Startup of the day (December 2017)

Continuing the “Startup of the Day” series of digests, today I present the most interesting projects for December. If you want to get acquainted with the others, then please in my blog. Entries are available on Facebook , ICQ and Telegram .

Privacy.com

The US startup Privacy.com has a very cool and expensive domain, but it does not fully reflect the essence of the product. A startup protects not only the client’s private data, but also his money.

Modern Internet all the time requires the user to pay - subscriptions, products, new levels in games. The active consumer enters the card parameters almost every day, and then two problems arise. First of all, just scammers. Secondly, smart marketers from venture startups that wrap up any service in a subscription, from this LTV rises.

Privacy.com allows you to create a special virtual card for each payment, one-time (for unsolicited subscriptions) or simply with a payment limit (for questionable stores). The browser plugin automatically recognizes the credit card entry form, click-click - and a completely new number is ready for this special case, there will be no unexpected surprises. Here, in fact, privacy arises - a fake name with an address is suitable for a temporary card, the store does not know what it does not need to know. When buying material goods, you still have to open up, but you can go to porn sites incognito, wow!

A startup creates its cards on top of bank accounts, rather than a regular credit card. This is important: as a result, Privacy.com receives an issuer commission, about a percent from each purchase, and for the user all services are free. The flip side of the coin is the need to integrate with banks separately, the startup works with the largest of them, but not all.

Over the three years of his life, Privacy.com raised two million dollars in investments, has not yet gained a mass audience, but the product (in the US) is working.

Kiwi.com

Air travel is a difficult market for intermediaries. There are few carriers, they have a strong brand, with the exception of directions such as Moscow-Peter, each flight is unique in time. As a result, the power of agencies is weak, and their commissions range from low to zero. The main money OTA earn on hotels or on additional services to the air ticket, let us remember the same FlySMS .

Kiwi.com found a way to sell unique tickets. Regular flights with transfers, which are in any search engine, are the result of cooperation of airlines, they agree among themselves and sell a single ticket, for which they are responsible. If the first plane is late and the passenger does not have time to transfer, then he will be fed and given at the airport and taken away with another aircraft as soon as possible - all at the expense of the carrier. In addition to the sale of such tickets, Kiwi, unlike other agencies, also combines flights itself, at its own peril and risk, without the knowledge of partners, including combinations that are completely impossible in other places - low-cost airlines with premiums, for example. Saratov - Domodedovo arrives at 11:00, Domodedovo - New York leaves at 16:00. OK, we sell Saratov - New York, in five hours the passenger will run so far.

If something went wrong, then the startup itself compensates for damage according to the rules, similar to the rules of the airlines. Insurance, of course, costs Kiwi money, but he himself appoints prices for combined tickets himself, no one limits him on the margin.

The user, in addition to possible compensation for non-flight, receives the fact of the chosen route. When flying from Saratov to New York, choosing a transfer is trivial, two tickets are easily bought in fifteen minutes, but for Moscow - Quebec the cheapest route was found through Milan, London and Toronto. Independently, such a person will not find out in principle. Of course, when the tickets have already been found, they can be bought directly, past the aggregator, but the average traveler in life will not guess that it is cheaper, plus the loss of insurance, plus the risk that during the purchase of the first segment of the second will be sold out.

Other than their own connections, Kiwi is a regular online agency. The standard interface, the classic promotion through the affiliate program and meta-search engines, just like everyone else. The startup did not raise large foreign investments, it started at the expense of the parent company. The other day, Kiwi loudly hinted that he would not mind selling for half a billion dollars with revenue of one hundred million, positive EBITDA at nine and plans for a two-fold increase next year.

Shazam

In December, Apple bought Shazam for $ 400 million - a great excuse for a note.

During his life, a startup scored more than a billion downloads. It is unlikely that someone from the readers does not know how it works, but just in case I will briefly describe the idea. The user launches the application, presses the main button the size of the half-screen, Shazam recognizes the music playing nearby, informs its author and the name along with a link to the store. The second half of the screen is busy advertising; By and large, there is nothing beyond this in the application.

Shazam works well, the music is recognized not only from the official track, but also from the background in advertising or mixes. The database of records does not cover at all everything created by mankind, but is very large. For example, a startup knows how to find “Komsomol volunteers” performed by the Alexandrov ensemble, but does not know “When is the dawn, comrade?” Mireille Mathieu, the limit of relevance lies somewhere between these two compositions.

The story of Shazam is the story of two technological revolutions. The startup received its first investment back in 2001, six years before the release of the iPhone, a year before the emergence of commercial 3G networks. The product was impossible not only massively to use, but also to effectively monetize - the iTunes Store presentation took place on April 28, 2003, Spotify was born in 2006. It took ten years to get all the necessary infrastructure and Shazam became really popular. The audience grew, along with its revenue grew, the company attracted new investments at an increasingly high estimate. In 2015, the startup has reached a valuation of one billion dollars, the prospects were very bright.

And then there was a revolution of deep learning, there was a breakthrough in the development of neural networks. Before our eyes, the key technology Shazam from the semi-mystic achievement of engineering thought is rapidly turning into a good diploma work of a student of the Technosphere. And at the same time, prospects disappear: in a new reality, the product is relatively easy and cheap to repeat, it has no competitive barrier, the user doesn’t care, use the original or a clone.

At the same time, maybe not right today, but someday Shazam wants to sell out to someone: the funds want to return their investments, and the founders finally earn something from a project that has been going on for almost twenty years. The fair sale price is determined by current revenue: $ 50 million a year - and this is definitely not a billion. Apple is from ideal customers: it has a lot of money, an interest in music is a huge, more logical deal difficult to come up with.

Earnin

The monstrous 300% per annum is at the same time a measly 0.4% per day. This mathematical illusion is enough for many MFIs to live, but people are gradually learning, and even regulators are struggling with super high percentages. American startup Earnin makes the business on an even more interesting formula: a miserable five with a loan of $ 100 is a predatory 5% for two weeks.

A startup gives out loans at zero percent, but offers to voluntarily leave a tip - after all, its service is no worse than a restaurant or a barber shop. In addition, he asks quite a bit, because see the basic mathematical illusion: five dollars for help in a difficult situation is perceived much better than 250% per annum.

In addition to this focus, Earnin is indistinguishable from any modern MFI: a beautiful mobile application, instant cash delivery, everything is like at all. For scoring, he requires access to the online bank and issues only the amounts that the borrower will return from the nearest salary, and to guarantee the return, he automatically debits the money as soon as they appear. However, it seems, nothing prevents to cross technology with tips and more risky scoring.

Unicorn Earnin on this model obviously will not, but he found his niche. The economy of a startup among generous Americans fits in perfectly, the company raised investments of $ 65 million, and in 2017 managed to get two rounds.

Pymetrics

Everyone knows: the interviews do not work, the interviewers are subjective and select candidates according to the wrong criteria. Not only does business efficiency suffer, discrimination also arises: the correct ratio of sexes and races is not respected, white men climb through to the best positions.

The mission of a Pymetrics startup is to fix these flaws. They developed a psychological-intellectual test, made in the form of games. The candidate answers the questions like “they gave you 10 dollars, but they did not give the partner anything that you gave him”, solves math problems and clicks on the space for speed. Testing, for my taste, is quite fun, a couple of games are just fascinating.

After 40 minutes, the results are ready. The candidate receives a sorted list, as far as it corresponds to each profession in terms of personality: “investment banker - 5%, project manager - 10%, teacher - 90%”. The startup claims that behind this vocational guidance there are not just Sly Algorithms, but High Science, and it must be believed, not arguing. A posteriori confirmation of the accuracy of the tests Pymetrics considers his bias in demographics: men and women, Asians and Latinos get the same marks. In case studies, a startup is pressing on cases where, with its help, clients have balanced the flows of accepted candidates. Whether this confirms the efficiency or the senselessness of the algorithm - decide for yourself. On my example, an obvious nonsense came out: judging by IT-technologies, which turned out to be one of the last places.

On the other hand, Pymterics decided that the job of an investment banker was perfect for me, and my name and link to my Facebook profile went to all companies interested in such specialists. It is hard to imagine that this mechanism really helps the recruitment: the recruiter gets semi-anonymous candidates without specifying professional skills and licenses, the conversion should be zero.

The other two monetization options look more realistic. Pymetrics offers screening tests for already existing candidates: there are 1000 people who want to become programmers, run them through toys, and leave for the next stages 500 of the most appropriate “according to science”. If the competition is large, even absolutely random selection will not be too harmful, “we do not need losers,” and the results of Pymetrics correlate with a true assessment. And the alternative - interviews, they are more expensive and even worse. The second approach is the assessment of already working employees, let the technology tell you who can move in which direction and from which testers to grow future managers. The final decision is still for the people, the machine does not bother much, and again, even at random, sometimes it will offer good solutions. And of course, diversity is always respected.

The investment startup has received 16 million dollars.