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Salesforce Ventures led the round, which saw participation from Goldman Sachs and Softbank Investment Advisers (the Vision Fund, more or less). The investment follows a $300 million Series A that Automation Anywhere raised in November of 2018, a round led by the Vision Fund. Automation Anywhere was worth a more modest $2.6 billion (post-money) after its Series A, meaning that its new valuation ascribes billions of new dollars of value to the company after just one more year in operation.1

That valuation growth works out to about $350 million per month since its November Series A. It’s worth recalling that Automation Anywhere’s Series A came in two parts, including a $250 million round completed in July of 2018. Between its first and second Series A checks and its new capital, the company has now raised around $840 million in under 1.5 years.

What for, is a fair question. Simply put RPA involves taking rote, or routine tasks that humans normally perform, and then deploying software to execute the effort instead. When we discuss automation, media worries tend to fixate on labor that IRL workers perform; you might consider RPA to be the white-collar equivalent, to some degree.

Automation Anywhere competitor UiPath describes RPA as “the technology that allows anyone today to configure computer software, or a ‘robot’ to emulate and integrate the actions of a human interacting within digital systems to execute a business process.” UiPath has raised around $1 billion for its RPA work, including money from Accel and a $568 million Series D in April of this year led by Coatue.

RPA is a hot space for private investors.

While it’s fun to note that UiPath and Automation Anywhere will now face-off with nearly $2 billion invested between them, it’s worth considering what the Automation deal means for SoftBank. The new round pushes the value of the SoftBank investment much higher. That sort of markup could help the Japanese conglomerate raise, and launch its second Vision Fund. Perhaps the new Automation Anywhere round will begin to paper over the WeWork mess.

Illustration: Li-Anne Dias.

As expected, WeWork announced layoffs this week. Some 2,400 positions are impacted thus far, a smaller number than many expected.

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WeWork, temporarily The We Company, is a concern in the midst of a transformation. Starting life as a coworking service, the firm morphed into a Medusa-like agglomeration of ambition, led by its erstwhile CEO Adam Neumann. However, after the company filed an infamous S-1 with the SEC as it looked to go public, its CEO was fired and the company’s management shaken up.

As a company, WeWork lost too much money, had little business focus or discipline, all while sporting one of the worst examples of corporate governance the market has seen. Now with new leadership in place, WeWork is limiting its efforts to coworking, shedding unneeded businesses, and trying to cut its losses.

But how much can 2,400 layoffs save the firm? WeWork posted a staggering $1.37 billion operating loss in the first half of 2019. Surely the layoffs can’t make much of a dent against that sum?

However, that isn’t the figure I’d focus on. Instead, if we observe WeWork’s cash flow statement we can see that the firm’s operating activities only burned $198.7 million in H1 2019. That’s a figure that 2,400 layoffs could begin to staunch. The firm’s comical -$1.47 billion in investing cash flow over the same period can be reined in separately.

How far the company is willing to curtail investing in new properties (and thus limiting growth) isn’t clear; the company’s plans still call for extensive buildouts.

Summing, it isn’t impossible to see that the WeWork layoffs will reduce its operating cash burn. But the firm will need to dial back build outs to get its figures where Wall Street wants them it seems. But it’s not all bad news, WeWork claims that its offices make more money over time, and it has lots of space still maturing. Perhaps those locations can provide enough growth to allow the firm to ratchet back spend and get its figures closer to the realm of sanity.

Illustration: Dom Guzman

This morning Meituan Dianping announced its third-quarter results, including 44.1 percent revenue growth to 27.5 billion RMB ($3.91 billion), and post-tax profit of 1.3 billion RMB ($189.1 million). Meituan improved from stiff year-ago losses on both an operating and net basis, making its growth and incomes all the more notable.

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The company, which provides deals, reservations, and on-demand delivery, went public last year worth around $55 billion. Today it is worth about $68 billion; shares of the company fell just over 5.5 percent in trading today, following the announcement of its results.

All that’s well and good, but what matters is that inside of Meituan Dianping’s earnings were positive notes regarding its food delivery business. Food delivery is a key growth driver for companies like Uber and Postmates, and the entire game for firms like DoorDash and GrubHub. So, what Meituan has to say about the economics of food delivery matters; can the Chinese giant make it work?

It seems that the answer is mostly yes. Here are the key excerpts from its earnings report, regarding food delivery (emphasis Crunchbase News):

[R]evenue from our food delivery business increased by 39.4% year-over-year to RMB15.6 billion for the third quarter of 2019 from RMB11.2 billion in the same period of 2018. Gross profit from our food delivery business increased by 64.5% to RMB3.0 billion for the third quarter of 2019 from RMB1.9 billion in the same period of 2018, while gross margin expanded to 19.5% from 16.6%. Although gross margin decreased by 2.8 percentage points on a quarter-over-quarter basis due to unfavorable weather conditions, we were able to achieve positive adjusted operating profit for our food delivery business for the third quarter of 2019.

Food delivery made up about 57.5 percent of Meituan’s gross transaction volume (total platform spend) in the third quarter. Yes, the firm’s profit note regarding the portion of its business that we care the most about was adjusted profit (removing “share-based compensation expenses, amortization of intangible assets resulting from acquisitions,” along with various impairment charges), but that’s still better than nothing.

Recall that Uber and Lyft are only promising full-business adjusted profit to begin in 2021; Meituan Dianping is already there with its whole business and food delivery operation. Uber Eats, generated negative adjusted EBITDA (another adjusted profit metric) of $316 million in Q3 off $392 million in adjusted net revenue ($645 million in un-adjusted top line). Those numbers are worse.

So What?

Meituan making money on delivery shows that it is possible to do so. And it was able to make money on food delivery in a market as competitive as China, and one that is slowing down. Turning a profit on delivery, it turns out, is not an impossible feat.

We don’t want to hold our breath for it, but perhaps if Meituan Dianping can generate adjusted profit on food delivery, others can too. (Food delivery is a crowded space in the U.S., which could complicate short-term profitability.)

It’s probably too bold to say that Meituan’s news will prompt Postmates to get off the sidelines public (Postmates’ CEO said market conditions are the reason for its delayed IPO, but it would be unusual for a company to go public in the midst of the holidays). Nevertheless, Meituan’s delivery profit is a good sign for all of the players in the space.

Illustration: Dom Guzman

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As a company Canaan is best known for its ASIC business or application-specific integrated circuits. ASICs themselves are perhaps best known for their use in the computing-intensive task of mining cryptocurrency.

Though Canaan would like you to know that its ASICs can also be used for artificial intelligence-related computing. The firm’s most recent F-1 filing (an S-1 filing submitted by a company domiciled outside of the United States) says “AI” nearly 230 times.

Financial Recap

As Crunchbase News reported previously, the company’s financial numbers are odd. Canaan’s revenues have fallen thus far in 2019, as has its gross profit. Both results are in precipitous decline, with revenue falling about 60 percent to $134.2 million over the first three quarters of the year. Over the same time frame, gross profit fell over 68 percent.

Canaan also slipped from a profit in the first nine months of 2018 to a similarly-sized loss ($33.1 million) during the same time period of this year.

The company needs cash sometime soon, perhaps explaining the debut. With $46.5 million in cash and equivalents at the end of calendar Q3 2019, Canaan burned $30 million from its combined operating, investing, and financing activities during quarters one, two, and three of this year.

This is the third time Canaan has tried to go public, and it ended up pricing at the bottom of its range. More when it starts trading tomorrow.

Illustration: Li-Anne Dias.

There’s no point in pretending that the idea of Patreon isn’t neat. By collecting supporters for an artist, or publication, or group in one place, Patreon is building a paid platform to support creativity. It’s a good idea, even if the company’s business choices have at times attracted user blowback.

As a private company, Patreon has been effective at attracting private capital. The startup has raised just under $166 million according to Crunchbase data. Its investors include Index Ventures, Hannibal Buress, Freestyle Capital, and Thrive Capital.

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This week Patreon announced two milestones that caught our eye, namely that it now has 4 million active patrons (folks paying for stuff on the site), and that the startup has now paid out $1 billion to users of its service. Neat, but, what’s the curve on those charts?

Looking Backwards

Let’s examine the record and find some other milestones that Patreon has announced over time. We’ll start with active paying customers (patrons):

• May 2017, 1 million patrons (source)
• May 2018: 2 million patrons (source)
• January 2019: 3 million patrons (source)
• November 2019: 4 million patrons (today, natch)

There’s acceleration there of a sort. Patreon took around a year to add 1 million patrons from May of 2017 to May of 2018. Then it required less than a year to get another million. Most recently it took around nine months for the firm to reach 4 million from three. Maybe.

The issue with milestones of this sort is that they are rarely announced when they actually happen; they’re announced when it makes sense for a company, and as Patreon tends to bundle its metrics-related announcements we can’t be clear on when it reached actually the specific marks.

That said, it’s fair to guesstimate that Patreon has seen a moderate acceleration in the pace at which it adds active patrons since 2017. That’s good for the company and good for its users, as the patrons are spending more over time:

• $150 million paid out in 2017 (company estimate, source)
• $300 million paid out in 2018 (company estimate, source)
• $500 million paid out in 2019 (company estimate, source)

Patreon has also announced various cumulative results, including $350 million in payouts when the company turned five. The new $1 billion figure fits inside this context.

Revenue

Patreon announced a new set of pricing options earlier this year, which it intends to offer to new users (creators) who sign up for its service. Old users will keep their former pricing.

This makes it hard to estimate the company’s revenue. However, the firm’s old method was a flat 5 percent while the new tiers have higher-cost options. You can quickly do the math based on how high you want to push up your estimate of the company’s take rate. For example, at 6.5 percent, the company’s expected $500 million in platform spend works out to $32.5 million in 2019 revenue.

Patrons are, in a way, a proxy for Patreon platform spend. But we also have to consider whether rising fees for new users will help accelerate growth or leave them searching for a cheaper alternative where they bring home a larger share of their revenue.

We’re curious to see if Patreon has the ability to scale to IPO size. More and more people are using the service to make money from their podcasts, videos, and articles. But will the company be able to get enough creators on board with Patreon, and get enough people to pay for their services, to reach sufficient IPO size at a growth rate that attracts new investors? Patreon’s revenue depends on the public’s willingness to pay for content, after all; that is a proposition that was out of favor some years ago. Though, Patreon has pushed back against the narrative by continuing to grow.

There’s also the question of whether public markets will understand the company. Patreon combines the characteristics of crowdfunding, memberships, social media, and community into an interesting conurbation. It has a membership model that works to gather payments from a group of people with a similar interest. How will Wall Street respond to such a hybrid?

And if Wall Street embraces it, we also have to wonder how recession-proof the model will prove. Patreon caters to artists and creators, but unfortunately, when money gets tight, people may cut their payments for entertainment and interests first.

It’s unclear how many patrons the company needs to go public. Patrons can set different rates for their content, so how much money the company makes depends on how money each patron is pulling in and how many patrons it has.

The sentiment lately has been that money-losing, high-growth startups are out of favor. This particular startup is gaining popularity among users, so only time will tell if investors feel similarly.

Illustration: Dom Guzman

That SmartNews is a unicorn is notable, as news-related venture-backed companies have missed revenue targets in recent years, or found themselves up for sale at low prices. SmartNews, which partners with external media companies (including Crunchbase News), helps provide traffic to a number of publishers. For a smaller cohort, SmartNews also pays for its part of the deal.

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I was curious about the deal, so I spent a little time collating some reported figures. SmartNews didn’t share much more than what I already knew regarding its revenue base, but let’s do what we can to understand the investment in the light of a media landscape that I don’t need to tell you is troubled.

SmartNews

As part of its fundraise, SmartNews put out a few new usage metrics. It re-released a monthly active user (MAUs) result, and some metrics on its audience growth in the United States. After sifting through the figures released with the round and looking around for historical records, we decided to put today’s figures (included below) in context.

Here’s what we could find regarding SmartNews’s MAU user growth around the world (the service is focused on the Japanese and U.S. markets):

• January 22, 2015: 5 million MAUs (combined data, source)
• July 21, 2018: 10 million MAUs (source)
• June 26, 2019: 15 million MAUs (source)
• August 5, 2019: 20 million MAUs (source)

Turning to the United States market, the numbers are a bit harder to figure out.

The company reported 1 million MAUs in the United States back in 2015 after the service had been in the market for around three months. Today, the company said that it has seen “US growth [of] 500% year over year per an independent report.” The company described this as “strong momentum” that it expects “will continue.”

Whenever you see a number like 500 percent, your first question must be from what base. It’s hard to say in this case. But, it seems fair to say that unless a huge percentage of the company’s aggregate DAUs are from the United States, the company’s product spent a few years in the doldrums after that initial burst of interest; we can tell that from the 1 million MAU result from 2015 and the amount of time that has passed.

Regardless, the MAU results give context as to how SmartNews managed to raise so much more money after its earlier $28 million raise back in August; the company grew its MAU base by a third in just a few months (give or take, we’re talking about opaque metrics and timings). That is the sort of growth that makes private capital sit up and take notice.

Speaking of money, how much money is SmartNews bringing in? The company provided us with the following note: “[W]e are generating a nine-figure annual revenue.” That seemed interesting, so we asked if the number was net or gross. The company replied that “9 figures is [its] total gross revenue” (emphasis: Crunchbase News).

From that point, I wanted to know if the figure led to a lower net revenue result, or if the sum was merely the company’s GAAP-equivalent revenue that it distributed in part to publishers.

Or more simply, did the nine-figure point include revenue that wouldn’t count as net under GAAP, making it more of a GMV-styled result that included funds that would pass-through to partners? If so, the nine-figure point might be a bit optimistic.

The company, at that point, didn’t have anything more to add. What we know, then, is merely that SmartNews is managing to drive substantial commercial activity through its product. Presuming the smallest nine-figure revenue number, $100 million, SmartNews is worth about 12 times revenue. It’s a smaller number than that, of course, but that’s a maximum multiple.

Toss in the company’s recent user growth as a proxy for top-line expansion and that figure slims even further, provided that the revenue figure all collects under the roof of SmartNews.

So, that’s what I got. I hope some of it was useful!

Illustration: Li-Anne Dias.

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So when a venture capitalist reached out wanting to talk about a cloud slowdown, I had to get on the phone and hear what they had to say. That this particular VC also mentioned revenue multiples before our chat made it all the more attractive a conversation, really.

Initially, I expected to just speak with the VC in question, Matt Holleran, a general partner at Cloud Apps Capital Partners, learn something, and leave it at that. But, after yammering with him a bit, I decided to bring a version of the conversation to you as it proved both useful and interesting to myself. (Cloud Apps Capital Partners is based in San Francisco, last raised $87 million in its second fund, and invests in early-stage cloud companies.)

So, I sent over a list of questions and let him compose answers at length, something that is nigh journalistic malpractice. Reporters nearly always value recorded and transcribed interviews over written chats as nearly everyone is more interesting, and authentic, when speaking out loud. Not to mention that such conversations brook less interference from third-parties. But in this case, we were discussing something technical so it felt like a good exception to the rule.

To make things fairer, I’ve weighed his lightly-edited and occasionally condensed responses with my notes from our first conversation (everything is fine) and have provided small commentary following some of his answers. Let’s go!

Questions, Answers

First, a few questions about the state of the cloud and SaaS market.

Crunchbase News: Could you detail your views regarding the slowing of growth among the most valuable public cloud companies, and what that might mean for SaaS and cloud startups?

Matt Holleran: The largest 25 public cloud companies by market capitalization had revenue growth of 27 percent in calendar 2018 and forecast 25 percent in 2019, 22 percent in 2020 and 20 percent in 2021. Part of the issue here is that these companies are larger, and adding incremental revenue at those growth rates gets more challenging. But we think reduction in the revenue growth forecasts is mainly due to executives at end-buying companies weighing the risk of recession in the US and abroad.

End customers are still and will still be buying new cloud business applications and growing their usage of existing applications because of the value proposition of the applications and the customer benefits of the recurring revenue model. But the size of new purchases may get smaller, and the rate of growth of existing applications may be slower than the last few years. Public and late-stage cloud companies will need to thoroughly qualify the opportunities in their pipelines and reframe their landing and expand strategies.

Cloud business application startups will need to be laser-focused on serving executives at buying companies with titles that have access to reasonable budgets and have the drive and authority to make new purchases and roll out meaningful applications. If solving a problem with a cloud business application is not a top-three priority for a target business executive title, it may not get done in a time of slowing economic growth and uncertainty. The first deployments may be smaller and take a little longer, but history has shown that great cloud business application companies have been started and gone through the foundational stages during major recessions and minor ones. Salesforce.com in 2000 and ServiceMax in 2008 are two good examples.

Alex’s Take: What was pretty interesting about Holleran’s take regarding cloud growth wasn’t that it was maximalist or negative, but that it split the difference. It’s not hard to find positive or negative cloud takes but to hear someone in the middle did stand out.

Crunchbase News: We discussed the size of new cloud/SaaS deployments and how they may shrink in time. What impact might that situation have on SaaS and cloud companies large and small?

Matt Holleran: We are already seeing the impact of smaller initial cloud purchases and deployments as enterprise customers become more cautious with their software spending in the face of global economic uncertainty.

In Q3, Workday said that sales of their flagship HR application to the world’s largest enterprises was slowing.

Public cloud companies will continue to sell to new enterprise customers, but the size of those initial deals will not be as large as they were in the recent past. Large public cloud companies like Workday and Salesforce.com will likely focus more on cross-selling new or acquired products to their existing customer base to grow revenue. Medium-sized cloud companies will likely focus on pipeline rationalization to focus on bringing on the most qualified new customers and proposing smaller initial new purchase prices to make the customer successful and plan for more future revenue versus upfront purchases.

Next, let’s talk about the most interesting thing in the world, cloud and SaaS revenue multiples.

Crunchbase News: We discussed rising SaaS and cloud company revenue multiples that seemed to peak over the summer; what drove that rise in valuations?

Matt Holleran: The average public cloud business application company forward revenue valuation multiple hit a record 12x this July. This run-up followed a significant revenue multiple compression and stock market correction in this market in December of 2018.

Early in 2019, the Fed lowered interest rates, which increased GDP growth and forecasts. As a result, executives at end-buying companies continued their purchases of cloud business applications all over the world. The lower rates also likely forced more capital to look for good sectors to invest in to generate returns resulting in an influx of capital with experience in the cloud business application business model and likely many new investors without prior experience.

The professional investors with experience in this market may have realized their substantial gains from the first half run-up by selling in Q3. The new investors may have conflated investing in good cloud companies with good recurring revenue models with good fundamental customer unit economics but losing money from investing in growth with unprofitable consumer companies and exited post the peak without significant gains or with losses.

We have seen this before, with one example being SuccessFactors. They spelled out their customer unit economics in their S-1 filing in 2007 and went public with good customer unit economics and large losses because they were investing in growth. In 2008, their stock dropped significantly and later regained a lot of the lost value prior to being acquired by SAP.

Public market investors’ understanding of the recurring revenue model, good customer unit economics and appreciating smart growth with losses has grown since Salesforce.com went public in the mid 2000s, but there may be many new investors who don’t have experience with the business model yet and may cause a flight to safety with profitable cloud companies but not necessarily a flight to quality.

Alex’s take: Years ago, an executive from a newly public company called me after their firm got beat up in earnings to explain how SaaS companies invest (i.e. lose money) in the short term to build long-term, high-margin recurring revenue. Happily, I was already read-in, but we do live in very different times today, at least in terms of the market’s familiarity with SaaS economics. 

Crunchbase News: Later in our conversation, we discussed cloud and SaaS multiples returning to more historically normal levels. What levels would you consider to be normal?

Matt Holleran: At the peak this summer, companies on the BVP Nasdaq Emerging Cloud Index were trading at an average of 12x forward revenue. The historical norms are closer to 6-8x. The Index is trading at 10x today on average. 8x on average is probably a reasonable valuation multiple. With 22% average revenue growth for the Top 25 cloud companies by market capitalization expected in 2020, these companies could grow into their current average revenue multiples within a year.

Alex’s take: We’ve touched on this idea before. If SaaS stocks held their value flat for a few quarters, revenue multiples would compress as the companies continued to grow.

Now, let’s wrap with a short note on the IPO window and a sports analogy.

Crunchbase News: We discussed how the SaaS and cloud IPO window may be closed for all but the best companies, why is that?

Matt Holleran: I think buyers will take a wait and see approach, wondering if the cloud market still has farther to fall. Similarly, cloud companies and their boards will make the calculation that it might be better to stay on the sidelines and wait it out. The market leaders targeting large global markets, serving meaningful titles with great customer unit economics will be able to come public if they choose to or they will access private capital until they think the time is right.

Alex’s take: If your current valuation is too rich for public-market multiples to be palatable today, and your most-recent investor wants a return, your IPO is a ways out. 

Crunchbase News: Finally, you remain bullish on the SaaS transformation that we’ve seen in the software over the past few decades. Stretching ourselves to a baseball analogy, what inning are we in today?

Matt Holleran: I’d say we’re still in the fourth inning. End customers realize the business value of deploying cloud applications and appreciate the recurring revenue business model as much as companies and their investors. The horizontal cloud application market is expanding globally across the small, medium, large, and enterprise markets. The vertical cloud business application market is also now a global market across many customer size segments. The global scale of these horizontal and vertical markets is creating the opportunity for more entrepreneurs to build global category leaders that can become public scale companies.

Illustration: Li-Anne Dias.

When Peloton filed to go public, the consumer-exercise phenom received wall-to-wall coverage. Given the company’s high marketing spend, its brand was well known even by non-users. So, the press couldn’t help itself. Crunchbase News included.

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Investors seemed similarly intrigued. After setting a $26 to $29 per-share IPO price range, Peloton, fueled by hundreds of millions of dollars in venture capital, was set to roughly double its final private valuation. Eventually pricing at $29 per share, Peloton started life as a public company worth about $8.1 billion.

But then things went off the rails. Peloton opened at $27 per share and closed its first day as a public company worth under $26 per share. The result looked like a sharp rebuke of the company’s newly-extended valuation. And as SmileDirectClub, Uber, Lyft, and others struggled as public companies Peloton was looped into the idea that investors were clamping down valuation — and, therefore, revenue multiples — for tech-ish companies not selling software.

Software companies sport high margins, and a high percentage of their revenue often recurs. The market values that particular cocktail richly, especially in recent quarters. When Peloton’s shares were falling alongside those of many of its newly-public brethren, it appeared that the market was cutting the prices of tech-enabled companies, in contrast to how it valued tech companies themselves.1

But then something odd happened: Peloton’s shares rallied. The company, which reported earnings on Nov. 5, has recently seen its shares price not only recover from declines but surge past its IPO price. Heading into trading today, Peloton is worth $30.25 per share, after surging over 11 percent yesterday. In snark-parlance, this is called a narrative violation.

For Peloton shareholders, it’s a welcome result. But what does it mean for startups?

Growth, Loss

In recent years, the startup mantra has been something like ‘growth at all costs.’ Investors liked high-growth companies, and have been more willing to overlook massive losses if a company reported quickly growing revenue. The idea has been that if high-growth, cash-burning companies are well-funded, they can grow quickly and eventually turn a profit, bringing in outsized returns for their investors.

It’s only been recently (within the past few months) that disappointing IPOs have turned people’s attention toward unit economics and profitability. But maybe that was just a brief distraction, and growth is back en vogue.

We’ll be able to tell by looking at how other high-growth, money-losing companies perform on the public markets to tell us if growth really is back in; in contrast, if other companies that fit the bill don’t see rising values, Peloton would be merely bucking a trend instead of showing that the trend itself is changing.

The public markets haven’t been kind to unicorns like Uber and Lyft, but if their stock starts to rise, it could be an indication that investors have more faith in high-growth companies than has been the sentiment recently.

A change in market sentiment could also have an impact on the IPO market. While 2019 has seen a crop of lackluster IPOs (the stock prices of companies being below the set price on its first day of trading and beyond), a shift in attitude back towards fast growth being more important than profits could allow for better public market reception of companies that still lose money.

Time and market activity will tell.

Illustration: Dom Guzman

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The figure is up sharply from its last announced number, 13 million DAUs this July. Seeing Teams grow to 20 million daily actives so quickly is notable, as 54 percent daily active user growth in less than half a year is pretty darn rapid. Slack, in contrast, grew its DAU count by 37 percent in a year, according to its last data release.

Slack, a recently public company that debuted via a direct listing, announced 12 million DAUs in October. While it would be simple to declare Microsoft the runaway winner in terms of active seats of its internal chat product, Slack unsurprisingly disagrees.

When announcing its 12 million DAU figure, Slack had a few things to say that underscore its views regarding what counts as an active user. Here’s a condensed set of quotations:

DAUs get cited a lot, but what, really, is their significance? In our book, the “U” is what matters: Use! Engagement is what makes Slack work — you can’t transform a workplace if people aren’t actually using the product. […] It’s Not a Successful Collaboration Tool if People Don’t Use It […] Deep and sustained levels of engagement across companies are what keep people adopting Slack and using it above other, less connected ways of working.

Slack went on to publicly define a daily active user, saying that it counted people who have “either created or consumed content in Slack within a given 24-hour period on either a free or paid subscription plan.” That seems pretty fair.

Regardless, the Slack narrative that its DAUs are more A than Microsoft’s DAUs was a little bit stronger when their aggregate figures were closer; now that the gap has grown larger, and it appears that Teams is accreting users even more quickly than before, we really have a scrap on our hands.

What About Startups?

We focus on private companies here at Crunchbase News, but we do allow ourselves a little wiggle room when it comes to companies we covered while private go public; how can we not cover recent graduates?

But this particular story is a bit more than that. We’ve covered Slack vs. Teams since the very first days of this publication’s life, making it something we cannot quite let go of. And, finally, Slack’s falling share price after its direct listing has become a critical piece of information that may inform how private companies choose to go public in the future. Summing, Slack’s a company we’ll keep writing about for a while, and not just for the sake of nostalgia. Its performance as a public company could set the tone for future direct listings, so we must pay attention.

More when Slack inevitably responds.

Illustration: Li-Anne Dias.

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Today, we’ll look at two companies that have ceased certain operations over the past week: Plated and Juno. A tweet shared by NPR reporter Mary Childs shares a screenshot of ride-hailing app Juno’s “sad” announcement of its “service coming to an end” from this morning. Childs also shared a screenshot of meal-box subscription service Plated “closing down” its subscription operations after its “last box ships on November 26.”

The news of Juno’s demise is not entirely shocking as Quartz had reported earlier this year that the company was seeking a buyer.

In a press release issued today, Juno parent company Gett announced the news while at the same time unveiling a “strategic partnership with Lyft  to enable Gett’s corporate clients to access rides in the United States beginning next year.”

In the release Gett CEO Dave Waiser said this move reinforced his company’s “strategy to build a profitable company focused on the corporate transportation sector.”

The company also blamed “the enactment of misguided regulations in New York City earlier this year.” It noted that Juno drivers would be paid in full by Juno for all rides completed by Juno’s service end-date, and that “all Juno riders will be invited to join Lyft.”

Juno was founded in 2015 and raised its Series A in June 2016, according to Crunchbase. It was acquired by Gett for $200 million in April 2017.

Gett, which has raised $813 million in total funding, according to Crunchbase, has made three acquisitions to date: Juno, StreetSmart, and RadioTaxis.

Business Insider covered the news of Plated’s closure on November 13, saying the company was “shifting the brand to become one of the grocery retailer’s [Albertsons Companies] private label products.”

In a November 12 press release, Albertsons said the phaseout was “giving way to a sharper focus on how the brand can help deliver a differentiated in-store experience.”

“Our vision for Plated includes an expanded set of products that goes far beyond a dinner-based solution and into a comprehensive in-house culinary brand,” said Geoff White, EVP & Chief Merchandising Officer, in the press release. “With a broader scope of offerings, we see Plated solving customer demands around convenience, lifestyle, and cooking experience, while adding yet another layer of interest to our in-store journey.”

Before being acquired by Albertsons for $200 million in 2017, Plated had raised a total of $56.4 million in venture funding from the likes of Greycroft and Formation 8.

Meal delivery is not for the faint of heart. Earlier this year, we covered the news of prepared meal delivery service provider Munchery abruptly shutting down. Founded nearly a decade prior, the company had raised $125.4 million from the likes of Menlo Ventures, Greycroft, and Northgate Capital.

The Market Moment

Seeing startups shut down is not, by itself, very notable. Something that is worth considering, however, is that we’re still seeing the shaking-out of two startup categories that were once the darlings of the venture market.

Prepared meal delivery was once attracted hundreds of millions of venture capital before the Blue Apron’s implosion stuck a fork in the entire enterprise; as it turned out, meal delivery had pretty rough customer churn. That fact turned a cohort of businesses that appeared to be worthy of a high valuation multiples into a set of companies that lost money and were actually worth about as much per dollar of revenue as a grocer. Which is to say not much.

On-demand ride startups feel much the same. Once they were the hottest companies on the planet, accepting a rising tide of venture dollars that lifted a whole group of boats. Now, as Uber and Lyft struggle to carve a path towards profits as their shares drag and Didi itself having a rough time, seeing shutdowns isn’t a huge surprise.

So while we’re merely looking at two somewhat modest closings, the pair feel more like end-caps on prior market enthusiasm. Who knows, perhaps they mark the nadir of their respective startup categories and better days ahead.

Illustration: Li-Anne Dias