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It’s time for tech startups to get political

By Walter Thompson
Xiao Wang Contributor
Xiao Wang is CEO at Boundless, a technology startup that has helped thousands of immigrant families apply for marriage green cards and U.S. citizenship while providing affordable access to independent immigration attorneys.

Between 2005 and 2018, the five biggest U.S. tech firms collectively spent more than half a billion dollars lobbying federal policymakers. But they shelled out even more in 2019: Facebook boosted its lobbying budget by 25%, while Amazon hiked its political outlay by 16%. Together, America’s biggest tech firms spent almost $64 million in a bid to shape federal policies.

Clearly, America’s tech giants feel they’re getting value for their money. But as CEO of Boundless, a 40-employee startup that doesn’t have millions of dollars to invest in political lobbying, I’m proposing another way. One of the things we care most about at Boundless is immigration. And while we’ve yet to convince Donald Trump and Stephen Miller that immigrants are a big part of what makes America great — hey, we’re working on it! — we’ve found that when you have a clear message and a clear mission, even a startup can make a big difference.

So how can scrappy tech companies make a splash in the current political climate? Here are some guiding principles we’ve learned.

1) Speak out

You can’t make a difference if you don’t make some noise. A case in point: Boundless is spearheading the business community’s pushback against the U.S. Department of Homeland Security’s “public charge rule.” This sweeping immigration reform would preclude millions of people from obtaining U.S. visas and green cards — and therefore make it much harder for American businesses to hire global talent — based on a set of new, insurmountable standards. We’re doing that not by cutting checks to K Street but by using our own expertise, creativity and people skills — the very things that helped make our company a success in the first place.

By leveraging our unique strengths — including our own proprietary data — we’ve been able to put together a smart, business-focused amicus brief urging courts to strike down the public charge rule. And because we combine immigration-specific expertise with a real understanding of the issues that matter most to tech companies, we’ve been able to convince more than 100 other firms  — such as Microsoft, Twitter, Warby Parker, Levi Strauss & Co. and Remitly — to cosign our amicus brief. Will that be enough to persuade the courts and steer federal policy in immigrants’ favor? The jury’s still out. But whatever happens, we take satisfaction in knowing that we’re doing everything we can on behalf of the entire immigrant community, not just our customers, in defense of a cause we’re passionate about.

2) Take a stand

Taking a stand is risky, but staying silent is a gamble, too: Consumers are increasingly socially conscious, and almost nine out of 10 said in one survey that they prefer to buy from brands that take active steps to support the causes they care about. It depends a bit on the issue, though. One survey found that trash-talking the president will win you brownie points from millennials but cost you support among Baby Boomers, for instance.

So pick your battles — but remember that media-savvy consumers can smell a phony a mile off. It’s important to choose causes you truly stand behind and then put your money where your mouth is. At Boundless, we do that by hiring a diverse workforce — not just immigrants, but also women (we’re over 60%), people of color (35%) and LGBTQ+ (15%) — and putting time and energy into helping them succeed. Figure out what authenticity looks like for your company, and make sure you’re living your values as well as just talking about them.

3) Band together

Tech giants might have a bigger megaphone, but there are a lot of startups in our country, and quantity has a quality all its own. In fact, the Small Business Administration reported in 2018 that there are 30.2 million small businesses in the United States, 414,000 of which are classified as “startups.” So instead of trying to shout louder, try forging connections with other smart, up-and-coming companies with unique voices and perspectives of their own.

At Boundless, we routinely reach out to the other startups that have received backing from our own investor groups — national networks such as Foundry Group, Trilogy Equity Partners, Pioneer Square Labs, Two Sigma Ventures and Flybridge Capital Partners — in the knowledge that these companies will share many of our values and be willing to listen to our ideas.

For startups, the venture capitalists, accelerators and incubators that helped you launch and grow can be an incredible resource: Leverage their expertise and Rolodexes to recruit a posse of like-minded startups and entrepreneurs that can serve as a force multiplier for your political activism. Instead of taking a stand as a single company, you could potentially rally dozens of companies — from a range of sectors and unique weights in their fields — on board for your advocacy efforts.

4) Use your superpowers

Every company has a few key superpowers, and the same things that make you a commercial success can help to sway policymakers, too. Boundless uses data and design to make the immigration process more straightforward, and number-crunching and messaging skills come in handy when we’re doing advocacy work, too.

Our data-driven report breaking down naturalization trends and wait times by location made a big splash, for instance, and not just in top-ranked Cleveland. We presented our findings to Congress, and soon afterward some Texas lawmakers began demanding reductions in wait times for would-be citizens. We can’t prove our advocacy was the deciding factor, but it’s likely that our study helped nudge them in the right direction.

5) Work the media

Whether you’re Bill Gates or a small-business owner, if you’re quoted in The New York Times, then your voice will reach the same people. Reporters love to feel like they’re including quotes from the “little guy,” so make yourself accessible, and learn to give snappy, memorable quotes to reporters, and you’ll soon find that they keep you on speed dial.

Our phones rang off the hook when Trump tried to push through a healthcare mandate by executive order, for instance, and our founders were quoted by top media outlets — from Reuters to Rolling Stone. It takes a while to build media relationships and establish yourself as a credible source, but it’s a great way to win national attention for your advocacy.

6) Know your lawmakers

To make a difference, you’ll need allies in the corridors of power. Reach out to your senators and congresspeople, and get to know their staffers, too. Working in politics is often thankless, and many aides love to hear from new voices, especially ones who are willing to stake out controversial positions on big issues, sound the alarm on bad policies or help move the Overton window to enable better solutions.

We’ve often found that prior to hearing from us, lawmakers simply hadn’t considered the special challenges faced by smaller tech companies, such as lack of internal legal, human and financial resources, to comply with various regulations. And those lawmakers come away from our meetings with a better understanding of the need to craft straightforward policies that won’t drown small businesses in red tape.

Political change doesn’t just happen in the Capital Beltway, so make a point of reaching out to your municipal and state-level leaders, too. In 2018, Boundless pitched to the Civic I/O Mayors Summit at SXSW because we knew that municipal leaders played a critical role in welcoming new Americans into our communities. Local policies and legislation can have a big impact on startups, and the support of local leaders remains a critical foundation for the kinds of change we want to see made to the U.S. immigration system.

Take the next step

It’s easy to make excuses or expect someone else to advocate on your behalf. But if there’s something you think the government could be doing better, then you have an obligation to use your company’s energy, talent and connections to push back and create momentum for reform. Sure, it would be nice to splash money around and hire a phalanx of lobbyists to shape public policy — but it’s perfectly possible to make a big difference without spending a dime.

But first, figure out what you stand for and what strengths and superpowers you can leverage to bear the problems you and your customers face. Above all, don’t be afraid to take a stand.

Scopely is buying FoxNext Games, adding MARVEL Strike Force to its game portfolio

By Jonathan Shieber

Scopely, the massively funded mobile game publisher, has made good on its promise to start buying up more properties with the treasure chest it amassed in a whopping $200 million round last year.

The target this time is Walt Disney Company’s FoxNext Games Los Angeles and Cold Iron Studios. Disney picked up Fox’s game division in the huge $71.3 billion deal which merged the two entertainment powerhouses in 2019.

There’s no word on how much Scopely spent on the deal, but the company is quickly becoming one of LA’s biggest mobile game studios, joining the ranks of companies like Jam City as mega-players in the mobile games ecosystem emerging in Los Angeles.

The city has long been home to game development talent including Riot Games, Activision Blizzard, and others.

FoxNext is already the home of the popular “Marvel Strike Force” game and is developing “Avatar: Pandora Rising”, which is a multiplayer strategy game based on the James Cameron blockbuster, “Avatar”.

The portfolio doesn’t include the Fox IP licensed game titles, which will continue to live under Disney’s licensed game business.

“We have been hugely impressed with the incredible game the team at FoxNext Games has built with MARVEL Strike Force and can’t wait to see what more we can do together,” said Tim O’Brien, Chief Revenue Officer at Scopely, in a statement. “In addition to successfully growing our existing business, we have been bullish on further expanding our portfolio through M&A, and FoxNext Games’ player-first product approach aligns perfectly with our focus on delivering unforgettable game experiences. We are thrilled to combine forces with their world-class team and look forward to a big future together.”

As a result of the acquisition, FoxNext’s President, Aaron Loeb will join Scopely in a newly created executive role, according to the company. Meanwhile, Amir Rahimi, FoxNext’s senior vice president will become assume the mantle of President, Games at FoxNext Games Los Angeles studio, the company said.

Last year, Scopely hit $1 billion in lifetime revenue and recently bought the DIGIT Game Studios to further expand its footprint in Europe and across North America.

UN calls for investigation after Saudis linked to Bezos phone hack

By Zack Whittaker

United Nations experts are calling for an investigation after a forensic report said Saudi officials “most likely” used a mobile hacking tool built by mobile spyware maker, the NSO Group, to hack into the Amazon founder Jeff Bezos’ phone.

Remarks made by U.N. human rights experts on Wednesday said said the Israeli spyware maker’s flagship Pegasus mobile spyware was likely used to exfiltrate gigabytes of data from Bezos’ phone in May 2018, about six months after the Saudi government first obtained the spyware.

It comes a day after news emerged, citing a forensics report commissioned to examine the Amazon founder’s phone, that the malware was delivered from a number belonging to Saudi crown prince Mohammed bin Salman. The forensics report, carried out by FTI Consulting, said it was “highly probable” that the phone hack was triggered by a malicious video sent over WhatsApp to Bezos’ phone. Within hours, large amounts of data on Bezos’ phone had been exfiltrated.

U.N. experts Agnes Callamard and Davie Kaye, who were given a copy of the forensics report, said the breach of Bezos’ phone was part of “a pattern of targeted surveillance of perceived opponents and those of broader strategic importance to the Saudi authorities.”

But the report left open the possibility that technology developed by another mobile spyware maker may have been used.

The Saudi government has rejected the claims, calling them “absurd.”

NSO Group said in a statement that its technology “was not used in this instance,” saying its technology “cannot be used on U.S. phone numbers.” The company said any suggestion otherwise was “defamatory” and threatened legal action.

Forensics experts are said to have began looking at Bezos’ phone after he accused the National Enquirer of blackmail last year. In a tell-all Medium post, Bezos described how he was targeted by the tabloid, which obtained and published private text messages and photos from his phone, prompting an investigation into the leak.

The subsequent forensic report, which TechCrunch has not yet seen, claims the initial breach began after Bezos and the Saudi crown prince exchanged phone numbers in April 2018, a month before the hack.

The report said several other prominent figures, including Saudi dissidents and political activists, also had their phones infected with the same mobile malware around the time of the Bezos phone breach. Some whose phones were infected including those close to Jamal Khashoggi, a prominent Saudi critic and columnist for the Washington Post — which Bezos owns — who was murdered five months later.

“The information we have received suggests the possible involvement of the Crown Prince in surveillance of Mr. Bezos, in an effort to influence, if not silence, The Washington Post’s reporting on Saudi Arabia,” the U.N. experts said.

U.S. intelligence concluded that bin Salman ordered Khashoggi’s death.

The U.N. experts said the Saudis purchased the Pegasus malware, and used WhatsApp as a way to deliver the malware to Bezos’ phone.

WhatsApp, which is owned by Facebook, filed a lawsuit against the NSO Group for creating and using the Pegasus malware, which exploits a since-fixed vulnerability in the the messaging platform. Once exploited, sometimes silently and without the target knowing, the operators can download data from the user’s device. Facebook said at the time more than the malware was delivered on more than 1,400 targeted devices.

The U.N. experts said they will continue to investigate the “growing role of the surveillance industry” used for targeting journalists, human rights defenders, and owners of media outlets.

Amazon did not immediately comment.

Lego made an International Space Station kit, including Space Shuttle and robotic arm

By Darrell Etherington

Lego is releasing an official International Space Station kit, which includes a scale model of the orbital platform, along with a miniature dockable Space Shuttle, a deployable satellite and two astronaut minifigurines. The kit is made up of 864 pieces, and celebrates the science station’s over 20 years in operation. It was originally suggested through Lego’s Ideas platform, which crowdsources ideas from the Lego fan community.

The new kit will be available starting in February, and will retail for $69.99. It looks like a fairly involved kit, and that’s backed up by the recommended age for the assembly being pegged at 16+. The station is presented in al its glory, including its large, fan-like solar power arrays, as well as its docking station, which works with both the Space Shuttle mini model and a cargo capsule that’s also included as part of the set.

As mentioned, there’s also a satellite as part of the kit, and you can make use of the robotic Canadarm that’s also part of the station model to deploy the satellite. Meanwhile, should the ISS require any servicing, two included astronaut minifigs can be tasked with any repairs or upgrades – just like those provided by actual astronauts Christina Koch and Jessica Meir this week to upgrade the lab’s on-board battery systems.

[gallery ids="1935405,1935406,1935407,1935408,1935409,1935410"]

The real ISS, a collaborative effort between NASA, Russia’s Roscosmos, Europe’s ESA and Canada’s CSA, was first launched in 1998, and has been operating continuously with people on board for just over 19 years (its official 20th ‘operational’ anniversary is this November. The station has exceeded its original intended mission lifespan, but it’s expected to continue serving as an orbital science facility until at least 2030 thanks to mission expansions.

Court rules Mike Rothenberg must fork over more than $31 million to settle SEC allegations

By Sarah Buhr

Mike Rothenberg, the once high-flying VC bent on bringing the party to Silicon Valley, must now pay a whopping $31.4 million to settle a California federal court ruling in favor of Security and Exchange Commission allegations.

TechCrunch deemed Rothenberg a “virtual Gatsby” back in 2016, when we first broke the news about the downfall of his venture capital firm, Rothenberg Ventures. It seemed he took it as a compliment, changing his Instagram handle to @virtualgatsby. Indeed, the name seemed appropriate for a man who seemingly lived a party-boy lifestyle and spent lavishly to woo startup founders — including going on Napa Valley wine tours, holding an annual “founder field day” where he rented the whole San Francisco Giants’ baseball stadium and spending unsparingly to executive produce a video for Coldplay.

But the party life came to a halt when top leadership jumped ship and the SEC started looking into the books. The SEC formally charged Rothenberg in August of 2018 for misappropriating millions of dollars of his investors’ capital and funneling that money into his own bank account. Rothenberg settled with the SEC at the time and, as part of the settlement, was barred from the brokerage and investment advisory business for five years.

Rothenberg was later caught up in several lawsuits, including one from Transcend VR for fraud and breach of contract, which ended in a settlement. Another suit between Rothenberg and his former CFO, David Haase, ended with Rothenberg being ordered to pay $166,000 in damages.

But there was more to come from the SEC, following a forensic audit in partnership with the firm Deloitte showing the misuse or misappropriation of $18.8 million in investor funding. Under that examination, Deloitte showed Rothenberg had used the money either personally, to float his flashy lifestyle, or for other extravagances, such as building a race car team and a virtual reality studio. Rothenberg has now been ordered to pay back the $18.8 million he took from investors, another $9 million in civil penalties, plus $3.7 million in interest.

Neither the SEC nor Rothenberg have responded for comment. It’s also important to note none of the charges so far have been criminal, but were handled in civil court, as the SEC does not handle criminal cases.

Through all of it, Rothenberg never admitted any guilt for his actions and it is important to note that, because of this he will be able to practice again after the bar is lifted in five years. He’s also made some decent early investments in startups like Robinhood, and many investor sources TechCrunch spoke to over the years seemed quite loyal to him as an investor, despite the charges, employee mass exodus and fund implosion that followed.

And it seems this saga is not over yet. Rothenberg told MarketWatch in a recent interview that he thought the ruling was, “historically excessive and vindictively punitive,” that he planned to appeal it and would be suing Silicon Valley Bank, which Rothenberg used to funnel several investments, over the matter.

Rothenberg Ventures already filed suit against Silicon Valley Bank in August of 2018, the same day the SEC filed formal charges against Rothenberg himself. In that suit, Rothenberg alleged negligence, fraud and deceit on the part of the bank and sought a trial before jury. Silicon Valley Bank said it would defend against the case at the time.

We’ve reached out to Silicon Valley Bank and are waiting to hear back. The real question is, if Rothenberg were to come back to investing in Silicon Valley, would anyone still trust him?

China Roundup: Tencent’s new US gaming studio and WeChat’s new paywall

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.

The spotlight this week is back on Tencent, which has made some interesting moves in gaming and content publishing. There will be no roundup next week as China observes the Lunar New Year, but the battle only intensifies for the country’s internet giants, particularly short-video rivals Douyin (TikTok’s Chinese version) and Kuaishou, which will be vying for user time over the big annual holiday. We will surely cover that when we return.

‘Honor of Kings’ creator hiring for U.S. studio

Tencent’s storied gaming studio TiMi is looking to accelerate international expansion by tripling its headcount in the U.S. in 2020, the studio told TechCrunch this week, though it refused to reveal the exact size of its North American office. Eleven-year-old TiMi currently has a team working out of Los Angeles on global business and plans to grow it into a full development studio that “helps us understand Western players and gives us a stronger global perspective,” said the studio’s international business director Vincent Gao.

Gao borrowed the Chinese expression “riding the wind and breaking the wave” to characterize TiMi’s global strategy. The wind, he said, “refers to the ever-growing desire for quality by mobile gamers.” Breaking the wave, on the other hand, entails TiMi applying new development tools to building high-budget, high-quality AAA mobile games.

The studio is credited for producing one of the world’s most-played mobile games, Honor of Kings, a mobile multiplayer online battle arena (MOBA) game, and taking it overseas under the title Arena of Valor. Although Arena of Valor didn’t quite take off in Western markets, it has done well in Southeast Asia in part thanks to Tencent’s publishing partnership with the region’s internet giant Garena.

Honor of Kings and a few other Tencent games have leveraged the massive WeChat and QQ messengers to acquire users. That raises the question of whether Tencent can replicate its success in overseas markets where its social apps are largely absent. But TiMi contended that these platforms are not essential to a game’s success. “TiMi didn’t succeed in China because of WeChat and QQ. It’s not hard to find examples of games that didn’t succeed even with [support from] WeChat and QQ.”

Call of Duty: Mobile is developed by Tencent and published by Activision Blizzard (Image: Call of Duty: Mobile via Twitter) 

When it comes to making money, TiMi has from the outset been a strong proponent of game-as-a-service whereby it continues to pump out fresh content after the initial download. Gao believes the model will gain further traction in 2020 as it attracts old-school game developers, which were accustomed to pay-to-play, to follow suit.

All eyes are now on TiMi’s next big move, the mobile version of Activision Blizzard’s Call of Duty. Tencent, given its experience in China’s mobile-first market, appears well-suited to make the mobile transition for the well-loved console shooter. Developed by Tencent and published by Blizzard, in which Tencent owns a minority stake, in September, Call of Duty: Mobile had a spectacular start, recording more worldwide downloads in a single quarter than any mobile game except Pokémon GO, which saw its peak in Q3 2016, according to app analytics company Sensor Tower.

The pedigreed studio has in recent times faced more internal competition from its siblings inside Tencent, particularly the Lightspeed Quantum studio, which is behind the successful mobile version of PlayerUnknown’s Battlegrounds (PUBG). While Tencent actively fosters internal rivalry between departments, Gao stressed that TiMi has received abundant support from Tencent on the likes of publishing, business development and legal matters.

WeChat erects a paywall – with Apple tax

Ever since WeChat rolled out its content publishing function — a Facebook Page equivalent named the Official Account — back in 2012, articles posted through the social networking platform have been free to read. That’s finally changing.

This week, WeChat announced that it began allowing a selected group of authors to put their articles behind a paywall in a trial period. The launch is significant not only because it can inspire creators by helping them eke out additional revenues, but it’s also a reminder of WeChat’s occasionally fraught relationship with Apple.

WeChat launched its long-awaited paywall for articles published on its platform 

Let’s rewind to 2017 when WeChat, in a much-anticipated move, added a “tipping” feature to articles published on Official Account. The function was meant to boost user engagement and incentivize writers off the back of the popularity of online tipping in China. On live streaming platforms, for instance, users consume content for free but many voluntarily send hosts tips and virtual gifts worth from a few yuan to the hundreds.

WeChat said at the time that all transfers from tipping would go toward the authors, but Apple thought otherwise, claiming that such tips amounted to “in-app purchases” and thus entitled it to a 30% cut from every transaction, or what is widely known as the “Apple tax.”

WeChat disabled tipping following the clash over the terms but reintroduced the feature in 2018 after reaching consensus with Apple. The function has been up and running since then and neither WeChat nor Apple charged from the transfers, a spokesperson from WeChat confirmed with TechCrunch.

If the behemoths’ settlement over tipping was a concession on Apple’s end, Tencent has budged on paywalls this time.

Unlike tipping, the new paywall feature entitles Apple to its standard 30% cut of in-app transactions. That means transfers for paid content will go through Apple’s in-app purchase (IAP) system rather than WeChat’s own payments tool, as is the case with tipping. It also appears that only users with a Chinese Apple account are able to pay for WeChat articles. TechCrunch’s attempt to purchase a post using a U.S. Apple account was rejected by WeChat on account of the transaction “incurring risks or not paying with RMB.”

The launch is certainly a boon to creators who enjoy a substantial following, although many of them have already explored third-party platforms for alternative commercial possibilities beyond the advertising and tipping options that WeChat enables. Zhishi Xingqiu, the “Knowledge Planet”, for instance, is widely used by WeChat creators to charge for value-added services such as providing readers with exclusive industry reports. Xiaoe-tong, or “Smart Little Goose”, is a popular tool for content stars to roll out paid lessons.

Not everyone is bullish on the new paywall. One potential drawback is it will drive down traffic and discourage advertisers. Others voice concerns that the paid feature is vulnerable to exploitation by clickbait creators. On that end, WeChat has restricted the application to the function only to accounts that are over three months old, have published at least three original articles and have seen no serious violations of WeChat rules.

TechCrunch’s Top 10 investigative reports from 2019

By Josh Constine

Facebook spying on teens, Twitter accounts hijacked by terrorists, and sexual abuse imagery found on Bing and Giphy were amongst the ugly truths revealed by TechCrunch’s investigating reporting in 2019. The tech industry needs more watchdogs than ever as its size enlargens the impact of safety failures and the abuse of power. Whether through malice, naivety, or greed, there was plenty of wrongdoing to sniff out.

Led by our security expert Zack Whittaker, TechCrunch undertook more long-form investigations this year to tackle these growing issues. Our coverage of fundraises, product launches, and glamorous exits only tell half the story. As perhaps the biggest and longest running news outlet dedicated to startups (and the giants they become), we’re responsible for keeping these companies honest and pushing for a more ethical and transparent approach to technology.

If you have a tip potentially worthy of an investigation, contact TechCrunch at tips@techcrunch.com or by using our anonymous tip line’s form.

Image: Bryce Durbin/TechCrunch

Here are our top 10 investigations from 2019, and their impact:

Facebook pays teens to spy on their data

Josh Constine’s landmark investigation discovered that Facebook was paying teens and adults $20 in gift cards per month to install a VPN that sent Facebook all their sensitive mobile data for market research purposes. The laundry list of problems with Facebook Research included not informing 187,000 users the data would go to Facebook until they signed up for “Project Atlas”, not receiving proper parental consent for over 4300 minors, and threatening legal action if a user spoke publicly about the program. The program also abused Apple’s enterprise certificate program designed only for distribution of employee-only apps within companies to avoid the App Store review process.

The fallout was enormous. Lawmakers wrote angry letters to Facebook. TechCrunch soon discovered a similar market research program from Google called Screenwise Meter that the company promptly shut down. Apple punished both Google and Facebook by shutting down all their employee-only apps for a day, causing office disruptions since Facebookers couldn’t access their shuttle schedule or lunch menu. Facebook tried to claim the program was above board, but finally succumbed to the backlash and shut down Facebook Research and all paid data collection programs for users under 18. Most importantly, the investigation led Facebook to shut down its Onavo app, which offered a VPN but in reality sucked in tons of mobile usage data to figure out which competitors to copy. Onavo helped Facebook realize it should acquire messaging rival WhatsApp for $19 billion, and it’s now at the center of anti-trust investigations into the company. TechCrunch’s reporting weakened Facebook’s exploitative market surveillance, pitted tech’s giants against each other, and raised the bar for transparency and ethics in data collection.

Protecting The WannaCry Kill Switch

Zack Whittaker’s profile of the heroes who helped save the internet from the fast-spreading WannaCry ransomware reveals the precarious nature of cybersecurity. The gripping tale documenting Marcus Hutchins’ benevolent work establishing the WannaCry kill switch may have contributed to a judge’s decision to sentence him to just one year of supervised release instead of 10 years in prison for an unrelated charge of creating malware as a teenager.

The dangers of Elon Musk’s tunnel

TechCrunch contributor Mark Harris’ investigation discovered inadequate emergency exits and more problems with Elon Musk’s plan for his Boring Company to build a Washington D.C.-to-Baltimore tunnel. Consulting fire safety and tunnel engineering experts, Harris build a strong case for why state and local governments should be suspicious of technology disrupters cutting corners in public infrastructure.

Bing image search is full of child abuse

Josh Constine’s investigation exposed how Bing’s image search results both showed child sexual abuse imagery, but also suggested search terms to innocent users that would surface this illegal material. A tip led Constine to commission a report by anti-abuse startup AntiToxin (now L1ght), forcing Microsoft to commit to UK regulators that it would make significant changes to stop this from happening. However, a follow-up investigation by the New York Times citing TechCrunch’s report revealed Bing had made little progress.

Expelled despite exculpatory data

Zack Whittaker’s investigation surfaced contradictory evidence in a case of alleged grade tampering by Tufts student Tiffany Filler who was questionably expelled. The article casts significant doubt on the accusations, and that could help the student get a fair shot at future academic or professional endeavors.

Burned by an educational laptop

Natasha Lomas’ chronicle of troubles at educational computer hardware startup pi-top, including a device malfunction that injured a U.S. student. An internal email revealed the student had suffered a “a very nasty finger burn” from a pi-top 3 laptop designed to be disassembled. Reliability issues swelled and layoffs ensued. The report highlights how startups operating in the physical world, especially around sensitive populations like students, must make safety a top priority.

Giphy fails to block child abuse imagery

Sarah Perez and Zack Whittaker teamed up with child protection startup L1ght to expose Giphy’s negligence in blocking sexual abuse imagery. The report revealed how criminals used the site to share illegal imagery, which was then accidentally indexed by search engines. TechCrunch’s investigation demonstrated that it’s not just public tech giants who need to be more vigilant about their content.

Airbnb’s weakness on anti-discrimination

Megan Rose Dickey explored a botched case of discrimination policy enforcement by Airbnb when a blind and deaf traveler’s reservation was cancelled because they have a guide dog. Airbnb tried to just “educate” the host who was accused of discrimination instead of levying any real punishment until Dickey’s reporting pushed it to suspend them for a month. The investigation reveals the lengths Airbnb goes to in order to protect its money-generating hosts, and how policy problems could mar its IPO.

Expired emails let terrorists tweet propaganda

Zack Whittaker discovered that Islamic State propaganda was being spread through hijacked Twitter accounts. His investigation revealed that if the email address associated with a Twitter account expired, attackers could re-register it to gain access and then receive password resets sent from Twitter. The article revealed the savvy but not necessarily sophisticated ways terrorist groups are exploiting big tech’s security shortcomings, and identified a dangerous loophole for all sites to close.

Porn & gambling apps slip past Apple

Josh Constine found dozens of pornography and real-money gambling apps had broken Apple’s rules but avoided App Store review by abusing its enterprise certificate program — many based in China. The report revealed the weak and easily defrauded requirements to receive an enterprise certificate. Seven months later, Apple revealed a spike in porn and gambling app takedown requests from China. The investigation could push Apple to tighten its enterprise certificate policies, and proved the company has plenty of its own problems to handle despite CEO Tim Cook’s frequent jabs at the policies of other tech giants.

Bonus: HQ Trivia employees fired for trying to remove CEO

This Game Of Thrones-worthy tale was too intriguing to leave out, even if the impact was more of a warning to all startup executives. Josh Constine’s look inside gaming startup HQ Trivia revealed a saga of employee revolt in response to its CEO’s ineptitude and inaction as the company nose-dived. Employees who organized a petition to the board to remove the CEO were fired, leading to further talent departures and stagnation. The investigation served to remind startup executives that they are responsible to their employees, who can exert power through collective action or their exodus.

If you have a tip for Josh Constine, you can reach him via encrypted Signal or text at (585)750-5674, joshc at TechCrunch dot com, or through Twitter DMs

Caregiving startup Homage raises Series B to enter new Asian markets

By Catherine Shu

In many countries, an aging population coupled with a low birth rate is increasing the demand for qualified caregivers. In Asia, the need is especially urgent because rapid demographic shifts and changing social structures means family members who traditionally cared for relatives are unable to because they need to work, or live far away. Homage wants to help with a platform that not only matches pre-screened professionals and clients, but also enables caregiving organizations to scale up more quickly.

The startup announced this week that it has raised Series B funding, led by EV Growth, with new investors Alternate Ventures and KDV Capital. Returning investor HealthXCapital also participated. The amount of funding was undisclosed, but sources tell TechCrunch it was $10 million.

Launched in 2016 by Gillian Tee, Lily Phang and Tong Duong, Homage currently operates in Singapore and Malaysia, with plans to expand into five more countries over the next two years. Before Homage, Tee, its CEO, worked in the United States, where she co-founded Rocketrip, a business travel startup backed by Y Combinator. Tee tells TechCrunch she realized the need for a caregiving platform while looking for carers.

“We saw that in ASEAN and the Asia Pacific region, there is really a need to build long-term care infrastructure,” she says.

This includes increasing the pool of basic caregivers to reduce costs, and also making it easier for families to be matched with professionals. Homage’s platform currently includes about 2,000 caregivers and focuses on elderly care, but also provides services needed by a wide age range, including rehabilitation care, physiotherapy, speech therapy and occupational therapy.

The platform was also created to give caregiving organizations a tech platform that allows them to expand more quickly and cost efficiently, in turn reducing care expenses for families. Homage interviews caregivers before they are added to the platform and partners with health organizations to provide continuing education and training. On the enterprise side, it helps providers with administrative tasks like compliance and bookings.

Tee says Homage’s screening process goes beyond interviews and background checks.

“From solving my own caregiving problems, I believe that a platform is needed, a highly curated one, so that every single individual has to be fully competency assessed,” she says.

For caregivers, this means building a profile, and in addition to the information they provide, Homage also works with nurses to evaluate how they are able to perform important tasks like manual transfer techniques. That information is then used by its matching engine.

“The human mind can take in so many details at once, so we have an algorithm for manual transfer techniques, like bent pivot transfers or two-handed transfers, down to that granularity,” Tee says. “It is captured into the system and that translates into mobility, and gives categories of mobility, so it helps us shortlist much better than humans can.” Then final assessments and matches are done by one of Homage’s operators.

Homage also provides compliance tools that collect information about licenses, background and health checks, AED and CPR training and other documentation. On the bookings side, Homage helps organizations manage fluctuations in demand, since many families only need carers a few days a week. Caregivers on the platform range from full-time nurses to part-time carers. It also helps organizations plan breaks to prevent burnout.

Tee says many caregiving organizations put together their own system for administrative tasks, and Homage gives them an alternative that lets them set up operations or expand more quickly.

Homage’s funding will be used to expand its base of caregivers, provide training, and new services, including its medical delivery service.

In a press statement, EV Growth managing partner Willson Cuaca said, “Increasing aging population and low TFR (total fertility rate) are inevitable. Urbanization and a fast-paced working environment make caregiving service one of the key services in our daily life. Gillian and the team have been consistently trying to make the on-demand caregiving service as accessible as possible, fast and reliable. We are proud to be part of the Homage journey to bring back caregiving with control, grace, and dignity.”

Google finally brings its security key feature to iPhones

By Zack Whittaker

More than half a year after Google said Android phones could be used as a security key, the feature is coming to iPhones.

Google said it’ll bring the feature to iPhones in an effort to give at-risk users, like journalists and politicians, access to additional account and security safeguards, effectively removing the need to use a physical security key like a Yubico or a Google Titan key.

Two-factor authentication remains one of the best ways to protect online accounts. Typically it works by getting a code or a notification sent to your phone. By acting as an additional layer of security, it makes it far more difficult for even the most sophisticated and resource-backed attackers to break in. Hardware keys are even stronger. Google’s own data shows that security keys are the gold standard for two-factor authentication, surpassing other options, like a text message sent to your phone.

Google said it was bringing the technology to iPhones as part of an effort to give at-risk groups greater access to tools that secure their accounts, particularly in the run-up to the 2020 presidential election, where foreign interference remains a concern.

Cloudflare is giving away its security tools to US political campaigns

By Zack Whittaker

Network security giant Cloudflare said it will provide its security tools and services to U.S. political campaigns for free, as part of its efforts to secure upcoming elections against cyberattacks and election interference.

The company said its new Cloudflare for Campaigns offering will include distributed denial-of-service attack mitigation, load balancing for campaign websites, a website firewall, and anti-bot protections.

It’s an expansion of the company’s security offering for journalists, civil rights activists and humanitarian groups under its Project Galileo, which aims to protect against disruptive cyberattacks. The project later expanded to smaller state and local government sites in 2018, with an aim of protecting servers containing voter registration data and other election infrastructure from attacks.

Cloudflare’s co-founder and chief executive Matthew Prince said there was a “clear need” to help campaigns secure not only their public facing websites but also their internal data security.

The company said it’s working with the non-partisan, non-profit organization Defending Digital Campaigns to provide its services to campaigns. Last year the Federal Elections Commission changed the rules to allow political campaigns to receive discounted cybersecurity assistance, which was previously a campaign finance violation.

Don’t be a selfless startup

By Danny Crichton

One of the enduring truths of big companies is that they aren’t innovative. They are “innovative” in the marketing sense, but fail to ever execute on new ideas, particularly when those ideas cannibalize existing products and revenues.

So it often takes a real competitor to force these incumbent, legacy businesses to evolve in any meaningful way. Usually that change leads to disruption, in the classic way that Clayton Christensen describes in “The Innovator’s Dilemma.” An upstart company creates a new technology or business model that is better for an under-served segment of a market, and as that company improves, it competes directly with the incumbent and eventually wins over its market with a vastly superior product.

Unfortunately, real life isn’t so easy, as WeWork and MoviePass have shown us over the past few years.

In both cases, there were incumbents. In movie theaters, you had AMC and the like, which built a business model around ticket sales (shared with movie studios) and food/beverage concessions that targeted occasional customers at a high price point. Meanwhile, in commercial real estate, you had large landowners and family holders who demanded extremely long rent terms at high prices, often with personal financial guarantees from the CEO of the tenant firm.

‘The Mandalorian’ returns for Season 2 on Disney+ in fall 2020

By Darrell Etherington

The last episode of the first season of Disney’s ‘The Mandalorian’ is available to stream on Disney+ today, and showrunner Jon Favreau wasted very little time confirming when we can expect season 2 of the smash hit to land: next fall.

Favreau tweeted the anticipated timeline for the sophomore series of “The Mandalorian” on Friday, accompanied by an image of a statuette of a Gamorrean, a type of alien from the Star Wars universe with a distinctly hog-like appearance. The Gamorrean’s most noteworthy appearance in the Star Wars cinematic universe to date is probably in “Return of the Jedi,” when they served as guards for crime lord Jabba the Hutt on Tatootine.

We already knew “The Mandalorian” would be returning for a second season, after Favreau revealed in November that he’d begun filming on the second installment of episodes. But now we have a better idea of exactly how long we’ll have to wait to find out what happens next in the streaming original, which is arguably the best new Star Wars universe content since the original series of films (yes, I really believe that).

If you haven’t yet seen the show, all eight episodes are now available to stream on Disney+, and it’s definitely worth the price of admission for one month of the service just to binge the series.

Season 2 of #TheMandalorian coming Fall 2020 pic.twitter.com/8VQYLDMQ0V

— Jon Favreau (@Jon_Favreau) December 27, 2019

As 2019 closes, a look back at what happened to the altcoin boom

By Alex Wilhelm

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Today we’re peeking at what’s gone on in the world of altcoins recently, the other cryptocurrencies aside from bitcoin.

As 2016 came to a close, altcoins like ether and XRP saw their value soar. Toward the end of 2016 through early 2018, bitcoin’s relative share of the aggregate value of all cryptocurrencies fell to about a third.

Since then there’s been a reversal. Bitcoin is not only back over the 50% market share mark, it has effectively doubled its portion of crypto worth over the last two years.

What happened? Why altcoins have struggled isn’t something we can answer with a single data point or chart. But we can highlight a few reasons that help explain what happened. We’ll start with a look at the data and then we’ll highlight three ideas concerning what changed that pushed altcoins down, and bitcoin back up.

Over the past few weeks we’ve spent most of our time digging into IPOs, larger startups, stocks and revenue thresholds. Today we’re expanding our horizons a bit, looking at a market that sits somewhere to the side of our usual public-private divide. We’re having fun!

First words

Let’s start with a few caveats to save tweets.

We all know that comparing the value of a cryptocurrency or token isn’t the only way to stack blockchains against one another. We also also know that comparing market caps isn’t a perfect way to examine the market. And, yes, there’s lots of development work that goes on behind the scenes that doesn’t show up in the data we are going to examine.

That said, we’re nearly 11 years into the bitcoin era. We care a bit more today than we did a half-decade ago about what is, versus what might be.

Comparative worth

From the fine folks over at CoinMarketCap, the following set of data maps the relative value of the major cryptos, with smaller coins aggregated into a shared line:

I know it’s the day after a major holiday, so let’s help out. The big orange area is bitcoin. The 2017-2018 era is the period in which altcoins had their heyday. And since mid-2018 you can see bitcoin recapture most of its lost, relative prominence.

Bearing in mind that the value of bitcoin has traded as high as roughly $20,000 in late 2017, and is worth about $7,400 today, the chart does not merely show bitcoin recovering its former value. But it does show how over the last two years bitcoin’s share of the value of traded cryptos has doubled. Here are the key data points:

  • December 15, 2016, bitcoin share of total crypto market cap: ~86%
  • December 15, 2017, bitcoin share of total crypto market cap: ~55%
  • January 15, 2018, bitcoin share of total crypto market cap: ~33%
  • December 15, 2018, bitcoin share of total crypto market cap: ~55%
  • December 15, 2019, bitcoin share of total crypto market cap: ~66%

More simply, bitcoin’s share of the value of all cryptos held steady above 80% for a very long time. Then in early 2017 that same share began to fall. It continued to slip into the early days of 2018. Since then it recovered first to its December 2017 levels. And this year the relative value of bitcoin rose again, bringing it to twice its lowest ratings.

Why did that happen? Here are three reasons that form a part of the why.

There and back again

For those of you with pie to eat, here’s our arguments upfront. Bitcoin bounced back due to:

  1. The failure of distributed apps to take off in terms of usage, and spend;
  2. The general nonperformance of ICOs;
  3. A fraud-led flight to quality.

Conductor execs buy their company back from WeWork

By Anthony Ha

It’s been less than two years since WeWork announced the acquisition of SEO and content marketing company Conductor — but those two years have been bumpy, to say the least.

Briefly: Parent organization The We Company’s disastrous attempt to go public resulted in the ouster of CEO Adam Neumann, an indefinite delay of its IPO and reports that the company was weighing the sale of subsidiaries Meetup, Managed by Q and Conductor.

So it’s no surprise that Conductor is, in fact, being sold — not to another company, but to its own CEO and co-founder Seth Besmertnik, COO Selina Eizik and investor Jason Finger (managing partner of The Finger Group and founder of Seamless).

“We’re grateful for our time with WeWork, during which we’ve been able to invest aggressively in R&D, doubling the size of our team with world-class talent that helps our customers achieve success everyday,” Besmertnik said in a statement. “People don’t want to be advertised to or sold to anymore. Our solutions make it easier for brands to deliver marketing that is helpful and valuable. It’s marketing that consumers actually seek out.”

The company also says that Conductor’s employees will be given a new category of stock that they’re calling founder-preferred shares, turning them into “250 employee co-founders” who can appoint a representative to the board of directors. This should give them a bigger stake and a bigger say in where Conductor goes from here.

In fact, Besmertnik noted that pre-acquisition, the Conductor team (including himself) owned less than 10% of the company, while under the new structure, employees will own “more than four times what they did when we sold the company” — and combined with Besmertnik and Eizik’s shares, they have a majority stake in the company.

“Our ownership model is going to really create an even more committed and even more passionate group of people as we apply that to our mission and vision,” he told me.

Conductor started out with a focus on helping marketers optimize their websites for search, then expanded with tools for creating the content that’s being found through search. Since its acquisition, the company has operated as a WeWork subsidiary, and it’s currently working with more than 400 enterprises including Visa, Casper and Slack.

The financial terms were not disclosed, but Conductor says that as a result of the deal, it’s fully divested from The We Company.

Investors find a spot for $65 million in Passport’s parking management tech

By Jonathan Shieber

The big new round of funding for Passport’s ticketing and parking management tech proves that software can even disrupt something as mundane and seemingly low-tech as the parking lot.

The startup, which just raised $65 million in new financing from investors is a permitting, parking and ticketing management service for cities, office parks and campuses.

The capital commitment more than doubles the North Carolina-based startup’s funding to $125 million and is actually the second big investment round of the year for a parking tech company. SpotHero, the Chicago-based marketplace for parking raised $50 million earlier in the year and other services related to auto care and servicing in parking lots or on-demand have raised tens of millions of dollars as well.

“In the future, almost everyone in the world will live in a city, so there’s no more important challenge to work on than how people move throughout communities and transact with cities,” said Bob Youakim, Passport co-founder and chief executive in a statement. “We envision a world where mobility is seamless. To bring this vision to life, we are creating an open ecosystem where any entity — a connected or autonomous vehicle, a mapping app, or a parking app — can leverage our transactional infrastructure to facilitate digital parking payments.”

Passport’s application interfaces allow any government to set up electronic payments for parking tickets and with mobile readers can scan licenses to check for permits and approvals that car owners have through the companies management service.

With the close of the new round, Habib Kairouz from Rho Capital Partners and Scott Hilleboe from H.I.G. will . both take seats on the company’s board of directors.

The company processes more than 100 million transactions per-year and will see $1.5 billion pass through its system this year.

 

Tesla Cybertruck reservations hit 146,000

By Kirsten Korosec

Tesla has received 146,000 reservations to order the Tesla Cybertruck, pulling in some $14.6 million in deposits just two days after the company’s CEO Elon Musk unveiled the futuristic and angled vehicle.

Reservations require a $100 refundable deposit. How many of those deposits will convert to actual orders for the truck, which is currently priced between $39,900 and $69,900, is impossible to predict. And there will likely be plenty of speculation over the next two years. Production of the tri-motor variant of the cybertruck is expected to begin in late 2022, Tesla said.

Musk tweeted Saturday that 146,000 Cybertruck orders have been made so far. Of those, 41% picked the most expensive tri-motor option and 42% of future customers chose the dual motor version. The remaining 17% picked the cheapest single-motor model.

146k Cybertruck orders so far, with 42% choosing dual, 41% tri & 17% single motor

Elon Musk (@elonmusk) November 23, 2019

The Tesla Cybertruck, which Musk unveiled in dramatic fashion at the Tesla Design Center in Hawthorne, Calif., has been polarizing with skeptics heaping on the criticism and supporters pushing back in kind. Even Tesla fans at the Cybertruck event, which TechCrunch attended, seemed torn with some praising it and others wishing Musk had created something a bit more conventional.

The vehicle made of cold-rolled steel and features armored glass that cracked in one demonstration and an adaptive air suspension.

Tesla said it will offer three variants of the cybertruck. The cheapest version, a single motor and rear-wheel drive model, will cost $39,900, have a towing capacity of 7,500 pounds and more than 250 miles of range. The middle version will be a dual-motor all-wheel drive, have a towing capacity of more than 10,000 pounds and be able to travel more than 300 miles on a single charge. The dual motor AWD model is priced at $49,900.

The third version will have three electric motors and all-wheel drive, a towing capacity of 14,000 pounds and battery range of more than 500 miles. This version, known as “tri motor,” is priced at $69,900.

Netgear’s Meural Canvas II is a better version of the best home gadget for photographers

By Darrell Etherington

Netgear has released the first updated Canvas digital art from from Meural since acquiring the company last September, and the next-generation connected frame comes with some decent quality-of-life improvements as well as a new, additional size. It’s not a dramatic change from the original Meural Canvas, but it means that a product that was already great is now even better.

The Meural Canvas II from Netgear comes in two sizes, including a smaller 16×24-inch frame that provides a 21.5-inch diagonal picture (starting at $399.95), and a 19×29-inch frame with a 27-inch diagonal display (starting at $599.95). Both screens are 1080P full HD resolution, and both feature ambient light sensors (which are relocated to a better location under the mat that surrounds the screen for improved light detection) that will automatically adjust the brightness of your image to make it appear more natural and less like a screen.

The Canvas II features built-in Wi-Fi, which is also upgraded with this generation (Netgear, which makes routers and other Wi-Fi products, seems to have brought its expertise to bear here) and they offer new Ethernet connectivity, as well as full-size SD ports. They also can hang either vertically or horizontally, and a new accessory mount for this generation (sold separately) allows for even easier switching between the two orientations via simple rotation.

For the virtual art collector

Meural is controlled primarily from the Meural companion app, though you can also access a web interface to accomplish much of the same thing from a desktop browser. The app features curated collections of artwork, which is available both via a paid monthly subscription and via direct, one-time purchases. One of the changes that the Meural service has undergone is that the subscription membership now gets you some, but not all, of the art available — some premium content is still an additional charge. It’s definitely not as good from the user’s perspective as when everything was free once you’d paid the subscription fee, but paying monthly still nets you 20GB of cloud storage for uploading your own art, discounts on the stuff that is available for purchase and access to a much larger library than you get without any membership.

Subscriptions go for either $8.95 per month, or $69.95 per year, and they’re probably plenty to satisfy most casual art lovers who just want some recognizable or interesting works to adorn their walls, and want to be able to change that on a fairly regular basis. And when you use the art provided through Meural’s various collections, you can take a look at credits and descriptions right on the display — available quickly via a motion control swipe up gesture made possibly by the sensors built into the frame.

A note on those motion controls — they allow you to navigate between artwork, and even change playlists and access a menu of other options related to the frame. Basically, you wave your hand near the bottom of the Meural to make this work, and it’s great when it does work, but it definitely takes some learning to figure out how and where to swipe to make it reliably respond. It’s convenient that it’s an option, but controlling the display with the iOS or Android app is a lot more pleasant, generally speaking.

The built-in library that Meural provides is definitely a selling point, and Meural is regularly adding new art collections, both for paid purchases and to build out the library of those works available included in the subscription. It just added a bunch through a new partnership with Marvel, in fact, including movie posters from a long list of their cinematic universe releases.

For the amateur/enthusiast/pro photographer

The primary reason I think the Meural Canvas II is a fantastic product has very little to do with its subscription-based art collection, however. Instead, it’s all about the flexibility and convenience that the Canvas provides when it comes to displaying your own photos. It’s incredibly easy to upload your photos from your mobile device or your desktop, and you can organize them in playlists, add descriptions and titles, and crop them manually or have the frame crop them automatically to display in its 16×9 aspect ratio.

As a display for your own photos, the Meural Canvas II is hard to beat: It’s a lot more flexible and cost effective than getting high-quality prints made, as you can rotate them out as often as you feel like, and the display’s color rendering and matte finish, while obviously not as good as a professional photo print, is nonetheless very pleasing to the eye. When you take as many photos as we collectively do now, but seldom have anywhere to show them off, the Canvas provides the perfect opportunity to ensure they have a great place to shine at home.

The included SD card reader means it’s easy to load up images and put them on the Canvas locally, but I also found that uploading from whatever Wi-Fi-connected device I had access to around the house was easy and fast (again, seems like Netgear’s core expertise came into play here). The ability to quickly change the orientation, which is fast and simple even without the rotation mount accessory, is another big plus for your own photos, as it means you can show off both portraits and landscapes.

Oh, and the ability to load your own artwork isn’t limited to just your photography, of course — any image in a standard format, including animated GIFs, can work on the Meural, which means it’s really only limited by the scope of what’s available on the internet.

Bottom line

Between the frame options, which you can swap out for different color options eventually when they’re sold separately, and the ability to upload your own content to the Canvas, it’s easily the most customizable piece of home decor you can find right now. For some, opting to move up to something like Samsung’s The Frame TV might be a better option, but that’s much larger, much more expensive, much heavier for mounting and not as flexible when it comes to playlists and your own curation of art to display.

The Meural Canvas II provides largely the same visual experience as the generation it replaces, but the other improvements make this a much better product overall, with faster, more reliable Wi-Fi connectivity, improved motion controls, more flexible on-device storage and new mounting options. If you like some variety in your wall art, or you’ve just been trying to figure out how to do something interesting with all those pictures you take, the Meural Canvas II is a great option.

Placement is the much-needed talent agent for jobseekers

By Josh Constine

“We’re giving away money to strangers on the internet” is a pretty cavalier pitch for a new startup. But the more I learned about Placement, the smarter it sounded. In exchange for 10% of your income for 18 to 36 months, Placement will find you a much higher paying job, prep you for the interview and help you move to your new city of employment.

Actors, athletes and musicians have talent agents. Why shouldn’t office workers? That’s co-founder and CEO Sean Linehan’s vision for Placement. The former VP of product at Flexport thinks he can consistently get people a 30% raise on their cost of living-adjusted income if they’re willing to relocate from either their sleepy hometown or an overpriced metropolis.

“We think you can transform your life without becoming an engineer. You just have to be in the right place,” says Linehan. Not everyone is going to learn to code, and Placement isn’t a school. “We’re not in the business of training people to do jobs. We’re in training people to get jobs.”

Placement sits at the lucrative center of a slew of megatrends. People switching jobs more often. The desperate need to pay off crushing student loan debt. The rise of mid-size cities as rent gets out of control in San Francisco and New York. Social apps keeping people in touch from afar. The search for deeper fulfillment going mainstream.

Placement co-founder and CEO Sean Linehan

Through the normalization of income sharing agreements, Placement has found a way to powerfully monetize these societal shifts. That potential has attracted a $3 million seed round led by Founders Fund and backed by Coatue’s new seed fund, XYZ Ventures, The House Fund, plus angels like Flexport CEO Ryan Petersen, Eventbrite founders Julia and Kevin Hartz, DoorDash CEO Tony Xu, 137 Ventures MD Elizabeth Weil and her husband Facebook Calibra VP of Product Kevin.

With the cash to build out its jobseeker’s software toolkit, Placement could grow far beyond the Jerry Maguire-style boutique talent agency into a scalable way to put millions on a better career track. “The number one problem that I see in the American economy right now is the lack of income mobility,” Linehan says. “There are so many services for making rich people get richer, but what about services to help low-income people to get to the middle, or help those in the middle to improve?”

“If I stayed home, there’s just no way”

The CEO’s own rise was “a tried and true American tale,” he tells me. “I grew up in a pretty low-income neighborhood in San Bernardino . . . below the poverty line.” But a chance to attend UC Berkeley brought him to Silicon Valley, and the economic powerhouse city of San Francisco (before the housing crisis made it so expensive). “I don’t think I could have been as successful if I went to another place. If I had stayed in my home town, there’s just no way.”

Yet after college, when friends moved away and he broke up with his girlfriend, Linehan found himself living in a bunkbed by himself with extra space. “I called a friend back home working a minimum wage job, still living at home, and said ‘Your life kinda sucks. Come crash with me!,’ ” Linehan recalls. “He was super smart — smarter than most of the people I went to Berkeley with, but he never got on the train out of town.”

In the following years, Linehan coached his friend through becoming a professional and navigating interviews. “Now he’s tripled his income on a cost of living adjusted basis. He went from minimum wage to $70,000 to $80,000.” That ignited the idea for Placement. “How do you take that process of tapping people who are special and just need economic opportunity, and bring it to more people?” But Linehan needed a co-founder who could execute on getting these up-and-comers jobs.

That’s where Katie Kent came in. Also from the product team at Flexport, Kent had helped start Zipfian Academy as the first data science bootcamp in America. The 12-week crash course had been placing 93% of graduates into full-time roles when Zipfian was acquired by Galvanize, where Kent became director of outcomes with the mandate to get students great jobs. The right idea, experience and the track record of turning Flexport into a $3.2 billion freight forwarding unicorn led investors to jump at the chance to fund Placement.

Share me the money

So how exactly do Placement’s income sharing agreements work? “They only pay us if they make more money on a cost of living adjusted basis” Linehan explains.

First, the startup recruits through targeted advertising and word of mouth referrals, which the company says 100% of clients have provided. Primarily, it’s seeking business professionals with a skill mismatched to their city, such as sales, human resources or operations in a place without companies competing to hire for those roles. They might have never left their hometown or returned after school at a mid-tier college, suppressing their earning potential. But lack of knowledge about jobseeking, fears of leaving their support network or a lack of funds to finance a move keep them stuck there.

“There are two moments when society puts a gentle hand on your shoulder saying its okay to move away: when you go to college and when you graduate college,” says Linehan. “We’re trying to engineer a third moment. We give people the permission and space to have that conversation with their family by providing that forcing function.” Placement serves the same utility the CEO did for his friend, revealing that if they seize the opportunity of moving to a growing but still affordable city like Denver, Austin, Raleigh or Seattle, “people’s lives would be so much better.”

The other demographic Placement seeks is the 10 million-plus workers who’ve gotten in over their heads in some of the country’s priciest cities. “If you’re ambitious and talented but not an engineer in SF, this is a hard life. The costs are exceeding the benefits at this point.” Placement looks for cheaper cities where their skills are still relevant and they might even earn the same or a little less, but they can fetch a huge increase in income on a cost of living-adjusted basis and they have a path to buying a house. Linehan declares that “Our controversial opinion is that more important than reskilling people is getting them to the right place where the work is happening in the first place.”

Placement then evaluates the prospective client in what is currently an extremely selective process to determine if they’re undervalued based on their skills, qualifications, shortfalls and redflags. If they’re already being adequately or overpaid, it won’t accept them. Those eligible are offered access to Placement’s research on all the optimal salary and location/hirer pairs for their role, which most people wouldn’t or couldn’t do themselves. Linehan says, “We run their job search for them. We’re kind of like a concierge.”

Once they’ve selected some targets, Placement quarterbacks their preparation process, helping them to improve their LinkedIn and resume, practice telling their story and offering mock interviews with experts in their field. As they progress through interviews Placement sets up and requires hirers offer remotely, it teaches clients to negotiate to get their best possible compensation.

“If you’re a normal person who didn’t go to an elite institution or are a couple years out of school, there’s no resources,” Linehan laments. While some top coding schools and other bootcamps place graduates, and some startups like Pathrise are also working on interview prep, most seeking a new employer end up relying on mediocre job hunting tips they find online. That’s in part because it was hard to get people to fork over significant cash in exchange for instruction that wasn’t guaranteed to help.

How Placement income sharing agreements work

The Placement income sharing agreement is designed to align incentives, though. It’s vested in getting clients not only the best job and salary, but one they’ll want to stick with. As long as the startup nets them a higher adjusted income, clients pay 10% of their earnings. That lasts for 18 months, or 36 months if they receive Placement’s $5,000 relocation stipend and human support. There are also caps on the total Placement can get paid back, and the agreement dissolves after five years so clients aren’t locked in if things don’t work out.

For example, Placement aims to help someone earning $40,000 per year pre-taxes reach $52,000 on a cost of living adjusted basis. They’d end up paying Placement $7,794 over the course of 18 months, or $433 per month. After the bill, they’d still be earning $3,900 per month, or $567 more than they used to. If they take the $5,000 relocation stipend and extra assistance, their ISA extends to 36 months and they’ll end up paying back $15,588 total, including the stipend.

Clients are likely to keep growing their compensation after their Placement ISA ends, so they’ll start reaping all the added proceeds. The startup has worked with fewer than 1,000 clients to date, but is supposedly growing quickly.

Eventually, Placement could move into working with programmers and designers, but it sees a big gap in assistance for business roles. Linehan notes that “We’re providing an option that will be available to a lot more people than a Lambda School or Galvanize coding bootcamp. Not everyone’s going to be software engineers.”

Making America anti-fragile

The biggest hurdle for Placement will be scaling what can be quite a hands-on, relationship-driven process of matching clients with the right hirers. “It’s one thing to get one person a job. It’s another to get 10,000 people a job,” Linehan admits. But he conquered the same problem at Flexport, which was moving 1,000 shipping containers across the ocean but had to figure out “how the hell do you move 1 million?”

Placement co-founders (from left): Katie Kent and Sean Linehan

That requires Placement to pour product know-how into building tools that equip clients to take more initiative to match themselves with hirers and teach themselves interview skills. It also must automate more of its marketing outreach, client screening and connections to recruiters while retaining a human element worth a four to five-figure price.

Right now, the startup’s team numbers just four, and though it will expand to seven soon, it may need to raise a bunch more to chase this dream. Some investors have been understandably skeptical about the whole “handing out $5,000” model without onerous ISAs.

For comparison, the one-year MissionU school for business and data jobs that was acquired and shut down by WeWork asked for 15% of income for three years without a relocation stipend, or $23,400 on a $52,000 per year job. ISAs for General Assembly’s tech job education cost 10% for 48 months, even if students don’t earn more than in their old job. Pathrise’s slimmer offering costs just 7% for one year. Colleges are jumping on the trend too, with some working with startup Leif to run their ISAs.

A https://t.co/Poyrlb586p customer just got 4 job offers!

He accepted a 319% raise.

So excited for him 🎉🎉🎉🎉

— Katie Kent (@k80kent) November 1, 2019

Placement has plans to cover prickly edge cases. If someone gets laid off from their new job, the startup will help them find another. “We’re on the hook to make sure they’re successful,” Linehan insists. It only won’t step in if an employee is fired for an ethical problem like sexual harassment or committing fraud. And if someone simply gets lonely in their unfamiliar city, they’re not required to stay, though moving home could hurt their earnings and Placement’s take. That’s why the startup is working to help its clients find community, even amongst each other, so they don’t feel isolated, and prefers sending workers to cities where they know someone.

Meanwhile, Placement must resist the temptation to become a hiring agency paid by employers and instead work fully on behalf of its clients. “When you’re aligned economically with the employer, you’re just chasing dollars from bigger and bigger whales of companies, and at one point you figure out you’re a recruiting firm for the Gap,” Linehan says with a shudder. The complexity of dealing with the U.S. Internal Revenue Service is enough hassle, so Placement doesn’t intend to work with jobseekers abroad or those that need visas, as “it’s not good for startups if you’re at the mercy of the government.”

Luckily, U.S. salaries total $8.6 trillion per year, Linehan claims, so it’s got enough of a domestic market. “The American economy is so huge that I don’t see other people tackling problems like that being competitive.” Placement does have potential to use its data to recommend and teach specific skills. “If you just make this change, if you learn Excel, you could totally get this job in a different industry that pays more and that you’ll like more,” Linehan says. He also dreams of one day improving urban planning by suggesting cities build music venues or parks that jobseekers say would soften the landing of moving there.

Zooming out, there’s also chance for Placement make the country more stable and resistant to strong-man populism promising financial security. “A two-tier society is fragile. I don’t want to live in a democracy where there’s a bunch of hay waiting for a matchstick to set it on fire,” Linehan concludes. “There doesn’t have to be a have and a have-not class, and you don’t need the government to do forced redistribituion to make everything fair. You just need people that care about getting on the right track, and that to me is a worthy cause to dedicate a life to.”

With echoes of Theranos, Truvian Sciences revives the dream of low-cost, accessible blood tests

By Jonathan Shieber

A little over a year after the dissolution of the once high-flying blood testing startup Theranos, another startup has raised over $27 million to breathe new life into the vision of bringing low-cost blood tests to point-of-care medical facilities.

Unlike Theranos, Truvian Sciences is not claiming that most of its blood tests do not need clearance from the U.S. Food and Drug Administration, and is, in fact, raising the money to proceed with a year-long process to refine its technology and submit it to the FDA for approval.

“More and more consumers are refusing to accept the status quo of healthcare and are saying no to expensive tests, inconvenient appointments and little to no access to their own test results,” said Jeff Hawkins, the president and chief executive of Truvian, in a statement. “In parallel, retail pharmacies are rising to fill demand, becoming affordable health access points. By bringing accurate, on-site blood testing to convenient sites, we will give consumers a more seamless experience and enable them to act on the vast medical insights that come with regular blood tests.”

Hawkins, the former vice president and general manager of reproductive and genetic health business at Illumina, is joined by a seasoned executive team of life sciences professionals including Dr. Dena Marrinucci, the former co-founder of Epic Sciences, who serves as the company’s senior vice president of corporate development and is a co-founder of the company.

Image courtesy of Flickr/Mate Marschalko

As part of today’s announcement, the company said it was adding Katherine Atkinson, a former executive at Epic Sciences and Illumina, as its new chief commercial officer, and has brought on the former chairman of the Thermo Fisher Scientific board of directors, Paul Meister, as a new director.

Funding for the company came from GreatPoint Ventures and included DNS Capital,Tao Capital Partners and previous investor Domain Associates.

The ultimate goal, according to Hawkins, is to develop a system that can be installed in labs and can provide accurate results in 20 minutes for a battery of health tests from a small sample of blood for as low as $50. Typically, these tests can cost anywhere from several hundred to several thousand dollars — depending on the testing facility, says Hawkins.

Using new automation and sensing technologies, Truvian is aiming to combine chemistries, immunoassays and hematology assays into a single device that can perform standard assessment blood tests like lipid panels, metabolic panels, blood cell counts, and tests of thyroid, kidney and liver functions.

The company’s system includes remote monitoring and serviceability, according to a statement from Truvian. Its dry reagent technology allows materials to be stored at room temperature, removing the need for cold chain or refrigerated storage. According to a statement, the company is working to receive a CE Mark in the European Economic Area and submitted to the FDA for 510(k) clearance along with a  “clinical laboratory improvement amendments” waiver application to let the devices be used in a retail setting or doctor’s office.

“We don’t believe that single drop of blood from a finger stick can do everything,” says Hawkins (in opposition to Theranos). “Fundamentally as a company we have built the company with seasoned healthcare leaders.”

As the company brings its testing technology to market, it’s also looking to compliment the diagnostics toolkit with a consumer-facing app that would provide a direct line of communication between the company and the patients receiving the results of its tests.

Truvian’s data will integrate with both Apple and Google’s health apps as well as reside on the company’s own consumer-facing app, according to Hawkins.

“At the end of the day precision medicine is going to come from integrating these data sources,” says Hawkins. “I think if we pull off what we want we should be able to make your routine blood testing far more accessible.”

Macy’s said hackers stole customer credit cards — again

By Zack Whittaker

For the second time in as many years, Macy’s customers have been hit by a data breach involving countless numbers of credit cards.

In a filing with the California attorney general, the retail giant said hackers siphoned off customers’ names, addresses, and phone numbers, but also credit card numbers, card verification codes, and expiration dates by inserting malicious code on its website and quietly sending the stolen data back to the hackers.

Macy’s said the breach lasted a week, between October 7 and October 15. The retail giant did not say how many customers were affected, but the breach is likely to affect thousands of customers.

It’s the latest example of hackers breaking into websites and installing credit card skimming malware. It’s not known who was behind the credit card theft, but a hacking group known as Magecart has been behind some of the largest credit card skimming efforts in recent years — including the American Cancer SocietyBritish AirwaysTicketmasterAeroGarden and Newegg.

Last year, Macy’s admitted a months-long breach that saw hackers steal credit card data and passwords about 0.5% of its customer base — on both its website and Bloomingdale’s site, which Macy’s owns. The breach resulted in a class action suit, which accused Macy’s of “lackadaisical, cavalier, reckless, and negligent” security practices.

Macy’s is one of the most popular websites in the U.S., according to Alexa rankings.

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