Ideaforge

Plagued with growth issues, Quibi, a short-form mobile-native video platform, is shutting down, according to multiple reports. The startup, co-founded by Jeffrey Katzenberg and Meg Whitman, had raised nearly $2 billion in its lifetime as a private company. Quibi did not respond to requests for comment from TechCrunch.

The company’s prolific fundraising efforts spanned prominent institutions in private equity, venture capital and Hollywood, all betting on Katzenberg’s ability to deliver another hit. The startup’s backers included Alibaba, Madrone Capital Partners, Goldman Sachs and JPMorgan as well as Disney, Sony Pictures, Viacom, WarnerMedia and MGM, among others.

Their pitch was highly produced bite-sized content, packed with Hollywood star power, and designed to be “mobile-first” entertainment. For the YouTube’s and Snap’s of the world producing mainstream content on a shoestring budget, Quibi wanted to be an HBO for smartphones. Investors and pundits questioned the firm’s ability to monetize this vision, and it became clear soon after launch that the company had miscalculated.

Rumors that Quibi was shutting down began early this week. The Information wrote that Katzenberg has told people within the industry that the company might need to shut down, after unsuccessfully pitching itself as an acquisition to Apple, Facebook, and Warner Media.

Netflix earnings from earlier this week suggest that the pandemic entertainment boom is slowing. The consumer video service disappointed on new paying customer numbers, and shares were down sharply yesterday after it released its earnings report. Those numbers also potentially showcase just how crowded the market for subscription video content has gotten in the past 12 months, with players like Apple, Disney, HBO and NBC each launching new services and collectively spending billions to acquire rights to past television hits.

Source: Tech Crunch

The Coalition for App Fairness (CAF), a newly-formed advocacy group pushing for increased regulation over app stores, has more than doubled in size with today’s announcement of 20 new partners — just one month after its launch. The organization, led by top app publishers and critics including Epic Games, Deezer, Basecamp, Tile, Spotify and others, debuted in late September to fight back against Apple and Google’s control over app stores, and particularly the stores’ rules around in-app purchases and commissions.

The coalition claims both Apple and Google engage in anti-competitive behavior, as they require publishers to use the platforms’ own payment mechanisms, and charge 30% commission on these forced in-app purchases. In some cases, those commissions are collected from apps where Apple and Google offer a direct competitor. For example, the app stores commission Spotify, which competes with Google’s YouTube Music and Apple’s own Apple Music.

The group also calls out Apple more specifically for not allowing app publishers any other means of addressing the iOS user base except through the App Store that Apple controls. Google, however, allows apps to be sideloaded, so is less a concern on that platform.

The coalition launched last month with 13 app publishers as its initial members, and invited other interested parties to sign up to join.

Since then, CAF says “hundreds” of app developers expressed interest in the organization. It’s been working through applications to evaluate prospective members, and is today announcing its latest cohort of new partners.

This time, the app publishers aren’t necessarily big household names, like Spotify and Epic Games, but instead represent a wide variety of apps, ranging from studios to startups.

The apps also hail from a number of app store categories, including Business, Education, Entertainment, Developer Tools, Finance, Games, Health & Fitness, Lifestyle, Music, Navigation, News, Productivity, Shopping, Sport, and Travel.

The new partners include: development studio Beonex, health app Breath Ball, social app Challenge by Eristica, shopping app Cladwell, fitness app Down Dog Yoga, developer tool Gift Card Offerwall, game maker Green Heart Games, app studio Imagine BC, business app Passbase, music app Qobuz, lifestyle app QuackQuack and Qustodio, game Safari Forever, news app Schibsted, app studio Snappy Mob, education app SpanishDict, navigation app Sygic, app studio Vertical Motion, education app YARXI, and the Mobile Marketing Marketing Association.

With the additions, CAF now includes members from Austria, Australia, Canada, France, Germany, India, Israel, Malaysia, Norway, Singapore, Slovakia, Spain, United Kingdom, and the United States.

The new partners have a range of complaints against the app stores, and particularly Apple.

SpanishDict, for instance, was frustrated by weeks of rejections with no recourse and inconsistently applied policies, it says. It also didn’t want to use Apple’s new authentication system, Apple Sign-In, but Apple made this a requirement for being included on the App Store.

Passbase, a Sign In With Apple competitor, also argues that Apple applied its rules unfairly, denying its submission but allowing its competitors on the App Store.

While some of the app partners are speaking out against Apple for the first time, others have already detailed their struggles publicly.

Eristica posted on its own website how Apple shut down its seven-year old social app business, which allowed users to challenge each other to dares to raise money for charity. The company claims it pre-moderated the content to ensure dangerous and harmful content wasn’t published, and employed human moderators, but was still rejected over dangerous content.

Meanwhile, TikTok remained on the App Store, despite hosting harmful challenges, like the pass out challenge, cereal challenge, salt and ice challenge and others, Eristica says.

Apple, of course, tends to use its policies to shape what kind of apps it wants to host on its App Store — and an app that focused on users daring one another may have been seen as a potential liability.

That said, Eristica presents a case where it claims to have followed all the rules and made all the changes Apple said it wanted, and yet still couldn’t get back in.

Down Dog Yoga also recently made waves by calling out Apple for rejecting its app because it refused to auto-charge customers at the end of its free trial.

The issue, in this case, wasn’t just that Apple wants a cut of developers’ businesses, it also wanted to dictate how those businesses are run.

Another new CAF partner, Qustodio, was among the apps impacted by Apple’s 2018 parental control app ban, which arrived shortly after Apple introduced its own parental control software in iOS.

The app developer had then co-signed a letter asking Apple release a Screen Time API rather than banning parental control apps — a consideration that TechCrunch had earlier suggested should have been Apple’s course of action in the first place.

Under increased regulatory scrutiny, Apple eventually relented and allowed the apps back on the App Store last year.

Not all partners are some little guy getting crushed by App Store rules. Some may have run afoul of rules designed to protect consumers, like Apple’s crackdown on offerwalls. Gift Card Offerwall’s SDK, for example, was used to incentivize app monetization and in-app purchases, which isn’t something consumers tend to welcome.

Despite increased regulatory pressure and antitrust investigations in their business practices, both Apple and Google have modified their app store rules in recent weeks to ensure they’re clear about their right to collect in-app purchases from developers.

Meanwhile, Apple and CAF member Epic Games are engaged in a lawsuit over the Fortnite ban, as Epic chose to challenge the legality of the app store business model in the court system.

Other CAF members, including Spotify and Tile, have testified in antitrust investigations against Apple’s business practices, as well.

“Apple must be held accountable for its anticompetitive behavior. We’re committed to creating a level playing field and fair future, and we’re just getting started,” CAF said in an announcement about the new partners. It says it’s still open to new members.

Source: Tech Crunch

After pricing at $27 per share, Datto’s stock rose during regular trading. By mid-afternoon the data and security software company was worth $28.10, up a hair over 4%.

The company’s IPO comes on the back of a rapid-fire Q3 in which a host of technology companies, particularly software, made it to the public markets. While the number of un-exited unicorns in the United States still rose in the quarter, Q3 brought with it a wave of liquidity that felt long coming.

Datto’s IPO is one among what appears set to be a smaller Q4 class, though offerings like Airbnb and Affirm are still tipped to be coming in short order. Airbnb and Affirm each announced that they have filed privately to float, though have yet to publicly drop their S-1 filings.

The Datto IPO was interesting for a few reasons, including its mix of slower growth and rising profitability, its place in the midst of the current Vista drama, and how well it was priced.

While 2020 has brought with it many venture-backed IPOs, the year has also brought a nearly commensurate number of complaints about the IPO process itself. After many tech, and tech-ish, companies saw their values skyrocket after pricing and listing, vocal tech and venture figures argued that IPOs were effectively handing upside from companies to underwriting banks, and their customers.

There was some merit to the arguments. Datto, however, will not stoke similar fires. Up a mere few points from its IPO price, it was priced pretty much perfectly from the perspective of raising as much money as it could for itself in its debut.

Datto will use its IPO proceeds to pay down debts that it accrued during its takeover from Vista (private equity: a good deal for private equity). However, Datto’s CEO Tim Weller told TechCrunch in a call that the company will still be well-capitalized after the public offering, saying that it will have a very strong cash position.

The company should have places to deploy its remaining cash. In its S-1 filings, Datto highlighted a COVID-19 tailwind stemming from companies accelerating their digital transformation efforts. TechCrunch asked the company’s CEO whether there was an international component to that story, and whether digital transformation efforts are accelerating globally and not merely domestically. In a good omen for startups not based in the United States, the executive said that they were.

The company did not entertain a SPAC-led public debut, with Datto’s founder, Austin McChord, saying that his company had long planned a traditional public offering. Closing on the Vista front, McChord said that the removal of Vista’s Brian Sheth was immaterial to Datto’s IPO process.

Source: Tech Crunch

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.

Dear Sophie:

What are the visa prospects for a graduate completing an advanced degree at a university in the United States who wants to co-found a startup after graduation? Can the new startup or my co-founders sponsor me for a visa?

—Brilliant in Berkeley

Dear Brilliant,

Thank you for your questions and for your contributions. The U.S. economy greatly benefits from entrepreneurial individuals like you who create companies — and jobs — in the U.S.

Let me take your second question first: Yes, it is theoretically possible for your startup to sponsor you for a visa, and for one of your co-founders to be your supervisor. Many visas and employment green cards require a company to sponsor you and for you to demonstrate that a valid employer-employee relationship exists.

Given your situation, timing will be key, particularly since one of your best visa options is the H-1B Visa for Specialty Occupations. The number of H-1B visas issued each year is typically capped at 85,000-60,000 for individuals with a bachelor’s degree and 25,000 for individuals with a master’s or higher degree. Because of the cap on H-1B visas and because the demand for them far outstrips the supply, U.S. Citizenship and Immigration Services (USCIS) holds a lottery once a year in the spring to determine who can apply for this visa.

Source: Tech Crunch

Yin Wu has co-founded several companies since graduating from Stanford in 2011, including a computer vision company called Double Labs that sold to Microsoft, where she stayed on for a couple of years as a software engineer. In fact, it was only after that sale she she says she “actually understood all of the nuances with a company’s cap table.”

Her newest company, Pulley, a 14-month-old, Mountain View, Ca.-based maker of cap table management software aims to solve that same problem and has so far raised $10 million toward that end led by the payments company Stripe, with participation from Caffeinated Capital, General Catalyst, 8VC and numerous angel investors.

Wu is going up against some pretty powerful competition. Carta was reportedly raising $200 million in fresh funding at a $3 billion valuation as of the spring (a round the company never official confirmed or announced). Last year, it raised $300 million. Morgan Stanley has meanwhile been beefing up its stock plan administration business, acquiring Solium Capital early last year and more recently purchasing Barclay’s stock plan business.

Of course, startups often manage to find a way to take down incumbents and a distraction for Carta, at least, in the form of a very public gender discrimination lawsuit by a former VP of marketing, could be the kind of opening that Pulley needs. We emailed with Yu yesterday to ask if that might be the case. She didn’t answer directly, but she did mention “values,” as well as sharing some more details about what she sees as different about the two products.

TC: Why start this company? Has Carta’s press of late created an opening for a new upstart in the space?

YW: I left Microsoft in 2018 and started Pulley a year later. We skipped the seed and raised the A because of overwhelming demand from investors. Many wanted a better product for their portfolio companies. Many founders are increasingly thinking about choosing with companies, like Pulley, that better align with their values.

TC: How many people are working for Pulley and are any folks you pulled out of Carta?

YW: We’re a team of seven and have four people on the team who are former Y Combinator founders. We attract founders to the team because they’ve experienced firsthand the difficulties of managing a cap table and want to build a better tool for other founders. We have not pulled anyone out of Carta yet.

TC: Carta has raised a lot of funding and it has long tentacles. What can Pulley offer startups that Carta cannot?

YW: We offer startups a better product compared to our competitors. We make every interaction on Pulley easier and faster. 409A valuations take five days instead of weeks, and onboarding is the same day rather than months. By analogy, this is similar to the difference between Stripe and Braintree when Stripe initially launched. There were many different payment processes when Stripe launched. They were able to capture a large portion of the market by building a better product that resonated with developers.

One of the features that stands out on Pulley is our modeling feature [which helps founders model dilution in future rounds and helps employees understand the value of their equity as the company grows]. Founders switch from our competitors to Pulley to use our modeling tool [and it works] with pre-money SAFEs, post-money SAFEs and factors in pro-ratas and discounts. To my knowledge, Pulley’s modeling tool is the most comprehensive product on the market.

TC: How does your pricing compare with Carta’s?

YW:  Pulley is free for early-stage companies regardless of how much they raise. We’re price competitive with Carta on our paid plans. Part of the reason we started Pulley is because we had frustrations with other cap table management tools. When using other services, we had to regularly ping our accountants or lawyers to make edits, run reports or get data. Each time we involved the lawyers, it was an expensive legal fee. So there is easily a $2,000 hidden fee when using tools that aren’t self-serve for setting up and updating your cap table.

TC: Is there a business-to-business opportunity here, where maybe attorneys or accountants or wealth managers private label this service? Or are these industry professionals viewed as competitors?

YW: We think there are opportunities to white label the service for accountants and law firms. However, this is currently not our focus.

TC: How adaptable is the software? Can it deal with a complicated scenario, a corner case?

YW: We started Pulley one year ago and we’re launching today because we have invested in building an architecture that can support complex cap table scenarios as companies scale. There are two things that you have to get right with cap table systems, First, never lose the data and second, always make sure the numbers are correct. We haven’t lost data for any customer and we have a comprehensive system of tests that verifies the cap table numbers on Pulley remain accurate.

TC: At what stage does it make sense for a startup to work with Pulley, and do you have the tools to hang onto them and keep them from switching over to a competitor later?

YW: We work with companies past the Series A, like Fast and Clubhouse. Companies are not looking to change their cap table provider if Pulley has the tool to grow with them. We already have the features of our competitors, including electronic share issuance, ACH transfers for options, modeling tools for multiple rounds and more. We think we can win more startups because Pulley is also easier to use and faster to onboard.

TC: Regarding your paid plans, how much is Pulley charging and for what? How many tiers of service are there?

YW; Pulley is free for early-stage startups with less than 25 stakeholders. We charge $10 per stakeholder per month when companies scale beyond that. A stakeholder is any employee or investor on the cap table. Most companies upgrade to our premium plan after a seed round when they need a 409A valuation.

Cap table management is an area where companies don’t want a free product. Pulley takes our customers’ data privacy and security very seriously. We charge a flat fee for companies so they rest assured that their data will never be sold or used without their permission.

TC: What’s Pulley’s relationship to venture firms?

YW: We’re currently focused on founders rather than investors. We work with accelerators like Y Combinator to help their portfolio companies manage their cap table, but don’t have a formal relationship with any VC firms.

Source: Tech Crunch

Adobe’s work on a chain of custody that could link online images back to their origins is inching closer to becoming a reality. The prototype, part of the Content Authenticity Initiative (CAI), will soon appear in the beta of Photoshop, Adobe’s ubiquitous image editing software.

Adobe says the preview of the new tool will be available to users in the beta release of Photoshop and Behance over the next few weeks. The company calls the CAI implementation “an early version” of the open standard that it will continue to hone.

The project has a few different applications. It aims to make a more robust means of keeping creators’ names attached to the content they create. But its most compelling use case for CAI would see the tool become a “tamper-proof” industry standard aimed at images used to spread misinformation.

Adobe describes the project’s mission as an effort to “increase trust and transparency online with an industry-wide attribution framework that empowers creatives and consumers alike.” The result is a technical solution that could (eventually) limit the spread of deepfakes and other kinds of misleading online content.

“… Eventually you might imagine a social feed or a news site that would allow you to filter out things that are likely to be inauthentic,” Adobe’s director of CAI, Andy Parson said earlier this year. “But the CAI steers well clear of making judgment calls — we’re just about providing that layer of transparency and verifiable data.”

The idea sounds like a spin on EXIF data, the embedded opt-in metadata that attaches information like lens type and location to an image. But Adobe says the new attribution standard will be less “brittle” and much more difficult to manipulate. The end result would have more in common with digital fingerprinting systems like the ones that identify child exploitation online than it would with EXIF.

“We believe attribution will create a virtuous cycle,” Allen said. “The more creators distribute content with proper attribution, the more consumers will expect and use that information to make judgement calls, thus minimizing the influence of bad actors and deceptive content.”

Source: Tech Crunch

Hello and welcome back to Equity, TechCrunch’s venture-capital-focused podcast where we unpack the numbers behind the headlines.

It’s a big day in tech because the U.S. federal government is going after Google on anti-competitive grounds. Sure, the timing appears crassly political and the case is not picking up huge plaudits thus far for its air-tightness, but that doesn’t mean we can ignore it.

So Danny and I got on the horn to chat it up for about 10 minutes to fill you in. For reference, you can read the full filing here, in case you want to get your nails in. It’s not a complicated read. Get in there.

As a pair we dug into what stood out from the suit, what we think about the historical context and also noodled at the end about what the whole situation could mean for startups; it’s not all good news, but adding lots of competitive space to the market would be a net-good for upstart tech companies in the long-run.

And consumers. Competition is good.

You can read TechCrunch’s early coverage of the suit here, and our look at the market’s reaction here. Let’s go!

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

Source: Tech Crunch

For all of the investors preaching that augmented reality technology will likely be the successor to the modern smartphone, today, most venture capitalists are still quite wary to back AR plays.

The reasons are plentiful, but all tend to circle around the idea that it’s too early for software and too expensive to try to take on Apple or Facebook on the hardware front.

Meanwhile, few spaces were frothier in 2016 than virtual reality, but most VCs who gambled on VR following Facebook’s Oculus acquisition failed to strike it rich. In 2020, VR did not get the shelter-in-place usage bump many had hoped for largely due to supply chain issues at Facebook, but VCs hope their new cheaper device will spell good things for the startup ecosystem.

To get a better sense of how VCs are looking at augmented reality and virtual reality in 2020, I reached out to a handful of investors who are keeping a close watch on the industry:

• Niko Bonatsos, General Catalyst
• Tipatat Chennavasin, The Venture Reality Fund
• Brianne Kimmel, Work Life Ventures
• Jacob Mullins, Shasta Ventures
• Gigi Levy-Weiss, NFX
• Brayton Williams, Boost VC
• Greg Castle, Anorak Ventures

Some investors who are bullish on AR have opted to focus on virtual reality for now, believing that there’s a good amount of crossover between AR and VR software, and that they can make safer bets on VR startups today that will be able to take advantage of AR hardware when it’s introduced.

“Besides Pokémon Go I don’t think we have seen the engagement numbers needed for AR,” Boost VC investor Brayton Williams tells TechCrunch. “We believe VR is still the largest long-term opportunity of the two. AR complements the real world, VR creates endless new worlds.”

Most of the investors I got in contact with were still fairly active in the AR/VR world, but many still disagreed whether the time was right for VR startups. For Jacob Mullins of Shasta Ventures, “It’s still early, but it’s no longer too early.” While Gigi Levy-Weiss of NFX says that the market is “sadly not happening yet,” Facebook’s Quest headsets have shown promise.

On the hardware side, the ghost of Magic Leap’s formerly hyped glory still looms large. Few investors are interested in making a hardware play in the AR/VR world, noting that startups don’t have the resources to compete with Facebook or Microsoft on a large-scale rollout. “Hardware is so capital intensive and this entire industry is dependent on the big players continuing to invest in hardware innovation,” General Catalyst’s Niko Bonatsos tells us.

Even those that are still bullish on startups making hardware plays for more niche audiences acknowledge that life had gotten harder for ambitious founders in these spaces, “the spectacular flare-outs do make it harder for companies to raise large amounts with long product release horizons,” investor Tipatat Chennavasin notes.

Responses have been edited for length and clarity.

Niko Bonatsos, General Catalyst

What are your general impressions on the health of the AR/VR market today?

We’re seeing some progress in VR and some of that is happening because of the Oculus ecosystem. They continue to improve the hardware and have a growing catalog of content. I think their onboarding and consumption experience is very consumer-friendly and that’s going to continue to help with adoption. On the consumer side, we’re seeing some companies across gaming, fitness and productivity that are earning and retaining their audiences at a respectable rate. That wasn’t happening even a year ago so it may be partially a COVID lift but habits are forming. 

The VR bets of several years ago have largely struggled to pan out, if you were to make a startup investment in this space today what would you need to see? 

Companies to watch are the ones that are creating cool experiences with mobile as the first entry point. Wave VR, Rec Room, VRChat are making it really easy for consumers to get a taste of VR with devices they already own. They’re not treating VR as just another gaming peripheral but as a way to create very cool, often celebrity-driven, content. These are the kinds of innovations that makes me optimistic about the VR category in general.

Most investors I chat with seem to be long-term bullish on AR, but are reticent to invest in an explicitly AR-focused startup today. What do you want to see before you make a play here?

In both AR/VR, a founder needs to be both super ambitious but patient. They’ll need to be flexible in thinking and open to pivoting a few times along the way. Product-market fit is always important but I want to see that they have a plan for customer retention. Fun to try is great, habit-forming is much better. Gaming continues to do pretty well as a category for VC dollars but it’d be interesting to see more founders look at making IRL sports experiences more immersive or figuring out how to enhance remote meeting experiences with VR to fix Zoom fatigue.

There have been a few spectacular flare-outs when it comes to AR/VR hardware investments, is there still a startup opportunity in AR/VR hardware?

Hardware is so capital intensive and this entire industry is dependent on the big players continuing to invest in hardware innovation. Facebook and Microsoft seem to be the main companies willing to spend here while others have backed away. If we expand our thinking for a minute, maybe the first real mainstream breakthrough AR/VR consumer experience isn’t visual. For VR, it might be the mobile experiences. For AR maybe AirPods or AirPod-like devices are the right entry point for consumers. They’re in millions of people’s ears already and who doesn’t want their own special-agent-like earpiece? That’s where founders might find some opportunity.

Tipatat Chennavasin, The Venture Reality Fund

Source: Tech Crunch