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January 17, 2019
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eCommerce

Instamojo raises $7M to help SMEs and ‘micro-entrepreneurs’ in India sell online

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In India, startups are quietly building the tools and platforms to enable a different kind of gig economy: one that allows ‘micro-entrepreneurs’ to tap growing access to the internet to sell goods and services online.

One such figure helping this burgeoning economy is Instamojo, a seven-year-old Bengaluru-based startup, has pulled in a $7 million Series B as it aims to grow its reach to over one million SMEs and micro-SMEs in India.

Founded in 2012 as a side-project, Instamojo offers independent merchants the means to operate a mobile-optimized storefront, collect payment and even take micro-loans. In an interview with TechCrunch, CEO and co-founder Sampad Swain said the company has some 650,000 merchants, and it is adding a further 1,200 daily. Most of them, he said, tend to earn less than $30,000 in annual sales; with around half sell physical products, such as e-commerce items, and the remainder using Instamojo to invoice for physical services or sell digital items such as courses.

The idea is to tap into those just testing the water of online commerce and give them the tools to ramp up their fledgling enterprise as India’s internet ‘population’ rises past 400 million people.

“A lot of micro-merchants in India are adopting [India’s payment service] UPI through [services like Paytm and PhonePe] but once they become a little more serious, at around 10-20 sales per month, we ask: ‘Can we give you lending, logistics, online store?’” explained Swain, who started the business with co-founders Akash Gehani and Harshad Sharma.

It’s a market that few banks or financial institutions care about because small loans and sales require enormous scale to be relevant to them. But Swain is bullish, and he believes the company will pass one million retailers this year.

The new funding is led by existing investor AnyPay — the Japanese fintech startup — with other returning backers Kalaari Capital, Beenext, and angel investor Rashmi Kwatra joining. Gunosy Capital, the VC arm of Japanese news app Gunosy, joined as a new investor. The deal takes Instamojo to around $9 million from investors to date.

Instamojo collects revenue through a two percent cut on sales, a fee on successful deliveries and commission on its micro-loan product, which essentially gives merchants advanced credit (same day or next-day) on their sales. The loans — which Swain describes as ‘sachet’ lending — are from Instamojo’s recently-established Mojo Capital unit which includes partnerships with 12 financial organizations. In just four months, Instamojo has dished out around $4 million in credit — through 50,000-odd dispersions — and Swain predicts it will scale to a $30 million run rate before the end of this year.

“Even I am surprised!” he said of the rapid uptake.

Instamojo founders [left to right] Akash Gehani, Sampad Swain and Harshad Sharma

Unlike Meesho, a YC-backed micro-entrepreneurship service in India that recently raised $50 million, Instamojo isn’t dominated by e-commerce to friends, family and neighbors. Swain said typical Instamojo sellers look to reach audiences outside of people they know, with platforms like YouTube, Facebook, WhatsApp and others commonly used to reach audiences. Instamojo’s big selling point is ease of sale; that’s through a unique link that sellers share with customers for the checkout therein bypasses some of the challenges of online payment in India, which include somewhat cumbersome steps for card transactions.

“Sellers just create a link and share it with the customer,” Swain explained. “Essentially they click and check out with debit or credit card or other means. Over the years we realized that’s the best beginning for our business.”

That was Instamojo’s first launch, and since then it has built out online store options to manage inventory and product as well as the recent credit launch. Beyond growing its scale, Swain said the next big focus is on developing a community for merchants, where they can share tips, collaborate and more. He is also aiming to increase the tech team and raise Instamojo’s headcount from 120 right now to around 250 by 2020.

For now, Swain said the company isn’t seeking overseas opportunities, although he did admit that the business could expand to regions like Africa or Southeast Asia. But more immediately, he sees a huge opportunity in India, where believes there are 65 million SMEs, of which 25 million are “micro-merchants,” to tackle initially. The company is planning a Series C round for later this year to finance a deeper push.

News Source = techcrunch.com

Riding the RV revolution, Outdoorsy fuels up with $50 million in fresh funding

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Outdoorsy is building for the road ahead. The three-year-old company, which connects customers with underused RVs and other trucks big enough to camp in overnight, just raised $50 million in Series C funding led by Greenspring Associates, with participation from earlier backers Aviva Ventures, Altos Ventures, AutoTech Ventures and Tandem Capital.

That puts its total funding, in less than year’s time, at $75 million. (We’d separately reported on its $25 million Series B round last February. It has now raised $81.5 million altogether.)

It’s easy to understand why investors are excited about Outdoorsy, which moved its headquarters from the Bay Area to Austin six months ago, partly to get closer to its base of customers, as well as to take advantage of attractive tax incentives. The company is capitalizing on a global trend of millennials who want to stay overnight at places other than hotels, which are often expensive and located in commercial districts that can’t provide the same authentic experience of staying in a neighborhood.

Yet Outdoorsy is taking things a step further, so to speak. As cofounder and CEO Jeff Cavins notes, even with Airbnbs seemingly everywhere, there remain plenty of places where it makes even more sense to rent an RV and set up a grill, including at a beach, beside a lake, or right outside events like musical festivals and car races. That’s saying nothing of traditional camping spots, like Yosemite and Yellowstone Valley.

It’s easier than ever thanks largely to Outdoorsy, too, says Cavins. Earlier on, the company logged serious time with outfits like Aviva, a British insurance company that is not only an Outdoorsy investor at this point but which was convinced by Outdoorsy to create an insurance product expressly to cover RVs as distinct from more accident-prone vehicles with which they’ve long been lumped, like dune buggies.

The math was easy to grasp, offers Cavins of the argument Outdoorsy made. “Most recreational vehicles really aren’t driven around much. They are used for camping purposes. Some people do cross-country stuff, but most people don’t like driving so much on their vacations, so there isn’t a lot of mobile time with these units.”

Such products have been meaningful for both sides. Outdoorsy says it’s been able to price that insurance for “basically the cost of what you’d pay for a beer each day.” Meanwhile, by offering U.S. and Canadian RV owners up to $1 million in protection, and even more protection for its European users, Outdoorsy says it has managed to sign up 31,000 vehicles to date. These include a mix of traditional RVs, camper vans, towable campers, and trucks that are rented for six days on average and that produce, on average, $1,900 in income for their owners over that same six-day period.

And that’s mostly in North America. Outdoorsy thinks that as it expands more aggressively in Europe and Australia and New Zealand, among other places into which it’s rolling, it will have closer to 65,000 vehicles available to rent on its platform by year end.

Not that expanding geographically is all the company has in mind. On the contrary, says Cavins, Outdoorsy is evolving into a kind of recreational marketplace, one with many more premium services beyond those it introduced last year, including insurance and roadside assistance. For example, it more recently began inviting customers to finance their vacations through Outdoorsy, which has partnered with the lending company Affirm toward that end. It also now offers trip and travel insurance to offset cancellations. And Cavins says the company is introducing a spate of other new premium services in roughly one month

Outdoorsy also ushering in a new wave of entrepreneurship, by Cavin’s telling. As it stands, vehicle owners set their own pricing, with the help of tools provided by Outdoorsy, and they keep between 75 and 80 percent of what they earn. For some, it’s a nice way to make income when they aren’t using their RV. (It’s especially nice compared with the alternative, which is to pay to keep the RV stored.) For others of its customers, he says, those rental fees are beginning to produce meaningful revenue. He points, for example, to one customer who he says is generating more than $1 million a year through Outdoorsy. Pushed on this number, Cavins notes that this customer owns between 50 and 55 RVs. But he insists that while “most users start with two vehicles, we have some that get to four, then 20, then they hire hire their own mechanic and cleaning crew.”

As for those stretches of time when it isn’t a holiday, and it isn’t summer, and fewer people are looking to rent RVs, Cavins admits the market slows down markedly. In fact, it’s largely why Outdoorsy is building up a business in New Zealand and Australia. It wants to take advantage of summer somewhere all year round.

Still, insists Cavins, the market is hotter than you might imagine. Even in Europe, which doesn’t have the same sprawling freeways of North America, car camping, including via camper van, is becoming a huge part of the culture. “By May, it’s now very hard to get your hands on something to rent.”

News Source = techcrunch.com

Instagram caught selling ads to follower-buying services it banned

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Instagram has been earning money from businesses flooding its social network with spam notifications. Instagram hypocritically continues to sell ad space to services that charge clients for fake followers or that automatically follow/unfollow other people to get them to follow the client back. This is despite Instagram reiterating a ban on these businesses in November and threatening the accounts of people who employ them.

A TechCrunch investigation initially found 17 services selling fake followers or automated notification spam for luring in followers that were openly advertising on Instagram despite blatantly violating the network’s policies. This demonstrates Instagram’s failure to adequately police its app and ad platform. That neglect led to users being distracted by notifications for follows and Likes generated by bots or fake accounts. Instagram raked in revenue from these services while they diluted the quality of Instagram notifications and wasted people’s time.

In response to our investigation, Instagram tells me it’s removed all ads as well as disabled all the Facebook Pages and Instagram accounts of the services we reported were violating its policies. Pages and accounts that themselves weren’t in violation but whose ads were have been banned from advertising on Facebook and Instagram. However, a day later TechCrunch still found ads from two of these services on Instagram, and discovered five more companies paying to promote policy-violating follower growth services.

This raises a big question about whether Instagram properly protects its community from spammers. Why would it take a journalist’s investigation to remove these ads and businesses that brazenly broke Instagram’s rules when the company is supposed to have technical and human moderation systems in place? The Facebook-owned app’s quest to “move fast” to grow its user base and business seems to have raced beyond what its watchdogs could safeguard.

Hunting Spammers

I first began this investigation a month ago after being pestered with Instagram Stories ads by a service called GramGorilla. The slicked-back hipster salesmen boasted how many followers he gained with the service and that I could pay to do the same. The ads linked to the website of a division of Krends Marketing where for $46 to $126 per month, it promised to score me 1000 to 2500 Instagram followers.

Some apps like this sell followers directly, though these are typically fake accounts. They might boost your follower count (unless they’re detected and terminated) but won’t actually engage with your content or help your business, and end up dragging down your metrics so Instagram shows your posts to fewer people. But I discovered that GramGorilla/Krends and the majority of apps selling Instagram audience growth do something even worse.

You give these scammy businesses your Instagram username and password, plus some relevant topics or demographics, and they automatically follow and unfollow, like, and comment on strangers’ Instagram profiles. The goal is to generate notifications those strangers will see in hopes that they’ll get curious or want to reciprocate and so therefore follow you back. By triggering enough of this notification spam, they trick enough strangers to follow you to justify the monthly subscription fee.

That pissed me off. Facebook, Instagram, and other social networks send enough real notifications as is, growth hacking their way to more engagement, ad views, and daily user counts. But at least they have to weigh the risk of annoying you so much that you turn off notifications all together. Services that sell followers don’t care if they pollute Instagram and ruin your experience as long as they make money. They’re classic villains in the ‘tragedy of the commons’ of our attention.

This led me to start cataloging these spam company ads, and I was startled by how many different ones I saw. Soon, Instagram’s ad targeting and retargeting algorithms were backfiring, purposefully feeding me ads for similar companies that also violated Instagram’s policies.

The 17 services selling followers or spam that I originally indexed were Krends Marketing / GramGorilla, SocialUpgrade, MagicSocial, EZ-Grow, Xplod Social, Macurex, GoGrowthly, Instashop / IG Shops, TrendBee, JW Social Media Marketing, YR Charisma, Instagrocery, SocialSensational, SocialFuse, WeGrowSocial, IGWildfire, and GramFlare. TrendBee and GramFlare were found to still be running Instagram ads after the platform said they’ve been banned from doing so. Upon further investigation after Instagram’s supposed crackdown, I discovered five more services sell prohibited growth services: FireSocial, InstaMason/IWentMissing, NexStore2019, InstaGrow, and Servantify.

Knowingly Poisoning The Well

I wanted to find out if these companies were aware that they violate Instagram’s policies and how they justify generating spam. Most hide their contact info and merely provide a customer support email, but eventually I was able to get on the phone with some of the founders.

What we’re doing is obviously against their terms of service” said GoGrowthly’s co-founder who refused to provide their name. “We’re going in and piggybacking off their free platform and not giving them any of the revenue. Instagram doesn’t like us at all. We utilize private proxies depending on clients’ geographic location. That’s sort of our trick to reduce any sort of liability” so clients’ accounts don’t get shut down, they said. “It’s a careful line that we tread with Instagram. Similar to SEO companies and Google, Google wants the best results for customers and customers want the best results for them. There’s a delicate dance” said Macurex founder Gun Hudson.

EZ-Grow’s co-founder Elon refused to give his last name on the record, but told me “[Clients] always need something new. At first it was follows and likes. Now we even watch Stories for them. Every new feature that Instagram has we take advantage of it to make more visibility for our clients.” He says EZ-Grow spends $500 per day on Instagram ads, which are its core strategy for finding new customers. SocialFuse founder Alexander Heit says his company spends a couple hundred dollars per day on Instagram and Facebook ads, and was worried when Instagram reiterated its ban on his kind of service in November, but says “We thought that we were definitely going to get shut down but nothing has changed on our end.”

Several of the founders tried to defend their notification spam services by saying that at least they weren’t selling fake followers. Lacking any self-awareness, Macurex’s Hudson said “If it’s done the wrong way it can ruin the user experience. There are all sorts of marketers who will market in untasteful or spammy ways. Instagram needs to keep a check on that.” GoGrowthly’s founder actually told me “We’re actually doing good for the community by generating those targeted interactions.” WeGrowSocial’s co-founder Brandon also refused to give his last name, but was willing to rat out his competitor SocialSensational for selling followers.

Only EZ-Grow’s Elon seemed to have a moment of clarity. “Because the targeting goes to the right people . . . and it’s something they would like, it’s not spam” he said before his epiphany. “People can also look at it as spam, maybe.”

Instagram Finally Shuts Down The Spammers

In response to our findings, an Instagram spokesperson provided this lengthy statement confirming it’s shut down the ads and accounts of the violators we discovered, claiming that it works hard to fight spam, and admitting it needs to do better:

“Nobody likes receiving spammy follows, likes and comments. It’s really important to us that the interactions people have on Instagram are genuine, and we’re working hard to keep the community free from spammy behavior. Services that offer to boost an account’s popularity via inauthentic likes, comments and followers, as well as ads that promote these services, aren’t allowed on Instagram. We’ve taken action on the services raised in this article, including removing violating ads, disabling Pages and accounts, and stopping Pages from placing further ads. We have various systems in place that help us catch and remove these types of ads before anyone sees them, but given the number of ads uploaded to our platform every day, there are times when some still manage to slip through. We know we have more to do in this area and we’re committed to improving.”

Instagram tells me it uses machine learning tools to identify accounts that pay third-party apps to boost their popularity and claims to remove inauthentic engagement before it reaches the recipient of the notifications. By nullifying the results of these services, Instagram believes users will have less incentive to use them. It uses automated systems to evaluate the images, captions, and landing pages of all its ads before they run, and sends some to human moderators. It claims this lets it catch most policy-violating ads, and that users can report those it misses.

But these ads and their associated accounts were filled with terms like “get followers”, “boost your Instagram followers”, “real followers”, “grow your engagement”, “get verified”, “engagement automation”, and other terms tightly linked to policy-violating services. That casts doubt on just how hard Instagram was working on this problem. It may have simply relied on cheap and scalable technical approaches to catching services with spam bots or fake accounts instead of properly screening ads or employing sufficient numbers of human moderators to police the network.

That misplaced dependence on AI and other tech solutions appears to be a trend in the industry. When I recently reported that child sexual abuse imagery was easy to find on WhatsApp and Microsoft Bing, both seemed to be understaffing the human moderation team that could have hunted down this illegal content with common sense where complex algorithms failed. As with Instagram, these products have highly profitable parent companies who can afford to pour more dollars in policy enforcement.

Kicking these services off Instagram is an important step, but the company must be more proactive. Social networks and self-serve ad networks have been treated as efficient cash cows for too long. The profits from these products should be reinvested in policing them. Otherwise, crooks will happily fleece users for our money and attention.

To learn more about the future of Instagram, check out this article’s author Josh Constine’s SXSW 2019 keynote with Instagram co-founders Kevin Systrom and Mike Krieger — their first talk together since leaving the company.

News Source = techcrunch.com

That GoFundMe to build a border wall is issuing $20 million in refunds

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A Trump-inspired GoFundMe campaign that raised $20 million to ostensibly to build a wall on the southern U.S. border will refund every cent. Run by Brian Kolfage, a veteran with a track record of questionable business practices, the project defied all logistical considerations with its proposal for a “simple and straightforward” plan to build the wall. That didn’t stop the fund from attracting the attention of 337,559 donors at the time of writing.

Surprising perhaps no one beyond its donors, the campaign collided with reality, with Kolfage coming to the realization that “the federal government won’t be able to accept our donations anytime soon” given that there is no actual mechanism through which it could do so. On the campaign page, Kolfage newly disclosed his plans to form a nonprofit, “We Build The Wall, Inc.” that would hold onto the donations until the federal government is able to accept them or until all of the donors eventually forget the project altogether.

Initially, donors were told that their money would be refunded if the goal for the project was not met. On December 22, the project’s language changed, removing any mention of refunds if the goal was not met. With that, the project appears to have run afoul of GoFundMe’s policies.

Kolfage claims that he has formed an advisory board that features war privatization enthusiast and brother of the Secretary of Education Erik Prince and the also ethically questionable former Kansas Secretary of State Kris Kobach who lost his race this past November.

While Kolfage might be in good company, it sounds like GoFundMe will be automatically handing back every bit of the $20 million he raised before getting called out changing the terms of the campaign. Donors who still want their money to go to Kolfage will need to opt in specifically.

“If a donor does not want a refund, and they want their donation to go to the new organization, they must proactively elect to redirect their donation to that organization,” GoFundMe told The Hill. “If they do not take that step, they will automatically receive a full refund.”

News Source = techcrunch.com

Meet Caper, the AI self-checkout shopping cart

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The Amazon boogie-man has every retailer scrambling for ways to fight back. But the cost and effort to install cameras all over the ceiling or into every shelf could block stores from entering the autonomous shopping era. Caper Labs wants to make eliminating checkout lines as easy as replacing their shopping carts while offering a more familiar experience for customers.

The startup makes a shopping cart with a built-in barcode scanner and credit card swiper, but it’s finalizing the technology to automatically scan items you drop in thanks to three image recognition cameras and a weight sensor. The company claims people already buy 18 percent more per visit after stores are equipped with its carts.

Caper’s cart

Today, Caper is revealing that it’s raised a total of $3 million including a $2.15 million seed round led by prestigious First Round Capital and joined by food-focused angels like Instacart co-founder Max Mullen, Plated co-founder Nick Taranto, Jet’s Jetblack shopping concierge co-founder Jenny Fleiss, plus Y Combinator. Caper is now in two retailers in the NYC area, though it plans to use the cash to expand to more and develop a smart shopping basket for smaller stores.

“If you walked in to a grocery store 100 years ago versus today, nothing has really changed” says Caper co-founder and CEO Lindon Gao. “It doesn’t make sense that you can order a cab with your phone or go book a hotel with your phone, but you can’t use your phone to make a payment and leave the store. You still have to stand in line.”

Autonomous retail is going to be a race. $50 million-funded Standard Cognition, ex-Pandora CTO Will Glaser’s Grabango, and scrappier startups like Zippin and Inokyo are all building ceiling and shelf-based camera systems to help merchants keep up with Amazon Go’s expanding empire of cashierless stores. But Caper’s plug-and-play cart-based system might be able to leapfrog its competitors if it’s easier for shops to set up.

Caper combines image recognition and a weight sensor to identify items without a barcode scan

Inventing The Smart Cart

“I don’t have an altruistic reason to care about retail, but I really want to put a dent in the universe and I think retail is severely under-innovated” Gao candidly remarked. Most founders try to spin a “super hero origin story” about why they’re the right person for the job. For Gao, chasing autonomous retail is just good business. He built his first startup in gaming commerce at age 14. The jewelry company he launched at 19 still operates. He went on to become an investment banker at Goldman Sachs and JP Morgan but “I always felt like I was more of a startup guy.”

Caper was actually a pivot from his previous entry to the space called QueueHop that made cashierless apparel security tags that unlocked when you paid. But during Y Combinator, he discovered how tough it’d be to scale a product that requires a complete rethinking of a merchant’s operations flow. So Gao hoofed it around NYC to talk to 150 merchants and discover what they really wanted. The cart was the answer.

Caper co-founder and CEO Lindon Gao

V1 of Caper’s cart lets people scan their items’ barcodes and pay on the cart with a credit card swipe or Apple/Android Pay tap and their receipt is emailed to them. But each time they scan, the cart is actually taking 120 photos and precisely weighing the items to train Caper’s machine vision algorithms in what Gao likens to how Tesla is inching towards self-driving.

Soon, Caper wants to go entirely scanless, and sections of its two pilot stores already use the technology. The cameras on the cart employ image recognition matched with a weight sensor to identify what you toss in your cart. You shop just like normal but then pay and leave with no line. Caper pulls in a store’s existing security feed to help detect shoplifting, which could be a bigger risk than with ceiling and shelf camera systems, but Gao says it hasn’t been a problem yet. He woudn’t reveal the price of the carts but said “they’re not that much more expensive than a standard shopping cart. To outfit a store it should be comparable to the price of implementing traditional self-checkout.” Shops buy the carts outright and pay a technology subscriptions but get free hardware upgrades. They’ll have to hope Caper stays alive.

“Do you want guacamole with those chips?”

Caper hopes to deliver three big benefits to merchants. First, they’ll be able to repurpose cashier labor to assist customers so they buy more and to keep shelves stocked, though eventually this technology is likely to eliminate a lot of jobs. Second, the ease and affordable cost of transitioning means businesses will be able to recoup their investment and grow revenues as shoppers buy more. And third, Caper wants to share data that its carts collect on routes through the store, shelves customers hover in front of, and more with its retail partners so they can optimize their layouts.

Caper’s screen tracks items you add to the cart and can surface discounts and recommendations

One big advantage over its ceiling and shelf camera competitors is that Caper’s cart can promote deals on nearby or related items. In the future, it plans to add recommendations based on what’s on your cart to help you fill out recipes. ‘Threw some chips in the cart? Here’s where to find the guacamole that’s on sale.’ A smaller hand-held smart basket could broaden Caper’s appeal beyond grocers amongst littler shops, though making it light enough to carry will be a challenge.

Gao says that with merchants already seeing sales growth from the carts, what keeps him up at night is handling Caper’s supply chain since the product requires a ton of different component manufacturers. The startup has to move fast if it wants to be what introduces Main Street to autonomous retail. But no matter what gadgets it builds in, Caper must keep sight of the real-world stress their tech will undergo. Gao concludes “We’re basically building a robot here. The carts need to be durable. They need to resist heat, vibration, rain, people slamming them around. We’re building our shopping cart like a tank.”

News Source = techcrunch.com

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