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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.

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.

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.

Customer experience startup Clootrack raises $4M, helps brands see through their customers’ eyes

By Christine Hall

Getting inside the mind of customers is a challenge as behaviors and demands shift, but Clootrack believes it has cracked the code in helping brands figure out how to do that.

It announced $4 million in Series A funding, led by Inventus Capital India, and included existing investors Unicorn India Ventures, IAN Fund and Salamander Excubator Angel Fund, as well as individual investment from Jiffy.ai CEO Babu Sivadasan. In total, the company raised $4.6 million, co-founder Shameel Abdulla told TechCrunch.

Clootrack is a real-time customer experience analytics platform that helps brands understand why customers stay or churn. Shameel Abdulla and Subbakrishna Rao, who both come from IT backgrounds, founded the company in 2017 after meeting years prior at Jiffstore, Abdulla’s second company that was acquired in 2015.

Clootrack team. Image Credits: Clootrack

Business-to-consumer and consumer brands often use customer satisfaction metrics like Net Promoter Score to understand the customer experience, but Abdulla said current methods don’t provide the “why” of those experiences and are slow, expensive and error-prone.

“The number of channels has increased, which means customers are talking to you, expressing their feedback and what they think in multiple places,” he added. “Word of mouth has gone digital, and you basically have to master the art of selling online.”

Clootrack turns the customer experience data from all of those first-party and third-party touchpoints — website feedback, chat bots, etc. — into granular, qualitative insights that give brands a look at drivers of the experience in hours rather than months so that they can stay on top of fast-moving trends.

Abdulla points to data that show a customer’s biggest driver of brand switch is the experience they receive. And, that if brands can reduce churns by 5%, they could be looking at an increase in profits of between 25% and 95%.

Most of the new funding will go to product development so that all data aggregations are gathered from all possible touchpoints. His ultimate goal is to be “the single platform for B2C firms.”

The company is currently working with over 150 customers in the areas of retail, direct-to-consumer, banking, automotive, travel and mobile app-based services. It is growing nine times year over year in revenue. It is mainly operating in India, but Clootrack is also onboarding companies in the U.S. and Europe.

Parag Dhol, managing director of Inventus, said he has known Abdulla for over five years. He had looked at one of Abdulla’s companies for investment, but had decided against it due to his firm being a Series A investor.

Dhol said market research needs an overhaul in India, where this type of technology is lagging behind the U.S.

“Clootrack has a very complementary team with Shameel being a complete CEO in terms of being a sales guy and serial entrepreneur who has learned his lessons, and Subbu, who is good at technology,” he added. “As CMOs realize the value in their unstructured data inside of their own database of the customer reviews and move to real-time feedback, these guys could make a serious dent in the space.”

 

Bangkok-based insurtech Sunday banks $45M Series B from investors like Tencent

By Catherine Shu

Sunday, an insurtech startup based in Bangkok, announced it has raised a $45 million Series B. Investors include Tencent, SCB 10X, Vertex Growth, Vertex Ventures Southeast Asia & India, Quona Capital, Aflac Ventures and Z Venture Capital. The company says the round was oversubscribed, and that it doubled its revenue growth in 2020.

Founded in 2017, Sunday describes itself as a “full-stack” insurtech, which means it handles everything from underwriting to distribution of its policies. Its products currently include motor and travel insurance policies that can be purchased online, and Sunday Health for Business, a healthcare coverage program for employers. Sunday also offers subscription-based smartphone plans through partners.

The company uses AI and machine learning-based technology underwrite its motor insurance and employee health benefits products, and says its data models also allow it to automate pricing and scale its underwriting process for complex risks. Sunday says it currently serves 1.6 million customers.

The new funding will be used to expand in Indonesia and develop new distribution channels, including insurance agents and SMEs.

Insurance penetration is still relatively low in many Southeast Asian markets, including Indonesia, but the industry is gaining traction thanks to increasing consumer awareness. The COVID-19 pandemic also drove interest in financial planning, including investment and insurance, especially health coverage.

Other insurtech startups in Indonesia that have recently raised funding include Lifepal, PasarPolis, Qoala and Fuse.

In a statement, Sunday co-founder and chief executive officer Cindy Kuo said, “Awareness for health insurance will continue to increase and we believe more consumers would be open to shop for insurance online. We plan to expand our platform architecture to offer retail insurance to our health members and partners while we continue to grow our portfolio in Thailand and Indonesia.”

Daily Crunch: 8 Indian banks launch Account Aggregator to centralize consumers’ financial data

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 Thursday, September 2, 2021. TechCrunch is largely off tomorrow thanks to a pan-Yahoo corporate reprieve. But don’t worry, all systems will continue to function while we recharge ahead of the next chapter of TechCrunch’s varied history of corporate ownership. — Alex

The TechCrunch Top 3

  • China is hacking U.S.-based Uyghurs: The campaign by China’s government to erase Uyghur culture and undermine the Uyghur population inside its borders doesn’t stop there. The Chinese state has been hacking Uyghurs while traveling, for example. And the FBI reports today that the Chinese Communist Party is doing the same thing inside the United States’ borders.
  • SEO is far from dead: A new $55 million funding round into startup Botify underscores how the era of search engine optimization is hardly behind us. The company said that despite seeing “more and more sections of the search results coming from first-party or paid results,” organic traffic is still growing. And everyone wants a piece of that clickstream.
  • Europe, where net neutrality lives on: Europe’s top court has dealt another blow to “zero rating,” TechCrunch reports. Zero rating is the practice by which internet providers don’t count certain content against bandwidth limits, giving certain materials — often their own — a leg up. It’s a practice frowned on by open-internet advocates, and the EU is apparently unwilling to bend on the matter.

Startups/VC

We’ll have a huge digest of our Y Combinator coverage so that you can peruse a few hundred different startups tomorrow in Daily Crunch. But we could not resist adding in a teaser. How’s this for a headline: “Fintech startup Jeeves raises $57M, goes from YC to $500M valuation in one year.” Even in 2021 that’s rapid valuation creation for an early-stage startup.

  • Yet more capital for neobanks: Challenger bank Point has put together a $46.5 million Series B, pouring more fuel into the startup’s goal of building a debit card that offers credit-card-level perks. Point’s service isn’t free, but for folks who don’t want to use revolving consumer credit accounts that often come with high interest rates, its model could be a neat way forward.
  • Shepherd raises $6.2M for construction insurance: TechCrunch is tracking a number of B2B neoinsurance companies today, including Shepherd. The startup is working to offer excess liability insurance to construction companies, building technology usage data into its underwriting models. It’s a neat idea. Procore put capital into the funding round.
  • HomeLight raises $100M: The real estate technology upstart wants to connect buyers and sellers, and also provides title and escrow services. And after its latest funding event, it’s worth $1.6 billion. HomeLight managed such a large round after projecting that its revenues will “triple to over $300 million in 2021.” So, when’s the IPO?
  • Edtech’s boom is not done: That’s our takeaway from news that General Atlantic has helped pour $60 million into Panorama Education, which has built a “a K-12 education software platform,” per TechCrunch reporting. Edtech startups got a huge boost in 2020 when schools around the world went remote. It appears that that wave has yet to crest.

All the reasons why you should launch a credit or debit card

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

To compete with retail banks, many startups 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

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

Big Tech Inc.

  • All hail the Googlebot: Alphabet has built an exoskeleton, our own Brian Heater reports in his Actuator series. It frankly looks rad. At times it’s easy to forget that Alphabet retains a large skunkworks effort despite being best known today for its Android mobile software, ad technology and online document editing services.
  • Virgin Galactic’s first commercial flight coming soon: After sending some folks to either space, or near-space the other month, Virgin Galactic is getting ready for commercial work. Per the company, that mission could come later this month, or in early October. For the company’s shareholders, it’s good news. Scratch that! After we wrote that blurb, news broke that the next Virgin flight is off after the FAA grounded the company. More here.
  • Today in Tesla: Two things from Elon-world today. First, Tesla has been told to share Autopilot data with the United States’ traffic safety agency. And Tesla’s hyper-quick Roadster car might not come until 2023. Follow-up question: When will the Cybertruck roll out?
  • And, finally, news from India: Eight banks in the country are soon rolling out “a system called Account Aggregator to enable consumers to consolidate all their financial data in one place.” India’s banking industry has a history of banding together to create products for consumers, including the “interoperable UPI rails” that many fintech companies in the country depend on, TechCrunch reports.

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.

Pancake aims to make customers flip for its virtual home design platform

By Christine Hall

Pancake brought in a $350,000 seed round to develop its home design platform that leverages furniture you already have in your home with a designer’s fresh eye on your space.

Maria Jose Castro and Roberto Meza, both from Costa Rica, started the company in 2020, based on their own experience of transitioning to work-from-home and needing to outfit a space. However, design services can be expensive, and therefore not accessible to everyone.

Pancake is reinventing the way you can work with an interior designer and get a rendering of your space to work from. Customers can go on the website and book a session with a designer, providing them with measurements and photos of the room.

The designer then prepares a rendering of the space and a deck to explain the design and how the customer will do it — and if paint or furniture is needed that isn’t already available, Pancake will show the customer where to find it. Future features of the site will include connecting with furniture providers, Jose Castro told TechCrunch.

Meza called the company “furniture-as-a-service,” with the main focus to reuse what already exists in a space to create healthy, sustainable spaces that someone can work in, live in and enjoy all at the same time. While that may seem like a tall order, he said that with everyone suddenly together during the global pandemic, relationships are better when people are in a space they like.

“Wellness in construction is what I do, and we wanted to create that with Pancake,” he added. “Sometimes it is the little things that create a space and makes you feel good, or not feel good.”

Pancake plans to use its funding to further develop its platform and add new features like an ecological footprint calculator so customers can see how sustainable their designs are. The company also prides itself on transparent pricing. An average two-hour session with a designer is $199, and the designer will add to the budget if items like paint and new furniture are needed.

Christian Rudder, co-founder of OkCupid, is the lead investor in the seed round. He said that he doesn’t typically invest at the seed stage, but was impressed with the progress Pancake has made in a short period of time. This includes marketing tests on social media platforms that yielded a respectable return on investment, he added.

Meanwhile, Pancake has facilitated over 100 designer sessions and has begun to see referrals and repeat customers who want to design additional rooms in their house. That has translated into 200% month over month revenue growth, on average, despite having to stop for four months during the pandemic, Meza said. Up next, the company will continue to build out its brand and revenue model as it advances to a Series A round next year.

 

Apple announces new settlement with Japan allowing developers to link to external websites  

By Kate Park

Apple has made a settlement with Japanese regulator that it will allow developers of “reader” apps link to their own website for managing users account. The change goes to effect in early 2022.

This settlement comes after the Japan Fair Trade Commission (JFTC) has forced Apple to make a change its polices on the reader apps, like Netflix, Spotify, Audible and Dropbox, that provide purchased content or content subscriptions for digital magazines, newspapers, books, audio, music, and video.

“We have great respect for the Japan Fair Trade Commission and appreciate the work we’ve done together, which will help developers of reader apps make it easier for users to set up an manage their apps and service, while protecting their privacy and maintaining their trust,” Phill Schiller, who oversees the App Stores at Apple.

Before the change takes into effect next year, Apple will continue to update its guidelines and review process for users of readers app to make sure to be a better marketplace for users and developers alike, according to its statement.

Apple Stores announced last week several updates, which allow developers more flexibility for their customer, and the company also launched the News Partner Program to support local journalists.

Apple will also apply this change globally to all reader apps on the store.

Global lawmakers have been increasingly under scrutiny over the market dominance of Apple and other tech giants. Australia’s Competitions and Consumer Commission is also considering regulations for the digital payment system of Apple, Google and WeChat while South Korea became the first country to curb Apple and Google from imposing their own payment system on in-app purchases.

Apple provides more than 30 million registered developers.

UK now expects compliance with children’s privacy design code

By Natasha Lomas

In the UK, a 12-month grace period for compliance with a design code aimed at protecting children online expires today — meaning app makers offering digital services in the market which are “likely” to be accessed by children (defined in this context as users under 18 years old) are expected to comply with a set of standards intended to safeguard kids from being tracked and profiled.

The age appropriate design code came into force on September 2 last year however the UK’s data protection watchdog, the ICO, allowed the maximum grace period for hitting compliance to give organizations time to adapt their services.

But from today it expects the standards of the code to be met.

Services where the code applies can include connected toys and games and edtech but also online retail and for-profit online services such as social media and video sharing platforms which have a strong pull for minors.

Among the code’s stipulations are that a level of ‘high privacy’ should be applied to settings by default if the user is (or is suspected to be) a child — including specific provisions that geolocation and profiling should be off by default (unless there’s a compelling justification for such privacy hostile defaults).

The code also instructs app makers to provide parental controls while also providing the child with age-appropriate information about such tools — warning against parental tracking tools that could be used to silently/invisibly monitor a child without them being made aware of the active tracking.

Another standard takes aim at dark pattern design — with a warning to app makers against using “nudge techniques” to push children to provide “unnecessary personal data or weaken or turn off their privacy protections”.

The full code contains 15 standards but is not itself baked into legislation — rather it’s a set of design recommendations the ICO wants app makers to follow.

The regulatory stick to make them do so is that the watchdog is explicitly linking compliance with its children’s privacy standards to passing muster with wider data protection requirements that are baked into UK law.

The risk for apps that ignore the standards is thus that they draw the attention of the watchdog — either through a complaint or proactive investigation — with the potential of a wider ICO audit delving into their whole approach to privacy and data protection.

“We will monitor conformance to this code through a series of proactive audits, will consider complaints, and take appropriate action to enforce the underlying data protection standards, subject to applicable law and in line with our Regulatory Action Policy,” the ICO writes in guidance on its website. “To ensure proportionate and effective regulation we will target our most significant powers, focusing on organisations and individuals suspected of repeated or wilful misconduct or serious failure to comply with the law.”

It goes on to warn it would view a lack of compliance with the kids’ privacy code as a potential black mark against (enforceable) UK data protection laws, adding: “If you do not follow this code, you may find it difficult to demonstrate that your processing is fair and complies with the GDPR [General Data Protection Regulation] or PECR [Privacy and Electronics Communications Regulation].”

Tn a blog post last week, Stephen Bonner, the ICO’s executive director of regulatory futures and innovation, also warned app makers: “We will be proactive in requiring social media platforms, video and music streaming sites and the gaming industry to tell us how their services are designed in line with the code. We will identify areas where we may need to provide support or, should the circumstances require, we have powers to investigate or audit organisations.”

“We have identified that currently, some of the biggest risks come from social media platforms, video and music streaming sites and video gaming platforms,” he went on. “In these sectors, children’s personal data is being used and shared, to bombard them with content and personalised service features. This may include inappropriate adverts; unsolicited messages and friend requests; and privacy-eroding nudges urging children to stay online. We’re concerned with a number of harms that could be created as a consequence of this data use, which are physical, emotional and psychological and financial.”

“Children’s rights must be respected and we expect organisations to prove that children’s best interests are a primary concern. The code gives clarity on how organisations can use children’s data in line with the law, and we want to see organisations committed to protecting children through the development of designs and services in accordance with the code,” Bonner added.

The ICO’s enforcement powers — at least on paper — are fairly extensive, with GDPR, for example, giving it the ability to fine infringers up to £17.5M or 4% of their annual worldwide turnover, whichever is higher.

The watchdog can also issue orders banning data processing or otherwise requiring changes to services it deems non-compliant. So apps that chose to flout the children’s design code risk setting themselves up for regulatory bumps or worse.

In recent months there have been signs some major platforms have been paying mind to the ICO’s compliance deadline — with Instagram, YouTube and TikTok all announcing changes to how they handle minors’ data and account settings ahead of the September 2 date.

In July, Instagram said it would default teens to private accounts — doing so for under 18s in certain countries which the platform confirmed to us includes the UK — among a number of other child-safety focused tweaks. Then in August, Google announced similar changes for accounts on its video charing platform, YouTube.

A few days later TikTok also said it would add more privacy protections for teens. Though it had also made earlier changes limiting privacy defaults for under 18s.

Apple also recently got itself into hot water with the digital rights community following the announcement of child safety-focused features — including a child sexual abuse material (CSAM) detection tool which scans photo uploads to iCloud; and an opt in parental safety feature that lets iCloud Family account users turn on alerts related to the viewing of explicit images by minors using its Messages app.

The unifying theme underpinning all these mainstream platform product tweaks is clearly ‘child protection’.

And while there’s been growing attention in the US to online child safety and the nefarious ways in which some apps exploit kids’ data — as well as a number of open probes in Europe (such as this Commission investigation of TikTok, acting on complaints) — the UK may be having an outsized impact here given its concerted push to pioneer age-focused design standards.

The code also combines with incoming UK legislate which is set to apply a ‘duty of care’ on platforms to take a rboad-brush safety-first stance toward users, also with a big focus on kids (and there it’s also being broadly targeted to cover all children; rather than just applying to kids under 13s as with the US’ COPPA, for example).

In the blog post ahead of the compliance deadline expiring, the ICO’s Bonner sought to take credit for what he described as “significant changes” made in recent months by platforms like Facebook, Google, Instagram and TikTok, writing: “As the first-of-its kind, it’s also having an influence globally. Members of the US Senate and Congress have called on major US tech and gaming companies to voluntarily adopt the standards in the ICO’s code for children in America.”

“The Data Protection Commission in Ireland is preparing to introduce the Children’s Fundamentals to protect children online, which links closely to the code and follows similar core principles,” he also noted.

And there are other examples in the EU: France’s data watchdog, the CNIL, looks to have been inspired by the ICO’s approach — issuing its own set of right child-protection focused recommendations this June (which also, for example, encourage app makers to add parental controls with the clear caveat that such tools must “respect the child’s privacy and best interests”).

The UK’s focus on online child safety is not just making waves overseas but sparking growth in a domestic compliance services industry.

Last month, for example, the ICO announced the first clutch of GDPR certification scheme criteria — including two schemes which focus on the age appropriate design code. Expect plenty more.

Bonner’s blog post also notes that the watchdog will formally set out its position on age assurance this autumn — so it will be providing further steerage to organizations which are in scope of the code on how to tackle that tricky piece, although it’s still not clear how hard a requirement the ICO will support, with Bonner suggesting it could be actually “verifying ages or age estimation”. Watch that space. Whatever the recommendations are, age assurance services are set to spring up with compliance-focused sales pitches.

Children’s safety online has been a huge focus for UK policymakers in recent years, although the wider (and long in train) Online Safety (neé Harms) Bill remains at the draft law stage.

An earlier attempt by UK lawmakers to bring in mandatory age checks to prevent kids from accessing adult content websites — dating back to 2017’s Digital Economy Act — was dropped in 2019 after widespread criticism that it would be both unworkable and a massive privacy risk for adult users of porn.

But the government did not drop its determination to find a way to regulate online services in the name of child safety. And online age verification checks look set to be — if not a blanket, hardened requirement for all digital services — increasingly brought in by the backdoor, through a sort of ‘recommended feature’ creep (as the ORG has warned). 

The current recommendation in the age appropriate design code is that app makers “take a risk-based approach to recognising the age of individual users and ensure you effectively apply the standards in this code to child users”, suggesting they: “Either establish age with a level of certainty that is appropriate to the risks to the rights and freedoms of children that arise from your data processing, or apply the standards in this code to all your users instead.” 

At the same time, the government’s broader push on online safety risks conflicting with some of the laudable aims of the ICO’s non-legally binding children’s privacy design code.

For instance, while the code includes the (welcome) suggestion that digital services gather as little information about children as possible, in an announcement earlier this summer UK lawmakers put out guidance for social media platforms and messaging services — ahead of the planned Online Safety legislation — that recommends they prevent children from being able to use end-to-end encryption.

That’s right; the government’s advice to data-mining platforms — which it suggests will help prepare them for requirements in the incoming legislation — is not to use ‘gold standard’ security and privacy (e2e encryption) for kids.

So the official UK government messaging to app makers appears to be that, in short order, the law will require commercial services to access more of kids’ information, not less — in the name of keeping them ‘safe’. Which is quite a contradiction vs the data minimization push on the design code.

The risk is that a tightening spotlight on kids privacy ends up being fuzzed and complicated by ill-thought through policies that push platforms to monitor kids to demonstrate ‘protection’ from a smorgasbord of online harms — be it adult content or pro-suicide postings, or cyber bullying and CSAM.

The law looks set to encourage platforms to ‘show their workings’ to prove compliance — which risks resulting in ever closer tracking of children’s activity, retention of data — and maybe risk profiling and age verification checks (that could even end up being applied to all users; think sledgehammer to crack a nut). In short, a privacy dystopia.

Such mixed messages and disjointed policymaking seem set to pile increasingly confusing — and even conflicting — requirements on digital services operating in the UK, making tech businesses legally responsible for divining clarity amid the policy mess — with the simultaneous risk of huge fines if they get the balance wrong.

Complying with the ICO’s design standards may therefore actually be the easy bit.

 

Daily Crunch: Researchers claim Fortress S03 home security system can be remotely disabled

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 1, 2021. It’s a big day in TechCrunch history in that we’ve been shuffled to a new parent company. More on that in a moment. First, Disrupt attendees, you can now hit up CrunchMatch to meet other cool folks. See you there! — Alex

The TechCrunch Top 3

  • Hello, Apollo! TechCrunch is no longer part of Verizon Media Group, a somewhat forgotten subsidiary of the U.S. telco. Instead, we are now part of Yahoo, which is owned, in turn, by Apollo, a large investing company that is publicly traded. Cue the parade. Jokes aside, the long-announced deal has finally been completed. We’ll have more notes on our new overlords as soon as we meet them.
  • Inside Amplitude’s IPO filing: TechCrunch’s coverage of the accelerating IPO market continued today with notes on Amplitude’s product-analytics-focused debut. For more on Toast and Freshworks’ filings, head here or here. Oh, and Warby Parker here, if D2C is your jam.
  • Sticking to the big-dollar news today, Vista Equity is buying a majority stake in Drift. Based in Boston, Drift focuses on what it calls “conversational” sales tools. The two parties were being coy to a silly level by not disclosing the price paid for Drift, other than that the majority sale of the company values the former startup at more than $1 billion. Why Drift sold to Vista instead of going public is not clear, but we do feel cheated out of its S-1 filing.

Startups/VC

As we write to you today, the TechCrunch team is busy writing thousands of words about the second day of startup pitches from Y Combinator’s Demo Day. You can read about every startup that pitched yesterday.

Now, to today’s news. First, Berlin Brands, which buys and hopes to scale brands that sell on Amazon, is now worth north of $1 billion after raising a $700 million equity-and-debt round. There is apparently infinite capital available to finance the purchase of smaller e-commerce brands.

So much so that Forum Brands also announced new capital for the activity today. Its $100 million in debt financing may sound small compared to what Berlin Brands just secured, but it’s still nine figures of dry powder.

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

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.

Read their analysis, then come back later today for their rundown of Day Two.

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

Big Tech Inc.

Today’s Big Tech news is mostly focused on feature upgrades. Enjoy!

TechCrunch Experts: Growth Marketing

Illustration montage based on education and knowledge in blue

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

In case you didn’t catch it yesterday: We’re giving away one free ticket to Disrupt through the Experts survey. Check out the schedule for Disrupt, and read on to learn about the giveaway details.

  • Have you already submitted a recommendation? That’s great — we’re counting all previous survey submissions as an entry for the Disrupt ticket.
  • We’ll also enter the next 100 survey submissions into the giveaway.
  • Do you want to submit 10 recommendations to increase your chance at winning? We love the enthusiasm, but we ask that you only submit one recommendation for each marketer that you’ve worked with.
  • Don’t know what to say in your recommendation? Start with what traits they had, what they did to help your company, how their work affected your business and go from there!
  • We manually go through all entries, so please don’t copy and paste the same response multiple times.
  • Have a question about the giveaway? Send us an email at ec_editors@techcrunch.com.

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.

3 tips to align your values with your startup’s culture

By Ram Iyer
Mark McClain Contributor
Mark McClain is the founder and CEO of SailPoint, the leader in cloud enterprise security.

You’ve heard the phrase “leading by example,” but what about “leading with values”?

I’ve always led by example by using my values as my guide. Still, it wasn’t until I founded my first company that I fully understood the importance of embedding those values into the company, too.

Integrity, individuals, impact and innovation are the “4 I values” that drive my decisions and the actions of those at my company each day. These are not just words on a wall at our HQ or on a mousepad for our remote crew, but values that everyone in the company lives and breathes. Over the last two years, these four values became even more important and continued to guide me, my family and the leaders at our company.

As organizations map out their “return to the workplace” (NOT “return to work,” because we never stopped working) plans, we should not simply go back to how things were before. Instead, let’s all take a moment to redesign something that sets everyone up for success, with values as the compass. I think you’ll find this approach helps people not only survive, but thrive in the workplace.

Leading with values is, in my experience, the best leadership position to take, and there are three ways to accomplish this goal.

Leave behind old-school mentalities on workplace hierarchy

The tone of the company’s culture comes from the top. The culture you envision for your company will only come about if your employees believe in the practices that you are asking them to implement.

At some point in your career — probably right out of school, a few years in or somewhere in the middle — you experienced a company where treating lower-level employees with less respect is just “a part of the job.” Companies with this type of “paying your dues” mentality tend to work these lower-level employees like grunts until they burn out and leave.

Or they eventually crawl their way up into management-level positions, and the cycle perpetuates itself as they deride the newer crop of employees, eroding any semblance of a healthy culture.

This is not the way.

As a leader, if you want your work environment to indicate inclusivity, support, collaboration and have the essence of a team mentality, you must set the precedent right away. This means stripping away the hierarchy that accompanies work titles and making it clear that your company values contribution based on merit, regardless of position. You are one team, united in your purpose to deliver on your mission, based on your values. This level setting ensures that everyone has skin in the game, and no one has the leeway to treat people poorly.

Don’t get caught in an ivory tower mindset

Early on in my career, I began sharing an office when I could. Those office spaces were purposely not what anyone would consider cool or nice “digs” — not the furniture and certainly not the view. Even as CEO now, I’ve had someone on the team describe my current office as a closet. But it gets the job done.

Simple signals like this send a powerful message, and the signal must remain consistent. Don’t take a limo; rent a cheap car. Don’t fly first class; fly coach. These may seem like minor details, but one of the biggest pitfalls any CEO can encounter is falling victim to an ivory tower mindset — when you become so out of touch with the people you manage, your employees start to notice.

Make a cognizant effort to know your people. Implement a “management by walking around” strategy. Don’t sit in your office all day; get out on the floor among your people. Drop by their desks and ask them how their day is going. Eat lunch in the break room. Put in the effort to attend new hire onboarding.

Not physically back in the office? Drop into Slack channels and Zoom meetings. I once “Zoom bombed” a baby shower for one of our crew members just to hear all the well wishes, and it made my day and theirs. Overall, just be present and humanize your workspace. It pays off in spades.

Be thoughtful and consistent with workplace practices

The tone of the company’s culture comes from the top. The culture you envision for your company will only come about if your employees believe in the practices that you are asking them to implement. More importantly, you will not grow a solid culture if you don’t give these initiatives and practices 100% of your own effort.

For example, one new initiative we rolled out last year is a campaign we call “Free2Focus.” Twice a week, the SailPoint crew is asked to avoid booking meetings for a couple of hours during Free2Focus time. Not only does this address Zoom fatigue, it also gives our crew the chance to catch their breath whichever way suits them best — whether that’s taking a walk, helping with their children’s schooling or just turning off the camera for a bit.

If I want my team to show themselves some grace during the week, I’ve found that I need to apply the same practice. This means not setting up meetings during Free2Focus, not sending emails all hours of the day and night and not judging people for taking breaks when they need them. I trust my team to get the job done largely on their own time and own their own terms. I promise, your employees’ performance will be better because of it.

Being a CEO is more than building on a vision, a product or an idea. It’s about leading your people with values to accomplish mutual goals in a way that doesn’t zap them of their morale or dignity. It’s easy to get caught up in all the things that come with a job, but if you don’t put in the effort to immerse yourself and your values into the entire company, you’ll end up too big for your own good — and certainly too big for your company’s good.

It won’t happen overnight, but remember, the smallest things are often the ones that have the biggest impact. If you’re the leader, lead by example. It’s the only way to build teams that stand the test of time.

Berlin Brands Group, now valued at $1B+, raises $700M to buy and scale merchants that sell on marketplaces like Amazon

By Ingrid Lunden

Berlin Brands Group — one of the new wave of e-commerce startups hoping to build lucrative economies of scale around buying up smaller brands that sell on marketplaces like Amazon and using technology to run and scale them more efficiently — has picked up a big round of funding to fill out that mission. The startup has closed a round of $700 million, comprising both equity and debt, which it will use in part to continue building its fulfillment and logistics infrastructure, as well as its tech platform, and in part to buy more companies.

BBG confirmed that the investment — one of the biggest to date in the space — boosts its valuation to over $1 billion.

Bain Capital is leading the equity portion of this round. The deal will also see it buy out a previous investor, Ardian, for an undisclosed amount that is separate to the $700 million raise.

This funding round is the second announced by BBG this year. In January it announced it would be investing $302 million off its own balance sheet for M&A, and in April it announced a debt round of $240 million. This latest $700 million is different in that it includes the equity component alongside the equity.

BBG got its start initially developing its own products and selling them on Amazon and other marketplaces — founder and CEO CEO Peter Chaljawski was a DJ in a previous life and started with a focus on audio equipment he developed for himself.

Over time, it saw an opportunity to diversify that into a wider consolidation play, where BBG would also acquire and merge third party brands into its business, tapping into the opportunity to provide the owners of the third-party businesses an exit route and bring those smaller brands more scale, more marketing nous, and more tech to improve the efficiency of their operations.

Today the mix totals 3,700 products and 14 own brands, including Klarstein (kitchen appliances), auna (home electronics and music equipment), Capital Sports (home fitness) and blumfeldt (garden). BBG says it has access to some 1.5 billion e-commerce customers across various marketplaces where it sells goods in Europe, the UK, the U.S. and Asia. Notablym unlike many others in the same space as BBG, it is focused on more than Amazon, with some 100 channels in 28 countries.

That list of “many others in the same space” is a long one and seemingly growing by the day. Yesterday, two of them — Heroes and Olsam — respectively raised $200 million and $165 million. Others leveraging the opportunity of consolidating merchants that sell via Fulfillment by Amazon include  Suma Brands ($150 million); Elevate Brands ($250 million); Perch ($775 million); factory14 ($200 million); Thrasio (currently probably the biggest of them all in terms of reach and money raised and ambitions), HeydayThe Razor GroupBrandedSellerXBerlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia.

As more startups enter the fray, all battling to buy the best of the third-party brands will become more of a challenge, and so the backing of Bain should help BBG shore up against that competition.

“With Bain Capital’s commitment and the additional funding secured, we have set our next milestone on our path to building a global house of brands,” said Chaljawski in a statement. “This allows us to tackle strategic goals of acquiring and developing brands globally, as well as the operational and logistical expansion. Bain Capital’s experience working with founders worldwide will help us continue our evolution as a leading e-commerce company in scaling brands.”

“BBG is a disruptive leader in the rapidly changing consumer goods space. Their ability to develop and scale brands that meet current consumer trends through their highly efficient e-commerce platform gives the company tremendous growth potential in a fast-growing market,” added Miray Topay, MD at Bain Capital Private Equity. “We have partnered with many founder-led management teams and look forward to helping Peter and his team achieve their goal of becoming a global leader in consumer e-commerce”.

Streamers are boycotting Twitch today to protest the platform’s lack of action on ‘hate raids’

By Amanda Silberling

Over the last month, Twitch users have become increasingly concerned and frustrated with bot-driven hate raids. To protest Twitch’s lack of immediate action to prevent targeted harassment of marginalized creators, some streamers are going dark to observe #ADayOffTwitch today.

Per the protest, users are sharing a list of demands for the Amazon-owned Twitch. They want the platform to host a roundtable with creators affected by hate raids, allow streamers to approve or deny incoming raids, enable tools to only allow accounts of a certain age to chat, remove the ability to attach more than three accounts to one email address, and share a timeframe for when comprehensive anti-harassment tools will be implemented.

Hey friendos, I won’t be streaming tomorrow in support of #ADayOffTwitch. (Here’s a handy graphic of some of the things those protesting are asking of @Twitch in case you’re not familiar with what’s going on.) I’ll be back on Thursday for our first swing at Senior Detective! 💜pic.twitter.com/OA9NQlTnq3

— Meg Turney (@megturney) September 1, 2021

TechCrunch asked Twitch if it has plans to address these demands. Twitch responded with a statement: “We support our streamers’ rights to express themselves and bring attention to important issues across our service. No one should have to experience malicious and hateful attacks based on who they are or what they stand for, and we are working hard on improved channel-level ban evasion detection and additional account improvements to help make Twitch a safer place for creators.”

Twitch Raids are a part of the streaming platform’s culture — after one creator ends their stream, they can “raid” another stream by sending their viewers over to check out someone else’s channel. This feature is supposed to help more seasoned streamers support up-and-comers, but instead, it’s been weaponized as a tool for harassment.

In May, Twitch launched 350 new tags related to gender, sexual orientation, race and ability, which users requested so that they could more easily find creators that represent them. But at the same time, these tags made it easier for bad actors to harass marginalized streamers, and Twitch hasn’t yet added tools for streamers to deal with increased harassment. In the meantime, Twitch users have had to take matters into their own hands and build their own safety tools to protect themselves while Twitch works on its updates. Twitch hasn’t shared when its promised anti-harassment tools will go live.  

As recently as December, Twitch updated its policies on hateful content and harassment, which the platform said have always been prohibited, yet vicious attacks have continued. After facing targeted, racist hate raids on their streams, a Black Twitch creator RekItRaven started the #TwitchDoBetter hashtag on Twitter in early August, calling out Twitch for its failure to prevent this abuse. While Twitch is aware of the issue and said it’s working on solutions, many users find Twitch’s response to be too slow and lacking.

We've been building channel-level ban evasion detection and account improvements to combat this malicious behavior for months. However, as we work on solutions, bad actors work in parallel to find ways around them—which is why we can't always share details.

— Twitch (@Twitch) August 20, 2021

Along with streamers LuciaEverblack and ShineyPen, RekItRaven organized #ADayOffTwitch to put pressure on Twitch to make its platform safer for marginalized creators.

“Hate on the platform is not new,” Raven told WYNC’s The Takeaway. But bot-driven raid attacks are more difficult to combat than individual trolls. “I’ve had people come in with bots. It’s usually one or two people who program a bunch of bots, you bypass security measures that are put in place and just spam a broadcaster’s chat with very inflammatory, derogatory language.”

While Raven said they have since had a discussion with Twitch, they don’t feel that one conversation is enough.

Turns out a bunch of LGBTQUIA2+, BIPOC, Disabled, Neurodivergent, and Plural creators really can make a difference by showing up, being loud, and not backing down despite people telling us we won't accomplish anything. Just remember, we aren't done yet. #ADayOffTwitch

— Lucia Everblack (@LuciaEverblack) August 26, 2021

As part of #ADayOffTwitch, some streamers are encouraging their followers to support them financially on other platforms through the #SubOffTwitch tag. Twitch takes 50% of streamers’ revenue, so creators are promoting their accounts on platforms like Patreon and Ko-Fi, which take a much smaller cut. Though competitor YouTube Gaming takes 30% of revenue, and Facebook Gaming won’t take a cut from creators until 2023, Twitch remains dominant in the streaming space. According to Streamlabs and Stream Hatchet, Twitch represented 72.3% of the market share in terms of viewership Q1 2021.

Still, popular creators like Ben Lupo (DrLupo), Jack Dunlop (CouRage), and Rachell Hofstetter (Valkyrae) have recently left Twitch for exclusive deals with YouTube Gaming. If Twitch remains unsafe for marginalized creators, others might be swayed to follow their lead, exclusive deals or not.

Apollo completes its $5B acquisition of Verizon Media, now known as Yahoo

By Brian Heater

Private equity firm Apollo Global Management this morning announced that it has completed its acquisition of Yahoo (formerly known as Verizon Media Group, itself formerly known as Oath) from Verizon. The deal is worth $5 billion, with $4.25 billion in cash, plus preferred interests of $750 million. Verizon will be retaining 10% of the newly rebranded company.

“This is a new era for Yahoo,” Yahoo CEO (and former VZM head) Guru Gowrappan said in a release tied to the news. “The close of the deal heralds an exciting time of renewed opportunity for us as a standalone entity. We anticipate that the coming months and years will bring fresh growth and innovation for Yahoo as a business and a brand, and we look forward to creating that future with our new partners.”

There have been reports that Gowrappan might not stay on as CEO of Yahoo for the long term now that the deal has closed; for now he’s still at the helm.

In addition to its titular Yahoo properties (Mail, Sports, Finance, et al.), the group includes us, TechCrunch; AOL; Engadget; and interactive media brand, RYOT. All told, the umbrella brand encompasses around 900 million monthly active users globally and is currently the third-largest internet property, per Apollo’s figures.

The deal puts to a close a years-long effort by Verizon to make a comprehensive move into online media, specifically around adtech, which ultimately proved to be too costly, mostly unprofitable and, finally, not core enough to the telco’s bigger growth strategy.

The news comes during a tumultuous time for online media, amid increasing industry-wide consolidation, many felt within Verizon Media. Verizon acquired AOL in 2015 for $4.4 billion, followed by buying Yahoo for $4.5 billion two years later, combining the two legacy media properties into a combined group named Oath. At the end of 2018, Oath wrote down $4.6 billion, following the merger.

It’s not clear how a new owner will steer that large ship differently, but one strategy — standard practice for PE firms — could involve Apollo selling off parts of the business or rationalizing it in other ways.

However, for its part, Apollo has promised to continue investing in the newly acquired proprieties, and it has secured all jobs at the time of handover for at least an initial period. The bigger firm of Apollo has a massive set of TMT, holdings so it will be interesting to see how and if it leverages that, too.

“We look forward to partnering with Yahoo’s talented employee base to build on the company’s strong momentum and position the new Yahoo for long-term success as a standalone consumer internet and digital media leader,” Apollo Partner Reed Rayman said in the release. “We couldn’t be more excited about this next chapter for Yahoo as we look to invest in growth across the business, including accelerating its customer-first offerings and commerce capabilities, expanding its reach and enhancing the daily user experience.”

Web building platform Duda snaps up e-commerce cart tool Snipcart

By Christine Hall

Duda announced Wednesday that it acquired Canada-based Snipcart, a startup that enables businesses to add a shopping cart to their websites.

The acquisition is Palo Alto-based Duda’s first deal, and follows the website development platform’s $50 million Series D round in June that brings its total funding to $100 million to date. Duda co-founder and CEO Itai Sadan declined to comment on the acquisition amount.

Duda, which works with digital agencies and SaaS companies, has approximately 1 million published paying sites, and the acquisition was driven by the company seeing a boost in e-commerce websites as a result of the global pandemic, he told TechCrunch.

This was not just about a technology acquisition for Duda, but also a talented team, Sadan said. The entire Snipcart team of 12 is staying on, including CEO Francois Lanthier Nadeau; the companies will be fully integrated by 2022 and the first collaborative versions will come out.

When he met the Snipcart team, Sadan thought they were “super experienced and held the same values.”

“We share many of the same types of customers, many of which are API-first,” he added. “If our customers need more headless commerce, they can build their own front end using Snipcart. Their customers will benefit from us growing the team — we plan to double it in the next year and roll out more features at a faster pace.”

The global retail e-commerce market is estimated to grow by 50% to $6.3 trillion by 2024, according to Statista. Duda itself has experienced a year over year increase of 265% in e-commerce sites being built on its platform, which Sadan said was what made Snipcart an attractive acquisition to further accelerate and manage its growth that includes over 17,000 customers.

Together, the companies will offer new capabilities, like payment and membership tools inside of the Duda platform. Many of Duda’s customers come with inventory and don’t want to manage it on another e-commerce platform, so Snipcart will be that component for taking their inventory and making it shoppable on the web.

“Everyone is thinking about how to introduce transactions into their websites and web experiences, and that is what we were looking for in an e-commerce platform,” Sadan said.

 

Olsam raises $165M to buy up and scale consumer and B2B Amazon Marketplace sellers

By Ingrid Lunden

On the heels of Heroes announcing a $200 million raise earlier today, to double down on buying and scaling third-party Amazon Marketplace sellers, another startup out of London aiming to do the same is announcing some significant funding of its own. Olsam, a roll-up play that is buying up both consumer and B2B merchants selling on Amazon by way of Amazon’s FBA fulfillment program, has closed $165 million — a combination of equity and debt that it will be using to fuel its M&A strategy, as well as continue building out its tech platform and to hire more talent.

Apeiron Investment Group — an investment firm started by German entrepreneur Christian Angermayer (known first for biopharmaceuticals, then investing and crypto, including playing a role in SoftBank investing in Wirecard) — led the Series A equity round, with Elevat3 Capital (another Angermayer firm that has a strategic partnership with Founders Fund and Peter Thiel) also participating. North Wall Capital was behind the debt portion of the deal. We have asked and Olsam is only disclosing the full amount raised, not the amount that was raised in equity versus debt. Valuation is also not being disclosed.

Being an Amazon roll-up startup from London that happens to be announcing a fundraise today is not the only thing that Olsam has in common with Heroes. Like Heroes, Olsam is also founded by brothers.

Sam Horbye previously spent years working at Amazon, including building and managing the company’s Business Marketplace (the B2B version of the consumer Marketplace); while co-founder Ollie Horbye had years of experience in strategic consulting and financial services.

Between them, they had also built and sold previous marketplace businesses, and they believe that this collective experience gives Olsam — a portmanteau of their names, “Ollie” and “Sam” — a leg up when it comes to building relationships with merchants; identifying quality products (versus the vast seas of search results that often feel like they are selling the same inexpensive junk as each other); and understanding merchants’ challenges and opportunities, and building relationships with Amazon and understanding how the merchant ecosystem fits into the e-commerce giant’s wider strategy.

Olsam is also taking a slightly different approach when it comes to target companies, by focusing not just on the usual consumer play, but also on merchants selling to businesses. B2B selling is currently one of the fastest-growing segments in Amazon’s Marketplace, and it is also one of the more overlooked by consumers.”It’s flying under the radar,” Ollie said.

“The B2B opportunity is very exciting,” Sam added. “A growing number of merchants are selling office supplies or more random products to the B2B customer.”

Estimates vary when it comes to how many merchants there are selling on Amazon’s Marketplace globally, ranging anywhere from 6 million to nearly 10 million. Altogether those merchants generated $300 million in sales (gross merchandise value), and its growing by 50% each year at the moment.

And consolidating sellers — in order to achieve better economies of scale around supply chains, marketing tools and analytics, and more — is also big business. Olsam estimates that some $7 billion has been spent cumulatively on acquiring these businesses, and there are more out there: Olsam estimates that there are some 3,000 businesses in the UK alone making more than $1 million each in sales on Amazon’s platform.

(And to be clear, there are a number of other roll-up startups beyond Heroes also eyeing up that opportunity. Raising hundreds of millions of dollars in aggregate,  others have made moves this year include Suma Brands ($150 million); Elevate Brands ($250 million); Perch ($775 million); factory14 ($200 million); Thrasio (currently probably the biggest of them all in terms of reach and money raised and ambitions), HeydayThe Razor GroupBrandedSellerXBerlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia.)

“The senior team behind Olsam is what makes this business truly unique,” said Angermayer in a statement. “Having all been successful in building and selling their own brands within the market and having worked for Amazon in their marketplace team – their understanding of this space is exceptional.”

Daily Crunch: Databricks reaches $38B billion valuation with $1.6B Series H

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 August 31, 2021. Today the TechCrunch machine was busy covering the first day of Y Combinator’s Demo Day event, so expect to see all sorts of coverage on the site after this hits your inbox. We’ll bring you a recap in tomorrow’s edition, though we do have a first taste down below.

In Disrupt news, TechCrunch is bringing an AI investor and a science-fiction author together and will have lots on deck for startups currently raising external capital. — Alex

The TechCrunch Top 3

  • Databricks is now worth $38B: Data and AI unicorn Databricks confirmed its previously reported financing event today, raising $1.6 billion at a $38 billion valuation. TechCrunch spoke with the company’s CEO about what the money’s for, and we dug a bit more deeply into its revenue results. The late-stage market has been busy, but this Databricks round is big even by today’s venture standards.
  • More African startups than ever in YC batch: As we write, Demo Day is ongoing, so most of our first-day coverage will be finished too late to include. But we got a look at the African startups in the summer batch, and there are more than ever. Given how active the African startup market is proving this year, we’re not surprised.
  • Apna could be India’s next unicorn: Focusing on upskilling Indian consumers, Apna could become a unicorn if a Tiger Global-led round comes to fruition. TechCrunch reports that the round could be worth $100 million at a valuation of more than $1 billion. Edtech in India remains one of the key startup narratives in recent years.

Startups/VC

Because this is the last day of August, we presume that the summer lull in funding events has come and gone. Not that we really noticed a downtick in volume, frankly, but all the same, expect things to get even crazier in the coming weeks. Here’s a sampling of the rounds that we covered today:

  • $200M more to roll-up Amazon merchants: Beyond Indian edtech companies, another trend that has raised nigh-infinite funds this year is startups raising capital to buy up smaller e-commerce merchants, often with a focus on those selling on Amazon. Heroes is the latest to raise capital for the concept, with the U.K.-based startup adding a few hundred million to its accounts in a single go.
  • Whoop, the Peloton of Apple Watches, raises $200M: If you are a fitness-wearable user, you may be familiar with Whoop. The company’s athlete-focused wristband has helped Whoop raise more than $400 million, now valuing the company at $3.6 billion. That’s many duckets for a fitness wearable. But as Whoop has a software fee bundled into its hardware — hence our Peloton analogy — it is not simply another hardware company.
  • Synthetic coffee is coming: Maricel Saenz, the founder and CEO of Compound Foods, wants to create and sell coffee sans beans. Why? Well, climate change is making growing coffee beans harder, and the process is hard on the environment to boot. So why not just synthesize your morning java? I am willing to try this out, with the caveat that coffee is delicious so it’s going to take a little convincing for me to change my routines.
  • Borzo wants to bring on-demand to more markets: Delivery service Dostavista is rebranding to Borzo, bringing its multicountry business under a single brand. The startup, per TechCrunch, was founded in 2012 and has a customer base of 2 million.
  • Former TechCrunch Disrupt Startup Alley company Quip raises $100M: Quip is best known as a toothbrush company, but it hit profitability last year, expanded its product line and landed nine figures in new capital. The company today offers a host of oral cleaning products as well as invisible teeth aligners.
  • To close out our startup coverage today, Peak has raised $75 million to help non-tech companies build AI apps. The Manchester, England-based Peak wants to help companies that lack in-house AI talent apply the software technique to their own businesses. SoftBank Vision Fund 2 led the latest investment, which the company intends to use to scale its staff and hit up new markets.

6 tips for establishing your startup’s global supply chain

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.

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

Big Tech Inc.

  • TikTok wants to help match influencers and brands: That’s the takeaway from our story today that TikTok’s “new Creator Marketplace API lets influencer marketing companies tap into first-party data.” Given how much we’ve read about astroturfing influencers, the concept makes sense. And TikTok wants its leading creators to make lots of money on its platform so they stick around. Expect to see more of this from other platforms in time.
  • Windows 11 launches October 5: As a Windows fan (and a macOS fan, for the record), I am somewhat hyped to try out the latest Windows build, though I worry if my CPU is sufficiently new. Regardless, the new code drops in early October, so the wait is nearly over.
  • Now you can troll your friends on Spotify with your musical tastes: Love music? Have friends that love music? And do you enjoy different music than your friends? Good news! Now you can create blended playlists with your team, so that you wind up with a playlist that pleases precisely no one.

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 Disrupt is in less than a month, and we’re excited to share that we’re giving away one free ticket through the Experts survey. Check out the schedule for Disrupt, and read on to learn about the giveaway details:

  • Have you already submitted a recommendation? That’s great — we’re counting all previous survey submissions as an entry for the Disrupt ticket.
  • We’ll also enter the next 100 survey submissions into the giveaway.
  • Do you want to submit 10 recommendations to increase your chance at winning? We love the enthusiasm, but we ask that you only submit one recommendation for each marketer that you’ve worked with.
  • Don’t know what to say in your recommendation? Start with what traits they had, what they did to help your company, how their work affected your business and go from there!
  • We manually go through all entries, so please don’t copy and paste the same response multiple times.
  • Have a question about the giveaway? Send us an email at ec_editors@techcrunch.com.

CryptoPunks creator inks representation deal with major Hollywood talent agency

By Taylor Hatmaker

One of Hollywood’s biggest talent agencies is getting into the NFT game.

Larva Labs, the creator of CryptoPunks, just signed with United Talent Agency (UTA) in a representation deal that will bring one of the earliest and most iconic NFT projects into the entertainment and branding worlds.

“I would say that it is one of the first opportunities for an IP that fully originated in crypto-world to enter a broader entertainment space, and they earned it,” head of UTA Digital Assets Lesley Silverman told The Hollywood Reporter. “They really have hit the zeitgeist in a tremendous way.”

The deal could see CryptoPunks popping up across film, TV, video games and other licensing areas. Larva Labs’ other art projects, Meebits and Autoglyphs, will also be represented by UTA moving forward. The terms of the deal weren’t disclosed.

As speculative investment in NFTs explodes, CryptoPunks remain one of the most recognizable — and valuable — pioneers in the space. Larva Labs launched 10,000 of the individual algorithmically generated pixelated figures on the Ethereum blockchain back in 2017.

To the untrained eye, and arguably to the trained eye too, CryptoPunks are just little pixelated portraits of different characters, some wearing pirate hats, others in aviator glasses smoking pipes. But to the crypto world, punks are a social signifier, communicating early investment into NFTs, personal style and, importantly, wealth.

The value of CryptoPunks skyrocketed from zero (they were initially given away for free) and now even the least expensive collectible punks run for hundreds of thousands of dollars, with the most valuable selling for millions. In May, a bundle of nine CryptoPunks sold for just under $17 million in an auction run by Christie’s. And last week, even Visa got in the game, spending $150,000 on CryptoPunk #7610, a digital illustration sporting a mohawk and green face makeup.

Over the last 60 years, Visa has built a collection of historic commerce artifacts – from early paper credit cards to the zip-zap machine. Today, as we enter a new era of NFT-commerce, Visa welcomes CryptoPunk #7610 to our collection. https://t.co/XoPFfwxUiu

— VisaNews (@VisaNews) August 23, 2021

It’s noteworthy that a traditional talent agency best known for representing A-list celebrities is getting into the NFT game, but it’s not the group’s first time getting its feet wet in the wild world of crypto. Earlier this month, UTA signed a company called Rally that runs a platform that helps creators issue branded social tokens that fans can spend on merch and exclusive content.

Cheeterz Club wants to make reading glasses hip

By Sarah Perez

Can reading glasses actually be cool? A new eyewear company called Cheeterz Club thinks so. The startup is working to change the perception of reading glasses from being just cheap, disposable items you pick up from a rotating display rack at your local drug store to being something you’d actually be proud to wear. To do so, the company is designing its glasses with quality lenses and frames in a range of styles, while still keeping the pricing affordable.

The startup — whose name is a reference to the slang term for glasses, “cheaters” — was founded by Jennifer Farrelly, whose background includes work in advertising and sales at companies like Uber and Virool.

She said the idea to make a better set of readers came to her because she found herself frustrated by the current options on the market.

“It all started a few years ago. My friends were posting on social media these really depressing comments and posts like: ‘I’m old and turning into my parents, this is awful.’ And I [thought to myself] why does it have to be like that? I feel just as young today as I did 10 years ago,” Farrelly explains. “Why are my friends and I feeling forced to feel old because of something that happens overnight?,” she says, of what felt like the sudden onset of middle age and the hardships it brings.

What’s worse, Farrelly says, is that when you finally make your way to the drugstore to pick out some reading glasses, all you’ll find are bad, plastic pairs that both look and feel cheap.

“That’s even more demoralizing,” she adds.

Image Credits: Cheeterz Club

So Farrelly teamed up with a former Warby Parker and Pair Eyewear head of Product, Lee Zaro, to design a new line of more fashion-forward eyewear.

Zaro, who is based in the LA area, immediately saw the opportunity.

“Drugstore reading glasses are typically poor in quality, and can feel like they are designed with our parents in mind, leaving a huge unmet need for sophisticated eyewear options,” he said. “When Jennifer approached me to help design her first line of eyewear, I knew it was a brilliant idea.”

To differentiate itself from lower-end readers, Cheeterz Club glasses are made with 100% acetate and feature spring hinges and stainless steel. The lenses, meanwhile, offer more clarity than is often found in reading glasses.

Image Credits: Cheeterz Club

Typically, ophthalmic plastic lens materials have an Abbe value — a measure of the degree at which light is dispersed or separated — between 30 and 58. The higher number offers better optical performance. Crown glass can have an Abbe value as high as 59, but polycarbonate readers (like those from Warby Parker, Farrelly notes) would have an Abbe value of 30. Cheeterz Club lenses, which are CR-39 lenses, are at at 58. This is a difference you can tell when trying the glasses on alongside your drugstore readers.

Cheeterz’ lenses also offer 100% UVA/UVB protection, and are oil and water repellent. They can optionally be bought in one of eight fashion tints, from pink to blue, or in two sun shades. Consumers can also opt to add Blue Light coating to help with screen-induced eye fatigue or they can choose Progressive lenses, which combine distance vision with a reading lens.

Tints are an extra $10, Blue Light protection is $25 and Progressive lenses are $40.99 — lower than market rates.

At launch, Cheeterz Club offers 42 different styles ranging from traditional to the more modern, starting at $28.99.

Farrelly says finding the right price was key, because unlike regular glasses, consumers often buy multiple pairs of readers to leave around the house or car, pack in purses and bags, and so on.

“If I break something that costs me a couple hundred dollars, I’d be really upset about it,” she says. “But at a drugstore price of under $30, I can have them in all sorts of colors and different tints.”

For Farrelly, making the startup a success goes beyond bringing higher-quality reading glasses to market. It’s also about serving a demographic that often gets overlooked.

“Founders in their forties do not get representation, and it’s unfortunate. And there are also people in their forties and fifties that have disposable income and are looking for cute things. They’re spending so much money on facial creams and Botox,” she says, “but then you’re forced to put this really ugly pair of glasses on your face that make you feel bad about yourself.”

While Cheeterz Club today is selling direct to the consumer, the company is talking to eye doctors, boutiques and others who may eventually resell for them, as more of a B2B model. It’s also testing selling on Amazon with one pair of Blue Light glasses.

Cheeterz Club plans to start discussing fundraising with seed investors later this fall.

Update, 8/31/21, 5:30 PM ET: Cheeterz Club incorrectly shared the number of frames available at launch. An earlier version of this article said it was 14, it’s actually 42, they said. We’ve updated with the new information. 

UK-based Heroes raises $200M to buy up more Amazon merchants for its roll-up play

By Ingrid Lunden

Heroes, one of the new wave of startups aiming to build big e-commerce businesses by buying up smaller third-party merchants on Amazon’s Marketplace, has raised another big round of funding to double down on that strategy. The London startup has picked up $200 million, money that it will mainly be using to snap up more merchants. Existing brands in its portfolio cover categories like babies, pets, sports, personal health and home and garden categories — some of them, like PremiumCare dog chews, the Onco baby car mirror, gardening tool brand Davaon and wooden foot massager roller Theraflow, category best-sellers — and the plan is to continue building up all of these verticals.

Crayhill Capital Management, a fund based out of New York, is providing the funding, and Riccardo Bruni — who co-founded the company with twin brother Alessio and third brother Giancarlo — said that the bulk of it will be going toward making acquisitions, and is therefore coming in the form of debt.

Raising debt rather than equity at this point is pretty standard for companies like Heroes. Heroes itself is pretty young: it launched less than a year ago, in November 2020, with $65 million in funding, a round comprised of both equity and debt. Other investors in the startup include 360 Capital, Fuel Ventures and Upper 90.

Heroes is playing in what is rapidly becoming a very crowded field. Not only are there tens of thousands of businesses leveraging Amazon’s extensive fulfillment network to sell goods on the e-commerce giant’s marketplace, but some days it seems we are also rapidly approaching a state of nearly as many startups launching to consolidate these third-party sellers.

Many a roll-up play follows a similar playbook, which goes like this: Amazon provides the marketplace to sell goods to consumers, and the infrastructure to fulfill those orders, by way of Fulfillment By Amazon and its Prime service. Meanwhile, the roll-up business — in this case Heroes — buys up a number of the stronger companies leveraging FBA and the marketplace. Then, by consolidating them into a single tech platform that they have built, Heroes creates better economies of scale around better and more efficient supply chains, sharper machine learning and marketing and data analytics technology, and new growth strategies. 

What is notable about Heroes, though — apart from the fact that it’s the first roll-up player to come out of the U.K., and continues to be one of the bigger players in Europe — is that it doesn’t believe that the technology plays as important a role as having a solid relationship with the companies it’s targeting, key given that now the top marketplace sellers are likely being feted by a number of companies as acquisition targets.

“The tech is very important,” said Alessio in an interview. “It helps us build robust processes that tie all the systems together across multiple brands and marketplaces. But what we have is very different from a SaaS business. We are not building an app, and tech is not the core of what we do. From the acquisitions side, we believe that human interactions ultimately win. We don’t think tech can replace a strong acquisition process.”

Image Credits: Heroes

Heroes’ three founder-brothers (two of them, Riccardo and Alessio, pictured above) have worked across a number of investment, finance and operational roles (the CVs include Merrill Lynch, EQT Ventures, Perella Weinberg Partners, Lazada, Nomura and Liberty Global) and they say there have been strong signs so far of its strategy working: of the brands that it has acquired since launching in November, they claim business (sales) has grown five-fold.

Collectively, the roll-up startups are raising hundreds of millions of dollars to fuel these efforts. Other recent hopefuls that have announced funding this year include Suma Brands ($150 million); Elevate Brands ($250 million); Perch ($775 million); factory14 ($200 million); Thrasio (currently probably the biggest of them all in terms of reach and money raised and ambitions), HeydayThe Razor GroupBrandedSellerXBerlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia. 

The picture that is emerging across many of these operations is that many of these companies, Heroes included, do not try to make their particular approaches particularly more distinctive than those of their competitors, simply because — with nearly 10 million third-party sellers today on Amazon globally — the opportunity is likely big enough for all of them, and more, not least because of current market dynamics.

“It’s no secret that we were inspired by Thrasio and others,” Riccardo said. “Combined with COVID-19, there has been a massive acceleration of e-commerce across the continent.” It was that, plus the realization that the three brothers had the right e-commerce, fundraising and investment skills between them, that made them see what was a ‘perfect storm’ to tackle the opportunity, he continued. “So that is why we jumped into it.”

In the case of Heroes, while the majority of the funding will be used for acquisitions, it’s also planning to double headcount from its current 70 employees before the end of this year with a focus on operational experts to help run their acquired businesses. 

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