Connect with us

Techcrunch

Stonks, flying burritos and my boss’s boss’s boss’s boss – TechCrunch

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday morning? Sign up here. What a week. What a month. Are you doing all right? It’s okay if […]

Published

on

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 morning? Sign up here.

What a week. What a month. Are you doing all right? It’s okay if you are tired. We all are. That’s why we have weekends.

Let’s reflect on what happened this week: Individual traders outraged more professional investors by doing something hilarious, namely taking a trade that made some sense — betting that an atrophying physical retailer was going to continue obsolesce — and inverting it.

By going long on GameStop, investors flipped the script on the smart money. Then all heck snapped free, some stocks got blocked on trading services, Congress got mad, billionaires started to front on Twitter like they were the Common Man, some cryptos surged, including Dogecoin of all things, and as we headed into the weekend nothing was truly resolved. It was weird.

Let’s talk over the lessons we’ve learned. First, don’t short a stock so heavily that you are at risk of having the trade exposed and inverted to your detriment. Second, the fintech startups that TechCrunch has covered for years were more brittle than anticipated, either thanks to reserve requirements or simple platform risk. And third, things can always get dumber.

Evidence of that final lesson came during the week’s news cycle in which it became known that WeWork might pursue a public listing via a SPAC. So much for this year being more serious and normal than 2020.

But let’s stop recapping and get into our main topic today, namely a chat that I had with the person I actually work for, Guru Gowrappan, the CEO of Verizon Media Group (VMG). For those who don’t know, Verizon owns VMG, which in turn owns TechCrunch. VMG is a collection of assets, ranging from Yahoo to media brands to technology products. It does billions in yearly revenue, which should help frame how far above my seat — an excellent perch inside of TechCrunch, but not one that comes with org-chart stature — Guru sits.

Very far away.

But we follow each other on Twitter and after Verizon reported earnings this week, inclusive of some honestly pretty good numbers from VMG that I tweeted about, I got about half an hour of Guru’s time. This meant that I had my boss’s boss’s [etc] boss on the record with zero agenda. How could I say no?

For context, VMG generated $2.3 billion in Q4 revenue, up 11% from the year-ago quarter. Verizon described that as “the first quarter of year-over-year growth since the Yahoo! acquisition.” What drove the result? Per the Verizon earnings call, “strong advertising trends with demand-side platform revenue growing 41% compared to the prior year.”

If you are Guru or, frankly, your humble servant, the growth was welcome after VMG’s revenue had dipped to $1.4 billion in Q2 2020, off 24.5% from its year-ago result.

I had a few questions: Would the recent advertising momentum persist in 2021, something that could impact a host of businesses far beyond the VMG org; how important was it to Verizon that VMG had managed to post year-over-year growth; how he expects to balance commerce revenue and journalism; and what Guru thinks about new media products like the recent rebirth of newsletter tech, something that Substack and Twitter and even Facebook are tinkering with.

Here’s what I learned:

  • Regarding strong advertising performance in the final months of the year during COVID, Guru said that “the core fundamentals [of] the market dynamics have changed so that they’re more permanent,” adding that consumer behavior is now “more digital, more online” than before.
  • The VMG CEO declined to share Q1 2021 expectations in detail, but did note that VMG is aiming to “continue [its] momentum.”
  • Part of that momentum comes from subscription products, which Guru cited as a win: “If you look at one of the trends that happened due to COVID, consumers [are] moving to more trusted content and want to spend more time and money on consuming subscription-based products […] TechCrunch/Extra Crunch grew almost 196% year-on-year.”
  • My read of his answer to where we are today is that it’s not a bad time to be in the online media game, which isn’t something that has been true much in the past few years, looking around the remains of the journalism industry.
  • Regarding VMG’s home inside of Verizon — something that I’ve thought about after the Buzzfeed-HuffPost deal — I asked Guru if VMG’s recent financial performance made our company more attractive to Verizon, and if we have proven the bet that we were trying to make. This, by the way, is the sort of question that is pretty easy to write down, but slightly harder to ask when you are talking to someone who could terminate you at will. Anyway, Guru said “completely” in response. The VMG CEO summarized the Verizon CEO as saying that the media business is “core” to Verizon, and that our parent company “will continue to invest in the media business while we continue to deliver on our promise.” So sign up for Extra Crunch.
  • Guru said VMG won’t exchange revenue for credibility when it comes to promoting e-commerce across its platform: “At no point will we trade dollar value in a transaction for trust; there’s no way. […] The editorial team keeps me honest,” he said, adding that he stays out of changes that might upset journalistic balance. That was good to hear.
  • And finally, are there new media products that VMG may want to emulate, or buy? Guru was generally bullish on personalization, but declined to dish that VMG is about to buy Substack or anything like that.

Oh and I asked if VMG is going to sell, or otherwise divest, any other media properties in the wake of the HuffPost-BuzzFeed decision. Guru said that the Verizon CEO said that the broader company is “fully committed” to the media business, and that that won’t be “built upon divestment.” Instead, he said, it will be built “upon investing and growing,” adding that there are “no plans to sell any additional properties.” As I like my health insurance, that was nice to hear.

I understand that the above is not a standard sort of Exchange entry, but one thing that I will always try to do is take the conversations that come my way thanks to my job, and bring them to you.

Now, back to venture capital.

Market Notes

GameStop was your entire Twitter feed this week but there is other stuff you need to know. Alfred, a US-based fintech raised $100 million on Tuesday, to pick an example. The company fuses digital intelligence and humans to help users manage their financial lives. Neat.

And adding to our recent data-focused coverage of 2020 venture data — including a dive into the African VC market — investing group Work-Bench put together a look at how NYC’s enterprise tech scene performed in the second half of last year. This is the exact sort of data I would parse for you during a more regular week. But since we had this week, you have to do it yourself.

Sticking to data, Hallo, a startup that helps companies recruit more diverse candidates, dropped a sheaf of data in its “Black Founder Funding Q4 2020” report. Read it. If you don’t have time, I’ll give you the headline stat that both caught my eye and depressed my heart: “Hallo’s research found that out of the 1,537 companies analyzed [in Q4 2020], 40 were led by Black founders.”

And this week I got to yammer with Microsoft after it reported earnings. Saving most of that for a later date, two things were clear: The cloud world still has oodles of growth ahead of it, which is good news for a large chunk of the startup software market. And if you wanted more data on Teams’ growth to better understand why Salesforce bought Slack, wait another quarter.

Various and Sundry

Closing out, in August of 2014 I came up with the idea for a burrito cannon food delivery service. You would push a button in an app, and it would deliver a burrito to your office sans the need for you to make choices. Then Postmates actually built a burrito cannon into its app, which was both hilarious and fun.

Fast forward to 2021, and Postmates is now part of Uber. And it is back with the return of the burrito cannon:

I did not anticipate that my lazy, stupid idea would help get an NFL star, over a half decade later, to sprint down a field as an industrial-scale potato cannon shot a Mexican delight in his direction. But it’s 2021 and this is where we are.

Evidence, I think, that all my startup ideas are brilliant,

Alex

By going long on GameStop, investors flipped the script on the smart money. Then all heck snapped free, some stocks got blocked on trading services, Congress got mad, billionaires started to front on Twitter like they were the Common Man, some cryptos surged, including Dogecoin of all things, and as we headed into the weekend nothing was truly resolved. It was weird.

Source: https://techcrunch.com/2021/01/30/stonks-flying-burritos-and-my-bosss-bosss-bosss-boss/

stonks,-flying-burritos-and-my-boss’s-boss’s-boss’s-boss-–-techcrunch

Techcrunch

South Korean antitrust regulator fines Google $177M for abusing market dominance – TechCrunch

The Korea Fair Trade Commission (KFTC) said on Tuesday it fined Google $177 million for abusing its market dominance in the Android operating system (OS) market. The U.S. tech company has restricted market competition by prohibiting local smartphone makers like Samsung Electronics and LG Electronics from customizing their Android OS, through Google’s anti-fragmentation agreements (AFA), […]

Published

on

The Korea Fair Trade Commission (KFTC) said on Tuesday it fined Google $177 million for abusing its market dominance in the Android operating system (OS) market.

The U.S. tech company has restricted market competition by prohibiting local smartphone makers like Samsung Electronics and LG Electronics from customizing their Android OS, through Google’s anti-fragmentation agreements (AFA), according to the antitrust regulator statement.

Under the AFA, smartphone developers are not allowed to install or develop “Android forks”, modified versions of Android.

The KFTC banned Google LLC, Google Asia Pacific and Google Korea from imposing local smartphone developers to sign the AFA and make changes on details about the existing version. The new measure in South Korea will be applied to not only mobiles devices but also other Android-powered smart devices including watches and TVs.

Android has spurred innovation among Korean mobile operator owners and software developers and that has led to a better user experience for Korean consumers, Google said in its statement. “The KFTC’s decision released today ignores these benefits, and will undermine the advantages enjoyed by consumers. Google intends to appeal the KFTC’s decision,” a spokesperson at Google said.

The commission has been investigating Google over the anti-competition practice in OS market since July 2016, a spokesperson at KFTC said.

Google’s global mobile OS market share excluding China has been increased to 97.7% in 2019 from 38% in 2010, as per KFTC’s announcement.

Google’s AFA has also limited to launch tech companies’ new devices like smart watches and TVs using the operating system (OS) including Samsung’s smart watch in 2013, LG Electronics’ LTE smart speaker in 2018 as well as Amazon’s smart TV in 2018.

South Korea’s watchdog is probing into three other cases including the Play Store app market, billing system and the advertisement market.

Meanwhile, South Korea’s “anti-Google law”, takes effect on 14 September, based on Korea Communications Commission’s press release.

In late August, South Korea passed a bill to curb global tech companies including Google and Apple from imposing their own proprietary in-app payment service and commissions on app developers.

Source: https://techcrunch.com/2021/09/14/south-korean-antitrust-regulator-fines-google-177m-for-abusing-market-dominance/

south-korean-antitrust-regulator-fines-google-$177m-for-abusing-market-dominance-–-techcrunch

Continue Reading

Techcrunch

The SEC and the DOJ just charged this startup founder with fraud, saying he lied to Tiger and others – TechCrunch

Today, both the U.S. Department of Justice and the Securities and Exchange Commission charged Manish Lachwani, cofounder of a mobile app testing company Headspin, with fraud. The SEC says he violated antifraud provisions, and the civil penalties it’s seeking include a permanent injunction, a conduct-based injunction, and to bar him for serving as a corporate […]

Published

on

Today, both the U.S. Department of Justice and the Securities and Exchange Commission charged Manish Lachwani, cofounder of a mobile app testing company Headspin, with fraud. The SEC says he violated antifraud provisions, and the civil penalties it’s seeking include a permanent injunction, a conduct-based injunction, and to bar him for serving as a corporate executive or board member.

The DOJ, which arrested Lachwani earlier, has accused him of one count of wire fraud and one count of securities fraud, and the associated penalties if he’s found guilty are are more harsh, including, for wire fraud, a maximum sentence of 20 years in prison and a fine of $250,000. If he’s found guilty of securities fraud, he faces a maximum sentence of 20 years in prison and a fine of $5,000,000.

Both the the SEC and the DOJ say Lachwani — who led the six-year-old company as CEO until May of last year — defrauded investors out of $80 million by falsely claiming that his company, Headspin, had “achieved strong and consistent growth in acquiring customers and generating revenue” when he was pitching its Series C round to potential backers.

By the SEC’s telling, his fabrications were designed to help secure the round at a so-called unicorn valuation. That apparent plan worked, too, with Palo Alto-based Headspin attracting coverage in Forbes in February of last year after Dell Technologies Capital, Iconiq Capital and Tiger Global provided the company with $60 million in Series C funding at a $1.16 billion valuation. Forbes reported at the time that the valuation was double the valuation investors assigned HeadSpin when it closed its Series B round in October 2018.

The SEC also says that Lachwani was looking to enrich himself, saying he did so “by selling $2.5 million of his HeadSpin shares in a fundraising round during which he made misrepresentations to an existing HeadSpin investor.” (It isn’t clear from its complaint whether the SEC is referring to the Series C or an earlier round.)

The DOJ’s federal complaint suggests that Lachwani’s alleged scheming dates back to at least November 2019, when the company was fundraising. It says it was then that the success of Palo Alto-based Headspin — which helps apps and devices work in different environments around the world – was being knowingly misrepresented to investors by Lachwani.

More specifically, the complaint alleges that “in materials and presentations to potential investors, Lachwani reported false revenue and overstated key financial metrics of the company. . . he maintained control over operations, sales, and record-keeping, including invoicing, and he was the final decision maker on what revenue was booked and included in the company’s financial records.”

In the investigation that led to the DOJ’s charges, the FBI discovered “multiple examples” of Lachwani “instructing employees to include revenue from potential customers that inquired but did not engage Headspin, from past customers who no longer did business with Headspin, and from existing customers whose business was far less than the reported revenue,” says the department.

How far off were these collective calculations? The complaint says that ultimately, Lachwani “provided investors false information that overstated Headspin’s annual recurring revenue . . . by approximately $51 to $55 million.”

According to the complaint, Lachwani’s fraud unraveled after the company’s board of directors conducted an internal investigation and revised HeadSpin’s valuation down from $1.1 billion to $300 million. Indeed, in August of last year, The Information reported that the company was planning to lower the value of its Series C stock by nearly 80%.

The outlet reported at the time that Lachwani had already been replaced by another executive. That person, according to LinkedIn, is Rajeev Butani, who joined Headspin as its chief sales officer around the time its Series C round was being announced in February of last year.

Nikesh Arora, a former SoftBank president, the current CEO and chairman of Palo Alto Networks helped lead the internal review as a then-director on the board of Headspin, said The Information.

The SEC says it’s investigation is continuing. Meanwhile, the DOJ notes in its announcement that “a complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.”

Either way, the outlook doesn’t look very promising right now for Lachwani, who, according to Forbes, previously sold a mobile cloud business to Google and wound up co-founding Headspin after Yahoo cofounder Jerry Yang introduced him to Brien Colwell, a former Palantir and Quora engineer was working at the time on a different startup.

Colwell remains with Headspin as its CTO. He has not been named in either the SEC or the DOJ’s complaints relating to Headspin.

The company itself, which says it has been cooperating with the government’s investigation, was also not charged.

Pictured above, left to right, Headspin founders Lachwani and Colwell.

The DOJ’s federal complaint suggests that Lachwani’s alleged scheming dates back to at least November 2019, when the company was fundraising. It says it was then that the success of Palo Alto-based Headspin — which helps apps and devices work in different environments around the world – was being knowingly misrepresented to investors by Lachwani.

Source: https://techcrunch.com/2021/08/25/the-sec-and-the-doj-just-charged-this-startup-ceo-with-fraud-saying-he-lied-to-tiger-and-others/

the-sec-and-the-doj-just-charged-this-startup-founder-with-fraud,-saying-he-lied-to-tiger-and-others-–-techcrunch

Continue Reading

Techcrunch

Blockchain startup XREX gets $17M to make cross-border trade faster – TechCrunch

A substantial portion of the world’s trade is done in United States dollars, creating problems for businesses in countries with a dollar shortage. Blockchain startup XREX was launched to help cross-border businesses in emerging markets perform faster transactions with products like a payment escrow service and crypto-fiat exchange platform. The Taipei-headquartered company announced today it has […]

Published

on

Blockchain startup co-founders Winston Hsiao and Wayne Huang in front of the company's logo

XREX co-founders Winston Hsiao and Wayne Huang

A substantial portion of the world’s trade is done in United States dollars, creating problems for businesses in countries with a dollar shortage. Blockchain startup XREX was launched to help cross-border businesses in emerging markets perform faster transactions with products like a payment escrow service and crypto-fiat exchange platform.

The Taipei-headquartered company announced today it has raised $17 million in pre-Series A funding led by CDIB Capital Group. The oversubscribed round also included participation from SBI Investment (a subsidiary of SBI Holdings), Global Founders Capital, ThreeD Capital, E.Sun Venture Capital, Systex Corporation, MetaPlanet Holdings, AppWorks, BlackMarble, New Economy Ventures and Seraph Group. XREX’s last funding was a $7 million seed round in 2019.

Part of the new round will be use to apply for financial licenses in Singapore, Hong Kong and South Africa, and partner with banks and financial institutions, like payment gateways.

“We specifically wanted to build a regulatory-friendly cap table,” XREX co-founder and chief executive officer Wayne Huang told TechCrunch. “It’s really hard for a startup like us to raise from banks and public companies, but as you can see, this round we deliberately to do that and we were successful.”

Huang sold his previous startup, anti-malware SaaS developer Armorize Technologies, to Proofpoint in 2013. Armorize analyzed source code to find vulnerabilities, and many of its clients were developers in Bangalore and Chennai, so Huang spent a lot of time traveling there.

“We ran into all sorts of cross-border money transfer issues. It seemed almost unstoppable,” Huang said. “Growing up in the U.S. and then in Taiwan, we were not exposed to those issues. So that planted a seed, and then when Satoshi [Nakamoto] published the bitcoin white paper, of course that was a big thing for all cybersecurity experts.”

He began thinking of how blockchain can support financial inclusion in emerging markets like India. The idea came to fruition Huang teamed up with XREX co-founder Winston Hsiao, the founder of BTCEx-TW, one of Taiwan’s first bitcoin exchanges. Hsiao grew up in India and founded Verico International, exporting Taiwan-manufactured semiconductors and electronics to other countries, so he was also familiar with cross-border trade issues.

XREX Crypto Services give merchants, especially those in countries with low U.S. dollar liquidity, tools to conduct trade in digital fiat currencies. “They have to get quick access to the U.S. dollar and be able to pay it out quick enough for them to secure important commodities that they want to import, and that’s the problem we want to solve,” said Huang.

To use the platform, merchants and their customers sign up for XREX’s wallet, which includes a commercial escrow service called Bitcheck. Huang said it is similar to having a standby letter of credit from a commercial bank, because buyers can use it to guarantee they will be able to make payments. Bitcheck uses digital currencies like USDT and USDC, stablecoins that are pegged to the U.S. dollar.

Merchants pay stablecoin to suppliers and XREX escrows the funds until the supplier provides proof of shipment, at which point it moves the payment to them. XREX’s crypto-fiat exchange allows users to convert USDT and USDC to U.S. dollars, which they can also withdraw and deposit through the platform.

Part of XREX’s funding will be used to expand its fiat currency platform, though Huang said it doesn’t plan to add too many cryptocurrencies “because we’re not built for crypto traders, we’re built for businesses and brand really matters to them. Brand and compliance, so whatever the U.S. Comptroller of the Currency says is a good stablecoin is what they’re going to use.”

Some of XREX’s partners include compliance and anti-money laundering providers like CipherTrace, Sum&Substance and TRISA. Part of XREX’s funding will be used to expand its security and compliance features, including Public Profiles, which are mandatory for customers, and user Reputation Index to increase transparency.

In a statement about the funding, CDIB Capital Innovation Fund head Ryan Kuo said, “CDIB was an early investor in XREX. After witnessing the company’s fast revenue growth and their commitment to compliance, we were determined to double our investment and lead this strategic round.”

The Taipei-headquartered company announced today it has raised $17 million in pre-Series A funding led by CDIB Capital Group. The oversubscribed round also included participation from SBI Investment (a subsidiary of SBI Holdings), Global Founders Capital, ThreeD Capital, E.Sun Venture Capital, Systex Corporation, MetaPlanet Holdings, AppWorks, BlackMarble, New Economy Ventures and Seraph Group. XREX’s last funding was a $7 million seed round in 2019.

Source: https://techcrunch.com/2021/08/22/blockchain-startup-xrex-gets-17m-to-make-cross-border-trade-faster/

blockchain-startup-xrex-gets-$17m-to-make-cross-border-trade-faster-–-techcrunch

Continue Reading

Title

Techcrunch3 days ago

South Korean antitrust regulator fines Google $177M for abusing market dominance – TechCrunch

The Korea Fair Trade Commission (KFTC) said on Tuesday it fined Google $177 million for abusing its market dominance in...

Cointelegraph6 days ago

El Salvador’s Bitcoin detractors: Opposition groups gather as crypto law rolls out

While President Bukele enjoys widespread popularity, his law that makes Bitcoin legal tender does not.

Ventureburn7 days ago

Startup partners with Telkom to launch translation platform for SA languages

Telkom has partnered with SA startup Enlabeler to launch an AI platform that translates speech into text and provides transcription...

Entrepreneur2 weeks ago

Why You Should Make Twitter Spaces Part of Your Business Strategy

Twitter's latest feature can help businesses grow their presence on the platform.

Bioengineer2 weeks ago

What factors put Philippine birds at risk of extinction?

Credit: Ça?an ?ekercio?lu The lush forests and more than 7,000 islands of the Philippines hold a rich diversity of life,

Reuters3 weeks ago

Chinese social media platforms to “rectify” financial self-media accounts

China's top social media platforms, Wechat, Douyin, Sina Weibo and Kuaishou, said on Saturday they would begin to rectify irregular...

Ventureburn3 weeks ago

South African startups helping to solve the global challenges

A new generation of entrepreneurs are not only incubating solid startups but are contributing to help solve some of the...

Techcrunch3 weeks ago

The SEC and the DOJ just charged this startup founder with fraud, saying he lied to Tiger and others – TechCrunch

Today, both the U.S. Department of Justice and the Securities and Exchange Commission charged Manish Lachwani, cofounder of a mobile...

Techcrunch4 weeks ago

Blockchain startup XREX gets $17M to make cross-border trade faster – TechCrunch

A substantial portion of the world’s trade is done in United States dollars, creating problems for businesses in countries with a...

ZDNET4 weeks ago

National Australia Bank keeping staff connected with Google Pixel rollout

More than 2,000 Google Pixel devices were issued to NAB's customer contact teams to enable them to support customers remotely.

Review

    Select language

    Trending