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

• September 11, 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’

• September 11, 2021
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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

• September 11, 2021
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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

• September 11, 2021
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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

Subscribe to the new Gillmor Gang Newsletter and join the backchannel here on Telegram.

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News: Data remains a vital part of the marketing world

• September 11, 2021
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“One of the biggest things that brands struggle with is figuring out attribution, and how you continue to spend money even though you may have lost some signal into the platform,” says Greg Gillman, chief revenue officer of LA-based performance marketing agency MuteSix, “If Facebook skews too heavily, and Google is on last click, then

“One of the biggest things that brands struggle with is figuring out attribution, and how you continue to spend money even though you may have lost some signal into the platform,” says Greg Gillman, chief revenue officer of LA-based performance marketing agency MuteSix, “If Facebook skews too heavily, and Google is on last click, then sometimes it looks like things are never working. To help companies make informed business decisions, we are building statistical models that show information at higher-than-the-platform level.”

Another week, another growth recap. TechCrunch has been busy working to expand not only our staff editorial content, like Anna Heim’s interview with MuteSix this week, we’re also working on increasing our guest posts as well for growth marketing. In this recap, we have an article from guest columnist Jonathan Metrick, an episode of the Equity podcast that features Metrick, TechCrunch Managing Editor Danny Crichton and TechCrunch Senior Editor Mary Ann Azevedo.

Help TechCrunch find the best growth marketers for startups.

Provide a recommendation in this quick survey and we’ll share the results with everybody.

If you didn’t already hear, we’re giving away one free ticket to Disrupt through the Experts survey. Check out the schedule for Disrupt, and read on to learn about the giveaway details:

• Have you already submitted a recommendation? That’s great — we’re counting all previous survey submissions as an entry for the Disrupt ticket.
• We’ll also enter the next 100 survey submissions into the giveaway.
• Do you want to submit 10 recommendations to increase your chance at winning? We love the enthusiasm, but we ask that you only submit one recommendation for each marketer that you’ve worked with.
• Don’t know what to say in your recommendation? Start with what traits they had, what they did to help your company, how their work affected your business and go from there!
• We manually go through all entries, so please don’t copy and paste the same response multiple times.
• Have a question about the giveaway? Send us an email at ec_editors@techcrunch.com.

Marketer: Kevin Miller, GR0
Recommended by: Leeann Schudel, The Word Counter
Testimonial: “Super detailed analysis of the space and what keywords to target that would move the needle the most. There is a full dedicated SEO team that communicates weekly at the minimum and provides in-depth analysis. They are very transparent with their strategies and explain all moves they are making on their end and how it will benefit our company. Super easy and flexible to work with, aren’t stingy on deliverables and are always there as a consultant.”

Marketer: Subfolder
Recommended by: Hayley Sonntag, Podium
Testimonial: “They delivered an end-to-end content marketing program that drives 150,000+ organic website visitors every month.”

Marketer: Jordan Banafsheha, icepop
Recommended by: Mini Dreamers
Testimonial: “He had experience in e-commerce and impressed us on our first call with how detailed and thorough he was with his plan.”

Marketer: Mike Le, CB/I Digital
Recommended by: Tony Drockton, Hammitt
Testimonial: “In the two years of conversations I’ve only spoken to a few people that are so analytical and data-driven. His unique in-house algorithms to scale spend have allowed us to maintain the hypergrowth (60%) that we’re on.”

Marketer: Visiture
Recommended by: Stephanie Bregman, Manly Bands
Testimonial: “I have worked with Visiture in the past. They have great attention to detail and really listen to their clients. Their ability to write great optimized content and perform outreach is what makes them stand out from other agencies and helped grow our ranked keywords faster than any other agency could. They have also helped us with our email flows and strategy and have been a great partner.”

Marketer: Tuff
Recommended by: Luke Oehlerking, Zenernet
Testimonial: “We were looking for a team focused on marketing that can truly move the needle with measurable results. And we wanted a company that can function as an extension of our own team, which Tuff seems to do exceedingly well at!”

Performance marketing agency MuteSix bets on content and data to boost DTC e-commerce: Anna spoke with Greg Gillman from MuteSix as part of our TechCrunch Experts series. This interview dives into performance marketing, what differentiates MuteSix from other agencies and the importance of data. Gillman says, “There’s one other piece that I think is super important and usually overlooked: first-party data. We work with brands to try and acquire as much of that first-party data as possible, segment it and use it, because that’s what they’d be left with if Facebook shut off tomorrow.” Read the full interview to find out what other pieces of data MuteSix focuses on.

(Extra Crunch) Use cohort analysis to drive smarter startup growth: Jonathan Metrick’s guest column explains not only what cohort analysis is, but why it’s important — especially to startups, using Black Friday in November of 2020 as an example. Metrick says, “Savvy marketers can go further and leverage cohort analysis to remove biases hidden within averages or blended metrics. One way to do this is segmenting ARPU by paid and organic channels, which allows you to gauge the sustainability of your customer growth.”

TikTok, influencers on the clock: Metrick joined the Equity crew to lend his expertise about growth marketing, especially in the ever-changing COVID-19 world. This episode is a must-listen.

Tell us who your favorite startup growth marketing expert to work with is by filling out our survey.

News: 3 methodologies for automated video game highlight detection and capture

• September 10, 2021
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Distilling the most impactful five to 10 minutes of content out of eight or more hours of raw video becomes a non-trivial time commitment. AI can help, but there are distinctions in methodologies.

With the rise of livestreaming, gaming has evolved from a toy-like consumer product to a legitimate platform and medium in its own right for entertainment and competition.

Twitch’s viewer base alone has grown from 250,000 average concurrent viewers to over 3 million since its acquisition by Amazon in 2014. Competitors like Facebook Gaming and YouTube Live are following similar trajectories.

The boom in viewership has fueled an ecosystem of supporting products as today’s professional streamers push technology to its limit to increase the production value of their content and automate repetitive aspects of the video production cycle.

The online streaming game is a grind, with full-time creators putting in eight- if not 12-hour performances on a daily basis. In a bid to capture valuable viewer attention, 24-hour marathon streams are not uncommon either.

However, these hours in front of the camera and keyboard are only half of the streaming grind. Maintaining a constant presence on social media and YouTube fuels the growth of the stream channel and attracts more viewers to catch a stream live, where they may purchase monthly subscriptions, donate and watch ads.

Distilling the most impactful five to 10 minutes of content out of eight or more hours of raw video becomes a non-trivial time commitment. At the top of the food chain, the largest streamers can hire teams of video editors and social media managers to tackle this part of the job, but growing and part-time streamers struggle to find the time to do this themselves or come up with the money to outsource it. There aren’t enough minutes in the day to carefully review all the footage on top of other life and work priorities.

Computer vision analysis of game UI

An emerging solution is to use automated tools to identify key moments in a longer broadcast. Several startups compete to dominate this emerging niche. Differences in their approaches to solving this problem are what differentiate competing solutions from each other. Many of these approaches follow a classic computer science hardware-versus-software dichotomy.

Athenascope was one of the first companies to execute on this concept at scale. Backed by $2.5 million of venture capital funding and an impressive team of Silicon Valley Big Tech alumni, Athenascope developed a computer vision system to identify highlight clips within longer recordings.

In principle, it’s not so different from how self-driving cars operate, but instead of using cameras to read nearby road signs and traffic lights, the tool captures the gamer’s screen and recognizes indicators in the game’s user interface that communicate important events happening in-game: kills and deaths, goals and saves, wins and losses.

These are the same visual cues that traditionally inform the game’s player what is happening in the game. In modern game UIs, this information is high-contrast, clear and unobscured, and typically located in predictable, fixed locations on the screen at all times. This predictability and clarity lends itself extremely well to computer vision techniques such as optical character recognition (OCR) — reading text from an image.

The stakes here are lower than self-driving cars, too, since a false positive from this system produces nothing more than a less-exciting-than-average video clip — not a car crash.

News: Daily Crunch: Microsoft acquires tutoring platform TakeLessons for undisclosed sum

• September 10, 2021
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Hello friends and welcome to Daily Crunch, bringing you the most important startup, tech and venture capital news in a single package.

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

Hi friends!

Welcome back to the Daily Crunch — it’s September 10, 2021. Alex Wilhelm returns next week, so this is my last day as the captain of this ship. Captain of the Daily Crunch. Captain … Crunch? Oh no.

Image Credits: evemilla / Getty Images

Things I’ve learned:

• Email newsletters are more stressful than blog posts because you can’t fix typos once they’re out (and now that I’ve mentioned it, Murphy’s law demands this newsletter will have 300% more typos ). [Ed. note: Not on my watch, Captain.]
• I have a weird tendency to not link to my own stories in this newsletter because it feels weird? (But I’m going to today, because I’VE EARNED IT. Also because it’s my birthday. Also because it ended up being one of our top stories since the last newsletter, so I probably should.)
• Alex is a much, much more efficient writer than I am. He gets this done in like a third of the time it takes me. This works well with my theory that, based on the amount of work he does in a day, Alex is actually three people.

Bye friends!

— Greg

The TechCrunch Top 3

• Apple will use Shazam to ID songs in DJ mixes: If a DJ mixes a bunch of songs into one big set, how do all the original artists get paid? Apple says the answer, at least for their purposes, starts with Shazam, which it bought back in 2018 for $400 million.
• JioPhone delayed: Google and India’s Jio Platforms have been working on a phone tailored for the Indian market, intending to launch it today. Alas, that’s not going to happen. In a very last-minute announcement, Jio says that global semiconductor shortages are behind the delay, and that two more months should let them leap that hurdle.
• Epic is shutting down Houseparty: Just two years after acquiring Houseparty for a reported $35 million, Epic says the party is over. It’ll be shutting down the video chat app in October, though bits of Houseparty DNA will remain — Fortnite’s cross-platform voice chat, for example, is based on Houseparty tech.

Startups/VC

• Mammoth, the unicorn: Mammoth Biosciences, a biotech company co-founded by CRISPR pioneer Jennifer Doudna, has blown past the billion-dollar valuation milestone. There’s literally zero chance that I’m going to be able to properly explain what this company does in one or two sentences, so check out Emma Betuel’s writeup for the breakdown.
• Supabase raises $30M: This one’s mine! Supabase is building an open source platform meant to automatically handle a lot of the annoying back-end work that comes with starting a new app project — the database, the API (and documentation!), etc. I’ve been hearing buzz about it constantly since it graduated from YC last year. Supabase just closed a $30 million Series A and is rolling out new features on the regular, all while being fully remote with a team distributed across the world.
• Snyk’s massive raise: Another company is raising an absolutely massive round at a mind-blowing valuation — this time it’s Snyk, which Ron Miller describes as a “Boston-based late-stage startup that is trying to help developers deliver more secure code.” It’s raising $530 million at a valuation of $8.5 billion. Meanwhile, I’m sitting here trying my hardest not to make any ’90s Nickelodeon references.

What China’s new data privacy law means for US tech firms

China’s first data privacy laws go into effect on November 1, 2021. Will your company be in compliance?

Modeled after the EU’s GDPR, the new regulations “[introduce] perhaps the most stringent set of requirements and protections for data privacy in the world,” writes Scott W. Pink, special counsel in O’Melveny’s Data Security & Privacy practice.

In a comprehensive overview, he explains its key requirements and compliance steps for U.S.-based firms that service Chinese consumers.

“American firms doing business in China or with companies inside China will need to immediately start assessing how this new law will impact their activities,” he advises.

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

Big Tech Inc.

• Microsoft buys TakeLessons: Another Microsoft acquisition! Just a few days after announcing it’s buying web-based video editor Clipchamp, MSFT announced it’s picking up TakeLessons. Based in San Diego, TakeLessons connects individual students with specialist tutors (both online and off) on topics like math, music, drawing and more. Given that Microsoft says over 100 million students use its Teams platform for school, it makes sense for it to dig a bit deeper on edtech.
• Judge says Apple must change App Store rules: Big shift in the Epic-versus-Apple legal battle royale this morning, with the judge declaring that Apple must allow developers to offer alternative payment options beyond Apple’s own in-app purchase system. Epic CEO Tim Sweeney says it’s not enough and that the company “will fight on.”
• Epic wants Fortnite back in the App Store in South Korea: Speaking of Epic-versus-Apple … South Korea recently passed a bill that will require Apple to allow developers to use their own payment systems. As such, Epic says it’s time for Apple to let it (and Fortnite) back on the App Store in the country. Apple says no, and that “as of now, there’s no legitimate basis for the reinstatement of their developer account.”
• What to expect from Apple’s event next week: It’s September, which means Apple is holding a big event. What will they announce — besides, if tradition holds, a new iPhone? Brian Heater has the roundup.

TechCrunch Experts: Growth Marketing

Image Credits: SEAN GLADWELL (opens in a new window) / Getty Images

We’re reaching out to startup founders to tell us who they turn to when they want the most up-to-date growth marketing practices. Fill out the survey here.

Read one of the testimonials we’ve received below!

Marketer: Mike Le, CB/I Digital

Recommended by: Tony Drockton, Hammitt

Testimonial: “In the two years of conversations I’ve only spoken to a few people that are so analytical and data driven. His unique in-house algorithms to scale spend have allowed us to maintain the hypergrowth (60%) that we’re on.”

Community

Join Danny Crichton on Twitter Spaces Tuesday, September 14, at 2 p.m. PDT/5 p.m. EDT as he discusses whether remote work will make H-1B visas redundant with Sophie Alcorn, a lawyer at Alcorn Immigration Law and guest columnist for “Dear Sophie” on Extra Crunch.

News: Is it so bad to take money from Chinese venture funds?

• September 10, 2021
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• in:  Blog 
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China is the second-largest source of venture capital in the world, and Chinese investors can bring value to foreign startups, but you need to study their expertise and how it can be useful for you.

China is becoming a superpower in the tech industry. According to Straits Times, China is the only place in the world where it takes less than six years for a startup to become a unicorn — it takes seven years in the U.S., eight years in the U.K. and 11 years in Germany. Despite geopolitical tensions and recent amendments in CFIUS, it is hard to ignore China.

When I joined Runa Capital almost a year ago, my task was to help our portfolio companies enter the Chinese market, find the right partners and raise funding from Chinese investors. And almost on every call with our startups, colleagues from Runa or other global VCs, I heard: Is it a good idea to raise from a Chinese VC? Is it OK to co-invest with Chinese investors? I was surprised to learn that there is little research answering such questions, as there is a lack of adequate information in English about Chinese investments.

So as a Mandarin-speaking specialist, I decided to fill this gap by conducting a study based on Chinese VC database ITjuzi (the Chinese version of Crunchbase) with the help of our powerful data science resources developed by Danil Okhlopkov.

Below, I will try to answer the following questions using statistics and a case-based approach:

• How much do Chinese funds invest abroad?
• What is the current trend?
• Can Chinese investors bring any value to Western startups?
• Who are the most active Chinese investors abroad?
• In which areas can Chinese funds bring the most value?
• What value can Chinese investors bring?
• When is it better to invite a Chinese investor?

Chinese investors are interested in Western startups

After studying data from ITjuzi, we estimated that Chinese funds invested around $250 billion in 2020 (three times higher than the figure in Crunchbase). This figure puts Chinese VC investments only 30% lower than investments by U.S. funds, but three times that of U.K. funds and 12.5 times more than German funds.

Fig. 1 — Comparison of investment from different countries in 2020, $bn. Source: Crunchbase, ITjuzi. Image Credits: Denis Kalinin

However, only 15% of investments in 2020 and 17% of investments in the first half of 2021 were in companies outside China, significantly lower than in 2019. This appears to be because during COVID, China’s economy recovered much faster than other countries’, so many Chinese investors preferred to redirect their capital flows to the domestic market.

On the other hand, there is great potential for overseas investments to rebound as soon as the borders reopen and the global economy starts to recover.

Fig. 2 — Dynamics of Chinese investments. $bn. Source: Crunchbase, ITjuzi. Image Credits: Denis Kalinin

We can also see that Chinese investors are eyeing European startups favorably, which is related to U.S.-China geopolitical tensions as well as the fact that the European VC market is becoming mature.

News: What we expect from next week’s Apple event

• September 10, 2021
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• in:  Blog 
• note:  no comments 

We’ve been scouring the latest rumors and leaks and playing all of The Mamas and The Papas songs forward and backward to get the best possible picture of what we’re in store for with next Tuesday’s “California Streaming’” event. The invites, which went out a week in advance, don’t appear to give the game away

We’ve been scouring the latest rumors and leaks and playing all of The Mamas and The Papas songs forward and backward to get the best possible picture of what we’re in store for with next Tuesday’s “California Streaming’” event.

The invites, which went out a week in advance, don’t appear to give the game away here. There was some extremely cool AR trickery, accessible through Safari on mobile, which could point to some fancy camera upgrades, though augmented reality has become a bit of a staple on these invites.

The California Streaming title, meanwhile, seems likely to be more of a nod to the all-virtual nature of the event, rather than anything to do with, say, Apple TV (of course, we’ve been one-more-thinged in the past). And as for that lovely shot of the Sierras — that could well be a nod to macOS, though the company has moved onto Monterey. It seems just as likely to be a reference to the aforementioned title.

The biggest, simplest and most important answer to the question of what to expect is a new iPhone. Last year’s models saw a notable delay due to COVID-19-related supply chain bottlenecking. Supply chain problems have persisted, of course, but by all accounts, the company appears to be back on track with its pre-pandemic release cycle.

The iPhone 12’s biggest upgrade was, of course, the long-awaited addition of 5G. That, coupled with the delay, led Apple to some pretty massive sales quarters amid a broader stalling of the overall mobile market. While other manufacturers have skipped the number out of superstitious concerns, Apple seems firmly on board with iPhone 13 (even as renders of its successor, the iPhone 14 have reportedly already leaked).

Image Credits: Getty Images / Qi Heng/VCG

Recent reports suggest that the iPhone 13 will arrive in four different configurations — much like its predecessor. So: the iPhone 13, 13 Mini, 13 Pro and 13 Pro Max. The screen sizes should remain the same: 5.4, 6.1 (x2) and 6.7 inches. A separate report, meanwhile, suggests that we’ll see additional colors, with the full lineup being black, white, blue, purple, pink (rather than green) and Product (Red). But, keep in mind that offering different color availabilities in different markets isn’t entirely out of the question.

Unsurprisingly, camera upgrades appear to be the biggest news here. Word from analyst Ming-Chi Kuo is that last year’s Pro Max model specs will graduate to the rest of the line (including, potentially, lidar). A ProRes video mode is said to be following the addition of ProRAW to further advance the handset’s bonafides as a semi-pro video shooting rig. Cinematic Video, meanwhile, is said to bring a Portrait-mode-style effect to video. Kuo has also suggested that the devices will be getting a feature based on the Qualcomm X60 that allows for emergency satellite calls — reportedly only available in select markets.

Of course, the phone will also be getting Apple’s latest chip, the A15, said to be coupled with 120 Hz ProMotion display. Apple could also be bringing an always-on feature to the screen, hopefully with minimal impact on battery life. Looks-wise we anticipate it will be more or less the same as its predecessor, albeit with a somewhat smaller camera notch up front — though not to the point of the fake Ted Lasso iPhone. The camera bump around back, meanwhile, is said to be getting larger, perhaps offering an improved telephoto lens.

Oh, and apparently they’ll be more expensive than the iPhone 12 — clearly not one of the new features Apple is going to be actively promoting.

Image Credits: Apple

The Apple Watch 7 seems destined to be the other big news of the event. Apple’s massively popular wearable is reportedly set to get more massive, with a larger display, resulting in a slightly larger case size, from 40 mm and 44 mm to 41 mm and 45 mm. The overall size won’t be too large a change, however, as the company is said to be reducing its bezels this go-round.

Perhaps the most exciting rumor around the Watch is the addition of significant battery life. That’s long felt like a blind spot for the product, compared to competing smartwatches — particularly after Apple significantly improved sleep tracking. Most aren’t anticipating major new health features for the Watch this outing, which is a bit of a surprise here, given that health and fitness have been a major cornerstone for Apple.

Image Credits: TechCrunch

AirPods 3 seem like a reasonably good bet. The latest version of the company’s entry-level earbuds (and their case) are said to be getting a more Pro-style redesign, along with a new chip that’s designed to improve battery life. Active noise cancelation and replaceable tips are apparently not going to make an appearance to maintain the distinction between the two models.

With the company’s rangewide upgrade to its own silicon chugging along, don’t be surprised if we see a number of new Macs. Rumors suggest a new MacBook Pro, Mac Mini and a larger, 27-inch version of its ARM-powered iMac.

The event kicks off Tuesday, September 14 at 10 a.m. PDT/1 p.m. EDT. We’ll be here, bringing you the news as it arrives.