The move comes just under one year after the New York-based company laid off 15% of its staff as a result of the shifting economic fortunes created by the global response to the novel coronavirus pandemic.
Prior to the IPO, SoftBank’s Vision Fund holds slightly more than a one-third stake in the company. Other investors include the Canadian Pension Plan Investment Board, Fidelity, Wellington Management, and the Qatar Investment Authority, according to Crunchbase.
The company’s last fundraise was in July 2019, when Compass — a company that has built a three-sided marketplace for the real estate industry, along with a wide set of algorithms to help make it work — raised a $370 million round of funding. That financing valued Compass at $6.4 billion.
One of the greatest things about companies going public is that we get insight into their financials. Compass is not profitable but it did see a massive surge in revenue over the past few years.
The company’s revenues have increased from $186.8 million in 2016 to a whopping $3.7 billion last year, with much of the top-line revenue growth coming in the last two years, according to its S-1. Given the startup’s agency model, most of that revenue is paid out directly to the firm’s agents, who netted about $3 billion in commissions in 2020. Compass posted a net loss of $270 million in 2020, a net loss roughly in line with what it has experienced in the past two years.
Total transactions on the platform grew from about 27,000 in 2018 to 145,000 in 2020, while total transaction volume (the value of the properties the company brokers) went up by about five-fold, from $34 billion to $152 billion last year. Since commissions on real estate are determined as fixed percentage of the value of the property, more transaction volume directly translates into more revenue for Compass. The company has been able to sustain that growth while limiting the number of agents it has added. From 2019 to 2020, the company only had 28% growth in its total number of agents, reaching just shy of 9,000 last year.
Compass had its share of trouble before the pandemic. In September 2019, the Wall Street Journal reported that the company had lost a number of senior level individuals over the previous eighteen months including its chief financial officer, chief marketing officer and chief technology officer.
What if we no longer needed cameras to make videos and can instead generate them through a few lines of coding?
Advances in machine learning are turning the idea into a reality. We’ve seen how deepfakes swap faces in family photos and turn one’s selfies into famous video clips. Now entrepreneurs with AI research background are devising tools to let people generate highly realistic photos, voices, and videos using algorithms.
One of the startups building this technology is China-based Surreal. The company is merely three months old but has already secured a seed round of $2-3 million from two prominent investors, Sequoia China and ZhenFund. Surreal received nearly ten investment offers in this round, founder and CEO Xu Zhuo told TechCrunch, as investors jostled to bet on a future shaped by AI-generated content.
Prior to founding Surreal, Xu spent six years at Snap, building its ad recommendation system, machine learning platform, and AI camera technology. The experience convinced Xu that synthetic media would become mainstream because the tool could significantly “lower the cost of content production,” Xu said in an interview from Surreal’s a-dozen-person office in Shenzhen.
Surreal has no intention, however, to replace human creators or artists. In fact, Xu doesn’t think machines can surpass human creativity in the next few decades. This belief is embodied in the company’s Chinese name, Shi Yun, or The Poetry Cloud. It is taken from the title of a novel by science fiction writer Liu Cixin, who tells the story of how technology fails to outdo the ancient Chinese poet Li Bai.
“We have an internal formula: visual storytelling equals creativity plus making,” Xu said, his eyes lit up. “We focus on the making part.”
In a way, machine video generation is like a souped-up video tool, a step up from the video filters we see today and make Douyin (TikTok’s Chinese version) and Kuaishou popular. Short video apps significantly lower the barrier to making a professional-looking video, but they still require a camera.
“The heart of short videos is definitely not the short video form itself. It lies in having better camera technology, which lowers the cost of video creation,” said Xu, who founded Surreal with Wang Liang, a veteran of TikTok parent ByteDance.
Some of the world’s biggest tech firms, such as Google, Facebook, Tencent and ByteDance, also have research teams working on GAN. Xu’s strategy is not to directly confront the heavyweights, which are drawn to big-sized contracts. Rather, Surreal is going after small and medium-sized customers.
Surreal’s face swapping software for e-commerce sellers
Surreal’s software is currently only for enterprise customers, who can use it to either change faces in uploaded content or generate an entirely new image or video. Xu calls Surreal a “Google Translate for videos,” for the software can not only swap people’s faces but also translate the languages they speak accordingly and match their lips with voices.
Users are charged per video or picture. In the future, Surreal aims to not just animate faces but also people’s clothes and motions. While Surreal declined to disclose its financial performance, Xu said the company has accumulated around 10 million photo and video orders.
Much of the demand now is from Chinese e-commerce exporters who use Surreal to create Western models for their marketing material. Hiring real foreign models can be costly, and employing Asian models doesn’t prove as effective. By using Surreal “models”, some customers have been able to achieve 100% return on investment (ROI), Xu said. With the multi-million seed financing in its pocket, Surreal plans to find more use cases like online education so it can collect large volumes of data to improve its algorithm.
The technology powering Surreal, called generative adversarial networks, is relatively new. Introduced by machine learning researcher Ian Goodfellow in 2014, GANs consist of a “generator” that produces images and a “discriminator” that detects whether the image is fake or real. The pair enters a period of training with adversarial roles, hence the nomenclature, until the generator delivers a satisfactory result.
In the wrong hands, GANs can be exploited for fraud, pornography and other illegal purposes. That’s in part why Surreal starts with enterprise use rather than making it available to individual users.
Companies like Surreal are also posing new legal challenges. Who owns the machine-generated images and videos? To avoid violating copyright, Surreal requires that the client has the right to the content they upload for moderation. To track and prevent misuse, Surreal adds an encrypted and invisible watermark to each piece of the content it generates, to which it claims ownership. There’s an odd chance that the “person” Surreal produces would match someone in real life, so the company runs an algorithm that crosschecks all the faces it creates with photos it finds online.
“I don’t think ethics is something that Surreal itself can address, but we are willing to explore the issue,” said Xu. “Fundamentally, I think [synthetic media] provides a disruptive infrastructure. It increases productivity, and on a macro level, it’s inexorable, because productivity is the key determinant of issues like this.”
Hyzon Motors plans to produce fuel cells, including a critical component required to power hydrogen vehicles, at two U.S. factories in a move aimed at kickstarting domestic production at a commercial scale.
The hydrogen-powered truck and bus manufacturer has already leased a 28,000-square-foot facility in the Chicago suburb of Bolingbrook and plans to expand it by an additional 80,000 square feet. Production at the Chicago facility is expected to begin in the fourth quarter of 2021. The announcement comes just three weeks after Hyzon announced it would become a publicly traded company through a merger with Decarbonization Plus Acquisition Corporation in a deal valued at $2.1 billion, and a little over one week after revealing plans to renovate a 78,000-square-foot factory in Monroe County, New York.
Hyzon is a new name with a nearly two decades of experience. The company was established in March of last year after spinning off from Singapore’s Horizon Fuel Cell Technologies, which has been developing commercial applications for fuel cells since 2003. Hyzon inked a deal in February with the New Zealand company Hiringa Energy for up to 1,500 fuel cell trucks on New Zealand’s roads by 2026. Now it is setting its sights on the North American hydrogen fuel cell vehicle market. Due to the lack of an established domestic hydrogen fueling network, the company is targeting heavy-duty vehicle customers that have a “back-to-base” business model.
Hyzon’s decision to build factories in the United States is noteworthy because production of fuel cell materials in the country lags far behind Europe and Asia. The U.S. also lacks the kind of national hydrogen refueling and infrastructure network found abroad.
“Hydrogen is much more available in places like Germany or The Netherlands,” Hyzon CEO Craig Knight said in an interview with TechCrunch. “There’s already a number of commercial vehicle stations where you can just pull up and pay to fill up like you do with gasoline today in the U.S. It won’t be long before that is a reality, but for the moment we limit the dependence on networks of hydrogen stations by focusing on the customers that use back-to-base operating models, where you only need one piece of hydrogen infrastructure to fuel dozens or even sometimes hundreds of vehicles in a given area.”
Much of the hydrogen that’s produced in the U.S. is so-called “grey hydrogen,” or hydrogen that’s produced from natural gas. An increasing number of companies are pursuing “green hydrogen,” or hydrogen produced via electrolysis powered by renewable energy. Hyzon sources both types for its operations. Hydrogen production remains one of the main factors determining the rate of scale for fuel cell producers.
The Chicago facility will design, develop and produce the membrane electrode assembly, the fuel cell component that helps trigger the electrochemical reaction required to produce power. The company anticipates the new facility will be able to produce enough MEAs for up to 12,000 fuel cell-powered trucks annually.
Finished MEAs will be sent to the company’s recently announced fuel cell stack and system assembly plant in Monroe County, where the components will be assembled into complete fuel cells. From there, the fuel cells will be delivered to a partner truck manufacturer to be assembled into commercial heavy-duty vehicles. The company’s main assembly partner in the United States is Berkshire Hathaway subsidiary Fontaine Modification.
Hydrogen fuel cell technology is finding use cases in heavy-duty vehicles because trucking companies are frequently paid by how much weight they can transport, and how quickly they can do it. The time investment of battery charging and the loss of carrying capacity makes fuel cells an attractive alternative for companies looking to decarbonize their vehicle fleets.
Hyzon sees positive network effects and economies of scale associated with hydrogen fuel cell adoption — and increasing marginal costs of electric battery adoption. Although the company has not announced plans to dive into the light-duty vehicle market, it remains bullish on the value proposition of hydrogen fuel cells.
“We think at some point it becomes an increasing marginal cost of adoption for battery electric, because you run into infrastructure limitations around the electricity grid, around the size of depots and the capacity to build the charging infrastructure,” Knight said. “We believe there’s a dis-economy of scale attached to going battery electric when you’ve got really high utilization. We believe that some of the lighter vehicles will also start to move onto hydrogen. We’re not totally dependent on that for our model, but that’s our belief.”
Hyzon, which expects to be listed on the Nasdaq in late May or early June, will be listed under the ticker HYZN.
Known for its innovations in the payments sector, Square is now officially a bank.
Nearly one year after receiving conditional approval, Square said Monday afternoon that its industrial bank, Square Financial Services, has begun operations. Square Financial Services completed the charter approval process with the FDIC and Utah Department of Financial Institutions, meaning its ready for business.
The bank, which is headquartered in Salt Lake City, Utah, will offer business loan and deposit products, starting with underwriting, and originating business loans for Square Capital’s existing lending product.
Historically, Square has been known for its card reader and point-of-sale payment system, used largely by small businesses – but it has also begun facilitating credit for the entrepreneurs and smalls businesses who use its products in recent years.
Moving forward, Square said its bank will be the “primary provider of financing for Square sellers across the U.S.”
In a statement, Square CFO and executive chairman for Square Financial Services, Amrita Ahuja said that bringing banking capability in house will allow the fintech to “operate more nimbly.”
Square Financial Services will continue to sell loans to third-party investors and limit balance sheet exposure. The company said it does not expect the bank to have a material impact on its consolidated balance sheet, total net revenue, gross profit, or adjusted EBITDA in 2021.
Opening the bank “deepens Square’s unique ability to expand access to loans and banking tools to underserved populations,” the company said.
Lewis Goodwin had been tapped to serve as the bank’s CEO, and Brandon Soto its CFO. With today’s announcement, Square also announced the following new appointments:
Sharad Bhasker, Chief Risk Officer
Samantha Ku, Chief Operating Officer
Homam Maalouf, Chief Credit Officer
David Grodsky, Chief Compliance Officer
Jessica Jiang, Capital Markets and Investor Relations Lead
The trend of fintechs becoming bank continues. In February, TechCrunch reported on the fact that Brex had applied for a bank charter.
The fast-growing company, which sells a credit card tailored for startups with Emigrant Bank currently acting as the issuer, said that it had submitted an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to establish Brex Bank.
A number of fintech companies, or those with fintech services, have spun up products typically offered by banks, including deposit and chequings accounts as well as credit offerings. Often, these are designed to provide capital to customers who might not be able to get funding on favorable terms from traditional banking institutions, but who might qualify for business-building loans from a provider who knows their company, like Square, inside and out.
Kaltura, a software company focused on providing video technology to other concerns, has filed to go public.
The Kaltura S-1 filing only partially surprised. TechCrunch previously covered the company as part of our ongoing $100 million ARR series focusing on private companies that have reached material scale. (TechCrunch has also covered its product life to a moderate degree.)
The company’s IPO documentation details a business that did more than merely accelerate its growth in 2020, and more specifically, during the COVID-19 era. Seeing a company that powers video tooling do well when much of the world has transitioned to remote work and education is not a bolt from the blue. What is notable, however, is that the company’s revenue growth has accelerated yearly since at least 2018 and its final quarter of 2020 placed the company at a new growth rate maximum.
Public investors, hungry for growth, may find such a progression compelling.
Kaltura also has an interesting profitability profile: As its GAAP net losses scaled in the last year, its adjusted profitability improved. Depending on your stance regarding adjusted metrics, Kaltura’s bottom line will either irk or delight you.
For now we’ll focus on Kaltura. Let’s get into it.
Inside Kaltura’s IPO filing
When TechCrunch last covered Kaltura’s financial results, we noted that the company founded in 2006 had raised just north of $166 million, crossed the $100 million ARR mark, and was, per its own reporting, “profitable on an EBITDA.” Kaltura also told TechCrunch that it had margins in the 60% range and was growing at around 25% year over year. That was just over a year ago.
Do those figures hold up? In the Q1 2020 period Kaltura recorded $25.9 million in revenue, software margins of around 78% and blended gross margins of 59.8%. And the company had grown 16.6% from the year-ago quarter. In Kaltura’s defense, the company’s growth accelerated to 24% in the year, so its self-reported numbers were mostly fair. Better than, I think, most numbers we get from private companies.
One-year-old Apna said Sequoia Capital India and Greenoaks Capital led the $12.5 million Series B investment in the startup. Existing investors Lightspeed India and Rocketship VC also participated in the round. The startup, whose name is Hindi for “ours,” has now raised more than $20 million.
More than 6 million low-skilled workers such as drivers, delivery personnel, electricians and beauticians have joined Apna to find jobs and upskill themselves. But there’s more to this.
An analysis of the platform showed how workers are helping one another solve problems — such as a beautician advising another beautician to perform hair dressing in a particular way that tends to make customers happier and tip more, and someone sharing how they negotiated a hike in their salary from their employer.
“The sole idea of this is to create a network for these workers,” Nirmit Parikh, Apna founder and chief executive told TechCrunch in an interview. “Network gap has been a very crucial challenge. Solving it enables people to unlock more and more opportunities,” he said. Harshjit Sethi, principal at Sequoia India, said Apna was making inroads with “building a professional social network for India.”
The startup has become an attraction for several big firms, including Amazon, Flipkart, Unacademy, Byju’s, Swiggy, BigBasket, Dunzo, BlueStar and Grofers, which have joined as recruiters to hire workers. Apna offers a straightforward onboarding process — thanks to support for multiple local languages — and allows users to create a virtual business card, which is then shown to the potential recruiters. Parikh said Apna’s AI understands the cultural nuances, helping recruiters find the best candidates for their needs.
The past six months have been all about growth at Apna, said Parikh. The app, available on Android, had 1.2 million users in August last year, for instance. During this period, there have been 60 million interactions between recruiters and potential applicants, he said. The platform, which has amassed more than 80,000 employers, has a retention rate of over 95%, said Parikh.
“Apna has taken a jobs-centric approach to upskilling that we are very excited about. Lack of accountability has been the core issue with current skill / vocational learning alternatives for grey and blue-collar workers. Apna has turned the problem on its head by creating net-positive job outcomes for anyone who chooses to upskill on the platform,” said Vaibhav Agrawal, partner at Lightspeed India, in a statement.
Image Credits: Nirmit Parikh
Parikh got the idea of building Apna after he kept hearing about the difficulty his family and friends faced in India in hiring people. This was puzzling to Parikh, as he wondered how could there be a shortage of workers in India when there are hundreds of millions of people actively looking for such jobs. The problem, Parikh realized, was that there wasn’t a scalable networking infrastructure in place to connect workers with employers.
Before creating the startup, Parikh met workers and went undercover as an electrician and floor manager to understand the problems workers were facing. That journey has not ended. The startup talks to over 15,000 users each day to understand what else Apna could do for them.
“One of the things we heard was that users were facing difficulties with interviews. So we started groups to practice them with interviews. We also started upskilling users, which has made us an edtech player. We plan to ramp up this effort in the coming months,” said Parikh, who also started an AI firm more than a decade ago to solve challenges with electricity flux and then another startup to solve for information overload. (The first startup is now being run by family and friends, and the second firm was sold to Intel, Parikh said.)
Parikh said the startup is overwhelmed each day with the response it is getting from its customers and the industry. Each day, he said, people share how they were able to land jobs, or increase their earnings. In recent months, several high-profile executives from companies such as Uber and BCG have joined Apna to scale the startup’s vision, he said, adding that the problem Apna is solving in India exists everywhere and the startup’s hope is to eventually serve people across the globe.
The app currently has no ads, and Parikh said he intends to not change that. “Once you get in the ad business, you start doing things you probably shouldn’t be doing,” he said. The startup instead plans to monetize its platform by charging recruiters, and offering upskill courses. But Parikh maintained that Apna will always offer its courses to users for free. The premium version will target those who need extensive assistance, he said. The startup also plans to expand its team.
As is the case elsewhere, millions of people lost their livelihood in India in the past year as coronavirus shut many businesses and workers migrated to their homes. There are over 250 million blue and grey-collar workers in India, and providing them meaningful employment opportunities is one of the biggest challenges in our country, said Sethi.
A challenger bank raises funding at a massive valuation, Instagram adds Live Rooms and Google updates Workspace. This is your Daily Crunch for March 1, 2021.
The big story: Klarna valued at $31B
The Swedish challenger bank and buy-now-pay-later (BNPL) service has raised $1 billion at a post-money valuation of $31 billion. Klarna says it will commit 1% of the capital to “key sustainability challenges around the world,” with the initiative formally launching on April 22 (Earth Day).
For its BNPL business, Klarna both integrates with a variety of retailers and has created its own shopping app, where users can browse all the stores that support payment through Klarna. The company is active in more than 17 countries and has more than 250,000 retail partners.
Google over the weekend began to update many of its flagship iOS apps after a lengthy delay caused by the company’s failure to add Apple’s newly required privacy labels in a timely fashion. Though Google earlier this year said it would “soon” begin to add the labels to its apps as they were updated, it has still yet to do so for a number of key properties — including Search, Photos, Assistant, Maps, Pay, Chrome, and others.
Per Apple’s policy, developers cannot issue further updates until privacy labels are applied. That prevented Google from updating many of its top apps for a much longer period of time than usual — especially for a company of its size where minor updates containing bug fixes and performance improvements are issued on a regular basis.
Gmail, for example, hadn’t been updated for three months before the update that rolled out this weekend.
According their iOS App Store listings, Slides, Docs, Sheets and Calendar all received updates this weekend, as well. And over the past couple of weeks, updates for other newly labeled Google apps have also been restarted — including YouTube, YouTube TV, YouTube Music, Google Tasks, and Google Podcasts, for example.
We’ve been tracking Google’s app updates here in Google Sheets. (Appfigures confirmed our spreadsheet’s accuracy by running it against its own data.)
This weekend’s set of newly updated apps aren’t the only ones from Google to have received their privacy labels in 2021. Labels can be applied without issuing an app update which makes them harder to spot, sometimes.
Across Google’s full suite of iOS apps, those apps with labels now include:
Google One, Google Podcasts, Google Stadia, Google Fit, Google Fi, Google Tasks, Google Chat, Onduo, Project Baseline, YouTube, YouTube TV, YouTube Music, YouTube Kids, YouTube Studio, Google Meet, Google Smart Lock, Motion Stills, Google Fiber, Google Ads, Wear OS, Google Calendar, Google Classroom, Google Slides, Google Sheets, Google Docs, Google Drive, Google Play Movies, Google Home, Fiber TV, Google Translate, and Google Authenticator.
Google has not said why it taking so long to apply its labels. It initially attributed its delay to add the privacy labels to its annual holiday code freeze — a time of the year when the company pauses updates on its apps while many people take time off.
But as the weeks turned into months, it was clear that Google was taking a much more cautious and methodical approach to applying the labels than other large tech companies. As a result, it’s received increased attention and scrutiny of its app updates.
In fact, every time a new Google app was updated with a label, it madeheadlines.
In mid-January, Google officially responded to the curiosity over its delays with a blog post explaining that its iOS apps would receive privacy labels as it received its next update. But the two have not necessarily gone hand-in-hand. Gmail received its privacy label back on Feb. 22, according to reports, but hadn’t been updated until just now.
And the list of labeled apps is far longer than the list of updated ones.
Google has not responded to a request for comment at this time.
Commitments to carbon neutrality keep coming from all corners of the business world — over the past few weeks, companies ranging from the fast-casual restaurant chain Sweetgreen to the security-focused networking IT company Palo Alto Networks to the online craft retailer Etsy committed to net-zero carbon emission plans.
As the companies look for ways to reduce their energy consumption, they’re turning to carbon offset programs as a stopgap measure until the energy grid decarbonizes, they implement technologies to reduce their energy consumption, or both.
This push toward corporate sustainability is creating all kinds of strange bedfellows and startup opportunities, with major corporate offset programs and the establishment of new startups focused on offsets creating channels for sustainable technologies to get to market.
The latest example of a company leveraging a sustainability angle to tie a corporate partner even closer to their business is the agreement between Delta and Deloitte, which involves the accounting and consulting firm paying Delta for renewable jet fuel to offset the emissions of its corporate travel.
To be clear, a better policy for Deloitte would be to cut back on non-essential travel significantly and focus on doing as much remote work as possible to reduce the need for flights. But in some cases business travel is unavoidable, and most folks want to get back to a pre-pandemic normal, which — at least in the U.S. and other countries — will include significantly ramping up air travel for a percentage of the population.
Which brings us back to Deloitte and Delta and startups.
Delta’s deal to buy sustainable aviation fuel that would offset a portion of the carbon emissions associated with Deloitte’s business travel is one small step toward greening the airline industry, but the question is whether it’s a significant first step or just an attempt to greenwash the unsustainable travel habits of a consulting industry that prides itself on such perks.
AWS launched the DeepRacer League in 2018 as a fun way to teach developers machine learning, and it’s been building on the idea ever since. Today, it announced the latest league season with two divisions: Open and Pro.
As Marcia Villalba wrote in a blog post announcing the new league, “AWS DeepRacer is an autonomous 1/18th scale race car designed to test [reinforcement learning] models by racing virtually in the AWS DeepRacer console or physically on a track at AWS and customer events. AWS DeepRacer is for developers of all skill levels, even if you don’t have any ML experience. When learning RL using AWS DeepRacer, you can take part in the AWS DeepRacer League where you get experience with machine learning in a fun and competitive environment.”
While the company started these as in-person races with physical cars, the pandemic has forced them to make it a virtual event over the last year, but the new format seemed to be blocking out newcomers. Because the goal is to teach people about machine learning, getting new people involved is crucial to the company.
That’s why it created the Open League, which as the name suggests is open to anyone. You can test your skills and if you’re good enough, finishing in the top 10%, you can compete in the Pro division. Everyone competes for prizes, as well, such as vehicle customizations.
The top 16 in the Pro League each month race for a chance to go to the finals at AWS re:Invent in 2021, an event that may or may not be virtual, depending on where we are in the pandemic recovery.