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Jason Rowley Contributor

Jason Rowley is a venture capital and technology reporter for Crunchbase News.

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Early-stage SaaS VC slip snaps recovery as public software stocks soar
International growth, primarily in China, fuels the VC market today

Chinese startups rule the roost when it comes to total reported venture dollars raised so far in 2018. That is, mostly. In one key category at least — software-as-a-service, better known as SaaS — they do not.

Ant Financialraised the largest-ever VC round in June,a mind-boggling $14 billion in Series Cfunding. And nearly a dozen privately held Chinese companies, includingSenseTime,Du Xiaoman Financial,JD Finance andELEME, raised $1 billion (yes, with a &b&) or more in single venture rounds thus far in 2018.

But if thereone thing to note from that shortlist of 2018largest China venture rounds, itthis: almost all of them involve consumer apps and services. Despite being one of the largest economies in the world andcurrently holding the top spotin the national venture dollar ranks, China doesn&t seem to have too much in the way of enterprise-focused software funding.

But why trust your gut when the trend is borne out in the numbers In the chart below, we show the top five global markets for SaaS investment (plus the rest of the world). We compare each marketshare of SaaS-earmarked funding against their share of total venture dollars raised in 2018 so far.

The SaaS VC gap: China other markets trail the US

As of mid-October (when we pulled the data for the above chart), Chinese companies accounted for about 39.3 percent of venture funding raised in 2018. Compare that to 38.4 percent for U.S.-based companies, overall. In this respect, the venture markets in the U.S. and China are running neck-and-neck.

Yet for SaaS funding, the China-U.S. gap is about as wide as the Pacific Ocean. The U.S. — top ranked by this measure — accounted for approximately 70.1 percent of known SaaS startup funding. China, by contrast, accounted for just 11.7 percent. No even matchup here. Itnot even close.

This asymmetry goes beyond just aggregate dollar figures. The contrast is starker when we use a slightly more exotic measure for the market.

One of our favorite (if somewhat arbitrary) metrics at Crunchbase News is the count ofsupergiant venture rounds. TheseVC deals weigh in at $100 millionor more, and they&re reshaping both sides of the venture market for founders and funders alike.

Whereas the United States played host toat least 15supergiant SaaS VC rounds so far this year, just four rounds raised by three different Chinese SaaS companies crossed the nine-figure mark:

A $100 million Series E round announced byBeisinon Tuesday.
Automotive industry software makerSoucheraised a staggering$578 million Series F roundin September.
Weimob, a business CRM system built for the WeChat platform, raised$160.3 million in Series D funding, and another$321 million Series E round, all in less than four months.

Keep in mind that, in general, U.S. and Chinese markets arefairly evenin their output of supergiant venture rounds. However, thatnot the case when we look specifically at SaaS rounds, where the counts and dollar volumes involved are so different.

These disparities suggest a structural difference, not just between the U.S. and Chinese markets, but between the U.S. and the rest of the world when it comes to building and backing SaaS businesses.

At this point itunclear, apart from funding metrics, what differentiates the U.S. SaaS market from the rest of the world&s. What conditions exist in this market that don&t exist elsewhere And are those conditions replicable in a local market with a still-nascent SaaS ecosystem These are questions meriting a follow-up. Even though its cause might be unclear, for now, itnonetheless important to mind the gap.

Details: Category: Technology; Published: 28 October 2018

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Facebook founder Mark Zuckerbergvisage loomed large over the European parliamentthis week, both literally and figuratively, as global privacy regulators gathered in Brussels to interrogate the human impacts of technologies that derive their power and persuasiveness from our data.

The eponymous social network has been at the center of a privacy storm this year. And every fresh Facebook content concern — be it about discrimination or hate speech or cultural insensitivity — adds to a damaging flood.

The overarching discussion topic at the privacy and data protection confab, both in the public sessions and behind closed doors, was ethics: How to ensure engineers, technologists and companies operate with a sense of civic duty and build products that serve the good of humanity.

So, in other words, how to ensure peopleinformation is used ethically — not just in compliance with the law. Fundamental rights are increasingly seen by European regulators as a floor not the ceiling. Ethics are needed to fill the gaps where new uses of data keep pushing in.

As the EUdata protection supervisor,Giovanni Buttarelli, told delegates at the start of the public portion of theInternational Conference of Data Protection and Privacy Commissioners: &Not everything that is legally compliant and technically feasible is morally sustainable.&

As if on cue Zuckerberg kicked off a pre-recorded video message to the conference with another apology. Albeit this was only for not being there to give an address in person. Which is not the kind of regret many in the room are now looking for, as freshdata breaches and privacy incursionskeep being stacked on top of Facebook&sCambridge Analytica data misuse scandallike an unpalatable layer cake that never stops being baked.

Evidence of a radical shift of mindset is what champions of civic tech are looking for — from Facebook in particular and adtech in general.

But there was no sign of that in Zuckerbergpotted spiel. Rather he displayed the kind of masterfully slick PR manoeuvering thatassociated withpoliticians on the campaign trail. Itthe natural patter for certain big tech CEOs too, these days, in a sign of our sociotechnical political times.

(See also: Facebook hiring ex-UK deputy PM, Nick Clegg, to further expand its contacts database of European lawmakers.)

Big tech must not reframe digital ethics in its image

And so the Facebook founder seized on the conferencediscussion topic of big data ethics and tried to zoom right back out again. Backing away from talk of tangible harms and damaging platform defaults — aka the actual conversational substance of the conference (from talk of how dating apps are impacting how much sex people have and with whom they&re doing it; to shiny new biometric identity systems that have rebooted discriminatory caste systems) — to push the idea of a need to &strike a balance between speech, security, privacy and safety&.

This was Facebook trying reframe the idea of digital ethics — to make it so very big-picture-y that it could embrace his people-tracking ad-funded business model as a fuzzily wide public good, with a sort of ‘oh go on then& shrug.

&Every day people around the world use our services to speak up for things they believe in. More than 80 million small businesses use our services, supporting millions of jobs and creating a lot of opportunity,& said Zuckerberg, arguing for a ‘both sides& view of digital ethics. &We believe we have an ethical responsibility to support these positive uses too.&

Indeed, he went further, saying Facebook believes it has an ðical obligation to protect good uses of technology&.

And from that self-serving perspective almost anything becomes possible — as if Facebook isarguing that breaking data protection law might really be the ‘ethical& thing to do. (Or, as the existentialists might put it: ‘If god is dead, then everything is permitted&.)

Itan argument that radically elides some very bad things, though. And glosses over problems that aresystemic to Facebookad platform.

A little later, Google CEO Sundar Pichai also dropped into the conference in video form, bringing much the same message.

&The conversation about ethics is important. And we are happy to be a part of it,& he began, before an instant hard pivot into referencing Googlefounding mission of &organizing the worldinformation — for everyone& (emphasis his), before segwaying — via &knowledge is empowering& — to asserting that &a society with more information is better off than one with less&.

Is having access to more information of unknown and dubious or even malicious provenance better than having access to some verified information Google seems to think so.

Big tech must not reframe digital ethics in its image

SAN FRANCISCO, CA & OCTOBER 04: Pichai Sundararajan, known as Sundar Pichai, CEO of Google Inc. speaks during an event to introduce Google Pixel phone and other Google products on October 4, 2016 in San Francisco, California. The Google Pixel is intended to challenge the Apple iPhone in the premium smartphone category. (Photo by Ramin Talaie/Getty Images)

The pre-recorded Pichai didn&thave to concern himself with all the mental ellipses bubbling up in the thoughts of the privacy and rights experts in the room.

&Today that mission still applies to everything we do at Google,& his digital image droned on, without mentioning what Google is thinking of doing in China.&Itclear that technology can be a positive force in our lives. It has the potential to give us back time and extend opportunity to people all over the world.

&But itequally clear that we need to be responsible in how we use technology. We want to make sound choices and build products that benefit society thatwhy earlier this year we worked with our employees to develop a set of AI principles that clearly state what types of technology applications we will pursue.&

Of course it sounds fine. YetPichai made no mention of the staff who&ve actuallyleft Googlebecause of ethical misgivings. Nor the employees still there and still protesting its ‘ethical& choices.

Itnot almost as if the Internetadtech duopoly is singing from the same ‘ads for greater good trumping the bad& hymn sheet; the Internetadtechduopoly is doing exactly that.

The ‘we&re not perfect and have lots more to learn& line that also came from both CEOs seems mostly intended to manage regulatory expectation vis-a-vis data protection — and indeed on the wider ethics front.

They&re not promising to do no harm. Nor to always protect peopledata. They&re literally saying they can&t promise that. Ouch.

Meanwhile, another common FaceGoog message — an intent to introduce ‘more granular user controls& — just means they&re piling even more responsibility onto individuals to proactively check (and keep checking) that their information is not being horribly abused.

This is a burden neither company can speak to in any other fashion. Because the solution is that their platforms not hoard peopledata in the first place.

The other ginormous elephant in the room is big tech&smassive size;which is itself skewing the market and far more besides.

Neither Zuckerberg nor Pichai directly addressed the notion of overly powerful platforms themselves causing structural societal harms, such as by eroding the civically minded institutions that are essential to defend free societies and indeed uphold the rule of law.

Of course itan awkward conversation topic for tech giants if vital institutions and societal norms are being undermined because of your cut-throat profiteering on the unregulated cyber seas.

A great tech fix to avoid answering awkward questions is to send a video message in your CEOstead. And/or a few minions. Facebook VP and chief privacy officer, Erin Egan, and GoogleSVP of global affairs Kent Walker, were duly dispatched and gave speeches in person.

They also had a handful of audience questions put to them by an on stage moderator. So it fell to Walker, not Pichai, to speak to Googlecontradictory involvement in China in light of its foundational claim to be a champion of the free flow of information.

&We absolutely believe in the maximum amount of information available to people around the world,& Walker said on that topic, after being allowed to intone on Googlegoodness for almost half an hour. &We have said that we are exploring the possibility of ways of engaging in China to see if there are ways to follow that mission while complying with laws in China.

&That&san exploratory project — and we are not in a position at this point to have an answer to the question yet. But we continue to work.&

Egan, meanwhile, batted away her trio of audience concerns — about Facebooklack of privacy by design/default; and how the company could ever address ethical concerns without dramatically changing its business model — by saying it has a new privacy and data use team sitting horizontally across the business, as well as a data protection officer (an oversight role mandated by the EUGDPR; into which Facebookplugged itsformer global deputy chief privacy officer, Stephen Deadman, earlier this year).

She also said the company continues to invest in AI for content moderation purposes.So, essentially, more trust us. And trust our tech.

She also replied in the affirmative when asked whether Facebook will &unequivocally& support a strong federal privacy law in the US — with protections &equivalent& to those in Europedata protection framework.

But of course Zuckerberg has said much the same thing before— while simultaneouslyadvocating for weaker privacy standards domestically. So who now really wants to take Facebook atits word on that Or indeed on anything of human substance.

Not the EU parliament, for one. MEPs sitting in the parliamentother building, in Strasbourg, this week adopted a resolutioncalling for Facebook to agree to an external audit by regional oversight bodies.

But of course Facebook prefers to run its own audit. And in a response statement the company claims it&working relentlessly to ensure the transparency, safety and security& of people who use its service (so bad luck if you&re one of those non-users it also tracksthen). Which is a very long-winded way of saying ‘no, we&re not going to voluntarily let the inspectors in&.

Facebookproblem now is that trust, once burnt, takes years and mountains& worth of effort to restore.

This is the flip side of ‘move fast and break things&. (Indeed, one of the conference panels was entitled ‘move fast and fix things&.) Italso the hard-to-shift legacy of an unapologetically blind ~decade-long dash for growth regardless of societal cost.

Given the, it looks unlikely that Zuckerbergattempt to paint a portrait of digital ethics in his companyimage will do much to restore trust in Facebook.

Not so long as the platform retains the power to cause damage at scale.

It was left to everyone else at the conference to discuss the hollowing out of democratic institutions, societal norms, humans interactions and so on — as a consequence of data (and market capital) being concentrated in the hands of the ridiculously powerful few.

&Today we face the gravest threat to our democracy, to our individual liberty in Europe since the war and the United States perhaps since the civil war,& said Barry Lynn, a former journalist and senior fellow at the Google-backedNew America Foundationthink tank in Washington, D.C., where he had directed the Open Markets Program — until it was shut down after he wrote critically about, er, Google.

&This threat is the consolidation of power — mainly by Google, Facebook and Amazon — over how we speak to one another, over how we do business with one another.&

Meanwhile the original architect of the World Wide Web, Tim Berners-Lee, who has been warning about the crushing impact of platform power for years now is working on trying to decentralize the netdata hoardersvia new technologies intended to give users greater agency over their data.

On the democratic damage front, Lynn pointed to how news media is being hobbled by an adtech duopoly now sucking hundreds of billion of ad dollars out of the market annually — by renting out what he dubbed their &manipulation machines&.

Not only do they sell access to these ad targeting tools to mainstream advertisers — to sell the usual products, like soap and diapers — they&re also, he pointed out, taking dollars from &autocrats and would be autocrats and other social disruptors to spread propaganda and fake news to a variety of ends, none of them good&.

The platforms& unhealthy market power is the result of a theft of peopleattention, argued Lynn. &We cannot have democracy if we don&t have a free and robustly funded press,& he warned.

His solution to the society-deforming might of platform power Not a newfangled decentralization tech but something much older: Market restructuring via competition law.

&The basic problem is how we structure or how we have failed to structure markets in the last generation. How we have licensed or failed to license monopoly corporations to behave.

&In this case what we see here is this great mass of data. The problem is the combination of this great mass of data with monopoly power in the form of control over essential pathways to the market combined with a license to discriminate in the pricing and terms of service. That is the problem.&

&The result is to centralize,& he continued. &To pick and choose winners and losers. In other words the power to reward those who heed the will of the master, and to punish those who defy or question the master — in the hands of Google, Facebook and Amazon… That is destroying the rule of law in our society and is replacing rule of law with rule by power.&

For an example of an entity thatcurrently being punished by Facebookgrip on the social digital sphere you need look no further than Snapchat.

Also on the stage in person:AppleCEO Tim Cook, who didn&t mince his wordseither — attacking what he dubbed a &data industrial complex& which he said is &weaponizing& peopleperson data against them for private profit.

The adtech modeus operandi sums to &surveillance&, Cook asserted.

Big tech must not reframe digital ethics in its image

Cook called this a &crisis&, painting a picture of technologies being applied in an ethics-free vacuum to &magnify our worst human tendencies… deepen divisions, incite violence and even undermine our shared sense of what is true and what is false& — by &taking advantage of user trust&.

&This crisis is real… And those of us who believe in technologypotential for good must not shrink from this moment,& he warned, telling the assembled regulators that Apple is aligned with their civic mission.

Of course Cookposition also aligns with Applehardware-dominated business model — in which the company makes most of its money by selling premium priced, robustly encrypted devices, rather than monopolizing peopleattention to sell their eyeballs to advertisers.

The growing public and political alarm over how big data platforms stoke addiction and exploit peopletrust and information — and the idea that an overarching framework of not just laws but digital ethics might be needed to control this stuff — dovetails neatly with the alternative track that Apple has been pounding for years.

So for Cupertino iteasy to argue that the ‘collect it all& approach of data-hungry platforms is both lazy thinking and irresponsible engineering, as Cook did this week.

&For artificial intelligence to be truly smart it must respect human values — including privacy,& he said. &If we get this wrong, the dangers are profound. We can achieve both great artificial intelligence and great privacy standards. It is not only a possibility — it is a responsibility.&

Yet Apple is not only a hardware business. In recent years the company has been expanding and growing its services business. It even involves itself in (a degree of) digital advertising. And it does business in China.

It is, after all, still a for-profit business — not a human rights regulator. So we shouldn&t be looking to Apple to spec out a digital ethical framework for us, either.

No profit making entity should be used as the model for where the ethical line should lie.

Apple sets a far higher standard than other tech giants, certainly, even as its grip on the market is far more partial because it doesn&t give its stuff away for free. But ithardly perfect where privacy is concerned.

One inconvenient example for Apple is that it takes money from Google to make the companysearch engine the default for iOS users — even as it offers iOS users a choice of alternatives (if they go looking to switch) which includes pro-privacy search engine DuckDuckGo.

DDG is a veritable minnow vs Google, and Apple builds products for the consumer mainstream, so it is supporting privacy by putting a niche search engine alongside a behemoth like Google — as one of just four choices it offers.

But defaults are hugely powerful. So Google search being the iOS default means most of Applemobile users will have their queries fed straight into Googlesurveillance database, even as Apple works hard to keep its own servers clear of user data by not collecting their stuff in the first place.

There is a contradiction there. Sothere is a risk for Apple in amping up its rhetoric against a &data industrial complex& — and making its naturally pro-privacy preference sound like a conviction principle — because it invites people to dial up critical lenses and point out where its defence of personal data against manipulation and exploitation does not live up to its own rhetoric.

One thing is clear: In the current data-based ecosystem all players are conflicted and compromised.

Though only a handful of tech giants have built unchallengeably massive tracking empires via the systematic exploitation of other peopledata.

And as the apparatus of their power gets exposed, theseattention-hogging adtech giants are making a dumb show of papering over the myriad ways their platforms pound on people and societies — offering paper-thin promises to ‘do better next time — when ‘better& is not even close to being enough.

Call for collective action

Increasingly powerful data-mining technologies must be sensitive to human rights and human impacts, that much is crystal clear. Nor is it enough to be reactive to problems after or even at the moment they arise. No engineer or system designer should feel ittheir job to manipulate and trick their fellow humans.

Dark pattern designs should be repurposed into a guidebook of what not to do and how not to transact online. (If you want a mission statement for thinking about this it really is simple: Just don&t be a dick.)

Sociotechnical Internet technologies must always be designed with people and societies in mind — a key point that was hammered home in a keynote by Berners-Lee, the inventor of the World Wide Web, and the tech guy now trying to defang the Internetoccupying corporate forcesvia decentralization.

&As we&re designing the system, we&re designing society,& he told the conference. &Ethical rules that we choose to put in that design [impact society]… Nothing is self evident. Everything has to be put out there as something that we think we will be a good idea as a component of our society.&

The penny looks to be dropping for privacy watchdogs in Europe. The idea that assessing fairness — not just legal compliance — must be a key component of their thinking, going forward, and so the direction of regulatory travel.

Watchdogs like the UKICO — which just fined Facebook the maximum possible penalty for the Cambridge Analytica scandal — said so this week. &You have to do your homework as a company to think about fairness,& said Elizabeth Denham, when asked ‘who decides whatfair& in a data ethics context. &At the end of the day if you are working, providing services in Europe then the regulatorgoing to have something to say about fairness — which we have in some cases.&

&Right now, we&re working with some Oxford academics on transparency and algorithmic decision making. We&re also working on our own tool as a regulator on how we are going to audit algorithms,& she added. &I think in Europe we&re leading the way — and I realize thatnot the legal requirement in the rest of the world but I believe that more and more companies are going to look to the high standard that is now in place with the GDPR.

&The answer to the question is ‘is this fair& It may be legal — but is this fair&

So the short version is data controllers need to prepare themselves to consult widely — and examine their consciences closely.

Rising automation and AI makes ethical design choices even more imperative, as technologies become increasingly complex and intertwined, thanks to the massive amounts of data being captured, processed and used to model all sorts of human facets and functions.

The closed session of the conference produced a declaration on ethics and data in artificial intelligence — setting out a list of guiding principles to act as &core values to preserve human rights& in the developing AI era — which included concepts like fairness and responsible design.

Few would argue that a powerful AI-based technology such as facial recognition isn&t inherently in tension with a fundamental human right like privacy.

Nor that such powerful technologies aren&t at huge risk of being misused and abused to discriminate and/or suppress rights at vast and terrifying scale. (See, for example, Chinapush to install a social credit system.)

Biometric ID systems might start out with claims of the very best intentions — only to shift function and impact later. The dangers to human rights of function creep on this front are very real indeed. And are already being felt in places like India — where the countryAadhaar biometric ID system has been accused of rebooting ancient prejudices by promoting a digital caste system, as the conference also heard.

The consensus from the event is itnot only possible but vital to engineer ethics into system design from the start whenever you&re doing things with other peopledata. And that routes to market must be found that don&t require dispensing with a moral compass to get there.

The notion of data-processing platforms becoming information fiduciaries — i.e. having a legal duty of care towards their users, as a doctor or lawyer does — was floated several times during public discussions. Though such a step would likely require more legislation, not just adequately rigorous self examination.

In the meanwhile civic society must get to grips, and grapple proactively, with technologies like AI so that people and societies can come to collective agreement about a digital ethics framework. This is vital work to defend the things that matter to communities so that the anthropogenic platforms Berners-Lee referenced are shaped by collective human values, not the other way around.

Italso essential that public debate about digital ethics does not get hijacked by corporate self interest.

Tech giants are not only inherently conflicted on the topic but — right across the board — they lack the internal diversityto offer a broad enough perspective.

People and civic society must teach them.

A vital closing contribution came from the French data watchdogIsabelle Falque-Pierrotin, who summed up discussions that had taken place behind closed doors as the community of global data protection commissioners met to plot next steps.

She explained that members had adopted a roadmap for the future of the conference to evolve beyond a mere talking shop and take on a more visible, open governance structure — to allow it to be a vehicle for collective, international decision-making on ethical standards, and so alight on and adopt common positions and principles that can push tech in a human direction.

The initial declaration document on ethics and AI is intended to be just the start, she said — warning that &if we can&t act we will not be able to collectively control our future&, and couching ethics as &no longer an option, it is an obligation&.

She also said itessential that regulators get with the program and enforce current privacy laws — to &pave the way towards a digital ethics& — echoing calls from many speakers at the event for regulators to get on with the job of enforcement.

This is vital work to defend values and rights against the overreach of the digital here and now.

&Without ethics, without an adequate enforcement of our values and rules our societal models are at risk,& Falque-Pierrotin also warned. &We must act… because if we fail, there won&t be any winners. Not the people, nor the companies. And certainly not human rights and democracy.&

If the conference had one short sharp message it was this: Society must wake up to technology — and fast.

&We&ve got a lot of work to do, and a lot of discussion — across the boundaries of individuals, companies and governments,& agreedBerners-Lee.&But very important work.

&We have to get commitments from companies to make their platforms constructive and we have to get commitments from governments to look at whenever they see that a new technology allows people to be taken advantage of, allows a new form of crime to get onto it by producing new forms of the law. And to make sure that the policies that they do are thought about in respect to every new technology as they come out.&

This work is also an opportunity for civic society to define and reaffirm whatimportant. So itnot only about mitigating risks.

But, equally, not doing the job is unthinkable — because thereno putting the AI genii back in the bottle.

Details: Category: Technology; Published: 28 October 2018

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Justine and Olivia Moore like to introduce themselves together, otherwise, it can be a little confusing.

They live together in an apartment in Menlo Park. They share clothes. They both wear Rothysustainable ballet flats and are big fans of Glossier. Their desks are only inches apart, because yes, they work together too — and because they share a space heater.

The 24-year-old identical twins are venture investors at CRV, a Palo Alto-based venture capital firm they joined a little over a year ago. They call themselves The Venture Twins and they may just be the nearly 50-year-old firmsecret weapon.

CRV hired Justine and Olivia to work under Saar Gur, a general partner responsible for leading deals in Bird, DoorDash, Patreon, Dropbox and ClassPass, in 2017. He was looking to expand CRVconsumer team when he found Justine, a recent Stanford economics graduate who was finishing a year-long stint at Goldman Sachs.

It wasn&t long before Justinereferences were urging Saar to hire her twin sister, too. &They are such a good team;& &You should hire both of them;& &They work great together,& they&d tell him.

The Portland natives have an impressive resume. At Stanford, they launched Cardinal Ventures, a first-of-its-kind on-campus startup incubator. Plus, one might say they were bred for venture capital.Their mother, Darcy Moore, was also a VC. Sheretired when they were just five years old, but the pair remember walking into pitch meetings and observing demo days before starting kindergarten.

&The cool thing to say is ‘oh, I never wanted to be in venture; I stumbled into it,& but we have always wanted to be in venture,& Justine told TechCrunch.

Breaking in

Despite long-held ambitions to become venture capitalists, Justine and Olivia enrolled at Stanford in 2012 to study journalism. After some time on The Stanford Daily covering the entrepreneurship beat, they realized journalism wasn&t going to quench their thirst for innovation.

Their junior year, they created Cardinal Ventures. The program gives two cohorts of 12 to 20 startups per year $5,000 in non-dilutive capital and supports them with 10 weeks of mentorship and programming. For the twins, Cardinal granted them access to some of Silicon Valleybest investors.

Justine (left) and her twin sister Olivia areventure investors at CRV.

By their senior year, they were fielding internship offers from those top-notch VCs. Olivia accepted an internship at First Round Capital, while Justine went to work at Cowboy Ventures. After graduation, they both went to work as analysts at Goldman.

After one year on the public equities team for Olivia and the private equities team for Justine, the twins were ready to transition into venture for good. They had met with CRVpartners during their Cardinal Ventures days and felt the opportunity to work with Gur on consumer tech investing was something they couldn&t pass up. That, and the firm was willing to give them the freedom they needed to build their personal brand.

Building a brand

In addition to their Twitter account,@VentureTwins, and a very active Medium page, Justine and Olivia have a weekly newsletter called Accelerated thatracked up some 5,200 subscribers since it launched one year ago.

The newsletter is written for college students. It provides the weekbiggest news in tech, notable internship and job openings, recommended reads and surveys on industry topics and trends for readers to complete.

The Venture Twins

&We are from Oregon and we weren&t engineering majors, so I think the problem we had and part of the reason we went to Goldman was because itreally hard if you aren&t from here to understand how it works,& Justine said. &Our full-time job is keeping up to date on Silicon Valley, what the hot trends are, whohiring, so we decided, why don&t we spend a couple of hours a week creating a newsletter that is the resource we wish we had when we were in college.&

Accelerated has a team of 120 campus ambassadors who Justine and Olivia can text at any time to ask about various topics. &Do you like this company& &Have you ever heard of this product& Things like that. So far, the Accelerated network has helped the twins source five potential deals, two of which became CRV portfolio companies. ThatHarper Wilde, a direct-to-consumer bra retailer,and Uppercase, which helps D2C companies open brick-and-mortar stores.

Some takeaways from our recent campus ambassador survey: Twitter is most abandoned social app, while IG usage has spiked 11% watch ASMR videos 50% have more than one IG account 20% use CBD products, and 54% would try a CBD product from a major brand (e.g. Coke)

— Justine - Olivia (@venturetwins) October 12, 2018

&I think we really underestimated what it would be,& Olivia said. &But being in someoneinbox every week is this really fun and cool connection.&

CRV isn&t known for its D2C investments; in fact, Harper Wilde was its first ever. With their instincts, youth and network, the twins have quickly proved their value to the firm.

Better together

At this point, you&re probably wondering how two 24-year-old siblings can live and work together and not want to kill each other.And it may sound too cutesy and convenient, but they think they&rebetter together.

&Honestly, we&ve gotten closer over time,& Olivia said. &Going to Stanford together and as we&ve moved into the professional world, we&ve found we are able to communicate really effectively as a team and get things done because there is less worry about stepping on toes or hurting someone elsefeelings.&

The twins plan to stick together, though itnot necessarily a requirement.For now, they&ll be keeping their residence in Menlo Park, where they have the space to dog-sit former 23andMe president Andy PageBernedoodle.

In 20 years, who knows, maybe Justine and Olivia will be known as some of the greatest consumer VCs the industry has ever seen. They are smart, refreshingly modest and they seem to know their stuff.

&We&d love to be doing this in the long term if we&re good at it,& Justine said.

Olivia agreed.

Details: Category: Technology; Published: 28 October 2018

A long and lonely road

Snapbig hope is to show a business turnaround story like Twitter, which saw its stock jump 14 percent this week despite losing monthly active users by deepening daily user engagement and producing profits. But without some change that massively increases daily time spent while reducing costs, it could take years for Snap to reach profitability. The company has already laid off 120 employees in March, or 7 percent of its workforce. And 40 percent of the remaining 3,000 employees plan to leave — up 11 percentage points from Q1 2018 according to internal survey data attained by CheddarAlex Heath.

Should cash-strapped Snapchat sell out To Netflix

Snapchat is relying on the Project Mushroom engineering overhaul of its Android app to speed up performance, and thereby accelerate user growth and retention. Snap neglected the developing worldAndroid market for years as it focused on iPhone-toting US teens. Given Snapchat is all about quick videos, slow load times made it nearly unusable, especially in markets with slower network connections and older phones.

Looking at the competitive landscape, WhatsAppSnapchat Stories clone Status has grown to 450 million daily users while Instagram Stories has reached 400 million dailies — much of that coming in the developing world, thereby blocking Snapgrowth abroad as I predicted when Insta Stories launched. Snap actually lost 3 million daily users in Q2 2018. Snap Map hasn&t become ubiquitous, SnapOriginal Shows still aren&t premium enough to drag in tons of new users, Discover is a clickbait-overloaded mess, and Instagram has already copied the best parts of its ephemeral messaging.

Should cash-strapped Snapchat sell out To Netflix

SAN FRANCISCO, CA & SEPTEMBER 09: Evan Spiegel of Snapchat attends TechCruch Disrupt SF 2013 at San Francisco Design Center on September 9, 2013 in San Francisco, California. (Photo by Steve Jennings/Getty Images for TechCrunch)

As BTIGRich Greenfield points out, CEO Evan Spiegel claims Snapchat is the fastest way to communicate, but itnot for text messaging, and the default that chats disappear makes it unreliable of utilitarian chat. And if WhatsApp were to add an ephemeral messaging feature of its own, growth for Snapchat could get even tougher. Snap will have to hope it can hold on to its existing users and squeeze more cash out of them to keep reducing losses.

All those product missteps and market neglect have metastasized into a serious growth problem for Snapchat. It lost another 2 million users this quarter, and expects to sink further in Q4. Even with the Android rebuild, Spiegelassurances for renewed user growth in 2019 seem spurious. That means ithighly unlikely that Snapchat will achieve Speigelgoal of hitting profitability in 2019. Snap did successfully reduce the rate of its free cash flow burn from a loss of $234 million in Q2 2018 to a loss of $159 million in Q3, adding to analyst MoffettNathansonprojections for its run. But unless Snap bounces back, it will stillneed either an investor or acquirer to come to its aid by 2020.

Snapchat loses 2M more users in Q3 as shares sink to new low

A bailout check

Snap could sell more equity to raise money. $500 million to $1 billion would probably give it the runway necessary to get into the black. But from where With all the scrutiny on Saudi Arabia, Snap might avoid taking money from the kingdom. Saudi&sPrince Al-Waleed Talal already invested $250 million to buy 2.5 percent of Snap on the open market.

Snapbest bet might be to take more money from Chinese internet giant Tencent. The massive corporation already spent around $2 billion to buy a 12 percent stake in Snap from the open market. The WeChat owner has plenty of synergies with Snapchat, especially since it runs a massive gaming business and Snap is planning to launch a third-party developer gaming platform.

Should cash-strapped Snapchat sell out To Netflix

Tencent could still be a potential acquirer for Snap, but given President Trumptrade war with China, he might push regulators to block a sale. The state of American social networks like Twitter and Facebook that are under siege by foreign election interference, trolls, and hackers might make the US government understandably concerned about a Chinese giant owning one of the top teen apps. The same goes for fellow Chinese giants like Alibaba, or Musically/TikTok owner ByteDance.

For Snap, the dream would be getting a minority stake investment from one of these that doesn&t come with voting rights. But regardless of who would invest, they&d be wise to demand a say in the business — something Snap has denied investors through a governance structure. Spiegel and his co-founder Bobby Murphy both get 10 votes per share. Thatestimated to amount to 89 percent of the voting rights. Shares issued in the IPO came with zero voting rights.

Snap could tap its credit facility from its IPO underwriters, with terms established back when it had much more momentum. Trying to raise new debt with the user base shrinking would likely come with onerous terms.

Evan Spiegel and Bobby Murphy, developers of Snapchat (Photo by J. Emilio Flores/Corbis via Getty Images)

But that surely wouldn&t sit well with any investor willing to pour hundreds of millions of dollars into the beleaguered company. Spiegel has taken responsibility for pushing the disastrous redesign early this year that coincided with a significant drop in its download rank. It also inspired a tweet from mega-celebrity Kylie Jenner bashing the app that shaved $1.3 billion off the companymarket cap.

Between the redesign flop, stagnant product innovation, and Spiegel laughing off Facebookcompetition only to be crushed by it, the CEO no longer has the sterling reputation that allowed him to secure total voting control for the co-founders. That means investors will want assurance that if they inject a ton of cash, they&ll have some recourse if Spiegel mismanages it. He may need to swallow his pride, issue voting shares, and commit to milestones herequired to hit to retain his role as chief executive.

A Soft Landing Somewhere Else

Snap could alternatively surrender as an independent company and be acquired by a deep-pocketed tech giant. Without having to worry about finances or short-term goals, Snap could invest in improving its features and app performance for the long-term. Social networks are tough to kill entirely, so despite competition, Snap could become lucrative if aided through this rough spot.

Should cash-strapped Snapchat sell out To Netflix Again, the biggest barrier to this path is Spiegel.Combine totalitarian voting control with the $637 million bonus Spiegel got for taking Snap public, and he has little financial incentive or shareholder pressure compelling him to sell. Even if the company was bleeding out much worse than it is already, Spiegel could ride it into the ground.The only way to get a deal done might be to make Spiegel perceive it as a win.

Selling to Disney could be spun as a such. It hasn&t really figured out mobile amidst distraction from super heroes and Star Wars. Its core tween audience are addicted to YouTube and Snap even if they shouldn&t be on them. They&re both LA companies. And Disney already ponied up $350 million to buy kids desktop social networking game Club Penguin. Becoming head of mobile or something like that for the most iconic entertainment company ever could a vaulted-enough position to entice Spiegel. I could see him being a Disney CEO candidate one day.

What about walking in the footsteps of Steve Jobs Apple isn&t social. It failed so badly with efforts like its Ping music listeners network that itbasically abdicated the whole market. iMessage and its cutesy Animoji are its only stakes. Meanwhile, itgetting tougher and tougher to differentiate with mobile hardware. Each new iPhone seems closer to the last. Apple has resorted to questionable decisions like ditching the oft-missed headphone jack and reliable TouchID to keep the industrial design in flux.

Should cash-strapped Snapchat sell out To Netflix Increasingly, Apple must rely on its iOS software to compete for customers with Android headsets. But you know whogreat at making interesting software Snapchat. You know who has a great relationship with the next generation of phone owners Snapchat. And do you know whose CEO could probably smile earnestly beside Tim Cook announcing a brighter future for social media unlocked by two privacy-focused companies joining forces Snapchat. Plus, think of all the fun Snapple jokes

Amazon could swoop in to turn Snapchat into a product discovery and demand generation hub. Amazon already rules in ecommerce when you know what you want, but doesn&t have a strong destination property that inspires people to lust for new purchases. Amazon already partnered with Snapchat to power product results for its new visual search feature. Spiegel could view becoming part of the worldmost valuable company as a success even if he&d prefer Snap stay independent. And Amazonacquisition of Twitch shows itnot afraid to assimilate large consumer software businesses.

Therea chance to take revenge on Facebook if Snapchat wanted to team up with Mark Zuckerbergold arch nemesis Google . After Zuck declared &Carthage must be destroyed&, Google+ flopped and its messaging apps became a fragmented mess. Alphabet has since leaned away from social networking. Of course it still has the juggernaut that is YouTube — a perennial teen favorite alongside Snapchat and Instagram. And itgot the perfect complement to Snapephemerality in the form of Google Photos, the best-in-class permanent photo archiving tool. With the consume side of Google+ shutting down after accidentally exposing user data, Google still lacks a traditional social network where being a friend comes before being a fan.

What Google does have is a reputation for delivering the future. From Waymoself-driving cars to Calicoplan to make you live forever, Google is an inventive place where big ideas come to fruition. Spiegel could frame Google as aligned with its philosophy of creating new ways to organize and consume information that adapt to human behavior. He surely wouldn&t mind being lumped in with Internet visionaries like Larry Page and Sergei Brin. GoogleAndroid expertise could reinvigorate Snap in emerging markets. And together they could take a stronger swing at Facebook.

But there are problems with all of these options. Buying Snap would be a massive bet for Disney, and Snaplingering bad rap as a sexting app might dissuade Mickey Mouseoverlords. Apple rarely buys such late-stage public companies. CEO Tim Cook has been able to take the moral high ground because Apple makes its money from hardware rather than off of personal info through ad targeting. If Apple owned Snap, it&d be in the data exploitation business just like everyone else.

And Googleexisting dominance in software might draw the attention of regulators.The prevailing sentiment is that it was a massive mistake to let Facebook acquire Instagram and WhatsApp, as it centralized power and created a social empire. With Google already owning YouTube, the government might see problems with it buying one of the other most popular teen apps. While Amazon also owns a top teen app in Twitch, and its status as the worldmost valuable company might also trigger regulatory scrutiny.

Should cash-strapped Snapchat sell out To Netflix

Thatwhy I think Netflix could be a great acquirer for Snap. They&re both video entertainment companies at the vanguard of cultural relevance, yet have no overlap in products. Netflix already showed its appreciation for Snapchatinnovation by adopting a Stories-like vertical video clip format for discovering and previewing what you could watch. The two could partner to promote Netflix Originals and subscriptions inside of Snapchat. Netflix could teach Snap how to win at exclusive content while gaining a place to distribute video thatunder 20 minutes long.

With a $130 billion market cap, Netflix could certainly afford it. Though since Netflix already has $6 billion in debt from financing Originals, it would have to either sell more debt or issue Netflix shares to Snapchatowners. But given Netflixhigh-flying performance, massive market share, and cultural primacy, the big question is whether Snap would drag it down.

Should cash-strapped Snapchat sell out To Netflix

So how much would it potentially cost Snapmarket cap is hovering around $8.8 billion with a $6.28 share price. Thataround its all-time low and just over a quarter of its IPO pop share price high. Acquiring Snap would surely require paying a premium above the market cap. Remember, Google already reportedly offered to acquire Snap for $30 billionprior to its final funding round and IPO. But that was before Snapgrowth rate sunk and it started losing the Stories War to Facebook. A much smaller offer could look a lot prettier now.

Social networks are hard to kill. Snapchat deserves to live on somehow, having invented formats that dominate social tech today, even if it doesn&t own all the products benefiting from them. If Snap can cut costs,fix its product, improve revenue per users, and score some outside investment, it could survive and slowly climb. If Twitter is any indication, aging social networks can reflower into lucrative businesses given enough time and product care. But if Snapchat wants to play in the big leagues and continue having a major influence on the mobile future, it may have to snap out of the idea that it can win on its own.

Snapchat loses 2M more users in Q3 as shares sink to new low

[Update: Thoughts about Amazon and ByteDance added, plus revised projections from MoffettNathanson stating Snap would not run out of cash until 2020.]

Details: Category: Technology; Published: 28 October 2018

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From humble beginnings as a simple Facebook group I posted in September 2015, Techfugees has come a long way. It was conceived as a vehicle to enthuse technologists about the plight of refugees by waking them up to the idea that their innovation, startup mentality and design-led thinking could potentially bring new, scalable new solutions to the plight of displaced people. Today, Techfugees is an international non-profit with its own CEO, Joséphine Goube and a team based between London and Paris. Not bad for a handful of posts on social media…

Whatfascinating about the project as itdeveloped is that, at the time, it was considered quite radical, perhaps even odd, to bring tech people into the equation. But simply watching the footage of refugees clutching smartphones as they fled war-torn regions and natural disasters made the tech world realize it can be part of the solution to many of the seemingly intractable problems refugees face.

Techfugees has grown into a community of around 18,000 innovators all over the world, supporting by way of their own projects or companies, via social media and taking part in hundreds of dedicated events around the world. This includes more than 30 hackathons and an annual Global Summit, the second of which happened over the last two days in Paris. The Summit had over 500 participants, such as social entrepreneurs, engineers, designers, humanitarians, policymakers, researchers or impact investors, a large number of whom who have a refugee background. Speakers discussed and debate the different uses of technology for displaced people during the time of migration until arrival to their new host societies.

The impact of climate change will cause the migration of 143 million people by 2050

This yearprogram looked at four main topics: Access to Rights and Information; Data Ethics; Social Inclusion; and Climate Migration. The last issue is now of even greater urgency in 2018. According to a study by the World Bank published earlier this year, the impact of climate change will cause the migration of 143 million people by 2050, bringing with it looming humanitarian challenges.

Just like at your typical tech startup conference, Techfugees has a similar programme: The Techfugees Global Challenges Competition. This showcases projects responding to the needs of displaced populations and building technological products or services for them, based on Techfugees& 8 guiding principles and addressing one of Techfugees& five focus area: access to rights and information, health, education, employment and social inclusion. The applications went through an international Jury of experts who selected the 25 finalists from hundreds of applications, from 52 countries across the world, which pitched their project in front of an international Jury and Summit attendees.

The 5 winners (described in their own words) were: