1. Upstart (UPST) — New Partner

Another week, another notable new Upstart partnership inked. Upstart announced Berkshire Hills Bancorp as a new banking partner in its loan aggregation and referral programs.

Berkshire boasts 130 branches across the East Coast and features $12.8 billion in total assets making it the 120th largest bank in the nation. This is the 3rd biggest bank win for Upstart to date with Customers Bank and Cross River being the 88th largest and 111th largest banks respectively.

As a reminder, Cross River originates a large chunk of Upstart’s loans in a somewhat clearinghouse-type manner. There’s a contract in place through 2024 but concentration risk must always be considered and an announcement like this will actively work to diminish that concern. These announcements have been abundant.

This is the 5th new partner that Upstart has signed since its last quarterly report which would bring the company’s total to 30 — representing 20% sequential growth. In recent quarters, it did not publicly announce all of its new partnerships so that number could be (and likely is) higher. It had just 10 partners in its ecosystem when it went public less than a year ago.

The larger partner network should not only bolster revenue growth, but it also gives Upstart’s algorithm access to more consumer data. More data means better risk quantification.

Click here for my broad overview of Upstart’s business.

2. Olo (OLO) — M&A

Olo announced its intention to purchase Wisely Inc. — a “customer intelligence and engagement platform” designed specifically for the restaurant industry. Wisely’s suite of data aggregation and analytics products will enable Olo’s restaurant clients to understand its guests on a deeper level.

Olo will use Wisely’s expertise to create a holistic, chain-wide customer profile for each guest pulling from several independent and disparate data sources that are not innately easy to connect. This birds-eye-view of each customer will inherently elevate the guest experience while fostering more targeted marketing and consumer retention initiatives to juice lifetime value (LTV) per customer without added sales and marketing (S&M). The longer term effect should be better run-rate margins for participating restaurant brands.

“With traditional loyalty programs, if you have 15% of your customers enrolled, you’re near world-class. With Wisely Customer Intelligence, we’re looking at 100% of customers to understand their behaviors and customer lifetime value.” — SVP Brand Strategy at First Watch Matt Eisenacher

This added functionality marks Olo’s formal entrance into the restaurant customer relationship and marketing worlds and bolsters its average revenue per user (ARPU) opportunity. By doing so, Olo is able to more completely support its clients’ operations and generate more loyal and more lucrative consumers.

When Olo fully rolls out its Pay module next year the debut will be its 5th product  — this purchase would give it up to 9 modules to give an idea of the added potential for up-selling. Guests win, chains win and yes, Olo wins.

The 2 companies had been partners for 5 years, and according to Olo CEO Noah Glass “clear synergies between the 2 platforms and a close cultural alignment of putting restaurants first” were two of the factors contributing to this decision.

Specifically, Wisely’s modules include:

1. Marketing Automation: End-to-end Customer Relationship Management (CRM) to aggregate and contextualize consumer data insights for raising order size and frequency.
2. Host: table management, waitlist and reservation solutions.
   1. This marks a more aggressive dive into on-premise dining which fits with Olo’s new objective to touch 100% of restaurant transactions. It calls this “digital entirety.”
3. Sentiment: Monitors consumer satisfaction and sentiment with pooled and annotated guest reviews to grasp and improve the customer experience.
4. A Consumer Data Platform (CDP) designed for restaurants to connect and utilize fragmented data sets.
   1. This is what enables the single, unified customer profile for chains to utilize.
   2. Helps guide menu item decisions in real-time.
   3. Helps direct new location expansion by offering chains an overarching picture of where their most passionate consumers are located.

These 4 products boost Olo’s existing total addressable market (TAM) by 14.3% — from $7 billion to $8 billion. This TAM solely considers large restaurant chains and does not include Olo’s long term objective to expand to smaller chains, internationally and to other on-demand commerce verticals.

Wisely’s most notable client is P.F. Chang’s which is already an Olo customer. It generally services smaller chains than Olo currently does business with meaning this could also be seen as a continuation of Olo’s move to smaller restaurant chains.

Wisely’s revenue is 95% subscription (with multi-year contracts) and features a gross margin similar to Olo’s (meaning roughly 82%). The purchase is also not expected to have a material impact on the consolidated company’s operating margin. Importantly, Wisely’s CEO and co-founder will stay on as a new Olo General Manager and Vice President of Customer Intelligence/Front of House.

The deal is for $187 million in total — $77 million in cash (from the balance sheet) and $110 million in class A stock representing 2.7% shareholder dilution. The transaction is expected to close later this year.

I’m personally pleased with the acquisition. In Olo’s S1, the company called out data analytics as a future avenue for expansion. This gives them a seat at that table without having to build these solutions internally and with quite modest shareholder dilution. Now, Olo not only emboldens digital ordering, channel management, and affordable delivery for chains (all while keeping restaurant brands in control of their data) — but it will play a key role in marketing as well.

The 2 companies being partnered since 2016 also gives me confidence that integration will be rather seamless.

Click here for my deep dive into Olo’s business.

3. The Trade Desk (TTD) — 2 Deepening Partnerships & Snap Inc. Earnings

a. Xiaomi

The Trade Desk extended its partnership with Xiaomi to enable advertisers to tap into Xiaomi’s app ecosystem (called MIUI) and to measure performance all within The Trade Desk’s platform. The consumer electronics giant is the 2nd largest smartphone maker in the world and the largest in Indonesia which represents the biggest internet economy in Southeast Asia.

Xiaomi boasts 454 million monthly active users (MAUs) outside of China who consume all of its content through mobile channels where The Trade Desk thrives. This user-base is growing at a rapid clip of 32% year over year while Asia — Xiaomi’s main geography — is enjoying faster app download growth than any portion of the world.

Interestingly, Xiaomi also has “established the world’s leading AI + internet of things (IoT) platform with 374.5 million connected smart devices.” Ad-impressions can be auctioned off and profited from here as well.

The Trade Desk has made it a point to expand into the Asian continent and this is a massive step in that direction.