Morning Report

What you need to know one minute before daylight

A B2B Yelp, Third-Wave Coffee, and Cardboard’s Comeback

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DAYLIGHT  

A 7-year-old startup, G2 Crowd is building a version of Yelp to review B2B businesses: “G2 is broken down to two reviews categories. One is a software tab, which offers a long list of business software companies from CRM to cybersecurity and their related customer reviews. The other tab is for services, which includes legal, marketing, professional and other services and their reviews.

“The company verifies reviewers by requiring them to use their business email account to sign up for G2 and, more recently, it partnered with LinkedIn to offer users the ability to show their job title and employer when clicking on their G2 user name. ‘By using LinkedIn to verify reviewers, people can see it is a real person and who they are. They can see it is tied to a professional identity and, as a result, the review is more trusted,’ Abel explained.” G2 Crowd doubled its revenue to $30 million last year and expects it to double again this year.

E-COMMERCE

Jetblack is a personal-shopping company targeted at mothers that was launched last summer by Walmart: “A few hundred shoppers in New York City pay $600 a year to order anything by text message except for fresh food. …

“Their orders go to Jetblack headquarters where dozens of agents sit at computers and field requests, from reordering diapers to making suggestions on high-end cribs, organic snacks and yoga attire. Couriers fetch the items and bring them back to a Manhattan delivery hub, where they are wrapped in black packaging and hand delivered, usually the same day. It’s a labor-intensive operation that loses money. But making money isn’t the goal, at least not right away.

“Walmart executives are betting the upstart becomes a powerful weapon in an escalating technological ground war with Amazon.com, as the two companies battle over shoppers who are increasingly making all sorts of purchases online.”

STARTUPS

Avidbots, which makes robotic cleaners, hopes to go from $3 million to $20 million in revenue this year: “Autonomous vehicles and robotic food-service startups have captured the public’s imagination, but cleaning robots have enormous, if unsexy, potential. The market for commercial-cleaning equipment is giant and fragmented, accounting for an estimated $5 billion in global sales annually. Sheikh and his co-founder Pablo Molina, also 31, believe that as much as a third of all commercial-cleaning equipment could be autonomous by 2023, giving them an opportunity to build a very large business.”

Sanctuary, a digital astrology startup backed by $1.5 million in venture capital, launched on Wednesday: “And with private equity veterans, celebrity astrologers and one of Snapchat’s earliest employees on board, its investors foresee fortunes. … The business model hinges upon a monthly subscription fee. For $19.99, users can chat with a live astrologer once a month for a 15-minute birth chart reading, during which they can ask for specific insights into their lives based on their star charts. Right now, the company has 30 astrologers lined up for readings, who work as independent contractors, and a small back-office staff of five.”

Katonya Breaux, platinum R&B singer Frank Ocean’s mother, is on a mission to rethink sunscreen, giving more options to people of color: “After about four months and infinite research about ingredients and toxicity, Breaux and the lab came up with a tinted mineral sunscreen with no irritants that blended nicely into a range of skin hues, from ‘olive skin tones to darker than chocolate,’ as Breaux describes them.”

At first, she saw this as a project for herself but her son saw an opportunity to educate about inclusivity. So, she launched UnSun Cosmetics in 2016, noting that drug stores tend to separate out products for curly hair, and darker shades of makeup are often the last thing a beauty brand develops. She wanted to do the opposite:  “The company is still scrappy, with three employees and production in Los Angeles, and most of its sales are direct-to-consumer through its website.”

Resonant Energy’s headquarters is on the second floor of a church in Dorchester, MA where the company provides solar energy to nonprofits, middle-class and low-income neighborhoods. Cofounders Isaac Baker and Ben Underwood “say they consider themselves social entrepreneurs who have more in common with churches and nonprofits than they do with other startups. ‘We share common values, common goals,’ Baker says. ‘Especially our responsibility to take care of those who have fewer resources and more challenging life circumstances.’ …

“Baker and Underwood stumbled on their business model while at Co-op Power, an energy cooperative Baker’s mother founded. They were working on a project to equip several churches with solar panels at a price the churches could afford.”

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VENTURE CAPITAL

With a new round of funding, Rent the Runway joins the few women-run businesses to be valued at $1 billion: “The valuation announced on Thursday is a milestone for Rent the Runway, which was founded a decade ago and has been working for years to expand its business beyond formal dress rentals.

“It introduced a subscription service for everyday clothing and accessories several years ago that has developed a particularly enthusiastic customer base among professional women. Recently, it announced a partnership with West Elm that will allow subscribers to rent ‘bundles’ of pillows, throws and quilts for their living rooms and bedrooms. ‘You’ll continue to see that this new living closet that we’ve created is going to apply not only to how you get dressed, but it’ll apply to all of the products that you use,’ Jennifer Hyman, 38, the company chief executive and a co-founder, said in a phone interview. ‘Our goal is really to create the Amazon Prime of rental.’”

MANUFACTURING

Thanks in part to a policy change in China, American paper mills are making a comeback: “Brown paper sales slowed following the Christmas e-commerce rush, but industry analysts say the conditions are still ripe for long-term growth. That’s where China comes in. Until early last year, much of the used cardboard consumed in the United States was being shipped to China, where it was recycled into new boxes. Then, in January 2018, China stopped accepting most used cardboard imports. The material was mixed with so much trash and food contamination that it was causing serious environmental issues.

“The policy change has disrupted residential recycling programs across the United States, forcing some communities to bury or burn materials they previously recycled. But for American paper companies that make new cardboard out of used boxes, China’s clampdown has been a boon. It has created a glut of cardboard scrap that is allowing American mills to obtain their most vital raw material at 70 percent less than it cost a year ago.”

ZACK ELLER’S DEAL OF THE DAY

24i, a video app developer acquired StreamOne, a multi-platform and device publishing company. “24i said the acquisitions are part of its strategic plan to build out its OTT offerings for customers and partners and provide better asset management, efficiencies and monetization.”

BEVERAGES

In 2007 Verve Coffee began as a small Santa Cruz cafe that has since grown to 11 locations nationwide and become the coffee of choice for some of the world’s top tech firms, including Google and Microsoft. Co-founder Colby Barr considers his company part of the “third wave of coffee” which appeals to consumers who are concerned about preparation and where beans are sourced.

The tech firms, Barr says, “are a sign of bigger things happening, because tech campuses are aggregators for a certain demographic. It’s an indicator of a greater validation of the third-wave coffee trend. They want something great and high end and premium that shows value and commitment to their staff.”

REAL ESTATE

Too many Baby Boomers built dream homes that were too big, and now nobody wants to buy them: “Large, high-end homes across the Sunbelt are sitting on the market, enduring deep price cuts to sell.

“The problem is especially acute in areas with large clusters of retirees. In North Carolina’s Buncombe County, which draws retirees with its mild climate and Blue Ridge Mountain scenery, there are 34 homes priced over $2 million on the market, but only 16 sold in that price range in the past year, said Marilyn Wright, an agent at Premier Sotheby’s International Realty in Asheville.”

COMPUTER SECURITY

Facebook has been storing hundreds of millions of account passwords in searchable plain text: “In an interview with KrebsOnSecurity, Facebook software engineer Scott Renfro said the company wasn’t ready to talk about specific numbers—such as the number of Facebook employees who could have accessed the data. Renfro said the company planned to alert affected Facebook users, but that no password resets would be required.”

SPOTLIGHT

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And that’s what’s ahead.

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