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Per Diem raises $2.26M to help local businesses build subscription programs

It might be time for neighborhood restaurants and coffee shops to start thinking about a subscription business — at least according to a new Y Combinator-backed startup called Per Diem. The company is announcing today that it has raised $2.26 million in seed funding led by Two Sigma Ventures.

As co-founder CEO Tomer Molovinsky put it, Per Diem helps local businesses “build their own Amazon Prime.” He said that he and his co-founder/CTO Doron Segal started working on this during the pandemic, as local businesses became more willing to consider new models to increase loyalty and regular purchases.

Not that this is an entirely new concept. In fact, Molovinsky said a number of the startup’s early customers already offered subscriptions of their own, like Norman’s Farm Market with its CSA subscription for produce, or IVX Coffee with a program initially focused on filling up reusable mugs with coffee.

But apparently these programs were usually managed through spreadsheets or an “old-school Rolodex,” making them increasingly difficult to manage as they grew. So Per Diem has built software to handle things like ordering, pickups/deliveries and payments.

Per Diem

Image Credits: Per Diem

“Today we offer support for both local delivery and shipping, and then we plan to build that out [with] different types of integrations, delivery partners and shipping partners,” Molovinsky said. “But we’re building on that core fundamental, which is that this is a brick-and-mortar business. That’s the ultimate differentiator.”

In other words, Per Diem emphasizes creating a strong in-store experience for subscriber, since that’s where they build a real relationship with the business.

“I don’t want to build a future where … I’m getting all my food from warehouses in another state,” Segal added.. “I want to be able to say, ‘Oh, I get my food from John, I get my coffee from Linda.’”

Per Diem says that after Norman’s Farm Market used the software to offer vegetable box subscription on its website, it sold over 500 subscriptions in the first month alone. And IVX is now able to offer a full menu of espresso, match and coffee (drip and bean) subscriptions, with the average subscriber visiting the store five days a week.

Per Diem founders Doron Segal and Tomer Molovinsky

Per Diem founders Doron Segal and Tomer Molovinsky

The startup is currently focused on New York, but it’s already working with businesses in Phoenix and Washington, D.C. as well, and Molovinsky said there are no real geographic limitations.

Ultimately, he said he’s hoping to create “more value” for businesses, which could eventually mean cross-promoting different subscriptions or creating a neighborhood-wide subscription.

“We want to stay focused on what are the things we can unlock for [our customers],” he said. “They’re struggling with email marketing, so we added tools like that into our system. Over time, we can build up our system to continue to strengthen the relationship between the customer and the business.”

Discount grocery startup Misfits Market raises $200M

Misfits Market, a startup known for selling “ugly” fruits and vegetables at discount prices, announced this morning that it has raised $200 million in Series C funding.

The company says this brings its total funding to $301.5 million and moves its valuation into unicorn territory (i.e., above $1 billion). It isn’t getting any more specific about that valuation, though Bloomberg reports that it’s $1.1 billion.

Founder and CEO Abhi Ramesh told me that the Delanco, New Jersey-based startup has expanded beyond produce into a variety of grocery categories. At the same time, he said all of its products remain united by a focus on “a single word, which is value.”

Misfits Market products are discounted by up to 40% compared to what you’d find in other grocery stores (in-person or online), which Ramesh said the company achieves by purchasing products that regular stores won’t buy or sell, often for “crazy, random” reasons. For example, he said the company had recently purchased 50,000 bottles of perfectly good olive oil “where the labeling was just angled the wrong way.”

The company says its active customer base and order volume grew 5x last year, when it shipped 77 million pounds of food to more than 400,000 customers. Ramesh said it was a challenge meeting increased consumer demand, but Misfits had advantages that many other grocery companies did not.

Misfits Market CEO Abhi Ramesh

Misfits Market CEO Abhi Ramesh

“Fortunately, because we operate our own fulfillment centers and we have our own internal tech built around this, we were not constrained by the same constraints that physical grocery store have, where we have to close at 9pm every day, where we have to make room for regular foot traffic and Instacart shoppers,” he said. “For us, we just have to scale our fulfillment centers, which is easier said than done.”

The new round was led by Accel and D1 Capital, with participation from Valor Equity Partners, Greenoaks Capital, Sound Ventures, Third Kind Ventures and others. Accel’s Ryan Sweeney is joining Misfits’ board of directors.

“Direct-to-consumer models aren’t anything new in the food industry, but the approach Misfits Market has taken is,” Sweeney said in a statement. “Instead of focusing only on their end customer, they’ve managed to create a dynamic solution that also supports food suppliers at every level.”

With the new funding, Misfits Market plans to continue expanding into new grocery categories and new geographies. For example, it’s taking its first orders from Oregon and Washington today, and Ramesh said his goal is to be shipping to “100 percent of zip codes in the 48 lower states” in the next 12 months.

Amazon is bringing its Amazon One palm scanner to select Whole Foods as a payment option

Amazon is bringing its new biometric device, the Amazon One scanner, to Whole Foods store. The retail giant this past fall first introduced the Amazon One scanner, which allows shoppers to enter a store by having their palm scanned. The customer’s palm signature can be associated with their payment mechanism in a retail environment — like Amazon’s cashier-less Amazon Go stores, where customers shop then walk out without having to go through a traditional checkout process. Now at Whole Foods, the Amazon One scanner will be added as a payment option at checkout.

That means customers could choose to scan their palm over the reader to pay for their purchases, instead of paying with cash or a credit or debit card, for example. It will not replace other payment options, Amazon stressed.

Amazon says it’s initially adding the Amazon One palm scanner to the Whole Foods Market store at Madison Broadway in Seattle, but plans to roll it out to seven more Whole Foods Market stores in the greater Seattle area in the months to come. Seattle will likely serve as a test market for the new technology before Amazon chooses to roll it out more broadly.

Since its launch in September, Amazon One scanners have already been installed in several Amazon stores in the Seattle area, including Amazon Go, Amazon Go Grocery, Amazon Books, Amazon 4-star, and Amazon Pop Up. The retailer says “thousands” of customers have now enrolled their palm signatures.

With the Whole Foods launch, customers will be able to sign up for Amazon One at a kiosk or device in the participating Whole Foods stores, where they can choose to enroll one or both palms. The scanner uses computer vision technology to create the unique palm signature, which is associated with the payment card the customer inserts into the device.

Existing customers who had previously enrolled in Amazon One at a different location will have to re-insert their credit card one time in the Whole Foods store to continue to use the service in those stores, Amazon said.

In addition, customers will be able to link their Amazon One ID with their Amazon account in order to get their Prime membership discount to apply to their Whole Foods Market purchases via the Amazon One device in the future.

“At Whole Foods Market, we’re always looking for new and innovative ways to improve the shopping experience for our customers,” said Arun Rajan, senior vice president of technology and chief technology officer at Whole Foods Market, in a statement about the expansion. “Working closely with Amazon, we’ve brought benefits like Prime member discounts, online grocery delivery and pickup, and free returns to our customers, and we’re excited to add Amazon One as a payment option beginning today. We’re starting with an initial store at Madison Broadway in Seattle and look forward to hearing what customers think as we expand this option to additional stores over time,” he added.

The device, of course, comes with concerns given Amazon’s track record with biometric technology. The company has sold biometric facial recognition services to law enforcement in the U.S.; its facial recognition technology was the subject of a data privacy lawsuit; and its Ring camera company continues to work in partnership with police. It was also found to be keeping Alexa voice records indefinitely, with no option for customers to delete them. (Amazon later changed that — and, to be fair, Google and Apple were mishandling customer voice data, too.)

Just yesterday, Amazon announced tests of other retail and AR technology in a London area hair salon, which would involve cameras capturing customer images. The company said it wasn’t retaining “customer data,” but declined to answer a question about the non-personal data being collected at the salon.

In today’s announcement, Amazon notes that the Amazon One device is “protected by multiple security controls, and palm images are never stored on the Amazon One device.” It says the images are encrypted and sent to a secure area built for Amazon One in the cloud where Amazon creates the customers’ palm signatures. It also offers a way for customers to unenroll from Amazon One from either a device itself or from one.amazon.com, which also deletes their biometric data when all their transactions have completed.