Month: August 2019

Hello and welcome back to Startups Weekly, a weekend newsletter that dives into the week’s noteworthy startups and venture capital news. Before I jump into today’s topic, let’s catch up a bit. Last week, I wrote about the flurry of IPO filings. Before that, I noted the differences between raising cash from angels vs. traditional venture capitalists.

Remember, you can send me tips, suggestions and feedback to kate.clark@techcrunch.com or on Twitter @KateClarkTweets. If you don’t subscribe to Startups Weekly yet, you can do that here.

What’s new

Venture capitalists look for companies poised to disrupt markets untouched by innovative technology. Believe it or not, a very small percentage of jewelry shopping is done online, which means there’s a big opportunity — for the right team — to bring jewelry buyers and sellers to the 21st century.

Enter Pietra, a new startup that’s just raised $4 million in a round led by Andreessen Horowitz’s Andrew Chen (Substack & Hipcamp investor). Robert Downey Jr.’s VC fund Downey Ventures and Will Smith’s fund Dreamers Fund also participated, as did Hollywood manager Scooter Braun, Michael Ovitz and supermodel Joan Smalls.

I spoke to the founding team, which includes Uber alum Ronak Trivedi and Ashley Bryan, who hails from fashion e-commerce site Moda Operandi. The pair bring a healthy mix of technology and fashion expertise to the mix. Trivedi tells TechCrunch he’s drawn on his Uber experience to recruit engineers from top tech companies and to advocate for fast growth. Meanwhile, Bryan has leveraged her fashion industry connections to establish relationships with luxury designers.

 “Fashion is typically really under-resourced in terms of tech,” Bryan tells TechCrunch. “[The fashion industry] is great at the creativity part but it’s tough, especially with jewelry because you really have to put up a lot of capital.”

Pietra’s plan is to create a high-end marketplace for consumers to connect with jewelry designers. To do this, the team has adopted the standard marketplace approach, taking a 30% marketplace fee from sellers, as well as a 7% fee from buyers commissioning jewelry on the platform.

“Whether you do custom jewelry or engagement jewelry or you do jewelry for celebrities like Drake, you can come on Pietra and connect with a global marketplace,” says Trivedi.

The jewelry market is expected to be worth more than $250 billion by 2020, according to McKinsey research. And where there’s a billion-dollar market, there are VCs. 

“Even though gemstones and jewelry have been at the center of art, commerce, and culture since the dawn of human civilization — going from stone jewelry created 40,000 years ago in Africa to the trade routes between East and West to Fifth Avenue in New York to the Instagram feed on your phone — the technology for discovering, designing, and purchasing jewelry online hasn’t evolved much at all,” writes a16z’s Chen, who overlapped with Trivedi during his Uber tenure.

Pietra completed its official launch this week. It has 100 designers on the platform and counting, along with what the founders say is a lengthy waitlist.

In other news

This week I published a long feature on the state of seed investing in the Bay Area. The TL;DR? Mega-funds are increasingly battling seed-stage investors for access to the hottest companies. As a result, seed investors are getting a little more creative about how they source deals. It’s a dog-eat-dog world out there and everyone wants a stake in The Next Big Thing. Read the story here.

Demo Day

Y Combinator graduated another batch of 200 companies this week. We were there both days, taking notes on each and every company. To make things easy on you, I’ve put together the ultimate YC reading list:

• All 84 startups from Y Combinator’s Demo Day 1
• All 82 startups from Y Combinator’s Demo Day 2
• The 11 best startups from YC’s Demo Day 1 (Extra Crunch membership required.)
• Our 12 favorite startups from Y Combinator’s S19 Demo Day 2 (Extra Crunch membership required.)
• YC’s Michael Seibel on building startups and early-stage deal-making
• YC is doubling down on these investment theses in its latest batch

Here’s a look at some of the profiles we’ve written on the S19 companies:

• Fresh out of YC, Tandem lands millions from a16z
• Stoic is a journaling app with a focus on understanding your feelings
• Narrator wants to become the operating system for data science
• This startup is building a weed breathalyzer for cops 
• Lokal wants to bring local news to 900M Indians in their regional languages
• Holy Grail is using machine learning to build better batteries
• YC’s latest bet is building a cyberpunk anime MMO
• Rent the Backyard wants to build a studio apartment in your yard
• Shiru is developing a protein replacement for food additives
• Lumineye helps first responders identify people through walls
• GradJoy is a fintech startup to help you knock out your student loans
• Traces AI is creating a less invasive alternative to facial recognition tracking

Listen

We recorded two great episodes of Equity, TechCrunch’s venture capital podcast, this week. The first was with YC CEO Michael Seibel, in which he speaks to trends at the seed stage of investing, changes at the accelerator program, including its move to San Francisco and more. You can listen to that one here. Plus, we had on Unusual Ventures co-founder and partner John Vrionis, who talked to us about direct listings versus IPOs and the future of DoorDash and Airbnb. You can listen to that one here.

Tips for B2B startups

Contributors Tyler Elliston and Kevin Barry share advice for B2B companies: “Over the years, we’ve seen a lot of B2B companies apply ineffective demand generation strategies to their startup. If you’re a B2B founder trying to grow your business, this guide is for you. Rule #1: B2B is not B2C. We are often dealing with considered purchases, multiple stakeholders, long decision cycles, and massive LTVs. These unique attributes matter when developing a growth strategy. We’ll share B2B best practices we’ve employed while working with awesome B2B companies like Zenefits, Crunchbase, Segment, OnDeck, Yelp, Kabbage, Farmers Business Network, and many more.” Read the full story here. (Extra Crunch membership required.)

Source: Tech Crunch

It’s easy to forget that Silicon Valley starts with ‘silicon’, and that there would be no technology innovation without innovation at the silicon level. And Graphcore is well aware of that as the Bristol-based company is designing its own dedicated AI chipset. That’s why I’m glad to announce that Graphcore co-founder and CEO Nigel Toon is joining us at TechCrunch Disrupt Berlin.

Graphcore has managed to attract a ton of attention from day one. Originally founded in 2016, the startup has raised more than $300 million from top investors, such as Sequoia Capital, BMW, Microsoft, Samsung and a ton of others.

The company last raised a $200 million Series D round led by Atomico and Sofina. It values the company at $1.7 billion.

So what is the magic product behind Graphcore? The startup’s flagship product is an Intelligence Processor Unit (IPU) PCIe processor card combined with a software framework. Essentially, it lets you build your own AI applications more efficiently. Those dedidacted AI chips should perform better than repurposed GPUs.

Tobias Jahn, principal at BMW i Ventures, summed it up pretty well in a statement for the Series D round: “The versatility of Graphcore’s IPU – which supports multiple machine learning techniques with high efficiency – is well-suited for a wide variety of applications from intelligent voice assistants to self-driving vehicles. With the flexibility to use the same processor in both a data centre and a vehicle, Graphcore’s IPU also presents the possibility of reduction in development times and complexity.”

It seems crazy that a tiny startup is competing directly with giant chip companies, such as Nvidia, AMD, Intel, Qualcomm, etc. But this isn’t Nigel Toon’s first company. He has been the CEO of Picochip and Icera, two companies that have been sold to Intel and Nvidia.

Graphcore believes that there’s an underserved niche with a lot of potential. And it feels like there’s a race to create the most efficient AI chip. So I can’t wait to hear Nigel Toon’s take on that race.

Buy your ticket to Disrupt Berlin to listen to this discussion and many others. The conference will take place on December 11-12.

In addition to panels and fireside chats, like this one, new startups will participate in the Startup Battlefield to compete for the highly coveted Battlefield Cup.

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Graphcore (graphcore.ai) is a new silicon and systems company based in Bristol, UK and Palo Alto, USA that has developed a new type of processor, the Intelligence Processing Unit (IPU), to accelerate machine learning and AI applications. Since its founding in 2016, Nigel has secured over $300m in funding and support for the company from some of the world’s leading venture capital firms including Sequoia Capital, Foundation Capital and Atomico, from major corporations including BMW, Bosch, Dell, Microsoft and Samsung and from eminent Artificial Intelligence innovators.

Nigel has a background as a technology business leader, entrepreneur and engineer having been CEO at two successful VC-backed processor companies XMOS and Picochip (sold to Nasdaq:MSPD, now Intel), a founder at Icera (sold to Nasdaq: NVDA) and VP/GM at Altera (Nasdaq: ALTR, sold to Intel for $17Bn) where he spent over 13 years and was responsible for establishing and building the European business unit that he grew to over $400m in annual revenues. Nigel was a non-executive director at Imagination Technologies PLC until itsacquisition in 2017 and is the author on 3 patents.

Source: Tech Crunch

Netflix is testing a new way to help users find TV shows and movies they’ll want to watch with the launch of a “Collections” feature, currently in testing on iOS devices. While Netflix today already offers thematic suggestions of things to watch, based on your Netflix viewing history, Collections aren’t only based on themes. According to Netflix, the titles are curated by experts on the company’s creative teams, and are organized into these collections based on similar factors — like genre, tone, story line and character traits.

This human-led curation is different from how Netflix typically makes its recommendations. The streaming service is famous for its advanced categorization system, where there are hundreds of niche categories that go beyond broad groupings like “Action,” “Drama,” “Sci-Fi,” “Romance” and the like. These narrower subcategories allow the streamer to make more specific and targeted recommendations.

Netflix also tracks titles that are popular and trending across its service, so you can check in on what everyone else is watching, as well.

The new Collections feature was first spotted by Jeff Higgins, who tweeted some screenshots of the addition.

If you’ve been opted in to the test, the Collections option is available at the top right of the app’s homepage — where My List would have been otherwise.

The suggestions are organized into editorial groups, with titles like “Let’s Keep It Light,” “Dark & Devious TV Shows,” “Prizewinning Movie Picks,” “Watch, Gasp, Repeat,” “Women Who Rule the Screen” and many more.

You can follow the Collection from the main screen, or you can tap into it to further explore its titles.

If you tap a collection that interests you, it smoothly expands to show the thumbnails of the suggested titles below a header that explains what the collection is about. You can choose to follow the suggestion from here too, which presumably ties into Netflix’s notification system.

Collections are also found on the app’s Home page, for those who have access to the new feature.

“We’re always looking for new ways to connect our fans with titles we think they’ll love, so we’re testing out a new way to curate Netflix titles into collections on the Netflix iOS app,” a Netflix spokesperson confirmed to TechCrunch. “Our tests generally vary in how long they run for and in which countries they run in, and they may or may not become permanent features on our service.”

This isn’t the first time Netflix has toyed with organizing content suggestions into Collections. The company’s DVD service (yes, it still exists), had rolled out a similar Collections feature in its own mobile app.

This test comes at a time when Netflix is working on features to better retain existing subscribers amid increased competition, including that from upcoming rivals like Disney+ and Apple TV+, among others. On this front, it also recently launched a feature allowing users to track new and soon-to-launch releases, as a means of keeping subscribers anticipating what comes next.

Netflix said Collections is only available on iOS. As a test, it won’t show to all users.

Source: Tech Crunch

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 9am Pacific, you can subscribe here.

1. Overstock CEO resigns after ‘deep state’ comments

This comes after CEO Patrick Byrne released a statement declaring that he cooperated with federal investigators back in 2015 and was in fact “the notorious ‘missing chapter 1’ of the Russia investigation.” He subsequently gave interviews that also touched on his relationship Maria Butina, who’s been accused of working as a Russian agent.

The ensuing controversy sent Overstock’s share price tumbling, and Byrne said yesterday that he would have to “sever ties with Overstock, both as CEO and board member.”

2. Sphero has acquired littleBits

Founded in 2010 and 2011 respectively, Sphero and littleBits took separate approaches to creating STEM toys, but ultimately ended up in similar spaces.

3. Google says China used YouTube to meddle in Hong Kong protests

The search giant, which owns YouTube, followed in the footsteps of Twitter and Facebook, which earlier this week said China had used their social media sites to spread misinformation and discord among the protesters.

4. VMware acquires Carbon Black for $2.1B and Pivotal for $2.7B

Although these are two very different companies, both Carbon Black and Pivotal focus on modern workloads.

5. Oracle directors give blessing to shareholder lawsuit against Larry Ellison and Safra Catz

Three years after closing a $9.3 billion deal to acquire NetSuite, several Oracle board members have written a letter to the Delaware Court, approving a shareholder lawsuit against company executives Larry Ellison and Safra Catz over the deal.

6. Tumblr’s next step forward with Automattic CEO Matt Mullenweg

In an interview, Automattic founder and CEO Matt Mullenweg discussed Tumblr’s history and the impact of the poorly received adult content restrictions. He also shed some light on where Tumblr goes under its new owners. (Extra Crunch membership required.)

7. Apple exec Susan Prescott is coming to TechCrunch Sessions: Enterprise

Prescott has been at Apple since 2003, and she’ll be joining us to discuss the company’s enterprise strategy.

Source: Tech Crunch

Waymo, the self-driving car company under Alphabet, has been testing in the suburbs of Phoenix for several years now. And while the sunny metropolis might seem like the ideal and easiest location to test autonomous vehicle technology, there are times when the desert becomes a dangerous place for any driver — human or computer.

The two big safety concerns in this desert region are sudden downpours that cause flash floods and haboobs, giant walls of dust between 1,500 and 3,000 feet high that can cover up to 100 square miles. One record-breaking haboob in July 2011 covered the entire Phoenix valley, an area of more than 517 square miles.

Waymo released Friday a blog post that included two videos showing how the sensors on its self-driving vehicles detect and recognize objects while navigating through a haboob in Phoenix and fog in San Francisco. The vehicle in Phoenix was manually driven, while the one in the fog video was in autonomous mode.

The point of the videos, Waymo says, is to show how, and if, the vehicles recognize objects during these extreme low visibility moments. And they do. The haboob video shows how its sensors work to identify a pedestrian crossing a street with little to no visibility.

Waymo uses a combination of lidar, radar and cameras to detect and identify objects. Fog, rain or dust can limit visibility in all or some of these sensors.

Waymo doesn’t silo the sensors affected by a particular weather event. Instead, it continues to take in data from all the sensors, even those that don’t function as well in fog or dust, and uses that collective information to better identify objects.

The potential is for autonomous vehicles to improve on visibility, one of the greatest performance limitations of humans, Debbie Hersman, Waymo’s chief safety officer wrote in the blog post. If Waymo or other AV companies are successful, they could help reduce one of the leading contributors to crashes. The Department of Transportation estimates that weather contributes to 21% of the annual U.S. crashes.

Still, there are times when even an autonomous vehicle doesn’t belong on the road. It’s critical for any company planning to deploy AVs to have a system that can not only identify, but also take the safest action if conditions worsen.

Waymo vehicles are designed to automatically detect sudden extreme weather changes, such as a snowstorm, that could impact the ability of a human or an AV to drive safely, according to Hersman.

The question is what happens next. Humans are supposed to pull over off the road during a haboob and turn off the vehicle, a similar action when one encounters heavy fog.  Waymo’s self-driving vehicles will do the same if weather conditions deteriorate to the point that the company believes it would affect the safe operation of its cars, Hersman wrote.

The videos and blog post are the latest effort by Waymo to showcase how and where it’s testing. The company announced August 20 that it has started testing how its sensors handle heavy rain in Florida. The move to Florida will focus on data collection and testing sensors; the vehicles will be manually driven for now.

Waymo also tests (or has tested) its technology in and around Mountain View, Calif., Novi, Mich., Kirkland, Wash. and San Francisco. The bulk of the company’s activities have been in suburbs of Phoenix  and around Mountain View.

Source: Tech Crunch

Netflix is still the No. 1 subscription streaming service in the U.S., according to a new report from eMarketer, but rivals including Amazon Prime Video and Hulu are starting to cut into its market share. The analyst firm forecasts 182.5 million U.S. consumers will subscribe to over-the-top streaming services this year, or 53.3% of the population. Netflix is still the too choice here, with 158.8 million viewers in 2019 and it is continuing to grow. However, its share of the U.S. over-the-top subscription market will decline even as its total subscriber numbers climb, the report said.

Though Netflix announced in Q2 the first drop in U.S. users in nearly a decade, eMarketer says Netflix will see strong growth throughout the rest of the year — up 7.6% over 2018. This will be driven by the new seasons of popular series like Orange is the New Black and Stranger Things, as well as Academy Award-winning director Martin Scorsese’s new movie, The Irishman.

But Netflix is no longer the only option for streaming video these days. Back in 2014, it had 90% of the market. In 2019, its share will have shrunk to 87%.

This decline in market share is attributed to the rise of rival services, like Hulu and Prime Video.

Hulu, for example, is estimated to reach 75.8 million U.S. viewers this year, or 41.5% of subscription service users. The number of viewers will also increase by 17.5% in 2019, but this is a drop from 2018’s big growth spurt of 49.6%

Prime Video, meanwhile will remain the second-largest subscription over-the-top video provider in the U.S. in 2019, the report says, with 96.5 million viewers. That’s up 8.8% over last year.

The firm estimates Prime Video will reach a third of the U.S. population by 2021.

Netflix market share dominance is about to face new threats as well, most notably from the Disney-Hulu-ESPN bundle, which is priced the same as a standard U.S. Netflix subscription.

“Netflix has faced years of strong competition for viewers, coming from streaming video platforms, pay-TV services, and even video games,” said eMarketer forecasting analyst Eric Haggstrom. “While there is no true ‘Netflix killer’ on the market, Disney’s upcoming bundle with Disney+, Hulu and ESPN+ probably comes closest. Netflix’s answer has been to stick to what has made it the market leader—outspending the competition on both licensed and original content, offering customers a competitive price,” he added.

Disney isn’t the only one with a new streaming service in the works, though.

Apple TV+ is poised to launch later this year, and is said to be spending $6 billion on content — far more than the $1 billion that had been reported. It’s also said to be considering a competitive $9.99 per month price point.

NBCUniversal and AT&T WarnerMedia are also poised to enter the market, the latter with HBO Max. And following the CBS-Viacom merger, the combined company is looking to beef up its own platforms, CBS All Access and the ad-supported Pluto TV, with the newly acquired content.

“The market for streaming video has been driven by an explosion in high-end original content and low subscription costs relative to traditional pay TV,” Haggstrom noted. “A strong consumer appetite for new shows and movies has driven viewer growth for services like Netflix, Hulu and Amazon Prime Video, as well as the broader market.”

Source: Tech Crunch

This week, nearly 200 startups convened at Y Combinator Demo Day to pitch venture capitalists, angels and other folks looking to spend some money.

YC chief executive officer Michael Seibel took some time out of his busy schedule to join us on a special episode of Equity, TechCrunch’s venture-capital-focused podcast. Given that we had Seibel to chat with, Kate and Alex decided to drop the regular format and riff interview-style about what the accelerator program is up to.

We discussed the new startup batch (roundups here, here, and here), recent changes to the program, rising deal prices, SAFEs versus convertible notes and the future of technology in San Francisco. Regarding price, here’s what Seibel had to say:

“It’s a competitive market where investors are bidding against each other. So if you see pricing go up you have to ask yourself the question, ‘where is the money supply coming from?’ The big trend over the last six years has been institutional investors moving from just kind of Series A funds and growth funds down to the seed level. When you looked at Demo Day when I was going through the first time it was full of angels – people investing off their own personal balance sheet. And if you look at the room today it’s full of funds. The reality is that, as the pool of capital increases in the seed world, the seed investors are competing against each other and one of the easier ways for investors to compete is to bid up price.”

But, Seibel continued, YC doesn’t necessarily consider the situation a net-positive, because companies that raise such huge rounds can spend money as though they had reached the fabled “product-market fit,” when in reality they have not. They just have money, which can feel the same but is not.

Ultimately, the thing that’s going to kill you, Seibel says, isn’t fundraising or who you raised from. The thing that’s going to kill you, he says, is that you didn’t build something your customers wanted.

Watch a clip from the interview here:

To hear more from Seibel and watch four more video clips discussing YC, the new class, and the startup game in San Francisco and beyond, become an Extra Crunch member. You can learn more and try it for free. 

Source: Tech Crunch