India announced sweeping changes to its guidelines for social media, on-demand video streaming services, and digital news outlets on Thursday, posing new challenges for small firms as well as giants such as Facebook and Google that count the nation as its biggest market by users.
Ravi Shankar Prasad, India’s IT, Law, and Justice minister, said in a press conference that social media companies will be required to acknowledge the request within 24 hours and deliver a complete redressal in 15 days. In sensitive cases that surround rape or other sexual nature, firms will be required to takedown the objectionable content within 24 hours.
These firms will also be required to appoint a chief compliance officer, a nodal contact officer, who shall be reachable round the clock, and a resident grievance officer. The firms will also be required to have an office in the country.
For social media companies, Prasad said they will be required to disclose the originator of objectionable content. “We don’t want to know the content, but firms need to be able to tell who was the first person who began spreading misinformation and other objectionable content,” he said. WhatsApp has previously said that it can’t comply with such traceability request without compromising end-to-end encryption security for every user.
Firms will also be required to publish a monthly compliance report to disclose the number of requests they received and what actions they took. They will also be required to offer a voluntary option to users who wish to verify their accounts.
The guidelines go into effect for small firms effective immediately, but bigger services will be provided three months to comply, said Prasad.
New Delhi has put together these guidelines because citizens in India have long requested a “mechanism to address grievances,” said Prasad. India has been working on a law aimed at intermediaries since 2018. This is the first time New Delhi has publicly shared an update on the specifics of the guidelines.
“India is the world’s largest open Internet society and the Government welcomes social media companies to operate in India, do business and also earn profits. However, they will have to be accountable to the Constitution and laws of India,” he said, adding that WhatsApp had amassed 530 million users, YouTube, 448 million users, Facebook’s marquee service 410 million users, Instagram 210 million users, and Twitter, 175 million users in the country.
For streaming platforms, the draft, which will be legally enforceable when it becomes a law, has outlined a three-tier structure for “observance and adherence to the code.” Until now, on-demand services such as Netflix, Disney+ Hotstar, and MX Player have operated in India with little to no censorship.
New Delhi last year said India’s broadcasting ministry, which regulates content on TV, will also be overseeing digital streaming platforms. 17 popular streaming firms had banded together to devise a self-regulation code. Prakash Javedkar, Minister of Information and Broadcasting, said the proposed solution from the industry wasn’t adequate and there will be an oversight mechanism from the government to ensure compliance of code of practices.
Streaming services will also have to attach a content ratings to their titles. “The OTT platforms, called as the publishers of online curated content in the rules, would self-classify the content into five age based categories- U (Universal), U/A 7+, U/A 13+, U/A 16+, and A (Adult). Platforms would be required to implement parental locks for content classified as U/A 13+ or higher, and reliable age verification mechanisms for content classified as “A”,” the Indian government said.
“The publisher of online curated content shall prominently display the classification rating specific to each content or programme together with a content descriptor informing the user about the nature of the content, and advising on viewer description (if applicable) at the beginning of every programme enabling the user to make an informed decision, prior to watching the programme.”
Digital news outlets will be required to disclose the size of their reach and structure of their ownership.
Industry executives have expressed concerns over the new proposed regulation, saying New Delhi hasn’t consulted them for these changes. IAMAI, a powerful industry body that represents nearly all on-demand streaming services, said it was “dismayed” by the guidelines, and hoped to have a dialogue with the government.
Javedkar and Prasad were asked if there will be any consultation with the industry before these guidelines become law. The ministers said that they had already received enough inputs from the industry.
This is a developing story. More to follow…
Rocket Lab’s 20th Electron launch ends in failure with the loss of its payload – TechCrunch
Rocket Lab flew its 20th Electron mission on Saturday morning, but the launch ran into a significant issue just after its second stage engine ignited. The engine appeared to shut down just after the ignition, which is not what it’s supposed to do, and which is likely the result of an automated emergency shutdown process that would trigger in case of a system failure. Rocket Lab confirmed that the issue happened shortly after the ignition of the second stage and resulted in the loss of the vehicle and its payload.
The company last encountered a mission failure in July 2020, when the vehicle and its payloads on Rocket Lab’s 13th Electron flight were lost after an engine failure that occurred during the second stage burn. That issue similarly resulted from a triggered safety shutdown, meaning that while the rocket and its cargo didn’t explode, the spacecraft simply stopped operating, but didn’t reach its target orbit or release its payload.
This flight, called “Running Out of Toes,” was Rocket Lab’s third this year, and a paid, dedicated launch for customer BlackSky, meant to deliver an Earth observation satellite for that company to help power its global monitoring and intelligence platform. This mission profile also included a key test of Rocket Lab’s rocket reusability program, with a planned recovery of the first-stage booster used in the Electron vehicle that carried the satellite to space.
This was also the second time that Rocket Lab performed a rocket recovery, after picking one up post-launch back in November. The company implemented a lot of improvements for this second try, including upgrades to Electron itself, with a better thermal protection system and upgraded heat shield to protect the Rutherford engines that power the booster, which are designed to help the final reusable design keep those in good shape for future reuse post-recovery.
Rocket Lab issued a statement later on Saturday noting that the second stage “remained within the predicted launch corridor” after its safety shutdown, and won’t pose any risk to the public or its teams. The company also noted that the first stage splashdown did occur as planned, and that the recovery team is on site in the Pacific Ocean to retrieve the booster, so that secondary aim of the mission appears to be on track for success, at least.
This anomaly will now result in an investigation in to the cause, which will be required before Rocket Lab returns to flight in order to ensure future missions don’t fall prey to the same issue.
Leveling the playing field – TechCrunch
In 2011, a product developer named Fred Davison read an article about inventor Ken Yankelevitz and his QuadControl video game controller for quadriplegics. At the time, Yankelevitz was on the verge of retirement. Davison wasn’t a gamer, but he said his mother, who had the progressive neurodegenerative disease ALS, inspired him to pick up where Yankelevitz was about to leave off.
Launched in 2014, Davison’s QuadStick represents the latest iteration of the Yankelevitz controller — one that has garnered interest across a broad range of industries.
“The QuadStick’s been the most rewarding thing I’ve ever been involved in,” Davison told TechCrunch. “And I get a lot of feedback as to what it means for [disabled gamers] to be able to be involved in these games.”
Laying the groundwork
Erin Muston-Firsch, an occupational therapist at Craig Hospital in Denver, says adaptive gaming tools like the QuadStick have revolutionized the hospital’s therapy team.
Six years ago, she devised a rehabilitation solution for a college student who came in with a spinal cord injury. She says he liked playing video games, but as a result of his injury could no longer use his hands. So the rehab regimen incorporated Davison’s invention, which enabled the patient to play World of Warcraft and Destiny.
Jackson “Pitbull” Reece is a successful Facebook streamer who uses his mouth to operate the QuadStick, as well as the XAC, (the Xbox Adaptive Controller), a controller designed by Microsoft for use by people with disabilities to make user input for video games more accessible.
Reece lost the use of his legs in a motorcycle accident in 2007 and later, due to an infection, his hands and legs were amputated. He says he remembers able-bodied life as one filled with mostly sports video games. He says being a part of the gaming community is an important part of his mental health.
Fortunately there is an atmosphere of collaboration, not competition, around the creation of hardware for gamers within the assistive technology community.
But while not every major tech company has been proactive about accessibility, after-market devices are available to create customized gaming experiences for disabled gamers.
At its Hackathon in 2015, Microsoft’s Inclusive Lead Bryce Johnson met with disabled veterans’ advocacy group Warfighter Engaged.
“Controllers have been optimized around a primary use case that made assumptions,” Johnson said. Indeed, the buttons and triggers of a traditional controller are for able-bodied people with the endurance to operate them.
Besides Warfighter Engaged, Microsoft worked with AbleGamers (the most recognized charity for gamers with disabilities), Craig Hospital, the Cerebral Palsy Foundation and Special Effect, a U.K.-based charity for disabled young gamers.
The finished XAC, released in 2018, is intended for a gamer with limited mobility to seamlessly play with other gamers. One of the details gamers commented on was that the XAC looks like a consumer device, not a medical device.
“We knew that we couldn’t design this product for this community,” Johnson told TechCrunch. “We had to design this product with this community. We believe in ‘nothing about us without us.’ Our principles of inclusive design urge us to include communities from the very beginning.”
Taking on the giants
There were others getting involved. Like many inventions, the creation of the Freedom Wing was a bit of serendipity.
At his booth at an assistive technology (AT) conference, ATMakers‘ Bill Binko showcased a doll named “Ella” using the ATMakers Joystick, a power-chair device. Also in attendance was Steven Spohn, who is part of the brain trust behind AbleGamers.
Spohn saw the Joystick and told Binko he wanted a similar device to work with the XAC. The Freedom Wing was ready within six weeks. It was a matter of manipulating the sensors to control a game controller instead of a chair. This device didn’t require months of R&D and testing because it had already been road tested as a power-chair device.
Binko said mom-and-pop companies are leading the way in changing the face of accessible gaming technology. Companies like Microsoft and Logitech have only recently found their footing.
ATMakers, QuadStick and other smaller creators, meanwhile, have been busy disrupting the industry.
“Everybody gets [gaming] and it opens up the ability for people to engage with their community,” Binko said. “Gaming is something that people can wrap their heads around and they can join in.”
Barriers of entry
As the technology evolves, so do the obstacles to accessibility. These challenges include lack of support teams, security, licensing and VR.
Binko said managing support teams for these devices with the increase in demand is a new hurdle. More people with the technological skills are needed to join the AT industry to assist with the creation, installation and maintenance of devices.
Security and licensing is out of the hands of small creators like Davison because of financial and other resources needed to work with different hardware companies. For example, Sony’s licensing enforcement technology has become increasingly complex with each new console generation.
With Davison’s background in tech, he understands the restrictions to protect proprietary information. “They spend huge amounts of money developing a product and they want to control every aspect of it,” Davison said. “Just makes it tough for the little guy to work with.”
And while PlayStation led the way in button mapping, according to Davison, the security process is stringent. He doesn’t understand how it benefits the console company to prevent people from using whichever controller they want.
“The cryptography for the PS5 and DualSense controller is uncrackable so far, so adapter devices like the ConsoleTuner Titan Two have to find other weaknesses, like the informal ‘man in the middle’ attack,” Davison said.
The technique allows devices to utilize older-gen PlayStation controllers as a go-between from the QuadStick to the latest-gen console, so disabled gamers can play the PS5. TechCrunch reached out to Sony’s accessibility division, whose representative said there are no immediate plans for an adaptable PlayStation or controller. However, they stated their department works with advocates and gaming devs to consider accessibility from day one.
In contrast, Microsoft’s licensing system is more forgiving, especially with the XAC and the ability to use older-generation controllers with newer systems.
“Compare the PC industry to the Mac,” Davison said. “You can put together a PC system from a dozen different manufacturers, but not for the Mac. One is an open standard and the other is closed.”
A more accessible future
In November, Japanese controller company HORI released an officially licensed accessibility controller for the Nintendo Switch. It’s not available for sale in the United States currently, but there are no region restrictions to purchase one online. This latest development points toward a more accessibility-friendly Nintendo, though the company has yet to fully embrace the technology.
Nintendo’s accessibility department declined a full interview but sent a statement to TechCrunch. “Nintendo endeavors to provide products and services that can be enjoyed by everyone. Our products offer a range of accessibility features, such as button-mapping, motion controls, a zoom feature, grayscale and inverted colors, haptic and audio feedback, and other innovative gameplay options. In addition, Nintendo’s software and hardware developers continue to evaluate different technologies to expand this accessibility in current and future products.”
The push for more accessible hardware for disabled gamers hasn’t been smooth. Many of these devices were created by small business owners with little capital. In a few cases corporations with a determination for inclusivity at the earliest stages of development became involved.
Slowly but surely, however, assistive technology is moving forward in ways that can make the experience much more accessible for gamers with disabilities.
Don’t repaint, reinvent – TechCrunch
I feel hungover. No, not in the traditional sense, but in the dizzying way you feel when half of your world is celebrating double vaccinations and no masks, and the other half, across the world, is mourning death and not a shred of light at the end of the tunnel. The privilege of watching this unfold is like playing the worst game of musical chairs, except some seats are clouds and others are simply rows of knives.
For tech, the questions that we will be debating are bigger than if “that conference will be virtual or in-person.” Instead, we’re now trying to figure out what the future of work and education are for the second time in a year. The United States is reopening and that means a lot of the culture of how we work will be rewritten. Shifting from an individual mindset to a collective, more distributed world is going to be harder than taking a mask off and popping an aspirin.
Startup founders new and old are about to start making decisions on how to lead in this changed world. They will have to consider things far more consequential than if free lunches come back. More serious questions abound: How do you give flexibility along with accountability? How do you repair the universal toll on mental health? How do you offer opportunity equally between remote employees and in-person employees? What happens when half of your workforce can go to happy hours while the other half is in a city under lockdown?
Naj Austin, the founder and CEO of Somewhere Good and Ethel’s Club, spoke to me about intention this week. She explained how repainting something is easier than reinventing the entire process, but the latter has the opportunity to disrupt far more than the former. It made me think about the return to offices, and how the frictionless option might not be the best option long term.
I’ve learned that the best founders embody this ethos and pick the harder bucket. It stands out when you are intentional about recruitment, the return and potential relief that comes with optionality.
In the rest of this newsletter, we’ll get into stock market volatility, Expensify’s origin story, and what one founder learned after getting rejected by YC 13 times. As always, you can support me by subscribing to Extra Crunch and following me on Twitter.
What goes up, must go down
The edtech public market is on that kind of fire this week, with many stocks slashing share prices nearly in half compared to 52-week highs.
Here’s what to know: Alex and I wrote about how the carnage in the public markets is expected in edtech, a sector filled with pandemic bumps. We predicted that bullish VCs will remain bullish, and the correction in the market is upon us.
In September 2020, Larry Illg, CEO of Prosus Ventures, told us that edtech was filled with “tourists” and “faddish money,” making it a hard time to assess companies and find accountable bets.
“It’s quite dangerous,” he said. “We’ve seen over the years in geographic context at different points in time that people are attracted to India or are attracted to Brazil and they start pumping money in and then two or three years later, they exit with their tail between their legs.”
Plus, two SPACs, two IPO updates and SoftBank:
The origin of expense management
Expensify has managed to become a leader in the expense management market, with 10 million users, only 130 employees, and of course, an upcoming IPO. For these reasons, and many more, it’s the latest company in our EC-1 series. The first installment, penned by Anna Heim, went live this week.
Here’s what to know: While managing finances feels like a pretty clearcut business, Expensify’s origin was far more chaotic. Think P2P hacker culture, consensus-driven decision-making, and, as always, an Uber angle. The origin story explores how a motley crew created a unique expense management system.
The deep dives continue:
We are revving up to TC Sessions: Mobility, this year’s virtual dive into the world of transportation. Book your general admission pass for $125 today, and I promise you won’t regret it.
Among the growing list of speakers at this year’s event are GM’s VP of Global Innovation Pam Fletcher, Scale AI CEO Alexandr Wang, Joby Aviation founder and CEO JoeBen Bevirt, investor and LinkedIn founder Reid Hoffman (whose special purpose acquisition company just merged with Joby), investors Clara Brenner of Urban Innovation Fund, Quin Garcia of Autotech Ventures and Rachel Holt of Construct Capital, Starship Technologies co-founder and CEO/CTO Ahti Heinla, Zoox co-founder and CTO Jesse Levinson, community organizer, transportation consultant and lawyer Tamika L. Butler, Remix co-founder and CEO Tiffany Chu and Revel co-founder and CEO Frank Reig.
Across the week
Seen on TechCrunch
Seen on Extra Crunch
Maybe SPACs were a bad idea after all – TechCrunch
Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday? Sign up here.
Ready? Let’s talk money, startups and spicy IPO rumors.
Hello friends, I was out yesterday with what I’m calling Moderna Syndrome. Basically I got whacked by my second vaccine dose, and instead of enjoying a day off eating candy and spoiling my dogs I spent the entire day on the couch unable to move. All that’s to say that I missed Coinbase and DoorDash earnings when they came out.
Catching us up, Coinbase met its forecasts that it had previously released (more here), and today its stock is flat. DoorDash, in contrast, beat market expectations and is currently up just over 25% as I write to you.
But despite huge quarters from each, both companies are far below their recently set all-time highs. Coinbase is worth around $265 per share today, off from an all-time high of $429.54, which it set recently. And DoorDash is worth $145 this afternoon, far below its $256.09 52-week high.
They are not alone amongst recent public offerings that have lost steam. Many SPAC-led combinations are tanking. But while Coinbase and DoorDash are still richly valued at current levels and worth far more than they were as private companies, some startups that took SPAC money to float are not doing well, let alone as well.
As Bloomberg notes, five electric vehicle companies that SPAC’d their way to the public markets were worth $60 billion at one point. Now the collection of mostly revenue-free public EV companies have shed “more than $40 billion of market capitalization combined from their respective peaks.” Youch.
And SPAC hype-man and general investing bon vivant Chamath Palihapitiya is taking some stick for his deal’s returns as well. It’s all a bit messy. Which, to be fair, is pretty much what we’ve expected all along.
Not that there aren’t some SPAC-combinations that make sense. There are. But mostly it’s been more speculative hype than business substance. Perhaps that’s why Coinbase and DoorDash didn’t need to lean on crutches to get public. Sure, the market is still figuring out what they are actually worth, but that doesn’t mean that they are in any real trouble. But consider, for a moment, the companies that have agreed to go public via a SPAC before the correction and are still waiting for their deal to complete.
TFW ur forecast is conservative
The Exchange has been on the horn recently with a few public company CEOs after their earnings report. After those conversations, we have to talk a bit about guidance. Why? Because it’s a game that I find slightly annoying.
Some public companies simply don’t provide forecasts. Cool. Root doesn’t, for example, provide quarterly guidance. Fine. Other companies provide guidance, but only in a super-conservative format. This is in effect no guidance at all, in my view. Not that we’re being rude to companies per se, but they often wind up in a weird dance between telling the market something and telling it something useful.
Picking on Appian’s CEO as he’s someone I like, when discussing his own company’s forecasts Matt Calkins said that its guidance is “unfailingly conservative” — so much so that he said it was nearly frustrating. But he went on to argue that Appian is not short-run focused (good), and that if a company puts up big estimates it is more judged on the expectation of those results versus the realization of said results. That line of thinking immediately makes ultra-prudent guidance seem reasonable.
This is a philosophical argument more than anything, as Wall Street comes up with its own expectations. The financial rubber hits the road when companies guide under Wall Street’s own expectations or deliver results that don’t match those of external bettors. So guidance matters some, just not as much as people think.
BigCommerce’s CEO Brent Bellm helped provide some more guidance as to why public companies can guide a bit more conservatively than we might expect during our recent call. It helps them not overspend. He noted that if BigCommerce — which had a super solid quarter, by the by — is conservative in its planning (the font from which guidance flows, to some degree) it can’t deploy too much near-term capital.
In the case of BigCommerce, Bellm continued, he wants the company to overperform on revenue, but not adjusted profits. So, if revenue comes in ahead of expectations, it can spend more, but won’t work to maximize their near-term profitability. And he said that he’s told analysts just that. So keeping guidance low means that it won’t overspend and blast its adjusted profitability, while any upside allows for more aggressive spend?
Harumph, is my general take on all of the above. It’s very fine to have public company CEOs play the public game well, but what I’d greatly prefer is if they did something more akin to what startups do. High-growth tech companies often have a board-approved plan and an internal plan that is more aggressive. For public companies this would be akin to a base case and a stretch case. Let’s have both, please? I am tired of parsing sandbagged numbers for the truth.
Sure, by reporting a guidance range, public companies are doing some of that. But not nearly enough. I hate coyness for coyness’s sake!
That’s enough of a rant for today, more on BigCommerce earnings next week if we can fit it in. You can read more from The Exchange on Appian and the larger low-code movement here, if that’s your jam.
Never going back
We’re running a bit long today, so let me demount with some predictions.
Nearly every startup I’ve spoken to in the last year that had 20 or fewer staff at the time of the chat is a remote-first team. That’s due to their often being born during the pandemic, but also because many very early-stage startups are simply finding it easier to recruit globally because often the talent they need, can afford or can attract, is not in their immediate vicinity.
Startups are simply finding it critical to have relaxed work location rules to snag and, we presume, retain the talent that they need. And they are not alone. Big Tech is in similar straits. As The Information reported recently:
An internal Google employee message board lit up last Wednesday morning as news of what many staff perceived as a more relaxed policy for working remotely circulated. One meme shared on the board showed a person crying, labeled “Facebook recruiters.” Another showed a sad person labeled “San Francisco landlords.”
If you aren’t laughing, maybe you have a life. But I do this for a living, and I am dying at that quote.
Look, it’s clear that lots of people can do lots of work outside of an office, and even though labor purchasers (employers) want to run 1984-style operations on their employees (labor sellers) to ensure that they are Doing Precisely Enough, the actual denizens writing code are like, naw. And that’s just too much for Big Tech to handle as they are literally just cash flows held up by people who type for a living.
What this means is that tech is not going back to 100% in-office work or anything close to. At least not at companies that want to actually ensure that they have top-tier talent.
It’s a bit like when you see a company comprising only white men; you know that it doesn’t have nearly the best team that it could. Firms that enforce full-office policies are going to overindex on a particular demographic. And it won’t be to their benefit.
Apple talks App Store fraud, responds to antitrust complaints; Facebook growth is slipping – TechCrunch
Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.
The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.
Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year
This week we’re diving into how Apple is defending its App Store fees amid the Epic lawsuit and how it responded to the other complaints raised by Spotify, Match and Tile in the Senate antitrust hearing. We’re also looking at new data that implies Facebook’s grip on social is starting to loosen, TikTok’s new features, tests and plans for e-commerce, security issues with Twitter’s Tip Jar and more.
This Week in Apps will soon be a newsletter! Sign up here: techcrunch.com/newsletters
Apple talks App Store fraud
Apple wants developers to know what they’re paying for with those App Store commissions. The company this week announced it stopped more than $1.5 billion in potentially fraudulent transactions in 2020, preventing theft of customers’ “money, information and time,” it said. And it kept nearly a million “risky and vulnerable” apps out of customers’ hands — meaning it rejected them from the App Store following their review. It also terminated 470,000 developer accounts in 2020 and rejected an additional 205,000 developer enrollments over fraud concerns. On the customer side, Apple deactivated 244 million customer accounts due to fraudulent and abusive activity, it said, and rejected 424 million attempted account creations because they “displayed patterns consistent with fraudulent and abusive activity.”
The company, of course, didn’t just randomly decide to post these figures. Its App Store fees and their legality, of sorts, are on trial as part of Epic Games’ lawsuit. The Fortnite maker alleges Apple is behaving as a monopolist by forcing app developers to use only Apple’s own payment mechanism — and by not even allowing developers to tell their customers where else they can make purchases, such as on the developer’s website, where App Store fees wouldn’t apply.
By publishing this data, Apple is attempting to position all the stories of fraudulent apps on the App Store as those that fell through the cracks of its much larger anti-fraud operation. That is, for all the mistakenly published fraudulent apps that Apple either internally fretted over, or those that have now come to light in the press (often now thanks to developer Kosta Eleftheriou‘s ongoing efforts), there were much, much larger numbers that Apple had stopped from making it through app review.
Where Apple’s case falls apart, however, is when Eleftheriou exposes how easy it is to find those scam apps after they mistakenly get approved. On his own, he’s building a tool that finds scams across the entire App Store. The question is, why can’t a multibillion-dollar company do the same — or even do more? A system that’s able to retroactively review apps that have both high revenues and a suspicious number of five-star reviews (amid a sizable amount of one-star reviews calling the app a scam), would give Apple’s app review team a good place to start a cleanup. The company has done widespread App Store sweeps in years past to get rid of junk, after all — maybe it needs another?
Facebook’s dominance is slipping
There are some signs that Facebook’s hold on the social app ecosystem is slipping. Already getting beat by TikTok and others as the most-downloaded apps of 2020, new data from Appfigures indicates Facebook’s app has been seeing an increasingly smaller number of monthly downloads over the past 12 months.
The Facebook app and Facebook Lite saw 15 million installs per week in May 2020, which dropped to 13 million in June 2020. As of April 2021, the number is now under 11 million — a loss of 23% of downloads in around 12 months. Meanwhile, a social app gaining downloads during this time has been TikTok, which saw 52 million downloads in April 2021.
In addition, eMarketer reported this week that Gen Z users now use TikTok more than Instagram in the U.S. This year, TikTok will have 37.3 million monthly active Gen Z users compared with 33.3 million Gen Z MAUs on Instagram. Snapchat is still leading, however, with 42.0 million MAUs this year. However, TikTok is on pace to surpass Snapchat as well, with 89.7 million total MAUs by 2023, compared with Snapchat’s 98.5 million.
Apple expands its Apple Developer Academy to Detroit and Korea. The program provides training and tools to aspiring iOS developers and designers. Apple already runs programs in more than a dozen other sites in Brazil, Indonesia and Italy.
Apple releases third developer beta and public beta of iOS 14.6 and iPadOS 14.6, and the third developer beta and public beta of watchOS 7.5 The betas include under-the-hood improvements and fixes, as well as small changes like the ability to use an email address to put AirTags and other items into Lost Mode. Apple is also now no longer signing iOS 14.5, blocking downgrades.
Apple is being hit with a class-action suit in the U.K over App Store commissions. The group alleges Apple is behaving like a monopolist over its excessive collection of fees, and is asking for damages of around £1.5 billion ($2.1 billion).
Google announced the winners of its #AndroidDevChallenge, which showcased apps built with Android’s new UI toolkit, Jetpack Compose. In later rounds, winners received a Google Pixel 5.
Pokémon GO’s developer, Niantic Labs, is rebranding its development platform as Niantic Lightship and opening to more developers as it enters private beta. The goal of Lightship will be to allow more developers to use the company’s tech that powers apps like Pokémon GO and Harry Potter: Wizards Unite to build their own immerse, multiplayer AR games.
New game studio Sequoia Games is planning to launch a tabletop AR game to capitalize on NBA Top Shot fever. The game has elements of trading cards, NFTs and AR.
Coinbase hit No. 1 on the U.S. App Store for the first time since 2017 on May 10. The app had broken into the top 10 in mid-April, climbing as high as No. 2 on April 14, its IPO day.
Google Pay makes its first push into the remittances market. Users in the U.S. can now send money to users in India and Singapore.
PayPal ranked No. 2 for MAUs in finance apps in Q1 2021 in the U.S., behind PayPal-owned Venmo. It was No. 1 in the U.K. and No. 4 in France. The company is preparing to make PayPal a “super app” that will enable shopping, bill pay, check cashing, investing, crypto buying and selling, and more.
Snap suspends anonymous Q&A apps YOLO and LMMK following a lawsuit over a teen’s death. (TW: suicide). The mother of an Oregon teen is suing Snap, YOLO and LMK after her son took his own life in 2020. The teen had received bullying messages on YOLO and LMK for months leading up to his death. The suit alleges that anonymous messaging apps facilitate bullying to such an extent that they should be considered dangerous products.
TikTok is testing a system that will allow creators to pay to promote their own videos to the For You Page, according to reports. TikTok told us the new self-serve advertising tool is not widely available, but will allow users and brands to promote their TikTok videos and foster engagement with the community more easily. The user can center their promotions around campaign objectives like video views or visits to a landing page or website.
TikTok rolls out a Green Screen Duet feature and a new way to browse videos. The Green Screen Duet feature combines two of TikTok’s most popular editing tools to allow creators to use another video from TikTok as the background in their new video. The company also confirmed the test of a new way to discover videos. Called “Topics,” these are dedicated interest-based feeds featuring the top, trending videos in a given category.
Facebook has begun testing its recently announced Clubhouse rival, Live Audio Rooms. The test was spotted being used by public figures in Taiwan, reported Bloomberg.
TikTok to take on LinkedIn? The video app is launching a job service that will offer a tool for brands to recruit employees. The platform isn’t integrated into the LinkedIn app, but is rather a separate web page for posting jobs and uploading video resumes.
TikTok also added a revamped Safety Center which includes a new section for parents and guardians that teaches them how to get started on the app and use its safety features, like Family Pairing. It also offers bully education and prevention resources, and details on safety and privacy tools, among other things.
Instagram is adding a dedicated spot for your pronouns in your Instagram bio. The company said it’s only available in a few countries right now, but is rolling out to others soon.
Facebook is testing new pop-up messages in its app that tell people to read a link before they share it, following the launch of a similar feature on Twitter. The goal is to encourage people to read through the article, rather than impulsively reshare potentially inflammatory content based on headlines.
Discord’s Clubhouse competitor, Stage Channels, will begin to surface events like open mic nights, book clubs, and more through a new portal called Stage Discovery starting in June. The company is also planning to add threaded conversations and ticketed events in the future.
Nearly half of TikTok users are buying from the brands they see on the platform. TikTok is preparing to double down on that trend, Bloomberg reports, noting it saw a brand testing special shopping features on its profile. TikTok also told us it’s running tests in select regions, including Southeast Asia, that will pave the way for its broader expansion into e-commerce. (But you already know about these, right? Because we told you back in February!)
Twitter DMs will be easier to search. Nearly two years after the search feature arrived on iOS, Twitter rolled out the DM search bar to Android. It also said that later this year users will be able to search DMs for message content, too.
Signal’s beta (v5.11.0) adds a feature that allows users to share 4K images by tapping a button and selecting “High” for the image quality.
Streaming & Entertainment
Podcast streaming app Castbox was found to be streaming dozens of subscription-only shows via leaked feeds. The podcasts offer their paying subscribers private feeds to listen. But these feeds can be easily shared, then accessed by any podcast app that supports RSS.
Bumble’s shares fell sharply after its first-quarter earnings, falling below the IPO price of $43 to $38.91. Investors were spooked by Bumble’s cautious H2 guidance. Bumble reported revenue of $170.7 million in Q1 2021, up from $79.1 million in Q1 2021. Paying users increased 30% to 2.8 million.
Roblox reported its revenue grew 140% YoY in its first earnings report since the company went public. The company reported $387 million in revenue and a loss per share of $0.46. The net loss for the quarter was $134.2 million. DAUs rose 79% YoY to 42.1 million, with users spending 9.7 billion hours on the platform, up 98% YoY.
The top five IP-based gaming titles generated $1.4 billion in the U.S. in 2020, reports Sensor Tower. The games included Pokémon GO, PUBG Mobile, Call of Duty: Mobile, Marvel Strike Force and Dragon Ball Z: Dokkan Battle. Pokémon GO led with $480 million.
Health & Fitness
Facebook shared updates on its vaccination efforts, saying more than 3.3 million people in the U.S. have used its vaccine finder since its March 11 launch. It has also given out $30 million in ad credits to governments, NGOs and other orgs to reach people with vaccine info. More than 5 million people globally have added the profile frame that shows support for vaccines, and more than 7 million people have used Instagram stickers for vaccines. Over 50% of people in the U.S. on Facebook have seen someone use the COVID-19 vaccine profile frames so far.
Uber and Lyft are giving free rides to COVID-19 vaccine sites in a deal with the White House. The free rides will last through July 4, the date when President Joe Biden wants 70% of U.S. adults to be vaccinated.
The NHS contact-tracing app had a significant impact on lowering the spread of the coronavirus in the U.K., a peer-reviewed report states. The app was “used regularly” by 16.5 million people, or roughly 28% of the U.K. population.
Apple is again seeking to dismiss an $800 million COVID app lawsuit. Apple rejected the app last year on the grounds that it didn’t come from a recognized health authority or institution.
Government & Policy
Apple’s Chief Compliance Officer Kyle Andeer responded to complaints made by Spotify, Match and Tile during the hearing held by the Senate Judiciary Committee Subcommittee on Competition Policy, Antitrust, and Consumer Rights. In a letter, Andeer reiterates Apple’s arguments, including that its commission structure is fair (e.g. it drops to 15% in year two for subscription apps; a 70/30 split is an industry standard); that the commission pays for far more than processing payments; that it doesn’t prohibit developers from communicating with customers — it only asks them to not do so inside their iOS app; and that it will provide access to UWB for Tile and others in its space, among other things.
Apple dealt some notable blows in the letter, too: it said Match had tried to implement shady pricing in Tinder that would have made an upfront six-month payment look like a subscription at one point, which is why it rejected its app update. And it refuted the idea that it used data from Tile’s retail sales inside stores to inform AirTag pricing, noting Tile “did not sell well” at Apple Stores.
Facebook is ordered not to apply its controversial WhatsApp T&Cs in Germany. The Hamburg data protection agency is blocking Facebook from processing the additional WhatsApp user data it was granting itself through the T&C change.
State Attorneys General representing 44 U.S. states and territories are pressuring Facebook to walk away from its plans to launch a version of Instagram aimed at children under the age of 13, citing the potential harm to children’s privacy and development health, as well as Facebook’s track record of prioritizing growth over the well-being of users.
TikTok removed over 500,000 accounts in Italy after the country’s data protection watchdog asked the company to recheck the ages of all Italian users and block access to those under the age of 13.
Google was fined just over €100 million (~$123 million) by Italy’s antitrust watchdog for its abuse of a dominant market position related to Android Auto. Google had restricted access to the platform to electric car charging app JuicePass, made by energy company Enel X Italia.
Security & Privacy
Twitter’s new Tip Jar feature, which lets users tip others via PayPal, Venmo, Cash App and others, was quickly found to have a privacy issue. Sending PayPal payments would reveal the recipient’s home address. And even without a transaction, it would reveal a user’s email. Twitter, meanwhile, permits users to be anonymous — but PayPal would expose them.
The FTC finalized its settlement with photo app Everalbum, which misled users of its Ever app saying that it would not apply facial recognition unless users opted in. But the company did activate the feature for all users except those in three U.S. states and the E.U. It also didn’t delete users’ photos and videos when accounts were deactivated. The company must now delete the users’ content and must obtain consent before using facial recognition.
A survey from SellCell found that 73% of respondents agree with Apple’s privacy changes around App Tracking Transparency, compared with 18% who opposed it and 9% who weren’t sure. Additionally, 36% said ATT was their favorite iOS 14.5 feature.
💰 Apptopia raised $20 million to expand its competitive intelligence platform beyond mobile to include data coming from smartwatches, desktop and connected TVs.
💰 Sanlo raised $3.5 million co-led by Index Ventures and Initial Capital to help apps and games gain access to financial insights and capital. The company will ingest select data from the developer’s account related to customer acquisition costs, retention, marketing data and a subset of financial data. It will then offer insights as to when to smartly deploy capital and even offer the financing.
💰 Blind, a social networking app for verified, but pseudonymous employees, raised $37 million in Series C funding led by South Korean venture firm Mainstreet Investment. The app now has 5 million users and is building out its hiring platform, “Talent by Blind.”
💰 Snack, a “Tinder meets TikTok”-style dating app, opens up to Gen Z investors in latest round. The startup will allow Gen Z community members, influencers, creators and others to invest in the company’s upcoming $2 million SAFE, alongside other funds and angels.
💰 SightCall raised $42 million for its AR-based visual assistance platform for field service teams and their customers to carry out technical and mechanical maintenance or repairs. The core of its service is AR technology, which comes embedded in their apps or the service apps used by customers.
💰 Lili, a neobank aimed at freelancers, raised $55 million in Series B funding after seeing usage grow 1,500% in a year. The service has topped 200K users.
💰 Fair, a multilingual neobank, is launching to the public after raising $20 million earlier this year. The app targets people new to the U.S., have no credit or need access to interest-free loans.
🤝 Enterprise Apple device management company Jamf acquired zero trust security startup Wandera for $400 million.
💰 U.K. fashion app Lyst raised $85 million in a pre-IPO round at a $700 million valuation. The company now has 150 million users, and a catalog of 8 million products from 17,000 brands and retailers.
💰 Vietnamese flexible pay startup Nano raised $3 million in seed funding led by returning investors Golden Gate Ventures and Venturra Discovery. Its app, VUI, now serves more than 20,000 employees from companies like GS25, LanChi Mart and Annam Gourmet.
🤝 Korea’s Kakao buys serialized fiction app Radish as well as Tapas Media’ storytelling apps, which have more than 3 million readers, for a combined total of $950 million. The former was valued at $440 million and the latter at $510 million.
🤝 The $600 million acquisition of reading community app Wattpad by South Korean internet giant Naver has now formally closed. Wattpad will continue to operate from Toronto, Canada, with co-founder Allen Lau remaining CEO and reporting to the CEO of Naver’s Webtoon, Jun Koo Kim.
💰 Astrology app Sanctuary raised $3 million in seed funding led by BITKRAFT Ventures to grow its live, on-demand astrology, tarot and psychic readings business.
The GasBuddy app, which has been around for over a decade, hit the No. 1 spot on the U.S. App Store for the first time ever due the Colonial pipeline attack. The app became a must-have app for finding gas stations nearby that aren’t out of fuel or diesel, following a surge of panic-buying across over a dozen U.S. states reporting outages. The company told TechCrunch it counted 313,001 total downloads on Wednesday, to give you an idea of how many users it’s been gaining as a result of the crisis.
Waitlist this: Pok Pok Playroom
Snowman, the small studio behind award-winning iOS games Alto’s Adventure, Alto’s Odyssey, Skate City and others, is spinning out a new company, Pok Pok, that will focus on educational children’s entertainment. Later this month, Pok Pok will debut its first title, Pok Pok Playroom, aimed at inspiring creative thinking through play for the preschool crowd. The app will feature a range of creative “digital toys” grounded in the real world — no unicorns or fairies or talking animals here. Rather it will feature a diverse range of characters that represent the real world as it is. The subscription-based app will have no ads or in-app purchases, so kids are encouraged to play, not pressured to buy things. The company has pre-announced its May 20th launch, but users can sign up on the website now to get an email when the app arrives.
Selling SaaS to developers, cracking YC after 13 tries, all about Expensify – TechCrunch
Before Twilio had a market cap approaching $56 billion and more than 200,000 customers, the cloud-communications platform developed a secret sauce to fuel its growth: a developer-focused model that dispensed with traditional marketing rules.
Software companies that sell directly to end users share a simple framework for managing growth that leverages discoverability, desirability and do-ability — the “aha!” moment where a consumer is able to incorporate a new product into their workflow.
Data show that traditional marketing doesn’t work on developers, and it’s not because they’re impervious to a sales pitch. Builders just want reliable tools that are easy to use.
As a result, companies that are looking to create and sell software to developers at scale must toss their B2B playbooks and meet their customers where they are.
Attorney Sophie Alcorn, our in-house immigration law expert, submitted two columns: On Monday, she analyzed a decision by the U.S. Department of Homeland Security not to cancel the International Entrepreneur Parole program, which potentially allows founders from other countries to stay in the U.S. for as long as 60 months.
On Wednesday, she responded to a question from an entrepreneur who asked whether it made sense to sponsor visas for workers who are working remotely inside the U.S.
Thanks very much for reading Extra Crunch this week, and have a great weekend.
Senior Editor, TechCrunch
4 lessons I learned about getting into Y Combinator (after 13 applications)
Can you imagine making 13 attempts at something before attaining a successful outcome?
Alex Circei, CEO and co-founder of Git analytics tool Waydev, applied 13 times to Y Combinator before his team was accepted. Each year, the accelerator admits only about 5% of the startups that seek to join.
“Competition may be fierce, but it’s not impossible,” says Circei. “Jumping through some hoops is not only worth the potential payoff but is ultimately a valuable learning curve for any startup.”
In an exclusive exposé for TechCrunch, he shares four key lessons he learned while steering his startup through YC’s stringent selection process.
The first? “Put your business value before your personal vanity.”
The Expensify EC-1
In March, TechCrunch Daily Reporter Anna Heim was interviewing executives at Expensify to learn more about the company’s history and operations when they unexpectedly made themselves less available.
Our suspicions about their change of heart were confirmed on May 3 when the expense report management company confidentially filed to go public.
With a founding team comprised mainly of P2P hackers, it’s perhaps inevitable that Expensify doesn’t look and feel like something an MBA might envision.
“We hire in a super different way. We have a very unusual internal management structure,” said founder and CEO David Barrett. “Our business model itself is very unusual. We don’t have any salespeople, for example.”
Similar to the way companies must file a Form S-1 that describes their operations and how they plan to spend capital, TechCrunch EC-1s are part origin story, part X-ray. We published the first article in a series on Expensify on Monday:
We’ll publish the remainder of Anna’s series on Expensify in the coming weeks, so stay tuned.
As Procore looks to nearly double its private valuation, the IPO market shows signs of life
Construction tech unicorn Procore Technologies this week set a price range for its impending public offering. The news comes after the company initially filed to go public in February of 2020, a move delayed by the pandemic.
In March 2021, Procore filed again for a public offering, but its second shot ran into a cooling IPO market. The company filed another S-1/A in April, and then another in early May. This week’s filing is the first that sets a price for the Carpinteria, California-based software upstart.
But Procore is not the only company that filed and later put on hold an IPO to get back to work on floating. Kaltura, a software company focused on video distribution, also recently got its IPO back on track. Are we seeing a reacceleration of the IPO market? Perhaps.
3 golden rules for health tech entrepreneurs
Family physician Bobbie Kumar lays out the golden rules to ensure your healthcare product, service or innovation is on the right track.
Rule 1: “It’s not enough to develop a ‘new tool’ to use in a health setting,” Dr. Kumar writes. “Maybe it has a purpose, but does it meaningfully address a need, or solve a problem, in a way that measurably improves outcomes? In other words: Does it have value?”
Dear Sophie: How does the International Entrepreneur Parole program work?
I’m the founder of an early-stage, two-year-old fintech startup. We really want to move to San Francisco to be near our lead investor.
I heard International Entrepreneur Parole is back. What is it, and how can I apply?
— Joyous in Johannesburg
Digging into digital mortgage lender Better.com’s huge SPAC
If you have heard of Better.com but really had no idea what it does before this moment, welcome to the club. Mortgage tech is like pre-kindergarten applications — it applies to a very specific set of folks at a very particular moment. And they care a lot about it. But the rest of us aren’t really aware of its existence.
Better.com, a venture-backed digital mortgage lender, announced this week that it will combine with a SPAC, taking itself public in the second half of 2021. The unicorn’s news comes as the American IPO market is showing signs of fresh life after a modest April.
As tech offices begin to reopen, the workplace could look very different
The pandemic forced many employees to begin working from home, and, in doing so, may have changed the way we think about work. While some businesses have slowly returned to the office, depending on where you live and what you do, many information workers remain at home.
That could change in the coming months as more people get vaccinated and the infection rate begins to drop in the U.S.
Many companies have discovered that their employees work just fine at home. And some workers don’t want to waste time stuck on congested highways or public transportation now that they’ve learned to work remotely. But other employees suffered in small spaces or with constant interruptions from family. Those folks may long to go back to the office.
On balance, it seems clear that whatever happens, for many companies, we probably aren’t going back whole-cloth to the prior model of commuting into the office five days a week.
For unicorns, how much does the route to going public really matter?
On a recent episode of TechCrunch’s Equity podcast, hosts Natasha Mascarenhas and Alex Wilhelm invited Yext CFO Steve Cakebread and Latch CFO Garth Mitchell on to discuss when companies should go public, the costs and benefits of the process and when a SPAC can make sense. Yext pursued a traditional IPO a few years back; Latch is now going public via a blank-check company combination.
The chat was more than illustrative, as we got to hear two CFOs share their views on delayed public offerings and when different types of debuts can make the most sense. While the TechCrunch crew has, at times, made light of certain SPAC-led deals, the pair argued that the transactions can make good sense.
Undergirding the conversation was Cakebread’s recent IPO-focused book, which not only posited that companies going public earlier rather than later is good for their internal operations but also because it can provide the public with a chance to participate in a company’s success.
In today’s hypercharged private markets and frothy public domain, his argument is worth considering.
The truth about SDK integrations and their impact on developers
Ken Harlan, the founder and CEO of Mobile Fuse, writes about the perks and pitfalls of software development kits.
“The digital media industry often talks about how much influence, dominance and power entities like Google and Facebook have,” Harlan writes. “Generally, the focus is on the vast troves of data and audience reach these companies tout. However, there’s more beneath the surface that strengthens the grip these companies have on both app developers and publishers alike.
“In reality, SDK integrations are a critical component of why these monolith companies have such a prominent presence.”
Don’t hate on low-code and no-code
The Exchange caught up with Appian CEO Matt Calkins after his enterprise app software company reported its first-quarter performance to discuss the low-code market and what he’s hearing in customer meetings. To round out our general thesis — and shore up our somewhat bratty headline — we’ve compiled a list of recent low-code and no-code venture capital rounds, of which there are many.
As we’ll show, the pace at which venture capitalists are putting funds into companies that fall into our two categories is pretty damn rapid, which implies that they are doing well as a cohort. We can infer as much because it has become clear in recent quarters that while today’s private capital market is stupendous for some startups, it’s harder than you’d think for others.
Bird’s SPAC filing shows scooter-nomics just don’t fly
Historically — and based on what we’re seeing in this fantastical filing — Bird proved to be a simply awful business. Its results from 2019 and 2020 describe a company with a huge cost structure and unprofitable revenue, per filings. After posting negative gross profit in both of the most recent full-year periods, Bird’s initial model appears to have been defeated by the market.
What drove the company’s hugely unprofitable revenues and resulting net losses? Unit economics that were nearly comically destructive.
Dear Sophie: Does it make sense to sponsor immigrant talent to work remotely?
My startup is in big-time hiring mode. All of our employees are currently working remotely and will likely continue to do so for the foreseeable future — even after the pandemic ends. We are considering individuals who are living outside of the U.S. for a few of the positions we are looking to fill.
Does it make sense to sponsor them for a visa to work remotely from somewhere in the United States?
— Selective in Silicon Valley
The hamburger model is a winning go-to-market strategy
“Today, we live in a world of product-led growth, where engineers (and the software they have built) are the biggest differentiator,” says Coatue Management general partner Caryn Marooney and investor David Cahn. “If your customers love what you’re building, you’re headed in the right direction. If they don’t, you’re not.
“However, even the most successful product-led growth companies will reach a tipping point, because no matter how good their product is, they’ll need to figure out how to expand their customer base and grow from a startup into a $1 billion+ revenue enterprise.
“The answer is the hamburger model. Why call it that? Because the best go-to-market (GTM) strategies for startups are like hamburgers:
- The bottom bun: Bottom-up GTM.
- The burger: Your product.
- The top bun: Enterprise sales.”
Software subscriptions are eating the world: Solving billing and cash flow woes simultaneously
Krish Subramanian, the co-founder and CEO of Chargebee, writes that while subscription business models are attractive, there are two major pitfalls: First, payment.
“Regardless of company size, there’s an ongoing need to convince customers to sign up long term,” Subramanian writes. “The second issue: How do businesses cover the funding gap between when customers sign up and when they pay?”
Is there a creed in venture capital?
Scott Lenet, the president of Touchdown Ventures, asks how deal-makers should think about how to handle themselves when counter-parties attempt to change an agreement. “When is it OK to modify terms, and when should deal-makers stand firm?” he asks.
“Entrepreneurs and investors should recognize that contracts are worth very little without the ongoing relationship management that keeps all parties aligned. Enforcement is so unusual in the world of startups that I consider it a mostly dead-end path. In my experience, good communication is the only reliable remedy. This is the way.”
Even startups on tight budgets can maximize their marketing impact
“Search engine optimization, PR, paid marketing, emails, social — marketing and communications is crowded with techniques, channels, solutions and acronyms,” writes Dominik Angerer, CEO and co-founder of Storyblok, which provides best practice guidance for startups on how to build a sustainable approach to marketing their content. “It’s little wonder that many startups strapped for time and money find defining and executing a sustainable marketing campaign a daunting prospect.
“The sheer number of options makes it difficult to determine an effective approach, and my view is that this complexity often obscures the obvious answer: A startup’s best marketing asset is its story.”
Solana, a blockchain platform followed by top crypto investors, says it’s far faster than Ethereum – TechCrunch
Solana isn’t widely known yet outside of the crypto community. But insiders think the blockchain platform is interesting for a wide variety of reasons, beginning with its amiable founder, Anatoly Yakovenko, who spent more than a dozen years as an engineer working on wireless protocols at Qualcomm and who says he had a lightbulb moment at a San Francisco cafe several years ago following two coffees and a beer.
His big idea centered on creating an historical record to speed along “consensus,” which is how decisions are made on blockchains, which are themselves peer-to-peer systems. Right now, consensus is reached on various blockchains when members solve a mathematical puzzle, a mechanism that’s called “proof of work.” These miners are rewarded for their efforts with cryptocurrency, but the process takes many hours in Bitcoin’s case and days in the case of Ethereum, and it’s insanely energy intensive, which is why neither Bitcoin nor Ethereum has proved very scalable. (Bitcoin’s heavy reliance on fossil fuel is the reason Elon Musk cited earlier this week to explain why Tesla is no longer accepting Bitcoin as payment for the company’s electric cars.)
But there is another way. Indeed, crypto watchers and developers are excited about Ethereum and other currencies that are transitioning to a new system called “proof of stake,” wherein people who agree to lock up a certain amount of their cryptocurrency are invited to activate so-called validator software that enables them to store data, process transactions, and add new blocks to the blockchain. Like miners, “validators” take on the role to earn more cryptocurrency, but they need far less sophisticated equipment, which opens up the opportunity to more people. Meanwhile, because more validators can participate in a network, consensus can be reached faster.
Yakovenko is enthusiastic about the shift. We talked with him yesterday, and he’s certainly not rooting against Ethereum, saying it would be “devastating for the entire industry” if Ethereum weren’t able to pull off its transition to proof of stake, given its mindshare and its roughly $500 billion market cap.
Still, he argues that not even proof of stake is good enough. The reason, he says, is that even with proof of stake, miners — and bots — have advance access to transaction information that allows them to exploit users, or front run transactions, because they can control transaction ordering and profit from that power.
Enter Yakovenko’s big idea, which he calls “proof of history,” wherein the Solana blockchain has developed a kind of synchronized clock that, in essence, assigns a timestamp for each transaction and disables the ability for miners and bots to decide the order of which transactions get recorded onto the blockchain.
Yakovenko says it also allows for faster block finalization and much faster consensus because the timestamps of previous transactions no longer need to be computed. “Basically, the speed of light is how fast we can make this network go.”
Certainly, Solana — which has sold tokens to investors but never equity in the company — has many excited about its prospects. In recent interviews with both investor Garry Tan of Initialized Capital and CEO Joe Lallouz of the blockchain infrastructure company Bison Trails, both mentioned Solana as among the projects that they find most interesting right now. (We assume both hold its tokens.)
Others say on background that while they understand the developer benefits and need for more scaleable blockchains than Ethereum, Solana still needs to more developer mindshare to prove its long-term worth and it’s not there yet. According to Solana itself, there are currently 608 validators helping secure the Solana Network and 47 decentralized applications (or “dapps”) powered by Solana. Meawhile, they were reportedly 33,700 active validators helping to secure “Eth 2.0” as of late December and 3,000 dapps running on the Ethereum blockchain as of February.
In fairness, the Ethereum network went live in 2015, so it has a three-year head start on Solana. In the meantime, Solana has a lead of its own, says Yakovenko, who is based in San Francisco and has assembled a distributed team of 50 employees, including numerous former colleagues from Qualcomm. Asked about other projects that have embraced a proof of history approach, he says that while it’s “all open source” and “anybody can go do it,” there “isn’t a set of our biggest competitors saying they’re going to rework their system and use this.”
One likely reason is that it’s almost comically complicated. “It just takes a lot of work to build these systems,” Yakovenko says. “It takes two to three years to build a new layer one, and you can’t really take an idea for one and stuff it in the other one. If you try to do that, you’re going to set yourself back by six to nine months at the least and potentially introduce bugs and vulnerabilities.”
Either way, Solana, which itself has a $12 billion market cap, isn’t interested in competing with Ethereum and other cryptocurrencies on every front anyway, suggests Yakovenko. All it really wants is to completely disrupt Wall Street and the rest of the global markets, even if he doesn’t put it that way exactly.
He knows it sounds crazy. But the way he sees it, what Solana is building is “an open, fair, censorship-resistant global marketplace” that’s better than anything inside of the New York Stock Exchange or any other means of settling trades. It’s certainly a much bigger opportunity than he imagined, backed at that cafe.
As he said yesterday: “Everything that we do to make this thing faster and faster results in this better censorship resistance, and therefore better markets. And price discovery is what I imagine is the killer use case for decentralized public networks. Can we be the world’s price discovery engine? That’s an interesting question to ask.”
He’s far from alone in pondering the possibilities. Pointing to the wild swings in cryptocurrency prices right now, he says he suspects that “part of that is just developers and folks discovering the network and building cool applications on it.” It’s exciting when people can “self serve and build stuff that they want to go to market,” he adds. “It’s the secret weapon of decentralized networks versus any incumbents like Bank of America or Visa or whatever. Those big companies can’t iterate and move as fast as global set of engineers who can just come together and code whenever they want to.”
He saw very similar dynamics play at Qualcomm, in fact. “Working in a big company, it seems like there’s a ton of resources, right? They can accomplish anything. But you saw us working on proprietary operating systems while the Linux guys were just working first for fun, right? And it seemed like it was just a weird hobby that people had; they were coding operating systems at night; they were coding over the weekend. Then all of a sudden, Linux is the de facto mobile iOS of Android.”
If you’re curious to learn more about Solana, we’ll have a podcast coming out soon with our longer conversation with Yakovenko. In the meantime, the outlet Decrypt today published an explainer titled “What is Solana?” that you might check out here.
Rocket Lab’s 20th Electron launch ends in failure with the loss of its payload – TechCrunch
Leveling the playing field – TechCrunch
Don’t repaint, reinvent – TechCrunch
Google Cloud teams up with SpaceX’s Starlink for enterprise connectivity at network’s edge – TechCrunch
Elon Musk, Technoking of Tesla orders a halt to bitcoin car payments – TechCrunch
ServiceNow leaps into applications performance monitoring with Lightstep acquisition – TechCrunch
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