Ideaforge

One of the selling points for HBO Max, the recently launched streaming service from WarnerMedia, is the inclusion of classic films from Turner Classic Movies and the Criterion Collection. But choosing which old movies to include, and how to present them, can get thorny.

Case in point: “Gone with the Wind” is generally considered one of the greatest and most popular movies of all time — but it also presents a cheery version of slavery and glorifies the antebellum South.

In the context of the recent protests following the death of George Floyd, along with the broader discussions about racial justice, “12 Years a Slave” screenwriter John Ridley published an op-ed in the Los Angeles Times calling on HBO Max to remove the film.

Ridley acknowledged that “movies are often snapshots of moments in history” and that “even the most well-intentioned films can fall short in how they represent marginalized communities.” However, he suggested that “Gone with the Wind” is “its own unique problem … It is a film that, when it is not ignoring the horrors of slavery, pauses only to perpetuate some of the most painful stereotypes of people of color.”

HBO Max has now responded by removing the film and releasing a statement acknowledging that its “racist depictions were wrong then and are wrong today.”

At the same time, the statement suggests that the removal is only temporary: “These depictions are certainly counter to WarnerMedia’s values, so when we return the film to HBO Max, it will return with a discussion of its historical context and a denouncement of those very depictions, but will be presented as it was originally created, because to do otherwise would be the same as claiming these prejudices never existed.”

HBO Max isn’t the first streaming service to face these questions. Disney+ (which probably needs to take a more hands-on approach, given its focus on family and children’s programming) includes disclaimers about “outdated cultural depictions” on titles like “Dumbo,” while former CEO Bob Iger has also said the notoriously racist “Song of the South” is “not appropriate in today’s world” and will never been included on the service.

Source: Tech Crunch

Grow Credit, the startup that launched last year to help customers build out their credit scores by providing a credit line for online subscriptions like Spotify and Netflix, has added Mucker Labs as an investor and closed its seed round with $2 million in total commitments.

The Los Angeles startup founded by serial entrepreneur Joe Bayen, had been bootstrapped initially and then received funding from a clutch of core angel investors before signing a deal with Mucker earlier this month, according to Bayen.

Using the Marqeta platform, Grow Credit can extend a loan to customers to expand their subscription services. Using the MasterCard network for payments, and Marqeta’s tools to restrict payment access Grow offers credit facilities to its customers to pay for their monthly subscriptions. By using Grow Credit for those payments, users can improve their credit scores by as much as 61 points in a nine-month span, says Bayen.

The company doesn’t charge any fees for its loans, but users can upgrade their service. The initial tier is free for access to $15 of credit, once a user connects their bank account. For a $4.99 monthly fee, customers can get up to $50 of subscriptions covered by the service. For $9.99 that credit line increases to $150, Bayen said.

Increases to a users’ credit score can make a significant dent in their costs for things like lease agreements for cars, mortgages for houses, and better rates on other credit cards, said Bayen.

“Everything is cheaper, you can get access to a credit card with lower interest rates and better rewards.” he said. “We’re looking at ourselves as the single best route to getting access to an Apple card.”

Additional capital for the new round came from individual investors like DraftKings chief executive, Jason Robins, former National Football League hall of fame player Ronnie Lott, Sebastien Deguy, VP of 3D at Adobe, of Adobe and Mucker Labs.

Coming up, Grow Credit said it has a deal in the works with one very large consumer bank in the U.S. and will be launching the Android version of tis app in a few weeks.

 

Source: Tech Crunch

Two men embodying the zenith of human villainy have admitted to making approximately a billion robocalls in the first few months of 2019 alone, and now face an FCC fine of $225 million and a lawsuit from multiple attorneys general that could amount to as much or more — not that they’ll actually end up paying that.

John Spiller and Jakob Mears, Texans of ill repute, are accused of (and have confessed to) forming a pair of companies to make millions of robocalls a day with the aim of selling health insurance from their shady clients.

The operation not only ignored the national Do Not Call registry, but targeted it specifically, as it was “more profitable to target these consumers.” Numbers were spoofed, making further mischief as angry people called back to find bewildered strangers on the other end of the line.

These calls amounted to billions over two years, and were eventually exposed by the FCC, the offices of several attorneys general, and industry anti-fraud associations.

Now the pair have been slapped with a $225 million proposed fine, the largest in the FCC’s history. The lawsuit involves mulitiple states and varying statutory damages per offense, and even a conservative estimate of the amounts could exceed that number.

Unfortunately, as we’ve seen before, the fines seem to have little correlation with the amounts actually paid. The FCC and FTC do not have the authority to enforce the collection of these fines, leaving that to the Department of Justice. And even should the DoJ attempt to collect the money, they can’t get more than the defendants have.

For instance, last year the FTC fined one robocaller $5 million, but he ended up paying $18,332 and the market price of his Mercedes. Unsurprisingly, these individuals performing white collar crimes are no strangers to methods to avoid punishment for them. Disposing of cash assets before the feds come knocking on your door is just part of the game.

In this case the situation is potentially even more dire: the DoJ isn’t even involved. As FCC Commissioner Jessica Rosenworcel put it in a statement accompanying the agency’s announcement:

There’s something missing in this all-hands effort. That’s the Department of Justice. They aren’t a part of taking on this fraud. Why not? What signals does their refusal to be involved send?

Here’s the signal I see. Over the last several years the FCC has levied hundreds of millions in fines against robocallers just like the folks we have here today. But so far collections on these eye-popping fines have netted next to nothing. In fact, it was last year that The Wall Street Journal did the math and found that we had collected no more than $6,790 on hundreds of millions in fines. Why? Well, one reason is that the FCC looks to the Department of Justice to collect on the agency’s fines against robocallers. We need them to help. So when they don’t get involved—as here—that’s not a good sign.

While the FCC’s fine and the lawsuit will certainly put these robocallers out of business and place further barriers to their conducting more scam operations, they’re not really going to be liable for 9 figures, because they’re not billionaires.

It’s good that the fines are large enough to bankrupt operations like these, but as Rosenworcel put it back in 2018 when another enormous fine was levied against a robocaller, “it’s like emptying the ocean with a teaspoon.” While the FCC and states were going after a pair of ne’er-do-wells, a dozen more have likely popped up to fill the space.

Industry-wide measures to curb robocalls have been underway for years now but only recently have been mandated by the FCC after repeated warnings and delays. Expect the new anti-fraud frameworks to take effect over the next year.

Source: Tech Crunch

Axiom, a startup that helps companies deal with their internal data, has secured a new $4m seed round led by UK-based Crane Venture Partners, with participation from LocalGlobe, Fly VC and Mango Capital. Notable angel investors include former Xamarin founder and current GitHub CEO Nat Friedman and Heroku co-founder Adam Wiggins. The company is also emerging from a relative stealth mode to reveal that is has now raised $7m in funding since it was founded in 2017.

The company says it is also launching with an enterprise-grade solution to manage and analyze machine data “at any scale, across any type of infrastructure”. Axiom gives DevOps teams a cloud-native, enterprise-grade solution to store and query their data all the time in one interface – without the overhead of maintaining and scaling data infrastructure.

DevOps teams have spent a great deal of time and money managing their infrastructure, but often without being able to own and analyze their machine data. Despite all the tools at hand, managing and analyzing critical data has been difficult, slow and resource-intensive, taking up far too much money and time for organizations. This is what Axiom is addressing with its platform to manage machine data and surface insights, more cheaply, they say, that other solutions.

Co-founder and CEO Neil Jagdish Patel told TechCrunch: “DevOps teams are stuck under the pressure of that, because it’s up to them to deliver a solution to that problem. And the solutions that existed are quite, well, they’re very complex. They’re very expensive to run and time-consuming. So with Axiom, our goal is to try and reduce the time to solve data problems, but also allow businesses to store more data to query at whenever they want.”

Why did they work with Crane? “We needed to figure out how enterprise sales work and how to take this product to market in a way that makes sense for the people who need it. We spoke to different investors, but when I sat down with Crane they just understood where we were. They have this razor-sharp focus on how they get you to market and how you make sure your sales process and marketing is a success. It’s been beneficial to us as were three engineers, so you need that,” said Jagdish.

Commenting, Scott Sage, Founder and  Partner at Crane Venture Partners added: “Neil, Seif and Gord are a proven team that have created successful products that millions of developers use. We are proud to invest in Axiom to allow them to build a business helping DevOps teams turn logging challenges from a resource-intense problem to a business advantage.”

Axiom co-founders Neil Jagdish Patel, Seif Lotfy and Gord Allott, previously created Xamarin Insights that enabled developers to monitor and analyse mobile app performance in real-time for Xamarin, the open-source cross-platform app development framework. Xamarin was acquired by Microsoft for between $400 and $500 million in 2016. Before working at Xamarin, the co-founders also worked together at Canonical, the private commercial company behind the Ubuntu Project.

Source: Tech Crunch

Amazon has promised vigilance against third-party price gouging since COVID-19 achieved global pandemic status. The company’s efforts have had mixed success, however, due in part to the sheer volume of vendors that utilize the company’s massive commerce platform. In a suit filed in California this week, 3M claims the seller was charging massively inflated prices for either damaged or counterfeit products.

“3M alleges that the defendants charged prices for the fraudulent respirators that exceeded as much as 20 times 3M’s N95 respirator list prices,” the company writes. “Amazon learned that the defendants misrepresented what would be delivered for these exorbitant prices, and that buyers had received non-3M respirators, fewer items than purchased, products in suspect packaging, and defective or damaged items. Amazon has blocked the accounts on its platform.”

N95 masks have become one of the most in-demand pieces of PPE during the ongoing crisis, due to their extreme filtration efficacy. The CDC recommends the respirators versus surgical masks, due to their ability to filter out small particles. The latter is mostly effective for large droplets and fluid. N95 masks, on the other hand, are capable of filtering out more than 95% of large and small air particles. For that reason, many groups have insisted the equipment be reserved for front-line responders.

Amazon confirmed its involvement in the suit, telling TechCrunch, “There is no place for counterfeiting or price gouging on Amazon and we’re proud to be working with 3M to hold these bad actors accountable. Amazon has longstanding policies against counterfeiting and price gouging and processes in place to proactively block suspicious products and egregious prices. When we find a bad actor violating our policies, we work quickly to remove the products and take action on the bad actor, as we’ve done here, and we welcome collaboration from brands like 3M.”

The site says it has removed more than half a million product offers and suspended more than 6,000 accounts over price gouging. In its own release, 3M claims to have been involved in the removal of more than 3,000 sites featuring counterfeit products or deceitful claims.

 

Source: Tech Crunch

Facebook News, the social network’s dedicated section devoted to journalism, is today launching for all users in the U.S. The feature was first introduced in October 2019 as a limited test in the U.S. The product represents Facebook’s much-debated new effort in wooing publishers to its platform with the promise of increased distribution.

In addition to the nationwide launch, Facebook has also added local news to its News section.

It’s impossible to properly cover Facebook News without noting how the company has had a long and troubled history with regard to how it handles news. Years ago, Facebook offered a short list of trending stories across its network. But it later fired the human editors who curated that news, and its algorithms immediately posted fake news to the untended list. That feature was removed in June 2018.

Facebook has also over the years attempted to serve publishers with poor results.

It hosted “Instant Articles” that restricted advertising, subscriptions and the recirculation modules publishers relied on, leading many to abandon the feature. It touted the “shift to video,” but inflated its video metrics, and then pulled back on paying publishers, wiping out some businesses. In 2018, it decided to prioritize friends and family posts in its News Feed, shrinking referrals to news outlets.

Then there’s the not insignificant matter of Facebook’s role in spreading fake news — including for years the distribution of un-fact-checked links published by biased organizations. Its platform has also been used for the spread of propaganda and disinformation. It has been called out as being too favorable to one side or the other. (But all that’s a whole other kettle of fish.)

This time around, Facebook is trying a different tack with regard to News.

The new product uses journalists to program Facebook News in addition to algorithms to better personalize story selection. Users can react and share articles, but not comment. Users are also able to hide articles, topics and publishers they don’t want to see, which can become problematic in terms of broadening someone’s exposure to the “other side.”

To qualify for inclusion in Facebook News, publishers will have to serve a sufficiently large audience and abide by integrity standards. Facebook doesn’t detail exactly how it makes determinations around integrity but says it looks at signals such as misinformation as identified by third-party fact-checkers, clickbait, engagement bait or use of scraped content, for example.

The News tab will appear to all U.S. users as a bookmark (under the three-lined “more” menu) on mobile, Facebook says. Those who frequently visit the bookmark will see News available as a tab (a button in the Facebook app) sooner.

Since the announcement last fall, Facebook has added new features in Facebook News, including breaking news alerts, timely news digests (e.g. “COVID-19 News” or “Unrest in America”), targeted notifications and more.

The notifications will appear at the top and may include alerts of a live video or breaking news — for example, you may currently see live coverage of George Floyd’s funeral or perhaps a breaking news alert about coronavirus.

Facebook is also now testing news video, which it didn’t have last fall, and it has introduced a local news section to Facebook News. The latter brings thousands more local and regional publications into the news experience across more than 6,000 towns and cities.

The company tells TechCrunch the majority of its publishers are now local outlets, as a result. In addition, it has over 200 general news publishers.

Facebook already had a way for users to keep up with local stories by way of its “Today In” news discovery experience, which had been a separate tab. In the next several weeks, the company says it will combine that tab’s content with Facebook News to make its News section a single place for users to keep up with local news.

The News feature is live now on mobile, but the desktop tab has yet to launch.

Source: Tech Crunch

New York-based fintech startup Wahed (meaning “One” in Arabic) describes itself as a digital Islamic investment platform and as the world’s first “halal robo adviser.” It has now closed a $25 million investment round led by Saudi Aramco Entrepreneurship Ventures (also known as Wa’ed Ventures), a venture capital investment arm of oil giant Saudi Aramco.

Existing investors BECO and CueBall Capital participated, as well as Dubai Cultiv8 and Rasameel. The funds will be used to expand internationally, including developing the company’s subsidiary in Saudi Arabia. The platform is currently running in the U.S. and U.K., and has more than 100,000 clients globally. It plans to grow in the largest Muslim markets, including Indonesia, Nigeria, India and the CIS. The three-year-old company has already received a license to operate in Saudi Arabia, and aims to get regulatory approval in 20 countries.

According to Crunchbase, Wahed has raised a total of $40 million in funding since its 2015 founding by Junaid Wahedna.

Last October, Wahed launched in Malaysia after the Malaysian Securities Commission awarded the company the country’s first Islamic Robo Advisory license. The firm is also considering listing its Islamic ETF on the Saudi stock exchange.

Ethical investment and Islamic finance is growing in popularity in Muslim countries so long as it is in line with Islamic ethics, so Wahed looks set to benefit.

Commenting on the investment, Junaid Wahedna, CEO of Wahed, said: “We’re excited to have the support of Aramco Ventures as we foray into the Saudi market. We consider Aramco a strategic long-term partner in both the Kingdom and the rest of the world.”

Wassim Basrawi, managing director at Wa’ed Ventures, said: “We believe in Wahed’s mission to provide ethical investing. The company has taken the lead in delivering investment services to one of the world’s fastest-growing sectors — Islamic Finance. Wahed is also, in the true spirit of fintech, helping to broaden the investment landscape. This latest funding round will enable Wahed to make Saudi their regional MENA hub and contribute towards a fast-growing fintech ecosystem.”

Source: Tech Crunch

After an indefinite postponement last week, Sony’s PlayStation 5 event is officially back on.

The event has been rescheduled for a live stream on June 11 at 1:00 pm Pacific Time according to a tweet from PlayStation’s official account. It will live stream on Twitch and YouTube.

The event, which was originally scheduled for June 4th, was postponed last week in response to protests against police violence flaring up across the United States and the world. The company’s statement at the time indicated that the timing didn’t feel quite right to make flashy announcements around new PS5 titles. “While we understand gamers worldwide are excited to see PS5 games, we do not feel that right now is a time to celebrate and for now, we want to stand back and allow more important voices to be heard,” the company’s statement read.

Sony has already shared plenty of details regarding the next-generation system, but details have been a bit more scant when it comes to the launch titles for the console. As Sony and Microsoft go head-to-head this holiday season with new consoles, the question will be whether PlayStation can maintain its edge in delivering launch exclusives that out-rival what Xbox can, even as Microsoft bulks up on studio acquisitions.

The event, which the company has detailed will last about an hour, will tee up “what’s in store for the next generation of games,” Sony says. We’ll be tuning in Thursday and giving a thorough rundown of what gets announced.

Source: Tech Crunch

Lemonade, a heavily-backed startup that sells renters and homeowners insurance to consumers, filed to go public today. The company (backed by SoftBank, part of the Sequoia empire, General Catalyst and Tusk Venture Partners, among others) releasing its financial results helps shed light on the burgeoning insurtech market, which has attracted an ocean of capital in recent quarters.

TechCrunch covered a part of the insurtech world earlier this year, asking why insurance marketplaces were picking up so much investment, so quickly. Lemonade is different from insurance marketplaces in that it’s a full-service insurance provider.

Indeed, as its S-1 notes:

By leveraging technology, data, artificial intelligence, contemporary design, and behavioral economics, we believe we are making insurance more delightful, more affordable, more precise, and more socially impactful. To that end, we have built a vertically-integrated company with wholly-owned insurance carriers in the United States and Europe, and the full technology stack to power them.

Lemonade is pitching that it has technology to make insurance a better business and a better consumer product. It is tempting. Insurance is hardly anyone’s favorite product. If it could suck marginally less, that would be great. Doubly so if Lemonade could generate material net income in the process.

Looking at the numbers, the pitch is a bit forward-looking.

Parsing Lemonade’s IPO filing, the business shows that while it can generate some margin from insurance, it is still miles from being able to pay for its own operation. The filing reminds us more of Vroom’s similarly unprofitable offering than Zoom’s surprisingly profitable debut.

The numbers

Lemonade is targeting a $100 million IPO according to its filings. That number is imprecise, but directionally useful. What the placeholder target tells us is that the company is more likely to try to raise $100 million to $300 million in its debut than it is to take aim at $500 million or more.

So, the company, backed by $480 million in private capital to date, is looking to extend its fundraising record, not double it in a single go. What has all that money bought Lemonade? Improving results, if stiff losses. Let’s parse some charts that the company has proffered and then chew on its raw results.

First, this trio of bar charts that are up top in the filing:

Gross written premiums (GWP) is the total amount of revenue expected by Lemonade for its sold insurance products, notably discounting commissions and some other costs. As you’d expect, the numbers are going up over time, implying that Lemonade was effective in selling more insurance products as it aged.

The second chart details how much money the company is losing on a net basis compared to the firm’s gross written premium result. This is a faff metric, and one that isn’t too encouraging; Lemonade’s GWP more than doubled from 2018 to 2019, but the firm’s net losses per dollar of GWP fell far less. This implies less-than-stellar operating leverage.

The final chart is more encouraging. In 2017 the company was paying out far more in claims than it took in from premiums. By 2019 it was generating margin from its insurance products. The trend line here is also nice, in that the 2018 to 2019 improvement was steep.

And then there’s this one:

This looks good. That said, improving adjusted EBITDA margins that remain starkly negative as something to be proud of is very Unicorn Era. But 2020 is alive with animal spirits, so perhaps this will engender some public investor adulation.

Regardless, let’s dig into the numbers. Here’s the main income statement:

Some definitions. What is net earned premium? According to the company it is “the earned portion of our gross written premium, less the earned portion that is ceded to third-party reinsurers under our reinsurance agreements.” Like pre-sold software revenue, premium revenue is “earned pro rata over the term of the policy, which is generally.” Cool.

Net investment income is “interest earned from fixed maturity securities, short term securities and other investments.” Cool.

The two numbers are the company’s only material revenue sources. And they sum to lots of growth. From $22.5 million in 2018 to $67.3 million in 2019, a gain of 199.1%. More recently, the company’s Q1 results saw its revenue grow from $11.0 million in 2019 to $26.2 million in 2020, a gain of 138.2%. A slower pace, yes, but from a higher base and more than large enough for the company to flaunt growth to a yield-starved public market.

Now, let’s talk losses.

Deficits

We’ll talk margins a little later, as that bit is annoying. What matters is that Lemonade’s cost structure is suffocating when compared to its ability to pay for it. Net losses rose from $52.9 million in 2018 to $108.5 million in 2019. More recently, a Q1 2019 net loss of $21.6 million was smashed in the first quarter of 2020 when the firm lost $36.5 million.

Indeed, Lemonade only appears to lose more money as time goes along. So how is the company turning so much growth into such huge losses? Here’s a hint:

This is messy, but we can get through it. First, see how operating revenue is different than the GAAP revenue metrics we saw before? That’s because it’s a non-GAAP (adjusted) number that means the “total revenue before adding net investment income and before subtracting earned premium ceded to reinsurers.” Cool.

That curiosity aside, what we really care about is the company’s adjusted gross profit. This metric, defined as “total revenue excluding net investment income and less other costs of sales, including net loss and loss adjustment expense, the amortization of deferred acquisition costs and credit card processing fees,” which means gross profit but super not really, is irksome. Given that Lemonade is already adjusting it, it’s notable that the company only managed to generate $5.4 million of the stuff in Q1.

Recall that the company had GAAP revenue of $26.2 million in that three-month period. So, if we adjust the firm’s gross profit, the company winds up with a gross margin of just a hair over 20%.

So what? The company is spending heavily — $19.2 million in Q1 alone — on sales and marketing to generate relatively low-margin revenue. Or more precisely, Lemonade generated enough adjusted gross profit in Q1 2020 to cover 28% of its GAAP sales and marketing spend for the same period. Figure that one out.

Anyway, the company raised $300 million from SoftBank last year, so it has lots of cash. “$304.0 million in cash and short-term investments,” as of the end of Q1 2020, in fact. So, the company can sustain its Q1 2020 operating cash burn ($19.4 million) for a long time. Why go public then?

Because like we wrote this morning (Extra Crunch subscription required), Vroom showed that the IPO market is open for growth shares and SoftBank needs a win. Let’s see what investors think, but this IPO feels like it’s timed to get out while the getting is good. Who can get mad at that?

Source: Tech Crunch