Category: Tech news

Plus: WhatsApp’s court case, a VPN exposed, and more of the week’s top security news.

Silence is increasingly scarce, even in national parks. Now, scientists and environmentalists are working to calm the noise for the good of nature—and for us.

Here’s how to take care of your nails, hair, and skin at home—because if there was ever a time to be kind to yourself, it’s now.

Whether it’s time to upgrade your headphones or you need to change up your sleeping routine, these sales have you covered.

If Tom Nook is getting you down, a new farming simulator offers a sweet escape.

“Animal Crossing: New Horizons” is a bonafide wonder. The game has been setting new records for Nintendo, is adored by players and critics alike and provides millions of players a peaceful escape during these unprecedented times.

But there’s been something even more extraordinary happening on the fringe: Players are finding ways to augment the game experience through community-organized activities and tools. These include free weed-pulling services (tips welcome!) from virtual Samaritans, and custom-designed items for sale — for real-world money, via WeChat Pay and AliPay.

Well-known personalities and companies are also contributing, with “Rogue One: A Star Wars Story” scribe Gary Whitta hosting an A-list celebrity talk show using the game, and luxury fashion brand Marc Jacobs providing some of its popular clothing designs to players. 100 Thieves, the white-hot esports and apparel company, even created and gave away digital versions of its entire collection of impossible-to-find clothes.

This community-based phenomenon gives us a pithy glimpse into not only where games are inevitably going, but what their true potential is as a form of creative, technical and economic expression. It also exemplifies what we at Forte call “community economics,” a system that lies at the heart of our aim in bringing new creative and economic opportunities to billions of people around the world.

What is community economics?

Formally, community economics is the synthesis of economic activity that takes place inside, and emerges outside, virtual game worlds. It is rooted in a cooperative economic relationship between all participants in a game’s network, and characterized by an economic pluralism that is unified by open technology owned by no single party. And notably, it results in increased autonomy for players, better business models for game creators, and new economic and creative opportunities for both.

The fundamental shift that underlies community economics is the evolution of games from centralized entertainment experiences to open economic platforms. We believe this is where things are heading.

Fallout continues from this week’s big Twitter hack, podcaster Harry Stebbings launches a small VC fund and robots help with sorting the mail. Here’s your Daily Crunch for July 17, 2020.

The big story: More details emerge in Twitter hack

As we recapped in yesterday’s newsletter, a number of high-profile Twitter accounts were hacked earlier this week as part of what appeared to be a cryptocurrency scam. So how bad was it?

“We have no evidence that attackers accessed passwords,” the company said. “Currently, we don’t believe resetting your password is necessary.”

However, Twitter did not comment on whether hackers were able to access users’ direct messages. Senator Ron Wyden criticized the company for failing to end-to-end encrypt DMs: “While it still isn’t clear if the hackers behind yesterday’s incident gained access to Twitter direct messages, this is a vulnerability that has lasted for far too long, and one that is not present in other, competing platforms.”

The tech giants

Apple opens another megastore in China amid William Barr criticism — Apple opened a new store in Beijing’s upscale shopping district Sanlitun, doubling the size of the previous store in that location.

Federal court rules WhatsApp and Facebook’s malware exploit case against NSO Group can proceed — Last October, WhatsApp and its parent company Facebook filed a complaint alleging that NSO Group exploited an audio-calling vulnerability in the messaging app to send malware to about 1,400 mobile devices.

Startups, funding and venture capital

Give us your seed round and we will send back double — The latest episode of Equity discusses funding rounds for Macro, The Browser Company and LiteBoxer.

From Twenty Minute VC to 20VC, Harry Stebbings launches a micro VC off the back of his popular podcast — The plan for Stebbings’ new $8 million fund is to invest in U.S. startups across various stages alongside “tier 1” co-investors.

Marketing, PR and brand building, oh my! TechCrunch Early Stage goes down July 21 and 22 — At next week’s virtual event, we’ll hear from some of the world’s top minds in the fields of marketing and brand building.

Advice and analysis from Extra Crunch

Extension rounds help some startups play offense during COVID-19 — A recent flurry of extension rounds for hot startups like Stripe and Robinhood suggests that this investment type has suddenly become cool.

Former Spotify marketing exec-turned-VC Sophia Bendz on her love of early-stage investing — Bendz recently joined Berlin’s Cherry Ventures to focus on startups in the Nordic region.

Assessing the potential for a gig economy in education — Entrepreneur and investor Rish Joshi looks at platforms that could help teachers deliver more personalized learning.

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

Everything else

SpaceX and NASA targeting August 1 for Crew Dragon return trip with astronauts on board — SpaceX’s Crew Dragon capsule has been docked at the International Space Station since its first crewed launch in May. Now it’s getting ready to make its return trip.

FedEx is utilizing robotic arms to sort packages at a Memphis facility — In March, FedEx installed a quartet of robotic arms from Yaskawa America and Plus One, with the goal of helping to sort the massive numbers of parcels that pass through its Memphis facility.

Play the prologue of ‘Linda & Joan,’ a video game about the worst year of its creator’s life — The full game isn’t due until 2022, but you can get a peek at what a video game about grief might look like.

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.

We continue to be stuck inside, and video games continue to sell well. It’s pretty much as simple as that, honestly. I mean, there’s more nuance than that, obviously, but that’s really the top line takeaway from NPD’s June gaming numbers.

More specifically, last month saw $1.2 billion total spent on gaming, up 26% from the year prior. That marks the highest figure for June since 2009. With June included, the first half of the year saw $6.6 billion total spent for the industry, the highest figure for that time frame since 2010, when it hit $7 billion. Not too shabby, considering the extremely tenuous economic situation the world finds itself in.

Over on Extra Crunch, read about how players are finding ways to augment the game experience through community-organized activities and tools.

Gaming software spending hit $570 for the month, up a full 49% from 2019. The Last of Us: Part II took the top spot for June, making it the third-best-selling title for the year and marking the highest launch month sales figure for the year so far.

Also notable is the success of the Nintendo Switch exercise title Ring Fit Adventure, which shot to No. 7 after only hitting No. 835 in May. The game’s success is no doubt due in part to the lack of access to gyms and other more traditional workouts. The figure was previously skewed by a depletion of stock for the game — something that has also impacted Switch sales.

Even so, the Nintendo console was once again the best-selling system for the month.

Many major websites and services were unreachable for a period Friday afternoon due to issues at Cloudflare’s 1.1.1.1 DNS service. The outage seems to have started at about 2:15 Pacific time and lasted for about 25 minutes before connections began to be restored.

Early reports suggested Google DNS may also have been affected, but this turned out not to be the case – Google Cloud confirmed it had no outages yesterday.

Update: Cloudflare at 2:46 says “the issue has been identified and a fix is being implemented.” CEO Matthew Prince explains that it all came down to a bad router in Atlanta:

The company also issued a statement via email emphasizing that this was not an attack on the system.

“This afternoon we saw an outage across some parts of our network. It was not as a result of an attack,” the company said in a statement. “It appears a router on our global backbone announced bad routes and caused some portions of the network to not be available. We believe we have addressed the root cause and monitoring systems for stability now. We will share more shortly—we have a team writing an update as we speak.”

Discord, Feedly, Politico, Shopify and League of Legends were all affected, giving an idea of the breadth of the issue. Not only were websites down but also some status pages meant to provide warnings and track outages. In at least one case, even the status page for the status page was down.

A DNS, or Domain Name System, is an integral part of the web, connecting domains (like TechCrunch.com) to their IP addresses (such as 152.195.50.33). If the one you or a site use goes down, it doesn’t matter whether a website’s own servers are working or not — users can’t even reach them in the first place. Internet providers usually have their own, but they’re often bad, so alternatives like Google’s have existed for many years, and Cloudflare launched its service in late 2018.

Cloudflare wrote in a tweet and an update to its own status page (which thankfully remained available) that it was “investigating issues with Cloudflare Resolver and our edge network in certain locations. Customers using Cloudflare services in certain regions are impacted as requests might fail and/or errors may be displayed.”

Despite much speculation as to the cause of the outage, there is no evidence that it was caused by a denial-of-service attack or any other form of malicious hackery.

(This story has been updated to reflect new information, such as the Google and Cloudflare statements.)

From a partnership with the Russian company 3D Bioprinting Solutions to make chicken meat replacement using plant material and lab-cultured chicken cells to an expansion of its Beyond Fried Chicken pilots to Southern California, KFC is aggressively pushing forward with its experiments around the future of food.

In Russia, that means providing 3D Bioprinting with breading and spices to see if the company’s chicken replacement can match the KFC taste, according to a statement from the company. As the company said, there are no other methods available on the market that can allow for the creation of complex products from animal cells.

“3D bioprinting technologies, initially widely recognized in medicine, are nowadays gaining popularity in producing foods such as meat,” said Yusef Khesuani, co-founder and managing partner of 3D Bioprinting Solutions, in a statement. “In the future, the rapid development of such technologies will allow us to make 3D-printed meat products more accessible and we are hoping that the technology created as a result of our cooperation with KFC will help accelerate the launch of cell-based meat products on the market.”

Image: Beyond Meat

Closer to its home base in the U.S., KFC is working with the publicly traded plant-based meat substitute developer Beyond Meat on an expansion of their recent trials for KFC’s Beyond Fried Chicken.

Continuing its wildly successful limited trials in Atlanta, Nashville and Charlotte, KFC is now setting its sights on the bigger markets in Southern California, near Beyond Meat’s headquarters in Los Angeles.

Beginning on July 20, KFC will be selling Beyond Fried Chicken at 50 stores in the Los Angeles, Orange County and San Diego areas, while supplies last, the company said.

Unlike the 3D bioprinting process used by its Russian partner, Beyond Meat uses plant-based products exclusively to make its faux chicken meat.

Beyond Fried Chicken first appeared on the market last year in Atlanta and was made available in additional markets in the South earlier this year. The menu item — first available in a one-day consumer test in Atlanta — sold out in less than five hours, the company said.

“I’ve said it before: despite many imitations, the flavor of Kentucky Fried Chicken is one that has never been replicated, until Beyond Fried Chicken,” said Andrea Zahumensky, chief marketing officer, KFC U.S. “We know the east coast loved it, so we thought we’d give those on the west coast a chance to tell us what they think in an exclusive sneak peek.

Beyond Fried Chicken nuggets will be available as a six or 12-piece à la carte or as part of a combo, complete with a side and medium drink starting at $6.99, plus tax.

Meanwhile, KFC’s Russian project aims to create the world’s first lab-made chicken nuggets, and plans to release them this fall in Moscow.

Popularizing lab-grown meat could have a significant impact on climate change according to reports. The company cited statistics indicating that growing meat from cells could cut in half the energy consumption involved in meat production and reduce greenhouse gas emissions while dramatically cutting land use.

“Crafted meat products are the next step in the development of our ‘restaurant of the future’ concept,” said Raisa Polyakova, general manager of KFC Russia & CIS, in a statement. “Our experiment in testing 3D bioprinting technology to create chicken products can also help address several looming global problems. We are glad to contribute to its development and are working to make it available to thousands of people in Russia and, if possible, around the world.”

Kittu Kolluri — who in late 2016 stepped down as a general partner with NEA after 11 years with the investing giant to form the much smaller, much earlier-stage outfit Neotribe — has closed on $216 million for the outfit’s second fund, a sizable jump up from its $130 million debut fund. (Kolluri and his team separately kicked in enough money to bring those funds to $138 million and $220 million, respectively.)

We talked yesterday with Kolluri — a longtime operator whose earlier career spans across Silicon Graphics, Healtheon (which he co-founded), the VPN software company Neoteris (which he ran as CEO) and Juniper Networks (which acquired the company that acquired Neoteris) — to ask about the new fund and Neotribe’s mission more broadly. We also wound up talking a bit about founder attitudes around being publicly traded, M&A and what VCs get wrong about founders (in his view).

TC: For those who don’t know you, why did you leave NEA to start your own thing?

KK: We wanted to capture an era gone by of investing in companies and founders developing breakthrough technologies that stretch the imagination. They’re solving hard problems but also looking around the corner and discovering a macro trend that they can then use to develop a new category of product.

TC: Wouldn’t all VCs say they are doing this?

KK: There are two types of VCs — those that fall in love with the story and who look at the world through the founder’s eyes and work really hard to influence the outcome, and those who look for proof. We’re a poster child for the first category. We like to take not just technology risk but also market risk.

TC: You’ve been involved with many startups over the last 14-plus years, so what are standouts that underscore your point?

KK: I was an early investor in Bloom Energy and Aruba Networks; these were personal investments. Climate Corp and Robinhood and VeloCloud [acquired in 2018 by VMware] are other examples from [my time at] NEA.

There are extremes in venture capital right now. On the one hand, you have micro VCs and super angel types who write a large number of checks and who take market risk but who have sort of a spray-and-pray strategy and who don’t have the wherewithal to make a difference at the companies they are funding. On the other extreme, you have large venture funds with large pools of capital but whose check sizes need to be so large that they can’t make investments at the seed stage; their checks start at $10 million. I was at NEA and you can’t afford to write $3 million checks.

There’s a yawning gap in the middle, and that’s where we play. We’re investing $2.5 million to $3 million at the low end and up to $5 million at the high end, and we’re the first money in a lot of the time.

TC: You mentioned a wide variety of companies — Robinhood caters to consumers; VeloCloud was an enterprise company [that tackled software-defined wide area networking]. What types of companies interest Neotribe?

KK: Companies with a deep tech nature that you can’t build with small rounds but that require scaffolding investment. One of our bets is Interai, which is using computer vision to automatically generate a new user interface based on a business process that you’re trying to simplify. We invested $2.5 million and helped them through those initial stages and about nine months later, they raised a round from Battery.

Climate.ai is using AI-powered and machine learning to predict medium- and long-term climate changes and weather patterns and the risks of extreme events and we led the seed and they are just in the process of getting [purchase orders] and will be [in the market soon for funding]. Fortanix is using runtime encryption to solve security and privacy. We led its A round and it closed on $23 million in Series B funding last year led by Intel Capital.

TC: What do founders reading this need in order to get a check out of you?

KK: We’re very selective. We fund 2% of the inbound deals that come to us. We funded 25 companies with our first fund but actually met with 1,500. But broadly, we’re looking for companies that are using data science to develop software to solve enterprise IT type problems and companies using engineering and data science to alter the pace of innovation of physical assets, like robotics or diagnostics or clean energy. Solving a hard problem is the first prerequisite.

TC: How do you describe your “value-add” to them?

KK: We’re conviction-based investors, so there aren’t going to be a large number of companies in each fund. When we have conviction, we’ll write a meaningful check and expect a meaningful percentage in exchange for our work hard.

When a founder is feeling vulnerable, their first call should be to us, because I’ve been there; I know what it feels like. Someone on my own board who I talked with regularly — one of my favorite VCs — was Danny Rimer [of Index Ventures]. I would call him at 8:30 a.m. after I dropped my son off at school, and he would say ‘I’m looking at this deal, what do you think?” I remember he asked this about MySQL. I said, “Danny trust me, suck it up and invest in the company.” From my vantage, there was a real give and take, like a real friendship, and if I was screwing up something, I told him.

You want someone who you can be vulnerable with. Authenticity is something that is getting lost a lot. I don’t want to be a referee or to do what a lot of Valley VCs do, which is to spew their wisdom at board meetings. The work is really in between.

TC: Has COVID-19 changed anything for you?

KK: We’re working out of our home offices, but truth be told, [the situation] hasn’t changed anything significantly. We invested in two companies so far without meeting the founders, which is a first for me.

TC: How did these come together?

KK: One is Vendia [a multi-cloud serverless platform], whose launch TechCrunch covered. It was co-founded by two Amazon veterans, one of whom, Tim Wagner, was the inventor of serverless technology at Amazon, and the other, Shruthi Rao, who was the former head of blockchain at AWS, so they have a lot of experience with supply chains and they’re building a serverless platform for better code sharing because they saw a burning need for this at Amazon and Amazon is keen for this solution to exist. We were the first money in, followed by Correlation [Ventures] and Floodgate and Westwave [Capital] among others.

TC: Seemingly, these Amazon vets had lots of options. How did they find you?

KK: They were introduced to me by a founder I’d backed in my NEA days; that’s how I got to know them.

Another high-profile founder who took money from us is Bill Gross, who is now running Heliogen, which is using computer vision and solar concentration to generate high-process heat that’s close to 1,600 degrees centigrade, which is one-third as hot as the sun’s surface. And they’re doing it in a clean way without requiring any fossil fuel. We invested in the company’s Series A-1, which was a pivot from an earlier photovoltaic idea, and they more recently raised another $25 million.

TC: Out of curiosity, what do you think of this stay-private trend that we’ve seen develop over the last decade? Does it make sense to you?

KK: I don’t think it’s a healthy trend for companies to be staying private for this long. If you rewind back to when eBay and Amazon went public, their market cap was probably $200 million and $400 million or so and most of the value accrued to the public investor. Then you look at Facebook, which went public at $100 billion and where the value accrued to the founders and the private investors. Sure, if you bought the shares early on, you’d see 2x or 3x but it’s not a 10-bagger, as Peter Lynch would put it.

Going public gives you a currency that you can use for strategic purposes, too, to explore growth.

TC: Yet a lot of companies with big balance sheets don’t seem to be shopping a whole lot.

KK: I’m appalled by how few acquisitions that some of these companies are making. When I was at Juniper, I envied Cisco, whose corporate development arm made hundreds of acquisitions. Some percentage of these don’t work out, but they made some very smart moves, [buying] Crescendo, StrataCom, Cerent, Airespace…

I give Facebook credit; it acquired Instagram and WhatsApp relatively soon after going public and boy, what fantastic acquisitions those have proved. Google similarly acquired YouTube and Waze. That’s how you grow. You use that as a weapon, too.

AutoX, the autonomous vehicle startup backed by Alibaba, has been granted a permit in California to begin driverless testing on public roads in a limited area in San Jose.

The permit will allow AutoX to test its autonomous vehicles without a human safety driver behind the wheel. This is the third company to receive a driverless testing permit. Waymo and Nuro also have driverless testing permits. Unlike the other two companies, AutoX’s permit is limited to one vehicle and restricted to surface streets within a designated part of San Jose near is headquarters, according to the California Department of Motor Vehicles, which regulates AV testing in the state. The vehicle is approved to operate in fair weather conditions and light precipitation on streets with a speed limit of no more than 45 mph, the agency said.

AutoX, which is developing a full self-driving stack, has had a permit to test autonomous vehicles with safety drivers since 2017. Currently, 62 companies have an active permit to test autonomous vehicles with a safety driver on California roads.

To qualify for a driverless testing permit, companies have to show proof of insurance or a bond equal to $5 million, verify the vehicles are capable of operating without a driver, meet federal Motor Vehicle Safety Standards or have an exemption from the National Highway Traffic Safety Administration.

While AutoX has been operating robotaxi pilots in California and China, the company has said its real aim is to license its technology to companies that want to operate robotaxi fleets of their own. It has been particularly active in China, although this driverless permit hints that the company might be ramping up its activity in the U.S. as well.

AutoX opened an 80,000-square-foot Shanghai Robotaxi Operations Center in April, following a 2019 agreement with municipal authorities to deploy 100 autonomous vehicles in the Jiading District. The vehicles in the fleet were assembled at a factory about 93 miles outside of Shanghai.

The company has been operating a fleet of robotaxis in Shenzhen through a pilot program launched in 2019 with BYD. In January, AutoX partnered with Fiat Chrysler to roll out a fleet of robotaxis for China and other countries in Asia.

Over the past few years, personalized learning has established itself as a focal point of innovation in education. Despite the focus, the rate of progress in establishing personalized learning practices in both K-12 school systems and online learning has been slower than expected.  

The Bill & Melinda Gates Foundation and the Chan Zuckerberg Initiative have together invested millions of dollars in support of it, and educators such as Sal Khan, founder of Khan Academy, have spoken extensively about its importance in education.

Personalized learning comprises many aspects of learning: letting students master topics before they move on to higher level ones, giving them agency over their learning based on their interests and goals and using teacher-aided instruction and interactivity, to name a few.

Much of the focus on implementing personalized learning practices has revolved around K-12 school systems, where new initiatives have been met with mixed results, and these efforts will continue. 

Beyond the K-12 school systems however, online education platforms present a large opportunity for delivering personalized learning experiences to students worldwide, and the level of innovation here has lagged expectations.

Massive Open Online Courses (MOOCs) such as Udacity, Coursera and edX emerged in the early 2010s and helped bring quality content online and make it accessible around the globe. However, they haven’t innovated much when it comes to personalized learning, and studies have shown that they have in fact seen declines in completion rate of courses.

In recent years, startups have built platforms that are powering a gig economy for teachers, enabling them to give live lectures in small-group, highly interactive settings. Apps focused on providing personalized learning experiences for users learning domain-specific skills such as math or languages have shown promise, but there’s room for a lot more innovation on this front.

These newer approaches have the potential to democratize personalized learning by innovating on the software teaching platform, enabling better teacher-aided instruction online, and helping students better understand their mastery of topics. 

Concerns about the Chinese government shouldn’t be dismissed, experts say. But banning TikTok would be a drastic measure.

It’s not hard to see why Russell Quinn calls 2017 the worst year of his life. That was the year he moved back to the United Kingdom to take care of his mother, and the year in which both his mother and grandmother died within a month of each other.

Quinn recalled returning to Los Angeles afterwards and “trying to unpack all of this trauma that had happened.” During that time, he said he was “reading a lot about how other creative people dealt with grief” and realized there’s “a rich history” of novelists writing about their personal tragedies.

So Quinn — a designer and programmer who previously worked as digital media director at McSweeney’s and co-created the digital novel “The Silent History” — decided to make a video game about the experience.

Grief isn’t exactly a popular subject for games, but Quinn suggested that this was the approach that made sense to him.

“I’m not a novelist and I’m not a filmmaker,” he said. “I had been wanting to make a game for a while, and it seemed to make sense to tell my story in the medium that I am most used to.”

He admitted that the development process could be emotionally taxing. For example, he delayed creating a 3D model of his mother, instead letting a pink cylinder stand in for her character, because he worried that her death would “become far too real once I put her in the game.” But once he created the model, “I realized: That is not my mother. It’s an actor, it’s an avatar. From that point onward, I felt like a director directing actors on a stage.”

And this week, Quinn released “Four Months Earlier,” a free prologue playable on Windows, Mac and iOS. As the title suggests, the prologue takes place months before the rest of the game, with Quinn going for a walk with his visiting mother Linda. Through dialogue choices, you get a sense of who they are and the challenges they’re facing.

Quinn doesn’t expect to finish the full game, “Linda & Joan,” until 2022, but he’s releasing “Four Months Earlier” now as a promotion, both for future players and potential publishers.

It sounds like the prologue is very different from the rest of the game, which will shift from sunny Los Angeles to “small houses in England.” Compared to “Four Months Earlier,” Quinn said “Linda & Joan” will be “more of a point-and-click adventure,” with “tasks and puzzles to solve.”

Not that he’s trying to add fictional drama or a happy ending to the real story. The puzzles, he said, are all “emotion-based” — you’ll play as Russell, Linda and Joan (his grandmother), trying to balance their different needs.

“It ends with the two deaths, there’s no way of avoiding those things,” Quinn said. “What you can change is how you feel about them, which kind of mirrors [real life]. If somebody in the family gets a terminal diagnosis, that is fixed. But you still have to live together for many more months, and your reality, how you deal with it, can change from day to day.”