As with so many YC companies, this one started with a pain point the founders were feeling in their jobs developing websites in an agency setting in 2014. Spiro was building the websites and CMO and co-founder Carson Gibbons was servicing accounts, and they saw a problem with the infrastructure piece.

“We found that there was a huge bottleneck just installing and maintaining our own backend infrastructure management. So around that time, I began building out Cosmic on the side. I thought it would be great if there was just a web dashboard and an API to deliver content as a service. And so that’s how it all got started,” Spiro explained. By removing infrastructure management from the equation, Cosmic was freeing developers to concentrate solely on the customer-facing bits.

Cosmic JS content edit view. Screenshot: Cosmic JS

Spiro and Gibbons left their jobs to concentrate on Cosmic full time after the release of the initial version in 2016. They aim the product at web development teams with between 5 and 100 members. The product has three main user types: developers, site managers and content producers. So far, it has attracted 250 customers in 100 countries.

While it’s not open source, it does rely on community members to build extensions and apps. “We have hundreds of apps (ready-made websites and applications) and extensions built by our community,” Spiro said. These tools enable Cosmic to connect to best of breed services and tools like photos, videos or search without having to create them from scratch.

Cosmic JS website templates and apps. Screenshot: Cosmic JS

Spiro says that they joined Y Combinator at the behest of their advisors and investors and it has been a formative experience. “We applied and got in, and and now we’re surrounded by just some of the most impressive and intelligent people in technology.” Spiro said.

So far Cosmic JS includes the two co-founders with some contractors and freelancers helping out along with the extended development community. The company has received some funding, but the founders weren’t ready to share the amount just yet.

Their goal is to continue building the paid user base, and increase community participation through outreach and events.

Source: Tech Crunch Startups | Cosmic JS wants to simplify web development so you can focus on content

When considering the structural impact of technology companies on our economy and society, we tend to focus on questions of scale and monopoly.

It’s true that the FAANG companies and more recent winners (Airbnb, Uber) have surfed a combination of network effects, preferential access to capital and classic efficiencies of scale to generate tremendous value for their shareholders — to the detriment of new entrants who attempt to unseat them.

At their high water mark in mid-2018, FAANG alone made up 11 percent of the total market cap of the S&P 500 and 38 percent of the index’s year-to-date gain, representing a doubling in their influence in only five years. The question of regulating technology companies — to the point of instituting anti-trust actions — has even become a rare point of relative concord between Democrats and Republicans in Congress.

But is the narrative of tech companies in the 2010s only a story of economic consolidation and growing inequality? Many of the most successful B2B startups of the last decade are aligned by a theme that paints a different picture. By transforming the nature of the costs required to start a business, these startups are reducing the influence of capital and leveling the playing field for new entrants to share in the surplus generated by the secular shift to a tech-mediated economy.

Source: Getty Images/MIKIEKWOODS

A path to equal opportunity: Turning fixed costs into variable costs

What do AWS, WeWork, Stord, Gusto and RocketLawyer have in common? They provide cloud computing services, office space, warehouse storage, payroll management and access to legal templates, respectively — at first glance, not a particularly congruent set of services.

But they are alike in the economic purpose they serve for their customers. Each of these services takes a fixed cost — a bank of servers, a lease, a legal retainer — and transforms it into a variable cost. As a refresher, a fixed cost stays constant regardless of output, and variable costs scale with the output of a business.

When my father started his software consulting business in the early 1990s, I remember the giant boxes of AIX servers that arrived at our apartment, and tagging along to office tours in central New Jersey before he decided to run the company out of our spare bedroom. Back then, starting almost any kind of business was hard because of high fixed costs. Without AWS or WeWork, you shelled out upfront for hardware and a lease.

Access to capital, whether in the form of a bank loan, savings or friends and family was a prerequisite for entrepreneurship.

Today, startups make it possible to start and scale almost any kind of business while incurring few fixed costs. Want to found an e-commerce store? Start with a free Shopify account and dropship your inventory. Want to become a freelance designer? Put a shingle up on Fiverr and meet clients at a Breather you rent by the hour.

Whether software or hardware or labor, building a business is way easier when overhead is transformed into a string of flexible microservices that you only pay for as you grow.

Image courtesy of Getty Images

Lower fixed costs means capital matters less

Taken together, startups that turn fixed costs into variable costs make it less capital-intensive to start a business. This decreases the influence of gatekeepers and aggregators of capital — an impact evident in the way entrepreneurs think about starting businesses today.

It’s no coincidence that the rise of B2B startups fitting this theme has coincided with the bootstrap movement, in which tech entrepreneurs with major ambitions demur from raising venture funding because — well, they don’t need the money anymore.

It has also coincided with a renaissance in freelance entrepreneurship: 56.7 million Americans freelanced in 2018. Beyond the economic benefits of working for yourself — the fastest growing segment of freelancers earns more than $75,000 a year — freelancers can access the lifestyle and health benefits of owning their destiny, which aren’t directly captured but play a role in the economic picture. Indeed, 51 percent of freelancers said no amount of money would lure them into a traditional job, and 64 percent reported feeling healthier and happier.

When capital plays a reduced role in new business formation, access to capital plays a smaller role in determining who will succeed. More companies are founded, and the economy becomes more likely to birth new Davids that will unseat the Goliaths. Economics 101: lower barriers to entry create markets that converge on perfect competition instead of oligarchic concentration.

Source: Getty Images/ERHUI1979

Variable costs don’t scale, but that’s OK

Variable costs have their downsides. A startup with a relatively higher proportion of fixed costs — the profile of the classic high-tech software business — can achieve higher profit margins as it scales. Compare Microsoft or Google, which pay high fixed costs in the form of salaries and servers but few costs in delivering their services and achieve operating margins of 25-30 percent, to Costco, which takes in more than $100 billion of annual revenue but earns an operating margin in the single digits.

That’s OK. Neither type of cost is “better” or “worse,” but having the option to decide how to structure costs through a company’s life cycle can meaningfully impact an entrepreneur’s ability to execute a business idea.
Founders investigating startup ideas — and politicians debating the impact of technology — would do well to pay attention to how B2B companies have democratized access to entrepreneurship.

Source: Tech Crunch Startups | How business-to-business startups reduce inequality

Nine years after launching its online magazine, and three years after diversifying into the subscription box business, FabFitFun has raised $80 million in a growth round of funding, led by Kleiner Perkins, with participation from its previous investors Upfront Ventures and NEA. 

The Los Angeles-based company has steadily expanded its retail and lifestyle empire through subscription boxes, video… and even an augmented reality app.

Last year the company crossed $200 million in revenue and managed to net more than 1 million subscribers for the service.

In a statement the company said the new financing would be used to expand FabFitFun membership offerings and consolidate its position as a marketing partner and platform for brands.

As a result of the investment, Kleiner Perkins general partners Mood Rowghani and Mary Meeker will join as board member and observer, respectively.

It’s been a long ride for co-founders Daniel and Michael Broukhim and Katie Rosen Kitchens. From a newsletter and blog to the subscription box to the launch of live programming last year.

For brands, the pitch is a new way to find customers and engage with them. The seasonally curated boxes and special exclusive co-branded box opportunities with Los Angeles’ pool of influencers results in hundreds of millions of targeted impressions, according to the company.

“FabFitFun has emerged into an exciting and entirely new distribution channel that brings retail to the platforms where consumers are most engaged,” said Mood Rowghani, a general partner at Kleiner Perkins, in a statement. “The company’s personalized connection with its community allows brands to better understand and interact with consumers – establishing a long-term relationship rather than simply a transaction.”

Source: Tech Crunch Startups | FabFitFun raises million for its growing lifestyle brand

Well, that was short-lived: Just 36 hours after Curve, the London fintech that lets you consolidate all of your bank cards into a single Curve card, re-instated support for Amex, the feature has once again been unceremoniously blocked by American Express. This time, however, the context feels very different from 2016, when the startup was barely off the ground, with Curve telling customers in an email this morning that it intends to “fight Amex’s decision with our full might.”

Going up against the deep pockets and dominant market position of American Express will undoubtedly be a “David and Goliath” battle, although, unlike two years ago, Curve is now backed by an array of investors that includes Connect Ventures and Santander. Arguably, the startup will have U.K. and EU payments and competition regulations on its side, too, although it is hard to predict with certainty if the U.K. regulators will use their full teeth in a situation like this and how they will interpret those existing U.K. and EU regulations.

Curve’s position, however, is clear: In the same email to customers, the company has called the move “anti-competitive” and says it is “entirely disproportionate and discriminatory” to Curve. “U.K. payment regulations clearly state that Curve should be allowed to access the Amex payment network on a level-playing field with every other fee-paying and legitimate merchant,” writes the startup.

However, American Express disputes this, telling TechCrunch it doesn’t have regulatory obligations to work “with Curve or any individual merchants.”

Meanwhile, the credit card giant has been busy briefing journalists that it ended its merchant contract with Curve for business reasons, following what looked like a successful beta test with a small number of joint customers. Perhaps the trial was too successful, with American Express telling me Curve customers were using Amex added to Curve in ways that were different to its regular customers, which, one could argue, is the whole point. To truly innovate, you have to offer something new. Something truly new, has to be different.

With that said, the method with which Curve was accessing the Amex network is a well-established one. Technically, Curve had signed a “merchant” contract with American Express, just like any other merchant and many existing e-wallet products, such as PayPal or YoYo Wallet, which, notably, haven’t been blocked. As part of the trial period, the fintech also made changes to its own product to accommodate Amex, requiring customers to top up their Curve card in advance if they wanted to spend from their Curve-Amex wallet.

In other words, this was definitely not a “don’t ask for permission, ask for forgiveness” situation on Curve’s part. The two companies had been working together for months, and in talks for even longer, to get Curve back on the Amex network. A merchant contract had been signed. What changed at the 11th hour is unclear, although we can be sure this one has a long way to play out just yet.

American Express provided TechCrunch with the following statement:

We participated in a limited Curve beta test in which we explored enabling Card Members to load funds onto an e-wallet using their Amex Card in the Curve app. A very small number of Amex Card Members participated in the test. Based on the results, we communicated to Curve that we would not participate in the further roll out of Curve because of concerns related to the overall American Express Card Member experience. Subsequently we terminated our contract with them.

And here’s the full email sent out by Curve to customers, myself included:

Dear Steve,

We are extremely sorry that the top-up functionality of your Amex wallet is currently disabled.

Like thousands of other UK merchants, Curve has a valid merchant agreement to accept Amex payments into its e-wallet. However, on Tuesday evening, Amex decided to terminate this agreement and block all Amex transactions to Curve with immediate effect.

Amex has given no good or fair reason for their decision and we believe it is entirely disproportionate and discriminatory to Curve and all our (joint) customers. UK payment regulations clearly state that Curve should be allowed to access the Amex payment network on a level-playing field with every other fee-paying and legitimate merchant.

Rest assured that you can still spend the funds that you have already topped up to your existing Amex Wallets. If you have contacted us for support, we apologise for the delay in response and will endeavour to do so as soon as possible. We will update you as soon as we have any further information.

With your interests in mind, and our mission to deliver a truly innovative product, we intend to fight Amex’s decision with our full might. We believe financial freedom is the future and we are prepared to fight for yours.

Team Curve

Source: Tech Crunch Startups | Amex blocks Curve as the fintech startup vows to fight ‘anti-competitive’ decision

Wannaby, a startup out of Belarus that is building “AR commerce” experiences, has launched a beta of its latest app, which aims to make it easier to find the perfect sneakers.

Dubbed “Wanna Kicks,” the iOS app uses augmented reality to let you “try on” various pairs of sneakers. You simply choose a pair of kicks from the list of 3D models, point your camera at your feet and — bingo — you’re now virtually wearing your chosen footwear.

The effect is pretty instant and tracks reasonably well as you move and rotate your feet or change camera angle. You can even try walking and the AR app will follow your footsteps. It doesn’t work quite as well standing in front of a mirror, which would be more useful, but that is something Wanna Kicks’ makers say they are working on.

Ultimate, however, Wannaby believes its technology can help both customers and retailers. The premise is simple: the better idea you have of how a pair of sneakers will look when you’re actually wearing them, the more likely you are to make the right purchase and the less likely you are to return an item. Online retailers spend a lot of their margins trying to get customers to convert, and arguably even more servicing returns.

“Our mission is to break online shopping barriers,” Wannaby CEO and ex-Googler Sergey Arkhangelskiy tells me. “We believe that AR try-on can help customers to shop online and will wash away the difference between online and offline shopping. We see two major problems in the shoe market. Online conversions are quite low, and returns are quite high, in comparison to traditional ‘brick-and-mortar’ shopping. The ability to try sneakers with your phone before buying online should shift conversions, engagement, and returns”.

Arkhangelskiy argues that AR is also a great marketing tool. Unsurprisingly, Wanna Kicks lets you save a photo of your feed clad in new virtual sneakers, which you can then share on social media. Video sharing is in the pipeline, too.

“Many shoe brands are presenting their new releases both online and offline,” he says. “Lots of customers are eager to know more about new sneaker releases, and AR is a great new way for people to experience sneakers that are new to the market or are about to get to the market. Essentially, this is the main idea behind Wanna Kicks: allowing users to choose and decide whether they like a shoe or not without visiting a physical store”.

Under the hood, Wannaby says it uses sophisticated “3D geometry algorithms” together with neural networks to identify the position of the shoe in space. It’s these algorithms that the startup says are its secret sauce and the company’s main innovation. To onboard sneakers into the app, Wannaby utilises its own studio to create bespoke 3D models.

“We’ve built Wanna Kicks for Gen Z and millennials who are interested in buying sneakers and eager to know whether they will fit their style or not,” adds Arkhangelskiy. “The AR and AI community will love our launch as well — we’ve accomplished a really difficult task in computer vision and rendering”.

Meanwhile, Wannaby is backed by Bulba Ventures, and Haxus. The startup has raised $2 million in seed funding to date.

Source: Tech Crunch Startups | Wanna Kicks, a new AR app from Wannaby, lets you virtually “try on” your next pair of kicks