Hi, it’s Alexandre from Idinvest. Overlooked is a weekly newsletter about underrated trends in the European tech industry. Today, I’m sharing the most insightful tech news of February
For 2021, I wanted to pick one piece of news per day and write a short comment about it. I want to talk about something that strikes me. Something that happened in the tech ecosystem. Here is the issue for February!
Please note that the date picked for each event is not always the exact event date but the one at which I decided to write the event.
Monday, Feb. 1st: UiPath is unstoppable. The robotic process automation company founded in Romania in 2015 raised a $750m funding round at $35bn valuation led by Coatue and Alkeon. As a reminder the last funding round in July 2020 valued the company at a $10.2bn valuation. UiPath is planning to become a publicly listed company in 2021. - Techcrunch
Tuesday, Feb. 2nd: ManoMano generated a €1.2bn GMV in 2020 implying a 100% annual growth rate (vs. 50% in 2019), attracted 50m visitors per month (70% YoY) and has now 7m active customers (+100% YoY). It's a marketplace focused on DIY, home improvement and gardening products operating in France (60% sales), Spain, Italy, Germany, the U.K. and Belgium. Manomano has also expanded in B2B with a fulfilment offering for third party retailers and a dedicated offering for professionals. We are lucky to be part of this journey with our growth fund which led Manomano's series D back in 2019! - Techcrunch
Wednesday, Feb. 3rd: Beam raised a $9.5m series A led by Pace Capital. Prominent business angels are also investing like Harry Stebbings (20VC), Albert Wenger (USV) and Christian Reber (Pitch, Wunderlist). Beam also acqui-hired an ad-blocker company called RadBlock to fasten recruitment and product development. Beam is part of a new generation of browsers focused on knowledge. Beam plans on automatically generating note card for each session you do on the broswser. - Techcrunch
Thursday, Feb. 4th: France has its own goPuff's copycat! Cajoo raised a €6m seed round co-led by Frst and Xange to offer grocery delivery in less than 15 minutes in Paris (only in the 9th arrondissement as a starting point) with a full-stack model. The company is led by Henri Capoul. He was general manager France at Bolt and has therefore a strong expertise in operations. Cajoo says that it will need 10 micro-fulfilment centres to cover Paris and will have to rush to capture the market before other European competitors land in Paris. - Xange, Techcrunch, Frst (🇫🇷)
Friday, Feb. 5th: Ireland-based venture house Frontline raised a €70m second seed fund to back European B2B entrepreneurs. Frontline has both a growth and a seed fund with the ambition to be the bridge between Europe and the U.S. for their portfolio companies. The fund will invest into 45 companies in the next four years with tickets ranging from €250k to €2.5m. 50% of the fund size will be used for follow-on investments. - Techcrunch
Saturday, Feb. 6th: Snap announced its 2020 full year annual results. It has been an incredible year for Snap and I'm still super bullish on the company's outlook. You know my investment thesis on the company: (i) Snap is a real social network when TikTok and Facebook are everything but social, (ii) Snap has always been ahead of the competition in terms of product innovations and (iii) Snap is working hard on game-changer capabilities (hardware, maps, augmented reality). - Snap
Snap has now 265m DAUs (22% growth YoY). Users open the app 30 times per day on average. 5bn of Snaps are created everyday. Snap generated $2.5bn in revenue (46% growth YoY) and was EBITDA positive for the first time in its history in 2020.
On product innovation, it's impossible to find a better illustration than the below graph showcasing the features released over the past 9 years.
In 2020, Snap introduced an important product redesign with an action bar to give more space to other key building blocks in the Snap products like Map and Spotlight. On the one hand, Map is a social map to connect users with their friends and different physical places. Map has attracted 250m users and 35m businesses are now registered on Map. On the other hand, Spotlight is a place in which users can publicly share their content and get rewarded based on the performance of the content released. To kickstart the feature, Snap distributed $1m per day to the most successful videos. Spotlight has attracted 100m+ monthly active users and 175k videos per day are submitted to Spotlight.
Snap has now a multisided communication platform that has expanded from videos and pictures to something more complex including chat, games and mini apps. On the gaming side, Voodoo has released its popular game Aquapark on Snap adding a social layer to the experience to play with your friends.
Sunday, Feb. 7th: Louis Chatriot recorded a podcast on Génération Do It Yourself. He talked about his background as a consultant at Bain and operator at Stripe. He also shared his journey as an entrepreneur building Alma which is disrupting the buy now, pay later market in France. - Génération Do It Yourself
Louis has a great personal story. He learnt how to code when he was 6-7 y.o. and spent his teenager years coding video games. He did it to understand the mechanics behind the programs and applications he was using in his daily life. He joined the top French engineering school Polytechnique taking an opposite family path with his dad being a former rally driver and his mum, a sculptor. He did an exchange at Stanford and discovered entrepreneurship there. After Polytechnique, he started a career in consulting at Bain. He left to build a first startup as CTO called tldr.io which had the ambition to summarize the web. Then, he became country manager at Local Motion (hardware for cars) before joining Stripe as general manager Italy. He founded Alma in January 2018 after his experience at Stripe.
It's impossible to be an expert in any topic, but it's crucial to have a basic understanding of multiple topics to see the world through different spectrums. Intersections between topics is a way to find new ideas and having a broader overview helps you take better decisions.
Stripe wants his employees to be macro-optimists and micro-pessimists. They should believe in the long term vision of Stripe and work on their daily job to solve all the small issues to move toward this vision. It works if you are consistent overtime.
Radical Candor is a key value in Alma’s culture. You should be radically transparent with your collaborators to provide them with both negative and positive feedbacks to make them better in their job. It requires a strong degree of trust between employees as well as a two sided movement in which you should not be afraid to give negative feedback to your manager.
Monday, Feb. 8th: a16z invested in Stir at a $100m valuation. I've already mentioned Stir twice in this newsletter when the company raised a seed round and to discuss their smart creator acquisition strategy centered around micro-product drops to support creators. The core product is a business hub for creators aggregating data from the different apps they use to generate revenues (e.g. ads from Youtube, merchandising from Shopify etc.). Stir also allows creators to collaborate on certain projects and share the generate revenues from these projects. - The Information
Tuesday, Feb. 9th: Reddit raised a $250m series E round at a $6bn valuation. It's a social network aggregating forums (called subreddits) on any topic possible. Reddit made the headline earlier this year with the GameStop's saga that was born on a subreddit called WallStreetBets in which users talk about public stocks. In Q4 2020, its revenue increased by 90% compared to 2019. Reddit also had 52m DAUs as of December 2020. In 2020, Reddit also acquired Dubsmash which is a short video-sharing platform that it aims to integrate to its product. The company is planning to double its number of employees in 2021 from 700 to 1.4k FTEs and to double down on product building, international expansion and monetisation. - The Verge, Techcrunch, The New York Times
Wednesday, Feb. 10th: Powder raised a $14m round led by Serena with the participation of Alven, General Catalyst, Bpifrance and Turner Novak. It's a social mobile app to edit and share game clips with your friends. Powder is one of the best social product teams in Paris together with Zenly, Yubo and Yolo founded by Stanislas Coppin a former cofounder at Mindee. Social gaming is a space in which there is so much room to innovate. I'm sure they will manage to find a good product market fit in the next 12-24 months. - Tech.eu
Thursday, Feb. 11th: Two French cybersecurity startups were exited to American corporates in the same week! Aslid (backed by Idinvest, 360 Capital and Axeleo) was sold to Tenable for c. $100m while Sqreen (backed by Greylock, Alven and P9) was sold to Datadog. Congrats to both teams! We are on a good path to show the world that there is an exit environment for French startups. It's also the third exit announced by Idinvest/Eurazeo in 2021 after Peakon was sold to Workday and Adjust to AppLovin. - Greylock, Datadog, Tenable
Friday, Feb. 12th: Dublin-based Flipdish raised a €40m round led by Tiger Global to help restaurants create their own online ordering platform instead of relying on food delivery platforms and to replace the 25-30% commission by a lower 7% plus a £0.5 per order fee. I love Flipdish because it's a verticalized SaaS giving restaurants the toolkit needed to thrive in a digital world. Flipdish is also a fintech enabled business as it can start earning revenues by processing payments like Shopify for ecommerce or Muze in the hospitality business. I won't be surprised to see them launching a full suite of financial services dedicated to restaurants. Today, Flipdish is operating in 15 countries (inc. U.K., France, the U.S.) and work with leading food brands like Subway, Vapiano or Cojean. The company processed 5m orders in 2020. - The Spoon, Flipdish, Sifted
Saturday, Feb. 13th: I discovered David Apple's content on customer success (thanks Clément and Sadek 🙏). He led customer success at Typeform for 5y and is now working in a similar role at Notion. David did several insightful conferences on customer success that you should watch on Youtube. - SaaS School, SaaStock
He has a four-step framework to work on customer success: focus, getting to know your customers, engaging with your customers and executing.
Step 1: focus. You should define your OKRs with the goals that you are going after but you should also explicitly say what you are not going to do in order to preserve your focus (e.g. focusing on enterprise sales vs. and not focusing on SMBs).
Step 2: get to know your customers. You should gather both qualitative feedbacks (through customer interviews) and quantitative feedbacks (digging into the usage data) to determinate your ideal customer profile. This ICP will be used in customer success but which is also key for all aspects of the business.
Step 3: engage with your customers. You should segment your customers. For each segment, work on different touch points in customer journey (onboarding, adoption, retention and expansion) to make customers go from one step to another at the pace and in the conditions that you wish.
Step 4: execute. You should create a culture of experimentation (esp. in the early days) to learn what is working and double down on the winning tactics. You should also close the loop and share your feedbacks with the other teams in the company (sales and product) as the customer success team is the team that is the closest to the customers.
Sunday, Feb. 14th: I listened to an Invest Like the Best’s podcast episode with Scott Belsky who cofounded Behance that he sold to Adobe in 2012 for $150m and who is now chief product officer at Adobe. He shared many useful tips on product building. - Invest Like the Best
Product builder are supposed to have empathy for those suffering from the problem that they are solving. It's a counterintuitive lesson as you will have to do many unscalable things to understand how a customer is feeling.
When building a product, you should focus on the first mile because it's the first impression that all your customers and potential customers will experience.
You should work on every screen between the first contact with a customer and the moment he is hooked on the product.
You should also segment your customers and make the experience unique based on the information you can gather on them.
Your first mile experience could evolve overtime because every new cohort of customer could behave differently.
Another lesson is to make an arbitrage between the problems that you want to solve now and the problems that you are willing to solve later.
Your users should progress very rapidly in your product. Scott talks about ego analytics and the fact that your users are driven by laziness, vanity and selfishness. People want to know and see that they are being successful. You have to craft an experience to make them successful 30 seconds after starting using your product.
Create awareness around your product. Generate direct utility for your audience and then you will show them another utility that your users don't see immediately (e.g. with Pinterest which primary utility is to collect images vs. its secondary utility of a discovery network to find your interests based on other people interests).
You should do window dressing to attract users. You should have two value proposition: (i) getting the attention of your users during the first 30 seconds after they start using the product, (ii) offering them a product generating value over the long run.
Understanding the insecurity of a customer at every moment in time. You should design and build a product that installs security and confidence in a customer experience (e.g. a note taking product that makes you feel more organised).
Monday, Feb. 15th: The Economist wrote a special report on the future of travel with noteworthy trends and figures on the market. - The Economist
The democratization of travel thanks to shrinking flying costs allowed the tourism industry to boom in many country and made business travel a routine. Travel contributed to 4.4% of GDP and 6.9% of employment in OECD countries before Covid-19.
Covid-19 is a disaster for the travel industry. International arrivals fell by 70-75% in 2020. In 2019, 4.5bn people took a flight. In 2020, 1.8bn and in 2021 it should be 2.8bn people. The airline industry should only recover its 2019 level in 2024. Numerous airlines went bankrupt (Norwegian, FlyBe, Virgin Australia). The airlines which will survive are either (i) low-cost carriers with a strong balance sheet and a sound business model or (ii) national historical airlines in which governments have poured billions to save.
Credit Suisse forecasted that there will be 65% less business travels in 2021 compared to 2019 and that 10-20% of business travels will disappear forever. Other people are even more radical: 50% of business travel will go away for Bill Gates and 25% for Citi.
Tuesday, Feb. 16th: Sifted published a report on the French tech ecosystem with interesting quotes from French founders. - Sifted
“What is missing is the next-stage companies, with 5 or 10 of revenues and at international scale. We have pretty good early-stage investors but for later stage, say €50m to €150m, it does not happen enough." - Jean-Charles Samuelian (Alan)
"What's missing in France is this M&A ecosystem. You can go quickly from series A to series B but then many companies look at M&A and the acquirers are still in the US." - Pierre-François Thaler (Ecovadis)
"We lack people that have experience, huge scale and that are creative and have worked in a big company at the beginning, like Snapchat and Instagram employees. The engineering part is strong, but in creative, marketing and branding we don't have that many people." - Sacha Lazimi (Yubo)
Wednesday, Feb. 17th: Standard Cognition raised a $150m series C round led by Softbank with participation of existing investors CRV, EQT and TI Platform Management. It's an autonomous checkout solution for retailers using a system of cameras, computer vision and artificial intelligence. The funding will be used to expand the technology in 100 stores in 2021, 1k in 2022 and 50k stores within the next 5y. At the moment, the technology is live with in a reduced number of stores with retailers like Circle K and the Compass Group. - The Spoon, EQT
Thursday, Feb. 18th: Robinhood's CEO Vladimir Tenev had to testify in front of the House of Representative about the recent Gamestop's soap opera. He shared numerous insights on Robinhood. - House of Representatives
Vladimir Tenev was born in Bulgaria and immigrated to the U.S. when he was 5 years old. I'm adding his name to my long list of U.S. entrepreneurs that are immigrants or sons of immigrants.
84% of the stock value owned by U.S. individuals is held by 10% of the wealthiest households and 50%+ Americans have never owned any stock. Robinhood’s mission is to democratize public market investment by removing barriers to entry (minimum investment, commissions)
Robinhood has now 13m customers. The average account size is $5k and the median account size is $240. The platform argues that most users behave responsibly (buying blue chip companies, buying and holding for the long run stocks, buying ETFs etc.). In 2020, only 13% customers traded basic options contracts and only 2% traded more complex options.
Friday, Feb. 19th: Earlybird raised €200m for its Earlybird Digital East Fund II. The first fund was outstanding with investments in Peak (sold to Zynga for $1.8bn) and UiPath (valued at $35bn): it ranks among the top 5% of global VC fund in its vintage, did a 24.9x investment multiple and a 84.1% net IRR. The second fund has already done four investments: FintechOS, Payhawk, Picus Security and Binalyze. The fund positioning is to invest in seed and series A in emerging European countries (Baltic, Central and Eastern Europe, Turkey) and claims to be successful because of its deep knowledge of the local ecosystems. - Earlybird, Techcrunch
After raising a round, you should define the key milestones that you need to reach to raise a subsequent round and build the organisation chart needed to hit these milestones.
Maddy recommend to hire a talent acquisition manager when you have 4+ open roles. A talent manager will work on 5-10 open roles at a given time, will help you find great candidates and will help you set up your ATS (Application Tracking System) and recruitment process.
You should take references on your final candidates. You can build a strong opinion by asking those four questions: (i) what was this person like to work with? (ii) what were they great at? (iii) what were they not so great at? (iv) would you hire them again?
Covid has obviously reshaped the way we work. 45% of the respondents had to work remotely because of Covid and in this subset 46% of the respondents said that their company was planning to allow remote work permanently.
The ability to have a flexible schedule is the biggest benefit to working remotely (32%) followed by the flexibility to work from anywhere (25%) and not having to commute (25%). Respondents who were not working remotely before Covid shared that not having to commute was the main benefit (28%) while native remote workers valued more the flexibility which comes with remote working.
The incapacity to unplug from work is the biggest struggle with remote working (27%) followed by difficulties in collaboration & communication (16%) as well as loneliness (16%).
Shifting remotely has mainly changed the way individuals communicate and collaborate with peers (41%).
Monday, Feb. 22nd: Shippo raised a $45m round led by D1 Capital at a $495m valuation. I love this company! Shippo is becoming the standard in the ecommerce stack to manage your shipping (as Shopify is the standard to set up your online shop and Klaviyo is the standard to manage your marketing efforts). It's an API that aggregates all shipping providers and automatically route your order to the cheaper and most efficient provider. Shippo works with 70k ecommerce businesses and doubled the total shipping spend on its platform in 2020. - Techcrunch, Laura Behrens
Tuesday, Feb. 23rd: Serena announced the final closing of its €300m third fund (vs. €94m for the fund I raised in 2008 and €134m for the fund II raised in 2013) investing mainly in French seed and series A startups with tickets between €5m and €15m. The fund has a strong operating team to support their portfolio companies on key topics like HR, sales, marketing, product and expansion in the US. BPI, FEI, Allianz, MACSF, BNP, MGEN, Covéa and FRR were among the LPs that invested in the fund. - Sifted
Wednesday, Feb. 24th: Reforge raised a $21m round led by a16z. Reforge was started by Brian Balfour (ex. VP Growth at Hubspot) as an education program for professionals working in growth who want to level up their professional skills and join a community with other growth professionals. Reforge has now grown into a global community and a new education platform offering 10 programs across 10 topics from product to marketing and engineering. - Brian Balfour, Andrew Chen
Thursday, Feb. 25th: Benchmark invested in a second French-based startup after leading Zenly's $22.5m series B back in 2016. This time, it's a company called Sorare building a football fantasy game based on non fungible tokens. You buy digital Panini-style cards powered by the blockchain and every week, you play with your cards in fantasy leagues. Sorare is raising a $50m series A with the participation from Accel as well as soccer stars like Antoine Griezmann and Rio Ferdinand. - Nicolas Julia, Boris Golden, Bloomberg
Friday, Feb. 26th: Maze raised a $15m series A led by Emergence Capital with the participation of existing investors like Amplify, Partech and Seedcamp. It's a testing tool compatible with all the main design platforms (Figma, Sketch and AdobeXD). Maze is used by 40k companies worldwide. 1m test participants used the platform and Maze’s reports have seen more than 1.2m times last year. The funding will be used to grow the team and double down on the product to make it usable beyond designers to product marketers and product managers. - Jonathan Widawski
Saturday, Feb. 27th: Yuri Milner, the Russian billionaire behind Mail.ru and DST Global, did an interview in Russian with the Bell sharing insights and anecdotes on the tech industry. - The Bell
He started Mail.ru on the insight that "geographical arbitrage" opportunities existed between continents and that he could build the Russian internet with all the services which were emerging in the U.S. (Amazon, eBay, Yahoo). Geographical arbitrage has always been a core principle of DST's investment strategy.
DST’s main philosophical principle is to always put yourself in the founder's shoes. Yuri Milner convinced Mark Zuckenberg to take his money for Facebook by coming prepared and motivated. He took a plane to the U.S. to meet him in person and prepared an excel sheet with insights on all Facebook competitors around the world. But he also offered Mark to keep the control of his company by giving him DST's voting shares.
In 2011, DST offered $150k to all the startups selected by YC in convertible debt with no cap and no discount at a time where YC were offering only $15-20k to their startups.
Natural curiosity is a common trait in many successful entrepreneurs. One should possess a wide outlook to build a business that could change the world. Entrepreneurs are usually interested in many things that go beyond their specialty (e.g. history, science). He thinks that there is a strong correlation between success and a broad outlook.
"Of the 60 investments DST has made in the past 10 years, we only lost money on 2." The major mistakes come from not investing in certain companies like Uber or Pinduoduo. "If you look at the statistics, about 8 tech companies crossed the $100 bln. Threshold. We’ve invested in 5 of them. 5 out of 8 — that’s more than a half. If you take the $10 bln.+ companies, we’ve invested in half of them, globally."
DST's investment strategy follows a science based approach: look at the emerging trends and invest in the top 3 companies in this trends across the different key geographies (e.g. ecommerce -> invest in Alibaba and JD in China, Flipkart in India, Zalando and Farfetch in Europe, Wish in the US, Rappi in Latin America).
DST plans to invest $1.5bn in the next 10y and needs to have LPs who are able to follow this pace. In the early years, it was mainly Russian investors but it's no longer the case. Today, DST works with private individuals as wells as sovereign wealth funds.
Sunday, Feb. 28th: The Economist wrote a paper on the prevalence of tech giants in our economies. - The Economist
“The incumbents are not getting smaller—their weighted-average market share is stable, at about 35% across each of 11 American tech subsectors. But the share of second and third firms has risen from 18% to 26% since 2015.”
There are two trends at play: (i) incumbents are diversifying their revenues to capture new opportunities and reduce the regulatory pressure (the share of the revenue overlap of the top 5 U.S. giants have increased from 22% to 38% since 2015), (ii) outsiders have momentum (e.g. Disney+ acquiring 116m subscribers in only 18 months after launch).
The top 5 tech giants (Google, Amazon, Facebook, Apple and Microsoft) are increasingly competing directly in industries like hardware (all), cloud (Google, Microsoft, Amazon), ecommerce (Google, Amazon, Facebook), social media (Google, Amazon, Facebook and Microsoft) and search (Google, Apple, Microsoft).
Thanks to Julia for the feedback! 🦒 Thanks for reading! See you next week for another issue! 👋