Blog

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This week Katie Roof and I were joined by David Welsh, part of KKR’s growth equity shop. (His formal title: Member and Head of TMT Growth Equity, where “member” actually means “partner,” it turns out.)

And what a week it was. There was news aplenty to get through, not the least of which that Spotify’s shares — as of airtime, at least — were being pretty reasonable. After rising sharply above their reference price, they fell some and then recovered a bit on Thursday.

That success, to pick a word, you might think would be an inspiration to other startups. However, our guest made a good case that the market is not about to see a bunch of other companies follow suit in putting together direct listings. Spotify was a bit of an outlier, it seems.

Moving along, we peeked into DocuSign’s latest numbers, which show declining net losses (GAAP, of course), and growing revenue. In short, the firm’s updated numbers that include calendar 2017 (long story, more here) look pretty good, and now DocuSign’s impending IPO’s only real question left concerns pricing.

But there was more to chew on, most especially the recent $2.7 billion buy of Mobike, a heavily-funded Chinese bikeshare company. However, how material or real or substantive the deal really was is up for debate. The short riff there is that Tencent, an Internet giant, backed both Mobike, and its acquirer. So, how much of the deal was cosmetic?

And finally, Katie’s piece on a potential Uber-JUMP Bikes tie-up brought us to the domestic bike and scooter market. I can proudly confirm that I didn’t crash on the way home on the LimeBike Scooter. I am sorry for your disappointment.

Hit play, stay cool, and we’re back in a week.

Harassment is clearly an issue everywhere. Hootsworth, founded by harassment legal expert Janine Yancey, is launching today to provide a resource and tool for employees and employers to address harassment and other workplace issues.

“For a long time now I’ve seen that the current structure is not designed to get great results on either side for employees or employers,” Janine Yancey told TechCrunch.

With Hootsworth, anyone can ask questions to human resource experts and employment lawyers. Within 24 hours, you can expect to get a personalized response from a neutral third party. In order to broadly provide this information to the masses, Hootsworth will anonymize your question and then post the answer for all to see. At launch, Hootsworth has more than 1,000 searchable questions and answers people can browse.

“The design and purpose is to provide people real guidance that is actionable in real time,” Yancey said. “Often times we’re suggesting language to use or emails to write because, as domain experts, we know what you need to do to get the results you need to get.”

Hootsworth is totally free to use, in part thanks to it being under the umbrella of Emtrain, a platform that sells compliance and learning platforms to employers like Pinterest, Netflix and BuzzFeed. In 2016, Emtrain launched an unconscious bias course in partnership with Paradigm, a diversity consulting company.

“We’re excited to bring a solution and the service to the marketplace that is really needed right now,” Yancey said. “We want to change the way people get information. Right now, a lot of times people kind of close their eyes and guess or feel stifled because they don’t feel comfortable going to HR.”

LG’s mobile business may be a serial loss-maker, but the rest of the Korean firm’s interests are doing pretty well… better than ever actually according to its newest earnings forecast.

Like fellow countryman Samsung, LG is on course for company-record Q1 financial results. The company is predicting an operating profit of 1.1 trillion KRW ($1.03 billion) on total sales of 15.1 trillion KRW ($14.1 billion) for the quarter.

That’s up 20 percent year-on-year and it represents the first time LG has made a profit of over 1 trillion KRW in the first quarter of the financial year.

The financial forecasts don’t include in-depth analysis of LG’s divisions — the full earnings are due later this month — so we don’t yet know what is driving this record for sure. Carrying on from its Q4 earnings, which helped 2017 become LG’s most-profitable financial year since 2009, we know that the firm’s home appliance and TV divisions were the star performers, while its home entertainment division saw operating income jump 134 percent to hit $345.96 million.

LG Mobile is likely to once again drag the numbers down.

Its newest device — the V30S ThinQ — is unlikely to move the needle with consumers as TechCrunch’s Brian Heater noted when he reviewed the device at Mobile World Congress in February.

To give credit, new LG Mobile CEO Hwang Jeong-hwan — who took the top job in November — managed to reduce losses from 375.3 billion KRW ($331.37 million) in Q3 to 213.2 billion KRW ($192.33 million) in Q4, but turning the division profitable is much harder than cutting the bleeding.

LG Mobile has posted just one-quarter of profitability over the last two years, that was a small $3.2 million profit Q1 2017, the first quarter of sales of its G6 flagship. Previous to that, you have to go way back to Q1 2015 to find a positive quarter for its mobile division.

“Due to the challenging business environment of smartphones, the mobile communications arm is presumed to have not posted a sharp improvement in performances,” NH Investment & Securities said in a note according to Yonhap.

That said, the company’s newest flagship phone — the G7 — is rumored to be dropping next month, so it won’t be too long before we can see what the new management team has in mind.

We’re busy searching all of Europe for the very best and brightest developers, hackers, tech builders and marketers. Why? Because we want you to come and compete in the TechCrunch Hackathon at VivaTech, of course! The Hackathon takes place at the Expo Porte de Versailles in Paris on May 25-26 and, if you act quickly enough, you can get your free tickets today. Alors, dépêche-toi!

Hundreds of supremely talented individuals will gather, form ad-hoc teams and combine their skills to hack, code and program their way to a new product like Quick Insurance, for example, the grand-prize winner of Disrupt Berlin Hackathon 2017. Or maybe something completely unlike it. That’s the awesome thing about the Hackathon. You just never know what might happen.

You get a mere 24 hours to conceive, design and build your tech creation and submit via BeMyApp, the official Hackathon platform. Then each team gets just 60 seconds to present their product to a panel of Hackathon judges — who award each team a ranking from 1-5. It’s arduous work at a feverish, frantic pace. And it’s glorious, semi-chaotic fun.

The grand-prize winner walks away with €5,000 and serious bragging rights. Plus, every team that earns a three or higher scores five tickets to VivaTech 2019 and two Innovator tickets to TechCrunch Disrupt Berlin in November.

But hey, it’s not a proper Hackathon without contests and prizes from our sponsors and this, you can be sure, is a proper Hackathon. We’ve got the scoop on our first sponsor challenge from leboncoin:

leboncoin

Almost everyone in France knows leboncoin. 98 million exchanges per year, leboncoin is the first classifieds site in France, in real estate, jobs, vehicles and other categories, with 1 million new ads every day. leboncoin is challenging our hackers to develop a marketplace of the future that emphasizes and improves on the relationship between the buyer and the seller. Feel free to use innovative technologies like augmented reality, IoT, and artificial intelligence – the hacker with the most creative product will get €5000.

There’s only one criterion to participate in this Hackathon: you must be a resident of one of these European countries. Tickets are free, but the supply is limited. If you want the chance to show us your mad skills, come to the TechCrunch Hackathon at Vivatech. Get your free tickets right here.

Privacy watchdogs in Canada and British Columbia are combining existing investigations into Facebook and AggregateIQ. The latter being a Victoria-based ad targeting tech company that has been linked to Cambridge Analytica, the political consultancy at the center of the Facebook data misuse storm.

CA whistleblower Chris Wylie — who last month gave public testimony revealing how millions of Facebook users’ data was passed to his former employer for political ad targeting — has described AggregateIQ as the Canadian arm of CA’s parent entity, SCL. (Although AggregateIQ has denied any affiliation with CA or SCL, claiming on its website “it is and has always been 100% Canadian owned and operated”.)

“The investigations will examine whether the organizations [Aggregate IQ and Facebook] are in compliance with Canada’s Personal Information Protection and Electronic Documents Act(PIPEDA) and BC’s Personal Information Protection Act (PIPA),” said Canada’s watchdog in a statement about the now joint investigation.

“The Office of the Information and Privacy Commissioner for BC opened its investigation into AggregateIQ late last year. Last month, the Office of the Privacy Commissioner of Canada launched an investigation into allegations about unauthorized access and use of Facebook user profiles.

“The two offices decided to jointly investigate these matters as Facebook and AggregateIQ are subject to both PIPEDA and PIPA.”

The statement does not go into any new detail about the investigations as it notes they are ongoing.

The OPCC’s Facebook investigation, which was launched on March 20, followed a complaint against the company. Facebook has since confirmed that more than 620k Canadian users had their data scraped and passed to CA — the majority of whom would not have consented or even known their information was being shared in this way.

Meanwhile AggregateIQ’s role in the UK’s 2016 Brexit referendum vote has been the subject of increasing scrutiny in the country, following a lengthy investigation by the Observer of London looking at links between the various entities involved and how money was spent by different groups campaigning for the UK to leave the European Union.

The company received £3.5M from leave campaign groups in the run up to the 2016 referendum, and has been described by leave campaigners as instrumental in securing their win.

AggregateIQ is now among 30 companies being investigated by the UK’s data watchdog, the ICO, as part of an ongoing (and now almost year-long) investigation into the use of data analytics for political purposes. Facebook and Cambridge Analytica are also part of that probe.

Giving an update on the investigation yesterday, the ICO said it looking at “how data was collected from a third party app on Facebook and shared with Cambridge Analytica”.

The watchdog secured a warrant to enter and search the London offices of CA last month.

The UK’s Electoral Commission is also investigation Brexit campaign spending — and has previously asked Facebook, Twitter and Google to provide information about ad spending linked to Russia.

Earlier this month Facebook revealed it had removed 70 Facebook accounts, 138 Facebook Pages, and 65 Instagram accounts run by the Russian government-connected troll farm the Internet Research Agency.

The company did not immediately respond to a request for comment on the now joint Canadian and British Columbian data probe.

Facebook is also facing shareholder lawsuits and a probe by the FTC into the data misuse scandal, among others.

Fans of Uber in Singapore will have a little more time to continue using the app after Grab, the rival that is acquiring Uber’s business in the region, agreed to extend the life of the app until April 15 while the country’s competition commission reviews the merger deal.

Grab had originally intended to close the Uber app by April 8, but that has been delayed in Singapore by one week following a request from the Competition and Consumer Commission of Singapore (CCCS) while it continues to assess the implications of the tie-up.

This agreement only covers Singapore, however, so the Uber app will be closed in the seven other countries where it was operational on April 8. Uber Eats is also being transitioned to Grab, as part of its Grab Food platform, and it will be closed at the end of May.

Last week, the CCCS said it has “reasonable grounds” to suspect that the deal may fall foul of section 54 of Singapore’s Competition Act. The organization issued an Interim Measures Directions (IMD) to Uber and Grab — the first of its kind in Singapore — which instructed both parties to “maintain pre-transaction independent pricing, pricing policies and product options,” hence the extension of life for Uber’s app.

Grab said it had provided an alternative proposal “which takes into account our role in Singapore’s vibrant point-to-point transport industry and how Grab serves commuters and drivers,” which the CCCS confirmed that it is reviewing.

A Grab spokesperson declined to discuss the details of the proposal with TechCrunch.

At this point it is unclear whether the Uber app will get another extension. Assuming that the CCCS doesn’t come to a conclusion within the next week and the IMD remains, then Uber may live on a little longer in Southeast Asia . But, if the commission is ready to move on, then the April 15 close will happen as scheduled.

Here’s the key segment of concern to the commission:

About the Section 54 Prohibition under the Competition Act & Merger Procedures

Section 54 of the Act prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition in Singapore.

CCCS is generally of the view that competition concerns are unlikely to arise in a merger situation unless:

The merged entity has/will have a market share of 40% or more; or
The merged entity has/will have a market share of between 20% to 40% and the post-merger combined market share of the three largest firms is 70% or more.

One major factor is how Grab’s business is viewed. The commision defines the space not as ride-hailing — where Grab would appear to hold a significantly dominant position by acquiring Uber’s business — but instead as “chauffeured personal point-to-point transport passenger and booking services.”

In that respect, taxi companies in Singapore — which allow booking by SMS and phone call, and also offer ride-hailing apps in some cases — may be considered competition which might water down Grab’s market share. Likewise, Grab’s case may be helped by Singapore carpooling service Ryde’s plan to add private car services in an effort to fill some of the gap post-Uber.

Here’s Grab statement in full:

Grab continues to engage closely with the CCCS. We’ve had productive discussions on our alternative proposals, which more appropriately address the CCCS’ objectives during this interim period, and which takes into account our role in Singapore’s vibrant point-to-point transport industry and how Grab serves commuters and drivers. Together with the CCCS and Uber, we’ve agreed that the Uber app will run for another week until 15 April, while the CCCS considers Grab’s proposal. We hope the CCCS will complete its review in an expeditious manner, so that we can continue competing with incumbent transport companies and with new entrants. We will continue working with the CCCS and other relevant agencies to ensure a pro-business and pro-innovation environment, so that Singapore consumers can benefit from new and improved services.

In the meantime, the Grab app operates as per normal. The extension also gives Uber drivers more time to sign up on alternative platforms. Grab has helped thousands of former Uber drivers sign up to the Grab platform and will continue to provide support to those who are interested, as well as to obtain their PDVL.

Note: The original version of this article has been updated to correct that the Uber app will only be extended in Singapore, not across all Southeast Asian markets.

PlayingViral founders Steven Wongsoredjo and Michael Rendy

Millennials have been accused of possessing shorter attention spans than goldfish. Though that claim is questionable, online marketers know display ads and even sponsored content are no longer enough to attract twentysomethings. PlayingViral gives brands a new way to lure young consumers with embeddable surveys and quizzes that use machine-learning algorithms to reach the right audiences.

The second Indonesian company accepted into Y Combinator (after bill payment platform Payfazz), PlayingViral finished the accelerator program last month and is now getting ready to expand in the United States, Canada, Brazil and other markets.

PlayingViral is part of Nusantara Technology, a tech and media group that develops marketing tools for clients, including Proctor & Gamble, that want to reach young Indonesians. So far, the company has received investment from former Sequoia Capital partner Yinglan Tan through his new firm Insignia Ventures, former Indonesian Minister of Trade Mari Elka Pangestu and Y Combinator.

Both Nusantara and PlayingViral were founded by chief executive officer Steven Wongsoredjo and chief product officer Michael Rendy. About a year after launching Nusantara in 2016, the team began to realize that “the online media business has the potential to go big, but it’s hard to scale because it lacks a human touch,” Wongsoredjo told TechCrunch. PlayingViral was created to fix that problem.

PlayingViral’s personalized, interactive content is intended to attract users who are jaded by banner ads. For example, a property developer used PlayingViral to create a survey that tells users what kind of house they can afford based on their income level and location. Other customers have embedded quizzes that reward players with discount codes. There are hundreds of dialects spoken in Indonesia and PlayingViral relies on its machine-learning algorithms to adapt content to different languages and decide where they should be placed in Nusantara’s online media network. It also analyzes what keywords, graphics and colors get the most engagement, helping brands refine their marketing strategies.

An example of PlayingViral’s interactive content is embedded below, while demos on PlayingViral’s site show its other uses, including text message stories and Mad Libs-style quizzes.

Wongsoredjo says PlayingViral became profitable just two months after it launched in January. Clients include Singapore Airlines, Garuda Indonesia and Nokia. Its biggest competitor is SurveyMonkey, but PlayingViral differentiates by focusing on more informal and shorter surveys. Of course, other companies are also developing interactive embeddable content, but Wongsoredjo says PlayingViral and Nusantara plan to future-proof themselves by building more comprehensive data sets about what captures millennials’ attention than their competitors.

“If someone wants to copy us, they have to do a lot of experimenting,” says Wongsoredjo.

Samsung has released primarily guidance for its Q1 2018 financial period and the signs are that it will be another blockbuster.

The Korean tech giant’s sales in 2017 were enough to see it unseat Intel as the world’s largest chipmaker based on revenue — ending Intel’s 25-year run at the top — and, while Samsung doesn’t break down its sources of revenue in the guidance, you’d imagine that chips are again the main revenue driver.

Samsung is forecasting that its Q1 profit could hit 15.6 trillion KRW ($14.7 billion) up 19 percent year-on-year and well above the 14.5 trillion that analysts polled by Reuters had predicted. Indeed, that figure would represent a record profit for the first quarter of the financial year for Samsung.

Total sales for the quarter are estimated at 60 trillion KRW (or approximately $1.4 billion), which would be down on the previous quarter (which includes the festive period) but up on the 50.55 trillion total it reported in Q1 2017.

Still though, there’s some concern that the popularity of the iPhone X may be causing slow sales of Samsung’s flagship Galaxy S9 smartphone. Samsung won’t give details on that until it releases its full results for the quarter later in April, but for now it appears that demand for its memory chips is offsetting any disappointment in the consumer smartphone space, despite some concerns around memory price stability.

“Demand for servers canceled out the effect of slow sales for iPhone X and premium Chinese smartphones. Demand is exceeding market expectations,” KTB Investment & Securities analyst Kim Yang-jae said according to Bloomberg.

The Q1 earnings will be Samsung’s first since Jay Y. Lee, vice chairman and the company’s heir apparent, was released from jail after his bribery sentence was suspended. With his father still in hospital following a heart attack in 2014, Bloomberg reports that Lee has been visiting customers and company locations in Europe and North America of late.

Japanese crypto exchange Coincheck, made famously after hackers made off with more than $400 million in digital token NEM, has been acquired.

The company announced today (in Japanese) that Tokyo-based online brokerage Monex Group will buy it in full. The transaction will see Coincheck become a wholly owned subsidiary of Monex.

The deal is a reaction of the NEM hack, with Coincheck recognizing that it needs to strengthen its management system and organization as a whole. That’s in direct response to Japan’s Financial Services Agency, which requested that the exchange make changes in the wake of the January hack — which saw Coincheck reimburse affected users.

Japan is the world’s first market to regulate cryptocurrencies, and the country has given its approval to over 26 exchanges that operate there, both locally and international. The Coincheck incident seems to serve as a wakeup call, however, and authorities clamped down on six others who were told to beef up their organizations to prevent more scandals or security issues. Added that, a number of regulated exchanges have announced plans to team up to create a self-regulatory body to add further scrutiny.

You can’t remove Facebook messages from the inboxes of people you sent them to, but Facebook did that for Mark Zuckerberg and other executives. Three sources confirm to TechCrunch that old Facebook messages they received from Zuckerberg have disappeared from their Facebook inboxes, while their own replies to him conspiculously remain. An email receipt of a Facebook message from 2010 reviewed by TechCrunch proves Zuckerberg sent people messages that no longer appear in their Facebook chat logs or in the files available from Facebook’s Download Your Information tool.

When asked by TechCrunch about the situation, Facebook claimed it was done for corporate security in this statement:

“After Sony Pictures’ emails were hacked in 2014 we made a number of changes to protect our executives’ communications. These included limiting the retention period for Mark’s messages in Messenger. We did so in full compliance with our legal obligations to preserve messages.”

However, Facebook never publicly disclosed the removal of messages from users’ inboxes, nor privately informed the recipients. That raises the question of whether this was a breach of user trust. When asked that question directly over Messenger, Zuckerberg declined to provide a statement.

Tampering With Users’ Inboxes

A Facebook spokesperson confirmed to TechCrunch that users can only delete messages their own inboxes, and that they would still show up in the recipient’s thread. There appears to be no “retention period” for normal users’ messages, as my inbox shows messages from as early as 2005. That indicates Zuckerberg and other executives  special treatment in being able to pull back previously sent messages.

Facebook chats sent by Zuckerberg from several years ago or older were missing from the inboxes of both former employees and non-employees. What’s left makes it look the recipients were talking to themselves, as only their side of back-and-forth conversations with Zuckerberg still appear. Three sources asked to remain anonymous out of fear of angering Zuckerberg or burning bridges with the company. [Update: Recent messages from Zuckerberg remain in users’ inboxes. Old messages from before 2014 still appear to some users, indicating the retraction did not apply to all chats the CEO sent. But more sources have come forward since publication, saying theirs disappeared as well.]

None of Facebook’s terms of service appear to give it the right to remove content from users’ accounts unless it violates the company’s community standards. While it’s somewhat standard for corporations to have data retention policies that see them delete emails or other messages from their own accounts that were sent by employees, they typically can’t remove the messages from the accounts of recipients outside the company. It’s rare that these companies own the communication channel itself and therefore host both sides of messages as Facebook does in this case, which potentially warrants a different course of action with more transparency than quietly retracting the messages.

Facebook’s power to tamper with users’ private message threads could alarm some. The issue is amplified by the fact that Facebook Messenger now has 1.3 billion users, making it one of the most popular communication utilities in the world.

Zuckerberg is known to have a team that helps him run his Facebook profile, with some special abilities for managing his 105 million followers and constant requests for his attention. For example, Zuckerberg’s profile doesn’t show a button to add him as a friend on desktop, and the button is grayed out and disabled on mobile. But the ability to change the messaging inboxes of other users is far more concerning.

Facebook may have sought to prevent leaks of sensitive corporate communications. Following the Sony hack, emails of Sony’s president Michael Lynton who sat on Snap Inc’s board were exposed, revealing secret acquisitions and strategy.

Mark Zuckerberg during the early days of Facebook

However, Facebook may have also looked to thwart the publication of potentially embarrassing personal messages sent by Zuckerberg or other executives. In 2010, Silicon Valley Insider published now-infamous instant messages from a 19-year-old Zuckerberg to a friend shortly after starting The Facebook in 2004. “yea so if you ever need info about anyone at harvard . . . just ask . . . i have over 4000 emails, pictures, addresses, sns” Zuckerberg wrote to a friend. “what!? how’d you manage that one?” they asked. “people just submitted it . .  i don’t know why . . . they “trust me” . . . dumb fucks” Zuckerberg explained.

The New Yorker later confirmed the messages with Zuckerberg, who told the publication he “absolutely” regretted them. “If you’re going to go on to build a service that is influential and that a lot of people rely on, then you need to be mature, right? I think I’ve grown and learned a lot” said Zuckerberg.

If the goal of Facebook’s security team was to keep a hacker from accessing the accounts of executives and therefore all of their messages, they could have merely been deleted on their side the way any Facebook user is free to do, without them disappearing from the various recipients’ inboxes. If Facebook believed it needed to remove the messages entirely from its servers in case the company’s backend systems we breached, a disclosure of some kind seems reasonable.

Now as Facebook encounters increased scrutiny regarding how it treats users’ data in the wake of the Cambridge Analytica scandal, the retractions could become a bigger issue. Zuckerberg is slated to speak in front of the U.S. Senate Judiciary and Commerce committees on April 10 as well as the House Energy and Commerce Committee on April 11. They could request more information about Facebook removing messages or other data from users’ accounts without their consent. While Facebook is trying to convey that it understands its responsibilities, the black mark left on public opinion by past behavior may prove permanent.

If you have more info on this situation, including evidence of messages from other Facebook executives disappearing, please contact this article’s author Josh Constine via open Twitter DMs, josh@techcrunch.com, or encrypted Signal chat at (585)750-5674.

For more on Facebook’s recent troubles, read our feature pieces: