Yearly Archives: 2020

News: Silicon Valley should reward zebras, not unicorns

• December 21, 2020
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Unlike unicorn companies, zebras are lean, efficient and consistent.

Silicon Valley has a unicorn problem.

While no one is calling for startups with high valuations to go extinct, there ought to be a lot fewer of them. At least that’s what many young founders have concluded after looking at the trials and travails of billion-plus-dollar private companies.

A unicorn is a mythical animal, so investors expect magical results: Lightning growth, near-monopolies and a record-setter IPO yielding 100x or 1,000x returns. A “zebra” company is different. Zebras are real animals that have evolved to fill and thrive in a particular niche. Unlike unicorn companies, zebras are lean, efficient and consistent.

Too often, a company’s name or perceived cachet — rather than its actual product or realistic business prospects — becomes the thing it is selling. For the most recent, and maybe most damning, example of this trend, look at WeWork .

The company’s 2019 failed IPO was the corporate debacle of the decade; few businesses since Enron have fallen so far so quickly. When the market got a chance to examine the unicorn, they discovered it was really a one-trick pony with a cardboard horn. Adam Neumann built his company for net worth, not actual value, and his employees and supporters paid the price. Then again, imagine if the IPO had been a success: How much of the company’s worth would have evaporated when COVID-19 rolled around in March?

Although most tech innovation requires venture capital in today’s economy, unicorns sometimes become case studies in taking too much of a good thing. Round after round of funding can, as in the case of WeWork, disguise rickety foundations and unsound business plans.

Earlier this month, the mobile video unicorn Quibi folded less than a year after its launch. Film and TV critics weren’t surprised, and neither were those few consumers who’d heard of the company.

Well before its ill-timed launch in early April, most observers knew it was a bad idea. So why did Quibi receive so much funding? The big names attached to the company, including Dreamworks co-founder Jeffrey Katzenberg and one-time HP CEO Meg Whitman, attracted investors who somehow didn’t realize that everything about the product, from its name to its pricing, was wrong.

What a unicorn offers isn’t as important as the fact that it’s a unicorn. The opposite of a unicorn company, to my mind, is a zebra company. They may be a little odd, they may not get the front-page headlines or breathless news coverage, but they’re built to last and built to do something.

Unicorns thrive so long as they remain in the enchanted forest of endless venture rounds; zebras tough it out in the savannas of the free market. A zebra company won’t become the next behemoth like Facebook or Amazon, but neither will it become the next Quibi or WeWork.

The emergence of zebra companies like Handshake and Turo, and to some extent corporations like Ben and Jerry’s and Patagonia, speaks to a broader change in our business and economic understanding. Even before the coronavirus shut down much of the world, endless growth was looking less and less attractive.

Instead of extracting ever more value from the economy, companies like Patreon realize that the same dollar can be earned multiple times as it circulates through the economy. One-way extraction of value is replaced with a circular flow of value. Exponential growth is neither the best nor the only way for businesses to operate.

For most of us, the new year will be a relief: 2020, over at last. But we shouldn’t neglect the opportunity to reflect on the past and plan for the future that a new year offers. The mistakes of WeWork and Quibi are all too easy to repeat; chances are that somewhere in Silicon Valley, a venture capitalist is giving too much money to a doomed business. We’ve been too focused on the unicorns. It’s time to give the zebras the attention they deserve.

News: Fintech startups are increasingly focusing on profitability

• December 21, 2020
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This year’s economic downturn has been a challenge for the current class of fintech startups: Some have grown nicely, while others have struggled, but the vast majority of them have changed their focus.

Fintech startups have been massively successful over the past few years. The biggest consumer startups managed to attract millions — sometimes even tens of millions — of users and have raised some of the biggest funding rounds in late-stage venture capital. That’s why they’ve also reached incredible valuations.

And yet, this year’s economic downturn has been a challenge for the current class of fintech startups: Some have grown nicely, while others have struggled, but the vast majority of them have changed their focus.

Instead of focusing on growth at all costs, fintech startups have been drawing a path to profitability. It doesn’t mean that they’ll have a positive bottom line at the end of 2020. But they’ve laid out the core products that will secure those startups over the long term.

Consumer fintech startups are focusing on product first, growth second

Usage of consumer products vary greatly with its users. And when you’re growing rapidly, supporting growth and opening new markets require a ton of effort. You have to onboard new employees constantly and your focus is split between product and corporate organization.

Lydia is the leading peer-to-peer payments app in France. It has four million users in Europe with most of them in its home country. For the past few years, the startup has been growing rapidly; engagement drives user signups, which drives engagement.

But what do you do when users stop using your product? “In April, the number of transactions was down 70%,” said Lydia co-founder and CEO Cyril Chiche in a phone interview.

“As for usage, it was obviously very quiet during some months and euphoric during other months,” he said. Overall, Lydia grew its user base by 50% in 2020 compared to 2019. When France wasn’t experiencing a lockdown or a curfew, the company beat its all-time high records across various metrics.

“In 2019, we grew all year long. In 2020, we’ve had very good growth numbers overall — but it should have been amazingly good during a normal year, without the month of March, April, May, November.” Chiche said.

In March and early April, Chiche didn’t know whether users would come back and send money using Lydia. Back in January, the company raised money from Tencent, the company behind WeChat Pay. “Tencent was ahead of us in China when it comes to lockdown,” Chiche said.

On April 30, during a board meeting, Tencent listed Lydia’s priorities for the rest of the year: Ship as many product updates as possible, keep an eye on their burn rate without firing people and prioritize product updates to reflect what people want.

“We’ve worked hard and shipped everything related to card payments, contactless mobile payments and virtual cards. It reflected the huge boost in contactless and e-commerce transactions,” Chiche said.

And it also repositioned the company’s trajectory to reach profitability more quickly. “The next step is bringing Lydia to profitability and it’s something that has always been important for us,” Chiche said.

Let’s list the most frequent revenue sources for consumer fintech startups such as challenger banks, peer-to-peer payment apps and stock-trading apps can be divided into three cohorts:

Debit cards

First, many companies hand customers a debit card when they create an account. Sometimes, it’s just a virtual card that they can use with Apple Pay or Google Pay. While there are some fees involved with card issuance, it also represents a revenue stream.

When people pay with their card, Visa or Mastercard takes a cut of each transaction. They return a portion to the financial company that issued the card. Those interchange fees are ridiculously small and often represent a few cents. But they can add up when you have millions of users actively using your cards to transfer money out of their accounts.

Paid financial products

Many fintech companies, such as Revolut and Ant Group’s Alipay, are developing superapps to serve as financial hubs that cover all your needs. Popular superapps include Grab, Gojek and WeChat.

In some cases, they have their own paid products. But in most cases, they partner with specialized fintech companies to provide additional services. Sometimes, they are perfectly integrated in the app. For instance, this year, PayPal has partnered with Paxos so that you can buy and sell cryptocurrencies from their apps. PayPal doesn’t run a cryptocurrency exchange, it takes a cut on fees.

News: 3 VCs discuss space junk and what else they’re betting on right now

• December 21, 2020
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Space may be the final frontier, but in terms of investment, VCs are just getting started.

Space may be the final frontier, but in terms of investment, VCs are just getting started. With that in mind during TC Sessions: Space 2020 last week, we spoke to three investors who’ve been actively funding what could become tomorrow’s biggest companies to learn where they might focus next.

Our guests — Tess Hatch of Bessemer Venture Partners, who has long focused on the commercialization of space; Mike Collett of Promus Ventures, a venture firm that invests in deep tech software and hardware companies; and Chris Boshuizen of the venture firm DCVC and a cofounder of Planet Labs — had a lot of intriguing observations on topics, including the dangers of orbital debris, space manufacturing, and how they’d rate the U.S. government when it comes to fostering space-related innovations.

For those who missed the event, we’ve posted a video of our conversation below.

Space junk could affect long-term sustainability

Hatch, who recently co-authored an informative piece on the topic, said there’s little consensus about whether space junk is a critical matter that deserves more regulatory attention or an issue that will resolve itself through tech advancements, even while startups like Astroscale and D-Orbit are focused on the issue. The commercial industry’s expectation seems to be that space companies can regulate themselves and launch constellations without leaving pieces of launch vehicles or rocket stages in space, she said.

For her part, Hatch said it’s something to potentially invest in within a “handful of years.” At the moment, she added, “it’s not at the top of my list just due to looking for a shorter return on my investment for my LPs in the fund.”

Collett and the others stressed that in the meantime, sustainability is a major issue for all of their portfolio companies. “Everybody wants to do their job as a corporate citizen to make sure they’re not leaving anything else up there that doesn’t need to be there. Indeed, Boshuizen noted that at Planet Labs, best practices were taken very seriously.

Still, Boshuizen noted concerns about newer capital sources that might be less focused on the issue of space debris. “I don’t think everyone necessarily has the same space background,” he said, explaining that “we’re seeing a lot of outside investment from new people joining the industry, which is exciting, but also they don’t really know how important this is [and] it’s important for people to realize that they’ve got to pay attention to this.”

News: Google expands its cloud with new regions in Chile, Germany and Saudi Arabia

• December 21, 2020
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It’s been a busy year of expansion for the large cloud providers, with AWS, Azure and Google aggressively expanding their data center presence around the world. To cap off the year, Google Cloud today announced a new set of cloud regions, which will go live in the coming months and years. These new regions, which

It’s been a busy year of expansion for the large cloud providers, with AWS, Azure and Google aggressively expanding their data center presence around the world. To cap off the year, Google Cloud today announced a new set of cloud regions, which will go live in the coming months and years. These new regions, which will all have three availability zones, will be in Chile, Germany and Saudi Arabia. That’s on top of the regions in Indonesia, South Korea, the U.S. (Last Vegas and Salt Lake City) that went live this year — and the upcoming regions in France, Italy, Qatar and Spain the company also announced over the course of the last twelve months.

In total, Google currently operates 24 regions with 73 availability zones, not counting those it has announced but that aren’t live yet. While Microsoft Azure is well ahead of the competition in terms of the total number of regions (though some still lack availability zones), Google is now starting to pull even with AWS, which currently offers 24 regions with a total of 77 availability zones. Indeed, with its 12 announced regions, Google Cloud may actually soon pull ahead of AWS, which is currently working on six new regions.

The battleground may soon shift away from these large data centers, though, with a new focus on edge zones close to urban centers that are smaller than the full-blown data centers the large clouds currently operate but that allow businesses to host their services even closer to their customers.

All of this is a clear sign of how much Google has invested in its cloud strategy in recent years. For the longest time, after all, Google Cloud Platform lagged well behind its competitors. Only three years ago, Google Cloud offered only 13 regions, for example. And that’s on top of the company’s heavy investment in submarine cables and edge locations.

News: Bolt adds $75M to its Series C, as the battle to rule online checkout continues

• December 21, 2020
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Bolt, a startup that offers online checkout technology to retailers, announced this morning that it has added $75 million to its Series C round, bringing the financing to a total of $125 million. WestCap and General Atlantic led the new tranche, which Bolt CEO Ryan Breslow told TechCrunch was raised at around twice its Series

Bolt, a startup that offers online checkout technology to retailers, announced this morning that it has added $75 million to its Series C round, bringing the financing to a total of $125 million.

WestCap and General Atlantic led the new tranche, which Bolt CEO Ryan Breslow told TechCrunch was raised at around twice its Series C valuation. PitchBook pegs the company’s Series C at a post-money valuation of $500 million, implying that the Series C1 values Bolt at around $1 billion.

The company is calling the latest check its “Series C1.’ Why not just call it a Series D? According to Breslow, Bolt’s future Series D will be much larger.

While Bolt’s creatively demarcated Series C1 is interesting, the capital event is in line with how the checkout space is growing in aggregate right now. There’s a lot of money being put to work on solving a particular e-commerce pain point.

Fast, a competing online checkout software provider, raised $20 million in March. And this June, Checkout.com, which is based in England but has a global stable of offices, raised $150 million at a $5.5 billion valuation.

Bolt, meanwhile, announced the first $50 million of its Series C in July. The company’s C1 event, therefore, represents not only the fourth major investment into checkout tech this year, but it also fits into a now-regular trend of fast-growing startups raising two checks in 2020 — companies like Welcome, Skyflow, AgentSync and Bestow also completed the feat this year.

But enough talking about its market. Let’s dig into what Bolt is building and why it just took on another truckload of cash.

Series C1

Bolt offers four connected services: checkout, payments, user accounts and fraud protection.

The company’s core offering is its checkout product, which it claims is both faster than comparable industry averages and has higher conversion rates. The startup’s payments and fraud services fits into its checkout universe by ensuring that transactions are real and that payments can be accepted. Finally, Bolt’s user accounts (shoppers are prompted to save their credentials when they first execute a purchase with the startup’s tech) boost the chance that someone who has checked out online using its tech will do so again in the future, helping Bolt to sell its service and ensure customers benefit from it.

The more shoppers that Bolt can attract, the more accounts it will have in the market feeding more data into its anti-fraud tool and checkout personalization technology.

And Bolt is reaching more online buyers, with the company claiming a roughly 10x gain of the number of people who have made accounts with its service this year. According to Breslow, the number was around 450,000 last December. It’s around 4.5 million now, he said, and Bolt expects the figure to reach 30 million next year.

Given the huge scale of its expected account creation, TechCrunch asked Breslow about his confidence interval in the number. He said 90%, thanks to Authentic Brands Group (ABG) linking up with Bolt, a deal that his company announced last month. Breslow said that ABG has 50 million shoppers; perhaps the 30 million figure is possible.

(Distribution for checkout tech is like oxygen, so competing companies in the space love to chat about their availability gains. Here’s Fast talking about being supported by WooCommerce from last week, for example. Fast declined to share processing growth metrics with TechCrunch after that announcement.)

Bolt’s historical shopper growth has paid dividends for its total transaction volume. The company told TechCrunch that it processed around $1 billion in transactions this year, up around 3.5x from its 2019 gross merchandise volume (GMV). That approximate pace of growth implies a roughly $286 million GMV result for Bolt last year; how far the company can scale that figure in 2021 will be our chief measuring stick for how well its ABG deal performs.

Breslow told TechCrunch that Bolt expects to 3x its GMV in 2021, which we read as implying a roughly $3 billion number.

But don’t just take that figure, apply a payment processing percentage, and walk away with a revenue guess for Bolt. The company does make money from payments, but also from charging for its other services — like fraud protection — on a SaaS basis. So Bolt is a hybrid payments-and-software company, an increasingly popular model, though one that certain categories of software are slow to pick up on.

Underpinning Bolt’s plans to treble GMV and greatly expand its shopper network is its new capital. The $75 million cache of new dollars is going into handling market demand, moving upmarket and engineering, the company said. In short there’s a lot of in-market demand for better checkout tech — hence all the venture activity — and larger customers need more customizations and sales support. Bolt is going to spend on that.

Given that Bolt just reloaded, it would not be a surprise to see Fast or Checkout.com raise more capital in Q1 or Q2 of 2021. More when that happens.

News: The Station: Zoox’s six-year ride, Aurora makes its Uber ATG employee picks and NHTSA takes a new position on AVs

• December 21, 2020
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The Station is a weekly newsletter dedicated to all things transportation. Sign up here — just click The Station — to receive it every Saturday in your inbox.  Hi friends and new readers, welcome back to The Station, a newsletter dedicated to all the present and future ways people and packages move from Point A to

The Station is a weekly newsletter dedicated to all things transportation. Sign up here — just click The Station — to receive it every Saturday in your inbox. 

Hi friends and new readers, welcome back to The Station, a newsletter dedicated to all the present and future ways people and packages move from Point A to Point B.

I asked you last week to share your picks for the biggest stories of the year. While there was a mix, two startup-focused themes emerged: COVID-19 and the pressure it put on companies as well as the unexpected flurry of deals that occurred despite the pandemic.

SPACs, Tesla’s skyrocketing share price, Waymo’s driverless ride-hailing service opening up to the public in the Phoenix area, Uber’s 2020 evolution (which I addressed last weekend) and Amazon’s acquisition of Zoox also made the list.

Speaking of Zoox, I posted an article last week of my interview with Jesse Levinson, the co-founder and CTO of Zoox. Access to the article requires an EC subscription, so I’ll offer a nugget here that I thought was new and interesting.

I asked Levinson what his hope was at the federal level? Specifically, if he sees real guidelines being formalized? Here’s the exchange.

LEVINSON: Well, we’re actually in good shape from a federal perspective. We have designed our vehicle to comply with the FMVSS (Federal Motor Vehicle Safety Standards) and we are crash testing our vehicle to all of those standards. We’ve actually attempted most of them and passed every one that we’ve attempted, so you know, really we’re not actually blocked on the federal level.

We’ll see what happens with the new administration and what the future of regulations brings but at this point we’re actually good to go.

YOURS TRULY: Then you don’t need an exemption (federally)? You don’t have a steering wheel.

LEVINSON: Yeah, we’ve designed our vehicle to be compliant with the FMVSS. And so we were not looking for an exemption approach.

ME AGAIN: Is it because you’re going to be under 25 miles an hour? My understanding was that if you didn’t have a steering wheel that the vehicle wouldn’t comply. So how does that work?

LEVINSON: I would just say that’s not our interpretation of the standards.

Readers: read the last item in the newsletter for the punch line. 

Email me anytime at kirsten.korosec@techcrunch.com to share thoughts, criticisms, offer up opinions or tips. You can also send a direct message to me at Twitter — @kirstenkorosec.

Deal of the week

The end of 2020 has produced a string of acquisitions, mergers and fundraising rounds that seemed unlikely this spring as the COVID-19 pandemic spread volatility and uncertainty.

One of the bright spots in 2020 was delivery. Startups focused on delivery — whether it is via trucking, autonomous bots or airborne devices like drones — managed to secure new funding while others struggled.

That doesn’t mean the pandemic didn’t delay or create obstacles for delivery startups. Take Indian food delivery company Zomato, for example.

The 12-year-old company did raise $660 million in a Series J round this month. Tiger Global, Kora, Luxor, Fidelity (FMR), D1 Capital, Baillie Gifford, Mirae and Steadview participated in the round. Zomato now has post-money valuation of $3.9 billion.

However, Zomato originally anticipated to close the round 11 months ago. Several obstacles, including the current pandemic, delayed the fundraise effort. Ant Financial, which had originally committed to invest $150 million in this round, only delivered a third of it.

More money appears to be headed toward Zomato, which is preparing to go public in 2021. Zomato co-founder and CEO Deepinder Goyal said the company is also in the process of closing a $140 million secondary transaction.

Zomato, which acquired Uber’s Indian-based food delivery business early this year, has good reason to stack its coffers. The company faces a fight for market share with rival Swiggy and a new emerging threat of Amazon.

Other deals that got my attention this week …

AutoLeap, a six-month-old, Toronto-based startup, revealed that it raised $5 million in seed funding in September led by Threshold Ventures. The round also included individual investors Shift co-founder George Arison, former General Motors CEO Rick Wagoner and former senior Bridgestone exec Ned Aguilar.

Bolt, the Estonian startup that’s building an on-demand network to move food and people around in cars, on scooters and on bikes, raised €150 million ($182 million at current rates) in an equity round. CEO and co-founder Markus Villig has growth on the brain. He told TechCrunch that Bolt, which already covers 200 cities in 40 countries, will use the new funds to expand geographically with an aim to become the biggest provider of electric scooters in Europe.

Boom Supersonic raised $50 million in new funding led by WRVI Capital for a post-money valuation of more than $1 billion, Bloomberg reported.

Cargo.one, the air cargo booking platform, raised $42 million in a Series B funding round that was led by Bessemer Venture Partners. Existing investors Creandum, Index Ventures, Next47 and Point Nine also participated in the round. The company raised $18 million in a Series A round earlier this year.

CarGurus, the online automotive marketplace, agreed to acquire a 51% interest in Plano, Texas-based CarOffer at an enterprise valuation of $275 million. Under the deal, CarGurus has the option to buy the remaining equity interest in the company over the next three years. CarOffer is an automated instant vehicle trade platform that offers an alternative to the traditional wholesale auction model.

GoFor Industries, a Canadian delivery company, raised CA$20 million in a Series A round that will be used to drive its expansion into the United States, Freightwaves reported.

Motorq, the connected car API company, raised $7 million in a Series A round of funding led by Story Ventures with participation from existing investors FM Capital and Monta Vista Capital. A new strategic investor, Avanta Ventures, the investment arm of CSAA, also joined the round.

Motorq developed a cloud-based system that captures and then monitors embedded data from a vehicle’s onboard computers and then run analytics and machine learning models on the data. Motorq says the system can help put those analytics into context, which can be combined with other information, and then sent to customers via application programming interfaces (APIs) and other tools. Datapoints include vehicle location, charge/fuel use, driver behavior, safety warnings, maintenance alerts and certain remote commands.

Volcon ePowersports raised $2.5 million in public funding through the WeFunder platform. The company said it has raised more than $4.5 million since September through a seed round of funding and through WeFunder. The capital will be used to continue the build-out of Volcon’s production facilities and assembly lines. For the unfamiliar, Volcon is aiming to build and start deliveries of an all-electric off-road motorcycle called the Grunt in Spring 2021.

Vroom, the online used-car company, has agreed to acquire Vast Holdings Inc., which includes Austin-based vehicle listings platform CarStory, for $120 million, reported Automotive News.

Uber ATG-Aurora integration

Autonomous vehicle company Aurora Innovation isn’t wasting any time integrating with Uber Advanced Technologies Group. As you might recall, just a week or so ago, Aurora announced that it was acquiring Uber’s self-driving subsidiary in a complex deal that will give the combined company a valuation of $10 billion.

Aurora CEO Chris Urmson sent offers via email Thursday to more than 75% of employees at Uber ATG, according to a source familiar with the post-acquisition integration process. That’s more than 850 employees. If every employee accepts, Aurora will more than double in size overnight.

Uber ATG Toronto, which employs about 50 people where the subsidiary conducted its research and development work, did not make the cut, according to a source. Nor has Uber ATG’s chief scientist Raquel Urtasun, who led the Uber ATG R&D team. Urtasun, who is considered a leading expert in machine perception for self-driving cars, is also a University of Toronto professor and the Canada Research Chair in Machine Learning and Computer Vision as well as the co-founder of the Vector Institute for AI.

News of the Toronto closure prompted a few venture capitalists and founders to share their surprise that Aurora wouldn’t have pinpointed Urtasun and the rest of the R&D as some of the most desirable candidates to join the newly combined company. We don’t know if they did. Here’s what I can predict. If the texts and emails I received are any indication, Urtasun is already fielding offers from several other AV companies.

One more policy thing

A curious item popped up this week that certainly must have captured the attention of policy folks at any autonomous vehicle company planning to operate in the United States.

The National Highway Traffic Safety Administration posted a notice this week that offers a clarification to AV policy. Before I dig in, let me provide a brief overview of the law.

Today, a motor vehicle must comply with all federal motor vehicle safety standards (FMVSS), which set a minimum threshold of performance that a vehicle must meet. But once you determine that the “driver” can be system of hardware and software (a simplification I know) and not a human, it raises questions about whether a vehicle really needs the physical steering wheel and other traditional controls a robot simply has no use for.

This notice reverses prior statements that NHTSA made, most notably a letter of interpretation that the agency sent in 2016 to Chris Urmson, who at the time was heading up Google self-driving project.

The 2016 interpretation created a Catch-22 scenario for AV companies that wanted to use vehicles with novel designs like those that lacked a steering wheel or pedals. NHTSA said, at the time, that manufacturers had certify that a motor vehicle complied with requirements of all applicable FMVSS and to design the vehicle in such a way that NHTSA would be able to conduct each element of each test procedure specified within each applicable regulation. But that was impossible because certain test conditions or procedures could not be conducted on the vehicle as specified in the FMVSS

The only real path forward was for a company to ask for exemptions.

This notice not only acknowledges that the 2016 interpretation was too restrictive, it seems to have removed a major obstacle that will allow robotaxis to get on the road sooner.

And now suddenly, Levinson’s comments (yeah way back up at the top of this newsletter) make more sense. Here’s a link to the notice.

News: IBM snags Nordcloud to add multi-cloud consulting expertise

• December 21, 2020
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IBM has been busy since it announced plans to spin out its legacy infrastructure management business in October, placing an all-in bet on the hybrid cloud. Today, it built on that bet by acquiring Helsinki-based multi-cloud consulting firm Nordcloud. The companies did not share the purchase price. Nordcloud fits neatly into this strategy with 500

IBM has been busy since it announced plans to spin out its legacy infrastructure management business in October, placing an all-in bet on the hybrid cloud. Today, it built on that bet by acquiring Helsinki-based multi-cloud consulting firm Nordcloud. The companies did not share the purchase price.

Nordcloud fits neatly into this strategy with 500 consultants certified in AWS, Azure and Google Cloud Platform; giving the company a trained staff of experts to help as they move away from an IBM -centric solution to choosing to work with the customer however they wish to implement their cloud strategy.

This hybrid approach harkens back to the $34 billion Red Hat acquisition in 2018, which is really the lynchpin for this approach, as CEO Arvind Krishna told CNBC’s Jon Fortt in an interview last month. Krishna is in the midst of trying to completely transform his organization, and acquisitions like this are meant to speed up that process.

“The Red Hat acquisition gave us the technology base on which to build a hybrid cloud technology platform based on open-source, and based on giving choice to our clients as they embark on this journey. With the success of that acquisition now giving us the fuel, we can then take the next step, and the larger step, of taking the managed infrastructure services out. So the rest of the company can be absolutely focused on hybrid cloud and artificial intelligence.”

John Granger, senior vice president for cloud application innovation and COO for IBM Global Business Services says that IBM’s customers are increasingly looking for help managing resources across multiple vendors, as well as on premises.

“IBM’s acquisition of Nordcloud adds the kind of deep expertise that will drive our clients’ digital transformations as well as support the further adoption of IBM’s hybrid cloud platform. Nordcloud’s cloud-native tools, methodologies and talent send a strong signal that IBM is committed to deliver our clients’ successful journey to cloud,” Granger said in a statement.

After the deal closes, which is expected in the first quarter next year subject to typical regulatory approvals, Nordcloud will become an IBM company and operate to help continue this strategy.

It’s worth noting that this deal comes on the heels several other small recent deals including acquiring Expertus last week and Truqua and Instana last month. These three companies provide expertise in digital payments, SAP consulting and hybrid cloud applications performance monitoring respectively.

Nordcloud, which is based in Helsinki with offices in Amsterdam, was founded 2011 and raised over $26 million, according to Pitchbook data.

 

News: The US wants startups to get a piece of the $16 billion spent on space tech

• December 21, 2020
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The U.S. government is one of the biggest spenders in the nascent space industry and the man who handles the money for the Air Force’s $16 billion checkbook wants startups to know that his door is open for them. In all, Will Roper, the Assistant Secretary of the Air Force for Acquisition, Technology and Logistics,

The U.S. government is one of the biggest spenders in the nascent space industry and the man who handles the money for the Air Force’s $16 billion checkbook wants startups to know that his door is open for them.

In all, Will Roper, the Assistant Secretary of the Air Force for Acquisition, Technology and Logistics, handles about $60 billion worth of budget for the Air Force — a mandate that includes spending money on the new tech initiatives the Air Force deems important.

Historically, the Department of Defense hasn’t been the greatest at working with startups — and many tech companies have been loath to work with the DoD. However, since much of modern civilian infrastructure is based on global positioning systems and other satellite technologies that fall under the Defense Department’s purview, those views on cooperation are changing on both sides.

“Space isn’t a quiet domain of communication and navigation and exploration anymore,” Roper told the audience at TechCrunch’s latest Sessions event, TC Sessions: Space 2020. “It’s increasingly becoming a hostile place… So we’re gearing up a new kind of competition the military side that could extend to space and that’s creating a lot of new space programs.”

Roper emphasized that the interest from the Air Force and the government more broadly extends well beyond offensive capabilities and military priorities. As space becomes an economic opportunity, Roper sees the Air Force as an engine for driving technology development forward in ways that have commercial benefits.

“It’s a great, great time for innovation in new technologies that could help the military, but we want to do more than just help the military. That’s the old thinking in the Pentagon . That’s all that would help us win the Cold War in the 20th Century, but it’s not going to help us in the 21st, where technology is globalized and accelerating,” Roper said.

“We want to find ways where our military mission and our funding can help accelerate commercial markets to so it’s competing on a much bigger stage. But we think it’s where we need to aspire to be, so that we’re playing the right catalyst role in this nation and with our partners around the world,” Roper said.

There are several programs that startups can tap to get those Federal dollars. Two of the easiest points of entry are through the AFWERX and its recently announced SpaceWERX arm focused entirely on space technology.

“These look like any tech company,” Roper told the audience at the TechCrunch event. “They’re outside our fence lines. They’re easy to walk into… Now you don’t have to know the mission, we will help you find the mission and the customer — the warfighter associated with it. It’s a great model because it keeps the company focuse don what they know best, which is their tech.”

Over the last three years, Roper estimated that the AFWERX program had brought 2300 companies into the Air Force and Space Force programs and most of them had never worked with the military before, he said.

Within AFWERX there are three programs that particularly relate to integrating startups into the procurement process, Roper said. One is the Spark program, which pairs military with private industry; one is the AFVentures program, which is designed to finance new innovations coming from private industry; and finally there’s the Prime program, which helps commercialize and certify technologies.

Roper pointed to the recent certification the Air Force gave to Joby Aviation for its flying cars. “So there’s a new military market that will hopefully generate a new commercial market,” Roper said.

In 2021, the Prime program will expand to space technologies, according to Roper.

As the demand for new tech grows, there’s no shortage of innovations Roper would like to see from private industry. From new autonomous innovations that could help co-pilot spacecraft to technology for refueling and in-space maneuverability, and reusable equipment from boosters to other components that can bring costs down.

Roper also acknowledged that the Pentagon has a long way to go to “hack the acquisition system” when it comes to dual use technologies.

Entrepreneurs have pointed out that one of the biggest obstacles to the growth of the commercial space industry has been the inability of the US government to open up the technology for use by private industry.

Roper hopes to change that. “We want to use our military dollars, our mission, and potentially our certifications to help get you there without changing your core product,” he said. “If you succeed as a commercial success, then then we succeed as well, because now we’ve got a great tech partner, that hopefully we can continue to come to to solve problems in future. The thing that we’ll want to understand early on is how our military market and all those benefits I just mentioned, how can they help you get to commercial success? And what is it that we not need to do to pull you off that trajectory?”

Contracts with AFWERX are fixed price and progress as companies hit certain milestones on the product roadmap. These orders increase incrementally as the technology proves itself, so a contract could start with the delivery of a prototype, then experimental usage, then a commercial contract, then broad adoption. “What we’re looking to do is see if you can move the ball forward on your technology, and if you do, then we do another contract. We step you up our process,” Roper said.

Roper sees the project as nothing less than the evolution of the aerospace and defense industry.

“We have a lot of amazing companies today that helped build stealth bombers and space planes and all sorts of awesome stuff. They’re defense companies and we still need them,” Roper said. “What we’re hoping to help build in this century is a set fo new companies that are just tech companies. They’re not defense, purely, and they’re not commercial purely. They’re just technology companies and they do a bit of business on both sides.”

News: TikTok launches its first personalized annual recap feature, ‘Year on TikTok’

• December 21, 2020
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Spotify users have Wrapped and Instagram users have their Top 9. And now TikTok users will have their own year-in-review feature, too. The company today announced the launch of its first personalized annual recap feature with the launch of “Year on TikTok,” a video highlight reel that showcases individual users’ own top TikTok moments. This

Spotify users have Wrapped and Instagram users have their Top 9. And now TikTok users will have their own year-in-review feature, too. The company today announced the launch of its first personalized annual recap feature with the launch of “Year on TikTok,” a video highlight reel that showcases individual users’ own top TikTok moments. This includes things like how long you’ve been on TikTok, what sort of videos you watched most, your favorite tracks and creative effects, metrics on how often you commented and shared videos, and more.

The feature will also identify your favorite “vibes” — meaning, the sort of videos you like best, such as crafts, cooking, animals, travel, cottagecore, or any of the now numerous communities that have sprung up on the social video platform.

If users haven’t been on TikTok long enough to have developed their own “vibe,” TikTok says their “Year on TikTok” will include other top videos from its “Year on TikTok: Top 100” list instead.

The content for the recap is presented in a familiar way. You’ll vertically scroll down through a video that details your 2020 interests and activities. You then have the chance to share that video directly to your own TikTok profile in order to receive a special profile badge that puts a “2020” on top of your profile photo.

The app’s “Year on TikTok” page also includes other TikTok highlights to browse through, including top memes, top creators, top viral videos, most impactful creators, top celebs, top songs, and other year-end trends.

TikTok users can access their “Year on TikTok” by tapping the icon on their For You feed — a prominent placement — or by scrolling to the banner at the top of the app’s Discover page.

The accuracy of TikTok’s recap is debatable. For example, even though every other video in my For You feed is related to politics and news (go figure!), TikTok informed me my top “vibes” were things like home, travel, and animal videos. That’s true too, but it’s an incomplete list and doesn’t match up with the majority of my past “likes.” It seems that TikTok may be curating the experience to focus on more positive “vibes” — and political videos and themes didn’t make the cut.

Regardless of its attempts at spin, social features that offer users a personalized retrospective of how they engaged with an app through the year have proven to be fairly popular — and a good marketing mechanism, as well.

Spotify’s Wrapped, for instance, has been so well-received that people began to complain that people’s Wrapped shares were dominating and overwhelming their social feeds at year-end. Spotify this year partially addressed this problem by offering new customization options for its 2020 Wrapped that let users adjust the color of their Wrapped card before sharing. This way, the flood of Wrapped shares wouldn’t look quite as homogenous as in prior years, and may be perceived as less of an annoyance.

The “Year on TikTok” feature will likely do well, too, though it’s hard to track. The hashtag #YearOnTikTok is up to 5.4 billion views, thanks to users who are adopting the tag in hopes of propelling their videos to a wider audience or getting on the For You page. The real test will be how many creators end up with the 2020 badge stuck on their profile in the days to come.

While TikTok’s feature is fun, if you find it somewhat lacking there are third-party alternatives.

One app, Retroplay, launched its own 2020 TikTok Year in Review this month. The app does more than just round-up your own stats and metrics. Users can also vote for their favorite creators and videos through Retroplay’s “Superlatives” awards, collect cards from favorite creators, and customize their own highlight reel. But the app is brand-new and struggling with bugs — the highlight reel is currently down while it’s being fixed, for instance, and the app couldn’t resolve a username that began with a period instead of a letter, we found.

“We wanted to focus more on the year-in-review for content creators, and over the past two weeks have been working with creators to get their ideas. We’ve temporarily disabled the Highlight Reel feature based on feedback,” the developers responded in an email to TechCrunch. They said creators will be able to create their Top 4 or Top 9 video compilations through a new feature launching at the end of the week.

The app also had difficulties pulling data as TikTok didn’t offer an API and cut them off from accessing public facing user videos and pulling stats.

But the app’s design is catchy and the interactive features are engaging, so hopefully the developer can address the other issues soon — and before year-end!

News: COVID-19 relief bill includes $1.9B to ‘rip and replace’ Huawei and ZTE equipment

• December 21, 2020
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A long-awaited COVID-19 relief bill finally received congressional approval over the weekend. Top-line efforts include plans to bolster a population feeling intense strain after nine months of shutdown. The $600 direct payment has, understandably, grabbed the most headlines, but there’s a ton to dig into amidst the $900 billion package. Most relevant for our coverage

A long-awaited COVID-19 relief bill finally received congressional approval over the weekend. Top-line efforts include plans to bolster a population feeling intense strain after nine months of shutdown. The $600 direct payment has, understandably, grabbed the most headlines, but there’s a ton to dig into amidst the $900 billion package.

Most relevant for our coverage is several billion earmarked for broadband-related issues, including $7 billion set aside to increase broadband access for low-income Americans. Speaker Nancy Pelosi and Senator Chuck Schumer issued a release noting that the money will go to “help[ing] millions of students, families and unemployed workers afford the broadband they need during the pandemic.”

Internet access has been one of countless pain points, as schools across the country have shutdown in order to stop the spread of COVID-19. Lack of a solid internet connection can severely hamstring remote schooling.

Also notable is the $1.9 billion set aside to “rip and replace” ZTE and Huawei equipment, according to reporting from Reuters. Huawei in particular has been a long-time target for the U.S. government. The Chinese technology giant was added to the Department of Commerce’s so-called Entity List last year. Precisely what such moves have meant for companies like Huawei and ZTE has been something of an evolving picture in subsequent months.

More legislation earlier this year officially barred U.S. companies from purchasing networking equipment from either, followed by plans to begin the process to “rip and replace” existing services. Part of the new bill, it seems, will involve the purchasing of equipment to replace those being removed from U.S. networks.

A Huawei spokesperson earlier noted, “to force removal of our products from telecommunications networks. This overreach puts U.S. citizens at risk in the largely underserved rural areas – during a pandemic – when reliable communication is essential.”

The future status of companies like Huawei and ZTE under the incoming Biden administration, however, remains to be seen. Notably, the Commerce Department recently added an additional 77 names to the Entity List, including prominent Chinese firms DJI and SMIC.