Month: July 2018

Zen Rooms, the budget hotel network startup founded by Rocket Internet, had faced the deadpool earlier this year after a prospective funding deal collapsed, but now the business appears to have found a home. Korea’s Yanolja, a popular motel brand that has branched out into app-based hotel bookings, has made a strategic investment that could see it fully acquire the business.

Ten-year-old Yanolja is initially paying $15 million for an undisclosed “strategic non-controlling stake,” but it will retain the rights to buy 100 percent of the Zen Rooms business. Zen Rooms clarified that the acquisition is an option and not based on performance or financial metrics.

Founded by a former hotel worker, Lee Su-jin, Yanolja is best known for its lovel hotels although it is trying to clean up the general image of short-stay hotels by promoting them as destinations for business travelers, tourists and families, as noted by a Bloomberg profile story. The company has also grown its own app-based booking service which among the most used in its homeland with 20,000 rooms.

The company is reportedly planning an IPO, so expansion is on its mind.

For those reasons, Zen Rooms fits that new focus. The company borrowed the budget hotel model, first pioneered by SoftBank-backed Oyo in India, and brought it to Southeast Asia when it launched three years ago. The concept is simple, Zen Rooms guarantees minimum standards at all hotels including free WiFi, fresh towels and bedding, hot showers, etc all of which is controlled via a mobile app. Those standards are normal to most hotel stayers, but when traveling in the East, standards can vary wildly especially at budget hotels, which Zen Rooms is focused on.

For hotels, Zen Rooms manages the brand — and sometimes more — and it allows helps them tap the internet to find customers and bookings.

Today, Zen Rooms is active in six cities in Southeast Asia — it had previously also run operations in Brazil, Hong Kong and Sri Lanka — across which it claims to operate 1,000 hotel franchisees with an inventory of more than 7,000 rooms. Its rivals in Southeast Asia include Red Doorz, which raised $11 million earlier this year.

The startup has raised $8 million from investors to date, including a $4.1 million Series A last April that was led by Korea’s Redbadge Pacific and SBI Investment Korea with participation Asia Pacific Internet Group (APACIG), the joint venture fund in Asia between Rocket Internet and Qatari operator Ooredoo.

However, TechCrunch understands that a major funding deal of over $10 million fell apart in Q1 2018 which left the company with a rapidly depleting runway. As a result and as TechCrunch reported in March, the company was aggressively shopped to potential buyers, investors and rival companies in order to keep the business afloat.

Yanolja has come to the rescue but a full buy-out looks like it will be dependent on the company’s future performance, such is often the arrangement with strategic deals made with a view to full ownership. Rocket Internet, which remains a major investor in Zen Rooms, will hope that the deal goes as smoothly as Lazada, its e-commerce service that is now owned by Alibaba.

Lazada ran out of capital in similar circumstances in early 2016 and Alibaba, the Chinese internet giant, came to its aid with a $1 billion investment. Although that was a majority investment it wasn’t a full-on buyout. Alibaba later increased its holdings until it fully owned the business, and today it is a key part of the firm’s overseas expansion strategy.

Already, TechCrunch understands from one source that Zen Rooms has gone on a hiring spree in recent weeks after it closed the deal. It had earlier been forced to make cutbacks to its team as a result of cost-cutting following the collapse of the funding deal earlier in the year.

“We now have the capital to invest,” ZenRooms co-founder Kiren Tanna told TechCrunch. “The deal has been in discussion since earlier this year…. we are treating like an acquisition but this is step one.”

Tanna added that the company plans to focus on five markets in Southeast Asia, and an expansion to Vietnam may be in the pipeline soon.

Google confirmed it has issued a strike against Infowars founder Alex Jones’ YouTube channel for breaking the video platform’s policies against child endangerment and hate speech. Four videos were also removed. The strike means Jones’ channel will not be allowed to live stream for 90 days.

In a statement emailed to reporters, a Google representative said “We have long standing policies against child endangerment and hate speech. We apply our policies consistently according to the content in the videos, regardless of the speaker or the channel. We also have a clear three strikes policy and we terminate channels when they receive three strikes in three months.”

According to The Verge, two of the deleted videos contained hate speech against Muslims, a third had transphobic content and the fourth showed a child being shoved to the ground by a grown man with the headline “how to prevent liberalism.”

The fact that four deleted videos only amounted to one strike against Jones’ channel has prompted scrutiny of YouTube’s moderation policy, with critics arguing that each video that breaks the platform’s rules should warrant its own strike, especially for prolific repeat offenders.

Jones’ channel was issued a strike in February for a video promoting the conspiracy theory that survivors of the Parkland, Florida shooting, which killed 17 people, were actually “crisis actors.” But strikes expire after three months, so the Alex Jones channel currently has only one active strike against it.

While he promotes ideas that are ridiculous and hateful, Jones is influential and Infowars has helped promulgate many pernicious conspiracy theories. For example, he is currently being sued by family members of Sandy Hook victims for claiming that the mass shooting, which killed 27 people, including 20 small children, was staged. Since the shooting in December 2012, victims’ families have been targeted for harassment by conspiracy theorists.

The YouTube strike come a few days after Facebook refused to take down a video of Jones ranting against Robert Mueller, in which he accused the special counsel of committing sex crimes against children and mimed shooting him. Facebook told BuzzFeed News that Jones’ comments in the video, which was posted to his verified page, did not violate community standards because they are not a credible statement of intent to commit violence.

TechCrunch has also contacted Infowars for comment.

The tech gods and goddesses must adore procrastinators, because we were suddenly compelled to extend our early-bird pricing on passes to Disrupt San Francisco 2018. It kills us to see folks paying more than necessary, so you now have until August 1 at midnight PST — another full week — to get your tickets and experience all the tech and VC goodness that Disrupt San Francisco 2018 has to offer. Don’t put it off; go buy your tickets today.

Our most ambitious Disrupt event takes place at our new, larger venue, Moscone Center West, on September 5-7. If you haven’t heard, this will be our only Disrupt event in North America this year, and we’ve gone all-out to make these three days special and value-packed.

Startup Battlefield is always frenzied excitement, but this year, we super-sized the stakes. The grand prize? $100,000 in non-equity cash. The competition will be fierce, and we can’t wait to see how it all goes down.

We’ve gone global with a Virtual Hackathon, which features thousands of the world’s best tech-heads, coders, designers and programmers hacking some incredible creations and competing for a $10,000 grand prize. And thanks to our generous sponsors, we have a bunch of amazing hack contests that offer thousands of dollars in cash and prizes.

Every Disrupt offers an incredible list of speakers, and this year may stand out from the rest. We’re particularly excited to have some of the top women in the VC world grace our stage. We’re talking Megan Quinn, a general partner at Spark Capital; Sarah Tavel, Benchmark’s first — and so far, only — female general partner; and Aileen Lee, who coined the term Unicorn and has formed her own company, Cowboy Ventures.

Whether you’re a founder, an investor, a marketer or a job-seeker, you won’t find any better place to network than Startup Alley. Our exhibition floor features more than 1,200 early-stage startups showcasing a range of technological goodness with a particular emphasis on these 12 categories: AI, AR/VR, Blockchain, Biotech/Healthtech, Fintech, Gaming, Privacy/Security, Space, Mobility, Retail or Robotics/IoT.

Founders and investors can make their networking a whole lot easier by using CrunchMatch. That’s our free business match-making service that connects early-stage startup founders and investors who share similar business interests and profiles.

Disrupt San Francisco 2018 takes place on September 5-7. So many great reasons to go, and now you have one extra week to buy your pass. Early-bird pricing ends on August 1 at midnight PST. Depending on which type of pass you choose, you can save up to $1,200. Don’t pay more than necessary. Buy your tickets today.

The trouble with microphones is that they don’t just hear — they have to listen. Powering the mic and its signal processor means using energy, and energy means a battery, and a battery means charging. This new microphone-like system hears more like the way our own ears do, requiring little or no power, and could help fill the world with voice-responsive machines. (If that’s something we really want.)

The device is called a “triboelectric auditory sensor,” and it works via what’s called the triboelectric effect — essentially when two surfaces rub together and create a charge. They’re still trying to figure out why this happens, but what matters to engineers is that it happens reliably.

Triboelectric nanogenerators have been around for a few years, creating power by having two compatible materials interact with each other at super-small scales. While they’re tiny and highly efficient, they don’t actually produce a lot of power. Researchers from Chongqing University found that, fortunately, you don’t need a lot of power for the purposes of detecting sound.

Our own ears have what’s called a cochlea inside them, a sort of long sealed canal filled with liquid and motion-sensitive cells; when sound hits the end of the cochlea, different parts of it vibrate depending on the frequencies that make up the sound. It’s basically a Fourier Transform done instantly by organic hardware and is very cool.

The triboelectric auditory sensor does something like this. All along its surface are tiny membranes that vibrate when sound waves strike them, causing the materials to rub together and generate a small charge. By recording the different charges from the different membranes with different frequency responses, the device puts together a complete picture of the sound it hears, using no power but what is created by the nanogenerators. It’s also extremely sensitive.

Currently it’s just a prototype, but the researchers demonstrate it in use in various everyday circumstances, so it definitely works. Such a low-power solution could be a way for, say, a piece of electronics to save energy and sleep all day, only waking when it detects someone has walked in the room. It’s a good fit for robots, too, as the device is thin and flat and can even be transparent. No need for ear holes, then.

Hearing aids could also be improved with these: hearing loss often covers a stretch of frequencies — say, from 500-1,000 Hz — and the triboelectric sensors can be tuned to accept only sound from that span and amplify it for the wearer. No need to accept all the frequencies, process the sound, apply filters, and retransmit it.

These aren’t going to replace microphones altogether, but they’re an attractive option for applications where energy consumption must be kept to an absolute minimum — and such applications are multiplying with the growth of IoT and embedded electronics.

In December, Apple introduced a new pay-per-install ad product called Search Ads Basic aimed at smaller developers, to complement the existing Search Ads product, which then became known as Search Ads Advanced. Today, the company is expanding Search Ads to more countries, including France, Germany, Italy, Japan, South Korea, and Spain, bringing the total number of countries where Search Ads is available to thirteen.

In addition to the U.S., Search Ads Advanced had already expanded to Australia, Canada, Mexico, New Zealand, Switzerland, and the U.K.

Developers in the newly supported countries will be able to create campaigns using Search Ads Advanced starting on July 25, 2018 at 4 PM PDT, with those campaigns appearing on the App Store starting August 1, 2018 at 4 PM PDT.

Meanwhile, Search Ads Basic will be available across all thirteen supported countries starting on August 22, 2018 at 10 AM PDT.

To encourage sign-ups, Apple is offering first-time advertisers a $100 USD credit to try out the product.

While the first version of Search Ads launched back in October 2016 in the U.S., the idea behind the newer “Basic” product was to offer developers a different – and simpler – means of reaching potential customers.

Search Ads was originally designed to allow developers to target users’ keyword searches, combined with other factors like location, gender or whether or not they had installed the app in the past. Developers would pay when users tapped on those targeted ads.

With the launch of Search Ads Basic, it’s easier to set up campaigns.

Developers only have to enter the app to be advertised, the campaign’s budget, and how much they want to pay per install. Apple helps by suggesting the max developers should pay using historical data. Then, developers only pay for actual installs, not taps.

Although the App Store was redesigned with the launch of iOS 11 to offer improved discoverability, search is still a key way people find out about apps.

Apple says that over 70 percent of App Store visitors use search to discover apps, in fact, and 65 percent of all downloads come directly from an App Store search.

The ads work well, too, as they have an over 50 percent conversion rate, on average, says Apple.

Apple’s advantage over the pay-per-install ads found elsewhere on the web isn’t only the ads’ placement – at the top of App Store searches, where they’re identified with a blue background and “Ad” icon – it also manages this without violating user privacy. That is, it doesn’t build specific profiles on individuals for ad targeting purposes, and it doesn’t share user data with developers. By its nature, this makes the system GDPR compliant.

In addition, Apple only places an ad when it’s relevant to a user’s search – developers can’t pay more to have their ad shown more often across less relevant searches, which offers a more level playing field.

Apple didn’t say when Search Ads would reach other countries, but with the new expansions it has some of the top markets now covered.

Facebook’s share price fell over 20 percent in after-hours trading today after the company announced its slowest-ever user growth rate and a scary warning that its revenue growth would rapidly decelerate. Before today’s brutal Q2 earnings, Facebook’s share price closed today at $217.50, but fell to around $172 after the earnings call. That’s a market cap drop of roughly $123 billion. In two hours, Facebook lost more value than most startups and even public companies are ever worth.

Here’s the full story on Facebook’s disastrous Q2 2018 earnings:

So why did Facebook’s share price sink like a stone? There are five big reasons:

Slowest-Ever User Growth Rate – Facebook’s monthly user count grew just 1.54, compared to 3.14 last quarter. Daily active users grew even slower at 1.44 percent, compared to 3.42 percent last quarter. For reference, 2.18 percent was its previous slowest DAU growth rate back in Q4 2017. Suddenly hitting this wall could limit Facebook’s total user count over the long-run, and its revenue with it. Facebook tried to distract from these facts by announcing a new “family of apps audience” metric of 2.5 billion people using at least one of its apps, which will hide the shift of users from Facebook to Instagram and WhatsApp.

User Count Shrank In Europe, Flat In US & Canada – Facebook saw its first-ever decline in monthly user count in Europe, from 377 million to 376 million. It got stuck at 241 million in the US & Canada after similarly pausing at 239 million in Q4 2017. Those are Facebook’s two most lucrative markets, with it earning $25.91 per user in North America and $8.76 in Europe. If those markets stall, even swift growth in the Rest Of World region where it earns just $1.91 per user won’t save it.

Decelerating Revenue Growth – Facebook’s revenue grew a remarkable 42 percent year-over-year this quarter. But CFO David Wehner warned that metric would decelerate by high single-digit percentage per quarter over the coming quarters. Wehner said a combination of currency headwinds, new privacy controls, and new experiences like Stories will contribute to the deceleration. This news is what caused Facebook’s share price to drop from -7 percent to `-20 percent.

Privacy And Well-Being – Q2 saw the debut of Europe’s GDPR that forced Facebook to change its privacy policies and get users to agree to how it collects data about them. Wehner blamed GDPR for Facebook loss of users in Europe. That law and Facebook’s Cambridge Analytica scandal led the company to have to improve its privacy controls. These could make it tougher for Facebook to target people with ads or show their content to more people.

Meanwhile, Facebook has continued to adopt the “Time Well Spent” philosophy, removing click-bait news and crappy viral videos that lead to passive internet content consumption that studies say is unhealthy. Instead, Facebook is pushing features like Watch Party where users actively interact with each other. Those might not produce as much time on site and subsequent ad views, but CEO Mark Zuckerberg said the changes are “positive and we’re going to continue in this direction.”

The Shift To Stories – Facebook estimates that by in 2019, sharing via ephemeral vertical Stories slideshows will surpass sharing via feeds. The problem is that advertisers may be slower than users to make that shift. “Will this monetize at the same rate as News Feed? We honestly don’t know” COO Sheryl Sandberg said. Stories ads might be full-screen and more immersive, but they don’t show off links to online stores as well, nor are they as well optimized from decades of banner ad experience by the industry.

Luckily, even though Snapchat invented the Stories format, Facebook has far more people using it each day, with 150 million Stories users on Facebook, 70 million on Messenger, 400 million on Instagram, and 450 million on WhatsApp . If Facebook does manage to figure out Stories ads, it could dominate, but it could take years for its advertiser count and ad prices to rise to offset the shift away from feeds.

The pre-social media phenomenon that was early 2000s American Idol might be a weird place to spend a lot of focus when it comes to thinking about the future. But it’s also worth noting how little these types of shows adapted to build themselves into the fabric of live social commentary. Twitter has offered a nice second screen for thirsty users, but what would reality TV look like if it was built for the smartphone?

The team behind FameGame is aiming to answer these very fascinating/worrying questions with their new app which envisions the rebirth of live reality TV on your smartphone. The company’s first offering seems to be a mix of American Idol, Musical.ly and HQ Trivia with young users vying to flex their talents and social media prowess to win cash and glory.

The startup sees live gamified engagement as a social outlet that existing apps and platforms aren’t making much of a dent in. FameGame CEO Alexandra Botez grew interested in the concept after getting into live-streaming herself playing chess on Twitch and seeing the potential of bringing users closer to less gaming-focused verticals.

“We thought that the interactivity of live gaming could also be applied to make conventional TV more entertaining,” Botez tells TechCrunch. “We think Musical.ly and Instagram are pretty big so it’s hard for them to change their infrastructure in such a way that they make the type of immersive experience that we’ve created with FameGame.”

FameGame plays the game of fame by getting users to submit self-shot smartphone videos of their talents. The challenges differ by week but one contest may be focused on dance skills while another may be focused on lip-syncing. After an initial submission period, users can check out what’s been uploaded and vote for their favorites which will be included in a live show that’s hosted at 5:00 PM PT every day.

Cash prizes are at stake, but the real emphasis seems to be on social validation. Winners will also get a shoutout from a Musical.ly “celebrity” user and a big emphasis is put on the host shouting out users and their handles to drive attention their way. The whole design seems to take some pretty clear, erm, inspiration from HQ Trivia but the live voting component adds a more impactful community vibe to it though once users see they aren’t included amongst the finalists, it might be hard to hold onto viewers.

The startup’s efforts are going to start with a focus on the crowd that has helped catapult apps like Instagram and Musical.ly to rabid success. “We decided to go with young teenage girls because they are really obsessed with becoming famous on social media and they spend a lot of time on Musical.ly posting videos and not necessarily getting the gratification that they might want,” CTO Ruben Mayer-Hirshfeld tells me.

There are certainly some unique challenges with catering to such a young user base, especially from a safety standpoint. The company is going to curate the few videos that go into the live show, but there isn’t any screening happening in between user submission and user voting aside from a reporting button so the burden is ultimately put on a young user base to decide what crosses the line.

FameGame is just the start for the company’s ambitions. Botez tells me that there are a number of different TV show formats that seem ripe for the live social mobile elements, but that the main focus is getting excited teens on FameGame right now and seeing whether the format can catch steam and move beyond what’s out there already.

A pair of Canadian students making a simple, inexpensive prosthetic arm have taken home the grand prize at Microsoft’s Imagine Cup, a global startup competition the company holds yearly. SmartArm will receive $85,000, a mentoring session with CEO Satya Nadella, and some other Microsoft goodies. But they were far from the only worthy team from the dozens that came to Redmond to compete.

The Imagine Cup is an event I personally look forward to, because it consists entirely of smart young students, usually engineers and designers themselves (not yet “serial entrepreneurs”) and often aiming to solve real-world problems.

In the semi-finals I attended, I saw a pair of young women from Pakistan looking to reduce stillbirth rates with a new pregnancy monitor, an automated eye-checking device that can be deployed anywhere and used by anyone, and an autonomous monitor for water tanks in drought-stricken areas. When I was their age, I was living at my mom’s house, getting really good at Mario Kart for SNES and working as a preschool teacher.

Even Nadella bowed before their ambitions in his appearance on stage at the final event this morning.

“Last night I was thinking, ‘What advice can I give people who have accomplished so much at such a young age?’ And I said, I should go back to when I was your age and doing great things. Then I realized…I definitely wouldn’t have made these finals.”

That got a laugh, but (with apologies to Nadella) it’s probably true. Students today have unbelievable resources available to them and as many of the teams demonstrated, they’re making excellent use of those resources.

SmartArm in particular combines a clever approach with state of the art tech in a way that’s so simple it’s almost ridiculous.

The issue they saw as needing a new approach is prosthetic arms, which as they pointed out are often either non-functional (think just a plastic arm or simple flexion-based gripper) or highly expensive (a mechanical arm might cost tens of thousands). Why can’t one be both?

Their solution is an extremely interesting and timely one: a relatively simply actuated 3D-printed forearm and hand that has its own vision system built in. A camera built into the palm captures an image of the item the user aims to pick up, and quickly classifies it — an apple, a key ring, a pen — and selects the correct grip for that object.

The user activates the grip by flexing their upper arm muscles, an action that’s detected by a Myo-like muscle sensor (possibly actually a Myo, but I couldn’t tell from the demo). It sends the signal to the arm to activate the hand movement, and the fingers move accordingly.

It’s still extremely limited — you likely can’t twist a doorknob with it, or reliably grip a knife or fork, and so on. But for many everyday tasks it could still be useful. And the idea of putting the camera in the palm is a high-risk, high-reward one. It is of course blocked when you pick up the item, but what does it need to see during that time? You deactivate the grip to put the cup down and the camera is exposed again to watch for the next task.

Bear in mind this is not meant as some kind of serious universal hand replacement. But it provides smart, simple functionality for people who might otherwise have had to use a pincer arm or the like. And according to the team, it should cost less than $100. How that’s possible to do including the arm sensor is unclear to me, but I’m not the one who built a bionic arm so I’m going to defer to them on this. Even if they miss that 50 percent it would still be a huge bargain, honestly.

There’s an optional subscription that would allow the arm to improve itself over time as it learns more about your habits and objects you encounter regularly — this would also conceivably be used to improve other SmartArms as well.

As for how it looks — rather robotic — the team defended it based on their own feedback from amputees: “They’d rather be asked, ‘hey, where did you get that arm?” than ‘what happened to your arm?’ ” But a more realistic-looking set of fingers is also under development.

The team said they were originally looking for venture funding but ended up getting a grant instead; they’ve got interest from a number of Canadian and American institutions already, and winning the Imagine Cup will almost certainly propel them to greater prominence in the field.

My own questions would be on durability, washing, and the kinds of things that really need to be tested in real-world scenarios. What if the camera lens gets dirty or scratched? Will there be color options for people that don’t want to have white “skin” on their arm? What’s the support model? What about insurance?

SmartArm takes the grand prize, but the runners up and some category winners get a bunch of good stuff too. I plan to get in touch with SmartArm and several other teams from the competition to find out more and hear about their progress. I was really quite impressed not just with the engineering prowess but the humanitarianism and thoughtfulness on display this year. Nadella summed it up best:

“One of the things that I always think about is this competition in some sense ups the game, right?” he said at the finals. “People from all over the world are thinking about how do I use technology, how do i learn new concepts, but then more importantly, how do I solve some of these unmet, unarticulated needs? The impact that you all can have is just enormous, the opportunity is enormous. But I also believe there is an amazing sense of responsibility, or a need for responsibility that we all have to collectively exercise given the opportunity we have been given.”

Coming to the U.S. on a work visa is getting harder across the board, but workers from India in particular are feeling the effects of recent policy shifts from the Trump administration. A new report from the National Foundation for American Policy sheds light on how the “Buy American and Hire American” executive order from April 2017 has impacted H-1B applicants in the last year. The H-1B visa, popular in Silicon Valley, lets skilled foreign workers live and work in the U.S. for a six year term.

For the three months period starting in July 2017, H-1B denial rates went from 15.9% to 22.4%. In the same time period, Requests for Evidence seeking additional documentation in the fourth quarter of 2017 nearly equaled the total amount of Requests for Evidence from the year’s other three quarters combined (63,184 and 63,599 requests, respectively).

Drilling down, workers from India appear to be the most affected. From July to September 2017, U.S. Citizenship and Immigration Services (USCIS) demanded additional documentation from 72% of Indian H-1B applications, compared to the 61% rate of other countries considered together. During that same three month period, 23.6% of Indian applications were rejected, up from 16.6% between April and June 2017.

“The increase in denials and Requests for Evidence of even the most highly skilled applicants seeking permission to work in America indicates the Trump administration is interested in less immigration, not ‘merit-based’ immigration,” the report adds.

“… U.S. Citizenship and Immigration Services has enacted a series of policies to make it more difficult for even the most highly educated scientists and engineers to work in the United States.”

In January, rumors of a ban on H-1B extensions for green card applicants had H-1B workers nervous. In June, new rules shortening visas for Chinese STEM students went into effect. While China only accounted for 9.4% of total H-1B visa applications in the 2017 fiscal year compared to India’s whopping 76%, the Trump administration will likely continue to tighten immigration policies targeting China as it obsessively tries to turn the screws on its perceived trade nemesis.

Facebook today for the first time announced that 2.5 billion use at least one of its apps: Facebook, Instagram, WhatsApp, or Messenger. That’s a helpful number because it counts real people, rather than accounts, since people can have multiple accounts on a single app. That’s compared to 2.23 billion monthly users on Facebook, 1 billion users on Instagram and, 1.5 billion users on WhatsApp, and 1.3 billion users on Messenger.

Mark Zuckerberg announced the new stat on Facebook’s Q2 2018 earnings call following a tough report that saw its user growth slow to its lowest rate ever.

Zuckerberg said the 2.5 billion count “Individual people rather than active accounts” which he says “excludes when people have multiple accounts on a single app. And it reflects that many people use more than one of our services.”

We’ll have more details shortly