VTEX, an e-commerce platform used by Walmart, raises $140M led by SoftBank’s LatAm fund

E-commerce now accounts for 14% of all retail sales, and its growth has led to a rise in the fortunes of startups that build tools to enable businesses to sell online. In the latest development, a company called VTEX — which originally got its start in Latin America helping companies like Walmart expand their business to new markets with an end-to-end e-commerce service covering things like order and inventory management; front-end customer experience and customer service — has raised $140 million in funding, money that it will be using to continue taking its business deeper into more international markets.

The investment is being led by SoftBank, specifically via its Latin American fund, with participation also from Gávea Investimentos and Constellation Asset Management. Previous investors include Riverwood and Naspers, and Riverwood continues to be a backer, too, the company said.

Mariano Gomide, the CEO who co-founded VTEX with Geraldo Thomaz, said the valuation is not being disclosed, but he confirmed that the founders and founding team continue to hold more than 50% of the company. In addition to Walmart, VTEX customers include Levi’s, Sony, L’Oréal and Motorola . Annually, it processes some $2.4 billion in gross merchandise value across some 2,500 stores, growing 43% per year in the last five years.

VTEX is in that category of tech businesses that has been around for some time — it was founded in 1999 — but has largely been able to operate and grow off its own balance sheet. Before now, it had raised less than $13 million, according to PitchBook data.

This is one of the big rounds to come out of the relatively new SoftBank Innovation Fund, an effort dedicated to investing in tech companies focused on Latin America. The fund was announced earlier this year at $2 billion and has since expanded to $5 billion. Other Latin American companies that SoftBank has backed include online delivery business Rappi, lending platform Creditas, and proptech startup QuintoAndar.

The common theme among many SoftBank investments is a focus on e-commerce in its many forms (whether that’s transactions for loans or to get a pizza delivered) and VTEX is positioned as a platform player that enables a lot of that to happen in the wider marketplace, providing not just the tools to build a front end, but to manage the inventory, ordering and customer relations at the back end.

“VTEX has three attributes that we believe will fuel the company’s success: a strong team culture, a best-in-class product and entrepreneurs with profitability mindset,” said Paulo Passoni, managing investment partner at SoftBank’s Latin America fund, in a statement. “Brands and retailers want reliability and the ability to test their own innovations. VTEX offers both, filling a gap in the market. With VTEX, companies get access to a proven, cloud-native platform with the flexibility to test add-ons in the same data layer.”

Although VTEX has been expanding into markets like the US (where it acquired UniteU earlier this year), the company still makes some 80% of its revenues annually in Latin America, Gomide said in an interview.

There, it has been a key partner to retailers and brands interested in expanding into the region, providing integrations to localise storefronts, a platform to help brands manage customer and marketplace relations, and analytics, competing against the likes of SAP, Oracle, Adobe, and Salesforce (but not, he said in answer to my question, Commercetools, which builds Shopify -style API tools for mid- and large-sized enterprises and itself raised $145 million last month).

E-commerce, as we’ve pointed out before, is a business of economies of scale. Case in point, while VTEX processes some $2.5 billion in transactions annually, it makes a relative small return on that: $69 million, to be exact. This, plus the benefit of analytics on a wider set of big data (another economy of scale play), are two of the big reasons why VTEX is now doubling down on growth in newer markets like Europe and North America. The company now has 122 integrations with localised payment methods.

“At the end of the day, e-commerce software is a combination of knowledge. If you don’t have access to thousands of global cases you can’t imbue the software with knowledge,” Gomide said. “Companies that have been focused on one specific region and now realising that trade is a global thing. China has proven that, so a lot of companies are now coming to us because their existing providers of e-commerce tools can’t ‘do international.'” There are very few companies that can serve that global approach and that is why we are betting on being a global commerce platform, not just one focused on Latin America.”

The first hires are the hardest

Welcome to this edition of The Operators, a recurring Extra Crunch column, podcast and YouTube show that brings you insights and information from inside of tech companies. Our guests are execs with operational experience at both fast-rising startups like Brex, Calm, DocSend and Zeus Living, along with more established companies like AirBnB, Facebook, Google and Uber. Here, they share strategies and tactics for building your first company and charting your career in tech.

In this episode, we’re talking about hiring and recruiting:

  1. Why people take the risk of working at early-stage startups
  2. When and how to work with recruiters
  3. How to make your first hires

A company’s first hires are often the hardest; money is usually too tight to pay competitive salaries, there’s no recognizable brand or reputation yet and most people would prefer to work at a company their friends and family have heard of before. There’s also fair presumption of risk and unviability — who wants to take a job that might not be around in a year?

Startup founders overcome these odds on a regular basis. To figure out how, we spoke with two experts:

Farah Sharghi-Dolatabadi began her career as a software developer and financial advisor before moving into recruiting. She’s been a recruiter at startups in addition to companies like Google and Lyft. She’s currently a senior technical recruiter at Uber and an active career coach at HireClub.

Kelly Kinnard is Vice President of Talent at Battery Ventures, where she’s worked with startups like Wag, Coupa, Fastly, and Gainsight. She also has experience at top recruiting firms and in executive search at Oracle.

Below is a synthesized summary of our conversation; check out The Operators for the full episode.

Why people take the risk of working at early-stage startups

Most early-stage startups fail. That shouldn’t be news to anyone. Still, however unlikely big outcomes are, the possibility of being a part of the next Facebook or Uber is tempting, and taking a job at a brand new company may even rational on an expected value basis.

Sometimes it’s not just the chance at a big financial outcome. We’ve heard early-stage employees say they made their choice based for more intangible reasons, like having more autonomy in their work, seeking a less structured environment, working with a certain type or set of colleagues, wanting a sense of adventure or purpose and the opportunity for more rapid career progression.

It may not be possible for an early-stage startup to offer market-rate compensation, but they can personalize the opportunity for early employees.

“Be creative and do things like cater to that individual and think about it on a case by case basis,” said Kinnard. “If that candidate really wants to work from home two days a week because they have a dog and you can’t allow dogs in the office, and they want to be able to walk their dog or go pick up their child from school after school, then try to customize things according to each individual.” But don’t forget that compensation still matters, as do market rates. According to Kinnard, “cash is still king, and I think sometimes I see founders and I see CEOs be unrealistic about what they expect to be able to pay people. A part of what I do is provide them with competitive comp data so they can look at the data and [see] here’s what 3000 companies that we’ve surveyed have suggested the compensation ranges.”

Creative problem-solving pays dividends in recruiting, just like in does with most other problems startups need to solve. Experienced recruiters can help companies figure out how to get creative, but how do you know if working a recruiter is right for you?

 

When and how to work with recruiters

Even after Microsoft wins, JEDI saga could drag on

The DoD JEDI contract saga came to a thrilling conclusion on Friday afternoon, appropriately enough, with one final plot twist. The presumptive favorite, Amazon, did not win, stunning many, including likely the company itself. In the end, Microsoft took home the $10 billion prize.

This contract was filled with drama from the beginning, given the amount of money involved, the length of the contract, the winner-take-all nature of the deal — and the politics. We can’t forget the politics. This was Washington after all, and Jeff Bezos does own The Washington Post.

Then there was Oracle’s fury throughout the procurement process. The president got involved in August. The current defense secretary recused himself on Wednesday, two days before the decision came down. It was all just so much drama, even the final decision itself, handed down late Friday afternoon — but it’s unclear if this is the end or just another twist in this ongoing tale.

Some perspective on $10 billion

Before we get too crazy about Microsoft getting a $10 billion, 10-year contract, consider that Amazon earned $9 billion last quarter alone in cloud revenue. Microsoft reported $33 billion last quarter in total revenue. It reported around $11 billion in cloud revenue. Synergy Research pegs the current cloud infrastructure market at well over $100 billion annually (and growing).

What we have here is a contract that’s worth a billion a year. What’s more, it’s possible it might not even be worth that much if the government uses one of its out clauses. The deal is actually initially guaranteed for just two years. Then there are a couple of three-year options, with a final two-year option at the end if it gets that far.

The DOD recognized that with the unique nature of this contract, going with a single vendor, it wanted to keep its options open should the tech world shift suddenly under its feet. It didn’t want to be inextricably tied to one company for a decade if that company was suddenly disrupted by someone else. Given the shifting sands of technology, that part of the strategy was a wise one.

Where the value lies

If the value of this deal was not the contract itself, it begs the question, why did everyone want it so badly? The $10 billion JEDI deal was simply a point of entree. If you could modernize the DoD’s infrastructure, the argument goes, chances are you could do the same for other areas of the government. It could open the door for Microsoft for a much more lucrative government cloud business.

But it’s not as though Microsoft didn’t already have a lucrative cloud business. In 2016, for example, the company signed a deal worth almost a billion dollars to help move the entire department to Windows 10. Amazon too, has had its share of government contracts, famously landing the $600 million to build the CIA’s private cloud.

But given all the attention to this deal, it always felt a little different from your standard government contract. Just the fact the DoD used a Star Wars reference for the project acronym drew more attention to the project from the start. Therefore, there was some prestige for the winner of this deal, and Microsoft gets bragging rights this morning, while Amazon is left to ponder what the heck happened. As for other companies like Oracle, who knows how they’re feeling about this outcome.

Hell hath no fury like Oracle scorned

Ah yes, Oracle; this tale would not be complete without discussing the rage of Oracle throughout the JEDI RFP process. Even before the RFP process started, they were complaining about the procurement process. Co-CEO Safra Catz had dinner with the president to complain that the contract process wasn’t fair (not fair!). Then it tried complaining to the Government Accountability Office. They found no issue with the process.

They went to court. The judge dismissed their claims that involved both the procurement process and that a former Amazon employee, who was hired by the DoD, was involved in the process of creating the RFP. They claimed that the former employee was proof that the deal was tilted toward Amazon. The judge disagreed and dismissed their complaints.

What Oracle could never admit was that it simply didn’t have the same cloud chops as Microsoft and Amazon, the two finalists. It couldn’t be that they were late to the cloud or had a fraction of the market share that Amazon and Microsoft had. It had to be the process or that someone was boxing them out.

What Microsoft brings to the table

Outside of the politics of this decision (which we will get to shortly), Microsoft brought to the table some experience and tooling that certainly gave it some advantage in the selection process. Until we see the reasons for the selections, it’s hard to know exactly why the DoD chose Microsoft, but we know a few things.

First of all there are the existing contracts with the DoD, including the aforementioned Windows 10 contract and a five-year $1.76 billion contract with DoD Intelligence to provide “innovative enterprise services” to the DoD.

Then there is Azure Stack, a portable private cloud stack that the military could stand up anywhere. It could have great utility for missions in the field when communicating with a cloud server could be problematic.

Fool if you think it’s over

So that’s that right? The decision has been made and it’s time to move on. Amazon will go home and lick its wounds. Microsoft gets bragging rights and we’re good. Actually, this might not be where it ends at all.

Amazon, for instance, could point to Jim Mattis’ book where he wrote that the president told the then Defense Secretary to “screw Bezos out of that $10 billion contract.” Mattis says he refused, saying he would go by the book, but it certainly leaves the door open to a conflict question.

It’s also worth pointing out that Jeff Bezos owns The Washington Post and the president isn’t exactly in love with that particular publication. In fact, this week, the White House canceled its subscription and encouraged other government agencies to do so as well.

Then there is the matter of current Defense Secretary Mark Espers suddenly recusing himself last Wednesday afternoon based on a minor point that one of his adult children works at IBM (in a non-cloud consulting job). He claimed he wanted to remove any hint of conflict of interest, but at this point in the process, it was down to Microsoft and Amazon. IBM wasn’t even involved.

If Amazon wanted to protest this decision, it seems it would have much more solid ground to do so than Oracle ever had. An Amazon spokesperson would only say that the company “was keeping its options open.”

The bottom line is a decision has been made, at least for now, but this process has been rife with controversy from the start, just by the design of the project, so it wouldn’t be surprising to see Amazon take some protest action of its own. It seems oddly appropriate.

Former Oracle co-CEO Mark Hurd has passed away

Mark Hurd, who until last month was one of two CEOs leading the database software giant Oracle, has passed away at age 62, one month after telling employees in a letter that he was taking a leave of absence owing to health reasons.

Staffers, who were notified that Hurd died earlier this morning, have been offering their condolences on Twitter.

Hurd joined Oracle nine years ago, after spending five years with Hewlett-Packard, where he was CEO, president and, ultimately, board chairman, all roles from which he was pressured to resign in 2010 after submitting inaccurate expense reports that concealed his personal relationship with an outside consultant to the company.

At the time, Allen Lind, a professor of leadership at Duke’s Fuqua School of Business, told Time magazine: “People don’t like their leaders to have frailties. That’s just the way it works.”

The very next month, Larry Ellison, a friend of Hurd, named him the co-president of Oracle, the company Ellison had himself founded in the summer of 1977. Said then-CEO Ellison in a statement relating to the move, “Mark did a brilliant job at H-P, and I expect he’ll do even better at Oracle. There is no executive in the I.T. world with more relevant experience than Mark.”

Indeed, when Ellison stepped down as the CEO of Oracle in 2014 to become the company’s chief technology officer, he promoted Hurd to the role of CEO, a role he had since shared with Oracle’s former CFO, Safra Catz.

When Hurd left last month, Catz, who has been an executive with Oracle since 1999, became the sole CEO of Oracle, though Ellison has indicated that she won’t be operating the company single-handedly for long. Instead, he told analysts last month that though some people find it “weird,” Oracle plans to keep its dual-CEO structure, in part owing to situations as with Hurd where life throws an executive team a curveball.

According to Business Insider, Ellison has already promised the board of directors the names of numerous internal candidates, including Don Johnson, the executive vice president of Oracle Cloud Infrastructure.

Said Ellison at Oracle’s OpenWorld event in San Francisco last month: “I believe in a dual-CEO structure. The normal case would be dual CEO here for obvious reasons. That it’s good to have capacity and good to have specialization. And then, God forbid, if something untoward should happen, you have capacity; you are not incapacitated.”

Hurd attended Baylor University in Waco, Texas on a tennis scholarship and reportedly dabbled on the professional tennis circuit immediately after graduating. He began his career at NCR Corp., where he was promoted to chief operating officer 22 years into his tenure with the company, and to the role of CEO the following year, in 2003.

Two years later, H-P brought him aboard.

Hurd is survived by his wife, Paula, and daughters Kathryn and Kelly.

Ellison released a statement just now about the development. It reads:

It is with a profound sense of sadness and loss that I tell everyone here at Oracle that Mark Hurd passed away early this morning. Mark was my close and irreplaceable friend, and trusted colleague. Oracle has lost a brilliant and beloved leader who personally touched the lives of so many of us during his decade at Oracle. All of us will miss Mark’s keen mind and rare ability to analyze, simplify and solve problems quickly. Some of us will miss his friendship and mentorship. I will miss his kindness and sense of humor. Mark leaves his beloved wife Paula, two wonderful daughters who were the joy of his life, and his much larger extended family here at Oracle who came to love him. I know that many of us are inconsolable right now, but we are left with memories and a sense of gratitude…that we had the opportunity to get know Mark, the opportunity to work with him…and become his friend.

Jobpal pockets $2.7M for its enterprise recruitment chatbot

Berlin-based recruitment chatbot startup Jobpal has closed a €2.5 million (~$2.7M) seed round of funding from InReach Ventures and Acadian Ventures.

The company, which was founded back in 2016, has built a cross-platform chatbot to automate candidate support and increase efficiency around hiring by applying machine learning and natural language processing for what it dubs “talent interaction”.

The target customers are large enterprises with Jobpal offering the product as a managed service.

For these employers the pitch is increased efficiency by being able to rapidly respond to and engage potential job applicants whenever they’re reaching out for more info via an always-on channel (i.e. the chatbot) which is primed to respond to common questions.

Candidates can also apply for vacancies via the Jobpal chatbot by answering a series of questions in the familiar messaging thread format. Jobpal says its chatbot can also be used to screen applicants’ CVs and recommend the most promising candidates.

It takes care of the logistical legwork of scheduling interview appointments — leaving HR departments with more time to spend on more meaningful portions of the recruitment process.

Co-founder and CEO Luc Dudler tells TechCrunch it has more than 30 enterprise clients at this stage, generating “thousands of conversations” per day. Customers he name checks include the likes of Airbus, Deutsche Telekom and McDonald’s.

The software works on popular messaging platforms including WhatsApp, Facebook Messenger, WeChat and SMS, and is available in 15+ languages — though Jobpal confirms the German market remains its largest so far.

“The sheer volume of interest and number of questions enterprises receive from prospective talent is often difficult to deal with, which results in a suboptimal experience and frustrated candidates. Conversational interfaces and Natural Language Processing enable us to deliver a candidate-centric experience and increase the efficiency of the recruiting function,” says Dudler, arguing that the recruitment landscape has become “candidate first” — putting the onus on enterprises to get the “candidate experience” right.

“This technology allows employers to engage with candidates when they want and on the platforms they use, such as WhatsApp. This gives control to the candidates, meaning they can get answers in a matter of seconds, instead of days or weeks. For Internal HR teams, they can spend time more time finding the best talent, as jobpal automates tedious and time-consuming tasks, allowing recruitment teams to focus on more value-add tasks.”

“We focus mainly on communication and engagement, and our customers only do in-house recruitment. We don’t work with agencies,” he adds.

Jobpal points to increased engagement from use of its chatbot — claiming companies are seeing more queries from jobseekers than they used to receive emails, as well as arguing the “low-friction” approach is accessible and convenient and leads to increased conversion rates.

With any automated process there could be a risk of biased and unequitable outcomes — depending on the criteria the chatbot is using to sift candidates. Although Jobpal says it’s not using algorithms to take recruitment decisions, so the biggest bias risk looks to be in the hands of the employers setting the criteria.

Misinterpretation of candidates’ queries based on the technology failing to understand what’s being asked could potentially lead to responses that disproportionately disadvantage certain applicants. Though Jobpal says queries that are too complex are routed to a human to deal with.

“We get a lot of queries about the application process/deadline/evaluation, qualifications needed, supporting documents, working hours, growth options and salary that Jobpal is designed to deal with,” says Dudler, of Jobpal candidate users. “Our chatbots don’t answer questions that are too personal, too obscure or anything non-recruitment related such as customer service queries.”

“Jobpal stores the query data but it’s de-associated from the candidate data. This data is used to train AI models which supports general communication as well as company-specific chatbots. We don’t mine or sell candidate profiles, and we don’t do algorithmic decision making in the recruitment process,” he adds.

The software integrates with a number of enterprise Human Capital Management suites at this point, including SAP SuccessFactors, Workday, Oracle (formerly Taleo), Avature and Smartrecruiters.

The seed round follows what Dudler couches as “a huge increase in demand” — with the team spying an opportunity for further growth.

“We’ll be investing in product development and tripling our headcount in the next 12 months. Specifically, we are looking to recruit a VP of marketing,” he tells us.

Chatbots still strike many consumers as robotic — and even irritating — but the technology has nonetheless been flourishing in the customer support and recruitment space for several years now. Business areas where there’s no shortage of repetitive tasks for automating. And where being able to offer some level of service 24/7 is a major plus.

On the hiring front, the power imbalance between employer and job applicant might even make interfacing with a bot more appealing for a candidate than the pressure of talking to an actual human who already works at the target employer.

For certain types of jobs employee churn can also be incredibly high — making hiring essentially a neverending task. Again, chatbots are a natural fit in such a scenario; being scalable, they take the strain out of repeat and formulaic conversations — with the promise of a smooth pipeline of candidate conversions.

Given all that there’s now no shortage of recruitment chatbots touting automated support for HR departments. At the same time there’s unlikely to ever be a one-size fits all approach to the hiring problem. It’s a multifaceted, multi-dimensional challenge on account of the spectrum of work that exists and jobs to be filled, and indeed the human variety of jobseekers.

This is why there are so many different ‘flavors’ and ‘styles’ of chatbots offering to assist, some with algorithmic matching, and/or targeting different types of employers and/or jobs/industry (or indeed jobseekers; passive vs active) — others just super basic tools (such as the Jobo bot which alerts jobseekers to vacancies matching criteria they’ve specified).

Some more sophisticated chatbot examples include MeetFrank (passive job matching); Mya (for recruiting agencies and massive enterprises, including for shift filling); Vahan (low skilled, blue-collar job-matching for high attrition delivery jobs); and AllyO (conversational AI for “end-to-end HR management”).

While a few recruitment chatbots that are closer to what Jobpal is offering include the likes of IdealBrazen and Xor, to name three.

With so much chatbot competition pledging to ‘streamline recruitment’ by applying automation to the hiring task, employers might be forgiven for thinking they have a fresh choice headache on their hands.

But for startups applying AI technology to ‘fix recruitment’ by making talk cheap (and structured), the patchwork of players and approaches still in play suggests there’s ongoing opportunity to grab a slice of a truly massive market. 

India’s Darwinbox raises $15M to bring its HR tech platform to more Asian markets

An Indian SaaS startup, which is increasingly courting clients from outside of the country, just raised a significant amount of capital to expand its business.

Hyderabad-based Darwinbox, which operates a cloud-based human resource management platform, said on Thursday it has raised $15 million in a new financing round. The Series B round — which moves the firm’s total raise to $19.7 million — was led by Sequoia India and saw participation from existing investors Lightspeed India Partners, Endiya Partners, and 3one4 Capital.

More than 200 firms including giants such as adtech firm InMobi, fintech startup Paytm, drink conglomerate Bisleri, automobile maker Mahindra, Kotak group, and delivery firms Swiggy and Milkbasket use Darwinbox’s HR platform to serve half a million of their employees in 50 nations, Rohit Chennamaneni, cofounder of Darwinbox, told TechCrunch in an interview.

The startup, which competes with giants such as SAP and Oracle, said its platform enables high level of configurability, ease of use, and understands the needs of modern employees. “The employees today who have grown accustomed to using consumer-focused services such as Uber and Amazon are left disappointed in their experience with their own firm’s HR offerings,” said Gowthami Kanumuru, VP Marketing at Darwinbox, in an interview.

Darwinbox’s HR platform offers a range of features including the ability for firms to offer their employees insurance and early salary as loans. Its platform also features social networks for employees within a company to connect and talk, as well as an AI assistant that allows them to apply for a leave or set up meetings with quick voice commands from their phone.

“The AI system is not just looking for certain keywords. If an employee tells the system he or she is not feeling well today, it automatically applies a leave for them,” she said.

Darwinbox’s platform is built to handle onboarding new employees, keeping a tab on their performance, monitor attrition rate, and maintain an ongoing feedback loop. Or as Kanumuru puts it, the entire “hiring to retiring” cycle.

One of Darwinbox’s clients is L&T, which is tasked with setting up subway in many Indian cities. L&T is using geo-fencing feature of Darwin to log the attendance of employees. “They are not using biometric punch machine that is typically used by other firms. Instead, they just require their 1,200 employees to check-in from the workplace using their phones,” said Kanumuru.

darwinbox event

Additionally, Darwinbox is largely focusing on serving companies based in Asia as it believes Western companies’ solutions are not a great fit for people here, said Kanumuru. The startup began courting clients in Southeast Asian markets last year.

“Our growth is a huge validation for our vision,” she said. “Within six months of operations, we had the delivery giant Delhivery with over 23,000 employees use our platform.”

In a statement to TechCrunch, Dev Khare, a partner at Lightspeed Venture, said, “there is a new trend of SaaS companies targeting the India/SE Asia markets. This trend is gathering steam and is disproving the conventional wisdom that Asia-focused SaaS companies cannot get to be big companies. We firmly believe that Asia-focused SaaS companies can get to large impact value and become large and profitable. Darwinbox is one of these companies.”

Darwinbox’s Chennamaneni said the startup will use the fresh capital to expand its footprints in Indonesia, Malaysia, Thailand, and other Southeast Asian markets. Darwinbox will also expand its product offerings to address more of employees’ needs. The startup is also looking to make its platform enable tasks such as booking of flights and hotels.

Chennamaneni, an alum of Google and McKinsey, said Darwinbox aims to double the number of clients it has in the next six to nine months.

New investment firm wants to change the way we fund early stage companies — from New Hampshire

The three founders of York IE have a vision about how to change the way early stage startups get funding. They have experience shattering norms, having built a successful startup, Dyn, in Manchester, New Hampshire, which is not exactly a hot-bed of startup activity.

The founders want to take that same spirit and apply it to investing, while maintaining its headquarters in New Hampshire (and Boston). In fact, the three founders — Kyle York, Joe Raczka and Adam Coughlin — launched Dyn and built it to $30 million in ARR before taking a dime in venture funding. They went onto raise $88 million before being acquired by Oracle in 2016. They believe they can apply the lessons that they learned to other early stage startups.

“We think, especially in B2B and SaaS, there is a way to build a scalable, effective and efficient business without chasing massive fund raises, diluting your company, bringing on traditional venture investors and chasing those kind of on-paper vanity metrics,” company CEO and co-founder Kyle York told TechCrunch.

For the past five years, while working at Oracle after the acquisition, the founders have been testing their theories while advising startups and acting as angel investors. They believed it was time to take all of those learnings and apply it to their own firm.

“I started thinking about how to transition out of Oracle, and what I wanted to do from a career perspective and we wanted to build a modern investment firm less focused on how to deploy as much capital as possible for the limited partners, and more on working with the entrepreneurs to help coach them on a path to success,” York said.

The company still wants to act as investors, and to make money along the way, but they want to help build more solid, grounded companies. York says that they want the founders truly understand that they are selling a part of their company in exchange for those dollars, and that it makes sense to have a strong foundation before taking on money.

York wants to change this culture of fund raising for fund raising’s sake. He acknowledges that some companies with deep tech or deep infrastructure require that kind of substantial up-front investment to get off the ground, but SaaS companies are supposed to be able to take advantage of modern technology to build companies more easily, and he wants to see them build solid companies first and foremost.

“The goal shouldn’t be to raise more capital. The goal should be to build a healthy successful, scalable company,” he said.

To put their money where their mouth is, the new firm will not take management fees. “We are investing like a normal investor and coming through with equity position, but we are betting on the future. In essence, if the startup wins, then we win.”

Oracle files new appeal over Pentagon’s $10B JEDI cloud contract RFP process

You really have to give Oracle a lot of points for persistence, especially where the $10 billion JEDI cloud contract procurement process is concerned. For more than a year, the company has been complaining  across every legal and government channel it can think of. In spite of every attempt to find some issue with the process, it has failed every time. That did not stop it today from filing a fresh appeal of last month’s federal court decision that found against the company.

Oracle refuses to go quietly into that good night, not when there are $10 billion federal dollars on the line, and today the company announced it was appealing Federal Claims Court Senior Judge Eric Bruggink’s decision. This time they are going back to that old chestnut that the single-award nature of the JEDI procurement process is illegal:

“The Court of Federal Claims opinion in the JEDI bid protest describes the JEDI procurement as unlawful, notwithstanding dismissal of the protest solely on the legal technicality of Oracle’s purported lack of standing. Federal procurement laws specifically bar single award procurements such as JEDI absent satisfying specific, mandatory requirements, and the Court in its opinion clearly found DoD did not satisfy these requirements. The opinion also acknowledges that the procurement suffers from many significant conflicts of interest. These conflicts violate the law and undermine the public trust. As a threshold matter, we believe that the determination of no standing is wrong as a matter of law, and the very analysis in the opinion compels a determination that the procurement was unlawful on several grounds,” Oracle’s General Counsel Dorian Daley said in a statement.

In December, Oracle sued the government for $10 billion, at the time focusing mostly on a perceived conflict of interest involving a former Amazon employee named Deap Ubhi. He worked for Amazon prior to joining the DOD, where he worked on a committee of people writing the RFP requirements, and then returned to Amazon later. The DOD investigated this issue twice, and found no evidence he violated federal conflict of interest of laws.

The court ultimately agreed with the DOD’s finding last month, ruling that Oracle had failed to provide evidence of a conflict, or that it had impact on the procurement process. Judge Bruggink wrote at the time:

We conclude as well that the contracting officer’s findings that an organizational conflict of interest does not exist and that individual conflicts of interest did not impact the procurement, were not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Plaintiff’s motion for judgment on the administrative record is therefore denied.

The company started complaining and cajoling even before the JEDI RFP process started. The Washington Post reported that Oracle’s Safra Catz met with the president in April, 2018 to complain that the process was unfairly stacked in favor of Amazon, which happens to be the cloud market share leader by a significant margin, with more than double that of its next closest rival, Microsoft.

Later, the company filed an appeal with the Government Accountability Office, which found no issue with the RFP process. The DOD, which has insisted all along there was no conflict in the process, also did in an internal investigation and found no wrong-doing.

The president got involved last month when he ordered Defense Secretary Mark T. Esper to look into the idea that, once again, the process has favored Amazon. That investigation is ongoing. The DOD did name two finalists, Amazon and Microsoft, in April, but has yet to name the winner as the protests, court cases and investigations continue.

The controversy in part involves the nature of the contract itself. It is potentially a decade-long undertaking to build the cloud infrastructure for the DOD, involves the award of a single vendor (although there are several opt-out clauses throughout the term of the contract) and involves $10 billion and the potential for much more government work. That every tech company is salivating for that contract is hardly surprising, but Oracle alone continues to protest at every turn.

The winner was supposed to be announced this month, but with the Pentagon investigation in progress, and another court case underway, it could be some time before we hear who the winner is.

Oracle directors give blessing to shareholder lawsuit against Larry Ellison and Safra Catz

Three years after closing a $9.3 billion deal to acquire Netsuite, several Oracle board members have written an extraordinary letter to the Delaware Court, approving a shareholder lawsuit against company executives Larry Ellison and Safra Catz over the 2016 deal. Reuters broke this story.

According Reuters’ Alison Frankel, three board members including former U.S. Defense Secretary Leon Panetta, sent a letter on August 15th to Sam Glasscock III, Vice Chancellory for the Court of the Chancellor in Georgetown, Delaware, approving the suit as members of a special Board of Directors entity known as the Special Litigation Committee.

The lawsuit is what is called in legal parlance, a derivative suit. According to the site Justia, this type of suit is filed in cases like this. “Since shareholders are generally allowed to file a lawsuit in the event that a corporation has refused to file one on its own behalf, many derivative suits are brought against a particular officer or director of the corporation for breach of contract or breach of fiduciary duty,” the Justia site explained.

The letter went onto say there was an attempt to settle this suit, which was originally launched in 2017, through negotiation outside of court, but when that attempt failed, the directors wrote this letter to the court stating that the suit should be allowed to proceed.

As Frankel wrote in her article, the lawsuit, which was originally filed by Firemen’s fund could be worth billions:

One of the lead lawyers for the Firemen’s fund, Joel Friedlander of Friedlander & Gorris, said at a hearing in June that shareholders believe the breach-of-duty claims against Oracle and NetSuite executives are worth billions of dollars. So in last week’s letter, Oracle’s board effectively unleashed plaintiffs’ lawyers to seek ten-figure damages against its own members, Frankel wrote

It’s worth pointing out, as we reported at the time of the Netsuite acquisition, that Larry Ellison was involved in setting up Netsuite in the late 1990s and was a major shareholder at the time of the deal.

Oracle was struggling to find its cloud footing in 2016, and it was believed that by buying an established SaaS player like Netsuite, it could begin to build out its cloud business much faster than trying to develop something like it internally. A June Synergy Research SaaS marketshare report, while admitting the market was fragmented, still showed Oracle was far behind the pack in spite of that deal three years ago.

SaaS Q119 1

While there have been bigger deals in tech M&A history, including Salesforce’s acquisition of Tableau for $15.7 billion earlier this year, it’s still stands with some of the largest.

We reached out to Oracle regarding this story, but it declined to comment.

 

 

Last chance for early-bird tickets to TC Sessions: Enterprise 2019

It’s down to the wire folks. Today’s the last day you can save $100 on your ticket to TC Sessions: Enterprise 2019, which takes place on September 5 at the Yerba Buena Center in San Francisco. The deadline expires in mere hours — at 11:59 p.m. (PT). Get the best possible price and buy your early-bird ticket right now.

We expect more than 1,000 attendees representing the enterprise software community’s best and brightest. We’re talking founders of companies in every stage and CIOs and systems architects from some of the biggest multinationals. And, of course, managing partners from the most influential venture and corporate investment firms.

Take a look at just some of the companies joining us for TC Sessions: Enterprise: Bain & Company, Box, Dell Technologies Capital, Google, Oracle, SAP and SoftBank. Let the networking begin!

You can expect a full day of main-stage interviews and panel discussions, plus break-out sessions and speaker Q&As. TechCrunch editors will dig into the big issues enterprise software companies face today along with emerging trends and technologies.

Data, for example, is a mighty hot topic, and you’ll hear a lot more about it during a session entitled, Innovation Break: Data – Who Owns It?: Enterprises have historically competed by being closed entities, keeping a closed architecture and innovating internally. When applying this closed approach to the hottest new commodity, data, it simply does not work anymore. But as enterprises, startups and public institutions open themselves up, how open is too open? Hear from leaders who explore data ownership and the questions that need to be answered before the data floodgates are opened. Sponsored by SAP .

If investment is on your mind, don’t miss the Investor Q&A. Some of greatest investors in enterprise will be on hand to answer your burning questions. Want to know more? Check out the full agenda.

Maximize your last day of early-bird buying power and take advantage of the group discount. Buy four or more tickets at once and save 20%. Here’s a bonus. Every ticket you buy to TC Sessions: Enterprise includes a free Expo Only pass to TechCrunch Disrupt SF on October 2-4.

It’s now o’clock startuppers. Your opportunity to save $100 on tickets to TC Sessions: Enterprise ends tonight at precisely 11:59 p.m. (PT). Buy your early-bird tickets now and join us in September!

Is your company interested in sponsoring or exhibiting at TC Sessions: Enterprise? Contact our sponsorship sales team by filling out this form.