Growing up in Mexico City, Pamela Valdes says she was a bullied child who was inspired by stories her parents told of other bullied individuals, such as Bill Gates, who went on to be very successful.
“Those stories my parents told me in a way created my reality,” she said.
Valdes recognized that her upbringing was more privileged than some others in Mexico and throughout Latin America, people who — in her words — heard stories about the drug cartels in their towns. Those drug lords were often the most successful people they knew of, and to Valdes, that was not okay.
So while in college, she came up with the idea behind her startup, Beek. In its first iteration, Beek leveraged tools like YouTube and emojis to create a site and mobile app where people could review the books they’re reading.
“I wanted to get Latinos to consume better stories, so I created this community around books,” she recalls. “I thought if I could fix reading by making it social, and monetize it via e-commerce, then more content will come to Spanish.”
It worked, up to a point. Before graduating from Y Combinator, the Mexico City-based company actually began as a hackathon project in Austin, Texas, where Valdes was studying at the University of Texas. The company went on to raise pre-seed and seed money from investors such as Greylock and Accel. But over time, Valdes realized that while the product worked well for people eager to engage around book content, it was less effective at getting people who don’t read to become readers.
So in 2019 — teaming up with now chief product officer and co-founder, Guatemalan-born Guillermo Sequeira — Beek pivoted to audio. The idea was to give Spanish speakers a way to listen to published content in Spanish but also to introduce them to unique content being produced by creators.
Audio made more sense, says Valdes, given that Latin Americans often have long commute times; for them, listening to content while driving to and from work is typically more convenient than reading.
Valdes and Sequeira also realized that while there are 1.5x more native Spanish speakers than English speakers in the world, the amount of audio content available in Spanish is 10x less. Astonishingly, there are only 25,000 Spanish audiobooks and 100,000 Spanish podcasts available.
Given the opportunity they spied, Beek — which raised $2 million in pre-seed funding early on — soon raised $5 million more in a seed round. That money, which the company collected in 2019, must seem like a smart investment in retrospect. Over the past two years, Beek has seen its paying subscriber base grow by 18x, Valdes says. Meanwhile, 35% of the content creators on Beek’s marketplace earn more than their local minimum wage in their first month, she says. “We didn’t expect it, but all of a sudden we became a huge revenue model for creators,” she told TechCrunch. “They started launching things like mini audiobooks and other premium content in audio.”
The model makes sense for everyone involved, she says. On other platforms such as Instagram or TikTok, she said, a creator needs high volumes of followers to earn a little money. On Beek, they are able to make more recurring passive income with fewer listeners. Creators are responsible for upwards of 70% of user acquisition, too, since many of them draw in subscribers and then benefit from a revenue share agreement with Beek — saving the startup money on marketing costs.
As for Beek’s listeners, it’s often more economical to pay $12 a month for one subscription to get unlimited access to numerous creators — such as Haru Escárcega, Rorro Echavez, Regina Carrot and Marguga — than to have to pay for access on an individual basis. Today, 60% of Beek’s users are from Mexico, 10% are U.S.-based Hispanics and 30% are located in other parts of Latin America.
To capitalize on its growth momentum, Beek is announcing today that it has raised an additional $13 million in a Series A round of funding led by Mercedes Bent, partner at Lightspeed Venture Partners. The fact that Bent — who historically has focused her investments on consumer fintech and crypto — was drawn to a company outside of her usual areas of focus is notable.
She found the company so compelling for a few reasons.
For one, Bent was naturally drawn to the company’s impressive year-over-year revenue growth (8x when it invested). But she was also attracted to the team’s ability to utilize their advisors in a way she doesn’t see most other startups do.
“They’re able to pull really senior people into their orbit and get them working with them on a day to day basis,” said Bent, who is joining the Beek board as part of her firm’s investment.
For example, Casey Winters, former head of growth at Pinterest and chief product officer at Eventbrite, is also joining the board after serving as an advisor to the company since its early days.
Bent added: “Another really unusual trait was the founders’ ability to articulate which levers they were pushing to control different KPIs — they had a masterful understanding of leading and lagging indicators, how to construct a growth engine, and how to produce network effects. I don’t normally see this level of command of the business KPIs in founders until after the Series B and they were seed founders that had taught the entire team to speak in this language.”
To Valdes, Bent’s investment is not as out of left field as it might first seem.
“She invests in fintech, but not just because of fintech — her thesis is empowerment. So she backs products that empower people, and that is what Beek is working to do,” she told TechCrunch.
Existing backers Greylock and Accel also participated in the latest round, as well as some new strategic angel investors like OpenAI CEO Sam Altman, Figma CEO Dylan Field, Duolingo CPO Jorge Mazal, Rappi co-founder Sebastian Mejía and Nowports CEO Alfonso de los Rios. Motivational speaker Tony Robbins also invested through his company IdealabX. “Many” creators who are active on the platform also invested in the round, including Lorena Ochoa, Mexican world golf champion and Oso Trava, according to Valdes.
A sustainable model
Economically, Valdes believes Beek opting for a marketplace model has proven to be more lucrative than if it had opted to be a media company.
“We have a network effect between listeners and creators that media companies don’t have,” she said. “In the long run, this creates a better and more sustainable business model to become the ‘super app’ for audio than if we were trying to produce it ourselves.”
Ultimately, though, it’s more than the money that drives the business — it’s her passion for wanting to help Latin Americans achieve their dreams.
“The majority of the content that gets consumed is around self help, personal development and business,” she told TechCrunch. “It’s not entertainment content. It’s not fiction content. It’s actually content that will give them bigger possibilities to dream of. And that’s why we exist. We are smart. We are hard workers. We have a lot of opportunities and possibilities…We just need a better narrative in our minds to dream of bigger possibilities. So, that’s what we want to do — build a better Latin American dream.”
Presently, Beek has 51 employees. It plans to use its new capital to build more tools to produce content at scale “so that creators can launch more content” on the platform while “making sure that the experience for listeners is super engaging.”
“People will continue watching El Chapo on Netflix if we don’t make them a much better experience,” Valdes said. “So we need to make Beek addictive. We need to make people addicted to good content that is going to help them improve their lives.”
Source: Tech Crunch