Year: 2020

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

This morning we’re talking about churn — the bane of software-as-a-service (SaaS) companies big and small — in the new world we find ourselves in. SaaS companies, from startups to huge public firms, have built their businesses under strong economic conditions. So what happens to the industry now that the global economy has hit pause, layoffs are piling up across national economies and venture capital is slowing?

It’s easy to say that churn will go up; some customers will close, cancelling contracts (boosting gross churn) while other customers will slow software budget growth (limiting net retention). But how bad will things really get? To get a handle on what’s next for churn, I spoke to the CEO of CrowdStrike, a public SaaS company; the CEO Gainsight, a quickly-growing private SaaS company who recently ran a survey on the topic; and Denis Barrier. a partner at venture capital firm Cathay Innovation. We also have fresh data to explore from Cledara, a startup that helps other companies control their software spend.

Let’s go!

Churn

TechCrunch Disrupt San Francisco is known around the world as the place where the early-stage startup community gathers to learn and launch, connect and collaborate. We know COVID-19 has created challenges, but Disrupt SF is still on schedule (keep tabs on our updates here). Like startup founders everywhere, we quickly learn where, when and how to pivot. Case in point, check out our new Disrupt Digital Pass option.

In the current climate, it’s even more important to get the focus of investors and customers on your startup. And your chance to do just that goes down on September 14-16, 2020. But did you know there’s a way that founders can extract even more opportunity from their Disrupt experience — for free?

Apply to be a TC Top Pick. It doesn’t cost anything to apply or participate, and you’re welcome to apply if your early-stage startup falls into one of these categories:

Artificial Intelligence + Machine Learning, Biotech + Healthtech, Enterprise + SaaS, Fintech, Mobility, Retail + E-commerce, Robotics, Hardware + IOT, Security + Privacy, Social Impact + Education, and Space.

TechCrunch editors will review every application and select up to three startups they feel represent the very best in each category. Check out who we chose as TC Top Picks at Disrupt SF 2019.

Making the cut won’t be easy, but you have nothing to lose and a whole lot to gain. For starters, every TC Top Pick startup receives a free Startup Alley Exhibitor Package and a VIP experience. You’ll exhibit for one full day in a prime, dedicated space in Startup Alley, our expo floor. Plus, you receive three complimentary Founder passes — you and your team can experience more of Disrupt’s extensive programming and networking opportunities.

Keep in mind that everyone at Disrupt wants to know who made the coveted Top Picks list. You’ll stand in a bright, metaphorical spotlight and draw attention from ardent investors, media looking for great stories, potential customers, could-be collaborators and, well, you just don’t know where a connection can lead you.

Don’t just take our word for it. Take it from one of your own.

“Earning a TC Top Pick is an awesome experience for an early-stage startup. As we grow bigger, we look forward to saying that our roots go back to TechCrunch Disrupt. Companies like Trello and Dropbox share the Disrupt pedigree. It’s a big deal, and I feel privileged to be part of that group.” — Joel Neidig, founder of SIMBA Chain.

We haven’t mentioned your live interview yet. Say what? Yup. A TechCrunch editor interviews every Top Pick — live on the Showcase Stage. We’ll record each interview, edit the video and promote it across our social media platforms. It’ll be yours to use as an impressive conversation starter with investors and customers. Again, take it from Joel Neidig.

“Our live interview with the TechCrunch editor was one of the best Top Pick perks. It’s an awesome long-term marketing tool.”

If you want to showcase your early-stage startup to the industry’s most influential movers, shakers, thinkers and makers, apply to be a TC Top Pick at TechCrunch Disrupt San Francisco 2020. You have nothing to lose — take your shot and buckle up for the ride of your startup life.

TechCrunch is mindful of the COVID-19 issue and its impact on live events. You can follow our updates here.

Is your company interested in sponsoring or exhibiting at Disrupt San Francisco 2020? Contact our sponsorship sales team by filling out this form.

It’s highly unlikely that the current coronavirus crisis will neatly and fully “solved” by any one endeavor or solution, which makes news studies like one involving startup WHOOP’s wrist-worn fitness and health tracking wearable all the more important. The study, conducted by the Central Queensland University Australia (CQUniversity), in partnership with the Cleveland Clinic, will employ data collected WHOOP’s hardware with hundreds of volunteers who have self-identified as having contracted COVID-19 to study changes in their respiratory behavior over time.

The data to be used for this study has been collected from WHOOP’s 3.0 hardware, which has also recently been validated by a University of Arizona external study conducted specifically to determine the accuracy of its measurement of respiratory rates during sleep, which the device uses to provide quality of sleep scores to its users. That study showed it to be among the most accurate measurement tools for respiratory rate short of invasive procedures, which is what has led researchers behind this new study to hypothesize that it could be valuable as a sort of early-warning system for detecting signs of abnormal respiratory behavior in COVID-19 patients before those symptoms are detectable by other means.

The WHOOP team says that the respiratory rate its hardware reports very rarely deviates from an established individual baseline, and that when it does so, it’s usually due to either one of two causes: environmental factors, like unusually high temperatures or significant differences in oxygen concentration, or something happening within the body, like a lower-respiratory tract infection.

COVID-19 is specifically a lower-respiratory tract infection, unlike the flue or the cold, which are upper-respiratory issues. That means there’s a strong correlation between rate changes due to lower-respiratory tract issues not accounted by environmental problems (which are relatively easy to cancel out) and instances of COVID-19. And since the WHOOP wearable is designed to look for deviations as a sign of distress, among the other sings it monitors, it could notice changes to respiratory rates relative to baselines before an individual becomes aware of any significant shortness of breath themselves.

This is a study, so at this point that’s just a hypothesis, and will need to be backed up by data. The team behind it says it should take around six weeks, and there are an “initial several hundred self-reported COVID-19 cases” already present in the app from which it will begin, with a target of enrolling at least 500 individuals with positive COVID-19 test results. There are also other investigations underway to see if wearables that monitor a user’s health and fitness can provide early warning systems for potential COVID-19 cases, including a study being conducted by UCSF using the Oura Ring.

Unlike with previous pandemics, the current coronavirus crisis comes at a time when we’re increasingly used to taking data-driven approaches to solving challenges, and when we also have a lot of self-quantifying health devices in circulation. Those could help us get a better grip on assessing the spread, as well as trends related to how it circulates and ebbs/grows within a population.

In just a few weeks, homeschooling has gone from a rarity to a baseline in homes across the country.

Jonah Liss, a 16-year-old student at International Academy of Bloomfield Hills in Michigan, was sent home out of precaution due to the coronavirus outbreak.

While the transition has been okay for Liss, who has used some of the extra time to create a service to help those impacted by COVID-19, he recognized that other students are experiencing some pain points; not everyone has access to the same technology outside of school, so they can’t complete assignments. The school, he says, isn’t giving tests because they have no way to prove students aren’t cheating. And learning doesn’t feel personalized.

“It can be difficult to learn in an environment where there is less structure, direct instruction and ability to ask as many questions as possible,” Liss said. His school is placing emphasis on Google Classroom, Hangouts, Zoom and Khan Academy — all currently free for schools that have been shut down.

Edtech companies are seeing a usage surge because they’re offering services for free or at discounted rates to schools that are scrambling to switch to remote learning. But when students return to campus, many of the hurdles to adopting education technology will persist.

And as edtech startups find their time in the spotlight, these emerging challenges must be addressed before companies can truly convert those free customers into paying ones.

Zoom’s troubled year just got worse.

Now that a large portion of the world is working from home to ride out the coronavirus pandemic, Zoom’s popularity has rocketed, but also has led to an increased focus on the company’s security practices and privacy promises. Hot on the heels of two security researchers finding a Zoom bug that can be abused to steal Windows passwords, another security researcher found two new bugs that can be used to take over a Zoom user’s Mac, including tapping into the webcam and microphone.

Patrick Wardle, a former NSA hacker and now principle security researcher at Jamf, dropped the two previously undisclosed flaws on his blog Wednesday, which he shared with TechCrunch.

The two bugs, Wardle said, can be launched by a local attacker — that’s where someone has physical control of a vulnerable computer. Once exploited, the attacker can gain and maintain persistent access to the innards of a victim’s computer, allowing them to install malware or spyware.

Wardle’s first bug piggybacks off a previous finding. Zoom uses a “shady” technique — one that’s also used by Mac malware — to install the Mac app without user interaction. Wardle found that a local attacker with low-level user privileges can inject the Zoom installer with malicious code to obtain the highest level of user privileges, known as “root.”

Those root-level user privileges mean the attacker can access the underlying macOS operating system, which are typically off-limits to most users, making it easier to run malware or spyware without the user noticing.

The second bug exploits a flaw in how Zoom handles the webcam and microphone on Macs. Zoom, like any app that needs the webcam and microphone, first requires consent from the user. But Wardle said an attacker can inject malicious code into Zoom to trick it into giving the attacker the same access to the webcam and microphone that Zoom already has. Once Wardle tricked Zoom into loading his malicious code, the code will “automatically inherit” any or all of Zoom’s access rights, he said — and that includes Zoom’s access to the webcam and microphone.

“No additional prompts will be displayed, and the injected code was able to arbitrarily record audio and video,” wrote Wardle.

Because Wardle dropped detail of the vulnerabilities on his blog, Zoom has not yet provided a fix. Zoom also did not respond to TechCrunch’s request for comment.

In the meanwhile, Wardle said, “if you care about your security and privacy, perhaps stop using Zoom.”

The Center for Disease Control (CDC) guidelines and the COVID-19 pandemic has surged event cancellations across the country. Tech workforces have found ways to stay productive: back-to-back Zoom calls, work-from-home happy hours and more Twitter threads than anyone asked for.

But Jason Craparo, the founder of events platform Hio, wants to put organic, face-to-face networking back on your calendar — in a socially distant, yet compliant, way.

Today, Hio launched a virtual lounge and a Network Now feature to replicate by-proximity networking. Using your iPhone, you can use Hio to see professionals nearby that are currently ready to, wait for it, hit it off. Then you can slide to their profile, ask if they want to do a 1:1 video chat and share information.

“Work from home doesn’t mean your results stop,” Craparo said. “People are being held accountable. We wanted to get this out so that the salespeople, entrepreneurs, small business owners and the like can basically get out to events virtually connected with people and meet their sales quotas and still do business.”

Network Now is a premium feature for which Hio usually charges $10 a month, but in light of all the canceled conferences, Craparo says it is free for the next three months.

The company also rolled out a virtual lounge. It’s similar to Network Now, except it is specific to events that have gone remote. Think a focused lounge produced by event organizers to help event participants meet each other.

From diners and drive-ins to startupland

For Craparo, the intricacies of sales and small business ownership were a focus long before Hio.
The founder moved to San Diego to attend college, but he instead worked his way up to owner at Sonic Drive-Ins, a fast food chain. He then went to Juma Ventures, a company that employs inner city kids at concession stands at stadiums and did volunteer work across San Diego. He then earned his MBA from Babson, where he received a $275,000 check at a startup competition for his Hio prototype.

Hio initially launched as an app that allowed users to share their chosen social media handles with others. Today, it connects people to events and professionals nearby.

Users sign up and create a profile with their bio, interests and an elevator pitch in the form of a short video. The idea is that people can then attend a virtual event, and meet others through the app putting their profile foot forward. Beyond video chatting, users can send follow-up emails or direct messages. People also can set reminders to contact said individual once a week, month, quarter or never.

Craparo claims that Eventbrite isn’t a competitor, but instead a partner: Hio integrates with the ticket-selling and event registration company to provide independent organizers with a mobile app to go along with their events as an added networking tool.

Craparo also integrates with Meetup, which was acquired on Monday from WeWork by a group of investors, including AlleyCorp.

The novel coronavirus outbreak and health concerns have led to a rapid adoption of online-only groups. In fact, at the time of publication, Eventbrite’s front page touts online events.

Hio has the potential to serve Eventbrite and Meetup customers that are now in an online-only world and want an extra layer of communication between event participants. Of course, for now shelter in place and lockdowns are mandated by governments around the world. But, if Hio and other remote meetup services are seamless and friendly enough, virtual networking could stay part of our culture long after the pandemic is controlled.

Hio’s more direct competitors are services like Bumble for business, which is an offshoot of the popular dating app into a professional connection network. BumbleBizz lets you swipe through professionals near you. Hio wants to touch upon that same organic discovery process, but have control of more parts of the networking experience: from pre and post-communication to live networking opportunities and messaging.

Craparo says that dating isn’t a focus for Hio right now, but he noted that the lines between work and personal life feel blurry (especially these days). He won’t be surprised if some personal relationships develop.

Prior to this announcement, Hio already landed a few big clients, like New York Tech Meetup, a 200-person meetup that happens monthly.

“Ticket services only know how many tickets they sold,” Craparo said. “We can tell them how many people physically showed up or virtually showed up, how many connections were made, how many pieces of contact information were shared, what the most commonly shared item was, or on average how many people each person met.”

Hio originally took seven months to hit 1,000 events. In the past three weeks alone, Hio has helped with 1,200 events. The rapid change illustrates that Hio is filling a gap for professionals that want to be connected during a time of isolation.

Addionics, an Israeli/U.K. startup that is developed next-generation rechargeable batteries for electric vehicles and other applications, has raised $6 million in funding. The round is led by Next Gear Ventures, and includes a $2.5 million grant as part of the European Union’s Horizon2020 innovation competition.

Founded by former Imperial College London academics, Addionics has created what it claims are improved rechargeable batteries through a redesign of chargeable battery architecture. It has developed a “patent-protected” and scalable 3D metal fabrication method that are said to enhance car battery performance, increase mileage and safety, and reduce cost and charging time.

Specifically, this new so-called “smart 3D structure” minimises internal resistance and improves the “mechanical longevity, thermal stability and other fundamental limitations and degradation factors” in standard batteries, says Addionics.

It also says its approach is different to other companies that are trying to improve batteries, which tend to focus on chemistry rather than on physics. Addionics’ chemistry agnostic approach means that it can still benefit from advances in chemistry, while bringing something additional to the table.

Addionics CTO Dr. Vladimir Yufit explains in a statement: “We are agnostic to the battery chemistry. Therefore, we can take existing or future batteries and enhance their performance by our smart 3D components. No matter what chemistry technology will win the electrification race, we will improve it even more”.

Or to put it more colourfully, Yufit says Addionics is “betting on the race, and not on the horse”.

To that end, the company is initially targeting the automotive market but also sees its technology finding a home in other products such as consumer electronics, medical devices, grid energy storage, drones, and more.

In terms of commercial traction, it’s still early days. However, Addionics says it is currently working with an unnamed tier-1 American automotive company on a proof-of-concept design and testing Addionics cells in vehicles.

Dr. Moshiel Biton, Addionics CEO, says that the goal is to have 3-4 major collaborations with “world-leading OEMs” over the next year.

The Los Angeles-based venture capital studio focused on blockchain and fintech startups which longtime venture investor Tim Draper now calls home has added a new venture partner to its team.

Draper Goren Holm, the firm Draper manages alongside co-founders Alon Goren and Josef Holm said Rodney Sampson has joined the crew as a venture partner.

Sampson previously founded Multicast Media Technologies, which was acquired for $24 million back in 2010 and was a partner at TechSquare Labs, which has a portfolio valued at over $1.5 billion.

Currently serving as a non-resident senior fellow at the Brookings Institution, Sampson was brought on by the new firm to work on diversifying deal flow.

“Rodney will play a key contribution to Draper Goren Holm’s strategy to diversify our deal flow. We are excited to have him on board as he brings the grit, deep industry insight, and entrepreneurial spirit we need to build the next generation blockchain hub in Los Angeles and beyond,” said Alon Goren, in a statement.

The relationship between Sampson, Goren and Holm dates back nearly a decade, when the three men met at a crowdfunding event in Las Vegas.

“I couldn’t be more excited to join their team to bring the future of blockchain technologies and startup to market; and as a platform for equity as we work to solve our planet and society’s hardest challenges,” said Sampson in a statement. 

 

Development of artificial intelligence agents tends to frequently be measured by their performance in games, but there’s a good reason for that: Games tend to offer a wide proficiency curve, in terms of being relatively simple to grasp the basics, but difficult to master, and they almost always have a built-in scoring system to evaluate performance. DeepMind’s agents have tackled board game Go, as well as real-time strategy video game StarCraft – but the Alphabet company’s most recent feat is Agent57, a learning agent that can beat the average human on each of 57 Atari games with a wide range of difficulty, characteristics and gameplay styles.

Being better than humans at 57 Atari games may seem like an odd benchmark against which to measure the performance of a deep learning agent, but it’s actually a standard that goes all the way back to 2012, with a selection of Atari classics including Pitfall, Solaris, Montezuma’s Revenge and many others. Taken together, these games represent a broad range of difficulty levels, as well as requiring a range of different strategies in order to achieve success.

That’s a great type of challenge for creating a deep learning agent because the goal is not to build something that can determine one effective strategy that maximizes your chances of success every time you play a game – instead, the reason researchers build these agents and set them to these tasks at all is to develop something that can learn across multiple and shifting scenarios and conditions, with the long-term aim of building a learning agent that approaches general AI – or AI that is more human in terms of being able to apply its intelligence to any problem put before it, including challenges it’s never encountered before.

DeepMind’s Agent57 is remarkable because it performs better than human players on each of the 57 games in the Atari57 set – previous agents have been able to be better than human players on average – but that’s because they were extremely good at some of the simpler games that basically just worked via a simple action-reward loop, but terrible at games that required more advanced play, including long-term exploration and memory, like Montezuma’s Revenge.

The DeepMind team addressed this by building a distributed agent with different computers tackling different aspects of the problem, with some tuned to focus on novelty rewards (encountering things they haven’t encountered before), with both short- and long-term time horizons for when the novelty value resets. Others sought out more simple exploits, figuring out which repeated pattern provided the biggest reward, and then all the results are combined and managed by an agent equipped with a meta-controller that allows it to weight the costs and benefits of different approaches based on which game it encounters.

In the end, Agent57 is an accomplishment, but the team says it can stand to be improved in a few different ways. First, it’s incredibly computationally expensive to run, so they will seek to streamline that. Second, it’s actually not as good at some of the simpler games as some simpler agents – even though it excels at the the top 5 games in terms of challenge to previous intelligent agents. The team says it has ideas for how to make it even better at the simpler games that other, less sophisticated agents, are even better at.

Spotify and Warner Music Group have renewed their global licensing partnership, the two said on Wednesday, confirming that the giant music label’s songs will now be available on the Sweden-headquartered firm’s platform in India. 

In a joint statement, the two giants said, “Spotify and Warner Music Group are pleased to announce a renewed global licensing partnership. This expanded deal covers countries where Spotify is available today, as well as additional markets. The two companies look forward to collaborating on impactful global initiatives for Warner artists and songwriters, and working together to grow the music industry over the long term.”

A Spotify spokesperson confirmed to TechCrunch that the two companies have renewed their global licensing deal.

The move comes months after Spotify signed a licensing agreement with Warner Music Group’s music publish arm Warner Chappell in India to put an end to their months-long legal battle.

Warner Music, one of the world’s top three music labels, had sued Spotify days before the music streaming service was to launch in India, one of the world’s biggest entertainment markets. Spotify argued that it was using an Indian rule that permits radio stations to offer songs from Chappell Music.

Today’s announcement will result in thousands of songs from artists such as Bruno Mars, Ed Sheeran and Cardi B — who are represented by Warner Music — to be available for the first time to Spotify users and subscribers in India.

More to follow…