InkHunter heads to YC to build a try-and-buy tattoo marketplace

InkHunter, an augmented reality tattoo try-on app that was born out of a 48-hour hackathon back in the altogether gentler days of 2014 has bagged a place in Y Combinator’s summer 2018 batch, scoring itself the seed accelerator’s standard $120,000 deal in exchange for 7% equity.

We first covered InkHunter in April 2016 when it had just launched an MVP on iOS and was toying with building a marketplace for tattoo artists. Several months and 2.5 million downloads later InkHunter launched its Android app, having spent summer 2016 going through the ERA accelerator program in New York.

At that time the team was considering a b2b business model pivot, based on licensing their core AR tech to ecommerce apps and other developers. Though they wanted to keep the tattoo try on app ticking over as a showcase.

Fast forward two years and it’s the SDK idea on ice after InkHunter’s app gained enough traction in the tattoo community for the team to revive their marketplace idea – having passed eight million users – so they’ve relocated to Mountain View and swung back around to the original concept of a try-before-you buy tattoo app, using AR to drive bookings for local tattoo artists.

“We are focusing on iterating from ‘try’ to ‘try and buy’ experience, based on feedback we got from our users. And this is our goal for the YC program, which places a lot of focus on growth and user interactions,” CTO Pavel Razumovskyi tells us.

“Last time we have talked, we did not expect such adoption on the tattoo market. But when we saw really strong usage and feedback from the tattoo community, we decided to double down on that audience.”

The newly added booking option is very much an MVP at this stage – with InkHunter using a Typeform interface to ask users who tap through with a booking request to input their details to be contacted later, via text message, with information about relevant local tattoo artists (starting with the US market).

But the team’s hope for the YC program is help to hone their approach.

Razumovskyi confirms they’ve started with a booking request concierge service in the US without onboarding any tattoo artists into the planned marketplace as yet, and are merely hand picking local tattoo artists to help users with bookings.

“While this approach doesn’t scale, it helps us to figure out problems and quickly iterate solutions,” he adds. “We are almost done with this stage, and close to launch an in-app search for tattoo artist into selected locations, listing only licensed artists with the large portfolio.”

InkHunter says close to half (45%) its users have expressed a desire to get a tattoo within the next few months, while it got more than 500 booking requests in the first week of the concierge feature.

Though you do have to wonder whether users’ desire to experiment with ink on their skin will also extend to a desire to experiment with different tattoo artists too – or whether many regular inkers might not prefer to stick with a tattooist they already know and trust, and whose style they like. (A scenario which may not require an app to sit in the middle to take repeat bookings.)

“We want to help them do this with as little regret as possible,” says CEO Oleksandra Rohachova of InkHunter’s tattoo hungry users – so presumably the team will also be carefully vetting the tattoo artists they list on their marketplace.

The main function of the app lets users browse thousands of tattoo designs and virtually try them on using its core AR feature – which requires people spill a little real-world ink to anchor the virtual design by making a few pen marks on their skin where they want the tattoo to live. As use-cases for AR go it’s a pretty pleasing one.

InkHunter also supports taking and sharing photos – to loop friends’ opinions into your skin-augmenting decision, and help the app’s fame spread.

The team’s hope for the next stage of building an app business is once an InkHunter user has settled on the design and placement of their next tat, they’ll get comfortable about relying on the app to find and book an artist. And the next time, for their next tattoo too.

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Self-driving car startup Zoox is raising $500 million at a $3.2 billion valuation

Zoox, a once-secretive self-driving car startup, is closing a $500 million raise at a $3.2 billion post-money valuation, Bloomberg Businessweek reports. Prior to the deal, Zoox was valued at $2.7 billion, Zoox confirmed to TechCrunch. The round, led by Mike Cannon-Brookes of Grok Ventures, brings its total amount of funding to $800 million.

Zoox’s plan, according to Bloomberg, is to publicly deploy autonomous vehicles by 2020 in the form of its own ride-hailing service. The cars themselves will be all-electric and fully autonomous. Meanwhile, ride-hail companies like Uber and Lyft are also working on autonomous vehicles, as well as a number of other large players in the space.

Zoox, which turned four years old this month, is a 500-person company founded by Tim Kentley-Klay and Jesse Levinson. In the meantime, head over to Bloomberg for the full rundown.

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The Local SEO’s Guide to the Buy Local Phenomenon: A Competitive Advantage for Clients

Posted by MiriamEllis

Photo credit: Michelle Shirley

What if a single conversation with one of your small local business clients could spark activity that would lead to an increase in their YOY sales of more than 7%, as opposed to only 4% if you don’t have the conversation? What if this chat could triple the amount of spending that stays in their town, reduce pollution in their community, improve their neighbors’ health, and strengthen democracy?

What if the brass ring of content dev, link opportunities, consumer sentiment and realtime local inventory is just waiting for you to grab it, on a ride we just haven’t taken yet, in a setting we’re just not talking about?

Let’s travel a different road today, one that parallels our industry’s typical conversation about citations, reviews, markup, and Google My Business. As a 15-year sailor on the Local SEO ship, I love all this stuff, but, like you, I’m experiencing a merging of online goals with offline realities, a heightened awareness of how in-store is where local business successes are born and bred, before they become mirrored on the web.

At Moz, our SaaS tools serve businesses of every kind: Digital, bricks-and-mortar, SABs, enterprises, mid-market agencies, big brands, and bootstrappers. But today, I’m going to go as small and as local as possible, speaking directly to independently-owned local businesses and their marketers about the buy local/shop local/go local movement and what I’ve learned about its potential to deliver meaningful and far-reaching successes. Frankly, I think you’ll be as amazed as I’ve been.

At the very least, I hope reading this article will inspire you to have a conversation with your local business clients about what this growing phenomenon could do for them and for their communities. Successful clients, after all, are the very best kind to have.

What is the Buy Local movement all about?

What’s the big idea?

You’re familiar with the concept of there being power in numbers. A single independent business lacks the resources and clout to determine the local decisions and policies that affect it. Should Walmart or Target be invited to set up shop in town? Should the crumbling building on Main St. be renovated or demolished? Which safety and cultural services should be supported with funding? The family running the small grocery store has little say, but if they join together with the folks running the bakery, the community credit union, the animal shelter, and the bookstore … then they begin to have a stronger voice.

Who does this?

Buy Local programs formalize the process of independently-owned businesses joining together to educate their communities about the considerable benefits to nearly everyone of living in a thriving local economy. These efforts can be initiated by merchants, Chambers of Commerce, grassroots citizen groups, or others. They can be assisted and supported by non-profit organizations like the American Independent Business Alliance (AMIBA) and the Institute for Local Self-Reliance (ILSR).

What are the goals?

Through signage, educational events, media promotions, and other forms of marketing, most Buy Local campaigns share some or all of these goals:

  • Increase local wealth that recirculates within the community
  • Preserve local character
  • Build community
  • Create good jobs
  • Have a say in policy-making
  • Decrease environmental impacts
  • Support entrepreneurship
  • Improve diversity/variety
  • Compete with big businesses

Do Buy Local campaigns actually work?

Yes – research indicates that, if managed correctly, these programs yield a variety of benefits to both merchants and residents. Consider these findings:

1) Healthy YOY sales advantages

ILSR conducted a national survey of independent businesses to gauge YOY sales patterns. 2016 respondents reported a good increase in sales across the board, but with a significant difference which AMIBA sums up:

“Businesses in communities with a sustained grassroots “buy independent/buy local” campaign reported a strong 7.4% sales increase, nearly doubling the 4.2% gain for those in areas without such an alliance.”

2) Keeping spending local

The analysts at Civic Economics conducted surveys of 10 cities to gauge the local financial impacts of independents vs. chain retailers, yielding a series of graphics like this one:

While statistics vary from community to community, the overall pattern is one of significantly greater local recirculation of wealth in the independent vs. chain environment. These patterns can be put to good use by Buy Local campaigns with the goal of increasing community-sustaining wealth.

3) Keeping communities employed and safe

Few communities can safely afford the loss of jobs and tax revenue documented in a second Civic Economics study which details the impacts of Americans’ Amazon habit, state by state and across the nation:

While the recent supreme court ruling allowing states to tax e-commerce models could improve some of these dire numbers, towns and cities with Buy Local alliances can speak plainly: Lack of tax revenue that leads to lack of funding for emergency services like fire departments is simply unsafe and unsustainable. A study done a few years back found that ⅔ of volunteer firefighters in the US report that their departments are underfunded with 86% of these heroic workers having to dip into their own pockets to buy supplies to keep their stations going. As I jot these statistics down, there is a runaway 10,000 acre wildfire burning a couple of hours north of me…

Meanwhile, Inc.com is pointing out,

“According to the Bureau of Labor Statistics, since the end of the Great Recession, small businesses have created 62 percent of all net new private-sector jobs. Among those jobs, 66 percent were created by existing businesses, while 34 percent were generated through new establishments (adjusted for establishment closings and job losses)”.

When communities have Go Local-style business alliances, they are capitalizing on the ability to create jobs, increase sales, and build up tax revenue that could make a serious difference not just to local unemployment rates, but to local safety.

4) Shaping policy

In terms of empowering communities to shape policy, there are many anecdotes to choose from, but one of the most celebrated surrounds a landmark study conducted by the Austin Independent Business Alliance which documented community impacts of spending at the local book and music stores vs. a proposed Borders. Their findings were compelling enough to convince the city not to give a $2.1 million subsidy to the now-defunct corporation.

5) Improving the local environment

A single statistic here is incredibly eye opening. According to the US Department of Transportation, shopping-related driving per household more than tripled between 1969-2009.

All you have to do is picture to yourself the centralized location of mainstreet businesses vs. big boxes on the outskirts of town to imagine how city planning has contributed to this stunning rise in time spent on the road. When residents can walk or bike to make daily purchases, the positive environmental impacts are obvious.

6) Improving residents’ health and well-being

A recent Cigna survey of 20,000 Americans found that nearly half of them always or sometimes feel lonely, lacking in significant face-to-face interactions with others. Why does this matter? Because the American Psychological Association finds that you have a 50% less chance of dying prematurely if you have quality social interactions.

There’s a reason author Jan Karon’s “Mitford” series about life in a small town in North Carolina has been a string of NY Times Best Sellers; readers and reviewers continuously state that they yearn to live someplace like this fictitious community with the slogan “Mitford takes care of its own”. In the novels, the lives of residents, independent merchants, and “outsiders” interweave, in good times and bad, creating a support network many Americans envy.

This societal setup must be a winner, as well as a bestseller, because the Cambridge Journal of Regions published a paper in which they propose that the concentration of small businesses in a given community can be equated with levels of public health.

Beyond the theory that eating fresh and local is good for you, it turns out that knowing your farmer, your banker, your grocer could help you live longer.

7) Realizing big-picture goals

Speaking of memorable stories, this video from ILSR does a good job of detailing one view of the ultimate impacts independent business alliances can have on shaping community futures:

I interviewed author and AMIBA co-founder, Jeff Milchen, about the good things that can happen when independents join hands. He summed it up,

“The results really speak for themselves when you look at what the impact of public education for local alliances has been in terms of shifting culture. It’s a great investment for independent businesses to partner with other independents, to do things they can’t do individually. Forming these partnerships can help them compete with the online giants.”

Getting going with a Go Local campaign, the right way

If sharing some of the above with clients has made them receptive to further exploration of what involvement in an independent business alliance might do for them, here are the next steps to take:

  1. First, find out if a Go Local/Shop Local/Buy Local/Stay Local campaign already exists in the business’ community. If so, the client can join up.
  2. If not, contact AMIBA. The good folks there will know if other local business owners in the client’s community have already expressed interest in creating an alliance. They can help connect the interested parties up.
  3. I highly, highly recommend reading through Amiba’s nice, free primer covering just about everything you need to know about Go Local campaigns.
  4. Encourage the client to publicize their intent to create an alliance if none exists in their community. Do an op ed in the local print news, put it on social media sites, talk to neighbors. This can prompt outreach from potential allies in the effort.
  5. A given group can determine to go it alone, but it may be better to rely on the past experience of others who have already created successful campaigns. AMIBA offers a variety of paid community training modules, including expert speakers, workshops, and on-site consultations. Each community can write in to request a quote for a training plan that will work best for them. The organization also offers a wealth of free educational materials on their website.
  6. According to AMIBA’s Jeff Milchen, a typical Buy Local campaign takes about 3-4 months to get going.

It’s important to know that Go Local campaigns can fail, due to poor execution. Here is a roundup of practices all alliances should focus on to avoid the most common pitfalls:

  1. Codify the definition of a “local” business as being independently-owned-and-run, or else big chain inclusion will anger some members and cause them to leave.
  2. Emphasize all forms of local patronage; campaigns that stick too closely to words like “buy” or “shop” overlook the small banks, service area businesses, and other models that are an integral part of the independent local economy.
  3. Ensure diversity in leadership; an alliance that fails to reflect the resources of age, race, gender/identity, political views, economics and other factors may wind up perishing from narrow viewpoints. On a related note, AMIBA has been particularly active in advocating for business communities to rid themselves of bigotry. Strong communities welcome everyone.
  4. Do the math of what success looks like; education is a major contributing factor to forging a strong alliance, based on projected numbers of what campaigns can yield in concrete benefits for both merchants and residents.
  5. Differentiate inventory and offerings so that independently-owned businesses offer something of added value which patrons can’t easily replicate online; this could be specialty local products, face-to-face time with expert staff, or other benefits.
  6. Take the high road in inspiring the community to increase local spending; campaigns should not rely on vilifying big and online businesses or asking for patronage out of pity. In other words, guilt-tripping locals because they do some of their shopping at Walmart or Amazon isn’t a good strategy. Even a 10% shift towards local spending can have positive impacts for a community!
  7. Clearly assess community resources; not every town, city, or district hosts the necessary mix of independent businesses to create a strong campaign. For example, approximately 2.2% of the US population live in “food deserts”, many miles from a grocery store. These areas may lack other local businesses, as well, and their communities may need to create grassroots campaigns surrounding neighborhood gardens, mobile markets, private investors and other creative solutions.

In sum, success significantly depends on having clear definitions, clear goals, diverse participants and a proud identity as independents, devoid of shaming tactics.

Circling back to the Web – our native heath!

So, let’s say that your incoming client is now participating in a Buy Local program. Awesome! Now, where do we go from here?

In speaking with Jeff Milchen, I asked what he has seen in terms of digital marketing being used to promote the businesses involved in Buy Local campaigns. He said that, while some alliances have workshops, it’s a work in progress and something he hopes to see grow in the future.

As a Local SEO, that future is now for you and your fortunate clients. Here are some ways I see this working out beautifully:

Basic data distribution and consistency

Small local businesses can sometimes be unaware of inconsistent or absent local business listings, because the owners are just so busy. The quickest way I know to demo this scenario is to plug the company name and zip into the free Moz Check Listing tool to show them how they’re doing on the majors. Correct data errors and fill in the blanks, either manually, or, using affordable software like Moz Local. You’ll also want to be sure the client has a presence on any geo or industry-specific directories and platforms. It’s something your agency can really help with!

A hyperlocalized content powerhouse

Build proud content around the company’s involvement in the Buy Local program.

  • Write about all of the economic, environmental, and societal benefits residents can support by patronizing the business.
  • Motivated independents take time to know their customers. There are stories in this. Write about the customers and their needs. I’ve even seen independent restaurants naming menu items after beloved patrons. Get personal. Build community.
  • Don’t forget that even small towns can be powerful points of interest for tourists. Create a warm welcome for travelers, and for new neighbors, too!

Link building opportunities of a lifetime

Local business alliances form strong B2B bonds.

  • Find relationships with related businesses that can sprout links. For example, the caterer knows the wedding cake baker, who knows the professional seamstress, who knows the minister, who knows the DJ, who knows the florist.
  • Dive deep into opportunities for sponsoring local organizations, teams and events, hosting and participating in workshops and conferences, offering scholarships and special deals.
  • Make fast friends with local media. Be newsworthy.

A wellspring of sentiment

Independents form strong business-to-community bonds.

  • When a business really knows its customers, asking for online reviews is so much easier. In some communities, it may be necessary to teach customers how to leave reviews, but once you get a strategy going for this, the rest is gravy.
  • It’s also a natural fit for asking for written and video testimonials to be published on the company website.
  • Don’t forget the power of Word of Mouth Marketing, while you’re at it. Loyal patrons are an incredible asset.
  • The one drawback could be if your business model is one of a sensitive nature. Tight-knit communities can be ones in which residents may be more desirous of protecting their privacy.

Digitize inventory easily

30% of consumers say they’d buy from a local store instead of online if they knew the store was nearby (Google). Over half of consumers prefer to shop in-store to interact with products (Local Search Association). Over 63% of consumers would rather buy from a company they consider to be authentic over the competition (Bright Local).

It all adds up to the need for highly-authentic independently-owned businesses to have an online presence that signals to Internet users that they stock desired products. For many small, local brands, going full e-commerce on their website is simply too big of an implementation and management task. It’s a problem that’s dogged this particular business sector for years. And it’s why I got excited when the folks at AMIBA told me to check out Pointy.

Pointy offers a physical device that small business owners can attach to their barcode scanner to have their products ported to a Pointy-controlled webpage. But, that’s not all. Pointy integrates with the “See What’s In Store” inventory function of Google My Business Knowledge Panels. Check out Talbot’s Toyland in San Mateo, CA for a live example.

Pointy is a startup, but one that is exciting enough to have received angel investing from the founder of WordPress and the co-founder of Google Maps. Looks like a real winner to me, and it could provide a genuine answer for brick-and-mortar independents who have found their sales staggering in the wake of Amazon and other big digital brands.

Local SEOs have an important part to play

Satisfaction in work is a thing to be cherished. If the independent business movement speaks to you, bringing your local search marketing skills to these alliances and small brands could make more of your work days really good days.

The scenario could be an especially good fit for agencies that have specialized in city or state marketing. For example, one of our Moz Community members confines his projects to South Carolina. Imagine him taking it on the road a bit, hosting and attending workshops for towns across the state that are ready to revitalize main street. An energetic client roster could certainly result if someone like him could show local banks, grocery stores, retail shops and restaurants how to use the power of the local web!

Reading America

Our industry is living and working in complex times.

The bad news is, a current Bush-Biden poll finds that 8/10 US residents are “somewhat” or “very” concerned about the state of democracy in our nation.

The not-so-bad news is that citizen ingenuity for discovering solutions and opportunities is still going strong. We need only look as far as the runaway success of the TV show “Fixer Upper”, which drew 5.21 million viewers in its fourth season as the second-largest telecast of Q2 of that year. The show surrounded the revitalization of dilapidated homes and businesses in and around Waco, Texas, and has turned the entire town into a major tourist destination, pulling in millions of annual visitors and landing book deals, a magazine, and the Magnolia Home furnishing line for its entrepreneurial hosts.

While not every town can (or would want to) experience what is being called the “Magnolia effect”, channels like HGTV and the DIY network are heavily capitalizing on the rebirth of American communities, and private citizens are taking matters into their own hands.

There’s the family who moved from Washington D.C. to Water Valley, Mississippi, bought part of the decaying main street and began to refurbish it. I found the video story of this completely riveting, and look at the Yelp reviews of the amazing grocery store and lunch counter these folks are operating now. The market carries local products, including hoop cheese and milk from the first dairy anyone had opened in 50 years in the state.

There are the half-dozen millennials who are helping turn New Providence, Iowa into a place young families can live and work again. There’s Corning, NY, Greensburg, KS, Colorado Springs, CO, and so many more places where people are eagerly looking to strengthen community sufficiency and sustainability.

Some marketing firms are visionary forerunners in this phenomenon, like Deluxe, which has sponsored the Small Business Revolution show, doing mainstreet makeovers that are bringing towns back to life. There could be a place out there somewhere on the map of the country, just waiting for your agency to fill it.

The best news is that change is possible. A recent study in Science magazine states that the tipping point for a minority group to change a majority viewpoint is 25% of the population. This is welcome news at a time when 80% of citizens are feeling doubtful about the state of our democracy. There are 28 million small businesses in the United States – an astonishing potential educational force – if communities can be taught what a vote with their dollar can do in terms of giving them a voice. As Jeff Milchen told me:

One of the most inspiring things is when we see local organizations helping residents to be more engaged in the future of their community. Most communities feel somewhat powerless. When you see towns realize they have the ability to shift public policy to support their own community, that’s empowering.”

Sometimes, the extremes of our industry can make our society and our democracy hard to read. On the one hand, the largest brands developing AI, checkout-less shopping, driverless cars, same-day delivery via robotics, and the gig economy win applause at conferences.

On the other hand, the public is increasingly hearing the stories of employees at these same companies who are protesting Microsoft developing face recognition for ICE, Google’s development of AI drone footage analysis for the Pentagon, working conditions at Amazon warehouses that allegedly preclude bathroom breaks and have put people in the hospital, and the various outcomes of the “Walmart Effect”.

The Buy Local movement is poised in time at this interesting moment, in which our democracy gets to choose. Gigs or unions? Know your robot or know your farmer? Convenience or compassion? Is it either/or? Can it be both?

Both big and small brands have a major role to play in answering these timely questions and shaping the ethics of our economy. Big brands, after all, have tremendous resources for raising the bar for ethical business practices. Your agency likely wants to serve both types of clients, but it’s all to the good if all business sectors remember that the real choosers are the “consumers”, the everyday folks voting with their dollars.

I know that it can be hard to find good news sometimes. But I’m hoping what you’ve read today gifts you with a feeling of optimism that you can take to the office, take to your independently-owned local business clients, and maybe even help take to their communities. Spark a conversation today and you may stumble upon a meaningful competitive advantage for your agency and its most local customers.

Every year, local SEOs are delving deeper and deeper into the offline realities of the brands they serve, large and small. We’re learning so much, together. It’s sometimes a heartbreaker, but always an honor, being part of this local journey.

Sign up for The Moz Top 10, a semimonthly mailer updating you on the top ten hottest pieces of SEO news, tips, and rad links uncovered by the Moz team. Think of it as your exclusive digest of stuff you don’t have time to hunt down but want to read!

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Ocean Solutions Accelerator names its first wave of conservation startups

Early this year the Sustainable Oceans Alliance announced it would be starting its own accelerator with a focus on conservation. The nonprofit has just announced the Ocean Solutions Accelerator’s first wave of startups: a particularly varied and international lineup that’s easy to root for.

You may also remember that the SOA was one of the beneficiaries of the mysterious Pineapple Fund, administered by a mysterious cryptocurrency multimillionaire. No doubt that has helped get the accelerator on its feet in good time.

The startups – which I’m getting to, be patient – will receive an initial investment to cover the cost of relocating to the Bay Area for eight weeks this summer. There they will receive the loving care of the collection of academics, founders, officials and others in or around the Alliance, plus some important “personal development and executive training” intended to keep your company alive long enough to ship a product.

Interestingly, applications were only open to founders 35 years and under, presumably to get that young blood into the conservation game. Here are the five companies selected to take part:

SafetyNet, from London, makes light-emitting devices that attach to fishing nets and can be programmed to attract or discourage certain kinds of fish. This prevents a boat from catching – and subsequently throwing away – thousands of the wrong fish, a huge waste.

CalWave came out of Berkeley a couple of years ago and has been testing and refining its wave-harvesting renewable energy system, and in fact won a big Department of Energy grant just last year. Now presumably the team is looking to go from prototype to product and do some big installs.

Loliware’s edible cups.

Loliware has created seaweed-based straws and cups that are so compostable you can do it yourself – like, in your mouth. The items last for a day in a drink (or with a drink in them) but when you throw it away it’ll totally dissolve in about two months – or you could literally eat it. The New Yorkers were on Shark Tank and I’m guessing they ate one on camera. You can already order them on Amazon and people say they’re actually pretty tasty.

Etac, a Mexican company from Culiacan, has few details on its site, but SOA’s press release says the company “designs and produces functional nanomaterials for energy and environmental applications, such as oil spill and wastewater cleanup.” I believe them.

And because there can’t be an accelerator without a blockchain startup in it, there’s Blockcycle, based in Sydney, which aims to create a marketplace around waste materials that would normally go to the landfill but could also be valuable to recyclers, reusers and so on. (Turns out there was an uptick in blockchain applications after the Pineapple Fund thing.)

All five companies will present their ideas on September 11 at an event (specifically, a gala) timed to coincide with California Governor Jerry Brown’s Global Climate Action Summit in San Francisco. And then in October they’ll present again in Bali at the Our Ocean Youth Summit.

“These ocean entrepreneurs are a beacon of hope at a time when new, bold approaches are needed to fast-track innovation and sustain the health of our planet,” said SOA founder and CEO Daniela Fernandez. “By supporting these incredible startups, we are encouraging young people to take ownership of the environmental threats facing their communities, bet against consensus and re-invent existing markets to benefit, instead of harm, our climate, and ocean.”

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Nurx raises $36 million and adds Chelsea Clinton to its board of directors

Telemedicine startup Nurx recently closed a $36 million funding round led by Kleiner Perkins. As part of the investment, Kleiner Perkins General Partner Noah Knauf is joining the startup’s board of directors, along with Chelsea Clinton .

With this new funding, CEO and co-founder Hans Gangeskar told TechCrunch that the startup plans to scale its clinical teams, pharmacies and geographic reach in the coming year.

“We have a new site in Miami where we have a team of nurses being on-boarded, [we’re] building out our engineering and design teams and really just [working to] increase the pace of everything that we’re doing,” Gangeskar said.

The startup launched in 2014 with the goal to make reliable access to contraceptives as easy as opening your web browser. After plugging your information into its online app, users are connected with physicians, given a prescription and Nurx prepares their product for delivery.

Since its launch, this California-based startup now operates in 17 states, and has expanded its products to include not only contraceptives (such as pills, patches, injectables and products like Nuva Ring) but the anti-HIV medication PrEP as well. Gangeskar says the company is also preparing to launch an at-home lab kit soon for HIV testing.

For Gangeskar, creating affordable access to contraceptives is a first step to changing how patients interact and receive medication from their physicians.

“Birth control is one of the fundamental functions of any health care system [so] for us its a natural place to start,” said Gangeskar.

To help advance its plans to redefine this space, Gangeskar says Nurx is excited to welcome public health veteran Chelsea Clinton to its board.

“Her experience in public health and global health from the Clinton Global Initiative has been really valuable, [particularly learning about] rolling out preventative services in large scales, because really that’s the potential of our platform – [to reach] populations that can’t be reached by the conventional medical system.”

While Washington looks to make cuts to American’s healthcare access, startups like Nurx offer a fresh perspective on this critical space.

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Is insurance a rich enough game to disrupt?

For the last decade, the largest technology companies have increasingly looked outside of tech to grow their operations. From automotive to retail to groceries, these companies use massive competitive advantages in the form of data, consumer relationships and software engineers to fundamentally change markets.

Now, companies like Apple and Google and Amazon are eyeing innovation across the insurance landscape. For example, Amazon is teaming with JPMorgan and Berkshire Hathaway to create a new way to approach health insurance, focusing first on the group’s own employees. On the retail side, Amazon is selling product insurance and extended warranties at the point of sale and investing in insurtech startups. Meanwhile, Tesla is developing an insurance product specific to the Model S. Waymo, Uber and Lyft are certainly having similar conversations internally.

Obviously, these are all preliminary steps. Insurance is a complex, multifaceted and, yes, risky business. In the end, whether or not companies like Amazon become insurers themselves depends on their appetite for risk, their ability to innovate and the potential pay off.

To start, let’s look at the reasons why tech giants are well-suited to upend the space.

They have direct consumer relationships

Like many businesses, a large aspect of a successful insurance business is distribution. Just look at brokers, which are a major means of distribution for insurers today – their cut can be up to 30 percent of the cost of an insurance policy. Brokers also see better margins than insurers themselves, usually around 10 percent net margins. Facebook, Amazon, Apple, Microsoft and Google (FAAMG) possess direct relationship with billions of consumers and could, over time, disrupt the broker business.

They have deep data and analytics

The big secret in insurance is that insurers are actually terrible at using their data. Different departments (marketing, underwriting, claims) rarely work together, and their data tends to be siloed. FAAMG, on the other hand, has put data at the core of their offering; they know how to leverage analytics and AI to create better products.

Tech giants may be tempted to use their troves of data to compete with insurers directly.

They also have access to data that insurers can only dream of having: global geospatial imagery of homes, infrastructure and buildings; location, browsing and advertising data; even real-world behavioral data from smartphones and IoT devices. Combining all these signals can create a very complete picture of human behavior, interests and risk profile.

They have an army of software engineers and a monopoly of AI talent

Tech innovation has long been a challenge for insurance incumbents. Old systems are difficult to displace in any industry, but the complexity of insurance, tradition of relying on the past to predict the future and silos of data can make it a Herculean effort. Tech giants, on the other hand, regularly cannibalize their own revenue with new products and can enlist tens of thousands of engineers to develop fantastic digital customer experiences and bring large-scale efficiencies to back-end insurance systems through better software and AI.

So, yes, FAAMG has a number of major advantages over insurance incumbents. But for tech giants, new verticals and initiatives are also longer-term decisions around margins and market scope. It’s an obvious point, but if FAAMG wants to jump into insurance, they’ll want a decent return. Can they find that in insurance?

There are a number of reasons why it might be a tough sell.

Ultra-low margins

Average insurance net margins are 3-8 percent, and 25-30 percent gross margins, which are meager for tech standards. Software companies average around 80 percent gross margins and around 15 percent net margins. Even consumer hardware like the iPhone – a costly endeavor by software standards – sees 55-60 percent gross margins.

Within insurance, health tends to have the highest margins, followed by property and casualty (i.e. home and auto insurance), followed by life insurance. So if anything, healthcare is probably the closest thing to “low-hanging fruit” – but it’s not exactly attractive to most companies outside insurance.

High risk

Such low margin also means that one major event can destroy a company’s balance sheet for an entire fiscal year (think disasters like hurricanes, fire, flood, etc.). In addition, tech companies don’t have the historical data and actuarial scientists that insurers have spent decades building up, so they might be more prone to misjudging their overall risk exposure.

Complex administration

For insurers, evaluating and underwriting policies is an expensive endeavor. Claims, customer support and back-end are costly and complex. That said, most insurance companies are already outsourcing the development of core administration software to companies like GuideWire and Duck Creek, and then customizing the software to meet their specific needs at the last mile. So it’s not as huge of a leap as it once was to think that the likes of Amazon or Google could develop similar infrastructure in-house to rival incumbent systems. Or, they could easily buy one of the development companies outright and subsume that expertise.

Amazon makes a big move

Still, the creation and underwriting of policies is something tech giants have avoided to date. Amazon has been working on warranties for certain products as an add-on to their margins – but these were backed and administered by The Warranty Group rather than Amazon itself. Before that, Amazon acted as a sales channel for SquareTrade and built up an understanding of the warranty business before diving in deeper. Tesla, as another example, announced it was selling Tesla-branded tailor-made policies for its vehicle owners, but those policies were backed by Liberty Mutual.

What role will tech giants in the U.S. play in the insurance landscape?

Then, in January, Amazon made a well-publicized announcement, in tandem with Berkshire Hathaway and JPMorgan, around its intention to create a private healthcare option for their workers. We don’t know much about the initiative, but Amazon has been working on a healthcare technology project codenamed 1492 for some time. Rumors point to a “platform for electronic medical record data, telemedicine, and health apps.” Amazon’s technology paired with Berkshire Hathaway’s insurance knowledge and JPMorgan’s financial expertise makes the creation of a new health insurance entity more likely. If so, this would be a significant shot across the bow of U.S. healthcare insurers.

Of all the tech giants, it would not be a surprise if Amazon were the first to jump into insurance. Amazon has mastered the art of building massive businesses off of razor-thin margins. They’re also targeting health insurance, which presents the best margin opportunity. They can test their offering within the company first and then scale across their massive consumer base. Finally, they have a history of building out complex back-end services for their own purposes before offering it to their customers – just look at AWS.

Will other tech companies follow Amazon’s lead?

Signs point to yes. Recently, Google’s sister company, Verily, “has been in talks with insurers about jointly bidding for contracts that would involve taking on risk for hundreds of thousands of patients.” In addition, Apple will be opening a network of medical clinics for its employees.

It may not stop at health insurance. There’s no question technology is changing human behavior and society, and as the developers of much of this new tech, FAAMG will inevitably be pushed closer to other sectors of insurance, as well, including home and auto.

Autonomous vehicle fleets will make companies like Tesla, Google and Uber the owners of tens of thousands of cars, subjecting them to the risk that comes with that. Meanwhile, IoT hardware and accompanying services are bringing tech giants into the living room. That’s a literal statement when it comes to Amazon Key. Nest, Google Home and Amazon Echo are more innocuous, but provide all sorts of data about what’s going on inside the home and could, someday, help inform the creation of real-time home insurance policies.

East Asia as a leading indicator?

It also can be instructive to look at markets outside the U.S. In East Asia, businesses are taking a more aggressive posture vis-à-vis insurance. BaiduAlibabaRakutenTencent and LINE have all shown some level of appetite for offering their own insurance products. These companies can verify identities, enforce trust and access the behavioral and financial data necessary to provide better policies than many insurance incumbents in those countries.

They also are exploring new ways of looking at risk and changing user behavior: Tencent’s WeSure is paying users to stay healthy by walking more, while Yongqianbao, a lending company, tracks unconventional digital data to determine credit risk, such as phone brand (iPhone users are less likely to default) and whether they let their phone batteries run down.

Still, the question remains: What role will tech giants in the U.S. play in the insurance landscape? Will they act as a channel for existing insurers, as a provider of data and analytics to those insurers or even as a provider of direct insurance themselves?

Insurance may not be lucrative-enough for tech giants in the short-term, but as real-time data and analytics are used to create insurance policies, tech giants may be tempted to use their troves of data to compete with insurers directly. Until then, we can expect insurers and tech giants to form alliances, as they have in East Asia, with tech companies using insurance and warranties as a value-add for their customers, and insurers using tech companies as a sales channel. Regardless, the story of FAAMG (and others) in insurance is undoubtedly just getting started, and we’ll have to check back in as the landscape develops.

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Announcing TechCrunch’s Startup Battlefield Latin America in São Paulo on Nov. 8

TechCrunch is excited to announce that the Startup Battlefield Latin America is coming to São Paulo on November 8 this year. This is the first event TechCrunch has ever held in Latin America, and we are all in to make it a memorable one to support the fast-emerging startup ecosystem in the region.

The Startup Battlefield is TechCrunch’s premier startup competition, which over the past 12 years has placed 750 companies on stage to pitch top VCs and TechCrunch editors. Those founders have gone on to raise more than $8 billion and produce more than 100 exits. Startup Battlefield Latin America aims to add 15 great founders from Latin America to those elite ranks.

Here’s how the competition works. Founders may apply now to participate in Startup Battlefield. Any early stage (pre-A round) company with a working product headquartered in an eligible Latin American country (see list below) may apply. Applications close August 6. TechCrunch editors will review the applications and, based on which applicants have the strongest potential for a big exit of major societal impact, pick 15 to compete on November 8. TechCrunch’s Startup Battlefield team will work intensively with each founding team to hone their six-minute pitch to perfection.

Then it’s game day. The 15 companies will take the stage at São Paulo’s Tomie Ohtake Institute in front of a live audience of 500 people to pitch top-tier VC judges. The judges and TechCrunch editors will pick five for a finals round. Those lucky finalists will face a fresh team of judges, and one will emerge as the winner of the first-ever Startup Battlefield Latin America. The winner takes home $25,000 and a trip for two to the next Disrupt, where they can exhibit free of charge in the Startup Alley and may also qualify to participate in the Startup Battlefield at Disrupt. Sweet deal. All Startup Battlefield sessions will be captured on video and posted on TechCrunch.com.

It’s an experience no founder would want to miss, considering the opportunity to join the ranks of Battlefield greats from years past, including Dropbox, Yammer, Mint, Getaround, CloudFlare, Vurb and many more.

Get that application started now.

Here’s the need-to-know about qualifying to apply:

  • Have an early-stage company in “launch” stage
  • Headquartered in one of these countries: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, French Guiana, Guyana, Paraguay, Peru, Suriname, Uruguay, Venezuela (Central America) Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Mexico, Panama (Caribbean – including dependencies and constituent entities), Dominican Republic, and Puerto Rico.
  • Have a fully working product/beta reasonably close to, or in, production
  • Have received limited press or publicity to date
  • Have no known intellectual property conflicts
  • Apply by Aug. 6, 2018, at 5 p.m. PST

Tickets to attend Startup Battlefield Latin America will go on sale soon. Interested in sponsoring the event, contact us here

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