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Startups Weekly: What the E-Trade deal says about Robinhood

[Editor’s note: Want to get this weekly review of news that startups can use by email? Just subscribe here.] 

How well do Robinhood’s financials stack up against incumbent online brokerages? While we wait for the seven-year-old company’s long-planned IPO, Alex Wilhelm examined Morgan Stanley’s big $13 billion purchase of E-Trade for fresh data comparison points. Robinhood has 10 million accounts — twice what E-Trade has — but it also appears to make much less money per user and has far fewer assets under management, as he covered for Extra Crunch. So while its fee-free approach has destroyed a key revenue stream for competitors, it still has to grow its own “order-flow” business into its private-market valuation.

One solution is to make the platform stickier via social features. On the same day as the E-Trade deal announcement, Robinhood launched a new Profiles feature to encourage users to share stock tips. Josh Constine explored the offering and where it is headed on TechCrunch, concluding that “Profiles and lists, and then eventually more social features, could get Robinhood’s users trading more so there’s more order flow to sell and more reason for them to buy subscriptions.”

Alex also took a look at a new report on fintech funding, which found last year was a peak overall — but skewed towards later-stage companies. Certainly, the wealth management segment is looking mature.

But the category is massive, with many more incumbents left to disrupt. What are fintech investors looking for? Check out our popular investor survey on this topic from November.

How your startup can use TikTok for growth
You know that TikTok is where the cool kids are these days, but maybe… how do I say… it is not the social media platform you know best when it comes to growth. So Geneviève Patterson and Hannah Donovan, founders of TikTok-oriented video editing app TRASH, have published a two-part guide to help you figure it out.

The first part, freely available on TechCrunch, walks you through how to increase your authority ranking in the TikTok algorithm, its review process, and pointers for making your own content. The second part, for Extra Crunch subscribers, goes deep on how TikTok decides whose content gets featured more (and less).

Fifth Wall’s Brendan Wallace: the proptech sector is hot despite WeWork

“Our mandate is any technology that can be strategic to the real estate industry,” the prolific investor told Connie Loizos in an extended interview for Extra Crunch this week. While WeWork may have depressed some investor interest, plenty of models are working great across various segments — so he and his partners are raising more funds. One of the hottest sectors, perhaps surprisingly, is in sustainable buildings. As Wallace details, public pressure, large-tenant pressure, large-investor pressure and new metro requirements have removed any choice that the industry has in the matter:

Make no mistake; we are front-and-center to what is happening in the real estate industry and the collision with technology, and this is the single-most-important thing that has happened to the real estate industry in the last five decades. The real estate industry is going to have to go carbon-neutral and that is brand-new.

Is this sector also your focus? Be sure to check out our survey of investors in construction robotics from last week to find out some of the latest opportunities, plus our overview survey of real estate and prop tech investors from November.

The future of manufacturing and warehouse robotics

Ahead of our big robotics conference at UC Berkeley in early March, we have been producing a whole series of surveys on robotics verticals. This week, our resident financial analyst Arman Tabatabai teamed up with our hardware editor turned conference organizer, Brian Heater, to do a series of interviews with VCs who are focused on warehouse and manufacturing robotics. Investors include:

Rohit Sharma, True Ventures
Ajay Agarwal, Bain Capital Ventures
Rick Prostko, Comcast Ventures
Fatima Husain, Comcast Ventures
Shahin Farshchi, Lux Capital
Cyril Ebersweiler, SOSV & HAX
Kelly Coyne, Grit Ventures

Read more here.

Tell TechCrunch about gaming startups and remote work

Our media columnist Eric Peckham wants to feature your advice in two upcoming articles. If you have relevant expertise, click the links below and share your opinions.

What are the best cities for gaming startups and how should gaming entrepreneurs compare which city is right for them?
Have you helped lead a startup whose team is split 8-10 time zones apart between offices in Europe/Israel and the West Coast of the US? What tips do you have for others navigating this challenge?

Across the week

Do AI startups have worse economics than SaaS shops? (EC)

Elon Musk says all advanced AI development should be regulated, including at Tesla (TC)

SpaceX alumni are helping build LA’s startup ecosystem (EC)

Dear Sophie: I need the latest details on the new H-1B registration process (TC)

Tracking China’s astounding venture capital slowdown (EC)

The rise of the winged pink unicorn (TC)

Voodoo Games thrives by upending conventional product design (EC)

Ex-YC partner Daniel Gross rethinks the accelerator (TC)

How companies are working around Apple’s ban on vaping apps (EC)

Rippling starts billboard battle with Gusto (TC)

#Equitypod

This week was a fun combination of early-stage and late-stage news, with companies as young as seed stage and as old as PE-worthy joining our list of topics.

Danny and Alex were back on hand to chat once again. Just in case you missed it, they had some fun talking Tesla yesterday, and there are new Equity videos on YouTube. Enjoy!

This week the team argued about org-chart companies, debt raises, some of the items mentioned above, and much more. Details here.


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News

Why Front’s Series C matters, the latest on Lambda and The Athletic makes media look good

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week Danny and Alex are back with more than ever to get through. 2020 has come out of the gate fast when it comes to news, so much so that we had to leave out of the show way more than we wanted. Things like the newest members of the $100 million ARR club, One Medical’s proposed IPO pricing, the Clubhouse funding round and Placer.ai’s latest investment.

But we did manage to chat through a host of news, including:

Why Front’s latest investment (a $59 million Series C) is a pretty big deal. Not because of how much money it has raised — the firm has raised more in a single, preceding round — but because of who put the capital to work.
On the venture capital front, Danny and Alex also chewed over signaling risk in venture, and why bigger funds are writing earlier and earlier checks.
Also on the docket was the latest from Lambda School, which our former co-host and friend Kate Clark wrote. The gist is that regardless of how you feel about the company, your views are probably a bit too negative, or a bit too positive. (More on the company’s ilk from Extra Crunch here, and here.)
And three media deals, including The Athletic’s latest investment ($50 million), who might buy the company behind the hit podcast “Serial” and why Spotify might buy The Ringer. Which is about sports, it turns out.

All that and we had fun. One more thing: Don’t fret, we’re going to bring guests back in just a few weeks. So if you’ve missed hearing from Folks Who Actively Invest, fear not, the VCs will be back.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.


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Software

SD Times news digest: OpenAPI Specification 3.0.3, Apache Samza 1.3.1, and Racket 7.6

The release of the OpenAPI Specification 3.0.3 brings patches and changes to improve the readability and accuracy of the specification. 

Changes include clarification on how Path Templating works, as well as clarifying the meaning of Semantic Versioning, changing hyperlinks from ‘http’ to ‘https,’ and other clarifications. 

The full details are available here.

Apache Samza 1.3.1
Apache Samza 1.3.1 includes many bug fixes such as that Checkpoint dir removal should only search in valid store dirs, Invoke onCheckpoint is only for registered SSPs, the checkpoint and changelog topic auto-creation has been fixed. 

Other fixes relate to the coordinator steam creation workflow, heartbeat failure that causes incorrect container shutdown, and the stream processor that should ensure the previous container is stopped during a rebalance. 

The full details are available here.

Racket 7.6
In the new release, DrRacket’s scrolling has been made more responsive, dark mode support has been improved for MacOS and Unix, Racket CS is ready for production use, and the Web Server provides fine-grained control over various aspects of handling client connections. 

“Using this new construct, we have decreased the web server’s default level of trust in client connections and made it detect additional, maliciously constructed requests,” Racket wrote in a post.

In addition, The Macro Stepper has a new macro hiding algorithm that tracks term identity through syntax protection. 

An update on DigitalOcean
DigitalOcean closed $300 million bank debt financing, with a consortium of blue-chip commercial lenders.

“When DigitalOcean was first founded, we focused on creating an offering specifically tailored to the needs of an underserved segment of the market – the developer,” DigitalOcean wrote in a blog post. “Over time, as our offerings have expanded, we have broadened our focus to include entrepreneurs and small and mid-sized businesses (SMB), who, like developers, need simple solutions to help them get lift-off on their ideas.”

SentinelOne raises $200 million for its cloud-native endpoint protection platform
SentinelOne announced that it has raised $200 million in Series E funding, elevating the company’s valuation to $1.1 billion. 

“The cybersecurity demands of today’s enterprises have evolved, and we’ve taken endpoint protection far beyond what it once was. Instead of solely protecting laptops, desktops, and servers with EPP and EDR capabilities, we protect the entire network edge with flexible, autonomous technology — from containerized workloads in the cloud and data center to IoT devices,” said Tomer Weingarten, CEO and co-founder of SentinelOne. 

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India’s space agency will fly a half-humanoid robot to prepare for its first human spaceflight missions

The Indian Space Research Organisation (ISRO) is getting ready to begin its human spaceflight program, which aims to carry its first astronauts starting in 2022. In advance of that milestone, however, the agency will be launching its “Gaganyaan” crewed orbital spacecraft later this year (if all goes to plan) — and while it won’t carry any human passengers, it will have one robotic crew member on board.

“Vyommitra” (via Times of India) is the name ISRO has given to its “half-humanoid” robotic astronaut, which will be on board the Gaganyaan when it takes its first flight in December. The robot has a range of functions and features, including being able to operate switch panels to control the capsule, and it can operate as a “companion,” with the ability to “converse with the astronauts, recognize them and respond to their queries,” as the robot put it in its own words at an unveiling this week.

Vyommitra is bilingual, and its semi-anthropomorphic nature will mean it can provide valuable data from this first uncrewed flight about how Gaganyaan would perform were a person actually strapped in and at the controls. The robot can also apparently perform “all” crew functions, including controlling environmental and life support systems, and it’s designed to have an expressive face and lip-sync capabilities for relaying info via voice, including messages from ground control.

This isn’t the first robot with human-like design or capabilities to make its way to space: Russia’s Skybot has made its way to the ISS, and NASA is testing spheroid robots called “Astrobee” that are designed to support astronauts and act as assistants. Each of these favors a different approach, however, and Vyommitra is an interesting take because of the clear effort put in to have it resemble a human in form as well as function.


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Software

SD Times Open-Source Project of the Week: Discover archetypes

IBM wants to help developers identify and classify archietypes in data with the release of a new code pattern.

Archetypes are formally defined as a pattern, or a model, of which all things of the same type are copied. According to the company, its Watson natural language understanding helps users discover archetypes in their text corpus. 

“When we read through a set of these records, our mind naturally groups the records into some collection of archetypes. For example, we may sort a song collection into easy listening, classical, rock, etc. This manual process is practical for a small number of records (e.g., a few dozen). Large systems can have millions of records, so we need an automated way to process them,” IBM wrote in a blog post.

Because records are often presented in unstructured text, automated processing needs to be able to understand natural language, which is why Watson Natural Language Understanding was built, IBM continued.

The code pattern, which can be found on GitHub, coupled with statistical techniques, can help users discover meaningful archetypes in their records and classify new records against this set of archetypes.

The user can interact with the Watson natural language understanding service through the provided application user interface or the Jupyter Notebook, can run a series of statistical analysis on the result, use the graphical display to explore the archetypes and classify a new dictation.

The full details on the capabilities of the code pattern are available here.

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Software

SD Times news digest: Automation Anywhere Discovery Bot, Obviously AI’s ML platform, and CircleCI’s new learning platform

Automation Anywhere announced an new integrated AI-driven process discovery solution that discovers business processes and creates bots to automate them. 

The Discovery Bot uses AI and machine learning to prioritize automation opportunities by potential return on investment (ROI) and develop RPA bots – accelerating the process automation journey for organizations, the company explained. 

In addition, as a zero-client solution, Automation Anywhere says it can be easily deployed across the enterprise and allows business users, IT and developers to collaborate via the same web-based interface and reduce the time spent understanding business process workflows.

Obviously AI rolls out natural language-powered ML platform
Obviously AI’s no-code machine learning platform enables users to run predictions and analytics using natural language questions. 

Users upload their dataset from CSV, databases or CRMs and then get a Google-like search bar to ask a question in natural language, according to the company. The platform shows what factors drove the results, so users don’t have to guess how they got them. 

“We realized that business users truly cared about getting decision making insights about their customers, products and its usage. This often meant writing frustrating SQL queries and waiting on web engineers who would try to figure out machine learning algorithms,” said Nirman Dave, co-founder and CEO of Obviously AI. “That’s why we have been on a mission to make data science effortless just by asking questions. It’s amazing what marketers, salespeople and other non-technical business users can learn when they use our platform.”

CircleCI announces new learning platform
With the new developer-focused learning platform, both new and seasoned CircleCI users can learn the basics of building, testing, and deploying on CircleCI. 

The course teaches about things like executors, workflows, secrets management, test results and artifacts, build optimizations, debugging failed builds, and using the CircleCI API. 

“Over the coming months, we will continue to expand on our course offerings for both free and paid users. You can expect content on topics like orbs, migration training, build environments, and more,” CircleCI wrote in a post.

Accusoft turns focus to SaaS technology
Accusoft announced its launch of a new SaaS business unit, focusing on the growth of its OnTask document automation tool. 

“OnTask is different than the other 20+ products that Accusoft offers because it is targeted toward end-users rather than developers. For its continued growth and success,  we need to treat it as a separate business unit,” said Steve Wilson, president of OnTask. While still offering professional services for more complex needs and integrations, OnTask is taking a new approach to giving users what they need up front and moving away from processes required by Accusoft’s other highly technical products, according to the company in a post.

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News

LumApps raises $70M Series C led by Goldman Sachs

LumApps, the cloud-based social intranet for the enterprise, has closed $70 million in Series C funding. Leading the round is Goldman Sachs Growth, with participation from Bpifrance via its Growth Fund Large Venture.

Others participating include Idinvest Partners, Iris Capital, and Famille C (the family office of Courtin-Clarins). The round brings the total raised by the French company to around $100 million.

Founded in Paris back in 2012, before launching today’s proposition in 2015, LumApps has developed what it describes as a “social intranet” for enterprises to enable employees to better informed, connect and collaborate. The SaaS integrates with other enterprise software such as G Suite, Microsoft Office 365 and Microsoft SharePoint, to centralize access to corporate content, business applications and social features under a single platform. The central premise is to help companies “break down silos” and streamline internal communication.

LumApps customers include Airbus, Veolia, Valeo, Air Liquide, Colgate-Palmolive, The Economist, Schibsted, EA, Logitech, Toto, and Japan Airlines, and the company claims to have achieved year-on-year revenue growth of 100%.

“Our dream was to enable access to useful information in one click, from one place and for everyone,” LumApps founder and CEO Sébastien Ricard told TechCrunch when the company raised its Series B early last year. “We wanted to build a solution that bridged [an] intranet and social network, with the latest new technologies. A place that users will love.”

Since then, LumApps has added several new offices and has seven worldwide: Lyon, Paris, London, New York, Austin, San Francisco, and Tokyo. Armed with additional funding, the company will continue adding significant headcount, hiring across engineering, product, sales and marketing. There are also plans to expand to Canada, more of Asia Pacific, and Germany.

“We’re actually looking at hiring 200 people minimum,” Ricard tells me. “We’re growing fast and have ambitious plans to take the product to new heights, including fulfilling our vision of making LumApps a personal assistant powered by AI. This will require a significant investment in top engineering/AI talent globally”.

Asked to elaborate on what machine learning and AI could bring to a social intranet, Ricard says the vision is to make LumApps a personal assistant for all communications and workflows in the enterprise.

“We see a future where this personal assistant can make predictive suggestions based on historical data and actions. Applying AI to prompt authors with suggested content, flagging important items that demand attention, and auto-archiving old content, are a few examples. Managing the massive troves of content and data companies have today is critical”.

Ricard also sees AI playing a big role in data security. “Employees have a high-degree of control with regard to data sharing and AI can help manage what employees can share in the workplace. This is more long-term but it’s where we’re headed,” he says.

“In the short-term, we’re making investments in automating as many workflows as possible with the goal of reducing or eliminating administrative tasks that keep employees from more productive tasks, including team collaboration and knowledge sharing”.

Meanwhile, LumApps says it may also use part of the Series C for M&A activity. “We’re growing fast and we’re looking at different areas for expansion opportunities,” Ricard says. “This includes retail and manufacturing and some business functions like HR, marketing and communications. We don’t have concrete plans to acquire any companies at the moment but we are keeping our options open as acquiring best-in-breed technologies often makes more sense from a business perspective than building it yourself”.


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Software

EU rejects Facebook’s proposed online regulations

Facebook’s proposal to the EU to tone down what the company called “intrusive regulations,” was rejected. European commissioner for the internal market Thierry Breton said that it was up to Facebook to adopt Europe’s standards, and not the other way around. 

The proposal came in the form of a whitepaper, which argued to ensure accountability in companies’ content moderation systems and procedures as the best way to create incentives for companies to responsibly balance values like safety, privacy, and freedom of expression.

It also argued that any national regulatory approach to addressing harmful content should respect the global scale of the internet and the value of cross-border communications, and asked for regulators to consider their impacts on freedom of expression. 

“If designed well, new frameworks for regulating harmful content can contribute to the internet’s continued success by articulating clear ways for government, companies, and civil society to share responsibilities and work together,” Facebook wrote in a post that described the proposal in detail. “Designed poorly, these efforts risk unintended consequences that might make people less safe online, stifle expression and slow innovation.

This was addressed at the EU’s possibility of trying to hold internet companies responsible for hate speech and other illegal speech published on its platforms. 

Breton will announce proposals this week aimed at exploiting the EU’s trove of industrial data and challenging the dominance of Facebook, Google, and Amazon. 

“Facebook cannot push away all the responsibility. Facebook and Mr. Zuckerberg have to answer themselves a question [of] who do they want to be as a company and what values they want to promote,” said EU justice chief Vera Jourova after she met with Mark Zuckerberg to discuss the matter, according to VentureBeat. “It will not be up to governments or regulators to ensure that Facebook wants to be a force of good or bad.”

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Netflix adds 8.8M subscribers despite growing competition

Netflix grew by 8.8 million net subscribers in the fourth quarter of 2019, according to its latest earning report, putting its growth well ahead of its forecast of 7.6 million.

The company says it has 167 million paid memberships worldwide, with more than 100 million outside the United States. It also reported stronger-than-expected financials, with revenue of $5.47 billion and earnings per share of $1.30, compared to analyst estimates of $5.45 billion and EPS of 53 cents.

That’s all despite the launch of two major streaming services, Disney+ and Apple TV+, with more competition coming this year from WarnerMedia’s HBOMax and NBCUniversal’s Peacock.

Netflix addresses the competitive landscape in its letter to shareholders, arguing that there’s “ample room for many services to grow as linear TV wanes,” and noting that during Q4, “our viewing per membership grew both globally and in the US on a year over year basis, consistent with recent quarters.”

Netflix also points to Google Search Trends showing much higher interest in its original series “The Witcher” than in Disney+’s “Mandalorian,” Apple TV+’s “Morning Show” or Amazon’s “Jack Ryan.”

Google Trends

That might seem like an unfair comparison, especially since Disney+ is only available in a handful of countries so far, but Netflix argues, “If Disney+ were global we don’t think the picture would be much different, to judge from the ​NL results​ where Disney+ first launched.”

In fact, Netflix says “The Witcher” is on-track to become “our biggest season one TV series ever,” with 76 million member households choosing to watch the show. It also says 83 million households chose to watch the Michael Bay-directed action film “6 Underground.”

If you’re wondering about the slightly awkward “chose to watch” phrasing — yep, Netflix is switching up the (already controversial) way that it reports viewership. While it previously shared the number of accounts that watched at least 70% of an episode or film, it’s now looking at how many members chose to watch a show or movie, and then actually watched for at least two minutes (“long enough to indicate that the choice was intentional”).

The company says this increases viewer counts by an average of 35%.

“Our new methodology is similar to the BBC iPlayer in their rankings​ based on ‘requests’ for the title, ‘most popular’ articles on the New York Times which include those who opened the articles, and YouTube view counts,” Netflix says. “This way, short and long titles are treated equally, leveling the playing field for all types of our content including interactive content, which has no fixed length.”

One dark cloud in the earnings report is what appears to be slowing growth, with 7.0 million projected net additions in Q1 of this year, compared to 9.6 million net adds in the first quarter of 2019. Netflix attributes this to “the continued, slightly elevated churn levels we are seeing in the US,” as well as more balance between Q1 and Q2 growth this year, “due in part to the timing of last year’s price changes and a strong upcoming Q2 content slate.”

As of 4:51pm Eastern, Netflix shares were up 0.41% in after-hours trading.

Netflix Q3 earnings exceed estimates, despite disappointing US subscriber growth


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Software

Facebook proposes new online regulations to the EU, EU rejects

Facebook’s proposal to the EU to tone down what the company called “intrusive regulations,” was rejected. European commissioner for the internal market Thierry Breton said that it was up to Facebook to adopt Europe’s standards, and not the other way around. 

The proposal came in the form of a whitepaper argued to ensure accountability in companies’ content moderation systems and procedures as the best way to create incentives for companies to responsibly balance values like safety, privacy, and freedom of expression.

It also argued that any national regulatory approach to addressing harmful content should respect the global scale of the internet and the value of cross-border communications, and asked for regulators to consider their impacts on freedom of expression. 

“If designed well, new frameworks for regulating harmful content can contribute to the internet’s continued success by articulating clear ways for government, companies, and civil society to share responsibilities and work together,” Facebook wrote in a post that described the proposal in detail. “Designed poorly, these efforts risk unintended consequences that might make people less safe online, stifle expression and slow innovation.

This was addressed at the EU’s possibility of trying to hold internet companies responsible for hate speech and other illegal speech published on its platforms. 

Breton will announce proposals on Wednesday aimed at exploiting the EU’s trove of industrial data and challenging the dominance of Facebook, Google, and Amazon. 

“Facebook cannot push away all the responsibility. Facebook and Mr. Zuckerberg have to answer themselves a question [of] who do they want to be as a company and what values they want to promote,” said EU justice chief Vera Jourova after she met with Mark Zuckerberg to discuss the matter. “It will not be up to governments or regulators to ensure that Facebook wants to be a force of good or bad.”

 

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