Shared Vacation Home Platform Pacaso Joins the Unicorn Club, Six Months After Launch
The venture capitalist Aileen Lee coined the term "unicorn" in 2013 as a catchy way to denote startups reaching the milestone of a billion-dollar valuation. It was meant to describe something unusual; at the time there were just 39 unicorns.
In today's red hot startup market, unicorns are far less rarified, currently numbering more than 600 worldwide, according to CB Insights.
Pacaso, a platform facilitating fractional ownership in second homes, announced Wednesday it too will join the unicorn club. That makes it one of the fastest companies ever to reach a $1 billion valuation, according to Pitchbook data.
Launched by two former Zillow executives six months ago, Pacaso had the good fortune to be perfectly positioned to benefit from three major trends that emerged during the pandemic – a sizzling real estate market fueled by low interest rates, strong demand for second homes given that employees can work from anywhere and a frothy fundraising environment where VCs are tripping over themselves to sign term sheets for promising young startups.
"If you were to talk to me a year ago and asked, 'Do you think this company will be a billion dollar company someday?,' I would have said yes without hesitation, but I would have thought it would have taken five years instead of six months," said CEO and co-founder Austin Allison. "It's certainly a favorable market for companies that have really promising stories and really high growth. Is it frothy? That term is probably up for debate. It's certainly a good time to be raising."
Allison, 35, previously founded Dotloop, a startup to manage real estate transactions, in 2009. It was acquired by Zillow Group in 2015, which at the time was headed by Spencer Rascoff, who is also the co-founder and chairman of dot.LA. The two started Pacaso last year with $17 million in Series A venture funding in a deal led by Maveron.
The new round, led by Greycroft and Global Founders Capital, brings in $75 million to help fuel the company's expansion into new markets beyond where it has the most initial success — Napa, Lake Tahoe, Palm Springs, Malibu and Park City. Pacaso also announced it has secured $1 billion in debt financing.
The company says more than half a million people have visited the website and 60,000 aspiring buyers have "engaged" the platform.
Putting a modern twist on timeshares, Allison and Rascoff started Pacaso to seamlessly bridge the gap between the vast supply of vacation homes that sit empty most of the year and buyers who can't afford or do not need to purchase an entire house.
Allison also argues there is an advantage for communities over Airbnb, with its short-term renters who are only staying temporarily over Pacaso, with its ownership model.
"They have significant skin in the game," Allison said. "They become part of the community. They get to know the neighbors."
Once buyers purchase a fraction of a home, Pacaso sets up an LLC for the co-owners and helps handle maintenance, financing and scheduling. In return, it takes a 10% cut of the purchase price on top of a yearly 1% property management fee.
"We're going to make second homeownership a reality for the top 20 percent of the world and that's a big market opportunity," Allison said. "Second home ownership has been a dream that people had long before the pandemic happened."
Allison talks a lot about democratizing vacation home ownership, but Pacaso's listings are still far out reach for most people, requiring $812,000 to own an eighth of an oceanfront 3-bedroom in Malibu or $873,000 to own an eighth of a lavish nine-acre estate in Napa. But he says less extravagant listings are on the horizon.
"We're planning to add a lot more markets and a lot more price points to make Pacaso and second home ownership accessible to a much broader audience, which is core to our mission," he said. "Twelve months from now, I expect that the majority of our homes will be within one to three hundred thousand per share."
Allison also expects more listings in cities, reversing the traditional notion of a second home, and he gives himself as an example. His primary home is in Napa but once workers return to the office he says he would use Pacaso to have a place to stay when he is in San Francisco.
"We're seeing this co-ownership concept deliver value in both directions, for urban people looking to get out or non-urban people looking to get in," Allison said. "There's a lot of interest in people owning second homes, regardless of where that home is located. And most of the time, people don't need to own the whole thing."
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Netflix's dominance in a crowded streaming market may be showing signs of waning, but chief executive Reed Hastings isn't worried about Disney Plus or any of the other streaming services nipping at its heels.
"Our largest competitor for TV viewing time is linear TV," Hastings said on Tuesday's earnings call. "Our second largest is YouTube, which is considerably larger than Netflix in viewing time. And Disney's considerably smaller."
Netflix's subscribers now number 208 million, more than double Disney Plus, its closest on-demand video subscription competitor.
Still, Netflix undershot its quarterly subscriber forecast for only the second time since the final quarter of 2019. With 4 million new subscribers, the 2 million shortfall was its second largest since 2016.
Chief financial officer Spencer Neumann ascribed the miss to COVID. He pointed to the "pull forward" of new subscribers in 2020 that led to the company's record growth last year and the simultaneous push back of key title launches into the latter half of 2021.
"It's super hard to, obviously, forecast quarterly subscribers in a typical quarter for us, and particularly hard in this particular environment," he said.
Sex Education Season 3 Announcement | Netflix www.youtube.com
Netflix also revealed it plans to spend $17 billion on content in 2021, up from $11.8 billion in 2020 and $13.9 billion in 2019.
The company highlighted the ongoing growth of streaming in general and its strong content slate in 2021 as signs for longer-term optimism. New launches in the second of this year will include returns of popular shows "Sex Education", "The Witcher" and "Casa de Papel" along with new original films including "Red Notice" starring Gal Gadot and Dwayne Johnson and "Don't Look Up" featuring Leonardo DiCaprio, Jennifer Lawrence, Cate Blanchett, Timothée Chalamet and Meryl Streep.
With 35 Oscar nominations, Netflix continues its foray into film supremacy. As for its cinematic ambitions, Hastings said he believes his company has a lot of room to grow.
"We've been doing series longer and we're more dialed in about what is really big and what hits," he said. "We're getting there on film. Also on animation. Also on kids. Each of these have their own experience curve that we're progressing down."
Netflix's share price was down about 8% in after-hours trading on news of the subscriber miss and tepid expectations for the second quarter, predicting 1 million net additions, compared to 10 million in the same period last year. Hastings' worries about YouTube are well-founded. A study out earlier this week found that Gen Z is the only generation that ranks browsing the internet and engaging on social platforms higher than watching TV or movies at home.
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Santa Monica-based business-to-business music licensing marketplace Songtradr is diving deeper into livestreaming with its acquisition of Pretzel, a Washington-based startup.
Pretzel focuses on licensing music to livestreamers on Twitch, Youtube and other platforms where gamers and influencers have flocked during the pandemic, often setting their live videos to music. According to Twitch representative Samantha Faught, the total number of streamers making money on its platform doubled in 2020 from a previous all-time high in 2019.
During that time, Pretzel has licensed over 6 million tracks and provided over 12,000 hours' worth of legally cleared music to those creators. And increasing its revenues by over 600%.
"Our goal with Pretzel has always been to allow broadcasters to stream the music they want to listen to, while compensating artists, songwriters, record labels and publishers fairly," said Pretzel chief executive Nate Beck in a statement. "By joining forces with Songtradr, we will be able to accelerate our progress, developing a platform that revolutionizes the way music is licensed."
Launched in 2014, Songtradr has now made four acquisitions in just over two years. In early 2019 the company bought London-based Big Sync Music, an agency that helps brands license music. Cuesongs, another UK-based track-licensing company, came under the umbrella in late 2020. And earlier this year Songtradr acquired SongZu, a self-styled 'music and sound design' company based in Australia.
In July 2020, Songtradr closed a $30 million Series C funding round, which brought its total fundraising to more than $51 million, according to Crunchbase.
"Music and gaming have always gone hand in hand and gamers are some of the most engaged and valuable fans," said Songtradr CEO Paul Wiltshire in a statement. "The explosive growth of lifestyle and gaming live streams opens up an array of opportunities for our artists and our clients."
Further terms of the deal were not disclosed.
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Los Angeles startup PeaTos brands its products as an alternative to "junk food" like Cheetos and it just nabbed a former executive from competitor Frito-Lay, maker of the neon orange puffy chip.
David Johnson, a 19-year veteran of Pepsico's Frito-Lay brand, was named chief growth officer of the Westchester-based brand.
As the startup's first CGO, Johnson will focus on driving retail sales and developing a greater presence in foodservice. The appointment comes after Peatos raised $12.5 million in February from Post Holdings, Inc., known for its hand in building out cereal brands like Honey Bunches of Oats. That came just four months after the company raised a $7 million Series A round.
The snack food brand, which is sold online and at retail outlets, has also picked up a steady stream of online subscribers for its fiber and protein-dense chips. In February, PeaTos CEO Nick Desai told dot.LA that the company grew 50% from 2019 to 2020 and expects 100% growth this year.
The flavored crunchy curls and rings are sold in 4,700 retailers including Vons, Albertsons Safeway, Sprouts and Kroger.
"It will be my pleasure to help ensure that all consumers have a choice of PeaTos while shopping their favorite retailers," Johnson said in a statement.
Johnson most recently served as chief executive of beeline North America, a fashion accessory supplier. His last post at Pepsico was as an executive on the Stacy's Pita Chips team.