Year: 2021

This morning Affirm, the buy-now-pay-later financing startup, raised its IPO price range to $41 to $44 per share, up from a previous range of $33 to $38 per share.

The sharp repricing is steep in percentage terms, with the bottom end of Affirm’s range rising a little more than 24% and the top end gaining a smaller 16%.

For Affirm, the news means a larger IPO fundraising haul and a confirmation from public investors that its model, its economics, its business performance and its relationship with Peloton are incredibly valuable.

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

As TechCrunch wrote when Affirm first affixed a price range to its IPO, the fintech unicorn will be worth a multiple of its final private price. The company was valued at around $2.9 billion in a 2019 round and raised more capital at a higher $19.93 per-share price in September of 2020; the company’s IPO price range is now more than double what the company was worth less than half a year ago.

Let’s calculate Affirm’s new simple and diluted new valuation ranges, and contrast those with its recent revenues to get a handle regarding how close to software numbers the startup can get its revenue multiple.

Inside the math

Very little has changed in Affirm’s S-1 filings when it comes to share counts. Today’s new S-1/A filing does include a note concerning around 18,824 shares, but past that it appears that most things are holding steady.

Facebook has hired Roy Austin to become its first-ever VP of Civil Rights and Deputy General Counsel to create a new civil rights organization within the company, Facebook announced today. Austin is set to start on January 19 and will be based in Washington, DC.

Austin most recently served as a civil rights lawyer at Harris, Wiltshire & Grannis LLP. Prior to that, Austin co-authored a report on big data and civil rights and worked with President Barack Obama’s Task Force on 21st Century Policing.

“I am excited to join Facebook at this moment when there is a national and global awakening happening around civil rights,” Austin said in a statement.

Roy Austin, Facebook’s new VP of Civil Rights

“Technology plays a role in nearly every part of our lives, and it’s important that it be used to overcome the historic discrimination and hate which so many underrepresented groups have faced, rather than to exacerbate it. I could not pass up the opportunity to join a company whose products are used by so many and which impacts the civil rights and liberties of billions of people, in order to help steer a better way forward.”

It’s not clear what the goals or responsibilities of the civil rights organization within Facebook will be, but we’ve reached out to Facebook for more information. In the meantime, here’s what Facebook’s Chief General Counsel Jennifer Newstead said on the company blog.

I am delighted to welcome Roy to Facebook as our VP of Civil Rights. Roy has proved throughout his career that he is a passionate and principled advocate for civil rights — whether it is in the courtroom or the White House. I know he will bring the same wisdom, integrity and dedication to Facebook. It’s hard to imagine anyone better qualified to help us strengthen and advance civil rights on our platform and in our company.

In July, former ACLU director Laura W. Murphy released the results of the multiyear investigation and civil rights audit of Facebook. The report highlights some progress, such as Facebook changing its policy on discriminatory housing and employment ads, expanding its voter suppression policies and having more frequent meetings with civil rights leaders. But the auditors still raised a number of concerns, many of which pertained to the 2020 U.S. election and President Trump.

In light of a pro-Trump mob storming the U.S. Capitol last week, Facebook CEO Mark Zuckerberg blocked Trump from both Facebook and Instagram at least through the inauguration of President-elect Joe Biden.

Before the pandemic, edtech companies went decades without raising financing due to lack of interest from generalist venture capitalists. Now, more than a year since COVID-19 began, the sector is showing signs of maturation, from first profits to unicorns, potential IPOs and a rush of talent.

Momentum in mind, cross-border venture capital firm SuperCharger Ventures is launching a debut accelerator exclusively for early-stage edtech founders. The 12-week accelerator, which kicks off today, is being held virtually, with six startups in the debut cohort.

Interestingly, this isn’t the firms’ first time doing an accelerator. SuperCharger has led three cohorts of startups through a fintech-focused accelerator. The pivot from one booming category to another boils down to a simple dynamic, says SuperCharger Ventures co-founder Janos Barberis: banks.

“Banks just don’t have the space or the bandwidth to start dealing with innovation right now,” Barberis said. The co-founder thinks that COVID-19 created a supply and demand unevenness between fintech services and banks, and as many branches struggle to stay open, “the first thing banks cut is innovation.”

So, the firm is hopping to edtech, and taking a key lesson with it from its fintech experience: the importance of B2B and recurring revenue streams.

“The corporate angle? It’s sticky, healthy and revenue driven,” Barberis said. “It’s healthy income, and I think right now investors are willing to pay for that healthy income.”

Financially, Barberis’ argument is hard to disagree with. But when you look at some of the biggest edtech unicorns in this current moment, many are B2C, including Quizlet, Course Hero and ApplyBoard. It’s because in education, it sometimes can be easier to sell to the end-user than dealing with highly fragmented institutions — at least in the United States.

Still, B2B businesses have the biggest potential for reach, and we’re seeing consumer businesses turn COVID-19 demand into enterprise deals. There’s also hope to be found internationally, which can sometimes have a less fragmented market of institutions, says Barberis.

Beyond B2B sales, cohort startups must be focused on expanding into European and Asian markets.

Barberis sees opportunity in those markets, minus China, because both appear to have gaps in edtech. In Europe, he says there’s a high demand for corporate digital learning from universities, and in Asia, he thinks that investor education is necessary so bets can be placed in countries beyond simply China. On one end there is demand, and on the other end there is opportunity to generate demand.

He leaves out China from the Asian market expansion because he thinks that the country, like the United States, is too saturated with companies right now.

The programming fits the normal accelerator model, with information tailored explicitly to the world of education, such as how to partner with an education institution or shorten sales cycles (as so much of edtech B2B sales happens during the summer months).

The firm doesn’t give any capital, but takes between 1-2% of equity in return for its services, which it estimates cost between $75,000 and $100,000 in “value.” SuperCharger culminates with a Demo Day, and companies in aggregate plan to raise between $15 to $20 million in venture capital.

Other firms have similarly created accelerator programs during the pandemic to help with deal flow and stay competitive in the always-hot seed space, including NextView Ventures.

This isn’t SuperCharger Ventures’ first time doing an accelerator. The firm held three fintech-focused accelerators in the past, graduating 49 companies. The pivot from one booming sector to another comes from fintech saturation, says Barberis.

Out of 208 applications, SuperCharger landed on six companies in its debut cohort:

• Axon Park: Founded by Taylor Freeman, Axon Park is using virtual reality to virtually train workforces, such as teaching proper PPE procedures to healthcare professionals. It sells its programming to businesses, governments and universities.
• BSD Education: Co-founded by Christopher Geary and Nickey Khemchandani, the startup sells tech curriculum to schools teaching students between the ages of eight and 18. Beyond curriculum, the startup offers professional training development for teachers and a platform for online learning to be held.
• Dijital Kolej: Zeynep Dereli and Ferruh Gürtaş are betting on an online hybrid education model that balances asynchronous and synchronous learning throughout the day.
• Newcampus: The startup, launched by Will Fan and Fei Yao, describes itself as a gym membership for learning experiences. It’s part of the wave of companies focused on lifelong learning, with a focus on leadership information.
• Ringbeller: CJ Casciotta is working on a startup that uses interactive video lessons to teach kids soft skills, such as creativity and kindness.
• Roybi: Elnaz Sarraf and Ron Cheng are creating an AI-robot that teaches kids topics in STEM.

We’ve been covering Square Off for a couple of CESes now – ever since the connected chess startup competed in one of our pitch offs. The Mumbai-based startup has been rapidly iterating on technology that lets users play a physical chess game with opponents across the globe, including the arrival the new modular gaming system, Swap.

Today at CES, it’s announced the upcoming arrival of a new rollable system, adding a level of portability to its offering. Obviously you lose some of the magic here – the self-moving pieces have been sacrificed in order to bring a board that can be rolled up and stashed in a backpack for easier transport. That effect was a big part of what made the tech so eye-catching in the first place.

Image Credits: Square Off

The system will still take advantage of Square Off’s existing AI and connected technologies, allowing people to play globally against competitors. Between the continued inability to congregate in-person and the rise in interest in chess in the wake of Netflix’s wildly popular The Queen’s Gambit, this seems like an opportune time for the startup to launch a new product.

Unlike past offerings, the company won’t be going through a crowdfunding site to launch this one. Square Off expects to bring the product to market around March, priced at $199.

At CES 2021, BMW today provided us with a first glimpse of the future of its iDrive system, twenty years after it first launched in the 2001 7 Series. Today’s announcement mostly focuses on the past, with a look back at the history of BMW’s infotainment platform, but the company did provide a bit more context and images of the new system that will make its official debut on the sizable displays in its upcoming iX soon.

Obviously, we’re looking at a refreshed and more colorful design here. Based on what we can glance from the materials that BMW did make available, current BMW drivers shouldn’t have too high a learning curve as the overall layout still looks familiar.

Despite the addition of BMW’s own personal voice assistant and gestures in recent updates, the iDrive knob in the center console isn’t going away, though it looks like it will be getting some design tweaks, too. Clearly, though, BMW isn’t planning to do away with physical controls anytime soon.

Image Credits: BMW

The overall philosophy behind the update, BMW says, is to offer a system that is better able to utilize the potential of a connected car in order to “make the mobility experience even safer, even more comfortable and convenient, and even richer in variety.”

The argument here is that the car, thanks to its myriad of sensors and connectivity, now often has access to far more information than the driver. That, BMW says, has influenced the new iDrive’s design, but the company isn’t quite ready to delve into any details yet, it seems. Based on what we can glance from the materials that BMW did make available, though, current BMW drivers won’t have too high a learning curve as the overall layout still looks somewhat familiar.

Image Credits: BMW

“The next generation of BMW iDrive takes the burgeoning relationship between a BMW and its driver to a new level,” the company writes in today’s announcement. “The new system neatly bridges the gap between analogue and digital technology. And this, in turn, heralds another paradigm shift, as the number of available functions in a car and their complexity continue along a constant upward curve.”

Pollen Robotics turned heads at last year’s CES . After all, a humanoid robot will do that on the show floor (even if it’s only half of one). The French startup is back for this year’s show (insofar as anyone is really back for the show), with some key updates to its robot, Reachy.

The biggest news this time out is the addition of teleoperation functionality using a virtual reality setup. Using a VR headset, a remote operator is capable of viewing video through the robot’s two face cameras. VR controllers are used to manipulate the robot’s arms for pick and place operations. The functionality can be used for, among other things, training the robot to perform tasks.

Reachy is notable for being an open-source robotics platform. The $17,000 bot is potentially suitable for robotics research, including prototyping one’s own technology. As evidenced by last year’s event, it’s also a fun presentation robot, fulfilling a similar function as, say, Softbank’s Pepper. It’s not, however, going to be taking over any manufacturing jobs any time soon.

Image Credits: Brian Heater

The robot’s software is built on the popular open-source robotics operating system, ROS 2. The on-board computer and cameras have both been upgraded since the company first showed off the robot roughly this time last year.

After a rallying to record-setting prices, recapturing the attention of the public, and becoming once-again the topic du jour, cryptocurrencies are losing ground today.

Bitcoin, the best-known cryptocurrency, peaked at more than $41,000 apiece on January 8th. Today after shedding a little over 23% in the last 24 hours, one bitcoin is now worth around $31,800.

Similarly, ether, the token associated with the Ethereum blockchain, peaked at a little over $1,300 on January 10th. Today, after losing an even sharper 29% in the last 24 hours, ether tokens are worth around $960 apiece.

Coins remain far above recent prices, with bitcoin setting new all-time highs this month, and ether nearly reaching its early 2018 all-time highs. CoinMarketCap, a data platform tracking the cryptocurrency market that was purchased by the Binance exchange in 2020, reports that the value of all cryptocurrencies has fallen by just over 22% in the last day to $832.4 billion.

Whether the recent declines, or the fact that cryptos were very recently worth north of $1 trillion in aggregate is bigger news will be determined by your perspective on the asset class.

For startups, however, focused on the digital token market, it’s been a heady start to the year. Coinbase, an American cryptocurrency exchange, filed to go public in late 2020. The recent rally in the price of bitcoin, for example, has led to record trading volumes for the coin. That could translate into lucrative incomes for Coinbase, and its rivals.

If so, the venture capital market could warm to companies in the space, opening wallets to crypto projects that may have been closed since 2017.

Embattled social media platform Parler is offline after Apple, Google and Amazon pulled the plug on the site after the violent riot at the U.S. Capitol last week that left five people dead.

But while the site is gone (for now), millions of posts published to the site since the riot are not.

A lone hacker scraped millions of posts, videos and photos published to the site after the riot but before the site went offline on Monday, preserving a huge trove of potential evidence for law enforcement investigating the attempted insurrection, many of which allegedly used the platform to plan and coordinate the breach of the Capitol.

The hacker and internet archivist, who goes by the online handle @donk_enby, scraped the social network and uploaded copies to the Internet Archive, which hosts old and historical versions of web pages.

In a tweet, @donk_enby said she scraped data from Parler that included deleted and private posts, and the videos contained “all associated metadata.”

Metadata is information about a file — such as when it was made and on what device. This information is usually embedded in the file itself. The scraped videos from Parler appear to also include the precise location data of where the videos were taken. That metadata could be a goldmine of evidence for authorities investigating the Capitol riot, which may tie some rioters to their Parler accounts or help police to unmask rioters based on their location data.

Most web services remove metadata when you upload your photos and videos, but Parler apparently wasn’t.

Parler quickly became the social network of choice after President Trump was deplatformed from Twitter and Facebook for inciting the riot on January 6. But the tech giants said Parler violated their rules by not having a content moderation policy – which is what drew many users to the site.

Many of the posts made calls to “burn down [Washington] D.C.,” while others called for violence and the execution of Vice President Mike Pence.

Already several rioters have been arrested and charged with breaking into the Capitol building. Many of the rioters weren’t wearing masks (the pandemic notwithstanding), making it easier for them to be identified. But thanks to Parler’s own security blunder, many more could soon face an unwelcome knock at the door.

The president of the United States is supposedly the most powerful man in the world. He also can’t post to Twitter. Or Facebook. Or a bunch of other social networks as we discovered over the course of the past week (He still has access to the nuclear launch codes though, so that’s an interesting dynamic to chew on).

The bans last week were exceptional — but so is Trump. There may not be another president this century who pushes the line of public discourse quite like the current occupant of the White House (at least, one can only hope). If the whole Trump crisis was truly exceptional though, it could simply be ignored. Rules, even rules around free speech, have always had exceptions to handle exceptional circumstances. The president provokes a violent protest, he gets banned. A unique moment in American executive leadership, for sure. Yet, apart from the actor, it’s hardly an unusual response from the tech industry or any publisher where violent threats have been banned for decades under Supreme Court precedent.

Why then aren’t we ignoring it? I think we can all feel that something greater is underfoot. The entire information architecture of our world has changed, and that has completely upended the structure of rules around free speech that have governed America in the modern era.

Freedom of speech is deeply entwined with human progressivism, with science and rationality and positivism. The purpose of a marketplace of ideas is for arguments to be in dialogue with each other, to have their own facts and deductions checked, and for bad ideas to be washed out by better, more proven ones. Contentious at times yes, but a positive contention, one that ultimately is meant to elucidate more than provoke.

I’m a free speech “absolutist” because I believe in that human progress, and I believe that the concept of a marketplace of ideas is the best mechanism historically we have ever built as a species for exploring our world and introspecting ourselves. Yet, I also can’t witness the events that transpired last week and just pretend that our information commons is working well.

I get it — that seems contradictory. I understand the argument that I’m supporting free speech but not really supporting it. Yet, there is a reasonable pause to be taken in this moment to ask some deeper, more foundational questions, for something is wrong with the system. I’m struggling with the same context that the ACLU in its official statement is struggling with:

It’s a milquetoast response, a “we condemn but we are also concerned” sort of lukewarm mélange. It’s also a reasonable response to a rapidly changing environment around speech. In the same vein, I’m a staunch defender of the marketplace of ideas, well, a marketplace of ideas, one that unfortunately no longer exists today. Just think about everything that isn’t working:

• There’s too much information, and it’s impossible for any reasonable human to process it all
• Much of that flood is garbage and outright fraud, or worse, brilliant pieces of psychological propaganda designed to distract and undermine the very information system it is distributed on
• We’ve never allowed so many people to gain access to the public square to distribute their missives, drivel and invective with such limited constraints
• Few ideas are in dialogue anymore. Collegiality is mostly dead, as is constructivist thought. There is no marketplace anymore since the “stores” are no longer in the same public squares but in each of our own individual feeds
• Coercive incentives from a handful of dominant, monopoly platforms drive wildly damaging communication practices, encouraging the proverbial “clickbait” over any form of careful discussion or debate
• The vast majority of people seem to love this, given the extremely high user engagement numbers seen on tech platforms

We’ve known this event was coming for decades. Alvin Toffler’s Future Shock, about the inability of humans to process the complexity of the modern, industrialized world, came out in 1970. Cyberpunk literature and sci-fi more generally in the 1980s and 1990s has extensively grappled with this coming onslaught. As the internet expanded rapidly, books like Nicholas Carr’s The Shallows interrogated how the internet prevents us from thinking deeply. It was published a decade ago. Today, in your local bookstore (assuming you still have one and can actually still read texts longer than 1,000 words), you can find a whole wing analyzing the future of media and communications and what the internet is cognitively doing to us.

My absolute belief in “free speech” was predicated on some pretty clear assumptions about how free speech was supposed to work in the United States. Those assumptions, unfortunately, no longer apply.

We can no longer assume that there is a proverbial public square where citizens debate, perhaps even angrily, the issues that confront them. We can no longer assume that information dreck gets filtered by editors, or by publishers, or by readers themselves. We can no longer assume that the people who reach us with their messages are somewhat vetted, and speaking from truth or facts.

We can no longer assume that any part of the marketplace is frankly working at all.

That’s what makes this era so challenging for those of us who rely every day on the right to free speech in our work and in our lives. Without those underlying assumptions, the right to free speech isn’t the bastion of human progressivism and rationality that we expect it to be. Our information commons won’t ensure that the best and highest-quality ideas are going to rise to the top and propel our collective discussion.

I truly believe in free speech in its extensive, American sense. So do many friends who are similarly concerned for the perilous state of our marketplace of ideas. Yet, we all need to confront the reality that is before us: the system is really, truly broken and just screaming “Free Speech!” is not going to change that.

The way forward is to pivot the conversation around free speech to a broader question about how we improve the information architecture of our world. How do we ensure that creators and the people who generate ideas and analyze them can do so with the right economics? That means empowering writers and filmmakers and novelists and researchers and everyone else to be able to do quality work, over perhaps extended periods of time, without having to upload a new photo or insight every ten minutes to stay “top of mind” lest their income tumbles.

How can we align incentives at every layer of our communications to ensure that facts and “truth” will eventually win the day in the asymptote, if not always right away? How do you ensure that the power that comes with mass distribution of information is held by those who embody at least some notion of a public duty to accuracy and reasonableness?

Most importantly, how do we improve the ability of every reader and viewer to process the information they see, and through their independent actions drive the discussion toward rationality? No marketplace can survive without smart and diligent customers, and the market for information is no exception. If people demand lies, the world is going to supply it to them, and in spades as we have already seen.

Tech can’t solve this alone, but it absolutely can and is obligated to be part of the solution. Platform alternatives with the right incentives in place can completely change the way humanity understands our world and what is happening. That’s an extremely important and intellectually interesting problem that should be enticing to any ambitious engineer and founder to tackle.

I’ll always defend free speech, but I can’t defend the system in the state that we see it today. The only defense then is to work to rebuild this system, to buttress the components that are continuing to work and to repair or replace the ones that aren’t. I don’t believe the descent into rational hell has to be paved by misinformation. We all have the tools and power to make this system what it needs to be — what it should be.

“A new law to follow” seems unlikely to have featured on many business wishlists this holiday season, particularly if that law concerned data privacy. Digital privacy management is an area that takes considerable resources to whip into shape, and most SMBs just aren’t equipped for it.

But for 2021, I believe startups in the United States should be demanding that legislators deliver a federal privacy law. Yes, they should demand to be regulated.

For every day that goes by without agreed-upon federal standards for data, these companies lose competitive edge to the rest of the world. Soon there may be no coming back.

Businesses should not view privacy and trust infrastructure requirements as burdensome. They should view them as keys that can unlock the full power of the data they possess. They should stop thinking about privacy as compliance and begin thinking of it as a harmonization of the customer relationship. The rewards flowing to each party from such harmonization are bountiful. The U.S. federal government is in a unique position to help realize those rewards.

To understand what I mean, cast your eyes to Europe, where it’s become clear that the GDPR was nowhere near the final destination of EU data policy. Indeed it was just the launchpad. Europe’s data regime can frustrate (endless cookie banners anyone?), but it has set an agreed-upon standard of protection for citizens and elevated their trust in internet infrastructure.

For example, a Deloitte survey found that 44% of consumers felt that organizations cared more about their privacy after GDPR came into force. With a baseline standard established — seatbelts in every car — Europe is now squarely focused on raising the speed limit.

EU lawmakers recently unveiled plans for “A Europe fit for the Digital Age.” in the words of Internal Market Commissioner Thierry Breton, it’s a plan to make Europe “the most data-empowered continent in the world.”

Here are some pillars of the plan. While reading, imagine that you are a U.S.-based health tech startup. Imagine the disadvantage you would face against a similar, European-based company, if these initiatives came to fruition:

• A regulatory framework covering data governance, access and reuse between businesses, between businesses and government, and within administrations to create incentives for data sharing.
• A push to make public-sector data more widely available by opening up “high-value datasets” to enable their reuse to foster innovation.
• Support for cloud infrastructure, platforms and systems to support the data reuse goals, with investments in European high-impact projects on European data spaces and trustworthy, energy-efficient cloud infrastructures.
• Sector-specific actions to build European data spaces that focus on specific areas such as industrial manufacturing, the Green New Deal, mobility or health.

There are so many ways governments can help businesses maximize their data leverage in ways that improve society. But the American public currently has no appetite for that. They don’t trust the internet.

They want to see Mark Zuckerberg and Jeff Bezos sweating it out under Senate Committee questioning. Until we trust our leaders to protect basic online rights, widespread data empowerment initiatives will not be politically viable.

In Europe, the equation is totally different. GDPR was the foundation of a European data strategy, not the capstone.

While the EU powers forward, America’s ability to enact federal privacy reform is stymied by two quintessentially American privacy sticking points:

• Can I personally sue a business that violates my privacy rights?
• Can individual states build additional privacy protections on top of a federal law, or will it act as a nationwide “ceiling”?

These are important questions that must be answered as a function of our country’s unique cultural and political history. But currently they’re the roadblocks that stall American industry while the EU, seatbelts secure, begins speeding down the data autobahn.

If you want a visceral example of how this gap is already impacting American businesses, look no further than the fallout of the ECJ’s Schrems II decision in the middle of last summer. Europe’s highest court invalidated a key agreement used to transfer EU data back to the U.S., essentially because there’s no federal law to ensure EU citizens’ data would be protected once it lands in America.

The legal wrangling continues, but the impact of this decision was so considerable that Facebook legitimately threatened to quit operating Europe if the Schrems II ruling was enforced.

While issues generated for smaller businesses don’t grab as many headlines, rest assured that on the front lines of this issue, I’ve seen many SMB’s data operations thrown into total chaos. In other words, the geopolitical battle for a data-driven business edge is already well underway. We are losing.

To sum it up, the United States increasingly finds itself in a position that’s unprecedented since the dawn of the internet era: laggard. American tech companies still innovate at a fantastic rate, but America’s inability to marshal private sector practices to reflect evolving public sentiment threatens to become a yoke around the economy’s neck.

The catastrophic response to the COVID-19 pandemic fell far short of other nations’ efforts. Our handling of data privacy protection costs far less in human terms, but it grows astronomically more expensive in dollar terms with every passing day.

The technology exists to treat users respectfully in a cost-effective manner. The public will is there.

The business will is there. The legislative capability is there.

That’s why I believe America’s startup community should demand federal lawmakers follow the recent example of Europe, India, New Zealand, Brazil, South Africa and Canada. They need to introduce federally guaranteed modern data privacy protections as soon as possible.