Author: Richard Dal Porto

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Daily Crunch: 6 months after launch, Indian DTC startup Mensa Brands exceeds $1B valuation

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Hello and welcome to Daily Crunch for November 16, 2021! Today’s news includes mac and cheese, AI unicorns and a few items that detail just how popular audio is today. But before we get into all of that, if you are keeping up with TechCrunch on all the latest from launch to low Earth orbit, don’t forget that our upcoming Sessions: Space event is in less than a month! — Alex

P.S. TechCrunch has podcasts! Did you know? Come hang out!

 

The TechCrunch Top 3

  • Upgrade upgrades valuation to $6B: Flush with $280 million in new funding, Upgrade’s credit card play — and expanding universe of fintech products — is keeping its foot to the floor. You may recall that Upgrade, which is focused on the U.S. market, last raised less than four months ago. Even for fintech, that is rapid-fire fundraising.
  • VCs bet on stampede of AI unicorns: AI has evolved from buzzword to promising software technique to a cohort of startups raising tens of billions of dollars per quarter. And as AI startup rounds get bigger, and valuations ever greater, it appears that private-market inventors are anticipating a huge wave of liquidity — IPOs! — in coming quarters. (We’ve certainly moved past economic concerns regarding AI revenue quality!)
  • Can you hear everyone looking to audio? Two items today from the realm of sound. First, Medium announced its third buy of the year, Knowable, which TechCrunch writes will “help [the publishing platform] cater to people seeking audio education.” And we took a look today at Racket, which thinks that short-form podcasts are the future. (Recall that Spotify, still digesting its podcast push, is also moving into audiobooks.)

Startups/VC

  • Remote IT startup AnyDesk raises $70M: AnyDesk’s software provides remote device access, control and collaboration tooling. Given the world’s shift to a more remote and hybrid working setup, it isn’t a surprise that the startup is doing well. Its latest round values AnyDesk at $660 million.
  • How are there any e-commerce brands left to consolidate? It seems that every week we hear of yet another mega-round for a startup looking to consolidate e-commerce brands, often on the Amazon platform. This time ‘round it’s Heyday, which has raised $555 million — we don’t know what portion of the total is equity or debt — to continue to snap up and grow DTC brands. It has competition, including “Thrasio (which picked up a cool $1 billion in October) and Perch ($775 million in May).”
  • Nirvana Health raises more to help therapists bill: You might think that the real issue in healthcare is getting the right treatment to the right people at the right time. Such a perspective may fit in some markets, but not in the United States. Hence the need for services like Nirvana Health, which can help make the money side of care flow correctly and quickly.
  • SnapAttack snaps up $8M to attack cyberthreats: A recent spinout from Booz Allen — one of the better names in business — SnapAttack has raised new capital to power its cybersecurity business. The company claims the “largest library of labeled threat data in the world,” for what it’s worth.
  • Luxury Presence raises $25.9M Series B: Making software to support particular industries or worker categories is big business. Call it vertical SaaS or whatever you prefer, segment-specific code is doing numbers. The latest example of that is Luxury Presence, which raised to keep building software for real estate agents. Notably, Bessemer was in this round, a firm that I have not seen as often in headlines lately as I had expected to.
  • Conductor rides again: Remember when Conductor was bought by WeWork? Well, that didn’t work out. It bought itself out, and is now back to the work of raising its own capital to build its own business, $150 million to be exact. What does Conductor do? SEO and content marketing software. Again, WeWork bought it. That was a silly time.
  • Insta-unicorns are a thing now: Sure, we might all be gawking at $100 million seed rounds, but what about startups that race from founding to a valuation of $1 billion or more in less than a year? Wild, right? Mensa Brands — yes, another DTC acquisition play, alas — has accomplished the feat, thanks to its recent $135 million raise.
  • To close out our startup coverage, what do you get when you fuse startups, Gal Gadot and noodles? Goodles, it turns out. I will taste test this particular product as soon as I can find it in a store. You are welcome in advance.

5 critical pitch deck slides most founders get wrong

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This is a fantastic time to found a startup, but unless you plan to bootstrap it, you’ll still need to go through the laborious exercise of crafting a pitch deck.

Most founders struggle with this task because it requires them to answer central questions for investors: Can you lay out your plan for tripling revenue YoY? What’s your ideal product use case?

According to Jose Cayasso, CEO and co-founder of pitch deck design agency Slidebean, there are five sides where pretty much all investors miss the mark:

  • Go-to-market
  • Use case/audience
  • TAM
  • Possible outcomes
  • Team

Using examples from decks by Airbnb, Uber and others, he shares several proven strategies for avoiding the most common pitfalls.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

Kicking off today’s Big Tech news with two deals, our own Ron Miller has the latest on $25 billion worth of liquidity in the data center market. That’s a lot of coin in one day.

  • Dang, Meta should really get ahold of its “Facebook” service: News from Down Under indicates that Facebook’s “announcement this summer when the tech giant claimed it would be limiting how advertisers could reach kids” might not be working out as some hoped. Researchers are accusing the social subsidiary of Meta of “still tracking teens for ad targeting on its social media platforms.”
  • Slack has a fascinating take on no-code development: Slack is a neat company. You might use its service. I haven’t been able to not use Slack for years and years. But as the company matured, it became a platform as well as a workplace chat app. And now The House That Stewart Built is out with a method to allow users to remix apps in a workflow context. One more step toward a world where programming is not a high art, but something that anyone can do.
  • Pinterest looks to recapture startup magic: Today social network and giant of the pinning economy Pinterest announced TwoTwenty, what TechCrunch described as a “an in-house, experimental products team.” Perhaps TwoTwenty will be able to boost the pace at which Pinterest adds new users in TwentyTwentyTwo.
  • Jumia posts earnings showing revenue growth, steeper losses: The saga of Jumia, a leading e-commerce player in Africa is one of promise and regular losses. TechCrunch covers its earnings every quarter, not only because Jumia is an interesting company with a large fintech arm, but also because it provides a glimpse into the larger African e-commerce market.

TechCrunch Experts

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TechCrunch wants you to recommend growth marketers who have expertise in SEO, social, content writing and more! If you’re a growth marketer, pass this survey along to your clients; we’d like to hear about why they loved working with you.

If you’re curious about how these surveys are shaping our coverage, check out this article on TechCrunch+ from Miranda Halpern, “Growth marketing experts survey: How would you spend a $25,000 budget in Q1 2022?”

Community

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Join a live chat with Ben Parr tomorrow, Wednesday, November 17, at 3 p.m. PST/6 p.m. EST when he joins Walter Thompson for a Twitter Spaces event hosted by the TechCrunch account. Read Parr’s latest article, “Collect and leverage zero-party data to personalize marketing and drive growth,” and bring any questions you have about it to the Twitter Space.

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Daily Crunch: Australian micromobility startup Zoomo spins up $60M Series B

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PST, subscribe here.

Hello and welcome to Daily Crunch for November 15, 2021! We have a ton to chat through, but first, briefly: We’re having a sale! Yep, you get a hefty discount on TechCrunch+ here, which I am happy to share because saving money is good. As is supporting your friendly local tech blog! OK, let’s talk news. — Alex

The TechCrunch Top 3

  • More money to reinvent cards: Startup card plays are popular enough that TechCrunch wrote a digest on when they make sense. But there’s still more to be done in the space, reckons Imprint, which just bagged $38 million for its consumer-brand debit card effort, including funds from Kleiner Perkins and Stripe.
  • Casper says “boo” to public markets, plans exit: After a tumultuous run, DTC mattress company — and former venture-backed startup — Casper is leaving the public markets for $6.90 per share, cash. The price is a steep premium on its previous share price though does little to provide a positive signal for the DTC space given its basement-level implied revenue multiple.
  • Utah’s tech scene stays hot: It’s been a good year for Utah startups. Qualtrics went public. Divvy sold for $2.5 billion. Weave went public. Now Podium has added just over $200 million to its accounts at a valuation of $3 billion. It was once a surprise that Utah was building a burgeoning tech scene, but in today’s more global startup world, the state is merely yet another success story when it comes to fostering upstart tech shops.

Startups/VC

  • Can you build a startup aimed at the battery supply chain? Mitra Future Technologies and Chamath Palihapitiya’s Social Capital think so. The startup wants to “boost the North American battery supply chain industry that’s currently dominated by China by producing an iron-based cathode for non-Chinese applications.” Heck yes.
  • SOS raises $3.4M for women’s health-focused vending machines: SOS is building a network of vending machines supplying health and hygiene products, replacing “the perennial problem of broken, out-of-stock tampon machines,” TechCrunch reports. The company intends to roll out advertising products and more hardware.
  • Mixpanel returns to fundraising after long break: After blasting to scale early in its life, Mixpanel found itself stuck between startup and public company. Now, seven years after its last round, the software company has added $200 million to its accounts via a Series C. Call it a comeback? Our own Ron Miller has even more on the Mixpanel turnaround here.
  • Virtuoso raises more money for automated software testing: If you combine machine learning and RPA and point the hybrid at software testing, you get Virtuoso, a U.K.-based startup that just raised $13.3 million in a round led by Paladin Capital. Not to turn this into a D&D joke, but we suppose that Virtuoso has to run lawful good from here on out.
  • Vertical SaaS still finding places to deploy code: The work to bring industry-tailored software products to market is not slowing down, it appears. Today’s evidence is Monograph raising $20 million in a Series B for its “cloud-based platform for architecture and design professionals to manage their projects,” TechCrunch reports.
  • Aplazo raises $527M for BNPL in Mexico: The Mexican startup market is crossing my radar more and more often. A good example came today with Aplazo’s new funding round, an event that comes just four months after it raised $5.25 million. Such rapid-fire funding was rare once in Silicon Valley. Today, hot startups around the world can access more capital than ever.
  • To close out our startup coverage today, Zoomo has raised $60 million for its e-bike subscription service. We love the idea that the Aussie EV company is working on. Cars are bad for the environment and take up too much room in cities. How about electric bikes?

Offer decks and other fresh tips for startup hiring

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Most new startups operate with a hybrid workforce, but that doesn’t guarantee that hiring processes have kept pace.

In a panel discussion at TechCrunch Disrupt, Managing Editor Eric Eldon interviewed Jaime Bott, talent partner at Sequoia, Tawni Nazario-Cranz, operating partner at SignalFire, and Doris Tong, founder and CEO of EQ Talent Group to learn more about recent shifts in recruiting.

It’s not just engineering talent that’s in high demand: With so many startups staffing up, “there aren’t enough senior people to hire overall in the world,” Eric writes.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

TechCrunch Experts

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Are you all caught up on last week’s coverage of growth marketing and software development? If not, read it here.

TechCrunch wants you to recommend growth marketers who have expertise in SEO, social, content writing and more! If you’re a growth marketer, pass this survey along to your clients; we’d like to hear about why they loved working with you.

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With all eyes on the Indo-Pacific, a burgeoning tech alliance is taking shape in the Euro-Atlantic

Tyson Barker Contributor
Tyson Barker is head of the Technology and Global Affairs Program at the German Council on Foreign Relations (DGAP). He previously worked at Aspen Germany where, as deputy executive director and fellow, he was responsible for the institute’s digital and transatlantic programs. Prior to that, Barker served in numerous positions including as senior adviser in the Bureau for European and Eurasian Affairs at the U.S. State Department.

The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics.

On September 29-30, in a converted steel mill in Pittsburgh now serving as a startup accelerator, three top Biden cabinet members and two top EU officials huddled to launch the U.S.-EU Trade and Technology Council (TTC). The TTC — if it takes root — could be a Euro-Atlantic answer to the Quad in the Indo-Pacific: an embryonic tech alliance and a building block for a new democratic tech arrangement.

When looking at the tech-foreign policy nexus in political Washington, all eyes seem to be on the Indo-Pacific — particularly China. But in data, software and hardware, the U.S.-EU relationship remains an equally if not more important tech corridor. For a sense of proportion, Euro-Atlantic data transfers are 55% greater than those between the U.S. and Asia.

With the TTC, the Euro-Atlantic partnership now has a strategic venue to take advantage of this massive democratic, digital corridor, particularly in light of the global geotech race in which the U.S., China and the EU are the three primary actors.

Read more from the TechCrunch Global Affairs Project
The 17-page Pittsburgh TTC statement outlines a roadmap for future work and a phalanx of working groups tackling critical issues like technical standards, secure supply chains, data governance, foreign direct investment (FDI) screening, green technology, misuse of technology in human rights abuses and open economies. While the word China does not appear once, the joint statement is riddled with language about “non-market economies,” “civil-military fusion” and use of “social scoring” by “authoritarian governments,” all of which are code for China.

Three immediate areas stand out. First, the U.S. and EU are rethinking their approach to technical standards. A saying that has been kicking around in China holds that “third-tier companies make products, second-tier companies make technology, first-tier companies make standards.” In September, the Chinese government released its Standards Strategy focused on greater internationalization of Chinese technical standards, acceleration of standards adoption and more private sector effort in standard development.

The U.S. and EU have both taken note of how standards can be instrumentalized for geopolitical purposes. The U.S. and EU increasingly recognize that their model of letting the private sector set standards has meant losing ground as companies adjacent to the Chinese Communist Party (CCP) colonized standard-setting bodies like the International Standards Organization (ISO) and the International Telecommunications Union (ITU). In light of China’s aggressive moves internationally, the two sides have revived dialogue between the National Institute of Standards and Technology (NIST), the U.S. agency in charge of technical standards, and its EU counterparts. Both want to use the TTC to coordinate their standard-setting strategies, including how they work with the private sector.

Second, COVID disruptions and U.S.-China tech tensions demonstrated the vulnerability of Euro-Atlantic tech supply chains, particularly in semiconductors given the use of Entity List restrictions and the precarious situation of Taiwan’s chip champion, TSMC. The U.S. share of global chip manufacturing has shrunk from 37% in 1990 to 12% in 2020. The EU has experienced an even more dramatic decline, from 44% in 1990 to 8% today. Both Washington and Brussels are committed to reversing that trend. Congress recently passed the $52 billion CHIPS Act in the United States and the coming European Chips Act could draw on the €93 billion Horizon Europe fund, the EU’s €750 billion post-COVID recovery fund and coordinated national semiconductor industrial efforts.

But while in the past this might have drawn fears of competing industrial policies, both European Commission Executive Vice President Margrethe Vestager and U.S. Commerce Secretary Gina Raimondo highlighted in Pittsburgh the desire to “avoid a subsidy race” in technology. Indeed, the TTC’s “dedicated track on semiconductors“ in the “mid to long term” provides a runway for a more ambitious joint agenda to work together on high-end semiconductor production. All indications are that they should coordinate and the Pittsburgh statement emphasized that it should be “balanced and of equal interest for both sides.” It is easy to imagine a transatlantic consortium with a “Mega-Fab” project — the largest green field project in Europe — at its heart.

Third, in the wake of restrictions on Huawei 5G equipment, new revelations about Xiaomi phone censorship in Lithuania and buying sprees of companies like Tencent across Europe, both sides are taking a hard look at how they manage foreign flows of critical technology. Levers like export controls, FDI screening and trustworthy vendors are all on the table. In the past, the EU and U.S. have implemented dual-use export controls along traditional bases: nuclear, chemical and biological but also increasingly on cyber.

But recent developments have created new challenges in governing digital spaces, particularly around investment screening and trustworthy vendors. Regulators are also worrying about how to preserve democratic data spaces and protect research and IP in areas like AI, semiconductors, 5G, gaming, AR/VR technology and perhaps even digital services and smartphones. It will be increasingly important for American agencies like the Bureau of Industry and Security (BIS) and the Committee on Foreign Investment in the U.S. (CFIUS) to create channels for intelligence sharing with their European counterparts as EU member states expand screening and market access restriction capabilities.

If it works, the TTC could be the apparatus through which the U.S. and EU write the global rule book governing technology companies. In recent years, the EU has felt compelled to go it alone regulating digital technology, taking the lead in areas like data protection, content moderation and the market power of online platforms.

While some in Washington appreciate Europe’s efforts in the absence of meaningful U.S. regulation (Washington has been perceived as wholly absent from tech foreign policy in the Trump years and captured by Big Tech in the Obama years), this so-called “Brussels Effect” has also created tension, particularly on data flows and the future of digital antitrust.

Free data flows between the Atlantic hang in limbo after a 2020 GDPR-based court ruling invalidated the Privacy Shield, the primary “passport” for European personal data into the United States. On the antitrust side, major players like Meta (Facebook), Amazon, Google and Apple are fighting hard to water down the EU’s signature law against the market dominance of online platforms. The Biden administration itself has not yet settled on a clear position.

More broadly, many Europeans remain skeptical about the U.S. as a partner. The Snowden affair (which revealed widespread NSA hacking of European leaders), Trump’s 2016 election, the Cambridge Analytica scandal and most recently the Facebook Papers have led to not only a geopolitical — but also a digital — estrangement in the Euro-Atlantic relationship. In a recent German Council on Foreign Relations Survey, 92.7% of Europeans believe that Europe is overly dependent on U.S. companies for cloud computing, 79.8% on AI and 54.1% on high performance computing. 54% of European stakeholders say they would like to remain independent in a tech confrontation between the U.S. and China, whereas 46% would like to move closer to the U.S.

Meanwhile, there is a question of whether Europe’s two key powers, France and Germany, are invested in the TTC. Both France and Germany’s support for the idea of “technological sovereignty” in recent years poses a question of how invested Europe’s biggest powers really are in the TTC’s success.

The transatlantic relationship was built in the industrial era of coal and steel; now, in the digital age of semiconductors and AI, the TTC is a bridge to ensuring the Euro-Atlantic alliance can confront the rise of techno-authoritarianism around the world. Both sides get it. Perhaps that’s what worries them the most.

Read more from the TechCrunch Global Affairs Project

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Can Europe compete in the quantum ‘space race’?

Alice Pannier Contributor
Alice Pannier is a Research Fellow at the French Institute of International Relations (IFRI), where she leads the Geopolitics of Tech program. She is the author of "Rivals in Arms: The Rise of UK-France Defense Relations in the 21st Century" and co-author, with Olivier Schmitt, of "French Defense Policy since the End of the Cold War".

The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics.

Quantum information science has long languished in an academic corner of the tech sector. But recent advances mean that the sector has taken on geopolitical significance. With several nations rushing to develop their own quantum systems, the quantum competition has started to resemble a new “space race.”

With the U.S. and China leading the way, European countries are feeling the pressure to step up their game, and several countries, as well as the European Union itself, have made a big push to invest in this space. But are European efforts too late and too fragmented to compete with the two tech giants?

U.S.-China: A race to the quantum advantage and beyond

Quantum computing seeks to exploit the counter-intuitive properties of quantum physics (that is to say, physics at the atomic or subatomic scale), such as entanglement and superposition. To do so, a quantum computer manipulates the states of particles (ions, electrons, photons) using lasers or electric and magnetic fields.
Read more from the TechCrunch Global Affairs Project

The United States and China have the most advanced quantum capabilities, with both claiming to have reached “quantum supremacy,” i.e., the ability to solve mathematical problems that would take a classical computer millions of years.

China’s efforts have been ongoing since around 2015, when the Edward Snowden revelations prompted anxiety over the extent of U.S. intelligence activities. Anxious about American capabilities, Beijing intensified its focus on quantum communications. Estimates of China’s spending on quantum research vary, but the country is the leading holder of patents in quantum communication and cryptography hardware and software. Chinese efforts in quantum computers are more recent, but Beijing has been moving fast. In December 2020 and again in June 2021, researchers from the University of Science and Technology of China (USTC) made credible claims to have achieved “quantum supremacy.”

Washington woke up to the possibility of China’s lead in quantum technologies when Beijing demonstrated its capacity in satellite-based quantum communications in 2016. In response, then-President Donald Trump launched a $1.2 billion National Quantum Initiative in 2018. Meanwhile — and perhaps most importantly — big technology firms started pouring huge sums into their own quantum research. IBM, which introduced the first two-qubit computer in the 1990s, is now exporting its Quantum System One machine. Though newer to the field, Google claimed to have achieved quantum supremacy in 2019 with a 53-qubit quantum processor based on superconductors.

Technologies with geopolitical implications

Driving China, the U.S. and other countries is a fear that lagging behind in quantum computing will pose cybersecurity, technological and economic risks.

First, a fully functioning quantum computer could allow an adversary to break any public encryption key currently in use. While it would take a classical computer 300 trillion years to crack a 2,048-bit RSA encryption key (used to secure online payments), a quantum computer with 4,000 stable qubits could in theory do the same in just 10 seconds. Such technology could be less than a decade away.

Second, European governments fear the consequences of becoming caught between American and Chinese quantum competition. Chief among those is quantum tech becoming subject to export restrictions. These should be coordinated among allied countries. Europeans remember how the U.S. embargoed the export of state-of-the-art computer equipment to France during the Cold War for fear that the technology could fall into Soviet hands. This motivated France to develop and support a national supercomputer industry.

Today, America’s European partners are concerned that in a tech cold war, they may struggle to access critical technologies or trade technologies with third countries. In addition to expanding its list of controlled items, the U.S. is adding more and more Chinese organizations to the “Entity List” (e.g., Chinese supercomputing centers in April 2021), thereby blocking technology exports — including from non-U.S. companies — to those entities. And as the list of restricted technologies grows, European companies feel the financial consequences in their international value chains. In the near future, some enabling technologies needed to make quantum computers work — such as cryostats — could be placed under control too.

But there are concerns about China as well. China has posed other types of risks to countries’ technological development, including challenging intellectual property rights and academic freedom, and it is well versed in economic coercion.

A final risk is economic. A disruptive technology like quantum computing will have massive industrial implications. While demonstrating “quantum supremacy” may constitute a scientific show of force, most governments, research labs and startups are in fact seeking to harness the “quantum advantage” — i.e., an acceleration of computing power sufficient to provide an advantage compared to classical machines for practical applications.

Considering its many use cases in complex simulation, optimization and deep learning, quantum computing will likely become a thriving business in the decades to come. Some quantum startups are already starting to go public in what is becoming a quantum investment frenzy. Europeans fear losing out on what stands to be a significant part of the 21st century economy.

Is Europe up to the task?

Unlike in most other digital technologies, Europe is well positioned in the global quantum race.

The U.K., Germany, France, the Netherlands, Austria and Switzerland all have significant quantum research capacities and flourishing startup ecosystems. Their governments, as well as the European Union, are making significant investments in quantum computing hardware and software and in quantum cryptography. In fact, the U.K. launched its National Quantum Technologies Program in 2013, well before the U.S. and China. As of 2021, Germany and France are just behind the U.S. in terms of public investment in quantum research and development, with approximately €2 billion and €1.8 billion, respectively.  Amazon is even developing a quantum computer based on a self-correcting quantum bit (qubit) technology discovered by the French hardware startup Alice & Bob.

So, what stands in Europe’s way to become a serious challenger to the U.S. and China?

For one, the challenge for Europe is less fostering the emergence of startups but keeping them. Most promising European startups have a tendency not to grow on the continent due to inadequate venture capital. Europe’s AI successes are a cautionary tale; many recall how Google (Alphabet) acquired DeepMind, one of the most promising British startups. The story is repeating itself with PsiQuantum, a leading British startup, which settled in California in search of capital.

To counter that risk, European governments and the European Union have launched several initiatives in emerging and disruptive technologies with the goal of building European “technological sovereignty.” But then, does Europe even adopt its own technologies? EU procurement rules do not necessarily favor European suppliers in contrast to the U.S. “Buy American Act.” Today, EU member states are reluctant to favor European technology providers when more advanced or cheaper foreign options exist, as Germany recently did with its acquisition of an IBM machine. This may change with the International Procurement Instrument, a new piece of legislation currently being negotiated in Brussels, which would introduce a principle of reciprocity in the openness of public procurement markets.

Alongside the government, private companies will play a key role in shaping the future quantum industry through their choices of investments, partnerships and adoption of technologies. The choice to opt for IBM systems in the 1960s and 1970s has had a lasting effect in structuring the global computing market. Similar choices in quantum computing have the potential to shape the field for decades to come.

The dissatisfaction in Europe today about the scarcity of world-leading European tech firms only underscores the significance that early choices in the support for and adoption of technologies can have. If Europe is to be competitive in quantum with the U.S. and China in the years to come, it must not just maintain its current momentum but increase it.

Read more from the TechCrunch Global Affairs Project

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How much money can crypto gaming absorb in the near term?

Welcome to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by the daily TechCrunch+ column where it gets its name. Want it in your inbox every Saturday? Sign up here. 

Hello and happy weekend! Today we’re talking insurtech, SPACs and how well direct listings can manage the IPO pricing question. But first, crypto.

The crypto beat was busy this week, with Coinbase earnings giving us a good look into just how busy trading activity was for the asset class in the third quarter. If you recall Robinhood’s earnings, what Coinbase had on offer won’t prove a surprise. After the American equity investment platform’s crypto revenues fell sharply, Coinbase also posted declines in its aggregate trading volumes and revenues compared to the second quarter of the year.

In related news, FTX’s U.S. operations disclosed some of its own performance data, indicating that growth is still possible in the crypto trading market despite a general downward trend in the three-month period wrapping up this September.

All that’s to say that the crypto market continues to evolve — molt? — rapidly. From one quarter to the next, activity surrounding major chains and smaller coins can fluctuate rather sharply. For companies like Coinbase, this means variable revenues and profits.

But as Coinbase is cash rich, near-term ups and downs aren’t that big of a deal, so long as the long-term trajectory of crypto activity remains positive.

Another set of companies betting on a long-term upward trend are crypto-gaming companies. And they have been very busy in recent months. For example, Patron raised a $90 million fund to invest in crypto-based games; Mythical Games raised $75 million this summer to build crypto games; a trading card game called Parallel raised at a $500 million valuation; and Axie Infinity raised a round earlier this year.

This week, Forte raised $725 million for its crypto-gaming infrastructure. This leads to me to wonder just how much capital the blockchain games can absorb in the near term. After all, games have historically proven to be poor venture capital investments, at least per traditional venture capital thinking. Why? Because games can prove rather hits-based, with certain titles performing well but fading in revenue terms after their launch.

Investors like strong, predictable, growing incomes. And investors like much less uneven revenues and uncertainty. The type of uncertainty that can come with new titles having the chance to flop.

And yet, slathered with crypto, gaming companies are hot? Are the economics and social risks that games have long demonstrated — the very things that made them less attractive venture wagers — improved when they are built with a blockchain backbone? I don’t see why that would be the case. But investors are putting capital into them as if they have. Let’s see how the various wagers pay out, or don’t, in time.

Insurtech, SPACs and data

We’re getting through earnings season at the moment, with all the majors behind us and smaller companies occupying much of our time and energy. From a number of calls this week, the following observations:

Insurtech is hard: On the heels of news that Metromile was selling itself to Lemonade, you would be forgiven for wondering about the fate of public insurtech companies broadly. However, Root’s earnings this week gave its share price a huge boost, after investors liked what they saw from the auto-focused insurance company.

But that doesn’t mean that it’s all clear sailing ahead for Root, even as one of its rivals finds a new corporate home. Talking with Root CEO Alex Timm this week, The Exchange got a view into how complicated it can be to time growth in the insurance space.

The CEO explained that Root has dialed back its near-term growth goals given market uncertainty regarding how to price coverage, a problem that many auto insurance companies are dealing with at the moment; this is not a Root issue, I mean to say. It turns out that inflation pressures on the cost of cars and labor are making it difficult to determine the cost of insurance, leading to more caution from the various players in the market when it comes to attracting new policies.

This doesn’t mean that Root is in any long-term trouble, but it does indicate how macro conditions can make life tough even for tech and tech-enabled businesses. Root is a bet data and smart software can better price insurance over time. But the company, right after it went public, is running into a shift in the underlying economics of its business that is effectively unprecedented, per Timm. Perhaps that complication is partially why Metromile buckled and sold its operations so quickly after its public debut.

SPACs can be ok: This week NextDoor began to trade as a public company (original notes here). The Exchange caught up with its CEO, Sarah Friar, on its first day of trading to chat about her choice of listing vehicle.

According to the executive, NextDoor had to leave some of its product plans on the cutting room floor in late 2020, giving the company a general desire to raise more capital. And as NextDoor was able to get public-market ready and raise a chunk of money via its SPAC partner at a prearranged price, the deal made sense for her company.

That’s a somewhat standard perspective, and one that details why SPACs were popular earlier in 2021. But things have changed since, with many SPAC-led combinations seeing some of their backers pulling their capital out after they announced takeover targets and moved to consummate the deals.

NextDoor showed that the redemption issue is not endemic. After stating in its first release that its SPAC partner would bring $416 million in cash to its business, the final tally was $404 million. That’s a super-low ratio of lost capital. And NextDoor shares are trading nicely in the wake of its combination. A SPAC-led debut, it appears, can still work well in certain cases.

Direct listings aren’t a pricing panacea: Amplitude debuted via a direct listing recently and reported its first set of earnings this week as a public company. The company has traded well since it listed, closing the week worth $73.86 per share, far above its $35 reference price.

Per Yahoo Finance, the company is worth just over $8 billion today. Given that the company chose a direct listing over a traditional IPO to avoid being mispriced, The Exchange was curious if the company was irked that it had raised at roughly a $4 billion valuation earlier this year, ahead of its direct listing. After all, it direct listed to avoid pricing issues, raising from private investors beforehand, similar to what Roblox executed.

Amplitude CEO Spenser Skates said that he felt good about the direct listing, arguing that a traditional IPO would have led to even greater price distortions. To which we say, maybe. But seeing private-market investors get a quick double on their money appears to be a similar cash-left-on-the-table moment as a mispriced IPO would generate, just with a different cohort of rich folks getting the lucre.

And, friends, with that, back to the weekend!

— Alex

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China’s next generation of hackers won’t be criminals. That’s a problem.

Dakota Cary Contributor
Dakota Cary is a research analyst at Georgetown’s Center for Security and Emerging Technology (CSET), where he works on the CyberAI Project.

The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics.

Criminals have a long history of conducting cyber espionage on China’s behalf. Protected from prosecution by their affiliation with China’s Ministry of State Security (MSS), criminals turned government hackers conduct many of China’s espionage operations. Alarming as it may sound, this is not a new phenomenon. An indictment issued by the U.S. Department of Justice last year, for example, indicated that the simultaneous criminal-espionage activity of two Chinese hackers went back as far as 2009. In another case, FireEye, a cybersecurity company, alleges that APT41, a separate cohort of MSS hackers, began as a criminal outfit in 2012 and transitioned to concurrently conducting state espionage from 2014 onward. But there’s reason to believe that since then, China has been laying the groundwork for change.

Read more from the TechCrunch Global Affairs ProjectA spate of policies beginning in 2015 put China in a position to replace contracted criminals with new blood from universities. The CCP’s first effort in 2015 was to standardize university cybersecurity degrees by taking inspiration from the United States’ National Initiative for Cybersecurity Education — a NIST framework for improving the U.S. talent pipeline. One year later, China announced the construction of a new National Cybersecurity Talent and Innovation Base in Wuhan. Including all of the Base’s components, it is capable of training and certifying 70,000 people a year in cybersecurity.

Along similar lines, in 2017, the Central Cyberspace Administration of China announced an award for World-Class Cybersecurity Schools; a program that currently certifies eleven schools in the same way some U.S. government agencies certify universities as Centers of Academic Excellence in cyber defense or operations. But having a new pool of talent untainted by criminal activity is not reason enough to change China’s operational approach.

Efforts to professionalize state hacking teams are also directly linked to President Xi’s political goal of reducing corruption. Xi’s recent purge of China’s state security services demonstrates the risk officials run by enriching themselves using government resources. Patronage relationships between contract hackers and their handlers are precisely the type of profiteering behavior that Xi has targeted in his sweeping anti-corruption campaign.

In an increasingly cutthroat environment, officers running operations that draw international ire or foreign criminal indictments are vulnerable to being turned in by rivals. Officials targeted by internal investigators may find themselves locked up in “black jails.” China’s security services will shed their relationship with underground hackers as they weed out corrupt officials and directly hire hackers.

The implications of these measures suggest that the Chinese hackers that the world’s companies and intelligence services are accustomed to defending against will be far more professional by the end of the decade.

A more capable China will behave differently than the China we see today. Given its reliance on illicit hackers to hide its criminal and espionage activities, the Ministry of Public Security has tolerated some cyber criminals’ Chinese operations, despite the problems they cause. Once criminal activity is no longer the norm, China’s security services will find that they can move these operations in-house, since government spying is an accepted behavior in international relations. As a result, China’s Ministry of Public Security may conduct more operations against cyber criminals. Analysts should be on the lookout for a rise in these internally focused, anti-crime operations, which would be a good indicator of a change in operational tactics.

This shift in Chinese cyber capabilities will be felt abroad as the list of targeted countries and entities grow. Espionage priorities that long languished near the bottom of the list are likely to  receive renewed attention as the roster of state hackers swells. These campaigns will not be more “sophisticated” than past operations, since China’s hacking teams are already on par with the best. But they will become more frequent.

As China’s security-backed hacking steadily sheds its veneer of criminality, we can expect to see a slowdown over the next decade in cybercrime conducted by contract hackers and others connected to the state. But this trend away from thuggery will be paired with a rise in espionage and intellectual property theft. In hindsight, China’s reliance on criminal hackers will seem like a vestige of the old MSS — corrupt and even amateurish.

While this shift will be gradual, we can expect certain indicators, like rumors of crackdowns within the security services or reports of disappearing or indicted criminal groups. Over time, we can expect to see the gradual separation of technical indicators between known criminal and espionage hacking teams.

But since spying isn’t against the rules, U.S. policymakers will need to continue prioritizing cybersecurity across government agencies, the defense industrial base and critical infrastructure operators. The White House is already moving in this direction; in August 2021 the administration rallied NATO allies on cyber policy and identified 500,000 unfilled cybersecurity jobs. For its part, the NSA launched the Cybersecurity Collaboration Center earlier this year to increase systemwide cybersecurity.  The United States already uses competitions like CyberPatriot to push students into the well-developed cybersecurity talent pipeline. Creating new programs aimed at encouraging job retraining through community colleges certified in cyber defense would leverage existing resources but may attract new students who missed the K-12 pipeline the first time around.

Above all, policymakers should remain vigilant. A decline in China’s use of criminals doesn’t mean the threat has disappeared, only changed. The U.S. government should be prepared to seriously consider the full range of options to meet the challenge of China’s next generation of hackers.

Read more from the TechCrunch Global Affairs Project

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Daily Crunch: Berlin-based revenue workspace Weflow takes aim at ‘Salesforce fatigue’

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PST, subscribe here.

Hello and welcome to Daily Crunch for November 12, 2021! It is Friday, my friends, the end of yet another week. The TechCrunch team hopes that you are healthy and ready for a rest. If you still have energy in the tank, Equity has an episode that digs into how Tiger is putting capital to work, while the Found team has an interview with Megan O’Connor from Nth Cycle that is worth checking out. Now, the news! — Alex

The TechCrunch Top 3

Startups/VC

  • What are recipes worth? A startup called Foody is wagering that they have real value — and that consumers will pay for them. The startup has raised $1.5 million for its food creator marketplace. That people will pay for recipes is at once true and dated. Yes, people pay for them, but largely in book format. Precisely how that model will translate to the digital realm is less clear.
  • Promoted.ai raises for better marketplace search: Perhaps Foody will become a customer of what Promoted.ai is building, namely technology to help consumers find what they really want to buy on digital marketplaces. It just raised $2 million. Given how much capital has been invested in marketplace startups, it isn’t hard to come up with a potential customer list for what Promoted is building.
  • Weflow wants to make Salesforce less irksome to use: First, a note that Weflow is not Webflow. The latter is a business that helps folks build no-code websites that has raised oodles of cash. Weflow is a tool to help salespeople keep their CRM up to date with less pain. And it has not raised nine figures of capital, instead adding a more modest $2.7 million to its own coffers this week.
  • Bellabeat’s new health wearable shows promise: From the hardware neck of the woods today, TechCrunch gave the Ivy wearable a try. Per our own Amanda Silberling, the wristband device wants to help users track “sleep patterns, heart rate, menstrual cycles, steps, hydration, activity, mindfulness and more.” But, she writes, its software left us wanting more.
  • $3.4M for electric motorcycles in Africa: Proof that not all startup activity in Africa is fintech-related, Zembo just raised capital from Toyota and others for its EV business. Zembo is notably based in France but focused on Africa, we should note, and sells its vehicles on a lease-to-own program.

Whether to sell your company is always going to be a huge decision for founders

Now Selling banner on building.

Image Credits: temmuzcan / Getty Images

To better understand what goes through a founder’s mind when considering a sale, Ron Miller hosted a panel at TC Sessions: SaaS with:

  • Jyoti Bansal, who sold his previous startup AppDynamics to Cisco for $3.7 billion.
  • Monica Sarbu, who sold her startup Packetbeat to Elastic.
  • Nick Mehta, who sold his email archiving startup LiveOffice to Symantec.

“It was four days of long board meetings and discussions and debates and fights and getting to the decision. So it wasn’t an easy decision,” said Bansal.

“Even though, at $3.7 billion, everyone thought it should probably be a no-brainer; it wasn’t.”

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

  • How Microsoft moved to the cloud: Based on an interview with Jared Spataro, corporate vice president for Microsoft 365, our own Ron Miller sketches out how the well-known software giant had to lead its customers into the cloud, despite having a simply huge legacy software business.
  • Instagram updates its TikTok clone: The drumbeat of product news from major social networks working to slow TikTok’s roll — scroll? — continued today, with Instagram adding both text-to-speech and voice effects to Reels, its competing service.
  • Facebook to become a live shopping hub: Elsewhere from Meta, Facebook is “rolling out new shopping features” today, including a group shopping experience and “a test of Live Shopping for Creators.” How well live shopping will fare in, say, the United States remains to be seen, but Meta is not the only company working on the product type. Startup Talkshoplive is in the business as well, and Pinterest has also shown interest.

TechCrunch Experts

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TechCrunch wants to help startups find the right expert for their needs. To do this, we’re building a shortlist of the top growth marketers. We’ve received great recommendations for growth marketers in the startup industry since we launched our survey.

We’re excited to read more responses as they come in! Fill out the survey here.

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Daily Crunch: Discord CEO says company has ‘no current plans’ for crypto integration

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PST, subscribe here.

Hello and welcome to Daily Crunch for November 11, 2021. Below we have the first news item I have seen in which a company not diving into crypto was met by cheers, so read on for some narrative violations. In TechCrunch news, Rocket Lab’s Peter Beck is coming to TC Sessions: Space 2021, which has me hype! — Alex

The TechCrunch Top 3

  • Discord backtracks on crypto push: After tweeting out a screenshot of NFTs inside of Discord, the social chat company said that it has “no current plans to ship this internal concept.” Given that every brand with a pulse is trying to smear crypto magic all over itself, the Discord community backlash to crypto integration feels notable.
  • The public is now at risk: Today’s tech boom is different from the dot-com era’s own period of outlandish exuberance. But after a long run of rich valuations and revenue-light companies being mostly constrained to the private market, we’re seeing more risk spill into the pockets of the investing public. It’s something to worry about.
  • GoTo raises $1.3 billion in pre-IPO deal: The hybrid of Indonesian ride-hailing giant Gojek and e-commerce player Tokopedia is not shy about adding funds to its accounts ahead of its public debut. And it could be worth around $30 billion after this latest infusion of cash. When GoTo does in fact go to the public markets, its IPO will make waves around the world.

Startups/VC

Before we dive into a whole mess of startup news, let’s talk about SoftBank. After its first Vision Fund wound down — though results are still trickling in from that particular capital vehicle — it seemed that Tiger and other groups took SoftBank’s leading-investor mantle. But the Japanese telco and investing powerhouse has put $3 billion into India this year alone and could do more next year. That says quite a lot about Indian startups and about SoftBank itself.

  • Stripe for debt: That’s what Sivo is building it appears, by offering access to debt via an API. Stripe, of course, has generated oceans of revenue by offering payments as a service via an API along with a growing stable of fintech products. In essence, Sivo should be able to help startups offer debt products without having to use their own balance sheet as their funding source.
  • Why is everyone obsessed with collectibles? I don’t know, but alternative asset investing is still putting up impressive growth. We can tell that thanks to Alt raising a $75 million round today. It’s currently a platform for buying and selling rare sports cards, or what you might prefer to refer to as IRL NFTs.
  • Instacart wants to bring you groceries tomorrow: Grocery delivery unicorn Instacart is rolling out lower-fee, next-day delivery and partnering with dollar stores for more goods. DoorDash, another delivery company, is also expanding its product remit. Uber Eats as well. It appears that every delivery company wants to deliver pretty much everything, in time.
  • Ro wants to freeze your swimmers: Troubled health unicorn Ro — parent company of well-known ED pill slinger Roman – is in talks to buy sperm storage company Dadi, TechCrunch reports. The expansion into sperm management makes sense given that the company has already done the work to ensure that folks are able to produce said material.
  • More money to help folks buy, sell houses more quickly: It seems that every market will have a few startups that want to make the process of buying and selling homes easier. Because it’s an awful experience everywhere, I suppose. Today’s example is Chilean proptech startup Houm, which has just raised a $35 million Series A.
  • Helium Health buys Meddy: In a notable bit of M&A, Nigeria-based Helium Health is buying UAE-based doctor-booking platform Meddy. Terms were not disclosed, but the transaction underscores how quickly the African and Middle Eastern startup markets are maturing.
  • Today’s Tiger deal is Hive: Berlin-based Hive provides software to help DTC brands manage fulfillment. The company just raised a $34 million round, which might sound small but the company had raised $10 million prior to the new investment.
  • And in case you forgot about SPACs, smart building tech concern Brivo intends to ride one to the public markets, giving itself an $800 million valuation.

Collect and leverage zero-party data to personalize marketing and drive growth

paper, paper craft, arts and crafts, elementary, weather, season, temperature, climate, art, abstract, studio, blue background, cute, humour, funny, playful, science, experiment

Image Credits: Paper Boat Creative (opens in a new window) / Getty Images (Image has been modified)

The advent of new privacy regulations in Europe, California and other regions has forced online marketers to rethink their basic practices.

Instead of surreptitiously skimming intelligence via cookies and invisible pixels, what if marketers just asked consumers for relevant details that would personalize their shopping experience?

“Think of the kind of things you’d tell a store associate helping you find the right gifts to purchase for your family,” says Ben Parr, president and co-founder of Octane AI. “That’s zero-party data.”

In a highly detailed post with multiple examples, he shares different methods for collecting zero-party data to drive dramatically higher conversions and engage customers.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

TechCrunch Experts

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TechCrunch wants you to recommend growth marketers who have expertise in SEO, social, content writing and more! If you’re a growth marketer, pass this survey along to your clients; we’d like to hear about why they loved working with you.

If you’re curious about how these surveys are shaping our coverage, check out this article on TechCrunch+ from Ben Parr, “Collect and leverage zero-party data to personalize marketing and drive growth.” If you have any questions, join a live chat with the author on Wednesday, November 17 at 3 p.m. PST/6 p.m. EST when he joins Walter Thompson for a Twitter Spaces event hosted by the TechCrunch account.

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Congolese volcano refugees create mobile bitcoin payments network

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PST, subscribe here.

Hello and welcome to Daily Crunch for November 10, 2021! I spent the bulk of today on a train being whisked up the Eastern Seaboard back home, which meant that I was reading novels instead of tech news. And that means I am also catching up today. Thank gosh TechCrunch wrote a zillion stories for us both. We have work to do! — Alex

The TechCrunch Top 3

  • Rivian’s IPO revs Wall Street: The public-market debut of electric vehicle company Rivian stormed to a per-share price north of $100 today after pricing its shares at $78. TechCrunch reports that the company’s valuation makes it worth more than GM or Ford, storied automakers with global footprints, and, well, revenues. Something that Rivian has not that much of. The return of high-risk IPOs is really, truly here.
  • Expensify’s CEO talks public debut: TechCrunch caught up with Expensify founder and CEO David Barrett today to discuss his company’s public offering. We wanted to know why he chose a traditional IPO and just how big his company’s market is (Airbase and others are waging war on one another to snag share). More on the company’s economics here.
  • Public investors struggle to grok crypto: Shares of Coinbase are lower today in the wake of its Q3 earnings report. Despite warning investors that its trading incomes would drop in the period, Wall Street was still let down by its numbers. In short, public-market investors appear to be struggling to properly estimate how well crypto-focused companies will perform quarter to quarter.

Startups/VC

Our own Brian Heater is a busy man. He’s busy getting his robotics-focused newsletter ready for launch — it’s called Actuator and you can sign up here for free. And he wrote a huge feature for the site on Bowery, which plays in the vertical farming space. So, we had him on the Equity podcast to chat farming that is more tall than broad.

  • Meet the Autism Impact Fund: A new venture capital fund wants to “revolutionize the status quo for diagnosing, treating and living with autism” through investing. It wants to put capital to work in products and companies that may have a positive impact on the larger autism community. Which sounds pretty cool.
  • Now you can subscribe to trees: No, this is not a cannabis joke. A startup called Ecologi is building a subscription service that lets consumers pay regular fees to help plant lots of trees. Trees consume carbon, of course, changing the global climate balance. It just raised $5.75 million. Trees as a service! TaaS!
  • There’s still white space in sales tooling: That’s the lesson I am taking away from Momentum’s $5 million seed round. The company is building a Slack integration that wants to bring the sales processes closer to other parts of an org. Which is ambitious, given that a CRM giant now owns Slack.
  • Cacheflow leaves stealth, announces $6M round: The SaaS buying experience is old-fashioned, Cacheflow reckons, giving it a shot at shaking up how customers pay for software. The startup, announcing itself to the world for the first time today, is offering a way for software companies to get paid all at once, while allowing customers to pay ratably.
  • Mega-round #1: ControlUp has raised a $100 million round to continue scaling its IT-focused service that helps improve desktop performance.
  • Mega-round #2: Workato has raised $200 million to help enterprise customers automate more of their regular work. The company is now worth $5.7 billion.
  • Daily raises $40M for its video-focused software: I recall when Daily raised a $4.6 million seed round. That was back in May 2020. Now the company is flush with a new eight-figure round that our own Christine Hall notes will help the company continue to build and sell its API-delivered video embed service.
  • Tiger likes Moov’s moves: So it put a $41 million Series A into the company. What does Moov do? It has built a marketplace for used manufacturing equipment. Given the role that used IRL tooling is playing in the global chip shortage, the company could be onto something major.
  • Latin American Toast is big business: Not the burned bread, but the Toast model. Toast, a U.S. software and hardware and payments company, has soared in value in recent quarters. Zak wants to bring a similar business to Latin America. And it has raised $15 million to do so.
  • To close out our startup coverage, TechCrunch wrote about how the eruption of a volcano in the Democratic Republic of the Congo led to the displaced using bitcoin to rebuild their lives. It’s a story worth reading.

Airbnb CEO Brian Chesky discusses the future of work and the one thing he’d do over

Airbnb Inc. Chief Executive Officer Brian Chesky As Company Plans Africa Expansion

Image Credits: Waldo Swiegers/Bloomberg / Getty Images

In an expansive interview, Airbnb CEO Brian Chesky and TechCrunch Managing Editor Jordan Crook looked back at how the travel company has adapted since the beginning of the pandemic.

Their chat covered topics as far afield as Airbnb’s “work anywhere” policy, how it’s addressing liability issues for hosts and his biggest regret from the COVID-19 era:

I overrode the host cancellation policy and refunded more than a billion dollars of guest bookings. I think it was the right thing to do. But I did it unilaterally, without consulting the hosts. They got really pissed off and it broke some trust with some of our host community.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

  • YouTube gives bad vibes the boot: Alphabet’s video giant YouTube is pulling dislike counts from view across its service. The goal is to prevent abuse, which makes some sense. It’s a bummer that humans are such regular jerks that this is a needed product move, but here we are.
  • Twitter is building a crypto team: Given how much Twitter CEO Jack Dorsey loves bitcoin — over and above other blockchains, which is a subject for another day — it is not a surprise that his social media company is building a crypto team. Twitter has previously tinkered with NFTs and crypto tipping.
  • Instagram wants to help you use it less: Users of the Meta-owned social service can now enable reminders to stop scrolling after a set time period. Recall that Meta is Facebook but under a new moniker.
  • Apple builds SMB hardware service: Keeping hardware up to date and safe is no small challenge. That’s why companies like Jamf are in business. But now Apple is rolling out “the beta of a device management solution called Apple Business Essentials aimed squarely at businesses with less than 500 employees.”
  • Google fails to get rid of huge EU settlement: The U.S. search giant’s challenge to a huge fine stemming from a 2017 case with the European Union over its shopping product has largely failed.
  • And, finally, the U.S. Department of Justice is suing Uber over part of its product, which it claims may discriminate against users with disabilities.

TechCrunch Experts

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If you have a software consultant that you think other startup founders should know about, fill out the survey here.

Read one of the testimonials we’ve received below!

Consultant: Innofied

Recommended by: Ravil Sookhoo, Insta Express

Testimonial: “[They impacted our business] by creating software and mobile apps that overall connect aspects of our business to make processes easier. They have helped with our e-commerce website, management software to handle orders and delivery solutions.”

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Zynga CEO on its blockchain gaming division and navigating the advertising crisis

Beating the street and its own guidance, Zynga reported record third-quarter revenue of $705 million, up 40% from the same period last year and reaching its largest mobile audience ever of 183 million monthly active users, up 120% year over year.

Despite warning in the second quarter of a material impact from Apple’s privacy policy changes that caused a dramatic 30% sell off in its stock from August 5 through November 4, Zynga’s share price jumped today on news that it had better than expected user-acquisition performance and is back on track to finish the year strong.

Zynga CEO Frank Gibeau

Zynga CEO Frank Gibeau. Image Credits: Zynga

TechCrunch spoke with Zynga CEO Frank Gibeau on how the mobile game giant has been able to navigate the advertising crisis while making moves to expand cross-platform and onto the blockchain.

Weathering the storm

On April 26, when Apple changed its IDFA (Identifier For Advertisers) and required developers to use its ATT (App Tracking Transparency) tool to allow users to opt out of being tracked across iOS apps, it shook the mobile ad ecosystem. New users gained during the lockdown dropped off in droves as pandemic restrictions lifted but as targeting became more difficult, acquisition costs soared. Companies began to report a 15%-20% hit to revenue according to marketing firm Consumer Acquisition. Among those most affected were ad platforms like Snapchat, advertisers like Peloton and Zynga, which is both an ad platform and advertiser.

“The midpoint of this year was tough,” Gibeau told TechCrunch. “We were one of the first ones out of the chute with the combination of IDFA and the great reopening demand issues. To navigate, we pulled back on our ad spend and began to experiment with new tools and techniques, and by September, we started to see yields come back to normal.”

Gibeau said they waited to launch FarmVille 3 until growth rates returned, and he was excited to see the game shoot to the No. 1 and No. 2 spots on the top free iPad and iPhone app store, respectively, after its November 4 launch.

“I’m happy to report that we feel the worst is behind us and we are scaling up our spending for new games as we head into the fourth quarter. The key to navigating this period has been how we use our first-party data with the Chartboost platform,” he said, referencing the ad network Zynga acquired earlier this year.

“We have a lot of data about what happens when players come into our games, the events they play and what advertisers are doing in our existing supply. First-party data allows us to build models that make predictions about the types of returns or auctions that would be beneficial to us,” he said.

Zynga is also partnering with Unity, Google and Iron Source, among others, to find ways to better target players.

“There are a lot of smart people attacking this problem. It’s more a function of time than there’s not going to be a solution,” he said. “Over the long term, Apple is building a capable platform to support a healthy advertising market while protecting player privacy, and we’re happy to work with them on this,” he said.

Rocking hypercasual

Although 80% of Zynga’s business is subscriptions and microtransactions from in-app purchases, a fifth of the company’s revenue is from advertising, a fast-growing segment being driven by the popularity of hypercasual games, which are games with simple interfaces that can typically be played in fewer than 30 seconds.

In the third quarter, Zynga nearly doubled its advertising revenue over the prior-year period, said Gibeau, attributing its success to Rollic, an Istanbul-based game studio that Zynga acquired a year ago that helped it become a top-three publisher in the category.

“If you look at the number of installs on the app stores, hypercausal is the largest category. These are very inexpensive games that reach massive audiences and utilize advertising as its primary means of monetization. It’s a very lucrative place for us to be and a great feeder of users into our network that ties into our ambitions to create an at-scale publishing and advertising platform that will be a growth driver for us into 2022 and beyond,” said Gibeau.

All roads lead to the metaverse

Zynga’s next big game release is Star Wars: Hunters, which is soft launching on Android in select markets next week and testing on iOS and Switch in the New Year, Gibeau said. It’s the company’s first cross-platform game on console and FarmVille 3 was its first cross-platform launch on macOS.

Gibeau explained his interest in making Zynga’s mobile games playable on other platforms.

“FarmVille fans and Star Wars fans are everywhere, so it really behooves us to be platform agnostic and make our experience available as many places as possible,” he said. “At the end of the day, we’re a social game company that believes it’s more fun to play games together than by yourself. So as part of our culture, we like to innovate and try new things.”

Since 2020, Zynga has had games on Snapchat, Google Nest and Amazon Alexa, and just released its first game on TikTok called Disco Loco 3D, which is a free-to-play music and dance challenge.

TikTok ventures into mobile gaming, initially in partnership with Zynga

“In gaming you can get caught out if you miss the next platform. If you get that wrong, it can be pretty painful. So we thought it would be cool to develop experiences on these social platforms to see if there’s any interest. With Snapchat, we partnered with them to help them figure out how to make gaming more a part of their ecosystem, and we’re seeing some good results — but it’s early days,” said Gibeau emphasizing that these games are intended to be proof of concept more than revenue generators.

With Netflix Gaming having launched on November 2 with former Zynga chief creative officer Mike Verdu at the helm, Gibeau said, “For Netflix, there’s a lot to learn in terms of how they want to approach the subscriptions end of the business and how their users interact with the games, so I don’t know if they’re ready yet for third-party content, but it would be great to talk with them at some point in the future.”

He added, “Whether it’s Netflix or Roblox or Epic or Valve, if they have a platform and it makes sense for our content to be there and reach an audience, we’ll definitely investigate it.”

But perhaps Zynga’s biggest venture ahead lies with the hire of former EA executive Matt Wolf to head up its new blockchain gaming division. As the NFT craze sweeps the gaming industry, blockchain startups like Mythical Games, Animoca and Forte have reached billion-dollar valuations in the past few months to help developers create permanent collectible items that can be used across games.

“There’s a lot of capital and talent heading into the space,” said Gibeau, explaining the timing of the decision. “Our founder and chair, Mark Pincus, and longtime board member, Bing Gordon, are very hot on the sector and we believe that blockchain is going to be part of the fabric of gaming long term.”

Gibeau said Wolf is setting up a skunkworks project to identify the best path forward and will be looking at things like how owning a farm in the FarmVille franchise could drive greater engagement and retention.

“We plan to move at Zynga speed so you should start to see some things from us in the coming months,” he said.