Category: UNCATEGORIZED

Some of the biggest names in online gaming in the United States have received letters from the U.S. government requesting information about their relationship with the multibillion-dollar Chinese technology company, Tencent, according to reports.

Even as the U.S. Department of Commerce moves to block new downloads of the Chinese company’s popular messaging and payment app, WeChat, it has sent out letters to U.S. gaming companies like Epic Games, Riot Games, and others about their data-security protocols and their relationship to Tencent, according to a report in Bloomberg.

Citing people familiar with the matter, Bloomberg reports that the Committee on Foreign Investment in the U.S., which is chaired by the Treasury Department, is looking for information about how these companies handle the personal data of their U.S. customers.

At Disrupt 2020, we got a chance to see some never-before-seen footage from HBO’s upcoming documentary The Perfect Weapon.

The documentary, which was executive produced by John Maggio, is based on the book by the same(ish) name written by David Sanger, Washington correspondent for the New York Times.

We got to sit down for an interview with Sanger where we discussed the cybersecurity threats the United States faces, the definition of an appropriate response, and in general, whether or not we should be worried.

You can check out the full interview below, as well as a never-before-seen clip from the upcoming documentary.

The conversation was an excellent lead-in to Zack Whittaker’s interview with the NSA’s Cybersecurity Chief Anne Neuberger, which you can check out here.

In a case of bizarre timing, Salesforce announced it was laying off 1000 employees at the end of last month just a day after announcing a monster quarter with over $5 billion in revenue, putting the company on a $20 billion revenue run rate for the first time. The juxtaposition was hard to miss.

Earlier today, Salesforce CEO and co-founder Marc Benioff announced in tweet that the company would be hiring 4000 new employees in the next six months, and 12,000 in the next year. While it seems like a mixed message, it’s probably more about reallocating resources to areas where they are needed more.

While Salesforce wouldn’t comment further on the hirings, the company has obviously been doing well in spite of the pandemic, which has had an impact on customers. In the prior quarter, the company forecasted that it would have slower revenue growth due to giving some customers facing hard times with economic downturn, time to pay their bills.

That’s why it was surprising when the CRM giant announced its earnings in August and it had done so well in spite of all that. While the company was laying off those 1000 people, it did indicate it would give those employees 60 days to find other positions in the company. With these new jobs, assuming they are positions the laid off employees are qualified for, they could have a variety of positions to choose from.

The company had 54,000 employees when it announced the layoffs, which accounted for 1.9% of the workforce. If it ends up adding the 12,000 news jobs in the next year, that would put at approximately 65,000 employees by this time next year.

We started this competition with 20 impressive startups. After five days of fierce pitching in a wholly new virtual Startup Battlefield arena, we have a winner.

The startups taking part in the Startup Battlefield have all been hand-picked to participate in our highly competitive startup competition. It was an unprecedented year as we moved all of the nail-biting excitement of our physical contest to a virtual stage. They all presented in front of multiple groups of VCs and tech leaders serving as judges for a chance to win $100,000 and the coveted Disrupt Cup.

After hours of deliberations, TechCrunch editors pored over the judges’ notes and narrowed the list down to five finalists: Canix, Firehawk Aerospace, HacWare, Jefa and Matidor.

These startups made their way to the finale to demo in front of our final panel of judges, which included: Caryn Marooney (Coatue Management), Ilya Fushman (Kleiner Perkins), Michael Seibel (Y Combinator), Sonali De Rycker (Sequoia), Troy Carter (Q&A) and Matthew Panzarino (TechCrunch).

We’re now ready to announce that the winner of TechCrunch Battlefield 2020 is….

Ever since Apple opened up subscription monetization to more apps in 2016 — and enticed developers with an 85/15 split on revenue from customers that remain subscribed for more than a year — subscription monetization and retention has felt like the Holy Grail for app developers. So much so that Google quickly followed suit in what appeared to be an example of healthy competition for developers in the mobile OS duopoly.

But how does that split actually work out for most apps? Turns out, the 85/15 split — which Apple is keen to mention anytime developers complain about the App Store rev share — doesn’t have a meaningful impact for most developers. Because churn.

No matter how great an app is, subscribers are going to churn. Sometimes it’s because of a credit card expiring or some other billing issue. And sometimes it’s more of a pause, and the user comes back after a few months. But the majority of churn comes from subscribers who, for whatever reason, decide that the app just isn’t worth paying for anymore. If a subscriber churns before the one-year mark, the developer never sees that 85% split. And even if the user resubscribes, Apple and Google reset the clock if a subscription has lapsed for more than 60 days. Rather convenient… for Apple and Google.

Top mobile apps like Netflix and Spotify report churn rates in the low single digits, but they are the outliers. According to our data, the median churn rate for subscription apps is around 13% for monthly subscriptions and around 50% for annual. Monthly subscription churn is generally a bit higher in the first few months, then it tapers off. But an average churn of 13% leaves just 20% of subscribers crossing that magical 85/15 threshold.

In practice, what this means is that, for all the hype around the 85/15 split, very few developers are going to see a meaningful increase in revenue:

Image Credits: RevenueCat (opens in a new window)

Engineers at MIT, in partnership with the University of Massachusetts at Lowell, have devised a way to build a camera lens that avoids the typical spherical curve of ultra-wide-angle glass, while still providing true optical fisheye distortion. The fisheye lens is relatively specialist, producing images that can cover as wide an area as 180 degrees or more, but they can be very costly to produce, and are typically heavy, large lenses that aren’t ideal for use on small cameras like those found on smartphones.

This is the first time that a flat lens has been able to product clear, 180-degree images that cover a true panoramic spread. The engineers were able to make it work by patterning a thin wafer of glass on one side with microscopic, three-dimensional structures that are positioned very precisely in order to scatter any inbound light in precisely the same way that a curved piece of glass would.

The version created by the researchers in this case is actually designed to work specifically with the infrared portion of the light spectrum, but they could also adapt the design to work with visible light, they say. Whether IR or visible light, there are a range of potential uses of this technology, since capturing a 180-degree panorama is useful not only in some types of photography, but also for practical applications like medical imaging, and in computer vision applications where range is important to interpreting imaging data.

This design is just one example of what’s called a ‘Metalens’ – lenses that make use of microscopic features to change their optical characteristics in ways that would traditionally have been accomplished through macro design changes – like building a lens with an outward curve, for instance, or stacking multiple pieces of glass with different curvatures to achieve a desired field of view.

What’s unusual here is that the ability to accomplish a clear, detailed and accurate 180-degree panoramic image with a perfectly flat metalens design came as a surprise even to the engineers who worked on the project. It’s definitely an advancement of the science that goes beyond what may assumed was the state of the art.

It was a trickle at first that has evolved into a slow and steady stream. Now, a wave of new electric vehicles is building, promising to deliver an unprecedented number of models to North America, Europe and China over the next two to three years.

There might not be a better time to dig into EVs and we have two superstars coming to TC Sessions: Mobility 2020. JB Straubel, co-founder and CEO of Redwood Materials who pioneered the battery powertrain design for Tesla as its longtime CTO, and Celina Mikolajczak, the vice president of battery technology for Panasonic Energy of North America, will join us on our virtual stage to talk about all things electric vehicles.

This virtual event takes place October 6-7, and we’re excited to hear from these two technology leaders working at the forefront of the industry.

Straubel’s role at Tesla cannot be understated. The co-founder and executive was responsible for some of the company’s most important technology during his 15 years there, including leading the cell design, supply chain and the first Gigafactory concept through the production ramp of the Model 3.

But Straubel’s story isn’t just tied to Tesla. The former Tesla executive went on to found another startup in 2017 called Redwood Materials . The battery recycling startup is focused on circular supply chains, essentially turning waste into profit and solving the environmental impacts of new products before they happen. Its first named customer is Panasonic; and just this week announced Amazon has joined that list.

Mikolajczak has a long history researching and developing better lithium-ion batteries. Her technical consulting practice at Exponent focused on lithium-ion cell and battery safety and quality. She then took a senior management position at Tesla that was focused on cell quality and materials engineering. During her time at Tesla, Mikolajczak developed the battery cells and packs for Tesla’s Model S, Model X, Model 3 and Roadster Refresh.

After leaving Tesla, Mikolajczak went on to serve as director of engineering focused on battery development for rideshare vehicles at Uber Technologies. Last year, she joined Panasonic Energy of North America, where she is vice president of battery technology. Mikolajczak leads a team of more than 200 engineers and other technical staff to improve lithium-ion cell manufacturing and to bring the latest cell technologies to mass production for Tesla at the Gigafactory facility in Sparks, Nevada.

In short: these two know a lot about battery technology from how it has developed in the past decade to where it’s headed and the implications it will have on automakers, consumers and the economy.

Mikolajczak and Straubel are just two in a long list of all-star speakers, including Bryan Salesky, co-founder and CEO of Argo AI, Tekedra Mawakana, chief operating officer at Waymo, Ike co-founder and chief engineer Nancy Sun as well as folks from Nuro, Aurora, Cruise, Lyft and Uber. There are startups as well including Refraction AI, which came out of stealth on our stage at last year’s mobility event.

We hope you can join in October 6-7, 2020 at the event. As you might have heard, TC Sessions: Mobility is a virtual event. Don’t worry, we know many of you want to network. We’ve built out features into our platform to give attendees unparalleled access to speakers, investors and fellow founders. Get your tickets before prices increase in a few short weeks! There are discounts for groups and students and exclusive opportunities for exhibiting for early-stage founders.

Zoox, the automated vehicle technology startup that was acquired by Amazon this year, has been issued a permit from California regulators that will allow it to test driverless vehicles on public roads.

The permit is not for all public roads in the state, but it’s still notable considering the company will be able to test its vehicles without a human safety operator behind the wheel. The California Department of Motor Vehicles, the agency that regulates automated vehicle testing in the state, has issued a permit for a designated part of Foster City in San Mateo County.

Mark Rosekind, the former director of the National Highway Traffic Safety Administration who is now chief safety officer at Zoox, called it another important milestone in the company’s “efforts to deliver safe, fully electric, and affordable autonomous mobility to riders in California.”

Zoox has taken the “all of the above” approach to autonomous vehicles. The company is aiming to build a purpose-built electric vehicle, develop, test and validate the automated vehicle technology and operate a robotaxi fleet. That mission seems to be intact. Amazon has said that Zoox will remain a standalone company.

Zoox has had a permit to test autonomous vehicles with safety drivers since 2016. This new permit allows the company to test two autonomous vehicles without a driver behind the wheel on specified streets near its Foster City headquarters. The vehicles are approved to operate in fair weather conditions, including light rain or fog, on streets with a speed limit of no more than 45 mph, the agency said Friday.

While dozens of companies — 60 in all — have active permits to test autonomous vehicles with a safety driver, it’s far less common to receive permission for driverless vehicles. Only AutoX, Nuro and Waymo hold this driverless permit. Companies who receive these driverless permits have to provide evidence of insurance or a bond equal to $5 million and follow several other rules such as training remote operators on the technology.

Zoox also has a permit, which it received in late 2018, to transport people in its automated vehicles on public roads. These ride-hailing permits fall under the jurisdiction of the California Public Utilities Commission and have a variety of other requirements and rules. This permit, which allows Zoox to participate in the state’s Autonomous Vehicle Passenger Service pilot, doesn’t allow companies to charge for rides.

Zoox has also been testing its technology in Las Vegas, which is considers another target market. Zoox received permission from the Nevada Department of Motor Vehicles in early 2019 to drive autonomously on state roads. The startup was mapping and test-driving new routes in the greater Las Vegas region last year.

The tagline from today’s announcement from the United States Attorney’s office for the Southern District of New York says it all: “Adam Rogas Allegedly Raised $123 Million from Investors Using Financial Statements that Showed Tens of Millions of Dollars of Revenue and Assets that Did Not Exist”.

Rogas, the co-founder and former chief executive and chief financial officer and board member of the Las Vegas-based fraud prevention company, NS8, was arrested by the Federal Bureau of Investigation and charged in Manhattan court with securities fraud, fraud in the offer of sale of securities, and wire fraud earlier today.

Last week, the company laid off hundreds of staff as reports of an investigation by the Securities and Exchange Commission surfaced, according to a report in Forbes.

“This is a rapidly evolving situation,” Lightspeed Ventures told Forbes in a statement. “We are shocked by the news and have taken steps to inform our LPs. It would be premature to comment further at this time.” Lightspeed Ventures helped lead NS8’s $123 million Series A this June. Other investors include Edison Partners, Lytical Ventures, Sorenson Ventures, Arbor Ventures, Hillcrest Venture Partners, Blu Venture Investors, and Bloomberg Beta, per Crunchbase data.

The allegations are, indeed, shocking.

“As alleged, Adam Rogas was the proverbial fox guarding the henhouse,” said Audrey Strauss, the acting U.S. Attorney for the Southern District of New York, in a statement. “While raising over $100 million from investors for his fraud prevention company, Rogas himself allegedly was engaging in a brazen fraud.  Today’s arrest of Rogas ensures that he will be held accountable for his alleged scheme.”

Allegedly, while Rogas was in control of the bank accounts and spreadsheets that detailed its transactions with customers, he cooked the books to show millions in transactions that did not exist.

From January 2019 through February 2020, the FBI alleges that somewhere between 40 percent and 95 percent of the purported total assets on NS8’s balance sheet were fictitious, according to the statement. Over the same period bank Rogas altered bank statements to reflect $40 million in revenue that simply were not there, according to the Justice Department’s allegations.

On the back of that fake financial data, NS8 was able to raise over $120 million from some top tier investment firms including Lightspeed Venture Partners and AXA Ventures. 

Rogas managed to hoodwink not just the investment firms, but the auditors who were conducting due diligence on their behalf. After the round was completed, NS8 did a secondary offering which let Rogas cash out of $17.5 million through personal sales and through a company he controlled, according to the statement from the DOJ.

“It seems ironic that the co-founder of a company designed to prevent online fraud would engage in fraudulent activity himself, but today that’s exactly what we allege Adam Rogas did. Rogas allegedly raised millions of dollars from investors based on fictitious financial affirmations, and in the end, walked away with nearly $17.5 million worth of that money,” said FBI Assistant Director William F. Sweeney Jr. “Within our complex financial crimes branch, securities fraud cases remain among our top priorities. We’ve seen far too many examples of unscrupulous actors engaging in this type of criminal activity, and we continue to work diligently to weed out this behavior whenever and wherever we find it.”

Funding comes in stages.

Understanding these will help you know when and where to go for funding at each stage of your business. Further, it will help you communicate with funders more precisely. What you think when you hear “seed funding” and “A rounds” might be different from what investors think. You both need to be on the same page as you move forward.

Early money stage

The first stage is early money, when cash is invested in exchange for large amounts of equity. This cash, which ranges between $1,000 and $500,000, typically, comes from the three Fs: friends, family and (we don’t like this nomenclature) fools. The last-named folks are essentially “giving” you cash, and these investors are well-aware that you will most likely fail — hence, “fools.”

Your earliest investors should reap the biggest rewards because they are taking the most risk. The assumption is that, ultimately, you’ll make good or improve their investment. The reality, they understand, is that you probably won’t.

Your first money may come from bootstrapping or F&F, and your first big checks may come from an accelerator that pays you about $50,000 for a fairly large stake in your company. Accelerators are essentially greenhouses — or incubators — for startups. You apply to them. If accepted, you get assistance and a small amount of funding.

Why do investors give early money? Because they trust you, they understand your industry and they believe you can succeed. Some are curious about what you are doing and want to be close to the action. Others want to lock you up in case you are successful. In fact, many accelerators have this in mind when they connect with new startups. At its core, the funding landscape is surprisingly narrow. When you begin fundraising, you’ll hear a lot of terminology including descriptions of various funding categories and investors. Let’s talk about them one by one.

Bootstrapping

As the old saying goes, if you need a helping hand, you’ll find it at the end of your arm. With that adage in mind, let’s begin with bootstrapping.

Bootstrapping comes from the concept of “pulling yourself up by your own bootstraps,” a comical image that computer scientists adapted to describe how a computer starts from a powered-down state. In the case of an entrepreneur, bootstrapping is synonymous with sweat equity — your own work and money that you put into your business without outside help.

Bootstrapping is often the only way to begin a business as an entrepreneur. By bootstrapping, you will find out very quickly how invested you are, personally, in your idea.

Bootstrapping requires you to spend money or resources on yourself. This means you either spend your own cash to build an early version of your product, or you build the product yourself, using your own skills and experience. In the case of service businesses — IT shops, design houses and so on — it requires you to quit your day job and invest, full time, in your own business.

Bootstrapping should be a finite action. For example, you should plan to bootstrap for a year or less and plan to spend a certain amount of money bootstrapping. If you blow past your time or money budget with little to show for your efforts, you should probably scrap the idea.

Some ideas take very little cash to bootstrap. These businesses require sweat equity — that is, your own work on a project that leads to at least a minimum viable product (MVP).

Consider an entrepreneur who wants to build a new app-based business in which users pay (or will pay) for access to a service. Very basic Apple iOS and Google Android applications cost about $25,000 to build, and they can take up to six months to design and implement. You could also create a simpler, web-based version of the application as a bootstrapping effort, which often takes far less cash — about $5,000 at $50 an hour.

You can also teach yourself to code and build your MVP yourself. This is often how tech businesses begin, and it says plenty about the need for founders to code or at least be proficient in the technical aspects of their business.

You can’t bootstrap forever. One entrepreneur we encountered was building a dating app. She had dedicated her life to this dating app, spending all of her money, quitting her job to continue to build it. She slept on couches and told everyone she knew about the app, networking to within an inch of her life. Years later it is a dead app in an app store containing millions of dead apps. While this behavior might get results one in a thousand times, few entrepreneurs can survive for a year of app-induced penury, let alone multiple years.

Another entrepreneur we knew was focused on nanotubes. He spent years rushing here and there, wasting cash on flights and taking meetings with people who wanted to sell him services. Many smart investors told him that he should go and work internally at a nanotube business and then branch out when he was ready. Instead, he attacked all angles for years, eventually leading to exhaustion. He’s still at it, however, which is a testament to his intensity.