Today's startups are playing in the big leagues.
If you think that tech startups have grown beyond their historical confines of enterprise software and computer hardware, you’re right.
Indeed, today’s new startups are not just building tech products to sell to other businesses or selling ads as the industry did for a long time. They’re taking on transportation, lodging, and much more.
“A lot of the best new companies in the last five or 10 years are companies that directly enter markets—incumbent markets—in other industries,” famed investor Marc Andreessen said on Thursday at an event in Palo Alto, Calif. Ride-hailing companies Uber and Lyft, for example, are taking on the transportation industry, while home-sharing service Airbnb is taking on the hospitality industry and fintech startups are trying to replace traditional financial and banking services.
Take Airbnb, for example, which has built a home-sharing marketplace that directly provides lodging to customers and competes against hotels. This phenomenon, Andreessen points out, is different from tech’s previous relationship with other industries. (Andreessen’s VC firm invested in Airbnb.)
“Ten years ago, the predecessor to Airbnb was not a failed version of that,” he said, but rather “a small boutique software company that sold booking software for small hotel chains.”
Of course, some of these companies made a good business from selling software and services to the real challengers, but they were also limited by the size of their market. There are only so many boutique hotels to sell software to, he said.
Airbnb, on the other hand, as well as Uber, Lyft, and several others, have the opportunity to grow much larger because they can deal directly with the end customers.
Of course, doing business in large existing industries also means there’s an existing body of regulations, something companies like Uber, Lyft, and Airbnb haven’t particularly enjoyed or done at times. But the cost may be worth the opportunity of playing in these big leagues.
Everyone's Talking About
Houseparty. Life on Air, the startup behind the once-hot video broadcasting app Meerkat, is now focused on a new app, Houseparty. The startup says its new app for group video chats now has one million users, though it’s not clear if they’re daily or monthly active users. Houseparty also faces competition from other video chat apps. (Fortune)
Snapchat now has 60 million daily active users in the U.S. and Canada. The ephemeral messaging app, which has 150 million daily active users worldwide, touted its popularity at the Advertising Week conference in New York City. (Fortune)
Spotify is reportedly in talks to buy SoundCloud. The two music streaming services may be plotting an acquisition, which would bring together their strengths—and weaknesses. (Financial Times) (Fortune)
Uber has inked a deal with a service used by thousands of businesses. Now, businesses that use Yext to manage their location-related data online can easily add “Ride Request” buttons to their websites and apps, among other features. (Fortune)
The Week in Startups
Robinhood, a Hip Stock Trading App, Is Adding New Features for Investing Pros (Fortune)
Energy Entrepreneurs Chart a New Path in the Wake of the Cleantech Crash (Fortune)
The Complete Guide to Understanding Equity Compensation at Tech Companies (Fortune)
ProsperWorks, a Sales App Startup, Is Going All In With Google (Fortune)
Kano, a Computer Kit Startup, Will Teach Kids to Build Even More Devices (Fortune)
Online Grocer FreshDirect Just Raised $189 Million (Reuters)
Kik Messenger Is No Longer Growing (Recode)
The New York Times Is Backing TheSkimm, the Fast-Growing Newsletter (Recode)
Lystable Adds Max Levchin to the List of Investors Backing Its Gig Economy SaaS (TechCrunch)
ClassPass Sacrifices 10% of Customers in Pursuit of Healthier Margins (TechCrunch)
Words of Wisdom
“I think the biggest [tip] is knowing what you’re about and being true to it. […] In many ways that was a reflection of us, if we’d have behaved differently, the community would have looked different (just like offline community organizing).”— Reddit co-founder Alexis Ohanian, on building online communities. (Fortune)