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Woven adds to its calendar app’s $20/mo premium plan

By Lucas Matney

Productivity software has had a huge couple of years, yet for all of the great note-taking apps that have launched, consumers haven’t gotten a lot of quality options for Google Calendar replacements.

This week, Woven, a calendar startup founded by former Facebook CIO Tim Campos is shaking up the premium tier of their scheduling software, hoping that productivity-focused users will pay to further optimize the calendar experience just as they have paid up for subscription email services like Superhuman and note-taking apps like Notion.

There’s been a pretty huge influx of investor dollars into the productivity space which has shown a lot of promise in bottoms-up scaling inside enterprises by first aiming to sell their products to individuals. Woven has raised about $5 million to date with investments from Battery Ventures, Felicis Ventures and Tiny Capital, among others.

“Time is the most valuable asset that we have,” Campos told TechCrunch. “We think there’s a real opportunity to do much more with the calendar.”

Their new product will help determine just how much demand there is for a pro-tier calendar that aims to make life easier for professionals than Google Calendar or Outlook Calendar cares to. The new product, which is $20 per month ($10 during an early access period if you pay for a year), builds on the company’s free tier product giving users a handful of new features. There’s still quite a bit of functionality in the free tier still, which is sticking around, but the lack of multi-account support is one of the big limitations there. 

Image credit: via Woven.

The core of Woven’s value is likely its Calendly-like scheduling links which allow single users to quickly show when they’re free, or give teams the ability to eliminate back-in-forth entirely when scheduling meetings by scanning everyone’s availability and suggesting times that are uniformly available. In this latest update, the startup has also launched a new feature called Open Invite which allows users to blast out links to join webinars that recipients can quickly register for.

One of Woven’s top features is probably Smart Templates which aims to learn from your habits and strip down the amount of time it takes to organize a meeting. Selecting the template can automatically set you up with a one-time Zoom link, ping participants for their availability with Woven’s scheduling links and take care of mundane details. Now, the titles automatically update depending on participants, location or company information as well. While plenty of productivity happens on the desktop, the startup is trying to push the envelope on mobile as well. They’ve added an iMessage integration to quickly allow people to share their availability and schedule meetings inside chat.

The product updates arrive soon after the announcement of the company’s Zoom “Zapp,” which shoves the app’s functionality inside Zoom and will likely be a bit sell to new users.

 

How to Design a Supersonic Plane for the (Fairly Rich) Masses

By Eric Adams
Boom Supersonic's sleek prototype craft rolled out this week; the final production model will be quieter than previous supersonics, and a novel fly-by-wire system will keep it stable at low speeds.

How to Beat Zoom Fatigue—and Set Healthy Boundaries

By Quinisha Jackson-Wright
This new era of constant video chats means we're all in front of cameras more than ever before. Here's how to cope.

Zoom to start first phase of E2E encryption rollout next week

By Natasha Lomas

Zoom will begin rolling out end-to-end encryption to users of its videoconferencing platform from next week, it said today.

The platform, whose fortunes have been supercharged by the pandemic-driven boom in remote working and socializing this year, has been working on rebooting its battered reputation in the areas of security and privacy since April — after it was called out on misleading marketing claims of having E2E encryption (when it did not). E2E is now finally on its way though.

“We’re excited to announce that starting next week, Zoom’s end-to-end encryption (E2EE) offering will be available as a technical preview, which means we’re proactively soliciting feedback from users for the first 30 days,” it writes in a blog post. “Zoom users — free and paid — around the world can host up to 200 participants in an E2EE meeting on Zoom, providing increased privacy and security for your Zoom sessions.”

Zoom acquired Keybase in May, saying then that it was aiming to develop “the most broadly used enterprise end-to-end encryption offering”.

However, initially, CEO Eric Yuan said this level of encryption would be reserved for fee-paying users only. But after facing a storm of criticism the company enacted a swift U-turn — saying in June that all users would be provided with the highest level of security, regardless of whether they are paying to use its service or not.

Zoom confirmed today that Free/Basics users who want to get access to E2EE will need to participate in a one-time verification process — in which it will ask them to provide additional pieces of information, such as verifying a phone number via text message — saying it’s implementing this to try to reduce “mass creation of abusive accounts”.

“We are confident that by implementing risk-based authentication, in combination with our current mix of tools — including our work with human rights and children’s safety organizations and our users’ ability to lock down a meeting, report abuse, and a myriad of other features made available as part of our security icon — we can continue to enhance the safety of our users,” it writes.

Next week’s roll out of a technical preview is phase 1 of a four-stage process to bring E2E encryption to the platform.

This means there are some limitations — including on the features that are available in E2EE Zoom meetings (you won’t have access to join before host, cloud recording, streaming, live transcription, Breakout Rooms, polling, 1:1 private chat, and meeting reactions); and on the clients that can be used to join meetings (for phase 1 all E2EE meeting participants must join from the Zoom desktop client, mobile app, or Zoom Rooms). 

The next phase of the E2EE rollout — which will include “better identity management and E2EE SSO integration”, per Zoom’s blog — is “tentatively” slated for 2021.

From next week, customers wanting to check out the technical preview must enable E2EE meetings at the account level and opt-in to E2EE on a per-meeting basis.

All meeting participants must have the E2EE setting enabled in order to join an E2EE meeting. Hosts can enable the setting for E2EE at the account, group, and user level and can be locked at the account or group level, Zoom notes in an FAQ.

The AES 256-bit GCM encryption that’s being used is the same as Zoom currently uses but here combined with public key cryptography — which means the keys are generated locally, by the meeting host, before being distributed to participants, rather than Zoom’s cloud performing the key generating role.

“Zoom’s servers become oblivious relays and never see the encryption keys required to decrypt the meeting contents,” it explains of the E2EE implementation.

If you’re wondering how you can be sure you’ve joined an E2EE Zoom meeting a dark padlock will be displayed atop the green shield icon in the upper left corner of the meeting screen. (Zoom’s standard GCM encryption shows a checkmark here.)

Meeting participants will also see the meeting leader’s security code — which they can use to verify the connection is secure. “The host can read this code out loud, and all participants can check that their clients display the same code,” Zoom notes.

Headroom, which uses AI to supercharge videoconferencing, raises $5M

By Ingrid Lunden

Videoconferencing has become a cornerstone of how many of us work these days — so much so that one leading service, Zoom, has graduated into verb status because of how much it’s getting used.

But does that mean videoconferencing works as well as it should? Today, a new startup called Headroom is coming out of stealth, tapping into a battery of AI tools — computer vision, natural language processing and more — on the belief that the answer to that question is a clear — no bad WiFi interruption here — “no.”

Headroom not only hosts videoconferences, but then provides transcripts, summaries with highlights, gesture recognition, optimised video quality, and more, and today it’s announcing that it has raised a seed round of $5 million as it gears up to launch its freemium service into the world.

You can sign up to the waitlist to pilot it, and get other updates here.

The funding is coming from Anna Patterson of Gradient Ventures (Google’s AI venture fund); Evan Nisselson of LDV Capital (a specialist VC backing companies buidling visual technologies); Yahoo founder Jerry Yang, now of AME Cloud Ventures; Ash Patel of Morado Ventures; Anthony Goldbloom, the cofounder and CEO of Kaggle.com; and Serge Belongie, Cornell Tech associate dean and Professor of Computer Vision and Machine Learning.

It’s an interesting group of backers, but that might be because the founders themselves have a pretty illustrious background with years of experience using some of the most cutting-edge visual technologies to build other consumer and enterprise services.

Julian Green — a British transplant — was most recently at Google, where he ran the company’s computer vision products, including the Cloud Vision API that was launched under his watch. He came to Google by way of its acquisition of his previous startup Jetpac, which used deep learning and other AI tools to analyze photos to make travel recommendations. In a previous life, he was one of the co-founders of Houzz, another kind of platform that hinges on visual interactivity.

Russian-born Andrew Rabinovich, meanwhile, spent the last five years at Magic Leap, where he was the head of AI, and before that, the director of deep learning and the head of engineering. Before that, he too was at Google, as a software engineer specializing in computer vision and machine learning.

You might think that leaving their jobs to build an improved videoconferencing service was an opportunistic move, given the huge surge of use that the medium has had this year. Green, however, tells me that they came up with the idea and started building it at the end of 2019, when the term “Covid-19” didn’t even exist.

“But it certainly has made this a more interesting area,” he quipped, adding that it did make raising money significantly easier, too. (The round closed in July, he said.)

Given that Magic Leap had long been in limbo — AR and VR have proven to be incredibly tough to build businesses around, especially in the short- to medium-term, even for a startup with hundreds of millions of dollars in VC backing — and could have probably used some more interesting ideas to pivot to; and that Google is Google, with everything tech having an endpoint in Mountain View, it’s also curious that the pair decided to strike out on their own to build Headroom rather than pitch building the tech at their respective previous employers.

Green said the reasons were two-fold. The first has to do with the efficiency of building something when you are small. “I enjoy moving at startup speed,” he said.

And the second has to do with the challenges of building things on legacy platforms versus fresh, from the ground up.

“Google can do anything it wants,” he replied when I asked why he didn’t think of bringing these ideas to the team working on Meet (or Hangouts if you’re a non-business user). “But to run real-time AI on video conferencing, you need to build for that from the start. We started with that assumption,” he said.

All the same, the reasons why Headroom are interesting are also likely going to be the ones that will pose big challenges for it. The new ubiquity (and our present lives working at home) might make us more open to using video calling, but for better or worse, we’re all also now pretty used to what we already use. And for many companies, they’ve now paid up as premium users to one service or another, so they may be reluctant to try out new and less-tested platforms.

But as we’ve seen in tech so many times, sometimes it pays to be a late mover, and the early movers are not always the winners.

The first iteration of Headroom will include features that will automatically take transcripts of the whole conversation, with the ability to use the video replay to edit the transcript if something has gone awry; offer a summary of the key points that are made during the call; and identify gestures to help shift the conversation.

And Green tells me that they are already also working on features that will be added into future iterations. When the videoconference uses supplementary presentation materials, those can also be processed by the engine for highlights and transcription too.

And another feature will optimize the pixels that you see for much better video quality, which should come in especially handy when you or the person/people you are talking to are on poor connections.

“You can understand where and what the pixels are in a video conference and send the right ones,” he explained. “Most of what you see of me and my background is not changing, so those don’t need to be sent all the time.”

All of this taps into some of the more interesting aspects of sophisticated computer vision and natural language algorithms. Creating a summary, for example, relies on technology that is able to suss out not just what you are saying, but what are the most important parts of what you or someone else is saying.

And if you’ve ever been on a videocall and found it hard to make it clear you’ve wanted to say something, without straight-out interrupting the speaker, you’ll understand why gestures might be very useful.

But they can also come in handy if a speaker wants to know if he or she is losing the attention of the audience: the same tech that Headroom is using to detect gestures for people keen to speak up can also be used to detect when they are getting bored or annoyed and pass that information on to the person doing the talking.

“It’s about helping with EQ,” he said, with what I’m sure was a little bit of his tongue in his cheek, but then again we were on a Google Meet, and I may have misread that.

And that brings us to why Headroom is tapping into an interesting opportunity. At their best, when they work, tools like these not only supercharge videoconferences, but they have the potential to solve some of the problems you may have come up against in face-to-face meetings, too. Building software that actually might be better than the “real thing” is one way of making sure that it can have staying power beyond the demands of our current circumstances (which hopefully won’t be permanent circumstances).

Why isn’t Robinhood a verb yet?

By Alex Wilhelm

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

This week Natasha MascarenhasDanny Crichton and your humble servant gathered to chat through a host of rounds and venture capital news for your enjoyment. As a programming note, I am off next week effectively, so look for Natasha to lead on Equity Monday and then both her and Danny to rock the Thursday show. I will miss everyone.

But onto the show itself, here’s what we got into:

Bon voyage for a week, please stay safe and don’t forget to register to vote.

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

What Teaching Online Classes Taught Me About Remote Learning

By Susan Shapiro
After teaching for 25 years, yes, moving my classes online has been weird. But then I found moments of gratitude.

Why hasn’t digital learning lived up to its promise?

By Walter Thompson
Tom Adams Contributor
Tom Adams is the president of Quantic School of Business & Technology.

The fall semester is off to a rocky start. When schools were forced to close in the spring, students (and parents) struggled. As the new school year begins, affluent families are building pandemic pods and inequities abound, while surveys suggest that college students want tuition discounts for online classes.

To avoid a catastrophic loss in revenue, colleges are bringing students back to campus. At UNC-Chapel Hill, those plans were quickly reversed when 130 students tested positive for the virus just a week into the new semester. As cases skyrocket, UNC will not be the only educational institution or school district to move online again.

What is it about digital learning that has schools so keen on reopening despite the health and reputational risks? Why hasn’t digital learning lived up to its promise?

If I were asked 20 years ago, as the founding CEO of Rosetta Stone, what digital learning would look like today, I would have imagined a very different future. Online learning was exploding. Teachers and faculty were experimenting with now commonplace consumer technologies like speech recognition and virtual reality to create immersive learning experiences.

Sadly, most of these innovations never took hold in our schools and colleges, and remote learners today are left with edtech that feels like it is still trapped in the 90s.

Ironically, the business of edtech and digital learning has been booming. Billions of dollars have been invested in tools and platforms that promise to improve the learning outcomes and lives of students. But for all the investments, headlines and flashy IPOs, edtech has little to show in terms of transformative outcomes.

The United States continues to lag behind many other advanced industrialized nations in math, science and reading literacy. Schools at all levels grapple with pervasive equity gaps. And research shows that heavily investing in education technology has, so far, yielded virtually no appreciable improvement in student achievement in these core subjects.

The challenge stems from the fact that rather than making learning better, the education technology field has, for the most part, focused on reaching more students. In our rush to scale, we have largely ignored tremendous pedagogical innovation that has occurred over the last twenty years.

No matter how high-tech a digital learning solution might be, it means nothing if it doesn’t also reflect recent and emerging changes in pedagogy. In 2010, a study at the University of North Texas compared how students retain information literacy skills in a face-to-face class, an online class and a blended class. The researchers found that there was no difference in outcomes between the three kinds of classes. This is because all three used the same materials and pedagogical approach.

But in a digital environment, far more is possible. We can now create video-game quality simulations to evaluate complex skills like creativity or problem-solving. Shy students can take the form of learning avatars in online laboratories — or explore career paths first-hand, through virtual reality. We know more than ever about attention span and engagement, or the connection between socio-emotional development and academic outcomes.

Researchers have, likewise, gained a deeper understanding of the ways students’ minds work. We know more than ever about how students reason, process information and solve problems. We know what kinds of scaffolding is required to develop and master these skills. Learning is best when it is built around doing, and when the context is practical, allowing students to try their hand at solving problems even as they’re still learning. It’s best when it is individualized, with progress based on a student’s personal aptitude and proficiency as they move toward mastering the material. And it’s best when it is enriched with peer-based discussion, practice and collaboration.

Astonishingly, few mass-market digital learning tools are built or adopted with these pedagogical advancements in mind. While Zoom is a fine tool for live conversations in small groups, it has few tools to facilitate the kind of engagement necessary for real learning. Coursera has raised millions for simply replicating the old-fashioned experience of a teacher lecturing at the front of a classroom. Quizlet is but a virtual collection of flashcards; it can assess the learning of certain facts, but it is hardly useful for the acquisition of skills. These types of common digital learning tools are increasingly great at making educators’ jobs easier. They are great at expanding access, allowing teachers and schools to reach more students than ever before. But scale, ease and access are not sufficient to help students learn and build skills.

The frustrations of educators and learners alike reflect the fact that education technology functions as a digital proxy for our oldest methods of teaching. Simply listening to a lecture is not effective in the real world, and yet that largely remains the default mode of education online. The impact of COVID-19 has only exacerbated these long-standing shortcomings. To create the digital learning experience students deserve — to finally fulfill the untapped promise and potential of educational technology — we must create tools that reflect not only advancements in technology, but in what we now understand about how the mind works and how students learn.

Balderton’s Chandratillake doffs his cap to Clubhouse, says enterprise audio is next

By Mike Butcher

Suranga Chandratillake has (almost) seen it all. After being the early CTO for Autonomy, he went on to found the blinkx video search engine in 2004, long before many thought we’d even need one. He scaled the company to San Francisco and the US market, eventually IPO’ing blinkx for over $1 billion. On his return to Europe, he joined Balderton Capital, of Europe’s top-tier VCs, and has invested in many of Europe’s hottest startups. As part of TechCrunch Disrupt 2020, we caught up with him.

Last year Balderton raised a $400 million fund. But has the way that fund is being invested changed because of COVID-19?

“In many ways, nothing has changed,” he said. ”We have been a series a focused pan-European VC for 20 years… If anything, I think COVID-19 has demonstrated how tech can help us get through various challenges, and I mean all of the work from home stuff…It’s been really weird, not being able to spend time in person with [entrepreneurs] those people… But the overall strategy of investing in tech in Europe, it’s exactly the same as it was before.”

Although it’s not that simple. For instance, Balderton invested in car rental startup Virtuo to the tune of 20 million euros. And travel is not exactly a great sector right now.

Chandratillake admitted, “some industries we have had challenges this year.” However, he said they “had a difficult April and May, but they’ve actually had a booming August” as holidays came back.

“I would say that by and large, most [startups] have navigated fairly well.” He noted that European governments have put in place funds to support tech companies, and of course, other sectors of tech have boomed.

During the pandemic lockdown, many consumers jumped into virtual networking via apps like Zoom and Houseparty, but Balderton did a small investment into a stealth-mode startup called Riff, which, not unlike Clubhouse, is using audio in a new way. He hinted that this will be an enterprise-play on Audio.

“Funnily enough, the closest to it right now is probably Discord which obviously is already a large network, but really a very much a vertical app aimed at gamers… But I think there’s a there’s an opportunity to do something similar in enterprise in the same way that Slack, you know, arguably got a lot of its initial cues from consumer messaging [such as] from WhatsApp or Facebook Messenger. I think we’ll see a similar thing where the enterprise gets something that’s based a bit on what we’ve seen in consumer products.”

He said Riff solves the “classic cliche of the watercooler moment when you bump into someone in the office and have a chat, and it’s really hard to do that in this new reality.”

He also said there are interesting sub-markets following on in the coattails of Zoom “that also need to be worked out.” Balderton invested in a company called DemoDesk (a cloud-based screen sharing platform), which looks at, for example, “webinars and sales meetings and specific kinds of conversations like that, where the requirements are a bit different.”

Chandratillake is of the opinion that the world will have to live with COVID-19 for many years, but that new solutions will emerge to mitigate the downsides: “Anything that helps you stay more connected to your colleagues and your co-workers is going to be interesting from a VC point of view, right?”

In terms of the diversity issues thrown up by the Black Lives Matter movement, Balderton has backed initiatives such as Diversity VC in Europe.

“If you’ve got a more diverse venture capital industry, they will start to back more diverse founders doing more diverse things, and that will naturally propagate. That’s really important to me and that’s a big part of what we focused on….

“In the last three years, we’ve hired more women than we have men into the investment team. We recently hired our first female general partner directly into the firm… three more people of color in the partnership and so on. So it’s beginning to change to where it should be, but I think it’s one of these things where you have to battle on many fronts.”

Roelof Botha shares what Sequoia’s Black Swan memo got wrong

By Natasha Mascarenhas

In March, famed investment firm Sequoia Capital published the Black Swan Memo, warning founders about the potential business consequences of the coronavirus, which had not yet been labeled a pandemic.

“It will take considerable time — perhaps several quarters — before we can be confident that the virus has been contained. It will take even longer for the global economy to recover its footing,” the memo read.

Six months later, Sequoia’s Roelof Botha is “surprised” at the state of venture capital and startups in the country, which are largely benefitting from — not struggling with — from COVID-19 tailwinds.

VCs are pouring money at a rapid clip into edtech, SaaS, low-code and no code, as well as telemedicine. In some cases, investors say venture funding has been hotter than ever ahead of the U.S. elections, beating not just March 2020, but 2019 records overall.

Sequoia, it seems, is happy to be wrong. This week, Sequoia Capital will have backed three of the 12 companies going public: Sumo Logic, Unity, and Snowflake. Snowflake is expected to go out at $30 billion valuation, which some say will be the largest U.S. software company to ever go public. Beyond the firm, numbers of unicorns are gearing up, or teasing, to go public in the coming weeks.

“I’m proud of the fact that we saw a few things and anticipated a few things,” he said during TechCrunch Disrupt. “But we also got many things wrong.”

Botha pointed to a few factors that saved startupland from freezing up. First, he said the U.S. government’s stimulus package helped make sure that there was not a “complete economic meltdown.”

“I didn’t quite expect that scale reaction,” Botha said. He’s referring to the $2 trillion CARES Act passed by Congress and signed by President Trump, which included PPP loans designed to provide a direct incentive for small businesses to keep their workers on the payroll. Tech recipients included Bolt Mobility, Getaround, Luminar, Stackin, TuSimple and Velodyne.

Botha addressed how tech companies have helped sustain businesses and operations amid the pandemic, which has trickled down to new customer growth and revenue.

Zoom, a Sequoia portfolio company, might be one of the best examples of how a tech company was poised to skyrocket during the pandemic. According to Botha, the firm, which still owns shares in the company, wishes it had held onto more of its position longer. Sequoia invested in Zoom when it was valued at $1 billion. Today, it is worth more than $100 billion, graduating from an enterprise videoconferencing service graduated to a household consumer product.

To be fair, some of Sequoia’s warning signs proved true: Layoffs inundated Silicon Valley; companies shuttered citing a drop in revenue; and the market remains volatile.

“We also have to realize there’s a lot of pain and there are many mainstream businesses and local services and restaurants and coffee shops that often suffer economically,” he said. “I don’t want to be overly sanguine just because technology stocks have had a good run. As a country, we need to brace ourselves for helping everybody.”

Google launches new AI-powered meeting room hardware

By Frederic Lardinois

Google today announced the Google Meet Series One, a new video conferencing hardware suite for meeting rooms. Built in collaboration with Lenovo, the Series One uses high-end cameras and microphones and then marries them with Google’s AI smarts thanks to using Google’s own Coral M.2 accelerator modules with the company’s Edge TPUs.

Previous Google Meet hardware efforts from companies like ASUS, Acer and Logitech were generally built around a Chromebox. This new effort uses a custom-built compute system at its core and combines that with an almost Google Nest-like tablet-sized screen, a soundbar with eight built-in microphones, additional microphone pods and one of two cameras.

Image Credits: Google

The cameras are maybe the most interesting option here, with the Smart Camera XL features a 20.3-megapixel sensor and 4.3x optical zoom. Thanks to these specs, it can be used as a digital PTZ (pan, tilt, zoom) camera. With that, the system can always automatically zoom in to frame everybody in the room and when the next person joins, it can zoom and pan as necessary to make sure everybody is still visible.

The regular Smart Camera can still do most of this, but it doesn’t feature the optical zoom, making it a better solution for smaller rooms. Google partnered with Huddly to develop this camera system (and the two companies also collaborated on previous Meet hardware projects).

But Google also put a lot of effort into the audio system. With its eight beam-forming microphones built into the soundbar and advanced noise cancellation techniques running on Google’s AI chips, the system should be able to filter out most distractions. Companies can add additional soundbars that only feature the speakers and microphones without the AI chips to cover even larger rooms. These additional units only feature the speakers and microphones, without the additional AI hardware since all of the processing needs to be done centrally.

Image Credits: Google

One nice touch here is that the team also made it easy to install these systems thanks to using Power-over-Ethernet. That should make installing one of these systems in a conference room pretty easy.

Since this is Google, it’s probably no surprise that you can also use the Google Assistant on this system, providing you with hands-free control over the room (something that’s maybe more important today than ever before).

The smallest room kit, with the basic Smart Camera but without the tablet-style meeting controller and microphone pod, will retail for $2,699. For $2,999 you get a complete set with one standard camera, soundbar, microphone pod and controller and if you have a very large room, you can opt for the $3,999 version with the additional soundbar, two microphone pods and the Smart Camera XL.

An IPO expert bats back at the narrative that traditional IPOs are for “morons”

By Connie Loizos

Lise Buyer has been advising startups on how to go public for the last 13 years through her consultancy, Class V Group. She built the business after working as an investment banker, and then as a director at Google, where she helped architect the company’s famously atypical 2004 IPO.

It’s perhaps because Google’s offering was so misunderstood that Buyer has come to think more highly of traditional IPOs over the years, likening herself to a golf caddie who has “played the course a whole lot of times” and can tell a management team what will happen in different circumstances.

Indeed, while Buyer says she is “paid the same regardless” of whether a team chooses a regular IPO, an auction model, a SPAC or a direct listing, she doesn’t believe the world needs direct listings or SPACs nearly as much as the investors forming them have made it seem. Rather, she thinks the traditional IPO process has been unfairly maligned in recent years, helped along by an outraged Bill Gurley.

(If you somehow missed it, the famed VC began pushing back very publicly on IPOs last year, calling them a “bad joke” because of the pre-IPO stakes handed by banks to favored institutional investors, who sometimes reap tens of millions of dollars from a company’s first day on the public market — money that would otherwise go to the issuers themselves. Gurley even hosted an invitation-only event in San Francisco last fall called “Direct Listings: A Simpler and Superior Alternative to the IPO.” )

Certainly, it irks Buyer that companies that choose the traditional route have been made out more recently to be “morons” that are taken advantage of by the investment banks that underwrite their deals.

“It’s so much more nuanced than that,” she says. “It’s a little pathetic that the conversation has evolved the way it has.”

What is it these discussions that do not ring true to her? Primarily, she says, these first-day “pops” are sanctioned by management teams. “It’s not up to Bill Gurley to choose the right price,” she says. It “isn’t just bankers [who] come in and say, ‘We think you’re worth $40 [per share] you’re going to sell at $20 [per share]. Have have it.” It is “up to the management team, which generally has to think about much more than just day one. Some want a pop, some don’t. It’s their call.”

Buyer points to the videoconferencing company Zoom, whose shares soared 72% on the day of its April IPO last year (and have kept surging through this pandemic). CEO Eric Yuan and the executive suite he’d built “knew the stock was going to jump” and agreed to the stock’s pricing anyway, according to Buyer.  They wanted to set realistic, achievable expectations, rather than begin racing to meet inflated ones.

Management “doesn’t want to be on the hook just because the market is temporarily willing to pay something astronomical — by in in many cases, people who really don’t understand the fundamentals,” she says. Otherwise, she continues, “when three months later the company comes out with a forecast that doesn’t match [those] crazy expectations, management has to live with that for very long time.”

Similarly, Buyer highlights the software company Bill.com, which saw its shares jump 60% on the day of its IPO this past December.  While there might have been hand-wringing over money left on the table, she thinks it was the right move and one for which the company was quickly rewarded.

“With Bill.com, management knew that demand dramatically outstripped supply and they could have priced that deal significantly higher,” she says. They didn’t raise their shares pricing because they didn’t want to “message anything unusual about Wall Street,” she continues, but also the company already had in mind its secondary stock sale. Indeed, in June, with Bill.com’s business accelerating and its shares ticking upward, management sold a much larger percentage of the company — at a much higher price.

One could argue the company benefited unexpectedly from the pandemic, as have many software businesses. Buyer sees it differently, though. “Because they’d previously established a good rapport and trust with investors with that lower priced IPO, such that they were able to raise so much more money and take less dilution four months later, who’s to say they made a mistake [on opening day], giving the public pension funds a little bit of a jump?”

Whether one of the most highly anticipated IPOs of the year — Airbnb — chooses a traditional path for some of these same reasons should become apparent soon enough. It was reported by Bloomberg just today that the company rebuffed a takeover by the SPAC of hedge fund billionaire Bill Ackman in favor of a traditional IPO.

In the meantime, the accommodations giant is far from alone in having to decide right now on the best way forward for its business. SPACs in particular right now are capturing the imagination of founders and investors alike. Says Buyer of her own clients, “There are folks who were not considering a SPAC six weeks ago who are getting tapped on the shoulder now and are trying to evaluate the specific terms — and the specific trade-offs — of these potential merger-partner-slash acquirers.”

As for direct listings — which have been lauded as a less expensive way to go public and, as of an SEC order last week, will allow companies to raise money as they are making that shift — Buyer isn’t exactly on the fence when it comes to these, either.

“With a direct listing that includes primary raise, it will be interesting to see if the company engages underwriters as opposed to advisors, and therefore if the expenses are lower – or perhaps even higher – than [with] an IPO. It could be either, we just don’t know yet.

“Again,” Buyer adds, “I have no horse in the hunt. I just see this as a solution desperately in search of an actual, as opposed to drummed-up, problem.”

As it delists, Rocket Internet’s ill-fated experiment with public markets is over

By Mike Butcher

It was all supposed to be so different. When Rocket Internet IPO’d in 2014 it was the largest tech company floatation in Europe for seven years. A year later it had lost $46 million and its valuation had dropped by 30%. Since then the German startup factory behind internet companies such as Delivery Hero, Zalando and Jumia has languished, in part because the reason for its existence — to provide growth capital for “rocket-fueled” startups — has ebbed away, as the tech market was flooded with capital in recent years. Today the company said it was delisting its shares from the Frankfurt and Luxembourg Stock Exchanges for just that reason.

Rocket’s market value has fallen from its high of 6.7 billion euros ($8 billion) on the day of its IPO on the Frankfurt Stock Exchange to just 2.6 billion euros and is now offering investors 18.57 euros ($22.23) for each of their shares, lower than Monday’s closing price of 18.95 euros.

The company said it was “better positioned as a company not listed on a stock exchange” as this would allow it to focus on long-term bets.

In a statement, the company said: “The use of public capital markets as a financing source as essential [sic] parameter for maintaining a stock exchange listing is no longer required and adequate access to capital is secured outside the stock exchange. Outside a capital markets environment, the Company will be able to focus on a long-term development irrespective of temporary circumstances capital markets tend to put emphasis on.”

Delisting, it said, will also reduce operational complexity when setting up new companies, “freeing up administrative and management capacity and reducing costs.”

Its investment division, Global Founders Capital, and CEO Oliver Samwer, will retain their stakes of 45.11% and 4.53% respectively, meaning the virtual shareholder meeting on Sept. 24 to ask for shareholder approval to delist will largely be a formality. It has also launched a separate buyback program to secure 8.84% of its shares from the stock market. Although the decision to delist makes sense, smaller shareholders will be burned, especially as Rocket is using its own cash for the buyback.

The bets Rocket took, however, have of course paid off. For some. According to Forbes, Samwer and his brothers and co-founders Alexander and Marc are worth at least $1.2 billion each.

The Berlin -based firm became quickly known as a “clone factory” after Samwer famously conceded during his Ph.D. that Silicon Valley had got innovation wrong by coming up with new ideas, and the “innovation” would simply be to make existing models more efficient. The fact those existing models were usually dreamt up by other people never seemed to phase him.

Almost like clockwork Rocket produced clones of Amazon, Uber, Uber Eats and Airbnb. Its defense for this rapacious strategy was that it was simply adapting proven models for other markets.

Rocket would say it was merely adapting proven models for untapped local markets. Of course, the kicker was usually that the company would either scale faster globally than the original U.S.-based startup, thus forcing some kind of acquisition, or that it would have its clones IPO faster. It did however produce some big, global, companies, even if they were not particularly original, including e-commerce firm Zalando, food delivery service Delivery Hero and meal-kit provider HelloFresh .

There have been successes. Jumia, the African e-commerce company, listed in April last year and when Rocket sold its stake earlier this year, it contributed to Rocket’s net cash position of €1.9 billion at the end of April.

But it has not benefitted from the recent stock market rally for tech companies, as it is overly exposed to e-commerce rather than pandemic-proof companies like Zoom .

For nostalgia’s sake, here’s that interview I did with Oliver Samwer in 2015, just one more time.

Zoom’s Q2 report details some of the most extraordinary growth I’ve ever seen

By Alex Wilhelm

Many companies have posted the occasional big quarter. These outsized periods may come when a business sells part of itself, or, through some arcane non-cash financial hijinks, it posts impressive numbers that appear prodigious when compared to their regular operating results. (Like when Uber recorded huge profits in its March 31, 2018 quarter.)


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


And then there’s Zoom, the cloud video comms company that went public in April, 2019. It just turned in a quarter so extraordinary that you might presume it was inflated, or otherwise somehow faux. But what makes Zoom’s Q2 earnings data so damn interesting and impressive is that it appears that the company has managed to just grow more than anyone expected or perhaps thought possible, in less time, while making more money than anticipated.

Re-reading the Zoom results this morning, I can confidently say that I haven’t ever read a more impressive earnings document. Zoom had a strong Q1, but it had a bonkers Q2.

Let’s dig into the numbers to understand what the world’s most impressive COVID-bump looks like.

A monster Q2

At the end of its Q1, Zoom told investors that it expected to generate revenue “between $495.0 million and $500.0 million” in Q2 2020 and “between $1.775 billion and $1.800 billion” for its full fiscal year, which is offset by one month from the calendar year.

Before its Q2 report, investors had expected a bit more, with average estimates for Q2 2020 revenue coming in at $500.5 million. Regarding its fiscal year, analysts expected the company to generate $1.81 billion in revenue.

Can learning pods scale, or are they widening edtech’s digital divide?

By Natasha Mascarenhas

Lucia, a six-year old, hides from Zoom calls and has rejected every edtech tool from Seesaw to Khan Academy. She will spend all of first grade in quarantine.

Her mother, Claire Díaz-Ortiz, says her daughter fits squarely into the “distance learning death zone.” The idea is that younger children are too young to do distance learning solo, even with tools meant to make it easier. Here’s one kindergartner’s remote fall class schedule:

Just got this schedule for my kindergartner’s “distance learning” in the fall and would just like to say LOL FOREVER TIMES A THOUSAND pic.twitter.com/CXXzdbwUWa

— Aubrey Hirsch (@aubreyhirsch) July 31, 2020

“And unfortunately for my daughter, I’m a VC, not a Zoom mom,” Díaz-Ortiz said.

The impact of the distance learning death zone, as Díaz-Ortiz calls it, is one of the reasons why many wealthy families with young children are considering a new solution: learning pods.

Learning pods are small clusters of children within the same age range who are paired with a private instructor. Depending on a parent’s preferences, learning pods could be an in-home or virtual experience and be either a full-time school replacement or supplemental learning.

In recent weeks, the concept has taken off all across the country, from suburbs to cities. There’s a Facebook group for Boulder, Colorado school districts; organizers launched Pandemic Pod San Diego to “connect families looking for in-home, teacher-led learning groups.” Some households are offering teachers a retainer. Among working mom groupchats, pods are taking off as a sanity lifesaver, especially as childcare responsibilities fall disproportionately on women.

Looking for the best 4-6th grade teacher in Bay Area who wants a 1-year contract, that will beat whatever they are getting paid, to teach 2-7 students in my back yard#microschool

If you know this teacher, refer them & we hire them, I will give you a $2k UberEats gift card

— jason@calacanis.com (@Jason) August 2, 2020

Startups are pivoting to keep up with the demand for private teachers. But because of high costs, only affluent families are able to form or join learning pods, which may limit the model’s ability to reach scale while extending the existing digital divide.

Funding in an uncertain market: using venture debt to bridge the gap

By Walter Thompson
Will Hutchins Contributor
Will Hutchins is a managing director at Espresso Capital, a leading provider of innovative growth financing and venture debt solutions.

While a handful of tech companies like Zoom and Shopify are enjoying massive gains as a result of COVID-19, that’s obviously not the case for most. Weaker demand, slower sales cycles, and customer insistence on pricing concessions and payment deferrals have conspired to cloud the outlook for many tech companies’ growth.

Compounding these challenges, a lot of tech companies are struggling to raise capital just when they need it most. The data so far suggests that investors, particularly those focused on earlier stage financings, are taking a more cautious approach to new deals and valuations while they wait to see how individual companies perform and which way the economy will go. With the outcome of their planned equity financings uncertain, some tech companies are revisiting their funding strategies and exploring alternative sources of capital to fuel their continued growth.

Forecasting growth in a pandemic: a difficult job just got harder

For certain businesses, COVID-19’s impact on revenue was immediate. For others, the effects of slower economic activity and tighter budgets surfaced more gradually with deals in the funnel before the pandemic closing in April and May. Either way, in the second half of 2020, technology CFOs face a common challenge: How do you accurately forecast sales when there’s very little consensus around key issues such as when business activity will return to pre-COVID levels and what the long-term effects of the crisis might be?

Unfortunately, navigating this uncertainty is just as daunting a challenge for investors. These days, equity investors’ assessment of a company’s growth potential, and the value they are willing to pay for that growth, aren’t just impacted by their view of the company itself. Equally important is their assumptions about when the economy will recover and what the new normal might look like. This uncertainty can lead to situations where companies and their potential investors have materially different views on valuation.

Longer funding cycles, more investor-friendly deals

While the full impact of COVID was felt too late to have a material impact on Q1 deal volumes, recently released data from Pitchbook and the NVCA suggest that 2020 will see a significant decrease in the number of companies funded, possibly by as much 30 percent compared to 2019 among early stage companies. And, while it often takes several months to see evidence of broad trends in investment terms, anecdotal evidence indicates investors are seeking to mitigate risk by demanding additional protective provisions.

Gumroad founder Sahil Lavingia launches new seed fund in collaboration with AngelList

By Natasha Mascarenhas

Gumroad founder Sahil Lavingia has teamed up with AngelList to launch his debut $5 million rolling fund to invest in early-stage entrepreneurs.

He is cutting $100,000 to $250,000 checks for startups and has a particular interest in B2B, SaaS, future of work, video, and developer tools. Limited partners include Arlan Hamilton, Josh Kopelman, and AngelList founder Naval Ravikant.

But, here’s the twist: Lavingia raised $5 million using just a Notion memo, a few tweets, and a Zoom call with over 1,800 registrants.

“It’s the power of Zoom and Twitter in the COVID era,” Lavingia said.

Still, two months ago, Lavingia didn’t even know he wanted to be a VC. The entrepreneur has made some angel investments in Lambda School, Figma, Haus, Clubhouse, and HelloSign (which was acquired by Dropbox). Eventually, though, he says angel investing got too expensive for him to do so he stopped.

Then, following George Floyd’s murder, he followed the lead of other investors rushing to invest in Black founders and tweeted this:

Occasionally I angel invest in tech startups, including @LambdaSchool, @figmadesign, @HelloSign. I’m also an LP in @Backstage_Cap.

My next investment will be in a Black founder. If you are one, please send me an email this week about what you’re working on: sahil@hey.com

Sahil Lavingia (@shl) June 1, 2020

As a result of the tweet, he invested in 4 startups founded by Black entrepreneurs. Since some were looking on follow-on capital, he tapped into his network, including AngelList founder Naval Ravikant. Ravikant, seeing the deals, floated the concept of a rolling fund by him.

Rolling funds via Zoom

In February, AngelList launched a so-called rolling venture fund product to help emerging venture capitalists close their first funds, faster. The fund structure allows fund managers to raise new capital commitments on a regular basis and invest as they go, ergo the “rolling” aspect. Lavingia worked with AngelList to create his fund, and has capital commitments of $1.25 million per quarter in a $5 million per year fund.

The rolling fund structure can be a bit volatile because limited partners have to “re-up” their investments on a quarterly basis. It could put a fund’s investing ability in flux and thus impact portfolio construction, too.

One way to battle this volatility is that limited partners must commit to at least four consecutive quarters when investing in a rolling fund. After that, investors can choose on a quarter by quarter basis if they want to invest in the fund. Lavingia says that on this first close, he could have raised 5 to 10 times the capital, but chose to pick smaller checks from exceptional people. The smallest check in is $55,000 a year split over four quarters, he said.

Lavingia also claims that the rotating nature of check acceptance will allow him to continually invite a more diverse limited partner base as time goes on. He declined to share specific numbers on the current diversity of his LP base, but said that 30 percent of his portfolio companies to date are founded by Black entrepreneurs.

One other note on rolling funds, an SEC regulation — 506(c) — allows investors to publicly fundraise.Traditional venture capital funds are usually raised in private which disproportionately benefits those who already have their foot in the door. Lavingia says the 506(c) regulation allows him, as a first-time fund manager, to raise publicly on Zoom.

Lavingia hosted a Q&A about his new fund with a group of his buddies: Work Life Ventures’ Brianne Kimmel, AngelList’s Sunil Pai, and Earnest Capital’s Tyler Tringas.

Lavingia says that there were around 600 to 700 people live on the call, which is larger than most conferences he’s spoken at.

Lavingia was the second employee at Pinterest and left to start building Gumroad, a platform to help creators sell products to consumers. The company went through a gutting round of layoffs and restructuring in 2015, inspiring Lavingia to pen a viral blog post about his “failure to build a billion-dollar company.” Today, Gumroad is at $10 million ARR and is growing 100% year over year with a team of 10 people.

While Lavingia will continue to work on Gumroad, he says that his failure and transparency around it “is actually growing the company faster.”

‘I think it gives me a little bit more bandwidth to do an experiment along these lines,” he said, of the fund.

First-time fund managers have had to turn to unique ways to de-risk themselves in this volatile time. Lavingia’s story is no different, and showcases that the power of remote deals isn’t just a phenomenon that founders will benefit from.

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