Month: June 2020

Boston’s tech boom has led to a huge need for tech-related talent. But while the last decade has brought nearly 72,000 new tech jobs to Massachusetts, the growth brought with it slim progress regarding the makeup of who actually fills those roles. (Spoiler: It’s largely white men.)

According to MassTLC, it will take until 2085 for Black workers to reach the same hiring rate of white men in the industry today. For Latinos, it will take until 2045. And for women, it will take until 2070.

In this month’s Boston column, we decided to check in on the region’s diversity efforts. Boston is a city that has been defined both by a historically racist reputation and its university-driven liberal bonafides. As companies across the country have reacted to systemic racism with promises to do better when it comes to hiring, we wondered: Is Boston stepping up to the plate when it comes to hiring underrepresented candidates?

Using a list generated by a simple, time-bounded Crunchbase search for most recent Boston-area fundraising events. we turned to 15 companies that have recently raised within Boston and asked about their diversity efforts:

• Ginkgo Bioworks
• Wasabi Technologies
• Orbita AI
• Atea Pharmaceuticals
• Amwell
• Hemista
• LifePod Solutions
• Jellyfish
• AllHere Education
• Canvas GFX
• PIC Therapeutics
• Tyme Wear

Only a handful of companies responded, which wasn’t a good sign. Boston has a stunted record of releasing diversity data, so the silence was somewhat expected, if a little disappointing. Let’s review the responses we received to see what we can learn from both the answers (and the nonanswers).

At the end, we’ll look at some recent Boston venture data. We also have a new Boston investor survey coming later this month, so stay tuned.

The responses

Source: Tech Crunch

As schools stay closed and summer camp seems more like a germscape than an escape, students are staying at home for the foreseeable future and have shifted learning to their living rooms. Now, Norwegian educational gaming company Kahoot — the popular platform with 1.3 billion active users and over 100 million games (most created by users themselves) — has raised a new round of funding of $28 million to keep up with demand.

The Oslo-based startup, which started to list some of its shares on Oslo’s Merkur Market in October 2019, raised the $28 million in a private placement, and said it also raised a further $62 million in secondary shares. The new equity investment included participation from Northzone, an existing backer of the startup, and CEO Eilert Hanoa. While it’s not a traditional privately held startup in the traditional sense, at the market close today, the company’s valuation was $1.39 billion (or 13.389 billion Norwegian krone).

Existing investors in the company include Disney and Microsoft, and the company has raised $110 million to date.

Kahoot launched in 2013 and got its start and picked up most of its traction in the world of education through its use in schools, where teachers have leaned on it as a way to provide more engaging content to students to complement more traditional (and often drier) curriculum-based lessons. Alongside that, the company has developed a lucrative line of online training for enterprise users as well.

The global health pandemic has changed all of that for Kahoot, as it has for many other companies that built models based on classroom use. In the last few months, the company has boosted its content for home learning, finding an audience of users who are parents and employers looking for ways to keep students and employees more engaged.

The company says that in the last 12 months it had active users in 200 countries, with more than 50% of K-12 students using Kahoot in a school year in that footprint. On top of that, it is also used in some 87% of “top 500” universities around the world, and that 97% of Fortune 500 companies are also using it, although it doesn’t discuss what kind of penetration it has in that segment.

It seems that the coronavirus outbreak has not impacted business as much as it has in some sectors. According to the midyear report it released earlier this week, Q2 revenue is expected to be $9 million, 290% growth compared to last year and 40% growth compared to the previous quarter, and for the full year 2020, it expects revenue between $32 million and $38 million, with a full IPO expected for 2021.

As it has been doing even prior to the coronavirus outbreak, Kahoot has also continued to invest in inorganic growth to fuel its expansion. In March, it acquired math app maker DragonBox for $18 million in cash and shares. The company also runs an accelerator, Kahoot Ignite, to spur more development on its platform.

However, Hanoa said that Kahoot is shifting its focus to now also work with more mature edtech businesses.

“When we started out, we were primarily receiving requests on early stage products,” he said. “Now we have the opportunity to consider mature services for either integration or corporation. It’s a different focus.”

Source: Tech Crunch

Amid a heavier focus on race, diversity and inclusion in light of the police killing of George Floyd, an unarmed Black man, Facebook is making its chief diversity officer, Maxine Williams, report directly to COO Sheryl Sandberg, Sandberg wrote in a memo to Facebook employees today. Before, Williams reported to VP of Human Resources Janelle Gale.

“We are expanding Maxine’s role and putting Diversity & Inclusion at the heart of our ongoing management team discussions and processes – at the heart of all we do,” Sandberg wrote in the memo.

This is certainly a step up for Williams on the chain of command, but it falls short of having her report directly to CEO Mark Zuckerberg. Diversity advocates for years have been calling for heads of diversity to report directly to the CEO. Many companies, however, have yet to do that. More often, tech companies have their heads of diversity report into the head of HR.

As we’ve noted before, heads of diversity and inclusion are oftentimes not in a position where they are set up to effect real change. As Project Include co-founder and CEO Ellen Pao told me last June, “they’re not empowered and they don’t have the team or the authority and there’s no metric that they can push people toward and hold people accountable to. They’re in this weird role where a lot of it is external facing.”

Beyond putting Williams in a position where she will hopefully have a better seat at the table, Facebook says it will encourage employees to engage in a day of learning on Juneteenth, a day that commemorates the end of slavery in the United States. More specifically, it acknowledges the day in which slaves in Galveston, Texas became aware of their freedom on June 19, 1865.

“This Juneteenth, Facebook will commemorate the ending of slavery in America with a day of learning,” a Facebook spokesperson said in a statement to TechCrunch. “We are canceling all meetings and engaging in conversation about the history, experiences and issues that Black Americans still face. We all have a responsibility to help give voice to underrepresented communities around the world. Our goal is to learn more so that we can do more.”

This comes days after Twitter and Square CEO Jack Dorsey declared Juneteenth a company-wide holiday. Unlike Twitter and Square, Facebook employees will not have Juneteenth as an official holiday but will instead be encouraged to use it as a day of learning and attend educational sessions.

Earlier this month, Facebook employees staged a virtual walkout in protest of the company’s inaction around President Donald Trump’s post that incited violence.

Amid protests in Minneapolis against the police killing of Floyd, Trump posted on both Twitter and Facebook that, “when the looting starts, the shooting starts.” Twitter’s response was to apply a notice to his tweet, stating that it violated Twitter’s rules about glorifying violence. Facebook, however, took a different approach. Its response was to do nothing.

Zuckerberg explained that the company’s policy “allows discussion around state use of force, although I think today’s situation raises important questions about what potential limits of that discussion should be.” Additionally, Zuckerberg said, “we think people need to know if the government is planning to deploy force.”

Facebook’s track record on race has not been great over the years. But that’s not to say no progress has been made. Last June, Williams pointed to how Facebook has increased the number of Black women by 25x and Black men by 10x over the last five years.

“There has been a lot of change,” Williams told me at the time. “Has there been as much as we want? No. And I certainly think we have the issue of when we started focusing on D&I in a very deliberate way. The company was already nine years old with thousands of people working here. The biggest takeaway is that the later you start, the harder it is.”

Currently, Facebook is just 3.8% Black, 5.2 Latinx in the U.S., and 3.1% two or more races, according to its most recent diversity report.

This story has been updated with a slightly revised comment from Facebook.

Source: Tech Crunch

Editor’s note: Andreessen Horowitz’s Crypto Startup School brought together 45 participants from around the U.S. and overseas in a seven-week course to learn how to build crypto companies. Andreessen Horowitz is partnering with TechCrunch to release the online version of the course over the next few weeks. 

In week four of a16z’s Crypto Startup School, the spotlight shifts to building companies by growing communities of users, developers and employees in a decentralized context.

In a virtual fireside chat, 16z General Partner Chris Dixon and GitHub and Chatterbug Co-founder Tom Preston-Werner discuss “Building Companies and Developer Communities.”

Preston-Werner explains how the open-source ethos is a great way to build social virality among developers, and how the clean, developer-focused interface of GitHub led to its wide adoption and caused developers to demand it within their own organizations.

He also offers marketing lessons from the early days of GitHub, when the company used informal methods of building community in a bid to create “superfans.”

He urges founders to view a company’s brand as an expression of its core beliefs, with a focus on how it helps its users succeed. The reason people would put a sticker on their laptop or wear a company tee-shirt is because of “what they believe they are communicating to others with that sticker or shirt … it’s a shortcut for communicating values.”

In the second video, Jesse Walden, a former a16z investment partner and Mediachain co-founder, and Robert Leshner, founder and CEO of Compound, do a “Deep Dive on Decentralization.”

Walden starts with a playbook for progressive decentralization — the process by which crypto project creators build a useful product, create a community around that product, and then gradually hand over control of the maturing network to the community. This process is in keeping with the cooperative model of crypto networks, which drives rapid, compounding innovation through better alignment of incentives and open participation.

Leshner follows with a case study of his experiences at Compound, an automated money market for crypto assets in which lenders and borrowers can come together to transact without the involvement of third parties. Compound, one of the first crypto projects to move through the full progressive decentralization model, built a thriving community of third-party application developers, who have set up shop on top of Compound’s smart-contract protocol.

The Compound team has gradually brought this community further into the protocol’s inner workings; in the final stages before handoff to the community, the founding team made changes transparently, with greater reliance on the community’s input, and created a sandbox for experimentation to test governance mechanisms. Decentralizing “allows the protocol to live forever,” Leshner says, which fosters innovation because developers can trust the protocol with their businesses and livelihood.

In the final video of week four, Tina Ferguson of a16z’s Tech Talent and People Practices team offers guidance on “Managing a Distributed Workforce.” Because of the decentralized mindset and evolving business models at the heart of crypto, founders and managers face unique challenges. In such a fast-moving space, for example, it’s important to hire someone who has the right skills now and will also adapt to what’s required in 12-18 months.

Compensation, which could include the allocation of tokens rather than more-traditional shares, also requires close attention. When hiring in other countries, teams must consider employment laws, as well as whether to use Professional Employer Organizations (PEOs) to move quickly via local contacts on important hires. Finally, real-time feedback is especially crucial in a distributed workforce, as is clear and timely dissemination of information.

Source: Tech Crunch

Spin has launched its scooter sharing business to Germany, the first step in the U.S. company’s plans to expand to Europe.

The company, which was acquired by Ford in 2018 for about $100 million, has launched in Cologne and plans to open up in German cities Dortmund and Essen in the coming weeks. Spin said it’s also expanding its footprint in the U.S., starting with Atlanta. Other U.S. cities will follow, Spin said without providing more details. 

Spin’s Europe expansion is part of a trend that was emerging in the beginning of the year before COVID-19 upended the economy. In early 2020, it looked like Europe would become a summertime battleground for e-scooter companies. European and U.S.-based companies, including Lime, Bird, Circ, Swedish startup Voi and German startup Tier, were vying for market share. Voi was in about 40 cities in Europe and Tier had expanded to roughly 56. Amsterdam-based Dott was also in the mix. Spin announced in February plans to expand to Europe.

COVID-19 spread throughout Europe and then North America soon after, putting the brakes on micromobility. The pandemic prompted a number of scooter and bike share companies to pause operations or even pull out of cities altogether.

E-scooter startups are now coming back to Europe, where adoption rates and unit economics have been rosier than in some U.S cities.

Spin is starting with Germany in part because a recent survey conducted by the company and YouGov suggests e-scooters are poised to become a favored mode of transit in the country. Nearly 50% of those surveyed in Germany indicated they are already using or planning to use a solo transportation option for commuting to and from work and for taking trips within their immediate vicinity, Spin said.

“We are seeing heavier adoption of micromobility all around the world especially as the need for people to commute in less crowded conditions increases,” CEO and co-founder Derrick Ko said in a statement.

Spin said it plans to expand beyond Germany. The company has applied for permits in Lyon and Paris in France and submitted a proposal for rental e-scooter pilot in several U.K. cities, including Birmingham, Liverpool, London and Manchester.

Spin continued operating in some U.S. cities where it was allowed and provided free rides for healthcare workers during the pandemic. The company has resumed operations in 14 cities this month. It is now operating in 25 U.S. cities.

“Spin scooters are being used now more than ever as a utility rather than for leisurely activities,” president and co-founder Euwyn Poon said in a statement. “As public transit is cutting services, Spin is stepping in to help.”

Since April, new daily active users have increased an average 34% week over week, according to Poon. Trip duration has also increased 44%, reaching a peak of 24 minutes per trip, in May, Poon added.

Source: Tech Crunch

As North America slowly begins to reopen after nearly two months of sheltering in place and business lockdowns, startups that paused fundraising are starting to get back into the game. But these are shaky economic times, and most founders will be coming back to a different world altogether.

George Arison, founder and co-CEO of Shift, has a few ideas on how entrepreneurs should approach fundraising in “the new normal,” whatever that means.

A tech platform that buys used cars off of individuals and sells them to new buyers, Shift has raised over $225 million over five rounds. But Arison has experience fundraising under difficult circumstances: In 2017, the company’s $38 million Series C was a down round, where Shift had to raise money at a lower valuation than it did for its Series B.

In a fundraising world where many companies have been “massively” overvalued, Arison expects these conditions to shape the new normal.

“I think flat is going to be the new up round, to be honest,” he says. “Some companies will do up rounds — like Stripe. But most companies are going to have a much harder time with capital.” On an episode of How I Raised It, Arison shared his top fundraising tips for when times get tough — from how to pick VC partners strategically to successfully navigating a down round.

Lean in to “no” and go for investors who will reject you

When Arison was trying to raise Shift’s Series A, he cast a wide net in terms of the venture capitalists he spoke to and purposefully connected with VCs who might not invest in the company.

“I’m a big believer in talking to a broader range of people than founders normally would,” Arison says. “There are many benefits to getting to know really great investors, even if they don’t invest in you, because you’ll learn a lot from them. They’ll tell you things you otherwise might not pay attention to — and that information, over time, becomes really critical.”

Source: Tech Crunch

If you’re a teacher who has been relying on Apple’s iTunes U platform to digitally share your courses with the world, it’s time to shift to something new. After a few years of letting it mostly stagnate (the last update with anything but “stability improvements” was in 2017), Apple has quietly disclosed that iTunes U will be discontinued at the end of 2021.

The news comes via a support document on Apple’s site, as spotted by MacRumors.

Why? In short: it doesn’t really make sense to support it anymore. iTunes is no longer the all-encompassing, cram-it-on-in feature beast that it once was, so the name doesn’t really make sense today. Apple points out that they’ve been building out standalone apps like Classroom and Schoolwork to help teachers distribute material and grade students; meanwhile, plenty of third party apps now focus on digital education as their first and foremost feature.

Apple first launched iTunes U in 2007 as a section of the iTunes Store meant to host courses and content from “top US colleges.” By 2013, Apple said that those courses had been downloaded over one billion times. By the middle of 2019, however, it was shifting much of the content to other platforms (such as moving audio-only content to the Apple Podcasts app), seemingly in preparation for an eventual shutdown.

Apple says that all current content on iTunes U will stay up “through the 2020-2021 educational year”, but encourages instructors to back up their materials sooner than later. If you’re a student working through a course on iTunes U, meanwhile, you’ll need to reach out to the instructor to figure out if/where they plan on moving it.

Source: Tech Crunch

One of the selling points for HBO Max, the recently launched streaming service from WarnerMedia, is the inclusion of classic films from Turner Classic Movies and the Criterion Collection. But choosing which old movies to include, and how to present them, can get thorny.

Case in point: “Gone with the Wind” is generally considered one of the greatest and most popular movies of all time — but it also presents a cheery version of slavery and glorifies the antebellum South.

In the context of the recent protests following the death of George Floyd, along with the broader discussions about racial justice, “12 Years a Slave” screenwriter John Ridley published an op-ed in the Los Angeles Times calling on HBO Max to remove the film.

Ridley acknowledged that “movies are often snapshots of moments in history” and that “even the most well-intentioned films can fall short in how they represent marginalized communities.” However, he suggested that “Gone with the Wind” is “its own unique problem … It is a film that, when it is not ignoring the horrors of slavery, pauses only to perpetuate some of the most painful stereotypes of people of color.”

HBO Max has now responded by removing the film and releasing a statement acknowledging that its “racist depictions were wrong then and are wrong today.”

At the same time, the statement suggests that the removal is only temporary: “These depictions are certainly counter to WarnerMedia’s values, so when we return the film to HBO Max, it will return with a discussion of its historical context and a denouncement of those very depictions, but will be presented as it was originally created, because to do otherwise would be the same as claiming these prejudices never existed.”

HBO Max isn’t the first streaming service to face these questions. Disney+ (which probably needs to take a more hands-on approach, given its focus on family and children’s programming) includes disclaimers about “outdated cultural depictions” on titles like “Dumbo,” while former CEO Bob Iger has also said the notoriously racist “Song of the South” is “not appropriate in today’s world” and will never been included on the service.

Source: Tech Crunch

Grow Credit, the startup that launched last year to help customers build out their credit scores by providing a credit line for online subscriptions like Spotify and Netflix, has added Mucker Labs as an investor and closed its seed round with $2 million in total commitments.

The Los Angeles startup founded by serial entrepreneur Joe Bayen, had been bootstrapped initially and then received funding from a clutch of core angel investors before signing a deal with Mucker earlier this month, according to Bayen.

Using the Marqeta platform, Grow Credit can extend a loan to customers to expand their subscription services. Using the MasterCard network for payments, and Marqeta’s tools to restrict payment access Grow offers credit facilities to its customers to pay for their monthly subscriptions. By using Grow Credit for those payments, users can improve their credit scores by as much as 61 points in a nine-month span, says Bayen.

The company doesn’t charge any fees for its loans, but users can upgrade their service. The initial tier is free for access to $15 of credit, once a user connects their bank account. For a $4.99 monthly fee, customers can get up to $50 of subscriptions covered by the service. For $9.99 that credit line increases to $150, Bayen said.

Increases to a users’ credit score can make a significant dent in their costs for things like lease agreements for cars, mortgages for houses, and better rates on other credit cards, said Bayen.

“Everything is cheaper, you can get access to a credit card with lower interest rates and better rewards.” he said. “We’re looking at ourselves as the single best route to getting access to an Apple card.”

Additional capital for the new round came from individual investors like DraftKings chief executive, Jason Robins, former National Football League hall of fame player Ronnie Lott, Sebastien Deguy, VP of 3D at Adobe, of Adobe and Mucker Labs.

Coming up, Grow Credit said it has a deal in the works with one very large consumer bank in the U.S. and will be launching the Android version of tis app in a few weeks.

Source: Tech Crunch

Two men embodying the zenith of human villainy have admitted to making approximately a billion robocalls in the first few months of 2019 alone, and now face an FCC fine of $225 million and a lawsuit from multiple attorneys general that could amount to as much or more — not that they’ll actually end up paying that.

John Spiller and Jakob Mears, Texans of ill repute, are accused of (and have confessed to) forming a pair of companies to make millions of robocalls a day with the aim of selling health insurance from their shady clients.

The operation not only ignored the national Do Not Call registry, but targeted it specifically, as it was “more profitable to target these consumers.” Numbers were spoofed, making further mischief as angry people called back to find bewildered strangers on the other end of the line.

These calls amounted to billions over two years, and were eventually exposed by the FCC, the offices of several attorneys general, and industry anti-fraud associations.

Now the pair have been slapped with a $225 million proposed fine, the largest in the FCC’s history. The lawsuit involves mulitiple states and varying statutory damages per offense, and even a conservative estimate of the amounts could exceed that number.

Unfortunately, as we’ve seen before, the fines seem to have little correlation with the amounts actually paid. The FCC and FTC do not have the authority to enforce the collection of these fines, leaving that to the Department of Justice. And even should the DoJ attempt to collect the money, they can’t get more than the defendants have.

For instance, last year the FTC fined one robocaller $5 million, but he ended up paying $18,332 and the market price of his Mercedes. Unsurprisingly, these individuals performing white collar crimes are no strangers to methods to avoid punishment for them. Disposing of cash assets before the feds come knocking on your door is just part of the game.

In this case the situation is potentially even more dire: the DoJ isn’t even involved. As FCC Commissioner Jessica Rosenworcel put it in a statement accompanying the agency’s announcement:

There’s something missing in this all-hands effort. That’s the Department of Justice. They aren’t a part of taking on this fraud. Why not? What signals does their refusal to be involved send?

Here’s the signal I see. Over the last several years the FCC has levied hundreds of millions in fines against robocallers just like the folks we have here today. But so far collections on these eye-popping fines have netted next to nothing. In fact, it was last year that The Wall Street Journal did the math and found that we had collected no more than $6,790 on hundreds of millions in fines. Why? Well, one reason is that the FCC looks to the Department of Justice to collect on the agency’s fines against robocallers. We need them to help. So when they don’t get involved—as here—that’s not a good sign.

While the FCC’s fine and the lawsuit will certainly put these robocallers out of business and place further barriers to their conducting more scam operations, they’re not really going to be liable for 9 figures, because they’re not billionaires.

It’s good that the fines are large enough to bankrupt operations like these, but as Rosenworcel put it back in 2018 when another enormous fine was levied against a robocaller, “it’s like emptying the ocean with a teaspoon.” While the FCC and states were going after a pair of ne’er-do-wells, a dozen more have likely popped up to fill the space.

Industry-wide measures to curb robocalls have been underway for years now but only recently have been mandated by the FCC after repeated warnings and delays. Expect the new anti-fraud frameworks to take effect over the next year.

Source: Tech Crunch