Day: October 9, 2020

Brian Armstrong’s new problem: 60-plus free agents

A lot has been made of the open memo that Coinbase CEO Brian Armstrong published nearly two weekends ago, essentially barring political activism at work because he sees it as a distraction. He also made it clear that employees who disagreed with the decision — and he foresaw that some would not be happy — were free to leave.

“I recognize that our approach is not for everyone, and may be controversial. I know that many people may not agree, and some employees may resign. I also know that some of what I’ve written above will be misinterpreted, whether accidentally or on purpose. But I believe it’s the right approach for Coinbase that will set us up for success long term, and I would rather be honest and transparent about that than equivocate and work in a company that is not aligned,” he wrote.

Perhaps owing to an almost immediate backlash, Armstrong sent a separate, internal memo the next day detailing separation packages for employees who might be upset and looking for the exits. Coinbase was willing to be very generous, too, offering four months’ severance pay for those who have been at the exchange for less than three years, and paying longer-term employees six months of severance. (Worth noting: Coinbase also gives employees up to seven years to exercise their stock options.)

Whether Armstrong expected that more than 60 employees of Coinbase’s staff of 1,200 would take him up on the offer is something only he knows. As he disclosed in a follow-up post yesterday, that’s how many people had alerted the company by its October 7th deadline that they are quitting, and Coinbase expects the number to inch higher, based on a “handful” of ongoing conversations.

Either way, if I were Armstrong, I might be a little nervous about that number. Though small in the grand scheme of the company’s ambitions, that’s 60-plus people who have Coinbase on their resume, institutional knowledge about the company in their head, and potentially money in the bank, between their severance and equity.

More worrisome, they might also have a bit of an axe to grind against a company that told them it was changing the world, then changed the terms of its pact with them in the middle of an already trying time for most people.

That frustration — if it exists — could come out in potential leaks to the press, though presumably every employee had to sign a lengthy non-disparagement agreement on their way out the door.

The bigger threat is that one or numerous of these employees might now start their own crypto-related business, or else join rival companies that could use their skills. (Non-compete agreements are famously difficult to enforce in the state of California.) As crypto enthusiasts like to say, it’s still early innings when it comes to decentralized finance.

Certainly, taking on Coinbase is a very tall order at this point. Two years ago, when the company closed on $300 million in Series E funding, it did so at a post-money valuation of more than $8 billion, putting it leaps and bounds ahead of numerous other crypto exchanges.

No matter what you think of Armstrong’s new policy, there aren’t a lot of founders with the stuff to grow a company as strong and fast as he has, either.

Still, it happens all the time that people launch companies to take down other companies. It’s human nature.

Given that a number of former Coinbase employees has already raised funding for projects after leaving Coinbase, combined with so many investing dollars sloshing around out there looking to be put to use, the risk of this happening to Coinbase because of Armstrong’s memo and its aftermath may be small. But it isn’t zero.

Hong Kong logistics unicorn Lalamove unveils foray into the US

Lalamove, an on-demand logistics service active in China, Southeast Asia, and Latin America, has officially entered the U.S. seven years after launch.

As the COVID-19 pandemic keeps millions of Americans home, Hong Kong-based Lalamove believes it can seize the growing demand for delivery services in the country. It makes its debut in the Dallas Fort-Worth area, a major hub for distribution and logistics in the U.S. In days the service will launch in Chicago and Houston.

The startup was one of the first in Hong Kong to hit the $1 billion unicorn valuation mark alongside its archrival GoGoVan. Its business is multifold and highly localized, but essentially it works as an Uber for businesses and individuals that need to move goods within the city.

In China, where it’s known as Huolala (货拉拉), it primarily serves as a broker between shippers who need to send cargo and a network of truck drivers. In Southeast Asia, the business functions similarly with the addition of food delivery for restaurants, a crowded and cash-burning space. In the U.S., its fleet of sedans, SUVs and pickup trucks are available 24/7, allowing it to target customers spanning catering, retail, e-commerce, manufacturing and construction, with fees starting at $8.90.

“Delivery is essential, especially during the pandemic. But many local businesses don’t have or cannot afford in-house fleets, so we’re excited to work with businesses in the Dallas Fort-Worth area to provide same-day, on-demand delivery services to their customers,” said Blake Larson, international managing director at Lalamove and formerly co-founder of Rocket Internet’s Asia-focused e-hailing startup Easy Taxi.

Like GoGoVan, Lalamove was founded by a Hong Kong entrepreneur who was educated in the U.S. Both companies have scored fundings from heavyweight institutions from China and elsewhere.

Lalamove’s investors included Hillhouse Capital, Sequoia Capital China and Xiaomi founder’s Shunwei Capital. Through a merger with China’s 58 Suyun, GoGoVan counts Tencent, Alibaba, KKR and New Horizon Capital amongst its backers.

The Hong Kong startup’s global expansion comes at a time when TikTok stumbles in the U.S. due to its links to China. In the logistics startup’s case, a Chinese team operates the Chinese division Huolala, while separate international teams manage the overseas segments of Lalamove, TechCrunch understands. The core of TikTok’s challenge in the U.S. is the video app’s dependence on its Chinese parent ByteDance’s technological capabilities.

To date, Lalamove has verified and onboarded more than 500 partner drivers in Dallas Fort-Worth, with plans to add another 500 in the area by the end of this year. It’s also hiring for its regional operational office at a time when the U.S. is struck by widespread virus-induced layoffs, furloughs and slowdown in hiring.

Lalamove claims it has to date matched more than 7 million users with a pool of over 700,000 delivery partners in 22 markets around the world.

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