Year: 2019

Sapphire Ventures, formerly the corporate venture capital arm of SAP, has lassoed $115 million from new limited partners (LPs) to invest at the intersection of tech, sports, media and entertainment.

A majority of the LPs for the new fund, called Sapphire Sport, have ties to the sports industry, from City Football Group, which owns English Premier League team Manchester City, to Adidas, the owners of the Indiana Pacers, New York Jets, San Jose Sharks and Tampa Bay Lightning, among others.

The firm plans to do five to six investments per year, sized between $3 million and $7 million. So far, they’ve deployed capital to five startups: at-home fitness system Tonal, live soccer streaming platform mycujoo, digital sports network Overtime, ticketing and events platform Fevo and gaming studio Phoenix Labs. Sapphire began backing tech startups in 2008; in 2016, the firm closed on $1 billion for its third flagship venture fund.

Sapphire managing director and co-founder Doug Higgins is leading the effort alongside newly tapped partner Michael Spirito, who joined from 21st Century Fox, where he focused on business development and digital media for the Fox Sports-owned Yankees Entertainment and Sports (YES) Network, in September.

Higgins was an investment manager at Intel Capital for four years prior to co-launching Sapphire. Throughout his career, he’s managed the firm’s investments in LinkedIn, DocuSign, Square and more.

“We invest in anything that tech is disrupting,” Higgins told TechCrunch. “We were early investors in Fitbit, so we saw the beginning of digital fitness and how tech can impact the lives of anyone, not just high-performance athletes … We are also investors in Square, TicketFly and Paytm and what we’ve been seeing — the dream as a VC — is these massive markets in the sports, media and digital health world that are getting disrupted by tech.”

Sapphire is betting its traditional and well-established venture platform, coupled with the expertise of leading sports entities on board as LPs, will give it a competitive edge as it targets some of the best emerging sports tech companies.

“We see a lot of FOMO happening in this world, where everyone wants to have a play, but to make the best investment you need to have the widest perspective,” Higgins said. “So if you’re a team owner of a particular football team you are going to make better decisions if you are able to share perspectives with owners of other teams.”

“The best entrepreneurs, the ones we all want to invest in, there’s not a draft, they have to select you,” he added.

Investment in esports and gaming has skyrocketed, surpassing a total of $2.5 billion in VC funding in 2018. According to PitchBook, a handful of startups have already raised a total of $65 million in VC backing this year, including a $10.8 million financing for ReKTGlobal, a provider of esports infrastructure services.

“You can’t ignore the numbers on esports,” Higgins added. “They just continue to grow massively and people who have teenage kids, like myself, [those kids] want to grow up to be the next ninja, not the next Tom Brady .”

Apple has released an update on its spending in the U.S. According to the company, Apple is now working with 9,000 different companies in the U.S. Those companies mostly work on hardware components and chipsets for Apple’s devices.

You may remember that Apple announced last year it would spend $390 million to expand Finisar’s production in the U.S. Finisar has been working on a key component for the iPhone and iPad Pro — the TrueDepth camera system.

That investment was part of a commitment to spend $1 billion in U.S.-based companies with its Advanced Manufacturing Fund in order to build new facilities and help manufacturers.

But Apple is already spending much more money with American companies. In 2018 alone, Apple spent $60 billion, which represents a 10 percent increase compared to 2017. The company estimates that it represents around 450,000 jobs.

In addition to Finisar, Apple names a few partners in its announcement — Corning, Cincinnati Test Systems and Broadcom.

Finally, if you take into account everybody working for Apple in one way or another, there are now 2 million people in the U.S. helping Apple as an employee, a contractor, a store manager, a supplier, etc. This number is up from 600,000 in 2011.

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1. Dropbox snares HelloSign for $230M, gets workflow and e-signature

Dropbox’s SVP of engineering Quentin Clark sees this as more than simply bolting on electronic signature functionality to the Dropbox solution. For him, the workflow capabilities that HelloSign added in 2017 were key to the purchase.

“What is unique about HelloSign is that the investment they’ve made in APIs and the workflow products is really so aligned with our long-term direction,” Clark said. “It’s not just a thing to do one more activity with Dropbox, it’s really going to help us pursue that broader vision.”

2. Google and IAB ad category lists show ‘massive leakage of highly intimate data,’ GDPR complaint claims

The complaint — lodged last fall by Dr. Johnny Ryan of private browser Brave; Jim Killock, director of the Open Rights Group; and Michael Veale, a data and policy researcher at University College London — alleges “wide-scale and systemic breaches of the data protection regime by Google and others” in the behavioral advertising industry.

3. Too few cybersecurity professionals is a gigantic problem for 2019

That’s according to Robert Ackerman Jr., founder and a managing director of AllegisCyber, an early-stage cybersecurity venture firm.

4. Naspers takes full control of Russian classifieds site Avito in $1.16B deal

South African internet conglomerate Naspers is best known for backing Chinese tech giant Tencent, but it also operates a vast network of online classifieds businesses. That network just got a little larger.

5. Contentsquare, the digital experience insights platform, raises $60M Series C

Contentsquare offers cloud-based software that helps businesses understand how and why users are interacting with their app, mobile and web sites.

6. Scribd has more than 1M paying subscribers

The company also says it’s been profitable since early in 2017, and that it’s currently bringing in $100 million in annual recurring revenue.

7. It’s not Monday without a TechCrunch podcast roundup

This week, the Equity team covers the latest news from scooter startups, while Original Content reviews the dueling Fyre Festival documentaries and Mixtape talks to the team at #builtbygirls.

Apple is slowly building a lineup of content subscriptions. According to a report from Cheddar, Apple may also be working on a gaming subscription. Alex Heath managed to get five people to talk about the rumored service.

If Apple goes ahead and launch such a service, users could pay a monthly subscription fee to access a library of games. It’s still unclear how much it would cost and what would be included in the subscription.

Given that many iOS games are now free-to-play games, it’s hard to see how it would work. Apple could choose to focus on paid games and give those games for free as part of the subscription. The company could also give you free coins and perks when it comes to free-to-play games.

Apple has to talk with potential partners to put together the service — that’s probably how Cheddar learned about Apple’s plans. The company isn’t going to develop a bunch games overnight (remember Apple’s Texas Hold ‘Em?). But it could act as a sort of game publisher by promoting and distributing new games in a subscription tier.

Games are by far the most popular category on the App Store. They generate a ton of downloads and revenue. And it sounds like Apple thinks it could generate more revenue by switching to a different business model, beyond the usual 30-percent cut on in-app purchases.

Apple has also been signing deals with TV producers in order to put together a streaming service. The company wants to compete with Netflix and other streaming platforms.

Apple has been working on a magazine subscription service as well. The company acquired Texture back in March 2018 to build the foundation of the service. And that new subscription should launch pretty soon. You can find a landing page for Apple News Magazines in the beta version of iOS 12.2.

And of course, Apple has attracted 56 million subscribers for Apple Music. Now let’s see if the company can replicate the same success with other services.

Kite, a San Francisco-based startup that uses machine learning to build what is essentially a very smart code-completion tool, today announced that it has raised a $17 million funding round. The round was led by Trinity Ventures, with personal participation from now-GitHub CEO Nat Friedman. In addition to the funding, Kite also today announced that its tools are now significantly smarter and that developers can run them locally on their machines, even if they don’t have an internet connection.

As Kite founder and CEO Adam Smith told me, the idea for Kite is based on the simple fact that a lot of programming is repetitive. “That’s why [developers] spend so much time on Stack Overflow. That’s why they spend so much time debugging really basic errors and looking up documentation, but not so much time looking at how the solution should work,” he said. “We thought we can use machine learning to fix that.”

Standard code completion tools often still use alphabetical sorting while Kite uses AI to infer what a developer is likely trying to do (though to be fair, the likes of IntelliSense and others are also starting to get smarter). In its first iteration, Kite, which sadly still only works for Python code right now, sorted its hints by popularity. Unsurprisingly, that was already more useful than alphabetical sorting and the right answer appeared in the top three results 37 percent of the time.

What’s interesting here is that if you can predict the next part of a line of code with high accuracy, you can start predicting a few more words ahead, too. And that’s exactly what Kite is starting to do now.

To do this, the team had to build its own machine learning models that worked well for code. As Smith told me, Kite first looked at using standard natural language processing (NLP) models, but it turns out that those don’t really work well for code, which has a different structure. As training data, Kite fed the system all the Python code on GitHub .

Looking ahead, what Smith really wants to achieve is what he calls ‘fully automated programming.’ “It’s that Star Trek vision of where you tell computers in a high-level language what to do,” he said. “If it’s ambiguous, the computer will ask questions.”

It’ll take a few more breakthroughs in AI to realize that vision, but for the time being, Kite’s tools are freely available and come with editor plugins for Atom, Sublime Text3, VS Code, Vim, PyCharm and IntelliJ. Currently, about 30,000 Python developers use its tools.

With today’s release, developers can also use these models locally, without the need for an Internet connection. That’s a sign of how efficient the models are, but as Smith also acknowledged, running the model locally means his company doesn’t have to manage a complex cloud infrastructure either. This should also make the tool more appealing to more developers — especially in larger corporations — given that the original tool would send all of your code to Kite’s servers (and in that context, it’s worth noting the company managed to create its own little scandal around some open source contributions that favored its auto-completion engine).

The company plans to use the new funding to build out the team, which mostly consists of engineers. It’ll also build out its product, with a special focus on supporting more languages.

As for its business model, it’s worth noting that Kite did test a subscription service last year, but as Smith argues, that was mostly to test if the company could monetize the service. “Now we want to optimize for growth,” he said and noted that the focus of the company’s monetization strategy will be on enterprise users. Indeed, that’s a common refrain I hear from startups that focus on developers. It’s very hard to sell subscriptions to individual developers, it seems, so most start to focus on enterprises sooner or later.

I get a little giddy at the notion of another iPod. It’s almost entirely nostalgic, of course. And Apple long ago abandoned my own favorite, the definitely dea iPod Classic. The touch, on the other hand, just kind of faded away. “The king is gone, but he’s not forgotten,” Neil Young once sang.

But 2019 could mark a sort of return for the final iteration of the beloved music device — which, toward the end more closely resembled a cellular-free iPhone than any of its predecessors. What form a new iPod Touch might take is uncertain, but a couple of breadcrumbs have suggested that the line might have a little life left in it, after all.

Earlier this month, a report tied to supply chain sources suggested a potential redesign of the hardware. That came alongside news that the iPhone might finally switch to USB-C.  That would put the devices in line with the latest iPad Pro, and could signal a larger company-wide shift toward the more ubiquitous port. Whether or not the music-focused product would drop both Lightning and the headphone jack is just one of a million questions around the potential refresh.

This week meanwhile, eagle-eyed Steve Troughton-Smith note an “iPod 9,1” among the Apple products listed in the iOS 12.2 code. The list also appears to confirm recent rumors around the addition of new iPad. Tellingly, the iPod listing doesn’t include Face ID or Touch ID, which could be an attempt to keep the device at a reasonable price. 

Of course, the ubiquity of the iPhone and other handsets, along with the exponential growth of streaming services like Spotify and Apple Music have dampened the necessity of music-only hardware devices. Still, as I noted in my bit of Palm phone wish fulfillment, some days an iPod would hit the spot.

For the past few years, China has been rolling out a Black Mirror / Harry Potter-esque social rating policy known as the Social Credit System (SCS). Far from just a credit score in the financial sense, an SCS score can determine whether a person can buy business class tickets on trains (or take the train at all) or have access to flights. Apps are rumored to exist that would tell users whether they are standing near someone with a debt listed in the system, so … they can walk away I guess.

This is a massive undertaking, and researchers are finally starting to collect good data on the system’s operation, such as a MERICS report looking at the implementation of this complex system, which involves companies and all levels of the Chinese government. Westerners have also increasingly explored the generally positive reception of the system by Chinese citizens, which would seem at odds with typical desires for privacy.

Yet, one of the biggest and most obvious open questions is what exactly will get you rewarded or punished by the SCS? Now, we are finally starting to get answers.

In a new paper that will be presented this week at the ACM FAT* Conference on algorithmic transparency, a group of researchers investigated how positive and negative points were assessed by downloading a large corpus of hundreds of thousands of entries from the Beijing SCS website and analyzing it with content analysis machine learning tools.

They found that Beijing was remarkably clear about what will get you punished, but vague about what will get you positive points. For instance, the vast majority of the blacklist was made up by people who had failed to pay their debts, or who had committed a traffic violation. Meanwhile, the people on the redlist (the positive list) were there because they were, say, great volunteers, but with no criteria on how to get that status or why they were listed at all.

“It’s very difficult to pinpoint the exact degree of transparency,” of SCS said Severin Engelmann, one of the lead researchers based at the Technical University of Munich. Far from being just an experimental startup, SCS is already quite advanced. “Blacklisting and redlisting are already in place, and they clearly indicate what behavior is bad … but not what behavior is actually good,” he said.

Even more interesting, there are more companies on the blacklist and redlist than there are individuals within the Beijing corpus, indicating that while the government is certainly concerned about citizens, it’s bringing its social control mechanism onto companies perhaps more aggressively.

Jens Grossklags, another of the researchers, noted that this level of transparency — while inconsistent — was unusual in the West. “It is really fascinating from a data science perspective to see how much information is being made available not just to individuals but to the general public,” he said. He noted that public shaming has been common with the Chinese system, while Western consumers have a hard time accessing their own scores let alone the scores of others.

The study is one of the first to look at the actual implementation of SCS and reverse engineer its algorithm, and the researchers are potentially following up by investigating regional variations and further changes to the system.

TechCrunch is experimenting with new content forms. This is a rough draft of something new – provide your feedback directly to the author (Danny at danny@techcrunch.com) if you like or hate something here.

Share your feedback on your startup’s attorney

My colleague Eric Eldon and I are reaching out to startup founders and execs about their experiences with their attorneys. Our goal is to identify the leading lights of the industry and help spark discussions around best practices. If you have an attorney you thought did a fantastic job for your startup, let us know using this short Google Forms survey and also spread the word. We will share the results and more in the coming weeks.

Stray Thoughts (aka, what I am reading)

Short summaries and analysis of important news stories

Hustling to nothing

Erin Griffith has a great piece on the increasing pervasiveness of hustle culture. This is part of a long-running debate in Silicon Valley between the work-your-ass-off crowd and the productivity-peaks-at-35-hours crowd. The answer in my mind is that we should see work in phases — running at 100 MPH all the time is most definitely not sustainable, but neither frankly is working a very stable number of hours per week. The vagaries of life and work mean that we need to surge and recede our efforts as dictated, and always track our own health.

Nvidia’s troubles continue

We’ve talked a lot about Nvidia over the past few months (Part 1, Part 2, Part 3). Well, the bad news train just continues. As my colleague Romain Dillet reports, Nvidia is cutting its revenue outlook, and now the stock is falling again (another 14% as I write this). It cites lowered demand particularly from China, which is experiencing a major slowdown in its economy.

Can Chinese startups subsidize customers forever?

The Financial Times asks an important question about the “China model” of startups: should founders heavily subsidize customers in order to buy market share and fight competitors? They point to bike sharing startup Ofo’s collapse, although I would point to the expensive rise of Luckin Coffee as perhaps the latest example. It’s a lesson that Munchery’s investors also have had to learn: at the end of the day, those unit economics better turn positive if a company is to survive.

What’s next

• More work on societal resilience

This newsletter is written with the assistance of Arman Tabatabai from New York

On February 8, less than two weeks from today, the cream of the Bay Area’s early-stage startup community will descend on Galvanize to celebrate everything great and small about tech startups at the 2nd Annual TechCrunch Winter Party. Tickets to this popular Silicon Valley soiree are in big demand and short supply.

Lucky for you, we just released the fifth round of tickets. They’re available on a strictly first-come-first-served basis, so if you want to join us for an unforgettable night of fun and opportunity, get your ticket now before they’re gone for good.

The TechCrunch Winter Party provides the perfect atmosphere to relax and connect with your peers while enjoying delicious canapes, signature cocktails and convivial conversation. It’s also the chance to converse with some of the community’s major movers and shakers — including investors and partners from August Capital, SV Angel and Uncork Capital.

We’re expecting more than 800 startuppers to attend our fabulous fete, and you never know who you might meet and where that chance meeting might lead. If you’re serious about opportunities to place your early-stage startup in front of people who can make dreams come true, book a demo table. We have a limited number available for $1,500, and that price includes three attendee tickets.

Want to know the essential party particulars? We’ve got ’em right here.

• When: Friday, February 8, 6:00 p.m. – 9:00 p.m.
• Where: Galvanize, 44 Tehama St., San Francisco, CA 94105
• Ticket price: $85

No TechCrunch party is complete without games, activities, swag and door prizes. And this event will deliver on all fronts. Planning to go to Disrupt San Francisco 2019? Party-goers have a chance to win free tickets.

Come to the TechCrunch Winter Party at Galvanize for great conversation, ample food and drink and the opportunity to celebrate and network with your community in a fun, relaxed setting. But get a move on and buy your ticket — these babies won’t last long. See you there!

Apple is sending out a message to app developers: stop tricking users into subscriptions. The company updated its guidelines for mobile developers to more clearly spell out what is and what is not allowed, according to 9to5Mac, which spotted the recent changes. The improved documentation comes at a time when subscriptions are becoming something of a plague on consumers.

Their rapid proliferation is turning everything into a subscription service, which could ultimately see consumers dropping favorite apps because they can’t afford dozens of ongoing payments. But more urgently, Apple’s lax enforcement its rules around subscriptions had allowed shady app developers to financially benefit.

Subscriptions are a big business the app stores, as the industry has begun to shift over to a recurring revenue model instead of one-time purchases within free apps or paid downloads. For developers who continue to improve apps and roll out new features, subscriptions give them the financial means of continuing that work, instead of constantly hunting for new users.

However, not all developers have been playing fair.

As TechCrunch reported last fall, a number of scammers had begun to take advantage of the subscription model in order to trick consumers into recurring payments, in addition to constantly pestering their free users to upgrade.

We found apps that constantly popped up upgrade prompts or hid the “x” to close the prompt’s window, as well as apps that promised free trials that actually converted after a very short period – like three days, for example. Others had intentionally confusing designs where subscription opt-in buttons would say things like “Start” or “Continue” in big text, while the text that explains you’re actually agreeing to a paid subscription is tiny, grayed out, difficult to read, or hidden in some other way.

Apple’s developer guidelines had clearly prohibited fraudulent behavior related to subscriptions, but Apple has now spelled out the details in black-and-white.

As 9to5Mac spotted, updates in Apple’s Human Interface Guidelines and App Store documentation now explicitly state that the monthly subscription price has to be clearly displayed, while information about how much people can save if they opt for longer periods of time, like a year, has to be less prominent.

Messages about free trials have to say how long trials last and what will be charged when the trial ends.

The new documentation has also been clearly organized, and includes screenshots of what a proper subscription sign-up flow should look like, as well as sample text developers can modify for use in their own apps. It even suggests that developers allow customers to manage their subscriptions within their app, rather than requiring them to find the subscriptions section in the App Store.

Today, many customers don’t know how to stop their subscriptions once activated – it takes several steps from the iPhone’s Settings to get into subscriptions, and still a few from within the App Store. (It’s also not that obvious. You tap on your profile icon on the top right of the Home page, then your Apple ID, then scroll down to the bottom of the page. By comparison, you can reveal the “Subscriptions” section with just one tap on Google Play’s left-side hamburger menu.)

While the existence of clear documentation that better spells out the do’s and don’ts is certainly welcome, the real question now is how well will Apple enforce its rules?

After all, Apple was supposedly not okay with subscription fraud and tricks before, yet its App Store was home to a good handful bad actors – particular in the utilities section.

Of course Apple doesn’t want to develop a reputation for allowing misleading or scammy apps to thrive in its App Store, but it simultaneously benefits when they do.

Although games still account for the majority of App Store spending, non-gaming apps across app stores now account for just over a quarter (26%) of total spend, according to App Annie’s “State of Mobile 2019” report. And that number has increased 18% since 2016, mainly because of in-app subscriptions.

Getting a handle on the proper way to market subscriptions is key. But there’s also the larger question as to whether subscriptions will be a sustainable model in the long run for the developers. There’s a bit too much of a gold rush mentality around subscriptions in today’s App Store, and it’s hard to resist the near-term benefit of money that rolls in monthly.

But as more developers adopt subscriptions, consumers will ultimately have to decide which have value for them. People are already paying for so many subscriptions – both inside and outside the app stores. Streaming video like Netflix, streaming music like Spotify, streaming TV like YouTube TV, subscription boxes like Ipsy, Prime memberships, grocery delivery like Instacart, smart home subscriptions like Ring or Nest, newspapers and magazines and newsletters, and so on. What’s really going to be left for a selfie editor, to-do list or weather app, in the end?

Many consumers are already starting to hit the point where they don’t have much more to spend, and will have to turn some subscriptions off in order to turn others on. Subscription app user bases could then contract, with only core customers remaining paying subscribers, as casual users return to free products – like Apple’s own built-in apps, for example, or free services offered by well-heeled tech giants, like Google.

Apple would do well to advise developers when subscriptions make sense for an app, not just how to implement and design them. Subscriptions should offer a real benefit, not just continued ability to use an app. And there could be cases where a one-time purchase to retain a customer who continually declines to subscribe makes sense, too.

 

 

Recharge, the business which got its start pitching pay-as-you-go rentals of unused hotel rooms, is adding private homes to its inventory of spaces — offering the first 100 signups in cities where the plan is available a guaranteed income of $1,000 per month.

“To celebrate the launch and continue to expand our community early Recharge hosts thate approved to be part of the Recharge 100 of each city will receive a guaranteed $1000/month,” said a spokesperson for the company. “Recharge 100 is a group of  early supporters and activists in each city that share their homes.”

The company began with a simple premise — that users might not need a hotel room for 24 hours. ” People are purchasing privacy,” says the company’s chief executive, Emmanuel (“Manny”) Bamfo. “If you think about getaround — allow you to purchase a car in 30 minute increments. There are so many services that have come out right now and that allow you take your amount of time and control how much time you buy it for,” says the company’s chief executive, Emmanuel (“Manny”) Bamfo. 

Bamfo says that Recharge actually began with homes as its first spaces available for rent back in 2016. At the time the spaces were all friends houses, but the company hadn’t figured out a way to vet and service the home inventory.

So Bamfo took his pitch to hotels. The company has done over 50,000 bookings and managed to attract industry investors like JetBlue Technology Ventures. JetBlue liked the company’s ability to offer private space to weary travelers off of red eye flights on well-traveled routes from Los Angeles to New York, according to Bamfo.

If JetBlue’s investment offered Recharge access to the demand side of the equation, then the company’s new investment partner, Fifth Wall Ventures, gives the company new access to supply.

Backed by a clutch of property developers, managers, and homebuilding companies, Fifth Wall will give Recharge access to new developments as they come online — and give property managers and owners access to instant revenue for unused spaces. That’s likely what attracted Fifth Wall — and its partner Brad Greiwe (who’ll be taking a seat on the board of directors) — to the company. To date, the company has raised $10 million in funding from Fifth Wall, JetBlue Technology Ventures, and

The Homes service, which is launching with just over 1,000 listings in Los Angeles, New York and the San Francisco Bay Area and another 80,000 people on its waiting list, can be offered in two ways. Homeowners can let Recharge manage the process and make up to $500 a month, or take care of cleaning and maintenance themselves and make upwards of $2000 or more per month.

There are two options available to homeowners that use the Recharge service.

“If you’re doing the work yourself we’re vetting you very hard,” says Bamfo. “We’ll qualify the overall character and will qualify the unit… whether it has a doorman, an elevator, other neighbors on the floor, a fob for the door, fob for the lock.”

In cities like New York and San Francisco Recharge is able to avoid regulatory scrutiny by not allowing its users to stay overnight — thereby skirting the rules that have landed Airbnb in hot water with local regulators.

On average, users stay for roughly two-and-a-half hours and spent between $80 to $100 for their use of spaces.

Average stay is roughly two and a half hours. People are spending $80 to $100… average is lower in homes.. Becaues there’s so much more of them and the money is going directly to people’s pockets..

“What’s missing in a city is privacy.. In your home right now you can shower, you can cry, you can do pushups, you can run around, you can meditate, pray… when you’re in the city there’s just.. You have this mask on… and you can’t unmask and offices don’t allow you to unmask, because you’re being watched still,” says Bamfo.