Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday? Sign up here.
Happy Saturday, everyone. I do hope that you are in good spirits and in good health. I am learning to nap, something that has become a requirement in my life after I realized that the news cycle is never going to slow down. And because my partner and I adopted a third dog who likes to get up early, please join me in making napping cool for adults, so that we can all rest up for Vaccine Summer. It’s nearly here.
On work topics, I have a few things for you today, all concerning data points that matter: Q1 2021 M&A data, March VC results from Africa, and some surprising (to me, at least) podcast numbers.
On the first, Dan Primack shared a few early first-quarter data points via Refinitiv that I wanted to pass along. Per the financial data firm, global M&A activity hit $1.3 trillion in Q1 2021, up 93% from Q1 2020. U.S. M&A activity reached an all-time high in the first quarter, as well. Why do we care? Because the data helps underscore just how hot the last three months have been.
I’m expecting venture capital data itself for the quarter to be similarly impressive. But as everyone is noting this week, there are some cracksappearingin the IPO market, as the second quarter begins that could make Q2 2021 a very different beast. Not that the venture capital world will slow, especially given that Tiger just reloaded to the tune of $6.7 billion.
On the venture capital topic, African-focused data firm Briter Bridges reports that “March alone saw over $280 million being deployed into tech companies operating across Africa,” driven in part by “Flutterwave’s whopping $170 million round at a $1 billion valuation.”
The data point matters as it marks the most active March that the African continent has seen in venture capital terms since at least 2017 — and I would guess ever. African startups tend to raise more capital in the second half of the year, so the March result is not an all-time record for a single month. But it’s bullish all the same, and helps feed our general sentiment that the first quarter’s venture capital results could be big.
And finally, Index Ventures’ Rex Woodburytweeted some Edison data, namely that “80 million Americans (28% of the U.S. 12+ population) are weekly podcast listeners, +17% year-over-year.” The venture capitalist went on to add that “62% of the U.S. 12+ population (around 176 million people) are weekly online audio listeners.”
As we discussed on Equity this week, the non-music, streaming audio market is being bet on by a host of players in light of Clubhouse’s success as a breakout consumer social company in recent months. Undergirding the bets by Discord and Spotify and others are those data points. People love to listen to other humans talk. Far more than I would have imagined, as a music-first person.
How nice it is to be back in a time when consumer investing is neat. B2B is great but not everything can be enterprise SaaS. (Notably, however, it does appear that Clubhouse is struggling to hold onto its own hype.)
Look I can’t keep up with all the damn venture capital rounds
TechCrunch Early Stage was this week, which went rather well. But having an event to help put on did mean that I covered fewer rounds this week than I would have liked. So, here are two that I would have typed up if I had had the spare hours:
Striim’s$50 million Series C. Goldman led the transaction. Striim, pronounced stream I believe, is a software startup that helps other companies move data around their cloud and on-prem setups in real time. Given how active the data market is today, I presume that the TAM for Striim is deep? Quickly flowing? You can supply a better stream-centered word at your leisure.
Kudo’s$21 million Series A. I covered Kudo last July when it raised $6 million. The company provides video-chat and conferencing services with support for real-time translation. It had a good COVID-era, as you can imagine. Felicis led the A after taking part in the seed round. I’ll see if I can extract some fresh growth metrics from the company next week. One to watch.
And two more rounds that you also might have missed that you should not. Holler raised $36 million in a Series B. Per our own Anthony Ha, “[y]ou may not know what conversational media is, but there’s a decent chance you’ve used Holler’s technology. For example, if you’ve added a sticker or a GIF to your Venmo payments, Holler actually manages the app’s search and suggestion experience around that media.”
I feel old.
And in case you are not paying enough attention to Latin American tech, this $150 million Uruguayan round should help set you straight.
Finally this week, some good news. If you’ve read The Exchange for any length of time, you’ve been forced to read me prattling on about the Bessemer cloud index, a basket of public software companies that I treat with oracular respect. Now there’s a new index on the market.
Meet the Lux Health + Tech Index. Per Lux Capital, it’s an “index of 57 publicly traded companies that together best represent the rapidly emerging Health + Tech investment theme.” Sure, this is branded to the extent that, akin to the Bessemer collection, it is tied to a particular focus of the backing venture capital firm. But what the new Lux index will do, as with the Bessemer collection, is track how a particular venture firm is itself tracking the public comps for their portfolio.
That’s a useful thing to have. More of this, please.
Amazon kicked off the holiday weekend by backtracking slightly on a social media offensive that unfolded in the waning days of a historic unionization vote. The earlier comments reportedly arrived as Jeff Bezos was pushing for a more aggressive strategy.
Along with taking on Senators Bernie Sanders and Elizabeth Warren, the Amazon News Twitter account went toe to toe with Congressman, Mark Pocan. The Wisconsin Democrat cited oft-reported stories of Amazon workers urinating in bottles in reaction to comments from Consumer CEO, Dave Clark.
“You don’t really believe the peeing in bottles thing, do you?” the account asked. “If that were true, nobody would work for us. The truth is that we have over a million incredible employees around the world who are proud of what they do, and have great wages and health care from day one.”
1/2 You don’t really believe the peeing in bottles thing, do you? If that were true, nobody would work for us. The truth is that we have over a million incredible employees around the world who are proud of what they do, and have great wages and health care from day one.
The Congressman’s initial response was pithy and to the point: “[Y]es, I do believe your workers. You don’t?”
Subsequent reports have served to cement those stories. One called the urination issue “widespread” among Amazon drivers, adding that defecation had also, reportedly, become a problem. Last night, the company offered a mea culpa of sorts, saying it “owe[s] an apology to Representative Pocan.”
Things break down a bit from there. Amazon’s apology acknowledges that workers peeing in bottles is a thing, but appears to imply that it’s limited to drivers and not the fulfillment center staff at the center of this large scale unionization effort. From there, the company adds that drivers peeing in bottles is an “industry-wide issue and is not specific to Amazon.”
The company helpfully includes a list of links and tweets that are, at very least, an indictment of the gig economy and the treatment of blue collar workers, generally. Essentially, Amazon is admitting to being a part of the problem, while working to spread the blame across an admittedly faulty system.
Reports of workers urinating in bottles also go beyond drivers, including stories of warehouse employees resorting to the act in order to meet stringent quotas.
“A typical Amazon fulfillment center has dozens of restrooms, and employees are able to step away from their work station at any time,” company writes in the post attributed to anonymous Amazon Staff. “If any employee in a fulfillment center has a different experience, we encourage them to speak to their manager and we’ll work to fix it.”
Union vote counting for the company’s Bessemer, Alabama warehouse began last week. Results could have a wide-ranging impact on both Amazon and the industry at large.
At the end of 2020, I argued that edtech needs to think bigger in order to stay relevant after the pandemic. I urged founders to think less about how to bundle and unbundle lecture experience, and more about how to replace outdated systems and methods with new, tech-powered solutions. In other words, don’t simply put engaging content on a screen, but innovate on what that screen looks like, tracks and offers.
A few months into 2021, the exit environment in edtech…feels like it’s doing exactly that. The same startups that hit billion and multi-billion valuations during the pandemic are scooping up new talent to broaden their service offerings.
James Gallagher, the author of the report, tells me:
It is important to note that the full potential of bootcamps has not yet been realised. We are now seeing more exploration of niches like technology sales which provide gateways into new careers in tech for people who otherwise may not have been able to acquire training. To scale such models, new businesses will need venture capital.
He went on to explain how a notable acquisition from 2020 was K12 scooping up Galvanize, “which would give K12 exposure into corporate training and the coding bootcamp space, a market outside of K12’s focus at the moment.”
To me this report signal two things: the financial interest in boot camps isn’t simply stemming from other bootcamps (although that is happening), but it’s surprising partnerships. Leaving this subsector, we see creative acquisitions such as a Roblox for edtech buying a language learning tool, and a startup known for flashcards scooping up a tech tutoring service.
I’ll end with this: Successful startup founders are innately ambitious, finding opportunity in moonshots and convincing others that the odds are in their favor. However, the ceiling for what defines ambition heightens almost everyday. What used to be a win is now a nonnegotiable, and a feat is only a feat until your competitor hits the exact same milestone.
Acquisitions are one way to scoop up competition and synergistic talent, but it’s what happens next that matters the most.
In the rest of this newsletter, we will talk about Clubhouse competitors, how a homegrown experiment became one of the fastest growing companies in fitness tech and a cool-down in public markets (?!). As always, you can get this newsletter in your inbox each Saturday morning, so subscribe here to join the cool kids.
Clubhouse might create billions in value, but could capture none of it
Remember when everyone was buzzing around about building Stories? That’s so pre-pandemic. A number of companies recently announced plans to build their own versions of Clubhouse, after the buzzy app unearthed the consumer love for audio.
Here’s what to know: It might be easier to start guessing who isn’t building a Clubhouse clone at this point. Our predictions are already starting, but jokes aside, the rise in clones could mean that Clubhouse might have to make a run for its pre-monetized money (cough, cough, Twitter spaces). It doesn’t matter if a startup is first in unlocking a key insight, all that matters is who executes that key insight the best.
Here’s what to know: The new status underscores market growth for at-home fitness solutions. And while we don’t have a Tonal S-1 yet, we do have a Tonal EC-1. EC-1’s are TechCrunch’s riff on an S-1, and are essentially a deep dive into a company.
Reporter JP Mangalindan wrote thousands and thousands of words about Tonal, from its origin story to business model, its focus on communities and its biggest hurdles ahead.
You’ve probably had a better week than Compass, Deliveroo and Kaltura. The three companies all had different events that illustrate a potential damper on the part that has been the public markets.
As governments scrambled to lock down their populations after the COVID-19 pandemic was declared last March, some countries had plans underway to reopen. By June, Jamaica became one of the first countries to open its borders.
Tourism represents about one-fifth of Jamaica’s economy. In 2019 alone, four million travelers visited Jamaica, bringing thousands of jobs to its three million residents. But as COVID-19 stretched into the summer, Jamaica’s economy was in free fall, and tourism was its only way back — even if that meant at the expense of public health.
The Jamaican government contracted with Amber Group, a technology company headquartered in Kingston, to build a border entry system allowing residents and travelers back onto the island. The system was named JamCOVID and was rolled out as an app and a website to allow visitors to get screened before they arrive. To cross the border, travelers had to upload a negative COVID-19 test result to JamCOVID before boarding their flight from high-risk countries, including the United States.
Amber Group’s CEO Dushyant Savadia boasted that his company developed JamCOVID in “three days” and that it effectively donated the system to the Jamaican government, which in turn pays Amber Group for additional features and customizations. The rollout appeared to be a success, and Amber Group later secured contracts to roll out its border entry system to at least four other Caribbean islands.
But last month TechCrunch revealed that JamCOVID exposed immigration documents, passport numbers, and COVID-19 lab test results on close to half a million travelers — including many Americans — who visited the island over the past year. Amber Group had set the access to the JamCOVID cloud server to public, allowing anyone to access its data from their web browser.
Whether the data exposure was caused by human error or negligence, it was an embarrassing mistake for a technology company — and, by extension, the Jamaican government — to make.
And that might have been the end of it. Instead, the government’s response became the story.
A trio of security lapses
By the end of the first wave of coronavirus, contact tracing apps were still in their infancy and few governments had plans in place to screen travelers as they arrived at their borders. It was a scramble for governments to build or acquire technology to understand the spread of the virus.
Jamaica was one of a handful of countries using location data to monitor travelers, prompting rights groups to raise concerns about privacy and data protection.
As part of an investigation into a broad range of these COVID-19 apps and services, TechCrunch found that JamCOVID was storing data on an exposed, passwordless server.
This wasn’t the first time TechCrunch found security flaws or exposed data through our reporting. It also was not the first pandemic-related security scare. Israeli spyware maker NSO Group left real location data on an unprotected server that it used for demonstrating its new contact tracing system. Norway was one of the first countries with a contact tracing app, but pulled it after the country’s privacy authority found the continuous tracking of citizens’ location was a privacy risk.
Just as we have with any other story, we contacted who we thought was the server’s owner. We alerted Jamaica’s Ministry of Health to the data exposure on the weekend of February 13. But after we provided specific details of the exposure to ministry spokesperson Stephen Davidson, we did not hear back. Two days later, the data was still exposed.
After we spoke to two American travelers whose data was spilling from the server, we narrowed down the owner of the server to Amber Group. We contacted its chief executive Savadia on February 16, who acknowledged the email but did not comment, and the server was secured about an hour later.
We ran our story that afternoon. After we published, the Jamaican government issued a statement claiming the lapse was “discovered on February 16” and was “immediately rectified,” neither of which were true.
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Instead, the government responded by launching a criminal investigation into whether there was any “unauthorized” access to the unprotected data that led to our first story, which we perceived to be a thinly veiled threat directed at this publication. The government said it had contacted its overseas law enforcement partners.
When reached, a spokesperson for the FBI declined to say whether the Jamaican government had contacted the agency.
Things didn’t get much better for JamCOVID. In the days that followed the first story, the government engaged a cloud and cybersecurity consultant, Escala 24×7, to assess JamCOVID’s security. The results were not disclosed, but the company said it was confident there was “no current vulnerability” in JamCOVID. Amber Group also said that the lapse was a “completely isolated occurrence.”
A week went by and TechCrunch alerted Amber Group to two more security lapses. After the attention from the first report, a security researcher who saw the news of the first lapse found exposed private keys and passwords for JamCOVID’s servers and databases hidden on its website, and a third lapse that spilled quarantine orders for more than half a million travelers.
Amber Group and the government claimed it faced “cyberattacks, hacking and mischievous players.” In reality, the app was just not that secure.
Politically inconvenient
The security lapses come at a politically inconvenient time for the Jamaican government, as it attempts to launch a national identification system, or NIDS, for the second time. NIDS will store biographic data on Jamaican nationals, including their biometrics, such as their fingerprints.
The repeat effort comes two years after the government’s first law was struck down by Jamaica’s High Court as unconstitutional.
Critics have cited the JamCOVID security lapses as a reason to drop the proposed national database. A coalition of privacy and rights groups cited the recent issues with JamCOVID for why a national database is “potentially dangerous for Jamaicans’ privacy and security.” A spokesperson for Jamaica’s opposition party told local media that there “wasn’t much confidence in NIDS in the first place.”
It’s been more than a month since we published the first story and there are many unanswered questions, including how Amber Group secured the contract to build and run JamCOVID, how the cloud server became exposed, and if security testing was conducted before its launch.
TechCrunch emailed both the Jamaican prime minister’s office and Jamaica’s national security minister Matthew Samuda to ask how much, if anything, the government donated or paid to Amber Group to run JamCOVID and what security requirements, if any, were agreed upon for JamCOVID. We did not get a response.
Amber Group also has not said how much it has earned from its government contracts. Amber Group’s Savadia declined to disclose the value of the contracts to one local newspaper. Savadia did not respond to our emails with questions about its contracts.
Following the second security lapse, Jamaica’s opposition party demanded that the prime minister release the contracts that govern the agreement between the government and Amber Group. Prime Minister Andrew Holness said at a press conference that the public “should know” about government contracts but warned “legal hurdles” may prevent disclosure, such as for national security reasons or when “sensitive trade and commercial information” might be disclosed.
That came days after local newspaper The Jamaica Gleaner had a request to obtain contracts revealing the salaries state officials denied by the government under a legal clause that prevents the disclosure of an individual’s private affairs. Critics argue that taxpayers have a right to know how much government officials are paid from public funds.
Jamaica’s opposition party also asked what was done to notify victims.
Government minister Samuda initially downplayed the security lapse, claiming just 700 people were affected. We scoured social media for proof but found nothing. To date, we’ve found no evidence that the Jamaican government ever informed travelers of the security incident — either the hundreds of thousands of affected travelers whose information was exposed, or the 700 people that the government claimed it notified but has not publicly released.
TechCrunch emailed the minister to request a copy of the notice that the government allegedly sent to victims, but we did not receive a response. We also asked Amber Group and Jamaica’s prime minister’s office for comment. We did not hear back.
Many of the victims of the security lapse are from the United States. Neither of the two Americans we spoke to in our first report were notified of the breach.
Spokespeople for the attorneys general of New York and Florida, whose residents’ information was exposed, told TechCrunch that they had not heard from either the Jamaican government or the contractor, despite state laws requiring data breaches to be disclosed.
The reopening of Jamaica’s borders came at a cost. The island saw over a hundred new cases of COVID-19 in the month that followed, the majority arriving from the United States. From June to August, the number of new coronavirus cases went from tens to dozens to hundreds each day.
To date, Jamaica has reported over 39,500 cases and 600 deaths caused by the pandemic.
Prime Minister Holness reflected on the decision to reopen its borders last month in parliament to announce the country’s annual budget. He said the country’s economic decline last was “driven by a massive 70% contraction in our tourist industry.” More than 525,000 travelers — both residents and tourists — have arrived in Jamaica since the borders opened, Holness said, a figure slightly more than the number of travelers’ records found on the exposed JamCOVID server in February.
Holness defended reopening the country’s borders.
“Had we not done this the fall out in tourism revenues would have been 100% instead of 75%, there would be no recovery in employment, our balance of payment deficit would have worsened, overall government revenues would have been threatened, and there would be no argument to be made about spending more,” he said.
Both the Jamaican government and Amber Group benefited from opening the country’s borders. The government wanted to revive its falling economy, and Amber Group enriched its business with fresh government contracts. But neither paid enough attention to cybersecurity, and victims of their negligence deserve to know why.
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NASA’s SBIR program regularly doles out cash to promising small businesses and research programs, and the lists of awardees is always interesting to sift through. Here are a dozen companies and proposals from this batch that are especially compelling or suggest new directions for missions and industry in space.
Sadly these brief descriptions are often all that is available. These things are often so early stage that there’s nothing to show but some equations and a drawing on the back of a napkin — but NASA knows promising work when it sees it. (You can learn more about how to apply for SBIR grants here.)
Martian Sky Technologies wins the backronym award with Decluttering of Earth Orbit to Repurpose for Bespoke Innovative Technologies, or DEORBIT, an effort to create an autonomous clutter-removal system for low Earth orbit. It is intended to monitor a given volume and remove any intruding items, clearing the area for construction or occupation by another craft.
There are lots of proposals for various forms of 3D printing, welding, and other things important to the emerging field of “On-orbit servicing, assembly, and manufacturing” or OSAM. One I found interesting uses ultrasonics, which is weird to me because clearly, in space, there’s no atmosphere for ultrasonic to work in (I’m going to guess they thought of that). But this kind of counterintuitive approach could lead to a truly new approach.
Doing OSAM work will likely involve coordinating multiple robotic platforms, something that’s hard enough on Earth. TRAClabs is looking into a way to “enhance perceptual feedback and decrease the cognitive load on operators” by autonomously moving robots not in use to positions where they can provide useful viewpoints of the others. It’s a simple idea and fits with the way humans tend to work — if you’re not the person doing the actual task, you automatically move out of the way and to a good position to see what’s happening.
Hall effect thrusters are a highly efficient form of electric propulsion that could be very useful in certain types of in-space maneuvering. But they’re not particularly powerful, and it seems that to build larger ones existing manufacturing techniques will not suffice. Elementum 3D aims to accomplish it by developing a new additive manufacturing technique and cobalt-iron feedstock that should let them make these things as big as they want.
Venus is a fascinating place, but its surface is extremely hostile to machines the way they’re built here on Earth. Even hardened Mars rovers like Perseverance would succumb in minutes, seconds even in the 800F heat. And among the many ways they would fail is that the batteries they use would overheat and possibly explode. TalosTech and the University of Delaware are looking into an unusual type of battery that would operate at high temperatures by using atmospheric CO2 as a reactant.
When you’re going to space, every gram and cubic centimeter counts, and once you’re out there, every milliwatt does as well. That’s why there’s always a push to switch legacy systems to low size, weight, and power (low-SWaP) alternatives. Intellisense is taking on part of the radio stack, using neuromorphic (i.e. brainlike – but not in a sci-fi way) computing to simplify and shrink the part that sorts and directs incoming signals. Every gram saved is one more spacecraft designers can put to work elsewhere, and they may get some performance gains as well.
Astrobotic is becoming a common name to see in NASA’s next few years of interplanetary missions, and its research division is looking at ways to make both spacecraft and surface vehicles like rovers smarter and safer using lidar. One proposal is a lidar system narrowly focused on imaging single small objects in a sparse scene (e.g. scanning one satellite from another against the vastness of space) for the purposes of assessment and repair. The second involves a deep learning technique applied to both lidar and traditional imagery to identify obstacles on a planet’s surface. The team for that one is currently also working on the VIPER water-hunting rover aiming for a 2023 lunar landing.
Bloomfield does automated monitoring of agriculture, but growing plants in orbit or on the surface or Mars is a little different than here on Earth. But it’s hoping to expand to Controlled Environment Agriculture, which is to say the little experimental farms we’ve used to see how plants grow under weird conditions like microgravity. They plan to use multi-spectral imaging and deep learning analysis thereof to monitor the state of plants constantly so astronauts don’t have to write “leaf 25 got bigger” every day in a notebook.
The Artemis program is all about going to the Moon “to stay,” but we haven’t quite figured out that last part. Researchers are looking into how to refuel and launch rockets from the lunar surface without bringing everything involved with them, and Exploration Architecture aims to take on a small piece of that, building a lunar launchpad literally brick by brick. It proposes an integrated system that takes lunar dust or regolith, melts it down, then bakes it into bricks to be placed wherever needed. It’s either that or bring Earth bricks, and I can tell you that’s not a good option.
Several other companies and research agencies proposed regolith-related construction and handling as well. It was one of a handful of themes, some of which are a little too in the weeds to go into.
Another theme was technologies for exploring ice worlds like Europa. Sort of like the opposite of Venus, an ice planet will be lethal to “ordinary” rovers in many ways and the conditions necessitate different approaches for power, sensing, and traversal.
NASA isn’t immune to the new trend of swarms, be they satellite or aircraft. Managing these swarms takes a lot of doing, and if they’re to act as a single distributed machine (which is the general idea) they need a robust computing architecture behind them. Numerous companies are looking into ways to accomplish this.
You can see the rest of NASA’s latest SBIR grants, and the technology transfer program selections too, at the dedicated site here. And if you’re curious how to get some of that federal cash yourself, read on below.
Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy. The app industry is as hot as ever, with a record 218 billion downloads and $143 billion in global consumer spend in 2020.
Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.
Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.
This week we’re looking into app store trends, Apple’s upcoming WWDC, new App Store rejections and what they mean for ATT (App Tracking Transparency), and whatever happened to that Arizona App Store bill, among other stories.
Top Stories
Apps just had the biggest quarter on record
Big news for the app economy this week, as App Annie reported that consumer spending on mobile apps broke a new record.According to new data, worldwide consumers in Q1 2021 spent $32 billion on apps across both iOS and Google Play, up 40% year-over-year from Q1 2020. It’s the largest-ever quarter on record, with mobile consumers spending roughly $9 billion more in Q1 2021 compared with Q1 2020, in part due to the pandemic’s continued impacts.
Image Credits: App Annie
Although iOS saw larger consumer spend than Android in the quarter — $21 billion versus $11 billion, respectively — both stores grew by the same percentage, 40%. Gaming drove a majority of the quarter’s consumer spending, as usual, accounting for $22 billion of the spend — $13 billion on iOS (up 30% year-over-year) and $9 billion on Android (up 35%).
Apple begins rejecting apps with fingerprinting tech
With the launch of iOS 14.5 looming, reports circulated this week that Apple has begun rejecting apps that use third-party SDKs that track users via a method called device fingerprinting. The Adjust SDK was one that didn’t yet comply with Apple’s new App Tracking Transparency guidelines, causing apps that included the SDK to be rejected. That could have been a large number of possible rejections, as Adjust’s website claims it’s trusted by more than 50,000 apps. But Adjust soon updated its SDK (open-sourced and here on GitHub), to hopefully re-enable app updates for its customers.
Per a number of developers, Apple has begun rejecting app updates that include the Adjust SDK related to its collection of data used for device fingerprinting.
The App Tracking Transparency (ATT) changes have thrown a whole industry into disarray as companies scramble to comply and diversify their revenues. Snap, however, was found to be looking into alternative ways to bypass ATT by gathering data like IP addresses from companies that analyze ad campaigns to see if it could then cross-reference that data with its own, in order to continue tracking its users. Snap told the Financial Times it had tested the technique, called probabilistic matching, to test the impact of Apple’s policies, but claimed it intended to discontinue the program after Apple introduced its changes. (Sure Jan!) The company says it believes that tracking individual users will no longer be allowed going forward, but gathering data on “cohorts” would be. On Thursday, Apple sent letters to developers warning them to remove code that supported probabilistic matching, just in case.
WWDC 2021 announced
WWDC will again be virtual, Apple announced this week. The online event will take place June 7 to 11, as it did last year, allowing developers worldwide to tune in to watch prerecorded keynotes and sessions, and virtually network and learn from Apple engineers and employees. Though April 18, students can submit their Swift playground to this year’s Swift Student Challenge to win exclusive outerwear and Apple pins.
Everyone has already begun to read wayyyy too much into the imagery Apple published, which shows Memoji characters wearing glasses looking at a Mac screen. Is Apple teasing AR glasses?, some wondered. That doesn’t seem likely, though. The glasses are just a way to reflect the computer screen in a picture whose message largely conveys, yep, it’s another virtual event this year.
The Arizona App Store bill is dead
The bill was the work of the Coalition for App Fairness, led by Epic Games, Spotify, Tile and other developers who want alternatives to paying app store commissions and alternative distribution channels. Last week, it had been unclear why the AZ Senate skipped the vote on the bill, which had been passed by the AZ House. But according to the bill’s (HB2005) backer, Rep. Regina Cobb, speaking to The Verge, the decision was due to heavy lobbying by Apple and Google, which caused Senate members who had agreed to a vote to waiver. When the votes weren’t there, the Senate decided to skip bringing it up altogether.
Cobb, in an email to TechCrunch, confirmed the same. “We have been working with members on the committee and had the votes a few days prior,” she said. “Just before the committee was set to proceed, the Chairman notified the lobbyist for App Fairness that the votes were not there so he did not want to waste committee time on the issue.”
Weekly News
Platforms: Apple
Apple released the iOS 14.5 beta 6 to developers, which includes one major change: the release of new Siri voices. With iOS 14.5, Siri will no longer default to a female voice, but will rather allow customers to choose from a set of voices, presented in random order. Prior to the release, there had been some expectation that beta 5 would be the last before the public release, but that turned out to not be the case. However, now that beta 6 has arrived, the Release Candidate could follow as soon as next week.
Ahead of WWDC 2021, Apple updated its Apple Developer app. The app offers an updated look-and-feel, which now supports a sidebar navigation on iPad, full-screen video on larger Mac displays and a new way to discover content to watch and read in an updated Search section. As with last year’s WWDC, attendees will be able to connect with and tune into announcements, sessions and 1:1 labs via the Developer app.
U.S. users spent an average of $138 on iPhone apps in 2020, and the number is expected to grow to $180 in 2021, reported Sensor Tower. Throughout 2020, consumers turned to iPhone apps for work, school, entertainment, shopping and more, driving per-user spending to a new record and the greatest annual growth since 2016. Per-device spending on mobile games was a large part of that figure, growing 43% year over year from $53.80 in 2019 to $76.80 in 2020. That’s more than 20 points higher than the 22% growth seen between 2018 and 2019, when in-game spending grew from $44 to $53.80.
Google will begin to limit Android 11+ apps from being able to see what other apps the user has installed on their devices starting on May 5. The company now considers this “sensitive information,” though for years had allowed the practice. That made it easy for data-gathering apps that catalog to operate. Now, Google will only allow a few exceptions — apps that will be able to use the permission include antivirus, file managers and browsers. Expect to see data-gathering firms quietly release those sorts of apps in the near future.
A feature in The Cut this week raises questions about the viability and effectiveness of therapy apps like Talkspace, BetterHelp and AbleTo, some which use dating app-like models for matching clients to therapists as well as similar business models, where you can upgrade to live video and more features. The article questions whether the apps are able to deliver on their promises and notes how some have already faced questions over their use of data, sponsorship deals, treatment of workers and healthcare rule violations.
The global airline industry body IATA said it will launch a digital travel pass for COVID-19 test results and vaccine certificates on iOS by mid-April. The travel pass, meant to help speed up check-ins, is being tested already by U.K.-based Virgin Atlantic, which is using the IATA app on its London to Barbados flight on April 16.
Apple Maps adds COVID-19 travel guidance for over 300 airports worldwide in its recent update. The app will now show COVID-19 health measure information for airports when searched via the app, either through a link to the airport’s own COVID-19 advisory page, or directly on the in-app location card itself.
Facebook teamed up with the U.S. Department of Health and Human Services (HHS) and Centers for Disease Control and Prevention (CDC) to launch a set of profile frames that will help to encourage vaccinations against COVID-19. The frames, offered in either English or Spanish, will say “Let’s Get Vaccinated” or “I Got My COVID-19 Vaccine.” Research shows that social norms can impact people’s behavior when it comes to their health, so the hope is that, as more adopt the frames, those hesitant about the vaccine will be encouraged to get one. Facebook will also begin showing users how many of their family and friends have been vaccinated, based on the frame usage.
Facebook this week introduced new tools that allow users to more easily switch to the “Most Recent” view or “Favorites” view of their News Feed, as well as tools to limit comments on posts and other changes. The launch came at the same time as the company argued in a long-winded post how its personalization algorithms are not at fault for the world’s ills and the rising spread of misinformation and dangerous health content. Rather, it blames the users who seek out this content and then engage with it. The company is pushing regulators to give it guidelines on misinformation, knowing that it will have an easier time with increased regulations than any new social media upstarts.
Instagram launched Remix on Reels, a TikTok Duets-like feature that allows users to record a video alongside someone else’s content in order to react, collaborate and more. Snapchat is developing its own Duets feature with the same name of Remix, too.
Snap is planning to expand further into hardware, The Information reported, with a new, more advanced version of its Spectacles smart glasses that include AR effects. It’s also reviving an older effort to build its own drone.
Instagram appears to be developing a new way to block the trolls. Reverse engineer Alessandro Paluzzi found in the app’s code a reference to a new option, “Hide More Comments,” which will automatically hide comments with frequently reported words.
#Instagram is working on a new option to filter comments: Hide more comments
When active, comments containing frequently reported words will be automatically hidden. This option seems to be available to everyone in the latest alpha for Android. It's a mistake, probably. pic.twitter.com/TilARqyvyW
Instagram announced it’s expanding its IGTV ads internationally for the first time, initially to markets including the U.K. and Australia.
Facebook extended the deadline for iOS apps using its Facebook Audience Network monetization platform to migrate their apps to bidding only — a response to Apple’s iOS 14 changes. The previous deadline was March 31, which has now been pushed to May 31. Android apps have until September 30.
Streaming & Entertainment
Business-focused social network LinkedIn confirmed it’s building a Clubhouse rivalthat will offer a speaker stage, as well as tools to join and leave the room, react to comments, request to speak and more. The company sees the feature as an extension of its existing offerings for creators, which also includes things like LinkedIn Live, Stories and newsletters. It says that it believes its offering will be able to differentiate from others because its network will be connected with people’s professional identity, not just a social profile.
Image Credits: LinkedIn
Spotify significantly expanded its personalized playlist lineup with the launch of three new categories of playlists, called “Spotify Mixes.” Inspired by Daily Mixes, these new options offer easy-to-understand titles that include artist mixes (e.g. Drake Mix), genre mixes (e.g. Pop Mix) and decade mixes (e.g. 2010s Mix).
Audioburst launches a platform that will allow developers to integrate podcast feeds into mobile apps. The platform supports both partial or complete podcasts and radio shows and other streaming audio.
Discord became yet another tech company to offer its own Clubhouse-like feature with the launch of Stage Channels. The feature allows certain people to broadcast to a group of listeners, who can raise their hand to ask questions, while moderators can bring people onstage, remove them or put them on mute. Stage Channels are available on desktop, web and in Discord’s mobile apps.
Image Credits: Discord/TechCrunch
Gaming
Apple’s subscription-based gaming service, Apple Arcade, was significantly expanded this week with the addition of more than 30 new titles, including new exclusives like NBA 2K21, Star Trek: Legends and a new version of The Oregon Trail from Gameloft. But it also notably adopted a new strategy as well, with the addition of older titles in two new categories called “Timeless Classics” and “App Store Greats.”
Image Credits: Apple
The former will include well-loved games like chess, backgammon, sudoku, crosswords, solitaire and others, while the App Store Greats will bring award-winning titles to Arcade like Threes!, Mini Metro, Fruit Ninja Classic, Monument Valley and Chameleon Run — all of which will be free and unlocked. With the additions, Apple Arcade has now grown to more than 180 total games for $4.99/mo (or included with an Apple One subscription.)
Finnish mobile gaming giant Supercell, developers of Clash of Clans and Clash Royale, announced it’s making three new Clash titles: a turn-based tactical game, Clash Quest; a virtual board game, Clash Mini; and a co-op action roleplaying game, Clash Heroes. The games are in early stages of development and will be killed if they don’t meet Supercell’s high standards.
Fintech
Following the meme stock frenzy, free stock trading app Robinhood will remove its controversial digital confetti feature, which critics said was a gamification technique — and not something that should be associated with financial investing.
WhatsApp Pay, the messaging app’s P2P payments feature, is now authorized in Brazil. The feature was first announced to roll out in Brazil last year, but had to be delayed after the country’s central bank said it could damage existing payments systems. It also said WhatsApp had failed to obtain proper licensing. On Tuesday, the bank said the service could go forward — now that it’s launched its own payments system called Pix, which has been widely adopted.
Bakkt released a digital wallet app for trading fiat currency for crypto, but also supports other digital assets not on the blockchain like frequent flier miles, loyalty points, gift cards and in-game assets.
Productivity
Microsoft’s Cortana mobile app for iOS and Android officially shut down on Wednesday, March 31. The AI-based personal assistant was Microsoft’s answer to Siri, Alexa and Google Assistant, but with more integration into Microsoft’s own apps. The mobile version, however, never caught on and Microsoft has since refocused on AI assistance built directly into its Microsoft 365 apps instead.
Google’s in-house incubator Area 120 launches Stack, an Android app that digitizes personal documents, IDs, receipts and more. It can then automatically name the files, extract key info (like the bill’s due date) and organize them, with help from Google’s DocAI technology. The app can also sync your scans to Google Drive for easy access.
Image Credits: Google
Amazon reports rising demand and engagement for productivity apps on Amazon Fire tablets. During 2020, the pandemic-fueled changes to work and home life led to a 62% increase in productivity by app users month over month across the tablet app store, and a 226% growth in app engagement amongst productivity customers in the last year. The company says it expects these trends to continue in 2021.
Government & Policy
Republicans on the House and Senate antitrust committees wrote letters to Apple, Google and Amazon, asking them about Parler’s removal from their respective platforms, framing it as targeting “one small business.” The tech companies had removed Parler for failing to follow their community guidelines over content and moderation after finding that the app had been used to plan, coordinate and facilitate the storming of the U.S. Capitol.
Apple’s App Store has been found to be hosting more than a dozen apps created by a China paramilitary group accused of Uyghur genocide, The Information reported. The organization, which has been sanctioned by the U.S. for human rights abuses, has published apps that offer news, info about government services and provides aid to small businesses with e-commerce orders, and more.
The Odyssey Team announced the release of its new Taurine jailbreak for all devices running iOS 14-iOS 14.3. The jailbreak is installed using AltServer, similar to the unc0ver jailbreak.
A research report covered by Ars Technica found that Google collects up to 20x more data on Android users than Apple collects from iOS users. The report had analyzed the telemetry data transmitted directly to the companies themselves through pre-installed apps and when idle. Google disagreed with the report’s finding and says there were flaws in the researcher’s methodology that caused findings to be off by “an order of magnitude.”
The Washington Post covered a story about how an App Store scammer stole a user’s life savings, $600,000, in bitcoin. The user believed the app was safe because Apple markets its App Store as trustworthy, but the app itself had been designed to trick users by pretending to be associated with Trezor, the maker of a hardware device used to store cryptocurrencies. The actual Trezor said it’s been notifying Apple and Google for years about fake apps that were scamming its customers, to no avail. The fake app got through App Review then changed itself to a crypto wallet without Apple’s knowledge.
Funding and M&A
Image Credits: Cameo
Celebrity video request app Cameo raised $100 million in Series C funding in a round led by Jonathan Turner with e.ventures. The new funds value the business at just north of $1 billion.
Spotify acquired Betty Labs, the maker of the live audio app Locker Room with the goal of taking on Clubhouse. The app currently focuses on sports talk but will be expanded to cater to a wider range of fans and creators across “a range of sports, music, and cultural programming.” It will also add “a host of interactive features that enable creators to connect with audiences in real time,” like Clubhouse. The rise of live audio has offered a potential threat to Spotify’s investment in podcasts, as it connects users to audio programming in real time, instead of through recorded and produced shows. Spotify had earlier said it would add interactivity to its Anchor podcast recording app to better connect podcasters and listeners, but with the Locker Room sale it’s taking a further step towards fully embracing live audio.
Holler raised $36 million from CityRock Venture Partners and New General Market Partners to power “conversational media” in your favorite apps. The company works with partners like PayPal-owned Venmo and The Meet Group to bring AI-powered recommendations of GIFs and stickers to use when messaging in the apps. The content is monetized in partnership with companies like HBO Max, IKEA and Starbucks for branded stickers. Holler’s content now reaches 75 million users monthly, up from 19 million last year.
Madison-based Fetch Rewards raised a $210 million Series D for its customer loyalty and retail rewards app, valuing the business at more than $1 billion. The round was led by SoftBank through its Vision Fund 2, and makes Fetch Rewards one of the Midwest’s few unicorns. The app’s 7 million active users earn points by sharing photos of their receipts, which allows them to earn gift cards and participate in sweepstakes. The funding will help the company speed up its ability to process online receipts.
Funko, makers of pop culture collectibles, entered the NFT market by acquiring a majority stake in TokenWave, the makers of the TokenHead mobile app. The app allows users to showcase and track their NFT holdings, and today has over 10 million NFTs on display. Funko aims to launch its first NFTs in June, at starting prices of $9.99, with a unique property offered each week. Its products will be sold on the Worldwide Asset Exchange.
Chinese video streaming platform Bilibili invested HK$960 million (around $123 million USD) into X.D. Network, the makers of the game distribution platform TapTap, giving it a 4.72% stake in the company. X.D. is seen as a competitor with traditional game distributors in China, including the Android app stores operated by smartphone makers.
Chinese grocery app Nice Tuan raised $750 million from Alibaba, DST Global, and others to bolster its supply chain and increase its fresh produce offerings. The company today serves 1,598 cities and counties across China, and sees 15 million orders per day.
U.K.-based Nested raised an additional £5 million for its modern real estate agency that connects home buyers and agents using technology across web and mobile.
Expense tracking app Ensemble raised $3 million in seed funding for its app that helps divorced parents track shared expenses, like medical bills, extracurricular activities, transportation and other things that may fall outside of child support, which tends to cover just food, shelter and clothing needs.
Stockholm-based sport fishing app Fishbrain raised $31 million in funding for its mobile app that offers both a social network and social commerce platform for fishing with nearly 12 million registered users worldwide.
Indonesian investment app Ajaib added $65 million to its Series A, bringing the round to $90 million, in an extension led by Ribbit Capital — the fintech investor who also led Robinhood’s $3.4 billion round last month. This is its first investment in Southeast Asia.
Gaming startup Lowkey raises $7 million from Andreessen Horowitz for its app that allows gamers to both create and view short gaming clips. The company sees an opportunity in helping gamers cut down their existing content for distribution to short-form video platforms, like Instagram and TikTok.
Downloads
Smart Photo Widget
Image Credits: Cromulent Labs
Cromulent Labs, the makers of Launcher and other apps, this week introduced a Smart Photo Widget that automatically frames each photo to fit the widget size you selected. You can also configure the widget to skip any bad photos from album (blurry, dark, screenshots, etc.) as it rotates through the best photos throughout the day. In the Premium version, you can add a date and time or other overlays and filter your photos to match your style. The app is free on iOS with in-app purchases.
Frenzic: Overtime (Soon)
Image Credits: Iconfactory
The popular app publisher and Twitterific developer Iconfactory announced on Friday it will soon launch Frenzic: Overtime, a sequel to the game that first launched on the iPhone App Store 13 years ago. The title will bring players over 45 levels with multiple gameplay modes and hundreds of mini-goals to achieve as they unlock the secrets of Frenzic Industries in this arcade style puzzler. The title will be available on Apple Arcade, but subscribers can already visit the game’s listing page and set a notification to be alerted to its launch.
SPIN Safe Browser
Image Credits: SPIN Safe Browser
A parental control app maker Boomerang, which continues to face App Review roadblocks, pivoted this year to develop safe browser technology. A new version of its SPIN Safe Browser designed for schools in need of filtering content was released this week. The app leverages AppConfig for content filter management through MDMs like Jamf School and Jamf Pro. Administrators can use the feature to enable or disable any of the categories as well as specific URLs that should be blocked or allowed.
Tweets
This is a story about how I lost $10,000,000 by doing something stupid.
Ten. Million. Dollars.
Literally up in smoke. Money bonfire.
That’s enough to retire with $250,000+ in annual income.
Apple adds classic titles to Apple Arcade, Microsoft experiences an outage and Coinbase is going public. This is your Daily Crunch for April 2, 2021.
The big story: Apple Arcade expands with classic games
Until now, Apple’s game subscription service was limited to exclusive new titles, but today it’s introducing two new categories: App Store Greats (popular iPhone games like Monument Valley+, Fruit Ninja Classic+, Cut the Rope Remastered and Badland+) and Timeless Classics (board games and puzzle games, such as Backgammon+ and Chess Play and Learn+).
This is a major expansion to the Apple Arcade back catalog, but it’s not simply a matter of putting previously free games behind a paywall. The Arcade versions of these titles will be ad-free and without in-app purchases — you’re never paying anything beyond the $4.99 monthly subscription fee. Also, some of these games had become unavailable in their original forms due to iOS and hardware updates.
(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.
For this morning’s column, Alex Wilhelm looked back on the last few months, “a busy season for technology exits” that followed a hot Q4 2020.
We’re seeing signs of an IPO market that may be cooling, but even so, “there are sufficient SPACs to take the entire recent Y Combinator class public,” he notes.
Once we factor in private equity firms with pockets full of money, it’s evident that late-stage companies have three solid choices for leveling up.
Seeking more insight into these liquidity options, Alex interviewed:
DigitalOcean CEO Yancey Spruill, whose company went public via IPO;
Latch CFO Garth Mitchell, who discussed his startup’s merger with real estate SPAC $TSIA;
Brian Cruver, founder and CEO of AlertMedia, which recently sold to a private equity firm.
After recapping their deals, each executive explains how their company determined which flashing red “EXIT” sign to follow. As Alex observed, “choosing which option is best from a buffet’s worth of possibilities is an interesting task.”
Thanks very much for reading Extra Crunch! Have a great weekend.
Full Extra Crunch articles are only available to members Use discount code ECFriday to save 20% off a one- or two-year subscription
The Tonal EC-1
Image Credits: Nigel Sussman
On Tuesday, we published a four-part series on Tonal, a home fitness startup that has raised $200 million since it launched in 2018. The company’s patented hardware combines digital weights, coaching and AI in a wall-mounted system that sells for $2,995.
By any measure, it is poised for success — sales increased 800% between December 2019 and 2020, and by the end of this year, the company will have 60 retail locations. On Wednesday, Tonal reported a $250 million Series E that valued the company at $1.6 billion.
Our deep dive examines Tonal’s origins, product development timeline, its go-to-market strategy and other aspects that combined to spark investor interest and customer delight.
We call this format the “EC-1,” since these stories are as comprehensive and illuminating as the S-1 forms startups must file with the SEC before going public.
Why did Deliveroo struggle when it began to trade? Is it suffering from cultural dissonance between its high-growth model and more conservative European investors?
The Exchange doubts many folks expected the IPO climate to get so chilly without warning. But we could be in for a Q2 pause in the formerly scorching climate for tech debuts.
A $65 million Series B is remarkable, even by 2021 standards. But the fact that a16z is pouring more capital into the alt-media space is not a surprise.
Substack is a place where publications have bled some well-known talent, shifting the center of gravity in media. Let’s take a look at Substack’s historical growth.
RPA market surges as investors, vendors capitalize on pandemic-driven tech shift
Image Credits: Visual Generation / Getty Images
Robotic process automation came to the fore during the pandemic as companies took steps to digitally transform. When employees couldn’t be in the same office together, it became crucial to cobble together more automated workflows that required fewer people in the loop.
RPA has enabled executives to provide a level of automation that essentially buys them time to update systems to more modern approaches while reducing the large number of mundane manual tasks that are part of every industry’s workflow.
This year is all about the roll-ups, the aggregation of smaller companies into larger firms, creating a potentially compelling path for equity value. The interest in creating value through e-commerce brands is particularly striking.
Just a year ago, digitally native brands had fallen out of favor with venture capitalists after so many failed to create venture-scale returns. So what’s the roll-up hype about?
The cyber world has entered a new era in which attacks are becoming more frequent and happening on a larger scale than ever before. Massive hacks affecting thousands of high-level American companies and agencies have dominated the news recently. Chief among these are the December SolarWinds/FireEye breach and the more recent Microsoft Exchange server breach.
Everyone wants to know: If you’ve been hit with the Exchange breach, what should you do?
Embedded procurement will make every company its own marketplace
Image Credits: Busakorn Pongparnit / Getty Images
Embedded procurement is the natural evolution of embedded fintech.
In this next wave, businesses will buy things they need through vertical B2B apps, rather than through sales reps, distributors or an individual merchant’s website.
Startups must curb bureaucracy to ensure agile data governance
Image Credits: RichVintage / Getty Images
Many organizations perceive data management as being akin to data governance, where responsibilities are centered around establishing controls and audit procedures, and things are viewed from a defensive lens.
That defensiveness is admittedly justified, particularly given the potential financial and reputational damages caused by data mismanagement and leakage.
Nonetheless, there’s an element of myopia here, and being excessively cautious can prevent organizations from realizing the benefits of data-driven collaboration, particularly when it comes to software and product development.
Cyber strategy and company strategy are inextricably linked. Consequently, chief information security officers in the C-Suite will be just as common and influential as CFOs in maximizing shareholder value.
Edtech unicorns have boatloads of cash to spend following the capital boost to the sector in 2020. As a result, edtech M&A activity has continued to swell.
The idea of a well-capitalized startup buying competitors to complement its core business is nothing new, but exits in this sector are notable because the money used to buy startups can be seen as an effect of the pandemic’s impact on remote education.
But in the past week, the consolidation environment made a clear statement: Pandemic-proven startups are scooping up talent — and fast.
There’s certainly no shortage of SaaS performance metrics leaders focus on, but NRR (net revenue retention) is without question the most underrated metric out there.
NRR is simply total revenue minus any revenue churn plus any revenue expansion from upgrades, cross-sells or upsells. The greater the NRR, the quicker companies can scale.
CEO Manish Chandra, investor Navin Chaddha explain why Poshmark’s Series A deck sings
“Lead with love, and the money comes.” It’s one of the cornerstone values at Poshmark. On the latest episode of Extra Crunch Live, Chandra and Chaddha sat down with us and walked us through their original Series A pitch deck.
Cities are bustling hubs where people live, work and play. When the pandemic hit, some people fled major metropolitan markets for smaller towns — raising questions about the future validity of cities.
But those who predicted that COVID-19 would destroy major urban communities might want to stop shorting the resilience of these municipalities and start going long on what the post-pandemic future looks like.
There’s plenty of uncertainty surrounding copyright issues, fraud and adult content, and legal implications are the crux of the NFT trend.
Whether a court would protect the receipt-holder’s ownership over a given file depends on a variety of factors. All of these concerns mean artists may need to lawyer up.
It’s a reasonable question: Why would anyone pay that much for Cazoo today if Carvana is more profitable and whatnot? Well, growth. That’s the argument anyway.
For this morning’s column, Alex Wilhelm looked back on the last few months, “a busy season for technology exits” that followed a hot Q4 2020.
We’re seeing signs of an IPO market that may be cooling, but even so, “there are sufficient SPACs to take the entire recent Y Combinator class public,” he notes.
Once we factor in private equity firms with pockets full of money, it’s evident that late-stage companies have three solid choices for leveling up.
Seeking more insight into these liquidity options, Alex interviewed:
DigitalOcean CEO Yancey Spruill, whose company went public via IPO;
Latch CFO Garth Mitchell, who discussed his startup’s merger with real estate SPAC $TSIA;
Brian Cruver, founder and CEO of AlertMedia, which recently sold to a private equity firm.
After recapping their deals, each executive explains how their company determined which flashing red “EXIT” sign to follow. As Alex observed, “choosing which option is best from a buffet’s worth of possibilities is an interesting task.”
Thanks very much for reading Extra Crunch! Have a great weekend.
Full Extra Crunch articles are only available to members Use discount code ECFriday to save 20% off a one- or two-year subscription
The Tonal EC-1
Image Credits: Nigel Sussman
On Tuesday, we published a four-part series on Tonal, a home fitness startup that has raised $200 million since it launched in 2018. The company’s patented hardware combines digital weights, coaching and AI in a wall-mounted system that sells for $2,995.
By any measure, it is poised for success — sales increased 800% between December 2019 and 2020, and by the end of this year, the company will have 60 retail locations. On Wednesday, Tonal reported a $250 million Series E that valued the company at $1.6 billion.
Our deep dive examines Tonal’s origins, product development timeline, its go-to-market strategy and other aspects that combined to spark investor interest and customer delight.
We call this format the “EC-1,” since these stories are as comprehensive and illuminating as the S-1 forms startups must file with the SEC before going public.
Why did Deliveroo struggle when it began to trade? Is it suffering from cultural dissonance between its high-growth model and more conservative European investors?
The Exchange doubts many folks expected the IPO climate to get so chilly without warning. But we could be in for a Q2 pause in the formerly scorching climate for tech debuts.
A $65 million Series B is remarkable, even by 2021 standards. But the fact that a16z is pouring more capital into the alt-media space is not a surprise.
Substack is a place where publications have bled some well-known talent, shifting the center of gravity in media. Let’s take a look at Substack’s historical growth.
RPA market surges as investors, vendors capitalize on pandemic-driven tech shift
Image Credits: Visual Generation / Getty Images
Robotic process automation came to the fore during the pandemic as companies took steps to digitally transform. When employees couldn’t be in the same office together, it became crucial to cobble together more automated workflows that required fewer people in the loop.
RPA has enabled executives to provide a level of automation that essentially buys them time to update systems to more modern approaches while reducing the large number of mundane manual tasks that are part of every industry’s workflow.
This year is all about the roll-ups, the aggregation of smaller companies into larger firms, creating a potentially compelling path for equity value. The interest in creating value through e-commerce brands is particularly striking.
Just a year ago, digitally native brands had fallen out of favor with venture capitalists after so many failed to create venture-scale returns. So what’s the roll-up hype about?
The cyber world has entered a new era in which attacks are becoming more frequent and happening on a larger scale than ever before. Massive hacks affecting thousands of high-level American companies and agencies have dominated the news recently. Chief among these are the December SolarWinds/FireEye breach and the more recent Microsoft Exchange server breach.
Everyone wants to know: If you’ve been hit with the Exchange breach, what should you do?
Embedded procurement will make every company its own marketplace
Image Credits: Busakorn Pongparnit / Getty Images
Embedded procurement is the natural evolution of embedded fintech.
In this next wave, businesses will buy things they need through vertical B2B apps, rather than through sales reps, distributors or an individual merchant’s website.
Startups must curb bureaucracy to ensure agile data governance
Image Credits: RichVintage / Getty Images
Many organizations perceive data management as being akin to data governance, where responsibilities are centered around establishing controls and audit procedures, and things are viewed from a defensive lens.
That defensiveness is admittedly justified, particularly given the potential financial and reputational damages caused by data mismanagement and leakage.
Nonetheless, there’s an element of myopia here, and being excessively cautious can prevent organizations from realizing the benefits of data-driven collaboration, particularly when it comes to software and product development.
Cyber strategy and company strategy are inextricably linked. Consequently, chief information security officers in the C-Suite will be just as common and influential as CFOs in maximizing shareholder value.
Edtech unicorns have boatloads of cash to spend following the capital boost to the sector in 2020. As a result, edtech M&A activity has continued to swell.
The idea of a well-capitalized startup buying competitors to complement its core business is nothing new, but exits in this sector are notable because the money used to buy startups can be seen as an effect of the pandemic’s impact on remote education.
But in the past week, the consolidation environment made a clear statement: Pandemic-proven startups are scooping up talent — and fast.
There’s certainly no shortage of SaaS performance metrics leaders focus on, but NRR (net revenue retention) is without question the most underrated metric out there.
NRR is simply total revenue minus any revenue churn plus any revenue expansion from upgrades, cross-sells or upsells. The greater the NRR, the quicker companies can scale.
CEO Manish Chandra, investor Navin Chaddha explain why Poshmark’s Series A deck sings
“Lead with love, and the money comes.” It’s one of the cornerstone values at Poshmark. On the latest episode of Extra Crunch Live, Chandra and Chaddha sat down with us and walked us through their original Series A pitch deck.
Cities are bustling hubs where people live, work and play. When the pandemic hit, some people fled major metropolitan markets for smaller towns — raising questions about the future validity of cities.
But those who predicted that COVID-19 would destroy major urban communities might want to stop shorting the resilience of these municipalities and start going long on what the post-pandemic future looks like.
There’s plenty of uncertainty surrounding copyright issues, fraud and adult content, and legal implications are the crux of the NFT trend.
Whether a court would protect the receipt-holder’s ownership over a given file depends on a variety of factors. All of these concerns mean artists may need to lawyer up.
It’s a reasonable question: Why would anyone pay that much for Cazoo today if Carvana is more profitable and whatnot? Well, growth. That’s the argument anyway.
Woody Sears has long been interested in storytelling. After spending several years in sales after nabbing an MBA from Pepperdine — and following the debut in 2007 of the first iPhone — he founded a storytelling app called Zuuka that built up a library of narrated and illustrated kids’ books for the iPhone and iPad.
Sears later sold that company to a small New York-based outfit called Cupcake Digital. But Sears, who is based in Santa Barbara, Calif., isn’t done with stories yet. Instead, he just raised $1.6 million in seed funding for his second and newest storytelling startup, HearHere, a subscription-based audio road-trip app that, with users’ permission, pushes information to them as they’re driving, giving them informational tidbits in three- to five-minute-long segments about their surroundings, including points of interest they might not have been aware of at all.
The idea is to surface the unknown or forgotten history of regions, which makes sense in a world where more people have returned to road trips and parents have grown desperate to pull their kids’ attention away from TikTok. In fact, Sears’s neighbor, Kevin Costner, liked the idea so much that he recently joined its five-person team as a cofounder and narrator and investor, along with Snap Inc., the law firm Cooley, Camping World CEO and reality TV star Marcus Lemonis, AAA, and numerous other individual investors, including from NextGen Venture Partners.
Because we, too, like history and road trips (and okay, fine, Kevin Costner), we talk with Sears and Costner earlier today to learn why they think they’ll succeed with HearHere when other content-rich geo-location based apps have fallen short of meaningful adoption.
Excerpts from that chat follow, edited lightly for length.
TC: You’re creating an audio map of the U.S., so how many stories do you have banked as we speak?
WS: We’re up to 5,500 stories across 22 states, and we’ll be nationwide by summer. The mission is to connect people to the places that they’re traveling through, lending people stories about the history, the natural wonders, and the colorful characters who’ve lived in that area. We also do stories about sports and music and provide local insights.
TC: That’s a lot of content to gather up, edit down, then record. What does the process look like?
WS: At the end of the day, the content is king, and we take great care with these stories, producing them with a team of 22, researchers, writers, editors and narrators, most whom come from a travel journalism background. We really feel like we get the best end result through that team approach.
Eventually, we’ll open up to third-party content contributors, where we’re hosting both professional content and also user-generated content.
TC: Is there an AI component or will there be?
WS: We more see this as augmented reality in that these stories really does overlay the landscape and give you a different perspective while all traveling. But AI and machine learning re things that we’ll incorporate as we start to move into foreign languages, and better tailor the content for the end user.
TC: How do you prioritize which stories to tell as you’re building up this content library?
WS: The major historical markers are a big inspiration, but we’re looking for those lesser-known gems, too, and we look at travel patterns — the way that people move when they’re on leisure trips, meaning what interstate highways they’re taking and which scenic routes are most popular.
TC: How does the subscription piece work?
WS: You get five free free stories each month; for unlimited streaming, it’s $35.99 per year.
TC: Kevin, you must be approached a lot with startup ideas and investment opportunities. Why get so involved with this one?
KC: Obviously I’m story-oriented; that doesn’t come as a shock to anybody. But you’re right, a lot ideas come to me.
Hearhere came through my wife, who said that Woody had something he wanted to talk about, and as she explained it to me, I got it, you know? That’s the shiny thing for me, storytelling and having the ability for a good story to come out, especially when it comes to our country.
So we had this meeting and he explained the concept to me, which is kind of equal to what I’d already been doing my whole life, which is stopping at the bronze plaques all over the country and reading about their historical significance — those [moments] that kind of interrupt everybody’s trip except mine. [Laughs.] You know, [it’s] getting out and stretching my legs and reading a little history and dreaming while the rest of the people in the car are kind of moaning because we stopped our progress.
This is an extension of that for me, without getting out of the car, and with stories that can evolve and perhaps get longer. And I can become more involved in what I was driving past and the people in the car can maybe sense what it was that interested me enough to stop.
Image Credits: Hearhere
TC: You love history.
KC: Hearhere is a lot more than history, but for me, it was the history [that I found so compelling]. And it’s how the foundation was set for me to become more involved in the company and understand it a lot better and then become somebody who wanted to be a part of the founding of it.
TC: AAA and Camping World are among the company’s strategic investors. How might they promote the app and what other partnerships have you struck to get Hearhere in front of people at the right time?
WS: Camping World also owns Good Sam Club, which is the largest organization of RV owners in the world, and AAA is a giant with 57 million members in the US, and they all see this as a way to fulfill something they’re aren’t currently doing for their audience; it’s making that bridge to digital, and we’re really excited to get this in front of their members and customers.
We also have partnerships with [the RV marketplaces] Outdoorsy and RVshare [and the RV rental and sales company] Cruise America. It’s a very hot market.
TC: There have been similar ideas. Caterina Fake’s Findery was an early app that aimed to help users discover much more about locations. Detour, a walking audio tour startup founded by Groupon cofounder Andrew Mason, seemed interesting but failed to take off with users. What makes you think this startup will click with users?
WS: I loved Detours. I ate up both of those.
I guess where I think [Detours] missed product market fit was the number of scenarios where you could use it and also, it was competing for people’s time. We chose to start with road trips because you have a captive audience; there’s only so much you can do when you’re driving in the car, unlike when you’re in a city [where Detours focused], where there are all kind of options to explore its history, either through physical books or tour guides, and you had to carve out two hours of your time, and it’s easy to get distracted while you’re walking around.
We want to capture the places that are along the journey and lesser known and more untold and where people have the space to engage in it. Starting as short form helps. It’s also on-demand, so you don’t have to follow a pre-designated route. We’re not taking you on a specific tour, where you have to turn left or turn right. We’re going to surface stories for you no matter what route you take.
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