New Research on the Region

  • December 2022 (Revised December 2022)
  • Case

Ribbit Capital and the Gauntlet Investment Opportunity

By: Shai Bernstein and Allison M. Ciechanover

Ten-year-old, Palo Alto-based Ribbit Capital is best-known for its global investments in fintech. The firm was also an early advocate of crypto and blockchain, having invested in more than two dozen startups in the space in the past decade. In the Spring of 2022, Partner Nick Shalek contemplates an investment into Gauntlet, a Brooklyn-based crypto startup. He weighs not only the pros and cons of the Gauntlet investment in the context of the fund’s overall portfolio, but also the deal structure. While investing in crypto starups played to many of the strengths that the Ribbit Capital team had built investing in fintech startups, there were a variety of aspects of crypto startup investing that were new and different. Sourcing deals, performing diligence, providing guidance to entrepreneurs, understanding governance, and negotiating deal terms were similar in principle, but presented new opportunities and challenges to navigate.

  • November 2022 (Revised December 2022)
  • Case

Replika AI: Monetizing a Chatbot

By: Julian De Freitas and Nicole Tempest Keller

In early 2018, Eugenia Kuyda, co-founder and CEO of San Francisco-based chatbot Replika AI, was deciding how to monetize the app she had built. Launched in 2017, Replika was a consumer AI “companion app” developed by a team of AI software engineers originally based in Moscow. Replika allowed users to create their own customized AI avatar and then have free-flowing text conversations back and forth with it, like one would with a friend. Replika had a successful initial launch, signing up 2.5 million users in its first year, however, it was struggling to keep users on its app. Replika’s research showed that its heavy users tended to be struggling with a bouquet of physical or mental health issues. Two monetization options were being considered: develop a subscription model for the AI companion app or pivot into a mental health app. The subscription model would offer a host of added benefits for subscribers and could be marketed at a broad TAM of lonely people. The mental health app would combine talk therapy (with the chatbot) with clinically proven therapeutic exercises, and would be targeted at people struggling with mental health issues. On the subscription side, investors were concerned that the app’s users did not fit the typical profile of paid app subscribers. Yet pursuing the mental health app would mean venturing into a more regulated market and engaging in more carefully scripted responses rather than the freeform texting of the current app. The firm had been through a series of pivots and was hoping to find a clear path before venture funding ran out.

  • November 2022
  • Case

Para: Pay Transparency and Gig Drivers’ Rights

By: Christopher Stanton and George Gonzalez

The case presents the founding vision and early days of a young startup that seeks to empower delivery drivers with tools and transparency. The company's flagship mobile app has been taken up by tens of thousands of delivery drivers across major U.S. cities who use it as a single-point to accept or reject gigs from multiple sources and map their routes. At the same time, the app has sparked the ire of major delivery services, who are concerned Para disintermediates drivers from their platforms. Para's founders look to the future and believe that there is a win-win outcome.

  • November 2022 (Revised January 2023)
  • Case

AES Corp: A Global Power Transformation

By: Tarun Khanna, Allison M. Ciechanover and Matt Higgins

  • October 2022
  • Case

Lyra Health: Transforming Mental Health

By: Rembrand Koning and Nicole Keller

In January 2022, Lyra Health was deciding between several different alternatives to grow the business. Founded in 2015, Lyra Health, was a digital mental health platform that combined technology with human therapists and coaches to deliver high quality mental health care to patients. One in five Americans suffered from mental health challenges each year, resulting in significant lost productivity. Yet access to mental health providers was severely limited since many providers did not accept insurance. Quality of care also varied as many providers did not use clinically proven therapeutic treatments. Lyra brought a new approach to the problem by offering easily accessible, high quality mental health services to employees of companies as part of a reimagined employee assistance program (EAP) that encouraged usage. To date, Lyra had focused on large enterprise customers, such as Starbucks, Facebook, and Morgan Stanley. The company believed there was significant untapped opportunity in the corporate enterprise market, but acknowledged that to continue to grow after 2025, it would need to tap into other customer segments. The company was considering expanding internationally, expanding into higher acuity care, targeting small business, and selling to government funded health plans. Each required significant changes to the product as well as operational changes, so realistically, Lyra could only focus on one or two growth options in the near term, and picking the order was important.

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California Research Center Team

Allison Ciechanover
Executive Director
George Gonzalez
Senior Researcher
Emily Grandjean
Research Associate
Jeffrey Huizinga
Assistant Director
Nicole Keller
Senior Researcher