In TechCrunch investor surveys of years past, we’ve seen a big focus on fixing what’s broken or bringing the infrastructure into the modern era. But the world has dramatically changed since the beginning of the COVID-19 pandemic.
More of us saw our doctor on video than ever before in 2020 — reaching a 300-fold increase in telehealth visits. It was the year healthcare finally moved fully into the digital space with data management solutions as well. And, though those digital visits have fallen slightly from the beginning of the pandemic, it doesn’t look like people want to go back to the way things were in the foreseeable future.
Now we’re onto the next phase where more people will be getting vaccinated, more of us will likely start to return to the office towards the end of the year, and there’s now a slew of new tech solutions to the issues 2020 presented. If you are investment-minded, as so many of our TechCrunch readers are, you will likely see a lot of potential in this space in 2021.
So we asked some of our favorite health tech VCs from The TechCrunch List where we are headed in the next year, what they’re most excited about and where they might be investing their dollars next. We asked each of them the same six questions, and each provided similar thoughts, but different approaches. Their responses have been edited for space and clarity:
Do you see more consumer demand for digital services? How does this trend affect what you are looking to invest in for 2021?
The pandemic certainly intensified pressure on the legacy, fee-for-service, activity-based healthcare system since volumes dried up for several months. People were scared to go to the doctor and doctors who are only paid when they see patients saw their revenue evaporate overnight. Telemedicine offered some revenue salvation fee-for-service healthcare but it was impossible to do as many tests and procedures so they have by and large, since summer 2020, reverted back to in-person as much as possible for increased revenue capture.
On the other hand, value-based providers were, in the short term, more insulated as they are paid based on typical levels of utilization. Not surprisingly, COVID-19 has motivated more providers to embrace value-based care because it offers much more stable cash flows and does not depend on the tyranny of cramming more patients into the daily schedule.
With value-based care, the incentives are strongly aligned for more, and continued, tech-enabled virtual care since it is more profitable for those clinicians when they detect diseases earlier and take action to avoid hospitalizations. The beauty of virtual and tech-enabled care is that it can be delivered more frequently and group visits can be facilitated easily, with multiple specialists or people supporting a patient, to improve coordination and speed of action. Also, much more data can be brought to bear to make these interactions higher quality. Imagine how much better blood pressure is controlled when a doctor has not just the in-office reading but also all of the daily readings, or diabetic control when it is informed by all the data from a patient’s continuous glucose monitor, or post-surgical care when a surgeon can review daily pictures of the surgical site.
The enormity of the opportunity to make healthcare more productive and recession-proof growth from our aging population will attract more entrepreneurs and more capital to healthcare IT.
Digital health funding broke records in 2020, with investors pouring in over $10 billion in the first three quarters and a jump in deals overall, compared to the previous year. Do you see that trend continuing as we move back to offices and out of this pandemic or do you think this was a blip due to special circumstances?
We think growth in healthcare IT has been and will continue to be, driven by (1) better businesses and business models via aligned economic incentives and information and (2) some big wins in the space via Teladoc-Livongo merger and JD Health IPO — so both sides of the supply (great businesses) — demand (investor interest) equation. For payers, many healthcare providers and patients, it is in their interest to adopt more cost-effective approaches for care delivery and to access new data to derive insights and remove arbitrages. These prerequisites are strongly aligned in favor of more healthcare IT company formation, rapid growth and successful exits.
While people may spend more time receiving in-person HC in the future than today, we think the rapid adoption of virtual care in 2020 coupled with ever-stronger incentives for the healthcare system to emulate consumer technology usability and the never-ending imperative of improving affordability, will continue to drive demand for startups. We also think that downward cost pressures will drive demand for technology to replace fax-machine-era, labor-first administrative processes too.
What do you think are the biggest trends to look out for in the digital healthcare industry this next year, given we are likely toward the end of the year to see more workers return to the office and everyone resuming activities as they did before this pandemic hit?
We think that telehealth will become the “Intel Inside” for many of the full stack healthcare IT businesses — Medicare Advantage payers, navigation companies, virtual pharmacies, virtual primary care practices — and that patients will continue to embrace telehealth. As a result, payers will increasingly redesign how insurance benefits work to encourage every patient to start with a telehealth visit every time. In many cases, telehealth will be able to fully resolve the problem and if not, guide the patient, along with the relevant data, to the best next step in care. This will improve responsiveness and reduce costs. We do think that brick-and-mortar players will lag behind since they continue to have strong incentives for in-person care and procedures to cover their large fixed costs.
COVID-19 has also made inescapable the inadequacy of behavioral healthcare in America. We have observed this firsthand through our investment in Lyra Health, which experienced dramatic growth in 2020. We think greater access to behavioral health, better coordination of behavioral health and primary care, better use of medications and tech-enabled care for more complex behavioral health conditions are all large opportunities.
We also foresee virtual care growing in more specialty care areas as patients demand more convenient ways to access specialist expertise and value-based primary care doctors desire more rapid and cost-effective ways to co-manage patients.
How will the Biden administration possibly affect your funding strategy in the digital health field now that there’s a change of the guard?
Economic incentives to lower healthcare cost growth and the desire to use information and data to find arbitrages and insights are as aligned as ever. Remember, the law driving the adoption of new payment models is MACRA, which passed the Senate in a bipartisan 92-8 vote in 2015. This implies an uninterrupted effort to drive the adoption of value-based care in Medicare, Medicare Advantage and Medicaid. A Biden administration will also continue efforts to create more interoperable data systems and support telehealth adoption.
A Biden administration also reduces uncertainty around the permanence of the Affordable Care Act (ACA). They instead will focus their efforts on expanding coverage through enhanced subsidies to buy insurance, more marketing of ACA plans, greater support for e-broker enrollment and strong incentives for states to expand Medicaid. And we do not think Medicare for All will be seriously considered by a ~50/50 Senate, although it will likely be spoken about periodically and loudly by the far left.
What’s the biggest category in your mind for digital health this next year? Why is that?
“Technology-enabled, virtual-everything” as the initial journey in healthcare, until you need to visit a facility because in-person is necessary. In 2020, we witnessed about a decade of user adoption compressed into six months as COVID-19 made it scary, or even impossible, to access in-person healthcare. Nearly every clinician in America, and at about half of the population, conducted a virtual healthcare visit in 2020. What happened? Patients liked it. Clinicians found virtual visits useful. And going forward we think that most care will incorporate aspects of virtual care, asynchronous communication and in-person encounters only when a procedure is needed. As importantly, payers found these approaches to be more cost-effective since care was delivered more rapidly and with only the most necessary diagnostics tests ordered.
Finally, are there any rising startups in your portfolio we should keep our eyes on at TechCrunch?
We have two portfolio companies that may be very compelling candidates: Suki and NewCo Health.
Suki has created a virtual medical assistant that acts as a voice user interface for electronic health records, enabling a doctor to write their clinical notes, enter orders, view information and exchange data with other providers dramatically and more efficiently. They have launched primary care and specialist doctors across dozens of health systems in 2020.
NewCo Health is a startup trying to democratize access to world-class cancer outcomes. Starting initially in Asia, they are tech-enabling the diagnosis, treatment planning and care management processes for cancer patients, connecting expert clinicians to every cancer case.
When the two year-old Indian company Jetsons Robotics began searching for a partner to help design charging stations for their autonomous rooftop solar installation cleaning robots, the Israeli company Powermat was an obvious choice.
While the company had made its name as the designer for wireless charging technologies for consumer electronics, over the past two years the company was shifting its focus to more industrial applications. So it made sense to work with the Indian company on new form factors and applications for its charging technologies.
Indeed, the consumer market that Powermat had hoped to capture had been, by that point, broadly commoditized, so the tech developer needed a new direction.
Cleaning rooftop solar installations can be a costly endeavor, running companies anywhere from $100,000 to $500,000 per year, according to Jetsons Robotics chief executive, Jatin Sharma. The use of robots to replace human labor can save money, but the autonomous solution that the company wanted to build necessitated some kind of wireless charging dock, he said.
Contact-based charging meant too many variables in the outdoor environment, but an inductive charger would be too costly. Until the company worked with Powermat on a solution, Sharma said.
Backed by 100x.vc, Sharma’s robots are already cleaning roughly 1.7 megawatts of solar installations on a daily basis.
For Powermat, the solar cleaning robots are a good test of the company’s new industrial focus, according to chief technology officer Itay Sherman.
“You can look at it like maturation of the market,” Sherman said. “Powermat had been a pioneer in driving wireless technology. This market is maturing and we are moving on to markets where the technology and innovation is important. We have decided to shift our efforts to these emerging markets. Robotics is one, medical devices, IOT, and the automotive market are others.”
Last week, Procter & Gamble (P&G) announced that it was terminating plans to acquire razor startup Billie following a U.S. Federal Trade Commission lawsuit to stop the deal.
Last year, Edgewell Personal Care ditched its debt-heavy $1.37 billion deal for Harry’s, Inc, formerly valued at $1 billion after the FTC sought to block the acquisition.
In addition to these FTC challenges, it is also now becoming clear that relying on VC-subsidized products and celebrating outrageous valuations can be problematic for D2C brands. With a few wonderful and rare exceptions such as Rothy’s (which raised $42 million but was profitable from the beginning and generated $140 million in revenue within two years of launching), D2C unicorns are addicted to the cycle of venture funding to feed growth in order to maintain a high valuation multiple.
The path to profitability has become a more important part of the startup story versus growth at all costs.
This works for a while; however, when the path to profitability appears murky and exit options either don’t appear or only appear from nontech companies with very conservative multiples, the walls start crumbling.
In a WWD article, Odile Roujol, the former CEO of Lancôme who launched venture fund FAB Ventures, said, “Generally speaking, the era of $1 billion valuations for beauty companies is over. The people that struggle have been the companies that spend so much money in just a few years.” She went on to say, “The big corporations now … are not ready to spend $1.2 billion, $1.5 billion on such a brand like Glossier.”
This change in sentiment from acquirers is further fueled by recent research on the challenges of turning hypergrowth companies profitable. In his Harvard Business School case study “Direct to Consumer Brands,” Professor Sunil Gupta wrote, “Acquiring DTC brands is easy for incumbent conglomerates, but making them profitable is challenging. More than three years after Unilever acquired Dollar Shave Club, it was still unprofitable.”
Unilever executives learned that the average cost of acquiring a new customer online was about the same as in stores. David Taylor, CEO of P&G, said his company was still figuring out how to turn recently acquired direct-to-consumer brands into profitable businesses.
Taylor summarized this dilemma, saying, “There are many, many launches that grow fast … a business model that makes money is a higher challenge.” Since making these realizations, incumbent conglomerates will be more cautious when considering the acquisition of hyped D2C brands that raised lots of venture capital.
What’s cooler than beauty companies that are (or were) valued at $1 billion? Beauty tech SaaS companies that are worth $5.2 billion at IPO. We don’t hear much about the leading global beauty tech companies such as Meitu and Perfect Corp. because their founders are not celebrity influencers, they don’t have massive Instagram followings here in the U.S. and they are not celebrated in our media. Although their companies are based in Asia and they raised money mostly from Chinese investors, their companies are global successes.
Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder.
TechCrunch surveyed five key investors who touch different aspects of the consumer electronics industry, based on our TechCrunch List of top VCs recommended by founders, along with other sources.
We asked these investors the same six questions, and each provided similar thoughts, but different approaches:
Despite the pandemic, each identified bright spots in the consumer electronic world. One thing is clear, investors are generally bullish on at-home fitness startups. Multiple respondents cited Peloton, Tonal and Mirror as recent highlights in consumer electronics.
Said Shasta Venture’s Rob Coneybeer, “With all due respect to my friends at Nest (where Shasta was a Series A investor), Tonal is the most exciting consumer connected hardware company I’ve ever been involved with.”
Besides asking about the trends and opportunities they’re pursuing in 2021, the investors we spoke to also identified other investors, founders and companies who are leaders in consumer hardware and shared how they’ve reshaped their investment strategies during the pandemic. Their responses have been edited for space and clarity.
Which consumer hardware sector shows the most promise for explosive growth?
For consumer hardware, offering end users a differentiated experience is extremely important. Social interactions, gamification and high-quality PGC (professionally generated content) such as with Peloton, Xiaomi and Tonal is a must to drive growth. It’s also easy to see how the acceleration of the digital economy created by COVID-19 will also drive growth for hardware.
First, services improved by the speed and reliability of 5G such as live streaming, gaming, cloud computing, etc. will create opportunity for new mobile devices and global mass market consumers will continue to demand high-quality, low-cost hardware. For example, Arevo is experimenting with “hardware as a service” with a 3D printing facility in Vietnam.
For enterprise hardware, security, reliability and fast updates are key competitive advantages. Also as a result of 5G… manufacturing automation and industrial applications. Finally IoT for health and safety may find its sweet spot thanks to COVID-19 with new wearables that track sleep, fitness and overall wellness.
How did COVID-19 change consumer hardware and your investment strategy?
One opportunity for consumer hardware companies to consider as a result of COVID-19 is how they engage with their customers. They should think of themselves more like e-commerce companies, where user experience, ongoing engagement with the consumer and iteration based on market feedback rule the day. While Peloton had this approach well before COVID, it has built a $46 billion company thinking about their products in this way.
For example, some consumers felt the bike was too expensive so instead of responding with a low-end product, the company partnered with Affirm to make their hardware more affordable with pay-as-you-go plans. A Peloton bike is not a one-and-done purchase; there is constant interaction between users, and the company that drives more satisfaction in the hardware adds more value in the business.
Entering 2021, in what way is hardware still hard?
Hardware is still hard because it takes more to iterate fast. The outcome for competitors relative to speed-to-market can be dramatic. For example, every year I look at future generation of EVs with lots of innovations and cool features from existing OEMs but see very few of these making it to market compared to Tesla and other pure players that are cranking out vehicles. Their speed of execution is impressive.
Who are some leaders in consumer hardware — founders, companies, investors?
Is there anything else you would like to share with TechCrunch readers?
Worry less about trends and build products that resonate with customers.
Amazon’s use of dark patterns that add friction to the process of terminating a Prime subscription is being targeted by 16 consumer rights groups in Europe and the US which are taking coordinated action to urge regulatory action.
One of them — Norway’s Consumer Council (NCC) — has also published a report calling out what it describes as the ecommerce giant’s “manipulative” and “unreasonably cumbersome” unsubscribe process for Prime. The report has been punningly titled ‘You can log out, but you can never leave‘.
“It should be as easy to end a subscription as it was to subscribe in the first place. Amazon should facilitate a good user experience instead of hindering customers and tricking them into continuing paid services they do not need or want,” said NCC director of digital policy, Finn Lützow-Holm Myrstad, in a statement.
“In our view, this practice not only betrays the expectations and trust of consumers but breaches European law,” he added.
The Prime subscription is a key tool in Amazon’s arsenal, generating reliably recurring revenue while simultaneously encouraging users to lock themselves in to making additional purchases via the carrot of unlimited ‘free’ fast shipping (which applies to a subset of qualifying items on the marketplace).
Other perks Amazon throws in to juice Prime membership include streaming movies, TV shows, music and games, plus exclusive shopping programs and discounts (though the exact bundle varies by market).
However a lock-in vibe also applies when trying to end a Prime subscription, per the complaints, because Amazon requires users to successfully navigate multiple menus, select from confusingly worded multiple-choice options and scroll past various distracting and/or irrelevant interstitials and dead space in order to locate the button that actually ends their subscription.
And, don’t forget, this is the same company that famously patented a ‘1-click’ button for consumers’ cash to pour into its coffers…
The NCC has made the below video illustrating the various dark patterns Amazon deploys to try to nudge Prime subscribers away from unsubscribing — including a cartoon of a dog barking because, uh, we have no idea tbh…
Complaints against Amazon’s click-heavy process for Prime unsubscribing are being filed by consumer groups in Denmark, France, Germany, Greece, Switzerland and Norway and the US — so a variety of national and regional consumer protection laws are involved.
The NCC’s complaint, for example, makes reference to Norway’s Marketing Control Act — which implements the EU’s Unfair Commercial Practices Directive — providing a framework for “what marketing, commercial practices and terms of service the service providers are allowed to use in different markets”, as it explains in the complaint.
“The Marketing Control Act section 6 implements the general clause in Article 5 of the Directive which states that an unfair commercial practice is banned. What constitutes an unfair commercial practice is defined in the second paragraph of section 6, which states that a commercial practice is unfair if it breaches ‘good business practices’ toward consumers, and is able to significantly alter a consumer’s financial conduct, so that the consumer makes a decision that they would not otherwise have made,” the NCC argues.
Some of the coordinated complaints will be less formal, taking the form of letters written to consumer protection agencies urging them to investigate. In the US, for example, the FTC will be urged to “investigate Amazon’s practices and analyze whether they violate Section 5 of the FTC Act”.
While in Germany the VZBV consumer protection agency told us it’s currently assessing Amazon’s cancellation process for Prime — which it noted “looks a bit different” to the one in the Norwegian complaints — saying it’s not yet clear whether or not it will file a court injunction over the issue.
“Unlike the other consumer organisations taking part in this concerted action, we’re not sending complaints to authorities,” the VZBV spokesperson added. “My employer, the Federation of German Consumer Organisations (vzbv) is able to send legal warnings and, if demands to cease and desist are not being met, sue companies infringing consumer protection laws in its own capacity. We will do so if there is enough legal merit to this case. But as I said, it is not completely decided yet.”
We contacted Amazon for comment on the complaints against the Prime unsubscribe process and it denied making it unclear and difficult for members to cancel their subscription, arguing that it only takes “a few clicks” online or “a quick phone call”.
Here’s its full statement:
Amazon makes it clear and easy for Prime members to cancel their subscription at any time, whether through a few clicks online, a quick phone call or by turning off auto renew in their membership options. Customer trust is at the heart of all of our products and services and we reject the claim that our cancellation process is unfair or creates uncertainty. We take great pride in the Prime service and the number of ways it makes our members lives easier, but we make it easy for customers to leave whenever they choose to. The information we provide in the online cancellation flow gives a full view of the benefits and services members are cancelling.
Consumer groups banding together to apply pressure on tech giants to change dubious practices is not a new phenomenon. Back in 2018, for example, a number of European groups coordinated complaints against Google’s ‘deceptive’ harvesting of location data. Just under a year ago the Irish Data Protection Commission opened a formal investigation — which remains ongoing.
In October, TechCrunch broke the news that PopSockets was developing its own line of MagSafe-compatible products that will support the new wireless charging capabilities of the iPhone 12 devices. Today, at the (virtual) 2021 Consumer Electronics Show, the company formally introduced its upcoming products for the first time. The new line will include three MagSafe-compatible PopGrips, a wallet with an integrated grip, and two mounts.
The first of these is the new PopGrip for MagSafe, which will magnetically attach to MagSafe-compatible cases for iPhone 12 devices.
The design of this PopGrip clears up some confusion over how a PopGrip (the round, poppable dongle that people normally think of when they think of “PopPockets”) will work with a MagSafe device. Instead of attaching just at the base of the grip itself, the grip is integrated into a larger base which attaches to the case.
Meanwhile, the grip has a swappable top so you can change the style of your PopGrip whenever you want without having to buy a whole new accessory.
This grip will also be compatible with PopSockets PopMount 2 phone mounts, including the new PopMount 2 for MagSafe, introduced today.
The PopMount 2 for MagSafe will launch as two solutions: PopMount for MagSafe Multi-Surface and PopMount for MagSafe Car Vent. As described by their name, both products will magnetically attach to iPhone 12 devices either at home or while on-the-go.
For those who use the new PopGrip for MagSafe grip, they’ll be able to leave the grip on then let the mount’s magnets attach to the base.
Image Credits: PopMount Multi Surface for MagSafe
Also new is an updated PopWallet+ for MagSafe, which is combination wallet and grip that lets users carry up to 3 cards that now attaches magnetically to MagSafe-compatible phone cases for iPhone 12 devices. The wallet has an elastic sock so you can extract your cards without having to remove the wallet from the back of the device, and it now includes a shield to protect credit cards from magnetic damage. The grip here is swappable, too.
Image Credits: PopWallet+ for MagSafe
There are also two versions of the PopGrip Slide becoming available. One, the PopGrip Slide Stretch will have expanding arms that attach mechanically to the sides of most phone cases, including iPhone 12 cases. You can slide this grip to the bottom of the phone to serve as a portrait stand or to attach MagSafe accessories, without having to remove the grip.
Image Credits: PopGrip Slide Stretch for MagSafe
The PopGrip Slide for iPhone 12 is basically the same thing, but designed to fit the Apple Silicone cases for iPhone 12 devices, more specifically.
Among the first of the new accessories to hit the market will be the PopGrip for MagSafe and PopWallet+ for MagSafe in spring 2021.
The PopGrip Slide Stretch will launch March 21st on PopSockets.com and in select Target locations ahead of a broader rollout. The PopGrip Slide will launch May 1st on PopSockets.com and in Apple Stores. And the PopMount for MagSafe line will launch in summer 2021.
The company also announced a few other non-MagSafe products, including the PopGrip Pocketable, which streamlines the grip when collapsed so the the surface is flat; the PopGrip Antimicrobial, which has an embedded silver-based treatment for protection; and the PopSockets x SOG PopGrip Multi-Tool, made in collaboration with SOG Speciality Knives, which includes a PopGrip with a detachable multi-tool.
The company didn’t share an exact timeframe for these products besides “early 2021.”
In 2020, venture capitalists unceremoniously broke up with D2C brands and product-based businesses.
Many watched as the consumer brands in their portfolios rushed to make hefty layoffs and eke out more runway and grew more concerned with their business models.
Many product-based brands, as it turns out, are no longer interested in chasing venture capital.
Last year, investors adopted a wait-and-see approach to all new investments and prayed portfolio brands could cut their burn significantly enough, stay relevant and ride things out.
Product-based businesses fell out of favor and venture capitalists, if they did invest last year, mainly focused on AI startups, or companies focused on data collaboration, data privacy and healthcare (mostly founded by men, might I add).
From a distance, it sounds like direct-to-consumer founders were left destitute and desperate for financing, wounded by every slow fade or hard pass, beholden as ever to the whims of Silicon Valley.
But as Hal Koss so eloquently shared in his “DTC playbook” post-mortem, this wasn’t a one-way breakup; this parting of ways is actually mutual. Many product-based brands, as it turns out, are no longer interested in chasing venture capital, playing the “grow-at-all-costs” game and relinquishing partial control to investors, despite the pandemic and the uncertain circumstances many founders find themselves facing.
Through my work running and scaling Bulletin, I’ve followed thousands of product-based businesses ranging from indie beauty brands selling clean serums and cleansers to sex tech companies making couples’ vibrators and foreplay accessories. I’ve followed them on Instagram, in the press and across various platforms, and in many cases, I’ve spoken to their founders directly.
Over the past two years, I interviewed executives at more than 30 women-owned businesses for my upcoming book, “How to Build a Goddamn Empire,” and had long phone calls with dozens of independent brands and makers as Bulletin got a handle on how the pandemic was impacting customers. And I noticed something new and remarkable about what founders want now, in 2021, compared to what they wanted in years past.
Back then, I’d get dozens of cold emails and DMs asking how I successfully raised VC and what the unspoken rules might be. I’d hear from business owners who were considering a raise or gearing up for one. Product-based entrepreneurs approached me at panels or Bulletin events and say they wanted to be the “Glossier for X” or the “Away for Y.” Many younger founders didn’t even know what venture capital really was, but they saw it as symbolic validation for the business, or the only way to get “big.”
Now, brands would rather scrape by than pursue an injection of funding on someone else’s terms; just ask the Gorjana founders or Scott Sternberg. Many brands that saw astronomical growth in 2020, like Rosen, Golde, Entireworld and others that spurred similar growth for Etsy and Shopify are fully bootstrapped businesses, and proudly so.
Some founders I’ve spoken to have even outright rejected offers for investment. A lot of D2C brands are interested in learning about alternative forms of financing like bank loans, lines of credit and crowdfunding, and ask about iFundWomen or Kickstarter, observing the success of other fully crowdfunded brands like Dame and Pepper.
Venture capital, from my vantage point, has lost its sheen for a lot of product-based brands. They’re not destitute and desperate for financing. They’re actually scoffing at the prospect and trusting they can succeed, scale and maintain long-term profitability without swapping equity for cash. They’re tripped up by what they’ve been reading in the media, or they’ve survived or even thrived during COVID, as a fully bootstrapped company, and feel more conviction than ever that the “grow slow” approach is the right move.
They’re reading the same stories about layoffs and tenuous unit economics at massive D2C companies and agreeing with Sam Kaplan that the old playbook — pricey customer acquisition practices, rapid scale, endless rounds of funding — is out of date. It’s 2021 and we’re midpandemic. These brands want to turn a profit.
Apple’s marketing of iPhones as ‘water resistant’ without clarifying the limits of the feature and also having a warranty that excludes cover for damage by liquids has got the company into hot water in Italy.
The Italian competition authority (AGCM) has informed the tech giant of an intent to fine it €10 million for commercial practices related to the marketing and warranty of a number of iPhone models since October 2017, starting with the iPhone 8 through to the iPhone 11, following an investigation into consumer complaints related to its promotion of water resistance and subsequent refusal to cover the cost of repairs caused by water damage.
In a document setting out the AGCM’s decision dated towards the end of October — which was made public today (via Reuters) — the regulator concludes Apple violated the country’s consumer code twice because of what it characterizes as “misleading” and “aggressive” commercial practices.
Its investigation found Apple’s iPhone marketing tricked consumers into believing the devices were impermeable to water, rather than merely water resistant — with the limitations of the feature not given enough prominence in ads. While a disclaimer stating that Apple’s warranty excludes damage by liquids was deemed an aggressive attempt to circumvent consumer rights obligations — given its heavy promotion of the devices as water resistant.
Apple places a liquid contact indicator inside iPhones, which changes from white or silver to red on contact with liquid, and checking the indicator is a standard step undertaken by its repair staff.
The AGCM report cites examples of consumers who’s iPhone had taken a “short dive” in the sea being refused cover. Another complainant had been washing their device under the tap — which Apple deemed improper use.
A third reported that their one-month old iPhone XR stopped working after coming into contact with water. Apple told them they must buy a new device — albeit at a subsidized price.
While an iPhone XS user, with a one-year old handset who reported it had never come into contact with water was refused coverage by Apple support who said it had, complained to the regulator there’s no way for a consumer to prove their device was not immersed in water for more than the length of time and depth to which Apple’s small print specifies it has water resistance.
We’ve reached out to Apple for comment on the AGCM’s findings.
The tech giant has 60 days from the date it was notified of the regulator’s intent to fine to appeal the decision.
The size of the penalty is well under half of the operating profit the regulator says Apple’s Italian operation made in the year September 2018 to September 2019, when it note it recorded revenues on its sales and services of €58,652,628; and an operating profit of €26,918,658.
Two years ago Italy’s competition watchdog also fined Apple and Samsung around $15M for forcing updates on consumers that may slow or break their devices. While, this February, France fined Apple $27 million for capping the OS performance of iPhones with older batteries.
Apple has also faced much larger penalties from competition authorities elsewhere in Europe — including being notified of a $1.2BN fine by France’s competition authority in March this year, which accused the tech giant of operating a reseller cartel along with two wholesale distribution partners, Ingram Micro and Tech Data.
Apple also had to stump up as much as €500M in back taxes demanded by French authorities last year.
While some $15BN from Apple’s European HQ is sitting in an escrow account to cover a 2016 European Commission ‘State Aid’ charge that it illegally benefited from corporate tax arrangements in Ireland between 2003 and 2014.
In July Apple and Ireland won the first round of an appeal against the charge. But the Commission filed an appeal in September — meaning the case will go up to the CJEU, likely adding years more of legal wrangling.
EU lawmakers are continuing to work on pushing for global reform of digital taxation, while some Member States push on with their own digital taxes.
The-Wolfpack’s co-founders, Toh Jin Wei, Tan Kok Chin and Simon Nichols (Image Credit: The-Wolfpack)
The COVID-19 pandemic has hit the consumer, leisure and media companies hard, but a new venture firm called The-Wolfpack is still very upbeat on those sectors. Based in Singapore, the firm was founded by former managing directors at GroupM, one of the world’s largest advertising and media companies, and plans to work very closely with each of its portfolio companies. Its name was chosen because they believe “entrepreneurs thrive best in a wolfpack.”
The-Wolfpack’s debut fund, called the Wolfpack Pioneer VCC, is already fully subscribed at $5 million USD, and will focus on direct-to-consumer companies, with plans to invest in eight to 10 startups. The firm is already looking to raise a second fund, with a target of $20 million SGD (about $14.9 million USD) and above, and will set up another office in Thailand, with plans to expand into Indonesia as well.
The-Wolfpack was founded by Toh Jin Wei and Simon Nichols, who met while working at GroupM, and Tan Kok Chin, a former director at Sunray Woodcraft Construction who has worked on projects with Marina Bay Sands, Raffles Hotel and the Singapore Tourism’s offices.
In addition to providing financial capital, The-Wolfpack wants to build ecosystems around its portfolio companies by connecting them with IP owners, digital marketing experts, content producers and designers who can help create offline experiences. It also plans to invest in startups based on opportunities for them to collaborate or cross-sell with one another.
Toh told TechCrunch that formal planning on The-Wolfpack began at the end of 2019, but he and Nichols started thinking of launching their own business five years ago while working together at GroupM.
“Our perspective on what the industry needed was similar — strategic investors who truly knew how to get behind D2C founders,” Toh said.
The COVID-19 pandemic and its economic impact has hurt spending in The-Wolfpack’s three key sectors (consumer, leisure and media). But it also presents opportunities for innovation as consumer habits shift, Nichols said.
For example, even though consumer spending has dropped, people are still “drawn towards brands that build towards higher-quality engagements,” he said. “There is a real business advantage for D2C brands who’ve recognized this shift and know how to act on it.”
The-Wolfpack hasn’t disclosed its investments yet since deals are still being finalized, but some of the brands its debut fund are interested in include one launched by an Australian makeup artist who wants to scale to Southeast Asia, and an online gaming company whose ecosystem includes original content, gaming teams and studios. The-Wolfpack plans to help them set up a physical studio to create an offline experience, too.
“Typically brands have talked at customers, but it’s become a two-way conversation, and startups who get D2C right have a real potential for exponential growth that’s worth investing in,” said Toh.
We review each of Apple’s new M1-powered Macs, Twitter launches its new Stories-like format and Amazon launches a pharmacy service. This is your Daily Crunch for November 17, 2020.
The big story: Reviewing Apple’s new Macs
We’ve got three big hardware reviews today, each one highlighting a new Mac with Apple’s M1 chipset.
First up, there’s the MacBook Air, which Brian Heater says offers strong performance gains and is probably the right Apple Mac for most consumers. Then there’s the new Mac mini desktop, which Matt Burns writes is also a winner.
Lastly, there’s the MacBook Pro, where Matthew Panzarino was most impressed by the battery life:
I personally tested the 13” M1 MacBook Pro and after extensive testing, it’s clear that this machine eclipses some of the most powerful Mac portables ever made in performance while simultaneously delivering 2x-3x the battery life at a minimum.
The tech giants
Twitter’s new Stories feature ‘Fleets’ is struggling under the load — Many Twitter users are reporting Fleets are lagging and moving slowly.
Amazon launches Amazon Pharmacy, a delivery service for prescription medications — Customers can add their insurance information, manage prescriptions and choose payment options all through Amazon’s service.
Google updates Maps with more COVID info and finally launches its Assistant driving mode — Google is updating the COVID layer in Google Maps with some new information, including the number of all-time detected cases in an area and links to resources from local governments.
Startups, funding and venture capital
SpaceX’s Crew Dragon docks with the International Space Station for first operational mission — SpaceX’s astronaut-ferrying Crew Dragon spacecraft is now docked to the International Space Station in Earth’s orbit.
Hover secures $60M for 3D imaging to assess and fix properties — Hover has built a platform that uses eight basic smartphone photos to patch together a 3D image of your home that can then be used by contractors, insurance companies and others.
Trust & Will raises $15M as digital estate planning hits mainstream — Estate planning is a growth business in 2020.
Advice and analysis from Extra Crunch
Construction tech startups are poised to shake up a $1.3-trillion-dollar industry — Too many of the key processes involved in managing multimillion-dollar construction projects are carried out on Excel or even with pen and paper.
Why some VCs prefer to work with first-time founders — It all depends on the type of venture capitalist you ask.
Five questions from Airbnb’s IPO filing — The company’s S-1 detailed an expanding travel giant with billions in annual revenue that was severely disrupted by the COVID-19 pandemic.
(Reminder: Extra Crunch is our membership program, which aims to democratize information about startups. You can sign up here.)
Conan O’Brien will launch a weekly variety show on HBO Max — “In 1993 Johnny Carson gave me the best advice of my career: ‘As soon as possible, get to a streaming platform.’ ”
Lego expands its Super Mario world with customization tools, new Mario power-ups and more characters — Lego’s partnership with Nintendo delivered a pretty awesome debut earlier this year, and now it’s following up with additional sets.
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.
Startups need to live in the future. They create roadmaps, build products and continually upgrade them with an eye on next year — or even a few years out.
Big companies, often the target customers for startups, live in a much more near-term world. They buy technologies that can solve problems they know about today, rather than those they may face a couple bends down the road. In other words, they’re driving a Dodge, and most tech entrepreneurs are driving a DeLorean equipped with a flux-capacitor.
That situation can lead to a huge waste of time for startups that want to sell to enterprise customers: a business development black hole. Startups are talking about technology shifts and customer demands that the executives inside the large company — even if they have “innovation,” “IT,” or “emerging technology” in their titles — just don’t see as an urgent priority yet, or can’t sell to their colleagues.
Rather than asking large companies about which technologies they were experimenting with, we created four buckets, based on what you might call “commitment level.” (Our survey had 211 respondents, 62% of them in North America and 59% at companies with greater than $1 billion in annual revenue.) We asked survey respondents to assess a list of 16 technologies, from advanced analytics to quantum computing, and put each one into one of these four buckets. We conducted the survey at the tail end of Q3 2020.
Respondents in the first group were “not exploring or investing” — in other words, “we don’t care about this right now.” The top technology there was quantum computing.
Bucket #2 was the second-lowest commitment level: “learning and exploring.” At this stage, a startup gets to educate its prospective corporate customer about an emerging technology — but nabbing a purchase commitment is still quite a few exits down the highway. It can be constructive to begin building relationships when a company is at this stage, but your sales staff shouldn’t start calculating their commissions just yet.
Here are the top five things that fell into the “learning and exploring” cohort, in ranked order:
Technologies in the third group, “investing or piloting,” may represent the sweet spot for startups. At this stage, the corporate customer has already discovered some internal problem or use case that the technology might address. They may have shaken loose some early funding. They may have departments internally, or test sites externally, where they know they can conduct pilots. Often, they’re assessing what established tech vendors like Microsoft, Oracle and Cisco can provide — and they may find their solutions wanting.
Here’s what our survey respondents put into the “investing or piloting” bucket, in ranked order:
By the time a technology is placed into the fourth category, which we dubbed “in-market or accelerating investment,” it may be too late for a startup to find a foothold. There’s already a clear understanding of at least some of the use cases or problems that need solving, and return-on-investment metrics have been established. But some providers have already been chosen, based on successful pilots and you may need to dislodge someone that the enterprise is already working with. It can happen, but the headwinds are strong.
Here’s what the survey respondents placed into the “in-market or accelerating investment” bucket, in ranked order:
The iPhone 12 Pro Max is probably the easiest of all of the new iPhone 12 models to review. It’s huge and it has a really, really great camera. Probably one of the best cameras ever in a smartphone if not the best. For those of you coming from an iPhone “Max” or “Plus” model already, it’s a no brainer. Get it, it’s fantastic. It’s got everything Apple has to offer this year and it’s even a bit smaller than the iPhone 11 Pro Max.
For everyone else — the potential upsizers — this review has only a single question to answer: Do the improvements in camera and screen size and potentially battery life make it worth dealing with the hit in handling ergonomics from its slim but thicc build?
The answer? Yes, but only in certain conditions. Let’s get into it.
I’m not going to spend a ton of time on performance or go through a feature-by-feature breakdown of the iPhone 12 Pro Max. I’ve published a review of the iPhone 12 and iPhone 12 Pro here and just today published a review of the iPhone 12 mini. You can check those out for baseline chat about the whole lineup.
Instead, I’m going to focus specifically on the differences between the iPhone 12 Pro Max and the rest of the lineup. This makes sense because Apple has returned us to a place that we haven’t been since the iPhone 8.
Though the rest of the lineup provides a pretty smooth arc of choices, the iPhone 12 Pro Max introduces a pretty solid cliff of unique features that could pull some people up from the iPhone 12 Pro.
The larger size sets off all of the work Apple did to make the iPhone 12 Pro look like a jewel. Gold coated steel edges and the laminated clear and frosty back with gold accent rings around the cameras and glossy logo. All of it screams posh.
Some of you may recall that there was a period of time where there existed a market for ultra-luxury phone makers like Vertu to use fine materials to “elevate” what were usually pretty poorly implemented Symbian or Android phones at heart. Leather, gold, crystal and even diamond were used to craft veblen goods for the über rich just so they could stay ‘above’ the proles. Now, Apple’s materials science experimentation and execution level is so high that you really can’t get anything on the level of this kind of pure luxe manifestation in a piece of consumer electronics from anyone else, even a ‘hand maker’.
To be fair, Vertu and other makers didn’t die because Apple got good at gold, they died because good software is needed to invest life into these bejeweled golems. But Apple got better at what they did faster than they could ever get good at what Apple does.
This is a great piece of kit and as mentioned even smaller than previous Max models with the same size screen. But in my opinion, the squared off edges of this year’s aesthetic make this phone harder to hold, not easier at this size. This is essentially the opposite effect from the smaller models. For a phone this size I’d imagine everyone is going to use a case anyway so that’s probably moot, but it’s worth noting.
My feelings on the larger iPhones, which I haven’t used as a daily driver since the iPhone 8, remain unchanged: these are two-handed devices best used as tablet or even laptop replacements. If you run your life from these phones then it makes sense that you’d want a huge screen with plenty of real-estate for a browser and a pip video chat and a generous keyboard all at once.
When we’re talking about whether or not to move up to this beast I think it’s helpful to have a list of everything here that is different, or you think might be but isn’t, from the iPhone 12 Pro.
Screen. The 6.7” iPhone 12 Pro Max screen has a resolution of 2778×1284 at 458 ppi. That’s nearly identical but slightly under the iPhone 12 Pro’s 460ppi. So though this is a difference I’d count it as a wash. The screen’s size, of course, and the software support that some Apple and third-party apps to take advantage of the increased real-estate are still a factor.
Performance. The iPhone 12 Pro Max performs exactly as you’d expect it to in the CPU and GPU department, which is to say exactly the same as the iPhone 12 Pro. It also has the same 6GB of RAM on board. Battery performance was comparable to my iPhone 11 Pro Max testing which is to say it outlasted a typical waking day though I could probably nail it in a long travel day.
Ultra wide angle camera. Exactly the same. Improved over the iPhone 11 Pro massively due to software correction and the addition of Night Mode, but the same across the iPhone 12 Pro lineup.
Telephoto camera. This is a tricky one because it uses the same sensor as the iPhone 12 Pro, but features a new lens assembly that results in a 2.5x (65mm equivalent) zoom factor. This means that though the capture quality is the same, you can achieve tighter framing at the same distance away from your subject. As a heavy telephoto user (I shot around 30% of my pictures over the last year in the iPhone 11 Pro’s telephoto) I love this additional control and the slightly higher compression that comes with it.
The framing control is especially nice with portraits.
Though it comes in handy with distant subjects as well.
There is also one relatively stealthy (I cannot find this on the website but I verified that it is true) update to the telephoto. It is the only lens other than the wide angle across all of the iPhone 12 lineup to also get the new optical stabilization upgrades that allow it to make 5,000 micro-adjustments per second to stabilize an image in low light or shade. It still uses the standard lens-style stabilization, not the new sensor-shift OIS used in the wide angle lens, but it goes up 5x in the amount of adjustments it can make from the iPhone 11 Pro or even the iPhone 12 Pro.
The results of this can be seen in this shot, a handheld indoor snap. Aside from the tighter lens crop, the additional stabilization adjustments result in a crisper shot with finer detail even though the base sensor is identical. It’s a relatively small improvement in comparison to the wide angle, but it’s worth mentioning and worth loving if you’re a heavy telephoto user.
Wide angle camera. The bulk of the iPhone 12 Pro Max difference is right here. This is a completely new camera that pushes the boundaries of what the iPhone has been capable of shooting to this point. It’s actually made up of 3 big changes:
Sensor-shift OIS systems are not new, they were actually piloted in the Minolta Dimage A1 back in 2003. But most phone cameras have used lens shift technology because it is very common, vastly cheaper and easier to implement.
All three things work together to deliver pretty stellar imaging results. It also makes the camera bump on the iPhone 12 Pro Max a bit taller. Tall enough that there is actually an additional lip on the case meant for it made by Apple to cover it. I’d guess that this additional thickness stems directly from the wide angle lens assembly needing to be larger to accommodate the sensor and new OIS mechanism and then Apple being unwilling to let one camera stick out further than any other.
These are Night Mode samples, but even there you can see the improvements in brightness and sharpness. Apple claims 87% more light gathering ability with this lens and in the right conditions it’s absolutely evident. Though you won’t be shooting SLR-like images in near darkness (Night Mode has its limits and tends to get pretty impressionistic when it gets very dim) you can absolutely see the pathway that Apple has to get there if it keeps making these kinds of improvements.
Wide angle shots from the iPhone 12 Pro Max display slightly better sharpness, lower noise and better color rendition than the iPhone 12 Pro and much more improvement from the iPhone 11 Pro. In bright conditions you will be hard pressed to tell the difference between the two iPhone 12 models but if you’re on the lookout the signs are there. Better stabilization when handheld in open shade, better noise levels in dimmer areas and slightly improved detail sharpness.
The iPhone 12 Pro already delivers impressive results year on year, but the iPhone 12 Pro Max leapfrogs it within the same generation. It’s the most impressive gain Apple’s ever had in a model year, image wise. The iPhone 8 Plus and the introduction of Apple’s vision of a blended camera array was forward looking, but even then image quality was pretty much parity with the smaller models that year.
A very significant jump this year. Can’t wait for this camera to trickle down the lineup.
LiDAR. I haven’t really mentioned LiDAR benefits yet, but I went over them extensively in my iPhone 12 Pro review, so I’ll cite them here.
LiDAR is an iPhone 12 Pro and iPhone 12 Pro Max only feature. It enables faster auto-focus lock-in in low light scenarios as well as making Portrait Mode possible on the Wide lens in Night Mode shots.
First, the auto-focus is insanely fast in low light. The image above is what is happening, invisibly, to enable that. The LiDAR array constantly scans the scene with an active grid of infrared light, producing depth and scene information that the camera can use to focus.
In practice, what you’ll see is that the camera snaps to focus quickly in dark situations where you would normally find it very difficult to get a lock at all. The LiDAR-assisted low light Portrait Mode is very impressive, but it only works with the Wide lens. This means that if you are trying to capture a portrait and it’s too dark, you’ll get an on-screen prompt that asks you to zoom out.
These Night Mode portraits are demonstrably better looking than the standard portrait mode of the iPhone 11 because those have to be shot with the telephoto, meaning a smaller, darker aperture. They also do not have the benefit of the brighter sensor or LiDAR helping to separate the subject from the background — something that gets insanely tough to do in low light with just RGB sensors.
As a note, the LiDAR features will work great in situations under 5 meters along with Apple’s Neural Engine, to produce these low-light portraits. Out beyond that it’s not much use because of light falloff.
Well lit Portrait Mode shots on the iPhone 12 Pro Max will still rely primarily on the information coming in through the lenses optically, rather than LiDAR. It’s simply not needed for the most part if there’s enough light.
The should I buy it workflow
I’m straight up copying a couple of sections for you now from my iPhone 12 Pro and iPhone 12 mini reviews because the advice applies across all of these devices. Fair warning.
In my iPhone 12/12 Pro review I noted my rubric for selecting a personal device:
And this is the conclusion I came to at the time:
The iPhone 12 Pro is bested in the camera department by the iPhone 12 Pro Max, which has the biggest and best sensor Apple has yet created. (But its dimensions are similarly biggest.) The iPhone 12 has been precisely cloned in a smaller version with the iPhone 12 mini. By my simple decision-making matrix, either one of those are a better choice for me than either of the models I’ve tested. If the object becomes to find the best compromise between the two, the iPhone 12 Pro is the pick.
But now that I’ve had time with the Pro Max and the mini, I’ve been able to work up a little decision flow for you:
If you haven’t gathered it by now, I recommend the iPhone 12 Pro Max to two kinds of people: the ones who want the absolute best camera quality on a smartphone period and those who do the bulk of their work on a phone rather than on another kind of device. There is a distinct ‘fee’ that you pay in ergonomics to move to a Max iPhone. Two hands are just plain needed for some operations and single-handed moves are precarious at best.
Of course, if you’re already self selected into the cult of Max then you’re probably just wondering if this new one is worth a jump from the iPhone 11 Pro Max. Shortly: maybe not. It’s great but it’s not light years better unless you’re doing photography on it. Anything older though and you’re in for a treat. It’s well made, well equipped and well priced. The storage upgrades are less expensive than ever and it’s really beautiful.
Plus, the addition of the new wide angle to the iPhone 12 Pro Max makes this the best camera system Apple has ever made and quite possibly the best sub compact camera ever produced. I know, I know, that’s a strong statement but I think it’s supportable because the iPhone is best in class when it comes to smartphones, and no camera company on the planet is doing the kind of blending and computer vision Apple is doing. Though larger sensor compact cameras still obliterate the iPhone’s ability to shoot in low light situations, the progress over time of Apple’s ML-driven blended system.
A worthy upgrade, if you can pay the handling costs.