Elon Musk has shared some details about future testing of Starship, the SpaceX launch vehicle currently being developed by the company at its Boca Chica, Texas facility. Recently, SpaceX has completed short, 150 meter (just under 500 feet) test flights of two earlier Starship prototypes, SN5 and SN6 – and SN8, which is currently set to be done construction “in about a week” according to Musk will have “flaps & nosecone” and ultimately is intended for a much higher altitude test launch.

The prototypes that SpaceX has flown and landed for its so-called ‘short-hop’ tests over the past few weeks have been full-sized, but with a simulated weight installed on the top in place of the actual domed nosecone that will perch atop the final production Starship and protect any cargo on board. SN5 and SN6, which are often compared to grain silos, are also lacking the large control flaps on either side of the nosecone that will help control its flight. SN8 will have both, according to Musk.

This version of the prototype will also undergo the same early testing and its precursors, including a static fire and other ground checkouts, followed by another static fire before ultimately attempting to fly to an altitude of 60,000 feet – and then returning back to the ground for a controlled landing.

SpaceX is off pace when it comes to Starship development relative to Musk’s earliest, rosiest projections – but the CEO is known for overly optimistic estimates when it comes to timeframes, something he’s repeatedly copped to himself.

Rocket development is also notoriously difficult, so this first high-altitude flight attempt could just as easily go very poorly. SpaceX in particular has a development program that focuses on rapid iteration, and learning from earlier mistakes while building simultaneous development prototypes incorporating different lessons gleaned from various generations. And while it may not have made Musk’s crazy timelines, it is moving very quickly, especially now that the most recent prototypes have survived pressure testing and made it up into the air.

Elon Musk has shared some details about future testing of Starship, the SpaceX launch vehicle currently being developed by the company at its Boca Chica, Texas facility. Recently, SpaceX has completed short, 150 meter (just under 500 feet) test flights of two earlier Starship prototypes, SN5 and SN6 – and SN8, which is currently set to be done construction “in about a week” according to Musk will have “flaps & nosecone” and ultimately is intended for a much higher altitude test launch.

The prototypes that SpaceX has flown and landed for its so-called ‘short-hop’ tests over the past few weeks have been full-sized, but with a simulated weight installed on the top in place of the actual domed nosecone that will perch atop the final production Starship and protect any cargo on board. SN5 and SN6, which are often compared to grain silos, are also lacking the large control flaps on either side of the nosecone that will help control its flight. SN8 will have both, according to Musk.

This version of the prototype will also undergo the same early testing and its precursors, including a static fire and other ground checkouts, followed by another static fire before ultimately attempting to fly to an altitude of 60,000 feet – and then returning back to the ground for a controlled landing.

SpaceX is off pace when it comes to Starship development relative to Musk’s earliest, rosiest projections – but the CEO is known for overly optimistic estimates when it comes to timeframes, something he’s repeatedly copped to himself.

Rocket development is also notoriously difficult, so this first high-altitude flight attempt could just as easily go very poorly. SpaceX in particular has a development program that focuses on rapid iteration, and learning from earlier mistakes while building simultaneous development prototypes incorporating different lessons gleaned from various generations. And while it may not have made Musk’s crazy timelines, it is moving very quickly, especially now that the most recent prototypes have survived pressure testing and made it up into the air.

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. 

Ready? Let’s talk money, startups and spicy IPO rumors.

Is the vaunted cloud acceleration falling flat?

This week we’re taking a look at the bad side of the cloud software market. In case you were avoiding the news over the last week, tech and software stocks are struggling. Not much compared to their 2020 gains, mind, but after months of only going up their recent declines have been notable. (As I write to you, the tech-heavy Nasdaq is headed for its worst week since March.)

The pullback makes some sense. Having watched SaaS and cloud valuations get stretched to historical highs, Slack’s earnings were an endcap on a good, but not-quite-as-good-as-expected set of results from public cloud and SaaS companies. 

As we’ve noted, most public software companies are not seeing their revenue growth accelerate. Some public software companies may be seeing their growth deceleration slow, but the number of public software companies actually accelerating in 2020 is tiny. The actually-accelerating group is Zoom, and maybe one or two other companies. 

Why is that, given all that we’ve heard about the presumably accelerating digital transformation? Slack earnings are a good explainer. The enterprise communications company’s recent filings explain that its COVID-bump has somewhat dissipated, while a number of COVID-related problems are persisting. 

Seeing recently risen valuations slip in the face of a lack of materially accelerated growth and some churn issues is reasonable. 

Does this matter for startups? Some. Public software valuations are still elevated compared to historical norms, which helps software startups defend their valuations and raise well. And there are plenty of startup hotspots as we’ve noted, including API-delivered startups enjoying time in the sun, as well as edtech startups that caught a COVID-related tailwind.

I am chatting with investors from a16z, Bessemer, and Canaan next week at Disrupt about the future of SaaS, collecting notes on the private-market side of this particular issue. So, more to come. But for now, I think we’ve seen the top of the peak and are now dealing more with reality than hype. Or, as public investors might say, the COVID trade has run its course and earnings will set the tone moving forward.

Market Notes

Moving on to market notes, a fintech stat, and some other bits of data for your consumption and edification:

• Fintech is staying hot, with M1 Finance doubling its AUM from $1 billion to $2 billion in about half a year. TechCrunch covered M1 reaching the $1 billion AUM threshold because it’s a Chicago company and I could not resist the fintech data point. Then M1 raised $33 million at $1.45 billion AUM in June. Now it’s at $2 billion. 
• Our read? The savings and investing boom that helped power Robinhood to new revenue records, along with other players, is continuing.
• More evidence of that? Alpaca, a startup that delivers equity-trading capabilities via an API, is seeing insane growth. (That piece has more notes on API-led startups in case that is your jam.)
• Quickly turning to the public markets, JFrog is about to show the power of profits in today’s markets, and next week should see a number of debuts of JFrog, Sumo Logic and Snowflake. Palantir is the week after. (More notes here if you need them.)
• Oh, and folks are pricing Palantir at a fraction of its final private valuation. Whoops. Maybe that’s why so many insiders are selling now? Big ups to Danny for that story. (Also, yowza this is not at all good.)

A brief interlude: Disrupt is next week, you should come. You can enjoy it from the comfort of your couch. 

Various and Sundry

SaaS and cloud earnings continue to trickle in, which means I spent a good portion of my week talking to more execs at public companies. Short notes from Smartsheet, nCino and BigCommerce to follow, along with some final thoughts for your weekend.

• On the valuations front, Smartsheet CEO Mark Mader told TechCrunch that “investors are thinking about how to balance historically high multiples with historically high potential returns in the space that’s still very young.” 
• He added that no one doubts that cloud “is going to be the answer” to a lot of stuff, or that “people are [going to] change how they work,” but did note that cloud companies are not impervious to macro headwinds, because “cloud companies serve non-cloud companies,” and not merely companies in sectors that are excelling.
• This fits neatly into our notes on Slack above. More on Smartsheet’s earnings here.
• nCino had a good quarter, beating expectations and guiding well during its first public earnings report. However, like many other SaaS and cloud companies, it has lost some valuation altitude in recent weeks. It’s still miles above its IPO price, however.
• I was curious about how the post-IPO period has been for the company’s CEO, Pierre Naudé, and his response was fun. Like all new public company CEOs, he made sure to note how quickly his team got back to work after the debut, but he also told The Exchange that he does now spend time that he used to invest in customers and “innovation” talking to analysts and investors. 
• Being a public company, therefore, has time and focus costs that are worth considering, as we see so many tech shops approach the public markets.
• And then there was BigCommerce, which went public quite recently. I got back on the horn with CEO Brent Bellm, wanting to learn a bit more about the current state of the e-commerce market. 
• Here’s what the CEO had to say, lightly edited and condensed for clarity:

“I think it’s staying pretty hot. The surprising thing in the post-pandemic weeks was just how rapidly growth accelerated, and consumer and business adoption grew. We all kept saying ‘well at some point stores will reopen, and the growth rates will come back down.’ But the growth rates for actual sales running through stores continued to be very strong. You know, whether you look at our customer set, or [at] credit card data from Bank of America or others […] you can see quite clearly that e-commerce remains very, very hot. It’s a permanent change in behavior. Consumers have found a lot more places where they now like to buy online and reasons to like to buy online, and companies have found new and more effective ways to sell.”

• This is probably a good reminder to turn our attention back to e-commerce when we get a chance post-Disrupt. 
• And, finally, read Natasha on why rolling funds are blowing up, something that we talked about on the podcast this week.

That’s all the room we have. Hugs, fist bumps, and good luck.

Alex

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. 

Ready? Let’s talk money, startups and spicy IPO rumors.

Is the vaunted cloud acceleration falling flat?

This week we’re taking a look at the bad side of the cloud software market. In case you were avoiding the news over the last week, tech and software stocks are struggling. Not much compared to their 2020 gains, mind, but after months of only going up their recent declines have been notable. (As I write to you, the tech-heavy Nasdaq is headed for its worst week since March.)

The pullback makes some sense. Having watched SaaS and cloud valuations get stretched to historical highs, Slack’s earnings were an endcap on a good, but not-quite-as-good-as-expected set of results from public cloud and SaaS companies. 

As we’ve noted, most public software companies are not seeing their revenue growth accelerate. Some public software companies may be seeing their growth deceleration slow, but the number of public software companies actually accelerating in 2020 is tiny. The actually-accelerating group is Zoom, and maybe one or two other companies. 

Why is that, given all that we’ve heard about the presumably accelerating digital transformation? Slack earnings are a good explainer. The enterprise communications company’s recent filings explain that its COVID-bump has somewhat dissipated, while a number of COVID-related problems are persisting. 

Seeing recently risen valuations slip in the face of a lack of materially accelerated growth and some churn issues is reasonable. 

Does this matter for startups? Some. Public software valuations are still elevated compared to historical norms, which helps software startups defend their valuations and raise well. And there are plenty of startup hotspots as we’ve noted, including API-delivered startups enjoying time in the sun, as well as edtech startups that caught a COVID-related tailwind.

I am chatting with investors from a16z, Bessemer, and Canaan next week at Disrupt about the future of SaaS, collecting notes on the private-market side of this particular issue. So, more to come. But for now, I think we’ve seen the top of the peak and are now dealing more with reality than hype. Or, as public investors might say, the COVID trade has run its course and earnings will set the tone moving forward.

Market Notes

Moving on to market notes, a fintech stat, and some other bits of data for your consumption and edification:

• Fintech is staying hot, with M1 Finance doubling its AUM from $1 billion to $2 billion in about half a year. TechCrunch covered M1 reaching the $1 billion AUM threshold because it’s a Chicago company and I could not resist the fintech data point. Then M1 raised $33 million at $1.45 billion AUM in June. Now it’s at $2 billion. 
• Our read? The savings and investing boom that helped power Robinhood to new revenue records, along with other players, is continuing.
• More evidence of that? Alpaca, a startup that delivers equity-trading capabilities via an API, is seeing insane growth. (That piece has more notes on API-led startups in case that is your jam.)
• Quickly turning to the public markets, JFrog is about to show the power of profits in today’s markets, and next week should see a number of debuts of JFrog, Sumo Logic and Snowflake. Palantir is the week after. (More notes here if you need them.)
• Oh, and folks are pricing Palantir at a fraction of its final private valuation. Whoops. Maybe that’s why so many insiders are selling now? Big ups to Danny for that story. (Also, yowza this is not at all good.)

A brief interlude: Disrupt is next week, you should come. You can enjoy it from the comfort of your couch. 

Various and Sundry

SaaS and cloud earnings continue to trickle in, which means I spent a good portion of my week talking to more execs at public companies. Short notes from Smartsheet, nCino and BigCommerce to follow, along with some final thoughts for your weekend.

• On the valuations front, Smartsheet CEO Mark Mader told TechCrunch that “investors are thinking about how to balance historically high multiples with historically high potential returns in the space that’s still very young.” 
• He added that no one doubts that cloud “is going to be the answer” to a lot of stuff, or that “people are [going to] change how they work,” but did note that cloud companies are not impervious to macro headwinds, because “cloud companies serve non-cloud companies,” and not merely companies in sectors that are excelling.
• This fits neatly into our notes on Slack above. More on Smartsheet’s earnings here.
• nCino had a good quarter, beating expectations and guiding well during its first public earnings report. However, like many other SaaS and cloud companies, it has lost some valuation altitude in recent weeks. It’s still miles above its IPO price, however.
• I was curious about how the post-IPO period has been for the company’s CEO, Pierre Naudé, and his response was fun. Like all new public company CEOs, he made sure to note how quickly his team got back to work after the debut, but he also told The Exchange that he does now spend time that he used to invest in customers and “innovation” talking to analysts and investors. 
• Being a public company, therefore, has time and focus costs that are worth considering, as we see so many tech shops approach the public markets.
• And then there was BigCommerce, which went public quite recently. I got back on the horn with CEO Brent Bellm, wanting to learn a bit more about the current state of the e-commerce market. 
• Here’s what the CEO had to say, lightly edited and condensed for clarity:

“I think it’s staying pretty hot. The surprising thing in the post-pandemic weeks was just how rapidly growth accelerated, and consumer and business adoption grew. We all kept saying ‘well at some point stores will reopen, and the growth rates will come back down.’ But the growth rates for actual sales running through stores continued to be very strong. You know, whether you look at our customer set, or [at] credit card data from Bank of America or others […] you can see quite clearly that e-commerce remains very, very hot. It’s a permanent change in behavior. Consumers have found a lot more places where they now like to buy online and reasons to like to buy online, and companies have found new and more effective ways to sell.”

• This is probably a good reminder to turn our attention back to e-commerce when we get a chance post-Disrupt. 
• And, finally, read Natasha on why rolling funds are blowing up, something that we talked about on the podcast this week.

That’s all the room we have. Hugs, fist bumps, and good luck.

Alex

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.

Warren Buffet is eager to invest in a money-burning SaaS unicorn that is about to IPO. Despite recent tech stock declines and growing fears of US election turbulence, this is one reason that Snowflake is on track to be one of the biggest offerings of the year. And it is not the only company defying the pandemic and newer problems in order to get out of the gate soon.

First, here’s Alex Wilhelm with more Snowflake filing details:

The $75 to $85 per-share IPO price target values the firm at between $20.9 billion and $23.7 billion, huge sums for the private company. Its IPO could raise more than $2.7 billion for the startup. Snowflake  was last valued at around $12.5 billion when it raised a Series G worth $479 million earlier this year.

Built into those valuation projections are two private placements of stock in Snowflake, $250 million apiece from both Salesforce,  the well-known CRM player, and Berkshire Hathaway, better known for its investment returns in the 80s and 90s, Cherry Coke and Charlie Munger’s humor. Jokes aside, the inclusion of Salesforce in the IPO is notable, but not a shock, but Berkshire taking part in the public market debut of Snowflake, a company with historic losses that are nigh-tyrannical, is.

Today, “epic growth, improving gross margins and dramatically curtailed losses” are factors that lure investors like Buffett, Alex concludes.

In other pre-IPO analysis this week, Eric Peckham takes a deeper look at Unity this week, updating a massive analysis he had done last year. Basically, the game engine creator could be more central to our online future than many seem to realize today:

Much of the press about Unity’s S-1 filing mischaracterizes the business. Unity is easily misunderstood because most people who aren’t (game) developers don’t know what a game engine actually does, because Unity has numerous revenue streams, and because Unity and the competitor it is most compared to — Epic Games — only partially overlap in their businesses….

For those in the gaming industry who are familiar with Unity, the S-1 might surprise you in a few regards. The Asset Store is a much smaller business that you might think, Unity is more of an enterprise software company than a self-service platform for indie devs and advertising solutions appear to make up the largest segment of Unity’s revenue.

In an accompanying analysis for Extra Crunch, he digs into the filing and maps out the bear and bull cases for the company. Some of the biggest issues he notes are that it is still fairly reliant on advertising (even though it wants a SaaS multiple) and it is continuing to lose lots of money on ambitious expansions. So this is probably not Warren Buffett’s type of frozen dessert, if you will. Risk-seekers and futurists, however, will want to try this free sample of the bull case:

Game engines are eating the world… A vast swath of entertainment and work activities already center on interactive content. Unity has demonstrated value and early adoption across numerous industries for a long list of use cases; it is on the precipice of entering the daily workload of millions of professionals, from engineers to industrial designers to film producers to marketers. Its Create Solutions division is on a path to becoming something of a next generation Adobe ($11 billion in 2019 revenue): A creative suite used by design, engineering, marketing and sales teams across industries.

As AR and VR technology expands into mainstream use over the decade ahead, Unity’s adoption will only expand further. The majority of AR and VR content is already made with Unity’s engine and Unity’s R&D is improving the ease of creating such content by less technical professionals (and students). This positions Unity to expand into key functions higher up in the tech/content stack of mixed reality by providing identity, app distribution, payment and other solutions across content experiences.

Elsewhere in our IPO coverage, Danny Crichton got the details about Palantir insiders accelerating their stock sales for Extra Crunch, and Alex dug into the fresh Sumo Logic and JFrog filings S-1 filings.

Two considerations of SPACs

Special purpose acquisition companies are a thing now for tech startups that want to go public, but are they the best thing? Here’s top seed-VC investor Josh Kopelman’s take, via an interview from this week with Connie Loizos.

On the one hand, just for fun, I made sure that we owned Lastround.com in case we ever wanted to launch our SPAC. [Laughs.] But it’s hard to know the true benefit of a SPAC. And I think that now that we’ve begun to see a market shift toward allowing direct listings with a fundraising component, you might see that as a far more viable and frequent fundraising or a liquidity device.

A fresh startup trend he’s more positive about is rolling funds (short-window raises for small very early investments, like the new offering from AngelList).

But back to SPACs. George Arison, cofounder and co-CEO of car-buying unicorn Shift, wrote a guest post for Extra Crunch this week about how he has approached taking his own company through a SPAC. Among other things, he says, private investments in public equity are not only good but essential:

There are some in Silicon Valley who think that raising a PIPE is a bad idea — quite frankly, this is patently false. A core reason why SPACs work today, and why they differ from the first generation of SPACs that often did not work, is because of the PIPE process. The PIPE period allows companies to raise more capital, to validate valuations, and it also creates a pathway to transition “special situations” investors to fundamental investors that you want as long-term shareholders.

A pause for Belarus, and PandaDoc employees

After Belarus-born PandaDoc CEO Mikita Mikado publicly supported opposition to his country’s dictatorship, state police raided the company’s large operation in the country and imprisoned four of its employees on spurious charges. As they fight for justice for their colleagues, and for the country’s political process, they’re planning to close operations in the country, and are joining with other startups to highlight the damage to the local tech scene. More about the movement in the subtitled video below:

Investor surveys: proptech’s future, Warsaw and more

We’ve been trying to understand what is really going on with real estate and proptech, given the various impacts the traditionally glacial sector has experienced lately (pandemic, remote work, retail issues etc.). On Tuesday we ran the second part of our most recent survey, focused on present and future opportunities. Here’s Clelia Warburg Peters, venture partner at Bain Capital Ventures, about making peace with real estate agents and focusing on financial and processing aspect that have not been disrupted in a very long time

Up until recently, the innovation in the residential space was all focused on disintermediating the real estate broker, and I think the most sophisticated entrepreneurs are increasingly understanding that service is a core component of a home sale… [T]he bigger opportunity is finding a way to leverage the position of the real estate agent (in whatever form) to sell affiliated products, including title, mortgage and home insurance or to innovate in those products themselves.

Elsewhere in survey work this past week, Mike Butcher checked in with investors focused on Warsaw and Poland, and is also looking for folks to talk to about the Vienna tech scene.

Around TechCrunch

Announcing the Startup Battlefield companies at TechCrunch Disrupt 2020

Meet the final round judges who will decide the winner of this year’s Disrupt Battlefield Competition

FaZe Clan’s Lee Trink, Troy Carter and Nick ‘Nickmercs’ Kolcheff are coming to Disrupt 2020

Drew Houston will talk about building a startup and digital transformation during COVID at TechCrunch Disrupt

Women exhibitors in Digital Startup Alley: Meet female-focused accelerators

Meet the TC Top Picks for Disrupt 2020

All the ways to meet someone and make connections at Disrupt 2020

Across the week

TechCrunch

How one VC firm wound up with no-code startups as part of its investing thesis

It’s time to better identify the cost of cybersecurity risks in M&A deals

Why established venture firms should court emerging managers

Apple lays out its messy vision for how xCloud and Stadia will work with its App Store rules

Viral article puts the brakes on China’s food delivery frenzy

Extra Crunch

How to respond to a data breach

Use ‘productive paranoia’ to build cybersecurity culture at your startup

What’s driving API-powered startups forward in 2020?

Slack’s earnings detail how COVID-19 is both a help and a hindrance to cloud growth

VCs pour funding into edtech startups as COVID-19 shakes up the market

#EquityPod

From Alex:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

The whole crew was back, with Natasha Mascarenhas and Danny Crichton and myself chattering, and Chris Gates behind the scenes tweaking the dials as always. This week was a real team effort as we are heading into the maw of Disrupt — more here, see you there — but there was a lot of news all the same.

So, here’s what we got to:

• AngelList is doubling down on rolling funds, driving that SaaS revenue into the firm that is also investing in the rolling funds. So that’s neat. (Really!)
• Edtech stayed hot this week with Byju’s raising $500 million from Silver Lake. Founded back in 2011, Byju’s is the highest-valued edtech company that we can think of, now worth $10.8 billion.
• And speaking of Silver Lake, the group just poured $1 billion into a part of the Reliance empire, this time Reliance Retail. And we talked about JioMart, which is taking on both Flipkart and Amazon in the country.
• Next there were two companies with names that start with “S” that raised $100 million in the last week, namely Snyk — more here — and Sprinklr — more here.
• Sticking to our “S” theme, Slack’s earnings were incredibly interesting. The company’s quarter didn’t get plaudits from investors, and it did note some negative COVID impacts that could impact startups as well.
• And, one more S-company to get through: Snowflake. We were all a-twitter about the company’s new valuation range and the fact that fucking Berkshire Hathaway is going to invest in it. That’s wild! What a thing!
• Finally on the IPO front, we did a quick Palantir update. Danny has all the latest here.

We wrapped with whatever this is, which was at least good for a laugh. We are back next week at Disrupt, so see you all there!

Happy Disrupt 2020 Eve, startup fans! It’s been a crazy mad dash to transform our annual flagship San Francisco event at Moscone Center into the first all-virtual Disrupt (thanks, COVID-19). Then again, going global seems an appropriate way to celebrate 10 years of Disruption. It all starts tomorrow with a pre-show session to explain how to access the different platforms we’ll use during the event — are you ready?

Wait, what? Did you just say you don’t have your Disrupt 2020 pass yet? Talk about a vinyl record scratch moment. Okay, don’t panic. You can still join your early-stage startup community and discover untold opportunities to build your business. Let’s break down the different pass options, access levels and current pricing.

Important note: Pricing for all passes increase tomorrow, September 13 at 11:59 p.m. (PT), so don’t drag your feet a moment longer. Choose and buy your pass right now.

 

Disrupt Digital Pro Pass ($345): You receive online access to all the programming on the Disrupt stage and the Extra Crunch stage. We’re talking live stream and replays on demand. Interactive sessions let you ask questions, participate in polling and engage with speakers. Your pass includes CrunchMatch to make virtual networking easy, organized, efficient and effective. It will come in handy as you find and meet attendees from around the world — and explore and connect with hundreds of early-stage startups in Digital Startup Alley — the show’s expo area. Meet the Startup Battlefield competitors and the TC Top Picks!

Disrupt Digital Pro Pass — Investor ($345): You receive all the features listed above and special opportunities to connect and network with the investor community. Plus, you receive a guide to the exhibitors in Startup Alley to simplify connecting with early-stage startups both during and after the event.

Digital Pro Pass — Students ($125), military personnel, active government employees and non-profit agency employees ($145): If you belong to any of the aforementioned groups, congrats, you qualify for a discount for full access to Disrupt 2020. Your pass provides the same level of access as the standard Digital Pro Pass but your status must be verifiable.

Disrupt Digital Pass ($45): You receive live access only to the Disrupt Stage, Breakout Sessions (workshops, product demonstrations, startup pitches, networking receptions) and access to the Digital Startup Alley expo area.

A multitude of ways and price points to make Disrupt 2020 accessible and to help you discover opportunities that can take your business forward to the next level and beyond. Get on board, buy your pass before 11:59 p.m. (PT) tomorrow night and save. We can’t wait to see where Disrupt takes you!

Welcome back to This Week in Apps, the TechCrunch series that recaps the latest OS news, the applications they support and the money that flows through it all.

The app industry is as hot as ever, with a record 204 billion downloads and $120 billion in consumer spending in 2019. People are now spending three hours and 40 minutes per day using apps, rivaling TV. Apps aren’t just a way to pass idle hours — they’re a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus.

In this series, we help you keep up with the latest news from the world of apps, delivered on a weekly basis.

Top Stories

App Store get new rules

Apple on Friday released updated App Store Guidelines with the goal of clarifying how it will approach new technologies, like game streaming services, App Clips and widgets, in addition to better detailing its stance over how and when it will collect in-app purchases from certain categories of apps. The changes arrive at a time when Apple is battling in court with Epic over its requirements regarding the use of in-app purchases. The company is also seeing its App Store business scrutinized by regulators over monopolistic practices in the  U.S., E.U. and Australia, and elsewhere.

Among the most critical changes is the new rule that effectively permits game streaming services like Microsoft’s xCloud and Google Stadia. These services will now be allowed so long as each individual app that can be streamed has its own App Store listing offering a playable (even if a demo), experience. A separate “catalog” app can also be offered where users sign up and subscribe. Who wants to bet Facebook will soon use this new permission to its advantage with Facebook Gaming?

Other notable changes involve clarifications around in-app purchases, including exceptions for enterprise apps, app companions for some web apps and a rule that says one-to-one experiences (think: telehealth) aren’t required to use only IAP. Another rule says personal loan apps must spell out their terms more clearly and puts restrictions on the max APR.

Apple and Epic continue fight

The Apple vs. Epic battle continued to heat up this week. Epic tweeted on Wednesday that Apple will no longer allow Fortnite users to sign in using “Sign In with Apple” starting on September 11, 2020. That meant Apple was using its power to make sure that even those iOS users who already had Fortnite installed before the game’s ban from the App Store could no longer log in.

Less than a day later, Epic announced that Apple decided to provide an indefinite extension on blocking players from logging in. However, the company warned that players should prepare their accounts for the eventual removal of “Sign In with Apple” support.

The move, if true, is another example of how Apple can use its ecosystem power to harm businesses, and ultimately its own customers — in this case, Fortnite players — in the process. As a result, iOS developers are beginning to realize that all the technologies Apple pushes them to use could become ways to control them, as Apple can easily yank them away the minute they cross the line. This move on Apple’s part (if true and not an exaggeration by Epic), could impact developers’ desire to adopt future Apple technologies.

Apple has the legal right to enforce the App Store terms that Epic agreed to, but doing so in the middle of multiple antitrust investigations around the world is surprisingly bold.

Plus, the approach Apple has been taking also comes across as incredibly petty — to the point that it’s burning through its own developer community’s goodwill in the process.

Developers are tuning into this courtroom drama, which this week includes Apple also suing for damages on breach of contract, and noticing the callous language Apple is using in its legal documents. As former Tumblr CTO and developer Marco Arment pointed (see above), people buy iPhone for its ability to run apps.

Ultimately, Apple needs a thriving developer community to succeed, so it’s not clear why Apple — which already offered a discounted commission to Amazon — won’t negotiate with other large players of significance, like Epic.

That said, Epic doesn’t come off too great in this fight, either. It has leveraged its own user base as a weapon, for starters, knowing that Apple would likely act aggressively and ban its app and maybe even worse. Meanwhile, Epic acts as if it’s on some great crusade against developer abuse, when really this battle is about Epic’s desire to keep more money. If Apple cut it Epic deal, it’s not like Epic would hold out until all other developers were treated fairly, too.

Still, Epic’s response to Apple’s claims that it wants a “free ride” makes a good point.

Epic has paid out $257 million in commission fees in two years’ time over in-app purchases that Apple doesn’t help to generate, beyond being the platform where they occur and the way they’re processed. Epic could have generated that money itself, via alternative payment mechanisms, if allowed. Apple gets its cut because it ties IAP to the App Store. And you can’t distribute to iPhone without the App Store.

Even Mark Zuckerberg this week suggested the App Store is a monopoly (isn’t that rich?), because of its control over the App Store.

“Well I certainly think that they have the unilateral control of what gets on the phones in terms of apps,” Zuckerberg said. “So, I do think that there are questions that people should be looking into about that control of the App Store and whether that is enabling as robust of a competitive dynamic,” he said.

TikTok’s time is up

Trump says TikTok won’t get an extension. The Beijing-based social video app still has only until September 20 to sell off TikTok’s U.S. operations in order for its app to remain in the country. The app will be banned if TikTok isn’t able to reach an agreement with a potential buyer before the deadline passes. And from the latest reports, it seems China doesn’t even want that to happen.

TikTok had run into new complications in recent days that would make a sale to Microsoft, Oracle or any other buyer more challenging. China introduced restrictions on the export of AI technology, which forced TikTok owner ByteDance to re-evaluate how it could even proceed with a sale. In light of the news, ByteDance began discussing possible agreements with the U.S. government that would allow TikTok to avoid a full sale of its U.S. operations. It’s not clear those have had any success, as Trump has said the deadline stands.

As it stands now, ByteDance will likely miss the September 20th deadline. And according to Reuters, Beijing would rather see the app shut down in the U.S. than a forced sale.

Despite TikTok’s troubles, which also include a ban in India, demand for the app remains strong. The app was the most downloaded non-gaming app in August 2020, according to Sensor Tower data. The company also this week revealed more about how its algorithm works, claiming it wanted to be transparent about its use of machine learning techniques and other technologies.

Weekly News

• Apple to host an event on September 15, where it’s expected to focus on iPad and Apple Watch.
• Android 11 makes its debut. The new OS was in public preview and will now roll out to select devices, including Pixel phones, to start. The updated OS is not a major overhaul, but offers several new consumer-facing features around messaging, privacy and smart devices. Built-in screen recording and revamped media controls are also included. (Frederic Lardinois/TechCrunch)
• Android Go 11, meanwhile, now works better on budget devices, up to 2GB of RAM, up from 1.5GB in Android Go 10. (Steve Dent/Engadget)
• Apple confirms the “Apple One” subscription bundle in its own Apple Music app’s code. The subscription will bundle Apple Music and Apple TV+. In higher tiers, consumers can bundle in other Apple services like Apple News+, Apple Arcade and iCloud. (Kyle Bradshaw/9to5Google)
• Apple releases iOS 14 and iPadOS 14 beta 8 to developers, followed by a release to public testers. We’re getting closer! (Apple)
• U.S. homebuying app installs grew 21% year-over-year in August, setting 2020 record. (Stephanie Chan/Sensor Tower)
• Google and Apple’s app stores are being investigated by Australia’s competition watchdog. (Josh Taylor/The Guardian)
• Apple agrees to meet with advertising coalition over iOS 14 concerns. The news follows last week’s announcement that the changes to IDFA were to be delayed. (Stephen Warwick/iMore)
• Apple announces enhancements to sandbox testing. Developers can now test upgrades, downgrades and cancellations for subscriptions, as well as reset the introductory offer eligibility for a test account from Settings on devices running iOS 14 or later, and more. (Apple)
• U.S. holiday shopping season on mobile expected to be largest to date, topping 1B hours on Android. (Sarah Perez/TechCrunch)
• AppsFlyer launches an ad spend tool designed to help app marketers better budget. (AppsFlyer)
• Ahead of Apple’s expected launch of AirTags, Tiles launches a subscription that reimburses for lost items. (Nicole Lee/Engadget)
• PUBG Mobile Generates $500 million in just over 2 months, passes $3.5 billion in lifetime revenue. (Craig Chapple/Sensor Tower)
• Smart banners in iOS 14 beta now point users to open stories in the Apple News app, at least for Apple News+ partners, not third-party publisher apps. (Mike Peterson/AppleInsider)
• Developers behind popular mobile game Alto’s Adventure have started a new studio, Land & Sea. The team describes the first, yet to be announced, game as “an accessible, coming-of-age folktale set against an ancient pastoral landscape.” (Andrew Webster/Verge)

Funding and M&A

• Groww, an investment app for millennials in India, raises $30 million led by YC Continuity
• Lokalise raises $6 million to make it easier to localize your product
• Curio, a curated audio platform for journalism, raises $9 million Series A led by Earlybird

Downloads

Poolside.fm

If you mashup feel-good summer music, ridiculous 80s-inspired imagery and retro tech, you’ll get the lighthearted and fun web radio service Poolside.fm. The service was already available on the web and, recently, as a Mac app. With the iOS launch, the team created a new design that references old mobile devices, like the Nokia 3310, and doused it in pink. It’s the most fun you’ll have with an app all week. Check it out via cellular.poolside.fm.

Google Maps returns to Apple Watch

But why? Google Maps first launched on Apple Watch in 2015 but was pulled two years later without explanation. Now it’s back, 9to5Google spotted this week. The new version doesn’t let you search for new locations from the Watch — you still have to use your phone. The app can then provide navigation instructions by car, bike, public transport or walking.

NewNew

Former Drake personal assistant Courtne Smith launches NewNew, a social network based on the video its users like and share. The app, a combination of TikTok and Facebook, allows users to create networks based on the videos, memes and images they’re sharing.

Disney’s live-action remake of “Mulan” comes with some serious baggage.

First, the film has drawn political controversy for its star’s statements in support of the action Hong Kong police against protestors, as well as the fact that “Mulan” was partly filmed in the Xinjiang region, where the Chinese government has held Muslim ethnic minorities in detention camps.

And although it’s less weighty, it’s also hard to escape the business context: “Mulan” is one of the first big Hollywood blockbusters (along with “Tenet”) to be released after the pandemic shuttered movie theaters around the world. Warner Bros. opted to release “Tenet” in theaters, while Disney is bringing “Mulan” to Disney+ with a hefty price tag of $29.99. (There’s still a theatrical release in some markets, including China.)

On the latest episode of the Original Content podcast, we acknowledge all of that context while also doing our best to discuss the merits of the film itself. It’s arguably the best of Disney’s live-action remakes, and it’s certainly gorgeous to watch, with some thrilling action scenes and beautiful landscape shots.

At the same time, Jordan argued that it doesn’t live up to the animated original, and we both agreed that the script can feel sleight and forgettable — particularly in the shadow of those real-world controversies. Plus, it’s hard to justify the current price, unless you’ve got kids who are eager to see it. Otherwise, you can probably wait until December 4, when “Mulan” becomes available to regular Disney+ subscribers.

Before we jump into our review, we also talk about this coming week’s virtual Disrupt conference.

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
0:31 Disrupt preview
6:33 “Mulan” review
35:10 “Mulan” spoiler discussion

Alameda-based rocket launch startup Astra finally got the chance to launch its first orbital test mission from its Alaska-based facility on Saturday, after the attempt had been delayed multiple times due to weather and other issues. The 8:19 PM PT lift-off of Astra’s ‘Rocket 3.1’ test vehicle went well – but the flight ended relatively shortly after that, during the first-stage engine burn and long before reaching orbit.

Astra wasn’t expecting to actually reach orbit on this particular flight – it has always said that its goal is to reach orbit within three test flights of Rocket, and prior to this first mission, said that the main goal was to have a good first-stage burn on this one specifically. This wasn’t a nominal first-stage burn, of course, since that’s when the failure occurred, but the company still noted in a blog post that “the rocket performed very well” according to their first reviews of the data.

The mission ended early because of what appears to be a bit of unwanted back-and-forth wobbling in the rocket as it ascended, Astra said, which caused an engine shutdown by the vehicle’s automated safety system. That’s actually also good news, since it means the steps Astra has taken to ensure safe failures are also working as designed. You can see in the video above that the light of the rocket’s engines simply go out during flight, and then some time later there’s a fireball from its impact on the ground.

It’s worth noting that most first flights of entirely new rockets don’t go entirely as planned – including those by SpaceX, whose founder and CEO Elon Musk expressed his encouragement to the Astra team on Twitter. Likewise, Rocket Lab’s Peter Beck also chimed in with support. Not to mention that Astra has been operating under extreme conditions, with just a six-person team on the ground in Alaska to deploy the launch system, which was set up in under a week, due to the COVID-19 crisis.

Astra will definitely be able to get a lot of valuable data out of this launch that it can use to put towards improving the chances of its next try going well. The company notes that it expects to review said data “over the next several weeks” as it proceeds towards the second flight in this series of three attempts. Rocket 3.2, the test article for that mission, is already completed and awaiting that try.

David Chao, the cofounder of the cross-border venture firm DCM, speaks English, Japanese, and Mandarin. But he also knows how to talk to founders.

It’s worth a lot. Consider that DCM should see more than $1 billion from the $26.4 million it invested across 14 years in the cloud-based business-to-business payments company Bill.com, starting with its A round. Indeed, by the time Bill.com went public last December, when its shares priced at $22 apiece, DCM’s stake — which was 16% sailing into the IPO — was worth a not-so-small fortune.

Since then Wall Street’s lust for both digital payments and subscription-based revenue models has driven Bill.com’s shares to roughly $90 each. Little wonder that in recent weeks, DCM has sold roughly 70 percent of its stake for nearly $900 million. (It still owns 30 percent of its position.)

We talked with Chao earlier today about Bill.com, on whose board he sits and whose founder, René Lacerte, is someone Chao backed previously. We also talked about another very lucrative stake DCM holds right now, about DCM’s newest fund, and about how he navigates between the U.S. and China as relations between the two countries worsen. Our conversation has been edited lightly for length and clarity.

TC: I’m seeing you owned about 33% of Bill.com after the first round. How did that initial check come to pass? Had you invested before in Lacerte?

DC: That’s right. Renee started [an online payroll] company called PayCycle and we’d backed him and it sold to Intuit [in 2009] and Renee made good money and we made money. And when he wanted to start this next thing, he said, ‘Look, I want to do something that’s a bigger outcome. I don’t want to sell the company along the way. I just want this time to do a big public company.’

TC: Why did he sell PayCycle if that was his ambition?

DC: It was largely because when you’re a first-time CEO and entrepreneur and a large company offers you the chance to make millions and millions of dollars, you’re a bit more tempted to sell the company. And it was a good price. For where the company was, it was a decent price.

Bill.com was a little bit different. We had good offers before going public. We even had an offer right before we went public.  But Renee said, ‘No, this time, I want to go all the way.’ And he fulfilled that promise he’d made to himself. It’s a 14-year success story.

TC: You’ve sold most of your stake in recent weeks for $900 million; how does that outcome compare with other recent exits for DCM? 

DC: We actually have another recent one that’s phenomenal. We invested in a company called Kuaishou in China. It’s the largest competitor to Bytedance’s TikTok in China. We’ve invested $49.3 million altogether and now that stake is worth $3.8 billion. The company is still private held, but we actually cashed out around 15% of our holdings. and with just that sale alone we’ve already [seen 10 times] that $30 million.

TC: How do you think about selling off your holdings, particularly once a company has gone public?

DC: It’s really case by case. In general, once a company goes public, we probably spend somewhere between 18 months to three years [unwinding our position]. We had two big IPOs in Japan last year. One company [had] a $1 billion market cap; the other was a $2 billion company. There are some [cases] that are 12 months and there are some [where we own some shares] for four or five years.

TC: What types of businesses are these newly public companies in Japan?

DC: They’re both B2B. One is pretty much the Bill.com of Japan. The other makes contact management software

TC: Isn’t DCM also an investor in Blued, the LGBTQ dating app that went public in the U.S. in July?

DC: Yes, our stake wasn’t  very big,  but we were probably the first major VC to jump in because it was controversial.

TC: I also saw that you closed a new $880 million early stage fund this summer.

DC: Yes, that’s right. It was largely driven by the fact that many of our funds have done well. We’re now on fund nine, but our fund seven is on paper today 9x, and even the fund that Bill.com is in, fund four, is now more than 3x. So is fund five. So we’re in a good spot.

TC: As a cross-border fund, what does the growing tension between the U.S and China mean for your team and how it operates?

DC: It’s not a huge impact. If we were currently investing in semiconductor companies, for example, I think it would be a pretty rough period, because [the U.S.] restricts all the money coming from any foreign sources. At least, you’d be under strong scrutiny. And if we invested in a semiconductor company in China, you might not be able to go public in the U.S.

But the kinds of deals that we do, which are largely B2B and B2C — more on the software and services side — they aren’t as impacted. I’d say 90% of our deals in China focus on the domestic market. And so it doesn’t really impact us as much.

I think some of the Western institutions putting money into the Chinese market — that might be decreasing, or at least they’re a little bit more on the sidelines, trying to figure out whether they should be continuing to invest in China. And maybe for Chinese companies, less companies will go public in the U.S., etcetera. But some of these companies can go public in Hong Kong.

TC: How you feel about U.S. administration’s policies?  Do you understand them? Are you frustrated by them?

DC: I think it requires patience, because what [is announced and] goes on the news, versus what is really implemented and how it truly affects the industry, there’s a huge gap.