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Wednesday, September 22, 2021

Resurrecting the humble business card, why going public is good, BNPL is everywhere at once – TechCrunch

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Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by what the weekday Exchange column digs into, but free, and made for your weekend reading. Want it in your inbox every Saturday? Sign up here

Happy weekend, friends. I am writing to you on Friday afternoon after powering through a grilled cheese. But as I have a huge iced coffee on deck, we can dodge a food coma and get right to work. Today we’re talking about a pretty neat venture round, chatting with a founder about verticalization and riffing on Marqeta’s earnings report. So, we have fintech and SaaS and public company notes for your enjoyment. Let’s do it!

HiHello’s ambitious Series A

You may be familiar with Manu Kumar. He’s a venture capitalist at K9 Ventures. But he’s also building a startup at the same time, and it’s the latter effort that we’re interested in today.

The company, called HiHello, raised a $7.5 million Series A, it announced recently. Foundry led the investment, Lux Capital took part, and a host of angels also kicked in checks. So far, so ordinary. But the round is not the interesting bit of the HiHello story. Instead, it’s what the company is building.

A question: When did you last order business cards? I can’t recall, frankly, but somewhere between my last job and coming back to TechCrunch I forgot to get new cards. And not simply thanks to COVID or the fact that I now live far from San Francisco. I just didn’t think of it as they didn’t seem too useful.

HiHello is building something akin to the future of business cards for the internet. Per Kumar, everyone still needs a way to show their identity and introduce themselves, even in a digital world. Sure, for scheduled gatherings, he argued, you can do prep. But for meeting folks in a more unplanned manner, having a way to share your identity is useful.

So, HiHello lets you create virtual business cards of a sort for yourself. But not just one, the idea is to have several, one for each of your personas. Kumar said that I could have one for our podcast (Equity), one for TechCrunch proper and so forth. You can make them for your personal life as well.

I figured that business cards were dead. And that we didn’t need to rebuild them. Kumar doesn’t agree. He sees a future where HiHello can create what are, in effect, personal social networks around context. It’s bold and it’s counterintuitive. Good startup fodder, in other words.

HiHello is monetizing off of consumer revenue today and has a business product as well. Let’s see how quickly the startup can grow. It’s about time we got excited about a new sort of social product.

Going vertical

I’ve written about Skyflow a few times. It’s co-founder, Anshu Sharma, is someone I’ve known for ages. We met when he was at Storm Ventures. Since then he’s invested as an angel and founded a few companies, one of which is Skyflow. The software startup sells a digital vault that allows for PII and other critical information to be secured on customers’ behalf and accessed in a safe manner, allowing companies for whom information security is not their core focus to avoid breaches.

The model is working, with Skyflow raising capital at a pretty aggressive rate. And Sharma seems chuffed thus far with customer progress. (Sharma also provided notes that helped me ground an essay the other day.)

Recently Skyflow announced a particular flavor of product for the healthcare market. Given that I’ve been tracking the company since it first launched, I was curious. So I got Sharma back on the phone to explain his verticalization strategy — I was curious how he was picking markets to pursue and where he might take his company next.

Sharma said that his company’s plan is to prove its technology in complex markets, and then expand its remit over time. Hence the healthcare push and Skyflow’s work with storing financial data. By solving hard problems and selling to complicated customers he said, Skyflow will earn market permission to offer its tech to other folks.

From the CEO’s perspective, we need to “rewire” the internet from the ground up with a privacy focus. Citing a Marc Andreeseen riff about how not building payments tech into the internet from the start was an error, Sharma argued that two things were forgotten in the early days of the web: payments, yes, and privacy.

The verticalization strategy of Skyflow, then, is to tackle the hardest problems that it can — healthcare data is privy to all sorts of rules and regulations — and then broaden its focus until PII is safer for everyone. It’s a fundamentally optimistic take on where the internet could be heading. Not a Facebookian world where privacy is theoretical and adtech is persistent, but a world where your data is yours and is safe, stored and out of reach.

The competitive landscape that Skyflow plays in will harden. But so long as even some of the startups in the market that want to return privacy to individuals wins, I will be content.

Marqeta’s first earnings call

Somewhat lost amidst the wave of IPOs that we’ve seen this year was Marqeta’s debut, a fintech unicorn working in the card issuing space. It reported its earnings publicly for the first time this week, so I got on the phone with its CEO Jason Gardner to yammer about the results.

In brief, Marqeta grew quickly in the second quarter, easily besting expectations. The company lost more money than the markets anticipated however, leading to its shares shedding effectively all their post-IPO gains.

A few notes from the call. First, Gardner seems content to be past the public offering. He said that he’s had the chance to fall back in love with running the company now that his 18-month IPO market is complete. And he said that swapping yearly board-level planning for quarterly reports has been enjoyable, as having more regular disclosures brings a sense of urgency to the company’s work.

As we usually hear private company CEOs worry about distracting earnings calls and the like, it was somewhat refreshing to hear a public executive praise floating their company. It reminded us of the comments that we heard from BigCommerce CEO Brent Bellm on the same topic, even if they like being public for different reasons.

More important to our understanding of the world of startups, however, was Marqeta’s notes on the BNPL market. In the wake of Klarna’s rise, Square buying Afterpay and a zillion startup BNPL rounds, seeing Marqeta note the buy now. pay later space as a growth market for its work caught our eye. Why was BNPL helping a card issuing platform?

Well, it turns out, the virtual cards that Marqeta and others can spin up for customers are often used as part of the software sinew that makes BNPL transactions possible. The fintech world is always more interconnected than you expect. So, when we consider BNPL as a category, we’ll do well to also keep tabs on what other boats its growth may be floating. That expands the number of startups that could be riding the BNPL wave.

One tip before we go. The fastest way to get an explanation of a market dynamic that you are not familiar with is to ask a public CEO to explain it to you. The downside to this particular educational method is that if you were close to understanding the concept before but missed a single key element, you will feel pretty silly when said CEO tells you in small words what you previously failed to grok.

However, as I am, in fact, very dumb, I refuse to be red-faced about not knowing things. Alright, that’s enough for today. There’s an extra Equity episode out today, and The Exchange is back on Monday morning!

Hugs, and get vaccinated. Your friend,

Alex

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