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XAlto Launches in LA as the 'Safer' Ride-Hailing Service
Francesca Billington is a freelance reporter. Prior to that, she was a general assignment reporter for dot.LA and has also reported for KCRW, the Santa Monica Daily Press and local publications in New Jersey. She graduated from Princeton in 2019 with a degree in anthropology.
The Texas ride-hailing startup Alto hopes to give tech giants like Uber and Lyft some stiff competition in Southern California with an employee model and a slew of safety measures — from masks to HEPA cabin air filters.
The company launched its app in Los Angeles on Tuesday at a time when the pandemic has hurt ride-hailing services' bottom lines and employee relations remain frayed by a spat over working conditions.
The move into L.A. marks Alto's first expansion outside of Texas, where it launched in 2016. The venture-backed company, which has so far raised $20.5 million, announced plans to begin operations in California last fall but the team rescheduled when coronavirus cases began to rise again.
"We're hoping people don't use us to go out to dinner or events but we know that some travel is essential," said co-founder and CEO Will Coleman. "We want to be there to serve those use cases in the safest way possible."
Alto owns its own fleet of clean SUVs and runs extensive background checks on new drivers. And, unlike its competitors, it classifies its drivers as W-2 employees, dodging the ongoing battle waged by Uber and Lyft over worker classification. The two companies poured millions into Proposition 22, which passed in November and exempted them from a state law that would require them to treat drivers as employees rather than contractors.
Beginning Tuesday, Alto will be available to consumers hailing on-demand rides in Santa Monica, Venice, Marina del Rey and West Hollywood. Users outside these areas can pre-book rides and the company hopes to expand services across the city this year.
To offset the costs that come with hiring employees, Alto charges more for rides — requesting a trip through Alto costs about 30% to 40% more than an UberX. Coleman describes his service as "affordable luxury" that promises consistency, like the Starbucks for ridesharing.
But launching a new transportation service could pose some challenges.
Ride-hailing services are bleeding revenue. Uber reported an 18% decline in the third quarter of 2020. Meanwhile, some drivers are hesitant to work. Rideshare Drivers United, a group that opposed Prop 22, found that only 20% of its members are still driving.
"Many of us are doing gigs that pose a little less risk such as food delivery," said Nicole Moore, an organizer with Rideshare Drivers United. "Drivers are at pretty high risk because the people in their cars are either essential workers or people not taking the health directives seriously."
Coleman said the company hasn't struggled to hire yet and it's onboarded 25 to 30 drivers in the city.
"We definitely have slowed down the progression of our launch," he said. "We know there are fewer use cases. Clearly, there's going to be less movement than if restaurants were open, for example."
As L.A. County continues to battle a surge in new cases and hospitalizations, Alto wants to position itself as the "safer" ridesharing option — for both drivers and consumers.
Plexiglass barriers and air filters are installed in each Alto car and drivers disinfect the vehicle between rides. The company also provides free PPE to drivers and riders.
Moore said many drivers she knows are paying for masks and disinfectant out of pocket. Some choose not to clean their cars between rides because they aren't paid for that time. She said Alto's selling points would be a "huge step up for drivers and, I would expect, passengers as well."
Lyft said it has a health and safety program in place for drivers.
Alto currently employs 200 drivers in Texas. Many previously drove for traditional rideshare services — taxi and limo companies — while others came from the hospitality and retail industries. As restrictions ease in L.A., Coleman is prepared to onboard more employees.
He also has plans to close a new round of fundraising in the first quarter. By the end of 2021, he wants to launch Alto in four to six new cities, including one or two in California.
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Francesca Billington is a freelance reporter. Prior to that, she was a general assignment reporter for dot.LA and has also reported for KCRW, the Santa Monica Daily Press and local publications in New Jersey. She graduated from Princeton in 2019 with a degree in anthropology.
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Activision Buys Game Studio Proletariat To Expand ‘World of Warcraft’ Staff
Samson Amore is a reporter for dot.LA. He previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
Activision Blizzard intends to acquire Proletariat, a Boston-based game studio that developed the wizard-themed battle royale game “Spellbreak.”
VentureBeat first reported that the Santa Monica-based publisher was exploring a purchase, noting its ongoing mission to expand the staff working on Blizzard’s hit massively multiplayer online game “World of Warcraft,” which launched in 2004.
Proletariat’s team of roughly 100 people will be merged into Activision’s “World of Warcraft” team to work on its upcoming expansion game. Though there’s no release date as yet for the title, “World of Warcraft: Dragonflight” is expected to debut before the end of this year.
Activision did not immediately return a request for comment. Financial terms of the deal were not available.
This Proletariat deal is Activision's latest push to consolidate its family tree by folding its subsidiary companies in under the Blizzard banner. More than 15 years after it bought out New York-based game developer Vicarious Visions, Activision merged the business into its own last year, ensuring that the studio wouldn’t work on anything but Blizzard titles.
The deal could also have implications for workers at Activision who have looked to unionize. One subsidiary of Activision, Wisconsin-based Raven Software, cast a majority vote to establish its Game Workers Alliance—backed by the nationwide Communications Workers of America union—in May.
Until recently, Activision has remained largely anti-union in the face of its employees organizing—but it could soon not have much of a say in the matter once it finalizes its $69 billion sale to Microsoft, which said publicly it would maintain a “neutral approach” and wouldn’t stand in the way if more employees at Activision expressed interest in unionizing after the deal closes.
Each individual studio under the Activision umbrella would need to have a majority vote in favor of unionizing to join the GWA. Now, Proletariat’s workforce—which, somewhat ironically given its name, isn’t unionized—is another that could make such a decision leading up to the Microsoft deal’s expected closing in 2023.
Samson Amore is a reporter for dot.LA. He previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
Snap Officially Launching ‘Snapchat Plus’ Subscription Tier
Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
Snap is officially launching Snapchat Plus, a paid subscription plan on Santa Monica-based social media company’s flagship app.
Snap is now the latest media company to tack a “plus” to the end of its name—announcing Wednesday that the new service will provide users with “exclusive, experimental and pre-release features” for the price of $3.99 a month. The first features available to paying subscribers include the ability to customize the style of app’s icon, pin a “BFF” to the top of their chat history and see which users have rewatched a story, according to The Verge.
The new product arrives after Snap confirmed reports earlier this month that it was testing Snapchat Plus—though the version that it has rolled out does not incorporate the rumored feature that would allow subscribers to view a friend’s whereabouts over the previous 24 hours.
Snapchat Plus will initially be available to users in the U.S., Canada, U.K., France, Germany, Australia, New Zealand, Saudi Arabia and the United Arab Emirates. While certain features will remain exclusive to Plus users, others will eventually be released across Snapchat’s entire user base, Snap senior vice president of product Jacob Andreou told The Verge. (Disclosure: Snap is an investor in dot.LA.)
The subscription tier introduces a new potential revenue stream for Snap, which experienced a “challenging” first quarter marked by disruptions to its core digital advertising market. However, Andreou told The Verge that the product is not expected to be a “material new revenue source” for the company. He also disputed that Snap was responding to its recent economic headwinds, noting that Snap had been exploring a paid offering since 2016.
Despite charging users, Snapchat Plus does not include the option to turn off ads. “Ads are going to be at the core of our business model for the long term,” Andreou said.
Snap is not the first popular social media platform to venture into subscriptions: Both Twitter and Tumblr rolled out paid tiers last year, albeit with mixedresults.Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
Bling Capital’s Kyle Lui On How Small Funds Can Better Support Young Founders
On this episode of the LA Venture podcast, Bling Capital’s Kyle Lui talks about why he moved earlier stage in his investing and how investors can best support founders.
Lui joined his friend—and first angel investor—Ben Ling as a general partner at Bling Capital, which focuses on pre-seed and seed-stage funding rounds. The desire to work in earlier funding stages alongside someone he knew well drew him away from his role as a partner at multi-billion-dollar venture firm DCM, where he was part of the team that invested in Musical.ly, now known as TikTok.
Bling primarily focuses on entrepreneurs looking to raise around $1 million to $3 million who are often early in their careers as founders. Lui said Bling evaluates companies on characteristics that go beyond whether they like the founder or feel that the market looks good. Instead, he said they take a hard look at the available company data, and quickly respond.
“And we send it back to them and say, ‘Okay, this is what's working, what's not working’,” Lui said. “And then create the playbook for them on how to find product market fit and get to like, ‘These are the milestones you actually need to hit’.”
When considering companies, Lui said Bling looks at the founder, the market, the company’s current traction and differentiation while asking the founder the questions they would expect to get at Series A and Series B funding rounds.
“One thing that I really admire about what [Ling’s] built with Bling is the consistency and the processes and playbooks— everything from the way that we evaluate deals to the way that we work with our portfolio companies,” Lui said. “Everything is kind of around playbooks and operationalizing things and also iterating to do those processes better.”
As part of its work to support founders, Bling maintains an extensive product council, which connects tech executives with the founders in Bling’s portfolio. Bling also has created numerous self-serve resources for founders so they can easily tap into the fund’s network and shared knowledge.
“We have a bunch of playbooks that we introduce to companies around how to hire efficiently, how to negotiate with counterparties, how to think about the founding team, business development…We just have these different things that we start to train our entrepreneurs on,” Lui said.
dot.LA Editorial Intern Kristin Snyder contributed to this post.
Click the link above to hear the full episode, and subscribe to LA Venture on Apple Podcasts, Stitcher, Spotify or wherever you get your podcasts.
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