Twilio’s $3.2B Segment acquisition about helping developers build data-fueled apps

The pandemic has forced businesses to change the way they interact with customers. Whether it’s how they deliver goods and services, or how they communicate, there is one common denominator, and that’s that everything is being forced to be digitally driven much faster.

To some extent, that’s what drove Twilio to acquire Segment for $3.2 billion today. (We wrote about the deal over the weekend. Forbes broke the story last Friday night.) When you get down to it, the two companies fit together well, and expand the platform by giving Twilio customers access to valuable customer data. Chee Chew, Twilio’s chief product officer says while it may feel like the company is pivoting in the direction of customer experience, they don’t necessarily see it that way.

“A lot of people have thought about us as a communications company, but we think of ourselves as a customer engagement company. We really think about how we help businesses communicate more effectively with their customers,” Chew told TechCrunch.

Laurie McCabe, co-founder and partner at SMB Group, sees the move related to the pandemic and the need companies have to serve customers in a more fully digital way. “More customers are realizing that delivering a great customer experience is key to survive through the pandemic, and thriving as the economy recovers — and are willing to spend to do this even in uncertain times,” McCabe said.

Certainly Chew recognized that Segment gives them something they were lacking by providing developers with direct access to customer data, and that could lead to some interesting applications.

“The data capabilities that Segment has are providing a full view of the customer. It really layers across everything we do. I think of it as a horizontal add across the channels and extending beyond. So I think it really helps us advance in a different sort of way […] towards getting the holistic view of the customer and enabling our customers to build intelligence services on top,” he said.

Brent Leary, founder and principal analyst at CRM Essentials, sees Segment helping to provide a powerful data-fueled developer experience. “This move allows Twilio to impact the data-insight-interaction-experience transformation process by removing friction from developers using their platform,” Leary explained. In other words, it gives developers that ability that Chew alluded to, to use data to build more varied applications using Twilio APIs.

Paul Greenberg, author of CRM at the Speed of Light, and founder and principal analyst at 56 Group agrees saying, “Segment gives Twilio the ability to use customer data in what is already a powerful unified communications platform and hub. And since it is, in effect, APIs for both, the flexibility [for developers] is enormous,” he said.

That may be so, but Holger Mueller, an analyst at Constellation Research says the company has to be seeing that the pure communication parts of the platform like SMS are becoming increasingly commoditized, and this deal, along with the SendGrid acquisition in 2018, gives Twilio a place to expand its platform into a much more lucrative data space.

“Twilio needs more growth path and it looks like its strategy is moving up the stack, at least with the acquisition of Segment. Data movement and data residence compliance is a huge headache for enterprises when they build their next generation applications,” Mueller said.

As Chew said, early on the problems were related to building SMS messages into applications and that was the problem that Twilio was trying to solve because that’s what developers needed at the time, but as it moves forward, it wants to provide a more unified customer communications experience, and Segment should help advance that capability in a big way for them.


Source: Tech Crunch

Hoping to be LatAm’s top digital bank for SMBs, Xepelin launches a lending and revenue management service

There’s another entrant in the startup race to provide financial services to Latin America’s small and medium-sized businesses.

Financial services have been a huge opportunity for startups coming out of Brazil, Colombia and Mexico in recent years, and now Xepelin, a new company from Chile, is looking to join the fray.

Xepelin’s founders, Sebastian Kreis and Guillermo Molina Carvallo, launched their company with the vision of creating a new kind of online bank for Latin America’s small businesses.

Sebastian Kreis, chief executive officer, Xepelin. Image Credits: Xepelin

The company’s pitch to business owners depends on a variation of the lending tool known as factoring, where small businesses can take out loans based on the income they’re expecting to receive. In Latin America, where small businesses have limited avenues to traditional loans, according to Kreis, factoring represents a novel solution.

Xepelin already has a multimillion dollar credit line on the books in addition to a small round of initial financing and the company will be using both the credit line to bring customers in and the equity infusion to continue developing revenue management and resource planning tools for its customers.

Starting in Chile and Mexico, where the two founders have a long history in the financial services world, the company expects to become a player across the continent in line with the growth of private debt services for small businesses.

Other startups, like Portal Finance and Marco Financial are also targeting the lending markets. Like Xepelin, the two companies have secured multiple lines of credit to support their businesses.

Kreis estimates that debt financing in Latin America could grow to 70 times its current size given changes to the regulatory environment and increasing demand for digital financial services over the next decade.

In the first stage we developed the new standard for SMBs’ working capital financing in LatAm, focusing on our client’s user experience, financial needs (not only transactions) and the way they manage their working capital. Xepelin gives SMBs access to capital in an easy and efficient way.

Mexico is a good indicator of the potential size of the market, according to Kreis. There only 300,000 businesses — out of more than 6 million registered companies — have sales and account executives offering revenue management and credit lines.

These money managers have a portfolio of 300 companies that they work with, while midmarket companies may work with as many as 1,000 to 5,000 small businesses.

So far, Xepelin has raised $3.5 million in early-stage funding from investors including Oskar Hjertonsson, Manutara Ventures, Ignacio Canals, Gonzalo Rojas, FJ Labs, Diego Fleischmann, and Daniel Undurraga. The most recent capital infusion, a $2.5 million round led by Impact Ideas VC closed earlier this month.

 


Source: Tech Crunch

If data is labor, can collective bargaining limit big tech?

There are plenty of reasons to doubt that the House Judiciary Committee’s antitrust report will mark a turning point in the digital economy. In the end, it lacked true bipartisan support. Yet we can still marvel at the extent of left-right agreement over its central finding: The big tech companies wield troublingly great power over American society.

The bigger worry is whether the solutions on the table cut to the heart of the problem. One wonders whether empowered antitrust agencies can solve the problem before them — and whether they can keep the public behind them. For the proposition that many Facebooks would be better than one simply doesn’t resonate.

There are good reasons why not. Despite all their harms, we know that whatever benefits these platforms provide are largely a result of their titanic scale. We are as uneasy with the platforms’ exercises of their vast power over suppliers and users, as we are with their forbearance; yet it is precisely because of their enormous scale that we use their services. So if regulators broke up the networks, consumers would simply flock toward whatever platforms had the most scale, pushing the industry toward reconsolidation.

Does this mean that the platforms do not have too much power, that they are not harming society? No. It simply means they are infrastructure. In other words, we don’t need these technology platforms to be more fragmented, we need them to belong to us. We need democratic, rather than strictly market processes, to determine how they wield their power.

When you notice that an institution is infrastructure, the usual reaction is to suggest nationalization or regulation. But today, we have good reasons to suspect our political system is not up to this task. Even if an ideal government could competently tackle a problem as complex as managing the 21st century’s digital infrastructure, ours probably cannot.

This appears to leave us in a lose-lose situation and explains the current mood of resignation. But there is another option that we seem to have forgotten about. Labor organization has long afforded control to a broad array of otherwise-powerless stakeholders over the operation of powerful business enterprises. Why is this not on the table?

A growing army of academics, technologists, and commentators are warming to the proposition that “data is labor.” In short, this is the idea that the vast data streams we all produce through our contact with the digital world are a legitimate sort of work-product — over which we ought to have much more meaningful rights than the laws now afford. Collective bargaining plays a central role in this picture. Because the reason that the markets are now failing (to the benefit of the Silicon Valley giants) is that we are all trying to negotiate only for ourselves, when in fact the very nature of data is that it always touches and implicates the interests of many people.

This may seem like a complicated or intractable problem, but leading thinkers are already working on legal and technical solutions.

So in some sense, the scale of the tech giants may indeed not be such a bad thing — the problem, instead, is the power that scale gives them. But what if Facebook had to do business with large coalitions representing ordinary peoples’ data interests — presumably paying large sums, or admitting these representatives into its governance — in order to get the right to exploit its users’ data? That would put power back where it belongs, without undermining the inherent benefits of large platforms. It just might be a future we can believe in.

So what is the way forward? The answer to this question is enabling collective bargaining through data unions. Data unions would become the necessary counterpart to big tech’s information acquiring transitions. By requiring the big tech companies to deal with data unions authorized to negotiate on behalf of their memberships, both of the problems that have allowed these giant tech companies to amass the power to corrupt society are solved.

Labor unions did not gain true traction until the passage of the National Labor Relations Act of 1935. Perhaps, rather than burning our political capital on breaking up the tech giants through a slow and potentially Sisyphean process, we should focus on creating a 21st century version of this groundbreaking legislation — legislation to protect the data rights of all citizens and provide a responsible legal framework for data unions to represent public interests from the bottom up.


Source: Tech Crunch

4-year founder vesting is dead

We recently invested in a team of co-founders who had voluntarily made their own vesting longer than four years. Four-year vesting is the industry standard. Why would someone voluntarily make it longer for themselves?

Their answer: “These days, with companies taking seven to 10 years to reach exit, it would make sense for founders to be on a similar schedule.”

This matters because the four-year co-founder vesting schedule frequently harms startup founders’ interests. Sometimes it damages their startup irreparably.

A growing number of founders are starting to realize this. I talked to quite a few about this over the last two years. Mostly, the “longer-than-four-years-vesting” founders share a similar story as well as logic. Almost always they are repeat, experienced founders. Often scarred by a co-founder separation in their prior startup, they are determined to set things up smarter in their next company.

Importantly, this group of founders assumes they are going to be the ones actually building the company. They created the company. They are the company. Nobody is forcing them out. I suspect founders who already believe this about their own startup will find this post most helpful.

Given the massive implications of co-founder vesting schedules, all startup founders should consider co-founder vesting lengths more carefully and then choose what makes sense for them. You make this decision around the time of incorporation but feel the effects over the lifetime of your company.

4-year vesting schedules are anachronistic

As far back as the 1980s, the standard startup vesting schedule was four or five years, with five being more prevalent on the East Coast. Nobody seems to remember a time it was anything different. The closest I’ve gotten to a logical answer on why it’s four years today stretches back to a pre-401(k) era, from before Reagan’s tax reforms in the ’80s. Prior to then, tax rules incentivized big company pension plans to have vesting periods of at least five years.

Startups didn’t offer traditional pension plans. Instead, startups offered employees stock, vesting over four years instead of five as a competitive move. That is all moot today. It has no relevance for startup founders in 2020.

More relevantly, time from founding to exit has gone from four years in 1999 to eight years in 2020. Yet founder vesting remains stuck at four. This is dangerous.

median time to exit

Exit data from U.S. startups with minimum $1 million in venture funding. Image Credits: PitchBook

Hedging against the crash of ineptitude


Source: Tech Crunch

France’s Health Data Hub to move to European cloud infrastructure to avoid EU-US data transfers

France’s data regulator CNIL has issued some recommendations for French services that handle health data, as Mediapart first reported. Those services should avoid using American cloud hosting companies altogether, such as Microsoft Azure, Amazon Web Services and Google Cloud.

Those recommendations follow a landmark ruling by Europe’s top court in July. The ruling, dubbed Schrems II, struck down the EU-U.S. Data Privacy Shield. Under the Privacy Shield, companies could outsource data processing from the EU to the U.S. in bulk. Due to concerns over U.S. surveillance laws, that mechanism is no longer allowed.

The CNIL is going one step further by saying that services and companies that handle health data should also avoid doing business with American companies — it’s not just about processing European data in Europe. Once again, this is all about avoiding falling under U.S. regulation and rulings.

The regulator sent those recommendations to one of France’s top courts (Conseil d’État). SantéNathon, a group of organizations and unions, originally notified the CNIL over concerns about France’s Health Data Hub.

France is currently building a platform to store health data at the national level. The idea is to build a hub that makes it easier to study rare diseases and use artificial intelligence to improve diagnoses. It is supposed to aggregate data from different sources and make it possible to share some data with public and private institutions for those specific cases.

The technical choices have been controversial as the French government originally chose to partner with Microsoft and its cloud platform Microsoft Azure.

Microsoft, like many other companies, relies on Standard Contractual Clauses for EU-U.S. data transfers. But the Court of Justice of the EU has made it clear that EU regulators have to intervene if data is being transferred to an unsafe country when it comes to privacy and surveillance.

The CNIL believes that an American company could process data in Europe but it would still fall under FISA702 and other surveillance laws. Data would still end up in the hands of American authorities. In other words, it is being extra careful with health data for now, while Schrems II is still unfolding.

“We’re working with health minister Olivier Véran on transferring the Health Data Hub to French or European platforms following the Privacy Shield bombshell,” France’s digital minister Cédric O told Public Sénat.

The French government is now looking at other solutions for the Health Data Hub. In the near future, if France’s top court confirms the CNIL’s recommendations, it could also have some effects for French companies that handle health data, such as Doctolib and Alan.


Source: Tech Crunch

Twilio is buying customer data startup Segment for between $3B and $4B

Sources have told TechCrunch that Twilio intends to acquire customer data startup Segment for between $3 and $4 billion. Forbes broke the story on Friday night, reporting a price tag of $3.2 billion.

We have heard from a couple of industry sources that the deal is in the works and could be announced as early as Monday.

Twilio and Segment are both API companies. That means they create an easy way for developers to tap into a specific type of functionality without writing a lot of code. As I wrote in a 2017 article on Segment, it provides a set of APIs to pull together customer data from a variety of sources:

Segment has made a name for itself by providing a set of APIs that enable it to gather data about a customer from a variety of sources like your CRM tool, customer service application and website and pull that all together into a single view of the customer, something that is the goal of every company in the customer information business.

While Twilio’s main focus since it launched in 2008 has been on making it easy to embed communications functionality into any app, it signaled a switch in direction when it released the Flex customer service API in March 2018. Later that same year, it bought SendGrid, an email marketing API company for $2 billion.

Twilio’s market cap as of Friday was an impressive $45 billion. You could see how it can afford to flex its financial muscles to combine Twilio’s core API mission, especially Flex, with the ability to pull customer data with Segment and create customized email or ads with SendGrid.

This could enable Twilio to expand beyond pure core communications capabilities and it could come at the cost of around $5 billion for the two companies, a good deal for what could turn out to be a substantial business as more and more companies look for ways to understand and communicate with their customers in more relevant ways across multiple channels.

As Semil Shah from early stage VC firm Haystack wrote in the company blog yesterday, Segment saw a different way to gather customer data, and Twilio was wise to swoop in and buy it.

Segment’s belief was that a traditional CRM wasn’t robust enough for the enterprise to properly manage its pipe. Segment entered to provide customer data infrastructure to offer a more unified experience. Now under the Twilio umbrella, Segment can continue to build key integrations (like they have for Twilio data), which is being used globally inside Fortune 500 companies already.

Segment was founded in 2011 and raised over $283 million, according to Crunchbase data. Its most recent raise was $175 million in April on a $1.5 billion valuation.

Twilio stock closed at $306.24 per share on Friday up $2.39%.

Segment declined to comment on this story. We also sent a request for comment to Twilio, but hadn’t heard back by the time we published.  If that changes, we will update the story.


Source: Tech Crunch

Hands on with Telepath, the social network taking aim at abuse, fake news and, to some extent, ‘free speech’

There’s no doubt that modern social networks have let us down. Filled with hate speech and abuse, moderation and anti-abuse tools were an afterthought they’re now trying to cram in. Meanwhile, personalization engines deliver us only what will keep us engaged, even if it’s not the truth. Today, a number of new social networks are trying to flip the old model on its head — whether that’s attempting to use audio for more personal connections, like Clubhouse, eliminate clout chasing, like Twelv, or, in the case of new social network Telepath, by designing a platform guided by rules that focus on enforcing kindness, countering abuse, and disabling the spread of fake news.

Many of these early efforts are already facing challenges.

Private social network Clubhouse has repeatedly demonstrated that allowing free-flowing communication in the form of audio conversations is an area that’s notoriously difficult to moderate. The app, though still unavailable to the broader public, courted controversy in September when it allowed anti-Semitic content to be discussed in one of its chat rooms. In the past, it had also allowed users to harass an NYT reporter openly.

Meanwhile, Twelv, a sort of Instagram alternative, ditches the “Like” button concept and all the other features now overloading Instagram, which had once been just a photo-sharing network. But, unfortunately, this also means there’s no easy way to find and follow interesting users or trends on Twelv — you have to push friends to join the app with you or know someone’s username to look them up, otherwise it shows you no content. The result is a social network without the “social.”

Telepath, meanwhile, is a more interesting development.

It’s pursuing an even loftier goal in social networking — creating a hate speech-free platform where fake news can’t be distributed.

No social network to date has been able to accomplish what Telegraph claims it will be able to do in terms of content moderation. Its ambitions are optimistic and, as the network remains in private beta, they’re also untested at scale.

Though positioned as a different kind of social network, Telepath isn’t actually focused on developing a new sharing format that could encourage participation — the way TikTok popularized the 15-second video clip, for example, or how Snapchat turned the world onto “Stories.”

Instead, Telepath, at first glance, looks very much like just another feed to scroll through. (And given the amount of linked Twitter content in Telepath posts, it’s almost serving as a backchannel for the rival platform.)

The startup itself was founded by former Quora employees, including former Quora Business & Community head, Marc Bodnick, now Telepath Executive Chairman; and former Quora Product Lead, Richard Henry, now Telepath CEO. They’re aided by former Quora Global Writer Relations Lead, Tatiana Estévez, now Telepath Head of Community and Safety; and Ro Applewhaite, previously research staff for Pete Buttigieg for America, now Telepath Head of Outreach.

It’s backed by a couple million in seed funding, led by First Round Capital (Josh Kopelman). Other backers include Unusual Ventures (Andy Johns), Slow Ventures (Sam Lessin), and unnamed angels. Bodnick and his wife, Michelle Sandberg, also invested.

Image Credits: Telepath

When talking about Telepath, it’s clear the founders are nostalgic for the early days of the web — before all the people joined, that is. In smaller, online communities in years past, people connected and made internet friends who would become real-world friends. That’s a moment in time they hope to recapture.

“I’ve benefited a lot by meeting people through the internet, forming relationships and having conversations — that sort of thing,” says Henry. “But the internet just isn’t fun in the ways that it used to be fun.”

He suggests that the anonymity offered by networks like Reddit and Twitter make it more difficult for people to make real-world connections. Telepath, with its focus on conversations, aims to change that.

“If we facilitate a really fun, kind, and empathetic conversation environment, then lots of good things can happen. And it might be that you potentially find someone you want to work with, or you end up getting a job, or you meet new friends, or you end up meeting offline,” Henry says.

Getting Started

To get started on Telepath, you join the network with your mobile phone number and name, find and follow other users, similar to Twitter, then join interest-based communities as you would on Reddit. When you launch the app, you’re meant to browse a home feed where conversation topics from your communities and interesting replies are highlighted — orange for those replies from people you follow and gray for those that Telepath has determined are worth being elevated to the home screen.

As you read through the posts and visit the communities, you can “Thumbs Up” content you like, downvote what you don’t, reply, mute, block, and use @usernames to flag someone.

Image Credits: Telepath, screenshot via TechCrunch

Another interesting design choice: everything on Telepath disappears after 30 days. No one will get to dig through your misinformed posts from a decade ago to shame you in the present, it seems.

What’s most different about Telepath, however, is not the design or format. It’s what’s taking place behind the scenes, as detailed by Telepath’s rules.

Users who join Telepath must agree to “be kind,” which is rule number one. They must also not attack one another based on identity or harass others. They must use a real name (or their preferred name, if transgender), and not post violent content or porn. “Fake news” is banned, as determined by a publisher’s attempts at disseminating misinformation on a regular basis.

Telepath has even tried to formalize rules around how polite conversations should function online with rules like “don’t circle the drain” — meaning don’t keep trying to have the last word in a contentious debate or circumvent a locked thread; and “stay on topic,” which means don’t bombard a pro-x network with an anti-x agenda (and vice versa.)

Image Credits: Telepath

To enforce its rules, Telepath begins by requiring users to sign up with a mobile phone number, which is verified as a “real” number associated with a SIM card, and not a virtual one — like the kind you could grab through a “burner” app.

In order to the create its “kind environment,” Telepath says it will sacrifice growth and hire moderators who work in-house as long-term, trusted employees.

“All the major social networks essentially grew in an unbounded way,” explains Henry. “They had 100 million-plus active users, then were like, ‘okay, now how do we moderate this enormous thing?’,” he continues. “We’re in a lucky position because we get to moderate from day one. We get to set the norms.”

Moderation

“Day one” was a long time in the making, however. The team rebuilt the product four times over a couple of years. Now, they say they’ve developed internal tools that provide moderators with visibility into the system.

According to moderator head Estévez, these include a reporting system, real-time content streams organized in to buckets (e.g. a bucket for “only new users”), as well as various searchable ways to get context around a report or a particular problematic user.

“Really good tools — including real-time streams of content, classifiers for problematic behavior, searchable context, and making it hard for banned users to return — mean that each moderator we hire will be quite scalable. We think that there are network effects around positive behavior,” she says.

Image Credits: Telepath

“It’s our intention to scale up fast and high accuracy moderation decision-making, which means that we’re going to be investing a lot of engineering effort in getting these tools right,” she adds.

The founders have decided not to use any third-party systems to aid in moderation at this time, they told TechCrunch.

“We looked at a bunch of off-the-shelf [moderation systems], and we’re basically building everything that we need from scratch,” says Henry. “We just need more control over being able to tweak how these systems work in order to get the outcome that we want.”

The investment in human moderation over automation will also require additional capital to scale. And Telepath’s decision to not run ads means it will eventually need to consider alternative business models to sustain itself. The company, for now, is interested in subscriptions, but hasn’t made decisions on this front yet.

Banning the trolls

Though Telepath has only 4,000-plus users in its private beta, the two-person moderation team is already tasked with moderating posts from across the thousands of pieces of content shared on a daily basis. (The company doesn’t disclose how many violations it takes action against per day, on average.)

When a user breaks the rules, moderators may first warn them about the violation and may require them to take down or edit a specific post. No one is punished for making a mistake or being unaware of the rules — they’re first given a chance to fix it.

But if a user breaks the rules repeatedly or in a way that seems intentional, such as engaging in a harassment campaign around another user, they are banned entirely. Because of the phone number verification system, they also can’t easily return — unless they go out and purchase a new phone, that is.

These moderation actions don’t necessarily have to follow strict guidelines, like a “three strikes rule,” for example. Instead, the way the rules may be enforced are determined on a case-by-case basis. Where Telepath leans towards stricter enforcement is around intentional and flagrant violations, or those where there’s a pattern of bad behavior. (As with Reply Guys and sealioning behavior.)

In addition, unlike on Facebook and Twitter — platforms that sometimes seem to be caught off guard by viral trends in need of moderation — Telepath intends for nothing to go viral on its platform without having been seen by a human moderator, the company says.

Fake News

Telepath is also working to develop a reputation score for users and trust scores for publishers.

In the case of the former, the goal is help the company determine how likely the user is to break Telepath’s rules. This isn’t developed yet, but would be something used behind the scenes, not put on display for all to see.

For publishers, the trust score will be how factually correct they are what percentage of the time.

Image Credits: Thomas Faull (opens in a new window) / Getty Images

“For example, if the most popular article in terms of views from the publisher is just completely factually incorrect or intentionally misleading…that should have a bigger penalty on the trust score,” explains Henry. “The problem is that the incumbent platforms have rules against disinformation, but the problem is that they don’t enforce them out of this desire to appear balanced.”

Bodnick adds this challenge is not as insurmountable as it seems.

“Our view is that, actually, a handful of outlets are responsible for most of the disinformation…I don’t think our intent is to build out some modern-day truth system that will figure out if The Washington Post is slightly more accurate than The New York Times. I think the main goal will be to identify repeat disinformation publishers — determine that they are perpetual publishers of disinformation, and then crush their distribution,” says Bodnick.

This plan, however, involves setting rules on Telepath that fly in the face of what many today consider “free speech.” In fact, Telepath’s position is that free speech-favoring social networks are a failed system.

“The problem, in our view, is that when you take this free-speech centered approach that sort of says: ‘I don’t care how many disinformation posts Breitbart has published in the last — three years, three months, three weeks — we’re going to treat every new post as if it could be equally likely to be truthful as any other post in the system,’” says Bodnick. “That is inefficient.”

“That’s how we will scale this disinformation rule — by determining which relatively small group of publishers — I’m guessing it’s hundreds, low hundreds — are responsible for publishing lots of disinformation. And then take their distribution down,” he says.

This opinion on free speech is shared by the team.

“We’re trying to build a community, which means that we have to make certain tradeoffs,” adds Estévez. “In the rules we refer to Karl Popper’s paradox of tolerance — to maintain a tolerant society, you have to be intolerant of intolerance. We have no interest in giving a platform to certain kinds of speech,” she notes.

This is the exact opposite approach that conservative social media sites are taking, like Parler and Gab. There, the companies believe in free speech to the point that they’ve left up content posted by an alleged Russian disinformation campaign, saying that no one filed a report about the threat, and law enforcement hadn’t reached out. These MAGA-friendly social networks are also filled with conspiracies, un-fact checked reports, and, frankly, a lot of vitriol.

The expectation is that if you go on their platforms, you’re in charge of muting and blocking trolls or the content you don’t like. But by their nature, those who join these platforms will generally find themselves among like-minded users.

Twitter, meanwhile, tries to straddle the middle ground. And in doing so, has alienated a number of users who think it doesn’t go far enough in counteracting abuse. Users report harassment and threats, then wait for days for their report to be reviewed only to be told the tweet in question didn’t break Twitter’s terms.

Telepath sits on the other end of the spectrum, aggressively moderating content, blocking and banning users if needed, and punishing publications that don’t fact check or those that peddle misinformation.

“Kindness” carve-outs

And yet, despite all this extra effort, Telepath doesn’t always feature only thoughtful and kind-hearted conversations.

That’s because it has carved out an exception in its kindness rule that allows users to criticize public figures, and because it doesn’t appear to be taking action on what could be problematic, if not violating, conversations.

Image Credits: Telepath

A user’s experience in these “gray” areas may vary by community.

Telepath’s communities today focus on hobbies and interests, and can range from the innocuous — like Books or Branding or Netflix or Cooking, for example — to the potentially fraught, like Race in America. In the latter, there have been discussions about the capitalization of “Black” where it was suggested that maybe this wasn’t a useful idea. In another, sympathy is expressed for a person who was falsely pretending to be a person of color.

In a post about affordable housing, someone openly wondered if a woman who said she didn’t want to live near poor people was actually racist. Another commenter then noted that gang members can bring down property values.

A QAnon community, meanwhile, discusses the movement and its ridiculous followers from afar — which is apparently permitted — though supporting it in earnest would not be.

There are also nearly 20 groups about things that “suck,” as in GOPSucks or CNNSucks or QuibiSucks.

Anti-Trump content, meanwhile, can be found on a network called “DumbHitler.”

Meanwhile, online publishers who routinely post discredited information are banned from Telepath, but YouTube is not. So if feel you need to share a link to a video of Rudy Giuliani accusing Biden of dementia, you can do so — so long as you don’t call it the truth.

And you can post opinions about some terrible people in which you describe them as terrible, thanks to the public figure carve-out.

Cheater and deadbeat dad? Go ahead and call them a “disgusting human being.” VP Pence was referred to by a commenter as “SmugFace mcWhitey” and Ronny Jackson is described as “such a piece of sh**.”

Explains Estévez, that’s because Telepath’s “be kind” rule is not intended to protect public figures from criticism.

“It is important to note that toxicity on the internet around politics isn’t because people are using bad words, but because people are using bad faith arguments. They are spreading misinformation. They are gaslighting marginalised groups about their experiences. These are the real issues we’re addressing,” she says.

She also notes that online “civility” is often used to silence people from marginalized groups.

“We don’t want Telepath’s focus on kindness to be turned against those who criticize powerful people,” she adds.

In practice, the way this plays out on Telepath today is that it’s become a private, closed door network where users can bash Trump, his supporters and right-wing politicians in peace from Twitter trolls. And it’s a place where a majority agrees with those opinions, too.

It has, then, seemingly built the Twitter that many on the left have wanted, the way that conservative social media, like Gab and Parler, built what the right had wanted. But in the end, it’s not clear if this is the solution for the problems of modern social media or merely an escape. It also remains to be seen whether a mainstream user base will follow.

Telepath remains in a closed beta of indefinite length. You need an invite to join.


Source: Tech Crunch

Venture capital gets less diverse in 2020

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. You can subscribe here.


First, a big congrats on making it through the week. If you live in the United States, you just endured one of the wildest news weeks ever. Rapid-fire headlines and nigh-panic have been our lot since last Friday when the president announced he was COVID-19 positive. We’re all very tired. You get points for just surviving.

Second, I wanted to bring you something uplifting this weekend, as you deserve it. Sadly, that’s not what we’re going to talk about.

On Friday, The Exchange covered new data concerning the venture capital results of female founders during the third quarter. The data set was U.S.-focused, but we can presume that it is illustrative of global trends. Regardless of that nuance, the data was depressing.

In the third quarter, U.S.-based female founders and co-founders raised 136 rounds worth $434 million, per PitchBook data. That was a handful more rounds than Q2 2020, but far fewer dollars. And it was down across the board compared to Q3 2019. Even more, as we noted in the piece, the aggregate venture capital world did very well.

Here’s some PwC data making that point, and a bit more from my old employer Crunchbase. What matters is that female founders are doing worse when VCs are super active. This will only perpetuate inequalities and inequities in the startup market.

Speaking of which, here’s some more bad news. Vern Howard Jr., the co-founder and CEO of Hallo, a startup that has raised nearly $2 million, according to Crunchbase, compiled some data on Black founders’ VC performance in Q3. Here’s what he set out to do:

[W]e wanted to put hard numbers behind the promises of so many venture capitalists and create a benchmark for how we can track the investment into black founders over time. So our team pulled a list from Crunchbase of all the startups globally with a total funding amount of $500,000 — $20,000,000 and who raised a round between July 1 and October 1. There were over 1383 companies here and our team went through one by one, to see how many Black founders there were.

There were 31.

Now, you could open up the funding bands to include both smaller and larger funding events, but regardless of the data boundaries, the resulting number — just 2.2% of the total — is a disgrace.

Market Notes

Various and Sundry

  • Continuing our coverage of the savings and investing boom that fintech startups around the world have been riding this year, Freetrade, a British Robinhood if you will, told The Exchange that it crossed £1 billion in September order volume. That’s not bad!
  • Freetrade also recently launched a paid version of its service, as the payment-for-order-flow method of generating revenue that Robinhood is growing on the back of is not allowed across the pond.
  • Sticking to the fintech world, Yotta Savings is a startup that provides a savings option to its users, with the added chance of winning a big monetary prize for having stored their money with the startup. Folks have been whispering in my ear about the company for a bit, but I’ve held off writing about it until now as it was not clear to me if the model was merely a gimmick, or something that would actually attract customers.
  • Well, Yotta grew from 8,000 accounts to more than 30,000 in the past few weeks and has reached the $100 million deposit mark. So, I guess we now care.
  • Coinbase lost one in 20 employees to its new strategy of standing neutral during political times on anything that its CEO deems as unrelated to its core mission, which, as a for-profit company with tectonic financial backing, is making money.
  • On the same topic, Can from The Margins made a salient point that “no politics is a political stance.” Correct, and it is a very conservative one at that.
  • Even more, Coinbase’s CEO made noise about how his company will “work to create an environment where everyone is welcome and can do their best work, regardless of background, sexual orientation, race, gender, age, etc.” Whether he likes it or not, this is a political stance, and one that has nothing to do with the company’s stated core mission. And a political fight earned it — namely, equal access to the workplace.
  • I’ll toss in a plug for this piece on the matter from a VC that TechCrunch published, and these thoughts from a tech denizen on how to guarantee that your company lands on the wrong side of history on essentially everything.
  • Wrapping our grab-bag this week, Ping Identity bought ShoCard. Ping is now a public company, so normally its deals would land outside our wheelhouse. But we care in this case because TechCrunch has covered ShoCard (2015: “ShoCard Is A Digital Identity Card On The Blockchain”), and because the startup does crypto-related work.
  • Seeing a public company snap up a blockchain startup for real money, on purpose and out loud, doesn’t happen every day. More here if you want to read about the deal.

Wrapping, this newsletter is a lot of fun and I appreciate your reading it. It is, also, a work in progress. So feel free to hit respond to it and let me know what you want to see more of. Or hit respond and send me a cute pic of your pet. Either is fine by me.

Chat soon,

Alex


Source: Tech Crunch

Public investors stay in love with tech, as Root and Affirm file to IPO

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.

Why are there so many tech IPOs right now? Startups are finding that they can get higher valuations from public markets than private ones these days, because so many public investors want to put serious money in tech. Also, the lure of the future, the benevolence of the Fed, the retail investor boom, the sheer number of unicorns that have been waiting for any decent moment to go, the new ways a company can go public… these are some of the reasons Alex Wilhelm found after reviewing the latest listings and quarterly data about tech in public markets.

Various political and economic turmoils threaten to end the run, but the impact to the startup world has arrived. Consider it for a minute before the newsletter dives into stocks, SPACs, emerging industries and other useful startup news.

From this IPO boom, there’ll be another wave of startup employee wealth flooding into adjacent real-world spaces, but spread more broadly outside of the Bay Area than the days of Facebook and Twitter IPOs. Some of those employees will become investors and maybe founders, and the now-public startups will replace those positions with big-company people. The dynamics around tech hiring will be further reshaped in surprising new ways, all combined with the other changes happening like remote work.

Today, if you’re founding a startup now, you can now confidently chart new ways to build your company long-term that previous generations of founders could barely imagine.

This coming decade, we might see a startup go public that raises from pre-seed rolling funds first, pulls in newly legalized crowdfunding, matches with the right VCs from among the thousands that have are operating these days — or perhaps the startup raises debt because it’s doing that well. It could stay private as long as it wants using the various financing and secondary market possibilities that have been figured out over the last decade. Then, when it is ready to go public, it could choose between traditional options, the perfect SPAC and a direct listing, and keep the shareholder pool in favor of the true believers who have been with the company over the course of the journey.

This current group of IPOs also demonstrates something else. Tech is no longer defined as some profitless, highly valued consumer tech startup in San Francisco. It can come from anywhere, it can solve practical problems, it can make real money, and it can keep building and growing — provided you’re okay with some ongoing risk. No wonder public markets like tech these days.

Take a look at Root Insurance, an insurtech unicorn that has already helped define the Columbus, Ohio startup scene. It’s a “startup Rorscach test,” as Alex details this week about its new IPO filing. “You can find things to like (improving adjusted margins! revenue growth!), and you can find things to not like (spiraling losses! negative margins!) very easily.”

Here’s more from the Extra Crunch article:

It appears that the tailwind that many insurance providers have seen during COVID-19 has provided Root with a nice boost (driving fell during the pandemic, leading some insurance providers to return premiums.) Root is taking advantage of the moment by filing when it can show sharply improved economics.

That’s smart. But how do those improved economics bear out in traditional accounting? Let’s find out:

  • Root’s revenue has skyrocketed from $43.3 million in 2018 to $290.2 million in 2019. In the first half of 2020, Root managed $245.4 million in revenue, up 135.73% from what it managed in the first half of 2019.
  • Root’s losses have also shot higher, from a net loss of $69.1 million in 2018 to $282.4 million in 2019. The startup has managed to consistently lose more money over time. This was also true more recently, when its H1 2020 net loss of $144.5 million dwarfed its H1 2019 loss of $97.0 million.

The other filing this week is for Affirm, which provides a point-of-sale credit for customers (without all the tricks of credit cards). It’s also a symbol of how innovation works across the decades, for those future founders who are studying the IPO experiments of unicorns today.

The company is a high-flying unicorn with a practical purpose from serial entrepreneur Max Levchin, who has also helped shape the concept of the modern startup — from cofounding Paypal and making numerous angel investments over the years, to Slide, a profitless, highly valued consumer tech company in San Francisco a decade ago. It’s not widely understood outside of tech, Slide and other social media companies helped pioneer the growth and engagement techniques that subsequent startups applied across SaaS, e-commerce, fintech and real-world sectors. Today, Root and Affirm and many of the other companies in this era of IPOs are standing on the lessons of those years.

Image Credits: Getty Images

SPAC growing pains

Special Purpose Acquisition Companies are sure to provide valuable lessons, as a growing group of startups use these investment vehicles to ease into public markets. Here’s the latest look at the action, starting with this disturbing quote that Connie Loizos got from one expert this week.

According to Kristi Marvin, a former investment banker who now runs the data site SPACInsider, she’s having, and hearing about, conversations with a much wider range of people interested in launching SPACs than in past years — and not all of them are necessarily equipped to manage the vehicles.

“You ask, ‘Have you ever acquired a company for $500 million or more? Do you have operating experience in the vertical that you’re targeting? Do you understand the reporting requirements involved?’ Often,” she says, “the answers are no.”

That was in the context of a controversial former Uber executive starting a SPAC; Connie also looked at gender representation in this emerging slice of high finance. Like other parts of that world, the people involve are almost entirely men (which is also continuing to be the case in startup funding, actually, Alex reports).

Meanwhile, Catherine Shu examined how troubled electric vehicle startup Faraday Futures is approaching SPAC plans, while Alex took a closer look at the challenges and opportunities facing Opendoor.

micromobility-ebikes-scooters

Image Credits: Getty Images

The future of mobility

Our annual conference on mobility and the future of transportation happened online this year, which means we have lots of easily accessible conference coverage to share for readers (and for Extra Crunch subscribers). Here are a few key headlines to help you focus your clicks:

What micromobility is missing

Quarantine drives interest in autonomous delivery, but it’s still miles from mainstream

Transportation VCs suggest frayed US-China ties will impact mobility markets (EC)

GettyImages 1063730694

Image Credits: Getty Images

Investor Surveys: APIs, Helsinki and Amsterdam

“I am surprised at how open companies are to a SaaS API for something as critical as cybersecurity,” Skyflow founder Anshu Sharma explains about the explosion of SaaS companies, and specifically API service providers like his company. “While I have spent over a decade in SaaS including some very large deals during my time at Salesforce, the scope of the projects by large companies including banks and healthcare companies is simply beyond what was a possibility just a few years ago. We have truly moved from ‘why SaaS’ to a ‘why not SaaS’ era.” Alex and Lucas Matney surveyed a range of top investors and founders in this exploding niche, and you can read the full thing on Extra Crunch.

Elsewhere in investor surveys, Mike Butcher checked out the Helsinki startup scene and has another about Amsterdam in progress.

Across the week

TechCrunch

Nobel laureate Jennifer Doudna shares her perspective on COVID-19 and CRISPR

Podcast advertising has a business intelligence gap

Standing by developers through Google v. Oracle

Dear Sophie: Now that a judge has paused Trump’s H-1B visa ban, how can I qualify my employees?

A clean energy company now has a market cap rivaling ExxonMobil

Extra Crunch

Understanding Airbnb’s summer recovery

Accel VCs Sonali De Rycker and Andrew Braccia say European deal pace is ‘incredibly active’

4 sustainable industries where founders and VCs can see green by going green

Six favorite Techstars startups ahead of its next rush of demo days

To fill funding gaps, VCs boost efforts to find India’s standout early-stage startups

#EquityPod

From Alex:

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

This week Natasha was on vacation, so Danny and your humble servant had to endeavor alone. She’s back next week, so we’ll be back to full strength as a collective soon enough.

But even with a depleted hosting crew, we had a mountain of news to get through. And to joke about, as Danny was in the mood for a laugh. Here’s the rundown:

That was a lot. We did our best. Hugs and chat with you next week!

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


Source: Tech Crunch

Original Content podcast: Netflix’s ‘Enola Holmes’ is thoroughly mediocre

There’s nothing excessively bad about “Enola Holmes,” a new film about Sherlock Holmes’ younger sister Enola. But there’s nothing particularly good, either.

The film was originally planned for a theatrical release from Warner Bros., but Netflix picked it up earlier this year, after the pandemic shuttered theaters around the world.

“Enola Holmes” stars Millie Bobby Brown as titular adolescent detective, along with Henry Cavill as Sherlock, and they’re both … fine? Neither of them seems to be phoning it in, and Cavill is downright charming at times. And although Brown has admitted that she struggled to reacquire her English accent, she brings plenty of energy to her role, which includes plenty of fourth-wall-breaking monologues that fill the audience in on backstory and explain the solutions to not-particularly-puzzling mysteries.

As we explain on the latest episode of the Original Content podcast, the film seems competent in virtually every respect, but thoroughly inspired, leaving us underwhelmed by the results — Anthony to the point where he was pacing around the room and wondering about his life choices. But hey, maybe kids will enjoy watching it?

In addition to reviewing the movie, we also discuss Netflix’s recent discussion to cancel “Glow” and “Teenage Bounty Hunters.”

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
0:37 “Away” listener response
4:04 “Glow”/”Teenage Bounty Hunters” discussion
12:43 “Enola Holmes” review
29:17: “Enola Holmes” spoiler discussion


Source: Tech Crunch