SUNDAY REWIND: Product strategy for beginners, Part 1

This week’s Sunday Rewind is the first of a two-part post from product designer Lassi Liikkanen on product strategy. The post aims to get you productive and to understand why starting with a strategy is difficult. Lassi starts by looking at what the absence of a strategy means for a digital product: it’s possible as [...] Read more »

The post SUNDAY REWIND: Product strategy for beginners, Part 1 appeared first on Mind the Product.

Elon Musk says Twitter will provide a free write-only API to bots providing ‘good’ content

Last week, Twitter said it is shutting down free access to its APIs starting February 9. Now, days before the deadline, Elon Musk said that after getting feedback from developers, Twitter will provide a write-only API for “bots providing good content that is free.”

This decision is as opaque as some of the other policy decisions under Musk’s management. There is no information on what constitutes “good content” and who will decide that. However, if Twitter ends up implementing this rule, some bots will get a new lifeline on the social network.

Previously, Twitter shuttered API access to third-party clients saying they broke a “long-standing rule” without any specification. Then the company silently updated its developer terms to reflect that app can’t  “use or access the Licensed Materials to create or attempt to create a substitute or similar service or product to the Twitter Applications.”

Following the announcement, a lot of developers who made fun of bots criticized the decision saying that their automation provided free content to people and in turn enhanced the services. Last week, Buzzfeed interviewed several bot developers who were unhappy with the decision. These include @_restaurant_bot which tweets random photos of restaurants and @_weather_bot_which tweets images of different places with weather updates.

At the moment, it’s not clear if accounts like @BigTechAlert, which tweets about big tech execs and organizations following and unfollowing each other, will be eligible for this free tier as they might need to scan account information.

Darius Kazemi, a developer who has made over 80 bots and even organized a bot devs summit in 2016, told TechCrunch over a call that these automated accounts have been an integral part of Twitter for years. He said that some of these bots with thousands of followers bring joy to many people daily.

He mentioned that it would be costly to maintain these bots who are providing free content to the platform

“I have more than 80 bots on Twitter so it would take me several thousand dollars to keep them up every year and I can’t afford that kind of money,” he said.

Musk has been trying to generate more revenue for Twitter with moves like a new costly subscription plan and ramping up ad money. He also plans to show ads in replies to share revenue with creators. While the details on how this will work are thin, the Twitter CEO said that only Blue Subscribers can earn this money. So it’s likely that content bots won’t earn money even if ads are displayed on their accounts or in replies below their tweets.

Twitter’s free API discontinuation doesn’t just affect bot developers. There are tons of student developers and hate speech or misinformation researchers who might not have a budget to pay a monthly fee. Twitter’s v2 API had special access for academics but that might not be the case under the new API rules.

Developers have also pointed out that a lot of bots spreading spam don’t use actually use the official API. So the company’s intention to shut down free API to weed out spam might not work well.

Elon Musk says Twitter will provide a free write-only API to bots providing ‘good’ content by Ivan Mehta originally published on TechCrunch

This Week in Apps: Instagram’s founders’ new app, another Twitter rival, Biden admin criticizes app stores

Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.

The app economy in 2023 hit a few snags, as consumer spending last year dropped for the first time by 2% to $167 billion, according to the latest “State of Mobile” report by data.ai (previously App Annie). However, downloads are continuing to grow, up 11% year-over-year in 2022 to reach 255 billion. Consumers are also spending more time in mobile apps than ever before. On Android devices alone, hours spent in 2022 grew 9%, reaching 4.1 trillion.

This Week in Apps offers a way to keep up with this fast-moving industry in one place with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions, and much more.

Do you want This Week in Apps in your inbox every Saturday? Sign up here: techcrunch.com/newsletters

Top Stories

Instagram’s co-founders launch a Toutiao-like news app

smartphone laid on colored tiles/blocks

Image Credits: Artifact(opens in a new window)

Surprising news this week saw Instagram’s co-founders Kevin Systrom and Mike Krieger return to the mobile app market with the launch of a news reading app called Artifact. The app is part of a new venture aimed at exploring social apps, a report in The Verge noted.

Artifact itself is not yet publicly available but offers a waitlist where interested users can sign up. As described, it sounds like a modern-day twist on Google Reader, a long-ago RSS newsreader app that Google shut down back in 2013. Except in this case, Artifact is described as a newsreader that uses machine learning to personalize the experience for the end user, while also adding social elements that allow users to discuss articles they come across with friends. (To be fair, Google Reader had a similar feature, but the app itself had to be programmed by the user who would add RSS feeds directly.)

The app presents a curated selection of news stories, which become more attuned to the user’s interests over time. According to a demo version of the app, you’ll need to read at last 25 articles for the app to personalize your feed. (You can track your progress in the app.)

During onboarding, you’ll tap on news interests you want to track to initially customize the experience. Users can also add their own paid news subscriptions for top publishers, like The New York Times and Bloomberg, if they choose. This will then prioritize those outlets in the app’s interface but links open in a web view. There’s no publisher integration or exclusive deals here, it seems.

Future app features will include comment controls, separate feeds for articles posted by people you follow alongside their commentary, and a direct message inbox for discussing posts more privately. But for now, you can thumbs down articles or hide the publisher, save articles to read later, share articles through iOS or Android’s built-in sharing features, report content, view your reading history and read articles in a cleaned-up reader mode.

There are some odd design choices, like the slightly too-small font for a text-heavy app and the italicized font styling on the sign-up page, but the latter isn’t present in the app itself. The app had two news reading tabs, which is strange, as one is a scrollable list of headlines, similar to an RSS reader like Feedly, while the other is a browsable page, similar to Apple News’ Today tab, but with categories at the top.

The app doesn’t immediately feel original, as it overlaps with other news readers and read-it-later apps, like Flipboard, SmartNews, Newsbreak, Pocket and Matter, plus other RSS readers and the default news apps from Apple and Google. It seems as if the company is hoping to reproduce the success of something like ByteDance’s Toutiao, but in the U.S. that’s difficult to do. The new market is more competitive here, where consumers also rely heavily on getting news from Google Search and Facebook — a platform not available in China. Plus, as TechCrunch’s Catherine Shu previously reported, many people in the country skipped the PC and first went online with their phones, paving the way for a mobile news app to eat up market share.

It will be interesting to track how well Artifact fares in this environment.

The Biden administration calls out app stores as anticompetitive

Capitol building

Capitol building. Image Credits: Bryce Durbin/TechCrunch

The Biden administration called out Apple and Google’s app stores for stifling competition. A new report, issued on Wednesday by the Commerce Department’s National Telecommunications and Information Administration (NTIA), said it had investigated the competitive conditions in the mobile app ecosystem and found that it’s “not a level playing field, which is harmful to developers and consumers.”

The report also made several policy suggestions that could improve the ecosystem and open up competition. These included pushes for more transparent app review process; limits on pre-installed apps and self-preferencing; bans on rules that restrict other means of installing apps, like sideloading; support for third-party payments; support for links to developers’ websites from apps; and more.

The recommendations, however, are just that — ideas, not policy. The report only helps to solidify and clarify the Biden administration’s position on app store competition. As the report points out, “Congress should enact laws” and “relevant agencies should consider measures” to limit anticompetitive conduct.

The Biden administration, so far, has seen mixed success in actually holding tech giants accountable. On the one hand, the Department of Justice is now suing Google over its digital ad monopoly, while on the other, Meta is winning against the FTC to move forward with its latest acquisition. The DoJ has yet to sue Apple, though it has been building a case and weighing in on Epic Games’ antitrust lawsuit. In the meantime, record lobbying spending from tech giants, including Apple and Google, has helped to block bipartisan bills that would curb anti-competitive behavior from advancing in Congress.

Another decentralized social app launches to take on Twitter, then gets kicked out of the China App Store

Damus app displayed om mobile phones

Image Credits: Damus

Twitter has another competitor, with this week’s arrival of Damus, a decentralized social networking application that’s powered by an open and decentralized social networking protocol known as Nostr, which is based on cryptographic key pairs.

Last year, Twitter co-founder Jack Dorsey donated around $245,000 in bitcoin (then roughly 14 BTC) to fund the development of Nostr even though he’s already investing in a different decentralized protocol with his Bluesky project.

Though there are some venture-backed Twitter rivals coming onto the scene, like Spill, T2 and Post, Damus is not one of them. It’s an experiment in decentralized social networking. The app’s promise is a social network without a central authority that makes decisions about the network’s content or who’s allowed to participate, as Facebook or Twitter do. Explains the app’s homepage, “you are in control…there is no platform that can ban or censor you. You are in control of your data,” it reads.

There’s no requirement to sign up with a phone number, email or name because of how the Nostr works. That’s a big point of differentiation with the federated platform, Mastodon, where a user’s account is attached to a particular server and admins have some control over their server’s registered users. That means issues with the Mastodon server you’re using — like an outage — could impact your ability to use the network. And you could risk losing data if that shutdown was sudden or permanent.

The new app also includes end-to-end encrypted messaging — something Twitter does not have, and which has concerned users in the wake of the Musk takeover. Messages are distributed through decentralized relays — in fact, the name Nostr is an acronym for “Notes and Other Stuff Transmitted by Relays.” And users can tip one another thanks to Bitcoin Lightning Network integrations.

The decentralization and promise of anonymity brought a flood of Chinese users to the app at launch, as typical social networks in China have censorship tools to eliminate content that’s illegal or banned in the country. Plus, anonymity is not allowed. Not surprisingly, China’s government soon took action on Damus and the iOS app was pulled from the App Store in China just two days after its launch.

App Updates

Apple News

Apple logo

Image Credits: Emmanuel Dunand / AFP / Getty Images

  • Apple missed on earnings. The company reported fiscal Q1 revenue that was down 5% year-over-year to $117.2 billion, its largest annual quarterly revenue decline since 2016 and below expectations of $121.10 billion. Net income was down 13% year-over-year to $30 billion.
  • Except for Services (up 6.4%) and iPad (up 30%), all business lines were down, including iPhone (down 8%), Mac (down 29%), Wearables/Home/Accessories (down 8%). Revenue in Greater China also fell 7.3% year-over-year to $23.9 billion.
  • Apple said it now has more than 2 billion active devices worldwide and 935 million paid subscriptions. Services, including iCloud, Apple Music, Apple TV+, Apple Arcade, Apple News+, Apple Fitness+, Apple One and Apple Pay, brought in $20.8 billion in the quarter.
  • Apple will raise the App Store app and IAP prices in the U.K. and some other markets on February 13. The company said it’s adjusting for taxes and conversion rate changes. Additional countries impacted include Colombia, Egypt, Hungary, Nigeria, Norway and South Africa. Prices in Uzbekistan will decrease to reflect a reduction of the value-added tax rate from 15% to 12%, the company also noted. Meanwhile, proceeds are being adjusted in Ireland, Luxembourg, Singapore and Zimbabwe due to tax changes, but prices aren’t changing.
  • Apple’s Support app adds Bulgarian, Croatian and Greek and expanded into 118 new markets.

Google/Android News

  • Spotify, an earlier tester of Google’s User Choice Billing option for third-party payments, said during earnings the offering has now expanded to more than 140 markets worldwide. The streamer didn’t say which markets were included nor how much of a commission cut it receives, but Google had previously said the program would reduce commissions by 4%.
  • Google’s new policy requiring digital lenders in Kenya to submit proof of license to operate has taken effect. The policy aims to cut down on the rogue loan apps that have been offering unsecured personal and business loans. Some apps have been sharing contact info from browsers with third-party debt collectors without consent.

Social

  • Meta reported Q4 earnings, with revenue down 4% year-over-year to $32.2 billion and net income down 55% year-over-year to $4.7 billion. However, the company said its family daily active users were up 5% year-over-year to 2.96 billion and Facebook had 2 billion daily active users, after adding 16 million DAUs in the quarter. WhatsApp had passed 2 billion DAUs in October. The stock jumped up by 24%+ after earnings, and is now up 110%+ since November, adding $250 billion to its market cap. (Apple observer John Gruber suggested that maybe Meta should maybe now stop “whining” about ATT!)
  • Instagram’s newly launched Notes feature, which lets users post a status update that can be seen at the top of their inbox, expanded to global markets outside the U.S., including the EU, U.K. and Japan. The feature was already available in Latin America, North America and parts of Asia, and should have become available across all regions sometime during this past week.
  • Instagram’s code reveals new references to a “paid blue badge” and a new subscription suggesting the company could be spinning up its own version of Twitter Blue-like paid verification.
  • Debt-laden Twitter made its first interest payment under Elon Musk to seven banks, led by Morgan Stanley, on the $12.5 billion Musk borrowed to take the company private last year. The payment was around $300 million, Bloomberg reported.
  • One of Meta’s last apps built by the experimental projects group, NPE Team, is shutting down. The company announced its social to-do list app Move will close down on March 2, 2023.
  • Snap reported mixed Q4 earnings. The company missed on revenue ($1.30 billion versus $1.31 expected) but beat on earnings per share (14 cents versus 11 cents expected). The app now has global daily active users of 375 million, close to expectations of 375.3 million. Snap’s stock plunged following the results as investors reacted to the net loss of $288 million and lack of official guidance for Q1.
  • Among Snap’s earnings highlights, it announced its subscription service Snapchat+ topped 2 million paid users and talked about how AI could be used in AR glasses in the future.

Entertainment

  • Spotify reported its Q4 earnings with revenue up 18% year-over-year to €3.2 billion and a €270 million loss, up from €39 million year-over-year. Paid subscribers were up 10 million to reach 205 million.
  • Investors asked Spotify about the tests of a new Friends tab in the app, which suggests the company has expanded social ambitions as fewer young people use Facebook, which is what powers Spotify’s existing social features.
  • Netflix’s “Kids Mystery Box” feature hit Android devices. The discovery tool works similarly to the Shuffle button offered to adult viewers but offers kids the ability to find new content in a more playful way.
  • Apple rolled out Apple Music Replay 2023, its annual collection of the top songs by year. The playlist is made available to the music app’s subscribers alongside a website that offers personalized details, like your top albums, songs and artists of the year.
  • Apple launched MLS Season Pass in more than 100 territories, offering soccer fans access to all MLS matches, playoffs and more for $14.99/mo or $99/year. The subscription service is available through the Apple TV app and can be shared with up to six family members with Apple’s Family Sharing.

Gaming

  • EA surprised investors this week with the news that it’s pulling the plug on “Apex Legends Mobile,” which was just named Game of the Year by both Apple and Google. According to CEO Andrew Wilson, the issue was that the game failed to keep enough casual players engaged. The decision also led the company to kill the planned mobile version of “Battlefield.”
  • Sony added support for Discord voice calls in beta on its PS5 in the U.S., Canada, Japan and the U.K., similar to support on the Xbox. The Xbox version was recently updated to allow for direct joining from the console itself without needing a phone or PC.
  • Roblox is going to host a free virtual Super Bowl concert featuring Saweetie. The concert will take place at 7:00 pm ET in Warner Music Group’s Rhythm City, a new destination on Roblox that was announced earlier this week.

Security

  • 1Password previewed new features coming to its iOS app, including the ability to reorder fields and sections inside items, the (returning) ability to search within any list of items, PIN unlock on mobile, improved Face ID unlock, better VoiceOver support and more.
  • A victim of the recent Google Fi hack had his Coinbase and 2FA app, Authy, hijacked by hackers, raising concerns about further potential fallout from the Google Fi data breach, which was likely related to the recent security incident at T-Mobile.
  • Password manager Dashlane published its source code to GitHub in a new transparency push. The published code includes the Android app code, iOS app code and code related to the Apple Watch and Mac apps. It plans to later publish the code for its web extension, too.

Etc.

  • Samsung reported a ~$1.38 billion mobile profit in Q4 2022, down from $2.15 billion in the year-ago quarter. Its operating profit was down 69% year-over-year to ~$3.5 billion, its lowest since Q3 2014. Revenue was down 8% year-over-year to ~$57.3 billion, due to weak chip and smartphone demand.
  • Samsung’s SmartThings iOS app now supports Matter devices.
  • Some users of queer dating app Lex are complaining about the company’s new focus on friends and community, as they preferred its prior raunchy nature.

Layoffs

Funding and M&A

  • Twitter rival Spill, being built by former Twitter employees, raised $2.75 million in a pre-seed round of funding after receiving 60,000 handle reservations.
  • Egyptian fintech and e-commerce MNT-Halan raised up to $400 million in equity and debt financing. A large portion of the equity, about $200 million, was provided by Abu Dhabi-based Chimera Investments. MNT-Halan runs the Halan digital wallet app offering bill pay, e-commerce, ride-hailing and loans.
  • Meta won a ruling against the FTC in a closely watched case over its proposed acquisition of VR software company Within. A U.S. district court judge denied the FTC’s request to block Meta’s purchase of Within, which makes a VR fitness app called Supernatural. The FTC had said Meta’s purchase would help the company dominate in VR, potentially creating a monopoly in the market.
  • U.K. neobank Zopa raised £75 million (around $93 million) in an all-equity investment round, without a lead investor. The company said it was an inside round from existing investors including IAG Silverstripe, Uprising and Augmentum, but not SoftBank.
  • Mexican employee wellness company Minu raised $30 million in a combination of equity and debt. The round includes $10 million in a bridge round from Coppel Capital, Besant Capital and Enea Capital, plus existing investors FinTech Collective, QED and Salkantay, and $20 million of debt from Accial Capital.

Downloads

Forum

Waverly Labs Forum app on a smartphone held in a hand

Image Credits: Waverly Labs

TechCrunch’s Ivan Mehta took a look at Forum, a new app from Waverly Labs, the company behind wearables focused on translation. With Forum, users can translate and transcribe audio in real time across 20 languages and 42 dialects, including Arabic, Dutch, English, Hindi, German, Japanese, Korean, Portuguese and Spanish. Users can switch to a new language in the middle of a session to get both a text and audio translation. The app also works with video calling apps like Zoom, Microsoft Teams and Google Meet.

Rewind

Image Credits: Rewind

A new app called Rewind wants to make it easier for music fans to explore the top songs of decades past. Hoping to cater to consumer demand for nostalgic music experiences, Rewind allows users to “time travel” through the music charts from 1960 through 2010 to learn about how older songs have influenced today’s hits. Users can explore the music from a given year by top albums and top music videos, in addition to growing the top Billboard charts. It also delves into relevant trends from a given time period — like 1991’s selection of “grunge-defining records.”

Other sections present tracks that saw major radio airtime that year, highly anticipated releases and newly formed bands that emerged that year, and so on. A TikTok-like feed lets you swipe through the year’s top songs quickly.

There’s also a “news” section that includes major events and moments from the year, and “ads” that give the app a retro feel. For example, in 1965, listeners will see ads for the first distortion guitar pedal while users browsing the 1980s might see ads for new synth instruments that helped shape 80s sounds. The app, a side project from a TIDAL developer, integrates only with TIDAL for now. Everyone else can hear 30-second song clips.

This Week in Apps: Instagram’s founders’ new app, another Twitter rival, Biden admin criticizes app stores by Sarah Perez originally published on TechCrunch

Netflix crackdown, monetizing ChatGPT and bypassing FB’s 2FA

Happy weekend, folks, and welcome back to the TechCrunch Week in Review. Henry here, standing in for a vacationing Kyle Wiggers, who is standing in for a parental-leaving Greg Kumparak. Listen, we’ve got a deep bench, and both blokes will be back very soon. Until then, check out just a few of the top stories from the week.

Want it in your inbox every Saturday AM? You can take care of that right here.

most read

Netflix’s password-sharing crackdown: The streaming giant has grown tired of its customers sharing passwords with friends and loved ones around the world. So this week it announced guidelines designed to keep the passwords close to home. Literally inside the walls of the abode of the account holder.

Monetized ChatGPT: OpenAI this week launched a pilot subscription for its text-generating AI. For $20 a month, subscribers can access more than what the base level gets: access to ChatGPT during peak hours, faster response times and priority access to new features and improvements.

Human or AI?: That is the question, and apparently OpenAI wants to help. The company launched a tool that is designed to distinguish between human-written and AI-generated text, but the success rate is only around 26%. OpenAI did say, though, that when used with other methods, it could help prevent AI text generators from being abused.

Bypassing FB 2FA: Meta created a new centralized system so users could manage their logins for Facebook and Instagram, but a bug could have allowed malicious hackers to switch off 2FA just by knowing a user’s phone number. Yikes. A security researcher from Nepal discovered the bug and reported it to Meta Accounts Center last September. And he got paid.

Salesforce layoffs hit: In January, the company announced the imminent reduction of 10% of its workforce. Not everyone was notified at the time, however. This week, hundreds more of the company’s staff found out the fate of their jobs.

“Spill the tea”: Alphonzo “Phonz” Terrell lost his job at Twitter as its global head of Social & Editorial three months ago and promptly got to work on a new app. Called Spill, the app has already attracted a seed round and 60,000 handle reservations. The app is due to launch in alpha during the first quarter of this year.

Google Fi breach: The company said its cell network provider, Google Fi, confirmed a data breach, which, based on the timing of the notice, was likely related to the recent security incident at T-Mobile that allowed hackers to steal millions of customers’ information.

audio roundup

This week out of the TechCrunch Podcast Network, Equity covered the usual slate of venture and startup funding news, and Mary Ann spoke with Hans Tung, investor and managing partner of GGVC, a venture firm with more than $9 billion in assets under management. On Found, Darrell and Becca talked to Rosie Nguyen, a co-founder and the CMO of Fanhouse, about her journey from content creator to founder and how her experience as a creator informs every product decision at Fanhouse.

TechCrunch+

TC+ subscribers get access to in-depth commentary, analysis and surveys — which you know if you’re already a subscriber. If you’re not, consider signing up. I doubt you’ll regret it. Just check out the highlights from this week:

Not quite secondarily: Becca reports on data this week that shows secondary deals are breaking away from the downturned venture market this year.

Open source startups: Paul Sawers examines a report out this week that explores which commercial open source software startups are growing fast and raising cash.

Go team: Ever wonder which slide is the most important slide in a startup’s pitch deck? Why, it’s the team slide and Haje expresses his surprise at just how many startups fail to tell a good story about their teams. And speaking of pitch decks, Haje brings Laoshi’s $570K angel deck breakdown to you.

Dear Sophie: Immigration Sophie Alcorn answers the question, What H-1B and other immigration changes can we expect this year?

Netflix crackdown, monetizing ChatGPT and bypassing FB’s 2FA by Henry Pickavet originally published on TechCrunch

Data hints at the value of startup offices

Toward the end of 2022, a number of entrepreneurs — some citing Elon Musk — told me they planned to bring back in-person work culture in the following year to help promote productivity and, in some cases, loyalty. One founder even told me over drinks that they weren’t worried about losing talent — claiming that those who leave just because there’s an in-person mandate weren’t truly mission-driven to begin with.

While some founders are clearly set on a return, others are confused. There’s the argument — sometimes coming from venture capitalists desperate to see portfolio companies succeed — that being in-person will help grow productivity and, eventually, the bottom line. And there’s also the counterargument that remote work allows for more inclusive and expansive hiring, which could also help, well, the bottom line.

And if 2023 isn’t the year for the bottom line, I don’t know what else it could be. Kruze Consulting, an accounting firm for startups, mined through over 750 companies’ finances — which includes upward of $300 million in quarterly revenue and over $750 million in quarterly spend. I spoke to Healy Jones, who runs financial planning and analysis for Kruze, about his findings. The results, he thinks, offer some balance to the debate.

Data hints at the value of startup offices by Natasha Mascarenhas originally published on TechCrunch

When the government is the customer (some things to keep in mind)

Five years ago, Google backed away from a Pentagon government contract because thousands of employees protested that its tech might be used for lethal drone targeting. Today, however, Silicon Valley has far fewer qualms about developing tech for the U.S. Department of Defense.

So said four investors — Trae Stephens of Founders Fund, Bilal Zuberi of Lux Capital, Raj Shah of Shield Capital and longtime In-Q-Tel president Steve Bowsher — speaking at a startup event for military veterans today in San Francisco. Said Shah of the shift in attitude that he has observed personally: “The number of companies, founders, and entrepreneurs interested in national security broadly — I’ve never seen it at this level.” Bowsher argued that the “reluctance of Silicon Valley to work with the [Defense Department] and intel community” was always “overblown,” adding that across his 16 year with In-Q-Tel, which is the CIA’s venture fund, his team has met with roughly 1,000 companies each year and just “five to 10 have turned us down, saying they weren’t interested in working with the customers we represent.”

We’ll have more from the panel in TechCrunch+ but wanted to share parts of our conversation that centered on Things to Consider when selling to the U.S. government, given that founders with commercial customers may be thinking increasingly trying to sell their products and applications to the U.S. military. (This is particularly true of AI and cybersecurity and automation startups.)

We talked with the investors, for example, about mission creep, meaning how a startup that begins to work with the government can ensure it doesn’t wind up spending the bulk of its time catering to the government owing to new requests — and ignoring earlier, commercial customers in the process.

Here Trae Stephens — who also cofounded Anduril, a maker of autonomous weapons systems that has aggressively courted business from government agencies from its outset — said that this kind of gradual shift in objectives is “exactly what makes it hard to do both [cater to civilian enterprises and the government] at an early stage.”

He said that a “lot of the programs that [enable founders to] do early business with the Department of Defense requires some, like, DoD-ization of your product for that use case.”

Though In-Q-Tel backed Anduril early on, for which Stephens said he is thankful, he offered that many companies that take money from government, including through its Small Business Innovation Research (SBIR) program, “end up building all of these very specific workflow steps that take them away from the commercial businesses needed to make” the business truly work. (Stephens relatedly noted that very few outfits can chase after the military exclusively, as did Anduril, because it “takes so long to get into production with the DoD that you have to be able to raise, basically, an infinite amount of seed dollars; otherwise, the company’s going to die.” )

Relatedly, we asked how so-called dual-use companies deal with their intellectual property rights once they’ve begun selling to the government. For example, you can imagine a scenario in which a tech helps the NSA identify certain types of people who are making certain types of calls, and while there are commercial applications for this tech, the government doesn’t want it being released to adversaries. Is there a way to sort that out in advance, we wondered?

Here, there was no easy answer other than: get the right help and do it as fast as possible.

Zuberi recounted one cautionary tale centered around one of Lux’s own portfolio companies. Said Zuberi: “I have a company that received a $100,000 [National Science Foundation] grant. Two guys started it in my office. I didn’t think much of it; I thought it was nice to have on their resume. Then they started to do a Series B raise, and one of the [interested] firms does diligence on what other contracts [the team might] have, and there was a clause in that NSF grant that said, ‘Hey, if the government needs [what you’re building], we can use it.’ So we had to wait six months while we negotiated with [someone] at the NSF who didn’t care about it at all to get that right back. I would have paid them double the amount of the grant just to make it go away, but they said ‘No, you can’t do this, we can’t go back.’ So you can run into problems.

Again, we’ll have more from this discussion soon, including about AI in military applications; we learned a lot — hopefully you will, too.

When the government is the customer (some things to keep in mind) by Connie Loizos originally published on TechCrunch

Kapor Capital’s new crew is raising an opportunity fund

Four months after closing its largest fund to date, Kapor Capital wants more. The firm is under new leadership after co-founders Freada and Mitch Kapor stepped back from the outfit, which focuses on funding social impact ventures and founders of color. Now, led by Uriridiakoghene “Ulili” Onovakpuri and Brian Dixon, Kapor Capital is hoping to raise a $50 million opportunity fund, according to an SEC filing.

The opportunity fund, if closed, would continue Kapor Capital’s new strategy of taking capital from outside investors. Up until last year, all of Kapor’s funds were directly from the founding partners; in September, though, the firm closed a $126 million Fund 3 backed by investors including Cambridge Associates, Align Impact, Ford Foundation, Bank of America, PayPal and Twilio.

At the time, Dixon told TechCrunch that turning to external investors helps the firm with access; Kapor is now writing checks between $250,000 and $3 million with a primary focus on participating in pre-seed and seed rounds. Onovakpuri said the larger fund would allow them to invest in more companies with bigger checks.

That said, with presumably a fresh chunk of capital to deploy, why would Kapor be eyeing an opportunity fund? It’s a trend-turned-standard among early-stage venture capital firms that want to get in on later rounds of their star portfolio companies. Last year, Khosla debuted its an opportunity fund and last week, Cowboy raised its first of the kind as well.

Kapor Capital did not immediately return a request for comment.

Kapor Capital’s new crew is raising an opportunity fund by Natasha Mascarenhas originally published on TechCrunch

Plant-based Rebellyous is raising millions to ‘rethink the nugget’

Rebellyous, a startup that’s striving to build “a better chicken,” has raised at least $20 million in fresh funding, TechCrunch has learned.

Based in Seattle, the venture-backed company calls its production tech the “most advanced plant-based meat manufacturing system on the planet.”

Rebellyous aims to raise as much as $30.7 million in total, according to a public regulatory filing with the Securities and Exchange Commission. The report names previously announced backers YB Choi of Cercano Management, angel investor Owen Gunden and Mike Miller of Liquid 2 Ventures among its directors. The filing indicates that at least 55 undisclosed investors chipped in on the latest round, but as usual the SEC disclosure leaves us wanting more.

Reached for comment on the fundraise, Rebellyous chief of staff Tina Meredith declined to share details on the startup’s plan for the money. Still, the company’s website lays out efforts to build “the next-gen meat machine,” dubbed Mock Two. Rebellyous calls its tech an alternative to factory farming, which it bluntly and justifiably describes as “fucking disgusting.”

The filing comes as some of the most prominent names in faux meat struggle to realize their overarching vision of disrupting big meat (which is more popular than ever in the U.S., per somewhat dated reports).

Impossible Foods could soon lay off 20 percent of its staff, according to a January 30 Bloomberg report. Likewise, Beyond Meat announced it would lay off 19% of its staff in October amid reportedly weak sales. For early-stage startups such as Rebellyous, all eyes will be on profitability, differentiation and, as always, cost. 

Plant-based Rebellyous is raising millions to ‘rethink the nugget’ by Harri Weber originally published on TechCrunch