June SMB News Round-Up
Brexit Not Impacting SMB Players
From June 23rd to June 27th following the stress of Brexit, the SurePath SMB Index fell from 107.5 to 100.2% based on peg at beginning of the 2016 trading year. With the rebound in stocks following a few tense days of market insecurity, the index is now at 104.4%. Comparatively, the NASDAQ is still lagging at 95.7%.
Sage, the one company in the SurePath SMB Index that is traded on the LSE, fell 8.3% from market close on June 23rd from 627 to 575 GBX on June 27, but have since rebounded back to 618 GBX at market open June 29th.
LendingClub becomes LayoffClub
Following the debacle leading up to and following the departure of CEO Renaud Laplanche, LendingClub has been in limbo. In May of this year, LendingClub ousted Laplanche following a sale of $22M near-prime loans despite clear instructions from the investor against it. Since then, the stock has reached an all time low of $3.51 on May 13th, a shock compared to the all time high of $25.74 in Dec 2014, shortly following their IPO. Since then, the stock has continuously dropped, plunging 70% in the past year.
LendingClub has announced that acting CEO, Scott Sanborn, is now CEO. In addition, they announced layoffs for 1 in 8 current employees. In the annual shareholder meeting, Sanborn tried hard to assuage the fear from analysts and investors with the overarching goal of redefining LendingClub as a company with integrity and compliance. Following the update on June 28th, shares bounced back 7.2%, but it’s still a long way to go back to the glory days.
Is Groupon’s Icarus Able To Take Flight Again?
Needless to say, Groupon IPO-ed to much fanfare and excitement in 2012, and since then has continuously faltered with slowing growth (down from 415% in 2011 to just 2.5% last year). With even Amazon shutting down its local deals site (Amazon Local), it’s natural to wonder whether or not the business model will work in the long run, and whether Groupon will ever return to its heydays.
Early this quarter, Groupon announced a $250M investment from Atairos — a private investment firm with deep connections with Comcast. The fund has over $4B USD in capital committed from Comcast and is headed by former Comcast CFO, Michael Angelakis. The investment from Atairos links Groupon with Comcast, with the aim to utilize its local expertise to help Comcast’s local advertising network (Comcast Spotlight).
The daily deal company has been shutting down many cities internationally and has been focused on spending in North America to grow its core markets. Groupon announced it was selling off its Indonesian business to KFit — a one year old start up with over $15M USD raised to date from VCs including Sequoia and 500 startups. The deal will result in Groupon Indonesia becoming a wholly owned subsidiary of KFit, while Groupon Inc will also become a “strategic shareholder” of KFit.
Web.com key leadership changes following Yodle acquisition
On June 13th, Web.com announced major organizational structure changes following its Yodle acquisition. Senior executives from Yodle including Steve Power (President of Yodle), Dafna Sarnoff (SVP of Marketing at Yodle), and Angela Dunham (SVP of Program and Performance Management at Yodle), have all transitioned into senior management roles within Web.com. Furthermore, Jason Teichman, the COO, will be leaving the company starting Q3 this year to pursue other opportunities, and there is no word yet on his replacement.
Wix.com introducing AI web Designer
On June 7th, Wix launched Wix ADI (Artificial Design Intelligence), an artificial intelligence solution to website creation. The concept is based on the idea that through leveraging the 86 million users that have already used Wix to customize their own site, Wix is able to generate an AI algorithm to facilitate website creation. The Wix ADI is supposed to develop the website completely for the user, simply by having the user answer questions and curating content to populate the website.
The concept behind AI-designed websites is not new. In 2014, the Grid launched to much fanfare by the company Rituwall. The Grid is an AI platform that analyzes your content and then automates the design. Despite being founded in 2010, and having raised a total of $7.3M, the Grid is still in closed beta. At $96 USD a month, it’ll be interesting to see how (when it finally launches) the Grid will compete with Wix’s ADI, which is free to use.
Another contender in this advanced website builder segment is Pagecloud — a Ottawa based website-creation platform that wants to take on Wordpress. While Pagecloud does not throw itself into the fray with terms like artificial intelligence, it aims to be the most advanced publishing platform. This area of web publishing is starting to get crowded, with the aforementioned companies plus Instapages, Squarespace, Weebly, Wordpress, Hubspot, and more marketing tech companies coming into this low-barrier segment.
Xero Partners with Wells Fargo
On June 8th, Wells Fargo announced that it will integrate its small business customer data with Xero. While Xero already has two-way integration with banks like National Australia Bank, as one of the largest banks internationally, Wells Fargo is opening the floodgates for larger financial institutions to share data with fintech startups. Xero is also working with RBS, HSBC and Barclays to create two-way data sharing.
While Xero has always had access to its customers’ banking data through a third party data aggregator service (Yodlee), the two-way communication means that not only is Xero getting up-to-date data directly from the source, Wells Fargo is also receiving feedback and data from Xero.
This will allow large financial institutions to improve the banking experience for the business accounts that utilize third-party apps to track their expenses, accounting and payroll. This will not only streamline workflows and processes for users, but also allow financial institutions to be the first to offer their customers products and services. For example, banks can automatically offer bill payments, lines of credits, and other services just by scanning a company’s Xero data. It’s hard not to imagine other financial institutions jumping on board and figuring out how to integrate with third-party solutions while ensuring security.
Angie’s List Shifts Business Models
CEO Scott Durchslag introduced the “Profitable Growth Plan” at Angie’s List’s Investor Day. Essentially, the plan removes the existing paywall from which Angie’s List makes the majority of its membership revenue. Following YoY contraction of 5.8% in membership revenue in Q1 YoY down to $16.3M, Angie’s List was under pressure to change its legacy business model. This puts Angie’s List into even more direct competition with rating & review platforms like Yelp. Angie’s List is aiming to convert the entirety of its platform to a freemium model by Q3 this year.
Shopify — Now With Apple Pay
At Apple Worldwide Developers Conference (WWDC) this year, Apple announced that Apple Pay will be coming to web (finally), pitting itself up against Paypal. Shopify was the first to announce Apple Pay integration, allowing 275,000 small, medium e-commerce stores to make it easier for their users to check out on mobile.
This no-brainer partnership marks another step forward for Shopify, the leading SMB e-commerce solution, which will roll out the integration in September this year.