Category: UNCATEGORIZED

It’s been less than a year since Group Nine Media acquired PopSugar — but it’s been a uniquely challenging time in digital media.

Brian Sugar founded the eponymous women’s lifestyle site with his wife Lisa Sugar . Post-acquisition, he’s become president for the entirety of Group Nine (which also owns Thrillist, NowThis, The Dodo and Seeker) and also joined the company’s board.

That job probably looks very different from what he expected last fall. The company had to lay off 7% of its staff back in April, which Sugar described as “one of the worst days of my career.” At the same time, he remains confident about the online advertising business. In his view, it’s TV advertising that’s taken a “huge punch” in the face and will never recover.

“We like to think of ourselves as one of the fastest, most innovative publishers out there,” Sugar told me. “And now’s the time for us to kind of show that off.”

You can read an edited, updated and condensed transcript of our conversation below, in which I talked to Sugar about how his role has evolved, how he motivates the team during difficult times and what gets lost in the shift to remote work.

TechCrunch: Obviously, it’s been a crazy couple of months since we last talked. What does your job look like now?

Brian Sugar: Well, I feel like a data miner, searching for answers. I feel like a hackathon engineer. And I feel like a therapist. You know, we like to think of ourselves as one of the fastest, most innovative publishers out there. And now’s the time for us to kind of show that off.

[We’ve just been] looking at data on how people are consuming our content across platforms. And on our site, we’ve come up with some really interesting ideas that we’ve implemented. We’ve been having these really cool hackathon Fridays to build stuff quickly, because a lot of people feel like they have a little bit more time on their hands — because you don’t have to travel to meetings, you can get more work done. Some people feel they’re more efficient.

We’re extremely optimistic. All our brands are extremely optimistic, and so is [the whole] company.

You mentioned launching some new products to respond to how audience behavior is changing. Are there any examples?

The first one [is] the PopSugar Fitness thing. We were planning on launching a paid workout subscription service in May, but everybody was working from home [in March], and we decided to pull the launch all the way up to as fast as we can launch it. We launched it that following weekend. Since the launch in late March, over the past few months, we’ve had 200,000 people sign up, and we have 50,000 monthly active users on it.

All of the people pictured above are real, but what you are seeing are synthetically-generated versions of their real selves. And they can be programmed to say anything. Tech futurists have long warned about humans being replaced by life-like AI-driven figures, where it would be almost impossible to tell between machine and human. Indeed, there’s even a new book on this subject of ‘deep fakes’.

But that future comes a step closer today with the news that Hour One, which creates AI-driven synthetic characters based on real humans, closes a $5 million seed funding led by Galaxy Interactive (via its Galaxy EOS VC Fund), Remagine Ventures and Kindred Ventures (with participation of Amaranthine).

Hour One will use the funds to scale its AI-driven cloud platform, onboard ‘thousands’ of new characters, and expand its commercial activities.
 
Founded in 2019, Hour One develops technologies for creating high-quality digital characters based on real people. The idea is to generate production-grade video-based characters in a highly scalable and cost-effective way. The upshot of this is that what appears to be a real human could talk about any product or subject at all, to the point of infinite scale.

This was showcased at its “real or synthetic” likeness test at CES 2020, challenging people to distinguish between real and synthetic characters generated by its AI.

Oren Aharon, Hour One’s Founder and CEO said in a statement: “We believe that synthetic characters of real people will become a part of our everyday life. Our vision is that Hour One will drive the use of synthetic characters to improve the quality of communication between businesses and people across markets and use cases. By enabling each person to create their own character together with our scalable cloud platform, we will provide a variety of solutions for next-gen remote business-to-human interactions.”
 
Hour One is currently working with companies in the e-commerce, education, automotive, communication, and enterprise sectors, with expanded industry applications expected throughout 2020.

The company also showcased its “real or synthetic” likeness test at CES 2020, challenging people to distinguish between real and synthetic characters generated by its AI.

The real issue, however, is how will this technology be deployed without it being abused.

Lior Hakim, cofounder and CTO says this potential problem is dealt with via encryption technologies to secure the use and rights of the characters enabling “anyone to identify our videos as well as mark them as altered to notify the viewers”. The company also says it has an ethical policy code for how its technology is used.

Sam Englebardt, Co-Founder and Managing Director of Galaxy Interactive says the startup’s “ethics-driven approach to the creation of synthetic video” is key and that “given how challenging production with live actors has become as a result of COVID-19, now is the perfect time for businesses of all sizes to produce their content with Hour One’s synthetic characters.”

Clearly this will reduce the cost of synthetic character creation meaning any textual content could be “automatically translated into a live-action video of a person that engages an audience by speaking the text” said Eze Vidra, Co-Founder and Managing Partner at Remagine Ventures .

Speaking to TechCrunch, Business strategy lead for Hour One Natalie Monbiot, said the company has a unique ability to onboard “basically any human being and turn them into a synthetic character that’s a lifelike replica of that person. So it’s not an avatar or a version of that person. It really does look and behave like that person. You can then basically generate new content by uploading new texts. So, for example, in e-commerce, you can pick your characters and get them to present your product or do a product presentation. This means every single product SKU can have its own video presentation.”

Lucid Motors will unveil its long anticipated all-electric luxury electric Air sedan on September 9, a vehicle that promises to have at least 517 miles on a single charge. The company has been toiling away for years now, pushing forward battery technology and raising money to fund its ambitious plans. 

Lucid is now poised to make its mark on the EV landscape. Which is why we’re excited to announce that Peter Rawlinson, the CEO and CTO of Lucid Motors will join us on our virtual stage at TC Sessions: Mobility. The virtual event will occur over two days on October 6 and October 7, and will build off of last year’s inaugural event.

Rawlinson has three decades of experience in the automotive industry that is now culminating with Lucid Motors . Prior to Lucid, Rawlinson was vice president of vehicle engineering at Tesla and chief engineer of the Model S, where he led the engineering of the Model S from a clean sheet to production readiness while building the engineering team. He was formerly head of vehicle engineering at Corus Automotive, chief engineer at Lotus Cars, and principal engineer at Jaguar Cars.

In short, Rawlinson has institutional knowledge — and probably some good stories — about what works and what doesn’t when building a car company. While on our virtual stage, Rawlinson will discuss Lucid Motors and plans for the automaker’s future as well as the electric vehicle industry and maybe some of those interesting stories from his days at Tesla, Jaguar and Lotus Cars.

In case you’re wondering, this won’t just be one long webinar. We have some technical tricks up our sleeves that will bring all of what you’d expect from our in-person events, from the informative panels and provocative one-on-one interviews to the networking and even a pitch-off session. While virtual isn’t the same as our events in the past, it has provided one massive benefit: democratizing access.

If you’re a startup or investor based in Europe, Africa, Australia, South America or another region in the U.S., you can listen in, network and connect with other participants here in Silicon Valley.

Get your tickets for TC Sessions: Mobility to hear from Bryan Salesky, along with several other fantastic speakers from Porsche, Waymo, Lyft and more. Tickets are just $145 for a limited time, with discounts for groups, students and exhibiting startups. We hope to see you there!

While Google Cloud Platform has shown some momentum in the last year, it remains a distant third behind Amazon and Microsoft in the cloud infrastructure market. But Google got some good news from Canalys today when the firm reported that GCP is the number one cloud platform provider for retailers.

Canalys didn’t provide specific numbers, but it did set overall market positions in the retail sector with Microsoft coming in second, Amazon third, followed by Alibaba and IBM in fourth and fifth respectively.

Image Credits: Canalys

It’s probably not a coincidence that Google went after retail. Many retailers don’t want to put their cloud presence onto AWS, as Amazon.com competes directly with these retailers. Brent Leary, founder and principal analyst at CRM Essentials, says that as such, the news doesn’t really surprise him.

“Retailers have to compete with Amazon, and I’m guessing the last thing they want to do is use AWS and help Amazon fund all their new initiatives and experiments that in some cases will be used against them,” Leary told TechCrunch. Further, he said that many retailers would also prefer to keep their customer data off of Amazon’s services.

Canalys Senior Director Alex Smith says that this Amazon effect combined with the pandemic and other technological factors has been working in Google’s favor, at least in the retail sector. “Now more than ever, retailers need a digital strategy to win in an omnichannel world, especially with Amazon’s online dominance. Digital is applied everywhere from customer experience to cost optimization, and the overall technological capability of a retailer is what will define its success,” he said.

COVID-19 has forced many retailers to close stores for extended periods of time, and when you combine that with people being more reluctant to go inside stores when they do open, retailers have had to take a crash course in eCommerce if they didn’t have a significant online presence already.

Canalys points out that Google has lured customers with its advertising and search capabilities beyond just pure infrastructure offerings, taking advantage of its other strengths to grow the market segment.

Recognizing this, Google has been making a big retail push including a big partnership with Salesforce and specific products announced at Google Cloud Next last year. As we wrote at the time of the retail offering,

The company offers eCommerce Hosting, designed specifically for online retailers, and it is offering a special premium program, so retailers get “white glove treatment with technical architecture reviews and peak season operations support…” according to the company. In other words, it wants to help these companies avoid disastrous, money-losing results when a site goes down due to demand.

What’s more, Canalys reports that Google Cloud has also been hiring aggressively and forming partnerships with big systems integrators to help grow the retail business. Retail customers include Home Depot, Kohl’s, Costco and Best Buy.

SUSE today announced that it has contributed EiriniX, a framework for building extensions for Eirini, a technology that brings support for Kubernetes-based container orchestration to the Cloud Foundry platform-as-a-service project.

About a year ago, SUSE also contributed the KubeCF project to the foundation, which itself allows the Cloud Foundry Application Runtime — the core of Cloud Foundry — to run on top of Kubernetes.

Image Credits: SUSE

“At SUSE we are developing upstream first as much as possible,” said Thomas Di Giacomo, president of Engineering and Innovation at SUSE. “So, after experiencing the value of contributing KubeCF to the Foundation earlier this year, we decided it would be beneficial to both the Cloud Foundry community and the EiriniX team to do it again. We have seen an uptick in contributions to and usage of KubeCF since it became a Foundation project, indicating that more organizations are investing developer time into the upstream. Contributing EiriniX to the Foundation is a surefire way to get the broader community involved.”

SUSE first demonstrated EiriniX a year ago. The tool implements features like the ability to SSH into a container and debug it, for example, or to use alternative logging solutions for KubeCF.

“There is significant value in contributing this project to the Foundation, as it ensures that other project teams looking for a similar solution to creating Extensions around Eirini will not reinvent the wheel,” said Chip Childers, executive director, Cloud Foundry Foundation. “Now that EiriniX exists within the Foundation, developers can take full advantage of its library of add-ons to Eirini and modify core features of Cloud Foundry. I’m excited to see all of the use cases for this project that have not yet been invented.” 

It’s possible to raise VC funding even if you haven’t built a real product, according to Charles Hudson, founder and managing partner at seed-stage firm Precursor Ventures. It’s just very, very difficult.

I interviewed Hudson during TechCrunch Early Stage, our virtual event for startup founders. He gave a short talk titled “How to sell an idea when you don’t have a product,” then answered questions from me and from attendees watching at home.

Hudson said Precursor invests in about 25 startups every year and that a majority are pre-launch and pre-traction. So when he’s considering startups where there “isn’t any evidence or traction,” he and other investors are basically considering two things: How well the founder knows the industry, and how well the investors know the founder.

Of course, if you’ve already had success and you know everyone on Sand Hill Road, it might not be that hard to get that first check. But what about everyone else?

Below, I’ve quoted some highlights from Hudson’s thoughts about how to raise money pre-product. You can also watch the full presentation/conversation at the end of this post.

‘You need to have a unique and durable insight that will still be true in 12 to 18 months’

You need to have a unique and durable insight that will still be true in 12 to 18 months … The unique part is important because you still haven’t launched your product yet. And so whatever it is that you’re doing, if it’s not unique, if it’s a really obvious insight, you’ll probably have 10 or 12 competitors that are launched in the market by the time you get your product out.

The United States Department of Commerce this morning issued updates to a list of rules designed to restrict Huawei’s access to U.S.-based technology. The new restrictions follow a similar decree announced in May, finding the government department engaged in a game of international whack-a-mole as it looks to cut off the Chinese hardware giant’s access entirely.

“It amends our May rule and goes at the problem of Huawei trying to backfill it,” a Commerce Department official said, following the announcement. Specifically the new rules attempt to address a kind of loophole wherein Huawei was able to do business with third-parties designing chips based on technologies originating in the United States. The specific rule will arrive later today, but the move is a clear attempt to cut off Huawei from access to semiconductors — a goal Department is making no bones about.

“Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from U.S. software and technology in order to fulfill the policy objectives of the Chinese Communist Party,” Commerce Secretary Wilbur Ross said rather pointedly in a statement issued this morning. “As we have restricted its access to U.S. technology, Huawei and its affiliates have worked through third parties to harness U.S. technology in a manner that undermines U.S. national security and foreign policy interests. This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.”

U.S. Secretary of State Mike Pompeo also refused to mince words in his own statement, which referred to the smartphone maker as “an arm of the Chinese Communist Party’s (CCP’s) surveillance state” and accusing it of “continuously [trying] to evade” U.S. rules.

“We will not tolerate efforts by the CCP to undermine the privacy of our citizens, our businesses’ intellectual property, or the integrity of next-generation networks worldwide,” Pompeo wrote. “We are backing up our words with actions across the U.S. Government. The Department of Justice has indicted Huawei for stealing U.S. technology, conspiracy, wire fraud, bank fraud, racketeering, and helping Iran to evade sanctions, amongst other charges.”

Huawei has yet to comment on these new regulations, but the company has consistently denied charges of spying and direct ties to the Chinese government. While it has long been a source of scrutiny for the U.S., actions against the company have greatly intensified under the Trump administration.

This latest round of rules adds to the ever-growing Entity List an additional 38 Huawei-affiliated parties from 21 countries. In an interview with Fox Business, Ross acknowledged Huawei’s continued maneuvers following the May rule, pertaining to both hardware and software — the latter likely a reference to Android and other Google-produced apps.

The rules “led them to do some evasive measures,” Ross told the business channel. “They were going through third parties. The new rule makes it clear that any use of American software or American fabrication equipment is banned and requires a license.”

At Disrupt this year TechCrunch is digging into the $100 million annual recurring revenue (ARR) threshold. To help us explore the software revenue milestone, we’re bringing a number of CEOs that have already reached it: Egnyte’s Vineet Jain, GitLab’s Sid Sijbrandij, and Kaltura’s Michal Tsur.

Join us on the Extra Crunch stage to hear this session along with several other sessions around how founders can navigate the choppy startup waters. You can snag a ticket here.

The modern software world, often called software as a service, or SaaS, operates against a well-defined set of inflection points. These include $1 million ARR, a key moment for startups looking to raise their first Series-define round of capital, the $10 million ARR mark, at which point the same companies become hard to kill, and $100 million ARR, at which point startups can start to prep for a public offering, or regular, large capital raises from private investors.

It’s that last milestone that we want to explore. With three executives from companies that we’ve included in our series on $100 million ARR companies, we’ll dig into what they had to learn the hard way as they grew to material business scale, what went well, and what they might be able to share to startups that aspire to a similar level of success.

That we’ll be hosting the conversation during a mini-IPO wave will make it all the more exciting; these three business leaders will certainly have at least one eye on the public markets. And as we’ll have the chat in the shadow of COVID-19, we’ll learn about how the highly-valued private companies have had to adapt to a changed economic environment, and working setup.

We’ll lean into lessons, learnings, and other operational questions with the CEO of Egnyte, an enterprise content and management service provider, the CEO of GitLab, a devops company that has long had a distributed-employee model that is incredibly pertinent to the current moment, and president of Kaltura, a software company that powers online video for other companies.

Since TechCrunch started compiling a list of companies that had either reached $100 million ARR, or were on their way, we’ve collected dozens of firms to the list. The three we’re talking to are among the most interesting. At a minimum the conversation should be an interesting look into the next set of leaders in the software, and startup space. See you there.

You can read our entries from the $100 million ARR series on each firm below:

• Egnyte
• GitLab
• Kaltura

Disrupt is happening for 5 action packed days — September 14-18 — and if you want to partake in this session (or any other session on the Extra Crunch stage), you’ll need to get your Digital Pro Pass for just $345 for a limited time. Or if you are a founder, showcase your startup in Digital Startup Alley for just $445 for you PLUS another member of your team. Get your pass today!

Coronavirus stay-home orders have sparked an unprecedented demand for grocery delivery around the world. Now investors are clamoring to bet on promising players in the field.

That includes DST Global, the investment firm helmed by Russian billionaire Yuri Milner. Most recently, it poured $35 million into Weee!, a California-based startup that delivers Asian groceries like fresh kimchi and Japanese desserts from its own warehouses to major cities across the U.S. The funding boosted the five-year-old startup’s total raise since launch to over $100 million.

Weee! declined to share its post-money valuation, but the figure likely surpasses $500 million given it’s widely known that DST Global does not generally back companies whose valuation is under $500 million.

Online grocery is a capital-intensive business with thin profit margins, so it’s unsurprising to see many contenders — in both China and the U.S. — operating in the red. Against the odds, Weee! turned profitable earlier this year and went cash-flow positive.

That means the startup was in no rush to fundraise, probably giving it more bargaining power in negotiating terms with a storied investor like DST Global, whose portfolio spans Spotify, Twitter, Airbnb, Slack, Didi, Gojek, just to name a few.

Weee! certainly matches DST Global’s investment target as a high-growth startup. In June, the company recorded 700% year-over-year growth in revenue and was on course to generate revenue in the lower hundreds of millions of dollars in 2020, it told TechCrunch at the time.

Since the U.S. begins winding down lockdowns and people return to supermarkets, some grocery delivery services have seen their revenue growth slow. Weee!, however, is currently growing 15-20% more than its March peak. Liu explained the sustained boom stems from the service’s product differentiation: Asian specialties that one can’t even find in Chinatowns.

“People don’t want to pay extra if [an online grocery] only provides convenient delivery but no product differentiation,” said Han Shen, founding partner of iFly.vc, a California-based fund that backed Weee! in its Series A round.

In addition, Weee! tries to streamline every step of its operations, from product procurement, warehouse management, staff allocation, through to door-to-door delivery. The result is zero food waste thanks to fast inventory turnover.

“There is no secret tactic that we can’t talk about, nothing more than achieving efficiency throughout the entire process,” Shen observed.

In the meantime, Weee! works to keep prices down by cultivating direct relationships with suppliers like local farms and opting for next-day delivery rather than the more costly 30-minute standard expected in China, where he grew up. Earlier this year, former chief operations officer of Netflix Tom Dillon joined the board to help beef up Weee!’s operational efficiency.

With the new proceeds, the Asian e-grocer hopes to hire new talents and expand its delivery service from eight key regions to 13-14 cities across the U.S. by the end of this year.

Though TikTok’s future in the U.S. remains uncertain, the company announced this morning its first music distribution partnership, with indie music distributor UnitedMasters. The deal will allow artists on TikTok to tap into the platform’s ability to make their music go viral, then distribute their songs directly to other music streaming services, like Spotify, Apple Music/iTunes, SoundCloud, and YouTube.

The deal allows indie artists to effectively circumvent traditional record labels by reaching young music fans on the social video app, then translate that to charting success.

Already, TikTok has proven its capabilities in this area, having helped push little known or undiscovered artists to further growth, including Lil Nas X, Ambjaay, StaySolidRocky, Powfu, BENEE, Y2K, bbno$, and others, the company noted in an announcement about the new deal. Meanwhile, artists like Curtis Roach, Curtis Waters, Breland, Tai Verdes, BMW Kenny and others have used TikTok to promote their music. Some, like ppcocaine and Avenue Beat, preview original music directly on the platform. Several emerging artists, like Shuba, Blu DeTiger, and Kid Sistr, have even used TikTok as a platform for creative performances.

UnitedMasters, meanwhile, has helped launched the careers of artists like platinum-selling rapper NLE Choppa, plus Lil Tecca, Tobe Nwigwe, Lil XXEL, and others. In the past 18 months, it has grown its lineup to over 400,000 artists who have a combined 5 billion streams and over a half million distributed tracks.

UnitedMasters takes a 10% share of revenue for music it distributes, and allows artists to retain their rights. It also works to facilitate relationships between artists and brands. According to the company’s website, UnitedMasters currently works with brands like the NBA, Bose, AT&T, the NFL and others.

TikTok says its new agreement with UnitedMasters will also involve promoting their artists on its video platform. That means artists will have more opportunities to reach new fans who could then, in turn, use the artists’ music in their videos. TikTok will also add the music from UnitedMasters’ artists, with their permission, to its Commercial Music Library. This catalog gives verified businesses access to royalty-free music for use with their promotional content.

“TikTok artists who are creating music in their bedrooms today will be featured in the Billboard charts tomorrow,” said Ole Obermann, Global Head of Music at TikTok, in a statement. “Our mission is to help those artists achieve their creative potential and success. This partnership with UnitedMasters gives us a turn-key solution to help artists who are born on TikTok to reach their fans on every music service.”

Trying to work around the labels is a tricky prospect, other music services have found. Spotify, for example, tried offering a tool that would have allowed indie artists to upload their own music directly to its streaming service. But the tool was shut down in less than a year’s time, after beta testing, as its existence complicated Spotify’s label negotiations.

TikTok, however, has different sorts of licensing deals with the major labels because it’s not a streaming service for music, nor a platform for watching official music videos, like YouTube and now, Facebook. Instead, its music deals are reportedly shorter-term agreements than those the labels strike with other tech companies, a Billboard report said. The deals give the video platform the right to use 30-second clips of the record labels’ songs, not full tracks. To date, many of TikTok’s music deals are separate from those its parent company ByteDance inked for its streaming music service, Resso. (A deal with Merlin was a recent exception, however).

Because of the complicated nature of these sorts of negotiations, it’s unclear how the major labels will react to what appears to be a way for TikTok to eventually route around their cut. By promoting indie artists to help them achieve viral success without a traditional label’s involvement, TikTok could become a launching pad for artists who don’t want a label deal. Instead, TikTok artists would gain access to fans and, eventually, the resulting revenue potential that comes with having a large audience.

This likely won’t go down well with labels, who have already been pushing TikTok to find more ways to generate revenue for music rights holders, as Billboard’s report had noted.

“If you are a musical artist, TikTok is the best place for your music to go viral and UnitedMasters is the best place to sustain it while retaining full ownership of your work,” said Steve Stoute, CEO and Founder of UnitedMasters, in a statement about the TikTok partnership. “By combining the two, we create the platform for tomorrow’s stars who will be famous, fiercely independent and wealthy.”