Hello friends, this is Week in Review.

Last week, I dove into the AR maneuverings of Apple and Facebook and what that means for the future of the web. This week, I’m aiming to touch the meme stock phenomenon that dominated American news cycles this week and see if there’s anything worth learning from it, with an eye towards the future web.

If you’re reading this on the TechCrunch site, you can get this in your inbox every Saturday morning from the newsletter page, and follow my tweets @lucasmtny.

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The big thing

This week was whatever you wanted it to be. A rising up of the proletariat. A case of weaponized disinformation. A rally for regulation… or perhaps deregulation of financial markets. Choose your own adventure with the starting point being one flavor of chaos leading into a slightly more populist blend of chaos.

At the end of it, a lot of long-time financiers are confused, a lot of internet users are using rent money to buy stock in Tootsie Roll, a lot of billionaires are finding how intoxicating adopting a “for-the-little-guy!” persona on Twitter can be, and here I am staring at the ceiling wondering if there’s any institution in the world trustworthy enough that the internet can’t turn it into a lie.

This week, my little diddy is about meme stocks, but more about the idea that once you peel away the need to question why you actually trust something, it can become easier to just blindly place that faith in more untrustworthy places. All the better if those places are adjacent to areas where others place trust.

The Dow Jones had its worst week since October because retail investors, organized in part on Reddit, turned America’s financial markets into the real front page of the internet. Boring, serious stocks like Facebook and Apple reported their earnings and the markets adjusted accordingly, but in addition to the serious bits of news, the Wall Street page was splashed with break neck gains from “meme stocks.” While junk stocks surging is nothing new, the idea that a stock can make outrageous gains based on nothing and then possibly hold that value based on a newly formed shared trust is newer and much more alarming.

The most infamous of these stocks was GameStop. (If you’re curious about GameStop’s week, there are at least 5 million stories across the web to grab your attention, here’s one. Side note: collectively we seem to have longer attention spans post-Trump.)

So, Americans already don’t have too much institutional faith. Looking through some long-standing Gallup research, compared to the turn of the century, faith in organized religion, the media, most wings of government, big business and banks has decreased quite a bit. The outliers in what Americans do seem to trust more than they did 20 or so years ago are small businesses and the military.

This is all to say that it’s probably not stellar that people don’t trust anything, and me thinking that the internet could probably disrupt every trusted institution except the military probably only shows my lack of creative thinking when it comes to how the web could democratize the Defense Department. As you might guess from that statement, I think democratizing access to certain institutions can be bad. I say that with about a thousand asterisks leading to footnotes that you’ll never find. I also don’t think the web is done disrupting institutional trust by a long shot, for better or worse.

Democratizing financial systems sounds a lot better from a populist lift, until you realize that the guys users are competing against are playing a different game with other people’s money. This saga will change plenty of lives but it won’t end particularly well for a most people exposed to “infinite upside” day trading.

Until this week, in my mind Robinhood was only reckless because it was exposing (or “democratizing access to” — their words) consumers to risk in a way that most of them probably weren’t equipped to handle. Now, I think that they’re reckless because they didn’t anticipate that OR how democratized access could lead to so many potential doomsday scenarios and bankrupt Robinhood. They quietly raised a $1 billion liquidity lifeline this week after they had to temporarily shut down meme stock trading, a move that essentially torched their brand and left them the web’s most hated institution. (Facebook had a quiet week)

This kind of all feeds back into this idea I’ve been feeding that scale can be very dangerous. Platforms seem to need a certain amount of head count to handle global audiences, and almost all of them are insufficiently staffed. Facebook announced this week in its earnings call that it has nearly 60,000 employees. This is a company that now has its own Supreme Court; that’s too big. If your institution is going to be massive and centralized, chances are you need a ton of people to moderate it. That’s something at odds with most existing internet platforms. Realistically, the internet would probably be happier with fewer of these sweeping institutions and more intimate bubbles that are loosely connected. That’s something that the network effects of the past couple decades have made harder but regulation around data portability could assist with.

Writing this newsletter, something I’m often reminded is that while it feels like everything is always changing, few things are wholly new. This great NYT profile from 2001 written by Michael Lewis is a great reminder of that, chronicling a 15-year-old who scammed the markets by using a web of dummy accounts and got hounded by the SEC but still walked away with $500k. Great read.

In the end, things will likely quiet down at Robinhood. There’s also the distinct chance that they don’t and that those meme traders just ignited a revolution that’s going to bankrupt the company and torch the globals markets, but you know things will probably go back to normal.

 

Until next week,
Lucas Matney

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Other things

SEC is pissed
I’ll try to keep these updates GameStop free, but one quick note from the peanut gallery. The SEC isn’t all that happy about the goings ons in the market this week and they’re mad, probably mostly at Robinhood. They got pretty terse with their statement. More

Facebook Oversight Board wants YOU
Zuckerberg’s Supreme Court wants public comment as it decides whether Facebook should give Trump his Instagram and Facebook accounts back. I’m sure any of Facebook’s executives would’ve stopped building the platform dead in its tracks in the years after its founding if they knew just how freaking complicated moderation was going to end up being for them, but you could probably have changed their mind back by showing them the market cap. More

Apple adtech-killing update drops in spring
After delaying its launch, Apple committed this week to the spring rollout of its “App Tracking Transparency” feature that has so much of the adtech world pissed. The update will force apps to essentially ask users whether they’d like to be tracked across apps. More

Robert Downey Jr. bets on startups
Celebrity investing has been popular forever, but it’s gotten way more common in the venture world in recent years. Reputation transfer teamed with the fact that money is so easy to come by for top founders, means that if you are choosing from some second-tier fund or The Chainsmokers, you might pick The Chainsmokers. On that note, actor Robert Downey Jr. raised a rolling fund to back climate tech startups, we’ve got all the deets. More

WeWork SPAC
Ah poor Adam Neumann, poor SoftBank. If only they’d kept their little “tech company” under wraps for another couple years and left that S-1 for a kinder market with less distaste for creative framing. It seems that WeWork is the next target to get SPAC’d and be brought onto public markets via acquisition. I’m sure everything will go fine. More

Tim Cook and Zuckerberg spar
Big tech is a gentlemen’s game, generally big tech CEOs play nice with each other in public and save their insults for the political party that just fell out of power. This week, Tim Cook and Mark Zuckerberg were a little less friendly. Zuckerberg called out Apple by name in their earnings investor call and floated some potential unfair advantages that Apple might have. Them’s fighting words. Cook was more circumspect as usual and delivered a speech that was at times hilariously direct in the most indirect way possible about how much he hates Facebook. More

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Extra things

Tidbits from our paywalled Extra Crunch content:
The 5 biggest mistakes I made as a first-time startup founder
“I and the rest of the leadership team would work 12-hour days, seven days a week. And that trickled down into many other employees doing the same. I didn’t think twice about sending emails, texts or slacks at night and on weekends. As with many startups, monster hours were simply part of the deal.”

Fintechs could see $100 billion of liquidity in 2021
“For the fourth straight year, the publicly traded fintechs massively outperformed the incumbent financial services providers as well as every mainstream stock index. While the underlying performance of these companies was strong, the pandemic further bolstered results as consumers avoided appearing in-person for both shopping and banking. Instead, they sought — and found — digital alternatives.”

Rising African venture investment powers fintech, clean tech bets in 2020
“What is driving generally positive venture capital results for Africa in recent quarters? Giuliani told TechCrunch in a follow-up email that ‘investment in Africa is being driven on the one hand by a broadening base for early-stage ecosystem support organizations, including accelerators, seed funds, syndicates and angel investing,” and “consolidation,” which is aiding both “growth-stage deals and a burgeoning M&A market.’”

 

Source: Tech Crunch

The new Netflix film “The White Tiger” tells the story of Balram, who is born to a poor family in the Indian village of Laxmangarh and escapes by using his intelligence and determination, ultimately becoming a successful entrepreneur in Bangalore.

Viewers knows this from the start, as Balram (played by Adarsh Gourav) narrates his life story in an email, apparently written to explain his success to China’s visiting head of state. That narration is one of the best things about the movie, providing plenty of black comedy while also allowing Balram to justify his choices in what — by his own admission — is an increasingly disturbing story.

As we explain in the latest episode of the Original Content podcast, “The White Tiger” makes a convincing case for the ruthlessness needed to escape from poverty, while also painting a damning portrait of Balram’s employers, the American-educated Ashok (Rajkummar Rao) and Pinky (Priyanka Chopra Jonas), whose ostensible warmth and compassion only go so far.

If “The White Tiger” falls short at all, it’s in comparison to “Parasite,” a film that deals with similar themes in even more ambitious and virtuosic ways. But a movie can fail to reach the heights of “Parasite” while still being quite good.

In addition to our review, we also discuss The Mother Box, a $130 meal kit tied to the March release of Zack Snyder’s cut of “Justice League” on HBO Max.

You can listen to our review in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also follow us on Twitter or send us feedback directly. (Or suggest shows and movies for us to review!)

If you’d like to skip ahead, here’s how the episode breaks down:
0:00 Intro
0:27 Snyder Cut discussion
9:16 “The White Tiger” review
29:20 “The White Tiger” spoiler discussion

Source: Tech Crunch

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday morning? Sign up here.

What a week. What a month. Are you doing all right? It’s okay if you are tired. We all are. That’s why we have weekends.

Let’s reflect on what happened this week: Individual traders outraged more professional investors by doing something hilarious, namely taking a trade that made some sense — betting that an atrophying physical retailer was going to continue obsolesce — and inverting it.

By going long on GameStop, investors flipped the script on the smart money. Then all heck snapped free, some stocks got blocked on trading services, Congress got mad, billionaires started to front on Twitter like they were the Common Man, some cryptos surged, including Dogecoin of all things, and as we headed into the weekend nothing was truly resolved. It was weird.

Let’s talk over the lessons we’ve learned. First, don’t short a stock so heavily that you are at risk of having the trade exposed and inverted to your detriment. Second, the fintech startups that TechCrunch has covered for years were more brittle than anticipated, either thanks to reserve requirements or simple platform risk. And third, things can always get dumber.

Evidence of that final lesson came during the week’s news cycle in which it became known that WeWork might pursue a public listing via a SPAC. So much for this year being more serious and normal than 2020.

But let’s stop recapping and get into our main topic today, namely a chat that I had with the person I actually work for, Guru Gowrappan, the CEO of Verizon Media Group (VMG). For those who don’t know, Verizon owns VMG, which in turn owns TechCrunch. VMG is a collection of assets, ranging from Yahoo to media brands to technology products. It does billions in yearly revenue, which should help frame how far above my seat — an excellent perch inside of TechCrunch, but not one that comes with org-chart stature — Guru sits.

Very far away.

But we follow each other on Twitter and after Verizon reported earnings this week, inclusive of some honestly pretty good numbers from VMG that I tweeted about, I got about half an hour of Guru’s time. This meant that I had my boss’s boss’s [etc] boss on the record with zero agenda. How could I say no?

For context, VMG generated $2.3 billion in Q4 revenue, up 11% from the year-ago quarter. Verizon described that as “the first quarter of year-over-year growth since the Yahoo! acquisition.” What drove the result? Per the Verizon earnings call, “strong advertising trends with demand-side platform revenue growing 41% compared to the prior year.”

If you are Guru or, frankly, your humble servant, the growth was welcome after VMG’s revenue had dipped to $1.4 billion in Q2 2020, off 24.5% from its year-ago result.

I had a few questions: Would the recent advertising momentum persist in 2021, something that could impact a host of businesses far beyond the VMG org; how important was it to Verizon that VMG had managed to post year-over-year growth; how he expects to balance commerce revenue and journalism; and what Guru thinks about new media products like the recent rebirth of newsletter tech, something that Substack and Twitter and even Facebook are tinkering with.

Here’s what I learned:

• Regarding strong advertising performance in the final months of the year during COVID, Guru said that “the core fundamentals [of] the market dynamics have changed so that they’re more permanent,” adding that consumer behavior is now “more digital, more online” than before.
• The VMG CEO declined to share Q1 2021 expectations in detail, but did note that VMG is aiming to “continue [its] momentum.”
• Part of that momentum comes from subscription products, which Guru cited as a win: “If you look at one of the trends that happened due to COVID, consumers [are] moving to more trusted content and want to spend more time and money on consuming subscription-based products […] TechCrunch/Extra Crunch grew almost 196% year-on-year.”
• My read of his answer to where we are today is that it’s not a bad time to be in the online media game, which isn’t something that has been true much in the past few years, looking around the remains of the journalism industry.
• Regarding VMG’s home inside of Verizon — something that I’ve thought about after the Buzzfeed-HuffPost deal — I asked Guru if VMG’s recent financial performance made our company more attractive to Verizon, and if we have proven the bet that we were trying to make. This, by the way, is the sort of question that is pretty easy to write down, but slightly harder to ask when you are talking to someone who could terminate you at will. Anyway, Guru said “completely” in response. The VMG CEO summarized the Verizon CEO as saying that the media business is “core” to Verizon, and that our parent company “will continue to invest in the media business while we continue to deliver on our promise.” So sign up for Extra Crunch.
• Guru said VMG won’t exchange revenue for credibility when it comes to promoting e-commerce across its platform: “At no point will we trade dollar value in a transaction for trust; there’s no way. […] The editorial team keeps me honest,” he said, adding that he stays out of changes that might upset journalistic balance. That was good to hear.
• And finally, are there new media products that VMG may want to emulate, or buy? Guru was generally bullish on personalization, but declined to dish that VMG is about to buy Substack or anything like that.

Oh and I asked if VMG is going to sell, or otherwise divest, any other media properties in the wake of the HuffPost-BuzzFeed decision. Guru said that the Verizon CEO said that the broader company is “fully committed” to the media business, and that that won’t be “built upon divestment.” Instead, he said, it will be built “upon investing and growing,” adding that there are “no plans to sell any additional properties.” As I like my health insurance, that was nice to hear.

I understand that the above is not a standard sort of Exchange entry, but one thing that I will always try to do is take the conversations that come my way thanks to my job, and bring them to you.

Now, back to venture capital.

Market Notes

GameStop was your entire Twitter feed this week but there is other stuff you need to know. Alfred, a US-based fintech raised $100 million on Tuesday, to pick an example. The company fuses digital intelligence and humans to help users manage their financial lives. Neat.

And adding to our recent data-focused coverage of 2020 venture data — including a dive into the African VC market — investing group Work-Bench put together a look at how NYC’s enterprise tech scene performed in the second half of last year. This is the exact sort of data I would parse for you during a more regular week. But since we had this week, you have to do it yourself.

Sticking to data, Hallo, a startup that helps companies recruit more diverse candidates, dropped a sheaf of data in its “Black Founder Funding Q4 2020” report. Read it. If you don’t have time, I’ll give you the headline stat that both caught my eye and depressed my heart: “Hallo’s research found that out of the 1,537 companies analyzed [in Q4 2020], 40 were led by Black founders.” 

And this week I got to yammer with Microsoft after it reported earnings. Saving most of that for a later date, two things were clear: The cloud world still has oodles of growth ahead of it, which is good news for a large chunk of the startup software market. And if you wanted more data on Teams’ growth to better understand why Salesforce bought Slack, wait another quarter.

Various and Sundry

Closing out, in August of 2014 I came up with the idea for a burrito cannon food delivery service. You would push a button in an app, and it would deliver a burrito to your office sans the need for you to make choices. Then Postmates actually built a burrito cannon into its app, which was both hilarious and fun.

Fast forward to 2021, and Postmates is now part of Uber. And it is back with the return of the burrito cannon:

I did not anticipate that my lazy, stupid idea would help get an NFL star, over a half decade later, to sprint down a field as an industrial-scale potato cannon shot a Mexican delight in his direction. But it’s 2021 and this is where we are.

Evidence, I think, that all my startup ideas are brilliant,

Alex

Source: Tech Crunch

Still figuring out what this newsletter is, I’m torn between aggregation and writing. The inputs vary from blog posts, Twitter threads, and the occasional video. Podcasting seems oddly muzzled by the acceleration of streaming. Blog posts are a misnomer; professional blogs represent the bulk of news and media citations, not usually the single voices of RSS yore.

Linear media is bifurcated between quick takes like The Recount and user tweets of streaming cable news. Podcasting meets longer form streaming with live casting on Facebook Live, Twitter (formerly Periscope), YouTube, and nascent LinkedIn live. As I discovered during a Restreamed recording session of the Gang, the Facebook Live version includes realtime captioning.

On this version of the show, recorded four days before the Inauguration of the Biden presidency, a familiar mood radiates from the Zoomcast. Anxiety, tinged with doubt that we will escape the grip of the pandemic any time soon, or the blight of Trump-o-nomics at all. Now, as I post this, there’s a reasonable chance of a renewal of rationality and respect. Then, it was a jump ball at best.

When we record the show, I leave either CNN or MSNBC on the monitor behind me. Given that we configure Zoom in Gallery Mode for the most part, that ups the chance that one of us will notice if some breaking news (haha) appears. It’s mostly for the sense of being plugged in without being overwhelmed by the repetitive analysis that oh, yes we are in deep trouble. Controlled anxiety beats plain old anxiety most of the time. Nonetheless, I still get complaints from viewers to turn it off.

I like the delay of the realtime version to accommodate post production sweetening with music and lower third titles. The interval gives me a chance to come up with a theme for this post to accompany the mixed show, and it allows for some of the buzzy issues to recede in favor of more sticky foreshadowing of the next show. Around this time, we usually come up with a title for the show. You may not find this all that interesting, but it helps me endure my pathetic contributions to the show.

On this session, Frank Radice is heard quoting lines from Firesign Theatre records. In the early days, we used to sit around college dorms and what we thought passed for hippie crash pads, reciting these Firesign catch phrases. In slightly earlier times, we did this with Bill Cosby records, in later years Monty Python routines. Michael Markman had posted to the Gang Telegram feed a Wisconsin Public Radio conversation with the two surviving TFTers Phil Proctor and David Ossman.

Back then, the comedy group had released I Think We’re All Bozos on This Bus, featuring a futuristic ride on a Firesign update of the Disneyland animatronic Presidents attraction. Now, Michael wondered whether Disney would add Trump to the ride when it reopens. It’s a good question. What, whether Disneyland will reopen?

So, newsletters. It seems possible the form is subsuming many of the pieces of blogging, podcasting, streaming, and social networking into a new construct. Where blogs once represented a ticket to parity with the mainstream of journalism, now journalists are acquiring parity with individual voices. Cable news not only feels like podcasting with its oversupply of talking head roundtables, but each anchor has a separate podcast to boot. Just as the record business ate the movies business with Saturday Night Fever, so too are the cable networks eating the broadcast networks as they are in turn eaten by the streamers.

And just as the former president was deplatformed by the social networks, live streamers are replatformed in this newslettered channel-in-your-pocket. Commentary, notification-based two-way feedback, realtime analytics, first party data relationships with creators and subscribers. More creation, less curation.

from the Gillmor Gang Newsletter

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The Gillmor Gang — Frank Radice, Michael Markman, Keith Teare, Denis Pombriant, Brent Leary and Steve Gillmor. Recorded live Friday, January 16, 2021.

Produced and directed by Tina Chase Gillmor @tinagillmor

@fradice, @mickeleh, @denispombriant, @kteare, @brentleary, @stevegillmor, @gillmorgang

Subscribe to the Gillmor Gang Newsletter and join the backchannel here on Telegram.

The Gillmor Gang on Facebook … and here’s our sister show G3 on Facebook.

Source: Tech Crunch

Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.

The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone.

And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.

Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.

This week, we’re taking a look at the biggest news in the world of apps, including how the GameStop frenzy impacted trading apps, as well as how Apple’s privacy changes are taking shape in 2021, and more.

Top Stories

The internet comes for the stock market, via trading apps

Was there really any other app news story this week, beside the GameStop short squeeze? That a group of Reddit users took on the hedge funds was the stuff of legends, even if the reality was that Wall Street likely got in on both sides of the trade. Whether you found yourself in the camp of admiring the spectacle or watching the train wreck in horror (or both), what we witnessed — at long last, I suppose — was the internet coming for the stock market. The GameStop frenzy upended the status quo; it rattled the traditional ways of doing things — much like what the internet has done to almost everything else it touches — whether that’s publishing, media, creation, politics, and more.

“This is community,” explained Reddit founder Alexis Ohanian, in an interview on AOC’s Twitch channel on Thursday.

“This is something that spans platforms and the internet, especially in the last 10 years — in particular social media and smartphone ubiquity. All these things have connected us in real-time ways to organize around ideas, around concepts,” he continued. “We seek out those communities. We seek out that sense of identity. We seek out that sense of connection. And the internet supercharges it because of scale,” he said. “I think one of the byproducts of where I think it continues to go is more of a push towards decentralization and more of a push toward individuals being able to take ownership — even individuals being able to get access — to do the same things that institutions, historically, had a monopoly on,” Ohanian noted.

Trading app Robinhood and social app Reddit, home to the WallStreetBets forum driving the GameStop push, immediately benefitted from the community-driven effort to squeeze the hedge funds — and jumped to the top of the App Store.

But Robinhood’s subsequent failure to be transparent as to why it was forced to stop customers from buying the “meme” stocks, like GameStop and others (it needed more cash), quickly damaged its reputation. Some investors have now sued for their losses. Others started petitions. And even more began downranking the app with one-star reviews, which Google then removed.

Other trading apps have gained not only during the frenzy itself, but also after, as Robinhood users looked for alternative platforms after being burned by the free trading app.

As of Friday, Robinhood remained at No. 1 on the App Store, but is now being closely trailed on the Top Free iPhone apps chart by No. 2 Webull, No. 6 Fidelity, No. 7 Cash App, No. 12 TD Ameritrade and No. 15 E*TRADE, among others.

Crypto apps are also topping the charts, as users realize the potential of collective action in markets not yet dominated by the billionaires. Coinbase popped to No. 4, while Binance-run apps were at No. 9 and No. 19, Voyager was No. 23 and Kraken No. 24.

In addition, forums where traders can join communities are also continuing to do well, with Reddit at No. 3, Discord at No. 14 and Telegram at No. 28, as of the time of writing.

Google says it will add those Apple privacy labels…sometime!

Google failed to meet its earlier promised deadline of rolling out privacy labels to its nearly 100-some iOS apps. Its initial estimate followed suggestions (aided by Apple’s typical quiet confirmations to press), that Google had been struggling over how to handle the privacy issues the updates would reveal. This week, Google again said its labels were on the way. But now, it’s not making any specific promises about when those labels would arrive. Instead, the company just said the labels would roll out as Google updated its iOS apps with new features and bug fixes, rather than rolling out the labels to all its apps at once.

However, some Google apps have been updated, including Play Movies & TV, Google Translate, Fiber TV, Fiber, Google Stadia, Google Authenticator, Google Classroom, Smart Lock, Motion Stills, Onduo for Diabetes, Wear OS by Google and Project Baseline — but not Google’s main apps like Search, YouTube, Maps, Gmail or its other productivity apps.

Apple’s IDFA changes to begin this spring

Apple announced this week its tracking restrictions for iOS apps are nearing arrival. The changes had initially been pushed back to give developers more time to make updates, but will now arrive in “early spring.”

Once live, the previous opt-out model for sharing your Identifier for Advertisers (IDFA) will change to an opt-in model, meaning developers will have to ask users’ permission to track them. Most users will likely say “no,” and be annoyed by the request. Users will also be able to adjust IDFA sharing in Settings on a per-app basis, or on all apps at once.

Facebook has already been warning investors of the ad revenue hit that will result from these changes, which it expects to see in the first quarter earnings. It may also be preparing a lawsuit. Google, meanwhile, said it would be adopting Apple’s SKAdNetwork framework and providing feedback to Apple about its potential improvements.

For years, Apple has been laying the groundwork to establish itself as the company that cares about consumer privacy. And it’s certainly true that no other large tech company has yet to give users this much power to fight back against being tracked around the web and inside apps.

But this is not a case of Apple being the “good guy” while everyone else is “bad” —  because the multi-billion-dollar ad industry is not that simple. With a change to its software, Apple has effectively carved out a seat at the table for its own benefit.

What many don’t realize is that Apple watches what its users do across its own platform, inside a number of its first-party apps — including in Apple Music, Apple TV, Apple Books, Apple News and the App Store. It then uses that first-party data to personalize the ads it displays in Apple News, Stocks and the App Store.

So while other businesses are tracking users around the web and apps to gain data that lets them better personalize ads at scale, Apple only tracks users inside its own apps and services. (But there sure are a lot of them! And Apple keeps launching new ones, too.)

With the new limits that impact the effectiveness of ads outside of Apple’s ecosystem, advertisers who need to reach a potential customer — say, with an app recommendation — will need to throw more money into Apple-delivered advertising instead. This is because Apple’s ads will be capable of making those more targeted, personalized and, therefore, more effective recommendations.

Apple says it will play by the same rules that it’s asking other developers to abide by. Meaning, if its apps want to track you, they’ll ask. But most of its apps do not “track” using IDFA. Meanwhile, if users want to turn off personalized ads using Apple’s first-party data, that’s a different setting. (Settings –> Privacy –> scroll to bottom –> Apple Advertising –> toggle off Personalized Ads). And no, you won’t be shown a pop-up asking you if that’s a setting you want on or off.

Apple, having masterfully made its case as the privacy-focused company — because wow, isn’t adtech gross? —  is now just laying it on. Apple CEO Tim Cook this week blamed the adtech industry for the growth in online extremism, violent incitement (e.g. at the U.S. Capitol) and growing belief in conspiracies, saying companies (cough, Facebook) optimized for engagement and data collection, no matter the damage to society.

Weekly News

Platforms: Apple

• Apple releases iOS 14.4 to iPhone and iPad users. The update patches three critical security vulnerabilities, adds Bluetooth audio monitoring to protect users from levels that could damage hearing, improves the ability for the camera to recognize smaller QR codes, adds a warning if the iPhone 12 has been repaired with non-Apple parts and fixes other bugs.
• Apple reports record-breaking Q1 2021 with $111.4 billion in revenue. The company beat investor expectations on both earnings per share and revenues, with more than the expected $103.3 billion in revenues and $1.68 EPS versus the $1.41 EPS expected. Earnings were driven by new 5G iPhones and a 57% rise in China sales.

• Apple dominates tablet market with 19.2 million iPads shipped in Q4 2020.
• Separately, from the IDFA news, Apple announced this week that Private Click Measurement (PCM) will roll out at the same time as the IDFA changes. PCM measures app-to-web conversions, while SKAdNetwork focuses only on app-to-app conversions. This gives advertisers a way to track the performance of apps that run inside ads that send users to websites.
• A researcher discovered a new iOS security system in iOS 14, BlastDoor, which offers a new sandbox system for processing iMessages data.
• The Washington Post checks in on Apple’s App Store privacy labels and finds many of them were wrong.

Platforms: Google

• Google Play Store updates its policies on gamified loyalty programs following confusion in India. Real gambling apps are still not permitted in India, but developers now will have better clarity on rules.
• Google Play Store opened to Android Auto apps in December, but only for closed testing. This week, it expanded to open testing, meaning there’s no limit to the number of users who can download the app — the next step toward launching to all users in production.

Gaming

• U.S. consumer spend in mobile simulation games up 61.8% in 2020, reports Sensor Tower. Top titles included Roblox and Township by Playrix.

Entertainment & Streaming

• Netflix can now stream studio-quality audio on Android 9 and newer devices, specifically Extended HE-AAC with MPEG-D DRC (xHE-AAC). This codec improves sound in noisy conditions and adapts to variable cellular connections.
• Spotify tests audiobooks. The company released a small selection of nine exclusive audiobook recordings from books in the public domain. The narrators included big names like David Dobrik, Forest Whitaker, Hilary Swank and Cynthia Erivo, to determine if there’s consumer demand for this sort of content.
• Spotify also tests a feature that inserts “slow down” songs in playlists when users approach school zones. The feature was being tried in Australia.
• YouTube said its TikTok rival, YouTube Shorts, was seeing 3.5 billion views per day during tests in India.

Security & Privacy

• Apple says iOS 14.4 fixes three security bugs that may have been exploited by hackers. Details were scarce but two of the bugs were found in WebKit. Apple wouldn’t say how many users may have been impacted.
• TikTok fixed a vulnerability that would have allowed for the theft of private user information.
• WhatsApp added a biometric authentication to its web and desktop apps to make authentication more secure for its over 2 billion users.

• A location broker called X-Mode was discovered to still be tracking users via Apple and Android apps, despite app store bans. The broker sold data collected in apps — like unofficial transportation app New York Subway, Video MP3 Converter and Moco — to U.S. military contractors.

Communication

• Telegram adds a new feature that would allow users to import their WhatsApp chats and others, making a switch easier. The feature appears in version 7.4, and supports WhatsApp, Line and KakaoTalk import on iOS and Android.

Social & Photos

• Instagram launches a professional dashboard for creators and small business. The new in-app destination offers centralized access to tools for tracking performance, discovering insights and trends, growing your business and staying informed through access to educational resources.
• Facebook expands its Facebook News portal to the U.K., its first international market.

• TikTok owner ByteDance’s revenue more than doubled in 2020, according to The Information, to about $37 billion.
• Snapchat launched a digital literacy program aimed at educating users about data privacy and security. The program teaches users how to turn on two-factor and introduced a new filter that connects users to privacy resources.
• Twitter launches Birdwatch, a community-based approach to handling misinformation on its platform. The system allows users to identify misleading info in tweets and write notes that provide information and context, in a sort of Wikipedia-like model. Eventually, these notes will be made visible directly on tweets for all to read, after consensus from a broad and diverse group of editors is achieved.
• QAnon moves to a free-speech focused TikTok clone called Clapper, which is a new home to some of the Parler crowd. ToS violations coming in 3, 2, 1…
• TikTok was found to be hosting a number of vape sellers who were clearly marketing toward minors, promising no ID checks and discreet packaging to hide vape purchases from parents.

Health & Fitness

• Apple expands its new Apple Fitness+ service with “Time to Walk,” a feature that offers inspiring audio stories from guests like country music icon Dolly Parton, NBA player Draymond Green, musician Shawn Mendes, Emmy Award winner Uzo Aduba and others. The launch indicates Apple understands how to make the service more broadly appealing to reach beyond those who are already deeply committed to their regular exercise routines.

• Health and Fitness app downloads grew 30% in 2020, reports App Annie, from $1.5 billion in consumer spend in 2019 to $2 billion in 2020, and from 2 billion downloads to 2.6 billion. On Android phones, time spent was up 25%.

Government & Policy

• Italy’s data protection agency gave TikTok a deadline to respond its order to block all users whose age it can’t verify following the death of a 10-year-old girl who repeated a dangerous “challenge” on the social app.
• Iran blocked the Signal messaging app after the WhatsApp exodus sent a flood of users to the open-source, encrypted communication service.
• India said it will continue its ban on TikTok, UC Browser and 57 other Chinese apps that the country first banned last June, saying the responses the companies provided didn’t adequately address the cybersecurity concerns. TikTok owner ByteDance said it’s closing its India operations and laying off 1,800 employees.

• Norway’s data protection agency notified U.S.-based dating app Grindr for violation of GDPR consent violations, which carry a fine of around $12.1 million USD.

Funding and M&A

• Buzzy voice chat app Clubhouse raises $100 million, valuing the business at $1 billion. Despite being launched under a year ago and remaining an invite-only experience for the time being, the app has been carving out a new form of audio-based social networking. With now over 180 investors and a pandemic coming to an end — perhaps — with the vaccine rollout, Clubhouse will soon have to prove it has value in a reopened world where there’s more to do, including, once again, networking events and conferences. It will also eventually have to contend with what sort of app it becomes when it finally opens up to the public. So far, its private, insiders-only atmosphere has given it something of a protected status. Though conversations have turned toxic at times, only a few users ever heard them — and there’s no transcript. When the world piles in, however, Clubhouse could not only lose its exclusive appeal but also become host to conversations that do real harm.

• Twitter acquires newsletter platform Revue, a Substack rival, to get its users a way to monetize their Twitter fan base. Despite only announcing this week, the company is already integrating Newsletters on its web app.
• Edtech app ClassDojo raises $30 million led by Product Hunt CEO Josh Buckley. The app has boomed during the pandemic as schools and teachers needed a new way to communicate with families at home.

• Scheduling startup Calendly raises $350 million for its cloud-based service that helps people set up and confirm meeting times with one another. The round values the business at $3 billion.
• Virtual social network IMVU raises $35 million from China’s NetEase and others. The app lets users create virtual rooms and chat with strangers using custom avatars.
• Short-form video app Clash acquires would-be TikTok rival Byte, created by a former Vine founder.
• IAC’s Teltech, home to Robokiller, acquires encrypted messaging app Confide, in an unannounced deal. Terms were not revealed but included the app and IP, not the team.

• Opal raises $4.3 million for its digital well-being assistant for iPhone that blocks you from distracting apps and websites.
• Finance tracking and budgeting app Brigit raises $35 million Series A led by Lightspeed Venture Partners, with participation from DCM, Nyca, Canaan, DN Capital, CRV, Core, Shasta, Hummingbird, Abstract, Brooklyn Bridge Ventures, Secocha, NBA star Kevin Durant, Ashton Kutcher’s Sound Ventures and Flourish Ventures.
• SoftBank-backed Travel platform Klook raises $200 million in a round led by Aspex Management. The startup, which helps users book activities in overseas destinations, had been impacted by the pandemic, so pivoted to “staycation” activities and service for local merchants.
• Video software company Vimeo raises $300 million in equity from funds and accounts advised by T. Rowe Price Associates, Inc. and Oberndorf Enterprises, LLC at a valuation in excess of $5 billion.
• RuneScape publisher Jagex has been acquired by investment firm The Carlyle Group for at least $530 million. The British video game publisher creates both PC and mobile games, including a mobile version of RuneScape with 8 million installs in 2019.
• Appointment booking app Booksy raises $70 million to acquire other salon appointment apps and expand internationally. The round was led by Cat Rock Capital with participation from Sprints Capital.

• Fintech startup Albert raises $100 million in Series C funding led by General Atlantic. The funds will be used to expand its financial wellness service now used by over 5 million people to help save, budget and more.
• Dating app S’More raises $2.1 million for its concept where users photos’ are initially blurred.
• Stacker raises $1.7 million seed round for its platform that lets non-developers build apps using spreadsheets from Google Sheets or Airtable.
• Kuaishou, ByteDance’s main rival in China, raises $5.4B in Hong Kong IPO, valuing the business at $61B

Downloads

Opal

Opal offers a digital well-being assistant for iPhone that allows you to block distracting websites and apps, set schedules around app usage, lock down apps for stricter and more focused quiet periods and more. The service works by way of a VPN system that limits your access to apps and sites. But unlike some VPNs on the market, Opal is committed to not collecting any personal data on its users or their private browsing data. Instead, its business model is based on paid subscriptions, not selling user data, it says. The freemium service lets you upgrade to its full feature set for $59.99/year.

Charlie

Founded by a former mobile game industry vet, Charlie “gamifies” getting out of debt using techniques that worked in gaming, like progress bars, fun auto-save rules that can be triggered by almost any activity, celebrations with confetti and more. The app plans to expand into a fuller fintech product in time to help users refinance debt at a lower rate and bill pay directly from the app.

 

Source: Tech Crunch

India plans to introduce a law to ban private cryptocurrencies such as bitcoin in the country and provide a framework for the creation of an official digital currency during the current budget session of parliament.

In the agenda (PDF) published on the lower house website, the legislation seeks to “prohibit all private cryptocurrencies in India,” but allow “for certain exceptions to promote the underlying technology [blockchain] of cryptocurrency and its uses.”

The law also seeks to “create a facilitative framework for creation of the official digital currency” that will be issued by the nation’s central bank, Reserve Bank of India, the agenda said.

In 2018, an Indian government panel recommended banning all private cryptocurrencies and proposed up to 10 years of jail time for offenders. The panel also suggested the government to explore a digital version of the fiat currency and ways to implement it.

At the time, RBI said the move was necessary to curb “ring-fencing” of the country’s financial system. It had also argued that Bitcoin and other cryptocurrencies cannot be treated as currencies as they are not made of metal or exist in physical form, nor were they stamped by the government. The 2018 notice from the central bank sent a panic to several local startups and companies offering services to trade in cryptocurrency. Nearly all of them have either since closed shop, or pivoted to serve other markets.

This proposal was challenged by several exchanges and traders, who filed a lawsuit in the Supreme Court. The nation’s apex court ruled in their favor last year. This ruling was seen as “historic” but it did not impact the earlier circular on the policy level.

“Since the government is considering introducing the bill during this session of Parliament, we are sure the government will definitely listen to all the stakeholders before taking any decision,” said Sumit Gupta, co-founder and chief executive of CoinDCX,a cryptocurrency exchange in India.

“We are talking to other stakeholders and will definitely initiate deeper dialogue with the government and showcase how we can actually create a healthy ecosystem in unison,” he said.

Source: Tech Crunch

Ireland’s technology scene has come in leaps and bounds in the last decade, with a growing VC scene, plenty of startups and tech giants attracted by the nation’s favorable tax incentives and talent pool.

Google, Facebook, Slack, Microsoft and Dropbox each have a European headquarters sited in Dublin. As the EU’s only remaining English-language speaking hub, Ireland is attracting more diversity in its founders than ever before, plus the tech diaspora is returning to its roots as the ecosystem matures.

We surveyed five local VCs to find out if they had any wisdom to share with TechCrunch readers who are considering hiring, investing or founding a company in Ireland this year.

VCs in Ireland don’t stray far from home, but there are plenty of great deals to be had there anyway. A small domestic market means Irish startups think internationally from launch, and there are high-quality seed opportunities. Top-tier American VCs like Sequoia are placing bets on Irish companies, sometimes even at a pre-seed stage.

The coronavirus pandemic has not really impacted many investment strategies — aside from the switch to Zoom calls instead of meet-and-greets — but it has made hiring more challenging, given the competitiveness of the local labor market. Still, top engineering talent is cheaper there than in the U.S., which means entrepreneurs can create great companies with less overhead.

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We spoke with the following investors:

• Andrew O’Neill, principal, Act Venture Capital
• Isabelle O’Keeffe, principal, Sure Valley Ventures
• Nicola McClafferty, partner, Draper Esprit
• Michelle Dervan, partner, Rethink Education Management, LLC
• Will Prendergast, partner, Frontline Ventures

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Andrew O’Neill, principal, Act Venture Capital

What trends are you most excited about investing in, generally?
We are seeing high-quality seed opportunities that are leading with exciting developer-first/bottoms-up go-to-market strategies in both security and enterprise software. The shift left in security is very well-publicized, but we feel the cultural element of developers truly caring about security and implementing it at design phase is still only beginning … and it’s hugely exciting.

What’s your latest, most exciting investment?
It’s a B2B SaaS design tool, in the world of Figma, Sketch and Invision App … and has some very interesting angels. It is only just complete and not announced yet … and we have not talked to any PR agencies yet, but would be happy to pitch an exclusive to you 😉

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
As a domestic market, Ireland is very small … so by its very nature, we do not see the same level of great B2C as the U.K. The expertise … and second, third-time consumer-tech founders are not as common, but there are still of course huge opportunities in the consumer space and companies like Buymie are proving it can be done in Ireland.

What are you looking for in your next investment, in general?
Like every investment: The people that truly understand the pain point, have passion around the product, have the patience and grit to keep going, and finally the potential for this company to become a category creator.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
No competition means no market … however there are high volumes of startups empowering remote working, productivity tools and HR tech focused around company culture metrics etc. … but that said, there is a wave of change happening around the future of work that no one has a crystal ball on, and new category winners will still emerge.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Very focused on Ireland and more than 50% … we can invest in Series A and B across Europe, but we invest at seed exclusively in Ireland.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Enterprise software startups have always been well-positioned for success within Ireland, and that has only increased with the secondary effects now appearing from the result of great talent coming out of large MNCs driven by 20+ years of FDI. Act has invested in over 120 companies and over half is in enterprise software. We are excited about seeing a new emerging amount of repeat founders in our portfolio (and Ireland) like Barry Lunn in Provizio, and Cathal McGloin in ServisBOT.

How should investors in other cities think about the overall investment climate and opportunities in your city?
When we looked at all the data in Ireland recently, there has been a 115% increase from €401 million to €860 million invested per annum over the last four years. So the market size has doubled and we are seeing some very exciting seed companies, which bides very well for the future.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Personally, I do expect to see even more great startups coming out of the south like Cork and Limerick and the west in Galway, but I don’t foresee startup hubs significantly losing people due to the pandemic and remote work.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? 
It’s obvious that there are now serious questions around the level of future of business travel, given how people have been forced to rethink and adapt how they do business. This industry shift alone will create both big winners and losers long term.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Not hugely, given the long-term timeframe we consider when investing. The bigger question around changing consumer behaviors, the acceleration of e-commerce adoption and digital transformation is something we are of course taking into account. Our advice is always bespoke and contextual to the individual startup, and only given when asked.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, our portfolio has proven itself to be quite robust through COVID and companies like SilverCloud Health, Toothpic and Buymie are experiencing great tailwinds due to the current pandemic environment.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Personally, seeing some incredibly talented founders with deep expertise at seed stage that are repeat founders. They know exactly what they want and need to do to go bigger this time around, and we believe they can get there much quicker than before.

 

Isabelle O’Keeffe, principal, Sure Valley Ventures

What trends are you most excited about investing in, generally?
AI/ML, cybersecurity, immersive technologies and gaming infrastructure.

What’s your latest, most exciting investment?
Getvisbility and Volograms.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now? What are you looking for in your next investment, in general?
Companies that are really creating defensibility using the technology. Companies creating new markets.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Ride-sharing, on-demand delivery, payments and challenger banks.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We invest more than 50% in our local ecosystem versus other startup hubs.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
The industries that will continue to thrive include: financial services, property and construction, pharmaceuticals, manufacturing and Big Tech. We’re very excited about some of our portfolio companies including VividQ, Admix, Buymie, Nova Leah and WarDucks.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Dublin and Ireland have a growing and prosperous tech ecosystem and there are plenty of great investment opportunities there.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes I would agree that we will see some of this happening. However, I do think that once there is a vaccine that we will see the return of cities and people will naturally be attracted back there.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
We have seen limited impact of COVID on some of segments that we invest into. The opportunities exist for companies operating in the future or work including remote working, e-commerce, on-demand grocery delivery, cybersecurity, gaming and immersive technologies.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID has not really impacted our investment strategy bar the fact that we have had to get comfortable with a lot of the process being conducted via Zoom. We have not shifted away from certain sectors or industries as we have tended to invest into areas that are relatively unaffected. The biggest worries for founders in our portfolio are around raising their next round of funding, hitting key milestones, achieving a repeatable go-to-market strategy and hiring great talent.

My advice to startups in my portfolio now is to keep a very close eye on burn, ensure that if they are going out to fundraise that they realize it can take at least two months longer than they originally anticipated and to continue to be working on the product and technology at times when sales have slowed down as when they emerge from this period they will be in a much stronger position with their products and technology and the sales will follow.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes we have “green shoots’ regarding momentum in Buymie, which is an “on-demand grocery delivery” company who have seen a surge in demand for the service due to the pandemic. Getvisibility, which is a cybersecurity company, has also seen a surge in interest from companies in the financial services, and pharmaceutical and defense industries as they adapt to their employees working from home and where there are greater risks of cyberattacks.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
I think the moment for everyone recently has been the announcement that we could be closer to a vaccine than we originally thought and that we may be able to resume normal life next year.

 

Nicola McClafferty, partner, Draper Esprit

What trends are you most excited about investing in, generally?
Future of work/consumerization of enterprise, machine-learning applications.

What’s your latest, most exciting investment?
Sweepr — automation of customer care for connected homes.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
True AI, digital health.

What are you looking for in your next investment, in general?
Global ambition.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
E-scooters.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
~20%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Software application, AI, machine learning, life sciences. key companies, WorkVivo, Manna Aero, Open, Sweepr, Roomex and Evervault.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Unfortunately seed stage is dramatically underserved by local players. Hiring can be challenging given competitiveness of labor market with large tech MNCs. However deep entrepreneurship culture, global thinking from day one, incredibly strong pool of technical talent from Irish universities. It’s also a key destination of other European founders. Brexit opens even more opportunity for this.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Startup economy will likely become a bit more distributed around the country but this will be a positive. Cities like Dublin, Cork and Galway will however remain strong hubs.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel tech extremely challenged but the best companies will survive and huge winners will emerge in the COVID recovery when travel returns. Big opportunity to accelerate enterprise SaaS adoption and automation as budgets have shifted dramatically to digital infrastructure and cost-cutting and productivity becomes key focus.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Strategy remains largely intact with some further reserves used to support companies. For those businesses very directly impacted (e.g., travel) — concern is visibility and timing of recovery that is largely out of founder control. Other concerns include cash runway in times of uncertainty — how will the market view performance for future fundraise; in big enterprise how to adapt your sales model for a remote world.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Most definitely. As tech businesses most have been very adaptable and are responding to customer needs as they change. After a slow Q2 many businesses rebounded very well in Q3 and have returned to strong growth. Early churn has been flushed out already.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Announcement of the vaccine! Path to recovery is nearing.

 

Michelle Dervan, partner, Rethink Education Management, LLC

What trends are you most excited about investing in, generally?
I am deeply specialized in education technology investing. Interested in seeing tailored Zoom alternatives for the classroom, tech-enabled vocational training programs, corporate learning solutions for the distributed workforce.

What’s your latest, most exciting investment?
Crehana, an online skills training platform serving Latin America.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Upskilling and reskilling programs for displaced workers.
Shorter, cheaper training programs and credentialing for middle-skills jobs.
Software to help high school students prep for college and career.
Effective remediation programs that can help students catch up on lost learning during COVID.

What are you looking for in your next investment, in general?
Outliers in terms of evidence of product market fit, proof of efficacy, impact baked into the business model, team with unique understanding of the problem and ability to execute against it.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
K-12 supplemental apps, games, content.
Tech bootcamps.
Corporate LMS.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
80% U.S.-focused, 20% outside of the U.S.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Ireland has traditionally had a very strong e-learning/edtech startup sector. Exciting growth companies include LearnIpon, Learnosity, Alison, Touch Press. Early-stage companies include Avail Support, Zhrum, Robotify.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Dublin is a really vibrant startup ecosystem. Young population. Lots of government supports to encourage entrepreneurship. Excellent experienced talent pool coming out of multinationals and existing startups. English speaking. Great connectivity to rest of Europe/U.S.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I recently relocated to Dublin after 10 years in NYC. There has been a mass exodus from cities like NYC and SF during the pandemic as the economics of living there plus the space constraints, etc. no longer make sense in a prolonged period of WFH and while most amenities are closed. Dublin is also a high-cost location so will likely also see some exodus although I think to a lesser extent.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
The COVID environment has caused a mass acceleration in the adoption of education technology across all age groups from K-12, higher education to corporate and workforce learning. This was already a secular trend albeit at a much slower pace of adoption. I believe that the prolonged period of reliance on a tech-enabled learning experience and the potential need to revert to this in the future will have a lasting effect on how we teach and learn.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our investment strategy has not been impacted by COVID. We are seeing a greater degree of opportunity and interest in our sector. The biggest concerns for founders are unpredictability in the sales funnel, potential delays to purchasing decisions and resultant cashflow implications. Even for companies that have been net beneficiaries of the COVID environment, it has injected a very high degree of unpredictability and that is very stressful for founders.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, as mentioned above.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Biden’s election and the list of people that he is evaluating for Education Secretary and for his cabinet.

 

Will Prendergast, partner, Frontline Ventures

What trends are you most excited about investing in, generally?
We take an opportunistic approach to investing at Frontline and are open to any number of different trends within the B2B space. Generally, we are excited to back founders working on:

• Complexity in the software/product development stack: As more and more businesses become software businesses and software products become more complex there will be a layer of tools that abstract away that complexity and provide connections between them. Software using other software will be an exciting space in the decade to come, facilitated by many API-first companies.
• Embedded finance: We are excited by fintechs that are helping non-financial institutions leverage their customer base to provide financial products. Open banking is an enormous enabler of embedded finance.
• Process augmentation rather than process automation: There are a number of key skill gaps emerging in many different sectors right now and software is emerging as the bridge for companies to handle the shortfall. These are products that help highly skilled workers maximize their productivity.

In the current environment, we are also highly interested in startups that are broadly targeting the key trends below brought on by COVID-19:

• Hospitals and clinics seek to increase efficiency and reach patients remotely.
• Banks cautious as financial crime grows.
• Remote employee management tools for HR and finance teams.
• Debt collection automation due to SME liquidations.

What’s your latest, most exciting investment?
We recently invested in a German business that aims to become the Moody’s of financial crime.
Since 2008, large banks have become less willing to transact with regional retail banks. They were unfairly deemed “too risky” in their portfolio. This company aims to create a fundamental shift in the industry — from old school box ticking compliance to data-driven ways of determining the risk. We are very excited to increase fairness and transparency between banks, which will inevitably create more value to the end consumer.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
B2B payments are undergoing a renaissance at the moment with companies like Bill.com dominating in the public markets. As fintech creeps into more aspects of the product stack, payments is just the first part to produce huge winners. Solving the nuts and bolts of business finance is still a hugely overlooked opportunity for both large and small companies.
We’d also love to see more companies dedicated to reducing the CFO burden at SME and enterprise level. From real-time payroll to treasury and employee pension management, so much of a CFO’s work is manual and time consuming.
We have supported companies that make a significant dent in the specific parts of the funnel (for example, Payslip — a global payroll automation platform), but we feel like there is more room for end-to-end automation in this realm.

What are you looking for in your next investment, in general?
We’re looking for challengers who seek out other strong minds; whether you’re a first-time founder building something that matters, or a seasoned entrepreneur that knows how hard it is to “make it.” In all of our investments, we prize self-awareness above all else in our founders; key to building great teams and scaling a global business. Ambition does not require experience. We’re looking to invest in pioneers across Europe from the world of tech, computer science and engineering, due to our own deep knowledge of technology. In return, we use our personal experience in building and scaling business across both sides of the Atlantic to help founders get off the ground — and go global.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Products that are being built specifically with the conditions created by COVID-19 today may find themselves in a wildly different environment in 18 months. We’re looking to speak to founders who see how things are now and have a strong opinion on how they’re going to affect things in the years to come.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We support founders with global ambition across both sides of the Atlantic. Frontline Seed is a pan-European early-stage fund investing all across Europe. Frontline X is a growth-stage fund, for fast and frictionless U.S.-Europe expansion.
When we first started Frontline, the vast majority of our investments came out of Ireland. Since 2012 we have expanded our scope, and for the last few years have been very much pan-European and now invest across Ireland, the U.K., Germany, the Netherlands and Southern Europe.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
U.S. tech companies like Amazon, Facebook, Google, Zendesk Hubspot (among many others) have a “pied-à-terre” in Ireland.
In most cases, top-class engineering talent is sourced more cheaply there than in the U.S., creating a self-fulfilling prophecy. They upskill great engineers, who then go on to create great companies.
We’ve seen startup developer tools thrive in Ireland as a result; an example of which is Tines.io. This Accel-and-Index-backed company was built by the world-renowned security team in Dublin.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Ireland is a hidden gem — we’ve had the privilege of reaping the rewards. However, I suspect that the likes of Tines.io, Intercom and Stripe are stirring investor curiosity.
We’re already seeing top-tier U.S. VCs like Sequoia placing bets in Irish companies at a pre-seed stage, for example Evervault, one of our portfolio companies.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
As a global fund, part of our core belief is that great companies and exceptional founders can come from anywhere in the world. COVID-19 has had a significant and eroding effect on traditional “tech hub” models and we have seen founders of all walks of life realize that companies can not only run, but thrive in a remote world.
That said, we also believe that geography will continue to matter. Where you set up your HQ in Europe as a growth-stage B2B SaaS business expanding from the U.S. (for example) will continue to matter in a post-COVID world — because legal entities will continue to matter.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

1. The closure of retail stores = tremendous growth in e-commerce. Companies big and small are vamping up their back and front ends, and attempting to get more visibility on their supply chain for better customer service.
2. Payments transition online = more financial crime. Banks need tools that help them detect fraud.
3. Consumers are tight on cash = HR departments want to provide more salary liquidity and help employees save for their pensions to create better financial wellness.

These are just to name a few.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID-19 has not changed our investment strategy but it will have lasting impact on the way businesses are run and built. That said, the pandemic has given us a new filter: “How successful can this product/business model be in a post-COVID world?”
At the moment, our founders are most worried by engagement (maintaining company culture) and talent (team expansion, senior leadership recruitment).
Every company is different and we shy away from blanket statements, but what we do advise is that founders spend time to identify what working format works best for their company and that they listen carefully to their employees. How can you continue to grow your business, whilst maintaining and nurturing an inclusive and engaged company culture?
Also — while you can, shore up your balance sheet. Believe it or not, VC funding was at an all-time high in Europe last quarter. Go fundraise to extend your runway as much as possible. No one really knows what the next 12 months is really going to hold.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Three companies in our portfolio stand out as pandemic green shoots:

• Workvivo is designed to promote team culture and communication digitally. They have successfully raised a Series A midpandemic with U.S. investor Tiger Global to cope with demand from large customers.
• Qualio is another portfolio company selling quality management software into life sciences and pharmaceutical companies. They blew out their Q2 targets and raised an $11 million Series A.
• Signal AI: Media monitoring is an attractive proposition to PR and comms teams in turbulent times. Signal AI has recently partnered with Deloitte to produce COVID-19 curated reports on how the pandemic has and is continuing to affect supply chains, business, society and travel.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Seeing how well the many teams in our portfolio focused on employee health, well-being and safety and how hard they have all worked to keep their companies going strong.

Source: Tech Crunch

Earlier this week, Science Inc, the 10-year-old, L.A.-based incubator and venture firm, rolled out a blank-check company onto the Nasdaq, raising $310 million for what firm founders Peter Pham and Mike Jones say will be used to take public a company in the mobile, entertainment or direct-to-consumer service space.

If they have one of their own portfolio companies in mind to take public, they wouldn’t say in conversation yesterday. Yet Science would have some interesting candidates from which to choose if so. It helped incubate the amateur esports platform PlayVS after Pham met its founder, Delane Parnell, on a dance floor at a South by Southwest festival. It’s also an investor in Bird, the micro-mobility company that is reportedly working with Credit Suisse to strike a deal with a blank-check company. And it helped create and grow Liquid Death, a company with a tongue-in-cheek marketing strategy that’s selling mountain water in aluminum cans — a lot of it, says Pham.

That’s not so silly. Water is the top-selling packaged drink in the U.S. and has been since 2016.

Indeed, we spent much of our time with the duo talking about how to create a powerful consumer brand in 2021, no matter the category. You can listen to that full conversation, or check out excerpts of much of our chat below, edited lightly for length and clarity.

TC: You have this new blank-check company. You’re about to start talking with potential targets. Will you consider a company that you’ve incubated or else funded at Science?

MJ: No. So the SPAC is an independent entity. We think that there’s a universe of well over 100 companies that would fit the credentials of what we’re looking for within the stack. Some of those companies, we may or may not have investment exposure [to them], but the process of analysis is independent of the Science portfolio.

TC: So you wouldn’t rule it out.

MJ: We have independent directors. So there’s a different process that would go through if we were looking at a company in the portfolio. But right now we’re just aggregating the right universe of potential targets. And then we’ll go through a formal process on it.

TC: What are the metrics you want to see? You are specialists, including in direct-to-consumer companies. Do the companies that you’re targeting have to be profitable?

MJ: When we look at the different, potential companies that we’re interested in, we’re not saying that they have to have some specific level of profitability or specific level of revenue . . . We don’t expose the the core metrics and revenue drivers that we think make for successful companies within sectors. But we’re a super data-focused team. We’re very much on the forefront of next-generation Gen Z and millennial-oriented marketing. And there are very specific things we look for that we think may build breakout brands.

TC: Both of you know the social media space. There are new social media plays that are gaining a lot of attention, such as Clubhouse. Back to your core business at Science, are there any investments in those areas in that area that you’re looking at?

PP: A decade ago is when YouTube became a platform for marketing. Then six of seven years ago, Instagram [became a platform for marketing]. And then Snapchat came along, and then all of a sudden Instagram stories [emerged], and then TikTok and now another platform, which is Clubhouse. There’s always something new coming around the corner.

You can’t take your eye off of Facebook, Instagram, and Snapchat, but Clubhouse is real. It’s almost radio, but it’s participatory. If you go to South by Southwest, it’s almost like SWSX panels around the clock. There’s this really interesting dynamic where you could be in crowd, raise your hand, and if they pull you up on stage, now you’re part of the panel. That’s why a lot of people are there — for the chance of getting discovered [and] the chance of letting their voice be heard by a larger audience.

TC: What makes you think its growth is sustainable?

PP: The moment marketers join a platform [you know]. When real marketers, people who are selling classes on how to make money, how to have real estate, how to make money [selling] real estate, that type of marketing — when [they show up], it’s an arbitrage. It’s basically very smart people who make a lot of money realizing for that every minute they spend doing this, it’s more valuable in terms of ROI, customer acquisition cost, and revenue, than spending time on this other thing that everyone else is on.

TC: How do your portfolio companies use these platforms in 2021? You are investors in Liquid Death. You helped incubate MeUndies, a subscription underwear company that raised saw $40 million late last year. You were involved in the early days of Dollar Shave Club. How do you break through the noise with things like water, underwear and razors?

PP: Platforms are always just a springboard. You can’t rely on these places long term because the rules of the game change, the feed changes. Ten years ago, when we launched Dollar Shave Club, we had on the homepage an autoplay of this YouTube video that was just about driving customers to buy something. At the time, no one thought about posting YouTube videos to get somebody to buy something. MeUndies [used] Instagram. Who would imagine subscription underwear? But every month, there’s a holiday — Christmas, New Year’s, Valentine’s Day, St. Patrick’s Day. What if there was something interesting and fun that you could wear?

With Liquid Death, it’s still very much [focused on] Instagram and now probably TikTok. But in all cases, the brand has to be worthy for somebody to talk about what’s interesting about it and even to defend it.

Mike underplays our data side, but we measure incessantly everything that’s happening in terms of the each one of our businesses, including their social reach, their engagements, business retention, how often customers are coming back, how much revenue we’re generating from each individual, what each piece of marketing is worth. All of these tie into this complex engine that [helps us determine], is there a business behind this thing? Can it grow on its own without a reliance on Facebook? With most companies, if you don’t understand how to build your own community, your own brand, and your own audience, ultimately the winner on the back end is Google or Facebook.

TC: How do you build that community right now?

I’ve handed out 4,000 cans personally. In the early days of Liquid Death, I just remember handing it to a bunch of teenagers, and six out of 10 would take a photo and Snap it to their friend. It was just this instant moment I kept seeing over and over, and I just knew, this is gonna work. If you noticed in March and April and May how boring your Instagram feed was, [it was] because everyone was staying home and there was nothing to do. But we [had this insight to] give somebody a piece of content.

TC: Liquid Death is now available in some stores, including 7-Elevens. Are people buying the water online? What percentage of them buy it through a subscription?

PP: One third of our customers who buy online [at the site] buy merchandise. They’re buying $24 hats, $45 hoodies — we’re selling out merch constantly. It’s the brand, it’s a lifestyle. Mike Cessario, the CEO, says he’s building something that’s like your favorite band. The product lets you be a fan of the thing [including] because it’s not a piece of plastic that’s going to go the ocean [like other water bottles]. It’s not sugar. It’s not alcohol that might result in a drunk driving incident.

It’s flair. It’s a reason to say hi to somebody. It’s an icebreaker. It’s fun. It’s irreverent. It’s dumb. It’s funny. It’s everything to everybody, but something worthy to talk about, something to look at.

The trajectory we’re on is hard to measure, You have to see it, and when you see it over and over, it’s obvious.

Source: Tech Crunch