Month: July 2020

Welcome to The Exchange, an upcoming weekly newsletter featuring TechCrunch and Extra Crunch reporting on startups, money, and markets. You can sign up for it here to receive it regularly when it launches on July 25th. You can email me about it here, or talk to me about it on Twitter. Let’s go!

Ahead of parsing Q2 venture capital data, we got a look this week into the VC world’s take on making deals over Zoom. A few months ago it was an open question whether VCs would simply stop making new investments if they couldn’t chop it up in person with founders. That, it turns out, was mostly wrong.

This week we learned that most VCs are open to making remote deals happen, even if 40% of VCs have actually done so. This raises a worrying question: If only 40% of VCs have actually made a fully remote deal, how many deals happened in Q2?

Judging from my inbox over the past few months, it’s been an active period. But we can’t lean on anecdata for this topic; The Exchange will parse Q2 VC data next week, hopefully, provided that we can scrape together the data points we need to feel confident in our take. More soon.

Private markets

As TechCrunch reported Friday, some startups are delaying raising capital for a few quarters. They can do this by limiting expenses. The question for startups that are doing this is what shape they’ll be in when they do surface to hunt for fresh funds; can they still grow at an attractive pace while trying to extend their runway through burn conservation?

But there’s another option besides waiting to raise a new round, and not raising at all. Startups can raise an extension to their preceding deal! Perhaps I am noticing something that isn’t a trend, or not a trend yet, but there have been a number of startups recently raised extensions lately that caught my eye. For example, this week MariaDB raised a $25 million Series C extension, for example. Also this week Sayari put together $2.5 million in a Series B extension. And CALA put together $3 million in a Seed extension. Finally, across the pond Machine Labs put together one million pounds in another Seed extension this week.

I don’t know yet how to numerically drill into the available venture data to tell if we’re really seeing an extension wave, but do let me know if you have any notes to share. And, to be completely clear, the above rounds could easily be merely random and un-thematic, so please don’t read into them more deeply than that they were announced in the last few days and match something that we’re watching.

Public markets

On the public markets front, the news is all good. Tech stocks are up in general, and software stocks set some new record highs this week. It’s nearly impossible to recall how scary the world was back in March and April in today’s halcyon stock market run, but it was only a few months back that stocks were falling sharply.

The return-to-form has helped a number of companies go public this year like Vroom, Accolade, Agora, and others. This week was another busy period for startups, former startups, and other companies looking to go out.

In quick fashion to save time, this week we got to see GoHealth’s first IPO range, nCino’s second (more on the two companies’ finances here), learned that Palantir is going public (it’s financial history as best we can tell is here), and even got an IPO filing (S-1) from Rackspace, as it looks towards the public markets yet again.

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The IPO waters are so warm that Lemonade is still up more than 100% from its IPO price. So long as growth companies that are miles from making money can command rich valuations, expect companies to keep running through the public market’s door.

There’s fun stuff on the horizon. Coinbase might file later this year, or in early 2021. And the Airbnb IPO is probably coming within four or five quarters. Gear up to read some SEC filings.

Funding rounds worth noting

The coolest funding round of the week was obviously the one that I wrote about, namely the $2.2 million that MonkeyLearn put together from a pair of lead investors. But other companies raised money, and among them the following investments stood out:

• Sony poured a quarter of a billion dollars into the maker of Fortnite, for a 1.4% stake. This rounds stands out for how small a piece of Epic Games that Sony got its hands on. It feels reminiscent of the recent investment deluge into Jio.
• TruePill raised $25 million in a Series B. In the modern world it seems batty to me that I have to get off my ass, go to Walgreens or CVS, wait in line, and then ask someone to please sell me Claritin D. What an enormous waste of time. TruePill, which does pharma delivery, can’t get here fast enough. Also, investors in TruePill are probably fully aware that Amazon spent $1 billion on PillPack just a few year ago.
• From the slightly off-the-wall category, this headline from TechCrunch: “UK’s Farewill raises $25M for its new-approach online will writing, funerals and other death services.” Farewill is a startup name that is so bad it probably works; I won’t forget it any time soon, even though I don’t live in the U.K.! And this deal goes to show how big the internet really is. There’s so much demand for digital services that a company with Farewill’s particular focus can put together enough revenue growth to command a $25 million Series B.
• Finally, TechCrunch’s Ron Miller covered a $50 million investment into OwnBackup. What matters about this deal was how Ron spoke about it: “OwnBackup has made a name for itself primarily as a backup and disaster-recovery system for the Salesforce ecosystem, and today the company announced a $50 million investment.” What to take from that? That Salesforce’s ecosystem is maybe bigger than we thought.

That’s The Exchange for the week. Keep your eye on SaaS valuations, the latest S-1 filings, and the latest fundings. Chat Monday.

Source: Tech Crunch

U.S. Customs and Border Protection has admitted that there is no practical way for Americans to avoid having their movements tracked by its license plate readers, according to its latest privacy assessment.

CBP published its new assessment — three years after its first — to notify the public that it plans to tap into a commercial database, which aggregates license plate data from both private and public sources, as part of its border enforcement efforts.

The U.S. has a massive network of license plate readers, typically found on the roadside, to collect and record the license plates of vehicles passing by. License plate readers can capture thousands of license plates each minute. License plates are recorded and stored in massive databases, giving police and law enforcement agencies the ability to track millions of vehicles across the country.

The agency updated its privacy assessment in part because Americans “may not be aware” that the agency can collect their license plate data.

“CBP cannot provide timely notice of license plate reads obtained from various sources outside of its control,” the privacy assessment said. “Many areas of both public and private property have signage that alerts individuals that the area is under surveillance; however, this signage does not consistently include a description of how and with whom such data may be shared.”

But buried in the document, the agency admitted: “The only way to opt out of such surveillance is to avoid the impacted area, which may pose significant hardships and be generally unrealistic.”

CBP struck a similar tone in 2017 during a trial that scanned the faces of American travelers as they departed the U.S., a move that drew ire from civil liberties advocates at the time. CBP told Americans that travelers who wanted to opt-out of the face scanning had to “refrain from traveling.”

The document added that the privacy risk to Americans is “enhanced” because the agency “may access [license plate data] captured anywhere in the United States,” including outside of the 100-mile border zone within which the CBP typically operates.

CBP said that it will reduce the risk by only accessing license plate data when there is “circumstantial or supporting evidence” to further an investigation, and will only let CBP agents access data within a five-year period from the date of the search.

When asked about its privacy assessment, CBP spokesperson Matthew Dyman responded: “How would you be able to opt out of a license plate reader? Can I opt out of speed cameras here in DC?”

CBP doesn’t have the best track record with license plate data. Last year, CBP confirmed that a subcontractor, Perceptics, improperly copied license plate data on “fewer than 100,000” people over a period of a month-and-a-half at a U.S. port of entry on the southern border. The agency later suspended its contract with Perceptics.

Updated with CBP response. 

Source: Tech Crunch

In its first few weeks of release, the latest game from QuizUp founder Thor Fridriksson took the top spot in the Games Section of Apple’s App Store and was the top app (for a brief time) in the App Store at large.

Since its launch on June 17, Trivia Royale has been downloaded more than 2.5 million times, with day-one retention of 45% and week-one retention of 45% on iOS, according to the company. Average daily usage per user is around 30 minutes. It currently sits in the number six spot in the Free Games category on the App Store.

There is no shortage of mobile games, but in such a cluttered space, it’s difficult to break through the noise. So how did Trivia Royale do it?

The game, which lets users compete in a 1,000-person, single-elimination trivia tournament, is built on the Teatime Games platform. Teatime emphasizes the fun of playing against other humans in the mobile gaming landscape, giving users the ability to communicate via video chat while they play in a game on their smartphone.

The platform allows game developers to use this video chat functionality, which comes with Snapchat-like face filters or Apple Memoji-style avatars, on their own games. But for Teatime to truly succeed as a gaming platform, the company needed a hit game, Fridriksson said.

The serial entrepreneur told TechCrunch that he decided to take off his CEO hat and return to his product roots by focusing on a category that few people know as well as he does: trivia.

The Trivia Royale tournament combines the scale of Battle Royale with the durability of trivia — whether it’s Jeopardy, HQ Trivia, bar trivia or this, we can’t get enough of it — or lets users match against one other player in a single category of trivia.

I’ve played around on the game for a while now and can say that it’s very well done, from the design to the production value. But more important than the mechanics of the tournament or the typeface or even the content of the questions are the avatars, which let users express themselves through customization and their real-life facial expressions.

But none of that means anything if players don’t join the game. So how did Trivia Royale earn more than 2.5 million downloads (and climbing) in a matter of days?

A big bet on TikTok

Fridriksson told TechCrunch that he has to give a ton of credit to his kids (who are 15 and 11). His daughter told him about TikTok and gave him a list of her favorite stars, including Addison Rae and Dixie D’Amelio.

Source: Tech Crunch

Replicated, the Los Angeles-based company pitching monitoring and management services for Kubernetes-based applications, has managed to bring on the former head of product of the $2.75 billion-valued programming giant GitLab as its new chief product officer. 

Mark Pundsack is joining the company as it moves to scale its business. At GitLab, Pundsack saw the company grow from 70 employees to 1,300 as it scaled its business through its on-premise offerings.

Replicated is hoping to bring the same kind of on-premise services to a broad array of enterprise clients, according to company chief executive Grant Miller.

First introduced to Replicated while working with CircleCI, it was the company’s newfound traction since the launch of its Kubernetes deployment management toolkit that caused him to take a second look.

“The momentum that Replicated has created with their latest offering is tremendous; really changing the trajectory of the company,” said Pundsack in a statement. “When I was able to get close to the product, team, and customers, I knew this was something that I wanted to be a part of. This company is in such a unique position to create value throughout the entire enterprise software ecosystem; this sort of reach is incredibly rare. The potential reminds me a lot of the early days of GitLab.”

It’s a huge coup for Replicated, according to Miller.

“Mark created the core product strategy at GitLab; transforming GitLab from a source control company to a complete DevOps platform, with incredible support for Kubernetes,” said Miller. “There really isn’t a better background for a product leader at Replicated; Mark has witnessed GitLab’s evolution from a traditional on-prem installation towards a Kubernetes-based installation and management experience. This is the same transition that many of our customers are going through and Mark has already done it with one of the best. I have so much confidence that his involvement with our product will lead to more success for our customers.”

Pundsack is the second new executive hire from Replicated in six months, as the company looks to bring more muscle to its C-suite and expand its operations.

Source: Tech Crunch

HBO Max, the WarnerMedia-owned streaming service that launched in May, announced today that it has made a series commitment to an untitled TV show tied to the movie “The Batman” (currently scheduled for release in 2021).

The show will be set in the Gotham City police department, with a creative team that includes Matt Reeves, the movie’s co-writer and director, along with “Boardwalk Empire” creator Terence Winter.

This sounds like familiar territory — the police department of a city overrun by colorful criminals was probably perhaps best explored in the “Gotham Central” comics series (written by Ed Brubaker and Greg Rucka and drawn by Michael Lark), but it was also the focus of the recent (bad) Fox TV show “Gotham.”

However, the announcement from HBO Max emphasized that this will be an extension of the feature film, “ultimately launching a new Batman universe across multiple platforms.” It’s an approach that the streamer is also taking with “Dune: The Sisterhood,” a series that ties into the upcoming “Dune” movie.

“This is an amazing opportunity, not only to expand the vision of the world I am creating in the film, but to explore it in the kind of depth and detail that only a longform format can afford — and getting to work with the incredibly talented Terence Winter, who has written so insightfully and powerfully about worlds of crime and corruption, is an absolute dream,” Reeves said in a statement.

It also remains to be seen whether the show is influenced in any way by the ongoing protests for racial justice. It might seem absurd to connect real-world political issues with a comic book TV show, but the protests have led to a Hollywood reckoning with how movies and television have glorified the police — for example, Andy Samberg recently said the writers and cast of “Brooklyn Nine-Nine” are trying to rethink the show to make something “that we all feel morally okay about.”

Source: Tech Crunch

Hey, ya’ll. I’m experimenting with a bi-weekly roundup that looks at the state of labor in tech.

We’ll use this space to explore topics related to diversity, equity and inclusion, the future of work, issues relating to pay equality, notable personnel changes and much more.

This week, we’re looking at Facebook’s civil rights audit, a new gig worker earnings study, the latest on California ballot measure Proposition 22 and layoffs amid COVID-19. 

Stay woke

It’s been less than two months since the police killing of George Floyd. While the tech industry has continued on with its funding rounds, mergers and acquisitions, there is still work to be done on the racial justice front. Here’s a look at some developments over the last couple of weeks. 

Facebook’s civil rights audit highlights gaps in DE&I work

As seen in Facebook’s final civil rights audit report conducted by former ACLU attorney Laura Murphy, the social networking giant still must do more to increase diversity in its senior leadership roles and C-suite. These roles for Black, indigenous and people of color must also not be “limited to diversity officer positions as is often the case in corporate America,” the report states. 

According to the audit, there must also be company-wide recognition that diversity, equity and inclusion efforts are not to fall solely on those in underrepresented groups, but rather on all members of the senior leadership team and managers. The audit also highlighted employee concerns around “a lack of recognition for the time URM employees spend mentoring and recruiting other minorities to work at Facebook.”

Source: Tech Crunch

If you’re an angel who invested in a startup that was meant to go public in 2014, you might be getting a little bit impatient. High-risk, high-reward investing has lost its shine in this environment: the stock market is a mess these days, and you want your cash back.

Enter recapitalization events, where startups restructure their entire cap table to squeeze out old investors, bring on new ones and shift the way equity and debt is managed. For investors, it’s a killer way to enter a company on friendlier terms than normal (read: desperation), and a nice way to get liquidity on a startup you’re betting on.

For founders, it’s rarely good news, as departing investors is not a metric they’re going to add to the pitch deck. As one investor said on background, the spur of coronavirus-related recapitalization events shows “hella dilution for desperate times.”

That’s what makes Workhuman’s transparency with its recent recapitalization event all the more enticing.

Last year, the human-resources platform brought in $580 million in revenue from customers like LinkedIn, Cisco, J&J and other clients. In April, business grew 40%. Co-founder and CEO Eric Mosley says business has grown five times in size since the company pulled back from its 2014 plans to IPO. Workhuman hasn’t raised a single venture round since 2004 (and doesn’t plan to any time soon).

Being conservative has paid off; although Workhuman has operated for nearly two decades, Mosley says he thinks the company is still at the “tip of the iceberg.” The company recently had a recapitalization event to sell the stakes of its earliest investors, who cut a $200,000 check more than 20 years ago.

Source: Tech Crunch

Harley-Davidson, the storied and struggling Milwaukee-based company that last year launched its first production electric motorcycle in an effort to reboot sales and appeal to a younger customer base, is cutting 700 jobs from its global operations. About 500 workers will be laid off before the end of the year, the company said Thursday.

The company’s CFO John Olin is also out, effective immediately. Harley-Davidson’s current VP Treasurer Darrell Thomas has taken over as interim CFO until a successor is appointed. “Significant changes are necessary, and we must move in new directions,” Harley Davidson Chairman, president and CEO Jochen Zeitz said in a statement.

Harley-Davidson has branded its job cuts and restructuring plan “The Rewire,” which Zeitz spoke about in the company’s first-quarter earnings call back in April. At the time, Zeitz said the company was still committed to its other strategic plan known as “More Roads” that aimed to make the manufacturer an accessible, global brand through marketing and dealership initiatives and a series of new products that included small displacement motorcycles for Asia markets and EVs starting with the LiveWire.

Still, Zeitz declared back in April it was time for a change.

“As a result of my observations and assessment, I’ve concluded that we need to take significant actions and rewire the company now in terms of priorities, execution, operating model and strategy to drive sustained profit and long-term growth,” he said in April. “We are calling it The Rewire. And it’s our playbook for the next few months, leading to a new five-year strategic plan, which we will share when visibility to the future returns.”

Visibility into the future has apparently returned, and in Harley-Davidson’s view it’s time to cut costs and possibly get back to its core products. Initial Rewire actions are expected to result in restructuring costs of about $42 million in second quarter of 2020, Harley-Davidson said in its announcement Thursday. The company plans to share a summary of The Rewire, including additional costs and expected savings, when it releases its Q2 results. The Rewire will set the foundation for a new 2021-2025 strategic plan which is expected to be shared in the fourth quarter.

Harley-Davidson has seen its sales drop in recent years in the U.S., its largest market as its core Baby Boomer customers have gotten older. The COVID-19 pandemic dampened sales further and the company has already cut back production, which resulted in dozens of job cuts last month at its factories in Wisconsin and Pennsylvania. The push into EVs and products for Asian countries aimed to expand into new markets and breath new life into Harley-Davidson.

It’s unclear is how “The Rewire” might affect the company’s push into EVs. The LiveWire, which launched last fall, was supposed to lead a future line-up of EVs planned by Harley-Davidson — spanning motorcycles, bicycles and scooters. Harley-Davidson has not responded to a request for comment; TechCrunch will update the article if the company responds.

The statement from HD makes no specific mention of EVs. It only said the key elements of its restructuring plan was to enhance core strengths and better balance expansion into new spaces, prioritize the markets that matter, reset product launches and build up its accessories and merchandising businesses.

Source: Tech Crunch

Apple today announced its plans for a new, free resource aimed at helping educators of all skill levels gain the ability to teach both Swift and Xcode — the latest in Apple’s educational initiatives focused on encouraging more students to learn app development. On July 13, Apple will begin offering free online training to educators that will serve as an introduction to its Develop in Swift curriculum.

This curriculum has also been completely redesigned to meet students learning styles, based on user feedback, says Apple.

The new series will now include four books, “Develop in Swift Explorations,” “Develop in Swift AP CS Principles,” and “Develop in Swift Fundamentals,” all of which are available today. A fifth book, “Develop in Swift Data Collections,” will become available later this fall. All are available in Apple Books.

The curriculum is geared toward high school and higher education students and focuses on the open-source programming language Swift, designed by Apple, and using Xcode on the Mac.

For younger learners, grades 4 through 8, Apple’s Everyone Can Code curriculum instead uses puzzles and games to teach the building blocks of coding in Swift through the Swift Playgrounds app. This course is now being expanded, as well.

For all the students who have already completed the “Everyone Can Code Puzzles” book, they can now move on to a new book, “Everyone Can Code Adventures.” This book includes more advanced activities where students can practice building with Swift while also learning about important programming concepts.

The company says its intention with the new and expanded courses is to supplement the need for computer science instructors in the U.S., where there is often a need.

Apple noted that The Computer Science Teachers Association claims that fewer than 50% of all American high schools offer computer science classes today and many college students aren’t able to get into the computer science courses needed to graduate, due to a teacher shortage.

In addition, the courses are also being offered to parents, many of whom are now making the transition to become homeschool teachers amid the coronavirus pandemic.

Also for parents of homeschoolers, Apple added a new set of remote learning resources for ages 10 and up, including “A Quick Start to Code” with 10 coding challenges on iPad or Mac. Plus, there are resources on Apple’s Learning from Home website, launched this spring. The site includes on-demand videos and virtual conferences on remote learning, and options to schedule free one-on-one virtual coaching sessions, hosted by educators at Apple.

The long-term impacts of Apple’s push for increased coding education still remain to be seen. “Everyone Can Code” was only launched in 2016, for example, and the “Develop in Swift” curriculum arrived just last year. Combined, the programs today reach 9,000 schools and higher education institutions worldwide.

The idea that “everyone” can and should learn to code is still somewhat controversial. While many may be able to learn coding fundamentals, not everyone will enjoy coding or excel at it. Plus, people often turn to coding for the wrong reasons or get duped by coding bootcamps into thinking that a few weeks of training will have them sailing into six-figure careers with ease.

On the other hand, exposing more kids to coding concepts may help to uncover the potential talent and interest in programming that would have otherwise been overlooked. That interest can then be nurtured by future courses and education as the child grows.

“Apple has worked alongside educators for 40 years, and we’re especially proud to see how Develop in Swift and Everyone Can Code have been instrumental in helping teachers and students make an impact in their communities,” said Susan Prescott, Apple’s vice president of Markets, Apps and Services, in a statement. “We’ve seen community college students build food security apps for their campus and watched middle school educators host virtual coding clubs over summer break. As part of our commitment to help expand access to computer science education, we are thrilled to be adding a new professional learning course to help more educators, regardless of their experience, have the opportunity to learn coding and teach the next generation of developers and designers,” she added.

Source: Tech Crunch