COVID-19
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Learn how COVID-19 has disrupted the startup world
What early-stage startup founder wouldn’t love to have a crystal ball? Especially now with a pandemic wreaking economic uncertainty across industries in every corner of the world.
We don’t have mystical powers, but we do have the next best thing, and it’s available exclusively to early-stage founders exhibiting in Digital Startup Alley at Disrupt 2020. Sign up today for our interactive webinar, COVID-19’s Impact on the Startup World, scheduled for August 19th at 1pm PT/ 4pm ET.
What does the future of work look like? In what ways will startups need to adapt, and how can they course-correct both during and after COVID-19? These are some of the challenging topics our expert panel will address, and they’ll take questions from the viewing audience, too.
Which brilliant minds will offer their perspective, tips and advice? None other than Nicola Corzine, executive director of the Nasdaq Entrepreneurship Center and Cameron Stanfill, a VC analyst at PitchBook. Jon Shieber, a TechCrunch writer who covers venture capital and private equity investments will moderate the conversation. It’s an interactive webinar, folks, so don’t be shy — bring your questions, comments and ideas to the table.
If you haven’t purchased a Disrupt Digital Startup Alley Package, go grab yours now. You’ll be able to attend this webinar and the next one, too (more on that in a minute). But here’s the most important part — you’ll showcase your tech, talent and products to thousands of Disrupt attendees from around the world. Boost your brand recognition, and connect with potential customers, partners, investors, media and other influencers across the startup ecosystem. You never know who you’ll meet exhibiting in the Alley or where a chance connection might lead.
“Exhibiting in Startup Alley gave our company and technology invaluable exposure to potential customers and partners that we would not have met otherwise. A company that does 15 billion in annual sales thinks our tech is a fit for their ecosystem, and we’re excited to continue building that relationship.” — Joel Neidig, founder of SIMBA Chain.
Now that you’re all set with your Digital Startup Alley exhibitor pass, circle August 26 on your calendar for the final webinar we scheduled for exhibitors’ edification.
August 26 — Fundraising and Hiring Best Practices
Moderated by TC’s Natasha Mascarenhas, panelists Sarah Kunst (Cleo Capital) and Brett Berson (First Round Capital) discuss two essential topics for startup success. Securing funding may feel like the hardest part of growing a startup, but hiring the right people ain’t no walk in the park either. You need to get a handle on both areas, and these folks can help you do just that.
Exhibitors, sign up for the August 19 webinar, COVID-19’s Impact on the Startup World. And to the rest of the early-stage startup founders out there — don’t miss your chance to be an exhibitor at Disrupt 2020 — buy a Disrupt Digital Startup Alley Package today.
Is your company interested in sponsoring or exhibiting at Disrupt 2020? Contact our sponsorship sales team by filling out this form.
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How tech can build more resilient supply chains
Over the past two years, the global supply chain has been hit with two major upheavals: the United States-China trade war and, more cataclysmically, COVID-19.
When Reefknot Investments launched its $50 million fund for logistics and supply chain startups last September, the industry was already dealing with the effects of the tariff war, says managing director Marc Dragon. Then a few months later, the COVID-19 crisis began in China before spreading to the rest of the world, disrupting the supply chain on an unprecedented scale.
Almost all industries have been impacted, from food, consumer goods and medical supplies to hardware.
Reefknot, a joint venture between Temasek, Singapore’s sovereign fund, and global logistics company Kuehne + Nagel, focuses on early-stage tech companies that use AI to solve some of the supply chain’s most pressing issues, including risk forecasting, financing and tracking goods around the world.
In March, around the time the World Health Organization declared the COVID-19 crisis a pandemic, Reefknot surveyed nine shippers about the challenges they face. While there are other macroeconomic factors at play, including Brexit and the oil price war, the survey’s main focus was on the combined effect of COVID-19 and the U.S.-China trade war on the supply chain and logistics industry.
According to the study, the main things shippers want is the ability to dynamically manage supply chain risks and operations and optimize cash flow between corporate buyers and their suppliers, who often struggle with working capital.
Many of the current solutions used in the supply chain involve a lot of manual tasks, including spreadsheets to predict demand, phone calls to confirm capacity on planes and ships and checking goods to make sure orders were fulfilled properly.
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PopSugar co-founder says pandemic will create ‘a huge windfall’ for digital media
It’s been less than a year since Group Nine Media acquired PopSugar — but it’s been a uniquely challenging time in digital media.
Brian Sugar founded the eponymous women’s lifestyle site with his wife Lisa Sugar . Post-acquisition, he’s become president for the entirety of Group Nine (which also owns Thrillist, NowThis, The Dodo and Seeker) and also joined the company’s board.
That job probably looks very different from what he expected last fall. The company had to lay off 7% of its staff back in April, which Sugar described as “one of the worst days of my career.” At the same time, he remains confident about the online advertising business. In his view, it’s TV advertising that’s taken a “huge punch” in the face and will never recover.
“We like to think of ourselves as one of the fastest, most innovative publishers out there,” Sugar told me. “And now’s the time for us to kind of show that off.”
You can read an edited, updated and condensed transcript of our conversation below, in which I talked to Sugar about how his role has evolved, how he motivates the team during difficult times and what gets lost in the shift to remote work.
TechCrunch: Obviously, it’s been a crazy couple of months since we last talked. What does your job look like now?
Brian Sugar: Well, I feel like a data miner, searching for answers. I feel like a hackathon engineer. And I feel like a therapist. You know, we like to think of ourselves as one of the fastest, most innovative publishers out there. And now’s the time for us to kind of show that off.
[We’ve just been] looking at data on how people are consuming our content across platforms. And on our site, we’ve come up with some really interesting ideas that we’ve implemented. We’ve been having these really cool hackathon Fridays to build stuff quickly, because a lot of people feel like they have a little bit more time on their hands — because you don’t have to travel to meetings, you can get more work done. Some people feel they’re more efficient.
We’re extremely optimistic. All our brands are extremely optimistic, and so is [the whole] company.
You mentioned launching some new products to respond to how audience behavior is changing. Are there any examples?
The first one [is] the PopSugar Fitness thing. We were planning on launching a paid workout subscription service in May, but everybody was working from home [in March], and we decided to pull the launch all the way up to as fast as we can launch it. We launched it that following weekend. Since the launch in late March, over the past few months, we’ve had 200,000 people sign up, and we have 50,000 monthly active users on it.
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Travel startups cry foul over what Google’s doing with their data
As the antitrust drumbeat continues to pound on tech giants, with Reuters reporting comments today from the U.S. Justice Department that it’s moving “full-tilt” on an investigation of platform giants including Google parent Alphabet, startups in Europe’s travel sector are dialing up their allegations of anti-competitive behavior against the search giant.
Google has near complete grip on the search market in Europe, with a regional market share in excess of 90%, according to Statcounter. Unsurprisingly, industry sources say a majority of travel bookings start as a Google search — giving the tech giant huge leverage over the coronavirus-hit sector.
More than half a dozen travel startups in Germany are united in a shared complaint that Google is abusing its search dominance in a number of ways they argue are negatively impacting their businesses.
Complaints we’ve heard from multiple sources in online travel range from Google forcing its own data standards on ad partners to Google unfairly extracting partner data to power its own competing products on the cheap.
Startups are limited in how much detail they can provide on the record about Google’s processes because the company requires advertising partners to sign NDAs to access its ad products. But this week German newspaper Handelsblatt reported on antitrust complaints from a number of local startups — including experience booking platform GetYourGuide and vacation rental search engine HomeToGo — which are accusing the tech giant of stealing content and data.
The group is considering filing a cartel complaint against Google, per its report.
We’ve also heard from multiple sources in the European travel sector that Google has exhibited a pattern of trying to secure the rights to travel partners’ content and data through contracts and service agreements.
One source, who did not wish to be identified for fear of retaliation against their business, told us: “Each travel partner has certain specialities in their business model but overall the strategy of Google has been the same: Grab as much data from your partners and build competing products with that data.”
Not OK, Google
This is now a very familiar complaint against Google. Crowdsourced reviews platform Yelp has been accusing the tech giant of stealing content for years. More recently, Genius got creative with a digital watermark that caught Google redhanded scraping lyrics content from its site which it pays to license (but Google does not). As Lily Allen might put it, it’s really not okay.
Last month’s congressional antitrust subcommittee hearing kicked off with exactly this accusation too — as chair David Cicilline barked at Google and Alphabet CEO Sundar Pichai: “Why does Google steal content from honest businesses?” Pichai dodged the question by claiming he doesn’t agree with the characterization. But for Google and parent Alphabet there’s no dodging the antitrust drumbeat pounding violently in the company’s backyard.
Based on this exchange, it seems like Google CEO Sundar Pichai *really* does not want to answer questions about local search. Perhaps because there are no good answers?
pic.twitter.com/49RVwHMHS8
— Luther Lowe (@lutherlowe) July 29, 2020
In Europe, Google’s business already has a clutch of antitrust enforcements against it — starting three years ago, in a case which dated back six years at that point, with a record-breaking penalty for anti-competitive behavior in how it operated a product search service called Google Shopping. EU enforcements against Android and AdSense swiftly followed. Google is appealing all three decisions, even as it continues to expand its operations in lucrative verticals like travel.
The Commission’s 2017 finding that Google is dominant in the regional search market carried what lawmakers couch as a “special responsibility” to avoid breaching the bloc’s antitrust rules in any market in which Google plays. That finding puts the travel sector squarely in the frame, although not yet under formal probe by EU regulators (although they have opened an active probe of Google’s data collection practices, announced last year).
EU regulators are also examining a range of competition concerns over its proposed acquisition of Fitbit, delaying the merger while they consider whether the deal would further entrench Google’s position in the ad market by giving it access to a trove of Fitbit users’ health data that could be used for increased ad personalization.
But so far, on travel, the Commission has been keeping its powder dry.
Yet for around a decade the tech giant has been building out products that directly compete for travel bookings in growth areas like flight search. More recently it’s added hotels, vacation rentals and experiences — bringing its search tool into direct competition with an increasing range of third-party booking platforms which, at least in Europe, have no choice but to advertise on Google’s platform to drive customer acquisition.
One key acquisition underpinning Google’s travel ambitions dates back to 2010 — when it shelled out $700 million for ITA, a provider of flight information to airlines, travel agencies and online reservation systems. The same year it also picked up travel guide community, Ruba.
Google beat out a consortium of rivals for ITA, including Microsoft, Kayak, Expedia and Travelport, which relied on its data to power their own travel products — and had wanted to prevent Google getting its hands on the data.
Back then travel was already a huge segment of search and online commerce. And it’s continued to grow — worth close to $700 billion globally in 2018, per eMarketer (although the coronavirus crisis is likely to impact some recent growth projections, even as the public health crisis accelerates the industry’s transition to digital bookings) — all of which gives Google huge incentive to carve itself a bigger and bigger share of the pie.
This is what Google is aiming to do by building out ad units that cater to travelers’ searches by offering flights, vacation rentals and trip experiences, searchable without needing to leave Google’s platform.
Google defends this type of expansion by saying it’s just making life easier for the user by putting sought for information even closer to their search query. But competitors contend the choices it’s making are far more insidious. Simply put, they’re better for Google’s bottom line — and will ultimately result in less choice and innovation for consumers — is the core argument. The key contention is Google is only able to do this because it wields vast monopoly power in search, which gives it unfair access to travel rivals’ content and data.
It’s certainly notable that Alphabet hasn’t felt the need to shell out to acquire any of the major travel booking platforms since its ITA acquisition. Instead, its market might allow it to repackage and monetize rival travel platforms’ data via an expanding array of its own vertical travel search products.
One of the German consortia of travel startups with a major beef against Google is Berlin-based HomeToGo. The vacation rentals platform confirmed to TechCrunch it has filed an antitrust complaint against the company with the European Commission.
It told us it’s watched with alarm as Google introduced a new ad unit in search results which promotes a vacation rental search and booking experience — displaying property thumbnails, alongside locations and prices plotted on a map — right from inside Google’s platform.
Screengrab showing Google vacation rental ad unit, populated with content from a range of partners
Discussing the complaint, HomeToGo CEO and co-founder, Dr Patrick Andrae, told us: “Due to the monopoly Google has in horizontal search, just by having this kind of access [to the vast majority of European Internet searchers], they’re so top of the funnel that they theoretically can go into any vertical. And with the power of their monopoly they can turn on products there without doing any prior investment in it.
“Anyone else has to work a lot on SEO strategies and these kind of things to slowly go up in the ranking but Google can just snap its fingers and say, basically, tomorrow I want to have a product.”
The complaint is not just that Google has built a competing ad product in vacation rentals but — following what has become a standard colonizing playbook for seemingly any vertical area Google sees is grabbing traffic — its packaging of the competing product is so fully featured and eye-catching that it results in greater prominence for Google’s ad versus organic search results (or indeed paid ad links) where rivals may appear as plain-old blue links.
“They create this giant, colorful super CTA [call-to-action], as we call it — this one-box thing — where everything is clickable and leads you into the Google product,” said Andrae. “They explain that it’s better for the user experience but no one ever said that the user wants to have a one-box there from Google. Or why shouldn’t it be a one-box from HomeToGo? Or why shouldn’t it be a one-box in the flight world from Kayak? Or in the hotel world from Trivago? So why is it just the Google product that’s colorful, nice, and showing up?”
Andrae argues that the design of the unit is intended to give the user the impression that “Google has everything there,” on its platform. So, y’know, why go looking elsewhere for a vertical search engine?
He also points out that the special unit is not available to competitors. “You cannot buy it,” he said. “So even if you would like to have this prominent kind of placement you cannot buy that as a third-party company. Even if you would like to pay money for it — I’m not talking about being in the product itself, that’s another topic — but just having the same kind of advertisement, because it is what they do — they advertise their own product there for free — and this is our complaint.”
Pay with your data
In 2017, when the Commission slapped Google with the first record-breaking penalty over its search comparison service — finding it had systematically given prominent placement to its own comparison shopping service over and above rival services in organic search results — competition chief Margrethe Vestager disclosed it had also received complaints about Google’s behavior in the travel sector.
Asked about the sector’s concerns now, some three years later, a Commission spokeswoman told us it’s “monitoring the markets concerned” — but declined to comment on any specific gripes.
Here’s another complaint: GetYourGuide, a Berlin-based travel startup that’s created a discovery and booking platform for travel tours and experiences, has similar concerns about Google’s designs on travel experience booking — another travel segment the tech giant is moving into via its own eye-catching ad units flogging experiences.
“They want to create experience products now directly on Google search itself, with the aim that ultimately people can book these type of things on Google,” said GetYourGuide CEO and co-founder Johannes Reck. “What Google tries to do now is they try to get [travel startups’] content and our data in order to create new competitive products on Google.”
The startup is unhappy, for example, that a “Things to do” ad product Google shows in its search results doesn’t link to GetYourGuide’s own search page — which would be the equivalent and competing third party product.
“Google will not allow us to link them into our search but only into the details page so the customer sees even less of our brand,” he said. “Or in Maps, for instance, if you go to Eiffel Tower and press to book tickets you don’t see any of GetYourGuide despite us fulfilling that order.”
He also rejects Google’s claim against this sort of complaint that it’s simply “doing the right thing for the user” by not linking them out to the rival platform. “We do know from our data that users convert better and spend more time on our site and have higher engagement rates when we link them into our search and then deeper down into the funnel,” he told TechCrunch. “What Google is saying is not that it serves the user — it serves Google and it serves their profits. Because the deeper down the funnel that you link, the user will either buy or they will bounce back to Google and search for the next product. If you link into searches — if you don’t verticalize as much — then the user will end up in a different ecosystem and might not bounce back to Google.”
“As a partner [of Google] you have limited choice to participate [in its ad products]. You do need to give Google that content and then Google will try to move as many of the customers to them,” Reck added. “I don’t think there ever will be a world where booking.com or Expedia or GetYourGuide will disappear — rather our brands will start to disappear.
“That is something that I think ultimately is bad for the customer and only serves Google, again, because the customer will, in the long run, have no other choice and no other visibility on how he can get to choice than to go through Google because our brands will basically be hidden behind a Google wall. That will turn Google firmly away from what their original mission was… to steer people to the most relevant content on the web… Now they are trying to be completely the opposite; they’re trying to be the Amazon or Alibaba of travel and try to keep and contain people in their ecosystem.”
During the congressional antitrust subcommittee hearing last month Pichai claimed Google faces fierce competition in travel. Again, Reck contends that’s simply not true. “In Europe more than 75% of travelers go to Google to search for travel and all those users are free,” he said. “Everyone else in the travel industry pays Google top dollar… for these queries. Which competition exactly is he referring to?”
“[Pichai] then claimed that they’re not leveraging partners’ content — that’s not accurate. If you look at Google if you want to be in the top results these days you either pay or you give them data so that they can build their own products into search.”
“This dates back 10 years now when they acquired ITA software, which is the leading data provider for flights,” Reck added. “They’ve just paved their way into travel. I think their intent is very clear at this point that they have no interest in their partners — or their customers for that matter, who like the choice that’s being offered on Google.
“What they want to morph into, basically, is to turn Google into the Amazon of travel where everyone else may be a content provider or a fulfillment agent but the consumer has no choice but to go through Google. I think that is the key intent here. They want to limit consumer choice. And they want to monopolise the space. We don’t want that and we will fight that. And if that means we need to go to the EU Commission to protect our and the customers’ interests then we’ll do that and we’re currently reviewing that option.”
The looming harm for consumers around reduced choice could manifest in poorer customer service, which is an area vertical players tend to focus on — whereas Google, as a platform funnel, does not.
Another German travel startup — Munich-based FlixBus — was also willing to go on the record with concerns about the impact of Google’s market power on the sector, despite not being in the same position as its business is not an aggregator.
Nonetheless, FlixBus founder and CEO Jochen Engert called on regional lawmakers to act against what he described as Google’s “systematic abuses” of market dominance.
“We call on the politicians in Germany and the EU to now work for fair competition on the internet. It must be forbidden that monopolistic companies like Google abuse their market power, especially in times of crisis, and prevent competition for the benefit of the customer due to their dominance,” he told us. “Google systematically abuses its dominant market position to seal off access to customers from competitors and gets away with it time and again. It is only a matter of time before other industries and business models, in addition to travel, hotel and flight bookings, are permanently threatened.
“For FlixMobility [FlixBus’ parent company] as an internationally positioned market leader with its own platform, technology and our unique content, the situation is more relaxed than for smaller startups or those which also aggregate content such as Google. Nevertheless, in our opinion Google should be obliged to list and market its own products in search results on an equal footing with comparable offers. Here regulation must not stand by and watch for too long, but must react before Google irretrievably controls customer access and excludes competition.”
GetYourGuide’s Reck expressed hope that German lawmakers might be able to offer more expeditious relief to the sector than the European Commission — whose competition investigations typically grind through the details for years.
“The German government is actually very alert at this point in time,” he said. “They’re currently working on a new competition legislation that they will put in place probably within the next six months. It’s already in the making — and that will also be addressed to exactly that type of behavior of global, quasi-monopolistic platforms crossing the demarcation line, moving into other fields and trying to leverage their monopoly in order to create synergies in adjacent fields and crowd out competition.”
Asked what kind of intervention he would like to see regulators make against Google, Reck suggests its business should be regulated akin to a utility — advocating for controls on data, including around the openness of data, to level the playing field.
Though he also told us he would be supportive of more radical measures, such as breaking Google up. (But, again, he says speed of intervention is of the essence.)
“If you look at all of the data that Google collects, whether that’s consumer reviews, availability from its partners, all of the content from its partners, all of the information that they have through Android, whether that’s geo-specific data, whether that is interests, whether that is contextual information, Google is training their algorithms day and night on this data, no one else can. But we all have to provide data to Google,” he said.
“That’s not a level playing field. We need to think about how we can have a more open data architecture, that obviously is compliant with our data privacy laws but where developers from anywhere can build products based on the Google platform… As a developer in travel it’s currently very hard for me to access any data from Google so I can build better products for consumers. And I think that really needs to change — Google needs to open us for us to create a more vibrant and competitive ecosystem.”
“At a national or EU level we need to have an updated legal code that allows for quick interventions,” Reck added, saying competition enforcement simply can’t carry on at the same pace as for the markets of the past. “Things are moving way too quickly for that. You need to take a completely new approach.
“As Google correctly pointed out consumer prices have fallen but falling consumer prices is the weapon in tech; offering products for free allows you to gain market share in order to crowd out competition, which again leaves less choice for the customer, so I think we need to think about how we think about tech and platforms in new ways.”
The Commission is currently consulting on whether competition regulators need a new tool to be able to intervene more quickly in digital markets. But there’s more than a trace of irony that its adherence to process means further delay as regulators question whether they need more power to intervene in digital markets to prevent tipping, instead of acting on longstanding complaints of market abuse attached to the 800-lb gorilla of internet search — with its “special responsibility” not to trample on other markets.
Reached for comment on the travel startups’ complaints, a Google spokeswoman sent us this statement:
There are now more ways than ever to find information online, and for travel searches, people can easily choose from an array of specialized sites, like TripAdvisor, Kayak, Expedia and many more. With Google Search, we aim to provide the most helpful and relevant results possible to create the best experience for users around the world and deliver valuable traffic to travel companies.
During the pandemic, we’ve been working hard with our partners in the travel industry to help them protect their businesses and look toward recovery. We launched new tools for airlines so they can better predict consumer demand and plan their routes. For hotels, we expanded our ‘pay per stay’ program globally to shift the risk of cancellation from our partners to us. And we’ve updated our search products so consumers can make informed decisions when planning future travel, further reducing the risk of cancellation.
The company did not respond to our request for a response to claims we heard that it seeks to secure rights to partners’ content and data via contracts and service agreements.
No relief
In another sign of the growing rift between Google and its travel partners in Europe, German startups in the sector banded together to press it for better terms during the coronavirus crisis earlier this year — accusing the tech giant of being inflexible over payments for ads they’d run before the crisis hit. This meant they were left with a huge hole in their balance sheets after making mass refunds for travelers who could no longer take their planned trip. But the gorilla wasn’t sympathetic, demanding full payment immediately.
Asked what happened after TechCrunch reported on their concerns at the end of April, Reck said Google went silent for a few weeks. But as soon as the travel market started picking up in Germany — and GetYourGuide decided it needed to start advertising on Google again — it reissued the demand for full payment.
GetYourGuide says it was left with no choice but to pay, given it needed to be able to run Google ads.
Reck describes the recovery package Google offered after it made the payment as “a Google recovery package” — as it was tied to GetYourGuide spending a large amount on YouTube ads in order to get a small discount.
The offer would recoup only a “fraction” of GetYourGuide’s original losses on Google ads during the peak of the COVID-19 crisis, per Reck. “YouTube obviously is not where we lost the money. We lost the money in search where we had high-intent customers, Google customers that wanted to come and shop. So that to us was [another] slap in the face,” he added.
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Five success factors for behavioral health startups
Courtney Chow is an associate with Battery Ventures in San Francisco who focuses on early and growth-stage internet, software and services companies.
Justin Da Rosa
Contributor
Contributor
Justin Da Rosa is a vice president with Battery Ventures in San Francisco. He focuses on consumer internet, online marketplace and software investments.
Telehealth, or remote, tech-enabled healthcare, has existed for years in primary medical care through companies like Teladoc (NYSE: TDOC), Doctors on Demand and MDLIVE.
In recent years, the application of telehealth had rapidly expanded to address specific chronic and behavioral health issues like mental health, weight loss and nutrition, addiction, diabetes and hypertension, etc. These are real and oftentimes very severe issues faced by people all over the world, yet until now have seen little to no use of technology in providing care.
We believe behavioral health is particularly suited to benefit from the digitization trends COVID-19 has accelerated. Previously, we’ve written about the pandemic’s impact on online learning and education, both for K-12 students and adult learners. But behavioral health is another area impacted by the fundamental change in consumers’ behavior today. Below are four reasons we think the time is now for behavioral health startups — followed by five key factors we think characterize successful companies in this area.
Telehealth can significantly lower the cost of care
Traditional behavioral healthcare is cost-prohibitive for most people. In-person therapy costs $100+ per session in the U.S., and many mental health and substance-use providers don’t accept insurance because they don’t get paid enough by insurers.
By contrast, telehealth reduces overhead costs and scales more effectively. Leveraging technology, providers can treat more patients in less time with almost zero marginal costs. Mobile-based communications enable asynchronous care that further helps providers scale. Access to digital content gives patients on-going support without the need for a human on the other side. This is particularly useful in treating behavioral health issues where ongoing support and motivation may be necessary.
Technology unlocks supply in “shadow markets” of providers
Globally, we face an extreme shortage of behavioral health providers. For example, the United States has fewer than 30,000 licensed psychiatrists (translating to <1 for every 10,000 people). Outside of big cities, the problem gets worse: ~50-60% of nonmetro counties have no psychologists or psychiatrists at all.
Even when providers are available, wait times for appointments are notoriously long. This is a huge issue when behavioral health conditions often require timely intervention.
We are seeing new platforms build large networks of certified coaches, licensed psychologists and psychiatrists, and other providers, aggregating supply in what has historically been a scarce and a highly fragmented provider population.
Behavioral/mental health issues are losing their stigma
We believe the stigma associated with mental illness and other behavioral health conditions is dissipating. More and more public figures are speaking out about their struggle with anxiety, depression, addiction and other behavioral health issues. Our zeitgeist is shifting fast, and there’s an all-time high in people seeking help as the Google Trends data below demonstrates.
Image Credits: Google
Note: The anomalous dip in March/April ’20 was driven by mandatory shelter-in-place due to COVID-19.
Policy and regulations are changing quickly
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Six Toronto VCs discuss COVID-19 and the post-pandemic era
As North America’s fourth-largest city, Toronto is one of the world’s top startup ecosystems.
After spawning companies like Eventbrite and Crowdmark, Ontario’s capital has attracted international talent that complements its homegrown population of entrepreneurs and technical talent.
Six investors we surveyed who work and live in the area said they believe Toronto will continue to thrive after the COVID-19 storm passes. Some of them focus exclusively on the region, while others invest elsewhere as well. As they explained, the city has a lot going for it: It’s diverse, has access to locally trained engineering and business workers, and the area has already fostered many companies that are doing very well.
Investors expect Toronto to remain a fintech hub
Fintech is one of the city’s top industries, and the investors in this survey expect this to continue. Stephanie Choo, head of investments at Portag3 Ventures, said “fintech continues to see massive tailwinds from the fallout from COVID-19 as incumbents struggle to fully digitize their offerings.”
Ameet Shah of Golden Ventures listed fintech as one of Toronto’s key industries. Eva Lau of Two Small Fish Ventures agreed, adding that “blockchain has also been doing well because many blockchain-related technologies or companies were started in Toronto.”
Other investors point to fintech business leaders in Toronto like CEOs Mike Katchen of Wealthsimple, Daniel Eberhard of Koho, Andrew D’Souza and Michele Romanow of Clearbanc and Kirk Simpson of Wave Financial.
Diversity is one of Toronto’s strengths
Nearly all of the surveyed investors cited diversity as a key reason to live and work in Toronto. Probal Lala, chairman of Maple Leaf Angels, says, “Beyond having a vibrant technology ecosystem, Toronto has one of the most diverse communities in North America and is not only a great place to find the intellectual horsepower and funding to build a great global startup, but also the mosaic of social communities that makes it a great place to live and raise a family.”
Choo said the United States’ current battles over immigration could benefit Canada. “Small, nimble teams that need to move fast may still choose to co-locate in person — and many will still want access to amenities that only a large, vibrant and diverse city like Toronto can offer.”
She also pointed to Toronto’s claim of being one of the most diverse cities in the world. “[This] not only makes the city interesting but also very welcoming for those who relocate from elsewhere; a strong startup and tech scene, and, lastly, a vibrant cultural and food scene, especially through the lens of cost-of-living compared to comparable major cities.”
Shopify’s executives are key players in Toronto’s ecosystem
Several VCs listed Shopify executives as local leaders, while others acknowledged the growing unicorn’s impact. Ameet Shah of Golden Ventures says, “Toronto has traditionally been strong in fintech, B2B SaaS, crypto and AI. The explosion of Shopify should also benefit companies focused on e-commerce and supply chain solutions.”
Adam McNamara and Ameet Shah, when asked about local business leaders, both listed Satish Kanwar. Kanwar is GM and VP of Product at Shopify after the company purchased Jet Cooper, a startup co-founded by Kanwar. McNamara also points to Farhan Thawar, Shopify’s VP of Engineering, as a local leader.
Who we spoke to:
- Probal Lala, chairman, Maple Leaf Angels Capital Corporation
- Stephanie Choo, head of investments, Portag3 Ventures
- Adam McNamara, founding partner, Ramen VC
- Ameet Shah, partner, Golden Ventures
- Matt Golden, founder and managing partner, mGolden Ventures
- Eva Lau, founding partner, Two Small Fish Ventures
Probal Lala, Maple Leaf Angels Capital Corporation
How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?
Prior to COVID-19 hitting, a requirement for the majority of my investments was a face-to-face visit with the founding team. For the most part, this meant founders spending time in Toronto. As we primarily invest in seed and pre-seed, this usually meant local founders.
When the pandemic hit, we shifted our process to primarily Zoom meetings (including due diligence) and as a result the mix of founding teams has expanded beyond our typical catchment area (two-hour drive from the city) to a broader base. Investment cycles appear to have slowed a bit due to the remote approach but our reach to founding teams has expanded to a broader base of geographically distributed founding teams (Mostly Canadian although we have recently seen a number of international opportunities).
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Labster lands new cash to bring its virtual reality science lab software to Asia
You could Zoom call into your science class, or you could conduct a lab experiment in virtual reality. During the coronavirus pandemic, the latter has never felt more full of potential.
The global need for learning solutions beyond Zoom is precisely why Labster, a Copenhagen-based startup that helps individuals engage in STEM lab scenarios using virtual reality, is growing rapidly. Since March, the usage of Labster’s VR product has increased 15X.
On the heels of this unprecedented momentum, Labster joins a chorus of edtech startups raising right now, and announced it has brought on $9 million in equity venture funding. The round was led by GGV, with participation from existing investors Owl Ventures, Balderton and Northzone.
“COVID-19 has been a great awareness builder of Labster, opening teachers’ eyes to the good sides of online learning as opposed to Zoom-only learning, which is largely failing,” CEO and co-founder Michael Jensen told TechCrunch.
Labster sells its e-learning solution to support and enhance in-person courses. Based on the subscription an institution chooses, participants can get differing degrees of access to a virtual laboratory. Imagine a range of experiments, from understanding bacterial growth and isolation to exploring the biodiversity of an exoplanet. Along with each simulation, Labster offers 3D animations for certain concepts, re-plays of simulations, quiz questions and a virtual learning assistant.
Photo credit: Labster.
While the majority of Labster’s customers are private institutions, the company landed a deal with all of California’s community colleges during the pandemic. The partnership added 2.1 million students to Labster’s customer base, which Jensen said has been bolstered by a broader growth in annual license deals and partnerships.
With GGV on board, Labster is looking to strengthen position in Asia. Breaking into new markets often requires a strategic investor with eyes on the ground on how that market works, thinks and, most importantly, learns. Asian markets are specifically lucrative for edtech companies because consumer spend is higher compared to the North American market.
Jenny Lee, a Shanghai-based partner with GGV, will take a board seat at Labster.
Lee has expressed interest in how automation, virtual and AI-based teachers can help bridge the gap between K-12 markets and lack of good-quality teachers everywhere.
Jensen said that the capital will also be used to bolster the company’s mobile offering, since Asian markets have high mobile usage compared to North American and European markets.
The round is significantly smaller than Labster’s previous $21 million Series B, closed in April of 2019. And it contrasts sharply to the momentum that has benefited edtech companies like MasterClass, Coursera and, reportedly, Udemy into raising nine-figure rounds.
So naturally, I asked Jensen: why the conservative raise?
Jensen says that the $9 million check was a strategic growth check to bring on GGV (all existing investors in Labster also participated in the round). Since being founded in 2012, the company has been relatively conservative in raising cash. To date, inclusive of this round, Labster has raised $40 million in venture capital.
He argues the new money, thus, is offensive capital instead of defensive capital. It’s a strategic check to open a global door.
This isn’t the first time an edtech company has raised a smaller round than expected during the coronavirus pandemic. In April, edtech unicorn Duolingo raised a short $10 million to expand into Asia and bring on General Atlantic as an investor to expand into global markets.
Duolingo, however, is cash-flow positive. Jensen did not comment on if Labster has turned a profit, but adds that it was a “significant up round” that brought the company’s valuation to above $100 million.
“Our primary objectives continue to be rapid growth and global impact, not profits,” he told TechCrunch.
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What’s different about hiring data scientists in 2020?
Tianhui Michael Li is founder of The Data Incubator, an eight-week fellowship to help PhDs and postdocs transition from academia into industry. Previously, he headed monetization data science at Foursquare and has worked at Google, Andreessen Horowitz, J.P. Morgan and D.E. Shaw.
More posts by this contributor
It’s 2020 and the world has changed remarkably, including in how companies screen data science candidates. While many things have changed, there is one change that stands out above the rest. At The Data Incubator, we run a data science fellowship and are responsible for hundreds of data science hires each year. We have observed these hires go from a rare practice to being standard for over 80% of hiring companies. Many of the holdouts tend to be the largest (and traditionally most cautious) enterprises. At this point, they are at a serious competitive disadvantage in hiring.
Historically, data science hiring practices evolved from software engineering. A hallmark of software engineering interviewing is the dreaded brain teaser, puzzles like “How many golf balls would fit inside a Boeing 747?” or “Implement the quick-sort algorithm on the whiteboard.” Candidates will study for weeks or months for these and the hiring website Glassdoor has an entire section devoted to them. In data science, the traditional coding brain teaser has been supplemented with statistics ones as well — “What is the probability that the sum of two dice rolls is divisible by three?” Over the years, companies are starting to realize that these brain teasers are not terribly effective and have started cutting down their usage.
In their place, firms are focusing on project-based data assessments. These ask data science candidates to analyze real-world data provided by the company. Rather than having a single correct answer, project-based assessments are often more open-ended, encouraging exploration. Interviewees typically submit code and a write-up of their results. These have a number of advantages, both in terms of form and substance.
First, the environment for data assessments is far more realistic. Brain teasers unnecessarily put candidates on the spot or compel them to awkwardly code on a whiteboard. Because answers to brain teasers are readily Google-able, internet resources are off-limits. On the job, it is unlikely that you’ll be asked to code on a whiteboard or perform mental math with someone peering over your shoulder. It is incomprehensible that you’ll be denied internet access during work hours. Data assessments also allow the applicants to complete the assessment at a more realistic pace, using their favorite IDE or coding environment.
“Take-home challenges give you a chance to simulate how the candidate will perform on the job more realistically than with puzzle interview questions,” said Sean Gerrish, an engineering manager and author of “How Smart Machines Think.”
Second, the substance of data assessments is also more realistic. By design, brainteasers are tricky or test knowledge of well-known algorithms. In real life, one would never write these algorithms by hand (you would use one of the dozens of solutions freely available on the internet) and the problems encountered on the job are rarely tricky in the same way. By giving candidates real data they might work with and structuring the deliverable in line with how results are actually shared at the company, data projects are more closely aligned with actual job skills.
Jesse Anderson, an industry veteran and author of “Data Teams,” is a big fan of data assessments: “It’s a mutually beneficial setup. Interviewees are given a fighting chance that mimics the real-world. Managers get closer to an on-the-job look at a candidate’s work and abilities.” Project-based assessments have the added benefit of assessing written communication strength, an increasingly important skill in the work-from-home world of COVID-19.
Finally, written technical project work can help avoid bias by de-emphasizing traditional but prejudicially fraught aspects of the hiring process. Resumes with Hispanic and African American names receive fewer callbacks than the same resume with white names. In response, minority candidates deliberately “whiten” their resumes to compensate. In-person interviews often rely on similarly problematic gut feel. By emphasizing an assessment closely tied to job performance, interviewers can focus their energies on actual qualifications, rather than relying on potentially biased “instincts.” Companies looking to embrace #BLM and #MeToo beyond hashtagging may consider how tweaking their hiring processes can lead to greater equality.
The exact form of data assessments vary. At The Data Incubator, we found that over 60% of firms provide take-home data assessments. These best simulate the actual work environment, allowing the candidate to work from home (typically) over the course of a few days. Another roughly 20% require interview data projects, where candidates analyze data as a part of the interview process. While candidates face more time pressure from these, they also do not feel the pressure to ceaselessly work on the assessment. “Take-home challenges take a lot of time,” explains Field Cady, an experienced data scientist and author of “The Data Science Handbook.” “This is a big chore for candidates and can be unfair (for example) to people with family commitments who can’t afford to spend many evening hours on the challenge.”
To reduce the number of custom data projects, smart candidates are preemptively building their own portfolio projects to showcase their skills and companies are increasingly accepting these in lieu of custom work.
Companies relying on old-fashioned brainteasers are a vanishing breed. Of the recalcitrant 20% of employers still sticking with brainteasers, most are the larger, more established enterprises that are usually slower to adapt to change. They need to realize that the antiquated hiring process doesn’t just look quaint, it’s actively driving candidates away. At a recent virtual conference, one of my fellow panelists was a data science new hire who explained that he had turned down opportunities based on the firm’s poor screening process.
How strong can the team be if the hiring process is so outmoded? This sentiment is also widely shared by the Ph.D.s completing The Data Incubator’s data science fellowship. Companies that fail to embrace the new reality are losing the battle for top talent.
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No pen required: The digital future of real estate closings
Jeanne Casey is a principal on the investment team at MetaProp, where she leads new investments into compelling proptech companies and works closely with portfolio companies on strategic growth initiatives.
On a Wednesday at 4 p.m. in June 2017, I was in a small, packed office in midtown Manhattan.
The overcrowded conference room, with at least five more people than any fire marshal would recommend, was stacked comically high with paperwork and an eclectic collection of cheap pens. As I neared the end of the third hour and the ink of my seventh pen, I realized the mortgage closing process may be somewhat antiquated.
After closing on my first home, it was inconceivable to me that every other expense in my life has gone digital, but the most significant purchase I’ve ever made required hundreds of signatures and several handwritten checks delivered in person. By comparison, I have been able to repay my student loans, comparable in magnitude to a down payment, exclusively through online portals.
How COVID-19 is accelerating digital advancements
The COVID-19 pandemic has changed nearly every facet of our lives. One potential silver lining for the real estate world may be a forced reckoning with the mortgage closing process. Technological advances like e-closings are accelerating this arduous process into the digital age. The U.S. Census Bureau released figures in July citing the rise in homeownership across the country as the pandemic fuels the demand for single-family properties outside of urban areas. This is confirmed by the significant spike in mortgage applications seen in the second quarter of 2020.
The first signs of digitization of the mortgage origination process were seen in mid-2010 when lenders began adopting digital disclosures. Despite the availability of technology, the market has been slower to fully embrace digital closings that enable the full loan package to be electronically reviewed, recorded, signed and notarized. A true e-closing includes a digital promissory note (“eNote”), a virtual closing appointment and the electronic transfer and recording of documents by the county, all of which can be remotely coordinated and executed by the parties involved. The market started to pick up pace in recent years, and we’ve seen the number of e-mortgages increase by more than 450% from 2018 to 2019.
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US gaming industry records another excellent quarter as pandemic fuels sales
The COVID-19 pandemic has utterly decimated a number of industries over the past several months, but the U.S. gaming industry continues to benefit as people continue to be stuck at home. Yet another report from NPD highlights an excellent quarter, with spending hitting a new Q2 record in the States.
According to the figures, gamers spent $11.6 billion, marking a 30% increase over a year prior. It was also a 7% increase over Q1’s 10.9 billion, as spending continues while the pandemic continues to rage.
Games themselves comprised $10.2 billion of that figure (itself a 28% increase y-o-y), with some familiar titles occupying the top spots, including Animal Crossing: New Horizons, Call of Duty: Warzone and Call of Duty: Modern Warfare. The gaming hardware category saw a 57% increase from 2019, with Nintendo Switch, PlayStation 4 and Xbox One all seeing strong sales.
The Switch isn’t a surprise, given shortages experienced earlier in the year. Perhaps a bit more unexpected are continued sales on the PS4 and Xbox One, given that both consoles are set to be eclipsed by next-generation devices later in the year. Of course, those upcoming systems aren’t doing gamers much good during the current moment of stay at home orders.
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