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Friday, January 17, 2020

Today Crunch News, News Updates, Tech News

Today Crunch News, News Updates, Tech News


SpaceX’s Crew Dragon astronaut spacecraft has a key launch Saturday — here’s what’s going down

Posted: 17 Jan 2020 01:45 PM PST

SpaceX and NASA are getting ready for a key test of SpaceX’s Crew Dragon commercial crew spacecraft on Saturday, and this should be the last major milestone that SpaceX has to pass in terms of demonstration missions before actual crew climb aboard the spaceship for a trip to the International Space Station. Starting at 8 AM ET (5 AM PT), a launch window opens during which SpaceX will hopefully perform what’s called an “in-flight abort” test of its Crew Dragon spacecraft and Falcon 9 launch vehicle, to demonstrate how its safety systems would protect astronauts on board in the unlikely event of an unexpected incident during a real crew flight.

The plan for this mission is to launch the Crew Dragon capsule atop a Falcon 9 — in this case, one that’s using a refurbished booster stage previously flown on three prior missions. This will be the Falcon 9’s last flight, however, as the plan includes loss of the rocket this time around instead of a controlled landing. The launch is intentionally being terminated early — just after the rocket achieves its “Max Q” point, or the moment during its flight when it’s under maximum atmospheric stress, at about 84 seconds post-liftoff.

At that point, the rocket will be about 19 kilometres (roughly 62,000 feet) above the surface of the Earth, and about four kilometres (2.5 miles) from its launch pad at Cape Canaveral Air Force Station in Florida. SpaceX has rigged the Dragon spacecraft’s launch escape system to automatically trigger at this point, which will separate the crew spacecraft from the Falcon and propel it away from the rocket very quickly in order to get it to a safe distance to protect any future passengers. After around five minutes past launch, the Dragon will deploy its parachute system, and then at around 10 minutes after it should splash down in the Atlantic Ocean between 3 and 3.5 km (roughly 2 miles) from shore.

After that, crews will recover the Dragon capsule from the ocean, and return it to Cape Canaveral, where SpaceX will study the spacecraft, including human-sized dummies acting as passengers and sensors within to monitor what happened in the cabin during the test. They’ll use this to ideally show that the abort process works as designed and will protect astronauts on board the spacecraft in case of any emergency that results in an early mission termination.

In addition to the in-flight abort system, SpaceX and NASA are also using this mission to prepare for crewed flight in a number of other ways. Today, astronauts Bob Behnken and Doug Hurley, who will crew the first piloted mission hopefully later this year, ran through a dry run of what they would experience in a live mission. They donned space suits and walked the transom that connects the Crew Dragon and Falcon 9 to its launchpad support structure, as NASA Administrator Jim Bridenstine noted on Twitter.

The test will not involve any attempt to recover the rocket, as mentioned, and SpaceX Crew Mission Management Director Benji Reed said during a press conference today that they do anticipate some kind of “ignition” event with the Falcon 9’s second stage, which could possibly be large enough to be seen from the ground, he said. SpaceX crews will be on standby to recover as much as possible from the rocket wreckage, which will be useful to study, and they’ll also be on hand to minimize any potential environmental impact from the test.

This test was originally scheduled for roughly six months ago, but SpaceX’s Crew Dragon capsule intended for the mission was destroyed during an unexpected incident while test firing its engines. SpaceX and NASA investigated that explosion, and are now confident that they understand the cause of that incident, and have taken steps to ensure that a similar problem doesn’t happen again. The Crew Dragon being used now for Saturday’s test was originally intended to be the one used for actually flying astronauts, and another capsule is currently in development to serve that purpose.

SpaceX’s launch window for this test opens at 8 AM ET tomorrow, but spans four hours, and Reed said it could actually extend longer tomorrow if need be. NASA Commercial Crew program manager Kathy Leuders explained today that it’s crucial that not only launch conditions, but also recovery conditions, are optimal for the purposes of this test, so both will play a factor in when exactly they launch. Unlike with launches actually designed to reach a specific orbit, timing doesn’t have to be quite as on the nose, so there’s more flexibility in terms of making the decision to proceed or stand down. SpaceX has backup opportunities on both Sunday and Monday should they be required.

We’ll have a live stream and live coverage of the test starting tomorrow morning, so check back early Saturday. The stream will kick off around 15 minutes prior to the scheduled opening of the launch window, so at around 7:45 AM ET.

As Alphabet crests the $1T mark, SaaS stocks reach all-time highs of their own

Posted: 17 Jan 2020 01:21 PM PST

Continuing our irregular surveys of the public markets, two things happened this week that are worth our time. First, a third domestic technology company — Alphabet — passed the $1 trillion market capitalization threshold. And, second, software as a service (SaaS) stocks reached record highs on the public markets after retreating over last summer.

The two milestones, only modestly related events, indicate how temperate the public waters are for technology companies today, a fact that should extend warmth into the private market where startups, and their venture capital backers, work.

The happenings are good news for technology startups for a number of reasons, including that major tech players have never had as much wealth in hand with which to buy smaller companies, and strong SaaS valuations help both smaller startups fundraise, and their larger brethren possibly exit.

Indeed, the stridently good valuations that major tech companies and their smaller siblings enjoy today should be just the sort of market conditions under which unicorns want to debut. We’ll continue to make this point so long as the public markets continue to rise, pricing tech companies that have already floated higher like the cliche’s own tide.

But while Alphabet, Microsoft and Apple are worth $3.68 trillion as a trio, and SaaS stocks are now worth 12.3x times their revenue (using enterprise value instead of market cap, for those keeping score at home), not every private, venture-backed company will necessarily benefit from public investor largesse.

What about tech-ish startups?

How much the current public-market tech valuation expansion will help companies that are increasingly sorted into the tech-enabled bucket isn’t clear; some companies that went public in 2019 were quickly spit up by investors unwilling to support valuations that matched or rose above their final private valuations. SmileDirectClub was one such offering.

The dividing line between what counts as tech — often fuzzy — appears to be slicing along gross margin lines, and the repeatability of business. The higher margin, and more recurring a company is, the more it’s worth. This market reality is why SaaS stocks’ recent return to form is not a surprise.

For Casper and One Medical, the first two venture-backed IPO hopefuls of the year, the more tech-ish they can appear between now and pricing the better. Because technology companies today are valued so highly, perhaps even a faint dusting of tech will save their valuations as they cross the chasm between private and adult.

Cruise calls for a new way to determine commercial readiness of self-driving cars

Posted: 17 Jan 2020 12:59 PM PST

Cruise co-founder and CTO Kyle Vogt said Friday that disengagement reports released annually by California regulators are not a proxy for the commercial readiness or safety of self-driving cars.

Vogt, in a lengthy post on Medium, called for a new metric to determine whether an autonomous vehicle is ready for commercial deployment. The post suggests that the autonomous vehicle company, which had a valuation of $19 billion as of May, is already developing more comprehensive metrics.

The California Department of Motor Vehicles, which regulates the permits for autonomous vehicle testing on public roads in the state, requires companies to submit an annual report detailing "disengagements,” a term that means the number of times drivers have had to take control of a car. The DMV defines a disengagement as any time a test vehicle operating on public roads has switched from autonomous to manual mode for an immediate safety-related reason or due to a failure of the system. 

“It's woefully inadequate for most uses beyond those of the DMV,” Vogt wrote. “The idea that disengagements give a meaningful signal about whether an AV is ready for commercial deployment is a myth.”

These disengagement reports will be released in a few weeks. Cruise did share some of its disengagement data, specifically the number of miles driven per disengagement event, between 2017 and 2019.

cruise disengagement data 2019

The so-called race to commercialize autonomous vehicles has involved a fair amount of theater, including demos. This lack of data has made it nearly impossible to determine if a company’s self-driving cars are safe enough or ready for the big and very real stage of shuttling people from Point A to Point B on city streets. Disengagement reports — as flawed as they might be — have been one of the only pieces of data that the public, and the media, have access to.

How safe is safe enough?

While that data might provide some insights, it doesn’t help answer the fundamental question for every AV developer planning to deploy robotaxis for the public: “How safe is safe enough?”

Vogt’s comments signal Cruise’s efforts to find a practical means of answering that question.

But if we can't use the disengagement rate to gauge commercial readiness, what can we use? Ultimately, I believe that in order for an AV operator to deploy AVs at scale in a ridesharing fleet, the general public and regulators deserve hard, empirical evidence that an AV has performance that is super-human (better than the average human driver) so that the deployment of the AV technology has a positive overall impact on automotive safety and public health.
This requires a) data on the true performance of human drivers and AVs in a given environment and b) an objective, apples-to-apples comparison with statistically significant results. We will deliver exactly that once our AVs are validated and ready for deployment. Expect to hear more from us about this very important topic soon.

Competitors agree

Cruise is hardly the only company to question the disengagement reports, although this might be the most strongly worded and public call to date. Waymo told TechCrunch that it takes a similar view.

The reports have long been a source of angst among AV developers. The reports do provide information that can be useful to the public, such as number of vehicles testing on public roads. But it’s hardly a complete picture of any company’s technology.

The reports are wildly different; each company provides varying amounts of information, all in different formats. There is also disagreement over what is and what is not a disengagement. For instance, this issue got more attention in 2018 when Jalopnik questioned an incident involving a Cruise vehicle. In that case, a driver took manual control of the wheel as it passed through an intersection, but it wasn’t reported as a disengagement. Cruise told Jalopnik at the time that it didn't meet the standard for California regulations.

The other issue is that disengagements don’t provide an “apples to apples” comparison of technology, as these test vehicles operate in a variety of environments and conditions.

Disengagements also often rise and fall along with the scale of testing. Waymo, for instance, told TechCrunch that its disengagements will likely increase as it scales up its testing in California.

And finally, more companies are using simulation or virtual testing instead of sending fleets of cars on public roads to test every new software build. Aurora, another AV developer, emphasizes its use of its virtual testing suite. The disengagement reports don’t include any of that data.

Vogt’s post also called out the industry for conducting carefully “curated demo routes that avoid urban areas with cyclists and pedestrians, constrain geofences and pickup/dropoff locations, and limit the kinds of maneuvers the AV will attempt during the ride.”

The shot could be interpreted as a shot at Waymo, which has recently conducted driverless demos on public streets in Chandler, Ariz. with reporters. TechCrunch was one of the first to have a driverless ride last year. However, demos are common practice among many other self-driving vehicle startups, and are particularly popular around events like CES. Cruise has conducted at least one demo, which was with the press in 2017.

Vogt suggested that raw, unedited drive footage that “covers long stretches of driving in real world situations” is hard to fake and a more qualitative indicator of technology maturity.

Eaze’s struggles reflect falling VC interest in cannabis startups

Posted: 17 Jan 2020 11:40 AM PST

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Yesterday, TechCrunch reported that Eaze, a well-known cannabis-focused startup, is struggling to stay in business amidst a cash crunch, leadership turmoil, banking issues and a business model pivot. It’s a compelling, critical read.

The news, however, asks a question: How are other cannabis-focused startups faring? We’ll explore the question through the lens of fundraising and the public market results of public cannabis companies in Canada.

Fundraising

EU lawmakers are eyeing risk-based rules for AI, per leaked white paper

Posted: 17 Jan 2020 11:12 AM PST

The European Commission is considering a temporary ban on the use of facial recognition technology, according to a draft proposal for regulating artificial intelligence obtained by Euroactiv.

Creating rules to ensure AI is ‘trustworthy and human’ has been an early flagship policy promise of the new Commission, led by president Ursula von der Leyen.

But the leaked proposal suggests the EU’s executive body is in fact leaning towards tweaks of existing rules and sector/app specific risk-assessments and requirements, rather than anything as firm as blanket sectoral requirements or bans.

The leaked Commission white paper floats the idea of a three-to-five-year period in which the use of facial recognition technology could be prohibited in public places — to give EU lawmakers time to devise ways to assess and manage risks around the use of the technology, such as to people’s privacy rights or the risk of discriminatory impacts from biased algorithms.

“This would safeguard the rights of individuals, in particular against any possible abuse of the technology,” the Commission writes, adding that: “It would be necessary to foresee some exceptions, notably for activities in the context of research and development and for security purposes.”

However the text raises immediate concerns about imposing even a time-limited ban — which is described as “a far-reaching measure that might hamper the development and uptake of this technology” — and the Commission goes on to state that its preference “at this stage” is to rely on existing EU data protection rules, aka the General Data Protection Regulation (GDPR).

The white paper contains a number of options the Commission is still considering for regulating the use of artificial intelligence more generally.

These range from voluntary labelling; to imposing sectorial requirements for the public sector (including on the use of facial recognition tech); to mandatory risk-based requirements for “high-risk” applications (such as within risky sectors like healthcare, transport, policing and the judiciary, as well as for applications which can “produce legal effects for the individual or the legal entity or pose risk of injury, death or significant material damage”); to targeted amendments to existing EU product safety and liability legislation.

The proposal also emphasizes the need for an oversight governance regime to ensure rules are followed — though the Commission suggests leaving it open to Member States to choose whether to rely on existing governance bodies for this task or create new ones dedicated to regulating AI.

Per the draft white paper, the Commission says its preference for regulating AI are options 3 combined with 4 & 5: Aka mandatory risk-based requirements on developers (of whatever sub-set of AI apps are deemed “high-risk”) that could result in some “mandatory criteria”, combined with relevant tweaks to existing product safety and liability legislation, and an overarching governance framework.

Hence it appears to be leaning towards a relatively light-touch approach, focused on “building on existing EU legislation” and creating app-specific rules for a sub-set of “high-risk” AI apps/uses — and which likely won’t stretch to even a temporary ban on facial recognition technology.

Much of the white paper is also take up with discussion of strategies about “supporting the development and uptake of AI” and “facilitating access to data”.

“This risk-based approach would focus on areas where the public is at risk or an important legal interest is at stake,” the Commission writes. “This strictly targeted approach would not add any new additional administrative burden on applications that are deemed ‘low-risk’.”

EU commissioner Thierry Breton, who oversees the internal market portfolio, expressed resistance to creating rules for artificial intelligence last year — telling the EU parliament then that he “won’t be the voice of regulating AI“.

For “low-risk” AI apps, the white paper notes that provisions in the GDPR which give individuals the right to receive information about automated processing and profiling, and set a requirement to carry out a data protection impact assessment, would apply.

Albeit the regulation only defines limited rights and restrictions over automated processing — in instances where there’s a legal or similarly significant effect on the people involved. So it’s not clear how extensively it would in fact apply to “low-risk” apps.

If it’s the Commission’s intention to also rely on GDPR to regulate higher risk stuff — such as, for example, police forces’ use of facial recognition tech — instead of creating a more explicit sectoral framework to restrict their use of a highly privacy-hostile AI technologies — it could exacerbate an already confusingly legislative picture where law enforcement is concerned, according to Dr Michael Veale, a lecturer in digital rights and regulation at UCL.

“The situation is extremely unclear in the area of law enforcement, and particularly the use of public private partnerships in law enforcement. I would argue the GDPR in practice forbids facial recognition by private companies in a surveillance context without member states actively legislating an exemption into the law using their powers to derogate. However, the merchants of doubt at facial recognition firms wish to sow heavy uncertainty into that area of law to legitimise their businesses,” he told TechCrunch.

“As a result, extra clarity would be extremely welcome,” Veale added. “The issue isn’t restricted to facial recognition however: Any type of biometric monitoring, such a voice or gait recognition, should be covered by any ban, because in practice they have the same effect on individuals.”

An advisory body set up to advise the Commission on AI policy set out a number of recommendations in a report last year — including suggesting a ban on the use of AI for mass surveillance and social credit scoring systems of citizens.

But its recommendations were criticized by privacy and rights experts for falling short by failing to grasp wider societal power imbalances and structural inequality issues which AI risks exacerbating — including by supercharging existing rights-eroding business models.

In a paper last year Veale dubbed the advisory body’s work a “missed opportunity” — writing that the group “largely ignore infrastructure and power, which should be one of, if not the most, central concern around the regulation and governance of data, optimisation and 'artificial intelligence' in Europe going forwards”.

Baraja’s unique and ingenious take on lidar shines in a crowded industry

Posted: 17 Jan 2020 11:02 AM PST

It seems like every company making lidar has a new and clever approach, but Baraja takes the cake. Its method is not only elegant and powerful, but fundamentally avoids many issues that nag other lidar technologies. But it’ll need more than smart tech to make headway in this complex and evolving industry.

To understand how lidar works in general, consult my handy introduction to the topic. Essentially a laser emitted by a device skims across or otherwise very quickly illuminates the scene, and the time it takes for that laser’s photons to return allows it to quite precisely determine the distance of every spot it points at.

But to picture how Baraja’s lidar works, you need to picture the cover of Pink Floyd’s “Dark Side of the Moon.”

GIFs kind of choke on rainbows, but you get the idea.

Imagine a flashlight shooting through a prism like that, illuminating the scene in front of it — now imagine you could focus that flashlight by selecting which color came out of the prism, sending more light to the top part of the scene (red and orange) or middle (yellow and green). That’s what Baraja’s lidar does, except naturally it’s a bit more complicated than that.

The company has been developing its tech for years with the backing of Sequoia and Australian VC outfit Blackbird, which led a $32 million round late in 2018 — Baraja only revealed its tech the next year and was exhibiting it at CES, where I met with co-founder and CEO Federico Collarte.

“We’ve stayed in stealth for a long, long time,” he told me. “The people who needed to know already knew about us.”

The idea for the tech came out of the telecommunications industry, where Collarte and co-founder Cibby Pulikkaseril thought of a novel use for a fiber optic laser that could reconfigure itself extremely quickly.

We thought if we could set the light free, send it through prism-like optics, then we could steer a laser beam without moving parts. The idea seemed too simple — we thought, ‘if it worked, then everybody would be doing it this way,’ ” he told me, but they quit their jobs and worked on it for a few months with a friends and family round, anyway. “It turns out it does work, and the invention is very novel and hence we've been successful in patenting it.”

Rather than send a coherent laser at a single wavelength (1550 nanometers, well into the infrared, is the lidar standard), Baraja uses a set of fixed lenses to refract that beam into a spectrum spread vertically over its field of view. Yet it isn’t one single beam being split but a series of coded pulses, each at a slightly different wavelength that travels ever so slightly differently through the lenses. It returns the same way, the lenses bending it the opposite direction to return to its origin for detection.

It’s a bit difficult to grasp this concept, but once one does it’s hard to see it as anything but astonishingly clever. Not just because of the fascinating optics (something I’m partial to, if it isn’t obvious), but because it obviates a number of serious problems other lidars are facing or about to face.

First, there are next to no moving parts whatsoever in the entire Baraja system. Spinning lidars like the popular early devices from Velodyne are being replaced at large by ones using metamaterials, MEMS, and other methods that don’t have bearings or hinges that can wear out.

Baraja’s “head” unit, connected by fiber optic to the brain.

In Baraja’s system, there are two units, a “dumb” head and an “engine.” The head has no moving parts and no electronics; it’s all glass, just a set of lenses. The engine, which can be located nearby or a foot or two away, produces the laser and sends it to the head via a fiber-optic cable (and some kind of proprietary mechanism that rotates slowly enough that it could theoretically work for years continuously). This means it’s not only very robust physically, but its volume can be spread out wherever is convenient in the car’s body. The head itself also can be resized more or less arbitrarily without significantly altering the optical design, Collarte said.

Second, the method of diffracting the beam gives the system considerable leeway in how it covers the scene. Different wavelengths are sent out at different vertical angles; a shorter wavelength goes out toward the top of the scene and a slightly longer one goes a little lower. But the band of 1550 +/- 20 nanometers allows for millions of fractional wavelengths that the system can choose between, giving it the ability to set its own vertical resolution.

It could for instance (these numbers are imaginary) send out a beam every quarter of a nanometer in wavelength, corresponding to a beam going out every quarter of a degree vertically, and by going from the bottom to the top of its frequency range cover the top to the bottom of the scene with equally spaced beams at reasonable intervals.

But why waste a bunch of beams on the sky, say, when you know most of the action is taking place in the middle part of the scene, where the street and roads are? In that case you can send out a few high frequency beams to check up there, then skip down to the middle frequencies, where you can then send out beams with intervals of a thousandth of a nanometer, emerging correspondingly close together to create a denser picture of that central region.

If this is making your brain hurt a little, don’t worry. Just think of Dark Side of the Moon and imagine if you could skip red, orange and purple, and send out more beams in green and blue — and because you’re only using those colors, you can send out more shades of green-blue and deep blue than before.

Third, the method of creating the spectrum beam provides against interference from other lidar systems. It is an emerging concern that lidar systems of a type could inadvertently send or reflect beams into one another, producing noise and hindering normal operation. Most companies are attempting to mitigate this by some means or another, but Baraja’s method avoids the possibility altogether.

“The interference problem — they’re living with it. We solved it,” said Collarte.

The spectrum system means that for a beam to interfere with the sensor it would have to be both a perfect frequency match and come in at the precise angle at which that frequency emerges from and returns to the lens. That’s already vanishingly unlikely, but to make it astronomically so, each beam from the Baraja device is not a single pulse but a coded set of pulses that can be individually identified. The company’s core technology and secret sauce is the ability to modulate and pulse the laser millions of times per second, and it puts this to good use here.

Collarte acknowledged that competition is fierce in the lidar space, but not necessarily competition for customers. “They have not solved the autonomy problem,” he points out, “so the volumes are too small. Many are running out of money. So if you don’t differentiate, you die.” And some have.

Instead companies are competing for partners and investors, and must show that their solution is not merely a good idea technically, but that it is a sound investment and reasonable to deploy at volume. Collarte praised his investors, Sequoia and Blackbird, but also said that the company will be announcing significant partnerships soon, both in automotive and beyond.

Where FaZe Clan sees the future of gaming and entertainment

Posted: 17 Jan 2020 10:20 AM PST

Lee Trink has spent nearly his entire career in the entertainment business. The former president of Capitol Records is now the head of FaZe Clan, an esports juggernaut that is one of the most recognizable names in the wildly popular phenomenon of competitive gaming.

Trink sees FaZe Clan as the voice of a new generation of consumers who are finding their voice and their identity through gaming — and it’s a voice that’s increasingly speaking volumes in the entertainment industry through a clutch of competitive esports teams, a clothing and lifestyle brand and a network of creators who feed the appetites of millions of young gamers.

As the company struggles with a lawsuit brought by one of its most famous players, Trink is looking to the future — and setting his sights on new markets and new games as he consolidates FaZe Clan’s role as the voice of a new generation.

“The teams and social media output that we create is all marketing,” he says. “It's not that we have an overall marketing strategy that we then populate with all of these opportunities. We're not maximizing all of our brands.”

The paradox of 2020 VC is that the largest funds are doing the smallest rounds

Posted: 17 Jan 2020 09:23 AM PST

I talked yesterday about how VCs are just tired these days. Too many deals, too little time per deal, and constant hyper-competition with other VCs for the same equity.

One founder friend of mine noted to me last night that he has already received inbound requests from more than 90 investors over the past year about his next round — and he's not even (presumably) fundraising. "I may have missed a few," he deadpans — and really, how could one not?

All that frenetic activity, though, leads us to the paradox at the heart of 2020 venture capital: It's the largest funds that are writing the earliest, smallest checks.

That's a paradox because big funds need big rounds to invest in. A billion-dollar fund can't write 800 $1 million seed checks with dollars left over for management fees (well, they could, but that would be obnoxious and impossible to track). Instead, the usual pattern is that as a firm's fund size grows, its managing partners increasingly move to later-stage rounds to be able to efficiently deploy that capital. So the $200 million fund that used to write $8 million Series As transforms into a $1 billion fund writing $40 million Series Bs and Cs.

That's logical. Yet, the real logic is a bit more complicated. Namely, that everyone is raising huge funds.

As this week's big VC report from the National Venture Capital Association made clear, 2019 was in many ways the year of the big fund (and SoftBank didn't even raise!). Twenty-one "mega-funds" launched last year (defined as raising more than $500 million), and that was actually below the numbers in 2018.

All that late-stage capital is scouring for late-stage deals, but there just aren't that many deals to do. Sure, there are great companies and potentially great returns lying around, but there are also dozens of funds plotting to get access to that cap table, and valuation is one of the only levers these investors have to stand out from the fray.

This is the story of Plaid in many ways. The fintech data API layer, which Visa announced it is intending to acquire for $5.3 billion, raised a $250 million Series C in late 2018 from Index and Kleiner, all according to Crunchbase. Multiple VC sources have told me that "everyone" looked at the deal (everyone being the tired VCs if you will).

But as one VC who said "no" on the C round defended to me this week, the valuation last year was incredibly rich. The company had revenues in 2018 in the upper tens of millions, or so I have been told, which coupled with its publicly reported $2.65 billion Series C valuation implies a revenue multiple somewhere in the 30-50x range — extremely pricey given the company's ongoing fight with banks to ensure it can maintain data access to its users' accounts.

Jeff Kauflin at Forbes reported that the company's revenues in 2019 are now in the lower three digits of millions, which means that Visa likely paid a similarly expensive multiple to acquire the company. Kleiner and Index doubled their money in a year or so, and no one should complain about that kind of IRR (particularly in growth investing), but if it weren't for Visa and the beneficial alchemy of exit timing, all might have turned out very differently.

Worse than just expensive valuations, these later-stage rounds can become very proprietary and exclusive. From the sounds of it, Plaid ran a fairly open process for its Series C round, which allowed a lot of firms to look at the deal, helping to drive the valuation up while limiting dilution for earlier investors and the founder. But that's not the only way to handle it.

Increasingly, firms that invested early are also trying to invest later. That Series A investor who put in $5 million also wants to put in the $50 million Series B and the $250 million Series C. After all, they have the capital, already know the company, have a relationship with the CEO and can avoid a time-consuming fundraise in the process.

So for many deals today, those later-stage cap tables are essentially locking out new investors, because there is already so much capital sitting around the cap table just salivating to double down.

That gets us straight to the paradox. In order to have access to later-stage rounds, you have to already be on the cap table, which means that you have to do the smaller, earlier-stage rounds. Suddenly, growth investors are coming back to early-stage rounds (including seed) just to have optionality on access to these startups and their fundraises.

As one VC explained to me last week (paraphrasing), "What's weird today is that you have firms like Sequoia who show up for seed rounds, but they don't really care about … anything. Valuation, terms, etc. It's all a play for those later-stage rounds." I think that's a bit of an exaggeration, to be clear, but ultimately, those one million-dollar checks are essentially a rounding error for the largest funds. The real return is in the mega rounds down the road.

Does that mean seed funds will cease to exist? Certainly not, but it's hard to make money and build a balanced, risk-adjusted portfolio when your competitors literally don't care and consider the investment a marketing and access expense. As for founders — the times are still really, really good if you can check the right VC boxes.

Harvestr gathers user feedback in one place

Posted: 17 Jan 2020 09:23 AM PST

Meet Harvestr, a software-as-a-service startup that wants to help product managers centralize customer feedback from various places. Product managers can then prioritize outstanding issues and feature requests. Finally, the platform helps you get back to your customers once changes have been implemented.

The company just raised a $650,000 funding round led by Bpifrance, with various business angels also participating, such as 360Learning co-founders Nicolas Hernandez and Guillaume Alary, as well as Station F director Roxanne Varza through the Atomico Angel Programme.

Harvestr integrates directly with Zendesk, Intercom, Salesforce, Freshdesk, Slack and Zapier. For instance, if a user opens a ticket on Zendesk and another user interacts with your support team through an Intercom chat widget, everything ends up in Harvestr.

Once you have everything in the system, Harvestr helps you prioritize tasks that seem more urgent or that are going to have a bigger impact.

When you start working on a feature or when you're about to ship it, you can contact your users who originally reached out to talk to you about it.

Eventually, Harvestr should help you build a strong community of power users around your product. And there are many advantages in pursuing this strategy.

First, you reward your users by keeping them in the loop. It should lead to higher customer satisfaction and lower churn. Your most engaged customers could also become your best ambassadors to spread the word around.

Harvestr costs $49 per month for five seats and $99 per month for 20 seats. People working for 360Learning, HomeExchange, Dailymotion and other companies are currently using it.

Daily Crunch: NBCUniversal reveals its streaming plans

Posted: 17 Jan 2020 09:10 AM PST

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. NBCU's streaming service Peacock launches April 15 for Comcast subscribers, everyone else on July 15

NBCUniversal shared the details about its upcoming streaming service at an investor event yesterday. There will be a free tier of Peacock that includes more than 7,500 hours of programming, including classic shows and the current seasons of freshman broadcast series.

But if you want to see the original programming that NBCUniversal is creating for Peacock — as well as get early access to "The Tonight Show Starring Jimmy Fallon" and "Late Night with Seth Meyers" and twice as many hours of content overall — you'll need Peacock Premium, which will be bundled for Comcast and Cox subscribers, and will cost $4.99 per month otherwise.

2. Elon Musk shares details about SpaceX's Starship, including estimated 20 to 30-year service life

Answering questions on Twitter, Musk said that Starship — meant to support a human colony on Mars — will need to operate on a brisk schedule. The spacecraft is being designed with the plan of flying it for an average of three flights per day, each carrying over 100 tons per flight, for a total of more than 1,000 flights per year per vehicle.

3. Xiaomi spins off POCO as an independent company

POCO, a sub-smartphone brand that Xiaomi created in 2018, is spinning off a standalone company that will now run independently of the Chinese electronics giant.

4. Zendesk launches Sell Marketplace to bring app store to CRM product

Zendesk acquired Base CRM in 2018 to give customers a CRM component to go with its core customer service software. After purchasing the company, it changed the name to Sell, and now the company has launched a new Sell Marketplace.

5. Funnel closes $47M Series B to prepare marketing data for better reporting and analysis

Funnel is a Stockholm-based startup that offers technology to help businesses prepare — or make "business-ready" — their marketing data for better reporting and analysis. The company says it will use the injection of capital to accelerate its plans in the U.S.

6. Chinese podcasting and audio content app Lizhi debuts on Nasdaq

Lizhi, one of China's biggest audio content apps, is debuting on Nasdaq today under the ticker symbol LIZI. It’s going public before its major Chinese competitors, but Ximalaya is expected to also list in the United States later this year.

7. Space Angels' Chad Anderson on entering a new decade in the 'entrepreneurial space age'

Space as an investment target is trending upwards in the VC community, but specialist firm Space Angels has been focused on the sector longer than most. The network of angel investors just published its most recent quarterly overview, revealing that investors put nearly $6 billion in capital into space companies across 2019. (Extra Crunch membership required.)

How scooter charging startups want to make the industry more profitable

Posted: 17 Jan 2020 09:00 AM PST

In an industry where unit economics are low, operators are seeking ways to improve margins while also maintaining fleet reliability and low prices for riders. Charging stations may be part of the solution. Already, there are a handful of companies, other than the operators themselves, looking to address this issue by deploying charging stations. The latest one that has come onto our radar is called Charge, which just launched charging hubs in Los Angeles for both bikes and scooters.

“Charge came from two investors of Lime who were noticing a trend in the several markets Lime was rolling out into,” Charge Global Head of Community Quemuel Arroyo told TechCrunch. “They saw the Achilles’ heel was the lack of charging infrastructure, and that infrastructure could allow scooters to be charged all day and would undo the litter and obstacles in the right of way that scooters have become in the world.”

Charge’s hubs, located on private properties, are designed to make it easier for gig workers to charge several scooters at once. Workers can reserve space at hubs for 24 hours at a time, with each secure bay supporting 18 scooters and each hub accommodating 72 scooters at a time. Once charged, workers can pick them up for redeployment.

“In addition to the solution of providing charge, we’re enhancing the experience for juicers,” Arroyo said.

Bird, Lime, Spin and other micromobility operators rely heavily on independent contractors to collect their scooters, charge them overnight and then redeploy them in the morning. That means scooter companies don’t have to use their own gas, labor and electricity in order to recharge these vehicles.

For gig workers who rely on charging scooters as a source of income, having a place to go other than their homes to charge a bunch of scooters at once is a major benefit. The catch, however, is that Charge costs $30 to charge while Bird and Lime, for example, offer a base pay of $3 to $5 for every charged and released scooter, but pay more depending on how difficult it is to locate.

Let’s use Spin, which pays $5 per scooter charged, as an example. If someone collects 15 scooters and brings them to a Charge hub, that worker will receive $75 from Spin for charging and redeploying the scooters, but will have to pay Charge $30. That’s a net profit of just $45.

“It’s not cheaper for them, but juicers say that instead of being able to charge 12 a night, they can charge 24 or more scooters per night,” Arroyo said. “That’s where we see an incremental increase for revenue for juicers themselves.”

Trying the calculation again with 24 scooters, the worker would pay Charge $30 and get $120 from Spin for a net profit of $90. That doesn’t seem all that great, but it could be depending on someone’s situation. Maybe one person only has enough space to charge five scooters at a time, so they would only be able to make $25 per night charging Spin scooters. If that same person can then charge 24 scooters a night, they still end up making a bit more by utilizing Charge. On top of that, they don’t have to crowd their living spaces and put themselves at risk of fire hazards.

Even though micromobility is a relatively young industry, there are already a number of startups specifically focused on charging micromobility vehicles. Collectively, they have raised more than $19 million in funding.

In addition to the hubs Charge has launched in Los Angeles, the company is also in talks with the city of Paris to deploy smart charging stations on sidewalks, which can accommodate up to 12 scooters.

“We’ve gotten an exclusive contract with the city, where the mayor says her streets are compromised and they can’t continue to allow scooter takeover of pedestrian space,” Arroyo said.

In this type of model, riders would be able to rent and return vehicles using the docks. This model is more similar to that of Swiftmile, which is working with the city of Austin to deploy 10 public-use sidewalk stations. That comes out to 80 parking slips per station. The company hopes to do this by the end of the year. With this type of model, charging companies charge operators based on usage.

swiftmile scooter charging

Swiftmile’s guerilla marketing at SXSW

Swiftmile, for example, charges the operators by the minute, but not to exceed a certain amount, depending on the market. Initially, the docking system will be open to all operators in order to show them how it works and how beneficial it can be. After a certain period of time, Swiftmile will only charge its customers' scooters. Swiftmile has also partnered with Spin to create branded charging hubs exclusively for Spin scooters.

"Cities and local officials have expressed ample concern about scooter clutter, and Spin has led the way in solving that problem, with the goal of making micromobility a true and sustainable solution for people to get around," Spin CEO and co-founder Derrick Ko told TechCrunch. "We've heavily invested in our charging and parking solution — Spin Hubs — and have expanded our offerings, such as incentivizing riders to park in designated drop zones or at a Hub."

Perch Mobility is another competitor in this space, which says it’s “built by chargers for chargers.” Perch, which also operates in Los Angeles, offers three types of products: the pod, the tri-pod and the suite. All three offer unlimited charging for a fixed price, ranging from $25 per night for charging 14 scooters and $45 per night to charge 21 scooters at a time.

Using Spin again as an example, a worker paying $25 a night to charge 14 scooters would earn $70 from Spin, resulting in a net income of $45.

“We are focused on providing our users both sustainable incomes and community sustainability,” Perch Mobility CEO Tom Schreiber told TechCrunch. “We serve all parts of a community, including lower-income areas.”

Perch Mobility gets workers more money, but Charge says its systems are better for the environment, as they utilize lithium-ion green battery power.

“We’re confident we have a completely green, environmentally sound asset that really helps introduce a missing parameter to make micromobility more successful,” Arroyo said.

If I were a charger, I’d surely continue to care about the environment, but I’d probably be more interested in making the most money.

*This story has been updated to clarify Charge's pricing structure.

Discount student tickets available for TC Sessions: Mobility 2020

Posted: 17 Jan 2020 09:00 AM PST

"Revolutionary" may be an over-used adjective, but how else to describe the rapid evolution in mobility technology? Join us in San Jose, Calif., on May 14 for TC Sessions: Mobility 2020. Our second annual day-long conference cuts through the hype and explores the current and future state of the technology and its social, regulatory and economic impact.

If you're a student with a passion for mobility and transportation tech, listen up. We can't talk about the future if we're not willing to invest in the next generation of mobility visionaries. That's why we offer student tickets at a deep discount — $50 each. Invest in your future, save $200 and spend the day with more than 1,000 of mobility tech's brightest minds, movers and makers.

As always, you can count on a program packed with top-notch speakers, panel discussions, fireside chats and workshops. We're in the process of building our agenda, but we're ready to share our first two guests with you: Boris Sofman and Nancy Sun.

Sofman is the engineering director at Waymo and former co-founder and CEO of Anki. Sun is the co-founder and chief engineer of Ike Robotics. Read more about Sofman and Sun's accomplishments here. We can't wait to hear what they have to say about automation and robotics.

Keep checking back, because we'll announce more exciting speakers in the coming weeks.

You'll also have plenty of time for world-class networking. What better place for a student to impress — and possibly score a great internship or job? You might even meet a future co-founder or an investor. That knocking sound you hear is opportunity. Open the door.

Hold up… you're not a student but still love a bargain? We've got you covered, too. You can save $100 if you purchase an early-bird ticket before April 9.

Be part of the revolution. Join the mobility and transportation tech community — the top technologists, investors researchers and visionaries — on May 14 at TC Sessions: Mobility 2020 in San Jose. Get your student ticket today.

Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2020? Contact our sponsorship sales team by filling out this form.

Cambridge Analytica email chain with Facebook sheds new light on data misuse scandal

Posted: 17 Jan 2020 08:23 AM PST

Cambridge Analytica whistleblower Brittany Kaiser has released new documents today that illuminate the initial jockeying between the company and Facebook as they discussed the need for Cambridge Analytica to delete data associated with 87 million Facebook users’ profiles.

The data was improperly obtained in 2014 by researchers with access to Facebook’s developer platform who were being paid by Cambridge Analytica to obtain and process social media users’ information for the purpose of targeting political ads.

In December 2015 a Guardian article about Cambridge academic Dr Aleksandr Spectre (Kogan) outlined how he had acquired the Facebook profiles for research, and that Cambridge Analytica had improperly acquired that data.

In subsequent Washington Senate hearings into the scandal, Mark Zuckerburg apologized for having failed to check that Cambridge Analytica had deleted the information.

At the time he said: "When we heard back from Cambridge Analytica that they had told us that they weren't using the data and deleted it, we considered it a closed case. In retrospect, that was clearly a mistake. We shouldn't have taken their word for it. We've updated our policy to make sure we don't make that mistake again."

Instead, Facebook let the political consultancy self-certify via email and then in a signed document [found below] that it had destroyed the records, which the social network said had been acquired in violation of its rules.

Cambridge Analytica data deletion certification from CEO Alexander Nix, delivered to Facebook in January 2016

Furthermore, for example, in a submission to the UK Parliament, Facebook CTO Mike Schroepfer said: “In late 2015, when we learned Kogan had shared the data, we immediately banned TIYDL [the personality quiz app used to harvest data] from our platform and demanded that he delete all data he obtained from that app. We also demanded deletion from everyone that Kogan identified as having been passed some data, including Cambridge Analytica, and certification from all parties that the deletion had been completed.”

The information Kaiser releases today reveals the initial exchange where Facebook only requested by email that CA delete the data — and only asked the company to "provide us with confirmation" [i.e. of deletion], with no mention of a specific process of ‘certification’, as Schroepfer later told the UK parliament. It wasn’t until January 2016 that Facebook received the signed certification from Cambridge Analytica CEO Alexander Nix vowing the company had deleted the data.

Today Kaiser revealed exclusively to TechCrunch on stage at the WorldWebForum conference in Zurich the initial email exchange with Cambridge Analytica executives.

This ’email exchange’ – which TechCrunch has not been able to independently verify at this point – has never previously been published. Kaiser released to TechCrunch what she claims is a copy of the exchange. We have reached out to Facebook for comment.

According to the document passed to us, writing on Dec 17, 2015, Alex Tayler, Chief Data Officer for Cambridge Analytica, allegedly wrote to Facebook executive Allison Hendrix saying:

"I wanted to confirm that following your inquiry, that Facebook is satisfied that CA has not breached it’s terms of service or stolen data on non-consenting individuals. If you are satisfied this matter is resolved, would it please be possible for us to have a statement from Facebook to disseminate through our PR agency? We are still finding some articles repeating the initial false allegations made by the Guardian, and would like to be able to firmly refute them in order to prevent any further reputational damage to our company. Alternatively, if Facebook would like to issue a joint press release, we would welcome the opportunity to do so."

A day later on 18 December 2015, Hendrix replied:

"Thank you again for taking the time to speak with me last week and providing additional information into Dr. Kogan's development of the GSR app which was funded by Cambridge Analytica (via SCL Elections). As discussed, we don't allow any information obtained from Facebook to be purchased or sold, and we have strict friend data policies that prohibit using friend data for any purpose other than improving a person's experience in your app. From our conversations, it is clear that these policies have been violated.

"You have told us that you received personality score data from Dr. Kogan that was derived from Facebook data, and that those scores were assigned to individuals included in lists that you maintained. Because that data was improperly derived from data obtained from the Facebook Platform, and then transferred to Cambridge Analytica in violation of our terms, we need you to take any and all steps necessary to completely and thoroughly delete that information as well as any data derived from such data, and to provide us with confirmation of the same.

"We need additional information to complete our review. As an initial matter, did you transfer any data you received from Dr. Kogan to any person or entity other than Ted Cruz's team? Have you made any other use of the data from Dr. Kogan? If there is any additional information of which you think we should be aware, we thank you in advance for providing us with that information and for your help resolving these issues.

"Please respond at your earliest opportunity confirming when you can complete the above request to delete all data (and any derivative data), and providing the additional information I've requested above. As mentioned above, our review is not complete; accordingly, we may have additional questions, requests, or requirements going forward, and this email should not be construed as a waiver of any of Facebook's rights."

On December 19, 2015, Tayler replied:

"Dear Allison, There are several incorrect statements in your email. First and foremost, Cambridge Analytica has not transferred the data we received from Dr Kogan to Cruz for President, nor to any other party. The only data we share with our clients are lists of contact information, perhaps with a few tags attached, for target audiences we identify for them (e.g. likely donors, persuadable voters), and models that we have produced under their direction. Secondly, Cambridge Analytica did not fund the development of Dr. Kogan’s app. We did not pay GSR for their time or technology, but rather paid the third party (e.g. survey vendor) costs for the surveys they ran. Please note that GSR was
contractually obliged to us to carry out this research with the consent of the survey respondents and in line with the terms of service of their vendors.

"Having made that clear, the model we received from Dr Kogan wasn’t very accurate (in validation experiments we ran, we found his predictions only slightly better than random). For our goal of extrapolating personality scores across our whole database, his model was simply not accurate enough to use as a training set, or to apply it commercially in any other way.

“Nevertheless, we still considered the project a success in that it provided us with a proof of concept for the personality research we have since undertaken internally (which is in no way connected with Facebook). It is these data that we have collected independently of GSR about which we have built our current business offering. For this reason, and in the spirit of the good-faith relationship we would like to maintain with Facebook, we will comply with your request to delete all data we received from Dr Kogan.

"Please let me know what else you require from us as soon as possible. It is a matter of urgency that we make it clear that Cambridge Analytica has not done anything wrong.”

There was then a time-lag probably due to the break for the holidays. On 5 January 2016, Hendrix replied:

"Thank you for your timely and detailed response, and for agreeing to delete any and all data that was derived from the Facebook Platform. Can you let me know how you were storing the data and what you did to delete it?"

On January 6, 2016, Tayler replied, copying in CA CEO Alexander Nix, saying:

"To be clear, we have not yet deleted the data we received from Dr Kogan, but will be happy to do so once Facebook confirms that this will resolve the matter. We are currently storing the data as csv files in an encrypted directory on our file server. When we delete the data we will simply rm -rf the directory."

Six days later on 12 January, Hendrix:

"As a reminder, you received the data inappropriately and are obligated to delete it. You've indicated that you would like to maintain a positive relationship with us. Having one will require deletion of the data. In addition to deleting the data from the directory, can you check to see whether your server has any backups which also contain the data? While we don't anticipate further issues at this time, we reserve our rights and can make no guarantees."

On Jan 18, 2016 Tayler replied:

"I can confirm that we have now deleted from our file-server the data we received from Dr Kogan in good faith that this resolves our obligation to Facebook. I also confirm that I have checked that the server contains no backups of that data. Our having deleted the data and cooperated in this matter should not be construed as an admission of any kind of wrongdoing on our part."

On January 18, 2016, Hendrix replied:

"Thank you, Alex. I will let you know if we have any follow up questions, and please don’t hesitate to reach out if you or your team have any questions on your end. Thanks again. – Ali"

This entire exchange was then forwarded by executives from the N6A PR agency to Cambridge Analytica executives and was, in turn, obtained by Kaiser on 23 January 2016.

[Correction 11:30am Pacific: This article originally stated that Facebook accepted merely the email exchange published above as proof that Cambridge Analytica had deleted data attained from Facebook. However, Facebook later received a more formal signed document from Cambridge Analytica CEO Alexander Nix claiming the data had been deleted. This story has been updated to reflect that Facebook received this additional certification, which we reproduce here.]

LocalGlobe partner Julia Hawkins discusses femtech’s risks and rewards

Posted: 17 Jan 2020 08:21 AM PST

London-based seed fund LocalGlobe is incredibly active at the early-stage end of the startup pipeline with a broad focus across multiple sectors and areas, including health.

We interviewed partner Julia Hawkins about the opportunities and risks related to femtech investing in light of the fund's early backing for Ferly, a female-founded startup with a subscription app that describes itself as an audio guide to "mindful sex."

The startup says its mission is to open up conversations around female sexual pleasure and create a place for self-discovery and empowering community — touting "sex-positive" content that it says is "backed by research, written by experts, and personalized to you.”

The interview has been edited for length and clarity.

Microsoft announces global Teams ad push as it combats Slack for the heart of enterprise comms

Posted: 17 Jan 2020 08:05 AM PST

The long-running contest between Microsoft and its Teams service and Slack’s eponymous application continued this morning, with Redmond announcing what it describes as its first “global” advertising push for its enterprise communication service.

Slack, a recent technology IPO, exploded in the back half of last decade, accreting huge revenues while burrowing into the tech stacks of the startup world. The former startup’s success continued as it increasingly targeted larger companies; it’s easier to stack revenue in enterprise-scale chunks than it is by onboarding upstarts.

Enterprise productivity software, of course, is a large percentage of Microsoft’s bread and butter. And as Slack rose — and Microsoft decided against buying the then-nascent rival — the larger company invested in its competing Teams service. Notably, today’s ad push is not the first advertising salvo between the two companies. Slack owns that record, having welcomed Microsoft to its niche in a print ad that isn’t aging particularly well.

Slack and Teams are competing through public usage announcements. Most recently, Teams announced that it has 20 million daily active users (DAUs); Slack’s most recent number is 12 million. Slack, however, has touted how active its DAUs are, implying that it isn’t entirely sure that Microsoft’s figures line up to its own. Still, the rising gap between their numbers is notable.

Microsoft’s new ad campaign is yet another chapter in the ongoing Slack vs. Teams. The ad push itself is only so important. What matters more is that Microsoft is choosing to expend some of its limited public attention bandwidth on Teams over other options.

Stock

While Teams is merely part of the greater Office 365 world that Microsoft has been building for some time, Slack’s product is its business. And since its direct listing, some air has come out of its shares.

Slack’s share price has fallen from the mid-$30s after it debuted to the low-$20s today. I’ve explored that repricing and found that, far from the public markets repudiating Slack’s equity, the company was merely mispriced in its early trading life. The company’s revenue multiple has come down since its first days as a public entity, but remains rich; investors are still pricing Slack like an outstanding company.

Ahead, Slack and Microsoft will continue to trade competing DAU figures. The question becomes how far Slack’s brand can carry it against Microsoft’s enterprise heft.

Zendesk launches Sell Marketplace to bring app store to CRM product

Posted: 17 Jan 2020 08:00 AM PST

Zendesk acquired Base CRM in 2018 to give customers a CRM component to go with its core customer service software. After purchasing the company, it changed the name to Sell, and today the company announced the launch of the new Sell Marketplace.

Officially called The Zendesk Marketplace for Sell, it’s a place where companies can share components that extend the capabilities of the core Sell product. Companies like MailChimp, HubSpot and QuickBooks are available at launch.

App directory in Sell Marketplace. Screenshot: Zendesk

Matt Price, SVP and general manager at Zendesk, sees the marketplace as a way to extend Sell into a platform play, something he thinks could be a “game changer.” He likened it to the impact of app stores on mobile phones.

“It’s that platform that accelerated and really suddenly [transformed smart phones] from being just a product to [launching an] industry. And that’s what the marketplace is doing now, taking Sell from being a really great sales tool to being able to handle anything that you want to throw at it because it’s extensible through apps,” Price explained.

Price says that this ability to extend the product could manifest in several ways. For starters, customers can build private apps with a new application development framework. This enables them to customize Sell for their particular environment, such as connecting to an internal system or building functionality that’s unique to them.

In addition, ISVs can build custom apps, something Price points out they have been doing for some time on the Zendesk customer support side. “Interestingly Zendesk obviously has a very large community of independent developers, hundreds of them, who are [developing apps for] our support product, and now we have another product that they can support,” he said.

Finally, industry partners can add connections to their software. For instance, by installing Dropbox for Sell, it gives sales people a way to save documents to Dropbox and associate them with a deal in Sell.

Of course, what Zendesk is doing here with Sell Marketplace isn’t new. Salesforce introduced this kind of app store concept to the CRM world in 2006 when it launched AppExchange, but the Sell Marketplace still gives Sell users a way to extend the product to meet their unique needs, and that could prove to be a powerful addition.

Chinese podcasting and audio content app Lizhi debuts on Nasdaq

Posted: 17 Jan 2020 07:01 AM PST

Lizhi, one of China's biggest audio content apps, is debuting on Nasdaq today under the ticker symbol LIZI. It is the first of its major competitors, Ximalaya and Dragonfly, to go public (though Ximalaya is expected to also list in the United States later this year). Lizhi is offering 4.1 million shares at an IPO price of $11 per share.

Though Lizhi, Ximalaya and Dragonfly each host podcasts, audiobooks and livestreams, Lizhi, whose investors include Xiaomi, TPG, Matrix Partners China, Morningside Venture Capital and Orchid Asia, has differentiated itself by focusing on user-generated content created with the app's recording tools.

According to market research firm iResearch, it has the largest community of user-generated audio content in China. The company said that in the third quarter of 2019, it had a base of 46.6 million average monthly active users on mobile and 5.7 million average monthly active content creators. While podcasts in the U.S. typically use revenue models based on ads or subscriptions, creators on Lizhi and other Chinese podcasting apps monetize through virtual gifts, similar to the ones given by viewers during video livestreams.

In an interview with TechCrunch, Lizhi CEO Marco Lai said the company plans to use proceeds from the IPO to invest in product development and its AI technology. Lizhi uses AI tech to distribute podcasts, which it says results in a 31% click rate on content. AI is also used to monitor content, give creators instant user engagement data and provide features that allow them to fine-tune recordings, reduce noise and create 3D audio.

Despite its quick growth, Lai says online audio in China is still an emerging segment. About 45.5% of total mobile internet users in China listened to online audio content in 2018, but adoption is expected to increase as IoT devices like smart speakers become more popular, especially in smaller cities. Lizhi has a partnership with Baidu for its Xiaodu smart speakers, and develop new ways of distributing content for IoT devices, says Lai.

Cannabis marketing company Fyllo acquires CannaRegs for $10M

Posted: 17 Jan 2020 06:14 AM PST

Fyllo, a digital marketing company focused on the cannabis industry, has acquired CannaRegs, a website offering subscription access to state and municipal cannabis regulations. Fyllo founder and CEO Chad Bronstein (pictured above) said his company paid $10 million in cash and stock.

Bronstein previously served as chief revenue officer at digital marketing company Amobee, and he told me that the two companies are “very complementary,” particularly since regulations and compliance present “a unique technical challenge” when it comes to advertising cannabis products.

Ultimately, his goal is for Fyllo to offer “compliance as a service,” with artificial intelligence helping brands and publishers ensure that all their cannabis advertising follows local laws. At the same time, Bronstein said Fyllo will continue to support CannaRegs’ 150-plus customers (mostly law firms, real estate professionals and cannabis operators) and work to bring more automation to the platform.

In addition, CannaRegs founder and CEO Amanda Ostrowitz will become Fyllo’s chief strategy officer, with CannaRegs’ 30 employees continuing to work out of their Denver office. This brings Fyllo’s total headcount to around 70.

"In a short period of time, Fyllo has emerged as an essential platform for publishers and cannabis companies to build creative campaigns in a safe and compliant way,” Ostrowitz said in a statement. “By teaming up with Fyllo, we have the chance to build a truly remarkable brand that can disrupt the entire industry. We look forward to delivering our same quality of data to existing customers and incorporating that data into Fyllo's platform to become a one-stop-shop for cannabis brands looking to grow their businesses."

Chicago-based Fyllo raised $18 million in funding last year.

DigitalOcean is laying off staff, sources say 30-50 affected

Posted: 17 Jan 2020 06:10 AM PST

After appointing a new CEO and CFO last summer, cloud infrastructure provider DigitalOcean is embarking on a wider reorganisation: the startup has announced a round of layoffs, with potentially between 30 and 50 people affected.

DigitalOcean has confirmed the news with the following statement:

“DigitalOcean recently announced a restructuring to better align its teams to its go-forward growth strategy. As part of this restructuring, some roles were, unfortunately, eliminated. DigitalOcean continues to be a high-growth business with $275M in [annual recurring revenues] and more than 500,000 customers globally. Under this new organizational structure, we are positioned to accelerate profitable growth by continuing to serve developers and entrepreneurs around the world.”

Before the confirmation was sent to us this morning, a number of footprints began to emerge last night, when the layoffs first hit, with people on Twitter talking about it, some announcing that they are looking for new opportunities and some offering help to those impacted. Inbound tips that we received estimate the cuts at between 30 and 50 people. With around 500 employees (an estimate on PitchBook), that would work out to up to 10% of staff affected.

It’s not clear what is going on here — we’ll update as and when we hear more — but when Yancey Spruill and Bill Sorenson were respectively appointed CEO and CFO in July 2019 (Spruill replacing someone who was only in the role for a year), the incoming CEO put out a short statement that, in hindsight, hinted at a refocus of the business in the near future:

"My aspiration is for us to continue to provide everything you love about DO now, but to also enhance our offerings in a way that is meaningful, strategic and most helpful for you over time."

The company provides a range of cloud infrastructure services to developers, including scalable compute services (“Droplets” in DigitalOcean terminology), managed Kubernetes clusters, object storage, managed database services, Cloud Firewalls, Load Balancers and more, with 12 data centers globally. It says it works with more than 1 million developers across 195 countries. It has also been expanding the services that it offers to developers, including more enhancements in its managed database services, and a free hosting option for continuous code testing in partnership with GitLab.

All the same, as my colleague Frederic pointed out when DigitalOcean appointed its latest CEO, while developers have generally been happy with the company, it isn't as hyped as it once was, and is a smallish player nowadays.

And in an area of business where economies of scale are essential for making good margins on a business, it competes against some of the biggest leviathans in tech: Google (and its Google Cloud Platform), Amazon (which as AWS) and Microsoft (with Azure). That could mean that DigitalOcean is either trimming down as it talks to investors for a new round; or to better conserve cash as it sizes up how best to compete against these bigger, deep-pocketed players; or perhaps to start thinking about another kind of exit.

In that context, it’s notable that the company not only appointed a new CFO last summer, but also a CEO with prior CFO experience. It’s been a while since DigitalOcean has raised capital. According to PitchBook data, DigitalOcean last raised money in 2017, an undisclosed amount from Mighty Capital, Glean Capital, Viaduct Ventures, Black River Ventures, Hanaco Venture Capital, Torch Capital and EG Capital Advisors. Before that, it took out $130 million in debt, in 2016. Altogether it has raised $198 million, and its last valuation was from a round in 2015, $683 million.

It’s been an active week for layoffs among tech startups. Mozilla laid off 70 employees this week; and the weed delivery platform Eaze is also gearing up for more cuts amid an emergency push for funding.

We’ll update this post as we learn more. Best wishes to those affected by the news.

Privacy experts slam UK’s ‘disastrous’ failure to tackle unlawful adtech

Posted: 17 Jan 2020 06:08 AM PST

The UK’s data protection regulator has been slammed by privacy experts for once again failing to take enforcement action over systematic breaches of the law linked to behaviorally targeted ads — despite warning last summer that the adtech industry is out of control.

The Information Commissioner’s Office (ICO) has also previously admitted it suspects the real-time bidding (RTB) system involved in some programmatic online advertising to be unlawfully processing people’s sensitive information. But rather than take any enforcement against companies it suspects of law breaches it has today issued another mildly worded blog post — in which it frames what it admits is a “systemic problem” as fixable via (yet more) industry-led “reform”.

Yet it’s exactly such industry-led self-regulation that’s created the unlawful adtech mess in the first place, data protection experts warn.

The pervasive profiling of Internet users by the adtech ‘data industrial complex’ has been coming under wider scrutiny by lawmakers and civic society in recent years — with sweeping concerns being raised in parliaments around the world that individually targeted ads provide a conduit for discrimination, exploit the vulnerable, accelerate misinformation and undermine democratic processes as a consequence of platform asymmetries and the lack of transparency around how ads are targeted.

In Europe, which has a comprehensive framework of data protection rights, the core privacy complaint is that these creepy individually targeted ads rely on a systemic violation of people’s privacy from what amounts to industry-wide, Internet-enabled mass surveillance — which also risks the security of people’s data at vast scale.

It’s now almost a year and a half since the ICO was the recipient of a major complaint into RTB — filed by Dr Johnny Ryan of private browser Brave; Jim Killock, director of the Open Rights Group; and Dr Michael Veale, a data and policy lecturer at University College London — laying out what the complainants described then as "wide-scale and systemic" breaches of Europe's data protection regime.

The complaint — which has also been filed with other EU data protection agencies — agues that the systematic broadcasting of people’s personal data to bidders in the adtech chain is inherently insecure and thereby contravenes Europe’s General Data Protection Regulation (GDPR), which stipulates that personal data be processed "in a manner that ensures appropriate security of the personal data".

The regulation also requires data processors to have a valid legal basis for processing people’s information in the first place — and RTB fails that test, per privacy experts — either if ‘consent’ is claimed (given the sheer number of entities and volumes of data being passed around, which means it’s not credible to achieve GDPR’s ‘informed, specific and freely given’ threshold for consent to be valid); or ‘legitimate interests’ — which requires data processors carry out a number of balancing assessment tests to demonstrate it does actually apply.

“We have reviewed a number of justifications for the use of legitimate interests as the lawful basis for the processing of personal data in RTB. Our current view is that the justification offered by organisations is insufficient,” writes Simon McDougall, the ICO’s executive director of technology and innovation, developing a warning over the industry’s rampant misuse of legitimate interests to try to pass off RTB’s unlawful data processing as legit.

The ICO also isn’t exactly happy about what it’s found adtech doing on the Data Protection Impact Assessment front — saying, in so many words, that it’s come across widespread industry failure to actually, er, assess impacts.

“The Data Protection Impact Assessments we have seen have been generally immature, lack appropriate detail, and do not follow the ICO's recommended steps to assess the risk to the rights and freedoms of the individual,” writes McDougall.

“We have also seen examples of basic data protection controls around security, data retention and data sharing being insufficient,” he adds.

Yet — again — despite fresh admissions of adtech’s lawfulness problem the regulator is choosing more stale inaction.

In the blog post McDougall does not rule out taking “formal” action at some point — but there’s only a vague suggestion of such activity being possible, and zero timeline for “develop[ing] an appropriate regulatory response”, as he puts it. (His preferred ‘E’ word in the blog is ‘engagement’; you’ll only find the word ‘enforcement’ in the footer link on the ICO’s website.)

“We will continue to investigate RTB. While it is too soon to speculate on the outcome of that investigation, given our understanding of the lack of maturity in some parts of this industry we anticipate it may be necessary to take formal regulatory action and will continue to progress our work on that basis,” he adds.

McDougall also trumpets some incremental industry fiddling — such as trade bodies agreeing to update their guidance — as somehow relevant to turning the tanker in a fundamentally broken system.

(Trade body the Internet Advertising Bureau’s UK branch has responded to developments with an upbeat note from its head of policy and regulatory affairs, Christie Dennehy-Neil, who lauds the ICO’s engagement as “a constructive process”, claiming: “We have made good progress” — before going on to urge its members and the wider industry to implement “the actions outlined in our response to the ICO” and “deliver meaningful change”. The statement climaxes with: “We look forward to continuing to engage with the ICO as this process develops.")

McDougall also points to Google removing content categories from its RTB platform from next month (a move it announced months back, in November) as an important development; and seizes on the tech giant’s recent announcement of a proposal to phase out support for third party cookies within the next two years as ‘encouraging’.

Privacy experts have responded with facepalmed outrage to yet another can-kicking exercise by the UK regulator — warning that cosmetic tweaks to adtech won’t fix a system that’s designed to feast off an unlawful and inherently insecure high velocity background trading of Internet users’ personal data.

“When an industry is premised and profiting from clear and entrenched illegality that breach individuals’ fundamental rights, engagement is not a suitable remedy,” said UCL’s Veale in a statement. “The ICO cannot continue to look back at its past precedents for enforcement action, because it is exactly that timid approach that has led us to where we are now.”

The trio behind the RTB complaints (which includes Veale) have also issued a scathing collective response to more “regulatory ambivalence” — denouncing the lack of any “substantive action to end the largest data breach ever recorded in the UK”.

“The ‘Real-Time Bidding’ data breach at the heart of RTB market exposes every person in the UK to mass profiling, and the attendant risks of manipulation and discrimination,” they warn. “Regulatory ambivalence cannot continue. The longer this data breach festers, the deeper the rot sets in and the further our data gets exploited. This must end. We are considering all options to put an end to the systemic breach, including direct challenges to the controllers and judicial oversight of the ICO.”

Wolfie Christl, a privacy researcher who focuses on adtech — including contributing to a recent study looking at how extensively popular apps are sharing user data with advertisers — dubbed the ICO’s response “disastrous”.

“Last summer the ICO stated in their report that millions of people were affected by thousands of companies’ GDPR violations. I was sceptical when they announced they would give the industry six more months without enforcing the law. My impression is they are trying to find a way to impose cosmetic changes and keep the data industry happy rather than acting on their own findings and putting an end to the ubiquitous data misuse in today’s digital marketing, which should have happened years ago. The ICO seems to prioritize appeasing the industry over the rights of data subjects, and this is disastrous,” he told us.

“The way data-driven online marketing currently works is illegal at scale and it needs to be stopped from happening,” Christl added. “Each day EU data protection authorities allow these practices to continue further violates people’s rights and freedoms and perpetuates a toxic digital economy.

“This undermines the GDPR and generally trust in tech, perpetuates legal uncertainty for businesses, and punishes companies who comply and create privacy-respecting services and business models.

“Twenty months after the GDPR came into full force, it is still not enforced in major areas. We still see large-scale misuse of personal information all over the digital world. There is no GDPR enforcement against the tech giants and there is no enforcement against thousands of data companies beyond the large platforms. It seems that data protection authorities across the EU are either not able — or not willing — to stop many kinds of GDPR violations conducted for business purposes. We won’t see any change without massive fines and data processing bans. EU member states and the EU Commission must act.”

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