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Epic trial forces App Store changes, Android 12 launch nears, Twitter tries communities – TechCrunch

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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 in Apps offers a way to keep up with this fast-moving industry in one place with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions, and suggestions about new apps and games to try, too.

Do you want This Week in Apps in your inbox every Saturday? Sign up here: techcrunch.com/newsletters

Image credit: Andrew Harrer/Bloomberg via Getty Images

At the start of the day on Friday, it seemed like the week’s big App Store news would be Epic Games’ attempt to get back into the App Store in South Korea, following the passage of a law that forced Apple and Google to permit apps to use third-party payment systems. But Friday turned out to have much bigger news in store.

That morning, U.S. District Judge Yvonne Gonzalez Rogers issued a ruling in California’s Epic Games v. Apple antitrust case, where the Fortnite maker had alleged Apple was abusing its market power by forcing developers to use its own in-app payment systems. The judge’s decision favored Apple on the larger matter of whether or not it was acting in a monopolistic fashion. The judge said both parties had defined Apple’s relevant market incorrectly — it wasn’t just the App Store or gaming, but specifically, the $100 billion market for digital mobile gaming transactions. And while Apple had a lot of financial success here, with a 55%+ market share and high profit margins, that success was “not illegal” under either federal or state antitrust law.

This decision also means Epic Games was in breach of its contract when it implemented its own payments system in its Fortnite iOS app (it now owes Apple $12 million for that), and Apple won’t be forced to host third-party app stores or allow apps to be sideloaded on its mobile devices. For Apple, this is a huge win.

However, the judge did find that Apple was engaging in anticompetitive behavior under California’s competition laws with regard to its anti-steering provisions, which Rogers said “illegally stifle consumer choice.” As a result, Apple may no longer prohibit developers from including links, buttons, or other calls to action in their apps that direct customers to other purchasing mechanisms besides Apple’s own.

This is a huge win for Apple’s developer community, many of whom have long since fought for the right to send customers over to their own websites to make purchases or subscribe, so they could save on fees by avoiding Apple’s in-app purchase commissions. As developer pushback has increased over the years, Apple tried to placate its community by reducing commissions from 30% to 15% for developers with under $1 million in revenues. But it had still blocked developers from telling consumers they could go elsewhere to make a payment from inside their apps.

In recent weeks, this particular guideline was starting to fall apart, as Apple made concessions related to other lawsuits and legislation, including a settlement with a Japanese regulator that saw the tech giant change its policies for “reader apps”– apps that provide access to purchased content — that would allow them to point users to their own website where users could sign up and manage their accounts. Another settlement gave developers permission to use customer contact information collected inside their app to tell customers about other payment options. And South Korea’s new law forced Apple and Google to allow developers to use their own third-party payment systems if they chose.

The larger ramifications of how this policy change will play out remain to be seen. Apple will likely still require its in-app purchase mechanism to remain in place as an option, and it may enact new rules around how and where developers can add their links or other calls to action that direct customers to alternative purchasing mechanisms. The injunction’s wording is vague enough that we’ll also likely see some attempts to place payment buttons that load up alt purchasing screens inside the app, which may not agree with how Apple interprets the ruling. It’s most likely that Apple will simply allow any developer to steer users outside the app, as it does now for the “reader” apps — a system that still makes Apple’s own IAPs feel more seamless and consumer-friendly by comparison.

Then there is the matter of developer adoption. For smaller developers, it may not make sense to try to support two separate payment mechanisms if Apple’s is still required. And some may be concerned about other, less obvious potential punitive measures for avoiding IAPs — like reduced visibility in App Store searches, perhaps, or fewer App Store Editorial highlights.

On the consumer side, things could also become more difficult. Apple’s holes in App Review have allowed too many scam apps to thrive. If these apps now also start to route around IAPs, it could finally motivate Apple to expand its review team to crack down on apps that abuse subscriptions — particularly if there will be no easy way to toggle those external subscriptions off, as there is now for Apple’s IAPs. And while ultimately that’s an issue between the customer and developer, Apple could take the fall for hosting the scam apps in the first place — especially when a scam app developer becomes unreachable and the subscription keeps renewing.

There were a few other notable bits tucked inside the ruling, which paint a picture of an App Store where almost all the revenue is delivered by games and their “whales”:

  • Gaming apps account for approximately 70% of all App Store revenues and is generated by less than 10% of App Store consumers.
  • Over 80% of consumer accounts generate virtually no revenue, as 80% of all apps on the App Store are free.
  • Apple enjoys a market share of over 55% in the market of digital mobile gaming transactions.
  • Over 98% of Apple’s IAP revenue came from games in 2018 to 2019.
  • Game transactions overall accounted for 76% of App Store revenue in 2017, 62.9% in 2018, and 68% in 2020.

Apple Updates

  • Apple announced it will hold its next big hardware event on September 14 (10 am pt/1 pm et), when the company is expected to introduce new iPhones (iPhone 13?), which are rumored to have a new 120Hz ProMotion screen and a new Portrait mode for video called Cinematic Mode. The event, dubbed “California Streaming,” may also introduce an Apple Watch Series 7 and new AirPods. (The event invite also had a nifty AR Easter egg included.)
  • Another App Store monopoly lawsuit had expanded ahead of the Epic ruling to include other developers who argued the App Store suppressed certain free apps in rankings and rejected others. Developers suing include the makers of Coronavirus Reporter, Bitcoin Lottery, WebCaller, and Caller-ID apps. It’s unclear what merit the suit will now have given the Epic decision.

Android Updates

Image Credits: Google

  • The final Android 12 beta arrives. Google this week rolled out the final developer beta (Android 12 Beta 5) before the public launch of its new mobile operating system in just a few weeks. The update delivered some minor tweaks and fixes but had already reached platform stability with Beta 4. Among the changes are the introduction of new Material You Clock widgets, a “Paint Chips” widget Easter Egg, a more powerful Pixel Launcher, relocated smart home controls, an overheating notification on Pixel phones, a Material You-themed Calculator app, and a search bar that’s regained rounded edges. Google Workspace apps will also feature a Material You design, which you can preview here.
  • Google released Android for Cars App Library version 1.1 and completed the transition to Jetpack. Android Auto apps using features that require Car App API level 2+, such as map interactivity, vehicle’s hardware data, multiple-length text, long message and sign-in templates, can now be used in cars with Android Auto 6.7+, the company said.
  • Chinese firm Xiaomi is promising 3 years of full Android OS updates, including Android 14, and an additional full year of security patches for its upcoming devices, the 11T Pro and 11T.
  • Google and Jio delayed their plan to launch the much-awaited JioPhone Next in India due to chip shortages.

E-commerce

  • Leafly launched an in-app marijuana ordering option following the changes to Apple’s App Store rules which now permit apps to directly facilitate these orders where legal. Other marijuana apps including Eaze and Weedmaps have done the same.
  • Amazon is offering Indian farmers real-time advice and info through a dedicated mobile app that helps them make decisions about crops and deploy machine learning tech. The company sees securing a steady stream of fruit, vegetables, and other groceries as a key to dominating Indian online commerce, Bloomberg reported.
  • Singapore-based Shopee has overtaken Mercado Libre to become the top shopping app in Latin America, Apptopia’s research found.

Augmented Reality

  • Snap has hired Nishad Pai, previously a business development and partnerships executive at Adobe, as its Global Head of Platform Partnerships Business Development, The Information reported. He will report to VP of Platform Partnerships Konstantinos “KP” Papamiltiadis, who recently came to Snap from Facebook.

Fintech

  • The SEC wants to regulate Coinbase’s crypto yield-generating product, Coinbase Lend, claiming it’s a security. Company CEO Brian Armstrong disagreed and said the SEC offered no explanation as to how it reached this conclusion.

Social

Image Credits: Facebook

  • Facebook launched its Snapchat Spectacles rival in partnership with Ray-Ban. The new smart glasses are called Ray-Ban Stories and allow users to record what they’re seeing as both photos and videos using the 2 onboard 5MP cameras, as well as listen to music and take calls. The glasses must be paired with an iOS or Android device to work, and transfer video through the new Facebook View app where users can further edit the media or add effects.
  • Twitter launched “Communities,” which allow users to tweet directly to others with their same interests. Initially, Twitter is testing topics like dogs, weather, sneakers, skincare, and astrology.
  • Other Twitter features that launched this week include a test taking place in Turkey that allows users to react to tweets using emoji, a test of full-width photos and videos, a test of a new label to identify the “good bots,” and a test of a soft-block feature that lets you remove people from your followers instead of blocking them outright.
  • Social network Peanut expanded to include more women with the launch of Peanut Menopause, a collection of features and groups that will allow women in all stages of menopause to network and discuss the topic.
  • Consumer spending in social apps will hit $17.2 billion annually by 2025 up from $6.78 billion in 2021, according to new data from App Annie. The boom is largely attributed to the growth of live streaming. In H1 2021, $3 out of every $4 spent in the top 25 social apps came from those that offered livestreams.

Image Credits: App Annie

Photos

  • Google Photos adds new ways to print. The app already offered photo prints, books, and more, but now introduces larger photo print sizes and new canvas prints. Now, for $0.18 per print (plus shipping), you can choose between the existing 4×6, 5×7, or 8×10 prints, or four additional sizes: 11×14, 12×18, 16×20, and 20×30 prints. New canvas prints will be added in sizes 8×10, 16×16, 20×30, 24×36, 30×40, and 36×36.
  • Dispo, the photo-sharing app that emulates disposable cameras, is now pilot testing a feature that will allow users to sell their photos as NFTs. The company hasn’t fully determined what blockchain it would use, if it would partner with an NFT marketplace, or what cut it would take from these sales if it moves forward.
  • Glass launches its photo-sharing app for photographers disenchanted with Instagram. The subscription app allows users to upload photos and follow others, view photo metadata, comment, and more.

Messaging

  • WhatsApp says users will now be able to encrypt their chat backups in the cloud. While the Facebook-owned app has allowed end-to-end encrypted chats for more than a decade, there was not yet an option to securely store their chat backup to the cloud, meaning iCloud on iOS or Google Drive on Android. The company has now created a system that will allow users to lock their backups with a 64-digit encryption key, which can be stored offline or in a password manager. Or they can create a password that backs up the key into a cloud-based “backup key vault” that WhatsApp has built.

Dating

Image Credits: Tinder

  • Tinder added a new home for interactive, social features with the launch of Tinder Explore. The new section will feature events, like the return of the popular “Swipe Night” series, as well as ways to discover matches by interests and dive into quick chats before a match is made. Combined, the changes help to push Tinder further away from its roots as a quick match-based dating app into something that’s more akin to a social network aimed at helping users meet new people.
  • Tinder CEO Jim Lanzone has left the dating app to take the top job at Yahoo, which btw, owns TechCrunch.

Streaming & Entertainment

  • Spotify playlist curators are complaining about the streamer’s reporting system that favors bad actors over innocent parties. Currently, playlists created by Spotify users can be reported in the app for a variety of reasons — like sexual, violent, dangerous, deceptive, or hateful content. When a report is submitted, the playlist in question will have its metadata immediately removed, including its title, description, and custom image. There is no internal review process that verifies the report is legitimate before the metadata is removed, which has allowed bad actors (and sometimes their bots) to constantly report playlists that are gaining bigger followings than their own.
  • Apple Music will now use Shazam to address attribution and royalties issues around DJ mixes. Apple Music is working with major and independent labels to devise a fair way to divide streaming royalties among DJs, labels, and artists who appear in the mixes, it said.

Gaming

  • Amazon’s game-streaming service added support for Chromebook and its own Fire Tablets, including the Fire 7, Fire HD 8, and Fire HD 10. The company has already supported Android, iOS (via a web app), Windows, Mac, and Fire TV. It also added a new “Family” channel for $2.99/month that offers 35 curated games that are appropriate for younger children and is preparing to launch a retro gaming channel, as well.
  • Genshin Impact version 2.1 is a hit. The game from miHoYo has generated $151 million in its first week (starting Sept. 1) across iOS and Android, or more than the game accumulated during the full month of August and up 5x from the week prior, Sensor Tower reports.
  • Google announced the winners of its Indie Games Festival, which included: Bird Alone by George Batchelor, United Kingdom; Cats in Time by Pine Studio, Croatia; Gumslinger by Itatake, Sweden; CATS & SOUP by HIDEA, Korea; Rush Hour Rally by Soen Games, Korea; The Way Home by CONCODE, Korea; Mousebusters by Odencat, Japan; Quantum Transport by ruccho, Japan; and Survivor’s guilt by aso, Japan.

News & Reading

Image Credits: Microsoft

  • Microsoft this week launched a news service called Microsoft Start which personalizes the news for its readers, both by explicit and implicit signals. Users can customize the page to their liking by adding and removing topics or give individual stories a thumbs up or down. It will also get smarter the more you use the service. On mobile, Microsoft Start is available as an app for iOS and Android.

Utilities

  • Apple Maps brings its Street View competitor Look Around to Italy, city-state Vatican City, San Marino, and Andorra.

Government & Policy

  • Google is under investigation in the EU for forcing Android phone manufacturers to pre-install its voice assistant, Google Assistant on Android devices. The AI assistant has been the default on Android devices since 2017.

💰 🤝 Mobile game publisher Jam City raised $350 million and closed on its purchase of game publisher Ludia for $165 million. The deal follows Jam City’s decision to drop its $1.2 billion plan to go public via a SPAC. The new funding is a combination of equity and debt and comes from Netmarble, Kabam, and affiliates of funds managed by Fortress Investment Group.

💰 Travel app Headout raised $12 million in Series B funding led by Glade Brook Capital, an investor in Airbnb, Uber, Instacart, and others, for its tour-booking marketplace that has grown 800% since January and reached profitability in July. The company plans to hire 150+ people with the funds.

💰 Live-shopping startup Whatnot is raising new capital at a $1.5 billion valuation, according to a report from The Information, which also says existing investor Andreessen Horowitz is involved in the new round. The app focuses on collectibles, like sports cards, Pokémon cards, Funko Pop figurines and others.

💰 Varo Bank raised a massive $510 million Series E funding round led by new investor Lone Pine Capital, valuing the business at $2.5 billion. The neobank, which has now raised $992.4 million since its 2015 founding, last year became the first U.S. neobank to be granted a national bank charter.

💰 Fintech app Nuula, aimed at small businesses, raised $120 million in new funding to build out a “super app” that will offer business banking, payments, cash flow forecasting, credit score monitoring, customer sentiment tracking, and more. The funding was a combination of $20 million in equity from Edison Partners, and a $100 million credit facility from funds managed by the Credit Group of Ares Management Corporation.

💰 Financial comparison super app Jeff raised a $1.5 million seed extension led by J12 Ventures for its app that operates in Vietnam and plans to move into Indonesia, followed by the Philippines.

💰 U.K. food sharing app OLIO raised $43 million in Series B funding led by Swedish investment firm VNV Global and New York-based hedge fund Lugard Road Capital/Luxor. The app allows users to post a photo of unwanted food to share it with the local neighborhood.

💰 Mayk.it, a social music creation app founded by TikTok and Snap alums, raised $4 million in seed funding and launched to the public. The app allows users to produce, own and share music they make with their phones. Investors include Greycroft, Chicago Ventures, Slow Ventures, firstminute, Steven Galanis, Randi Zuckerberg, YouTuber Mr. Beasts’ Night media, Spotify’s first CMO Sophia Bendz, Cyan Banister, artist T-Pain and music industry veteran Zach Katz, among others.

💰 Fertility tracking app Flo closed on $50 million in Series B funding co-led by VNV Global and Target Global. The round values the business at $800 million. Flo has 200 million global users and leverages machine learning to make cycle predictions, offer health insights, and send health alerts.

Tape It

Image Credits: Tape It

Tape It launches an AI-powered music recording app designed to be a better alternative to using Apple’s built-in Voice Memos app for quick recordings. The app offers a variety of features, including higher-quality sound, automatic instrument detection, support for markers, notes and images, and more, and will later expand to include collaboration features. It also breaks longer recordings onto multiple lines, more like wrapped text, which it believes is easier to work with than one long, horizontal scroll. But the standout feature is its support for “Stereo HD” quality, which leverages two microphones on newer iPhone models to improve the recording’s sound quality. This feature is a $20 per year subscription, but the app is a free download on iOS. (Full review here.)

Marvel Unlimited (update)

Image Credits: Marvel

The Marvel Unlimited comics subscription app has been overhauled with the latest release. The updated version introduces 27 Infinity Comics, which are high-res vertical comics for phones and tablets. At launch, these include series like X-Men Unlimited, Captain America, Black Widow, Deadpool, Shang-Chi, and Venom/Carnage. By year-end, there will be 100 of these available. The app provides access to over 29,000 comics. The updated version of the app was rebuilt by DMED Technology, which worked closely with Marvel, to deliver a combination of new features and technology, which include enhanced curation, search, personalization, speed, and performance, as well as support for offline reading. DMED is the team within Disney Media & Entertainment Distribution that builds, manages, and maintains Disney’s apps and sites that reach 380 million users globally each month, including Marvel, ESPN, ABC News, ABC, Disney Now, Disney.com, National Geographic, FX, and more. (Full review here.)

ETA 3 (update)

Image Credits: ETA

First launched in 2014, ETA offered an Apple Watch app that made it easier to get the travel time to favorite places right on your wrist. Now, the developer has rebuilt ETA to transform it into a new app for Apple Watch. With ETA 3, the app is entirely independent from the iPhone for starters. You can quickly glance at your locations and see the travel time to your destinations like home, work, school, the airport and any others you input. It now also supports cycling times in addition to driving, walking, and transit. And it will support all calendars, so you can sync your appointments to the app to see the travel time to your next meeting. You can also organize top locations into lists, sync workouts with Apple Health, and more.

Sound Off

Image Credits: Sound Off

A new app called Sound Off offers an easy way to keep a journal using only your voice. Ideal for those who like to think out loud, the app offers daily prompts that help you get started when you don’t know what to say. The app will focus on topics like gratitude, happiness, confidence, relationships, reflection, friendships, sleep, habits, anxiety, family, and more, giving you time to reflect and practice self-care. The recordings are saved locally to your iPhone, so the app developer cannot access them, and are backed up by default using iCloud.



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Marcy Venture Partners, cofounded by Jay-Z, just closed its second fund with $325 million – TechCrunch

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Marcy Venture Partners, the venture firm cofounded in 2018 by Shawn Carter (Jay-Z), former Roc Nation CEO Jay Brown, and former Walden VC general partner Larry Marcus, says it has closed its second fund with $325 million in capital commitments. The team, which closed its debut fund with $85 million, is now managing $600 million in assets altogether, says cofounder Marcus.

The firm describes itself as having a “consumer, culture and positive impact” investment strategy, and it says the majority of its existing portfolio companies are founded or run by people who identify as women or people of color.

To date, the trio has written checks to at least 21 companies, including in fashion, skin care, and food companies. Among those many bets includes Rihanna’s lingerie company Savage X Fenty; the sneaker marketplace StockX; Therabody, which makes percussion therapy tools; Simulate, which makes plant-based, chicken-flavored nuggets; and an allergen-free cookie maker called Partake Foods.

Carter and company have also begun investing in crypto projects, supporting Bitski, a San Francisco-based startup NFT marketplace, earlier this year, and investing more recently in spatial LABS (sLABS), a tech incubator that focuses on the metaverse and blockchain-based products

The San Francisco- and L.A.-based firm, named after the Marcy Projects in Brooklyn where Carter grew up, was initially targeting $200 million for the newest fund, per an SEC filing from April.



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Heart to Heart raises $750K to bring sweet, sweet flirtation to your ear-holes – TechCrunch

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Radio has long been described as the most intimate of media. Quips about putting radio on the internet aside, the persistent popularity of podcasting and the cockamamie climb of Clubhouse shows that audio-based platforms will continue to echo around the upper echelons of the ecosystem for a while yet. Joining the fray is Heart to Heart, an audio-first dating app aiming to bring back some intimacy to the process of finding the right person for your next foray, whether that’s a saucy encounter or a mate for life.

“I used to act, and from my time in acting, I saw how much voice, and audio experiences drive intimacy between people,” explains Joshua Ogundu, co-founder and CEO of Heart to Heart. “When it came down to the dating apps, it was never something I could get into. I felt like you needed to come up with a textual one-liner. That was never my way of approaching romantic conversations.”

Heart to Heart is pushing back against the endless swiping and messaging of many of its competitors, offering a contrasting experience to sending the same opening line to dozens of people or typing with your thumbs until deep into the night.

“I believe that the best consumer investments come from people who have unique insights on consumer behavior and ways that new tech products can allow new forms of social interaction,” said Charles Hudson from Precursor Ventures, who led the pre-seed investment round. “I have been a big fan of Josh’s TikTok videos for some time and his ability to poke at the tech industry with timely, relevant videos really showcased his creativity and ability to communicate via short-form video. I think the idea around confirming photos, storytelling, and audio will yield a product that really speaks to people’s unmet needs around communication and will create a whole new way for people to connect.”

While Precursor doesn’t particularly focus on audio-first startups, the team has seen a number of opportunities in that space. It was an early investor in Howard Akumiah’s company, Betty Labs (acquired by Spotify), as well as Isa Watson’s company (Squad), Falon Fatemi’s company (Fireside) and several others that are still in stealth.

“I believe that there is a major wave of interesting activity happening around non-music audio and I believe that we are still in the early innings of non-music, audio-driven social experiences,” says Hudson. “The last two companies that I feel really innovated in this category were Tinder and Bumble. I think Josh and his team have a new mechanic that feels differentiated and unique and I think it has the potential to be the foundation for a new way for people to meet and get to know each other in ways that aren’t easily accomplished today.”

Joshua Ogundu, co-founder and CEO of Heart to Heart (Photo provided by Heart to Heart)

The company raised the pre-seed round of $750,000. The round was led by Precursor Ventures, and Bryce Roberts of OATV & Angelica Nwandu of The Shade Room partnered on the investment, as well as Marie Rocha at Realist Ventures. In addition, a number of angel investors joined the round, including Chris Bennett (Wonderschool), Andy Weissman (USV) and Gregory Levey (Robinson Huntly).

“The main thing we are trying to accomplish with the $750K, is to focus on building our iOS app, and making LA our first launch market,” says Ogundu. “Dating is such a local experience, and it makes sense to us to build and improve locally, then scaling it up from there.”

“Voice is so intentional and intimate, and that is exactly what we’re building here at Heart to Heart,” says Ogundu, suggesting that the voice mechanic is helpful in a dating context because it helps slow people down. “I think that because it takes more energy to send that voice snippet to someone, you’ll be more intentional with who you even look to strike up conversations with.”

The founding team consists of Joshua Ogundu, who wears the CEO hat. He is joined by Arihant Jain and Komal Shrivastava, who have been heading up the engineering and design efforts. The company hopes to get its product to market by the end of the year.



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The return of text is inevitable – TechCrunch

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Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here.

On Equity this week, we discussed the value of the written word. You can imagine that the resulting argument is inherently biased, considering we are three journalists who have bet our livelihoods on ink; but, I promise, there’s more nuance here beyond how important a lede is.

We recently published a recent deep dive on Automattic, the commercial media company behind the WordPress publishing platform. Founded in 2005, Automattic is one of the few companies that has been able to evolve and expand its way through a graveyard of media sites. Valued at $7.5 billion, it has also convinced investors of the financial promise of its vision.

I was most struck by how text has shaped Automattic’s hiring process: The company offers a purely written interview, where potential new hires never need to reveal their face or voice to anyone through the recruitment funnel. It takes away the inherent bias that comes with a Zoom interview, which, at its core, is just a digital version of a face-to-face interview. Monica Ohara, chief marketing officer of WordPress.com, explained more about her thinking:

“You normally think you’ve got to talk to them; see them on video. With text only, you remove all this bias and focus on the content of what they’re saying, and also test for a style of communication that’s really important in a distributed team.

“In Silicon Valley, everyone is competing for the same people that would add diversity to your pool. Which is great for those people, but what about all the others who don’t have those opportunities because of where they were born or live? For me, I was born in the Philippines and if I hadn’t had the luck to move here, I’d be living a different life.”

Rethinking the value of text, the same way we rethink how many synchronous meetings should be on our calendar, feels like the natural next step for companies figuring out how to scale distributed work. Even in a world seemingly ruled by short-form video, words — and sound — seem to matter in a way that other formats never will.

In the rest of this newsletter, we’ll talk about PayPal’s reported new friend, the Chinese venture capital market and not at all about Facebook’s impending new rebrand. 

PayPal picks Pinterest

Image Credits: TechCrunch

We rushed to Twitter Spaces this week after rumors came out that PayPal may be buying Pinterest for a reported $45 billion. The fintech giant has been on an acquisition spree of sorts, but scooping up a social, photo-sharing platform may signal its hungry to own the content — not just the customer.

Here’s what to know: This feels nostalgic. PayPal potentially joining forces with a more content-focused e-commerce business comes more than a half-decade after it divorced from eBay. But, as Finix Chief Growth Officer Jareau Wadé pointed out, Pinterest is not a shopping destination like eBay — it’s a place where shopping begins for nearly 450 million users.

In a Substack post, Wadé makes the following argument to describe why PayPal may buy Pinterest:

At its core, Pinterest is more like Google than eBay. It’s a search engine that conducts over 5 billion searches per month for fuzzy, hard-to-describe ideas where pictures, rather than words, are often the best place to start. It also has a growing ads business that produced $613 million last quarter, up 125% YoY. With Pinterest, PayPal would be buying the top of the funnel — the awareness and interest stages — for millions of websites on the internet. PayPal would provide Pinterest with the bottom of the funnel, allowing them to see the purchases that result from shopping that began on Pinterest.

Imagine if PayPal could use their core product and the commerce assets they’ve acquired over the past five years to build a deconstructed sales funnel, not just for one website, but for the whole internet.

Put a pin in it:

China is thriving

Flag of China with pile of bitcoin

Image Credits: TechCrunch

Data from CB Insights shows us that, aside from a single outsized 2018 round, China’s third quarter of 2021 was the best three-month period for Chinese startups ever — both in deal value and deal count.

Here’s what to know: We’re surprised, too. On Equity, we discussed how the growth of China’s venture capital market contrasts in sentiment with the region’s government restrictions. It seems that regulatory impact hasn’t stopped all companies from raising, and growing, their businesses there.

Internationally speaking:

Around TC

TC Sessions: SaaS 2021 is next week! My colleagues have put together an amazing show about the sector that seemingly can’t stop attracting millions from investors. We’ll see what stopped eating the world, how hunger is turning into innovation and definitely hit a few SaaSy notes through panels with experts.

Check out the event agenda, buy your pass and come hang with us on October 27.

Across the week

Seen on TechCrunch

A massive ‘stalkerware’ leak puts the phone data of thousands at risk

What do people want in a co-founder? YC has some answers

Station F adds an online program to educate the next generation of entrepreneurs

Trump to launch his own social media platform, calling it TRUTH Social

Seen on TechCrunch+

Mission-driven ventures are growing fast during the pandemic

Dear Sophie: Any suggestions for recruiting international tech talent?

Lessons from founders raising their first round in a bull market

Udemy targets valuation of $4B in major edtech IPO

Talk soon,

N 



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Decoupling tech supply chains would do more harm than good – TechCrunch

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For a technology sector that would much prefer to focus on growth over geopolitics, the push for U.S.-China “decoupling” poses an inescapable threat. The fuzziness of the concept only increases the danger.

U.S. distrust of China, particularly in technology, is nothing new. Indeed, Congress took action to keep Huawei and ZTE out of U.S. telecommunications almost a decade ago, during the Obama administration.

But during the administrations of both George W. Bush and Barack Obama, there was a broad push to engage in dialogue and find common ground between the world’s two biggest economies. As China emerged as a leading global economy and became an increasingly important trading partner to the U.S., (accounting for 2.5% of U.S. imports in 1989 and rising to a peak of 21.6% in 2017), there were moves to incorporate it into the U.S.-led global trading system. In 2005, Deputy Secretary of State Robert Zoellick put forward the idea of China as a “Responsible Stakeholder,” under the assumption that embracing China’s entry into the global trading system would ensure that it helped that system continue to function.

Not long before that, the U.S. had agreed to China’s 2001 accession to the World Trade Organization. But while it was seen by many as a turning point, it was really just a waypoint. That year, China’s share of U.S. imports was already 9.0%. Growth in Chinese imports, moreover, reflected a rebalancing of Asian trade more than anything else; from 1989 to 2017, Asia’s share (including China) of U.S. imports grew from 42.3% to just 45.2%. China’s relative growth instead ate into the share of countries like Japan and Malaysia, reflecting a reordering within Asia. The standard system of trade accounting overplayed this shift, as a good that was finished in China and had 10% Chinese value added would count as 100% Chinese for trade statistics.

Regardless of what was labeled as produced where, the bottom line was that a well-developed Asian supply chain incorporated China as a major player. With increased engagement, however, and very different economic systems, the points of economic disagreement between China and the United States accumulated. During the Trump administration, dialogue took a back seat to new trade barriers. The United States applied tariffs on hundreds of billions of dollars of Chinese imports and China responded with barriers of its own. Although the Trump tariffs were initially cast as temporary measures meant to achieve finite policy objectives, some key policymakers within the Trump administration saw value in diminished interaction between the two countries.

Matthew Pottinger, who served as Deputy National Security Adviser under President Trump, subsequently wrote that “important U.S. institutions, especially in finance and technology, cling to self-destructive habits acquired through decades of ‘engagement,’ an approach to China that led Washington to prioritize economic cooperation and trade above all else.” His solution calls for bold steps “to frustrate Beijing’s aspiration for leadership in … high-tech industries.” The Biden administration recently announced, after a prolonged review, that it was maintaining the Trump tariffs and Congress has pushed to fund initiatives that would subsidize technological independence. These moves for lessening dependence, particularly in technology, have fallen under the broader rubric of “decoupling.”

Amidst all the newfound enthusiasm for U.S. decoupling from China, one might imagine that the term is well-defined. Yet it takes relatively little probing to discover a lack of clarity. Of course, the above-mentioned tariffs have served to discourage trade between the two countries, but how far is this policy meant to go?

Does decoupling mean the U.S. will turn away from inbound and outbound foreign direct investment? What about portfolio investment, such as the purchase of U.S. Treasuries? Does it mean that the U.S. should avoid importing final goods produced by Chinese firms? What about European firms producing in China? What about U.S. firms producing in China? Or European or U.S. firms producing outside China but incorporating Chinese parts? Or companies selling into the Chinese market and thus, presumably, subject to Chinese influence?

The sheer breadth of economic interactions between the two giant economies illustrates the implausibility of a clean divide between them. Instead, the most likely result of an attempt at exclusion would be another reordering, not China’s disappearance as a supply chain power. This is particularly true when other global economic powers, such as the European Union, do not share even the vague objective of decoupling.

TechCrunch Global Affairs Project

The nebulous nature of the decoupling push poses a particular threat to the tech sector. Over decades, the push to take advantage of scale economies and to drive down production costs has resulted in highly-integrated global tech production. Further, in subsectors that have recently emerged as particularly contentious, such as the production of semiconductors, investments have to be made at large scale and well in advance. That leaves the sector especially vulnerable to rapidly-shifting rule changes, as policymakers struggle to give substance to a problematic concept at a time of difficult supply chain disruptions. Policy responses that shower the sector with subsidies, as some bills in Congress have proposed, seem appealing, but lose their effectiveness when countries such as Japan move to match them.

A world in which the United States provides an extreme answer to the above questions and is absolutist in its separation from China is likely to be one in which the United States cripples itself technologically, denying itself access to globally-competitive sourcing and empowering competitors elsewhere. The only politically viable alternative at the moment, a world in which the United States takes a more moderate stance and struggles to find a middle ground, is likely to be an unpredictable one in which rules are constantly evolving.

In either case, proponents of U.S.-China decoupling will find such a move counterproductive. Far from resolving strategic policy concerns, its primary impact may be to challenge U.S. technology leadership instead.



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Software product company Arbisoft on the growing startup market in Pakistan – TechCrunch

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“In 2007, I, along with a few other colleagues, founded Arbisoft because we loved solving a variety of computing problems rather than staying close to one particular domain or technology vertical. We felt it was much easier to do that in a software services company than a software product company,” says Yasser Bashir, co-founder of Arbisoft. “In addition to our love for software development, we also had strong ideas on the kind of culture that would likely inspire smart people to do their best in a technology-focused organization. Arbisoft is a manifestation of many of those ideas.”

Over the past two weeks, Anna Heim has interviewed Bashir from Arbisoft as part of our Experts project. They were recommended to us through our survey; we’d love to know which software consultants you’d recommend to other startups. We also had guest columns focused on growth marketing about growth tactics and early-stage comm teams, but more on that below.

Software Consulting

Consultant: Arbisoft
Recommended by: Omri Traub, CEO of Popcart
Testimonial: “We were able to create a high-performance dev team that includes dev, QA and DevOps. We had access to top talent and, importantly, elasticity in hiring. If we wanted to add a developer, we could have an incredible one join our team in under one week. It would have taken us weeks and months to recruit and hire a developer in Boston or the U.S.”

Consultant: Solwey Consulting
Recommended by: Paul Shaked, Sandland
Testimonial: “They helped us tremendously — a not so great dev team in Europe built our site with no documentation and lots of sloppy code, but Solwey was able to come in and sort through everything. Not to mention, our e-comm site is built on a headless CMS x Shopify checkout. Solwey was one of the only teams that was able to jump in and really get things to a good place with almost no major delays due to tech debt.”

Consultant: Planetary
Recommended by: Ryan Doney, Ad Lunam
Testimonial: “I vetted several different consultancies, and Planetary not only brought technical expertise to the table, but their startup-specific mindset meant that it was incredibly easy to get aligned on our mission, and how to best build it. Josh is a great talent, and he’s built a remarkable team. Their work dramatically cut down our time to market, as well as giving us a ready-made jumping off point to start iterating on our product.”

Consultant: OpenCubicles
Recommended by: Anonymous
Testimonial: “The OpenCubicles team helped us improve our infrastructure utilization, response time and other aspects critical to e-commerce success. We were able to rationalize cloud infrastructure costs due to thorough analysis and optimization. They helped us automate many aspects of operations. Would recommend to those looking for reliable technology services, especially e-commerce development.”

Consultant: ThinkNimble
Recommended by: Philip Deng, Grantable
Testimonial: “They are focused on helping startups succeed and they care deeply about the missions of the companies they help. They brought us way forward in terms of our design and also connected us with lots of thoughtful people beyond the company who have helped us move forward.”

Arbisoft co-founder Yasser Bashir on building trust with early-stage startups: Anna and Bashir spoke about how Arbisoft has grown over the past 13 years, how they build trust with their clients and the startup scene in Pakistan. Bashir says, “I have been very involved with the startup and tech ecosystem in the country since its inception. It is indeed taking off like a rocket ship right now, and we couldn’t be more excited about it. This year, startups raised more funding than all of the previous years combined. Arbisoft is excited because many of these startups need technology services, and therefore, we have a new and exhilarating market at our disposal.”

Growth Marketing

Marketer: Ki from WITHIN
Recommended by: Anonymous
Testimonial: “Ki has been supporting our business for over three years, and every time he finds unique ways to exceed expectations. From launching new products that sell out in days rather than weeks, being able to onboard new members of our team so they can contribute faster, and being someone that can work at a strategic level with our VPs and at the data-driven level with analysts, his range is truly outstanding and I believe he is in the 1% of the 1% of marketers.”

Marketer: Kaveh from WITHIN
Recommended by: Anonymous
Testimonial: “Kaveh is one of the most empathetic and collaborative marketers I have ever worked with. Our team was largely brand marketers and Kaveh did a great job of bridging their world and our profit-optimized media strategy seamlessly (even if it meant an after-hours marketing jam session). Not only that, but you could tell he really cared about the brand, catching small issues with the site and sharing them with the team proactively, etc.”

(TechCrunch+) Smart growth tactics put account-based marketing within reach for startups and SMBs: Jonas van de Poel, head of content marketing at Unmuted, says, “F​​or many startups and SMBs, successfully setting up account-based marketing strategies can feel like a pipe dream. Startups still struggling to find product-market fit wouldn’t dream of being able to identify and map out their ideal customer profile (ICP) clearly enough. At the same time, small and midsize businesses often lack the resources to invest in elaborate multitouch-point content marketing strategies.” Van de Poel shares what account-based marketing is, the importance of mapping a customers journey to marketing content and more.

(TechCrunch+) Hiring is just the first step when building an early-stage comms team: Yousuf Khan, partner at Ridge Ventures, writes about not just the importance of having an early-stage comms team, but the importance of communicating with them. Khan says, “It’s not just important to have relationships between executives and media — you should have solid relationships with your comms people, too. Allow them to get to know you, your likes and dislikes, the environments in which you thrive and where you feel most comfortable.”



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SaaS on Oct. 27th – TechCrunch

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This year automation hit center stage when robotic process automation (RPA) vendor UiPath went public after raising $2 billion in private investment. Investors who had been a part of that were richly rewarded when it closed above its private valuation. At the same time, established companies like ServiceNow, Microsoft, IBM and others were seeing the value in building automation into their product sets.

We are fortunate to have three people who have been smack dab in the middle of this trend on a panel called “Automation’s Moment Is Now” at TC Sessions: SaaS happening on October 27th. Those panelists include UiPath CEO Daniel Dines; Laela Sturdy, general partner at CapitalG and Dave Wright, chief innovation officer at ServiceNow.

Dines’ company, which went public in April, concentrates mostly on RPA, and is the market leader according to Gartner, but automation has many dimensions beyond RPA, including no-code/low-code tools and workflow automation. As we wrote on in an article on the hot automation market earlier this year:

What we have here is a frothy mix of startups and large companies racing to provide a comprehensive spectrum of workflow automation tools to empower companies to spin up workflows quickly and move work involving both human and machine labor through an organization.

RPA helps companies automate a series of mundane legacy tasks, which can include human intervention or not. Think of pulling information from an insurance claim, adding it to a spreadsheet and emailing a human administrator with the needed information — and doing all of this without a human touching it.

ServiceNow got into RPA in March when it bought Indian startup Intellibot. It also has several tools for low-code and workflow automation, and with the Intellibot purchase, other acquisitions and organic development, has built automation across its entire platform.

Sturdy was an investor in UiPath and serves on its board. Other investments include Stripe, Cloudflare and Credit Karma, which Intuit bought last year for $7.1 billion. She was also the captain of the women’s basketball team while attending Harvard, and participated in the 1998 NCAA basketball tournament, helping defeat No. 1 Stanford in a huge upset.

We’re going to discuss why automation is coming to the fore now, the role of the pandemic in its rising popularity and whether it’s a jobs killer or if it’s actually making life easier for employees.

We hope you’ll join us at TechCrunch Sessions: SaaS on October 27th. We’ll also be talking to Monte Carlo CEO Barr Moses, Microsoft executive Jared Spataro and investor Casey Aylward.



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Tech watchdog campaign challenges big tech for hiding behind small business – TechCrunch

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Time and time again, tech’s most powerful companies have pushed the narrative that any threat to their own trillion-ish dollar businesses will trickle down, hurting the small companies that rely on their products.

But counter to the warm and fuzzy anecdotes that big tech has rolled out over the years, some business owners struggle with relying so heavily on massive, opaque corporations and often have little recourse if things go wrong.

Those struggles are the kind of thing that tech watchdog group Accountable Tech wants to draw attention to with its new awareness push, “Main Street Against Big Tech.” The six figure campaign includes a full-page ad in San Jose’s daily paper the Mercury News next week, digital ads across social platforms and an ongoing video series highlighting experiences from small business owners that run counter to the PR narratives from tech companies.

The project has received support from the Main Street Alliance, Small Business Rising, the Institute for Local Self-Reliance, and the American Economic Liberties Project.

“The [campaign] really underscores the litany of Big Tech’s harms to which these small business owners are subject – from misleading and unreliable data, to hidden costs and sudden changes to rules or algorithms that can kneecap their entire company without any access to customer service,” Accountable Tech co-founder Jesse Lehrich told TechCrunch. “Each entrepreneur has their own story and reason for speaking out.”

Lehrich calls Facebook’s longstanding PR campaign around standing up for small business “incredibly cynical and opportunistic” — a position that some Facebook employees appear to share. The reality of running a business on big tech platforms isn’t always rosy for small business owners, who are subject to the whims of massively powerful corporations they have only a tenuous relationship with.

“They are completely at the mercy of these giants, with little access to legitimate metrics or customer service,” Lehrich said. “It’s not a partnership; it’s exploitation.”

Public sentiment also seems to be moving into a phase where people widely acknowledge that even free tech platforms extract a cost, whether that’s in the form of privacy sacrifices or the endless streams of user-created content that provide a canvas for advertising.

Small businesses may rely on tools from dominant tech companies, but that doesn’t mean that in theory an upstart competitor couldn’t build something that serves them just as well or better. “This is how monopolies and oligopolies work –– these Big Tech corporations and their services are only ‘essential’ because they’ve engaged in an endless array of anticompetitive behavior to ensure they’re the only game in town,” Lehrich told TechCrunch.

As Congress wrestles with how to update laws designed for an era well before internet businesses even existed, the biggest companies in tech will continue to lean into their market dominance, leaving businesses and users alike stuck with what they’ve got.

“In an effort to avoid regulatory scrutiny, monopolists like Facebook, Google, and Amazon have spent millions of dollars persuading lawmakers and the public that their business products are a lifeline for small businesses when in fact the opposite is true,” Accountable Tech Co-Founder and Executive Director Nicole Gill said. “… But now small business owners are fighting back by sharing their lived experience to expose the real relationship between Big Tech and Main Street.”



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