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Saturday, February 1, 2020

Today Crunch News, News Updates, Tech News

Today Crunch News, News Updates, Tech News

At CAA, Michael Yanover is still betting startups can change Hollywood’s agencies

Posted: 01 Feb 2020 12:30 PM PST

In a large office scattered with drums, family mementos, and a well-used whiteboard, on the second floor of Creatlve Artist Agency‘s Los Angeles glass, steel, and marble headquarters, Michael Yanover is busy plotting which CAA-repped talent could be the next big entrepreneur.

Over a sixteen year career at one of Hollywood’s biggest agencies, Yanover has developed various strategies to align Silicon Valley’s tech industry with the star-making machine in Hollywood.

It’s a bid to keep agencies relevant (and profitable) in a world where technological innovation continually resets the fifteen minute clock on the famous, the almost famous, and the used-to-be famous.

Over the years Yanover (who isn’t an agent) helped start businesses like Funny or Die; launched CAA’s venture capital fund, CAA Ventures; and co-founded Haus Laboratories, the cosmetic business launched in collaboration with Stefani Germanotta (also known as Lady Gaga).

But it’s Creative Labs, a Vancouver-based business incubator that collaborates with CAA talent to build startup companies, that may prove to be the company that vindicates Yanover’s belief that new businesses can help shape the future of Hollywood’s big agencies.

At CAA, this presents another way for the company to operate in a way that aligns with what the agency’s new owner, TPG Capital, thought when it acquired a majority stake in the company.

“We were intrigued by CAA because they’re in the middle of the ferment that’s going on in this industry, but they’ve been brokers instead of principals, and we think they have plenty of opportunities to be principals,” David Bonderman, the co-head of TPG Capital is quoted as saying in The Hollywood Reporter.

The timing couldn’t be better.

For nearly a year, Hollywood agents and the Writers Guild of America have been locked in a bitter battle over a fairly arcane part of the industry — the collection of packaging fees and expansion of the agency business into production and distribution.

Packaging writing talent with celebrities for blockbuster productions was part of what made agencies like CAA power brokers in Hollywood and generated massive windfalls for clients and the agents who represented them. As new contracts from streaming services generate huge checks on the front end, but little-or-nothing in residual payments for the long-term success of a title or production over the course of its now near-infinite lifespan, agencies and their clients are looking for new ways to make money.

It’s also putting the agents at odds with the talent they represent. The Writers Guild laid out their claims in a fascinating report a few years ago.

The major Hollywood agencies now make much of their money by demanding direct payments from the studios that employ their clients, known as "packaging" fees, which are unrelated to their clients' compensation and come directly from TV series and film production budgets and profits. Packaging fees are a conflict of interest because they introduce direct negotiations between the agency and its client's employer over how much the agency will be paid. Agency success is severed from client income.

CAA co-chairman Bryan Lourd has said the fight over packaging and production is a distraction from the real threat — the multinational technology development, telecommunications, production and distribution companies that control the direct pipelines to audiences.

“The unspoken strategy of these multinational content and distribution companies is to drive prices down and wipe out ownership for writers and creators," Lourd is quoted as saying, in an article by Variety. "This is happening in real time as we've sat here in limbo for these last two months, fighting with each other as opposed to cooperating with each other to face this real challenge.”

The rise of YouTube, Snap, Instagram, TikTok and Twitch have created transparency around artist discovery, audience discovery, and performance monitoring and management in an entertainment business that thrives on its opacity. And Netflix, Hulu, Amazon, along with other deep-pocketed producers create new ways of doing business for entertainers.

With the doors to reaching an audience wide open and new technology-enabled marketplaces emerging to connect brands with entertainers, agencies need to rethink their pitch.

“As celebs develop more direct channels to fans we will see more of this entrepreneurial activity,” according to Yanover. “For agencies it’s an essential part of our evolution with the talent.”

Michael Yanover, Business Development Head at CAA, Los Angeles, Calif. 10.8.15

Back in 2003, with Silicon Valley still recovering from the collapse of the first generation of consumer companies built on the back of the Internet, Hollywood and Silicon Valley were still relatively strange bedfellows. And Yanover, a former executive in charge of developing video productions at the early multimedia streaming pioneer Atom/Shockwave, was an ideal candidate to help bridge the gap.

He started building relationships between technology firms and the agency, leveraging connections with investors at some of Silicon Valley’s top venture capital firms like Sequoia Capital to bring in corporate clients and create new opportunities for the agency’s celebrity talent.

“There’s three parts to my life here,” says Yanover. “One part is investing. The second part is I’ve created companies on behalf of CAA. And the third thing is I’ve created businesses on behalf of agents that are centered around particular clients.”

Ginni Rometty leaves complex legacy as she steps away as IBM CEO

Posted: 01 Feb 2020 11:47 AM PST

When Ginni Rometty steps down as CEO at IBM in April and her replacement Arvind Krishna takes the helm, more than eight years will have passed since she took the reins at Big Blue. The executive helped lead a massive transformation, but IBM has had a bumpy financial ride throughout her tenure — at one time recording an astonishing 22 straight quarters of declining revenue.

To be fair, Rometty took over at a tumultuous time when technology was shifting from on-prem software stacks to the cloud. She saw what was coming and used the company’s considerable cash position to buy what she needed to make that switch while taking advantage of IBM’s extensive R&D to build other pieces in-house. But the transition took time, which resulted in some financial missteps.

She deserves credit for trying to move the battleship in a new direction — culminating with the $34 billion purchase of Red Hat — even if the results were ultimately mixed.

Leading the way

Rometty was the first woman to lead IBM in an industry where female CEOs are scarce. When she came on board in 2012, there were just 21 women running Fortune 500 companies; last year, that number had risen to 33, still a paltry 6.6%. Along with Safra Catz at Oracle and Lisa Su of Advanced Micro Devices, Rometty has been part of a small group of female CEOs at large technology companies.

Startups Weekly: One Medical IPO raises unicorn hopes

Posted: 01 Feb 2020 09:00 AM PST

Maybe ‘tech-enabled’ is good enough for public markets?

Everybody’s talking about revenues after WeWork, but maybe you still don’t need to have all the right numbers in place to achieve a strong IPO? That’s the initial takeaway Alex Wilhelm has after One Medical’s successful debut this week. One might think it looks like a tech-enabled unicorn, that doesn’t generate the recurring revenue and margins of a true tech-powered business.

But, the doctor-services provider closed up almost 40% on a somewhat ambitious price of $14 per share. It had raised $532.1 million during its time as a private company, with a fairly recent valuation of $1.71 billion. With its closing value of $19.50 per share today, One Medical is now worth $2.38 billion.

That’s despite gross margins under the 50% mark, deeply minority recurring revenue and 30% revenue growth in 2019 at best, as Alex noted on Extra Crunch Friday. It is now worth about 8.5x its trailing revenues.

“There are cash-generating SaaS companies that are growing only a bit more slowly that are trading for lower multiples,” he has previously observed. “I cannot see what makes the company — an unprofitable, only moderately growing upstart with non-recurring revenue — worth a SaaS multiple. Especially as its gross margins aren't great and aren't improving.”

Meanwhile, mattress-seller Casper, which also filed new information about its IPO plans this week, has numbers that aren’t all that different. But it’s just hoping to not take too big of a haircut on its last private valuation, Alex separately noted on EC.

Maybe public investors still care about a great story, despite the rough debuts of Blue Apron, SmileDirect, WeWork and a range of others? Certainly, One Medical’s work to improve medical care is laudable regardless of these questions (in fact, it won the Best Healthcare Startup Crunchie in 2013).

Stay tuned for more.

How acquirers look at your company

Let’s say the public markets are not for you, though, and instead you want to get acquired. Ed Byrne of Scaleworks looks at this both as a startup investor and, through a separate part of his company, as an acquirer, and has kindly provided a detailed explainer on Extra Crunch for startup founders.

Here are his key deciders from the purchaser perspective:

  1. Downside protection: Are we confident we are not going to lose money?
  2. Median: If we work hard, focus on good business operations and execute the low-hanging fruit, will we be able to grow this business enough to make a solid return (solid return being an increased valuation multiple from a higher revenue base)?
  3. Upside: If one of our category creation ideas pans out, and we succeed in winning a very targeted segment of the market, is there an opportunity for this business to be a real winner and provide outsized returns?

Buying and taking on someone else's business is always a scary proposition — the unknown unknowns — but if you get comfortable with the fundamental of the company, acquisitions can be a real accelerator compared to the epic effort — and high risk — of starting from scratch.

Where top VCs are investing in travel, tourism and hospitality tech

Want to build the next Airbnb? In this week’s investor survey, Arman Tabatabai spoke to some of the most active and successful investors in travel-oriented industries today — the general mood is pretty positive, with M&A expected to help incumbents boost consumer-facing service quality, and new technologies cracking open more possibilities for companies of all sizes.

Respondents include:

A conversation with 'the most ambitious female VC in Europe'

Starting a company in Europe? Want to? Here’s how Blossom Capital cofounder and long-time investor Ophelia Brown explains the opportunities in the region to Steve O’Hear.

Having now been in this ecosystem for so long, I think the inflection point is the number of successful high-growth companies that we've produced from Europe, be it Adyen, Spotify, Farfetch, Elastic and Klarna, where my [Blossom] partner Louise was as well, I think what it has really shown to people is that you can take risk at the early stage and build meaningful businesses from Europe. And I think that's really encouraged a new next generation of entrepreneur. And Europe is changing its mindset that it's okay to fail.

And I think the other shift is that now people are saying, "okay, well, I'm not going to move to the valley and trying to build my teams because talent is so competitive and so expensive over there, I want to build in Europe." And then finally, the great engineering, design, product talent here and then being helped by funds like us to scale it at the beginning and early stages, and then going on to produce some really interesting things. I don't think U.S. funds are coming over here because they see cheaper pricing and lower valuations. They're coming over here because they are looking at markets and industries and finding the potential next best thing over in Europe.

Around the horn

SoftBank wants its on-demand portfolio to stop losing so much money (TC)

Tracking corporate venture capital's rise over the past decade (EC)

True product-market fit is a minimum viable company (TC)

Gauging email success, invite-only app launches and other growth tactics (EC)

All eyes are on the next liquidity event when it comes to space startups (TC)

Essential advice for securing your small startup (EC)

Adding India to your business (TC)


This week’s episode features Alex along with co-host Danny Crichton talking about:

  • Kleiner Perkins’ fast investment of a recent $600m round
  • Free Agency’s tech play for talent management
  • The huge round for “Ring for enterprise” Verdaka
  • Insurance startup funding trends
  • Updates on the on-demand wars
  • The latest in tech IPOs

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Justin Kan opens up (Part 1)

Posted: 01 Feb 2020 08:35 AM PST

I am a chaplain trying to understand the tech world, and to me, that means I need to understand people like Justin Kan.

Who, after all, most "represents tech?" There are the obvious answers: secular deities like Bill Gates, Elon Musk or the late Steve Jobs. Or there are the often-marginalized figures on whom I've often preferred to focus in writing this column: the immigrant women of color who built the industry’s physical infrastructure; social workers and feminist philosophers who study how tech really works on a subconscious level, and how to fix it; or the next generation of leaders who represent the future of tech even as they worry about the inequalities they themselves embody.

But you can't understand what has come to be the power and mystique of tech without also understanding the minds of its enigmatic founders. Justin Kan is a serial entrepreneur and founder who, whether you appreciate his public voice or not, certainly stands out as one of the most interesting examples of that classic Silicon Valley archetype: a tech entrepreneur ostensibly doing much more than just selling technology.

Kan famously started his business career not long after he graduated from Yale in 2005 by creating, a tech platform from which he broadcast his own life 24/7. Fifteen years later, Kan's original idea seems quaint, given the level of self-promotion and oversharing that’s become commonplace. And yet, as he was arguably the first person to turn surveillance capitalism into not only overt performance art but also a noteworthy career in startups and venture capital, one can't help but take the idea of Justin Kan seriously, at the very least as a harbinger of what is to come.

What Nutanix got right (and wrong) in its IPO roadshow

Posted: 01 Feb 2020 07:01 AM PST

Back in 2016, Nutanix decided to take the big step of going public. Part of that process was creating a pitch deck and presenting it during its roadshow, a coming-out party when a company goes on tour prior to its IPO and pitches itself to investors of all stripes.

It’s a huge moment in the life of any company, and after talking to CEO Dheeraj Pandey and CFO Duston Williams, one we better understood. They spoke about how every detail helped define their company and demonstrate its long-term investment value to investors who might not have been entirely familiar with the startup or its technology.

Pandey and Williams reported going through more than 100 versions of the deck before they finished the one they took on the road. Pandey said they had a data room checking every fact, every number — which they then checked yet again.

In a separate Extra Crunch post, we looked at the process of building that deck. Today, we’re looking more closely at the content of the deck itself, especially the numbers Nutanix presented to the world. We want to see what investors did more than three years ago and what’s happened since — did the company live up to its promises?

Plan of attack

This Week in Apps: Apple’s record quarter, dating apps under investigation, Byte launches to problems

Posted: 01 Feb 2020 06:18 AM PST

Welcome back to This Week in Apps, the Extra Crunch series that recaps the latest OS news, the applications they support and the money that flows through it all.

The app industry is as hot as ever with a record 204 billion downloads in 2019 and $120 billion in consumer spending in 2019, according to App Annie's recently released "State of Mobile" annual report. People are now spending 3 hours and 40 minutes per day using apps, rivaling TV. Apps aren't just a way to pass idle hours — they're a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus.

In this Extra Crunch series, we help you keep up with the latest news from the world of apps, delivered on a weekly basis.

This week, Apple released earnings and gave us hints about the power of its wearables market. Congress as begun investigating top dating apps. Google’s App Maker announced a shutdown is coming. The iPad turned 10 and people discussed where it’s going wrong.

We also take a look at Byte, the so-called Vine reboot. I’m not impressed. Not only did Byte launch with a comment spam problem, including pornbots, it’s also heavily filled with adult and sometimes dark humor. This includes videos featuring dick jokes, sex toys, drugs and jokes about child abuse, despite a 12+ age rating and many users who appear to be children.


Apple reports blockbuster earnings, details the growth of wearables

Two-year-old Indian edtech startup Doubtnut raises $15M

Posted: 01 Feb 2020 03:52 AM PST

Doubtnut, a Gurgaon-based startup that operates an app to help students learn and master concepts from math and science using short videos, has raised $15 million in a new financing round as it looks to serve more people in small cities and towns of the country.

The financing round, Series A, was led by Chinese giant Tencent. Existing investors Omidyar Network India, AET, Japan and Ankit Nagori (founder of fitness startup Cure.Fit), and Sequoia Capital India also participated in the round, the two-year-old startup said.

Doubtnut, part of Sequoia Capital India’s Surge accelerator, has raised $18.5 million to date, and its new financing round valued it at about $50 million, a person familiar with the matter said.

The app allows students from sixth grade to high-school solve and understand math and science problems in local languages. Doubtnut app allows them to take a picture of the problem, and uses machine learning and image recognition to deliver their answers through short-videos.

A student can take a picture of the problem, and share it with Doubtnut through its app, website, or WhatsApp and get a short video that shows the answer and walks them through the procedure to tackle it.

Doubtnut said it has amassed over 13 million monthly active users across its website, app, YouTube, and WhatsApp . More than 85% of Doubtnut users today come from outside of the top 10 cities in India, said Tanushree Nagori, co-founder of Doubtnut. She said that more than half of these students have come online in the last one year.

"Doubtnut is truly democratizing education across India. Our user base reflects the entire demography of India, something which no other education app in the country has come close to achieving," she said.

The growth of Doubtnut represents the emergence of a wave of startups in India that are tackling local challenges. In the education space alone, a number of players including Byju's, which is now valued at $8 billion, Unacademy, Vedanutu, and GradeUp have shown impressive growth.

Gaurav Munjal, founder and chief executive of Unacademy, said on Saturday that his startup's one-year-old premium offering had clocked $30 million in revenue.

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