Extra Crunch roundup: antitrust jitters, SPAC odyssey, white-hot IPOs, more

Some time ago, I gave up on the idea of finding a thread that connects each story in the weekly Extra Crunch roundup; there are no unified theories of technology news.

The stories that left the deepest impression were related to two news pegs that dominated the week — Visa and Plaid calling off their $5.3 billion acquisition agreement, and sizzling-hot IPOs for Affirm and Poshmark.

Watching Plaid and Visa sing “Let’s Call The Whole Thing Off” in harmony after the U.S. Department of Justice filed a lawsuit to block their deal wasn’t shocking. But I was surprised to find myself editing an interview Alex Wilhelm conducted with with Plaid CEO Zach Perret the next day in which the executive said growing the company on its own is “once again” the correct strategy.


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In an analysis for Extra Crunch, Managing Editor Danny Crichton suggested that federal regulators’ new interest in antitrust enforcement will affect valuations going forward. For example, Procter & Gamble and women’s beauty D2C brand Billie also called off their planned merger last week after the Federal Trade Commission raised objections in December.

Given the FTC’s moves last year to prevent Billie and Harry’s from being acquired, “it seems clear that U.S. antitrust authorities want broad competition for consumers in household goods,” Danny concluded, and I suspect that applies to Plaid as well.

In December, C3.ai, Doordash and Airbnb burst into the public markets to much acclaim. This week, used clothing marketplace Poshmark saw a 140% pop in its first day of trading and consumer-financing company Affirm “priced its IPO above its raised range at $49 per share,” reported Alex.

In a post titled A theory about the current IPO market, he identified eight key ingredients for brewing a debut with a big first-day pop, which includes “exist in a climate of near-zero interest rates” and “keep companies private longer.” Truly, words to live by!

Come back next week for more coverage of the public markets in The Exchange, an interview with Bustle CEO Bryan Goldberg where he shares his plans for taking the company public, a comprehensive post that will unpack the regulatory hurdles facing D2C consumer brands, and much more.

If you live in the U.S., enjoy your MLK Day holiday weekend, and wherever you are: thanks very much for reading Extra Crunch.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

 

Rapid growth in 2020 reveals OKR software market’s untapped potential

After spending much of the week covering 2021’s frothy IPO market, Alex Wilhelm devoted this morning’s column to studying the OKR-focused software sector.

Measuring objectives and key results are core to every enterprise, perhaps more so these days since knowledge workers began working remotely in greater numbers last year.

A sign of the times: this week, enterprise orchestration SaaS platform Gtmhub announced that it raised a $30 million Series B.

To get a sense of how large the TAM is for OKR, Alex reached out to several companies and asked them to share new and historical growth metrics:

  • Gthmhub
  • Perdoo
  • WorkBoard
  • Ally.io
  • Koan
  • WeekDone

“Some OKR-focused startups didn’t get back to us, and some leaders wanted to share the best stuff off the record, which we grant at times for candor amongst startup executives,” he wrote.

5 consumer hardware VCs share their 2021 investment strategies

For our latest investor survey, Matt Burns interviewed five VCs who actively fund consumer electronics startups:

  • Hans Tung, managing partner, GGV Capital
  • Dayna Grayson, co-founder and general partner, Construct Capital
  • Cyril Ebersweiler, general partner, SOSV
  • Bilal Zuberi, partner, Lux Capital
  • Rob Coneybeer, managing director, Shasta Ventures

“Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder,” says Matt, noting that the pandemic fueled wide interest in fitness startups like Mirror, Peloton and Tonal.

Bonus: many VCs listed the founders, investors and companies that are taking the lead in consumer hardware innovation.

A theory about the current IPO market

Digital generated image of abstract multi colored curve chart on white background.

Digital generated image of abstract multi colored curve chart on white background.

If you’re looking for insight into “why everything feels so damn silly this year” in the public markets, a post Alex wrote Thursday afternoon might offer some perspective.

As someone who pays close attention to late-stage venture markets, he’s identified eight factors that are pushing debuts for unicorns like Affirm and Poshmark into the stratosphere.

TL;DR? “Lots of demand, little supply, boom goes the price.”

Poshmark prices IPO above range as public markets continue to YOLO startups

Clothing resale marketplace Poshmark closed up more than 140% on its first trading day yesterday.

In Thursday’s edition of The Exchange, Alex noted that Poshmark boosted its valuation by selling 6.6 million shares at its IPO price, scooping up $277.2 million in the process.

Poshmark’s surge in trading is good news for its employees and stockholders, but it reflects poorly on “the venture-focused money people who we suppose know what they are talking about when it comes to equity in private companies,” he says.

Will startup valuations change given rising antitrust concerns?

GettyImages 926051128

financial stock market graph on technology abstract background represent risk of investment

This week, Visa announced it would drop its planned acquisition of Plaid after the U.S. Department of Justice filed suit to block it last fall.

Last week, Procter & Gamble called off its purchase of Billie, a women’s beauty products startup — in December, the U.S. Federal Trade Commission sued to block that deal, too.

Once upon a time, the U.S. government took an arm’s-length approach to enforcing antitrust laws, but the tide has turned, says Managing Editor Danny Crichton.

Going forward, “antitrust won’t kill acquisitions in general, but it could prevent the buyers with the highest reserve prices from entering the fray.”

Dear Sophie: What’s the new minimum salary required for H-1B visa applicants?

Image Credits: Sophie Alcorn

Dear Sophie:

I’m a grad student currently working on F-1 STEM OPT. The company I work for has indicated it will sponsor me for an H-1B visa this year.

I hear the random H-1B lottery will be replaced with a new system that selects H-1B candidates based on their salaries.

How will this new process work?

— Positive in Palo Alto

Venture capitalists react to Visa-Plaid deal meltdown

A homemade chocolate cookie with a bite and crumbs on a white background

OLYMPUS DIGITAL CAMERA

After news broke that Visa’s $5.3 billion purchase of API startup Plaid fell apart, Alex Wilhelm and Ron Miller interviewed several investors to get their reactions:

  • Anshu Sharma, co-founder and CEO, SkyflowAPI
  • Amy Cheetham, principal, Costanoa Ventures
  • Sheel Mohnot, co-founder, Better Tomorrow Ventures
  • Lucas Timberlake, partner, Fintech Ventures
  • Nico Berardi, founder and general partner, ANIMO Ventures
  • Allen Miller, VC, Oak HC/FT
  • Sri Muppidi, VC, Sierra Ventures
  • Christian Lassonde, VC, Impression Ventures

Plaid CEO touts new ‘clarity’ after failed Visa acquisition

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Alex Wilhelm interviewed Plaid CEO Zach Perret after the Visa acquisition was called off to learn more about his mindset and the company’s short-term plans.

Perret, who noted that the last few years have been a “roller coaster,” said the Visa deal was the right decision at the time, but going it alone is “once again” Plaid’s best way forward.

2021: A SPAC odyssey

In Tuesday’s edition of The Exchange, Alex Wilhelm took a closer look at blank-check offerings for digital asset marketplace Bakkt and personal finance platform SoFi.

To create a detailed analysis of the investor presentations for both offerings, he tried to answer two questions:

  1. Are special purpose acquisition companies a path to public markets for “potentially-promising companies that lacked obvious, near-term growth stories?”
  2. Given the number of unicorns and the limited number of companies that can IPO at any given time, “maybe SPACS would help close the liquidity gap?”

Flexible VC: A new model for startups targeting profitability

12 ‘flexible VCs’ who operate where equity meets revenue share

Spotlit Multi Colored Coil Toy in the Dark.

Spotlit Multi Colored Coil Toy in the Dark.

Growth-stage startups in search of funding have a new option: “flexible VC” investors.

An amalgam of revenue-based investment and traditional VC, investors who fall into this category let entrepreneurs “access immediate risk capital while preserving exit, growth trajectory and ownership optionality.”

In a comprehensive explainer, fund managers David Teten and Jamie Finney present different investment structures so founders can get a clear sense of how flexible VC compares to other venture capital models. In a follow-up post, they share a list of a dozen active investors who offer funding via these non-traditional routes.

These 5 VCs have high hopes for cannabis in 2021

Marijuana leaf on a yellow background.

Image Credits: Anton Petrus (opens in a new window) / Getty Images

For some consumers, “cannabis has always been essential,” writes Matt Burns, but once local governments allowed dispensaries to remain open during the pandemic, it signaled a shift in the regulatory environment, and investors took notice.

Matt asked five VCs about where they think the industry is heading in 2021 and what advice they’re offering their portfolio companies:

Facebook blocks new events around DC and state capitols

As a precaution against coordinated violence as the U.S. approaches President-elect Joe Biden’s inauguration, Facebook announced a few new measures it’s putting in place.

In a blog post and tweets from Facebook Policy Communications Director Andy Stone, the company explained that it would block any events slated to happen near the White House, the U.S. Capitol or any state capitol building through Wednesday.

The company says it will also do “secondary” sweeps through any inauguration-related events to look for violations of its policies. At this point, that includes any content connected to the “Stop the Steal” movement perpetuating the rampant lie that Biden’s victory is illegitimate. Those groups continued to thrive on Facebook until measures the company took at the beginning of this week.

Facebook will apparently also be putting new restrictions in place for U.S. users who repeatedly break the company’s rules, including barring those accounts from livestreaming videos, events and group pages.

Those precautions fall short of what some of Facebook’s critics have called for, but they’re still notable measures for a company that only began taking dangerous conspiracies and armed groups seriously in the last year.

GitLab raises $195M in secondary funding on $6B valuation

GitLab has confirmed with TechCrunch that it raised a $195 million secondary round on a $6 billion valuation. CNBC broke the story earlier today.

The company’s impressive valuation comes after its most recent 2019 Series E in which it raised $268 million on a 2.75 billion valuation, an increase of $3.25 billion in under 18 months. Company co-founder and CEO Sid Sijbrandij believes the increase is due to his company’s progress adding functionality to the platform.

“We believe the increase in valuation over the past year reflects the progress of our complete DevOps platform towards realizing a greater share of the growing, multi-billion dollar software development market,” he told TechCrunch.

While the startup has raised over $434 million, this round involved buying employee stock options, a move that allows the company’s workers to cash in some of their equity prior to going public. CNBC reported that the firms buying the stock included Alta Park, HMI Capital, OMERS Growth Equity, TCV and Verition.

The next logical step would be appear to be IPO, something the company has never shied away from. In fact, it actually at one point included the proposed date of November 18, 2020 as a target IPO date on the company wiki. While they didn’t quite make that goal, Sijbrandij still sees the company going public at some point. He’s just not being so specific as in the past, suggesting that the company has plenty of runway left from the last funding round and can go public when the timing is right.

“We continue to believe that being a public company is an integral part of realizing our mission. As a public company, GitLab would benefit from enhanced brand awareness, access to capital, shareholder liquidity, autonomy and transparency,” he said.

He added, “That said, we want to maximize the outcome by selecting an opportune time. Our most recent capital raise was in 2019 and contributed to an already healthy balance sheet. A strong balance sheet and business model, enables us to select a period that works best for realizing our long term goals.”

GitLab has not only published IPO goals on its Wiki, but it’s entire company philosophy, goals and OKRs for everyone to see. Sijbrandij told TechCrunch’s Alex Wilhelm at a TechCrunch Disrupt panel in September, he believes that transparency helps attract and keep employees. It doesn’t hurt that the company was and remains a fully remote organization, even pre-COVID.

“We started [this level of] transparency to connect with the wider community around GitLab, but it turned out to be super beneficial for attracting great talent as well,” Sijbrandij told Wilhelm in September.

The company, which launched in 2014, offers a DevOps platform to help move applications through the programming lifecycle.

The pandemic was top of mind in the tech of CES 2021

Of course COVID-19 was bound to be an unavoidable topic during the first-ever all-virtual CES. After all, the topic is at front of mind regardless of the topic these days. Close to a year into the pandemic, presenters still understandably feel obligated to address the always-present elephant in the room. Sometimes it was as simple as acknowledging the strangeness of moving from the Las Vegas Convention Center to a Microsoft-powered virtual venue. Other times it felt far more forced.

When it comes to the technology itself, there’s no doubt that the pandemic is going to have a profound effect on the industry for years to come, from health measures to remote work setups. Sometimes it’s a genuinely organic evolution aimed at adapting technology to an ever-changing world. In other cases, it can feel far more exploitative — like the consumer electronics equivalent to a beer commercial discussing “these uncertain times.”

I’ve written a lot about how the pandemic will impact robotics and AI going forward. The short version is that companies will no doubt be more enthusiastic about embracing these technologies, after bumping up against the limitations of a human workforce with a deadly and highly contagious virus spreading across the world.

We saw some glimpses of robotics’ response. Though there tends to be a far longer lead time than in the consumer category. The clearest and most immediate example had to be the prevalence of UV outfitted robotics. LG, Ubtech and Ava Robotics all bombarded my inbox with their take on the category. The desire for disinfecting technology should be clear during a pandemic, and robotics offer both a way to automate a dull and repetitious process like this, while removing a potential human viral vector from the equation.

Image Credits: Razer

UV disinfecting made appearances in a number of other form factors. Phones have been a target for the tech for a few years now. After all, it didn’t take COVID-19 to teach us that smartphones are mobile petri dishes we watch TikToks on. Products like CleanPhone from Canadian startup Glissner are looking to enter a space that’s been thus far dominated by PhoneSoap, which was genuinely ahead of the curve on the phenomenon.

Targus’s keyboard may well have been the most widely reported-on UV solution of the show, because, well, it’s a bit wacky, with an ultraviolet lamp that sits above it.

Masks are another piece of the puzzle that have slowly been infiltrating the show, but really hit a fever pitch this year. Obviously wearing a face mask in public is only a new phenomenon in some countries — in other parts of the world like East Asia it’s long been a normal part of life. Last year, Portland-based Ao Air grabbed some headlines with its own take on the category.

Razer’s Project Hazel was undoubtedly the most prominent mask to debut at the show. It’s big and flashy and a bit of a diversion for a company that primarily trades in gaming peripherals. The N95 mask sports LEDs to indicate charging status and make the wearer’s face visible in dark surroundings. There’s also technology built in to make the wearer’s voice clearer. For the moment, however, it’s hard to see them as much beyond a headline grabber.

One piece I genuinely expected to see more of was remote work. We caught glimpses, like the Dell monitor with Microsoft Teams conferencing built in. Microsoft pitched its new Surface as a remote work machine, but frankly, it didn’t feel any more targeted at that vertical than any other portable Surface.

No doubt many of the innovations companies are working on will have to wait until CES 2022. Fingers crossed, we’ll see them next year in Vegas.

Daily Crunch: WhatsApp responds to privacy backlash

WhatsApp delays enforcement of a controversial privacy change, Apple may get rid of the Touch Bar in future MacBooks and Bumble files to go public. This is your Daily Crunch for January 15, 2021.

The big story: WhatsApp responds to privacy backlash

Earlier this month, WhatsApp sent users a notification asking them to consent to sharing some of their personal data — such as phone number and location — with Facebook (which owns WhatsApp). The alert also said users would have to agree to the terms by February 8 if they wanted to continue using the app.

This change prompted legal threats and an investigation from the Turkish government. Now the company is pushing the enforcement date back three months.

“No one will have their account suspended or deleted on February 8. We’re also going to do a lot more to clear up the misinformation around how privacy and security works on WhatsApp,” the company said in a post. “We’ll then go to people gradually to review the policy at their own pace before new business options are available on May 15.”

The tech giants

Uber planning to spin out Postmates’ delivery robot arm — Postmates X is seeking investors in its bid to become a separate company.

Apple said to be planning new 14- and 16-inch MacBook Pros with MagSafe and Apple processors — This could be the end for the Touch Bar.

Amazon’s newest product lets companies build their own Alexa assistant for cars, apps and video games — Yes, that means your next car could have two Alexas.

Startups, funding and venture capital

Bumble files to go public — The company plans to list on the Nasdaq stock exchange, using the ticker symbol “BMBL.”

Tracy Chou launches Block Party to combat online harassment and abuse — Currently available for Twitter, Block Party helps people filter out the content they don’t want to see.

Everlywell raises $75M from HealthQuest Capital following its recent $175M Series D round — Everlywell develops at-home testing kits for a range of health concerns, and it added a COVID-19 home collection test kit last year.

Advice and analysis from Extra Crunch

Fifteen steps to fundraising a new VC or private equity fund — Launching is easy; fundraising is harder.

Lessons from Top Hat’s acquisition spree — The acquisition of Fountainhead Press marks Top Hat’s third purchase of a publishing company in the past 12 months.

Twilio CEO Jeff Lawson says wisdom lies with your developers — Takeaways from Lawson’s new book “Ask Your Developer.”

(Extra Crunch is our membership program, which aims to democratize information about startups. You can sign up here.)

Everything else

Video game spending increased 27% in 2020 — According to the latest figures from NPD, spending on gaming hardware, software and accessories was up 25% in December and 27% for the full year.

DOT evaluated 11 GPS replacements and found only one that worked across use cases —  The government wants to create additional redundancy and resiliency in the sector.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

Twitter’s vision of decentralization could also be the far-right’s internet endgame

This week, Twitter CEO Jack Dorsey finally responded publicly to the company’s decision to ban President Trump from its platform, writing that Twitter had “faced an extraordinary and untenable circumstance” and that he did not “feel pride” about the decision. In the same thread, he took time to call out a nascent Twitter-sponsored initiative called “bluesky,” which is aiming to build up an “open decentralized standard for social media” that Twitter is just one part of.

Researchers involved with bluesky reveal to TechCrunch an initiative still in its earliest stages that could fundamentally shift the power dynamics of the social web.

Bluesky is aiming to build a “durable” web standard that will ultimately ensure that platforms like Twitter have less centralized responsibility in deciding which users and communities have a voice on the internet. While this could protect speech from marginalized groups, it may also upend modern moderation techniques and efforts to prevent online radicalization.

Jack Dorsey, co-founder and chief executive officer of Twitter Inc., arrives after a break during a House Energy and Commerce Committee hearing in Washington, D.C., U.S., on Wednesday, Sept. 5, 2018. Republicans pressed Dorsey for what they said may be the “shadow-banning” of conservatives during the hearing. Photographer: Andrew Harrer/Bloomberg via Getty Images

What is bluesky?

Just as Bitcoin lacks a central bank to control it, a decentralized social network protocol operates without central governance, meaning Twitter would only control its own app built on bluesky, not other applications on the protocol. The open and independent system would allow applications to see, search and interact with content across the entire standard. Twitter hopes that the project can go far beyond what the existing Twitter API offers, enabling developers to create applications with different interfaces or methods of algorithmic curation, potentially paying entities across the protocol like Twitter for plug-and-play access to different moderation tools or identity networks.

A widely adopted, decentralized protocol is an opportunity for social networks to “pass the buck” on moderation responsibilities to a broader network, one person involved with the early stages of bluesky suggests, allowing individual applications on the protocol to decide which accounts and networks its users are blocked from accessing.

Social platforms like Parler or Gab could theoretically rebuild their networks on bluesky, benefitting from its stability and the network effects of an open protocol. Researchers involved are also clear that such a system would also provide a meaningful measure against government censorship and protect the speech of marginalized groups across the globe.

Bluesky’s current scope is firmly in the research phase, people involved tell TechCrunch, with about 40-50 active members from different factions of the decentralized tech community surveying the software landscape and putting together proposals for what the protocol should ultimately look like. Twitter has told early members that it hopes to hire a project manager in the coming weeks to build out an independent team that will start crafting the protocol itself.

A Twitter spokesperson declined to comment on the initiative.

Bluesky’s initial members were invited by Twitter CTO Parag Agrawal early last year. It was later determined that the group should open the conversation up to folks representing some of the more recognizable decentralized network projects, including Mastodon and ActivityPub, which joined the working group hosted on the secure chat platform Element.

Jay Graber, founder of decentralized social platform Happening, was paid by Twitter to write up a technical review of the decentralized social ecosystem, an effort to “help Twitter evaluate the existing options in the space,” she tells TechCrunch.

“If [Twitter] wanted to design this thing, they could have just assigned a group of guys to do it, but there’s only one thing that this little tiny group of people could do better than Twitter, and that’s not be Twitter,” said Golda Velez, another member of the group who works as a senior software engineer at Postmates and co-founded civ.works, a privacy-centric social network for civic engagement.

The group has had some back and forth with Twitter executives on the scope of the project, eventually forming a Twitter-approved list of goals for the initiative. They define the challenges that the bluesky protocol should seek to address while also laying out what responsibilities are best left to the application creators building on the standard.

Parrot.VC Twitter account

Image: TechCrunch

Who is involved

The pain points enumerated in the document, viewed by TechCrunch, encapsulate some of Twitter’s biggest shortcomings. They include “how to keep controversy and outrage from hijacking virality mechanisms,” as well as a desire to develop “customizable mechanisms” for moderation, though the document notes that the applications, not the overall protocol, are “ultimately liable for compliance, censorship, takedowns etc.”

“I think the solution to the problem of algorithms isn’t getting rid of algorithms — because sorting posts chronologically is an algorithm — the solution is to make it an open pluggable system by which you can go in and try different algorithms and see which one suits you or use the one that your friends like,” says Evan Henshaw-Plath, another member of the working group. He was one of Twitter’s earliest employees and has been building out his own decentralized social platform called Planetary.

His platform is based on the secure scuttlebutt protocol, which allows users to browse networks offline in an encrypted fashion. Early on, Planetary had been in talks with Twitter for a corporate investment as well as a personal investment from CEO Jack Dorsey, Henshaw-Plath says, but the competitive nature of the platform prompted some concern among Twitter’s lawyers and Planetary ended up receiving an investment from Twitter co-founder Biz Stone’s venture fund Future Positive. Stone did not respond to interview requests.

After agreeing on goals, Twitter had initially hoped for the broader team to arrive at some shared consensus, but starkly different viewpoints within the group prompted Twitter to accept individual proposals from members. Some pushed Twitter to outright adopt or evolve an existing standard while others pushed for bluesky to pursue interoperability of standards early on and see what users naturally flock to.

One of the developers in the group hoping to bring bluesky onto their standard was Mastodon creator Eugen Rochko, who tells TechCrunch he sees the need for a major shift in how social media platforms operate globally.

“Banning Trump was the right decision though it came a little bit too late. But at the same time, the nuance of the situation is that maybe it shouldn’t be a single American company that decides these things,” Rochko tells us.

Like several of the other members in the group, Rochko has been skeptical at times about Twitter’s motivation with the bluesky protocol. Shortly after Dorsey’s initial announcement in 2019, Mastodon’s official Twitter account tweeted out a biting critique, writing, “This is not an announcement of reinventing the wheel. This is announcing the building of a protocol that Twitter gets to control, like Google controls Android.”

Today, Mastodon is arguably one of the most mature decentralized social platforms. Rochko claims that the network of decentralized nodes has more than 2.3 million users spread across thousands of servers. In early 2017, the platform had its viral moment on Twitter, prompting an influx of “hundreds of thousands” of new users alongside some inquisitive potential investors whom Rochko has rebuffed in favor of a donation-based model.

Image Credits: TechCrunch

Inherent risks

Not all of the attention Rochko has garnered has been welcome. In 2019, Gab, a social network favored by right-wing extremists, brought its entire platform onto the Mastodon network after integrating the platform’s open-source code, bringing Mastodon its single biggest web of users and its most undesirable liability all at once.

Rochko quickly disavowed the network and aimed to sever its ties to other nodes on the Mastodon platform and convince application creators to do the same. But a central fear of decentralization advocates was quickly realized, as the platform type’s first “success story” was a home for right-wing extremists.

This fear has been echoed in decentralized communities this week as app store owners and networks have taken another right-wing social network, Parler, off the web after violent content surfaced on the site in the lead-up to and aftermath of riots at the U.S. Capitol, leaving some developers fearful that the social network may set up home on their decentralized standard.

“Fascists are 100% going to use peer-to-peer technologies, they already are and they’re going to start using it more… If they get pushed off of mainstream infrastructure or people are surveilling them really closely, they’re going to have added motivation,” said Emmi Bevensee, a researcher studying extremist presences on decentralized networks. “Maybe the far-right gets stronger footholds on peer-to-peer before the people who think the far-right is bad do because they were effectively pushed off.”

A central concern is that commoditizing decentralized platforms through efforts like bluesky will provide a more accessible route for extremists kicked off current platforms to maintain an audience and provide casual internet users a less janky path towards radicalization.

“Peer-to-peer technology is generally not that seamless right now. Some of it is; you can buy Bitcoin in Cash App now, which, if anything, is proof that this technology is going to become much more mainstream and adoption is going to become much more seamless,” Bevensee told TechCrunch. “In the current era of this mass exodus from Parler, they’re obviously going to lose a huge amount of audience that isn’t dedicated enough to get on IPFS. Scuttlebutt is a really cool technology but it’s not as seamless as Twitter.”

Extremists adopting technologies that promote privacy and strong encryption is far from a new phenomenon, encrypted chat apps like Signal and Telegram have been at the center of such controversies in recent years. Bevensee notes the tendency of right-wing extremist networks to adopt decentralized network tech has been “extremely demoralizing” to those early developer communities — though she notes that the same technologies can and do benefit “marginalized people all around the world.”

Though people connected to bluesky’s early moves see a long road ahead for the protocol’s development and adoption, they also see an evolving landscape with Parler and President Trump’s recent deplatforming that they hope will drive other stakeholders to eventually commit to integrating with the standard.

“Right at this moment I think that there’s going to be a lot of incentive to adopt, and I don’t just mean by end users, I mean by platforms, because Twitter is not the only one having these really thorny moderation problems,” Velez says. “I think people understand that this is a critical moment.”

Marc Lore leaves Walmart a little over four years after selling Jet.com for $3B

Marc Lore, the executive vice president, president and CEO of U.S. e-commerce for Walmart, is stepping down a little over four years after selling his e-commerce company Jet.com to the country’s largest retailer for $3 billion.

Lore’s tenure at the company was a mixed bag. Walmart instituted several new technology initiatives under Lore’s tenure, but the Jet.com service was shuttered last May and other initiatives from Lore, like an option to have customers order items via text, was also a money-loser for the Bentonville, AK-based company.

“After Mr. Lore retires on January 31, 2021, the U.S. business, including all the aspects of US retail eCommerce, will continue to report to John Furner, Executive Vice President, President and Chief Executive Officer, Walmart U.S., beginning on February 1, 2021,” Walmart said in a filing.

Walmart has continued to push ahead with a number of tech-related initiatives, including the launch of a new business that will focus on developing financial services.

That initiative is being undertaken through a strategic partnership with the fintech investment firm, Ribbit Capital and adds to a startup tech portfolio that also includes the incubator Store N⁰8, which launched in 2018.

“Reflecting on the past few years with so much pride – Walmart changed my life and the work we did together will keep changing the lives of customers for years to come. It has been an honor to be a part of the Walmart family and I look forward to providing advice and ideas in the future,” Lore said in a statement posted to Linkedin. “Looking forward, I’ll be taking some time off and plan to continue working with several startups. Excited to keep you all up to date on what’s next.”

 

 

 

Coinbase commits to a “better customer experience” following complaints

Coinbase has a problem. As interest in bitcoin has soared along with its price, the popular cryptocurrency exchange has found itself the target of a growing spate of angry customers who haven’t been able to access customer service.

A quick look at Twitter tells the story. As ranted one upset user of the service just earlier today: “Multiple issues over the last month which cost me $$$ several open cases and 0% response?? When are you going to help me or is it easier to just forget. This wont be so easy when your publicly traded. Will be following up with [SEC] soon.”

There are many (many) similar complaints to be found.

In the interest of full disclosure, this editor asked the company this week for more insight into its customer service operations after emailing its support staff more than a half dozen times and tweeting once over 10 days, and receiving no response. (I bought one unit of Ether in 2018 on the platform and wanted to access my account, which I’d been locked out of nearly two years ago.)

To its credit, Coinbase today issued a statement, promising to do better. Its VP of customer success, Casper Sorenson, wrote on the company’s blog that Coinbase is “committing to a better customer experience during this time of heightened interest in the cryptoeconomy,”  The company says it is adding more people to its team; adding more self-service options (there are startling few); expanding its “help center”, and launching a new educational site, Coinbase Learn, “as a one-stop-shop for first timers, experienced investors, and everyone in between.”

Most meaningful perhaps, Coinbase says that in the coming months, it will begin offering live messaging with Coinbase representatives, which is not currently an option. Indeed, Coinbase does not offer live support of any kind. A help support phone line is only available to users wanting to freeze their accounts, and it is automated.  (The flip side of its slow customer response times may tie to the apparent seriousness with which Coinbase, which works closely with regulated banks, takes security issues.)

Still, the company will have to do far more for its increasingly mainstream users as a publicly traded outfit, both because regulators will undoubtedly take a greater interest in its unhappy customers and because it will otherwise lose existing and potential clients to rivals, of which there are a growing array, from the international payment giant PayPal, which is now seeing record daily cryptocurrency trading, to investment brokers like Robinhood. (Another increasingly popular option: digital asset managers like Grayscale whose trusts are publicly traded over the counter.)

More attention to the issue appears overdue. While Coinbase has presumably been dealing with a surge in complaints that corresponds with the volatility of Bitcoin’s ups and downs, customer service has been an ongoing issue for the nearly nine-year-old, San Francisco outfit, which filed its confidential form with the SEC in December to go public and says it has 35 million users in more than 100 countries.

In 2018, Mashable obtained 134 pages of complaints filed to the SEC and the California Department of Business Oversight following a five-month FOIA process,  and the picture that emerged was “not of a responsible actor in the cryptocurrency space opening the market to new investors, but rather a company overwhelmed by and underprepared for its own success,” the outlet reported at the time.

Asked today, among other things, how Coinbase’s processes have since changed, how many of its more than 1,100 employees are focused on customer support, and whether the outfit could share its latest customer numbers, Coinbase, currently in its SEC-mandated quiet period, declined to comment.

15 steps to fundraising a new VC or private equity fund

Launching is easy; fundraising is harder.

I’ve been fortunate to be a partner at two different VC firms over the past nine years, and we’ve grown AUM 10x both times.

Based on my experience, taking the 15 steps below will help build the core of a high-performing fundraising and investor relations function.

1. Build the firm as much as possible before soliciting LPs

The more baked you are, the more investable you are. The best possible move is to invest in and warehouse some special purpose vehicles that fit your strategy. However, that may distract you from the larger goal of raising a fund, not just a special purpose vehicle.

The next best move is to build your core team, e.g., recruit an advisory board, venture partners and EIRs. Lastly, gather feedback. Yohei Nakajima, founder of Untapped.vc, said, “Before pitching LPs and building my firm, I talked with over 50 people I knew to get feedback.”

2. Set up a basic marketing toolkit: Deck, website and social media

It’s virtually mandatory to develop a detailed, data-backed deck and ideally a video pitch. Your materials should ideally meet the expectations of the Institutional Limited Partners Association, even if you’re not targeting institutions. Keep these documents constantly up to date, so all team members are aligned on key numbers, e.g., total dollars raised so far. You’ll look unprofessional if you’re not coordinated.

Fundamentally, almost no one invests based on a deck; they want to talk with the people. However, a high-credibility deck opens the door to a meeting where you then have the chance to sell yourself.

Note that limited partners view formatting as a proxy for professionalism. It’s worth investing a little money in a graphic designer who can design a consistent website, business card, logo and presentation templates.

Richard Dukas, CEO, Dukas Linden Public Relations, said, “If you don’t have a website and have no material online presence, you likely won’t get past the first hurdle with potential investors.”

When you’re fundraising, you’re selling a luxury good. The less widely marketed your fund, the more valuable it is perceived to be. For example, one LP told me she prefers to receive customized emails from fund principals, as opposed to a bulk-mailed quarterly update. An extreme example of this are venture capitalists who don’t even bother with a website, e.g., Benchmark and Thrive Capital. They are the equivalent of a nightclub with an unmarked door, but other investors will need to shape up their social media tech stack.

3. Make your online profile data-driven and internally consistent

All team members should have internally consistent and professional profiles on Linkedin at a minimum and typically also on Twitter, Facebook and/or other platforms you use. In particular, highlight the metrics by which you measured your past activities: size of exit, number of people you managed, budget you were responsible for, etc.

4. Set up a data room with a completed due diligence questionnaire

Among the most important information to include: details on return history, legal documents, fund organization chart, portfolio construction model, portfolio company one-pagers, key personnel resumes and case studies of past investments. We are using Digify to manage this.

5. Prepare FAQs for prospective LPs

You will inevitably receive a wide range of one-off questions from potential LPs. Make sure to compile all your answers in a single document so that you can recycle and refine these answers.

Lessons from Top Hat’s acquisition spree

Top Hat, a startup that digitizes textbooks and turns them into an interactive experience for college students, announced on Wednesday that it has acquired yet another business: Fountainhead Press. The acquisition marks Top Hat’s third scoop of a publishing company in the past 12 months.

Consolidation is going to be huge in the next few years for edtech, as bigger players raise enough financing (and gain profits) to be able to afford other businesses.

Top Hat’s whole business proposition is a subtweet to Zoom University: It wants to make learning an active, online experience and completely digital. That focus has let them reach 3.5 million students and thousands of universities. With a new acquisition, Top Hat is bringing more content into its fold, and with it, more customers who need a better solution to a dusty textbook.

I caught up with Top Hat CEO and founder Mike Silagadze to understand what has triggered this string of content acquisitions. While the M&A isn’t tech-focused, we can learn about how a well-funded edtech startup is navigating the early innings of 2021.

We’ll talk about the shift from offline to online, edtech’s consolidation environment and why the “sell to Pearson or bust” mindset might officially be out the door for the sector.

Offline to online