The early work of Kurzweil and many others has rippled across the commerce and technology world in stunning ways. Today’s equivalent of Kurzweil’s machine is Microsoft’s Seeing AI app, which uses AI-based image recognition to “see” and “read” in ways that Kurzweil could only have dreamed of. And it’s free to anyone with a mobile phone.
Remarkable leaps forward like that are the foundation for Sight Tech Global, a new, virtual event slated for December 2-3, that will bring together many of the world’s top technology and accessibility experts to discuss how rapid advances in AI and related technologies will shape assistive technology and accessibility in the years ahead.
The technologies behind Microsoft’s Seeing AI are on the same evolutionary tree as the ones that enable cars to be autonomous and robots to interact safely with humans. Much of our most advanced technology today stems from that early, challenging mission that top Silicon Valley engineers embraced to teach machines to “see” on behalf of humans.
From the standpoint of people who suffer vision loss, the technology available today is astonishing, far beyond what anyone anticipated even 10 years ago. Purpose-built products like Seeing AI and computer screen readers like JAWS are remarkable tools. At the same time, consumer products, including mobile phones, mapping apps and smart voice assistants, are game changers for everyone, those with sight loss not the least. And yet, that tech bonanza has not come close to breaking down the barriers in the lives of people who still mostly navigate with canes or dogs or sighted assistance, depend on haphazard compliance with accessibility standards to use websites and can feel as isolated as ever in a room full of people.
A computer can drive a car at 70 MPH without human assistance but there is not yet any comparable device to help a blind person walk down a sidewalk at 3 MPH.
In other words, we live in a world where a computer can drive a car at 70 MPH without human assistance but there is not yet any comparable device to help a blind person walk down a sidewalk at 3 MPH. A social media site can identify billions of people in an instant but a blind person can’t readily identify the person standing in front of them. Today’s powerful technologies, many of them grounded in AI, have yet to be milled into next-generation tools that are truly useful, happily embraced and widely affordable. The work is underway at big tech companies like Apple and Microsoft, at startups, and in university labs, but no one would dispute that the work is as slow as it is difficult. People who are blind or visually impaired live in a world where, as the science fiction author William Gibson once remarked, “The future is already here — it’s just not very evenly distributed.”
That state of affairs is the inspiration for Sight Tech Global. The event will convene the top technologists, human-computer interaction specialists, product designers, researchers, entrepreneurs and advocates to discuss the future of assistive technology as well as accessibility in general. Many of those experts and technologists are blind or visually impaired, and the event programming will stand firmly on the ground that no discussion or new product development is meaningful without the direct involvement of that community. Silicon Valley has great technologies, but does not, on its own, have the answers.
The two days of programming on the virtual main stage will be free and available on a global basis both live and on-demand. There will also be a $25 Pro Pass for those who want to participate in specialized breakout sessions, Q&A with speakers and virtual networking. Registration for the show opens soon; in the meantime, anyone interested may request email updates here.
It’s important to note that there are many excellent events every year that focus on accessibility, and we respect their many abiding contributions and steady commitment. Sight Tech Global aims to complement the existing event line-up by focusing on hard questions about advanced technologies and the products and experiences they will drive in the years ahead — assuming they are developed hand-in-hand with their intended audience and with affordability, training and other social factors in mind.
In many respects, Sight Tech Global is taking a page from TechCrunch’s approach to its AI and robotics events over the past four years, which were in partnership with MIT and UC Berkeley. The concept was to have TechCrunch editors ask top experts in AI and related fields tough questions across the full spectrum of issues around these powerful technologies, from the promise of automation and machine autonomy to the downsides of job elimination and bias in AI-based systems. TechCrunch’s editors will be a part of this show, along with other expert moderators.
As the founder of Sight Tech Global, I am drawing on my extensive event experience at TechCrunch over eight years to produce this event. Both TechCrunch and its parent company, Verizon Media, are lending a hand in important ways. My own connection to the community is through my wife, Joan Desmond, who is legally blind.
The proceeds from sponsorships and ticket sales will go to the nonprofit Vista Center for the Blind and Visually Impaired, which has been serving Silicon Valley area for 75 years. The Vista Center owns the Sight Tech Global event and its executive director, Karae Lisle is the event’s chair. We have assembled a highly experienced team of volunteers to program and produce a rich, world-class virtual event on December 2-3.
Sponsors are welcome, and we have opportunities available ranging from branding support to content integration. Please email email@example.com for more information.
Our programming work is under way and we will announce speakers and sessions over the coming weeks. The programming committee includes Jim Fruchterman (Benetech / TechMatters), Larry Goldberg (Verizon Media), Matt King (Facebook) and Professor Roberto Manduchi (UC Santa Cruz). We welcome ideas and can be reached via firstname.lastname@example.org
For general inquiries, including collaborations on promoting the event, please contact email@example.com.
Hello and welcome back to The Station, a newsletter dedicated to all the present and future ways people and packages move from Point A to Point B.
Before we get into all the mobility news and analysis of the week I wanted to flag an upcoming event that might be of interest to the budding entrepreneurs out there. TC Disrupt, that BIG annual event we hold each fall, is virtual this year. I can’t tell you everything yet, except we put a lot of effort and tech into making this interactive and exciting. This is not going to some boring webinar.
We’re adding a bunch of new events to Disrupt this year, including something we’re calling Pitch Deck Teardown. Top venture capitalists and entrepreneurs will evaluate and suggest fixes for Disrupt 2020 attendees’ pitch decks. Investors who signed up for the Pitch Deck Teardown, include Aileen Lee of Cowboy Ventures, Charles Hudson with Venture Forward, Niko Bonatsos of General Catalyst, Megan Quinn with Spark Capital, Cyan Banister of Long Journey Ventures, Roelof Botha from Sequoia and Susan Lyne with BBG.
The Pitch Deck Teardown couldn’t come at a better time either. During our Early Stage event last month, Jake Saper with Emergence Capital talked about how to time your Series A fundraise. September just so happens to be a big month for investors to review pitch decks.
Alrighty then. Vamos.
Friendly reminder that you can reach out and email me anytime at firstname.lastname@example.org to share thoughts, criticisms, offer up opinions or tips. You can also send a direct message to me at Twitter — @kirstenkorosec.
This summer is turning out to be a crucial period for scooter companies vying for permits in a handful of markets. Cities learned a thing or two during that first wave of electric scooters that hit the streets a couple of years ago. This time around, city leaders are placing more restrictions on e-scooters and limiting the number of companies allowed to operate in an urban area. That’s an important change, and one that raises the stakes for scooter companies.
First there was Paris, which awarded Dott, Lime and Tier permits to operate in the city. Now, Chicago has issued permits to Bird, Lime and Spin for its second pilot program. Chicago is limiting scooter use to 15 mph between 5 a.m. and 10 p.m. And there are few areas, like the Lakefront Trail, where scooters are prohibited.
Each scooter company is limited to no more than 3,333 devices, 50% of which must be deployed with an equity priority area. New to the second pilot is a requirement that all e-scooters must have locks that require riders to secure the scooter to a fixed object to end their trip.
On a side note, Lyft did not apply for the scooter permit. I asked Lyft, ‘why not?’ The company said it’s focusing on its expansion of Divvy, Chicago’s bike-sharing system. The city made Lyft the exclusive operator of Divvy last year and now starting to expand. The Divvy system will eventually include 16,500 bikes and 800 stations. Here’s what Lyft had to say:
“We have spent the better part of the last year working with communities in Chicago’s South and West Sides to prepare for new stations and ebikes. In order to prioritize our work with CDOT to expand Divvy and provide the highest possible experience for Divvy members, Lyft opted out of submitting an application that mirrored requests of this year’s scooter pilot. We are dedicated to the long-term success of micromobility in Chicago, and we look forward to future opportunities to work with the City to combine the benefits of bikes and scooters into one Divvy membership.”
In other micromobbin’ news …
Bird said Friday it is launching its shared e-scooters in Yonkers, New York as an “exclusive” operator. The word “exclusive” is one of those buzzwords that is tossed around a lot so I asked what this actually means. And Bird says it is the only company that will be issued a permit to operate in Yonkers. So there you have it. The company’s fleet of next-generation Bird Two scooters will be available to rent starting August 10.
Revel, the shared moped startup, has shut down operations in New York City following two deaths within days of each other. The startup’ blue mopeds had become a common sight in New York City. Revel, founded in March 2018 by Frank Reig and Paul Suhey, started with a pilot program in Brooklyn and later expanded to Queens. Revel has been on a fast-paced growth track, expanding to Austin, Miami and Washington, D.C in its first 18 months of operation. In January, the company launched in Oakland and recently announced plans to expand to San Francisco this August.
The company said in a statement that is reviewing its safety measures and does plan to return to New York.
Deal of the week
Prickly relations between China and the United States, particularly around trade, has not slowed the march of Chinese companies hoping to list on American stock exchanges. Li Auto is just the latest example, Rita Liao reported this week.
Li Auto is aiming for a growing Chinese middle class that aspires to drive cleaner, smarter and larger vehicles. Its first model, sold at a subsidized price of 328,000 yuan, or $46,800, is a six-seat electric SUV that began shipping at the end of last year.
The five-year-old Chinese electric vehicle startup raised $1.1 billion through its debut on Nasdaq. Li Auto priced its IPO north of its targeted range at $11.5 per share, giving it a fully diluted market value of $10 billion. It also raised an additional $380 million in a concurrent private placement of shares to existing investors.
Other deals that got my attention this week …
Argo AI is now valued at $7.5 billion, a figure that was confirmed Thursday, nearly two months after VW Group finalized its $2.6 billion investment in the autonomous vehicle technology startup. You might recall that Argo came out of nowhere in 2017 with $1 billion (to be spread over several years) in back from Ford. Last year, VW announced it was going to invest in Argo as well.
Under the deal that was finalized last month, Ford and VW have equal ownership stakes, which will be roughly 40% each over time. The remaining equity sits with Argo’s co-founders as well as employees. Argo’s board is comprised of two VW seats, two Ford seats and three Argo seats. Ford said Thursday it netted $3.5 billion in the second quarter from selling some of its Argo equity to Volkswagen.
AUTO1 Group, the European digital used-car trading platform, raised 255 million euros ($300 million) in the form of convertible notes. The round was led by Farallon Capital Management and the Baupost Group as well as existing investor Softbank Group, the NYT reported.
Cargo.one, a Berlin-based startup that runs a marketplace for booking air freight, closed an $18.6 million Series A round of funding led by Index Ventures. Other participants in the round include Next47 as well as prior backers Creandum, Lufthansa Cargo and Point Nine Capital. A number of angel investors also joined in, including Tom Stafford of DST Global and Carlos Gonzalez-Cadenas, the COO of GoCardless and former chief product officer of Skyscanner.
LINE MAN, the Thai food delivery platform that is a unit of Japanese chat app LINE Corp, raised $110 million from BRV Capital Management and merged with a local restaurant aggregator. LINE MAN is loading up on capital as it aims to compete with Singapore-based Grab, Indonesia’s Go-Jek and Foodpanda of Germany’s Delivery Hero SE, Reuters reported.
FreightWaves, the freight data and analytics company, raised $37 million in a round led by Kayne Partners Fund. Other investors include 8VC, Fontinalis Partners, Revolution Ventures, Hearst Ventures, Prologis Ventures, Story Ventures and Engage Ventures.
Theeb Rent-a-Car is looking into a potential initial public offering. The Saudi Arabian rental company hired Saudi Fransi Capital to advise on the IPO, Bloomberg reported.
Toyota is taking a 10% stake in BluE Nexus, a company that makes electric drive modules. The investment is part of a deepening collaboration between the two companies.
Xpeng, the Chinese electric vehicle startup and Tesla rival that just announced a $500 million Series C+ round, is reportedly in talks to raise around $300 million ahead of an initial public offering (IPO) in the United States. (back to my earlier point about interest among Chinese companies to list on U.S. stock exchanges)
Delivery and data (breaches)
If you hadn’t noticed, delivery has been cast as one of the big success stories to emerge during the COVID-19 pandemic. I use the term “cast” because it’s not all sunshine, roses and rainbows for the delivery industry or its users.
The COVID-19 pandemic has led to a spike in demand for delivery services. It has also helped propel unprecedented consolidation as companies like Uber seek profitability.
There are challenges though, including an area that perhaps deserves A LOT MORE ATTENTION. I’m talking about data and privacy. Delivery companies, which includes a growing number of autonomous and teleoperated services, collect a ton of personal data from its customers. The kind of valuable data, like home addresses and credit card numbers, that are sold on the dark web.
This week, our cybersecurity editor Zack Whittaker reported on two data breaches involving delivery companies. The first was Drizly, one of the biggest online alcohol delivery services in the U.S. and Canada, raising over $68 million to date. Drizly told customers a hacker “obtained” some customer data. The hacker took customer email addresses, date-of-birth, passwords hashed using the stronger bcrypt algorithm and, in some cases, delivery addresses.
As many as 2.5 million Drizly accounts are believed to have been stolen. Here’s something to take note of, Drizy told TechCrunch that no financial information was compromised. However, a listing on a dark web marketplace from a well-known seller of stolen data claims otherwise. TechCrunch, of course, didn’t link to it. But Whittaker did take and share a screenshot.
Meanwhile, online shopping and delivery service Instacart is blaming customers who reused passwords for a recent spate of account breaches. The data breach compromised 270,000 Instacart customers. The company published a statement late on Thursday saying its investigation showed that Instacart “was not compromised or breached,” but pointed to credential stuffing, where hackers take lists of usernames and passwords stolen from other breached sites and brute-force their way into other accounts.
Customers can’t shoulder all of the responsibility. Instacart, as Whittaker notes, still does not support two-factor authentication, which — if customers had enabled — would have prevented the account hacks to begin with.
Other delivery news …
Flipkart, which is owned by Walmart, launched a hyperlocal service in suburbs of Bangalore, four years after the e-commerce group abruptly concluded its previous foray into this category.
The new service called Flipkart Quick uses the company’s supply chain infrastructure and a new location mapping technology framework to deliver within 90 minutes to customers more than 2,000 products across grocery, perishables, smartphones, electronics accessories and stationary items.
Remember the days when electric vehicle news was relegated to Tesla, the Nissan Leaf and Chevy Bolt? Times have changed and, well, stayed the same. Tesla still dominates the headlines and this week wasn’t any different. (more on them later). But now, there are dozens of other electric vehicle models coming to market. The upshot: charging infrastructure is becoming more important. (Hey, not everyone has a garage).
This week, GM and EVgo announced plans to add more than 2,700 new fast chargers. The rollout, which will take five years, will triple the size of the EVgo network. The first of these new EVgo fast charging stations will be available to customers starting early 2021.
The companies are targeting high-traffic areas like grocery stores, retail outlets, entertainment centers, areas where people typically spend 15 to 30 minutes. The stations, which will be powered by renewable energy, will feature new charging technology with 100 to 350-kilowatt capabilities, the companies said.
The charging partnership follows a numerous announcements from GM around its electric vehicle strategy. Earlier this week, GM said steel construction has started on the nearly 3-million-square-foot factory that will mass produce Ultium battery cells and packs. The Ultium battery, along with a modular propulsion system and electric vehicle platform, is the cornerstone of GM’ strategy to bring 20 electric vehicles to market by 2023.
GM recently released a video of its upcoming GMC Hummer EV and next week plans to reveal the Cadillac LYRIQ.
Other electric news this week …
BMW said it will offer the all-electric versions of X1 compact SUV and the 5 Series as part of the German automaker’s plans to have 25 electrified models in its portfolio by 2023.
Electric Brands is working on a VW Bus-inspired EV called the eBussy, via The Drive.
Fisker Inc. revealed in a presentation that was filed with the SEC that a “cornerstone agreement” with Volkswagen has been delayed, the Verge reported. Fisker wants to use Volkswagen’s modular EV platform for its upcoming electric vehicles.
Kandi Technologies Group, the Chinese electric vehicle and parts manufacturer, bringing two EVs to the United States through its subsidiary Kandi America. The two models, which are priced under $30,000 before federal incentives, will be the cheapest EVs in the United States.
Lucid Motors provided new details about its upcoming electric vehicle, the Air. In short, this luxury EV sedan is loaded up with hardware — dozens of sensors, a driver monitoring system and an Ethernet-based architecture — for an advanced driver assistance system that aims to match and even surpass its rivals.
There will be 32 sensors in all, according to Lucid, which has branded its advanced driver assistance system DreamDrive. Lidar, a sensor that gets a lot of attention, will be on the vehicle. But I was struck by the number of radar sensors on the Air. There will be five radars in all, giving the vehicle 360 degrees of radar coverage.
Panasonic revealed to TechCrunch this week that it developed new battery technology for the “2170” lithium-ion cells it produces and supplies to Tesla, a change that improves energy density by 5% and reduces costly cobalt content. The new, higher energy dense 2170 cells will be produced by Panasonic at Tesla’s factory in Sparks, Nevada. Improvements on the battery tech will continue with a 20% improvement in energy density over the next five years and a goal to be cobalt free.
Rivian’s retail strategy is starting to emerge. The company has said it will try and repurpose existing buildings for its stores, when possible. This week, the company said it is pursuing the purchase of the historic Laguna Beach South Coast Cinema. The theater’s present structure, was opened in 1935 and stood as the city’s only cinema until it closed its doors in August 2015.
Tesla’s sales in China are becoming increasingly important to its bottom line. An SEC filing this week shows that revenue in China climbed 102.9% year-over-year to $1.4 billion. That means China now makes up 23.3% of Tesla’s total revenues of $6 billion in the quarter, compared to just about 11% in the same period a year before.
Tesla also revealed in the same SEC filing that it received payroll-related benefits from the government, funds that helped reduce the impact of the coronavirus pandemic on its business, Reuters reported.
Speaking of Tesla … CEO Elon Musk took to Twitter on Tuesday night to say that the automaker would be “open to licensing software and supplying powertrains & batteries” to other automakers. Musk added that that would even include Autopilot, the advanced driver assistance software that Tesla offers to provide intelligent cruise control in a number of different driving scenarios. No word on whether any companies are biting.
ADA and mobility
The Americans with Disabilities Act of 1990 paved the way for decades of incremental changes to the way buildings, businesses and laws accommodate people with a wide variety of disabilities. As reporter Devin Coldewey notes, the law’s effect on tech has been profound.
There is still a lot of work to do. I’m looking at all of you autonomous vehicle engineers, designers and founders.
Here are a few stories that highlight the impact of ADA.
Start with Coldewey’s overview on ADA and tech. Then move over to Streetsblog, which digs into the role bicycles have played as mobility assistive devices. Finally, check out this story on Fable, a startup that aims to make disability-inclusive design easier by providing testing and development assistance from disabled folks on-demand.
See ya’ll next week.
German software giant SAP bought experience management platform Qualtrics for $8 billion days before the unicorn’s IPO, back in November of 2018. But last weekend it decided to spin out the experience management provider to finally go public on its own. The analysts Ron Miller talked to speculated about strategic issues on the SAP side, and concluded this was more of an internal reset combined with the financial gain from a promising offering.
Qualtrics, meanwhile, already put the Utah startup scene on the map for people around the world. Having grown strongly post-acquisition, it is now set up to be the largest IPO in state history. Here’s Alex Wilhelm with more analysis in Extra Crunch:
According to metrics from the Bessemer Cloud Index, cloud companies with growth rates of 35.5% and gross margins of 71.3% are worth around 17.3x in enterprise value compared to their annualized revenue.
Given how close Qualtrics is to that averaged set of metrics (slightly slower growth, slightly better gross margins), the 17.3x number is probably not far from what the company can achieve when it does go public. Doing the sums, $800 million times 17.3 is $13.8 billion, far more than what SAP paid for Qualtrics. (For you wonks out there, it’s doubtful that Qualtrics has much debt, though it will have lots of cash post-IPO; expect the company’s enterprise value to be a little under its future market cap.)
So, the markets are valuing cloud companies so highly today that even after SAP had to pay a huge premium to buy Qualtrics ahead of its public offering, the company is still sharply more valuable today after just two years of growth.
Back to the era of nation-states
The tech industry is getting broken down and reformed by national governments in ways that many of its leaders do not seem to have planned for as part of scaling to the world, whether you consider TikTok’s ever-shrinking global footprint or leading tech CEOs getting called out by Congress. When you skim through the numerous headlines on these topics this week, you’ll see a very clear message in the subtext: Every startup has to think more carefully about its place in the world these days, as a matter of survival.
Time for TikTok:
And last but not least ominously, for large platforms…
Remote work still getting big investment
This loosely defined subsector of SaaS went from being a somewhat mainstream idea within the startup world last year to being fully mainstream with the wider world due to the pandemic this year. But publicly traded companies have been some of the biggest beneficiaries (see previous item), and the action around earlier-stage startups has been less clear. Lucas Matney and Alex caught up with six investors who have been focused on various parts of the space to get the latest for Extra Crunch. Here’s a pithy description of fundraising trends that companies are experiencing, from Elliott Robinson, a growth-stage investor at Bessemer:
How competitive are remote-work tooling venture rounds now?
Incredibly competitive. I think one dynamic I’ve seen play out is that the basket of remote-work companies that are really high-performing right now are setting lofty price expectations well ahead of the raise. Many of these companies didn’t plan on raising in Q2/Q3, but with COVID tailwinds, they are choosing to raise at some often sight-unseen-level valuation multiples.
Are prices out of control?
I think it depends on your definition of out of control. The reality is that many of these companies are raising money off cycle from their natural fundraising date for two reasons: One, they are seeing once in a lifetime digital transformation and adoption of remote-work tooling solutions. And, two, so many investors have raised sizable funds during the last nine months that they are leaning into investing in these companies — one of the few segments that will likely continue to see tailwinds as COVID cases continue to rise again in the U.S. Other traditional software value props may face significant headwinds in a uncertain COVID world. Thus, growth equity investors are paying high multiples to get a shot at the category-defining RW app companies.
Haptics in a pandemic-stricken world
Haptics are a great sort of gee-whiz technology, but the practical future of touch-based communication is all over the place — VR devices are suddenly more interesting, touchpads less so. Devon Powers and David Parisi are academics and authors who focus on the space, and they wrote a big guest post for TechCrunch this week that sketched out some of the ups and downs of the decades-old concept. Here’s a key excerpt:
Getting haptics right remains challenging despite more than 30 years’ worth of dedicated research in the field. There is no evidence that COVID is accelerating the development of projects already in the pipeline. The fantasy of virtual touch remains seductive, but striking the golden mean between fidelity, ergonomics and cost will continue to be a challenge that can only be met through a protracted process of marketplace trial-and-error. And while haptics retains immense potential, it isn’t a magic bullet for mending the psychological effects of physical distancing.
Curiously, one promising exception is in the replacement of touchscreens using a combination of hand-tracking and midair haptic holograms, which function as button replacements. This product from Bristol-based company Ultraleap uses an array of speakers to project tangible soundwaves into the air, which provide resistance when pressed on, effectively replicating the feeling of clicking a button.
Ultraleap recently announced that it would partner with the cinema advertising company CEN to equip lobby advertising displays found in movie theaters around the U.S. with touchless haptics aimed at allowing interaction with the screen without the risks of touching one. These displays, according to Ultraleap, “will limit the spread of germs and provide safe and natural interaction with content.”
A recent study carried out by the company found that more than 80% of respondents expressed concerns over touchscreen hygiene, prompting Ultraleap to speculate that we are reaching “the end of the [public] touchscreen era.” Rather than initiate a technological change, the pandemic has provided an opportunity to push ahead on the deployment of existing technology. Touchscreens are no longer sites of naturalistic, creative interaction, but are now spaces of contagion to be avoided. Ultraleap’s version of the future would have us touching air instead of contaminated glass.
Finding the best investors for you: The TC List and Europe surveys
Speaking of investors, TechCrunch has been busy with a few other projects to you find the right ones faster.
First, Danny Crichton has pushed a third update to The TechCrunch List, due to the ongoing flood of recommendations. In his words: “Now using more than 2,600 founder recommendations — more than double our original dataset — we have underscored a number of the existing investors on our list as well as added 116 new investors who have been endorsed by founders as investors willing to cut against the grain and write those critical first checks and lead venture rounds.”
Check it out and filter by location, category and stage to narrow down your pitch list. If you are a founder and haven’t submitted your recommendation yet, please fill out our very brief survey. If you have questions, we put together a Frequently Asked Questions page that describes the qualifications and logistics, some of the logic behind the List and how to get in touch with us.
Second, our editor-at-large Mike Butcher is embarking on a virtual investor survey of European countries, to help Extra Crunch provide a clearer view about what’s happening in the Continent’s startup hubs in the middle of the world going crazy:
TechCrunch is embarking on a major new project to survey the venture capital investors of Europe. Over the next few weeks, we will be “zeroing-in” on Europe’s major cities, from A-Z, Amsterdam to Zurich — and many points in-between. It’s part of a broader series of surveys we’re doing to help founders find the right investors. For example, here is the recent survey of London.
Our survey will capture how each European startup hub is faring, and what changes are being wrought amongst investors by the coronavirus pandemic. We’d like to know how your city’s startup scene is evolving, how the tech sector is being impacted by COVID-19 and, generally, how your thinking will evolve from here. Our survey will only be about investors, and only the contributions of VC investors will be included. The shortlist of questions will require only brief responses, but the more you want to add, the better.
He also wanted me to let you know that he’ll resume his in-person trips as soon as allowed. (I actually made that up, but he has said as much.)
The TechCrunch Exchange: What’s an IPO to a SPAC?— In case you haven’t checked out Alex’s new weekly email newsletter yet.
Across the week
Sadly this week we had to kick off with a correction as I am 1) dumb, and, 2) see point one. But after we got past SPAC nuances (shout-out to David Ethridge), we had a full show of good stuff, including:
- Y Combinator Demo Day is going virtual, as before, and its coming iteration will also be live. The Equity crew all agree that this is the right thing to do, and probably more fun, to boot. And now the founders can sweat a live event, too! What fun.
- Speaking of live events going digital, Disrupt is coming up. And it is going to be great. Read more here.
- A group of Stanford business school students are putting together an investment vehicle to invest money into themselves, which is a good idea and something that is highly risible. Luckily, Danny and Natasha had good things to say about the effort.
- Ro raised $200 million, and any jokes that were inappropriate are Danny’s fault. The company’s reported $1.5 billion valuation makes the news that its competitor Hims could go public via a SPAC all the more exciting.
- I covered a neat round: $20 million for Instrumental, a super neat startup that has me hyped.
- Facebook is still hunting up ways to get a better look into growing startups — this time via investments in venture capital funds.
- And, finally, there were some hearings this week, you might have heard. We’re working on something neat that you are going to love on just that topic, so stay tuned.
And that’s Equity for this week. We are back Monday morning early, so make sure you are keeping tabs on our socials. Hugs, talk soon!
Back in April the country’s government announced it would adopt a mandatory code requiring the tech giants to share ad revenue with media business after an attempt to negotiate a voluntary arrangement with the companies failed to make progress.
Today Australia’s Competition and Consumer Commission (ACCC) has published details of a first pass at that mandatory code — which it says is intended to address “acute bargaining power imbalances” between local news businesses vs the adtech duopoly, Google and Facebook.
The draft follows a consultation process before and after the release of a concepts paper in May, in which the ACCC sought feedback on a range of options. More than 40 submissions were received, it said.
Under the proposed code the ACCC is suggesting a binding “final offer” arbitration process as a way to avoid platforms seeking to drag payment negotiations. Under the proposal they’d get three months’ “negotiation and mediation”, after which an independent arbitrator would choose which of the two parties’ final offer is “the most reasonable”, doing so within 45 business days.
“This would ensure disagreements about payment for content are resolved quickly. Deals on payment could be reached within six months of the code coming into effect if arbitration is required,” the ACCC writes.
The code also aims to enable groups of media businesses (such as local and regional publications) to collectively negotiate to get a better deal out of platforms use of their content.
On the enforcement front, the draft proposes that non-compliance — such as not bargaining in good faith or breaching minimum commitments — can lead to infringement penalties, with the maximum set at $10M or 3x the benefit obtained or 10% of a platform’s turnover in the market in the last 12 months (whichever is greater). So Facebook and Google could potentially be on the hook for fines running to many millions of dollars if they are found to have breached such a code.
The scope of the code’s application looks broadly enough drawn that it seems intended to try to prevent platforms from dodging payment by simply switching off a single news-focused products (such as Google News). Google did just that in Spain instead of paying for reuse of news snippets there (and it remains switched off in the market). But the ACCC’s proposal also applies to Google search and Discover so Google would have to forgo showing any Australian news content to avoid the revenue share — which is a far bigger switch to flip.
Another interesting aspect of the proposal would require the platforms to give news media businesses around a month (28 days’) notice of algorithm changes that are “likely to materially affect” referral traffic to news and/or the ranking of news behind paywalls; and also for “substantial” changes to the display and presentation of news, and advertising directly associated with news.
Another notable requirement is for platforms to give news media businesses “clear information” about the data they collect via users’ interactions with news content on their platforms — such as how long people spend on an article; how many articles they consume in a certain time period; and other data about user engagement with news across platform services.
This aspect of the proposal looks intended to tackle the problem of dominant platforms using their market power to maintain their grip on the attention economy by being able to monopolize access to data by blocking content producers from being able to access information about how Internet users are engaging with their work.
Platforms like Facebook have sought to centralize others’ content to their advantage — applying market power to encourage content to be posted in a place where only they have full access to interaction data. This breaks the link between news producers and their own audience, making it harder for them to perform analytics around articles or respond to changes and trends in consumption behavior.
Being cut off from so much user data also makes it harder for media outlets to cultivate closer relations with consumers of their product — something that looks increasingly vital for developing successful additional revenue streams, such as subscription offers, for example.
“There is a fundamental bargaining power imbalance between news media businesses and the major digital platforms, partly because news businesses have no option but to deal with the platforms, and have had little ability to negotiate over payment for their content or other issues,” said ACCC chair, Rod Sims, commenting on the proposal in a statement.
“In developing our draft code, we observed and learned from the approaches of regulators and policymakers internationally that have sought to secure payment for news. We wanted a model that would address this bargaining power imbalance and result in fair payment for content, which avoided unproductive and drawn-out negotiations, and wouldn’t reduce the availability of Australian news on Google and Facebook.”
“We believe our proposed draft code achieves these purposes,” he added.
The proposal contains more suggestions aimed at breaking down the power imbalance between the two adtech giants and news producers. One element would require them to publish proposals for recognizing original news content on their services — which sounds like an ‘exclusive’ label (to go alongside ‘fact-checked’ labels platforms can sometimes choose to apply).
The pair would also need to provide news media businesses with what the ACCC dubs “flexible user comment moderation tools” — such as the ability to turn off comments on individual stories posted to a platform.
The theme here is increased agency for news businesses vs Facebook and Google so they have a better chance to shape public debate happening around their own content — platforms having also gobbled up the sorts of conversations which used to happen via a newspaper’s letters’ page.
In terms of eligibility, the ACCC says media businesses would be eligible for payment for platforms’ content reuse if the online news content they produce “investigates and explains issues of public significance for Australians” or “issues that engage Australians in public debate and inform democratic decision-making; or issues relating to community and local events”.
Other criteria include adhering to minimum levels of professional editorial standards; maintaining a “suitable degree” of editorial independence; operating in Australia for the main purpose of serving Australian audiences; and generating revenue of more than $150,000 per year.
The code, which would initially only apply to Facebook and Google (though the ACCC notes that other platforms could be added if they gain similar market power), is not intended to capture any non-news content producers, such as drama, entertainment or sports broadcasting.
In a statement responding to the proposal Google expressed deep disappointment. Mel Silva, MD of Google Australia, said:
Our hope was that the Code would be forward thinking and the process would create incentives for both publishers and digital platforms to negotiate and innovate for a better future – so we are deeply disappointed and concerned the draft Code does not achieve this. Instead, the government’s heavy handed intervention threatens to impede Australia’s digital economy and impacts the services we can deliver to Australians.
The Code discounts the already significant value Google provides to news publishers across the board – including sending billions of clicks to Australian news publishers for free every year worth $218 million. It sends a concerning message to businesses and investors that the Australian Government will intervene instead of letting the market work, and undermines Australia’s ambition to become a leading digital economy by 2030. It sets up a perverse disincentive to innovate in the media sector and does nothing to solve the fundamental challenges of creating a business model fit for the digital age.
We urge policymakers to ensure that the final Code is grounded in commercial reality so that it operates in the interests of Australian consumers, preserves the shared benefits created by the web, and does not favour the interests of large publishers at the expense of small publishers.
Facebook had far less to say — sending a line attributed to William Easton, its MD for Australia & New Zealand — which says it’s reviewing the proposal “to understand the impact it will have on the industry, our services and our investment in the news ecosystem in Australia”.
In terms of Australia’s next steps, further consultation will take place on the draft mandatory code during August, with the ACCC saying it will be finalised “shortly after”.
More details about the draft code can be found here.
While regulation being applied to big tech now looks like a given in multiple jurisdictions around the world — with US lawmakers alive to the damage flowing from a handful of hyper-powerful homegrown tech giants— the question of how fair and effective it will be is very much up in the air.
One potentially problematic element of Australia’s approach with this news ad revenue share is that it does not appear to tackle Facebook’s and Google’s abusive model of surveillance capitalism — which remains under regulatory scrutiny in Europe — but seems set to further embed the media with data-mining business models that work by stripping consumers of their privacy to target them with behavioral ads.
Critics contend that a myriad of harms flow from behavioral advertising — from time-wasting clickbait at the low end to democracy-denting disinformation and hate speech at the other. Meanwhile other less intrusive types of ad-targeting are available.
A section of the proposed code that touches on “the privacy of platform users” notes only that: “The draft code’s minimum standards require digital platforms to provide clear information about the data they currently collect through news content. However, the code does not include any requirements for digital platforms to increase sharing of user data with news media businesses. Accordingly, the code does not have an impact on the privacy protections currently applicable to digital platform users.”