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Gamefam aims to be the first big gaming company built on Roblox – TechCrunch

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Roblox went public yesterday after seeing tremendous growth in 2020, and that’s not just good news for the company’s employees and investors — there are also startups like Gamefam hoping to take advantage of the platform’s success.

Roblox has a whole ecosystem of millions of developers and creators building on its game platform, and some are banding together to create their own teams and studios. (We profiled several of those teams earlier this year in an article about the company’s creator accelerator.) But Gamefam founder and CEO Joe Ferencz said his startup is “the first and only fully-dedicated, professional game publishing company on Roblox.”

Founded in 2019, Gamefan currently has 37 full-time employees and eight live games, including Ultimate Driving and Hot Wheels Open World, and Ferencz said there are another 10 in development. Collectively, those games are seeing 48 million monthly visitors and generating six figures in monthly revenue.

Ferencz described the team as “gaming industry professionals working hand-in-hand with the top up-and-coming Roblox creators.” For example, Ultimate Driving creator TwentyTwoPilots also serves as Gamefam’s creative director.

Ferencz himself has worked as a manager Ubisoft and Mattel, where he worked on franchises including Hot Wheels, and where he recalled seeing the emergence free-to-play mobile gaming: “I said to myself, ‘The next time there’s this big platform shift, I want to be a part of this.’” The rise of Roblox and user-created games provided him with that opportunity.

Joe Ferencz

Image Credits: Gamefam

At the same time, Ferencz said he was excited about the opportunities that Roblox provides to escape from the “orthodoxies” of free-to-play gaming, where the economics often drive game design decisions.

“Roblox truly is the metaverse for this younger generation,” he argued. “What they are finding here is something that transcends gaming, it’s human co-experience. What that means is that each game needs to have a very distinctive and attractive immersion to it in way that mobile free-to-play doesn’t.”

Of course, part of Roblox’s appeal is the fact that individual creators don’t need to work with large teams or publishers, but Ferencz said, “Superstar developers and creators are thinking about bigger and bigger games, the sophistication is really evolving at a rapid pace.” That, in turn, means bigger teams, and “when you have bigger teams, you have more process, you need to know how to structure high-performing teams and drive positive teamwork between people.”

“As the business gets bigger, you need people focused on the business opportunities, dedicated marketing functions, a dedicated live operations team,” he continued. “That’s what we offer.”

Ferencz and Gamefan’s business team have been involved in the Roblox platform for several years now, but he admitted, “Although we get it, we don’t get it exactly the way people who have been playing on it since they were 10 and developing for it since 15 get it … We respect that and lean into that.”

So one of the key elements to the Gamefam approach, he said, is to make sure the creators are driving the game development process.

“We believe that there needs to be a visionary or a team of visionaries on each project, and that they need to decide what is right,” Ferencz said. “There will then be a team around them that is part of a consensus process, that the visionaries are responsible for bringing along for a ride.”

And as he thinks about Gamefam’s future, Ferencz said the company could eventually publish games on other platforms. Don’t expect it to happen anytime soon, though.

“Our focus is UGC gaming, and Roblox is the only place that matters in UGC gaming today,” he said. “We plan to build a huge brand and media business hand-in-hand with the Roblox platform. In the long term, if other platforms become relevant, then course we will be looking to evaluate and expand on those platforms —but the truth is, right now we couldn’t be more all about Roblox.”



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When the Earth is gone, at least the internet will still be working – TechCrunch

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The internet is now our nervous system. We are constantly streaming and buying and watching and liking, our brains locked into the global information matrix as one universal and coruscating emanation of thought and emotion.

What happens when the machine stops though?

It’s a question that E.M. Forster was intensely focused on more than a century ago in a short story called, rightly enough, “The Machine Stops,” about a human civilization connected entirely through machines that one day just turn off.

Those fears of downtime are not just science fiction anymore. Outages aren’t just missing a must-watch TikTok clip. Hospitals, law enforcement, the government, every corporation — the entire spectrum of human institutions that constitute civilization now deeply rely on connectivity to function.

So when it comes to disaster response, the world has dramatically changed. In decades past, the singular focus could be roughly summarized as rescue and mitigation — save who you can while trying to limit the scale of destruction. Today though, the highest priority is by necessity internet access, not just for citizens, but increasingly for the on-the-ground first responders who need bandwidth to protect themselves, keep abreast of their mission objectives, and have real-time ground truth on where dangers lurk and where help is needed.

While the sales cycles might be arduous as we learned in part one and the data trickles have finally turned to streams in part two, the reality is that none of that matters if there isn’t connectivity to begin with. So in part three of this series on the future of technology and disaster response, we’re going to analyze the changing nature of bandwidth and connectivity and how they intersect with emergencies, taking a look at how telcos are creating resilience in their networks while defending against climate change, how first responders are integrating connectivity into their operations, and finally, exploring how new technologies like 5G and satellite internet will affect these critical activities.

Wireless resilience as the world burns

Climate change is inducing more intense weather patterns all around the world, creating second- and third-order effects for industries that rely on environmental stability for operations. Few industries have to be as dynamic to the changing context as telecom companies, whose wired and wireless infrastructure is regularly buffeted by severe storms. Resiliency of these networks isn’t just needed for consumers — it’s absolutely necessary for the very responders trying to mitigate disasters and get the network back up in the first place.

Unsurprisingly, no issue looms larger for telcos than access to power — no juice, no bars. So all three of America’s major telcos — Verizon (which owns TechCrunch’s parent company Verizon Media, although not for much longer), AT&T and T-Mobile — have had to dramatically scale up their resiliency efforts in recent years to compensate both for the demand for wireless and the growing damage wrought by weather.

Jay Naillon, senior director of national technology service operations strategy at T-Mobile, said that the company has made resilience a key part of its network buildout in recent years, with investments in generators at cell towers that can be relied upon when the grid cannot. In “areas that have been hit by hurricanes or places that have fragile grids … that is where we have invested most of our fixed assets,” he said.

Like all three telcos, T-Mobile pre-deploys equipment in anticipation for disruptions. So when a hurricane begins to swirl in the Atlantic Ocean, the company will strategically fly in portable generators and mobile cell towers in anticipation of potential outages. “We look at storm forecasts for the year,” Naillon explained, and do “lots of preventative planning.” They also work with emergency managers and “run through various drills with them and respond and collaborate effectively with them” to determine which parts of the network are most at risk for damage in an emergency. Last year, the company partnered with StormGeo to accurately predict weather events.

Predictive AI for disasters is also a critical need for AT&T. Jason Porter, who leads public sector and the company’s FirstNet first-responder network, said that AT&T teamed up with Argonne National Laboratory to create a climate-change analysis tool to evaluate the siting of its cell towers and how they will weather the next 30 years of “floods, hurricanes, droughts and wildfires.” “We redesigned our buildout … based on what our algorithms told us would come,” he said, and the company has been elevating vulnerable cell towers four to eight feet high on “stilts” to improve their resiliency to at least some weather events. That “gave ourselves some additional buffer.”

AT&T has also had to manage the growing complexity of creating reliability with the chaos of a climate-change-induced world. In recent years, “we quickly realized that many of our deployments were due to weather-related events,” and the company has been “very focused on expanding our generator coverage over the past few years,” Porter said. It’s also been very focused on building out its portable infrastructure. “We essentially deploy entire data centers on trucks so that we can stand up essentially a central office,” he said, empathizing that the company’s national disaster recovery team responded to thousands of events last year.

Particularly on its FirstNet service, AT&T has pioneered two new technologies to try to get bandwidth to disaster-hit regions faster. First, it has invested in drones to offer wireless services from the sky. After Hurricane Laura hit Louisiana last year with record-setting winds, our “cell towers were twisted up like recycled aluminum cans … so we needed to deploy a sustainable solution,” Porter described. So the company deployed what it dubs the FirstNet One — a “dirigible” that “can cover twice the cell coverage range of a cell tower on a truck, and it can stay up for literally weeks, refuel in less than an hour and go back up — so long-term, sustainable coverage,” he said.

AT&T’s FirstNet One dirigible to offer internet access from the air for first responders. Image Credits: AT&T/FirstNet

Secondly, the company has been building out what it calls FirstNet MegaRange — a set of high-powered wireless equipment that it announced earlier this year that can deploy signals from miles away, say from a ship moored off a coast, to deliver reliable connectivity to first responders in the hardest-hit disaster zones.

As the internet has absorbed more of daily life, the norms for network resilience have become ever more exacting. Small outages can disrupt not just a first responder, but a child taking virtual classes and a doctor conducting remote surgery. From fixed and portable generators to rapid-deployment mobile cell towers and dirigibles, telcos are investing major resources to keep their networks running continuously.

Yet, these initiatives are ultimately costs borne by telcos increasingly confronting a world burning up. Across conversations with all three telcos and others in the disaster response space, there was a general sense that utilities just increasingly have to self-insulate themselves in a climate-changed world. For instance, cell towers need their own generators because — as we saw with Texas earlier this year — even the power grid itself can’t be guaranteed to be there. Critical applications need to have offline capabilities, since internet outages can’t always be prevented. The machine runs, but the machine stops, too.

The trend lines on the frontlines are data lines

While we may rely on connectivity in our daily lives as consumers, disaster responders have been much more hesitant to fully transition to connected services. It is precisely in the middle of a tornado and the cell tower is down that you realize a printed map might have been nice to have. Paper, pens, compasses — the old staples of survival flicks remain just as important in the field today as they were decades ago.

Yet, the power of software and connectivity to improve emergency response has forced a rethinking of field communications and how deeply technology is integrated on the ground. Data from the frontlines is extremely useful, and if it can be transmitted, dramatically improves the ability of operations planners to respond safely and efficiently.

Both AT&T and Verizon have made large investments in directly servicing the unique needs of the first responder community, with AT&T in particular gaining prominence with its FirstNet network, which it exclusively operates through a public-private partnership with the Department of Commerce’s First Responder Network Authority. The government offered a special spectrum license to the FirstNet authority in Band 14 in exchange for the buildout of a responder-exclusive network, a key recommendation of the 9/11 Commission, which found that first responders couldn’t communicate with each other on the day of those deadly terrorist attacks. Now, Porter of AT&T says that the company’s buildout is “90% complete” and is approaching 3 million square miles of coverage.

Why so much attention on first responders? The telcos are investing here because in many ways, the first responders are on the frontiers of technology. They need edge computing, AI/ML rapid decision-making, the bandwidth and latency of 5G (which we will get to in a bit), high reliability, and in general, are fairly profitable customers to boot. In other words, what first responders need today are what consumers in general are going to want tomorrow.

Cory Davis, director of public safety strategy and crisis response at Verizon, explained that “more than ever, first responders are relying on technology to go out there and save lives.” His counterpart, Nick Nilan, who leads product management for the public sector, said that “when we became Verizon, it was really about voice [and] what’s changed over the last five [years] is the importance of data.” He brings attention to tools for situational awareness, mapping, and more that are a becoming standard in the field. Everything first responders do “comes back to the network — do you have the coverage where you need it, do you have the network access when something happens?”

The challenge for the telcos is that we all want access to that network when catastrophe strikes, which is precisely when network resources are most scarce. The first responder trying to communicate with their team on the ground or their operations center is inevitably competing with a citizen letting friends know they are safe — or perhaps just watching the latest episode of a TV show in their vehicle as they are fleeing the evacuation zone.

That competition is the argument for a completely segmented network like FirstNet, which has its own dedicated spectrum with devices that can only be used by first responders. “With remote learning, remote work and general congestion,” Porter said, telcos and other bandwidth providers were overwhelmed with consumer demand. “Thankfully we saw through FirstNet … clearing that 20 MHz of spectrum for first responders” helped keep the lines clear for high-priority communications.

FirstNet’s big emphasis is on its dedicated spectrum, but that’s just one component of a larger strategy to give first responders always-on and ready access to wireless services. AT&T and Verizon have made prioritization and preemption key operational components of their networks in recent years. Prioritization gives public safety users better access to the network, while preemption can include actively kicking off lower-priority consumers from the network to ensure first responders have immediate access.

Nilan of Verizon said, “The network is built for everybody … but once we start thinking about who absolutely needs access to the network at a period of time, we prioritize our first responders.” Verizon has prioritization, preemption, and now virtual segmentation — “we separate their traffic from consumer traffic” so that first responders don’t have to compete if bandwidth is limited in the middle of a disaster. He noted that all three approaches have been enabled since 2018, and Verizon’s suite of bandwidth and software for first responders comes under the newly christened Verizon Frontline brand that launched in March.

With increased bandwidth reliability, first responders are increasingly connected in ways that even a decade ago would have been unfathomable. Tablets, sensors, connected devices and tools — equipment that would have been manual are now increasingly digital.

That opens up a wealth of possibilities now that the infrastructure is established. My interview subjects suggested applications as diverse as the decentralized coordination of response team movements through GPS and 5G; real-time updated maps that offer up-to-date risk analysis of how a disaster might progress; pathfinding for evacuees that’s updated as routes fluctuate; AI damage assessments even before the recovery process begins; and much, much more. In fact, when it comes to the ferment of the imagination, many of those possibilities will finally be realized in the coming years — when they have only ever been marketing-speak and technical promises in the past.

Five, Gee

We’ve been hearing about 5G for years now, and even 6G every once in a while just to cause reporters heart attacks, but what does 5G even mean in the context of disaster response? After years of speculation, we are finally starting to get answers.

Naillon of T-Mobile noted that the biggest benefit of 5G is that it “allows us to have greater coverage” particularly given the low-band spectrum that the standard partially uses. That said, “As far as applications — we are not really there at that point from an emergency response perspective,” he said.

Meanwhile, Porter of AT&T said that “the beauty of 5G that we have seen there is less about the speed and more about the latency.” Consumers have often seen marketing around voluminous bandwidths, but in the first-responder world, latency and edge computing tends to be the most desirable features. For instance, devices can relay video to each other on the frontlines, without necessarily needing a backhaul to the main wireless network. On-board processing of image data could allow for rapid decision-making in environments where seconds can be vital to the success of a mission.

That flexibility is allowing for many new applications in disaster response, and “we are seeing some amazing use cases coming out of our 5G deployments [and] we have launched some of our pilots with the [Department of Defense],” Porter said. He offered an example of “robotic dogs to go and do bomb dismantling or inspecting and recovery.”

Verizon has made innovating on new applications a strategic goal, launching a 5G First Responders Lab dedicated to guiding a new generation of startups to build at this crossroads. Nilan of Verizon said that the incubator has had more than 20 companies across four different cohorts, working on everything from virtual reality training environments to AR applications that allow firefighters to “see through walls.” His colleague Davis said that “artificial intelligence is going to continue to get better and better and better.”

Blueforce is a company that went through the first cohort of the Lab. The company uses 5G to connect sensors and devices together to allow first responders to make the best decisions they can with the most up-to-date data. Michael Helfrich, founder and CEO, said that “because of these new networks … commanders are able to leave the vehicle and go into the field and get the same fidelity” of information that they normally would have to be in a command center to receive. He noted that in addition to classic user interfaces, the company is exploring other ways of presenting information to responders. “They don’t have to look at a screen anymore, and [we’re] exploring different cognitive models like audio, vibration and heads-up displays.”

5G will offer many new ways to improve emergency responses, but that doesn’t mean that our current 4G networks will just disappear. Davis said that many sensors in the field don’t need the kind of latency or bandwidth that 5G offers. “LTE is going to be around for many, many more years,” he said, pointing to the hardware and applications taking advantage of LTE-M standards for Internet of Things (IoT) devices as a key development for the future here.

Michael Martin of emergency response data platform RapidSOS said that “it does feel like there is renewed energy to solve real problems,” in the disaster response market, which he dubbed the “Elon Musk effect.” And that effect definitely does exist when it comes to connectivity, where SpaceX’s satellite bandwidth project Starlink comes into play.

Satellite uplinks have historically had horrific latency and bandwidth constraints, making them difficult to use in disaster contexts. Furthermore, depending on the particular type of disaster, satellite uplinks can be astonishingly challenging to setup given the ground environment. Starlink promises to shatter all of those barriers — easier connections, fat pipes, low latencies and a global footprint that would be the envy of any first responder globally. Its network is still under active development, so it is difficult to foresee today precisely what its impact will be on the disaster response market, but it’s an offering to watch closely in the years ahead, because it has the potential to completely upend the way we respond to disasters this century if its promises pan out.

Yet, even if we discount Starlink, the change coming this decade in emergency response represents a complete revolution. The depth and resilience of connectivity is changing the equation for first responders from complete reliance on antiquated tools to an embrace of the future of digital computing. The machine is no longer stoppable.


Future of Technology and Disaster Response Table of Contents




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Betting on upcoming startup markets – TechCrunch

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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.

Betting on upcoming startup markets

This week M25, a venture capital concern focused on investing in the Midwest of the United States, announced a new fund worth $31.8 million. As the firm noted in a release that The Exchange reviewed, its new fund is about three times the size of its preceding investment vehicle.

I caught up with M25 partner Mike Asem to chat about the round. Asem joined M25 in 2016 after partner Victor Gutwein spearheaded the effort with a small $1 million fund. Asem and Gutwein have led the firm since its first material, if technically second fund.

Asem said that his team had targeted a $25 million to $30 million fund three, meaning that they came in a bit higher than anticipated in fundraising terms. That’s not a surprise in today’s venture capital market, given the pace at which capital is both invested into VC funds and startups.

The investor told The Exchange that M25 has been investing out of its third fund for some time, including CASHDROP, a startup that I’ve heard good things about regarding its growth rate. (More here on the CASHDROP round that M25 put capital into.)

All that’s fine, but what makes M25 an interesting bet is that the firm only invests in Midwest-headquartered startups. Often when I chat to a fund that has a unique geographical focus, it’s merely that, a focus. As opposed to M25’s more hard-and-fast rule. Now with more capital and plans to take part in 12-15 deals per year, the group can double down on its thesis.

Per Asem, M25 has done about a third of its deals in Chicago, where it’s based, but has put capital into startups in 24 cities thus far. TechCrunch covered one of those companies, Metafy, earlier this week when it closed more than $5 million in new capital.

Why does M25 think that the Midwest is the place to deploy capital and generate outsize returns? Asem listed a number of perspectives that underpin his team’s thesis: The Midwest’s economic might, the network that his partner and him developed in the area before founding M25, and the fact that valuations can prove to be more attractive in the region at the stage that his firm invests. They are sufficiently different, he said, that his firm can generate material returns even with exits at around the $100 million mark, a lower threshold than most VCs with larger capital vehicles might find palatable.

M25 is not alone in its bets on alternative regions. The Exchange also chatted with Somak Chattopadhyay of Armory Square Ventures on Friday, a firm that is based in upstate New York and invests in B2B software companies in what we might call post-manufacturing cities. One of its investments has gone public, and the group’s latest fund is a multiple of the size of its first. Armory now has around $60 million in AUM.

All that’s to say that the venture capital boom is not merely helping firms like a16z raise another billion here, or another billion there. But the generally hot market for startups and private capital is helping even smaller firms raise more capital to take on less traditional spaces. It’s heartening.

On-demand pricing, and grokking the insurance game

This week The Exchange chatted with Twilio CFO Khozema Shipchandler about his company’s earnings report. You can read more on the hard numbers here. The short gist is that it was a good quarter. But what mattered most in our chat was Shipchandler riffing on where the center of gravity at Twilio will remain in revenue terms.

Briefly, Twilio is best known for building APIs that allow developers to leverage telecom services. Those developers and their employers pay for as much Twilio as they used. But over time Twilio has bought more and more companies, building out a diverse product set after its 2016-era IPO.

So we were curious: Where does the company stand on the on-demand versus SaaS pricing debate that is currently raging in the software world? Staunchly in the first camp, still, despite buying Segment, which is a SaaS service. Per Shipchandler, Twilio revenue is still more than 70% on-demand, and the company wants to make sure that its customers only buy more of its services as they sell more of their own.

Startups, then, probably don’t have to give up on on-demand pricing as they scale. Twilio is huge and is sticking to it!

Then there was Root’s earnings report. Again, here are the core numbers. The Exchange is keeping tabs on Root’s post-IPO performance not only because it was a company we tracked extensively during its late private life, but also because it is a bellwether of sorts for the yet-private, neoinsurane companies. Which matters for fellow neoinsurance player Hippo, as it is going public via a SPAC.

Alex Timm, Root’s CEO, said that his firm performed well in the first quarter, generating more direct written premium than anticipated, and at better loss-rates to boot. The company also remains very cash-rich post IPO, and Timm is confident that his company’s data science work has lots more room to improve Root’s underwriting models.

So, faster-than-expected growth, lots of cash, improving economics and a bullish technology take — Root’s stock is flying, right? No, it is not. Instead Root has taken a bit of a public-market pounding in recent months. The Exchange asked Timm about the disparity between how he views his company’s performance and future, and how it is being valued. He said that the insurance folks don’t always get its technology work and that tech folks don’t always grok Root’s insurance business.

That’s tough. But with years and years of cash at its current burn rate, Root has more than enough space to prove its critics wrong, provided that its modeling holds up over the next dozen quarters or so. Its share price can’t be great for the yet-private neoinsurance companies, however. Even if Next Insurance did just raise another grip of cash at another new, higher valuation.

Corporate spend’s big week

As you’ve read by now, Bill.com is buying corporate-spend unicorn Divvy for $2.5 billion. I dug into the numbers behind the deal here, if that’s your sort of thing.

But after collecting notes from the CEOs of Divvy competitors Ramp and Brex here, another bit of commentary came in that I wanted to share. Thejo Kote, the corporate spend startup Airbase’s CEO and founder did some math on Divvy’s results that Bill.com shared with its own investors, arguing that the company’s March payment volume and active customer account implies that the company’s “average spend volume per customer was $44,400 per month.”

Is that good or bad? Kote is not impressed, saying that Airbase’s “average spend volume per customer is almost 10 [times] that of Divvy,” or around “$375,000 per month.” What’s driving that difference? A focus on larger customers, and the fact that Airbase covers more ground, in Kote’s view, than Divvy by encompassing software work that Bill.com itself and Expensify manage.

I bring you all of this as the war in managing spend for companies large and small is heating up in software terms. With Divvy off the table, Ramp is now perhaps the largest player in the space not charging for the software it wraps around corporate cards. Brex recently launched a software product that it charges for on a recurring basis. (More on Brex at this link, if you are into it.)

Various and sundry

Two final notes for you, things that should make you either laugh, grimace, or howl:

  1. The Wall Street Journal’s Eliot Brown tweeted some data this week from the Financial Times, namely that amongst the roughly 40 SPACs that completed deals last year, a dozen and a half have lost more than half their value. And that the average drop amongst the combined entities is 38%. Woof.
  2. And, finally, welcome to peak everything.

More to come next week, including notes on the return of the Kaltura and Procore IPOs, and whatever it is we can suss out from the Krispy Kreme S-1 filing, as donuts are life.

Alex



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A huge fintech exit as the week ends – TechCrunch

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

Our thanks to everyone who wrote in this week about the format changes to the newsletter! Feedback largely sorted into two themes: Some people really like the more narrative format, and some folks really want a more link-list styled missive. What follows is an attempt to balance both perspectives.

Starting today we’ll bold company names, so that you can more quickly pick out startups, add more bulleted points to sections, and, per a different piece of feedback, include more regular descriptors of companies that are not household names.

That said, we’re not going to abandon chatting with you every day, as TechCrunch is nothing if not full of things to say. So here’s a blend of what the new, updated Daily Crunch team had in mind, and your notes. A big thanks to everyone who wrote in!

Alex @alex on Twitter

A mega-exit for American fintech

The news that public fintech company Bill.com will buy Divvy, a Utah-based startup that helps small and midsized businesses manage their spend, was perhaps the biggest startup story of the week. Breaking late Thursday, the $2.5 billion transaction was long expected. Divvy had raised more than $400 million from PayPal Ventures, New Enterprise Associates, Insight Partners and Pelion Venture Partners.

TechCrunch covered the impending sale, rumors of which sprung up before Bill.com reported its Q1 earnings. To see the company drop the news at the same time as its earnings was not a surprise. For the burgeoning corporate payment space (more here on startups in the space like Ramp, Airbase and Brex).

I got to noodle on the financial results that Bill.com detailed regarding Divvy — they are pretty key metrics to help us value the startups that are competing to go public or find a similarly feathered corporate nest. In short, the corporate spend startup cohort is doing great. It’s even spawning new startups like Latin American-focused Clara, which raised $3.5 million earlier this year.

Broadly, the fintech market had a huge Q1 and is blasting its way toward a record venture capital year, like AI startups and the rest of the VC world.

Startups and venture capital

5 investors discuss the future of RPA after UiPath’s IPO

Much ink (erm, pixels) has been spilled about robotic process automation (RPA) recently, particularly in the wake of UiPath’s IPO last month.

But while some of the individuals Ron interviewed about the future of RPA believe the technology is in its “early infancy,” the pandemic increased attention toward things we can let robots handle for us. And it’s hard to argue that repetitive tasks like billing and spreadsheeting and paper-pushing should not be outsourced to robots.

“RPA allows companies to automate a group of highly mundane tasks and have a machine do the work instead of a human,” Ron writes. “Think of finding an invoice amount in an email, placing the figure in a spreadsheet and sending a Slack message to accounts payable. You could have humans do that, or you could do it more quickly and efficiently with a machine. We’re talking mind-numbing work that is well suited to automation.”

Although RPA is the fastest-growing category in enterprise software, the market remains surprisingly small. Ron spoke to five investors about where the sector is headed, where there are opportunities and the biggest threats to the RPA startup ecosystem.

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

The tech giants

It was a quieter day from the tech giants, who made plenty of news earlier in the week. The good news is that their relative calm means we can take a look at news from other Big Tech companies, those that don’t quite crack the $1 trillion market cap threshold yet:

Community

Some of us are mourning the shutdown of Nuzzel, so we asked … would you pay for it (and why)? Let us know what you think!



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Tesla refutes Elon Musk’s timeline on ‘full self-driving’ – TechCrunch

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What Tesla CEO Elon Musk says publicly about the company’s progress on a fully autonomous driving system doesn’t match up with “engineering reality,” according to a memo that summarizes a meeting between California regulators and employees at the automaker.

The memo, which transparency site Plainsite obtained via a Freedom of Information Act request and subsequently released, shows that Musk has inflated the capabilities of the Autopilot advanced driver assistance system in Tesla vehicles, as well the company’s ability to deliver fully autonomous features by the end of the year. 

Tesla vehicles come standard with a driver assistance system branded as Autopilot. For an additional $10,000, owners can buy “full self-driving,” or FSD — a feature that Musk promises will one day deliver full autonomous driving capabilities. FSD, which has steadily increased in price and capability, has been available as an option for years. However, Tesla vehicles are not self-driving. FSD includes the parking feature Summon as well as Navigate on Autopilot, an active guidance system that navigates a car from a highway on-ramp to off-ramp, including interchanges and making lane changes. Once drivers enter a destination into the navigation system, they can enable “Navigate on Autopilot” for that trip.

Tesla vehicles are far from reaching that level of autonomy, a fact confirmed by statements made by the company’s director of Autopilot software CJ Moore to California regulators, the memo shows.

“Elon’s tweet does not match engineering reality per CJ,” according to the memo summarizing the conversation between regulators with the California Department of Motor Vehicles’ autonomous vehicles branch and four Tesla employees, including Moore.

The memo, which was written by California DMV’s Miguel Acosta, states that Moore described Autopilot — and the new features being tested — as a Level 2 system. That description matters in the world of automated driving.

There are five levels of automation under standards created by SAE International. Level 2 means two primary functions — like adaptive cruise and lane keeping — are automated and still have a human driver in the loop at all times. Level 2 is an advanced driver assistance system, and has become increasingly available in new vehicles, including those produced by Tesla, GM, Volvo and Mercedes. Tesla’s Autopilot and its more capable FSD were considered the most advanced systems available to consumers. However, other automakers have started to catch up.

Level 4 means the vehicle can handle all aspects of driving in certain conditions without human intervention and is what companies like Argo AI, Aurora, Cruise, Motional, Waymo and Zoox are working on. Level 5, which is widely viewed as a distant goal, would handle all driving in all environments and conditions.

Here is an important bit via Acosta’s summarization:

DMV asked CJ to address from an engineering perspective, Elon’s messaging about L5 capability by the end of the year. Elon’s tweet does not match engineering reality per CJ. Tesla is at Level 2 currently. The ratio of driver interaction would need to be in the magnitude of 1 or 2 million miles per driver interaction to move into higher levels of automation. Tesla indicated that Elon is extrapolating on the rates of improvement when speaking about L5 capabilities. Tesla couldn’t say if the rate of improvement would make it to L5 by end of calendar year.

Portions of this commentary were redacted. However, Plainsite was able to copy and paste the redacted part, which shows up as white space on a PDF, into another document.

The comments in the memo are contrary to what Musk has said repeatedly in the public sphere.

Musk is frequently asked on Twitter and in quarterly earnings calls for progress reports on FSD, including questions about when it will be rolled out via software updates to owners who have purchased the option. In a January earnings call, Musk said he was “highly confident the car will be able to drive itself with reliability in excess of a human this year.” In April 2021, during the company’s first quarter earnings call, Musk said “it’s really quite, quite tricky. But I am highly confident that we will get this done.”

The memo released this week provided other insights into Tesla’s push to test and eventually unlock greater levels of autonomy, including the number of vehicles testing a beta version of “Navigate on Autopilot on City Streets,” a feature that is meant to handle driving in urban areas and not just highways. Regulators also asked the Tesla employees if and how participants were being trained to test this feature, and how the sales team ensures that messaging about the vehicle capabilities and limitations are communicated.

As of the March meeting, there were 824 vehicles in a pilot program testing a beta version of “city streets.”  About 750 of those vehicles were being driven by employees and 71 by non-employees. Pilot participants are located across 37 states, with the majority of participants in California. As of March 2021, pilot participants have driven more than 153,000 miles using the City Streets feature, the memo states. The memo noted that Tesla planned to expand this pool of participants to approximately 1,600 later that month.

Tesla told the DMV that it is working on developing a video for the participants and that the next group of participants will include referrals from existing participants. “The new participants will be vetted by Tesla by looking at insurance telematics based on the VINs registered to that participant,” according to the memo.

Tesla also told the DMV that it is able to track when there are failures or when the feature is deactivated. Moore described these as “disengagements,” a term also used by companies testing and developing autonomous vehicle technology. The primary difference worth noting here is that these companies only use employees who are trained safety drivers, not the public.



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Toyota AI Ventures and May Mobility will talk the future of the transportation industry on Extra Crunch Live – TechCrunch

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Besides a passion for progress in the mobility space, what do Toyota AI Ventures’ Jim Adler, May Mobility’s Nina Grooms Lee and May’s Edwin Olson have in common?

All three of them are joining us on an upcoming episode of Extra Crunch Live. The show goes down on May 12 at 3pm ET/noon PT. Register here for free!

May Mobility is one the most exciting companies to enter the transportation space in the past decade. The autonomous shuttle company has a fleet of autonomous low-speed shuttles spread out between Detroit, Grand Rapids and Providence. Recently, May launched a Lexus-based autonomous shuttle. The company has raised $83.6 million in funding, including a $50 million Series B led by Toyota Motor Corp.

Which brings us this episode of Extra Crunch Live.

Toyota AI Ventures Founding Managing Director Jim Adler will sit down with May Mobility Chief Product Officer Nina Grooms Lee and May co-founder and CEO Edwin Olson to discuss how that Series B deal came about. We’ll talk about what made May stand out to Toyota, and vice versa, and how the teams have worked together since.

We’ll also talk about what to expect out of the ever-changing and growing mobility industry.

Following the interview, Grooms Lee, Olson and Adler will weigh in on startup pitches from the audience. Yup, that’s right. Our ECL audience will once again have the chance to pitch our seasoned tech professionals. Attendees can virtually “raise their hand” as soon as our virtual doors open and throw their hat in the ring for an opportunity to make a 2-minute elevator pitch. Imagine running into a VC or potential customer at a tech conference like Disrupt or bumping into them at a park. As such, no visual aids are allowed, including decks, videos, demoes, etc. Excited? Smash this link to register for free!

Extra Crunch Live goes down every Wednesday at 3pm ET/noon PT and is accessible to anyone and everyone. However, on-demand access to the content is reserved exclusively for Extra Crunch members. If you’re not yet a member, what are you waiting for?



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SpaceX might try to fly the first Starship prototype to successfully land a second time – TechCrunch

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SpaceX is fresh off a high for its Starship spacecraft development program, but according to CEO Elon Musk, it’s already looking ahead to potentially repeating its latest success with an unplanned early reusability experiment. Earlier this week, SpaceX flew the SN15 (i.e., 15th prototype) of its Starship from its development site near Brownsville, Texas, and succeeded in landing it upright for the first time. Now, Musk says they could fly the same prototype a second time, a first for the Starship test and development effort.

The successful launch and landing on Wednesday included an ascent to around 30,000 feet, where the 150-foot tall spacecraft flipped onto its ‘belly’ and then descended back to Earth, returning vertical and firing its engines to slow its descent and touch down softly standing upright. This atmospheric testing is a key step meant to help prove out the technologies and systems that will later help Starship return to Earth after its orbital launches. The full Starship launch system is intended to be completely reusable, including this vehicle (which will eventually serve as the upper stage) and the Super Heavy booster that the company is also in the process of developing.

A second test flight of SN15 is an interesting possibility among the options for the prototype. SpaceX will obviously be conducting a number of other check-outs and gathering as much data as it can from the vehicle, in addition to whatever it collected from onboard sensors, but the options for the craft after that basically amounted to stress testing it to failure, or dismantling it and studying the pieces. A second flight attempt is an interesting additional option that could provide SpaceX with a lot of invaluable data about its planned re-use of the production version of Starship.

Whether or not SpaceX actually does re-fly SN15 is still up in the air, but if it does end up being technically possible, it seems like a great learning opportunity for SpaceX that could help fast-track the overall development program.



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GajiGesa, a fintech focused on Indonesian workers, adds strategic investors and launches new app for micro-SMEs – TechCrunch

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GajiGesa, a fintech startup that provides earned wage access (EWA) and other services for workers in Indonesia, has added strategic investors to help it launch new services and expand its user base. Its new backers include OCBC NISP Ventura, the venture capital arm of one of Indonesia’s largest banks, and the founders of grab-and-go coffee chain Kopi Kenangan. GajiGesa also recently expanded beyond the enterprise space with a new employee management system for SMEs and micro-SMEs. Called GajiTim, the app is aimed at businesses with between five to 100 workers and has gained more than 50,000 active users since it was launched in mid-March.

The amount of GajiGesa’s latest funding was undisclosed. The startup, launched last year by husband-and-wife team Vidit Agrawal and Martyna Malinowska, announced a $2.5 million seed round led by Defy.vc and Quest Ventures in February. Over the last quarter, GajiGesa’s enterprise customer base has doubled to more than 60 companies, representing tens of thousands of workers.

GajiGesa is part of a new wave of startups focused on digitizing the 60 million small businesses in Indonesia. Others include digital bookkeeping apps like BukuWarung and BukuKas for very small businesses including neighborhood stores; Moka and Jurnal for larger companies; and CrediBook, which focuses on B2B businesses.

Before starting GajiGesa, Agrawal’s experience included serving as Uber’s first employee in Asia, while Malinowska was former product lead at Standard Chartered’s SC Ventures and alternative credit-scoring platform LenddoEFL. They created GajiGesa to give workers an alternative to payday and other high-interest lenders by allowing them to access their earned wages immediately, instead of waiting for semi-monthly or monthly paychecks. (Other companies that offer similar services around the world include Square, London-based Wagestream and Gusto). Based on a recent survey, GajiGesa said more than 75% of workers at companies that use its EWA feature have stopped using informal lenders for short-term needs.

The founders of Kopi Kenangan, the grab-and-go coffee chain backed by investors like Sequoia Capital India, Alpha JWC and Horizons Ventures, have become prolific angel investors in other startups, and their network will help GajiGesa onboard more employers, Agrawal told TechCrunch. Its strategic partnership with Bank OCBC NISP, meanwhile, will help it launch more services.

GajiGesa co-founders Vidit Agrawal and Martyna Malinowska

“One thing we are realizing is that a lot of employees who use the earned wage aspect of GajiGesa are expecting more kinds of products, either a loan product or an insurance product, and that’s where an opportunity arises to partner with a bank,” Agrawal told TechCrunch. About two-thirds of Indonesia’s population is “unbanked,” meaning they don’t have a bank account, so this also gives Bank OCBC NISP a chance to onboard new customers.

“Having a bank as a partner allows us to structure the right interest rate, the right size of products and create a larger impact,” said Malinowska.

GajiGesa does not charge interest rates or require collateral, since users are pre-approved by their employers. Instead, companies can decide to charge fees or offer GajiGesa as part of a benefits package. When a worker withdraws money, GajiGesa asks why they are using the Earned Wage Access feature, and presents that data to companies in an anonymized and aggregated format.

This allows employers to see what needs their work base has and potentially develop new benefits. For example, one of the top three reasons workers use EWA is to pay medical bills. “This is a strong signal to an employer that if you’re trying to retain employees, especially a blue collar employee, even a basic insurance product might be very attractive for the family,” said Agrawal.

GajiGesa also discovered that many workers, especially in Tier 2 to Tier 3 cities, use its EWA to fund family businesses instead of taking out loans for working capital.

“A lot of families in Indonesia often have one member working in a factory with fixed salaries, and they have micro-industries at home, for example making wafers or stickers to sell in their communities or online,” said Agrawal. “They were going to loan sharks previously or private lenders for very expensive rates so they can run their business, and now the family member who is working in a factory can withdraw capital to support the family business so they don’t need to go to loan sharks.”

GajiTim was launched because the startup saw many inbound inquiries from SMEs, like restaurants, small factories and general stores, that have a lot of part-time workers. These businesses often rely on paper systems, including punch time cards, to track working hours and calculate paychecks. But this often results in disputes, so having an app that counts working hours and earned wages in real-time gives workers more transparency and helps companies save time. GajiTim also has access to GajiGesa’s flagship EWA service and allows it to bring more clients onto the platform.



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