DoorDash acquires autonomous driving startup Scotty Labs

DoorDash has been on an acquisition tear of late, with Scotty Labs as its latest target. Terms of the deal were not disclosed, but this comes after DoorDash acquired Caviar in a deal worth $410 million.

Scotty Labs, a tele-operations company that is working on technology to enable people to remotely control self-driving cars, raised a $6 million seed round from Gradient Ventures, with participation from Horizon Ventures and Hemi Ventures, last March. The startup had previously worked with Voyage for its self-driving cars in retirement communities.

“Our core belief at Scotty has always been that Autonomy + Remote Assistance is the future,” Scotty CEO Tobenna Arodiogbu wrote on Medium. “We have intentionally always considered ourselves to be the anti-hype company and focused intensely on developing core infrastructure and algorithms to ensure the safe deployment of autonomous vehicles.”

Meanwhile, DoorDash quietly brought on the two co-founders from Lvl5, another company that had built tech to create high-resolution maps for autonomous driving using crowdsourced imagery and computer vision to merge and process the images. In April, Lvl5 announced it was shutting down after the acquisition.

Details of how Scotty Labs and Lvl5 will fit into DoorDash’s business are nonexistent, but you could imagine DoorDash using Scotty’s technologies to remotely control delivery robots or other types of autonomous vehicles.

“We’ll share more updates in the near future but for now, we’re really excited to be part of the amazing DoorDash family and looking forward to building something magical together,” Scotty Labs co-founder Tobenna Arodiogbu wrote on Medium.

From what we understand, the Lvl5 deal was more of an acqui-hire and did not include any of the maps that were built using the company’s technology. Instead, startup Mapillary obtained that trove of hundreds of millions of images.

DoorDash would not comment on what the new hires are working on, but through its robot pilots and partnership with GM, the startup has made no secret of its interest in exploring autonomous technology, specifically looking at how it can improve the cost and efficiency of deliveries, and it would make sense that it would also want to have in-house expertise to own and manage those projects.

DoorDash has experimented with delivery robots before. In 2017, DoorDash partnered with both Starship Technologies and Marble to test food delivery via robot. More recently, DoorDash announced a partnership with GM’s Cruise to test self-driving food delivery cars. DoorDash is also beefing up its in-house team of autonomous and navigation specialists.

This investment in autonomous tech through its acquisition of Scotty Labs and acqui-hire of the team from Lvl5 comes at a time when DoorDash says it is revamping its policies around driver wages.

The enthusiasm and potential of autonomous tech had led to startups creating literally dozens of interesting products that focus on different aspects of this field. But it will take a village to get this tech off the ground, which means that consolidation is inevitable.

DoorDash — operating on the principle of economies of scale — has been pretty aggressive in positioning itself as one of those consolidators. We have heard it tried to merge with Postmates. It bought Caviar this summer. And it has raised an absolute ton of money. In May, DoorDash raised a $400 million round, valuing it at $12.6 billion. Meanwhile, DoorDash’s main competitor, Postmates, is gearing up to go public this quarter. Just this month, the company received the first permit to deploy autonomous delivery bots in San Francisco.

As technology becomes a key way for the crowded arena of delivery startups to differentiate themselves, investing in its own autonomous tech R&D — by way of picking up some of these disparate startups that may have struggled to survive on their own — is one way for DoorDash to build out that tech cred.

SmileDirectClub files to go public amid concerns from dental associations

SmileDirectClub, the at-home teeth-straightening service, is on its way to becoming a public company. SmileDirectClub is seeking to raise up to $100 million in its IPO, according to its S-1 filed today. The number of shares and price range for the offering have yet to be determined.

Prior to this, SmileDirectClub reached a $3.2 billion valuation following a $380 million funding round last October. Investors from Clayton, Dubilier & Rice led the round, which featured participation from Kleiner Perkins and Spark Capital. This funding came on top of Invisalign maker Align Technology’s $46.7 million investment in SmileDirectClub in 2016, and another $12.8 million investment in 2017 to own a total of 19% of the company.

In 2018, SmileDirectClub’s revenues came in at $432.2 million, a significant uptick from just $147 million the year prior.

The company ships invisible aligners directly to customers, and licensed dental professionals (either orthodontists or general dentists) remotely monitor the progress of the patient. Before shipping the aligners, patients either take their dental impressions at home and send them to SmileDirectClub or visit one of the company’s “SmileShops” to be scanned in person. SmileDirectClub says it costs 60% less than other types of teeth-straightening treatments, with the length of treatments ranging from four to 14 months. The average treatment lasts six months.

Though, members of the American Association of Orthodontists have taken issue with SmileDirectClub, previously asserting that SmileDirectClub violates the law because its methods of allowing people to skip in-person visits and X-rays is “illegal and creates medical risks.” The organization has also filed complaints against SmileDirectClub in 36 states, alleging violations of statutes and regulations governing the practice of dentistry. Those complaints were filed with the regulatory boards that oversee dentistry practices and with the attorneys general of each state.

SmileDirectClub explicitly calls out those issues in its S-1 as potential risk factors. Here’s a key nugget:

A number of dental and orthodontic professionals believe that clear aligners are appropriate for only a limited percentage of their patients. National and state dental associations have issued statements discouraging use of orthodontics using a teledentistry platform. Increased market acceptance of our remote clear aligner treatment may depend, in part, upon the recommendations of dental and orthodontic professionals and associations, as well as other factors including effectiveness, safety, ease of use, reliability, aesthetics, and price compared to competing products.

Furthermore, our ability to conduct business in each state is dependent, in part, upon that particular state’s treatment of remote healthcare and that state dental board’s regulation of the practice of dentistry, each which are subject to changing political, regulatory, and other influences. There is a risk that state authorities may find that our contractual relationships with our doctors violate laws and regulations prohibiting the corporate practice of dentistry, which generally bar the practice of dentistry by entities. Two state dental boards have established new rules or interpreted existing rules in a manner that purports to limit or restrict our ability to conduct our business as currently conducted.

Additionally, as the S-1 notes, a national dental association recently filed a petition with the U.S. Food and Drug Administration claiming that SmileDirectClub’s manufacturing violates “prescription only” requirements. While no regulations or laws have been passed that would affect SmileDirectClub to date, it’s a possible scenario that would greatly impact the company’s core business.

Local governments are forcing the scooter industry to grow up fast

Gone are the days when tech companies can deploy their services in cities without any regard for rules and regulations. Before the rise of electric scooters, cities had already become hip to tech’s status quo (thanks to the likes of Uber and Lyft) and were ready to regulate. We explored some of this in “The uncertain future of shared scooters,” but since then, new challenges have emerged for scooter startups.

And for scooter startups, city regulations can make or break their businesses across nearly every aspect of operations, especially two major ones: ridership growth and ability to attract investor dollars. From issuing permits to determining how many scooters any one company can operate at any one time to enforcing low-income plans and impacting product roadmaps, the ball is really in the city’s court.

Skip unveils its first custom electric scooter

Skip is beginning to test the first electric scooter that the startup built entirely in-house. They’re not quite ready for prime time, but Skip expects to deploy them in San Francisco this October.

That’s notably when San Francisco plans to allow service providers to deploy electric scooters as part of the city’s first permanent permitting program. Skip’s current permit expires on October 14, but the company plans to reapply for a permit, Skip CEO Sanjay Dastoor told TechCrunch.

For riders, they will likely notice the sheer difference in the size of this scooter compared to Skip’s previous models. Skip’s S3 is much larger than the company’s previous models in order to help riders feel more stable and secure on the scooter. The S3 also ditches the regenerative brake for a traditional hand brake and rear foot brake.

This comes shortly after Skip announced it would bring back its scooters to Washington, D.C. following some battery-related issues that led to fires.

The scooter fire in D.C. was caused by a damaged battery, though, it’s not clear if it was intentional or accidental. With this new scooter model, the battery was custom built for the shared electric scooter service use case and is also completely enclosed, which should help prevent it from getting damaged, Dastoor said.

This swappable battery should also help with unit economics, given that it won’t need to be replaced as often. The battery pack, Dastoor said, can last for about 20 rides, with a range of 35 miles per charge. The custom battery also features diagnostic capabilities that can detect if it’s wet. Though, the battery is designed to be able to survive submerged in 1 meter of water for up to 30 minutes.

“What we’re looking at now is how do we actually do the swap,” Dastoor said. “We’re changing the model from taking vehicles off of the road to swapping out the batteries.”

Dastoor said he currently envisions a warehouse with a bunch of electric vehicles lined up charging the batteries. Given that the current model relies on independent contractors to take vehicles home to charge them, you could imagine a world in which the independent contractors instead are responsible for picking up fresh batteries at the warehouse and then swapping them out with the depleted ones.

Previous models of Skip’s scooters had swappable batteries and even cameras, but the cameras didn’t make it into the new version.

“We are testing a variety of sensor systems to solve some of our key priorities, like parking compliance, rider safety and etiquette, and reliable location tracking,” Dastoor said in a follow-up email.

And thanks to the modular design of the scooter, Skip can easily add and remove elements, such as cameras, locks and even regenerative braking.

Tech leaders condemn tech’s role in elevating white supremacy

A group of tech leaders has banned together to speak out against white supremacy and rampant hate speech on tech platforms. The group, Build Tech We Trust, refers to itself as a collective of tech CEOs, activists, changemakers and workers who are committed to countering hate and terrorism.

In a public letter published today, Project Include CEO Ellen Pao, Code 2040 CEO Karla Monterroso, ReadySet CEO Y-Vonne Hutchinson, Project Include Founding Member Erica Baker, Block Party CEO Tracy Chou and others make a call to hold tech platforms accountable and build tech everyone can trust.

“We did this because we have a deep belief that there are more people on the right side of history on this than on the side of violent white supremacists,” Monterroso told TechCrunch. “In times of great pain and risk, we all need to be united together. So we wanted to both ensure tech’s role in this is clear and give us an opportunity to get aligned.”

Despite platitudes by tech CEOs that their respective platforms are designed to bring the world together and foster connection, these platforms too often cause harm and “are radicalizing and fragmenting communities by providing an unprecedented ability to coordinate attacks and amplify hate,” the letter states.

That’s not to say that tech companies have done nothing to try to combat hate speech and white supremacy, but what they’ve done just hasn’t been enough. In June, former ACLU Washington Director Laura Murphy said Facebook’s white supremacy policy, despite some changes, was still too narrow. Meanwhile, stories have recently emerged regarding how people become radicalized on YouTube.

The letter comes shortly after the mass shootings in El Paso, Texas and Dayton, Ohio where many of the victims were either Latinx or black. Tech leaders in the letter also note other shootings where people were targeted because of their race, sexuality and/or religion, like Pulse Nightclub shooting and Charleston church massacre.

“White supremacist terrorism and violence, fueled by racism and misogyny, and empowered by technology, is on the rise,” they write. “They’ve moved beyond their white robes and hoods to social media and public rallies where they radicalize and fund their growing membership. Our government leaders at the highest levels encourage and spread it. Our industry leaders enable and profit from it. Four of the five worst gun massacres in modern history have taken place over the past two years. Evidence shows that many of these shooters are inspired by white supremacist ideology and targeting marginalized people.”

The aim of the letter is to serve as a call to action to encourage their fellow technologists to build ethical and responsible tech platforms.

“Whether it be a walkout, refusing to build or buy tech that accelerates hate, calling out unfair anti-abuse policies that silence marginalized voices, or continuing to demand answers from those in positions of power, the time to act is now,” the leaders write.

You can read the full letter over on Build Tech We Trust.

Postmates to drop IPO filing next month

Postmates plans to make its IPO paperwork public in September, TechCrunch has learned. Despite previous reports indicating the on-demand delivery company is seeking an M&A exit, sources close to the matter say Postmates is on track to go complete an initial public offering this year.

With the S-1 dropping in September, San Francisco-based Postmates is expected to debut on the stock exchange by the end of the third fiscal quarter of 2019. The company has tapped JP Morgan Chase and Bank of America Corp. as lead underwriters, Bloomberg previously reported, though other details of the float, including the size and price range of the proposed offering, have yet to be announced.

“We can’t comment on the IPO process and we don’t comment on rumor or speculation,” a Postmates spokesperson told TechCrunch.

In February, Postmates confidentially filed with the U.S. Securities and Exchange Commission for an IPO. Shortly after, Postmates held M&A talks with DoorDash, another food delivery unicorn, according to people familiar with the matter, but failed to come to mutually favorable terms. DoorDash declined to comment for this story.

Postmates has raised $681 million to date with its latest round coming in earlier this year at a $1.85 billion valuation. DoorDash, on the other hand, reached a $12.6 billion valuation in May with a $600 million Series G.

As Postmates gears up for its IPO, the food delivery business continues to consolidate. DoorDash last week purchased another food delivery service, Caviar, from Square in a deal worth $410 million. Uber is said to have considered buying Caviar, which had been looking for a buyer at least since 2016, according to Bloomberg.

DoorDash has been under heavy scrutiny as of late for the way it pays its drivers. Back in February, we reported how DoorDash offsets the amount it pays drivers with tips from customers. It wasn’t until after much backlash that DoorDash finally said it would change its policies. DoorDash has yet to implement the new policy.

How Postmates will fare on the public markets is up for debate. The billion-dollar company will go head-to-head with other public businesses in the space, including powerhouses Uber and Grubhub.

Uber last week shared disappointing second-quarter earnings. The company’s food delivery unit, UberEats, however, continues to grow at an impressive rate. UberEats did $3.39 billion in gross bookings last quarter with monthly active platform consumers (MAPCs) growing more than 140% year-over-year. Still, the unit is years away from profitability, Uber chief Dara Khosrowshahi told CNBC on Thursday.

Postmates’ updated IPO plans follow a report from Bloomberg that WeWork expects to make its IPO prospectus available in the next week. Eyes will be on both WeWork, which hopes to raise more than $3.5 billion, and Postmates, as the companies occupy two unproven categories.

Postmates follows Uber, Lyft, Pinterest and many others to the public markets in 2019, a year when many of Silicon Valley’s most notable unicorns finally decided to make the transition from private to public.

Postmates, founded in 2011 by Bastian Lehmann, is backed by Spark Capital, Founders Fund, Uncork Capital, Slow Ventures, Tiger Global, Blackrock and others.

Skip scooters are returning to Washington, DC after battery fires

Following battery issues and a single-alarm fire caused by improperly disposed of batteries in Washington, D.C., Skip has been given the green light to resume operations in Washington, D.C. and the surrounding areas of Alexandria and Arlington. The plan is to redeploy the scooters in the coming weeks.

In June, a battery on one of Skip’s scooters caught fire in D.C., prompting the company to ground its scooters in both D.C. and San Francisco. The scooter in question was found with its external battery on fire, which caused “minor damage” to a wall nearby. In light of that incident, Skip identified other potential at-risk batteries and quarantined them in its warehouse.

“In DC, they weren’t disposed of properly, which helped create the right conditions for a single-alarm fire,” Skip wrote in a blog post. “After the incident, DDOT asked us to suspend operations. Frankly, that was the right call. We didn’t just let our cities and riders down, we let ourselves down.”

Since then, Skip says it has consulted with battery experts and OSHA compliance firms to put in place new procedures and operations around handling and disposing of damaged equipment. Now, Skip has real-time monitoring and alerting for battery and vehicle issues to ensure batteries are disposed of before exhibiting any safety issues. Among other steps, Skip is now reporting its handling of batteries and employee injuries to the District Department of Transportation.

Skip is not the only micromobility company that has experienced issues with battery fires. Last month, a couple of Lyft’s electric bike batteries caught on fire in San Francisco, prompting the company to pull its bikes from the streets. Late last year, Lime recalled some of its Ninebot scooters due to fire concerns.

And battery fires do not only affect electric bikes and scooters. You may remember the year of the exploding hoverboards, as well as exploding smartphones and laptops. What all of those have in common are lithium-ion batteries, which are very commonly used for portable electronics and now, personal electric vehicles. The downside to these types of batteries is potential overheating, which can lead to a failure mode called “thermal runaway” and result in a battery fire.

Other potential issues that can lead to battery failure are bad design and the mere fact that scooters can be banged around by users. In the case of Skip, the issue seemed to fall on the latter.

“The investigation found the main cause to be physical damage, but it was not able to determine whether the damage was intentional or unintentional,” a Skip spokesperson told TechCrunch.

Given the amount of scrutiny all of these companies are under, coupled with their reliance on approval from cities, the likes of Skip, Lyft and Lime need to make sure their respective safety procedures are buttoned up if they want to thrive in this space.

This startup wants to democratize custom sneaker ownership

There’s nothing like having a pair of fresh, unique sneakers. Limited release culture facilitates some of that, but The Custom Movement hopes to make originality and self-expression via sneakers more accessible to the masses.

The Custom Movement, a custom sneaker startup backed by Y Combinator, enables independent artists to sell their one-of-a-kind sneaker designs to those who want highly unique Nikes, Vans, Timberlands or any other brand of shoe. Customers can shop by shoe brand, style, artist or price.

You can think of it a bit like an Etsy for custom sneakers. Right now, there are about 40 artists featured on the site that offer more than 5,000 different shoes. The platform is entirely open, meaning any artist can sign up to sell their shoes.

That means the prices can vary, but the cheapest shoe you can buy right now costs $110 and the most expensive one costs upwards of $1,000. The Custom Movement processes the payments but artists handle the shipping.

In exchange for the platform, The Custom Movement takes a 10% commission on the sales price of the shoe. Down the road, the startup wants to help artists more easily manage their inventory and shipping processes. And, in the event something goes wrong with the order, The Custom Movement fully protects buyers.

Growing up in the Philippines, The Custom Movement founder Akshar Bonu’s experience of sneaker culture was different from people who grew up in the United States, he told TechCrunch.

“I went to a high school where we had to wear uniforms, so the only real article of clothing we had control over was our shoes,” Bonu said. “It’s my form of self-expression that I had growing up. What was interesting in the Philippines and high school, there wasn’t this monoculture around what people should wear. I’ve always been interested in unique shoes that help me express myself.”

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Design by Nate Rivera, one of the artists of The Custom Movement.

When Bonu came to the U.S. for college, he was introduced to limited release culture and “shoes defined by what everyone else wanted,” he said. “That was a huge contrast to my experience with sneakers back in the Philippines. I found the sneaker culture and limited release culture a bit problematic.”

That’s because, he said, it’s really hard to get the shoes and then if you get them, there’s some incentive to resell them at a price that is hundreds of dollars higher than what you bought them for. There are even sites like StockX and GOAT that are entirely dedicated to reselling sneakers.

“The full experience led me to feel like there has to be a place where we can get super original, creative shoes without breaking the bank,” he said. “I ended up finding them across Instagram with independent artists buying Air Force ones and customizing it. They were drawing on them or changing fabrics. It was amazing. This is where I found this new pool of creativity. Some of the artists resonated with me in a way that a big brand like Nike never could.”

That’s where the idea for The Custom Movement originated. Since joining Y Combinator, the startup has shifted from enabling people to describe what they were looking for to instead having artists put up the designs they were willing to make. All of the shoes are made to order, which enables more artists who don’t have the means to stockpile shoes upfront in order to participate.

“Our youngest artist is 15 years old,” Bonu said. “One thing that keeps us going is we get to enable this generation of sneakerheads who have previously just been spectating in the culture to now participate in it, as opposed to having it all come top-down from Nike. Everything we think about is how do we make it easier for more people to design sneakers and help them grow.”

Prior to Y Combinator, The Custom Movement raised a small amount of funding from Pear Ventures, which has backed startups like DoorDash, Gusto and Branch Metrics. In the near term, The Custom Movement is hoping to help its customers more easily find the designs that resonate with them.

DoorDash is buying Caviar from Square in a deal worth $410 million

DoorDash has reached an agreement with Square to purchase on-demand food delivery and catering business Caviar . DoorDash has agreed to pay Square $410 million in cash and preferred DoorDash stock.

Square bought Caviar about five years ago in a deal worth about $90 million. Now, Caviar has found a new home with DoorDash, the on-demand delivery startup that had been under fire for months regarding how it pays its delivery workers. DoorDash finally did right by its workers just last week.

“Today’s announcement is another important step forward on our mission to empower local economies,” DoorDash CEO Tony Xu (pictured above) said in a statement. “We have long-admired Caviar, which has a coveted brand, an exceptional portfolio of premium restaurants and leading technology. The acquisition further enhances the breadth of our merchant selection, enabling us to offer customers even more choice when they order through DoorDash. We look forward to welcoming the Caviar team to DoorDash and expanding our partnership with Square in the future.”

The big players in the on-demand food delivery space are now DoorDash/Caviar, Postmates and GrubHub/Seamless. In May, DoorDash raised a $400 million round valuing it at $12.6 billion.

With Caviar joining DoorDash, Square’s Caviar lead, Gokul Rajaram, along with all the other Caviar employees will join DoorDash once the acquisition closes. The deal is expected to close sometime this year.

“Caviar has built a trusted brand with customers and many of the best restaurants,” Rajaram said in a statement. “DoorDash has national scale, complementary restaurant selection, a tremendous logistics platform, and a team that shares our passion and commitment to better serve restaurants, couriers, and customers. I’m incredibly excited to be joining, with the rest of the Caviar team, to help build the future of local commerce.”

For Square, this deal provides the company with an opportunity to focus more on its products for businesses and individuals, Square CEO Jack Dorsey said.

“We are increasing our focus on and investment in our two large, growing ecosystems — one for businesses and one for individuals,” Dorsey said. “This transaction furthers that effort, and we believe partnering with DoorDash provides valuable and strategic opportunities for Square.”

Meanwhile, Square just reported its Q2 2019 earnings with net revenues of $1.17 billion (44% y/o/y growth), adjusted revenues of $563 million (46% y/o/y growth) and a net loss of $7 million. In Square’s letter to shareholders, the company described how there will now be more clarity regarding how the company operates.

This story is developing…

Bird, Uber and Lyft get another chance to apply for electric scooter permit in SF

In light of a so-far successful electric scooter pilot program in San Francisco, the city has opened up the application process for service providers to deploy their respective scooters as part of a more permanent program. However, the permits will only be valid for about one year, “reflecting the rapid pace at which the scooter industry continues to involve,” the San Francisco Municipal Transportation Agency wrote on its blog.

That means starting in October 2019, we may see electric scooters from more than just Skip and Scoot. Skip and Scoot’s current permits expire on Oct. 14, 2019.

As part of the permitting program, the SFMTA plans to issue permits to “a limited number” of applicants, the agency said. The city also plans to maintain a cap on the number of scooters to be deployed at any one time, likely somewhere between 1,000 to 2,500 scooters per company. Currently, Skip is authorized to operate 800 scooters, while Scoot is authorized to operate up to 625.

The application requires companies to integrate locking mechanisms to all of its scooters, implement stricter policies to ensure people don’t ride on sidewalks as well as pilot adaptive scooters to ensure people with disabilities are not left out from this new form of transportation. This comes shortly after Lyft began testing adaptive bike share for riders in San Francisco and Oakland, Calif.

The deadline to apply is Aug. 21, 2019, which gives the likes of Bird (proud new owner of Scoot), Skip, Lime, Uber/JUMP, Lyft, Spin and the many others a fair amount of time to get their things in order. All of those companies mentioned above applied for permits to operate as part of SF’s pilot program, but were denied. Some companies took it worse than others, while others decided to focus their efforts on other markets for the time being.

What we can expect is yet another battle among the electric scooter providers to deploy their vehicles in the highly-coveted market of San Francisco. Last time, there were about one dozen applicants for the city’s pilot program.

On average, scooter riders took about 3,400 trips per day in San Francisco in May. Scoot has had a pretty drama-free existence in San Francisco, minus the whole theft and vandalism issue that forced the company to add a locking mechanism to its scooters. Skip, on the other hand, had to pull its scooters off the streets after one caught on fire in Washington, D.C.

It would be odd if the SFMTA didn’t consider that as it looks over all of the applications this time around. Meanwhile, given that a couple of Lyft’s electric bikes recently caught on fire due to apparent issues with the batteries, Lyft has likely given the SFMTA some pause around the company’s abilities to safely deploy electric vehicles.