France’s tax on tech giants is happening

Is it happening? Is it not happening? After years of back and forth, it looks like the new tax on tech giants in France is about to become a law. Big tech companies that generate significant revenue in France will be taxed on their revenue generated in France.

France’s Economy Minister Bruno Le Maire has been lobbying for a new tax so that tech giants would stop optimizing their European corporate structure to lower their effective tax rate. Originally, Le Maire wanted to convince other European countries to get on board.

But you need a unanimous vote when it comes to tax reforms in Europe. And Le Maire couldn’t convince everyone.

Le Maire still wanted to do something. So here we are, with a new tax on tech companies that generate over €750 million in revenue globally and €25 million in France.

If you’re operating a marketplace (Amazon’s marketplace, Uber, Airbnb…) or an advertising business (Facebook, Google, Criteo…), you will have to pay 3 percent of your French revenue in taxes. The government says that it isn’t against American companies as European and Asian companies are also about to get taxed.

It’s a weird taxation model as it is based on revenue and not profit. It’ll also require some work from the taxation administration as French revenue means that it involves all transactions with somebody with a French mailing address or a French IP address. France expects to generate €400 million in revenue with this new tax in 2019.

I’ve been talking about this new tax with people in the French tech ecosystem and they think it’s a publicity stunt more than anything else. The OECD has been working on a way to properly tax tech companies with a standardized set of rules.

It could still take a couple of years, but it would be based on profit and it would clarify the situation across dozens of countries. It would replace today’s new tax.

Don’t get me wrong. Taxing tech giants is important and tech companies have been fined for tax avoidance for too many years. But this feels a bit rushed.


Source: Tech Crunch

Camelot lets Twitch and YouTube audiences pay for what they want to see

As the streaming world continues to grow, startups are looking to take advantage of the opportunity and grab a slice of the pie, and indeed create new revenue models around it entirely. 

Camelot, a YC-backed startup, is one of them.

Camelot allows viewers to place bounties on their favorite streamers, putting a monetary value on the things they want to see on stream. This could include in-game challenges like “win with no armor,” as well as stream bounties like “Play Apex” or “add a heartbeat monitor to the stream.”

When a viewer posts a bounty, other viewers can join in and contribute to the overall value, and the streamer can then choose whether or not to go through with it from an admin dashboard.

Because internet platforms can often be used for evil alongside good, cofounder and CEO Jesse Zhang has thought through ways to minimize inappropriate requests.

There is an option for streamers to see and approve the bounty before it’s ever made public to ensure that they avoid inappropriate propositions. Bounties are also paid for up front by viewers, and either returned if the creator declines the bounty or pushed through when the streamer completes the task, raising the barrier to entry for nefarious users.

Camelot generates revenue by taking a five percent stake in every bounty completed.

The platform isn’t just for Twitch streamers — YouTubers can also get in on the mix using Camelot and making asynchronous videos around each bounty. Not only does it offer a new way to generate revenue, but it also offers content creators the chance to get new insights on what their viewers want to see and what they value.

Cofounder and CEO Jesse Zhang believes there is opportunity to expand to streamers and YouTube content creators outside of the gaming sphere in the future.

For now, however, Camelot is working to bring on more content creators. Thus far, streamers and viewers have already come up with some interesting use cases for the product. One streamer’s audience bought his dog some treats, and one viewer of Sa1na paid $100 to play against the streamer himself.

Camelot declined to share how much funding it has received thus far, but did say that lead investors include Y Combinator, the Philadelphia 76ers, Soma Capital, and Plaid cofounders William Hockey and Zach Perret.


Source: Tech Crunch

VCs have growing appetite for ‘AgriFood’

Venture investors are pouring billions of dollars into feeding their hunger for food and agriculture startups. Whether that trend line is due to enthusiasm for the sector or just broader heavy investing in the VC space is much less clear.

According to a recent report published by AgFunder – a VC and investing marketplace focused on the agriculture and food sectors – the “AgriFood” space is booming. Using data from Crunchbase and several other data partners, the organization published its “2018 AgriFood Tech Investing Report” this morning, finding that investment in AgriFood companies increased 43% year-over-year, reaching $16.9 billion in 2018.

AgFunder classifies AgriFood tech as “the small but growing segment of the startup and venture capital universe that’s aiming to improve or disrupt the global food and agriculture industry.” Their definition is intentionally broad, encompassing everything from crop and livestock biotech, property management systems, and payments, to biomaterials and meat alternatives, all the way up to tech platforms for restaurants, grocers, deliveries and at-home cooks.

While some of the AgriFood tech categories – such as delivery or restaurant software – have long been popular destinations for venture capital, we’re now seeing a more diverse array of startups innovating across the entire food supply chain. According to the report, expansion in AgriFood is fairly consistent across upstream (agricultural and farming) subsectors to downstream (more consumer-facing) subsectors, with each group growing roughly 44% and 42% year-over-year respectively.

The data also shows growth occurring across almost all deal stages. AgriFood saw huge increases in the average deal size and total investment for late-stage companies in particular, as venture-backed startups have grown to global scale. And penetrating and attracting capital from international markets seems more feasible than ever. AgriFood investing, which traditionally has been largely US-centric, is rapidly becoming a global phenomenon, with more than half of total funding – and some of the largest rounds – now coming from companies and investors outside the US.


Source: Tech Crunch

Daily Crunch: Zuckerberg lays out his privacy vision

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. Mark Zuckerberg discovers privacy

In a long post published yesterday, the Facebook CEO laid out his vision for making Facebook’s products more privacy-friendly. But can Facebook reform its 15-year legacy as devourer of all things private with a single sweeping manifesto?

Taylor Hatmaker has a simple answer: Heck no, of course it can’t. (Except she says it less politely.)

2. Huawei is suing the US government over ‘unconstitutional’ equipment ban

At the center of the suit is the company’s claim that Section 889 in the National Defense Authorization Act — which contains restrictions that prevent federal agencies from procuring Huawei equipment or services — is unconstitutional.

3. Trump called Apple’s CEO ‘Tim Apple’ by mistake

Actual quote: “You’ve really put a great investment in our country. We really appreciate it very much, Tim Apple.”

4. Google gives Android developers new tools to make money from users who won’t pay

“Rewarded Products” will allow non-paying app users to contribute to an app’s revenue stream by sacrificing their time, but not their money. The first product will be rewarded video, where users can opt to watch a video ad in exchange for in-game currency, virtual goods or other benefits.

5. Tesla’s new Supercharger slashes charging times

The V3 Supercharger, which was unveiled Wednesday, supports a peak rate of up to 250 kilowatts on the long-range version of the Model 3. At this rate, the V3 can add up to 75 miles of range in five minutes, Tesla said.

6. Bird launches platform to let entrepreneurs manage their own fleet of scooters

Bird Platform sells the vehicles to entrepreneurs at cost and then takes a 20 percent cut from the ride revenue. The program is launching in New Zealand, Canada and Latin America in the coming weeks.

7. Google brings its Duplex AI restaurant booking assistant to 43 states

Starting this week, Pixel 3 owners in 43 U.S. states will be able to use the company’s AI technology to book appointments at any restaurants that use booking services that partner with the Reserve with Google Program but don’t have an online system to complete the booking.


Source: Tech Crunch

Google gives Android developers new tools to make money from users who won’t pay

Google today is introducing a new way for Android developers to generate revenue from their mobile applications. And no, it’s not subscription-related. Instead, the company is launching a new monetization option for apps called “Rewarded Products.” This will allow non-paying app users to contribute to an app’s revenue stream by sacrificing their time, but not their money. The first product will be rewarded video, where users can opt to watch a video ad in exchange for in-game currency, virtual goods, or other benefits.

The feature may make developers happy, but it remains to be seen how users react. Reception will depend on how the videos are introduced in the app.

Even in Google’s example of the rewarded product in action – meant to showcase a best design practice, one would think – the video interrupts gameplay in between levels with a full screen takeover. This is not a scenario users would respond well to unless this was presented as the only way to play a popular, previously paid-only game for free, perhaps.

Rewarded video has worked for some apps where users have come to expect a free product. That could include free-to-play games or others services where subscribing is an option, not a requirement.

For example, Pandora’s music streaming service was free and ad-supported for years, as it was radio-only. After it introduced tiers offering on-demand streaming to compete with Spotify, it rolled out a rewarded video product – so to speak – of its own. Today, Pandora listeners can choose to watch a video ad to access on-demand music for a session, as an alternative to paying a monthly subscription.

Android app developers, of course, are already using advertisements to supplement or as a means of monetization, but this launch creates an official Google Play “product.” This makes implementation easier on developers and gives Google a way compete with third parties offering something similar.

Rewarded products can be added to any app using the Google Play Billing Library or AIDL interface with only a few additional API calls, the company says. It won’t require an SDK.

The launch comes at a time when Apple has been seeing success with subscriptions, which it has fully embraced, pushed and sometimes even let run amok. Subscriptions are now one of the biggest factors, outside of games, in app store revenue growth.

But Android users, historically, have been more averse to paying for apps than those on iOS. Apple’s store has even seen nearly double that of Google Play, in terms of revenue – despite having far fewer downloads. That means Android developers will not be able to tap into the subscription craze at the same scale as their iOS counterparts. And it means cross-platform developers may further prioritize building for iOS, as a result.

Rewarded products offer those developers an alternative path to monetization on a platform where that’s often been more difficult, outside of running ads.

Google says the rewarded video product is launching into open beta, and is available in the Play Console for developers.

 

 


Source: Tech Crunch

Zuckerberg wants messages to auto-expire to make Facebook a “living room”

On feed-based “broader social networks, where people can accumulate friends or followers until the services feel more public . . . it feels more like a town square than a more intimate space like a living room” Facebook CEO Mark Zuckerberg explained in a blog post today. With messaging, groups, and ephemeral stories as the fastest growing social features, Zuckerberg laid out why he’s rethinking Facebook as a private living room where people can be comfortable being themselves without fear of hackers, government spying, and embarrassment from old content — all without encryption allowing bad actors to hide their crimes.

Perhaps this will just be more lip service in a time of PR crisis for Facebook. But with the business imperative fueled by social networking’s shift away from permanent feed broadcasting, Facebook can espouse the philosophy of privacy while in reality servicing its shareholders and bottom line. It’s this alignment that actually spurs product change. We saw Facebook’s agility with last year’s realization that a misinformation- and hate-plagued platform wouldn’t survive long-term so it had to triple its security and moderation staff. And in 2017, recognizing the threat of Stories, it implemented them across its apps. Now Facebook might finally see the dollar signs within privacy.

The New York Times’ Mike Isaac recently reported that Facebook planned to unify its Facebook, WhatsApp, and Instagram messaging infrastructure to allow cross-app messaging and end-to-end encryption. And Zuckerberg discussed this and the value of ephemerality on the recent earnings call. But now Zuckerbeg has roadmapped a clearer slate of changes and policies to turn Facebook into a living room:

-Facebook will let users opt in to the ability to send or receive messages across Facebook, WhatsApp, and Instagram

-Facebook wants to expand that interoperability to SMS on Android

-Zuckerberg wants to make ephemerality automatic on messaging threads, so chats disappear by default after a month or year, with users able to control that or put timers on individual messages.

-Facebook plans to limit how long it retains metadata on messages once it’s no longer needed for spam or safety protections

-Facebook will extend end-to-end encryption across its messaging apps but use metadata and other non-content signals to weed out criminals using privacy to hide their misdeeds.

-Facebook won’t store data in countries with a bad track record of privacy abuse such as Russia, even if that means having to shut down or postpone operations in a country

You can read the full blog post from Zuckerberg below:

A Privacy-Focused Vision for Social Networking

My focus for the last couple of years has been understanding and addressing the biggest challenges facing Facebook. This means taking positions on important issues concerning the future of the internet. In this note, I’ll outline our vision and principles around building a privacy-focused messaging and social networking platform. There’s a lot to do here, and we’re committed to working openly and consulting with experts across society as we develop this.

Over the last 15 years, Facebook and Instagram have helped people connect with friends, communities, and interests in the digital equivalent of a town square. But people increasingly also want to connect privately in the digital equivalent of the living room. As I think about the future of the internet, I believe a privacy-focused communications platform will become even more important than today’s open platforms. Privacy gives people the freedom to be themselves and connect more naturally, which is why we build social networks.

Today we already see that private messaging, ephemeral stories, and small groups are by far the fastest growing areas of online communication. There are a number of reasons for this. Many people prefer the intimacy of communicating one-on-one or with just a few friends. People are more cautious of having a permanent record of what they’ve shared. And we all expect to be able to do things like payments privately and securely.

Public social networks will continue to be very important in people’s lives — for connecting with everyone you know, discovering new people, ideas and content, and giving people a voice more broadly. People find these valuable every day, and there are still a lot of useful services to build on top of them. But now, with all the ways people also want to interact privately, there’s also an opportunity to build a simpler platform that’s focused on privacy first.

I understand that many people don’t think Facebook can or would even want to build this kind of privacy-focused platform — because frankly we don’t currently have a strong reputation for building privacy protective services, and we’ve historically focused on tools for more open sharing. But we’ve repeatedly shown that we can evolve to build the services that people really want, including in private messaging and stories.

I believe the future of communication will increasingly shift to private, encrypted services where people can be confident what they say to each other stays secure and their messages and content won’t stick around forever. This is the future I hope we will help bring about.

We plan to build this the way we’ve developed WhatsApp: focus on the most fundamental and private use case — messaging — make it as secure as possible, and then build more ways for people to interact on top of that, including calls, video chats, groups, stories, businesses, payments, commerce, and ultimately a platform for many other kinds of private services.

This privacy-focused platform will be built around several principles:

Private interactions. People should have simple, intimate places where they have clear control over who can communicate with them and confidence that no one else can access what they share.

Encryption. People’s private communications should be secure. End-to-end encryption prevents anyone — including us — from seeing what people share on our services.

Permanence. People should be comfortable being themselves, and should not have to worry about what they share coming back to hurt them later. So we won’t keep messages or stories around for longer than necessary to deliver the service or longer than people want it.

Safety. People should expect that we will do everything we can to keep them safe on our services within the limits of what’s possible in an encrypted service.

Interoperability. People should be able to use any of our apps to reach their friends, and they should be able to communicate across networks easily and securely.

Secure data storage. People should expect that we won’t store sensitive data in countries with weak records on human rights like privacy and freedom of expression in order to protect data from being improperly accessed.

Over the next few years, we plan to rebuild more of our services around these ideas. The decisions we’ll face along the way will mean taking positions on important issues concerning the future of the internet. We understand there are a lot of tradeoffs to get right, and we’re committed to consulting with experts and discussing the best way forward. This will take some time, but we’re not going to develop this major change in our direction behind closed doors. We’re going to do this as openly and collaboratively as we can because many of these issues affect different parts of society.

Private Interactions as a Foundation

For a service to feel private, there must never be any doubt about who you are communicating with. We’ve worked hard to build privacy into all our products, including those for public sharing. But one great property of messaging services is that even as your contacts list grows, your individual threads and groups remain private. As your friends evolve over time, messaging services evolve gracefully and remain intimate.

This is different from broader social networks, where people can accumulate friends or followers until the services feel more public. This is well-suited to many important uses — telling all your friends about something, using your voice on important topics, finding communities of people with similar interests, following creators and media, buying and selling things, organizing fundraisers, growing businesses, or many other things that benefit from having everyone you know in one place. Still, when you see all these experiences together, it feels more like a town square than a more intimate space like a living room.

There is an opportunity to build a platform that focuses on all of the ways people want to interact privately. This sense of privacy and intimacy is not just about technical features — it is designed deeply into the feel of the service overall. In WhatsApp, for example, our team is obsessed with creating an intimate environment in every aspect of the product. Even where we’ve built features that allow for broader sharing, it’s still a less public experience. When the team built groups, they put in a size limit to make sure every interaction felt private. When we shipped stories on WhatsApp, we limited public content because we worried it might erode the feeling of privacy to see lots of public content — even if it didn’t actually change who you’re sharing with.

In a few years, I expect future versions of Messenger and WhatsApp to become the main ways people communicate on the Facebook network. We’re focused on making both of these apps faster, simpler, more private and more secure, including with end-to-end encryption. We then plan to add more ways to interact privately with your friends, groups, and businesses. If this evolution is successful, interacting with your friends and family across the Facebook network will become a fundamentally more private experience.

Encryption and Safety

People expect their private communications to be secure and to only be seen by the people they’ve sent them to — not hackers, criminals, over-reaching governments, or even the people operating the services they’re using.

There is a growing awareness that the more entities that have access to your data, the more vulnerabilities there are for someone to misuse it or for a cyber attack to expose it. There is also a growing concern among some that technology may be centralizing power in the hands of governments and companies like ours. And some people worry that our services could access their messages and use them for advertising or in other ways they don’t expect.

End-to-end encryption is an important tool in developing a privacy-focused social network. Encryption is decentralizing — it limits services like ours from seeing the content flowing through them and makes it much harder for anyone else to access your information. This is why encryption is an increasingly important part of our online lives, from banking to healthcare services. It’s also why we built end-to-end encryption into WhatsApp after we acquired it.

In the last year, I’ve spoken with dissidents who’ve told me encryption is the reason they are free, or even alive. Governments often make unlawful demands for data, and while we push back and fight these requests in court, there’s always a risk we’ll lose a case — and if the information isn’t encrypted we’d either have to turn over the data or risk our employees being arrested if we failed to comply. This may seem extreme, but we’ve had a case where one of our employees was actually jailed for not providing access to someone’s private information even though we couldn’t access it since it was encrypted.

At the same time, there are real safety concerns to address before we can implement end-to-end encryption across all of our messaging services. Encryption is a powerful tool for privacy, but that includes the privacy of people doing bad things. When billions of people use a service to connect, some of them are going to misuse it for truly terrible things like child exploitation, terrorism, and extortion. We have a responsibility to work with law enforcement and to help prevent these wherever we can. We are working to improve our ability to identify and stop bad actors across our apps by detecting patterns of activity or through other means, even when we can’t see the content of the messages, and we will continue to invest in this work. But we face an inherent tradeoff because we will never find all of the potential harm we do today when our security systems can see the messages themselves.

Finding the right ways to protect both privacy and safety is something societies have historically grappled with. There are still many open questions here and we’ll consult with safety experts, law enforcement and governments on the best ways to implement safety measures. We’ll also need to work together with other platforms to make sure that as an industry we get this right. The more we can create a common approach, the better.

On balance, I believe working towards implementing end-to-end encryption for all private communications is the right thing to do. Messages and calls are some of the most sensitive private conversations people have, and in a world of increasing cyber security threats and heavy-handed government intervention in many countries, people want us to take the extra step to secure their most private data. That seems right to me, as long as we take the time to build the appropriate safety systems that stop bad actors as much as we possibly can within the limits of an encrypted service. We’ve started working on these safety systems building on the work we’ve done in WhatsApp, and we’ll discuss them with experts through 2019 and beyond before fully implementing end-to-end encryption. As we learn more from those experts, we’ll finalize how to roll out these systems.

Reducing Permanence

We increasingly believe it’s important to keep information around for shorter periods of time. People want to know that what they share won’t come back to hurt them later, and reducing the length of time their information is stored and accessible will help.

One challenge in building social tools is the “permanence problem”. As we build up large collections of messages and photos over time, they can become a liability as well as an asset. For example, many people who have been on Facebook for a long time have photos from when they were younger that could be embarrassing. But people also really love keeping a record of their lives. And if all posts on Facebook and Instagram disappeared, people would lose access to a lot of valuable knowledge and experiences others have shared.

I believe there’s an opportunity to set a new standard for private communication platforms — where content automatically expires or is archived over time. Stories already expire after 24 hours unless you archive them, and that gives people the comfort to share more naturally. This philosophy could be extended to all private content.

For example, messages could be deleted after a month or a year by default. This would reduce the risk of your messages resurfacing and embarrassing you later. Of course you’d have the ability to change the timeframe or turn off auto-deletion for your threads if you wanted. And we could also provide an option for you to set individual messages to expire after a few seconds or minutes if you wanted.

It also makes sense to limit the amount of time we store messaging metadata. We use this data to run our spam and safety systems, but we don’t always need to keep it around for a long time. An important part of the solution is to collect less personal data in the first place, which is the way WhatsApp was built from the outset.

Interoperability

People want to be able to choose which service they use to communicate with people. However, today if you want to message people on Facebook you have to use Messenger, on Instagram you have to use Direct, and on WhatsApp you have to use WhatsApp. We want to give people a choice so they can reach their friends across these networks from whichever app they prefer.

We plan to start by making it possible for you to send messages to your contacts using any of our services, and then to extend that interoperability to SMS too. Of course, this would be opt-in and you will be able to keep your accounts separate if you’d like.

There are privacy and security advantages to interoperability. For example, many people use Messenger on Android to send and receive SMS texts. Those texts can’t be end-to-end encrypted because the SMS protocol is not encrypted. With the ability to message across our services, however, you’d be able to send an encrypted message to someone’s phone number in WhatsApp from Messenger.

This could also improve convenience in many experiences where people use Facebook or Instagram as their social network and WhatsApp as their preferred messaging service. For example, lots of people selling items on Marketplace list their phone number so people can message them about buying it. That’s not ideal, because you’re giving strangers your phone number. With interoperability, you’d be able to use WhatsApp to receive messages sent to your Facebook account without sharing your phone number — and the buyer wouldn’t have to worry about whether you prefer to be messaged on one network or the other.

You can imagine many simple experiences — a person discovers a business on Instagram and easily transitions to their preferred messaging app for secure payments and customer support; another person wants to catch up with a friend and can send them a message that goes to their preferred app without having to think about where that person prefers to be reached; or you simply post a story from your day across both Facebook and Instagram and can get all the replies from your friends in one place.

You can already send and receive SMS texts through Messenger on Android today, and we’d like to extend this further in the future, perhaps including the new telecom RCS standard. However, there are several issues we’ll need to work through before this will be possible. First, Apple doesn’t allow apps to interoperate with SMS on their devices, so we’d only be able to do this on Android. Second, we’d need to make sure interoperability doesn’t compromise the expectation of encryption that people already have using WhatsApp. Finally, it would create safety and spam vulnerabilities in an encrypted system to let people send messages from unknown apps where our safety and security systems couldn’t see the patterns of activity.

These are significant challenges and there are many questions here that require further consultation and discussion. But if we can implement this, we can give people more choice to use their preferred service to securely reach the people they want.

Secure Data Storage

People want to know their data is stored securely in places they trust. Looking at the future of the internet and privacy, I believe one of the most important decisions we’ll make is where we’ll build data centers and store people’s sensitive data.

There’s an important difference between providing a service in a country and storing people’s data there. As we build our infrastructure around the world, we’ve chosen not to build data centers in countries that have a track record of violating human rights like privacy or freedom of expression. If we build data centers and store sensitive data in these countries, rather than just caching non-sensitive data, it could make it easier for those governments to take people’s information.

Upholding this principle may mean that our services will get blocked in some countries, or that we won’t be able to enter others anytime soon. That’s a tradeoff we’re willing to make. We do not believe storing people’s data in some countries is a secure enough foundation to build such important internet infrastructure on.

Of course, the best way to protect the most sensitive data is not to store it at all, which is why WhatsApp doesn’t store any encryption keys and we plan to do the same with our other services going forward.

But storing data in more countries also establishes a precedent that emboldens other governments to seek greater access to their citizen’s data and therefore weakens privacy and security protections for people around the world. I think it’s important for the future of the internet and privacy that our industry continues to hold firm against storing people’s data in places where it won’t be secure.

Next Steps

Over the next year and beyond, there are a lot more details and tradeoffs to work through related to each of these principles. A lot of this work is in the early stages, and we are committed to consulting with experts, advocates, industry partners, and governments — including law enforcement and regulators — around the world to get these decisions right.

At the same time, working through these principles is only the first step in building out a privacy-focused social platform. Beyond that, significant thought needs to go into all of the services we build on top of that foundation — from how people do payments and financial transactions, to the role of businesses and advertising, to how we can offer a platform for other private services.

But these initial questions are critical to get right. If we do this well, we can create platforms for private sharing that could be even more important to people than the platforms we’ve already built to help people share and connect more openly.

Doing this means taking positions on some of the most important issues facing the future of the internet. As a society, we have an opportunity to set out where we stand, to decide how we value private communications, and who gets to decide how long and where data should be stored.

I believe we should be working towards a world where people can speak privately and live freely knowing that their information will only be seen by who they want to see it and won’t all stick around forever. If we can help move the world in this direction, I will be proud of the difference we’ve made.


Source: Tech Crunch

Verified Expert Lawyer: Jared Verzello

TechCrunch is profiling great startup lawyers wherever they may be working — and that includes within new companies built from the ground up around tech. Today, we’re interviewing Jared Verzello of Atrium. While even the most old-line of law firms have begun integrating document automation and analysis software, Atrium started that way. Around two years old, it’s both a full-service corporate law firm, Atrium LLP, and a technology startup, Atrium Legal Technology Services, that focuses on building tech for its clients and lawyers.

For his part, Verzello joined Atrium 18 months ago from Silicon Valley law firm Cooley LLP, and heads up the seed stage practice. In the interview below, he tells us how he got into this position, how he works with startups from within Atrium, and trends he’s seeing in the market today.


On common founder mistakes:

“Having represented over 20% of Y Combinator (YC) companies for the last few batches, I come across many of the same founder mistakes. One of the more common is that a founder will choose to incorporate as an LLC because they can write off a bit of the losses on their personal tax return.

“As a very early-stage company, one can be exposed to so many vulnerabilities and even potential bullies when it comes to legality. Jared (my attorney) has been knowledgable, understanding, and adaptable and the value of that to a startup cannot be overstated.” Leslie Fong, San Francisco, founder and CEO, VENIM

“But by the time they’ve decided to work with YC, they usually have raised money — often in the form of a convertible note — and they end up having to flip their LLC to a Delaware corporate (YC only invests in Delaware C-corps). What founders don’t realize is there are partnership tax issues for converting with debt outstanding in the business. We end up having to do conversions with $25,000 or $30,000 in legal fees and bring in tax and accounting specialists because a founder got some misguided advice at the very beginning.

“What I advise is that founders should not cut small short-term corners like incorporating as an LLC vs Delaware C-corp if they know they want to be venture-backed.”

On his approach:

“My goal, and Atrium’s goal, is to provide both legal and business advice so that our founders can worry about finding product-market fit or keeping money in the bank versus worrying about legal. My objective is for our clients to be protected but to spend little or no time thinking about legal.

“I always advise my clients that they should not be interested in being innovative in their legal structure. In order for startups to move quickly, the legal should be simple to administer, simple to understand, simple for investors to get on board with, so they can focus all of their brain power into the products and competitive advantage of the business.”

On Atrium:

“When engaging with Atrium, our clients are first and foremost engaging with a law firm but to know if it’s the right fit, I usually try to gauge what type of firm and relationship they want. For example: do you want a firm that’s doing business the same way they’ve always done business, for decades, or do you want a firm that thinks innovatively, like you, and has a key objective to improve their services and operational efficiency over time?”

Below, you’ll find founder recommendations, the full interview, and more details like their pricing and fee structures.

This article is part of our ongoing series covering the early-stage startup lawyers who founders love to work with, based on this survey and our own research — the survey is open indefinitely so please fill it out if you haven’t already. If you’re trying to navigate the early-stage legal landmines, be sure to check out our growing set of in-depth articles, like this checklist of what you need to get done on the corporate side in your first years as a company.


The Interview

Eric Eldon: You’ve ended up in a pretty unique place, in terms of a legal career. Tell me more about how that happened.

Jared Verzello: I’m not a Silicon Valley insider. I’m not from this area. I grew up in Georgia and Connecticut, and I knew nothing about technology companies or any of that stuff when I chose to go to law school. I had an independent reason for going to law school, which is I thought I wanted to do courtroom and trial work, and a lot of the things that you would see lawyers portrayed as in the media, and that’s a whole other can of worms about making long-term education decisions early in life, when you have limited life experience.

But suffice it to say that, once I was in law school, I quickly found out that I was not interested in those more formulaic areas of law. I found them very constraining and not very interesting or creative. Every year students go out and they find the best internships and placement programs that they can get into, they build their resume, as do we all in our schooling, and I found that I wasn’t interested in anything that was available to first-year law students.

I went to Brigham Young University. I was in Utah. I was not in Silicon Valley exposed to all this stuff. But all of my peers were going to go work for judges or volunteer at one institute or another, and I just could not find anything that was interesting to me. But I had a friend who had come out to Silicon Valley several years earlier and ended up raising some money, and they actually raised a decent Series A. This was back in 2011. They were a super lean team and suddenly the biggest blocker for them was hiring. They needed to hire engineers. So long story short, I spent my entire summer here working in Palo Alto, helping them recruit engineers and we recruited over a dozen engineers in four months, which was pretty phenomenal.


Source: Tech Crunch

Google brings its Duplex AI restaurant booking assistant to 43 states

No moment wowed the audience at last year’s I/O more than Duplex. The demo of the artificial intelligence restaurant and appointment booking program left many in the audience wondering whether Google had just pulled a fast one over on them.

Turns out, it’s real.

Over the summer, I got a chance to test drive Duplex at a Thai restaurant in Manhattan. And later in the year, the company rolled out the program in limited testing to restaurants in four U.S. cities. Today, it announced that it’s opening things up even more.

Starting this week, Pixel 3 owners in 43 U.S. states will be able to use the Duplex technology to book appointments. The tech should work with any restaurants that use booking services that partner with the Reserve with Google Program that accept reservations but do not have an online system to complete the booking.

In the coming weeks, the service will be rolled out to users on other Android and iOS devices, as the company continues to tweak the program based on user feedback. Meanwhile, that may or may not give the rest of us time to come to grips with the creepily natural interactions of Google’s new AI.

Updated to correct the types of restaurants that can use Duplex .


Source: Tech Crunch

‘Save the Internet Act’ would bring back net neutrality, plain and simple

The net neutrality rules established in 2015 were a triumph decades in the making, but their undoing was rather a quick bit of work. So it is hoped, by Democratic leadership in the House and Senate, that it will be equally quick to nix the new administration’s rules and restore the old ones — via a very simple piece of legislation known as the “Save the Internet Act.”

Announced by a group of lawmakers Wednesday morning, the act is a very straightforward one. As Representative Anna Eshoo (D-CA) noted: “This is a two page bill. A two page bill! It has all the clarity in the world.”

Indeed, its important portions fit comfortably in a block quote (with some very minor formatting):

The Declaratory Ruling, Report and Order, and Order in the matter of restoring internet freedom that was adopted by the Commission on December 14, 2017 (FCC 17–166) shall have no force or effect.

The Declaratory Ruling, Report and Order, and Order described in paragraph (1) may not be reissued in substantially the same form.

The following are restored as in effect on January 19, 2017: (1) The Report and Order on Remand, Declaratory Ruling, and Order in the matter of protecting and promoting the open internet that was adopted by the Commission on February 26, 2015 (FCC 15–1924). (2) Part 8 of title 47, Code of Federal Regulations.

That Part 8 is the transparency rule added to the FCC’s 2015 rules, technically separate but effectively part and parcel. You can read the rest of the bill here (PDF).

Re-establishing the 2015 rules and zapping the new ones is a quick fix that gets everyone on the right page, moots a great deal of hullabaloo and controversy over the comment process, the technical underpinnings of the Restoring Internet Freedom rulemaking, and so on. The law is hard to mistake: out with the new and in with the old.

What it doesn’t do is address the issue at the heart of the problem: that the laws governing the FCC and defining internet communication for the purposes of regulation are quite out of date. It is the ambiguity in critical portions of the Communications Act (and its major 1996 overhaul) that enable the FCC to pick and choose which industries it regulates.

The FCC’s argument, at the center of the 2017 rule, that broadband isn’t telecommunications is supported by almost no experts whatsoever, yet as an expert agency it can decide such technical matters on its own. If Congress were to establish a law clarifying that, however, it would remove the Commission’s freedom in this matter and constrict it to operating as the law dictates.

That’s not the law being proposed today; such a bill would need to be very carefully researched and written, and these things take time. But the “Save the Internet Act” is a good stopgap, as it puts the necessary rules back in place and prevents a similarly flawed replacement from being substituted. That’s enough for now.

It has a very good chance of passing through Congress as-is, but of course faces a hostile president whose own administration put in place the changes being reversed. It seems unlikely to be approved at the Executive level, but it’s worth a try.


Source: Tech Crunch

Kobalt, the music services company, is raising a big round that could exceed $100 million, says new report

Kobalt, a 19-year-old, London-based music services company that operates as both a music publisher and a service-based music company — among other things, it helps artists collect the royalties owed them — is reportedly raising a new round of funding that could surpass $100 million.

Music Business Worldwide (MBW) reported on the round yesterday, with Kobalt founder and CEO Willard Ahdritz confirming that the news is directionally correct without divulging precisely how much capital Kobalt is closing on currently.

The new funding comes about one year after Kobalt closed on its most recent funding, which valued the company at roughly $800 million, as TC had reported at the time.

A large part of Kobalt’s appeal to investors, as well as the artists, publishers and labels that are among its customers, is the content management system it has created and that makes it far easier and more transparent to capture the millions of incremental plays happening across streaming platforms like Apple Music, Spotify, and Soundcloud — then to collect money where it is due.

The company is made up of numerous parts, however, including Kobalt Music Publishing; Kobalt Neighbouring Rights; a recorded music division called AWAL (Artists Without a Label) into which Kobalt sunk $150 million last year to expand the business; and a collection agency that Kobalt acquired in 2015 AMRA. That’s short form for what was previously called the American Mechanical Rights Agency.

Kobalt also oversees Kobalt Capital, an acquisitive fund managed by KMG.

Kobalt’s investors to date have included GV;  Section 32, whose founder, Bill Maris, was previously the CEO of GV; Hearst Entertainment; Balderton Capital; and MSD Capital, a private investment firm that exclusively manages the capital of Michael Dell and his family.

According to MBW, Kobalt is currently talking with investment banks to pull together its mega round. Though Ahdritz would not state the express amount that Kobalt is targeting, he told the outlet that the fresh capital will be used to grow Kobalt’s presence in each of its verticals.

He added that its record vision, AWL, is particularly eager to challenge traditional and, as he sees it, outdated, record labels that tend to benefit a limited number of artists at the expense of so many others.

AWAL, as described last year by the Financial Times, offers musicians marketing and promotional services but lets them keep the copyright to their material, and has already drawn both new and established artists, including Nick Cave and De La Soul. Though they maintain ownership of their royalties, they share revenue with Kobalt in return for its services.


Source: Tech Crunch