Year: 2020

Creative platform Patreon has laid off 13% of its workforce, TechCrunch has learned.

“It is unclear how long this economic uncertainty will last and therefore, to prepare accordingly, we have made the difficult decision to part ways with 13% of Patreon’s workforce,” a Patreon spokesperson said in a statement to TechCrunch. “This decision was not made lightly and consisted of several other factors beyond the financial ones.”

Patreon, which enables creators to build relationships with their fans via monthly subscriptions for content in exchange for perks and other benefits, had seen an uptick in new creators launching on the platform in light of the COVID-19 pandemic.

In March, Patreon said wrote in a blog post, “Not only are patrons not leaving the platform, we’ve even seen many of them upgrade their tiers to support their favorite creators during this challenging time.” Additionally, the average income for creators was 60% higher in March than in previous months, according to the company.

Around that same time, however, Patreon said it saw patrons exiting the platform more than usual due to financial hardships. Still, Patreon said churn rates were stable.

The startup ecosystem has been hit hard by the COVID-19 pandemic, with layoffs no longer the exception, but the rule. Still, it’s peculiar timing for Patreon, given the company touted an increase in new memberships during the first three weeks of March.

“This surge, along with years of continuous growth, has put Patreon in a strong financial position to help creators successfully manage creative businesses during this challenging time,” the spokesperson said. “Although the business is in a strong cash position, we want to ensure that we can continue to support creators for many years to come.”

Here’s Patreon’s full statement below:

Software as a service companies, modern software firms often referred to by the acronym ‘SaaS,’ had a tough day in the public markets. The basket of companies, as tracked by Bessemer’s cloud index, dropped 4.49% during regular trading hours.

The losses gave back some of the software industry’s recent gains, advances that had followed a sharp decline in the value of their shares as concerns relating COVID-19-induced economic hit the richly-valued cohort of companies hard; indeed, at one point earlier in the year, SaaS and cloud companies were down around 38% from the 2020 highs.

Those losses, however, largely proved transitory. A steep rally in SaaS and cloud shares brought their decline from all-time highs (set earlier this year) to just about 10% yesterday afternoon. Then, today, the firms lost over 4%. This puts SaaS and cloud shares in between a correction and a bear market.

Earlier today, TechCrunch covered a number of “green shoots” for software companies relating to churn, and some back-of-the-napkin funding data for the month of April thus far. To see SaaS firms drop as sharply as they did right after rings of comedic timing.

The impact of today’s trading was varied. Atlassian fell a modest 2.9%, Dropbox 3.3%, Zuora 5.99%, and Slack a sharp 9.54%.

But despite all the worries about churn and changing sentiment, SaaS companies are still richly valued compared to historical norms. How rich? Bessemer notes this on its website the companies it tracks in its index were valued at an enterprise value/revenue multiple of 12.9x.

It’s kind enough that SaaS trades on a multiple of revenue, and not EBITDA; to see that revenue multiple sit comfortably above ten is a gift. So far, however, a durable one. Investors have not lost their shine to SaaS shares, today’s trading notwithstanding.

In broader indices, the day’s damage was less severe, with the Dow Jones Industrial Average falling 2.67%, the S&P 500 falling 3.07%, and Nasdaq Composite dropping 3.48%.

With almost everyone stuck at home thanks to the COVID-19 pandemic, Netflix was widely expected to do well in the first quarter of 2020 — but it did even better than anticipated.

Before the current crisis, Netflix had been forecasted 7 million net new paid subscribers. It was obviously going to beat that, but Netflix came in at more than double the forecasts, with 15.77 million paid net additions, bringing its total paid subscriber count to 182.86 million.

Meanwhile, the company also reported revenue of $5.77 billion and earnings per share of $1.57 — roughly in line with Wall Street predictions on revenue and slightly behind EPS predictions of $1.65.

In his investor letter, CEO Reed Hastings outlined three main impacts that the pandemic has had on Netflix’s finances:

First, our membership growth has temporarily accelerated due to home confinement. Second, our international revenue will be less than previously forecast due to the dollar rising sharply. Third, due to the production shutdown, some cash spending on content will be delayed, improving our free cash flow, and some title releases will be delayed, typically by a quarter

As of 4:22pm Eastern, Netflix shares were fluctuating between a slight gain and a slight loss in after-hours trading — a sign, perhaps, that that spectacular growth is exactly what investors were expecting.

Updating

The coronavirus pandemic has presented plenty of challenges for ad-reliant social networks, but Snap made clear it was not yet feeling significant negative effects with its Q1 earnings release today.

Snap surged 17% after-hours after dropping nearly 4% today, on news of its Q1 results. The company reported revenue of $462 million in line with precious guidance and besting Wall Street’s tempered expectations around $430 million. EPS was -$0.08, slightly worse than analyst expectations of a 7-cent loss.

Daily active users reached 229 million in the first-quarter, representing a 20% year-over-year gain, higher than the 224.5 million users that had been expected.

“Snapchat is helping people stay close to their friends and family while they are separated physically, and I am proud of our team for overcoming the many challenges of working from home during this time while we continue to grow our business and support those who are impacted by COVID-19,” Spiegel said in a statement accompanying the release.

2019 was a redemptive year for the social media company which had seen steady declines in its share price since entering public markets. Since its last earnings release in early February, Snap’s stock price has dropped more than 30%, echoing similar declines seen by other social media companies in the midst of a broader market plunge.

A positive Q1 earnings report is welcome news for the downward-trending stock.

The full impacts of COVID-19 will be fully evident in the second-quarter filings, as Q1 includes financial performance in a February and early March which were much less impacted by pandemic fallout on the broader digital ad market.

This was a relatively quiet quarter for Snap in terms of product updates. Late last month, the company announced that it would be enabling Stories syndication to other apps as the company aims to make its developer platform more attractive to third-parties.

We’ll be updating with more information from the investor call.

Houzz, an online platform for home renovation and design, has laid off 155 employees, roughly 10 percent of its staff, per an internal memo obtained by TechCrunch. Executive salaries also took a cut.

The company, last valued at $4 billion, confirmed the content of the memo in a statement to TechCrunch.

“Due to the impact of COVID-19 on small businesses in the home renovation and design space, and the resulting impact on our core business of pro subscriptions, we have made the incredibly difficult decision to part ways with 155 employees, which is approximately 10% of our team,” said a spokesperson.

In the internal memo, Houzz’s founders Adi Tatarko and Alon Cohen cite COVID-19’s impact in its core business: pro subscriptions. The subscriptions are for home remodeling and design professionals to find work. Due to COVID-19, many of those same professionals are facing project delays or cancellations as states promote social distancing and shelter in places.

Beyond serving as a marketplace for home renovators and customers, the company also sells furniture from third parties. Many consumers might not be thinking about renovating their bathroom or welcoming construction into their home as the pandemic shows up on doorsteps around the world.

While the layoffs are COVID-19 related, this isn’t the first sign of Houzz struggling as a business. Last month, Houzz fired 10 people and scrapped a plan to create furniture in-house. The move would have seen Houzz bring some of the revenue it usually federates out to third-party manufacturers, in-house.

“At Houzz, we continually review our strategic investments, such as Private Label, to ensure that they are aligned to the current needs of our business and optimized for our continued growth,” the company said in a statement to TechCrunch back in March. “As a result of this process, we have made the difficult decision to discontinue our investment in Private Label at this time.”

The company also had some turbulence last year when it disclosed a data breach compromising 57 million records. A year prior, Houzz fired 10 percent of its staff to cut costs and restructure ahead of preparing for an IPO. And considering a number of factors, we’re guessing that plan to barrel toward the public markets may have changed.

Houzz will provide those laid off with severage packages based on tenure and will pay for benefits until the end of June. The company also said it will help those laid off find their next gig through resume writing, career coaching, and network referrals.

Epic Games is finally settling its feud — kind of — with Google and putting Fornite onto the Google Play Store, but the studio sounds pretty pissed about it.

When Fortnite launched on mobile in 2018, Epic Games very notably sidestepped the Google Play Store and pushed users to download the title directly from their website, an effort made to avoid the substantial revenue cuts that Google takes from in-app purchases of Play Store downloads. At the time, the move was understandable for Epic, which was sitting on the hottest free-to-play game of the year that was pulling in substantial revenues from in-app purchases.

After 18 months years of harsh rhetoric regarding platform gatekeeping, Epic Games says that Fortnite is now available for download on the Google Play Store, though it will still be downloadable from fortnite.com moving forward.

“Google puts software downloadable outside of Google Play at a disadvantage, through technical and business measures such as scary, repetitive security pop-ups for downloaded and updated software, restrictive manufacturer and carrier agreements and dealings, Google public relations characterizing third party software sources as malware, and new efforts such as Google Play Protect to outright block software obtained outside the Google Play store,” an Epic Games spokesperson said in a statement. “Because of this, we’ve launched Fortnite for Android on the Google Play Store.”

Epic Games withholding Fortnite from the Play Store was a very clear threat to Google’s app profits, though Google argued that downloading Android software outside of the Play Store presented a clear security threat to users who could unknowingly download malware from less reputable sites.

Epic Games clearly isn’t happy with the roadblocks Google has put up to dissuade users from downloading software from the web as well as the blanket warnings Android delivers regardless of whether the publisher is considered a trusted one.

For now, it seems Google has maintained the upper hand though Epic Games clearly isn’t satisfied with their dealings with Google.

“We hope that Google will revise its policies and business dealings in the near future, so that all developers are free to reach and engage in commerce with customers on Android and in the Play Store through open services, including payment services, that can compete on a level playing field,” Epic Game’s statement further read.

We’ve reached out to Google for comment.

Astronauts may make a second home of space, but even they have a first time going up. NASA is hoping to better prepare its crews for the challenges of space by sending them on suborbital flights from the likes of Virgin Galactic and Blue Origin — suggesting a potentially huge new market for the nascent private spaceflight industry.

Speaking at the Next Generation Suborbital Researchers conference in March, NASA Administrator Jim Bridenstine explained that the agency was considering private carriers now mainly because previously, the possibility simply didn’t exist.

“That’s a capability we as a nation have not had until recently,” he said, in remarks reported by Space.com.

Indeed it is not entirely clear we have it even now. Virgin Galactic and Blue Origin have both demonstrated suborbital flights that have skimmed the very verge of space, but test flights and commercial flights to order are very different.

While Virgin is already selling tickets, there’s no date set for the first flight with passengers. That flight will likely be this year, but without a reliable schedule and record of successful missions it’s hard to say that the capability is anything but aspirational at present. That’s the nature of space travel — 99 percent of the way is still nowhere.

Still, it seems inevitable that Virgin, Blue, or another provider will, some time in the next few years, offer suborbital flights with space for payloads and passengers. That’s something NASA seems hot to take them up on.

It’s rather strange, but equally inescapable, that astronauts have to do all their training here on Earth. They can take do all the simulators, “vomit comet” flights, and pool training they like — but in the end, the only way to experience space is to go there.

Astronauts Bob Behnken and Doug Hurley, who will fly in the first Commercial Crew demo mission to the ISS, operate a simulator of the Crew Dragon capsule.

Until quite recently that meant getting on top of a hundred million dollar rocket and going up to the ISS, or in earlier days to the Moon in an orbiter or lander.

There’s very little one can do to prepare for that, but among those few things is going to space more cheaply and temporarily. That’s what suborbital flights make possible.

The rocket-powered ascent out of the atmosphere and resulting minutes of weightlessness are a suitable venue for training, testing, and other operations that might otherwise have had to take place in orbit. And that’s what NASA is hoping will take place — though no contracts have been signed just yet.

Although the first few suborbital flights from these providers were practically guaranteed to sell out, space tourism isn’t a proven industry and events like the present pandemic and inevitable economic downturn afterwards may in fact have a serious impact on such high-ticket items (or the ability to provide them). So the prospect of regular government contracts is almost certainly a huge relief to any company aiming to provide or support suborbital flights.

“This is a big shift for NASA, but it’s an important shift,” Bridenstine said. The shift is not simply relying more on private industry, which government programs have done lately, but using private flights as official training. He indicated that the flights would need to be extremely safe, though not quite to the same standards as flights to the ISS.

More training and testing, but on flights not actually run by NASA, would both increase preparedness for new missions, speed up readiness, and reduce complexity of existing programs that rely on NASA-flown missions for those capabilities. I’ve asked the agency for more information on this topic and will update the post if I hear back.

GM’s experiment with car-sharing is over. The automaker Tuesday said its Maven car-sharing service, which launched in 2016, will shut down for good.

Maven had paused service due to the COVID-19 pandemic. The company sent an email to customers Tuesday that after examining the business, the car-sharing industry and COVID-19, it decided to shutter the service permanently. The Verge was the first to report the story.

The car-sharing service has struggled for months and long before COVID-19 upended the “shared” mobility sector. Last year, Maven scaled back and stopped service in nearly half of the 17 North American cities in which it operated. Maven continued to operate in Detroit, Los Angeles, Washington, D.C. and Toronto. However, two programs within Maven, its consumer car-sharing and peer-to-peer service, also stopped in Washington D.C. Only a program directed at gig workers was still operational in that city.

GM confirmed to TechCrunch that it has started to wind down Maven. All assets and resources will be transferred to GM’s Global Innovation organization, as well as the larger enterprise, according to a GM spokesperson.

The company confirmed that all operations should be concluded by later this summer. Maven had already suspended its consumer car-sharing and a peer-to-peer service due to COVID-19. A separate program directed at gig economy workers has been “very limited and will continue to wind down,” a GM spokesperson said.

“We’ve gained extremely valuable insights from operating our own car-sharing business,” Pamela Fletcher, GM’s vice president of global innovation, said in an emailed statement. “Our learnings and developments from Maven will go on to benefit and accelerate the growth of other areas of GM business.”

Below is a screenshot of the email sent Tuesday morning to Maven customers.

Image Credits: Screenshot/Maven email

The company doesn’t have plans to re-enter the car-sharing business. The company told TechCrunch that it “will take the great insights we’ve gained from Maven and leverage its car sharing technology to provide new GM fleet services, and explore other new service offerings.”

Maven was designed to bring and expand several of GM’s existing test programs under one brand. At the time of its launch, Maven was essentially three car-sharing services in one that included a city-based service that rented GM vehicles by the hour through an app and another for urban apartment dwellers in Chicago and New York.

Maven developed and launched a smartphone app, which was used by customers to search for and reserve a vehicle, unlock the door and remotely start, cool or heat the car. 

It was an important launch for GM and its Chairman and CEO Mary Barra, who used a study commissioned in the wake of the ignition switch engineering scandal to accelerate her plans to transform the culture and operations at the automaker. Dozens of executives participated in transformational leaders programs; Maven was one of the fruits that spun out of that.

A wave of other initiative and investments were announced in 2016 that showed GM’s shift in interest towards unconventional transportation businesses that were adjacent to its core business of producing, selling and financing cars, trucks and SUVs to consumers. That same year,

But Maven never quite settled on one business model. The car-sharing service continued to evolve, leaving and entering cities or tweaking where it offered certain programs. For instance, the company launched in 2017 Maven Reserve in Los Angeles and San Francisco to allow customers to rent its GM-branded vehicles for a month at a time. It also started Maven Gig in hopes of tapping into a growing demand from rideshare and delivery app drivers.

Maven then launched a service in summer 2018 in Chicago, Detroit and Ann Arbor that let owners rent out their personal GM-branded vehicles through its Maven car-sharing platform. The peer-to-peer car rental service was designed to operate in a similar fashion to how Turo and Getaround work.

The service’s demise seemed to begin after the company lost its CEO Julia Steyn in January 2019. It scaled back a few months later and was only operating in a handful of cities up until the COVID-19 pandemic put further pressure on the business.

BoostVC has been an accelerator known for its unconventional bets, it’s chased — and is still chasing — trends like blockchain and AR/VR that other investors have long sworn off. Its accelerator program has been as classical as it comes, offering perks like office space and living quarters for a relatively tight group of admitted founders.

With the pandemic crisis, BoostVC founder Adam Draper has had to make some adjustments to his latest batch, including a digital demo day taking place next week. Venture capital firms have proven reticent in the past to invest in founders they hadn’t met in person, but the quarantine has forced early stage investors to step out of comfort zones. Draper hopes that a Zoom-based Demo Day focused on allowing the 13 companies to present and then break off into their own smaller Q&A subgroups will allow investors to feel more comfortable backing the startups remotely.

BoostVC’s digital demo day takes place on April 28.

A smaller group of 13 startups will certainly make logistics easier for Boost, Y Combinator’s latest batch tapped out at 240 companies. The current class is BoostVC’s smallest in recent memory, the result of a format change last year that boosted individual investments to $500K per startup (for a 15% equity chunk) and shrunk the total pool. The change was an attempt by Draper and his team to differentiate the accelerator’s offering and attract founders solving more capital-intensive problems.

The pandemic threw them a curveball, but Draper hopes their tighter group can sell investors next week.

“I can’t say it’s all gone according to plan, we’re a very physical accelerator and we’ve had to completely adapt,” Draper says. “But we’ve gotten the value of getting to see how Y Combinator and 500 Startups did their demo days.”

The latest group includes plenty of bets in Boost’s familiar zones — blockchain, AR/VR, hardware and logistics.  Boost has invested more than $50 million in startups since its founding in 2013.

An ebullient Draper tells TechCrunch that BoostVC has just closed a $40 million fund — its fourth and largest to date — to bankroll future batches of startups going through its accelerator. The new fund is backed by Devonshire Investors and ECMC. The firm’s last fund, which clocked in at around $38 million, closed in 2018.

Draper is hopeful that Boost’s next “tribe” can shift back to its in-person format when in kicks off in late August, if not, he hopes his team can apply what they’ve learned to help incubate a new class of startups and ready them for an uncertain market.

Seattle-based Pulumi has quickly made a name for itself as a modern platform that lets developers specify their infrastructure through writing code in their preferred programming language — and not YAML. With the launch of Pulumi 2.0, those languages now include JavaScript, TypeScript, Go and .NET, in addition to its original support for Python. It’s also now extending its reach beyond its core infrastructure features to include deeper support for policy enforcement, testing and more.

As the company also today announced, it now has over 10,000 users and more than 100 paying customers. With that, it’s seeing a 10x increase in its year-over-year annual run rate, though without knowing the exact numbers, it’s obviously hard to know what exactly to make of that number. Current customers include the likes of Cockroach Labs, Mercedes-Benz and Tableau .

When the company first launched, its messaging was very much around containers and serverless. But as Pulumi founder and CEO Joe Duffy told me, today the company is often directly engaging with infrastructure teams that are building the platforms for the engineers in their respective companies.

As for Pulumi 2.0, Duffy says that “this is really taking the original Pulumi vision of infrastructure as code — using your favorite language — and augmenting it with what we’re calling superpowers.” That includes expanding the product’s overall capabilities from infrastructure provisioning to the adjacent problem spaces. That includes continuous delivery, but also policy-as-code. This extends the original Pulumi vision beyond just infrastructure but now also lets developers encapsulate their various infrastructure policies as code, as well.

Another area is testing. Because Pulumi allows developers to use “real” programming languages, they can also use the same testing techniques they are used to from the application development world to test the code they use to build their underlying infrastructure and catch mistakes before they go into production. And with all of that, developers can also use all of the usual tools they use to write code for defining the infrastructure that this code will then run on.

“The underlying philosophy is taking our heritage of using the best of what we know and love about programming languages — and really applying that to the entire spectrum of challenges people face when it comes to cloud infrastructure, from development to infrastructure teams to security engineers, really helping the entire organization be more productive working together,” said Duffy. “I think that’s the key: moving from infrastructure provisioning to something that works for the whole organization.”

Duffy also highlighted that many of the company’s larger enterprise users are relying on Pulumi to encode their own internal architectures as code and then roll them out across the company.

“We still embrace what makes each of the clouds special. AWS, Azure, Google Cloud and Kubernetes,” Duffy said. “We’re not trying to be a PaaS that abstracts over all. We’re just helping to be the consistent workflow across the entire team to help people adopt the modern approaches.”