Month: August 2020

Apple’s still-in-beta operating systems will automatically redirect News+ subscribers to the Apple News app when they click on links from a News+ publisher.

In other words, if you click or tap on a link to a paywalled story published by a News+ partner — including stories from our own Extra Crunch membership program — iOS 14, iPadOS 14 and macOS Big Sur will take you straight to the article page in the News+ app, even when the link ostensibly points to the publisher’s own website.

Tony Haile (who founded the ad-free subscription news service Scroll)  tweeted about the change this morning, and I’ve been able to replicate it myself.

The experience should be familiar to (for example) New York Times app readers who, when they click on a web link, are taken straight to the article page in the NY Times app. (In TechCrunch’s case, I noticed that Apple even prompts users to open the News app when they click on stories that aren’t paywalled.)

This addresses one of the more frustrating elements of being a News+ subscriber: Although your $9.99 monthly subscription gets you access to paywalled stories from publishers like The New Yorker and the Wall Street Journal, you only get access via the News app — not the publishers’ websites. So I’ve often seen something I want to read on Google or Twitter, but instead of clicking the link, I have to open the News app and track down the story.

So this seems like it should significantly improve the reader experience, even if it might be a little disconcerting at first. And it only applies to News+ subscribers, who are opted-in but will have the option to turn off the “Open Web Links in News” feature in their News settings.

But as Haile noted, publishers may be less excited about the change: “Any strategic rationale that Apple News+ represents a separate  channel/audience is now gone. This directly cannibalizes a publishers’ core subscription audience.”

Although Apple has not released News+ subscriber numbers, there have been several reports — including a November 2019 story from CNBC —suggesting that the service has struggled to attract new subscribers after signing on 200,000 users in the first 48 hours after launch. And Digiday reported that publishers have been underwhelmed with revenue.

Source: Tech Crunch

Angel funding, seed investing and generally focusing on earlier stage investing is a huge business in the world of startups these days — it helps investors get in early to the most promising companies, and (because of the smaller size of the checks) allows for even the less prolific to spread their bets.

There was a time when it was immensely difficult for a founder to get a first check, not least because there were fewer people writing them. However, Jeff Clavier was an exception to that rule.

As the founder of Uncork Capital (formerly known as SoftTech VC), he has been in the business of angel and seed investing for 16 years, popularizing the opportunity and highlighting the need for more support at this stage — well before it was cool. You could say he was early to early stage.

Clavier said that at the end of 2019, it was estimated that there were more than 1,000 firms focusing on seed investing in the market, but by the end of this year, there will be about 2,000. “Don’t ask me whether it makes any sense because when I started 16 years ago, I didn’t think would be a big deal,” he said. “But certainly that creates a bit of a conundrum for founders to try and understand.”

As of now, Clavier has made nearly 230 investments and counting.

TechCrunch Early Stage, our virtual conference highlighting that stage of startup life, was the perfect venue to hear from him on all things seed investing and building startups today. Below are some highlights, a link to the video and a pitch deck he put together for the chat. Questions were edited for space and clarity.

Not all VCs are created equal (so know who you are pitching)

First thing to understand is that not all VCs are created equal. There are a bunch of different firms, tons of them out there, and you as a founder need to understand what are the specifics of your pitch opportunity, how to match with the right firm, and to figure out what stage of “early” you happen to be.

Startups can be super early, or mid-stage, which is typically what we refer to as pre-seed. Then there’s the seed stage, where you have developed a product, with a demo. And there is post-seed, where you have product but are not quite ready to raise a Series A. So who are the firms that can actually be the right fit for me at those different stages? The qualification part of the targeting is really important. Especially in a COVID environment when you can’t spend the same kind of time with each other.

It’s useful for founders to try and understand investors better, maybe asking a couple of questions like, “When is the last time you made a brand new investment at seed stage?” And “How has your investment process changed as a result of COVID?”

For investors, you want to understand how you’re going to evolve your process to cope with the fact that you don’t spend time with those founders face-to-face. Some firms are still struggling with that.

At Uncork, we’re now past the point of portfolio triage that we had in the first few weeks of of the pandemic. What was surprising to me was the speed and velocity at which some deals actually.

Find an investment lead

Source: Tech Crunch

Timothy Bouré and his co-founder Geoffrey Lucks were both near broke when they moved to Dallas to join the first accelerator they entered after forming VenoStent, a company that aims to improve outcomes for dialysis patients.

Failed dialysis surgeries occur in roughly 55% to 65% of patients with end-stage renal disease, according to the company. Caring for these patients can cost the Medicare and Medicaid Services system roughly $2 billion per year — and Bouré and Lucks believed that they’d come up with a solution.

So after years developing the technology at the core of VenoStent’s business at Vanderbilt University, the two men relocated from Nashville to South Texas to make their business work.

Bouré had first started working on the technology at the heart of VenoStent’s offering as part of his dissertation in 2012. Lucks, a graduate student at the business school was introduced to the material scientist and became convinced that VenoStent was on the verge of having a huge impact for the medical community. Five years later, the two were in Dallas where they met the chief of vascular surgery at Houston Medicine and were off to the races.

A small seed round in 2018 kept the company going and a successful animal trial near the end of the year gave it the momentum it needed to push forward. Now, as it graduates from the latest Y Combinator cohort, the company is finally ready for prime time.

In the interim, a series of grants and its award of a Kidney XPrize kept the company in business.

The success was hard won, as Bouré spent nearly three sleepless nights in the J-Labs, Johnson and Johnson’s  medical technology and innovation accelerator in Houston, synthesizing polymers and printing the sleeve stents that the company makes to keep replace the risky and failure-prone surgeries for end stage kidney disease patients.

The key discovery that Bouré made was around a new type of polymer that can be used to support cell growth as it heals from the dialysis surgery.

In 2012, Bouré stumbled upon the polymer that would be the foundation for the work. Then, in 2014, he did the National Science Foundation Core program and started thinking about the wrap for blood vessels. Through a series of discussions with vascular surgeons he realized that the problem was especially acute for end stage renal disease patients.

Already the company has raised $2.4 million in grant funding and small equity infusions. and the KidneyX Prize from the Department of Health and Human Services and the American Society of Nephrology. VenoStent was one of six winners.

“It’s part of this whole ongoing effort by the executive office to improve dialysis,” said Bouré. “[They are] some of the most expensive patients to treat in the world… Basically the government is highly incentivized to find technologies that improve patient’s lives.”

Now the company is heading into its next round of animal testing and will seek to conduct its first human trials outside of the United States in 2021.

And while the company is focused on renal failure first, the materials that Bouré has developed have applications for other conditions as well. “This can be a material for the large intestine,” says Bouré. “It has tunability in terms of all its properties. And we can modify it for a particular application.”

Source: Tech Crunch

The Wall Street Journal is reporting that TikTok and Twitter have held talks about a potential merger, even as the video sharing company defends itself against President Donald Trump’s pressure to force the sale of the business or potentially ban it.

As the internationally distributed video streaming version of Chinese technology developer Bytedance’s social media app, TikTok has amassed a global user of avid consumers for its short form videos, including at least 100 million users in the US.

According to The Wall Street Journal, Twitter and Bytedance have had preliminary talks about a merger of TikTok’s US operations with the publicly traded social media company. The Journal noted that Microsoft remains the front-runner for TikTok’s business in the US, Australia, Canada and New Zealand, and that a potential tie-up with Twitter would just be for TikTok’s North American business.

Any Twitter bid for Bytedance’s TikTok business would likely have to bolstered by additional investors, since TikTok is valued anywhere between $15 billion and $50 billion dollars — far too big a bite for Twitter, which has a market capitalization of $29 billion.

Last week, President Trump signed an executive order that would force the sale of TikTok’s US operations or face being banned. So Bytedance has to find a buyer before Sept. 15, or shut the business down in the US.

So far, Twitter and Microsoft are the only reported bidders for Bytedance’s business, but others could emerge. And there’s the potential that any sale could be scuttled by lawsuits challenging the President’s executive order.

On Saturday, National Public Radio reported that TikTok is planning to do just that. The company will reportedly argue that the executive order from the President didn’t follow due process, and that its underlying argument that TikTok poses a national security threat is baseless, according to NPR.

Some prominent figures in the technology industry, like Bill Gates, are also questioning the process by which Bytedance is being forced to sell its business.

“[Having] Trump kill off the only competitor, it’s pretty bizarre,” Gates said in an interview with Wired. “[The] principle that this is proceeding on is singly strange. The cut thing, that’s doubly strange.”

If Twitter, were, by some miracle, to acquire TikTok’s US operations, it would add a huge additional pillar to the company’s business and permanently reshape the social media landscape. It would add a massive new user base and change the demographics of the company’s user base.

The irony of such a deal shouldn’t be lost on longtime tech watchers, who will remember that Twitter had the opportunity to become TikTok if it hadn’t killed the short form video streaming service, Vine.

Source: Tech Crunch

TikTok, the video-sharing app that’s moved to the center of the economic conflict between the US and China, is planning to challenge the executive order issued by President Donald Trump that would force the sale or ban the service in the United States.

According to a report from National Public Radio yesterday, TikTok could file a federal lawsuit challenging the order as soon as Tuesday. The lawsuit is expected to be filed in the U.S. District Court for the Southern District of California, where TikTok has its American headquarters.

TikTok will challenge the constitutionality of the ban and its underlying claims that the video sharing service represents a national security threat to the country, according to NPR’s report.

TikTok did not respond to a request for comment at the time of publication.

On Thursday, the President signed executive orders that put a 45-day deadline on American companies to unwind their business relationships with TikTok’s parent company, Bytedance, and with WeChat, the messaging service owned by Chinse tech giant, Tencent.

TikTok had already laid out its opposition to the executive order when news first broke that the President had signed it.

As TechCrunch reproted, the company said the order was “issued without any due process” and would risk “undermining global businesses’ trust in the United States’ commitment to the rule of law.” The mechanisms the White House wants to use to ban the app include the International Emergency Economic Powers Act and the National Emergencies Act. But claiming that the operations of a subsidiary of a foreign business on US soil constitutes a national emergency is highly unprecedented.

Under the International Emergency Economic Powers Act, which was passed during the Iran hostage crisis in 1976, the President has sweeping authority to issue tariffs and suspend economic relationships with other companies.

Any challenge to the executive order needs to come soon, because Bytedance, TikTok’s parent company is also looking at how to unwind its US operations through a sale.

After the President’s executive order was announced, Microsoft said in a statement that it was in talks with Bytedance about acquiring TikTok.

Microsoft said:

“Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok  in the United States. Microsoft fully appreciates the importance of addressing the President’s concerns. It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”

Analysts and bankers have said that TikTok’s US business could be worth anywhere from $20 billion to $50 billion, thanks to the company’s user base of over 100 million customers in the US, according to reports in Fortune.

And other bidders are emerging for TikTok’s US business as well. According to The Wall Street Journal, TikTok has also engaged in preliminary discussions with Twitter over a possible combination.

Source: Tech Crunch

The first season of “The Umbrella Academy” had its flaws, but empathetic portrayals of its seven superhero siblings (all adults bearing the emotional scars of an upbringing under their strict adoptive father Reginald Hargreeves) more than made up for its meandering plot.

In season two, which recently launched on Netflix, the Umbrella Academy has been transported to Dallas in the early 1960s, where the Hargreeves must once again try to repair their familial bonds while also averting a nuclear apocalypse — an apocalypse that they themselves may be causing.

Once again, the show takes a while to get good, with early episodes that keep our heroes apart and take a few too many digressions into the world of the JFK assassination and Jack Ruby. But once the Umbrella Academy is reunited — and especially after they get a chance to confront a younger version their father — the story moves full speed ahead to a spectacular and moving finale.

We have plenty of praise for the show and its delightful musical numbers on the latest episode of the Original Content podcast, and even get a little choked up when recapping the final episode. And before we get to our review, we discuss the news that Disney will be releasing “Mulan” on Disney+ next month, for an additional price of $29.99.

You can listen to our review in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also follow us on Twitter or send us feedback directly. (Or suggest shows and movies for us to review!)

If you’d like to skip ahead, here’s how the episode breaks down:
0:00 Intro
0:36 “Mulan” discussion
18:03 “Umbrella Academy” review
40:20 “Umbrella Academy” spoiler discussion

Source: Tech Crunch

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter for your weekend enjoyment. It’s broadly based on the weekday column that appears on Extra Crunch, but free. And it’s made just for you. You can sign up for the newsletter here. 

With that out of the way, let’s talk money, upstart companies and the latest spicy IPO rumors. 

(In time the top bit of the newsletter won’t get posted to the website, so do make sure to sign up if you want the whole thing!)

BigCommerce isn’t worried about its IPO pricing

One of the most interesting disconnects in the market today is how VC Twitter discusses successful IPOs and how the CEOs of those companies view their own public market debuts.

If you read Twitter on an IPO day, you’ll often see VCs stomping around, shouting that IPOs are a racket and that they must be taken down now. But if you dial up the CEO or CFO of the company that actually went public to strong market reception, they’ll spend five minutes telling you why all that chatter is flat wrong.

Case in point from this week: BigCommerce. Well-known VC Bill Gurley was incensed that shares of BigCommerce opened sharply higher after they started trading, compared to their IPO price. He has a point, with the Texas-based e-commerce company pricing at $24 per share (above a raised range, it should be said), but opened at $68 and is worth around $88 on Friday as I write to you.

So, when I got BigCommerce CEO Brent Bellm on Zoom after its debut, I had some questions. 

First, some background. BigCommerce filed confidentially back in 2019, planned on going public in April, and wound up delaying its offering due to the pandemic, according to Bellm. Then in the wake of COVID-19, sales from existing customers went up, and new customers arrived. So, the IPO was back on.

BigCommerce, as a reminder, is seeing growth acceleration in recent quarters, making its somewhat modest growth rate more enticing than you’d otherwise imagine.

Anyhoo, the company was worth more than 10x its annual run-rate at its IPO price if I recall the math, so it wasn’t cheap even at $24 per share. And in response to my question about pricing Bellm said that he was content with his company’s final IPO price. 

He had a few reasons, including that the IPO price sets the base point for future return calculations, that he measures success based on how well investors do in his stock over a ten-year horizon, and that the more long-term investors you successfully lock in during your roadshow, the smaller your first-day float becomes; the more investors that hold their shares after the debut, the more the supply/demand curve can skew, meaning that your stock opens higher than it otherwise might due to only scarce equity being up for purchase.

All that seems incredibly reasonable. Still, VCs are livid. 

Market Notes

The Exchange spent a lot of time on the phone this week, leading to a host of notes for your consumption. And there was a deluge of interesting data. So, here’s a digest of what we heard and saw that you should know:

• Fintech mega-rounds are heating up, with 28 in the second quarter of 2020. Total fintech rounds dipped, but it appears that the sky is still pretty much afloat for financial technology startups.
• Tech stocks set new records this week, something that has become so common that the new all-time highs for the Nasdaq didn’t really create a ripple. Hell, it’s Nasdaq 11,000, where’s our gosh darn party?
• Axios’ Dan Primack noted this week that SPACs may be raising more money than private equity at the moment, and that there were “over $1 billion in new [SPAC] filings over past 24 hours” on Wednesday. I’ve given up keeping tabs on the number of SPACs taking place, frankly.
• But we did dig into two of the more out-there SPACs, in case you wanted a taste of today’s market.
• The Exchange also spoke with the chief solutions officer of Rackspace, Matt Stoyka, before its shares had started to trade. The chat stressed post-COVID-19 momentum, and the continuing cloud transition of lots of IT spend. Rackspace intends on lowering its debt load with a chunk of its IPO proceeds. It priced at $21, the lower-end of its range, so it didn’t get an extra debut check. And as the company’s shares are sharply under its IPO price today, there was no VC chatter about mispricing, notably. (That stuff only tends to crop up when the results bend in a particular direction.)
• I also chatted with Joshua Bixby, the CEO of Fastly this week. The cloud services company wound up giving back some of its recent gains after earnings, which goes to show how the market is perhaps overpricing some public tech shares. After all, Fastly beat on Q2 profit, Q2 revenue, and raised its full-year guidance — and its shares fell? That’s wild. Perhaps the income it generates from TikTok was concerning? Or perhaps after racing from a 52 week low of $10.63 to a 52 week high of over $117, the market realized that Fastly could only accelerate so much.

Whatever the case, during our chat Fastly CEO Joshua Bixby taught me something new: Usage-based software companies are like SaaS firms, but more so.

In the old days, you’d buy a piece of software, and then own it forever. Now, it’s common to buy one-year SaaS licenses. With usage-based pricing, you make the buying choice day-to-day, which is the next step in the evolution of buying, it feels. I asked if the model isn’t, you know, harder than SaaS? He said maybe, but that you wind up super aligned with your customers. 

Various and Sundry

To wrap up, as always, here’s a final whack of data, news and other miscellania that are worth your time from the week:

• TechCrunch chatted with Intercom, which recently hired a CFO and is therefore prepping to go public. But then it said the debut is at least two years away, which was a bummer. The company wrapped its January 31, 2020 fiscal year with $150 million ARR. It’s now much larger. Go public!
• The Zenefits “mafia” raised a lot, and a little this week. “Mafia” is a terrible term, by the way. We should come up with a new one.
• Danny Crichton wrote about SaaS revenue securitization, which was cool.
• Natasha Mascarenhas wrote about learning pods, which aren’t super germane to The Exchange but struck me as incredibly topical to our current lives, so I am including the piece all the same.
• I spoke with the CEO of Wrike this week, noodling on his company’s size (over $100 million ARR), and his competitors Asana and Monday.com. The whole cohort is over $100 million ARR each, so I might turn them into a post next week entitled “Go public you cowards,” or something. But probably with a different title as I don’t want to argue with 17 internal and external PR teams about why I’m right.
• The Exchange also chatted with VC firms M13 (big on services, various domestic office locations, focus on consumer spend over time) and Coefficient Capital (D2C brand focused, super interesting thesis) this week. Our takeaway is that there is more juice, and focus on the more consumer-focused side of VC than you’d probably expect given recent data. 

We’ve blown past our 1,000 word target, so, briefly: Stay tuned to TechCrunch for a super-cool funding round on Monday (it has the fastest growth I can recall hearing about), make sure to listen to the latest Equity ep, and parse through the latest TechCrunch List updates.

Hugs, fistbumps, and good vibes, 

Alex

Source: Tech Crunch

There’s a certain kind of panic that at some point gets us all.

You just got to work but did you leave the oven on at home? The gut-punch “call me ASAP” message from your boss but now they’re not answering their phone. Or that moment you unexpectedly see your camera light flash on your computer and you’re suddenly in a video call with a ton of people you don’t know.

Yes, that last one was me. In my defense it was only slightly my fault.

I got a tip about a new security startup, with fresh funding and an idea that caught my interest. I didn’t have much to go on, so I did what any curious reporter did and started digging around. The startup’s website was splashy, but largely word salad. I couldn’t find basic answers to my simple questions. But the company’s idea still seemed smart. I just wanted to know how the company actually worked.

So I poked the website a little harder.

Reporters use a ton of tools to collect information, monitor changes in websites, check if someone opened their email for comment, and to navigate vast pools of public data. These tools aren’t special, reserved only for card-carrying members of the press, but rather open to anyone who wants to find and report information. One tool I use frequently on the security beat lists all the subdomains on a company’s website. These subdomains are public but deliberately hidden from view, yet you can often find things that you wouldn’t from the website itself.

Bingo! I immediately found the company’s pitch deck. Another subdomain had a ton of documentation on how its product works. A bunch of subdomains didn’t load, and a couple were blocked off for employees only. (It’s also a line in the legal sand. If it’s not public and you’re not allowed in, you’re not allowed to knock down the door.)

I clicked on another subdomain. A page flashed open, an icon in my Mac dock briefly bounced, and the camera light flashed on. Before I could register what was happening, I had joined what appeared to be the company’s morning meeting.

The only saving grace was my webcam cover, a proprietary home-made double layer of masking tape that blocked what looked like half a dozen people from staring back at me and my unkempt, pandemic-driven appearance.

I didn’t stick around to explain myself, but quickly emailed the company to warn of the security lapse. The company had hardcoded their Zoom meeting rooms to a number of subdomains on their company’s website. Anyone who knew the easy-to-guess subdomain — trust me, you could guess it — would immediately launch into one of the company’s standing Zoom meetings. No password required.

By the end of the day, the company had pulled the subdomains offline.

Zoom has seen its share of security issues and forced to change default settings to prevent abuse, largely driven by greater scrutiny of the platform as its usage rocketed since the start of the coronavirus pandemic.

But this wasn’t on Zoom, not this time. This was a company that connected an entirely unprotected Zoom meeting room to a conveniently memorable web address, likely for convenience, but one that could have left lurkers and eavesdroppers in the company’s meetings.

It’s not much to ask to password-protect your Zoom meetings, because next time it probably won’t be me.

Source: Tech Crunch