News: The next big startup may just help venture back more startups

• September 11, 2021
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Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here.  Oper8r, built by Winter Mead and Welly Sculley, wants to help new entrants in the VC world scale. The accelerator launched last year as a “Y Combinator for emerging fund managers,” built

Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here. 

Oper8r, built by Winter Mead and Welly Sculley, wants to help new entrants in the VC world scale. The accelerator launched last year as a “Y Combinator for emerging fund managers,” built to help solo capitalists and people launching rolling funds grow up.

The idea was that a well-networked, smart individual may be able to raise their first $10 million in a debut fund off of connections, but when it comes time to scale to a $50 million or $200 million fund, managers need to have a sophisticated understanding of how the LP world works.

Now, Mead claims that all 18 graduates within his first cohort, which include Stellation capital, Maple VC, Interlace Ventures and Supply Change Capital, have successfully closed funds. Its second cohort is still in the fundraising process, but across both cohorts, over $500 million has been closed. Oper8r is launching its third cohort next week and soon will announce the launch of Cr8r, an early-stage program to help talented angel investors grow their investment cadence.

Oper8r’s expansion comes as the rate of first-time venture fundraising grows as well. The Wall Street Journal’s Yuliya Chernova wrote a story this week about how, after years of being on the decline, the rate of first-time venture fundraising in the United States is “on track to reverse course.” The story, pulling analysis from advisory firm Different Funds, states that “in the second quarter of this year, some 40% of venture-fund announcements, which includes funds just setting out to raise capital, were made by debut funds, whereas they represented between roughly 20% and 30% of fund announcements in each quarter over the past two years.”

This data screams that the rise of a solo GP, or an ambitious rolling-fund-turned-venture firm, isn’t a one-off, it’s an actual trend. This means there’s more pressure for venture firms to go beyond a scout program when it comes to supporting the next big investors — and there’s more of a market for formal efforts to scale operations.

Mead, meanwhile, is cooking up ways to add validation and signal to Oper8r. Many accelerators write checks to further validate their choices, but also to tap into the access they’re getting by helping budding entrepreneurs before top-tier LPs and VCs notice them. He hinted that Oper8r may pursue a similar strategy as it seeks to be the go-to for emerging managers.

“I think capital speaks louder than educational programs,” he said. “If you’re putting money into the opportunities you’re engaged with, I think it serves as a greater signal than someone just coming through the program.”

In the rest of this newsletter, we’ll discuss the creator economy’s latest dance, international BNPL week, and why I’m putting Reid Hoffman in the hot seat. As always, you can find me on Twitter @nmasc_ and listen to my podcast, Equity.

Edtech wants to have its creator economy moment, and it’s complicated

Image Credits: Bryce Durbin / TechCrunch

Edtech and the creator economy certainly differ in the problems they try to solve: Finding a VR solution to make online STEM classes more realistic is a different nut to crack than streamlining all of a creator’s different monetization strategies into one platform. Still, the two sectors have found common ground in the past year — as encapsulated by the rise of cohort-based class platforms.

Here’s what to know: I wrote about how the overlap of both sectors is leading to some complications during the rise of cohort-based classes. Some fear that turning creators into educators could bring in a rush of unqualified teachers with no understanding of true pedagogy, while others think that the true democratization of education requires a disruption of who is considered a teacher.

Edtech extras: 

• Quizlet plans for IPO over a year after hitting unicorn status 
• Microsoft acquires TakeLessons, an online and in-person tutoring platform, to ramp up its edtech play
• The Education Revolt: 7 key drivers and 4 industry shifts

TTYL, BNPL

Image Credits: Bryce Durbin / TechCrunch

This week on Equity, Mary Ann and I made sense of what felt like international BNPL week: PayPal acquired Japan’s Paidy for $2.7 billion, Zip bought Africa’s Payflex and Addi raised $75 million to prove BNPL’s power in LatAm.

Here’s what to know: The global boom is partly in response to e-commerce trends, partly in response to consumer demand for more flexibility when it comes to financing. The market isn’t a winner-takes-all, so expect more well-capitalized startups buying their way into consumer markets outside of their geography.

Other news of note:

• As BNPL startups raise, a look at Klarna, Affirm and Afterpay earnings
• Wisetack closes on $45M to bring ‘buy now, pay later’ to in-person services
• Why Square is shelling out $29B to snag BNPL player Afterpay
• Fintech is transforming the world’s oldest asset class: Farmland

Reid Hoffman on the hot seat

Image Credits: Kelly Sullivan/Getty Images for LinkedIn

I read Reid Hoffman’s podcast-turned-new-book “Masters of Scale” over the past few days. The entire time, I felt like a well-networked mentor was giving me a pep talk, with name-drops that turned into generalist advice and a behind-the-scenes look at humanity’s decisions.

Here’s what to know: While the book gave me a needed boost of optimism, I still had some critiques. I felt like the book’s choice to not talk much about the ugly within startupland creates an imbalance of sorts. It would have benefitted from talking directly about divisive dynamics, ranging from how WeWork’s Adam Neumann impacted the way we talk about visionary founders, Brian Armstrong’s Coinbase memo and what it means for startup culture, or even the role of the tech press today.

So, I have an idea. Let’s balance out the cheerfulness with the cynical, and let’s do it live. I’m interviewing Hoffman at TechCrunch Disrupt this year, where I’ll put him on the hot seat and push him to explain some of the choices he made in the book. Other people I’m excited to see at the show include Peloton’s CEO and chief content officer and Ryan Reynolds.

Buy your tickets to TechCrunch Disrupt using this link, or use promo code “MASCARENHAS20” for a little discount from me.

Around TC

I’ll be honest, all we’re talking about internally these days is one thing: Disrupt, Disrupt, Disrupt. Here’s the agenda for the Disrupt Stage, which includes three virtual days of nonstop chatter on disruptive innovation.

Across the week

Seen on TechCrunch

• The time Animoto almost brought AWS to its knees
• Facebook debuts its Ray-Ban Stories smart sunglasses
• Twitter wants you to tweet to interest-based communities, not just followers
• Apple prohibited from blocking outside payment in Epic ruling
• Google Workspace opens up spaces for all users

Seen on Extra Crunch

• What China’s new data privacy law means for US tech firms
• Anatomy of a SPAC: Inside Better.com’s ambitious plans
• Debt versus equity: When do non-traditional funding strategies make sense?
• Advanced rider assistance systems: Tech spawned by the politics of micromobility

And that’s it! Didn’t feel like a short week at all, huh?

Talk soon,

N

News: Epic trial forces App Store changes, Android 12 launch nears, Twitter tries communities

• September 11, 2021
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• in:  Blog 
• note:  no comments 

Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy. The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone.

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

The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.

Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.

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

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

Top Story: App Store “not a monopoly” judge rules

Image credit: Andrew Harrer/Bloomberg via Getty Images

At the start of the day on Friday, it seemed like the week’s big App Store news would be Epic Games’ attempt to get back into the App Store in South Korea, following the passage of a law that forced Apple and Google to permit apps to use third-party payment systems. But Friday turned out to have much bigger news in store.

That morning, U.S. District Judge Yvonne Gonzalez Rogers issued a ruling in California’s Epic Games v. Apple antitrust case, where the Fortnite maker had alleged Apple was abusing its market power by forcing developers to use its own in-app payment systems. The judge’s decision favored Apple on the larger matter of whether or not it was acting in a monopolistic fashion. The judge said both parties had defined Apple’s relevant market incorrectly — it wasn’t just the App Store or gaming, but specifically, the $100 billion market for digital mobile gaming transactions. And while Apple had a lot of financial success here, with a 55%+ market share and high profit margins, that success was “not illegal” under either federal or state antitrust law.

This decision also means Epic Games was in breach of its contract when it implemented its own payments system in its Fortnite iOS app (it now owes Apple $12 million for that), and Apple won’t be forced to host third-party app stores or allow apps to be sideloaded on its mobile devices. For Apple, this is a huge win.

However, the judge did find that Apple was engaging in anticompetitive behavior under California’s competition laws with regard to its anti-steering provisions, which Rogers said “illegally stifle consumer choice.” As a result, Apple may no longer prohibit developers from including links, buttons, or other calls to action in their apps that direct customers to other purchasing mechanisms besides Apple’s own.

This is a huge win for Apple’s developer community, many of whom have long since fought for the right to send customers over to their own websites to make purchases or subscribe, so they could save on fees by avoiding Apple’s in-app purchase commissions. As developer pushback has increased over the years, Apple tried to placate its community by reducing commissions from 30% to 15% for developers with under $1 million in revenues. But it had still blocked developers from telling consumers they could go elsewhere to make a payment from inside their apps.

In recent weeks, this particular guideline was starting to fall apart, as Apple made concessions related to other lawsuits and legislation, including a settlement with a Japanese regulator that saw the tech giant change its policies for “reader apps”– apps that provide access to purchased content — that would allow them to point users to their own website where users could sign up and manage their accounts. Another settlement gave developers permission to use customer contact information collected inside their app to tell customers about other payment options. And South Korea’s new law forced Apple and Google to allow developers to use their own third-party payment systems if they chose.

The larger ramifications of how this policy change will play out remain to be seen. Apple will likely still require its in-app purchase mechanism to remain in place as an option, and it may enact new rules around how and where developers can add their links or other calls to action that direct customers to alternative purchasing mechanisms. The injunction’s wording is vague enough that we’ll also likely see some attempts to place payment buttons that load up alt purchasing screens inside the app, which may not agree with how Apple interprets the ruling. It’s most likely that Apple will simply allow any developer to steer users outside the app, as it does now for the “reader” apps — a system that still makes Apple’s own IAPs feel more seamless and consumer-friendly by comparison.

Then there is the matter of developer adoption. For smaller developers, it may not make sense to try to support two separate payment mechanisms if Apple’s is still required. And some may be concerned about other, less obvious potential punitive measures for avoiding IAPs — like reduced visibility in App Store searches, perhaps, or fewer App Store Editorial highlights.

On the consumer side, things could also become more difficult. Apple’s holes in App Review have allowed too many scam apps to thrive. If these apps now also start to route around IAPs, it could finally motivate Apple to expand its review team to crack down on apps that abuse subscriptions — particularly if there will be no easy way to toggle those external subscriptions off, as there is now for Apple’s IAPs. And while ultimately that’s an issue between the customer and developer, Apple could take the fall for hosting the scam apps in the first place — especially when a scam app developer becomes unreachable and the subscription keeps renewing.

There were a few other notable bits tucked inside the ruling, which paint a picture of an App Store where almost all the revenue is delivered by games and their “whales”:

• Gaming apps account for approximately 70% of all App Store revenues and is generated by less than 10% of App Store consumers.
• Over 80% of consumer accounts generate virtually no revenue, as 80% of all apps on the App Store are free.
• Apple enjoys a market share of over 55% in the market of digital mobile gaming transactions.
• Over 98% of Apple’s IAP revenue came from games in 2018 to 2019.
• Game transactions overall accounted for 76% of App Store revenue in 2017, 62.9% in 2018, and 68% in 2020.

Weekly News

Apple Updates

• Apple announced it will hold its next big hardware event on September 14 (10 am pt/1 pm et), when the company is expected to introduce new iPhones (iPhone 13?), which are rumored to have a new 120Hz ProMotion screen and a new Portrait mode for video called Cinematic Mode. The event, dubbed “California Streaming,” may also introduce an Apple Watch Series 7 and new AirPods. (The event invite also had a nifty AR Easter egg included.)
• Another App Store monopoly lawsuit had expanded ahead of the Epic ruling to include other developers who argued the App Store suppressed certain free apps in rankings and rejected others. Developers suing include the makers of Coronavirus Reporter, Bitcoin Lottery, WebCaller, and Caller-ID apps. It’s unclear what merit the suit will now have given the Epic decision.

Android Updates

Image Credits: Google

• The final Android 12 beta arrives. Google this week rolled out the final developer beta (Android 12 Beta 5) before the public launch of its new mobile operating system in just a few weeks. The update delivered some minor tweaks and fixes but had already reached platform stability with Beta 4. Among the changes are the introduction of new Material You Clock widgets, a “Paint Chips” widget Easter Egg, a more powerful Pixel Launcher, relocated smart home controls, an overheating notification on Pixel phones, a Material You-themed Calculator app, and a search bar that’s regained rounded edges. Google Workspace apps will also feature a Material You design, which you can preview here.
• Google released Android for Cars App Library version 1.1 and completed the transition to Jetpack. Android Auto apps using features that require Car App API level 2+, such as map interactivity, vehicle’s hardware data, multiple-length text, long message and sign-in templates, can now be used in cars with Android Auto 6.7+, the company said.
• Chinese firm Xiaomi is promising 3 years of full Android OS updates, including Android 14, and an additional full year of security patches for its upcoming devices, the 11T Pro and 11T.
• Google and Jio delayed their plan to launch the much-awaited JioPhone Next in India due to chip shortages.

E-commerce

• Leafly launched an in-app marijuana ordering option following the changes to Apple’s App Store rules which now permit apps to directly facilitate these orders where legal. Other marijuana apps including Eaze and Weedmaps have done the same.
• Amazon is offering Indian farmers real-time advice and info through a dedicated mobile app that helps them make decisions about crops and deploy machine learning tech. The company sees securing a steady stream of fruit, vegetables, and other groceries as a key to dominating Indian online commerce, Bloomberg reported.
• Singapore-based Shopee has overtaken Mercado Libre to become the top shopping app in Latin America, Apptopia’s research found.

Augmented Reality

• Snap has hired Nishad Pai, previously a business development and partnerships executive at Adobe, as its Global Head of Platform Partnerships Business Development, The Information reported. He will report to VP of Platform Partnerships Konstantinos “KP” Papamiltiadis, who recently came to Snap from Facebook.

Fintech

• The SEC wants to regulate Coinbase’s crypto yield-generating product, Coinbase Lend, claiming it’s a security. Company CEO Brian Armstrong disagreed and said the SEC offered no explanation as to how it reached this conclusion.

Social

Image Credits: Facebook

• Facebook launched its Snapchat Spectacles rival in partnership with Ray-Ban. The new smart glasses are called Ray-Ban Stories and allow users to record what they’re seeing as both photos and videos using the 2 onboard 5MP cameras, as well as listen to music and take calls. The glasses must be paired with an iOS or Android device to work, and transfer video through the new Facebook View app where users can further edit the media or add effects.
• Twitter launched “Communities,” which allow users to tweet directly to others with their same interests. Initially, Twitter is testing topics like dogs, weather, sneakers, skincare, and astrology.
• Other Twitter features that launched this week include a test taking place in Turkey that allows users to react to tweets using emoji, a test of full-width photos and videos, a test of a new label to identify the “good bots,” and a test of a soft-block feature that lets you remove people from your followers instead of blocking them outright.
• Social network Peanut expanded to include more women with the launch of Peanut Menopause, a collection of features and groups that will allow women in all stages of menopause to network and discuss the topic.
• Consumer spending in social apps will hit $17.2 billion annually by 2025 up from $6.78 billion in 2021, according to new data from App Annie. The boom is largely attributed to the growth of live streaming. In H1 2021, $3 out of every $4 spent in the top 25 social apps came from those that offered livestreams.

Image Credits: App Annie

Photos

• Google Photos adds new ways to print. The app already offered photo prints, books, and more, but now introduces larger photo print sizes and new canvas prints. Now, for $0.18 per print (plus shipping), you can choose between the existing 4×6, 5×7, or 8×10 prints, or four additional sizes: 11×14, 12×18, 16×20, and 20×30 prints. New canvas prints will be added in sizes 8×10, 16×16, 20×30, 24×36, 30×40, and 36×36.
• Dispo, the photo-sharing app that emulates disposable cameras, is now pilot testing a feature that will allow users to sell their photos as NFTs. The company hasn’t fully determined what blockchain it would use, if it would partner with an NFT marketplace, or what cut it would take from these sales if it moves forward.
• Glass launches its photo-sharing app for photographers disenchanted with Instagram. The subscription app allows users to upload photos and follow others, view photo metadata, comment, and more.

Messaging

• WhatsApp says users will now be able to encrypt their chat backups in the cloud. While the Facebook-owned app has allowed end-to-end encrypted chats for more than a decade, there was not yet an option to securely store their chat backup to the cloud, meaning iCloud on iOS or Google Drive on Android. The company has now created a system that will allow users to lock their backups with a 64-digit encryption key, which can be stored offline or in a password manager. Or they can create a password that backs up the key into a cloud-based “backup key vault” that WhatsApp has built.

Dating

Image Credits: Tinder

• Tinder added a new home for interactive, social features with the launch of Tinder Explore. The new section will feature events, like the return of the popular “Swipe Night” series, as well as ways to discover matches by interests and dive into quick chats before a match is made. Combined, the changes help to push Tinder further away from its roots as a quick match-based dating app into something that’s more akin to a social network aimed at helping users meet new people.
• Tinder CEO Jim Lanzone has left the dating app to take the top job at Yahoo, which btw, owns TechCrunch.

Streaming & Entertainment

• Spotify playlist curators are complaining about the streamer’s reporting system that favors bad actors over innocent parties. Currently, playlists created by Spotify users can be reported in the app for a variety of reasons — like sexual, violent, dangerous, deceptive, or hateful content. When a report is submitted, the playlist in question will have its metadata immediately removed, including its title, description, and custom image. There is no internal review process that verifies the report is legitimate before the metadata is removed, which has allowed bad actors (and sometimes their bots) to constantly report playlists that are gaining bigger followings than their own.
• Apple Music will now use Shazam to address attribution and royalties issues around DJ mixes. Apple Music is working with major and independent labels to devise a fair way to divide streaming royalties among DJs, labels, and artists who appear in the mixes, it said.

Gaming

• Amazon’s game-streaming service added support for Chromebook and its own Fire Tablets, including the Fire 7, Fire HD 8, and Fire HD 10. The company has already supported Android, iOS (via a web app), Windows, Mac, and Fire TV. It also added a new “Family” channel for $2.99/month that offers 35 curated games that are appropriate for younger children and is preparing to launch a retro gaming channel, as well.
• Genshin Impact version 2.1 is a hit. The game from miHoYo has generated $151 million in its first week (starting Sept. 1) across iOS and Android, or more than the game accumulated during the full month of August and up 5x from the week prior, Sensor Tower reports.
• Google announced the winners of its Indie Games Festival, which included: Bird Alone by George Batchelor, United Kingdom; Cats in Time by Pine Studio, Croatia; Gumslinger by Itatake, Sweden; CATS & SOUP by HIDEA, Korea; Rush Hour Rally by Soen Games, Korea; The Way Home by CONCODE, Korea; Mousebusters by Odencat, Japan; Quantum Transport by ruccho, Japan; and Survivor’s guilt by aso, Japan.

News & Reading

Image Credits: Microsoft

• Microsoft this week launched a news service called Microsoft Start which personalizes the news for its readers, both by explicit and implicit signals. Users can customize the page to their liking by adding and removing topics or give individual stories a thumbs up or down. It will also get smarter the more you use the service. On mobile, Microsoft Start is available as an app for iOS and Android.

Utilities

• Apple Maps brings its Street View competitor Look Around to Italy, city-state Vatican City, San Marino, and Andorra.

Government & Policy

• Google is under investigation in the EU for forcing Android phone manufacturers to pre-install its voice assistant, Google Assistant on Android devices. The AI assistant has been the default on Android devices since 2017.

Funding and M&A

Mobile game publisher Jam City raised $350 million and closed on its purchase of game publisher Ludia for $165 million. The deal follows Jam City’s decision to drop its $1.2 billion plan to go public via a SPAC. The new funding is a combination of equity and debt and comes from Netmarble, Kabam, and affiliates of funds managed by Fortress Investment Group.

Travel app Headout raised $12 million in Series B funding led by Glade Brook Capital, an investor in Airbnb, Uber, Instacart, and others, for its tour-booking marketplace that has grown 800% since January and reached profitability in July. The company plans to hire 150+ people with the funds.

Live-shopping startup Whatnot is raising new capital at a $1.5 billion valuation, according to a report from The Information, which also says existing investor Andreessen Horowitz is involved in the new round. The app focuses on collectibles, like sports cards, Pokémon cards, Funko Pop figurines and others.

Varo Bank raised a massive $510 million Series E funding round led by new investor Lone Pine Capital, valuing the business at $2.5 billion. The neobank, which has now raised $992.4 million since its 2015 founding, last year became the first U.S. neobank to be granted a national bank charter.

Fintech app Nuula, aimed at small businesses, raised $120 million in new funding to build out a “super app” that will offer business banking, payments, cash flow forecasting, credit score monitoring, customer sentiment tracking, and more. The funding was a combination of $20 million in equity from Edison Partners, and a $100 million credit facility from funds managed by the Credit Group of Ares Management Corporation.

Financial comparison super app Jeff raised a $1.5 million seed extension led by J12 Ventures for its app that operates in Vietnam and plans to move into Indonesia, followed by the Philippines.

U.K. food sharing app OLIO raised $43 million in Series B funding led by Swedish investment firm VNV Global and New York-based hedge fund Lugard Road Capital/Luxor. The app allows users to post a photo of unwanted food to share it with the local neighborhood.

Mayk.it, a social music creation app founded by TikTok and Snap alums, raised $4 million in seed funding and launched to the public. The app allows users to produce, own and share music they make with their phones. Investors include Greycroft, Chicago Ventures, Slow Ventures, firstminute, Steven Galanis, Randi Zuckerberg, YouTuber Mr. Beasts’ Night media, Spotify’s first CMO Sophia Bendz, Cyan Banister, artist T-Pain and music industry veteran Zach Katz, among others.

Fertility tracking app Flo closed on $50 million in Series B funding co-led by VNV Global and Target Global. The round values the business at $800 million. Flo has 200 million global users and leverages machine learning to make cycle predictions, offer health insights, and send health alerts.

Reading Rec’s

• Eight things Apple could do to prove it actually cares about App Store users by Sean Hollister, The Verge: The article presents a list of changes Apple should make, which include hiring a larger App Review team, better police apps for fraud, automatically refund consumers who were scammed by apps, and more.

Downloads

Tape It

Image Credits: Tape It

Tape It launches an AI-powered music recording app designed to be a better alternative to using Apple’s built-in Voice Memos app for quick recordings. The app offers a variety of features, including higher-quality sound, automatic instrument detection, support for markers, notes and images, and more, and will later expand to include collaboration features. It also breaks longer recordings onto multiple lines, more like wrapped text, which it believes is easier to work with than one long, horizontal scroll. But the standout feature is its support for “Stereo HD” quality, which leverages two microphones on newer iPhone models to improve the recording’s sound quality. This feature is a $20 per year subscription, but the app is a free download on iOS. (Full review here.)

Marvel Unlimited (update)

Image Credits: Marvel

The Marvel Unlimited comics subscription app has been overhauled with the latest release. The updated version introduces 27 Infinity Comics, which are high-res vertical comics for phones and tablets. At launch, these include series like X-Men Unlimited, Captain America, Black Widow, Deadpool, Shang-Chi, and Venom/Carnage. By year-end, there will be 100 of these available. The app provides access to over 29,000 comics. The updated version of the app was rebuilt by DMED Technology, which worked closely with Marvel, to deliver a combination of new features and technology, which include enhanced curation, search, personalization, speed, and performance, as well as support for offline reading. DMED is the team within Disney Media & Entertainment Distribution that builds, manages, and maintains Disney’s apps and sites that reach 380 million users globally each month, including Marvel, ESPN, ABC News, ABC, Disney Now, Disney.com, National Geographic, FX, and more. (Full review here.)

ETA 3 (update)

Image Credits: ETA

First launched in 2014, ETA offered an Apple Watch app that made it easier to get the travel time to favorite places right on your wrist. Now, the developer has rebuilt ETA to transform it into a new app for Apple Watch. With ETA 3, the app is entirely independent from the iPhone for starters. You can quickly glance at your locations and see the travel time to your destinations like home, work, school, the airport and any others you input. It now also supports cycling times in addition to driving, walking, and transit. And it will support all calendars, so you can sync your appointments to the app to see the travel time to your next meeting. You can also organize top locations into lists, sync workouts with Apple Health, and more.

Sound Off

Image Credits: Sound Off

A new app called Sound Off offers an easy way to keep a journal using only your voice. Ideal for those who like to think out loud, the app offers daily prompts that help you get started when you don’t know what to say. The app will focus on topics like gratitude, happiness, confidence, relationships, reflection, friendships, sleep, habits, anxiety, family, and more, giving you time to reflect and practice self-care. The recordings are saved locally to your iPhone, so the app developer cannot access them, and are backed up by default using iCloud.

News: BNPL everywhere

• September 11, 2021
• by:   
• in:  Blog 
• note:  no comments 

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter for your weekend enjoyment.

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by what the weekday Exchange column digs into, but free, and made for your weekend reading. Want it in your inbox every Saturday? Sign up here. 

Hello everyone – Anna here, covering for Alex who’s enjoying some well-deserved but soon-ending vacation time. The Exchange also went on pause for the week, but the news didn’t stop, so strap on!

The buy now, pay later space has been one of the hottest fintech verticals since at least last August, when Square announced that it would spend a mind-blowing $29 billion to acquire Australian company Afterpay. But things really caught fire this week, with newsworthy BNPL-related announcements all around. Let’s take a closer look:

While the biggest news was undoubtedly PayPal’s decision to acquire Japan’s Paidy for $2.7 billion, Amazon closing a deal with Max Levchin’s Affirm was also a major move. What clearer sign that BNPL is going mainstream than the ability for U.S.-based Amazon shoppers to defer payments on purchases of $50 or more?

And it’s not just about a handful of players in the world’s leading e-commerce markets: BNPL startups all over the world have been growing, as reflected in recent rounds. For instance, Europe-focused Scalapay raised $155 million at a $700 million valuation, while Colombia’s Addi disclosed a $75 million extension to its Series B totaling $140 million.

“Buy now, pay later is officially everywhere, and Latin America is no exception,” Mary Ann Azevedo wrote for TechCrunch. This isn’t a copy-and-paste of the same model, though. Different markets have different needs, leading to important tweaks. The main one? BNPL isn’t necessarily synonymous with e-commerce.

As a matter of fact, Addi’s partners also include brick-and-mortar stores. This is understandable in markets where e-commerce, although fast growing, doesn’t yet have the same levels of adoption as in the U.S., and where installments were already a thing; but it is also happening as a natural expansion of BNPL beyond e-commerce and retail.

San Francisco-based startup Wisetack is a good example of this trend: It brings buy now, pay later to in-person home services, from HVAC repairs to plumbing. A very fragmented space that Wisetack cleverly worked its way around by teaming up and accessing the professional customer base of vertical SaaS providers such as Housecall Pro and Jobber. Oh, and it just raised $45 million.

What’s particularly relevant with buy now, pay later expanding beyond retail is that it encompasses larger expenses. For example, according to Wisetack CEO Bobby Tzekin, purchases made to service-based businesses average $4,000 to $5,000. Exciting for BNPL companies … and also likely to increase scrutiny from regulators who already had this new segment under review.

Although BNPL is framed as interest-free and an alternative to credit card payments, public authorities and consumer protection bodies have expressed concerns that it may encourage overspending and underplay the risks that customers are taking.

This translated into a regulatory push in the U.K, and in the EU, potentially casting a shadow over Klarna’s “plausible but not imminent” listing. Having raised $3.7 billion to date according to Crunchbase, it would be logical for the Swedish quadradecacorn to follow Affirm’s footsteps and go public, but timing will matter.

With so much funding flowing into the sector and consolidation already happening, it will definitely be interesting to watch.

Factorial, Wave and SPACs

The Exchange may have been on hiatus this week, but there were plenty of stories to digest across TechCrunch and Extra Crunch. Here are the ones that most caught my attention:

Factorial and betting on SMBs: Spanish HR startup Factorial raised an $80 million Series B round at a $530 million valuation. This is noteworthy in itself, and also for being led by Tiger Global. However, my favorite part is that it puts the spotlight on the money to be made by serving SMBs.

Shameless plug: This was also a key point of my Expensify EC-1 a few weeks ago.

As TechCrunch’s Ingrid Lunden pointed out, “Factorial’s rise is part of a much longer-term, bigger trend in which the enterprise technology world has at long last started to turn its attention to how to take the tools that originally were built for larger organizations, and right-size them for smaller customers.”

Right-sizing typically means avoiding unnecessary complexity in the product, and it is often done better by companies that only focus on this, rather than by enterprise incumbents. And it isn’t just a phase either: More and more, it is understood as a segment that companies can focus on forever.

A Wave of funding: Earlier this week, Africa recorded its biggest Series A to date: a $200 million round into mobile money startup Wave. With a valuation of $1.7 billion, this also turned the U.S.- and Senegal-based company into French-speaking Africa’s first unicorn.

It is not surprising that a fintech company was the first one to reach this milestone, Tage Kene-Okafor noted: Fintech has been attracting the lion’s share of VC funding on the continent. Per The Big Deal, a Substack newsletter on Africa’s startup scene, 48% of venture capital flowing into African startups in the first half of 2021 went to fintech — and this giant round may skew things even further when the time comes to check yearly tallies.

On a higher level, this seems to confirm that Africa’s tech sector is set to break records in 2021, which would be nice to see — especially after a tough 2020, and more generally, in a context of underfunding.

To SPAC or not to SPAC: According to Bloomberg, Traveloka is pulling back on its plans to go public via a SPAC with Peter Thiel’s Bridgetown Holdings. The question, it seems, is not whether to list: Talking to travel industry news site Skift, a Traveloka spokesperson described going public as “a natural evolution given Traveloka’s position as a category leader [with] aspirations to grow the business further.”

Instead, the Indonesian travel heavyweight is debating which path to follow — and sources told Bloomberg that it now will likely choose a traditional U.S. IPO instead, as SPACs “have fallen out of favor.” These are Bloomberg’s words, not mine; because it might still be early to say.

Sure, tighter regulation is looming, amid criticism that is well captured by this February headline: “When it comes to SPAC investing, the house always wins. The public, not so much.”

Nevertheless, my colleague Ryan Lawler brought a great counterpoint this week: Better.com is set to merge with blank-check company Aurora Acquisition Corp. at “a post-money equity value of approximately $7.7 billion.” According to its chief executives, a traditional IPO makes sense for companies that can easily be categorized. But a SPAC may be a better fit for a company like Better, which as Ryan reports, “has bigger ambitions than just being seen as a mortgage lender compared with other financial services companies.”

Is this the exception to the rule? Maybe, but it could also be a sign that SPACs still have a card to play.

Thanks for reading and have a great weekend, The Exchange will be back to its regular schedule from Monday onward!  — Anna

News: Tech can help solve US cities’ affordability crisis

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Maria Rioumine Contributor Share on Twitter Maria Rioumine is the CEO and co-founder of Agora. U.S. cities are in the midst of an affordability crisis. Just between May 2020 and May 2021, home prices saw their biggest annual increase in more than two decades and construction material prices increased by 24%. The cost of renting

U.S. cities are in the midst of an affordability crisis. Just between May 2020 and May 2021, home prices saw their biggest annual increase in more than two decades and construction material prices increased by 24%. The cost of renting has risen faster than renters’ incomes for 20 years. Construction needs to play a critical role in fixing these pressing issues, but is the industry ready?

Construction is a $10 trillion global industry that employs more than 200 million people worldwide. But despite its size and importance, the industry’s annual labor productivity has only increased by 0.1% per year since 1947.

Since 1947, we’ve witnessed amazing advances in technology and science. Industries like agriculture, manufacturing and retail have achieved quantum leaps in productivity with improved bioengineering increasing yields and the introduction of cutting-edge logistics bringing affordable consumer goods to the mass market. Labor productivity in these industries increased by over 8x between 1947-2010, compared with 1x in construction.

Why, amid all this progress and innovation, do millions of construction workers in the U.S. still have to rely on manual, pen-and-paper processes for critical parts of their work?

We’ve heavily underinvested in the technology that can help save us from the crisis we face. Historically, entrepreneurs, technologists and investors haven’t spent the time to understand the specific needs and workflows of the construction industry.

Today, more than $800 billion a year is spent on commercial construction, but just a tiny fraction of that goes toward construction technology. In recent years, construction ranked lowest of all industries for technology spending as a percentage of revenue — coming in at just 1.5% — far below the all-industry average of 3.3%, let alone industries like banking, which came in at 7.2%.

A massive chunk of that annual spending — more than $250 billion a year — is spent on construction materials. And they’re only getting more expensive. Materials represent roughly a third of a project’s cost, yet most contractors have to rely on manual workarounds created long before the invention of smartphones to order materials.

This results in both workers on the job site and in the office being overburdened and spending far too much valuable time on paperwork, chasing down materials and fixing errors.

Office teams receive hundreds, if not thousands, of materials requests from the field, all in different formats — including requisitions written with a marker on pizza boxes. They have to manually convert handwritten requisitions into purchase orders sent to suppliers via email, spreadsheets and PDFs, retype order information into their accounting systems, and play phone tag with their suppliers and field teams to keep tabs on order statuses.

Unfortunately, all of that chaos often leads to mistakes, missed opportunities to buy at the best price and project delays.

The mayhem continues for accounting teams, who have no easy way to reconcile their invoices or know if they’re paying the right amount, let alone track rebates and payment terms across different vendors.

Meanwhile, foremen — whose time is more valuable than ever in the current labor squeeze — are often spending less than 30% of their time doing what they do best: building. Without an easy way to select the exact materials they need and track them to delivery, cases of the wrong materials showing up at the wrong time are too common, throwing project timelines off track and creating a huge amount of waste.

Technology can make ordering and managing materials much easier, allowing workers on site and in the office to focus on other critical tasks. It can also help contractors catch common errors before they derail a project and help us build in a more environmentally sustainable way.

Buildings are more than bricks and mortar; they’re hospitals, schools, homes and small businesses. The buildings that surround us quite literally shape our lives. Our communities need them — we need places to meet, learn, play and heal. Imagine if the things that we rely on to create vibrant communities were cheaper to fix — or faster to build?

A new generation of workers who grew up with phones in their pockets are now joining the construction industry and expecting change. By fixing the broken supply chain, we can make construction faster, cheaper and more efficient.

We can move forward and solve our most urgent needs as a society — from building affordable housing to fixing our nation’s infrastructure — and make our cities more affordable and accessible to all.

News: China roundup: Tencent takes on sites trying to circumvent its age limits

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Hello and welcome back to TechCrunch’s China roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. The enforcement of China’s new gaming regulations is unfolding like a cat-and-mouse game, with the country’s internet giants and young players constantly trying to outsmart each

Hello and welcome back to TechCrunch’s China roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.

The enforcement of China’s new gaming regulations is unfolding like a cat-and-mouse game, with the country’s internet giants and young players constantly trying to outsmart each other. Following Didi’s app ban, smaller ride-hailing apps are availing themselves of the potential market vacuum.

Tencent and young gamers

The Chinese saying “Where there is a policy, there is a countermeasure” nicely encapsulates what is happening in the country’s tightening regulatory environment for video games. This month, China enacted the strictest rules to date on playtime among underage users. Players under the age of 18 were startled, scrambling to find methods to overcome the three-hour-per-week quota.

Within days, gaming behemoth Tencent has acted to root out these workarounds. It sued or issued statements to over 20 online services selling or trading adult accounts to underage players, the company’s gaming department said in a notice on Weibo this week.

Children were renting these accounts to play games for two hours at a few dollars without having to go through the usual age verification checks. Such services “are a serious threat to the real-name gaming system and underage protection mechanism,” Tencent said, calling for an end to these practices.

Educational games

China has mainly been targeting games that are addiction-inducing or deemed “physically and mentally harmful” to minors. But what about games that are “good” for kids?

When Tencent and Roblox set up a joint venture in China in 2019, the speculation was that the creator-focused gaming platform would give Tencent a leg up in making educational games to inspire creativity or something that would help it align better with Beijing’s call for using tech to do more social good. As we wrote earlier:

Roblox’s marketing focus on encouraging “creativity” could sit well with Beijing’s call for tech companies to “do good,” an order Tencent has answered. Roblox’s Chinese website suggests it’s touting part of its business as a learning and STEM tool and shows it’s seeking collaborations with local schools and educators.

If Roblox can inspire young Chinese to design globally popular games, the Chinese authorities may start regarding it as a conduit for exporting Chinese culture and soft power. The gaming industry is well aware that aligning with Beijing’s interests is necessary for gaining support from the top. Indeed, a member of the Chinese People’s Political Consultative Conference, an organ for non-political spheres like the business community to “put forward proposals on major political and social issues,” said in June that video games are “an effective channel for China’s cultural exports.”

The case of Roblox will be interesting to watch for reading Beijing’s evolving attitude toward games for educational and export purposes.

Didi challengers

Didi has had many rivals over the years, but none has managed to threaten its dominance in China’s ride-hailing industry. But recently, some of its rivals are seeing a new opportunity after regulators banned new downloads of Didi’s app, citing cybersecurity concerns. Cao Cao Mobility appears to be one.

Cao Cao, a premium ride-hailing service under Chinese automaker Geely, announced this week a $589 million Series B raise. The round should give Cao Cao ammunition for subsidizing drivers and passengers. But amid the government’s spade of anti-competition crackdowns, internet platforms these days are probably less aggressive than Didi in its capital-infused growth phase around 2015.

The app ban seems to have had a limited effect on Didi so far. The app even saw a 13% increase in orders in July, according to the Ministry of Transport. While people who get new phones will not be able to download Didi, they still are able to access its mini app run on WeChat, which is ubiquitous in China and has a sprawling ecosystem of third-party apps. It’s unclear how many active users Didi has lost, but its rivals will no doubt have to shell out great incentives to lure the giant’s drivers and customers away.

DTC fast fashion

Venture capitalists are pouring money into China’s direct-to-consumer brands in the hope that the country’s supply chain advantage coupled with its pool of savvy marketers will win over Western consumers. July saw PatPat, a baby clothing brand, raise a sizable $510 million raise. This month, news came that up-and-coming DTC brand Cider, which makes Gen Z fast fashion in China and sells them in the U.S., has secured a $130 million Series B round at a valuation of over $1 billion. The news was first reported by Chinese tech news site 36Kr and we’ve independently confirmed it. 

DST Global led Cider’s new round, with participation also from the startup’s existing A16Z, an existing investor and Greenoaks Capital. Investors are clearly encouraged by Shein’s momentum around the world — its new download volume has surpassed that of Amazon in dozens of countries and is often compared side by side with industry behemoth Zara. Unlike a pure internet firm, export-oriented e-commerce has a notoriously long and complex value chain, from design, production, marketing and shipment to after-sales service. Shein’s story might have inspired many followers, but it won’t be easily replicated.

News: What’s happening in venture law in 2021?

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The venture world is growing faster than ever, with more funding rounds, bigger funding rounds, and higher valuations than pretty much any point in history. That’s led to an exponential growth in the number of unicorns walking around, and has also forced regulators and venture law researchers to confront a slew of challenging problems. The

The venture world is growing faster than ever, with more funding rounds, bigger funding rounds, and higher valuations than pretty much any point in history. That’s led to an exponential growth in the number of unicorns walking around, and has also forced regulators and venture law researchers to confront a slew of challenging problems.

The obvious one, of course, is that with so many companies staying private, retail investors are mostly blocked from participating in one of the most dynamic sectors of the global economy. That’s not all though — concerns about disclosures and board transparency, diversity among leaders as well as employees, whistleblower protections for fraud, and more have increasingly percolated in legal circles as unicorns multiply and push the boundaries of what our current regulations were designed to accomplish.

To explore where the cutting edge of venture law is today, TechCrunch invited four law professors who specialize in the field and securities more generally to talk about what they are seeing in their work this year, and argue for how they would change regulations going forward.

Our participants and their arguments:

• Yifat Aran, an assistant law professor at Haifa University, argues in “A new coalition for ‘Open Cap Table’ presents an opportunity for equity transparency” that we need better formats for cap table data to allow for portability. That will increase transparency for shareholders including employees, who are often left in the dark about the true nature of a startup’s capital structure.
• Matthew Wansley, an assistant law professor at Cardozo School of Law, argues in “The next Theranos should be shortable” that private company shares of unicorns should be able to be scrutinized and traded by short sellers. Since venture investors have little incentive to sniff out frauds post-investment, short sellers could bring a valuable perspective into the market and increase capital efficiency.
• Jennifer Fan, an assistant law professor at the University of Washington, argues in “Diversifying startups and VC power corridors” that in addition to board mandates related to diversity (which have passed in a number of states), startups need to create more incentives around diversity in all their relationships, including with their employees, with VCs, and with the LPs of their VCs. A more comprehensive and systematic approach will better open the tech world to the many folks it overlooks.
• Finally, Alexander I. Platt, an associate law professor at the University of Kansas, argues in “The legal world needs to shed its ‘unicorniphobia’” that we should scrutinize the rush to change our securities regulations when we’ve created so much value with startups. For every Theranos, there is a Moderna, and adding more rules and disclosures may not prevent the problems of the former, and may actually stop the progress of the latter.

The once quiet research literature of venture law has been energized with the arrival of a reform-minded camp in the halls of power in DC. TechCrunch will continue to report and bring diverse perspectives on some of the most challenging legal and regulatory issues facing the tech and startup world.

News: The legal world needs to shed its ‘unicorniphobia’

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As policymakers and scholars work out how securities regulation can be used to address climate change, they should not overlook the potentially important role unicorn regulation can play.

Once upon a time, a successful startup that reached a certain maturity would “go public” — selling securities to ordinary investors, perhaps listing on a national stock exchange and taking on the privileges and obligations of a “public company” under federal securities regulations.

Times have changed. Successful startups today are now able to grow quite large without public capital markets. Not so long ago, a private company valued at more than $1 billion was rare enough to warrant the nickname “unicorn.” Now, over 800 companies qualify.

Legal scholars are worried. A recent wave of academic papers makes the case that because unicorns are not constrained by the institutional and regulatory forces that keep public companies in line, they are especially prone to risky and illegal activities that harm investors, employees, consumers and society at large.

The proposed solution, naturally, is to bring these forces to bear on unicorns. Specifically, scholars are proposing mandatory IPOs, significantly expanded disclosure obligations, regulatory changes designed to dramatically increase secondary-market trading of unicorn shares, expanded whistleblower protections for unicorn employees and stepped-up Securities and Exchange Commission enforcement against large private companies.

This position has also been gaining traction outside the ivory tower. One leader of this intellectual movement was recently appointed director of the SEC’s Division of Corporation Finance. Big changes may be coming soon.

In a new paper titled “Unicorniphobia” (forthcoming in the Harvard Business Law Review), I challenge this suddenly dominant view that unicorns are especially dangerous and should be “tamed” with bold new securities regulations. I raise three main objections.

First, pushing unicorns toward public company status may not help and may actually make problems worse. According to the vast academic literature on “market myopia” or “stock-market short-termism,” it is public company managers who have especially dangerous incentives to take on excessive leverage and risk; to underinvest in compliance; to sacrifice product quality and safety; to slash R&D and other forms of corporate investment; to degrade the environment; and to engage in accounting fraud and other corporate misconduct, among many other things.

The dangerous incentives that produce this parade of horrible outcomes allegedly flow from a constellation of market, institutional, cultural and regulatory features that operate distinctly on public companies, not unicorns, including executive compensation linked to short-term stock performance, pressure to meet quarterly earnings projections (aka “quarterly capitalism”) and the persistent threat (and occasional reality) of a hedge fund activist attack. To the extent this literature is correct, the proposed unicorn reforms would merely amount to forcing companies to shed one set of purportedly dangerous incentives for another.

Second, proponents of new unicorn regulations rely on rhetorical sleight of hand. To show that unicorns pose unique dangers, these advocates rely heavily on anecdotes and case studies of well-known “bad” unicorns, especially the cases of Uber and Theranos, in their papers. Yet the authors make few or no attempts to show how their proposed reforms would have mitigated any significant harm caused by either of these companies — a highly questionable proposition, as I show in great detail in my paper.

Take Theranos, whose founder and CEO Elizabeth Holmes is currently facing trial on charges of criminal fraud and, if convicted, faces a possible sentence of up to 20 years in federal prison. Would any of the proposed securities regulation reforms have plausibly made a positive difference in this case? Allegations that Holmes and others lied extensively to the media, doctors, patients, regulators, investors, business partners and even their own board of directors make it hard to believe they would have been any more truthful had they been forced to make some additional securities disclosures.

As to the proposal to enhance trading of unicorn shares in order to incentivize short sellers and market analysts to sniff out potential frauds, the fact is that these market players already had the ability and incentive to make these plays against Theranos indirectly by taking a short position in its public company partners like Walgreens, or a long position in its public company competitors, like LabCorp and Quest Diagnostics. They failed to do so. Proposals to expand whistleblower protections and SEC enforcement in this domain seem equally unlikely to have made any difference.

Finally, the proposed reforms risk doing more harm than good. Successful unicorns today benefit not only their investors and managers, but also their employees, consumers and society at large. And they do so precisely because of the features of current regulations that are now up on the regulatory chopping block. Altering this regime as these papers propose would put these benefits in jeopardy and thus may do more harm than good.

Consider one company that recently generated an enormous social benefit: Moderna. Before going public in December 2018, Moderna was a secretive, controversial, overhyped biotech unicorn without a single product on the market (or even in Phase 3 clinical trials), barely any scientific peer-reviewed publications, a history of turnover among high-level scientific personnel, a CEO with a penchant for over-the-top claims about the company’s potential and a toxic work culture.

Had these proposed new securities regulations been in place during Moderna’s “corporate adolescence,” it’s quite plausible that they would have significantly disrupted the company’s development. In fact, Moderna might not have been in a position to develop its highly effective COVID-19 vaccine as rapidly as it did. Our response to the coronavirus pandemic has benefited, in part, from our current approach to securities regulation of unicorns.

The lessons from Moderna also bear on efforts to use securities regulation to combat climate change. According to a recent report, 43 unicorns are operating in “climate tech,” developing products and services designed to mitigate or adapt to global climate change. These companies are risky. Their technologies may fail; most probably will. Some are challenging entrenched incumbents that have powerful incentives to do whatever is necessary to resist the competitive threat. Some may be trying to change well-established consumer preferences and behaviors. And they all face an uncertain regulatory environment, varying widely across and within jurisdictions.

Like other unicorns, they may have highly empowered founder CEOs who are demanding, irresponsible or messianic. They may also have core investors who do not fully understand the science underlying their products, are denied access to basic information and who press the firm to take risks to achieve astronomical results.

And yet, one or more of these companies may represent an important resource for our society in dealing with disruptions from climate change. As policymakers and scholars work out how securities regulation can be used to address climate change, they should not overlook the potentially important role unicorn regulation can play.

News: 20 years later, unchecked data collection is part of 9/11’s legacy

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Twenty years from now, will we look back on this decade as a turning point in protecting and upholding individuals’ right to privacy, or will we still be saying, “Never again,” again and again?

Almost every American adult remembers, in vivid detail, where they were the morning of September 11, 2001. I was on the second floor of the West Wing of the White House, at a National Economic Council Staff meeting — and I will never forget the moment the Secret Service agent abruptly entered the room, shouting: “You must leave now. Ladies, take off your high heels and go!”

Just an hour before, as the National Economic Council White House technology adviser, I was briefing the deputy chief of staff on final details of an Oval Office meeting with the president, scheduled for September 13. Finally, we were ready to get the president’s sign-off to send a federal privacy bill to Capitol Hill — effectively a federal version of the California Privacy Rights Act, but stronger. The legislation would put guardrails around citizens’ data — requiring opt-in consent for their information to be shared, governing how their data could be collected and how it would be used.

But that morning, the world changed. We evacuated the White House and the day unfolded with tragedy after tragedy sending shockwaves through our nation and the world. To be in D.C. that day was to witness and personally experience what felt like the entire spectrum of human emotion: grief, solidarity, disbelief, strength, resolve, urgency … hope.

Much has been written about September 11, but I want to spend a moment reflecting on the day after.

When the National Economic Council staff came back into the office on September 12, I will never forget what Larry Lindsey, our boss at the time, told us: “I would understand it if some of you don’t feel comfortable being here. We are all targets. And I won’t appeal to your patriotism or faith. But I will — as we are all economists in this room — appeal to your rational self-interest. If we back away now, others will follow, and who will be there to defend the pillars of our society? We are holding the line here today. Act in a way that will make this country proud. And don’t abandon your commitment to freedom in the name of safety and security.”

There is so much to be proud of about how the country pulled together and how our government responded to the tragic events on September 11. First, however, as a professional in the cybersecurity and data privacy field, I reflect on Larry’s advice, and many of the critical lessons learned in the years that followed — especially when it comes to defending the pillars of our society.

Even though our collective memories of that day still feel fresh, 20 years have passed, and we now understand the vital role that data played in the months leading up to the 9/11 terrorist attacks. But, unfortunately, we failed to connect the dots that could have saved thousands of lives by holding intelligence data too closely in disparate locations. These data silos obscured the patterns that would have been clear if only a framework had been in place to share information securely.

So, we told ourselves, “Never again,” and government officials set out to increase the amount of intelligence they could gather — without thinking through significant consequences for not only our civil liberties but also the security of our data. So, the Patriot Act came into effect, with 20 years of surveillance requests from intelligence and law enforcement agencies crammed into the bill. Having been in the room for the Patriot Act negotiations with the Department of Justice, I can confidently say that, while the intentions may have been understandable — to prevent another terrorist attack and protect our people — the downstream negative consequences were sweeping and undeniable.

Domestic wiretapping and mass surveillance became the norm, chipping away at personal privacy, data security and public trust. This level of surveillance set a dangerous precedent for data privacy, meanwhile yielding marginal results in the fight against terrorism.

Unfortunately, the federal privacy bill that we had hoped to bring to Capitol Hill the very week of 9/11 — the bill that would have solidified individual privacy protections — was mothballed.

Over the subsequent years, it became easier and cheaper to collect and store massive amounts of surveillance data. As a result, tech and cloud giants quickly scaled up and dominated the internet. As more data was collected (both by the public and the private sectors), more and more people gained visibility into individuals’ private data — but no meaningful privacy protections were put in place to accompany that expanded access.

Now, 20 years later, we find ourselves with a glut of unfettered data collection and access, with behemoth tech companies and IoT devices collecting data points on our movements, conversations, friends, families and bodies. Massive and costly data leaks — whether from ransomware or simply misconfiguring a cloud bucket — have become so common that they barely make the front page. As a result, public trust has eroded. While privacy should be a human right, it’s not one that’s being protected — and everyone knows it.

This is evident in the humanitarian crisis we have seen in Afghanistan. Just one example: Tragically, the Taliban have seized U.S. military devices that contain biometric data on Afghan citizens who supported coalition forces — data that would make it easy for the Taliban to identify and track down those individuals and their families. This is a worst-case scenario of sensitive, private data falling into the wrong hands, and we did not do enough to protect it.

This is unacceptable. Twenty years later, we are once again telling ourselves, “Never again.” 9/11 should have been a reckoning of how we manage, share and safeguard intelligence data, but we still have not gotten it right. And in both cases — in 2001 and 2021 — the way we manage data has a life-or-death impact.

This is not to say we aren’t making progress: The White House and U.S. Department of Defense have turned a spotlight on cybersecurity and Zero Trust data protection this year, with an executive order to spur action toward fortifying federal data systems. The good news is that we have the technology we need to safeguard this sensitive data while still making it shareable. In addition, we can put contingency plans in place to prevent data that falls into the wrong hands. But, unfortunately, we just aren’t moving fast enough — and the slower we solve this problem of secure data management, the more innocent lives will be lost along the way.

Looking ahead to the next 20 years, we have an opportunity to rebuild trust and transform the way we manage data privacy. First and foremost, we have to put some guardrails in place. We need a privacy framework that gives individuals autonomy over their own data by default.

This, of course, means that public- and private-sector organizations have to do the technical, behind-the-scenes work to make this data ownership and control possible, tying identity to data and granting ownership back to the individual. This is not a quick or simple fix, but it’s achievable — and necessary — to protect our people, whether U.S. citizens, residents or allies worldwide.

To accelerate the adoption of such data protection, we need an ecosystem of free, accessible and open source solutions that are interoperable and flexible. By layering data protection and privacy in with existing processes and solutions, government entities can securely collect and aggregate data in a way that reveals the big picture without compromising individuals’ privacy. We have these capabilities today, and now is the time to leverage them.

Because the truth is, with the sheer volume of data that’s being gathered and stored, there are far more opportunities for American data to fall into the wrong hands. The devices seized by the Taliban are just a tiny fraction of the data that’s currently at stake. As we’ve seen so far this year, nation-state cyberattacks are escalating. This threat to human life is not going away.

Larry’s words from September 12, 2001, still resonate: If we back away now, who will be there to defend the pillars of our society? It’s up to us — public- and private-sector technology leaders — to protect and defend the privacy of our people without compromising their freedoms.

It’s not too late for us to rebuild public trust, starting with data. But, 20 years from now, will we look back on this decade as a turning point in protecting and upholding individuals’ right to privacy, or will we still be saying, “Never again,” again and again?

News: Tesla should say something

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Last weekend, a reader wrote to this editor, politely asking why tech companies should speak up about the abortion law that Texas passed last week. “What does American Airlines have to do with abortion?” said the reader, suggesting that companies can’t possibly cater to both pro-abortion and anti-abortion advocates and that asking them to take

Last weekend, a reader wrote to this editor, politely asking why tech companies should speak up about the abortion law that Texas passed last week.

“What does American Airlines have to do with abortion?” said the reader, suggesting that companies can’t possibly cater to both pro-abortion and anti-abortion advocates and that asking them to take a stand on an issue unrelated to their business would only contribute to the politicization of America.

It’s a widely held point of view, and the decision yesterday by the U.S. Department of Justice to challenge the law, which U.S. Attorney General Merrick Garland has called “clearly unconstitutional,” may well reinforce it. After all, if anyone should be pushing back against what happened in the Lone Star State, it should be other legislators, not companies, right?

Still, there are more reasons than not for technology companies – and particularly Tesla – to step out of the shadows and bat down this law.

It’s a fact that abortion restrictions lead to higher healthcare costs for employers, but one consequence of the Texas law that could hit tech companies especially hard is its impact on hiring. According to a study by the social enterprise Rhia Ventures, 60% of women say they would be discouraged from taking a job in a state that has tried to restrict access to abortion, and the same is true for a slight majority of men, the study found.

Texas’s abortion law also creates an extra-judicial enforcement mechanism that should alarm tech companies. The new law allows private citizens to sue not just abortion providers but anyone who wittingly or unwittingly helps a woman obtain an abortion, whether they have a connection to the case or not. More, there are significant financial awards should a plaintiff win: each defendant is subject to paying $10,000, as well as subject to covering the costs and plaintiff’s attorney’s fees.

Just imagine if this precedent were applied to an issue that involves technology companies, such as consumer privacy. As Seth Chandler, a law professor at the University of Houston Law Center, observed to ABC this week. “[the] recipe that SB 8 has developed is not restricted to abortion. It can be used for any constitutional rights that people don’t like.”

Tech companies might very well say that taking asides on the Texas abortion debate would be the political equivalent of jumping on a live wire, and it’s easy to sympathize with this viewpoint. Even though Pew Research reports that about 6 in 10 Americans say abortion should be legal in all or most cases, passions are heated on both sides.

Still, corporations have safely stood up for their values on controversial issues before — and they’ve shown that corporate pressure works. In a 2016, a group of roughly 70 major corporations, including Apple, Cisco, and even, yes, American Airlines, joined a legal effort to block a North Carolina law that banned transgender people from using public bathrooms consistent with their gender identity. Their ‘friend of the court’ brief argued that the law condoned “invidious discrimination” and would damage their ability to recruit and retain a diverse workforce.

By 2017, having already experienced severe economic consequences a lot of these same companies stopped doing business with North Carolina, the ban was rescinded.

The handful of CEOs, including from Lyft, Uber, Yelp, and Bumble have already taken very public positions against the next Texas law.  A company like Tesla could have an even bigger impact on the state’s politics. Elon Musk’s move to Texas ignited a firestorm of interest in the Texas tech scene, and Texas Governor Greg Abbott was so cognizant of Musk’s influence that he said Musk supported his state’s “social policies” the day after the new law was passed.

Musk — whose many financial interests in Texas include plans to build a new city called Starbase and to become a local electricity provider — has so far refused to take a stand on the law. When asked about the issue, he responded, “In general, I believe government should rarely impose its will upon the people, and, when doing so, should aspire to maximize their cumulative happiness.”

He also added that he would “prefer to stay out of politics.”

That could prove a mistake as lawmakers and executives in at least seven states, including Florida and South Dakota, have said they’re closing reviewing Texas’s new law and considering similar statutes.

In May 2019, nearly 200 CEOs, including Twitter’s Jack Dorsey and Peter Grauer of Bloomberg a signed a full-page New York Times ad declaring that abortion bans are bad for business: “Restricting access to comprehensive reproductive care, including abortion,” the ad read, “threatens the health, independence and economic stability of our employees and customers.”

If Musk truly believes government should “rarely impose its will upon the people,” he should take a similar, public stand in Texas while the federal government fights what’s anticipated to be a long, uphill battle. He has little to lose in doing so — and much to gain.

News: Gillmor Gang: Life Goes On

• September 11, 2021
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When we imagine what it will be like when we exit the pandemic, what we’re really wondering is what we want from the digital transformation we’ve seen overturn our understanding of work and living safely. As much as we long for the days of the office and collaboration with our peers, some of that is

When we imagine what it will be like when we exit the pandemic, what we’re really wondering is what we want from the digital transformation we’ve seen overturn our understanding of work and living safely. As much as we long for the days of the office and collaboration with our peers, some of that is about the mental space we achieve from the constant disruption of home life. Parenting has shifted from an arms-length affair to a therapeutic maintenance of burnout, over-saturation of news, and anxiety — and that’s just us. Our kids in many ways have already made the digital transition we are all now forced to endure.

They don’t see work from home as a choice because they’ve already defined it as how things work. The shift from meetings to asynchronous threads (texting only, please) has put work into a kind of binge streaming model. You don’t go to the movies — you check in to the situation the characters find themselves grappling with. Conversations overlap in group chats, solving existing problems while foreshadowing the next set. Overriding themes like what am I going to do in life and who are my real friends joust for interaction time.

Voice calls are fundamentally transactional. Video (FaceTime) is used for pitches and demos. And the flow is in both directions. Our kids want reassurance, a sense that wiser heads will prevail as we learn the rules of the new society. Parents want reassurance too, that they will be able to balance the competing needs of kids, grandparents, and the constant pressure of a notification grid filled with breaking news. Interruptions in this new environment are the single biggest cost of loss of focus and diminished productivity.

Turning off notifications often creates more problems than it solves. You trade protection from the immediate crisis for reduced ability to respond to a broader one. Answers to the next question prove more effective. The permissions and posting privileges of a messaging layer guide the information flow, bubble to the top, and anticipate the aggregate value of the channel in follows and subscriptions. The patterns of social metadata — @mentions, retweets, private messages, likes— can be separated from the content to prioritize the distribution of threads.

The appeal of the creator economy and its emerging suite of tools for disrupting traditional media is moving from personal to professional. Mom and pop businesses can project sophisticated services to evangelize, market, and fund growth of their products. The same contours of notification personalization become the valuable data streaming juggernauts like Netflix hoard to run their production and publishing businesses.

On this edition of the Gang, Frank Radice sees parallels to the television industry grappling with digital for the first time.

That’s exactly about the same time that NBC decided that they needed to get into digital. And we had this gigantic meeting in California with all the executives in one huge room with the doors closed and nobody was allowed to have their phone on them so that we could talk about what digital was going to be and what it was going to do and how we were going to use it and what we were going to make of it. And in the end, everybody walked out of there saying, you know, we don’t understand anything about this, but I’ll tell you, we know we need to be there. And I think a lot of it started that way.

The problem with transforming industries is that the collapsing business models are a habit that’s hard to quit. As Michael Markman remembers:

My friend Hardie Tankersley [colleague in the early days at Apple] predicted this a decade ago when he was working for Fox. And they said, ‘Yeah, we all know that. Just don’t bother us now. We’re still making money.’

This is the lesson the record companies learned the hard way, by waiting too long to absorb the Napster threat. Are newsletters and live streaming the tip of the spear to do the same to the media companies?

Michael adds a note of caution:

Zuckerberg did his own version of this. He’s using AR to give you the feeling you’re sitting in a room at a conference table with a bunch of other people. And I’m remembering back to my old time working for corporations. That was the worst part of work, sitting in a room at a conference table with other people.

As the Beatles say, la-la-la-la life goes on.

the latest Gillmor Gang Newsletter

__________________

The Gillmor Gang — Frank Radice, Michael Markman, Keith Teare, Denis Pombriant, Brent Leary and Steve Gillmor. Recorded live Friday, August 20, 2021.

Produced and directed by Tina Chase Gillmor @tinagillmor

@fradice, @mickeleh, @denispombriant, @kteare, @brentleary, @stevegillmor, @gillmorgang

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