Wishing Well: Wish, the e-commerce startup valued at $3.5 billion, is raising $500 million in new funding, according to sources familiar with the situation.
Recode first reported the news last night, noting that Temasek, the investment arm of the Singapore government, is one of the investors. But according to sources I've spoken with, Temasek may be getting cold feet about the deal.
Last week CB Insights unveiled a Delaware filing that showed Wish authorized the sale of 7.75 million new Series F preferred shares. (Wish's formal company name is ContextLogic.) The filing revealed no pricing or investor information, except some investor-friendly liquidation preferences.
A Temasek representative declined to comment. Wish did not respond to requests for a comment.
Launched three years ago, Wish acts as an online marketplace for extremely cheap stuff, mostly made in China. The company has claimed it will hit $2 billion in gross merchandize volume this year. Wish has raised nearly $600 million in funding from investors including 8VC and Founders Fund. Its most recent fundraise was a $500 million Series D from DST Global in mid-2015.
Wish’s growth has come in part via aggressive advertising. Wish spends $100 million a year on Facebook ads, according to Recode. The marketplace’s goods are heavily discounted, and the company has not revealed how many repeat purchases it takes to break even on a new customer, or how many of its first-time customers return.
Founder Peter Szulczewski has predicted his company will be a trillion-dollar-a-year marketplace, and has publicly stated he won’t sell his company for less than $10 billion.
Driverless Hype: Last week George Hotz, founder of Andreessen Horowitz-backed self-driving car startup Comma.ai, announced that because of a threatening letter from the NHTSA, he would cancel his company’s plans to build kits that retrofit cars to drive themselves.
“Would much rather spend my life building amazing tech than dealing with regulators and lawyers. It isn't worth it,” he tweeted. The NHTSA was asking for proof that the Comma One device was safe, with a threat to block its sale if the proof wasn’t provided.
It’s been on my mind all week, alongside Andreessen Horowitz’s investment thesis that “software is eating the world.” The idea has become so common it is now an Onion headline: New Company Aims To Explore Intersection Of Technology, Other Thing.
One side effect of software creeping (barging) into every sector of the economy is that technologists are now butting up against rules and regulations they didn’t face when they were just selling ads and data storage.
Despite the lessons learned from Uber and Airbnb’s regulatory stumbles, some startups still prefer pure, unadulterated, “leave us alone” disruption. As I wrote earlier this year, it’s the attitude of, “Why don’t people just trust that we are doing the right thing? Just let us work without picking apart every detail, and we’ll all be better off in the end.” Expressing concern and asking hard questions about new technologies, even in situations where the public is confused and wants to know more, makes you a “hater.”
Nevermind that Hotz was practically baiting regulators with his over-the-top proclamations and blustery conference speeches. (Comma’s t-shirts even say “Comma.ai / I am gonna be so rich.”) Or that self-driving kits like the Comma One operate in a legal gray area with little more than a loose set of guidelines in place. Or that building amazing technology and dealing with regulators and lawyers are not mutually exclusive. Hotz decided to take his ball and go home, an approach that, unsurprisingly, met a fairly negative response online.
It’s possible Comma, which has less than a dozen employees, was already re-evaluating its plan to sell aftermarket kits. The company’s self-imposed year-end deadline for launching that product is fast approaching. (The founders of Cruise Automation made a similar pivot after they realized how many makes and models they’d have to integrate their kits with.) If Comma was already planning a pivot, the NHTSA provided a convenient excuse and an on-brand rallying cry (disruption!) to go with it.
Some players in the self-driving industry are nervous about wild card startups like Comma.ai. It reminds me of the time Oculus VR CEO Brendan Iribe warned virtual reality headset competitors not to “poison the well” by introducing a product that wasn’t ready. In other words, a bad first impression could hurt the entire category. With self-driving cars, the stakes are so much higher than sub-par VR kits: It’s a matter of saving lives.
This summer, after the Tesla Autopilot fatality, I interviewed David Strickland, former NHTSA regulator and current counsel to the Self-Driving Coalition for Safer Streets, a lobbying group that includes Uber, Lyft, Ford, Volvo and Google. He expressed a similar sentiment: “We need to make sure to protect the ecosystem, so that we don’t have some player taking on unnecessary risk that may impact the opportunity to fully deploy because people think self-driving may not be ready or dangerous.”
In case it’s not clear from my coverage, I am very excited for all the benefits of self-driving technology. As I’ve covered the topic in recent months, I’ve talked to experts ranging from academics to executives in Detroit that caution against the hype. (“The public is being fed a publicity story that is not based on reality,” one told me earlier this week.) Given the stakes, I’m willing to wait until the technology is ready.
Corrections: Daniel Green joined Meketa Investment Group, not David. And yesterday’s link to the Facebook story was broke, you can read it here.
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FIRMS + FUNDS
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