As Coinbase falters, Binance.US is waiting in the wings

As the largest publicly traded crypto exchange in the United States, Coinbase has become something of a household name. But as the going gets tough in the crypto markets, the company seems to be fumbling the bag, leaving it vulnerable to competition.

Coinbase’s stock price is down nearly 80% from where it started the year and it recently made headlines for laying off one-fifth of its staff. The company posted a $430 million loss in the first quarter of 2022, underperforming Wall Street analysts’ expectations. Its trading volumes and number of monthly transacting users were both down from Q4 last year — bad news for a company that depends heavily on transaction fees for its revenue.

The exchange got over its skis quicker than even Coinbase itself probably imagined, a point evidenced by its decision to rescind job offers last month from candidates who had already accepted them. Its competitors, though, have been lying in wait for their moment to close in on the U.S. market. Now, sensing Coinbase’s moment of weakness, the two largest crypto exchanges in the world by volume (Coinbase is third globally) — Binance and FTX — are hoping to seize their opportunity stateside.

The three crypto giants all have different established customer bases and are trying to steal each other’s market share. Retail investors comprise around 95% of Coinbase’s transaction revenue, according to its latest quarterly filing. FTX, in contrast, already has a strong institutional trading business anchored in its founder and chief executive Sam Bankman-Fried’s background working at a quant hedge fund.

SBF, as he’s known in the crypto world, has been pulling out all the stops to gain retail customers, including introducing zero-fee U.S. stock trading in May, to try to turn FTX into a one-stop shop for the retail investor’s needs. After all, if Coinbase ascended to the No. 3 spot buoyed almost entirely by U.S. retail investors, its decline presents a valuable opportunity for global, institutionally focused exchanges to poach its users and boost their own trading volumes.

It makes sense, then, that Binance has its sights set on luring more retail investors, but the largest global exchange is still a bit of a dark horse in the race for the U.S. market as it battles against FTX for customers. Its Binance.US division saw spot trading volumes below $300 million as of July 12. That’s a drop in the bucket compared to its global business, which saw volumes of $10 billion for the same period — about seven times higher than volumes at both FTX and Coinbase.

Today, 70% of trading volume on Binance.US, the American offshoot of the global exchange, comes from institutional customers, its CEO Brian Shroder told TechCrunch in an interview. Still, retail investors bring in more revenue overall, in part because of the steep discounts Binance.US offers to its highest-volume customers, he added.

Binance is also taking a markedly different approach from FTX in luring U.S. retail investors, focusing on its core competency in crypto.

“Some exchanges want to go back to stock trading and target that market. That’s, again, not a wrong or right approach. We are a pure web3 company. We’re not going back; we’re moving forward. We want to build more web3 tools,” Binance founder Chanpeng Zhao told Decrypt in an interview this week.

The exchange is also taking a less flashy tack when marketing in the U.S. While other competitors including Coinbase, FTX and Crypto.com were spending millions of dollars on Super Bowl ads during the crypto bull run, Binance.US stayed relatively quiet.

Under Shroder’s tenure, Binance.US seems to be reversing its reputation, once marred by rapid management turnover and ongoing regulatory battles, and pulling ahead in the fight to win over the U.S. retail investor. From a customer perspective, its strategy is undeniably appealing — undercut competitors by offering lower fees.

Coinbase’s fees are notoriously high at up to 3.99% for certain spot trades compared to FTX.US, which charges up to 0.20%. Binance.US, meanwhile, reaffirmed its commitment to keeping costs low for its customers last month when it launched fee-free bitcoin spot trading for all users, saying it is the first U.S. crypto exchange to have done so, though it’s worth noting that exchanges still make money from the spread on trades even if they don’t charge an upfront fee. It also rolled out a staking product last month that it claims provides some of the highest APY rates compared to its competitors and said it plans to add fee-free trading for more currencies in the future.

“On the cost side, it is unquestionable that we are the lowest-cost provider in this space,” Shroder said.

When asked about how Binance.US is able to provide above-market yields from its staking product, Shroder’s response was: “My guess is that when you look at the other firms having much lower APYs, it’s just that they are taking that themselves, and we are passing it on to the customer.”

Naturally, investors gravitate toward lower fees and higher returns, giving the deep-pocketed Binance a potential advantage over Coinbase in that it can afford to sacrifice profits in the U.S. to attract users as long as it makes them elsewhere. The same goes for FTX, which is able to offer no-fee equity trading only because it’s making money in other parts of its business.

Customers have shown enthusiasm for Binance.US, although investors, at times, have seemed more hesitant. Still, this April, the company was able to raise its first external funding from investors in a $200 million round valuing it at $4.5 billion. The fundraise marked a crucial first step on its path to an IPO — a milestone Shroder told TechCrunch he sees happening in the next two to three years.

Armed with the new cash and an extension to the round that Shroder says is coming soon, the company seems well positioned to weather a choppy market. It is actively hiring for 80+ new roles to add to its current employee base of ~400, TechCrunch reported last month.

“What I experienced at Uber, I’m living through again”

Despite Binance’s recent efforts in the U.S. market, its messy history with local regulators makes it easy to underestimate. The company is currently under investigation by the U.S. Commodities and Futures Trading Commission for allegations that it engaged in market manipulation. The U.S. Justice Department and IRS are also reportedly examining whether the exchange engaged in money laundering and tax evasion.

For context, Binance.US launched in 2019 as a standalone entity that licenses its branding and core technology from Binance itself. Zhao is said to have spun off the division in a bid to appeal to U.S. regulators who refused to greenlight the global exchange.

Zhao still wields significant influence over the U.S. exchange today as a major shareholder, although he told Decrypt this week that Binance “is no longer top-down driven” by him. The New York Times reported last August that Zhao held 90% of Binance.US shares.

Zhao’s ownership stake, according to the Times, became a sticking point with outside investors when former Binance.US CEO Brian Brooks tried to raise a venture round for the company as a step to an eventual IPO. Brooks ended up leaving the company just three months after taking over the top job, perhaps in part because the deal fell through.

Brooks isn’t the only top exec at Binance.US who has left unexpectedly. The company’s founding CEO, Catherine Coley, left the company so quietly last May that numerous unconfirmed rumors began swirling regarding her whereabouts. Last October, when Shroder took over the company as its next permanent CEO after Coley, Binance.US’s founding CFO Joshua Sroge made his exit. Last week, after nine months of searching, the company finally filled Sroge’s role, appointing former Acorns exec Jasmine Lee as its new permanent CFO.

In addition to its troubles in the U.S., Binance has also faced heavy regulatory scrutiny in Japan, the EU, Germany, Thailand and other regions. Shroder, who previously led Uber’s Asia-Pacific strategy, likened the exchange to the controversial ride-share startup.

“What I experienced at Uber, I’m living through again,” Shroder said. “When I was at Uber, we were bad boy No. 1, you know? We were the big bad guys picking on the taxi industry and hurting the taxi employees and things like that.”

“What was true about Uber is also true about Binance, globally, and then Binance in the U.S., which is that basically there was an entrepreneur who had an innovative approach to expanding technology that has never been contemplated by regulators,” he continued. “To support that, the regulators had to play catch-up to the technology, and I think that’s exactly what we’re experiencing now in the crypto space.”

Shroder is determined to shepherd Binance.US to its longstanding goal of going public, a milestone he believes it will achieve in the next two to three years. He said Binance.US is strong enough to continue growing even amid tough market conditions, citing the firm’s plans to hire some employees who were let go by Coinbase and competing crypto exchange Gemini as evidence that his company is better positioned for the challenges ahead.

“Coinbase and Gemini have multiple products and services, and they have them out there; they’ve been out there for a while. We historically have only had spot [trading] up until really this [quarter]. So as we add more products and services, which we have a very aggressive roadmap to do. We require more products and tech talent; we require more operations people to actually run those new business units. With the infusion of capital that we just got from our very first seed round, we’re taking all the funding, and we’re plowing it back into growth,” Shroder said.

Only time will tell if Shroder’s ambitious plan will work, but he is determined to reshape the narrative surrounding Binance.US in the public eye. One of the biggest misperceptions the public has about Binance.US, he said, is around its “desire to be a fully compliant and regulated entity,” a goal Shroder said has been central to the company since its founding.

“In the vacuum of you telling your own story, your story is being told by your competitors, or your story is being told based on your click rate. And to the extent that negative headlines drive views more than positive ones, I think that that just creates a misperception in the market that is not based on reality,” Shroder said.

Spotify acquired Heardle, the Wordle-inspired music guessing game

If you tried to play Heardle this morning and got redirected to a Spotify website, that wasn’t a glitch. Spotify announced today that it acquired the Wordle-inspired music guessing game, which the streamer will leverage to support music discovery.

Heardle is one of many beloved spinoffs that have cropped up in the vein of Wordle, the daily word game that became so popular that it was acquired by The New York Times. In the game, you’re served the first second of a popular song. If you can guess which song it is within one second, then congrats, you win! If not, you have six tries to guess, and after each failed guess, the length of the clip doubles. By your final guess, you have a full 16 seconds to see if you’re the music aficionado you think you are.

“For existing Heardle players, the look and feel of the game will stay the same, and it’ll remain free to play for everyone,” Spotify wrote in a press release. “And effective today, players can listen to the full song on Spotify at the end of the game.”

Before its acquisition, Heardle invited players to make donations via ko-fi, a creator tipping platform, to support the game. Now, its ko-fi page is no longer active. Still, some fan-made Heardle spinoffs like Lorde Heardle (… a real missed opportunity to call it “Lordle”) remain online.

Spotify Heardle logo

Image Credits: Spotify

The New York Times acquired Wordle for an undisclosed amount in the “low seven figures,” but Spotify didn’t disclose the cost of its Heardle purchase. The Wordle acquisition seems to have paid off for the newspaper, which noted in its quarterly earnings that the game brought “tens of millions” of new users to the site. After playing the day’s Wordle puzzle, users are served a small ad for another New York Times word game called Spelling Bee. So, it’s probably not a coincidence that The New York Times saw its best-ever quarter for net subscriber additions to Games after its January acquisition.

Though Heardle may not be as popular as Wordle, it’s still a strategic get for Spotify. According to web analytics firm Similarweb, the game peaked at 69 million monthly desktop and mobile web visits in March. Last month, the Heardle website was visited 41 million times.

This acquisition makes sense for Spotify as it attempts to improve music discovery and keep listeners on their app. Like its popular Spotify Wrapped feature, which even included a game this year, Heardle has the potential to drum up organic social media shares for the app. Even Spotify’s own Twitter account has joined in on the fun.

Over the last few years, Spotify has made a number of acquisitions mostly in the podcasting space, such as Anchor, Megaphone and Podz, but this marks Spotify’s first acquisition of a game. Even Netflix is trying to leverage gaming to support its original content.

Update, 7/12/22, 10:45 AM ET with analytics from Similarweb

An Apple store in Maryland makes history by forming the company’s first recognized union

As several Apple stores across the country fight to unionize, workers in Towson, Maryland became the first to win formal recognition. Out of 110 eligible employees, the union received 65 yes votes and 33 no votes.

This historic victory comes after concentrated efforts from Apple to discourage its retail workers from unionizing. Last month, the trillion-dollar company’s vice president of people and retail Deirdre O’Brien sent a video to 58,000 retail staff warning them about the perceived drawbacks of unionizing. O’Brien reiterated anti-union talking points, stating that it would be more difficult to enact change in stores with a union standing between Apple and employees — but workers don’t think that meaningful change is possible without having a formally recognized bargaining unit.

A store in Atlanta was supposed to be the first to hold a union election, but the organizers withdrew their request, claiming that Apple was leveraging illegal union-busting tactics, such as holding “captive audience” meetings. At the time that they filed for an election, the Cumberland Mall store in Atlanta had 70% out of about 100 employees sign union authorization cards, demonstrating their interest in moving forward. Since then, Apple has raised retail pay to a minimum of $22 per hour, up from $20.

Now, the store in Maryland will become unionized through the International Association of Machinists and Aerospace Workers (IAM) and are calling themselves the Coalition of Organized Retail Employees (CORE). When they first announced their intent to unionize, they wrote a letter to Apple CEO Tim Cook.

 

“We have come together as a union because of a deep love of our role as workers within the company and out of care for the company itself,” the letter said. “To be clear, the decision to form a union is about us as workers gaining access to rights that we do not currently have.”

As the first Apple store to unionize in the country, these Towson workers may spark a movement for other retail locations to follow their lead. According to the New York Times, over two dozen Apple stores have expressed interest in organizing, including the Grand Central Terminal store in New York City.

To suppress the growing push for retail unions, Apple is working with Littler Mendelson, the same law firm supporting Starbucks’ anti-union push. But Starbucks workers have managed to win a wave of union elections regardless. In December, a Starbucks store in Buffalo, New York became the first of the company’s coffee shops to unionize. Now, about seven months later, 158 stores in 30 states have unionized.

TechCrunch reached out to an Apple spokesperson for comment, but did not hear back before publication.

Yahoo appoints six new board members, including Jessica Alba

Yahoo announced six new members of its board of directors today, about a year after the internet brand was acquired by private equity firm Apollo for $5 billion [Disclosure: TechCrunch is part of Yahoo].

The new appointees include Jessica Alba, actress and founder of The Honest Company; Aryeh Bourkoff, founder and CEO of the independent global investment firm LionTree, an investor in Yahoo; Fouad ElNaggar, co-founder and CEO of Array and Sapho (acquired by Citrix); Michael Kives, founder and CEO of K5 Global, an incubator with investments in SpaceX, Coinbase, FTX and others; Cynthia Marshall, CEO of the Dallas Mavericks and 36-year veteran of AT&T; and Katie Stanton, founder and general partner at Moxxie Ventures.

The six tech veterans bring varied experience in industries including digital media, private equity, entertainment and more. They join representatives from Apollo and Verizon, as well as Yahoo CEO Jim Lanzone, who joined the company last year after serving as CEO of Tinder.

Six appointees at once is a big change, but the company is already in a period of transition under its new ownership and leadership.

“As we enter into a new era of Yahoo, establishing a powerful board of directors with strategic knowledge of diverse industries will drive greater growth, innovation, and scale,” Lanzone said in a statement. “The intersection of media, tech, product, and content is more relevant than ever and this board represents the best minds in those categories.”

Lanzone told the New York Times that he envisions the company’s media properties as individual products — TechCrunch is TechCrunch, Yahoo Sports is Yahoo Sports. He added that he has gotten multiple offers to buy the assets formerly belonging to AOL that are housed under Yahoo, though this isn’t in Yahoo’s immediate plans. In the future, Lanzone said that he’s looking for potential acquisitions, but we probably won’t see that happen for at least another year.

“As a newly standalone company, Yahoo’s business has experienced incredible momentum, reflected in our financial performance, user engagement figures, and perhaps most importantly, the quality of talent that has joined the company over the last several months,” said Yahoo Chairman Reed Rayman.

Coinbase is testing a real-time employee feedback system. It sounds rough.

The crypto exchange Coinbase is testing a real-time workplace feedback tool called Dot Collector, created by hedge fund billionaire Ray Dalio, founder of Bridgewater Associates.

Slack your colleague to say hello? Perhaps you’ll be rated as being off-task. Babbling too much in a meeting? You’ll get a low rating in efficiency. Tired after a night awake with your sleepless toddler? That’s a low enthusiasm rating. At any moment of the work day, you can rate and be rated, watching as your scores fluctuate up and down.

Per a report from The Information, Coinbase has been using Dot Collector since the first quarter of the year, emulating a less intense version of the practices at Bridgewater.

Dalio is notorious for promoting a culture of “radical transparency” at Bridgewater. The fund has been known to videotape almost everything that happens at the office for reference, and employees walk around with iPads to grade each other on their adherence to Dalio’s Principles, a collection of over 200 rules for business and life.

With the Dot Collector program and Zoom plug-in, any company (like Coinbase) can invite their employees to judge each other’s performance in real time, even while working remotely.

“It’s hard to have an objective, open-minded, emotion-free conversation about performance if there is no data to discuss. It’s also hard to track progress,” Dalio wrote in a tweet about the product. “This is part of the reason I created the Dot Collector.”

But this data-driven, “emotion-free” approach to management ignores the humanity of the people behind products.

Feedback fatigue

Using Dalio’s Dot Collector app, Coinbase employees rate their colleagues based on how well they adhere to Coinbase’s cultural tenets, which include “positive energy,” “efficient execution” and “clear communication.”

An assistant management professor at the Wharton School, Samir Nurmohamed, told TechCrunch that there hasn’t been much research conducted on these kinds of feedback systems — but if a system works in one workplace, that doesn’t guarantee it will translate effectively in others. Plus, different workplaces and industries have different standards for churn. At Bridgewater, 30% of employees leave within 18 months of their start date. While Dalio might be okay with that, other managers might find that concerning.

Bridgewater aims to “champion diversity,” but Nurmohamed says that in the workplace, people are more likely to think favorably about people who share similar views, which may impact the way they rate their colleagues.

“So, if people from marginalized backgrounds are making comments that are not in line with my own values or ideology, I might suddenly penalize them when it comes to these rating systems,” he explains. “The question becomes then, how are these ratings being looked at? If there’s systemic bias across the board, how will they evaluate that data?”

Proponents of Dot Collector argue that the system levels the playing field, since it allows lower-level employees to provide honest feedback to managers. But that transparency comes at the cost of constant surveillance.

“From a managerial standpoint, it might be helpful, right? We know that sometimes, those with more power are more likely to dominate the conversation in meetings, rather than listen,” Nurmohamed says. “But those with less power are already getting worried about what kind of impression they’re giving off. It could induce a sense of fear in the organization.”

These systems may also cause a feeling of “feedback fatigue,” where workers become desensitized to criticism and are less likely to benefit from such constant feedback.

“Sometimes people just have a bad day — something went wrong at home last night, or maybe it’s a virtual meeting and their technology wasn’t good,” Nurmohamed adds. “It could be very exhausting for people at work to constantly get this feedback.”

‘A cauldron of fear’

Dalio credits Bridgewater’s unique and divisive corporate culture as its secret to success — his hedge fund is the largest in the world. Coinbase is similarly known for its company culture, which controversially bars employees from political activism.

In June 2020, a group of Coinbase employees staged a walk out in response to CEO Brian Armstrong’s refusal to support Black Lives Matter. Then, weeks before the 2020 U.S. Presidential election, he instituted this apolitical policy and offered severance packages for those who didn’t want to stay.

Over at Bridgewater, Dalio’s “radical transparency” isn’t always effective in practice either. In one high-profile case, an employee filed a complaint against the company, calling it “a cauldron of fear and intimidation.” That doesn’t seem too surprising a description of a workplace where workers are given iPads for the explicit purpose of judging each other.

According to a 2016 report in the New York Times, this employee alleged that he experienced sexual harassment from his supervisor, but kept this a secret out of fear that he wouldn’t be promoted. He suddenly withdrew the complaint jointly with Bridgewater, but then the National Labor Relations Board filed a separate complaint, arguing that Bridgewater was preventing employees from speaking about negative treatment due to the rigorous NDAs they sign upon employment. Bridgewater reached a resolution with the National Labor Relations Board over the complaint, but like most of what goes on at the hedge fund, the final agreement is secret.

Dalio has denied these claims, noting that “If Bridgewater was really as bad as the New York Times describes, then why would anyone want to work here?” (Money, probably.)

“It can sound mean, crazy or like a cult to people who don’t know what it’s really like,” Dalio said to Business Insider in 2016. “Some people describe it as being like an intellectual Navy SEAL. Others describe it as being like spending time with the Dalai Lama to obtain self-discovery. To me, it’s a wonderful community of people who bust their asses to be excellent.”

It’s still up in the air whether or not Coinbase will continue using Dot Collector. For now, companies using the tool must decide whether they hope to emulate Bridgewater — a profitable, yet intense company — or hone a culture where employee happiness is a priority.

The IRS’s crypto tax partner, ZenLedger, raises $15 million Series B

Government tends to struggle when it comes to keeping up with tech innovation. The past U.S. tax season that just wrapped up in April was particularly stressful for investors and the Internal Revenue Service (IRS) alike, as both struggled with the implications of 2021’s crypto investing boom.

The IRS, for its part, turned to Seattle, WA-based startup ZenLedger for help. Since its founding in 2017, ZenLedger has managed to secure four contracts with the U.S. government worth just over $500,000, none of which are expected to expire, the New York Times reported. While $500,000 seems like a paltry sum for a federal agency, the contracts are significant in the small, hypercompetitive world of crypto tax prep startups. Heading into this year’s tax filing period, ZenLedger had raised just $11.5 million in its latest funding round — significantly less than competitors such as CoinTracker and TaxBit had in their coffers at the time.

Still, ZenLedger gained the trust of the U.S. government, and it’s been doubling down on that strategy ever since, its CEO and founder Pat Larsen told TechCrunch. The company announced today that it has taken in $15 million in fresh funding from investors through a Series B fundraise.

ZenLedger founder and CEO Pat Larsen

ZenLedger founder and CEO Pat Larsen Image Credits: ZenLedger

New investor ParaFi Capital led the round alongside existing investor Bloccelerate VC, which led ZenLedger’s Series A last August. A mix of old and new investors also participated, including King River Capital, G1 Ventures, Main Street Investment, Three Point Capital, Shorooq Partners, VaynerFund, Blizzard the Avalanche Fund, and AngelList Quant Fund, the company says.

“We are moving ahead with more government contracting, which is interesting, because, basically, what we do is we build a plan for crypto. We have to ingest all the transactions from on-chain off-chain, NFTs, decentralized exchange income, sales of NFTs, and clean that up and then report it out,” Larsen said. “That turns out to be extremely useful for an individual when you do accounting and tax. It also turns out to be very useful for accounting firms.”

ZenLedger’s historical focus on individual tax filers rather than enterprise contracts differentiates it in some ways from competitors like TaxBit too, Larsen said. Still, Larsen added that ZenLedger is used by “Big Four” accounting firms, ultra-high-net-worth tax practices and CPA firms.

As for other competitors like TokenTax and Koinly, Larsen said ZenLedger aims to win by building out more, and better, integrations. The company supports over 500 exchanges, 50 blockchains, and 40 DeFi protocols including NFTs today, it says. While Larsen didn’t share details on how much ZenLedger makes in revenue, he said that its revenue has grown 5x from last year.

The company announced it had hired multiple C-suite executives in April, including a CTO and CFO.

The latest funding comes about a month after ZenLedger landed in the spotlight because its former COO, Dan Hannum, was found by the New York Times to have misrepresented his educational and work credentials to the company itself, investors, and the general public. ZenLedger found out about Hannum’s untruths well before the Times article went up and immediately fired Hannum, Larsen said.

In its April announcement, the company said it had hired Greg Adams, an army veteran with an MBA from Harvard, to serve as its new COO. Larsen said the situation with Hannum didn’t affect investors’ attitude towards the funding round, and that ZenLedger had already secured ParaFi as a lead investor before Hannum’s misdeeds were made public.

“Some investors can be pretty fickle, but we didn’t have low conviction investors. We weren’t the super-hot deal where people just wanted to get in because Tiger Global is here or something,” Larsen said. “[Our investors] weren’t here just because other people were in. They were in because they really liked the team and the business. We weren’t any individual token that had some rug pull that just explodes the whole value proposition…nothing changed materially about the business.”

TikTok launches its first creator crediting tool to help video creators cite their inspiration

After years of stolen memes and uncredited dance trends, TikTok today is introducing a new feature that it says will be the first iteration of its creator crediting tools that allow creators to directly tag and credit others using a new button during the publishing process. This button lets creators credit all sorts of inspiration for their content, including dances, jokes, viral sounds, and more — and will help TikTok viewers discover the original creators behind the latest trend by tapping on the credit from the video’s caption.

Larger creators lifting ideas from smaller ones is an issue that’s not limited to TikTok. But as one of the largest social apps on the market, particularly among a younger Gen Z to Millennial demographic, how it approaches the issue of creator recognition matters.

To that end, TikTok says it’s now rolling out a new feature that will allow users to add a credit as part of the publishing process on the app.

Image Credits: TikTok

To access the feature, users will tap on a new “video” icon on the posting page after creating or editing their own video. Once on the video page, users will be able to select a video they have liked, favorited, posted, or that had used the same sound.

After this video is selected, the video tag will be added as a mention in the caption.

Those whose videos were tagged by another creator will then be alerted to this via an alert in their TikTok app Inbox.

Image Credits: TikTok

The feature’s launch follows years of controversy over creator credits and attribution on TikTok.

In particular, TikTok had struggled with some of its top stars sourcing new choreography to perform in their dance videos from creators on other, smaller platforms — like the rival short-form video app Dubsmash, later acquired by Reddit. Many of these unknown creators had helped kick off TikTok’s biggest dance trends in years past, like the Renegade, Backpack Kid, or Shiggy. And many were creators of color, who saw their dances go viral after more famous TikTokers would perform their moves without tagging them as the inspiration. This issue came to a head when The New York Times in 2020 reported on the original creator of the Renegade, then a 14-year-old Atlanta teen, Jalaiah Harmon, who hadn’t received credit for her work after TikTok’s largest creator, Charli D’Amelio, performed her dance for her millions of fans, helping her to further grow her already outsized celebrity status.

The following year, a similar controversy made headlines after TikTok star Addison Rae went on “The Tonight Show” where she taught host Jimmy Fallon a number of popular TikTok dances. Meanwhile, the dances’ original creators, many of whom are Black, remained uncredited in the segment. Later, a number of Black creators went on strike as part of a viral campaign to call attention to the issue of creator credits by refusing to choreograph a dance to Megan Thee Stallion’s latest single.

D’Amelio and some other creators have since begun to handwrite dance credits in their video descriptions, often using the shorthand “dc” for dance credit followed by a tag pointing to the username of the creator. A famous Hollywood choreographer, JaQuel Knight, who made history as the first to copyright his work, has also begun helping other dancers on TikTok get credit for their work too, Vice reported in December.

But dances aren’t the only things being stolen on TikTok. Creators have fielded accusations of stealing everything from cheerleading routines to comedy bits to challenge ideas to music or sounds and much more.

 

A TikTok spokesperson acknowledged the problem with credits on the platform, noting that the culture of credit was “critical” for the community and for  TikTok’s future. “Equitable creator amplification is important for creators, especially the BIPOC creator community,” they added.

Image Credits: TikTok

In an announcement, Director of the Creator Community at TikTok, Kudzi Chikumbu introduced the feature and highlighted other efforts the company has made to help better highlight original creator work on its platform.

Chikumbu pointed to TikTok’s Originators series, launched last October, which showcases trend originators through the app’s Discover List feature. TikTok also recently debuted a TikTok Originators monthly social series highlighting Originators on the platform. In addition, the TikTok Creator Portal includes a “Crediting Creators” section that highlights the importance of attributing trend originators for their work. Here, the company lays out best practices for crediting originators and explains how to find the originators if you aren’t sure who had started a trend.

The use of the new crediting tag could help make it easier for creators to cite their inspiration. However, it still relies on user adoption to work. If a creator wants to lift ideas without credit, they could simply not use the feature.

“It’s important to see a culture of credit take shape across the digital landscape and to support underrepresented creators in being properly credited and celebrated for their work,” said Chikumbu. “We’re eager to see how these new creator crediting tools inspire more creativity and encourage trend attribution across the global TikTok community.”

Daily Crunch: PayPal Ventures leads $50M Series B for Egyptian fintech Paymob

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

Monday, May 9, is upon us, and today is a day of browser-cache-powered drama in the form of a Wordle word The New York Times decided was too controversial, but still existed for people who hadn’t refreshed their browser in a while. Find out what the word was, and why there was dramaaaaaaa, in Amanda’s piece. Incidentally, DRAMA would be a great Wordle word, so there’s that. – Christine and Haje

The TechCrunch Top 3

  • An offer they couldn’t refuse: It looks like Egyptian fintech Paymob snagged one of the largest funding deals in the region — a $50 million Series B, with PayPal Ventures and Kora Capital leading — based on its ability to turn cash-loving customers into digital users with its cards and wallets. That subsequently led to 4x monthly volume growth, and it is expected the company’s expansion into Pakistan will yield even better results.
  • Wall Street’s downward spiral continues, but not everyone is feeling it: The stock market was still showing red as we wrote this, so it might be good to hold off on checking your investments for a bit. However, not all is bad in the world of stock performance, and Alex and Ron took a look at four tech companies that actually did OK last week, despite the choppy markets.
  • Hacking your Tesla’s radio: If you are looking to get CarPlay into your Tesla, look no further than one of TechCrunch’s resident tinkerers Matt, who decided to give it a try on his Ford F-150 to show how easy it could be.

Startups and VC

If you’re a startup founder, money – specifically, your own wages – can be a sticky point. You need permission from your board to give yourself a wage bump, but how do you know whether you’re under- or over-paying yourself? We got a hold of a 250-company dataset that sheds some light on that question.

Over on TC+, Alex described the current stock market spiral as “joker detection,” which we are all for. Meanwhile, Connie talked with Sequoia’s Jess Lee to get a deeper understanding of how VC companies think about their deals.

Feed your brain with these tasty morsels:

  • Hug it out with linguistically progressive robots: We’re fans of startups with great names, and the now-valued-at-$2-billion Hugging Face may very well be up there as one of the best. The company is building the “GitHub of machine learning” and just raised $100 million to continue down that path.
  • Workin’ 9 to 5 (Indonesia edition): Atma, an Indonesian startup that wants to make job hunting less painful, raised $5 million in pre-seed funding led by AC Ventures.
  • Workin’ 9 to 5 (Middle East and Africa edition): For the Middle Eastern and North African market, Manara raised $3 million to grow the region’s tech talent pool.
  • So clever you can barely beleaf it: When machines take a closer look at plants, some fun things start to happen. Brightseed’s Forager is a machine-learning platform that identifies and categorizes plant compounds. It has already mapped 2 million, considerably more than is characterized in scientific literature. And it raised $68 million to get deeper into the science.
  • I fought the law and … well, the jury is still out, actually: Swedish startup PocketLaw — a contract automation software-as-a-service legal tech platform that is mainly focused on SMEs — has pocketed $11 million in Series A funding to fuel expansion in Europe.
  • Virtually unstoppable home improvements: South Korean startup Bucketplace, which operates a home decorating and interior app OHouse, is looking to continue capitalizing on the DIY trend, raising $182 million to add some AR to the mix.

A founder’s guide to calculating CAC and LTV the right way

Blue calculator and a graph made from colored arrows

Image Credits: Maryna Terletska (opens in a new window) / Getty Images

How fluent are you when it comes to your key metrics?

Round sizes are shrinking, but investors are raising their expectations. Blair Silverberg, CEO and co-founder of Hum Capital, says founders need to get a firm handle on LTV (lifetime value) and customer acquisition cost (CAC) before they start sending out pitch decks.

“While founders with an eye on high valuations may hesitate to follow a conservative approach, doing so can be pivotal for building trust with investors,” writes Silverberg.

This post identifies several factors that will help calculate LTV/CAC accurately while increasing transparency for potential investors.

“As a former venture capitalist, I always tell founders that the most powerful tool they can employ while fundraising is a data-driven pitch.”

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

Big Tech Inc.

There was much mobility news today: Let’s begin with Lordstown Motors, which reported a $90 million loss (the electric truck maker has yet to produce a vehicle) and offered no word yet on whether a proposed facility acquisition deal with Foxconn will meet the May 14 deadline. Next, Rivian, another public EV truck maker, saw its shares drop on news that Ford was selling some of its shares in the company. Then we have a pair of Uber stories — the first has the rideshare giant opting for arbitration to settle a dispute it has with drivers in Kenya over a reduction of commuter fares. The second is that Uber shareholders were to vote today on a proposal that would open up the company’s lobbying activities. It’s a proposal the Teamsters tried to put forth last year, but didn’t have the votes. Like all this car talk? Kirsten lays it all out nicely for you in her newsletter, The Station.

Are you a fan of the office? No, not the show, the place where you work. Ron spoke to a bunch of tech companies to gauge their feelings on what a possible office-free future might look like. Some shuttered offices early in the pandemic and then brought them back. Others gave up office leases permanently. Others realized you don’t need to be in a cubicle every day. What’s evident is that most companies will have to figure out what the future looks like for them.

Here’s what else happened today:

The New York Times edits Wordle answer list after Roe v. Wade leak

Perhaps you played the Wordle this morning and encountered a pretty ordinary five-letter word. But if you haven’t refreshed your page over the last week, you could’ve encountered the solution “FETUS,” which the New York Times decided was a bit too closely linked to current events — last week, Politico leaked a Supreme Court opinion draft that is poised to overturn Roe v. Wade, reversing the constitutional right to an abortion.

The New York Times changed today’s solution to a word that’s less politically charged, though the original solution might still appear for users who haven’t reloaded the game.

“Some users may see an outdated answer that seems closely connected to a major recent news event. This is entirely unintentional and a coincidence,” wrote New York Times Games editorial director Everdeen Mason in a statement, published right as today’s Wordle hit the web.

As Mason explains, Wordle’s answers are predetermined in its code, pulling from an answer pool of five-letter words that founder Josh Wardle concocted over a year ago. Not all five-letter words appear in the list — he intentionally removed the most obscure five-letter words, since he wanted the game to be solvable more often than not (you also probably won’t encounter a four-letter noun with an added “S” at the end to make it plural).

“When we acquired Wordle in January, it had been built for a relatively small group of users,” Mason said. “We’re now busy revamping Wordle’s technology so that everyone always receives the same word.”

Since Wordle joined New York Times Games, there have been a few instances where there are two possible solutions to a Wordle. Most recently, this happened at the end of March, when users could have encountered either “STOVE” or “HARRY” as the answer.

This happened because the New York Times removed some of the more obscure words left in the Wordle solution bank, such as “HARRY,” which is not the name of a boy wizard, but an outdated verb meaning “to persistently harass.” But when Wordle migrated from Wardle’s personal website to the New York Times, some users’ games were still pulling data from the original Wordle, not the slightly tweaked New York Times version.

The New York Times says that “tens of millions” of people are playing Wordle each day. Its “low seven figures” acquisition of the delightfully simple game seems to be paying off, as the company said it had its best quarter ever for user growth in its subscription-based Games section.

Daily Crunch: Larry Ellison leads investor group chipping in $7.1B toward Musk’s Twitter buyout

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What’s a five-letter word containing ERUSS? You made the GUESS — USERS, that’s what — and tens of millions of them have joined The New York TIMES after its acquisition of Wordle, according to Amanda‘s REPORT. As LOYAL players, we ADORE it. – Christine and Haje

The TechCrunch Top 3

  • Backing Elon: Like sands through the hourglass, we are learning more every day about who is stepping up to invest in Elon Musk’s bid to purchase Twitter. A Thursday filing revealed that nearly two dozen investors have contributed money, including Sequoia Capital, Binance, and Oracle co-founder Larry Ellison, who had $1 billion he wasn’t doing anything with at the moment.
  • CVC may lead to M&A: Over the past year, we saw a number of corporations start their own venture capital arms, and now it looks like all of that venture activity could churn up some M&A activity. Why? Alex and Anna dig into a couple of reasons, including lowered public valuations and a stock market environment that has some companies hitting the pause button on an IPO. They expect CVCs to begin eyeing early-stage companies for potential deals, perhaps starting with those in their cap table.
  • Shopify signals its next move with Deliverr acquisition: Shopify pulled the trigger on an acquisition of Deliverr for $2.1 billion, which has us wondering if this was Shopify trying to elbow in on Amazon’s Fulfillment By Amazon territory, one of the reasons some small businesses may have chosen the e-commerce company over other marketplaces. We also looked into whether that was a fair acquisition price.

Startups and VC

Lynda did it back in 2013, Kevin raised $65 million a few days ago, and now it’s Alan’s turn, with a $193 million round for a medical one-stop shop. I’m not entirely sure what’s happening in the world of startup naming, but we’re here for it. We’re looking forward to hearing from Wendy, Talesha and Fred next.

Come with me, and you’ll see, a world of pure appreciation:

Pitch Deck Teardown: Momentum’s $5M seed pitch deck

Image Credits: TechCrunch

Momentum, a B2B company that makes sales process automation software, accidentally convinced an early investor to lead its seed round before the founders had even created a pitch deck.

“We showed up on a Friday board meeting. On Monday, they were like, ‘Hey, do you have five minutes? We want to sit down with you,’” said CEO and co-founder Santiago Suarez Ordoñez.

“They literally put a term sheet on the table with the exact terms we wanted.”

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

Big Tech Inc.

  • Apple, Google and Microsoft, oh my!: These three are coming together in support of passwordless logins across mobile, desktop and browsers. Yes, there are password managers and other technology out there to help us choose “v6Yp8eR43wQ!” instead of “openuporelse1,” but the goal is to make logging into a website as easy as unlocking your phone. Speaking of privacy, as we wait on the fate of Roe v. Wade, Carly looked into whether it was time to delete that period-tracking app you’ve been using.
  • More sanctions for Hikvision: The surveillance camera company saw its shares take a tumble following a report that said the Biden administration would impose further sanctions on the China-based company, accusing it of enabling human rights abuses.
  • Some shutdowns: YouTube Go is coming to a stop in August, while Facebook is shuttering its podcast service on June 3, barely a year after its launch. However, Meta had some better news for Facebook Reels creators.
  • Starlink adds on some more fees: If you like taking your Starlink internet everywhere you go, it might be less advantageous now that the company has added a $25-a-month fee.