Tech Crunch

TikTok owner ByteDance’s long-awaited chat app is here

In WeChat -dominated China, there’s no shortage of challengers out there claiming to create an alternative social experience. The latest creation comes from ByteDance, the world’s most valuable startup and the operator behind TikTok, the video app that has consistently topped the iOS App Store over the last few quarters.

The new offer is called Feiliao (飞聊), or Flipchat in English, a hybrid of an instant messenger plus interest-based forums, and it’s currently available for both iOS and Android. It arrived only four months after Bytedance unveiled its video-focused chatting app Duoshan at a buzzy press event.

Screenshots of Feiliao / Image source: Feiliao

Some are already calling Feiliao a WeChat challenger, but a closer look shows it’s targeting a more niche need. WeChat, in its own right, is the go-to place for daily communication in addition to facilitating payments, car-hailing, food delivery and other forms of convenience.

Feiliao, which literally translates to ‘fly chat’, encourages users to create forums and chat groups centered around their penchants and hobbies. As its app description writes:

Feiliao is an interest-based social app. Here you will find the familiar [features of] chats and video calls. In addition, you will discover new friends and share what’s fun; as well as share your daily life on your feed and interact with close friends.

Feiliao “is an open social product,” said ByteDance in a statement provided to TechCrunch. “We hope Feiliao will connect people of the same interests, making people’s life more diverse and interesting.”

It’s unclear what Feiliao means by claiming to be ‘open’, but one door is already shut. As expected, there’s no direct way to transfer people’s WeChat profiles and friend connections to Feiliao, and there’s no option to log in via the Tencent app. As of Monday morning, links to Feiliao can’t be opened on WeChat, which recently crossed 1.1 billion monthly active users.

On the other side, Alibaba, Tencent’s long-time nemesis, is enabling Feiliao’s payments function through the Alipay digital wallet. Alibaba has also partnered with Bytedance elsewhere, most notably on TikTok’s Chinese version Douyin where certain users can sell goods via Taobao stores.

In all, Flipchat is more reminiscent of another blossoming social app — Tencent-backed Jike — than WeChat. Jike (pronounced ‘gee-keh’) lets people discover content and connect with each other based on various topics, making it one of the closest counterparts to Reddit in China.

Jike’s CEO Wa Nen has taken noticed of Feiliao, commenting with the 👌 emoji on his Jike feed, saying no more.

Screenshot of Jike CEO Wa Ren commenting on Feiliao

“I think [Feiliao] is a product anchored in ‘communities’, such as groups for hobbies, key opinion leaders/celebrities, people from the same city, and alumni,” a product manager for a Chinese enterprise software startup told TechCrunch after trying out the app.

Though Feiliao isn’t a direct take on WeChat, there’s little doubt that the fight between Bytedance and Tencent has heated up tremendously as the former’s army of apps captures more user attention.

According to a new report published by research firm Questmobile, ByteDance accounted for 11.3 percent of Chinese users’ total time spent on ‘giant apps’ — those that surpassed 100 million MAUs — in March, compared to 8.2 percent a year earlier. The percentage controlled by Tencent was 43.8 percent in March, down from 47.5 percent, while the remaining share, divided between Alibaba, Baidu and others, grew only slightly from 44.3 percent to 44.9 percent over the past year.

Equity transcribed: Away’s $1.4B valuation and CrowdStrike’s S-1

Welcome back to another transcribed edition of Equity, the wildly popular TechCrunch podcast that digs deep into the week’s news about … equity.

There were no IPOs this week so there was only one episode, but it was jam-packed with news about direct-to-consumer scooters, luggage funding and fake meat. This is where tech has taken us this week.

Oh, and Slack set the date for its direct listing.

Kate: So [Away] raised a 100 million, series D. This round was led by Wellington Management, so not by a traditional venture capital firm. Though Away is backed by big name faces like Forerunner Ventures, which is responsible for investments in pretty much direct to consumer companies. So this valued Away at 1.4 billion, and that’s obviously quite large, but what’s particularly surprising about that valuation is that Away was valued at just 400 million the last time they raised money, which was a series C of 50 million, maybe about 1 or 2 years ago.

Alex: Oh gosh.

Kate: I’m not sure exactly when that was. But we’re seeing a major, major, major uptick in its valuation. And the reason why is because at its series C, Away was profitable already. Like I was telling Alex, they didn’t say anything about profitability this time, so I don’t know where that stands, but I do know they have $150 million in revenue.

Alex: Yearly revenue.

Kate: Yes. They are growing top line at 100%. They have an NPS score in the 80’s, and they have a bunch of new investors in this round that I think kind of shows that they’re going well. And also, they want to use this capital to create a generic travel brand. So they want to be more than just these Instagram-friendly cute luggage, suitcases, carry-ons, whatever they want to be. Kind of provide anything and everything you might need when you’re going on a trip of any kind.

For access to the full transcription, become a member of Extra Crunch. Learn more and try it for free. 


Kate Clark: Hello, and welcome back to Equity. I am TechCrunch’s Kate Clark. This week, I am in the studio with Alex Wilhelm of Crunchbase News. Hello Alex, how are you doing today?

Alex Wilhelm: I am good, but as we were just saying before we hit record, this is in some ways a bittersweet moment for us in this room, because it is the last time that the three of us, you, myself, and our excellent producer Christopher Gates, will be together in the TC podcast studio at 410 Townsend.

Kate: It is indeed a bittersweet moment for all of us.

Chat app Line is adding Snap-style disappearing stories

Facebook cloning Snap to death may be old news, but others are only just following suit. Line, the Japanese messaging app that’s popular in Asia, just became the latest to clone Snap’s ephemeral story concept.

The company announced today that it is adding stories that disappear after 24-hours to its timeline feature, a social network like feed that sits in its app, and user profiles. The update is rolling out to users now and the concept is very much identical to Snap, Instagram and others that have embraced time-limited content.

“As posts vanish after 24 hours, there is no need to worry about overposting or having posts remain in the feed,” Line, which is listed in the U.S. and Japan, wrote in an update. “Stories allows friends to discover real-time information on Timeline that is available only for that moment.”

Snap pioneered self-destructed content in its app, and the concept has now become present across most of the most popular internet services in the world.

In particular, Facebook added stories to across the board: to its core app, Messenger, Instagram and WhatsApp, the world’s most popular chat app with over 1.5 billion monthly users. Indeed, Facebook claims that WhatsApp stories are used by 500 million people, while the company has built Instagram into a service that has long had more users than Snap — currently over one billion.

The approach doesn’t always work, though — Facebook is shuttering its most brazen Snap copy, a camera app built around Instagram direct messages.

China’s top chat app WeChat added its own version earlier this year, and while it said in its earnings this week that users upload “hundreds of millions of videos each day” to its social platforms, it didn’t give numbers on its Snap-inspired feature.

Line doesn’t have anything like the reach of Facebook’s constellation of social apps or WeChat, but it is Japan’s dominant messaging platform and is popular in Thailand, Taiwan and Indonesia.

The Japanese company doesn’t give out global user numbers but it reported 164 million monthly users in its four key markets as of Q1 2019, that’s down one million year-on-year. Japan accounts for 80 million of that figure, ahead of Thailand (44 million), Taiwan (21 million) and Indonesia (19 million.)

While user growth has stagnated, Line has been able to extract increase revenue. In addition to a foray into services — in Japan its range covers ride-hailing, food delivery, music streaming and payments — it has increased advertising in the app’s timeline tab, and that is likely a big reason for the release of stories. The new feature may help timeline get more eyeballs, while the company could follow the lead of Snap and Instagram to monetize stories by allowing businesses in.

In Line’s case, that could work reasonably well — for advertising — since users can opt to follow business accounts already. It would make sense, then, to let companies push stories to users that opted in follow their account. But that’s a long way in the future and it will depend on how the new feature is received by users.

Tech stocks slide on US decision to blacklist Huawei and 70 affiliates

The United States has been lobbying for months to prevent its western allies from using Huawei equipment in their 5G deployment, and on Wednesday, Washington made it more difficult for the Chinese telecom titan to churn out those next-gen products.

The U.S. Department of Commerce announced that it will add Huawei and its 70 affiliates to the so-called ‘Entity List,’ a move that will prevent the telecom giant from buying parts and components from U.S. companies without approval from Washington. That confirms reports of the potential ban a day before.

Despite being the largest telecom equipment maker around the world, Huawei relies heavily on its American suppliers, giving the U.S. much leeway to hobble the Chinese firm’s production.

Following the dramatic move, shares of a gauge of Huawei affiliates slumped on Wednesday. Tatfook Technology, which sells to Huawei as well as Ericsson and Bosch, dropped 2.84 percent in Shenzhen in morning trading. New Sea Union Telecom, a supplier to China’s ‘big three’ telecom network operators and Huawei, slid 4.88 percent. Another Huawei key partner Chunxing Precision Mechanical dropped as much as 5.37 percent.

Huawei did not comment directly on the Commerce Department’s blacklist when reached out by TechCrunch, but said it’s “ready and willing to engage with the U.S. government and come up with effective measures to ensure product security.”

“Restricting Huawei from doing business in the U.S. will not make the U.S. more secure or stronger; instead, this will only serve to limit the U.S. to inferior yet more expensive alternatives, leaving the U.S. lagging behind in 5G deployment, and eventually harming the interests of U.S. companies and consumers,” Huawei hit back in the statement.

This view is congruent with some of the harshest criticisms of Washington’s backlash against Huawei. Scholars and industry observers warn that Chinese tech firms have become such an integral part to the global economy that severing ties with Huawei will do ham to 5G advancement worldwide.

In addition, the Chinese company said the U.S.’s “unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues,” though it did not spell out what those rights and legal concerns are.

The announcement dropped on the same day U.S. President Donald Trump declared “a national emergency” over technology supply chain threats from the country’s “foreign adversaries”.

The Commerce Department said it has a reasonable basis to conclude that “Huawei is engaged in activities that are contrary to U.S. national security or foreign policy interest.”

Some of the U.S’s allies including the U.K. are still investigating Huawei’s possible security threat and deciding how close a link they should keep with Huawei, but the Shenzhen-based company has already taken a bold step to give its potential clients some assurance.

Just this Tuesday, Huawei told reporters in London that it’s “willing to sign no-spy agreements with governments, including the U.K. government,” and commit itself to making its equipment “meet the no-spy, no-backdoors standard.”

The U.S.’s tit-for-tat with Huawei also includes the push to arrest the company’s CFO Meng Wanzhou on charges that Huawei did business in Iran in breach of U.S. sanctions.

Huawei launches AI-backed database to target enterprise customers

China’s Huawei is making a serious foray into the enterprise business market after it unveiled a new database management product on Wednesday, putting it in direct competition with entrenched vendors like IBM, Oracle and Microsoft.

The Shenzhen-based company, best known for making smartphones and telecom equipment, claims its newly minted database uses artificial intelligence capabilities to improve tuning performance, a process that traditionally involves human administrators, by over 60 percent.

Called the GaussDB, the database works both locally as well as on public and private clouds. When running on Huawei’s own cloud, GaussDB provides data warehouse services for customers across the board, from the financial, logistics, education to automotive industries.

The database launch was first reported by The Information on Tuesday citing sources saying it is designed by the company’s secretive database research group called Gauss and will initially focus on the Chinese market.

The announcement comes at a time when Huawei’s core telecom business is drawing scrutiny in the West over the company’s alleged ties to the Chinese government. That segment accounted for 40.8 percent of Huawei’s total revenues in 2018, according to financial details released by the privately-held firm.

Huawei’s consumer unit, which is driven by its fast-growing smartphone and device sales, made up almost a half of the company’s annual revenues. Enterprise businesses made up less than a quarter of earnings, but Huawei’s new push into database management is set to add new fuel to the segment.

Meanwhile, at Oracle, more than 900 employees, most of whom worked for its 1,600-staff research and development center in China, were recently let go amid a major company restructuring, multiple media outlets reported earlier this month.

Data provided to TechCrunch by Boss Zhipin offers clues to the layoff: The Chinese recruiting platform has recently seen a surge in newly registered users who work at Oracle China. But the door is still open for new candidates as the American giant is currently recruiting for more than 100 positions through Boss, including many related to cloud computing.

Shares of SoftBank Group, Uber’s biggest stakeholder, slide after its disappointing IPO

As Uber’s biggest shareholder, SoftBank Group had high hopes for the ride-sharing company’s stock market debut last week. Instead, the Japanese conglomerate’s shares have been sliding along with Uber’s following its disappointing initial public offering. SoftBank shares began sliding at the end of last week after Uber set its IPO price at the low end of its planned range. Since the start of trading on Friday morning, SoftBank Group shares have fallen 14.4 percent in value from 11,700 yen (about $106.69) to 10,020 yen (about $91.37)

On paper, SoftBank Group, which became an investor in Uber in early 2018, had expected to make a profit of $3 billion from its debut. According to its IPO filing, SoftBank Group is Uber’s largest shareholder, owning 16.3 percent of pre-IPO shares through its Vision Fund.

After shares continued falling on their second day of trading, Uber CEO Dara Khosrowshahi told employees in a memo that “like all periods of transition, there are ups and downs. Obviously, our stock did not trade as well as we had hoped post-IPO. Today is another tough day in the market, and I expect the same as it relates to our stock.”

All major market indexes fell on Monday as the China-U.S. trade war continued to escalate, with China planning to raise customs on American imports after the U.S.increased tariffs on Chinese goods last week.

Singapore’s Grain, a profitable food delivery startup, pulls in $10M for expansion

Cloud kitchens are the big thing in food delivery, with ex-Uber CEO Travis Kalanick’s new business one contender in that space, with Asia, and particularly Southeast Asia, a major focus. Despite the newcomers, a more established startup from Singapore has raised a large bowl of cash to go after regional expansion.

Founded in 2014, Grain specializes in clean food while it takes a different approach to Kalanick’s CloudKitchens or food delivery services like Deliveroo, FoodPanda or GrabFood.

It adopted a cloud kitchen model — utilizing unwanted real estate as kitchens, with delivery services for output — but used it for its own operations. So while CloudKitchens and others rent their space to F&B companies as a cheaper way to make food for their on-demand delivery customers, Grain works with its own chefs, menu and delivery team. A so-called ‘full stack’ model if you can stand the cliched tech phrase.

Finally, Grain is also profitable. The new round has it shooting for growth — more on that below — but the startup was profitable last year, CEO and co-founder Yi Sung Yong told TechCrunch.

Now it is reaping the rewards of a model that keeps it in control of its product, unlike others that are complicated by a chain that includes the restaurant and a delivery person.

We previously wrote about Grain when it raised a $1.7 million Series A back in 2016 and today it announced a $10 million Series B which is led by Thailand’s Singha Ventures, the VC arm of the beer brand. A bevy of other investors took part, including Genesis Alternative Ventures, Sass Corp, K2 Global — run by serial investor Ozi Amanat who has backed Impossible Foods, Spotify and Uber among others — FoodXervices and Majuven. Existing investors Openspace Ventures, Raging Bull — from Thai Express founder Ivan Lee — and Cento Ventures participated.

The round includes venture debt, as well as equity, and it is worth noting that the family office of the owners of The Coffee Bean & Tea Leaf — Sassoon Investment Corporation — was involved.

Grain covers individual food as well as buffets in Singapore

Three years is a long gap between the two deals — Openspace and Cento have even rebranded during the intervening period — and the ride has been an eventful one. During those years, Sung said the business had come close to running out of capital before it doubled down on the fundamentals before the precarious runway capital ran out.

In fact, he said, the company — which now has over 100 staff — was fully prepared to self-sustain.

“We didn’t think of raising a Series B,” he explained in an interview. “Instead, we focused on the business and getting profitable… we thought that we can’t depend entirely on investors.”

And, ladies and gentleman, the irony of that is that VCs very much like a business that can self-sustain — it shows a model is proven — and investing in a startup that doesn’t need capital can be attractive.

Ultimately, though, profitability is seen as sexy today — particularly in the meal space where countless U.S. startups has shuttered including Munchery and Sprig — but the focus meant that Grain had to shelve its expansion plans. It then went through soul-searching times in 2017 when a spoilt curry saw 20 customers get food poisoning.

Sung declined to comment directly on that incident, but he said that company today has developed the “infrastructure” to scale its business across the board, and that very much includes quality control.

Grain co-founder and CEO Yi Sung Yong [Image via LinkedIn]

Grain currently delivers “thousands” of meals per day in Singapore, its sole market, with eight-figures in sales per year, he said. Last year, growth was 200 percent, Sung continued, and now is the time to look overseas. With Singha, the Grain CEO said the company has “everything we need to launch in Bangkok.”

Thailand — which Malaysia-based rival Dahamakan picked for its first expansion — is the only new launch on the table, but Sung said that could change.

“If things move faster, we’ll expand to more cities, maybe one per year,” he said. “But we need to get our brand, our food and our service right first.”

One part of that may be securing better deals for raw ingredients and food from suppliers. Grain is expanding its ‘hub’ kitchens — outposts placed strategically around town to serve customers faster — and growing its fleet of trucks, which are retrofitted with warmers and chillers for deliveries to customers.

Grain’s journey is proof that startups in the region will go through trials and tribulations, but being able to bolt down the fundamentals and reduce burn rate is crucial in the event that things go awry. Just look to grocery startup Honestbee, also based in Singapore, for evidence of what happens when costs are allowed to pile up.

Educational gaming platform Kahoot acquires math app maker DragonBox for $18M

Kahoot, the popular e-learning platform that provides a range of games to teach subjects (it has described itself as the “Netflix of education”), has made its first acquisition: it has acquired DragonBox, a startup that builds math apps, for $18 million in a combination of cash and shares.

Åsmund Furuseth, Kahoot’s CEO and co-founder, said in an interview that the deal was being done at an uptick to Kahoot’s previous valuation of $376 millon; the bigger company is now creeping up to $400 million.

It’s a relatively strong exit for DragonBox, which had raised less than $500,000 since 2012 primarily from going through incubators and accelerators, according to PitchBook.

The plan will be to bring DragonBox — which, like Kahoot, has roots in Norway — on wholesale to continue growing DragonBox’s existing business, as well as to supplement Kahoot’s offering. Today the smaller startup already has millions of users in Europe, including schools that use it to teach K-12 math curriculum subjects, but alongside that it will also to start to develop more educational content for the main Kahoot platform.

That Kahoot platform up to now has grown organically through a combination of both Kahoot-created, and user-created content (users can build their own games on Kahoot); as well as through serving two markets: K-12 users, and enterprise customers for corporate training. Furuseth sees DragonBox as supplementing the first of these, specifically by helping it expand into more parent-led and home learning that supplements what children might be getting in classrooms.

That’s an area where Kahoot already has a sizeable business. Furuseth said that of the 1 billion plays that its platform saw in 2018, 700 million came from K-12 classrooms, 30 million came from enterprises, and the rest — around 270 million — came from people using Kahoot at home, playing around 100 million games. That speaks to an opportunity to build more content to serve that third sector, which is where DragonBox will fit.

“Since day one, DragonBox has made learning math more fun and engaging for children around the world. Together with Kahoot!, we will enable millions of more users to enjoy learning math in an awesome way,” said Jean-Baptiste Huynh, math teacher, CEO and co-founder of DragonBox.

Furuseth added that the company is also looking at making further acquisitions to continue growing Kahoot alongside its own organic growth, tapping into the fact that there are dozens of smaller startups in the world of education that will be challenged to scale up on their own. (Not the small number of enterprise users in the mix today: my guess is that’s an area where the company may try to grow through more bolt-on businesses.)

“In general, it’s hard for many small and even successful ed-tech companies to reach a large mass of users because it’s difficult to cut through the noise,” Furuseth said in an interview. “We think our brand can help by reaching out with more learning experiences now and in the future.”

Under Furuseth as CEO, the company has been trying to tap into that also by way of a new accelerator that it launched last year called Ignite, which it sees partly as a way to help grow those businesses, as well as a way to find promising startups that it might worth with or acquire itself.

Match Group records solid first-quarter revenue thanks to an increase in Tinder subscribers

Match Group’s revenue saw solid growth in the first quarter thanks to an increase in Tinder subscribers. The company, whose portfolio of dating apps also includes Match.com, PlentyOfFish, OkCupid and Hinge, among others, said in its earnings report today that total quarterly revenue grew 14% year over year to $465 million. If the effects of foreign exchange aren’t included, growth would have been 18%.

Net earnings attributable to shareholders grew 23% to $123 million, or 42 cents per share, from $99.7 million, or 33 cents in the same period a year ago. Operating income increased 6% to $119 million from $112 million. During the first quarter of 2019 and 2018, Match Group recorded an income tax benefit of $28 million and $12 million, respectively, related to the exercise of vesting of stock-based awards.

During the first quarter, Tinder average subscribers were 4.7 million, up from 384,000 in the previous quarter and 1.3 million year over year. In total, Match Group’s average subscribers increased 16% to 8.6 million, up from 7.4 million a year ago. Match Group said the growth in subscribers and increase in average revenue per user (ARPU) at Tinder boosted its revenue, but it was partially offset by foreign exchange effects. ARPU was flat year-over-year, but without foreign exchange effects, it would have increased by 4% to 60 cents.

The company said its adjusted EBITDA (earnings before interest, tax, depreciation and amortization) growth was impacted by the higher cost of generating revenue, specifically in-app purchase fees because revenue increasingly comes through mobile app stores, and higher legal costs, but offset by lower selling and marketing expenses. Adjusted EBITDA grew 13% to $155 million from $138 million.

During the first quarter, Match Group restructured its executive team, appointing three new general managers to oversee regions in Asia in order to gain more users there and focus on international growth. Its first-quarter earnings presentation highlighted opportunities in India, where Tinder is the highest-grossing Android app according to App Annie; Japan, where Match Group now owns two of the top five dating apps (Pairs is number one in Japan, while Tinder is ranks at fourth); and Southeast Asia, where Tinder is now within the top 10 grossing apps in six countries.

The company did not break down earnings by country, but during the first quarter, it had a total of 8,613,000 million average subscribers, with 4,361,000 in North America and 4,252,000 internationally. Total ARPU was 58 cents: 60 cents in North America and 56 cents internationally. Total revenue was $ $464.6 million, and of that $454 million was direct revenue, split between $237.8 million from North America and $216.2 million from international (indirect revenue is revenue that does not come directly from Match Group’s end users, and most of that is advertising revenue.

Great teams, UBI, data retention policies, and Amazon HQ2

3 key secrets to building extraordinary teams

David Cancel, the CEO and founder of Drift, wrote a deep dive on how to think about finding and recruiting the kinds of people who build incredible startups. Among the factors he looks at:

Scrappiness (Importance: 35%)

The four most telling words a new hire can say: “I’ll figure it out.” If you find someone who says that (and can follow through on it), you know you’ve found someone with drive — someone who will plunge headfirst into any challenge and help move the company forward. But to clarify, the type of drive I look for in new hires is different from traditional ambition. Because traditionally ambitious people, while hard workers, tend to obsess over their own personal rise up the corporate ladder. They always have an eye on that next title change, from manager to director, director to VP, or VP to C-suite, and that influences how they perform. That’s why a decade ago, while running my previous company Performable, I added a new requirement to our job descriptions: “Scrappiness.” Today, it’s one of our leadership principles at Drift.

Scrappy people don’t rely on titles or defined sets of responsibilities. Instead, they do whatever it takes to get the job done, even when no one is looking, and even if the tasks they’re performing could be considered “beneath their title.”

Takeaways from F8 and Facebook’s next phase

We had a greatly informative conference call with our very own Josh Constine and Frederic Lardinois, who were checking in from Facebook’s F8 conference in San Jose this week. In case you weren’t able to join us, the transcript and audio have been posted for Extra Crunch members:

Coinbase loses its first CTO after just one year in the job

Coinbase, the $8 billion-valued crypto exchange, has lost its CTO after Balaji Srinivasan announced his departure from the company.

Srinivasan became the U.S. company’s first CTO one year ago after it acquired Earn.com, where he was CEO and co-founder. Given the tenure — one year and one day — it looks like Srinivasan’s departure comes after he served the minimum agreed period with Coinbase.

A high-profile figure in the crypto space who has also spent time with Coinbase and Earn investor A16z, Srinivasan announced his move on Twitter. He declined to go into specifics but told TechCrunch that he plans to take time off to get fit, among other things, before launching into his next product.

1/2 Really enjoyed my time at Coinbase working with my friend @brian_armstrong. The Earn integration was successful and we’ve closed ~$200M in deals for the new Coinbase Earn. Was also my privilege to help with shipping new assets, launching USDC, & getting staking/voting going.

— Balaji S. Srinivasan (@balajis) May 4, 2019

Coinbase CEO Brian Armstrong paid tribute to Srinivasan’s “incredible contributions” to the company.

Srinivasan’s time at Coinbase saw the company ramp up its expansion efforts. Those include the launch of its own USDC stablecoin, the expansion (and planned expansion) of assets sold to consumers and ‘pro’ traders, and a wider global push. Away from consumers, it launched a slew of services for retail investors and today its services also include staking and over-the-counter trading.

There’s also Coinbase’s own VC arm for doing deals with promising startups and, also on the M&A side, the firm has continued making acquisitions and acquihires. This year, it has snapped up Y Combinator graduate Blockspring and Neutrino, whose founders controversially once worked for surveillance firm Hacking Team, in what were its eleventh and twelfth acquisitions to date.

Talent retention appears to be becoming a bit of an issue at Coinbase.

Srinivasan’s exit comes a month after Dan Romero, the company’s head of international, left after a five-year stint. According to Coindesk, the company has seen at least a dozen senior or mid-level executives leave since October when it raised $300 million led by Tiger Global.

Samsung sees Q1 profit plummet 60%

Samsung’s Q1 earnings are in and, as the company itself predicted, they don’t make for pretty reading.

The Korean giant saw revenue for the three-month period fall by 13 percent year-on-year to 52.4 trillion KRW, around $45 billion. Meanwhile, operating profit for Q1 2019 came in at 6.2 trillion KRW, that’s a whopping $5.33 billion but it represents a decline of huge 60 percent drop from the same period last year. Ouch.

Samsung’s Q1 last year was admittedly a blockbuster quarter, but these are massive declines.

What’s going on?

Samsung said that sales of its new Galaxy S10 smartphone were “solid” but it admitted that its memory chip and display businesses, so often the most lucrative units for the company, didn’t perform well and “weighed down” the company’s results overall. Despite those apparent S10 sales, the mobile division saw income drop “as competition intensified.” Meanwhile, the display business posted a loss “due to decreased demand for flexible displays and increasing market supplies for large displays.”

That’s all about on par with what analysts were expecting following that overly-optimistic Q1 earnings forecast made earlier this month.

The immediate future doesn’t look terribly rosy, too.

Samsung said the overall memory market will likely remain slow in Q2 although DRAM demand is expected to recover somewhat. It isn’t expecting too much to change for its display business, either, although “demand for flexible smartphone OLED panels is expected to rebound” which is where the company plans to place particular focus.

On the consumer side, where most readers know Samsung’s business better, Samsung expects to see improved sales in Q2, where buying is higher. It also teased a new Note, 5G devices — which will likely limited to Korea, we suspect — and that foldable phone.

The Galaxy Fold has been delayed after some journalists found issues with their review units — TechCrunch’s own Brian Heater was fine; he even enjoyed using it. There’s no specific mention in the quarterly report of a new launch date but it looks like the release will be mid-June, that’s assuming what AT&T is telling customers is accurate. But we’ll need to wait a few weeks for that to be confirmed, it seems.

Samsung says it will announce a revised launch date for the Galaxy Fold in the next few weeks.
Executives are speaking on a 1Q earnings conference call.

— Tim Culpan (@tculpan) April 30, 2019

Apple defends its takedown of some apps monitoring screen-time

Apple is defending its removal of certain parental control apps from the app store in a new statement.

The company has come under fire for its removal of certain apps that were pitched as tools giving parents more control over their children’s screen-time, but that Apple said relied on technology that was too invasive for private use.

“We recently removed several parental control apps from the App Store, and we did it for a simple reason: they put users’ privacy and security at risk. It’s important to understand why and how this happened,” the company said in a statement

The heart of the issue is the use of mobile device management technologies in the parental control apps that Apple has removed from the app store, the company said.

These device management tools give  control and access over a device’s user location, app use, email accounts, camera permissions and browsing history to a third party.

“We started exploring this use of MDM by non-enterprise developers back in early 2017 and updated our guidelines based on that work in mid-2017,” the company said.

Apple acknowledged that the technology has legitimate uses in the context of businesses looking to monitor and manage corporate devices to control proprietary data and hardware, but, the company said, it is “a clear violation of App Store policies — for a private, consumer-focused app business to install MDM control over a customer’s device.”

The company said it communicated to app developers that they were in violation of App Store guidelines and gave the company 30 days to submit updates to avoid being booted from the App Store.

Indeed, we first reported that Apple was warning developers about screen-time apps in December.

“Several developers released updates to bring their apps in line with these policies,” Apple said in a statement. “Those that didn’t were removed from the App Store.”

Bad PR ideas, esports, and the Valley’s talent poaching war

Sending severed heads, and even more PR DON’Ts

I wrote a “master list” of PR DON’Ts earlier this week, and now that list has nearly doubled as my fellow TechCrunch writers continued to experience even more bad behavior around pitches. So, here are another 12 things of what not to do when pitching a startup:

DON’T send severed heads of the writer you want to cover your story

Heads up! It’s weird to send someone’s cranium to them.

This is an odd one, but believe it or not, severed heads seem to roll into our office every couple of months thanks to the advent of 3D printing. Several of us in the New York TechCrunch office received these “gifts” in the past few days (see gifts next), and apparently, I now have a severed head resting on my desk that I get to dispose of on Monday.

Let’s think linearly on this one. Most journalists are writers and presumably understand metaphors. Heads were placed on pikes in the Middle Ages (and sadly, sometimes recently) as a warning to other group members about the risk of challenging whoever did the decapitation. Yes, it might get the attention of the person you are sending their head to, in the same way that burning them in effigy right in front of them can attract eyeballs.

Now, I get it — it’s a demo of something, and maybe it might even be funny for some. But, why take the risk that the recipient is going to see the reasonably obvious metaphorical connection? Use your noggin — no severed heads.

Why your CSO — not your CMO — should pitch your security startup

Elon Musk, SEC agree to guidelines on Twitter use

Tesla,  Elon Musk and the U.S. Securities and Exchange Commission reached an agreement Friday that will give the CEO freedom to use Twitter —within certain limitations — without fear of being held in contempt for violating an earlier court order.

Musk can tweet as he wishes except when it’s about certain events or financial milestones. In those cases, Musk must seek pre-approval from a securities lawyer, according to the agreement filed with Manhattan federal court.

U.S. District Judge Alison Nathan, the presiding judge on this matter, must still approve the deal. Nathan had given the SEC and Musk two weeks to work out their differences and come to a resolution.

Musk must seek pre-approval if his tweets include:

  • any information about the company’s financial condition or guidance, potential or proposed mergers, acquisitions or joint ventures,
  • production numbers or sales or delivery number (actual, forecasted, or projected),
  • new or proposed business lines that are unrelated to then-existing business lines (presently includes vehicles, transportation, and sustainable energy products);
  • projection, forecast, or estimate numbers regarding Tesla’s business that have not been previously published in official company guidance
  • events regarding the company’s securities (including Musk’s acquisition or disposition of shares)
  • nonpublic legal or regulatory findings or decisions;
  • any event requiring the filing of a Form 8-K such as a change in control or a change in the company’s directors; any principal executive officer, president, principal financial officer, principal accounting officer, principal operating officer, or any person performing similar functions

The fight between the two parties began after Musk’s now infamous August 7, 2018 tweet that had “funding secured” for a private takeover of the company at $420 per share. The SEC filed a complaint in alleging that Musk had committed securities fraud.

Musk and Tesla settled with the SEC last year without admitting wrongdoing. Tesla agreed to pay a $20 million fine; Musk had to agree to step down as Tesla chairman for a period of at least three years; the company had to appoint two independent directors to the board; and Tesla was also told to put in place a way to monitor Musk’s statements to the public about the company, including via Twitter.

The fight was re-ignited after Musk sent a tweet on February 19 that Tesla would produce “around” 500,000 cars this year, correcting himself hours later to clarify that he meant the company would be producing at an annualized rate of 500,000 vehicles by year end.

The SEC argued that the tweet sent by Musk violated their agreement. Musk has said the tweet was “immaterial” and complied with the settlement.

The SEC had asked the court to hold Musk in contempt for violating a settlement agreement reached last October over Musk’s now infamous “funding secured” tweet. The SEC had argued that Musk was supposed to get approval from Tesla’s board before communicating potentially material information to investors, the agency has argued. The SEC claimed a February 19 tweet violated the agreement.

Musk has steadfastly maintained that he didn’t violate the agreement.

Internet connectivity projects unite as Alphabet spinout Loon grabs $125M from SoftBank’s HAPSMobile

Two futuristic projects are coming together to help increase global internet access after Loon, the Google spinout that uses a collection of floating balloons to bring connectivity to remote areas, announced it has raised money from a SoftBank initiative.

HAPSMobile, a SoftBank project that is also focused on increasing global connectivity, is investing $125 million into Loon, according to an announcement from SoftBank made this morning. The agreement includes an option for Loon to make a reciprocal $125 million investment in HAPSMobile and it includes co-operation plans, details of which are below.

HAPSMobile is a one-year-old joint venture between SoftBank and U.S. company AeroVironment . The company has developed a solar-powered drone that’s designed to deliver 5G connectivity in the same way Facebook has tried in the past. The social network canceled its Aquila drone last year, although it is reported to have teamed up with Airbus for new trials in Australia.

Where Facebook has stumbled, HAPSMobile has made promising progress. The company said that its HAWK 30 drone — pictured below in an impression — has completed its initial development and the first trials are reportedly set to begin this year.

Loon, meanwhile, was one of the first projects to go after the idea of air-based connectivity with a launch in 2013. The business was spun out of X, the ‘moonshot’ division of Alphabet, last year and, though it is still a work in progress, it has certainly developed from an initial crazy idea conceived within Google.

Loon played a role in connecting those affected by flooding in Peru in 2017 and it assisted those devastated by Hurricane Maria in Puerto Rico last year. Loon claims its balloons have flown more than 30 million kms and provided internet access for “hundreds of thousands” of people across the world.

In addition to the capital investment, the two companies have announced a set of initiatives that will help them leverage their collective work and technology.

For starters, they say they will make their crafts/balloons open to use for the other — so HAPSMobile can tap Loon balloons for connectivity and vice-versa — while, connected to that, they will jointly develop a communication payload across both services. They also plan to develop a common ground station that could work with each side’s tech and develop shared connectivity that their airborne hardware can tap.

Loon has already developed fleet management technology because of the nature of its service, which is delivered by a collection of balloons, and that will be optimized for HAPSMobile.

The premise of HAPSMobile is very much like Loon

Outside of tech, the duo said they will create an alliance “to promote the use of high altitude communications solution with regulators and officials worldwide.”

The investment is another signal that shows SoftBank’s appetite in tech investing is not limited to up-and-coming startups via its Vision Fund, more established ventures are indeed also in play. Just yesterday, the Vision Fund announced plans to invest $1 billion in German payment firm Wirecard and its past investments include ARM and Nvidia, although SoftBank has sold its stake in the latter.

Douyu, China’s Twitch backed by Tencent, files for a $500M U.S. IPO

Douyu, a Chinese live streaming service focused on video games, has filed with the U.S. Securities and Exchange Commission as it prepares to raise up to $500 million on the NYSE less than a year after its archrival floated on the same stock market.

Wuhan-based Douyu, whose name translates as “fighting fish”, is the second Twitch -like service backed by Tencent to go public in the United States. Its direct competitor Huya, who has a similarly fierce name “tiger’s teeth” and also counts Tencent as a major investor, raised $180 million from its NYSE listing last May.

It’s not surprising for Tencent to hedge its bets in esports streaming, given the giant relies heavily on video games to make money. For example, Tencent can use some of its portfolio companies’ ad slots to get the word out about its new releases. Indeed, Douyu’s filing shows it received a hefty 27.48 million yuan ($4.09 million) in advertising fees from Tencent last year.

As Douyu warns in its prospectus, its alliance with Tencent can be tenuous.

“Tencent may devote resources or attention to the other companies it has an interest in, including our direct or indirect competitors. As a result, we may not fully realize the benefits we expect from the strategic cooperation with Tencent. Failure to realize the intended benefits from the strategic cooperation with Tencent, or potential restrictions on our collaboration with other parties, could materially and adversely affect our business and results of operations.”

But there are nuances in the giant’s ties to China’s top two live streaming services that could mean more affinity between Tencent and Douyu. The social media and gaming behemoth is currently Douyu’s largest shareholder with a 40.1 percent stake owned through its wholly-owned subsidiary Nectarine. Over at Huya, Tencent is the second-largest stakeholder behind YY, the pioneer in China’s live streaming sector that had spun off Huya.

When it comes to the financial terms, the rivaling pair is in a head-on race. In 2018, Douyu doubled its net revenues to $531.5 million. Huya held an edge as it earned $678.3 million in the same period, also doubling the amount from a year ago.

Huya may have learned a few things about monetizing live streaming from 14-year-old YY as it managed to pull in more revenues despite owning a smaller user base. While Douyu claimed 153.5 million monthly active users in the fourth quarter, Huya had 116.6 million.

How the two make money also diverge slightly. In the fourth quarter, 86 percent of Douyu’s revenues originated from virtual items that users tipped to their favorite streaming hosts, with the remaining earnings derived from advertising and more. By contrast, Huya relied almost exclusively on live streaming gifts, which made up 95.3 percent of total revenues.

douyu

Screenshot of a Douyu live streaming session 

As Douyu grows its coffers to spend on content as well as technologies following the impending IPO, competition in China’s live streaming landscape is set to heat up. Just earlier this month, Huya raised $327 million in a secondary offering to invest in content and R&D. Like many other businesses anchored in content, Huya and Douyu depend tremendously on quality creators to keep users loyal. Both have offered sizable checks to live streaming hosts, promising to grow the internet celebrities into bigger stars.

And they’ve extended the battlefield outside China as emerging media forms, most exemplified by short video services Douyin (TikTok’s China version) and Kuaishou, threaten to steal people’s eyeball time away. Both bite-size video apps now enjoy a much bigger user base than their live streaming counterparts.

“We intend to further explore overseas markets to expand our user base through both organic expansion and selective investments,” noted Douyu in its IPO filing.

In a similar move, Huya’s overseas expansion is also well underway. “In addition to our vigorous domestic growth, we have successfully leveraged our unique business model to enter new overseas markets. We believe we are delivering long-term value through strategic investments in overseas markets in 2019 and beyond,” said Huya chief executive Rongjie Dong in the company’s Q4 earnings report.

No one knows how to hire, plus brand design and African tech

Editor’s Note: No one knows how to hire

Hiring is the lifeblood of the world. Few people do truly singular work; instead, nearly every facet of our civilization is built by groups of humans (and increasingly machines) working in tandem.

Image by PeopleImages via Getty Images

That presents quite the puzzle though: if teamwork is so critical to the functioning of, well, everything, why are we so god awfully bad at building teams?

Minus a couple of high functioning teams of course, the evidence for team rot is all around us. Startups go bust when teams of two (i.e. founders) can’t make simple decisions about the future of their business. Large companies exsanguinate cash while their teams spend eons debating the minutia of a pixel in the checkout flow. At even larger scale, massive infrastructure projects like California’s HSR fail because the right people weren’t planning and building it (plus ten other issues of course).

How do we get this so wrong, so consistently?

The first reason, and the one most challenging to overcome, is that human endeavors are fundamentally built upon aspirations. A startup is a dream, no different than improving Excel’s formula editor or adding traffic signals to an intersection. Action cannot happen without aspiration, and so we tend to be far more optimistic with all facets of a plan before execution.

Notes from the Samsung Galaxy Fold: day four

Apologies for skipping day three. This kept me extremely busy yesterday. Though the Galaxy Fold remained a constant companion.

Before you ask (or after you ask on Twitter without having read beyond the headline), no it’s hasn’t broken yet. It’s actually been fairly robust, all things considered. But here’s the official line from Samsung on that,

A limited number of early Galaxy Fold samples were provided to media for review. We have received a few reports regarding the main display on the samples provided. We will thoroughly inspect these units in person to determine the cause of the matter.

Separately, a few reviewers reported having removed the top layer of the display causing damage to the screen. The main display on the Galaxy Fold features a top protective layer, which is part of the display structure designed to protect the screen from unintended scratches. Removing the protective layer or adding adhesives to the main display may cause damage. We will ensure this information is clearly delivered to our customers.

I’ll repeat what I said the other day: breakages and lemons have been known to happen with preproduction units. I’ve had it happen with device in a number of occasions in my many years of doing this. That said, between the amount of time it took Samsung to let us reviewers actually engage with the device and the percentage of problems we’ve seen from the limited sample size, the results so far are a bit of a cause for a concern.

The issue with the second bit  is that protective layer looks A LOT like the temporary covers the company’s phones ship with, which is an issue. I get why some folks attempted to peel it off. That’s a problem.

At this point into my life with the phone, I’m still impressed by the feat of engineering went into this technology, but in a lot of ways, it does still feel like a very first generation product. It’s big, it’s expensive and software needs tweaks to create a seamless (so to speak) experience between screens.

That said, there’s enough legacy good stuff that Samsung has built into the phone to make it otherwise a solid experience. If you do end up biting the bullet and buying a Fold, you’ve find many aspects of it to be a solid workhorse and good device, in spite of some of the idiosyncrasies here (assuming, you know, the screen works fine).

It’s a very interesting and very impressive device, and it does feel like a sign post of the future. But it’s also a sometimes awkward reminder that we’re not quite living in the future just yet.

Day One

Day Two

Uber’s self-driving car unit raises $1B from Toyota, Denso and Vision Fund ahead of spin-out

Uber’s has confirmed it will spin out its self-driving car business after the unit closed $1 billion in funding from Toyota, auto-parts maker Denso and SoftBank’s Vision Fund.

The development has been speculated for some time — as far back as October — and it serves to both remove a deeply-unprofitable unit from the main Uber business: helping Uber scale back some of its losses, while giving Uber’s Advanced Technologies Group (known as Uber ATG) more freedom to focus on the tough challenge of bringing autonomous vehicles to market.

The deal values Uber ATG at $7.25 billion, the companies announced. In terms of the exact mechanics of the investment, Toyota and Denso are providing $667 million with the Vision Fund throwing in the remaining $333 million.

The deal is expected to close in Q3, and it gives investors a new take on Uber’s imminent IPO, which comes with Uber ATG. The company posted a $1.85 billion loss for 2018, but R&D efforts on ‘moonshots’ like autonomous cars and flying vehicles dragged the numbers down by accounting for over $450 million in spending. Moving those particularly capital-intensive R&D plays into a new entity will help bring the core Uber numbers down to earth, but clearly there’s still a lot of work to reach break-even or profitability.

Still, those crazy numbers haven’t dampened the mood. Uber is still seen as a once-in-a-generation company, and it is tipped to raise around $10 billion from the IPO, giving it a reported valuation of $90 billion-$100 billion.

Like the spin-out itself, the identity of the investors is not a surprise.

The Vision Fund (and parent SoftBank) have backed Uber since a January 2018 investment deal closed, while Toyota put $500 million into the ride-hailing firm last August. Toyota and Uber are working to bring autonomous Sienna vehicles to Uber’s service by 2021 while, in further proof of their collaborative relationship, SoftBank and Toyota are jointly developing services in their native Japan which will be powered by self-driving vehicles.

The duo also backed Grab — the Southeast Asian ride-hailing company that Uber owns around 23 percent of — perhaps more aggressively. SoftBank has been an investor since 2014 and last year Toyota invested $1 billion into Grab, which it said was the highest investment it has made in ride-hailing.

“Leveraging the strengths of Uber ATG’s autonomous vehicle technology and service network and the Toyota Group’s vehicle control system technology, mass-production capability, and advanced safety support systems, such as Toyota Guardian, will enable us to commercialize safer, lower cost automated ridesharing vehicles and services,” said Shigeki Tomoyama, the executive VP who leads Toyota’s ‘connected company’ division, said in a statement.

Here’s Uber CEO Dara Khosrowshahi’s shorter take on Twitter

Excited to announce Toyota, Denso and the SoftBank Vision Fund are making a $1B investment in @UberATG, as we work together towards the future of mobility. pic.twitter.com/JdqhLkV7uU

— dara khosrowshahi (@dkhos) April 19, 2019

Congress readies for Mueller report to be delivered on CDs

If there weren’t enough obstacles already standing between Congress and the results of the special counsel’s multiyear investigation, lawmakers are expecting to need an optical drive to read the document.

A Justice Department official told the Associated Press that a CD containing the Mueller report would be delivered to Congress tomorrow between 11 and noon Eastern. At some point after the CDs are delivered, the report is expected to be made available to the public on the special counsel’s website.

.@PaulaReidCBS reports the Mueller report will be delivered to the Hill on CDs tomorrow.

House Judiciary Committee staff was prepared for this possibility — among many — and checked they still have a computer with a working CD-ROM drive (they do).

— Rebecca Kaplan (@RebeccaRKaplan) April 17, 2019

Any Congressional offices running Macs will likely have to huddle up with colleagues who still have a CD-capable drive. Optical drives disappeared from Apple computers years ago. With people increasingly reliant on cloud storage over physical storage, they’re no longer as popular on Windows machines either.

Tomorrow’s version of the report is expected to come with a fair amount of detail redacted throughout, though a portion of Congress may receive a more complete version at a later date. The report’s release on Thursday will be preceded by a press conference hosted by Attorney General William Barr and Deputy Attorney General Rod Rosenstein. If you ask us, there’s little reason to tune into that event rather than waiting for substantive reporting on the actual contents of the report once it’s out in the wild. Better yet, hunker down and read some of the 400 pages yourself while you wait for thoughtful analyses to materialize.

Remember: No matter what sound bites start flying tomorrow morning, digesting a dense document like this takes time. Don’t trust anyone who claims to have synthesized the whole thing right off the bat. After all, America has waited this long for the Mueller report to materialize — letting the dust settle won’t do any harm.

Billionaire François-Henri Pinault just pledged more than 100 million euros to rebuild the Notre Dame Cathedral

The Notre Dame Cathedral in Paris has been saved after fire broke out in the early hours of Monday evening, but not before extensive damage was inflicted on the 856-year-old building, with much of its roof collapsing into itself, along with its main spire.

The fire had blazed for eight hours before firefighters were able to largely contain it, including saving its two iconic rectangular towers and many of its precious relics, including the Crown of Thorns, said to have been worn by Jesus Christ before the crucifixion. Still, as French President Emmanual Macron said outside the cathedral once the fire was nearly extinguished, “The worst has been avoided, but the battle isn’t fully won yet.” Macron continued on to say that France planned to start an international fundraising campaign to raise money for the renovations.

He may have a major head start on that campaign, thanks to billionaire François-Henri Pinault, who has already pledged more than 100 million euros to rebuild the cathedral. According to the AFP, Pinault said in a statement that he plans to provide the money through his family’s investment firm, Artemis — funding that he hopes will help church officials “completely rebuild Notre Dame.”

Pinault owns the French luxury group Kering, which oversees the luxury fashion brands Gucci and Saint Laurent, among others. Lesser known is that he’s a bit of a geek, or was once.

Pinault talked with TechCrunch years ago about his early love of computer science and about having interned at Hewlett Packard as a software developer. At the time, he also said he helped start Soft Computing, a company that was founded in Paris in 1984 by fellow students of Pinault, Eric Fischmeister and Gilles Venturi. They later took the company public and, last December, sold a majority stake in the business to ad giant Publicis.

An active philanthropist, Pinault has seemingly steered around much of the startup world since, unlike others of the world’s richest individuals. His few known startup investments include an early check to the online shopping platform Fancy. More recently, he helped provide funding to Muzik, an L.A.-based maker of so-called smart headphones that raised $70 million from investors last May.

Did you fly a drone over Fenway Park? The FAA would like a chat

Drones are great. But they are also flying machines that can do lots of stupid and dangerous things. Like, for instance, fly over a major league baseball game packed with spectators. It happened at Fenway Park last night, and the FAA is not happy.

The illegal flight took place last night during a Red Sox-Blue Jays game at Fenway; the drone, a conspicuously white DJI Phantom, reportedly first showed up around 9:30 PM, coming and going over the next hour.

One of the many fans who shot a video of the drone, Chris O’Brien, told CBS Boston that “it would kind of drop fast then go back up then drop and spin. It was getting really low and close to the players. At one point it was getting really low and I was wondering are they going to pause the game and whatever, but they never did.

Places where flying is regularly prohibited, like airports and major landmarks like stadiums, often have no-fly rules baked into the GPS systems of drones — and that’s the case with DJI. In a statement, however, the company said that “whoever flew this drone over the stadium apparently overrode our geofencing system and deliberately violated the FAA temporary flight restriction in place over the game.”

The FAA said that it (and Boston PD) is investigating both to local news and in a tweet explaining why it is illegal.

FAA Statement: The FAA is investigating a report that a #drone flew over @fenwaypark during the baseball game last night. Flying drones in/around stadiums is prohibited starting 1hr before & ending 1hr after the scheduled game & prohibited within a radius of 3 nm of the stadium. pic.twitter.com/o6nOGVf8K2

— The FAA (@FAANews) April 12, 2019

That’s three nautical miles, which is quite a distance, covering much of central Boston. You don’t really take chances when there are tens of thousands of people all gathered in one spot on a regular basis like that. Drones open up some pretty ugly security scenarios.

Of course, this wasn’t a mile and a half from Fenway, which might have earned a slap on the wrist, but directly over the park, which as the FAA notes above could lead to hundreds of thousands in fines and actual prison time. It’s not hard to imagine why: If that drone had lost power or caught a gust (or been hit by a fly ball, at that altitude), it could have hurt or killed someone in the crowd.

It’s especially concerning when the FAA is working on establishing new rules for both hobby and professional drone use. You should leave a comment there if you feel strongly about this, by the way.

Here’s hoping they catch the idiot who did this. It just goes to show that you can’t trust people to follow the rules, even when they’re coded into a craft’s OS. It’s things like this that make mandatory registration of drones sound like a pretty good idea.

(Red Sox won, by the way. But the season’s off to a rough start.)

The Inning: Bottom 9
The Score: Tied
The Bases: Loaded
The Result: pic.twitter.com/lrRneiCGim

— Boston Red Sox (@RedSox) April 12, 2019

Blackpink’s “Kill This Love” sets new YouTube records, including the biggest Premiere

Blackpink, one of the highest-profile Korean pop groups, is breaking YouTube records with its latest video. A Google spokesperson confirmed to TechCrunch that “Kill This Love” is the fastest music video to hit 100 million views, having hit that number in less than three days. It is also now YouTube’s most viewed music video debut, racking up 56.7 million in the first 24 hours after it was posted.

Furthermore, “Kill This Love,” the first single and title track of Blackpink’s new EP, is the biggest YouTube Premiere to date, with a peak of 979,000 concurrent views. This surpasses the 829,000 concurrent views racked up during the YouTube Premiere of Ariana Grande’s “thank u, next” in December. YouTube launched Premieres as part of a new suite of creator tools in October. The feature allows them to create a landing page to promote a video ahead of its release and includes a chat feature like live videos, allowing YouTube to compete more directly with Twitch.

“Kill This Love” also hit milestones on iTunes, reaching the number one position in the US store, the first Asian girl group to do so.

Blackpink, a quartet of four women formed by YG Entertainment, one of Korea’s biggest music labels, is one of the most popular K-Pop groups. While it has already gained a massive fan following in Asia (and abroad) since its debut in 2016, Blackpink is now poised to follow BTS as the next K-Pop group to break into the mainstream in Western markets, with its first North American tour starting in Los Angeles later this month. Blackpink has always mixed Korean and English in its lyrics, but “Kill This Love” is notable for being more multilingual than the group’s previous tracks, broadening its potential appeal.

VSCO sues PicsArt over photo filters that were allegedly reverse engineered

Photo-editing app-maker VSCO has filed a lawsuit against competitor PicsArt.

The suit focuses on 19 PicsArt filters that were supposedly “reverse engineered from VSCO’s filters,” with VSCO alleging it has become a legal issue involving false advertising and violations of the app’s terms of service.

“VSCO has invested significant time and resources in developing its presets [a.k.a. filters], which represent valuable intellectual property of VSCO,” the company writes.

In a statement, PicsArt denied the suit’s claims:

VSCO is not a direct competitor, but they clearly feel threatened by PicsArt. VSCO’s claims are meritless. It’s disappointing that they have made these false claims against us. PicsArt will vigorously defend itself against these baseless claims and all options are under consideration.

Specifically, VSCO says that at least 17 PicsArt employees created VSCO accounts — probably not an uncommon competitive practice, but the suit claims they used those accounts to reverse engineer the filters, thus violating the terms in which users “agree not to sell, license, rent, modify, distribute, copy, reproduce, transmit, publicly display, publicly perform, publish, adapt, edit or create derivative works from any VSCO Content.”

In addition, the suit accuses PicsArt of engaging in false advertising by describing the filters in its PicsArt Gold subscription as “exclusive” and “only for [PicsArt] Gold users.”

Why is VSCO so sure that the PicsArt filters were based on its own? The suit says:

VSCO’s color scientists have determined that at least nineteen presets published by PicsArt are effectively identical to VSCO presets that are only available through a VSCO account. Specifically, VSCO determined that those PicsArt filters have a Mean Color Difference (“MCD”) of less than two CIEDE2000 units (in some cases, far less than two units) compared to their VSCO counterparts. An MCD of less than two CIEDE2000 units between filters is imperceptible to the human eye and cannot have been achieved by coincidence or visual or manual approximation. On information and belief, PicsArt could have only achieved this degree of similarity between its filters and those of VSCO by using its employees’ VSCO user accounts to access the VSCO app and reverse engineer VSCO’s presets.

The suit goes on to claim that VSCO’s lawyers sent PicsArt a letter in February demanding that the company identify and remove any filters that were reverse engineered or copied from VSCO. The letter also demanded “an accounting of all profits and revenues generated from such filters” and that PicsArt identify any employees who had created VSCO accounts.

In VSCO’s telling, PicsArt then responded that it was “in the process of replacing certain underperforming filters and modifying others,” including the 19 filters in question, but it only removed 17 — and supposedly two of the new filters “were similarly reverse engineered from VSCO’s proprietary presets.” The suit also says PicsArt has failed to provide the information that VSCO demanded.

VSCO does not appear to be suing for a specific monetary value, but the suit asks for “disgorgement of any proceeds obtained from PicsArt’s use of VSCO filters,” as well as injunctive relief, compensatory damages and “the costs of corrective advertising.”

You can read the full complaint below.

VSCO Complaint by on Scribd

Online catering marketplace ezCater gets another $150M at a $1.25B valuation

In 2007, Stefania Mallett and Briscoe Rodgers conceived of ezCater, an online marketplace for business catering, and began building the company in Mallet’s Boston home, mostly at her kitchen table.

Recently, sitting at that same table, Mallett negotiated with Brad Twohig of Lightspeed Venture Partners the final terms of a $150 million Series D-1 at a $1.25 billion valuation. Lightspeed, alongside GIC, co-led the round, with participation from Light Street Capital, Wellington Management, ICONIQ Capital and Quadrille Capital.

“Raising money or getting to unicorn status, it’s all nice validation but that’s not the purpose, the purpose of being in business is to grow a very successful company with happy customers and happy employees,” Mallett, ezCater’s chief executive officer, told TechCrunch. “We are going to have cupcakes with unicorns on them. That will take us about a half hour, then we will get back to work.”

EzCater co-founder and CEO Stefania Mallett

Mallett compares ezCater to Expedia . The travel company doesn’t own and operate hotels, nor do they create them. EzCater, similarly, works with 60,500 restaurants and caterers around the U.S. to fulfill orders, but at no point do they work directly with food nor make any deliveries themselves.

Since its inception, the ezCater marketplace has grown considerably, expanding 100 percent annually for the last eight years, Mallett tells us. Though, like most unicorns, ezCater isn’t profitable yet.

Both Mallett and Rodgers are software industry veterans, establishing engineering careers prior to tackling business catering. The pair bootstrapped the company until 2011, when they secured a small Series A investment of $2.7 million. That same year, U.S. foodtech startups raised $176 million, per PitchBook. EzCater would go on to raise more than $300 million in equity funding, including its latest round, and VC interest in foodtech would explode. Already this year, U.S. foodtech startups have brought in $626 million after pulling in a whopping $5 billion in 2018.

EzCater has benefited from this boom. The company raised a $100 million Series D just 10 months ago.

“We really didn’t need the money, we have quite a lot of money in the bank from the last round,” Mallett said. “There was so much talk of a funding winter and a recession coming so we said maybe we should try to raise money and then people jumped on it so we thought OK, why not? If there is a funding winter, we’re set; if not, well, we are still set.”

The investment comes hot off the heels of ezCater’s acquisition of Monkey Group, a cloud platform for take-out, delivery and catering. Mallett declined to disclose terms of the deal but said the partnership makes ezCater the indisputable market leader in catering management software. The company will use its recently expanded war chest to accelerate its international expansion and, potentially, continue its M&A streak. As for the future, an initial public offering is amongst the possibilities.

“We certainly are considering it,” Mallett said. “As we’ve grown, we’ve become more sophisticated and mature; that puts us in a good position to continue operating as a successful standalone company or be acquired by a public company or go public if we see an opportunity to do that. We are not wedded to any of these outcomes.”

New Facebook tool answers the question “Why am I seeing this post?”

Facebook announced today that it is adding a feature called “Why am I seeing this post?” to News Feeds. Similar to “Why am I seeing this ad?,” which has appeared next to advertisements since 2014, the new tool has a dropdown menu that gives users information about why that post appeared in their News Feed, along with links to personalization controls.

Meant to give users more transparency into how Facebook’s News Feed algorithm works, the update comes as the company copes with several major events that have highlighted the platform’s shortcomings, including potentially harmful ones. These include its role in enabling the dissemination of a video taken during the shooting attacks on New Zealand mosques two weeks ago, which were originally broadcast using Facebook Live; a lawsuit filed by the U.S. Department of Housing and Urban Development that accuses Facebook’s ad-targeting tool of violating the Fair Housing Act and its role in spreading misinformation and propaganda (after years of complaints and criticism, Facebook recently announced plans to downrank anti-vaccination posts and ban white nationalist content.

Facebook’s announcement says this is the first time its “built information on how ranking works directly into the app.” Users will be able to access “Why am I seeing this post?” as a dropdown menu in the right hand corner of posts from friends, Pages and Groups in their News Feed that displays information about how its algorithm decided to rank the post, including:

  • Why you’re seeing a certain post in your News Feed — for example, if the post is from a friend you made, a Group you joined, or a Page you followed.
  • What information generally has the largest influence over the order of posts, including: (a) how often you interact with posts from people, Pages or Groups; (b) how often you interact with a specific type of post, for example, videos, photos or links; and (c) the popularity of the posts shared by the people, Pages and Groups you follow.

The same menu will also include links to personalization options, including See First, Unfollow, News Feed Preferences and Privacy Shortcuts. The company’s blog post said that “during our research on ‘Why am I seeing this post?,’ people told us that transparency into News Feed algorithms wasn’t enough without corresponding controls.”

“Why am I seeing this ad,” a similar feature that launched in 2014, will be updated with to include more information. For example, it will tell users if an ad appeared in their News Feed because a company uploaded their contact lists, like emails or phone numbers, or if they worked with a marketing partner to place the ad.

A look at new power banks from OmniCharge and Fuse Chicken

When you’ve been doing this job long enough, you start to develop strange interests (though some might compellingly argue that strange interests are a prerequisite). Lately for me it’s been power banks. Quite possibly the least sexy product in all of consumer electronics outside of the ever-ubiquitous dongle.

I don’t know what to tell you. Blame the fact that I’m traveling every other week for this job. There are also all of the liveblogs from years’ past that got cut off in the last few minutes as my poor ancient MacBook put itself to sleep during those last precious battery percentages. Low batteries give me anxiety. I’m the guy who’s the first to notice when your phone’s screenshot is below 10 percent.

So the power bank has become constant accessory in my life, both home and on the road. Until last year, I used to carry a massive one that was just north of 20,000mAh. The peace of mind to back pain ration seemed sensible enough, but I learned the hard way that, not only do Chinese airports have a limit on battery size, they chuck yours in the trash without a second thought if you go over. It’s a quick way to lose $150.

The good news, however, is that between USB-C, wireless charging and the magic of crowdfunding, it seems we might be living through the golden age of the power bank. I know, right? What a time to be alive.

Point is, there are a lot of choices out there. Anker and Amazon’s house brand RAVPower both offer some good options on a budget. There’s also mainstay Mophie for those who don’t mind paying a bit of a premium for design.

Fuse Chicken was actually a brand that was new to me when they hit me up to try out their latest product. It’s a name I definitely would have remembered — because, honestly, it’s pretty terrible. Memorable, but terrible. Maybe that’s why the company went with such a mundane name for what’s a really interesting charger.

My dad ones told me that he gave my sister and I boring first names because we had such an unusual surname. I have no idea if this is true, but it’s an interesting story and could well apply here.

The Universal is a good example of making the most of out a form factor. It manages to jam a lot of features in without creating a Frankenstein’s Monster worthy of the name Fuse Chicken. On its face, the product looks like a black and white version of Amazon’s default power bricks. It serves that purpose, of course, coupled with a trio of swappable international wall adapters (bonus points for travelers).

But the brick also sports a 6,700mAh battery inside, so you can continue charging gadgets while unplugged. That’s ideal for a phone — you can keep a laptop alive for a bit as well, but you’re going to burn through that pretty quickly. There’s also a wireless charging pad up top, so you can power up another phone or, say, a new set of AirPods at the same time. The side of the device features a small display showing off how much juice is left.

It’s great having a bank that’s also a plug, though like Apple’s brick, it’s much too massive to plug into many vertical outlets. I learned this lesson the hard way on a recent coast to coast flight. Thankfully, though, it’s compatible with Apple’s extension cable.

OmniCharge, meanwhile, is a company I’ve been following since their earliest Kickstarter days. Matter of fact, the aforementioned power bank that’s currently sitting in a Chinese garbage dump is one of their products. R.I.P. noble battery pack.

The Omni Mobile 12,800 mAh is a much more basic product that the company’s earliest offerings. There’s no display for power information here — instead you have to rely on four lights to let you know how much juice is left.

As with most of the company’s products, I do quite like the design language. It’s subtle and unobtrusive and fits nicely inside a backpack. It’s definitely too big for carrying around in a pocket, however. Thanks the wonders of USB it will charge a laptop, as well, though once again, you’re going to run through that 12,800 mAh pretty quickly, if you do.

The Fuse Chicken and OmniCharge run $85 and $99, respectively. They’ve both served me well as travel companions these last few weeks. Here’s to long flights and avoiding life’s landfill.

In San Francisco, a fight over a homeless shelter shines a harsh light on a conflicted population

As of 2017, there were roughly 7,000 people living without homes in San Francisco, a number that comprises minors — a lot of them. The San Francisco Unified School District estimates that as of 2017, roughly 2,100 of the children in the school system were homeless —  a number that it said looked to be escalating, not shrinking.

While parents may not hesitate to send their offspring to these same schools, some in the city’s northeast corner may be uncomfortable with the idea of homeless adults and families seeking shelter in close proximity. Such appears to be the point of a GoFundMe campaign that was launched late last week called “Safe Embarcadero for All.” Its objective: to raise $100,000 for legal counsel to push against the creation of a shelter along the city’s eastern waterfront region.

The campaign is a reaction to an idea introduced earlier this month by San Francisco Mayor London Breed to turn a parking lot along Embarcadero that’s owned by the Port of San Francisco into a center that would provide health and housing services and round-the-clock stays for up to 200 of the city’s homeless residents.

It isn’t just theoretical. If the Port Commission agrees to the plan, Breed estimated the center could be open by summer. Thus the GoFundMe campaign, which has now raised $71,250 as of this writing from 180 people, some of whom presumably live in the luxury high-rise apartments nearby and others who share the  campaign organizers’ concerns that the shelter could introduce “public safety, drug use, and other problems.”

It’s a frustrating state of affairs, though some are finding inspiration in a new, rival campaign that was created yesterday in support of the center and which is fast gaining financial support. Called a “SAFER Embarcadero for ALL,” it has already raised more than earlier GoFundMe campaign, with more than 1,021 donors  contributing more than $76,000 as of this writing, including Twilio CEO Jeff Lawson and Salesforce CEO Marc Benioff, who has been a frequent and public supporter of Breed and a number of her initiatives.

Lawson appears to have given $20,000; Benioff has given at least $10,000 to the campaign and is using Twitter as a platform to drum up more support.

Join me in supporting @TheCoalitionSF and @fbach4 and @LondonBreed in building a new navigation center in San Francisco on the Embarcadero. Homelessness is our number crisis and it requires all of our attention and resources. https://t.co/hY6KxeT5D9

— Marc Benioff (@Benioff) March 29, 2019

Some are heralding their involvement as proof that tech CEOs do care about San Francisco’s homeless population, which they’re often accused of exacerbating by planting themselves in the city, paying their employees high wages, and driving up the cost of everything from rent to groceries in the process.

Even GoFundMe itself has joined sides, donating $5,000 to the new campaign in support of the homeless center or, more specifically the Coalition on Homelessness, which has been promised the monies.

“I don’t think the tech industry is doing enough about the homeless issue,” GoFundMe CEO Rob Solomon told the San Francisco Chronicle this morning. “We wanted to do our small part, even though we’re not located in San Francisco.”

No doubt critics will argue that because GoFundMe is 25 miles south of San Francisco, in Redwood City, the company has less at stake.

Still, proponents of the center will take support wherever they can find it.

As Jennifer Friedenbach, executive director of the Coalition on Homelessness, told the Chronicle earlier today, the group is already planning to use the new funds to help with public education, to get input on the center, and to educate residents about what they grossly misunderstand about the city’s homeless population.

Tencent-backed news app Qutoutiao nabs $171M from Alibaba

The race to give Chinese users their daily dose of news intensifies as Qutoutiao, a rival to TikTok parent Bytedance, net an installment of sizable backing.

Alibaba is injecting $171 million in a convertible loan to Qutoutiao, the three-year-old news and video aggregation startup, according to an announcement released Thursday. The transaction will convert into about 11.4 million shares of Qutoutiao at a price of $15 per American depositary shares, representing about 4 percent of Qutoutiao. The deal arrived just six months after Qutoutiao raised $84 million in a downsized initial public offering through Nasdaq.

TechCrunch has reached out Qutoutiao for more details on its new funding and will update the story if we hear back.

Qutoutiao, which means “Fun headlines” in Chinese, runs a news app that feeds users content based on their past habit and an e-book reading app for those with a longer attention span. The Shanghai-based company is among a handful of startups alongside ecommerce challenger Pinduoduo that are piling into the largely untapped, smaller cities outside China’s major urban centers of Beijing and Shanghai for growth.

The fresh capital will make Qutoutiao one of the unusual Chinese tech startups with backings from both Alibaba and Tencent, the arch-foes that compete in many realms. The other companies that have enjoyed fundings from both heavyweights include car-hailing service Didi Chuxing and youth-focused media company Bilibili.

Alibaba’s support is also a significant boost for Qutoutiao as it fights a relentless battle with Bytedance, a growing threat to China’s tech veterans. Unlike most of China’s emerging startups, Bytedance has not taken fundings from Baidu, Alibaba and Tencent, collectively known as the “BAT” to acknowledge their dominance in the Chinese internet.

Bytedance has had a history of hostility with social media leader Tencent while it has been more pally with Alibaba the e-commerce giant, which agreed to facilitate ecommerce sales for Bytedance influencers.

Bytedance runs an empire of popular new media products that include short-form video app Douyin and news distribution platform Jinri Toutiao. TikTok, which is the international version of Douyin, is turning heads across the globe including in the United States and has reportedly spurred a Facebook clone.

Battling in the relentless Chinese market has come at huge costs for Qutoutiao, which sees itself spending heavily on marketing to collect and retain users. While its 2018 revenues jumped 484 percent to $440 million, net loss soared to $283 million in the year compared to just $14.3 million in the previous period. But the startup is ready to spend more as it works on a new app that could take on Douyin in China’s blossoming short-form video market.

Apple TV+ makes Facebook Watch look like a joke

Apple flexed its wallet today in a way Facebook has been scared to do. Tech giants make money by the billions, not the millions, which should give them an easy way to break into premium video distribution: buy some must-see content. That’s the strategy I’ve been advocating for Facebook but that Apple actually took to heart. Tim Cook wrote lines of zeros on some checks, and suddenly Steven Spielberg, JJ Abrams, Reese Witherspoon, Jennifer Aniston, and Oprah became the well-known faces of Apple TV+.

Facebook Watch has…MTV’s The Real World? The other Olsen sister? Re-runs of Buffy The Vampire Slayer? Actually, Facebook Watch is dominated by the kind of low-quality viral video memes the social network announced it would kick out of its News Feed for wasting people’s time.

And so while Apple TV+ at least has a solid base camp from which to make the uphill climb to compete with Netflix, Facebook Watch feels like it’s tripping over its own feet.

Today, Apple gave a preview of its new video subscription service that will launch in fall offering unlimited access to old favorites and new exclusives for a monthly fee. Yet even without any screenshots or pricing info, Apple still got people excited by dangling its big-name content.

Spielberg is making short films out of the Amazing Stories anthology that inspired him as a child. Abrams is spinning a tale of a musician’s rise called Little Voice Witherspoon and Aniston star in The Morning Show about anchoring a news program. Oprah is bringing documentaries about workplace harassment and mental health. Apple even has the Seasame Street gang teaching kids how to code.

This tentpole tactic will see Apple try to draw users into a free trial of Apple TV+ with this must-see content and then convince them to stay. And a compelling, exclusive reason to watch is exactly what’s been missing from…Facebook Watch. Instead, it chose to fund a wide array of often unscripted reality and documentary shorts that never felt special or any better than what else was openly available on the Internet, let alone what you could get from a subscription. It now claims to have 75 million people Watching at least one minute per day, but it’s failed to spawn a zeitgeist moment. Even as Facebook has scrambled to add syndicated TV cult favorites like Firefly or soccer matches to free, ad-supported video service, it’s failed to sign on anything truly newsworthy.

That’s just not going to fly anymore. Tech has evolved past the days when media products could win just based on their design, theoretical virality, or the massive audiences they’re cross-promoted to. We’re anything but starved for things to watch or listen to. And if you want us to frequent one more app or sign up for one more subscription, you’ll need A-List talent that makes us take notice. Netflix has Stranger Things. HBO has Game Of Thrones. Amazon has the Marvelous Mrs. Maisel. Disney+ has…Marvel, Star Wars, and the princesses. And now Apple has the world’s top directors and actresses.

Video has become a battle of the rich. Apple didn’t pull any punches. Facebook will need to buy some new fighters if Watch is ever going to deserve a place in the ring.

Alibaba acquires Israeli VR startup Infinity Augmented Reality

Infinity Augmented Reality, an Israeli virtual reality startup, has been acquired by Alibaba, the companies announced this weekend. The deal’s terms were not disclosed. Alibaba and InfinityAR have had a strategic partnership since 2016, when Alibaba Group led InfinityAR’s Series C. Since then, the two have collaborated on augmented reality, computer vision and artificial intelligence projects.

Founded in 2013, the startup’s augmented glasses platform enables developers in a wide range of industries (retail, gaming, medical, etc.) to integrate AR into their apps. InfinityAR’s products include software for ODMs and OEMs and a SDK plug-in for 3D engines.

Alibaba’s foray into virtual reality started three years ago, when it invested in Magic Leap and then announced a new research lab in China to develop ways of incorporating virtual reality into its e-commerce platform.

InfinityAR’s research and development team will begin working out of Alibaba’s Israel Machine Laboratory, part of Alibaba DAMO Academy, the R&D initiative it is pouring $15 billion into with the goal of eventually serving two billion customers and creating 100 million jobs by 2036. DAMO Academy collaborates with universities around the world and Alibaba’s Israel Machine Laboratory has a partnership with Tel Aviv University focused on video analysis and machine learning.

In a press statement, the laboratory’s head, Lihi Zelnik-Manor, said “Alibaba is delighted to be working with InfinityAR as one team after three years of partnership. The talented team brings unique knowhow in sensor fusion, computer vision and navigation technologies. We look forward to exploring these leading technologies and offering additional benefits to customers, partners and developers.”

Hackers conquer Tesla’s in-car web browser and win a Model 3

A pair of security researchers dominated Pwn2Own, the annual high-profile hacking contest, taking home $375,000 in prizes including a Tesla Model 3 — their reward for successfully exposing a vulnerability in the electric vehicle’s infotainment system.

Tesla handed over its new Model 3 sedan to Pwn2Own this year, the first time a car has been included in the competition. Pwn2Own is in its 12th year and run by Trend Micro’s Zero Day Initiative. ZDI has awarded more than $4 million over the lifetime of the program.

The pair of hackers Richard Zhu and Amat Cam, known as team Fluoroacetate, “thrilled the assembled crowd” as they entered the vehicle, according to ZDI, which noted that after a few minutes of setup, they successfully demonstrated their research on the Model 3 internet browser.

The pair used a JIT bug in the renderer to display their message — and won the prize, which included the car itself. In the most simple terms, a JIT, or just-in-time bug, bypasses memory randomization data that normally would keep secrets protected.

Tesla told TechCrunch it will release a software update to fix the vulnerability discovered by the hackers.

“We entered Model 3 into the world-renowned Pwn2Own competition in order to engage with the most talented members of the security research community, with the goal of soliciting this exact type of feedback. During the competition, researchers demonstrated a vulnerability against the in-car web browser,” Tesla said in an emailed statement. “There are several layers of security within our cars which worked as designed and successfully contained the demonstration to just the browser, while protecting all other vehicle functionality. In the coming days, we will release a software update that addresses this research. We understand that this demonstration took an extraordinary amount of effort and skill, and we thank these researchers for their work to help us continue to ensure our cars are the most secure on the road today.”

That’s a wrap! Congrats to @fluoroacetate on winning Master of Pwn. There total was $375,000 (plus a vehicle) for the week. Superb work from this great duo. pic.twitter.com/Q7Fd7vuEoJ

— Zero Day Initiative (@thezdi) March 22, 2019

Pwn2Own’s spring vulnerability research competition, Pwn2Own Vancouver, was held March 20 to 22 and  featured five categories, including web browsers, virtualization software, enterprise applications, server-side software and the new automotive category.

Pwn2Own awarded a total of $545,000 for 19 unique bugs in Apple Safari, Microsoft Edge and Windows, VMware Workstation, Mozilla Firefox, and Tesla.

Tesla has had a public relationship with the hacker community since 2014 when the company launched its first bug bounty program. And it’s grown and evolved ever since.

Last year, the company increased the maximum reward payment from $10,000 to $15,000 and added its energy products as well. Today, Tesla’s vehicles and all directly hosted servers, services and applications are now in scope in its bounty program

Elon Musk defends tweets in SEC’s contempt proceedings

Tesla CEO Elon Musk argued Friday that his Twitter use did not violate a settlement agreement with the U.S. Securities and Exchange Commission and that the agency’s request to have him held in contempt is based on a “radical interpretation” of the order, according to court papers filed in Manhattan federal court.

The SEC has asked a judge to hold Musk in contempt for violating a settlement agreement reached last year over Musk’s now infamous “funding secured” tweet. Under that agreement, Musk is supposed to get approval from Tesla’s board before communicating potentially material information to investors.

Musk contends he didn’t violate the agreement and that the problem lies in the SEC’s interpretation, which he describes as “virtually wrong at every level.” The filing also reveals new details about the settlement negotiations, notably that the SEC sent Musk a draft agreement that would have required him to obtain pre-approval for all public statements related to Tesla, in any format.

Musk and Tesla never agreed to those terms. Instead, Musk says the agreement requires him to comply with Tesla own policy, which would require pre-approval for “written communications that contain, or reasonably could contain, information material to the company or its shareholders.”

The barbs traded via court filings are the latest in an escalating fight between the billionaire entrepreneur and SEC that began last August when Musk tweeted that he had “funding secured” for a private takeover of the company at $420 per share.  The SEC filed a complaint in federal district court in September alleging that Musk lied.

Musk and Tesla settled with the SEC last year without admitting wrongdoing. Tesla agreed to pay a $20 million fine; Musk had to agree to step down as Tesla chairman for a period of at least three years; the company had to appoint two independent directors to the board; and Tesla was also told to put in place a way to monitor Musk’s statements to the public about the company, including via Twitter.

But the fight was re-ignited last month after Musk sent a tweet on February 19 that Tesla would produce “around” 500,000 cars this year, correcting himself hours later to clarify that he meant the company would be producing at an annualized rate of 500,000 vehicles by year end.

The SEC argued that the tweet sent by Musk violated their agreement. Musk has said the tweet was “immaterial” and complied with the settlement.

Nintendo’s Labo: VR Kit is not Virtual Boy 2.0

Even the most successful tech company is going to have a stumble from time to time. Nintendo’s 45 years in the video game industry is spotted with a few doozies, but none are more infamous than the Virtual Boy. The 1994 portable console was marketed as an early home entry into virtual reality, but in actual reality ended up being little more than a blood-red headache.

Nintendo knew the comparisons to the doomed console would come fast and furiously when it launched its next VR venture, so the company took the time to get it just right. In a sense, Labo VR is a cautious push into the virtual realm. It’s nowhere near the all-in approach of Oculus, Vive or even PlayStation VR, for that matter — but it’s uniquely Nintendo.

Like the first Labo kits, it’s a friendly reminder that Nintendo’s chief job is to surprise and delight, and it happily delivers on both fronts. But just as the Labo piano shouldn’t be mistaken for a real musical instrument, Labo VR ought not be viewed as a real virtual reality.

It’s not just the pop-out cardboard form factor, either. Google made that a perfectly acceptable beginner’s approach to VR. It’s more that Nintendo has taken a very casual approach to all of this. The kit’s virtual reality experience is an extension of Labo itself. It’s no more important than the process of building the headset and various accessories step by step on the app. Or, for that matter, sharing all of the above experiences with others.

During a demo of the new kits in New York this week, Nintendo was quick to point out that the headsets are built without a strap. It claims this was a conscious decision so that the experience can be passed around and shared. I’m sure there are some practical reasons behind this decision as well, but it’s certainly a nice thought.

Virtual reality is, by nature of its form factor, a solitary experience. Labo VR doesn’t have any sort of video-out feature to share the experience on a big screen (for now, at least), so the idea of offering it up in a more social play-and-pass scenario is appealing. This goes double for the fact that, like the original Labo kits, all of the games included fall under the casual banner. The experiences share a common lineage with Nintendo analog titles like Mario Party or Mario Paint.

Your mileage with each title will vary. Certainly some (Bird and Blaster spring to mind) will stay with you longer than others and demand more repeat play. On the whole, each buildable peripheral launches with one (maybe two) compatible games. The good news, however, is that, like Labo, the company packs a lot of controllers (and therefore experiences) into a single kit.

The standard Labo: VR Kit ships with six Toy-Con projects (VR Goggles, Toy-Con Blaster, Toy-Con Camera, Toy-Con Bird, Toy-Con Wind Pedal and Toy-Con Elephant), while the cheaper Starter Set comes with two (Goggles and Blaster). If you go for the latter to dip your toes in the water or just to save on cash, there are a pair of “expansion sets” to get the full experience.

Unlike the last time Nintendo came to town with a Labo press tour, we didn’t actually get any time to build. That said, if previous kits are any indication, that’s half of the fun and value proposition here. Also, the amount of time you’ll spend building varies greatly from project to project — take it from me, someone who spent most of a work morning building that damn piano.

Once built, the VR experience is about on-par with what you’d expect from a Google VR. Again, it’s a set of lenses attached to a hunk of cardboard. This is no Rift or Vive and the immersiveness of your own experience will vary. The graphics are cartoony and oftentimes just large polygons. But a well-crafted casual gaming experience can be enough to pull you out of your own head for a bit. Bird is the best example of this.

The controller clips on the headset, with a Toy-Con popping out the other end like a beak. As a player, you hook your hands on either side of the display and flap along as you play a bird, flying around trees and completing different missions to feed an army of hatchlings. It’s a relaxing reprieve from some of the faster-paced games, as you glide around the skies. Add in the foot-controlled Wind Pedal, and the system delivers a puff of air to your face as you boost your bird, adding to the effect.

Blaster, a big, fun novelty gun, is the most engaging of the bunch. When I ended my demos with some extra time to spare, the Nintendo rep asked me if I wanted to give any of the games another go. The answer was simple. A simple first-person shooter, Blaster pits you against an army of alien blobs. You load the gun by cocking it like a shot-gun, and pull the trigger to an explosive effect.

Honorable mention goes to Doodle, which uses the bizarre elephant-shaped controller. The experience is unique from the rest in that it’s not actually a game, but rather a 3D drawing tool. It’s one of the more clever additions to the pack, though actually drawing on a 3D plane with a cardboard controller shaped like an elephant’s trunk is easier said than done. The implementation is a bit lacking, but it offers interesting insight into where Labo VR might go in the future.

Honestly, I just scratched the surface during my briefing. But there’s little question that Labo VR is a fun and singular experience. There’s also a special screen holder, so users who have rough time with VR can experience a 2D version of the games and accessories. Also, as with the standard Labo kit, Nintendo has bundled in Toy-Con Garage, so users can start building their own games when they tire of the pre-packaged experiences.

If there’s one disappointment in all of this, it’s that it will likely be a while before we see a full standalone VR experience from Nintendo. The idea of playing as Mario, Link and the like in virtual reality is no doubt something of a lifelong dream for plenty of gamers who grew up on the characters. But while Virtual Boy is a quarter-century in the past, the memory still lingers.

Until then, Labo VR is a fully engaging take on VR, and a uniquely Nintendo one, to boot.

PicsArt hits 130 million MAUs as Chinese flock to its photo editing app

If you’re like me, who isn’t big on social media, you’d think that the image filters that come inside most apps will do the job. But for many others, especially the younger crowd, making their photos stand out is a huge deal.

The demand is big enough that PicsArt, a rival to filtering companies VSCO and Snapseed, recently hit 130 million monthly active users worldwide, roughly a year after it amassed 100 million MAUs. Like VSCO, PicsArt now offers video overlays though images are still its focus.

Nearly 80 percent of PicsArt’s users are under the age of 35 and those under 18 are driving most of its growth. The “Gen Z” (the generation after millennials) users aren’t obsessed with the next big, big thing. Rather, they pride themselves on having niche interests, be it K-pop, celebrities, anime, sci-fi or space science, topics that come in the form of filters, effects, stickers and GIFs in PicsArt’s content library.

“PicsArt is helping to drive a trend I call visual storytelling. There’s a generation of young people who communicate through memes, short-form videos, images and stickers, and they rarely use words,” Tammy Nam, who joined PicsArt as its chief operating officer in July, told TechCrunch in an interview.

PicsArt has so far raised $45 million, according to data collected by Crunchbase. It picked up $20 million from a Series B round in 2016 to grow its Asia focus and told TechCrunch that it’s “actively considering fundraising to fuel [its] rapid growth even more.”

picsart

PicsArt wants to help users stand out on social media, for instance, by virtually applying this rainbow makeup look on them. / Image: PicsArt via Weibo

The app doubles as a social platform, although the use case is much smaller compared to the size of Instagram, Facebook and other mainstream social media products. About 40 percent of PicsArt’s users post on the app, putting it in a unique position where it competes with the social media juggernauts on one hand, and serving as a platform-agnostic app to facilitate content creation for its rivals on the other.

What separates PicsArt from the giants, according to Nam, is that people who do share there tend to be content creators rather than passive consumers.

“On TikTok and Instagram, the majority of the people there are consumers. Almost 100 percent of the people on PicsArt are creating or editing something. For many users, coming on PicsArt is a built-in habit. They come in every week, and find the editing process Zen-like and peaceful.”

Trending in China

Most of PicsArt’s users live in the United States, but the app owes much of its recent success to China, its fastest growing market with more than 15 million MAUs. The regional growth, which has been 10-30 percent month-over-month recently, appears more remarkable when factoring in PicsArt’s zero user acquisition expense in a crowded market where pay-to-play is a norm for emerging startups.

“Many larger companies [in China] are spending a lot of money on advertising to gain market share. PicsArt has done zero paid marketing in China,” noted Nam.

Screenshot: TikTok-related stickers from PicsArt’s library

When people catch sight of an impressive image filtering effect online, many will inquire about the toolset behind it. Chinese users find out about the Armenian startup from photos and videos hashtagged #PicsArt, not different from how VSCO gets discovered from #vscocam on Instagram. It’s through such word of mouth that PicsArt broke into China, where users flocked to its Avengers-inspired disappearing superhero effect last May when the film was screening. China is now the company’s second largest market by revenue after the U.S.

Screenshot: PicsArts lets users easily apply the Avengers dispersion effect to their own photos

A hurdle that all media apps see in China is the country’s opaque guidelines on digital content. Companies in the business of disseminating information, from WeChat to TikTok, hire armies of content moderators to root out what the government deems inappropriate or illegal. PicsArt says it uses artificial intelligence to sterilize content and keeps a global moderator team that also keeps an eye on its China content.

Despite being headquartered in Silicon Valley, PicsArt has placed its research and development center in Armenia, home to founder Hovhannes Avoyan. This gives the startup access to much cheaper engineering talents in the country and neighboring Russia compared to what it can hire in the U.S. To date, 70 percent of the company’s 360 employees are working in engineering and product development (50 percent of whom are female), an investment it believes helps keep its creative tools up to date.

Most of PicsArt’s features are free to use, but the firm has also looked into getting paid. It rolled out a premium program last March that gives users more sophisticated functions and exclusive content. This segment has already leapfrogged advertising to be PicsArt’s largest revenue source, although in China, its budding market, paid subscriptions have been slow to come.

picsart 1

PicsArt lets users do all sorts of creative work, including virtually posing with their idol. / Image: PicsArt via Weibo

“In China, people don’t want to pay because they don’t believe in the products. But if they understand your value, they are willing to pay, for example, they pay a lot for mobile games,” said Jennifer Liu, PicsArt China’s country manager.

And Nam is positive that Chinese users will come to appreciate the app’s value. “In order for this new generation to create really differentiated content, become influencers, or be more relevant on social media, they have to do edit their content. It’s just a natural way for them to do that.”

Here are the 88 companies that launched at YC’s W19 Demo Day 2

Today was the second half of Y Combinator’s two-day Demo Day for its Winter 2019 class. Over 85 startups pitched on stage yesterday, and another huge batch launched today.

Previously held at the Computer History Museum in Mountain View, this YC Demo Day instead took over a massive warehouse in San Francisco. Like yesterday’s pitches, today’s were split across two stages (“Pioneer” and “Mission”) running in parallel — so even if you were there, you couldn’t see everything alone.

Here are all of the companies that launched today, and our notes from their presentations.

Pioneer Stage:

YSplit: Splitting utility bills and other recurring payments with roommates or loved ones is a huge pain where one person has to front the money and then nag the others to get paid back. YSplit offers virtual debit cards that make it easy to automatically split bills and collect cash from users’ bank accounts. By charging a 2 percent interchange fee to merchants, YSplit could build a solid business from the 26 million shared homes in the US alone.

The Juggernaut: A subscription publication focusing on South Asian stories. They hire freelance writers, publish one story per day, and charge users $5 a month. We wrote about The Juggernaut here.

 

Searchlight: Reference checks can screen out bad hires, yet many businesses wait until the very end of the interview cycle or don’t do extensive checks. Searchlight offers reference checks as a service. Job candidates invite their references to submit testimonials, which Searchlight collects and organizes into reports about someone’s work style, ideal environment, and skillset. Searchlight earns an average of $250 per job hopes to investigate all 30 million skilled hires in the US per year.

Allo: Connects local parents and helps them help each other with things like babysitting and errand-running through a “Karma” point system. Average user returns 12x per week.

 

Coursedog: Universities employ full time scheduling administrators to place faculty into courses and rooms. Coursedog automates this process by plugging into a school’s data to eliminate this busy work. Coursedog already has 8 university clients paying over $100,000 for a three-year contract. Next it wants to move into modernizing the process of booking spaces on campus as well as instructor and tuition payments.

 

AI Insurance: Cloud-based software for insurance claims. By moving things to the cloud rather than filing cabinets, the founders say they can save “thousands of hours per claim”. Their goal, once they’ve got enough claim data, is to use AI to determine things like how much a claim might ultimately cost.

 

Nebullam: Growing crops indoors can produce more food per acre that’s not dependent on weather, but the problems are the high labor costs and payback times for expensive equipment. Nebullam wants to be the John Deere of indoor farming. It sells a vertical farming cube and other equipment that can maximize yield and minimize costs. With a CEO who grew up on a farm, it’s already managed a 3 year payback time for its equipment vs an industry standard for 7 years.

Pronto: Ride-sharing for smaller cities in Latin America. Co-founder Miguel Martinez Cano says that the Uber model doesn’t work in these cities, as would-be riders don’t have credit cards and instead want to pay cash. Drivers pay a subscription fee of $59-99 per month. Currently doing 62,000 trips per month.

 

LEAH Labs: People spend $500 million per year on chemotherapy for their dogs, even though the treatment only extends their life temporarily without curing their disease. LEAH Labs wants to cure B-cell lymphoma cancer in dogs using Car T cells, a powerful new treatment method. There have been $20 billion in recent Car T cell company exits, but none of the big players are focused on dogs. LEAH Labs falls under the USDA instead of the FDA, so it requires less investment to get approved, which translate into $5,000 treatments.

 

Balto: A platform for fantasy sports league managers to make money from their work. As fantasy sports betting moves toward legality in more states, they want to capture the audience already making bets through other means.

 

Visly: Developers waste a ton of time rebuilding the same product for iOS, Android, and web and Visly says only 15 percent of developers use tools to simplify this. Visly’s cross-platform UI development suite makes it quick and easy to create consistent apps for different devices. The CEO worked on Facebook’s version called Yoga, but it always failed. Visly has fixed those problems so developers can focus on their invention, not porting it to other operating systems.

 

Mudrex: Lets people do algorithmic trading without programming knowledge, beginning with cryptocurrency. Last week, they saw a trading volume of $150,000. They charge users $300 a year for access to a drag and drop interface for building trading models, which the user can then test against historical trading data.

Brain Key: Diagnosis for brain diseases using 3D MRI data. Whereas many doctors use 2D slices from MRIs for diagnosis, Brain Key says they’re able to analyze data in 3D to do things like identify Parkinsons subtypes 35% more accurately than experts. They’re aiming to be in hospitals worldwide within 2 years.

 

Switchboard: It’s tough to efficiently match available trucks with freight needing to be shipped if you don’t know where the trucks are. Switchboard’s on-board truck sensors collect real time data on a truck’s location, destination, and more. Switchboard’s trucking freight marketplace launched three months ago and is already gathering data that could unlock more revenue streams.

Shef: Two months ago, California passed the first law in the country legalizing the sale of home cooked food. Shef creates a marketplace where home chefs can find nearby customers. Shef’s meals cost around $6.50 compared to $20 per meal for traditional food delivery, and the startup takes a 22 percent cut of every transaction. It’s been growing 50 percent month over month thanks to deals with large property management companies that offer the marketplace as a perk to their residents. Shef wants to be the Airbnb of home cooked food.

Qwest: Lets people pay money to skip lines at venues like clubs and bars. They’re currently at 10 venues in 2 cities, and say they should be at 100 venues in 6 cities this year. They aim to expand to events like music festivals and sporting events.

 

Circumvent Pharmaceuticals: Brain disease Batten, the Alzheimer’s of children, has no adequate treatment. Circumvent says its treatment can replace the missing enzyme at the root of the disease and has already been shown to be effective in mice. If it can get through expedited approval thanks to incentives for treating rare diseases, Circumvent wants to sell its medicine for $100,000 which is covered by insurance. Once it clears that hurdle, Circumvent will be much closer to working on Alzheimer’s treatments which could be hugely lucrative and a big win for humanity.

Withfriends: Membership programs for small businesses like bars, theaters, and barbershops. So far they have 80 small businesses on the platform, with over 5000 members working out to $400,000 in revenue. By integrating right into PoS machines, they say 15% of customers convert into members.

 

Askdata: Non-technical employees rarely use company data because it’s difficult to find and understand. Askdata offers a natural language search engine for internal data that translates words into SQL queries. Making data conveniently accessible could help businesses make better decisions.

 

Modern Labor: Pays people $10,000 to learn to code in exchange for 15% of their income for 2 years thereafter. Founder Francis Larson says Modern Labor’s first group of students is going through the program now, with 10,000 students on a waiting list.

NALA: Making mobile payments in Africa can require an internet connection and typing in a complex 46-digit code like the one above. NALA makes a mobile money app for easily paying friends and merchants as well as buying Internet airtime to capture the $300 billion in yearly mobile payments in Africa. Co-founder Benjamin Fernandes says NALA is 7X faster than competitors and has 5,000 active users. NALA earns money off commissions on airtime and bill payments, interest on savings, sending leads to insurance companies and other services. 

 

Vice Lotteries: A lottery platform that’s trying to “take the loss” out of lotteries. Amongst other things, they limit the bets users are allowed to make based on their wealth to prevent betting too much. Founder Matthew Curtis notes that their model is currently not legal, but they’re actively trying to change that.

 

GoLinks: Long, complex URLs make it tough to access internal company tools. GoLinks makes links short and easy to remember for clients like Reddit and Lyft. Its tool can programmatically generate URLs that are single sign-on compliant, and teams get a dashboard of analytics. Whether employees are setting up a new computer or working while traveling, GoLinks means they won’t be locked out.

Allure Systems:  Fashion brands spend $8 billion per year on models and photographers. Allure Systems uses AI to programatically produce apparel images for shopping sites. The technology can take one photo of a jacket and show it in a variety of poses on a range of models across different sizes. By increasing shopping conversion rates by 14 percent, the team has already racked up $1.4 million in annual recurring revenue with an average SAAS contract costing over $200,000 per year.

Spiral Genetics: Software built to compare large sets of human genome data to help cure diseases. Founder Adina Mangubat says existing software can’t analyze genome data at the massive scale it’ll be at in the coming years. They’ve generated $250K in revenue so far, with $1M in Letters of Intent.

 

Rune: Voice chat and automated friend/squad finder for players on mobile games (like Fortnite, PUBG.) In 10 days since launch, the company says it’s got 5,000 users who spend an average of 30 minutes per day on the platform. Friendships are handled within Rune, allowing users to switch from game to game.

 

Truora:  Truora offers fast and reliable background checks for Latin America at $3 per check. Truora also collects reports of fraud by workers from its clients to create a valuable database employers will pay to access. It already has Uber, Rappi, and other top regional marketplaces using their service.

Aura Vision: Like Google Analytics for physical stores. By pulling a video feed from “any camera” in a store, Aura provides customer age, gender, and how long customers have lingered with a method they say is anonymous and doesn’t require facial recognition. The company founders say they’ll charge stores an average of $9,600 per year.

 

GeoPredict: GeoPredict aims to remove the middlemen from oil and gas real estate sales, and use AI and historical data to help evaluate acreage. They transacted roughly $100,000 last week, and charge a 5% fee.

 

Union Apartment: It’s hard for international students to find housing if they don’t speak the language, don’t have local friends, and might not even have a bank account. Union Apartment offers furnished co-living apartments for international students starting with those from China. Beyond dwellings, Union Apartment provides events like karaoke nights and services like help with banking. It’s already profitable with $130,000 in gross profit in February which makes this a $24 billion gross profit potential business.

 

jet.law: Charges flat legal fees for employment litigation, using court records to predict the workload and how much they should charge up front (rather than charging by billable hours). Co-founder Jesse Unruh previously worked in big business litigation, while co-founder Kyle Harris was a manufacturing design engineer at Apple.

Friendshop:  Friendshop lets you recruit friends to buy with you to get deals. Friendshop wants to be the US version of Pinduoduo, a $24 billion Chinese group buying company. And after its virality helps Friendshop grow in beauty, it plans to move into other consumer goods businesses.

 

Pulse Active Stations Network: Health kiosks for India, meant to be installed in train stations. Co-founder Joginder Tanikella says that there are 600,000 preventable deaths in India as many in the region don’t get regular doctor checkups. “But everyone takes train,” he says. Their in-station kiosk measures 21 health parameters. The company made $28,000 in revenue last month. Charging $1 per test, Tanikella says each machine pays for itself within 3 months. In the future, the kiosks will allow them to sell insurance and refer users to doctors.

 

Pyxai: Employers don’t have scalable ways to screen for soft skills and culture fit. Pyxai gives job applicants a 30 minute quiz that it analyzes with natural language processing to assess what they can do and if they’ll mesh with existing staff. Deemphasizing resumes could decrease discrimination in hiring. Pyxai charges $6 per screening and wants to be part of how all 36 million knowledge job openings get filled.

 

Mage: An app built specifically for buying and selling cards from Magic: The Gathering — the largest trading card game in the world. Aiming to do for Magic what GOAT did for shoe resales, their app scans, recognizes, and prices cards and helps users to list them. The company says their average customer spends $120 per month on Magic cards.

 

Geosite: Businesses that need satellite imagery have to piece it together from 40 providers, manually download the content, and upload it to their system. Geosite is a marketplace for immediately usable spatial imagery. Clients pay an annual fee, and Geosite already has $3 million in contracts with the US Air Force.

 

Community Phone: Community Phone aims to be a friendlier wireless carrier, aggregating three existing wireless networks behind a company focused on a positive customer service experience. Co-Founder James Graham says they’re currently seeing $230k in annual recurring revenue, and are profitable with a 45% margin.

Superb AI: To build artificial intelligence, you need accurately labeled training data, but services like Mechanical Turk can be slow and inaccurate. Superb AI has built an AI that assists in the labeling process to speed it up 10X, and creates its own in-house AI algorithms. Superb AI has already done $1 million in revenue in the past 7 months. For most businesses to keep up with the AIs from Google, Facebook, and the other tech giants, they’ll need help generating training data that Superb can provide.

Termius: Termius makes an SSH client that works on desktop and mobile and already has 11,000 paying customers including employees at Disney and NASA. The freemium business model is propelled by its #1 ranking in app stores for “SSH”. Next, Termius wants to expand to teams to become a full collaboration platform.

 

Verto FX: Helps businesses in Africa obtain foreign currencies needed to work with international companies. They currently support the exchange of 18 currencies. The company has seen $26M transaction volume in 5 months of private beta, with $30k monthly revenue. Co-founders Anthony Oduwole and Ola Oyetayo both have backgrounds in building technology platforms for large banks.

Inito: This app lets you measure fertility hormones using a hardware dongle that plugs into your phone. Inito can perform a hormone test and use that data to diagnose and treat conditions, and aid in planning procedures like IVF and IUI. Inito claims it can help people get pregnant faster while earning a 65 percent margin on its hardware, and that its data could help diagnose illnesses earlier.

Woke: Finances ad campaigns for budding eCommerce brands and helps them grow in exchange for a cut of the profits. In one month, they’ve onboarded 4 merchants who are giving them 50% of profits on each sale.

 

 

PNOE: They’ve built a compact breath analysis device for fitness facilities, to provide athletes with information about their cardiac/metabolic health. It’s $6,000, and is meant to replace massive $60,000 alternatives. Revenue is growing 40% per month. After fitness facilities, they aim to bring the device into healthcare centers to help with heart disease, obesity. and breathing problems.

Mission Stage:

WeatherCheck: Measures weather damage for insurance companies. The company has secured 4.7 million in annual bookings in the five months since it launched to help insurance carriers reduce their overall claims expense. To use the service, insurers upload data about their properties. WeatherCheck then monitors the weather and sends notifications to insurance companies, if, for example, a property has been damaged by hail.

 

EatGeek: After selling their last startup to GrubHub, the co-founders of Eatgeek are looking to help restaurants pull in more large-scale catering orders. Most restaurants aren’t focused on courting those looking to cater events; EatGeek opens them up to an audience of people looking specifically for these larger orders. The company takes a 20 percent commission on every order that moves through their systems, but they don’t have to worry about dealing with the food preparation or delivery.

 

Avo: Prevents human error when implementing analytics. The company says humans suck at implementing analytics. Their team of engineers and data scientists previously built QuizUp, a startup backed by Sequoia Capital that garnered 100 million users. Avo is currently being used by Skip Scooters, among other businesses.

 

Adventurous Co: Adventurous is building an augmented reality scavenger hunt that partners live actors with a mobile app that can create an interactive family activity that’s a lot more engaging than regular “screen time.” They’re launching in San Francisco with 45-60min experiences that cost $15 per person. We previously wrote about Adventurous here.

 

Globe: The startup, which has dubbed itself the “Coinbase for derivatives,” has built a cryptocurrency-derivative exchange that supports high-frequency trading. The platform allows crypto holders to trade global markets with bitcoin and grants users the same access to data leveraged by institutional investors.

 

XGenomes: XGenomes is aiming to revolutionize DNA sequencing with a low-cost, high-efficiency solution that saves time and money. The company’s solution involves laying out samples on glass slides, identifying individual sequences and using machine learning to stitch together the high resolution photos and turn these images into a full DNA sequence. The team from Oxford and Harvard say that the market XGenomes is targeting is now larger than $6.5 billion.

 

Habitat Logistics: A food delivery startup that doesn’t have a consumer mobile app but helps restaurants make deliveries. What sets them apart from competitors?  The company only delivers to restaurants that are within 10 minutes of a customer’s home, saving them time on long deliveries. Restaurants ping Habitat when they have delivery needs and the company sends a driver to complete the delivery. Habitat says they are growing 17 percent month over month, currently collecting $110,000 monthly revenue by charging restaurants per delivery.

 

WorkClout: WorkClout is building software to help manufacturers manage their operations in a cohesive product. The team says 56 percent of all manufacturers still manage their software on paper and Excel, WorkClout makes it much easier to spot inefficiencies and improve workflows. The team is focusing on customers in the packaging manufacturing space first, and is looking to tackle food and beverage companies and textile manufacturers next.

 

PadPiper: A marketplace for finding monthly housing and compatible roommates. The company helps interns find the right place to live, with the right roommates, partnering with big companies who need to help their interns navigate the housing market. The founders say they had to move 35 times in five years for academic reasons and were disappointed by Craigslist and other options. PadPiper has $10,000 in monthly revenue and says it’s growing 37 percent week-over-week.

 

DevFlight: DevFlight wants to revamp the business model for open-source software. They’re building a marketplace to pair open-sourced developer with companies. DevFlight works with the company and developers to create a plan that helps both parties understand the scope of the project. DevFlight takes a 25 percent transaction on the deals.

Handle.com: Automates the collection process of unpaid construction invoices. Construction companies are often forced to pay for their own jobs when customers are late on payments. According to Handle, there are $104 billion in unpaid construction invoices every year. Handle launched six weeks ago and is currently collecting $22,800 in monthly revenue. The founders previously launched an Andreessen Horowitz-backed company called Tenfold.

 

Gerostate Alpha: Gerostate Alpha is tackling human aging, an ambitious goal. The three co-founders are all academics at the Buck Institute where they’ve spent years researching aging. They’ve used their proprietary platform for drug discovery to quickly parse 90,000 compounds and identify 150 hits for further research.

 

Trestle: Founded by a former employee of Stripe, a fellow Y Combinator grad, Trestle provides companies a home page/easy-to-use intranet with profiles of each employee. The company is already working with Brex, Plaid and others to help employees feel less isolated and work more productively amongst each other.

Green Energy Exchange: Green Energy Exchange wants to give consumers a choice in where they get their energy. The virtual utility co. plans to let consumers choose where their renewable energy comes from — at least in the 12 states where that’s legal. The founder previously ran a large multi-billion dollar energy company and now wants to make choosing your energy supplier as easy as paying for Netflix by partnering directly with solar and wind generators. The startup is launching in Texas next month.

 

rct studio: Led by a team of YC alums behind Raven, an AI startup acquired by Baidu in 2017, rct studio is a creative studio for immersive and interactive film. The platform provides a real time “text to render “engine (so the text “A man sits on a sofa” would generate 3D imagery of a man sitting on a sofa) that supports mainstream 3D engines like Unity and Unreal, as well as a creative tool for film professionals to craft immersive and open-ended entertainment experiences called Morpheus Engine.

 

CredPal: CredPal is building a credit card company for Africa that looks to help the 200 million in Africa’s neglected middle class that lack access to formal credit, the startup says. The company hopes to become the next American Express and bring African consumers more convenience and freedom in how they purchase goods.

 

Calii: The company helps consumers in Latin America save money by directly connecting them to producers of fruits and vegetables. Cutting out the middlemen saves consumers lots of cash, say the founders. The Latin American companies are taking Chinese behemoth Pinduoduo’s business model and applying it to a different geography, like Rappi and Grin have done before them.

 

Nabis: Nabis is tackling the cannabis shipping and logistics business, working with suppliers to ship out goods to retailers reliably. It’s illegal for FedEx to ship weed so Nabis has swooped in and is helping ship and connect while taking cuts of the proceeds, a price the suppliers are willing to pay due to their 98 percent on-time shipping record.

 

Nettrons: A no-human-in-the-loop AI talent sourcer meant to make the recruiting process more efficient. The company has three paying companies who they’ve helped make six hires to date. Nettrons, founded by a pair of engineers, says their target market is worth $1 billion.

 

Fuzzbuzz: Fuzzing is the process of throwing mountains of invalid data at code to find bugs. Fuzzbuzz is looking to simplify the process of fuzzing for developers, taking a long complicated setup and turning it into a 30 minute process that automates the easy parts and connects with existing services like Jira, Github and Slack.

 

Interprime: Provides “Apple level” treasury services to startups. Startups are raising a lot of money with no way to manage it, says Interprime. They want to help these businesses by managing these big investments. They take a .25 percent advisory fee for all the investment they oversee. So far, they have $10 million in investment capital they are servicing.

Taali Foods: Taali Foods is looking to create a new healthy snack food, starting off with a popcorn replacement made from popped water lily seeds. The snacks ditch artificial flavoring, ingredients or preservatives and delivers serial snackers a healthier option with 67% less fat and 20% less calories than regular popcorn.

 

Gordian Software: An API for travel booking companies to sell seat selection and checked bags. Right now, Gordian is profitable and earning $65,000 per month offering online travel agencies tools to help them sell seating, baggage and other ancillary products. Gordian has three major pilots in the works, including one with lastminute.com.

 

Shiok Meats: A cell-based clean shrimp meat provider founded by a team of scientists. Compared to other shrimp on the market, Shiok says their cell-based shrimp meat is more sustainable and taste the same as regular shrimp. The shrimp meat is grown in bioreactors, similar to brewing beer. The startup is targeting the Asia-Pacific shrimp market, which it says is worth $25 billion.

 

Hatch: Hatch is looking to keep the conversations between franchise businesses and their customers moving along and driving sales all the while. The team is focusing on text, email and voice automation to push revenue at their customers which includes Jeep, Ashley Homestore and Rent-A-Center. The company is profitable and earning $119,000 per month.

 

Bot Orange: A customer communication system built on WeChat that integrates sales, marketing and more. WeChat currently offers no tools to companies to manage customers. Bot Orange will be that customer management tool within the app, helping businesses manage various channels without having to navigate another third-party tool.

 

Postscript: Postscript is working with online commerce brands to contact customers on smartphones via SMS. The startup wants to be a Mailchimp for texts, automating conversations between mobile-savvy millennial consumers and companies that are increasingly focused on direct-to-consumer and subscription models. We wrote about Postscript on TechCrunch here.

 

Tailor-ED: Launched by a pair of Stanford grads, the startup helps teachers create tailored lesson plans by sending short quizzes to groups of students to figure out the best lesson plans for those students. In the last four weeks, 2,500 students have received lessons from Tailor-ED. Operating under a freemium model, the company says they are targeting a $1.5 billion market.


Wallets Africa: African debit cards often don’t let users pay for international services like Netflix. Wallets Africa is building a digital bank that brings support to many of these online purchases via a partnership with Visa. The team is currently processing $3.5 million in purchases every month.

 

AuroraQ: A developer of a “practical” quantum computer. The founder has a Ph.D. in quantum physics and says AuroraQ will be the “Dell of quantum computing,” building integrated computers from quantum components, which is must less costly.

 

Probably Genetic: Probably Genetic is selling direct-to-consumer DNA tests, aiming to help Americans diagnose whether they are one of the 15 million undiagnosed people in the country that have a rare genetic disease. The co-founders say that on average it takes people more than 7 years to get diagnosed, and Probably Genetic hopes to change that with their $1,200 test which they will be launching in 12 weeks.

 

Viosera Therapeutics: Uses AI to predict and block drug resistance in cancer and bacteria. The startup has treated its solution with mice infected with MRSA and were able to cure 100 percent of the infected mice. The company is targeting MRSA patients initially with its drug discovery platform. Viosera says it is beginning clinical trials in the next six months.

 

Upsolve: Upsolve wants to helps low-income individuals file for bankruptcy more easily. The non-profit service gets referral fees from pointing non low-income families to bankruptcy lawyers and is able to offer the service for free. The company says that medical bills, layoffs and predatory loans can leave low-income families in dire situations and that in the last 6 months, their non-profit has alleviated customers from $24 million in debt.

 

AllSome:  Virtual warehouses and fulfillment for online sellers in Southeast Asia. How it works: customers ship their inventory to AllSome’s warehouse space, and AllSome handles quality assurance, storage, labelling, packaging and shipping. AllSome’s founders say the company is profitable.

 

BearBuzz: BearBuzz is building an influencer marketplace that moves things along much more quickly than today’s negotiation slog. They’ve standardized ad formats and can automatically verify the video ads via image and voice recognition. The team plans to make money by facilitating these quicker connections and taking 25 percent of adspend.

 

Point: A digital bank offering a debit card with rewards and a better user experience. The company is going live with virtual debit cards and checking accounts next month. 

 

MyScoot: MyScoot wants to help urban millennials make friends in India with their platform for home-hosted social events. Users can search the service and pay to attend events. MyScoot looks to keep things safe for attendees through background checks, peer reviews and what they’re calling a “social trust scoring algorithm.” They have had more than 1000 bookings through their app, with 60% of users returning after booking their first event.

 

Memfault: A developer of tools for engineers at embedded hardware companies that they say are as good as tools available for mobile engineers. Memfault is used for deployment, monitoring and analytics. So far, they have four customers and $5,500 in monthly recurring revenue.

 

Board: Board is a mortgage company that lets home buyers lock down a house with an all-cash offer. Cash buyers are 4 times more likely to win in a bidding war and often save tens of thousands off of a property’s purchase price compared to those with mortgages. They’re looking to be a cash buyer for the 80 percent of people who need a mortgage, by approving people for these massive loans and then making 2 percent off the mortgage.

 

Portal Entryways: Portal automatically opens doors for wheelchair users and keeps them open until they’ve gone through. Many existing accessibility buttons are out of reach, or too far from doors to be helpful; Portal uses a smartphone app on the user’s phone to control these existing buttons (modified with Portal’s hardware), effectively hitting the button for them. Portal is focusing on public places with many doors at first, like universities and malls.   We wrote about Portal Entryways on TechCrunch here.

 

Blueberry Medical: A pediatric telemedicine company that provides medical care instantly to families. Blueberry provides constant contact, the ability to talk to a pediatrician 24/7 and at-home testing kits for a total of $8 per month. They’ve just completed a paid consumer pilot and were able to resolve 50 percent of issues without in-person care. They’ve partnered with insurance providers to reduce ER visits.

 

Maitian.ai: Maitian is building the next generation of vending machines, taking notes from the hotel mini-bar fridge and allowing businesses to sell food in a way that’s friendlier than the average vending machine. Users swipe their credit card, open the door to the machine and pick out what they want. The team is focusing on South East Asia and has launched in 2 locations.

 

Emi Labs: Is developing a virtual assistant for human resources workers that automates the hiring process for low-skilled jobs. The startup counts Burger King and PwC as customers, with a total market size of $2.4 billion. Emi Labs improves the candidate experience by making the hiring process more personalized to them using AI.

 

Latchel: Latchel is building a maintenance platform for property managements that helps them free up their time by processing requests and dispatching contractors to fix the issues. Latchel makes up to $10 per unit per month for property managers and charges a 10 percent referral fee to contractors when they source them for jobs.

 

Alpaca: Is developing an API for free stock trading to replace legacy software. The founders say Alpaca’s commission-free stock trading API is the first and only broker dealer that understands developers, and it allows customers to build and trade with real-time market data free of cost.

 

 

Sprint customers say a glitch exposed other people’s account information

Several Sprint customers have said they are seeing other customers’ personal information in their online accounts.

One reader emailed TechCrunch with several screenshots describing the issue, warning that they could see other Sprint customers’ names and phone numbers. The reader said they informed the phone giant of the issue, and a Sprint representative said they had “several calls pertaining to the same issue.”

In all, the reader saw 22 numbers in a two-hour period, they said.

Several other customers complained of the same data exposing bug. It’s unclear how widespread the issue is or for how long the account information leak persisted.

Logged in to pay my @sprint bill, saw what looked like the details of another user. Did this 3 times. I called, rep said they’d been getting other similar calls. Advice on clarifying if this is the privacy breach it looks like? @EFF @publiccitizen @NCLC4consumers @eyywa

— Kylie B-C (@notthatkylie) March 14, 2019

@sprint are you having a known issue with your website?! I’m trying to set permissions on my account and some other damil’s information is on my account!

— Thelma Cheeks (@Tcheeksiamhair) March 19, 2019

If you are a @sprint customer please be aware that there has been a data breach. I have logged on to my account twice and both times have seen other customers’ devices. A phone call with @sprintcare resulted in them hanging up on me.

— Madeline Finch (@themadfinch) March 19, 2019

Another customer told TechCrunch how the Sprint account pages were initially throwing errors. The customer said they scrolled down their account page and saw several numbers that were not theirs. “I was able to click each one individually and see every phone call they made, the text messages they used, and the standard info, including caller ID name they have set,” the customer told TechCrunch.

Of the customers we’ve spoken to, some are pre-paid and others are contract.

We’ve reached out to Sprint for more but did not hear back. We’ll update when more comes in.

How to build The Matrix

Rizwan Virk
Contributor

Rizwan Virk is executive director of Play Labs @ MIT, a serial entrepreneur and author.

Released this month 20 years ago, “The Matrix” went on to become a cultural phenomenon. This wasn’t just because of its ground-breaking special effects, but because it popularized an idea that has come to be known as the simulation hypothesis. This is the idea that the world we see around us may not be the “real world” at all, but a high-resolution simulation, much like a video game.

While the central question raised by “The Matrix” sounds like science fiction, it is now debated seriously by scientists, technologists and philosophers around the world. Elon Musk is among those; he thinks the odds that we are in a simulation are a billion to one (in favor of being inside a video-game world)!

As a founder and investor in many video game startups, I started to think about this question seriously after seeing how far virtual reality has come in creating immersive experiences. In this article we look at the development of video game technology past and future to ask the question: Could a simulation like that in “The Matrix” actually be built? And if so, what would it take?

What we’re really asking is how far away we are from The Simulation Point, the theoretical point at which a technological civilization would be capable of building a simulation that was indistinguishable from “physical reality.”

[Editor’s note: This article summarizes one section of the upcoming book, “The Simulation Hypothesis: An MIT Computer Scientist Shows Why AI, Quantum Physics and Eastern Mystics All Agree We Are in a Video Game.“] 

From science fiction to science?

But first, let’s back up.

“The Matrix,” you’ll recall, starred Keanu Reeves as Neo, a hacker who encounters enigmatic references to something called the Matrix online. This leads him to the mysterious Morpheus (played by Laurence Fishburne, and aptly named after the Greek god of dreams) and his team. When Neo asks Morpheus about the Matrix, Morpheus responds with what has become one of the most famous movie lines of all time: “Unfortunately, no one can be told what The Matrix is. You’ll have to see it for yourself.”

Even if you haven’t seen “The Matrix,” you’ve probably heard what happens next — in perhaps its most iconic scene, Morpheus gives Neo a choice: Take the “red pill” to wake up and see what the Matrix really is, or take the “blue pill” and keep living his life. Neo takes the red pill and “wakes up” in the real world to find that what he thought was real was actually an intricately constructed computer simulation — basically an ultra-realistic video game! Neo and other humans are actually living in pods, jacked into the system via a cord into his cerebral cortex.

Who created the Matrix and why are humans plugged into it at birth? In the two sequels, “The Matrix Reloaded” and “The Matrix Revolutions,” we find out that Earth has been taken over by a race of super-intelligent machines that need the electricity from human brains. The humans are kept occupied, docile and none the wiser thanks to their all-encompassing link to the Matrix!  

But the Matrix wasn’t all philosophy and no action; there were plenty of eye-popping special effects during the fight scenes. Some of these now have their own name in the entertainment and video game industry, such as the famous “bullet time.” When a bullet is shot at Neo, the visuals slow down time and manipulate space; the camera moves in a circular motion while the bullet is frozen in the air. In the context of a 3D computer world, this make perfect sense, though now the camera technique is used in both live action and video games.  AI plays a big role too: in the sequels, we find out much more about the agents pursuing Neo, Morpheus and the team. Agent Smith (played brilliantly by Hugo Weaving), the main adversary in the first movie, is really a computer agent — an artificial intelligence meant to keep order in the simulation. Like any good AI villain, Agent Smith (who was voted the 84th most popular movie character of all time!) is able to reproduce itself and overlay himself onto any part of the simulation.

“The Matrix” storyboard from the original movie. (Photo by Jonathan Leibson/Getty Images for Warner Bros. Studio Tour Hollywood)

The Wachowskis, creators of “The Matrix,” claim to have been inspired by, among others, science fiction master Philip K. Dick. Most of us are familiar with Dick’s work from the many film and TV adaptations, ranging from Blade Runner, Total Recall and the more recent Amazon show, The Man in the High Castle.  Dick often explored questions of what was “real” versus “fake” in his vast body of work. These are some of the same themes we will have to grapple with to build a real Matrix: AI that is indistinguishable from humans, implanting false memories and broadcasting directly into the mind.

As part of writing my upcoming book, I interviewed Dick’s wife, Tessa B. Dick, and she told me that Philip K. Dick actually believed we were living in a simulation. He believed that someone was changing the parameters of the simulation, and most of us were unaware that this was going on. This was of course, the theme of his short story, “The Adjustment Team” (which served as the basis for the blockbuster “The Adjustment Bureau,” starring Matt Damon and Emily Blunt).

A quick summary of the basic (non-video game) simulation argument

Today, the simulation hypothesis has moved from science fiction to a subject of serious debate because of several key developments.

The first was when Oxford professor Nick Bostrom published his 2003 paper, “Are You Living in a Simulation?” Bostrom doesn’t say much about video games nor how we might build such a simulation; rather, he makes a clever statistical argument. Bostrom theorized that if a civilization ever got the Simulation Point, it would create many ancestor simulations, each with large numbers (billions or trillions?) of simulated beings. Since the number of simulated beings would vastly outnumber the number of real beings, any beings (including us!) were more likely to be living inside a simulation than outside of it!

Other scientists, like physicists and Cosmos host Neil deGrasse Tyson and Stephen Hawking weighed in, saying they found it hard to argue against this logic.

Bostrom’s argument implied two things that are the subject of intense debate. The first is that if any civilization every reached the Simulation Point, then we are more likely in a simulation now. The second is that we are more likely all AI or simulated consciousness rather than biological ones. On this second point, I prefer to use the “video game” version of the simulation argument, which is a little different than Bostrom’s version.

Video games hold the key

Let’s look more at the video game version of the argument, which rests on the rapid pace of development of video game and computer graphics technology over the past decades. In video games, we have both “players” who exist outside of the video game, and “characters” who exist inside the game. In the game, we have PCs (player characters) that are controlled (you might say mentally attached to the players), and NPCs (non-player characters) that are the simulation artificial characters.

Lyft’s imminent IPO could value the company at $23B

Ridehailing firm Lyft will make its Nasdaq debut as early as next week at a valuation of up to $23 billion, The Wall Street Journal reports. The business will reportedly price its shares at between $62 and $68 apiece, raising roughly $2 billion in the process.

With a $600 million financing, Lyft was valued at $15.1 billion in June.

Lyft filed paperwork for an initial public offering in December, mere hours before its competitor Uber did the same. The car-sharing behemoths have been in a race to the public markets, igniting a pricing war ahead of their respected IPOs in a big to impress investors.

Uber’s IPO may top $120 billion, though others have more modestly pegged its initial market cap at around $90 billion. Uber has not made its S-1 paperwork public but is expected to launch its IPO in April.

Lyft has not officially priced its shares. Its S-1 filing indicated a $100 million IPO fundraise, which is typically a placeholder amount for companies preparing for a float. Lyft’s IPO roadshow, or the final stage ahead of an IPO, begins Monday.

San Francisco-based Lyft has raised a total of $5.1 billion in venture capital funding from key stakeholders including the Japanese e-commerce giant Rakuten, which boasts a 13 percent pre-IPO stake, plus General Motors (7.76 percent), Fidelity (7.1 percent), Andreessen Horowitz (6.25 percent) and Alphabet (5.3 percent). Early investors, like seed-stage venture capital firm Floodgate, also stand to reap big returns.

Lyft will trade under the ticker symbol “LYFT.” JPMorgan Chase & Co., Credit Suisse Group AG and Jefferies Financial Group Inc. are leading the IPO.

Lyft recorded $2.2 billion in revenue in 2018 — more than double 2017’s revenue — on a net loss of $911 million.

Lyft declined to comment.

Decade in review: Trends in seed- and early-stage funding

We’ve decided to step back from the breaking news for a minute to conduct a review of seed and early-stage funding trends over the last decade for U.S.-based companies.

I’m fairly certain we can all agree that the environment for startups has changed dramatically in the past 10 years, specifically in two major ways:

  1. The development of seed funding as its own class and;
  2. The expansion of growth stage investing.

What we’ve also seen are recent concerns raised about the decline in seed stage funding by Mark Suster, a partner at UpFront Ventures, as there has not been commensurate growth in early stage funding (Series A and B), to meet this growth in seed-financed companies. This is often expressed as the Series A crunch.

So with venture funding at an all-time high, along with increased growth in supergiant rounds, now seems like an appropriate time to conduct this kind of review.

Setting the stage

First, let’s set the stage for our analysis and explain where our data comes from with a few quick facts:

  • Rounds below $1 million can be the most difficult to capture adequately as many angel and pre-seed deals are not reported.
  • Luckily, Crunchbase has an “active founder community” that adds early stage financings.
  • By “active founder community” we are referring to many founders who are active on Crunchbase adding their company, themselves as founders, and their fundings.
  • Around 47 percent of fundings below $5 million in the U.S. are added by contributors, as distinct from our analyst teams who process the news, track Twitter, and work directly with our venture partners.
  • For this study, we bucket U.S. funding rounds by size to indicate stage.
  • Given the high percentage of self-reported seed financing, data added after the end of a quarter needs to be factored in.
  • For this reason we use projected data for many of the Crunchbase quarterly reports in order to more accurately reflect recent funding trends. For the charts below we are using actual data, with some provisions for the data lag when discussing the trends.

Now, let’s take a look at the trends.

Rounds below $1 million are slumping

Since 2014 we have seen mostly double-digit declines in less than $1 million rounds each year – a strong pivot from 2008-2014 when we saw double-digit growth.

In 2018 seed funding counts and amounts below $1 million were down from 2015 at 41 and 35 percent respectively. Given that data at this stage can be added long after the round took place, we assess there could be a 20 percentage-point relative increase in 2018 compared to 2017.

If we factor this in, 2018 seed funding counts and amounts below $1 million are down from 2015 at 30 and 23 percent respectively. In other words, seed below $1 million are closer to 2012 and 2017 levels.

$1 million to $5 million rounds are flattening

Round from $1 million to $5 million also experienced growth from 2008 through 2015, more than threefold for counts and close to threefold for amounts. Upward growth stalled from 2015. However, we do not see a substantial downward trend in the last three years. Dollars invested are stable at $7.5 billion from 2015 through 2017. Counts and amounts are down in 2018 from the 2015 height by 12 percent for deal count and 6 percent for amounts.

At Crunchbase we are always cautious about reporting downward trends for the most recent year or quarter, as data does flow in after the close of the most recent time period. If the trend is over a greater time period, that is a stronger signal for change in the market. Based on data continuing to be added after the end of a year for the previous year, we assess around 10 percentage point increase relative to 2017. This would make 2018 roughly equivalent  to 2017 on rounds and slightly up on amounts.

Seed funds take bigger stakes

Why is seed flattening? Seed investors report putting more dollars into fewer deals. Or as they raise more substantial subsequent funds, they are putting more dollars into the same number of transactions. Seed funds need to get enough equity for a meaningful stake, should a startup survive to raise subsequent rounds. Seed funds are investing in fewer startups for more equity.

Larger venture funds taking a less active role in seed

UpFront Ventures’ Suster (referenced earlier) also talks about larger venture firms becoming less active in seed, as investing at the seed stage can limit their ability down the road to invest in competitive startups who emerge as growing contenders in a specific sector. The growth of more substantial funds in venture allows firms to see deals mature before investing, perhaps paying more to get the equity they want, and allowing startups not growing as quickly to fail or get acquired.

As Fred Wilson from Union Square Ventures notes, “In the first five years of this decade, we saw the seed portion of the market explode. In the last five years of this decade we saw the growth portion of the market explode. But over those last ten years, the middle part, the traditional venture capital market, has not changed much.”

The middle is growing

For the middle, Series A and B rounds (which used to be the first institutional money in), the market for $5 million to $10 million rounds has almost doubled, but it has taken from 2008 to 2018. In that same period, growth has been slower than round below $5 million. Growth has continued past 2015. Since 2015, rounds are down slightly for one year, and then continue to grow in 2017 and 2018. Counts are up from 2015 by 17 percent and dollars by 18 percent.

$10 to $25 million rounds are growing

Rounds of $10 million to $25 million have grown over 11 years by 73 percentage points for counts, and 78 percentage points for amounts. This is a slower pace than $5 million to $10 million rounds, but continuing to edge up year over year.

Seed is maturing

Seed is its own class that is here to stay. Indeed pre-seed, seed and seed extension all seem to have specific dynamics. Of the 600-plus active seed funds who have raised a fund below $100 million, close to half have raised more than one fund. In the last three years in the U.S. we have not seen a slowing of seed funds raised for $100 million and below.

Conclusion

When we take into account the data lag, dollars for below $5 million is projected to be $8.5 billion, close to the height in 2015 of $8.6 billion. Deal counts are down from the height by a fifth, which does mean less seed-funded startups in the U.S. Provided that capital allocation is greater than $5 million continues to grow, less seed funded startups will die before raising a Series A. More companies have a chance to succeed, which is good for seed funds, and ultimately for the whole ecosystem.

No Man’s Sky has a big new update due out this summer

After a conspicuous stretch of silence ending with a mysterious teaser tweet on Thursday, No Man’s Sky creator Sean Murray revealed that another major free update is on the way. The new content, which is the first since last year’s Visions update, will hit the massive space exploration game this summer.

The bundle of new content, called No Man’s Sky “Beyond,” will tie together three different updates, though Murray is only giving up the details of one so far. The one we know about is something that Murray is calling “No Man’s Sky Online” which “includes a radical new social and multiplayer experience which empowers players everywhere in the universe to meet and play together” and weaves together three standalone updates into “a vision for something much more impactful.”

No Man’s Sky BEYOND, a major free chapter, coming Summer 2019.

With three updates in one:
1) No Man’s Sky Online
2) ?
3) ?

We’re working out butts off on something special
More Info soon ❤https://t.co/YtKimYyj6U pic.twitter.com/Txi8orUIs9

— Sean Murray (@NoMansSky) March 15, 2019

The short preview video doesn’t reveal much, but it shows a ship we haven’t seen before in what looks like either a reimagined space station (that would be nice!) or some kind of brand new multiplayer hub area.

Murray emphasized that the multiplayer update wouldn’t add things from other major multiplayer games like microtransactions or subscriptions and that he has no intention of turning No Man’s Sky into an MMO. (Still, if a lot of people are playing online together in a massive world, isn’t it uh, kind of an MMO?) The blog post noted that the team would release more details on the other two big pieces of new content in the coming weeks.

“These changes are an answer to how we have seen people playing since the release of NEXT, and is something we’ve dreamed of for a long time,” Murray added.

After a very rough launch and its accompanying critical lambasting in 2016, No Man’s Sky’s team has consistently added huge free content updates to the game. That dedication to building out the world the development team initially promised has brought “millions” of new players into the fold and inspired a thriving online and in-game community.

That community will be happy to hear that according to his latest blog post, Murray doesn’t intend to walk away from the game any time soon.

Which types of startups are most often profitable?

Julian Shapiro
Contributor

Julian Shapiro is the founder of BellCurve.com, a growth marketing agency that trains you to become a marketing professional. He also writes at Julian.com.
More posts by this contributor

I co-run an agency that teaches a hundred startups per year how to do growth marketing. This gives me a unique vantage point: I know which types of startups most often reach profitability.

That’s an important metric, because startups that don’t reach this milestone typically fail to raise additional funding — then die.

Here’s what we’ll learn:

  1. Companies are increasingly living and dying by ads. Because it’s the startup’s approach to customer acquisition — not its business model or market — that most determines its early-stage profitability.
  2. E-commerce companies lend themselves best to ads, and SMB SaaS the worst. Meanwhile, most startup founders in 2019 are starting SaaS companies. They’d benefit from the data we share in this post.
  3. In fact, our agency has found that every other type of business reaches profitability quicker than SMB SaaS, including mobile apps, Chrome extensions and enterprise SaaS.

Our sampling of startups isn’t as biased as startup valuation leaderboards, because we also see those that failed. That’s the key.

You can use our experience to de-risk your startup. That’s what this post explores: How to change your product roadmap to pursue a path more likely to reach profitability.

The startups that frequently reach profitability

Here’s the data my agency is referencing for this post:

  • We train 12+ venture-backed and bootstrapped startups every month. Half are Y Combinator graduates. This is how we study early-stage product-market fit trends.
  • We run ads full-time for between 20 and 30 mature companies per year. On average, each spends $2.5 million annually on paid acquisition. And, on average, each has 30 employees. Our clients include Tovala.com, PerfectKeto.com, SPYSCAPE.com, ImperfectProduce.com, Clearbit.com and Woodpath.com.
  • Our students and clients are roughly evenly distributed across D2C e-commerce, B2B, mobile apps and marketplaces.

When we try to control for founder skill and funds raised, the types of startups that first reach profitability do so in this order:

  1. E-commerce
  2. Chrome extensions
  3. Mobile apps
  4. Enterprise SaaS
  5. Small-to-medium business SaaS

On average, an e-commerce company is more likely to first reach profitability than an SMB SaaS company.

Before I explain why, let me explain how we’re differentiating startups: I use the word “type” instead of “business model” or “markets” because I’ve learned that business model and market are often not the best predictors of success. Instead, it’s your approach to customer acquisition. That’s what typically determines the likelihood of profitability.

Leica’s Q2 is a beautiful camera that I want and will never have

Leica is a brand I respect and appreciate but don’t support. Or rather, can’t, because I’m not fabulously rich. But if I did have $5,000 to spend on a fixed-lens camera, I’d probably get the new Q2, a significant improvement over 2015’s Q — which tempted me back then.

The Q2 keeps much of what made the Q great: a full-frame sensor, a fabulous 28mm F/1.7 Summilux lens, and straightforward operation focused on getting the shot. But it also makes some major changes that make the Q2 a far more competitive camera.

The sensor has jumped from 24 to 47 megapixels, and while we’re well out of the megapixel race, that creates the opportunity for a very useful cropped shooting mode that lets you shoot at 35, 50, and 75mm equivalents while still capturing huge pixel counts. It keeps the full frame exposure as well so you can tweak the crop later. The new sensor also has a super low native ISO of 50, which should help with dynamic range and in certain exposure conditions.

Autofocus has been redone as well (as you might expect with a new sensor) and it should be quicker and more accurate now. Ther’s also an optical stabilization mode that kicks in when you are shooting at under 1/60s. Both features that need a little testing to verify they’re as good as they sound, but I don’t expect they’re fraudulent or anything.

The body, already a handsome minimal design in keeping with Leica’s impeccable (if expensive) taste, is now weather sealed, making this a viable walk-around camera in all conditions. Imagine paying five grand for a camera and being afraid to take it out in the rain! Well, many people did that and perhaps will feel foolish now that the Q2 has arrived.

Inside is an electronic viewfinder, but the 2015 Q had a sequential-field display — meaning it flashes rapidly through the red, green, and blue components of the image — which made it prone to color artifacts in high-motion scenes or when panning. The Q2, however, has a shiny new OLED display with the same resolution but better performance. OLEDs are great for EVFs for a lot of reasons, but I like that you get really nice blacks, like in an optical viewfinder.

The button layout has been simplified as well (or rather synchronized with the CL, another Leica model), with a new customizable button on the top plate, reflecting the trend of personalization we’ve seen in high-end cameras. A considerably larger battery and redesigned battery and card door rounds out the new features.

As DPReview points out in its hands-on preview of the camera, the Q2 is significantly heavier than the high-end fixed-lens competition (namely the Sony RX1R II and Fuji X100F, both excellent cameras), and also significantly more expensive. But unlike many Leica offerings, it actually outperforms them in important ways: the lens, the weather sealing, the burst speed — it may be expensive, but you actually get something for your money. That can’t always be said of this brand.

The Leica Q2 typifies the type of camera I’d like to own: no real accessories, nothing to swap in or out, great image quality and straightforward operation. I’m far more likely to get an X100F (and even then it’d be a huge splurge) but all that time I’ll be looking at the Q2 with envious eyes. Maybe I’ll get to touch one some day.

The Khashoggi murder isn’t stopping SoftBank’s Vision Fund

Money talks in the startup community, especially when SoftBank comes knocking with the megabucks of its Vision Fund.

Despite the public outcry around the firm’s dependence on money from Saudi Arabia in the wake of that country’s assassination of Washington Post journalist Jamal Khashoggi, deal flow for Softbank’s Vision Fund appears to be back to normal.

The $100 billion megafund has done 21 deals over the last two quarters, that’s as more than in the other quarters of the previous year combined, according to data from Crunchbase, thanks to an uptick from Asia. Since the October 2 murder, there have been 11 investments in U.S. companies, seven in Asia, two in Europe and one in Latin America. Just this week, the fund completed a near $1.5 billion investment in Southeast Asia-based ride-hailing company Grab.

While U.S. and European firms have more options, and therefore, perhaps deserve more scrutiny, Softbank’s cash is increasingly the only game in town for startups in Asia, where there are fewer alternatives for later stage capital outside of large Chinese private equity firms or tech giants — which come with their own risks.

The Vision Fund is seen by some critics as tainted money for its links to the Saudi Royal family. Saudi Arabia’s Public Investment Fund (PIF) is the fund’s anchor investor and it is controlled by Crown Prince Mohammed bin Salman, who has been strongly linked with the murder of Saudi journalist Jamal Khashoggi, an outspoken critic of the regime.

Khashoggi, a Washington Post columnist, was murdered on October 2 after he entered the Saudi consulate in Istanbul. His visit was part of an effort to obtain divorce documents in order to marry his fiancée, but it ended with his apparently gruesome death. Audio clips suggest he was beheaded, dismembered, and had his fingers severed before his body was dissolved in acid, although new reports suggest it may have been burned.

Jamal Khashoggi — pictured in 2014 — was murdered in the Saudi consulate in Istanbul last year [Photographer: Ohammed Al-Shaikh/AFP/Getty Images]

The Vision Fund is designed to finance ‘global winners’ which, like all investment funds, is set up to provide ‘unfair advantages’ to help its companies grow into hugely important businesses. On the financial end, as is the norm, it is built to provide handsome returns to the LPs, thus directly boosting the coffers of the PIF, the Saudi kingdom, and by extension the Saudi prince himself.

An investigation is going, but there’s already plenty of evidence to suggest that the murder happened at the request of the prince.

Sources within the U.S. State Department have reportedly said it is “blindingly obvious” that the Crown Prince ordered the killing — he reportedly threatened to shoot Khashoggi one year before. But, now that the apparent period of outrage is over, SoftBank has reverted back to writing checks and companies are taking them in spite of the links to Saudi Arabia.

For startups, the money flow means that a major source of capital for growth or subsidies for customers comes from the Saudi royal family’s pockets — a regime that would reportedly not hesitate to murder a critical voice.

SoftBank’s Vision Fund has ramped up its deals over the past six months, according to data from Crunchbase

What are the companies saying?

SoftBank itself said it has a commitment to “the people” of Saudi Arabia that will see it deploy its capital unchanged, although Chairman Masayoshi Son did concede that he will wait on the findings of the investigation into the murder before deciding on whether PIF will be involved in a second Vision Fund.

The founders taking the capital have been more cautious. When questioned, executives talk about the specifics of their deal and their growth plans, most defer issues on the management of LPs, like PIF, to SoftBank. While offering words in support of the ongoing murder investigation, they manage to say little about the ethics of taking money from the Saudi regime.

Bom Kim, CEO of Korean e-commerce company Coupang — which raised $2 billion from the Vision Fund — told TechCrunch in November that the allegations around the murder “don’t represent us and don’t represent [Vision Fund] companies.”

“We are deeply concerned by the reported events and alongside SoftBank are monitoring the situation closely until the full facts are known,” Tokopedia CEO William Tanuwijaya told TechCrunch in December after the Vision Fund co-led a $1.1 billion round.

William Tanuwijaya is the co-founder and CEO of Tokopedia [Photographer: Jason Alden/Bloomberg]

OYO, the budget hotel network based out of India, did not respond to a request comment sent the day before this story was published. The startup raised $1 billion led by the Vision Fund in September.

TechCrunch was also unable to get a response to questions sent to Chehaoduo, the Vision Fund’s first China-based startup which raised $1.5 billion in February. The company is notable for being the only one of this group that didn’t count SoftBank as an existing investor prior to its Vision Fund deal.

The latest addition to the collection is Grab, the ride-hailing company in Southeast Asia that’s led by CEO Anthony Tan, who is very publicly a devout Christian. In a statement sent to TechCrunch this week, Grab defended its relationship with SoftBank, which first invested in Grab back in 2014:

What happened to Jamal Khashoggi was obviously horrible. We hope whoever is responsible is held accountable. We are not in a position to comment on behalf of SoftBank but from our perspective Son-san and the entire SoftBank team have brought so much value to the table for Grab – beyond just financing. They have brought advice, mentorship and potential business opportunities. The Vision Fund is about investing for the next 100 or 200 years and investing in trends that will move the needle for humanity in positive ways. This is a lofty and ultimately positive goal.

Anthony Tan is the co-founder and chief executive officer of Grab [Photographer: Ore Huiying/Bloomberg/Getty Images]

The Vision Fund is just getting started in Asia, however, with rumors suggesting it is planning to open offices in China and India. Singapore is presumably on that list, too, while the fund has been busy hiring a general team that will operate globally out of the U.S.

To date, the fund’s focus in Asia has been on some of the region’s largest (highest-valued) companies, but as it develops a local presence it is likely to seek out less obvious deals to grow its portfolio. That’s going to mean this question of ethics and conscience around the Vision Fund’s capital will present itself to more founders in Asia. Going on what we’ve seen so far, most will have no problem taking the money and issuing platitudinous statements.

Privately, VCs in the region who I have canvassed have told me that founders have little choice but to take the Vision Fund’s money. They explain that nobody else can offer billion-dollar-sized checks, while SoftBank is an existing investor in many of them already which gives it additional leverage. The fund also takes the aggressive approach of threatening to back rival companies if it doesn’t get the deals it wants, as we saw when Son said he’d consider a deal with Lyft when its Uber investment was uncertain.

That reality may be true — finding an alternative to a hypothetical $1 billion Vision Fund check is a daunting challenge — but we’ve reached a very sad time and place when the sheer size of an investment overrides important concerns about where that money came from.

Sea is raising up to $1.5B for its Shopee e-commerce business in Southeast Asia

Alibaba is about to get a jolt from its largest rival in Southeast Asia. Sea, the Nasdaq-listed business, is raising as much as $1.5 billion from a new share offering that’s sure to be funneled into its Shopee e-commerce business.

Singapore-based Sea said in a filing that it plans to offer 60 million American Depositary Shares (ADS) at a price of $22.50 each. That could raise $1.35 billion, but that number could increase by a further $202 million if underwriters take up the full allotment of 9 million additional shares that are open to them. If that were to happen, the grand total raised would pass $1.5 billion. (Shopee raised $500 million in a sale last year.)

Sea said it would use the capital for “business expansion and other general corporate purposes.” That’s a pretty general statement and its business span gaming (Garena) and payments (AirPay), but you would imagine that Shopee, its primary focus these days, would be the main benefactor.

The $22.50 price represents a discount on Sea’s current share price — $24.06 at the time of writing — and the timing sees Sea take advantage of a recent share price rally. The company announced its end of year financials for 2018 last month, but which included positive progress for Shopee and Garena.

Whilst it remains unprofitable, Shopee saw annual GMV — total e-commerce transactions, an indicator of business health — cross $10 billion for the first time, growing 117 percent in the fourth quarter alone.

Those green shoots were met with enthusiasm by investors, as trading drove the stock price to a record high since its October 2017 IPO. That, in turn, made founder Forrest Li a billionaire on paper and gave Sea a market cap of over $8 billion.

Shopee shares have rallied after its 2018 financial report showed signs of promising growth for its Shopee e-commerce business

The capital is very much needed, however, as Shopee is some way from profitability and that is dragging down Sea’s overall business.

While adjusted revenue for Shopee increased by over 1,500 percent last year, it represented just over one-quarter of Sea’s overall $1 billion income in 2018 and contributed heavily to the parent company’s net loss of $961 million. Shopee alone posted a $893 million net loss in 2018.

Shopee is up against some tough competitors in Southeast Asia, most of which have strong links to Alibaba. Those include Alibaba’s own AliExpress service, Lazada — the e-commerce service it acquired — and Tokopedia, the $7 billion-valued Indonesian company that counts Alibaba and SoftBank’s Vision Fund among its backers.

Sea claims to be the largest e-commerce firm in “Greater Southeast Asia” — a classification that includes Taiwan alongside Southeast Asia — although direct comparisons are not possible since Alibaba doesn’t provide detailed information on its e-commerce businesses outside of China.

Alibaba said its international e-commerce businesses — which include many other services beyond Lazada — made $849 million in revenue during its most recent quarter, an annual increase of 23 percent. Lazada is in the midst of a transition — it appointed a new CEO in December — that has included a move away from direct sales. Alibaba said that impacted growth, with GMV rates slowing, but it pledged to continue its focus, having invested a fresh $2 billion into the business last year.

“We continue to invest resources to integrate Lazada’s business and technology operations into Alibaba with the aim of building a strong foundation for us to extend our offerings in Southeast Asia,” it said.

After more than 10 years, Flickr frees its login system from Yahoo

Oh joy, oh rapture, unsubdued, Flickr’s login is no longer tied to Yahoo. The photo-sharing platform announced today that it will roll out a new system to members over the next few weeks that doesn’t require a Yahoo ID. This is welcome news to long-time Flickr users who are still bitter over the requirement, introduced in 2007, two years after Yahoo acquired Flickr, that forced everyone to use Yahoo credentials to sign in. Flickr was acquired by SmugMug in April 2018 and since then, a new login has been “the single most requested feature by our community,” according to a post on the company’s blog.

Flickr may no longer have the same clout as it did in the pre-Instagram era, but many users (like me) have been uploading photos to it for years and still use it as an archive for images taken before smartphones became ubiquitous. The Yahoo login system, however, was a lot more tedious than it needed to be, especially if you did not use Yahoo Mail or its other services and constantly forgot your password. Two enormous data breaches of Yahoo accounts made users even more upset that they were tied into a system that they otherwise never used.

Users still have to use their Yahoo credentials until they get access to the new login process. When that happens, they will be allowed to pick a new login email address and new password. That address will be the only one used by their Flickr account for both authentication and emails from the company.

Facebook won’t let you opt-out of its phone number ‘look up’ setting

Users are complaining that the phone number Facebook hassled them to use to secure their account with two-factor authentication has also been associated with their user profile — which anyone can use to “look up” their profile.

Worse, Facebook doesn’t give you an option to opt-out.

Last year, Facebook was forced to admit that after months of pestering its users to switch on two-factor by signing up their phone number, it was also using those phone numbers to target users with ads. But some users are finding out just now that Facebook’s default setting allows everyone — with or without an account — to look up a user profile based off the same phone number previously added to their account.

The recent hubbub began today after a tweet by Jeremy Burge blew up, criticizing Facebook’s collection and use of phone numbers, which he likened to “a unique ID that is used to link your identity across every platform on the internet.”

For years Facebook claimed the adding a phone number for 2FA was only for security. Now it can be searched and there’s no way to disable that. pic.twitter.com/zpYhuwADMS

— Jeremy Burge 🐥🧿 (@jeremyburge) March 1, 2019

Although users can hide their phone number on their profile so nobody can see it, it’s still possible to “look up” user profiles in other ways, such as “when someone uploads your contact info to Facebook from their mobile phone,” according to a Facebook help article. It’s a more restricted way than allowing users to search for user profiles using a person’s phone number, which Facebook restricted last year after admitting “most” users had their information scraped.

Facebook gives users the option of allowing users to “look up” their profile using their phone number to “everyone” by default, or to “friends of friends” or just the user’s “friends.”

But there’s no way to hide it completely.

Security expert and academic Zeynep Tufekci said in a tweet: “Using security to further weaken privacy is a lousy move — especially since phone numbers can be hijacked to weaken security,” referring to SIM swapping, where scammers impersonate cell customers to steal phone numbers and break into other accounts.

See thread! Using security to further weaken privacy is a lousy move—especially since phone numbers can be hijacked to weaken security. Putting people at risk. What say you @facebook? https://t.co/9qKtTodkRD

— zeynep tufekci (@zeynep) March 2, 2019

Tufekci’s argued that users can “no longer keep keep private the phone number that [they] provided only for security to Facebook.”

Facebook spokesperson Jay Nancarrow told TechCrunch that the settings “are not new,” adding that, “the setting applies to any phone numbers you added to your profile and isn’t specific to any feature.”

Gizmodo reported last year that when a user gives Facebook a phone number for two-factor, it “became targetable by an advertiser within a couple of weeks.”

If a user doesn’t like it, they can set up two-factor without using a phone number — which hasn’t been mandatory for additional login security since May 2018.

But even if users haven’t set up two-factor, there are well documented cases of users having their phone numbers collected by Facebook, whether the user expressly permitted it or not.

In 2017, one reporter for The Telegraph described her alarm at the “look up” feature, given she had “not given Facebook my number, was unaware that it had found it from other sources, and did not know it could be used to look me up.”

WhatsApp, the messaging app also owned by Facebook (alongside Messenger and Instagram), uses your phone number as the primary way to create your account and connect you to its service. Facebook has long had a strategy to further integrate the two services, although it has run into some bumps along the way.

To the specific concerns by users, Facebook said: “We appreciate the feedback we’ve received about these settings and will take it into account.”

Concerned users should switch their “look up” settings to “Friends” to mitigate as much of the privacy risk as possible.

When asked specifically if Facebook will allow users to users to opt-out of the setting, Facebook said it won’t comment on future plans. And, asked why it was set to “everyone” by default, Facebook said the feature makes it easier to find people you know but aren’t yet friends with.

Others criticized Facebook’s move to expose phone numbers to “look ups,” calling it “unconscionable.”

Alex Stamos, former chief security officer and now adjunct professor at Stanford University, also called out the practice in a tweet. “Facebook can’t credibly require two-factor for high-risk accounts without segmenting that from search and ads,” he said.

Since Stamos left Facebook in August, Facebook has not hired a replacement chief security officer.

5G phones are here but there’s no rush to upgrade

This year’s Mobile World Congress — the CES for Android device makers — was awash with 5G handsets.

The world’s No.1 smartphone seller by marketshare, Samsung, got out ahead with a standalone launch event in San Francisco, showing off two 5G devices, just before fast-following Android rivals popped out their own 5G phones at launch events across Barcelona this week.

We’ve rounded up all these 5G handset launches here. Prices range from an eye-popping $2,600 for Huawei’s foldable phabet-to-tablet Mate X — and an equally eye-watering $1,980 for Samsung’s Galaxy Fold; another 5G handset that bends — to a rather more reasonable $680 for Xiaomi’s Mi Mix 3 5G, albeit the device is otherwise mid-tier. Other prices for 5G phones announced this week remain tbc.

Android OEMs are clearly hoping the hype around next-gen mobile networks can work a little marketing magic and kick-start stalled smartphone growth. Especially with reports suggesting Apple won’t launch a 5G iPhone until at least next year. So 5G is a space Android OEMs alone get to own for a while.

Chipmaker Qualcomm, which is embroiled in a bitter patent battle with Apple, was also on stage in Barcelona to support Xiaomi’s 5G phone launch — loudly claiming the next-gen tech is coming fast and will enhance “everything”.

“We like to work with companies like Xiaomi to take risks,” lavished Qualcomm’s president Cristiano Amon upon his hosts, using 5G uptake to jibe at Apple by implication. “When we look at the opportunity ahead of us for 5G we see an opportunity to create winners.”

Despite the heavy hype, Xiaomi’s on stage demo — which it claimed was the first live 5G video call outside China — seemed oddly staged and was not exactly lacking in latency.

“Real 5G — not fake 5G!” finished Donovan Sung, the Chinese OEM’s director of product management. As a 5G sales pitch it was all very underwhelming. Much more ‘so what’ than ‘must have’.

Whether 5G marketing hype alone will convince consumers it’s past time to upgrade seems highly unlikely.

Phones sell on features rather than connectivity per se, and — whatever Qualcomm claims — 5G is being soft-launched into the market by cash-constrained carriers whose boom times lie behind them, i.e. before over-the-top players had gobbled their messaging revenues and monopolized consumer eyeballs.

All of which makes 5G an incremental consumer upgrade proposition in the near to medium term.

Use-cases for the next-gen network tech, which is touted as able to support speeds up to 100x faster than LTE and deliver latency of just a few milliseconds (as well as connecting many more devices per cell site), are also still being formulated, let alone apps and services created to leverage 5G.

But selling a network upgrade to consumers by claiming the killer apps are going to be amazing but you just can’t show them any yet is as tough as trying to make theatre out of a marginally less janky video call.

“5G could potentially help [spark smartphone growth] in a couple of years as price points lower, and availability expands, but even that might not see growth rates similar to the transition to 3G and 4G,” suggests Carolina Milanesi, principal analyst at Creative Strategies, writing in a blog post discussing Samsung’s strategy with its latest device launches.

“This is not because 5G is not important, but because it is incremental when it comes to phones and it will be other devices that will deliver on experiences, we did not even think were possible. Consumers might end up, therefore, sharing their budget more than they did during the rise of smartphones.”

The ‘problem’ for 5G — if we can call it that — is that 4G/LTE networks are capably delivering all the stuff consumers love right now: Games, apps and video. Which means that for the vast majority of consumers there’s simply no reason to rush to shell out for a ‘5G-ready’ handset. Not if 5G is all the innovation it’s got going for it.

LG V50 ThinQ 5G with a dual screen accessory for gaming

Use cases such as better AR/VR are also a tough sell given how weak consumer demand has generally been on those fronts (with the odd branded exception).

The barebones reality is that commercial 5G networks are as rare as hen’s teeth right now, outside a few limited geographical locations in the U.S. and Asia. And 5G will remain a very patchy patchwork for the foreseeable future.

Indeed, it may take a very long time indeed to achieve nationwide coverage in many countries, if 5G even ends up stretching right to all those edges. (Alternative technologies do also exist which could help fill in gaps where the ROI just isn’t there for 5G.)

So again consumers buying phones with the puffed up idea of being able to tap into 5G right here, right now (Qualcomm claimed 2019 is going to be “the year of 5G!”) will find themselves limited to just a handful of urban locations around the world.

Analysts are clear that 5G rollouts, while coming, are going to be measured and targeted as carriers approach what’s touted as a multi-industry-transforming wireless technology cautiously, with an eye on their capex and while simultaneously trying to figure out how best to restructure their businesses to engage with all the partners they’ll need to forge business relations with, across industries, in order to successfully sell 5G’s transformative potential to all sorts of enterprises — and lock onto “the sweep spot where 5G makes sense”.

Enterprise rollouts therefore look likely to be prioritized over consumer 5G — as was the case for 5G launches in South Korea at the back end of last year.

“4G was a lot more driven by the consumer side and there was an understanding that you were going for national coverage that was never really a question and you were delivering on the data promise that 3G never really delivered… so there was a gap of technology that needed to be filled. With 5G it’s much less clear,” says Gartner’s Sylvain Fabre, discussing the tech’s hype and the reality with TechCrunch ahead of MWC.

“4G’s very good, you have multiple networks that are Gbps or more and that’s continuing to increase on the downlink with multiple carrier aggregation… and other densification schemes. So 5G doesn’t… have as gap as big to fill. It’s great but again it’s applicability of where it’s uniquely positioned is kind of like a very narrow niche at the moment.”

“It’s such a step change that the real power of 5G is actually in creating new business models using network slicing — allocation of particular aspects of the network to a particular use-case,” Forrester analyst Dan Bieler also tells us. “All of this requires some rethinking of what connectivity means for an enterprise customer or for the consumer.

“And telco sales people, the telco go-to-market approach is not based on selling use-cases, mostly — it’s selling technologies. So this is a significant shift for the average telco distribution channel to go through. And I would believe this will hold back a lot of the 5G ambitions for the medium term.”

To be clear, carriers are now actively kicking the tyres of 5G, after years of lead-in hype, and grappling with technical challenges around how best to upgrade their existing networks to add in and build out 5G.

Many are running pilots and testing what works and what doesn’t, such as where to place antennas to get the most reliable signal and so on. And a few have put a toe in the water with commercial launches (globally there are 23 networks with “some form of live 5G in their commercial networks” at this point, according to Fabre.)

But at the same time 5G network standards are yet to be fully finalized so the core technology is not 100% fully baked. And with it being early days “there’s still a long way to go before we have a real significant impact of 5G type of services”, as Bieler puts it. 

There’s also spectrum availability to factor in and the cost of acquiring the necessary spectrum. As well as the time required to clear and prepare it for commercial use. (On spectrum, government policy is critical to making things happen quickly (or not). So that’s yet another factor moderating how quickly 5G networks can be built out.)

And despite some wishful thinking industry noises at MWC this week — calling for governments to ‘support digitization at scale’ by handing out spectrum for free (uhhhh, yeah right) — that’s really just whistling into the wind.

Rolling out 5G networks is undoubtedly going to be very expensive, at a time when carriers’ businesses are already faced with rising costs (from increasing data consumption) and subdued revenue growth forecasts.

“The world now works on data” and telcos are “at core of this change”, as one carrier CEO — Singtel’s Chua Sock Koong — put it in an MWC keynote in which she delved into the opportunities and challenges for operators “as we go from traditional connectivity to a new age of intelligent connectivity”.

Chua argued it will be difficult for carriers to compete “on the basis of connectivity alone” — suggesting operators will have to pivot their businesses to build out standalone business offerings selling all sorts of b2b services to support the digital transformations of other industries as part of the 5G promise — and that’s clearly going to suck up a lot of their time and mind for the foreseeable future.

In Europe alone estimates for the cost of rolling out 5G range between €300BN and €500BN (~$340BN-$570BN), according to Bieler. Figures that underline why 5G is going to grow slowly, and networks be built out thoughtfully; in the b2b space this means essentially on a case-by-case basis.

Simply put carriers must make the economics stack up. Which means no “huge enormous gambles with 5G”. And omnipresent ROI pressure pushing them to try to eke out a premium.

“A lot of the network equipment vendors have turned down the hype quite a bit,” Bieler continues. “If you compare this to the hype around 3G many years ago or 4G a couple of years ago 5G definitely comes across as a soft launch. Sort of an evolutionary type of technology. I have not come across a network equipment vendors these days who will say there will be a complete change in everything by 2020.”

On the consumer pricing front, carriers have also only just started to grapple with 5G business models. One early example is TC parent Verizon’s 5G home service — which positions the next-gen wireless tech as an alternative to fixed line broadband with discounts if you opt for a wireless smartphone data plan as well as 5G broadband.

From the consumer point of view, the carrier 5G business model conundrum boils down to: What is my carrier going to charge me for 5G? And early adopters of any technology tend to get stung on that front.

Although, in mobile, price premiums rarely stick around for long as carriers inexorably find they must ditch premiums to unlock scale — via consumer-friendly ‘all you can eat’ price plans.

Still, in the short term, carriers look likely to experiment with 5G pricing and bundles — basically seeing what they can make early adopters pay. But it’s still far from clear that people will pay a premium for better connectivity alone. And that again necessitates caution. 

5G bundled with exclusive content might be one way carriers try to extract a premium from consumers. But without huge and/or compelling branded content inventory that risks being a too niche proposition too. And the more carriers split their 5G offers the more consumers might feel they don’t need to bother, and end up sticking with 4G for longer.

It’ll also clearly take time for a 5G ‘killer app’ to emerge in the consumer space. And such an app would likely need to still be able to fallback on 4G, again to ensure scale. So the 5G experience will really need to be compellingly different in order for the tech to sell itself.

On the handset side, 5G chipset hardware is also still in its first wave. At MWC this week Qualcomm announced a next-gen 5G modem, stepping up from last year’s Snapdragon 855 chipset — which it heavily touted as architected for 5G (though it doesn’t natively support 5G).

If you’re intending to buy and hold on to a 5G handset for a few years there’s thus a risk of early adopter burn at the chipset level — i.e. if you end up with a device with a suckier battery life vs later iterations of 5G hardware where more performance kinks have been ironed out.

Intel has warned its 5G modems won’t be in phones until next year — so, again, that suggests no 5G iPhones before 2020. And Apple is of course a great bellwether for mainstream consumer tech; the company only jumps in when it believes a technology is ready for prime time, rarely sooner. And if Cupertino feels 5G can wait, that’s going to be equally true for most consumers.

Zooming out, the specter of network security (and potential regulation) now looms very large indeed where 5G is concerned, thanks to East-West trade tensions injecting a strange new world of geopolitical uncertainty into an industry that’s never really had to grapple with this kind of business risk before.

Chinese kit maker Huawei’s rotating chairman, Guo Ping, used the opportunity of an MWC keynote to defend the company and its 5G solutions against U.S. claims its network tech could be repurposed by the Chinese state as a high tech conduit to spy on the West — literally telling delegates: “We don’t do bad things” and appealing to them to plainly to: “Please choose Huawei!”

Huawei rotating resident, Guo Ping, defends the security of its network kit on stage at MWC 2019

When established technology vendors are having to use a high profile industry conference to plead for trust it’s strange and uncertain times indeed.

In Europe it’s possible carriers’ 5G network kit choices could soon be regulated as a result of security concerns attached to Chinese suppliers. The European Commission suggested as much this week, saying in another MWC keynote that it’s preparing to step in try to prevent security concerns at the EU Member State level from fragmenting 5G rollouts across the bloc.

In an on stage Q&A Orange’s chairman and CEO, Stéphane Richard, couched the risk of destabilization of the 5G global supply chain as a “big concern”, adding: “It’s the first time we have such an important risk in our industry.”

Geopolitical security is thus another issue carriers are having to factor in as they make decisions about how quickly to make the leap to 5G. And holding off on upgrades, while regulators and other standards bodies try to figure out a trusted way forward, might seem the more sensible thing to do — potentially stalling 5G upgrades in the meanwhile.

Given all the uncertainties there’s certainly no reason for consumers to rush in.

Smartphone upgrade cycles have slowed globally for a reason. Mobile hardware is mature because it’s serving consumers very well. Handsets are both powerful and capable enough to last for years.

And while there’s no doubt 5G will change things radically in future, including for consumers — enabling many more devices to be connected and feeding back data, with the potential to deliver on the (much hyped but also still pretty nascent) ‘smart home’ concept — the early 5G sales pitch for consumers essentially boils down to more of the same.

“Over the next ten years 4G will phase out. The question is how fast that happens in the meantime and again I think that will happen slower than in early times because [with 5G] you don’t come into a vacuum, you don’t fill a big gap,” suggests Gartner’s Fabre. “4G’s great, it’s getting better, wi’fi’s getting better… The story of let’s build a big national network to do 5G at scale [for all] that’s just not happening.”

“I think we’ll start very, very simple,” he adds of the 5G consumer proposition. “Things like caching data or simply doing more broadband faster. So more of the same.

“It’ll be great though. But you’ll still be watching Netflix and maybe there’ll be a couple of apps that come up… Maybe some more interactive collaboration or what have you. But we know these things are being used today by enterprises and consumers and they’ll continue to be used.”

So — in sum — the 5G mantra for the sensible consumer is really ‘wait and see’.

Equity Shot: Lyft files to go public and we’re stoked

Hello and welcome to an Equity Shot, a short-form episode of the show where we dive into a single breaking news story. Guess what we’re talking about today?! It’s Lyft . You guessed correctly.

The Lyft S-1 is the very first major S-1 event of 2019. As you might recall, the government shutdown gummed the IPO process by halting the Securities and Exchange Commission, an agency that plays the most active role in helping a company go public. Now the government is open, and Lyft’s formerly private filing is now a public filing.

You can read Kate’s deep dive here or mine here, but what follows is an overview of what we chatted about on the show. Here’s the SEC filing if you want to follow along.

Up top are revenue and growth. Lyft’s revenue grew from $1.06 billion to nearly $2.2 billion from 2017 to 2018. That’s impressive.

Next is costs. Lyft’s costs rose dramatically during 2018, compared to the year prior. In fact, Lyft’s total cost profile rose from $1.77 billion in 2017 to a staggering $3.13 billion in 2018. That’s a lot, and each figure is far higher than its revenue.

Which lead us to losses. Sure those revenue numbers look hot, but Lyft, at the same time, lost $911 million on 2018 revenue and $688 million the previous year. Though, as Alex points out, that ratio is improving, pointing to a positive (maybe even profitable???) future for Lyft.

However, while the S-1 had its ups and downs, two data points stood out that weren’t GAAP, but did make us appreciate Lyft’s work a bit more. As we explain, Lyft’s share of bookings (total value of services) from its platform is rising as is its revenue-per-rider. Those bode well for the future, too.

We closed the episode with some chatter on Lyft’s plan to reward its drivers. The business is helping drivers — the core of its business — earn a piece of that tasty IPO pie with a $10,000 bonus. TechCrunch’s Megan Rose Dickey has more on that here. Plus, we’d have been remiss not to discuss Lyft’s scooter play, which it apparently spent $60 million on last year.

All that and we got an S-1 done. Let’s have a few more, and quickly.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocket Casts, Downcast and all the casts.