Having a bad quarter? The coronavirus is probably the reason.
Quibi, the short-form video streaming app formed by Jeffrey Katzenberg and Meg Whitman, is definitely blaming the pandemic for its anemic performance.
“I attribute everything that has gone wrong to coronavirus,” Katzenberg, a film producer whose credits include The Little Mermaid and The Lion King, told the New York Times. “Everything. But we own it.”
Despite a roster of bite-sized shows bolstered by the likes of Jennifer Lopez and Chrissy Teigen, Quibi dropped off of the list of top 50 most downloaded free iPhone apps in the U.S. a week after it went live.
Certainly, launching a product in the middle of coronavirus is no easy feat—especially not one that was designed for on-the-go consumers. But blaming it solely on the coronavirus rings hollow for an online-only business when customers desperate for entertainment are flocking to every other streaming service, such as Netflix, Amazon Prime Video, and YouTube.
KKR bets on beauty: Nail polish and makeup can become a form of therapy in recessions, and the beauty industry at large held up better than other industries during past downturns. French cosmetics giant L’Oréal famously posted higher revenues in 2008 as consumers looked for cheap ways to feel good about themselves. In the middle of the coronavirus, though, nail salons and hair stylists are closed for business, few people appear to be putting on makeup while working from home, and early signs show the industry is taking a hit.
Still, buyout giant KKR, with experience handling the likes of Unilever, is investing in troubled and debt-laden beauty giant Coty. KKR will invest an initial $750 million in the mass market-focused company via a sale of convertible preferred shares, and plans to acquire 60% of the company’s professional beauty and retail hair operations (Wella, Clairol, OPI and ghd brands) in a deal that values the carveout at $4.3 billion. Coty expects to gain cash proceeds of $3 billion from the divestment.
Remember Webvan? The rapid rise and fall of grocery delivery startup Webvan is often cited as a poster child for the headiness of the dot-com bubble. The company raised $1.2 billion fast from the likes of Sequoia, Benchmark, and SoftBank, and then went bankrupt after four years.
Now, as grocery delivery takes off amid the pandemic, Webvan founder Louis Borders is looking to Silicon Valley once again to fund his newest startup, focusing on where Webvan had failed two decades earlier. Borders tells Term Sheet that Home Delivery Services (HDS Global), founded in 2012, is looking to raise $25 million in Series A funding from “top tier” venture capital firms.
HDS, a warehouse automation startup that counts Ingram Micro and Toyota among its current investors, plans to use that capital to build out its first fulfillment center in San Francisco with an eye toward making deliveries to customers sometime next year. It plans to start with groceries and general merchandise first.
HDS is moving into a crowded market, with the likes of Amazon and Instacart all part of the pie—but Borders believes the industry is nascent, and that he can differentiate HDS enough by using proprietary software and robots to pack and move products across the warehouse (compared to Instacart, which has human shoppers), while using in-house delivery people (like Amazon Fresh does). The robotics, according to the company, “removes all human hands from the fulfillment process.”
A high tide doesn’t lift all boats though, as Borders knows well. He says about Webvan’s failures: “They moved too fast and they moved to open up 20 plus locations in one year when they should have opened two or three. Premature scaling is the number-one reason startups fail.”
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