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The time Animoto almost brought AWS to its knees

By Ron Miller

Today, Amazon Web Services is a mainstay in the cloud infrastructure services market, a $60 billion juggernaut of a business. But in 2008, it was still new, working to keep its head above water and handle growing demand for its cloud servers. In fact, 15 years ago last week, the company launched Amazon EC2 in beta. From that point forward, AWS offered startups unlimited compute power, a primary selling point at the time.

EC2 was one of the first real attempts to sell elastic computing at scale — that is, server resources that would scale up as you needed them and go away when you didn’t. As Jeff Bezos said in an early sales presentation to startups back in 2008, “you want to be prepared for lightning to strike, […] because if you’re not that will really generate a big regret. If lightning strikes, and you weren’t ready for it, that’s kind of hard to live with. At the same time you don’t want to prepare your physical infrastructure, to kind of hubris levels either in case that lightning doesn’t strike. So, [AWS] kind of helps with that tough situation.”

An early test of that value proposition occurred when one of their startup customers, Animoto, scaled from 25,000 to 250,000 users in a 4-day period in 2008 shortly after launching the company’s Facebook app at South by Southwest.

At the time, Animoto was an app aimed at consumers that allowed users to upload photos and turn them into a video with a backing music track. While that product may sound tame today, it was state of the art back in those days, and it used up a fair amount of computing resources to build each video. It was an early representation of not only Web 2.0 user-generated content, but also the marriage of mobile computing with the cloud, something we take for granted today.

For Animoto, launched in 2006, choosing AWS was a risky proposition, but the company found trying to run its own infrastructure was even more of a gamble because of the dynamic nature of the demand for its service. To spin up its own servers would have involved huge capital expenditures. Animoto initially went that route before turning its attention to AWS because it was building prior to attracting initial funding, Brad Jefferson, co-founder and CEO at the company explained.

“We started building our own servers, thinking that we had to prove out the concept with something. And as we started to do that and got more traction from a proof-of-concept perspective and started to let certain people use the product, we took a step back, and were like, well it’s easy to prepare for failure, but what we need to prepare for success,” Jefferson told me.

Going with AWS may seem like an easy decision knowing what we know today, but in 2007 the company was really putting its fate in the hands of a mostly unproven concept.

“It’s pretty interesting just to see how far AWS has gone and EC2 has come, but back then it really was a gamble. I mean we were talking to an e-commerce company [about running our infrastructure]. And they’re trying to convince us that they’re going to have these servers and it’s going to be fully dynamic and so it was pretty [risky]. Now in hindsight, it seems obvious but it was a risk for a company like us to bet on them back then,” Jefferson told me.

Animoto had to not only trust that AWS could do what it claimed, but also had to spend six months rearchitecting its software to run on Amazon’s cloud. But as Jefferson crunched the numbers, the choice made sense. At the time, Animoto’s business model was for free for a 30 second video, $5 for a longer clip, or $30 for a year. As he tried to model the level of resources his company would need to make its model work, it got really difficult, so he and his co-founders decided to bet on AWS and hope it worked when and if a surge of usage arrived.

That test came the following year at South by Southwest when the company launched a Facebook app, which led to a surge in demand, in turn pushing the limits of AWS’s capabilities at the time. A couple of weeks after the startup launched its new app, interest exploded and Amazon was left scrambling to find the appropriate resources to keep Animoto up and running.

Dave Brown, who today is Amazon’s VP of EC2 and was an engineer on the team back in 2008, said that “every [Animoto] video would initiate, utilize and terminate a separate EC2 instance. For the prior month they had been using between 50 and 100 instances [per day]. On Tuesday their usage peaked at around 400, Wednesday it was 900, and then 3,400 instances as of Friday morning.” Animoto was able to keep up with the surge of demand, and AWS was able to provide the necessary resources to do so. Its usage eventually peaked at 5000 instances before it settled back down, proving in the process that elastic computing could actually work.

At that point though, Jefferson said his company wasn’t merely trusting EC2’s marketing. It was on the phone regularly with AWS executives making sure their service wouldn’t collapse under this increasing demand. “And the biggest thing was, can you get us more servers, we need more servers. To their credit, I don’t know how they did it — if they took away processing power from their own website or others — but they were able to get us where we needed to be. And then we were able to get through that spike and then sort of things naturally calmed down,” he said.

The story of keeping Animoto online became a main selling point for the company, and Amazon was actually the first company to invest in the startup besides friends and family. It raised a total of $30 million along the way, with its last funding coming in 2011. Today, the company is more of a B2B operation, helping marketing departments easily create videos.

While Jefferson didn’t discuss specifics concerning costs, he pointed out that the price of trying to maintain servers that would sit dormant much of the time was not a tenable approach for his company. Cloud computing turned out to be the perfect model and Jefferson says that his company is still an AWS customer to this day.

While the goal of cloud computing has always been to provide as much computing as you need on demand whenever you need it, this particular set of circumstances put that notion to the test in a big way.

Today the idea of having trouble generating 3,400 instances seems quaint, especially when you consider that Amazon processes 60 million instances every day now, but back then it was a huge challenge and helped show startups that the idea of elastic computing was more than theory.

China roundup: Beijing wants tech giants to shoulder more social responsibilities

By Rita Liao

Hello and welcome back to TechCrunch’s China roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.

This week, the gaming industry again became a target of Beijing, which imposed arguably the world’s strictest limits on underage players. On the other hand, China’s tech titans are hastily answering Beijing’s call for them to take on more social responsibilities and take a break from unfettered expansion.

Gaming curfew

China dropped a bombshell on the country’s young gamers. As of September 1, users under the age of 18 are limited to only one hour of online gaming time: on Fridays, Saturdays and Sundays between 8-9 p.m.

The stringent rule adds to already tightening gaming policies for minors, as the government blames video games for causing myopia, as well as deteriorating mental and physical health. Remember China recently announced a suite of restrictions on after-school tutoring? The joke going around is that working parents will have an even harder time keeping their kids occupied.

A few aspects of the new regulation are worth unpacking. For one, the new rule was instituted by the National Press and Publication Administration (NPPA), the regulatory body that approves gaming titles in China and that in 2019 froze the approval process for nine months, which led to plunges in gaming stocks like Tencent.

It’s curious that the directive on playtime came from the NPPA, which reviews gaming content and issues publishing licenses. Like other industries in China, video games are subject to regulations by multiple authorities: NPPA; the Cyberspace Administration of China (CAC), the country’s top internet watchdog; and the Ministry of Industry and Information Technology, which oversees the country’s industrial standards and telecommunications infrastructure.

As analysts long observe, the mighty CAC, which sits under the Central Cyberspace Affairs Commission chaired by President Xi Jinping, has run into “bureaucratic struggles” with other ministries unwilling to relinquish power. This may well be the case for regulating the lucrative gaming industry.

For Tencent and other major gaming companies, the impact of the new rule on their balance sheet may be trifling. Following the news, several listed Chinese gaming firms, including NetEase and 37 Games, hurried to announce that underage players made up less than 1% of their gaming revenues.

Tencent saw the change coming and disclosed in its Q2 earnings that “under-16-year-olds accounted for only 2.6% of its China-based grossing receipts for games and under-12-year-olds accounted for just 0.3%.”

These numbers may not reflect the reality, as minors have long found ways around gaming restrictions, such as using an adult’s ID for user registration (just as the previous generation borrowed IDs from adult friends to sneak into internet cafes). Tencent and other gaming firms have vowed to clamp down on these workarounds, forcing kids to seek even more sophisticated tricks, including using VPNs to access foreign versions of gaming titles. The cat and mouse game continues. 

Prosper together

While China curtails the power of its tech behemoths, it has also pressured them to take on more social responsibilities, which include respecting the worker’s rights in the gig economy.

Last week, the Supreme People’s Court of China declared the “996” schedule, working 9 a.m. to 9 p.m. six days a week, illegal. The declaration followed years of worker resistance against the tech industry’s burnout culture, which has manifested in actions like a GitHub project listing companies practicing “996.”

Meanwhile, hardworking and compliant employees have often been cited as a competitive advantage of China’s tech industry. It’s in part why some Silicon Valley companies, especially those run by people familiar with China, often set up branches in the country to tap its pool of tech talent.

The days when overworking is glorified and tolerated seem to be drawing to an end. Both ByteDance and its short video rival Kuaishou recently scrapped their weekend overtime policies.

Similarly, Meituan announced that it will introduce compulsory break time for its food delivery riders. The on-demand services giant has been slammed for “inhumane” algorithms that force riders into brutal hours or dangerous driving.

In groundbreaking moves, ride-hailing giant Didi and Alibaba’s e-commerce rival JD.com have set up unions for their staff, though it’s still unclear what tangible impact the organizations will have on safeguarding employee rights.

Tencent and Alibaba have also acted. On August 17, President Xi Jinping delivered a speech calling for “common prosperity,” which caught widespread attention from the country’s ultra-rich.

“As China marches towards its second centenary goal, the focus of promoting people’s well-being should be put on boosting common prosperity to strengthen the foundation for the Party’s long-term governance.”

This week, both Tencent and Alibaba pledged to invest 100 billion yuan ($15.5 billion) in support of “common prosperity.” The purposes of their funds are similar and align neatly with Beijing’s national development goals, from growing the rural economy to improving the healthcare system.

Apple’s dangerous path

By Lucas Matney

Hello friends, and welcome back to Week in Review.

Last week, we dove into the truly bizarre machinations of the NFT market. This week, we’re talking about something that’s a little bit more impactful on the current state of the web — Apple’s NeuralHash kerfuffle.

If you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny


the big thing

In the past month, Apple did something it generally has done an exceptional job avoiding — the company made what seemed to be an entirely unforced error.

In early August — seemingly out of nowhere** — the company announced that by the end of the year they would be rolling out a technology called NeuralHash that actively scanned the libraries of all iCloud Photos users, seeking out image hashes that matched known images of child sexual abuse material (CSAM). For obvious reasons, the on-device scanning could not be opted out of.

This announcement was not coordinated with other major consumer tech giants, Apple pushed forward on the announcement alone.

Researchers and advocacy groups had almost unilaterally negative feedback for the effort, raising concerns that this could create new abuse channels for actors like governments to detect on-device information that they regarded as objectionable. As my colleague Zach noted in a recent story, “The Electronic Frontier Foundation said this week it had amassed more than 25,000 signatures from consumers. On top of that, close to 100 policy and rights groups, including the American Civil Liberties Union, also called on Apple to abandon plans to roll out the technology.”

(The announcement also reportedly generated some controversy inside of Apple.)

The issue — of course — wasn’t that Apple was looking at find ways that prevented the proliferation of CSAM while making as few device security concessions as possible. The issue was that Apple was unilaterally making a massive choice that would affect billions of customers (while likely pushing competitors towards similar solutions), and was doing so without external public input about possible ramifications or necessary safeguards.

A long story short, over the past month researchers discovered Apple’s NeuralHash wasn’t as air tight as hoped and the company announced Friday that it was delaying the rollout “to take additional time over the coming months to collect input and make improvements before releasing these critically important child safety features.”

Having spent several years in the tech media, I will say that the only reason to release news on a Friday morning ahead of a long weekend is to ensure that the announcement is read and seen by as few people as possible, and it’s clear why they’d want that. It’s a major embarrassment for Apple, and as with any delayed rollout like this, it’s a sign that their internal teams weren’t adequately prepared and lacked the ideological diversity to gauge the scope of the issue that they were tackling. This isn’t really a dig at Apple’s team building this so much as it’s a dig on Apple trying to solve a problem like this inside the Apple Park vacuum while adhering to its annual iOS release schedule.

illustration of key over cloud icon

Image Credits: Bryce Durbin / TechCrunch /

Apple is increasingly looking to make privacy a key selling point for the iOS ecosystem, and as a result of this productization, has pushed development of privacy-centric features towards the same secrecy its surface-level design changes command. In June, Apple announced iCloud+ and raised some eyebrows when they shared that certain new privacy-centric features would only be available to iPhone users who paid for additional subscription services.

You obviously can’t tap public opinion for every product update, but perhaps wide-ranging and trail-blazing security and privacy features should be treated a bit differently than the average product update. Apple’s lack of engagement with research and advocacy groups on NeuralHash was pretty egregious and certainly raises some questions about whether the company fully respects how the choices they make for iOS affect the broader internet.

Delaying the feature’s rollout is a good thing, but let’s all hope they take that time to reflect more broadly as well.

** Though the announcement was a surprise to many, Apple’s development of this feature wasn’t coming completely out of nowhere. Those at the top of Apple likely felt that the winds of global tech regulation might be shifting towards outright bans of some methods of encryption in some of its biggest markets.

Back in October of 2020, then United States AG Bill Barr joined representatives from the UK, New Zealand, Australia, Canada, India and Japan in signing a letter raising major concerns about how implementations of encryption tech posed “significant challenges to public safety, including to highly vulnerable members of our societies like sexually exploited children.” The letter effectively called on tech industry companies to get creative in how they tackled this problem.


other things

Here are the TechCrunch news stories that especially caught my eye this week:

LinkedIn kills Stories
You may be shocked to hear that LinkedIn even had a Stories-like product on their platform, but if you did already know that they were testing Stories, you likely won’t be so surprised to hear that the test didn’t pan out too well. The company announced this week that they’ll be suspending the feature at the end of the month. RIP.

FAA grounds Virgin Galactic over questions about Branson flight
While all appeared to go swimmingly for Richard Branson’s trip to space last month, the FAA has some questions regarding why the flight seemed to unexpectedly veer so far off the cleared route. The FAA is preventing the company from further launches until they find out what the deal is.

Apple buys a classical music streaming service
While Spotify makes news every month or two for spending a massive amount acquiring a popular podcast, Apple seems to have eyes on a different market for Apple Music, announcing this week that they’re bringing the classical music streaming service Primephonic onto the Apple Music team.

TikTok parent company buys a VR startup
It isn’t a huge secret that ByteDance and Facebook have been trying to copy each other’s success at times, but many probably weren’t expecting TikTok’s parent company to wander into the virtual reality game. The Chinese company bought the startup Pico which makes consumer VR headsets for China and enterprise VR products for North American customers.

Twitter tests an anti-abuse ‘Safety Mode’
The same features that make Twitter an incredibly cool product for some users can also make the experience awful for others, a realization that Twitter has seemingly been very slow to make. Their latest solution is more individual user controls, which Twitter is testing out with a new “safety mode” which pairs algorithmic intelligence with new user inputs.


extra things

Some of my favorite reads from our Extra Crunch subscription service this week:

Our favorite startups from YC’s Demo Day, Part 1 
“Y Combinator kicked off its fourth-ever virtual Demo Day today, revealing the first half of its nearly 400-company batch. The presentation, YC’s biggest yet, offers a snapshot into where innovation is heading, from not-so-simple seaweed to a Clearco for creators….”

…Part 2
“…Yesterday, the TechCrunch team covered the first half of this batch, as well as the startups with one-minute pitches that stood out to us. We even podcasted about it! Today, we’re doing it all over again. Here’s our full list of all startups that presented on the record today, and below, you’ll find our votes for the best Y Combinator pitches of Day Two. The ones that, as people who sift through a few hundred pitches a day, made us go ‘oh wait, what’s this?’

All the reasons why you should launch a credit card
“… if your company somehow hasn’t yet found its way to launch a debit or credit card, we have good news: It’s easier than ever to do so and there’s actual money to be made. Just know that if you do, you’ve got plenty of competition and that actual customer usage will probably depend on how sticky your service is and how valuable the rewards are that you offer to your most active users….”


Thanks for reading, and again, if you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny

Lucas Matney

What 377 Y Combinator pitches will teach you about startups

By Natasha Mascarenhas

Along with a cadre of other TechCrunch folks, I spent this week extremely focused on one event: Y Combinator. The elite accelerator announced a staggering 377 startups as its Summer 2021 cohort. We covered every single on-the-record startup that presented and plucked out some favorites:

There’s something quite earnest and magical about spending literally hours hearing founder after founder pitch their ideas, with one minute, a single slide and a whole lot of optimism. It’s why I like covering demo days: I get tunnel vision into where innovation is going next, what behemoths are ripe for disruption and what founders think is a witty competitive edge versus a simple baseline.

That said, I will share one caveat. While YC is an ambitious snapshot, it’s not entirely illustrative of the next wave of decision-makers and leaders within startups — from a diversity perspective. The accelerator posted small gains in the number of women and LatinX founders in its batch, but dropped in the number of Black founders participating. The need for more diverse accelerators has never been more obvious, and as some in the tech community argue, is Y Combinator’s biggest blind spot.

This in mind, I want to leave you with a few takeaways I had after listening to hundreds of pitches. Here’s what 377 Y Combinator pitches taught me about startups:

  1. Instacart walked so YC startups could stroll. Instacart, last valued at $39 billion, is one of Y Combinator’s most successful graduates — which makes it even more spicier that a number of startups within this summer’s batch want to take on the behemoth. Instead of going after the obvious — speed — startups are looking to enhance the grocery delivery experience through premium produce, local recipes and even ugly vegetables. It suggests that there may be a new chapter in grocery delivery, one in which ease isn’t the only competitive advantage.
  2. Crypto’s pre-seed world is quieter than fintech. YC feels more like a fintech accelerator than ever before, but when it comes to crypto, there weren’t as many moonshots as I’d expect. We discussed this a bit in the Equity podcast, but if anyone has theories as to why, I’m game to hear ‘em.
  3. Edtech wants to disrupt artsy subjects. It’s common to see edtech founders flock to subjects like science and mathematics when it comes to disruption. Why? Well, from a pure pedagogical perspective, it’s easier to scale a service that answers questions that only have one right answer. While math may fit into a box that works for a tech-powered AI tutoring bot, arts, on the other hand, may require a little bit more human touch. This is why I was excited to see a number of edtech startups, from Spark Studio to Litnerd, focusing on humanities in their pitches. As shocking as it sounds, to rethink how a bookclub is read is definitely a refreshing milestone for edtech.
  4. Sometimes, the best pitch is no pitch at all. One pitch stood out simply because it addressed the elephant in the room: We’re all stressed. Jupe sells glamping-in-a-box and the profitable business likely benefited from COVID-19. I remember that because the founder used a portion of his pitch to tell investors to breathe, because it’s been a long two days. Being human, and more importantly, speaking like one, is what it takes to stand out these days.

On that note, exhale. Let’s move on to the rest of this newsletter, which includes nostalgic nods to Wall Street, public filings and my favorite new podcast. As always, you can find and support me on Twitter @nmasc_ or send me tips at natasha.m@techcrunch.com.

A return to old school Wall Street

With so many new funds, solo-GPs and alternative capital sources on the market these days, founders are confused. Funding may have moved away from three dudes on Sand Hill Road, but it’s also become more fragmented, which means entrepreneurs need to be even more sophisticated in how they fill up their cap tables. This week, I interviewed one recently venture-backed startup that proposed a solution: a return to old school Wall Street. 

Here’s what to know: Hum Capital wants to help investors allocate their resources to ambitious businesses, perfectly. The startup seeks to emulate the world of old school Wall Street, which helped ambitious business owners find the best financing option for their goal, instead of today’s dance of startups trying to prove worthiness for one type of capital. In my story, I explained more about the business.

At this stage, Hum Capital’s product is easy to explain:

It uses artificial intelligence and data to connect businesses to the available funders on the platform. The startup connects with a capital-hungry startup, ingests financial data from over 100 SaaS systems, including QuickBooks, NetSuite and Google Analytics, and then translates them to the some 250 institutional investors on its platform.

From Hum to mmhmm:       

IPO filings & other hubbub

Image Credits: ansonmiao / Getty Images

When the pandemic began to impact startups, Toast was top of the list. The restaurant tech startup had a series of deep layoffs as many of its clients in the hospitality industry had to shut down. Months later, Toast reentered headlines with a dramatically different message: It’s going public, and here’s all of our financial data.

Here’s what you need to know: This week, Toast published its S-1, offering a portrait into how the startup was impacted by the COVID-19 pandemic and answering questions on why it’s going public now. After ripping apart the Warby Parker S-1, Alex had five takeaways from the Toast S-1. My favorite excerpt? Toast was smart to diversify beyond its hardware, hand-held payment processors:

Toast’s two largest revenue sources — software and fintech incomes — have posted constant growth on a quarter-over-quarter basis. Hardware revenues have proved slightly less consistent, although they are also moving in a positive direction this year and set what appears to be an all-time record result in Q2 2021.

Toast would have had a much worse second quarter last year if it didn’t have software revenues. And since then, its growth would not have been as impressive without payments revenues (its fintech line item, speaking loosely). The broad revenue mix that Toast built has proved to limit downside while opening lots of room for growth.

Butter or jam:

Around TC

You already bought your tickets to Disrupt right? If not, here’s the link, with a fancy discount from yours truly.

Now that that’s out of the way, I want you to listen to Found, TechCrunch’s newest podcast that focuses on talking to early-stage founders about building and launching their companies. Recent episodes include:

Across the week

Seen on TechCrunch

Seen on Extra Crunch

Talk next week,

N

This Week in Apps: Another App Store settlement, Apple asks to personalize ads, Twitter launches Super Follows

By Sarah Perez

Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.

The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.

Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.

This Week in Apps offers a way to keep up with this fast-moving industry in one place with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions… and suggestions about new apps and games to try, too!

Do you want This Week in Apps in your inbox every Saturday? Sign up here: techcrunch.com/newsletters

Top Story

Apple settles another App Store antitrust case…but it’s still winning the war with developers

Netflix app icon iOS

Photo: TechCrunch

Another day, another App Store settlement announced late at night in the hopes that reporters will miss it. (Apparently, publishing press releases after 8 PM ET is a good time to try to hide the news, huh?)

PR theatrics aside, this week’s settlement is only a minor concession on Apple’s part that its aggressive anti-steering guidelines could be considered anticompetitive. The company said it reached a settlement with Japanese regulator, the Japan Fair Trade Commission (JFTC), to change its policies for “reader apps” that would allow them to point users to their own website. Yes, Apple literally had to be drug through an antitrust investigation to agree to allow a subgroup of developers the ability to add a link to a website inside their app.

Anyone celebrating this as a major win for developers needs to think again. Apple is still winning this war.

The rule change, which kicks in globally in early 2022, will only apply to “reader” apps, Apple says. Reader apps provide access to purchased content, like books or audiobooks, or content subscriptions, like streaming music and video. The rule could also apply to apps that provide access to digital magazines or newspapers. Think: Spotify, Netflix, Kindle and others. Of course, “reader apps” is a sort of made-up category Apple invented years ago in hopes of forcing a revenue share, but instead forced some smaller apps out of business. But now, having this category allows Apple to make up rules that only apply to a subgroup of apps. That is some forward thinking.

Historically, reader apps that have not wanted to share subscription revenue with Apple (or that got big enough to no longer need the in-app purchase option) have offered only a sign-in form for existing subscribers on the home screen that appears at first launch. Some also don’t offer any way to buy their content through the app itself, forcing users to figure out how to purchase the content they want through the company’s website. Now they can finally say, “here is our website.” Big whoop, we knew where Netflix.com was.

Overall, the iOS reader app experience from a consumer perspective has been a crappy one. It doesn’t “just work,” it’s a hassle. It’s an annoyance.

Now, Apple says these apps will be able to offer users a link to a website that launches inside their app so users can “set up and manage their account.” Presumably, that could include entering in payment information — after all, once the website is open, it would seem users could navigate it freely, right? But Apple hints that it will have specific rules about these links to come, saying the company “will also help developers of reader apps protect users when they link them to an external website to make purchases.” (Hopefully, Apple just means something like https is required, not that it’s planning to tell developers how to design their own websites and payment processing.)

Apple critics largely panned the settlement, saying they want better rules for everyone.

“This is a step in the right direction, but it doesn’t solve the problem,” said Spotify CEO Daniel Ek. “App developers want clear, fair rules that apply to all apps. Our goal is to restore competition once and for all, not one arbitrary, self-serving step at a time. We will continue to push for a real solution.”

For whatever reason, Apple appears to want to battle App Store antitrust complaints on a case-by-case basis, instead of just rewriting its rules to even the playing field. That decision seems pretty obstinate, not to mention expensive. But, so far, it’s working. The changes emerging from these settlements so far (including last week’s) are the very smallest of updates to App Store guidelines. Apple is ceding very little ground here.

But the fight is far from over. As soon as the JFTC ruling hit, news broke that Apple is facing another antitrust challenge in India over in-app payments. There are similar cases underway in the EU, too, and U.S. lawmakers have been pursuing their own legislation, as well. Time will tell.

Apple asks users to opt-in to its personalized ads

Does this seem fair?

Today, developers have to show their users a pop-up box that asks if they can track their users, with options like “Ask App not to Track” or “Allow.” Most users decline tracking. After Apple introduced this new policy, aka App Tracking Transparency (ATT), there was some pushback around the fact that Apple didn’t have to follow its own rules — even though it had an ads business of its own where personalized ads were switched on by default.

While Apple, to be clear, is only sharing its data in-house — and not, say, with a third-party data broker — it also was doing so without any sort of opt-out screen presented to users who would prefer that data wasn’t gathered by anyone, you know, at all. 

Image Credits: iOS 15 screenshot

Now, things are changing. In iOS 15, Apple has begun popping up a message that allows users to turn off personalized ads in the App Store and other Apple apps. But wow, does it have a lot of screen space to make its case. Not only does Apple explain the many ways its personalized ads are beneficial to users, it also says its ad platform “does not track you” because it doesn’t link the data it collects with other data, nor does it share any personally identifiable information with third parties.

But there is an argument to be made here that Apple’s distinction between data-gathering across a set of first-party apps (Apple News, App Store and Stocks) and what it calls “tracking” — where app data is shared externally, or combined with others — is a line in the sand that is not only about Apple’s user privacy mission, but also about harming other ad-dependent businesses (like Facebook’s, naturally) in order to boost its own.

Weekly News

Apple updates

  • Apple delays plans to roll out CSAM detection in iOS 15. Apple says it will delay its CSAM detection tech in light of the feedback from customers and policy groups. While everyone agrees that a system to discover and report CSAM is overall a good thing, critics are concerned about how the system itself was built. They’re worried that it could be abused by authoritarian governments in the future, who would use it to implicate innocent victims or to detect non-CSAM materials they find objectionable. (China comes to mind here.) Apple says it will now take the time to make improvements before releasing these “critically important child safety features.”
  • Apple’s Wallet app will soon be able to hold your ID. The company said it now secured two states, Arizona and Georgia, to bring digital driver’s license and state IDs to the app. Connecticut, Iowa, Kentucky, Maryland, Oklahoma and Utah are expected to follow. The TSA will allow you to present your digital wallet by tapping it on an identity reader, similar to how Apple Pay works.

Android updates

  • Android apps will not run on Windows 11 when the new OS launches on October 5. Although support for Android apps was touted as one of Windows’ biggest new features, Microsoft said it will only start previewing the feature in the “coming months.”

E-commerce

Image Credits: Instagram

  • Instagram is kicking off a live shopping event on September 1. Instagram’s 10+ Days of Live Shopping will feature events with Selena Gomez, Kacey Musgraves, Lil Yachty and other surprise guests, and will be found in the “Live” section in the Shop tab. Participating brands include Outdoor Voice, Hologear, Peloton, DragunBeauty, Aveda and others.
  • Time spent in shopping apps grew 49% year-over-year in the first quarter of 2021, reports App Annie. The typical mobile consumer is currently spending $88 every time they order from a shopping app. By May 2021, Android users averaged 2 billion shopping hours per week — up 51% from pre-pandemic levels.

Fintech

  • China’s Twitter-like app Weibo bans stock-tip accounts with millions of followers in an effort to comply with Beijing’s new rules focused on removing content that bad-mouths China’s financial markets or misinterprets domestic policies or economic data.
  • Indian digital payments company launched Pulse, a free product that offers insights into the digital payments market across Indian states, districts and over 19,000 postal codes.
  • PayPal is exploring a stock-trading service for U.S. customers, according to a CNBC report. The company hired Rich Hagen, previously of Ally Invest, to lead the new division. It’s unlikely that the service will launch this year, CNBC said, citing undisclosed sources.

Social

  • Twitter launched Super Follows, allowing users to subscribe to favorite creators via in-app purchases for exclusive content. But the system is chaotic on the App Store, as each Super Follow is listed as an individual IAP. The App Store can only show 10 IAPs, because there are too many options available. There’s got to be a better way to do this.
  • Twitter also launched Safety Mode to a small group on iOS for feedback and testing. The feature lets users protect themselves from harassment by temporarily blocking accounts for seven days that send harmful language or send repetitive, uninvited replies.
  • LinkedIn is shutting down Stories. The Microsoft-owned business networking platform informed advertisers they will need to adjust their ad campaigns when the format leaves the platform on September 30. Instead of Stories, LinkedIn will pursue short-form videos instead, it says.
  • TikTok added educational resources to its app to help parents using its Family Pairing parental control feature better understand how to help teens navigate their digital life.
  • TikTok launched a new Creator Marketplace API that allows influencer marketing companies the ability to tap into first-party data from the social video app, including things like audience demographics, growth trends, best-performing videos and real-time campaign reporting (e.g. views, likes, shares, comments, engagement, etc.) Alpha testers include Captiv8, Influential, Whalar and INCA.
  • Facebook said a glitch in its ad platform caused it to send faulty campaign data to advertisers — an example of how Apple’s privacy rules have impacted the adtech industry.
  • Instagram is requiring users to share their birthday with the company. The app will now start popping up a notification that asks you to add your birthday to “personalize your experience.” But the prompt can only be dismissed a handful of times before becoming a requirement. Instagram says it needs this information to aid with its new safety features aimed at younger users, including the teen privacy protections it recently added.

Image Credits: Instagram

Messaging

  • Mobile messaging app Telegram has topped 1 billion downloads, according to data from Sensor Tower. The app, launched in 2013, passed the milestone last Friday. India makes up 22% of Telegram installs, followed by Russia (10%) and Indonesia (8%). In the first half of 2021, the app saw 214.7 million installs, up from 133 million in H1 2020.
  • Telegram also expanded its livestream feature to support an unlimited number of viewers, up from the prior limit of 1,000.
  • Google’s Messages app is redesigning its attachment menu’s UI, which previously opened a scrollable list with several carousels. It now shows a four-wide grid that expands to take up more space as you scroll, with buttons for GIFs, stickers, files, location, contacts and more.

Streaming & Entertainment

  • Clubhouse added support for spatial audio to give listeners a feeling that they’re really hanging out live with a group of people. To make this possible, the company is integrating licensed code from Second Life creator Philip Rosedale’s spatial audio company High Fidelity and blending it with its own custom audio processing.
  • YouTube Music says it has surpassed 50 million Music and Premium subscribers, including those on trials.

Dating

  • Tinder says daily swipe activity this summer was up 13% and messages were up 12%. Conversations were also 38% longer, compared with April, May and June 2020. And 76% of survey respondents went on more dates compared to last summer.

Health & Fitness

  • Meditation and mindfulness app Calm has topped 100 million downloads, solidifying its spot as the world’s most downloaded meditation app. The app was also the No. 1 Health and Fitness app on iOS (July 1, 2010-August 21, 2021) and Android (January 1, 2012-August 2021).
  • Strava’s iOS fitness app makes its Beacon location-sharing safety feature available to all users for free, instead of only to paid subscribers. Launched in 2016, Beacon allows users to share their live location with up to three people who can track you until you’re finished with your activity.

News/Reading

Image Credits: Flipboard

  • Flipboard added newsfeed personalization tools that help you personalize your home feed, aka the “For You” page, to your own interests. This has been a top request from users, who wanted to dial down the level of politics and other bad news about current events in their feeds.

Government & Policy

  • WhatsApp was fined $267 million for breaching Europe’s GDPR. The messaging app had been under investigation by the Irish DPC, a leading data supervisor in the EU, since December 2018. The regulator found that WhatsApp failed to fully inform its users what it does with their data, and gave the company three months to come into compliance with several provisions of Europe’s privacy law. A WhatsApp spokesperson said the decision would be appealed.
  • The grace period for compliance with the Age Appropriate Design Code (aka the “Children’s Code”) has ended. App makers offering digital services that are likely to be accessed by children now need to ensure that a high level of privacy is applied by default to users’ accounts, and geolocation and profiling should be off by default. The code also says app makers should provide parental controls while kids receive age-appropriate information about those tools. “Dark patterns” are also now forbidden.

Security & Privacy

  • The FTC bans spyware maker SpyFone, an Android stalkerware app that was marketed under the guise of parental control, but was often used by adults to spy on their partners. SpyFone secretly gathered data on people’s physical movements, phone use and online activities. The company will also be required to notify victims where the app had been installed on their devices.
  • Mozilla VPN, its private VPN that works across desktop and mobile devices, completed a security audit from cybersecurity firm Cure53 in Berlin. The audit found two medium and one high-severity issue, all of which have now been addressed.
  • A WhatsApp vulnerability discovered by Check Point could have allowed a hacker to read sensitive info from WhatsApp’s memory. The exploit, however, was complex and has now been fixed.

Funding and M&A

💰 Neobank Point raised $46.5 million in Series B funding, led by existing investor Peter Thiel’s Valar Ventures. Point offers an online account, debit card and banking app for $49 per year.

💰 Callin, a new “social podcasting” app from former PayPal COO and Yammer CEO David Sacks, raised $12 million in Series A funding, co-led by Sequoia, Goldcrest and Craft Ventures, where Sacks is a founder and partner. The app competes with Clubhouse and Twitter Spaces, but allows users to download a recording that can be edited into a podcast.

💰 French grocery delivery service Cajoo raised $40 million in a Series A round led by supermarket giant Carrefour. The deal allows Cajoo to take advantage of Carrefour’s purchasing organization, making more products available to Cajoo customers. Cajoo currently has more than 100,000 customers across 10 cities in France and operates 20 dark stores.

💰 Social commerce app Flip raised $28 million in Series A funding led by Streamlined Ventures for its app that combines live commerce and real customer reviews. The company claims 1 million downloads and shipped out 30,000 orders in the last quarter.

🤝  Playtika Holding Corp., the maker of games like Bingo Blitz and Slotomania, is buying 80% of Finland’s Reworks Oy, the maker of a home-decorating game, Redecor. The $400 million deal allows Playtika to acquire the balance for as much as $200 million more in 2023, if earnings meet an agreed-on target. If not, Playtika can buy the remaining portion for $1. This is Playtika’s first acquisition as a public company and eighth overall, and will bring ~$30 million in sales to Playtika this year.

💰 U.K. diet and lifestyle coaching app Oviva raised $80 million in Series C funding, co-led by Sofina and Temasek, for its service that aims to empower users to change their diet habits and improve their health, with a particular focus on treating obesity and health conditions like Type 2 diabetes. The company sells to health insurance companies or publicly funded health services, which then refer or provide Oviva to their own customers.

💰 Amsterdam-based delivery startup Borzo (previously Dostavista), which focuses on emerging markets, has raised $35 million in Series C funding in a round led by UAE-based investor, Mubadala. The service, accessible via a mobile app, has 2 million users, 2.5 million couriers and operates in 10 countries, including Brazil, India, Indonesia, Korea, Malaysia, Mexico, the Philippines, Russia, Turkey and Vietnam.

💰 No-code tool Anima raised $10 million in Series A funding. The service lets designers upload from Figma to have their work turned into code, including support for React, Vue.js, HTML, CSS and Sass. The platform now has 600,000 users, up from 300,000 last October.

🤝Family safety and communication app Life360 completed its acquisition of wearable maker Jiobit on September 1. The company plans to integrate Jiobit into its offerings, and allow family members to track Jiobit users (or pets), through the mobile app.

Downloads

Clay

Image Credits: Clay

Clay is a new cross-platform app (web, mobile and desktop) that allows you to better manage your relationships, both business and personal. The service is something of a consumer-grade CRM. That is, it’s not about a sales pipeline, it’s about better recalling who you met, how and when, and other important details. This information can be useful to you ahead of meetings and other networking events, business appointments or many other situations. The system is designed to be flexible enough that it can work for a variety of use cases — so far, it’s been used by teachers, veterinarians, political candidates and others. The company, backed by $8 million in seed funding, is encrypting data, but ultimately plans to allow the data to be housed locally on users’ machines, more like the Apple model. The app, however, is pricey — it’s $20/month for the time being, but the company hopes to bring that down to a freemium model over time.

Read the full review here on TechCrunch.

Playbyte

Image Credits: Playbyte

A startup called Playbyte wants to become the TikTok for games. The company’s newly launched iOS app offers tools that allow users to make and share simple games on their phone, as well as a vertically scrollable, full-screen feed where you can play the games created by others. Also like TikTok, the feed becomes more personalized over time to serve up more of the kinds of games you like to play. At its core, Playbyte’s game creation is powered by its lightweight 2D game engine built on web frameworks, which lets users create games that can be quickly loaded and played even on slow connections and older devices. After you play a game, you can like and comment using buttons on the right side of the screen, which also greatly resembles the TikTok look-and-feel.

At launch, users have already made a variety of games using Playbyte’s tools — including simulators, tower defense games, combat challenges, obbys, murder mystery games and more. The app is a free download on iOS.

Read full review here on TechCrunch.

From passion to hobby to startup

By Richard Dal Porto

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by what the weekday Exchange column digs into, but free, and made for your weekend reading. Want it in your inbox every Saturday? Sign up here.

Hey team! Alex here. I am off next week. Anna, my regular co-pilot on the weekday column, will be handling next week’s newsletter. It will be beyond good. Enjoy!

A few weeks back we took a look at some startup results, with a focus on growth. Today we’re narrowing our focus to a single company from the collection of startups that wrote in: Water Cooler Trivia.

Many startups begin life as a solution to a problem. A developer finds a flaw in their workflow, codes up a solution for it and later builds that hack into a product that scales. That sort of thing.

Collin Waldoch did something different, turning a hobby of his into a business.

Coming from a family of six kids in what he called a competitive family, Waldoch hosted bar trivia during college, and later sent around weekly trivia questions at his workplace after he completed his schooling. He kept the habit up during his early career, which included a stint at Lyft.

It was during his corporate life that Waldoch realized that companies were willing to spend heavily on team activities. Like a soccer team that he joined during one job that his employer spent a few grand on, but which struggled to find enough regular players. If companies would drop that much money on a group sport that few of its denizens wanted, he thought, perhaps there was some budget he could attack with a trivia product.

So Waldoch started Water Cooler Trivia, building it as a corporate product that he and some friends scaled to around $20,000 in ARR as a side project. The founder described its level of success at the time as pretty good beer money. Helping the project bring in revenue was a super-low churn rate, something that helped Waldoch decide to quit his day job at Lyft and take his side project full time.

Today Water Cooler Trivia has reached $300,000 worth of ARR and sports a collection of workers around the globe that help it run. Companies can select difficulty levels for their weekly trivia questions and track employee scores with longitudinal leaderboards.

Part of the idea’s success in Waldoch’s view is that it is built for the end user — employees — instead of HR. Which means that it’s actually fun. Today the company has experienced some churn, but still sports net retention rates of just under 100%. That’s great for a product that doesn’t feature enterprise-SaaS level upsells.

And the service is cheap. Probably too cheap frankly. At $100 per month for 100 seats, Water Cooler could likely boost what it charges and push its revenues higher in short order. Waldoch said that his company might start raising its rates in Q4 of this year. But even without that, Water Cooler thinks that it has a huge amount of growth open to it from its core product.

I dig it. Long live software making life a bit more fun.

Drift, Xometry, Carrot

It was a busy week with infinite IPO filings and eight billion YC startups pitching, but other things did happen that we need to talk about:

I’m curious about Drift’s sale to private equity: Boston’s Drift sold the majority of its shares to Vista Equity Partners, it announced this week. I’ve been to the Drift offices, as the company once lent us a room to record a podcast in. The folks there were nice. But with the company reporting 70% ARR growth in 2020, I am dead curious why Drift didn’t just raise more capital and keep growing. The company was able to raise lots of private money in the past, including, say, a $60 million round back in 2018. Exiting the bulk of the company early feels a little weird, similar to how the Gainsight sale to PE was a bit of a head scratcher. For Boston, the exit is good news as it may help mint new angel investors. But it still feels like an exit for which we’re missing a key detail.

Xometry: This one has been in the notes folder for too long, and since I’m off next week we’re including it here. I spoke with Xometry CEO Randy Altschuler after his company reported earnings a few weeks back. Recall that Xometry went public earlier this year. Altschuler reported generally bullish views on the process of going public during the COVID-19 era, calling his company’s Zoom roadshow efficient in a manner that allowed his company to chat to more folks while also saving on travel-related exhaustion.

Xometry, continued: But past the standard post-IPO chit chat, Altschuler had a few notes that stood out in my memory. The first being that inflation can impact technology businesses. Rising costs are impacting companies like Root, who have to deal with used car prices impacting claims costs. Inflation also crops up in Xometry’s business connecting manufacturing demand with manufacturing supply. It’s a good reminder that macro market conditions really do matter in the technology world, just not in ways that we can always easily see.

Xometry, even more: Altschuler also said that he thinks that a carbon tax at some point is inevitable. This came up in our discussion of onshoring manufacturing in the United States over time. Shipping stuff is expensive today and would prove even more costly if we added in the price of carbon emissions via a tax. That could make local manufacturing more competitive, notably. Perhaps that will prove a boon to folks in favor of more industrial production in post-industrial societies. For tech companies that deal with physical-world goods, it’s something to keep in mind.

And, finally, Carrot: Another entry from the notes archive, let’s talk about Carrot. The startup raised a $75 million round a few weeks back, so I asked the company about its growth history and a few other things. Carrot sells a product to employers so that they can offer their workers fertility benefits. Given falling human fertility rates, coverage of this sort is, in my view, likely to become more popular over time.

Other factors are at work, of course, but the last 18 months have proved accelerative for Carrot’s business. Per the company, it has seen “nearly 5x overall growth” in the last six quarters. The startup expects to reach 450 customers by the end of 2021, which will add up to around one million covered folks.

Carrot declined to share a valuation differential from its Series B to its Series C. Happily PitchBook has data on the matter, so we can report that per its dataset, Carrot’s valuation rose from around $66 million (post-money) following its $21 million Series B to around $260 million after its Series C. That’s a good markup for the company’s employees and founders.

My general bullishness around rising needs for fertility support matches the company’s ethos, which it described in an email by saying that it thinks fertility and “family-forming care could and should be the fourth pillar of employee benefits and health care more broadly, much like medical or dental or vision.” A hard yes to that one.

OK, that’s all from me for a few weeks. Stay safe, get vaccinated, and let’s be kind to one another. — Alex

Talking shop with Twitter’s recent head of corp dev — and now VC — Seksom Suriyapa

By Connie Loizos

Seksom Suriyapa was seemingly destined to land at a venture firm. A Stanford Law graduate, he worked at two blue-chip investment banks before joining the cybersecurity company McAfee as a senior corp dev employee, later logging six years at the human resources software company SuccessFactors and, in 2018, landing at Twitter, where he headed up its 12-person corporate development team until June.

The bigger surprise is that Suriyapa — who just joined the L.A.-based venture firm Upfront Ventures — didn’t make the leap sooner. “The catalyst was finding a firm that felt like the exact right fit for me,” says Suriyapa.

We talked earlier today with Suriyapa — who lives and will remain in the Bay Area — about his new role at Upfront, where he will be leading its expanding growth-stage practice with firm founder Yves Sisteron.

He also shed light on how Twitter — which has been on a bit of buying spree — thinks about acquisitions these days. Our chat has been edited lightly for length.

TC: How did you wind up joining Upfront?

SS: [Longtime partner] Mark Suster and I were introduced through a mutual business acquaintance in the venture world, and I got to know him over a period of time and really came to find him to be a remarkable individual. He’s thoughtful about the business itself, he’s an incredible brand builder. I think you could argue that [Upfront] put L.A. on the venture map.

TC: It was also, for a long time, an early-stage firm, but now it has a ‘barbell’ strategy. Is your new job to make sure it can maintain its stake in its portfolio companies as they grow? Can you shop outside of that portfolio?

SS: The mission for me will be supporting the best of Upfront’s hundred-plus existing portfolio companies that are poised to scale, and also to invest in companies not currency on the platform, and I anticipate [the latter] will happen more and more over time.

TC: Twitter was a lot more active on the corp dev front during the years when you were there. Why?

SS: When i joined in 2018, Jack Dorsey had been CEO for about three years, and really his focus was on the core mission of driving the public conversation, and in doing that, Twitter shrunk itself out of a lot of businesses and [shrunk] people wise as well.

TC: I remember it laid people off in 2016.

SS: And one of the offshoots of that was way less in the way of newer products, so there were no new acquisitions in the three years prior to me joining, and that muscle atrophies if you don’t exercise it. So [ahead of me] Jack had transformed the management team, which had been, relatively speaking, a revolving door of executives until that point, and I was brought in with a specific mandate of reviving a corporate development practice that had been quiet for a few years. I’d known [CFO] Ned Segal when he was a banker at Goldman Sachs and [while] I was at SuccessFactors, so when I heard about the role through the grapevine, I reached out.

TC: So Twitter starts shopping, buying up the news reader service Scroll, the newsletter platform Revue. Were these decisions coming down from the top or vice versa?

SS: The best way to describe it would be that it was product-need driven. The company had a few different objectives. One was to diversify Twitter from its dependency on being an ad-driven business. Something like 80% of revenue comes from ads.

Second, there’s an incredible need to ramp up its machine learning and artificial intelligence as a company. If you’re looking for toxicity in conversation, it’s not scalable to hire tens of thousands of people to do that. You need machine learning to find it. Twitter done well is also able to show you the conversations that are most interesting to you, and to do that, it has to take signals from what you follow and spend time reading and what you interact with, and that, at its core, is ML AI.  [Relatedly] Jack has a vision that anybody who tweets in whatever their native tongue is should be able to talk with someone else in their native tongue as part of a global conversation, and to do that, you need [natural language processing] techniques galore.

TC: There’s also this focus on consumer applications.

SS: That’s the third objective. What are the tools that followers and creators can use in conversation with each other? So [Twitter] added audio [via its Clubhouse rival Spaces]. We bought Revue, which is a competitor to Substack. So there’s a lot of innovation happening around the type of content that someone should expect to see or create on Twitter.

TC: Would you describe these acquisitions as proactive or reactive?

SS: From the outside it would seem reactive, but the reality is we’d been thinking a lot about something like Spaces even before Clubhouse took off. I think what’s noticeable to me is [Spaces] is one of the first times you’ve seen a company like Twitter build up a capability and a new product area that’s going head-to-head going against a company that’s focused only on that realm, and it’s competitive from day one. Twitter beat Clubhouse in [offering an] Android version because it poured resources into it, and I’d argue that a lot of the mechanics of Twitter and the fact that creators are on Twitter puts it in an awesome spot to win this segment.

Twitter also just has a huge amount of expertise in finding toxicity and things you want to be wary of when you’re a social media play, and a company of Clubhouse’s size, at least in its initial days, will have a hard time getting there.

TC: Twitter has so many interests, including around cryptocurrencies and decentralization. 

SS: In terms of priorities at Twitter,  a lot is under wraps in terms of the technologies that we expect [will rise up over] the next five  to 10 years, but [a lot of thought is being given to] the impact of cryptocurrency and the underlying protocols around it and how Twitter participates in a trustless, permissionless [world] where there’s a decentralized internet that can protect people’s privacy and allow people not to worry where their content is stored. People think of Twitter as a consumer app but there’s amazing and considerable diversity under the hood.

TC: Do you think because of the current regulatory environment that it has a better shot at working with companies and projects that might have gotten snapped up by Facebook and Google?

In terms of the regulatory environment, the reality is that even if you take the Facebooks and Googles out of the equation, there are acquirers that are competitive that would step up and buy things, so it’s a little short-sighted to think of just those two. But even when they were active, we were winning [deals]. A lot of the companies we acquired self-selected to be at Twitter because they like what it stands for, they like the way that Jack Dorsey leads the organization, and they believe in the stands that he takes and the positions that he and his leadership espouse.

TC: You’re now representing a very different brand. How will your work at Twitter help you compete for deals on behalf of Upfront?

SS: I have this network of incredible entrepreneurs around the world because of companies across my career that I’ve helped acquire or tried to acquire or who are running businesses; I also [have relationships with] VCs at different stages who actively spot businesses around the world [and introduce them to corp dev teams]. You might also know that Twitter has a diversity and inclusion program where they intend to have 25% of leadership be diverse over the next several years, so my team was often involved in finding the best ways to find diverse targets to buy. I also led a series of LP investments into newly emerging funds, some LatinX-founded, some women-founded, some Black-founded, some that were diverse from a geographic standpoint that are scouting companies in far flung places . . .

TC: Does Twitter also make direct investments?

SS: We did direct investments but [backing fund managers] is a more leveraged approach. Most of them are seed funds and they’ll in turn invest in 30 to 60 companies each. But yes, I scouted companies in far flung places, including [India’s] ShareChat where I served on the board for two years. [Editor’s note: TechCrunch reported earlier this year that Twitter explored buying ShareChat at an earlier point; the company has since raised numerous rounds of funding and was most recently valued by its investors at nearly $3 billion.]

TC: You have a lot of relationships, but it would still seem really hard to compete for growth-stage deals when so many other outfits are now investing there, too. How do you plan to compete?

SS: I will clearly be drawing on those networks to find deals. I’ll be investing in sectors where Upfront has already invested in, but initially I’ll be double-clicking [in areas[ I have strong interest in, including around the creator economy ecosystem, because I did so much of that at Twitter, and “Web 3.0,” this permissionless [evolution that Twitter is also focused on]. But I won’t kid myself. You compete by learning what your value proposition is. At Twitter, my strategy was winning on speed, knowing people earlier, and [underscoring] Twitter’s value proposition [to close deals]. I can’t talk about my [VC] strategy without having implemented yet; I’ll have to figure out what’s most interesting to entrepreneurs that the megafunds don’t offer.

Daily Crunch: Fintech startup Jeeves snags $500M valuation after $57M Series B

By Richard Dal Porto

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.

Hello and welcome to Daily Crunch for September 3, 2021. As noted yesterday, most of TechCrunch has the day off so today’s newsletter is a little bit different than usual.

Up top let’s chat early-stage startups. The TechCrunch team spent an age this week cataloging a host of startups from Y Combinator’s marathon demo day, with our notes covering all presentations from day one and day two. We also yanked our favorites in two batches, in case you wanted to avoid the full download and want to skip straight to the highlights.

But that’s not all. We also dug into trends from the group and hopped on Twitter Spaces to chat about what we saw. Of course, Y Combinator is a single accelerator, but given its mammoth cohort sizes we pay extra attention to the trends that its startups detail.

That behind us, let’s take a moment to highlight some great stuff from newer TechCrunch reporters:

Finally, Disrupt is coming up. So make sure that you have a ticket. As it’s a virtual event they are cheaper than they have been in years past, despite the event having perhaps its strongest content lineup ever. We’re excited!

With that, let’s head into the weekend — a long one here in the United States — and get some rest. What a week in the world at large and in our startup-focused niche. I’ll be taking all next week off, but I will leave the Daily Crunch in the very capable hands of one Greg Kumparak. — Alex

Use cohort analysis to drive smarter startup growth

Cohort analysis is a basic tool for startups that need to better understand customer behavior, but many early-stage companies let it slide.

Grouping users into “buckets” is common practice at most startups, but robust cohort analysis uncovers trends and missed opportunities that young companies can pounce on.

Don’t wait to hire a senior marketing person or a consultant to start this critical work: In a guest column, Jonathan Metrick, chief growth officer at Sagard & Portage Ventures, offers a detailed example explaining the value of this type of analysis.

If you have questions after reading this comprehensive step-by-step, please join us for a Twitter Spaces chat with Metrick on Tuesday, September 7, at 3 p.m. PDT/6 p.m. EDT. For details and a reminder, follow @TechCrunch on Twitter.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

TechCrunch Experts: Growth Marketing

Illustration montage based on education and knowledge in blue

Image Credits: SEAN GLADWELL (opens in a new window) / Getty Images

TechCrunch wants to help startups find the right expert for their needs. To do this, we’re building a shortlist of the top growth marketers. We’ve received great recommendations for growth marketers in the startup industry since we launched our survey.

We’re excited to read more responses as they come in! Fill out the survey here.

Community

Jonathan Metrick

Image Credits: Jonathan Metrick

Join Danny Crichton and Mary Ann Azevedo Tuesday, September 7, at 3 p.m. PDT/6 p.m. EDT on Twitter Spaces as they talk with Jonathan Metrick about fintech and growth marketing.

Rivian’s electric R1T pickup truck, R1S SUV get their official EPA ranges

By Kirsten Korosec

Rivian announced Friday that the first edition version of its all-electric R1T pickup truck has an official EPA range of 314 miles, while its R1T SUV comes in a skosh higher at 316 miles.

The official range and fuel economy values have been posted on the U.S. EPA website. The official numbers align with Rivian’s own previous estimates, which it has advertised as 300 miles.

While EPA estimates can’t account for different driving styles, the test cycle is robust enough to provide an accurate benchmark for customers shopping for an electric vehicle.

In this case, Rivian has the benefit of being the first electric truck on the market. Ford’s F-150 Lightning, which isn’t expected to come on the market until spring 2022, has a targeted range of 230 miles in the standard and up to 300 miles in the extended version. The EPA has not issued official ranges for the Ford Lightning.

Rivian’s “Launch edition” R1T truck and R1S SUV come equipped with a 135-kWh battery pack that is branded as the “large pack.” Deliveries of the Launch Edition vehicles are slated to begin this month.

The official EPA range values for our Launch Edition vehicles are in:
R1T Large Pack: 314 miles
R1S Large Pack: 316 miles
We'll share more EPA information about other editions as we have it. https://t.co/MPY1wVzkz9 pic.twitter.com/rzrCkQpggd

— Rivian (@Rivian) September 3, 2021

The R1T and R1S vehicles will be offered in two trims, both of which are offered with the same 135-kWh-pack size. The Adventure variant of the R1T, which has a premium interior, starts at $73,000. The R1T Explore trim starts at $67,500.

The Adventure trim in the R1S SUV starts at $75,500, while the Explore package has a base price of $70,000.

Rivian intends to begin deliveries of the Adventure and Explore packages in January 2022.

Rivian also plans to offer an even larger pack, dubbed the “Max pack,” for the R1T. That larger pack costs an additional $10,000 and is expected to push the range of the R1T past 400 miles. The EPA has not posted an official range for the max pack or other editions, including a planned smaller battery pack option.

Make accessibility part of your startup’s products and culture from day one

By Annie Siebert
Joe Devon Contributor
Joe Devon is the co-founder of Diamond, a digital agency that builds accessible experiences. He is also a co-founder of Global Accessibility Awareness Day and chair of the GAAD Foundation.

The world of accessibility has experienced a tipping point thanks to the pandemic, which drove people of all abilities to do more tasks and shopping online.

For the last year, the digital world was the only place brands could connect with their customers. A Forrester survey found that 8 in 10 companies have taken their first steps toward working on digital accessibility.

What’s driving this change besides the increased digital interactions? Fortune 500 companies are finally starting to realize that people with disabilities make up 1 billion of the world’s market. That population and their families control more than $13 trillion in disposable income, according to Return on Disability’s “The Global Economics of Disability.”

However, only 36% of companies in Forrester’s survey are completely committed to creating accessible digital experiences.

Although digital accessibility has been around for decades, companies have not caught on to its benefits until recently. In its latest survey, the WebAIM Million analysis of 1 million home pages found accessibility errors on 97.4% of the websites evaluated.

What does this mean for you? Why should you care about this? Because this is an opportunity for your company to get ahead of the competition and reap the rewards of being an early adopter.

The benefits of digital accessibility

Companies are now realizing the advantages of creating accessible products and properties that go beyond doing the right thing. For one, people are living longer. The World Health Organization says people aged 60 and older outnumber children under 5. Moreover, the world’s population of those who are 60 and older is expected to reach 2 billion by 2050, up from 900 million in 2015.

W3C Web Accessibility Initiative provides an overview on Web Accessibility for Older Users. Here’s what it reveals.

  • Hearing loss affects 47% of people aged 61 to 80.
  • Vision decline affects 16% of people aged 65 to 74.
  • Mild cognitive impairment affects 20% of people over 70.
  • Arthritis affects more than 50% of people over 65.

In short, developing accessible digital products helps you reach a much larger audience, which will include you, your co-workers and your family. Everyone is going to become situationally, temporarily or episodically impaired at some point in their lives. Everyone enters a noisy or dark environment that can make it harder to see or hear. An injury or an illness can cause someone to use the internet differently on a temporary basis. People with arthritis, migraines and vertigo experience episodes of pain and discomfort that affect their ability to interact with digital devices, apps and tools.

Additionally, no one has ever advocated against making products and websites accessible to more people. Despite this, the relative universal appeal of accessibility as a principle does not mean that it will be as easy as explaining the need and getting people on board to make major organizational changes. A lot of work remains in raising awareness and educating people about why we need to make these changes and how to go about it.

You have the why. Now here are five things to help you with how to make changes in your company to integrate accessibility as a core part of your business.

1. Tap the right people to create accessible experiences

According to the second annual State of Accessibility Report, only 40% of the Alexa Top 100 websites are fully accessible, proving the needs of people with disabilities are, more often than not, being overlooked when creating web experiences.

To design for people with disabilities, it’s important to have an understanding of how they use your products or web properties. You’ll also want to know what tools will help them achieve their desired results. This starts with having the right people on board.

Hiring accessibility experts to advise your development team will proactively identify potential issues and ensure you design accessibly from the start, as well as create better products. Better yet, hiring people with disabilities brings a deeper level of understanding to your work.

2. Hire designers passionate about accessibility

Having accessibility experts on your team to provide advice and guidance is a great start. However, if the rest of your team is not passionate about accessibility, that can turn into a potential roadblock. When interviewing new designers, ask about accessibility. It’ll gauge a candidate’s knowledge and passion in the area. At the same time, you set an expectation that accessibility is a priority at your organization.

Being proactive about your hires and making sure they will contribute to a culture of accessibility and inclusion will save you major headaches. Accessibility starts in the design and user experience (UX) phase. If your team doesn’t deliver there, then you will have to fix their mistakes later, essentially delaying the project and costing your organization. It costs more to fix things than to build them accessibly in the first place.

3. Remember that accessibility is for everyone

People deciding whether to invest in accessibility often ask themselves how many people are going to use the feature. The reasoning behind the question is understandable from a business perspective; accessibility can be an expense, and it’s reasonable to want to spend money responsibly.

However, the question is rooted in one of the biggest misconceptions in the field. The myth is that accessibility only benefits people who are blind or deaf. This belief is frustrating because it greatly underestimates the number of people with disabilities and minimizes their place in society. Furthermore, it fails to acknowledge that people who may not have a disability still benefit greatly from accessibility features.

Disability is a spectrum that all of us will find ourselves on sooner or later. Maybe an injury temporarily limits our mobility that requires us to perform basic tasks like banking and shopping exclusively online. Or maybe our vision and hearing change as we age, which affects our ability to interact online.

When we understand that accessibility is about designing in a way that includes as many people as possible, we can reframe the conversation around whether it’s worth investing in. This approach sends a clear message: No business can afford to ignore a fast-growing population.

Think about it this way: If you have a choice of taking an elevator or the stairs, which would you take? Most pick the elevator. Those ramps on street corners called curb cuts? They were initially designed for allowing wheelchairs to cross the street.

Yet, many use these ramps, including parents pushing strollers, travelers pulling luggage, skateboarders rolling and workers moving heavy loads on dollies. A feature initially designed for accessibility benefits far more people than the original target audience. That’s the magic of the curb-cut effect.

4. Hire agencies that build accessibly by default

Whether you have a small team or are expanding an in-house accessibility practice, working with an agency can be an effective way to embrace and adopt accessible practices. The secret to a successful partnership is choosing an agency that will help your team grow into its accessibility practice.

The key to finding the right agency is selecting one that builds accessibly by default. When you know you are working with an agency that shares your organization’s values, you have a trusted partner in your mission of improving accessibility. It also removes any guesswork or revisions down the line. This is a huge win, as many designers overlook details that can make or break an experience for a user with a disability.

Working with an agency focused on providing accessible experiences narrows the likelihood of errors going unnoticed and unremedied, giving you confidence that you are providing an excellent experience to your entire audience.

5. Integrate accessibility into your supply chain

On any given day, enterprises and large organizations often work with dozens of stakeholders. From vendors and agencies to freelancers and internal employees, the nature of business today is far-reaching and collaborative. While this is valuable for exchanging ideas, accessibility can get lost in the mix with so many different people involved.

To prevent this from happening, it’s important to align these moving pieces of a business into a supply chain that is focused on accessibility at every stage of the business. When everyone is completely bought in, it cuts the risk of a component being inaccessible and causing issues for you in the future.

The startup advantage

A major challenge that comes up repeatedly is the struggle to change the status quo. Once an organization implements and ingrains inaccessible processes and products into its culture, it is hard to make meaningful change. Even if everyone is willing to commit to the change, the fact is, rewriting the way you do business is never easy.

Startups have an advantage here: They do not bear years of inaccessible baggage. It’s not written into the code of their products. It’s not woven into the business culture. In many ways, a startup is a clean slate, and they need to learn from the trials of their more established peers.

Startup founders have the opportunity to build an accessible organization from the ground up. They can create an accessible-first culture that will not need rewriting 10, 20 or 30 years from now by hiring a diverse workforce with a passion for accessibility, writing accessible code for products and web properties, choosing to work with only third parties who embrace accessibility and advocating for the rights of people with disabilities.

Many of these considerations here have a common denominator: culture. While most people in the technology industry will agree that accessibility is an important and worthy cause to champion, it has a huge awareness problem.

Accessibility needs to be everywhere in software development, from requirements and beyond to include marketing, sales and other non-tech teams. It cannot be a niche concern left to a siloed team to handle. If we, as an industry and as a society, recognize that accessibility is everyone’s job, we will create a culture that prioritizes it without question.

By creating this culture, we will no longer be asking, “Do we have to make this accessible?” Instead, we’ll ask, “How do we make this accessible?” It’s a major mindset shift that will make a tangible difference in the lives of 1 billion people living with a disability and those who eventually will have a disability or temporary, situational or episodic impairments affecting their ability to use online and digital products.

Advocating for accessibility may feel like an uphill battle at times, but it isn’t rocket science. The biggest need is education and awareness.

When you understand the people you build accessible products for and the reasons they need those products, it becomes easier to secure buy-in from people in all parts of your organization. Creating this culture is the first step in a long quest toward accessibility. And the best part is, it gets easier from here.

The cocktail party problem: Why voice tech isn’t truly useful yet

By Ram Iyer
Ken Sutton Contributor
Ken Sutton is CEO and co-founder of Yobe, a software company that uses edge-based AI to unlock the potential of voice technologies for modern brands.

On average, men and women speak roughly 15,000 words per day. We call our friends and family, log into Zoom for meetings with our colleagues, discuss our days with our loved ones, or if you’re like me, you argue with the ref about a bad call they made in the playoffs.

Hospitality, travel, IoT and the auto industry are all on the cusp of leveling-up voice assistant adoption and the monetization of voice. The global voice and speech recognition market is expected to grow at a CAGR of 17.2% from 2019 to reach $26.8 billion by 2025, according to Meticulous Research. Companies like Amazon and Apple will accelerate this growth as they leverage ambient computing capabilities, which will continue to push voice interfaces forward as a primary interface.

As voice technologies become ubiquitous, companies are turning their focus to the value of the data latent in these new channels. Microsoft’s recent acquisition of Nuance is not just about achieving better NLP or voice assistant technology, it’s also about the trove of healthcare data that the conversational AI has collected.

Our voice technologies have not been engineered to confront the messiness of the real world or the cacophony of our actual lives.

Google has monetized every click of your mouse, and the same thing is now happening with voice. Advertisers have found that speak-through conversion rates are higher than click-through conversation rates. Brands need to begin developing voice strategies to reach customers — or risk being left behind.

Voice tech adoption was already on the rise, but with most of the world under lockdown protocol during the COVID-19 pandemic, adoption is set to skyrocket. Nearly 40% of internet users in the U.S. use smart speakers at least monthly in 2020, according to Insider Intelligence.

Yet, there are several fundamental technology barriers keeping us from reaching the full potential of the technology.

The steep climb to commercializing voice

By the end of 2020, worldwide shipments of wearable devices rose 27.2% to 153.5 million from a year earlier, but despite all the progress made in voice technologies and their integration in a plethora of end-user devices, they are still largely limited to simple tasks. That is finally starting to change as consumers demand more from these interactions, and voice becomes a more essential interface.

In 2018, in-car shoppers spent $230 billion to order food, coffee, groceries or items to pick up at a store. The auto industry is one of the earliest adopters of voice AI, but in order to really capture voice technology’s true potential, it needs to become a more seamless, truly hands-free experience. Ambient car noise still muddies the signal enough that it keeps users tethered to using their phones.

NYC-based insurance underwriting platform Kalepa raises $14M Series A led by Inspired Capital

By Mike Butcher

Kalepa, an insurance underwriting platform based out of New York, has raised a $14 million Series A funding round led by Inspired Capital, with participation from previous investor IA Ventures. Also participating was Gokul Rajaram of Doordash, Coinbase, and formerly of Google, Jackie Reses, formerly of Square, and Henry Ward of Carta.

Founded by Paul Monasterio and Daniel Hillman, the startup was launched in 2018 aimed at commercial insurance underwriters.

Co-Founder and CEO, Paul Monasterio said: “InsureTech has seen a massive evolution over the past decade, but commercial insurance—which supports hard-working business owners and protects their most important assets—has been left behind. We leverage billions of data points and unlock crucial insights in order to bring businesses and insurers a single version of the truth.”

Kalepa says its Copilot software automatically learns what the best underwriters are doing, allowing an underwriter to take a more accurate underwriting decision as quickly as possible vs. simply aggregating a lot of data for them. It competes with the legacy MGAs (e.g., RT Specialty, AmWins) as well as new entrants such as Pathpoint in the E&S market.

Penny Pritzker, co-founder at Inspired Capital and former U.S. Secretary of Commerce said: “Commercial insurance represents a $1T industry globally and helps 30 million U.S. businesses. Kalepa has brought some of the sharpest minds in understanding risk to this segment of the insurance market.”

Veteran insurance player Mario Vitale is also joining Kalepa’s Board.

A founder’s guide to effectively managing your options pool

By Ram Iyer
Allen Miller Contributor
Allen Miller is a principal at Oak HC/FT based in San Francisco. He invests in early- and growth-stage companies, with a particular focus on fintech.

There’s an old startup adage that goes: Cash is king. I’m not sure that is true anymore.

In today’s cash rich environment, options are more valuable than cash. Founders have many guides on how to raise money, but not enough has been written about how to protect your startup’s option pool. As a founder, recruiting talent is the most important factor for success. In turn, managing your option pool may be the most effective action you can take to ensure you can recruit and retain talent.

That said, managing your option pool is no easy task. However, with some foresight and planning, it’s possible to take advantage of certain tools at your disposal and avoid common pitfalls.

In this piece, I’ll cover:

  • The mechanics of the option pool over multiple funding rounds.
  • Common pitfalls that trip up founders along the way.
  • What you can do to protect your option pool or to correct course if you made mistakes early on.

A minicase study on option pool mechanics

Let’s run through a quick case study that sets the stage before we dive deeper. In this example, there are three equal co-founders who decide to quit their jobs to become startup founders.

Since they know they need to hire talent, the trio gets going with a 10% option pool at inception. They then cobble together enough money across angel, pre-seed and seed rounds (with 25% cumulative dilution across those rounds) to achieve product-market fit (PMF). With PMF in the bag, they raise a Series A, which results in a further 25% dilution.

The easiest way to ensure you don’t run out of options too quickly is simply to start with a bigger pool.

After hiring a few C-suite executives, they are now running low on options. So at the Series B, the company does a 5% option pool top-up pre-money — in addition to giving up 20% in equity related to the new cash injection. When the Series C and D rounds come by with dilutions of 15% and 10%, the company has hit its stride and has an imminent IPO in the works. Success!

For simplicity, I will assume a few things that don’t normally happen but will make illustrating the math here a bit easier:

  1. No investor participates in their pro-rata after their initial investment.
  2. Half the available pool is issued to new hires and/or used for refreshes every round.

Obviously, every situation is unique and your mileage may vary. But this is a close enough proxy to what happens to a lot of startups in practice. Here is what the available option pool will look like over time across rounds:

 

Option pool example

Image Credits: Allen Miller

Note how quickly the pool thins out — especially early on. In the beginning, 10% sounds like a lot, but it’s hard to make the first few hires when you have nothing to show the world and no cash to pay salaries. In addition, early rounds don’t just dilute your equity as a founder, they dilute everyone’s — including your option pool (both allocated and unallocated). By the time the company raises its Series B, the available pool is already less than 1.5%.

Acquired by Mercedes-Benz, YASA’s revolutionary electric motor is set for big things

By Mike Butcher

Back in July, YASA (formerly Yokeless And Segmented Armature), a British electric motor startup with a revolutionary ‘axial-flux’ motor, was acquired by Mercedes-Benz. The acquisition didn’t exactly garner enormous press attention, as scant other details were announced. But YASA is likely to be an entity worth watching.

Founded in 2009 after being spun out of Oxford University, YASA will now develop ultra-high-performance electric motors for Mercedes-Benz’s AMG.EA electric-only platform. It will stay in the UK as a fully owned subsidiary, serving both Mercedes-Benz and existing customers like Ferrari. The company will retain its own brand, team, facilities, and location in Oxford.

YASA’s axial-flux electric motors generated EV industry interest because of their efficiency, high power density, small size, and low weight.

By contrast, the ‘radial’ electric motor design is more common in today’s EV market. Even Tesla relies on radial electric motors, a legacy technology more than 40 years old with very little left to give in terms of innovation.

But YASA’s axial-flux design, which has very thin segments, means they can be combined into powerful single drive units. This makes them one-third the weight of other electric motors, more efficient, and with 3x higher power densities than Tesla.

Tim Woolmer, YASA’s Founder and CTO, invented this very new approach to electric motor design. I caught up with him to find out what’s next.

TC: What’s the journey so far:

TW: We started just over 12 years ago with really one remit: let’s accelerate electric cars, let’s do anything we can to make electric cars happen faster. We’re now 10 years into a 20-year revolution, every new car that gets sold in 10 years will be electric, no question. There’s nothing more exciting for an engineer than a period of revolution because the speed of innovation is what’s important. What is so exciting for us is we get to innovate fast, and that’s where the partnership with Mercedes is really interesting.

TC: What was different about the engine you came up with?

TW: We started with a blank sheet of paper at the beginning of my PhD. And the idea was to say, what could be created for the electric car industry in 10 or 15 years from now that they would need, that we could meet. Something that was lighter, more efficient, mass-producible in volume. In the 2000s, axial flux motors were not very common, but by combining axial flux technology and making a couple of little tweaks using some new materials, I basically stumbled into this new design which we call YASA: Yokeless And Segmented Armature. It takes what is a light topology in axial flux and makes it even lighter, about half as much again. There’s a benefit because the rotors are rotating at a bigger diameter. So, essentially torque is force times diameter, so for the same force, you get more torque. So if you double your diameter, you get double the torque for the same amount of materials. So that’s the benefit of axial flux.

TC: You’ve done this with deal with Mercedes – what’s next?

TW: We are basically a fully owned subsidiary. We’re going to utilize Mercedes’ industrialization powerhouse. But the key thing is, if you watch how technologies filter down in automotive, they start in the luxury sector, like the Ferraris and McLarens, and then filter down into mainstream sector and then go into higher volumes after that. That’s a space where Mercedes are world-class in terms of their industrialization, so that’s the kind of the idea behind the partnership.

TC: What else can you do from here?

TW: We will have a very high, high power, low density and lightweight engine so we can explore sport performance coupled with high levels of industrialization. That puts us in a really unique position for all sorts of things.

Although coy about his future plans, Woolmer is certainly one to watch in the EV and electric motor space. Post the acquisition YASA released this video:

Instagram may not be a photo-sharing app anymore, but Glass is

By Amanda Silberling

Instagram made headlines (including this one) when product head Adam Mosseri said in June that the app is “no longer just a square photo-sharing app,” since it’s pivoting its focus to shopping and video. But where does that leave photographers who want a social photo-sharing experience?

According to Tom Watson, a former product designer at Facebook and Pinterest, photographers have lacked a social network for a while. That’s why, with co-founder Stefan Borsje, Watson built Glass, a subscription-based iOS app designed to be a home for photographers.

“I’ve always loved photography, and when Flickr got bought by Yahoo, it was a sad moment for me. I love that kind of nerdy photography community,” Watson told TechCrunch. “Then you started to see it pick up with Instagram to take the torch into the mobile space. But I was at Facebook when Facebook purchased Instagram, and you could kind of see that it would inevitably be where it is today.”

For those of us accustomed to free, ad-supported social media, it might feel unfamiliar to pay a monthly fee for an app. Glass costs $4.99 a month (or $29.99 a year) to use, but you can try it without charge for 14 days. Still, the app takes your App Store payment info right away, so it could be a barrier to entry for people who worry they won’t remember to delete Glass before the trial period ends, should they not want to continue with it. But this model is intentional. Watson and Borsje are specifically trying to build their app — which only has five team members — without any venture funding or ad revenue. They only want to have to answer to their community of photographers.

“I wanted to do something different and start with a social subscription model and to bootstrap without venture capital,” said Watson. “We’ve seen in the past what happens when you take on venture capital and go for the moon. You keep pivoting away from your photographer community in order to become more broad.”

Image Credits: Glass

From the moment you open the Glass app, it’s clear that the emphasis is on the photography itself. When you follow photographers, their posts will appear in a feed of images designed to minimize distractions. The photos take up the entire screen, and you can only see who posted them if you drag them to the right. When you click on an image, you can see its caption and other information about how the photograph was shot. You can engage socially through comments, but there aren’t likes on photos — this is an intentional design choice, though Watson says some users are asking for a like button, even if it just helps them bookmark images for later browsing. In the coming weeks, Glass will launch discovery features, like categories for photographs. Glass also has a feedback board, which allows users to request features and upvote or downvote other users’ ideas. If Glass chooses to develop a suggestion, it is noted as “in progress” on the board.

Though it’s only in its beginning stages, Glass already sets itself apart from Instagram or VSCO by offering EXIF data, which is like candy for the “photography nerds” that Glass hopes to attract. EXIF data shows what camera a photographer used, as well as the photo’s ISO, aperture, shutter speed, and focal length. This data and sense of community was what drew people to Flickr in its early days, but when Yahoo gave free users up to one terrabyte of data, it became more of a personal archive than a community. Then, when SmugMug bought Flickr from Yahoo in 2018, it tried to backpedal by only allowing free users to have 1000 photos, warning that they could delete free users’ photos if they didn’t upgrade to a paid plan.

Glass also appeals to photographers by allowing for a wider variety of image sizes on the app — the maximum aspect ratio is 16 x 9, which accommodates the size of standard camera photos. But on Instagram, even after the platform moved away from its square image motif, it’s not possible to post vertical photographs from most cameras without cropping them. Like VSCO, Glass doesn’t show how many followers each user has, though you can see comments. While you can’t see how many followers someone else has, you can see who is following your own account.

“We thought that was important for safety. If someone follows you, you need to know who that is, and to be able to block them,” Watson said. “We really wanted to build blocking and reporting features from day one.”

Watson declined to share how many users have downloaded the app so far, but Watson said he’s “extremely happy with the response” to Glass. It launched with a waitlist in August, and Wednesday the app opened up to all iOS users. The goal of the waitlist wasn’t to generate hype, but rather, to make sure that the user experience remained smooth, and that the app wouldn’t get overloaded. At the time of the app’s waitlist launch in August, Watson told TechCrunch that Glass was sending hundreds of invites out every day. 

“I’ve been on the internet a long time, and I used to feel like there was a cozier, safer space,” Watson said. “I hope that by having this subscription model, these spaces can feel that way a little bit more again.”

Private equity giveth, and private equity taketh away

By Natasha Mascarenhas

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

Natasha and Alex and Grace and Chris gathered to dig through the week’s biggest happenings, including some news of our own. As a note, Equity’s Monday episode will be landing next Tuesday, thanks to a national holiday here in the United States. And we have something special planned for Wednesday, so stay tuned.

Ok! Here’s the rundown from the show:

That’s a wrap from us for the week! Keep your head atop your shoulders and have a great weekend!

Equity drops every Monday at 7:00 a.m. PDT, Wednesday, and Friday morning at 7:00 a.m. PDT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Playbyte’s new app aims to become the ‘TikTok for games’

By Sarah Perez

A startup called Playbyte wants to become the TikTok for games. The company’s newly launched iOS app offers tools that allow users to make and share simple games on their phone, as well as a vertically scrollable, fullscreen feed where you can play the games created by others. Also like TikTok, the feed becomes more personalized over time to serve up more of the kinds of games you like to play.

While typically, game creation involves some aspect of coding, Playbyte’s games are created using simple building blocks, emoji and even images from your Camera Roll on your iPhone. The idea is to make building games just another form of self-expression, rather than some introductory, educational experience that’s trying to teach users the basics of coding.

At its core, Playbyte’s game creation is powered by its lightweight 2D game engine built on web frameworks, which lets users create games that can be quickly loaded and played even on slow connections and older devices. After you play a game, you can like and comment using buttons on the right-side of the screen, which also greatly resembles the TikTok look-and-feel. Over time, Playbyte’s feed shows you more of the games you enjoyed as the app leverages its understanding of in-game imagery, tags and descriptions, and other engagement analytics to serve up more games it believes you’ll find compelling.

At launch, users have already made a variety of games using Playbyte’s tools — including simulators, tower defense games, combat challenges, obbys, murder mystery games, and more.

We made an app called Playbyte that lets you make games on your phone, discover games made by other users, and challenge your friends https://t.co/FFnMbKG1ls pic.twitter.com/eqhabN3kM1

— Playbyte (@PlaybyteInc) May 25, 2021

According to Playbyte founder and CEO Kyle Russell — previously of Skydio, Andreessen Horowitz, and (disclosure!) TechCrunch — Playbyte is meant to be a social media app, not just a games app.

“We have this model in our minds for what is required to build a new social media platform,” he says.

What Twitter did for text, Instagram did for photos and TikTok did for video was to combine a constraint with a personalized feed, Russell explains. “Typically. [they started] with a focus on making these experiences really brief…So a short, constrained format and dedicated tools that set you up for success to work within that constrained format,” he adds.

Similarly, Playbyte games have their own set of limitations. In addition to their simplistic nature, the games are limited to five scenes. Thanks to this constraint, a format has emerged where people are making games that have an intro screen where you hit “play,” a story intro, a challenging gameplay section, and then a story outro.

In addition to its easy-to-use game building tools, Playbyte also allows game assets to be reused by other game creators. That means if someone who has more expertise makes a game asset using custom logic or which pieced together multiple components, the rest of the user base can benefit from that work.

“Basically, we want to make it really easy for people who aren’t as ambitious to still feel like productive, creative game makers,” says Russell. “The key to that is going to be if you have an idea — like an image of a game in your mind — you should be able to very quickly search for new assets or piece together other ones you’ve previously saved. And then just drop them in and mix-and-match — almost like Legos — and construct something that’s 90% of what you imagined, without any further configuration on your part,” he says.

In time, Playbyte plans to monetize its feed with brand advertising, perhaps by allowing creators to drop sponsored assets into their games, for instance. It also wants to establish some sort of patronage model at a later point. This could involve either subscriptions or even NFTs of the games, but this would be further down the road.

The cutest lil sprite blob I’ve ever seen 😭#pixelart #gamedev pic.twitter.com/7uBRzs6ix0

— Playbyte (@PlaybyteInc) August 21, 2021

The startup had originally began as a web app in 2019, but at the end of last year, the team scrapped that plan and rewrote everything as a native iOS app with its own game engine. That app launched on the App Store this week, after previously maxing out TestFlight’s cap of 10,000 users.

Currently, it’s finding traction with younger teenagers who are active on TikTok and other collaborative games, like Roblox, Minecraft, or Fortnite.

“These are young people who feel inspired to build their own games but have been intimidated by the need to learn to code or use other advanced tools, or who simply don’t have a computer at home that would let them access those tools,” notes Russell.

Playbyte is backed by $4 million in pre-seed and seed funding from investors including FirstMark (Rick Heitzmann), Ludlow Ventures (Jonathon Triest and Blake Robbins), Dream Machine (former Editor-in-Chief at TechCrunch, Alexia Bonatsos), and angels such as Fred Ehrsam, co-founder of Coinbase; Nate Mitchell, co-founder of Oculus; Ashita Achuthan, previously of Twitter; and others.

The app is a free download on the App Store.

Australia’s TechnologyOne acquires UK-based higher-ed platform Scientia for $16.6M

By Mike Butcher

TechnologyOne, an Australian SaaS enterprise, has agreed to acquire UK-based higher education software provider Scientia for £12 million /$16.6 million in cash.
 
TechnologyOne claims to have 75% of Higher Education institutions in Australia using its software, while Scientia claims 50% market share in the UK.

The acquisition includes an initial payment of £6m and further payments.
 
Adrian Di Marco, TechnologyOne founder and Executive Chairman said: “This is our company’s first international acquisition and it demonstrates our deep commitment to serving the higher education sector and the UK market. The unique IP and market-leading functionality of Scientia’s product supports our vision of delivering enterprise software that is incredibly easy to use.”

Commenting, Michelle Gillespie, Registrar and Director of Student Administration and Library Services at Swinburne University of Technology said: “The one thing that students care most about is their timetable. Being able to fully integrate a schedule into the full student experience is very important, and an exciting step for those universities – like Swinburne – that use TechnologyOne’s student management system.”

Extra Crunch roundup: Cohort analysis, YC Demo Day recaps, building your supply chain

By Walter Thompson

The ongoing fintech revolution continues to level the playing field where legacy companies have historically dominated startups.

To compete with retail banks, many newcomers are offering customers credit and debit cards; developer-friendly APIs make issuance relatively easy, and tools for managing processes like KYC are available off the shelf.

To learn more about the low barriers to entry — and the inherent challenges of creating a unique card offering — reporter Ryan Lawler interviewed:

  • Michael Spelfogel, founder, Cardless
  • Anu Muralidharan, COO, Expensify
  • Peter Hazlehurst, founder and CEO, Synctera
  • Salman Syed, SVP and GM of North America, Marqeta

Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.


We’re off on Monday, September 6 to celebrate America’s Labor Day holiday, but we’ll be back with new stories (and a very brief newsletter) on Tuesday morning.

Thanks very much for reading,

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

 

6 tips for establishing your startup’s global supply chain

Image Credits: Suriyapong Thongsawang (opens in a new window) / Getty Images

The barrier to entry for launching hardware startups has fallen; if you can pull off a successful crowdfunding campaign, you’re likely savvy enough to find a factory overseas that can build your widgets to spec.

But global supply chains are fragile: No one expected an off-course container ship to block the Suez Canal for six days. Due to the pandemic, importers are paying almost $18,000 for shipping containers from China today that cost $3,300 a year ago.

After spending a career spinning up supply chains on three continents, Liteboxer CEO Jeff Morin authored a guide for Extra Crunch for hardware founders.

“If you’re clear-eyed about the challenges and apply some rigor and forethought to the process, the end result can be hard to match,” Morin says.

Our favorite startups from YC’s Summer 21 Demo Day, Part 1

Y Combinator’s Summer 21 Demo Day, Part 1

Image Credits: Bryce Durbin / TechCrunch

Twice each year, we turn our attention to Y Combinator’s latest class of aspiring startups as they hold their public debuts.

For YC Summer 2021 Demo Day, the accelerator’s fourth virtual gathering, Natasha Mascarenhas, Alex Wilhelm, Devin Coldewey, Lucas Matney and Greg Kumparak selected 14 favorites from the first day of one of the world’s top pitch competitions.

Virtual events startups have high hopes for after the pandemic

Image Credits: Yuichiro Chino / Getty Images

Few people thought about virtual events before the pandemic struck, but this format has fulfilled a unique and important need for organizations large and small since early 2020. But what will virtual events’ value be as more of the world attempts a return to “normal”?

To find out, we caught up with top executives and investors in the sector to learn about the big trends they’re seeing — as the sequel to a survey we did in March 2020.

We surveyed:

  • Xiaoyin Qu, founder and CEO, Run The World
  • Rosie Roca, chief customer officer, Hopin
  • Hemant Mohapatra, partner, Lightspeed Venture Partners India
  • Paul Murphy, former investor in Hopin with Northzone (currently co-founder of Katch)

Tracking startup focus in the latest Y Combinator cohort

Alex Wilhelm and Anna Heim wrapped up TechCrunch’s coverage of the summer cohort from Y Combinator’s Demo Day with an evaluation of how the group fared in comparison to their expectations.

They were surprised by the number of startups focusing on no-and low-code software, and pleased by the unanticipated quantity of new companies focusing on space.

“It seems only fair to note that some categories of startup activity simply met our expectations in terms of popularity,” noting delivery-focused startups including dark stores and kitchens.

Popping up less than expected? Crypto and insurtech.

Read on for the whole list of startups that caught the eye of The Exchange.

Use cohort analysis to drive smarter startup growth

Image Credits: erhui1979 / Getty Images

Cohort analysis is what it sounds like: evaluating your startup’s customers by grouping them into “cohorts” and observing their behavior over time.

In a guest column, Jonathan Metrick, the chief growth officer at Sagard & Portage Ventures, offers a detailed example explaining the value of this type of analysis.

Questions? ​​Join us for a Twitter Spaces chat with Metrick on Tuesday, September 7, at 3 p.m. PDT/6 p.m. EDT. For details and a reminder, follow @TechCrunch on Twitter.

Apple delays plans to roll out CSAM detection in iOS 15 after privacy backlash

By Zack Whittaker

Apple has delayed plans to roll out its child sexual abuse (CSAM) detection technology that it chaotically announced last month, citing feedback from customers and policy groups.

That feedback, if you recall, has been largely negative. The Electronic Frontier Foundation said this week it had amassed more than 25,000 signatures from consumers. On top of that, close to 100 policy and rights groups, including the American Civil Liberties Union, also called on Apple to abandon plans to roll out the technology.

In a statement on Friday morning, Apple told TechCrunch:

“Last month we announced plans for features intended to help protect children from predators who use communication tools to recruit and exploit them, and limit the spread of Child Sexual Abuse Material. Based on feedback from customers, advocacy groups, researchers and others, we have decided to take additional time over the coming months to collect input and make improvements before releasing these critically important child safety features.”

Apple’s so-called NeuralHash technology is designed to identify known CSAM on a user’s device without having to possess the image or knowing the contents of the image. Because a user’s photos stored in iCloud are encrypted so that even Apple can’t access the data, NeuralHash instead scans for known CSAM on a user’s device, which Apple claims is more privacy-friendly than the current blanket scanning that cloud providers use.

But security experts and privacy advocates have expressed concern that the system could be abused by highly resourced actors, like governments, to implicate innocent victims or to manipulate the system to detect other materials that authoritarian nation states find objectionable.

Within a few weeks of announcing the technology, researchers said they were able to create “hash collisions” using NeuralHash, effectively tricking the system into thinking two entirely different images were the same.

iOS 15 is expected out later in the next few weeks.

This report has been updated with more detail about NeuralHash and to clarify iCloud Photos are encrypted but not end-to-end encrypted. 

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