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In conversation with European B2B seed VC La Famiglia

Earlier this month, La Famiglia, a Berlin-based VC firm that invests in seed-stage European B2B tech startups, disclosed that it raised a second fund totaling €50 million, up from its debut fund of €35 million in 2017.

The firm writes first checks of up to €1.5 million in European startups that use technology to address a significant need within an industry. It’s backed 37 startups to date (including Forto, Arculus and Graphy) and seeks to position itself based on its industry network, many of whom are LPs.

La Famiglia’s investors include the Mittal, Pictet, Oetker, Hymer and Swarovski families, industry leaders Voith and Franke, as well as the families behind conglomerates such as Hapag-Lloyd, Solvay, Adidas and Valentino. In addition, the likes of Niklas Zennström (Skype, Atomico), Zoopla’s Alex Chesterman and Personio’s Hanno Renner are also LPs.

Meanwhile, the firm describes itself as “female-led,” with founding partner Dr. Jeannette zu Fürstenberg and partner Judith Dada at the helm.

With the ink only just dry on the new fund, I put questions to the pair to get more detail on La Famiglia’s investment thesis and what it looks for in founders. We also discussed how the firm taps its “old economy” network, the future of industry 4.0 and what La Famiglia is doing — if anything — to ensure it backs diverse founders.

TechCrunch: You describe La Famiglia as B2B-focused, writing first checks of up to €1.5 million in European startups using technology to address a significant need within an industry. In particular, you cite verticals such as logistics and supply chain, the industrial space, and insurance, while also referencing sustainability and the future of work.

Can you elaborate a bit more on the fund’s remit and what you look for in founders and startups at such an early stage?

Jeannette zu Fürstenberg: Our ambition is to capture the fundamental shift in value creation across the largest sectors of our European economy, which are either being disrupted or enabled by digital technologies. We believe that opportunities in fields such as manufacturing or logistics will be shaped by a deep process understanding of these industries, which is the key differentiator in creating successful outcomes and a strength that European entrepreneurs can leverage.

We look for visionary founders who see a new future, where others only see fragments, with grit to push through adversity and a creative force to shape the world into being.

Judith Dada: Picking up a lot of signals from various expert sources in our network informs the opportunity landscape we see and allows us to invest with a strong sense of market timing. Next to verticals like insurance or industrial manufacturing, we also invest into companies tackling more horizontal opportunities, such as sustainability in its vast importance across industries, as well as new ways that our work is being transformed, for workers of all types. We look for opportunities across a spectrum of technological trends, but are particularly focused on the application potential of ML and AI.

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What does accountability look like in 2020?

“What happens after a company gets called out?” he asked over the phone. “Do you know what happens to the people in-house that come forward?”

I didn’t.

A Black male engineer at a fashion tech company who wished to remain anonymous was telling me how he’d been passed over for promotions white counterparts later received after they’d pursued risky and unsuccessful projects. At one point, he said management tasked him with doing recon on a superior who made disparaging comments about women because his subordinates were uncomfortable reporting it directly to HR.

When human resources eventually took up the matter, the engineer said his participation was used against him.

More recently, his company brought furloughed employees back and managers promoted a younger, white subordinate over him. When he asked about the move, his direct supervisor said he was too aggressive and needed to be more of a role model to be considered in the future.

In the absence of industry leadership, there’s no blueprint to remedy institutional problems like these. The lack of substantial progress toward true representation, diversity and inclusion across several industries illustrates what hasn’t worked.

Audrey Gelman, former CEO of women-focused co-working/community space The Wing, stepped down in June following a virtual employee walkout. Three months earlier, a New York Times exposé interviewed 26 former and current employees there who described systemic discrimination and mistreatment. At the time, about 40% of its executive staff consisted of women of color, the article reported.

Within days, Refinery29’s EIC Christene Barberich also resigned after allegations of racism, bullying and leadership abuses surfaced with hashtag #BlackatR29.

In December 2019, The Verge reported allegations of a toxic work environment at Away under CEO Steph Korey. After a series of updates and corrections in reporting, it seemed she would be stepping away from her role or accelerating an existing plan for a new CEO to take over. But the following month, she returned to the company as co-CEO, sharing the statement: “Frankly, we let some inaccurate reporting influence the timeline of a transition plan that we had.”

Last month, after Korey posted a series of Instagram stories that negatively characterized her media coverage, the company again announced she would step down.

Bon Appétit former editor-in-chief Adam Rapaport resigned his position the same month after news broke that the cooking brand didn’t prioritize representation in its content or hiring, failed to pay women of color equally and freelance writer Tammie Teclemariam shared a 2013 photo of Rappaport in brown face.

In a public apology, staffs of Bon Appétit and Epicurious acknowledged that they had “been complicit with a culture we don’t agree with and are committed to change.”

Removing one problematic employee doesn’t upend company culture or help someone who’s been denied an opportunity. But with so much at stake when it comes to employing Instagram-ready branding, the lane is wide open for companies to meet the moment when it comes to doing the right thing.

A 2017 report by the Ascend Foundation found few Asian, Black and Latinx people were represented in leadership pipelines, and at that point, the numbers were actually getting worse. Seemingly, in an effort for transparency and accountability to do better, 17 tech companies shared diversity statistics and their plans to improve with Business Insider in June 2020. The numbers were staggering, especially for an initiative supposedly prioritized industry-wide in 2014:

Underrepresented minorities like Black and Latinx people still only make up single-digit percentages of the workforce at many major tech companies. When you look at the leadership statistics, the numbers are even bleaker.

While tech’s shortcomings show up clearly in a longstanding lack of diversity, companies in other industries polished their brands sufficiently to skate by — until COVID-19 and the call for racial justice after George Floyd’s murder called for lasting change.

In June, Adidas employees protested outside the company’s U.S. headquarters in Portland, Oregon and shared stories about internal racism. Just a year ago, The New York Times interviewed current and former employees about “the company’s predominantly white leadership struggling with issues of race and discrimination.”

In 2000, an Adidas employee filed a federal discrimination suit alleging that his supervisor called him a “monkey” and described his output as “monkey work.” When spokesperson Kanye West said in 2018 that he believed slavery was a choice, CEO Kasper Rorsted discussed his positive financial impact on the brand and avoided commenting on West’s statement.

In response to the internal turmoil at Adidas, the brand originally pledged to invest $20 million into Black communities in the U.S. over the next four years, increasing it to $120 million and releasing an outline of what they plan to do internally, Footwear News reported.

On June 30, Karen Parkin stepped down from her role as Adidas’ global head of HR in mutual agreement with the brand. In an all-employee meeting in August 2019, she reportedly described concerns about racism as “noise” that only Americans deal with. She’d been with the brand for 23 years.

Routinely protecting employees perceived as racist, misogynistic or abusive is bad for business. According to a 2017 “tech leavers” study conducted by the Kapor Center, employee turnover and its associated costs set the tech industry back $16 billion.

POC experience-centered social and wellness club Ethel’s Club invested into its community’s well-being and has not only managed to stay open (virtually) through the COVID-19 pandemic, it has managed to grow. Meanwhile, The Wing lost 95% of its business.

So, what really happens after the companies are called out? Often, the bare minimum. While the perpetrators of the injustice may endure backlash, abusers in corporate structures are often shifted into other roles.

Tiffany Wines, a former social media and editorial staffer at media/entertainment company Complex, posted an open letter to Twitter on June 19 alleging that Black women at the outlet were mistreated, sharing a story in which she claimed to have ingested marijuana brownies left in an office that was billed as a drug-free environment. Wines said she blacked out and accused superiors of covering up the incident after she reported it.

Her decision to speak up prompted other former employees to share stories alleging misogyny, racism, sexual assault and protection of abusers. One anonymous editor said she was asked if she would be comfortable with a workplace that had a “locker room culture” during a 2010 interview. (She did not end up working there.)

Complex Media Group put out a statement four days later on its corporate Twitter account, which had approximately 100 followers — as opposed to its main account, which has 2.3 million followers.

“We believe Complex Networks is a great place to work, but it is by no means perfect,” read the statement. “It’s our passion for our brands, communities, colleagues, and the belief that a safe and inclusive workplace should be the expectation for everyone.” It went on to state that they’ve taken immediate action, but it’s unclear if anyone has been terminated. [Complex is co-owned by Verizon Media, TechCrunch’s parent company.]

Members of the fashion community have formed multiple groups to combat systemic racism, establish accountability and advance Black people in the industry.

Set to launch in July 2020, The Black In Fashion Council, founded by Teen Vogue editor-in-chief Lindsay Peoples Wagner and fashion publicist Sandrine Charles, works to advance Black individuals in fashion and beauty.

The Kelly Initiative is comprised of 250 Black fashion professionals hoping to blaze equitable inroads, and they’ve publicly addressed the Council of Fashion Designers of America in a letter accusing them of “exploitative cultures of prejudice, tokenism and employment discrimination to thrive.”

Co-founders of True To Size, Jazerai Allen-Lord and Mazin Melegy, an extension of the New York-based branding agency Crush & Lovely, started offering their Check The Fit solutions to the brands they were working with in 2019. The initiative is an audit process created to align in-house teams and ensure sufficient representation is in place for brands’ storytelling.

Check The Fit determines who the consumer is, what the internal team’s history is with that demographic and the message they’re trying to communicate to them, and how the team engage’s with that subject matter in everyday life and in the office. Melegy says, “that look inward is a step that is overlooked almost everywhere.”

“At most companies, we’ve seen a lack of coherence within the organization, because each department’s director is approaching the problem from a siloed perspective. We were able to bring 15 leaders across departments together, distill through a list of concerns, find points of leverage and agree on a common goal. It was noted that it was the first time they were able to feel unified in their mission and felt prepared to move forward,” Lord says of their work with Reebok last year.

Brooklyn-based retailer Aurora James established the 15 Percent Pledge campaign, which urges retailers to have merchandise that reflects today’s demographics: 15% of the population should represent 15% of the shelves.

During the melee that transpired largely on Twitter and Instagram only to attempt to be reconciled in boardrooms, one Condé Nast employee and ally has been suspended. On June 12, Bon Appétit video editor Matt Hunziker tweeted, “Why would we hire someone who’s not racist when we could simply [checks industry handbook] uhh hire a racist and provide them with anti-racism training…” As his colleagues shared an outpouring of support online, a Condé Nast representative said in a statement, “There have been many concerns raised about Matt that the company is obligated to investigate and he has been suspended until we reach a resolution.”

Simply reading through accusers’ first-person accounts, it often seems like these stories end up on public forums because little to nothing is done in favor of the people who step forward. The protection has consistently been of the company.

The Black engineer I spoke to escalated his concerns to his company’s CEO and said the executive was unaware of the allegations and seemed deeply concerned.

Seeing someone who seemed genuinely invested in doing the right thing “obviously, means a lot,” he said.

“But at the same time, I’m still really concerned knowing the broader environment of the company, and it’s never just one person.”

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FIVE YEARS OF WORKING WITH PARLEY TO END PLASTIC WASTE

Today marks the 5th anniversary of our partnership with Parley.

Five years since our joint commitment to bring change to the industry and fight plastic waste, producing more than 30 million pairs of shoes using Parley Ocean Plastic. 

We said here is a company that has influence and that combines performance, fashion, style, and youth culture, together we could show that brands don’t have to be destructive.  adidas decided to implement our strategy Parley AIR. Avoid. Intercept. Redesign. And make it the core of their company.”  ~ Cyrill Gutsch, CEO and founder of Parley for the Oceans. 

And so, during the 2015 Parley ‘Oceans. Climate. Life.’ event at the United Nations in New York, we announced our partnership to create change together.

We are not just focused on changing how we do business; we are dedicated to changing how our industry does business” ~ James Carnes, adidas VP Brand Strategy.

Moving forward, we will continue working together with Parley on developing, testing and implementing new materials to replace plastic for good. We have joined the Parley Institute for Material Science as a founding Partner; the Institute identifies, evaluates and funds material replacements for plastic and other harmful, toxic or exploitative materials.

The next step for us, in partnership with adidas, is to develop a completely new generation of materials to see all these harmful substances – that are destroying our planet, that are destroying our future – go. You can expect from us to come up with new fabrics and technologies that build on what we see in nature. Technologies that have been on this planet way before we arrived as a species.

The chapter of the new, the next, high tech in materials has just begun and we’re going to surprise you with a lot of new things in the next years to come.” ~ Cyrill. 

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WHAT IF A SHOE COULD DECREASE YOUR CARBON FOOTPRINT?

We have always believed in the power and positive impact of coming together as one team. These past months have reaffirmed that.

As we look ahead to what comes next, we have not lost sight of reimagining what’s possible for all of us, as we remain committed to tackling hard-hitting issues head-on – for all of our teammates and our planet.

The stat that has us doing more than just talking is: the footwear industry emits 700M metric tons of carbon dioxide, every year.That’s equivalent to 80,775,444 homes’ energy use for one year.

Taken to a personal level, that translates into a single pair of running shoe made of synthetic materials having a carbon footprint of somewhere between 11.3 and 16.7 kg CO2.

What if we reduced those numbers to zero?

What if by simply choosing the right shoe you could decrease your carbon footprint?

These are not questions that one person or one company can or should answer alone. And so, we’re teaming up with Allbirds, as we seek answers on our joint mission to create a sports-performance shoe with the lowest carbon emissions.

Together we will explore innovations that span everything from manufacturing and supply chain to transportation methods as we aim to eliminate carbon emissions, all while creating a shoe that meets the highest of performance standards – our own. The entire process will be analyzed by both of our life cycle assessment tools, ensuring for double the accountability.

This is a start, but to build the future we must keep talking, and keep pushing forward. Some of the world’s most important conversations are still being had separately, and now more than ever we’re ready to have them together. 

To find out more about adidas’ End Plastic Waste initiative, visit www.adidas.com/sustainability. To learn more about Allbirds’s “Tread Lighter” program and the company’s carbon reduction initiatives, visit www.allbirds.com/sustainability 

1 Quantis International (2018) Measuring Fashion: Environmental Impact of the Global Apparel and Footwear Industries Study.  Retrieved from https://quantis-intl.com/wp-content/uploads/2018/03/measuringfashion_globalimpactstudy_full-report_quantis_cwf_2018a.pdf 

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As fashion has its metaverse moment, one app looks to bridge real and virtual worlds for sneakerheads

Fashion is having its moment in the metaverse.

A riot of luxury labels, music, and games are vying for attention in the virtual world. And as physical events and the entertainment industry that depends on them shuts down, virtual things have come to epitomize the popular culture of the pandemic.

It’s creating an environment where imagination and technical ability, not wealth, are the only barriers to accumulating the status symbols that only money and fame could buy.

Whether it’s famous designers like Marc Jacobs, Sandy Liang, or Valentino dropping styles in Nintendo’s breakout hit, Animal Crossing: New Horizons; HypeBae’s plans to host a fashion show later this month in the game; or various crossovers between Epic Games’ Fortnite and brands like Supreme (which pre-date the pandemic), fashion is tapping into gaming culture to maintain its relevance.

One entrepreneur who’s spent time on both sides of the business as a startup founder and an employee for one of the biggest brands in athletic wear has launched a new app to try build a bridge between the physical and virtual fashion worlds.

Its goal is to give hypebeasts a chance to collect virtual versions of their physical objects of desire and win points to maybe buy the gear they crave, while also providing a showcase where brands can discover new design talent to make the next generation of cult collaborations and launch careers.

Aglet’s Phase 1

The app, called Aglet, was created by Ryan Mullins, the former head of digital innovation strategy for Adidas, and it’s offering a way to collect virtual versions of limited edition sneakers and, eventually, design tools so all the would-be Virgil Ablohs and Kanye Wests of the world can make their own shoes for the metaverse.

When TechCrunch spoke with Mullins last month, he was still stuck in Germany. His plans for the company’s launch, along with his own planned relocation to Los Angeles, had changed dramatically since travel was put on hold and nations entered lockdown to stop the spread of COVID-19.

Initially, the app was intended to be a Pokemon Go for sneakerheads. Limited edition “drops” of virtual sneakers would happen at locations around a city and players could go to those spots and add the virtual sneakers to their collection. Players earned points for traveling to various spots, and those points could be redeemed for in-app purchases or discounts at stores.

We’re converting your physical activity into a virtual currency that you can spend in stores to buy new brands,” Mulins said. “Brands can have challenges and you have to complete two or three challenges in your city as you compete on that challenge the winner will get prizes.”

Aglet determines how many points a player earns based on the virtual shoes they choose to wear on their expeditions. The app offers a range of virtual sneakers from Air Force 1s to Yeezys and the more expensive or rare the shoe, the more points a player earns for “stepping out” in it. Over time, shoes will wear out and need to replaced — ideally driving more stickiness for the app.

Currency for in-app purchases can be bought for anywhere from $1 (for 5 “Aglets”) to $80 (for 1,000 “Aglets”). As players collect shoes they can display them on their in-app virtual shelves and potentially trade them with other players.

When the lockdowns and shelter-in-place orders came through, Mullins and his designers quickly shifted to create the “pandemic mode” for the game, where users can go anywhere on a map and simulate the game.

“Our plan was to have an LA specific release and do a competition, but that was obviously thrown off,” Mullins said.

The app has antecedents like Nike’s SNKRS, which offered limited edition drops to users and geo-located places where folks could find shoes from its various collaborations, as Input noted when it covered Aglet’s April launch.

While Mullins’ vision for Aglet’s current incarnation is an interesting attempt to weave the threads of gaming and sneaker culture into a new kind of augmented reality-enabled shopping experience, there’s a step beyond the game universes that Mullins wants to create.

Image Credits: Adidas (opens in a new window)

The future of fashion discovery could be in the metaverse

“My proudest initiative [at Adidas] was one called MakerLab,” said Mullins.

MakerLab linked Adidas up with young, up-and-coming designers and let them create limited edition designs for the shoe company based on one of its classic shoe silhouettes. Mullins thinks that those types of collaborations point the way to a potential future for the industry that could be incredibly compelling.

“The real vision for me is that I believe that the next Nike is an inverted Nike,” Mullins said. “I think what’s going to happen is that you’re going to have young kids on Roblox designing stuff in the virtual environments and it’ll pop there and you’ll have Nike or Adidas manufacture it.”

From that perspective, the Aglet app is more of a Trojan Horse for the big idea that Mullins wants to pursue. That’s to create a design studio to showcase the best virtual designs and bring them to the real world.

Mullins calls it the “Smart Aglet Sneaker Studio”. “[It’s] where you can design your own sneakers in the standard design style and we’ll put those in the game. We’ll let you design your own hoodies and then [Aglet] does become a YouTube for fashion design.”

The YouTube example comes from the starmaking power the platform has enabled for everyone from makeup artists to musicians like Justin Bieber, who was discovered on the social media streaming service.

“I want to build a virtual design platform where kids can build their own brands for virtual fashion brands and put them into this game environment that I’m building in the first phase,” said Mullins. “Once Bieber was discovered, YouTube meant he was being able to access an entire infrastructure to become a star. What Nike and Adidas are doing is something similar where they’re finding this talent out there and giving that designer access to their infrastructure and maybe could jumpstart a young kid’s career.”

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FROM THE SIDELINES TO THE FRONTLINES, ‘THANK YOU’

Dr. Achanta pulls up to Washington Hospital, taking a deep breath before putting on his face shield, gearing up just like one of our sport heroes would before a game, except this ‘game’ is not a game at all. 

The face shield that Dr. Achanta now wears is one of the more than 200,000 shields that we co-created with Carbon and their global network to support our healthcare workers, as we shifted production of 3D printed midsoles to produce personal protective equipment to aid the Covid-19 relief efforts. 

Dr. Achanta is one of the many healthcare professionals who guided the development of our medical safety equipment, providing invaluable feedback to help the team understand the specific needs of the medical community, a community that was already facing their fair share of obstacles. 

The hospital staff knew this was not a sprint, but rather a marathon and that they’d be in it for the long haul; reminded of the very reason they became healthcare professionals in the first place – to change lives. 

Whether it be reimagining our craft or a simple show of support, we all play our individual parts, but it’s only when we bring those pieces together that we make the biggest change. 

As many of us were sidelined by Covid-19, we saw the real heroes jump to action – our essential healthcare heroes. 

We thank those who day-in and day-out are keeping us safe. 

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