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How Jyve secretly raised $35M & built a $400M retail gig economy

Posted by | Apps, Collaborative Consumption, eCommerce, food, funding, Fundings & Exits, gig economy, Grocery store, Instacart, Jyve, Logistics, Mobile, on-demand economy, Recent Funding, Startups, Talent, TC, Transportation | No Comments

What if instead of just accepting Uber rides, gig workers could pick from higher-paying skilled tasks around town like stocking shelves, checking inventory or driving a forklift at a local grocer? When they work quickly and accurately or learn new trades, they get to choose between more complex jobs. That’s the idea that’s racked up $400 million in staffing contracts for Jyve, an on-demand labor platform that’s coming out of stealth today after 3.5 years. It already has 6,000 workers doing tasks for 4,000 stores across the country.

“I believe the skill economy is way bigger than the gig economy,” says Jyve CEO and founder Brad Oberwager. He sees Uber driving as just the low-expertise beginning of a massive new job type where people with specializations or experience are efficiently matched to retail work. Jyve’s secret sauce is the work quality review system built into its app for managers and stores that lets it know who got the job done right and deserves even better opportunities.

Jyve’s potential to become the skilled labor marketplace has quietly attracted $35 million in funding across a seed and Series A round raised over the past few years, led by SignalFire and joined by Crosscut Ventures and Ridge Ventures. “Jyve is one of the fastest-growing companies we’ve seen, having already reached $400 million in bookings in three short years,” writes Chris Farmer, CEO of SignalFire. “They are creating a new economic class.”

It’s all because Safeway hasn’t touched a bag of Doritos in 50 years, Oberwager tells me. Grocery stores have long outsourced the shelving and arrangement of products to the big brands that make them, which is why the retail consumer packaged good industry employs 10 million people in the U.S., or more than 10 percent of the country’s workforce. But instead of relying on one person to drive goods to the store, load them in and shelve them, Jyve can cut costs and divide those tasks and match them to nearby people with sufficient skills.

“Retail isn’t dying, it’s changing, and brands that are thriving are the ones investing in their in-store experience as well as owning their e-commerce initiatives,” observed Oberwager. “The question we must ask then is how do we fill this labor shortage and also enable people to refine special skills that are multi-dimensional and rewarding.”

Oberwager knows the tribulations of grocery shelving well. He built online drugstore More.com before the dot-com boom, then started making his own food products. He created True Fruit Cups, one of the country’s largest importer of grapefruit, and founded and sold his Bare apple chips company. Competing for shelf space with big brands paying workers to set up elaborate displays in grocery stores, he saw a chance to reimagine retail labor.

But it was when his daughter got sick and he realized the surgeon who performed the operation was essentially a high-skilled mercenary that he seized on the opportunity beyond grocers. “He walks in, does the surgery, walks out. He’s a gig worker, but it’s a skill I’m willing to pay a lot for,” says Oberwager.

He created Jyve to aggregate the demand from different stores and the skills from different workers. When someone signs up for Jyve, they start with easier tasks like moving boxes in the backroom. If they do that well, they could unlock higher-paying shelf stocking and display arrangement, then product ordering and brand ambassadorship. At each step, they take photos and leave comments about their work that are reviewed by a combination of store and brand managers, as well as Jyve’s machine vision algorithms and human quality-control team. It can quickly tell if someone puts the Cheerios box on the shelf the wrong way, and won’t give them public-facing tasks if they don’t improve

“Seventy percent of our market managers were originally drivers, and they become W-2 workers,” Oberwager says proudly. Jyve even makes it easy for brands and retailers to hire its top giggers for full-time jobs. Why would the startup allow that? “I want to put it on a billboard, ‘Work hard, get promoted,’ ” he tells me. The fact that Oberwager’s last name could be interpreted as “higher wages” in German makes Jyve seem like his destiny.

But to fulfill that prophecy, Jyve will have to out-tech old-school staffing firms like Acosta, Advantage and Crossmark. It’s also hoping to ween grocers off of Instacart by bringing shopping for online orders back to stores’ in-house staff — provided by Jyve. A worker could be stocking shelves, then use that knowledge to quickly pick up all the items for an online order and give them to a curbside driver, then return to their task.

Keeping work quality up to snuff will be a challenge, but by dangling higher wages, Jyve aligns its incentives with its workers. The bigger hurdle may be convincing big brands and retail institutions to change the way they’ve done staffing forever. Oberwager professes that it takes a long time to onboard, but also a long time to offboard, so it could build a solid moat if it’s the first to win this market. Jyve is now in more than 1,200 cities across the U.S.., and a real-time map showed a plethora of gigs available around San Francisco during the demo.

Oberwager admits the unskilled gig economy is “a little dehumanizing. It makes people a cog in a machine.” But he hopes each “Jyver,” as he calls them, can become more like a circuit — a complex machine of its own that powers something bigger.

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DoorDash makes a big push into grocery delivery through a pilot program with Walmart

Posted by | Apps, DoorDash, Instacart, Mobile, Postmates, Startups, Walmart | No Comments

DoorDash is about to make a huge move into grocery delivery, but instead of going all out as a delivery service on its own, it’s instead going to be working behind the scenes to power delivery networks for larger companies — with Walmart as its first big partner.

While Instacart looks to control the end-to-end customer experience for grocery delivery, and Amazon is off doing Amazon-y things with its Whole Foods delivery system, DoorDash is hoping it can build a network that any company that needs some delivery network can tap without giving up its direct relationship with their customers. DoorDash is rolling out grocery delivery with Walmart in Atlanta in the first of what may be a major move to become a back-end platform for companies like Walmart, which want a delivery button on their website but don’t want to build the entire network themselves. By doing that, it offers DoorDash a potentially nice neutral niche as grocery delivery heats up.

“You can use the term white label, but our drivers still will often wear the DoorDash shirt and have the DoorDash bag,” DoorDash COO Christopher Payne said. “But if you go to Walmart.com, and order from Walmart in Atlanta, you’ll have no idea it’s from DoorDash. We’re very supportive of that scenario, that’s the DoorDash Drive scenario. We’re excited to build a business with them and provide this capability.”

Payne said he hopes this will be one of the first of a major expansion of that DoorDash Drive initiative to become a tool that businesses can start tapping for local delivery. And while DoorDash may partly be giving up that direct relationship with users, it can start getting a lot more data when it comes to deliveries. That data then helps it become more and more efficient, ensuring that it can get deliveries done in the best matter and attract more customers, leading to the need for more drivers, and so on.

DoorDash also basically started the whole last-mile delivery business on hard mode with restaurant delivery, Payne said. What DoorDash loses in that direct user experience is paid back in data, Payne says, and that’s more than valuable enough. Walmart is also running a similar program with Postmates as it looks to get further into grocery delivery.

“It turns out restaurant delivery is probably one fo the hardest delivery use cases you have — you have to get a pizza somewhere in 20 or 30 minutes or it won’t be crisp, and you have to get an ice cream cone somewhere before it melts. Grocery delivery tends to be delivered earlier in the day, which is before dinner or before you go to work,” he said. “That works out perfectly for us, actually, because our drivers aren’t busy or are less busy than they would be otherwise. It’s a delivery window, as opposed to one that’s getting something to you at an exact moment and time. That’s actually much easier and less demanding than a real-time delivery.

It’s still a significant step beyond its core competency, which is restaurant delivery. But while that has the potential to be a big business, it’s also going to top out at some point. GrubHub, for example, has a market cap of nearly $9 billion — but Amazon, the backbone of how many consumers engage with physical goods through the Internet, is a $700 billion-plus company. If DoorDash is going to continue to grow, it has to start expanding into new lines of revenue, and figuring out how to take all the data and tools it’s built and bring them to new businesses is going to be critical.

Amazon changed the calculus of last-mile grocery delivery, and it pretty much did it overnight — or at least over the span of a few months, which is the equivalent of overnight for a $700 billion company. Amazon acquired Whole Foods, and all of its locations in major metropolitan areas, for $13.7 billion and very quickly began offering two-hour delivery for prime customers for Whole Foods. On top of that, the company quickly started offering a credit card with an absurdly good reward system that’s tied directly to Prime purchases and Whole Foods (assuming you stay within the Prime ecosystem).

That’s meant that larger companies find themselves trying to figure out how to make such an agile move, and do it as soon as possible. For Walmart, getting this partnership with DoorDash allows it to just add a small segment to its typical customer flow without having to build out a full-on logistics delivery system. The opportunity to expand that to other businesses is pretty natural, and that’s the theme behind the Drive platform, and in theory offers businesses a way to quickly ramp up a delivery network without having to hand off the customer relationship to DoorDash. That may, in the end, be much more palatable for businesses.

“One of the other advantages of partnering with a company like Walmart isn’t just that they’re a leading grocer in the US,” Payne said. “They’re in a lot of other lines of businesses. As they want to expand and deliver more to their customers, they have physical assets to do that, so it provides a nice solution for us to test other items in the future. I would say grocery delivery is very much in its early days, it’s roughly equivalent to where food delivery was four years ago. We’re all going to be learning together, and it also means there’s gonna be a lot of other competition as there is in food delivery. But we believe our merchant operational excellence and quality of delivery will set us apart, and that’ll be proven in time.”

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On-demand shipping startup Shyp is shutting down

Posted by | Enterprise, Instacart, Kevin Gibbon, Mobile, on-demand, Postmates, Shyp, Startups | No Comments

After rocketing to a $250 million valuation in 2015 amid a massive hype cycle for on-demand companies, on-demand startup Shyp is shutting down today.

CEO Kevin Gibbon announced that the company would be shutting down in a blog post this afternoon. The company is ending operations immediately after, like many on-demand companies, struggling to find a scalable model beyond its launching point in San Francisco. Shyp missed targets for expanding to cities beyond its core base as well as pulled back from Miami. In July, Shyp said it would be reducing its headcount and shutting down all operations beyond San Francisco.

The company raised $50 million in a deal led by John Doerr at Kleiner Perkins back in 2015, one of his last huge checks as a variety of firms jumped onto the on-demand space. The thesis at the time was pretty sound: look at a strip mall, and see which businesses can come to you first. Shipping was a natural one, but there was also food, and eventually groceries. Today, there are only a few left standing, with Postmates, Instacart and DoorDash among the most prominent ones. Even then, Instacart is now under threat from Amazon, which is ramping up its own two-hour delivery after buying Whole Foods.

“At the time, I approached everything I did as an engineer,” Gibbon wrote. “Rather than change direction, I tasked the team with expanding geographically and dreaming up innovative features and growth tactics to further penetrate the consumer market. To this day, I’m in awe of the vigor the team possessed in tackling a 200-year-old industry. But, growth at all costs is a dangerous trap that many startups fall into, mine included.”

Shyp is now a casualty of the delivery space. Where it originally sought to make up the cost of delivery in the form of cheaper bulk costs for those deliveries, Shyp’s one-size-fits-all delivery — where you could deliver a computer or a bike — eventually ended up being one of the most challenging and frustrating elements of its business. It began adding fees to its online returns business and changing prices for its bulk shipments. As it turns out, a $5 carte blanche for delivery was not a model that really made sense.

Indeed, that growth-at-all-costs directive has cost many startups, with companies like Sprig shutting down and many companies getting slapped on the wrist for aggressive growth tactics like text spamming. It also meant that startups had to very quickly develop an effective playbook that, in the end, might not actually translate to markets beyond their core competency. Shyp pivoted to focusing on businesses toward the tail end of its lifetime, including a big deal with eBay, which we had heard at the time was doing well.

“We decided to keep the popular-but-unprofitable parts of our business running, with small teams of their own behind them,” he wrote. “This was a mistake—my mistake. While large, established companies have the financial freedom to explore new product categories for the sake of exploring, for startups it can be irresponsible.”

But Gibbon said the company kept parts of its popular but challenged models online – which may have also contributed to its eventual shut-down. The company expected to be in cities like Boston, Seattle and Philadelphia in early 2016, but that didn’t end up panning out. And Shyp increasingly felt the challenges of an on-demand model, trying to push the cost to the consumer as low as possible while handling the overheads and logistical headaches of a delivery business.

“My early mistakes in Shyp’s business ended up being prohibitive to our survival,” Gibbon wrote. “For that, I am sorry.”

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Instacart CMO Cheryl Law is no longer at the company

Posted by | Amazon, Amazon Whole Foods, Cheryl Law, Instacart, Mobile, Prosper, Startups, TC, whole foods | No Comments

 Instacart CMO Cheryl Law is no longer at the company, TechCrunch has learned. Instacart confirmed the departure. We were tipped off about her departure a bit before the whole Amazon making a $13.7B bid for Whole Foods thing went down. Law joined Instacart at the beginning of the year and was previously the CMO of Prosper. Instacart’s challenges can change on a nearly daily basis… Read More

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Cornershop, a grocery-delivery app in Chile and Mexico, raises $21M

Posted by | Apps, cornershop, Instacart, Mobile, Startups, TC | No Comments

 The whole on-demand space has faced a lot of scrutiny in the past few years as questions about whether they are viable businesses balloon and the periodic down round leaks out. Then Instacart raised a massive round at a $3.4 billion valuation, and while the terms aren’t exactly clear, the funding environment for that space may be softening a bit. That’s offered an opportunity for… Read More

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Instacart reverses course, re-introducing tips for shoppers

Posted by | Apoorva Mehta, Apps, Instacart, Mobile, Startups, TC | No Comments

instacart-thumb Under pressure from shoppers complaining about losing the ability to receive tips last month as the company looked to smooth out the earnings curve, Instacart said it is re-introducing customer tipping. “After announcing this change, we heard a lot of feedback from our shopper community,” the company said in a blog post. “While our shoppers liked most of the changes, they did… Read More

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How Apoorva Mehta hopes to build an Instacart empire with a promoted ad business

Posted by | Apoorva Mehta, Apps, Instacart, Mobile, Startups, TC, TechCrunch Disrupt, TechCrunch Disrupt SF, techcrunch disrupt sf 2016 | No Comments

disrupt_sf16_apoorva_mehta-4077 Instacart is one of the most well-known companies in what can be an extremely difficult on-demand delivery economy. It’s known for being one of the pioneers of a new age of online grocery delivery, especially in light of the previous failure of companies like Webvan, but it’s going to have a long uphill battle to profitability and sustainability. Instacart CEO Apoorva Mehta,… Read More

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Instacart Adds Coupons Through Its New “Deals” Platform

Posted by | Apps, coupons, deals, eCommerce, grocery delivery, Instacart, Mobile, TC | No Comments

grocery_being_delivered_instacart Grocery delivery services are convenient, but they’re not always affordable. In addition to slight mark-ups on the cost of the products themselves, services typically require delivery fees and/or membership fees. Today, Instacart is rolling out a new option that could help reduce the expense of using its service for price-conscious consumers: Instacart Deals. Essentially an online… Read More

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You Can Now Use Shazam, Instacart, And Other Android Apps With “Okay Google” Commands

Posted by | Android, Apps, Flixster, Google, Instacart, Mobile, shazam, TC | No Comments

shazam You’ve been able to use your voice (“Ok Google”) to do all sorts of stuff on Android for a while now. But said stuff has all been built-in by Google itself; third party developers haven’t really been able to tap into that functionality.
Today, that changes. Read More

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