We'll probably retire before Databricks IPOs

Here's what Mary Ann, Alex and Kirsten got into: More layoffs at Divvy Homes: More cuts at a company that was once richly valued and heavily venture-backed. Rising interest rates are having a ripple effect across startup-land. Databricks is big, and now richer: With $500 million in a new Series I, Databricks is now worth more money and has fresh capital to continue working on AI. Lime, just go public already: What is profitable and private and a tease? Lime. Well, that last bit is a stretch, but really you can only ring us up and tout profits and growth so many times before we expect an S-1. More data is good: Venture capital firms, however, seem to disagree. If you want groceries in 15 minutes, here's where to live: Brazil, for one. Or India. Differing labor costs around the world appear to be the axis around which quick deliveries are feasible, or a financial mess. We are back next week for a busy run at Disrupt! We'll see you there! For episode transcripts and more, head to Equity’s Simplecast website. Equity drops at 7 a.m. PT every Monday, Wednesday and Friday, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders and more! Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:10Speaker 00

  Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and the nuance behind the headlines. My name is Alex and I am joined today by my dear friend and colleague. It's TechCrunch's Senior Reporter on the FinTech Beat, Mary Ann Asvetto. Mary Ann, hi.

• 0:27Speaker 01

  Hi, Alex. I'm so excited to see you next week.

• 0:30Speaker 00

  I know. Disrupt is next week. I'm very excited, but I feel like because I haven't actually traveled to SF yet, I'm still in the like the stress mode, you know? So I fly tomorrow. I'm gonna get on the plane and get out of here and get settled and I'll feel better. But right now, a little bit distracting. And to assuage my inability to stay on topic and on track today, we have brought along, it's Kirsten Korosec, our other friend from the TechCrunch team on the transit desk. Kirsten, hi. What are you going to disrupt?

• 0:57Kirsten Korosec?

  Well, if anyone can keep you on track, I'm sure it's me, who definitely has no organizational problems at all and doesn't jump around at all.

• 1:04Speaker 00

  None. No.

• 1:05Kirsten Korosec?

  Disrupt. Yeah, I'm ready. I'm also flying out early. I'm just a ball of energy. Haven't packed, haven't done anything. I'm ready, though. I'm ready.

• 1:14Speaker 00

  I did laundry. Really proud of myself.

• 1:16Speaker 01

  I'm proud of you, too.

• 1:18Speaker 00

  To be clear, I often do laundry. That's not the be proud of me point. It's the fact that I like did laundry before the last possible minute. Because usually it's me at like midnight taking clothes out of the dryer, like, where's that sock? So the fact that I've done it early means that I'm not gonna panic and I'm very happy about that.

• 1:32Speaker 01

  Yeah, I'm impressed. Pretty good.

• 1:33Speaker 00

  Thank you, Mary Ann.

• 1:34Kirsten Korosec?

  Alex, did you pack your Tech Brain hat?

• 1:38Speaker 00

  I did not. I'm actually, I'm not, I don't have any hats.

• 1:43Kirsten Korosec?

  It was my attempt at a terrible joke. It's okay. You know how you put like your reporter hat on or your, you know, your, yeah, it was poorly delivered.

• 1:51Speaker 00

  I see. What I have packed is my little ball of stress because I'm an anxious person who gets stage fright hat on. So I will have that in my bags with me.

• 1:59Speaker 01

  I can bring some of my daughter's old fidget toys for all of us. There we go.

• 2:05Speaker 00

  We may be stressy about Disrupt, but that does not mean we don't have an awesome show for you today. So in the deals of the week category, we have Divvy Homes and their layoffs, Databricks and its growth, what's going on with Lime and how two wheels can equal big profits, then diversity policy as it relates to venture capital firms in California, and why quick grocery delivery is finding success in some markets and not others. It's going to be a blast. But Mary Ann, first to kick things off, I want to know why Divvy Homes is going to get by with a skeleton crew and now half of a skeleton crew.

• 2:33Speaker 01

  Yeah, not good. I wrote about Divvy Homes this week and the company had its third, conducted its third round of layoffs in a year's time. This time they laid off about 94 employees, which is about half the company. So first, let me explain what Divvy Homes is or does for those who don't know. They're kind of a rent to own home startup. So a couple of years ago, like I think the very first week I started working at TechCrunch, I wrote about their $110 million Series C. And of course, at the time, you know, everything was great, you know, mortgage interest rates were low, business was apparently going well. And as we've talked about before, things have changed dramatically since then with interest rates having climbed to

• 3:18Speaker 01

  almost 8% recently. So for a company like Divvy, where they actually would buy homes on behalf of a person who who wants to own the home and then rent it back to them and help them kind of build equity is the goal so that they can eventually buy the house from Divvy, the rise in mortgage interest rates was was pretty devastating. Now, you look a little confused, Alex, did that did that not make sense? Because I'm happy to clarify.

• 3:45Speaker 00

  No, no, I'm just, so many things made sense when money had no cost. And I think we're seeing a lot of business models that just don't work as well when interest rates are higher. And the thing that I don't get is why didn't

• 4:00Speaker 00

  People expect this to change at some point in time. But yes, I know we had 0% interest rates for a while, but certainly it wasn't always going to be the case. And so it feels like there's more shock in the market than there should be, what should have been an anticipated result.

• 4:13Kirsten Korosec?

  So we also saw the same mentality right before the recession, this shock of like, how could this have possibly happened? And then of course, 2020 hindsight is a wonderful thing to look back and say, well, all of these 20 things coming together, of course, it's going to result in this. So it's not surprising. Human behavior is kind of a tricky thing. We had free money for so long that people just adjusted to that in the marketplace and couldn't foresee a future and made no adjustments either in their brain or in their business models for that to change.

• 4:54Speaker 00

  Yeah, that makes sense.

• 4:56Speaker 01

  It just feels short sighted, though. Like, I mean, still, it's like, you kind of have to know this, it couldn't last forever. But at the same time, I don't think any of us really did expect that the interest rates would climb to this extent in such a short period of time. But yeah, it's hurting Divvy. They're not, you know, not, not good. Their last known valuation was 2.3 billion in 2021. They have investors like Tiger Global and Dreason Horwitz. You know, one telling thing is this most recent round of layoffs included a lot of high profile roles, like VP of Sales, compliance, people and comms and PR, as well as a bunch of software engineers and a senior recruiter. So this model, I just, I just don't think it's going to work as long as interest rates stay high. And we'll have to

• 5:40Speaker 01

  see if Divvy can even keep itself alive.

• 5:43Speaker 00

  Yeah. And if you want to understand, I think, why this has gotten so much harder for the company, if you think about the cost of purchasing a home today, at the same kind of dollar amount with a 30 year fixed rate mortgage, it's just dramatically higher on a per month basis. And so if Divvy is going to purchase a home and they rent it back to people, it has to make some margin in there. And so if the loans are more expensive, then I presume that the monthly fees to consumers via rental costs will be higher. And then the math probably gets harder to square for everybody. And then why not just buy it yourself? So I, it just sounds like a tough place.

• 6:14Speaker 01

  Yeah. And Divvy has been actually accused of that, of having, charging higher than like market rate rents. So all of that makes perfect sense.

• 6:23Kirsten Korosec?

  Well, and Divvy's model is interesting, but they're not alone in the prop tech space for having problems, right? I mean, Mary Ann, you've seen, you've seen a lot of this. So to me, the question is, setting aside the rent to own business model for a moment, in the larger prop tech, you know, when does the recovery come? Like, when are the remaining startups that are out there, when do they start to see relief? Is it when we just have to wait for interest rates to rise to fall again? Or is there some other thing that has to happen in order for prop tech to look a little bit better than it has?

• 7:02Speaker 01

  I'm not sure, but I, you're right. Definitely. We've seen a lot of prop tech companies struggle. Better.com being just one example, Reali, a company last year that had to shut down. So, yeah, well, I don't know if it's all about interest rates, or if there's more that can help save the space, remains to be seen.

• 7:22Speaker 00

  I just checked Better's share price, 65 cents per share. They're gonna get delisted. Not that long after they listed. That's brutal. Well, Divvy is struggling, even though we do like a model that does boost homeownership in general, but I will say that not every company is out there sucking air. In fact, one that we've talked about on the show quite often is doing quite well. And that is ye olde Databricks, a company that is now so big, it would be much greater than a mid-cap company in the public markets, just announced that it raised $500 million more from some pre-IPO investors and some strategic people. And Mary Ann, they announced that they have reached a $1.5 billion annualized run rate

• 8:04Speaker 00

  in their second fiscal quarter of the year, the period ending in July. I'm just kind of curious, is that bigger than you expected? Because I've been checking Databricks for so long, I've lost kind of like the ability to kind of notice these numbers and be shocked by them.

• 8:17Speaker 01

  Yeah, I can't say I had any expectations, but I will say that seems like a lot. One and a half billion dollar run rate is impressive. Also, I was, I was startled when I read this to see that it was a series I round, because I can't remember the last time I've seen like an I round, right? Like, I mean,

• 8:37Speaker 00

  Yeah.

• 8:39Speaker 01

  That's just kind of crazy.

• 8:40Speaker 00

  There's a joke that Series F stood for failure because if you had to raise a Series F, you probably were in trouble. But in this don't go public for a while thing, I guess we can go A, B, C, D, E, F, G, H, I. Maybe I stands for like interminable as in how long we've been waiting for this IPO.

• 8:57Speaker 01

  Well, but the company, I mean, it did see its valuation go up by $5 billion, right? Compared to 2021.

• 9:04Speaker 00

  Yeah. And that's actually why I thought it was really great that you brought up the Divvy Homes 2021 valuation, because I don't think anyone from the three of us here expects that they're still worth 2.3 billion if they raise money today. And here's Databricks defending a not just very large valuation, but a laser valuation set in 2021. So that's very impressive to me. But I do think Mary Ann, that that means they're not going to go public for a bit because at that valuation, at their current revenue base, they look a little bit expensive. So I think they're going to grow for a couple of quarters, womp womp, and get that revenue multiple under the 20x mark and then pull the trigger. So like, I would say late next year is the earliest I would expect to see an S1 from them, which is just, I mean, I think I'm going to like retire before they go public.

• 9:50Speaker 01

  But that's probably the right thing for them to do, right?

• 9:52Speaker 00

  No, the right thing for them to do is not to worry about their shareholders, but instead to think about how happy I am and build their business case around that. Ergo, drop the S1 now. I'm tired of it.

• 10:02Speaker 01

  Instacart's finally dropped a couple of weeks ago. Damn it, it was a Friday afternoon. Remember that?

• 10:08Speaker 00

  I do. Yeah. Instacart, not only should you drop your S1 sooner, you should drop it on a Thursday, not a Friday. So this team does not collapse. The only other thing I want to call out here is that they took some money from Nvidia in this deal. And I talked to the CEO of Databricks, Alagazi, and my impression is that they didn't really need the money. But by getting pre-IPO investors, they're set up well for that. And then Nvidia and Capital One Ventures also showed up with capital. So I think they're just kind of like building out their friend list for now.

• 10:36Kirsten Korosec?

  Yeah, just question. So building out their friend list, is this all leading up to that IPO potential? Or is, do they need these friends for a different purpose?

• 10:46Speaker 00

  I think it's the former. I mean, when I see T. Rowe Price and Fidelity and Franklin Templeton and so forth kind of showing up in your new fundraise list, I'm like, oh, okay, you're starting to work with companies that are going to want allocation maybe in the IPO for their own. Customers and so forth. And so it just, it just smelled like getting the right people in the room and building a relationship ahead of time, which is smart. I mean, if you have the time and you have the cachet to do so, do it. But this is not, I think, like a fundraising event. And that's why this round was smaller than the round it raised back in 21 by a big amount, because I just don't think they were like hunting for another huge check to keep them going for a couple of years. So anyways, Databricks eventually will go public. There's an AI story there. I wrote a lot about it, but we should move on. In the meantime, because

• 11:27Speaker 00

  everyone's favorite way of getting around the city, provided you ride on a sidewalk and scare all the children, is apparently profitable. Kirsten, what's up with Lime?

• 11:36Kirsten Korosec?

  So Lime is saying once again that they're so close to going to an IPO. So for, for folks who haven't heard this before, this isn't new. Lime is this e-scooter and e-bike company, Uber has its hands and literal stake in the company, Jump, which was acquired by Uber and then sort of sold to Lime in this very complex deal is that was actually absorbed into the company. And today they have, they're in about 280 cities around the world. And we did a little bit of a check in with them, talked to their CEO, Wayne Ting, and had a story about it. And

• 12:14Kirsten Korosec?

  really, this was them laying out the rosiness of their financial for the first time in a while. We checked in with them probably about six months ago or so. And their unadjusted profitability is about 20.6 million with an M. So not a ton, but better than before. Last year, they reported, I should say, adjusted EBITDA profitability of 15 million and an unadjusted profitability of 4 million in 2022. So there's some, there's some positive growth there. But the big message here was, hey, this is looking good for us. We're getting ready for an IPO, but didn't give a date, which they've done to us before. And I think they're waiting for economic

• 12:58Kirsten Korosec?

  conditions to get a little bit better.

• 13:00Speaker 00

  Yeah, I'm super excited about this because I see jump bikes and we have Bird here in Providence. And so I don't see a lot of Lime, so they kind of fall out of my, my vision a little bit. So I don't see folks out on their machines, but with gross bookings of 250 million, I think in the first half of this year, of 45% from last year, that's fantastic. That's a lot of revenue, a lot of growth. And if they're EBITDA profitable and also profitable on a non-adjusted basis, I love it. And I think that we had all written these companies off to a degree because I think apart from Lime, every other scooter company is struggling, but it's great to see a winner in the category. Shout out to Lime for not giving up.

• 13:40Speaker 01

  Yeah, I remember we talked about this earlier in the year on equity and because I was like, what are they doing differently? Why are they, why are they actually making money compared to all their rivals that are losing money and doing so bad? And one of the things that the CEO had said was they were, they had invested a lot into building their own vehicles with swappable batteries. And so they've worked hard to get that design right. And that means that supposedly their scooters and e-bikes all last, they stay operational or work for a longer period of time, like more than five years is what they said. They don't break down as much and they use spare parts. So I was like, well, that's, that's smart. I mean, you know, I mean, that sounds like a really smart strategy. And it seems like it's worked for them.

• 14:25Speaker 00

  I think swappable batteries are fantastic and I hope that technology continues to grow because imagine like a citywide battery swapping service for all your e-bikes. If they were standardized, that'd be great. I'd love that.

• 14:35Speaker 01

  Very cool.

• 14:36Kirsten Korosec?

  Yeah, you know, what's interesting to me about Lime is also it's sort of the polar opposite of it, which is Bird. So this is a company that also does scooters and has really struggled. So the question is, and was the buzziest of all, of all the scooter startups. So to me, the question is, and what I really want to dig into a little bit more is, is it the e-bike business or some other piece of the business model for on Lime's side that really has given it an edge? As opposed to Bird and other companies that have really struggled because it's not a, oh, let's do a shared scooter business.

• 15:16Kirsten Korosec?

  We will make money. It's been really hard and very unprofitable for numerous companies. So what makes Lime successful?

• 15:26Speaker 01

  Another thing the CEO said is that they really have worked hard to go global and that they said that they've gone into markets that a lot of their competitors left too, which I thought was interesting. So apparently they're able to scale faster because they're already in certain markets. I mean, I don't know, I just, the CEO, the tone of his comments just come across as so much more kind of rational, I feel like, than a lot of comments I read from CEOs lately. It's kind of refreshing.

• 15:58Speaker 00

  Well, I'm here for it, and I hope that micromobility keeps doing well. But Kirsten, you want the last word here?

• 16:03Kirsten Korosec?

  Well, I guess my last word is I am waiting for them to finally like file the S1 already, right? And I understand why they didn't in 2022, but we've been hearing about this for a while. And then we get to really dig into the financials because really we, you know, as a privately held company, they've been providing them, but they're not publicly available. So we can really dig in, Alex, I know you'll be first to do that, into their risks, right? And, and really how much money they're making, but also their costs. I'm very, very interested in their costs. And I just can't wait. I hope they do it before the end of the year.

• 16:40Speaker 00

  Oh, yeah. And you know what they could do is they could file like Turo and just keep updating their S1 filing as needed and just not go public until it's time. Turo has been dropping GAAP financials every quarter for some time now. And it's part of my quarterly rotation. I'm like, are the Turo numbers out yet? And I read them. So they could do that and then pull the trigger later. Here's hoping. I mean, that would be a hell of a Christmas present. I'd take that.

• 17:03Speaker 01

  It would be.

• 17:04Speaker 00

  That would make my December much better for business than usual. But while we're talking about numbers and transparency, it's a great time to also talk about a new bill in California that wants to get venture capitalists on the record for who they invest into. But first, a quick break.

• 17:20Speaker 00

  And we are back, but in a slightly changed configuration because Kirsten had to run away and cover some breaking news. And that, my friends, is the danger of the news business because you can plan when everyone is free to record, but you cannot plan when the news will leave you alone long enough to do so. So it's just Mary Ann and I for the rest of this. Don't worry, Kirsten will be back with us next Tuesday at Disrupt. Now, Mary Ann, we're talking about a new law that may become an actual law in California. It's passed out of the Senate, but needs the signature of the governor, talking about SB54, which may be, I think, the first legislation in the country at the state level that will force private investors to disclose to whom they are investing their money. Now, there's nuance here, but from the top, what do you think of this?

• 18:01Speaker 01

  Well, I think any attempts at increasing transparency are good. It's a good thing. So what this, this law would do is require these VC firms that are operating in California. And although I do have a quick question, is it operating in California or headquartered in California?

• 18:17Speaker 00

  Hmm. I have the information here. So covered person, which is the, the language that defines who has to take part in this, is a person that is an investment advisor to a VC company or is a registered or exempt investment advisor. But I do think they have to be domiciled in California proper. Tell me why you care about that. Will I check that answer for you?

• 18:39Speaker 01

  Yeah, no, I was just, I was just curious because there, if you're talking about a firm that's has headquarters in California as opposed to firms who might just have an office there, you know, it, it changes the numbers a lot in terms of who's affected by this legislation. So sorry, sorry to open up a can of worms here on the show, but anyway.

• 18:56Speaker 00

  Not at all. That's a, it's a great question that we should absolutely clarify because everyone has an office in California. And if it's a headquarters question that matters, that's super clutch. There's a lot of language in bills and I did not notice that bit. But Mary Ann, if it is, let's just say it's more constrained.

• 19:13Speaker 01

  I mean, either way, what they're trying to do is ask firms operating in California to report diversity breakdown of the founders that they fund. And that includes things like gender, ethnic and racial background, dollar amount given. And this, the hope apparently behind this is that if firms are kind of put more on the spot about this, they'll make more of an effort to include more diverse founders in their portfolios. So that's, that's apparently the hope here. Of course, this, we don't know if it's going to pass. There's some organizations criticizing it. The National Venture Capital Association wrote the bill sponsors. They claimed that this would produce misleading and counterproductive data that would hurt the cause of diversity, equity and inclusion

• 19:54Speaker 01

  efforts. I really did not understand that at all. How could more transparency hurt?

• 20:02Speaker 00

  There's concerns about how people will self-report or not self-report because the way the data is collected, if I understand the legal language, it's that it's essentially a survey of founders and people can fill it in. And there's some kind of like mandated categories you have to have available. TechNet also had a complaint about how small teams might be outed by this data in some way or another, but the data will be aggregated and then of course anonymized. So that'll be less important. At first, Mary Ann, I was kind of like, this seems a little bit onerous because it's more paperwork and whatever. And then honestly, there's no, as far as I can tell, teeth that I could find at least. This is just like, report some data. We're going to look at it. And I struggled to get that mad about more information in the market in general.

• 20:46Speaker 01

  Right. Yeah, I don't really see how this could be a bad, a bad thing. And at the same time though, if there's no accountability behind, beyond just saying, okay, here you are, you have to report how, you know, who you're investing in, but there's no accountability after that. I guess we'll have to see. I'm still a little skeptical on how much it will actually help, right? Lime, well, how many firms, if they're already not really investing that much in diverse founders, and surely they already know that. I mean, I hate, you know, they're not stupid. Like, they probably already know that. So is being put on the spot going to push them to do more of it? One would hope, but I don't know.

• 21:26Speaker 00

  I don't have a lot of pity here because we've known that venture capital is industry tends to invest in men and it tends to invest in men of a particular group. So. That's been a fact for a long time. I mean, how long have we been talking about increasing the percentage of investors who are women, just as a data point? And how much has that really changed?

• 21:48Speaker 01

  Right.

• 21:48Speaker 00

  How much has funding changed for mixed gender groups? How far has funding changed really for all women groups? I mean, we report on this data all the time and the numbers are always shit.

• 21:56Speaker 01

  Yeah.

• 21:57Speaker 00

  So if, if the only way to get possibly some change into a relatively high bound and exotic and niche part of the finance world, venture capital is pretty small compared to private equity. If public shame is the way to go for it, okay. I mean, because it's not like they haven't had a couple of decades to stop being bad at this.

• 22:13Speaker 01

  Yeah, I mean, you're right. If, that's a good point. Like if firms start getting, getting negative headlines for their, you know, abysmal numbers in terms of investing in diverse founders, maybe they will kind of step up and make more of an effort. So anyway, I don't see how it could hurt at all.

• 22:29Speaker 00

  I don't see how it could hurt. I mean, I, I think people just don't want to be embarrassed and don't want to deal with the headlines. And VC is often incredibly private. I mean, some people, some venture capital firms, I should say, don't take money from certain pension funds because those returns are then public. And so they don't even want that data to be available. And here's the thing, California is one of the biggest economies in the world, period. And as Dom has pointed out repeatedly in her reporting, this is a piece that Dominic Madori Davis wrote for TechCrunch Plus, you know, the numbers are just, are moribund and bad. And so I'm, I'm just more sympathetic to people who want more transparency because as they say, disinfectant is the best sunlight or no, sunlight is the best disinfectant.

• 23:13Speaker 00

  Disinfectant is in fact not sunlight.

• 23:16Speaker 01

  Oh, I love that. Your analogy, how do you do it, Alex? You manage every episode, but still like, but you, the where you fit them into what we're talking about is always brilliant. So thank you.

• 23:29Speaker 00

  I, I mean, Mary Ann, how long have you known me?

• 23:31Speaker 01

  You know, I was thinking about that the other day. It's like six and a half years now.

• 23:35Speaker 00

  Yeah. Have I ever gotten less full of shit?

• 23:38Speaker 01

  No.

• 23:39Speaker 00

  Nope. I just got more where that came from. And I wish you on that point, I want to make a slight backtrack. I respect that there's professional pride in craft. Like, I get it. And I don't want, I don't mean to sound dismissive, but a little bit of transparency at the industry level just does not seem that bad. And I, I, I think

• 23:57Speaker 01

  Agreed.

• 23:58Speaker 00

  it creates bad faith to avoid that to a degree. And it's not too onerous because, for example, at TechCrunch, when we host an event like we are next week, sorry for Seamus plug, we spend a lot of time thinking about who we're inviting.

• 24:11Speaker 01

  Right.

• 24:12Speaker 00

  And what the, the makeup of our speakers looks like. And we try to have people from around the world, from different backgrounds, at, you know, different cultures, different identities. Like, we try.

• 24:21Speaker 01

  We're very thoughtful about it.

• 24:23Speaker 00

  Yeah. And we have a lot less money than venture capital firms do in many cases. So, you know, more reporting on this from Dom to come. Of course, I believe when we last left this, it was possibly a waiting signature by Governor of California Gavin Newsom. So we'll have to see what he does with it, but there is both push and pull, and we'll bring that to you when it lands. But, Mary Ann, let's go ahead and put California down and instead pick up some of our favorite markets out there, emerging markets, and the quick grocery delivery space. So to start, do you order groceries delivered to your house in Texas?

• 24:55Speaker 01

  Yes, I do.

• 24:57Speaker 00

  Fantastic. And how long does that take?

• 24:59Speaker 01

  You know, it depends. We, you know, we have a perk. We can use Shipt. Did you know that, Alex?

• 25:05Speaker 00

  We have a perk?

• 25:06Speaker 01

  Yeah. Shipt, S-H-I-P-T. Maybe this is not fodder for the show, but yeah, we can get

• 25:12Speaker 00

  I mean.

• 25:13Speaker 01

  free delivery from certain stores through Shipt. And it's, and the good thing about that is that it comes quicker than like, say, if you try to order directly from the actual grocery store. I don't use Instacart, so I can't compare. But anyway, yes, yes. So if I use Shipt, it can come in about two hours is what I was trying to get at.

• 25:33Speaker 00

  Great. Also, thank you. Now I need to go look up Shipt and see if it's in Providence, because that sounds amazing. Corporate perks, by the way, check your corporate perks, because apparently you might be leaving money on the table.

• 25:43Speaker 00

  Two hours, though, seems like a very reasonable amount of time to get something delivered at your house if it's groceries, because probably you're not so desperate for paprika that you're going to need it faster than a two-hour turnaround. However, there is a category of grocery delivery, which is, I think they call it quick grocery delivery, instant delivery. There were various titles for this, but the idea was like 15 minutes, get you stuff to your house. Not a new idea, has been tried a bunch in the past, and there was hope that with modern logistics, mobile connectivity, e-bikes, et cetera, that there was a way to make this work. And Mary Ann, it turns out that that's partially true and partially not.

• 26:18Speaker 01

  Yeah, I mean, so it depends on what markets you're talking about, right? If there's these quick grocery delivery companies operating in markets like the US or Western Europe,

• 26:31Speaker 01

  not, not really so profitable. The margins are much, much tighter. It's harder to make money. But if you go to other places like Brazil, for example, things change.

• 26:40Speaker 00

  Things absolutely do change. And essentially is labor inputs, I think, is what this, what this really boils down to. And in markets with higher labor costs, given that these quick delivery services, call them what you will, depend on people. Like, I mean, you can't, you can't robot someone paprika in 15 minutes, but you can put it into a backpack of someone on a bike and send them off if you're in a dense enough area to make it all kind of math out. And so to me, I think that we're not going to see this model actually work in, I'm just gonna say, higher cost of living markets, for lack of a better phrase, until robots can kind of take over for the humans.

• 27:18Speaker 01

  Yeah, there's also, I mean, I don't know if people realize, if you're not familiar with, with like markets like Brazil, so, because my husband's Brazilian, but for example, getting an Uber in Brazil is significantly less expensive than getting one here. Like, you can get a driver through Uber for like, Two or three hours can go around the city with you doing stuff for remarkably cheap in places like Brazil, especially certain cities. So that's where I think this ties into this. So good or bad, service labor is just they the commandless money. So for people delivering these for these grocery delivery companies, they don't ask for as much money. They don't make as much money, I guess is the appropriate way to put it.

• 28:03Speaker 01

  So that's cheaper for the companies. Also, what they can do in markets like that is cut out the middleman and they can work with food producers directly. And you can't do that here in the US. But that saves these companies a lot of money, too.

• 28:16Speaker 00

  And the results are pretty stark. So if you look at companies like, you know, fridge no more and by K or bike, I'm not quite sure how to pronounce that one. They closed down for good last year in 2022. And we've seen gorillas, which was one of the fastest growing things that I saw during this particular period, actually sell to getter G E T I R for 1.1 billion euro, which is a lot of money, but it raised 1.3. So not quite the result that you would hope for.

• 28:45Speaker 01

  Yeah.

• 28:45Speaker 00

  But our own Becca Scootak reported that if you look at Joker, which is J O K R no E, it actually left the US, focused on Latin America, really, really invested in Brazil, and actually is doing quite well there. And then finally, the most recent data point that I think also helped to get the story put together was that Zepdo, which is based in India, recently raised 200 million valuation that was above a billion. So it's rare to see a new unicorn in 2023, frankly, around the world. And imagine seeing a new unicorn that was a quick delivery company. I mean, that's like, it's like finding a trout in Times Square. Like, what the hell is that?

• 29:21Speaker 01

  Yeah, this was definitely a surprise. And also, I think another thing about these markets, too, even a big city like Sao Paulo, and there's a lot of people in it, it's not as densely populated with actual grocery stores as we see here, like in the US. So I think there's a lot of different factors that that come into play here. But really great piece by Becca and fascinating subject to look at.

• 29:43Speaker 00

  Yeah, absolutely. I love these kind of like step back and look at markets that were doing a lot of like individual news events a couple of years down the road to see how they're playing out. But I just, I just realized something, Mary Ann. I've been to Sao Paulo and I don't think you can get anywhere in that city in 15 or 20 minutes because my recollection of getting around Sao Paulo was sitting in a car, not moving at all.

• 30:06Speaker 01

  Yeah.

• 30:06Speaker 00

  Yeah, traffic is nuts. Like,

• 30:09Speaker 01

  Yes.

• 30:10Speaker 00

  Like, if you're, if you've, if you've only been in like, America and Europe, you don't know what I'm talking about. Like, this may have changed, this was a while, it was like 10, 12 years ago, but like, traffic was so bad that intersections would be backed up for several other intersections. So you would be in a line, like, three blocks away from a light, and you would be blocking several of the streets, but that was just the, the norm somehow? It, it, it worked out, we got places, but holy crap.

• 30:36Speaker 01

  It takes forever. Yeah. And that's not just exclusive to Sao Paulo.

• 30:41Speaker 00

  Is that, well, it's my only city I've been to in Brazil, had a great time, but traffic, not good. I heard, actually, that in Sao Paulo, the wealthiest people take helicopters around the city, building to building, to avoid the traffic, because it's that bad.

• 30:54Speaker 01

  Oh, gosh, but, I mean, I would hate that. Could you imagine, like, to have to get into a helicopter just to get to where you needed to go? What the hell?

• 31:04Speaker 00

  Right, so you're saying this is a bad thing?

• 31:06Speaker 01

  In my opinion. Now, we're gonna disagree on this one.

• 31:09Speaker 00

  I think it sounds awesome. Okay, Mary Ann, what if it was a self-driving helicopter that was powered by NFTs?

• 31:14Speaker 01

  That's a nightmare. You're, you're killing me, Alex. Oh, my God.

• 31:18Speaker 00

  I think it would be great. All right, listen, let's, let's go ahead and wrap up. As a reminder, everybody, Mary Ann, myself, and our dear friend Kirsten Corasek are gonna be onstage Tuesday at, I think it's 9:00 AM on the builder's stage, at Disrupt, Floor 3 in Moscone. We're coordinating our dress, I'm gonna be going to be wearing red shoes, we're trying to get some red themes, and we're gonna be doing Equity to kick off the show, so, you know, come hang out with us. We would really love to spend time kicking it with you guys, and last year, it was a lot of fun, and frankly, a lot of people turned up, and that made me feel good inside, so we'd love to have that happen again.

• 31:55Speaker 01

  It was a blast.

• 31:56Speaker 00

  Yeah, it was a blast. We've done live shows at Equity off and on for a long time. We've had some good ones, we've had some bad ones. I would say last year's Disrupt on the then TechCrunch Postage was our best one, so I'm hoping to top it this year. I'm gonna bring some jokes, we're gonna bring some microphones, Mary Ann's gonna bring a whole gallon of coffee with a really big straw, so I think we'll be in good shape.

• 32:15Speaker 01

  We had so much fun, it's gonna be a blast.

• 32:18Speaker 00

  Yes, and we're looking forward to seeing all of you. So we'll see you in a couple of days. We're going to pack up our bags and get into the air and get our butts back to the bay. In the meantime, we'll see you on social under the handle equitypod. We'll see you in person. Goodbye. Bye.

• 32:33Speaker 00

  Equity is hosted by myself, editor in chief of TechCrunch Plus Alex Wilhelm, and TechCrunch senior reporter Mary Ann Azvedo. We are produced by Teresa Locan Solo with editing by Kel. Bryce Durbin is our illustrator, and a big thank you to the audience development team, and Henry Pickavet, who manages TechCrunch Audio Products. Thank you so much for listening, and we'll talk to you next time.