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After raising $15 million in financing from one of technology’s most successful global investment firms, the Los Angeles-based consumer goods rental company Joymode is selling itself to an early-stage retail investment firm out of New York, XRC Labs.

Joymode’s founder Joe Fernandez will continue on as an advisor to Joymode as the company moves to pivot its business to focus on retail partnerships.

The relationship with XRC Labs’ Pano Anthos began after a small pilot integration between Joymode and Walmart launched in late 2019. “[It] became obvious that we should go all in on retail partnerships,” according to Fernandez. And as the company cast about for partners to pursue the strategy, Anthos and his firm, XRC, kept being mentioned, Fernandez said.

The precise terms of the deal with XRC Labs were undisclosed, but Joymode will become a wholly owned business of XRC and could potentially return to market to raise additional funds from additional investors, according to Fernandez.

“We could never crack growth at the scale we needed,” said Fernandez of the company’s initial business. “From day one, my belief was Joymode was going to be huge or dead. We grew, but given the cost structure of our business it put a lot of pressure on the business to grow exponentially fast. Everyone loved the idea but the actual growth was slower than we needed it to be.”

Though Joymode wasn’t a success, Fernandez said he can’t fault his investors or his team. “We got to iterate through every possible idea we had. Literally every idea we had was exhausted… We failed and that’s a bummer, but we got a fair shot,” he said.

What remains of the company is an inventory management system on the back end and a service that will allow any retailer to get involved in the rental business going forward.

“Part of the thesis was that by making things available for rental, people would want to do more stuff,” said Fernandez, but what happened was that consumers needed additional reasons to use the company’s service, and there weren’t enough events to drive demand.

“I believe that the inventory management system we made was incredible and it will be a standard for retailers doing rentals going forward,” he said. 

 As the company turned to retailers, the rental option became a way to generate revenue through additional products. “All the accessories that made the event even better,” said Fernandez. “Add-ons, try before you buy, experiential things that are just much more complete in a retail environment.”

At Joymode, the problem was that the company was owning the inventory, which created a high fixed cost. “We never felt confident with the growth in LA to justify the expense of opening in another city,” Fernandez said. “If we had cracked user acquisition in LA we would have rolled it out in a bunch of places.”

Ultimately, Joymode members saved $50 million by using Joymode to rent products rather than buying them. In all, the company acquired 2,000 unique products — from beach and camping equipment to video games, virtual reality headsets to cooking appliances. On a given weekend, roughly 30,000 products would ship from the company’s warehouse to locations across Southern California.

At XRC Labs, a firm launched in 2015 to support the consumer goods and brand space, Joymode will complement an accelerator that raises between $6 million and $9 million every two years and manages a growth fund that could reach $50 million in assets under management.

For Anthos, the best corollary to Joymode’s business could be the rental business at Home Depot. “Home Depot’s rental business is over $1 billion per year,” Anthos said. “There’s going to be this enormous component of our society and for them renting will be not just a more sustainable but reasonable option. They’re going to want to rent because they don’t want to own it.”

Joymode was backed by TenOneTen, Wonder, Struck Ventures, Homebrew and Naspers (now Prosus).

Google’s Sundar Pichai faced an awkward line of enquiry during today’s House Antitrust Subcommittee hearing related to its 2007 acquisition of adtech platform DoubleClick, and how it went on to renege on an original promise to lawmakers and regulators that it would not (nor could not) merge DoubleClick data with Google account data — automagically doing just that almost a decade later.

By linking Internet users’ browsing data, as harvested via the DoubleClick cookie, to Google accounts it was able to join the dots of user identities, (Gmail) email data, search history, location data and so on (Google already having collapsed the privacy policies of separate products, to join up all that activity) with its users’ wider Internet browsing activity — vastly expanding its ability to profile and target people with behavioral ads.

Agency for Google users to prevent this massive privacy intrusion, there was none.

Rep. Val Demings contended that by combining DoubleClick cookie data and Google account data Google had essentially destroyed user privacy on the Internet. And — importantly, given the domestic antitrust scrutiny the company now faces — that that had only been possible because of the market power Google had amassed.

“When Google proposed the merger alarm bells were raised about the access to data Google would have — specifically the ability to connect a user’s personal identity with their browsing activity,” said Demings, before zooming in to hammer Pichai on another tech giant broken data privacy promise.

“Google… committed to Congress and to the antitrust enforcers that the deal would not reduce user privacy. Google chief’s legal advisor testified before the Senate Antitrust Subcommittee that Google wouldn’t be able to merge this data. Even if it wanted to, given contractual restrictions. But in June of 2016 Google went ahead and merged this data anyway — effectively destroying anonymity on the Internet,” she explained.

Demings then pressed Pichai on whether he personally signed off on the privacy-hostile move, given he became CEO of Google in 2015.

Pichai hesitated before attempting a bland response — only to be interrupted by Demings pressing him again: “Did you sign off on the decision or not?”

“I — I reviewed at a high level all the important decisions we make,” he said, after a micro pause.

He then segwayed in search of more comfortable territory, starting into Google’s usual marketing spiel — about how it “deeply cares about the privacy and security of our users”.

Demings was having none of it. The U-turn had enabled Google to combine a user’s search and browsing history, location data and information from emails stored in Gmail, she said, blasting it “absolutely staggering”.

She then referenced an email from a DoubleClick exec who had told the committee it was “exactly the kind of user reduction in privacy that users’ founders had previously worried would lead to a backlash”.

“‘They were unwavering on the policy due to philosophical reasons. Which is Larry [Page] and Sergey [Brin] fundamentally not wanting users associated with a cross-site cookie. They were also worried about a privacy storm, as well as damage to Google’s brand’,” she said, quoting directly from the email from the unnamed DoubleClick exec.

“So in 2007 Google’s founders feared making this change because they knew it would upset their users — but in 2016 Google didn’t seem to care,” Demings went on, before putting it to Pichai that what had changed between 2007 and 2016 is that Google gained “enormous market power”.

“So while Google had to care about user privacy in 2007 it no longer had to in 2016 — would you agree that what changed was Google gained enormous market power?” she asked.

The Alphabet and Google CEO responded by asking for a chance “to explain” — and then rattling off a list of controls Google offers users so they can try and shrink how it tracks them, further claiming it makes it “very easy” for people to control what it does with their information. (Some EU data regulators have taken a very different view of Google’s ‘transparency’, however.)

“We today make it very easy for users to be in control of their data,” claimed Pichai. “We have simplified their settings, they can turn ads personalization on or off — we have combined most of activity settings into three groupings. We remind users to go do a privacy check up. One billion users have done so.”

Demings, sounding unimpressed, cut him off again — saying: “I am concerned that Google’s bait and switch with DoubleClick is part of a broader pattern where Google buys up companies for the purposes of surveilling Americans and because of Google’s dominance users have no choice but to surrender.”

She went on to contend that “more user data means more money” for Google.

Pichai had a go at denying that — starting an answer with the claim that “in general that’s not true” before Demings repeated the contention: “So you’re saying that more user data does not mean the more money that Google can collect?”

That was easier for Pichai to sidestep. “Most of the data we collect is to help users and provide personalized experiences back”, he shot back, neatly avoiding the key point that the access Google has given itself to people’s data by cross linking their web browsing with Google IDs and product activity enables the tech giant to generate massive profits via targeting them with creepy ads, which in turn makes up the vast majority of Alphabet’s profit.

But with that Demings’ five minutes were up — although the hearing continues. You can tune in here.

In one of the first substantive moments at Wednesday’s major tech hearing, Facebook’s 2012 acquisition of Instagram came under fire, unearthing a few new revelations about the company’s internal thinking at the time.

Alluding to new documents provided to the committee as part of its ongoing year-long antitrust investigation, House Judiciary Committee Chairman Jerry Nadler said emails between Mark Zuckerberg and other Facebook executives at the time tell “a very disturbing story.”

Nadler went on to declare that Facebook’s acquisition of Instagram violated antitrust laws. “If this was an illegal merger at the time of the transaction, why shouldn’t Instagram now be broken off into a separate company?” Nadler asked.

In a video question and answer session on April 6, 2012 — three days before announcing the Instagram acquisition — Zuckerberg describes the threat posed by the social photo sharing app, mentioning Facebook’s own “not awesome” mobile app that users only “tolerate.”

“They’re growing well. We need to dig ourselves out of a hole. The good news is, we’ve been doing that. The bad news is that they are growing really quickly, they have a lot of momentum and it’s kind of going to be tough to dislodge them. We have a hard battle ahead of ourselves there.”

In emails obtained by the committee, Nadler quotes Zuckerberg saying “one thing about startups is you can often acquire them” — and beginning with Instagram, Facebook has certainly done that.

“I’ve always been clear that we viewed instagram as both a competitor and as a complement to our services,” Zuckerberg said Wednesday, defending the company and downplaying Nadler’s critiques.

“At the time, almost no one thought of them as a general social network,” Zuckerberg claimed.

The reality is that Instagram was already wildly popular, with more than 100,000 daily downloads in Apple’s App Store. “At 27 million registered users on iOS alone, Instagram was increasingly positioning itself as a social network in its own right — not just a photo-sharing app,” TechCrunch’s Sarah Perez wrote at the time.

Given the climate of the deal, the House Judiciary chairman threatened that unwinding the merger would be appropriate, even eight years later.

“… Facebook saw Instagram as a powerful threat that could siphon business away from Facebook so rather than compete with it, Facebook bought it,” Nadler said.

“This is exactly the same kind of anticompetitive action that the antitrust laws were designed to prevent.”

From Airbnb to Zapier, and Coinbase to Instacart, many of the tech world’s most valuable companies spent their earliest days in Y Combinator’s accelerator program.

Steering the ship at Y Combinator today is its president, Geoff Ralston . We’re excited to share that Ralston will be joining us on Extra Crunch Live tomorrow at noon pacific.

Extra Crunch Live is our virtual speaker series, with each session packed with insight and guidance from the top investors, leaders and founders. This live Q&A is exclusive to Extra Crunch members, so be sure to sign up for a membership here.

Ralston took on the YC President role a little over a year ago shortly after Sam Altman stepped away to focus on OpenAI.

In the months since, Y Combinator has had to reimagine much about the way it operates; as the pandemic spread around the world, YC (like many organizations) has had to figure out how to work together while far apart. In the earliest weeks of the pandemic, this meant quickly shifting their otherwise in-person demo day online; later, it meant adapting the entire accelerator program to be completely remote.

While still relatively new to the president seat, Ralston is by no means new to YC. He joined the accelerator as a partner in 2012, and his edtech-focused accelerator Imagine K12 was fully merged into YC’s operations in 2016.

As offices worldwide shift to remote work, our interactions with customers and colleagues have evolved in tandem. Professionals who once relied on face-to-face communication and firm handshakes must now close deals in a world where both are rare. Coworkers we once sat beside every day are now only available over Slack and Zoom, changing the nature of internal communication as well.

While this new reality presents a challenge, the advancement of key technologies allows us to not just adapt, but thrive. We are now on the precipice of the biggest revolution in workplace communication since the invention of the telephone.

It’s not enough to simply accept the new status quo, particularly as the overall economic climate remains tenuous. Artificial intelligence has much to offer in improving the way we speak to one another in the social distance era, and has already seen wide adoption in certain areas. Much of this algorithmic work has gone on behind the scenes of our most-used apps, such as Google Meet’s noise-canceling technology, which uses an AI to mute certain extraneous sounds on video calls. Other advances work in real-time right before our eyes — like Zoom’s myriad virtual backgrounds, or the automatic transcription and translation technology built into most video conferencing apps.

This kind of technology has helped employees realize that, despite the unprecedented shift to remote work, digital conversations do not just strive to recreate the in-person experience — rather, they can improve upon the way we communicate entirely.

It’s estimated that 65% of the workforce will be working remotely within the next five years. With a more hands-on approach to AI — that is, using the technology to actually augment everyday communications — workers can gain insight into concepts, workflows and ideas that would otherwise go unnoticed.

Your customer service experience

Roughly 55% of the data companies collect falls into the category of “dark data”: information that goes completely unused, kept on an internal server until it’s eventually wiped. Any company with a customer service department is invariably growing their stock of dark data with every chat log, email exchange and recorded call.

When a customer phones in with a query or complaint, they’re told early on that their call “may be recorded for quality assurance purposes.” Given how cheap data storage has become, there’s no “maybe” about it. The question is what to do with this data.

The video below contains the first glimpse at the upcoming electric GMC Hummer. The preview video is short, full of nonsense buzzwords, but still telling. It’s clear GM identified two main competitors against the upcoming Hummer: The Ford Bronco and Tesla Cybertruck.

The Hummer EV was announced pre-COVID 19 during the Super Bowl. At the time, GM promised it would feature a 1,000 HP from the electric powertrain. Since then, little has been released about the upcoming vehicle, though GM maintains it’s still on track for production in the fall of 2021.

The video released today sports a handful of expected features and capabilities. Interestingly enough, these features are on both sides of the motoring spectrum. If categorized, they fall into two groups: on-road thrills and off-roading adventure. The video paints a clear picture GM is targeting the Hummer EV against the Tesla Cybertruck and the Ford Bronco — both vehicles that are getting a lot of attention because of their capabilities and design.

For positioning against the Cybertruck, GM is touting the Hummer EV’s power of 1,000 HP and 11,500 lb-ft (though this number is derived in a different fashion than usual). It’s also saying the massive truck can hit 60 mph in 3 seconds, which is in the same realm as the top sports cars. Lastly, the video teaser stated the Hummer EV has an Adrenaline Mode, which is easy to assume is similar to Tesla’s Ludicrous mode, along with improved self-driving capability.

For the Bronco, GM is showing the Hummer EV’s off-roading features, including a so-called Open Air Infinity Roof and Modular Sky Panels, which is likely similar to the Bronco’s expansive removable roof. Even more, telling is the Crab Mode mentioned in the video. Crab Mode is likely a high-torque rock crawling mode for when bouldering off-road. With the crazy amount of torque available, the Hummer EV will probably be able to crawl up impressive inclines.

Pricing and exact availability have yet to be announced, and the same can be said about the Tesla Cybertruck. And don’t forget about the upcoming electric Ford F-150. There’s a war of the electric pickup coming, and I’m here for it.

In his opening statements, the chairman of Wednesday’s historic tech hearing argued that regulating tech’s most dominant players is vital in the midst of the ongoing pandemic that has driven even more of American life online.

“Prior to the COVID-19 pandemic, these corporations already stood out as titans in our economy,” House Judiciary Antitrust Subcommittee Chair David Cicilline said. “In the wake of COVID-19, however, they are likely to emerge stronger and more powerful than ever before.”

The argument that tech stands to benefit from the COVID-19 crisis is a smart one — and a timely attack that’s difficult to dispute. While many major companies in other industries are struggling, grappling with layoffs or filing for bankruptcy, many of tech’s largest tech companies stand to emerge from the economic storm largely unscathed if not better off.

In his own opening remarks, ranking member Jim Sensenbrenner also argued that because Americans are relying more on online companies than ever before, tech’s power must be examined in light of the pandemic.

“That responsibility comes with increased scrutiny of your dominance in the market,” Sensenbrenner said.

The fortunes of startups that leverage artificial intelligence have soared dramatically in recent years.

These AI-powered startups have seen quarterly investment totals rise from a few hundred rounds and a few billion dollars each quarter to 1,245 rounds and $17.3 billion in the second and third quarters of 2019, according to data from CB Insights. The rise in dollars chasing AI startups has been huge, demonstrating strong venture capital interest in the cohort.

But in recent quarters, the trend has slowed as VC deals for AI-powered startups fell off.

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

A new report from the business-data company looking at the second quarter of venture capital results for global AI startups shows historically strong but declining investing rates for the upstart firms. During a pandemic and widespread recession, this is not a complete surprise; other areas of VC investment have also fallen in recent quarters. This is The Exchange’s second look at quarterly data in the startup category, something partially spurred by our interest in the economics of the startups that make up the group.

The scale of decline is notable, however, as is the national breakdown of VC investment into AI. (The United States is doing better than you probably guessed, if you have only listened to politicians lately.)

Let’s unpack the latest results, determine how investing patterns have changed by stage and examine how different countries compare when it comes to deal and dollar volume for AI-powered startups.

Global declines, US dominance

In the second quarter of 2020, global investment into AI startups fell to 458 deals worth $7.2 billion. According to the CB Insights dataset, the deal volume is the lowest for 12 quarters, or since Q2 2017 when 387 investments into AI startups were worth $4.7 billion.

Google One, Google’s subscription program for buying additional storage and live support, is getting an update today that will bring free phone backups for Android and iOS devices to anybody who installs the app — even if they don’t have a paid membership. The catch: while the feature is free, the backups count against your free Google storage allowance of 15GB. If you need more you need — you guessed it — a Google One membership to buy more storage or delete data you no longer need. Paid memberships start at $1.99/month for 100GB.

Image Credits: Google

Last year, paid members already got access to this feature on Android, which stores your texts, contacts, apps, photos and videos in Google’s cloud. The “free” backups are now available to Android users. iOS users will get access to it once the Google One app rolls out on iOS in the near future.

Image Credits: Google

With this update, Google is also introducing a new storage manager tool in Google One, which is available in the app and on the web, and which allows you to delete files and backups as needed. The tool works across Google properties and lets you find emails with very large attachments or large files in your Google Drive storage, for example.

With this free backup feature, Google is clearly trying to get more people onto Google One. The free 15GB storage limit is pretty easy to hit, after all (and that’s for your overall storage on Google, including Gmail and other services) and paying $1.99 for 100GB isn’t exactly a major expense, especially if you are already part of the Google ecosystem and use apps like Google Photos already.

When founders start fundraising is as important as how they make their pitch to investors.

Timing matters and it’s more complicated than founders might realize, but it’s not just about picking the right month or time of day. Finding the right time to fundraise requires a micro- and macro-level strategy, according to Jake Saper of Emergence Capital, who joined TechCrunch’s virtual Early Stage event last week.

“There are really two angles to think about,” Saper said. The first is the macro perspective that takes into account the general flow of deals in the industry. Then there’s the micro timing that is specific — and different — for every startup, he added.

While Saper was particularly focused on giving advice to startup founders who have already raised a seed round and are preparing to raise a Series A, he said that most of his guidance can be applied to companies at a variety of funding stages. Let’s get started with the basics.

Peak pitch deck

The reality is that founders fundraise in all times of the year. However, there are certain times of the year when investors are more actively reviewing pitch decks.

January and February, followed by September, are the most active months for investors, based on data from DocSend that measured visits per pitch deck sent out by entrepreneurs each month.

Image Credits: Jake Saper/Emergence Capital

This fits with Emergence’s anecdotal evidence. The firm sees founders who spend a lot of December preparing for a big launch or fundraise in January and February, Saper said. By the time founders begin sending decks out in January, VCs are back from holiday vacations or other tech-related events, like CES. The same rhythm begins in summer with founders using these months to prep for fundraising in the fall.

While this is a common time to pitch VCs, keep in mind that you’re also fighting for their attention, Saper said.