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Andrew Masons Descript snags $15M, acquires Lyrebird to let users type text to create audio in their own voices

The boom in popularity for podcasting has given a new voice to the world of spoken word content that had been largely left for dead with the decline of broadcast radio. Now riding the wave of that growth, a startup called Descript that’s building tools to make the art of creating podcasts — or any other content that involves working with audio — a little easier with audio transcription and editing tools, has a trio of news announcements: funding, an acquisition and the launch of a new tool that brings some of the magic of natural language processing and AI to the medium by letting people create audio of their own voices based on text that they type.

Descript, the latest startup from Groupon founder Andrew Mason, created as a spin-off of his audio-guide business Detour (which got acquired by Bose last year), is today announcing $15 million in funding, a Series A for expanding the business (including hiring more people) that’s coming from Andreessen Horowitz (it also funded the startup’s seed round in 2017) and Redpoint.

Along with that, the company has acquired a small Canadian startup, Lyrebird — which had, like Descript, also built audio editing tools. Together, the two are rolling out a new feature for Descript called Overdub: people will now be able to create “templates” of their voices that they can in turn use to create audio based on words that they type, part of a bigger production suite that also will let users edit multiple voices on multiple tracks. The audio can be standalone, or the audio track for a video.

(The video transcription works a little differently: When you add words, or take them out, the video makes jumps to account for the changes in timing.)

Overdub is the latest addition to a product that lets users create instant transcriptions of audio text that can then be cut and potentially augmented with music from other audio using drag-and-drop tools that take away the need for podcasters to learn sound engineering and editing software. The non-technical emphasis of the product has given Descript a following among podcasters and others that use transcription software as part of their audio production suites. The product is priced in a freemium format: no charge for up to four hours of voice content, and $10 per month after that.

In the age of market-defining, election-winning fake news aided and abetted by technology, you’d be forgiven for wondering if Overdub might not be a highway to Deep Fake City, where you could use the technology to create any manner of “statements” by famous voices.

Mason tells me the company has built a way to keep that from being able to happen.

The demo on the company’s home page is created with a special proprietary voice just for illustrative purposes, but to actually activate the editing and augmenting feature for a piece of their own audio, users have to first record a number of statements that are repeated back, based on text created on the fly and in real time. These audio clips are then used to shape your digital voice profile.

This means that you can’t, for example, feed audio of Donald Trump into the system to create a version of the president saying that he is awfully sorry for suggesting that building walls between the U.S. and Mexico was a good idea, and that this would not, in fact, make America Great Again. (Too bad.)

But if you subscribe to the idea that tech advances in NLP and AI overall are something of a Pandora’s box, the cat’s already out of the bag, and even if Descript doesn’t allow for it, someone else will likely hack this kind of technology for more nefarious ends. The answer, Mason says, is to keep talking about this and making sure people understand the potentials and pitfalls.

“People already have created the ability to make deep fakes,” Mason said. “We should expect that not everybody is going to follow the same constraints that we have followed. But part of our role is to create awareness of the possibilities. Your voice is your identity, and you need to own that voice. It’s an issue of privacy, basically.”

The developments underscore the new opportunity that has opened up in tapping some of the developments in artificial intelligence to address what is a growing market. On one hand, it’s a big market: Based just on ad revenues alone, podcasting is expected to bring in some $679 million this year, and $1 billion by 2021, according to the IAB — one reason why companies like Spotify and Apple are betting big on it as a complement to their music streaming businesses.

On the other, the area of production tools for podcasters is a very crowded market, with a number of startups and others putting out a lot of tools that all work quite well in identifying what people are saying and transcribing it accurately.

On the front of transcription and the area where Descript is working, rivals include the likes of Trint, Wreally and Otter, among many others. Decript itself doesn’t even create its basic NLP software; it uses Google’s, as basic NLP is now an area that has essentially become “commoditized,” said Mason in an interview.

That makes creating new features, tapping into AI and other advances, all the more essential, as we look to see if one tool emerges as a clear leader in this particular area of SaaS.

“In live multiuser collaboration, there is still no other tool out there that has done what we have done with large uncompressed audio files. That is no small feat, and it has taken time to get it right,” said Mason. “I have seen this transition manifest from documents to spreadsheets to product design. No one would have thought of something like product design to be huge space but just by taking these tools for collaboration and successfully porting them to the cloud, companies like Figma have emerged. And that’s how we got involved here.”

Andreessen Horowitz values camping business Hipcamp at $127M

Hipcamp uses technology to get people away from technology.

The San Francisco-based startup provides a “people-powered platform” that unlocks access to private land for camping, glamping or just a beautiful spot to park your RV, as described by Alyssa Ravasio, founder and chief executive officer. Amid explosive growth in emerging markets, including Florida and Texas, the company has attracted a $25 million Series B investment at a valuation of $127 million.

Andrew Chen, a general partner at Andreessen Horowitz, has led the round and will join Hipcamp’s board of directors as part of the deal. Caterina Fake of Yes VC, Sarah Tavel of Benchmark, August Capital and O’Reilly AlphaTech Ventures also participated in the financing, which brings Hipcamp’s total funding to $41.8 million. We first covered Hipcamp in 2014, when the nascent startup raised a $2 million seed round led by AlphaTech.

A self-described internet nerd and avid camper, Ravasio loves the outdoors, as you might’ve guessed. She founded Hipcamp after becoming frustrated with the complex process that is identifying and booking campsites across the U.S.

“I couldn’t believe how difficult the whole process was,” Ravasio told TechCrunch. “I had one camping trip where I spent five hours doing research and almost gave up … I realized camping was broken and the internet could fix it.”

In 2013, Ravasio learned to code and built the first iteration of the Hipcamp platform, a comprehensive database of campsites that earns money by taking a commission made from each booking it facilitates. Today, the company has grown to 40 employees, with campsites in 300,000 sites across the U.S. and plans to expand internationally soon.

“We’re committed to getting people outside, and that’s really the guiding light of our expansion plans,” she said.

As for long-term plans, an Airbnb acquisition wouldn’t make sense, Ravasio explained: “I think going public and making Hipcamp a company that anyone can buy and own part of is exciting to me”

Divvy, an interesting new fractional home ownership startup, just raised a Series A round led by Andreessen Horowitz

Tech startups have found all kinds of ways to lend money to those hampered by either too little or not very good credit.

The approach of a nearly two-year-old, 15-person San Francisco-based startup called Divvy Homes is among the more creative we’ve seen, even while we question (for now) whether it’s good over the long term for potential customers.

How it works: In Cleveland, Memphis, and Atlanta, where Zillow estimates median home prices are $52,000, $82,000, and $242,000, respectively, Divvy will enable a person or family to select a home they’d like to someday own, then to buy that home with Divvy’s help. The family chips in at least two percent for a down payment. Divvy pays for the rest, then it collects a monthly amount that includes both market-rate rent and an equity payment.

It does this until the newly installed residents have amassed a 10 percent stake in the home. The reason, says the company: By partnering with Divvy, tenants — some of whom have credit scores as low as 550, which is considered “very poor” by the consumer credit ratings agency Experian — can build their credit scores and eventually land a mortgage insured by the Federal Housing Administration, which requires a credit score of at least 580.

According to CEO Brian Ma — who co-founded the startup at the company creation studio HVF Labs — the idea is for this to happen within three years, at which point Divvy will sell and transfer the property over to them.

It’s easy to appreciate why this might be attractive to potential homebuyers who can’t secure a traditional mortgage in the current market — not all of whom suffer from poor credit but who are sometimes contract and self-employed workers without months of salary stubs to show nervous bankers. For example, Divvy says that it charges less in rent as a buyer’s equity begins to add up. That equity, it insists, can later turn into the person or family’s first mortgage payment.

For largely self-serving reasons, Divvy does what it can to ensure that the house isn’t a dud, too. As Ma describes it, Divvy uses data science and algorithms to ensure that a property makes sense financially, meaning that it will likely appreciate and that the tenants aren’t paying so much that they can’t simultaneously build equity in their homes.

Divvy also works with inspectors to make doubly certain each home is “move-in ready and won’t have large unforeseen expenses during the lease, like major roof, structural, pest, or foundation issues,” says Ma, who previously co-founded three startups, as well as spent several years as a program manager with Zillow.

Still, it’s also easy to imagine that some of Divvy’s aspiring homeowners will never actually own their homes. Consider: While Divvy may help some percentage of them improve their credit score, roughly 62 percent of consumers with credit scores under 579 are “likely to become seriously delinquent (i.e. go more than 90 days past due on a debt payment) in the future,” says Experian.

Naturally, like any other property owner, Divvy will evict tenants who don’t pay, even if it does so reluctantly.

“If a rent payment is missed, we will follow up to see how we can help,” says Ma. “Most of the time, it’s immediately curable or curable within a couple days. If it’s been longer than a week and we believe the tenant is going through some hardship, we will work our best to offer alternatives, including allowing them to purely rent the property by dropping the equity payments to lower their monthly payment. If we can’t find a way to cure the situation, we will go through an eviction procedure.”

Divvy also establishes the buyback price at the time that it’s buying the home — which can work for, or against, the tenants who hope to own it someday.

Adena Hefets, another Divvy co-founder who worked previously in both VC and private equity, recently explained to us that Divvy has a back-end model that projects where the house would price three years down the line and it allows tenants to “buy it back at that price at any time.” Yet buying it back early would invariably mean overpaying. Moreover, in the cities where Divvy is operating, housing prices don’t move around a lot, so a tenant could be overpaying at any buyback price that’s north of where the home sells today. (Home prices in Northeast Ohio were rising as of last spring, but they were still at 2004 levels.)

With the broader housing market poised for a slowdown, tenants wanting to buy their homes might decide it’s cheaper in the end to just move out of them and find something else. (They’d still get 10 percent of the sale of the home, even if they overpaid for it over their three-year commitment.)

Where would that leave Divvy? We’d guess it would leave it looking more like a modern residential real estate investment trust than a “rent-to-own innovator.”

That’s not a terrible thing for Divvy, even if it sounds a little less glamorous. In fact, the company — which says it’s already buying one home a day — is today disclosing that it has raised $30 million in equity and debt from Andreessen Horowitz (a16z) and a commercial bank called Cross River Bank that notably is backed by a16z.

Ma declines to say how much of the round is equity and how much is debt. But he says that Alex Rampell, an a16z investor whose other real estate-related bets include a different fractional ownership startup, Point, has joined the company’s board.

Pictured above (at TC headquarters), left to right: Divvy founders Nicholas Clark, Brian Ma and Adena Hefets.

Slack narrows losses, displays healthy revenue growth

Workplace messaging powerhouse Slack filed an amended S-1 with the U.S. Securities and Exchange Commission on Friday weeks ahead of a direct listing expected June 20.

In the document, Slack included an updated look at its path to profitability, posting first-quarter revenues of $134.8 million on losses of $31.8 million. Slack’s Q1 revenues represent a 67% increase from the same period last year when the company lost $24.8 million on $80.9 million in revenue.

For the fiscal year ending January 31, 2019, the company reported losses of $138.9 million on revenue of $400.6 million. That’s compared to a loss of $140.1 million on revenue of $220.5 million the year prior.

Slack is in the process of completing the final steps necessary for its direct listing on The New York Stock Exchange, where it will trade under the ticker symbol “WORK.” A direct listing is an alternative approach to the stock market that allows well-known businesses to sell directly to the market existing shares held by insiders, employees and investors, instead of issuing new shares. The method lets companies bypass the traditional roadshow process and avoid a good chunk of Wall Street’s IPO fees.

Spotify completed a direct listing in 2018; Airbnb, another highly valued venture capital-backed business, is rumored to be considering a direct listing in 2020.

Slack is currently valued at $7 billion after raising $1.22 billion in VC funding from investors, including Accel, which owns a 24% pre-IPO stake, Andreessen Horowitz (13.3%), Social Capital (10.2%), SoftBank, T. Rowe Price, IVP, Kleiner Perkins and many others.

Instacart raises another $600M at a $7.6B valuation

Instacart chief executive officer Apoorva Mehta wants every household in the U.S. to use Instacart, a grocery delivery service that allows shoppers to order from more than 300 retailers, including Kroger, Costco, Walmart and Sam’s Club, using its mobile app.

Today, the company is taking a big leap toward that goal.

San Francisco-based Instacart has raised $600 million at a $7.6 billion valuation, just six months after it brought in a $150 million round and roughly eight months after a $200 million financing that valued the business at $4.2 billion.

D1 Capital Partners, a relatively new fund led by Daniel Sundheim, the former chief investment officer of Viking Global Investors, led the round.

Instacart is raking in cash aggressively but spending it cautiously. The company still has all of its Series E, which ultimately totaled $350 million, and the majority of its $413 million Series D in the bank, a source close to the company told TechCrunch. That means, in total, Instacart has $1.2 billion at its fingertips. Currently, according to the same source, the company is only profitable on a contribution margin basis, meaning it’s earning a profit on each individual Instacart order.

In a conversation with TechCrunch, Mehta said the company didn’t need the capital and that it was an “opportunistic” round, i.e. the capital was readily available and Instacart has ambitious plans to scale, so why not fundraise. Instacart plans to use the enormous pool of capital to double its engineering team by 2019, which will include filling 300 open engineering roles in its recently announced Toronto office, he said.

As far as an initial public offering, it will happen — eventually.

“It will be on the horizon,” Mehta told TechCrunch.

“2018 has been a really big year for us,” he added. “The reason why we are so excited is because the opportunity ahead of us is enormous. The U.S. is a $1 trillion grocery market and less than 5 percent of that is bought online. It’s an enormous category that’s highly under-penetrated.”

Instacart is now available to 70 percent of U.S. households

In the last six months, Instacart has announced a few notable accomplishments.

As of August, the service has been available to 70 percent of U.S. households. That’s due to the expansion of existing partnerships and new deals entirely, like a recently announced pilot program between Instacart and Walmart Canada that gives Canadian Instacart users access to 17 different Walmart locations across Winnipeg and Toronto, Ontario.

The company has also completed several executive hires. Most recently, it tapped former Thumbtack chief technology officer Mark Schaaf as CTO. Before that, Instacart brought on David Hahn as chief product officer and Dani Dudeck as its first chief communications officer.

In early September, the company confirmed its chief growth officer Elliot Shmukler would be leaving the company.

The six-year-old Y Combinator graduate has raised more than $1.6 billion in venture capital funding from Coatue Management, Thrive Capital, Canaan Partners, Andreessen Horowitz and several others.

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