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Welcome to the 2-Minute Drill -- a curated selection of the week's hottest stories from the world of tech, all in 2 minutes.  

As a reminder, join us on Tuesday mornings at 8am PT / 11am ET in the Crossover Club on Clubhouse where we talk through the week's stories in more detail and with a rotating panel of special guests from the worlds of pro sports, entertainment and technology. 

As always, shoot me a note to learn more or if you just want to say 👋.

-Noah  


✉️ noah@crossovervc.com
📱 650.468.9543
📸 @crossovervc 
👋 @ndl / the Crossover Club


On my whistle...
FIRST DOWN


 

Forget The Wine, BeReal Aims To Become The Top French Import
Let's be real, when you think of French imports, champagne, baguettes, and brie tend to come to mind before super fast-growing early-stage social apps. But French social media startup BeReal is looking to buck this trend with a $30 million Series A round of new funding co-led by Silicon Valley stalwarts a16z and Accel at a healthy $150 million valuation. [Side Note: can the U.S. Mint actually produce dollars fast enough for a16z to spend them on new consumer apps?!?!]

So what is this new French app that Silicon Valley is salivating over? BeReal is the latest social app to take a turn at building a new network on top of photos. We've talked about Dispo, and last week covered Poparazzi. BeReal's unique spin is that at a random time each day, it sends you a push notification to capture a photo of what you're doing, and gives you 2 minutes to complete it. When you open the app, it simultaneously captures a photo with both the outward and front-facing cameras, to provide a unique perspective that is differentiated from a post on Instagram (and harkens back to some extent to the once-hot-and-now-defunct FrontBack). Users can only see the photos of their network if they post their own photo (go-go-gadget virality!).

So what is it that these new social apps offer that Facebook, Instagram, and Snap aren't fulfilling for photo fans? Namely, each of these apps looks to purposely restrict how a user can post photos, and focuses on building community around these unique activities that are distinct from the behaviors users are familiar with on existing social platforms (capture, scroll, like, tag, share). And ultimately, the goal is to achieve true authenticity--a distinct rejection of the over-filtered worlds of Instagram and Snap.

BeReal has reportedly grown from 50k monthly downloads in March to more than 200k in May, with self-reported daily average users topping 300k. A cool feature of the app is the ability to get an instant pulse on the happenings of your social network, and to create a sense of community through targeted app-prompted challenges. Whether that can scale from a cute/fun feature to a full-scale social platform is yet to be seen.

If we sound like a broken record in covering these new social apps, it's because we still have the same perspective on the each of the hot new buzzy apps that pop up every few months. We're well aware that in the history of great social networks, many times the initial use case seemed odd or downright stupid at first glance. (Sharing just photos...don't we already have Facebook? Sharing pictures that disappear...how do you build a social network with ephemeral content?). So for now, we'll keep playing with the app and and see if it becomes the next big social network--or the latest star to burn bright and quickly fade. But one thing I do like is the sense of community they are creating around this global "pulse."

But first, like a fine bottle of Bordeaux, it needs to be imported from France and we'll see how it fares in larger and differentiated markets.

(more here)
SECOND DOWN


 

Guild Gobbles Up A $3.7 Billion Valuation For Upskilling
One of the things I love most as an early-stage venture investor is when you meet founders with little more than a pitch deck and a big vision, and get to see them turn that idea into a multi-billion dollar company with hundreds of employees and thousands of lives changed by their product. In this case, the company is Guild Education and the founders were Rachel Carlson and Brittany Stich.

As a refresher, Guild is an education benefits platform that partners with leading Fortune 1000 employers, such as Disney, Chipotle, Walmart and Lowe’s to offer debt-free degrees to employees. And while the opportunity to offer education as a benefit has resonated with employers (and their employees) for years, over the past year the need for Guild's services has become more acute. Since the onset of the pandemic nearly three-quarters of U.S. companies reported major talent shortages, which is the highest level reported in a decade. Add to this the fact that vast swaths of the domestic labor force who have no secondary education are at direct risk of having their jobs lost to automation, and there is a critical need for employee upskilling.

As we wrote about previously, I first met Guild founders Rachel Carlson and Brittany Stich back in 2015 when the two co-founders pitched the idea for "education as a benefit" to the venture fund I was an investor at prior to Crossover. The firm ultimately co-led the Seed round investment in the company at a single-digits valuation, and this week Guild announced a new $150 million in Series E growth funding at a $3.75 billion valuation--up 3x from the last round's $1 billion valuation. (quick shoutout to our associate Joanne for sourcing the original investment for the firm).

The Money Quote: "Employers are facing a rapidly changing workforce, with major shortages today in fields like engineering, cybersecurity and data analytics that are only accelerating. As both employees and employers look to be competitive for the future of work, upskilling has quickly become the logical answer.” -- Guild co-founder and CEO, Rachel Carlson

A huge, huge congrats on this milestone to the Guild team. It has been so fun to follow along with this journey and I'm excited to see what the future brings.

(more here)

Disclosure: if it's not obvious from reading this segment, Noah has a financial interest in Guild Education and is in no way impartial :)
THIRD DOWN


 

KYX Kicks Up $1.75M For Rent The Runway For Sneakers
By now it should come as now surprise that sneakers are big business. And the world of limited edition, exclusive sneakers has soared in recent years with sneaker resale marketplaces like StockX and GOAT growing to billion dollar valuations. Add to that the booming broader fashion resale market led by companies such as Poshmark, ThredUp, and The RealReal projected to reach $33 billion this year (and $64 billion by 2024), and you're looking at a white-hot market.

To try to capitalize on the sneaker niche within the growing subscription and resale market, this week, Los Angeles-based startup KYX World launched with $1.75 million in seed funding to enable members to gain access to a rotation of authentic, limited-release shoes from a selection of hundreds of styles. To start with KYX offers four tiers of subscriptions, starting at $49/mo for one pair of shoes valued up to $250, and scaling up to as much as $599 a month for the highest-end kicks. Members can further select between new or lightly worn shoes, and the company uses a partnership with a cleaning and sanitizing company for those grossed out by sharing shoes.

At launch, the company self-reports having 900+ subscribers accessing more than 275 styles for men and women to choose from. Current inventory includes Off-White x Air Jordan 5 SP “Sail,” the Union x Air Jordan 4 Retro “Off Noir,” the Adidas Yeezy 700 V3 “Clay Brown” and more.

KYX is by no means the first company to dip its toe into the fashion rental business. Rent The Runway remains the pioneer in the sector, though it came upon hard times during COVID, and has recently announced plans to increase focus on resale as it looks to claw its way back. KYX hopes that it can straddle the rental and resale ecosystem by generating recurring revenue via subscription, and layering on resell revenue when members choose to keep a pair.

One of the biggest challenges KYX will face is the operational intensity required to run a subscription clothing business. The company will have to calculate the exact minimum number of turns each pair of sneakers will hold up for, and ensure the unit economics add up. Wear and tear, shifting customer preferences, ensuring adequate supply to match growing subscriber demand, accounting for the unpredictability of returns relative to resale, etc. will all need to be addressed both now and as the business scales. 

This is an idea I've actually discussed at length with some executives from the retail and sneaker ecosystems, and thought could be a solid operating business with the right team in place. But whether or not this has the potential for venture-scale returns is yet to be determined and we'll be curious to see if the business model pans out.

(more here)
FOURTH DOWN


 

Psych-Out: NUE Looks To Combine Psychedelics + Psychiatry
This week, Miami-based mental wellness platform NUE Life Health announced a fresh $3.3 million seed round of funding to help combine digital mental health services and psychedelic-assisted therapy. The round was led by a syndicate of angels who are part of the new Miami tech mafia.

As we've written about at length in the 2-Minute Drill, the past 18 months have seen record-setting venture investment into digital mental health startups. In fact, according to Crunchbase, investors have pumped more than $1.8 billion into global startups focused on mental health in the first half of 2021 alone.

While most of that funding has gone into digitizing traditional mental health practices and associated operations/infrastructure, NUE aims to take a different approach by incorporating Ketamine into a more holistic mental wellness treatment plan that can produce a "mental reset." Research from leading institutions like Johns Hopkins and Imperial College in London on psychedelics have shown that their use in treatment can help with conditions ranging from anxiety and depression to bipolar disorder and PTSD. However, use of psychedelics in treatment is still relatively new, and proponents would argue is heavily under-utilized due to misconceptions and lack of innovation around how to safely and effectively deliver treatments outside a clinical setting.

NUE starts you off with an app-guided evaluation, followed by medical consultation, all with the goal of understanding the precise treatment plan that will work best for each individual. The startup refers to this personalize data-driven plan as a "knowledge graph" of the patient, which enables them to diagnose and treat the patient with an approach that integrates psychiatry and psychedelics--and can be personalized down to the dosage and even the music to listen to during therapy.

Currently NUE is available for customers in California, Texas and Florida, with plans to expand nationally. It does not accept insurance, and treatments can range from $850 to nearly $3k. 

While it's far to early to see whether or not NUE will be a financial success as a startup, it's part of a growing trend aimed at unlocking the value from psychedelic medicines as effective treatments for a range of conditions outside of what has traditionally bee accepted in the American healthcare system. We expect to see numerous companies emerge to capitalize on this growing trend as the range of what we view as "accepted treatments" continues to expand.

The Money Quote: “We view ketamine therapy and psychedelic therapy simply as catalysts for change. While helping patients reset is important, we at NUE Life are committed to helping our members find community and connection through our digital platform well after the effects of any psychedelic therapies have faded.” - NUE Life CEO, Juan Pablo Cappello

(more here)
EXTRA POINT



Athletes + Entertainers in Tech: Shef
One of the most fundamental questions founders of startups get asked by prospective investors is "Why now?" In other words, what has changed, or what is unique about this moment in time that enables this opportunity to thrive. For YouTube it was plummeting bandwidth costs. For Uber the ubiquity of smartphones, GPS accuracy, and mobile app reliability. For Dropbox it was the combination of increasingly cheap, reliable online storage paired with increased reliability of broadband in homes and offices.

And for San Francisco-based food tech startup Shef, the "Why Now" is the fact that 44 new bills related to loosening restrictions around commercial home cooking were introduced in 29 states across the U.S. last year. Historically, regulatory hurtles kneecapped several startups who attempted this model, but the global pandemic changed things for the ecosystem--and for Shef--overnight.

But let's back up and describe what Shef is doing. Shef is a two-year old startup looking to empower local cooks to make a meaningful income from home by selling authentic, homemade dishes to their neighbors. It is part of this trend of both virtualization of restaurants (including ghost/cloud kitchens) and the rise of the solo-preneur. And this week, Shef cooked up a new $20 million in Series A venture funding led by Silicon Valley firm a16z to scale its efforts. This brings the startup's total funding to nearly $30 million.

Of course when you move from commercial kitchens into the home, the number one concern is around health and safety. Shef addresses this by ensuring that all chefs on the platform go through food-handling certification, and receive an onboarding kit filled with items needed to make food safely and legally, including gloves, masks and thermometers. They also teach chefs packaging, menu formulations, pricing, safety training and food quality assessments. Helping solve for compliance and onboarding are key value-adds for the startup.

The company is still in its infancy, but reports that chefs on the platform today earn an average of $40/hour, with the platform charging a 15% transaction fee per order. Delivery fees vary by region and chefs receive proceeds from tips as well. Chefs also have the flexibility to list their own dishes and to operate on delivery timelines that enable them to manage shopping and cook/prep times.

While there are still a lot of variables to solve for when working with individual chefs, perishable food, supply chain logistics, delivery windows, discovery, etc. etc. we like the approach Shef takes in being asset-lite (pushing the cost of the kitchen onto the chef vs building/buying commercial kitchen spaces) and helping provide much of the back-office software, training and compliance required to operate the business.

Athletes + Entertainers involved include: entertainers Padma LakshmiTiffany Haddish, Katy Perry, Orlando Bloom, celebrity chef Aarón Sánchez, and NBA star Andre Iguodala.

(more here)
 

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Disclaimer: The content in this newsletter is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It also does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security.



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