Published by Rip Empson
in category ecommerce
, food order
, food tech
, Fundings & Exits
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Today, thanks to the maturation of the web, digital tech, and smartphones now in seemingly every pocket, startups are finding it easier than ever before to build scalable solutions to finally address the many inefficiencies in our food manufacturing, production and distribution systems.
As interest in food tech balloons, one area in particular appears to already be at the tipping point: Online and mobile food delivery. Over the last few days, we’ve hearing about a merger between two of the largest companies in the space. Rumor has it that “arch rivals” GrubHub and Seamless are in talks which could see them join forces as part of a merger. While our sources tell us that the talks are serious, the terms of the merger are not yet clear and, of course, any potential deal could fall through.
Furthermore, it’s not yet clear what kind of synergies would take place, how management of the new entity would be structured or even what the new business will be called. The two companies would not confirm on the record on any of the above. But as far as the name goes, we’re hoping for Grubless. Or Hubless GrubSeam. But they have a nice ring to them, don’t they?
If these rumors are true, the merger comes at a good time for the arch rivals, who have been seeing mounting competition of late from a laundry list of new startups entering the space, including increasingly popular alternatives like Delivery.com, ChowNow, Munchery (meals from local chefs), Campus Special, eat24 or the bigs of Europe, like Food Hero and Just-Eat.
If the online food-ordering and delivery market is roughly where daily deals were three-plus years ago, then the deal essentially creates the Groupon of food delivery. Like the daily deals market, food ordering has traditionally had a fairly low barrier to entry, which helps explain why we seem to see a new startup pop up every week.
Plus, the business model isn’t particularly complicated, making it replicable. That being said, innovation and tech adoption have been slow to come to the food industry, and, at scale, this model (taking a slice of transactions) has the potential to be able to generate a lot of cash.
This is just one part of why the “food tech” business has been so hot lately. Just ask venture capitalists who collectively poured $350 million into food startups over the last year. (Compare that to 2008, when it was less than $50 million.) Plus, when you get right down to it: People need to eat. And, as it turns out, people are pretty busy. Uh, and lazy.
Of course, for those who remember the spectacular failure of online food companies like Webvan, Kozmo and HomeRuns, this whole “tech in your kitchen” and online ordering jibber-jabber probably sounds familiar — and not in a good way. But this time it’s different. Research from Cornell University recently found, for example, that over 40 percent of adults in the U.S. have ordered food online, and 10 percent of restaurant orders now originate online — and these numbers continue to head north. GrubHub and Seamless have built successful businesses on this very idea.
Both GrubHub and Seamless have been around for some time: The New York City-based Seamless was founded in 1999, while the Chicago-based GrubHub got its start in 2004. And for the most part, the two companies have catered to two different markets geographically. While both now have fairly expansive coverage, GrubHub has naturally developed a firm foothold in the Midwest, while Seamless focused its early attention on NYC, before moving into cities like Los Angeles and San Francisco. From that perspective, a merger would make sense, allowing the new, consolidated entity to gain penetration into markets where they lacked a major presence.
Writ large, the companies, while having some fundamental differences, do seem to have a lot of synergies on paper — at least “nominally,” depending on who you ask — likely why they’ve increasingly become rivals over the years. Both are of fairly comparable size, as GrubHub has more than 18,000 restaurant partners across more than 500 cities, while Seamless has over 12,000 restaurants and serves nearly 5,000 businesses and more than 2 million users. As of February, Reuters reported that Seamless was on track to generate more than $100 million in revenue this year as it expands into new cities and focuses more aggressively on mobile.
The company reportedly generated $85 million in revenue last year, growing its consumer business by 60 percent year-over-year and “will soon be processing $1 billion worth of food orders a year,” Seamless CEO Jonathan Zabusky told Reuters at the time. For the majority of its history, the company focused primarily on New York, but launched a major expansion effort last year, bringing its service to 10 new cities. According to the report, Seamless saw its transaction volume quadruple in Los Angeles during 2012, with transactions tripling in San Francisco.
Another interesting point to note: GrubHub was reported to be considering an IPO last fall. The company denied the rumors at the time, and if this merger is true, then they’ve been given the proper perspective. Certainly, it would seem that this wouldn’t take a potential IPO off the table, instead, likely making an opening price that much higher.
The IPO rumors for GrubHub came at a time when the company was reportedly doing about $60 million in revenue (this was in 2012) — a little less than half that of Seamless. Furthermore, Crain’s reported in December that GrubHub’s revenue has been doubling every year and, as the company reported $30 million in revenue in 2011, that revenue estimate would make sense and put the company on the path to crossing $100 million well before the end of this year.
That is all to say that, although the terms of the potential deal are unclear, these are two sizable businesses that are growing relatively fast, so any potential valuation has got to be fairly high. After all: The two companies were fairly comparably capitalized and staffed, with GrubHub growing to over 250 employees and Seamless over 300, while GrubHub raised about $84 million from a mix of venture and growth equity firms (including Benchmark) and Seamless raised $51 million, $50 million of which came from private equity firm Spectrum Equity.
While both companies have made a couple of acquisitions, this would be the second big M&A deal for Seamless, as the company was acquired by food services giant, ARAMARK, in 2006. Five years later, Spectrum bought a minority stake in Seamless from ARAMARK, and about a year later, the food services company spun-off its remaining interest in Seamless to its shareholders. Free from its corporate ownership, Seamless proceeded to go out and buy MenuPages for $15 million, showing up GrubHub, which MenuPages had initially targeted as its acquirer. When GrubHub and MenuPages couldn’t agree to a deal, and it seems that GrubHub was instead in the process of buying Dotmenu/Allmenus, Seamless swooped in — according to BetaBeat.
So, as you can see, the companies have a long history of jostling. While GrubHub had been out acquiring restaurant partners fast and furiously, Seamless stagnated a bit under ARAMARK, but since becoming an independent company (again) and with a new board/investors, the company seems to have been compounding its growth. Together, that growth could be exponentially higher.
Finally, if this deal is in fact a go, it’s worth looking at this quote from GrubHub co-founder and CEO Matt Maloney from back in 2011. In it, he shares his opinion on GrubHub’s top competitor, a little company called Seamless. He told BetaBeat:
I typically don’t talk this much about Seamless because we don’t view them as incredibly strong competition for what we’re doing … Seamless fundamentally is a corporate catering business. They were founded years and years and years ago to do just that. And they’re still best in the business for corporate. They recently got into the consumer and residential pick-up and delivery. And they do it well in New York, but they really have zero business anywhere else. We don’t even consider them competition anywhere other than Manhattan specifically.
So, there you go. A match potentially made in heaven, and one that’s sure to shake up online and mobile food ordering if it happens.
Find Seamless at home here and GrubHub here.
While you’re probably worried about the future and are constantly trying to make your business a more customer-friendly environment, there are a couple of things you need to know about mobile devices. Smartphones and tablets have been penetrating the workplace for a while already. They’ve made conducting business a very simple process while, at the same time, ensuring that employees can attend to work practically anywhere in the world. It’s been quite a blast to have these things around.
However, there’s a flip-side to mobile penetration. Your business’ security and integrity can be threatened by two things: The loss of a device that eventually ends up in the wrong hands, and the intentional theft of one. These things can’t always be prevented, but there are ways in which you can make the possibility of such things happening minimal.
Digital Defense, Inc., a provider of a variety of network security products, has been kind enough to give us some tips on ensuring that your mobile security is as tight as a taut rope:
- Make and enforce a mobile security policy within your business. Obviously, this means having a dialogue with your employees on how they should operate their mobile devices. We’ll get to some of the details in the points below.
- Make sure that employees are aware that they must use certain devices to access your enterprise networking infrastructure. This is to help you determine which devices are able to access the network and which aren’t.
- Configure the network in such a way that only devices you’ve approved for use with that network will have connectivity.
- If you’re giving employees devices you own for their use at work, make sure you have a way to track them. Make an inventory of these devices regularly.
- Limit the amount of operating systems and device brands that you distribute to employees. It’s preferable to have only one or two brands of phones. This removes the headaches of having to manage the weaknesses in each brand of phone.
- If you’re going to limit phones to one operating system, choose one that has strong OS-level encryption. iOS has very powerful security that includes solid encryption, for example.
- Lest you be concerned about employee privacy on a phone that you gave them, conduct random inspection of these phones. Obviously, if you let employees bring their own phones, you’d be breaching their privacy by doing this.
- Any phones you give employees should not be capable of tethering or providing hotspots.
- Don’t allow company-owned devices to synchronize with cloud services automatically (like iCloud).
- Teach employees how to make a strong password (a combination of numbers, letters, and symbols, like “fjF@94#,” works) and enforce this policy any way you can. The hardest passwords to crack are phrases with symbols embedded in them (such as “ph1llip w3nt to th3 m@rk3t”). The longer the password, the better it is at resisting brute force and dictionary attacks.
- Configure mobile devices so that they do not cache sensitive data (like passwords) on their browsers.
They also have one final piece of advice: Keep up to date on the latest mobile security threats. After you’ve learned how to mitigate these threats, teach your employees to do the same and ensure that their phones and tablets are kept up to snuff!
The post 12 Mobile Security Tips All Small Businesses Must Be Aware Of appeared first on Small Business Technology.
Do you have a mentor, accountability partner, confidant and evangelist on your business team?
“Nobody has ever before asked the nuclear family to live all by itself in a box the way we do. With no relatives, no support, we’ve put it in an impossible situation.” ~ Margaret Mead
We can not afford to have a lone wolf, go it alone, isolationist mentality in our life or business. That is not a survivalist formula. We live in a hyper connected, engagement, interactivity, real time world. The World Wide Web, social media and smartphones have connected us all far and wide, 24/7.
Having an extended support system of key people that we can seek out and rely on to help us through moments and cycles of fast paced change is a valuable asset to have.
I think back to several turning points in my life and can clearly remember how important my support system was and is. The 4 years my mother took ill and then passed, the months leading up to leaving a 20+ year career in Broadcast radio sales, launching my current endeavor, challenging economic times and 2012 which was a turning point year for me.
My support system guided me through all of those moments, times and cycles helping me to find the humor, wisdom and grace in the challenge and the solution.
I have always welcomed and sought out great people as mirrors, sounding boards and sources of feedback from my family, friends and colleagues. We are built as social creatures and need to have community and connections to survive. The importance, value and benefits of a support system and role players in life and business are well documented in history.
Below are 4 essential role players to have on your business team that can make a huge difference in your sanity and the outcome of things.
4 Essential Players You Want On Your Business Team
Having people who educate, inspire and pass on what they know and have learned is an old tradition.
“Seek out mentors who offer you career guidance, advice and assistance from a real world point-of-view”, says Chrissy Scivicque in “How To Start a Mentorship Relationship.” She suggests choosing someone you respect, is willing and available and that you like personally.
The key is defining the relationship from the beginning and making it an open dialogue.
Accountability Partners or Group
Accountability is our ability and willingness to give an honest account to someone else of our actions and motives. Who do you trust to keep you on track, honest, true to your word and that you allow to call you out when you don’t fulfill your promises?
This can be uncomfortable but very beneficial.
We all need those inner circles of trusted people we can have honest conversations with about what’s really going on, that we may not have with anyone else, including family.
Airing out fears, reservations, dilemma’s and self confidence issues can be empowering. Confidants can be found through friends and family, self help groups, counselors or meeting new people through shared activities.
Welcoming people who are your ambassadors, cheerleaders and evangelists is such an esteem builder. These are people who truly believe in us and like us with no agenda, who are simply our fans. Here are some things that an ambassador or evangelist does for us in business.
Not only welcome them but let them consistently support and cheer you through and on.
Build a championship team of people who can help you grow, accepts you exactly the way you are and has your best interest at heart. These role players are the true secrets to success and happiness. It begins with “me” and continues with “we.”
Who are the key role players on your business team that are on your side and make a difference?
The post 4 Essential Role Players You Want On Your Team appeared first on Small Business Trends.
Telefonica is today announcing a deal with Samsung that will see it make an even bigger move into the area of carrier billing. Samsung will integrate the carrier’s billing backend directly into its own mobile services, meaning that the Telefonica customers (it has 316 million worldwide) who use the Samsung Hub and Samsung Apps portals on Samsung smartphones will be able to buy apps, music, videos, books, games and more and charge them directly to their phone bills.
The agreement, which will use Telefonica’s BlueVia payment APIs, is a significant one for Telefonica. So far it has inked deals with app portal operators, including Google, Facebook, Microsoft and RIM, and with billing providers like Bango; this effectively closes the loop for it by securing a deal with the world’s largest handset maker, although a recent deal to help the carrier finance the procurement and distribution of BlackBerry devices could point to Telefonica gearing up for a similar deal with that handset maker, too.
In addition to Bango, Telefonica also works with BOKU, where it led a $35 million investment last year. It’s not clear how this deal with Samsung will play out between these two rival billing providers. In the past Telefonica has been vague on the subject, saying that it will work one or the other depending on the situation.
Telefonica has been especially bullish on trying to come up with a way to get a piece of the action on apps and other content that is getting purchased on smartphones and tablets. Apple’s early move into the area with its very popular App Store (just this week marking its 50-billionth download) set a precedent for all but cutting carriers out of the picture, with Apple handling the payment on its own platform and then dividing up resulting revenues with the app publishers.
Mobile advertising alongside often-free apps is one other area where carriers and others have tried to play, although these revenues are still small in relation to those collected from downloads and in-app purchases.
But the promise of carrier billing, as we have noted before, is that it not only offers carriers a look in to the growing pot of money being made from smartphone content, but it also provides a route for publishers to better target consumers in parts of the world where smartphone usage is growing rapidly, but payment card penetration is not so much.
The carrier framework can be used not only for consumers who take monthly plans, but also for prepaid accounts, with each purchase deducted from there, as already happens with phone minutes, data bytes and SMS messages. This is an area where Spain’s Telefonica, which has more users in emerging markets in Latin America than it does in any single market in Europe, can hope to gain a foothold with its carrier billing offering, even if it has (so far) missed the boat in more developed markets.
Nevertheless, this deal will be implemented in phases, starting first with a rollout with Telefonica’s subsidiary in Germany “in the coming months.”
“We strongly believe that carrier billing has the potential to drive the monetisation of digital content,” Wayne Thorsen, vice president of Global Partnerships at Telefónica Digital, said in a statement. “Partnerships like this allow us to harness the power of the billing relationships we have with our customers to make it easier for them to consume content on their tablets and mobile devices.”
For Samsung, meanwhile, it gives the company the ability to promote its own content portals as easy to use — one way of driving more users there instead of to Google’s services. As Samsung tries to further differentiate itself from the other OEMs using Android, and Google itself, little things like this could help it along the way.
“Samsung is committed to ensuring that our customers have choice and convenience when purchasing content on our devices,” Lee Epting, VP of Media Solutions Centre Europe for Samsung Electronics Europe, said in a statement. “Our partnership with Telefónica Digital allows us to deliver yet another easy and convenient purchasing experience to our Samsung Hub and Samsung Apps customers.”
Telefonica and Samsung are not strangers to each other in the area of new services; they have co-invested in the latest round for semantic, real-time search startup Expect Labs.
IDC today was the latest to publish its numbers on smartphone market shares after the major handset makers released Q1 earnings, and like Gartner, Strategy Analytics and the rest, it underscores the power of Google’s Android platform at the moment: Android OEMs shipped 162.1 million handsets in the quarter, giving the platform a 75% share of total worldwide shipments, while Apple’s 37.4 million devices put it at an increasingly distant second position at 17.3%. Microsoft’s Windows Phone, driven primarily by its partner Nokia (79% of all WP shipments), grew the most of all platforms, with a rise of 133.3%, but that still puts it at a single-digit share, 3.2% on 7 million devices shipped.
That meant that Microsoft has now overtaken BlackBerry, which declined by just over 35% with 6.5 million shipments, ending with a 2.9% market share.
Important to note that IDC specifies that this is devices shipped, not sold. Some analysts have told me that the two are effectively interchangeable terms, but shipped is also potentially a more optimistic figure: it points to how well retailers and carriers think certain models are likely to sell in the quarter ahead. Occasionally these can lag compared to how well certain handset makers are actually doing if a device ends up selling worse than expected.
What “shipped” numbers like IDC’s say is that Android and iOS continue to, more or less, remain the only games in town in terms of how confident sales channels feel about shifting devices, with other platforms relegated to niche status. This is something that companies like BlackBerry are trying to change, as evidenced by a recent deal to extend a $256 million loan to Telefonica for purchasing BlackBerry devices.
IDC’s numbers show that together these two platforms accounted for nearly 200 million units (199.5 million) shipped, up 59% over a year ago. The smaller players are not to be dismissed, though. Not only is Windows Phone the most rapidly rising of all platforms at the moment, but IDC notes that BlackBerry’s BB10 new range have hit 1 million shipped devices this quarter.
But turnaround will only come with that kind of growth being sustained. “Given the relatively low volume generated, the Windows Phone camp will need to show further gains to solidify its status as an alterative to Android or iOS,” writes Kevin Restivo, senior research analyst with IDC.
For the time being, the message to users, and to app developers, is that these are the platforms where you want to be. Considering how key content has been as a route to attracting users to these devices, that will continue to pose a challenge for the smaller players.
As with Strategy Analytics’ numbers yesterday detailing the profitability of different smartphone platforms in the quarter, IDC notes that Samsung is by far the “clear leader” in Android. It notes that it had a 41.1% market share. As a sign of the ongoing fragmentation of players on the platform, no other single OEM had more than a single-digit percentage market share after that, “and an even longer list of vendors with market share less than one percent.” The fact that it’s still “free” to license Android, and relatively easy to modify it for a more custom experience, will mean that it will continue to be the platform of choice for OEMs looking for more revenues from the ongoing boom in smartphones.
As we saw in Apple’s earnings earlier in the quarter, the company’s sales of iPhones are at an all-time high, but in comparison to the growth of the rest of the market, it’s actually off, with market share down nearly six percentage points. There is some feeling that part of this is due to the fact that the platform appears stale compared to all the change going on elsewhere with software and hardware features, news handsets and more. “Although demand remains strong worldwide, the iOS experience has remained largely the same since the first iPhone debuted in 2007,” IDC notes, pointing to a “massive overhaul” that appears to be on the cards with iOS 7.
IDC also notes that over the last year, shares of the biggest platforms have fluctuated, although Android’s current 75% is the highest in a year. Against that, the last time that Android approached 75%, in Q3 2012, Apple’s share was only 14.5% as people held out for a new iPhone model. That shows that Apple’s growth this quarter was at the expense of declines for other smaller platforms.