Daily Archives: November 21, 2020

News: How the pandemic drove the IPO wave we see today

This is The TechCrunch Exchange, a newsletter that goes out on Saturdays, based on the column of the same name. You can sign up for the email here. I had a neat look into the world of mental health startup fundraising planned for this week, but after being slow-motion carpet-bombed by S-1s, that is now shoved off

This is The TechCrunch Exchange, a newsletter that goes out on Saturdays, based on the column of the same name. You can sign up for the email here.

I had a neat look into the world of mental health startup fundraising planned for this week, but after being slow-motion carpet-bombed by S-1s, that is now shoved off to Monday and we have to pause and talk about COVID-19.

The pandemic has been the most animating force for startups and venture capital in 2020, discounting the slow movement of global business into the digital realm. But COVID did more than that, as we all know. It crashed some companies as assuredly as it gave others a boost. For every Peloton there is probably a Toast, in other words.

Such is the case with this week’s crop of unicorn IPO candidates, though they are unsurprisingly weighted far more toward the COVID-accelerated cohort of startups instead of the group of startups that the pandemic cut off at the knees. 

More simply, COVID-19 gave most of our recent IPOs a polite shove in the back, helping them jog a bit faster toward the public-offering finish line. Let’s talk about it.

Roblox, the gaming company that targets kids, has been a beneficiary during the COVID-19 pandemic, as folks stayed home and, it appears, gave their kids money to buy in-game currency so that their parents could have some peace. Great business, even if Roblox warned that growth could slow sharply next year, when compared to its epic 2020 gains.

But Roblox is hardly the only company taking advantage of COVID-19’s impacts on the market to get public while their numbers are stellar. We saw DoorDash file last week, crowing from atop a mountain of revenue growth that came in part from you and I trying to stay home since March. As it turns out you order more delivery when you can’t leave your house.

Affirm got a COVID-19 boost as well, with not only e-commerce spend growing — Affirm provides point-of-sale loans to consumers during online shopping — but also because Peloton took off, and lots of folks chose to finance their new exercise bike with the payment service. Call it a double-boost.

The IPO is well-timed. Wish falls into the same bucket, though it did hit some supply-chain and delivery issues due to the pandemic, so you could argue it either way.

Regardless, as we have seen from global numbers, COVID-19 is very much not done wreaking havoc on our health, happiness, and ability to go about normal life. So the trends that this week’s S-1s have shown us still have some room to run.

Which is irksome for Airbnb, a unicorn that was supposed to have debuted already via a direct listing, but instead had to hit pause, borrow money, lay off staff, and now jog to the startup finish line with less revenue in this Q3 than the last. In time, Airbnb will get back to full-speed, but among our new IPO candidates it’s the only company net-harmed by COVID-19. That makes it special.

There are other trends to keep tabs on, regarding the pandemic. Not every software company that you might expect to be thriving at the moment actually is; Workday shares are off 8% today as I write to you, because the company said that COVID-19 is harming its ability to land new customers. Here’s its CFO Robynne Sisco from its earnings call

Keep in mind, however, that while we have seen some recent stability in the underlying environment, headwinds due to COVID remains particularly to net new bookings. And given our subscription model, these headwinds that have impacted us all year will be more fully evident in next year’s subscription revenue weighing on our growth in the near-term.

Yeesh. So don’t look at recent IPOs and think that all things are good for all companies, or even all software companies. (To be clear, the pandemic is a human crisis, but my job is to talk about its business impacts so here we are. Hugs, and please stay as safe as you can.)

Market Notes

There was so much news this week that we have to be annoyingly summary. 

I caught up with Brex CEO Henrique Dubugras the other day, giving The Exchange a chance to parse what happened to the company during the early COVID days when the company decided to cut staff. The short answer from the CEO is that the company went from growing 10% to 15% each month, to seeing negative growth — not a sin, Airbnb saw negative gross bookings for a few months earlier this year — and as the company had hired for a big year, it had to make cuts. Dubugras talked about how hard of a choice that was to make.

Brex’s business rebounded faster than the company expected, however, driven in part by strong new business formation — some data here — and companies rapidly moving into the digital realm and moving to finance systems like Brex’s. 

Looking forward, Dubugras wants to expand the pool of companies that Brex can underwrite, which makes sense as that would open up its market size quite a lot. And the company is as remote as companies are now, with its CEO opening up during our chat about the pros and cons of the move. Happily for the business fintech unicorn, Dubugras said that some of the negatives of companies working more remotely haven’t been as tough as expected. 

Next up: Growth metric. Verbit, a startup that uses AI to transcribe and caption videos, raised a $60 million Series C this week led by Sapphire Ventures. I couldn’t get to the round, but the company did note in its release that it has seen 400% year-over-year revenue growth, and that its “revenue run-rate [has] grown five-fold since 2019.” Nice.

Jai Das led the round for Verbit, and, in a quirk of good timing, I’m hosting an Extra Crunch Live with him in a few weeks. (Extra Crunch sub required for that, head here if you need one. The discount code ‘EQUITY’ should still be working if it helps.)

Telos, a Virginia-based cybersecurity and identity company went public this week. It fell under our radar because there is more news than we have hands to type it up. Such is the rapid-fire news cycle of late 2020. But, to catch us both up, Telos priced midrange but with an upsized offering, valuing it around $1 billion, according to MarketWatch.

After going public, Telos shares have performed well. Cybersecurity is having one hell of a year.

Turning back to our favorite topic in the world, SaaS, ProfitWell’s Patrick Campbell dropped a grip of data on the impact of COVID-19 on the B2B SaaS market. Mostly it’s positive. There was a hit early on, but then growth seems to have accelerated. Just keep in mind the Workday example from earlier; not everyone is in software growth paradise as 2020 comes to a close.

And, finally, after Affirm released its S-1 filing, competing service Klarna decided it was a good time to drop some performance data of its own. First of all, Klarna — thanks. We like data. Second of all, just go public. Klarna said that it grew from 10 million customers in the United States to 11 million in three weeks, and that the second statistic was up 106% compared to its year-ago tally. 

Affirm, you are now required by honor to update your S-1 with even more data as an arch-nerd clapback. Sorry, I don’t make the rules.

Various and Sundry

Alright, that’s enough of all that. Chat to you soon, and I hope that you are safe and well and good.

Alex

News: Human Capital: Uber’s Black employee base shrinks

Welcome back to Human Capital, where I break down the latest in diversity, equity and inclusion, and labor in tech. TL;DR: This week, Apple announced its third head of diversity and inclusion in four years, Uber’s Black employee base shrunk despite the company committing to anti-racism and Reddit brought on its second Black board member

Welcome back to Human Capital, where I break down the latest in diversity, equity and inclusion, and labor in tech.

TL;DR: This week, Apple announced its third head of diversity and inclusion in four years, Uber’s Black employee base shrunk despite the company committing to anti-racism and Reddit brought on its second Black board member this year. 

Meanwhile, Facebook’s content moderators spoke out against the company for forcing some of them to work in the office during a pandemic and a new report from Silicon Valley Rising showed 63% of blue-collar tech workers are Black or Latinx. 

Sign up here to get this as a newsletter in your inbox every Fridays at 1 p.m. PT. However, I’m taking next week off so you won’t be hearing from me until December 4.

Facebook content moderators demand better protections and benefits

A group of more than 200 Facebook  content moderators, as well as some full-time employees, demanded the tech company “stop needlessly risking moderators’ lives,” they wrote in an open letter to Facebook and the company’s contractors that manage content moderators, Accenture and Covalen. The demands came after The Intercept reported how some Facebook content moderators — who deal with things like sexual abuse and graphic violence — were required to come back into the office during the pandemic. Shortly after they returned to the office, a Facebook content moderator reportedly tested positive for COVID-19.

Facebook later defended its decision to bring some content moderators into the office, saying it’s “not able to route some of the most sensitive and graphic content to outsourced reviewers at home,” its VP of Integrity Guy Rosen said on a press call. “This is really sensitive content. This is not something you want people reviewing from home with their family around.”

Turo commits $1 million to addressing wealth inequality

Car-sharing marketplace Turo teamed up with Kiva to offer interest-free loans to Black people and folks from traditionally underserved communities to buy cars and then share them on Turo. The $1 million commitment aims to address the issue of wealth inequality in the United States.

Called the Turo Seed Initiative, those who are eligible can raise up to $15,000 via crowdfunding and Turo’s matching program. In order to raise money on Kiva, folks must use the funding for business purposes, which includes car sharing on Turo. Through Kiva, they can raise up to $7,500 and Turo will then match up to $7,500. From there, they can buy a car and list it on Turo.

Tech’s cafeteria workers, security officers, etc. are predominantly Black or Latinx

A Silicon Valley Rising report recently showed about 63% of blue-collar tech workers are Black or Latinx. These are the workers who cook and serve food in tech company cafeterias, drive tech shuttles or work as security officers or custodians.

Also this week, a group of cafeteria workers who formerly worked inside Verizon Media’s offices protested outside its CEO’s home in San Francisco. These workers were laid off by Verizon Media contractor Compass in September. Meanwhile, LinkedIn stopped paying more than 260 food service workers at the end of June and Tesla laid off 280 janitors and bus drivers in April

Transitioning from Trump to Biden: Now is not the time for complacency 

On this week’s episode of TC Mixtape, we spoke with Y-Vonne Hutchinson of Ready Set about DEI and what a new administration means for the work she and so many others are doing. Here’s an excerpt from our conversation:

While I’m optimistic and so thrilled at the prospect that we’re not going to see harm like we did under the Trump administration, I also remember the Obama administration. This isn’t like these structures that got spun up — this didn’t happen out of the blue.

I hope that we have learned some really valuable lessons when it comes to the impact that not just like lack of diversity inclusion, because that feels so milk toast to say, but like these exclusionary and harmful organizations, platforms, powerful people in our industry, like I hope we’ve learned from our mistakes there. But I think that there’s always going to be a temptation to say, ‘well, we got Trump out and the work is done’ [or] feel a little bit complacent. I worry about that complacency. Because, you know, the dirty, nasty undercurrents, all of that stuff that got us to where we are today — all of that’s still there, all that festering toxicity.

We still have work to do, and I’m not saying that everybody’s a bad actor and you know, get rid of it. But I think that we really need to be critical and think about what accountability looks like for our industry and make sure that we’re not falling into the same bad habits that we did that got us here in the first place. So I’m kind of waiting to see how that plays out.

Apple announces a new head of D&I 

Apple recently announced Barbara Whye, former head of D&I at Intel, will be joining them as its VP of inclusion and diversity in early 2021. The announcement came after its former head of D&I, Christie Smith, left the company in June “to spend time with her family,” an Apple spokesperson said at the time. Smith had been in the role since late 2017, after Denise Young Smith, the company’s first-ever VP of diversity and inclusion, left after only being in the role for six months.

Uber’s D&I efforts fall short this year

Uber recently released its latest diversity report, showing a decline in the overall representation of Black employees in the U.S. despite an increased focus on racial justice this year in the wake of the police killing of George Floyd. In 2019, Uber was 9.3% Black while this year, only 7.5% of its employees are Black.

Uber attributes the decline in Black employees to its layoffs earlier this year, where about 40% of its employees in community operations were laid off, Uber Chief Diversity Officer Bo Young Lee told TechCrunch.

“As a company that has so publicly stated its stance on anti-racism, that’s not acceptable,” she said.

That unintentional decline in the Black population at Uber “led to a lot of soul searching,” she said. “Dara was certainly upset by it. Every leader was. It reinforced how easy it is to lose some ground after all the work you’ve done.”

Reddit adds another Black director to the board

Reddit has appointed Paula Price, who has served on the board of six public companies, including Accenture and Deutsche Bank, to its board of directors. Price’s appointment makes her one of two Black directors on the company’s board.

“Paula’s vast experience as a world-class financial leader and strategic advisor will be a tremendous asset to us in the years ahead,” Reddit CEO Steve Huffman said in a statement. “Best of all, she embodies the two qualities most important to us for this Board seat: expertise leading companies through periods of transformative growth and real passion for Reddit’s mission.”

Before Reddit co-founder Alexis Ohanian stepped down from the board and urged the company to appoint a Black director to take his place, Reddit had zero Black board members. Reddit took Ohanian’s advice and appointed Y Combinator Michael Seibel to the board.

LAPD bans commercial facial recognition

Following an inquiry from Buzzfeed regarding officers’ use of Clearview, the LAPD has banned the use of commercial facial recognition programs. That’s not to say LAPD won’t continue using facial recognition that compares images to suspect booking records but it will no longer use facial recognition tools that rely on social media and other websites. 

News: Affirm, Airbnb, C3.ai, Roblox, Wish file for tech IPO finale of 2020

For some of the most awaited Silicon Valley tech companies of the decade, this week looked good enough to file for IPOs

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.

The wait was long but this week the time was right: Airbnb finally filed its S-1 and so did Affirm, C3.ai, Roblox, and Wish. We are likely to see these five price on public markets before the end of an already superlative year for tech IPOs. The ongoing pandemic and political turmoil were not scary enough, apparently.

This coming decade, you have to think that we’ll see a more even spread of tech companies going public. Many of the companies above have been bottled up for years behind privately funded growth strategies. Today, however, the industry has a better grasp of SPACs and direct listings, and various funding routes. Companies have more options from their founding for how they might grow and exit one day. Public investors in 2020 also seem to have a deeper appreciation for the current revenue numbers and future growth opportunities for tech companies. Why, I can still remember all the geniuses who bragged about shorting the Facebook IPO not so long ago.

Will we see a more even spread of where IPOs come from? While all of this week’s filers are headquartered in San Francisco or environs, that now feels almost like a coincidental reference to the years when these companies were founded. More states have been minting their own unicorns, with Ohio-based Root Insurance recently going public and Utah-based Qualtrics heading (back) that way. Tech startups are now global, meanwhile, and plenty of countries are working to keep their unicorns closer to home than New York.

On to the headlines from TechCrunch and Extra Crunch:

If you didn’t make $1B this week, you are not doing VC right (EC)

Affirm files to go public

Inside Affirm’s IPO filing: A look at its economics, profits and revenue concentration (EC)

Airbnb files to go public

5 questions from Airbnb’s IPO filing (EC)

The VC and founder winners in Airbnb’s IPO (EC)

Roblox files to go public

What is Roblox worth? (EC)

Wish files to go public with 100M monthly actives, $1.75B in 2020 revenue thus far

Unpacking the C3.ai IPO filing (EC)

With a 2021 IPO in the cards, what do we know about Robinhood’s Q3 performance? (EC)

(Photo by Win McNamee/Getty Images)

What does a Biden administration mean for tech?

What does Joe Biden intend as president around technology policy? On the one hand, tech companies might not be returning to the White House too fast. “All told, we’re seeing some familiar names in the mix, but 2020 isn’t 2008,” Taylor Hatmaker explains about potential presidential appointments from the industry. “Tech companies that emerged as golden children over the last 10 years are radioactive now. Regulation looms on the horizon in every direction. Whatever policy priorities emerge out of the Biden administration, Obama’s technocratic gilded age is over and we’re in for something new.”

However, tech industries and companies focused on shared goals might find support. In a review of Biden’s climate-change policies, Jon Shieber looks at major green infrastructure plans that could be on the way.

Any policies that a Biden administration enacts would have to focus on economic opportunity broadly, and much of the proposed plan from the campaign fulfills that need. One of its key propositions was that it would be “creating good, union, middle-class jobs in communities left behind, righting wrongs in communities that bear the brunt of pollution, and lifting up the best ideas from across our great nation — rural, urban and tribal,” according to the transition website. An early emphasis on grid and utility infrastructure could create significant opportunities for job creation across America — and be a boost for technology companies. “Our electric power infrastructure is old, aging and not secure,” said Abe Yokell, co-founder of the energy and climate-focused venture capital firm Congruent Ventures. “From an infrastructure standpoint, transmission distribution really should be upgraded and has been underinvested over the years. And it is in direct alignment with providing renewable energy deployment across the U.S. and the electrification of everything.”

Rebar is laid before poring a cement slab for an apartment in San Francisco CA.

Image Credits: Steve Proehl (opens in a new window) / Getty Images

The future of construction tech

A skilled labor shortage is piling on top of the construction industry’s traditional challenges this year. The result is that tech adoption is getting a big push into the real world, Allison Xu of Bain Capital Ventures writes in a guest column for Extra Crunch this week. She maps out six main construction categories where tech startups are emerging, including project conception, design and engineering, pre-construction, construction execution, post construction and construction management. Here’s an excerpt from the article about that last item:

  • How it works today: Construction management and operations teams manage the end-to-end project, with functions such as document management, data and insights, accounting, financing, HR/payroll, etc.
  • Key challenges: The complexity of the job site translates to highly complex and burdensome paperwork associated with each project. Managing the process requires communication and alignment across many stakeholders.
  • How technology can address challenges: The nuances of the multistakeholder construction process merit value in a verticalized approach to managing the project. Construction management tools like ProcoreHyphen Solutions and IngeniousIO have created ways for contractors to coordinate and track the end-to-end process more seamlessly. Other players like Levelset have taken a construction-specific approach to functions like invoice management and payments.

Virtual HQs after the pandemic?

Pandemic-era work solutions like online team meeting spaces are heading towards a less certain, vaccine-based reality. Have we all gone remote-first enough that they will have a real market, still? Natasha Mascarenhas checks in with some of the top companies to see how it’s looking, here’s more:

With the goal of making remote work more spontaneous, there are dozens of new startups working to create virtual HQs for distributed teams. The three that have risen to the top include Branch, built by Gen Z gamers; Gather, created by engineers building a gamified Zoom; and Huddle, which is still in stealth.

The platforms are all racing to prove that the world is ready to be a part of virtual workspaces. By drawing on multiplayer gaming culture, the startups are using spatial technology, animations and productivity tools to create a metaverse dedicated to work.

The biggest challenge ahead? The startups need to convince venture capitalists and users alike that they’re more than Sims for Enterprise or an always-on Zoom call. The potential success could signal how the future of work will blend gaming and socialization for distributed teams.

Around TechCrunch

Head of the US Space Force, Gen. John W. ‘Jay’ Raymond, joins us at TechCrunch Sessions: Space

Amazon’s Project Kuiper chief David Limp is coming to TC Sessions: Space

Across the week

TechCrunch

Against all odds: The sheer force of immigrant startup founders

S16 Angel Fund launches a community of founders to invest in other founders

Pre-seed fintech firm Financial Venture Studio closes on debut fund to build on legacy of top investments

How esports can save colleges

Why are telehealth companies treating healthcare like the gig economy?

A court decision in favor of startup UpCodes may help shape open access to the law

Extra Crunch

Will Zoom Apps be the next hot startup platform?

Is the internet advertising economy about to implode?

Surging homegrown talent and VC spark Italy’s tech renaissance

Why some VCs prefer to work with first-time founders

3 growth tactics that helped us surpass Noom and Weight Watchers

A report card for the SEC’s new equity crowdfunding rules

#EquityPod

From Alex Wilhelm:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This week wound up being incredibly busy. What else, with a week that included both the Airbnb and Affirm IPO filings, a host of mega-rounds for new unicorns, some fascinating smaller funding events and some new funds?

So we had a lot to get through, but with Chris and Danny and Natasha and your humble servant, we dove in headfirst:

What a week! Three episodes, some new records, and a very tired us after all the action. More on Monday!

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

News: Hulu UX teardown: 5 user experience fails and how to fix them

Hulu is the first major streaming platform to offer a social watching experience. And with most major league sports now being allowed to resume behind closed doors, Hulu’s combined proposition with ESPN will likely help entertain the service’s 30+ million users over the winter months. But users have a surplus in choice of streaming services

Hulu is the first major streaming platform to offer a social watching experience. And with most major league sports now being allowed to resume behind closed doors, Hulu’s combined proposition with ESPN will likely help entertain the service’s 30+ million users over the winter months.

But users have a surplus in choice of streaming services right now, so how will Hulu stay competitive?

With the help of UX expert Peter Ramsey from Built for Mars, we’re going to give Hulu an Extra Crunch UX teardown, demonstrating five ways it could improve its overall user experience. These include easy product comparisons, consistent widths, proportionate progress bars and other suggestions.

Comparing features inside packages

If your product/service has different tiers/versions, ensure that the differences between these options are obvious and easy to compare.

The fail: Hulu has four different packages, but the listed features are inconsistent between options, making it incredibly difficult to compare. Instead of using bullet points, they’ve buried the benefits within paragraphs.

The fix: Break the paragraphs down into bullet points. Then, make sure that the bullet points are worded consistently between options.

 

Steve O’Hear: I’m really surprised this one got past the marketing department. Not a lot to say except that I would argue that when UX, including layout and copywriting decisions, become decoupled from business goals and customer wants, a company is in trouble. Would you agree that’s what has happened here?

Peter Ramsey: Honestly, this happens all the time. I think it’s just a symptom of the designers building things that look nice, not things that work nicely. I probably raise this issue on about one-third of the private audits I do — it’s that common.

Keep a consistent width

Try to maintain a consistent page width throughout a single journey — unless there’s a major benefit to changing the width.

The fail: During the Hulu sign-up process, the page width doubles at a totally unnecessary point. This is disorienting for the user, with no obvious rationale.

The fix: Hulu has a pretty consistent first-half of their journey and then it drops the ball. I’d redesign these “extra-wide” pages to be the default width.

News: This Week in Apps: Apple slashes commissions, Twitter launches Fleets, warnings about Parler

Welcome back to This Week in Apps, the TechCrunch series that recaps the latest OS news, the applications they support and the money that flows through it all. The app industry is as hot as ever, with a record 204 billion downloads and $120 billion in consumer spending in 2019. People are now spending three hours and 40 minutes per day

Welcome back to This Week in Apps, the TechCrunch series that recaps the latest OS news, the applications they support and the money that flows through it all.

The app industry is as hot as ever, with a record 204 billion downloads and $120 billion in consumer spending in 2019. People are now spending three hours and 40 minutes per day using apps, rivaling TV. Apps aren’t just a way to pass idle hours — they’re a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus.

Top Stories

Apple reduces App Store commissions to 15% for ‘vast majority’ of developers

The changes apply to developers with less than $1 million in revenue.

app store icon 2

Image Credits: TechCrunch

Apple this week announced a major shakeup to its App Store commission rate. The company, as of January 1, 2021, will only charge App Store developers 15% on paid apps and in-app purchases if their business has not exceeded $1 million in proceeds during 2020 for all their apps combined. Qualification for the new App Store Small Business Program, as it’s called, will be re-assessed revenues on an annual basis going forward.

The changes arrive at a time when Apple has been under increased regulatory scrutiny over how its App Store operates, which includes antitrust investigations in the U.S. and E.U. It has also waged war with developers throughout the year over in-app purchases, leading the company to revise its already complex rules even further, and spell out how and when it gets to charge its so-called “Apple tax.” And it’s in the middle of a nasty legal battle with Fortnite maker Epic Games, which doesn’t want to be forced to use Apple payments or even, necessarily, the App Store.

The commission changes may help silence some disgruntled voices from the wider app development community, while giving Apple a way to show regulators that it’s enabling fair competition.

However, several of Apple’s largest and harshest critics reacted negatively to the news.

The advocacy group, the Coalition for App Fairness, which includes Epic, Basecamp, Deezer, Match Group, Spotify and many others, said: “developers want a level playing field from Apple, not a symbolic gesture.” They argued that Apple still owns the customer relationship, the threshold of $1M is arbitrary, and they said the majority of developers who “generate livable revenue,” won’t benefit.

Match, Spotify and Epic separately echoed these sentiments in statements of their own.

Apple, though, had claimed the change would benefit the “vast majority” of the App Store development community. Today its App Store hosts 1.8 million apps that reach more than 1.5 billion Apple devices.

Individual developers we spoke to, including those who would qualify for the program, weren’t complaining. And many were fairly surprised by Apple’s move.

“I think it’s fair to say that this change wouldn’t have happened without either the impending antitrust investigations, or the Epic lawsuit. But something can be both a very clever piece of political manoeuvring, and still genuinely welcome and beneficial to the vast majority of developers out there,” said indie developer James Thomson, maker of the PCalc app and others.

“We fall significantly under the million dollar threshold, so we’re looking at roughly a 20% increase in our income under the new system. We’re in a much better position than most businesses under the pandemic, in that our sales are purely digital and people always need calculators (or dice), but we’ve certainly seen a decrease in sales over the last eight months. I can see the current situation taking a good while to resolve, so that extra revenue is appreciated,” he added. “These changes will particularly help the small developers who have traditionally been the heart of the developer community, and I as happy about this, as I am surprised,” Thomson said.

Others also said they were generally happy with the changes. But some expressed reservations about the details of how the program works.

“Overall, I’m very pleased with this new program,” said developer David Smith, maker of Widgetsmith, Watchsmith, Sleep++ and a range of other iOS apps. “It will help countless small developers who can really benefit from that extra margin. I’m excited for all the indie developers who will now be able to focus full time on their apps just that little bit sooner.”

But Smith noted that it was odd that the program isn’t applied in a way that’s similar to a graduated tax rate, where, he explained, “your first $1M is at 15% and the rest at the higher rate.”

“The proposed system creates an awkward differentiation between developers, and one of the things I’ve always appreciated most about the App Store was that it treats developers equally,” Smith continued. “It also creates a strange disincentive for growth for mid-sized businesses who are approaching the threshold.”

We turned to third-party analytics firms to try to better understand the market.

According to App Annie data, around 98% of all iOS developers in 2019 (meaning, unique publisher accounts) fell under the $1 million annual consumer spend threshold. This supports Apple’s claims that the “vast majority” of developers would benefit. This group of developers accounts for 567,000 unique apps, or 93% of all apps generating revenue through in-app purchases.

Combined, their revenues represented just under 8% of the overall App Store revenue share — in other words, it’s money Apple could stand to lose.

Image Credits: App Annie

App Annie also found that the group of mid-range developers who are “nearing” that $1 million threshold is really small. The data indicates roughly 0.5% of developers are making between $800,000 and $1 million. And just over 1% are in the $500,000-$800,000 range.

Most developers have much smaller revenue streams, with 87.7% making less than $100,000 in 2019.

Image Credits: App Annie

Some expressed concern that Apple’s system would unfairly penalize developers who made just $1 over the $1 million threshold, and then trap them at the higher rate (30%).

If you sell $1 over $1M on the @AppStore, you won’t match the income again the next year unless you make *$430K* more. That means making $1 over $1M may lead to having to fire an employee the following year since you’ll now be penalized $150K on the same revenue the next year.

— Francisco Tolmasky (@tolmasky) November 18, 2020

But others suspected that the percentage of developers who were growing “slowly” at over $800,000 in ARR was actually pretty small.

This “dollar over, double the commission” scenario I would imagine dampens the enthusiasm of the cadre that hovers at that number. But I think it’s a strong possibility that the percentage of developers “growing ARR slowly at $800,000+” is actually pretty small. https://t.co/2eOXFLSBOD

— Matthew Panzarino (@panzer) November 18, 2020

From the data we’ve collected, it seems that subscription-based apps tend to keep growing fairly quickly once they pass that $1 million threshold. According to data from subscription platform RevenueCat, the apps on its platform grow, on average, at 1.5x year-over-year. So once an app crossed the $1 million threshold, the most likely scenario is that it would make $1.5 million the next year. Plus, the apps that are “nearing” the threshold tend to be growing even faster than the average rate, we understand. And they rarely backslide.

“Apple has made a lot of changes to the App Store over the years, and this is one of the first I’ve seen where there’s really not much to complain about,” said RevenueCat CEO Jacob Eiting. “It’s impactful to the App Store economy broadly and meaningful to individual indie developers. Sure it may have been for PR and they might not have a lot of downside in doing this, but it’s genuinely a great thing for so many developers,” he said.

We’ll have more data on this subject in the weeks ahead. 

Parler’s funders revealed…it’s the Mercers; parents warned about the app

The “Free speech” app Parler rising in the charts after Facebook and Twitter increased fact-checks, turns out to be funded by prominent conservative donor and Trump supporter Rebekah Mercer, The WSJ revealed.

Rebekah is the daughter of Robert Mercer, the hedge fund manager and principal investor in Cambridge Analytica — the data analytics firm behind the largest data leak in Facebook history, where 87 million users had their data harvested for the purposes of political advertising. The Mercers have also backed Breitbart News, the Heritage Foundation think tank, the Federalist Society, a super PAC that initially backed Ted Cruz’s bid for the Republican presidential nomination (before switching to Trump) and Citizens United (which distributed a 2007 anti-Clinton movie and succeeded in a Supreme Court ruling that reversed campaign finance restrictions), among other things.

This week, the nonprofit ParentsTogether issued a warning to parents about Parler, saying that the app’s weak moderation policies and extremist user base put kids at risk of exploitation, abuse and recruitment for racist violence. The organization described Parler as hosting dangerous content, including hate speech, incitements of violence and widespread disinformation.

In addition, the group was concerned that while Apple’s App Store rates the app at 17+, Google Play has it listed as suitable for kids ages 13+.

“All parents of children under age 18 to immediately check their kids’ phones and tablets to ensure that their children have not installed Parler,” the group warned parents, in a statement. “If your child has installed Parler, we strongly recommend that you delete their account and the app.”

Twitter launches Fleets

Image Credits: Bryce Durbin

Twitter this week launched its own version of Stories — aka “Fleets” — to its global user base. The product, which allows users to post ephemeral content that disappears in 24 hours, had already rolled out to select markets, including Brazil, India, Italy, South Korea and, most recently, Japan. The rollout almost immediately ran into some snags, with Fleets suffering performance and stability issues. Twitter said it would pause things while it worked this out. On Thursday, the company announced the feature was globally available.

Reactions to Fleets has been mixed. Some users hate the feature, which is designed to encourage more users to post to Twitter, when they’ve otherwise been too shy to participate — largely because of Twitter’s “cancel culture” vibe where mistakes, bad takes and unpopular opinions are harshly criticized, even when they’re more minor offenses. It’s not clear how a Stories feature resolves this, however, as Fleets are still being published to Twitter’s public social network.

Twitter also said it will begin testing a Clubhouse rival where users will join audio chat rooms.

These changes follow the activities by activist investor Elliott Management Group, which took a sizable stake in Twitter earlier this year, along with Silver Lake. The firms did so with a plan to push the company for more innovation and new executive leadership. The companies later struck a deal to spare Twitter CEO Jack Dorsey’s ousting, gain board seats, and put someone on the board with expertise in technology and artificial intelligence. Dorsey disagreed with the characterization that their involvement had any impact on product development.

Weekly News

Platforms

  • Apple’s IDFA is targeted by EU privacy complaints. Apple had already told advertisers they’ll soon have to allow users the option to opt-out of ad tracking, but the new complaints are more about the fact that IDFA was ever created and stored in the first place, and that Apple’s planned changes don’t go far enough as they restrict its use for third parties, but not Apple itself.
  • Apple’s Developer Transition Kits (DTKs) help developers get their apps ready for Apple’s silicon. But it turns out they won’t be able to install iOS or iPadOS apps like M1 Macs can.
  • Google reminds Android developers they only have until January 18, 2021 to get approval to continue using background location data if they want to stay on Google Play.
  • Apple releases a new version of iOS 14.2 for iPhone 12. The update appears to fix the iPhone 12 mini lock screen issue that caused some users’ lock screens to not respond to touches. The update also fixes issues with MMS messages, Made for iPhone hearing devices and more.
  • Google also reminds Android developers that, starting Augut 2021, Google Play will require all apps to use the Android App Bundle publishing format and make other changes.
  • Apple now allows developers to market and distribute their subscriptions with offer codes. These one-time, alphanumeric codes can be redeemed either on the App Store or within the app itself, allowing developers to acquire and retain customers or win back lapsed subscribers with special deals. Here are some tips on putting them to work.
  • Apple’s iOS 14.3, beta 2 indicates that Apple will do away with the intermediate step of opening the Shortcuts app when app shortcuts are launched. This was one of the major pet peeves from the iOS 14 home screen customization trend, where users designed iOS themes using custom icons and widgets.

Services

Security & Privacy

  • Dating app Bumble’s vulnerabilities puts Facebook Likes, locations and pictures of 95 million online daters at risk. Bumble took six months to fix the flaws and says no user data had been compromised.
  • TikTok expands parental controls to include search, commenting and account privacy. The company launched Family Pairing in April, allowing parents to link their account to their teen’s in order to manage screen time, direct messaging and whether or not the teen’s account would be in “Restricted” mode — a special mode which limits TikTok’s feed to a safer set of more moderated content. This week, it also gave parents the ability to control whether the teen’s Liked Videos are visible to others, control who can comment on the teen’s videos and decide whether the teen is allowed to use TikTok search.
  • Messaging app Go SMS Pro exposed millions of users’ private photos and files. The app, popular on Android, didn’t respond to security researchers about the problem. Typically, companies are given a 90-day deadline before vulnerabilities are made public.

Apps in the News

  • Epic Games added video chat to Fortnite, via a Houseparty integration. The company bought the video chat app last year. Players use their phone or tablet as the webcam while they play on PCs, PS4 or PS5.
  • Epic Games sues Apple in Australia too. The Fortnite maker is currently in a legal battle in the U.S. over Apple’s requirement to use Apple Pay and pay commissions on in-app purchases. In an interview this week, Epic Games founder Tim Sweeney likened the fight with Apple to a fight for civil rights. (That’s a bit much, we’d say.)
  • Snap acquired Voisey, a U.K.-based app that lets users create music tracks and videos by overlaying their own vocals. The app had raise $1.88 million to date, but deal terms weren’t immediately available.
  • Google Maps is updated with more COVID info and adds its Assistant driving mode. The COVID layer in Google Maps on Android and iOS can now show the number of all-time detected cases in an area, links to COVID resources from local governments and how busy transit lines are. The driving mode can read texts and lets you control your music from Maps.
  • Facebook’s Messenger Kids redesigned to look more like Messenger. The updated app puts chats in a more traditional vertical list, with message and media previews, and bold text and blue dots to indicate their unread status. It also added a new tabbed navigation, which better highlights the separation between apps and games.
  • YouTube launches 15-second audio ads aimed at users who listen to music or podcasts while the app plays in the background.
  • Apple’s Shazam passes 200 million monthly active users.
  • Instagram expands its Guides features and upgrades Search. Guides now allow creators to share tips, resources and other long-form content in a dedicated tab on their profiles. Now, everyone can make guides for Products, Places and Posts. Users can also now search by keywords, instead of just by names, usernames, hashtags and locations.
  • Instagram also updates its Threads mobile messaging app. The app now adds a tab for easier navigation between stories and statuses. All users should also now have the tabbed inbox where they can see everyone’s stories, not just close friends, and have the option to publish to stories, not just close friends’ stories.
  • Facebook sued an operator of Instagram clone websites. The operator had scraped Instagram data of some 100,000 accounts using its own 30,000 fake accounts that pretended to be humans to avoid detection.
  • SoundCloud adds profile verification with official blue checks.
  • App Growth Awards announce their finalists. 
  • Google launches iOS 14 widgets for Gmail, Drive and Fit. Says Calendar and Chrome widgets will come soon.
  • State and federal investigators are preparing to bring antitrust charges against Facebook over its acquisition of Instagram and WhatsApp, The Washington Post reports.
  • Twitter and Facebook sat for another congressional tech hearing that again largely served to give lawmakers a chance to just talk about whatever they wanted, instead of the topic at hand: social media’s role during the election. The CEOs were asked about their apps’ addictiveness, their algorithms, their approaches to misinformation and more.

Deadpool

Trends

  • U.S. mobile strategy game spending surges 22% to $2.8 billion in the first 10 months of 2020, Sensor Tower reports. The top game by player spending during this time was Clash of Clans, which generated close to $262 million in the U.S.
  • Top home screen widget apps have reached 1 in 7 U.S. iPhones, another Sensor Tower report claims. The five most popular apps — Widgetsmith, Color Widgets, Photo Widget: Simple, WidgetBox and Photo Widget — have collectively seen 13 million iPhone installs since the launch of iOS 14. Globally, they’ve reached 45 million installs to date.

Image Credits: Sensor Tower

 

Funding and M&A (and IPOs)

Duolingo 2

Image Credits: Duolingo

  • Language learning app Duolingo confirms its raise of $35 million on a $2.4 billion valuation. The news was reported last week, but the numbers are now official. The app was valued at $1.65 billion earlier this year.
  • Baidu to acquire Joyy’s Chinese live-streaming service YY for $3.6 billion. The search giant has been struggling to fight newcomers, like ByteDance, and video giant Kuaishou. Last year, Joyy’s YY took a $1.45 billion majority stake in Bigo, which operates streaming app Bigo Live and TikTok rival Likee.
  • OpenPhone raises $14 million to replace outdated corporate phone systems with an app. Yammer founder David Sacks’ Craft Ventures led the round.
  • Flipkart acquires AR startup Scapic to build an immersive shopping experience. Deal terms were undisclosed.
  • Athlete social platform Strava raises $110 million in Series F financing from TCV and Sequoia Capital, with by Dragoneer Investment Group and existing investors including Madrone Capital Partners, Jackson Square Ventures and Go4it Capital.
  • Yubo raises $47.5 million for its social app offering live-streaming rooms, now used by 40 million users. Existing investors Idinvest Partners, Iris Capital, Alven and Sweet Capital returned, and new investor Gaia Capital Partners joined.
  • English learning app AllRight raises $5 million from Genesis Investments. The Ukraine startup combines real teachers with AI-powered tutors.
  • ContextLogic, the maker of the mobile e-commerce app Wish, filed to go publicWish saw revenues slow in 2019, but has grown more quickly in 2020. In the first nine months of 2019, Wish generated $1.33 billion in revenue compared with $1.75 billion during the same period in 2020, or up 32%.
  • Roblox files for its IPO, noting it has lost $206 million on $589 million in revenue, has 31.1 million daily active users who now spend up to 22.2 billion hours in app, a figure up 122% year-over-year.

Downloads

Amazon’s GameOn

Amazon this week launched GameOn for Android, an app that lets users record 30-second to five-minute long gameplay clips — including through a “Recall” feature that saves the clip after it happens. Clips are then shared the GameOn social network or elsewhere on social media. The app supports more than 1,000 games at launch, including PUBG Mobile, Crossy Road, Final Fantasy Brave Exvius and Angry Birds 2. A selfie camera lets gamers add their own commentary to the clips. Winners of weekly challenges get special profile badges. The launch follows Amazon’s release of its cloud gaming platform Luna.

Google Pay

Image Credits: Google

Google Pay launched a major redesign of its app on Android and iOS this week with a ton of new features, including a mobile bank account. The company partnered with 11 banks, including Citi and Stanford Federal Credit Union, to launch Plex, a mobile banking service where accounts are held at partner banks but Google Pay operates as the front end. Plex users will have no monthly fees, overdraft charges or minimum balances and can pay both businesses and friends from their account. They can also explore offers and rewards to save money while shopping and get spending insights, including from their connected bank accounts outside the app. Another new feature makes it easier to split bills with friends, like restaurant checks, rent or utilities.

Moment’s RTRO app

RTRO, launched earlier this year, offers a way to record and share vintage-looking photos and video. This week, the app was updated with “Instant Film,” which lets you emulate instant film photos powered by the app’s “analog effects engine.” The resulting photos will give you the feel of a instant camera pic.

Big news for RTRO…now with Instant Film for iPhone. It’s like an instant camera, but on your phone.

We’ve created the first real-time instant film emulation so every photo is unique. No scanning required!

Get snappin: https://t.co/MqW8i5BvZc pic.twitter.com/Wsw8i38lst

— Moment (@moment) November 17, 2020

News: Watch SpaceX launch a satellite that will monitor the world’s oceans

SpaceX is set to launch a Falcon 9 from Vandenberg Air Force Base in California on Saturday morning, with a target liftoff time of 9:17 AM PST (12:17 PM EST). This is the Sentinel-6 Michael Freilich Mission, which carries a satellite of the same name developed by the European Space Agency, NASA, and both U.S.

SpaceX is set to launch a Falcon 9 from Vandenberg Air Force Base in California on Saturday morning, with a target liftoff time of 9:17 AM PST (12:17 PM EST). This is the Sentinel-6 Michael Freilich Mission, which carries a satellite of the same name developed by the European Space Agency, NASA, and both U.S. and European meteorological monitoring bodies.

The Sentinel-6 is named for former NASA Earth Science Division Director Michael Freilich, who occupied the position between 2006 and 2019 and passed away in August. It’s one of two Sentinel-6-series satellites that will be launched for the program, with the Sentinel-6B set to join the Sentinel-6 Michael Freilich sometime in 2025.

SpaceX will be looking to recover the Falcon 9 first stage booster with a powered landing back on Earth at Landing Zone 4 at Vandenberg. This is the first SpaceX launch from Vandenberg since June of last year, though it has flown plenty of missions from both Cape Canaveral Air Force Station and Kennedy Space Center in Florida.

The webcast above will go live approximately 15 minutes prior to the liftoff time, so at around 9:02 AM PST (12:02 PM EST). Should this mission have to be canceled today, there’s a backup opportunity set for Sunday at 9:04 AM PST (12:04 PM PST).

News: All IPOs should be paid for in Robux

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines. This is an all-time first for the show, it’s an Equity Leftovers. Which means that we’re not focusing on a single topic like we would in an Equity Shot. This is just, well, more Equity.

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This is an all-time first for the show, it’s an Equity Leftovers. Which means that we’re not focusing on a single topic like we would in an Equity Shot. This is just, well, more Equity.

Danny and I and Chris got together to chat about a few things that we could not leave out:

And with this, our fourth episode in six days, we shall pause until Monday. Hugs from the Equity crew.

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

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