Startups Weekly: Spotify gets acquisitive and Instacart screws up

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Did anyone else listen to season one of StartUp, Alex Blumberg’s OG Gimlet podcast? I did, and I felt like a proud mom this week reading stories of the major, first-of-its-kind Spotify acquisition of his podcast production company, Gimlet. Spotify also bought Anchor, a podcast monetization platform, signaling a new era for the podcasting industry.

On top of that, Himalaya, a free podcast app I’d never heard of until this week, raised a whopping $100 million in venture capital funding to “establish itself as a new force in the podcast distribution space,” per Variety.

The podcasting business definitely took center stage, but Lime and Bird made headlines, as usual, a new unicorn emerged in the mental health space and Instacart, it turns out, has been screwing its independent contractors.

As mentioned, Spotify, or shall we say Spodify, gobbled up Gimlet and Anchor. More on that here and a full analysis of the deal here. Key takeaway: it’s the dawn of podcasting; expect a whole lot more venture investment and M&A activity in the next few years.

This week’s biggest “yikes” moment was when reports emerged that Instacart was offsetting its wages with tips from customers. An independent contractor has filed a class-action lawsuit against the food delivery business, claiming it “intentionally and maliciously misappropriated gratuities in order to pay plaintiff’s wages even though Instacart maintained that 100 percent of customer tips went directly to shoppers.” TechCrunch’s Megan Rose Dickey has the full story here, as well as Instacart CEO’s apology here.

Slack confidentially filed to go public this week, its first public step toward either an IPO or a direct listing. If it chooses the latter, like Spotify did in 2018, it won’t issue any new shares. Instead, it will sell existing shares held by insiders, employees and investors, a move that will allow it to bypass a roadshow and some of Wall Street’s exorbitant IPO fees. Postmates confidentially filed, too. The 8-year-old company has tapped JPMorgan Chase and Bank of America to lead its upcoming float.

Reddit CEO Steve Huffman delivers remarks on “Redesigning Reddit” during the third day of Web Summit in Altice Arena on November 08, 2017 in Lisbon, Portugal. (Horacio Villalobos-Corbis/Contributor)

It was particularly tough to decide which deal was the most notable this week… But the winner is Reddit, the online platform for chit-chatting about niche topics — r/ProgMetal if you’re Crunchbase editor Alex Wilhelm . The company is raising up to $300 million at a $3 billion valuation, according to TechCrunch’s Josh Constine. Reddit has been around since 2005 and has raised a total of $250 million in equity funding. The forthcoming Series D round is said to be led by Chinese tech giant Tencent at a $2.7 billion pre-money valuation.

Runner up for deal of the week is Calm, the app that helps users reduce anxiety, sleep better and feel happier. The startup brought in an $88 million Series B at a $1 billion valuation. With 40 million downloads worldwide and more than one million paying subscribers, the company says it quadrupled revenue in 2018 from $20 million to $80 million and is now profitable — not a word you hear every day in Silicon Valley.

Here’s your weekly reminder to send me tips, suggestions and more to kate.clark@techcrunch.com or @KateClarkTweets

I listened to the Bird CEO’s chat with Upfront Ventures’ Mark Suster last week and wrote down some key takeaways, including the challenges of seasonality and safety in the scooter business. I also wrote about an investigation by Consumer Reports that found electric scooters to be the cause of more than 1,500 accidents in the U.S. I’m also required to mention that e-scooter unicorn Lime finally closed its highly anticipated round at a $2.4 billion valuation. The news came just a few days after the company beefed up its executive team with a CTO and CMO hire.

Databricks raises $250M at a $2.75B valuation for its analytics platform
Retail technology platform Relex raises $200M from TCV
Raisin raises $114M for its pan-European marketplace for savings and investment products
Self-driving truck startup Ike raises $52M
Signal Sciences secures $35M to protect web apps
Ritual raises $25M for its subscription-based women’s daily vitamin
Little Spoon gets $7M for its organic baby food delivery service
By Humankind picks up $4M to rid your morning routine of single-use plastic

We don’t spend a ton of time talking about the growing, venture-funded, tech-enabled logistics sector, but one startup in the space garnered significant attention this week. Turvo poached three key Uber Freight employees, including two of the unit’s co-founders. What’s that mean for Uber Freight? Well, probably not a ton… Based on my conversation with Turvo’s newest employees, Uber Freight is a rocket ship waiting to take off.

Who knew that investing in female-focused brands could turn a profit for investors? Just kidding, I knew that and this week I have even more proof! This is L., a direct-to-consumer, subscription-based retailer of pads, tampons and condoms made with organic materials sold to P&G for $100 million. The company, founded by Talia Frenkel, launched out of Y Combinator in August 2015. According to PitchBook, it was backed by Halogen Ventures, 500 Startups, Fusion Fund and a few others.

Speaking of ladies getting stuff done, Bessemer Venture Partners promoted Talia Goldberg to partner this week, making the 28-year-old one of the youngest investing partners at the Silicon Valley venture fund. Plus, Palo Alto’s Eclipse Ventures, hot off the heels of a $500 million fundraise, added two general partners: former Flex CEO Mike McNamara and former Global Foundries CEO Sanjay Jha.

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase editor-in-chief Alex Wilhelm and I chat about the expanding podcast industry, Reddit’s big round and scooter accidents.

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Instacart expands a pickup option for grocery orders across the US

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Online grocery delivery service Instacart has expanded the availability of a ‘click and collect’ pickup service it’s been trialing for a few months in the U.S. — now offering it in stores across the nation.

It says the collect in person Instacart Pickup option is now available in nearly 200 stores — across 25 “key markets” near Atlanta, Boston, Charlotte, Minneapolis, Nashville, San Francisco, and Washington D.C.

The Pickup service is intended to offer customers more flexibility by letting them choose a time to drive by and grab their groceries, rather than wait in for a delivery.

Customers are offered a range of partner stores to choose for collecting their order. While pick ups can be made on the same day.

Instacart says it’s expanded its partnerships for the now expanded Pickup service — saying it’s working with the likes of ALDI, Cub Foods, Food Lion, Price Chopper, Publix, Schnucks, Smart & Final, Sprouts, Tops Friendly Markets and Wegmans.

To access the Pickup service, customers can use Instacart’s website or mobile app, selecting their city and store. After they add groceries to their cart they get to choose either a delivery window or pickup window before they check out.

If picking up, they’ll get an in-app notification when their groceries are ready to collect.

But that’s not the end of the process; Pickup customers are supposed to send an in-app notification to their Instacart personal shopper to let them know they’re on the way.

Then, once they arrive, Instacart says one of its shoppers or a retailer employee will bring the groceries out to their car. Assuming the car has been described accurately enough in the app…

Instacart says the service is free for its Express members.

For non-members there is a cost involved — though Instacart says this is lower relative to paying for delivery (which also varies depending on factors like location/time of day etc). The Pickup cost can also vary depending on the retail partner selected.

For its main grocery delivery service, Instacart says it’s currently accessible to more than 70% of U.S. households, in all 50 states, and more than 50% of Canadian households — available in more than 15,000 different grocery stores across 4,000 cities overall.

While it has partnerships with more than 300 retailers at this point.

On the gig economy side, its service is powered by some 70,000 personal shoppers.

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Sam’s Club to offer same-day grocery delivery via Instacart at over half its stores by month end

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Fresh off its $600 million round of new funding, grocery delivery service Instacart is expanding its relationship with Walmart, the companies announced this morning. The two first joined up in February to offer same-day grocery delivery at select Sam’s Clubs locations in the U.S. Today, Walmart says it plans to offer Instacart-powered grocery delivery in over half of Sam’s Clubs stores by the end of this month.

That expansion will make Sam’s Club grocery delivery via Instacart available to nearly 1,000 new ZIP codes and more than 100 new stores, including those in markets like New Jersey, Indianapolis, Houston and others, the company says.

In total, customers will be able to order from nearly 350 clubs by the end of October.

The partnership was first piloted in Dallas-Fort Worth, Austin and St. Louis, then reached San Diego and L.A. in more recent weeks.

The deal also allows consumers to shop Sam’s Clubs stores without a membership, including shopping its sales. However, Sam’s Club members will receive lower, membership-only pricing, Walmart says.

Deliveries are offered in as little as an hour, and may include non-grocery items, the retailer also notes.

“To help the holidays run smooth, we’re offering a wide product assortment available on Instacart so shoppers can now get household goods delivered,” said Sachin Padwal, Sam’s Club’s Vice President of Product Management, in a statement. “We’re excited that last-minute gifts, small appliances, extra pillows and towels – just to name a few things – are just a few clicks and minutes away,” he added.

The partnership between Sam’s Club and Instacart is significant in terms of Walmart’s larger battle with Amazon, which offers grocery pickup and delivery through its Whole Foods division, as well as grocery delivery through AmazonFresh and Prime Now.

Sam’s Club parent Walmart also offers an affordable curbside pickup program for groceries – which, unlike with third-party services, sells items at the same price as they are in stores. In select markets, Walmart offers grocery delivery, too.

In Walmart’s recent fiscal year 2020 guidance, it said that it expects to offer grocery pickup at 3,100 Walmart stores by 2020, and delivery at 1,600 locations. Currently, Walmart’s grocery delivery is on track to reach 100 U.S. metros by year-end.

Same-day delivery for Sam’s Club isn’t the only change Walmart’s warehouse membership club has made in recent months. Also in February, the club began to offer free shipping on orders, with no minimum purchase, and simplified memberships to two tiers, Savings ($45/year) and Plus ($100/year). Both of those options are cheaper than Amazon Prime, now $119/year.

Sam’s Club shoppers can visit samsclub.com/Instacart to see if their local store is supported.

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