Category: Tech news

The sequel to the 10-year-old horror classic is a psychological journey to hell and back.

Plus: Facebook’s attempt at a search engine, China’s handling of Covid-19, and a slippery situation for the president.

From the Mini to the Pro, here are the differences among Apple’s latest models, and where you can score the best deals.

This week, we examine the possible implications of the US government’s complaint against Google, and how it could impact consumer technology.

A secret experiment in 2007 proved that hackers could devastate power grid equipment beyond repair—with a file no bigger than a gif.

“Permission to jump in an X-wing and blow something up?” “Permission granted.”

A report finds 50,000 cases where law enforcement agencies turned to outside firms to bypass the encryption on a mobile device.

“I have to choose my words carefully,” says Joe Castelino of Stevens Creek Volkswagen in San Jose, California, when asked about the management software on which most car dealerships rely for inventory information, marketing, customer relationships and more.

Castelino, the dealership’s service director, laughs as he says this. But the joke has apparently been on car dealers, most of whom have largely relied on a few frustratingly antiquated vendors for their dealer management systems over the years — along with many more sophisticated point solutions.

It’s the precise opportunity that former Tesla CIO, Jay Vijayan, concluded he was well-positioned to address while still in the employ of the electric vehicle giant.

As Vijayan tells it, he knew nothing about cars until joining Tesla in 2011, following a dozen years of working in product development at Oracle, then VMware. Yet he learned plenty over the subsequent four years. Specifically, he says he helped to build with Elon Musk a central analysis system inside Tesla, a kind of brain that could see all of the company’s internal systems, from what was happening in the supply chain to its factory systems to its retail platform.

Tesla had to build it itself, says Vijayan; after evaluating the existing software of third-company providers, the team “realized that none of them had anything close to what we needed to provide a frictionless modern consumer experience.”

It was around that time that a lightbulb turned on. If Tesla could transform the experience for its own customers, maybe Vijayan could transform the buying and selling experience for the much bigger, broader automotive industry. Enter Tekion, a now four-year-old, San Carlos, California company that already employs 470 people locally and in Bangalore and has come far enough along that just attracted $150 million in fresh funding led by the private equity investor Advent International.

With the Series C round — which also included checks from Index Ventures, Airbus Ventures, FM Capital and Exor, the holding company of Fiat-Chrysler and Ferrari — the company has now raised $185 million altogether. It’s also valued at north of $1 billion. (The automakers General Motors, BMW and the Nissan-Renault-Mitsubishi Alliance are also investors.)

Eric Wei, a managing director at Advent, says that over the last decade, his team had been eager to seize on what’s approaching a $10 billion market annually. Instead, they found themselves tracking incumbents Reynolds & Reynolds, CDKGlobal and Cox Automotive’s Dealertrack — and waiting for a better player to emerge.

Then Wei was connected to Tekion through Jon McNeill, a former Tesla president and an advisory partner to Advent.

Says Wei of seeing how Tekion’s tech compared with its more established rivals: “It was like comparing a flip phone to an iPhone.”

Unsurprisingly, McNeill, who worked at Tesla with Vijayan, also sings the company’s praises, noting that Tekion even bought a dealership in Gilroy, Calif., to use as a kind of lab while it was building its technology from scratch.

It’s nice, such praise, but more important is that Tekion is also attracting the attention of dealers. Though citing competitive reasons, Vijayan declines to share how many customers have bought its cloud software — which connects dealers with both manufacturers and car buyers and is powered by machine learning algorithms — he says it’s already being used across 28 states.

One of these dealerships is the national chain Serra Automotive, whose founder, Joseph Serra, is now an investor in Tekion.

Another is that Volkswagen dealership in San Jose, where Castelino — who doesn’t have a financial interest in Tekion — speaks enthusiastically about the time and expenses his team is saving because of Tekion’s platform.

For example, he says customers need only log-in now to flag a particular issue. After that, with the help of an RFID tag, Stevens Creek knows exactly when that customer pulls into the dealership and what kind of help they need, making their arrival far more seamless.

Tekion can also make recommendations based on a car’s history. It might, for instance, suggest a brake fluid flush to a customer without an advisor having to look through that customer’s history, Castelino says.

As crucially, he says, the dealership has been able to cut ties with a lot of other software vendors, while also making more productive use of its time. Says Castelino, “As soon as a [repair order] is live, it’s in a dispatcher’s hand and a technician can grab the car.” It’s like that with every step, he insists. “You’re saving 15 minutes again and again, and suddenly, you have three hours where your intake can be higher.”

With converts like Castelino, it’s easy to image Tekion making serious strides in market share. And yet it does have rivals, some of which have long contracts in place with their customers.

Even steeper competition, should it come, might eventually be from Tesla itself.

In a Tesla earnings call earlier today, Musk told analysts that there are essentially a dozen startups housed inside of Tesla, including one centered on vehicle service. It’s the very business that Vijayan helped to create.

As for whether Musk might spin out any of these, he said Tesla currently has no plans to do so. He suggested it has enough on its plate for the time being. If Tekion takes off, however, that could well change.

Today during a call with investors and journalists, Tesla CEO Elon Musk was asked to expand a tweet from yesterday. In it, he stated: “Tesla should really be thought of as roughly a dozen technology startups, many of which have little to no correlation with traditional automotive companies.”

In short, he explained there are over a dozen startups in Tesla, and he views every product line and plant as a startup. It’s an interesting point of view from the top of Tesla, a car manufacturing company that also builds batteries, home solar panels and, among other things, is looking to offer car insurance, too.

Outside of vehicle manufacturing, Musk points to insurance when asked about the growth potential. He says the insurance business could grow into 30-40% of Tesla’s car business.

This strategy seemingly works well for Tesla, which constantly rolls out updates to existing products at an unusual pace. New features arrive without much warning, and it makes sense when Tesla is treating different vehicle component divisions as a collection of companies instead of a collection of divisions.

According to Musk, some of the so-called startups include autonomy, chip design, vehicle service, sales, designing a drive unit, motors, supercharger network and, soon, insurance.

“The thing people don’t understand about Tesla is [the company] is a whole chain of startups,” Musk said. “And then people say, ‘well, you didn’t do that before.’ Yeah, well, we’re doing it now. I think we may have been a bit slower than other startups, but I don’t think we’ve really had anything fail.”

He concluded there are no plans to spin out any business, noting there’s no need to add complexity.

The end is in sight for Quibi, PayPal adds cryptocurrency support and Netflix tests a new promotional strategy. This is your Daily Crunch for October 21, 2020.

The big story: Quibi is shutting down

The much-hyped streaming video app led by Jeffrey Katzenberg and Meg Whitman, which raised nearly $2 billion in funding, is shutting down, according to reports in The Information and The Wall Street Journal.

Katzenberg, a longtime Hollywood executive, had blamed the coronavirus pandemic for a lackluster launch in May — an app designed for on-the-go viewing didn’t have much appeal when people were largely stuck at home. And whatever the reason, none of Quibi’s shows ever became a breakout hit.

Quibi executives confirmed the news in a post on Medium.

The tech giants

PayPal to let you buy and sell cryptocurrencies in the US — In partnership with Paxos, PayPal plans to support Bitcoin, Ethereum, Bitcoin Cash and Litecoin at first.

Facebook is working on Neighborhoods, a Nextdoor clone based on local groups — Facebook said that Neighborhoods currently is live only in Calgary, Canada.

Netflix to test free weekend-long access in India — The streaming service recently stopped offering a month of complimentary access to new users in the United States.

Startups, funding and venture capital

Syte, an e-commerce visual search platform, gets $30M Series C to expand in the US and Asia — Launched in 2015 to focus on visual search for clothing, Syte’s technology now covers other verticals, like jewelry and home decor.

June’s third-gen smart oven goes up for pre-order, starting at $599 — It’s been two years since the smart oven’s last major update.

Mine raises $9.5M to help people take control of their personal data — Mine scans users’ inboxes to help them understand who has access to their personal data.

Advice and analysis from Extra Crunch

Founders don’t need to be full-time to start raising venture capital — John Vrionis and Sarah Leary of Unusual Ventures told us that lightweight investing matters in the early days of a company.

Dear Sophie: What visa options exist for a grad co-founding a startup? — The latest edition of immigration lawyer Sophie Alcorn’s column answering immigration-related questions about working at tech companies.

Lessons from Datto’s IPO pricing and revenue multiple — How do you value slower, more profitable software growth?

(Reminder: Extra Crunch is our membership program, which aims to democratize information about startups. You can sign up here.)

Everything else

Sam’s Club will deploy autonomous floor-scrubbing robots in all of its US locations — Sam’s Club parent company Walmart is already using robotics to perform inventory in its own stores.

AOC’s Among Us stream topped 435,000 concurrent viewers — The purpose of the stream, which drew a massive crowd, was to get out the vote as we head into the general election.

Coalition for App Fairness, a group fighting for app store reforms, adds 20 new partners — The coalition claims that both Apple and Google engage in anti-competitive behavior.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

In memory of the death of Quibi, here’s a quick sendoff from four of our writers who came together to discuss what we can learn from Quibi’s amazing, instantaneous, billions-of-dollars failure.

Lucas Matney looks at what the potential was for Quibi and how it missed the mark in media. Danny Crichton discusses why billions of dollars in VC funding isn’t enough in competitive markets like video. Anthony Ha discusses the crazy context of Quibi and our interview with the company earlier this year. And Brian Heater looks at why constraints are not benefits in new products.

Lucas Matney: A deadpool company before it was even launched

There will be dozens of post-mortems on Quibi, but the fact is there were dozens of post-mortems written about Quibi before it even launched. The whole idea was, to be kind, audacious, though it was also clear to most people that weren’t personal friends with founder Jeffrey Katzenberg that it was doomed from the start.

Quibi’s death is an important moment for streaming, largely because it’s a pretty strong rebuke of services trying to one-up the Netflix model by solely focusing on high-dollar original content. I think Quibi made several mistakes, but its most pertinent ones can be tied to a lack of flexibility in vision.

The startup insisted that all of its titles were mobile-only, high-production value and relying on Hollywood star power when they probably could have succeeded by keeping a closer eye on what kind of quick-bite content was succeeding elsewhere. Snap has seen success with Discover after years of attempts, and there is space for a dedicated player here, but Katzenberg tried to level-up by throwing checks at his friends and not doing the hard work of scouting out rising trendsetters in the creator world.

There are other lessons here that apply to other streaming new-comers like Apple. Namely that creating a hit TV show is hard and buying a hit TV series is easier if you already have the money. Quibi and Apple TV+ both launched with plenty of new series and no back libraries of beloved legacy content for users to spend time digging into. There’s just so much good stuff out there already. Apple has shifted strategy here, but Quibi boxed itself in and probably couldn’t afford to play here once its error was made clear.

Quibi showcases how the streaming wars’ upending of Hollywood has probably eclipsed reason at this point. Players like Apple don’t belong here, and there’s just too much money pouring into original content that loosely fits the Hollywood mold.

Netflix stock is down 7% today after earnings yesterday showcased slowing growth. With HBO Max, Disney+, Peacock and Apple TV+ all launching in the last 12 months, the streaming market’s cup runneth over. And while I don’t think a Quibi death spells the end for innovation here, I think that the market is ready for some 2021 consolidation.

Here we sit in the valley of predespair, 2 weeks ahead of the election and God knows where we are in the pandemic. As my partner Tina says to me on this once glorious sunny day (the view formerly known as the Pacific Ocean has been replaced by the fog like a Zoom background) we seem to be better prepared for something to go wrong than right.

We’ve learned how to stay socially distant, half-learned to wear a mask, unlearned how it might be a good idea to stay home and let things just happen. The last four years seems like a bizarre experiment in what not to do, the triumph of the worst of our instincts and fear of the other. For my generation, the thought that we would be tested so apocalyptically had never entered our mind. Free love, social media, mind-altering drugs — all ideas that seemed good at the time.

Too good to be true, it turned out. In the stampede to enjoy the fruits of our labors, we turned success into the failure of others. The space race may have spawned the computer industry, but it also reinforced the notion that we beat them to save us. And the tech boom saw us undermine the very soul, the soundtrack of how we marked our lives. Thanks, Napster.

Today, East v. West is Apple v. Android, a detente that Washington distorts into trust v. loyalty. Which is worse, the silence of the social giants or making mistakes in the open? I’m sick of beating up on Twitter for our failures, even more so our toothless tut-tutting of Facebook for spreading the lies we support by staying put.

So, let’s try something going right for a change. Take Spotify and their new plan to embed full versions of our musical heritage in podcasts. This is a complicated offer, to be sure. You can’t use partial versions of songs, talk over any portion of the song, or place ads within 60 seconds of music. Ads must have at least 10 minutes of non-music content between them. More importantly, these shows are only available on Spotify’s Anchor podcasting service.

But what really stands out is the attempt by one of the two major music streaming services to create a composite product reconstituting a post digital radio business. If Apple Music were nudged to support the idea, it would resuscitate a major platform of the tech crowd with a mashup of DJ and playlist content. This in turn would create new leaderboards or charts in old record biz terms that would jumpstart new and catalog music in media. Already we see some of that energy in Saturday Night Live clips where audience numbers are shifting to mobile and online viewing. Composite ratings of broadcast and digital are growing fast.

This evolution from broadcast to online ratings success may presage how live entertainment venues and audiences obliterated by the pandemic adapt with hybrid live/digital events. We’re seeing this act out in real time with the election, where early voting and election day registration have produced record turnout for both the safety of mail and absentee voting (mostly Democrats) and more traditional party switching (mostly Republicans or former Democrats more engaged by Trump.) This “new normal” in politics may not bear immediate fruit, but it’s at a minimum a harbinger of things to come.

Fast forward to a future dinner party in an AR/VR augmented version of our favorite restaurants, with autotesting and contact tracing making it safe enough to reconstitute weekly gettogethers not just of local friends but virtual guests from around our town and beyond. Courses are served by delivery and robot waiters as we watch party our favorite artists and comedians both professional and amateur. Election night becomes a vote-from-home proposition, with the electoral college results calculated in realtime.

As the concession speeches wind down, a vanquished candidate references the Paul Simon song:

When something goes wrong
I’m the first to admit it
I’m the first to admit it
But the last one to know
When something goes right
Well it’s likely to lose me
It’s apt to confuse me
It’s such an unusual sight
I can’t get used to something so right
Something so right

__________________

The Gillmor Gang — Frank Radice, Michael Markman, Keith Teare, Denis Pombriant, Brent Leary, and Steve Gillmor . Recorded live Friday, October 16, 2020.

Produced and directed by Tina Chase Gillmor @tinagillmor

@fradice, @mickeleh, @denispombriant, @kteare, @brentleary, @stevegillmor, @gillmorgang

For more, subscribe to the Gillmor Gang Newsletter and join the backchannel here on Telegram.

The Gillmor Gang on Facebook … and here’s our sister show G3 on Facebook.

Tesla’s latest quarterly numbers beat analyst expectations on both revenue and earnings per share, bringing in $8.77 billion in revenues for the third quarter.

With the report that Tesla had already beaten Wall Street’s expectations for deliveries earlier this month, the question for today’s earnings call was how much efficiency (and by extension, profit) the electric car and battery company was able to wring out of its manufacturing processes.

Now we have the answer, as Tesla reported net income of $331 million* on revenues of $8.77 billion for the third quarter. That’s up 39% from the year-ago period. Wall Street had expected $8.36 billion in revenue for the quarter, according to estimates published by CNBC.

Revenue grew 30% year-on-year, something the company attributed to substantial growth in vehicle deliveries, and operating income also grew to $809 million, showing improving operating margins to 9.2%.

And while the automotive business is clearly still the star of the show, both Tesla’s solar and storage businesses showed marked improvements in the third quarter.

Energy storage reached a company record 759 Megawatt hours in the quarter, and the company said that megapack production for its large-scale batteries is growing while Powerwall demand remains strong.

“We continue to believe that the energy business will ultimately be as large as our vehicle business,” the company said.

And the solar business is also improving, according to Tesla. “Our recently introduced strategy of low-cost solar (at $1.49/watt in the U.S. after tax credit) is starting to have an impact. Total solar deployments more than doubled in Q3, to 57 MW compared to the prior quarter, with Solar Roof deployments almost tripling sequentially.”

Operating expenses for the company were also up. New factories in Austin and Brandenburg, Germany mean additional expenses, and Tesla poured $1.25 billion into operations, up 33% from the previous quarter.

Earlier this month, the company tipped its hand on the good news around deliveries, saying that it had already delivered 139,300 vehicles in the third quarter, slightly above Wall Street’s expectations, and a notable improvement from last quarter, as well as the same period a year ago.

The delivery beat marked a 43% improvement from the same quarter last year, when the company reported deliveries of 97,000 electric vehicles. And delivery numbers were up 53% quarter on quarter, as the globally spreading COVID-19 pandemic took its toll on sales and production operations for Tesla at its main U.S. factory.

The quarter also saw Tesla unveil a sweeping new vision for its battery manufacturing plans. During the shareholder presentation Tesla chief executive Elon Musk said that he expected to deliver up to 40% more electric vehicles than in 2019 and laid out the road map for better battery manufacturing efficiency.

Tesla’s earnings beat comes amid mounting competition from some of the world’s largest automakers. Yesterday GMC unveiled its Hummer EV and, in September, Ford announced that it would be slashing the price on its Mustang Mach E to “stay fully competitive.”

Meanwhile startups like Lucid Motors are proving that they could be serious contenders to Tesla’s market dominance. Lucid’s recent pricing for its Air sedan was enough to force Tesla chief executive and head of public relations, Elon Musk, to parry back with a (creatively selected) price cut on the company’s own models.

This story is developing and will be updated. 

Plagued with growth issues, Quibi, a short-form mobile-native video platform, is shutting down, according to multiple reports. The startup, co-founded by Jeffrey Katzenberg and Meg Whitman, had raised nearly $2 billion in its lifetime as a private company. Quibi did not respond to requests for comment from TechCrunch.

The company’s prolific fundraising efforts spanned prominent institutions in private equity, venture capital and Hollywood, all betting on Katzenberg’s ability to deliver another hit. The startup’s backers included Alibaba, Madrone Capital Partners, Goldman Sachs and JPMorgan, as well as Disney, Sony Pictures, Viacom, WarnerMedia and MGM, among others. The Information reports that Quibi will have $350 million left to return to shareholders.

Their pitch was highly produced bite-sized content, packed with Hollywood star power, and designed to be “mobile-first” entertainment. For the YouTubes and Snaps of the world, producing mainstream content on a shoestring budget, Quibi wanted to be an HBO for smartphones. Investors and pundits questioned the firm’s ability to monetize this vision, and it became clear soon after launch that the company had miscalculated.

Rumors that Quibi was shutting down began early this week. The Information wrote that Katzenberg has told people within the industry that the company might need to shut down, after unsuccessfully pitching itself as an acquisition to Apple, Facebook and Warner Media.

In its first few months, Quibi was downloaded 3.5 million times and had 1.5 million active users. While those figures aren’t too shabby, the company had to adjust its original projections, which put the service on a trajectory to reach 7 million users and $250 million in subscriber revenue in its first year. Admitting that the launch hadn’t gone as planned, Katzenberg blamed the coronavirus for the streaming app’s challenges.

The company expanded in Australia in August with a free ad-supported tier for users. It is unclear if the tweak in the business model brought Quibi success, or if the problems for the app had to do with the business model in the first place.

Netflix earnings from earlier this week suggest that the pandemic entertainment boom is slowing. The consumer video service disappointed on new paying customer numbers, and shares were down sharply yesterday after it released its earnings report. Those numbers also potentially showcase just how crowded the market for subscription video content has gotten in the past 12 months, with players like Apple, Disney, HBO and NBC each launching new services and collectively spending billions to acquire rights to past television hits.

The Coalition for App Fairness (CAF), a newly formed advocacy group pushing for increased regulation over app stores, has more than doubled in size with today’s announcement of 20 new partners — just one month after its launch. The organization, led by top app publishers and critics, including Epic Games, Deezer, Basecamp, Tile, Spotify and others, debuted in late September to fight back against Apple and Google’s control over app stores, and particularly the stores’ rules around in-app purchases and commissions.

The coalition claims both Apple and Google engage in anti-competitive behavior, as they require publishers to use the platforms’ own payment mechanisms, and charge 30% commission on these forced in-app purchases. In some cases, those commissions are collected from apps where Apple and Google offer a direct competitor. For example, the app stores commission Spotify, which competes with Google’s YouTube Music and Apple’s own Apple Music.

The group also calls out Apple more specifically for not allowing app publishers any other means of addressing the iOS user base except through the App Store that Apple controls. Google, however, allows apps to be sideloaded, so is less a concern on that platform.

The coalition launched last month with 13 app publishers as its initial members, and invited other interested parties to sign up to join.

Since then, CAF says “hundreds” of app developers expressed interest in the organization. It’s been working through applications to evaluate prospective members, and is today announcing its latest cohort of new partners.

This time, the app publishers aren’t necessarily big household names, like Spotify and Epic Games, but instead represent a wide variety of apps, ranging from studios to startups.

The apps also hail from a number of app store categories, including Business, Education, Entertainment, Developer Tools, Finance, Games, Health & Fitness, Lifestyle, Music, Navigation, News, Productivity, Shopping, Sport and Travel.

The new partners include: development studio Beonex, health app Breath Ball, social app Challenge by Eristica, shopping app Cladwell, fitness app Down Dog Yoga, developer tool Gift Card Offerwall, game maker Green Heart Games, app studio Imagine BC, business app Passbase, music app Qobuz, lifestyle app QuackQuack and Qustodio, game Safari Forever, news app Schibsted, app studio Snappy Mob, education app SpanishDict, navigation app Sygic, app studio Vertical Motion, education app YARXI, and the Mobile Marketing Marketing Association.

With the additions, CAF now includes members from Austria, Australia, Canada, France, Germany, India, Israel, Malaysia, Norway, Singapore, Slovakia, Spain, United Kingdom and the United States.

The new partners have a range of complaints against the app stores, and particularly Apple.

SpanishDict, for instance, was frustrated by weeks of rejections with no recourse and inconsistently applied policies, it says. It also didn’t want to use Apple’s new authentication system, Apple Sign-In, but Apple made this a requirement for being included on the App Store.

Passbase, a Sign In With Apple competitor, also argues that Apple applied its rules unfairly, denying its submission but allowing its competitors on the App Store.

While some of the app partners are speaking out against Apple for the first time, others have already detailed their struggles publicly.

Eristica posted on its own website how Apple shut down its seven-year-old social app business, which allowed users to challenge each other to dares to raise money for charity. The company claims it pre-moderated the content to ensure dangerous and harmful content wasn’t published, and employed human moderators, but was still rejected over dangerous content.

Meanwhile, TikTok remained on the App Store, despite hosting harmful challenges, like the pass out challenge, cereal challenge, salt and ice challenge and others, Eristica says.

Apple, of course, tends to use its policies to shape what kind of apps it wants to host on its App Store — and an app that focused on users daring one another may have been seen as a potential liability.

That said, Eristica presents a case where it claims to have followed all the rules and made all the changes Apple said it wanted, and yet still couldn’t get back in.

Down Dog Yoga also recently made waves by calling out Apple for rejecting its app because it refused to auto-charge customers at the end of its free trial.

The issue, in this case, wasn’t just that Apple wants a cut of developers’ businesses, it also wanted to dictate how those businesses are run.

Another new CAF partner, Qustodio, was among the apps impacted by Apple’s 2018 parental control app ban, which arrived shortly after Apple introduced its own parental control software in iOS.

The app developer had then co-signed a letter asking Apple to release a Screen Time API rather than banning parental control apps — a consideration that TechCrunch had earlier suggested should have been Apple’s course of action in the first place.

Under increased regulatory scrutiny, Apple eventually relented and allowed the apps back on the App Store last year.

Not all partners are some little guy getting crushed by App Store rules. Some may have run afoul of rules designed to protect consumers, like Apple’s crackdown on offerwalls. Gift Card Offerwall’s SDK, for example, was used to incentivize app monetization and in-app purchases, which isn’t something consumers tend to welcome.

Despite increased regulatory pressure and antitrust investigations in their business practices, both Apple and Google have modified their app store rules in recent weeks to ensure they’re clear about their right to collect in-app purchases from developers.

Meanwhile, Apple and CAF member Epic Games are engaged in a lawsuit over the Fortnite ban, as Epic chose to challenge the legality of the app store business model in the court system.

Other CAF members, including Spotify and Tile, have testified in antitrust investigations against Apple’s business practices, as well.

“Apple must be held accountable for its anticompetitive behavior. We’re committed to creating a level playing field and fair future, and we’re just getting started,” CAF said in an announcement about the new partners. It says it’s still open to new members.