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Yesterday — August 8th 2020Your RSS feeds

Startups Weekly: What countries want your startup?

By Eric Eldon

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7am PT). Subscribe here.

They say business needs certainty to succeed, but new tech startups are still getting funded aggressively despite the pandemic, recession, trade wars and various large disasters created by nature or humans. But before we get to the positive data, let’s spend some time reviewing the hard news — there is a lot of it to process.

TikTok is on track to get banned if it doesn’t get sold first, and leading internet company Tencent’s WeChat is on the list as well, plus Trump administration has a bigger “Clean Network” plan in the works. The TikTok headlines are the least significant part, even if they are dominating the media cycle. The video-sharing social network is just now emerging as an intriguing marketing channel, for example. And if it goes, few see any real opening in the short-form video space that market leaders aren’t already deep into. Indeed, TikTok wasn’t a startup story since the Musical.ly acquisition. It was actually part of an emerging global market battle between giant internet companies, that is being prematurely ended by political forces. We’ll never know if TikTok could have continued leveraging ByteDance’s vast resources and protected market in China to take on Facebook directly on its home turf.

Instead of quasi-monopolies trying to finish taking over the world, those with a monopoly on violence have scrambled the map. WeChat is mainly used by the Chinese diaspora in the US, including many US startups with friends, family and colleagues in China. And the Clean Network plan would potentially split the Chinese mobile ecosystem from iOS and Android globally.

Let’s not forget that Europe has also been busy regulating foreign tech companies, including from both the US and China. Now every founder has to wonder how big their TAM is going to be in a world cleaved back the leading nation-states and their various allies.

“It’s not about the chilling effect [in Hong Kong],” an American executive in China told Rita Liao this week about the view in China’s startup world. “The problem is there won’t be opportunities in the U.S., Canada, Australia or India any more. The chance of succeeding in Europe is also becoming smaller, and the risks are increasing a lot. From now on, Chinese companies going global can only look to Southeast Asia, Africa and South America.”

The silver lining, I hope, is that tech companies from everywhere are still going to be competing in regions of the world that will appreciate the interest.

Startup fundraising activity is booming and set to boom more

A fresh analysis from our friends over at Docsend reveals that startup investment activity has actually sped up this year, at least by the measure of pitchdeck activity on its document management platform used by thousands of companies in Silicon Valley and globally (which makes it a key indicator of this hard-to-see action).

Founders are sending out more links than before and VCs are racing through more decks faster, despite the gyrations of the pandemic and other shocks. Meanwhile, many startups shared that they had cut back hard in March and now have more room to wait or raise on good terms. Docsend CEO Russ Heddleston concludes that the rest of the year could actually see activity increase further as companies finish adjusting to the latest challenges and are ready to go back out to market.

All this should shape how you approach your pitchdeck, he writes separately for Extra Crunch. Additional data shows that decks should be on the short side, must include a “why now” slide that addresses the COVID-19 era, and show big growth opportunities in the financials.

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

SaaS founders could transcend VC fundraising via securitized debt

“In one decade, we went from buying licenses for software to paying monthly for services and in the process, revolutionized the hundreds of billions spent on enterprise IT,” Danny Crichton observes. “There is no reason why in another decade, SaaS founders with the metrics to prove it shouldn’t have access to less dilutive capital through significantly more sophisticated debt underwriting. That’s going to be a boon for their own returns, but a huge challenge for VC firms that have been doubling down on SaaS.”

Sure, the market is sort of providing this with various existing venture debt vehicles, and by other routes like private equity (which has acquired a taste for SaaS metrics this past decade). Danny sees a more sophisticated world evolving, as he details on Extra Crunch this week. First, he sees underwriters tying loans to recurring revenues, even to the point that your customers could be your assets that the bank takes if you go bust. The trend could then build from there:

Part two is to take all those individual loans and package them together into a security… Imagine being an investor who believes that the world is going to digitize payroll. Maybe you don’t know which of the 30 SaaS providers on the market are going to win. Rather than trying your luck at the VC lottery, you could instead buy “2018 SaaS payroll debt” securities, which would give you exposure to this market that’s safer, if without the sort of exponential upside typical of VC investments. You could imagine grouping debt by market sector, or by customer type, or by geography, or by some other characteristic.

Image Credits: Hussein Malla / AP

Help the startup scene in Beirut

Beirut is home to a vibrant startup scene but like the rest of Lebanon it is reeling from a massive explosion at its main port this week. Mike Butcher, who has helped connect TechCrunch with the city over the years, has put together a guide to local people and organizations that you can help out, along with stories from local founders about what they are overcoming. Here’s Cherif Massoud, a dental surgeon turned founder of invisible-braces startup Basma:

We are a team of 25 people and were all in our office in Beirut when it happened. Thankfully we all survived. No words can describe my anger. Five of us were badly injured with glass shattered on their bodies. The fear we lived was traumatizing. The next morning day, we went back to the office to clean all the mess, took measurements of all the broken windows and started rebuilding it. It’s a miracle we are alive. Our markets are mainly KSA and UAE, so customers were still buying our treatments online, but the team needed to recover so we decided to take a break, stop the operations for a few days and rest until next Monday.

How to build a great “revenue stack”

Every business has been scrambling to figure out online sales and marketing during the pandemic. Fortunately the Cambrian explosion of SaaS products began years ago and now there are many powerful options for revenue teams of all shapes and sizes. The problem is how to put everything together right for your company’s needs. Tim Porter and Erica La Cava of Madrona Venture Group have created a framework for how to build what they call the “revenue stack.” While most companies are already using some form of CRM, communications and agreement management software generally, each one needs to figure out four new “capabilities.” What they define as revenue enablement, sales engagement, conversational intelligence and revenue operations.

Here’s a sample from Extra Crunch, about sales engagement:

Some think of sales engagement as an intelligent e-mail cannon and analysis engine on steroids. While in reality, it is much more. Consider these examples: How can I communicate with prospects in a way that is both personalized and efficient? How do I make my outbound sales reps more productive and enable them to respond more quickly to leads? What tools can help me with account-based marketing? What happened to that email you sent out to one of your sales prospects?

Now, take these questions and multiply them by a hundred, or even a thousand: How do you personalize a multitouch nurture campaign at scale while managing and automating outreach to many different business personas across various industry segments? Uh-oh. Suddenly, it gets very complicated. What sales engagement comes down to is the critical understanding of sending the right information to the right customer, and then (and only then) being able to track which elements of that information worked (e.g., led to clicks, conversations and conversions) … and, finally, helping your reps do more of that. We see Outreach as the clear leader here, based in Seattle, with SalesLoft as the number two. Outreach in particular is investing considerably in adding additional intelligence and ML to their offering to increase automation and improve outcomes.

Around TechCrunch

Hear how working from home is changing startups and investing at Disrupt 2020

Extra Crunch Live: Join Wealthfront CEO Andy Rachleff August 11 at 1pm EDT/10am PDT about the future of investing and fintech

Register for Disrupt to take part in our content series for Digital Startup Alley exhibitors

Boston Dynamics CEO Rob Playter is coming to Disrupt 2020 to talk robotics and automation

Across the week

TechCrunch
The tale of 2 challenger bank models

Majority of tech workers expect company solidarity with Black Lives Matter

‘Made in America’ is on (government) life support, and the prognosis isn’t good

What Microsoft should demand in exchange for its ‘payment’ to the US government for TikTok

Equity Monday: Could Satya and TikTok make ByteDance investors happy enough to dance?

Extra Crunch
5 VCs on the future of Michigan’s startup ecosystem

Eight trends accelerating the age of commercial-ready quantum computing

A look inside Gmail’s product development process

The story behind Rent the Runway’s first check

After Shopify’s huge quarter, BigCommerce raises its IPO price range

#EquityPod

From Alex Wilhelm:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

As ever, I was joined by TechCrunch managing editor Danny Crichton and our early-stage venture capital reporter Natasha Mascarenhas. We had Chris on the dials and a pile of news to get through, so we were pretty hyped heading into the show.

But before we could truly get started we had to discuss Cincinnati, and TikTok. Pleasantries and extortion out of the way, we got busy:

It was another fun week! As always we appreciate you sticking with and supporting the show!

Equity drops every Monday at 7:00 a.m. PT and Friday at 6:00 a.m. PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Share Ventures, an LA-based studio for company creation, is MoviePass co-founder Hamet Watt’s next act

By Jonathan Shieber

Nearly eight years ago, Hamet Watt and Stacy Spikes launched MoviePass, the subscription-based movie ticketing service that captured the minds and dollars of investors and brought thousands of cinephiles a too-good-to-be-true deal for all-you-can watch movie passes.

Watt, who came to MoviePass as an entrepreneur in residence at True Ventures, previously founded the brand and product placement startup NextMedium and also spent time as a board partner at Upfront Ventures. Now, the serial entrepreneur and startup investor is combining his two career paths under the auspices of Share Ventures.

“It’s what I feel like I’ve been put here to do,” says Watt. “I love solving problems with design and entrepreneurship. I wasn’t fully scratching the itch as an investor by itself.”

With $10 million in financing from a slew of investors including Upfront Ventures, Alpha Edison, the general partners and founders of True Ventures, and a Korean family office, Share Ventures will look to launch between two and four companies per year.

Watt says that the new studio will focus on what he calls “human performance”. The businesses will use a blend of technology and human interaction to create services targeting fitness, nutrition, and mental health, according to Watt.

Share Ventures’ initial focus will be on two main areas, the future of living and the future of working. Within those two areas, the company will focus on developing businesses that enable the development of individual purpose, mental and physical enhancement, and personal and professional growth, according to Watt. And

Image Credit: Share Ventures

For Watt, the studio model represents the next iteration of startup investing. “We think the studio is going to lead the way,” he says.

Rather than invest in companies and management teams that are unknown quantities, Watt thinks the studio will be able to create discrete companies much faster in the same way that companies today iterate on new products and services.

“We have aggregated tools into a company building stack,” says Watt. “These are tools that are usable that third parties have developed and internal tool stacks.”

Image Credit: Share Ventures

Watt says Share Ventures will operate as a holding company with pooled equity shared across the employees at the company. “As we work on portfolio companies and build out dedicated teams, there’s a generous pool to incentivize talent.”

In some ways, the model isn’t that different from Bill Gross’ idealab, the Pasadena, Calif.-based incubator company that’s a few miles up the road from Share Ventures Los Angeles home base. Another inspiration is @Ventures, the dot-com era company that built a number of different portfolio companies. “Our investors are getting founders takes in all the companies that we build,” Watt says.

The company has ten people on staff to help build its first slate of companies.

Watt began talking to investors in 2018 about the idea and spent the bulk of 2019 trying to build out its first few companies.

We run a lot of experiments, we generate a lot of ideas,” Watt says. “The number of shots on goal that we’re taking before we launch a company is significant.”

Before yesterdayYour RSS feeds

Extra Crunch members get 20% off an annual Canva Pro plan

By J.M. Donaldson

Extra Crunch is excited to announce an update to our Partner Perk from design and publishing platform Canva. Starting today, annual and two-year members of Extra Crunch can receive 20% off an annual Canva Pro plan. You must be new to Canva to claim this offer, and reside in the U.S., Canada or U.K. 

Canva empowers users to create social media graphics, presentations, posters and other visual content. Featuring a simple drag-and-drop user interface and a vast library of templates and design ingredients such as fonts, illustrations, stock photography, video and audio content, and the power to include content from the web such as Giphy and Google Maps, anyone can take an idea and create something beautiful. Canva is available on the web, iOS and Android. Learn more about your secret design weapon for social media, print materials and beyond with Canva.  

You can sign up for Extra Crunch and claim this deal here.

Extra Crunch is a membership program from TechCrunch that features how-tos and interviews on company building, intelligence on the most disruptive opportunities for startups, analysis of IPOs, an experience on TechCrunch.com that’s free of banner ads, discounts on TechCrunch events and several partner perks like the one mentioned in this article. We’re democratizing information for startups, and we’d love to have you join our community.

Sign up for Extra Crunch here.

New annual and two-year Extra Crunch members will receive details on how to claim the perk in the welcome email. The welcome email is sent after signing up for Extra Crunch.

If you are already an annual or two-year Extra Crunch member, you will receive an email with the offer at some point over the next 24 hours. If you are currently a monthly Extra Crunch subscriber and want to upgrade to annual in order to claim this deal, head over to the “account” section on TechCrunch.com and click the “upgrade” button.  

This is one of nearly a dozen community perks we’ve launched for annual Extra Crunch members. Other community perks include a 20% discount on TechCrunch events, 90% off an annual DocSend plan and an opportunity to claim $1,000 in AWS credits. For a full list of perks from partners, head here.

If there are other community perks you want to see us add, please let us know by emailing travis@techcrunch.com.

Sign up for an annual Extra Crunch membership today to claim this community perk. You can purchase an annual Extra Crunch membership here.

Disclosure:

This offer is provided as a partnership between TechCrunch and Canva, but it is not an endorsement from the TechCrunch editorial team. TechCrunch’s business operations remain separate to ensure editorial integrity.

Human Capital: Uber and Lyft’s ongoing battle with the law and a brief history of diversity at Snap

By Megan Rose Dickey

Welcome back to Human Capital (formerly known as Tech at Work) that looks at all-things labor in tech. This week presented Uber and Lyft with a fresh labor lawsuit as a judge heard arguments from Uber, Lyft and lawyers on behalf of the people of California in a separate suit brought forth by California’s attorney general. Meanwhile, Snap recently released its first-ever diversity and inclusion report — something the company had been holding off on doing for years. 

Below, we’ll explore the nuances and the significance of these lawsuits, as well as Snap’s track record with diversity and inclusion. Let’s get it.


Gig life


CA Superior Court Judge Ethan P. Schulman heard arguments regarding a preliminary injunction that seeks to force Uber and Lyft to reclassify their drivers as employees

In May, California Attorney General Xavier Becerra, along with city attorneys from Los Angeles, San Diego and San Francisco sued Uber and Lyft, alleging the companies gain an unfair and unlawful competitive advantage by misclassifying workers as independent contractors. The suit argues Uber and Lyft are depriving workers of the right to minimum wage, overtime, access to paid sick leave, disability insurance and unemployment insurance. In June, plaintiffs filed a preliminary injunction in an attempt to force Uber and Lyft to comply with AB 5 and immediately stop classifying their drivers as independent contractors.

This week, more than 100 people tuned in to the hearing regarding the preliminary injunction. The hearing, held on Zoom, initially was only able to hold just 100 people. But the interest in the case forced the court to increase its webinar capabilities to 500. There hasn’t been a ruling yet, but Judge Schulman said we could expect one likely within a matter of days, rather than weeks.

In the hearing, Schulman expressed how hard it is to determine the impact of a preliminary injunction in this case. For example, how Uber and Lyft would comply with the injunction is unknown, as are the economic effects on drivers, such as their ability to earn income, the hours they would be able to work and their eligibility for state benefits, Schulman said.

“I feel a little bit like I’m being asked to jump into a body of water without really knowing how deep it is, how cold the water is and what’s going to happen when I get in,” he said.

Here are some other key quotes from the hearing:

Rohit Singla, counsel for Lyft

The proposed injunction would cause irreparable injury to Lyft and Uber, and would actually cause massive harm to drivers and harm to riders.

Matthew Goldberg, deputy city attorney for San Francisco

We think the parties have drastically overstated precisely what they would need to do to be in compliance with the law.

The other lawsuits against Uber and Lyft

Earlier in the week, California Labor Commission sued Uber and Lyft in separate lawsuits. The goals of the separate suits are to recover the money that is allegedly owed to these drivers. By classifying drivers as independent contractors rather than employees, both Uber and Lyft have not been required to pay minimum wage, overtime compensation, nor have they been required to offer paid breaks or reimburse drivers for the costs of driving.

What these lawsuits share is a core focus and argument, that Uber and Lyft are misclassifying their drivers as independent contractors and breaking the law. These two companies have been sued many, many times for their labor practices, specifically as they pertain to the classification of their respective drivers as independent contractors. What’s different about the latest string of lawsuits is that they’re coming in light of a new law that went into effect in California earlier this year that is supposed to make it harder for these gig economy companies to classify their workers this way. The lawsuits are also coming from legislative bodies, rather than from drivers themselves. 

This moment has been a long time coming. Uber faced its first high-profile labor lawsuit back in 2013, when Douglas O’Connor and Thomas Colopy sued Uber for classifying them as 1099 independent contractors. Uber settled the lawsuit several years later in 2019 by paying out $20 million to O’Connor and Colopy, as well as the other class members


Stay Woke


Snap finally releases a diversity report

Snap, after declining to release diversity numbers for years, finally decided now was the time to make them public. Before we jump in, let’s take a quick look at Snap’s history with diversity.

2016: Snap came under fire for a couple of filters that many people called out as being racist. The first was a Bob Marley filter that basically enabled some sort of digital blackface. The second time it had to do with a lens that was supposed to be a take on anime characters. Instead, there was an outcry about Snapchat enabling yellowface.

2017: “We fundamentally believe that having a team of diverse backgrounds and voices working together is our best shot at being able to create innovative products that improve the way people live and communicate. There are two things we focus on to achieve this goal. The first—creating a diverse workplace—helps us assemble this team. We convene at the conferences, host the hackathons, and invest in the institutions that bring us amazing diverse talent every year. The second—creating an inclusive workplace—is much harder to get right, but we believe it is required to unleash the potential of having a diverse team. That’s because we believe diversity is about more than numbers. To us, it is really about creating a culture where everyone comes to work knowing that they have a seat at the table and will always be supported both personally and professionally. We started by challenging our management team to set this tone every day with each of their teams, and by investing in inclusion-focused programs ranging from community outreach to internal professional development. We still have a long and difficult road ahead in all of these efforts, but believe they represent one of our biggest opportunities to create a business that is not only successful but also one that we are proud to be a part of” – Snap’s S-1

2018: A former Snap engineer criticized the company for a “toxic” and “sexist” culture. Snap CEO Evan Spiegel later said the letter was “a really good wake-up call for us.”

2019: Snap hired its first head of diversity and inclusion, Oona King. King previously worked at Google as the company’s director of diversity strategy.

June 2020: Spiegel reportedly said in an all-hands meeting the company will not publicly release its numbers. Snap, however, disputed the report, saying it would release that data.

August 2020: Snap releases its first-ever diversity report showing its global workforce is just 32.9% women, while its U.S. workforce is 4.1% Black, 6.8% Latinx and less than 1% Indigenous.

Snap’s numbers are not good but also nothing out of the ordinary for the tech industry. What’s novel about Snap’s report, however, is the intersectional data breakdown. You’ll note that the representation of Black women (1.3%) is lower than the representation of Black men (2.8%). The same goes for all race/ethnicity categories. Across all distinct races, there are more men than women. Again, this is not good but it’s to be expected, unfortunately.


Don’t miss


R&D Roundup: Supercomputer COVID-19 insights, ionic spiderwebs, the whiteness of AI

By Devin Coldewey

I see far more research articles than I could possibly write up. This column collects the most interesting of those papers and advances, along with notes on why they may prove important in the world of tech and startups. This week: supercomputers take on COVID-19, beetle backpacks, artificial spiderwebs, the “overwhelming whiteness” of AI and more.

First off, if (like me) you missed this amazing experiment where scientists attached tiny cameras to the backs of beetles, I don’t think I have to explain how cool it is. But you may wonder… why do it? Prolific UW researcher Shyam Gollakota and several graduate students were interested in replicating some aspects of insect vision, specifically how efficient the processing and direction of attention is.

The camera backpack has a narrow field of view and uses a simple mechanism to direct its focus rather than processing a wide-field image at all times, saving energy and better imitating how real animals see. “Vision is so important for communication and for navigation, but it’s extremely challenging to do it at such a small scale. As a result, prior to our work, wireless vision has not been possible for small robots or insects,” said Gollakota. You can watch the critters in action below — and don’t worry, the beetles lived long, happy lives after their backpack-wearing days.

The health and medical community is always making interesting strides in technology, but it’s often pretty niche stuff. These two items from recent weeks are a bit more high-profile.

One is a new study being conducted by UCLA in concert with Apple, which especially with its smartwatch has provided lots of excellent data to, for example, studies of arrhythmia. In this case, doctors are looking at depression and anxiety, which are considerably more difficult to quantify and detect. But by using Apple Watch, iPhone and sleep monitor measurements of activity levels, sleep patterns and so on, a large body of standardized data can be amassed.

How to pick the right Series A investors

By Kirsten Korosec

Early-stage startup founders who are embarking on a Series A fundraising round should consider this: their relationship with the members of their board might last longer than the average American marriage.

In other words, who invests in a startup matters as much — or more — than the total capital they’re bringing with them.

It’s important for founders to get to know the people coming onto their board because they’ll likely be a part of the company for a long time, and it’s really hard to fire them, Jake Saper of Emergence Capital noted during TechCrunch’s virtual Early Stage event in July. But forging a connection isn’t as easy as one might think, Saper added.

The fundraising process requires founders to pack in meetings with numerous investors before making a decision in a short period of time. “Neither party really gets to know the other well enough to know if this is a relationship they want to enter into,” Saper said.

“You want to work with people who give you energy,” he added. “And this is why I strongly encourage you to start to get to know potential Series A leads shortly after you close your seed round.”

Here are the best methods to meet, win over and select Series A investors.

Identify industry experts

Saper recommends extending the typically short Series A time frame by identifying a handful of potential leads as soon as a founder has closed their seed round. Founders shouldn’t just pick any one with a big name and impressive fund. Instead, he recommends focusing on investors who are suited to their startup’s business category or industry.

IoT and data science will boost foodtech in the post-pandemic era

By Walter Thompson
Sunny Dhillon Contributor
Sunny Dhillon is an early-stage investor at Signia Ventures in San Francisco where he invests in retail tech, e-commerce infrastructure and logistics, alongside consumer and enterprise software startups.

Even as e-grocery usage has skyrocketed in our coronavirus-catalyzed world, brick-and-mortar grocery stores have soldiered on. While strict in-store safety guidelines may gradually ease up, the shopping experience will still be low-touch and socially distanced for the foreseeable future.

This begs the question: With even greater challenges than pre-pandemic, how can grocers ensure their stores continue to operate profitably?

Just as micro-fulfillment centers (MFCs), dark stores and other fulfillment solutions have been helping e-grocers optimize profitability, a variety of old and new technologies can help brick-and-mortar stores remain relevant and continue churning out cash.

Today, we present three “must-dos” for post-pandemic retail grocers: rely on the data, rely on the biology and rely on the hardware.

Rely on the data

Image Credits: Pixabay/Pexels (opens in a new window)

The hallmark of shopping in a store is the consistent availability and wide selection of fresh items — often more so than online. But as the number of in-store customers continues to fluctuate, planning inventory and minimizing waste has become ever more so a challenge for grocery store managers. Grocers on average throw out more than 12% of their on-shelf produce, which eats into already razor-thin margins.

While e-grocers are automating and optimizing their fulfillment operations, brick-and-mortar grocers can automate and optimize their inventory planning mechanisms. To do this, they must leverage their existing troves of customer, business and external data to glean valuable insights for store managers.

Eden Technologies of Walmart is a pioneering example. Spun out of a company hackathon project, the internal tool has been deployed at over 43 distribution centers nationwide and promises to save Walmart over $2 billion in the coming years. For instance, if a batch of produce intended for a store hundreds of miles away is deemed soon-to-ripen, the tool can help divert it to the nearest store instead, using FDA standards and over 1 million images to drive its analysis.

Similarly, ventures such as Afresh Technologies and Shelf Engine have built platforms to leverage years of historical customer and sales data, as well as seasonality and other external factors, to help store managers determine how much to order and when. The results have been nothing but positive — Shelf Engine customers have increased gross margins by over 25% and Afresh customers have reduced food waste by up to 45%.

How to access ‘America’s Seed Fund,’ the $3 billion SBIR program

By Devin Coldewey

One of the best kept secrets in the world of capital is that the federal government has billions of dollars it’s dying to give away to early stage founders and inventors — and all you have to do is ask. Well, there’s a bit more to it than that, so here’s a guide to getting in the door of the massive Small Business Innovation Research program.

First, as a bit of background: SBIR is a large network of programs, spread across a dozen federal agencies and the military, established some 40 years ago as a way to help out any American with a great idea but little access to capital.

Over time it has grown to impressive proportions, with a total award budget in 2019 of nearly $3.3 billion. To be clear, this is money intended to be essentially given away to qualified recipients, and not as license fees, or orders, or equity; These cash awards, which range from hundreds of thousands to over a million dollars, come with remarkably few strings attached.

That said, it’s not as if you just reach into the SBIR cookie jar and pull out a million bucks. As with anything involving the federal government, there’s a process — and not a short or simple one. There are extensive official tutorials for later, but this article (informed by tips from officials in the program) should help get you up and running.

It should be noted that this is not the only tech-related government grant program by a long shot, but it is the largest, broadest, and arguably the most accessible to small business entrepreneurs and inventors like you — or it will be once you read this guide. Just be ready to put in a little work.

Step 1: Check yourself

Image Credits: Maskot / Getty Images

The first thing you should know is that the SBIR program operates with a specific (though not uncommon) type of entrepreneur in mind: Someone who needs money to develop and commercialize a new technology or intellectual property, but isn’t yet at the stage where they can attract traditional investment, and the risk or cost is too high for an ordinary loan.

SBIR awards (some agencies offer “grants,” others “contracts,” but you can just say “awards”) are basically cash to bring something from idea to commercialization. They are not for footing manufacturing down payments, repaying earlier loans, or other miscellaneous operating costs.

If your company or invention needs help to cover R&D to get from experiment to working prototype, or prototype to commercialization, you might be a good fit. It doesn’t matter whether it’s software or hardware, your first product or your tenth — just as long as you’re a self-owned, U.S-based small business and you’re building a new technology that needs some cash to get started.

A second, lesser-known benefit of the program is that if you get selected, your company is eligible to skip the line for some government procurement processes that would otherwise require competitive offers. If you picture the U.S. Government as a potential client down the road, this benefit alone may be worth the toil.

The program is generally divided into phases, which you’ll probably want to do in order.

Phase I is for people demonstrating proof of concept — anywhere on the line from whiteboard to prototype. Awards range from tens of thousands to over $200,000, over a period of 6 to 12 months, depending on what is warranted for the specific development costs.

Phase II is for those doing deeper R&D on a proven concept and may be more than a million dollars over a two-year period; As you can see, this is a long term play, not a quick cash grab.

Phase III is where a project may transition to actual paid contracts and purchases — but you can worry about that when you get there.

In other words, while the money has few catches once you get it, the program isn’t a free-for-all. If it sounds like a match and you’re willing to do a little legwork, proceed.

Step 2: Figure out where to apply

Image Credits: Imaginima / Getty Images

Here’s where it starts getting complicated. There isn’t actually just one SBIR program, there are a dozen, spread across as many federal agencies, from Defense and Energy to NASA and NOAA. Each has its own budget and application process — making this already complex enough that many a grant-seeker has bounced right off it (or closed this tab). But don’t worry, it’s not as bad as it sounds. You’ve got three things going for you.

First, not every technology or business is a fit for every agency.

This is actually a good thing. Think about who the “customer” is for your technology: Your rocket engine isn’t going to be of much use to Health and Human Services; A collision avoidance system for a drone might be good for the Defense Department, but it also might be helpful to the Department of Energy in a different way. What specifically does your tech enable, and why would it be helpful to the work of specifically one agency? That should help narrow it down considerably — but don’t be afraid to think outside the box a little. You might be surprised what some of these departments get up to.

Second, each agency has specific things it’s looking for, both right now and perennially.

This means there’s not much in the way of guesswork. These numerous and various “solicitations” range from general areas of interest to highly detailed requests, are listed publicly (see the links below), and can usually be searched through or sorted by topic. Once you’ve decided that your tech might be useful to either the EPA or NOAA, for example, look through their solicitations — they’re updated regularly, though the schedule differs by agency — and see if one is already asking for what you’re offering or uses similar keywords. You can and should also search through previous years to see if they’ve requested something like your tech in the past.

Third, there are people whose job it is to help businesses through this process.

Procurement Technical Assistance Centers, or PTACs, exist in every state, as well as D.C., Guam, and Puerto Rico. These are staffed with people whose job it is to help small businesses navigate the complexities of government grant programs. You can find your local office by selecting it from the list here.

PTACs are more focused on contracts, however, and for these awards you may want to look up your local Small Business Development Center instead. These SBA-funded organizations are also here to help and there are several in and around most cities (select them in the dropdown menu here and hit search).

Though each program has its own requirements and solicitations, they’re all public. Here are the agencies with active SBIR programs, starting with the largest, with links to their starting pages for SBIR applicants. The second link is to their solicitations page (though it may use different terminology), which should list or itself link to current topics of interest.

Current solicitations are also centrally listed here in a different format. Please note that these addresses may at any time be rendered obsolete, as the government has no standard format for these programs or websites. Even the promotional materials I was given directly by SBIR officials were already out of date. But a little hunting around should get you to the right place. (And feel free to tell us in the comments if something seems off.)

Some of the programs are more similar than others, but there are a couple notable exceptions. The NSF, for instance, has more open-ended solicitations for basic research rather than development. But NASA and Defense are definitely the most complicated.

NASA’s SBIR program is divided up among its various research centers — Ames, Goddard, etc — each of which specializes in different technologies. While the specifics are too many and various to list here, a good way to get started is to look at a list of recent awards for similar or related technologies to your own, and find which center is the lead for it — for example robotic sampling is led by JPL, but small satellite propulsion is at Glenn. Then you can reach out to the SBIR contact for that center.

NASA also has a particularly robust Phase II program, with extended and expanded options for space-based work that necessarily takes longer or costs more money.

Defense has numerous grant programs under several umbrellas, including each branch of the military. To be honest, it’s kind of a mess, but they are working to simplify and accelerate the process. The actual DoD SBIR program, however, overlaps the most with the others and as such should be considered alongside them. You may want to rely on your PTAC or SBA representative to point the way.

Others will have their own idiosyncrasies, but getting started looks similar for all of them.

Step 3: Paperwork

woman writing writer

USA, New York, New York City

Once you’ve decided to apply, you’ll want to register at SBIR.gov first thing — you have to get in the system in the first place to be eligible for participation in the process.

The SBIR officials I spoke to emphasized that while understanding the program and finding the right agency or agencies to submit to are important steps, it all falls down if you phone in the actual application — something they’ve seen over and over, apparently.

The applications differ agency to agency, and different topics demand different information, naturally. But in all of them you should be ready to articulate at least the following:

  • Detailed but concise explanation of the technology you’re developing
  • Company budget, financials, and investors
  • Commercial applications and plan to achieve them

Although the applications may only be 10 or so pages long, companies should budget at least 80 full-time hours to complete them. For companies with little experience with this sort of thing, hiring a professional grant writer is a perfectly valid option but by no means required. This is also something that PTACs and SBDCs can help with.

It’s important, officials said, not to focus just on selling the technology or science itself — you must also show that there is a viable path forward for the team and company that the government’s funding will enable. They may not want much in return, but they’d like some assurance that they’re not throwing money down a well.

There is nothing stopping you from applying to multiple programs, though be aware that you probably won’t be able to copy-paste your application from one to the other. You can also apply year after year or quarter after quarter if you like, or to multiple solicitations within the same agency. It’s not uncommon for a company to be accepted only after multiple attempts.

Lastly, if you have any questions about any of this, find and contact the SBIR representative for the agency you’re applying to. These folks are there to liaise and connect you with the right resources, so don’t hesitate to reach out. Just don’t try to pitch them directly — it won’t work.

As you can see, applying to SBIR is not a simple process but if you know the basic steps and resources, you can frontload the hard work while your project is still at an early stage. And while it may sound like a lot of winnowing is being done, recall that there really is a ton of money going into these programs and the whole point is to support American small businesses. That’s you!

Survey: Tell us what you think of Extra Crunch

By Travis Bernard

Since launching our membership product Extra Crunch 1.5 years ago, we’ve added a number of new features at the request of our community. This includes improvements to login stability, introducing the video Q&A series Extra Crunch Live, launching over a dozen Partner Perks, and revamping our newsletters.

We also listened to the community for where to add payments support. The product is now available in over 20 countries and territories, with Australia and Israel support coming soon. 

Feedback from our community is critical as we continue to build and develop the product. We’re always looking to improve, and we’d love to get feedback on the product in its current state. If you have a few minutes, please fill out the survey below.

mmhmm, the virtual presentation software from Phil Libin, launches its Beta 2

By Jordan Crook

mmhmm, the latest project from Evernote founder Phil Libin and All Turtles, has today announced the launch of the mmhmm Beta 2. The 100,000-strong waitlist of people who have requested access are getting their invite to the platform today. Also part of the beta 2: a handful of new features for the video presentation software.

Most notable among them is Co-Pilot. Co-Pilot allows two users to ‘drive’ the presentation simultaneously, with one user speaking and visible and the other running the controls of that presentation, switching slides, playing video and/or changing the look and feel.

But let me back up for those of you who’ve (understandably) missed the mmhmm news in the past few weeks.

What is it?

If Twitch got together with the production team for a late night talk show, and their resulting love child was into corporate presentations, that baby would be called mmhmm.

Essentially, users can elevate their on-screen virtual presentations from a head in a box (or sometimes a screen-shared slide deck) to a more elegantly produced affair.

mmhmm users can run their presentation from a PIP (picture-in-picture) window, change the size of themselves on screen, add interesting filters and effects, and do it all on the fly.

And as fun as that may be, there is a lot involved in running a live production while also giving a presentation, which is why mmhmm is introducing Co-Pilot. Co-Pilot offers users the chance to have their very own executive producer help them with their call, allowing the presenter to focus on what they’re saying instead of the mmhmm controls.

Since Co-Pilot is multiplayer, beta users can invite one friend per day to the platform starting now.

Alongside Co-Pilot, mmhmm is also launching Dynamic Rooms, which gives users the ability to create a background unique to them, selecting the colors, shapes, etc. to have your own ‘template’.

The product has raised a total of $4.5 million led by Sequoia, with participation from Human Capital, Biz Stone, Jana Messerschmidt (#ANGELS), Hiroshi Mikitani (Rakuten), Taizo Son (Mistletoe), Brianne Kimmel (worklife.vc), Digital Garage, Precursor Ventures, Kevin Systrom (IG), Mike Krieger (IG), Linda Kozlowski (Blue Apron), Julia and Kevin Hartz (EventBrite), and Lachy Groom (Stripe).

Conversational analytics are about to change customer experiences forever

By Walter Thompson
Evan Kohn Contributor
A digital marketing and customer experience leader, Evan Kohn is chief business officer at Pypestream, where he created PypePro, an AI onboarding methodology used by Fortune 500 firms.

Companies have long relied on web analytics data like click rates, page views and session lengths to gain customer behavior insights.This method looks at how customers react to what is presented to them, reactions driven by design and copy. But traditional web analytics fail to capture customers’ desires accurately. While marketers are pushing into predictive analytics, what about the way companies foster broader customer experience (CX)?

Leaders are increasingly adopting conversational analytics, a new paradigm for CX data. No longer will the emphasis be on how users react to what is presented to them, but rather what “intent” they convey through natural language. Companies able to capture intent data through conversational interfaces can be proactive in customer interactions, deliver hyper-personalized experiences, and position themselves more optimally in the marketplace.

Direct customer experiences based on customer disposition

Conversational AI, which powers these interfaces and automation systems and feeds data into conversational analytics engines, is a market predicted to grow from $4.2 billion in 2019 to $15.7 billion in 2024. As companies “conversationalize” their brands and open up new interfaces to customers, AI can inform CX decisions not only in how customer journeys are architected–such as curated buying experiences and paths to purchase–but also how to evolve overall product and service offerings. This insights edge could become a game-changer and competitive advantage for early adopters.

Today, there is wide variation in the degree of sophistication between conversational solutions from elementary, single-task chatbots to secure, user-centric, scalable AI. To unlock meaningful conversational analytics, companies need to ensure that they have deployed a few critical ingredients beyond the basics of parsing customer intent with natural language understanding (NLU).

While intent data is valuable, companies will up-level their engagements by collecting sentiment and tone data, including via emoji analysis. Such data can enable automation to adapt to a customer’s disposition, so if anger is detected regarding a bill that is overdue, a fast path to resolution can be provided. If a customer expresses joy after a product purchase, AI can respond with an upsell offer and collect more acute and actionable feedback for future customer journeys.

Tap into a multitude of conversational data points

Register for our next pitch-off happening on August 13

By Marquise Foster

Here’s a shout-out to all the early-stage founders attending Disrupt 2020. Don’t forget to register for our next Pitchers & Pitches — on August 13 — and get ready to hone your 60-second pitch to a razor’s edge.

If you’re not in the know, our ongoing Pitchers & Pitches webinar series is a pitch-off-masterclass-mashup. It’s a chance to deliver your best pitch to a panel of experts who will provide invaluable critique to help you craft a more compelling pitch. Better pitches equal more opportunities, amirite?

Anyone can benefit by attending Pitchers & Pitches, but only companies exhibiting in Digital Startup Alley can compete. Want to be eligible to pitch in next week’s event? Buy a Disrupt Digital Startup Alley Package here.

We’ll randomly select five startups to pitch, receive direct feedback and have a shot at taking the top prize. We love prizes…especially the kind that help build a better startup. The winning founders receive a consulting session with cela, a company that connects early-stage startups to accelerators and incubators that can help scale their businesses.

Here’s another great reason to exhibit in Digital Startup Alley. You get exclusive access to our three-part interactive webinar series. Check the dates and topics below:

  • August 12: The Dos and Don’ts of Working with the Press
  • August 19: COVID-19’s Impact on the Startup World
  • August 26: Fundraising and Hiring Best Practices

We’ll announce the pitching lineup — and the specific VC judges those founders need to impress — on August 12. Remember, only startups exhibiting at Disrupt 2020 are eligible to pitch. If you want in on the action, get yourself a Digital Startup Alley Package today.

Register here and join us for the next Pitchers & Pitches on August 13. And hey, even if you don’t compete, you’ll hear loads of good advice on ways to improve your presentation skills and make the most of your 60-second pitch.

Is your company interested in sponsoring or exhibiting at Disrupt 2020? Contact our sponsorship sales team by filling out this form.

Extra Crunch Live: Join Eric Hippeau for a live Q&A on August 13 at 11am PT/2pm ET

By Jordan Crook

The media landscape is changing rapidly. Even before COVID, media companies were looking at new revenue models beyond your standard banner ad, all the while trying to navigate the oft-changing world of social media and search, where a minor algorithm change can boost or tank traffic.

Anytime an industry is in the midst of a transformation is a great time for startups to capitalize. That’s why we’re amped to have Lerer Hippeau’s Managing Partner Eric Hippeau join us for an episode of Extra Crunch Live.

The episode will air at 2pm ET/11am PT on August 13. Folks in the audience can ask their own questions, but you must be an Extra Crunch member to access the chat. If you still haven’t signed up, now’s your chance!

Eric Hippeau served as CEO for the Huffington Post before cofounding Lerer Hippeau. HE also served as Chairman and CEO at Ziff-Davis, a former top publisher of computer magazine. He sits on the board of BuzzFeed and Marriott International.

Lerer Hippeau portfolio companies include Axios, BuzzFeed, Genius, Chartbeat and Giphy. And while the firm has experience in media, that doesn’t mean that the portfolio is squarely focused on it. Other portfolio companies include Casper, WayUp, Warby Parker, Mirror, HungryRoot, Glossier, Everlane, Brit + Co., and AllBirds, to name just a few.

As an early stage investor, Hippeau knows what it takes for companies to get the attention of VCs and take the deal across the finish line. We’ll chat with Hippeau about some of the do’s and don’ts of fundraising, his expectation for the next-generation of startups born in this pandemic world, and which sectors he’s most excited to invest in.

As previously mentioned, Extra Crunch members are encouraged to bring their own questions to this discussion. Come prepared!

Hippeau joins an all-star cast of guests on Extra Crunch Live, including Mark Cuban, Roelof Botha, Kirsten Green, Aileen Lee and Charles Hudson. You can check out the full slate of episodes here.

You can find the full details of the conversation below the jump.

Details:
Date: Thursday, August 13th @ 11am PT/2pm ET/6pm GMT
Zoom Info: https://zoom.us/j/92633495658
Add this event to your calendar

Civic tech platform Mobilize launches a census hub for the 2020 count’s critical final stretch

By Taylor Hatmaker

With the already narrow window of remaining time to complete a census count abruptly cut short by the Trump administration, getting every person living in the U.S. to fill out the form, already a scramble in a normal census year, is a compound challenge in 2020.

The critical once-a-decade count determines everything from Congressional representation to Pell grants to funding for school lunch programs — and as of this week, as many as 60 million households remain unaccounted for. If left untallied, those individuals and their communities will be invisible when the time comes to allocate vital federal resources.

To rise to that challenge, the progressive volunteer and campaign coordination platform Mobilize is launching a central resource hub to empower census volunteers during the six week final stretch. The civic tech startup noticed that a handful of nonprofits doing census work were already bringing campaigns onto the platform, and the new site, GetOutTheCount.com, will amplify those efforts and collect them in one place. 

Speaking with TechCrunch, Mobilize Co-Founder and CEO Alfred Johnson describes the task, reasonably, as “Herculean.” 

“Organizations are trying to reach communities and help them understand what they’re going to be asked in the census, what they’ll not be asked by the census and make sure… that those communities are aware of what their rights are here, are aware of what the deadlines are, and can be counted,” Johnson said. “Because we know that being counted is such a fundamental piece of being included in our democracy.”

One of the biggest challenges this census year is the focus on reaching historically undercounted Black, Latinx and indigenous communities — a key goal if the 2020 census is to capture U.S. demographic shifts and allocate resources and representation accordingly.

Mobilize launched in early 2017 amidst the post-Trump surge of activism on the left and quickly became ubiquitous among progressive causes and candidates. In the 2020 Democratic primary contest, Biden, Bernie and everybody in between relied on the platform to marshal campaign volunteers and steer supporters. This January, the civic tech startup raised a $3.75 million Series A round led by progressive tech incubator Higher Ground Labs. LinkedIn co-founder Reid Hoffman, a prominent Democratic donor, and Chris Sacca’s Lowercase Capital also contributed to the round.

The digital platform aims to both be a unifying resource to Democratic and progressive campaigns and to do what the events page on social networks like Facebook can’t. For Mobilize, that means translating what on a different platform might remain aspirational online activity into action. It accomplishes that by sending volunteers reminders, prompting them to invite friends and staying connected even after they take action to keep them engaged in similar campaigns.

Groups already coordinating their census campaigns on Mobilize include the NYC Census Bureau, CensusCounts, and Fair Count, an organization founded by Fair Fight founder and former Democratic nominee for Georgia governor Stacey Abrams. Fair Count’s mission is to reach what it calls “hard to count” communities in Georgia, including the state’s historically undercounted Black male population, to win the state the resources and representation that reflect its reality.

GetOutTheCount.com lets anyone type in their zip code to see local census mobilization efforts coordinated across those organizations and others. It stands to reason that if you’re willing to phone bank to reach people who’ve yet to be counted for one group, you’d probably be willing to do it for a different one with overlapping goals. 

For Mobilize, the crucial final census push is something of a crucible for the platform’s power in a year that’s gone all-digital. Johnson has seen virtual events skyrocket on Mobilize as COVID-19 took root across the U.S. Prior to the pandemic, about a quarter of events were virtual — now they all are.  

Johnson acknowledges that the “headwinds” against an accurate census count in 2020 are very real, both politically and logistically, and particularly now that the Trump administration has trimmed the deadline. But he hopes that Mobilize is able to help organizations leverage the power of the platform’s network effect and its scalability during a national crisis that has a nation cooped up indoors rather than knocking on them.

In spite of the crisis, or perhaps because of it, Mobilize has seen a major uptick in volunteer signups between the months of April and July and expects August to be even bigger once the numbers are in.

“2020 is a very hard year for a lot of people for very real reasons,” Johnson said. “I think that is actually motivating even more civic engagement by virtue of the fact that people are wanting to see circumstances change and help their friends, neighbors [and] communities in this moment of existential crisis, on whatever axis you’re evaluating it.”

Hear how working from home is changing startups and investing at Disrupt 2020

By Danny Crichton

Let’s just say it has been a year. While a few ambitious startups like InVision and GitLab built their corporate cultures and talent hiring with a remote-first mentality, the reality is that the vast majority of founders never thought they would have to be socially distant from all of their employees. And it isn’t going to change: Google recently announced that all of their employees will be work from anywhere until summer 2021. We are only getting started with this new model of work.

Culture, productivity, and speed are absolutely vital to the survival of early-stage startups, but how do you build growth and momentum in a remote-only world? And how are investors approaching this new environment and the opportunities that our changing patterns of work mean for us?

These are critical questions, which is why we are hosting a panel of VC investor superstars to talk more about them on the Extra Crunch stage at TechCrunch Disrupt 2020.

First, we have Sarah Cannon, partner at Index Ventures who is perhaps best known in the Valley these days for her ambitious bet behind productivity tool Notion, which valued the relatively nascent startup at a cool $2 billion. Cannon has also backed messaging app Quill as well as Pitch, which offers collaboration around presentation documents. Future of work has been her bread and butter, and we’re excited to hear what she thinks is next in productivity and how startups will grow going forward.

Next, we have Sarah Guo, who is a general partner at Greylock. Guo also has been investing in the future of work and B2B tools including Clubhouse (not the Clubhouse you are thinking about) which helps dev teams collaborate more effectively. In addition, she has backed family benefits platform Cleo and a panoply of cybersecurity companies — an area that has become acutely important as the classic perimeter of the workplace office has been replaced with employee laptops scattered across locations worldwide.

Third and finally on this panel, we have Dave Munichiello, who is a general partner at GV. He’s backed a little social tool called Slack (I refuse to call it a productivity tool but that might be one person’s opinion), as well as that remote-first startup Gitlab, which has received upwards of a $3 billion valuation, and fintech infra company Plaid, which was sold to Visa last year for $5.3 billion in one of the biggest fintech exits of 2019.

From how to build products to how to build teams to what investors are looking for in startups in our crazy pandemic world, this panel has got you covered. Plus, since we are on the Extra Crunch stage at Disrupt 2020, we will be taking audience questions throughout the discussion. So come join the conversation as we figure out what 2020 means for the startup world this decade.

Get your pass today to Disrupt 2020. It’s 100% virtual which means we 100% want to see you there!

LivingPackets hopes to nurture a circular economy with its smart parcels

By Devin Coldewey

More than ever before, people are getting life’s essentials delivered — good news for Amazon, but bad news for the environment, which must bear the consequences of the resulting waste. LivingPackets is a Berlin-based startup that aims to replace the familiar cardboard box with an alternative that’s smarter, more secure and possibly the building block of a new circular economy.

The primary product created by LivingPackets is called The Box, and it’s just that: a box. But not just any box. This one is reusable, durable, digitally locked and monitored, with a smartphone’s worth of sensors and gadgets that make it trackable and versatile, and an E-Ink screen so its destination or contents can be updated at will. A prototype shown at CES and a few other locations attracted some interest, but the company is now well into producing V2 of The Box, improved in many ways and ready to be deployed at the scale of hundreds of thousands.

Sure, it costs a lot more than a cardboard box. But once a LivingPackets Box has been used a couple hundred times for returns and local distribution purposes, it breaks even with its paper-based predecessor. Cardboard is cheap to make new, but it doesn’t last long — and that’s not its only problem.

The Box, pictured here with standard cardboard boxes on a conveyor belt, is meant to be compatible with lots of existing intrastructure. Image Credits: LivingPackets 

“If you think about it, online transactions are still risky,” said co-founder Sebastian Rumberg. “The physical transaction and financial transaction don’t happen in parallel: You pay up front, and the seller sends something into the void. You may not receive it, or maybe you do and you say you didn’t, so the company has to claim it with insurers.”

“The logistics system is over-capacity; there’s frustration with DHL and other carriers,” he said. “People in e-commerce and logistics know what they’re missing, what their problems are. Demand has grown, but there’s no innovation.”

And indeed, it does seem strange that although delivery has become much more important to practically everyone over the last decade and especially in recent months, it’s pretty much done the same way it’s been done for a century — except you might get an email when the package arrives. LivingPackets aims to upend this by completely reinventing the package, leaving things like theft, damage and missed connections in the past.

Apps let users track the location and status of their box. Image Credits: LivingPackets

“You’re in full control of everything involved,” he explained. “You know where the parcel is, what’s happening to it. You can look inside. You can say, I’m not at the location for delivery right now, I’m at my office, and just update the address. You don’t need filling material, you don’t need a paper label. You can tell when the seal is broken, when the item is removed.”

It all sounds great, but cardboard is simple and, while limited, proven. Why should anyone switch over to such a fancy device? The business model has to account for this, so it does — and then some.

To begin with, LivingPackets doesn’t actually sell The Box. It provides it to customers and charges per use — “packaging as a service,” as they call it. This prevents the possibility of a business balking at the upfront cost of a few thousand of these.

As a service, it simplifies a lot of existing pain points for merchants, consumers and logistics companies.

For merchants, among other things, tracking and insurance are much simpler. As co-founder Alexander Cotte explained, and as surely many reading this have experienced, it’s practically impossible to know what happened to a missing package, even if it’s something large or expensive. With better tracking, lossage can be mitigated to start, and the question of who’s responsible, where it was taken, and so on can be determined in a straightforward way.

For packaging and delivery companies, the standard form factor with adjustable interior makes these boxes easy to pack and difficult to meddle with or damage — tests with European online retail showed that handling time and costs can be reduced by more than half. LivingPackets also pays for pickup, so delivery companies can recoup costs without changing routes. And generally speaking, more data, more traceability, is a good thing.

For consumers, the most obvious improvement is returns; no need to print a label or for the company to pre-package one, just notify them and the return address appears on the box automatically. In addition there are opportunities once an essentially pre-paid box is in a consumer’s house: for instance, selling or donating an old phone or laptop. LivingPackets will be operating partnerships whereby you can just toss your old gear in the box and it will make its way to the right locations. Or a consumer can hang onto the box until the item they’re selling on eBay is bought and send it that way. Or a neighbor can — and yes, they’re working on the public health side of that, with antibiotic coatings and other protections against spreading COVID-19.

The Box locks securely but also folds down for storage when empty. Image Credits: LivingPackets

The idea underpinning all this, and which was wrapped up in this company from the start, is that of creating a real circular economy, building decentralized value and reducing waste. Even The Box itself is made of materials that can be reused, should it be damaged, in the creation of its replacement. In addition to the market efficiencies added by turning parcels into traveling IoT devices, reusing the boxes could reduce waste and carbon emissions — once you get past the first hundred uses or so, The Box pays for itself in more ways than one. Early pilots with carriers and retailers in France and Germany have borne this out.

That philosophy is embodied in LivingPackets’ unusual form of funding itself: a combination of bootstrapping and crowdsourced equity.

Cotte and his father founded investment firm the Cotte Group, which provided a good starting point for said bootstrapping, but he noted that every employee is taking a less than competitive wage with the hope that the company’s profit-sharing plan will pan out. Even so, with 95 employees, that amounts to several million a year even by the most conservative estimate — this is no small operation.

CEO Alex Cotte sits with V2 of The Box. Image Credits: LivingPackets

Part of keeping the lights on, then, is the ongoing crowdfunding campaign, which has pulled in somewhere north of €6 million, from individuals contributing as little as €50 or as much as €20,000. This, Cotte said, is largely to finance the cost of production, while he and the founding team essentially funded the R&D period. Half of future profits are earmarked for paying back these contributors multiple times their investment — not exactly the sort of business model you see in Silicon Valley. But that’s kind of the point, they explained.

“Obviously all the people working for us believe deeply in what we’re doing,” Cotte said. “They’re willing to take a step back now to create value together and not just take value out of an existing system. And you need to share the value you create with the people who helped you create it.”

It’s hard to imagine a future where these newfangled boxes replace even a noticeable proportion of the truly astronomical number of cardboard boxes being used every day. But even so, getting them into a few key distribution channels could prove they work as intended — and improvements to the well-oiled machines (and deeply rutted paths) of logistics can spread like wildfire once the innumerable companies the industry touches see there’s a better way.

The aims and means of LivingPackets may be rather utopian, but that could be the moonshot thinking that’s necessary to dislodge the logistics business from its current, decidedly last-century methods.

Here are a few ways GPT-3 can go wrong

By Walter Thompson
Liz O'Sullivan Contributor
Liz O’Sullivan is a co-founder and VP of Commercial at Arthur, an AI monitoring and explainability company. She is also Technology Director of STOP, the Surveillance Technology Oversight Project, where she fights the ever-growing threat of technology-enabled surveillance.
John P. Dickerson Contributor
John P. Dickerson is chief scientist at Arthur as well as computer science faculty at the University of Maryland; he works broadly at the intersection of economics and computer science with a focus on using machine learning to balance fairness and efficiency in markets.

OpenAI’s latest language generation model, GPT-3, has made quite the splash within AI circles, astounding reporters to the point where even Sam Altman, OpenAI’s leader, mentioned on Twitter that it may be overhyped. Still, there is no doubt that GPT-3 is powerful. Those with early-stage access to OpenAI’s GPT-3 API have shown how to translate natural language into code for websites, solve complex medical question-and-answer problems, create basic tabular financial reports, and even write code to train machine learning models — all with just a few well-crafted examples as input (i.e., via “few-shot learning”).

Soon, anyone will be able to purchase GPT-3’s generative power to make use of the language model, opening doors to build tools that will quietly (but significantly) shape our world. Enterprises aiming to take advantage of GPT-3, and the increasingly powerful iterations that will surely follow, must take great care to ensure that they install extensive guardrails when using the model, because of the many ways that it can expose a company to legal and reputational risk. Before we discuss some examples of how the model can potentially do wrong in practice, let’s first look at how GPT-3 was made.

Machine learning models are only as good, or as bad, as the data fed into them during training. In the case of GPT-3, that data is massive. GPT-3 was trained on the Common Crawl dataset, a broad scrape of the 60 million domains on the internet along with a large subset of the sites to which they link. This means that GPT-3 ingested many of the internet’s more reputable outlets — think the BBC or The New York Times — along with the less reputable ones — think Reddit. Yet, Common Crawl makes up just 60% of GPT-3’s training data; OpenAI researchers also fed in other curated sources such as Wikipedia and the full text of historically relevant books.

Language models learn which succeeding words, phrases and sentences are likely to come next for any given input word or phrase. By “reading” text during training that is largely written by us, language models such as GPT-3 also learn how to “write” like us, complete with all of humanity’s best and worst qualities. Tucked away in the GPT-3 paper’s supplemental material, the researchers give us some insight into a small fraction of the problematic bias that lurks within. Just as you’d expect from any model trained on a largely unfiltered snapshot of the internet, the findings can be fairly toxic.

Because there is so much content on the web sexualizing women, the researchers note that GPT-3 will be much more likely to place words like “naughty” or “sucked” near female pronouns, where male pronouns receive stereotypical adjectives like “lazy” or “jolly” at the worst. When it comes to religion, “Islam” is more commonly placed near words like “terrorism” while a prompt of the word “Atheism” will be more likely to produce text containing words like “cool” or “correct.” And, perhaps most dangerously, when exposed to a text seed that involves racial content involving Blackness, the output GPT-3 gives tends to be more negative than corresponding white- or Asian-sounding prompts.

How might this play out in a real-world use case of GPT-3? Let’s say you run a media company, processing huge amounts of data from sources all over the world. You might want to use a language model like GPT-3 to summarize this information, which many news organizations already do today. Some even go so far as to automate story creation, meaning that the outputs from GPT-3 could land directly on your homepage without any human oversight. If the model carries a negative sentiment skew against Blackness — as is the case with GPT-3 — the headlines on your site will also receive that negative slant. An AI-generated summary of a neutral news feed about Black Lives Matter would be very likely to take one side in the debate. It’s pretty likely to condemn the movement, given the negatively charged language that the model will associate with racial terms like “Black.” This, in turn, could alienate parts of your audience and deepen racial tensions around the country. At best, you’ll lose a lot of readers. At worst, the headline could spark more protest and police violence, furthering this cycle of national unrest.

OpenAI’s website also details an application in medicine, where issues of bias can be enough to prompt federal inquiries, even when the modelers’ intentions are good. Attempts to proactively detect mental illness or rare underlying conditions worthy of intervention are already at work in hospitals around the country. It’s easy to imagine a healthcare company using GPT-3 to power a chatbot — or even something as “simple” as a search engine — that takes in symptoms from patients and outputs a recommendation for care. Imagine, if you will, a female patient suffering from a gynecological issue. The model’s interpretation of your patient’s intent might be married to other, less medical associations, prompting the AI to make offensive or dismissive comments, while putting her health at risk. The paper makes no mention of how the model treats at-risk minorities such as those who identify as transgender or nonbinary, but if the Reddit comments section is any indication of the responses we will soon see, the cause for worry is real.

But because algorithmic bias is rarely straightforward, many GPT-3 applications will act as canaries in the growing coal mine that is AI-driven applications. As COVID-19 ravages our nation, schools are searching for new ways to manage remote grading requirements, and the private sector has supplied solutions to take in schoolwork and output teaching suggestions. An algorithm tasked with grading essays or student reports is very likely to treat language from various cultures differently. Writing styles and word choice can vary significantly between cultures and genders. A GPT-3-powered paper-grader without guardrails might think that white-written reports are more worthy of praise, or it may penalize students based on subtle cues that indicate English as a second language, which are in turn, largely correlated to race. As a result, children of immigrants and from racial minorities will be less likely to graduate from high school, through no fault of their own.

The creators of GPT-3 plan to continue their research into the model’s biases, but for now, they simply surface these concerns, passing along the risk to any company or individual who’s willing to take the chance. All models are biased, as we know, and this should not be a reason to outlaw all AI, because its benefits can surely outweigh the risks in the long term. But in order to enjoy these benefits, we must ensure that as we rush to deploy powerful AI like GPT-3 to the enterprise, that we take sufficient precautions to understand, monitor for and act quickly to mitigate its points of failure. It’s only through a responsible combination of human and automated oversight that AI applications can be trusted to deliver societal value while protecting the common good.

This article was written by humans.

A look inside Gmail’s product development process

By Megan Rose Dickey

Google has long been known as the leader in email, but it hasn’t always been that way.

In 1997, AOL was the world’s largest email provider with around ten million subscribers, but other providers were making headway. Hotmail, now part of Microsoft Outlook, launched in 1996, Yahoo Mail launched in 1997 and Gmail followed in 2004, becoming the most popular email provider in the world, with more than 1.5 billion active users as of October 2019.

Despite Google’s stronghold on the email market, other competitors have emerged over the years. Most recently, we’ve seen paid email products like Superhuman and Hey emerge. In light of new competitors to the space, as well as Google’s latest version of Gmail that more deeply integrates with Meet, Chat and Rooms, we asked Gmail Design Lead Jeroen Jillissen about what makes good email, how he and the team think about product design and more.

Here’s a lightly edited Q&A we had with Jillissen over Gmail.

Google has been at email since at least 2004. What does good email look like these days?

Generally speaking, a good email experience is not that different today than it was in 2004. It should be straightforward to use and should support the basic tasks like reading, writing, replying to and triaging emails. That said, nowadays there is a lot more email, in terms of volume, than there was in 2004, so we find that Gmail has many more opportunities to assist users in ways it didn’t before. For example, tabbed inboxes, which sorts your email into helpful categories like Primary, Social, Promotions, etc. in a simple, organized way so you can focus on what’s important to you. Also, we’ve introduced assistive features like Smart Compose and Smart Reply and nudges, plus robust security and spam protection to keep users safe. And lastly, we’ve made deeper integrations a priority: both across G Suite apps like Calendar, Keep, Tasks and most recently Chat and Meet, as well as with third-party services via the G Suite Marketplace.

How has Google’s hypothesis about email evolved over the years?

We see email as a very strong communication channel and the primary means of digital communication for many of our users and customers for many years to come. Most people still start their workday in email, which is still used for important use cases, such as more formal or external communications (i.e., with clients/customers), for record-keeping or easy access/reference, and for communications that need a little more thoughtfulness or consideration.

As the world stays home, edtech’s Q2 venture totals rose sharply

By Alex Wilhelm

My friend and colleague Natasha Mascarenhas has been reporting on the edtech beat quite a lot in 2020. So far reading her coverage, I’ve discovered that not only is edtech less dull than I anticipated, it’s actually somewhat interesting on a regular basis.

This week, for example, India’s Byju bought WhiteHat Jr., another Indian edtech company, for $300 million. So what, you’re thinking, that’s just another startup deal? Yes, but it was an all-cash transaction, and White Hat Jr. was only 18 months old.

That’s enough to tell you that edtech is hot at the moment. Which makes sense: much of the world is sheltering at home with school and offices shuttered.


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

 

The COVID-19 era has provided an enormous boon to many software startups, though some more than others. Luckily for its boosters, edtech, after being neglected by VCs due to an expectation of small exits and long sales cycles thanks to red tape, is one of the sectors enjoying renewed interest from private investors and customers alike.

According to a Silicon Valley Bank (SVB) markets-focused report, edtech venture funding reached a local-maxima in Q2 2020, jumping more than 60% from the first quarter of this year to the second. On a year-over-year basis, Q2’s VC edtech results were even more impressive.

But, there’s some nuance to the data that should temper declamations that private edtech funding is forever changed.

This morning let’s peel apart the SVB data and parse through edtech funding rounds themselves from the second quarter to see what we can learn. COVID-19 is remaking the global economy as we speak, so it’s up to us to understand its evolving form.

An edtech boom?

From the top-line numbers, you’d be forgiven for thinking that edtech’s Q2 venture capital results were across-the-board impressive.

Before we dig into the results themselves, here’s the chart you need:

Mashroom raises £4M for its ‘end-to-end’ lettings and property management service

By Steve O'Hear

Mashroom, the London proptech that offers an “end-to-end” lettings and property management service, has raised £4 million in new funding.

Backing comes from existing unnamed private investors and matched funding from the U.K. taxpayer-funded Future Fund. It brings total funding to date for the company to £7 million.

Pitching itself as going “beyond the tenant-finding service” to include the entire rental journey — from property advertising, arranging viewings, credit history checks, maintenance, to end of tenancy and dispute resolution — the self-service platform lets landlords list their property, which tenants can then rent easily.

This includes digital credit and reference checks and the signing of rental agreements and tenancy renewals. In addition, open banking is employed to collect rental payments and provide real-time payment information to landlords.

“Letting and renting is, for the most part, still a fragmented, bricks-and-mortar industry,” says Mashroom founder and ex-venture capitalist Stepan Dobrovolskiy. “The experience as a landlord or tenant normally still involves a traditional estate agent who acts as intermediary and charges a hefty fee. While plenty of new players have come along with tech to solve certain points in the experience, we are the first to look at the entire process from end to end”.


Over on Extra Crunch, learn more about the opportunities within property tech with A/O PropTech, the European VC disrupting the €230 trillion real estate industry.


Dobrovolskiy says this sees Mashroom digitise about “98%” of the rental journey, although he maintains that some human interaction is, and perhaps always will be, necessary. “Unlike most traditional agents, we are also still there to help after tenants move in — things like maintenance requests, insuring contents, moving out or extending contracts at the end of the tenancy. We fundamentally believe that automation and tech should augment rather than replace human interactions in this market, and a big part of our brand is to create better relationships between landlords and tenants,” he says.

As an example, Mashroom incentivises tenants to help landlords with viewings at the end of their tenancy by offering a week’s worth of rent as a reward. “No one knows a property better than people who actually live in it, and it removes a lot of friction to have current tenants schedule and host viewings at times that suit them,” explains Dobrovolskiy. “This costs less than 2% of annual rent for landlords, compared to paying 10%+ to an estate agent for finding a new tenant. So we are unlocking financial benefits for landlords and tenants at the same time as giving them more flexibility”.

Mashroom has also developed a “Deposit Replacement Product” as an alternative to the traditional deposit. In partnership with insurer Arch Capital, it lets tenants pay one week’s rent while offering landlords more protection than a regular deposit — up to 12 weeks compared to the typical 5 weeks.

Noteworthy, the basic Mashroom service is free for tenants and landlords, with the proptech startup generating revenue via its financial products offering which, along with deposit replacement, includes rent guarantee and other insurance products. The startup also operates its own in-house mortgage brokerage for buy-to-let mortgages and refinancing for landlords.

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