The New York Times - USA (2020-12-01)

THE NEW YORK TIMES BUSINESSTUESDAY, DECEMBER 1, 2020 N B3

TECHNOLOGY | AUTOMOBILES

SAN FRANCISCO — Two years ago,

fed up with stories of harassment

and discrimination in Silicon Val-

ley, a group of female venture cap-

italists formed a nonprofit called

All Raise to focus on women’s

equality.

This week, the group raised $11

million toward a target of $15 mil-

lion from backers including Piv-

otal Ventures, the investment firm

of Melinda Gates; the Reid Hoff-

man Foundation; and GGV Capi-

tal. The money will fund expan-

sion plans for the next three years,

said Pam Kostka, All Raise’s chief

executive. It previously raised $4

million in 2018.

“We’re moving as aggressively

as we can to change the ecosys-

tem,” Ms. Kostka said.

In two years, All Raise built a

network of 20,000 people across

four U.S. tech hubs. The industry

began adding more female invest-

ors, who now make up 13 percent

of the venture industry, compared

with 9 percent before. All Raise

said it aimed to help push that

number to 18 percent by 2028.

Yet many challenges remain.

Roughly two-thirds of venture

capital firms still have no female

partners. Venture capital funding

going to women entrepreneurs

stagnated over the last year at

around 12 percent. Women own

just 11 percent of founder and em-

ployee equity in start-ups, accord-

ing to a study conducted by Carta,

a financial technology start-up.

And by some measures, har-

assment has worsened, according

to a recent survey from Women

Who Tech, a nonprofit. Forty-four

percent of female founders said

they had been harassed. Two-

thirds said they had been proposi-

tioned for sex, up 9 percent from

2017, and one-third said they had

been groped, up 7 percent from

2017.

More broadly, bigger tech com-

panies, which began publishing

diversity statistics on their work

forces six years ago and have

poured millions of dollars into di-

versity efforts, are nowhere close

to gender parity and have shown

even less progress on hiring more

Black and Latino workers. This

year, the World Economic Forum

concluded that it would take wom-

en 257 years to close the employ-

ment gender gap across all indus-

tries, compared with its previous

estimate of 202 years.

“We are not going to take hun-

dreds of years of stereotyping and

systemic oppression and turn that

around overnight,” Ms. Kostka

said. “But are we making more

tangible progress? Yes.”

All Raise helps peer groups,

boot camps, and mentorship pro-

grams for female and nonbinary

investors and founders. It also

produces data reports on the

start-up industry, publishes a di-

rectory of vetted speakers and

runs a program for Black female

founders, When Founder Met

Funder. With the new money, it

plans to establish chapters in

more cities and offer more pro-

grams, which it said were “over-

subscribed.”

Ms. Kostka said the demand for

All Raise’s programs showed that

the tech industry’s lack of diversi-

ty was not caused by a lack of tal-

ent or interest from women and

minorities. “We don’t have a pipe-

line problem,” she said. “We have

a talent network problem.”

At a summit in October, 700 of

its members gathered online for a

virtual networking event. The

mood was celebratory as Ms.

Kostka rattled off success stories

from women in venture capital,

and inspirational videos showed

sound bites from Oprah Winfrey.

But there was also a familiar

frustration, as two executives who

recently sued their employers,

claiming discrimination and re-

taliation, discussed the cost of

speaking up and the slow pace of

change.

“People in power do not want to

give up power,” said Emily Kra-

mer, an executive who sued Carta

in July. She urged people with the

privilege or ability to speak out

against the industry’s problems.

“We are not making change fast

enough,” she said.

Aileen Lee, a venture capitalist

who co-founded All Raise, said the

tech industry had a long way to go

but added that she had noticed en-

couraging changes.

Five years ago, she said, “you

risked being a pariah in tech by

pointing out the serious deficien-

cies and inequities in our system.”

But now, she said, “they can’t look

at the data and think, ‘Oh, yeah,

everything is fine.’ ”

$11 Million

Is Raised

For Equality

In Tech Sector

By ERIN GRIFFITH

Progress is slow,

with women vastly

underrepresented.

SAN FRANCISCO — Facebook is fac-
ing the glare of regulators for buy-
ing up promising start-ups and
neutralizing them as a competi-
tive threat. But that hasn’t
stopped the social network from
shelling out for more companies.
Facebook announced on Mon-
day that it planned to acquire Kus-
tomer, a customer relationship
management start-up, to help it
build its e-commerce business.
The deal values Kustomer at close
to $1 billion, said two people with
knowledge of the talks. Kustomer,
which is based in New York, had
raised roughly $170 million in ven-
ture funding, according to data
compiled by Crunchbase.
The deal, which is subject to
regulatory approval, could pro-
vide businesses and customers
more support for interactions that
occur on Facebook and its other
apps, such as WhatsApp, Insta-
gram and Facebook Messenger.
More than 175 million people con-
tact businesses using WhatsApp,
Facebook said.
“Messaging provides a better
overall customer experience and
drives sales for businesses,” Dan
Levy and Matt Idema, executives
at Facebook and WhatsApp, said
in a company blog post.
Facebook announced the deal
even as the Federal Trade Com-
mission and dozens of states pre-
pare antitrust lawsuits against the
company for maintaining its
power through past mergers of
nascent competitors. The F.T.C.
and state attorneys general are
expected to announce plans for le-
gal action against the social net-
work within days, several people
briefed on the cases have said.
The cases are likely to focus on
how Facebook came to dominate
social media through its $1 billion
acquisition of Instagram in 2012
and its $18 billion purchase of

WhatsApp in 2014, they said. The

companies were not directly com-

peting with Facebook but have

since become highly popular apps

with billions of users. A Kustomer

deal, which would follow a $400

million acquisition of the ani-

mated GIF maker Giphy this year,

could heighten regulatory scru-

tiny of Facebook.

A Facebook spokesman said

plenty of competition remained in

technology, especially as Kus-

tomer is not a social networking

app and is adjacent to Facebook’s

main business.

“This deal is about providing

more choices and better products

for consumers,” the spokesman

said in a statement. “The key to

Facebook’s success has always

been innovation, with M&A being

just a part of our overall business

strategy, and we will continue to

demonstrate to regulators that

competition in the technology sec-

tor is vibrant.”

Founded in 2015, Kustomer

built a business by simplifying the

back-end software used by many

Fortune 500 companies to serve

customers. The start-up has

presented itself as an alternative

to other customer service soft-

ware companies like Zendesk and

Oracle. Kustomer’s investors in-

clude Battery Ventures, Canaan

Partners and Redpoint Ventures.

Facebook said Kustomer’s soft-

ware could help support millions

of business conversations, mak-

ing it easier for customer support

representatives to view and serv-

ice the interactions.

In particular, Facebook’s

WhatsApp messaging app, which

has more than one billion users,

has expanded to business mes-

saging services. In recent months,

WhatsApp built a special app for

businesses as customers in Latin

America, Southeast Asia and else-

where increasingly conduct trans-

actions through messaging apps.

In India, where more people are

buying smartphones and using

WhatsApp, the messaging app

sees an opportunity to expand its

digital commerce offerings.

“People have made the shift to

messaging, with more than 100

billion messages sent per day on

WhatsApp,” Mr. Idema, who is

chief operating officer of the com-

pany, said in an interview. “And

they’re starting to use modern

channels like messaging to talk to

businesses. It’s a better experi-

ence than waiting on hold, than

not knowing if your email has

been read.”

The demand for managing dig-

ital relationships with customers

has also grown because of the co-

ronavirus pandemic. Millions of

people, having gone into quaran-

tine or sheltering at home, have

migrated to buying goods and

communicating with businesses

virtually rather than in person.

That has led to a boom in deals for

the makers of customer relation-

ship software and workplace col-

laboration tools.

“It was going to happen natu-

rally. It’s just been accelerated by

Covid,” said Brad Birnbaum, a

founder of Kustomer. “Instead of

investing in expensive storefronts

and retail locations, companies

are investing more in digital tools

and experiences.”

Salesforce, another company

that sells customer service soft-

ware, for instance, has been in

talks to acquire Slack, the work-

place productivity software

provider, said two people with

knowledge of the situation. A deal

could be announced as soon as

Tuesday, they said.

If that deal is completed, Slack

will be Salesforce’s largest acqui-

sition and among the biggest in

the software industry. Slack was

valued at more than $24 billion on

Monday. Last year Salesforce ac-

quired Tableau, a data analytics

provider, for nearly $16 billion.

Facebook to Buy Kustomer as It Faces Antitrust Glare

By MIKE ISAAC

Facebook sees the acquisition of the startup Kustomer as a way to build up its e-commerce operation.

TONY AVELAR/ASSOCIATED PRESS

Cecilia Kang and Erin Griffith contrib-

uted reporting.

investors valued Nikola at more
than they did Ford Motor, one of
the world’s largest automakers.
The new agreement gives
Nikola access to fuel-cell technol-
ogy that G.M. has developed but
never commercialized. The cells
use hydrogen to produce electrici-
ty and some experts consider
them a better way to eliminate
greenhouse-gas emissions from

heavy-duty trucks than batteries,
which weigh a lot and can take
hours to recharge.
“I suspect Nikola needed a deal
more than G.M. needed the deal,”
said David Whiston, a Morn-
ingstar analyst. “Nikola needs
fuel cells for their core business.
For G.M., one supply deal isn’t a
big deal either way.”
G.M. has plans to produce its
own electric pickup trucks, sport-
utility vehicles and cars. Earlier in
November, the company said it in-

tended to spend $27 billion on

electric vehicles over the next five

years.

Mr. Russell said Nikola had con-

cluded that the pickup it was go-

ing to make with G.M., the Badger,

was not part of its core focus. “It

was difficult to make a business

case for it. It was always some-

thing we did on the side and would

take a partner to do it.”

Nikola was founded in 2014 by

Trevor Milton, 39, a college drop-

out who previously started a secu-

rity alarm business and a com-

pany that sought to convert diesel

engines to run on natural gas be-

fore it ran into legal trouble and

was sold. He envisioned Nikola as

the trucking industry’s answer to

Tesla, the maker of luxury electric

cars and S.U.V.s.

Daimler, Toyota and other com-

panies are also working on fuel-

cell trucks, but Nikola’s plan has a

twist in that it also intends to build

a network of hydrogen fueling sta-

tions. The company’s plan to cre-

ate a full-service hydrogen truck

business was compelling to many

investors. Nikola went public ear-

lier this year through a merger

with a special purpose acquisition

company — an increasingly popu-

lar kind of venture that owns noth-

ing but a stock listing and a pile of

cash from investors hoping to ac-

quire a promising business.

Nikola shares soared when

trading began in June, helped by

Mr. Milton’s decision make a bat-

tery-powered pickup truck, after

similar moves by automakers like

Ford, G.M., Tesla and Rivian. At

the time, Nikola had no concrete

plans for making the truck, and

some analysts viewed it as only

tangentially related to its goal of

putting heavy-duty hydrogen

trucks on the road.

The September announcement

was widely interpreted as a seal of

approval from G.M. The au-

tomaker was supposed to develop

and manufacture the Badger.

But just days after the Sept. 8

partnership announcement, a

small investment firm, Hinden-

burg Research, put out a report

asserting that Nikola and Mr. Mil-

ton had greatly overstated how

much technology the company

had developed. The report said

that the company produced a vid-

eo in 2017 in which a truck was

rolled down an incline to make it

look as if the company had devel-

oped a working prototype.

Nikola called the report “false

and defamatory,” and said that the

company never claimed that the

truck was moving under its own

power. Later that month, Mr. Mil-

ton resigned.

The Justice Department and

the Securities and Exchange

Commission have begun investi-

gating the company.

Nikola has since developed two

working prototypes of its fuel-cell

truck. Five test models of a second

truck powered only by batteries

have nearly been completed, Mr.

Russell said. The battery trucks

are on track to go into production

by the end of 2021, with fuel-cell

trucks following in 2022, he added.

Weeks after the Hindenburg re-

port, G.M. said it had not closed its

deal with Nikola as planned, and

the companies continued to nego-

tiate. With Mr. Milton gone, Nikola

replaced two board members who

had been close to the founder.

The deal the companies an-

nounced on Monday was de-

scribed as “a nonbinding memo-

randum of understanding.” G.M.

also said that Nikola would have

to “pay upfront” for it to expand

capacity to produce hydrogen fuel

cells.

G.M. and Nikola also said that

they would discuss Nikola’s use of

a G.M. battery system called Ul-

tium for the fully electric trucks

the start-up plans to start pro-

ducing next year.

G.M. Scales Back Deal

With Start-Up Nikola

FROM FIRST BUSINESS PAGE

General Motors and Nikola will now

work together on hydrogen fuel cells

— but not a pickup truck.

NIKOLA MOTOR, VIA AGENCE FRANCE-PRESSE — GETTY IMAGES
News of the pact

prompted a sell-off

in Nikola’s stock.

With Broadway and theaters
across the country idle because of
the coronavirus, some actors,
producers and prop designers
have found an unlikely outlet for
their talents: a musical version of
the animated film “Ratatouille”
that is playing out in exuberant
60-second increments on TikTok.
Starting in October, thousands
of TikTok users, including many
with Broadway credits, have paid
homage to the 2007 Disney Pixar
film, about a rat who dreams of be-
coming a French chef, by creating
their own songs, dances, makeup
looks, set designs, puppets and
Playbill programs.
The result is a virtual show un-
like any on Broadway. There is no
director, no choreographer, no
stage crew. It has come together
organically on TikTok, where us-
ers have only a minute to catch
people’s attention.
In the film, Remy the rat follows
the example of a famous chef who
says that “anyone can cook.” It is
in that spirt that professionals and
amateurs alike have taken up the
“Ratatouille” musical challenge,
said Brandon Hardy, a puppet de-
signer whose Broadway credits
include “Charlie and the Choco-
late Factory” and “The Pee-Wee
Herman Show.”
“He never limited himself on his
vision,” Mr. Hardy, 30, said of
Remy. He added, “We just fell in
love with this, and we don’t want
anyone to stop us.”
The project began in August,
when Emily Jacobsen, 26, a

schoolteacher, Disney fanatic and

theater lover from Westchester

County, N.Y., read about a “Rata-

touille” ride that is scheduled to

open next year at Walt Disney

World in Florida.

As she was cleaning her apart-

ment, she started singing a song

about Remy. Adopting a high

pitch, she recorded what she de-

scribed as “a love ballad” for the

rat — “Remy, the ratatouille / The

rat of all my dreams / I praise you,

my ratatouille / May the world re-

member your name” — and

posted a video of the tune on Tik-

Tok.

Daniel Mertzlufft, 27, a New

York-based composer, orchestra-

tor and arranger, was tagged in

Ms. Jacobsen’s video. Then he

used a computer program to en-

hance her original ode to Remy,

adding a French horn, trumpets,

vocals and strings to create a big

Disney-style finale for a “Rata-

touille” musical.

Mr. Mertzlufft said he had been

inspired by the music Alan

Menken composed for “The Little

Mermaid,” “Beauty and the

Beast” and other classic animated

Disney films.

Since Mr. Mertzlufft posted his

video in mid-October, thousands

of others have shared their own

contributions to what has become

something of a virtual “Rata-

touille” musical. In the last few

days, Disney signaled that it had

been paying attention, quoting

Ms. Jacobsen’s lyrics on Insta-

gram and Twitter. It even made its

own TikTok rap at Epcot, where

the “Ratatouille” ride is being

built.

“We love when our fans engage

with our stories,” Disney said in a

statement, “and we look forward

to seeing these super fans experi-

ence the attraction when it opens

at Walt Disney World next year.”

Kevin Chamberlin, whose

Broadway acting credits include

“The Addams Family” and

“Seussical,” revisited the “Rata-

touille” movie before recording

his own contribution to the musi-

cal. It was the Chef Gusteau char-

acter, and his observation that

“anyone can cook,” that spoke to

him, he said.

A theme of the movie, Mr.

Chamberlin said, is that even the

clumsiest among us can find tal-

ent deep inside ourselves. In-

spired, Mr. Chamberlin sat down

to write while his husband rushed

out to get him a chef’s hat.

Once in costume, he sat at his

piano and sang: “Anyone can cook

/ All you have to do is look inside

yourself.”

Only the coronavirus pandemic

could have brought out a virtual

show like this, Mr. Chamberlin

said. “What’s really interesting

about all this is that, during this

pandemic, art is pushing through

because we can’t get on stages

and in front of audiences.”

Other contributors echoed that

sentiment, adding that the “Rata-

touille” musical project had given

them reason to hope during a dark

time.

“If it can bring joy to people, and

it seems like it has, then that’s the

best feeling in the world,” said

Tristan McIntyre, 22, a Los Ange-

les actor who helped choreograph

a rat dance for the show.

RJ Christian, 21, a vocal per-

formance student at New York

University, said he had been in-

spired by the movie’s acerbic food

critic, Anton Ego, for the solo he

contributed. He said he wanted to

embody Mr. Ego with “weird

chords, spicy harmony and

creepy-crawly kind of music.”

For Blake Rouse, 17, of Fort

Collins, Colo., the “Ratatouille”

project gave him an outlet after

the pandemic forced the cancella-

tion of his high school’s production

of “Newsies.”

He contributed several songs

based on scenes from the movie,

including a tango between two

chefs and a duet between Remy

and his brother.

“This is no longer a niche Tik-

Tok theater joke,” he said. “This is

kind of a thing that people care

about and are starting to keep up

with.”

The contributions go beyond

performances. Mr. Hardy, the

puppeteer, made some masks and

small puppets for the virtual show,

even using garbage to create

some of the elements.

“We’ve created something

that’s engaging to people at every

level,” he said. “People of every

age group are fascinated by this

and want to contribute to this. As

far as I’ve seen, there really hasn’t

been a show or musical in history

that’s sort of operated that way.”

And Christopher Routh, 30, of

Chatham, N.J., used boxes to cre-

ate elaborate miniature set de-

signs for the show, complete with

lighting and a Lego robotics set to

move the pieces around.

“It’s such an incredible trend on

how our community can come to-

gether like this and create a musi-

cal out of nowhere,” he said. “And

it all started with one girl.”

On TikTok, Anyone Can Make a ‘Ratatouille’ Musical. And They Are.

By CHRISTINA MORALES

Remy, the rat who dreams of

becoming a chef, in the 2007 film

“Ratatouille.” Thousands of TikTok

users have been paying homage.

WALT DISNEY PICTURES AND PIXAR

ANIMATION STUDIOS

People from all over

are posting one-

minute contributions.