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XBird Seeks to Unload Santa Monica HQ as Fund Marks Down Shares
Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

After completing a costly renovation less than a year ago, the once high-flying e-scooter unicorn Bird Rides has put its airy and sleek Santa Monica offices up for sublease, dot.LA has learned. Prior to the pandemic, Bird was looking at tripling its local footprint, but now with a local workforce numbering less than half what it was before the pandemic and those who remain working from home indefinitely, the company is dramatically downscaling.
The move comes as Fidelity Investments filed a disclosure Friday with the SEC revealing it has marked down the value of its Bird investment by 17% since the beginning of the year.
Bird would not respond to questions sent by dot.LA, including whether it was attempting to unload its entire headquarters. But, the 79,019 square feet being offered appears to represent most — if not all — of the company's Santa Monica footprint. Former employees say it would be difficult to imagine splitting up two-story space, which could not be less suited to social distancing requirements.
"Bird had finished a massive expansion of that office space back in November of last year, which only doubled down on the 'openness' of the office," said the former employee who asked not to be named because they had to sign a nondisclosure agreement. "I don't see a conceivable way where they'd only be able to sublease a part of it and not all of it."
Bird spent several million dollars on network infrastructure and over a million dollars on furniture alone in last year's expansion, according to another former employee. The renovation opened up new desks, a number of new conference rooms, and a large kitchen with two buffet-style central islands where the company brought in daily catered lunches for employees from Halal Guys, Fresh Corn Grill and My Taco Guy on Taco Tuesday.
"Overall it was a really nice space," remembers a business operations employee who was laid off in March. "It kind of sucks things went down the way they did and remote work became mandatory."
Bird became the fastest company in history to reach unicorn status in 2018. Shortly after that, it achieved a $2 billion valuation in less than a year. But in March, it abruptly laid off 406 employees via a Zoom call that former employees described as dystopian. Headquarters was particularly hard hit, with the layoffs reducing the staff by more than half.
"Given the pandemic, Bird employees are currently working from home and the company is not currently utilizing the space," said a source at the company not authorized to talk on the record but who is close to the matter. The source portrayed the move as a reaction to the pandemic rather than indicative of anything about the company's financial performance.
Lime and Bird offices https://t.co/NgB5I2VbPE— EB (🏢,🏢) (@EB (🏢,🏢)) 1602043892
Pandemic Hits E-Scooters
The pandemic occurred at the worst possible time for e-scooter companies. They typically bring in little revenue in the cold winter months, recouping their investment in warmer weather. But in March, they had to pull their fleets and close down operations just as they would normally be returning to city streets. Cash-starved Lime, a Bird competitor that has also put up its offices for sublease, was forced to raise new capital at 79% discount from its last round in May.
Bird has the fortune of being better capitalized and in late January, the company raised another $75 million of Series D2 funding at a $2.77 billion valuation. But Dan Hoffer, managing director of Autotech Ventures, an early-stage venture firm focused on transportation, thinks Bird also might eventually be forced to raise a down round. He has long been skeptical that the company's unit economics can justify its lofty valuation.
"Our position is being validated right now as investors get wiped out and their companies recapped," Hoffer said. "In an environment in which multiples are retracting, having raised at a very high valuation is not always a good thing."
As a private company, Bird does not have to share its financials, which is why Fidelity's markdown is revealing. But the company has maintained that in many ways, the pandemic has been a positive as people eschew crowded buses and subways and cities use the crisis as a way to rethink city streets and prioritize scooters over automobiles. It is seeing riders take longer trips than they did before the pandemic and consolidation in the industry could be good for Bird, which is the market leader.
Early investors including Mark Suster, Upfront Ventures managing partner, say they remain bullish on Bird and that the company has done a good job of reducing expenses.
How Bird Could Benefit From a Post-COVID World
assets.rebelmouse.io
"The unit economics are already very positive," Suster said before headquarters was listed. "We have narrowed our losses because capital is harder to raise right now in the micro-mobility market."
Inside Bird, the latest move to get rid of headquarters is seen by some as a way to further trim expenses and prepare the company for an IPO or exit. The company has been able to continually improve its unit economics – each scooter model is less expensive and more durable – so cutting administrative costs is crucial.
Expansion Plans Halted
Before the pandemic, Bird was said to be on the hunt for up to 300,000 square feet of office space for a new corporate headquarters - more than tripling its current size, according to Michael Soto, research director at Savills, a commercial real estate advisory firm.
Soto says Bird is certainly not alone in trying to unload costly unused office space. The company's neighbor, Edmunds.com, has been attempting to sublease 195,000 square feet at the headquarters it opened to great fanfare in 2016 and Beachbody, a provider of fitness and weight-loss programs, is trying to shed 135,000 square feet in Santa Monica. (Beachbody did not respond to a request for comment. An Edmunds spokeswoman said the company has more square footage than it needs and noted that it was considering a sublease before the pandemic.)
"It's tough right now," said Soto. "There's just too much uncertainty in the economy so most companies are putting off signing deals unless they have to. And for those companies who are signing deals, there's a lot of kick-the-can-down-the-road short-term deals because a lot of companies aren't comfortable locking in a long-term financial commitment right now, especially since they don't know what they'll look like post-COVID or even if they'll keep their employees working from home."
One exception is Netflix, a major beneficiary of the stay-at-home economy, which signed a lease last month for 171,000 square feet to house its first dedicated animation studio in Burbank. LegalZoom also recently extended its 50,000 square feet lease in Glendale. But overall, just 1.6 million square feet of office space was leased in the third quarter in Los Angeles, a decline of 18% from the previous quarter and a 61% dropoff year over year, according to Savills.
"As long as uncertainty over COVID remains, overall leasing activity will continue to be low," Soto said. "That doesn't mean there aren't or won't be larger leases being signed over the short-term, but I really think those will continue to be the exception rather than the rule."
Bird moved into its current headquarters at the Colorado Center in 2018, signing a lease for 58,000 square feet, which it later expanded to 72,019 square feet. Other tenants include Hulu, Goop, and EHarmony.
Bird's listing says renters can occupy the space until either the end of 2023 or until next September, which is around the time Bird can execute a lease termination option, according to a source familiar with the matter.
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Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.
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Rivian Stock Roller Coaster Continues as Amazon Van Delivery Faces Delays
David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.
Rivian’s stock lost 7% yesterday on the back of news that the company could face delays in fulfilling Amazon’s order for a fleet of electric delivery vans due to legal issues with a supplier. The electric vehicle maker is suing Commercial Vehicle Group (CVG) over a pricing dispute related to the seats that the supplier promised, according to the Wall Street Journal.
The legal issue could mean that Amazon may not receive their electric vans on time. The dispute hinges on whether or not Commercial Vehicle Group is allowed to raise the prices of its seats after Rivian made engineering and design changes to the original version. Rivian says the price hike from CVG violates the supply contract. CVG denies the claim.
Regardless, the dispute could hamper Rivian’s ability to deliver electric vans to Amazon on time. The ecommerce/streaming/cloud computing/AI megacorporation controls an 18% stake in Rivian as one of the company’s largest early investors. Amazon has previously said it hopes to buy 100,000 delivery vehicles from Rivian by 2030.
The stock plunge marked another wild turn for the EV manufacturer. Last week, Rivian shares dropped 21% on Monday after Ford, another early investor, announced its intent to sell 8 million shares. The next few days saw even further declines as virtually the entire market saw massive losses, but then Rivian rallied partially on the back of their earnings report on Wednesday, gaining 28% back by Friday. Then came yesterday’s 7% slide. Today the stock is up another 10%.
Hold on tight, who knows where we’re going next.
David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.
Snapchat’s Attempt to Protect Young Users From Third-Party Apps Falls Short
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.
Some Snap Kit platform developers have skirted guidelines meant to make the app safer for children.
A new report from TechCrunch released Tuesday found that some third-party apps that connect to users’ Snap accounts have not been updated according to new guidelines announced in March. The restrictions, which target anonymous messaging and friend-finding apps, are meant to increase child safety. However, the investigation found a number of apps either ignore the new regulations or falsely claim to be integrated with Snapchat.
The Santa Monica-based social media company announced the changes after facing two separate lawsuits related to teen suicide allegedly caused by the app. Over 1,500 developers integrate Snap features like the camera and Bitmojis. Snap originally claimed the update would not affect many apps.
Developers had 30 days to revise their software, but the investigation found that some apps, such as the anonymous Q&A app Sendit, were granted an extension. Others blatantly avoided the changes—the anonymous messaging app HMU, which is now meant for adult users, is still available to users "9+" in the App Store. Certain apps that have been banned from Snap, like Intext, still advertise Snapchat integration.
“First and foremost, we put the privacy and safety of our community first and expect the products built by our developer community to adhere to that standard in addition to bringing fun and positive experiences to people,” Director of Platform Partnerships Alston Cheek told TechCrunch.
The news is a blow to Snap’s recent efforts to cast itself as a responsible social media platform The company recently announced Colleen DeCourcy would take over as the company’s new chief creative officer and CEO Evan Spiegel to recently made a a generous personal donation to graduates of Otis College of Art and Design. The social media company currently faces a lawsuit from a teenager who claims it has not done enough to protect minors from sexual exploitation. In April, 44 attorney generals sent a letter to Snap and TikTok urging the companies to strengthen parental controls.
Lawmakers are considering new policies that would hold social media companies accountable for the content on their platforms. One such bill would require social media companies to share data with independent researchers.
Snapchat recently rolled out augmented reality shopping features and influencer-led original content to grow its younger base of users.
Snap Inc., Snapchat's parent company, is an investor in dot.LA.
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.
When we list the attributes most associated with successful founders, investors, billionaires, and industry leaders, we often think of things like determination, grit, fortitude and even obsessiveness. The winners are the most relentless, the ones who work the hardest, know the most, start the earliest in the morning on four hours of sleep and won’t accept no for an answer.
While discussing the venture capital world, and his upcoming technology conference in Santa Monica, The Montgomery Summit 2022, March Capital co-founder and Managing Partner Jamie Montgomery doesn’t necessarily contradict this formula for success, but adds a new attribute to the mix that’s sometimes left out: curiosity.
Montgomery’s a believer that there’s no one right way to go about things, and no surefire process for success. Sometimes, the best company emerges from not just the best data and team but the most creative approach. “If something isn’t clear, invert,” Montgomery explained. “Then invert again. Soon the subject becomes clear.”
The best investors and leaders have an innate inquisitiveness about the world around them, and seek out opportunities not just based on market trends but genuine observations about problems in desperate need of solutions.
“You sort of have to be a very heuristical thinker,” Montgomery said. “Sometimes I find some people I talk to are very smart and interesting, and I think, “That person’s very thoughtful. They’re going to be a good investor.’ Sometimes you meet people and you think ‘Well, they come across smart, but they’re always preparing what they’re going to say in response to what you have to say, they’re not really listening.’ Being a good investor, you’ve got to be a good listener. You’ve got to figure out, what’s the signal and what’s the noise? Filter out the noise and say ‘What’s real?’”
Thoughtfulness, attentiveness and curiosity are typically the sort of attributes that we think of as innate, as opposed to skills you can improve via on-the-job training. Montgomery noted, “I always ask entrepreneurs why rather than what. You get a more interesting answer.” Reading and research and investigation can help, but innate curiosity remains an essential ingredient in business success.
“I think, to be an investor, not just a VC but an overall investor, one benefits from an incredible amount of reading and knowledge,” Montgomery explained. “You have to have a voracious appetite, so it’s really a high-level curiosity. Some people have it, some don’t.”
March Capital Founder Jamie Montgomery.
Illustration by Dilara Mundy
One subject that’s on Montgomery’s mind these days is quantum computing, and its potential impact on cybersecurity, a major area of focus for March. His process starts by asking core questions about the next 5-10 years and what they’ll look like, before even considering potential solutions.
“If you’re investing, you have to look at something that’s inevitable,” Montgomery explained. “Is it gonna happen or not. If it’s inevitable, then the question is, is it imminent? And is it investible? Start with inevitable. Eventually you’re going to have quantum computing, and that’s gonna create an existential threat to cybersecurity. Is that imminent?... What is the post-quantum cyber world like, with all this information that’s been siphoned out of America by China… what do they have and how do we prepare for a post-quantum cybersecurity? It’s almost existential.”
This holistic question-based approach also drives Montgomery as he plans and organizes the annual Montgomery Summit, the largest such event of the L.A. tech calendar year (Montgomery refers to it as the “Rose Bowl of Conferences.”)
He expects around 1,200 people to attend this year – the event’s big return post-pandemic – for panels and sessions that don’t just cover areas in which March Capital specializes, but a vast and diverse variety of subjects and topics, designed to intrigue and inspire curious minds.
Over 175 speakers in total have signed on for the 19th annual Montgomery Summit, to be held on May 24 and 25, from the worlds of technology, economics, geopolitics, public policy, the sciences and beyond. Montgomery gets animated as he tells me about the voluminous range of topics being covered, from the Federal Reserve’s response to inflation to the war in Ukraine to the stories behind companies like Bill.com and CrowdStrike. One session will feature Chapman University Presidential Fellow Jack Horner, one of the world’s leading paleontologists and a key inspiration for the “Jurassic Park” character Dr. Alan Grant.
“It’s the interaction, the entrepreneurs with the investors and the executives,” Montgomery told me. “It’s fantastic, it’s enjoyable, it’s fun, and it’s candid. There are no big egos. The speakers will actually come and talk to you, they don’t come in the back door and leave through the back door. You actually can go to any one of seven sessions, and it’s going to be interesting, and they’re all short. 25-45 minutes each.”
The shorter 25-45 minute sessions help to stave off boredom and mean that attendees can sample a wider range of subjects and sessions than they might at other conferences. It helps keep things moving and makes them fun, a theme Montgomery returned to a few times in our discussion.
“There’s a lot of conferences that are very professionally run or research-driven or they’re very commercial. People come here and they’re gonna have a blast, right?”
The Montgomery Summit runs May 24th-25th at Santa Monica's Fairmont Miramar Hotel & Bungalows. Find out more information on their website.
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