Year: 2021

The days of a scrolling to the end of your Instagram feed look to be coming to an end. After adding algorithmic suggestions to the bottom of the app last year, Instagram is running a test that would splice more recommended posts from accounts you don’t follow into the feed with those you do.

In the next few days, the company will begin testing an expansion of “Suggested Posts” which would sprinkle that content through the regular feed. As it stands now, Suggested Posts appear at the bottom of Instagram after you’ve scrolled through all of the content from people you follow and hit the “You’re all caught up” message that the app implemented in 2018. Depending on how many accounts you follow, it’s possible to not run into that message or Instagram’s recommendations very often, if at all.

In addition to boosting the prominence of Suggested Posts, Instagram will test an option that lets users “snooze” the feature, removing it from the feed for 30 days. Anyone in the test will be able to offer feedback when a specific post doesn’t interest them, but it sounds like you won’t be able to disable Suggested Posts in the feed in a permanent way.

The Suggested Posts expansion will be accompanied by a way for users to shape what they see through managing their interests — stuff like cats, makeup or basketball. If you’ve seen enough cats, you can toggle that interest off or tell Instagram that you never wanted to see those damn cats to begin with when it shows you the next one.

A Facebook spokesperson described the expansion of Suggested Posts to TechCrunch as an “extension” of the Instagram feed, noting that the ratio of these algorithmic recommendations to posts from followed accounts will be variable based on how someone uses the app.

The test will roll out to a small number of users in English-speaking countries only, though the company declined to specify how many accounts will be involved.

The experiment might not make it into the final product, but from the way the winds over at Facebook have been blowing lately it looks pretty likely. Like we mentioned, Instagram and parent company Facebook introduced some tools to give people more control over their own behavior on the notoriously addictive-by-design apps back in 2018, including the “You’re all caught up” message and a way to track time spent.

Those tools weren’t a sea change for a company that generally values keeping people glued to its services (and its ads) at all costs, but they showed that Facebook was at least mildly self aware of the conversation about social media addiction sweeping through the tech world at the time.

In 2020, it sounds like Facebook is done humoring those concerns. The new way Suggested Posts work is just a test for now, but mixing algorithmic suggestions into the feed with posts from accounts you follow would be a pretty big change to the core way the app works. As it stands, if people want a truly endless Instagram experience they could turn to the Explore tab or scroll past the “caught up” message. Many doubtless did to stave off boredom, to the likely detriment of their mental health.

But under the test, it will be less possible to use Instagram to only keep up with just the accounts that you’ve got a personal interest in, whether they’re friends, local businesses or influencers of your choosing. Instagram wants to inject more of what it wants you to see into that experience, or what the company believes you’d want to see but you just don’t know it yet.

The end result might not be that noticeable for people who follow huge swaths of accounts already and rarely meet the end of their feed, but it strays even further from the original product — a distant memory at this point — while giving Instagram a way to keep people on the app for longer while serving them more ads.

Five-year old self-driving truck startup Embark Trucks Inc. said Wednesday it would merge with special purpose acquisition company Northern Genesis Acquisition Corp. II in a deal valued at $5.2 billion.

Embark takes a different approach to autonomous trucking: As opposed to manufacturing and operating a fleet of trucks themselves, which is the route rival TuSimple is taking, Embark offers its AV software as a service. Carriers and fleets can pay a per-mile subscription fee to access it. The company includes carriers Mesilla Valley Transportation and Bison Transport, and companies Anheuser-Busch InBev and HP Inc., amongst its partners.

Carriers purchase trucks with compatible hardware directly from OEMs, so Embark says it has designed its system to be “platform agnostic” across multiple components and manufacturers. The company says its software can simulate up to 1,200 60-second scenarios per second, and make adaptive predictions using those scenarios for the behaviour of other vehicles on the road.

Embark said in an investor presentation for the SPAC deal that it was targeting “driver-out,” or operating on roads without a safety driver, by 2023 and launching at a commercial scale across the American sunbelt the following year. However, Embark still has technical milestones yet to achieve, noting in the presentation that the software still needs to accomplish actions such as interactions with emergency vehicles, and responding to blown tires and other mechanical failures.

Upon closing, the transaction will inject Embark with around $615 million in gross cash proceeds, including $200 million in private investment in public equity (PIPE) funding from investors including CPP Investments, Knight-Swift Transportation, Mubadala Capital, Sequoia Capital and Tiger Global Management.

Embark also said former Department of Transportation Secretary Elaine Chao was joining its board, likely a boon for a company operating in the autonomous trucking industry, which is still only authorized for commercial deployment in 24 states.

Embark was founded in 2016 by CEO Alex Rodrigues and CTO Brandon Moak, who worked together on autonomous driving while completing engineering degrees from Canada’s University of Waterloo. After launching out of Y Combinator, the company quickly went on to raise $117 million in total funding, including a $30 million Series B led by Sequoia Capital and a $70 million Series C led by Tiger Global Management.

The transaction is anticipated to close in the second half of 2021. The company joins competitor AV trucking developer Plus in going public via a SPAC merger. TuSimple opted for a traditional initial public offering in March.

Inspired by this Hunter Walk tweet and the ensuing chatter.

TechCrunch recently sat down with Leading Investor from Well Known Firm to chat about their investing theses, the state of today’s venture capital market, and why prices are so high for early-stage startups.

We’ve been hunting down Leading Investor for some time, so it’s great to get their thoughts on today’s startup market and the larger venture capital industry. Let’s have some fun!

TechCrunch: To kick things off, the early-stage startup market has been super active lately. How has the accelerating cadence of deal-making impacted how you and Well Known Firm invest?

Leading Investor: We’ve made no changes to our process. Everyone who has is weak of conviction and poor of wallet.

TC: Got it, got it. The rapid-fire, early-stage market, though, does seem expensive at times. At least compared to historical norms. Are you worried about overpaying for nascent startup shares?

LI: Every deal that we’ve been a part of has been fairly priced. Every deal that we didn’t win was overpriced. Every deal we didn’t see was stupid.

TC: Cool. Sure. Let’s talk about the technology market more generally. Where are you seeing the most startup opportunity? Or perhaps more simply, where are you paying the most attention today for future deals?

LI: Please consult our portfolio page. Here is a name of a startup we’ve backed. Here’s another. Those are the hot areas and the hot companies. All other areas are ice-cold, overpriced, and generally over-hyped.

TC: So —

LI: Let me cut you off there to name drop Eric from Zoom, with whom I have a great relationship. Salesforce. Snowflake. On-demand pricing. Historical Twilio reference. Also have you read Recently Published Book? Someone gave me a copy and I read the dust cover. Books are good. I read them.

TC: Right. Turning to the venture capital market, how competitive is Well Known Firm these days? Other firms are offering more services in addition to capital than you are. Does that impact your win rate in competitive deals?

LI: Our firm’s services are real and impactful and accretive. Other VCs offer services but don’t deliver. You have to deliver. Delivery is key. We’re like the AWS of service delivery. Except free. We only demand the right to profit from founder success while enriching ourselves as the cost of our fine, free services.

TC: All right. Let’s talk about the exit market. We’ve seen a pretty active IPO market, and TechCrunch has heard that SPACs are getting incredibly frisky, even pinging Series B-funded companies in case they want to go public. What’s your take on that?

LI: Here’s a generic answer that doesn’t answer your question but ensures that my portfolio companies continue to receive all possible inbound in case we need to float a company that won’t make it as a venture-backed, private company. Public investors are dumb and will happily hold our bags. They are the valets of the investing world.

TC: Last question, how are returns at your firm? You’ve raised successively larger funds over the years. Is your IRR holding up as you’ve taken more capital under management?

LI: Recall that Well Known Firm invested in Very Old Company, so our returns have historically been strong. Regarding Every Deal Since Then, it’s a bit too soon to tell. But recall Very Old Company that did well. That’s how we do things at Well Known Firm.

TC: Sorry one more before we let you go. Your firm still only has male partners and nearly all of them are white. Why has progress been so slow in building a more diverse team at Well Known Firm?

LI: Sorry, I have a hard stop that started 15 second ago.

The notorious Clop ransomware operation appears to be back in business, just days after Ukrainian police arrested six alleged members of the gang.

Last week, a law enforcement operation conducted by the National Police of Ukraine along with officials from South Korea and the U.S. saw the arrest of multiple suspects believed to be linked to the Clop ransomware gang. It’s believed to be the first time a national law enforcement group carried out mass arrests involving a ransomware group.

The Ukrainian police also claimed at the time to have successfully shut down the server infrastructure used by the gang. But it doesn’t seem the operation was completely successful.

While the Clop operation fell silent following the arrests, the gang has this week published a fresh batch of confidential data which it claims to have stolen from two new victims — a farm equipment retailer and an architects office — on its dark web site, seen by TechCrunch.

If true — and neither of the alleged victims responded to TechCrunch’s request for comment — this would suggest that the ransomware gang remains active, despite last week’s first-of-its-kind law enforcement sting. This is likely because the suspects cuffed included only those who played a lesser role in the Clop operation. Cybersecurity firm Intel 471 said it believes that last week’s arrests targeted the money laundering portion of the operation, with core members of the gang not apprehended.

“We do not believe that any core actors behind Clop were apprehended,” the security company said. “The overall impact to Clop is expected to be minor although this law enforcement attention may result in the Clop brand getting abandoned as we’ve recently seen with other ransomware groups like DarkSide and Babuk.”

Clop appears to still be in business, but it remains to be seen how long the group will remain operational. Not only have law enforcement operations dealt numerous blows to ransomware groups this year, such as U.S. investigators’ recent recovery of millions in cryptocurrency they claim was paid in ransom to the Colonial Pipeline hackers, but Russia has this week confirmed it will begin to work with the U.S. to locate cybercriminals.

Russia has until now taken a hands-off approach when it comes to dealing with hackers. Reuters reported Wednesday that the head of the country’s Federal Security Service (FSB) Alexander Bortnikov was quoted as saying it will co-operate with U.S. authorities on future cybersecurity operations.

Intel 471 previously said that it does not believe the key members of Clop were arrested in last week’s operation because “they are probably living in Russia,” which has long provided safe harbor to cybercriminals by refusing to take action.

The Clop ransomware gang was first spotted in early 2019, and the group has since been linked to a number of high-profile attacks. These include the breach of U.S. pharmaceutical giant ExecuPharm in April 2020 and the recent data breach at Accellion, which saw hackers exploit flaws in the IT provider’s software to steal data from dozens of its customers including the University of Colorado and cloud security vendor Qualys.

Video game giant Electronic Arts is continuing to make M&A moves as it looks to bulk up its presence in the mobile gaming world.

Fresh off the $2.4 billion acquisition of Glu Mobile this past April, their biggest purchase to date, Electronic Arts announced Wednesday that they are buying Warner Bros. Games’ mobile gaming studio Playdemic for $1.4 billion in an all-cash deal. The Manchester studio is best known for its release “Golf Clash” which the studio boasts has more than 80 million downloads globally.

The rather ominously-named startup is being jettisoned to its new home ahead of the $43 billion WarnerMedia-Discovery deal where the rest of the Warner Bros. Games division will live post-merger.

Electronic Arts is the second-largest Western video games company with a market cap around $40 billion. Their success has largely come from desktop and console titles including titles in their most popular franchises like Battlefield, Star Wars and Titanfall. Mobile dominance hasn’t come easy to the company which has spent much of the past decade or so trying to keep pace with competitors like Activision Blizzard which struck gold with its 2016 King acquisition. 

Electronic Arts has been on a studio buying spree as of late — in 2021 they’ve announced three major acquisitions worth some $5 billion combined.

It’s become increasingly obvious over the last few years, as Vladimir Putin has tightened his grip on his country, that Russian entrepreneurs who want to engage properly with the rest of the world have had to leave their mother country. Gone are the days when a startup in Russia might attract attention from many Western investors. The same, alas, is true of Russian-speaking Belorussians, many of whom have left the country after brutal crackdowns there. Ukraine’s economy also remains sub-par due to the ongoing Russian aggression in the East of the country. So it’s fallen to enterprising Russian-speaking investors in and outside Russia to work out the best ways to harness the obvious talent out there.

Leta Capital makes a play of investing in Russian-speaking entrepreneurs based just about anywhere. It’s now launching its third and largest fund to date and says it will invest over $100 million in UK, European, and US-based growth-stage tech companies over the next three years. Its focus will be Seed/ Round A / Round B investments. It intends to invest in the range of $2-5 million and will be focused on software, IT, and internet technologies

The new fund will to hone in on East European and Russian-speaking entrepreneurs. Particularly those operating out of international hubs such as London and New York.

Leta’s founder and former tech entrepreneur Alexander Chachava says Russian-speaking startups based abroad are often – these days – over-looked and under-valued by Western VCs and investors, and I dare say he’s right. Prejudice isn’t just about skin color, as we all know.

Chachava says his fund has invested over $45 million to date since 2012, going into 30 technology companies including Synthesis AI, Unigine, InDriver, NovaKid (which I covered last year) and 365Scores.

Exits include the sale of Bright Box HK to Zurich Insurance Group in 2017, and WeWork’s acquisition of sales and marketing platform Unomy.

Chachava said: “While we are significantly broadening our geographic focus towards key global hubs, our strategy effectively remains the same: to identify exciting, high-potential technology start-ups and entrepreneurs, and support them in realizing their international ambitions.”

Chachava says his own research suggests there are in excess of 17,000 Russian-speaking and East European tech entrepreneurs and start-ups active in the UK, Europe, and US.

“Our analysis shows they continue to be undervalued and overlooked for funding, despite often generating significant cash when it comes to ARR. These entrepreneurs are some of the most dynamic and technically skilled in the world, and for investors, they represent a massive untapped opportunity.”

He has a point. Significant businesses such as Telegram, Revolut, TradingView, PandaDoc, and Preply were all started by Russian speakers who are emigres from their respective Russian-influenced countries.

Leta says its first “evergreen” fund of $15 million was fully deployed in early 2020, delivering a gross IRR of 27% per annum to investors. Its second $50 million fund had its first closing in September 2018 and has committed about 60% of its capital, says the company.

Leta will invest out of an entity in the Cayman Islands, but doesn’t plan to have an office right now, and nor will it need it to invest.

As Chachava told me over a Zoom call: “The last two years, we have not been not traveling too much, our work has been downgraded to Zoom calls. But before that, we spent a couple of months in the US, a couple of months in Western Europe. I was a frequent visitor to London but I don’t think we need space anymore in our modern world.”

Turning the page from the early-stage venture capital market to the super late-stage exit market, this morning we’re talking about endpoint security company SentinelOne’s IPO in the context of Sprinklr’s own. We’ll have more on the public offering market later today when Doximity and Confluent price their respective IPOs after the close of trading.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.

SentinelOne’s IPO, expected to price on June 29 and trade June 30, is a fascinating debut. Why? Because the company sports a combination of rapid growth and expanding losses that make it a good heat-check for the IPO market. Its debut will allow us to answer whether public investors still value growth above all else. And this week, the company gave us an early dataset regarding its market value in the form of an IPO price range. This means we can do some unpacking and thinking.

A reminder regarding why we dwell on the exit market for unicorns: We care because the value of late-stage startups when they reach a liquidity point helps set valuation comps for myriad smaller startups. Furthermore, the level of public-market enthusiasm for loss-making, growth-focused companies will determine the scale of returns for many a venture capitalist, founder, and early employee.

So, let’s talk about SentinelOne’s cybersecurity IPO price range; Sprinklr’s social-media software debut will play foil.

The price of growth

It can make good sense to pay up for a quickly growing company’s shares. This is why you may hear of a startup raising an early-stage round at a very high revenue multiple.

Why put a $50 million price tag on a startup that just crossed the $1 million annual recurring revenue (ARR) threshold? If it’s growing sufficiently quickly, the math can pencil out. If that startup was growing at 300% per year, say, the revenue multiple that you paid in the round valuing the startup at $50 million would fall sharply over the next year, at which point other investors would probably scramble to put more capital into the firm at a higher price.

Bingo! You just got a markup on your initial investment, and the company has found someone else to lead their next round at a higher price, giving it even more capital to keep its growth game going and make your early investment appear prescient. See? Venture capital is easy.¹

The same general idea applies to companies going public. Growth matters, and the more rapidly a company is adding revenue, the more money it will be worth because investors can anticipate its future scale (within reason). Some companies that sport quick growth can have other issues that impact their value. Extensive debt, for example, a history of uneven growth, or deteriorating economics could come into play. Or simply very high losses.

In 2019, LinkedIn’s engineering team announced DataHub, a metadata tool it had built to help it organise, search and discover insights from its vast data trove. In 2020, LinkedIn open sourced it. Now, a startup co-founded by one of the creators of DataHub and by a former senior engineer from Airbnb who helped build the latter company’s Dataportal, is coming out of stealth — backed by LinkedIn, among others — to usher the DataHub platform into its latest chapter: commercialization.

Acryl Data, as the company is called, is launching today with $9 million led by 8VC, with LinkedIn and Insight also participating, to help other companies use the tools for their own big data needs.

The impetus for Acryl Data comes from the salient fact that big data, and specifically being able to organize, understand, make the most of fragmented big data troves (with information coming from and living in multiple places, be it Snowflake, or Databricks, or Looker, or something else altogether), is a challenge that impacts any organization that has a large digital component in its operations. Traditionally, big tech companies have been some of the more innovative in addressing that issue, with a number of them also open sourcing their technology to make it usable by others.

The breakthrough for the founders of Acryl — discovered before they started the company, when they were still working at their respective big tech companies — was the realization that metadata held the key to organizing that big data information.

“The interesting part about metadata is actually that it has become a big data problem,” said Shirshanka Das, the LinkedIn alum who is CEO and co-founded the company with Swaroop Jagadish (the Airbnb alum who is CTO). “And so all of the data infrastructure DNA that we have, in terms of building large-scale data collections, streaming, indexing, searching — those all need metadata management solutions that can actually scale to the demands of the modern enterprise. That, I think, is really our secret sauce, that we’ve been able to build a metadata platform that takes in all the best practices of doing data infrastructure right, and applied it to doing metadata infrastructure.”

As an open source project, DataHub has picked up some significant traction. In addition to LinkedIn itself, Expedia, Saxo Bank, Klarna and many others are using the framework — essentially a generalized metadata search and discovery tool — to build their own metadata graph to connect their various data entities together. Altogether the project has racked up over 3,200 GitHub stars and has more than a 100 contributors.

Acryl Data, like other open source commercialization efforts, is setting out to build a toolset that will make that framework easier to scale and apply in more use cases, particularly at those companies that might lack the resources to build these implementations on their own. The first of these, it says, will be a data catalogue that is based on design learnings from Airbnb’s Dataportal. LinkedIn will be collaborating with Acryl Data, along with the wider open source community, on future products.

“LinkedIn’s unique view of the global economy provides us with the opportunity to improve economic outcomes for hundreds of millions of people around the world through data-driven insights and AI-powered products. To discover the right data, navigate the tens of thousands of derived datasets that our researchers and engineers use every day and manage them well, we rely on DataHub,” said Igor Perisic, Chief Data Officer at LinkedIn, in a statement. “We are excited to partner with Acryl Data to continue to advance DataHub with them.”

The opportunity is a big one. Collibra, a competitor in the same space, last year raised a round at a $2.3 billion valuation. Another, Alation, was valued at $1.2 billion earlier this month. But with a lot of space for innovation left, it’s interesting to see the people who built some of the most foundational tools in the space getting stuck in as entrepreneurs themselves to meet the challenge.

“The modern data stack needs a fundamental rethink in how metadata is managed,” said Insight Partners MD George Mathew, in a statement. “We believe a next-generation, real-time metadata platform is needed, and Acryl Data is the best team to lead this transformation based on their groundbreaking work with DataHub.”

Spin, Ford’s micromobility subsidiary, has launched its first custom designed and built electric scooter. The company says the S-100T scooters are its safest and longest lasting, two qualities that it hopes will attract the attention of cities as it aims its strategy at exclusive partnerships. 

When the company launches its service in Sacramento in July, it’ll deploy 25 of the new S-100T scooters along with its existing fleet. Spin hopes to scale to 350 S-100Ts by August and have more than a few thousand in the market by the end of the year, according to a spokesperson for the company. 

The S-100T joins Spin’s other vehicles, the original S-100, the three-wheeler S-200 and a new e-bike, which are manufactured in partnership with Segway-Ninebot and Okai. Spin will continue these partnerships in order to maintain a diverse fleet.

Spin has been working on its own scooter since 2019, when many of the scooters on the road came off-the-shelf and fell apart fast. A Los Angeles Times report found LA-area Bird scooters lasted only 126 days.

“At that time, the founders decided to really set a new standard not only for Spin itself, but also for the industry on what e-scooter durability should be,” Maxime Veron, VP of product at Spin, told TechCrunch. “So we really set out to create the toughest scooter out there, and that has been the north star for the design, build and testing of the S-100T.”

The ‘T’ stands for ‘tough,’ Veron added. 

“And we really tested it, tortured it, I should say, way beyond the expectation of the industry, and that’s why we expect it to last twice as long as other e-scooters,” he said.

Spin expects the S-100T to last over three years, compared to about 18 months for its S-100. The company reached this estimated lifespan after performing 400 different safety and durability tests, many of which involved pulverizing the vehicle and making it withstand temperatures from -4 degrees Fahrenheit to 149 degrees Fahrenheit.

Low life expectancy of scooters is one of the main reasons why it’s been so hard for companies to achieve profitability, which is why Spin is focusing its scooter design around durability. 

“Durability is the biggest lever we have in terms of profitability,” said Veron. “It’s gonna help both our bottom line in terms of making sure that the scooters last longer, and our top line of attracting customers who will love the ride.”

Veron says the S-100T is designed to be modular, with a single frame design that’s durable and allows for easy repairs and parts replacements, which should help with lifespan and sustainability of the vehicle. Perhaps one day, both the design and Spin’s ownership of the vehicles will also help the company come up with a good end-of-life strategy and design for recyclability. 

“Durability has been the number one, but we will be able over time to improve on all the key checkpoints including end-of-life because we control it all,” said Veron.

Thoughtful and high-quality product design is no longer optional. Gone are the days that a startup could launch with a bare-bones app or website. The demand side of the design equation has only grown — consumers are used to beautiful, intuitive products — while the supply side is struggling to keep up.

How are startups supposed to educate themselves in product design, hire the right people for those positions and think about product design as a core piece of their business?

A good starting point is an upcoming TC Early Stage: Marketing & Fundraising session with Scott Tong on July 8 & 9.

Tong was a principal designer at IDEO, a co-founder at IFTTT, head of product design at Pinterest, an EIR at IMO Ventures and is now a startup advisor at Design Fund.

When it comes to thoughtfully crafting products, and ensuring that those designs fit in line with the company’s broader short and long-term goals, there is perhaps no one better suited to show us how it’s done.

Tong joins a long list of experts in a variety of startup core competencies who will be speaking at TC Early Stage in July. That list includes Sequoia’s Mike Vernal (Product Market Fit Is All About Tempo), Coatue’s Caryn Marooney (formerly Facebook’s head of comms) and Superhuman’s Rahul Vohra (Growth Hacking). You can check out the agenda here.

The coolest part of TC Early Stage is that all sessions are designed with plenty of time for audience Q&A, so founders can get specific, tailored advice about their own business challenges.

These mini-bootcamps kick off in just two weeks so we hope you’ll be joining us at TC Early Stage— Grab your ticket here!